TCLG
IT/Internet Law:
The Year in Review
Toronto Computer Lawyers Group
Wednesday May 28, 2003
McCarthy Tétrault
Suite 4700, TD Bank Tower
Toronto, ON
Barry Sookman
Partner, McCarthy Tétrault
Chair, Internet and Electronic
Commerce Law Group (Toronto)
bsookman@mccarthy.ca
(416) 601-7949
www.mccarthy.ca
3639894
TCLG
Enforceability of
On-Line Agreements
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Enforceability of Click-Wrap Agreements
» Courts that have had the occasion to consider click-wrap
contracts have held them to be valid and enforceable. Specht v.
Netscape Communications Corp., 150 F.Supp. 2d 585, 594
(SDNY 2001) aff'd, 306 F.3d 17 (2d Cir. 2002) and authorities
cited therein.
» Click-wrap licenses are enforceable when they are displayed on
the user's computer screen before the software can be installed
and the user is required to indicate his assent by clicking on the
“I agree” button before proceeding with installation. Moore v.
Microsoft Corp., 293 A.D.2d 587 (N.Y. App. Div. 2002).
» See, also, Rudder v. Microsoft, (1999), 2 C.P.R. (4th) 474
(S.C.J.) (“Install-wrap” Agreement)
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Enforceability of Web Wrap Agreements
“Whether governed by the common law or by Article 2 of the
Uniform Commercial Code ("UCC"), a transaction, in order
to be a contract, requires a manifestation of agreement
between the parties…. a consumer's clicking on a download
button does not communicate assent to contractual terms if
the offer did not make clear to the consumer that clicking on
the download button would signify assent to those terms.”
Specht v. Netscape Communications Corp., 306 F.3d 17 (2d
Cir. 2002)
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Enforceability of Web Wrap Agreements
“Every person who has actual notice of circumstances
sufficient to put a prudent man upon inquiry as to a particular
fact, has constructive notice of the fact itself in all cases in
which, by prosecuting such inquiry, he might have learned
such fact." Cal. Civ. Code § 19. These principles apply
equally to the emergent world of online product delivery, popup screens, hyperlinked pages, clickwrap licensing, scrollable
documents, and urgent admonitions to "Download Now!“
Specht v. Netscape Communications Corp., 306 F.3d 17 (2d
Cir. 2002)
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Fighting Bots and Agents
Website terms and conditions enforced against the
use of scraper tools. American Airlines Inc. v.
Farechase, Inc. No. 067-194022-2 (Tex. 67 District
Court, Mar. 8, 2003)
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Screen Presentation
“As was the case with the agreement that was before Mr. Justice
Winkler, here the arbitration clause is a separate defined clause with
its own heading in bold print. It is displayed just as all of the other
clauses of the agreement are displayed. It is not contained within a
larger clause dealing with other matters nor is it in fine print or
otherwise tucked away in some obscure place designed to make it
discoverable only through dogged determination. The clause is
upfront and easily located by anyone who wishes to take the time to
scroll through the document for even a cursory review of its
contents. The arbitration clause is, therefore, not at all equivalent to
the fine print on the back of the rent-a-car contract in the Tilden case
or on the back of the baseball ticket in the Blue Jays case.” Kanitz v
Rogers Cable Inc. (2002) 58 O.R.(3d) 299 (S.C.J.). See, also ,
Rudder v Microsoft Corp. (1999), 2 C.P.R. (4th) 474 (S.C.J.)
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Electronic Notices
» (Cancellation Screen):
» "You have just requested to cancel the following trades. Enter
your PIN to continue. If you do not receive a confirmation that
your change request was accepted, please check the Trade Status
Screen or contact your local Merrill Lynch HSBC office. Please
remember that your change request is subject to any fills already
executed on the market..."
» (Trade Confirmation Screen):
» "Below is a confirmation that your trade cancellation request has
been sent. Please note that all cancel and change requests are
subject to prior fill.
