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IP Gold Summary 2003 Prepared by Sarita Keirouz

Conceptualizing and Justifying IP Space

Introductiono David Vever

IP is the practice of encouraging new enterprises by granting monopolies Protection of new produce Protection of human rights Guarantee of quality

Modern TM law is however a product of the industrial revolution, when judges decided to protect business names and symbpols.

Without protection, people would not have the incentive to invent, because they could not have the benefit of their ideas ( fear of competition)

o Paris Convention for the protection of industrial property (covers patents, TM, Designs, unfair competition etc..)

o Berne convention for the protection of literary and artistic works (covers authors rights)

o No protection for indigenous rights. Why intellectual property?

o Ownership of everyting that can be turned into casho Borrowing IP is not actually theft, since it is not property: its owner is still left with

possession after the taking.o IP is classified as personal property, and is bought, sold; forms part of the

matrimonial assets (may form part of the estate). It can be changed, taxed, and become subject to a trust. It cannot be expropriated without compensation.

Justifying IP propertyo Morally, a person may be said to have a natural right to the product of her braino Society should reward people who have produced something useful for societyo Much inventiveness is kept secret, and the law rigorously protects that decisiono Economical: Utalitarian : without protection, there would be no money and no

interest in research. Protection is limited in time and space

o Roderick A. MacDonald “The Suisse Army Knife of Governance” (2002) Choice of governing instruments:

o SAKnife is an instantiation of the logic of plural modes and multiple sites of governance.o The gadgets of the knife are hypotheses of actiono Two hypothesis:

o Finding an appropriate mean to an end: I have to regulate the right of inventors, writers and image, how do I do that? The end constrains the choice of means.

o Finding an appropriate end attainable by the means available: I have an IP regime, what can I do with it? The mean constrains the choice of end.

o Problems: o 1- Too many tools . “What should I use?”

o There isn’t necessarily a best tool in any given situation. o Moreover, different users might have preferences for one or another tool.o Sometimes, less obvious solutions might actually prove to be more effective.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo 2- Over-inclusiveness . “I just want a knife. Can’t I get a model without all the other stuff?”

o Although a tool is flexible and highly varied, sometimes, a certain problem requires a totally specialised and different tool.

o Conceptualising the problem at the outset is important, with a specific end in mind. Clears out what type of means to use.

o 3- Wrong tool . Some problems require a totally different tool altogether. None of the available ones are intended to solve this issue.

o 4- Intended use, Unforeseen problems . Collateral damage from poorly-designed regulatory solutions.

o 5- Creative Use, Unforeseen Problems . Don’t expect too much from your instrument. Don’t use the Tax Act for something more.

o 6- Design Redundancies: Couldn’t we merge a few steps together in order to have a more effective IP system?

o 7- Specific-Use tools. Micro-regulation tends to sell people short, by denying the creative role that citizens can have in solving their own problems.

o 8- Design Tradeoffs: sometimes, a liability rule might be most suited for the task.o The criterion used to evaluate the regulatory solution is important

o 9- Cultural Limits: Some countries don’t consider copying an infringement on CR. Cultural predispositions limit at the outset the possible range or character of regulatory solutions available.

o 10- Preconceptions of use: Patents are used to solutions certain problems, and CR others; but couldn’t we switch around?

Issues to be considered when deciding on what tool to use:o Primary v. Secondary characteristics: the end helps decide which characteristics are

primary, and mandatory in picking the type of tool.o Relations between uses: sometimes, by the force of habit, it is difficult to make a tool

adapt to another problem: like patents on life.o Political Ideology helpso Administrative cost-benefit analysis: new technologies require more sophistication in

order to deploy them properly.o Multiple regulatory sites: sometimes, if you can get certification in USA, it does not

guarantee a certification in CAD. Different criteria in Europe and North America.

Class notes:

o Swiss Army knife: Is IP the right tool to be used? Or should a liability rule be used instead?

o To what extent does IP considers efficiency in its allocation of rights? Theory of utilitarianism: Notion of efficiency = justification of the regime Is that an appropriate descrition of IP or should we let Moral Rights play a

larger role? Compulsory licensing for medication to generic companies might be one way

of including moral rights….but, NAFTA and TRIPS consider that this approach would limit research, and therefore place pressure to limit this practice.

Compulsory licensing still used in Europe, as it carries historical valueso Political Ideology:

What is the ideology behind each scheme?

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IP Gold Summary 2003 Prepared by Sarita Keirouz Which theory justifies IP?

o Cost Benefit Analysis: How about pressure to use the tool because of tradition? Conviction vs.

Convention. How about practical difficulties with the system? Are people overusing the

system? Patent offices, whom do they represent? A ghost in the machine, with a quota to

allow a certain number to pass and others not to? You can get a faster read in the US if you pay more. Does that create a conflict of interest? Does it matter that they are not neutral?

Is the system flexible enough to adapt to new technology? (patenting life-mice). Who is going to make the changes? The legislative? Regulatory agencies? Judge-made law?

Question is: who should regulate our lives? Votes? IQ? Market? Spiritual Power? The Lottery?

How about the need for stability?

Property and its Limits

Just because the final product is protected by an IP right doesn’t mean that there are no other rights to consider. Similarly, a proprietary right may not extend to IP rights ( Moore).

You’ll see that the courts prefer to read down common or civil law property in order to ensure that there aren’t too many rights. As the IP schemes grow, the courts tend to limit the common and civil law rights.

Property

o Moore v. The Regents of the University of California U.S. (1990) Facts:

Doctor develops a patentable cell line by stealing the spleen cells of his patient. Issue:

Does the patient retain a property right over cells or other parts of his body once these parts have been medically removed? No

Assuming one has a property right in one’s body. Does it give one a property right to a patent? No

Ratio:o (remoteness) I can’t get a patent on an improvement you make on my invention. You get a

patent on the improvement.o However, a patent does not negate a prior right: you can only get an improvement on the

improvement.o Different in this case, because I don’t retain a right in the cells after they leave my body. o Dissent:o I have a proprietary right over my body: right to transfer, right to use, right to alienate,

right to abuseo Do I have a moral right? My body should not be comodified.

o However, in this case, Moore is asking for his body to be comodified, he is asking for a share in his body.

o Doctrine of exhaustion: when someone buys something, he should be able to do what ever he wants with it, and I can’t prevent him.

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o Gould Estate v. Stoddart Publishing, (1996) OR Facts:

Respondent Stoddart publishes a book without the consent or compensation of the Gould estate.

Material (pictures and taped –fixed-oral conversation) collected in 1956. Interview. Issue:

Did Gould have any proprietary rights in his image, likeness or personality which have been appropriated by the publication of the photographs in the book? Yes

Held: There is a public interest in knowing more about Gould (renown); as such, the book falls

into the protected category. Ratio: Lederman J.

o The scope of the right of publicity should be measured or balanced against societal interests in free expression.

For a CR to subside in a work, it must be expressed in a material form, having a more or less permanent endurance.

Thus, a person’s oral statements in a speech, interview or conversation are not recognized in that form as literary creations and do not attract copyright protection.

The nature of the interview here was intended to be casual and to catch the spontaneity of Gould.

The Copyright Act does not protect spontaneous conversation Note: Lederman was trying not to comodify personality: p. 60 he distinguishes between the fact

that right of personality exists in sales, but not with respect to the subject.

o Gould Estate v. Stoddart Publishing (1998) CA Issue:

Whether the respondent Carroll was entitled, for his own exclusive benefit , to later exploit commercially the photos he took of Gould in 1956 and to use his notes and tapes of his interviews at that time to write other articles on Gould notwithstanding that such later use of the photos and interviews had never been discussed with or agreed to by Gould or his successors or assigns

Addresses the IP rights of each Held:

Carroll, as the author of the text and captions in the book, was the owner of the unrestricted copyright in written material, and the only person entitled to publish the book.

Ratio: Finlayson J.A. Once an artist freely consents to having the photos taken and doesn’t attach a condition to

their use in the future, no action can be taken against the owner of the pictures, bc CR belongs to him.

You can attach conditions through K, something Gould did not do. Under the CRA, s. 10 (2), CR subsides in a photograph for 50 years from the end of the

year of the first making of the original negative Carrol is the owner (having exclusive rights) to all 400 photos taken in 1956

Test: who is the owner of the negatives?

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IP Gold Summary 2003 Prepared by Sarita Keirouz Exception: When Gould or other commissions the pictures for himself, in

which case he owns the negatives. The onus is therefore on the Gould estate to prove that he doesn’t. Class discussion: This is an error, just because Carrol has a CR, it only gives him a negative right to prohibit

someone else from publishing and reproducing his work, it gives him a positive right to do these things himself. This right does not override the positive right to personality of Gould.

Positive rights trump over negative rights. The issue SHOULD be: by publishing the book, did Carrol violate the right of Gould’s

personality In the end, it doesn’t matter, bc, there is a public interest in doing so. Comparing Moore to Gould Moore no longer has any interest in his cells, but Gould’s estate still has an interest in his

image.f

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Entitlements and enforcements of entitlements

o Guildo Calabresi & Douglas Melamed “ Property rules, liability rules and inalienability : one view of the Cathedral”.

“Entitlements”: whenever a state is presented with the conflicting interests of two or more people, or two or more groups of people, it must decide which side to favour; the fundamental thing that law does is to decide which of the conflicting parties will be entitled to prevail. Decide re the manner in which entitlements are protected and whether they may be sold or traded

I. Three types of entitlements:1) entitlement protected by property rule: s/o who wishes to remove the entitlement from its holder must buy it from him/her in a voluntary transaction in which the value of the entitlement is agreed upon by the seller. State intervenes only to determine to whom the entitlement will go. Least amount of state intervention. 2) entitlement protected by liability rule: s/o may destroy the initial entitlement if he/she is willing to pay an objectively determined value for it. Additional stage of state intervention; value is determined by state, not by parties.3) inalienable entitlements: transfer is not permitted between willing buyer and seller. State intervenes to determine who is entitled, the compensation if the entitlement is taken or destroyed and to forbid its sale under some or all circumstances. (Harvard Mouse Case)

Issues: (1) Under what circumstances should we grant a particular entitlement? (2) In what circumstances should we decide to protect that entitlement by using a property, liability or inalienability rule?

II. Entitlements are set for reasons of(1) Economic efficiency (2) distributional preferences (3) other justice considerations.

1) Economic efficiency: simplest reason for granting a particular entitlement: minimizing administrative costs of

enforcement. Not used by itself, for this is the same as might makes right, leave the costs where they fall. Occurs when reasons are indifferent between conflicting entitlements, and one is cheaper to enforce than others.

*****Pareto optimality: economic efficiency asks that we choose the set of entitlements which would lead to that allocation of resources which could not be improved in the sense that a further change would not so improve the condition of those who lost from it and still be better off than before. Increase the benefits of a group (i.e., increase the value attached to its entitlements); no matter what the distribution is within the group; as long as those who are better off could theoretically compensate the less-favoured, then Pareto optimality has been reached****

It is argued that, if there are “no transaction costs,” i.e., perfect knowledge and the absence of any impediments or costs of negotiating (no freeloaders, etc.), then Pareto optimality – economic efficiency- will occur regardless of initial entitlement; (Based on assumption that people are able to set a value on the good and have the money to pay for it; so: the optimal situation has been reached even if A has $0 and lives on the street, as long as B lives on top of the mountain in a mansion with lots of capital.)

But, an economically efficient situation will vary with the starting distribution of wealth

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IP Gold Summary 2003 Prepared by Sarita Keirouz Distribution of wealth may affect a society’s choice of entitlements. In field of accident law:

1) Econ efficiency alone dictates the entitlements that favours choices between social benefits and social costs of obtaining them, and the social costs of avoiding them;

2) When the worth of a benefit to society is in doubt, the cost of the activity should be put on the party best-located to make a cost-benefit analysis,

3) In accidents or pollution, the costs should therefore be put on the party which can most cheaply avoid them,

4) When unclear who that party is, cost should be put on the party which can act in the market to correct an error in entitlement with the lowest transaction costs, and induce the party who can avoid social costs most cheaply to do so,

5) Mkt does not work perfectly in this area; so, there are transactions costs, t/f must make decision about whether market transactions or collective fiat will be more econ efficient

2) Distributional concerns: 2 types (1) distribution of wealth and (2) distribution of (merit) goods. all societies have wealth distribution preferences; can be based on the arbitrary or on morality or

on efficiency or on worthiness or some other organizing principle. cannot be equality for that is impossible: not enough to start everyone off with the same amount of

money; other entitlements will make some richer than others (silence is preferred, so silence lovers will be richer than noise makers).

how to compensate for all the differences and the various individual valuations of various things (how much is silence worth to Mr. A? to Mr. B? tax people with brains and give to those who haven’t got?) If perfect equality is impossible, a society must choose what entitlements it wishes to have on the basis of criteria other than perfect equality. In doing this, a society often has a choice of methods, and the method chosen will have important distributional implications. A society may force everyone to serve in the military. It could also entitle people to be free of the military and induce them to join up, or require all to serve but enable each to buy his way out.

If the choice of entitlements affects wealth distribution generally, it also affects the chances that people will obtain what have sometimes been called merit goods. “a society which prefers people to have silence, or own property, or have bodily integrity, but which does not hold the grounds for its preference to be sufficiently strong to justify overriding contrary preferences by individuals, will give such entitlements according to the collective preference, even though it will allow them to be sold thereafter” (p. 127 cb 1, 1101)

3) Other justice reasons:

They are reasons which would influence a society’s choice of initial entitlements that cannot be comprehended in terms of efficiency and distribution.

Example: two neighbors, one likes noise, the other silence. In case of no transaction costs, we know that Pareto Optimality- economic efficiency- will be reached regardless of whether, say, we chose an entitlement to make noise or to have silence.

From a distributional point of view, we are also indifferent as to what the initial entitlement is, because we do not know whether it will lead to greater equality or inequality.

This leaves us with 2 reasons on which to base our choice of entitlement. The first is the relative worthiness of silence lovers and noise lovers. The second is the consistency of choice, or its apparent consistency, with other entitlements in the society. but how to choose who is worthy? Depending on how they impact 3rd parties? Is it different from econo efficiency or distribution? Not really.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Treat like cases alike? Choose silence lovers because we choose people who are not violent ? Both come down to econo efficiency and distributional reasons. For instance, there are good distributional reasons for this; simplifies task of obedience

justice reasons are ultimately all the reasons; economic efficiency and distributional reasons are a kind of justice

III. Rules for Protecting and Regulating Entitlements

Whenever society chooses an initial entitlement, it must also determine whether to protect the entitlement with a property rule, a liability rule or an inalienability rule.

Property and liability rules: Liability rules exist because often the cost of establishing the value of an initial entitlement

by negotiation is so great that even though a transfer of the entitlement would benefit all concerned, such a transfer will not occur. If a collective determination of the value were available instead, the transfer would occur.

Ex., Guildacres. A tract of land owned by 1000 owners in 1000 parcels would benefit a neighbouring town. Each of the 100 000 citizens of the town would be willing pt pay $100 to get it. Transaction would be econ efficient if owners of land valued it at less than $1000 a tract (what they would get at above price). But even then, if some of the owners hold out for more b/c they think the buyers will pay more, they will not get it and transaction will not happen. Sellers will have an incentive to hide their true valuation and the market will not succeed in establishing it.

Or, maybe buyers cannot raise enough b/c some are freeloading, expecting others to make up for what they won’t pay. Will lie and hope others will value it more and be willing to pay more. Market will not cause people to express their true valuations again, t/f desirable results cannot be achieved.

Liability rule allows society to decide the value collectively and impose it: no more holdouts. Also, can charge benefits tax on collective valuation of each citizen’s desire to have a park:

no more freeloader. Are also problems with liability rules: may be lying when we say what value s/t has for us.

“objective” liability rules may result in over or under compensation. Benefits tax: value of an entitlement to each individual cannot be determined accurately.

Accidents: if we were to give victims a property entitlement not to be accidentally injured, we would have to require all who engage in activities that may injure individuals to negotiate with them before an accident, and to buy the right to knock off an arm etc…such pre-accident negotiations would be extremely expensive, often prohibitively so.

Nevertheless: “the most common [reason] for employing a liability rule rather than a property rule to protect an entitlement is that market valuation of the entitlement is deemed inefficient, that is, it is either unavailable or too expensive compared to a collective valuation.” (p. 131 cb 1, 1110)

Efficiency not the only reason: “may allow us to accomplish a measure of redistribution that could only be attained at a prohibitive sacrifice of efficiency if we employed a corresponding property rule.”

Inalienable entitlements: also efficiency and distributional goals underlying use Limitations on right to engage in transactions may serve efficiency when there would be a high

cost to 3rd parties Ex. in cases of sale of land to polluters: neighbour doesn’t want me to sell land to polluter, pays

me. But if there are many neighbours, freeloader and information costs make this practically

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IP Gold Summary 2003 Prepared by Sarita Keirouzimpossible. State could protect neighbours and let land be sold by letting neighbours prevent sale to polluter by employing liability rule. But costs could be high: eg. Excise tax on all sales of land to polluters equal to the estimate of the external cost to the neighbours of the sale.

Barring the sale to polluters is most efficient because it is clear that avoiding pollution is cheaper than paying its costs.

Or external costs can’t be measured in acceptable way. Such costs are called moralisms . One person can’t be allowed to sell himself into slavery b/c of the cost to the other members

of society. Can’t be valued in monetary terms. Other reasons for forbidding sale: self paternalism and true paternalism

- Self paternalism : decision of individual (or group) not to engage in economic activity; based on notion that no one knows better than the individual what is best for him or her. May require certain conditions to exist before allowing a sale, or may explain inalienability, like invalidity of K’s entered into when drunk or under coercion.

- True paternalism : activities of minors. Others know better than the individual what is good for the individual.

Distributional goals also play role: e.g. “prohibiting exculpatory clauses in product sales makes richer those who were injured by a product defect and poorer those who were not injured and who paid more for the product because the exculpatory clause was forbidden. Favouring the specific group that has benefited may or may not have been the reason for the prohibition on bargaining. What is important is that, regardless of the reason for barring a contract, a group did gain from the prohibition.” E.g. 2, Prohibiting the selling of babies.

Pollution rules: balancing of costs and values can achieve econ efficiency; but often transaction costs are too high and the market place cannot adjust the balance

t/f likely to use liability rules when we are uncertain whether the polluter or the pollutees can most cheaply avoid the cost of pollution.

inalienability could be used in such cases: moralisms against pollution: expectations of future generations, etc. This ground for inalienabilty could be strengthened by self-paternalism. State could also restrict pollution on paternalistic grounds.

Why criminal liability for theft? Why not liability rule? Because society needs to keep all property rules from being changed at will into liability rules. “We impose criminal sanctions as a means of deterring future attempts to convert property rules into liability rules.”

Comments Presumption that property rules are the most efficient way of enforcing claim; Property requires no state role; it is up to the person with the entitlement to say how valuable it is;

state would set an arbitrary value, either under- or over-valuing If, however, property is inefficient (too difficult, expensive, etc.) move to liability rule If this is inefficient b/c it affect the interests of too many others (if morally problematic) move to

inalienability rule Above article does not address initial distribution of entitlements; assumes initial entitlements are

there; Also ignores moral weight of the protection of an invention ; there is no right or wrong; if leg’re

decided to change © protection to 5 years, they would have no opinion. Dessert/Lockean view of asserting personal o’ship: makes no sense in C & M context

Public interest in IP Protection by liability rule: E.g. © on music: royalties: thru leg’n, © societies exist to which a

musician belongs. Radio can play their songs for a fixed tariff, and funnel the money for royalties to the relevant society; avoids transaction costs of negotiating; musician gives up veto right.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Or: Compulsory licensing: can’t prevent people from copying medications; product can be

manufactured on payment of r’ble royalty to patent owner. © or patent right to reproduce can also be protected by a property rule: injunction. moral rights are also inalienable rights in IP; in Canada, they are not assignable although they can be

waived (inalienable right combined with liability rule).

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Contracto ProCD Inc v. Zeidenberg Facts:

Zeidenberg purchased a consumer package of SelectPhone and two additional packages, each containing a License Agreement that he ignored.

When ProCD filed suit for an injunction against further dissemination exceeding rights specified in license, the district court held the licenses ineffectual because their terms did not appear on the outside of their packages. K includes only the terms agreed to upon purchase.

Issue: Must buyers of computer software obey the terms of shrinkwrap licenses? Yes

Held: Shrinkwarpe licenses are enforceable unless invalid on some ground of positive law.

Ratio: When you buy a CD, there is transfer of physical good and money; there is no transfer of

IP right. That is handled by the licence contained in the box. Transactions in which the exchange of money precedes the communication of detailed

terms are common. The licence would take a lot of place on the package; it is conventional that you buy the

product, read the licence, and if you don’t find it acceptable, return the product for you money back .

Z agreed to purchase the software on the condition that the transaction was subject to a licence.

Sale of software over the internet occurs in the same way: people buy and then agree to the license.

Under UCC, different Ks are allowed. Comment: Property law makes no sense in the absence of contract law. If all we’ve studied is K law,

we’ve missed a good deal about the practicability of IP law.

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o Raymond Nimmer “ Breaking Barriers: The relation between Contracts and Intellectual Property” (1998)

Synopsis: Looks at the myth between K and IP:

that K encroaches on IP’s PD; that it tilts the balance between private domain and public domain by allowing people to tilt the balance in favour of the private domain:

eg. Clause: “do not use for educational purposes”. In response to this concern, Nimmer offers: The K is an integral part of IP:

The main justification of IP is on the economic efficientcy basis: namely, giving people IP rights provides incentive for creation and innovation and K is the way the IP holder realises these benefits: selling or licensing.

It is not enough to have an IP, you want ot use it, and the only way tot use it is with K.

K is already limited: Unconscionability Competitive law IP= fair use Given that we have all of these safeguards; that is all we need; and we should continue to look at

K on a case by case basis Other Reasons that concern is unfounded

Even though you might have an adhesion K (the IP holder dictates the terms) there are a lot of other market factors which influence

One has to be conscious of elasticity of demand Adhesion K are very efficient because they reduce transaction costs

_____________________________________ Politicians argue that by bringing contract to the context of information transactions, contracts will be

used to stifle free speech or to block access to materials that are otherwise in the public domain. The fundamental premise is of this view is flawed: K & IP law have always co-existed peacefully and in interaction between mutually supportive fields.

“Contracts provide the means for the development and commercial exploitation of information assets.”

The underlying property rights are often relatively unimportant in the bargaining process. They tend to be treated as ‘default rules;’ those rules that state a legal position that exists between the contracting parties unless the parties otherwise agree. Contract law provides other default rules.

The relationship/ symbiotic conjunction of contract and property law All of the relationships and distribution choices involved in commercialization of information

assets involve contracts. One way to distribute info assets is open form: non-K: involves giving away information and a

willingness not to assert rights, at least to some extent under some conditions. Commercialization use (e.g. contracting for) informational assets is the another primary means by

which information is distributed. It represents that portion of the matrix that yields financial and similar incentives for the

creation of new, and the distribution of existing, information assets.

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IP Gold Summary 2003 Prepared by Sarita Keirouz In that sense, the so-called IP bargain does not exist in the absence of contract law and

practice. How contract and property interrelate : the 2 bodies of law differ in how they regulate a party’s

conduct; the impact of a property right in a marketplace shaped by K’al relationships is most often

indirect, with the rules of property being filtered and adapted through contractual and other relationships;

in this marketplace setting, IP law provides ‘default rules’ for K’al relationships. These are default rules in that by their own terms, the effect of the rule can

ordinarily be altered by contract. Contract Law: Contract Law is a party choice regime, emphasizing with few exceptions the ability of the parties

to define their own relationship. In contrast, IP law (with the possible exception of trade secret law) is a vested rights regime. It defines the relationship of persons to an identified corpus of information in the absence of a contractual relationship altering that established or vested right.

K law does not mandate outcomes in a contract relationship. It has three primary functions: (a) it established when an agreement becomes enforceable in law between the parties;(b) it provides background or default rules which indicate what the terms of the relationship

are in the event that the parties do not otherwise agree; and, (c) in limited situations, it provides that particular terms may be unenforceable on the grounds

for example that the term is unconscionable. K law relies on the premise that parties, rather than laws, create (or decline to create) a

relationship. Negotiation over the terms seldom occurs in either a mass market or a commercial

marketplace. One party (the vendor or the purchaser) proposes terms and the other party assents or

refuses. (ex. DuPont offers cleaning product to janitorial company at specific price

with disclaimer of warranties. If janitorial company is willing to purchase the product, the terms are fully enforceable.)

W/ few exceptions, standard form contract terms are enforceable (consistent w/ K theory), the decision to market (or offer to purchase) is the vendor’s and in the seller-dominant scenario, the buyer chooses to accept the product and terms or to reject them and purchase something else or nothing at all. The phrase most commonly associated with standard form contracts is “contract of adhesion”. These are routinely enforced.

Property Law: A common but not completely accurate image of property or vested rights law is that the

rules define a party’s relationship to a corpus (the “property”) in terms independent of any relationship between the rights owner and a third party.

Crt in Bonito Boats Inc. v. Thunder Craft Boats Inc. invalidated a state law on grounds of pre-emption.

The law purported to grant the distributor of boats a right to prevent others from duplicating the design of the boat hull through use of a particular technology.

The Court argued that this state law purported to create rights that federal copyright and patent law denied.

The underlying factual premise was that there was no contractual or other relationship between the original designer-manufacturer and the person duplicating the hull design.

In effect the state law created an enforceable right in the absence of a relationship that federal law denied.

Limited role of property interests in determining the contours of contractual relationships.13

IP Gold Summary 2003 Prepared by Sarita Keirouz From a K law standpoint, the primary function of property law is to set out background

principles. The CR Act recognizes that the copyright owner can separately transfer (or withhold) any of

the exclusive rights. As a result, a contract (“license”) that gives the grantee the rights to reproduce and distribute

copies does not give the grantee a license to use the other exclusive rights held by the copyright owner (e.g. the rights of public performance or display or to make derivative works from the original).

Conclusion: CR and other forms of law have never been able to foster active development and

distribution of information products in society without relying extensively on contracts. Commercialisation, which depends on K relationships, constitutes one of the core

mechanisms by which information is developed and distributed. It is a central part of the IP law bargain and should be recognised as such.

Points of tension have always been resolved by contextually nuanced analyses of particular cases and particular claims of abuse.

Class Notes: Nimmer takes a slightly different approach as compared to Easterbrook J. in ProCD. He does not tell

us that property is irrelevant; rather, that the only way IP rights work is when we contract them through licensing, or by selling them altogether.

Contract law is what is going to define what can and cannot be done in IP space to a much greater degree than property law.

His view is that property sets out a starting point, but contract fills up IP space. He would praise Easterbrook J. for making it easier to have Licensing agreements.

Says IP only makes sense in K context. Says that our focus should be on K Law and not IP K allows you to alienate your IP rights.. e.g. alienate fair use (?)

When Property allows alienability, then the market will set who will get it = he who thinks it is highly valuable.

Nimmer says that K are very flexible and enhance freedom. Eventually, only K will govern. View 1: IP should se the boundaries between what you should and should not do. View 2: yes, you need IP to get the motor of K going.

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o J.H. Reichman and Franklin “ Privately Legislated IPR: Reconciling Freedom of Contract with Public Good Uses of Information” (1999).

Synopsis: Thinks that courts should play a more active role in discriminating and scrutinizing the K Although adhesion Ks are advantageous because of their low transaction costs, thery ahave a lot of

disadvantages: 1- k can prohibit public good uses:

education uses Technological innovation (ProCD) Freedom of speech (you can buy this book only if you agree not to critique it) Reduce competition

Implication of the internet: Leads to a lot of non-negotiable licenses Gives IP holder a high control over their products bc they’re easily copied through inscription

devices Public Interest: unconscionability doctrine:

Gives courts more discretion According to this doctrine, courts would pose the question whether the test of K is reasonable Whether they give due respect to the public domain and interest and good use He thinks however that this doctrine should be used cautiously, because it could create

uncertainty in k. Problematic is nimmer is right and adhesion ks are great

_______________________________ The purpose of this article is to formulate and develop minimalist doctrinal tools to limit the

misuse of adhesion contracts that might adversely affect the preexisting balance of private and public interests.

There is a need for a uniform set of default rules to validate non-negotiable licenses as a mechanism for minimizing transaction costs. However, routine validation of non-negotiable constraints on users would likely convert standard form licenses (contracts of adhesion) into the functional equivalent of privately legislated IP rights. This would ignore the balance between incentives to create and free competition recognized in IP laws.

Author concedes that entrepreneurs should have more contractual powers to control the online exchange of downsream products without encountering excessive premature gov. regulations.

It does not follow however that entrepreneurs should have equal autonomy to restrict use of the information when used for education and science.

R & F propose a set of countervailing doctrinal tools, collected under a “public interest unconscionability” rubric that courts could apply case-by-case rather than invoking the pre-emption doctrine (see ProCD) from IP law or the public policy exception from standard contract law.

They advocate public interest checks on standardized access contracts and on non-negotiable terms and conditions affecting users. They try to preserve the maximum degree of freedom of contract:

All mass-market contracts, non-negotiable access contracts, and contracts imposing non-negotiable restrictions on uses of computerized information goods must be made on fair and reasonable terms and conditions, with due regard for the public interest in education, science, research, technological innovation, freedom of speech, and the preservation of competition…Affirmatively negotiated terms falling into above-mentioned categories shall enjoy a presumption of validity.

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IP Gold Summary 2003 Prepared by Sarita Keirouz This presumption may be rebutted whenever the cumulative harm to the public interest from use,

including repeated use, of the term or terms in question seem likely to outweigh the private and public benefits flowing from the specific transaction.”

By allowing licensors wide leeway in the name of freedom of contract, we remain confident that market forces will generate an abundance of information goods and drive them to their highest values.

However, mindlessly tolerating abuses of that freedom to contract under a model of formation that dispenses with the requirement of mutual assent could produce unprecedented anticompetitive effects detrimental to the public interest.

Class Notes: R & F see the relationship between contract and property quite differently from the Easterbrook J.

and Nimmer. R & F = property law is the ideal. Property law is the state saying who ought to have what. The

statutory schemes are designed to endure that we allow some commodification so that people can profit from it but has inherent limitations on it such as fair dealing. K law virtually ignores this balance between incentive and access. The information holder extends the reach through contract and tries to get more than what copyright law would give them by making the consumer into the licensee.

All contracts are to be evaluated against the private interest to make money and the public interest to gain access (see the statement of claim dealing with the anti-virus software on each of our computers).

One of the contract terms in the Network Associates case is that you cannot publish a review of the software.

The terms undermine free speech and the market. The case has not been heard, but this is where the battle lines are in terms of this question

under dispute by the authors discussed. All of this assumes the centrality of contract. It is not the IP right that matters; it’s how you use it. The property right defines when you can use a right and what rights you have and the

contract depends on the property rights. Property law comes first in order to set up the initial distribution but then contract law comes in to formalize the rules.

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Justifications for ordering IP space

Why do we want to protect these entitlements? Mechanisms of protection:1) Economic Theory – Version of Utalitarism - Mkt and Econo Analysis.2) Natural Rights Theory – We argue to have a right3) Hegelian Theory – What right do people have?

Utalitarian /Economic/ Efficiency

o Utilitarianism Generally In philosophy: the ethical view (developed by English philosopher and law reformer Jeremy

Bentham, and perfected by his disciple, philosopher and political theorist John Stuart Mill) that moral actions are those that maximize goodness.

For Bentham, goodness is pleasure and badness is pain, and moral judgment is akin to calculative reasoning.

Mill has a more subtle view of what goodness is. Problem 1: the notion of ‘goodness’ is not very well defined. Problem 2: utilitarianism’s view of moral reasoning is unsatisfying (is a moral person

just someone good at calculating the consequences of his/her actions? What about one’s reasons for acting: are they worthless? And should everything be subjected to the calculus, like the right to life and liberty, personal emotional attachments, or torturing little babies for fun? If not, can limits be explained using only utilitarian premises?

Nevertheless, an elegant, powerful and tremendously influential theory, not only in philosophy, but also in sociology, public policy… and economics

o Economic/Efficiency-Based Utilitarianism The view that, all things equal, a wealthier society is better off than a poorer one Value is assessed in terms of money Things have a money value because they’re scarce (an unlimited resource would be free) People have unlimited needs People are rational, i.e. they are motivated to maximize their economic welfare (e.g., all things

equal, you’re better off with $100 than with $50. Therefore a rational agent will choose the option with $100 outcome rather than the option with $50 outcome)

Total value is increased either by creating new things or adding value to existing things (thru improvement, innovation, exchange (see below), etc.)

