Laws of .com

Volume VI, Issue 10: May 15, 2008

Ontario Court Issues Decision on E-Discovery Citing the Sedona Principles

Plaintiff’s Facebook Use Undermines Her Litigation Position

Bell Canada Hit with Privacy Complaint over Deep Packet Inspection

Court Rules No Likelihood of Confusion with Use of Competitor’s Trademarks in Metatags

Social Networking Websites Effective Tools of Communications in Emergencies

Apple Settles Canadian iPod Class Actions

Amazon Sues New York State over Requirement to Collect Sales Tax

Manitoba Teen Charged with Impersonating Teacher on Facebook

Court Issues Split Decision In Lucent-Microsoft Patent Row

U.S. Court Sets Formula for Online Music Royalties

Ontario Court Issues Decision on E-Discovery Citing the Sedona Principles

The Ontario Superior Court of Justice dismissed an appeal from the decision of Master Dash ordering a defendant (“Cox”) to produce his personal laptop computer for inspection by a forensic expert retained by the plaintiff (“Vector”). Vector alleged that Cox had gone to work for Vector’s competitorand was soliciting Vector’s clients for his new employer. Vector produced copies of emails forwarded by Cox to them, which Cox claimed he no longer had in his possession as he had deleted them from his laptop. Vector requested that Cox be ordered to produce his computer to Vector’s expert, who would search for emails containing references to the names of Vector’s clients in order to ascertain whether Cox was soliciting them.

In his ruling, Justice Perell made reference to a number of decisions regarding electronic discovery, including a favourable consideration of the British Columbia case of Desganage v. Yuen . Significantly, Justice Perell also made what appears to be the first judicial reference to The Sedona Canada Principles - Addressing Electronic Discovery since the release of that document earlier this year (as reported on in the February 7, 2008 issue of this Newsletter). Justice Perell made particular reference to Sedona Principle 2 and its associated commentary, which prescribes a notion of proportionality in e-discovery in order to avoid excessive cost and impinging on privacy and confidentiality. In this case, Justice Perell stated that the Master had either ruled that there was an undisclosed document in the laptop, or had ruled that the requested order was reasonable given the relevance of the evidence, the carefully-defined parameters of the search, and Vector’s willingness to pay the costs associated with disclosure.

For a copy of the decision, visit:
http://www.canlii.org/en/on/onsc/doc/2008/2008canlii11050/2008canlii11050.html

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Plaintiff’s Facebook Use Undermines Her Litigation Position

In Goodridge v. King (Ontario S.C.), the plaintiff had been injured in a car accident, and the question before the court was whether her injuries constituted “a permanent serious disfigurement or a permanent serious impairment of an important physical, mental or psychological function.”. In support of her argument that her injuries met this threshold, the plaintiff led evidence that she had scarring on her face and shoulder and that this caused her embarrassment and impaired her enjoyment of life. Justice Platana, in ruling that the scarring did not meet the threshold of “seriousness,” gave weight to the fact that the plaintiff had posted pictures of herself on Facebook and found that the scarring “does not appear to have interfered with her normal, everyday life in any way”.

For additional information, visit:
Goodridge v King

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Bell Canada Hit with Privacy Complaint over Deep Packet Inspection

Bell Canada (“Bell”) has been accused of violating the Personal Information Protection and Electronic Documents Act (“ PIPEDA”). The Canadian Internet Policy and Public Interest Clinic (“CIPPIC”), a University of Ottawa legal clinic specializing in Internet and other technology-related law, has claimed that Bell has failed to obtain the consent of its Internet customers before implementing its deep-packet inspection technology (“DPI”). The use of DPI allows Bell to determine the ways in which subscribers are using their connection.

Bell has argued that the use of DPI is necessary to find and limit the use of “peer-to-peer applications such as BitTorrent,” which is congesting its network. However, CIPPIC argued that Bell has failed to prove that its actions were necessary for quality control purposes, since it never offered proof to demonstrate that its network was congested.

