Intellectual Property
Fall Semester 2003
COPYRIGHT ............................................................................................................................................... 3
PASSING OFF (SUBSET OF TRADEMARKS) ....................................................................................... 8
TRADEMARKS ..........................................................................................................................................10
TRADE SECRETS ......................................................................................................................................12
PATENTS.....................................................................................................................................................13
SUMMARY..................................................................................................................................................18
COMMON ELEMENTS OF IP REGIMES.........................................................................................................19
CONCEPTUALIZING THE NATURE OF RELATIONSHIPS IN IP SPACE ............................................................19
“The Swiss Army Knife of Governance” by Roderick Macdonald ................................................................. 19
1. WHAT’S THE NATURE OF IP RIGHTS? ....................................................................................................22
Moore v. Regents of the University of California – Cal. SC, 1990 ................................................................. 23
Gould Estate v. Stoddart Publishing – Ont. 1996 ............................................................................................ 24
2A. PROPERTY AND ENTITLEMENTS...........................................................................................................25
“Property Rules, Liability Rules and Inalienability” - Guido Calabresi and A. Douglas Malamed ................ 25
2C. CONTRACTS .........................................................................................................................................28
ProCD, Inc v. Zeidenberg – US CA, 1996 ...................................................................................................... 28
“Breaking Barriers: The Relationship between Contract and Intellectual Property Law” by Raymond Nimmer
........................................................................................................................................................................ 28
“Privately Legislated Intellectual Property Rights” by J.H. Reichman and Jonathan A. Franklin .................. 30
3. JUSTIFICATIONS FOR ORDERING OF IP SPACE ........................................................................31
A. ECONOMIC/EFFICIENCY/UTILITARIAN ...................................................................................................31
Free World Trust v. Electro Santé – SCC, 2000.............................................................................................. 32
“Law and Economics” by Robert Couter and Thoms Ulen ............................................................................. 34
“Trademark Law: An Economic Perspective” by William M. Landes and Richard A. Posner ....................... 35
“The Language and Culture of Economics” by James Boyd White ................................................................ 35
B. DISTRIBUTIVE JUSTICE ..........................................................................................................................36
“The Second Enclosure Movement and the Construction of the Public Domain” by James Boyle ................ 36
“The Public Domain” by Jessica Litman......................................................................................................... 37
C. PERSONHOOD ........................................................................................................................................38
“The Philosophy of Intellectual Property” by Justin Hughes .......................................................................... 38
Hegel ............................................................................................................................................................... 40
D. LABOUR/DESERT ...................................................................................................................................41
“The Philosophy of Intellectual Property” by Justin Hughes .......................................................................... 41
“Deserving to Own Intellectual Property” by Lawrence C. Becker ................................................................ 43
Locke .............................................................................................................................................................. 45
E. CASE STUDY ..........................................................................................................................................45
“Droit D’Auteur and Copyright: Between History and Nature” by Alain Strowel.......................................... 45
Théberge v. Galeries d’Art du Petit Champlain – SCC, 2002. ........................................................................ 48
4. ORIGINS OF PRESENT IP REGIMES ...............................................................................................50
“Explanations for the shape of intellectual property law” by Sherman and Bentley ....................................... 50
A. COPYRIGHT ...........................................................................................................................................51
“Essence of Creation” by Sherman and Bentley ............................................................................................. 51
Prise de Parole Inc. v. Guérin – Federal Court of Canada, 1995 ..................................................................... 51
Computer Assocs. Int’l v. Altai, Inc – US CA, 1992 ...................................................................................... 52
B. PATENTS ................................................................................................................................................53
“The Third Part of the Institutes of the Laws of England” by Edward Coke (1797) ....................................... 53
“The Making of Modern Intellectual Property Law” by Sherman and Bently ................................................ 53
“The Making of Modern Intellectual Property Law” by Sherman and Bently ................................................ 54
Schlumberger Canada Ltd. v. Canada (Commissioner of Patents) – Federal Court, 1982. ............................. 54
Tennessee Eastman Co. v. Canada (Commissioner of Patents) – SCC, 1974. ................................................ 55
C. TRADEMARKS ........................................................................................................................................55
“Trademarks as a form of intellectual property” by Sherman and Bentley ..................................................... 55
Reddaway v. Banham – House of Lords, 1896. .............................................................................................. 56
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Institut National des Appellations d’Origine des Vins et Eaux-de-Vie v. Andrews Wines Ltd – Ontario CA,
1987. ............................................................................................................................................................... 57
Eli Lilly and Co. v. Novopharm – Federal Court of Canada, 1997 ................................................................. 58
5. COURTS AND INSTITUTIONAL COMPETENCE ..........................................................................59
Parker v. Flook – US SC, 1978 ....................................................................................................................... 60
Diamond v. Chakrabarty – US SC, 1980. ....................................................................................................... 62
Diamond v. Diehr – US SC, 1981 ................................................................................................................... 63
Harvard College v. Canada (Commissioner of Patents) – SCC, 2002 ............................................................. 64
6. MODALITIES OF ORDERING OF IP SPACE ..................................................................................65
A. PATENTS AND TRADE SECRETS .............................................................................................................65
Beloit Canada Ltd. v. Valmet Oy – Federal CA, 1986 .................................................................................... 65
Kewanee Oil v. Bicron Corp – US SC, 1974 .................................................................................................. 68
Cadbury Schweppes v. FBI Foods – SCC, 1999. ............................................................................................ 69
B. COPYRIGHT ...........................................................................................................................................70
Feist Publications v. Rural Telephone Service – US, 1991 ............................................................................. 70
Tele-Direct (Publications) v. American Business Information – Federal Court, 1998 .................................... 72
“Reconsidering the Idea/Expression Dichotomy” – Allen Rosen ................................................................... 73
“A Rights-Based View of the Idea/Expression Dichotomy in Copyright Law” by Abraham Drassinower .... 75
CCH Canadian Ltd. v. Law Society of Upper Canada - 2002 ......................................................................... 77
Nichols v. Universal Pictures Corp – US, 1930 .............................................................................................. 79
Walt Disney Productions v. Air Pirates – US, 1978 ........................................................................................ 80
Rogers v. Koons – US, 1992 ........................................................................................................................... 81
“Intellectual Property and the Problem of Parody” by Michael Spence .......................................................... 84
C. TRADEMARKS .......................................................................................................................................85
Reckitt & Colman Products Ltd. v. Borden Inc. – House of Lords, 1990. ...................................................... 85
Linoleum Manufacturing v. Nairn – UK Chancery, 1878 ............................................................................... 87
Pink Panther Beauty Corporation v. United Artists Corporation – Federal Court, 1998 ................................. 88
Kirkbi AG v. Ritvik Holdings Inc. – Fed CA , 2003 ....................................................................................... 89
Michelin-Michelin & Cie v. CAW – Fed CA, 1996........................................................................................ 90
BC Automobile Association v. Office & Professional Employees’ International Union – BC SC, 2001 ....... 90
“Rational Basis of Trademark Protection” by Frank Schecter ........................................................................ 93
“Search and Persuasion in Trademark Law” by Barton Beebe ....................................................................... 94
7. ALTERNATIVES TO IP REGIMES ....................................................................................................95
Competition Policy and Intellectual Property Rights – Michael Trebilcock, pg. 255 ..................................... 95
Volkswagen Canada v. Access International Automotive – Federal CA, 2001 .............................................. 99
Breck’s Sporting Goods Co. v. Magder – SCC, 1976 ................................................................................... 101
H.J. Heinz Co. of Canada v. Edan Foods Sales – Federal Court, 1991. ........................................................ 101
Browne & Co. v. Bluebird Industries – Canadian Internet Registration Authority, 2002 ............................. 102
Sallen v. Corinthians Licenciamentos – US, 2001 ........................................................................................ 103
“Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?” – Jeanne Clark. ............... 103
8. TRANSNATIONAL ASPECTS OF IP GOVERNANCE ..................................................................104
Yahoo! Inc v. Ligue contre le racisme et l’antisematisme – US, 2001 .......................................................... 105
Pro-C Ltd. v. Computer City – US, 2001. ..................................................................................................... 106
Braintech, Inc. v. Kostiuk – BC CA, 1999 .................................................................................................... 107
“Regulation of the Internet: Three Persistent Fallacies” by Jack Goldsmith ................................................. 108
“Information Wants to be Free: IP and the Mythologies of Control” by Polk Wagner ................................. 109
“Intellecutal Property Infringement in Global Networks: The Implications of Protection Ahead of the Curve”
– Wendy Adams. ........................................................................................................................................... 111
B. REGULATORY INSTITUTIONS ......................................................................................................114
“Compliance with the TRIPs Agreement” by J.H. Reichmann ..................................................................... 115
“Fast-Track Trade Authority and the Free Trade Agreements: Implications for Copyright Law” by Samuel
Trosow .......................................................................................................................................................... 118
9. IMPLICATIONS OF CHANGES ........................................................................................................120
“Recovering Collectivity” by Angela Riley .................................................................................................. 120
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Copyright
September 9, 2003
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Two basic forms of regime: (1) Copyright; (2) Patent.
All others are a hybrid.
Copyright – More open than patent.
What Copyright Gives You
 Definition – “Right to copy”. Reproduction of an existing work. Not reading the book, using the book
as a paperweight, etc.
 Ancillary rights – Particular use of item.
 Right to prevent others from:
 Producing or reproducing work
 Performing work in public
 Publishing work
 Engaging in or authorizing above acts
Difference between Patent and Copyright – Expression v. Content
 Copyright about reproducing particular way of expressing ideas.
 Copyright is NOT about protecting substantive idea. This is patents.
 Expression vs. content dichotomy.
 Substance is not protecting by copyright although form is.
Example: Teaching. Can reproduce Gold’s ideas, just can’t put them in the same format.
Fixation v. Corporeality
 Copyright is about expression. However, abstract expression is not protected by copyright. Must be
able to point to some physical (“fixed”) form.
 Why must work be fixed? Evidentiary value. Must be able to point to expression and say “this is
mine”.
Originality
 “What is worthy copying is prima facie worth protecting” – University of London Press.
 Work must be original.
 Traditional viewpoint - Originality means that it originated with the author. Must tie expression to you
and no further.
 Quality of expression doesn’t matter. Irrelevant that expression is bad.
 Break between Canada and US. US has increased originality standard – not enough that idea originated
with you, must also have creative sparks.
 Example: Telephone books. They originate with telephone company, but are they original. Fiest – No,
not original.
 Lower standard in Canada.
 Why would we have an originality standard? Certain ideas are part of the public domain. Leaves open
everything that was produced before the last century for use.
Category of Copyrights – Artistic Works
 “Artistic works” includes paintings, drawings, maps, charts, plans, photographs, sculptures, etc.
 Why maps? Historically, they have had an artistic quality.
 Word “artistic” identifies phrase “artistic work” and used to qualify “artistic craftsmanship”
 Does the use of the word “artistic” in the phrase import any requirements of artistic-ness in the object?
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Conclusion is that an artistic work need not be artistic. If you fit within the “box”, artistic merit is not
assessed. Categorized on the basis of type of work, not content.
Possible debate over term “artistic craftsmanship”. Implies degrees of artisticness.
Why no standards? Judges don’t want to get involved. Extremely subjective.
Category of Copyrights – Literary Works
 “Literary works” includes tables, computer programs, and compilations of literary works” (s. 2 of the
Copyright Act).
 Must literary works be literary? Gold – “What does literary mean?”
 Definition – Literary means pertaining to the use of words rather than to literature. Explains why books
are not explicitly included in definition. However, not limited to words.
 Problem with spoken word – not fixed. Therefore, not covered by this definition.
 Are characters developed in a literary work subject to copy right? Possible, but very difficult.
 Explains why we had to wait for Margaret Mitchell to die before writing a sequel to “Gone with the
Wind”.
 Again, courts do not want to have make decisions about what is literary and what is not.
Category of Copyrights – Titles
 “Work” includes the title thereof when such title is original and distinctive (s. 2 of the Copyright Act).
 Distinctiveness is a new requirement.
 Two ways to protect it: (1) Title is part and parcel of overall work. To this extent, title is protected by
copyright; (2) When title is original and distinctive, as separate work. Must claim that “Gone with the
Wind” is a work. Title in and of itself is a work that is separate from book. Difficult to argue.
 What to have a high standard for titles. Very few titles that we would consider worthy of separate
protection.
Category of Copyrights – Computer Programs
 “Computer program” means a set of instructions or statements, expressed, fixed, embodied or stored in
any manner, that is to be used directly or indirectly in a computer in order to bring about a specific
result”
 Only in the last 20 years that we have protected computer programs.
 Importance of computer program is not so much its expression. We tend to see results of work, not
work (i.e. HTML) itself.
 Literary in the sense that they use symbols.
 Don’t really fit in with the regime – utilitarian, don’t express ideas, very easy to change expression by
changing code without altering overall work.
Category of Copyrights – Dramatic Works
 “Dramatic works” includes: (a) any piece for recitation, choreographic work or mime, the scenic
arrangement or acting form of which is fixed in writing or otherwise; (b) any cinematographic work;
and (c) any compilation of dramatic works (s. 2 of the Copyright Act).
 Must be fixed in writing or otherwise.
 Is improve a dramatic work? Gold – clearly falls within (a). What if it’s not recorded by anyone? What
if someone secretly tapes it? Gold – no one knows the answer to these questions.
Category of Copyrights – Musical Works
 “Musical works” means any work of music or musical composition, with or without words, and
includes any compilation thereof.
 Can have a single copyright in combined music and lyrics to a song.
 Beatles song “Revolution” was adapted for the occasion of 1982 Constitution. Court concluded that the
new song could not be copyrighted because both the words and the song were already copyrighted.
 Again, debates as to what constitutes substantial copyright.
 Gold – As original as we think we are, we always borrow things from others. A song wouldn’t be
acceptable if it was completely new. Instead, builds on existing base.
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Certain degree of copying is perfectly acceptable. Can borrow certain elements from a particular
melody, but can’t copy what makes a song identifiable.
Elements of a Musical Work
 What are the various parts of a musical work?
 Melody
 Harmonic structure
 Rhythm
 Hook
Compilations and Databases
 “Compilation” means: (a) A work resulting from the selection or arrangement of literary, dramatic,
musical or artistic works or parts thereof; or (b) a work resulting from the selection or arrangement of
data (s. 2 of the Copyright Act).
 I will be protected for the way in which I put the material together.
 My selection of articles in a casebook is protected by copyright. A form expression.
 Still don’t have copyright of the material in the casebook. If you want to use article, must go to original
author.
 If you are originator of work, you can copyright it even if it’s identical to an existing work.
 Onus is on you to prove that work is original.
Example – Monkey accidently reproduces complete works of Shakespeare. Can get a copyright on this
because it was original.
This is where the debate about how creative a work must be (Fiest, Tele-Radio).
Assignment v. License
 Copyright arises at present day – moment you produce original work. I have a copyright on my notes.
Arises automatically.
 There is the opportunity to register their copyright. Can go to Copyright Office and register work. Most
people usually wait until they want to sue someone before they register their work.
 Amount of work is subject to copyright is mind-boggling.
 Who makes the decision about who gets a copyright? Decision is initially made by me. I decide
whether or not to seek a copyright. No governmental body decides this. A distinguishing feature
between copyrights and trademarks/patents.
 Assignment changes ownership of underlying copyright (in whole or in part).
 Translating into another language is a violation of copyright, as long as you are capturing a substantial
part of the work.
 Licence involves contractual relations only.
 May be hundreds of copyright claims in a single product. How do we deal with this? (1) Either sell
your copyright. Give your rights to someone else.
 Copyrights last for the life of the author + 50 years. Doesn’t necessarily need to be held by the author,
though.
 Joint works – When more than one person contributes to the substance of the work. Copyright will
then last until the last person dies.
 Consultants own their work unless their contract states otherwise.
Licence
 Property right is the right to exclude other people from doing certain things.
Example – Land on which we are sitting isn’t owned by anyone. Do you have the right to sit there? Yes,
there is no one to tell you that you can’t be there. Doesn’t necessarily give you a property right, though.
Merely a liberty.
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Example – McGill owns a piece of property. Can any member of the public come on to the land? No,
McGill can prevent you from trespassing. They have the power to exclude you. You have not lost a liberty,
but someone else has gained a liberty. I am allowed to be here because McGill has promised that it would
not exclude me. I am exercising my liberty. Return to state of nature. McGill University contractually gave
up a right against me.
Definition – Right to exclude.
 License is a promise not to sue you for having copied the work. I will not sue you if you copy my
casebook. Right now, I don’t have the right to copy Gold’s copyright. Even if I did, I couldn’t copy the
articles because I wouldn’t have license to all of them. Exception – Gold has accumulated the licenses
to all of the articles and gives me a license to use all of these.
 Having a license doesn’t necessarily mean that you can do something.
 Licence is the main way that people earn money off of intellectual property.
Right to Reproduction
 s. 3(1) – “Copyright means the sole right to produce or reproduce the work or any substantial part
thereof in any material part whatever”.
 What constitutes reproduction? Must consider both quality and quantity. Reproduction only applies to
the copying of the “heart” of a work.
 Translation from one medium to another is still a violation. As long as you’ve copied a substantive part
of the work, it qualifies as reproduction.
 “Material form whatever” encompasses many forms – i.e. translation from one language to another.
 Gold – This is the right to prevent other people from producing and reproducing. Really, a negative
right. Right to exclude others.
Théberge
Plaintiff gave right to print certain number of posters.
Defendant altered poster slightly.
Court found that reproduction refers to quantity of copies. To have a reproduction, there must be more than
one copy of a work in the world.
In this case, there was never more than one copy of the work in existence at one time.
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Copyright goes beyond literal words to any differences (i.e. adding a moustache to the Mona Lisa).
Learned Hand Case
Decided by Learned Hand.
Case revolved around two plays with same characters, scenes, etc.
Court found that it is possible to have a copy even if it is non-literal if the second work is essentially the
same to the first in substance.
In this case, the plays were different enough to preclude reproduction.
Summary – Copying refers to a whole work, to part of it or to its substance. Doesn’t include “common
goods” – i.e. stock phrases, computer programs that everyone writes the same way.
Limits to Copyright
 Term in US is “Fair Use”. Very Broad.
 Based in equity. “Is this fair or not fair?”
 Courts have a certain amount of discretion.
 No defined categories.
 Generally, if material is reproduced for commercial purposes, court will generally find that
infringement has occurred.
 If material is reproduced for non-commercial purposes, court will look at impact of infringement. If it
doesn’t hurt anyone, they’ll generally let it go.
 Defence
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Term in Canada is “Fair Dealing”. More narrow.
Canada allows individuals to copy material. However, a tax has been added to blank CD’s. Used to
compensate record makers.
What about parodies (i.e. Weird Al Yankovich)? Relatively difficult to argue that parody is not
infringement. Usually, copyright owners are unwilling to grant permission to parody their song. US is
more lenient.
Three exceptions:
You are allowed to copy a work for the purpose of research or private study.
You are entitled to copy a work for criticism or review (i.e. clip from film shown on TV).
You are entitled to copy a work for the purpose of news reports.
Other exceptions: University copying material for study (i.e. posting materials on WebCT).
Issues
 Copyright holder has powerful arsenal of rights. Breach of copyright still occurs every day.
 Most copyright infringements are never discovered.
 Most people don’t care that copyright infringement occurs. Don’t usually seek to enforce our rights.
 Gold – This is all part of the copyright system. Very misleading for record companies from argue that
copying is immoral. Happens all the time.
 Whole system is premised on the notion that not all copyright holders will enforce their rights.
System would grind to a halt if everyone tried to enforce their rights.
Moral Rights
 Term in continental countries is “Droit d’Auteur”. Has given rise to two forms of rights: (1) Moral
rights; (2) Reproductive rights.
 These two rights come into existence at the same time.
 Canada is a hybrid of the continental and Commonwealth systems - recognizes both moral and
reproductive rights. US recognizes only reproductive rights.
 Definition – Moral right refers to the personality/time that is invested in the work. Can’t ever sell this.
Moral rights cannot be alienated. Only way that can move is through wills. Right that the work is
preserved in its integrity – I can insist on a pseudonym, insist that my name continues to appear on
work even after I sell copyright, etc.
 Although moral rights cannot be given away, they can be waived in Canada. Waiver can be passed on.
Waiver can then be passed on to subsequent buyer by new owner. Therefore, you can demand both a
fee for the copyright and a fee for the waiver.
 Integrity is a nebulous concept (s. 28(2) of Act). Author’s right to integrity of the work is only
prejudiced if work is used in way that violates author’s honour. Must reflect negatively on author.
Parameters:
 Can’t deface work.
 Can’t use work in conjunction with products that author objects to. Doesn’t matter that you no longer
have copyright.
Any change to a sculpture, engraving or painting is deemed to be to my prejudice. Only applies to these
three categories!!!
Example – If you are trying to get a license to a joint work, must get license from both authors. Otherwise,
license is useless. Party that doesn’t want to grant a license can just sue you.
License is not permission to do something. Only the right to not be excluded.
Under Bern Convention, Canadian who obtain copyright in Canada automatically get a copyright in the US.
Americans who get a copyright automatically get a copyright in Canada.
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Can waive copyright in advance. Can try to waive moral rights in advance. Also a good idea to waive
them afterward.
Two ways to get copyright: (1) Create a work; (2) Apply to patent office. Under no obligation to do
this.
Copyrights all end 50 years after an author’s death. Copyright is completely gone after that. Anyone
can use it.
US recently decided to extent copyright time limitation to 70 years after an author’s death. Did this to
accommodate Walt Disney. Retroactive.
Purpose of copyright is to induce authors to produce more work. US time extension makes no sense
since time extension won’t encourage authors to produce more.
Once a work is in the public domain, the only thing that stops other people from taking the work and
copywriting it themselves is the “originality” requirement.
Exceptions:
 Anonymous works – 50 years from the date of publication or 75 years from the making of the work.
Whichever is less.
 Posthumous – 50 years from date of publication. Doesn’t matter that it was published 5 years after
your death.
 Joint works – 50 years after the date of death of the last author.
Bern Convention
 Drafted in 1886.
 Four main features:
(1) If you have copyright in your home state, then you automatically have copyright in all of the other
Bern member states. All these copyrights arise at the same moment.
(2) Not allowed to set up different rules for foreign authors than domestic authors. If I, as a Canadian,
travel to a state where copyrights are extended to 70 years after death, my copyright will extend
for 70 years post-death in that state.
(3) US didn’t initially sign the agreement. Instead, required authors to include © to show that their
work was copyrighted.
(4) Most of the Bern Convention has since been subsumed by one of the WTO agreements (TRIPS).
Re-affirms need to treat all authors the same. New protection for computer programmers and
broadcasters.
Passing Off (Subset of Trademarks)
September 11, 2003.
Passing Off & Trademarks
 Essence is the protection of goodwill. In contrast, patents are about the protection of expression.
 Definition – Goodwill is intangible. Refers to reputation. Value that company has in its reputation.
Protecting reputation of company as identified by certain marks, slogans, etc.
Example – Nike swoosh. You pay more for shirt with Nike swoosh because of goodwill (reputation)
associated with that mark.
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Passing off – Deals with unregistered marks. Symbols that companies use to identify their products.
No special steps need to be taken – just start using a set of colours, symbols, etc. that become
associated with the company over time. Goodwill embodied in the use of the mark.
Trademarks don’t depend on historical use. Must be registered.
Don’t need to have used trademark before registering it.
Valid for 15 year period.
Marks and Guises
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In both passing off and trademark, the marks can be a variety of things.
Works, phrases, designs, shapes, “get-up”, colours, sounds, etc.
Also certification marks or “extended passing off”. Examples – ISO 9001, “Green Product”. Certifies
that products comes from a certain geographical location or is of a certain quality.
Passing Off
 A tort that provides property rights. Part of common law.
 Applies across Canada by virtue of s. 7 (b).
 “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 commenced so to direct attention to them, between his
wares, services or business and the wares, services or business of another” (s. 7(b) of the Trademarks
Act).
Passing off prevents:
 Use of name or get-up directly to sell competing product.
 Dilution of distinctiveness of name.
 Must be able to link symbol, colour, etc. to your product before “passing off”.
Example – I can’t sell a watch called “Cartier” unless I am Cartier. I can be prevented from calling my
watch if Cartier is a registered trademark or if a company has been using name “Cartier” in conjunction
with their company. However, I can still talk about Cartier watches.
Example – I can’t call my restaurant “McDaniels” because this might infringe on McDonald’s
distinctiveness. However, I am not prevented from opening a shoe store called “McDaniels” or
“McDonald’s”.
What’s the point of all of this? To ensure that my product can be distinguished from those of my
competitors.
NB: Normally, you get better protection under trademarks. Provides statutory remedies. What if you never
bothered to register your trademark or your trademark is deficient? Can turn to common law remedies
provided by passing off.
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Remedies for Passing Off
Damages
Lost Profits – Loss of trade, damage to rpeutaiton, harmful association, loss of opportunity to licence,
inability to expand.
Accounting of Profits.
Injunction
Elements of Passing Off
 Must have goodwill or reputation attached to goods or services. Must show that you have a reputation
embodied in product. Can’t suddenly declare that particular symbol represents company.
 Must show that there has been a misrepresentation by defendant to the public leading of likely to lead
to conclusion that goods or services are those of plaintiff. Must show that average consumer would
have been confused as to whether they had bought my product or another.
 Resulting or likely to result in damage from belief engendered by misrepresentation.
Example – Doesn’t matter that Wal-Mart produces knock-off brands as long as they are marketed under
different names. However, they could potentially be sued for copying other companies’ packaging.
Example – Bluenose (boat) symbol is widely used and is not associated with one thing. No distinctiveness.
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Origin of the Mark
 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.
 Reputation need not be attached to a company. Just need to know that it comes from the same place.
Example – Every believes that Volvos come from Sweden.
Distinctiveness v. Descriptiveness
 Normally, descriptive word cannot be protected but where word acquires a secondary meaning
distinguishing one’s goods or services form that of others, can obtain protection.
Example – No name brand. Descriptive but it’s come to be recognized as a brand. Has a secondary
meaning
Example – I can’t call my hairbrush company “Hairbrush”. Exception – If I’ve been using this name for a
long time and customer have come to recognize it as a brand-name. Relevant court case – Camel Hair
Belting.
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
When used to distinguish rather than functionally describe, can give rise to passing off action.
Over time, terms may become generic. Not just a brand name, but signify a product. Examples:
Thermos, Kleenex, Q-Tips.
Example – This is why Mattel goes after people who use the word “Barbie” in songs. Don’t want it to lose
its distinctiveness and risk losing. Don’t want it to be viewed as a generic object.
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Passing off is dependent on distinctiveness in a particular territory. I can get protection for “Poulet
Frite Kentucky” in Quebec, but not in BC. Has no meaning in BC.
Companies don’t want their trademark to become generic.
Duration – As long as you use it. USE IT OR LOSE IT!!!
™ - refers to passing off.
® - refers to registered trademark.
Who must be confused?
 Product sold through distributors, etc.
 Not the confusion of middle people that counts but end consumer going into store (i.e. purchasing
pharmaceuticals).
Summary – A mark that embodies goodwill. If there’s misuse, companies can sue for injunction/damages.
Aimed at avoiding confusion among consumers. Ultimately, it is companies that benefits from this
protection.
Trademarks
“Trade-mark”
 A mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or serves
manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or
performed by others,
 A certification mark
 A distinguishing guise, or
 A proposed trade-mark
 Allows you to begin marketing a product with the knowledge that your trademark is protected.
Distinctiveness: Names and Surnames
 12(1) Subject to subject 13, a trademark is registered if it is not
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


a word that is primarily merely the name of the surname of an individual who is living or has died
within the preceding 30 years.
Whether depicted, written or sounded, either clearly descriptive or deceptively misdescriptive in the
English or French language of the character or quality of the wares of services.
Passing off could happen through a secondary meaning.
Example – Wendy’s Restaurant. Has acquired protection via passing off. It has a secondary meaning
beyond a female’s name.
Example – Can’t call my brand “Best Brand”. Cannot be misdescriptive or misleading.
Example of descriptive – “Chocolate Snack”
Example of misleading descriptive –“Chocolate Snack” that was no chocolate in it.
Never distinctive
 Some things can never overcome the distinctiveness hurdle. Never allowed to be registered.
 Covered in s. 12(1) (c) – (h). These include:
 Name in any language (Gold says this is not entirely correct!)
 Confusing with a registered TM
 Prohibited & official marks (s. 9) & generic (s. 10).
 Geographical indications (though still subject to many (supposedly temporary exceptions). Can’t sell a
product called “Montreal”.
Non-use of a trade-mark
 45(3) – “Where … it appears to the Registar that a trade-mark, either with respect to all of the wares or
services specified in the registration or with respect to any of those wares or services, was not used in
Canada at any time during the three-year period immediately preceding the date of the notice and that
the absence of use has not been due to special circumstances that excuse the absence of use, the
registration
Becoming Generic
 18(1) The registration of a trade-mark is invalid if…
(b) the trade-mark is not distrinctive at the time proceedings brinigng the validity
of the registration in to question are commenced… (s. 18(1) of the TradeMarks Act).
Certification Marks
 23(1) A certification mark may be adopted an registered only by a person who is no engaged in the
manufacture, sale, leasing or hiring of wares or the performance of services such as those in
association with which the certification mark is used.
 Character of words and services or where they come from.
 Important in that it is not a TM to use for distinguishing from others. Cannot get certification if you are
going to sell a product. There is separation and independence from the actual sale. Person who holds it
is independent and they license it out to be put on that product.
Use
 “A trade-mark is deemed to be used in association with 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.” (s. 4(1) of the Trade-Mark Act)).
 Mark has to be associated with object itself – must be direct connection between mark and product.
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Infringement of Trade-Mark
 s. 19 – Literal Infringement (i.e. guy on corner selling Cartier watches for 20 dollars. Do not need to
show that infringement has had negative impact on you – can automatically seek damages.
 s. 20 – Non-literal Infringement (i.e. similar version). Need to show that infringement has caused
damage.
 s. 22 – Depreciation of good will (i.e. tarnishing good will, reducing distinctiveness of “Barbie”.
Confusion: Famous Marks
 Pink Panther case - “What the Appellant seeks to do is 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.”
 Must specify where you are going to use the name an din what field. If you are outside of this field,
you cannot claim.
 Brand names are problematic. Have global meaning.
 Courts have read into the statute ways of giving brand names more protection. Some marks are so
famous that even if infringement is not in area that is protected, violators will still profit. Courts won’t
give trademark over unrelated areas, but may prevent others from obtaining a trademark in that area.
Depreciation
 Uses of the mark that reduced its value, esteem OR induces customers away from you.
 Allowed to use negative comparisons but not positive comparisons.
Example: Ads can say: “Pepsi is better than Coke.” Ads cannot say: “Pepsi is as good as Coke but
cheaper.”
Grey Marketing
 Product might be sold for less in one country than another.
 Enterprising individual might buy in one country and re-sell in another country for less. Not a phony
product, but hurts domestic market for product.
 Grey marketing is usually not allowed.
Trade Secrets
September 16, 2003.
A trade secret is:
 Information
 That is not generally known in the industry or easily accessible. Element of scarcity over item.
 With a commercial value
 In respect of which the owner takes precautions to maintain its secrecy..
 A trade secret does not have to be a completely new thing.
Examples – Coca cola formula; date that my store is opening, etc.
Trade secrets at common law
 Confidential information:
o Cannot be completely in public domain although can be application of thought to
information available to the public.
o Can be “out there”, but not in a form that is usable.
o Must treat as confidential and ensure that right.
 Was communicated in circumstances indicating its confidential nature.
 The receiver may only use the information for purposes for which is was conveyed.
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No limit to how long trade secrets last. (1) Effectively limited by length of time that trade secret is kept
confidential and; (2) The fact that no one else discovers trade secret independently.
Advantage of trade secret over patent – patent has limited time period. Advantage of patent over trade
secret – doesn’t matter if someone else discovers formula independently.
The right goes against anyone who uses the information in a way you don’t permit. Not a proprietary
right. Only gives me a basis for action against those who I let into my confidence. NOT A LEGAL
RIGHT. Not a right, as with trademark and copyright, against everybody. If an individual does not
know about the trade secret, you may not have a basis for action.
Risk is built into this regime – danger that someone else will discover formula or that it won’t be kept
secret.
Gold – Coca Cola’s big selling point is its trademark, not its trade secret. It would be fine even if its
trade secret was discovered.
No registration for trade secrets under common law.
Example – Nancy Oliveri. Hired to conduct confidential tests on new medical product. Discovered that
medication was not only ineffective but also hurt people. Decided to go public with information and got
sued.
Remedies
 Damages/lost profits
 Injunction
 Accounting of profits
 Restitutionary awards
Patents


s. 42 – “Every patent granted ... shall, subject to this Act, grant to the patentee and the patentee’s legal
representative for the term of the patent, from the granting of the patent, the exclusive right, privilege
and liberty of making, constructing and using the invention and selling it to others to be used … (s. 42
of the Patent Act).
A negative right.
Term of Protection
 44. `(s. 44 of the Patent Act).
 46(1) A patentee … shall, to maintain the rights according by the patent, pay to the Commissioner such
fees … as may be prescribed.
(2) Where the fees payable under subsection
(1) Are not paid within the time provided by the regulations, the term limited for the duration of
the patent shall be deemed to have expired at the end of that time (s. 46 of the Patent Act).
 Changed in 1989 to accommodate NAFTA/WTO.
 20 year minimum is an international standard.
 Individual countries can go beyond this.
Obtaining a patent
 File application with Commissioner of Patents (s. 27 of the Patent Act).
 Application must contain:
o A specification
 Must file more documents than you do for a trademark.
Review of Patent Application
(1) File application with CIPO
o Full application
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o Provisional application – Application where a person sets submits their application in an abridged
manner. Must submit full application at a later date. Danger of provisional application –
incompleteness works against you. I can only include information in my full application that
is outlined in my provisional application.