Property rights and contract are the tools of value maximization: Property creates incentives for better resource use and protection, and rewards the best value-maximizers by giving them more value to enjoy. Contract allows for value maximization through exchange by making both parties better off after the exchange (i.e. when I contract with you, I get something I value more in exchange for something I value less, and so do you)

To work, this system requires good property and contract systems. (By the way, these happen to be the most developed areas of private law. Coincidence?)

Problem #1: like #2 above. It’s not at all clear we actually think like that—the “rationality-as-maximization” premise has no solid empirical basis

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IP Gold Summary 2003 Prepared by Sarita Keirouz Problem #2: (related) it’s definitely not clear we should think like that about everything

(notions like the expected return of playing foosball with your friends make no sense) but the purely economic reasons why we should not

Nevertheless, once again, elegant, powerful and tremendously influential theory

o Economic/Efficiency-Based Utilitarianism and Intellectual Property

Posner: econo justification of Patents/ CR: The most widely-held justificatory framework for intellectual property rights is

economic/utilitarian. 3 ways to implement intellectual property:

Reward by monopoly : Give the inventor an intellectual property right in the form of a monopoly. The market will determine how much the discovery is worth.

Monopoly for profit : The collective social goal is to provide an incentive for people to create more. Creativity is encouraged thru the grant of a monopoly.

“exchange for secrets” argument: It is socially and economically desirable to incite people to disseminate their

ideas. Mere production of new ideas is not sufficient.

Different results are reached depending on the justification employed. Some of these results may be inconsistent Not also that courts are not clear on what they are trying to achieve.

o Free World Trust v. Electro Santeo This case shows how economic justifications play a role in the judge’s reasoning. o According to the , judge this system of incentives must be finely tuned so that patent

holders cannot make wide claims that will impede r&d and economic development (through, e.g. cheaper substitutes)

o See case in patents section.

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o Robert Coutler & Thomas Ulen “Law and economics 3r Ed”

o A property right to the author/creator of an idea helps her to appropriate its value. This comes to the cost of exclusiveness. There is therefore a tradeoff between the breadth of the scope of the right granted and its duration. The greater the breadth, the greater the incentive on creators, but the higher the costs on society.

o Patents: broad or narrow? The big question in patents is what is the optimal combination of breadth and

duration Broad patents encourage fast, duplicative research (by definition a single patent can

cover several different claims) Narrow patents encourage slower but complementary research The question of what breadth is the more efficient makes the incorrect assumption

that all patents are similar. But some patents are for pioneering inventions while others are for commercial applications. And both depend on fundamental research (e.g. no good math no good engineering no better engines no better cars)

A further complication is that the stand-alone value of a pioneering invention may fluctuate. But a pioneering invention with little stand-alone value might eventually have great commercial value. There is therefore an incentive problem for pioneering inventions with little stand-alone value.

Therefore, patent protection for pioneering inventions with little stand-alone value should be broader than patent protection for pioneering inventions with large stand-alone value.

o Patents: duration As time goes by, the benefits of granting an intellectual property monopoly for a

new product will decrease while the costs will increase. The ideal duration is that which stops when the costs equal the benefits. Any longer will result in a decrease in aggregated value. This means the current uniform 20-year duration is inefficient. While it is impractical to grant a different patent life for each invention, the market can approximate the result: in Germany for instance, patent holders must pay to maintain their patents, and the fee goes up as time goes by.

o Copyright: There is no reason in principle to limit the duration of a copyright. What limits it are the costs of tracing the copyright holder CR grants writers, composers and other artists a proprietary right in their creation upon

demonstration that their work is an original expression. Tracing costs increase with time, as the author becomes more difficult to locate

o TM TM are inherently good They reduce the cost of searching They also encourage companies to keep quality high, because a TM is as good as

the market goodwill that supports it Therefore there are no real reasons to limit TM.

Gold’s Criticisms This kind of analysis presupposes that intellectual property creators are in it for $,

which isn’t true (that’s the part where he wondered out loud how much he’d make now if he hadn’t left the technology group at Torys)

Presumes these various rights are independent while they may not

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o Landes and Posner: “TM Law: An Economic Perspective”

o TM decreases consumer search costs by promoting easy identification (distinction)o Encourages spending on quality to guarantee uniformity and encourage repeat purchases

by consumers, which in turns decreases the costs of saleso Therefore TM have a self-enforcing nature that is economically beneficialo TM also encourages the use of short phrases and generally benefits the “economy of

language” by creating new termso Further, the costs of enforcing TM are generally small, unless a TM is in danger of

becoming generic (although it now appears sufficient to add “brand” after the endangered TM as in “Post-It Brand”

o James Boyd White “The Language and the culture of economics” in Justice as Translationo Doesn’t like economic analysis in particular because of its cultural consequences.o In North America, economic language is often the basis of decisions re intellectual

property. The dominant view seems to be that use of economic analysis and language will yield the best intellectual property regimes.

o But at the center of economic analysis is the idea that things are convertible into money, and widespread economic talk conveys in the culture the belief that everything is fungible.

o Economists retort that notions like “self-interest” or “rich” are only analytical tools with technical meanings, but such talk only reinforces ordinary selfishness and greed.

o Also problematic is the idea that values are reducible to agent preferences, thereby suggesting that moral choices are sheer matters of taste and just as disposable or subject to change. In fact, the very value-neutrality claimed by economics is in itself problematic, because all the greatest questions and the greatest human endeavors are value-driven.

o Further, economics claims to be fair because it presumes democracy, equality and freedom of choice. But real people are not equally free in their capacity to make choices, and democracy is based on the equality of individual rights, not on the equal purchase value of a dollar.

o Even as an economic tool, economics doesn’t have much to say. Economists are interested in the exchange of value, but value can change thru the influence of non-economic factors like culture. The non-economic background is not stable.

o Further, the end of life is not exchange. Exchange is merely a way to accomplish those ends.

o Some questions should simply not be answered through economic analysis (eg. Rape).

Distributive Justice/ Fairness

This section is about the distributive consequences of allocating intellectual property rights. In other words, what are the effects on the public of those property rights?

Both authors we looked at (Boyle and Litman) observe that the protection of intellectual property rights is increasing (e.g. computer programs were originally not protected, then they got protected by copyright, and now they are protected by patents, patents are granted on biological material, etc.). The prevalent discourse appears to be that increasing the privatization of intellectual property space means better protection. Both authors criticize the prevalent discourse.

Concept of the Public Domain:

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1- Negative description: Something that is left-over. Free for everybody to use and improve on.2- Lipman: PD should not be understood as a left over/ not valuable; but rather as something which

serves the function of providing a public database to create. We need to take steps to protect it: by enacting fair use legislation or other legal doctrines which restrict trade law.

3- Boyle: says we need a “viable P.D.” and we need to regulate it w/ K and other private legislation.Option 1: Person 1 contributes to PD and doesn’t acquire a patent. Person 2 makes an improvement or contribution and gets a patent on that….unfair.Option 2: Open Source: Person1 makes contribution1. Then it gets a patent, but with a compulsory license, including a restrictive covenant obliging other people to leave their innovation in the public domain. Person 1 could go bankrupt however and sell to person 3 with no covenant.

4- Type of policies which would encourage such a system: A- Economic incentive to the inventor: e.g. econo pressure on artists to give tapes to Socam

(and radio stations) and pay them royalties. Artists get money out of the publicity.B- Patent pooling: Airplane industry, sewing machine: people getting different patens on

different things.

5- Some problems with these arguments:o Boyle doesn’t identify the source of injustice behind the property system.o He also doesn’t provide a unifying principle guiding public domain generally.o Further, we know that intellectual property rights help intellectual property

creation; we also know that they hinder intellectual property creation. What we don’t know is on which side the scale falls. There is no cost-benefit analysis. In that sense Boyle’s argument falls short of showing what he wants to show. We can buy everything he says about the value of such a controlled public domain and still resist the conclusion that it must be implemented

o So we haven’t made any progress—we don’t know what’s going on and we don’t have a grounded policy reason to go either way

o Further, neither Boyle nor Litman give us a context. They do not provide us with the theory of justice that ground their views. Posner is a free-market libertarian: for him a well-functioning market will ensure that people get what they deserve. Boyle says this is wrong. On the other hand, White claims people’s attitudes towards a certain thing are affected by whether the thing is commodified/fungible or not. Boyle doesn’t agree with that. So Boyle is in between Posner and White, but since these are basically opposite views, it’s not possible to guess what Boyle stands for.

o Jessica Litman, “The public domain”o The idea that the public domain in copyright comprises what is not protected is incomplete.

The bigger part of the public domain also includes those aspects of copyrighted works copyright doesn’t protect.

o She thinks public domain is best understood as a “zone of freedom” that exists to preserve the integrity of intellectual property rights.

o The public domain does that because copyright law is meant to encourage authorship more than to protect individual authors.

o Since authorship always relies on previous works (and hence that nothing ever is absolutely original), it is essential to protect the public domain for the sake of protecting authorship.

o Otherwise protecting more will leave nothing to create from.

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o James Boyle “The Second Enclosure Movement and the Construction of the Public Domain”

o Synopsis:o Thinks that the PD is shrinkingo European Database directive is granting rights for indeterminate time for databases andt for

that reason, there is an encroachment (in CAD, only an arrangement)o Ip allows for the appropriation of ideas

o European directiveo Rulings against the dilution of TMo Patent holders are starting to get proprietary interest in math formulas

o Looks at arguments that people make in favour of this movemento Property induces innovationo Info in IP is non-excludable: different people can make use at the same time: use of one does

not exclude the othero Historically, the proprietary right has not been adequately

o Boyle emphasizes that ok; BUT, if it’s non-excludable, it increases your ability to distribute and makes it easier for people to make money out of it. It is therefore of no advantage to IP.

o Open source software is an example of an alternative system:o You can make money even if you license: you make money out of the services that you create

and which surround the innovation that you’ve made. _____________________________________o I. English enclosure movement: the process of fencing off CM Land and turning it into

private property: the conversion into private property of sg that had formerly been common property, or outside of the property system altogether.

o II Advantages of privatization:oAllowed the expansion of productive possibilitiesoAllowed the control over exploitationo Insured that the resources could be used more efficientlyoStron property rights and single entity control avoid the tragedies of overuse and

underinvestment ( tragedy of the commons)oThe Feudal Lords would not invest in drainage schemes, sheep purchase and crops that

might increase the yield bc the fruits of the labour would be appropriated by another.o Although protection of the commons was the fundamental goal on IP, the new vision that it

should be extended everywhere (longer CR, expansion of patentable items) is tragic.o However, there are profound dissimilarities between the two systems lead us to ask

whether the common is really as tragic as we think.o Unlike the common, the common mind is generally non-rival (many uses of the land are

mutually exclusive but an MP3 file may be used by multiple parties at the same time)o There is also no risk of depradation with overuse.o The concern is with the ability to exclude: the same tools that allow for swift copying

(internet) also allow us to detect illicit copying (search engines).o The fact that IP is now generally more important than before: your info output is someone

else’s input: reducing access to your info raises the costs and places roadblocks in the way of subsequent innovations.

o New collaborative methods of production are created through IPR: The GPL ( general Public License in software: users may add to or modify the code, may build on it and incorporate it

22

IP Gold Summary 2003 Prepared by Sarita Keirouzinto their work, but if they do so, then the new programme created is also covered by GPL: the result is not only a donation of a programme, or a work to the public domain, but a continual accretion in which all the gain and the benefit of the program goes back to the public domain…of course, there is no adequate incentive to ensure continued production, yet! “e pur si mueve”.

oSome incentives:oLove of inventionoHope and joy of doing a better jobo Joy of solving puzzles

o Patents and CR should therefore be the exception and not the norm: when the marginal cost of production is zero, the marginal cost of transmission should approach zero

o Dangers of not doing the above:oPropriatization is a vicious cycle: once a new IP has been created over some info good, the only

way to ensure efficient allocation of the good is to give the rights holder still more control over the user or consumer in the after market so as to allow for “price discrimination”.

oNeed to get rid of anonymity and need to locate and identify users in order to exert control and to be able to sanction

Recognizing the public domaino Yet, for the GPL (open source) to work, it depends on K: for distribution, way it grows,

way it is binding to future innovations…oo Complains of the “anti-commons effect” of increasing the allocation of intellectual

property rights. Intellectual property gets developed thru collaboration and sharing, and granting more property rights increases the chance

o Boyle argues that monopolies are a restraint on innovation because of the “anti-commons” problem. The public domain needs to be there and needs protection and growth. It should be mandatory for creators to contribute to the public domain so that the innovation that allows for intellectual property to flourish can continue

o Boyle views the public domain as a zone of controlled freedom rather than as a free-for-all. The public domain also needs to be controlled—“systemic” measures must be in place—so as to ensure that the public domain is perpetuated and the freedom that sustains it is maintained

o Therefore, the public domain is not a mere left-over, a kind of ‘vacant space’ that is there to support the existing intellectual property system. The notion of “public domain” is something that must be ‘created’ to bring together disparate interests and people that otherwise would not speak to one another because there would be no way of avoiding the “anti-commons” problem. Boyle likens “public domain” to the notion of “environment”, which he says is a construct that helps addressing disjointed issues that would otherwise remain disjointed in an increasingly coherent way. Just as “the environment” creates a space for new discourse, so public domain brings about a space that would not otherwise exist

o Regulation of this space does not have to come from granting property rights. It is fine to make ideas available freely, as long as the “public domain” space that offers these free ideas has a means of avoiding free-riding problems

o Boyle’s example is that of the open-source software movement (LINUX). Working code is available for free, however if you make changes to the code and produce some kind of new software or an improvement on existing software, your licensing agreement requires that you put it back on-line

23

IP Gold Summary 2003 Prepared by Sarita Keirouzwith the changes you made. The cost to you of everybody else’s free code is making your own new code available to others for free.

o Because, Boyle argues, the open-source movement is successful, it shows that intellectual goods production can be fostered without granting property rights and their anti-commons effect. This is what he calls “positive property rights”

o Boyle also cites the internet as an example of a “space” where innovation happens without there being monopolistic property rights, and where the quality of innovation comes very close to what big corporations do—without, once again, the externalities of a property system

o In the long run, intellectual property rights may slow down innovation, because too much insistence on property rights interferes with the production of those property rights. Instead of granting away more and more property rights in a manner that is both self-reinforcing and detrimental, it would be better advised to control the public domain

o Boyle is therefore committed to the claim that failing to provide positive and self-reinforcing protective measures of the public domain will limiting the opportunities technology is giving us

o Further, and as evidenced by the success of the open-source movement, it is wrong to assume that people are only motivated to produce intellectual property goods for economic reasons. Like White (see section on economic rights), Boyle thinks that people are motivated by a number of non-economic reasons (like fame or the sheer pleasure of solving difficult problems), and that those reasons are not taken into account by an economics-based model.

o Therefore, creation doesn’t necessarily need economic incentives. What matters is that people’s own reasons for creating receive some measure of outside protection so that people keep creating. Licensing is one way to do it—at any rate it works well in the open source movement

o Therefore, the more we encourage this organized ‘sharing’ the more development will occur, the better the public domain will be protected (that’s the “positive reinforcement effect” mentioned above) and the more new opportunities will be created.

Concept of the Public Domain:

5- Negative description: Something that is left-over. Free for everybody to use and improve on.6- Lipman: PD should not be understood as a left over/ not valuable; but rather as something which

serves the function of providing a public database to create. We need to take steps to protect it: by enacting fair use legislation or other legal doctrines which restrict trade law.

7- Boyle: says we need a “viable P.D.” and we need to regulate it w/ K and other private legislation.Option 1: Person 1 contributes to PD and doesn’t acquire a patent. Person 2 makes an improvement or contribution and gets a patent on that….unfair.Option 2: Open Source: Person1 makes contribution1. Then it gets a patent, but with a compulsory license, including a restrictive covenant obliging other people leave their innovation in the public domain. Person 1 could go bankrupt however and sell to person 3 with no covenant.

8- Type of policies which would encourage such a system: A- Economic incentive to the inventor: e.g. econo pressure on artists to give tapes to Socam

( and radio stations) and pay them royalties. Artists get money out of the publicity.B- Patent pooling: Airplane industry, sewing machine: people getting different patens on

different things

Some problems with these arguments:o Boyle doesn’t identify the source of injustice behind the property system.o He also doesn’t provide a unifying principle guiding public domain generally.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Further, we know that intellectual property rights help intellectual property

creation; we also know that they hinder intellectual property creation. What we don’t know is on which side the scale falls. There is no cost-benefit analysis. In that sense Boyle’s argument falls short of showing what he wants to show. We can buy everything he says about the value of such a controlled public domain and still resist the conclusion that it must be implemented

o So we haven’t made any progress—we don’t know what’s going on and we don’t have a grounded policy reason to go either way

o Further, neither Boyle nor Litman give us a context. They do not provide us with the theory of justice that ground their views. Posner is a free-market libertarian: for him a well-functioning market will ensure that people get what they deserve. Boyle says this is wrong. On the other hand, White claims people’s attitudes towards a certain thing are affected by whether the thing is commodified/fungible or not. Boyle doesn’t agree with that. So Boyle is in between Posner and White, but since these are basically opposite views, it’s not possible to guess what Boyle stands for.

25


Personhoodo Justin Hughes: The philosophy of int’l property

For Hughes, the ‘personality theory’ for justifying property stands as the main alternative to the labour theory of justification.

Existing law support the credibility of different theories and these theories, in turn, support the validity of existing laws.

The main alternative to labour (lockean) theory is a personality theory that describes property as an expression of the self (Hegel)

WHAT COUNTS AS INTELLECTUAL PROPERTY Generally, property makes the property owner risk-averse, avoiding decisions that might diminish his

property. It is a conservative concept which stabilizes society. Persons with property are protected from non-propertied people of greater natural ability or talent.

Intellectual property, however, is far more egalitarian, in that it is of limited duration and obtainable by anyone. It shifts power/prop rights to those with more natural ability and talent.

However, much IP is produced only after considerable financial investment (labs, technology, education).

While IP shares its origins with other types of property, it is more neutral in that its limited scope and duration tend to prevent the accumulation of wealth inherent with other types of property (Hughes says those we think of as big profiteers are actually the exception to the rule).

Practically, IP is property created by regimes of patent, copyright, and trademark (duh!), but also other peripheral legal regimes.

Different IP legal systems in different nations are more representative of countervailing social policy than a different conception of IP.

Universal definition: IP is nonphysical property which stems from, is identified as, and whose value is based upon some idea or ideas, with some additional element of novelty. (‘idea’ being shorthand for the unique product of cognitive effort).

IP, like all property, is an amorphous bundle of rights. IP rights are subject to limitations, such as fair use (copyright), and judicially created exceptions for

patent. Limitations serve the primary purpose of IP, which is to promote the progress of the science and

useful arts. The greatest difference between rights in IP and rights in other property is that IP always has a self-

defined expiration.

A HEGELIAN JUSTIFICATION & HEGELIAN IP The personality justification sees property as a mechanism for (a) self-actualization, (b) personal

expression, (c) dignity and recognition as an individual person. Margaret Radin posits that to develop as a person, we need some sort of control over resources in the

external environment – property rights fulfill this need for control. In IP, the personality justification best applies to the arts.

general philosophy

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IP Gold Summary 2003 Prepared by Sarita Keirouz For Hegel, the individual’s will is at the core of his existence, constantly seeking actuality and

effectiveness, and thus will is at the top of Hegel’s hierarchy of elements in an individual’s mental make-up.

Personality is identified with the will’s struggle to actualize itself. “personality is that which struggles to lift itself above this restriction of being only subjective and to

give itself reality, or in other words to claim that external world as it’s own” Freedom is increasingly realized as the individual unites with and is expressed through a higher

objective order – freedom grows with higher degrees of realized self-determination. This is contrary to the classical liberal notion of freedom (freedom form restraint). In terms of IP discussion, however, Hegel’s ‘freedom’ is much closer to liberal notion (immediate

freedom of the individual), but still involves positive freedom to act.

the person/property connection Since will is at the top of the hierarchy, the other elements of the mental make up are held by the will

as if they property. Thus, parts of one’s person are property. Similarly, then, the concept personality can extend to include

physical objects deemed property. The barriers in both directions are abandoned. The will interacts with the external world. For Hegel, the true purpose of property to allow the will

to seek to appropriate the external world, and impose itself upon it. This is the first step in a person’s self-actualization. Self-actualization is manifested in enduring objects, not just fleeting acts. Thus, property rights

allow us to freely seek the self-actualization of our personality, insofar as our property (expression of our will) is protected.

Respect for property allows us to pursue self-actualization in non-property areas, or to use the property in a manner that helps us become the person we wish to be.

It is not enough to impose our will on the physical world – society must acknowledge our property claims based on some objective social will.

For Hegel, abandonment occurs easily because the relationship b/n person and property lasts only as long as the person’s will manifests itself in the object. Absent constant reaffirmation, the right is lost. Also, the will can be actively withdrawn by the individual (alienability).

Labour is often a means by which the will occupies an object, but labour is not necessary. [Hughes gives the example of a souvenir rock from a beach – the will occupies the object without use or labour].

There are objective indicia of the will’s occupation. A non-exhaustive list includes (1) physically seizing the object, (2) imposing a form upon it, and (3) marking it. For example, using an object in a manner which preserves it could count as ‘marking it’, as it indicates a desire for continues utilization and enjoyment of the object.

Much of Hegel’s theory, however, seems to depend on the more subjective relationship between the holder and the object.

This subjectivity may cause unhealthy identifications with property that should not legitimately be claimed. The identification is unhealthy when it prevents the individual form maximizing self-actualization from other sources, such as lovers, friends, peers, careers.

Radin’s theory also recognizes the potential detrimental effects of property on self-actualization, with a focus on people other than the holder. She distinguishes between ‘personal’ property, which increases self-actualization, and merely ‘fungible’ property. The principle is: property fungible to X should be denied to X if giving that property to X would deny personal (that is, self-actualizing) property to Y.

For Radin, ‘healthy’ appropriation is that which does not deny others their self-actualization. Hegel implicitly agrees in his argument for equality as to the possibility of obtaining property. [also resembles Locke’s ‘enough and as good’ condition].

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IP Gold Summary 2003 Prepared by Sarita Keirouz The fungible/personal distinction also suffers from the subjectivity dilemma, in that what is

considered fungible or personal may differ from person to person. An assessment of when property actualizes the self will necessarily be either artificially constrained or entirely subjective.

Intellectual Property under Hegel IP does not need to be analogized to physical property. In fact, IP avoids the problem of having to

materialize the personality traits Hegel says are inherent in all property. You cannot alienate yourself from IP because an intellectual/artistic product is a ‘universal element

of one’s self’, thus unalienable. You can, however, alienate yourself from copies of that product because a copy represents the

copyist’s own mental and technical ability. (???) Hegel admits that IP is ‘the purely negative, though primary, means of advancing the sciences and

arts’. It is a ‘capital asset’ in that it that it provides some economic security.

Problems in Applying the Personality Justification to Intellectual Property. The main problem with the idea that property protects personality is that it is difficult to tell when

someone has a particular ‘personality stake’ in a given object. Also, if such a stake is recognized, to what degree does the object manifest the personality of the individual.

Does more personality warrant more property protection? Do certain categories of works warrant more protection because they are more ‘personal’?

varying degrees of personality in IP The personality justification seems to offer little protection to intellectual products which reflect

little or no personality from their creator. Poems, sculptures, paintings, novels, etc. are what Hughes calls ‘receptacles for personality’ – the

personality stake in such objects is obvious. The same can be said of the legal concept of an individual’s ‘persona’ or public image. If the persona

is property (Hughes notes that the labour theory might conclude it isn’t), it is also easily justifiable with the personality principle, even more so than artistic works.

The problems for the personality justification arise when dealing with intellectual objects which are not the individual’s personal reaction to nature.

Copyrights, for example, protect more than just personality-rich objects. Maps and atlases are a good example, although they may still have some artistic content.

The problem is more difficult with objects such as computer software, or other more technical areas of intellectual property. We think of these items more as utilitarian solutions to specific needs or manifestations of generic insight, not as manifestations of someone’s personality.

Even the most technical products may involve some aesthetic vision, albeit minimal. If there are ten ways to write a computer efficiently, for example, making the choice could demonstrate personality and thus property rights are justifiable.

Thus, no one genre of intellectual property is devoid of personality. Rather, constraints such as economy, efficiency, and physical environment, which can exist in every genre, limit personal expression.

The more a creative process is subject to external constraints, the less apparent personality is in the creation. The personality justification lends itself better to processes which are less limited by such constraints.

Some subtle manifestations of personality may be difficult to identify to one who is not knowledgeable in the field.

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IP Gold Summary 2003 Prepared by Sarita Keirouz The object expresses personality, but also the association people make between object and

creator is an expression of the personality – it creates a persona. (i.e. Edison = light bulb, the association expresses Edison’s persona more than the physical light bulb). Hughes calls this externalization.

Problem: you can’t just say you want to be associated with an object – there has to be internal connection to claim property.

alienation and the personality justification Logically, for Hegel, alienation occurs when the individual ‘removes’ his will from an object. It is

equivalent to abandonment. We abandon X for Y when we feel that Y better expresses our personality, thus increasing actualization.

This concept is weakened by a fragile money economy, in that future investment does not guarantee further actualization, because a profitable return is no certainty.

A further problem with alienation is that, in most cases, alienation involves some degree of determining the object’s future, even though the personal link to the object is no more. I can choose to sell my rare hockey card to a collector or to a sports bar, thus affecting its future. It is difficult under the personality justification to justify my right to dictate the future of the object, which is theoretically no longer a manifestation of my personality.

Hughes calls this the paradox of alienation under the personality model of property. The subtle control of the object’s future does not jibe with foreseen future denial of the personality stake.

One way to explain the paradox is to say that the personality justification is powerful for property protection, but that it fails to explain property exchange. The justification for protection disappears when an external source offers a value higher than our internal value; or, as Radin would put it, when something moves from ‘personal’ to ‘fungible’.

It is similarly difficult to justify placing restrictions on property we alienate, such as selling land on the condition no trees are cut. The new owner is unable to maximize his personal expression, while the old owner maintains an unjustifiable stake.

Alienation of intellectual property can take on two forms: (1) entire alienation [selling all rights at one time], and (2) complete alienation of copies of the property [with limitations on how those copies may be used].

The first presents the same paradox as with physical property. Hughes asks: If a person genuinely has no personality stake in a work, why should she determine who publishes it, who markets it, or who dramatizes it? The very act of alienation denies the personality stake necessary to justify property rights.

The paradox is more acute with IP because it is difficult to conceive abandonment of creative expression with no tangible res. Abandonment of an idea is arguably alienation of personality, which Hegel’s system prohibits.

We must ask: does the created work exist independent of the creator?, does it exist beyond the individual’s expression? This is the battle between creators (playwrights/composers) and interpreters (actors/conductors).

Interpreters believe the intellectual property can be, and usually is, abandoned. Hegel disagrees. He considers complete alienation of IP to be morally wrong, like slavery,

because it is the surrender of a ‘universal’ aspect of the self. This makes sense when we consider that an artist may oppose certain uses for his art (political poster, i.e.).

Hegel feels you can alienate yourself from copies of your work, however, while maintaining the ‘whole’ of the property and yourself, because you retain some rights.

This further justified by the fact it creates economic well-being for the creator. Payments offer recognition of the creator as a person because they acknowledge the individual’s claim over property, and, of course, property = personality.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Also, income allows further expression, and alienation of copies allows further exposure to one’s

ideas, which leads to non-economic recognition (honor, respect, admiration). Two conditions are essential. (1) the creator of the work must receive public identification. (2) the

work must receive protection against any changes unintended or unapproved by the creator.

The Personality Justification in U.S. Law. The 2 conditioned mentioned above are recognized in some IP regimes as ‘moral rights’. Both

copyright and patent owners have the right to be identified with their creations, and copyright owners are further allowed to guard the integrity of their works.

There are no such provisions in American law. However, the personality justification has subtly affected American copyright doctrine.

The property interest in IP is not dependent on any external measure of artistic, cultural, or social worth. Even bad poems are protected.

In the 1903 case of Bleistein v. Donaldson Lithographing Co., the Supreme Court established a “very modest grade of art” standard, thus casting a wide net of copyright protection for any expression of individual personality. [note: Hughes claims this is the only S.C. case on IP which refers explicitly to ‘personality’.

This case stands for a shift in focus from societal judgement of worth to a subjective personal judgement of worth.

The courts, although not explicitly, seem to apply the Bleistein standard of ‘modest grade of art’ to trademark law. While courts claim to be protecting consumers’ right to full information, Hughes argues this could easily be done with truth-in-advertising or misrepresentation laws. Rather, trademark decisions seem to protect a right of expression and recognition for the manufacturer.

The same cannot be said of U.S. Patent law, where courts will be unsatisfied with minor advances which could be accomplished by the ‘average practitioner’. Subjective expression will not get you a patent.

Civil Rights Support for a Personality Justification People often try to bridge U.S. Law with IP protection through defamation claims, such as a

playwright suing a director who ‘degrades’ the play. Hughes posits that civil rights approaches are a better way to protect IP, and elaborates on 2 of

them.

the privacy right argument right to privacy should allow people to prevent publication of private documents, even when a would-

be publisher is recipient (letter, for example) Even when part of a work is in the public arena, the creator should be allowed to keep the rest private.

If an author produces a final edited version, the omitted material should remain private. Dicta in many cases has suggested that dissemination of a work under an author’s name against the

author’s wishes may infringe privacy rights. It follows that those who wish to remain anonymous or prevent publications of intimate details

about themselves should have that right.

the freedom of expression argument First Amendment freedom of expression is often portrayed as the enemy of IP rights, in that free

speech is often used, for example, as a reason for limiting copyright. However, freedom of expression is meaningless without assurances that the expression will

remain unadulterated. If IP is expression, we need those assurances. Free speech demands that 30

IP Gold Summary 2003 Prepared by Sarita Keirouzspeech be guaranteed some integrity – a guarantee that the speech will not be divorced from the intention of the speaker.

The speaker’s expression must therefore be protected from distortion. Often, speaker has means to counter the distortion, such as a politician whose statements may get

distorted, but who has access to the media and can rectify the distortion. When the speaker is powerless vis-à-vis the distortion, such as a novelist upset with a publisher’s

version, the legal system can establish protective mechanisms to deal with possible frustration of the speaker’s intent.

Thus, increased property rights such as copyright protection can be justified on the basis that a speaker’s expression should not be distorted.

This goes to the importance of preserving cultural heritage. We need a system where even dissident or different voices survive.

There is a wider social interest in protecting the integrity, or ‘personality’ of expressions.

Labour/Deserto Justin Hughes: The philosophy of int’l property

See my notes

Case Studyo Theberge v. Galerie d’Art du petit Champlain (2002) SCCo Binnie sees moral rights and economic rights separatelyo Ghontier adds an economic value to the moral right

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To establish an infringement of copyright, a plaintiff must show: (1) ownership of a copyright in an original work and (2) that def. copied the protected material without authorisation.

When assessing any case, always start by assessing whether the person claiming an infringement in their IP rights is actually a valid holder of that right. Ie. do they have a valid TM? a CR? A valid Patent?

Then move on to the defendant Don’t forget defenses in each case Policy

_______________________________________________________________________Copyrights Theory:

History:o R. Bettigo In 6th Century Europe, the attribution to individual authors grew more out a concern for

accuracy and authority of the oral record rather than a concern for copy right.o Same now in India’s oral tradition: different attitudes might explain why CR emerged in

13th Europe not in Asia.o In Venice the printing press was introduced by John of Speyer. He was given exclusive

printing privileges for 5 yrs by the Venetian Collegio. This type of privilege was given by the city government to encourage the importation of new industrial techniques and stimulate the growth of local industry and commerce.

o In England, John Locke justified the practice of CR on natural rights, stating that an author has a natural right in his work since he has expended his own labour in creating it.

o This builds on Hobbes’ possessive individualism, but contains some traditional moral law, which was more appealing to the rising capitalist class. Locke further argued that when one removes something out of the state of nature and mixes his labour with it, it becomes his property. Inherent to the property is the right to exclude others from using it.

o Sherman and Bentleyo After Lock, people discovered the author bc the guilds and stationary societies started to

fall apart. As their power started to diminish, they resorted to a new concept in order to protect their trade: they found the author! And purported that he had a natural right to his work. The right of the author would then extend to the publisher who would benefit from this lifelong right on the product.

o The Statute of Anne is often cited as the first modern CR law. It granted CR protection; however it wasn’t clear whether the work would go into the public domain when the statutory protection periods were over or whether perpetual rights were retained at common law.

o 1774: In Donaldson v. Beckett, the HL recognized the author’s natural CR at ComL but stated that once the work is published it becomes subject to the statutory law. Thus there is no perpetual right to copy.

o Alain Strowelo In Donaldson v. Becket, the court held that the Statute of Anne created the CRo This removed the right from the sphere of natural rights.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Donaldson v. Beckett (1774)o Becket purchased all right on Thomson’s works. Donaldson published them independentlyo Held: Beckett does not have natural (perpetual) Copyrights.o An author has a natural right before publishing. It is extinguished upon publishing.o The statut provides sole right of printing to the author and his assignees 14 years starting

from the day of 1st publishing.o An author does not have the sole right to publish to perpetuity at CML

o In Theberge, Binnie bases his views on Donaldsono Public Utility argument asserts that the production should be diffused as widely as possibleo The right to copy is an economical right and no more, there is nothing natural about it.

