Laws of .com

Volume III, Issue 5: March 10, 2005

Amazon.com Granted New U.S. Patent re Novel Business Process

U.S. Satellite Company DirecTV Sues Nineteen Canadians

EU Council Approves Software Patent Directive

Music Industry Continues Strategy of Suing File-Swappers

Privacy Related Class Action Filed Against CIBC

Microsoft Gets a Second Chance in $521M Web Browser Patent Suit

VOIP Continues to Make News

Should Software Makers be Liable for Flaws?

Amazon.com Granted New U.S. Patent re Novel Business Process

The U.S. Patents and Trademark office has recently granted Amazon.com a patent that assists users in purchasing items and gifts by providing them with suggestions about alternatives and complimentary products, and by sending them gift reminders. In general terms, the patent works by inferring information about a recipient by analyzing the users' choices in selecting items. For instance, if the user purchases a toy item for a two year-old girl in a given year, and then purchases another toy for a three-year old girl the following year, the Website can use this information and infer the gender, age and the approximate date of birth of the recipient. Messages sent with the gift can also be broken down by the system to search for keywords such as "birthday" or "gift" to provide additional information about the recipient. The Website, through its data mining techniques, may then provide birthday reminders to users, and offer suggestions and alternatives about what kinds of gifts and products may be appropriate.

For more information, visit:
http://news.com.com/2100-1038_3-5606053.html

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U.S. Satellite Company DirecTV Sues Nineteen Canadians

DirecTV, a U.S. satellite company, commenced legal action against nineteen individual Canadians whom it alleges sold devices that allow viewers to pick up DirecTV signals without paying, and seeks an injunction to prevent them from selling any further devices. The company claims that these individuals and their businesses have helped Canadians access the "grey market", in which Canadians can access DirecTV by subscribing using a U.S. postal address. The Coalition against Satellite Signal Theft has also lobbied the Canadian government to increase penalties under the Radiocommunications Act for individuals convicted of stealing signals.

For additional information, visit:
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050304/RSATELLITE04

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EU Council Approves Software Patent Directive

A recent report indicates that the EU Council has granted first reading approval of the controversial proposed Computer Implemented Inventions Directive in support of software patents. The Directive seeks to harmonize the scope of patentable software across all 25 member nations of the EU. Opponents of the Directive fear that it will hurt smaller tech companies and question the democracy of the process by which the EU Council approved the Directive . The Directive is now subject to a second reading by the European Parliament.

For more information, visit:
http://uk.news.yahoo.com/050307/152/fdugu.html
http://news.bbc.co.uk/1/hi/technology/4325215.stm

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Music Industry Continues Strategy of Suing File-Swappers

The UK music industry has been successful in its first wave of lawsuits against persons illegally sharing music online. The British Phonographic Industry recently settled suits launched against 23 people in the first wave for an average settlement of PS2,200 each. A second wave of lawsuits against an additional 31 file-sharers is underway.

In a related development, the U.S. music industry has filed yet another round of lawsuits against 753 people it claims have swapped music illegally over the Internet. To date, the Recording Industry Association of America and its member music companies have sued more than 6500 people, most of whom have settled for between $US3000 and $US5000 each.

For additional information, visit:
http://news.bbc.co.uk/1/hi/entertainment/music/4318765.stm
http://afr.com/articles/2005/03/01/1109546862699.html

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Privacy Related Class Action Filed Against CIBC

On February 4, 2005, Theodore Joel Speevak instituted a class action under the Ontario Class Proceedings Act, 1992, before the Ontario Superior Court of Justice against the Canadian Imperial Bank of Commerce. The claim is on behalf of bank clients whose personal information, including RRSP account numbers and amounts, was faxed to third parties without their consent. A total of $9,000,000 is claimed in, general, punitive, aggravated and exemplary damages.

The claim for damages is based on three alternate grounds: (1) breach of contract; (2) breach of rights under the Personal Information Protection and Electronic Documents Act, C.S.R. 2000, c.5, (PIPEDA); or (3) breach of duty of care.

