The US Court of Appeals, Second Circuit has affirmed that the “first sale” doctrine of US copyright law, codified as section 109(a) of the , does not apply to works manufactured outside of the United States.

In textbook publisher Wiley claimed that Kirstaeng had imported foreign editions of their textbooks and distributed them within the US. This infringed their exclusive right to do the same, as guaranteed to them by section 602(a)(1) of the Copyright Act. Kirstaeng submitted that the first sale doctrine provided a defence to the claim. The first sale doctrine reads, in part, “the owner of a particular copy, lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy”.

An earlier Supreme Court case (), involved hair care products (and their copyrighted labels) manufactured within the US, exported to foreign countries and then re-imported by a third party for sale within the US. The court unanimously found that the first sale doctrine does limit the scope of a copyright holder’s exclusive right of distribution in the case of copies manufactured within the US.  They chose not to resolve the issue of whether this was true for copies manufactured outside of the US.

In Kirstaeng, the trial court held that as the textbooks were manufactured outside of the United States, they were not “lawfully made under this title” and thus the first sale doctrine was not available as a defence. Kirstaeng appealed the decision. The Court of Appeals followed the decision of the trial court, holding that “lawfully made under this title” referred to copies produced under the US Copyright Act, rather than under the laws of another country. Section 602(a)(1) contained no such limiting language, and so Wiley’s exclusive right of distribution remained intact regardless of where the textbooks were manufactured.

At present, Canadian law does not grant the copyright holder exclusive distribution rights. However, the changes that Bill C-32 proposed to make to section 3(1) of Canada’s would have created a . While Bill C-32 died with the dissolution of the 40th Parliament, the current Conservative majority government is expected to shortly. There is also no codified first sale doctrine in Canadian law, although the Supreme Court has of the idea.

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Matt Lonsdale is a graduate of the Schulich School of Law at Dalhousie University.

On July 27, 2011, the UK Supreme Court released its in Lucasfilm Limited v. Ainsworth. While Andrew Ainsworth is presumably happy with the court’s ruling that the Storm Trooper armour from the Star Wars franchise is utilitarian and does not receive protection under UK copyright law, others have expressed concern with the court’s decision on the second issue of the case: the justiciability of foreign copyright laws by UK courts.

The history of the case has been detailed several times here on IPOsgoode, first when it and then again when it was . At the Supreme Court level, two issues were raised. The first concerned the armour itself. UK copyright law provides protection to “sculptures”, but not to purely functional items. This was an important detail; if the armour was purely functional and did not receive copyright protection, then Lucasfilm could not succeed in their allegations that Ainsworth had infringed their copyright by selling reproductions of the armour. Counsel for Lucasfilm submitted that as the helmets were merely props used to illustrate a fictional universe, they could not be considered functional items. Regardless of how they were depicted in the films, their purpose was not to “to keep their wearers warm or decent or to protect them from injury in an inter-planetary war”, but merely to “make a visual impression on the filmgoer”. The court rejected this argument, finding that the armour “was utilitarian in the sense that it was an element in the process of production of the film”. In doing so, the Supreme Court largely upheld the decision of the Court of Appeal.

The Supreme Court reversed the Court of Appeal on a few points. One of these was the effect that the relatively recent emergence in UK law of registered design rights, which provides some limited protection to functional items, should have on the court’s interpretation of the word “sculpture”. The Supreme Court held that while functional items received less protection than artistic works, this was a policy decision that should not be disturbed “and the Court should not, in our view, encourage the boundaries of full copyright protection to creep outwards”.