Aim/ Purpose:o To grant rights of exploitation to authors of original, literary, dramatic, musical and

artistic works.o One of the purposes of the copyright legislation, historically has been to protect and reward

the intellectual effort of the author in the work. o (1) To promote the dissemination of arts by giving economic incentive.o (2) To provide the author with protection: “CR law should be used to recognize the

important role of the artist in our society and the need to encourage production and dissemination of artistic works by providing adequate legal protection for one who submits his work to the public”. Lumbard J. in Gilliam.

o Underlying assumption of statutes is that humans need economic reward as an incentive for artistic and creative activity.

o Policy: Need of a balance between the incentive to create and the impact on the population and its access to creativity.

Conditions: o Quality is irrelevant : Porn, trasho Legality is irrelevant: unauthorized translation still has CR

Protection:o is automatico Application to register is optional o lasts life of last living author + 50 yearso In case of anonymous works, lasts the least of 70 years from date of death or publication

Key features of CR protection:

o Only original work is protected Originated from the author Cannot be copied Must involve some minimal intellectual effort. CR law prevents copying only, an independent but similar creation is also protected

and does not infringe the rights of other owners (unlike patents). To make out a defense of independent creation is to make out a claim that the

defendant’s work is not copied ( Drassinower).

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Work must be fixedo It is automatico CR protects EXPRESSION only NOT content:

Not ideas Not Schemes Not Systems Not Artistic Style Or any method or principle of manufacture or construction

o The form in which it is expressed is irrelevant. It celebrates form over substance

Who is Protected:o Authors and Artistso Rome Convention and Bill C-32 (1996): Performers, Record producers, Broadcasters

They don’t do anything original They don’t produce work

What is Protected: S.2 , S.5 of Copyright Acto S. 5 CR subsists in every Original Literary, Dramatic Musical And Artistic Work

S.2 “Every original literary, dramatic, musical and artistic work is protected by CR, whatever may be the mode or form of its expression”.

Extends to everything written, composed, drawn or shaped Also flexible to admit logos, lottery tickets, ads, CDROM which could figure under

s. 13 (9) Compilations: the mode or form of expression being irrelevant. Is taking a picture of a logo and framing it copying? Yes Is taking elements of a lottery ticket and shaping something else copying? Yes How far should a copyright owner be able to control what others do with his work?

o Literary work: everything “expressed in print or in writing” Books, Computer Programs, Tables, compilations of literary works. Literary means pertaining to the use of words rather than literature. Characters need to be very clearly detailed (Nichols) Short combinations of words like TM are not protected since they risk

monopolizing the idea behind the expression. Spontaneous, oral speech and singing are not protected How about e-mail? Since form is celebrated over substance, shouldn’t it be

protected? Titles: “work” includes title thereof when such title is original and distinctive.

May be protected as part of overall work Or alone if distinctive (very difficult)

Computer programs: Means a set of instructions or statements expressed and fixed To be used directly or indirectly to bring about a specific result.

o Dramatic Works: Plays, Film, Choreography, compilation Ideas may be taken from non-fiction if the form (treatment and development) are

different Must be fixed (peter’s questions)

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o S 2 (b) Artistic Works Maps, Charts, Plans, Pictures, craft, Architecture (novelty) compilations of artistic

work A work that is intended to have an appeal to the aesthetic sense.Yet, it solely

qualifies artistic craftsmanship, otherwise, the test would be subjective. (Koons) Make-up not included Photographs: but, if a picture is extensively manipulated on the computer, then it

looses its originatlity Expression in 3-D: sculpture

o Industrial design: protected under industrial design act.o Compilations and Databases

Work resulting from the selection or arrangement of literary, dramatic, musical, or artistic works.

How creative must it be? (Fiest, Tele-Direct, CCH)

o Musical work The Hook is what is important Three types of CR: in the song, in the lyrics, in the combination

o Title of a work: only if involving substantial literary composition or under passing off

Criteria for protection ( judge made rules)o Originality

(1) Originated with the author i.e. cannot be copied (3) Must involve some minimal intellectual effort (Fiest and Progeny) at least wrt

compilations: this allows things in the public domain to remain there. If A and B, working independently, produce a similar or identical work, their work

is protected A BAD attempt to copy is original! Policy: impo to encourage production and distribution of work, prevents copiers

from claiming CR. Test: the author has to exercise some skill, ingenuity, judgment, labor or expense in

making the work. Can someone record the public domain and get a CR on that? How about the photographer who happened to have his camera rolling

upon the assassination of the president?

o Fixation For a CR to subside in a work, it must be expressed in a way to be identifiable Adds certainty to the law (find case). Work must be fixed, but need not be physical

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o Connection with CAD or WTO, Berne or UCC state What matters is not the nationality or where it was published, just that the country

is a Berne signatory. Once you obtain protection in one of those countries, you obtain protection in all

others For non-Berne signatories, you need to register to obtain CR. Berne: convention for the protection of literary and artistic works 186 up to Paris

Revision of 1971. Universal protection throughout member states Absence of formalities Term of protection National treatment

TRIPs: Agreement on trade related aspects of intellectual property rights under WTO agreements.

Requires compliance with Berne National treatment Most favourite nation treatment Protection of software and compilations of data Protection of performers and broadcasters

Duration:o S. 6 : 50 years starting the end of the calendar year of the last author’s death.o USA: Eldred Case: USSC upheld the Sony Bono CR extension to 70 years and 95 + years

for certain cartoonso Any assignment ends after 25 years after death and the CR reverts to his estate: the idea is

to free the estate from any improvident deal made during the life fo the authoro Anonymous: lesser of 50 years form date of publication or 75 years from making of worko Posthumus works: 50 years

Title of Authorshipo Oral K is sufficient to transfer the worko Assignment changes ownership of underlying CR in whole or in part: I exclude myself

from my rightso License involves K-relations: I promise not to exclude the licenseeo Economic rights can be bought or sold, entirely or partially (Gilliam). Consequently, the

author of the work need not be the owner of the CR ( Theberge)o A licensee can only sublicense the extent of his license ( BBC in Gilliam was not allowed

to grant ABC the right to edit the show, only to air it).

Owner’s Rightso Performing in publico Publishingo Engaging in or authorizing above actso 1st public distribution of unpublished work

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Control over resale and 2nd distributiono Entitlement

Involves a fair return of the work and all its uses (Theberge)o Producing and Reproducing in any material form

Reproduction requires a causal connection Intent is not necessary Test: S. 3(1) involves the right to produce or reproduce the work or any

substantial part thereof in any material form whatever Even if a portion is quantitatively small, it could be qualitatively significant Must assess the work as a whole and determine the importance of elements that

are similar (Altai, Tele-Direct) Translation is prohibited Use of stock elements does not amount to copying (Nichols)

Reproduction requires the creation of new copies (Theberge decision) Prevents non-literal copying as well as literal (i.e outline)

Degree of similarity between the works is key but hard to measure (Nichols)

Limits on copying -Defense S. 29 Fair dealing for the purpose of research and private study do no infringe

CR Test in Rogers v. Koons

S. 29 (1) Fair dealing for the purpose of criticism or review Parody is difficult to protect because CR owner is unlikely to give you

permission to engage in it. USA freedom of speech argument might protect it as fair dealing. In CAD conflict with Moral Rights

S. 29 (2) Fair dealing for the purpose of news reporting Balances the interest of the CR holder with those of the public Almost any commercial use is presumably unfair Non-commercial use only fair if strong evidence or likely future harm

o Moral Rights Descend from the CLL and are found in Berne convention abiding countries Treat the artist’s oeuvre as an extention of his personality –Haegelian (Binnie J.in

Theberge) Droit d’auteur is often tied into natural law, while CR is considered a positive right

created by the legislator. USA: Gilliam “moral right, which may be summarized as including the right of the

artist to have his work attributed to him in the form in which he create it (Nimmer) is taken from continental europe”: a passing-off action

S. 14 (2) May not be assigned. Can only be waived. Hereditary Can you have a moral right before you produce the piece? S. 14.1 (1) : The author has the right to be associated with the work (attribution) S. 28.2 (1): the author has a right to the integrity of the work

The author’s right to the integrity of the work is infringed only if the work is to the prejudice of the honour or reputation of the author:

Distorted, mutilated or modified: Snow v. Eaton Centre

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IP Gold Summary 2003 Prepared by Sarita Keirouz Test: Prise de Parole: Objective test

Alain Strowel Moral Right: French revolution: value accorded to property- Natural right

o We have no Droit de Destination (Theberge) : i.e. we cannot control what people who acquire a property right in my book or oeuvre do to it (as long as it doesn’t hurt my honour or reputation.

o We don’t have the US right not to have our work “recast, transformed or adapted” (Theberge)

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Property and its limits

o Gould Estate v. Stoddart Publishing (1998) CA Issue:

Whether the respondent Carroll was entitled, for his own exclusive benefit , to later exploit commercially the photos he took of Gould in 1956 and to use his notes and tapes of his interviews at that time to write other articles on Gould notwithstanding that such later use of the photos and interviews had never been discussed with or agreed to by Gould or his successors or assigns

Addresses the IP rights of each Held:

Carroll, as the author of the text and captions in the book, was the owner of the unrestricted copyright in written material, and the only person entitled to publish the book.

Ratio: Finlayson J.A. Once an artist freely consents to having the photos taken and doesn’t attach a condition to

their use in the future, no action can be taken against the owner of the pictures, bc CR belongs to him.

You can attach conditions through K, something Gould did not do. Under the CRA, s. 10 (2), CR subsides in a photograph for 50 years from the end of the

year of the first making of the original negative Carrol is the owner (having exclusive rights) to all 400 photos taken in 1956

Test: who is the owner of the negatives? Exception: When Gould or other commissions the pictures for himself, in

which case he owns the negatives. The onus is therefore on the Gould estate to prove that he doesn’t. Class discussion: This is an error, just because Carrol has a CR, it only gives him a negative right to prohibit

someone else from publishing and reproducing his work, it gives him a positive right to do these things himself. This right does not override the positive right to personality of Gould.

Positive rights trump over negative rights. The issue SHOULD be: by publishing the book, did Carrol violate the right of Gould’s

personality In the end, it doesn’t matter, bc, there is a public interest in doing so. Comparing Moore to Gould Moore no longer has any interest in his cells, but Gould’s estate still has an interest in his

image.f

Origins of Present IP Regimes

Prise de Parole v. Guerin (1995) Fed. Court Justice, Canada Facts:

o Author write North Ontario story in French for gr. 9 students.o Prise de Parole incorporates 1/3rd of his story in a book for gr. 8 and publishes.o Author says that the editing was done in a way so as to make him ashamed to have that

work attributed to him.o His sales plummeted but not his speaking engagements.

Issue/ Held:

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Is there a breach of CR? Yes, they published the extract without permission of the

author. o Injunction and exemplary damages awarded S. 34 ( see BCAA)o Is there a breach of Moral rights? No, although the author showed that his novel was

substantially modified without his knowledge, he has no shown, objectively, any prejudice to his honour and reputation = his number of speaking engagements did not plummet.

Ratio:o He never waived his moral right s. 14.(2) o Test: But to have a case, he must show, objectively, under s. 28.2 (1) that

The work was distorted, mutilated, or otherwise modified To the prejudice of the author’s honour or reputation

The court is concerned with the value of his reputationo Clearly, he was subjectively hurt, but that doesn’t count.o Commento Can you have a moral right before a work is doneo Can you give a blanket waiver for a particular purpose?

Gilliam v. American Broadcasting Companies (1976) Fed Cir. Facts:

o Mounty Python agreed to allow BBC to license the transmission of its programs overseas.o Mounty Python retained all CR.o ABC / time life edited the program before airing

Issue:o Is there a breach of moral rights? yes

Ratio:o Ability of CR holder to control his work remains paramount in CR lawo CR in underlying script survives intact, despite the incorporation of that work into a

derivative work.o Although licensees are entitled to some degree of latitude, they may not mutilate the work

while presenting it to the public.o No statutory protection, ok to rely on outside regimes:o The cause of action which seeks redress for the determination of an artist’s work finds its

roots in the continental concept of droit moral, or moral right, which may be summarized as including the right of the artist to have his work attributed to him in the form in which he create it

o Here, misrepresentation is used in lieu of CR theory: negative passing off was used: bc, it allows people, like Mounty Python to still obtain protection even if they convey their CR to BBC

o Comments:o Negative passing-off : the artist has the right to be linked to his work in the same way it

was originally bc it would be a misrepresentation as to the quality of the work: negative passing off.

o This case allows the US to say that they have incorporated the droit moral in their law, and therefore are in accordance with the Berne convention. However, all this case does is equate the droit moral with mirepresentation.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo In Canada there is an automatic presumption that any change in the work would cause a

violation of a moral right. 14.1 and 28.2

Theberge v. Galerie d’Art du petit Champlain (2002) SCC Justification for ordering IP regimes Facts:

o Art Gallery put a resin on the poster and took the paper off but left the ink attached to the resin, then attached the resin to a canvas:

o Theberge claims breach of CR (nothing on moral rights) Binnie: no interaction between moral right and economic right Ghontier: merger, you can import, even in the economic right a sort of moral right. He

merges them. Issue:

o Is this a reproduction? Held:

o Binnie J: no there is a property right lawfully incorporated in the C’ righted expression.o They started with one copy and ended with one copy. No new reproductions “in any

material form” of the respondent’s work were brought into existence. Ratio:

o Binnie J. CML approach o He has a CR: his talent is embodied in an artistic work (s.2) of great originality (judge

made rule, not required in act)o They bought it, they have a property right in ito He must demonstrate that his CR overrides their Property right in the object.o A CR prohibits reproduction (s. )o It extends not only to the original expression, but also to subsequent copies which embody

the worko The process began with a single poster and ended with a single postero One should not overcompensate the artist:

Can’t have an expansive reading of s. 3 (1) economic rights. It would tilt the present balance too far in favour of the CR holder and insufficiently recognises the proprietary rights of the appellants in the physical posters they purchased.

o His only claim is under moral rights, we have no droit de destination in CAD

o Gonthier J. CLL approach ( dissent) o Reproduction = fixation of a first original material fixationo CR is not to protect ideas, but the form in which ideas are expressedo The copy is not an infringement of the CR, but is dealt with in infringement of S 3.1o If the test is substantial infringement, the quality of reproduction must be considered:

reproducing in a modified form (“any form whatever”) is an infringement:o Fixation of a work is a condition of production.o Therefore, producing a work refers to the initial materialisation and reproducing it refers to

any subsequent material fixation that is modelled on its fixation.

Rogers v. Koons (1992) Fed. Cir. Facts:

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Case of Group expressiono Photographer takes picture, wanting to capture the American dreamo Sculptor buys a postcard, and decides to commission someone to carve the image in order

to join it to a series representing the mundane and the banal. Issue:

o Did he reproduce the work? Was there infringement? Yes Ratio:

o Ownership of CR in an original work of art Photographer has valid CR But, Koons copied a postcard, not the original work…is that CR infringement? What is the difference with Theberge? Gonthier says: the physical act of copying involves mechanical reproduction into a

non-original copy “non-original material fixation”. But Koons’ expression was original…even in a different form …not accepted ( “any form”)

o Unauthorised copying by defendant Test: is not about comparing detail and detail, but about whether the average viewer

would recognize it. Had Koons simply used the idea in the photograph, it would not have been a

problem; however, he copied it bit by bit.o Fair Use Doctrine

Allows people to use copyrighted material without the owner’s consent, in a reasonable manner for certain purposes.

Claim of criticism: Koons portrays the mundane in what Rogers portrays as the American Dream

Test: 1- The purpose and character of use: should be done in good faith

Parody can be accepted if it leads to creative work: Koons work is a duplicate; it cannot be considered parody.

2- The nature of the CRighted work The picture is the kind of Art that Rogers makes a living off.

3- The amount of substantiality in the work Koons copied it ALL

4- The effect of the use on the market value of the original Balance must be struck here b/t the benefit gained by the CR owner

when the copying is found an unfair use and the benefit gained by the public when the use is held to be fair. The less adverse impact on the owner, the less public benefit need be shown to sustain non-commercial fair use.

Critical factor is whether k’s work was for profit, which would make the infringement all the more exploitative…but why? Wouldn’t it in fact profit Rogers to be well known?

Comments:o Hegelian theory of property: The question is whether I am attached to the idea: the more

the object expresses who I am, the more protection I should geto Dichotomy and natural rights is the only way we could find that Koons has a CR: he has an

idea, he finds someone else who has expressed it, he asks others to develop and express it in a different form.

o Different from Fiest in that he expresses judgemento Copying like Theberge

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Passing off like Gilliamo Comparison test like Altai

Computer Associates v. Altai (1992) Fed Cir. Issue:

o How similar are the two computer programs?

Ratio:o TEST:o Determine whether the object is entitled to CR as a wholeo Then determine whether the allegedly infringing product is equivalent to a substantial part

of the good which holds CR. (abstraction → filtration → comparison method) (Applied in Delrina)

o Step1: Abstraction test

Separate idea from expression Begin with the code and end with the articulation of the program’s ultimate

function

o Step 2: Filtration

Substantial similarity inquiry moves from the abstract to the concrete. Sift out all unprotected material

These are elements taken from the public domain (Incorporated ideas and Expression that is necessarily incidental to those ideas (Nichols))

Elements dictated by efficiency ( there is only one way of expressing those ideas)- Merger doctrine: Allan Rosen

Elements dictated by external factors (can the consumer use my way?)

o Step 3: Comparison

Compare the rest The result of this comparison will determine whether the protectable elements of

the programs at issue are substantially similar to warrant a finding of infringement. o Comments:

Altai is less stringent so as not to limit economic activity or confuse the user who would not be able to identify a different server.

Nichols v. Universal Pictures Corp. (1930) USA Learned Hand Facts:

o Pl. alleges def has taken plot of play from her story Issue:

o Is the second play a copy of the central portion of the 1st? No Held:

o We found that the plot of the 2nd play was too different to infringe43

IP Gold Summary 2003 Prepared by Sarita Keirouzo Because the most detailed pattern, common to both, eliminated so much from each that its

content went into/came from the public domain.o Mere subsection of a plot does not merit a CR.

Ratio:o TEST: o The less developed the characters o The more different the plotso The more general the themeo the less they can be copyrightedo Both have a CRo He CR however does not cover everything that might be in the play. Some of its content

went into the public domaino Comments:o Some expression represents a lot of my personality, but at each level of abstraction, the

level of expression goes down: Distinguishing idea from expression therefore makes sense.

Modalities of Ordering IP space

Fiest Publications v. Rural Telephone Service (1991) US Facts:

o Rural refuses to license its database to Fiesto Fiest copies a portion of Rural’s phone book in order to complete its regional phone book

collection Issue:

o Does Rural hold a CR? No, they do not meet the minimum requirement for originalityo Did Fiest, by taking the data copy anything? No, rural concedes that her list is of pre-

existing material. Although the standard of creativity required is low, rural doesn’t satisfy it.

Held:o Fiest is off the hook, it is copying public domain. Rural discovered it, it did not create it.

Ratio:o Onus is on Rural to show that they satisfy the requirements for CR protection.

Originality (1) independent creation (2) minimal degree of creativity Fixation

o Tension between two well established propositions: Facts which are not Copyrightable- the Compilations of fact generally are (Sweat of the Brow theory- rejected) Compilations of fact which, after this case, require a minimum of creativity “zest”

in order to be copyrightable.o CR in a compilation is therefore very thin, because a subsequent compiler remains free to

use the facts contained in another’s publication to aid in preparing a competing work.o Sweat of the brow theory is rejected.o Under the statute, for a compilation to be C-right-able, it must satisfy:

1- the collection and assembly of pre-existing material facts or data 2- the selection, coordination and arrangement of these materials 3- the creation, by virtue of the particular selection, coordination or

arrangement of an “original” work of authorship.

44

IP Gold Summary 2003 Prepared by Sarita Keirouz Tele-Direct (Publications) v. American Business Information (1998) Fed Ct Jst, Canada Facts:

o Tele-direct claims a CR wrt the organization of the subscriber informationo Trial judge did not find a CR

Issue:o Test of Originality: Whether the CR subsides in the compilation of information contained

in the yellow pages directories published by Tele-Direct ( appellant) and affiliate of Bell Canada.

Held:o No CR. o Not enough originality: creativity missing

Ratio:o Compilation is a r Work resulting from the selection or arrangement of literary, dramatic,

musical or artistic works or of parts thereof;o Test of Originality: For a compilation of data to be original, it must be:

(1) a work that was independently created by the author and (2) which displays at least a minimal degree of skill, judgment and labour in its

overall selection or arrangement.

o Droit d’auteur. The word “author” conveys a certain amount of creativity and ingenuity. He distinguishes this from the notion of the ‘sweat of the brow’ doctrine.

o In Fiest a very high standard was accepted, in Tele-Direct a very low standard.

CCH Canadian Ltd. v. Law Society of Upper Canada (2002) Fed Crt Appeal, Canada. Facts:

o The great library, allows, with some restrictions the copying of the work of the plaintiffs.o A librarian verifies whether there was a breach.o There is also a disclaimer posted next to the photocopying machines.

Issue:o Subsistence of CR: Is there a CR in the judicial decisions, head notes, the case summaries,

and the topical indexes?o Infringement of CR: If so, was there an infringement of the CR (their exclusive right to

reproduce, and communicate their work to the public)? Is the society liable for selling, distributing and possessing infringing copies of their work?

o Exemption from infringement: the law library submits that their activities fall within the fair dealing exemptions, and therefore, it does not infringe any CRs that may subsist in the publisher’s work. They also submit that various public policy and equitable defences should prevent the publisher’s action from succeeding.

Held:o

Ratio:o The Standard of Originalityo Is an imaginative or creative spark essential to a finding of originality?o The act contains no express requirement for a creative spark, the only prerequisite for

protection is that the work be original: (Tele-Direct) (1) a work that was independently created by the author and

45

IP Gold Summary 2003 Prepared by Sarita Keirouz (2) which displays at least a minimal degree of skill, judgment and labour in its

overall selection or arrangement. Labor alone is not sufficient

o Application to the publisher’s Worko S.3 (1) speaks of “substantial part of a work” and therefore allows for material to be

part of a work as opposed to being work themselves. Test: perception of the user. P. 59

If the work can stand alone, then it may be deemed a work in itself, otherwise, its is part of a whole.

o In assessment of CR, one must look at the work in whole, not in part: CR rests not in the components of the work, but in the overall arrangement of

the work (Tele-Direct)

A- The reported judicial decision: Stands alone. Yes, is CR: lots of skill, labour and judgment invested in them. Investment of style and manner of expression.

B- The headnotes: Are capable of standing apart from the decisions. Yes CR: Are useful with or without full reasons for judgment.

C- The case summary: Stands alone. Yes CR: the condensation of judicial decisions requires significant skill and

judgment in its composition and discretion in its presentation. D- The topical index:

Same as above E- The monograph

Same as above

o Did the law society infringe the CR of the publishers? S27 (1) describes infringement as doing anything that a CR holder only can do S. 3(1) grants the cr holder this right to reproduction of a work or substantial part

thereof S. 3 (1) f : communication to the public via fac simile

Is sending to ONE recipient distribution to the public? Authorization:

Yes, the library, by placing photocopiers is authorizing use. It should have control over them.

Secondary infringement: S. 27 (2) makes it an infringement of CR for a person to deal in certain ways with copies of works that infringe Cr and that the person knows or should know infringes CR.

The law society did distribute copies but reasonably though that fair dealing applied, so effectively, it did not know that the copies were infringing

Now that there works in Q are seemed to be CR’ble – Was there an infringement of CR? The claims of infringement can be separated into 3 categories derived from s. 3(1) of the CR Act:

46

IP Gold Summary 2003 Prepared by Sarita Keirouz1. Reproduction of a whole/of a substantial part of a work: Crt refuses to outline exactly what

constitutes a ‘substantial amount’ (can be very braod) → Library did not exceed its limit. 2. Communication to the Public by Telecommunication: On request, Library transmits facsimiles

of cases from the journals. Crt accepts that a series of such transmissions, even if made to one person, may constitute communication to the public.

3. Authorisation: Library maintains free-standing machines that may be used to make copies for a fee. The Law Society’s provision of photocopy machines constitutes authorisation. This in combo w/ the limited attempts to control their use (posted signs warning about CR infringements) adds to the authorisation. Crt decides that this is not enough.

The Law Society assumes that its patrons are using the machines in a legal way. → yes but also adds that where evidence suggests otherwise, such an assumption is unreasonable.

Clearly, the patrons of the Great Library will reproduce the Publisher’s works. The Law Society implicitly authorises any such acts by providing both readily available photocopiers and a vast collection of the Publisher’s works together in an environment that they control.

Secondary infringement While Law Society does have the argument of fair dealing, this does not exempt them from liability.

Even though it is a library where various fair dealing things can be done, this is insufficient to absolve the Law Society of responsibility.

Damages: No permanent injunction since it is not clear that every copy made infringes CR. No costs awarded. It may be burdensome on the part of the Publishers to establish that all their

materials are original works. It may also be onerous to prove prima facie infringement every time a work is reproduced by the Law Society.

For the Law Society to prove a patron’s legitimate purpose & fair dealing for each request will require considerable effort and cost on its part.

Problems with notion of creativity: The whole notion of creativity undermined the copyright argument; ‘The fact that an objective and coherent definition of creative is elusive at best and that creativity can sometimes connote qualities that are not required of an original work makes it preferable to avoid such unpredictable labels when assessing originality.’

Importance of Labour and skill: The Court of Appeal felt we should stay away from a creative definition and look towards labour and skill involved in producing a work instead. Look at your arrangement: did you put some thought into it, did it involve choice: but the choice did not have to be creative.

o Do any exemptions apply in this case? Fair dealing

S 29: fair dealing for the purpose of research or private study does not infringe CR.

A- Allowable purposes Non-private study is not allowable

B- Library exemptions S. 30.2 (1): is not an infringement of CR for a library, archive or

museum or a person acting under its authority to do anything on behalf of any person that the person may do personally under s. 29 or 29.1

Yes, it has the exemption especially that it does not operate for profit S.29.3 (1): no action

refered to in s. 29 may be carried out for motif of gain C-Fairness

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IP Gold Summary 2003 Prepared by Sarita Keirouz Purpose of dealing Character of dealing Amount of dealing Alternatives to dealing Nature of the work Effects of dealing on the public Effects of dealing on the work

Michael Spence: IP and the problem of Parody Parody might infringe Cr

oS.6 of the Copyright, Designs and Patents Act 1988, Artist still only entitled to use the idea of the original work and not to avail himself of a substantial part of the work itself

oS. 30 (1)A work of criticism or review must be accompanied by “sufficient acknowledgment” Parody might infringe moral rights

oS. 84 (!) right to object to false attribution of authorship: if parody is represented as the work of the author himself

oS. 80 (1) right to object to derogatory treatment: right to protect form additions to, deletions from, or adaptations of a CDR work or film that amount to distortion or mutilation of the work or are otherwise prejudicial to the honour or reputation of the author or director.

Parody might infringe Passing off and registered TMoLiability in passing off depends on misrepresentation Liability in TM depends on consumer

confusion. oMay be found liable for passing his product off as the original or associating himself with the

creator of the original workoOr infringe the mark ( through use etc): in UK, even without consumer confusion!- dilution

only: loosing distinctiveness. Parody might infringe Registered designs

oThere is an infringement of the design ( say on the T-shirt) if, the consumer, having seen the parody and the original would come back to the parody and, with imperfect recollection, find it not substantially different.

The Parodist and Public Policy Parody is a distinctive genre and should be afforded special treatment

oEg, Spanish legislation which allows for it Market-failure

oBc there is a refusal to licence ( to preserve honour) parody allows the dissemination of the art anyways

o Is the goal of CR to disseminate works? Maybe that of industrial design, but the reputation is far more important in the preservation of the goodwill.

Transformative useoArt in and of itself: it is sometimes described as a use that does not constitute a market substitute

for the text Problem of free speech?

oWe should limit IP rights whenever they are at odds with Free Speech

Allan Rosen The only criteria that can be used to distinguish ideas from their expression is the one we invent The purpose of the idea/expression dichotomy is to promote:

48

IP Gold Summary 2003 Prepared by Sarita KeirouzoHighly specific and well developed ideas should be likely candidates for CR protection

because extending protection to such ideas provides incentives for additional creativity without unduly impeding the free flow of ideas

oHighly general ideas should remain in the public domain because having unfettered public access to such ideas is central tot eh goal of continued progress in the arts and sciences while the cost in the lost incentives of not allowing CR protection fro them is usually small.

CR protection is a means of promoting creativity amongst authors. Style/ Content contrast Hettinger implies that content is not protected, but that style of presentation is protected. Problem when abstract works are evaluated. The more abstract the content, the more they merge with

the style of presentation. Fixed and Unfixed ideas The requirement of fixation is not closely related to the idea/expression dichotomy Providing CR protection for ideas that are entrenched in enduring material form does not promote the

free flow of ideas. This distinction between Fixed and Unfixed ideas only serves to remove an entire class of objects Ideas and Language: the lockean story Does not make sense because it leads to soliloquy and the result is that we would never know what

people mean when they use a particular word. General and specific ideas That CR does not extend to unelaborated ideas or concepts That what differs David from a naked man is that much more was added But where do we draw the line between general and specific ideas? That is between idea and

expression? Hand believes that they are distinguishable ( Expression being the concrete form) The merger doctrine Where the idea can only be expressed in one form and the form adds nothing to the original idea, the

idea is said to “merge” with the expression. Software. Rules of a contest ( game) Conclusionary principle: the courts can use it both ways, sometimes saying that no, there ARE different

ways of doing something.

Abraham Drassinower: A rights-Based view of the idea/expression dichotomy in CR law Two views to CR law

oThe rights-based view posits that the inherent dignity of authorial rights is the defining axis around which the law of CR either does or ought to orbit.

o Instrumentalist view: CR is a statutory instrument designed to balance incentives necessary for the author’s productivity with the public interest in access to a dissemination of her products. i.e. the legal title is but a function of the public interest, a means to an end.

The central doctrine of idea/expression dichotomy is a crucial means whereby CR law limits the scope of the author’s entitlement in light of the public domain: the doctrine provides that the an author’s idea, no matter how novel, are not subject to CR protection. Only her expression of those ideas is.

Instrumentalist view prevails because the right-based view cannot account of the idea/expression dichotomy: Vever: one does not conceive of a universe in which natural rights are given to perpetuity.

Author does not offer a rights-based justification of CR.

49

IP Gold Summary 2003 Prepared by Sarita Keirouz He wants to undo the widespread assumption that a rights-based justification is inconsistent with an

account of the public domain: recognition of the inherent dignity of the author does not overlook the claims of the public domain.

Admittedly the public domain derived from an instrumentalist point of view is wider than the public domain derived after the recognition of the inherent dignity of the author.

However, a rights-based account can generate its own affirmation of the limits of authorial right the limitation is grasped by incorporating the interpersonal dimension of the property right more deeply

into the analysis of the author’s relation to her work. Authors and equality Cr does not protect ideas, it protects the work not as object, but as expression. It protects not eh work

but the link between the author and work. The substance of this link is the author’s right to her expression

Ff f

50

IP Gold Summary 2003 Prepared by Sarita KeirouzFirst, assess if subject matter is acceptableSecond, assess if novel etc….

Trade Secret at Civil Law:

Information: no limit on type of informationo Confidential informationo Was communicated in circumstances indicating its confidential nature

In respect of which the owner takes precautions to maintain secrecy. o Trade secret will remain secret for as long as I can keep it as sucho Best to get a patent after that.

o Sometimes, you can file for confidentiality when your patent is being examined approved.

o If I don’t have a prior relationship of confidentiality, I can reverse engineer the formula, and even get it patented

o Before the company does and even sue the company!o Eg. Coca Cola: after a while, the value is no longer in the TS, but built into the TM.

What is not generally known in the industry, or easily accessible With a commercial value (must be marketable)

Remedies: Only recourse is against person who has breached the law of confidential information

Cannot annul the patent that another has gotten by overhearing, by being told by the person breaching the secrecy or the person who reversed engineered.

Damages/lost profits Injunction Accounting of profits Restitutionary award

Patents

Purpose Stimulating the creation and development of new technologies. Granted to inventors of new, useful and unobvious ideas with practical industrial applications.

The underlying aim is to protect ideas of “practical applications in industry, trade or commerce”.

