On August 6, 2020, Trump issued , prohibiting the use of TikTok in the U.S. after September 20, 2020. The order stated that TikTok collects sensitive personal data from Americans that could be used by the Chinese government and thus poses significant security threats to the U.S. On August 14, Trump issued , demanding that ByteDance “divest all interests and rights” in TikTok’s American operations. Trump’s executive orders spurred to purchase TikTok’s operations in the U.S.

The fight over TikTok’s ownership raises at least two legal concerns for Canada to consider. First, the issue of the state’s regulatory power and interventions by the government due to national security concerns is noteworthy. As two MIT researchers , internet-connected products that collect personal data across borders are ubiquitous. Invoking national security concerns as the main reason for banning ��trans-border products could quickly escalate into , which would not be in any country’s (or company’s) interest.

Due process is also a concern in this case. On August 24, 2020—soon after Trump’s executive order for divestiture—TikTok a lawsuit against the Trump administration, that its executive orders are unconstitutional. Notwithstanding its legal merits, the lawsuit alerts us to the necessity of scrutinizing a government’s regulatory discretion. On February 10, 2021, the Biden administration . Although the Biden administration did not completely call off political pressures on TikTok when it removed the immediate divestiture order imposed by the Trump administration, it gave the company some breathing room.

TikTok’s lawsuit against the Trump administration brings forth an important question about the regulatory relationship between the government and technology companies. Should a government�� be allowed to unilaterally evict a company out of its market without due process? Should Canada follow the model set by the former U.S. administration or embrace a different regulatory scheme?

The second important issue in this story is the rights of TikTok users. For many, TikTok has become more than a lighthearted means of entertainment. The platform has provided income for many users. India, a geopolitical rival of China, where TikTok also happened to be wildly popular, on June 29, 2020. On March 11, 2021, Pakistan banned TikTok for the second time on the grounds that . These bans bring forth concerns about freedom of speech infringements. India’s ban has also cost many Indian citizens, whose self-made videos attracted tens of thousands of views, . The question is, should governments be held liable for losses of income resulting from their banning of a popular app such as TikTok?

Canada may have to confront similar questions, especially regarding technological products made by Chinese companies. It is not too early to start identifying the best legal tools to regulate Canada’s technology market, .

Written by Jingcai Ying, IPilogue Contributing Writer and J.D. student at Osgoode Hall Law School (Class of 2023).

The post The US-China Fight Over TikTok and Its Lessons for Canada appeared first on IPOsgoode.

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COPYRIGHT LAW

CUSMA Implementation

On July 1, 2020, the (CUSMA) officially came into force, replacing the North American Free Trade Agreement (NAFTA). Signed in 2018, the desired effect of CUSMA is to preserve existing trade relations between the three North American countries, and to introduce modernized provisions that address 21st-century trade issues. In particular, the builds upon the legal framework of standards in North America for the protection and enforcement of IP rights.��

Regarding copyright and related rights, Canada is increasing the duration of its term for general copyright protection from 50 to 70 years following the life of the author. Canada will have a two-and-a-half-year transition period to realize this new measure. Additionally, the term of protection for performances and sound recordings will also increase from 70 to 75 years plus life. CUSMA will also increase protection for Rights Management Information (RMI), also known as digital watermarks. While Canada already imposes criminal remedies for altering or removing Technological Protection Measures (TPMs, or digital locks), the Agreement creates new criminal remedies for circumventing RMI. Organizations will have to be mindful when implementing these new provisions to ensure that their practices align with CUSMA’s new obligations.

Canadian Copyright Case Law

91��ɫ v The Canadian Copyright Licensing Agency, 2020 FCA 77

On April 22, 2020, the regarding a dispute between 91��ɫ (“91��ɫ”) and The Canadian Copyright Licensing Agency (“Access Copyright”), holding that the tariffs set against 91��ɫ by the Copyright Board are not mandatory, but dismissed 91��ɫ’s counterclaim regarding the fair dealing guidelines. Access Copyright had sued 91��ɫ for non-payment of tariffs, arguing that they are mandatory and enforceable against anyone who infringes upon a copyright owner’s exclusive rights. Following this decision, both parties filed for leave to appeal the FCA decision to the Supreme Court of Canada.