Lucasfilm had had more success against Ainsworth in the US courts under US copyright law, obtaining a default judgement against him in the sum of $20 million. Rather than asking the UK courts to enforce the US judgement, they instead sought to obtain a UK judgement directly against Ainsworth by arguing that the UK courts should apply US copyright law to the case, thus raising the second issue of the case: the justiciability of foreign copyright laws in the UK courts. The Court of Appeal, by extending the decision from an to apply to foreign intellectual property rights, had held that UK courts did not have jurisdiction to hear claims of infringement of foreign copyright laws. The Supreme Court reversed this aspect of the decision, holding that legal developments subsequent to that case had limited this principle to apply only to questions of title of “immovable property”. Claims of infringement of foreign copyright laws were justiciable, provided the UK courts had personal jurisdiction over the defendants. It is unclear whether damages would be calculated according to the rules of the UK or of the foreign country.

The decision has generated mixed reactions. Some commentators have speculated that the UK will see an increase in , with UK citizens being sued in the UK courts for actions which, while legal in the UK, are illegal under the copyright laws of another country. Others have been , and have pointed out that the decision is with the .

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European Union contract law may receive a shot in the arm next October, if Viviane Reding, EU Justice Commissioner and Vice-President of the European Commission, makes good on her for a new legal instrument aimed at harmonizing contract law in the more than 27 legal systems which currently comprise the EU.

While the European Single Market is now approaching its 20th anniversary, contract law has continued to be developed at the national level. This has lead to problems in the development of the single market. Consider the various contracts that might come into play in one of the most basic and common of cross-border transactions: the online purchase of a small consumer good. A number of services must be performed in order for the purchase to successfully reach the consumer. The web site must be hosted and maintained, the payment must be processed and the goods must be retrieved and shipped. It’s unlikely that even the largest of multinational corporations will perform all of these services themselves; most will retain the services of other, specialized companies and so even a simple transaction can involve multiple contracts in multiple jurisdictions. In order to minimize the potential for unexpected liability under unfamiliar laws, some companies have elected not to make their products and services available to all EU residents.

Commissioner Reding addressed this and similar problems in a at the “Towards a European Contract Law” conference in Leuven, Belgium. “The idea of a single market is that products and services of higher quality and lower price become available to consumers because of economies of scale. However, it appears that we do not have economies of scales yet in all fields, and that contract law is one of the reasons for this”. While numerous solutions on how to best address this have been discussed over the years, the European Commission on European Contract Law has settled on a set of “voluntary and optional” guidelines which would exist alongside existing national contract law. Although the details of this new legal instrument have not yet been determined, Commissioner Reding has pledged to deliver a legislative proposal by October 2011. Her efforts were of the European Parliament on June 8, 2011.

As the basis for economic transactions both large and small, contract law is pervasive in the daily life of consumers. In addition to the upcoming legislative proposal, EU residents' shopping experience will also be affected by the Consumer Rights Directive, which was . The result of years of lobbying and negotiation, the directive seeks to establish a “compromise between necessary consumer rights and justified business interests”. Among other things, the legislation establishes harmonized rules for electronic contracts and withdrawal rights for off-premises sales. As can be the case with attempts to harmonize laws across the European Union, in certain respects consumer rights law will actually be weakened in some jurisdictions. However, these small losses are more than offset by the gains and the new legislation has by consumer advocacy organizations.

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A claims that in 2009, 59% of the intellectual property rights in the work product of contractors hired by Canadian government agencies were retained by the agencies themselves. This is a departure from the goals of a government policy dating back to 2000, which states that such rights should remain with contractors.

The states that one of the socio-economic objectives pursued through Crown Procurement Contracts is the stimulation of economic growth through the commercialization of intellectual property. As the private sector is best placed to achieve this goal, the intellectual property rights in the work product (or “foreground”) of contractors should remain with the contractors, unless one of a defined list of exceptions is invoked by the Crown. The job of monitoring compliance with the policy rests with Industry Canada and the Treasury Board Secretariat.