It gives its holder a lengthy breathing space to enable the invention to be developed and marketed without competition except from non-infringing substitutes.

The patentee can thus recoup the cost of invention and product development; and obtain a profit, commensurate with the value the market puts on the invention.

Rights granted Absolute monopoly: nobody can make, sell or use the patented invention, even if he arrives at it

independently, without knowing of the earlier inventor or patent. Trade secret: a trade secret confided in China and wrongly used in CAD may be provided if the

Chinese confider sues in Canada.

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Applying to the Patent Office: An earlier invention will lose to one arriving first to the patent office with an application. If a filing date is within 12 months of an earlier filing in a Paris Convention or WTO state, the

foreign filing date then becomes the CAD claim date. After filing, an applicant has 5 years to request examination, so the market for the invention can be

tested. If no timely request is made, the application is deemed abandoned. International Patents: There is no such thing as an international patent; patents are applied for country by country. In

Europe, a single application to the European Patent Office in Munich can lead to patents for states nominated by the applicant.

The patent convention treaty of 1970 sets up a simplified procedure for states beyond Europe; and it has been ratified by most industrialized countries.

Application must be truthful; even innocently made false “material allegations” invalidate the patent.

What is protected: S. 2 Invention means any useful “art, process, machine, manufacture or “composition of

matter” or any new, useful “improvement” of one of these qualities as a patentable “invention” in Canada if it is new and useful”.

The underlying aim is to protect ideas of “practical applications in industry, trade or commerce”.

Public Benefit: measured by the market, not by the patent office or the courts: requirement that inventions must have no “illicit object in view” has been swept.

Arto An art is an act, or series of acts performed by some physical agent upon some physical

object and producing in such object some change, either of character or of conditiono This definition encompasses process and business methods and any applied learning or

knowledge, including its resulting product (new applications/ uses of chemical products).o The art must be usefulo Excluded:

Written material and fine art because they are protected under CR. Professional arts bc they are not professionally traded on the market. Methods of advocacy, Tax avoidance, Cross examination, Medical treatments bc

they would hinder the disclosing and sharing of skills within a profession.

Processo Systematic series of interdependent actions or steps directed to some useful end.o Need not produce a marketable commodity as long as an economically useful result is

achieved.o Example, a method of applying a herbicide.

o Often synonymous with Art and excludes a machine, thing or result.

Machineo P. 122: it is either an apparatus with interdependent parts or any device which, alone or with

other elements, can achieve some useful end, by modifying force or motion.

52

IP Gold Summary 2003 Prepared by Sarita Keirouz Manufacture

o Product made manually or by industrial process, by changing the character or condition of material objects. It overlaps with machine or composition of matter.

Composition of mattero Any composite or substance, (solid, gas etc) produced from two or more substances eg.

New molecules, isolated microorganisms

New substanceso A manufacture or a composition of matter. o Some substances may be patented later for “non-obvious” use or application.

Patenting lifeo Microorganisms, yeasts, moulds, fungi, bacteria, actinomycetes, unicellular algae, cell

lines, viruses or protozoa….all new forms of life which are produced en masse as chemical compounds are prepared and are formed in such large quantities that any measurable quantity will possess uniform properties and characteristics.

o It shouldn’t be a discovery

o Should new and unobvious higher life forms such as plants or animals which did not exist before (and thus are not the product of nature) and which can be recreated uniformly and at will be patented? And this, as long as they are useful (eg to destroy worms)

o Positive Public policy issues:o Improved human and animal lifeoGain efficient agricultural yields

o Negative public policy issues:oFear of reduced biodiversityoSuffering caused to sentient being in experimentsoObjectification of lifeoAltering the balance of natureoGeneral inappropriateness of humans playing godsoHow about Human Cell Lines, especially when taken from 3rd world people: did

they consent? Do they have a right in the invention? Should they share the benefits?o Fed Court of Appeal denied hybrid plants patents bc they were not produced from raw

material or from a combination of two or more substances united by chemical or mechanical means.

o US: patent and trademark office announced that it would not allow patents for “non-naturally occurring non-human multicellular living organisms, including animals”: Harvard Mouse Case, human and recombinant DNA.

Plant varietieso Plant Breeder’s right Acto The right does not prevent the development of different varieties from protected plants.

Medicine o Generic Drug industryo Devices or drugs treating H. or Animla illness o Methods of testing not relating to any steps of actual treatment or vital functions of the

body

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Unpatentable inventions Material under other Intellectual Property laws

o Semi-conductor topographies are protected under the integrated circuit acto Plant varieties under the PBR Acto Designs under the industrial design acto TM under the TM act and the law of passing offo Literary and artistic works under the CRA

Natural phenomena, scientific principles, Abstract Theoremso Patents can be granted fro a new application of Newton’s theory of gravity, but Neuton’s

purely mental operation may not.o Discoveries of new minerals, animals and plants are newly discovered natural law and not

patentable.

Schemes, Plans, Business Methods o System for operating (eg. bank accounts)

Computer Programso Fear that technological progress would be impeded in this volatile industryo Programs are effectively treated as algorithms “ a set of rules or processes for solving a

problem in a finite number of steps”

Medical or surgical treatmentso Nothing requiring skill is patentable: methods of treating humans or animals by surgery or

therapy are Unpatentable.

Criteria for Patentability Novelty (same in Europe) equivalent to originality in CR

o S. 28.2 (1) The subject-matter defined by a claim in an application for a patent in Canada must not have been disclosed more than one year before the filing date by the applicant or by a person who obtained knowledge, directly or indirectly, from the applicant, in such a manner that the subject-matter became available to the public in Canada or elsewhere

o Novelty is determined at the date of filing

o Must be relatively new, in the sense that nobody, anywhere, thought of it or made it before.

o Test 1: the invention is anticipated only if a skilled worker working on a problem would, on picking up a document, figure it out.

All the invention must be found in one publication The publication can come from anywhere in the world, and from any field Unfortunately, unexploited anticipatory documents are not recognized as prior

publication. Courts operate under a double standard:

54


o If it’s subject matter has been disclosed so as to have become “available to the public” anywhere in the world, the invention is old and Unpatentable.

oPublication of the specifications render it a disclosure.o Inventor has 1 year grace period during which he can disclose the invention before

filing a CAD application w/o this counting as public disclosure.o Europe has 6 months of grace period only for innovations shown at:

Officially recognized Int’l exhibitions Breaking of confidentiality agreement

oOutside of US, file first, show and tell later.

oAn earlier application for a patent which remains undisclosed bc abandoned or withdrawn is not a disclosure.

o Info is disclosed if it is made publicly available without restriction:

Reeves Brothers Shown off / disclosing without requirement of confidentiality

Neighbor who overhears Corset of 19th century girl

Displayed in public space Lectured on at a public conference Installed in one’s hosue where guests can see it Prior Publication Undetected uses (only in UK) in CAD, the public must be aware of the

product.

What doesn’t count: Private memo Idle gossip Experiments Disclosure under express or implied conditions of confidentiality

Non-obviousness (inventive step)o But for human intervention, would not exist.o Purpose: same as novelty: one should not be able to obtain monopoly over knowledge that

is already in the public domaino The invention must not, at its claim date, be obvious: very plain to a person skilled in the

relevant art or science.o S. 28 (3) Objective test of the notional person.

o Modified Cripp’s question:o Would the skilled, unimaginative worker, in light of his/her common

general knowledge and armed with the available prior art be led “directly and without difficulty” to the claimed invention?

o Prior Arto Allowed to mosaic search ( more than one source, anywhere in the world),

but only in publications relevant to the field. Prior Art Includes documents such as patents, scientific/ technical articles,

and prior use.55


o Test to determine prior art Sufficiently disseminated and accepted within the art Would the researcher have found the prior art after a diligent search?

Knowledge that is established sufficiently disseminated and accepted within the art so as to be generally known and understood by the real life equivalents of the unimaginative skilled technician in the art.

Not the same as common knowledge Must be known and widely accepted without question by the bulk of

practitioners Knowledge that practitioners may be expected to have as a part of their

technical equipment.

o The objective test is a very hard test to satisfy bc every intention becomes obvious after it has been made.

o New rules have developed to verify non-obviousness or creativity: Disinterested experts may praise the invention. Long felt need. Attempts by others to solve the problem. Competitors may have accepted its validity by taking licenses or by working around it Contemporary development. The patented product may have been an instant success. Path to success was littered with failure. The inventor, although qualified, might have experimented long and hard

o USA: the result should be non-obvious: is the strand unobvious? yeso CAD: the steps should be non-obvious: are the steps non-obvious? No: might be less

willing to accord a patent to DNA there.o European approach:

Problem and solution approach: id the technical problem to be solved.- least creative Is the technical solution to this problem obvious to the unimaginative skilled person? The problem is to find random sequence of DNA, and since any DNA sequence is a

solution to this technical solution, then it is. o

Usefulness (industrial application)o S.2 An invention must be useful to be patentableo It must be directed to a practical use and do the job the inventor claims for it.o It might still be uneconomical, unsafe, primitive or commercially uselesso A researcher producing a new compound has to show that it is something more than a

scientific curiosity: test must be produced to point to some useful property.

o Canadian Test: actual and ultimate utility: Invention must work for the purposes for which it was designed (need to work

well) Must serve some positive purpose Judge uses the perspective of someone skilled in the art. Benefit to society not relevant Commercial success

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IP Gold Summary 2003 Prepared by Sarita Keirouz Infringers using the product

o USA standard: specific, substantial and credible utility US standard – specific, substantial and credible utility Specific utility: a utility that is specific to what makes the invention “inventive” Substantial utility: not a “throw away” utility but a real substantive use Credible utility: credible given the state of knowledge the in the art. Brenner v. Manson: A patent is not a hunting license

Patent application claimed steroid with specific utility in the treatment of cancer.

No practical use, only useful for future research Patent was rejected bc not marketable, no practical use

o Industrial application in Europe EU utility standard – Something has industrial application if it can be (1) made or

(2) used in industry Least stringent European Patent Convention requires that the invention have an industrial

application Can be made Or has an essential use

Euro Patent Office has signalled that it may add requirement that someone would actually want to use the invention.

Failure to satisfy criteriao S. 60 (1) a patent or a claim in patent may be declared invalid or void by the Federal Court

at the insistence of the Attorney General of Canada or at the insistence of any interested person.

Application Possibility to file a provisional application:

o Giving enough specifications in order to go to a conference and disclose the worko Can only add description, nothing else.

Publication o It takes 2-3 years for examinationo 18 months after filing, my patent is published

o good for societyo public domain informationo Causes Trade secret holders who are applying to want to have the

patent issued faster. Before, they used to file and let it rot until they were certain that the secret was going to be out. Now, they file and want the issuance to take place fast in order to avoid suing for a longer period than 18 months.

o bad for me, others can copy it o Once I get my patent, I can sue retroactively however

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The Content of a patent Disclosure

o S. 27 (3) Must show correctly and fully how to make it and put it to use.o Description of the invention must be complete.o Must disclose the best mode of using the machine described in the specifications.o S. 27 (3) where a specification refers to a deposit of biological material and the deposit is

in accordance with the regulations, the deposit shall be considered part pf the specification.

Description of the inventiono Description of the invention must be complete and correcto No need however, to explicitly describe how the invention is usefulo Adopt a point of view of someone with ordinarily skill in the art

o Test: cannot require any knowledge other than obvious steps falling within common knowledge of someone skilled in the art

o If there is evidence that some instantiations of the invention do not work, then the claim must be rejected. (flows from the utility requirement) (Minerals Separation)

o Test: would this person understand that all instantiations of the invention would likely work?

o Must disclose the best mode of using a machine in the specifications.

US disclosureo Description: did you give me all the info to (1) make it (in general) and (2) to use it?

o Specifications must describe how the invention operates or, in case of pharmaceuticls, evidence supporting the claim.

o Enablement : can I build each object, which falls within each category of the claims? (eg. Chemicals).

o Invention not enabled if not all instantiations worko Test: reasonable standard

European disclosureo Description: same as CAD: Would a person in the field, after reading the description be

able to figure out the thing and fill in the gaps with general knowledge?o Must disclose best mode and most likely mode.

Claimso S. 27 (3) claims define distinctly and in explicit terms the subject matter of the invention.o In the claims, the applicant marks the territory it wants to monopolize “what is not claimed

is disclaimed”.o Each claim is independent, and if one is found invalid, it will not affect the validity of the

others.o Yet, courts cannot resist construing claims to catch free riders or deliberate copiers.o Game is reveal as little and claim as much as possible:

oThe less that is disclosed, the more that can be retained as competitive edge.oThe wider one claims, the tougher it is for imitators

o Must be clear and set out the monopoly distinctly and in explicit terms.

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Reading a patent Patents are now interpreted against the history of their making.

CAD: Purposive Interpretation saves claims: judges are reminded not to read the claims too literally or meticulously.

USA: Doctrine of Equivalents: (patent prosecution estoppels).

Dissect the claim into component parts and ask if the thing infringing your patent so similar that it is the same or are there component differences

An applicant may be precluded from claiming something he had willingly given up at the time of registration.

German: What is the real invention.

Title Inventor

o Whoever first independently thought of the invention and objectively manifested the idea.

Joint inventorso Everyone who materially helped to create or to develop the idea, however big or small a

role, can claim to be a co-inventor or a co-owner.

Ownership: Employeeso Left to provincial law.o Depends on K of employment.o When there is no K, the test is that of CR law: The Eer will own the Ee’s invention where

an Ee is specifically hired to invent, innovate, or develop an invention, or even when he hands over an idea without thought of payment or under a K.

Ownership: Freelancerso Treated less favorably than in CR law.o Provincial law

Owner’s rights S. 42: Exclusive right, privilege and liberty of making, constructing and using the innovation

and selling it to others to be used. Patent gives a negative right of exclusion

S. 44, subject to 46: the term is limited for the duration of 20 years from the filing date. S. 46 (1): if the patentee does not pay the fees within the time provided, the term limited for the

duration of the patent shall be deemed to have expired at the end of that time.

International Protection Through the Paris convention, entitled to apply for patent in member state within 12 months of

first filing Through Patent Cooperation Treaty, can apply for int’l search and examination

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IP Gold Summary 2003 Prepared by Sarita Keirouz Takes longer (delays by 1 year), but allows me to market and see if it is worth

investing time and money to apply for a patent in countries. The decision is not binding, but highly persuasive It saves me money in transaction costs in case I decide to apply everywhere at the

same time

In the end, Ps are granted on a country-by- country basis, so you may have a different set of rights in Canada and a different set of rights in another country.

Invalidity §53(1) “A patent is void if any material allegation in the petition of the applicant in respect of the

patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission/addition is willfully made for the purpose of misleading.”

S. 48 (1) may request a re-examination of any claim of a patent by filing with the commissioner. S. 59: Def may plead as matter of defense any fact or default which by this Act or by law renders

the patent void.

Failure to identify inventors In Canada, the failure to list all inventors does not lead to invalidity: not a material allegation

(Apotex v. Wellcome Foundation) In US, failure to name an inventor leads to invalidity unless innocent error (See 35 U.S.C. § 256) This is important if trying to challenge a patent: in US: less incentive to sue, bc all I get is the

invalidity of the patent. In CAD, I get to be included and get a share in the win.

History

Class notes

“The Third Part of the Institutes of the Laws of England” - Edward Coke (1797) Monopolies are contrary to “the ancient and fundamental laws”, and are punishable by law Recognition that a balance must be struck in rewarding privileges to inventor/new manufacturer

(so that the inventiveness may be rewarded and so to encourage others to be inventive) and the public (so that the public can benefit from the invention)

The protective period should not be too long to protect the private privilege Coke lists 7 terms for the manufacturer to comply with in order to obtain a patent: If any of these

are missing, the patent will be declared void pursuant to the Act Against Monopolies 1. Must be for 21 years or under2. It must be granted to the first and the true inventor3. It cannot be an invention which is already protected by patent4. The privilege cannot be contrary to law. This means it must be a new invention. One cannot

obtain a patent for a mere improvement or addition to a patented invention. The invention must be completely new.

5. The invention cannot be harmful to consumers. (Prof. Gold states this is usually never enforced)6. The invention cannot be harmful to the trade

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Justifications for ordering IP space Economic/ Efficiency/ Utalitarian

o Free World Trust v. Electro Sante Facts:

Two patents granted independently for the same thing. Are they valid? The respondent’s apparatus achieves similar therapeutic purposes, but employs different

technology. Are these differences sufficiently substantial to put the respondent outside the appellant’s monopoly? Or does one infringe the other?

Issue: To what extent does a patent protect the “substance” or the “spirit” of an invention, as

distinguished from what is literally described in the written claims, and whether, on the facts of this case, the claims patented by the appellant are sufficiently elastic to catch the electro-magnotherapy of the repondent’s electro-sante inc?Held:

Held: Each patent is valid. No infringing: there is no recourse to vague notions as “spirit of the invention” to expand

the claims further. The respondent’s device is different both structurally and operationally from the device

contemplated in the claims. There is no recourse to vague notions as “Spirit of the invention” to expand the claims

further. Adherence to the language of the claims promotes fairness and predictability.

Ratio: Binnie J. The big question is how to resolve the tension between "literal infringement" and

"substantive infringement". The objective of the Patent Act of promoting research and development will be

undermined if competitors fear to “go near” an existing patent just because its scope is imprecise.

With the “purposive interpretation” the claims made in a patent are first listed and then separated into essential and non-essential (substitutable) based on the standard of a hypothetical “worker skilled in the relevant art”.

There is no infringement if an essential element is different or omitted in the allegedly infringing device, but there may still be infringement if non-essential elements are substituted or omitted.

For there to be infringement, all essential elements should be copied. In this case, the respondents' device does not infringe, because they simply show a

different way of reaching the result reached by the appellants. And claims can’t be stretched to allow a patent holder to monopolize anything that

achieves the desirable result. The scope of the patents granted would be too wide and there would be no

incentive to improve on existing patents. There is in this case enough difference between the respondent’s and appellants’

devices to be different claims.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Test : Purposive approach:

(1) Does the variant have a material effect upon the way the invention works? If yes, the variante is outside the claim (or is infringing), if no:

(2) Would this have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variante is outside the claim. If yes:

(3) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance requirement of the invention? If yes, the variante is outside of the claim

Comments: This case shows how economic justifications play a role in the judge’s reasoning.

According to the , judge this system of incentives must be finely tuned so that patent holders cannot make wide claims that will impede r&d and economic development (through, e.g. cheaper substitutes)

The US approach is different: Literal Approach List all the claims made in the patent List all the claims made in the copycat Consider each element in the copycat application. Is it identical, and if it is not

identical is it substantially similar, to an element in the original application? If all claims are identical or substantially similar, then the copycat is infringing Therefore burden on defendant is light

Also geared towards economic incentive: Patent Protection Estoppel (PPE): bargain between lawyer and patent office:

If you willingly added words of limitation, you made a bargain with the patent officer.

You are thereafter estopped from claiming that the words of limitation are too restrictive.

As a competitor, I have access to the files of correspondence between your lawyer and the PTO.

PPE gives an incentive to push as far as you can on every element. Advantages of the PPE:

(1) predictability, (2) courts don’t like it when people get max = they want to leave room for

innovation.


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Schumberger Canada Ltd v. Canada (Commissioner of Patents), [2000] USA Facts:

The purpose of the invention is to facilitate the exploration of oil and gas. The invention discloses a process whereby the measurements obtained from drilling

boreholes are recorded, transmitted to a computer program according to a mathematical formulae set out in the specifications and converted by the computer into useful information produced in human readable form. The Commissioner rejected the application.

Issue: Is this invention (computer program) patentable? No.

Held: The invention is not the computer program; it is the complex math process which is

effected by the computer. It transforms measurements into useful information.

Ratio: Mathematical formulae are not patentable. They are assimilated to the “mere

scientific principle or abstract theorem” for which subsection 28 (3) of the Act prescribes that “no patent shall issue”.

The fact that a computer has been used to implement the discovery does not change the nature of the discovery

Comment Gold: sometimes, if you phrase it properly, you can get the patent: An application using the math principle can be patented.

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Tennessee Eastman Co. v. Canada (Commissioner of Patents), [1974] SCR Facts:

The claim regards a patent for a surgical method: the use of a - known - nontoxic glue to join surfaces of incisions or wounds in living animal tissue.

Although the particular compounds used were old and well-known, their use as a bonding tool for human tissue is a novel discovery.

The examiner’s report states that medical and surgical processes are not involved in trade or commerce or industry and are thus outside the scope of Section 2(d) of the Patent Act.

Issue: Can a new use for a known substance for surgical purposes be claimed as an invention?

No. Held:

Surgical methods rely on the skill of the physician and are therefore uncontrollable, thus we can’t patent it.

Ratio: A new substance that is useful in the medical or surgical treatment of humans or of animals

is an invention. But to establish that a treatment using this substance is an invention ( drug ), we have to be

careful: There are underlying public policy concerns here. If surgical methods were eligible for

patent protection, then that would counter the desirability of making the treatment available and affordable to the entire public

Court held that here, it was not the manufacture of the glue (which could be patentable), but the use that was being patented; and anything requiring judgment or skill cannot be.

Smith v. Klein: Canada used to grants patents on the manufacture (process) of pharmaceutical products, not their use.

Now, you can patent equipment, diagnostic tests, procedures done outside the body, but not medical in vivo procedures requiring skill or judgment of physician.

CAD has 4 exemptions from patent protection:1- 2-3- Research exemption4- pharma co. allowed to work on a pharma product during its patent so as to be

able to release its own into the market upon the end of the patent. Europe has a broader exemption (but not including diagnostic tests) US has an exemption for purely philosophical inquiry; however, the gov cannot use a

patented thing and do research on it.

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Courts and Institutional Competence

Parker v. Flook, U.S. (1978) Facts:

Flook’s patent claim covers any use of his formula for updating alarm limits (which signal the presence of an abnormal condition in catalytic conversion processes).

The novel feature claimed is the mathematical formula/ algorithm for computing an updated limit

by plugging in certain variables, the operator calculates an updated alarm limit Held:

The patent application was rejected: the point of novelty lays in the formula or algorithm, a subject matter that was Unpatentable.

Ratio “While a scientific (fundamental) truth, or mathematical expression of it, is not patentable

invention, a novel and useful structure created with the aid of knowledge of scientific truth may be” quoted from MacKay Radio & Telegraph Co v. Radio Corp. of America.

It is incorrect to assume that if a process application implements a principle in some specific fashion, it automatically falls within the patentable subject matter of S. 101 and the substantive patentability of the particular process cab then be determined by the conditions in s. 102 and s. 103. It would make the determination of patentable subject matter purely dependant on the art of the draftsaman ( who can always find an application or a process for the formula)

The rule that the discovery of a law of nature cannot be patented rests, not on the notion that natural phenomena are not processes, but rather on the more fundamental understanding that they are not the kind of “discoveries” that the statute was enacted to protect.

The obligation to determine what type of discovery is sought to be patented (§101 analysis) must precede the determination of whether that discovery is new or obvious (§§102 & 103 requirement)

The respondent’s claim contains no patentable invention, not because it contains only a new and presumably better formula for calculating alarm limit values, but because, when you plug this formula into a the prior art, you don’t get anything novel aside from the formula (the prior art- chemical processes involved in catalytic conversion of hydrocarbons- are well known).

Dissent: Thousands of processes or combinations have been patented that contained one or more

steps or elements that themselves would have been Unpatentable subject matter. (Eibel process)

One should not import into the inquiry of s. 101 the criteria of novelty and inventiveness. 101 is only concerned with the subject-matter of patentability. Whether a patent will actually issue depends on the criteria in 102 and 103, which include novelty and inventiveness amongst other things. A patent may not issue for abandonment, novelty, anticipation etc.. but in this case, the process clearly meets the standards of subject-matter patentability.

The Ct stresses the importance of NOT extending patent rights into areas unforeseen by congress

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Diamond v. Diehr, U.S. (1981) Issue:

Is a process for curing synthetic rubber, which includes the use of mathematical formula and a programmed digital computer patentable subject matter under s. 101?

Patent office thinks not: the only novelty in the process is the inclusion of the formula. The remaining steps ( installing the rubber in the press and the subsequent closing of the press are conventional and necessary to the process and cannot be the basis of patentability). Same as Flook.

Respondent appeals that his patent claim is not on the math formula, but on an improved process. Same as Flook.

Held: yes Ratio:

Based on Chakrabarty S. 35: whoever, invents or discovers any new and useful process, machine, manufacture, or

composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.

Although “process” was not added to s. 35, it was always enjoyed protection because it was considered a form of art: a process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing. IF it is new and useful, it is just as patentable as a machine. The machine pointed out to perform the process may not be new, while the process, itself, may entirely be new. (Chochrane).

Excluded from statutory patent protection are laws of nature (established in Gottwchalk v. Benson and then in Parker v. Flook), natural phenomena, and abstract ideas. A mathematical formula is not patentable since it is equivalent to a law of nature

A process is a mode of treatment of certain materials to produce a result, which, if new and useful, is patentable. Indeed, in this case, the process employs a well known formula. The applicant does not want to foreclose the use of this formula (which was the case in Parker) but rather to prohibit others from using this formula in conjunction with all the other steps in their claimed process. ( is it non-obvious?)

This conclusion is not altered by the fact that the process involves using a mathematical equation and a programmed digital computer. Although a mathematical equation in isolation is not patentable, when it is used in a process which incorporates a formula, the process is not barred at the threshold of §101.

Dissent : Flook made it clear that an improved method of calculation, even when employed as

part of a physical process, is not patentable subject matter under 101. The court in Flook also set out the correct method of analyzing a patent claim employing a

mathematical algorithm: (1) the process is assumed to be new, novel and non-obvious and assessed to find out whether it is patentable subject matter (2) the claim is then examined to determine whether it discloses “some other inventive step”.

Policy reasons: concern of the flood of applications that would inevitably flow from a decision that computer programs are patentable.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Class Discussion:

IP is vague; how should the courts interpret vagueness in order to make sense of IP? There are two distinctions:

Category 1: Particular objects:o Courts will find things patentable only if legislative says yes

oParker: Courts may move forward either when it is abundantly clear that the legislative does want to act

Category 2: Class of Objects (eg. Particular objects within computer programs):

oCourts will find for any patent unless the legislature has specifically said it should not

oDiehr: or, when it is abundantly clear that the legislative does not want to act

Should we use this system? The concept of class could vary between each judge…we should not create new categories in court

It is easy to say: go to legislation…in fact, it takes a lot of time and sometimes, it is court decision which bring an issue to the legislatives’ attention.

View here is: we do not want to extend the scope of patent law to new category of goods unless the legislature explicitly tells us to. It amounts to the incorporation of an algorithm…and this by itself is excluded.

Note that the inventions in the Diamond and Parker cases are very similar; YET the responses are different

WHY?o There is the obvious reason of the change in the US Supreme Court’s composition causing the

minority in Parker to become the majority in Diamond.

o The way in which the invention was characterized was different.

o In Parker, the invention was analyzed in isolation. The Ct said that the process already existed and that all that was new was the addition of an extra step and a few elements.

o In Diehr, the invention was characterized as a process, even though the only thing that was new was a computer Algorithm.

o We could also argue that the difference relates to a difference in the underlying justifications for giving/denying the patent.

o In Parker, the Ct seems to think the invention is not that useful to society. Thus in order to earn a patent, the invention must do some good.

o The reasoning of the Ct in Diehr seems to comply more with the historical emphasis of the economic rationale for IP rights. Diamond seems to place heavier faith in the market.

o The Ct seems to say that everything should be patentable unless there is good reason not to.

o Prof. Gold believes the debate in these cases is about utilitarianism v. libertarianism. Whereas the Ct in Parker places more emphasis on utilitarian justifications, the Ct in Diehr relies on an economic justification.

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Writing for a unanimous court in Parker v. Flook, Stevens J. denied Flook his patent for a method of updating alarms. He reasoned that although an inventive and useful application of a mathematical algorithm may be patented, the discovery of such a phenomenon was not.

However, in the 1981 Supreme Court decision Diamond v. Diehr, the court applied a very liberal rule which amounted to the patenting of software algorithm. At issue was whether a process for curing rubber using a computerized application of a mathematical formula was patentable subject matter. The court reasoned that the claimants were not seeking to patent the mathematical formula, but rather to foreclose others from using the equation in conjunction with all the other steps in the process to produce their product.

After this decision, patents have been routinely granted in the U.S. where “there is no transformation of physical substances into a different physical state, and only manipulation of data is involved.” In Re Alappat the court held that data transformed by a machine through a series of mathematical calculations was patentable because it produced a “useful, concrete and tangible result”: a smooth wave displayed on a screen. The same test was applied in State Street Bank v. Signature Financial Group, to award the defendant a software patent on a data-processing system used in financial transactions. Through a series of mathematical equations, this system transformed dollar amounts into a final share price. This ruling was later confirmed in AT&T Corp. v. Excel Communications, Inc. where the Federal Circuit patented a business method, finding that no physical transformation was necessary for a mathematical algorithm to be patentable subject matter.

Dangers of Patenting New Life forms: Flood gates: the patenting of genetically altered organisms will lead to the patenting of other life

forms, possibly even human products. It also encourages people to research in this area. It is argued that genetic research may pose a serious threat to the human race or that the dangers are far too substantial to permit such research to proceed at this pace.

Crt takes the stance that the legislation is meant to be flexible enough to cover these kinds of inventions but ‘the grant/denial of patents on micro-organisms is not likely to put an end to genetic research or to its attendant risks.’

The evidence on this point is inconclusive: If crts are to make such a decision in light of policy issues, they would be over stepping their bounds. The choice was not one that should be determined by the court: they ignore the policy questions behind it. In the eyes of the court, this is legislative territory.

Article 53 of the European Patent Convention: Patents not granted for things that, if patented, would be in conflict with morality/public order. Even if

an invention meets these three criteria, the patent office is entitled not to grant a patent if there is a threat to the environment or other moral concerns.

The following are unpatentable: humans and their body parts, modification of the genetic line of humans, fetuses for use in genetic testing and genetic testing on animals that may cause them harm.

The patent office might withhold patents that, if commercialised, will cause a lot of damage.

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Funk Bros. Seed Co. v. Kalo Inoculant Co., Facts:

Man invents an inoculum containing a series of bacteria which are able to survive together without killing each other.

These bacteria fix nitrogen This inoculum can be used when different types of legumes are planted near each other.

Held: No, cannot patent because found in nature. The Supreme Court applied the "products of nature" doctrine to reject Kalo's patent. Justice

Douglas, writing for the majority, held the patent claims to the mixed bacterial culture invalid, reasoning that "the combination of species produces no new bacteria, no change in the six species of bacteria, and no enlargement of the range of their utility." 107 Justice Douglas declared that

Diamond v. Chakrabarty, US (1980) Facts:

Genetically engineered oil digesting bacteria Issue:

Is the micro-organism patentable? Held:

Yes, the language of the statute embraces the resp’s invention. Ratio:

There are limits to the legislation: neither of natural processes or physical phenomenon can be patented.

Analysis: What must be determined is whether the respondent’s micro-organism constitutes a ‘manufacture’ or ‘composition of matter’ within the meaning of the statute.

Crt emphasises how these words have been widely construed by other crts and that the relevant legislative history also supports such a broad construction.

The bacterium produced has markedly different characteristics from any found in nature and one having the potential for significant utility. The discovery is not nature’s handwork but that of his own.

Judged in this light, the respondent’s micro-organism plainly qualifies as patentable subject matter. His claim is not to a hitherto unknown natural phenomenon, but to a non-naturally occurring manufacture or composition of matter-a product of human ingenuity.

Rejected: Micro-organisms cannot qualify as patentable subject matter until Congress expressly authorises such protection. This position rests on the fact that genetic technology was unforeseen when Congress enacted s. 101-so this decision should be left up to Congress: to decide whether or not an organism is patentable.

Comments: Should patent law be able to expand what comes under its protection? The presumption was that it is patentable unless reasons are found that it should not be.

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http://www.lexis.com/research/retrieve?_m=2979ca2fae441adaba68267061246de6&docnum=8&_fmtstr=FULL&_startdoc=1&wchp=dGLbVlb-zSkAb&_md5=f8ad849929516cc84a1701b129b66e09#n107%23n107

IP Gold Summary 2003 Prepared by Sarita Keirouz President & Fellows of Harvard College v. Canada (Commissioner of Patents) 2000

Facts:

The patent being claimed is a biotechnological development of the oncomouse, a cancer prone mouse. The patent application states that the objective is to produce animals susceptible to cancer to conduct carcinogenic studies.

The appellants seek to protect the product of the process, or the founder mammal and the offspring whose cells are affected by the oncogene.

Issue: Does the oncomouse fit within the scope of the Patent Act? Yes.

