E-TIPS® Newsletter’s “2022: Year In Review”

Thank you for your readership over the last year and welcome to what we hope will be an exciting 2023!  In this year’s first issue of the E-TIPS® Newsletter, we will recap our most noteworthy reports from 2022, covering developments in intellectual property (IP) and information technology (IT) law under the following categories: (1) “Supreme Court of Canada Matters”, (2) “Legislative, Treaty and Policy Developments”, (3) “Patents and Industrial Designs”, (4) “Trademarks”, (5) “Copyright”, (6) “Privacy and Cybersecurity”, and (7) “Legal Developments in Emerging Technology Around the World”.

This issue of E-TIPS® Newsletter’s “2022: Year in Review” is brought to you by Michelle Noonan, M. Imtiaz Karamat, Steffi Tran, and Sharan Johal.  Remember, all of our past coverage – over 20 years’ worth – is accessible in our archive.

1. Supreme Court of Canada Matters

Making Works Available Online is Not a Separately Protected and Compensable Activity

In July 2022, the Supreme Court of Canada (SCC) in Society of Composers, Authors and Music Publishers of Canada v Entertainment Software Association, 2022 SCC 30, found that making works available online is not a separately protected and compensable activity.  The SCC held that the Copyright Act only required users to pay one royalty fee to stream works online, concluding that Parliament did not intend to create a new compensable “making available right” under section 2.4(1.1) of the Copyright Act and that, when properly interpreted, the provision did not subject downloads and streams into two royalties.  Furthermore, the SCC clarified that where an administrative body and courts share first instance jurisdiction over questions of law, the standard of review is correctness, and that concurrent first instance jurisdiction should be recognized as an additional correctness category.  Our report on the decision can be found here.

Largest Canadian Patent Infringement Award Upheld

In November 2022, the SCC in Nova Chemicals Corp. v Dow Chemical Co., 2022 SCC 43, affirmed a patent infringement award of approximately $645 million and set out a three-step test for determining an accounting of profits.  The SCC confirmed that springboard profits were legally permissible, holding that such profits were an extension of the principle that, in calculating an accounting of profits, the infringer must disgorge all profits causally attributable to the infringement.  Furthermore, the SCC stated that royalties paid for the post-filing, pre-grant period were not related to the calculation of profits earned from infringement, during the period of patent protection.  Click here for our full report on the decision.

2. Legislative, Treaty and Policy Developments

Copyright Term Extended to Life of Author Plus 70 Years Beginning December 30, 2022

In November 2022, the Government of Canada published an Order in Council to fix December 30, 2022 as the date in which Division 16 of Part 5 of the Budget Implementation Act would come into force, amending the Copyright Act to extend the term of copyright protection in literary, dramatic, musical, and artistic works from 50 years to 70 years after the life of the author.  This extension is not retroactive and will only apply to works published on or after December 30, 2022.  Our full report on the topic can be found here.

New Patent Rules Came into Force on October 3, 2022

On October 3, 2022, most of the provisions set out in the Rules Amending the Patent Rules came into force.  The Rules brought significant changes to the patent examination process, including introducing excess claim fees for each claim in excess of 20 that is added after examination has been requested.  The new Rules also limit examination to a maximum of three examination reports, requiring Applicants to file a Request for Continued Examination and pay a prescribed fee to continue examination after the third examination report and every second examination thereafter.  Click here for our full summary.

Government of Canada Introduces Bill C-27, Seeking to Overhaul Canada’s Federal Privacy Legislation

In June 2022, the Government of Canada introduced Bill C-27, the Digital Charter Implementation Act, 2022, seeking to establish three pieces of legislation: the Consumer Privacy Protection Act (the CPPA), Personal Information and Data Protection Tribunal Act (the PIDPTA), and Artificial Intelligence and Data Act (the AIDA).  Among other changes, the CPPA would:

• repeal and replace Part 1 of the Personal Information Protection and Electronic Documents Act;
• increase transparency when Canadians’ personal information is handled by organizations; and
• give the Privacy Commissioner of Canada greater oversight abilities. 

The PIDPTA would enable the creation of a new tribunal to facilitate the enforcement of the CPPA, and the AIDA would implement a regulatory framework for the private sector relating to the design, development, and use of artificial intelligence systems.  Click here for our full report.