The report entitled, , was prepared for Industry Canada by consulting firm, TDV Global, in December of 2010. Relying on data from the Government-Wide Procurement Reporting System, they found that while all departments were aware of the policy, the Crown continued to retain 59% of all relevant intellectual property rights overall. In some departments, this figure reached as high as 90%. The report declined to reach a conclusion on whether these abnormally high rates were “the product of erroneous data, the nature of the work, or a failure to comply with the Policy”. 95 contracts were reviewed as case studies, out of which 12 of were singled out as examples of the misapplication of the exceptions clause. This included “[t]wo contracts that claimed a national security exception when there was no evidence of any national security issue in the contract”. The report also found a lack of documentation detailing why exceptions were considered appropriate in specific cases. The report concludes by suggesting that the roles of Industry Canada and the Treasury Board Secretariat need to be more clearly defined to allow them to better fulfill their monitoring duties and that departments needs to be better educated on the best practices to follow while structuring contracts.

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American motor club AAA has in support of . The bill, which aims to “protect the rights of consumers to diagnose, service, maintain, and repair their motor vehicles” by placing a duty on automakers to make necessary information and tools available, has some automakers concerned that they will be required to divulge trade secrets.

As automotive technology has advanced and computer systems have become integral components, servicing modern vehicles has begun to require access to increasingly specialized information and tools. The concern is that if an automaker chooses not to make these available, independent repair shops may be unable to repair modern vehicles and will have no choice but to refer owners to dealership-affiliated repair shops. In the spirit of “Promoting competition in price and quality for the diagnosis of problems, service, maintenance, and repair of motor vehicles”, H.R. 1449 places a duty on automakers to make available to owners and repair shops all information necessary to service their vehicles. Complementary duties are introduced with regards to tools and replacement parts. The bill also has a minor privacy component: section 2(a) states that “Car owners have the right to choose where and to whom information generated by their vehicle and vehicle computers is sent”.

H.R. 1449 is not the first bill of its kind to be introduced, nor is it the first to use the name The Right to Repair Act. A federal Right to Repair Act was proposed as early as 2002, and similar bills have been introduced in several state legislatures.

While the desire to promote competition and protect independent repair shops is laudable, , allowing third parties to produce generic replacement parts for their vehicles. Some independent repair shops agree with them. According to independent shop owner Diane Larson, all the necessary tools and information . Of a similar bill in the Massachusetts state legislature, she said “Passing this bill doesn't help anyone, except for the parts manufacturers”.

In the US, trade secrets fall under state jurisdiction. The majority of states have chosen to adopt the provisions of the , a model law drafted by the National Conference of Commissioners on Uniform State Laws. The UTSA defines a trade secret as information that has economic value, is not readably ascertainable by others who might gain economic value from it and is the subject of reasonable efforts to maintain its secrecy.

Predictions about the death of independent repair shops have been made before. Donny Seyfer, quoted in a , talked about the mood in the industry when he started working as a mechanic in 1983: “It was doom and gloom. 'Independent shops aren't going to be able to fix anything'”. But just as claims that proved not to be true, independent repair shops have not died out. With over 250,000 automotive technicians by independent repair shops in the United States, and a of aftermarket parts manufacturers and distributors coming out in support, the Right to Repair Act has a large fanbase. However, the large auto manufacturers are to the need to protect their intellectual property and will certainly not let the bill pass without some lobbying of their own.

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When Parliament was dissolved on March 25, 2011, over a dozen criminal justice related bills died with it. During their subsequent election campaign, the Conservative party, and pass it through Parliament within 100 days of returning to work on June 2.

Now armed with a majority government, they stand poised to make good on their promise in what one criminal defence lawyer “the most comprehensive agenda for crime reform since the Criminal Code was introduced”.  Stoking the fires of public concern is a produced by the Parliamentary Information and Research Service of the Library of Parliament.

Currently, section 319 of the Criminal Code makes it an offence to incite hatred against an identifiable group by communicating statements in a public place. Clause 5 of , the Investigative Powers for the 21st Century Act, modifies the definition of “communicating” to mean “communicating by any means and includes making available”. The for the bill states that this could include “creating a hyperlink that directs web surfers to a website where hate material is posted”. The notion that the omnibus crime bill might make it a crime to link to web sites which contain hate speech has about the “Internet police” and has been called “an attack on our liberty”. However, legislative summaries are not binding interpretations of legislation and a conviction under section 319 would still require that the accused purposefully incited hatred by posting the link.