Reasoning: The purpose of the specified period in the Patent Act is to enable the inventor to exploit the

invention free from competition for that period. This will permit the recover of research and development investment necessary to produce the invention and a return on the investment of the investor, commensurate with the value purchasers place on the invention. It is meant to provide an incentive for the creation processes or products which are new, useful, and unobvious. In return for the protection period, the patentee is required to make full disclosure of the invention.

The Patent Act contains no provisions relating directly to biotechnological inventions and new forms of life in particular. However, the language of the statue is broad and is to be given a wide scope, especially since inventions are necessarily unanticipated and unforeseeable

The mouse fits within the definition of “composition of matter” found in s. 2 of the Act. This term does NOT apply to natural phenomena, scientific principles, and abstract theorems

The definition of “invention” does not exclude discoveries that follow the laws of nature

The oncomouse is a result of ingenuity and the laws of nature. The ingenuity is in the introduction of genetic material into the mouse by artificial means and to the makeup of the critical oncogene itself.

Additionally, the mouse is patentable since the mouse described in the patent claim would not exist in nature. Thus the mouse is not something that already exists in nature, a thing that has merely been discovered or recreated

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SCC Decision on the Harvard Mouse case:

Facts: L'Heureux-Dubé, Gonthier, Iacobucci, Bastarache and LeBel JJ.:

This appeal raises the issue of the patentability of higher life forms within the context of the Patent Act.

Issue: whether the words “manufacture” and “composition of matter” in the context of the Patent Act, are sufficiently broad to include higher life forms. If the words are not sufficiently broad to include higher life form, then it is irrelevant whether the court believes that they should be included or not

Held: It was decided that Cdn law prohibits animals from being patented. The oncomouse does not fit the definition of an invention under sec. 2 of the Cdn Patent Act.

Bastarache J (Majority) “Patenting higher life forms would involve a radical departure from the trad’l patent regime.”

The patenatbility of such life forms is a “highly contentious matter that raises a number of extremely complex issues. If higher life forms are to be patentable, it must be under the clear & unequivocal direction of Parliament.”

Higher life forms were in the contemplation of parliament: cross breeds etc…it didn’t give clear direction, in fact, it can be implied that it opted not to, so we can’t move forward. In Abitibi, parliament limited higher life forms to “microorganisms etc….”. We can’t include under this class something the parliament has not intended.

FC is said to have over simplified the matter & that lawmakers should deal w/ the “increasingly blurred line b/t human beings & other higher life forms.”

‘Manufacture’ denotes a non-living, mechanistic product or process. Composition of matter can apply to lesser forms of life (ex. yeast) but not higher ones. A mouse is composed of various ingredients and substances, but it does not consist of ingredients and substances that have been combined or mixed together by a person.

SCC refused to define a human & whether its ban includes human fetuses & human organs. There was also an express concern that patents on higher life forms could lead to eventual patents on human beings.

Binnie J (dissent): McLachlin C.J. and Major, Binnie and Arbour JJ. dissenting: The appeal should be allowed.

A higher life form is not patentable because it is not a "manufacture" or "composition of matter" within the meaning of "invention" in s. 2 of the Patent Act.

Cdn Charter would prohibit ownership of human beings for commercial purposes. The Patent Act was designed to protect such invention/discovery: “While Parliament did not

contemplate the oncomouse in 1869 when it enacted the definition of invention, it did not contemplate moon rockets, antibiotics, telephones, e-mail, or hand-held computers, either.”

Biotech research is going to continue w/ or w/o this sort of patented ‘technology.’ The issue for the dissent was whether the Harvard will benefit from its discovery &

whether research capital will avoid Cda & migrate to more hospitable countries: “The legal issue is a narrow one & does not provide a proper platform on which to engage in a debate over animal rights, or religion or the arrogance of the human race.”

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IP Gold Summary 2003 Prepared by Sarita Keirouz The profound cellular changes in the mouse render it a ‘composition of matter.’ This was a defeat for biotech – all the patent application of plants & animals are not going to

be accepted. It is departure for Cda from the int’l trend. The US, Japan, Australia & some Euro countries have allowed the oncomouse to be patented.

Reciprocity is huge in biotech – this decision means that Cda will have exclusivity on our markets, but we are not going to give it back to you [world].”

This was a victory for religious & enviro grps

Reaction in Biotech industry Dr Berstein (Cdn Institutes of Health Research): the decision creates a level playing field – no

researcher will have to worry about cost of L’ing fees to use certain transgenetic creatures in their work – already exempted from fees for oncomouse use unless they commercialize a product derived from it

Prof Gold: Cdn industry has survived & flourished all this time w/o out patent protection on higher life forms. 100s of genetically altered organisms w/ patents pending in Cda while the Harvard mouse was wending its way thru the crst for the past 17yrs. In the meantime, companies have been free as they still will be to patent individual genes, other DNA sequences & cell lines.

Nexia Biotech (in Mtl) genetically engineering goats to produce spider-silk proteins in their milk – never applied for a patent for the goats anywhere – Turner states that “we are not in this to sell our animals, but the product we get from the animals. Holds 14 patents on spider-silk making genes that have been inserted into the goats DNA.

G Adams (CEO of Innovatiosn Foundation – UofT office responsible fro commercializing the uni’s research): Bleak day for biotech – “If you can’t patent, you can’t make a company out of it, you just have to dump it into the public domain & you can’t get investment.” Research will go elsewhere.

Judge Brand: no patent on computers helped the boom.

Comments:

The Ct states that all that is at issue is whether the interpretation of the Patent Act permits the invention to be patented. The Ct states that it is their duty to take the statute as they find it, and that they cannot expand the interpretation of the Act beyond Parliament’s intention as expressed by the language in the statute. Thus, policy questions should be addressed by Parliament and not the Ct

The Ct further states that a patent does NOT give a positive right to develop or use an invention but rather only a right to excluded other from using or reproducing the invention for a limited period of time

Note that the Ct draws on Chakrabarty for the definition of “composition of matter”

Issues to be considered

Policy arguments against the patent are based on human health, environmental and other concerns

Ordre Public or Morality: NAFTA and TRIPs provide that contracting states may exclude patentable inventions wich are contrary to morality of the country.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Important not to discourage research on stem cells and the creation of artificial organs….but

this is the legislator’s realm.

biotech are important contributors to university research, which needs to be encouraged, or… better leave in public domain and affordable!

religious objection : playing god

Lack of regulatory framework objection : opponents of lack of regulation should address parliament. Plus, normally, regulation follows rather than precedes innovation.

Genetic tests and engineered products hold out the possibility of modifying genetic mutation that either causes a disorder or are responsible for increasing an individual’s risk to develop, at some point during their lifetime, a particular disease. Yet, just because something is necessary, it doesn’t mean that it is patentable. However, this is the sort of research that the patent act intended to promote. Indeed, Dr. Leder’s widely shared view is that transgenic mice produced by DNA injection have been employed in a vast range of studies. Eg. The method allows the evaluation of the effects of gene mutations thought to be implicated in the inception of cancer. It has also highly contributed to our understanding of the immune defence system.

We are not unique in our legislation.

Biotech has intellectual mobility and there is a need to harmonize patent, CR and TM laws: pressures from Japan and Europe.

Enviro factors such as that fear that chakrabarty’s bacteria escapes and reproduce in the environment is not present here.

“Higher life forms” is very subjective in its definition. P. 372

Other objections to: claim on life: Claim is not on life; it is on the modification of higher life form. P. 374

Law of nature argument: many patents rely on the laws of nature to assist: AZT, fermentation p. 278

De minimis argument: an organism modified by 1/30,000 genees does not cesase to be himself. This argument understates the scientific achievement. 279.

Unjust enrichment: why is it that Harvard should be rewarded with inventing a creature that exists in nature? It modified ONE gene, not the whole of it! These related to remedy, not to patentability. This is not a sound basis on which to deny a patent. P. 381

animal rights:pets ARE property. If denied the Patent, everybody will be able to use, sell etc the oncomouse…and Harvard will be denied the quid pro quo for disclosing the invention.

Commodification of human life: living objects becoming commodity…qualtitative difference between rodents and human life

environmental protection:even if the oncomouse was not found to be patentable, this would not prevent inventors from developing the product

policy options p. 383

Discussion:

Prof. Gold believes the SCC will overturn this decision. The decision is looking at a threshold issue

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IP Gold Summary 2003 Prepared by Sarita Keirouz How to we define what is an invention?

How do we apply the criteria of non-obviousness and utility, and public policy?

Most states have a clause that addresses public policy, but not in Anglo-American patent law Invention = human intervention necessary

Binnie: all is patentable unless legislation says no. Majority: no, mouse is a class of goods that is not characterized by the Act, and we

are not willing to move the boundaries of patent law. All we do is statutory interpretation.

Policy decision: don’t want to increase environmental uncertainty and harm. Only consequence is economic.

(European Directive: you need to pass legislation that meets the criteria layed out in the directive)

Gold: Strategy of the CAD Advisory: Legislation should patent and pass other provisions along.

Gold did not want the courts to patent- he is for patenting, but through legislation- Industry in CAD is now working on new legislation.

Effect on CAD: cost of production goes down and value stays the same.

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The questions here deal with the institutional organisation of IP. We look at the parameters of the different IP systems, its limits and how far it is meant to extend and how it goes about extending into new areas

Beloit Canada Ltd. v. Valmet Oy (1986) F.C.A. Criteria allowing me to qualify for a patent (enter into the IP regime) Facts:

Two patents (for the press section of a paper machine) granted for the same invention. Their applications should have been put in conflict by the patent office, but this was not

done. Issue:

Are either or both invalid? Held:

Ratio:

Attack on non-obviousness: lack of inventiveness: any fool could have done that Secondary test: it obtained immediate commercial success.

Attack on anticipation: lack of novelty: your invention is already known, disclosed to the public prior to application.

S. 28 (1) …described in any patent or in any publication printed in Canada or in any other country more than two years before presentation of the petition.

A patent that lacks obviousness cannot be novel, one that lacks novelty can still be obvious.

You can also plead misrepresentation of facts in the applicationto invalidate the other’s patent

Discussion: According to Hegelian ideas, would these 2 criteria be valid? It would seem that you should

get a proportional amount of protection for the creativity you are putting in. It seems difficult to reconcile these two tests on the basis of Locke or Hegel.

Why do we have such low standards for patenting an invention? Practically speaking: it would be impossible to measure the qualities that make work

valuable under the Lockian and Hegelian schemes. The way these tests were put together, courts can actually measure invention. It would be impossible to measure invention according to Locke/Hegelian principles. We could allow the market to make these determinations, but this would still be hard to do.

Economic justifications: we do not care about the creativity, we care about the commercial aspects, protecting the economic value of the invention, and these two tests allow us to make these measurements.

Utility: it does not matter if the invention is of a benefit to society. It is sufficient to have utility if it provides a cheaper alternative. Imagine a patent that includes a whole class of substances. It has to be something that works, and that someone skilled in the art would see as working. Its purpose need not provide any kind of public benefit. If you put these three criteria together (utility, novelty and non-obviousness) almost anything can be patented.

Why these three criteria? 75

IP Gold Summary 2003 Prepared by Sarita Keirouz Utilitarian arguments: monopoly as reward for incentive, reward for invention, to encourage

you to disclose. These criteria is not based on a coherent theoretical system but rather it is based on

pragmatism. Steroid case: it had anti-cancer effects and was patented. Another group of steroids was

discovered, and they tried to patent it but the court refused to allow the patent because they had not contributed to knowledge and the utility that it might be eventually useful was not enough of a criterion.

The invention has to do something even if it is not hugely useful.

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Kewanee Oil v, Bicron Corp. U.S. (1974) Facts:

Harsaw became Kewanee Oil. While it was H, specialised in the production of a synthetic crystal that is useful in the detection of ionizing radiation.

They had dev’ed many processes, procedures & manufacturing techniques in the purification of raw materials and the growth and encapsulation of the crystals which enabled it to accomplish this feat. Some of these processes, H considers to be trade secrets. Bicron was formed by several former H EEs.

While they had worked at H they had signed confidentiality agreements re info they obtained while working at H.

Issue: Whether trade secret protection is pre-empted by the operation of Federal patent law.

Held: The Ohio state law regarding trade secrets is not pre-empted by the Fed Law.

Ratio: According to the restatement: a trade secret may consist of any formula, pattern, device or

compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.

The subject of a trade secret must be secret, and must no be of public knowledge or of a general knowledge in the trade or business.

This element of secrecy is not lost if the holder of the secret reveals it to another “ In confidence, and under an implied obligation not to use or disclose it”.

Secrecy requires minimal novelty, so as to make of the trade secret something not generally known.

If the scheme of protection developed by the Ohio state respecting trade secrets “clashes with the objectives of the federal patent laws”, then the sate law must fall.

To determine whether the ohio law clashes with the federal alw, it is important to examine the objectives of both the patent and the trade secret laws.

Federal laws impose upon the inventor a requirement of disclosure so that, upon the expiration of the 17 year period, “ the knowledge of the invention enures to the people, who are thus enabled without restriction to practice it and profit by its use.

Patent application includes a full description etx..o The case illustrates how the system of trade secrets and patent philosophy works with

regards to the protection of innovation. o Issue #1: Whether a state can make their own IP laws? Yes as long as they do not conflict

with Congress’ laws. o Issue #2: Is there anything about Ohio’s laws that make it so that their law stands as an

obstacle to the accomplishment and execution of the full purposes and objectives of Congress?

o Purpose of Congress’ IP laws: To legislate in the area of intellectual property in order to promote the Progress of Science and useful Arts.

o Patent laws provide for a right of exclusion for a limited period as an incentive to inventors to risk the enormous costs of research and development. In return, for the right of exclusion, patent laws impose upon the inventor a requirement of disclosure.

o Goals of T-S laws:

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Maintenance of standards of commercial ethics and the encouragement of invention.

While a discovery may not be patentable that does not ‘destroy the value of the discovery to one who makes it, or advantage the competitor who by unfair means, or as beneficiary of a broken faith, obtains the desired knowledge without himself paying the price in labour, money, or machines expended by the discovery.’

o Interaction of the 2 systems to see if and under what circumstances the latter might constitute ‘too great an encroachment on the federal patent system to be tolerated.’

o Since the 2 systems have similar goals, they do not conflict. The patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invention.

o Distinctions the CA made w/ regards to T-S; 3 situations that might be faced by someone who has decided to place their invention under trade secret law protection:

o Invention is clearly unpatentable: no conflict as the innovator would never have been able to take advantage of the system and be forced to disclose. Where patent law does not reach, trade secret law encourages innovation

o Invention is dubiously patentable: in patents, no conflict here between the two IP regimes. o Innovations that are clearly patentable: If an inventor chose the protection of the T-S law

regime over the patent regime, then there would be a conflict of laws. If it turned out the trade secret system deterred people from issuing a patent system, then trade secret would conflict with the priority of disclosure. Crt concluded that there would be very few that would opt for the trade secret regime over the patent regime.

o Even in these situations, it would not be likely to occur often enough to create a conflict with the patent regime, largely b/c the trade secret law provides far weaker protection than patent law. Thus, trade secret law would never act as a replacement for patent law.

o Trade secret protection does not forbid others from trying to decipher your secret recipes, and using them once they are discovered. The trade secret protection seeker also runs the substantial risk that the secret will be passed on to his competitors. Where patent law functions as a barrier, trade secret law functions relatively as a sieve.

o Conclusion: The extension of trade secret protection to clearly patentable inventions does not conflict with the patent policy of disclosure.

o Discussion:

This accords with the labour theory: matches with trade secret. As long as you did not copy someone else’s work, you can use it. There is no novelty requirement here.

Trade secrets function as a power for someone to use the invention and if they do not want to use it than they can license it out to someone else. Trade secret protection encourages dissemination despite the fact it requires a secret to be kept.

Patent: incentive to encourage people to endure the costs of making and researching an invention. By encouraging the production of new products, it will lead to more jobs. Disclosure is good because it encourages innovation by other people. This innovation leads to a better economy. Both systems have a similar goal: improving society.

The ideal combination of IPRs is the maximum protection with the least amount of disclosure. This often involves a blending of different kinds of IP. Some things are easy to process and make, so patent those because others will eventually find out how to do it themselves and trade secret will prove to be not enough.

If you want to protect a process, it would be easier to do so under trade secret because it will be hard to prove that someone copied your process if they make the same product as you if you only have patent protection.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Why should the state be in charge in controlling what becomes a patent and what does not?

Holmes: if we did not have patent system, it would be foolhardy to create one-but since we have one, we might as well use it because that does not cause harm either.

Cadbury Schweppes v. FBI Foods, [1999] 1 S.C.R. 142 Suis generic regime Facts:

The appellants manufactured Clamato juice at plants in Vancouver and eastern Ontario under license from the respondents.

Respondents terminated the license, but thereafter the appellants misused confidential information related to the Clamato juice recipe obtained during the license period to continue to manufacture a rival tomato-based drink, Caesar Cocktail.

Issue: Was there a fiduciary relation? What should the remedy be for breach of confidence in a

commercial context? Appeal allowed. Held:

Ratio: Binnie J.

The respondents’ reliance on IP law ignores the bargain that lies at the heart of patent protection. A patent is a statutory monopoly given in exchange for a full and complete disclosure by the patentee of his or her invention. The disclosure is the essence of the bargain between the patentee and the public.

Thus, at least one of the policy objectives underlying the statutory remedies available to a patent owner is to make disclosure more attractive and hasten the availability of useful knowledge in the public sphere. If the court were to award compensation to the respondents on principles analogous to those applicable in case of patent infringement, the respondent would be obtaining the benefit of patent remedies without establishing that their invention meets the statutory criteria for the issuance of a patent, or paying the price of public disclosure of their secret. There was breach of confidentiality but a proprietary remedy would be inappropriate, as it would add confusion to the task of weighing policy objectives and furthermore, the trial judge considered the confidential information to be nothing very special.

The policy objectives in both equity and tort would support restoration of the plaintiff to the position it would have occupied “but for” the breach. However, in contrast to other tort cases, the loss

79

IP Gold Summary 2003 Prepared by Sarita Keirouzmeasured in this case according to common law principles would produce the same result as the loss measured in equity. The use of the confidential information may have been an actionable wrong but it did not cause any monetary loss to the respondents.

Class Notes: In Cadbury there was agreement that the secret information (the Clamato recipe) was improperly

used. Binnie J. says that in order to determine the remedy, you have to determine what kind of right this is. He reaches the conclusion that it is not a property, tort or unjust enrichment claim. What would he have had to do had he reached a different conclusion? He was avoiding the imposition of a great amount of damages. The value of the remedy would have been too high. By calling this a sui generis right, we can avoid making the defendant pay too high a cost.

The entitlement here was control over a formula. Enforced as a property rule would allow for damages or an injunction. The court gave an objective value to the information that was not too high. Binnie J. could have achieved the same result through property and torts. It seems despite what Binnie J. said, that this is a property right.

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Remember:1- distinguishing guises should not stop industry

2- TM should not be a patent

3- DM is important

Trademark Theory:

History F.I. Schecter, “The rational Basis of Trademark Protection” (1927)

Two types:o Proprietary mark:

o To facilitate identification for illiterate shopkeepers.o To facilitate reclamation by owners, in situation of piracy.

o Regulatory production mark:o facilitates the tracing back of defective work.o Prevents the confiscation of outside goods, smuggled into an area where a guild has

a monopoly. Function:

o Symbol of Goodwill: Identifies a product as satisfactory & thereby stimulate further purchases.

o The more distinct the mark, the more effective its selling power: The mark sells the good.

Crts have allowed the use of same/similar TM for non-competing goods b/c its uses do not confuse the public as to the origin of the goods. o The Crts still uphold the cardinal principle that “there is no property rights in a TM apart from

a business or trade in connection w/ which it is employed.” (pink panther)o The courts have ignored the fact that the creation & retention of custom, as opposed to the

designation of origin, is the primary purpose of TM. o A TM’s uniqueness is a paramount importance to its owner.

Advancement in technology (ex. telephone, high-speed interurban trolleys, etc.) have changed the scene & the crts are not keeping up w/ the times: o “the consumer now projects his shopping far from home & comes to rely more & more upon

trademarks & tradenames as symbols of quality & guarantees of satisfaction.”o Once a TM has come to indicate to the public “a constant & uniform source of

satisfaction”, its owner should be allowed the broadest scope possible for the ‘natural expansion of his trade’ to other fields or lines of enterprise.

o The law protects the mark when confusion is created by misuse. However, non-related goods may also injure the owner of the mark even in the absence of confusion. (Pink Panther)

o The effects of the use of another’s mark outside of the class of goods, is the gradual whittling away or dispersion of the identity & hold upon the public mind of the mark/name by its use by non-competing goods.

81

IP Gold Summary 2003 Prepared by Sarita KeirouzoExample cases are Kodak (cameras & bikes), Vogue (fashion mag & hats), Rolls-

Royce (cars & radio parts)

o The value of the modern TM lies in its selling power.

o Such uniqueness or singularity is vitiated or impaired by its use upon either related or non-related goods.

Aim/Purpose: §7(b) of the Trade-marks Act: No person shall (b) direct public attention to his wares, services, or

business in such a way as to cause or be likely to cause confusion in Canada, at the time he commences so to direct attention to them, between his wares, services or business and the wares, services of business of another”.

Primarily at preventing the disruption of economic relations by misrepresentation.

Built on the psychology of the consumer:

Impulse buying

It serves to validate the consumer’s position in society

Protects the investment in the brand name and quality

also, concern with guaranteeing the consumers the quality of goods they have come to rely upon in the course of trade. (pink panther)

Balancing the public right to competition with the private right to ownership. (pink panther)

TM and TN are protected at CML (passing off) and under the Trade-Marks Act (its predecessor was the Unfair Competition Act).

TM are not IP;

o Only use, intention to use or public recognition create rights and not in the creator, but in the person behind the use, intent or creation of public recognition.

o Instable: may be diluted and become generic (loose its distinctiveness)

o Yet, they can be licensed or sold and pass in bankruptcy (I have to make sure the person I license it to maintains the quality)

o But, owner is not entitled to exclude all others from all or most uses.

o This low protection is purposive:

SCC does not want it to extend beyond the protection from the consequential damage from unfair competition or trade

and misappropriation which could likely cause public deception or confusion

However, should not limit fair competition

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Remedies: Damages (lost profit, lost trade, damages to reputation, harmful association, loss of opportunity to

license, inability to expand)

Lost profit

Accounting profit

Injunction.

Establishing a claim in Passing off = Establishing title through useo Protects a symbol in the locality of its reputation

o Does not prevent a mark from becoming diluted or tarnished

o It may work in tandem with R ( when it is not valid) and it is broader and more flexible than the act.

o Proof of the following required; otherwise, defense

1- Use is required

2- Must have Mkt reputation or goodwill attached to goods and services at time the action is brought.

Establish that the consumer looks for your guise (Eli Lilly was not able to establish that the appearance of the capsule leads consumers to request its product over competitions)

3- Must be misrepresentation by the defendant to the public, causing, or likely to cause deception and confusion between the two enterprises, in the eyes of the consumer.

Misrepresentation can exist without intention (Eli Lilly)

4- Proof of consequential damage or likely damage to the pl’s goodwill

A lack of dm can be used a defense ( see Prise de Parole).

5- No reason of public policy to withhold the remedy

6- Origin: Need not prove that the reputation in goods derives from its origins in a particular supplier but simply that goods have the same origin even if unknown. Do you assume that these 2 goods with the same name came from the same place? That is the important question.

A Registered TM:o Monopoly

o Registration confers the right to enjoin the use of the mark by another as an indication of origin (Ritvik).

o Protects the symbol all over Canada

o Prevents a mark from any depreciation of its goodwill, even without any misrepresentation (confusion)

o When Def uses the TM as is, sue in USE

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IP Gold Summary 2003 Prepared by Sarita Keirouzo When Def uses a confusingly similar symbol, need to establish confusion, even for registered

TM

o S.4 : Use at registration

§. 4(1) A TM is deemed to be used in association w/ wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or

it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.

§4(2) “A trademark is deemed to be used in association with services if it is used of displayed in the performance of advertising of those services”

o May be renewed by paying 300$ fee every 15 years: in case of distinguishing guises, there is a risk of perpetual patent: (ReaLemon).

Infringement:o i.e. unlawful use of a TM

o Requires proof that other is using the mark (Michelin Case)

o Requires no proof of Mkt reputation. It is assumed to be valid.

o Protects the image from any depreciation of good will without proof of misrepresentation (confusion)

If same field

Need proof of damage?

o Protects from Non-Literal Use: Like CR, do not need literal copying. Test: likelihood of confusion. (s.6 for def)

o Protects confusingly similar even without proof of confusion/Damage

o Protects from Depreciation: Reduction of esteem in which mark held or through direct persuasion and enticement of customers. Is there value in comparisons between products?

o Protects from Positive/Negative comparison: If I’m trying to say that my product is as good as another product, that is ‘+’comparison. If I’m trying to lure away customers, I cannot depreciate the value of another product. I can do negative comparisons but not positive ones.

o Protects from grey marketing (Heinz)

Criteria for registrability: Absolute Bars:

Mark confusing with a registered TM

Wines and spirits cannot include protected geographical indicators if they are not produced there

Offensive Marks: scandalous, obscene, immoral, against freedom of speech

Suggested connection with a living or recently deceased individual

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IP Gold Summary 2003 Prepared by Sarita Keirouz S. 9 (1) n Marks and Official Symbols representing public authority

Relative Bars: may become registrable upon proof of distinctiveness

Names or surnames of people

o Primarily merely surnames are not acceptable (s. 12 (1))

o Unless they have acquired a secondary meaning (S. 13)

o (McDonalds has acquired 2ndary meaning).

Descriptive: prima facie not registrable become so when they acquire 2ndary meaning, distinguishing one’s goods and services from those of the others.

oReferring to character or quality: Subject matter (Linoleum)

oGeographical marks

Misdescriptive: S. 12(1) subject to s. 13

Deceptive : deceive people into buying the opposite (S. 12(1) subject to s. 13)

Foreign registered marks

Invalidation

Unregistrability of the mark: see criteria the above

S. 18 Opponent has better title than the applicant (has acquired 2ndary meaning) see Ritvik

S. 18 (1) The mark of pl lacks distinctiveness

S. 45 (3) Non-use of the mark for 3 years and the absence of use has not been due to special circumstances that excuse the absence of use.

S. 18 (1) The TM is abandoned

S. 16 if confusing with a TM that had been previously used in Canada or made known in Canada by any other person (i.e. origin).

What is a TM? A mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or

services manufactured, sold, leased, hired, or performed by him from those manufactured, sold, leased, hired, or performed by others, (b) a certification mark, (c) a distinguishing guise, (d) a proposed mark

S. 2 (t) Categories of TM

o Classic TM: distinguishes one product from competition

A mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or other services manufactured, sold, leased, hired, or performed by him from those manufactured, sold leased, hired or performed by others.

o Service TM: distinguishes one service from competition

o Proposed TM: applied for before having been used ( for approval)

Cannot be the name of a subject - matter (Linoleum)

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IP Gold Summary 2003 Prepared by Sarita Keirouzo S.2 : Distinguishing guise : (a) a shaping of wares of their containers, or (b) a mode of

wrapping or packaging wares the appearance of which is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others.

S. 7 (b) Cannot be purely functional [Reckitt (ReaLemon), Kirkibi (Lego)]

Would lead to grave abuse (Imperial Tobacco)

Cannot unreasonably limit the development of any art or industry

S. 13 (1) Can only be registered after becoming distinctive through use

S. 32 (1) Need to establish use

Registration is restricted to area where it has become distinctive.

o S. 2: Certification Mark : distinguishes products or services of a defined standard from others

with respect to (a) the character or quality of the wares or services …

(d) the area within which the wares have been produced or the services performed, from wares or services that are not of that defined standard.

The standard setter owns the mark and licenses those meeting the standard to use it

o Famous Marks : The appellant seeks to profit financially from the goodwill associated with the respondent’s trade name. The appellant anticipates that the average consumer will associate its products with the name Pink Panther and be more apt to buy them (United Artists –Macdonald J.)

Attributes of TM

o A Mark: encompasses signs, slogans and sound elements.

o Distinctiveness

Has two themes:

1- Rule of priority of user: allows the first user to object to a later user on the basis that the later user’s mark is not distinctive if it too closely resembles the first user

oOne can be second user in general, but first user in a geographical area, in which case, he will obtain the status of first user in this area.

It is the negligence of the first user to have not expanded his market

2- Secondary Meaning and Descriptiveness: a policy imposing the domination of the common or descriptive terms of the market-place, similar to the policy against ownership of trademarks in gross

oA mark which merely describes a product cannot possibly distinguish one product from another.

oA descriptive term is ineligible for TM protection, unless it acquires secondary meaning.

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IP Gold Summary 2003 Prepared by Sarita KeirouzoA mark which indicates a geographical location or is primarily merely a surname,

or is deceptive or misdescreptive needs to acquire a secondary meaning before registrability

S. 2 (f) Distinctive in relation to TM means a Tm that actually distinguishes the wares or services in association with which it is used by its owners from the wares or services of others or is adapted so to distinguish them

2ndary meaning: local distinctiveness may suffice: a mark registered only in Ottawa can be registered for the whole of Canada.

o Depreciation under s. 22: Test: prove that the def’s activities would likely have a negative effect or depreciate

the commercial power of the pl’s. marks in the marketplace.

o Confusion under s. 20 and 6

It asks whether an average consumer, having a vague or imperfect recollection of the registerd TM would infer from all the circumstances detailed in subsection 6(5) that the allegedly confusing mark originates with the owner of the registered mark

o Use:

S. 19 provides that the registration of a TM in respect of any wares or services gives the owner “the exclusive right to the use of such TM throughout Canada in respect of such wares or services.”

Test: “Use in association with wares or services” test ( see Michelin v. CAW)

Genericism: falls into the language and is no longer a TM

Multiple Use: it is not distinctive if used in CAD by 2 or more firms (i.e. TM holder didn’t take action)

Unadvertised Change of Product Origin: can create confusion (Heizman’s pianos)

Functional and Ornamental Features: elements that are primarily or essentially ornamental or functional are unregistrable.

Colour: does not work for pills because too common to be distinguishable.

o Dilution theory: “the more widely a symbol is used, the less effective it will be for any one user.”

If diluted, could lead to confusion, which goes against the primary intention of the Tm theory: to distinguish between different sources so that consumers would not be confused between similar products.

In a market composed of anonymous sources, TM are treated not so much as identifying the particular source, but, rather as indicating a common (though anonymous) source of ownership such as a product line.

In this type of market, where the mark is used solely to distinguish origin, confusion is the only relevant factor for infringement purposes.

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IP Gold Summary 2003 Prepared by Sarita Keirouz As the function of TM changes from distinction between different origins to an

embodiment of the owner’s reputation and goodwill, the standard of infringement also will change.

Now, incorporated under the dilution theory are the following rights

(Arthur Miller and Michael Davis)

The right of the prior user to enter a related field.

The right to protect its reputation from association with inferior

goods.

The right of the public in being free from confusion and mistake.

Burden of proving the negative on the defendant

Once the possibility of confusion is demonstrated, it is irrelevant that no confusion has yet occurred.

Only necessary to prove that a recognizable number of consumers will be mislead

Since confusion is unnecessary to prosecute a dilution case, courts have identified the distinctiveness of the pl’s mark as the interest being protected.

Even absent competition and any confusion, the use by another tends to dissipate the strength of the mark ( strong marks will benefit much more from the dilution doctrine than weak marks.)

In this case, the protection from infringement does not prevent confusion so much as it prevents the marketing of similar goods.

o Licensing:

§50(1): “For the purposes of this Act, if an entity is licensed by or with the authority of the owner of the TM to use the TM in a country and the owner has, under the license, direct or indirect control of the character or quality of the wares or services, then the use, advertisement or display of the TM in that country as or in a TM, TM or otherwise by that entity has, and is deemed always to have had the same effect as such a use, advertisement or display of the TM in that country by the owner.”

A USA parent can bring an action against a licensee in CAD if he is not preserving the

goodwill of the product.

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Frank Reddaway Co. v. Georges Banham (1896) HL Facts:

“Camel Hair Belting” is what Reddaway calls his products to distinguish them from other wares

He has Good will and reputation Banaham now employs the name

Issue: Is Banham passing off his product as Reddaway’s with the purpose of benefiting from it?

yes Or is it now a generic name (i.e. descriptive) no Or does it suffer from the Linoleum syndrome? no

Held: there is ample evidence to justify that, amongst those who were purchasers of such goods,

the words “Camel Hair” were not applied to belting made of that material in general, but belting made by the particular manufacturer: Reddaway.

Ratio: Passing-off is an issue of Commercial Morality Test:

When the term is new or the term has acquired secondary meaning, only proof of misrepresentation/ confusion (passing off )is necessary

When the term is generic, proof of goodwill is necessary otherwise, you cannot prohibit them from using it in a way not intended to mislead the public.