» Your trade was cancelled at..." (the time of the cancellation is set
out.) Zhu v Merrill Lynch case. [2002] BCCP 0535
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Electronic Notices
“It strikes me that an electronic system which is incapable of giving
to a customer a simple instruction that he should not continue with a
request for a trade or cancellation until he or she is advised
specifically that the request has been successfully and completely
dealt with, or that his transaction is pending until he is advised to the
contrary, is in my opinion a faulty system, and does not provide that
reasonable level of performance that a customer is entitled to receive
from that system and for which he contracted. The faultiness of a
NetTrader system is all the more apparent if the customer is advised
that he must telephone the provider of the system if he wishes to
properly confirm any trade or cancellation made by him. As for the
suggestion made the Defendant's Adrian O in retrospect that the
customer should resort to process of changing an order rather than
canceling an order to ensure successful completion of his request, I
find such advice supportive of the inherent faultiness of the system.”
Zhu v Merrill Lynch case. [2002] BCCP 0535
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Enforceability of Disclaimers
» “It strikes me that the Defendant's Legal Disclaimer falls into
the category of an agreement which virtually eliminates
liability for inaccuracy in the performance of the services
contracted for by the customer and can be construed as in fact
exonerating the broker from acts of... gross negligence and in
fact reserving the right to be grossly negligent to the broker.
» On this basis I find the Legal Disclaimer of the Defendant
unenforceable.” Zhu v Merrill Lynch case. [2002] BCCP 0535
» See, also Robet v. Versus Brokerage Services Inc., [2001] O.J.
No. 1341 (Ont. S.C.J.)
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UECA Based Legislation
» Alberta – Electronic Transactions Act (Proclamation April 1, 2003.)
» British Columbia – Electronic Transactions Act, in force April 19, 2001.
» Manitoba – Electronic Commerce and Information Act, Royal Assent (partly in force
March 19, 2001)
» New Brunswick – Electronic Transactions Act, in force March 31, 2002.
» Newfoundland & Labrador – Electronic Commerce Act, in force December 13, 2001.
» Nova Scotia – Electronic Commerce Act, in force November 30, 2000.
» Ontario – Electronic Commerce Act, in force October 16, 2000.
» PEI – Electronic Commerce Act, in force May 15, 2001.
» Québec – An Act to establish a legal framework for information technology, in force
November 1, 2001.
» Sask. – Electronic Information and Documents Act, in force November 1, 2000.
» Yukon – Electronic Commerce Act, in force March 27, 2001.
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Consumer Protection
Developments
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Internet Sales Contract Harmonization
Template (“Internet Template”)
» Template for Internet sales consumer protection laws
• Approved May 25, 2001
» Relatively uniform rules expected nationwide
» Applies to any Internet sales contract:
• With a consumer
• For goods or services
» Covers
• Provision of information
• Contract formation
• Cancellation rights
• Credit card charge backs
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Implementation of Internet Template
» Alberta Internet Sales Contract Regulation, Alta. Reg.
81/2001, in force Oct 15/01
» B.C. Consultation paper released
» Manitoba Included as Part 7, in force Oct 23/00
» Ontario Consumer Protection Statute Law Amendment Act,
2002, S.O. 2002, c. 30
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Disclosure of Information
Disclosure of information
» 38. (1) Before a consumer enters into an internet
agreement, the supplier shall disclose the prescribed
information to the consumer.
Express opportunity to accept or decline agreement
» (2) The supplier shall provide the consumer with an express
opportunity to accept or decline the agreement and to correct
errors immediately before entering into it. Ontario Consumer
Protection Act, 2002
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Disclosure of Information
Manner of disclosure
» S38(3) In addition to the requirements set out in section 5,
disclosure under this section shall be accessible and shall
be available in a manner that ensures that,
» (a) the consumer has accessed the information; and
» (b) the consumer is able to retain and print the information.
Ontario Consumer Protection Act, 2002
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Provide Copy of Agreement
Copy of internet agreement
» 39. (1) A supplier shall deliver to a consumer who enters into an
internet agreement a copy of the agreement in writing within the
prescribed period after the consumer enters into the agreement.
Content of internet agreement
» (2) The copy of the internet agreement shall include such information
as may be prescribed.
Deemed supply of internet agreement
» (3) For the purposes of subsection (1), a supplier is considered to
have delivered a copy of the internet agreement to the consumer if the
copy is delivered in the prescribed manner. Ontario Consumer
Protection Act, 2002
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Consequences of Failures to Comply
Cancellation of internet agreement
»
40. (1) A consumer may cancel an internet agreement at any time from the
date the agreement is entered into until seven days after the consumer receives
a copy of the agreement if,
»
(a) the supplier did not disclose to the consumer the information required
under subsection 38 (1); or
»
(b) the supplier did not provide to the consumer an express opportunity to
accept or decline the agreement or to correct errors immediately before
entering into it.
