Professional Documents
Culture Documents
Toronto Computers Lawyers Group (2006-2007)
Toronto Computers Lawyers Group (2006-2007)
Lawyers Group
June 26, 2007
The Year in Review
(2006-2007)
Barry B. Sookman
bsookman@mccarthy.ca
416-601-7949
McTet2 #3697855
Contracting and E-
Commerce Issues
Remedies for Breach of Outsourcing 3
Agreements
Vertex Data Science Ltd v Powergen Retail Ltd [2006] EWHC 1340 (Comm)
Vendor seeking to prevent customer from terminating a BPO outsourcing
contract where fees payable would be £1.1 billion over 10 years, where sole
termination fee was £11.5 million and limit of liability was £12 million.
“In these circumstances I do not consider that it is appropriate to grant
injunctive relief which will have the effect of compelling the parties to work
together. Nor do I consider that the terms of the contract are sufficiently
precisely defined to indicate to Powergen precisely what is required of it if it is
not to prevent or hinder Vertex from performing its functions under the MSA…”
“These sophisticated parties included in their contract clause 11 which excludes
liability for loss of profit, loss of contract and loss of goodwill and imposes a cap
on each party's liability in the aggregate sum of £12 million. Of course there will
be issues as to the proper construction and applicability of these provisions and
Vertex also contends, somewhat implausibly as it seems to me, that they are
unfair and as such unenforceable. However that may be, it is not immediately
obvious to me that it would be unjust for Vertex to be confined to such remedy
in damages as is determined to be the extent of the bargain which it struck.”
4
Click Fraud
Payday Advance Plus, Inc. v. Findwhat.com, Inc. 478 F.Supp.2d 496
(S.D.N.Y.,2007)
“The facts alleged in the Complaint, if taken to be true, suggest that
Findwhat could have violated its implied covenant by inflating the bidding
prices for search terms and by directing Advertising to generate “clicks”
on Payday's website by people or “bots” who had no purpose for visiting
the site other than to generate revenues for Findwhat and Advertising.
Because this tactic would allow Findwhat to increase its profits solely at
its discretion and with no benefit to Payday, it is plausible that it could
be found to “destroy[ ] or injur[e]” Payday's rights under the contract…It
is furthermore likely that a reasonable advertiser entering into such a
contract would expect that, whatever the external risks of unproductive
“clicks,” it would not be subjected to unbounded increases in its prices at
the hands of its promisor or at its promisor's direction.”
9
Click Fraud
Findology Interactive Media Inc. v. Revquest Technologies Inc., 2007 NSSM 13
(CanLII)
“Based on the fact that the Defendant has not provided any corroborating
evidence of the alleged fraudulent traffic, I dismiss that defence…
In doing so I am mindful of the language of the agreement which states
that RevQuest may at its sole discretion credit back click through revenue
which it believes are fraudulent or invalid in nature.
While the contract clearly gives RevQuest the discretion to do so, such
discretion must be exercised in good faith and objectively and consistent
with the parties’ expectations at the time of entering into the contract…
To put it plainly, the company in the position of RevQuest should be able
to provide some objective verification of its position that the traffic was
fraudulent. It is not sufficient to in effect merely say it is fraudulent
traffic because we say it is fraudulent traffic. That puts the company in
the position of Findology into an impossible situation.”
10
Conversion of Intangibles
Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283
(N.Y.C.A.2007)
Is a claim for the conversion of electronic data
cognizable under New York law”
Nationwide repossessed systems and denied Thyroff
access to his computers, electronic records and data.
Thyroff was unable to retrieve his customer information
and other personal information that was stored on the
computers.
