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E-commerce, Technology and

Intellectual Property Summaries

 Headlines:  October 11, 2006 (Volume 5, Number 8)

Canadian Copyright Board Decides Downloadable Ringtones Are Subject to Copyright

Financial Institutions to Police Online Gambling Transactions in US

National Pharmaceuticals Strategy Report: Concern about Generic Drug Prices in Canada

New York State Enacts Three Identity Theft Laws

Canadian Technology Extracts Tantalizing Information from the Mona Lisa

US States Consider Regulating Online Dating: Will There be a Satisfaction Guarantee?

 

Canadian Copyright Board Decides Downloadable Ringtones Are Subject to Copyright

In a recent decision, the Canadian Copyright Board (Board) has ruled that downloadable ringtones are subject to copyright royalties.

Pursuant to the Canadian Copyright Act, one of the rights of a copyright owner of a musical work is the right to communicate the work to the public by telecommunication.  Therefore, the Board has jurisdiction to impose royalties only if the copyrighted work is a “communication to the public”.  The primary legal question before the tribunal was whether the delivery of ringtones to cell phone subscribers is such a communication.

The wireless carriers had argued before the Board that while downloading a musical ringtone involves a communication of a musical work by telecommunication, the communication is not public.  Rather, they contended, the transmission of a ringtone involves a point-to-point, one-to-one delivery of a file purchased by a consumer from a carrier’s web site to a consumer’s handset.

However, the Board decided that the transmission of the ringtone to the single recipient is only one stage of the process.  Before transmission to the recipient, ringtones must first be uploaded to a web site for the specific purpose of marketing and communicating them to any subscriber who wishes to download them.

The Board held that wireless carriers offer to sell a musical ringtone to all their subscribers, not simply to one individual, and the fact that an individual member of the public receives the work does not change what would otherwise be a communication to the public into a private transaction.  [The transmission to the public does not have to be simultaneous.] Consequently, messages with identical content such as musical ringtones sent to multiple individuals can be a communication to the public.

The wireless carriers also argued that the effective royalty rate applicable to “mastertones” should be lower than that for synthesized ringtones.  Mastertones are ringtones which use the actual recorded version of the musical work.  The wireless carriers submitted that the higher price which they charge for mastertones results solely from the addition of non-SOCAN inputs, that is, the original sound recording and the performance embedded in the recording.  Consumers, they claimed, tend to purchase ringtones based on the performer rather than the author.

Although recognizing that part of the added value of mastertones is attributable to producers and performers, the Board held that authors also contribute to the added value of mastertones and therefore the same royalty rate should apply to all ringtones.

For the full decision of the Copyright Board, visit:

http://www.cb-cda.gc.ca/decisions/m20060818-b.pdf

Summary by:  Katharine McGinnis

Financial Institutions to Police Online Gambling Transactions in US

US Congress has passed legislation to hinder Internet gambling by making it illegal for gambling sites to accept payment in the form of credit, electronic funds transfer, or cheque from US residents.  The bill also forces financial institutions “to identify and block or otherwise prevent or prohibit restricted transactions through the establishment of [effective] policies and procedures”.  The bill has been sent to the President for signature.  Although there have been numerous previous attempts to legislate against online gambling, this is the first bill to pass both the US House of Representatives and the Senate.

The announcement sent shock waves through the gaming sector in the US and elsewhere.  Gaming companies saw stocks plummet, as many scrambled to implement or fine-tune technology that would effectively block US residents from betting through their sites.  Canadian gaming software giant, Cryptologic, assured investors that it had already begun to focus on attracting non-US customers.

For the text of the US bill, visit:

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:h.r.04954

For several news links, visit these sites:

http://www.law.com/jsp/article.jsp?id=1160397320810; and

http://makeashorterlink.com/?N6B4212FD

Summary by:  James Kosa

National Pharmaceuticals Strategy Report: Concern about Generic Drug Prices in Canada

Provincial and Territorial governments released the National Pharmaceuticals Strategy Progress Report (Progress Report) on September 21, 2006.  Drafted cooperatively by the federal, provincial and territorial (FPT) governments, the Progress Report recommends a multi-year strategy to improve access to drugs and ensure their affordability, and to encourage the sustainability of the public health care system.  Quebec chose not to participate in the process and will maintain its own pharmacare program.

One focus of the report is the pricing of generic drugs. While patented medicines are regulated in Canada by the Patented Medicines Price Review Board (PMPRB), the pricing of generic drugs is left to market forces.  FPT governments have recently become concerned with a lack of international parity in generic drugs pricing.

As a result, with the consent of the Health Ministers, the PMPRB, which has no regulatory jurisdiction over non-patented drugs, is now monitoring international non-prescription drug pricing.  A report released by the Board in July of this year, noted that Canadian generic drug prices exceed those in 11 comparator countries, including the United States.

Even though the PMPRB is now monitoring generic prices, it seems that generic drug pricing will remain outside the regulatory reach of the PMPRB and any other body.  The Progress Report prefers a non-regulated, business-management approach to generic drug pricing, but suggests if the lack of parity continues, regulation should be considered.

