EU Court Upholds Microsoft Competition Ruling

From the EU Court of First Instance ruling today upholding Commission's large fine and its finding of abuse of dominant position regarding IP:

It is only when it is accompanied by exceptional circumstances such as those hitherto envisaged in the case-law that such a refusal can be characterised as abusive and that, accordingly, it is permissible, in the public interest in maintaining effective competition on the market, to encroach upon the exclusive right of the holder of the intellectual property right by requiring him to grant licences to third parties seeking to enter or remain on that market. It must be borne in mind that it has been established above that such exceptional circumstances were present in this case. (para. 691)

Here's a good article from the IHT.

Here's the CFI decision itself and the Court's press release.

And here's the response from Microsoft's top lawyer and Senior VP, Brad Smith.

It will be interesting to see if antitrust/competition law enforcement in intellectual property ever gets back on track in Canada.

HK

Otttawa Citizen on Copyright Lobbying

Deirdre McMurdy - who is a new face on the copyright journalism beat - though very experienced on related matters - is off to a very good start on the next revision round with an excellent article on copyright lobbying, in today's paper at the Canada Page 4 and here.

It is fairly detailed and well balanced - and even includes your's truly.

She concludes:

Whatever the results from the latest inter-departmental sessions and briefings, there are lots of sequels ahead. All of them coming to the big screen soon.

HK

Economic Value of Fair Use - Size Matters

A very important study by the CCIA on the economic value of fair use in the USA has just been released.

Here's Gigi Sohn's (Public Knowledge) take on it:

“CCIA should be congratulated for sponsoring this significant project. For years, the copyright industries have made their case for restricting the rights of consumers based on the argument that their industry makes a significant contribution to the economy that could be jeopardized by fair use rights.

“The results are telling. While the content industries claim employment of 11.3 million workers in 2005, the CCIA study found industries depending on fair use employed 17.3 million people in 2006. While the copyright industries claim to have generated $1.3 trillion (or 11.2% of Gross Domestic Product), the CCIA study found that fair-use industries generated $2.2 trillion in 2006.

“This report should guide policymakers and others who want to tilt further the copyright laws away from a reasonable balance between creators on the one hand and consumers and innovators on the other. The report presents a clear case that the harm to the economy could be more significant than previously thought by following a radical content industry policy that diminishes legitimate lawful use of copyrighted material.”

(emphasis added)

Couldn't have said it better myself.

HK

Joyful noise from the EU

EU Directive Limits Orchestra Loudness

By THE ASSOCIATED PRESS
Published: September 7, 2007 VIENNA, Austria (AP) -- Shhhh! Mute the brass, and please -- go easy on the cymbals! A European Union directive on noise abatement contains a provision that will limit the ''noise'' of symphony orchestras beginning early next year. While it's not meant to ban Beethoven's ''ba-ba-ba-baah,'' some musicians are worried overzealous enforcement could take the ''Joy'' out of the German master's exuberant ''Ode to ...''

And what does this have to do with copyright? Well - I'm glad you asked.

Given the way the EU can work, there could be a conflict between the noise abatement directive and deeply entrenched moral rights principles in copyright law. Some particularly noisy composer (no names) might well complain that his or her music isn't being played loudly enough.

And then we could have litigation, with one set of laws conflicting with the other and various directorates in Brussels engaging in noisy internecine turf warfare.

And we could have moral rights of performers who want to play louder (usually trombone and percussion players) pitted against those who want to play softer (e.g. clarinetists and violists) and in turn those of the composer...not to mention the conductor...And large orchestras have over one hundred performers...

And then there's the cultural diversity issue....

And it could all end up in the European Court of Justice...

And if you don't believe me about moral rights of performers, see Article 5 of the WPPT.

Maybe the answer would be a noise rights collective, that could deal in noise credits in a manner analogous to carbon credits and distribute the proceeds in a fair and equitable manner...

But I shouldn't give out ideas here... somebody in Canada may decide that another collective is just what we need... After all, we only have about three dozen now.

What fun copyright law can be!

HK

Breakthrough at the Copyright Board on architectural plans?

Mr. Justice Vancise, who is the Chairperson of the Copyright Board and a Court of Appeal Judge in Saskatchewan has presented what seems to be an annual tradition, namely a speech to IPIC in the latter’s copyright course given in August.