(2) Examination of patent – Reviewed by employee of patent office with expertise in that
area. Often takes two to three years for review.
(3) Issuance of patent – Patent is published 18 months after it is filed. This is when the patent actually
comes into effect. From this point on, can’t claim “trade secret” because trade secret is part of public
domain.
 During the interim period, an individual could steal the formula.
 This is why people often include “patent pending” on their product. Trying to scare you to keep you
from using the invention.
 If patent is eventually granted, patentee can then sue and claim damages.
Problem – There is incentive to delay the patent. 18 month date is meant to remove incentive to delay.
Pressure on patent offices to make their decisions faster.
Trade secret is a preferred mechanism as long as it works. Covers all information, not what’s
described in your patent application.
Why would you want provisional protection? You find out that one of your researchers is about to disclose
details about your invention. You don’t have time to complete a full patent application, so you complete a
provision patent application.
International Protection
 Through Paris Convention, entitled to apply for patent in member state within 12 months of first filing.
o Summary – I file in Canada. Within one year, I have to file in all other countries where I
want protection. Determined on a country by country basis.
 Through Patent Cooperation Treaty (PCT), can apply for international search and examination. An
alternative to Paris Convention. Only need to file patent in one of the official languages of the Paris
Convention. No need to translate for each country. After the international search and examination, I
then approach each country individually. International search and examination is very persuasive.
Delays things (and expense of translation) by about a year and half.
 It costs about $10,000 per country per patent application.
 Delay gives you time to decide whether or not patent will be commercially successful. Money is more
important than rights at this stage.
 In the end, patents are granted on a country by country basis.
Example – Harvard Mouse did not receive a patent in Canada. Therefore, I could go to the US, look at the
patent and produce a Harvard Mouse in Canada. Nothing that Harvard could do about this.
NB: “Claims” section of a patent is the important part. This is where you list all of your inventions. You get
more protection by describing your invention in less detail.
Example – Gold places chair on top of table. Describes it as a vertical structure on four struts. This
description is purposefully vague – could also cover stools, chairs, etc. Every word after description will
limit its scope.
Just because a patent office issues a patent, it doesn’t mean that it’s any good. Claim widely as possible,
then hone into what is truly important to me. Even if several claims fall away over time, I’m left with what
matters.
Scope – Literal v. Non-Literal
 Non-literal infringement – So similar, that courts find that it’s the same thing.
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
Purposive approach is used to examine non-literal infringement in Canada. Read language of the claim
and try to get at the purpose that the inventor had. We differentiate between elements that are essential
to the thing and those that are immaterial to what is really “inventive” to the invention.
Slightly different approach in the US called “patent prosecution estoppel”.
Example of patent prosecution estoppel – I have a patent on wheel up to 19 cm wide. A competitor comes
out with a wheel that is 19.1 cm wide. US will look back at negotiations over patent. If they find that you
had originally asked for a patent on wheels up to 50 cm wide but had been negotiated down to 19 cm, you
are deemed to have given up anything over 19 cm.
Approach to seeking patents – Ask for the world. Request more than you actually proceed and then
negotiate with patent office as necessary.
NB: Words in different jurisdiction don’t necessarily mean the same thing depending on how patents are
interpreted.
Patent Criteria
 To obtain a patent, an invention must satisfy all of the following criteria:
o The invention must be new (novelty)
o The invention must be inventive (non-obviousness).
o The invention must be useful.
 “Invention” means any new and useful art, process, machine, manufacture or composition of matter, or
any new and useful improvement in any art, process, machine, manufacture or composition of matter”
(s. 2 of the Patent Act). Harvard Mouse claimed to be a composition of matter.
 An invention is something that would not exist if it were not for human intervention
Failure to satisfy criteria
 s. 48.1(1) Any person may request a re-examination of any claim of a patent by filing with the
Commissioner prior art.
o An internal process.
 59. The defendant, in any action for infringement of a patent may plead as matter of defence any fact
of default which by this Act or by law renders the patent void …
 60(1). A patent or any claim in patent may be declared invalid or void by the Federal Court at the
instance of the Attorney General of Canada or at the instance of any interested person.
Novelty
 28.2 (1) The subject-matter defined by a claim in an application for a patent in Canada … must not
have been disclosed.
 (a) 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 because available to
the public in Canada or elsewhere.
 (b) before the claim date by a person not mentioned in paragraph (a) in such a manner that the subjectmatter became available to the public in Canada or elsewhere;
 (c) in an application for a patent that is filed in Canada by a person other than the applicant, and has a
filing date that is before the claim date; or
 (d) [same but for foreign application]
UNTIL YOU FILE, YOU SHOULD KEEP YOUR INVENTION AS A TRADE SECRET!
By filing, we mean first filing anywhere in the world.
Novelty requires disclosure in a single source before it is filed.
What is in an anticipated claim?
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What must be disclosed in prior art?
Test in Reeves Brothers?
Concept of Obviousness
 Expands upon novelty requirement. Allows us to “mosaic”. Generally, background knowledge + one
or two documents.
 Similar purpose to novelty.
o Should not be able to obtain monopoly over knowledge that is already in the public domain.
 Why obviousness? Anyone could make it with minimal amount of thought.
 Doesn’t matter that it wasn’t disclosed before
Statutory Provisions
 28.3 – The subject-matter defined by a claim in an application for a patent in Canada must be subjectmatter that would not have been obvious on the claim date to a person skilled in the art or science to
which it pertains, having regard to
 Is the information generally available to people in a particular field?
 (b) information disclosed before the claim date by a person not mentioned in paragraph (a) in such a
manner that the information became available of the public in Canada or elsewhere (s. 28.3 of the
Patent Act).
Test for non-obviousness
 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 This person is purported to have perfect knowledge of everything in that field.
Secondary Characteristics
 Indicia of nonobviousness includes the following:
o Commerical success. If it’s so obvious, why didn’t anyone do it before?
o Long-felt need
o Attempts by others to solve problem
o Acceptance by relevant public
o Contemporaneous development
 Court will look at all of these indicia to determine “whether the spark exists”.
European Approach to Inventive Step
 Based on determining the “technical problem” to be solve
 “Problem and solution approach”:
o Identify the technical problem to be solved
o Is the technical solution to this problem obvious to unimaginative skilled person?
o Problem of invention of purely scientific interest.
Our question – Is this the obvious next step? Their question – Is this the technical salutation to a
problem?
Different Standards
 Canada – actual and ultimate utility. Canada has least developed caselaw on meaning of utility.
 US– specific, substantial and credible utility. US has most developed caselaw on meaning of utility.
 Europe - can be made or used in industry.
Gold – None of these tests provide really high barriers to patents.
Utility in the US
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
Brenner v. Manson
Applicant claimed three forms utility:
o Specific utility in fighting tumours.
 Rejected by Patent Office for lack of evidence.
o Process is useful because it results in intended product.
o Process resulted in chemical that subject to serious scientific investigation.
To be useful, science must do something specific. Specificity is linked to invention. Has to be credible and
substantial.
Example – I can’t argue that a computer makes a good door stop. While it can hold doors open, this
specificity is not linked to the invention iteslef.
Industrial application in Europe
 European Patent Convention requires that the invention have an industrial application.
o Can be made; or
o Has an industrial use.
 European Patent Office has signalled that it may add requirement that someone would actually want to
use the invention. Must solve a problem.
Statutory Requirement for Disclosure
 “The specification of an invention must (a) correctly and fully describe the invention and its operation
or use as contemplated by the inventor;
Description of Invention
 Description of the invention must be complete
 No need, however, to explicitly describe how the invention is useful
 Adopt the point of view of someone with ordinary skill in the art
o Cannot require any knowledge other than obvious steps falling within common knowledge
of someone skilled in the art.
Description
 Would such a person understand the description to describe all instantiations of the claimed invention?
o If not, claim is over-broad.
 If there is evidence that some instantiations of the invention do not work, then claim must be rejected.
o This flows from utility requirement.
 Would this person understand that all instantiations of the invention would likely work?
o “if it is possible for the patentee to make a sound prediction and to frame a claim which does
not go beyond the limits within which the prediction remains sound, then he is entitled to do
so.”
Best Mode
 Must disclosed the “best mode” of using a machine in specifications. Some evidence that courts will be
applying this standard to other inventions. In US, this standard is applied to all products.
Biological Materials
 “Where a specification refers to a deposit of biological material and the deposit is in accordance with
the regulations, the deposit shall be considered par tof the specification and, to the extent that
subsection 27(3) cannot otherwise reasonably be complied with, the desosit shall be taken into
consideration indetermining whether the speicfiication complies with that subsection.” (s. 31.1(1) of
the Patent Act.
 Can describe invention through words, pictures, or, in the case of biological materials, through
deposits.
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US Disclosures
 Only ones in the world with this test.
 Two parts to this requirement
 Specification must describe how to make and use the invention.
US Enablement Requirement
 To be enabled, the specification must give instructions to someone skilled in the art on how to make
and use the invention
 If not all instantiations of the invention work, then the invention is not enabled.
 Cannot require undue experimentation. Apply a reasonableness standard.
Invalidity
 “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 or addition is wilfully made for the purpose of
misleng.” (s. 53(1) of the Patent Act).
 Purpose is to keep you focused on what you actually invented. Should not be claiming inventions that
are similar.
 IF YOU MAKE ONE MISTAKE, YOU LOSE EVERYTHING!
Failure to Identify Inventors
 In Canada, the failure to list all inventors does not lead to invalidity
o Not a material allegation
o See Apotext v. Wellcome Foundation
 In US, failure to name an inventor leads to invalidity unless innocent error.
Summary
Copyright
Trademark
Patent
Object
Expression, not ideas
Symbols that differentiate
Criteria
Originality, Fixation
Distinguishing
Examination
Author
Scope of Rights
Exclude copying,
performing, publishing,
broadcasting, etc.
Literal and substantially
similar
Canadian Intellectual
Property Office
Publication – Use.
Inventions/
Applied Ideas
Novelty, non-obviousness,
utility
Canadian Intellectual
Property Office
Use, Making, Selling,
Importing, Profiting from.
Scope of
Protection
Exclusions
Basis for
Invalidity
Can  Fair Dealing. US 
Fair Use. Fair Use is
broader.
Must argue that product is
not original or fixed. Can
also argue that you’ve
independently created the
same object.
Literal marks and Confusing
marks.
Lose protection if trademark
becomes generic
Becomes generic or owner
fails to use it for a period of
three years.
Purposeful. Depending on
where you are, you get
different levels of
protection. US  Very
restrictive.
Experimental Use, Medical
Procedures
A failure to disclose
material information
(including inventor in US),
Novelty, Non-Obviousness,
Failure to Pay Maintenance
fee. US  Failure to enable.
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Remedies
Damages on amount of
profit made by
infringement, my lost profits
or an injunction.
Damages on amount of
profit made by
infringement, my lost profits
or an injunction.
Damages on amount of
profit made by
infringement, my lost profits
or an injunction.
NB: These are negative rights to exclude. They are rights against other people. Language in statutes is
misleading – makes it seem as if these are positive rights.
September 23, 2003
Common Elements of IP Regimes
(1) Tangible/Intangible - All regimes are intangible.
(2) Commercial use – Plays a large role in all regimes. For some, we got beyond commercialism (i.e. CR).
TM, yes. CR, not necessarily. Patent, usually.
(3) Distribution – Initially, distributed to the author. Market is used as a mechanism to distribute these
rights. You cannot derive economic value from IP rights unless they are commercial.
(4) Negative Rights – All regimes provide right to exclude.
(5) Assignable – All regimes are fully assignable. Can be sold. Grant of right PLUS its assignability makes
it marketable.
(6) Market – Regimes use market to distribute IP goods.
(7) Amount of Reward – Value that can be extracted from IP goods is equivalent to its valuation in the
marketplace. My investment and time is irrelevant. Person who has the best use for it will pay the most
for it.
(8) Private Rights/Public Design – IP regimes allow you to acquire private rights within a public
(government) design. Shows that public/private distinction is irrelevant.
Copyright protects certain types of intangible, creative goods. Trademark protects symbols. Patents protect
applied ideas.
Conceptualizing the Nature of Relationships in IP Space
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
Ideas in the public space cannot be protected (i.e. laws of gravity).
At some point, it was decided that the way in which IP rights should be dealt with is through the
market.
“The Swiss Army Knife of Governance” by Roderick Macdonald
Thesis  Swiss army knife as an allegory for plural modes and multiple sites of governances.


Central question of institutional design is: “How are we to understand the relationship of means to ends
in imagining and developing human institutions and processes of social ordering?
State is only one instrument among many that people choose to let manage their lives in common.
(1) Swiss Champ  Too Many Tools
 There is no best response for a given problem.
 Personal atavism/biases lead to obvious solutions when non-obvious solutions might be more effective.
(2) Victorinox Handy-Man  Over-Inclusiveness
 Narrow conceptualization can be dangerous – may close off useful directions by designing a response
solely for a particularly end currently in view.
 When governing through delegates, sometimes preferable to give general power rather than specific
instruments at the risk of being overly constraining.
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(3) The Victorinox Moutaineer  Wrong Tool
 For certain jobs, a particular tool will be of not help at all.
 Some problems are beyond the capabilities of the proposed solution. An effective solution may entail
deploying larger variet of tools and swell as brining in a different actor.
(4) The Victorinox Climber  Intended use, Unforeseen Problems
 Problem is collateral damage from a poorly-designed tool. Though it may be designed for a
particularly purpose, other design compromises limit its effectiveness.
 Even when deployed within design specifications, some regulatory solutions can have unforeseen
negative consequences. Peculiarities of situation can force solution to behave in strange and
unpredictable ways.
(5) The Victorinox Camper  Creative Use, Unforeseen Problems.
 Sometimes actual use s beyond capacity of tool.
 Regularly solutions are no infinitely flexible. Efficiency and other problems can arise if solution is
asked too much. Criminal Code is groaning under weight of multiple policy objectives.
(6) The Victorinox Ranger  Design Redundancies
 Remnants if vestigial uses can clutter otherwise efficient tool (i.e. why have a pen-knife when nobody
cuts off pen nibs anymore?).
 Since explicit, legislative law reform tends to be incremental rather than revolutionary, new initiatives
are constrained by the vestiges of existing regimes.
 Leaving vestiges in place increases possibility of duplication. However, radical change leads to
discomfort.
(7) The Victorinox Time-Keeper  Specific Use Tools
 Greater specificity of intended use tends to cut off creative rethinking of uses. If there are lots of
gadgets, you tend to assume that each has a particular use.
 Microregulation tends to sell people short by denying creative role that citizens can have in solving
problems.
 Specific regulations tend to promote culture of legalism  rules are rigid and flexible.
(8)



The Victorinox Explorer  Design Tradeoffs
Inevitable tradeoffs in tool design – some due to use, some due to functionality.
Criterion used to evaluate a regulatory solution is important  closely related to end sought.
More complex the ends, more difficult to weigh alternatives. Multifaceted program of criminal
sanctions, tax incentives, regulatory permits, etc. is overkill if all you want to do is create no parking
zones in front of schools.
(9) The Victorinox Soldier  Cultural Limits
 Cultural factors influence design of tools, their use, their non-use and even their characterization (eg:
kirpan is not a weapon).
 Canadian-style health care regime is decried in US as socialism. Yet, US has many government-owned
enterprises on the periphery of military
 Cultural predispositions limits possible range of character or regulatory solutions available.
(10) The Victorinox Angler  Preconceptiosn of Use
 “Why does the knife have a corkscrew? I don’t bring bottles of wine on camping trips.”
 Preconceived notions of tool use can limit flexibility in deployment.
 Regulations tend to follow well-worn paths. Criminal sanctions used for certain problems, tax
incentives for others.
 Creative solutions require shifting categories.
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(11) The Victorinox Spartan  Primary v. Secondary Characteristiics
 Decision-making based on primary v. secondary characteristics tends to deflect from intelligent
judgement.
 Primary characteristics (i.e. strength, durability, design) v. second characteristics (i.e. price, brand
name) of tool.
 Always be numerous criteria with which to judge a solution – efficiency, effectiveness, cost, etc.
Determining which criteria are essential and which are secondary depends on end sought.
 If end sought is bang for buck, then efficiency is essential.
(12) The Victorinox Huntsman  Relations Between Uses
 “I used hook disgorger an now there are fish guts all over my knife”.
 Particular use can negate/compromise other uses.
 Particular regulatory strategy might be effective and efficient, but unpalatable to certain groups for
other reasons (i.e. sex education in schools).
 Inability of government to deal with drugs as public health stems from “moral panic campaigns of
1930’s”. Set framework in language of morality.
(13) The Victorinox Swiss Champ or the Wenger Highlander  Political Ideology
 Often, we make choices for reasons external to considerations of regulatory efficiencies. Example 
Swiss government buys knives for army from company in German-speaking canton and Frenchspeaking canton.
 Ideology looms large in all governance matters.
 How much federal policy directed to choice of instruments is shaped by consideration that some forms
(i.e. Crown corporations, direct subsidy by cheques) make it easier to display the Canadian flag?
(14) The Wenger Brushed Stainless Steel Cigar-Cutter  Administrative Cost-Benefit Analysis
 Gadgets on advanced models require a high degree of sophistications to deploy them properly.
Demand sense of purposes for which tool was initially designed.
 Particular governing instrument may require a regulatory infrasturcutre than is simply not justified
given the purposes of the policy being advanced.
 Disadvantage of tort litigation as regulatory strategy is transaction costs associated with brining
lawsuit.
(15) The Wenger Traveller: Deployment Difficulty
 Every implement requires a certain knowledge and physical capacity in order to be used effectively.
 Particular governing instrument may be appropriate in the hands of certain uses or when deployed
against a certain regulatory clientele, but inappropriate in other circumstances.
 Powers of arrest granted to peace officers under Criminal Code ought to not be given to security
guards and private police forcers.
(16) The Wenger Patriot  The Possible Becomes the Necessary
 Great number of gadgets designed to achieve a wide range of purposes suggests the necessity of the
Swiss Army Knife for whatever tasks it claims to be capable of performing. People look to knife for
solutions rather than for simpler, more easily accessible solutions.
 Knife as a whole can become so unwieldy that it’s not useful at all (i.e. Income Tax Act).
 Powers to police granted under C-36 are dangerous in that they suggest that regular police are not
sufficient to deal with terrorism and that special-purpose tools destroys reflection and judgement
necessary in choosing between instruments.
(17) Wenger Standard Issue  If it is too Complex, it will be Used for Something Else
 “This knife makes a great paperweight”. Almost any conceivable use can be accommodated with
Swiss Army Knife if it is simply made thicker and/or bigger each time.
 Highly sophisticated regulatory analysis leads governments to create highly sophisticated regulatory
instruments. Especially the case with “standards” regulation in drugs, food, etc.
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
People do not think of orienting their conduct by reference to vast range of implements with highly
specialized uses.
(18) The Wenger Esquire  Multiple Regulatory Sites
 Choosing right tool can require significant investment of time and energy. Risk of paralysis.
 Governance is viewed as affair of the government  ie competition for governance lies between
provincial and federal government.
 Causes difficulty when different instrument are deployed. Example  Delegating regulation of tax
regimes to private sector. Raises questions about constitutionality, distribution of powers between
different levels of government, etc.
(19) The Wenger Mini-Grip  The Ghost in the Machine
 No amount of instructions, no amount of education in use, no amount of supervisory control can ever
prevent a person intent on doing harm from accomplishing their objectives.
 Certain tools enhance agency of user more than others. Certain delegations formally escape obligatory
governmental collateral norms (i.e. privatized public service sector).
Conclusion  Governance issues confronting government is how ought law and legal institutions be
deployed to achieve the symbolic governance of human agency is a manner that facilitate the just
achievement of individual and collective human purpose.
Discussion
(1) IP is a tool used by public policy makers to achieve certain goals.
 Goal may be recognizing a pre-existing right.
(2) Nothing inevitable about the structure of IP rights (private rights, assignabiliity).
 There are other potential regimes.
 Could have used other mechanisms to allocate rights in IP space.
(3) All tools are broad in scope. Same regime that applies to toothbrushes also applies to nuclear weapons.
 Covers a huge range of activities.
 Could have had separate regimes but didn’t.
(4) What are the consequences of taking a private rights approach? Is this merely a tool to reach an end?
 i.e. Harvard Mouse Patent. We’re saying that we control animals.
 i.e. US Olympic Committee has trademark over term “Olympics”. Allowed Paralymics to use
word “Olympics”. Refused to allow Gay Olympics to use word “Olympics”. Implicit valuation.
(5) People know that there are overlapping rights. Patent very little to keep rest as trade secret. People do
not use system as public policy makers designed them.
(6) Redundancies
 Systems don’t always make sense. Patent system developed in 18 th century is now being applied to
GMO’s.
(7) Cultural Limits
 Copying is not necessarily viewed as a bad thing in certain parts of the world.
 i.e. China awarded $50,000 to Microsoft for a patent infringement.
(8) Preconceptions
 We don’t know if things actually work the way we think they do.
1. What’s the Nature of IP Rights?
Rights just exist. Just because the final product is protected by an IP right doesn’t mean that there are no
other rights to consider. 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.
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Moore v. Regents of the University of California – Cal. SC, 1990
Facts
Moore had spleen removed. Doctor held on to spleen. After period of years, Moore discovered that doctor
had patented a genetic sequence derived from his cells. Market value of this product was potentially $3
million. Moore sued. Argued that he had a common law property right in his cells.
Issue
Does Moore’s claim make sense?
Ratio
Patent is factually and legally distinct from the cells. It is the inventive effort that is rewarded. Moore did
nothing to contribute materially to the invention.
Reasoning
 Patient whose extracted cells were utilised in research program to manufacture patented cell line did not
have cause of action under theory of conversion; patient did not retain ownership interest in cells
following their removal.
 Patent is about creativity, not about physical object. By claiming physical object, you cannot get a
claim on the “idea”. Really about creative spark, the intangible thing.
Comments
Argument that “but for” Moore invention wouldn’t exist is moot.
Example – If a robber breaks into a house and comes up with a great idea during the course of the break-in,
do the proprietors have a right to the idea? No. Could claim for trespass (just as Moore could claim for
trespass), but no claim over ideas.
Discussion
 What rights come out of property rights in a cell? You can destroy it, use it, sell it, etc. I can exclude
other people from doing these things.
 When I have a patent over a cell line, what rights do I have? I have the right to prevent anyone from
using my invention. My invention is the cells. Therefore, I can keep people from using these same
cells. Can stop anyone from me using the “idea” of my cells. Every incarnation of the cell line is
subject to my rights.
 Theoretically, how do you patent a cell line? Test – (1) Novelty; (2) Originality. Must look at whether
or not the cell line exists in nature in this form. Cell line qualifies as an invention because, if it wasn’t
for human intervention, it wouldn’t exist?
 I can get an injunction to stop people from researching on my cells.
 Assuming Moore had a property right in the extracted cells: Moore claims that but for those cells, there
would be no patent. (p. 48) Crt: distinction b/t claim to the patent and the claim to the cells.
 Why? I make a mouse trap that uses cheese and you make one that doesn’t. I have a veto to prevent
anyone from using a mouse trap that uses cheese. You have a veto to prevent anyone from using a
mouse trap that doesn’t. I have a veto over your activity because you only added something to my
mouse trap to create your own. Their mere addition of invention doesn’t mean that I don’t have some
proprietary interest in your patent. This is distinguishable from Moore’s claim.
 Patent right and common law right are different and separate.
 Law in Canada is unclear. No comparable cases. Approach  Must identify subject matter first!
NB: Moore is NOT claiming that the doctor should not have patented the cells. Rather, he’s claiming a
proprietary stake in the patent. He claimed a common law property right in the cells, therefore wanted a
proprietary right in the patent.
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Gould Estate v. Stoddart Publishing – Ont. 1996
Facts
Journalist interviewed Gould early in his career. Resulted in a magazine article. Gould passed away.
Journalist then published a book about Gould based on these interviews. Gould’s estate than sued for
copyright infringement (violation of Gould’s right to personality). Journalist argued that he had copyright
over pictures and text. Right to exclude everybody else.
Ratio
Carroll, as the author of the text and captions in the book, was the owner of the unrestricted copyright in
written material. It was Carroll alone who was the owner of all relevant copyright and he was the only
person entitled to publish the book.
Reasoning
 Address the proprietary rights Carroll had in the photos and other material created by Carroll in 1956
& 1995 [as opposed to Gould’s right to privacy & exploitation of his own image]. Gould clearly
consented to the photographs being taken and to the continuing interviews by Carroll. No contract b/t
them. The only issue is whether Gould or his agent imposed any limitation on that consent (Gould did
not).
 In 1995 Carroll was the owner of the copyright in all 400 photos taken in 1956 & in the photo captions
& the accompanying text in the book. Accordingly, prior to entering into publishing arrangements with
the respondent Stoddart Publishing, Carroll had exclusive proprietary rights in the photographs by
virtue of being the author. Thus, the onus is on Gould’s side to show that Gould retained the copyright
or that Carroll’s copyright expired once the article in question was published in Weekend Magazine.
 Under the Copyright Act, §10(2) copyright subsists in a photograph for 50 years from the end of the
year of the first making of the original negative (or photograph if there is no negative) from which the
photograph was directly or indirectly derived. The owner of the original negative or photograph as the
case may be, is deemed to be the author and the first owner of the copyright. In no sense can Gould be
said to have commissioned the photographs of himself.
Personality Rights  Applies only to celebrities who exploit their fame in a commercial setting.
Glen Gould’s estate was unsuccessful in trying to stop the use of photographs of the pianist in the bio. A
claim that Gould’s personality had been misappropriated failed: the shots had been taken with Gould’s
consent during an interview and were used on an occasion of public interest, not merely to exploit Gould’s
personality to sell products. The estate of Glen Gould sued and the court said that the right of personality
was not violated. The Court of Appeal (p.68) said that once Carroll had a property right in the photographs
and the other material, there was no cause of action: copyright was not violated.
Discussion
 Journalist had copyright over his material. However, he treated it as if he had a positive right not a
negative right.
 Didn’t realize that someone else might have a negative right against him. Gould had personality rights
which excluded journalist.
 In this case, copyright was deemed to trump personality rights.
 Gold – Effect of this decision would be to kills right of personality as someone is going go have IP
rights in photos, interviews, etc.
Comparing Moore to Gould
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Moore no longer has an interest in his cells, but Gould’s estate does have an interest in his
photographs.
Moore  Even though it was necessary for the cells to be extracted for the cell line to be made, there
were other factors necessary for the patent creation. Imagine if someone wants to create a lot of these
cell lines, they need to buy the cell line and the cells. In terms of separating the patent right from the
cells, the court was right.
If applied to Gould, then the right of personality is not extinguished. All property rights are positive
rights, so Carroll had a veto over the photos. To the extent that Gould had a negative right over this
personality, Gould’s estate had a veto power. The Court of Appeal was wrong and Lederman J.’s
account in the lower court was the correct one. He understood where the Court of Appeal did not: the
right of personality continued.
Appropriateness of considering subject matter as property
 In both cases, there seem to be an unwillingness to think about the objects in question in terms of a
property regime.
 Do you think it is appropriate for the court not to think of these things in terms of property? Lederman
J. was trying not to commodify all aspects of a public persona; (p.60) the right of personality exists in
respect of sales, but does not exist with respect to subject. Sales to him: you’re just using the persona
to sell the subject; you’re already treating it as a commodity. Before this case, rights of personality
were quite vague.
 The previous decision in Krouse v. Chrysler Canada Ltd. was the total opposite of this decision.
Unless the Court of Appeal was trying to overturn that decision, it made Krouse totally irrelevant and
wrongly so.
Authorship
 We could see Moore and Gould as authors. What was the reason for saying that Gould did not have a
copyright in what he was saying? It was a fixation argument and Gould’s estate argued that Gould did
not intend his words to be fixed. The courts are more concerned about the lack of a creative
intervention in Moore and Gould’s case. The value of Carroll’s work came partly from Gould’s
persona and partly from Carroll’s work; the value of the patented cell line came from Moore’s cells:
why do we only protect the last step (the fixation)?
2a. Property and Entitlements
“Property Rules, Liability Rules and Inalienability” - Guido Calabresi and A. Douglas Malamed
Thesis  Classic article examining nature of entitlement. Problem of entitlement is the basic issue faced
by any legal system.
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Definition of entitlement  A relationship that a person ought to have with a particular good.
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 am entitled to be kept alive. I am entitled to a car.
Reasons for entitlements includes:
(1) Economic efficiency. 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
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optimality has been reached,What allocation of efficiency will lead to optimal market
decisions (i.e. between buying a car and taking the train?)
(2) Distributional Goods. Two types of distributional goods  (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 some other allocational principle. Looks
at how to compensate for all the differences and various valuations of various things. How
does society distribute entitlements? Is a particular entitlement deemed essential or governed
by the market?
(3) Other Justice Reasons. Explaining entitlements solely in terms of efficiency and distribution is
not enough. Includes all other reasons for favouring one way of distributing efficiencies over
another (i.e. caste system).
Types of entitlements:
(1) Offer me a property right. Something that cannot be taken away from you. You have a veto
over other people’s activities with regards to that good. You can stop them from using that
good. This form gives rise to least amount of state intervention. Someone who wishes to
remove the entitlement from you must buy it from me in a voluntary transaction in which the
value of the entitlement is agreed upon by the seller.
(2) Liability rule. Does not give entitlement holder the right to prevent another from using the
good. However, user must pay compensation. State requires a mechanism to determine what
the appropriate level of compensation is. Example: I can’t prevent you from crashing into my
car. No veto. However, I can require you to pay liability.
(3) Inalienability. 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. Example: I can’t transfer my right to vote to someone else. I can’t give away
my right to life. State will not allow you to deal with a particular good in this manner.
Question to examine: “What is the entitlement that a theory entitles me to? How do we protect this
entitlement?”
Sometimes property rules have negative consequences. If my entitlement is protected by a property
rule, I have veto. However, everyone else with entitlements also has vetoes. How do we coordinate all
of our activities? These vetoes can be impractical and increase the cost of doing business.
Must look at entitlement separately from property right.
When you’re thinking about IP, it’s important to consider both: (1) What is your entitlement and; (2)
How do you enforce it.
Gold – The separation of these two rights is the great contribution of this article.
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
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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 impossible.
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 sale is most efficient: 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
o Self paternalism: decision of individual (or group) to not 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.
o 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.
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
Dessert/Lockean view of asserting personal o’ship: makes no sense in C & M context.
2c. Contracts
 A look at the role of contract law in enforcing intellectual property rights.
ProCD, Inc v. Zeidenberg – US CA, 1996
Facts
Plaintiff produced searchable telephone directory based on 3000 different telephone books (not
copyrightable). License (a form of contract) was included inside of the product’s shrinkwrap. The product
was not copywrited. Defendant purchased the product, then proceeded to resell it on the internet in
violation of the terms of the license. Defendant tried to argue that terms of license were only binding if
printed on the side of the box.
Issue
Is the license agreement and its terms enforceable even though they were not known to the defendant at the
time of purchase?
Ratio
Shrinkwrap licenses are enforceable unless their terms are objectionable on grounds applicable to contracts
in general. Contracts can play the same role as copyright.
Reasoning
(1) Custom – You know that there are contractual terms associated with any software
purchase. Can’t possibly print all of these terms on the box.
(1) The Importance of Contract – Must have a series of contract rules that are applicable to intellectual
property. Cannot just rely on property rights to protect transfer of goods.
Per UCC, buyer can accept contract through performance of an act. In this case, defendant accepted terms.
Had opportunity to reject license terms, but did not.
Discussion
 Property law makes no sense in the absence of contract law. If all we’ve studied is property law, we
have missed a good deal about the practicality of IP law.
 This is a case about buying software and licensing agreements. Easterbrook J. thought the idea of
licensing is a good thing and made it easy in that case to have contracts of adhesion. When you
purchase a box, the agreement is inside. Instead of viewing this relationship as a relationship of
property, he thinks its better to be able to govern what you can and cannot do in IP space, through
contract. He wants there to be transactional lawyers rather than IP lawyers.
“Breaking Barriers: The Relationship between Contract and Intellectual Property Law” by
Raymond Nimmer
Thesis  When one speaks about an existing balance in the property rights sector, it is futile to focus
solely on the statutory provisions of the copyright, patent or trademark laws. One must, of necessity,
understand and incorporate into the analysis the fact that the policy choice has always assumed that
property rights are routinely transferred, waived, released, and licensed. Contracts provide the means for
the development and commercial exploitation of information assets.”
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Without contract law, intellectual property is useless field.
Politicians argue that by bringing contract to the context of information transactions, contracts will be
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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.
Therefore, we should be concentrating far more on contract law rather than intellectual property law.
Bargain between buyer and seller cannot be understood outside of the realm of contract law.
Intellectual property regime merely gets market going. Market ultimately sets the price.
Doesn’t matter who gets it. Market will ensure that it gets to the person who values it the most.
When software makers sell their products, they form contracts with each and every purchaser.
Through this contract, they can ask for anything they want. They can ask for your first born.
Can ask for things that go beyond realm of intellectual property rights.
Contracts are what govern our lives. It’s up to me to decide what rights I do and do not want to give up
through contract. If I don’t want to give up my first born, I just shouldn’t buy the product.
We should encourage the trend to use contracts rather than property rules to govern relationships
between people.
Eventually, intellectual property will become less and less relevant.
Relationship/Symbiotic Conjunction of Contract and Property Law
 All of the relationships and distribution choices involved in commercialization of information assets
involve contracts. The second method through which information and information assets are created
and exploited involves situations in which the information if given away and any rights in it
relinquished in whole or in part (non-contractual, open forum use of information: 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 one of two 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. 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 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.
 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. These form, in effect, a starting point for fashioning the transaction.
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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.
From a K law standpoint, setting out background principles is the primary function of property law.
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).
Discussion
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 by contracting 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 L’ing agreements.
“Privately Legislated Intellectual Property Rights” by J.H. Reichman and Jonathan A. Franklin
Thesis  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.