Same
»
(2) A consumer may cancel an internet agreement within 30 days after the
date the agreement is entered into, if the supplier does not provide the
consumer with a copy of the agreement pursuant to section 39. Ontario
Consumer Protection Act, 2002
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Excluding Arbitrations
No Waiver of substantive and procedural rights
» 7(1) The substantive and procedural rights given under this
Act apply despite any agreement or waiver to the contrary.
Limitation of Effect of term requiring arbitration
» 7(2) Without limiting the generality of subsection (1), any
term or acknowledgment in a consumer agreement or a
related agreement that requires or has the effect of requiring
that dispute arising out of the consumer agreement be
submitted to arbitration is invalid insofar as it prevents a
consumer from exercising a right to commence an action in
the Superior Court of Justice given under this Act. Ontario,
Consumer Protection Act, 2002.
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Excluding Class Proceedings
Class proceedings
8(1) A consumer may commence a proceeding on behalf of
members of a class under the Class Proceedings Act, 1992 or
may become a member of a class in such a proceeding in
respect of a dispute arising out of a consumer agreement
despite any term or acknowledgment in the consumer
agreement or a related agreement that purports to prevent or
has the effect of preventing the consumer from commencing
or becoming a member of a class proceeding. Ontario,
Consumer Protection Act, 2002.
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Warranty on Quality of Services
» “The supplier is deemed to warrant that the services supplied
under a consumer agreement are of reasonable acceptable
quality.” Section 9(1) Ontario, Consumer Protection Act,
2002.
» Industry Implications?
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Are Mass Market Software
Agreements Unfair?
»
Lawsuit commenced against Microsoft, Symantec and several software retailers over their
software licensing agreements alleging.
»
“Defendants’ acted in concert and have concocted a scheme to sell consumers in the State
of California software licenses in retail stores without allowing them to review the terms
and conditions of such software licenses prior to sale - when consumers finally are able to
view the software licenses for the first time during the software installation process consumers who do not electronically agree to such terms and conditions are prohibited
from using the software AND are prohibited from returning the software to retail stores. If
consumers are able to return the software to the manufacturers such manufacturers have
erected hurdles and unfair burdens on such consumers including not refunding taxes paid,
not refunding shipping and handling, and causing delays in sending refund checks.
»
Plaintiff Cathy Baker brings this action, as more fully stated below, to stop defendants’
unlawful, misleading, and unfair business practices, and allow consumers to make an
informed decision on whether they want to agree to the onerous terms of such software
license agreements - and if consumers choose not to agree - then allow consumers a fair
and symmetrical way to return such software licenses to the retail stores where originally
purchased for a FULL refund.” Baxter v Microsoft (Marin County Cal. Feb, 2003)
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Consumer Protection
and Internet Advertising
» Canadian Competition Bureau has published an
information bulletin discussing compliance with the
Competition Act when advertising on the Internet entitled
Application of the Competition Act to Representations on
the Internet, Competition Bureau, available at the
Competition Bureau’s web site, www.competition.ic.gc.ca.
» Replaces the previous draft guidelines, Staying On-Side”
When Advertising On-Line: A Guide to Compliance with
the Competition Act When Advertising on the Internet.
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Spam Spam Spam
»
Industry Canada Discussion Paper: E-mail marketing: Consumer choices and
business opportunities (January, 2003)
Should new laws be enacted in Canada? If so, what activities should be targeted?
»
Should the use of e-mail for commercial solicitation be prohibited, in some or all
instances?
»
Should the use of e-mail to acquire new customers be prohibited?
»
Should the option of refusing further solicitation be required?
»
Should the use of falsified return e-mail addresses be prohibited?
»
Should e-mail commercial solicitation be required to be clearly labelled as
advertising?
»
Should providers or individuals be allowed to seek specified damages for junk email?
»
Should software products used for collecting e-mail addresses, transmitting bulk
e-mail and falsifying return addresses be controlled or banned?
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Consumer Protection Principles
» The Working Group on Electronic Commerce and Consumers
released a document entitled Canadian Code of Practice for
Consumer Protection in Electronic Commerce in January, 2003.