In this speech, Justice Vancise describes at length the Board’s activities concerning unlocatable copyright owners. Most of these files are very routine, and likely do not or should not (in my view) involve any significant time on the part of board members. The one decision where the Board members apparently got seriously involved (Breakthrough Films) is very problematic in many ways, which I’ve touched upon elsewhere.

Justice Vancise says that there will be an announcement soon about what the Board will do about architectural plans, when the architect cannot be located and someone needs copies of the plans from city hall. A very large number of the Board’s issued licenses where the owner is unlocatable (about 60 out of 206 or about 29%) arise from this situation. Apparently, the city solicitors in Ottawa and Calgary in particular will not allow copies of filed plans to be made for renovation or other construction work without either permission from the architect or a Copyright Board decision.

The Supreme Court of Canada held in 1971 that permission is not required to make copies of architectural plans in this kind of circumstance - because there is an implied right to use them and make copies for such purposes. The case is NETUPSKY et al. v. DOMINION BRIDGE CO. LTD. (1971) 3 C.P.R. (2d) 1 SCC Varying 58 C.P.R. 7 Reversing 56 C.P.R. 134.

The Court stated at page 7:

In the circumstances of this case, it is clear that the changes or modifications not only were not forbidden but were in contemplation at the time when the City of Ottawa and, through it, Dominion Bridge, its sub-contractor, became the licensee of Netupsky for the construction of its Civic Centre. Such a licence carries with it an implied consent to make the changes which Netupsky should have made and refused to make, and also, an implied consent to reproduce the plans in as many copies as might be necessary for the construction of the work.

While that decision may have been based upon particular circumstances, there is no reason to suggest that its overall principle would not apply generally.

If the city solicitors haven’t read this case or don’t read it the way I do, then the Copyright Board should issue a ruling once and for all going through the case law in order to make this problem go away. It is clearly a waste of the Board’s staff time, and an obvious source of significant costs and delays to anyone needing to do any building renovation or other construction work requiring old plans in Ottawa or Calgary. As anyone who owns a home or a building knows, delays cost money when work needs to be done.

It serves no useful purpose and can only promote considerable disrespect for copyright to invoke copyright law to delay the obtaining of copies of old blueprints to repair or renovate old buildings when the result will be long delays and great expense and the architect of the plans is no longer around and likely wouldn’t be entitled to any money or to deny permission anyway. There is an implied right of the owner of a building to repair or renovate that building, and the plans may be essential for that activity - for efficiency and even safety purposes.

Hopefully, this is what Justice Vancise has in mind. Such a change in Board practice would be better late than never. I have no knowledge of what the announcement will be - but I hope I’m right.

HK

Knopf v. Speaker of the House of Commons - the Appeal

Here's an update to the litigation in Knopf v. Speaker of the House of Commons, which I wrote about last year, when the Federal Court decision came out (wherein I lost).

The Appeal was heard yesterday, September 4, 2007 in the Federal Court of Appeal. Here's the Ottawa Citizen's report on it by Jack Aubry.

HK

Gambling on International Law and IP

It looks like Antigua has beaten the US Government fair and square and at the Appellate level of the WTO on the latter's prohibition of offshore online gambling. See the story here in NYT.

Apparently, the US got nailed on issues such as not treating foreign online gambling sites in the same way it treats its own. Sounds like "national treatment" to me, but I must say I haven't yet read the decision.

Here's the link to the WTO material to get started on this case.

The really interesting angle is that Antigua is threatening to retaliate by suspending its application to the USA of international IP law (i.e. the TRIPS agreement), since there isn't much else that Antigua could do that the USA would ever notice. According to the WTO site:

On 21 June 2007, Antigua and Barbuda requested authorization from the DSB, pursuant to Article 22.2 of the DSU, to suspend the application to the United States of concessions and related obligatins of Antigua and Barbuda under the GATS and the TRIPS Agreement. On 23 July 2007, the United States (i) objected to the level of suspension of concessions and obligations proposed by Antigua and Barbuda and (ii) claimed that Antigua and Barbuda's proposal does not follow the principles and procedures set forth in Article 22.3 of the DSU. At its meeting on 24 July 2007, the DSB agreed that the matter referred to by the United States be referred to arbitration.
(emphasis added)

This is potentially a really serious situation for the USA. See the comments in the NYT from serious experts like John Jackson and Charles Nesson.

And the USA is still flouting the WTO s. 110 ruling.

People who live in glass houses....

Is Antigua about to become The Mouse that Roared?

