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McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
McCarthy Tétrault Advance™
Building Capabilities for Growth
Barry B. Sookman
bsookman@mccarthy.ca
416-601-7949 June 10, 2015
TCLG: The Year in Review
2014-2015
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
¬ Online Agreements
¬ Licensing/Technology
Contracting
¬ Privacy
¬ Online Liability
¬ Cybersecurity
¬ Copyright
2
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 3
Online Agreements
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014)
¬ Is the arbitration clause in B&N’s browsewrap enforceable?
¬ “The website's Terms of Use are available via a "Terms of Use"
hyperlink located in the bottom left-hand corner of every page on the
Barnes & Noble website, which appears alongside other hyperlinks
labeled "NOOK Store Terms," "Copyright," and "Privacy Policy."
These hyperlinks also appear underlined and set in green typeface in
the lower lefthand corner of every page in the online checkout
process.
¬ Nguyen neither clicked on the "Terms of Use" hyperlink nor actually
read the Terms of Use. Had he clicked on the hyperlink, he would
have been taken to a page containing the full text of Barnes &
Noble's Terms of Use, which state, in relevant part: "By visiting any
area in the Barnes & Noble.com Site, creating an account, [or]
making a purchase via the Barnes & Noble.com Site ... a User is
deemed to have accepted the Terms of Use." Nguyen also would
have come across an arbitration provision…”.
4
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014)
¬ “Were there any evidence in the record that Nguyen had actual
notice of the Terms of Use or was required to affirmatively
acknowledge the Terms of Use before completing his online
purchase, the outcome of this case might be different. Indeed, courts
have consistently enforced browsewrap agreements where the user
had actual notice of the agreement.”
¬ ”…where the website contains an explicit textual notice that
continued use will act as a manifestation of the user's intent to be
bound, courts have been more amenable to enforcing browsewrap
agreements.See, e.g., Cairo, Inc. v. Crossmedia Servs., Inc., 2005
WL 756610 (N.D.Cal. Apr. 1, 2005) (enforcing forum selection clause
in website's terms of use where every page on the website had a
textual notice that read: "By continuing past this page and/or using
this site, you agree to abide by the Terms of Use for this site, which
prohibit commercial use of any information on this site").”
5
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014)
¬ “But where, as here, there is no evidence that the website user had actual
knowledge of the agreement, the validity of the browsewrap agreement turns
on whether the website puts a reasonably prudent user on inquiry notice of
the terms of the contract. Specht, 306 F.3d at 30-31; see also In re
Zappos.com, Inc. Customer Data Sec. Breach Litig., 893 F.Supp.2d 1058,
1064 (D.Nev.2012). Whether a user has inquiry notice of a browsewrap
agreement, in turn, depends on the design and content of the website and
the agreement's webpage. Google,2013 WL 5568706. Where the link to a
website's terms of use is buried at the bottom of the page or tucked away in
obscure corners of the website where users are unlikely to see it, courts
have refused to enforce the browsewrap agreement.”
¬ “See Woodrow Hartzog, Website Design as Contract, 60 Am. U.L.Rev. 1635,
1644 (2011) (observing that courts "tend to shy away from enforcing
browsewrap agreements that require no outward manifestation of assent");
Lemley, 91 Minn. L.Rev. at 472-77 ("An examination of the cases that have
considered browsewraps in the last five years demonstrates that the courts
have been willing to enforce terms of use against corporations, but have not
been willing to do so against individuals.").” (emphasis added)
6
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014)
¬ “Barnes & Noble argues that the placement of the "Terms of Use" hyperlink in
the bottom left-hand corner of every page on the Barnes & Noble website, and
its close proximity to the buttons a user must click on to complete an online
purchase, is enough to place a reasonably prudent user on constructive notice…
¬ But the proximity or conspicuousness of the hyperlink alone is not enough to
give rise to constructive notice, and Barnes & Noble directs us to no case law
that supports this proposition…
¬ In light of the lack of controlling authority on point, and in keeping with courts'
traditional reluctance to enforce browsewrap agreements against individual
consumers, we therefore hold that where a website makes its terms of use
available via a conspicuous hyperlink on every page of the website but otherwise
provides no notice to users nor prompts them to take any affirmative action to
demonstrate assent, even close proximity of the hyperlink to relevant buttons
users must click on — without more — is insufficient to give rise to constructive
notice. Given the breadth of the range of technological savvy of online
purchasers, consumers cannot be expected to ferret out hyperlinks to terms and
conditions to which they have no reason to suspect they will be bound.”
7
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ Browsewrap exists where the online host dictates that assent
is given merely by using the site.
¬ Clickwrap refers to the assent process by which a user must
click "I agree," but not necessarily view the contract to which
she is assenting.
¬ Scrollwrap requires users to physically scroll through an
internet agreement and click on a separate "I agree" button in
order to assent to the terms and conditions of the host
website.
¬ Sign-in-wrap couples assent to the terms of a website with
signing up for use of the site's services; it is the form used by
Gogo in the instant case.
8
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
“Following the ruling in Specht, courts generally have enforced browsewrap
terms only against knowledgeable accessors, such as corporations, not
against individuals. See, e.g., Register, 356 F.3d at 403 (applying California
law in finding that defendant using automated programs to repeatedly
access competitor's website was put on notice of "terms of use" that were
sent to defendant each time after it accessed the website's
data); Ticketmaster Corp. v. Tickets.com, Inc., 2003 WL 21406289 (C.D.
Cal. March 7, 2003) (applying California law in finding binding contract
where defendant company was put on reasonable notice of "terms of use"
of competitor's website, plaintiff having "placed in a prominent place on the
home page the warning that proceeding further binds the user to the
conditions of use" and defendant accessed the site repeatedly). "An
examination of the cases that have considered browsewraps in the last five
years demonstrates that the courts have been willing to enforce terms of
use against corporations, but have not been willing to do so against
individuals." Lemley, 91 Minn. L. Rev. at 472”.
9
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “Clickwrap agreements necessitate an active role by the user of a
website. Courts, in general, find them enforceable. Drew, 259 F.R.D. at
462 n.22. "Clickwrap agreements require a user to affirmatively click a
box on the website acknowledging awareness of and agreement to the
terms of service before he or she is allowed to proceed with further
utilization of the website." Id. By requiring a physical manifestation of
assent, a user is said to be put on inquiry notice of the terms assented
to.”
¬ Courts of Appeals, while accepting the general definition of what
constitutes a clickwrap agreement, have yet to rule on their presumptive
validity. The term "clickwrap" only appears in seven reported Courts of
Appeals decisions, none of which decide the per se enforceability of
these agreements…
¬ “By contrast, almost "[e]very [lower] court to consider the issue has
found `clickwrap' licenses, in which an online user clicks `I agree' to
standard form terms, enforceable." Lemley, 91 Minn. L. Rev. at 459”.
10
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “There is a crucial distinction between online agreements that a user must view
because of the nature of the website's construction and design—
i.e., scrollwraps—and those that merely require a user to click an "I agree" box
that appears next to a hyperlink containing "terms of use"—i.e., clickwraps.
¬ Some court decisions that use the term "clickwrap" are in fact dealing with
"scrollwrap" agreements where an internet consumer had a realistic opportunity to
review and scroll through the electronic agreement…
¬ Reference to scrollwrap agreements as clickwraps is misleading… Cf. Juliet M.
Moringiello and William L. Reynolds, From Lord Coke to Internet Privacy: The
Past, Present, and Future of the Law of Electronic Contracting, 72 Md. L. Rev.
452, 466 (2013) ("In the world of electronic contracts . . . clickwrap is a
meaningless term. Click-to-agree transactions come in many flavors. Sometimes
the click is at the end of the terms so that a reader must at least scroll through to
reach the `I agree' icon, while [at] other times the click is next to a hyperlink that
leads to the terms, either in one click or in several. Whether the terms are
classified as clickwrap says little about whether the offeree had notice of them.").”
11
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “A questionable form of internet contracting has been used in
recent years—sign-in-wraps. These internet consumer
contracts do not require the user to click on a box showing
acceptance of the "terms of use" in order to continue. Rather,
the website is designed so that a user is notified of the
existence and applicability of the site's "terms of use" when
proceeding through the website's sign-in or login process.
Courts of Appeals have yet to rule on the validity and
enforceability of the terms of such contracts…
¬ Lower courts upholding sign-in-wrap arrangements, such as
the one presented in Fteja, have done so under three
circumstances. They emphasized notice and an effective
opportunity to access terms and conditions.” (emphasis added)
12
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “First, where the hyperlinked "terms and conditions" is next to the only button that will
allow the user to continue use of the website. See, e.g., Crawford v. Beachbody,
LLC, No. 14-CV-1583, 2014 WL 6606563, at *3 (S.D. Cal. Nov. 5, 2014) (forum
selection clause binding where consumer clicked on button marked "Place Order" and
above button was statement informing user that by clicking the button user was
subject to the website's "terms and conditions," which were available in the same
screen via hyperlink)..
¬ Second, where the user "signed up" to the website with a clickwrap agreement and
was presented with hyperlinks to the "terms of use" on subsequent visits. See, e.g.,
Nicosia v. Amazon.com, Inc., No. 14-CV-4513, 2015 WL 500180, (E.D.N.Y. Feb. 4,
2015) (arbitration clause enforceable where user clicked box acknowledging terms at
initial signup to website and was presented with hyperlink at top of webpage to "terms
of use" multiple times after completing purchases)…
¬ Third, where notice of the hyperlinked "terms and conditions" is present on multiple
successive webpages of the site. See, e.g., Major v. McCallister, 302 S.W.3d 227,
230-31 (Mo. Ct. App. S. Dist. 2009) (forum selection clause enforceable where
hyperlink to "terms and conditions" was presented on multiple successive webpages
and the final step in the website's signup process was to click a button next to which
was the phrase: "By submitting you agree to the Terms of Use").
13
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “… the following four-part inquiry in analyzing sign-in-wraps, and electronic
contracts of adhesion generally, is required:
¬ (1) Aside from clicking the equivalent of sign-in (e.g., log-in, buy-now,
purchase, etc.), is there substantial evidence from the website that the user
was aware that she was binding herself to more than an offer of services or
goods in exchange for money? If not, the "terms of use," such as those
dealing with venue and arbitration, should not be enforced against the
purchaser.
¬ (2) Did the design and content of the website, including the homepage, make
the "terms of use" (i.e., the contract details) readily and obviously available to
the user? If not, the "terms of use," such as those dealing with venue and
arbitration, should not be enforced against the purchaser.
¬ (3) Was the importance of the details of the contract obscured or minimized
by the physical manifestation of assent expected of a consumer seeking to
purchase or subscribe to a service or product? If yes, then the "terms of
use," such as those dealing with venue and arbitration, should not be
enforced against the purchaser.
14
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ (4) Did the merchant clearly draw the consumer's attention to material terms that
would alter what a reasonable consumer would understand to be her default rights
when initiating an online consumer transaction from the consumer's state of residence:
The right to (a) not have a payment source charged without notice (i.e., automatic
payment renewal); (b) bring a civil consumer protection action under the law of her
state of residence and in the courts in her state of residence; and (c) participate in a
class or collective action? If not, then (a), (b), or (c) should not be enforced against the
consumer.
¬ It is desirable to have hard-edged rules of adhesion that apply no matter what the
consumer's background. Such rules reduce substantial litigation costs. But, until useful
consumer studies demonstrate that average consumers using the computer
understand what contract terms are being accepted when a purchase is made,
preemptive rules in favor of vendors who do not forcefully draw purchasers' attention
to terms disadvantageous to them should be rejected. The burden of showing
agreement to details of a contract on a website's contract of adhesion is on the
vendors. It is the vendor who designs the website and puts into it terms favoring itself.
¬ Proof of special know-how based on the background of the potential buyer or
adequate warning of adverse terms by the design of the agreement page or pages
should be required before adverse terms, such as compelled arbitration or forced
venue, are enforced.
15
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015)
¬ “Applying the proposed framework for analyzing sign-in-wrap agreements to Berkson, it
is necessary to decide whether sufficient evidence has been proffered by defendants
demonstrating that Berkson knew he was binding himself to more than a one-time offer
of service in exchange for money. The evidence to date indicates that he was
unaware…
¬ It cannot be taken for granted that Berkson clicked on the "SIGN IN" button on the
lower left hand corner of the website, which indicated that by clicking "Sign in" he was
agreeing to the company's "terms of use.“…
¬ The design and content of the website, including the homepage, did not make the
"terms of use" readily and obviously available to Berkson. The hyperlink to the "terms of
use" was not in large font, all caps, or in bold. Nor was it accessible from multiple
locations on the webpage. By contrast, the "SIGN IN" button is very user-friendly and
obvious, appearing in all caps, in a clearly delineated box in both the upper right hand
and the lower left hand corners of the homepage.
¬ The importance of the "terms of use" was obscured by the physical manifestation of
assent, in this case clicking the "SIGN IN" button, expected of a consumer seeking to
purchase in-flight Wi-Fi. Once Berkson clicked "SIGN IN," the "terms of use" did not
appear in a new screen or in a pop-up window on the same screen. He was not
required to scroll through the contract of adhesion and its boilerplate terms in order to
click "accept" or "I agree."
16
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691
(E.D.Ill.Feb. 2015)
“The question in this case is whether the Agreement in a
scrollable Window was a valid clickwrap agreement, and
therefore, whether Plaintiff's clicking the Button constituted
his assent to terms of the Agreement. Since neither party
disputes that Plaintiff clicked the Button, which is an
affirmative action to accept some type of terms stated on
the "Step 2 of 3" page, I only examine whether there was
reasonable notice of terms of the Agreement and indication
that a click would constitute assent to the terms.
17
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691
(E.D.Ill.Feb. 2015)
¬ The layout of the Window, the Button, and the Paragraph may
have provided reasonable notice of the existence of the terms.
However, it did not provide reasonable notice that a users' click
would constitute assent to the terms in the Window... Therefore,
this Agreement is not a valid clickwrap agreement. (emphasis
added)
¬ Defendants allege that the Agreement is a valid clickwrap
because the placement of the Window and the Button, a visible
scrollbar, and a phrase "I Accept" on the Button were
conspicuous enough for users to understand that their clicking the
Button would mean that they are agreeing to the terms in the
Window… Plaintiff, however, contends that notice was insufficient
since there was no instruction referencing the Agreement or
informing users that their clicking the Button would constitute
assent to the terms in the Window.”
18
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691
(E.D.Ill.Feb. 2015)
¬ “To determine whether a website provides reasonable constructive
notice, courts have applied two different approaches. In the first
approach, courts only look at whether hyperlinks or texts of agreements
were conspicuous enough. The conspicuousness depends on design
and contents of defendants' website and agreement's
webpage. Nguyen, 763 F.3d at 1177…
¬ In the second approach, the recent trend in both federal district and
appellate courts, courts require (i) conspicuous hyperlinks or texts of
agreements and (ii) an explicit text referencing terms of agreements or
instructing users that they are assenting to agreements. An additional
requirement of an explicit reference is to protect users who may "have
no reason to suspect [that] they will be bound" by the terms hidden in
hyperlink agreements. Nguyen, 763 F.3d at 1179.” (emphasis added)
19
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691
(E.D.Ill.Feb. 2015)
“Even accepting Plaintiff's argument that this Agreement may be a
browsewrap agreement if the terms in the Window and terms linked to the
Printable Version link are treated separately from the Button, the Agreement
in our case fails to be a valid browsewrap agreement under both
approaches. Under the first approach, the location of the Window and the
Button, as well as the visible scroll bar may have provided sufficient notice
of terms to users. However, they were insufficient to inform users that their
clicks would constitute assent to the terms in the Window. Under the
second approach, which provides greater protection for internet users,
Defendants failed to provide constructive notice since there is no explicit
reference indicating that users should read the terms in the Window. It is
unreasonable to expect users to scroll down the Window when they are not
aware of a possibility of being bound by the terms in the Window.
Therefore, this Agreement is not a valid browsewrap agreement because it
did not provide sufficient constructive notice to users that they are being
bound by the terms in the Window by using the website.”
20
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Savetsky v Pre-Paid Legal Services, Inc 2015 WL 604767
(N.D.Cal. 2015)
“Here, there is no evidence Savetsky had actual notice of the sample
member contract on LegalShield's website, or acknowledged the
existence of such a contract prior to purchasing his membership. In
fact, by simply checking the desired services and clicking the "BUY
NOW" button, a consumer can order a LegalShield plan without even
being aware a member contract exists. Not to mention that a
consumer would only receive actual notice if he clicked through two
optional links and read to page seven where, under the
inconspicuous heading "Settlement of Disputes," the arbitration
provision appears. See Windsor Mills, 25 Cal. App. 3d at 993 (noting
that "an offeree, regardless of apparent manifestation of his consent,
is not bound by inconspicuous contractual provisions of which he was
unaware, contained in a document whose contractual nature is not
obvious.").”
21
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Douez v. Facebook, Inc., 2014 BCSC 953
¬ Is Facebook’s forum selection clause in its Terms of Use enforceable?
¬ “A user must agree to Facebook’s Terms of Use when the user registers for
a Facebook account. I have not been given an online demonstration, but
one version of the Terms of Use, when printed, runs 13 pages long, with the
portion dealing with “Governing Law: Venue and Jurisdiction” commencing
ten pages after the first page.
¬ Another version of the Terms of Use as of April 26, 2011, appears to be in
very small font and comprised of approximately 18 sections. The Forum
Selection Clause set out above in these Reasons is towards the end of these
tiny terms, as item 15 under the heading “Disputes”.
¬ I have not heard evidence as to how long it would take the average reader to
read Facebook’s Terms of Use, or for that matter, the context of that time in
relation to every “terms of use” facing an internet user on a daily basis.
¬ But the obscure nature of a clause in online terms of use has been found in
some other cases not to defeat a forum selection clause: see Rudder v.
Microsoft Corp., [1999] O.J. No 3778 (Ont. S.C.J.)”
22
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Douez v. Facebook, Inc., 2014 BCSC 953
¬ “There is other language in the Terms of Use indicating
that Facebook promises to respect local laws. For example, one version of
the Terms of Use includes this language:
¬ We [Facebook] strive to create a global community with consistent
standards for everyone, but we also strive to respect local laws... .”
¬ The plaintiff argues in effect that this is contractual recognition
by Facebook that where local laws oust the contract or are inconsistent with
the contract, then the local laws apply. Since the local law here, the Privacy
Act, confers exclusive jurisdiction on this Court and such claims could not be
brought in California, and this is inconsistent with the selection of a California
forum, the Forum Selection Clause must give way to the Privacy Act.