Focus on the end user ( the consumer) to make sure that they are not mislead and recognize that the trader has an interest as well.

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Institut National des Appellations d’Origine des Vins et Eaux de vie v. Andre Wines (1987) O.R.

Facts: Shared goodwill: R does not seek to distinguish a product over another, but a particular

source, mode od production, origin, and quality over another. Institute seeks to prohibit Andre from using “Champagne”.

Fear of dilution of label “Champagne” Fear of confusion

Issue: Are the Df’s liable for the tort of passing off pursuant to the use of the name “Champagne”

on their product? No. Ratio:

Pl must establish that the def : Misrepresented their products as being sparkling wines known as “Champagne”. The misrepresentation is calculated to deceive the public into thinking the Cdn product

is champagne. The conduct has or will injure the goodwill of the pl.

o “CAD champagne” is marked in accordance with Canadian policy (Food and Drug Act 1970 sec 5(1,2))

o Consumer unlikely to be mislead: 100 years of sale of CAD champagne: it has developed its own reputation and

goodwill Cheaper: Price difference (its competing with other CAD producers, not French) Consumer more educated Consumer never complained

o Hasn’t hurt the trade of French Champagne There is no demonstration of financial loss: No damage Their sales have increased alongside those of CAD champagne

o The CAD have no intention to pass off their produce as another one. That is evidence of good faith.

o Say this suite took place in 1906 when CAD champagne was just entering on the market, would the result have been different?

Yes: CAD admitted benefiting from the reputation of Champagne No evidence of lack of confusion Similar to United Artists in Pink Panther ( but it is not the same field in this case).

No: Difference in price pt

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IP Gold Summary 2003 Prepared by Sarita Keirouz Different markings Dilution- generic product Regulation by states that you’re allowed

Elli Lilly v. Novopharm (1997) O.R. Facts:

Chemical (subject-matter) name ( Fluoxitine) Brand name ( Prozac) Mkt technique: market generic product before losing patent in order to capture the generic

market Novopharm produces generic brand….but pills are very similar to Eli Lilly’s!

Issue: Has Eli Lillly established that it had goodwill in the color of its pill? Is Novopharm using the same color violating Lilly’s passing off? (P-O because colors are

not normally registrable) Held:

o Eli Lilly has not established that the appearance of its capsule has acquired the requisite reputation in the market place as a distinguishing feature of the pl’s product.

The appearance of the def’s capsule does not operate to lead a customer to request the products of the def rather than those of the pl.

o The capsule’s similar appearances do not increase the likelihood of confusion.

Ratio: Reed J. ( good judge) 1- Establish Good Will 2- Establish P-O

Which user might be confused? The physician? The pharmacist? The consumer?

Only the consumer in this case might be confused Recognition Confusion about origine

But the pill is hidden in the case, and so his choice is not based on that No statistical evidence showing confusion Policy

Safety issue Allowed in Cad (Lilly did it before)

Colors mean fluoxitine and cannot be protected by Reddaway (Linoleum problem)

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(ReaLemon) Reckitt & Coleman Ltd. v. Borden Inc (1991) H.L. Facts:

Similar lemon juice containers competing in the mkt. Will Borden be able to break Jiff’s monopoly?

Issue:o Has the container acquired enough goodwill in order to qualify as a Distinguishing Guise

(TM)? yes

o Was the distinguishing guise interfering with the development of the industry? No

o Can a Container be a TM or would it be acquiring a perpetual patent?

Yes in fact, the court distinguished here between the object and the symbol as sg that points to the product or service, but is not the object itself.

o Was ReaLemon passing off (P-O)? Yes (3 step test)

Ratio: Was there P-O?

1. Must establish public the goodwill/reputation attached to the goods/services w/ the identified ‘get-up’.

2. Must demonstrate a misrepresentation by the defendant to the public (regardless of intention) that is likely to or leads to confusion.

3. Must demonstrate that the plaintiff has suffered damages from the misrepresentation that the source of the defendant’s goods/services is the same as the source of those offered by the plaintiff.

oGrants the injunction b/c in the minds of the public the plastic lemon bottle is synonymous w/ Jif lemon juice for the past 30yrs.

Thus if ReaLemon came into the market, there would be confusion in the market which satisfies the P-O requirements.

o This ruling gives a large scope of protection that prevents anyone from selling lemon juice in similar plastic containers. This decision appears to be treading into patent territory

o You can’t get a TM on the container bc it would unduly limit the entry of other people on the market

o But, you can get a TM in the product, and along with it the container if the container comes to signify the product (which is lemon juice) if:

People identify you (the source) with it (i.e. having acquired 2ndary meaning).

Doesn’t unduly limit other’s entry point in the market.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Seller of Lemon Juice is different: they are selling lemon, and the object is not purely a

functional aspect; it is acting as a signifier (the people will associate the bottle shape with Jiff.

o The Court is not preventing the sale of Lemon Juice; it is preventing the sale of Lemon Juice in this particular container.

o Although it has a functional use, it has taken a secondary meaning, it being linked with the shape of the object (distinguishing guise) and the company.

Linoleum Manufacturing v. Nairn (1878) HL Facts:

o Mr. Walton discovered a congealed oil and made up a word to describe it: linoleum. He had a patent, and exclusive rights to sell it.

o Walton’s patent ended and he kept selling the product.

o Other people entering the Mkt called their product Linoleum as well.

o Walton claims that he has the TM for ‘Linoleum.’

Issue: Does he have a TM in his product?

Held: No, the name of a subject matter is not a signifier It is your duty to separate in the consumer’s mind and make it distinctive

Ratio: Linoleum does not communicate a source, but is rather a description of the product. When the patent expired, the product was exploited and its name was expropriated since no

only knew of a subject-matter name different from the brand name. The competitors called it by its now generic subject-matter: Linoleum If they were attempting to use the name “in connection w/ other parts of a trade-mark, so

as to appears that the oxidized oil made by the Defendants was made by the Plaintiffs, of course the case would be entirely different.”

“I think that if ‘Linoleum’ means a substance which may be made by the Defendants, the Defendants may sell by the name which that substance bears.”

Had he had a TM, he would have had a cause of action, since you don’t’ need to show misrepresentation and you only need to use the mark actively.

That is why you say: Band Aid from Band Aid.

Pink Panther v. United Artists ( 1998) Ottawa Facts:

o United Artists applied to register the TM “Pink Panther” for proposed use in association with hair care and beauty product supplies, and in operation of a business dealing in their distribution, and instructing and educating others in their distribution.

o Pink Panther opposes the application

Pink Panther is a Famous Mark, eligible to benefit from special treatment Issue:

1- Should the holder of a famous mark benefit from a wider ambit of protection? Not if different trade.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Acknowledged that when you have a famous mark, it puts a greater burned on

the 2nd mark; but doesn’t change the analysis of distinctiveness (geography etc…)

2- Can the holder of a famous mark prevent another from using it, even if it is in association with a totally different trade?

No, the services wares and trades of the parties are completely different and the opponent has failed to evidence any reputation in them in Canada

Ratio: When deciding property issues, it is always a matter of balancing the public right to

protection with the private right to ownership (and building a brand). (Army Knife) What is important is that the TM be associated in the minds of the public with the

goods produced by the TM owner. (Exactly!!! Consumer thinks the beauty saloon is of good quality! In fact, it might not

be! Leading to the dilution and depreciation of the good will of the pl).

Points considered: Extent to which the inherent distinctiveness of the T-Mark and T-name have become

known. Length of time in use

Nature of the wares, services or business: Where one product does not suggest the other, it will be a strong indication that confusion is unlikely.

Nature of the trade: The risk of confusion is greater when the wares and services, though dissimilar, are distributed in the same types of stores or are of the same general category of goods. Eg. Two products sold in the category household products.

Extention to the trading environment as well :wholesale or retail

Similarity in appearance, sound and idea suggested

All the surrounding circumstances

Point of view taken is that of the consumer, not the manufacturer…(see Barton Beebe for disagreement).

McDonald J.(Dissent) United Artist’s decision to use Pink Panther is an attempt to free ride on their goodwill

They seek to profit financially from their goodwill Yes, but the same can be said about the Champagne case, had it been at the beginning

of the century, before Given the popularity of the respondent’s TM, and the extent to which it prevails in the

CAD market (over 30 years) and its widespread diversification (from comic books to advertisements) I am of the view that allowing the appellant to use the name Pink panther will almost certainly be confusing for the average consumer.

The ave consumer is likely to believe that there is an association with the beauty products sold by the appellant and the respondent’s mark to the extent that the products are being sold by, approved by or endorsed by the respondent.

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Barton Beebe: search and persuasion in TM law:

o Perhaps Pink Pather would have entered other fields!: N

o Today, companies build value in the TM and enter into other fields.

o Marks are the number 1 asset of the co. which allows them go in other fields and exploit the distinctiveness they have produced or build up.

We use it not only on the original line of products. Eg. Nike now has a line of cloting etc…

o They should therefore be encouraged to enter into new fields in order to increase production and manufacture.

o The scope of protection the law will afford a TM is inversely proportional to the law’s estimation of the relative search sophistication of the consumers of the goods to which that TM is affixed.

o Search sophistication refers to the consumer’s capacity during search to distinguish between similar but not identical TM uses. In determining the likelihood of consumer confusion and thus of TM infringement in any given case, TM law typically compares search sophistication of the relevant consumer.

o In the case of professional buyers, the courts typically limit the scope of protection they afford to plaintiffs, sometimes so severely as to allow even near identical competing marks.

o Two factors affect the extent of a TM’s scope of protection: first, the distinctiveness or strength of the TM and second, the sophistication of the relevant consumer population.

o Persuasion sophistication refers to a consumer’s capacity during search to resist “selling power”.

o All else remaining equal, consumers with a relatively low degree of persuasion sophistication will be persuaded by a relatively low degree of distinctiveness.

95


Kirkbi v. Ritvki (2003) F.C.A., Canada Facts:

Kirkbi (lego) followed same reasoning as linoleum in treating the shape as being distinctively about lego in the mind of the consumers.

When it lost its patent, Ritvki made mini-blocks with similar interlocking functions. However one way to distinguish this case from Eli Lilly and Linoleum is that in this case,

there can be different ways of fitting the blocks together, making it a stronger case than linoleum and Eli lilly.

Lego’s TM was declared valid because of the doctrine of functionality 7 (b) TMAct, so it is suing in P-O

Issue: Is a distinguishing guise (Lego) which is primarily functional capable of being a TM?

No, you cannot evergreen a patent by means of a TM You cannot achieve the statute of a patent by means of a TM.

Can a mark, which is primarily functional in nature sustain an action in P-O?

Ratio: Sexton J. S. 13 (2) makes clear that the public is not constrained from using any utilitarian features

of a distinguishing guise. It follows that if a distinguishing guise is wholly or primarily functional, then the public is

not constrained from using the distinguishing guise in its entirety. There is therefore no need to discuss passing off Pelletier J.A. (dissent) The question raised by this appeal is whether concerns about extending monopoly rights

through trade-mark law justify the denial of a remedy where a vendor uses another’s distinguishing guise, which has a functional elements, to pass off his goods as those of the other user.

The plaintiff’s right to ensure that the Lego indicia were not used in such a way that the public were deceived as to the origin of the good does not amount to evergreening.

Whereas the owner of a R has the right to exclude all use of his trademark, the holder of an unregistered trademark does not have an enforceable right to prevent non-confusion use of its trade-mark by others.

He should however enjoy protection from confusing use of its Trade-mark or marks. This conclusion is not inconsistent with other rights which owners of unregistered trade-

marks might have. (S.18)One of the conditions of invalidity of registration of a TM is that the

registrant was not the person who is entitled to registration of the TM. S. 16 if confusing with a TM that had been previously used in Canada or made

known in Canada by any other person (i.e. origin). As to functionality, neither the statutory or the common law definition of a TM preclude a

TM which is primarily functional; the doctrine has arisen in jurisprudence, in context of registered TM and proceed from a concern that TM law not be used to acquire a monopoly of rights wrt functional elements.

Since one only acquires monopoly by registration, there is no need to apply the policy against monopolies to unregistered TM.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Furthermore, the definition of TM in 2 (t) excludes distinctive. This is an indication that a

TM is intended to be free of formal requirements so that whether something is a TM depends only on whether it is used with the intention of distinguishing the goods of one TM from others, or whether it has the effect of doing so.

The definition of distinguishing guise makes no reference to functionality Like distinctiveness, functionality has been made an issue at registration, yet not a bar to it

(see p. 184). If the rationale is based on confusion, then the dissent works; if the rationale is based on

deterring evergreening, then the majority wins, regardless of the confusion argument. Cites jurisprudence:

As a result, he does not find that the doctrine of functionality deprives them from the status

of TM. the appelant’s lego indicia is capable of supporting an action under subsection 7 (b).

Then establishes that there is existence of goodwill, deception to the public due to a misrepresentation , and actual or potential damage to the plaintiff

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Michelin v. CAW (1996) F. C. J., Canada Facts:

During its campaign, the CAW distributed leaflets, distributed posters and issued information sheets that reproduced the term “Michelin” and that featured the Michelin Tire Man or Bibendum design.

Action in CR and TM infringement

Issue: Was there a breach of TM? No

Because CAW have not used Michelin’s registered TM in the sale, distribution or advertisement of wares or services in association with a confusing TM

or in a manner that is likely to have the effect of depreciating the value of the goodwill attached to the TM.

Was there a breach of CR? Yes

Ratio: Use:

Case turns on whether the def used the pl’s TM in association with the def’s wares or services.

No, the actions of the CAW do not fall under the ambit of sec. 22 of the TM act The Clairol interpretation of Sec. 19, 20 and 22 is still the law. In Clairol, the def depicted Clairol’s hair dye TM on the packages of their own hair

solutions in a chart comparing hair colors. Clairol sued for TM infringement under sec 19 and 20.

Sec 19 provides that the registration of a TM in respect of any wares or services gives the owner “the exclusive right to the use of such TM throughout Canada in respect of such wares or services.”

In Clairol, use in sec 19 has been limited to cases in which the infringer uses a mark identical to the registered TM in association with the same wares or services as the registered TM.

Under s.4, in association with is proven when: For wares: infringer transfers or possesses the property with the owner’s

marks. For services, infringer uses or displays/ in the performance or advertising of

the services.

o TEST: use in association test (1) did the defendants associate their services with the plaintiff’s TM? (i.e did they use

them in the course of trading, in association with wares or services?

(2) did the defendant use the mark as a TM for the purpose of distinguishing or identifying the defendants’ services in connection with the plaintiff’s wares or services?

o Application to facts:

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IP Gold Summary 2003 Prepared by Sarita Keirouzo CAW cannot be labeled as a commercial enterprise; and its campaign literature,

depicting the plaintiff’s TM cannot be classified as advertisement of services. Even if they gain over 1million dollars a year in union dues if they

successfully organize the 3000 workers. Dues are not profit. A person reading the information sheet would not make an association

between use of the TM and the plaintiff. Def was not using the Bibendum to identify with Michelin’s wares and

services . in fact, used to stand in contrast with the corporate image.

Confusion: Secondary question under s. 20 is whether the mark used was “confusing”o Section 6 outlines the criteria for determining when marks are confusing TMs:o It asks whether an average consumer, having a vague or imperfect recollection of

the registerd TM would infer from all the circumstances detailed in subsection 6(5) that the allegedly confusing mark originates with the owner of the registered mark

o In this case, given the nature of the wares and services of the pl, there is little confusion over the source of the CAW leaflets.

Depreciation: secondary question under s. 22: whether the use was likely to depreciate the goodwill of the TM

o Failure to prove that the good will has been depreciated by the def’s activities.o Clairol: goodwill in relation to TM means that portion of the goodwill of the business of

its owner which consists of the whole advantage, whatever may be, of the reputation and connection, which may have been built up by years of honest work or gained by lavish expenditure of money and which is identified with the goods distributed by the owner in association with the trademark.

o Test: prove that the def’s activities would likely have a negative effect or depreciate the commercial power of the pl’s. marks in the marketplace.

Also, the leaflets were distributed to ees only, not to the wider community (competition for the ees, not the customers) so the customers are not affected by that.

The leaflets may diminish the reputation of Michelin as an employer, but will not deleteriously affect his reputation as a manufacturer.

Thus, judge concludes that def has not infringed the pl’s TM, because they have not used the pl’s registered TM in the sale, distribution or advertisement of wares or services in association with a confusing TM or in a manner that is likely to have the effect of depreciating the value of the goodwill attached to the TM.

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BC Automobile Association v. Office and Professional Employees’ International Union Local 378 (2001). B.C.J.

Facts: Union Local represents some ees of the BCAA.Lawful strike action Issue:

Did the union, by creating, publishing and using its first an second websites infringed the pl’s CR? ( through unlawful reproduction of the pl’s design elements)

Did the union, by creating, publishing and using its first an second websites comitt the tort of passing-off ? (through the unlawful reproduction of the plaintiff’s registered trademarks, certification marks, and through the make-up of its website)

Has the union used the pl’s TM in a manner likely to depreciate the goodwill attached thereto, contrary to s.22 of the TM act?

Ratio: A- Passing-off: The tort of passing off can occur in 2 ways:

1- Where competitors are engaged in a common field of activity and the pl has alleged that the def has named, packaged or described its product or business in a manner likely to lead the public to believe the defendant’s product or business is that of the plaintiff.

2- Where the def has promoted his product or business in such a way as to create the false impression that his product or business is in some way approved, authorized or endorsed by the plaintiff or that there is some business connection between the defendant and the plaintiff.

By these means, the def can hope to cash in on the goodwill of the plaintiff. Passing-off concerns misrepresentations by one party which damage the reputation or

goodwill of another party: It is necessary to establish 3 components to succeed in passing-off:

1- the existence of goodwill or reputation at the relevant time Is the pl recognized by the Tname? Whether the TN is distinctive within the relevant field or activity

2- A misrepresentation leading the relevant public to believe there is a business association or connection between the parties

Is the use of the TM by the def likely to deceive the relevant public? Evidence of likelihood of confusion, leading to the possibility of lost business

opportunity, is relevant; However, the establishment of actual confusion is not required.

Proof of intent is not necessary However proof of intent constitutes strong evidence of confusion

(Brookfield) 3- Damage or potential damage flowing to the pl as a result of any

misrepresentation due to loss of control over its reputation is presumed No passing off in this case because no misrepresentation that the union site is a site of the

plaintiff, or a site endorsed by, affiliated to or connected to the plaintiff. There is therefore no confusion or possibility of confusion in the minds of an internet user that the site is associated with the BCAA.

There is also a question of freedom of expression and a balance must be found.

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IP Gold Summary 2003 Prepared by Sarita Keirouz However, there was proof of passing-off in the first website bc there was an intention to

confuse. (a consumer might think that they reached the BCAA site: striking visual similarities, colours etc…)

B- Has the union contravened to s. 22 of the act and depreciated the value of the goodwill of the pl by using its TM without its permission?

Sec22 provides: (1) no person shall use a TM registered by another person in a manner that is likely

to have the effect of depreciating the value of the goodwill attaching hereto (2) in any action in respect of a use of a TM contrary to subsection (1), the court

may decline to order the recovery of damages or profits and may permit the defendant to continue to sell wares marked with the TM that were in his possession or under his control at the time notice was given to him that the owner of the registered TM complained of the use of the TM.

Test: In order to succeed, the pl must establish: 1- It has a valid TM 2- Pl must demonstrate that the def has used the registered TM as “use” is defined

in the TM act ( in association with wares or services). Vever: Explains that in Clairol, only uses in the technical trade-mark sense can

dilute a mark. This restriction at least allows consumers magazines to criticize

products and unions to caricature the mark of firms they are striking, without

fear of TM consequences. 3- That such use is likely to have the effect of depreciating the goodwill attached to

the registered TM. Depreciating:

= rendering the mark less extensive and thus less advantageous = diluting the TM’s effectiveness as a TM

Test: is the def attempting to convince the public that any positive feeling they may have towards the BCAA should apply to it?

Negative advertisement allowed. Not allowed to reduce the chance of other people to hear from the

competitor. not allowed to use his competitor’s TM for the purpose of appealing to

his competitor’s customers in his effort to weaken their habit of buying what they have bought before or whatever binds them to this consumer so as to secure the custom for himself, for this is not only calculated to depreciate and destroy his competitor’s goodwill but is using his competitor’s TM to accomplish this purpose.

No, the union is entitled to speak freely. The use did not depreciate the goodwill of BCAA according to s. 22.

Question: Depreciation = dilution= use of the goodwill of competition to attract the public to one’s wares. How about use so as to reduce the value of the competitor? What if the leaflets were meant to deprecitate the value of Michelin as a manufacturer, not as employer, would that count as depreciation? If yes, how do you justify negative advertisement?

C- Breach of CR

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IP Gold Summary 2003 Prepared by Sarita Keirouz Yes and Damages to breach of CR are at S. 34

Alternatives to IP regime

Formal Regulation

IP in the real world is seeking intellectual protection without control of use. Regimes beyond IP which achieve some of the same purposes but from different points of view:

1) Competition law2) Grey marketing in TM law3) Domain registration: not an IP regime bc no protection of TM, but it protects rights in the domain

name, so registration of URLs. Control over use:

oPatent Act: most of the regimes we look at do not look at how we use IP. Except maybe patents. I can’t abuse it, or not use it because (1) the PO can make compulsory licensing sec, 19: allows the commissioner of P to give to someone who needs a license when the owner refuses to give it and it could be detrimental to CAD not to give it.

Eg. Anthrax scare: during this public emergency, the government Ked with a generic pharmaceutical to supply an antidote.

You can’t get an injunction against the government: most of what you will get is to force the government to pay a license fee.

Compulsory licensing scheme for the government.

oThere is no compulsory use of CR or TM (Gold: maybe)

Other mechanisms to control use:oOECD: controls CAD content oCAD ownership rules: eg. Book industry distribution: Indigo is allowed, but not other co. bc it is

CAD based and would have a lot of ees hired from CAD.oCompetition rules are most similar to IPoFormal rules: What industry has come up with in terms of its approach:

patent pooling SOCAN

Link between patent and competition law M. Trebilcock, et al., Competition Policy & Intellectual Property Rights” in The Law &

Economics of Canadian Competition Policy

3 Principles Guiding Competition Policy w/ Respect to IPo These guidelines acknowledge

- the rights provided by patents, - the benefits to be gained from diffusion, - the potential effects of particular licensing restrictions, and - the possible adverse effects on prices

o They are SILENT on whether competition law should evaluate the impact that L restrictions may have on INCENTIVES to INNOVATION

1. There should be no presumption that an IPR creates market power.

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IP Gold Summary 2003 Prepared by Sarita Keirouz- There are a lot of substitutes on the market for products & processes (including those w/ patent

protection)- Just b/c a patent may confer some market power – this does not mean that it infringes

competition law.2. Competition policy should acknowledge the basic rights granted under patent law.

- For patented innovations, patent law ensures the EXISTENCE of those rights; competition policy restricts the EXERCISE of those rights.

- It is important for competition law to recognize the value of the protection granted to IP holders & to allow the legitimate exercise of IPRs.

- Competition policy may intervene if an IP holders’ conduct goes b/y that which is inherent in the patent.

3. A licensing restriction should be permitted if it is not anticompetitive relative to the outcome that would result if that licence were proscribed; otherwise an evaluation of potential efficiency effects of the restriction on the pricing & diffusion of the IPR should be made.- Acknowledges the role that competition policy had to play in the promotion of the efficient

diffusion of technology & in pricing of goods that use the technology.- Evaluates the impact of an L (licensing) restriction relative to a benchmark situation in which

the restriction is prohibited. Ex. L-ee & L-or horizontal competitors pre-L, an innovator may choose not to license its competitor where restrictions in the K are prohibited. Here the benchmark against which to compare the L is the situation under no L.

- Where the transfer of technology generates social benefits relative to exclusive exploitation of the patent, this principle permits such restrictions, even when they have anti-competitive effects.

- Licensing may not be socially desirable: concern for ‘sham agreements’ where technology of little value is transferred just to divide the market among competitors, exclusive dealings, cartel patent pooling arrangements. If the L restrictions are not necessary to encourage diffusion, then, as in non-IP cases, the anti-competitive effects would be weighed against possible efficiency benefits to determine the social merits of the restriction.

Distinction b/t IP & tangible property1. IP can be used by many at the same time. The social cost of transferring innovations is 0 – it is

socially efficient for innovation to be freely available. BUT a pantentee (P’ee) may be reluctant to license the competition unless restrictions can be imposed to the use of the innovation. It is a contentious issue whether a P’ee can impose restrictions on the use of the innovation & whether this distinction calls for a different application of competition law to IP

2. W/ reference to principle #3: In many licensing Ks, the rel’ship of the parties is both horizontal & vertical. L’or & L’ee are horizontally related if they would be competitors in the same market w/o the L. They are vertically related if the IP represents an input used in the production of the licensed product.

The Canadian Competition Acto In the Competition Act, we acknowledge that IP played a special role. In early provisions: the mere

practice of IP law did not count as competition law. Competition law helps regulate IP law to some extent.

o General purpose of the act is to prevent abuse of power. This can occur through various ways. There are natural monopolies that exist, or people may have historically had monopolies: it is the exercise and enforcement of these monopolies that the competition law controls. They regulate competitive activity and are meant to control abuse of the market.

o Recent economic views now see IPR as competitive-view is that yes, we are creating monopolies, but they would not have been produced if there was no market for them. The new thinking is that property

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IP Gold Summary 2003 Prepared by Sarita Keirouzand competition law are in conjunction in IPR systems, rather than before when IPRs were considered anti-competitive.

Do IPRs increase innovation? o We add something to the market that may not have been there before. If we assume economic

incentives work, then use of intellectual property right creates market power. The use of intellectual property rights to control the market beyond what was narrowly intended by the statute: if you use that exclusivity to go beyond the powers of the statute: that is when competition law comes into play.

o Nimmer: we should allow freedom of contract to extend IP rights. This policy would not work either. Often contracts may go much further than the statute will allow. Using contract law to extend your IP rights: competition law is meant to regulate this extension of power: making sure you do not go beyond.

o Take the general principle that we can extend these laws: Roles of Competition Law1. See competition law as a correction of IP rights.

- Competition law allows one to look at the actual market that IPRs are working in.- Competition law allows us to correct the possible excesses of IP law.

2. Look at the use of IP to prevent people from innovating-known as the innovation market. 3. Competition law is not meant to deal with innovation.

- What we care about is the sale of the final product. There are some similarities: they are not water-tight compartments.

- Ex: Microsoft and the anti-trust case (below).

Tied Sale & the Extension of IPRso Tie: the supply of a product (tying product) either on the condition that the buyer also takes a 2nd

product (tied product) or on the terms that induce the buyer to take a 2nd product in addition to the 1st.o Test: are you using your Mking regime to force them into a purchase? o 2 types of tying restrictions: (a) bundling (grouping patents in a licensing K), and (b) requirements

tying (buyers right to buy one is tied to obli to buy all reqs of a 2nd product exclusively from the same sellor)

o Alternate forms of tying: L’ing a bundle of products or setting royalties on the total sales of Ls, as opposed to the use of the licensed input.

o Example: (Monsanto: although not charged with tied selling: linked the sale of seeds with a previously patented product (herbicide)

o Tying arrangements are not always anticompetitive (i.e. aimed at foreclosing the market): Tying can be welfare enhancing; it can achieve economies of scope & protection of good will. “If the tying product has uncertain value to customers, as in the case of innovation, then charging less for the innovation & tying it to a good whose demand is correlated w/ the revealed value of the innovation can insure consumers against the possibility of an imprudent purchase.” It is hard to tell when tying in anticompetitive & when it serves to enhance welfare.

o S.77: prohibits exclusive dealing ( Microsoft) Microsoft & Anti Trust (mid-late 1990s)o Microsoft had a natural monopoly because they were the main producers of the operating system for

computers.o Tippy market: some product markets are like seesaws: take the first fax machine: one is worth nothing,

value goes up with the number, some markets: the more people in it, the more incentive you have to buy them. Once you hit a certain point in the market, everyone swings to your side b/c they have no reason not to buy your product. It makes it very hard for others to enter into the market.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Microsoft had captured a part of the market and used their power to insist that people buy all their

programs (i.e. every computer had Microsoft programs). They made it very cheap to use Microsoft for all your computers, (as a computer salesperson) it made it cheaper for the sales people to load all their computers with Microsoft. Why buy other operating systems if you can get Microsoft cheaper than any of the others?

o MS started to insist that Explorer popped up automatically w/ Windows, and made it free. That way people did not have to go out and buy the competitor’s product. They were essentially knocking out competitors like Netscape and others. Microsoft got a license for Java and then rewrote it so it would only work with Microsoft; destroying the purpose of Java.

o Bright line between innovation and sale to the retail market. Problem is that there is a gap where things fall in between the cracks – One section of the Competition Act that deals with abuse of IPR and a section of the act dealing with general abuse of power.

Judge Jackson’s test for tying liability1. 2 separate ‘products’ are involved2. The Def affords its consumers no choice but to take the tied product in order to obtain the

tying product.3. The arrangement affects a substantial volume of interstate commerce.4. The Def has ‘market power’ in the tying product market.o Under the test the judge finds MS liable (under #1 consumers distinguished b/t the operating system &

the net browser as separate). (#2) The consumers had no choice but to take Explorer b/c cannot delete or hide it on the system – could not get the operating system w/o Explorer. (#3) MS is nationwide (worldwide). (#4) Windows dominates the market.

o Judge orders breakup of MS but MS appealed & won reversing the finding that MS had attempted to monopolize the browser market b/c the crt failed to define the browser market. The litigation continues (up till Spring 2002).

IPR & Economic Growth o By the 1980s, IPR came to be viewed as “serving useful, pro-competitive functions in a market

economy, rather than as statutory monopolies conferred by the intellectual property system”o Interface b/t competition policy & IPRs became a focus. IP became a bargaining chip w/ regards to

relationships b/t the developed & developing worlds. o US (& dev’ed world), having the competitive advantage; it wanted to set int’al rules that would

protect their IPR abroad (as much as their laws did at home). o Developing countries where innovation is not a huge part of their economic growth (good copiers)

concerned that an agreement like TRIPS would erode their economic welfare. The WTO/TRIPS agreement & others “reflect the important role IPRs paly in economic growth & the difficulty in balancing the protection of IPRs w/ other social interests (such as assuring healthy competition).”

Section 32 of the Competition Ac t o There are explicit references in the Act that ensure that conduct that goes b/y the exercise of inherent

IPRs falls w/in the Act. There are specific provisions designed to deal with abuse of IPR. There are also other sections that references can be drawn to IPR abuses (ss. 45, 75, 77 as examples)

o Section 32 allows the A-G (attorney-general) to apply to the Fed Crt of Cda (FC) for various remedial orders to address the abuse of IPRs.

o The remedial powers of the FC are broad: revocation of the patent, declaration of the K’ual arrangement as void, imposition of compulsory L’ing

o Provides that where the exclusive rights & privileges conferred by patents, TM, CR have been used to(a) Limit unduly the facilities for transporting, producing, manufacturing, supplying, storing,

or dealing in any article or commodity that may be subject to trade & commerce105

IP Gold Summary 2003 Prepared by Sarita Keirouz(b) Restrain or injure unduly trade or commerce in relation to any such article or commodity(c) Prevent, limit, or lessen unduly the manufacture or production of any such article or

commodity or unre’bly enhance the price thereof(d) Prevent or lessen unduly competition in production, manu, purchase, barter, sale, transport,

or supply of any such article of commodity then the FC may:i. Declare void, in whole or part, any agreement, L, arrangement relating to the

use of the IPR in Qii. Restrain any person from carrying/exercising any or all of the

terms/provisions of the agreement, L, or arrangementiii. Direct the grant of licenses under the IPR to persons on terms & conditions

determined by the Crt or if the grant/other remedies is insufficient to prevent such anticompetitive use, revoke the patent

iv. Direct that registration of TM in the register of TMs be expunged or amendedv. Direct that such other acts be done or omitted as the crt deems necessary to

prevent anticompetitive useo Section 32 also has the reprisal that no remedial order shall be made that would be a variance w/ any

treaty or arrangement respecting IPRs to which Cda is a party to.o Want to leave room for IPR to work, to abuse IPR you have to go beyond the bounds of what was

awarded to you. Say you have an IPR and you implement it, you need to existence of IPR in your hands to be tainted.