(which is one of the best movies of all times, starring Peter Sellers, Peter Sellers, and Peter Sellers)

Or another movie called Casablanca comes to mind:

Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
[aloud]
Captain Renault: Everybody out at once!

Or, maybe the USA will simply "Send The Marines"...


HK

More lost Billions and Billions....

The Institute for Policy Innovation has a new overwrought study about the billions and billions of dollars lost in the USA and worldwide because of "download piracy" and other sordid assorted evils.

Jon Newton has a good take on it here.

Where is Carl Sagan when we need him.....?

"Billions and billions...." of lost sales and lost dollars.....

Interestingly, the stats on pirate sales in and at retail prices seem to make Canada look rather well behaved by developed country standards.

HK

Piracy, Counterfeiting and Montebello Manifesto

As expected, there’s a whole lot of huff, puff and stuff about counterfeiting and piracy from Montebello.

I’m sure that it’s purely coincidental that there was a huge bust fake involving allegedly illegal DVDs announced today in Toronto.

And that Lucky and Flo are being honoured in Malaysia.

Turns out that Lucky and Flo can’t actually tell which DVDs are fake and which are real (never mind which are parallel imports) - which will also be a problem for many peace officers and customs officials (an maybe even some lawyers?), so we shouldn’t be too critical about Lucky and Flo. Besides, they are so cute.

It looks like the RCMP, OPP, etc . will be thrilled that they can now ask for awesome new resources to fight piracy and counterfeiting. And what normal peace officer wouldn’t prefer to raid flea markets than chase cigarette and drug smugglers carrying machine guns or even worse on speed boats in the dead of night?

In all seriousness, there are some issues here.

• Pirate and counterfeit goods are much more brazenly sold on the streets in mid town New York than anywhere I know of in Canada. (I admit that I don’t frequent flea markets.) The USA can’t control this problem on their own streets, including Fifth Avenue in NYC.

• There is a real danger that parallel imports will get caught up in this frenzy. These goods are genuine and legal by definition, but there will always be those who try to block them from importation, and who don’t mind if folks such as border officials, police, the press, and the populace get confused about the difference between pirated or counterfeit goods (illegal) and grey or parallel imports (legal). We have just recently succeeded at the Supreme Court of Canada in the Euro-Excellence v. Kraft case in fighting off an attempt to block parallel imports based upon copyright in some elements of the packaging of absolutely genuine Toblerone chocolate bars. However, I have little doubt that there will still be lots of goods and shipments that will be stopped at the border or seized in stores and fought about because of allegations of “infringement” that turn out to be unfounded because the goods are really parallel imports and not pirated or counterfeit goods and somebody doesn't understand or doesn't want others to understand the difference and the law, or simply as a result of mistaken or over zealous efforts by police and border officials.

HK

No CDN lawsuits aginst individuals for file sharing?

There’s a Slyck interview from August 17, 2007 with David Basskin, spokesperson these days for the CPCC - the collector of private copying levies in Canada.

Leaving aside lots of other issues that merit comment, one answer was quite strange.

Slyck.com: Many people have argued for some time that sending lawsuits to people on P2P networks is a bad idea. Some are arguing that, instead of sending lawsuits, it's better to put a levy on ISPs to counteract what the industry considers losses over the internet. Is this something that the CPCC has considered? What are your thoughts on this idea?

David: No lawsuits have been brought in Canada against individuals with respect to unauthorized file "sharing".
...

Excuse me, but what about BMG v. Doe, in which the big record companies sued 29 John and Jane Doe Canadian defendants for file sharing? The result, as we all know, is that BMG et al failed to get disclosure of the names of the actual 29 individuals who were alleged to be illegally sharing files.

If the law suits didn’t actually proceed any further, it wasn’t for lack of effort. The record companies - backed by CRIA - lost in both the Federal Court and the Federal Court of Appeal. CRIA went through three prominent law firms to get this result. There was no lack of effort to sue individuals here.

See my comment on these cases here.

These major record companies - who tried to sue 29 individuals in Canada - happen to be major stakeholders in the private copying levy scheme, through one of the collectives that comprise the CPCC. CRIA was probably the prime mover for the levy scheme in the first place.

I should remind readers that I acted against the record companies in the BMG case and I have long acted against CPCC concerning the private copying levies.

HK

WIPO Broadcasting Treaty - CDN Government Report

The Canadian government has made its report on the recent WIPO meeting concerning the proposed WIPO Broadcasting Treaty available. It follows below. The responsible officials are to complimented for providing this useful information in good detail and in a timely way.

