Sunday, January 25, 2015

Labrecque c. Trudel – The Tale of a Copyright Infringement Action Gone Wrong

In Canada, a copyright infringement action may be brought before either the Federal Court or the Superior Court of a province. The Federal Court is generally favoured by litigants given its experience with copyright law. The Superior Court of Quebec’s decision in Labrecque (O Sauna) c. Trudel (Centre Bellaza, s.e.n.c.) exemplifies why that is, and also why it is prudent to assure that your lawyer is up on his or her copyright law. 

One of the photos in question
Plaintiff, a sauna manufacturer and distributer, entered into negotiations with Defendant who was seeking to purchase a sauna for a beauty/wellness center (which ultimately never opened). The deal went sour and resulted in litigation. Defendant had registered a domain name where it posted images of saunas belonging to Plaintiff; Plaintiff was posing in the photos (pictured to the left). Defendant found the images in a Google image search.

Plaintiff sued Defendant asking for $1,500 in compensatory damages and $5,500 in punitive damages. The claim was based on provisions of the Quebec Charter of Human Rights and Freedoms (Quebec Charter) and Civil Code of Quebec (C.c.Q.) dealing with the right to privacy:

Article 5 – Quebec Charter

 “Every person has a right to respect for his private life”

Article 35 C.c.Q.
Every person has a right to the respect of his reputation and privacy.
No one may invade the privacy of a person without the consent of the person unless authorized
by law.

Article 36 C.c.Q.
 The following acts, in particular, may be considered as invasions of the privacy of a person: 

(5) Using his name, image, likeness or voice for a purpose other than the legitimate information of the public.”

Gervais J. did not accept Plaintiff’s arguments based on these provisions. He found that since Plaintiff posted the images online herself, they could hardly be considered “private”. The Court did find that Defendant infringed Plaintiff’s copyright. 

In addition to more minor errors, such as equivocating between a domain name registrar and internet service provider (para. 22), or imputing a Canadian citizenship requirement for an author’s work to be protected in Canada (para. 44), the Court conflated the legal analysis for calculating damages and accounting of profits. Of course, none of this mattered in the end as the Court decided to, seemingly arbitrarily, award Plaintiff $400 in damages without justifying that calculation. The Court also cited repealed provisions of the Copyright Act (“Act”) to determine whether Plaintiff actually owned rights in the photographs, though Gervais J. did acknowledge his awareness that the provisions had been repealed. 

Since Defendant never launched a business, Plaintiff was unable to prove that it suffered losses resulting from the infringement. This would have been a perfect occasion for Plaintiff to take advantage of the Act’s new statutory damage provisions. Since these were arguably “commercial” infringements, Plaintiff would have been awarded $500-$20,000 per image, at the court’s discretion (s. 38.1(1)(a)). Electing statutory damages would also not have prevented Plaintiff from seeking punitive damages (s. 38.1(7)), though none appear to be merited in this case. 

Counsel for Plaintiff also curiously failed to ask the Court for an injunction forcing Respondent to remove the images from the website. This would have been appropriate given that Plaintiff only found out about the images from other customers asking whether Plaintiff was affiliated with the website. Plaintiff has an interest in ending that confusion.

This appears to be a case in which nearly everything that could go wrong did. While the Court rightly found that Defendant infringed Plaintiff’s copyright, the $400 damage award was entirely baseless. Gervais J. noted that Plaintiff did not prove that it suffered any damages or that Defendant made any profits. However, he states that even though he could find no quantifiable harm, the jurisprudence gives judges broad discretion on whether and how much to award a successful party in a copyright claim. Gervais J. fails to cite any authority for this statement. Upon a finding of infringement, the court does not have any discretion to refuse proven damages. Accounting of profits is an equitable remedy and it is therefore at the court’s discretion whether it should be granted; but once the court decides to allow an accounting, the manner in which the accounts are calculated should not be seen as discretionary. 