Hyperlinking is not the only aspect of the Internet that would be affected by the omnibus bill. The original bills, which were sponsored by Minister of Justice Rob Nicholson and Minister of Public Safety Vic Toews, can be found on Parliament’s LEGISInfo site and . In addition to C-51, they include C-50 and C-52, the “lawful access” bills which prompted an open letter from the Federal and Provincial Privacy Commissioners expressing their concern over the extent which the bills expanded police surveillance powers. The bills would place new obligations on Internet Service Providers to design their networks in ways which facilitate surveillance, and make it easier for police officers to obtain subscriber information from ISPs or to require ISPs to preserve data without a court order. They would allow judges to order ISPs to release transmission data to police when there are “reasonable grounds to suspect” that an offence has been committed. Lawful access continues to in its bundled form, with one commentator suggesting that the omnibus bill will be and without sufficient debate over its consequences.

Clause 11 of C-51 removes the reference to specific technologies contained in section 371 of the Criminal Code, which prohibits the sending of a “telegram, cablegram or radio message” under a false name. Similar references are removed from section 372, which is concerned with the sending of false information intended to alarm or harass, bringing messages sent through email or social networks into the sphere of conduct prohibited by the sections.

Beyond the privacy and technology context the bill would, , eliminate pardons and house arrest for perpetrators of serious crimes and create mandatory minimum sentences for drug laws. Now that they have a majority government, the Conservative’s motivation for bundling the bills together is not clear. Presumably it is simply to speed up the process; after all, they no longer need to force opposition parties into supporting the bill in its entirety in order to avoid looking soft on crime.

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Software giant Microsoft has for a cool $8.5 billion. Microsoft’s purchase comes in the wake of Skype filing to become a publicly traded company. Microsoft CEO Steve Ballmer commented that “Skype was on a path to IPO, and we said, 'Hey, we think at least from our perspective, it would be better if we owned this company.'”

Skype was founded in 2003 and rose to become one the largest players, if not the largest, in the Internet telephony sphere. Internet telephony requires a fair amount of bandwidth. Skype usually associated with file sharing networks to distribute this burden to the end users of their products, saving them from having to invest heavily in servers and expensive bandwidth. Skype’s business model relies on offering Skype-to-Skype calls for free, while charging for calls made to regular phones and other premium services. Skype has posted a profit only once in the last five years.

The acquisition places Microsoft in a position to bundle Skype’s telephony capabilities with other Microsoft products, potentially allowing users to make calls from within the Outlook email client, from their Xbox game console or via mobile phones based on the Windows Phone platform. Microsoft has to “continue to invest in and support Skype clients on non-Microsoft platforms.” This may not be welcome news for law enforcement agencies, who have long bemoaned the difficulties in eavesdropping on calls made using the service. In 2009, The Register reported that the National Security Agency was to anyone able to offer a reliable solution to the eavesdropping problem.

While some commentators that Microsoft’s purchase was motivated by a desire to keep Skype out of the hands of Google and Facebook, suggested that the purchase might be good news for Facebook. Microsoft is an investor in the social networking company, and could use Skype’s peer-to-peer technology to offer voice and video chat services to Facebook’s over 500 million users without incurring crippling overhead costs.

Skype has had a complicated history of ownership. The company was purchased by eBay in 2006 for $2.6 billion. The two companies proved to be a poor fit, and eBay later sold 70% of the company to a which included the Canada Pension Plan Investment Board. In 2009, Google , but ultimately decided against it. The company has over 107 million users, who average 100 minutes a month of usage.

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Matt Lonsdale is a JD candidate at Dalhousie University.

On April 15, 2011, a Texas court Google to pay $5 million to Bedrock Computer Technologies for patent infringement. The covers a method of storing and retrieving data which is claimed to be used in a number of versions of the Linux kernel.