As far as I know, this is not online.

HK
*****************************

Report on June 2007 Meeting of the WIPO Standing Committee on Copyright and Related Rights

For several years the World Intellectual Property Organization (WIPO) Standing Committee on Copyright and Related Rights (SCCR) has been discussing a proposed treaty on the rights of broadcasting organizations. The WIPO Assembly in 2006 mandated the SCCR to have two special sessions devoted exclusively to the discussion of the proposed treaty. The first session was held in January 2007.

This is a report on the second special session of the SCCR which was held June 19 - 23, 2007 at WIPO headquarters in Geneva.

The primary purpose of the meeting was to finalize a Basic Proposal (draft treaty) on the rights of broadcasting (and cablecasting) organizations for purposes of a diplomatic conference tentatively set for Nov. - Dec. 2007. The meeting failed to agree on such a text. Therefore, there will be no diplomatic conference in 2007.

The Canadian delegation supported the recommendation that it would be premature to have a diplomatic conference in 2007.

The key elements of the formal Conclusions of the second special session are that the SCCR will resume regular sessions and the proposed treaty will remain on the agenda. Other items will also be on the agenda.

It is worth noting that a draft version of the Conclusions recommended aiming for a diplomatic conference in 2008 but a number of delegations opposed having any recommended date in the Conclusions and therefore the draft was not accepted by the meeting.

The next SCCR meeting is expected to be in late November (presumably in the time period set aside for the diplomatic conference). Regular SCCR meetings usually last for three days.

The Conclusions must be approved by the WIPO Assembly which meets Sept. 24 to Oct. 3 2007. At this point we assume the Conclusions will be accepted without amendment but that is impossible to say for certain. (A link to the Conclusion is below).

The June Meeting

Most of the meeting was in an informal session meaning that only national delegations (not observer delegations) were in the room. The informal session will not be included in the WIPO report of the meeting.

The basic document discussed was the Chair's non-paper of April 20, 2007 (see link below).

There were two formal submissions to the meeting made by Canada and Mexico (see link below). The US made a formal statement on its overall position (see link below).

The Chair worked on an expanded version of the April 20 non-paper which included many of the suggestions made by delegations during the informal meeting. This non-paper has no official status.

Comments Made on the April 20 Non-Paper

There were comments by delegations on many articles in the draft. The notes below summarize only some of the comments on the most important or controversial articles.

General

During the informal session one industrialized country suggested that the treaty should include a provision that the broadcaster could not assert rights against the content owner or a person licensed by the content owner.

Several developing country delegations objected to the fact that the public interest and access to knowledge provisions had been moved into the Preamble as opposed to being in substantive articles as in document SCCR 15/2.

Art. 7 Protection of Broadcasts

There was some discussion about whether the rights should be "exclusive rights" or whether other forms of protection should be allowed, e.g. a prohibition, administrative remedies. One industrialized country expressed the view that there should be no exclusive rights but that broadcasters should nevertheless have the ability to directly enforce remedies.

There was some discussion of the meaning of "deferred" in "deferred transmission". One developing country suggested that it might be 24 hours. One industrialized country also expressed the view that there should be a clear limit on the duration of this protection.

As in previous meetings certain delegations, especially India, objected to the fact that this wording would prohibit retransmission "by any means". Several delegations see this wording as giving broadcasters a positive right to authorize retransmission over the Internet. This may be reinforced by the fact that the right is "an exclusive right of authorizing" as opposed to a right to prohibit.

One developing country delegation said that the rights should be limited to "traditional" broadcasts and cablecasts, i.e. that the word "traditional" should be added to the text of the treaty. It said that this would be consistent with the mandate set by the 2006 WIPO Assembly.

One developing country delegation said that individual countries should be allowed to opt out of any aspect of Art. 7. (The Canadian submission would allow a limited opt-out with respect to free over-the-air signals.)

The Canadian delegation outlined its position on retransmission as stated in its written submission.

Art. 9 Protection of Encryption and Rights Management Information

As noted in its formal statement (see link above) the USA favoured mimicing the wording in the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. Some developing country delegations are opposed to any article of this type.

The Canadian delegation said that the electronic rights management information protected under the proposed article should be factual or identifying information.

Art. 10 Limitations and Exceptions

A number of developing country delegations have made written submissions on this issue.