19
Conversion of Intangibles
Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (N.Y.C.A.2007)
“It cannot be seriously disputed that society's reliance on computers and
electronic data is substantial, if not essential. Computers and digital
information are ubiquitous and pervade all aspects of business, financial and
personal communication activities. Indeed, this opinion was drafted in
electronic form, stored in a computer's memory and disseminated to the Judges
of this Court via e-mail. We cannot conceive of any reason in law or logic why
this process of virtual creation should be treated any differently from production
by pen on paper or quill on parchment. A document stored on a computer hard
drive has the same value as a paper document kept in a file cabinet…
In light of these considerations, we believe that the tort of conversion must keep
pace with the contemporary realities of widespread computer use. We
therefore answer the certified question in the affirmative and hold that the type
of data that Nationwide allegedly took possession of-electronic records that were
stored on a computer and were indistinguishable from printed documents-is
subject to a claim of conversion in New York. Because this is the only type of
intangible property at issue in this case, we do not consider whether any of the
myriad other forms of virtual information should be protected by the tort.”
20
Conversion of Intangibles
OBG Limited and others v. Allan [2007] UKHL 21
“The economic torts which I have discussed at length are highly
restricted in their application by the requirement of an intention to
procure a breach of contract or to cause loss by unlawful means. Even
liability for causing economic loss by negligence is very limited. Against
this background, I suggest to your Lordships that it would be an
extraordinary step suddenly to extend the old tort of conversion to
impose strict liability for pure economic loss on receivers who were
appointed and acted in good faith. Furthermore, the effects of such a
change in the law would of course not stop there. Hunter v Canary Wharf
Ltd. [1997] AC 655, 694 contains a warning from Lord Goff of Chieveley
(and other of their Lordships) against making fundamental changes to the
law of tort in order to provide remedies which, if they are to exist at all,
are properly the function of other parts of the law.” per Lord Hoffman
21
Conversion of Intangibles
OBG Limited and others v. Allan [2007] UKHL 21
“This prompts a further question: why should this extension of the tort of
conversion be confined to cases where the intangible rights are specially
recorded in a document? I would like to think that, as a mature legal
system, English law has outgrown the need for legal fictions. There was a
time when John Doe and Richard Roe were popular characters. They had
to be parties to some forms of action. When they were in their prime
their names appeared again and again in the law reports. English law has
moved on. John Doe and Richard Roe are no more. So here, if there is to
be a limit to the types of intangibles which attract a remedy in
conversion, this limit should be capable of being articulated and justified
openly, not by reference to fiction piled upon fiction.” per Lord Nicholls
of Birkenhead
22
Conversion of Intangibles
OBG Limited and others v. Allan [2007] UKHL 21
“The better approach today is to discard the fictional significance of a
piece of paper. Instead one should seek to identify the common
characteristic of the intangible rights in respect of whose
misappropriation English law, as a matter of reality, already provides the
remedy of conversion. The common characteristic, it seems to me, is that
the rights protected in this way are contractual rights. No principled
reason is apparent for attempting, for this purpose, to distinguish
between different kinds of contractual rights.”
“Whether the law on conversion should extend beyond contractual rights
and embrace other forms of intangibles is not a matter to be pursued on
this occasion. This further step has been taken elsewhere in some parts of
the common law world. But other forms of intangible rights, such as
intellectual property, raise problems of their own. These problems are
best considered when they arise.” Lord Nicholls of Birkenhead; see also
Baroness Hale of Richmond.
IP Issues
24
Importance of IP
Gowers Review of Intellectual Property (London, Nov. 2006) http://www.hm-
treasury.gov.uk/media/53F/C8/pbr06_gowers_report_755.pdf “The
Intellectual Property (IP) system provides an essential framework both to
promote and protect the innovation and creativity of industry and artists”.
“Innovative ideas create value, whether they are improved products, new
brands or creative expressions. As a result, IP rights – the means by which
these assets are owned – have become a cornerstone of economic activity.”
“However, while global and technical changes have given IP a greater
prominence in developed economies, they have also brought challenges.
Ideas are expensive to make, but cheap to copy. Ideas are becoming even
cheaper to copy and distribute as digital technology and the Internet reduce
the marginal cost of reproduction and distribution towards zero. As a result,
the UK’s music and film industries lose around twenty per cent of their
annual turnover through pirated CDs and illegal online file sharing.