Tariffs
The FCA held that the tariffs set by the Copyright Board are not mandatory. Because 91��ɫ opted out of the tariffs in 2010, they are not enforceable against 91��ɫ. On this issue, the FCA stated, “Acts of infringement do not turn infringers into licensees so as to make them liable for the payment of royalties. Infringers are subject to an action for infringement and liability for damages but only at the instance of the copyright owner, its assignee or exclusive licensee.”

Fair Dealing
91��ɫ argued that it was not accountable for any tariffs associated with the reproduction of materials because they met their “” and therefore constituted fair dealing pursuant to section 29 of . On this issue, the FCA found that the Federal Court made no palpable error in its analysis, concluding that even though copying followed the guidelines, this did not necessarily make it a fair dealing.

Continuing into 2021
On October 15, 2020, the Supreme Court of Canada granted leave to appeal. This eagerly anticipated decision will affect many of Canada’s educational institutions who opted out of paying tariffs and have also followed the Fair Dealing Guidelines discussed in this decision. Further, a Supreme Court decision in 91��ɫ’s favour will surely cause businesses who rely on similar tariffs to rethink their business model.

Wiseau Studio, LLC et al. v. Harper et al., 2020 ONSC 2504

On April 23, 2020, Justice Paul Schabas’ released his decision in the case of . Filmmaker Tommy Wiseau brought a claim against the defendants, alleging that their documentary, Room Full of Spoons, about Wiseau’s film, The Room, breached his copyright. In his reasons, Justice Schabas provides artists in Canada with an authoritative statement defining documentaries an allowable purpose under the Copyright Act’s fair dealing provisions, “to the extent that a documentary uses copyrighted material for the purposes of criticism, review or news reporting.”

The decision affirms fair dealing as a user’s right, as opposed to a defense to the copyright infringement alleged by the plaintiff, solidifying the balancing of rights and freedoms as a core purpose of the Canadian Copyright Act. In addressing the Copyright Act’s fair dealing provisions, the Court offers useful guidance to documentary filmmakers wishing to stay on-side with section 29 through an analysis of the factors outlined in . A more in-depth discussion can be found . As well, Justice Schabas’ reasons address the Copyright Act’s moral rights provisions, fundamentally finding that criticism or negative tones alone will not trigger a breach of an author’s right to the integrity of a work.

Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada 2020 FCA 100 & CMRRA-SODRAC Inc. v. Apple Canada Inc., 2020 FCA 101

On June 5, 2020, the Federal Court of Appeal released two decisions (2020 FCA 100 and 2020 FCA 101) which ruled on the applicability of the “making available right” (“MAR”) under s. s.2.4(1.1) of the Copyright Act. The FCA found that songwriters are not entitled to royalties when music is first posted online, but only after it has been downloaded. This decision overturns a 2017 ruling from the Copyright Board, which found that composers and songwriters are entitled to two royalties: first when it is made available under a streaming platform such as Apple Music or Spotify, and second when the song is downloaded or streamed.

By way of background, The Society of Composers, Authors and Music Publishers of Canada (“SOCAN”) administers the right to “communicate” musical works on behalf of copyright owners. It filed with the Copyright Board proposed tariffs for certain years for the communication to the public by telecommunication of works in its repertoire through online music services including Apple Music and Spotify. These tariffs are available when a musical work is “communicated.”

After SOCAN had filed its proposed tariffs, the Copyright Act was amended to include the MAR Provision, which reads as follows:

For the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.

This raised the question of whether the mere making available of a work on a server for the purpose of later streaming or download by the public was a “communication” for which a tariff was payable. In 2017, the Copyright Board concluded on the basis of expert witnesses that the double royalty scheme is available.

