Trade-mark use descriptions get tricky with tech

That’s the title of my Slaw post for today.  It reads as follows.

Drafting proper trade-mark use descriptions when registering a trade-mark is important to get the right protection. Drafting uses can sometimes be a challenge when the wares or services the mark is used for is new and changing technology. The use description must accurately describe the wares and services the mark is used for, must stand the test of time, and must satisfy CIPO’s (Canadian Intellectual Property Office) rules on use descriptions.

Software is a good example of how things can rapidly change. If a business is selling software in the traditional manner where the user installs it on his/her computer, then from a trade-mark perspective, the software is a ware. It might be described, for example, as “Computer software for [describe function]“.

But if that software is being provided as an online service, then from a trade-mark perspective it is not a ware, it is a service. It might be described, for example, as “Online service providing [describe function]“.

Then we get to the smartphone world. If it is an app installed on a phone, it would be software. If it is coded in html5 and used through the phone’s browser, then it is a service.

Since wares and services are considered to be different things, you can get into the position where, for example, software brand X might be considered confusing with software brand X1 – but not be considered confusing with service brand X1 that provides the same function to the user.

Cloud sevices – Is the bloom off the rose?

For the London Free Press – May 9, 2011

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Recent outages at Amazon and Sony’s PlayStation Network have left businesses and consumers without service for lengthy periods of time.

The tech press is full of articles suggesting the bloom is off the rose for cloud services and cloud providers are in denial about risks. These articles call on online providers to take financial responsibility and offer more than token services credits.

These outages have done more than just prevented gamers from playing. Services provided by Foursquare, Hootsuite, Discovr, the New York Times and others were affected by the “Amazonpocalypse”. Other businesses using Amazon were barely affected, as they designed their use with disaster prevention in mind.

One reason cloud services are inexpensive is that they come with no guarantees, and no liability on the part of the provider. That’s not meant to suggest online providers aren’t motivated to keep their services running. It’s bad for business if they don’t. But some are better than others, and problems can occur despite provider efforts.

If users expect financial responsibility and compensation for their losses in a failure, they can expect to pay more.

Online service provider user agreements contain limitation clauses that deny liability if the services don’t work. At most, there might be a refund for the cost of their services proportionate to the amount of downtime. If users want more, they can expect to pay for the provider’s insurance to back up the liability. And in practice. most users opt not to pay more for liability protection.

Anyone using online or cloud services needs to first consider how crucial the services are to them. What will the effect be if the service is disrupted for a short or long period of time, or if their online data is lost?

If such disruptions would have serious effects, then the user must take steps to control those risks.

For the risk of losing data, it might be as simple as keeping local backups, or keeping a mirrored copy at a different service provider at a different location.

To keep the service operating continuously, users should take a close look at how the service is provided, and plan their use in a way designed to survive failure.

In other words, assume things will fail, plan around that, and test to ensure the plan works.

Amazon, for example, has several “availability zones”. Amazon customers who were able to switch between them suffered only minor issues.

Another approach is to use multiple service providers based in different locations.

Anti-spam bill far reaching: The Act applies to all software installed on someone’s computer

For the London Free Press.  March 21, 2011

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The anti-spam bill — Bill C-28 — was passed in December and is expected to be in force later this year. The main goal of the Act is the prevention of spam, but it also contains anti-spyware provisions.

Canadian software creators — indeed any entity selling software to Canadians — will need to review the Act, given the significant potential fines and consequences to directors and officers if there is a violation.

The goal is to eliminate the spyware, malware, and other malicious software which has essentially gone unregulated.

You might recall the Sony copy protection rootkit scandal which occurred in 2005 where Sony music CD’s automatically installed digital rights management software on users’ computers without their knowledge or consent. This software made operating systems more vulnerable to third-party attacks and could be used to collect and transmit information about computer use back to Sony. Under the act, such practices will be prohibited.

The Act applies to all software — good or bad — installed on someone’s computer. The definitions include any electronic instructions that execute to perform a function on any device capable of executing them.

That is extremely broad. It will include software installed on things such as smart phones, tablets, e-book readers and– since almost everything includes some kind of computing power these days — even things such as PVR’s and cars.

The Act prohibits the installation of computer programs and the transmission of electronic messages from a computer program unless the creator of the software has the express consent of the owner or authorized user of the computer system.