Furthermore, global markets must contend with rights that remain largely
national in scope.”
25
Importance of IP
Gowers Review of Intellectual Property
“Counterfeit goods and piracy are damaging the UK’s creative
industries, as well as threatening jobs. The Review recommends,
inter alia:
consulting to ensure that an effective and dissuasive system of
damages exists for civil IP cases. This will provide an effective
deterrent to IP infringement;
matching penalties in the physical and digital world for IP
infringement. This will remove the current unjustifiable anomaly
whereby infringement in the digital world carries softer penalties
than infringement in the physical world. This is particularly important
given that so much infringement now occurs via digital media”.
26
Databases
Robertson v. Thomson Corp., [2006] 2 S.C.R. 363
“Section 2 of the Copyright Act, as noted above, defines a
compilation as an original work that is created as a result of
selection or arrangement…We note that the use of the disjunctive
“or” in s. 2 is significant. The Copyright Act does not require
originality in both the selection and arrangement. Similarly, and
with all due respect to Weiler J.A.’s contrary finding, we agree with
the Publishers that a reproduction of a compilation or a collective
work need not preserve both the selection and arrangement of the
original work to be consistent with the Publisher’s reproduction
rights.”
Protection for Collective Works and 35
Databases
Robertson v. Thomson Corp., [2006] 2 S.C.R. 363
“Viewed “globally”, to use the language of this Court in CCH, Info Globe Online and
CPI.Q are different selections than the selections that they incorporate. They are
compilations of individual articles presented outside of the context of the original
collective work from where they originated. The resulting collective work
presented to the public is not simply each of the collective works joined together —
it has become a collective work of a different nature.”
“Notwithstanding the foregoing, we part ways with Weiler J.A. regarding the CD-
ROMs. In our view, the CD-ROMs are a valid exercise of the Globe’s right to
reproduce its collective works (or a substantial part thereof) pursuant to s. 3(1) of
the Copyright Act.”
“The user of the CD-ROM is presented with a collection of daily newspapers which
can be viewed separately. When viewing an article on CD-ROM after searching for a
particular edition, the other articles from that day’s edition appear in the frame on
the right-hand side of the screen. To pass muster, a reproduction does not need to
be a replica or a photographic copy. But it does need to remain faithful to the
essence of the original work. And, in our view, the CD-ROM does so by offering
users, essentially, a compendium of daily newspaper editions.” *(Emphasis added)
36
Fair Use
Perfect 10 v. Google, Inc., 2007 WL 1428632 (9th Cir. 2007)
“Although Perfect 10 has succeeded in showing it would prevail in its prima facie
case that Google’s thumbnail images infringe Perfect 10’s display rights, Perfect
10 must still show a likelihood that it will prevail against Google’s affirmative
defense. Google contends that its use of thumbnails is a fair use of the images
and therefore does not constitute an infringement of Perfect 10’s copyright. See
17 U.S.C. § 107.
The fair use defense permits the use of copyrighted works without the copyright
owner’s consent under certain situations. The defense encourages and allows the
development of new ideas that build on earlier ones, thus providing a necessary
counterbalance to the copyright law’s goal of protecting creators’ work product.
“From the infancy of copyright protection, some opportunity for fair use of
copyrighted materials has been thought necessary to fulfill copyright’s very
purpose . . . .” Campbell, 510 U.S. at 575. “The fair use doctrine thus ‘permits
[and requires] courts to avoid rigid application of the copyright statute when, on
occasion, it would stifle the very creativity which that law is designed to foster.’