Stratas J, writing for the FCA, overturned this conclusion and stated that the Copyright Board "skewed its analysis in favour of one particular result" and relied on "leaps of reasoning" that are incompatible with the precedent set out in the Supreme Court of Canada’s (SCC) 2012 Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada decision. In that decision, the SCC concluded that transmission over the Internet of a musical work that results in a download of that work is not a communication.

PATENT LAW��

The Impact of COVID-19 Legislation on the Patent Act and Patentee Rights

(“An Act respecting certain measures in response to COVID-19”) received Royal Assent on March 25, 2020.�� Included in this bill was the addition of section 19.4 to the which significantly changed the rights of patent owners this year. For instance, while section 19.4 allowed the to authorize the government’s use of previously patented inventions to respond to a public health emergency, the Commissioner’s new powers permitted authorization to be granted to other entities as well. In addition, there was no requirement for applicants (be they the government or otherwise) to inform the patentee in advance of applying for authorization to use its patent. This meant that patentees received no notice if an applicant applied to use its intellectual property. Instead, patentees only received notice if the Commissioner granted authorization to the applicant following their submission. Moreover, section 19.4 precluded patentees to an express right of appeal of the Commissioner’s authorization. Instead, patentees were left to rely on section 19.4(8) of the Act and had to apply to the Federal Court to prevent the government (or any applicant) from “making, constructing, using or selling the patented invention in a manner that [was] inconsistent with the authorization.”

While patentees seemingly received little benefit from the Patent Act's amendments mentioned above, the legislative changes offered some positive developments for patent owners. For example, pursuant to s.19.4(5), holders of the patent are compensated for government use, “taking into account the economic value of ‘the authorization and the extent to which they make, construct, use and sell the patented invention.’” Additionally, as of September 30, 2020, the Commissioner can no longer award the government with any authorizations, which effectively serves as an imposed limit on the Commissioner’s powers. While COVID-19 may arguably be captured by other provisions of the Patent Act (cf. s. 19 or s. 21), s. 19.4 clarifies the boundaries of government uses of patents for public health emergencies.��

CIPO Issues New Guidance Document After Federal Court Rejects Problem-Solution Approach to Claim Construction

Following the 2020 Federal Court decision in , CIPO released a new to clarify patentable subject matter under the Patent Act. The court, and CIPO, endorsed the purposive construction approach to constructing claims set out in 2000 by the SCC in and . The new guidelines cover the framework to be followed by patent examiners while identifying certain elements of patent claims as essential. CIPO’s earlier pointed at undertaking claim analysis, which involved identifying the “proposed problem to the disclosed solution.” The Federal Court in Choueifaty clarified this problem-solution test as incorrect for claim construction.

The Federal Court held that a correct approach looks at the entirety of the specification and presumes an element as essential unless demonstrated to the contrary. Purposive construction attempts to give effect to the intentions of the applicant in determining the scope of the claimed monopoly.

This is particularly important for computer-implemented inventions. CIPO, in the , clarified that an algorithm that improves the functioning of the computer would constitute a single invention and is patentable subject-matter. However, the mere use of a computer to execute an algorithm remains nonpatentable subject-matter under subsection 27(8) of the . This update has brought much needed clarity to the subject matter eligibility issues in computer-related patents.

TRADEMARK LAW

Claims to Official Marks not a Complete Defence to an Infringement Claim��

In February 2020, the Federal Court of Appeal upheld the Federal Court’s decision in , finding that public authorities cannot rely on relating to official marks as a complete defence against an infringement claim. At its most basic level, official marks allow public authorities to , even those that may not otherwise be registered as regular trademarks. Quality Program Services Inc. (QPS) brought a Federal Court claim against the Ministry of Energy (MOE) for infringing their “EMPOWER ME” trademark related to energy awareness, conservation, and efficiency services. The MOE had launched a website with the mark “emPOWERme” to educate Ontario residents about the province’s electricity system. In response to QPS’s claim, the MOE sought protection and public recognition of its mark as an official mark pursuant to which states that “no person shall adopt in connection with a business, as a trademark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for… any badge, crest, emblem or mark…adopted and used by any public authority, in Canada as an official mark for goods or services.”