At the meeting, some delegations suggested that the first paragraph (which allows for limitations and exceptions comparable to those for copyright works and other related rights) should be made mandatory. One industrialized country suggested that the exceptions in the first paragraph should be made mandatory on a mutatis mutandis basis.

Other Issues

There remain wide divergences of views including on what is meant by "signal-based approach" to protection.

Conclusion / Future Work

At this point it is impossible to predict how the discussions may evolve in the SCCR meetings in 2008.

Contacts for Further Information

For any further information on the meeting or future work please feel free to contact:

Bruce Couchman

Intellectual Property Policy Directorate

Department of Industry

(613) 952-2621

couchman.bruce@ic.gc.ca

Danielle Bouvet

Copyright Policy Branch

Department of Canadian Heritage

(613) 990-6235

Danielle_Bouvet@pch.gc.ca

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Documents for the June SCCR meeting (including links to Canadian and Mexican written submissions) may be found at:

http://www.wipo.int/meetings/en/details.jsp?meeting_id=12744

http://www.wipo.int/meetings/fr/details.jsp?meeting_id=12744

The Conclusions of the meeting may be found at:

http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=79838

http://www.wipo.int/meetings/fr/doc_details.jsp?doc_id=79838

The WIPO Press release after the meeting may be found at:

English

http://www.wipo.int/pressroom/en/articles/2007/article_0039.html

French

http://www.wipo.int/pressroom/fr/articles/2007/article_0039.html

An unofficial version of the statement by the U.S. delegation may be found at

http://www.keionline.org/index.php?option=com_jd-wp&Itemid=39&p=57#more-57

The Chair's non-paper of April 20, 2007.

http://www.wipo.int/meetings/en/doc_details.jsp?doc_id=77333

http://www.wipo.int/meetings/fr/doc_details.jsp?doc_id=77333

Cellular Backwater in Canada

Michael's post today took me to the National Post.

This took me to the NYT Editorial. Read it while you still can for free before the paywall goes up and Access Copyright tries to "tax" you for browsing and - heaven forbid - printing.....

The editorial decries the excessive restrictions and oligopolist rents earned by US cellular companies and the resulting gap in services and price compared to other nations.

The closed nature of America’s wireless networks is the main reason that its cellphone technology is so primitive compared with Europe’s and Japan’s. The F.C.C.’s new rules go part of the way to solve this, but unfortunately, American consumers have once again been denied a truly open and competitive cellular market.

Everyone knows that US cellular prices and technology are vastly better than in Canada.

So where does that put Canada....????

CRTC (Konrad von Finckenstein) and Competition Bureau (Sheridan Scott) - "please phone home" (for those who remember the long missing E.T.) That is if you can afford the roaming charge.

And what does that have to do with this blog?

Excess oligopoly verging on monopoly is strangling Canadian competitiveness. Canada's copyright policy is rapidly going in this direction, particularly with respect to collectives.

More on that to come.

HK

"Audience Isn't the Enemy" - Zero Tolerance in US Movie Theater

One thing that legislators should be forced to recite every day - and which law schools should hammer home in every class - is that the worst possible ridiculous consequence of any law is bound to occur sooner rather than later.

So - a young lady in Arlington, VA has been charged under anti-camcording legislation for taking a 20 second clip on what is reported to be a Canon Power Shot (which is apparently a digital still camera with limited “movie” capability, as have most still cameras and cell phones now). She thought her little 13 year old brother might like to see the movie too - so she was advertising, in effect, for the theatre and the movie producer.

She even arrived late at the movie, which doesn't fit with the profile of your average professional pirate. Her camera was confiscated. She is banned for life from this theater.

The very model of a modern pirate? Just the type of person that cries out for "zero-tolerance policy at the theater level"?

The powers that be in this case are defending their zero tolerance policy.

She faces a year in jail and a $2,500 fine.

If her story is true, she is being prosecuted and could have a criminal record, a fine and jail time for recording 20 seconds of a film on a digital still camera at presumably very low quality in order to show her little brother so that he would come to see the movie and buy a ticket.

Is this a case of bad law or a bad enforcement call or both?

At least the young lady has capable representation and some notable people caring about her.

Coming soon to a theatre near you in Canada?

Hopefully, the Canadian statute would not permit this kind of charge in such a de minimis situation.

And hopefully our enforcement apparatus would not let it get off the ground.

Hopefully...