” Id. at 577 (quoting Stewart v. Abend, 495 U.S. 207, 236 (1990)) (alteration in
original)”
39
Fair use
Perfect 10 v. Google, Inc., 2007 WL 1428632 (9th Cir. 2007)
“We must be flexible in applying a fair use analysis; it “is not to be simplified with
bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case
analysis. . . . Nor may the four statutory factors be treated in isolation, one from
another. All are to be explored, and the results weighed together, in light of the
purposes of copyright.” Campbell, 510 U.S. at 577-78; see also Kelly, 336 F.3d at 817-
18. The purpose of copyright law is “[t]o promote the Progress of Science and useful
Arts,” U.S. CONST. art. I, § 8, cl. 8, and to serve “ ‘the welfare of the public.’ ” Sony
Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 n.10”
In applying the fair use analysis in this case, we are guided by Kelly v. Arriba Soft
Corp., which considered substantially the same use of copyrighted photographic images
as is at issue here. See 336 F.3d 811. In Kelly, a photographer brought a direct
infringement claim against Arriba, the operator of an Internet search engine. The
search engine provided thumbnail versions of the photographer’s images in response to
search queries. Id. at 815-16. We held that Arriba’s use of thumbnail images was a fair
use primarily based on the transformative nature of a search engine and its benefit to
the public. Id. At 818-22. We also concluded that Arriba’s use of the thumbnail images
did not harm the photographer’s market for his image. Id. at 821-22.”
40
Fair Use
Perfect 10 v. Google, Inc., 2007 WL 1428632 (9th Cir. 2007)
“Google’s use of thumbnails is highly transformative. In Kelly, we concluded that
Arriba’s use of thumbnails was transformative because “Arriba’s use of the images
serve[d] a different function than Kelly’s use—improving access to information on
the [I]nternet versus artistic expression.” Kelly, 336 F.3d at 819. Although an
image may have been created originally to serve an entertainment, aesthetic, or
informative function, a search engine transforms the image into a pointer
directing a user to a source of information. Just as a “parody has an obvious claim
to transformative value” because “it can provide social benefit, by shedding light
on an earlier work, and, in the process, creating a new one,” Campbell, 510 U.S.
at 579, a search engine provides social benefit by incorporating an original work
into a new work, namely, an electronic reference tool. Indeed, a search engine
may be more transformative than a parody because a search engine provides an
entirely new use for the original work, while a parody typically has the same
entertainment purpose as the original work… Accordingly, we conclude that
Google’s inclusion of thumbnail images derived from infringing websites in its
Internet-wide search engine activities does not preclude Google from raising a fair
use defense.” (Emphasis added)
41
Fair Use
Perfect 10 v. Google, Inc., 2007 WL 1428632 (9th Cir. 2007)
“We conclude that the significantly transformative nature of Google’s search engine,
particularly in light of its public benefit, outweighs Google’s superseding and
commercial uses of the thumbnails in this case. In reaching this conclusion, we note the
importance of analyzing fair use flexibly in light of new circumstances. Sony, 464 U.S. at
431-32; id. at 448 n.31 (“ ‘[Section 107] endorses the purpose and general scope of the
judicial doctrine of fair use, but there is no disposition to freeze the doctrine in the
statute, especially during a period of rapid technological change.’ ”)… We are also
mindful of the Supreme Court’s direction that “the more transformative the new work,
the less will be the significance of other factors, like commercialism, that may weigh
against a finding of fair use.” Campbell, 510 U.S. at 579. (Emphasis added)
Accordingly, we disagree with the district court’s conclusion that because Google’s use
of the thumbnails could supersede Perfect 10’s cell phone download use and because the
use was more commercial than Arriba’s, this fair use factor weighed “slightly” in favor of
Perfect 10. Perfect 10, 416 F. Supp. 2d at 849. Instead, we conclude that the
transformative nature of Google’s use is more significant than any incidental superseding
use or the minor commercial aspects of Google’s search engine and website. Therefore,
the district court erred in determining this factor weighed in favor of Perfect 10.”
42
“distribution”?
Chan Nai Ming v HKSAR [2007] HKEC 908 (H.K.C.A.)
“The point may be illustrated by two commonplace examples:
(a) An academic publishes a book review which he has written on his computer
and stored on his hard disk as an electronic document file. His friends A, B and C
ask for copies. The academic creates electronic copies and sends the reproduced
document files as e-mail attachments to A, B and C. Giving “distribution” its
ordinary meaning, he has distributed electronic copies of his work without
delivery of any physical storage device to the recipients.