Available at www.strategis.gc.ca.
» The Code is intended to establish bench marks for good business
practices for merchants conducting commercial activities with
consumers on-line. The Code leaves unchanged, rights, remedies
and other obligations that may exist as a result of consumer
protection, privacy or other laws and regulations, or other general
or sector-specific voluntary codes of conduct to which vendors may
subscribe.
» OECD Consumers in the Online Marketplace: The OECD
Guidelines Three Years Later 03-Feb. 2003. Surveys worldwide
implementation of OECD Guidelines for Consumer Protection in
the Context of Electronic Commerce (9 Dec. 1999)
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Copyright
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Copyright Reform
Consultation Paper on Digital Copyright Issues June 22, 2001
» Supporting Culture and Innovation: Report on the Provisions
and Operation of the Copyright Act (Section 92 report) was
tabled in the House of Commons October 3, 2002. It proposes
an agenda for copyright reform that sets out groupings of
issues to be addressed in the short, medium and long terms
» Reforms being considered include “making available” right,
ISP liability reform, and technological measures, databases
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Copyright Reform Internet Retransmission
» “The Commission further notes…that recent amendments to the
Copyright Act (Bill C-11) exclude Internet retransmitters from the
compulsory licensing regime embodied in section 31 thereof.
Accordingly, Internet retransmitters will be obliged to negotiate with
copyright holders and obtain their consent in order to retransmit the
programming of over-the air broadcasters.
» In light of the above, the Commission does not consider it necessary or
appropriate to require the licensing of Internet retransmitters. Rather,
Internet retransmission undertakings should remain exempt from these
and from other requirements under Part II of the Broadcasting Act. In
addition, since the recent amendments to the Copyright Act address the
main concern identified in this proceeding, the Commission sees no
need to amend the New Media Exemption Order at this time.”
Broadcasting Public Notice CRTC 2003-2, 17 January 2003, Report to
the Governor General in Council pursuant to Order in Council P.C.
2002-1043
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Copyright and Supreme Court
» Théberge v. Galerie d'Art du Petit Champlain inc. (2002),
17 C.P.R. (4th) 161 (S.C.C.)
» SOCAN v. Canadian Assn. of Internet Providers
(2002),19 C.P.R. (4th) 289 (Fed. C.A.), leave to appeal to
SCC granted.
» CCH Canadian Ltd. v. Law Society of Upper Canada
(2002), 18 C.P.R. (4th) 161 (Fed. C.A.), leave to appeal
to SCC granted.
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The Music Wars
» 227 million copies KAZAA downloaded
» 2.5 million copies KAZAA downloaded each week
» 4 million people swapping files at “any given moment”.
Financial Post May 28, 2003.
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Aimster File Sharing Service
»
“Defendants in this case have provided the software and the support services
necessary for individual Aimster users to connect with each other. Without Aimster's
services, Aimster's infringing users would need to find some other way to
connect…The very existence of Club Aimster demonstrates the extent to which
Defendants contribute to infringing activity. The Aimster Top 40 catalogues and
presents for Aimster users the top copyrighted music that they may wish to transfer.
It comments upon that music and, in some cases, even suggests that the user should
have it…What's more, users wishing to download music using Club Aimster need
merely click on a play button and the Aimster software automatically creates a
connection with another users' computer to facilitate the transfer…” “Aimster
predicates its entire service upon furnishing a 'road map' for users to find, copy, and
distribute copyrighted music.” Defendants manage to do everything but actually
steal the music off the store shelf and hand it to Aimster's users.”