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IP bargain is fundamental and is the basis for society’s balance of entitling IP goods. Traditionally,
trying to achieve balance between owner and users. Owners must receive compensation for use of
goods.
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.
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: (a) All
mass-market contracts, non-negotiable access contracts, and contracts imposing non-negotiable
restrictions on uses of compeuterized 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.
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
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detrimental to the public interest.
A court can find a clause in one of these agreements to be an unenforceable if the product cannot be
catalogued, put into a library, etc.
A contract that tries to undermine the fundamental tenets of IP law should be declared invalid.
The balance of IP rights ought to be set by the state.
Conclusion – IP and Contracts
 R & F see the relationship between contract and property quite differently from the Easterbrook J. and
Nimmer.
 R & F believe 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 (//you shouldn’t
regulate pollution, but what should matter is the consumption of water). 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.
 Easterbrook and Nimmer argue that IP will become less and less important.
 Two opposing camps: (1) IP law should set out the parameters of what you can and cannot do; (2) You
need IP law to get the “motor” running, but contract law is necessary to establish a “fine balance”.
 Both contracts and intellectual property rights are regulatory tools. One is committed to patent rules
and the other to market forces.
 Contract is always there to modify rules.
 Gold – In Canada, we seem to be more on the Reichman side of things rather than the
Easterbrook/Franklin perspective.
 “Bargain” language seems to be far more pervasive in Canadian courts than in American courts.
3. Justifications for Ordering of IP Space
a. Economic/Efficiency/Utilitarian
Utilitarianism - General
 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.
Economic/Efficiency-Based Utilitarianism
 The view that, all things equal, a wealthier society is better off than a poorer one.
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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?)
Three ways to implement IP rights
(1) Reward by Monopoly. Give the intelleuctual property holder a monopoly. A creative act should be
rewarded. Creative acts are beneficial to society. State can’t determine what reward ought to be.
Instead, the market tells us what the value of a creation is. Entitlement enforced by a property rule
allows you to trade that good in the marketplace.
(2) Monopoly by Profit. The collective social goal is to provide an incentive for people to create more.
Creativity is encouraged through the grant of a monopoly. What kind of incentive do we need to give
people to encourage them to invent. Answer – we need to give them enough money so that they’ll
invent.
(3) Exchange for Secrets. How much of an incentive do we need to give people so that they give us details
about their invention? Emphasis is on maximizing disclosure. May have to give a different set of
incentives then if we were just trying to encourage innovation.
Free World Trust v. Electro Santé – SCC, 2000
Facts
Plaintiff created a machine called a “Rhumart” which used electro-magnetic waves for therapeutic
purposes. This technology was protected by two separate patents. One of the plaintiff’s employees left the
company and subsequently created a similar machine based on different technology.
Issue
Does a patent protect the “spirit” or “substance” of an invention, in addition to what’s described in the
written claim? How do you resolve the tension between “literal” and “substantive” infringement?
Ratio
Courts should look to the language of a claim (“purposive approach”) rather than its substance. Elements of
the claim should be identified as either essential (where substitution of another element takes device outside
monopoly) or non-essential (where substitution is not fatal to allegations of monopoly) based on: (1)
Purposive interpretation; (2) Whether reasonable person would construe element as essential/non-essential
based on knowledge on date when patent was disclosed.
Reasoning
 The claim cannot be stretched to allow the patentee to monopolize anything that achieves the desirable
result. Language is interpreted in light of what a “reasonable man possessing ordinary knowledge of
the art” would comprehend. Once it is determined what is protected by the scope of the language, can
then determine if defendant’s product falls within this ambit.
 Adherence to language is important because the scope of its prohibition must be made clear to the
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public. If claims were interpreted in their substance, could have a “chilling” effect on experimentation.
More discretion courts have in interpreting “substance of claims”, the less certainty there is.
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.
In this case, the respondents' device does not infringe, because they simply show a different way of
reaching the result reached by the appellants. 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.
Approach
(1) Spirit of the patent  Used by Germans. More of an emphasis on natural rights
approach than other approaches.
(2) Literal  Used by Americans. Purely economic theory.
(3) Purposive  Derived from English law. Court looks at the words used and interprets
them in the eyes of someone in the field.
o What would someone in the field recognize as being essential/non-essential to the claim?
o Binnie – “Patent protection rests on a bargain with the public. In exchange for disclosure to the
public, inventor acquires for a limited time an exclusive right of use.”
o Gold – Explicit use of “exchange for secrets” approach.
o A balancing of “not too much, not too little”.
Discussion
 Problems with literal approach  Very narrow. If you leave out a couple of words, you may be out of
luck This rationale invokes the reward by monopoly approach.
 Problems with broad approach  Inventions may be attributed to inventor that he never thought of.
“Chilling effect” on invention because inventors are worried about infringing on other people’s patents.
This rationale invokes monopoly by profit.
 There is clearly an emphasis on economic theory in this judgment. Binnie, J. is not referring to other
social values/societal needs. The patent system should be calibrated to an economic theory. Gold –
Unfortunately, Binnie is not clear about which economic theory he is invoking.
 If we are too narrow, we won’t have enough invention. If we go too broad, we are over-compensating
the inventor. We would be capturing social values that should be going to the public/other inventors.
 No discussion of natural right to invention. Court has not adopted this approach. Gold – This rationale
is almost never used in patent law. Sometimes arises.
 NB: Any time you are examining a patent, must first examine the scope. List the essential and the nonessential elements. Then, you look at the infringing invention. Must look at whether or not essential
elements are present in the infringing inventions. If one essential element is missing, then there is no
infringement. For non-essential elements, they do not need to be there at all. Not restricting inventor to
specific language, but not going beyond it. Claims to be an objective test.
Festo (US case)
Free World
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As in Canada, make a list of all elements.
However, these are not divided into
essential/non-essential.
Instead, examine each element one-at-atime to find out if invention contains that
element or a substantial equivalent.
If all elements are present, in either in exact
form or substantial equivalence form, then
there is infringement.
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“How would a reasonable person interpret the
claim at the time of publication? What elements are
essential/non-essential?”
Non-essential elements – Even if these weren’t
present, we would still have basically the same
invention.
- All essential elements must be present for
invention to be infringement.
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Which approach is broader? Gold – it’s not really clear. They could lead to different results in different
situations. Canada allows no variation on essential elements while US allows some. US is stricter when it
comes to copying non-essential elements.
Patent Prosecution Estoppel  Once patent is issued, record of communication between patent and
inventor is made public. In US, people who are reading the correspondence could use this information to
figure out what are an invention’s essential elements. Perhaps you used specific words of limitations
because patent office required it. By including these words, you are saying they matter. Therefore, you are
estopped from arguing that these elements don’t matter. Patent office takes words of limitation very
seriously. Cannot claim substantial equivalence. Example: I can see that my competitor claimed a wheel of
50 cm, but settled for a wheel of 20cm. I can then try to claim all wheels bigger than 20 cm.
Adding one extra/different thing is enough to avoid being sued under the American “All Elements” rule.
Why is this a good thing? We want to encourage innovation/ predictability. Moreover, courts don’t like the
fact that patent lawyers keep asking for the moon and the stars. Better that they ask for what’s reasonable.
“Law and Economics” by Robert Couter and Thoms Ulen
Thesis  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
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The broader the interpretation of a patent, the longer a patent lasts. This gives a stronger incentive to
create. If you know you are going to get more, the more people will get involved in inventing.
However, the longer it lasts, the more it discourages people to stay away because they can’t get
patented information. Less tools with which to work.
Can see patents in two ways:
(1) Broad – Encourages people to engage in vast research. Can’t wait to see what someone else does,
have to get there first. If I am first, I get the whole territory. Must invent quickly. Encourages
quick, duplicative research.
(2) Narrow – Causes less fear. Even if my competitor gets territory, I can get the neighbouring
territory. Research is slower, but more complimentary. More incentive to build on what others
have done.
Two types of new innovation:
(1) Pioneering Invention – By itself, doesn’t mean a whole lot. Needs more research to be useful.
Little stand-alone value. Others must find ways to use it/improve it. If something has little standalone value, we should give broader patent protection. Gives people incentive to invent further.
(2) Stand-alone Inventions – Inventions that are useful in and of themselves. Example: Penicillin.
Market will immediately give you good reward for research. Therefore, you don’t need broad
protection
Opposite of doctrine of equivalence.
A lot of what the courts do doesn’t make sense. Courts often give inventions in new fields very broad
patents. No incentive to improve upon this, difficult for competitors to get into the field.
From an economic point, we have copyright to encourage people to invent. We have limitations on
copyright because at a certain point it becomes burdensome to determine who has the old copyright.
Subsequent innovation using that original copyright would amount to zero.
Trademarks are inherently good. They encourage companies to maintain high quality, because a
trademark is as good as the market goodwill that supports it. No real reason to limit trademarks.
Gold’s Criticisms
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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
“Trademark Law: An Economic Perspective” by William M. Landes and Richard A. Posner
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Trademarks serve a different function. A signal of quality. Someone with a valuable trademark has an
incentive to keep quality up. If you’re going to invest money in a trademark, it makes sense to keep
quality high.
From consumer perspective, trademarks are sensible. Don’t have to spend a lot of time determining
which product is best. Save consumers time and money. Decreases search costs by promoting easy
identification. Encourages spending on quality to guarantee uniformity and encourage repeat purchases
by consumers, which in turns decreases the costs of sales
Therefore TM have a self-enforcing nature that is economically beneficial.
TM also encourages the use of short phrases and generally benefits the “economy of language” by
creating new terms.
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”.
“The Language and Culture of Economics” by James Boyd White
Thesis  Challenge to notion that economics is a good tool to distribute goods in an efficient manner.
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In important ways, we become the language we use.
Economics can’t talk about anything other than the acquisitive or instrumental one.
Doesn’t like economic analysis in particular because of its cultural consequences
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.
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.
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.
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.
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.
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.
Further, the end of life is not exchange. Exchange is merely a way to accomplish those ends.
Economic utilitarianism: Focused on two things: (1) Inhibition Effect; (2) Market Power Effect. IP seeks to
find a balance between these. Tries to give enough of a property right to encourage innovation, but no so
much as to swamp individuals.
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b. Distributive Justice
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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.
“The Second Enclosure Movement and the Construction of the Public Domain” by James Boyle
Thesis  Takes us through various conceptions of the public domain. Looks at: (1) Inhibiting effects of
patents; (2) Basic right of access. To what extend should the public have access to information?
Conceptions
(1) Public domain is whatever is not subject to property rights. Negative description of public domain. No
one has a positive right to extract things what is in the public domain.
(2) Litman – Public domain should not be seen as what’s leftover. Without a public domain, we would not
have new works. We need to take steps to ensure that public domain has a repository of material so
that new inventions can occur.
(3) Boyle – We need to have a viable public domain. We can have private protection for public domain to
ensure that it is protected and that this protection will increase. Explains this with an analogy to the
open source movement. You can do whatever you want as long as publish the source code AND you
put in back in the public domain.
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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
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
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
If I put something in the public domain, nothing prevents me from taking someone else’s work,
improving it slightly and then seeking a patent. Instead, contracts can be used to protect rights. You can
license the right to use your product and ask for contractual obligations in return. This person can then
re-sell this license according to the parameters that you’ve established. Boyle likes this method because
it results in a large pool of resources in the public domain.
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
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
Boyle’s example is that of the open-source software movement (LINUX). Working code is available
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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 with
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.
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”
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
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
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
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.
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
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.
Boyle sees this as the difference between formal freedom and actual freedom.
Three visions of the public domain are not necessarily exclusive.
Boyle would like his vision to become more widespread and enrich the public domain.
On what basis should we choose one definition of the public domain over another? (1) Clearinghouse;
(2) One stop shopping for everything.
People innovate for other reasons than just making money. Traditional economics may not accept these
arguments. Using this to make a case for distributive justice.
Looking at user side of things. Why? (1) Access; (2) Second generation needs to get access to the first
generation.
“The Public Domain” by Jessica Litman
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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.
She thinks public domain is best understood as a “zone of freedom” that exists to preserve the integrity
of intellectual property rights.
The public domain does that because copyright law is meant to encourage authorship more than to
protect individual authors.
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.
Otherwise protecting more will leave nothing to create from.
Discussion
 Boyle doesn’t identify the source of injustice behind the property system.
 He also doesn’t provide a unifying principle guiding public domain generally.
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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
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
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.
c. Personhood
“The Philosophy of Intellectual Property” by Justin Hughes
Thesis  The main alternative to the labour justification for intellectual property is “personality theory”
which describes property as an expression of self. Origins lie in Hegel’s work
What is intellectual property?
 Intellectual property is more egalitarian than regular property. Limited duration and obtainable by
anyone. A reward for talented upstarts. The propertization of “talent”.
 The converse argument is that intellectual property is only produced after considerable financial
investment. Most holders of copyrights/patents are middle class.
 More neutral form of property (i.e. from the perspective of labourer/capitalist hierarchy)  Patents
that make millions are not the norm. Instead, most patent holders are modestly successful university
researchers, etc.
 Intellectual property is “…nonphysical property which stems from, is identified as, and whose value is
based upon some idea or ideas. Furthermore, there must be some additional element of novelty.”
 May also be thought of as the use or the value of an idea.
 Intellectual property, like all property, remains an amorphous bundle of rights. Clear limits to these
rights, i.e. fair use in copyright.
 Biggest different between IP and regular property is the “built-in sunset clause”.
Hegelian Justification
 Personality theory has intuitive appeal when applied to intellectual property. An idea belongs to its
creator because the idea is a manifestation of the creator’s personality or self.
 For Hegel, individual’s will is the core of the individual’s existence, constantly seeking actuality and
effectiveness in the world.
 “Personality” is identified with the will’s struggle to actualize itself.
 In property, Hegal focused on the immediate freedom of an individual. Property is genre of freedom.
Property/Person Connection
 “Self” is a type of property. Difference between internal property and property external to the person is
that the latter can be alienated.
 Will interacts with the external world at different levels. Mental processes (i.e. recognizing,
classifying, explaining) are appropriation of the external world by the mind. Cognition and resulting
knowledge, however, are the world imposing itself upon the mind. Will is not bound by these
impressions.
 Hegel explicitly disavows a need for the institution of property to satisfy physical wants.
 Acting upon things is an initial step in ongoing struggle for self-actualization.
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
Once we accept that self-actualization is manifested in enduring objects as well as in fleeting acts,
property rights acquire an important purpose in preventing men from forever being embroiled in
conflict of each individual trying to protect his forays at self-actualization. Property becomes
expression of the will, a part of personality, and it creates conditions for further free action.
 Respect for property allows the will to continue abstraction and “objectification”.
 With some property secure, people can pursue freedom in nonproperty areas.
 Individual person comes to be manifested in some object through “occupation” and “embodiment”.
 Relationship between object and person is fluid. Being first in possession of object is not sufficient to
maintain title to it; property relationship continues only so long as the will manifests itself in the
object.
 While labour may be sufficient condition for occupation, it is not a necessary one. One may manifest
one’s will in a gift or in a natural object to which one becomes emotionally attached.
IP under Hegel
 IP “materializes” personal traits.
 One cannot alienate or surrender any universal element of one’s self.
 A sculptor or painter physically embodies his will in the medium and produces one piece of art. When
another artist copies this, Hegal thinks that the hand-made copy is essentially a product of the
copysist’s own mental and technical ability. Does not infringe on original work.
 Problems arise when work does not embody will in an object. Example: writing. Will is manifest in a
series of abstract simples which are rendered into things through processes not requiring talent.
 Alienation of a single copy of a work need not entail the right to produce facsimiles because such
reproduction is one of the “universal ways and means of expression which belong to the author.”
Copies are sold for the buyer’s own consumption  only purpose is to allow buyer to incorporate
ideas into his “self”.
Problems in applying personality justification to intellectual property
 Property system protecting personality will have difficulty finding reliable indicia for when people do
and do not have a “personality stake” in particular objects. Further complicated by fact that there may
be differing amounts of personality in objects.
Varying Degrees of Personality
 Personality justification, like labour justification, has problems with IP products that appear to reflect
little or not personality from their creators.
 Can overcome this with a utilitarian principle that justifies property rights on the grounds that they
protect the “net gain” of personality achieved by entire system. Avoids question of whether or not
personality is present in every case.
 Seem to be no categories of IP that are more or less hospitable to labour theory. Not true with
personality theory. Some categories seem to be receptacles for personality while others do not manifest
any personality.
 Poems, stories, novels, musical works, sculptures, paintings and prints are all receptacles for
personality.
 Another receptacle for personality is the legal concept of an individual’s persona. Persona is an
individual’s public image, including his physical features, mannerisms and history. One type of IP that
is generally not thought of as result of labour.
 Problems arise with IP that do not appear to be personal reaction of an individual on nature.
 Can arise in copyright  protects not only personality-rich objects (i.e. paintings) but also maps and
atlases. Does not mean that they are completely devoid of personality  may be social commentary in
choices of colour, symbols, reference points, etc.
 More difficult is computer software/technological categories (including patents and trade secrets). Seen
as reflecting raw, generic insight rather than personality.
 However, writing programs can involve certain aesthetic insight. Many different ways to write a
computer program  each one is reflective of personality.
 May have to work under constraints like economy and efficiency. The more a creative process is
subject to external constraints, the less apparent personality is in creation.
 Two rights at stake  personality may be vested in object, but creator may also wish to be identified
with the property. In this case, creator claims property to create a particular persona. Must have some
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internal connection to property (i.e. can’t just say, “I want to be associated with WTC”).
Alienation and Personality Justification
 Alienation is final element in individual’s relationship to propertized thing. Alienation is equivalent to
abandonment.
 Two people can exchange distinct objects if each thinks her own personality would be better expressed
through the object presently owned by the other. Each person increased actualization of his or her
own personality.
 Paradox of alienation under personality model of property. Present owner maintains ownership
because he identifies the property as expression of self. Alienation is the denial of personal link to an
object. But if the personal link does not exist (i.e. if the object does not express or manifest part of the
individual’s personality) there is no foundation for property rights over the object by which the owner
may determine the object’s future.
 One way to explain this is to say that personality justification is powerful for property protection, but
fails to explain property exchange. Willingness to sell a piece of property suggests that the property
has moved from the “personal” category to the “fungible” category. Personality rights justification
disappears when external value exceeds internal value (i.e. personality rights).
 Alienation of IP can take two forms  (1) Entire alienation by selling one work at a time or; (2)
Complete alienation of copies with limitations on how those copies may be used.
 Alienation of entire IP has paradoxical problems. If person genuine has no personality stake in a work,
why should she determine who publishes it, copies it, etc? Seems to deny personality stake necessary
to justify property rights.
 Hegel believes that complete alienation of intellectual property is wrong  a surrender of a
“universal” aspect of self.
 Alienation of copies of IP offers a different set of issues. This type of alienation does not fall prey to
the paradox of complete alienation: there is not exercise of property rights after an owner no longer has
a personality stake in object.
 It is more difficult to defend a personality justification for restrictions than it is for complete alienation.
Property rights can be used to alter an object to suit our personality. Restriction destroys the flexibility
by which property becomes and continues to be a reflection of those who own it. Matters greatly to a
new owner seeking to maximize his expression of personality.
 However, Hegel provides economic rationale for this type of right. Payments from IP users are acts of
recognition. Acknowledge individual’s claim over property. Income further facilitates expression (i.e.
royalties allow musician to buy grand piano). Transaction therefore helps to maximize personality.
 Personality theory provides sounder justification. Alienation of copies of most rational way to gain
exposures for ideas.
 Two conditions should be attached to alienation: (1) Creator of work must receive public
identification; (2) Work must receive protection against any changes unintended/unapproved by
creator.
 No recognition of moral rights in US.
Hegel
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Property is a stepping stone to freedom.
Start off being interior beings. To be truly free, we need to have an emanation in the real world. Body
acts upon the world. By acting upon the world, we make things in which we are invested. We care
about the things that are produced.
If I can be a useful member of the community, I can be a useful member of the state.
Construction of the idea reflects personality.
Three people with a wedding ring. (1) Person who sells it; (2) Person who buys it: (3) Person who
wears it. Person who sells it has the least invested in the ring. Just a piece of metal. Person who wears it
has the most invested in the ring. Represents a significant relationship.
What kind of property rights are justified through Hegelian analysis? (1) Moral rights. Protect the right
to be associated with a work and not have it mutilated; (2) Protects inventions that involve creativity.
Hegelians have a difficult time justifying a strong attachment to computer programs and less creative
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types of goods.
If my personality is so invested in this object, how can I let it out of my control?
Gold – Hegel has intuitive appeal, particularly for more creative inventions.
What’s the point of all of this? To show us some of the normative aspects of patent theories.
Do we need a theory to justify intellectual property or is it all right to take bits and pieces from these
theories?
d. Labour/Desert
“The Philosophy of Intellectual Property” by Justin Hughes
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Can justify propertizing ideas under Locke’s approach with three propositions: (1) Production of ideas
requires a person’s labour; (2) Ideas are appropriated from a “common” which is not significantly
devalued by the idea’s removal; (3) Ideas can be made property without breach non-waste conditions.
Labour and Production of Ideas
 Conflict about whether there is labour in IP. Obviously labour in a work of art. Is there also labour in
large research laboratories that produce patentable ideas daily?
 Locke says that initially only our bodies are property.
 Handwork becomes our property because our hands – and the energy, consciousness and control that
fuel their labour --- are our property.
Avoidance View of Labour
 Locke viewed labour as something unpleasant  only engage in labour with the expectation of
benefits.
 Instrumentalist argument  “Unpleasantness of labour must be rewarded with property because
people must be motivated to perform labour.”
 In almost all of its decisions on patents, the UN SC has opined that property rights are needed to
motivate idea-makers.
 Unpleasantness of labour is relative. Idea-making is relatively less pleasant than recreation. Without
incentive, people will opt to participate in recreational activities instead.
Value-Added Labour Theory
 This position holds that when labour produces something of value to others – something beyond what
morality requires the labourer to produce—then the labourer deserves some benefit for it.
 “Labour-desert” theory asserts that labour often creates social value, and it is this production of social
value that deserves reward, not the labour that produced it.
 People will add value if the added value accrues to them personally.
 Legal doctrines of unfair competition and trade secret protection are inherently oriented toward valueadded theory  People rarely go to court to enforce these rights unless something valuable is at stake.
 Patent provides vexing example of reliance on value-added theory  patent must have
usefulness/utility. However, this has been interpreted as meaning that the patent can’t be wholly
useless. More contemporary tests support a value-added interpretation (i.e. a “step forward” or an
“advance over prior art”).
 To require that something be an “advance” over existing technology demands that there be new value
in this item.
 However, inventions can be patented even when they do not advance society (i.e. a new vote counting
machine that errs up to 10% in its vote-counting).
 Moreover, a patentee is not required to exploit his patent. Universal recognition that patentee may
shelve his invention and use his patent only to prevent others from using process/invention.
 Copyright also defies value-added reasoning. An individual can register a writing for copyright
protection without ever planning to publish the work.
 No statutory provision requires value from copyright.
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
Value-added interpretation of intellectual property laws is easier to support by moving away from
particular legal doctrines. Probably the best support comes from the net gains argument.
Labour and the Idea/Expression Dichotomy
 Creation of finished IP product is a two-step process  One step is thinking up the idea, second step is
the work necessary to employ the ideas as the core of a finished product.
 Two steps represent the difference between an idea and its execution.
 Creativity we perceive in an intellectual product may be either in the core idea (i.e. idea of cathedral)
or its execution (i.e. painting of the cathedral).
 If we perceive ideas as being plucked from some commons, the only activity possible is execution (i.e.
transporting, translation and communicating ideas).
 Existing IP regimes favour granting property rights only to those ideas which have received substantial
execution.
 Under Copyright Act, expression are protected, but underlying “ideas” are not.
 Illicit copying is copying an expression, “the total concept and feel” of a work, not just the idea.
 Dichotomy is frequently explain in terms of balancing the need to reward artists with free access to
ideas.
 Idea/expression and idea/execution dichotomies are one and the same.
 At a minimum, the concern for labour significantly contributes to explaining the idea/expression
division.
 In Lockean framework, freedom of expression manifests a problem with the “common”. Some ideas
and facts cannot be removed from the common because there would not be the slightest chance of
there being “enough and as good” afterwards.
Ideas and the Common
 “Field” of all possible ideas prior to formation of property rights is more similar to Locke’s common
than to unclaimed wilderness.
 Locke’s commons had enough goods of similar quality so that one person’s extraction from it did not
prevent the next person from extracting something of the same quality and quantity. With ideas, the
inexhaustibility condition is easily satisfied. Each idea can be used by an unlimited number of
individuals.
 As long as complete exclusion cannot or does not happen, ideas will be available to people in their
own thoughts even though these ideas already have become someone else’ property.
 Through this availability, one idea can lead to other new ideas.
 Example: Parodies of Mona Lisa. These are cultural objects which would have never existed without
the original idea.
 According to Locke, the act by which physical object X is transformed into property is an act that
creates new social value. However, this value-added goes directly into the hands of the creator.
 Intellectual property systems release the added value of a new idea without requiring the property
owner’s active and intentional introduction of the idea into commerce.
 Intellectual property handles this situation as follows: (1) If the idea is sufficiently separate from its
“parent” idea to have required significant independent labour or creativity, it belongs to the labourer;
(2) If the new idea bears to much resemblance to the parent idea, the owner of the parents has a
controlling interest in the new idea.
 For example  Copyright does not enable its holder to prevent parodies of copyrighted work; as long
as parody has creativity and originality, it may use substantial elements of the original. However, if
reasonable people could easily mistake the parody for the original, the copyright holder would have an
especially strong interest in stopping publication.
 Certain ideas are in a permanent common (i.e. discoveries of natural properties and everyday ideas like
adding paprika to egg salad).
 Ideas which can be privatized fall somewhere between the everyday and the extraordinary.
 When ideas become extraordinary, society’s increasing dependency on them creates pressure to
remove them from private control (i.e. aspirin and Xerox).
Locke and Non-Waste
 Locke’s non-waste condition  Individuals should only take as many goods as they can reasonably
use (i.e. perishable food).
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Unlike food, ideas are not perishable. Retain future value. Yet, the value lost by hoarding an idea until
it becomes obsolete is a very different kind of loss than food spoilage. May be reversible  Future
trends may make the outdated idea fashionable again.
While social value of an idea may decline below an optimal point, the value of the idea may remain
constant. Secret recipe for KFC will still taste good to creator if whole world knows it.
With IP, there is no waste to the individual because the act of “consumption” is inseparable form the
act of production.
However, difficult to think of ways that IP scheme embody any notion of non-waste condition.
Problem applying Locke’s theory to IP>
“Deserving to Own Intellectual Property” by Lawrence C. Becker
Thesis  The article examines the notion that people might deserve to own products of their intellectual
labour in a stronger way than they deserve to own products of non-intellectual labour.
Attention to the desert-for-intellectual-labour arguments has two results: (1) These arguments seem
especially powerful for intellectual property, but (2) they yield results that seem to be a bad fit with those
reached by economic or utilitarian arguments.
The Issue
All standard justifications for property (utilitarian, personality, labour) can apply to intangible products.
Surely, if people ‘deserve’ property in tangible objects they improve with their labour, they deserve
property in the intellectual objects they create.
Focussing on IP forces us to face the issue of desert directly, because IP depends less on
environmental/societal factors which affect other types of property rights and how we obtain them (family,
wealth). IP forces us to ask ourselves what we think people truly deserve or merit for their efforts.
Reflections on the Nature of Intellectual Products
Becker suggests we narrow the discussion to the sort of labour which constitutes authorship. Something
has an author when it satisfies tree conditions: (1) it’s causal history is traceable to the intellectual states of
agent or agents, (2) those agents, in the process of making their causal contribution to producing the thing,
are also creating or realizing their mental representations of it, and (3) those representations constitute the
thing (i.e. idea) or play a substantial causal role in its production. Condition 1 rules out natural objects, 2
and 3 rule out happy accidents and mere physical labour.
Some intellectual products are identified in part by reference to their authors. Most of the value of paintings
by masters, for example, depend on this author-identification.
Originality here means simply that the product originates in the agent’s labour – that its causal explanation
is in some important sense traceable to the agent but not beyond. Non-original intellectual labour is not
creative, but merely productive. Original intellectual labour is the source, the beginning of the causal
account of the product. Non-original labour does not give rise to any special claim to the product.
Intellectual products are often not subject to natural scarcity, because the mental element can be possessed
by many people if it can be ‘known’ in sufficient detail. Once created, intellectual products can be
replicated. Property rights sustain an artificial scarcity to benefit owners. It is scarcity-by artifice that needs
justification.
IP is singular, in that it springs from a singular intellectual effort. This occurs because the work is pure
genius, or it is defined by an intricate fine structure (note-for-note, word-for-word) rather than a coarse
structure (themes, plot lines). Problem: how fine is fine? How coarse is coarse?
Becker says IP products are given unjustified weight due to temporal primacy (being the first or oldest
known). This is a red herring, as originality and singularity are what is relevant.
Desert/Social practice
Virtually all societies recognize the strength of possessory claims to ‘personal’ things such as: (a) things
created by one’s own effort, and (b) things held for personal use, especially when they are identified with
the person.
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Deserving to own
[NOTE: This is the part of this article that GOLD really spent time on in class]
Property rights can grant a person much power over the liberty of others. Becker asks: under what
circumstances to I deserve to have such powers over you by virtue of my labour? What sort of labour
could do that? He identifies three possibilities: (1) justifiable public response to special excellence, (2)
justifiable reciprocal exchange, and (3) justifiable social response to special human needs.
Excellence
 The argument is that some intellectual labour exemplifies human excellence, and is thus worthy of
special admiration. Admiration should be our reaction, not envy, indifference, or malice.
 If we admire the intellectual labour, we should admire the laborer(s), which helps sustain them. A
public expression through social institutions is appropriate.
 Giving people property rights helps sustain them, thus it is an appropriate public expression of
admiration. It is something they deserve.
 The problem with this argument is that there are many plausible alternatives for expressing
admiration publicly, such as medals, honour rolls, awards. Thus, the argument from excellence gives
only equivocal support.
 GOLD asks: why reward with property?
 Becker also says that there can be many original authors for IP, so there is a principle of nonpreclusion which must exist with the excellence argument, in that the IP rights are subject to revision
when it is discovered others also deserve admiration.
 GOLD asks: who decides what is excellent?
Reciprocal benefits
 A second argument is based on the idea that laborers are entitled to prop. Rights in the value they
create through there work.
 Producing public benefit by morally permissible but unrequited means deserves a fitting and
proportional benefit from the public. If the act produces public burden, however, the person
deserves fitting and proportional burden.
 Fitting implies a genuine benefit (or burden) for the one receiving it. Proportional is limited by the
equal sacrifice principle (sacrifice, not benefit, must be equal for the creator and the public).
 Property rights, then, would represent a fitting and proportional benefit.
 Once again, however, there are many plausible alternatives which would constitute a benefit for the
creator. Plus, they are still vulnerable to revision due to non-preclusion (as with excellence)
 Also, this argument forces us to assess the social benefits/costs of every creative activity. GOLD asks:
What if it benefits some and is a burden to (harms) others?
Need
 The argument here is that someone who labours on something becomes dependent on his
creation because they identify with it, and have a personal attachment to it. This identitydependence means that the welfare of the product is related to his integrity or welfare as a
person.
 Thus there is a need for the welfare of the product. If this need is created and sustained by social
norms (i.e. identifying human distinction with authorship or originality), than society should give help
to fulfill that need, in this case with property rights.
 There is a troubling problem of subjectivity with this argument. Basically, labourers who are toughminded or psychologically secure are at a disadvantage because they don’t have that need, whereas
possessive insecure types do.
 GOLD also asks: wouldn’t having your name associated with the product logically be enough to fulfill
this need? Why do you need property rights?
Results and Remainders
 Property rights ought not to follow directly from only desert arguments, for there are many other
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factors to consider when making rational policy recommendations.
However, desert must factor in somehow because it can be linked to important elements of fairness and
justice in IP law.
We need a careful classification system for IP (what products correlate best with prop. Rights?), as
well as careful analysis of how products are defined (recall: fine vs. coarse).
Locke
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Grants property rights because it leads to social goods.
We all have a property right in our bodies.
Anything that we take that is unowned becomes ours because the social value of it was the labour
value. Value is added through human expropriation.
Had a vision that we were put on Earth to use the world.
Saw that we had an obligation to use it.
Don’t need state to say, “You have a property right”. Property right exists first and state ought to not
interfere with that right.
Get it merely by labouring.
Key to this argument is the fact that intellectual property is labour. My labour represents the thing I
came up with. But for me, the thing wouldn’t exist. Therefore
Locke is saying that I get the property right because I laboured on it once.
Natural rights theories have less problems with alienation.
Gold  Locke’s theory doesn’t have the problem that Hegel’s theory has. Can just as easily patent a
mousetrap as a work of art. Hegel is very focussed on expressive value.
Problems with Locke’s theory  Locke has a difficult time in justifying how a small increase in
knowledge allows you to expropriate everything that comes before it. However, when I sell it on the
market, you set it for the entire value of the new invention plus the previous invention. Has a tough
time with fact that you get to profit from it.
e. Case Study
“Droit D’Auteur and Copyright: Between History and Nature” by Alain Strowel

Droit d’auteur is often tied into natural law while copyright is considered a positive right created by the
legislator. The aim of this paper is to examine this juxtaposition considering three factors said to
distinguish droit d’auteur from copyright (See below). Thesis: In spite of similarities between these
two, a fundamental difference separates the two: the interpretative framework within which the
rights are posited.