(b) A computer user decides to install anti-virus software on his computer and
purchases an online copy of such a program. He pays by credit card and a copy of
the program is transmitted to him via the internet to be downloaded onto his
computer and activated to give protection against computer viruses. That copy is
in electronic form and has been bought, sold and delivered via the medium of the
internet without anyone delivering a disk or other storage medium containing that
program. This is a common method adopted for distributing copies of computer
programs. Each electronic copy sold is distinguishable from any other such copy
and each commonly requires a distinct code or “product key” for activation.”
Is transmitting a file over Bit Torrent a 46
“distribution”?
Chan Nai Ming v HKSAR [2007] HKEC 908 (H.K.C.A.)
“There is also no legal reason to confine distribution of copies to cases
involving delivery by physical means. “Distribution” is not defined in
the Ordinance and should be given its ordinary meaning. In the present
case, the evidence showed that upon being accessed by downloaders
seeking to obtain a copy of the relevant film, the appellant’s computer
reproduced the infringing electronic copy (which remained on his hard
disk) in the form of packets of digital information which were sent to
the downloaders and reassembled by their computers in the correct
sequence to constitute an entire infringing copy of that film. In my
view, that process in aggregate is aptly described as involving the
appellant’s creation of infringing electronic copies (transient or
otherwise) of the film and their distribution directly or indirectly to
each member of each swarm.”
Is making a file available over a P2P 47
service a “distribution”?
U.S. v. Shaffer 472 F.3d 1219 (10th .Cir.2007)
“Under Section 2252A(a)(2), it is unlawful for a person knowingly to distribute child
pornography by any means, including by computer.”
“To distribute something simply means to deliver or transfer possession of it to someone
else.”
“We have little difficulty in concluding that Mr. Shaffer distributed child pornography in
the sense of having “delivered,” “transferred,” “dispersed,” or “dispensed” it to others.
He may not have actively pushed pornography on Kazaa users, but he freely allowed
them access to his computerized stash of images and videos and openly invited them to
take, or download, those items. It is something akin to the owner of a self-serve gas
station. The owner may not be present at the station, and there may be no attendant
present at all. And neither the owner nor his or her agents may ever pump gas. But the
owner has a roadside sign letting all passersby know that, if they choose, they can stop
and fill their cars for themselves, paying at the pump by credit card. Just because the
operation is self-serve, or in Mr. Shaffer's parlance, passive, we do not doubt for a
moment that the gas station owner is in the business of “distributing,” “delivering,”
“transferring” or “dispersing” gasoline; the raison d'etre of owning a gas station is to do
just that. So, too, a reasonable jury could find that Mr. Shaffer welcomed people to his
computer and was quite happy to let them take child pornography from it.”
Is making a file available over a P2P 48
service a “distribution”?
U.S. v. Shaffer 472 F.3d 1219 (10th.Cir.2007)
“Though the question how Section 2252A applies to peer-to-peer file sharing programs may be
relatively novel, at least one other court has faced the question we do today and reached
precisely the same conclusion. In United States v. Abraham, the court held that “the defendant
distributed a visual depiction when as a result of the defendant's installation of an internet peer-
to-peer video file sharing program on his computer, a Pennsylvania state trooper was able to
download the child pornography from the defendant's computer to the trooper's computer.” No.
05-344, 3006 WL 3052702 at *8, 2006 U.S. Dist. LEXIS 81006 at *22 (W.D.Pa. Oct. 24, 2006)
(emphasis added); see also id. At *7-8 (looking to dictionary definitions for plain meaning).
Courts faced with related issues have, in a variety of other contexts, issued rulings similarly
harmonious with our own. See United States v. Mathenia, 409 F.3d 1289, 1290 (11th Cir. 2005)
(upholding 15-level sentencing enhancement for, inter alia, distributing child pornography
through peer-to-peer file-sharing groups); United States v. Gunderson, 345 F3d 471, 473 (7th Cir.