Express consent may only be obtained if there is a notice to the user containing prescribed information about the software, and clearly and simply describes the function and purpose of the program or program update to be installed.

In addition, if a program performs certain undesirable functions then more prominent and explicit disclosure is required. The Act contains a list of undesirable functions often found in spyware, malware, and other types of malicious software, including:

Collecting personal information stored on the computer;

Interfering with the authorized user’s control of the computer; 

Unknowingly changing or interfering with data; 

Unknowingly changing or interfering with settings, preferences or commands;

Causing the computer system to communicate with another computer system; and  

Installing a program that may be activated by a third party without the user’s knowledge.

 If software contains one of these functions, the program distributor must clearly and prominently bring to the attention of the user the reasonably foreseeable impacts of these functions.

Software vendors will have to consider how their software works, how the Act might come into play, and what permissions are required. They may need to amend their end user license agreements (EULAs) to comply. Some circumstances will require specific permission with full disclosure before the change can be made, regardless of the contents of a EULA.

Software vendors may want to consider whether changing from a traditional installed software model to a hosted SAAS or cloud model will avoid some of these issues.

Set code of code conduct

For the London Free Press – November 29, 2010

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It’s important to document your intentions before any code is created

It is not unusual for a business to hire someone to create computer code, such as a specialized program, website, or iPhone app.

It’s important to agree in writing who owns what’s created. Many people don’t realize that with nothing in writing saying the person who commissioned it owns it, the creator owns it.

Problems can result later if the intended ownership is not documented at the outset.

On the other hand, people sometimes get too hung up on ownership. It is not unusual for two parties each to want to own the same software.

For example, code creators often reuse existing code to create parts of their end product. It doesn’t work for the buyer of the end product to own everything in it to the exclusion of the creator. At the same time, the buyer may want to own the product as a whole, and not want the creator to reuse or resell it.

The buyer may feel that it paid for it, and the creator shouldn’t otherwise profit from it. The creator may feel that since the buyer got the benefit of existing code, it’s not right to deny others the benefit of parts of the new code. And too many restrictions on the creator can limit its ability to provide services to others.

To some extent, it depends on the novelty of the code, its intended use and competitive value. The buyer may not want competitors to use the new software. And if the whole idea is to create a product for the buyer to exploit commercially, it makes no sense for the creator to be able to do that as well.

Often, the focus should be less on who owns the software, and more about what the parties can do with it. At very least, considering the issue in that light will help sort out ownership.

The parties should think about what they need to do with the product and its parts and what they do and don’t want the other to do with them.

Sometimes, the issue can be resolved by creating broad licence rights, and perhaps restricting what the other party can do. For example, the buyer might get a licence letting it do whatever it wants with the product internally, but not sell it to anyone else.

But the time to deal with and document this issue is before the work starts. The longer it waits after that, the more difficult it becomes to reach consensus and document the result.

Scareware forms a fake security software

For the London Free Press – September 27, 2010

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Most of us are familiar with the terms “software” and “hardware”. Over the years, many other “ware” words have been coined to describe the myriad applications available today.

There are a variety of terms for software designed to harm your computer. For example, “malware” (or “scumware”) describes software developed to harm your computer. It includes things such as viruses and worms, and often uses communication tools such as e-mail and instant messaging programs to spread from computer to computer.

“Scareware” is a type of malware. A form of fake security software, it claims that your computer is infected with viruses, and persuades the user to buy a full version of software that will “clean” the infection. It tries to scare users into buying a product. The product you buy could simply be unnecessary, but it could also be intended to damage your computer. It is even possible to become infected with scareware without buying the software, for example, if the user tries to close the notification. Some scareware messages are particularly deceptive because they are designed to look like they were generated by your computer’s operating system.

“Spyware” is another kind of malware that collects personal information about users without their knowledge. The information it collects is often used for the purposes of advertising and identity theft. Some can also slow down your computer, causing applications to freeze and systems to crash.

“Junkware” refers to unwanted, and often intrusive, software. It may be installed with the user’s consent when the user accepts an end-user licence agreement, but it typically serves no useful purpose. It can include adware, spyware, as well as “hijackware”, which can, among other things, set the user’s default Internet homepage to a site of its choice.

There are forms of “wares” that are less harmful, but equally annoying. “Annoyware” (or “nagware”) describes software that users find annoying. Such as software that frequently disrupts the normal operation of a program to remind users to register it.