However, the Federal Court was not persuaded that s. 9 provided the MOE complete immunity from an infringement claim. Instead, it was recognized that the infringement rights of a trademark holder, such as QPS under , could not be ignored simply because a public authority has been given public notice of its adoption and use of an official mark, especially when that mark follows a registered trademark which could cause confusion between the two marks, as was the case here. The Federal Court of Appeal further that “a public authority that chooses to use a mark that is confusing to a registered trademark does so at its peril.” As a result of this case, we get more clarity and limitations to the confusing and all-encompassing world of official marks. While it is clear that official marks following an existing trademark do not automatically strike down an infringement claim, the official mark and the preceding trademark must be similar in some way to set off a trademark confusion analysis.

Lack of Use is Insufficient for Opposing a Trademark Application

In , the Federal Court affirmed the Registrar’s decision to reject Pentastar Transport Ltd’s opposition to Fiat Chrysler Automobiles (FCA) US’s trademark application for Pentastar. Pentastar Transport Ltd owns a registered mark Pentastar for its oil and gas services, whereas FCA US applied to register Pentastar for its vehicle engines. Pentastar’s ground of opposition is that FCA US did not possess a genuine intention to use Pentastar for its engines, which contravened s. 30(e) of the old Trade-Marks Act. As summarized��, “opposition proceedings involve a two stage inquiry. First, the opponent bears an evidential burden to establish that the facts alleged to support the issue exist. If established, then the applicant bears a legal burden to show that its application does not contravene the provisions of the Act as alleged.” The Court upheld the Registrar’s factual finding that Pentastar did not adduce sufficient evidence as the factual ground of its opposition. The Court also agreed with the Registrar that “use” and “intended to use” were not synonymous. In this case, this ruling entails that even though FCA US had not started using Pentastar as a trademark on its engines, it did not follow that FCA US had no intention to use it in the future. In fact, there was circumstantial evidence (as summarized��) indicating that FCA US indeed harbored the intention to use Pentastar as a mark for its engines.

United States Supreme Court Developments

In April 2020, the United States Supreme Court decided the case . The Court determined that even an innocent trademark infringer could lose its profits and that wilful infringement is not a pre-condition to a profits award. The Court came to this determination by interpreting which does not mention the condition of wilful infringement. Fossil was liable for $6.7 million in profits to Romag, for using counterfeit Romag fasteners in its manufacturing of leather goods.

In June 2020, the Court in held that a term styled “generic.com” is a generic name for a class of goods or services only if the term has that meaning to consumers. Booking.com sought to register a mark with the USPTO but was denied because “Booking.com” was not a generic name to consumers. Therefore, the term was not held to be generic. The USPTO analyzed the terms “Booking” and “.com” separately. This decision suggests that domain names may need to be marketed to consumers as such to be trademarked.

Trademark Law and Sports in 2020

With all its troubles, 2020 has also been an eventful year for trademark lawyers in sports. In February, a Maryland-based nonprofit Game Plan����against Lebron James and his commercial associates, including Nike, ESPN, and Take-Two Interactive. Game Plan claims that Lebron and his associates had encroached upon its trademark rights by unauthorized use of the registered slogan “I am more than an athlete” to make profits. In April 2020, Michael Jordan����in China that had dragged on for eight years. China’s highest court ruled in favor of Jordan against a Chinese company which had been marketing its sports products under the brand name Qiaodan - a Chinese transliteration of Jordan - since the 1980s.

