Atlanteknology - Technology News for Atlantic Canada

Spider-Man toothbrushes anyone?

I remember when Marvel Comics went bankrupt in the mid 1990s. I was at the tail end of my career as a comic book collector and I was saddened by the possibility the comic book company that brought us the Fantastic Four, Spider-Man, The Incredible Hulk, X-Men and Iron Man (my favourite) was going to die such a death. 

What a difference ten years makes. Somewhat akin to the resurrection of Apple computers when you think about it.

How did it happen? 

Among other reasons, Marvel perfected the art of licensing its trade-marks. When the first Spider-Man movie hit the silver screen in 2001, Marvel received only 5% of the $400 million dollars the movie grossed in the United States of America. The rest went to Sony. Sony had, smartly, previously purchased the theatrical rights to the comic book character.

Marvel obviously had someone in its organization who figured out that there was another way to make money from Spider-Man - by licensing the Spider-Man trade-marks and associated goodwill. In 2002, Marvel generated $155 million dollars from toys and other goods bearing the Spider-Man symbol, logo, etc.

Using this model, Marvel went on to monetize various other superhero characters and the company now generates approximately $230 million annually simply from its licensing business. Marvel is now (or was in 2006) the fourth leading licensor in the world after Disney, Warner Bros., Nickelodeon, and Viacom. Marvel has licensing arrangements for all manner of goods and services with companies ranging from Johnson & Johnson (for health and beauty products) to Microsoft (for a multiplayer online game set in the Marvel universe). 

The point I am trying to make here is that there is more to the world of intellectual property than patents and copyright. In particular, patents. The company that owns the brand Jack Daniels is one part manufacturing company and one part branding company. Indeed, Jack Daniels and other brands of that type have, in some circumstances, eclipsed the product behind the brand such that the product is sometimes purchased by consumers for the brand and not the other way around. 

Who would have thought.

Whose idea is it?

I often get asked whether an individual can sue somebody who has stolen an idea.  It is remarkable how frequently this question comes up. 

In a recent and famous case the authors of a book called "The Holy Blood and The Holy Grail" sued Dan Brown (the author of "The DaVinci Code") alleging that he had stolen or otherwise used, without permission, the idea that Mary Magdalene and Jesus married, that their children eventually became intermingled with certain french nobility, and that this lineage is preserved and protected by an organization called the Priory of Sion.   

Ultimately, the authors were unsuccessful because the court correctly held that there are no intellectual property rights in a mere idea. 

The issue often comes up in the context of commercial negotiations in which one party has some sort of business idea and proposes it to other individuals (often investors) with a view to obtaining financing or partnerships.  On occasion, one of the people who has been told about the idea takes it and commercializes it without the knowledge/consent/involvement of the original person who conceived the idea.

While there are certainly issues of fiduciary duties in such circumstances, it is difficult to plead the theft of an idea.  There is generally no proprietary interest in a mere idea. 

If you have a business idea, your primary protection at the early stages of development is a well-crafted confidentiality and non-disclosure agreement prohibiting the party to whom the idea is disclosed from acting on that information for a period of time after disclosure.  Such agreements will contain other constraints and prohibitions but the essential element is a prohibition against disclosure for a specified period of time. 

All of this is highlighted in the recent case of Donor Gateway Inc. v. Passero, a 2007 decision from the Ontario Court of Justice.  The plaintiff, Donor Gateway, sought to prevent Passero, a former partner, from commercializing an idea developed by Passero while Passero was still working for Donor Gateway.  After leaving Donor Gateway, Passero developed the idea on her own and without the involvement of Donor Gateway. 

Understandably, Donor Gateway was displeased with such course of action and applied for an interlocutory injunction prohibiting Passero from proceeding further.  The court declined to grant the injunction on the basis that there was no proprietary interest in a mere idea.  The court further noted that Donor Gateway had not acted on the idea itself in a time and a reasonable fashion and could not therefore prevent Passero from commercializing the matter herself.

Certified organic, or free range, or natural?

A while back I wrote an article on the topic of certification marks (marks that indicate a product or service is of some predefined and objective quality). Such marks include CSA (Canadian Standards Association), "Woolmark" and various derivations of “Certified Organic”.

In Canada, as in other jurisdictions, the registration of such marks is governed by legislation and must meet certain criteria to be registered as a certification mark.

I recently read about a new food label/certification mark. It is “Animal Welfare Approved”. Put it on the list with “organic”, “certified organic”, “natural”, “free range” and the like (not all of these are certification marks to be sure).

Certification marks can be good - there is no question about that. But they can also do more harm than good in the right circumstances, and I think that we have reached that point in the not so nascent organic food category.

The reality is that there are so many buzzwords and so-called standards that consumers find it difficult to cull the wheat from the chaff (to use an agricultural cliché). In such cases, the truly worthwhile certification marks lose their potency because consumers are unable to ascertain (or sometimes even differentiate) the useful and informative marks from those that, in the words of a certain famous English judge, are mere “puffery”.

In the case of “Animal Welfare Approved” the goal is to go beyond several other standards which compete in the same space – “Free Farm Certified” and Animal Compassionate”. Honestly, how many people have the time and inclination to go and do research to determine exactly what each standard means and why one is better or worse than another? At some point, you see the various labels and throw your hands up in the air at the complexity (or absurdity) of it all. Not to mention the fact that some of these labels are so exclusive that only a tiny fraction of the foods produced in any given category actually qualify for the label.