Québec Adopts New Language Bill That Will Restrict Use of Non-French Trademarks in Québec

In May 2022, the Government of Québec adopted Bill 96, An Act respecting French, the official and common language of Québec (Bill 96).  Bill 96 requires that common law (unregistered) trademarks displayed on signage, posters, commercial advertising, and product packaging and labelling be translated to French.  Bill 96 further requires that if a registered trademark includes a non-French generic term or description of the product, the generic term or description must appear in French elsewhere on the product.  For outdoor signage, non-French trademarks must be accompanied by “markedly predominant” French text.  These requirements are set to come into force on June 1, 2025.  Our full report can be found here.

Ontario Enacts Mandatory Disclosure Requirements for Electronic Monitoring of Employees

In April 2022, Bill 88, Working for Workers Act, 2022 (Bill 88) received Royal Assent. Bill 88 required employers that have 25 or more employees as of January 1, 2022, to implement a written policy with respect to the electronic monitoring of their employees by October 11, 2022.  A copy of this policy was to be provided to all employees by November 10, 2022. For employers that would, as of January 1, 2023, have 25 or more employees, the written policy requirement must be complied with by March 1, 2023, with a copy of the written policy being provided to employees by March 31, 2023.

To assist employers with these new requirements, Ontario’s Guide to the Employment Standards Act (the Guide) was updated in July 2022 to provide guidance regarding disclosure obligations for the electronic monitoring of employees. The Guide offers direction on the meaning of “electronic monitoring”, how to determine the number of employees that an employer has, and elements that must be included in a written policy.  For more information, see here and here.

3. Patents and Industrial Designs

Federal Court of Canada Directs the Commissioner of Patents on the Legal Test for Assessing Patentable Subject Matter for Computer-Implemented Inventions

In June 2022, in Benjamin Moore & Co. v Attorney General Of Canada, 2022 FC 923, the Federal Court of Canada (FC) instructed the Commissioner of Patents on the proper legal test for assessing claim construction and patentable subject matter for computer-implemented inventions.  The two patent applications at issue related to Benjamin Moore & Co.’s colour selection system.  The Intellectual Property Institute of Canada (IPIC), acting as a third-party intervenor, asked the FC to adopt a framework for assessing the patentability of computer-implemented inventions involving: (i) a purposive construction of the claim; (ii) asking whether the construed claim as a whole consists of only a mere scientific principle or abstract theorem, or whether it comprises a practical application that employs a scientific principle or abstract theorem; and (iii) if the construed claim comprises a practical application, assessing the construed claim for the remaining patentability criteria.  The FC held that IPIC’s framework is consistent with applicable jurisprudence and directed the Commissioner of Patents to use it to reconsider the patentability of the patent applications at issue.  Click here for our full report on this decision. 

The Attorney General has since appealed the decision, and the Federal Court of Appeal of Canada (FCA) has allowed the appeal to proceed (2022 FCA 194; as previously reported in the E-TIPS® Newsletter here).  Stay tuned to the E-TIPS® Newsletter for future developments in 2023.

Federal Court Interprets the Prior Use Defence under Section 56 of the Patent Act for the First Time

In January 2022, the FC in Kobold Corporation et al v NCS Multistage Inc., 2021 FC 1437, interpreted the defence of prior use in a patent infringement action for the first time since the 2018 amendments to section 56 of the Patent Act.  The FC concluded that ”subsection 56(1) provides a defence to one who makes, constructs, or uses an invention or sells it to others to use, that infringes a claim of the patent, if prior to the issuance of the patent that person did the same act of making, constructing, using, or selling, and the relevant (i.e. relating to the inventive concept) part of the invention is identical” [emphasis added].  The FC set out a process that should be followed when considering the prior use defence under subsection 56(1), holding that only where the pre- and post-claim date acts are identical, the construction of the patent’s claims or an infringement analysis will not be required.  Our report on the decision can be found here. 

Federal Court of Canada Awards Crocs Canada Accounting of Profits for Industrial Design Infringement

In October 2022, the FC in Crocs Canada, Inc. v Double Diamond Distribution Ltd, 2022 FC 1443, found that Double Diamond Distribution Ltd (Double Diamond) infringed Canadian Industrial Design Number 120939 (939 Design) owned by Crocs Canada, Inc. (Crocs Canada), and awarded Crocs Canada an accounting of profits in the amount of nearly $650,000.  The FC found that the 939 Design was valid and novel, and that the asserted prior art was substantially different from it.  The FC then compared the 939 Design with Double Diamond’s Fleece Dawgs footwear and held that they were “nigh identical” and amounted to infringement.  Our full report on the decision can be found here.