¬ In my view, the plaintiff has at least a triable issue on her argument that the
Forum Selection Clause does not apply to the Privacy Act cause of action,
based on a full interpretation of the Terms of Use. However, it is not
necessary to decide this issue, as I am able to decide the jurisdictional issue
on other grounds.”
23
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Douez v. Facebook, Inc., 2014 BCSC 953
¬ The plaintiff argues that the Privacy Act is a protection for BC residents that
overrides any choice of law clause in a contract between Facebook and its
members…
¬ Interestingly, Facebook’s public Form 10-K annual report filed pursuant to the
US Securities Exchange Act, 15 U.S.C. §78a (1934), for the year ending
December 31, 2012, contains the following statements indicating that it is subject
to foreign laws concerning privacy:
¬ We are subject to a number of U.S. federal and state, and foreign laws and
regulations that affect companies operating on the Internet, …These may
involve user privacy….In particular, we are subject to…foreign law as
regarding privacy and protection of user data. Foreign data protection,
privacy and other laws and regulations are often more restrictive than those
in the United States…
¬ I find that whether or not the Privacy Act applies despite Facebook’s choice of
law clause is an issue common to all members of the proposed class and its
determination will materially advance the litigation.”
24
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Douez v. Facebook, Inc., 2014 BCSC 953
¬ “While the Privacy Act was introduced in 1968, the policy reasons behind
protecting the privacy rights of British Columbians have only expanded since
that time.
¬ The protection of privacy rights are now found to be consistent with the
values of Canadians as expressed in the Canadian Charter of
Rights: ss. 7, 8 of the Canadian Charter of Rights and Freedoms…
¬ Furthermore, with the creation and growth of the internet the potential
implications for a loss of privacy are greater than ever. The difficulty in
proving quantifiable damage remains great for an individual whose privacy is
lost, but the social harm can be monumental if the loss of privacy includes
publicity over the internet with its almost infinite reach and timelessness.
¬ I conclude that the legislative conferral of exclusive jurisdiction on this Court
for claims under the Privacy Act evidences both a legislative intention to
override any forum selection clause to the contrary, and a strong public
policy reason for not enforcing the Forum Selection Clause.”
25
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Knutson v. SIRIUS XM RADIO, INC., 717 F. 3d. 559 (9th.Cir.
2014)
¬ “Sirius XM argues nevertheless that although there was a delay between the activation
of the service and Knutson's receipt of the Customer Agreement, Knutson's continued
use of its service after that receipt constituted his assent to be bound to the Customer
Agreement. Sirius XM cites Golden Eagle Ins. Co. v. Foremost Ins. Co., which states
that "[a]s a general rule, silence or inaction does not constitute acceptance of an offer.
There are several well-recognized exceptions to this rule. Acceptance of an offer may
be inferred from inaction in the face of a duty to act . . . and from retention of the
benefit offered.“…
¬ Nothing in the record, however, indicates that Sirius XM's offer was clearly and
effectively communicated to Knutson by mailing him the Customer Agreement.
Knutson would only have had notice of his opportunity to cancel his subscription, or
the effect of his continued use of the service, if he opened the Welcome Kit from Sirius
and read all of the documents therein, which—in view of his lack of awareness of any
contractual relationship with Sirius—he had no reason to do. He could not be obligated
to act where there was no effective notice that action was required. Accordingly,
Knutson's continued use of the service after his receipt of the Customer Agreement
did not manifest his assent to the provisions in the Customer Agreement.”
26
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Tompkins v. 23andMe, INC., 2014 WL 2903752 (N.D.Cal.
Jun. 25, 2014)
“23andMe cannot rely on purported acceptance of the TOS upon purchase
to demonstrate a valid agreement. As explained above, during checkout,
the website did not present or require acceptance of the TOS. Rather, the
only way for a customer to see the TOS at that stage was to scroll to the
very bottom of the page and click a link under the heading "LEGAL." Such
an arrangement provided insufficient notice to customers and website
visitors. For example, in Be In, this Court held that "mere use of a website"
could not demonstrate users' assent, and that the "mere existence of a link"
failed to notify users of terms of service. 2013 U.S. Dist. LEXIS 147047.
Other courts have held that similar browsewrap-style agreements are
ineffective. E.g., Specht, 306 F.3d at 20, 32 (finding that a "reasonably
prudent Internet user" would not have seen "a reference to the existence of
license terms on a submerged screen"); Jerez v. JD Closeouts, LLC, 943
N.Y.S.2d 392, 398 (Dist. Ct. 2012) ("[E]-commerce merchants cannot
blithely assume that the inclusion of sale terms, listed somewhere on a
hyperlinked page on its website, will be deemed part of any contract of
sale.")”.
27
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Tompkins v. 23andMe, INC., 2014 WL 2903752 (N.D.Cal.
Jun. 25, 2014)
¬ “Plaintiffs do not dispute that the 23andMe website requires each person who
creates an account or registers a kit to indicate acceptance of the TOS before
receiving any test results, nor do Plaintiffs dispute that the TOS contained the
same arbitration provision at all relevant times. Various Plaintiffs have alleged
that they received test results after purchasing kits… Thus, these Plaintiffs
must have clicked "I ACCEPT THE TERMS OF SERVICE" when creating an
account and registering… Other courts have found that user access to portions
of websites that require indicating assent to be sufficient evidence that the user
clicked "I Accept.”…
¬ The Court also determines that Plaintiffs received adequate notice regarding
the TOS. As noted above, during the account creation and registration
processes, each named Plaintiff clicked a box or button that appeared near a
hyperlink to the TOS to indicate acceptance of the TOS. In this respect, the
TOS resemble clickwrap agreements, where an offeree receives an
opportunity to review terms and conditions and must affirmatively indicate
assent. See Specht, 306 F.3d at 22 n.4. The fact that the TOS were
hyperlinked and not presented on the same screen does not mean that
customers lacked adequate notice.”
28
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523
(N.D. Cal. 2015)
¬ “The prices quoted on our web site at the time of your order are
estimated prices only. You will be charged the prices quoted for
Products you have selected for purchase at the time your order is
processed at checkout. The actual order value cannot be determined
until the day of delivery because the prices quoted on the Web site are
likely to vary either above or below the prices in the store on the date
your order is filled and delivered.”
¬ “The Special Terms promise that, with the exception of the actually
disclosed special charges and delivery fees, the prices charged for
Safeway.com products will be those charged in the physical store where
the groceries are delivered. Since Safeway actually marked up the
charges for the in-store prices beyond the disclosed delivery and special
charges, the Court grants summary judgment that Safeway breached its
contract with its customers who registered between January 1, 2006 and
November 15, 2011.”
29
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523
(N.D. Cal. 2015)
¬ “In both versions, Safeway "reserves the right to, from time to time, with or without
notice to you, in [Safeway's] sole discretion, amend the Terms and Conditions."
Defendant's version reinforces this with an additional term: "We may amend the
Agreement at any time by posting the amended terms on the Site." In both
versions, the Special Terms provide that "[a]ny amendments by [Safeway] will be
effective only as to orders you place after [Safeway]'s revisions of these Terms and
Conditions as displayed on the Web site.“
¬ “The Safeway.com agreement did not give Safeway the power to bind its customers
to unknown future contract terms, because consumers cannot assent to terms that
do not yet exist. A user confronting a contract in which she purports to agree to
terms in whatever form they may appear in the future cannot know to what she is
are agreeing. At most, this term in the Safeway.com agreement could be read to
indicate that a customer agrees to read the terms and conditions every time she
makes a purchase on the website in the future. But the Court also concludes that,
even in light of their agreement to the Special Terms at the time of registration,
customers' assent to the revised Terms cannot be inferred from their continued use
of Safeway.com when they were never given notice that the Special Terms had
been altered.”
30
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523
(N.D. Cal. 2015)
“Safeway's claim that a court could infer a customer's assent to the revised
terms from that customer's continued use of the Safeway.com website
resembles the type of browsewrap agreement the Ninth Circuit rejected in
Nguyen. Although Class Members were presented with a clickwrap agreement
at the time of their registration, they were never presented with a subsequent
clickwrap agreement asking them to consent to the revised Special Terms. As
was the case in Nguyen, Class Members could have completed all their
subsequent purchases on Safeway.com without ever visiting the webpage
hosting the revised Special Terms which Safeway claims governed the sale and
without ever clicking anything on the website that would indicate that they have
agreed to those terms. Customers' lack of awareness that the Special Terms
have been altered undermines Safeway's claim that each purchase on
Safeway.com constitutes an agreement to those changes. Douglas teaches that
assent to a contract's revised terms "can only be inferred" from a customer's
ongoing use of a service "after [the customer] received proper notice of the
proposed changes." Douglas, 495 F.3d at 1066.”
31
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523
(N.D. Cal. 2015)
¬ “Although it is true that a customer could, as matter of course, read the entirety of the
Special Terms before every grocery purchase they make from Safeway.com, generally
"[p]arties to a contract have no obligation to check the terms on a periodic basis to
learn whether they have been changed by the other side.“…
¬ But beyond the impracticality of expecting consumers to spend time inspecting a
contract they have no reason to believe has been changed, the imposition of such an
onerous requirement on consumers would be particularly lopsided, as Safeway is
aware that it has — or has not — made changes to the Terms and is the party to the
contract that wishes for the new terms to govern. "[T]he onus must be on website
owners to put users on notice of the terms to which they wish to bind consumers."
Nguyen, 763 F.3d at 1179. Safeway is best positioned to make sure customers are
aware of changes that Safeway has made to its contract with Class Members. After
making a change, Safeway can take any number of actions to alert users that the
Special Terms they agreed to at registration have been altered. For instance, Safeway
could ask customers to click to indicate that they agree to the new Special Terms or
send all existing Safeway.com customers an email in order to ensure that every
consumer is aware of a change in the Special Terms prior to making a purchase.
When Safeway changed the Special Terms on November 15, 2011, it opted to do
neither.”
32
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Ilana Imber-Gluck v Google Inc. 2015 WL 1522076 (N.D.Cal.
Aug 12, 2014)
“Here, Google’s Terms of Service signed by plaintiff and class expressly
provides that signees are “responsible for the activity that happens on or
through [their] Google account[s].” This express provision agreed to by
plaintiff and class entitles Google to bill plaintiff and class’s Google Play
accounts for charges incurred through such activity regardless of their
intent. However, plaintiff has alleged that Google encouraged children to
make In-App Purchases, without providing notice to the parent or
guardian of the 30-minute window in which the account holder’s
password is not required to make subsequent purchases. Such acts
may frustrate the common purpose of the agreement by forcing parents
to pay for purchases that Google induced parents’ minor children to
make. Therefore, plaintiff has sufficiently pled facts which would
demonstrate how Google breached the duty of good faith and fair
dealing. Accordingly, the court DENIES Google’s motion.”
See, Bhasin v. Hrynew 2014 SCC 71
33
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
JBB Investment Partners, Ltd. v. Fair, 232 Cal. App. 4th 974
(2014)
¬ “At 10:17 a.m., on July 5, Fair sent the following e-mail to Russo from his
cell phone: "[Russo], the facts will not in any way support the theory in
your e-mail. I believe in Cameron. So I agree. Tom [F]air.”
¬ “Even if a printed name can satisfy the signature requirements of Code
of Civil Procedure section 664.6, a printed name is not a signature under
contract law simply because the person deliberately printed his or her
name. "[I]t is a universal requirement that the statute of frauds is not
satisfied unless it is proved that the name relied upon as a signature was
placed on the document or adopted by the party to be charged with the
Intention of authenticating the writing." (Marks v. Walter G. McCarty
Corp., supra, 33 Cal.2d at p. 820, italics added.) The evidence must also
demonstrate that the person printing his or her name intended to
execute the document. Here, as already discussed, the record is devoid
of any evidence demonstrating that Fair intended to execute a
settlement agreement by electronic means when he printed his name at
the end of his e-mail.”
34
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Majdoub v CarsOnTheWeb.Deutschland GmbH, CJEU,
Case C-322/14 (21 May, 2015)
¬ “In the case in the main proceedings, it is not disputed that click-wrapping
makes printing and saving the text of the general terms and conditions in
question possible before the conclusion of the contract. Therefore, the fact
that the webpage containing that information does not open automatically on
registration on the website and during each purchase cannot call into
question the validity of the agreement conferring jurisdiction.
¬ Having regard to the foregoing considerations, the answer to the question
referred is that Article 23(2) of the Brussels I Regulation must be interpreted
as meaning that the method of accepting the general terms and conditions of
a contract for sale by ‘click-wrapping’, such as that at issue in the main
proceedings, concluded by electronic means, which contains an agreement
conferring jurisdiction, constitutes a communication by electronic means
which provides a durable record of the agreement, within the meaning of that
provision, where that method makes it possible to print and save the text of
those terms and conditions before the conclusion of the contract.”
35
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Small Justice LLC v Xcentric Ventures LLC 2015 WL
1431071 (D.Mass Mar.27, 2015)
¬ “Here, the Court concludes that a reasonably prudent user was on inquiry
notice of the terms and conditions associated with the ROR, and, therefore,
the transfer of copyright ownership was valid. The screen where users
submitted their reports prominently featured a portion of the terms in the
center of the screen, above the "continue" button that the users clicked to
conclude the posting process. That screen, along with at least two of the
other screens used in the posting process, also contained blue links to the
terms of service at the bottom of the page which were conspicuously visible
without scrolling beyond the "continue" button used to progress to the
subsequent screen. The conspicuousness of the terms is supported by the
contrasting color of the link to them coupled with the placement of the terms
themselves on the final screen prior to submission.”
¬ “The Court concludes that DuPont transferred copyright ownership to
Xcentric by means of an enforceable browsewrap agreement.”
¬ Can a browsewrap transfer ownership of a copyright?
36
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Bank of Montreal v Rogozinsky, 2014 ABQB 771
¬ “Ms. Rogozinsky’s November 14, 2014 affidavit included a document entitled
“Common law Copyright Notice”, which I have reproduced and attached as
Appendix “E”. This document was sent to the Bank. In brief, this is another
foisted unilateral agreement that claims if someone uses Ms. Rogozinsky’s
name without her permission then she can bill them $1 million. This is the
alleged basis for $6 million of Ms. Rogozinsky’s counterclaim.
¬ One of the alleged occasions where the Bank breached Ms. Rogozinsky’s
“Common law Copyright” in her name was that her name was used, without
authorization, on the Bank’s statement of claim.
¬ However, the “Common law Copyright Notice” does not merely stop with
Ms. Rogozinsky’s name, but also extends to her biological and physical
properties (para 5) and “... absolute control and mastery over the peaceful
possession of [his or her] body, mind and mental facilities ...”, which, the bank
is apparently interfering with by asking that the debt be repaid…
¬ “Ms. Rogozinsky’s alleged breach of copyright and trade-mark damages are
frivolous. Her attempts to enforce them are without merit and had no prospect
of success.”
37
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 38
Licensing/Technology Contracting
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nortel Networks Corporation (Re) 2015 ONSC 2987
¬ Article 4 – Legal Title to NN Technology
¬ (a) Except as otherwise specifically agreed, legal title to any and all NN
Technology whether now in existence or hereafter acquired, or developed
pursuant to the terms of this Agreement, shall be vested in NNL. In consideration
therefor, NNL agrees to enter into an Exclusive License and a Non-Exclusive
License with each of the Licensed Participants as set forth in Article 5.
¬ Article 5 – Grant of Exclusive Licenses by NNL
¬ (a) To the extent of its legal right to do so, and subject to the rights of
relevant third parties, NNL hereby:
¬ (i) continues to grant to each Licensed Participant an exclusive, royalty-free
license, including the right to sublicense, which except as hereinafter provided
shall be in perpetuity, rights to make, have made, use, lease, license, offer to sell,
and sell Products using or embodying NN Technology in and for the Exclusive
Territory designated for that Licensed Participant, and all rights to patents,
industrial designs (or equivalent) and copyrights, and applications therefor, and
technical know-how, as necessary or appropriate in connection therewith
(“Exclusive License”);
39
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Nortel Networks Corporation (Re) 2015 ONSC 2987
¬ “I interpret the MRDA, and find, that under it, and
while Nortel operated as a going concern business, NNL had all
ownership interests of the NN Technology subject to grants,
being…the grant of exclusive and non-exclusive licenses to the
Licensed Participants under article 5(a).
¬ The licenses under article 5(a) were not licenses of all rights to the
NN Technology but were subject to field of use restrictions that gave
the Licensed Participants the right to use the NN Technology to
make, use or sell Products as defined in the MRDA, which meant
products, software or services that were made or sold by, or for, any
of the Licensed Participants. The Products must have been created
or marketed by or for the Nortel Group. No product that was part of a
third party’s business rather than the business of Nortel fell within
the definition of Products….The Licensed Participants’ rights to
sublicense were subject to these restrictions.”
40
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
In re: NORTEL NETWORKS, INC., 2015 WL 2374351 (D.Del.
May 12, 2015)
¬ “The MRDA grants the Licensed Participants all valuable rights
to and beneficial ownership in NN Technology in their
respective territories. The Court looks to the purpose, rules,
and representations underlying Nortel's transfer pricing
agreements, including the R&D CSAs and the MRDA; Nortel's
pre-petition business practices; and custom in the industry.”
¬ “Therefore, NNL had no right to practice or otherwise exploit
Nortel patents or other NN Technology in the United States
and could not place a buyer of its interests in any better
position than NNL itself occupied or protect such a buyer from
an infringement suit by NNI.”
41
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Planification-Organisation-Publications Système (POPS)
Ltée v. 9054-8181 Québec Inc., 2014 FCA 185
¬ Did the trial judge err by granting an implied license to use and make
adaptations to source codes where the plaintiffs had asked for a right to use
computer programs?
¬ “The respondents’ argument to the effect that the user licence sought
necessarily included access to the source code is in no way supported by the
evidence adduced at the hearing. The respondents concede in their
memorandum that the judge did not indicate in his reasons that such access was
a condition of the implicit user licence or that such access was necessary for the
use requested….
¬ However, neither the judge nor this Court can award more that what was sought
in the proceeding by the respondents…
¬ I therefore find it necessary to reformulate the judgment to limit the scope of the
licence to the use of all versions of Ceres, Omega, Epsilon and Comex existing
at the end of the collaboration…It is also necessary, in my view, to remove the
reference to the source code from paragraph viii) of the judgment and to amend
it so that it requires that only the versions described above be provided.”
