Michael Geist says the Ottawa rumour mill indicates that we might see a copyright reform bill soon. His article is worth a read to find out why “the decision to forge ahead with the controversial reform package is a curious one”, and a suggested course of action for getting the copyright reform bill we really do need.
For the London Free Press – April 21, 2008
A recent court of appeal ruling found that Craigslist — a popular venue which provides an electronic forum for those who want to buy, sell or rent housing or other goods and services — should be treated like an Internet service provider and should not be liable for material posted by third parties.
That decision is sensible, and should be the norm for sites that provide for content added by others. That is similar to the concept that phone companies and Internet service providers should not be liable for their customers’ messages and conversations.
Craigslist came under scrutiny when the Chicago Lawyer’s Committee for Civil Rights sued Craigslist, arguing the Internet classified ads company violated the Fair Housing Act by publishing discriminatory housing posting.
Under American law, section 360(4)(a) of the Fair Housing Act forbids discrimination on account of race, religion, sex, or family status when selling or renting housing. This prohibition is accompanied by a ban on ads that state a preference with respect to any of the protected classes, essentially making it illegal to print or publish any type of notice or ad for the sale or rental of a dwelling that indicates a preference for race, colour, religion, sex, handicap, familial status or national origin.
The Chicago Lawyer’s Committee noted offensive comments in notices for the sale or rental of homes on Craigslist, including comments like “no minorities” or “no children.”
The matter was recently appealed to the U.S. Seventh Circuit Court of Appeal. The key issue in the appeal was whether the site could be liable for allowing customers to post discriminatory housing ads. The lower court decision was upheld. The court found Craigslist should be treated like an Internet service provider and should not be liable for materials posted by third parties.
The judge considered whether Craigslist should hire staff to vet postings, but concluded this would be expensive and futile. Vetting would result in posting delays that defeat the purpose of Craigslist.
Each month, more than 30 million notices are posted to the system. Fewer than 30 people, all based in California, operate the system that offers classifieds in 450 cities. It would be necessary to add staff, indirectly increasing consumer costs, to handle the sort of editorial review the committee demanded.
In addition, whether something is inappropriate or offensive is a judgment call.
One of the ads cited contained the phrase, “Catholic church and beautiful Buddhist temple within one block,” which the committee viewed as a signal of religious preference.
Craigslist viewed it as an objective description of a neighborhood that would help people zero in on properties attractive to them. Craigslist noted it is no more exclusionary than assuming an ad reading “elementary school within five minutes” would indicate a landlord would refuse to rent to childless couples. It is not reasonable to expect such companies to exercise something akin to judicial oversight.
1. Take some behavior/activity that most would agree is wrong (aka the “evil”)
2. Someone says “we need a law to stop the evil”.
3. Someone drafts a law with no rational thought or research into:
(a) whether it will actually stop/diminish/fix the evil; or,
(b) what collateral damage it will cause.
4. Lawmakers/supporters get on the bandwagon thinking that:
(a) it’s a good cause (see # 1); and/or
(b) it makes a good sound bite (see # 2); and/or
(c) it might impress voters/lobby groups (see # 1 and 2):
with no independent thought, or uncaring disregard, as to its effects (see # 3).
5. People won’t say no to the proposed law because they are afraid of being seen as in favor of the evil.
We need to stop doing this. Too many ineffective/obtrusive/unenforceable laws are passed as a result of this recipe.
So what caused this rant?
An Ontario private members bill has been proposed to require everyone to report any suspected child pornography. While no rational person would support child pornography, the above recipe is being followed. There is apparently much support for the proposed bill within the legislature. Commentary on a legal list serve is virtually unanimous in its condemnation of the bill because the only likely effect will be to cause collateral damage.
For the London Free Press – Febrary 4, 2008
Canada’s do-not-call list for telemarketers is to be in place by Sept. 30.
Don’t expect the phone to stop ringing at dinner time, though, because the legislation has many exceptions.
On Dec. 21, the CRTC announced the winner in the competition to operate the eagerly anticipated National Do Not Call List. Bell Canada was awarded a five-year contract.