“Adware” displays advertisements while the software is running. Although it can be harmless, and is typically used by application developers as a source of income, they can include spyware. Similar to “Adware” is “Beggarware”, a form of “freeware” that encourages the user to donate to the freeware’s author.

There are also terms for software with limited functionality. “Shareware” free software is sometimes limited in its functionality, availability or convenience. It may be trial or demo software. Additional features become available if the user chooses to purchase the full version. “Crippleware” refers to an even more restricted type of shareware.

Bloatware (or “fatware”) is software that uses so many resources it slows your system. A recent example of this is some pre-loaded applications found on Android smartphones.

Not all wares are evil, though. “Charityware”, for example, is a type of software whose end is to benefit a charity by encouraging its users to donate to a charity, instead of paying for the software.

How sale conducted may finger liable party

For the London Free Press – June 14, 2010

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A UK court ruled it would be unfair to enforce a limitation of liability clause where the buyer relied on the company’s advice

Commercial software purchases can be major investments. If problems arise or the buyer ultimately finds the software is not the right solution, either the buyer or seller must bear the cost of the product, lost profits and additional staffing.

Software companies include limitation of liability clauses in their standard terms and conditions, but this has not stopped courts from awarding damages to buyers in some situations.

The recent United Kingdom court decision of Red Sky v. London Kingsway Hall Hotel suggests that how the sale is conducted may determine which party is liable.

The court said it would be unfair to enforce a limitation of liability clause where the buyer relied on the software company’s advice in deciding to purchase the product and the product was inappropriate for the buyer’s intended use.

The software in question was meant to provide reservations and point-of-sale functions for hotels. After installation, the buyer found it did not meet its needs, and replaced it with other software.

The court also said that standard terms including a limitation of liability clause are predicated on the fact that a prospective customer would investigate the software and make up its own mind whether to purchase based on demonstrations and the operating documents.

UK courts have placed a heavy onus on software companies to provide the buyer with all relevant information if they wish to rely on limitation of liability clauses. What is relevant or sufficient will necessarily vary from case to case.

But it is clear – at least in the UK – that software companies are expected to take steps to ensure that the buyer has a fair chance to assess the product before purchase.

In this case, the court said the limitation of liability clause was unfair under the UK’s Unfair Contract Terms Act, as the software was not fit for its purpose. Basically, the software vendor was not transparent enough to give the buyer enough information to make an informed decision on the suitability of the software for its particular needs.

In the end, the court found the vendor liable for 110,000 pounds in damages for software that it had been paid 50,000 pounds.

Though Canadian courts may not have gone this far based on the same reasoning, Canadian courts have found liability despite limitation clauses where they find them to be unconscionable in the circumstances. Unconscionable means that it has to be more than unfair or unreasonable. Essentially, courts won’t allow vendors or their products to be incompetent, or cavalier in their claims, then hide behind limitation clauses.

Every product vendor, whether it sells software, online services, or other products, clearly wants to market their products in their best possible light. But it is wise to be as transparent as possible about the products, especially when it comes to helping purchasers make buying decisions.

Software vendors playing hardball

For the London Free Press – February 1, 2010

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IBM recently announced that Euro Partners, a New York-based brokerage, downloaded $1.7 US million worth of IBM software between 2003 and 2008 without permission.

Euro Partners, a unit of BGC Partners, was acquired by BGC in 2005 for about $97.3 million. IBM accuses BGC of downloading extra copies of its Informix software without paying licensing fees.

IBM is suing BGC for breach of contract and copyright infringement and is seeking an injunction to impound all improperly downloaded copies of its software.

In 2008, after a customer audit, IBM found BGC was downloading more copies of Informix than its purchase agreement allowed. In September 2008, IBM sent BGC a bill for $1,730,665.24; BGC refused to pay.

In December, IBM offered BGC a new licence covering both previously licensed copies of Informix and the improperly downloaded copies. When BGC said no, IBM terminated BGC’s International Program License Agreement.

As a condition of its IPLA, BGC was required to destroy its copies of Informix. Not only did BGC refuse to destroy existing copies, but it downloaded more after the IPLA ended.

This is not the only example of a software distributor playing hardball and cracking down on users of unlicensed software.

The Business Software Alliance, an industry trade group that polices software licences, announced last fall it settled with 12 Canadian companies for a total of $431,336 in damages for using unlicensed software. Settlements ranged from $11,900 to $128,800.