»
“Here, it is our finding that Aimster is a service specifically designed to aid the
infringing activities of its users and, on that basis alone, should not be eligible for
Sony's protections.” In re Aimster Copyright Litigation 2002 WL 31006142
(N.D.Ill.2002)
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MP3Board File Sharing Service
“However, there is sufficient evidence from which a factfinder could
determine that MP3Board engaged in an overall course of conduct
which materially contributed to copyright infringement. The
MP3Board site featured a search engine: an automated system
devoted to searching for, aggregating and organizing links…The site
also solicited third parties to post links to sites containing audio
files…MP3Board provided a link to a third party named Freedrive
where users could store audio files online… MP3Board offered new
users "getting started" information and a tutorial containing
instructions on how to locate and download audio files via
MP3Board — actually using one of the record companies'
copyrighted recordings as an example.” Arista Records, Inc. v
MP3Board, Inc, 2002 WL 1997918 (S.D.N.Y. 2002)
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Grokster Case
“Defendants distribute and support software, [Streamcast (Morpheus)
(Kazaa) and Gnutella] the users of which can and do choose to employ
it for both lawful and unlawful ends. Grokster and StreamCast are not
significantly different from companies that sell home video recorders or
copy machines, both of which can be and are used to infringe
copyrights. While Defendants, like Sony or Xerox, may know that their
products will be used illegally by some (or even many) users, and may
provide support services and refinements that indirectly support such
use, liability for contributory infringement does not lie "merely because
peer-to-peer file-sharing technology may be used to infringe plaintiffs’
copyrights." Napster, 239 F.3d at 1020-21 (citation omitted). Absent
evidence of active and substantial contribution to the infringement
itself, Defendants cannot be liable.” MGM Studios v Grokster Ltd (C.D.
Cal. Apr. 23, 2003)
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DMCA Circumvention
of Technological Measures
» “The authentication sequence that occurs between Lexmark’s printers and
the microchips contained on authorized Lexmark toner cartridges constitutes
a technological measure that controls access to a copyright work. This
authentication sequence requires the application of information and the
application of a process to gain access to Lexmark’s copyrighted Toner
Loader Programs and Printer Engine Programs.
» Lexmark’s authentication sequence effectively controls access to the Toner
Loader Programs and Printer Engine Programs because it controls the
consumer’s ability to make use of these programs.”
» “SCC’s SMARTEK microchips cannot be considered independently created
computer programs. The SMARTEK microchips serve no legitimate
purpose other than to circumvent Lexmark’s authentication sequence and
the SMARTEK microchips cannot qualify as independently created when
they contain exact copies of Lexmark’s Toner Loading Programs.” Lexmark
Int’l, Inc. v Static Control Components, Inc. 66 USPQ2d 1405 (E.D.Ken.
2003)
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Copying to Achieve Compatibility
“Even if the Toner Loading Programs were somehow considered to
be lock-out codes, copyright infringement would still exist in the
instant case…Infringement may still be found if there is substantial
similarity and ‘that those similarities extend beyond those
necessary to produce the sequence of bits that will unlock the
[copyright owner’s] console…’ ‘[T]he fact that multiple ways exist
to generate the necessary signal stream may provide evidence that
[the accused infringer] copied more than was necessary to achieve
compatibility.’” Lexmark Int’l, Inc. v Static Control Components,
Inc. 66 USPQ2d 1405 (E.D.Ken. 2003)
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Copying to Achieve Compatibility
» “Both Altai and Mitel clearly held that in determining aspects of the
program not entitled to protection because of external factors, we
examine the program from the viewpoint of the creator…The Mitel
court pointedly noted that the focus is on the factual circumstances and
the external factors surrounding the author of the infringed program…
» Dewar’s explanation of the need to interoperate two programs, and
industry practice and custom, do not justify unauthorized accessing
and copying Geac’s copyrighted code. The Court in Mitel specifically
rejected the analysis of the district court in that case which focused on
whether external factors such as market forces and efficiency
considerations justified the copying… We also reject the doctrine of
externalities, including interoperability, as justification for using the
Copy and Call commands to access Geac’s copyrighted software in
violation of the License Agreements and the Copyright Code.” Dun &
Bradstreet Software Services v Grace Consulting Inc. 64 USPQ2d
1705 (3rd Cir. 2002)
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Reverse Engineering
and Copyright Pre-emption
» “Thus, case law indicates the First Circuit would find that private
parties are free to contractually forego the limited ability to reverse
engineer a software product under the exemptions of the Copyright
Act. Of course, a party bound by such a contract may elect to
efficiently breach the agreement in order to ascertain ideas in a
computer program unprotected by copyright law. Under such
circumstances, the breaching party must weigh the benefits of
breach against the arguably de minimus damages arising from
merely discerning non-protected code.” Bowers v Baystate
Technologies Inc. 65 USPQ2d 1746 (Fed.Cir.2003)
» See, also Frontline Test Equipment v. Greenleaf Software, 10 F.