2003) (affirming 5-level increase in base-offense level for distribution for pecuniary gain; “[a]s
for his argument that he did not engage in distribution because his computer automatically
distributed files, the fact that his computer traded files automatically is irrelevant: Gunderson
is the person who programmed his computer to trade files in this manner”); State v. Perry, 83
Ohio St. 3d 41, 697 N.E. 2d 624, 628 (1998) (“Posting software on a bulletin board where others
can access and download it is distribution.”); United Statse v. Todd, 100 Fed. Appx. 248, 250 (5th
Cir. 2004) (unpub.) (user of file-share software who downloaded child pornography images and
“ma[de] them accessible to others” through file sharing met the definition of “trafficking” for
purposes of a sentencing enhancement).”
Is making a file available over a P2P 49
service a “distribution”?
U.S. v. Shaffer 472 F.3d 1219 (10th.Cir.2007)
“Even the Supreme Court has described the users of peer-to-peer
networks in terms of the distribution of files. See Metro-Goldwyn-
Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, ----, 125 S. Ct.
2764, 2771, 162 L. Ed. 2d 781 (2005) (“Some musical performers, for
example, have gained new audiences by distributing their copyrighted
works for free across peer-to-peer networks, and some distributors of
unprotected content have used peer-to-peer networks to disseminate
files, Shakespeare being an example.”) (emphases added); id. at
2770 (“[P]eer-to-peer networks are employed to store and distribute
electronic files by universities, government agencies, corporations,
and libraries, among others.”) (emphasis added); id. at 2771.”
Privacy
Can a Company Collect Voice 51
Characteristics of Employees?
Wansink v. Telus Communications Inc., 2007 FCA 21
Is it reasonable to use voice recognition technology (e.Speak) to collect voice characteristics
of employees for authentication to computer networks under S5(3) of PIPEDA?
“The judge went on to find, on the facts, that a reasonable person would find the use of that
new technology to be reasonable in the circumstances. I…endorse it in its entirety:”
“Taking into account the foregoing, and against the above brief analysis of: the degree
of sensitivity associated with voice prints as personal information; the security
measures implemented by Telus; the bona fide business interests of Telus as
established on the evidence before the Court and to which the collection of voice
prints is directed; the effectiveness of the use of voice prints to meet those
objectives; the reasonableness of the collection of voice prints against alternative
methods of achieving the same levels of security at comparable cost and with
comparable operational benefits; and the proportionality of the loss of privacy as
against the costs and operational benefits in the light of the security that Telus
provides; I conclude that the collection of the voice print information here at issue
would be seen by a reasonable person to be appropriate in the circumstances, as they
existed at all times relevant to this matter, and against the security measures adopted
by Telus.”
But, consent is needed from employees and S 7(1) exceptions do not apply.
52
Injunctions
Impulsora Turistica de Occidente, S.A. de C.V. v. Transat Tours Canada Inc., 2007 SCC 20
First, we agree with Dussault J.A. that the Superior Court had jurisdiction over the application for an
injunction and other incidental relief. He stated the following, at paras. 32-36:
[TRANSLATION] I cannot accept the respondents’ argument that a court of competent jurisdiction
could lack the power to issue an injunction with purely extraterritorial effects.
On the one hand, article 46, paragraph 1 C.C.P. provides that “[t]he courts and judges have all the
powers necessary for the exercise of their jurisdiction”.
On the other hand, insofar as article 3148 C.C.Q. defines the scope of the jurisdiction of Quebec
courts under private international law and as, in the instant case, the Superior Court has jurisdiction
pursuant to subparagraph (3) of the first paragraph of that article to decide the dispute, that court
has the power to issue an injunction against the respondents.