The Linux kernel forms the core of not just the operating system which runs Google's many servers, but also of their Android operating system for mobile phones. The lawsuit was filed in 2009 against Google, Yahoo, MySpace, Amazon, PayPal, Match.com, AOL, CME Group, Softlayer and Citiware. The case was decided by a jury in the Eastern District of Texas. The jury rejected Google's defense that they had not infringed the patent and that the patent was invalid, although the amount of the claim was to $5 million from $180 million. The claims against Google were the first to reach a verdict and it is expected that Bedrock's success there may lead to settlements with the other defendants. Google will likely appeal the settlement.

While the term Linux is often used to describe a complete operating system, the name actually refers only to the very core of the operating system, known as the kernel. The kernel is usually distributed together with a graphical user interface, device drivers and useful applications in order to comprise a useful system.

Unlike Microsoft's Windows and Apple's OSX, operating systems built around the Linux kernel are not distributed by only a single company. A number of companies have developed business models based around selling customized operating systems built around the Linux kernel, often bundled with technical support contracts. The lawsuit targets just a handful of the many large companies which make use of these operating systems. Perhaps motivated by a desire to protect its business model and its customers, , one of the most prominent of the Linux distribution companies, is suing Bedrock in an attempt to have the patent invalidated.

While one commentator saw Google's loss as having for the IT industry, others were and felt that this was merely an example of a bad decision in a lower court which would be overturned on appeal.

Google has criticized frivolous patent litigation and advocated for patent reform. In a dated April 21, 2011, a spokesman for Google wrote “The recent explosion in patent litigation is turning the world's information highway into a toll road, forcing companies to spend millions and millions of dollars defending old, questionable patent claims, and wasting resources that would be much better spent investing in new technologies for users and creating jobs”. Google is also currently facing a filed by Oracle concerning the Java programming language.

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Matt Lonsdale is a JD candidate at Dalhousie University.

On April 20, 2011, the UK High Court released its in the judicial review of the Digital Economy Act. The Act was challenged on five grounds by two prominent British internet service providers (ISPs), TalkTalk and BT. Justice Parker largely rejected their submissions, with the ISPs finding success on only one of the five grounds.

The Act places an obligation on ISPs to notify subscribers when a report is filed with them that an Internet Protocol address associated with their account is engaging in file sharing activities which infringe copyright. With the appropriate court order, rights holders would be able to obtain the personal details of subscribers they have filed reports on in order to commence litigation against them. If these measures were not successful in reducing illegal file sharing, further “technical obligations” could be imposed on ISPs. These might require the ISPs to limit the Internet access of certain subscribers by engaging in bandwidth shaping or even the temporary suspension of accounts.

TalkTalk and BT submitted that the Act was incompatible with several European Union directives on electronic privacy and commerce, and that it constituted a technical regulation on services as contemplated by the Technical Services Directive which should have been submitted to the EU Commission for review while still in draft form. They allege that it violates the Authorisation Directive by requiring ISPs to fund 25% of the operating costs of the scheme, including the cost of setting up an appeals body for subscribers who feel they have been unjustly reported. These costs, they argued, should be characterized as “administrative charges” of a type a prohibited by the Directive. Finally, they argued that the restrictions on privacy and freedom of speech that the Act would impose are disproportional to the limited benefits it would provide,

The ISPs were unsuccessful on all but the costs argument, and even there they found only . Justice Parker agreed that passing the cost of establishing an appeals body on to ISPs had the effect of imposing administrative charges on them. He was not as sympathetic with regards to the cost of sending notifications to subscribers, which he viewed not as administrative charges but merely as internal costs incurred by the ISPs in meeting their statutory duties.

British ISPs were understandably disappointed with the outcome of the judicial review. Darren Famden, marketing head for Entanet “[T]he government seems determined to get this controversial and poorly considered Act implemented no matter what and seem to have little consideration for the views of one of the two main industries to be affected by it”.

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