Supp. 2d 583, 593 (W.D. Va. 1998)
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Jurisdiction
and the Internet
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Subject Matter Jurisdiction - Patents
»
“The claimed invention requires there to be a host computer. In the age that we live in, it does
not matter where the host computer is situated. It could be in the United Kingdom, on a
satellite, or even on the border between two countries. Its location is not important to the user of
the invention nor to the claimed gaming system. In that respect, there is a real difference
between the claimed gaming system and an ordinary machine. For my part I believe that it
would be wrong to apply the old ideas of location to inventions of the type under consideration
in this case. A person who is situated in the United Kingdom who obtains in the United
Kingdom a CD and then uses his terminal to address a host computer is not bothered where the
host computer is located. It is of no relevance to him, the user, nor the patentee as to whether or
not it is situated in the United Kingdom.
»
If the host computer is situated in Antigua and the terminal computer is in the United Kingdom,
it is pertinent to ask who uses the claimed gaming system. The answer must be the punter.
Where does he use it? There can be no doubt that he uses his terminal in the United Kingdom
and it is not a misuse of language to say that he uses the host computer in the United Kingdom.
It is the input to and output of the host computer that is important to the punter and in a real
sense the punter uses the host computer in the United Kingdom even though it is situated in
Antigua and operates in Antigua. In those circumstances it is not straining the word "use" to
conclude that the United Kingdom punter will use the claimed gaming system in the United
Kingdom, even if the host computer is situated in, say, Antigua. Thus the supply of the CD in
the United Kingdom to the United Kingdom punter will be intended to put the invention into
effect in the United Kingdom.” Menashe Business Mercantile Ltd. & Anor v William Hill
Organization Ltd. [2002] EWCA Civ 1702 (Eng.C.A.Nov.28 2002)
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Subject Matter Jurisdiction - Patents
Roger’s prepaid wireless system not infringing US patent
where billing database in U.S. but system control point in
Canada. Court ruling that: “As a matter of precedent, a
transnational system that extends beyond the United States
border can satisfy the territoriality requirement where the
system’s control point is present within the United States.”
Freedom Wireless, Inc. v Boston Communications Group, Inc.
et al (D. Mass. Apr. 16, 2002)
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Personal Jurisdiction
“…the person who sets up the website can be regarded as potentially
committing a delict in any country where the website can be seen, in
other words in any country in the world. It does not follow that he
actually commits a delict in every country in the world, however. It is
obvious that the overwhelming majority of websites will be of no
interest whatsoever in more than a single country or a small group of
countries. In my opinion a website should not be regarded as having
delictual consequences in any country where it is unlikely to be of
significant interest. That result can readily be achieved by a vigorous
application of the maxim de minimis non curat praetor; if the impact of
a website in a particular country is properly regarded as insignificant, no
delict has been committed there. In determining whether the impact of a
website is insignificant, it is appropriate in my opinion to look both at
the content of the website itself and at the commercial or other context
in which the website operates.” Bonnier media Limited v Smith
http://www.scotcourts.gov.uk/opinions/DRU2606.html
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Personal Jurisdiction
“In my opinion an inference may readily be drawn from the
foregoing facts that the defenders, acting together, intend to set up a
website which is designed to pass themselves off as the pursuers, and
to make use of a name sufficiently close to the pursuers' trade mark
to amount to an infringement of that trade mark. Those acts are
clearly aimed at the pursuers' business. That business is centred in
Scotland, and it is in my opinion obvious that the defenders' actings
are intended to have their main effect in Scotland. In these
circumstances I am of opinion that the requirement that the effect in
Scotland of the website should be significant is plainly satisfied, and
that accordingly the defenders can be regarded as threatening a delict
in Scotland. I accordingly conclude that the Scottish courts have
jurisdiction over the defenders.” Bonnier media Limited v Smith
http://www.scotcourts.gov.uk/opinions/DRU2606.html
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U.S. Personal Jurisdiction
“Thus, adopting and adapting the Zippo model, we conclude that a
State may, consistent with due process, exercise judicial power over a
person outside of the State when that person (1) directs electronic
activity into the State, (2) with the manifested intent of engaging in
business or other interactions within the State, and (3) that activity
creates, in a person within the State, a potential cause of action
cognizable in the State's courts. Under this standard, a person who
simply places information on the Internet does not subject himself to
jurisdiction in each State into which the electronic signal is transmitted
and received. Such passive Internet activity does not generally include
directing electronic activity into the State with the manifested intent of
engaging business or other interactions in the State thus creating in a
person within the State a potential cause of action cognizable in courts
located in the State” ALS Scan Inc. v Digital Service Consultants Inc.