The CRTC announced Jan. 28 it will issue a request for proposals by the end of this month to select a party to investigate DNCL complaints.
Critics have complained the bar to qualify as the operator was set so high it effectively eliminated smaller businesses from the running. This left the selection of a large telecommunications company a forgone conclusion.
The role of DNCL operator was created by the CRTC in a bid to limit its involvement in the DNCL as much as possible.
While the selection process may have its critics, it still means we are moving closer to the implementation of the DNCL, a possibility that will excite many Canadians.
Currently, there is no single do-not-call list, though individual telemarketers must keep their own lists. To avoid telemarketers, individuals must register with each one.
The DNCL will be a nationwide registry that will let consumers reduce the number of telemarketing calls they receive. Telemarketers will be prohibited from making unsolicited calls to telephone numbers on the DNCL.
Consumers will be able to register or deregister any Canadian telephone number on the DNCL. It will be possible to register online. Registration will be effective for three years, after which the number will automatically deregister and require reregistration.
There will be no charge for the consumer to register, with the costs of the list being paid from subscription fees for the list paid by telemarketers.
If, after registering, a consumer receives a call from a non-exempt organization, the consumer will have 14 days to complain, either online or by calling a toll-free number. Complaints will be investigated and penalties may be issued. Penalties may be as high as $1,500 per violation for individuals and $15,000 per violation for corporations.
There are a number of notable exceptions to the DNCL that will reduce its effectiveness.
Those exempted from the list include registered charities, political parties, those collecting information for a survey, solicitors of subscriptions for general-circulation newspapers and businesses with an existing business relationship with the consumer.
The question may fairly be asked, “Who does that leave?”
Telemarketers are not entirely happy with the DNCL. Besides limiting the ability of many businesses to telemarket, telemarketers have argued the fee requirements place an unfair burden on Canadian businesses.
For those who’ve waited a long time for a respite from telemarketers, the DNCL implementation in September may be a disappointment. For those who will pay for it, its implementation will be little more than a new burden.
Perhaps the real winners may be the CRTC, which is now relieved of the matter, and the service providers who can look forward to a new source of revenue.
For the London Free Press – December 3, 2007
The federal government just introduced proposed amendments to the Criminal Code to provide more tools to fight identity theft. This bill is a welcome addition to fight this growing problem.
Privacy advocates support this effort, but say it is not the only solution. They point out the need to do a better job of stemming the flow of personal information into the wrong hands in the first place. This includes not keeping personal information one doesn’t need, better security, attention to privacy and security issues at the board level, and better training and awareness in the trenches.
The bill’s preamble states: “This enactment amends the Criminal Code to create a new offence of identity theft, of trafficking in identity information and of unlawful possession or trafficking in certain government-issued identity documents, to clarify and expand certain offences related to identity theft and identity fraud, to exempt certain persons from liability for certain forgery offences, and to allow for an order that the offender make restitution to a victim of identity theft or identity fraud for the expenses associated with rehabilitating their identity.”
The bill adds to current forgery offences by making illegal the preparatory steps to forgery of collecting, possessing and trafficking in identity information.
Three new offences, as summarized in a federal news release, would be:
- Obtaining or possessing identity information with intent to use it to commit certain crimes.
- Trafficking in identity information with knowledge of or recklessness as to its intended use in the commission of certain crime.
- Unlawfully possessing and trafficking in government-issued identity documents.
Criminal Code amendments would create new offences of fraudulently redirecting or causing redirection of a person’s mail, possessing a counterfeit Canada Post mail key and possessing instruments for copying credit card information.
Identity information is broadly defined to include any information — biological or physiological — that is commonly used to identify or purport to identify an individual, such as a fingerprint, voice print, retina image, iris image, DNA profile, name, address, date of birth, written signature, electronic signature, digital signature, user name, credit card number, debit card number, financial institution account number, passport number, social insurance number, health insurance number, driver’s licence number or password.
The restitution that a court could order might include the cost of replacement cards and documents and costs in relation to correcting a credit history.