In addition, the Canadian Association of Internet Providers (“CAIP”), which represents fifty-five Internet service providers renting portions of Bell’s network, has also filed a complaint with the Canadian Radio-television and Telecommunications Commission (“CRTC”). It claims that Bell has been invading users’ privacy and that its traffic shaping was causing its members to lose customers and incur unneeded costs. It requested an urgent interim cease-and-desist order until the practice could be fully investigated. The CRTC denied this request for an interim order, but has initiated a process to dispose of CAIP's application on a final basis.

For a copy of the legislation (PIPEDA), visit:
http://www.privcom.gc.ca/legislation/02_06_01_01_e.asp

For a copy of the CRTC’s decision, visit:
http://www.crtc.gc.ca/archive/ENG/Decisions/2008/dt2008-39.htm

For additional information, visit:
http://www.cbc.ca/technology/story/2008/05/12/tech-bell.html

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Court Rules No Likelihood of Confusion with Use of Competitor’s Trademarks in Metatags

The United States District Court for the Eastern District of Wisconsin recently ruled that, with respect to the sale of trademarked goods over the Internet, trademark use in metatags will not substantiate a finding of initial interest confusion absent some direct competition.

Standard Process, Inc. (“SP”), a company which manufactures and sells dietary supplements to health care providers and retailers approved by the company, commenced the action against Dr. Banks, one of its former customers, alleging trademark infringement and false designation of origin in violation of 15 U.S.C. §§1114(1) & 1125(a).

SP terminated its contract with Dr. Banks when it discovered he was selling SP products over the Internet, which was in direct contravention with SP policy. After the contract was terminated, Dr. Banks nevertheless continued to sell unaltered SP products through his website. He also continued to use SP trademarks and photographs of SP products on his website. As a result of SP’s objections, Dr. Banks removed all photos of SP products and SP logos from his website. He also placed a disclaimer on his website which notified his customers of the fact that he was not an authorized seller of SP products and was not affiliated in any way with SP. However, he continued to use SP trademarks in the metatags of his website.

SP claimed that the use of its trademarks in the metatags of Dr. Banks’ website created “initial interest confusion.” That is, by using SP trademarks in the metatags of his website, Dr. Banks confused customers into believing that he was an authorized retailer of SP products. However, the Court rejected this argument, stating that keyword metatags do not create initial interest confusion, in part because keyword metatags are no longer used by modern search engines and so do not influence search results. In any event, the Court ruled that even if search engines still made significant use of metatags, and consumers who enter the words “Standard Process” in a search engine are diverted to Dr. Bank’s website, they are actually given an opportunity to purchase unaltered SP goods. Thus, Dr. Banks is not a direct competitor to SP, and the likelihood of consumer confusion is not present in this situation.

For a copy of the decision (United States District Court, Eastern District of Wisconsin), visit:
http://www.scribd.com/doc/2719759/Standard-Process-v-Banks

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Social Networking Websites Effective Tools of Communications in Emergencies

A recent study conducted by the University of Colorado has indicated that social networking and other web based systems are more useful than traditional media in disseminating information about emergency situations. Researchers looked at the way these technologies were used during last year’s California wildfires and Virginia Tech shootings.

The researchers found that non-traditional social media was more quickly updated (detailed reports of the Virginia Tech shootings went up on Wikipedia within 90 minutes). Moreover, the capabilities of these alternate media venues can be more effective than traditional media. For example, Google Maps was used during the wildfires to monitor the fire and users were able to mark business closures while government authorities found maintaining up-to-date information difficult. This is likely due to the fact that traditional media simply did not have the ability to put reporters on the front lines, whereas Internet users effectively became reporters with the new technologies being used. Authorities such as the American Red Cross and U.S. Geological Survey are starting to take advantage of this new way to monitor disasters, a trend which is likely to continue.