These are not always instances of intentional “theft” of software. Sometimes the business simply doesn’t keep proper track of its software use compared to what they have actually licensed.

The most common way software vendors become aware of improper use is through tips from current or former employees.

In its 2009 Global Software Piracy Study — available at www.bsa.org — the alliance notes that “in 2008, the worldwide monetary value of unlicensed software — ‘losses’ to software vendors — was $53 billion. This was up $5.1 billion from 2007, or 11%, in non-constant dollars.” In 2008, “for every $100 of legitimate software sold, another $69 was pirated.”

Calling this entire amount “losses” is a stretch, since many of those who copied would simply not use the software if they had to pay for it.

Regardless, it is clear that any business or organization that uses a significant amount of unlicensed software — whether intentionally or through lax management — exposes itself to possible fees and damage claims likely to exceed the actual licence fees. Not to mention the internal time and public embarrassment entailed in such a claim.

Apple takes bite out of Hackintosh

For the London Free Press – December 14, 2009

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COMPUTERS: In a hardware-software legal war, the company reaches a partial, $2.7-million US settlement with knock-off computer maker

Apple’s business model is to sell hardware with software on it. It does not intend for its operating systems to be installed on hardware it doesn’t make and its software licences expressly forbid it.

But that hasn’t stopped people installing Apple operating systems on non-Apple machines, dubbed Hackintoshes, from “hacker” and “Macintosh.” The main attractions are lower prices and wider selection of hardware.

Several companies have created bargain-priced, knock-off computers able to run Apple software. The most widely used is the OSx86 project, which runs the Mac OS X operating system on non-Apple computers with x86 architecture-compatible processors.

Apple software licences strictly prohibit use on computers that aren’t “Apple-labelled.” But companies such as Psystar and PearC have released products that let consumers use Apple software on non-Apple computers at considerable savings.

Apple has fought back in several ways.

The latest Apple OS version 10.6.2 added code to prevent it being used with the Atom chip used in most netbooks, a common Hackintosh platform. But within a week, a Russian-based hacker had circumvented the code.

Apple also has taken its Hackintosh battle to the courts.

On July 3, 2008, Apple filed suit against Psystar Corp. for violating the licence and breaching Apple’s copyright-protected technologies.

The end-user agreement for Mac OS X reads: “You agree not to install, use or run the Apple software on any non-Apple-labelled computer, or to enable others to do so.”

Psystar began selling PCs hacked to run Apple software — and priced more than $2,000 lower than an Apple notebook — in April 2008. After the suit was filed, Psystar kept selling systems and even created new ones.

Last month, the U.S. District Court judge trying the case found Psystar had violated Apple’s copyrights and anti-circumvention provisions of the Digital Millennium Copyright Act.

Two weeks later, Apple filed a motion against Psystar seeking statutory damages of between $500,000 and $4.5 million US, plus attorney’s fees and costs. Apple also wants Psystar permanently enjoined from continuing a business causing “irreparable harm” to Apple’s business, brand and goodwill.

In the most recent development, a partial settlement has been reached. Psystar agreed to stop selling Hackintoshes and pay Apple about $2.7 million in damages in return for dismissal of some Apple claims. But Apple can’t collect until appeals are complete, which may take years.

Though this is a success for Apple, it remains to be seen what effect it will have on the Hackintosh phenomenon as a whole.

Today is World Day Against Software Patents

From my post to Slaw today:

Slashdot reports that today has been declared World Day Against Software Patents by the European based Foundation for a Free Information Infrastructure

They believe that software patents impede innovation and investment.

So depending on what side of this debate one falls on, feel free to either celebrate and promote it, or cringe and rail against it.

My thoughts? First, my bias – I’m not a patent agent, although I do deal with a lot of IP and IT issues, and advise companies that create and sell software or SAAS products. I have mixed feelings about it – but can’t help wonder if there is a good argument that to some extent patent protection has gone too far and can indeed impede innovation. That may be especially true in fields like software where change and innovation happen far more quickly, and from far more sources, than traditional technology.

Be careful with GPL3 software

Law.com has an article entitled Open Source Software Shows Its Muscle that talks about the perils of using open source software that uses the GPL3 license.

If one just uses some open source software with the GPL3 license on its own, it’s not an issue. The problem arises when it is tied in to other software, especially if one’s own product needs to work with some GPL3 software. Depending on how they interact, it can compromise the IP rights of your own product.

Read the article