HK

A Warning Shot about Copyright Warnings

An important warning shot has been fired about overblown copyright warnings that literally threaten jail sentences and severe fines for activity that is very often fair use or fair dealing, or simply not covered by copyright law in the first place.

Much ado about the complaint to the FTC about frequently ridiculous copyright warnings on TV, in theatres, in books, on DVDs, etc.

A few comments.

The complaint is not from the usual copyleft wing. It is from a trade group that includes Microsoft and Google.

A coalition of American library associations called the Library Copyright Alliance have strongly supported the complaint. It would be really nice if Canadian libraries could more often take such strong, unified and useful positions on copyright matters.

Judge Posner raised the flag on this three years ago in a remarkable guest blog he did on Larry Lessig's site:

The result is a systematic overclaiming of copyright, resulting in a misunderstanding of copyright's breadth. Look at the copyright page in virtually any book, or the copyright notice at the beginning of a DVD or VHS film recording. The notice will almost always state that no part of the work can be reproduced without the publisher's (or movie studio's) permission. This is a flat denial of fair use. The reader or viewer who thumbs his nose at the copyright notice risks receiving a threatening letter from the copyright owner. He doesn't know whether he will be sued, and because the fair use doctrine is vague, he may not be altogether confident about the outcome of the suit.

...

What to do about such abuses of copyright? One possibility, which I raised hypothetically in my opinion in WIREdata, pp. 11-12, is to deem copyright overclaiming a form of copyright misuse, which could result in forfeiture of the copyright. For a fuller discussion, see the very interesting paper by Kathryn Judge...

As usual, Judge Posner in his scholarly capacity was way ahead of the curve.

BTW, the article he mentions by Kathryn Judge is “Rethinking Copyright Misuse” (2004), 57 Stan. L. Rev. 901. Ms. Judge clerked for both Justice Posner of the Seventh Circuit and Justice Breyer of the U. S. Supreme Court - which is extraordinary.

Her notable article was cited in last week's Supreme Court of Canada decision in Euro-Excellence v. Kraft.

HK

Euro v . Kraft - Further Thoughts

Some further thoughts beyond my first take on the Kraft decision of the Supreme Court of Canada delivered July 26, 2007:

1. While it is true that there is much comment about the interesting arithmetic comparing counts of how the four opinions split on the various issues, one thing is quite clear. Seven out of nine judges decisively ruled against Kraft.

2. In terms of arithmetical predictions for future cases based upon various splits on various issues, the law is not based on arithmetic. Otherwise, lawyers wouldn’t have much to do. The bottom line in this case presumably is that the Supreme Court of Canada has ruled - 7/2 - that based on these facts, there is no copyright infringement.

3. Several lawyers have suggested in blogs, law firm web sites, or in media interviews that assignments could now replace exclusive licenses and that the result would be different if Kraft had chosen this strategy. In fact, a Kraft spokesperson was quoted by Bloomberg as saying:

``We believe the outcome would've been in Kraft's favor if we had assignment of copyright,'' Galia said. ``So we do see an opportunity to look at further options.''

4. However, it has long been known that assignments - as contrasted with exclusive licenses - avoid the difficulties with the “hypothetical maker” doctrine as clearly now enunciated by Rothstein, J., with whom three other Justices agreed. Assignments, as opposed to exclusive licences, are “old news”, as they say.

5. So - why has nobody successfully used a strategy involving assignment of copyright in packaging elements before? There have been many reasons - and it’s not my job to set them out here. Let me simply say that any company contemplating such a strategy should make sure that it is getting not only well informed copyright advice, but also good trade-marks, tax, corporate and competition law advice as well - for starters.

6. One thing, however, that is news is that now, based on what we can see from last week’s decision, at least four of the current Justices - and maybe more - might well see through and reject a strategy based on assignments as either copyright abuse or misuse or, as Fish, J. stated, as “an instrument of trade control not contemplated by the Copyright Act.” They may see such a strategy as a blatantly artificial attempt to use copyright in a trade restrictive manner for products not themselves protected by copyright. The abuse/misuse issue was mentioned but not dealt with on the merits in last week’s ruling, which was quite predictable because there was no need to deal with it and there was an insufficient record. But it may be very different next time. It has been expressly mentioned and left open for another day.

7. As I often say, copyright owners must be careful what they wish for. A carefully developed strategy to thwart gray marketing of products not themselves protected by copyright based upon assignments (as contrasted with exclusive licenses) in packaging or labelling elements may well provoke an unintended and unpleasant result (from the owner’s viewpoint) on the copyright abuse/misuse front.