DROIT D’AUTEUR
COPYRIGHT
THE CHARACTERIZATION OF DROIT D’AUTEUR AS A RIGHT OF PROPERTY COMPARED WITH THE MONOPOLY
BASIS OF COPYRIGHT
French revolution swept away privilege system and
sanctified concept of property (Le Chapelier’s
contention: “the most sacred, the most inviolable
and, if I might venture, the most personal of all
forms of property is the work, the fruit of a writer’s
thoughts.”). Given the value accorded to property, it
is not surprising that Revolutionary legislators and
their commentators should have invoked the
authority of the natural right to property in order to
Because the monopolistic position of the copyright
holder does not rest on actual market power but
derives from the attribution of a right, copyright is
said to be a legal monopoly. In the Betamax case,
the Supreme Court of California held that the sale of
video recorders could not be seen as a violation of
copyright in television programmes because
monopoly privileges are limited in scope.
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legitimize the rights of authors.
The right of destination (droit de destination), a
construct of droit d’auteur gives the author power of
control over the use, which third parties may make
of copies of the work circulating on the market. It is
considered to be based on the right of reproduction
and unquestionably flows from the fundamental
control that authors have over the distribution of
their work. This reinforces the idea that authors are
reflected in their work and are bound to it. The idea
of property, combined with the invocation of natural
right, has often served in the history of droit
d’auteur as the basis for arguments seeking to
expand the sphere of rights. Such was the case when
the Paris booksellers invented “the author as
proprietor” and the case with the doctrine of the
right of destination.
DROIT D’AUTEUR AS A NATURAL LAW SYSTEM IN CONTRAST TO THE POSITIVISTIC COPYRIGHT SYSTEM (the
distinction is not as hard and fast as commentators would have us believe. However in cases of uncertainty
the differences are noticeable and can be explained by fundamental divergences between civil and common
law).
It is not the law which gives rise to this right;
The statute creates the right. In Donaldson
through the mere creation of the work, droit
v. Becket, the House of Lords held that at common
d’auteur arises in the person of the author. Two
law, the author held the exclusive right to the
factors call into question the natural law basis of
publication of his/her works, but as soon as the
droit d’auteur: 1) There was a contradiction which
work was published, copyright ceased to apply and
endured in France for over fifty years between the
the author could bring an action only under the
recognition of droit d’auteur as the most sacred of
conditions of statutory copyright established by the
all properties and the restriction of the right to
Statute of Anne. This had the effect of removing
French citizens and resident foreigners. The
copyright from the sphere of natural rights and from
territorial character of the law affected the position
the outset, copyright could be said to be a statutory
of foreigners, thereby contradicting the natural law
concept and not one of common law, which allowed
character of droit d’auteur. 2) Natural law only
a positivist conception to come to the forefront.
provides a partial explanation. We cannot explain
Although early American copyright law
why a given prerogative was introduced, why a
has traces of both natural and positive conceptions
particular time limit was chosen and why a
of copyright, the decision in Wheaton v. Peters that
particular exception was made. These are best
drew a distinction between statutory copyright and
explained by utilitarian and pragmatic
common law copyright contributed to the isolation
considerations.
of the former from its natural law foundation. The
Court held that copyright was not an innate right,
but that a common law right exists for nonpublished works because of the labour of the author.
From then on, copyright legislation seems to have
departed drastically from natural rights concepts
except perhaps if we accept Goldstein’s view that
there is a natural law influence in the Copyright Act
of 1976 and Reichman’s view that the long period
of protection after the death of an author
demonstrates a similar logic and the view that the
US subscription to the Berne convention is more in
line with the natural law vision that the traditional
positivist conception.
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THE SYNTHETIC AND OPEN NATURE OF DROIT D’AUTEUR AS DISTINCT FROM THE CLOSED SYSTEM OF
COPYRIGHT (the nature of each is largely determined by the framework of interpretation in which they
situated)
This is an open and synthetic system: legislators
express themselves in broad terms, allowing caselaw to fill in the gaps (much like the style of the
Code Civil). Judges (non-elected) thus have a lot of
power to correct uncertainty. French law is content
to enunciate absolute and fundamental principles.
are
This is a relatively closed system with rights set out
in a catalogue and a precise manner. The British
text is replete with qualifications, provisos,
exceptions, limitations.
Discussion
 England  Original impetus for copyright was trade monopoly, not author’s rights.
 Locke didn’t believe that there were natural rights to creative effort. Did, however, think there were
practical reasons why you had to give rights to authors in order to provide incentives to create.
 Post-Locke, people started to invoke natural rights language. Focus shifted to the author and the
author’s rights. Publishers started seeking a new way to protect industry. Invoked natural rights theory
to argue that authors should have perpetual rights in work. Of course, all of these rights would be
transferred from author to publisher.
 Sherman argued that copyright was a purer form of natural rights. Copyright entailed creative effort.
 Debate was settled in 1710. Statute provided that there was a period of exclusivity for the publishing of
works. However, statute did not make it clear whether or not the common law copyright continued to
existence. Statute was seen as providing another layer of rights.
 Question answered in 1774 (Donaldson v. Beckett). Had to do with publication of poem 28 years after
its initial publication. Fell outside of statutory exclusivity period. Plaintiff put forward a natural rights
theory  implied agreement that the buyer will not reproduce works. Defendants argued that restraint
on use of works by buyers was a restraint on liberty. Majority of the court found that there was a
natural right to copyright before publication. Post-publication, rights disappeared due to statute.
 From this point on, debate in English law has been about balancing. Monopolies have been constrained
to minimize impact on society while providing incentives to innovate.
 Debate continues today in cases like Théberge.
Continental Europe  Didn’t move over to a much more economic approach. Moved to droit d’auteur
while Britain retained copyright.
Canada  Civil or common law approach to copyright? Majority of court mostly adopts an economic
(common law) approach. Influenced by Berne Convention, which recognized the relationship between
author and work. Gonthier wants to bring more harmony between natural and economic rights.
Example of Monty Python - BBC had a right in the final production of Monty Python sketches. Script was
written by members of the group. Never broke into primetime because they were 30 minutes long 
designed for commercial-free television stations. Troupe was unwilling to have their shows changed,
therefore never appeared on primetime television. BBC sold rights to ABC. ABC broadcast them as 90
minute specials which consisted of three sketches each. When they aired, there were 24 minutes cut out.
Moreover, ABC was very squeamish about sexual/scatological humour. These were cut out. Troupe raised
two arguments: (1) Breach of copyright; (2) Breach of moral rights.
US has never been a signatory to the Berne Convention, partly because of moral rights provisions. Moral
rights have not been recognized in the US.
Argument about copyright  Unauthorized editing of work constitutes an infringement of copyright.
Exceeded the rights granted by the troupe. ABC had rights to broadcast but not to infringe the original
copyright. If ABC had broadcast the shows in their entirety, there would have bee no breach of copyright.
Why? Agreement between ABC and BBC took the form of a license. License is a waiver of the right to sue,
assuming the other party conforms to terms of license. BBC contractually told ABC that they could
broadcast show in its entirety. As soon as ABC edited the work, they breached the terms of the license.
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Therefore, Monty Python’s agreement not to sue was no longer applicable.
Argument about moral rights  American copyright does not recognize moral rights. Nevertheless, the
economic incentive that serves as the foundation of American copyright cannot be reconciled with the
artist’s desire to seek compensation for mutilated works upon which they are dependent. Therefore, court
invoked economic rationale to justify provision of moral rights. Mutilation could have negative economic
consequences on artist’s reputation. Framed concern in economic language. This claim doesn’t necessarily
fall within the Copyright Act. Instead, part of “passing off”. Author has a right to be associated with work
in whatever form they chose. Work has been misrepresented in such a way as they are misled as to the
quality of the work.
Therefore, Python can win either on the basis of copyright infringement or on misrepresentation theory.
What would have happened in Python had sold copyright to BBC? Couldn’t sue for copyright
infringement. However, representation rights remain with author. Cannot sell these. Could still sue on the
basis of passing off. However, there’s a significant US limitation to this principle. Must be able to show a
significant economic loss.
Théberge v. Galeries d’Art du Petit Champlain – SCC, 2002.
Facts
EGI purchased posters of the plaintiff’s work. These were subsequently sold to a third party (Galeries d’Art
du Petit Champlain) who used a mechanical process to transfer the image from a paper-backed poster to a
canvass-backed poster. Canvass could be sold for a higher price than the poster. Contract between
defendant and third party read: “The product offered for sale is without restrictions as to use, i.e. it may be
framed, laminated or combined with other products and such uses shall not be considered to have generated
products or sub-products other than those provided for in this contract.” Appellant argued that defendant
had violated his copyright.
Issue
Does the mechanical transfer of an image from one medium to another violate the Copyright Act?
Ratio
Defendants were within their rights to reproduce lawfully purchased posters because: (1) No new
reproductions of the respondents works were brought into existence; (2) There was no production or
reproduction of a new artistic work “in any material form” within the meaning of s.3(1) of the Copyright
Act. What began as a poster, authorized by the plaintiff, remained a poster.
Definition of fixation (from “The Modern Law of Copyright and Designs)  “A copyright springs into
existence as soon as the work is written down or otherwise recorded in some reasonably permanent form
(“fixated”). s. 3(1) should
Reasoning
(1) Balance of economic/moral rights should not be altered to public’s detriment  Image itself was not
reproduced. Transferred from one medium to another. Should not give artists too much discretion over
what can and cannot be done with posters.
(2) Proposed Test Would Depart from General Principle that Breach of Copyright Requires Copying 
Reproduction usually constitutes producing additional or new copies of work. Original poster lives on in
“re-fixated” work.
(3) There was no reproduction “in substantial part”  Layers of ink in which artistic content resides remain
intact. Therefore, there is no multiplication of a “substantial part” of the poster.
(4) Quebec CA’s test of “unanticipated Market” similarly exceed statutory copyrights limit  CA supports
cause of action when new market not anticipated by creator of underlying work is found, who may not have
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captured the highest price to be charged for the sale. Not applicable here as market was not unknown or
unforeseen. Rather, plaintiff is alleging that they don’t want to enter this market.
(5) Proposed test would undermine the distinction between moral rights and economic rights contrary to
legislative intent  Legislative intent of s. 28.2(1) appears to suggest that modifications that do not
prejudice an author are allowed. Per s. 28.2(3), change in physical structure does not violate either
copyright (economic rights) or moral rights.
(6) Droit de Destination would be introduced into law without any basis in Copyright Act  Dichotomy
between copyright and droit d’auteur. Traditionally, copyright refers only to economic rights while droit
d’auteur refers to a bundle of rights, which includes right of destination. Canada’s Copyright Act does not
include destination rights except in specified situations. Do not, by virtue of economic rights, retain control
over subsequent uses of authorized copies.
(7) Proposed test would conflict with precedent from other comparable jurisdictions  In England,
accepted that parties can cut out pictures from books and resell them on notecards. In US, accepted that
parties can purchase individual greeting cards and resell them pasted on plaques.
(8) The US concept of a “Recast, Transformed or Adapted” derivative work would be introduced into our
law without any legislative basis  s. 3(1) should not be read as to give the words “recast, transformed or
adapted” a free-standing source of entitlement.
Parliament intended modification without reproduction to be dealt with under provisions dealing with
moral rights rather than economic rights.
Moral rights act as a continuing restraint on what purchasers can do with a work once it passes from the
author.
Discussion
 This case is not about the relationship between EGI and the plaintiff. EGI legitimately produced
posters of the appellant’s work.
 Binnie takes a common law approach to interpreting statute and Gonthier takes a civilian approach.
 Everything turns on one word in this case  the meaning of the word “reproduction” in the copyright
act.
 How might Malamed/Calabresi see this? Would look at author’s rights in terms of economics. Pareto
optimality  Promote creativity while protecting public domain.
Reproduction
 Binnie  Reproduction is usually defined as producing additional copies of a work. Legal concept of
reproduction has been broadened to include “metaphorical” reproduction. This includes copies that are
not in physical form (i.e. from novel to a film). The copy has to be a new thing, but it need not be
physical. After the act is done, there is one more version of the thing in some form.
 Gonthier  It appears that the meaning of the word reproduce is “to produce a copy” or “to be seen
again”. Accordingly, in order for a work to be reproduced, there is no need to show that there has been
an increase in the total number of works. Reproducing a work simply means rematerializing what first
existed in a material form. To determine if a work has been reproduced, must look at the number of
materializations that occur over time. Looking at number of fixations.
Where in the act do you find the word “fixation”?
 Doesn’t actually appear in the act, except in regards to dramatic acts. A judge-made rule.
 What constitutes fixation? Physical form that points to the essence of the work/expression. Gonthier is
saying that any time a physical substantiation that represents the expression occurs, this is a copy.
 For Binnie, what is the work? It’s the thing we see and copies of it. Therefore, to have a copy, you just
have to have more of these. Gonthier has a more abstract notion of “reproduction”. Anytime that
essence coalesces into a physical form, we have a reproduction. Includes non-literal copying.
Different approaches to analysis
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Binnie clearly did not adopt a natural rights theory. Instead, uses explicit economic/ utilitarian
analysis. Seeks to maximize incentive to create work while balancing the needs of the public domain.
Takes a balancing approach: (1) Must balance the rights of the artist and the person who buys the art.
Believes that Gonthier hasn’t taken account of fact that buyer has physical right in the poster they have
purchased. If I buy a CD, I can do anything I want it. I can break it, use it as a doorstopper, etc. The
only thing I can’t do it copy it. Gonthier looks purely at abstract expression, not at what’s happening to
person who has/should have right; (2) Incentive to create must be balanced with the public domain.
Once an authorized copy of a work has been sold to the public, it is generally up to the buyer and not
the author to determine what happens to it. If we give artist more than the incentive that is required, all
we’re doing is harming the public domain. Taking away from the public domain without getting greater
good.
Gonthier doesn’t really go beyond doctrinal analysis. To interpret the Copyright Act, we must
acknowledge that this document is formed by a mixture of English copyright law and French droit
d’autuer. Our laws must keep both into account. In interpreting non-moral rights sections, we can’t
ignore the relationship between the author and their work. Binnie responds that droit d’auteur should
only be considered under moral rights provision.
Gonthier’s approach is much more reflective of European viewpoints. Binnie’s is more reflective
of English viewpoint.
4. Origins of Present IP Regimes
“Explanations for the shape of intellectual property law” by Sherman and Bentley
Thesis  Emergence of modern intellectual property law was neither natural nor inevitable. Rather, the
separation of intellectual property law into its now familiar categories was the product of a complex and
changing set of circumstances. Subject matter of intangible property is the key organizing factor used to
explain categories. At same time, organizational role played by subject matter has changed over time.
Quantity of Mental Labour
 Initially, copyright and patents were distinguished on the basis of the quantity of mental labour
required by each.
 Underpinned by notion that the value of every art is in proportion to the mental labour employed in it.
 Various forms of intellectual property could be distinguished by amount of mental labour embodied in
them. At one end of continuum were objects that contained little mental labour (i.e. utensils). At the
other extreme were literary works.
 Literary works were pure (i.e. contained more of the creator). Therefore, they could be less diluted than
other works.
 Machines were seen as being “quasi-pure”. Mostly the product of manual labour, but with some mental
labour.
 Notion emerged that duration of a property right should be in proportion to its purity.
 Another factor – ease with which a work could be copied. Little thought, difficulty required to copy a
book. Meant that books should be given greater protection.
Quality of Mental Labour
 Shift in thinking occurred in 1860’s in relation to controvery over patents.
 Literary works were seen as the product of creative processes. Authors gave ideas a unique expression
that no other inventor could duplicate.
 Invention was better understood as a discovery rather than as a creation. Because they were
discoveries, exact same invention could be created independently by different inventors. Same thing
cannot occur with literary works.
 “If Shakespeare had not written King Lear or Richardson Clarissa these works would never have seen
the light of day.”
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No longer possible to use amount of mental labour embodied in objects as a basis by which to
distinguish the different forms of intellectual property. Why? Discoveries involved no creative effort of
contribution on behalf of the inventor.
Therefore, had to find a new basis for which inventors could be said to leave mark on product.
Further complicated by fact that literary works were readily distinguishable from one another while
inventions were not. Led to different modes of identification for literary works and inventions.
Registration process implemented to deal with problem of inventions.
Manner in which copyright is infringed is different than patents. Since literary works are unique, any
duplication must be the result of copying. With patents, monopolies were granted over property rights.
Copyrights were limited to copying whereas patents were extended to include independent creations.
Another difference b/t mental labour/discovery dichotomy  Literary works granted copyright only
for way in which they express themselves. Why? To avoid placing fetters on common knowledge.
Since discoveries involved applying pre-existing ideas, they necessarily involved using common
knowledge. Granting inventors rights over mode of expression would interfere with others. Therefore,
patents restricted ways in which ideas could be used.
Notion emerged that patent was a contract between inventor and state. Right stemmed from fact that
inventor was the first to communicate idea to public.
a. Copyright
“Essence of Creation” by Sherman and Bentley
Thesis  The enigmatic nature of intangible property is compounded by the law’s willingness to accept
that the subject of intellectual property can be infringed beyond the immediate form in which it is
expressed.
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Law has found that it is not enough for owner to be only protected against identical copies. Protection
must also be given to non-identical copies, to the extent that the copies are somewhat similar.
In admitting that copying need not imply that the work be identical, the law moved from the concrete
to the abstract.
Intangible had to be both identifiable and at the same time malleable enough to move from work to
work. Took on a transcendental quality.
One of the primary tasks confronting intellectual property law is that of recreating or locating the
essence of the creation.
Before being able to determine whether the property interest has been appropriated, the law first ahs to
locate and identify the essence of the intangible property.
Prise de Parole Inc. v. Guérin – Federal Court of Canada, 1995
Facts
Plaintiff author gave plaintiff publisher the exclusive right to publish his work. The defendant subsequently
published a collection which included substantial extracts (approximately a third of the entire book) from
his work. Defendant argued that copyright infringement had not occurred because he had cut out
description of Northern Ontario and of hunting/fishing – elements that the book was known for. The
defendant never approached the plaintiff for permission to publish the work.
Issue
As per s. 28.2(1) of the Copyright Act, was the work modified to the prejudice of the author’s reputation or
honour?
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Ratio
While the novel was substantially modified without the author’s knowledge, it did not prejudice his
reputation from an objective point-of-view.
Reasoning
Author’s Reputation:
 Plaintiffs rights under s. 27 were violated by virtue of copyright infringement. Per s. 35(1), plaintiffs
can claim damages for copyright infringement and conversion, as well as profits made by the infringer.
 Per s. 14(1), author has moral rights to his work. To make a claim based on s.14(1), the work must be
distorted, mutilated or otherwise modified to the prejudice of the author’s honour.
 Assessment requires: (1) Subjective  Author must show that work was altered to his prejudice; (2)
Objective  Evaluation based on public or expert opinion.
 Author was not ridiculed or mocked by colleagues. Publicly acknowledged that publication of work
did not do him harm.
Conversion:
 Per s. 38, copyright owner is deemed to be owner of infringing copies. May claim possession of these
copies or damages equivalent to the value of the copies at the time of conversion.
 Plaintiff was granted general damages. Can’t compensate twice. Remaining copies of collection to be
delivered for destruction.
Exemplary Damages
 Act does not provide explicitly for these. Only to be granted in exceptional circumstances.
 Defendant continued to sell collection even though he knew full well (via correspondence from the
plaintiffs) that he did not have permission to do so.
 Defendant’s conduct was wilful and intentional. Plaintiffs are therefore entitled to $10,000
compensation.
Computer Assocs. Int’l v. Altai, Inc – US CA, 1992
Facts
Case of alleged copyright infringement of a computer program.
Issue
What is the proper way to analyze an allegation of copyright infringement with regards to a computer
program?
Ratio
Use three step test to address this issue.
Reasoning
Substantial Similarity Test
(1) Abstraction  Must break program down into its constituent parts and isolate each level of abstraction
within it. Start with the smallest elements and move out. At progressively higher levels, individual
elements will be replaced by functions. Begins with code and ends with an articulation of program’s
function.
(2) Filtration  Examine each part for incorporated ideas, expression that is necessarily incidental and
elements that are taken from the public domain. Must examine structural components at each level of
abstraction to determine if their inclusion at that level was an “idea” or was dictated by considerations
of efficiency. Purpose is to define scope of plaintiff’s copyright.
a. Elements Dictated by Efficiency  When specific instructions are the only and essential
means of accomplishing a given task, their later use by another will not amount to
infringement. Efficiency concerns may so narrow the practical range of choice as to make
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only one or two forms of expression workable. Must inquire whether use of particular set of
modules is necessary efficiently to implement that part of the program’s process.
b. Elements Dictated by External Factors  Sometimes, it becomes virtually impossible to write
programs to perform particular functions in specific computing environment without
employing standard techniques. Freedom of choice is circumscribed by mechanical
specifications of computer, compatibility requirements of other programs, computer
manufacturers’ designs standards, demands of industry and programming practices.
c. Public Domain  Material that is free for the taking cannot be appropriated by a single
author even though it is included in a copyrighted work.
(3) Comparison  After sifting out all elements, there may remain a core of protectable expression. Must
focus on whether defendant has copied any aspect of protected expression, as well as assess copied
portion’s relative importance with respect to plaintiff’s overall program.
Public Policy  Interest of copyright law is not in simply conferring a monopoly on industrious persons,
but in advancing the public welfare through rewarding artistic creativity, in a manner that permits the free
use and development of non-protectable ideas and processes.
“…a satisfactory answer to this problem cannot be reached by resorting, a priori, to philosophical first
principals.”
b. Patents
“The Third Part of the Institutes of the Laws of England” by Edward Coke (1797)
Thesis: Monopolies are normally against the laws of England. However, patents are the exception to this
rule.
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
A monopoly awards the sole right to a person to buy, sell, make, use any thing. It is against the laws of
the realm.
The act against monopolies does not apply to letters patents granted for the sole making of new
manufacture. Such manufacture must have seven properties:
(1) Twenty year monopoly
(2) Must be granted to first inventor
(3) Invention must not have been used by anyone at time of issuance of letters patent
(4) Privilege must not be contrary to law
(5) It is no new invention if merely an addition was made to an existing invention
(6) Invention must not hurt trade
(7) Invention must not be inconvenient, i.e. mass production devices: no jobs shall be lost
“The Making of Modern Intellectual Property Law” by Sherman and Bently
Thesis  Two concepts underpinned 19th Century intellectual property law – (1) Creativity (mental labour)
and; (2) Image of creation (discovery v. invention dichotomy).
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Creativity  Mid-19th C, creativity was the common denominator which united patent law, literary
property and all areas of law which granted property rights in mental labour.
Thomas Webster - Authors, musicians, painters, designers, inventors, etc. have a “…peculiar claim
derived from the nature of the subject – namely that the subject matter of such property did not exist
like land, the air or wild-animals … such property is, in the strictest sense of the term, a creation.”
Image of Creation  Another important feature of early IP law was an image of what it meant to
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create. Starting point was a belief that there was a reservoir from which inventions were drawn (nature,
laws of science, etc). These ideas fell outside of the realm of what was patentable.
Patentable inventions were juxtaposed against non-patentable discoveries. To move from realm of
discovery to realm of invention, had to show that abstract principles had been reduced to practice, that
nature had been individualised or activated.
Invention = Embodiment of natural principles in a material or practical form.
“While God may have provided the starting blocks for the creative process, it was the contribution
made by the author, engraver, designer or inventor who individualised the subject matter they worked
with the law protected.
“The Making of Modern Intellectual Property Law” by Sherman and Bently
Thesis  During the 19th Century, patents were only granted to inventions that were deemed to be socially
useful. Recognition of the arbitrariness/introspective nature of this type of evaluation led to a shift away
from this approach.
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19th Century – Law explicitly passed judgment as to the quality of inventions. Tried to exclude from its
ambit what were seen as non-deserving creations. Quality of what was registered that mattered most.
Questions began to arise about whether it was appropriate for the law to engage in speculative
activities. Led to a fear about making qualitative decisions in general.
Law’s response was to avoid valuation of inventions. “It opted for a form of aesthetic and technical
agnosticism.”
Judgment should instead be left to the public and the market.
At same time, there was growing demand for IP to be placed in a calculable form. Difficult to calculate
labour/creativity. Problem resolved by looking at quantifiable closed work and contribution that
invention made to the economy.
Schlumberger Canada Ltd. v. Canada (Commissioner of Patents) – Federal Court, 1982.
Facts
Plaintiff invented a process whereby information derived from geological boreholes was recorded onto
magnetic tape, transmitted to a computer and converted into charts/graphs. The Commissioner of Patents
rejected the patent application on the basis that the plaintiff was seeking a monopoly over a computer
program and that it is not an invention within the meaning of s.2 of the Patent Act. Plantiff countered that
they were seeking a patent not over a computer program but a process. Moreover, s. 2 of the Patent Act
contains no limits as to what constitutes an invention.
Issue
Does this process constitute a discovery or an invention?
Ratio
“What the appellant claims as an invention here is merely the discovery that by making certain calculations
according to certain formulae, useful information could be extracted from certain measurements. This is not
an invention within the meaning of s 2”.
Reasoning
 First, must look at what is claimed to have been discovered. In this case, it is the discovery that data
can be extracted from certain calculations and the mathematical formula for these calculations.
 s. 28(3) of the Act clearly states that no patent shall be issued for “mere scientific principles of abstract
theorem.”
 Contention that use of computer transforms mental process into a mechanical one is erroneous. Fact
that computer is used to implement discovery does not change the nature of that discovery.
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Tennessee Eastman Co. v. Canada (Commissioner of Patents) – SCC, 1974.
Facts
Plaintiff discovered that applying pre-existing compounds to human tissues bonds them together. Applied
for a patent, but was denied on the basis that the application in question does not constitute a patentable
subject mater under subjection (d) of section 2 of the Patent Act.
Issue
Is the application of a compound to bond tissues an art or a process or an improvement of an art or process
within the meaning of subsection (d) of section 2 of the Patent Act? Can you patent a new use for a preexisting compound?
Ratio
What is claimed here is new surgical method of using a known substance. Methods of medical treatment
are not contemplated in the definition of invention
Reasoning
 Inventions must be new and useful process, composition of matter or art.
 Inventions relating to substances intended for medicine  No patents are given for the substance itself,
only for process of making it. Otherwise, this would preclude use of the substance by others. By
extension, therapeutic uses of such substances are also non-patentable.
 It does not make sense to allow the new application to be patentable, while not allowing a substance to
be patented.


s. 41 of the Act no longer exists. Patent law in Cda is going through a transformation
Surgical methods rely on skills of the physician and is uncontrollable, thus we can’t patent this. The
same policy perspective limiting patent applications in s. 41 is found in this argument. The reasoning is
just different.
c. Trademarks
“Trademarks as a form of intellectual property” by Sherman and Bentley
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
Historically, trademark law was not recognized at all, much less included under the rubric of
intellectual property.
This changed due to two factors: (1) Growing recognition and use of marks in commercial practice led
to increased specialization in this field. This heightened calls for recognition of trademarks as a
separate field of law and for the introduction of a registration system for marks; (2) Growing number of
bilateral treaties required explicit statements of law to ensure that there was some degree of
equivalence between the legal regimes of parties. Led to introduction of a trademarks register.
For Inclusion of TM in IP
 As trademark law began taking shape, there was increasing pressure for it to be included in framework
for intellectual property law. Why? Dealt with similar subject matter, shared professional bodies, the
nature and form of international treaties.
 Another practice which reinforced association between trademarks and IP was from trademark
proprietor who used pre-existing arrangements for copyright and designs to register images like labels.
Against Inclusion of TM in IP
 Many objections to treating trademarks as IP, the most significant being the issue of creativity.
Argument that rights were granted for the creation of new objects (i.e. copyright) but not of pre-
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
existing subject matter (i.e. trademarks).
“With trademarks, we create nothing new, but provide only a new mode of defending the right that we
acknowledge”.
Different reasons for protecting these rights. Copyright and patents are concerned with the creation and
protection of property, while trademarks are more concerned with forgery or fraud.
Origins
 Originated with passing off in mid-19th C.
 Impetus came from fact that UK was entering treaties. Difficult to enter treaties if you don’t know
what your laws are. Led to greater codification.
 In early days, there was a great deal of debate over whether trademarks are IP rights.
 Lametti doesn’t believe that trademarks are IP rights. Why? No property.
 Two difference: (1) Trademarks are not created in the same way as copyright. These works don’t
necessarily capture your personality; (2) Not truly a property right. Not allowed to sell your trademark
by itself. Only saleable with the business to which it is attached. Why? Because trademark embodies
reputation. Supposed to be a signal to the public.
 If I license my trademark, I have to make sure that it’s used properly. If it becomes generic, I will lose
it.
 Rationale behind trademark  Don’t want public buying one thing thinking that it’s another.
Reddaway v. Banham – House of Lords, 1896.
Facts
Reddaway produced a brand of machine belts called “Camel Hair”. These belts were manufactured from
yarn made of camel hair. Therefore, the words “Camel Hair” both described the product and served as a
brand name. Banham was employed with Reddaway until 1889. In 1891, he formed his own company for
producing machine belts. He called these belts “Camel Hair Belting” and stamped the belts with these
words. Reddaway then sought an injunction to force Banham to market his product under a different name.
Issue
In calling his product “Camel Hair Belting”, did Banham deceive consumers into believing they were
purchasing Reddaway’s product? Reddaway brought forward an action in passing off.
Ratio
A trader is not entitled to pass off his goods as the goods of another trader by selling them under a name
which is likely to deceive purchasers into the belief that they are buying the goods of that other trader,
although in its primary meaning the name is merely a true description of the goods.
Reasoning
 In the market, “Camel Hair” did not mean belting made of a particular material, but belting made by a
particular manufacturer.
 Individuals cannot use names, markers, letters, or other indicia by which he may induce purchasers to
believe that the goods which he is selling are the manufacture of another person.
 The name of a person, or words forming part of the common stock of language, may become so far
associated with the goods of a particular maker that it is capable of proof that the use of them without
explanation or qualification by another manufacturer would deceive a purchaser into the belief that he
was getting the goods of A. However, it is not enough to show that the rival manufacturer is using
your mark. You must show that the mark is being used in such a way that it misleads the public.
 Primary/secondary meaning leads to situations where a manufacturer may be telling a falsehood that in
its primary sense may be true.
 Reddaway has a right to insist that the trade mark not be used without explanation or qualification.
Obiter
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“I doubt myself whether it is accurate to speak of there being property in such a trade mark…”
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Obvious problem with bringing forward this action  The machine belts are actually made of camel
hair. The term is descriptive of the thing. Anything that is purely descriptive is not subject to
protection. Why? Because it shouldn’t be confusing to the consumer.
Court were still worried. Gave relief to Reddaway because the name “Camel Hair” belting had
acquired a secondary meaning. An exception to the rule that you can’t get protection over purely
descriptive terms.
Not simply an interest in insuring that consumers are not confused. Acknowledgement that name also
has significance to owner.
When trademark gets divorced from product, raises questions about trademarks constituting property.
Example  Don’t buy Nike t-shirts because they are of superior quality to other t-shirts. You buy it for
the brand name. Therefore, the name “Nike” has inherent value. A type of property?
Institut National des Appellations d’Origine des Vins et Eaux-de-Vie v. Andrews Wines Ltd –
Ontario CA, 1987.
Facts
Manufacturers of Champagne from Champagne region in France sought an injunction against the use of
word Champagne in “Canadian Champagne”. Word “Champagne” in France can only be attached to
sparkling wines produced in the region and according to certain standards of production. Claim that
Champagne is a trademark  Canadian Champagne is being passed off as French Champagne and
goodwill attached to it is destroyed
Issue
Are Canadian producers of champagne attempt to pass their product off as French champagne?
Reasoning
 In this case, the claim is for destruction of goodwill attached to Champagne.
 To succeed, plaintiffs had to establish that the defendants misrepresented their products as being
sparkling wines known as champagne and produced in France; that such misrepresentation is
calculated or likely to deceive the wine-consuming public into thinking that the Canadian product is
champagne, and that such conduct has or is likely to injure the goodwill of the plaintiff’s business.
 Tort of passing off  Concerns claims by plaintiff sellers or producers of a product who alleged
having suffered damages as a result of defendant’s misrepresenting his goods as the goods of the
plaintiff. False representation, which is likely to lead to confusion on the part of consumers, is
critical to this case.
Test for passing off:
(1) There must be goodwill or reputation in the product
(2) There must be a misrepresentation leading to or capable of leading to deception of consumer
(3) Such misrepresentation is likely to lead to damage to goodwill or reputation.
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No evidence that defendants have mislead consumers because: (1) Canadian champagne is clearly
marketed a domestic product; (2) This product has had a distinct marketing niche since the 1920’s; (3)
The product is produced in accordance with government directives, which ensures that it is similar to
French champagne; (4) Canadian champagne is sold in separate sections than French champagne in
LCBO. Argument is further bolstered by the fact that sales of French champagne have been increasing
consistently, in spite of price increases.
While Canadian producers benefit from the connotations associated with the word “champagne”, this
does not constitute passing off because the product is not being portrayed as being produced in France.
No quantifiable evidence of confusion.
Tort does not apply here because one product is not really passed off as the product of another
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producer. Word “Champagne” can be appropriated by any producer making sparkling wine in the
region and according to certain standards of production.
NB: If parties both have goodwill in product with same name, may both be entitled to use that name (i.e.
Anheuser-Busch v. Budweiser Budvar Brewery).
-Features of a shared goodwill claim are:
1. That the element in the goodwill of each of the individual plaintiffs was not exclusive but rather shared
with every other shipper
2. The class of traders were capable of continuing expansion since it might be joined by any future shipper
who was able to satisfy the condition
Discussion
 What’s the difference between passing off and the claim being made here? This case involves a case of
“shared goodwill”. Goodwill isn’t associated with one company, but instead with a group of company.
Normally, a trademark serves to distinguish my wares from those of my competitors.
 How do we get over this hurdle of identification? Judge acknowledged that term “champagne” could
be used as a trademark. If you see trademarks are a right of the consumer rather than a right of the
producer, you can argue that the consumer is still being misled even though the goodwill is not
attributed to a particular producer. Believe that term “champagne” refers to a specific product. A
controlled meaning to champagne. Consumers are entitled to believe that product they’re buying
conforms to specific standards. Therefore, court took point-of-view of consumers.