63 USPQ 2d 1389 (4th Cir. 2002)
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U.S. Personal Jurisdiction
“Similarly, in Young v. New Haven Advocate, two newspapers in
Connecticut posted on the internet articles about the housing of
Connecticut prisoners in Virginia that allegedly defamed a Virginia
prison warden. The Fourth Circuit held that Virginia could not
exercise personal jurisdiction over the Connecticut defendants because
“they did not manifest an intent to aim their websites or the posted
articles at a Virginia audience.” Following its decision in ALS Scan,
Inc. v. Digital Service Consultants, it reasoned that “application of
Calder in the Internet context requires proof that the out-of-state
defendant’s Internet activity is expressly directed at or directed to the
forum state.” It observed that more than simply making the news
article accessible to Virginians by defendants’ posting of the article on
their internet sites was needed for assertion of jurisdiction: “The
newspapers must, through the Internet postings, manifest an intent to
target and focus on Virginia readers.”” Revell v Lidov 317 F.3d 467
(5th Cir. 2002)
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U.S. Personal Jurisdiction
“Cases citing a defendant's knowledge of the effects of its tortious
conduct on an industry centered in the forum state to support a
finding of jurisdiction under the effects test are inapposite. In
exercising jurisdiction, those courts concluded that the defendant's
knowledge of industry-wide effects in the forum state in conjunction
with other evidence of express aiming at the forum state established
purposeful availment under the effects test. Thus, those cases merely
hold that such knowledge is relevant to any determination of
personal jurisdiction. They do not establish that such knowledge, by
itself, establishes express aiming. Indeed, DVD CCA does not cite,
and we have not found, any case where a court exercised jurisdiction
under the effects test based solely on the defendant's knowledge of
industry-wide effects in the forum state.” Pavlovich v DVD Control
Copy Association Inc 65 USPQ2d 1422 (Sup. Ct. Cal. 2002)
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US Personal Jurisdiction
“As Zippo and the Courts of Appeals decisions indicate, the
mere operation of a commercially interactive web site should
not subject the operator to jurisdiction anywhere in the world.
Rather, there must be evidence that the defendant
"purposefully availed" itself of conducting activity in the
forum state, by directly targeting its web site to the state,
knowingly interacting with residents of the forum state via its
web site, or through sufficient other related contacts.” Toys
“R” US, Inc. v Step two, S.A. 65 USPQ2d 1628 (3rd Cir. 2003)
50
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Defamation
and the Internet
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Where Defamation Occurs
»
“Harm to reputation is done when a defamatory publication is comprehended by the
reader, the listener, or the observer. Until then, no harm is done by it. This being so
it would be wrong to treat publication as if it were a unilateral act on the part of the
publisher alone. It is not. It is a bilateral act - in which the publisher makes it
available and a third party has it available for his or her comprehension.”
»
“In defamation, the same considerations that require rejection of locating the tort by
reference only to the publisher's conduct, lead to the conclusion that, ordinarily,
defamation is to be located at the place where the damage to reputation occurs.
Ordinarily that will be where the material which is alleged to be defamatory is
available in comprehensible form assuming, of course, that the person defamed has
in that place a reputation which is thereby damaged. It is only when the material is
in comprehensible form that the damage to reputation is done and it is damage to
reputation which is the principal focus of defamation, not any quality of the
defendant's conduct. In the case of material on the World Wide Web, it is not
available in comprehensible form until downloaded on to the computer of a person
who has used a web browser to pull the material from the web server. It is where
that person downloads the material that the damage to reputation may be done.
Ordinarily then, that will be the place where the tort of defamation is committed.”
Dow Jones & Company Inc. v Gutnick [2002] HCA 56 (10 December 2002) Per
Gleeson J.
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Where Defamation Occurs
“However, such results are still less than wholly satisfactory. They
appear to warrant national legislative attention and to require
international discussion in a forum as global as the Internet itself. In
default of local legislation and international agreement, there are
limits on the extent to which national courts can provide radical
solutions that would oblige a major overhaul of longstanding legal
doctrine in the field of defamation law. Where large changes to
settled law are involved, in an area as sensitive as the law of
defamation, it should cause no surprise when the courts decline the
invitation to solve problems that others, in a much better position to
devise solutions, have neglected to repair.” Dow Jones & Company
Inc. v Gutnick [2002] HCA 56 (10 December 2002) Per Gaudron J.