While this bill will certainly help, individuals and organizations alike must continue to be vigilant in the protection of personal information — whether their own or the information of others to which they have been entrusted.
itWorldCanada has an article today about the part of the proposed identity theft law that would make it a crime to be “reckless” about making personal information available to one who intends to use it for fraud. I am quoted in the article.
The exact wording of the section is:
Everyone commits an offence who transmits, makes available, distributes, sells or offers for sale another personâs identity information, or has it in their possession for any of those purposes, knowing or believing that or being reckless as to whether the information will be used to commit an indictable offence that includes fraud, deceit or falsehood as an element of the offence
Food for thought: Is this a backdoor way to put some criminal teeth in the security requirements of PIPEDA? If an organization was to leave personal data where it is easily found and unprotected, would that “make it available”, and be reckless?
This is a summary of a presentation I made for TechAlliance yesterday.
Dealing with legal issues sooner rather than later lessens risk and costs. Some legal mistakes can take a lot of time, energy and cost to correct, and some can’t be cured at all. They can affect daily operations, reputation, financing, risk and liquidity events.
If, for example Microsoft or Google come knocking to buy your business, but find some of these things have been done poorly or not at all, they may lower the price or go elsewhere.
The odds are the details wonât be right and the corporation will not get organized with the right bylaws, resolutions etc.
Companies often choose the wrong jurisdiction.
It’s important to get tax and accounting advice at this stage to ensure proper share structure.
If there are any assets to be transferred in it may be advantageous to do a section 85 rollover, which requires accounting help and the accountant to work with the lawyer to draft the right special share structure.
It’s more expensive to fix this later than to have it done right up front.
RELYING ON ANECDOTAL ADVICE
Relying on the ubiquitous “consultant” or anecdotal advice from others on legal matters is never good legal advice.
Even if one can’t afford to do everything up front, at least get some upfront advice and prioritize them.
If one shares their business plan early with their lawyer, the lawyer can help prioritize the needs and perhaps raise other issues or give advice on some issues that can make a difference going forward. For example, the fundamental structure of arrangements with customers or suppliers. The potential value of a lawyerâs input is diminished if it is sought only on the eve of the signing of a document.
Web 2.0 concepts are based on the wisdom of the crowd but beware of the tyranny of the majority.
Doing research on various issues on your own to see what other companies have done can be helpful, but it doesnât replace legal advice. Even if you research your ailment online, you wouldnât perform surgery on yourself.
NOT PLANNING FOR GROWTH
Some new businesses under price their products based on the cost of working out of their garage. Products or services should be priced based on what it would cost to operate as you grow. Premises, people and professional services cost money and must be incorporated in your plan.
Often customers won’t take your services seriously if you charge too little â i.e. it canât be any good if it costs that much less than the competition.
If a business waits until it is larger to do things like human resources and employee policies it becomes harder to put them in place and enforce them. While those things don’t have to be done immediately, they should be done reasonably early in the growth phase.
Businesses should plan for the scalability of their operations as well as the scalability of the product.
I have seen deals fail because the vendor was unable to support or implement the product because they did not have enough resources, yet could have afforded to provide that support if they had charged more, yet still undercut the competition.
This includes things like not keeping proper records of contracts or keeping track of tasks that need to be done.
It’s important to keep contracts and records intact and in one place (or at least have a master index that tracks where they are). That includes corporate records, customer contracts, supplier contracts, intellectual property documentation and other matters.
Itâs crucial to have a tickler system for various matters that have due dates – such as domain name renewals, lease renewals, tax filings and payments and various agreements. Even mundane agreements for things like water coolers, copiers, and postage meters.
Agreements with a term may require notice to either stop them or to extend them. One doesn’t want to either miss renewing something or fail to terminate something inadvertently.
Tracking future actions is something that’s easy to do but the consequences can be severe if its not done.
It can be done either electronically or on paper but it needs to be organized and easy to administer.
For example it could be devastating if one misses the renewal of their domain name.