 Class of people entitled to champagne is not a fixed group. People will become entitled to use the term
“champagne” who do not currently have that right. People may lose the right. Therefore, group is
undefined over time.
 There was a lack of confusion between French champagne and Canadian champagne. Sales history,
lack of complaints and polling support this. As a result, there was no impact on champagne’s goodwill.
 What would have happened if this lawsuit had gone through in the early days of Canadian champagne?
Could point out different prices, try to argue that term “champagne” is generic, regulation by the state
in terms of labelling law allowed the use of Canadian champagne. Gold  It would have been much
more difficult for Canadian producers to have defended their case if the lawsuit had been brought forth
earlier. As thing were, they had the chance to establish their own goodwill.
 Generic argument  Champagne has become a mainstream term, i.e. “The Champagne of ginger
ales”. Also refers to a colour. However, court found that term “champagne” hasn’t become entirely
generic yet.
Importance  First time “shared goodwill” was recognized in Canada. Also maps out interest
features of “passing off”.
Eli Lilly and Co. v. Novopharm – Federal Court of Canada, 1997
Facts
Patented first anti-depressant without serious side-effects. Sold Prozac under patent. Patent expired. Eli
Lilly still wanted to protect income stream. Did two things to protect their market: (1) Claimed trademark
over bullet shaped, distinctly-coloured pill; (2) Gave a license to a generic company to sell generic
philoxadene (chemical name for Prozac). Generic Prozac and regular Prozac were produced in the same
factory. Wanted to ensure that if generics were going to enter the market, their generic pills would capture
the market. Novopharm began producing Philoxadene in coloured, bullet shaped pills. Eli Lilly claimed
that Novopharm had produced the pill.
Issue
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Has Eli Lilly’s trademark been violated?
Ratio
No confusion on the part of consumers. Moreover, there are subtle policy reasons for allowing generic
companies to produce same coloured pills as brand-name companies.
Reasoning
Court found that there was no confusion on the part of doctors/pharmacist. Also found that there was no
confusion on the part of consumers.
Two reasons for this: (1) Consumers don’t see the product until they bring it home; (2) Statistical evidence
didn’t show strong correlation between colours and identification with particular pills.
Subtle policy reasons for permitting generic company to produce same coloured pills as Eli Lilly  (1)
Seniors and other people who are taking many different pills rely on colours to keep them straight; (2)
Pharmacists are more likely to catch mistakes if they see that pills are wrong colour; (3) Generic/Brandname drugs have used same colours for years. Consumers have come to rely on this.
Complication here  Two sets of possible consumers: (1) Doctor/Pharmacist who supplies to drug; (2)
Patient who buys the product.
Discussion
 Eli Lilly wanted court to find that the patient was the ultimate consumer. Less sophisticated consumer
when it comes to making choices than doctor/pharmacist.
 What if you wanted to convert patent monopoly into a brand. What would you do? Try to register
colours in the packaging. If you register, you don’t have to prove confusion. Not clear if you have a
register.
 Gold says that the best way to enter the generic market is to be the first one in. As Eli Lilly, I want to
license my product ASAP so that generic company will be ready to produce it on the day that my
patent expires.
NB: Why do drugs have both a brand-name and a chemical name? To ensure that the brand-name does not
become generic.
What does history teach us about patent law?
 Example: Canadian Champagne case. Relied on historical trends to justify use of term “champagne”.
 Regulatory framework is better reflected by a common law approach, rather than a civil law approach.
 Harmonizing intellectual property rights is attractive because security for assets guaranteed by
changing theory and incomplete normative foundations is not strong.
 Should it be the courts who decide what falls within the parameters of intellectual property regimes or
the legislatures?
5. Courts and Institutional Competence
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
By nature, intellectual property laws are vague.
Often have to deal with situations that were not contemplated by Parliament at time laws were made.
Can also have new classes of objects – i.e. “computer programs”. Law was then presented with this
situation (through TM and patents).
How do we treat these categories of goods?  (1) Particular objects (i.e. this particular mousetrap, this
particular symbol); (2) Computer Programs.
To views on judicial approach to this situation: (1) Courts should only act if it’s abundantly clear that
legislature wants them to act; (2) Courts should act unless it’s abundantly clear that legislature doesn’t
want them to act.
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Category 1 – Object that wasn’t contemplated
 Example: A new kind of mousetrap.
 Not in the contemplation of the legislature at the time the legislation was passed.
 Gold  Would be strange if courts could not award patents to these objects simply because they didn’t
exist when laws were made.
 Even though they were not contemplated, it should be patentable if it falls within proper parameters.
Category 2 – Categories of Objects
 Is a mouse patentable?
 Have doubts about patentability because it belongs to a class of objects that may or may not be
patentable.
 Mouse represents a bigger class. Leads to questions about whether mice should be patentable.
Tension  Why should courts even consider categories of goods? Perhaps they should just look at objects
on a case by case (i.e. category 1) basis. Counter-argument  Even if all objects are assessed on a case by
case basis, will it lead to different results that the categorization that Gold has proposed?
Example  Chakrabarty. All we do is examine object against criteria. If object meets particular criteria, it
is patentable. Public policy questions are not the realm of the courts. If courts were concerned about
bacteria being patented, they would take action.
Approach
(1) Statutory Interpretation  When you decide to extend laws to objects that weren’t contemplated by
legislature, laws won’t necessarily provide guidance. Therefore, statutory interpretation isn’t particularly
useful;
(2) Policy Considerations  In Harvard Mouse, Binnie says that the only policy consideration is economic
consequences. If there are no laws on point, you are making a policy decision. Laws don’t provide any
guidance. In Cakrabarty, court claimed that it didn’t have authority to make policy decisions. Gold
disagrees.
(3) Without patents, industry will die  Statistics don’t support this. In fact, early computer programming
industry flourished because of the lack of patents
Gold  Everytime you change rules, you change the nature of the marketplace. Example: If no patents are
being granted in the area of computer programming, lots of kids will invent programs in their garage.
Motivated by belief that assuming that they don’t copy anyone, they will be able to sell their invention in
the marketplace.
Parker v. Flook – US SC, 1978
Facts
Parker invented a new process for determining alarm limits during catalytic conversion processes. The
patent application only provided a formula for computing an updated alarm limit.
Issue
Do novel uses for mathematical formulas make an individual’s method eligible for patent protection?
Ratio
The process itself, not merely the mathematical algorithm, must be new and useful.
Reasoning
The notion that post-solution activity, no matter how conventional or obvious in itself, can transform an
unpatentable principle into a patentable process is erroneous. It is equally clear that a process is not
unpatentable simply because it contains a law of nature or a mathematical algorithm.
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The process itself, not merely the mathematical algorithm, must be new and useful. Respondent’s process is
unpatentable not because it contains a mathematical algorithm as one component but because once that
algorithm is assumed to be within the prior art, the application, considered as a whole, contains no
patentable invention. Respondent simply provides a new and presumably better method for calculating
alarm limits.
**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)
Parker v. Diamond
 Invention in Parker v. Flook is just about identical to the invention in Diamond v. Diehr. In Flook,
Court takes point-of-view that it is legislature that is responsible for moving boundaries of IP law, not
courts. Court in Diehr chooses to re-characterize what is essentially the same invention as in Flook.
Allowed them to grant a patent. Claims that this particular process didn’t previously discuss.
Explanation for Parker v. Diamond
(1) There is the obvious reason of the change in the US Supreme Court’s composition.
Those that were the minority in Parker, became the majority in Diamond.
(2) The way in which the invention was characterized was different. In Parker, the court
said that all that was new was the addition of an extra step. An existing process was
taken and a few elements were added. Thus, the invention was analyzed in isolation.
In Diamond, the invention was characterized as a process, even though the only
thing new was a computer algorithm.
(3) We could also argue that the difference relates to a difference in the underlying
justifications forgiving/denying the patent. The reasoning of the court in Diamond seems to comply
more with the historical emphasis of the economic rationale for IP rights. Diamond seems to place
heavier faith in the market. The court seems to say that everything should be patentable unless there is
good reason not to.
(4) In Parker, the court seems to think the invention is not that useful to society. Thus in order to earn a
patent, the invention must do some good.
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 Diamond relies on an economic
justification
Funk Brothers  Involved a class of plants called “legumes”. Found a mixture of bacteria that promoted
health of legumes. Found to be unpatentable because it involved natural processes. In Charabarty, scientist
found a naturally occurring DNA strand and inserted this into a completely different kind of bacteria. Court
found that this bacteria was patentable. Last year, followed by Pioneer Hybrid, where court found that
hybridization is, in theory, patentable. New rule indicates that if this had been applied back in the time of
Funk Brothers, patent would have likely been granted.
Harvard Mouse  Binnie adopts American approach which sees mouse as a patentable object. Majority
argues that mouse belongs to a class of goods which is unpatentable, unless the legislature says otherwise.
Nothing in the act specifically says that mice are unpatentable. SCC majority relied on vagueness of act to
justify their decision.
Natural substances  Natural substances are patentable if they are transformed into another form.
Gold feels that Parliament should make laws in uncharted intellectual property areas, not courts.
SCC Decisions on Harvard Mouse Case
 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.
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
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.
Diamond v. Chakrabarty – US SC, 1980.
Facts
Chakrabarty invented a human-made, genetically engineered bacterium that is capable of breaking down
multiple components of crude oil. Could have significant value for the treatment of oil spills. Claimed for:
(1) Process for producing the bacteria; (2) An inculum; (3) The bacteria themselves. Patent Office accepted
claims for (1) and (2), but rejected (3) on the basis that living things are not patentable subject matter.
Issue
Is a live, human-made micro-organism a patentable subject matter?
Ratio
The patentee has produced a new bacterium with markedly different characteristics from any found in
nature and one having the potential for significant utility. His discovery is not nature’s handiwork, but his
own; according, it is patentable subject matter under s. 101.
Reasoning
 s. 101 reads: “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.
 Specifically, what must be determined is whether the respondent’s micro-organism constitutes a
‘manufacture’ or ‘composition of matter’ within the meaning of the statute.
 Court emphasises how these words have been widely construed by other courts and that the relevant
legislative history also supports such a broad construction.
 There are limits to the legislation  Includes natural processes and physical phenomenon cannot be
patented.
 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.
The petitioners offer other arguments why the organism should not be patented:
(1) That organisms were never included in the Plant Patent Act and certain asexually reproducing plants
were protected under the act, which meant that in some circumstances, Congress had recognised when
‘manufacture’ and ‘composition of matter’ did not cover living things;
(2) 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.
Gold doesn’t like this case  Feels that court made stuff up to justify their position.
(1) Courts quoted another case and claimed it stated that judiricary should not read into patent laws
limitations that legislature hasn’t specified. In reality, case said something completely different;
(2) This case also talked about Thomas Jefferson. Claimed that Jefferson supported a very liberal
interpretation of “invention”. If you go back in patent law history, Jefferson was extremely resistant to
extending patent laws. Believed in public knowledge. Felt that patents should only be granted in most
exceptional circumstances.
Dangers of Patenting New Lifeforms
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

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.
Diamond v. Diehr – US SC, 1981
Facts
Diamond claims that they have contributed to the production of moulding articles by developing a process
whereby the temperature inside the mould is constantly regulated and processed by computer to recalculate
cure time. The patent examiner rejected the claim, stating that the steps carried out by computer constituted
non-statutory subject matter. Furthermore, the installation of rubber in the press and closing of the press
were conventional and necessary to the process, making them unpatentable. The Patent and Trademark
Office Board of Appeals agreed with this analysis, but the Court of Customs and Patent Appeals reversed.
The latter stated that a claim drawn to subject matter otherwise statutory does not become nonstatutory b/c
a computer is involved.
Issue
Is a process for curing synthetic rubber, which includes the use of mathematical formula and a programmed
digital computer patentable subject matter?
Ratio
When a claim containing a mathematical formula implements or applies that formula in a structure or
process which, when considered as a whole, is performing a function which the patent laws were designed
to protect, then the claim satisfied the requirements of s. 101.
Reasoning
Here, the respondents do not seek to patent a mathematical formula. Instead, they seek patent protection for
a process of curing synthetic rubber.
A process is patentable. A process is a mode of treatment of certain materials to produce a result, which, if
new and useful, is patentable. The machinery used to perform the process may not be new or patentable,
but the process and product may be new. The claim falls within the §101 categories of possibly
patentable subject matter
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.
The claimant do not seek to patent a mathematical formula, but rather to foreclose others from using the
equation in conjunction w/ all the other steps in the process to produce their product.
Discussion
 Excluded from statutory patent protection are laws of nature (established in Gottwchalk v. Benson),
natural phenomena, and abstract ideas. A mathematical formula is not patentable since it is equivalent
to a law of nature
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


The dissent claims that the holding misunderstands the applicant’s claimed invention and failure to
recognize the difference between discovery requirement in §101and the “novelty” requirement in §102.
Note  Proper analysis begins with what the inventor claims to have discovered
See Parker which states that a process is not patentable
-§101 addresses subject matter patentability; §§102 & 103 address inventiveness and novelty
Harvard College v. Canada (Commissioner of Patents) – SCC, 2002
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?
Ratio
It was decided that Canadian law prohibits animals from being patented. The oncomouse does not fit the
definition of an invention under the Canadian Patent Act
Reasoning
Bastarache J:
 “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.”
 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.
 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): Dismissed this prospect
 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.”
 The profound cellular changes in the mouse render it a ‘composition of matter.’
Comments
 This was a defeat for biotech – all the patent application of plants & animals are not going to be
accepted. It is departure for Canada 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 Canada 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 groups.
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SCC Decision on Harvard Mouse
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.
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.
Reaction to this Ruling
 Biotechnology was disappointed.
 Academic community didn’t really care, except for Gold.
 Gold believes that the majority is right. Doesn’t agree with their reasoning, though. Gold was working
for Biotechnology Advisory Board. Didn’t want this case to succeed because wants to force Parliament
to create laws governing this area. Anytime courts go ahead and expands categories, legislature
generally doesn’t go back and address this area. This ruling ensures that legislature will have to
examine this area of law. Dangerous for courts to treat this area of law in a piecemeal fashion.
 Gold believes that Bastarache, who wrote for the majority, was determined to rule against Harvard.
Struggled to find reasons to justify this position.
Point of all of this  Drawing boundaries is not always as easy as it seems (like Chakrabarty tried to
say) . If we always try to push things to Legislature, there are costs (inefficiencies, chance that
Legislature will make a bad decision). Those who believe that courts are acting correctly want
Legislature to stay out of patent law. This is the possession of US industry.
6. Modalities of Ordering of IP Space
a. Patents and Trade Secrets

There are some theoretical justifications behind these systems and how to use them. 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.
Criteria for Patents
(1) Novelty – This idea must not have been expressed before.
(2) Non-Obviousness – Creation at the end of the 18th Century.
(3) Utility
** If you fulfill these three criteria, as determined by the Patent Office, you will be granted a patent.
Invention must be fully described.
Patent law in Canada is underdeveloped. In Canada, you generally don’t go to court for an invention that is
worth less that $1 million. Why? Because going to court would cost you about this much. This is the reason
why we look to other jurisdictions for guidance.
Step 1  Criteria allowing you into an IP regime.
Beloit Canada Ltd. v. Valmet Oy – Federal CA, 1986
Facts
Two patents were granted to two different parties for the same invention. The invention is for the press
section of a paper machine.
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Issue
Since both patents cannot be valid, is one or both of the patents void?
Ratio
Patent that was issued first was not struck down by the obviousness and anticipation tests. Therefore, it was
infringed by the patent that came later.
Reasoning
Obviousness (“Any fool could have done that.”):
 What you did is not even creative. Obviousness is an attack on a patent based on its lack of
inventiveness
 Difficult to knock out patents because of obviousness.
 Mosaic approach  If you examine various elements of the invention, is the invention obvious?
Combination of information must lead directly to the invention. Must look at documents that would be
accessible to someone in that field. Therefore, a write-up in an art history book wouldn’t destroy a
claim on this basis.
 Test  Would technician skilled in the art but having no scintilla of inventiveness or imagination, in
the light of the state of the art and of common general knowledge have come directly and without
difficulty to the solution taught by the patent? Can’t show any spark of creativity.
 The invented machine is now almost universally adopted for use in the press section of paper machines
 non-obviousness. Otherwise industry would have adopted technology before
 “Aren’t a lot of things obvious in hindsight?” – yes, but courts are only looking for things that were
obvious at the date of invention.
Novelty (“your invention, though clever, was already known”):
 What you’ve done is creative, but someone got there first.
 Also difficult to knock out patents because of novelty.
 Test: s.28(b) of Patent Act
 Inquiry is directed to invention in suit and not to the state of the art.
 Refers to fact that invention has not been described in previous publication or in previous patent.
 Novelty must be found in a specific patent or publication published more than 2 years before petition.
It is not enough to pick bits and pieces from a variety of prior publications
 Document itself must reveal in exact language the entire invention. Every element/combination of
elements must be present.
 In reading this document, a skilled individual must be able to construct the invention without further
instruction or thought.
 The prior publication must contain so clear a direction that a skilled person following it would be led to
the claimed invention..
 In this case, there was no novelty.
Utility
 Court doesn’t care if invention is a real benefit to society. I can invent a swiss army knife that is blunt.
Nobody’s going to buy it, but I can get it patented.
 All you have to show is that you’ve invented a new article and that it’s new/better/different than what’s
already out there. Must accomplish the task I say it will accomplish.
 What about harmful compounds? As long as someone skilled in the art can tell the difference between
your invention and another one, you’re fine.
Comments
 Why is first patent allowed to strike down second? Novelty requirement. If patent that was registered is
first, the one that came after cannot be novel.
Novelty
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Requirements in Canada do not differ that much from rules elsewhere in the world. Publications
anywhere in the world are admissible.
Some countries may limit origins of eligible publications.
Canada has a grace period for novelty. Inventors will not be knocked out for lack of novelty if you or
someone close to you has presents the invention less than 12 months ago. If today is October 30 th,
2003, any disclosures made after October 30th, 2002 are fine.
What if someone else from a different lab introduced the same invention? Even though I may have
invented the same thing earlier, I’m knocked out due to lack of novelty.
Europe takes a narrow view of admissible documents, but immediate preclusion from patents upon
disclosure (no grace period).
What’s the point of all this? To encourage disclosure and encourage invention. Little good to society in
rewarding you for disclosing information that you have already disclosed.
Most countries in the world have adopted the “first file” system. First person who gets to th Patent
Office wins. Exception is the United States. In US, first person who invents gets the patent. If there are
conflicts, “mini-trials” will be held to determine who actually invented the object first.
Obviousness
 Differences between Anglo-Canadian law and American law.
 Example – DNA sequencing. You are examining DNA sequences. You know you’re going to find
something. By using an obvious process, you get a non-obvious result.
 Does obviousness related to the process to get there or the end result? Americans look to end result.
Canadians look to procedure.
 Europeans use an “inventors” step. Ask the question: “What is this thing supposed to do? What is the
problem that the invention is trying to over come.” Then, must ask the question: “Is this solution a nonobvious answer to this problem.” Europeans would probably find that discovery of application for
DNA sequence is not patentable.
 End result in Canada  Modified Crips question. “Would the skilled, unimaginative worker in light of
his or her common, general knowledge and armed with the available prior art be led directly and
without directly to the claimed invention.”
If sued for patent infringement
 First thing you do is allege that other patent is invalid. 25% of this succeed at trial.
 If the trial goes to CA, rate of success goes up to 50%
Utility
 US – Credible, substantial and specific utility. Credible – Someone in the field must believe that your
invention will work. Specific – I can’t try to argue that my VCR was invented to be a doorstop.
 Canada – These terms are much less defined. All of you have to do is show that your invention is
new/different/provides choice. If I invent a blunt swiss army knife, I can patent it because it’s different.
However,
 Europe – Most lax test. Must be able to make the invention. Someone has to want it.
Description Requirements
 Canada  Specifications only describe the invention as you claim it. Someone reading the
specifications should be able to read this document and understand how the machine works. What
about things that are impossible to describe? You can deposit it at the Patent Office.
 US  You have to actually be able to make the thing. Not enough just to describe it. Has the effect of
restricting the scope of claim.
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.
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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 nonobviousness) almost anything can be patented.
Why these three criteria?
 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.
According to Hegelian ideas, would these two 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.
Step 2  Link between Patent and Trade Secret Protection
Kewanee Oil v. Bicron Corp – US SC, 1974
Facts
Plaintiff developed a process for growing crystals. This process was protected by trade secret law. The
defendant was a former employee of the plaintiff. While working for the plaintiff, he signed a nondisclosure form affirming that he would not share the company’s trade secrets. After leaving the plaintiff’s
company, the defendant formed his own company to produce crystals. CA found that defendant had used
trade secrets to grow the crystals. However, they also found that Ohio’s trade secret law was in conflict
with the patent laws of the US. On this basis, the claim was rejected.
Issue
Do trade laws necessarily conflict with patent laws?
Ratio
Patent law does not pre-empt trade secret law. They have co-existed for 100 years. Each has its particular
role to play, and the operation of one does not take away from the need for the other.
Reasoning
Trade secret law encourages the development and exploitation of those items of lesser or different
invention than might be accorded protection under the patent laws, but which items still have an important
part to play in the technological and scientific advancement of the Nation.
Trade secrets refer to information used in one’s business, which provides opportunity to obtain an
advantage over competitors. Subject matter of trade secret must be secret, and must not be of public
knowledge in the trade or business. Secrecy is not lost if the holder reveals the secret to another in
confidence and under and implied obligation not to use or disclose it. Trade secret law does not offer
protection against discovery by fair and honest means. Novelty is no required for trade secrets
Trade Secret law v. Patent Law.
Trade secret law  Maintenance of standards of commercial ethics and encouragement of invention, even
though the invention may not be patentable
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Categories of trade secrets:
(1) Trade secrets not patentable  Trade secret law encourages invention and disclosure where patent law
does not reach.
(2) Trade secrets whose valid patentability is considered dubious  Risk of patent invalidity and costs
associated with that risk may impel inventor with doubt as to patentability to opt for trade secret protection.
(3) Trade secret whose patentability is likely  Trade secret law provides much weaker protection than
patent law: (a) patent law excludes the rest of the world, while trade secret law does not forbid the
discovery of the trade secret by fair and honest means; (b) trade secret holder also runs the risk that the
secret will be passed on to competitors by theft or breach of contract no conflict with patent law
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.
 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.
Paramountcy v. Pre-Emption
 US has a pre-emption doctrine, where we have a paramountcy doctrine. Paramountcy 
 As long as federal and provincial laws don’t conflict, they can both stand. Pre-emption  If federal
government entered a field and attempted to block it off, states can’t enter. Doesn’t matter that you
could potentially comply with both sets of rules?
Competing points of view
(1) Federal government introduced patent system with very specific parameters  new, non-obvious and
useful. Things that do not fit into this criteria were intended to remain in the public domain.
(2) When Congress passed legislation, all they cared about things that fit into new, non-obvious and useful
criteria. Didn’t care what happened to inventions that fell outside of these parameters.
Cadbury Schweppes v. FBI Foods – SCC, 1999.
Facts
Takes up where Lac Minerals left off. 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
What’s the proper remedy for breach of trade secret?
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Ratio
This is not a property, tort or unjust enrichment claim. Instead, it is a sui generis system. Action is rooted in
the relationship of confidence rather than the confidential info.
Reasoning
 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 measured
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.
 What’s the entitlement in question here? That the people to whom you reveal the trade secret will not
reveal it. The obvious remedy here seems to be a property right.
Discussion
 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.
 Gold believes that there is sloppy reasoning in this case.
Options that were considered
(1) Fiduciary Obligation
(2) Tort
(3) Property Right
b. Copyright
Feist Publications v. Rural Telephone Service – US, 1991
Facts
Rural provides telephone service to several communities in Northeast Kansas. They have to provide an
updates phone book annually for Kansas. Feist is in the business of making a white pages & wanted to
provide a bk that would serve a wider base of people than Rural’s. F asked other companies if they could
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copy the numbers from their directories in return for a fee (most said okay) but Rural refused. The omission
would leave Feist w/ a huge gap in their phone book. So, Feist copied the numbers from Rural’s books.
Anti-competitive behaviour? Previous crt battle b/t the 2 over yellow pages. There, crt found that the
refusal was motivated by an unlawful purpose ‘to extend its monopoly in telephone service to a monopoly
in yellow pages advertising’.
Issue
(1) Was this a copyright violation? Yes (in area of criteria)
(2) Did they meet the minimum requirement for originality? No
Ratio
If there is no minimal amount of originality, in the selection or arrangement of facts (names, towns,
telephone numbers), there can be no copyright protection.
In order to be considered copyrightable, a compilation must have three elements:
(1) It must be a collection and assembly of pre-existing material, facts, or data
(2) The selection, coordination, or arrangement of those materials
(3) The creation, by virtue of the particular selection, coordination or arrangement, of an original work of
authorship.
Reasoning
 Onus is on Rural to show that they satisfy the requirements for copyright protection.
 Tension between two well-established propositions in this case: the first is that facts are not
copyrightable; the other, that compilations of fact generally are.
 There is a tension between these two propositions as many compilations consist of nothing but raw
data. Common sense tells us that 100 uncopyrightable facts do not magically change their status when
gathered together in one place. Yet copyright law seems to contemplate that compilations that consist
exclusively of facts are potentially within its scope.
 The court says the key to understanding this is to understand why it is that facts are not copyrightable.
Facts are not copyrightable because they do not pass the essential CR test of originality.
 Original in copyright means only that the work is independently created by the author and that it
possesses at least some minimal degree of creativity.
 The mere fact that the work is copyrightable does not necessarily mean that every element of the work
is may be protected. Copyright only extends to those portions of the work that are original.
 This inevitably means that copyright in a compilation is thin because a subsequent compiler remains
free to use the facts contained in another’s publication to aid in preparing a competing work, so long as
the competing work does not feature the same selection and arrangement.
 A factual compilation is eligible for copyright if it features an original selection or arrangement of facts
but the copyright is limited to the particular section or arrangement.
 The sweat of the brow theory (i.e. rewarding artists for their labour) has numerous flaws. It extended
copyright protection in a compilations beyond selection & arrangement-the compiler’s original
contributions-to the facts themselves. But, eventually the originality requirement prevailed.
 Def of ‘compilation’ in the CR Act is meant to reinforce this idea that collections of facts are not
copyrightable.
 Since Rural’s white pages lack the requisite originality for copyright, Feist was not infringing when it
took the numbers it did from Rural’s listings.
 Even if a copyrightable compilation, it receives only limited protection. It is clear that CR is not a tool
by which a compilation author may keep others from using the facts or data he or she has collected.
Application to the case:
In order to establish infringement, Rural needs to establish:
(1) Ownership of a valid copyright – not an issue in this case
(2) Copying of constituent elements of the work that are original.
 The court finds that Rural’s selection and arrangement of names did not satisfy the minimum
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requirements for creativity under the act. In fact, Rural’s selection too obvious.
Rural was required to do select the names in its directory by the Kansas Corporation authority.
There is nothing remotely creative about arranging names alphabetically in a while pages directory.
The names, towns and telephone numbers copied by Feist were not original to Rural and therefore
were not protected by the copyright in Rural’s combined yellow and white pages directory. Copyright
only protects those constituent elements of a work that possess more than a de minimis quantum of
creativity.
Because Rural’s white pages lack the requisite originality, Feist’s use of the listings cannot constitute
infringement.
Discussion
 The court tries to draw the line between fact and expression. The law protects originality, not fact. The
facts here are irrelevant because they are not original. The real basis of the decision is the discussion of
originality.
 The overall view of the court is that the purpose of copyright is to promote the production of useful
works. US copyright law is based on utilitarianism, not desert. Phone books are not original.
Tele-Direct (Publications) v. American Business Information – Federal Court, 1998
Facts
Tele-Direct claims copyright in the subscriber information subscriber information received in a
disorganised state from Bell Canada and in respect of the collection of additional data such as fax numbers,
etc. Trial Judge found that copyright did not subsist in the compilation. She based her findings on the
criteria set out by McLachlin J for compilations of material produced by others: that they may be protected
by copyright, provided that the arrangement of the elements taken from other sources is the product of the
plaintiff’s thought, selection and work. It is not the several components that are subject to protection but the
compilation itself. The originality requisite to copyright is a matter of degree depending on the amount of
skill, judgment or labour that has been involved in making the compilation. Tele-Direct was seen to have
arranged its work in ways that were not subject to copyright according to the commonplace standards of
selection in the industry.
Issue
Whether copyright subsists in the compilation of information contained in the Yellow Pages directories
published by Tele-Direct (appellant).
Ratio
No copyright can be claimed by the Appellant. Since there is no copyright, there is no need to deal with the
issue of infringement
Reasoning
The definition of compilation to be used is:
(1) Work resulting from the selection or arrangement of literary, dramatic, musical or artistic works or of
parts thereof;
(2) Work resulting from the selection or arrangement of data
 The important criteria for measuring whether something is copyrighted is whether it has the elements
of creation of the intellect. So we also use the standard not of sweat of the brow but of creativity.
The test of originality:
 The test threshold is low: for a compilation of data to be original, it must be a work that was
independently created by the author and which displays at least a minimal degree of skill, judgment
and labour in its overall selection or arrangement.
 While we have the above definition of compilation and the notions of the importance of originality;
one should always keep in mind that one of the purposes of the copyright legislation, historically has
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been to protect and reward the intellectual effort of the author in the work.
Reference to the French phrase for copyright: 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.
Prof. Siebrasse: ‘IP law must strike a balance b/t protecting the new products of inventive labour and
allowing these to be freely available so as to form the basis for future progress.’ A compilation cannot
be seen as a new product of inventive labour.
American interpretations of copyright: the standard for originality is very low – ‘Originality is not a
stringent standard: it does not require that facts be presented in an innovative or surprising way. It is
equally true, however, that the selection and arrangement of facts cannot be so mechanical or routine
as to require no creativity whatsoever. The standard of originality is low, but it does exist.
Feist v. Teledirect
 Feist & Teledirect  Why did they have this tension between the two standards? For Feist, a very high
standard was insisted on and then for Teledirect a very low standard was maintained.
 Why did Teledirect push back the level of creativity? As more and more goods are less of a creative
variation, that is more technical in nature, creativity seems to be an improper scale to use to protect them.
The test of originality
For a compilation of data to be original, it must be a work that was independently created by the author and
which displays at least a minimal degree of skill, judgment and labour in its overall selection or
arrangement. The standard is low.
“Reconsidering the Idea/Expression Dichotomy” – Allen Rosen
The judge Learned Hand: there is no fixed line to draw distinction –there is an arbitrary line drawn between
idea and expression.
→ Purpose of the idea/expression distinction: that it is meant to protect the two goals of copyright law:
a) To encourage a free flow of ideas for the benefit of the public
b) To ensure sufficient incentives for continued creativity.
Content/Style Contrast
 Style is a way of explaining an idea=expression: Used by Hettinger to suggest that the idea/expression
distinction means the content of an idea and expression means the style in which an idea is presented.
 What is protected is not the content of copyright but the style of presentation.
 The content/style dichotomy fails to explain all aspects of the importance and application of the
idea/expression dichotomy.
Fixed/Unfixed:
 Expression is an idea in fixed form: The contrast between ideas and their expression represents the
difference between ideas that are fixed in a tangible way and those that are not.
 ‘If the idea, however original, is nothing more than an idea...then there is no such thing as copyright at
all. It is not until it is reduced into writing or into some tangible form that there is any copyright.’
 When someone expresses an idea for a story, they cannot be said to have a copyright in that story.
However, if someone overhears the idea and puts it into film or some other enduring form, then they
receive the copyright, even if the idea was not their own.
Ideas & Language: The Lockean Story: Disembodied/Embodied:
 Floating ideas v. a description of ideas. Many courts use this distinction: the dichotomy is connected
with the distinction between ideas as mental objects and the language in which they are expressed.
 The metaphor here is that ideas become ‘embodied’ in language and then are susceptible to copyright
protection. Disembodied ideas, on the other hand, are not subject to copyright protection.
 The idea/expression distinction may be expressed as a distinction between embodied and disembodied
ideas.
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General/Specific Ideas (Learned Hand):
 It is not a dichotomy but a spectrum that lies between idea and expression. The right place to draw the
line is where we think it is most convenient to achieve the purposes of copyright.
 ‘Between the initial, very general idea for a creative work and its final development in the completed
material form there is an infinitely large range of possible ideas of ever increasing specificity-which
can be overlaid upon the finishing work. Somewhere in this range, Hand believes, there is a point at
which the author’s idea is distinguishable from his or her manner of expressing it in a concrete form.’
 This is the only distinction that is able to serve the purpose that the idea/expression dichotomy is
intended to promote.
 We should use pragmatic criteria to distinguish ideas from their expression by employing the contrast
between general and specific ideas to promote
Entitlements: The tools of the IP system
Author :
 Natural Entitlement: to control all use (the author has dominion). The author is entitled to a copyright:
the revenue that streams from the work and the revenue streaming from any use of the work.
 Moral Rights: Recognition of authorship
 Integrity of Work
 A-C are all like property rights. The courts are schizophrenic about which entitlement they want to use.
There is a trend towards revenue types (not property).
 The priority has become that of liability above authors’ rights, in the sense that as long as the author is
paid, everybody can use the work.
Publisher: They have only economic rights-the revenue stream comes from added value of the work and
any use of the published work.
Users (other authors):
 This is the weakest claim to copyright: the use of everything that is not otherwise controlled. Includes
the right to information/ideas; and the right to access to create something new.
 The tools of the Copyright Regime are: originality, reproduction, expression-idea.
 Originality: defines the right to ideas/information (creativity, sweat of the brow)
 Idea/Expression: Types of revenue streams (added value=expression)
If we had to redesign the Copyright Act:
 Add a more rigorous originality test-like what we have in the patent application. That would protect
the public’s right to information. The harder we make the originality requirement, the more we need
enforcement mechanisms, registration, etc.