42
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Planification-Organisation-Publications Système (POPS)
Ltée v. 9054-8181 Québec Inc., 2014 FCA 185
¬ Did the trial judge err by finding that a non-exclusive license was perpetual and
not revocable for cause?
¬ “In my opinion, there is no generally applicable rule of law that would preclude a
non-exclusive user licence from being non-revocable when the licensee has
provided consideration. Neither the law nor the Act restrict the parties’
contractual freedom in this regard. In every case, it is for the trial judge to
determine the terms that are implicit in the contract in light of all of the relevant
contextual elements in civil law.
¬ This is exactly what the judge did in this case and the appellants have not
established the existence of any palpable or overriding error in this regard.
Naturally, and as the appellants argue, the expression “non-revocable” must not
be understood in its strictly narrow sense. It certainly means, as the judge
indicated, that the appellants cannot repudiate the licence unilaterally or
wantonly. It is not necessary to attempt to define the situations in which such a
licence could be repudiated because in this case and for the reasons that follow I
am satisfied that the appellants had no such right, whether the licence was
revocable for misconduct or non-revocable.”
43
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Northrop Grumman Mission Systems Europe Ltd v BAE
Systems [2014] EWHC 2955 (TCC) (08 September 2014)
¬ “BAE contends that by Clause 5.1 of the Licence Agreement the terms of an…
Enabling Agreement governed the Licence Agreement so that Clause 10.4 of the
Enabling Agreement which provided for termination for convenience entitled BAE to
terminate the Licence Agreement on that basis with effect from 19 December
2011.”
¬ “In relation to perpetual licences I was referred to the decision of Sales J in BMS
Computer Solutions Limited v AB Agri Limited [2010] EWHC 464 (Ch) at [17] to [18]
where he said:
¬ The word "perpetual" can carry different shades of meaning. It can, for example,
mean "never ending" (in the sense of incapable of being brought to an end) or it
can mean "operating without limit of time“…
¬ a possible meaning of "perpetual" is "of indefinite duration" …the termination
provisions in both those agreements were very important terms of those
agreements. They dealt with important commercial matters such as termination for
breach of the agreement or in circumstances of insolvency of the other party. It is
reasonable to think that any parties to licence and support agreements of this kind
would wish such important commercial matters to be dealt with by such terms."
44
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Northrop Grumman Mission Systems Europe Ltd v BAE
Systems, [2014] EWHC 2955 (TCC) (08 September 2014)
¬ “Termination clauses are commonplace in commercial contracts and software
licensing agreements are not an exception, as the BMS Computer
Solutions case indicates…
¬ “Turning then to Clause 10.4, I consider that, treating the Licence Agreement
as being the same as a Purchase Order, there is no difficulty in construing that
clause governing the Licence Agreement and applying so as to give the
Purchaser, BAE, the right to terminate the Licence Agreement for
convenience…
¬ For the reasons set out above, I propose to make a declaration that, on a true
construction of the Licence Agreement, BAE was entitled to terminate the
Licence Agreement for convenience on 20 calendar days' notice under the
provisions of Clause 10.4 of the Enabling Agreement which governed the
Licence Agreement.”
45
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Filmflex Movies Ltd v Piksel Ltd [2015] EWHC 426 (Ch) (24
February 2015)
¬ Is a licensee entitled to copies of source code from escrow.
¬ "9.1 For the purposes of this Agreement only and subject to clause 9.4, all
Intellectual Property Rights in the ioko365 Materials and the ioko365 Platform
belong to ioko365. ioko365 grants the Company a perpetual, royalty free, non-
exclusive, non-transferable, irrevocable licence to run, use, access, maintain,
modify, enhance, copy and create derivative works of the ioko365 Materials,
ioko365 Platform and all associated documentation, as applicable, throughout
the world (and permits its subcontractors to do the same for the sole purpose of
providing services to the Company).
¬ 9.2 All Intellectual Property Rights in the Company Materials, the Company
Platform, the Company Platform Materials and Company Data belong to the
Company. The Company grants ioko365 a non-exclusive, non-transferable,
revocable licence during the term of this Agreement to use, copy, access,
maintain, modify, enhance and create derivative works of the Company
Materials, Company Platform Materials and Company Data for the sole purpose
of delivering the Platform to the Company and delivering the Services."
46
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Filmflex Movies Ltd v Piksel Ltd, [2015] EWHC 426 (Ch) (24
February 2015)
¬ Is a licensee entitled to copies of source code from escrow.
¬ “I therefore accept FilmFlex 's argument that in this contract, the parties
must have intended by licensing each other to use the rights in their software
in the manner described in clause 9.1 and 9.2 that they would be entitled to a
copy of the software from the other if that was necessary in order for those
rights to be exercised. Thus, in a situation where (i) FilmFlex is granted
rights over the whole of the Platform which entitle it to use, copy, modify etc
that software; (ii) it can only sensibly carry out those activities if it has a copy
of the Source Code; (iii) it does not currently have a copy of the Source Code
but Piksel does have a copy; and (iv) Piksel can provide FilmFlex with a
copy and at the same time retain a copy which enables it to exercise its own
rights (ownership and licence) in the Platform, a reasonable observer would
interpret the contract as meaning that Piksel is required on request to
provide FilmFlex with a copy of the Source Code. If that right is not
conferred by clause 9.11 (and I have held that it is) then it must be conferred
impliedly by clauses 9.1 and 9.2.”
47
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
118 Data Resource Ltd v IDS Data Services Ltd & Ors
[2014] EWHC 3629 (Ch) (05 November 2014)
¬ Right of database owner to obtain order for specific perofmance entitling it to conduct
an audit.
¬ Clause 4.7 provides as follows: "[IDS] undertakes and agrees with [118] that it will …
permit any duly authorised representative of [118] on reasonable prior notice to enter
into any of its premises where any copies of [the Database] are used, for the purpose
of ascertaining that the provisions of this Agreement are being complied with.“
¬ “Having looked at the Agreement as a whole, I now turn to construe clause 4.7. The
following issues arise:
¬ 1 IDS agrees to permit access to "any duly authorised representative" of 118. Who
is to be given access?
¬ 2 Access is to be given to "any of its premises where copies of [the Database] are
used". Which premises are meant?
¬ 3 Access is to be given "for the purpose of ascertaining that the provisions of this
Agreement are being complied with". What does this mean?
¬ 4 Clause 4.7 merely refers to access but does not say what 118 is permitted to do
once it has gained access.”
48
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
118 Data Resource Ltd v IDS Data Services Ltd & Ors
[2014] EWHC 3629 (Ch) (05 November 2014)
¬ “I return to the phrase defining the premises to be searched. I can see no good
reason for permitting a search of the place where the Database is stored if that
gives 118 carte blanche to search for anything which happens to be on those
premises, whether or not connected with the storage or use of the Database. It
seems to me to be more likely that those words limit the nature of what may be
inspected as well as defining the location…
¬ Finally, there is the question of what 118 is permitted to do once it has gained
access. I readily accept that the intention was to enable 118 to police the
Agreement, albeit that this is limited to policing the use of the Database. This
clearly imposes some kind of obligation on IDS to permit access to the computer
in order that 118 can carry out the permitted investigation. But what kind of
access is permitted?...
¬ In the circumstances I am satisfied that 118 has the right to enter IDS's office in
Glasgow for limited purposes, but I am not satisfied that 118 has shown a
sufficiently clear case that it is entitled to enter for the purposes for which it
wishes to enter, nor as to what it is allowed to do once it has entered.”
49
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Carlson Inc. v IBM 2014 U.S. Dist. LEXIS 102086 (D.Minn.
Jul. 30, 2014)
¬ IBM’s right to collect termination for convenience fees for ERP build charges,
balance sheet charges, and wind-down charges of $14 million.
¬ “Carlson's "unclean hands" defense also would be without merit even if IBM had
committed fraud. The equitable defense of unclean hands is available only in
response to a claim for equitable relief…
¬ Finally, Carlson's "penalty" defense is also unavailing. Penalty analysis is
applicable only to liquidated damage provisions, which in any event "are
presumed valid" under Minnesota law.. but which may be unenforceable if
"greatly disproportionate" to actual damages…
¬ The termination payment provisions here are not "damage" provisions at all,
liquidated or otherwise. They are not triggered by a Carlson breach, but rather by
the termination of the contract — even if done pursuant to Carlson's termination
rights — and are simply payment to IBM for services rendered or expenses
incurred. Such provisions are valid under Minnesota law…”
50
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Dong v. Clyne, 2014 BCPC 132
¬ Can a person that recommends a programmer be liable for negligent
misrepresentation?
¬ “In this case, there was a special relationship between the Claimant and the
Defendant based on both their personal and professional dealings.
¬ The Claimant was a professional in the area of software development and
portrayed both himself and Mr. Qi as such to the Defendant.
¬ In the circumstances of the representations made by the Claimant, both the
Claimant and a reasonable person should have known that the Defendant, at
the time, relied on the Claimant’s skill and judgment, and reasonably relied
upon the Claimant’s representations about Mr. Qi.”
¬ “…while the Defendant may have at first been induced by the Claimant’s
misrepresentations to work with Mr. Qi, his decision to expend money and
continue to work with Mr. Qi in the face of the apparent breach of what was
represented to him with regard to both time and cost, were decisions made
independent of the misrepresentations.
¬ As such, no liability can be attributed to the Claimant for them.”
51
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 52
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ “Customer Profiles - Bell creates and maintains a Customer Profile for each Bell Customer of a
Bell Service that is associated with the RAP, using network usage information and
account/demographic information it already collects for various existing operational purposes…
Generally speaking, a Customer Profile includes demographic information and account
information combined with network usage information, such as specific websites visited and
apps used on a Bell Customer's mobile device. The Customer Profile also includes interests
Bell has inferred from such network usage…
¬ Ad Profiles - RAP Advertisers create, via a special web interface, "Ad Profiles" that define the
audience of Bell Customers to which they would like to deliver targeted ads (e.g., 26-30 year
old males in the city of Ottawa with below average credit and an interest in hockey). Ad Profiles
are comprised of a number of "dimensions", each corresponding to a specific type of
information captured in Bell's Customer Profiles…
¬ Profile Matching and Ad Placement - Bell then facilitates the delivery of targeted ads
by RAP Advertisers to Bell Customers...Bell sends a temporary customer ID and Customer
Profile identification number to the RAP Advertiser, which in turn allows the advertiser to
deliver a targeted ad to the Bell Customer whose Customer Profile matches an active Ad
Profile. Bell does not, except when also acting as a RAPAdvertiser, deliver the ads directly,
and does not share the identity of the Bell Customer with RAP Advertisers during the process.”
53
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ Is “personal information” used in the RAP?
¬ “All account/demographic and network usage information collected and used by Bell for
the purposes of the RAP is individual-level data linked to a specific Bell Customer and
therefore constitutes personal information under the Act.”
¬ “Interest Categories - Bell also uses URLs visited by a customer…to assign and rank
interest categories to that customer's Customer Profile…
¬ Any categories that correspond to a list of categories that Bell has predetermined to be
sensitive (e.g., "Adult Content", "Special Education", "Diabetes", "Catholicism" or "Gay
Life") or likely to be of interest to minors (e.g., "Family Internet", "Society - Teens" or
"Animation") are discarded and not added to the Customer Profile.
¬ However, URLs that may be considered inherently sensitive could be used to yield non-
sensitive interest categories. For example, hypothetically, a URL related to a certain
type of cancer could yield the interest categories "Cancer" and "Men's Health". Bell
would discard "Cancer", as a category it deems to be sensitive, and assign the non-
sensitive category, "Men's Health", to the Customer Profile.”
54
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OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ Is a behavioral advertising program to deliver relevant ads (a RAP) an appropriate
purpose under s5(3) of PIPEDA?
¬ “In general, and subject to the caveat explained below, we believe that a reasonable
person would consider Bell's purpose in using account/demographic and network usage
information (i.e., to deliver targeted ads) to be appropriate in the circumstances…
¬ In our analysis of this issue, we have considered Bell's objectives in implementing
the RAP, the likely effectiveness of the RAP in achieving those objectives, and the
nature of the information used. We must also remain cognizant that the purpose
of PIPEDA is to "establish…rules to govern the collection, use and disclosure of
personal information in a manner that recognizes the right of privacy of individuals with
respect to their personal information and the need of organizations to collect, use or
disclose personal information for purposes that a reasonable person would consider
appropriate in the circumstances".
¬ With that in mind, we accept that Bell's objectives of maximizing advertising revenue
while improving customers' online experience is a legitimate business objective. We also
accept that the RAP may very well be effective in achieving those objectives.”
(emphasis added)
55
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ Does the RAP require express consent?
¬ “In our view, Bell does not ensure adequate consent for the RAP. For such
consent to be meaningful in this context, Bell should:
¬ obtain express opt-in consent for the practice;
¬ ensure that Bell Customers' understanding of the RAP and their
associated choices are supported by clear explanations outlining all
RAP Information.”
¬ “More specifically, our rationale for requiring opt-in consent is based primarily
on two key factors, as provided by PIPEDA:
¬ the sensitivity of the information at issue, and
¬ the reasonable expectations of Bell's customers.”
56
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ “In our view, the mere fact that sensitive URLs are used to generate non-sensitive
interest categories does not change the fact that the underlying information being used
is sensitive. Both the underlying information and the resulting categories that are derived
from such information must be assessed in determining the sensitivity of the information
at issue.
¬ To focus solely on the end-result of the process, as Bell is suggesting, would unduly
minimize the privacy interest at stake and would have serious implications. According to
Bell's logic, accessing, for example, sensitive medical records would not be a "use" of
sensitive information provided the resulting category derived from such medical records
is non-sensitive in nature, a result which in our view, is clearly unreasonable.”
¬ “Taking into consideration all of the factors surrounding Bell's RAP, in combination and
in concert with each other (i.e., that Bell wishes to use customers' personal information,
much of it sensitive, originally collected for the purposes of delivering paid
telecommunications and broadcasting distribution services, for the new secondary
purpose of enabling third-party behaviourally targeted advertising), we are of the view
that Bell Customers would reasonably expect Bell to give them an express choice with
respect to whether or not they wish to participate in the RAP.”
57
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
OPC PIPEDA Report of Findings #2015-001, Results of
Commissioner Initiated Investigation into Bell’s Relevant
Ads Program, April 7, 2015
¬ “Following the release of the Report of Findings, Bell advised us that it has decided to
withdraw its Relevant Ads Program and that it will delete all existing customer profiles
related to the program. Furthermore, Bell has said that if it launches a similar program in
the future, it would do so using express opt-in consent.
¬ We appreciate Bell’s cooperation throughout the course of our investigation and we
respect Bell’s decision to terminate the program.
¬ As we stated in our investigation report, our Office accepted that Bell’s objective of
maximizing advertising revenue while improving the online experience of customers was
a legitimate business objective. We also accepted that Bell’s targeted advertising
initiative could be effective in achieving those objectives.
¬ Our recommendation to Bell was that it use opt-in consent in its targeted advertising
program. We felt that the privacy implications of the initiative were significant enough to
require opt-in consent from customers.
¬ We consider this matter to be resolved.” (emphasis added)
58
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Ladas v. Apple Inc., 2014 BCSC 1821
¬ Causes of action against Apple for storing location data on iDevices in class
action proceedings; no claim that any data was transmitted to Apple or that
data was accessed by anyone.
¬ “There can be no doubt that there is no common law tort of invasion or
breach of privacy in British Columbia…Any alleged breach of privacy is only
actionable under the Privacy Act (B.C.)” and other similar provincial statutes
in Saskatchewan, Manitoba, and Newfoundland…” [confirmed in Albayate v.
Bank of Montreal, 2015 BCSC 695]
¬ “the attempt to plead a cause of action in negligence, based on the bare
allegation of a duty of care owed by Apple, fails to state a reasonable
claim…
¬ The Charter does not apply to common law disputes between private
individuals:...
¬ it is plain and obvious that the Privacy Act (Canada) does not provide a legal
basis for the plaintiff …”
59
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Ladas v. Apple Inc., 2014 BCSC 1821
¬ Were there common issues to be tried as a class action?
¬ “But the issue raised is whether Apple’s conduct violates the plaintiff’s and
class members’ privacy rights; in other words, whether Apple is liable under the
Privacy Act. Resolution of proposed common issue (a) requires the court to
look not only at Apple, but also at the individual circumstances of the plaintiff
and other proposed class members in order to make a determination of the
issue on the merits. As Madam Justice Griffin pointed out in Douez (at para.
283), the subjective elements of reasonableness and context are relevant
under ss. 1(2) and (3) of the Privacy Act (B.C.).”
¬ “The plaintiff has not shown any basis in fact to conclude that reasonableness
and context could be proved on a class-wide basis.
¬ In addition, one of the factual issues on which a defendant’s liability under
the Privacy Act (B.C.) depends is whether Apple acted “without a claim of right”
(see s. 1(1)). Another is whether the act or conduct complained of was
consented to by a person entitled to consent (see s. 2(2)(a)). The plaintiff has
not shown a basis in fact to conclude that either of these issues could be
proved on a class-wide basis. They are individual issues.”
60
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Zuckerman c. Target Corporation, 2015 QCCS 1285
¬ Can a Quebec court assume jurisdiction over a class action against a foreign
entity (Target) based on a data breach which requires showing damage was
suffered in Quebec?
¬ “The prejudice allegedly sustained by Zuckerman does not per se constitute
compensable damages in the present context. With the advent of computers
and Internet, the ever increasing use of technology in business transactions,
online or in store, the use of electronic devices to effect a payment with a
credit or debit card and the proliferation of people who unfortunately use the
technology and Internet in their attempt to defraud others,
the “inconveniences” described by Zuckerman fall in the category
of “ordinary annoyances, anxieties and fears that people living in society
routinely, if sometimes reluctantly, accept…and do not constitute
"compensable“ damages.’
¬ “There are no allegations that he was victim of identity theft. There are no
allegations that any personal information of his was indeed part of the Data
Breach as we cannot tell upon reading the Motion if Zuckerman used his
credit card at Target during the Data Breach.”
61
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Green v. eBAY INC. 2015 WL 2066531, (E.D. La. May 4,
2015)
¬ “Following Clapper, the majority of courts faced with data breach class
actions where complaints alleged personal information was accessed but
where actual identity theft was not alleged have applied this "certainly
impending" standard; notably, where plaintiffs have alleged their injury was
the increased risk of identity theft, courts have dismissed the complaints
for lack of Article III standing. These courts found that the mere increased
risk of identity theft or identity fraud alone does not constitute a cognizable
injury unless the harm alleged is certainly impending.”