For additional information, visit:
http://tinyurl.com/56kzuy

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Apple Settles Canadian iPod Class Actions

Apple has settled a pair of class-action lawsuits in Canada which alleged that Apple made misleading claims to consumers that iPod batteries lasted 10 hours of continuous playing time. In reality, the battery power of their older generation ultra-popular iPod personal music players is significantly less. According to court documents, Apple is offering credits for its online store of $44.75 to people who live in Canada and bought certain iPods on or before June 24, 2004. To be eligible for a credit, the battery life of the iPods needs to have dropped to five hours or less continuous playing time for the first and second generation versions of the iPod and four hours or less for the third generation. Apple settled similar class-action claims in the United States in 2005.

For additional information, visit:
http://www.siliconvalley.com/news/ci_9216429
http://www.teleclick.ca/2008/05/apple-settles-ipod-battery-life-lawsuits-in-canada/

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Amazon Sues New York State over Requirement to Collect Sales Tax

New York State’s new law, which forces online retailers to collect sales tax on shipments to state residents, has its first challenge. Amazon.com has filed a complaint in the Supreme Court of the State of New York arguing that the statute is unconstitutional.

Under the new law, companies with a presence in the State of New York must collect sales or use tax on behalf of the state. The new law broadened the definition of “presence” to include any website based in New York State and which earns a referral fee for sending customers to an online retailer such as Amazon.

Amazon has hundreds of thousands of affiliates that feature links to its products. The law asserts that if even one of these affiliates is located in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate.

Amazon is seeking a declaratory judgment that the law is invalid and that the new law violates the Constitution’s equal-protection clause, as the statute was specifically aimed at Amazon. It notes that New York state officials have described the statute as the “Amazon Tax.”

The New York State Department of Taxation has stated that it will not comment on the suit until it files a formal reply with the Court.

For additional information, visit:
http://www.nytimes.com/2008/05/02/nyregion/02amazon.html?_r=1&oref=slogin

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Manitoba Teen Charged with Impersonating Teacher on Facebook

A Manitoba teenager has been charged with the offence of personation for creating a Facebook profile in the name of one of his teachers. After the profile was posted, the teacher contacted police, who determined that the profile contained enough information to cause disadvantage to the teacher. While personation is an uncommon charge in Canada, schools across the country are grappling with the need to create policies for dealing with students’ activities online. Last year, 4 Edmonton junior high students were expelled and 20 were suspended in connection with the posting of profiles and comments about their teachers on Nexopia, an Edmonton-based social networking site.

For additional information, visit:
http://winnipegsun.com/News/Manitoba/2008/05/05/5471331-sun.html
http://tinyurl.com/6ym67u

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Court Issues Split Decision In Lucent-Microsoft Patent Row

A federal appeals court reinstated one of two patent cases previously tossed out in the ongoing patent dispute on user-interface technology that pits Alcatel-Lucent against Microsoft Corp. and Dell Inc..

The technology covered by the patent in that matter is a communications protocol that aids information exchange between a host processor computer and a terminal device, like a portable computer or smart phone.

Gateway and Dell were initially sued by Alcatel-Lucent over a series of patents in 2003, and Microsoft subsequently stepped in on their behalf. Alcatel-Lucent had claimed computers made by Gateway and Dell, using Microsoft programs including Outlook and Quicken, infringed on its patents.

For additional information, visit:
http://www.siliconvalley.com/news/ci_9196327

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U.S. Court Sets Formula for Online Music Royalties

In a recent ruling, a U.S. federal judge has set a formula for the royalties to be paid to the American Society of Composers, Authors and Publishers (ASCAP) by AOL, Yahoo and RealNetworks for the online performance of musical works in the ASCAP repertory. Based on the formula, ASCAP, which represents 320,000 music composers, writers and publishers, will be entitled to royalties for its members of up to 2.5% of the music-related revenues of AOL, Yahoo and RealNetworks. The decision applies to the period starting as far back as July 1, 2002, and continuing through December 31, 2009. As a result, it is contemplated that these three major on-line services could be required to pay license fees of up to $100 million, depending on how much music they stream over the Internet.

For additional information, visit:
http://online.wsj.com/article/SB120959909400857751.html

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