 The Scope of Copyright: a shift is occurring-the S.C.C. is moving away from complete control to the
revenue stream right held by authors.
 In the last decade, by contrast, the scope has extended to complete control of use-the uncertainty of the
system of jurisprudence produced a contractual definition of rights.
 Another mechanism that is meant to meet the needs of the uncertain system is the “technological
speedbox” building technology that makes it difficult to copy-overrides the Court decision of only
revenue entitlements by other mechanisms.
 Property law says: here are your initial entitlements, do with them what you want. By moving towards
“control of use” authors/publishers cut in their own fingers because they are also users, drawing from
ideas. Find the market mechanisms that discourage “Control of Use.”
 Fair use: if I use something for private study, it must also be fair. May be fair in the case of a student
but definitely not a law firm.
Idea/Expression Dichotomy
 Copyright protects expression and not ideas.
 If we’re going to be true to the purpose of copyright, we must draw this distinction.
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Of course, distinction is not always so clear. Becomes less evident with computer programs (or
anything with a utilitarian function).
Does this dichotomy still make sense given the scope of materials covered by copyright?
Functional argument  Distinguishes copyright from other regimes. Developed different historical
paths – separates area of coverage between patent and copyright even though there is overlap.
Drausinhauer  Believes there are clear distinctions between categories.
Locke  Invest time in it, deserve level of protection. I deserve protection but if I get too much I am
infringing upon others. If purpose of granting right is to reward effort, it doesn’t makes sense to reward
me but not others. This is what would effectively happen if I got a stranglehold over idea.
Hegel  Am I attached to the idea or the manner in which is express the idea shows who I am, what I
believe, what I stand for. More expressive the good, the more protection is should get. Protecting in
terms of expressive quality. Gold – However, this argument would work against things like computer
programs, which don’t have the same expressive element as a painting.
Binnie (in Théberge)  We need to balance needs of society with needs of artist.
Instrumental  No justification that there ought to be a distinction. Yet if we take a Hegelian point of
view, there are some things that express personality. At each level of abstraction, the protection
decreases.
Per Drassinhauer  Inherent in idea of copyright that you leave room for others to create.
Gold  Where does my expression end and your expression begin? In the end, our expression is
culturally based. No such thing as pure, new expression. May not make sense given the cultural setting.
Gold  To what do you have an entitlement? From a Lockeian perspective, you have an entitlement
to everything you produce. Our entitlement is potentially larger than the scope of copyright. Can have
an entitlement that is only partly protected by copyright. Extends into property rights, liability rules
(plagiarism serves this function – you can use by idea as long as attribute it). My entitlement is large,
but only part of it is protected by property rights. Entitlements may be based on Hegel/Locek, but on a
practical view, doesn’t makes sense to reward property rights past a particular boundary. Drassinhauer
missed this because he missed the point of entitlement.
Expression/idea dichotomy exists not because it is good but because it is all we have.
Very few people accept that this dichotomy makes sense. Certain authors (i.e. Drassinhauer) are trying to
resurrect natural rights theory.
“A Rights-Based View of the Idea/Expression Dichotomy in Copyright Law” by Abraham
Drassinower
Thesis  A rights-based account of the idea/expression dichotomy. An effort to formulate claims of public
domains not in terms of an external limit imposed upon the author but rather in terms of an unfolding of
presuppositions of the author’s right.
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Two visions of copyright law  (1) Vindication of author’s natural right to the products of their
labour; (2) Statutory instrument designed to balance incentives necessary for author’s productivity with
the public interest in access to and dissemination of her products.
 Central doctrine of copyright right law, the idea/expression dichotomy, is a crucial means whereby
copyright law limits scope of author’s entitlement in light of public domain.
 Doctrine provides that an author’s ideas, no matter how novel, are not subject to copyright protection.
Only expression of those ideas is.
 The plaintiff in a copyright action must show not that her ideas have been adopted by the defendant,
but that the defendant has copied the plaintiff’s expression.
 Consequence of dominance of instrumentalism account of copyright is sense that rights-based view
cannot account for idea/expression dichotomy.
Labour and Intersubjectivity
 Perennial difficulty with efforts to derive the property right from the category of labour is that whereas
labour is a relation between a person and a thing, property is neither a thing nor a relation between a
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person/thing.
Author’s right as a matter of copyright are best grasped by incorporating the interpersonal dimension
of the property right more deeply into the analysis of the author’s relation to her work.
 Author cannot be reduced to her identify as labourer any more than property can be understood as a
unilateral relation between person/thing.
 As a matter of proprietorship rather than authorship, the analysis of copyright is an analysis not of
relation between author and work but of relation between author and audience.
 Plaintiff’s ideas are not copyrightable even though they may be said to have originated in her – and are
in that sense “her” ideas – as much as her expression (Nichols).
Authors and Equality
 Doctrine of originality  Work does not have to be new or novel, but must have originated with the
author. Originality requirement is inseparable from defense of independent creation.
 Copyright protects expression – not a particular sequence of words belonging to the plaintiff, but rather
as a particular sequence of words originating in the plaintiff.
 Law of copyright conceptualizes the author’s work not as an external object in and of itself but as the
embodiment of the author’s interiority or personality.
 Plaintiff’s right to expression is limited by requirement that it be consistent with defendant’s equal
right to defendant’s own original expression.
 Defence of independent creation emblematizes equality of parties.
 My claim that another person respect what originates in me as mine binds me to accept that person’s
reciprocal claim that I respect what originates in him as his.
 Parties’ status as equally entitled to their own expression – i.e. equality as authors – contains an
understanding of the idea/expression dichotomy.
 If I write a story about star-crossed lovers, I am not reproducing Romeo and Juliet, but expressing this
idea a new.
 This is why copyright law speaks not of copying ideas but of adopting or using them. The lesson to be
drawn from such formulations is that plaintiff seeking to enjoin a defendant from using or adopting in
the defendant’s own work ideas expressed in the plaintiff’s work is a plaintiff seeking to interfere with
the defendant’s own original expression.
 Just as the defence of independent creation precludes the defendant’s liability even where the
defendant’s work is identical to the plaintiff’s, so does the idea/expression dichotomy preclude the
defendant’s liability even where the defendant’s work draws ideas from the plaintiff.
 Copyrighting ideas is inconsistent with the doctrine of originality and its normatively necessary
corollary, the defence of independent creation.
 It may be true that copyrighting ideas is compatible with the way in which the law of copyright defines
originality, this does not yet explain why the law of copyright defines originality as pertinent only to
expression and not to ideas.
 Why does the law of copyright find authorship in expression but not in ideas?
 Thoughts are legally irrelevant. The plaintiff’s identify as a thinking being is a matter thoroughly
internal to the plaintiff. Outside the purview of the plaintiff’s relations to others.
 It is expression, not ideation, that render though a matter of right.
 So serious is the law of copyright about the necessity for an author’s externally recognizable
manifestation of her though that it in fact refuses to copyright expression itself where such expression
is not “fixed” in tangible form.
 Not the subjectivity of through but the intersubjectivity of communication is at the heart of the legal
concept of authorship. Expression is always expression towards another.
 Proposition that interiority of ideas excludes them from copyright protection is insufficient as an
account of the idea/expression dichotomy.
 While it is true that ideas can enter the world of legality only as communicated, it is equally true that
not every instance of communication is an instance of copyrightable expression.
 Ideas are the material but not the product of the work of authorship. Therefore, ideas are not subject to
copyright due to their inherent generality. This is why copyright can arise only at the point where the
plaintiff’s claim to the specificity of her expression is no longer inconsistent with the defendant’s claim
to his original expression, to his own translation of general into particular.
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As a matter of copyright, authorship has nothing to do with bare ideas, novel or otherwise. Ideas
cannot be occupied or possessed in their bare generality in a manner consistent with another’s equal
dignity as an author.
An Author among Authors
 The law of copyright, then, formulates the acquisition of the author’s right in terms of the author’s
labour.
 Doctrine of originality provides that the author’s labour of origination is a pre-requisite of copyright
protection. Copyright is acquired in and through labour.
 Nonetheless, law of copyright does not formulate subject matter or scope of author’s right in terms of
category of labour.
 The idea/expression dichotomy differentiates the domain of the author’s copyright (i.e. expression) out
of the larger expanse of the author’s labour (i.e. idea and expression).
 This can only be done by way of deployment of category other than labour itself. Other category is
equality of parties to copyright action as equals.
 Plaintiff’s ideas cannot be copyrighted in name of protection of the plaintiff’s authorship because
copyright of ideas denies possibility of defendant’ s authorship.
 Plaintiff can claim ownership only as an author among authors.
 The defendant cannot claim the plaintiff’s expression as a matter of right because the defendant’s
unauthorized copying of the plaintiff’s expression is a denial of the possibility of entitlement in
expression.
 The idea/expression dichotomy is neither on the side of the plaintiff nor on that of the defendant
because it is rather then instantation of their equality. Defendant’s equal dignity as an author is the
concept by way of which a rights-based approach to copyright law insists upon the preservation and
cultivation of the public domain.
 The instrumentalist view regards both the author’s right and the public domain as means to
maximization of the public interest in the productions and dissemination of intellectual works. Within
the instrumentalist discourse, the question of public domain, like that of the author’s right, is a question
about the requirements of the public interest. The public interest may require a severely constricted
public domain.
 In contrast, the rights-based approach regards both the author’s right and the public domain as a matter
of inherent dignity.
 Potential of a rights-based account of copyright law for an investigation of the interaction between
authorial right and democratic culture, between authors and citizens, remains largely untapped.
Discussion
 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.
CCH Canadian Ltd. v. Law Society of Upper Canada - 2002
CCH Canada produces legal materials. The Law Society of Upper Canada is a statutory, non-profit
corporation that governs the legal profession in the province of Ontario. The Law Society will provide
copies of cases and other legal material as needed from their collection. The Law Society also provides
free-standing photocopiers. The publishers were aware of the Great Library’s custom photocopying service
but did not object to it until 1993 when, after delivering a cease and desist letter, they commenced this
litigation. In essence, the publishers assert that copyright subsists in their material, and that the Law Society
infringes those copyrights through its custom photocopying service and by making free-standing copiers
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available in the Great Library. The Law Society denies all liability. They claim that their activities fell
within the fair dealing exceptions and therefore, it does not infringe any copyrights that may subsist in the
Publisher’s works. The Law Society also submitted that various public policy and equitable defences
should prevent the publisher’s action from succeeding.
Issue:
1.
2.
Does copyright subsist in the reported judicial decisions, the head notes, the case summaries and the
topical index? Yes
The cross appeal, is the Law Society’s liable of CR infringements? Yes
Holding: The appeal is allowed in part and the cross appeal is denied.
Reasoning:
The purposes of Canadian copyright law are:
(1) To benefit authors by granting them a monopoly for a limited time and to simultaneously encourage
the disclosure of works for the benefit of society at large.
(2) Copyright law should recognise the value of disseminating works, in terms of advancing science and
learning, enhancing commercial utility, stimulating entertainment and the arts an promoting other
socially desirable ends.
 Is imagination/creative spark essential to a finding of originality? Jurisprudence suggests that the
creative spark is not required for a finding of originality.
 Scope of originality is inherently broad & uses a variety of terms to describe it (incl. work, taste,
discretion, skill, judgment, industry and labour)
 Original work must be independently produced and not merely copied. Must look at the evidence
& not reliance on a particular word or phrase that merely seeks to explain the concept of originality.
 Concern for the public interest in the dissemination of works may be a policy reason to impose a high
standard of ‘creativity’ as a prerequisite to copyright protection. Concern that overprotection of certain
works will thwart social and scientific progress by precluding persons from building upon earlier
works.
 Crt runs through each of the texts in question in order to decide if they can be classified as original.
 Reported Judicial Decisions: These constitute literary works & their originality stems from the
Publisher’s selection of the elements of each reported judicial decision. Then the Publisher has added a
summation of the facts, decision etc. All of which form part of the originality of the piece. CR’ble
 Headnotes, Case Summary, Topical Index and the Monograph: meaningful on their own;
information though present in the case could have been presented in any number of ways. All CR’ble.
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:
1. 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
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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.
Discussion
(1) Authorisation and what it means to authorise a copyright.
(2) Scope of the right given to the copyright holder including rights to control royalties,
and to control people authorising this activity.
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In these two cases, the libraries were passive in providing the means of reproduction. To authorise
someone to copy the book, do I have to assume they might reproduce them?
Jacobs  you do not need any specific knowledge. When you are implying permission, you look at
the acts of the two parties; you look to the circumstances to determine how the permission was broken
up.
If photocopy machines and books are provided in the same area, it is reasonable that people will make
copies from the books. Whether or not you know that people will do it, we will hold you responsible
by making you provide some sort of preventative measure to prevent copying.
In both cases, it came down to an issue of control, not of creativity. If you control the facilities, you
could prevent the copying and do not take action to prevent than you are responsible for the
infringement.
The Law Society was not taking the complaints seriously, which is probably why the court decided to
punish them, whereas the Library seemed far more responsive and aware of the dangers of copyright.
Nichols v. Universal Pictures Corp – US, 1930
Facts
2 plays that had superficial similarities: they both centred around two families, one a Jewish family and the
other Irish. In both plays, the families disapprove of their children’s choice in mates. Nichol’s play is called
Abie’s Irish Rose. Universal’s is called The Cohens and the Kellys.
Issue
Did Universal pictures infringed Nichol’s copyright with respect to his play? No
Reasoning
 It is essential to any protection of literary property that the right cannot be limited literally to the text,
else a plagiarist could escape by immaterial changes to the text.
 Generally, in order to determine CR infringement, must decide if the part taken is substantial and
therefore not a fair use of the CR’ed work
 Not clear when appears that an author may have taken the barest outline of a story & added his own
details. Here, the controversy centres chiefly upon the characters & sequence of incident, these being
the substance. → The def took no more than the law allowed since the stories are different.
 Plot: Play A is of a religious zealot who insists on his child’s marrying no one outside his faith;
opposed by another who is in respect just like him-they reconcile over the birth of a first grand child.
Play B no zealotry/religion focus – though the two families are Jewish and Irish. Commonalities: a
quarrel between a Jewish and an Irish grandfather, the marriage of their children, the birth of a
grandchild and subsequent reconciliation.
 While the plaintiff’s play is wholly original and new (not the requirements for CR), she cannot insist
on a monopoly using those grounds.
 Characters: Her characters are not very original →‘It is indeed scarcely credible that she should not
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have been aware of those stock figures, the low comedy Jew and Irishman.’ Not surprising then that
Universal came up with similar characters for their play. Both have 4 characters: the lovers and the
fathers. Character development very different & achieved at varying levels of sophistication in each
play. Universal play, they are rough stereotypes with poorly developed character sketches. Whereas in
the plaintiff’s play they are very thoughtfully developed & described
The plaintiff’s CR did not cover everything in her play and a certain amount of it went into the public
domain. The court takes it upon itself to decide how much entered into the public domain. While that
line may be arbitrary, that is not a reason to avoid drawing it.
A comedy based upon conflicts between Irish and Jews, into which the marriage of their children
enters, is no more susceptible of copyright than the outline of Romeo and Juliet.
Discussion
 Could the described characters be subject to independent copyright from the play? Can you copyright a
character out of the context of the play? Generally you can describe a play at any level of generality:
specific words used, scenes etc compare the two all the way to the conflict between two families etc:
 Learned Hand  Somewhere along the spectrum we go from a copy to a non-copy even if the line is
unclear. Saw this in computer programs: the abstraction, filtration and comparison test.
 Here, court rejects the abstraction, filtration and comparison test: The judge looks at the intertwined
aspect: the character is developed in certain ways: develop a character that has enough generality that it
should fit within the generality. Characters for both plays are drawn from stereotypes. Language is
used to distinguish and develop the characters. The more developed a character is, the easier it is to
protect. We will use abstraction to describe the character to decide if there will be conflict.
Walt Disney Productions v. Air Pirates – US, 1978
Facts
Dealing with the standard Disney characters  Here, what was produced was an underground comic strip
that placed Walt Disney characters into different settings. The goal of Disney was to further and encourage
the innocence of youth through their characters. The goal of the depictions of the Disney characters by the
defendants was very different, the authors of the comic books ‘placed several well-known Disney cartoon
characters in incongruous settings where they engaged in activities clearly antithetical to Disney’s
objectives (i.e. bawdy depiction of the Disney characters as active members of a promiscuous & drug
ingesting counterculture.)
Issue
Whether the defendants’ copies of the images of Disney’s characters are infringements of Disney’s
copyright.
1. Are Disney’s characters copyrightable? Yes
2. If so, is Disney’s CR infringed? Yes
3. Are the defendants’ infringement can be excused by the fair use? No
Reasoning
Copyright Infringement
 The fact that its characters are not the separate subjects of a CR does not preclude their protection,
copyright is meant to extend protection for all the copyrightable component parts of the copyrighted
work.
 The court finds that copyright is too strong a protection for comic book characters, generally, but in
this case, the comic book characters have physical and conceptual qualities that are more likely to
contain some unique elements of expression. Because comic book characters therefore are
distinguishable from literary characters, the Warner Brothers language does not preclude protection of
Disney’s characters.
 Infringement and Fair Use
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The defendants do not contend that their admitted copying was not substantial enough to constitute an
infringement, and it is plain that copying a comic book character’s graphic image constitutes copying
to an extent sufficient to justify a finding of infringement.
Fair use defense since it purportedly is a parody of Disney’s cartoons.
Benny and Berlin Test for infringement: they opt for the latter because it has a wider range of
coverage- which is whether the parodist has appropriated a greater amount of the original work than is
necessary to ‘recall or conjure up’ the object of his satire.
To determine which test, the court has to decide which parts to use for the comparison. No purpose
served to separate a cartoon character into its component parts
Under any test, the defendants took more than is allowed in both conceptual and physical senses.
In deciding how much should have been retained to bring the original into the mind of the readers, the
following had to be considered:
1. Keep in mind how famous the Disney characters are.
2. When the medium chosen is a comic book, a recognisable caricature is not difficult to draw,
so that an alternative that involves less copying is more likely to be available than if a speech
is parodied.
3. Significant that the essence of this parody did not focus on how the characters looked, but
rather parodied their personalities, their wholesomeness and their innocence.
The parody is too close to the appearance of the original Disney characters. Some differentiation has to
be made, otherwise, the copying of the graphic image appears to have no other purpose than to track
Disney’s work as a whole as closely as possible.
Defs asserted that in order to make a good parody, they have to copy the characters as closely as
possible, so that at first glance, the characters look like the real thing. → Court insists that this interest
of creating the best parody has to be balanced with the need to protect the copyrighted material,
that is, protect the rights of the artist
There is a rule in the American courts that excessive copying precludes fair use.
Discussion:
 Fair dealing in Canada is far narrower than in the US. These narrowly defined sections include exceptions
for the purpose of studying or research, criticising or review and news reporting. If you do not fall under
one of these categories, then you are infringing.
 Courts indicate that parody has a special status  it is socially beneficial; crts will allow some sorts of
parody that they might not for other copies. If you change a copy so as to further one of those goods, the
court will look at the way the work was originally and see if you really made a different object in the end.
Rogers v. Koons – US, 1992
Facts
Rogers took a picture of dogs and their owners. Sold the rights to a postcard maker. Koons was a sculptor
who liked to make art about the banality of life. He took the postcard and asked several Italian sculptors to
make a sculpture that looked like the postcard. Made a few small changes. Had a show in which this piece
and others were displayed. Raises the issue of what exactly Koons’ work was. Claimed it was “social
commentary”.
Issue
What was Koons’ work?
Ratio
If an infringement of copyrightable expression could be justified as fair use solely on the basis of the
infringer’s claim to a higher or different artistic use—without insuring public awareness of the original
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work—there would be no practicable boundary to the fair use doctrine.
By requiring that the copied work be an object of the parody, we merely insist that the audience be aware
that underlying the parody there is an original and separate expression, attributable to a different artist.
[This is not a clear definition of parody]
Rebasoning
Visually, an reasonable person would consider painting and sculpture to be substantially the same. Court
found that there was a copyright infringement on this basis.
Ownership of Copyright in an Original Work of Art
 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.
 The defendants argue that while the plaintiff had a valid copyright, that the work they are supposed to
have infringed was not an original piece as required under the CR Act. → R’s work was original. It is
the product of the plaintiff’s artistic creation. His efforts in posing the group for the photograph and
setting up the lighting, etc are all elements of his creative contribution.
Unauthorised Copying by the Defendant
 This case presents the rare scenario where there is direct evidence of copying. Koons admitted to
giving a photograph of Puppies to his artists when they were making the sculpture.
 The test to see if there has been infringement is not done by comparing detail next to detail-but on the
basis of whether the average viewer would recognise it. (similar to the TM test)
 K’s allegation that a trial judge uneducated in art is not an appropriate decision-maker → the decision
maker need not have any special skills other than to be a reasonable and average lay person.
 Had Koons simply used the idea in the photograph that would not have been a problem.
The Fair Use Doctrine
 The defendant argues that the use of the photograph is protected under the claim of a privilege of fair
use.
 Fair use is an equitable doctrine that permits other people to use copyrighted material w/o the owner’s
consent in a reasonable manner for certain purposes. In some cases, an original work copied for
purposes such as criticism or comment may not constitute infringement, but instead may be fair use.
The test to determine fair use involves looking at the following factors:
1. The purpose and character of the use: whether this was done in good faith. In this area, the def seen
as exploiting the R’s work. Parody can be considered here but, in this case, it is protected only if it
leads to creative work. K’s work cannot be considered a parody of R’s work.
2. The nature of the copyrighted work: the photo is the kind that R makes a living off of.
3. The amount and substantiality of the work used: K went b/y the factual setting of the photo &
strove to capture its very essence.
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.
 A critical factor here is whether K’s work was for profit, which would make the infringement all the
more exploitative. There is nothing in the record to support a view that K’s produced ‘String of
Puppies’ for anything other than sale as high priced art. Hence, the likelihood of future harm to R’s
photograph is presumed, and plaintiff’s market for his work has been prejudiced.
 The test is highly dependent on the facts of a case.
Discussion
 Difficult to justify the Koons decision: especially since, if the test was applied to Air Pirates, the court
most likely would not have found infringement.
 Was it an infringement of the original photograph? That is, was it a production or reproduction of
the original work? Argument asserted by Koons: this was a different expression, in that it was in a
different form.
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Test used in Koons: The average lay observer – Would an average lay observer recognises the piece
as a copy, the average person might not know about the movement and might be able to provide a sort
of control, basis on which to judge if it could be seen as a copy.
Is the visual impact of his work the same as that felt in the photograph? If this was merely done to
copy and sell the same image, this would be a clear violation. The whole artistic move was to make
something different.
Parody: The test used in Canada and the US is different for determining whether the use for parody is
permissible. In Canada, the test is fair use/substantial part. In the US the test is fair dealing.
Gonthier J: the physical act of copying involves mechanical reproduction into a non-original copy.
“Non-original material fixation” But K’s expression was original.
What are the entitlements of the author? There is an economic right, which includes a fair return of the
work and all uses of the work (Theberge).
The public has some entitlement to the use of works to some extent: to create new works or for the
purposes of criticism and research.
Alternative decision: the author’s entitlement ends when the use does not fall into the author’s scope.
What type of work did Koons do?
 Ignoring question of infringement of Rogers’s work, where does the copyright originate? It wasn’t
Koons who produced the work, it was the Italian sculptors.
 You can have a copyright while infringing on someone else’s copyright. Example: Re-arranging
Gold’s class notes.
 Could argue that Italian sculptors were fulfilling a mechanical function.
 Idea and expression are vested with different people. Idea originated with Koons but expression was
produced by sculptors.
 Locke would say that Koons should have rights to sculpture because it was his idea.
 Parallel with Bill Reid’s last sculptures. Was physically unable to carve, but had other sculptors
execute his ideas. Controversy over who has copyright.
 Many examples of society where “assembly line” production occurs.
 Gold  There’s a website that automatically creates original works of art. You have to input words for
the work to be based on, i.e. building. Can you get a copyright?
Koons not only had an idea (“banality”) but also exercised judgment as to what should be in the
painting. Taking of an idea, exercising judgment and using skill to convey it. Selected image. Chose it
specifically because it was copyrighted. Did enough to cross a poorly defined line. Recall tests in CCH
and Feist Publications.
What was the original work here?
 What was the original photographer’s expression? Trying to convey American values, optimism, lightheartedness, etc.
 How would you describe Koons’ expression? Critiquing the banality of life. This is consumerism, this
is trivial. This is not what life is/should be about. Inverse of original message. Deliberately picked this
photograph because it showed happiness in a trivial way.
 Demonstrates idea/expression dichotomy. Same idea but very different expressions.
 People who are buying art are doing so because of the expression.
 Image that is protected not the expression, not the idea – easy for courts to apply this rather than
theoretical concepts of idea/expression.
 If copyright is about protecting expression, the expression by Rogers is not the same as Koons. The
end result is the same.
 Protection of the end product? Using words like expression, but court uses economics to judge. Less
creativity, less expression.
What about the parody aspect?
 Recall that US has fair use while Canada has fair dealing.
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Court found that this did not constitute fair use. To be a parody, sculpture would have to be
mocking the postcard itself, not the abundance of puppies.
Spence  Courts are suspicious of “general social statements” that try to pass themselves off as
parodies. Different from Ronald McDonald example.
Koons felt he had to select a pre-existing photograph to make his critique.
Monetary elements  Koons was making several hundred thousand dollars off of each sculpture.
Court would have been more sympathetic had he been making art for the public good. Not permitted to
trump the rights of a hardworking photographer.
Could this be a matter of attribution? Had Koons made it clear that he was parodying Rogers, might
have been acceptable.
Canada  Maybe would be covered under fair dealing, but this is generally for a review of work (i.e.
movie critique).
“Intellectual Property and the Problem of Parody” by Michael Spence
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Definition of Parody
o No definition: can be specific to work, genre, or just ‘society’
o Can parody an entire text or a mere quote
o Can emerge in political debate, or Jordache-Lardashe / Gential Electric
o Taken here to be mostly humorous commentary of a text
How can parody infringe CR’s, TM’s, Passing off, designs, moral rights?
o Copyright
 If a substantial part of a work has been taken, infringement
 Old UK protection of creating a new copyrightable work exculpates using a
substantial portion of a copyrighted work is now non-operative
 Fair Use is possible, provided there is some sort of acknowledgement or that ‘any
reasonably alert person could identify the author’
 Still an open question as to what is sufficient identification
o Moral Rights
 Two grounds of infringement: false attribution of ownership and derogatory
treatment
 Latter is open question – evaluated in context
o Passing Off / Registered TM’s
 Requirement of deliberate misrepresentation for the former; seems unlikely.
Moreover, requirement proof of confusion for the latter.
 Caselaw, however, is nuts: even obvious parodies that seem unlikely to cause
confusion have been ruled against by US/UK courts (i.e. dope smoking ninja turtle tshirts)
 TM Act in UK has found that even if no confusion found, likelihood of imperiling
the reputation (i.e. goodwill) of the mark was sufficient for infringement (dilution).
 Dispute over whether UK TM law has an ‘anti-dilution’ or rather a ‘anticonfusion’ clause in s. 10(3).
o Design
 Infringement occurs when a consumer with imperfect recollection cannot find a
substantial difference
Four justifications for parody’s special treatment
o Parody as distinctive genre
 Operative in Spain, France, Belgium
 Problematic: what is distinctive about parody, and just try to define its ‘genre’
o Parody as a problem of market failure
 Market for public goods is a failure as they are inexhaustible: CR is a solution to this
(?)
 Refusal to license parodies can be construed as a failure in the dissemination of
public goods, and hence protection is required to achieve the desirable creation and
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dissemination of parody as a pubic good.
Counter-argument is that refusal to license may be, depending on the context, an
example of market success….(very weak but strident rebuttals here)
 Market isn’t necessarily the most efficient distribution mechanism
o Parody as a problem of transformative use
 i.e. parody creates a creative work in its own right and deserves protection for that
reason
 Old UK, and maybe still current Au position
 Problems, in that
 It isn’t clear that CR ambit is to foster the distribution of texts
 How does one define acceptable transformative use? If we block book-film
transformations….
 It isn’t clear that the market is the most efficient mechanism
 Fundamentally, privileging certain parodies over others due to their modalities
o Parody as a problem of free speech
 German approach
 Congruent with the idea of IP existing to order, structure, and encourage the
dissemination of ideas
 Two areas of incompatibility between f/s and IP:
 Where it is necessary to draw upon a protected work to effectively comment
on it
 Where a text has become a generic shorthand for a range of meanings not
expressed in alternate form
 Parody often lies in these two areas of conflict
 Seek t/f justification for f/s trumping IP
 i.e. texts shouldn’t be protected from criticism, or unfair criticism, but rather
appropriation
 other oblique arguments
How to give parody special treatment
o Blanket infringement protection (France, Spain…)
 Difficult to define
 Hard w.r.t. CR given international CR regimes
 Why not go for blanket free speech protection?
 But blanket free speech protection is too blunt a tool
o Proposes weaving concern for free speech into existing IP legislation
 having judges ‘more alive’ to it would enhance the disposition of injunctions, the
handling dilution claims, and the like.
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C. Trademarks
 Trademarks have distinctiveness.
 Almost any distinctive image/sound can become a trademark.
 About “signifiers”. Something that points to an object or service. Not the object or service itself. We
saw this in Reckitt.
Reckitt & Colman Products Ltd. v. Borden Inc. – House of Lords, 1990.
Facts
For decades, Reckitt has sold lemon juice in England under the brand name Jif. The brand name came to be
associated with its yellow, lemon-shaped container. Reckitt succeeded several times in having distinct
shape of container protected. Borden is a US firm which wants to introduce its “ReaLemon” lemon juice on
the UK market. The lemon juice is packaged in plastic containers that are similar but not identical to those
of Reckitt. The brand name is written prominently on the containers so that everybody looking reasonably
carefully can distinguish the two products
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Issue
Can Reckitt, having acquired a public reputation for their juice by selling it in a distinctive container,
legitimately complain about the sale of Borden’s product although it is not in an identical container?
Ratio
While the lemon-shaped bottle has a functional use, it has taken on a secondary meaning. Link between
product and bottle’s shape/colour.
Reasoning
Lord Bridge of Harwich:
 Idea of giving a company a commercial monopoly over a container is repugnant.
 Ruling of trial judge does not amount to a de jure monopoly, because Borden can still sell juice in
lemon-shaped containers as long as that container is distinctive from that of Jif.
 Trial judge also found that housewives would be confused by multiple lemon-shaped containers.
Result is a de facto monopoly over the lemon-shaped container.
Lord Oliver of Aylmerton:
 Evidence shows that many housewives would purchase Borden lemon juice believing it to be Jif’s
product.
 Embossing of word “ReaLemon” on Borden’s product is far from legible.
 Differentiates between product itself (lemon juice) which cannot be protected in the absence of a
patent and the special trade insignia (container) used to designate its origins.
 When dealing with descriptive terms (i.e. Camel Hair Belting), plaintiffs must show that term has
acquired secondary meaning. Same thing with lemon-shaped containers.
 Borden has not sufficiently distinguished their goods from those of Jif.
 No man is entitled to steal another’s trade by deceit.
 Rejects suggestions that this ruling amounts to a monopoly.
Lord Jauncey of Tullichettle:
 No monopoly in goods or containers which are in common use: lemon-shape container is part of
get-up and can be protected as such
 Monopoly assumption whereby customers assumed without reading labels that all plastic lemons
must be Jif
 Impossible to acquire secondary meaning in the shape of a plastic lemon: no reason why the fact
that this get-up is allusive of its content should deprive it of protection
Law of Passing Off:
 “No man may pass off his goods as those of another.”
 Three elements: (1) Must establish goodwill or reputation attached to the goods or services; (2)
Must demonstrate a misrepresentation by the defendant to the public; (3) Must demonstrate that he
suffers damage by reason of the erroneous belief engendered by the defendant’s misrepresentation.
Lord Brandon of Oakbrook
1. Good will
 plastic container is part of the get-up under which R’s product is sold
 even purely descriptive terms may by course of dealing over many years become so associated with
a particular trader that it acquires a secondary meaning describing the trader’s goods alone.
 Nothing original in selling lemon juice in lemon shaped plastic containers: done all over Europe. It
is only that in UK only one trader sells lemon juice in plastic containers and thus, Jif lemon juice has
come to be associated with plastic containers
2. Misrepresentation
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Proof that B is using R’s descriptive device alon is not sufficient. He must also prove that B did that
with the intent of passing off his goods as R’s. B is obliged to use reasonable care in distinguishing his
good from R’s in order to avoid confusion
Test of whether goods are likely to be confused must be done on case by case basis: type of market,
manner in which goods are sold, habits and characteristics of purchasers.
R is entitle to injunction: UK consumers associate lemon shaped plastic containers with Jif juice and B
has not done enough to distinguish their lemon juice from R’s.
No entitlement to steal another’s trade by deceit.
Discussion
 Can the container be a trademark? Does the bottle play a signifier role?
 Court made a distinction between people who make yellow, lemon-shaped bottles from the people who
sell lemon juice.
 In the first instance, you are selling the bottle. Can’t claim a trademark because the bottle is the thing
being produced. Giving them a trademark would effectively give a monopoly over production of
yellow, lemon-shaped bottles.
 However, product being sold by Reckitt is not a bottle, but lemon juice. Container is merely a signifier
to the public that they are buyer Jif-brand lemon juice.
 Object is not merely a functional part of the object being sold. Services as a signifier.
 Not preventing the sale of lemon juice, just preventing the sale of lemon juice in particular bottle.
Linoleum Manufacturing v. Nairn – UK Chancery, 1878
Facts
Plaintiff invented a chemical substance and obtained patent for it. He named the substance “linoleum” and
sought to prevent another manufacturer to use the word for his goods. Plaintifff claimed a trademark in
word linoleum and alleged passing off defendant’s good for his.
Issue
Is this a case of passing off?