NOT DOCUMENTING IP OWNERSHIP
Intellectual property covers a wide gamut of things ranging from copyright, trademarks, patents, nondisclosures, trade secrets and license arrangements both in and out.
This is one of the most common problems and sometimes the most difficult to correct. While it is theoretically easy to document this after-the-fact, it is often not easy to find the right people, convince them that they should cooperate, and convince them that your view of ownership is the right one. People often donât agree.
Not being able to prove that you actually own the rights to the product or service you sell can be fatal to that Microsoft / Google takeover.
It is crucial for ownership and moral rights issues to be addressed in writing with contractors. This is true whether one is hiring a large corporation to do some programming, whether borrowing some creative people from the business down the hall, or whether hiring an independent contractor to perform a task. Absent an agreement to the contrary, the starting position is that that contractor, and not the corporation that hires them to do the job, owns whatever they create.
It’s also important to ensure what they provide is original and not “borrowed”. Watch out for the use of open-source software or shareware. Often it can be used for personal use but not for business use, or not to create a product.
It is not uncommon for a client to a come to their lawyer with the problem where they think they own something, but a former employee or contractor insists they own it. Typically that happens were one needs to prove that you own it for some reason. If the other party knows that, it just raises the difficulty and the price to get it resolved.
NOT PROTECTING INTELLECTUAL PROPERTY.
Itâs important to protect your own IP.
Protection includes not disclosing anything that might be sensitive unless one has to, ensuring appropriate nondisclosures are in place, marking branding with trade-mark notices, registering trade-marks for important brands, and making sure licenses for your product or service include appropriate provisions.
On the patent side, it is important to consider whether any of your creations are patentable. Patent rights can be lost if the subject matter is made public before the patent is applied for. It is not unusual for example to have someone who wants to apply for a patent on something they created while in school. But they canât get a patent on it because the subject matter was disclosed in their master’s thesis published over a year ago.
Open-source software can cause issues. There’s nothing inherently wrong with the open-source model or using open-source software. The danger is that with some open-source licenses, depending on how you integrate your own code with the open-source code, you can be forced to disclose the source code of your own proprietary software. On the flip side, some programmers think that one must disclose the source code of your software if it comes anywhere near open-source software, which is not true.
One can compromise one’s own intellectual property if you violate the copyrights of others. Examples include copying creative works, whether that is computer code, web sites, photographs or promotional material of others.
GETTING INVESTORS WITHOUT LEGAL ADVICE
Securities laws are complex and failure to abide by them can be incurable. Many people don’t realize that the same laws that apply to public companies affect how private companies raise capital. Failure to do this right can severely hurt a corporationâs ability to get future financing or participate in a liquidity event. Securities laws are very strict regarding how one can advertise and sell shares, and the process for doing that.
There are many rules and exceptions to the rules. This is an area so complex that many business lawyers don’t understand it.
Another problem is issuing stock options to employees. Stock option agreements are a valuable tool for public companies but should be avoided by private companies. The minute one goes down this road, the employees become shareholders and as such are entitled to the same control and information disclosure as a normal shareholder. It can severely fetter the discretion of the founders or real owners. While having shares can be an incentive to employees, it can also give them an inflated sense of entitlement.
Employees of private corporations can be incented in other ways such as profit-sharing or bonus programs. The benefit to employees owning shares in private companies is illusory as there is no real market for the shares.
BLINDLY USING AGREEMENTS OF OTHERS
Businesses often try to use material that others have created for things like software licensing, Web terms and conditions, privacy policies and HR policies.
That’s a dangerous thing to do. Just because it’s OK for Microsoft doesn’t mean it fits your situation.
There are jurisdictional differences in agreements. US based limitation of liability clauses; for example, usually miss a key Canadian concept that can severely limit its effectiveness.
Different products, different delivery mechanisms and different fact situations all lead to different needs for documentation.
Things like warranties, conditions and disclaimers may not be effective in different jurisdictions. UK for example.
For things like privacy policies, being compliant with privacy laws involves far more than just sticking up a policy.