M. Trebilcock’s Conclusion o Competition policy should be based on the efficiency merits of the practice as opposed to whether

licensing generates too much or too little reward for the innovator’s research efforts. The basic exclusive rights provided by the patent grant should be respected at all points of the analysis.

o IP differs from other property in its public goods nature – which leads to a different application of competition law in certain instances. Also consider the horizontal-vertical nature of the rel’ships b/t competitors w/ regard to licensing

o In many cases the application of the law may be the same as in non-patent cases but certain criteria characteristic of innovations (ex. uncertainty & specific investments) may justify the use of restrictive practices. IP cases may get more leniency than non-IP cases when applying the same laws

o Competition law should not attempt to take on the mandate of patent policy in encouraging innovation. Nor should patent law attempt to rule on anticompetitive practices.

o Competition policy should work w/ patent policy to provide adequate incentives for innovators to share their discoveries w/ others when this is efficient. Patent & competition laws should be complimentary to strike a balance b/t dynamic & allocative efficencies.

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IP Gold Summary 2003 Prepared by Sarita Keirouz Volkswagen Canada v. Access International Automotive, [2001] F.C. Facts:

o The 2 companies sell auto parts & accessories. o VW Canada is the authorized dealer of VW & Audi products. o AIA has been selling for the past 20 years products w/ the VW & Audi logos which they acquire from

manufacturers [albeit other than VW Canada] who are authorized by VW to produce and sell them on the open market.

o Thus they get their product outside the authorized Cdn distribution channels o AIA states that it has authorization from VW AG & that VW Cda has had knowledge of its

dealings since 1986. o In 1991, VW demanded that AIA stop selling VW products – AIA refused. o In 1996, VW AG assigned its CR for for the VW & Audi logos & registered itself to VW CAD

and VWCAD became the CR owner for both. o VWCAD then sent notice to AIA to stop dealing in parts & accessories bearing either logo, except for

parts that were purchased from VW Cda (directly or indirectly). o AIA did not stop and VW CAD sued, claiming that AIA’s activities are an infringement of its CR. o VW asksfor a number of remedies (incl. permanent injunction, delivery up of all infringing materials,

damages & accounting)o AIA counterclaims that VW is abusing the CR (s. 32 of the Competition Act) bc they got their

CR for the only purpose of putting them out of the market, and thus are abusing the CR by “unduly preventing and lessening competition in the trade of genuine VW & Audi parts.

Issue: Was VW Cda abusing it CR? Yes

Held: Competition law s. 32 allows the federal court to restrain VW CAD from carrying out

or exercising any or all of the terms of the agreement, arrangement, or licence. Situation would have been different had the CR resided with VWCAD a long time ago:

what is colourable in this case is that the transfer of the CR was done to lessen competition.

Ratio: Sharlow J.A.

o Application of s 32 of the Competition Act: This provision cannot be used as the basis of a defence/counterclaim in CR infringement action (the act serves to permit the FC to grant remedies for certain uses of CR but only if the result of the CR use is to unduly or prevent competition).

o AIA relies on Eli Lilly & Co. v. Marzone Chemicals (1976), (patent infringement case) to justify the application of s. 32.

o The court does not accept AIA’s argument by distinguishing from Eli Lilly b/c the statutory preconditions preclude AIA from claiming a remedy for breach under s. 32. Thus, to permit AIA’s counterclaim to stand would mean that AIA would be benefiting from a statutory remedy (s. 32(2)(b)) w/o adhering to the statutory preconditions.

o BUT: AIA has an equitable defence: in Eli Lilly, Addy J. indicated that the allegations in the statement of defence should not be struck b/c s. 31.1 of the Combines Investigation Act [now replaced by the Competition Act – s. 32] potentially afforded a defence to the infringement claim.

o Addy J. went on to say that plaintiffs who are seeking equitable relief must come into Crt w/ clean hands (i.e. must show that their past record in the transaction is clean).. If they are in breach of the statute – “this would constitute a more valid reason for refusing injunctive relief although the allegations might well not constitute a defence to a claim at law.”

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Thus VW Cda’s [CR holder’s] unclean conduct may form a basis of a defence under equitable

relief for infringement of CR.

o Clean hands doctrine: An unclean hands defence can only be made out if & only if there is a sufficient connection b/t the subject-matter of the claim & the equitable relief sought. That is, there must be a relationship/connection between the wrongful conduct of the IPR holder & the IPR.

o The assignment of the logos to VW Cda is conduct prescribed in 32(1) of the Competition Act b/c the result of VW Cda obtaining the CR was to unduly limit or prevent competition in authentic VW & Audi parts & accessories. There is a sufficient rel’ship b/t the CR & the unclean hands defence that the equitable remedy may not be granted.

o Allows the appeal except w/ regard to AIA’s counterclaim.

A discussion on Nutrisweeto NS had patent over aspartame; the patent expired in Canada but existed in US. They wanted to

continue their market, so they created the TM; so anyone who bought their product, they licensed them the NS symbol (the swirl). If vendors bought other sweetners, they would lose their license to NS.

o NS entered into these agreements with soft drink companies, insisting that they buy all their fake sugar products from NS. NS had 95% of the market: through years of exclusivity, they were able to force others from producing fake sugar: able to force the entire industry to use their aspartame.

o NS was deemed to have market power: Coke decided not to accept the license on those terms. They used aspartame and sucrose. Pepsi used just aspartame: and Coke eventually moved right to aspartame only. NS, w/ this market power, figured they could force Pepsi and Coke to buy NS products alone.

o NS used TM to get market power, then they abused that right and were forced to stop.

Closing Class CommentsIs this the appropriate line to draw between IPR and Competition law?

Is setting up the game by allocation of rights sufficient to show these different roles? o It would seem that we would require the patent commissioner to be more aggressive in implementing

section 65. o If there was too much overlap, you would start to wonder why we bother with both systems. If the

patent commissioner was to take more of a role in controlling competitive behaviour through use of section 65, then we would wonder why we have competition law.

What about the innovation argument? If someone has an IPR and does not let people use it: what about that situation? o Stem cells : you cannot use them in US unless they are federally funded. If you have a stem cell line

and you do not license it: you are not effecting the licensing market, you are effecting the innovation market. Then you have to turn to the IP system: on what basis can we force you to license it out?

o Could bring in a European compulsory licensing system, but that would result in the patent system acquiring a role that is controlled by competition law: that is taking over what is done by competition law.

o Clearly a black hole here: when it comes to overlap and possible holes of regulation and control. Patent pool gets around these problems: you get a group of people together with different patents and

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IP Gold Summary 2003 Prepared by Sarita Keirouzshare them. Have to be careful not to lapse into a cartel. Competition law will often regard these as competitive as long as they follow certain rules.

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IP Gold Summary 2003 Prepared by Sarita KeirouzManipulation of IP rules:

Grey marketing: buying legitimate products: but from a person who does not have a license to market in this country. Indeed, there are licensees in different countries and they divide the world

Heinz v. EdanFacts:- Heinz Canada produces ketchup using a different recipe than Heinz USA. They have tailored their recipe to Canadian taste through huge expenditure. Even the packaging is designed differently, with the CAD consumer in mind.- Edan foods bought shipments from the US and distributed them in CAD at cost saving, in the same stores where Heinz CAD distributes.-Heinz CAD is suing for TM infringement and asking for an interlocutory injunction: it claims that Heinz US is not licensed by Heinz CAD to use Heinz Trademark in CAD.- Heinz CAD buys 40% of Canadian tomatoes.

Issue: Can the exclusive CAD license block the sale of that product in this country? Yes

Held: The TM was under the control of Heinz CAD already ( distinction with VW CAD)

Ratio: TM infringement granted because Edan was using Heinz’s goodwill to sell its products in CAD.

Breck’s sporting goods v. Madger (1976)Facts:- Brecks is the registered TM owner of fishing lures. He has exclusive distribution rights to the lures in CAD to from France and sells them under the name of “Mepps”.-Respondent sold Meppes lures in Canada in competition with the appellant, obtaining lures elsewhere than from appellant or from the French manufacturer.- Breck brought an infringement action.- CAD transferred goodwill and TM of business to US in 1955.- The US transferred back the goodwill to CAD in 1959.-distinction from Heinz: Heinz was producing it here, with a different taste.

Held: the TM lacked distinctiveness within the terms of s. 2 (f) and s. 18 (1) (b). His wares could not be distinguished from competitor’s wares and the French manufacturer’s wares at the relevant date.

Ratio: - it is not enough for the pl to rely on its registration mark and on the fact that it has promoted, but assiduous cultivation of the market in CAD, the widespread sale of the Mepps lures if it be the case tha at the material date those wares, so marketed by the French supplier, have not become identified with the appellant as its wares either as their manufacturer or seller.- the fact that Meppe’s price was higher was dismissed by the judge.- test: what message is being conveyed to the public?

- According to Gold: the goodwill/ distinctiveness belongs in France, so the people are not infringing on it. Would the same have been ruled in the VW case had they brought an action in TM?

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IP Gold Summary 2003 Prepared by Sarita KeirouzQuestions:1- I thought that all you needed was to register you mark, that you didn’t need to prove distinctiveness if it was not a passing off action3- Does that mean that car sold by the CAD dealer should be different from the those of the manufacturer who may sell somewhere else in order for it to have a distinctive TM?3- when you assign your TM, CR etc…do you loose it? Does France have a TM in Meppes anymore? Hw about VW AG? 4- Can you transfer your Goodwill or is it geographically made?5- Didn’t we say in some other case that there is no need to know where the product comes from as long as we know what quality it is of? How do we justify this ruling then?6- Is use essential even if it is an action in TM not in passing off?

ICANN: K-ual Framework to fight competition law:Uniform Domain Name Dispute Resolution Policy

o Private K using similar terminology and invoking similar notions as the TM aCto DN names facilitate this: there can only be one person who controls/ administers the DN: a

central registery allows the people who control the registery to impose K-ual obligations: they imposet he same onesws on everyone else, including infor about paying.

o If you DN conflicts with a TM, then the TM owner can complain to an arbitraror at ICAN: and they will issue a decision.

o This K-ual regime is a fabricated regime.o The parties were able to take it out of the hands of the state and lobbying groupeso They have instituted provisions to prevent cybersquatters.o A form of Private control: if you control an access point that everybody has to pass, you can

control Domain Names.ACPA & IP: The Regulation of Domain Nameso Domain names are unique & are to be used by one party to the mutual exclusion of another party.o Corinthians.com cannot be used in the US to post Biblical messages & used in Brazil for the

promotion of a soccer team.o ICANN: not-for-profit corporation that administers the domain name systemo Cybersquatting : individuals register Internet domain names in violation of the rights of TM owners.o Reverse domain name hijacking : TM owners abusively assert their TM rights to strip domain names

from rightful owners. Some TM owners find accusations of cybersquatting a convenient way to bypass legit disputes over TM rights.

Uniform Domain Name Dispute Resolution Policy (UDRP)o Governs allegations by 3rd party TM holders asserting that a registrant has engaged in ‘cybersquatting’o Registrant is req’ed to submit mandatory administration proceeding in the event that a 3rd party …

asserts, to an ICANN-approved administrative dispute resolution service provider1. The registrant’s domain name is ‘identical or confusingly similar to a TM or service ,ark in which

the complainant has rights’2. The registrant has no rights or legit interests in the domain name3. The registrant’s domain name has been registered & is used in bad faith

Complainant wins under the UDRP if all 3 aspects listed above are established.

56-Brown Vs. Blue birdFact:

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IP Gold Summary 2003 Prepared by Sarita Keirouz- Browne & Co has created a reputation attatched to the TM which causes them the Trade Name to identify his business-A competitor registered the DN: Browneco.ca such that it is confusingly similar to the Mark and Trade name: Browne & Co., such tha the DN is likely to be mistaken for the mark.- The B&C brought a suit before the panel and asked for DN back.

Held: The competitor has registered the DN in bad faith, for the purpose of disrupting the business of the complainant.Ratio: A. Requirements for the complainant to succeed under the policy:The complainant must prove, on a balance of probabilities that:1- The DN is confusingly similar to the TM.2- DN has to be registered in Bad Faith.3- The person who registers has no legitimate interest in the DN.B&C. His TM is Brown & Co does he have a rights in the TN?1- passing off does not protect the name itlsef, passing off protects the business reputation, among customers and others dealing with the business, which has become attached to the name thorugh actual use of that name in business activity.2- Use is therefore essential to a passing off actionIt has been concluded that he has used his TM and therefore has a right to it.D. Confusingly similar1- Policy requirement: policy para 3.1 (a) and 4.1 (a): the DN is confusingly similar to a Mark if the DN so nearly resembles the mark in appearance, sound or the ideas suggested by the mark as to be likely to be mistaken for the mark.2- Interpretation of Confusingly similar:a) Similar: to the mark or name or products or businessb) Confusingly: i) recognition the wrong of passing off one’s product or business for someone else’s. ii) the statut frame it as the likelihood of causing confusion in the mind of the target consumer.

3) In passing off law, the inherent lack of distinctiveness of a mark tends to be the thereshold question of whether the complainant can establish any rights in the mark.Distinctive in passing off or TM law is the capacity of a mark or name used in the marketplace to point to one, particular product source or business, and so the capacity to distinguish those products or the business from the products of other businesses or from other businesses. i) Browne would not automatically lead to distinctiveness in the minds of Canadians, who are more likely to associate it with the name of an individual,If a mark is inherently not distinctive, complainant may adduce evidence of distinctiveness acquired throughout use: evidence of secondary meaning of the mark (the inherently not distinctive term)

4) Secondary meaning in this case overcame inherent non-distinctiveness: the relevant group of internet users are likely to associate the Registrant’s domain name with the complainant’s business.

E. The competitor is in bad faith,G. Does he has an interest?1- was not used for the purpose of non-commercial criticism, so he had no legitimate interest in it.

112


Sallen v. Corinthians Licenciamentos Ltda., 273 F.3d 14 (1st Cir. 2001), p. 298Dispute b/t Sallen & CL over Sallen’s registration & use of the domain name corinthians.com. 1998: Sallen registered the domain name w/ NSI.1999: Sallen emailed CL. CL responded by sending Sallen a cease & desist letter. Sallen posted some Biblical material on corinthians.com but there is a debate as to when he did this (before or after CL’s letter). He is allegedly not using the domain name in compliance w/ its purpose.May 2000: CL complained to WIPO (World IP Org) that (1) Sallen’s domain name is confusingly similar to its TM, (2) Sallen has no right to the domain name, and (3) Sallen has registered a domain name in bad faith. WIPO panel decided in favour of CL & ordered the transfer of the registered domain name to CL. Sallen did not immediately transfer the domain name which was his K’al obli. Aug 2000: Sallen filed a complaint to the US Fed Crt seeking declaratory relief to establish that his use of the domain name was not unlawful under the ACPA (Antisquatting Consumer Protection Act) & thus he is not req’ed to transfer the domain name over to CL.

Issue: Can Sallen invoke US law to reverse the WIPO decision regarding the use & transfer of his registered domain name? Yes

Notes: Lynch, Circuit Judgeo Should a federal crt declare that Sallen is in compliance w/ the ACPA, that declaration would

undercut the rationale of the WIPO panel discussiono There is a long discussion of US law & subject matter jurisdiction debating whether US law can quash

the WIPO panel.o Senator Leahy explains his added amendments to the ACPA: “a domain name registrant whose name

is suspended in an extra-judicial dispute resolution procedure can seek a declaratory judgment that his use of the name was, in fact, lawful under the TM Act. This clarification is consistent w/ other provisions of the reported bill that seek to protect domain name registrants against overreaching TM owners.”

o Hatch-Leahy amendments to ACPA were understood to “balance the rights of TM owners w/ the interests of Internet users” & “to preserve the rights of Internet users to engage in protected expression online & to make lawful uses of others’ TMs in cyberspace.”

o The applicable US law here serves to create a protection for registrants to counteract abusive behaviour by TM holders. Abuses includes administrative dispute resolution proceedings under the UDRP where the proceedings are intended to strip a domain name from a registrant who has lawfully registered & used the domain name.

o District Crt’s decision is reversed & the case is remanded.Class Comments:o The application of the ACPA & other US law went b/y the American TM Act & other IP legislation

but its effects provide IP-like protection.o Created a private IP right: Shows the integration of the ACPA designed to stop people from

registering domain names that remind people of company names. o The Anti-Cybersquatting Act says that you can always challenge the decision of a dispute panel

through private meanso The goal of the Act is to protect US DN from foreign arbitration and preserve DN in US.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Private IP regime and reaction of the state to regulate that action : IP is not a formal regime, K is able

to interfere.

B. Informal Regulation52- Jeanne Clark et al. “ patent pools : A solution to the problem of access in biotechnology patents?”

People’s practice:o ICANoClearing House example

In the music industry, you go to SOCAN ( a clearing house). SOCAN licenses to everyone! Good for the industry because it gets the music on the radio and good for the radio because it reduces the transaction cost of going from singer to singer to obtain the permission to air their song without infringing their CR.

oPatent pools Specifically wrt the biotech industry The technology that anyone needs in the industry in order to compete is placed at the

disposal of everyone. The holders of the these important patents obtain royalties, regardless of how important

their patent is in comparison with the rest, they will not obtain more money for it. A 3rd party expert decides Essence: in US: most agricultural biotech research is done in universities, and

universities don’t grant licenses. KEYPRO: a quasi-private regime: manages all the patents of the universities and licenses

to researchers who want to use the technology for humanitarian purposes KEYPRO is extra institutional.

Other Examples: oRoosvelt’s intervention during WWII when he threatened all sides with compulsory licensing if

they didn’t pull their act together and made airplane technology available to everyone for a basic license fee.

oSame for the radio: under pressure oSame for MPEG and DVD technology: they learned form the VHS and BETA models:

Sony produced BETA and Panasonic produced VHS. It was of lower quality than BETA. Sony refused to license, but Panasonic widely licensed. Most consumers got VHS.

o fWith MPEG and DVD, it was decided that the technology would be the same: Everybody placed everying in the patent pool With obligation to licence to all

This system is not done through IP, but again, through private means, like ICAN and SOCANN. It is premised on the fact that you can still compete, but on the essential variants. The advantage is increased and widespread production and sales. The control is by the patent pool owners (administered by a 3rd party) ICAN is formal because it involves formal K-law Patent pooling is highly informal Legal guidelines of the regime which are pro-competitive

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Integrates complementary technologiesoReduces transaction costsoClears blocking positionsoAvoids costly infringement litigation and oPromotes the dissemination of technologyo Increases the likelihood that a company will recover some, if not all, of its costs of research and

development effortsoPatent pooling is an institutionalised exchange of technical information not covered by patents:

by fostering lines of communication between members, trade secrets would become less prevalent.

Patent pools can be anti-competitive as well:o The excluded firms cannot effectively compete in the relevant market for the good

incorporating the licensed technologieso the pool participants collectively possess market power in the relevant market and o the limitations on participation are not reasonably related to the efficient development and

exploitation of the pooled technologies

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IP Gold Summary 2003 Prepared by Sarita Keirouz8. Transnational aspects of IP governancea. Jurisdictional problems

What is the effect of a country’s IP on another country? We have international conventions, but obligations under them are fairly minimal: it is the

recognition that other states have access to this tech. Trips goes really far, but allows countries to give substance to factors that have not been looked

into before. For instance, it allows countries to attach a different meaning to novelty etc… Issue: what is the effect of different meaning? The only effect in IP is to increase price. LDC (least developped countries ) recognize that in the short term, IP rights are a harm, but in the

long run, it is better to have IP. Developping countries make a lot of money off of their patents. They have lots of market power

since there are a few competing products.o Expertise: keep priceso IP Patents work best

Middle income countries Don’t give patents over pharma products for example because they benefit from reduced IP

rights. But, now that they’ve developped a big scientific base, they become net exporters Say we have 2 countries, and in one the courts find an infringement, and in the other no

infringement, whose country’s regime is going to triumph? Yahoo! Case and the Harvard mouse case!

Yahoo!, Inc. (Y) v. Ligue contre le racisme et l’antisematisme (L)(N.D. Cali. 2001) P.370 Y is never part of the sale transactions resulting from its auction site. Y monitors transactions through limited regulation by prohibiting particular items being sold, such as stolen goods, body parts, weapons, goods violating US © law, goods violating Cuban embargo… Y informs auction sellers that they must comply w/ Y’s policies and may not offer items to buyers in jurisdictions in which the sale of such item violates the jurisdiction’s applicable laws. Y’s auction site sold Nazi-related propaganda and Third-Reich memorabilia. French court issues order that this not be available to French citizens (who can access material directly on yahoo.com or through a link on yahoo.fr). Y then posted a warning and prohibited postings of material promoting/glorifying hateful or violent positions or acts, such as Nazis or KKK. Nonetheless, this material can still be found on the site. For the French order to be effective, must be enforceable in USA where Y is based. Y claims it doesn’t have technology to bar only French citizens from accessing the site. Y seeks declaratory order that the French order is unenforceable under 1st Amendment protection of free speech, and b/c a US court would never make that decision and it would thus be inappropriate for a US court to enforce it.

Issue: Is it consistent w/ US Constitution & laws for another county to regulate speech by a US resident w/in the US on the basis that such speech can be accessed by Internet users in that nation? No Held: - We very much respect France’s position, but we believe in freedom of speech.- Enforcing this judgment from the French court would be inconsistent with the first amendement.- It’s very nice and well that France thinks this way, but we’re not going to enforce it; and given that

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IP Gold Summary 2003 Prepared by Sarita KeirouzYahoo’s assets are in the US, France’s order will not be carried away- Our courts can’t make a similar order!Ratio: Foreign judgments respected unless antithetical to US laws or Constitution.Court will decide this case in accordance with the Constitution and the laws of the USReasoning: Case not about moral acceptability of the material, nor is it about the right of France, or other

countries, to determine its own laws and social policies.Real and Immediate Threat Fr. order prohibits sale or display of items based on their association w/ a particular political

organization and bans the display of websites based on the author’s viewpoint w/ respect to the Holocaust and anti-Semitism. A US court could not make such an order constitutionally. The 1st Amendment does not permit gov’t to engage in viewpoint-based regulation of speech absent of gov’tal interest, such as clear and present danger of imminent violence.

Fr. order deemed too imprecise for 1st Amdmt scrutiny.Comity: The extent to which the US, or any state, honours judicial decrees of foreign nations is a matter of

choice governed by the “comity of nations.” US generally recognizes foreign judgments & decrees unless enforcement would be prejudicial or

contrary to the country’s interests. Internet allows one to speak in more than one place at the same time. Although Fr. has the right to

regulate what speech is permissible in Fr., a US court cannot enforce an order that violates the protections of the US Constitution by chilling protected speech that occurs simultaneously w/in US borders.

The protection of free speech would be seriously jeopardized by the entry of foreign judgments granted pursuant to standards deemed appropriate in another country but considered antithetical to the protections afforded the press in the US Constitution.

Conclusion: Y has shown that the Fr. order is valid under the laws of Fr., and that it may be enforced w/ retroactive

penalties, BUT- its enforcement in the US would chill Y’s 1st Amdmt rights. Y has shown that there is an actual controversy and that the threat to its constitutional rights is real

and immediate.

Prof Gold: Jurisdictional problem: b/c of the seize of the US market and the high # of companies based there, a

large portion of the world would be subsumed under a US-world-order.

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IP Gold Summary 2003 Prepared by Sarita KeirouzPro-C Ltd. (P) V. Computer City (CC) (2001) O.R. P.379 - A Canadian (P) company sells source code generators for software to be used in the production of computer programs. The company has a TM “Wingen” which covers its products. It is registered in Canada and USA for “computer programs used to generate programs for Windows.” - An American (CC) company developed an in house line of computers it called “Wingen” sold in USA. - P used the TM as the name of its website, which P used to sell good and provide service. CC had a passive website (computercity.com) to advertise and provide product info, but did not interact w/ customers. - However, when CC’s American customers sought info they came to P’s website (because they have the same name). P alleged that its site was so overwhelmed (over 100,000 hits in a “some” months) that it could not service its own customers and its business was ruined. P’s statement of claim is based solely on infringement of its Canadian TM.

Issue: Does P have a valid claim against CC under P’s Canadian TM? No.Ratio: For CC to have infringed, it would need (1) to “use” the mark (2) in Canada.

Reasoning: TM Act s.19 gives TM owner exclusive use in Canada of TM w/ respect to the goods and services the

TM is for. This clearly refers to the use in Canada of the TM in association w/ the wares or services described in the TM Registration. The computer hardware not sold in Canada. S.19 doesn’t apply.

Infringement under TM Act s. 20(1) is dependant on the word “use.” “Use” is defined in TM Act s.4: (1) when TM displayed in sale/transfer of possession of wares so as

to create an association, (2) when TM is displayed in performance or advertising of services, (3) when it is marked on export goods.

CC’s passive website could not constitute use in association w/ the wares b/c no transfer of ownership was possible through that medium (def’n (1) of “use” applies).

There is no use in Canada by CC of P’s TM, that action for infringement must fail. Actually, the TM is irrelevant to P’s complaint. No wares competed in the mktplace, and the damage

(if damage there was) would have been the same if the name of the website did not have TM protection

Court suggests use of tort as a remedy : “if a party intentionally or negligently causes injury and the ingredients for establishing a tort can be proved, then the new technology of the Internet and websites can be readily accommodated. It is much more sensible to apply tort principles to accommodate new technologies than to distort statutory TM rights.”

Note: This is the appeal judgment. When case went to Ontario Superior Court, Computer City was deemed to have infringed and Pro-C actually won.

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Interaction of international and domestic law in global regulation IP

Braintech , Inc. v. Kostiuk (1999) (BCCA) (Vol 2, p. 445.)

NOT an IP case, but deals w/ cross-jdc’l disputes: Cdn postionFacts: - Kostiuk., resident of B.C., contributed to an Internet bulletin board, made allegedly defamatory comments about Braintech. - Braintech. operated out of BC, but had office in Texas. 10% of shareholders resident in Texas. - Braintech sued Kostiuk in Texas (could get triple damages). - Kostiuk didn’t defend, saying they had no jdc’n. - Texas ct ruled for Braintech, forcing Kostiuk to pay damages of $400G. - Braintech then went to BC to have j’ment enforced.

Issue: Is the judgment enforceable in Canada? Held:

1st ct: yes, there is a substantial enough connection btw TX and the case to enforce it. Court of Appeal (here): No. The connection between the location (TX) and the cause of action is not real and substantial.

In order for BC to accept the TX decision, we must feel that TX cts had jdc’n and then, in accordance with principles of fairness we would then enforce it. There must be a real and substantial connection btw TX and the alleged injuryK. was not a resident of TX, but of BC.B. is incorporated in Nevada, resident of BC.TX took jdc’n on the basis of the availability of the web site to potential and existing shareholders in TX. Cite from US case Zippo Manufacturing v. Zippo DotCom: 3 pronged test to determine jdc’n over non-resident:“(1) defendant must have sufficient minimum contacts with the forum state (2) the claim asserted against the defendant must arise out of those contacts, and (3) the exercise of jdc’n must be r’ble.”Wrt the Internet: depends on the nature and quality of commercial activity that is conducted over the Internet. Active/passive web sites. “A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jdc’n”Here: the bulletin board is passive, only posting information, accessible only to users who have the mean so gaining access and who exercise that means. “Need more proof that the defendant has entered TX than the mere possiblity that s/o in that jdc’n might have reached out to cyberspace to bring the defamatory to a screen in TX.” No evidence to show anyone in TX actually read it. Was available everywhere. If we allow this, why not suits from everywhere else in the world? Note that this does not change the law of TX. But his assets are in BC, and TX can’t do anything.Push and pull of different jdc’ns. There is potential for unfairness on both sides, either for plaintiffs or defendants.

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J. Goldsmith, “Regulating of the Internet: Three Persistent Fallacies” (1998)

Article looks at three myths that exist about cyberspace in the int’l context and the challenges these pose to national regulation

Fallacy 1: Cyberspace is a separate placeo Territorial govs should not regulate internet transaction since internet providers cannot control their

information flow in territorial space b/c information on the net appears simultaneously in all national jurisdictions. Problems of spill over contribute to the argument for self-regulation of the internet.

o BUT, the net is NOT a separate place. Real-space communication can cause real-world harms. Moreover, the people harmed by these internet transactions often do not have a voice in the transaction and cannot exit from the private ‘rule-sets’ that facilitate it.

o The efficiency analysis provides no basis for choosing b/t trans-jurisdictional costs produced by the competing regulatory regimes in Minnesota & Antigua (w/ regard to gambling sites) – can only be made by virtue of a normative theory. This theory would explain why Minnesota would forgo control & protection of persons w/in its territory to accommodate users in Antigua.

Fallacy 2: Territorial governments cannot regulate the non-territorial neto Claim that restrictive CR will be ineffectual when applied to digital goods on the net. Because

territorial governments with restrictive CR regimes cannot prevent the import of cheap digital goods made offshore in permissive CR territories (because of high traffic over the internet and difficult inspection), the restrictive regimes’ CR restrictions will become useless. Information produces in the restrictive regimes will be forced to lower their prices in order to compete with the offshore goods

o Says that Dan Burk thinks that territorial governments cannot regulate offshore content producers who are beyond the state’s physical control. Second, they think that because territorial governments cannot stop the flow of information packets across territorial boundaries, they cannot regulate the flow of net transactions within their boundaries.

o Sees that Burk is underestimating the many ways that nations can regulate the net.o A nation does not have to inspect every item crossing its borders to effectively regulate the flow of

items within its borders. Instead, it can achieve a great deal of regulatory control over illegal foreign imports by imposing costs on persons and property within its territory. To the extent that these local regulations raise the cost of obtaining foreign content, they regulate the foreign content even though the source of the content is beyond the nation’s control and the nation cannot stop broadcast signals at its borders.

o Nations regulate grey marketing the same way: they wait for it to cross the border and then strike. They regulate the domestic users and distributors of the gray-market goods.

o Not suggesting that enforcement strategies will eliminate illegal digital imports. Can regulate certain aspects: the consumers, the providers in the territory. Will not be 100% but all regulation is imperfect.

o The relevant question is whether these regulatory strategies will heighten the cost of transmitting, obtaining, copying and using digital goods sufficiently to achieve acceptable control over them. How much control is acceptable control?

o How much control is acceptable control? Depends on several factors:1. The normative commitment of the regulating gov: the importance to the gov. of achieving this

type of control.2. The costs the gov is willing to pay to achieve regulation.

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IP Gold Summary 2003 Prepared by Sarita Keirouzo Can regulate thru technology: regulate the notion thru national transmission. Can block the signal

from coming in – tech gives you a basis to regulate.

Fallacy 3: Optimism about cheap, plentiful informationo Some say that the internet will foster tolerance, promote democracy, redistribute wealth, improve

writing skills, destroy trade barriers, & bring world peace! [get real]o Just because the access to court decisions and legal doctrine from all over the world is now easier, it

doesn’t mean that this will facilitate the harmonization and the enforcement of international private and public law.

o Harmonization = convergence on a single substantive standard for a particular issue by courts and lawmakers in different territorial jurisdictions.

o While the internet may promote partial harmonization it is by far going to establish complete harmonization

o Note that judicial decisions are not made in a vacuum. Thus while some states may join in creating a global uniform legal system, national interest will still play a role in judicial decision making.

o Judges will be moved by personal or national biases. While some judges are immuned from political pressure, others are sometimes legally barred from following a foreign precedent

o It will not harmonize customary international law (CIL): it is too complex and changing in nature to ever be harmonized by hundreds of actors – internet has probably made the problem worse not better

Class discussionHow will this apply to pharmaceuticals & biotecho Rule of exhaustion : Patent user has the right to make, use, sell. Once you sell a product, you exhaust

your right against that product. Right is exhausted on first sale. You can now resell the car safely in Canada

o What about if drive this car in US: Cdn patents exhausted. USA has national exhaustion, that means that the patent owner in USA can sue you for infringement.

o National exhaustion – if you buy in another country under a different patent and come back to Canada, you violate the Cdn patent since never given right to use it in Cda: Grey marketing. Importation of the good is illegal, it is not free from owners rights. May be legally purchased in the US & it has a Cdn TM – if buy outside the country use & sale in country is illegal. Undermining the domestic market of that country

o Paris Convention says that for things that are temporarily in another country it is Okay – for hairdyers and whatnot does not apply.

o Regional exhaustion: EU, countries cannot have national exhaustion – if buy product in England okay to sell product inGermany – regional exhaustion – if purchased in the EU community

o International exhaustion: buy the product anywhere deemed to exhaust the rights of the patent holder.o Why international exhaustion: reduce costs, dependence on importation. No incentive to keep prices

high. If want to preserve domestic market, will have national exhaustion to encourage the market. Country can choose what form of exhaustion. Japan has international exhaustion: you can “grey market” there legally. This forces national companies to reduce their prices.

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Pharmaceutical in the Developing Worldo Roadblock is cost: want a regime that will sell at cost – no one cares about the effect of the market.