Ratio
The word describes the article and competitors are at liberty to produce the same article.
No exclusive use of names
Reasoning
Linoleum describes the chemical substance. Linoleum developed a secondary meaning, describing the
linoleum goods produced by the plaintiff.
“Linoleum” only secondarily means the manufacture of the plaintiffs and has that meaning only so long as
the plaintiffs are the sole manufacturers.
Discussion
 Plaintiff had invented word “linoleum” and claimed that it had come to represent his product.
 Court found that linoleum was a signifier for the product, not for a particular manufacturer.
 Contrast  Coca-Cola is a signifier that the product is made by the Coca-Cola Company. Signifier that
points to a particular manufacturer.
 In Reckitt, lemon-shaped bottles demonstrated the distinctiveness of a particular manufacturer’s
product. Linoleum does not designate a manufacturer, but a product. Plaintiff should have come up
with another way of signifying object.
 If he had called his product “Linoleum brand congealed oil”, they would be no problems.
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Plaintiff was trying to find ways to continue their exclusivity in the market. A matter of overlapping
rights. Had already had 20 years of exclusivity under patent law. Giving him further protection would
mean violating the principles of patent law.
Distinctiveness in the minds of the consumer is key.
TM has a lower standard than P-O since you don’t have to show misrepresentation; you just have to
actively use the mark to associate the mark w/ the goods.
Pink Panther Beauty Corporation v. United Artists Corporation – Federal Court, 1998
Facts
The “Pink Panther” movies are a series of comedy films. UA is the owner of three trademarks registered in
Canada, including the words “The Pink Panther”. In contrast, Pink Panther Beauty Corporation was
incorporated to sell haircare and beauty products. Registrar of Trademarks found that there was no
likelihood of confusion between the marks given the disparate nature of the goods. Trial judge reversed this
ruling, finding that famous trademarks deserve a wide ambit of protection.
Issue
Is there a reasonable likelihood of confusion between these trademarks in the mind of the average
consumer? Can the owner of a “famous mark” prevent anyone else from ever using it?
Ratio
Key factor here is the gaping divergence in the nature of the wares and in the nature of the trade. Products
are dissimilar enough to ensure that confusion will not occur.
Reasoning
Five specific considerations:
(1) Inherent distinctiveness of trademark and extent to which they are known. Further broken down
into  (1) Inherent distinctiveness of mark; (2) Acquired distinctiveness of mark.
(2) Length of time in use
(3) Nature of wares, servces or business  Are the wares similar enough to result in confusion?
(4) Nature of Trade  Confusion is greater if goods, though dissimilar, are distributed in same store
or fall within same general category of goods. Relates to environment and nature of consumer.
(5) Similarity in sound, appearance and idea suggested  Example: Ikea Design v. Idea Design.
Conclusion:
 Court must balance the right to he trade-mark owner to the exclusive use of their mark with the
right of others in the marketplace to compete freely.
 Common law developed the tort of passing off to help assure that a person representing his or her
goods as being his or her own goods and not the goods of someone else.
 Famous marks must be examined on a case-by-case basis. In cases where famous marks have been
protected, there has been a connection or similarity between products/services. Example: Symbol
for Maple Leaf Gardens and Maple Leaf Confections was substantially similar.
 UA produces movies while Panther Beauty produces beauty products. These goods are not likely
to be found in the same place.
 When speculating as to future events and possibilities of confusion, must restrict exploration to
present circumstances. Speculation as to entirely new ventures is sufficient to extend protection to
every field of endeavour imaginable.
 Pink Panther beauty does not use any accompanying design or music that could lead to confusion.
Disssent
 Why would the defendants use the mark if not to benefit from confusion?
Discussion
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Revolved around a registration application that was opposed by UA.
“Pink Panther” falls under the category of “famous marks”.
Normal rule is that I call my restaurant “Xenon Café”, I can stop other people from calling their
restaurants “Xenon”. However, I could not stop someone from calling their dog food “Xenon Dog
Food”. Gives you protection across Canada.
As long as goods/services with same name are distinctive, it is permissible for them to have the same
name.
Under this general rule, UA would have no case. Not operating in sale of beauty products.
UA argued that consumers would believe that Pink Panther Beauty Products originate
d with
them.
Court acknowleged that when there is a famous mark, there is a greater burden on the company that
wishes to use it. Must prove that their own use will be distinctive.
However, just because we’re dealing with a famous mark, it doesn’t mean that companies are
prevented from forever using that mark.
Issue to be decided is not how famous the mark is, but whether or not confusion is likely. As long
as there are enough differences so that the average consumer can distinguish between the two
products, the famous mark can be used.
Majority was more concerned ensuring that trademark law was not used to shut entire world out of
particular marks.
Gold  A mark obviously has value. Do we want to protect this value or stick to the traditional
trademark justification of preventing confusion?
Article in Harvard Law Review
 Should not think about trademarks just in the context of avoiding confusion.
 Example - Nike swoosh is used on a wide variety of products.
 Company builds up value in a mark, then exploits it. Marks today are an asset – encourages companies
to exploit the value of the distinctiveness that they have created.
 If I have created a mark with value, I should be encouraged to enter new markets. Perhaps UA would
have entered into beauty products!
 Ruling in cases like Pink Panther make no sense.
Kirkbi AG v. Ritvik Holdings Inc. – Fed CA , 2003
Facts
Lego had a patent on the way that its building blocks fit together. The patent expired. Lego then tried to
argue that the Lego block shape was distinctive. The rectangle-shaped block signified that Lego was the
manufacturer. Other manufacturers can produce many other shapes of blocks. As such, Lego should get
protection. Lego did not register the trademark. Therefore, this action was based on a common law action
for passing off. A rival company produced “Mega Blocks” which produced blocks that interlocked in the
same way as Lego blocks.
Ratio
“It appears to me that the appellants are attempting to extend the monopoly they once held over these
construction bricks and their knobs through the guise of a trademark.”
Trademark Act  A registered trademark cannot be applied to something that is primarily functional in
nature. Therefore, Lego would have failed had they tried to get a trademark over interlocking block.
Reasoning
 Protection of function and design is what a patent does.
 Trying to avoid using trademark law to extend patents.
 When patents expire, knowledge is supposed to go into the public realm.
 Moreover, doctrine of functionality applies in this case. The Lego indicia in question is invalid as a
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“trademark” because it is primarily functional.
Fact that appellants’ patents seem remarkably like the Lego indicia provides support for the notion that
the mark being claimed is function and, perhaps, is merely being claimed for the purpose of extending
the patent monopoly once held by the appellants.
NB: In trademark law, don’t have to prove confusion. Just have to show that someone is using your
trademark in the same market. In contrast, passing off requires: (1) A symbol that you’re using; (2) Actual
proof of confusion. If there’s no confusion, you cannot seek damages.
Discussion
 Rationale in Trademark Act does not apply to “passing off”.
 Different approaches to policy  (1) Majority argues that policy is necessary ; (2) Minority argues that
policy is necessary to ensure that trademarks are not extended into the realm of patents.
Michelin-Michelin & Cie v. CAW – Fed CA, 1996
Facts
CAW launched an attempt to unionise three Michelin plants. During the unionisation campaign, the CAW
distributed leaflets and posters that reproduced the term “Michelin”. Also used Michelin’s corporate logo
(the Michelin Tire Man).
Reasoning
 Test for “use” in s. 20 of the Trademark Act requires two separate elements of proof from s. 2 and s.4
(test derived from Clairol case)  (1) Did the defendants associate their services with the plaintiff’s
trademark (s.4); (2) Did the defendants use the mark as a trademark for the purpose of distinguishing
or identifying the defendants’ services in connection with the plaintiff wares or services?
 “Use in association” test was not satisfied. There can be no use in association with “wares” because the
definition of wares under subsection 4(1) requires association during the ordinary course of trade.
Handing out leaflets and pamphlets to recruit for a union does not qualify as commercial activity.
Similarly, does not qualify as advertising because it does not carry a commercial element. Moreover,
an individual receiving a pamphlet would not make a connection between logo and Michelin company.
 “Use as trademark” test also fails. Defendants were not using logos to indicate that Michelin was the
source of pamphlets and leaflets.
 No really need to consider “confusion” as it has not been proven that defendants used the trademark.
Test here is whether average consumer would be confused by marks used on pamphlets. Little danger
that consumer would confused source of leaflets with defendant company (i.e. the menacing look on
the Michelin Tire Man’s face).
 Also no need to consider goodwill. Pamphlets were targeted at employees, not general public.
Therefore, use of mark is unlikely to diminish goodwill among general public.
Michelin Case
 Registered Michelin trademarks are being used to recruit employees to the union.
 Essentially, the union is using these marks to increase its trade. Court found that this constitutes a use.
BC Automobile Association v. Office & Professional Employees’ International Union – BC SC, 2001
Facts
Employees (EEs) on strike & their union decided to campaign. It registered 3 websites: (1)
www.bcaaonstrike, (2) www.picketline, (3) www.bcaabacktowork. In the metatags they had BCAA. On the
sites themselves (1) used BCAA logos directly & BCAA ‘offramp’, (2) dropped some stuff, (3) removed
all but the meta tags & reference to the BCAA.
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Issue
1. Is this passing off? No (yes for earlier sites).
2. Is this a TM infringement? No.
3. Has there been a CR infringement? Yes w/ regard to the earlier sites.
Reasoning
Passing-off issue
o 2 kinds of P-O
1. Competitors in the same market – one alleges that another has named/packaged /described its
product/business in a manner likely to lead the public that this entity is that of the plaintiff
2. Defendant as promoted his product/business in such a way as to create a false impression that his
product/business is in some way approved/authorized/endorsed by the plaintiff or that there is some
kind of business connection b/t the 2 in the def’s hope to cash in on the goodwill of the plaintiff.
o P-O involving a non-commercial competition:
The current website (#3) not P-O: there is no confusion or likely confusion in the mind of the public – there
is no misrepresentation – no P-O.
o Domain names & meta tags: uses other words than BCAA (‘back to work”, “on strike”); not using
identical meta tags any more
o Not competing commercially: attempting to communicate its message to the public about the on-going
labour relations campaign – “similar meta tags or domain names is of less significance in a labour
relations or consumer criticism situation, partly b/c there is far less likelihood that there will be
confusion.”
o BCAA during the strike “must be able to reach people [lawfully] who are attempting to find an
employer’s or producer’s site. Otherwise the Union’s lawful activities of activities of consumer groups
would be significantly frustrated.”
o Freedom of expression: “The Union must be free to identify its employer & communicate about its
labour dispute.” The website is clear that there is a labour dispute to the re’ble or rushed observer. It is
also clear that the site is not endorsed by or the property of the BCAA.
o Charter rights: need a re’ble balance b/t the legitimate protection of a party’s IP & a citizen’s/Union’s
right of expression. The BCAA’s property rights cannot excessively infringe on the Union’s right to
free expression. In this regard, the law favours the union.
o Disclaimer combined w/ other elements of the current Union site makes it clear that the Union site has
no ties w/ or endorsements from BCAA.
o There is no misrepresentation since no one when on the site is thinking that it represents the BCAA
S. 22 of the T-M Act
o BCAA: (1) must show that it has a valid registered TM; (2) must demonstrate that the Union has used
the registered TM as ‘use’ is in the T-M Act; (3) must establish that such use is likely to have the effect
of depreciating the goodwill attached to the TM.
o 3 essential elements required under s. 22: (1) Is there a requirement for a commercial element to
allegedly infringing conduct? (2) Are the activities at the Union’s website services which s. 22 of the
T-M Act applies? (3) Has the defendant shown depreciation of goodwill?
o Clairol International Corp. v. Thomas Supplies & Equipment Co. (1968): def’s use of TM on
package was contrary to s. 22 of the T-M Act but the def’s brochures were not.
o The test for s. 22 is not deception but the likelihood of depreciating the value of the goodwill attaching
to the TM.
o Positive comparison: You cannot use the competitor’s TM for the purpose of appealing to your
competitor’s customers in an effort to weaken their habit of buying the competition’s products so as to
secure the customers for yourself. This is not only calculated to depreciate & destroy the competitor’s
goodwill but is using your competition’s TM to accomplish this purpose.
o Does s.22 require a commercial content? Vaver: ‘uses’ in the technical sense dilute a mark. This
restriction allows “unions to caricature the marks of firms they are striking, w/o the fear of T-M
consequences.”Nothing on the website is being sold – nor is a service being provided in exchange for $
o S. 4 of the T-M Act does not apply either in this case b/c there is no commercial element in the case
o Unlike in Clairol, the Union is not attempting to convince the public that any positive feeling that the
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public may feel t/w the BCAA should apply to it. They are attempting to convince the public to not do
business w/ BCAA
o There is no depreciation of goodwill here – so there is no breach of the T-M Act.
Copyright infringement issue (w/ regard to the 1st 2 websites)
o To succeed in breach of CR, BCAA must demonstrate that the Union has reproduced a substantial part
of the BCAA’s work or elements thereof. There must be similarity & a causal connection
o The question is whether on a qualitative, not simply a quantitative basis, there has been substantial
copying (a matter of fact & degree). The Crt must exclude elements that are not subject to CR (i.e.
ideas, information, functionality). Note that colour, font, lay-out, etc. (relating to creativity) are subject
to CR
o 1st site breached the BCAA’s CR – the similarities b/t the 2 sites make were substantially similar.
Passing-off issue for the early union websites
o The website causes confusion in the minds of the public as to who the site actually belongs to based on
the visual similarities – there is passing-off
Discussion
 Union had a strike against BCAA.
 Set up a website called www.bcaaonstrike.com and www.bcaabacktowork.com.
 Used various symbols from the BCAA/CAA.
 Some ambiguity in the beginning  People surfing on to this website might have thought they were
looking at the official BCAA webpage. Kept the BCAA name in the URL and in their meta-tags.
 Is this an infringement under the trademark act?
 Holders of trademarks are allowed to prevent a competitor from using your trademark to benefit from
your goodwill.
 In this case, the end consumer knows that the website was not put together by BCAA.
 “Use” for the purposes of the trademark act is fairly narrow. Applicable in a commercial context,
where you are trying to sell your product. Definition of “use” should not be extended beyond what is
necessary to accomplish this goal.
 Outside of a consumer context, you are free to use trademarks.
 Recognition that trademarks are an appropriation of language. Can’t say that a trademark is purely the
invention of the proprietor.
 Relevant consideration with trademarks  Are you selling a confusing good or service?
Irrelevant that union is benefiting from BCAA’s name/symbols.
Clairol Case
 Case revolved around comparative advertising.
 In earlier days, you never saw ads that said: “My product is better than brand X”.
 In this case, Clairol produced hair dye. A competitor said that they could provide the same product as
Clairol, but at a lower price. Used same colours/same colour names.
 Case came down to depreciation of the value of the name.
 Depreciation refers to the fact that use by someone else is undermining the value of my mark.
 Two approaches: (1) “My product is as good as Clairol’s”. I’m trying to appropriate Clairol’s
goodwill; (2) “My product is better than Clairol’s”. Not trying to appropriate goodwill, but arguing that
your product is superior.
 First approach diminishes Clairol’s goodwill. I don’t have to invest much time/money to attain
benefits.
 Second approach is acceptable.
Two different entitlements
 Entitlement of trademark holder to benefit from their symbol v. entitlement of consumer to have
choice.
 Cases show that courts go back and forth.
 Often comes down to which entitlement a particular judge feels is more important.
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“Rational Basis of Trademark Protection” by Frank Schecter
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2 historical sources of TMs: (1) proprietary mark optionally put on products to facilitate illiterate
shopkeepers or to be reclaimed by owners in situations of piracy, (2) regulatory production mark so
that defective work can be traced or to prevent/confiscate outside goods smuggled into an area where a
guild has a monopoly,
Function of a TM: “to identify a product as satisfactory & thereby stimulate further purchases.” “To
describe a TM merely as a symbol of good will, w/o recognising in it an agency for the actual creation
& perpetuation of good will, ignores the most potent aspect of the nature of TM & that phase most in
need or protection.”
The TM is the most effective agent in the CREATION of good will. It imprints on the public’s mind an
anonymous & impersonal guaranty of satisfaction & a desire for further satisfaction – the mark sells
the good. The more distinct the mark, the more effective the selling power.
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. The Crts 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.”
Advancement in technology (ex. telephone, high-speed interurban trolleys, etc.) have changed the
scene & the crts are not keeping up w/ the times: “the consumer now projects his shopping far from
home & comes to rely more & more upon trademarks & tradenames as symbols of quality &
guarantees of satisfaction.”
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.
The law in its most liberal form will prevent misuses of marks only where there is actual confusion
created by misuses that result in damage to the owner. However, non-related goods may also injure the
owner of the mark even in the absence of confusion.
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. Example cases are Kodak (cameras & bikes), Vogue (fashion mag & hats), Rolls-Royce (cars &
radio parts)
The more distinctive the mark, the deeper is its impress on the public consciousness, & the greater the
need for protection against vitiation from the particular product w/ which it has a connection
Emerging Principles of TM (1927)
 The value of the modern TM lies in its selling power.
 This selling power depends for its psychological hold upon the public, not merely upon the merit of
goods upon which it is used, but equally upon its own uniqueness & singularity.
 Such uniqueness or singularity is vitiated or impaired by its use upon either related or non-related
goods.
 The degree of its protection depends in turn upon the extent to which, through the efforts or ingenuity
of its owner, it is actually unique & different from other marks.
Conclusions
 The preservation of the uniqueness of a TM should be the only rational basis for its protection
 Germany has fortified this:
o Supreme Crt, owner of the Kodak mark was not entitled to cancel the registration of the
same mark for bath tubs. The Crt held that the public was aware that the bath tubs did not
come form Kodak the photo company.
o A similar case was heard at another German crt involving the TM known as ‘Odol.’ The Crt
pointed out that when the public hears the word ‘odol’, it thinks of the complainant’s mouth
wash, & that an article designated w/ the name ‘Odol” leads the public to assume that the
good is of good quality. If the mark is lessened in any way, the job of the complainant of the
mark to compete will be all the more difficult. The type of the good as competing or non-
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competing is not what is important but the quality of the goods being sold under the TM.
“Search and Persuasion in Trademark Law” by Barton Beebe
Intro
 Trademarks do not exist and infringement does not occur except as perceived by consumers.
 “Instable” regime as it requires for its characterization viewing the market only as the consumer does:
called a negative capability.
 Based upon a ‘largely mythical’ consumer construct (analogous to a CR author construct), describing a
utilitarian consumer of ‘unbounded rational choice’ – the sovereign consumer.
 Historical conflict over this use of this idea: restrictionists portray the consumer as more a fool than
sovereign. Different circuit appellate courts have adopted different extremes of this concept.
 The ‘sovereign’ serves ‘TM apologists’ in theoretical disputes (i.e. TM’s exist only for their
informational content), and serves restrictionists in the scope of TM protection (consumers being
rational, TM’s only merit a narrow scope of protection).
 TM law lacks a sophisticated consumer model to help resolve this dialectic.
[summary of paper’s sections: part 3 discusses the relationship between distinctiveness and persuasion
sophistication. Part 4 the dialectic between search and persuasion. Part 5 trademark law politics. Part three
appears here.]
TM Scope & Search Sophistication
 Often the TM Pf argues for the ignorance of her consumers and commonness of her goods: protection
is inversely proportional to the law’s estimation of consumers’ relative sophistication.
 The spatial model sees a product/TM relationship graphed along a continuum of TM distinctiveness
and a continuum of product source similarity (i.e. unleaded, leaded, diesel, kerosene).
 In this 2D space distance is a measure of difference in two domains: the relative distinctiveness of
product and the likelihood of consumer confusion.
 Hence, TM law grants protection over a scope rather than a point in this space to avoid confusion (i.e.
Bass Stout competing with Boss Ale).
 The size of scope is determined by the strength (distinctiveness) of the mark, and sophistication of the
consumer (relative resistance to confusion and ability to distinguish between similar products).
 The sophistication of the consumer is typically represented by a bell curve, the mean of which is the
‘reasonable consumer’, with extremes at either end (with surprising results; jurisprudence has
industrial machine part buyers and American wine buyers as very sophisticated and very not,
respectively). Typically, however, sophistication is proportional to the cost of goods.
 The relevant consumer population having been identified on the overall consumer curve, the subset is
also subject to a bell-curve characterization as to relative consumer confusion (usually the left side of
the curve), and courts have found infringement when it has been shown that as little as 8.5 to 15% of
the consumer subset is confused.
 Obviously, the greater the ‘search sophistication’ the narrower the TM protection afforded; i.e.
virtually none in the case of professional buyers (characterized by Posner as high information cost
consumers).
 Employing this model yields contradictory arguments in litigation: the Pf often argues for more
protection by asserting an unsophisticated population. However, the logical relationship proffered is
dependant on a model which assumes the ‘sovereign consumer’ as a base. The Dft. often makes the
reciprocal argument, but is subject to the same danger of invalidating the argumentative model.
 The data, however, suggests a different and unacknowledged force: the persuasion-sophistication
curve.
The Danger of Persuasion Sophistication
 Strong marks in the jurisprudence merit a wide scope of protection: the stronger a mark, the more
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



likely it is to be identified and therefore mistake other marks for it. Also, a strong mark also attracts
consumers outside its relevant subset, almost exclusively those of a lower sophistication, and hence in
the interest of their protection its scope of TM protection must be broadened.
The shattering argument for both assertions is that an increase in consumer awareness of a mark may
increase consumer sophistication. This dangerous argument for TM industries has been held, however,
by only a minority.
Hence, the logic is ‘ratchet-like’ as the two assertions are self-reinforcing: increased strength provides
increased scope which preserves the increased strength.
While, distinctiveness ostensibly minimizes informational search costs, ‘Persuasion sophistication’ can
be expressed as the ability to resist differential distinctiveness – the power of distinctiveness to alter
preferences. Obviously, the higher the persuasion sophistication of consumers, the greater the
distinctiveness of the product required to persuade consumers to purchase.
However, persuasion sophistication is a learned behaviour: acknowledged only implicitly in the
literature, children and adolescents are acknowledged as being most vulnerable to persuasive
advertising.
Conclusion
 Does TM law really exist to minimize our search costs or those of manufactuers – are we searching for
goods or are goods searching for us?
 The majority view sees TM as the most efficient means to an end. The minority rationalizes the means
to pass judgement on the law for allowing an entirely different end.
 In the name of the sovereign consumer, TM itself has been made sovereign.
7. Alternatives to IP Regimes
Competition Policy and Intellectual Property Rights – Michael Trebilcock, pg. 255
3 Principles Guiding Competition Policy w/ Respect to IP
These guidelines acknowledge
o the rights provided by patents,
o the benefits to be gained from diffusion,
o the potential effects of particular licensing restrictions, and
o the possible adverse effects on prices
 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.
o There are a lot of substitutes on the market for products & processes (including those w/ patent
protection)
o 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.
o For patented innovations, patent law ensures the EXISTENCE of those rights; competition policy
restricts the EXERCISE of those rights.
o It is important for competition law to recognize the value of the protection granted to IP holders &
to allow the legitimate exercise of IPRs.
o Competition policy may intervene if an IP holders’ conduct goes b/y that which is inherent in the
patent.
o
(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.
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o
o
o
o
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 id 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 property
 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
 W/ reference to principle #3: In many licensing Ks, the rel’ship of the parties in 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 Act
 Checks the abusive exercise of IPRs and provides remedies for such practices.
 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.
 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.
 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
and competition law are in conjunction in IPR systems, rather than before when IPRs were considered
anti-competitive.
Do IPRs increase innovation?
 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.
 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.
 Three different views on the questions of the important to be attached to research and development
considerations in competition cases are below:
(1) See competition law as a correction of IP rights.
o Competition law allows one to look at the actual market that IPRs are working in.
o Competition law allows us to correct the possible excesses of IP law.
o Under this view, competition policy plays a direct role in ensuring that an innovator received
an adequate return on her research and development investments..
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(2) Look at the use of IP to prevent people from innovating-known as the innovation market.
o Several types of arrangements would be challenges under this approach, including mergers
between firms capable of developing similar technologies; exclusive dealing restrictions that
prevent a rival from using technologies; patent pooling arrangements to suppress innovation
(3) Competition law is not meant to deal with innovation.
o What we care about is the sale of the final product. There are some similarities: they are not
water-tight compartments.
o Advocates that the allocative effects from a contract on diffusion and pricing, and not on R
and D, should be the paramount concerns of public policy.
o This approach focuses on providing incentives for transferring technology and ensuring that
product markets operate efficiently, while deferring the problem of providing incentives to
invoate.
o Ex: Microsoft and the anti-trust case (below).
o Generally, this approach is best.
o Extensive economic investigations have no uncovered an unambiguous causal link between
innovation and competition, and to expect more success from competition authorities in
predicting the social harm to innovative activity from certain arrangements is, at best,
impractical.
1. Tied Sale & the Extension of IPRs  Example of Unilateral Licensing Practices by a Dominant
Firm.
 Tie: the supply of a product (tying product) either on the condition that the buyer also takes a 2 nd
product (tied product) or on the terms that induce the buyer to take a 2nd product in addition to the 1st.
 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 2 nd product exclusively from the same
sellor)
 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
 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.
Microsoft & Anti Trust (mid-late 1990s)
 Microsoft had a natural monopoly because they were the main producers of the operating system for
computers.
 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.
 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?
 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.
 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 liability
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2 separate ‘products’ are involved
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
 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
 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)
(1)
(2)
2. Refusal to license
 Compulsory licensing is an instrument that can be and ahs been used if the innovation is not being
worked to an adequate degree, especially when licensing on reasonable terms would be in the public
interest. Both copyright and patent act make provisions for this.
3. Resale Price Restrictions
 s. 61 of the Competition Act clearly state that IP will be treated no differently from other forms of
property.
 Provision specifies that IPRs cannot be sued directly or indirectly to attempt to influence upward or to
discourage reduction in price.
 Refusal to supply a product to a particular person or class of persons because low pricing is probhiited.
4. Exclusivity Restrictions
 Effects of exclusive restrictions can be either horizontal or vertical in nature.
 Horizontal  Contracts that coordinate competition among horizontal competitors in a market.
 Vertical  Interests of an upstream producer or licensor.
(a) Territorial restrictions  a vertical restraint. Restrict the territory in which licensee can produce
and sell. Can give rise to grey markets. Occurs when a price differential exists between tow areas. For
example, the price for good may be higher in Canada than in another country because value of
Canadian dollar has appreciated. Exhaustion attempts to address this. Several incentives for closes
territories: (1) Manufacturers often imposes territorial restriction to encourage the exclusive distributor
to invest substantially in specific assets, such as good will; (2) Close territorial restrictions may be
needed to eliminate distortion among licensees in setting produce quality, price, product service, and
product differentiation that arise from competition among the licensees; (3) Manufacturers may
establish closed territorial restrictions in order to price discriminate. NB: Patentees are also able to
segment domestic markets. Territorial restrictions used by major supplies to lessen competition are
subject to s. 77 of the Competition Act.
IPR & Economic Growth
 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”
 Interface b/t competition policy & IPRs became a focus. IP became a bargaining chip w/ regards to
relationships b/t the developed & developing worlds.
 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).
 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 Act
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





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)
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.
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
Provides that where the exclusive rights & privileges conferred by patents, TM, CR have been used to:
(1) Limit unduly the facilities for transporting, producing, manufacturing, supplying, storing, or
dealing in any article or commodity that my be subject to trade & commerce
(2) Restrain or injure unduly trade or commerce in relation to any such article or commodity
(3) Prevent, limit, or lessen unduly the manufacture or production of any such article or
commodity or unre’bly enhance the price thereof
(4) Prevent or lessen unduly competition in production, manu, purchase, barter, sale, transport,
or supply of any such article of commodity then the FC may:
a. Declare void, in whole or part, any agreement, L, arrangement relating to the use of
the IPR in Q
b. Restrain any person from carrying/exercising any or all of the terms/provisions of
the agreement, L, or arrangement
c. 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
d. Direct that registration of TM in the register of TMs be expunged or amende
e. Direct that such other acts be done or omitted as the crt deems necessary to prevent
anticompetitive use
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.
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
 Competition policy should be based not on whether licensing generates too much or too little reward
for the innvoator’s research efforts, but rather on the efficiency merits of the practice.
 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.
 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
 In many cases the application of the law may be the sameas 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
 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.
 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.
Volkswagen Canada v. Access International Automotive – Federal CA, 2001
Facts
Two companies sell auto parts & accessories. VW Canada is the authorized dealer of VW & Audi products.
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AIA sells products with the VW & Audi logos that originate from sources other than VW Canada – thus
they get their product outside the authorized Canadian distribution channels (AIA does not have VW’s
consent to do this). In 1996, VW Canada was assigned the Canadian copyright for the VW & Audi logos &
registered itself as the copyright owners for both. VW then sent notice to AIA to stop dealing in parts &
accessories bearing either logo, except for parts that were purchased from VW Canada (directly or
indirectly). VW claims that AIA’s activities are an infringement of its copyright. VW asking for a number
of remedies (incl. permanent injunction, delivery up of all infringing materials, damages & accounting)
AIA stated that it has authorization from VW AG & that VW Canada has had knowledge of its dealings
since 1986. In 1991, VW demanded that AIA stop selling VW products – AIA refused. AIA counterclaims
that VW is abusing the CR (s. 32 of the Competition Act).
Issue
Was VW Canada abusing its copyright? Yes
Ratio
Result of VW Canada’s obtaining the copyright was to unduly limit or prevent competition in authentic
VW and Audi pars. There is a sufficient relationship between the copyright and the unclean hands defence
that the equitable remedy might not be granted.
Reasoning
 Application of s 32 of the Competition Act  This provision cannot be used as the basis of a
defence/counterclaim in copyright infringement action (the act serves to permit the Federal Court to
grant remedies for certain uses of copyright but only if the result of the copryight use is to unduly or
prevent competition).
 AIA relies on Eli Lilly & Co. v. Marzone Chemicals (1976), (patent infringement case) to justify the
application of s. 32. The court does not accept AIA’s argument by distinguishing from Eli Lilly because
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)) without adhering to the statutory preconditions.
 AIA’s 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. Addy J. went on to
say that plaintiffs who are seeking equitable relief must come into Crt w/ clean hands. 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.” Thus VW Canada’s [CR
holder’s] conduct may form a basis of a defence claim of equitable relief for infringement of
copyright.
 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.
 The assignment of the logos to VW Canada is conduct described in 32(1) of the Competition Act
because the result of VW Canada obtaining the copyright was to unduly limit or prevent
competition in authentic VW & Audi parts & accessories. There is a sufficient relationship b/t the
CR & the unclean hands defence that the equitable remedy may not be granted.
 Allows the appeal except w/ regard to AIA’s counterclaim.
Discussion
 Court found that Volkswagon was not unduly limiting competition.
 Falls within provisions of s. 32 of Competition Act.
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Breck’s Sporting Goods Co. v. Magder – SCC, 1976
Facts
Canadian distributor of MEPPS fishing lures tried to prevent competitor from importing MEPPS lures from
France and re-selling them in Canada.
Issue
Can the exclusive distributor prevent the importation of MEPPS lures from France?
Ratio
Products imported from France are not misleading public because they already think the product is coming
from France.
Reasoning
 Basis for this judgment – who really had the goodwill?
 Consumer buying a MEPPS lure not with a Canadian distributor, but with an American manufacturer.
 A reason for this decision was fact that American company used to hold Canadian trademark. People
bought it anyways, regardless of the fact that it was a US company that was the licensee. Therefore,
people were buying lures because they originated in France.
Discussion
 Breck’s was importing fishing lures under the name “MEPPS”.
 In 1959, US transferred Canadian trademark for MEPPS to a Canadian company.
 The Canadian company did not manufacture the lures – just resold them.
 Slightly different answer than in Heintz.
 Products imported from France are not misleading public because they already think the product is
coming from France.
 Heintz is generally regarded as the more contemporary ruling.
Grey Marketing
 An example of grey marketing  Manufacturer is not licesened to sell in a particular country.
 Licensees in particular countries are given exclusive rights to distribute a particular product in a
particular country.
 When I buy a Sony TV from a licensed dealer, the licensee has supplied them.
 In certain cases, it might be cheaper for me to go to a foreign country, buy a product for less than it
would cost me in Canada, then re-sell it in Canada.
 Point of grey marketing  Someone buys a product from a legitimate dealer in another market and
then tries to re-sell it. Can Canadian licensee block the sale of this product?
 What is grey marketing? How important are difference in ingredients between products? Ownership
v. licensing of TM to affiliated companies
 It is not quite illegal. It involves someone who legitimately has the mark, just not in that country.
Ex. If I buy Heinz ketchup in the US and sell it in Canada, then I’m going against the Canadian
Licensee. Does the Canadian Licensee have the only right to sell Heinz ketchup in Canada? When
the US licensee has the US license, they only have the right to sell in the US and not in Canada. If
there are two separate owners, then grey marketing can be prevented. If the parent company was the
same and there is one single entity in control, then grey marketing can go on without judicial
intervention.
H.J. Heinz Co. of Canada v. Edan Foods Sales – Federal Court, 1991.
Facts
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Heinz Canada was a division of Heinz US. Heinz US had assigned to Heinz Canada the “Heinz” trademark.
Canadian product was distinct from US product  formulated to please Canadian palate. The defendant
began importing Heinz ketchup from the US, which was then re-sold in Canada. Heinz Canada sought an
interlocutory injunction to halt the defendant’s actions.
Issue
Are the trademarks similar enough to lead to trademark infringement?
Ratio
The trademarks used by the defendant are virtually identical with those on the products imported by the
defendant. Clearly the likelihood of confusion between the two products.
Reasoning
 s. 21 and 32 of the Trademark Act states that registration of trademark gives the owner of the
trademark exclusive right to the use of that mark throughout Canada.
 s. 20 of the Trademark Act states that the rights of the trademark owner that are deemed to be infringed
by a person not entitled to use of that mark who sells, distributes or advertises wares in association
with a confusing trademark or name.