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Defamation on the Internet
» Is material placed on a website and made available through the internet a
“newspaper” or a "broadcast" under the Libel and Slander Act triggering
the notice and limitations provisions of Sections 5(1) and 6 of the Act.?
» “In my view, the purpose and scheme of the notice provision in the Libel
and Slander Act are to extend its benefits to those who are sued in respect
of a libel in a newspaper irrespective of the method or technique of
publication. To use the words of Justice Lax, “a newspaper is no less a
newspaper because it appears in an online version”. Weiss v. Sawyer,
(2002) 61 O.R. (3d) 526 (Ont. C.A.)
» “The internet, sometimes more than traditional broadcast media, reaches a
mass audience. It uses the same infrastructure common to radio and
television, as set out in the Act. I conclude therefore, that placing material
on the internet, via a website, where it may be accessed by a large
audience, constitutes broadcasting within the meaning of the Libel and
Slander Act.” Bahlieda v. Santa, (2003-04-02) ONSC 02-0017
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Trademarks
and the Internet
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UDRP Proceedings
»
WIPO received its 5,000th domain name case under the Uniform Domain Name
Dispute Resolution Policy (UDRP) this month.
»
The Center has handled over 15,500 cybersquatting cases under specific dispute
resolution policies, bringing the total number of cybersquatting cases filed with
WIPO to 20,511. The Center is receiving new UDRP cases at an average rate of
three per day, suggesting that the abusive registration of trademarks as domain
names continues.
»
A review of the cases received shows the multinational nature of the
phenomenon. The Center has so far processed disputes in ten languages Chinese, English, French, German, Japanese, Korean, Norwegian, Portuguese,
Russian, Spanish. The geographical distribution of parties involved in UDRP
cases filed with the WIPO Center spans 110 countries. The top five filing
countries are United States of America (46.8%), United Kingdom (9%), France
(6%), Spain (5.5%), and Germany (5.1%). The top five respondent countries are
United States of America (44%), United Kingdom (9.4%), Spain (6%), Republic
of Korea (5.2%) and Canada (3.9%). WIPO Press Release Geneva, May 20, 2003
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CIRA DNDRP
» For cases decided under CIRA Domain Name Dispute Resolution
Policy, see, http://www.cira.ca/en/cat_dpr_decisions.html
‫־‬
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Red Robin International,
Browne & Co. Ltd./Lteé Bluebird Industries
Biogen, Inc
Cheap Tickets and Travel Inc.
Elysium Wealth Management Inc.
Canadian Broadcasting Corporation/Société Radio-Canada
Air Products Canada Ltd / Prodair Canada Ltée
Trans Union LLC1491070 Ontario Inc.transunion.ca
» Loads of cases under U.S. Anti-Cyber-squatting legislation
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Passing-off/Trade-mark Infringement
» “Has there been a misrepresentation that amounts to a
deception? That is to say, when CDNE uses lawsocietyofbc.ca or
lsbc.ca to attract members of the public to websites other than the
Society's for the purpose of generating income (that is to say uses
the goodwill of the society for CDNE's own profit as Mr. Wright
conceded during oral submissions) is there a good argument that
that second requirement for passing off has been met? I think there
is. I think that in part because of what is indicated in the case of
British Telecommunications plc and Another v. One In A Million
Ltd. which is a case in the English Court of Appeal reported at
[1998] 4 All E.R. 476.” Law Society of British Columbia v
Canada Domain Name Exchange Corporation 26 2002 BCSC
1249
» See also, Bonnier media Limited v Smith
http://www.scotcourts.gov.uk/opinions/DRU2606.html
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IT/Internet Law:
The Year in Review
Toronto Computer Lawyers Group
Wednesday May 28, 2003
McCarthy Tétrault
Suite 4700, TD Bank Tower
Toronto, ON
Barry Sookman
Partner, McCarthy Tétrault
Chair, Internet and Electronic
Commerce Law Group (Toronto)
bsookman@mccarthy.ca
(416) 601-7949
www.mccarthy.ca
3639894