NOT HAVING YOUR OWN IT HOUSE IN ORDER
Backup and continuity plans are crucial. It can be a disaster if you lose work.
While we usually think of hurricanes, floods and 9/11 as the type of disasters we have to plan for, the most common disasters are things like water leaks, hard drive failures or backhoe Bob.
The risks of each organization will vary. It is crucial to access what risks exist for your business and address them appropriately.
In addition to effective backups, it is important to have disciplined file/document retention with consistent filing standards and revision control for documents and code.
Many businesses fail to adequately deal with security and privacy issues. That includes the security measures necessary to protect intrusions to your system and your paper files. Also any extra security measures required for portable media such as laptops, smart phones and jump drives.
Be sure that you have enough licenses for the software used in your operation.
There are also risks inherent in the application service provider model that many don’t deal with. The asp or apps on tap model has been around for many years but is growing in popularity. Since you do not house your own data, there is a risk of losing that data. While the asp provider may very well be able technically to better data backup than you can, the issue is what happens if something goes wrong and they go bankrupt or simply refuse to provide the data. That issue can sometimes be addressed by keeping local updated copies of the data. On the flip side, those businesses providing asp type services should expect this to be raised occasionally by purchasers, and have a plan to provide a solution to the issue.
HIRING THE WRONG COUNSEL
Lots of lawyers can do basic business things such as incorporating a company.
Tech companies are better off with a lawyer who understands tech issues and tech company needs, products and services.
Good legal advice (like most kinds of advice) is dependent on knowing the facts and context, and the practical issues at hand â not just the law.
For example, not many lawyers would check US trademarks or domain names before choosing a corporate name.
Not all business lawyers are familiar with issues surrounding intellectual property/licenses/security/privacy.
For the London Free Press – October 15, 2007
Second Life is an online fantasy world where people adopt a resident with any appearance they choose.
The person then controls the resident, or avatar, as they go about their lives in a virtual version of the real world. Since its launch in 2003, Second Life has had more than 8.9 million accounts registered and it is growing rapidly.
Early on it was seen as little more than a hippy hangout where people took virtual drugs and participated in quirky games.
Second Life’s growth has led to the emergence of Second Life entrepreneurs who see tantalizing business prospects in this world of seemingly limitless possibilities.
The extent to which game dollars translate to real world dollars is debatable, but people do pay other gamers real world dollars to acquire game assets.
Politicians and businesses have also seen potential in this virtual world, setting up stores and campaign headquarters.
As the virtual world has been invaded by the real world it has struggled with disruptive residents known as griefers who have resisted this development.
Griefers were originally tolerated due to the anything goes attitude of the world’s residents. For those with financial investments in the world, these griefers represent not an annoyance, but a potential source of lost revenue.
Many view virtual worlds such as Second Life as the modern equivalent of the Wild West.
The question is how much real world governance of fantasy worlds should there be ?
One suggestion is to look to sport. In many sports, behaviour that would be considered assault off the field is considered acceptable on the field.
Within Second Life there are elements of self regulation by the designers and the residents. The goal of Linden Labs, the creator of Second Life, is to “foster a self-governing community where residents are empowered to act on things they feel strongly about.”
This may not be enough for those who want the law to protect their virtual assets in the same way it protects their real assets. The worry is that legislators will say virtual worlds should be like the real world and fear the evolution of Second Life into Real Life2.
But they approach the issue, in a world where even the law of gravity doesn’t necessarily apply, legislators may face a battle.
That’s the title of a presentation I am giving for the TechAlliance on October 25th. Take a look at the TechAlliance web site for more detail, and to sign up.
I’ve avoided commenting on the recent Macleans cover story entitled Lawyers are rats that tarred the entire profession with the sins of a few bad apples. Various legal groups are in an uproar.
I was disappointed that a publication would stoop that low to sell copies, and frustrated that many people would believe it regardless of reality.
I only mention it now because Steve Matthews has a good post about it on his Vancouver Law Librarian Blog that is worth a read as it summarizes the situation well and puts it in a good perspective.