8. There are also several other good arguments not mentioned in the judgment that could sink any attempt to refloat this same ship with slightly different sails. They, too, may be left for another day.

9. As the old cliché about grey marketing goes, the law is rarely black and white. The underlying issue never goes away - which is that some IP owners crave monopolistic exploitation by market segmentation of their alleged rights, while the market place seeks competition and free trade in genuine goods. This issue has been in the Courts since the at least 1871 and nobody expected it to come to an end last week. It has a hydra-like aspect - one cuts off one head and more soon appear. Anyway, the last round went to the parallel importers and free traders - as it seems to more often than not overall, except with respect to books, records DVDs and other products actually protected themselves (and not simply their packaging) by copyright.

10. One can expect much more attention to the issue now with this decision and with a CDN $ dollar approaching par with the US $.

11. And there may be demands that this issue be dealt with by legislative reform - as has happened in Australia and the UK. But that would be extremely controversial.

12. For now, we have a 7/2 judgment and I’m glad to have been on the winning side. Full disclosure - we acted for an intervener supporting the successful Appellant in this case - but these views are purely my own.

HK

Euro v. Kraft Decision - First take on landmark parallel imports decision

Updated*

Here's the Supreme Court decision in Euro Excellence v. Kraft.

Here's my quick analysis on this landmark decision.

1. The main judgment by Rothstein, J. (+ Binnie & Deschamps) is based upon highly technical arguments we put forward on the “hypothetical maker” doctrine, and the nature of exclusive licenses. These reasons highlight very important differences between the rights of assignees and exclusive licensees. Although some companies may now look to use assignments as a basis to block parallel imports of goods not themselves protected by copyright, they would do well to remember why this has not been done much if at all in the past. They will need to think through the practical tax and loss of control issues, and look carefully at the reasoning of Justices Fish, Bastarache, LeBel and Charron - which suggest that even an assignee may have great difficulty in using copyright law to block parallel imports where the copyright element in question is only “incidental” to the real transaction. An intercorporate assignment may be disregarded for purposes of blocking trade in legitimate articles, and an arms length assignment means just that - an assignment. Who is going to sell the artwork in their crown jewels?

2. Fish, J. agrees with the foregoing and notes the purely nominal consideration for the intercorporate transaction and says in admitted obiter dicta that he has “grave doubts” about using IP law as “an instrument of trade control not contemplated by the Copyright Act.”

3. Bastarache, J. (with LeBel and Charron, JJ.) looked at the “incidental” aspect of the work in question and that the Act was not meant to stop parallel imports where the copyright interest is merely incidental to the consumer good in question. This is not consistent with the “legitimate economic interest” of the owner or in turn the exclusive licensee. These Justices also leave the door open to application of the copyright misuse doctrine, which was unnecessary to consider in this instance and would be “best left for another day.”

4. Abella, J. (with McLachlin, C.J.) basically said that the transaction was caught by the literal language of the legislation and disagreed with any judicially created limit on this meaning. Her reasoning on exclusive licenses, in particular. appears to be quite different from that of Rothstein, J.

Bottom line:

This is a major victory for those who who favour free trade and real competition. The core reasoning turns mainly on the hypothetical maker doctrine and the rights (or lack thereof) of exclusive licensees.

The Court looked very carefully at comparative jurisprudence here. Although only briefly mentioned, I believe that Sir Hugh Laddie's material on the hypothetical maker doctrine and exclusive licenses from his major treatise on UK law was very influential. There were also a couple of references on the point of exclusive licenses to Nimmer’s American treatise. Bill Patry’s major new seven volume treatise was published only after the case was heard by the Court. Bill has already blogged about the decision.

The additional theory of “incidental” work or use and “legitimate economic interest” could be helpful in any borderline situations that may arise in the future. These theories could certainly lead to beneficial policy results in other contexts as well.

The academics will have a field day with this - trying to parse the differences between the judges and in turn with previous jurisprudence from this and other high courts.

Bloomberg has a business oriented article that cuts to the chase....

Interestingly, one major Canadian law firm - Ogilvy, Renault - which had nothing to do with the case - has issued a frankly rather confusing press release [now updated - see below*] inexplicably - and incorrectly - claiming that :

“Grey Market Goods Illegal According to Supreme Court of Canada - Decision rendered today in Euro-Excellence v. Kraft”

So - there are clearly still going to be many questions ahead on the issue of grey (gray as the Americans say) marketing and parallel imports.