This is not to say that such exclusivity is bad, which it clearly is not, but that you have to be careful in making sure your label is not one of those which is losing (or has lost) its potency. If you stamp 10000 turkeys a year with a label and that label has lost its worth, the mark may do more harm than good and your $100,00 dollar turkeys might sit in the freezers for an terribly long time. Unfortunately for some British Columbia producer of turkeys, I witnessed such an unfortunate event – a significant number of some sort of organic turkeys sitting in the deep, deep discount freezer.

Beware the over used certification mark!

How to lose friends and create trouble

Here is a good story that falls into the "What not to do when....." category.

Some enterprising person discovered something about HD-DVD's and potentially blue-ray DVD's that might allow someone to do something illegal (being as vague as I can - not because I am afraid of someone threatening me but because I am not interested in being specific). And so, like anyone who accomplishes anything nifty, the person posted the information, and the information eventually made its way to Digg.

So shortly thereafter, so did the obligatory nasty cease and desist letter from a lawyer representing some company or another.

Digg took down the information but, by that time, it had (of course) spread. A bit like closing the barn door after the horses have left. And the irony is that the nasty demand letter served not to dampen or otherwise reverse the damage, but to hasten and spread the knowledge - somewhat like pouring petrol on a fire. So here I am blogging about it when I otherwise would not have had the slightest inkling that something had happened.

The moral of the story is this (as I said to a friend of mine today) - just because you may have legal rights with respect to something does not mean you should try to enforce them. Indeed, there are numerous circumstances (as here) where doing so will have such a deleterious effect that you wonder why you even thought of it in the first instance.

The Coffee News - In News Again

Some time ago, I wrote an article about a case originating here in Nova Scotia. The facts, summarized briefly, are as follows:

· There is a publication called Coffee News which originates from Manitoba, Canada and which has achieved great success over the last 10 years. Coffee News is now published in over 50 countries and has acquired a reputation as a highly rated, award winning, trade publication. The phrase “Coffee News” is trade-marked in both Canada and the United States of America.

· The company is set up using the franchise model and local business owners enter into franchise agreements to use the layout, content, and various business methods.

· The defendant had entered into a franchise agreement with the plaintiff in the Province of Nova Scotia. Subsequently the defendant decided to create his own publication called Flying Cow. The nature of this publication is summarized nicely in paragraph 17 of the appeal decision where the Court of Appeal states:

[17] ... “Witnesses at trial testified that the first several issues of Flying Cow were published by the same printer as Coffee News, and were identical to the Coffee News in every respect including design, format, and the quality and colour of the paper. Only the editorial content and the masthead were different”. 

Obviously the plaintiff publisher of Coffee News was displeased when she found out about Flying Cow and sued the defendants alleging, among other things, copyright infringement, passing off, and interference with business relations.

The trial judge agreed with the plaintiff and awarded total damages (including punitive damages) of CDN. $239,000. 

The defendants appealed and the Nova Scotia Court of Appeal rendered its decision on 3 April 2007. 

The appeal was allowed only to the extent that the damage award was reduced by almost 50% and the finding of interference with business relations was dismissed. The Court of Appeal otherwise confirmed the trial judge’s decision.

There are several points I would like to make arising from the decision. First, that Coffee News was confirmed as a “compilation” under the Copyright Act. Under the Copyright Act “compilation” means a work resulting from the selection or arrangement of literary, dramatic, musical or artistic works or of parts of any of those works, or a work resulting from the selection or arrangement of data. The defendants had originally alleged that no copyright existed in Coffee News and it was quite clear from both the trial judge’s and the Court of Appeal’s decisions that this argument could not stand. I had had several inquiries concerning rights in compilations and I think publishers of these types of works will be pleased in this regard.­­­­­­­­

Another item I thought was interesting was that the defendants represented themselves at trial but had lawyers for the appeal. In the appeal, the defendants attempted to raise an argument which should have been raised at trial. The Court of Appeal correctly declined to accept the argument and I think this should be a lesson for all people who want to save a few dollars (at least initially) by representing themselves in lawsuits. The argument the defendants/appellants did not raise at trial could have been fatal to the plaintiff’s case had it been proved, thus avoiding the need for an appeal. In any event, the defendants ultimately did hire lawyers for the appeal and were able to reduce the global award by almost half. 

Finally, I think it is relevant to note that the Court of Appeal confirmed the trial judge’s strong findings of fact that the defendants had acted in the “reprehensible” manner (to use the judge’s words). Undoubtedly, these findings of fact played into the trial judge’s ultimate decision. I think the Court of Appeal’s statement at paragraph 55 of their decision bears repeating: 

[55] … “There was ample evidence to support the trial judge’s conclusion that the appellants nefarious conduct affected the public at large and not only Ms. Jean Daum [the owner of the plaintiff company]. The judge was satisfied that the appellant’s conduct was planned, systematic, and deliberate, was designed to deceive Ms. Daum and her company, and do them harm. Recognizing his distinct advantage in seeing and hearing the witnesses, the judge’s findings are owed considered deference.”

So, for all of you out there who may contemplate taking that which belongs to others – words of warning.

TV on the internet is here (almost)

At long last (well, almost) TV on the Internet is here. Not that I watch TV but it is nice in theory.

Go to Joost. it is not yet open to the public but you can sign up for the newsletter that will tell you when it will be open.

Now, this is a innovation that shows the true value of the internet and what good licensing can do in the digital world (at least in theory).

If only the rights holders in the music world would come up with a useful regime that will make them money and accommodate the the consumers of music. It is possible.