Counsel for Plaintiff’s reliance on Article 5 of the Quebec Charter and Articles 35-36 C.c.Q. was misguided. As Gervais J. rightly pointed out, the right to privacy under Article 35 C.c.Q. and Article 5 of the Quebec Charter cannot be engaged when the information (or in this case image) is already in the public domain. This is consistent with the Supreme Court of Canada’s 2004 decision in Gilles E. Néron Communication Marketing Inc. v. Chambre des notaires du Québec.

The Court found as a matter of fact that Defendant had no malicious intent in using Plaintiff’s images and that they were not trade competitors. The claim for punitive damages was therefore rightly recognized by the Court as unwarranted. 

Failing to ask for statutory damages was a major oversight. It was obvious that no real injury occurred. Since Defendant never launched a business, it is debatable whether it was truly a “commercial infringer”. In any event, Plaintiff would have been entitled to damages under s. 38.1(1) of the Act. 

By far the funniest paragraph in the decision (para. 22) is where Gervais J. relays Defendant’s testimony regarding its domain name registration. Defendant testified that since it signed a three-year contract with the “internet service provider”, it could not remove the content before that time was up. Such a counter-factual argument did not, however, noticeably diminish Defendant’s credibility with the Court considering Gervais J.’s low damage award.

Monday, September 8, 2014

Patent Trolls: Cultivating A Growing Distaste Among Attorneys General In The U.S.

The term “patent troll” is nothing new. Patent trolls (also referred to as “patent assertion entities” (PAEs) or “non-practicing entities” (NPEs)) are patent holders that generate revenue by sending demand letters to claimed infringers in an attempt to produce licensing opportunities. In order to be considered a patent troll the entity must not actually practice the patent themselves, instead relying on the threat of litigation as a revenue stream. 
Image by Stuart Miles
Much has been made of patent trolls and their practices. An article recently published on JDSupra detailed several individual efforts undertaken by legal officials in a number of American states to curb the practices of patent trolls within their respective jurisdictions. To give a few examples:

  •        In New York, Attorney General Eric Shneiderman investigated MPHJ Technology, an alleged patent troll. The investigation concluded with a settlement under which MPHJ agreed do desist from hundreds of threatened law suits against businesses in that state. Known as the “scanner troll”, MPJH claimed a patent on a process for scanning and emailing electronic documents. It sent demand letters asking businesses for $1,000 per employee to avoid having suit filed against them for patent infringement. The Attorney General of Vermont, Bill Sorrell has also taken up against MPHJ.
  •        The Oregon State Senate introduced a bill that would amend the State’s Unlawful Trade Practice Act to allow individuals to sue supposed patent trolls for sending a demand letter without identifying the patents at issue or how it was infringed.
  •          In early 2014, The Wisconsin State Legislature passed a bill that actually makes sending a demand letter a crime in certain instances. The bill requires that any demand letter relating to the assertion of patent rights must contain the patent’s registration number and a copy of the patent itself as well as the legal theory under which the complaining party asserts that the responding party infringed. The Law also prohibits a demand letter from containing “false, misleading, or deceptive information.” It enables the Attorney General to seek injunctions against alleged trolls and fine them up to “$50,000 for each violation or three times the aggregate amount of actual damages and costs and attorney fees awarded by the court, whichever is greater.”

These are but a few examples of actions taken by legislators and attorneys general in the U.S. against alleged patent trolls. The Wisconsin law is particularly ferocious, notwithstanding the fact that “misleading” and “deceptive” mean exactly the same thing. 

In addition to individual state efforts, the National Association of Attorneys General (NAAG) sent a letter to the U.S. Senate in February 2014 signed by 42 state attorneys general calling for a bi-partisan legislative amendment to the patent law aimed at addressing patent trolls. The only States that did not participate were California, Delaware, Georgia, Montana, North Dakota, Ohio, Oklahoma, South Dakota, and West Virginia.