¬ “In most data breach cases, the complaints allege sensitive information
was stolen, such as financial information or Social Security numbers. In
such cases, courts nonetheless have found that the mere risk of identity
theft is insufficient to confer standing, even in cases where there were
actual attempts to use the stolen information.”
¬ See also, Storm v. Paytime, Inc., 2015 WL 1119724 (M.D. Pa. Mar. 13,
2015); In Re Zappos.com Inc. Customer Data Security breach Litigation,
D.Nev. Jun. 1, 2015)
62
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Albayate v. Bank of Montreal, 2015 BCSC 695
¬ Is the bank liable for a privacy breach for changing a person’s mailing address
in its computer system where statements are sent to the wrong address and
inaccurate information is sent to a credit bureau?
¬ “In my view, the bank was in breach of its privacy policy which formed part of
its contract with Ms. Albayate in providing inaccurate information to the credit
bureaus and by not correcting the inaccurate information when it became
aware of the address had been changed in its computer system without her
authorization.”
¬ Damages for mental distress rejected as “Quite simply, minor and transient
upsets do not constitute personal injury, and hence do not amount to damage.”
quoting Mustapha v. Culligan of Canada Ltd., 2008 SCC 27.
¬ “Having reviewed the evidence and the case law, including considering the
factors set out in Jones, it is my opinion that a nominal award in the amount of
$2,000 is appropriate in the circumstances of this case.”
¬ See also McIntosh v. Legal Aid Ontario, 2014 ONSC 6136 - $7,500 damages
for unauthorized access of information from Legal Aid files.
63
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Gulati & Ors v MGN Limited, [2015] EWHC 1482 (Ch) (21
May 2015)
¬ How to assess damages for the breach of privacy tort, in this case arising from
the “phone hacking” (mobile voice message interception) scandals.
¬ “While the law is used to awarding damages for injured feelings, there is no
reason in principle, in my view, why it should not also make an award to reflect
infringements of the right itself, if the situation warrants it. The fact that the loss
is not scientifically calculable is no more a bar to recovering damages for “loss
of personal autonomy” or damage to standing than it is to a damages for
distress. If one has lost “the right to control the dissemination of information
about one’s private life” then I fail to see why that, of itself, should not attract a
degree of compensation, in an appropriate case. A right has been infringed,
and loss of a kind recognised by the court as wrongful has been caused. It
would seem to me to be contrary to principle not to recognise that as a potential
route to damages. In my view that would make it all the more anomalous, as a
matter of principle, were damages to be unavailable for them. Of course, in a
great number of cases the emphasis will be on the distress caused, both
because it will be that distress which motivates an action in the first place and
because it will be the most focused on result of the infringement when it is
discovered.”
64
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Google Inc v Vidal-Hall & Ors [2015] EWCA Civ 311 (27
March 2015)
¬ Are damages recoverable under the UK DPA for Google’s collection of
personal data using the “Safari workaround”?
¬ Misuse of private information is a tort under English law.
¬ Since what the Directive purports to protect is privacy rather than economic
rights, it would be strange if the Directive could not compensate those
individuals whose data privacy had been invaded by a data controller so as to
cause them emotional distress (but not pecuniary damage). It is the distressing
invasion of privacy which must be taken to be the primary form of damage
(commonly referred to in the European context as "moral damage") and the
data subject should have an effective remedy in respect of that damage.
¬ “On the face of it, these claims raise serious issues which merit a trial. They
concern what is alleged to have been the secret and blanket tracking and
collation of information, often of an extremely private nature, as specified in the
confidential schedules, about and associated with the claimants' internet use,
and the subsequent use of that information for about nine months. The case
relates to the anxiety and distress this intrusion upon autonomy has caused….”
65
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Hopkins v. Kay, 2015 ONCA 112
¬ Is the Personal Health Information Protection Act, S.O. 2004, c. 3, Sch.
A (“PHIPA”) an exhaustive code that ousts the jurisdiction of the Superior
Court to entertain any common law claim for invasion of privacy rights in
relation to patient records?
¬ “the appellants reference decisions from other jurisdictions – namely, British
Columbia and Alberta – where courts have held that privacy statutes occupy
the field and preclude resort to common law remedies…
¬ In my view, these decisions do not assist the appellants. The provincial
privacy legislation in British Columbia and Alberta establishes a statutory
cause of action for breach of privacy. As described in Jones v. Tsige, at para.
54, courts in these jurisdictions are left to define the contours of the statutory
right to privacy within the parameters of that legislation. In contrast, there is
no general statutory cause of action for breach of privacy in Ontario. The
respondent’s claim is not based upon a breach of PHIPA, but on a distinct
common law tort. The wrong contemplated by the common law tort of
intrusion upon seclusion differs in its essential character from a claim that a
statutory provision has been breached.”
66
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Hopkins v. Kay, 2015 ONCA 112
“I conclude that the language of PHIPA does not imply a legislative
intention to create an exhaustive code in relation to personal health
information. PHIPA expressly contemplates other proceedings in
relation to personal health information. PHIPA’s highly discretionary
review procedure is tailored to deal with systemic issues rather than
individual complaints. Given the nature of the elements of the common
law action, I do not agree that allowing individuals to pursue common
law claims conflicts with or would undermine the scheme established
by PHIPA, nor am I satisfied that the review procedure established
by PHIPA ensures that individuals who complain about their privacy in
personal health information will have effective redress. There is no
basis to exclude the jurisdiction of the Superior Court from entertaining
a common law claim for breach of privacy and, given the absence of
an effective dispute resolution procedure, there is no merit to the
suggestion that the court should decline to exercise its jurisdiction.”
67
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Grant v. Winnipeg Regional Health Authority et al., 2015
MBCA 44
¬ “Again, it is clear from the emerging jurisprudence that, had
Mr. Sinclair survived, he may, on the facts set out in the statement
of claim, have advanced a claim for breach of confidence or
intrusion upon seclusion or perhaps for publicity which placed him
in a false light in the public eye.
¬ Whether family members, who claim to have suffered as a result of
a breach of a privacy interest of another member, are in sufficient
proximity to the victim in a tort context and are therefore able to
advance a claim in their own right, remains an open question. It
would not be appropriate to dismiss at this early stage the
possibility of a court recognizing that damages suffered by
immediate or close family members as a result of such a breach
are compensable.”
68
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 69
Online Liability
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys
Limited (411travelbuys.ca), 2015 FC 19
¬ Are metatags protected by copyright?
¬ “The evidence before me shows that the Plaintiff’s redtag metatags allegedly
copied by the Defendants were substantially derived from a list of Google key
words which are then incorporated into short phrases descriptive of travel
industry types of travel, locations, and discounts or deals for consumers.
Examples included in comparisons of the redtag.ca and 411travelbuys.ca
webpages related to, for instance, cruises, group vacations, nolitours and hola-
sun holidays, are indicative of the common generic terms used in this regard, to
attract consumers, to buy travel packages for various destinations.
¬ In this case there is little evidence of any sufficient degree of skill and judgement
in creating these metatags, as is required by the test set out by the Supreme
Court of Canada in CCH, above, or for the originality required in compiling data
or other compilations, as discussed by the Federal Court of Appeal in Tele-Direct.
While in some cases there may be sufficient originality in metatags to attract
copyright protection when viewed as a whole, the substance of the metatags
asserted by the Plaintiff in this case does not meet the threshold required to
acquire copyright protection in Canada.”
70
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys
Limited (411travelbuys.ca), 2015 FC 19
¬ Is use of a competitor’s metatags passing off or trade-mark infringement?
¬ “Even if a searcher is looking for the website connected with a particular
trade name or trademark, once that person reaches the website, there must
be confusion as to the source of the entity or person providing the services
or goods. If there is no likelihood of confusion with respect to the source of
the goods or services on the website, there is no support for finding this
prong of the test for passing off. Accordingly, use of a competitor’s trademark
or trade name in metatags does not, by itself, constitute a basis for a
likelihood of confusion, because the consumer is still free to choose and
purchase the goods or services from the website he or she initially searched
for.
¬ Here, there is no use of any of the Plaintiff’s trademarks or trade names on
the Defendants’ visible website. The website is clearly identified as 411
Travel Buys’ website. There is no likelihood of deception as to the source of
the services provided on the 411 Travel Buys website, and the consumer is
free to redirect his or her search to the Plaintiff’s website.”
71
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys
Limited (411travelbuys.ca), 2015 FC 19
¬ Is use of a competitor’s metatags depreciation of goodwill?
¬ “Use” under section 22 requires use of the plaintiff’s trademarks, as
registered. There has been no such use here and accordingly,
section 22 does not apply. Moreover, even if it could arguably be
said that there is at least some use of redtag.ca by use of red tag,
that use was not in any visible portion of 411 Travel Buys’ website,
it was in the metatags. There is no connection between the online
services of 411 Travel Buys on their website and the services of the
Plaintiff as offered on 411 Travel Buys’ website.”
¬ See also, Insurance Corporation of British Columbia v. Stainton
Ventures Ltd., 2014 BCCA 296; Interflora Inc & Ors v Marks and
Spencer Plc [2014] EWCA Civ 1448 (12 November 2014)
72
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Weaver v. Corcoran, 2015 BCSC 165
¬ Whether a message to “e-mail a friend” or a hyperlink to a document that
the person publishes is a republication for defamation purposes.
¬ The Supreme Court of Canada summarized the basic legal principles
behind re-publication in Breeden v. Black,2012 SCC 19 (CanLII) at
para. 20. The Court noted:
¬ … It is well established in Canadian law that the tort of defamation
occurs upon publication of a defamatory statement to a third party…
It is also well established that every repetition or republication of a
defamatory statement constitutes a new publication. The original
author of the statement may be held liable for the republication where
it was authorized by the author or where the republication is the
natural and probable result of the original publication
73
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Weaver v. Corcoran, 2015 BCSC 165
¬ “The invitation to email the article to a friend meets the test set out in the
jurisprudence that re-publication is the “natural and probable result of the
original publication”. The invitation is to email an article, the content of which
is known and indeed created by the defendants. This is unlike the situation
in Crookes which involved a website concerning commentary on various
issues with hyperlinks to other websites, the content of which is not
controlled by the operator of the website. In this context, I am prepared to
conclude that a reasonable inference could be drawn of publication to a third
person of each of the articles at issue.”…
¬ As noted, however, by Abella J., it appears that control of the content at
issue on the Internet may well inform the developing framework to analyze
the legal issues at this time. A review of the concurring opinions establishes
these are early days in the consideration of the impact of the Internet on
jurisprudence concerning publication and defamation. As such, there is likely
room for a nuanced approach when considering the emerging issues.”
74
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Weaver v. Corcoran, 2015 BCSC 165
¬ “The evidence of re-publication includes numerous downloads of Weaver’s
Web; Weaver’s Web II; Climate Agency Going up in Flames; and some of So
Much for Pure Science from various websites. The defendants maintain,
however, republication cannot be a mere hyperlink as stated in Crookes.
Thus, the “story tools” on the National Postwebsite do not qualify as
authorization. The evidence established these are merely permitted
hyperlinks back to the original article.”…
¬ A review of the material demonstrates further reader comments, including
many reader comments on the Climate Audit site of the article. In my view,
this evidence is sufficient to establish the fact of re-publication…
¬ As noted, however, by Abella J., [in Crookes v Newton] it appears that
control of the content at issue on the Internet may well inform the developing
framework to analyze the legal issues at this time. A review of the concurring
opinions establishes these are early days in the consideration of the impact
of the Internet on jurisprudence concerning publication and defamation. As
such, there is likely room for a nuanced approach when considering the
emerging issues.”
75
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Weaver v. Corcoran, 2015 BCSC 165
¬ Is the operator of an Internet forum – a reader comment area on a
newspaper website – liable for publication of the defamatory postings?
¬ “Until awareness occurs, whether by internal review or specific complaints
that are brought to the attention of the National Post or its columnists,
the National Post can be considered to be in a passive instrumental role in
the dissemination of the reader postings. It has taken no deliberate action
amounting to approval or adoption of the contents of the reader posts. Once
the offensive comments were brought to the attention of the defendants,
however, if immediate action is not taken to deal with these comments, the
defendants would be considered publishers as at that date…
¬ Action must immediately be taken to fulfill the responsibility not to distribute
defamatory material. The evidence establishes that was done within one to
two days to address that problem. In my view, that is all the defendants could
realistically do in the circumstances. While the plaintiff maintains more
should have been done, I am unable to agree based on the evidence before
me. As technology progresses, the answer and evidence on this issue may
well be different.”
76
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Baglow v. Smith, 2015 ONSC 1175
¬ Liability of message board operators for 3rd party defamatory posts.
¬ “It is the position of the Fourniers that the simple provision of software to enable
a message board or forum is equivalent to the provision of a hyperlink. The
message board itself, the software, is content neutral. In my view this position
is disingenuous and ignores reality. A message board or forum is set up
precisely to provide content to its readers. Its whole purpose is to provide
content.
¬ The Fourniers are the moderators and administrators of Free Dominion. They
decided to set up a politically conservative venue in 2001 on the Internet. It is a
message board. The purpose of the Free Dominion message board is to allow
conservatively minded individuals to voice their opinions. Its home page states
that it is “The Voice of Principled Conservatism”. Members discuss political
issues from a conservative point of view. The Fourniers are not mere passive
bystanders. They make posts themselves and participate in threads.
¬ Moreover, as moderators and administrators, the Fourniers have the ability to
control content on Free Dominion.”
¬ Note: defense of innocent dissemination not claimed.
77
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Murray v Wishart [2014] NZCA 461 (19 September 2014)
¬ Can the poster of a tweet that links to a defamatory site be liable for publishing
defamatory material available at the linked to site?
¬ “…in Crookes v Newton the Supreme Court of Canada treated hyperlinks as
essentially a reference rather than something communicating content…
¬ In our view, the combined text and hyperlink may amount to publication of
defamatory material in the hyperlink in some circumstances. Publication of a
defamatory statement via a hyperlink should be found if the text indicates adoption
or endorsement of the content of the hyperlinked text. If the text communicates
agreement with the content linked to, then the hyperlinker should be liable for the
defamatory content.
¬ We do not consider we need to reach any more general view about the role of
hyperlinking because it is clear that, on the present facts, the Twitter statements are
closely connected to the Information Statement. We agree with Courtney J that
meaning can be determined on the basis that the two statements would be read as
one. We say that because the first of the Twitter statements encouraged the reader
to go to the Facebook page. Hence, on Twitter, Mr Murray said, “I’ve fired up a
facebook page to drive awareness” and the reader was then given the link to
follow.”
78
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Murray v Wishart [2014] NZCA 461 (19 September 2014)
¬ Is the publisher of a Facebook page liable for defamatory postings of
3rd parties on the page?
¬ “These concerns lead us to conclude that the actual knowledge test
should be the only test to determine whether a Facebook page host is
a publisher. That is consistent with at least some of the authorities to
which we have referred, (Sadiq v Baycorp (NZ) Ltd, A v Google New
Zealand Ltd and Davison v Habeeb) and with the Law Commission’s
analysis. It conforms with the approach in Byrne v Deane, which is, we
believe, the most appropriate analogy and with the decision
in Urbanchich v Drummoyne Municipal Council. It makes the liability
risk of a Facebook page host no greater than that of an organiser of a
public meeting – another appropriate analogy, in our view. It is
consistent with the right of freedom expression in the Bill of Rights,
bearing in mind the unavailability of the innocent dissemination
defence. And it provides a situation where liability for defamation is not
imposed on the basis of negligence.”
79
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February
2015)
¬ Is a social network [Facebook] liable for the tort of misuse of private
information for not removing a profile page that had personal information
about former sex predators?
¬ “In relation to the first series of posts it was apparent to the first defendant
from the profile/page "Keeping our Kids Safe from Predators 2" and in
particular from the content in relation to CG that individuals were trying to
find out where convicted sex offenders, including CG lived, with an obvious
risk of vigilante violence given the inflammatory language which condoned
and incited such violence. The first defendant misused private information
in not deleting that information. The content was obviously unlawful being
misuse of private information. The first defendant is not able to limit its
liability under the Electronic Commerce (EC Directive) Regulations 2002. It
is liable to the plaintiff for misuse of private information for the entire period
22 April 2013 to 22 May 2013 or alternatively from the date of receipt of
the initial letter dated 26 April 2013 to 22 May 2013.”
80
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February
2015)
¬ “The first defendant asserts that in order to have actual knowledge it
has to have received from the plaintiff proper notification which
includes a complainant needing to identify content by specific URL. It
also asserts that it acted expeditiously as soon as it received proper
notification from the plaintiff…
¬ In the particular circumstances of this case and in relation to each of
the three series of postings it was not necessary for the plaintiff to
provide URLs of the individual postings or for the plaintiff to set out a
definitive analysis of the unlawful nature of each and every posting. By
looking at the postings, with the knowledge of the XY litigation the first
defendant would have been aware of facts or circumstances from
which it would have been apparent to it that the activity or information
was plainly unlawful being misuse of private information and
harassment of the plaintiff. The only efficacious remedy was to remove
all the postings. (emphasis added)
81
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February
2015)
For the first defendant to be able to characterise something as
unlawful it would need to know something of the strength and
weakness of the available defences, see Bunt v Tilley [2007] 1 WLR
1243. However the first defendant in this case has considerable
resources at its disposal and does not require to have spelled out to
it on each occasion with inappropriate precision the particular laws of
the UK which are in issue and which are being contravened. For
instance, to take an example not applicable to this case, it can be
assumed that the first defendant knows that organising terrorism is
unlawful and does not need that to be spelt out to it. It can also be
assumed that the first defendant knows that harassing and
threatening violence against sex offenders together with attempts to
publicise exactly where the sex offender lives are also unlawful being
the misuse of private information and contrary to public policy.
82
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February
2015)
“The plaintiff also sought a mandatory injunction requiring the first defendant to
terminate the account of the second defendant. I understood that the account
being referred to was the profile/page "Keeping our Kids Safe from Predators 2"
and not the private account held by the second defendant. The application is not
just limited to any part of that profile/page that refers to CG but all of it which
refers to numerous other sex offenders. The profile/page is doing damage to
other individuals and clearly is unlawful. One method of approaching the
question of an injunction is that the first defendant could anticipate that it might
be potentially liable in damages to all or many of the other individuals named on
that profile/page and then leaving it to the first defendant to take action and
close it down. However that would depend on other individual sex offenders
exposing themselves to the emotional and financial costs of litigation. There is
also a public interest in play as the profile/page increases the risks to the public.