4. Trademarks

Federal Court of Canada Expunges Trademark on the Basis of Bad Faith

In May 2022, in Beijing Judian Restaurant Co Ltd v Meng, 2022 FC 743, the FC found for the first time that a trademark was registered in bad faith and should be invalidated and expunged from the Register in accordance with the new section 18(1)(e) of the Trademarks Act.  The FC found that the respondent, Wei Meng, registered the JU DIAN & Design Mark without a legitimate commercial purpose, noting that the respondent instead intended to extort money from the applicant, Beijing Judian Restaurant Co Ltd, or use the applicant’s reputation in the JU DIAN trademarks to obtain money from others.  Click here for our report on this decision.

Federal Court of Canada Concludes That Trademark Consisting of Line of Latitude is Unregistrable

In February 2022, the FC in Nia Wine Group Co., Ltd. v North 42 Degrees Estate Winery Inc., 2022 FC 241, held that “place of origin” under section 12(1)(b) of the Trademarks Act can include a line of latitude.  Nia Wine Group Co. opposed a trademark application for NORTH 42 DEGREES filed by North 42 Degrees Estate Winery Inc. for wine and operation of a winery on the basis that it was clearly descriptive of the place of origin, and not distinctive.  The FC determined that the term “place of origin” should be interpreted to refer to any geographical designation, including a designated line of latitude or longitude.  The FC concluded that since evidence established that the goods and services originated from a farm and winery located along the 42nd parallel or North 42 degrees latitude, the trademark NORTH 42 DEGREES was unregistrable.  Our full report on the decision can be found here.

5. Copyright

Federal Court of Canada Issues Dynamic Site Blocking Orders to Prevent Unauthorized NHL and FIFA World Cup Streams

In May 2022, the FC in Rogers Media Inc. v John Doe 1, 2022 FC 775, granted the first dynamic site blocking order in Canada, seeking to prevent access to streaming servers that provide unauthorized streams of National Hockey League (NHL) games in real time.  The FC held that the plaintiffs, Rogers Media Inc., Bell Media Inc., and Group TVA, established a strong prima facie case that certain unknown defendants were engaging in ongoing breaches of their copyright in the broadcasts of live NHL games.  The FC issued a dynamic site blocking Order directing Third Party Respondent Internet Service Providers (ISPs) to block access to certain IP addresses identified in real time during NHL hockey matches.  The terms of the order included that it was limited to the 2021-2022 NHL season, and that the ISPs would only have to block streams in which they had the technical capacity to do so.

Similarly, in October 2022, the FC granted a substantially identical dynamic site blocking order to prevent unauthorized streams of the 2022 FIFA World Cup matches.  Our full report on the NHL and FIFA decisions can be found here and here, respectively.

Federal Court of Canada Finds US Certificates of Registration Cannot Be Used as Proof of Existence of Copyright under Section 53

In April 2022, the FC in August Image LLC v AirG Inc., 2022 FC 470, concluded that section 53 of the Copyright Act is only applicable to Canadian certificates of registration, and that certificates of registration issued by the United States Copyright Office could not be used as proof of the existence of copyright pursuant to subsection 53(2).  The FC also found that August Image LLC (August) failed to prove that copyright subsisted in the photographs at issue as it failed to show that celebrity photographer, Joe Pugliese, was a resident or citizen of the US or any other Berne Convention country at the time the photographs were created.  The FC dismissed August’s action for copyright infringement and awarded costs in favour of AirG Inc.  Our full report on the decision can be found here.

Federal Court of Appeal Dismisses Appeal Relating to Copyright Infringement of Jewellery Designs

In January 2022, the FCA in Pyrrha Design Inc. v Plum and Posey Inc., 2022 FCA 7, affirmed the FC’s analysis on issues of originality and infringement of certain jewellery designs.  Pyrrha Design Inc. claimed copyright in nine pieces of jewellery (the Pyrrha Designs), asserting that Plum and Posey Inc. and its principal infringed the copyrighted designs.  The FCA found that the FC did not err in concluding that the expression of each design was of lower originality.  The FCA also noted that the FC correctly referred to the “skill and judgment” approach, and upheld the FC’s conclusion that the Pyrrha Designs were relatively simple copyrighted works.  The FCA held that the FC applied the correct test for copyright infringement, and that the FC made no palpable and overriding errors in concluding that the Pyrrha Designs were not infringed.  Our full report can be found here.