PIPEDA section 14(1) also provides that aggrieved parties may apply to the Federal Court to seek redress. It has been suggested by commentators that this provision does not prohibit filing in other courts to take advantage of potentially more advantageous class action rules on the basis that the provincial courts are the courts of general jurisdiction. It remains unclear whether the CIBC will challenge the Ontario Superior Court of Justice's jurisdiction to hear the mixed claim or portion of the claim based on PIPEDA.

For a copy of the claim, visit:
http://www.cacounsel.com/CIBC%20Class%20Action%20Claim.pdf

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Microsoft Gets a Second Chance in $521M Web Browser Patent Suit

The U.S Court of Appeals for the Federal Circuit has ordered a new trial on two issues raised by Microsoft Corp. in its appeal of a jury verdict awarding $521M plus pre-judgment interest in a patent suit over its Internet Explorer (IE) browser. The suit was brought by Eolas Technologies Inc. and the University of California, licensor to Eolas of a U.S. patent to technology that allows a web browser to access interactive features of a web page.

The appellate court decided that the District Court judge at first instance erred in keeping evidence from the jury in two grounds of defence raised by Microsoft. The first evidence related to the public use of another browser, which could render invalid the patent in suit. The second evidence related to an allegation of inequitable conduct before the U.S. Patent and Trademark office and the duty of candor owed by inventors and others associated with a patent application to disclose all information material to the patentability of an invention. Microsoft alleged that an inventor of the patent in suit was aware of the prior use of the other browser and ought to have disclosed same when obtaining the patent.

Importantly, the appellate court ruled against Microsoft on the meaning of a portion of section 271(f) of the patent code, which makes it an infringement of a U.S. patent to supply "components" of an invention to be combined outside the U.S. Microsoft's golden master disks supplied from the U.S. to make software abroad are "components" within this section and Microsoft remains liable for the portion of the $521M award related to IE software made and distributed outside the U.S.

For more information, visit:
http://www.pcworld.com/news/article/0,aid,119880,00.asp

For a copy of the decision, visit:
http://www.fedcir.gov/opinions/04-1234.pdf

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VOIP Continues to Make News

As the use of VOIP (Voice over Internet Protocol) continues to expand, the Internet communication technology continues to cause legislative and administrative ripples around the world. Three recent news stories highlight this trend.

First, the Instituto Costarricense de Electricidad, Costa Rica's state-owned telecommunication monopoly, has proposed legislation that might make Internet telephone calls a crime. The agency says that it views VOIP as a value-added telecommunications service that uses the country's telecommunication infrastructure, and which therefore should be regulated. Not surprisingly, members of Costa Rica's software industry believe that the proposed legislation could seriously harm their efforts to expand the country's software development and outsourcing business.

Second, a North Carolina ISP has reached a deal with the FCC under which it will refrain from blocking VOIP calls and will pay a fine to the government. The ISP had engaged in "port blocking" - that is, preventing certain types of Internet traffic from traveling through its networks. The FCC declared that it acted swiftly to ensure that VOIP remains a viable option for consumers.

Third, in a similar case, Kenya's Communications Commission recently ordered a state-owned telecommunications provider to restore VOIP services. The Commission reminded Telkom Kenya that VOIP was no longer outlawed, and that the provider should stop fearing legal competition.

For more information, visit:
http://allafrica.com/stories/200503040983.html
http://news.com.com/2100-7352_3-5598633.html
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-05-543A2.pdf
http://www.techweb.com/wire/networking/60403862

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Should Software Makers be Liable for Flaws?

Heightened concerns over security are leading many large companies to rethink the legal terms and conditions on which they purchase software. It has been fairly standard in the software industry to exempt vendors from liability for damages caused by flaws in their products. For instance, vendors are contractually exempted from responsibility for damages that result from computer crashes or virus attacks that exploit faults in their software. Right now the push is coming from customers but some commentators suggest that there may be a need for regulation in the area. Software vendors such as Oracle Corp., say they hope the industry can avoid regulation by responding better to customer demands for security. In the U.S., the changing attitudes are attributed to the tough new accountability and privacy rules such as Sarbanes Oxley and health information privacy.

For more information, visit:
http://online.wsj.com/article/0,,SB110920333716762568,00.html

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