In those circumstances I consider that the only efficacious remedy is to require
the first defendant to terminate the profile/page "Keeping our Kids Safe from
Predators 2" and I make that order.”
83
McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891
Bleyer v Google Inc. [2014] NSWSC 897 (12 August 2014)
¬ Is a search engine liable for publishing defamatory content in its computer
generated snippets?
¬ “Google Inc submitted that two English decisions have determined that, in the
circumstances established by the evidence in this case, Google Inc could not
be regarded as a publisher for the purposes of defamation law because there
is no human input into the search process. None of the officers or employees
of Google Inc takes part in the search, which is performed automatically in
accordance with computer programs or "web-crawling robots“…
¬ The evidence before me establishes that there is no human input in the
application of the Google search engine apart from the creation of the
algorithm. I would respectfully disagree with the conclusion reached by
Beach J in Trkulja that the performance of the function of the algorithm in that
circumstance is capable of establishing liability as a publisher at common
law. I would adopt the English line of authority to the effect that, at least prior
to notification of a complaint (and on the strength of the evidence before me),
Google Inc cannot be liable as a publisher of the results produced by its
search engine.”
84
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Sookman tclg 2015_year_in_review_slides

  • 1. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 McCarthy Tétrault Advance™ Building Capabilities for Growth Barry B. Sookman bsookman@mccarthy.ca 416-601-7949 June 10, 2015 TCLG: The Year in Review 2014-2015
  • 2. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 ¬ Online Agreements ¬ Licensing/Technology Contracting ¬ Privacy ¬ Online Liability ¬ Cybersecurity ¬ Copyright 2
  • 3. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 3 Online Agreements
  • 4. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014) ¬ Is the arbitration clause in B&N’s browsewrap enforceable? ¬ “The website's Terms of Use are available via a "Terms of Use" hyperlink located in the bottom left-hand corner of every page on the Barnes & Noble website, which appears alongside other hyperlinks labeled "NOOK Store Terms," "Copyright," and "Privacy Policy." These hyperlinks also appear underlined and set in green typeface in the lower lefthand corner of every page in the online checkout process. ¬ Nguyen neither clicked on the "Terms of Use" hyperlink nor actually read the Terms of Use. Had he clicked on the hyperlink, he would have been taken to a page containing the full text of Barnes & Noble's Terms of Use, which state, in relevant part: "By visiting any area in the Barnes & Noble.com Site, creating an account, [or] making a purchase via the Barnes & Noble.com Site ... a User is deemed to have accepted the Terms of Use." Nguyen also would have come across an arbitration provision…”. 4
  • 5. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014) ¬ “Were there any evidence in the record that Nguyen had actual notice of the Terms of Use or was required to affirmatively acknowledge the Terms of Use before completing his online purchase, the outcome of this case might be different. Indeed, courts have consistently enforced browsewrap agreements where the user had actual notice of the agreement.” ¬ ”…where the website contains an explicit textual notice that continued use will act as a manifestation of the user's intent to be bound, courts have been more amenable to enforcing browsewrap agreements.See, e.g., Cairo, Inc. v. Crossmedia Servs., Inc., 2005 WL 756610 (N.D.Cal. Apr. 1, 2005) (enforcing forum selection clause in website's terms of use where every page on the website had a textual notice that read: "By continuing past this page and/or using this site, you agree to abide by the Terms of Use for this site, which prohibit commercial use of any information on this site").” 5
  • 6. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014) ¬ “But where, as here, there is no evidence that the website user had actual knowledge of the agreement, the validity of the browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract. Specht, 306 F.3d at 30-31; see also In re Zappos.com, Inc. Customer Data Sec. Breach Litig., 893 F.Supp.2d 1058, 1064 (D.Nev.2012). Whether a user has inquiry notice of a browsewrap agreement, in turn, depends on the design and content of the website and the agreement's webpage. Google,2013 WL 5568706. Where the link to a website's terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce the browsewrap agreement.” ¬ “See Woodrow Hartzog, Website Design as Contract, 60 Am. U.L.Rev. 1635, 1644 (2011) (observing that courts "tend to shy away from enforcing browsewrap agreements that require no outward manifestation of assent"); Lemley, 91 Minn. L.Rev. at 472-77 ("An examination of the cases that have considered browsewraps in the last five years demonstrates that the courts have been willing to enforce terms of use against corporations, but have not been willing to do so against individuals.").” (emphasis added) 6
  • 7. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014) ¬ “Barnes & Noble argues that the placement of the "Terms of Use" hyperlink in the bottom left-hand corner of every page on the Barnes & Noble website, and its close proximity to the buttons a user must click on to complete an online purchase, is enough to place a reasonably prudent user on constructive notice… ¬ But the proximity or conspicuousness of the hyperlink alone is not enough to give rise to constructive notice, and Barnes & Noble directs us to no case law that supports this proposition… ¬ In light of the lack of controlling authority on point, and in keeping with courts' traditional reluctance to enforce browsewrap agreements against individual consumers, we therefore hold that where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on — without more — is insufficient to give rise to constructive notice. Given the breadth of the range of technological savvy of online purchasers, consumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.” 7
  • 8. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ Browsewrap exists where the online host dictates that assent is given merely by using the site. ¬ Clickwrap refers to the assent process by which a user must click "I agree," but not necessarily view the contract to which she is assenting. ¬ Scrollwrap requires users to physically scroll through an internet agreement and click on a separate "I agree" button in order to assent to the terms and conditions of the host website. ¬ Sign-in-wrap couples assent to the terms of a website with signing up for use of the site's services; it is the form used by Gogo in the instant case. 8
  • 9. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) “Following the ruling in Specht, courts generally have enforced browsewrap terms only against knowledgeable accessors, such as corporations, not against individuals. See, e.g., Register, 356 F.3d at 403 (applying California law in finding that defendant using automated programs to repeatedly access competitor's website was put on notice of "terms of use" that were sent to defendant each time after it accessed the website's data); Ticketmaster Corp. v. Tickets.com, Inc., 2003 WL 21406289 (C.D. Cal. March 7, 2003) (applying California law in finding binding contract where defendant company was put on reasonable notice of "terms of use" of competitor's website, plaintiff having "placed in a prominent place on the home page the warning that proceeding further binds the user to the conditions of use" and defendant accessed the site repeatedly). "An examination of the cases that have considered browsewraps in the last five years demonstrates that the courts have been willing to enforce terms of use against corporations, but have not been willing to do so against individuals." Lemley, 91 Minn. L. Rev. at 472”. 9
  • 10. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “Clickwrap agreements necessitate an active role by the user of a website. Courts, in general, find them enforceable. Drew, 259 F.R.D. at 462 n.22. "Clickwrap agreements require a user to affirmatively click a box on the website acknowledging awareness of and agreement to the terms of service before he or she is allowed to proceed with further utilization of the website." Id. By requiring a physical manifestation of assent, a user is said to be put on inquiry notice of the terms assented to.” ¬ Courts of Appeals, while accepting the general definition of what constitutes a clickwrap agreement, have yet to rule on their presumptive validity. The term "clickwrap" only appears in seven reported Courts of Appeals decisions, none of which decide the per se enforceability of these agreements… ¬ “By contrast, almost "[e]very [lower] court to consider the issue has found `clickwrap' licenses, in which an online user clicks `I agree' to standard form terms, enforceable." Lemley, 91 Minn. L. Rev. at 459”. 10
  • 11. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “There is a crucial distinction between online agreements that a user must view because of the nature of the website's construction and design— i.e., scrollwraps—and those that merely require a user to click an "I agree" box that appears next to a hyperlink containing "terms of use"—i.e., clickwraps. ¬ Some court decisions that use the term "clickwrap" are in fact dealing with "scrollwrap" agreements where an internet consumer had a realistic opportunity to review and scroll through the electronic agreement… ¬ Reference to scrollwrap agreements as clickwraps is misleading… Cf. Juliet M. Moringiello and William L. Reynolds, From Lord Coke to Internet Privacy: The Past, Present, and Future of the Law of Electronic Contracting, 72 Md. L. Rev. 452, 466 (2013) ("In the world of electronic contracts . . . clickwrap is a meaningless term. Click-to-agree transactions come in many flavors. Sometimes the click is at the end of the terms so that a reader must at least scroll through to reach the `I agree' icon, while [at] other times the click is next to a hyperlink that leads to the terms, either in one click or in several. Whether the terms are classified as clickwrap says little about whether the offeree had notice of them.").” 11
  • 12. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “A questionable form of internet contracting has been used in recent years—sign-in-wraps. These internet consumer contracts do not require the user to click on a box showing acceptance of the "terms of use" in order to continue. Rather, the website is designed so that a user is notified of the existence and applicability of the site's "terms of use" when proceeding through the website's sign-in or login process. Courts of Appeals have yet to rule on the validity and enforceability of the terms of such contracts… ¬ Lower courts upholding sign-in-wrap arrangements, such as the one presented in Fteja, have done so under three circumstances. They emphasized notice and an effective opportunity to access terms and conditions.” (emphasis added) 12
  • 13. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “First, where the hyperlinked "terms and conditions" is next to the only button that will allow the user to continue use of the website. See, e.g., Crawford v. Beachbody, LLC, No. 14-CV-1583, 2014 WL 6606563, at *3 (S.D. Cal. Nov. 5, 2014) (forum selection clause binding where consumer clicked on button marked "Place Order" and above button was statement informing user that by clicking the button user was subject to the website's "terms and conditions," which were available in the same screen via hyperlink).. ¬ Second, where the user "signed up" to the website with a clickwrap agreement and was presented with hyperlinks to the "terms of use" on subsequent visits. See, e.g., Nicosia v. Amazon.com, Inc., No. 14-CV-4513, 2015 WL 500180, (E.D.N.Y. Feb. 4, 2015) (arbitration clause enforceable where user clicked box acknowledging terms at initial signup to website and was presented with hyperlink at top of webpage to "terms of use" multiple times after completing purchases)… ¬ Third, where notice of the hyperlinked "terms and conditions" is present on multiple successive webpages of the site. See, e.g., Major v. McCallister, 302 S.W.3d 227, 230-31 (Mo. Ct. App. S. Dist. 2009) (forum selection clause enforceable where hyperlink to "terms and conditions" was presented on multiple successive webpages and the final step in the website's signup process was to click a button next to which was the phrase: "By submitting you agree to the Terms of Use"). 13
  • 14. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “… the following four-part inquiry in analyzing sign-in-wraps, and electronic contracts of adhesion generally, is required: ¬ (1) Aside from clicking the equivalent of sign-in (e.g., log-in, buy-now, purchase, etc.), is there substantial evidence from the website that the user was aware that she was binding herself to more than an offer of services or goods in exchange for money? If not, the "terms of use," such as those dealing with venue and arbitration, should not be enforced against the purchaser. ¬ (2) Did the design and content of the website, including the homepage, make the "terms of use" (i.e., the contract details) readily and obviously available to the user? If not, the "terms of use," such as those dealing with venue and arbitration, should not be enforced against the purchaser. ¬ (3) Was the importance of the details of the contract obscured or minimized by the physical manifestation of assent expected of a consumer seeking to purchase or subscribe to a service or product? If yes, then the "terms of use," such as those dealing with venue and arbitration, should not be enforced against the purchaser. 14
  • 15. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ (4) Did the merchant clearly draw the consumer's attention to material terms that would alter what a reasonable consumer would understand to be her default rights when initiating an online consumer transaction from the consumer's state of residence: The right to (a) not have a payment source charged without notice (i.e., automatic payment renewal); (b) bring a civil consumer protection action under the law of her state of residence and in the courts in her state of residence; and (c) participate in a class or collective action? If not, then (a), (b), or (c) should not be enforced against the consumer. ¬ It is desirable to have hard-edged rules of adhesion that apply no matter what the consumer's background. Such rules reduce substantial litigation costs. But, until useful consumer studies demonstrate that average consumers using the computer understand what contract terms are being accepted when a purchase is made, preemptive rules in favor of vendors who do not forcefully draw purchasers' attention to terms disadvantageous to them should be rejected. The burden of showing agreement to details of a contract on a website's contract of adhesion is on the vendors. It is the vendor who designs the website and puts into it terms favoring itself. ¬ Proof of special know-how based on the background of the potential buyer or adequate warning of adverse terms by the design of the agreement page or pages should be required before adverse terms, such as compelled arbitration or forced venue, are enforced. 15
  • 16. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Berkson v. Gogo LLC, 2015 WL 1600755, (E.D.N.Y. 2015) ¬ “Applying the proposed framework for analyzing sign-in-wrap agreements to Berkson, it is necessary to decide whether sufficient evidence has been proffered by defendants demonstrating that Berkson knew he was binding himself to more than a one-time offer of service in exchange for money. The evidence to date indicates that he was unaware… ¬ It cannot be taken for granted that Berkson clicked on the "SIGN IN" button on the lower left hand corner of the website, which indicated that by clicking "Sign in" he was agreeing to the company's "terms of use.“… ¬ The design and content of the website, including the homepage, did not make the "terms of use" readily and obviously available to Berkson. The hyperlink to the "terms of use" was not in large font, all caps, or in bold. Nor was it accessible from multiple locations on the webpage. By contrast, the "SIGN IN" button is very user-friendly and obvious, appearing in all caps, in a clearly delineated box in both the upper right hand and the lower left hand corners of the homepage. ¬ The importance of the "terms of use" was obscured by the physical manifestation of assent, in this case clicking the "SIGN IN" button, expected of a consumer seeking to purchase in-flight Wi-Fi. Once Berkson clicked "SIGN IN," the "terms of use" did not appear in a new screen or in a pop-up window on the same screen. He was not required to scroll through the contract of adhesion and its boilerplate terms in order to click "accept" or "I agree." 16
  • 17. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691 (E.D.Ill.Feb. 2015) “The question in this case is whether the Agreement in a scrollable Window was a valid clickwrap agreement, and therefore, whether Plaintiff's clicking the Button constituted his assent to terms of the Agreement. Since neither party disputes that Plaintiff clicked the Button, which is an affirmative action to accept some type of terms stated on the "Step 2 of 3" page, I only examine whether there was reasonable notice of terms of the Agreement and indication that a click would constitute assent to the terms. 17
  • 18. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691 (E.D.Ill.Feb. 2015) ¬ The layout of the Window, the Button, and the Paragraph may have provided reasonable notice of the existence of the terms. However, it did not provide reasonable notice that a users' click would constitute assent to the terms in the Window... Therefore, this Agreement is not a valid clickwrap agreement. (emphasis added) ¬ Defendants allege that the Agreement is a valid clickwrap because the placement of the Window and the Button, a visible scrollbar, and a phrase "I Accept" on the Button were conspicuous enough for users to understand that their clicking the Button would mean that they are agreeing to the terms in the Window… Plaintiff, however, contends that notice was insufficient since there was no instruction referencing the Agreement or informing users that their clicking the Button would constitute assent to the terms in the Window.” 18
  • 19. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691 (E.D.Ill.Feb. 2015) ¬ “To determine whether a website provides reasonable constructive notice, courts have applied two different approaches. In the first approach, courts only look at whether hyperlinks or texts of agreements were conspicuous enough. The conspicuousness depends on design and contents of defendants' website and agreement's webpage. Nguyen, 763 F.3d at 1177… ¬ In the second approach, the recent trend in both federal district and appellate courts, courts require (i) conspicuous hyperlinks or texts of agreements and (ii) an explicit text referencing terms of agreements or instructing users that they are assenting to agreements. An additional requirement of an explicit reference is to protect users who may "have no reason to suspect [that] they will be bound" by the terms hidden in hyperlink agreements. Nguyen, 763 F.3d at 1179.” (emphasis added) 19
  • 20. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Sgouros v TransUnion Corp. 2015 U.S.Dist. LEXIS 13691 (E.D.Ill.Feb. 2015) “Even accepting Plaintiff's argument that this Agreement may be a browsewrap agreement if the terms in the Window and terms linked to the Printable Version link are treated separately from the Button, the Agreement in our case fails to be a valid browsewrap agreement under both approaches. Under the first approach, the location of the Window and the Button, as well as the visible scroll bar may have provided sufficient notice of terms to users. However, they were insufficient to inform users that their clicks would constitute assent to the terms in the Window. Under the second approach, which provides greater protection for internet users, Defendants failed to provide constructive notice since there is no explicit reference indicating that users should read the terms in the Window. It is unreasonable to expect users to scroll down the Window when they are not aware of a possibility of being bound by the terms in the Window. Therefore, this Agreement is not a valid browsewrap agreement because it did not provide sufficient constructive notice to users that they are being bound by the terms in the Window by using the website.” 20
  • 21. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Savetsky v Pre-Paid Legal Services, Inc 2015 WL 604767 (N.D.Cal. 2015) “Here, there is no evidence Savetsky had actual notice of the sample member contract on LegalShield's website, or acknowledged the existence of such a contract prior to purchasing his membership. In fact, by simply checking the desired services and clicking the "BUY NOW" button, a consumer can order a LegalShield plan without even being aware a member contract exists. Not to mention that a consumer would only receive actual notice if he clicked through two optional links and read to page seven where, under the inconspicuous heading "Settlement of Disputes," the arbitration provision appears. See Windsor Mills, 25 Cal. App. 3d at 993 (noting that "an offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious.").” 21
  • 22. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Douez v. Facebook, Inc., 2014 BCSC 953 ¬ Is Facebook’s forum selection clause in its Terms of Use enforceable? ¬ “A user must agree to Facebook’s Terms of Use when the user registers for a Facebook account. I have not been given an online demonstration, but one version of the Terms of Use, when printed, runs 13 pages long, with the portion dealing with “Governing Law: Venue and Jurisdiction” commencing ten pages after the first page. ¬ Another version of the Terms of Use as of April 26, 2011, appears to be in very small font and comprised of approximately 18 sections. The Forum Selection Clause set out above in these Reasons is towards the end of these tiny terms, as item 15 under the heading “Disputes”. ¬ I have not heard evidence as to how long it would take the average reader to read Facebook’s Terms of Use, or for that matter, the context of that time in relation to every “terms of use” facing an internet user on a daily basis. ¬ But the obscure nature of a clause in online terms of use has been found in some other cases not to defeat a forum selection clause: see Rudder v. Microsoft Corp., [1999] O.J. No 3778 (Ont. S.C.J.)” 22
  • 23. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Douez v. Facebook, Inc., 2014 BCSC 953 ¬ “There is other language in the Terms of Use indicating that Facebook promises to respect local laws. For example, one version of the Terms of Use includes this language: ¬ We [Facebook] strive to create a global community with consistent standards for everyone, but we also strive to respect local laws... .” ¬ The plaintiff argues in effect that this is contractual recognition by Facebook that where local laws oust the contract or are inconsistent with the contract, then the local laws apply. Since the local law here, the Privacy Act, confers exclusive jurisdiction on this Court and such claims could not be brought in California, and this is inconsistent with the selection of a California forum, the Forum Selection Clause must give way to the Privacy Act. ¬ In my view, the plaintiff has at least a triable issue on her argument that the Forum Selection Clause does not apply to the Privacy Act cause of action, based on a full interpretation of the Terms of Use. However, it is not necessary to decide this issue, as I am able to decide the jurisdictional issue on other grounds.” 23