So there should be no worries.o But pharmas are concerned? UK (int’al exhustion) will import legally and sell on the cheap (below

the market price)o If developed countries go for national exhaustion – pharmas will be very pricy there.o 1. National exhaustion – 2. Labelling differently (the pills – colour etc. catch illegal imports) – These

would be in theory. It would have be done on good will.o The rules adopted in Engl will affect the world market – problem of co-ordination – domestic &

international affecto Trying to keep health costs down (low patent) & promote industry (high patent). How do you

resolve? Add on the international? Where do you sell the stuff? o Developing countries should have mini standards so they can copy – have protection from US – but

minimal enough so that they can’t come after you BUT at the same time take advantage of the developing countries. Add in the related industries – are we better off?

o Import/Export, market locations – all must be considered when determining the patent regimeso You can take advantage of people who feel a need for high protection you can piggy back onto w/

your low patentso US gets most patents application – better than Cda in this regardo With National exhaustion in the US: I can’t resell a mouse I bought in CAD back in the US bc I

haven’t exhausted their national patent (by buying it there) that would be gray -marketing, but if I use it as a tool to invent a molecule, I can sell the molecule in the US, and I would have saved on the cost of the mouse.

o CAD negotiated a developing countries regime, sort of like that of an importer of technologyo The cost is political and long-term: people not wanting to invest here.o National exhaustion allows for price discrimination: if a rich country has national exhaustion, you can

charge a higher price at homeo International exhaustion: allows arbitrage: gray-marketing: going into cheaper market and reselling in

the country: method to bring country’s prices down.

1- Polk WagnerPositive externatlity: when you do something that, by you doing it, benefits other people.- Part of IP is to internalize positive externality- US has a fairly robust IP regime- It does increase in novation donc, US IP systems create I, II and III.- For CAD, if we don’t give high protection, we get a higher positive externality, bc we capture I, II and III. Eg., Harvard Mouse: we get free all info at little cost yet, we can produce and sell it back to the US.

Type I is mostly appropriable: it is the information created: the actual work of authorship or creativity in CR or the actual invention in the patent context. Well delineated and IP laws are at their most potent there.

Type II is partially appropriable: it is in some way directly derived from the underlying creation. Typically described as follow-on innovations or cumulative innovations.

Type III is not appropriable: it is only indirectly associated with the underlying creation: that there exists a class of information that is in some sense “derivative”, but falls outside the reach of the

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IP Gold Summary 2003 Prepared by Sarita Keirouzintellectual property laws. The relationship between Type I and Type III thus consists of a “but-for” causal link, but the relationship is generally sufficiently indistinct and removed so as essentially to preclude appropriation by the Type I creator and indeed, nay not even be conceived as appropriable. In other words, Type III is “open” information, available for widespread use, as an inherent consequence of the creation of the underlying Type I information.

One form of Type III is positive externality: spillover: this information may not be embodied in any product or service: it is a way of viewing a problem, adaptations of old or unrelated principles, a promising direction or research, or the identification of new uses for materials.

Type III can be converted into Type I by mixing it with further creativity or research Another form of Type III is stimulative in nature: information begets more information. WE respond

to stimuli. Essentially, Type III is a direct contribution to the total public knowledge. Information is substantial

(albeit indistinctly known), yet incapable of being appropriated by the holder of the underlying intellectual property rights.

It is impossible to appropriate information Takes the same view as Nimmer and the opposite view from Reichman Where Reichman finds that the Public Domain is shrinking, Wagner says that having Type I

inventions actually increases the domain (Type III) i.e. strong rights allow for more price discrimination, and therefore allow you to reach a broader range of consumers therefore giving you an incentive to innovate more. The more you innovate, the more Type III you will have.

A. Additional appropriability (probably) means greater information If you increase type I, you increase the pie, and you consequently increase type III (open information),

which is indirectly linked to it.

B. Flexibility and control There are two benefits of control that seem likely to create conditions wherein additional information

can be created for the public benefit.1. Fostering Flexibility In the development of the internet, where, it is difficult to predict ex ante the scope and direction of

marketplace with any reliability, strong intellectual property rights offer a way to ensure that development is not hindered by unclear or limited rights. (Kelly v. Arriba).

Had Kelly had control over the search engines, i.e. over who could visit his website, he would not have had the all or nothing choice to make ( either that anyone access his website or remove the material completely from the website)

2. Reconciling the Market power and incentives First, control allows price discrimination, which is generally understood to have beneficial effects of

relecance her. One is ameliorating costs related to monopoly, by increasing access to the good of service. Two, it can increase the monopolist-discriminator’s revenue thus maintaining or increasing ex ante

incentives.C. Adding to the Public Domain: control and coordination:The extent that the control of int’l property allows owners to coordinate the uses of their works to restrict access, it also enables those owners to coordinate in such a way as to enhance access: two examples: open source software development and outright dedications to the public domain.1. Control and open source software development Open source software is so designated because the source code for an application is released along

with the compiled version, thus ( in theory at least) allowing users to inspect, alter, improve, and perhaps even redistribute the software at low or no cost.

Champions of this approach argue that this will, in the long run, produce better software.

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IP Gold Summary 2003 Prepared by Sarita Keirouz However, it may demoralize the volunteer programmers who may see their work appropriated for

commercial gain- thus diminishing the crucial human inputs into the open source projects Thus, for the efforts to be successful in the long term, the use of the open source software must be co-

ordinated: that is, controlled. There is therefore a need for external coordination: mainly attempting licensing (GPL) (general public

license): it binds future users by the same terms as the original license. It contains a number of restrictions as well: like all changes must be noted and released to the public,

that all changes tot eh code be licensed back to the original source, the original clause can assert infringement claims under certain conditions.

Despite rethoric therefore, it seems quite clear that the “open” source is actually rather tightly controlled, and it is fundamentally the control of IPR that allow such arrangements to be struck.

2. Dedicating the Public Domain Control can be used to affirmatively to increase and/or maintain the public domain. Dedicating a work to the public is useless if someone else appropriates it and builds a fence around it.

( going back to the open source software). When the owner does not want to grant complete unfettered rights to the work, he creates an

intellectual easement of sorts. The creatives commons project, for example represents a particularly compelling recognition of this

role of intellectual property rights, formed by a coalition of academics and activists, ironically, come of the most determined critics of the control of int’l goods assists in crafting deeds to their works by draftig CR licenses for particular situations.

This demonstrates the benefits that come with granting creators broad, flexible rights to control the uses of their inventions.

Wendy A. Adams, “Intellectual Property Infringement in Global Networks: The Implications of Protection Ahead of the Curve” (2002) (Vol. 2, p. 457)

TRIPS sought to harmonise IP norms by imposing universal minimum standards of protection to be implemented w/in the domestic legal systems of WTO member states.TRIPS harmonises, but it does not mandate uniform law. A member state remains free to implement increased levels of protection above the minimum w/in its domestic legal system but cannot compel other member states to rec’ze the heightened levels of protection when goods are exported to other states“protection ahead of the curve” : higher than the minimum standardWTO: institutional design was intended to address rapid advancements in globalisation, meaning an increasing degree of economic integration of financial affairs of actors from different states. Transborder transaction friction remedied by trade liberalisation aimed at free movement of goods. But in context of Internet: now possible to engage in commercial transactions w/in a borderless medium. But trade regulation in relation to IP rts still operating on territorial modelTransactions on Internet: 1st generation: orders for goods delivered by conventional means. 2nd generation: sale of digital products. Geopolitical borders insignificant. States with high IP protection to new technologies will be protected “ahead of the curve”When transaction are conducted in circumstances of jdc’l certainty, higher levels of protection in local markets not affected by other states’ protection.But w/ Internet, more jdc’nl uncertainty.

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IP Gold Summary 2003 Prepared by Sarita KeirouzTerritoriality, Universality, Global Trade and the Implications of Protection Ahead of the Curve

Justifications for IP: competing ones exist, but in developed countries, the economic case in support of granting a limited term monopoly over intangible goods generally prevailsEconomic rationale: monopoly rts necessary to address public goods problem inherent in intellectual assets: lack of exclusivity and inherent scarcity. A. invested resources in generating good but can’t exclude B from enjoying the benefits. T/f no incentive for A to create, unless A can withhold goods/’benefits from B, or provide them for compensation. Otherwise, couldn’t stop imitation, and the selling of it at lower price (since there would be no recoup cost for R&D)Need to strike a balance btw monopoly and competitive market. Protectionism = reduction of free flow of public domain to detriment of users and innovatorsTerritorial nature of IP protection: Historically viewed as subject to territorial jdc’n where rts granted. Rt holder in one state can’t enforce those rts against infringer in another state where it’s not an infringementWhere no transborder transactions, diversity among states doesn’t affect balance. Regulates local actors and prevents imitators in foreign markets from entering domestic market.Comparative advantage in intellectual assets: Int’l trade in intellectual assets reintroduces problem of free-riding. Intangible product protected in home country exported to country where equal IPRs not available may be freely appropriated imitators who will then directly compete with the original innovatorInt’l IP trade agreements justified by limitations of territorial protection in relation to the theory of comparative advantage: a state benefits from trade liberalisation by specialising the production and export of goods in which its comparative advantage is the greatest (in which it can produce the goods more cheaply than its trading partner). Conversely, states should import goods where its comparative disadvantage is the greatest.TRIPS negotiations: developing/least developed states argued that high protection would be bad for them b/c they often lack capacity to produce innovation but consume technology produced in developed countries; high levels of protection would turn them from imitators into infringers. Developed states argued that optimal levels of protection are a fcn of economic and tech levels of development and strengthening protection would result in positive benefit by increasing capactiy thru tech transfer and foreign direct investmentAgreed on core set of minimum standards; quid pro quo deal of increased access to markets for developing statesMimimum standards and protection ahead of the curve: Harmonising, but not implementation of global law. Difficult to enforce IPRs in cyberspace. Not contemplated in TRIPS, which is backward-looking: did not consider new techs. Scope for diversity still exists. Must have minimum standard, but if state wishes, can extend IP protection beyond baseline to protect new techs as required by conditions in local market; can’t make other members do the sameWhen TRIPS promulgated, s/o thought that states would go beyond minimum levels of protection; this would just retrun states w/ superior innovative capacity to pre-Trips enivironmentTRIPS was carefully crafted: to strike a balance btw innovation and imitation AND to address distributive justice issues, i.e., allocation of benefits and burdens of trade liberalisation (fear that developing nations would be burdened by heavy load and US would reap al the benefits) The prescribed standards favour the developing nations: this ensures higher participation rate and is more just; developing nations retained some “wiggle room” to tailor minimum standards to meet their domestic requirementsMinimum standards crystallised the comparative advantages of technically advanced states over less advanced states at the time of promulgation—but will not necessarily continue as countries develop

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IP Gold Summary 2003 Prepared by Sarita KeirouzMember sates are free to respond to domestic pressure to increase protection for new technologies but there is no guarantee of comparative advantage in new industries.Will be able to suppress competition locally, but not within foreign markets; developing states may gain competitive advantages as their technology improves

Judicial AmbiguityIncrease in online transactions and digital products: no uniform law: t/f rts holders can sue for infringement thru private int’l lawIf case is geographically diverse: domestic cts must apply the laws of one state to the exclusion of all others, even tho’ other states can claim that some portion of the impugned activity took place thereBut doesn’t address “underlying judicial puzzle inherent in internet transactions”: how to localise activity legallyResolving jdc’n: must establish a default rule in favour of either the location of the commercial website (initial server or operator’s place of business) or the location of the person accessing the website (then might be complications of nationality or residence)If the rule favours the location of the website: = to ‘universal permission” : operator assumed to be in compliance w/ local reg’n; individual states would then have to apply indirect reg’n (punishing end-users of prohibited products in their jdc’n) to prohibit access in violation of local lawsIf the rule favours the location of the persona accessing the website: = to ‘universal prohibition’: website providers have to determine in advance the states where their products are permitted, and allow residents of these states to opt in, and restrict access from elsewhere(Latter rule: decrease in efficiency of Internet; would lead to Balkanisation)If the website seems to be targeting people in a specific territorial market: there is no need for the default rule; but domestic cts have to justify assuming jdc’n. On a traditional basis?: commercial nexus btwe jdc’n and activity; probably more fair to target the person accessing the infoAny imperfect fit btw online activity and territorial jdc’n could have an adverse effect on levels of compensation; would result in either under- or over-compensation

Patent examplein US, patent protects “online business methods” (ruling in State Street Bank & Trust)Amazon.com: patented their “one-click” method. Server computer stores ID info of buyer, and a copy of the identifier is stored in cookie in client’s computer, and they just have to click once to buy. The patent was not upheld. BUT ASSUME IT WAS: Business methods not protected in Cda. If Barnes & Noble set up in Cda and used the one-click method. Would not be infringing, b/c one-click not protected here. But if purchasers were in the US (and they don’t know where the server is). Where would Amazon sue? Can’t sue in Cda, b/c there is no cause of action.If sue in US: where does the infringement take place? In the server computer in Cda? In the cookie on the buyer’s computer in the US? To breach patent, you must infringe every element: totality of breach would not have occurred in the jdc’n where the patent is valid. Cts will probably say that it is infringement only if all of the activity happens in the US—but we don’t know. US cts will have to decide.If the US cts decide they have jdc’n: the ct will be saying that they don’t care about the laws of other countries where part of the activity is taking place; they would be imposing their higher protection IP regime on people in the other country if they act into the US. OVERCOMPENSATIONIf the US cts decide they don’t have jdc’n: then Amazon would be losing the economic benefit of the patent in the US that the US leg’re had decided was appropriate: UNDER-COMPENSATION

© exampleICrave: took signals off US TV airwaves to broadcast in videostreaming format on computer. Material located on co’s server in Cda, was available to both US and Cdn viewers. They did not negotiate with

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IP Gold Summary 2003 Prepared by Sarita KeirouzAmerican networks, relying on exemption for Cdn companies which has a compulsory licensing fee for American broadcast signals. US broadcasters sued. ICrave said that Cdn law should apply and they should get the exemption b/c the website was restricted to Cdn viewers. It was just that the restrictions were easily circumvented: only prrof of residence was provision of a telephone area code. US viewers just had to plug in a Cdn area code. But they had the “intention” to exclude American viewers. Activity was plausibly legal in Cda, since there was compulsory licensing for Cdn broadcasts. But US cts asserted jdc’n b/c iCrave had domain name reg’red in US, and advertising office in Pittsburgh. Ct concluded that the receipt of the transmissions constituted unauthorised public performance in violation of US © law, and ordered the company to stop US broadcastingCdn co., JumpTV.com did the same, but they claimed they had better way to restrict access to only Cdn viewers. US took jdc’n, and ordered the Cdn co, with its activities in Cda, to shut down. Was never brought to the Cdn cts for enforcement, b/c the co shut down in fear that Cdn cts would accept US j’ment. Importation of US laws to Cda. Domestic adjudication (private enforcement) of multi-jdc’nl disputes is not appropriate. Each country had different rules, and where there is an important difference in the level of IP protection, it leads to a tug of war If a country is a net exporter of technology, it is more likely to have higher standards. It will also make it easier for that country to assert jdc’n, which will lead to unfairness and overprotection of IP in other jdc’ns: “domestic adjudication cannot reconcile protection ahead of the curve with the minimum standards provided under the terms of the TRIPS Agreement in a manner which preserves but does not enhance TRIPS entitlements.” (495)US test of passive/active: Zippo case: Commercial transactions can be positioned along a continuum of interactivity, based on factors like website design and nature of communications with customers. Greater interactivity indicates commercial intent to attract customers, and justifies liability w/in foreign jdc’n where customers are physically located. But not adequate: difference between targeted activity and passive acquiescence to attentions of foreign consumers difficult to identify.Also presupposes ct will adopt default rule of universal prohibition. Must first decide whether online commercial enterprises have “travelled” or whether customers have “travelled” in principled manner.US cts assuming that internet companies must adjust their behaviour to all the jdc’ns in the world. “The imperative of sovereign equality more readily supports local regulation of online activity specifically directed twds a state’s own residents, than a state’s attempt to apply local reg’n to generic online activity in the interests of its own residents.”Can look at commercial intent to distinguish btw generic online activity and websites targeting a specific jdc’n. But difficult to see difference. See Pro-C case. Passive US based website, but Cdn ct asserted jdc’n based on a “de facto common market” btw US and Cda and the location of harm in Cda. Website gave location of Cdn stores. Plai’s TM could not be purchased thru website or at Cdn stores, but the common market and cross border shopping meant that Cdn consumers could buy impugned product at US location. Was this really commercial intent? “An excess of jdc’n will enforce protection ahead of the curve beyond a state’s territorial jdc’n, establishing a state’s comparative advantage in new technologies w/out the necessity of negotiating formal amendments to the text [of TRIPS]. In contrast, any deficiencies in jdc’n will divert revenue from domestic innovators to foreign imitators, notwithstanding that the TRIPS Agreement expressly permits protection ahead of the curve within domestic markets.” (502)t/f need multilateral approach b/c any jdc’nl solution will be unfair and would violate the understanding of TRIPS. But if dealt with thru WTO process, arbitration is uncertain: no precedent, no guidelines. TRIPS backward looking, and does not deal with new technologies. Provisions are vague, need judicial

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IP Gold Summary 2003 Prepared by Sarita Keirouzinterpretation. Expansive interpretation would lead to too much harmonisation, and undermine regulatory diversity embedded in TRIPS. Would have negative impact on states that need lower levels of protection. Must go to public int’l law, not private int’l law. There should be amendments to TRIPS;. Would take into account distributive justice concerns, as the initial negotiations did (with the comparative advantage trade-off)negotiations must take into account the “wiggle room” given to developing nations: Art. 8 permits members states to implement public interest exceptions addressing concerns of public health and nutrition and other sectors of vital importance of domestic levels of socioeconomic an technological developmentIf the US (or other developed nation) wants to impose higher standards, developing nations have this bargaining chip. US would have to give something back if they were forced to give it up.

b. Regulatory institutionsJ.H. Reichman, “Compliance with the TRIPS Agreement: Introduction to a Scholarly Debate” (Vol. 2 p. 427)

TRIPS: Nature and Scope: most ambitious IP convention ever attempted; unprecedented breadth of subject matters comprising the IP to which specified minimum standards apply; all WTO member states must guarantees that detailed enforcement procedures as specified in the agreement are available under their national laws.Provisions make it likely that states will lodge actions against other states before duly constituted int’l bodies to vindicate the privately owned IP rts of their citizens against unauthorised uses that occur outside the domestic territorial jdc’ions.Many WTO members lack the legal infrastructure, technical skills, philosophic commitment to make it workWTO IP and Investment Division: article indicates 4 approaches for diplomatic policy:1) emphasis on “transparency” during early implementation stages and transition phases (5 years for developing nations, 11 years for least developed): must report on the state of their leg’ve progress twd full compliancethus makes states avoid non-conforming leg’n; also hopefully means that states w/ big interests in IP protection (like US) will be less confrontational in maintaining momentum2) “enforcement” provisions that member states are supposed to implement in their domestic laws: private enforcement actions by rights holders under domestic laws will relieve the pressure for “top down” administrative action int’ly. Such actions will also provide empirical evidence to inform future. Particular attention to border control measures against counterfeit TM’ed and ©’ed goods.3)technical assistance for developing and least-developed countries; TRIPS will monitor extent to which developed nations fulfil their obligations to assist4) collaboration with WIPO and UNCTAD; try to resolve differences btw states w/out need for formal recourse to dispute settlementbut still lack of consensus re IP int’lyhas been argued that TRIPS based on no solid theoretical or empirical foundations whatsoevercan any of the theories justify universal standards of patent protection? Irony of US relying on “natural rts” by US trade reps in negotiations, when US doctrine and practice reject it as a foundation in US domestic law; but this theory still important in EU Hard to justify TRIPS standards of patent protection under economic analysis

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IP Gold Summary 2003 Prepared by Sarita KeirouzStructural impediments in developing countries: lag behind the newly industrialised countries, usually lack the infrastructure to benefit from local usage of the patent system for the f’ble future. Also, low per-capita GDP, which is usually an obstacle to tech progress. Patent paradigm becomes obsolete and counterproductive in information age when it is too much used to protect small and imcremental applications of knowledge to industry. What the developing countries need for the immediate future is not string, 19thC type patent protection, but rather more appropriate IP regimes to stimulate investment in new techs and in various forms of subpantentable innovation that lie w/in their limited tech reachBut may be advantages for developing countries as their technological prowess improvesAlso: standards may be high for developing countries now, but there was a quid pro quo of trade concessions, which gave these countries greater access to developed country markets, especially in the agricultural and textile sectorsMaybe they gave up a lot, but these trade concessions are valuable; and now that the countries are in TRIPS, they may be able to use it (eventually) to their advantage

Interface with Competition LawDeveloping countries must lessen their dependence on foreign suppliers of technological goods: must be able to learn from the technologies they import to be able to develop their ownBut this flies in the face of policies of developed countries to restrict the flow of technical knowledge Developed countries have relaxed antitrust laws in favour of horizontal collaborative practices, including joint research among natural competitors and pooled licensing agreements. This, with their strong market power and high levels of transnational IP protection make it harder for firms in developing countries to gain access to the most valuable new techsHow can developing countries respond w/out undermining TRIPS? Should there be a new int’l minimum standard of competition law to maintain a balance?Scholars are debating the level of antitrust standards that are appopriateTRIPS contains a rudimentary positive list of measures that states may implement to curb abuse of IP rts; but some argue that it would be very difficult and unwise to write the ruses in advance, given the lack of consensus. Eleanor Fox (scholar) says there should be a “common law” evolutionary approach, with guiding principles, most important being “existing developed systems of antitrust are presumptively legit, even tho’ they may function as a limitation on IP rts.” States should be free to pick and choose among the doctrines in use under the different systems when formulating their own approaches. Developing countries can and should formulate their own jurisprudence of licensing under their domestic law and they should leg’vely impose a K’l rider on transfers of tech that invokes principles of fairness, the preservation of competition, and due regard for the scientific and educational communities in nat’l economic developmentUniversal standards should be limited to 2 norms: 1) to preserve market access and prevent anticompetitive exclusions and 2) to prevent anticompetitive collaborations of competitors designed to raise prices (for example pooling and crosslicensing as a cover for a cartel): Such minimalist internat’l intervention on competition law would give states leeway to formulate own statutes

Impact of TRIPS on Specific DisciplinesPatents:

some (optimistic) scholars say that economic analysis does justify strong int’l minimum standards of patent protection

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IP Gold Summary 2003 Prepared by Sarita KeirouzThey say that universal patent system would benefit the world community by eliminating the free-riders’ disincentives to innovate and would increase the supply of needed inventions that would otherwise not have been madeFree riders in pharmaceutical industry: hope that leaving the cost of development of new drugs to the developed world will not stunt the development of too many drugs. But it may affect it so much that it backfires. Plus, these countries will not have drugs developed for local diseases.India as example: before TRIPS, took pharmaceuticals out of its patent system and built a tariff wall to protect it. Indian manufacturers of bulk drugs dominate Indian market and fiercely competitive wrt production of generic drugs. But low investment in R&D and local firms developed no new drugsUnder TRIPS will change: rising investment in R&D, and joint research ventures w/ major foreign companies. Stronger norms will allow it to develop robust drug sector, with focuses on diseases of local importance. Some (pessimistic) scholars disagree: Italy as example: well-positioned but has never been able to capitalise on the introduction of strong patent protection for pharmaceuticals in 1978. If Italians can’t make it work, unlikely developing countries will be able toIndeed: India would not have been able to develop its present success( and really low prices) w/out low patent protection, and access to the latest drugs all over the world, which they then re-engineered thru new processes and sold domestically. Successful import substitution. Perhaps now, India can use a stronger patent protection, but they needed a lower one before. Some scholars say that TRIPS can boomerang against even developed nations. Protectionism will have to give way to national treatment requirements and TRIPS treatment that is now int’l law.US implementation of TRIPS has been half-hearted and inadequate b/c patent authorities don’t want to abandon long-standing discriminatory advantages built into the domestic law. Still have some laws that don’t comply with TRIPS. Will this make other countries less likely to comply too?

© law : disagreement btw scholars here too:some favour high-protectionism: driving force behind TRIPS: need to stem losses to publishers in developed countries from free-riding uses of ©’ed works in developing countries. Represent lost jobs and economic growth for US economy, which is already suffering due tot he comparative advantages of the developing countries in a number of manufacturing sectors natural rights philosophy: cannot sacrifice the cause of authors’ rts to the generic category of “users” like Internet users, developing nations, consumers, small competitors and creators of derivative works; maybe some people don’t like the fact of US o’ship of most exported IP, but hey have to get used to it and to the remaking of int’l © law in the US’s image[ but: © law cannot effectively protect computer programs or other forms of industrial property w/out serious anticompetitive results; high protectionsim could lead to tech decline of US and EU ]other scholars: social costs to users of © culture under minimum standards of protection: new US leg’n is a radical transformation of the purposes of © law that undermines its const’l foundations in USUS: © justified only to extent that it stimulated progress in arts and sciences by enriching store that would enter public domain after a time; but now, the “cultural bargain” has given way to trade-driven goal, which seeks to enhance the wealth and overall financial well-being of companies which invest in the production and distribution of ©’ed worksShould be limited: historical emphasis in US on public interest has been eclipsed; need to defend user interests and the public domain; use competition lawUniversalisation of the high standards is a form of cultural imperialismTROPs ignores new info techs, taking into account more the private rather than the public interest; need a “free use zone”: cyberspace parallels to fair use and personal use exceptions

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IP Gold Summary 2003 Prepared by Sarita KeirouzTRIPS is backward looking: drafters were unable (technically and politically) to address the problems facing innovators and investors at work on important new technology

TM and Geographical Indications of OriginLack of controversy, generally: Paris Convention already had well-developed set of int’l minimum standards wrt TMIt is argued: TM protection prevents marketplace confusion that is detrimental to in interests of consumers in every nation. Improves consumer wealth by improving consumer informationfocus on enforcement, especially border controlsgeographical indications, special provisions for wines and spirits: trade-offs US had to make to get European support in other areasdrafters omitted problem of exhaustion. Some defend to import genuine “gray market” goods.

Future of TRIPStensions generated by TRIPS portend a major realignment of interest that will cross nat’l boundaries and will unlitmately ship the balance btw incentives to create and free competition to the global marketplace and away from the territorial legal and economic jdc’ns“In the past, the US and the EC preached the virtues of competitive markets to developing countries that were mired in command economies. The collapse of these command economies means that the developing countries will now take the developed countries at their word and demand to compete in the world market. The real question is not whether these countries can compete, even in markets for tecnological and information goods, but whether the developed countries still have the stomach for stiff global competition once it becomes a legal and economic reality.”“the logical task of developing countries is to shoulder the pro-competitve mantle abandoned elsewhere when implementing obligations under the TRIPS Agreement in their domestic laws. To the extent that these countries systematically adhere to lower levels of protection than their more developed counterparts, their firms may become ever more competitive wrt those in the developed countries.”Developing world as a bastions of competition? If so, will represent the interests of consumers, users, second-comers, small and medium size entrepreneurs in developed countries too. Transnational commonality of interests.

TRIPS is backward looking: Rts were set in 1994; if one state has taken on a new practice since, it can’t force others to complyIt does not address plants and animals: states couldn’t agree; there will be a review in a few years. Least developed countries have recently been given a longer transitional period. They now have until 2016 to comply.

Mailbox provision: s. 70 ¶8: Products not protected by patent in developing country (under TRIPS had transitional period before compliance)But mailbox provision says that there is a mechanism to accept applications before patent laws in place, and that the application will be granted once the laws come into place. Until then, the company applying will have exclusivity in that country. Patent will happen when laws come into effect, but interim exclusivity time before this will be counted; patent will last the remainder of time left. (E.g., patent lasts 20 years, exclusivity from 2002 to 2005, laws come in, patent until 2022. As though it had been granted at time of application.)Acts as a disincentive to generics, if they know that there will be a patent on the drug, there is no incentive to re-engineer a generic. Pharmaceutical companies pushed the US gov’t to get this provision included.

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IP Gold Summary 2003 Prepared by Sarita KeirouzIs now in abeyance and under review

Compulsory licensing : must be done primarily for the nat’l market. This is problem in countries that have to import drugs. Compulsory licensing is useless. It is also now under review. It may become possible to do compulsory licensing for another country.

Under TRIPS: there are only 3 criteria for patentability: 1) industrial application 2) non-obviousness 3) novelty. Patent lasts 20 years.

2- Samuel Trosow “Fast track trade authority and the free trade agreements: Implication for CR law”

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2. Implications of change

Angela R. Riley, “Recovering Collectivity: Group Rights to Intellectual Property in Indigenous Communities” (2000) (Vol. 2, p. 518)

German group Enigma took recordings of traditional Ami (Taiwanese indigenous group) music and put it in a song. Ami elder is a “messenger” who “works to keep the chants alive” Ami language not written; oral tradition is only way culture is passed down. Had been invited by Ministries of Culture of Taiwan and France to perform in Europe, and was recorded without knowledge or consent. Recordings published later, and Enigma used them, purchasing rts from French Cultural Ministry. No payment to Ami people.Riley says © law gives them no protection. Gold: she’s wrong: singers had automatic © in performance of song. If they had known, they could have sued for compensation. (of course there’s the obstacle of not knowing, and of cost of suit). Ami now seek complete rec’n of their rights as a tribe to cultural propertyIndigenous works fail to fulfil individualistic notions of property rts that underlie the structure of Western law; works are t/f omitted from IP regimes. Riley argues for group rts model of o’ship of intangible property. Such works can’t be valid under © law: not original: spark of creativity necessary not fulfilled: not independently created by the author; essence of song is that it is communal in nature (although there is creativity in the song: imagination of storyteller integral to transformation of story to better meet needs of changing community). Author: sole creator. Even a “joint work” in western conception is the product of several individual authors. Here: impossible to identify all the creators who have contributednot fixed in tangible medium. This requirement excludes oral cultures. Places burden on them to abandon their methods of knowledge transmission, which goes to the essence of such knowledge, and write it down. Indigenous knowledge being distorted thru appropriation; removed from context (pop song)Communal rts model: must be able to determine the destiny of their knowledge to keep their integrity as a community, crucial element in self-determinationMust recognise injustice to indigenous peoples by enacting special community IP rights to ensure cultural survival.

Gold: Traditional knowledge: takes the form of knowledge that indigenous populations have regarding uses of plants of animals; pre-scientific knowledge; also includes cultural elements, like songs, stories, etc.E.g.: neem tree or tumeric in India: researchers knew of their value b/c of their use by indig groups; enabled them to hone in on their research targets, saving time and $. Claims for indig community prop rts to counter cultural insensitivity of taking song out of context, no compensation to groupsNote that singer in Ami tribe would have protection over the performance of the song that was recorded; would be individual, atomistic rt, not community rt like the one Riley is asking forSong itself not protected; could have been re-recorded, sung in same way, and would not have been protectedRiley’s claim: problematic: should we protect communtiy IP rts simply b/c the community doesn’t like it when the songs/info are taken out of context? What is the normative basis of the protection? Utilitarian? Natural rights? Attachment of the community to the songs?

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IP Gold Summary 2003 Prepared by Sarita KeirouzPublic domain arguments apply as much to traditional knowledge as to industrial and technical knowledge. Riley seems to be trying to claim expansive control over all use: but even our own moral rights are circumscribed.Our belief: Knowledge should be open to be used. Our culture develops by incorporating public domain elements and elements from other cultures. © would have solved the problem in this case. But not all cases.Example of Ontario company mass-producing dream-catchers: Cultural appropriation. But is it misappropriation? Is the very act of taking s/t from another culture wrong? Western (and industrialised) cultures do it to each other all the time. Are procedural problems: have been patents granted on actual traditional knowledge (that has not been isolated in artificial setting): patent examiners did not know it was already known and was therefor not new. To address this problem: in India, they are creating a data bank of traditional knowledge for reference; problem here, though, is that the knowledge still can’t be protected for the use of the traditional populations, b/c everyone would have access to it. Groups are forced to share, and some don’t want to. Must reflect on the consequences of labelling everything as IPWhen examining whether IP rt should be granted: 1) Start from background position of value of public domain: general consensus that availability of info to all is better b/c it allows for the development of knowledge2) deviation from this rule: need normative justification: labour? Natural rts? One theoretical justification cannot explain all rts: need mixture, and depends on nature of object3) if there is a justification: what entitlement should go with it? should there be a veto over all use? Some uses? Control over revenue stream? Determination should depend on normative justificationMust also look at how the good is used and how it ought to be used (in accordance with the justification for taking it out of the public domain)4) How should the entitlement be protected?

Property rt (absolute veto)?Liability entitlement to damages?Compulsory licensing?Licensing pools (music model)Government grants (research grants, tax credits, etc…)

5) what are the limits on the entitlements? (exceptions to exceptions) And what are the remedies ?e.g., in cases of catastrophic illnesses: AIDS drugs must be made available to all suffererswhat rules?6) Who makes the decisions?

So far, they have largely been made by the cts. In the EU, decisions have been leg’ve.Should they be domestic? International?

No regime is static: changes must be contemplated, but they must be looked at within a coherent policy framework.

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