The non-regulated approach calls for coordination to capitalize on the collective purchasing power of FPT governments and the continued examination of rebate and marketing-conduct issues within the generic supply chain.

Presumably the general effect of the Progress Report and of the publicity surrounding it will exert downward pressure on generic drug prices.  However, the Progress Report was not without good news for generic manufacturers because it highlighted the need to accelerate access to non-patented drugs.  One possible outcome is that generics may get to market quicker and, potentially, at a lower price.

For a copy of the Progress Report, see:

http://www.hc-sc.gc.ca/hcs-sss/pubs/care-soins/2006-nps-snpp/index_e.html

Summary by:  Michael Migus

New York State Enacts Three Identity Theft Laws

The Governor of New York State, George Pataki, recently signed into law three bills that are intended to enhance consumer protection and strengthen consumer privacy, relating to what has been commonly referred to as “identity theft”.

First, the new Consumer Communication Records Privacy Act prohibits the sale, fraudulent transfer, or solicitation of consumers’ telephone records without their consent.  Before this law came into effect, consumers’ phone logs could be sold to third parties without their knowledge.

A second bill (Bill No S6909C/A10076D) prevents Social Security numbers (SSNs) from being accessed by unauthorized persons.  The new law limits the use and dissemination of SSNs through:

·                    prohibiting the intentional communication of SSNs to the general public,

·                    restricting businesses’ ability to print SSNs on mailings, or on any card or tag required to access products, services, or benefits,

·                    prohibiting businesses from requiring someone to transmit their  SSN over the Internet, and

·                    requiring businesses to have appropriate SSN privacy safeguards and limit unnecessary employee access to SSNs.

The third new piece of legislation (Bill No A891F/S5005F) is New York State’s first anti-spyware law.  It elaborates and clarifies existing state laws to permit the prosecution of those who intentionally disrupt computer systems, steal personal information, or plant malicious programs on others’ computers without their consent.

For more information (including reference to pre-existing relevant legislation in New York), visit:

http://www.ny.gov/governor/press/06/0926061.html; and

http://www.northcountrygazette.org/articles/092606IdentityTheft.html

Summary by:  Andrei Edwards

Canadian Technology Extracts Tantalizing Information from the Mona Lisa

Canada’s National Research Council (NRC) and its Institute for Information Technology (NRC-IIT) have published the first results of its 3D, high resolution, colour laser examination of Leonardo da Vinci’s masterpiece, Mona Lisa.

Using a patented infrared technology that allowed them to see beneath many layers of varnish, in 2004 researchers captured images in a portable lab set up in the basement of the Louvre in Paris.  Analysis of the data took over a year.  Via the NRC web site, the public now has direct access to a wide range of text and graphic information, including data about the layers in the painting, the shape of the wood panel, the damage and cracks in it and the artist’s style and technique.  Although undetectable to the naked eye, it seems that the sitter for the portrait wore over her dress a translucent gauze garment called a guarnelo, indicating that she either was pregnant or had recently given birth.

The technology has been licensed to a number of companies.  One application was used recently onboard the NASA space shuttle Atlantis in its September mission, in order to examine the changing state of the shuttle’s heat shield during orbit.

For articles in The Globe and Mail and on the CBC web site, see:

http://makeashorterlink.com/?A2D4122FD; and

http://www.cbc.ca/technology/story/2006/09/26/mona-lisa-research.html

For a comprehensive series of articles, visit the NRC/NRC-IIT web site at:

http://iit-iti.nrc-cnrc.gc.ca/projects-projets/monalisa-lajoconde_e.html

Summary by:  The Editor

US States Consider Regulating Online Dating: Will There be a Satisfaction Guarantee?

Many US states are considering enacting laws to protect their citizens from the some of the potential perils of online dating. While it is impossible to legislate an end to broken hearts, States including California, Florida, Michigan, Ohio, Virginia and Texas are looking at ways to lessen the risk a user may end up on dates with felons or those already married.  New York already regulates the practice as an aspect of consumer protection law.

Regulations being considered range from mandatory criminal background checks to simply requiring web sites to feature warnings to users that background checks have not been conducted.

Concerns about such proposed legislation abound, however, including the concern that background checks may create a false sense of security for users and create liability for the online dating company.

For more information and views on this topic visit these two sites:

http://www.law.com/jsp/article.jsp?id=1158915928398; and

http://writ.news.findlaw.com/ramasastry/20060928.html

For an outline of New York State law and regulation, visit:

http://www.consumer.state.ny.us/clahm/clahm-dating_services.htm

Summary by:  Sue Diaz

 The E-TIPS^® newsletter is edited by Richard Potter QC, an independent consultant to professional services firms (see his web site at www.i-lawmarketing.ca).

To review past issues of the E-TIPS^® newsletter, visit:

http://www.dww.com/newsletter/archive.html

Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property.  It is not intended to be a complete statement of the law, nor is it intended to provide legal advice.  No person should act or rely upon the information contained in this newsletter without seeking legal advice.

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