  • 24. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Douez v. Facebook, Inc., 2014 BCSC 953 ¬ The plaintiff argues that the Privacy Act is a protection for BC residents that overrides any choice of law clause in a contract between Facebook and its members… ¬ Interestingly, Facebook’s public Form 10-K annual report filed pursuant to the US Securities Exchange Act, 15 U.S.C. §78a (1934), for the year ending December 31, 2012, contains the following statements indicating that it is subject to foreign laws concerning privacy: ¬ We are subject to a number of U.S. federal and state, and foreign laws and regulations that affect companies operating on the Internet, …These may involve user privacy….In particular, we are subject to…foreign law as regarding privacy and protection of user data. Foreign data protection, privacy and other laws and regulations are often more restrictive than those in the United States… ¬ I find that whether or not the Privacy Act applies despite Facebook’s choice of law clause is an issue common to all members of the proposed class and its determination will materially advance the litigation.” 24
  • 25. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Douez v. Facebook, Inc., 2014 BCSC 953 ¬ “While the Privacy Act was introduced in 1968, the policy reasons behind protecting the privacy rights of British Columbians have only expanded since that time. ¬ The protection of privacy rights are now found to be consistent with the values of Canadians as expressed in the Canadian Charter of Rights: ss. 7, 8 of the Canadian Charter of Rights and Freedoms… ¬ Furthermore, with the creation and growth of the internet the potential implications for a loss of privacy are greater than ever. The difficulty in proving quantifiable damage remains great for an individual whose privacy is lost, but the social harm can be monumental if the loss of privacy includes publicity over the internet with its almost infinite reach and timelessness. ¬ I conclude that the legislative conferral of exclusive jurisdiction on this Court for claims under the Privacy Act evidences both a legislative intention to override any forum selection clause to the contrary, and a strong public policy reason for not enforcing the Forum Selection Clause.” 25
  • 26. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Knutson v. SIRIUS XM RADIO, INC., 717 F. 3d. 559 (9th.Cir. 2014) ¬ “Sirius XM argues nevertheless that although there was a delay between the activation of the service and Knutson's receipt of the Customer Agreement, Knutson's continued use of its service after that receipt constituted his assent to be bound to the Customer Agreement. Sirius XM cites Golden Eagle Ins. Co. v. Foremost Ins. Co., which states that "[a]s a general rule, silence or inaction does not constitute acceptance of an offer. There are several well-recognized exceptions to this rule. Acceptance of an offer may be inferred from inaction in the face of a duty to act . . . and from retention of the benefit offered.“… ¬ Nothing in the record, however, indicates that Sirius XM's offer was clearly and effectively communicated to Knutson by mailing him the Customer Agreement. Knutson would only have had notice of his opportunity to cancel his subscription, or the effect of his continued use of the service, if he opened the Welcome Kit from Sirius and read all of the documents therein, which—in view of his lack of awareness of any contractual relationship with Sirius—he had no reason to do. He could not be obligated to act where there was no effective notice that action was required. Accordingly, Knutson's continued use of the service after his receipt of the Customer Agreement did not manifest his assent to the provisions in the Customer Agreement.” 26
  • 27. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Tompkins v. 23andMe, INC., 2014 WL 2903752 (N.D.Cal. Jun. 25, 2014) “23andMe cannot rely on purported acceptance of the TOS upon purchase to demonstrate a valid agreement. As explained above, during checkout, the website did not present or require acceptance of the TOS. Rather, the only way for a customer to see the TOS at that stage was to scroll to the very bottom of the page and click a link under the heading "LEGAL." Such an arrangement provided insufficient notice to customers and website visitors. For example, in Be In, this Court held that "mere use of a website" could not demonstrate users' assent, and that the "mere existence of a link" failed to notify users of terms of service. 2013 U.S. Dist. LEXIS 147047. Other courts have held that similar browsewrap-style agreements are ineffective. E.g., Specht, 306 F.3d at 20, 32 (finding that a "reasonably prudent Internet user" would not have seen "a reference to the existence of license terms on a submerged screen"); Jerez v. JD Closeouts, LLC, 943 N.Y.S.2d 392, 398 (Dist. Ct. 2012) ("[E]-commerce merchants cannot blithely assume that the inclusion of sale terms, listed somewhere on a hyperlinked page on its website, will be deemed part of any contract of sale.")”. 27
  • 28. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Tompkins v. 23andMe, INC., 2014 WL 2903752 (N.D.Cal. Jun. 25, 2014) ¬ “Plaintiffs do not dispute that the 23andMe website requires each person who creates an account or registers a kit to indicate acceptance of the TOS before receiving any test results, nor do Plaintiffs dispute that the TOS contained the same arbitration provision at all relevant times. Various Plaintiffs have alleged that they received test results after purchasing kits… Thus, these Plaintiffs must have clicked "I ACCEPT THE TERMS OF SERVICE" when creating an account and registering… Other courts have found that user access to portions of websites that require indicating assent to be sufficient evidence that the user clicked "I Accept.”… ¬ The Court also determines that Plaintiffs received adequate notice regarding the TOS. As noted above, during the account creation and registration processes, each named Plaintiff clicked a box or button that appeared near a hyperlink to the TOS to indicate acceptance of the TOS. In this respect, the TOS resemble clickwrap agreements, where an offeree receives an opportunity to review terms and conditions and must affirmatively indicate assent. See Specht, 306 F.3d at 22 n.4. The fact that the TOS were hyperlinked and not presented on the same screen does not mean that customers lacked adequate notice.” 28
  • 29. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523 (N.D. Cal. 2015) ¬ “The prices quoted on our web site at the time of your order are estimated prices only. You will be charged the prices quoted for Products you have selected for purchase at the time your order is processed at checkout. The actual order value cannot be determined until the day of delivery because the prices quoted on the Web site are likely to vary either above or below the prices in the store on the date your order is filled and delivered.” ¬ “The Special Terms promise that, with the exception of the actually disclosed special charges and delivery fees, the prices charged for Safeway.com products will be those charged in the physical store where the groceries are delivered. Since Safeway actually marked up the charges for the in-store prices beyond the disclosed delivery and special charges, the Court grants summary judgment that Safeway breached its contract with its customers who registered between January 1, 2006 and November 15, 2011.” 29
  • 30. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523 (N.D. Cal. 2015) ¬ “In both versions, Safeway "reserves the right to, from time to time, with or without notice to you, in [Safeway's] sole discretion, amend the Terms and Conditions." Defendant's version reinforces this with an additional term: "We may amend the Agreement at any time by posting the amended terms on the Site." In both versions, the Special Terms provide that "[a]ny amendments by [Safeway] will be effective only as to orders you place after [Safeway]'s revisions of these Terms and Conditions as displayed on the Web site.“ ¬ “The Safeway.com agreement did not give Safeway the power to bind its customers to unknown future contract terms, because consumers cannot assent to terms that do not yet exist. A user confronting a contract in which she purports to agree to terms in whatever form they may appear in the future cannot know to what she is are agreeing. At most, this term in the Safeway.com agreement could be read to indicate that a customer agrees to read the terms and conditions every time she makes a purchase on the website in the future. But the Court also concludes that, even in light of their agreement to the Special Terms at the time of registration, customers' assent to the revised Terms cannot be inferred from their continued use of Safeway.com when they were never given notice that the Special Terms had been altered.” 30
  • 31. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523 (N.D. Cal. 2015) “Safeway's claim that a court could infer a customer's assent to the revised terms from that customer's continued use of the Safeway.com website resembles the type of browsewrap agreement the Ninth Circuit rejected in Nguyen. Although Class Members were presented with a clickwrap agreement at the time of their registration, they were never presented with a subsequent clickwrap agreement asking them to consent to the revised Special Terms. As was the case in Nguyen, Class Members could have completed all their subsequent purchases on Safeway.com without ever visiting the webpage hosting the revised Special Terms which Safeway claims governed the sale and without ever clicking anything on the website that would indicate that they have agreed to those terms. Customers' lack of awareness that the Special Terms have been altered undermines Safeway's claim that each purchase on Safeway.com constitutes an agreement to those changes. Douglas teaches that assent to a contract's revised terms "can only be inferred" from a customer's ongoing use of a service "after [the customer] received proper notice of the proposed changes." Douglas, 495 F.3d at 1066.” 31
  • 32. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Rodman v. SAFEWAY INC., 2015 U.S.Dist. LEXIS 17523 (N.D. Cal. 2015) ¬ “Although it is true that a customer could, as matter of course, read the entirety of the Special Terms before every grocery purchase they make from Safeway.com, generally "[p]arties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side.“… ¬ But beyond the impracticality of expecting consumers to spend time inspecting a contract they have no reason to believe has been changed, the imposition of such an onerous requirement on consumers would be particularly lopsided, as Safeway is aware that it has — or has not — made changes to the Terms and is the party to the contract that wishes for the new terms to govern. "[T]he onus must be on website owners to put users on notice of the terms to which they wish to bind consumers." Nguyen, 763 F.3d at 1179. Safeway is best positioned to make sure customers are aware of changes that Safeway has made to its contract with Class Members. After making a change, Safeway can take any number of actions to alert users that the Special Terms they agreed to at registration have been altered. For instance, Safeway could ask customers to click to indicate that they agree to the new Special Terms or send all existing Safeway.com customers an email in order to ensure that every consumer is aware of a change in the Special Terms prior to making a purchase. When Safeway changed the Special Terms on November 15, 2011, it opted to do neither.” 32
  • 33. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Ilana Imber-Gluck v Google Inc. 2015 WL 1522076 (N.D.Cal. Aug 12, 2014) “Here, Google’s Terms of Service signed by plaintiff and class expressly provides that signees are “responsible for the activity that happens on or through [their] Google account[s].” This express provision agreed to by plaintiff and class entitles Google to bill plaintiff and class’s Google Play accounts for charges incurred through such activity regardless of their intent. However, plaintiff has alleged that Google encouraged children to make In-App Purchases, without providing notice to the parent or guardian of the 30-minute window in which the account holder’s password is not required to make subsequent purchases. Such acts may frustrate the common purpose of the agreement by forcing parents to pay for purchases that Google induced parents’ minor children to make. Therefore, plaintiff has sufficiently pled facts which would demonstrate how Google breached the duty of good faith and fair dealing. Accordingly, the court DENIES Google’s motion.” See, Bhasin v. Hrynew 2014 SCC 71 33
  • 34. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 JBB Investment Partners, Ltd. v. Fair, 232 Cal. App. 4th 974 (2014) ¬ “At 10:17 a.m., on July 5, Fair sent the following e-mail to Russo from his cell phone: "[Russo], the facts will not in any way support the theory in your e-mail. I believe in Cameron. So I agree. Tom [F]air.” ¬ “Even if a printed name can satisfy the signature requirements of Code of Civil Procedure section 664.6, a printed name is not a signature under contract law simply because the person deliberately printed his or her name. "[I]t is a universal requirement that the statute of frauds is not satisfied unless it is proved that the name relied upon as a signature was placed on the document or adopted by the party to be charged with the Intention of authenticating the writing." (Marks v. Walter G. McCarty Corp., supra, 33 Cal.2d at p. 820, italics added.) The evidence must also demonstrate that the person printing his or her name intended to execute the document. Here, as already discussed, the record is devoid of any evidence demonstrating that Fair intended to execute a settlement agreement by electronic means when he printed his name at the end of his e-mail.” 34
  • 35. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Majdoub v CarsOnTheWeb.Deutschland GmbH, CJEU, Case C-322/14 (21 May, 2015) ¬ “In the case in the main proceedings, it is not disputed that click-wrapping makes printing and saving the text of the general terms and conditions in question possible before the conclusion of the contract. Therefore, the fact that the webpage containing that information does not open automatically on registration on the website and during each purchase cannot call into question the validity of the agreement conferring jurisdiction. ¬ Having regard to the foregoing considerations, the answer to the question referred is that Article 23(2) of the Brussels I Regulation must be interpreted as meaning that the method of accepting the general terms and conditions of a contract for sale by ‘click-wrapping’, such as that at issue in the main proceedings, concluded by electronic means, which contains an agreement conferring jurisdiction, constitutes a communication by electronic means which provides a durable record of the agreement, within the meaning of that provision, where that method makes it possible to print and save the text of those terms and conditions before the conclusion of the contract.” 35
  • 36. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Small Justice LLC v Xcentric Ventures LLC 2015 WL 1431071 (D.Mass Mar.27, 2015) ¬ “Here, the Court concludes that a reasonably prudent user was on inquiry notice of the terms and conditions associated with the ROR, and, therefore, the transfer of copyright ownership was valid. The screen where users submitted their reports prominently featured a portion of the terms in the center of the screen, above the "continue" button that the users clicked to conclude the posting process. That screen, along with at least two of the other screens used in the posting process, also contained blue links to the terms of service at the bottom of the page which were conspicuously visible without scrolling beyond the "continue" button used to progress to the subsequent screen. The conspicuousness of the terms is supported by the contrasting color of the link to them coupled with the placement of the terms themselves on the final screen prior to submission.” ¬ “The Court concludes that DuPont transferred copyright ownership to Xcentric by means of an enforceable browsewrap agreement.” ¬ Can a browsewrap transfer ownership of a copyright? 36
  • 37. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Bank of Montreal v Rogozinsky, 2014 ABQB 771 ¬ “Ms. Rogozinsky’s November 14, 2014 affidavit included a document entitled “Common law Copyright Notice”, which I have reproduced and attached as Appendix “E”. This document was sent to the Bank. In brief, this is another foisted unilateral agreement that claims if someone uses Ms. Rogozinsky’s name without her permission then she can bill them $1 million. This is the alleged basis for $6 million of Ms. Rogozinsky’s counterclaim. ¬ One of the alleged occasions where the Bank breached Ms. Rogozinsky’s “Common law Copyright” in her name was that her name was used, without authorization, on the Bank’s statement of claim. ¬ However, the “Common law Copyright Notice” does not merely stop with Ms. Rogozinsky’s name, but also extends to her biological and physical properties (para 5) and “... absolute control and mastery over the peaceful possession of [his or her] body, mind and mental facilities ...”, which, the bank is apparently interfering with by asking that the debt be repaid… ¬ “Ms. Rogozinsky’s alleged breach of copyright and trade-mark damages are frivolous. Her attempts to enforce them are without merit and had no prospect of success.” 37
  • 38. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 38 Licensing/Technology Contracting
  • 39. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nortel Networks Corporation (Re) 2015 ONSC 2987 ¬ Article 4 – Legal Title to NN Technology ¬ (a) Except as otherwise specifically agreed, legal title to any and all NN Technology whether now in existence or hereafter acquired, or developed pursuant to the terms of this Agreement, shall be vested in NNL. In consideration therefor, NNL agrees to enter into an Exclusive License and a Non-Exclusive License with each of the Licensed Participants as set forth in Article 5. ¬ Article 5 – Grant of Exclusive Licenses by NNL ¬ (a) To the extent of its legal right to do so, and subject to the rights of relevant third parties, NNL hereby: ¬ (i) continues to grant to each Licensed Participant an exclusive, royalty-free license, including the right to sublicense, which except as hereinafter provided shall be in perpetuity, rights to make, have made, use, lease, license, offer to sell, and sell Products using or embodying NN Technology in and for the Exclusive Territory designated for that Licensed Participant, and all rights to patents, industrial designs (or equivalent) and copyrights, and applications therefor, and technical know-how, as necessary or appropriate in connection therewith (“Exclusive License”); 39
  • 40. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Nortel Networks Corporation (Re) 2015 ONSC 2987 ¬ “I interpret the MRDA, and find, that under it, and while Nortel operated as a going concern business, NNL had all ownership interests of the NN Technology subject to grants, being…the grant of exclusive and non-exclusive licenses to the Licensed Participants under article 5(a). ¬ The licenses under article 5(a) were not licenses of all rights to the NN Technology but were subject to field of use restrictions that gave the Licensed Participants the right to use the NN Technology to make, use or sell Products as defined in the MRDA, which meant products, software or services that were made or sold by, or for, any of the Licensed Participants. The Products must have been created or marketed by or for the Nortel Group. No product that was part of a third party’s business rather than the business of Nortel fell within the definition of Products….The Licensed Participants’ rights to sublicense were subject to these restrictions.” 40
  • 41. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 In re: NORTEL NETWORKS, INC., 2015 WL 2374351 (D.Del. May 12, 2015) ¬ “The MRDA grants the Licensed Participants all valuable rights to and beneficial ownership in NN Technology in their respective territories. The Court looks to the purpose, rules, and representations underlying Nortel's transfer pricing agreements, including the R&D CSAs and the MRDA; Nortel's pre-petition business practices; and custom in the industry.” ¬ “Therefore, NNL had no right to practice or otherwise exploit Nortel patents or other NN Technology in the United States and could not place a buyer of its interests in any better position than NNL itself occupied or protect such a buyer from an infringement suit by NNI.” 41
  • 42. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Planification-Organisation-Publications Système (POPS) Ltée v. 9054-8181 Québec Inc., 2014 FCA 185 ¬ Did the trial judge err by granting an implied license to use and make adaptations to source codes where the plaintiffs had asked for a right to use computer programs? ¬ “The respondents’ argument to the effect that the user licence sought necessarily included access to the source code is in no way supported by the evidence adduced at the hearing. The respondents concede in their memorandum that the judge did not indicate in his reasons that such access was a condition of the implicit user licence or that such access was necessary for the use requested…. ¬ However, neither the judge nor this Court can award more that what was sought in the proceeding by the respondents… ¬ I therefore find it necessary to reformulate the judgment to limit the scope of the licence to the use of all versions of Ceres, Omega, Epsilon and Comex existing at the end of the collaboration…It is also necessary, in my view, to remove the reference to the source code from paragraph viii) of the judgment and to amend it so that it requires that only the versions described above be provided.” 42
  • 43. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Planification-Organisation-Publications Système (POPS) Ltée v. 9054-8181 Québec Inc., 2014 FCA 185 ¬ Did the trial judge err by finding that a non-exclusive license was perpetual and not revocable for cause? ¬ “In my opinion, there is no generally applicable rule of law that would preclude a non-exclusive user licence from being non-revocable when the licensee has provided consideration. Neither the law nor the Act restrict the parties’ contractual freedom in this regard. In every case, it is for the trial judge to determine the terms that are implicit in the contract in light of all of the relevant contextual elements in civil law. ¬ This is exactly what the judge did in this case and the appellants have not established the existence of any palpable or overriding error in this regard. Naturally, and as the appellants argue, the expression “non-revocable” must not be understood in its strictly narrow sense. It certainly means, as the judge indicated, that the appellants cannot repudiate the licence unilaterally or wantonly. It is not necessary to attempt to define the situations in which such a licence could be repudiated because in this case and for the reasons that follow I am satisfied that the appellants had no such right, whether the licence was revocable for misconduct or non-revocable.” 43