 Trademark affixed to products imported by defendant is virtually identical to that of Heinz Canada.
Heinz
 Heinz ketchup is adapted to particular markets. Therefore, taste of Heinz ketchup in Canada is different
than in the US.
 Heinz Canada was the licensee. A wholly owned subsidiary of Heinz US.
 Case revolved around a store-owner who bought Heinz ketchup in the US cheaply, then resold in
Canada.
 Court found that Heinz Canada was allowed to block the importation of Heinz US ketchup in Canada.
 Store-owner was using Heinz name and trademark in Canada without permission.
Contractual Means of Dealing with Domain Names
 All domain names must be registered.
 Registry imposes contractual obligations.
 Same contractual obligations are imposed on anyone.
 Important obligations is  “If your domain name conflicts with a trademark, the trademark owner is
allowed to complain to an arbitration board. The board will decide if you are using the domain name in
a way that conflicts with the rights of the trademark holder. May mean that you will lose your domain
name.”
 Effectively serves as an alternative dispute mechanism that is outside of the IP regime.
Browne & Co. v. Bluebird Industries – Canadian Internet Registration Authority, 2002
Facts
Involved a company that registered a website address called “browneco.com.” Their major competitor was
called “Browne & Co.” Browne & Co. brought an action against their competitor to the arbitration panel.
Issue
Ratio
Registrant (Bluebird Industries) registered this domain name in bad faith, primarily for the purpose of
disrupting the plaintiff’s business.
Reasoning
 To succeed, plaintiff needs to do the following: (1) Must show that domain name is confusing similar
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to your trademark: (2) Domain name had to have been registered in bad faith; (3) Person who
registered the domain name had no legitimate interest in that name.
Plaintiffs had established a reputation attached to the trademark.
Trademark used to identify plaintiff’s product in the marketplace.
The domain name “brownco” greatly resembles the plaintiff’s trademark. Points to their business.
What is confusingly similar? Canadian Policy (appears to have been copies from the Trademarks Act)
defines it as: “A domain name “Confusing Similar” to a Mark if the domain name 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.”
Browne
 Court looked at the definition of “confusingly similar”. Determined it had the same definition as
“similar” in the Competition Act.
 In this case, Browne & Co. was able to recover the domain “brownco.com”
 Significance  A regime completely outside of the scope of legislators and IP law. Parties involved
can take this out of the hands of the state and determine how to deal with issues.
Sallen v. Corinthians Licenciamentos – US, 2001
Facts
Sallen registered the domain name “Corinthians.com”. A Brazilian corporation of the same name
challenged their right to the domain. Sallen then lost WIPO dispute resolution proceeding, where he was
declared a cybersquatter. Per federal legislation, Sallen had the ability to bring an action in federal court to
declare that: (1) He was not a a cybersquatter; (2) He did not have to hand over the domain name; (3) He
could seek relief.
Ratio
Sallen had a right to use domain name and didn’t have to comply with ACPA.
Sallen
 Dispute arose when an individual named Sallen registered the domain name “Corinthians.com”
 Was challenged by a Brazilian soccer team by the name of “Corinthians”.
 Sallen found a piece of US legislation that prevented “cyber-hijacking”. Purpose of this legislation was
to ensure that international companies could not displace US domain name holders. Provision in this
act allowed Sallen to challenge decisions of the dispute panel through the US courts. This is what
Sallen did.
 Court ruled that Sallen had a right to use this domain name.
 A private intellectual property regime being set up through contract and the state’s reaction to it.
 State intervened to protect interests after-the-fact.
 Interaction between private means and state action.
 One of the many tools to regulate IP regime. Others  Private contracts, competition law, etc.
“Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?” – Jeanne Clark.
Thesis  Private industry coming together to solve a problem that affected them. A private solution to an
intellectual property question.
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“Patent Pool”  An agreement between two or more patent owners to license one or more of their
patents to one another or third parties. Alternatively, a patent pool may also be defined as the
“aggregation of intellectual property rights which are the subject of cross-licensing whether they are
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transferred directly by patentee to licensee or through some medium, such as a joint venture, set up
specifically to administer the patent pool.”
Idea of a patent pool is that you identify a core set of technology that anyone in a particular industry
would need in order to sell their product.
Example  Singer sewing machines. There are basic parts that every sewing machine needs. You
share info about basic parts, then make additions to be competitive.
Difficulties during the First WWI  (1) Wright Brothers and another company each had patents that
were necessary to build airplanes. Neither party was willing to give rights to the other. Roosevelt
intervened and threatened mandatory licensing. Under pressure, the two companies got together and
formed a patent pool. Pool contained basic information needed to construct an airplane. Anyone could
get access to this, provided that they were willing to pay a license fee; (2) Radio Industry  Under
pressure from US government (threat of compulsory licensing), radio industry created patent pool
(RCA). All patent rested in one place. Therefore, radios could be built because you didn’t have to go to
third parties for licenses.
20 years ago, there were two types of video recorders  Beta and VHS. Sony (producers of Beta)
refused to allow anyone else to manufacture Beta machines. Result was that there were far more VHS
machines than Beta machines. Although Beta machine was superior, industry catered to VHS market
where there were more consumers.
Industry looked at VHS/Beta example, and responded by created a patent pool for DVD’s technology.
Pool was constructed in a way that helped to alleviate concerns from the Competition Act. Everyone
was allowed to license out this technology, so it is used very widely. End result  Anyone who wants
the technology has to enter the pool. Moreover, you must contribute all of your knowledge  Can’t
put in one key patent, but not another. Another interesting feature  Everyone gets paid the same
amount. Doesn’t matter that one person contributed a patent that was far more valuable than another.
Why would anyone want to buy into a patent pool? Cheaper, could remain competitive by customizing
product, avoiding Beta/VHS competition, could facilitate development by not protecting information.
By creating a patent pool of basic patents, businesses can easily obtain all the necessary licenses
required to practice technology from a single entity. Can facilitate rapid development of technology.
Without this pool, it’s unlikely that industry would have invested much further in technology.
Can eliminate the need for litigation over patent rights because such disputes can be easily settled or
avoided through the creation of a patent pool. Small businesses which cannot afford costs of litigation
are more likely to survive in this environment.
Essence of a patent pool is that there is a technological standard. For DVD technology, the standard is
now clear. May not be applicable to other areas, i.e. biotechnology.
Problem with biotechnology  People who want to do specialized research do not have the
time/resources to track down individual patents. University researchers have compensated for this by
providing those engaged in “humanitarian” research with easy access to these patents. Yet another
example of a private solution to an IP problem.
A neutral third party oversees patents and “weeds” out any that are not useful/beneficial.
End result  A very open patent pool surrounding DVD technology.
Example  SOCAN. Artists voluntarily sign over their rights to SOCAN. Broadcasters can then play
the music.
Good for SOCAN because they don’t have to
8. Transnational aspects of IP governance
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What is the effect of one country’s IP regimes on others?
There are international conventions, i.e. Berne Convention. However, these primarily govern ways of
securing
End result  Some international rules that apply. However, these international rules give individual
countries a great deal of discretion to establish their own rules.
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Different countries use different rules to assess novelty, usefulness and non-obviousness.
Low income countries  Some countries have a very low level of development in the area of
intellectual property law. Only effect of international property rights is to increase the cost of
technology in those countries. Limiting.
High income countries  To the extent that IP laws work to create incentives, these countries benefit.
Mere fact that you have patent/copyright doesn’t prevent competition. Still enough expertise to spur
innovation/exploration.
Middle income countries  Countries have benefited from low pharmaceutical costs because they
don’t issue patents on pharmaceuticals. Have developed scientific knowledge where they are in a
position to export technology. Have the potential to benefit from IP regimes in the future.
Costs in the short-term, particularly for low-income countries. However, even low-income countries
will benefit in the long term because IP laws will spur exploration/technology.
Therefore, it is not surprising that we have a spectrum of IP laws, ranging from weak to strong.
What kind of problems do these different regimes pose?
Scenario
 We have two different countries engaging in trans-national transactions. Whose IP law govern and to
what extent can one country impose regime on the other?
Yahoo! Inc v. Ligue contre le racisme et l’antisematisme – US, 2001
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 1 st 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
Ratio: Foreign judgments respected unless antithetical to US laws or Constitution.
Reasoning:
 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 1 st
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 1 st 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
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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.
Discussion
 Yahoo was required to prevent access by French citizens to the purchase of Nazi memorabilia.
 Problem was that Yahoo’s server was in the US. Yahoo didn’t want to comply with this order.
 Yahoo went to courts and sought a declaration that compliance with order would violate US law.
 Court agree, relying on freedom of speech arguments. Refused to enforce French court’s order.
 Illustrates problems with private international law.
Pro-C Ltd. v. Computer City – US, 2001.
A Canadian (P) company’s TM “Wingen” covered its software products. It is registered in Canada and
USA for “computer programs used to generate programs for Windows.” The TM was adopted by an
American (CC) company in association w/ a non-competitive product, personal computers, 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. When
CC’s American customers sought info they came to P’s website. 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
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(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.
Discussion
 Canadians could access US website that used the name “Wingen” in conjunction with computers.
 Canadian company had trademark over term “Wingen”.
 Canadian court refused to grant the order on the basis that this was a passive website. The fact that the
website of
 Here, there is an effective violation of Canadian trademark law. However, courts realized that the
website was operating out of another country and that website complied with that country’s laws.
Braintech, Inc. v. Kostiuk – BC CA, 1999
Facts:
K., resident of B.C., contributed to an Internet bulletin board, made allegedly defamatory comments about
Braintech. B. operated out of BC, but had office in Texas. 10% of shareholders resident in TX. B. sued K in
TX (could get treble damages). K didn’t defend, saying they had no jdc’n. TX ct ruled against him for
damages of $400G. B. then went to BC to have j’ment enforced.
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 we would 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 injury
 K. 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 agains
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
maean 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?
Braintech
 Found that US courts had taken jurisdiction wrongly.
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In case above, Canadian courts recognized right of domestic courts to govern their own affairs. In this
case, Texas courts refused to acknowledge this principle.
Since Canadian and US have very different rules when it comes to patents, enforcing US IP laws in
Canada effectively enforce US regime in Canada.
Note: This case did not actually deal with IP law. Instead, it deals with cross-jurisidictional disputes.
“Regulation of the Internet: Three Persistent Fallacies” by Jack Goldsmith
Thesis  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 place
 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.
 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.
 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 indy 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 net
 Claim that restrictive CR will be ineffectual when applied to digital goods on the net. Sees that Burk is
underestimating the many ways that nations can regulate the net
 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.
 How much control is acceptable control? Depends on several factors
 The normative commitment of the regulating gov
 The costs of gov regulation
 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 information
 Some say that the internet will foster tolerance, promote democracy, redistribute wealth, improve
writing skills, destroy trade barriers, & bring world peace! [get real]
 Legal harmonization problem is complex. While the internet may promote partial harmonization it
is by far going to establish complete harmonization
 Note that judicial decisions are not made in a vacuum. Thus while some states may join in in
creating a global uniform legal system, national interest will still play a role in judicial decision
making
 It will not harmonize customary international law (CIL): it is too complex an changing in nature
ever be harmonized by hundreds of actors – internet has probably made the problem worse not
better
Goldsmith
 Believes that regulation of IP space may be imperfect, but you can still regulate people in your country
when it comes to internet transactions.
 Makes analogy with catalogue sales  I can buy products from the US even though I live in Canada.
Sales in Canada may be goverened by different rules that in US.
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“Information Wants to be Free: IP and the Mythologies of Control” by Polk Wagner
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Suggests that economic utilitarianism (Wagner effect) is the basis for IP law.
Large benefits that are untapped/unrecognized with regards to IP law.
Three types of information  (1) Thing that is describe din patent specifications; (2) Thing that is
easily derived from initial work; (3) Makes people think about new ideas.
First level  Covered almost 100% by IP law.
Second level  Some of it is covered and some is not. Room for parodies.
Third level  Most of this is not covered. Leads to innovation.
If you look at a country that has strong IP laws, it encourages innovation. You get Type 1 and Type 2
information. However, thanks to the internet, this information is available around the world.
Encourages type 3 innovation.
Survivor TV show  Gold attempts to make a bizarre analogy with Survivor TV program. Level 1
Different IP regimes in different countries allow individual countries to put different types of
information into public domain.
If you have no IP regime, public domain consists of Type 1, Type 2 and Type 3 information into the
public domain.
Japan and US have strong IP rights  To the extent that IP laws have encouraged innovation in US,
information has been placed in the public domain. We in Canada can log onto the information and use
it to our benefit. We get access to the whole thing.
Example  Harvard Mouse. Animals are not patentable in Canada but not the US. Fact that Canadian
law does not protect this type of patent, we get access to Type 1, Type 2 and Type 3 information in this
area from the US. Gold thinks we ultimately come out ahead  we benefit from all of this information
while US only benefits from Type 2 and Type 3 agreements.
Raises questions about international equity.
Equivalent of Grey Marketing Principle
 Exhaustion principle  If I have a patent and I sell the product, I have exhausted my rights.
 I can longer enforce my rights against the person to whom I have sold my product.
 I can do whatever I want with my purchased objects.
 Complication  What if I buy a car in Canada? I purchase it from someone with the Canadian patent.
That manufacturer has then exhausted their rights to the car when they sold it to me. I then cross into
the US. US patent holder never gave me permission to use patent. Analogies to Heintz Ketchup case.
However, Paris Convention specifically excludes imports of cars, planes, etc.
 Another complication  The process just describe is national exhaustion. I have exhausted my rights
in Canada, but not any other countries. If I bought a toaster in Canada, rights are exhausted in Canada
but not in the US.
 International exhaustion  Once a product has been legitimately been sold (i.e. place on the market
anywhere in the world), you have exhausted your rights to the product anywhere in the world.
Therefore, if I brought my toaster to the US, I wouldn’t be in trouble as long as the US has an
international exhaustion rule.
 US/Canada have national exhaustion.
 Japan has international exhausation.
 EU has regional exhaustion  I can bring my product anywhere in the EU and the patent right is
exhausted everywhere.
 What if I purchase a product in the US and then bring it into France? I’m out of luck  product was
not sold in France. French law would then determine whether or not the patent has been exhausted in
that country.
 Problem with access to medicines occurs with respect to international exhausation. Pharamaceutical
companies are not really interested in Africa as a market for drugs. Why? Afraid that products sold
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cheaply in Africa will wind up being re-sold in the US, Japan and EU. They will, therefore, lose their
markets in those countries.
Two problems: (1) How do you technically stop the importation of drugs from one country to another;
(2) If your country has international exhaustion, you can legally buy pills in Botswana and bring them
into Mozambique.
Therefore, pharmaceutical countries want national exhaustion.
Incentives in publicly-funded healthcare systems to have international exhaustion rules so that drugs
can be imported from cheapest source.
Pending bill in Canada would allow importation of pills from overseas.
Wagner Article
 When someone imports a product into Canada, must look at issue of nationa/international exhaustion.
 Exhaustion  Notion that a patent/trademark/copyright can no longer be enforced with a particular
object once it is re-sold.
 What happens if someone buys a Walkman in Japan and brings it into Canada? This person has not
secured approval from the Canadian patent holder means that the Canadian patent holder can sue.
However, the reverse would not constitute infringement. In Japan, as long as something was
legitimately purchased somewhere in the world, you cannot sue for the importation of that walkman in
Japan.
 Why would a country want to have international exhaustion? Products are very expensive in Japan.
Products from cheaper countries can be imported and re-sold in Japan for lower prices. NB:
International exhaustion is not a government policy, but the result of a court ruling.
 National exhaustion allows for greater price exhaustion. You know that if product is sold for a higher
price in a neighbouring countries will not effect the price of product in your country.
 Part of the reason why IP went into the international trade agenda. Only private law system in the
WTO.
“I crave TV” example
 “I crave TV” was a web-based television station that was licensed in Canada.
 Some US viewers may watch television shows. This would violate US copyright. Sought an order to
have “I crave IV” shutdown.
 Adams  Imagine a situation where “I crave TV” tried to figure out where you were watching from.
Of course, there’s no way of preventing an American from watching this channel.
 We’re using Canadian law, we’re taking steps to prevent Americans from watching it, but there’s
bound to be so leakiness. Threfore, US could still take action against this company.
 Through this order, US is able to impose their more intellectual property right holder system on us.
 Adams finds that this is problematic  fact that one country’s laws affect another.
 Business patent  A way of patenting an electronic way of doing business. Business methods are
patentable in the US, but not patentable in Canada. What would happen if a Canadian sold into the US
using the business method? That person is competing in the market with Americans who are fully
subject to the US patent. Since some of the transaction is happening in Canada, you don’t actually have
infringement in the US. This means that the Canadian selling into the US has an advantage over the
American selling into the US market. Why? Canadian is not subject to the patent. This constitutes an
advantage to Canadians.
 How to deal with this? (1) Private international law. However, doesn’t always work; (2) WTO 
Adams feels that this is the only solution. Once it’s been determined that IP is part of trade, you’ve
started a discourse that must be followed through to its conclusion. When intellectual property was
incorporated into the WTO agreements, it was acknowledged that this was a poor deal for less
developed countries. The trade-off here was that richer countries would give poorer countries
advantages in terms of things like textiles.
 When we see that different jurisdictions have influence over one another. If we allow countries to deal
individually with spill-over effects, they can undermine this basic agreement about how individual
countries deal with IP laws.
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TRIPS was bad for Canada. It was a cost we were willing to put up with in order to get other benefits
from WTO agreement. We ensured that there was flexibility so we didn’t have to go to the same
lengths as the US to enforce IP rights.
Solution must be that we continue this discussion. US wants the ability to exercise “long-arm
jurisdiction” into Canada, they’d better give us another advantage.
The only way to solve one country’s IP spill-over into another country is to continue discourse. Those
countries who want strong IP protection will have to give things up.
Otherwise, we’re allowing countries to impose their IP laws on other without requiring them to give up
anything in return.
We’ve got TRIPS within the WTO and must use this tool to resolve disputes.
Not suggesting that TRIPS was the right choice for Canada. However, it was the choice that Canada
made. Therefore, we’ve got to work within the parameters we negotiated.
Note  TRIPS does not address issue of exhaustion.
“Intellecutal Property Infringement in Global Networks: The Implications of Protection Ahead of
the Curve” – Wendy Adams.
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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 standard
WTO: 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 model
Transactions 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.
Territoriality, 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 prevails
 Economic 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 innovators
 Territorial 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
infringement
 Where 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
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innovator
Int’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 investment
Agreed on core set of minimum standards; quid pro quo deal of increased access to markets for
developing states
Mimimum 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 same
When 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 enivironment
TRIPS 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 requirements
Minimum 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
Member 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 Ambiguity
 Increase in online transactions and digital products: no uniform law: t/f rts holders can sue for
infringement thru private int’l law
 If 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 there
 But doesn’t address “underlying judicial puzzle inherent in internet transactions”: how to
localise activity legally
 Resolving 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 endusers of prohibited products in their jdc’n) to prohibit access in violation of local laws
 If 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
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btwe jdc’n and activity; probably more fair to target the person accessing the info
Any 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 example
 in 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. OVERCOMPENSATION
 If 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
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© example
 ICrave: 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
American 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 broadcasting
 Cdn 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:
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“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.
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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
interpretation. 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
development
If 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 Institutions
Local (state/province)
 trade secrecy is regulated by provincial law
 passing off is also provincial; it is essentially a cause of action at common law (or civil law) although
it is also in the TM Act
 almost always sue in both passing off and TM at same time, in case TM is invalid
 K law (licencing)
 If there is a conflict between local and national: under doctrine of Paramountcy, federal law prevails
 For example, in Quebec, there is an Act that protects performing artists; their services and creation of
IP, their skills, etc. But this is dealt with more in a labour relations way, so as not to interfere with
federal jurisdiction (jd’n) over ©
National
 All formal statutory regimes: © Act; Patent Act; TM Act; Industrial Design Act
 Application is nation-wide; this has not posed any problems in Cda (although it has in the US, in a
1999 decision)
Regional
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Regional patent acts: the European Patent Office , also Asia and Africa
EPO does not depend on the European Union (EU) for existence
A patent granted by the EPO is valid in all EU member states, but each enforces its own national laws;
different results in different countries
It is geared to overcoming the costs of getting patent protection, especially for smaller countries; it
allows for a pooling of costs, especially in terms of review of patents
see Gold’s article on Euro Biotech Directive below
Trade Agreements: NAFTA, probably the FTAA, Treaty of Rome (Europe)
Clauses regarding IP in NAFTA are virtually identical to TRIPS; Under NAFTA and TRIPS, Cda is
under obligation to act in accordance with international standards
Int’l
 WIPO: responsible for maintaining the Paris and Berne Conventions, with some changes; includes
some protection for traditional knowledge; role is diminishing
 WTO/TRIPS: COMPARATIVE ADVANTAGE TRADE-OFF: until 1984 GATT was only trade.
US insisted that GATT include IP to protect its computer and biotech industry; used the rhetoric of
“theft” by other countries with lower IP protection (but of course it isn’t theft, b/c it was perfectly legal
in those countries and served the purpose of that society)
 There was resistance; developing countries saw US as perpetrating biocolonialism, North/South
polarity: resources, traditional knowledge primarily in the South, patenting in the North, and then reselling to the South
 US won the debate, but in response to resistance, made it a trade-off: Used the “comparative
advantage” trade-off (horse-trading): developing countries good at providing labour and resources,
developed countries good at production and use of knowledge
 Lifted trade barriers and allowed developing countries access to certain of its markets (e.g., textiles) in
exchange for signing on to TRIPS (Trade Related Aspects of Intellectual Property Rights)
 Was in the interests of
 Also allowed for transition periods: established in 1995:
 developed countries had 1 year to comply, developing nations had 5 years (until 2000) and least
developed had 10 years (until 2005)
 there is ambiguity in the agreement: terms have no precedent in int’l law; there is lots of room for
different countries to interpret it differently; broad compulsory licensing provisions; ordre public and
morality clauses
 there is also an obligation on developed states to assist developing states to build infrastructure (e.g.,
patent offices) and to transfer technologies
“Compliance with the TRIPs Agreement” by J.H. Reichmann
- 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
work
- WTO 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 compliance
- thus 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 momentum
- 2) “enforcement” provisions that member states are supposed to implement in their domestic laws:
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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 assist
4) collaboration with WIPO and UNCTAD; try to resolve differences btw states w/out need for formal
recourse to dispute settlement
but still lack of consensus re IP int’ly
has been argued that TRIPS based on no solid theoretical or empirical foundations whatsoever
can 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
Structural 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 reach
But may be advantages for developing countries as their technological prowess improves
Also: 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 sectors
Maybe 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 Law
- Developing 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 own
- But 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 techs
- How 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 appopriate
- TRIPS 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 development
- Universal 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
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Impact of TRIPS on Specific Disciplines
Patents:
- some (optimistic) scholars say that economic analysis does justify strong int’l minimum standards of
patent protection
- They say that universal patent system would benefit the world community by eliminating the freeriders’ disincentives to innovate and would increase the supply of needed inventions that would
otherwise not have been made
- Free 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 drugs
- Under 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 to
- Indeed: 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 US
- US: © 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 works
- Should be limited: historical emphasis in US on public interest has been eclipsed; need to defend user
interests and the public domain; use competition law
- Universalisation of the high standards is a form of cultural imperialism
- TROPs 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
- TRIPS is backward looking: drafters were unable (technically and politically) to address the
problems facing innovators and investors at work on important new technology
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TM and Geographical Indications of Origin
- Lack of controversy, generally: Paris Convention already had well-developed set of int’l minimum
standards wrt TM
- It is argued: TM protection prevents marketplace confusion that is detrimental to in interests of
consumers in every nation. Improves consumer wealth by improving consumer information
- focus on enforcement, especially border controls
- geographical indications, special provisions for wines and spirits: trade-offs US had to make to get
European support in other areas
- drafters omitted problem of exhaustion. Some defend to import genuine “gray market” goods.
Future of TRIPS
- tensions 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.
Reichman
 TRIPS, like most trade agreements, is backwards looking.
 TRIPS doesn’t try to anticipate problems in the future, but trying to address existing problem.
 Language in TRIPS is very loose. Appears to impose a lot of obligations. Gold says that once you get
it, doesn’t actually impose many obligations.
 Terms are very vague. Why? Parties hoped that vague terms would eventually be interpreted in their
favour.
 Example  What does “invention” mean? Is a gene an invention?
 All of the flexibility that is built into TRIPS could be interpreted uniformly narrowly.
 No clear trends, but some decisions have been restrictive.
 A bunch of countries got together with very different interests. Came up with vague terms and hoped
they would be interpreted favourably.
 Provides minimum standards and not maximum standards. Example  Must have a 20 year
patent. Of course, can also have a 25 year patent.
 Canada doesn’t grant patents over animals, plants and seeds. This is in complete compliance with
TRIPS. Why would any country want to patents these things? Canada can just benefit from the positive
externalities. However, other countries have continued to increase IP standards.
“Fast-Track Trade Authority and the Free Trade Agreements: Implications for Copyright Law” by
Samuel Trosow
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Congress can delegate to the President constitutional authority to fasttrack certain policy items.
This has been (re)done in 2002 for international trade policy.
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The paper asserts that the information and entertainment interests have ‘captured’ the fast track trade
promotion authority.
The issue of the delegation of international trade from the legislative to the executive branch is
contentious in and of itself; a deadlock was broken by President Bush invoking national security.
The President’s authority under the resulting 2002 Act is very broad, allowing ‘unilateral’ negotiation
of trade agreements irrespective of existing border measures – any perceived ‘block’ can be invoked to
bestow blanket authority to negotiate.
With respect to IP, a section in the Act lists among its goals: accelerating and implementing TRIPS,
ensuring trade agreements reflect the standards of protection found in US law, providing strong
enforcement mechanisms, and ensuring standards of protection keep pace with technological
development…in particular legal and technological means to control the use of…works throught the
Internet….
In general, reflecting the interest of rights-holders with little attention paid to balances and trade-offs
which typically characterized informed IP policy.
Convergence between international IP and international trade laws
Reoccuring issue is pressure on developing countries to give up recourses provided under TRIPS.
IP language in Trade Agreements
 Holy grail in US international trade policy currently is achieving the FTAA by Jan’05.
 In their proposal, the US advocate TRIPS-plus for IP, in addition to WIPO CR and Performances and
Phonograms treaties for all FTAA countries.
 Has been criticized by a coalition of US library associations (?) for attempting to impose IP rules
stronger than domestic US legislation on the new FTAA countries.
 Moreover, what’s the point of bringing up IP in the FTAA if TRIPS covers the same ground?
 CAFTA, which is ongoing, will serve as a FTAA precursor, and contains an IP section with expansive
CR protection.
 Bilateral trade agreements are under way; Jordan’s has been held up as a model to adopt in further
agreements.
 The US-Chile free trade agreement was lauded for its lack of cultural exemptions.
 Morocco also has a free trade deal pending, pleasing the MPAA.
 IP language in the deals is TRIPS-plus, US-plus in some cases.
Temporary Reproduction, and Erosion of US Digital Fair Use
 The US Clinton administration’s copyright White Paper advocated that copying a document to a
computer’s RAM (temporary memory) could constitute an infringement; the White Paper cited out of
context.
 Chile and Singaporean free trade deals explicitly state that temporary copies can be considered as IP
infringement, as does the FTAA draft.
 The Digital Millenium Consumer Rights Act aims to ‘restore the balance lost’ with respect to
derogations from fair use imposed by the Digital Millenium Copyright Act of ’98. Growing
conciousness of the way the DMCA is being used (not as promised): need to fix things
Conclusion
 Conclusion is that the USTR policy in language in trade agreements is causing a rapidly increase in the
level of IP protection on a global scale, overly favouring rights-holders, and acting counter to
democratic institutions – Congress included.
 Only solution is to pressure countries to embrace TRIPS, not TRIPS-plus, and to pressure Congress to
resist domestic CR expansion.
Troso
 US requires compliance with TRIPS, then adds obligations.
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Exemption is s. 27..7(3)  Vietnam wanted to enter the WTO. US told them not only had to comply
with TRIP, but also “TRIPS PLUS” Had to agree to give up this exemption if they want to get in.
Result is a two-tiered system. Those who were part of the agreement initially don’t have to agree to
these additional obligations.
Same things happens when existing WTO members want to engage in free trade with the US. US will
add on obligations to TRIPS.
US likes bilateral agreements because they can impose additional obligations on other countries. US
market is so lucrative that countries will comply.
This is another reason why Adams feels that WTO is the better option. Just going to lose in the end if
you continue to agree to “one-off” agreements.
What are the long-term implications of Canada being an “IP” free-rider? Gives a poor impression of
Canada as a place you’d want to do business. An IP regime is part of the PR strategy that is necessary to
attract investment. Harvard Mouse case reinforced this.
9. Implications of Changes
“Recovering Collectivity” by Angela Riley
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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 property
Indigenous 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 contributed
not 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-determination
Must recognise injustice to indigenous peoples by enacting special community IP rights to ensure
cultural survival.
When drug companies are looking for new drugs, they can either test plants randomly or can look to
aboriginal traditions.
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Aboriginal traditional medicines don’t fall into any IP regime  T/S because it’s known, patent  not
original, copyright  not a form of expression. NB: If aboriginals choose not to give away info about
medicines, it’s a trade secret.
Seed banks  Taking seeds from traditionally grown crops that are put away for the future. Provide
genetic material for new hybrids that may be resistant to new diseases.
Homogenous populations  Good for genetic research. Small differences are easy to pick out.
Aboriginal groups and Iceland are good examples.
None of these items are protected by intellectual property regimes.
Reilly says this is a problem.
Aboriginal groups ought to have some protection over oral traditions, medicines, etc. Need to have
protection.
Certain international agreements do provide protection to aboriginals  i.e. nations can control access
to plants in a particular country. Does not provide intellectual property, rights.
Some talk about international trade organizations (i.e. WTO) about how to deal with this issue.
Copyright is not expansive enough to cover traditionally passed down information. Disqualified on the
basis of novelty  You’ve copied it from you ancestors.
Originality requirement must be changed to allow cultural groups to preserve copyrights.
Copyright must go on forever and belong exclusively to the group as a whole.
Gold says that Reilly is looking for a “moral clause”. Aboriginals don’t like it when other people
appropriate their traditions and misrepresent them.
Argument in support of this notion  We give trademarks to groups of people (i.e. champagne
producers). Why can’t we give it to a group and their descendants?
What justification can we give to protect the work of these communities?
Argument takes place against a historical backdrop of aboriginal exploitation. Since that this is
continuing to occur.
Locke  People who are claiming the work today neither created the work nor invested in it.
Hegel  This theory could be applied easier. People are attached to their work  work represents
them.
Utilitarian  This analysis fails. We give out IP rights to encourage creation of goods. Doesn’t make
sense because creators of goods are already dead  won’t encourage them to write more. Won’t
encourage the overall increase of traditional knowledge. Will it encourage dissemination? Maybe –
groups would have incentive to spread information. However, this appears to be contrary to the reasons
that aboriginals are seeking IP protection.
Gold feels that the Hegelian argument is the strongest. Good of society must be paramount. What is the
good of society? Are we better off having a store of knowledge that is completely out of our grasp?
Gold says “no”. Better to have access to this. Start with the premise that everything is open and we
need justification to take it out of the public domain and privatize it.
Historically, our culture has advanced by taking other people’s ideas. We don’t like giving away too
many property rights  reduces freedom, reduces ability to create.
Therefore, claim being made here goes against most of our theories.
Gold feels that it would be difficult to justify awarding property rights in these circumstances.
Reilly’s rebuttal is that our IP laws are a reflection of our culture. Aboriginal claim is that their request
for protection of their cultural resources is based.
Why has this suddenly become an issue? At the international level, the US does not talk about balance.
Has advanced an agenda that IP rights are akin to a Lockeian analysis. At the international level, there
is an absolute right to any idea. Argument being perpetuated at the international level is that IP rights
are a natural right.
Aboriginals saw this and wondered, “Why don’t we have a natural right over our property?” An effort
to try to “propertize” property.
Gold doesn’t believe that we should give into any of these arguments  either US’ argument that we
don’t need balance or the aboriginal view.
Gold says that we wouldn’t even consider this argument if it was being advanced by people from Lac
St. Jean.
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Just as we need to resist the US’ argument that IP is a natural right, we must resist this argument when
it is advanced by aboriginal. This is a really a question about distribution.
Whole idea of licensing traditional knowledge “to be nice” is dangerous in two ways: (1) Perpetuates
the American Lockean natural right over any given idea.
Reilly also argues that fixation requirements forces you to write everything down. Gold says this is
poppycock  just have to record it somehow.
Reilly also uses example of pop group “Enigma” taking Ami group performance to justify need for IP
rights on aboriginal traditional knowledge. She ignores the fact that the Ami already have a copyright
on their performance and can potentially sue on the strength of this right.
Gold says that he favours pursuing a principled approach to IP regimes as it expands in the
international sense, to counter US hegemony seen in bilateral agreements. Otherwise, if we take the
public policy approach, IP structure is subject to the voice.
NB: Transaction costs (i.e. IP litigation) are high making its use as a distributional device limited.
Wrap-up
 Must look at what the purpose of IP law is. Can use different tools to distribute IP rights depending on
our purpose.
 Exisiting IP system in Canada is based on utilitarian analysis. Comes down to economics.
 A bit of Hegelian analysis is present. More popular in continental Europe.
 Until 1980, Lockean theory had very little effect on IP. Has experienced a resurgence since that time.
 Start with the presumption that things are free. Unless there is a good reason, there should be complete
freedom. What is our justification for taking things out of the public domain? What is the nature of
entitlements (i.e. Melamed)  just a right to prevent access or to prevent others from using? Then, we
ask ourselves if the entitlement requires property rights in order to be effective or can the depend on
other rights (i.e. tort rules, patent pools). Even if you have an entitlement protected by property rights,
what rights do you get?
 What body should administer IP rights?
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