In September, soccer superstar Leo Messi’s legal team����Europe’s highest court that Messi should be granted the exclusive right to the brand name Messi. Other similar names, such as “Massi,” should be disallowed for commercial purposes to avoid confusing the consumers. Lastly, although the Washington Football Team (formerly, Washington Redskins) changed its name in 2020, it now runs into��. As it turns out, many alternative team names have already been registered by a trademark squatter Martin McCaulay. Washington fans may need to wish for the new year that their team will receive a new name that neither infracts trademark law nor carries racist connotations.

Fashion Trends Followed by Brand Owners throughout the Pandemic��

As it is said, every crisis brings new opportunities. While some members of the general public may have doctor-recommended masks in the early months of the pandemic, they have become a trend for upcoming years. As a result of this trend, big luxury brands tapped into this unchartered territory just after the���� in July. Luxury fashion companies are now monetizing their brand value through this����i.e., face masks and shields, which have become the new reality and necessity of everyday life. Fashion brands like����have already filed applications for their trademarks in classes 9 and 10 with the USPTO and other countries for “Protective” and “Respiratory Masks.” In September,����for its uniquely styled��Toile Monogram print for its��Face Shield, filed for��“protective face shields; protective masks; protective chin shields; [and] protective gloves” (class 9), and “face masks for medical use; Surgical masks; protective face shields for medical use; protective chin shields for medical use; [and] gloves for medical use” (class 10).����

On the other hand, , Nike, and����masks also lead the charts of most searched and purchased masks.��Small and high street brands are attempting to claim proprietary rights in these trademark classes because of the long-term monetary potential. The new fashion ornament brings in value, and the brand owners wish to benefit from damages in infringement and counterfeits cases. Counterfeits are also escalating on e-commerce portals, such as��. A Chinese company has filed a trademark infringement suit for its brand����in the Illinois state. Furthermore, on December 14, 2020 the����announced an initiative to accept expediated examination requests for trademark applications for COVID-19 related goods and services, which include sanitary masks and other things. In view of this, we can predict an����from such luxury and burgeoning fashion brands.����

Bricks and Mortar Presence No Longer Necessary to Establish Use of a Trademark

In the past, the Federal Court of Canada has been unclear as to the fate of travel-related services that do not have a physical presence in Canada, but seek to maintain their Canadian trademark registration through regular use. However, following the Federal Court of Appeal’s decision in , that fate has been clarified in favour of travel-related services. Since 2014, Miller Thompson has tried to expunge Hilton’s WALDORF ASTORIA trademark given that it did not offer physical WALDORF ASTORIA hotel-related services in Canada. As such, Miller Thomson commenced proceedings under s.45 of the Trademarks Act, which would require Hilton to show use of its WALDORF ASTORIA trademark during the three years prior to the proceedings, known as the Relevant Period.

But, on September 9, 2020, the Court of Appeal upheld the Federal Court’s decision that Hilton had demonstrated use of their WALDORF ASTORIA trademark during the Relevant Period. Among other evidence presented by Hilton, during the Relevant Period, Canadians could see the WALDORF ASTORIA trademark when visiting their website and could book reservations in several ways, including directly on the site. As well, Canadians generated $50 million in revenue for Hilton as a result of their stays at WALDORF ASTORIA hotels outside of Canada. Thus, the Court of Appeal summed up the as follows: “so long as consumers, purchasers, or members of the public in Canada receive a material benefit from the activity at issue, it is a service.” This means that online reservations and payment services for later stays outside of Canada are included under the meaning of “hotel services.” Furthermore, a brick and mortar hotel is no longer absolutely necessary to establish use. In fact, in the Court of Appeal’s conclusion, it stated that “the requirements for ‘use’ under section 45 of the Act must adapt to accord with 21st century commercial practices.” For other trademark owners facing the same issue as Hilton, the Federal Court of Appeal provided guidance on how to make a , including website metrics showing that Canadians access their services online and subsequently purchase services as a consequence of their mark being displayed.