However, the victory today is clearly on the side of those who believe in free trade, real competition and what I argued to be a correct reading of the current Canadian Copyright Act.

I acted in this instance for the intervener, Retail Council of Canada - which supported the successful appellant and argued in favour of free trade and a competitive marketplace, where copyright law cannot be used as an artificial “strategy” to “thwart” importation of genuine products other than through an exclusive distributor’s own distribution channel. However, as always, on this blog, these comments are my own.

*Update:

Michael Geist, as usual, was very quick to analyze the judgment.

Warwick Rothnie in Australia - who wrote a wonderful monograph on parallel imports published in 1993 and which I hope he updates one of these years - has a blog entry on this decision.

Jorge Espinosa, a Miami lawyer, has an entire and very impressive blog devoted to "gray" marketing called the Gray Blog. He has sympathy for the correct Canadian/Commonwealth spelling - but he is, after all, in America. He has opened up a section on his blog for Canada and has a couple of entries already on this decision.

As a reader comments below, Ogilvy, Renault has updated the headline in its press release.

Supreme Court of Canada: selling grey goods is not necessarily copyright infringement - Decision rendered today in Euro-Excellence v. Kraft

Well, with respect, 7 out of 9 of the Justices said that what took place in this instance was *not* copyright infringement. There was no qualification about "necessarily."


HK

Choral Performance of SONY EULA

Here's a choral performance of the Sony/BMG End User License Agreement -- remember the Rootkit fiasco -- set to music and arranged for choir and recorded by Toronto recording artist Brian Joseph Davis.

Here's the story in Wired.

Hat tip to Fred Von Lohmann.

Apparently, Sony is suing the software supplier. Sony must be shocked, shocked that the software did what it did.

Now let's see if SONY goes after Mr. Davis.

HK

Kraft Decision - Judgment Day Set for July 26, 2007

The Supreme Court of Canada today announced that it will deliver its judgment in the very important case of Euro‑Excellence Inc. v. Kraft Canada Inc., Kraft Foods Schweiz AG and Kraft Foods Belgium SA this Thursday, July 26, 2007 at 9:45 AM.

The announcement contains the Court's summary of the case.

Here's what I said about the case at the time that leave was granted, on May 18, 2006 on the subject of: Copyright, Competition, Free Trade & Chocolate Bars.

I acted for the Retail Council of Canada, which was an intervener in this case.

HK

iPod Levy - Déjà Vu All Over Again?

Last week the Copyright Board ruled that CPCC's proposed new tariff that would include a levy on Digital Audio Recorders, e.g. iPods, could proceed. The Board indicated that it will entertain CPCC's request for a levy on digital audio recorders.

Here's the Board's ruling.

Here's an article in today's Globe and Mail, quoting my client, the Retail Council of Canada.

And here's the judgment of the Federal Court of Appeal from 2004 which says, among other things;

[160] A digital audio recorder is not a medium; the CPCC recognized so much when it asked that the levy be applied on the memory found therein but not on the recorder itself. The Board erred when it held that it could certify a levy on the memory integrated into a digital audio recorder.

...

[164] In my respectful view, it is for Parliament to decide whether digital audio recorders such as MP3 players are to be brought within the class of items that can be levied under Part VIII. As Part VIII now reads, there is no authority for certifying a levy on such devices or the memory embedded therein.

The Supreme Court of Canada refused to grant leave to appeal from this decision.

Since I'm quite involved with this, I'll say no more. I just thought the above would be useful for information purposes.

HK

President Bush on Neighbouring Rights

This was the President's response to a question posed during his recent visit to Nashville:

Q Mr. President, music is one of our largest exports the country has. Currently, every country in the world -- except China, Iran, North Korea, Rwanda and the United States -- pay a statutory royalty to the performing artists for radio and television air play. Would your administration consider changing our laws to align it with the rest of the world?

THE PRESIDENT: Help. (Laughter.) Maybe you've never had a President say this -- I have, like, no earthly idea what you're talking about. (Laughter and applause.) Sounds like we're keeping interesting company, you know? (Laughter.)

Look, I'll give you the old classic: contact my office, will you? (Laughter.) I really don't -- I'm totally out of my lane. I like listening to country music, if that helps. (Laughter.)

One has to admire his honesty and sense of humour in this instance.

HK