US Supreme Court Evaluates Scope of Safe Harbor Provision for Mistakes Made During Copyright Registrations

In February 2022, the Supreme Court of the United States (SCOTUS), in Unicolors, Inc. v H&M Hennes & Mauritz, L. P., Case No. 20-915, held that a lack of either factual or legal knowledge could excuse an inaccuracy in a copyright registration under 17 U.S.C. § 411(b)(1)(A), the safe harbor provision of the US Copyright Act.  Unicolors, Inc., (Unicolours) sued H&M Hennes & Mauritz, L.P. (H&M) for infringement of its registered copyright in various fabric designs.  At the District Court, H&M asked to be granted judgment as a matter of law, arguing that Unicolors’ copyright registration was invalid.  SCOTUS found that Unicolors indeed made a mistake of law when filing for copyright registration, but this mistake fell under the safe harbor provision, which is not limited to mistakes of fact and may extend to other aspects of copyright law.  SCOTUS referred to legislative history to suggest that Congress enacted § 411(b) to make it easier for non-lawyers to register copyright and eliminate loopholes that might prevent enforcement of otherwise valid registrations.  Therefore, “it would make no sense if §411(b) left copyright registrations exposed to invalidation based on applicants’ good-faith misunderstandings of the details of copyright law.”  Click here for our full report.

6. Privacy and Cybersecurity

Ontario Courts Provide Clarification on the Scope of the Tort of Intrusion Upon Seclusion

In 2022, the Ontario courts released several decisions clarifying the scope of the tort of intrusion upon seclusion.

In January 2022, the Ontario Superior Court of Justice (ONSC) in Winder v Marriott International, Inc., 2022 ONSC 390, found no legally viable cause of action for the tort of intrusion upon seclusion against Marriott International Inc., Luxury Hotels International of Canada ULC and Starwood Canada ULC (collectively, Marriott), as Marriott was not an intruder for the purposes of the tort.  The ONSC found that the tort “does not extend to constructive intruders and is limited to real ones”, otherwise “floodgates” would unnecessarily open to ascribe liability that is adequately controlled by other causes of action such as negligence, breach of confidence and breach of contract.  The ONSC further noted that there is no gap in the law of privacy that needs to be filled by extending the nature of intruders.

In June 2022, the Ontario Court of Appeal (ONCA), in Demme v Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503, dealt with whether a commercial liability insurer had a duty to defend against claims that were based on the tort of intrusion upon seclusion.  Despite several arguments by the plaintiff to try to bring the tort under the applicable commercial liability policy, the ONCA ultimately held that the insurer did not have a duty to defend.

The ONCA later revisited the tort in November 2022 when it released a trilogy of decisions clarifying the scope of liability in data breach class actions for the tort of intrusion upon seclusion. The ONCA held that the tort was not a viable cause of action against a defendant who fell victim to a cyberattack, nor could such a claim arise on the basis of the defendant’s alleged failure to prevent the cyberattack.  Each case arose from the alleged failure of the respective defendants to take adequate steps to protect the personal information of Canadians, which was accessed by malicious third-parties without authorization.  Our full reports on the decisions can be found here, here and here.

Canadian Courts Certify Class Actions for Data Breaches

2022 saw several class action certifications arising in the context of data breaches from both the FC and certain provincial courts.

In August 2022, in Sweet v Canada, 2022 FC 1228, the FC certified a class action against the Government of Canada relating to data breaches where hacker(s) gained access to the personal, financial and other information of thousands of Canadians through Government of Canada websites.  The proposed class representative, Todd Sweet, sought to certify a class action for actions based on the torts of systemic negligence, breach of confidence, and intrusion upon seclusion.  The FC concluded that it was not plain and obvious that Sweet’s causes of actions would fail, and that the requirements for certification were met.  Our full report on the decision can be found here.

Additionally, the Supreme Court of British Columbia (BCSC), in Campbell v Capital One Financial Corporation, 2022 BCSC 928, certified a class action lawsuit against Capital One Financial Corporation (Capital One) in June 2022, in relation to a data breach that affected 6 million Canadians.  Later, in August 2022, the Québec Superior Court of Justice certified a class action against MGM Resorts International for its alleged failure to implement proper security measures to protect its customers’ personal information in relation to a 2019 data breach that impacted more than 10 million hotel guests. See here and here for our summary of the decisions.