Trademark Modernization Act of 2020 Passed

On December 21, 2020, Congress passed the . This bill was enacted to amend the 1946 Trademark Act and authorized third parties "." The bill also introduced a����that would allow any party to petition for the expungement of a registered trademark that is not commercially active. The goal of these amendments was to reduce the number of “” that were on the register despite not being in use, allowing a more productive, competitive commercial trademark market. These amendments are also speculated to affect the longevity of trademark registrations as trademarks become increasingly vulnerable to cancellation. The Trademark Modernization Act of 2020 will certainly continue to generate more discussion and result in changing practices in Canada.

Giuseppina (Pina) D’Agostino is��the Founder & Director of IP Osgoode, the IP Intensive Program, and the IP Innovation Clinic, the Editor-in-Chief for the IPilogue and the Intellectual Property Journal, and an Associate Professor at Osgoode Hall Law School.

With contributions from IPilogue Editors:

Copyright:��Meghan Carlin, Emily Xiang, Joaquin Arias, Sarah Raja,��Saumia Ganeshamoorthy

Patents:��Dan Choi, Gurbir Sidhu,��Khristoff Browning, Jin Xu,��Madelaine Lynch

Trademarks:��Adele Zhang, Aishwerya Kansal,��Jingcai Ying, Eloise Somera, Lauren Chan

Bonnie Hassanzadeh, Nikita Munjal, Sebastian Beck-Watt, and Alessia Monastero

The post 2020 IP Year In Review appeared first on IPOsgoode.

More importantly, an increasingly digitalized economy leaves many national governments frustrated with their limited ability to tax tech companies whose cross-borders businesses do not require a physical presence. Given the global scale of many tech companies, both the and have been developing a new international digital tax model that can help countries collect revenues from non-resident tech companies. However, it is uncertain when a new international digital tax model will come into force. The expects a new digital tax agreement to be reached by mid-2021 but cautions that nothing is certain. The biggest obstacle is the U.S. government, to let other countries levy more taxes on American tech companies.

Without any imminent multilateral tax agreement, have decided to forge their own paths by imposing digital taxes unilaterally. The problem with a proliferation of unilateral digital taxes is that it creates for multinational tech companies and could trigger a trade war that, according to the , could “reduce global GDP by more than 1% annually.”

Where does this current global impasse on digital tax leave Canada? Certainly, a multilateral framework for digital taxes under the OECD model is the most beneficial outcome for Canada, since such a framework allows Ottawa to collect more revenues without antagonizing our trading partners. Another route would be to negotiate with those countries whose tech companies have a significant economic presence in Canada. The problem with this approach is that the U.S., the most important trading partner of Canada, is unwilling to budge on any digital tax matters, which is precisely the reason why OECD has trouble pushing the tax talks forward.

With the current stalemate at the international level, it would seem to make sense for Canada to propose its own digital tax. In fact, a few commentators are calling Ottawa (see and ) to follow the examples of and in imposing its own digital tax without waiting for an international agreement. In fact, has already implemented its own digital tax. is also following a similar path. Although such a move at the national level would likely further strain the trading relationship with the U.S., it might be worth the risk. Together with who have taxed or are considering taxing tech companies, a new digital tax in Canada may incentivize the U.S. to make concessions on a multilateral digital tax agreement to obtain a better deal than the rates imposed by individual countries.

In short, there is a growing global consensus on the urgent need to tax tech giants at an adequate rate. Since nearly all these corporations are American companies, the U.S. remains unwilling to sign on any international agreement that would increase the tax rate on their tech sector. With an uncooperative American government, the world is at the risk of a global trade over a rapidly growing digital economy, which could severely impede the economic recovery from the shocks of the ongoing pandemic. The best scenario for Canada is to work with other partners to pressure the U.S. to accept the multilateral OECD tax framework. Imposing its own digital tax in following the examples of other countries might be one of the ways to achieve that aim.

Written by Jingcai Ying, a contributing editor at the IPilogue and a J.D. candidate at Osgoode Hall Law School (Class of 2023).

The post The International Impasse on Digital Tax and Its Implications for Canada appeared first on IPOsgoode.