The possibility that the Superior Court would have difficulty sanctioning a failure to comply with its
orders does not affect its power to issue an injunction. As Barclay J. of the Saskatchewan Court of
Queen’s Bench pointed out, “[a]lthough the Courts are reluctant to grant injunctions against parties
not within the jurisdiction, the power does exist”…
Rather, it is when the court exercises its discretion under article 3135 C.C.Q., which authorizes it,
“[e]ven though [it] has jurisdiction to hear a dispute, . . . exceptionally and on an application by a party,
[to] decline jurisdiction if it considers that the authorities of another country are in a better position to
decide”, that it will have to take difficulties in sanctioning a failure to comply with the requested order
into consideration (I.C.F. Spry, The Principles of Equitable Remedies, Scarborough, Carswell, 1984, at
p. 38).
64
of Foreign Websites
Desjean v. Intermix Media Inc., 2006 FC 1395
Action under Competition Act for bundling spyware and adware with free software that is downloaded
from foreign website, where 2.5 to 5.3% of downloads are to Canadians.
…the Ontario Court of Appeal, in Muscutt v. Courcelles 2002 CanLll 44957 (ON C.A.), (2002), 213
D.L.R. (4th) 577, developed eight factors which courts should look to when dealing with questions
of assumed jurisdiction, in order to ensure jurisprudential clarity and certainty. These factors
are:
1. The connection between the forum and the plaintiff’s claim;
2. The connection between the forum and the defendant;
3. Unfairness to the defendant in assuming jurisdiction;
4. Unfairness to the plaintiff in not assuming jurisdiction;
5. Involvement of other parties to the suit;
6. The court’s willingness to recognize and enforce an extra-provincial judgment rendered on
the same jurisdictional basis;
7. Whether the case is interprovincial or international in nature; and
8. Comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.
Personal Jurisdiction Over Operator 68
of Foreign Website
Desjean v. Intermix Media Inc., 2006 FC 1395
“…it would be manifestly unfair to subject Intermix to this Court’s jurisdiction since it
would, in effect, mean a U.S.-based operator of a website, with no business assets in
Canada and no physical presence in the jurisdiction, could be sued in this country as well
as in any other country from which a plaintiff might choose to download its products.
Despite the inconvenience for plaintiffs in similar situation of having to pursue their claims
in foreign jurisdictions, this is only one factor to be taken into consideration. As the law
now appears to stand, this is not enough to bring a claim within the jurisdiction of a
Canadian court. It would put much too great an onus on foreign website operators or any
foreign commercial undertakings with no real presence in Canada which happen to deal
with Canadian residents.
With respect to the fourth factor, Intermix could not reasonably expect to be sued in
Canada for allegedly breaching the criminal provisions of Canadian competition legislation
because of alleged false advertising on its website – one which is solely supported by a
server located in the U.S. Clearly, any alleged false representations, if made, were made
by Intermix in the U.S., hosted by a server situated in the U.S. and thus not within this
Court’s jurisdiction. Jurisdiction cannot be founded simply upon the fact that the plaintiff
was in Canada when he downloaded the foreign content. Plaintiff’s inconvenience in suing
Intermix in the U.S. is also insufficient to justify this Court’s jurisdiction.”
Most Stupid Cases
Does the GPL violate antitrust laws? 70
Wallace v. International Business Machines Corp. 467 F.3d 1104 (7th.Cir. 2006)
“It does not help to characterize people who accept the GPL as “conspirators.”
Although the antitrust laws forbid conspiracies “in restraint of trade,”, the GPL
does not restrain trade. It is a cooperative agreement that facilitates production
of new derivative works, and agreements that yield new products that would not
arise through unilateral action are lawful.
Nor does it help to call the GPL “price fixing.”… Intellectual property can be used
without being used up; the marginal cost of an additional user is zero (costs of
media and paper to one side), so once a piece of intellectual property exists the
efficient price of an extra copy is zero, for that is where price equals marginal
cost. Copyright and patent laws give authors a right to charge more, so that they
can recover their fixed costs (and thus promote innovation), but they do not
require authors to charge more. No more does antitrust law require higher
prices. Linux and other open-source projects have been able to cover their fixed
costs through donations of time; as long as that remains true, it would reduce
efficiency and consumers' welfare to force the authors to levy a charge on each
new user.”
72
McTet2 #3697855