  • 44. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Northrop Grumman Mission Systems Europe Ltd v BAE Systems [2014] EWHC 2955 (TCC) (08 September 2014) ¬ “BAE contends that by Clause 5.1 of the Licence Agreement the terms of an… Enabling Agreement governed the Licence Agreement so that Clause 10.4 of the Enabling Agreement which provided for termination for convenience entitled BAE to terminate the Licence Agreement on that basis with effect from 19 December 2011.” ¬ “In relation to perpetual licences I was referred to the decision of Sales J in BMS Computer Solutions Limited v AB Agri Limited [2010] EWHC 464 (Ch) at [17] to [18] where he said: ¬ The word "perpetual" can carry different shades of meaning. It can, for example, mean "never ending" (in the sense of incapable of being brought to an end) or it can mean "operating without limit of time“… ¬ a possible meaning of "perpetual" is "of indefinite duration" …the termination provisions in both those agreements were very important terms of those agreements. They dealt with important commercial matters such as termination for breach of the agreement or in circumstances of insolvency of the other party. It is reasonable to think that any parties to licence and support agreements of this kind would wish such important commercial matters to be dealt with by such terms." 44
  • 45. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Northrop Grumman Mission Systems Europe Ltd v BAE Systems, [2014] EWHC 2955 (TCC) (08 September 2014) ¬ “Termination clauses are commonplace in commercial contracts and software licensing agreements are not an exception, as the BMS Computer Solutions case indicates… ¬ “Turning then to Clause 10.4, I consider that, treating the Licence Agreement as being the same as a Purchase Order, there is no difficulty in construing that clause governing the Licence Agreement and applying so as to give the Purchaser, BAE, the right to terminate the Licence Agreement for convenience… ¬ For the reasons set out above, I propose to make a declaration that, on a true construction of the Licence Agreement, BAE was entitled to terminate the Licence Agreement for convenience on 20 calendar days' notice under the provisions of Clause 10.4 of the Enabling Agreement which governed the Licence Agreement.” 45
  • 46. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Filmflex Movies Ltd v Piksel Ltd [2015] EWHC 426 (Ch) (24 February 2015) ¬ Is a licensee entitled to copies of source code from escrow. ¬ "9.1 For the purposes of this Agreement only and subject to clause 9.4, all Intellectual Property Rights in the ioko365 Materials and the ioko365 Platform belong to ioko365. ioko365 grants the Company a perpetual, royalty free, non- exclusive, non-transferable, irrevocable licence to run, use, access, maintain, modify, enhance, copy and create derivative works of the ioko365 Materials, ioko365 Platform and all associated documentation, as applicable, throughout the world (and permits its subcontractors to do the same for the sole purpose of providing services to the Company). ¬ 9.2 All Intellectual Property Rights in the Company Materials, the Company Platform, the Company Platform Materials and Company Data belong to the Company. The Company grants ioko365 a non-exclusive, non-transferable, revocable licence during the term of this Agreement to use, copy, access, maintain, modify, enhance and create derivative works of the Company Materials, Company Platform Materials and Company Data for the sole purpose of delivering the Platform to the Company and delivering the Services." 46
  • 47. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Filmflex Movies Ltd v Piksel Ltd, [2015] EWHC 426 (Ch) (24 February 2015) ¬ Is a licensee entitled to copies of source code from escrow. ¬ “I therefore accept FilmFlex 's argument that in this contract, the parties must have intended by licensing each other to use the rights in their software in the manner described in clause 9.1 and 9.2 that they would be entitled to a copy of the software from the other if that was necessary in order for those rights to be exercised. Thus, in a situation where (i) FilmFlex is granted rights over the whole of the Platform which entitle it to use, copy, modify etc that software; (ii) it can only sensibly carry out those activities if it has a copy of the Source Code; (iii) it does not currently have a copy of the Source Code but Piksel does have a copy; and (iv) Piksel can provide FilmFlex with a copy and at the same time retain a copy which enables it to exercise its own rights (ownership and licence) in the Platform, a reasonable observer would interpret the contract as meaning that Piksel is required on request to provide FilmFlex with a copy of the Source Code. If that right is not conferred by clause 9.11 (and I have held that it is) then it must be conferred impliedly by clauses 9.1 and 9.2.” 47
  • 48. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 118 Data Resource Ltd v IDS Data Services Ltd & Ors [2014] EWHC 3629 (Ch) (05 November 2014) ¬ Right of database owner to obtain order for specific perofmance entitling it to conduct an audit. ¬ Clause 4.7 provides as follows: "[IDS] undertakes and agrees with [118] that it will … permit any duly authorised representative of [118] on reasonable prior notice to enter into any of its premises where any copies of [the Database] are used, for the purpose of ascertaining that the provisions of this Agreement are being complied with.“ ¬ “Having looked at the Agreement as a whole, I now turn to construe clause 4.7. The following issues arise: ¬ 1 IDS agrees to permit access to "any duly authorised representative" of 118. Who is to be given access? ¬ 2 Access is to be given to "any of its premises where copies of [the Database] are used". Which premises are meant? ¬ 3 Access is to be given "for the purpose of ascertaining that the provisions of this Agreement are being complied with". What does this mean? ¬ 4 Clause 4.7 merely refers to access but does not say what 118 is permitted to do once it has gained access.” 48
  • 49. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 118 Data Resource Ltd v IDS Data Services Ltd & Ors [2014] EWHC 3629 (Ch) (05 November 2014) ¬ “I return to the phrase defining the premises to be searched. I can see no good reason for permitting a search of the place where the Database is stored if that gives 118 carte blanche to search for anything which happens to be on those premises, whether or not connected with the storage or use of the Database. It seems to me to be more likely that those words limit the nature of what may be inspected as well as defining the location… ¬ Finally, there is the question of what 118 is permitted to do once it has gained access. I readily accept that the intention was to enable 118 to police the Agreement, albeit that this is limited to policing the use of the Database. This clearly imposes some kind of obligation on IDS to permit access to the computer in order that 118 can carry out the permitted investigation. But what kind of access is permitted?... ¬ In the circumstances I am satisfied that 118 has the right to enter IDS's office in Glasgow for limited purposes, but I am not satisfied that 118 has shown a sufficiently clear case that it is entitled to enter for the purposes for which it wishes to enter, nor as to what it is allowed to do once it has entered.” 49
  • 50. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Carlson Inc. v IBM 2014 U.S. Dist. LEXIS 102086 (D.Minn. Jul. 30, 2014) ¬ IBM’s right to collect termination for convenience fees for ERP build charges, balance sheet charges, and wind-down charges of $14 million. ¬ “Carlson's "unclean hands" defense also would be without merit even if IBM had committed fraud. The equitable defense of unclean hands is available only in response to a claim for equitable relief… ¬ Finally, Carlson's "penalty" defense is also unavailing. Penalty analysis is applicable only to liquidated damage provisions, which in any event "are presumed valid" under Minnesota law.. but which may be unenforceable if "greatly disproportionate" to actual damages… ¬ The termination payment provisions here are not "damage" provisions at all, liquidated or otherwise. They are not triggered by a Carlson breach, but rather by the termination of the contract — even if done pursuant to Carlson's termination rights — and are simply payment to IBM for services rendered or expenses incurred. Such provisions are valid under Minnesota law…” 50
  • 51. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Dong v. Clyne, 2014 BCPC 132 ¬ Can a person that recommends a programmer be liable for negligent misrepresentation? ¬ “In this case, there was a special relationship between the Claimant and the Defendant based on both their personal and professional dealings. ¬ The Claimant was a professional in the area of software development and portrayed both himself and Mr. Qi as such to the Defendant. ¬ In the circumstances of the representations made by the Claimant, both the Claimant and a reasonable person should have known that the Defendant, at the time, relied on the Claimant’s skill and judgment, and reasonably relied upon the Claimant’s representations about Mr. Qi.” ¬ “…while the Defendant may have at first been induced by the Claimant’s misrepresentations to work with Mr. Qi, his decision to expend money and continue to work with Mr. Qi in the face of the apparent breach of what was represented to him with regard to both time and cost, were decisions made independent of the misrepresentations. ¬ As such, no liability can be attributed to the Claimant for them.” 51
  • 52. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 52
  • 53. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ “Customer Profiles - Bell creates and maintains a Customer Profile for each Bell Customer of a Bell Service that is associated with the RAP, using network usage information and account/demographic information it already collects for various existing operational purposes… Generally speaking, a Customer Profile includes demographic information and account information combined with network usage information, such as specific websites visited and apps used on a Bell Customer's mobile device. The Customer Profile also includes interests Bell has inferred from such network usage… ¬ Ad Profiles - RAP Advertisers create, via a special web interface, "Ad Profiles" that define the audience of Bell Customers to which they would like to deliver targeted ads (e.g., 26-30 year old males in the city of Ottawa with below average credit and an interest in hockey). Ad Profiles are comprised of a number of "dimensions", each corresponding to a specific type of information captured in Bell's Customer Profiles… ¬ Profile Matching and Ad Placement - Bell then facilitates the delivery of targeted ads by RAP Advertisers to Bell Customers...Bell sends a temporary customer ID and Customer Profile identification number to the RAP Advertiser, which in turn allows the advertiser to deliver a targeted ad to the Bell Customer whose Customer Profile matches an active Ad Profile. Bell does not, except when also acting as a RAPAdvertiser, deliver the ads directly, and does not share the identity of the Bell Customer with RAP Advertisers during the process.” 53
  • 54. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ Is “personal information” used in the RAP? ¬ “All account/demographic and network usage information collected and used by Bell for the purposes of the RAP is individual-level data linked to a specific Bell Customer and therefore constitutes personal information under the Act.” ¬ “Interest Categories - Bell also uses URLs visited by a customer…to assign and rank interest categories to that customer's Customer Profile… ¬ Any categories that correspond to a list of categories that Bell has predetermined to be sensitive (e.g., "Adult Content", "Special Education", "Diabetes", "Catholicism" or "Gay Life") or likely to be of interest to minors (e.g., "Family Internet", "Society - Teens" or "Animation") are discarded and not added to the Customer Profile. ¬ However, URLs that may be considered inherently sensitive could be used to yield non- sensitive interest categories. For example, hypothetically, a URL related to a certain type of cancer could yield the interest categories "Cancer" and "Men's Health". Bell would discard "Cancer", as a category it deems to be sensitive, and assign the non- sensitive category, "Men's Health", to the Customer Profile.” 54
  • 55. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ Is a behavioral advertising program to deliver relevant ads (a RAP) an appropriate purpose under s5(3) of PIPEDA? ¬ “In general, and subject to the caveat explained below, we believe that a reasonable person would consider Bell's purpose in using account/demographic and network usage information (i.e., to deliver targeted ads) to be appropriate in the circumstances… ¬ In our analysis of this issue, we have considered Bell's objectives in implementing the RAP, the likely effectiveness of the RAP in achieving those objectives, and the nature of the information used. We must also remain cognizant that the purpose of PIPEDA is to "establish…rules to govern the collection, use and disclosure of personal information in a manner that recognizes the right of privacy of individuals with respect to their personal information and the need of organizations to collect, use or disclose personal information for purposes that a reasonable person would consider appropriate in the circumstances". ¬ With that in mind, we accept that Bell's objectives of maximizing advertising revenue while improving customers' online experience is a legitimate business objective. We also accept that the RAP may very well be effective in achieving those objectives.” (emphasis added) 55
  • 56. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ Does the RAP require express consent? ¬ “In our view, Bell does not ensure adequate consent for the RAP. For such consent to be meaningful in this context, Bell should: ¬ obtain express opt-in consent for the practice; ¬ ensure that Bell Customers' understanding of the RAP and their associated choices are supported by clear explanations outlining all RAP Information.” ¬ “More specifically, our rationale for requiring opt-in consent is based primarily on two key factors, as provided by PIPEDA: ¬ the sensitivity of the information at issue, and ¬ the reasonable expectations of Bell's customers.” 56
  • 57. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ “In our view, the mere fact that sensitive URLs are used to generate non-sensitive interest categories does not change the fact that the underlying information being used is sensitive. Both the underlying information and the resulting categories that are derived from such information must be assessed in determining the sensitivity of the information at issue. ¬ To focus solely on the end-result of the process, as Bell is suggesting, would unduly minimize the privacy interest at stake and would have serious implications. According to Bell's logic, accessing, for example, sensitive medical records would not be a "use" of sensitive information provided the resulting category derived from such medical records is non-sensitive in nature, a result which in our view, is clearly unreasonable.” ¬ “Taking into consideration all of the factors surrounding Bell's RAP, in combination and in concert with each other (i.e., that Bell wishes to use customers' personal information, much of it sensitive, originally collected for the purposes of delivering paid telecommunications and broadcasting distribution services, for the new secondary purpose of enabling third-party behaviourally targeted advertising), we are of the view that Bell Customers would reasonably expect Bell to give them an express choice with respect to whether or not they wish to participate in the RAP.” 57
  • 58. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 OPC PIPEDA Report of Findings #2015-001, Results of Commissioner Initiated Investigation into Bell’s Relevant Ads Program, April 7, 2015 ¬ “Following the release of the Report of Findings, Bell advised us that it has decided to withdraw its Relevant Ads Program and that it will delete all existing customer profiles related to the program. Furthermore, Bell has said that if it launches a similar program in the future, it would do so using express opt-in consent. ¬ We appreciate Bell’s cooperation throughout the course of our investigation and we respect Bell’s decision to terminate the program. ¬ As we stated in our investigation report, our Office accepted that Bell’s objective of maximizing advertising revenue while improving the online experience of customers was a legitimate business objective. We also accepted that Bell’s targeted advertising initiative could be effective in achieving those objectives. ¬ Our recommendation to Bell was that it use opt-in consent in its targeted advertising program. We felt that the privacy implications of the initiative were significant enough to require opt-in consent from customers. ¬ We consider this matter to be resolved.” (emphasis added) 58
  • 59. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Ladas v. Apple Inc., 2014 BCSC 1821 ¬ Causes of action against Apple for storing location data on iDevices in class action proceedings; no claim that any data was transmitted to Apple or that data was accessed by anyone. ¬ “There can be no doubt that there is no common law tort of invasion or breach of privacy in British Columbia…Any alleged breach of privacy is only actionable under the Privacy Act (B.C.)” and other similar provincial statutes in Saskatchewan, Manitoba, and Newfoundland…” [confirmed in Albayate v. Bank of Montreal, 2015 BCSC 695] ¬ “the attempt to plead a cause of action in negligence, based on the bare allegation of a duty of care owed by Apple, fails to state a reasonable claim… ¬ The Charter does not apply to common law disputes between private individuals:... ¬ it is plain and obvious that the Privacy Act (Canada) does not provide a legal basis for the plaintiff …” 59
  • 60. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Ladas v. Apple Inc., 2014 BCSC 1821 ¬ Were there common issues to be tried as a class action? ¬ “But the issue raised is whether Apple’s conduct violates the plaintiff’s and class members’ privacy rights; in other words, whether Apple is liable under the Privacy Act. Resolution of proposed common issue (a) requires the court to look not only at Apple, but also at the individual circumstances of the plaintiff and other proposed class members in order to make a determination of the issue on the merits. As Madam Justice Griffin pointed out in Douez (at para. 283), the subjective elements of reasonableness and context are relevant under ss. 1(2) and (3) of the Privacy Act (B.C.).” ¬ “The plaintiff has not shown any basis in fact to conclude that reasonableness and context could be proved on a class-wide basis. ¬ In addition, one of the factual issues on which a defendant’s liability under the Privacy Act (B.C.) depends is whether Apple acted “without a claim of right” (see s. 1(1)). Another is whether the act or conduct complained of was consented to by a person entitled to consent (see s. 2(2)(a)). The plaintiff has not shown a basis in fact to conclude that either of these issues could be proved on a class-wide basis. They are individual issues.” 60
  • 61. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Zuckerman c. Target Corporation, 2015 QCCS 1285 ¬ Can a Quebec court assume jurisdiction over a class action against a foreign entity (Target) based on a data breach which requires showing damage was suffered in Quebec? ¬ “The prejudice allegedly sustained by Zuckerman does not per se constitute compensable damages in the present context. With the advent of computers and Internet, the ever increasing use of technology in business transactions, online or in store, the use of electronic devices to effect a payment with a credit or debit card and the proliferation of people who unfortunately use the technology and Internet in their attempt to defraud others, the “inconveniences” described by Zuckerman fall in the category of “ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept…and do not constitute "compensable“ damages.’ ¬ “There are no allegations that he was victim of identity theft. There are no allegations that any personal information of his was indeed part of the Data Breach as we cannot tell upon reading the Motion if Zuckerman used his credit card at Target during the Data Breach.” 61
  • 62. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Green v. eBAY INC. 2015 WL 2066531, (E.D. La. May 4, 2015) ¬ “Following Clapper, the majority of courts faced with data breach class actions where complaints alleged personal information was accessed but where actual identity theft was not alleged have applied this "certainly impending" standard; notably, where plaintiffs have alleged their injury was the increased risk of identity theft, courts have dismissed the complaints for lack of Article III standing. These courts found that the mere increased risk of identity theft or identity fraud alone does not constitute a cognizable injury unless the harm alleged is certainly impending.” ¬ “In most data breach cases, the complaints allege sensitive information was stolen, such as financial information or Social Security numbers. In such cases, courts nonetheless have found that the mere risk of identity theft is insufficient to confer standing, even in cases where there were actual attempts to use the stolen information.” ¬ See also, Storm v. Paytime, Inc., 2015 WL 1119724 (M.D. Pa. Mar. 13, 2015); In Re Zappos.com Inc. Customer Data Security breach Litigation, D.Nev. Jun. 1, 2015) 62
  • 63. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Albayate v. Bank of Montreal, 2015 BCSC 695 ¬ Is the bank liable for a privacy breach for changing a person’s mailing address in its computer system where statements are sent to the wrong address and inaccurate information is sent to a credit bureau? ¬ “In my view, the bank was in breach of its privacy policy which formed part of its contract with Ms. Albayate in providing inaccurate information to the credit bureaus and by not correcting the inaccurate information when it became aware of the address had been changed in its computer system without her authorization.” ¬ Damages for mental distress rejected as “Quite simply, minor and transient upsets do not constitute personal injury, and hence do not amount to damage.” quoting Mustapha v. Culligan of Canada Ltd., 2008 SCC 27. ¬ “Having reviewed the evidence and the case law, including considering the factors set out in Jones, it is my opinion that a nominal award in the amount of $2,000 is appropriate in the circumstances of this case.” ¬ See also McIntosh v. Legal Aid Ontario, 2014 ONSC 6136 - $7,500 damages for unauthorized access of information from Legal Aid files. 63