In a 2006 case styled Ebay Inc. v. MercExchange, L.L.C., the U.S. Supreme Court had to decide whether injunctions should issue as a matter of course in patent infringement law suits. The Court found this not to be the case. Overturning the Court of Appeals for the Federal Circuit’s (CAFC) ruling that “the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances”, the Supreme Court held 8-0 (Justice Alito did not participate) that because the injunction is an equitable remedy, the legal test for obtaining one and the equitable factors apply. 

This is relevant because the Plaintiff at trial, MercExchange, was an alleged patent troll. The District Court for the Fourth Circuit ruled that MercExchange was not entitled to an injunction because it does not practice the patent. The CAFC overturned. Without endorsing the District Court’s reasons, the Supreme Court disabused us of the notion that injunctions should issue (almost) as a matter of course- a point I incidentally found myself squarely on the other side of when I argued for exactly that interpretation in a Canadian IP moot completion in 2012. 

One of the concurrences in that case penned by Justice Kennedy (joined by Souter, Breyer and Stevens) pointed out that granting injunctions in cases where a non-practicing entity sues a company engaging in commerce may run counter to the public interest. They noted that often money damages are more fitting. If that is the case, the injunction is inappropriate as it should only be granted when there is no sufficient remedy at law. 

It will be interesting to see if the U.S. Congress acts on the recommendations of the NAAG. There has been no sign of movement on this matter and no indication that there will be any in the near future. As noted above, however, individual states are not waiting for the Federal government to join the party.

Tuesday, August 19, 2014

Gotta Catch ‘Em All: Nintendo Pulls The Plug On 3D Printed Pokémon Planters

Claudia Ng is obviously a big fan of Pokémon. So much so that she decided to design 3D printed planters in the shape of her “personal favourite starter Pokémon”, Bulbasaur. She posted and offered these ceramic planters for sale on Shapeways, an online marketplace for 3D printed items. According to a GameZone post, the original Shapeways page featuring the planters was pulled when the website got a takedown request from Nintendo saying that the planters infringed its copyright. Much like YouTube and Facebook, Shapeways has a copyright content policy and takedown procedure (outlined here) which allows copyright holders to address these issues quickly and effectively.
The adorable side of copyright infringement
According to Ms. Ng, Nintendo asked that the page be taken down and for all monies generated from products already shipped by Shapeways. It is unclear whether Nintendo will pursue any formal copyright infringement proceedings against Ms. Ng or the Shapeways website. Its recourse against the latter may be significantly curtailed depending on the forum of a potential suit. This is because many countries, including the U.S. and Canada, have enacted provisions in their respective copyright laws limiting the liability of internet intermediaries or ISPs.

3D printing technology promises to hold many challenges to IP rights holders. These challenges will extend beyond the copyright space to touch patents and trademarks as well. On the bright side, rights holders should be encouraged by Shapeways’ response to this claim and hope that other players in the 3D printing market follow suit. 

From the perspective of someone looking to create and sell content on these sites, takedown policies will always be a looming nuisance. There will invariably be frivolous claims and false claims of infringement made out of malice. It may sometimes prove difficult (and costly) to discern legitimate from illegitimate copyright claims. One need only look at YouTube’s copyright policy to get a notion of the major machinery involved in implementing a fair copyright takedown system.

 Google has developed a highly advanced ContentID system whereby rights holders may submit reference files to YouTube of their copyright protected audio and audiovisual works. YouTube compares all videos uploaded to its service to the content stored in this reference database to weed out infringing uploads. YouTube has created a manual copyright claim process for those uploads that are missed by this system. Instead of each claim resulting in an automatic takedown, the policy allows for a time period during which the uploader may make a “counter-claim”. The original claimant may also withdraw an erroneous claim during this period. 

Google has the funds and manpower to do this; smaller websites may not. Since national laws, such as the ISP safe harbour provisions in the American DMCA, often require that qualifying ISPs have a robust takedown procedure, websites like Shapeways are more likely to favour caution and adopt a policy of “when in doubt, take it down”. The hope is that this reality does not have a chilling effect on the productivity enabled by the exciting new technology that is 3D printing and the innovative services growing around it.