Investigations Conducted by Privacy Commissioners

Canadian Privacy Commissioners Find Tim Hortons’ App Violated Privacy Laws

In June 2022, the Office of the Privacy Commissioner of Canada and the provincial privacy commissioners of Alberta, British Columbia and Québec (collectively, the Commissioners) determined that the Tim Hortons mobile ordering application (the App) violated applicable federal and provincial privacy laws by collecting location data of its users without their adequate knowledge or valid consent.  The Commissioners’ investigation found that for users who provided permission to access their mobile device’s geolocation, the App continuously collected their location data as long as their device was on.  This allowed Tim Hortons’ third-party service provider to infer the location of a user’s home, place of work, whether they were travelling, and to identify when a user visited a competitor of Tim Hortons.  The Commissioners determined that Tim Hortons’ collection of location data was not for a purpose that a reasonable person would consider appropriate in the circumstances.  The Commissioner made several recommendations for Tim Hortons to enact, including deleting any remaining location data and any data derived from it, and directing third-party service providers to do the same.  Please see here for our full report.

Office of the Privacy Commissioner of Canada Publishes Results of Investigation into Marriott Data Breach of 2018

In September 2022, the Privacy Commissioner of Canada (the OPC) published the results of its investigation into the 2018 data breach involving Marriott International, Inc. (Marriott), finding many of the hotel giant’s privacy controls inadequate and in contravention of the Personal Information Protection and Electronic Documents Act.  The OPC found that deficiencies in information security safeguards represented a failure to implement proper protection measures, and that Marriott failed to adequately perform ongoing security assessments.  The OPC further found that certain personal information was retained for longer periods than necessary.  However, the OPC also acknowledged Marriott’s response efforts, stating that Marriott’s notification and mitigation measures were adequate.  The OPC concluded by recommending further action to ensure compliance, including having Marriott retain an independent assessor to review any enhancements it made to its systems, and review its organizational and governance measures relating to selected privacy practices.  Our full summary on the matter can be found here.

OSFI Releases Final Version of Guideline B-13: Technology and Cyber Risk Management

In July 2022, the Office of the Superintendent of Financial Institutions (OSFI) released its final Guideline B-13: Technology and Cyber Risk Management (Guideline B-13), which described OSFI’s expectations for how federally regulated financial institutions (FRFIs) should manage technology and cyber risks.  Guideline B-13 centers around three “domains”, each of which sets out specific outcomes for FRFIs to achieve in order to align with OSFI’s expectations.  Guideline B-13 is set to come into effect on January 1, 2024.  Click here for our full report.

7. Legal Developments in Emerging Technology Around the World

Artificial Intelligence and D.A.B.U.S (Device for the Autonomous Bootstrapping of Unified Sentience)

This year brought international developments on the question of whether an artificial intelligence (AI) system could qualify as an inventor:

• In July 2022, the Legal Board of Appeal of the European Patent Office confirmed that an AI system could not be an inventor of a patent on the basis that an inventor must be a person with legal capacity under the European Patent Convention, and a machine could not transfer any rights to the Applicant.
• In August 2022, the US Court of Appeals for the Federal Circuit held that an AI system could not qualify as an inventor under US patent law based on precedent and unambiguous statutory interpretation of the US Patent Act, finding that only natural persons could be considered inventors.

Non-Fungible Tokens

Non-fungible tokens (NFTs) gained a further foothold in the legal sphere in 2022.  The following decisions addressed NFT disputes in the IP field:

• In May 2022, the US District Court for the Southern District of New York denied Mason Rothschild’s motion to dismiss Hermès International and Hermès of Paris, Inc.’s amended complaint, which alleged that Rothschild’s “MetaBirkin” NFTs, each depicting fur-covered handbags in the silhouette of a BIRKIN handbag, constituted trademark infringement.
• In October 2022, the High Court of the Republic of Singapore found that NFTs were a form of property in granting an injunction to prevent the potential sale of the NFT in issue.
• In November 2022, the Rome Court of First Instance reported its July 2022 decision, granting Juventus Football Club s.p.a (Juventus) a preliminary injunction enjoining Blockeras s.r.l. from producing, marketing, promoting, or selling its NFTs bearing Juventus’ trademarks. This marked the first known injunction to be granted by a European court in an NFT trademark dispute.