  • 64. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Gulati & Ors v MGN Limited, [2015] EWHC 1482 (Ch) (21 May 2015) ¬ How to assess damages for the breach of privacy tort, in this case arising from the “phone hacking” (mobile voice message interception) scandals. ¬ “While the law is used to awarding damages for injured feelings, there is no reason in principle, in my view, why it should not also make an award to reflect infringements of the right itself, if the situation warrants it. The fact that the loss is not scientifically calculable is no more a bar to recovering damages for “loss of personal autonomy” or damage to standing than it is to a damages for distress. If one has lost “the right to control the dissemination of information about one’s private life” then I fail to see why that, of itself, should not attract a degree of compensation, in an appropriate case. A right has been infringed, and loss of a kind recognised by the court as wrongful has been caused. It would seem to me to be contrary to principle not to recognise that as a potential route to damages. In my view that would make it all the more anomalous, as a matter of principle, were damages to be unavailable for them. Of course, in a great number of cases the emphasis will be on the distress caused, both because it will be that distress which motivates an action in the first place and because it will be the most focused on result of the infringement when it is discovered.” 64
  • 65. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Google Inc v Vidal-Hall & Ors [2015] EWCA Civ 311 (27 March 2015) ¬ Are damages recoverable under the UK DPA for Google’s collection of personal data using the “Safari workaround”? ¬ Misuse of private information is a tort under English law. ¬ Since what the Directive purports to protect is privacy rather than economic rights, it would be strange if the Directive could not compensate those individuals whose data privacy had been invaded by a data controller so as to cause them emotional distress (but not pecuniary damage). It is the distressing invasion of privacy which must be taken to be the primary form of damage (commonly referred to in the European context as "moral damage") and the data subject should have an effective remedy in respect of that damage. ¬ “On the face of it, these claims raise serious issues which merit a trial. They concern what is alleged to have been the secret and blanket tracking and collation of information, often of an extremely private nature, as specified in the confidential schedules, about and associated with the claimants' internet use, and the subsequent use of that information for about nine months. The case relates to the anxiety and distress this intrusion upon autonomy has caused….” 65
  • 66. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Hopkins v. Kay, 2015 ONCA 112 ¬ Is the Personal Health Information Protection Act, S.O. 2004, c. 3, Sch. A (“PHIPA”) an exhaustive code that ousts the jurisdiction of the Superior Court to entertain any common law claim for invasion of privacy rights in relation to patient records? ¬ “the appellants reference decisions from other jurisdictions – namely, British Columbia and Alberta – where courts have held that privacy statutes occupy the field and preclude resort to common law remedies… ¬ In my view, these decisions do not assist the appellants. The provincial privacy legislation in British Columbia and Alberta establishes a statutory cause of action for breach of privacy. As described in Jones v. Tsige, at para. 54, courts in these jurisdictions are left to define the contours of the statutory right to privacy within the parameters of that legislation. In contrast, there is no general statutory cause of action for breach of privacy in Ontario. The respondent’s claim is not based upon a breach of PHIPA, but on a distinct common law tort. The wrong contemplated by the common law tort of intrusion upon seclusion differs in its essential character from a claim that a statutory provision has been breached.” 66
  • 67. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Hopkins v. Kay, 2015 ONCA 112 “I conclude that the language of PHIPA does not imply a legislative intention to create an exhaustive code in relation to personal health information. PHIPA expressly contemplates other proceedings in relation to personal health information. PHIPA’s highly discretionary review procedure is tailored to deal with systemic issues rather than individual complaints. Given the nature of the elements of the common law action, I do not agree that allowing individuals to pursue common law claims conflicts with or would undermine the scheme established by PHIPA, nor am I satisfied that the review procedure established by PHIPA ensures that individuals who complain about their privacy in personal health information will have effective redress. There is no basis to exclude the jurisdiction of the Superior Court from entertaining a common law claim for breach of privacy and, given the absence of an effective dispute resolution procedure, there is no merit to the suggestion that the court should decline to exercise its jurisdiction.” 67
  • 68. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Grant v. Winnipeg Regional Health Authority et al., 2015 MBCA 44 ¬ “Again, it is clear from the emerging jurisprudence that, had Mr. Sinclair survived, he may, on the facts set out in the statement of claim, have advanced a claim for breach of confidence or intrusion upon seclusion or perhaps for publicity which placed him in a false light in the public eye. ¬ Whether family members, who claim to have suffered as a result of a breach of a privacy interest of another member, are in sufficient proximity to the victim in a tort context and are therefore able to advance a claim in their own right, remains an open question. It would not be appropriate to dismiss at this early stage the possibility of a court recognizing that damages suffered by immediate or close family members as a result of such a breach are compensable.” 68
  • 69. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 69 Online Liability
  • 70. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19 ¬ Are metatags protected by copyright? ¬ “The evidence before me shows that the Plaintiff’s redtag metatags allegedly copied by the Defendants were substantially derived from a list of Google key words which are then incorporated into short phrases descriptive of travel industry types of travel, locations, and discounts or deals for consumers. Examples included in comparisons of the redtag.ca and 411travelbuys.ca webpages related to, for instance, cruises, group vacations, nolitours and hola- sun holidays, are indicative of the common generic terms used in this regard, to attract consumers, to buy travel packages for various destinations. ¬ In this case there is little evidence of any sufficient degree of skill and judgement in creating these metatags, as is required by the test set out by the Supreme Court of Canada in CCH, above, or for the originality required in compiling data or other compilations, as discussed by the Federal Court of Appeal in Tele-Direct. While in some cases there may be sufficient originality in metatags to attract copyright protection when viewed as a whole, the substance of the metatags asserted by the Plaintiff in this case does not meet the threshold required to acquire copyright protection in Canada.” 70
  • 71. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19 ¬ Is use of a competitor’s metatags passing off or trade-mark infringement? ¬ “Even if a searcher is looking for the website connected with a particular trade name or trademark, once that person reaches the website, there must be confusion as to the source of the entity or person providing the services or goods. If there is no likelihood of confusion with respect to the source of the goods or services on the website, there is no support for finding this prong of the test for passing off. Accordingly, use of a competitor’s trademark or trade name in metatags does not, by itself, constitute a basis for a likelihood of confusion, because the consumer is still free to choose and purchase the goods or services from the website he or she initially searched for. ¬ Here, there is no use of any of the Plaintiff’s trademarks or trade names on the Defendants’ visible website. The website is clearly identified as 411 Travel Buys’ website. There is no likelihood of deception as to the source of the services provided on the 411 Travel Buys website, and the consumer is free to redirect his or her search to the Plaintiff’s website.” 71
  • 72. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19 ¬ Is use of a competitor’s metatags depreciation of goodwill? ¬ “Use” under section 22 requires use of the plaintiff’s trademarks, as registered. There has been no such use here and accordingly, section 22 does not apply. Moreover, even if it could arguably be said that there is at least some use of redtag.ca by use of red tag, that use was not in any visible portion of 411 Travel Buys’ website, it was in the metatags. There is no connection between the online services of 411 Travel Buys on their website and the services of the Plaintiff as offered on 411 Travel Buys’ website.” ¬ See also, Insurance Corporation of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296; Interflora Inc & Ors v Marks and Spencer Plc [2014] EWCA Civ 1448 (12 November 2014) 72
  • 73. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Weaver v. Corcoran, 2015 BCSC 165 ¬ Whether a message to “e-mail a friend” or a hyperlink to a document that the person publishes is a republication for defamation purposes. ¬ The Supreme Court of Canada summarized the basic legal principles behind re-publication in Breeden v. Black,2012 SCC 19 (CanLII) at para. 20. The Court noted: ¬ … It is well established in Canadian law that the tort of defamation occurs upon publication of a defamatory statement to a third party… It is also well established that every repetition or republication of a defamatory statement constitutes a new publication. The original author of the statement may be held liable for the republication where it was authorized by the author or where the republication is the natural and probable result of the original publication 73
  • 74. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Weaver v. Corcoran, 2015 BCSC 165 ¬ “The invitation to email the article to a friend meets the test set out in the jurisprudence that re-publication is the “natural and probable result of the original publication”. The invitation is to email an article, the content of which is known and indeed created by the defendants. This is unlike the situation in Crookes which involved a website concerning commentary on various issues with hyperlinks to other websites, the content of which is not controlled by the operator of the website. In this context, I am prepared to conclude that a reasonable inference could be drawn of publication to a third person of each of the articles at issue.”… ¬ As noted, however, by Abella J., it appears that control of the content at issue on the Internet may well inform the developing framework to analyze the legal issues at this time. A review of the concurring opinions establishes these are early days in the consideration of the impact of the Internet on jurisprudence concerning publication and defamation. As such, there is likely room for a nuanced approach when considering the emerging issues.” 74
  • 75. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Weaver v. Corcoran, 2015 BCSC 165 ¬ “The evidence of re-publication includes numerous downloads of Weaver’s Web; Weaver’s Web II; Climate Agency Going up in Flames; and some of So Much for Pure Science from various websites. The defendants maintain, however, republication cannot be a mere hyperlink as stated in Crookes. Thus, the “story tools” on the National Postwebsite do not qualify as authorization. The evidence established these are merely permitted hyperlinks back to the original article.”… ¬ A review of the material demonstrates further reader comments, including many reader comments on the Climate Audit site of the article. In my view, this evidence is sufficient to establish the fact of re-publication… ¬ As noted, however, by Abella J., [in Crookes v Newton] it appears that control of the content at issue on the Internet may well inform the developing framework to analyze the legal issues at this time. A review of the concurring opinions establishes these are early days in the consideration of the impact of the Internet on jurisprudence concerning publication and defamation. As such, there is likely room for a nuanced approach when considering the emerging issues.” 75
  • 76. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Weaver v. Corcoran, 2015 BCSC 165 ¬ Is the operator of an Internet forum – a reader comment area on a newspaper website – liable for publication of the defamatory postings? ¬ “Until awareness occurs, whether by internal review or specific complaints that are brought to the attention of the National Post or its columnists, the National Post can be considered to be in a passive instrumental role in the dissemination of the reader postings. It has taken no deliberate action amounting to approval or adoption of the contents of the reader posts. Once the offensive comments were brought to the attention of the defendants, however, if immediate action is not taken to deal with these comments, the defendants would be considered publishers as at that date… ¬ Action must immediately be taken to fulfill the responsibility not to distribute defamatory material. The evidence establishes that was done within one to two days to address that problem. In my view, that is all the defendants could realistically do in the circumstances. While the plaintiff maintains more should have been done, I am unable to agree based on the evidence before me. As technology progresses, the answer and evidence on this issue may well be different.” 76
  • 77. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Baglow v. Smith, 2015 ONSC 1175 ¬ Liability of message board operators for 3rd party defamatory posts. ¬ “It is the position of the Fourniers that the simple provision of software to enable a message board or forum is equivalent to the provision of a hyperlink. The message board itself, the software, is content neutral. In my view this position is disingenuous and ignores reality. A message board or forum is set up precisely to provide content to its readers. Its whole purpose is to provide content. ¬ The Fourniers are the moderators and administrators of Free Dominion. They decided to set up a politically conservative venue in 2001 on the Internet. It is a message board. The purpose of the Free Dominion message board is to allow conservatively minded individuals to voice their opinions. Its home page states that it is “The Voice of Principled Conservatism”. Members discuss political issues from a conservative point of view. The Fourniers are not mere passive bystanders. They make posts themselves and participate in threads. ¬ Moreover, as moderators and administrators, the Fourniers have the ability to control content on Free Dominion.” ¬ Note: defense of innocent dissemination not claimed. 77
  • 78. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Murray v Wishart [2014] NZCA 461 (19 September 2014) ¬ Can the poster of a tweet that links to a defamatory site be liable for publishing defamatory material available at the linked to site? ¬ “…in Crookes v Newton the Supreme Court of Canada treated hyperlinks as essentially a reference rather than something communicating content… ¬ In our view, the combined text and hyperlink may amount to publication of defamatory material in the hyperlink in some circumstances. Publication of a defamatory statement via a hyperlink should be found if the text indicates adoption or endorsement of the content of the hyperlinked text. If the text communicates agreement with the content linked to, then the hyperlinker should be liable for the defamatory content. ¬ We do not consider we need to reach any more general view about the role of hyperlinking because it is clear that, on the present facts, the Twitter statements are closely connected to the Information Statement. We agree with Courtney J that meaning can be determined on the basis that the two statements would be read as one. We say that because the first of the Twitter statements encouraged the reader to go to the Facebook page. Hence, on Twitter, Mr Murray said, “I’ve fired up a facebook page to drive awareness” and the reader was then given the link to follow.” 78
  • 79. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Murray v Wishart [2014] NZCA 461 (19 September 2014) ¬ Is the publisher of a Facebook page liable for defamatory postings of 3rd parties on the page? ¬ “These concerns lead us to conclude that the actual knowledge test should be the only test to determine whether a Facebook page host is a publisher. That is consistent with at least some of the authorities to which we have referred, (Sadiq v Baycorp (NZ) Ltd, A v Google New Zealand Ltd and Davison v Habeeb) and with the Law Commission’s analysis. It conforms with the approach in Byrne v Deane, which is, we believe, the most appropriate analogy and with the decision in Urbanchich v Drummoyne Municipal Council. It makes the liability risk of a Facebook page host no greater than that of an organiser of a public meeting – another appropriate analogy, in our view. It is consistent with the right of freedom expression in the Bill of Rights, bearing in mind the unavailability of the innocent dissemination defence. And it provides a situation where liability for defamation is not imposed on the basis of negligence.” 79
  • 80. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February 2015) ¬ Is a social network [Facebook] liable for the tort of misuse of private information for not removing a profile page that had personal information about former sex predators? ¬ “In relation to the first series of posts it was apparent to the first defendant from the profile/page "Keeping our Kids Safe from Predators 2" and in particular from the content in relation to CG that individuals were trying to find out where convicted sex offenders, including CG lived, with an obvious risk of vigilante violence given the inflammatory language which condoned and incited such violence. The first defendant misused private information in not deleting that information. The content was obviously unlawful being misuse of private information. The first defendant is not able to limit its liability under the Electronic Commerce (EC Directive) Regulations 2002. It is liable to the plaintiff for misuse of private information for the entire period 22 April 2013 to 22 May 2013 or alternatively from the date of receipt of the initial letter dated 26 April 2013 to 22 May 2013.” 80
  • 81. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February 2015) ¬ “The first defendant asserts that in order to have actual knowledge it has to have received from the plaintiff proper notification which includes a complainant needing to identify content by specific URL. It also asserts that it acted expeditiously as soon as it received proper notification from the plaintiff… ¬ In the particular circumstances of this case and in relation to each of the three series of postings it was not necessary for the plaintiff to provide URLs of the individual postings or for the plaintiff to set out a definitive analysis of the unlawful nature of each and every posting. By looking at the postings, with the knowledge of the XY litigation the first defendant would have been aware of facts or circumstances from which it would have been apparent to it that the activity or information was plainly unlawful being misuse of private information and harassment of the plaintiff. The only efficacious remedy was to remove all the postings. (emphasis added) 81
  • 82. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February 2015) For the first defendant to be able to characterise something as unlawful it would need to know something of the strength and weakness of the available defences, see Bunt v Tilley [2007] 1 WLR 1243. However the first defendant in this case has considerable resources at its disposal and does not require to have spelled out to it on each occasion with inappropriate precision the particular laws of the UK which are in issue and which are being contravened. For instance, to take an example not applicable to this case, it can be assumed that the first defendant knows that organising terrorism is unlawful and does not need that to be spelt out to it. It can also be assumed that the first defendant knows that harassing and threatening violence against sex offenders together with attempts to publicise exactly where the sex offender lives are also unlawful being the misuse of private information and contrary to public policy. 82
  • 83. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February 2015) “The plaintiff also sought a mandatory injunction requiring the first defendant to terminate the account of the second defendant. I understood that the account being referred to was the profile/page "Keeping our Kids Safe from Predators 2" and not the private account held by the second defendant. The application is not just limited to any part of that profile/page that refers to CG but all of it which refers to numerous other sex offenders. The profile/page is doing damage to other individuals and clearly is unlawful. One method of approaching the question of an injunction is that the first defendant could anticipate that it might be potentially liable in damages to all or many of the other individuals named on that profile/page and then leaving it to the first defendant to take action and close it down. However that would depend on other individual sex offenders exposing themselves to the emotional and financial costs of litigation. There is also a public interest in play as the profile/page increases the risks to the public. In those circumstances I consider that the only efficacious remedy is to require the first defendant to terminate the profile/page "Keeping our Kids Safe from Predators 2" and I make that order.” 83
  • 84. McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 14498891 Bleyer v Google Inc. [2014] NSWSC 897 (12 August 2014) ¬ Is a search engine liable for publishing defamatory content in its computer generated snippets? ¬ “Google Inc submitted that two English decisions have determined that, in the circumstances established by the evidence in this case, Google Inc could not be regarded as a publisher for the purposes of defamation law because there is no human input into the search process. None of the officers or employees of Google Inc takes part in the search, which is performed automatically in accordance with computer programs or "web-crawling robots“… ¬ The evidence before me establishes that there is no human input in the application of the Google search engine apart from the creation of the algorithm. I would respectfully disagree with the conclusion reached by Beach J in Trkulja that the performance of the function of the algorithm in that circumstance is capable of establishing liability as a publisher at common law. I would adopt the English line of authority to the effect that, at least prior to notification of a complaint (and on the strength of the evidence before me), Google Inc cannot be liable as a publisher of the results produced by its search engine.” 84