I am proud to announce that my article on Canada - South Korea Free Trade Agreement (CKFTA) has just been published by Intellectual Property Magazine. You can buy or subscribe to the magazine at http://www.intellectualpropertymagazine.com/.

The publisher generously agreed to its republication, so you can read my comments below.

MUCH ADO ABOUT CKFTA

CONTEXT

On September 22, 2014, Canada’s Prime Minister Stephen Harper and Korean President Park Geun-hye celebrated the signing of Canada-Korea Free Trade Agreement (CKFTA). This article’s objective is to provide the context for and brief comments on IP-related provisions of CKFTA.

The official Canadian summary of the Agreement’s highlights states that the Agreement “will ensure that Canadian IP rights-holders can do business with confidence in the South Korean market”^1..

This appears somewhat condescending given that Canada is not exactly known for being at the forefront of intellectual property protection. Just the opposite, since 1995, Canada has been on the U.S. Government’s Special “Watch List” as a country where IP protection is problematic^2.. Canada’s position is that its failure to adequately protect IP is an attempt to find “an appropriate balance between the interests of IP rights-holders and the interests of users.” How using somebody else’s property without permission can ever be a right is being conveniently overlooked.

The author of this article is a Canadian lawyer and does not purport to know Korean law, but statistics for both countries’ participation in international treaties on intellectual property demonstrate that Korea takes IP more seriously. Canada is a party to 10 international treaties (of which two Canada joined in 2014)^3., while Korea is a party to 18^4.:

Many IP-related provisions of CKFTA merely reference other international treaties to which Canada and Korea are parties. This is important because Canada does not enforce international treaties directly. To have the force of law in Canada, provisions of all international conventions, treaties and agreements (including CKFTA) must be implemented in national Canadian legislation.

Add to this rather vague language of Canadian statutes on intellectual property and scarcity of precedent law—and you will see the problem. How would you know if a certain provision of an international treaty needs implementation into the national legislation if two lawyers can’t agree on what the national legislation actually is? Some Canadian lawyers, myself included, believe that extensive scope of exceptions from copyright conflicts with Canada’s obligations under the Berne Convention and TRIPS, while some others believe that it doesn’t. As a result, the parties are likely to have different assumptions about how these provisions should be interpreted.

GENERAL PROVISIONS

One of the declared objectives of CKFTA is “to achieve a balance between the rights of IP right-holders and the legitimate interests of IP users.^5.” Notice that the treaty does not use the controversial words “users’ rights”, however there still remains the question, what legitimate interests do IP users have regarding intellectual property of others. Who determines what interests are legitimate? Is using someone else’s music for your YouTube videos your legitimate interest? Is copying textbooks for the purposes of education a legitimate interest? What about using pictures on a blog by a non-profit?

CKFTA reaffirms both parties’ obligations under TRIPS as a minimal standard^6., confirms the national treatment requirement^7., and opens the door for a more extensive protection for and enforcement of intellectual property, as long as such extensive protection “does not contravene CKFTA.^8.” Which, again, brings the question of users and their rights and legitimate interests. By definition, protection of exclusive rights comes at the expense of everyone other than the owner of that exclusive right. Logically, it is impossible to unilaterally offer more extensive protection to IP owners without disturbing the “balance of interest” that CKFTA purports to achieve.

TRADEMARKS

The Treaty specifically opens the door for sound trademarks and forbids limiting registrable trademarks to those that are visually perceptible^9.. This is in line with the law established in Canada after a 2012 Practice Notice by the Canadian Intellectual Property Office and the recent amendments to the Trade-Marks Act.

CKFTA requires the parties to protect collective marks (trademarks owned by an organization for the use by its members) and certification marks (trademarks for the use by anyone who meets a defined standard prescribed by the owner of the mark), whether such trademarks are protected as a separate category or not^10.. While Canadian law protects certification marks, it does not (nor do the soon-to-be-in-force amendments to the Trade-Marks Act) refer collective marks.

The Agreement confirms the right (but not an obligation) of the parties to recognize unregistered, common-law, trademarks^11..

CKFTA requires both parties to provide extra protection to well-known trademarks, whether or not such marks are registered, included on a list of well-known marks, or already recognized as well-known^12.. Such protection must be conferred even if the goods and services are not identical or even similar, as long as using the well-known trademark in relation to non-similar goods or services “would indicate a connection between those goods or services and the owner of the trademark.” The interesting thing is that Canadian trademark regime is uncertain about the status of well-known marks. The leading case is the 2006 decision of the Supreme Court of Canada in Mattel Inc. v. 3894207 Canada Inc.^13. that confirmed that difference in goods and services must be considered, however, in different cases such difference may carry greater or smaller weight. Whatever the interpretation, it is more narrow than what is commonly expected from protection conferred to well-known trademarks. Unfortunately, CKFTA does not provide more clarity whether Canada’s current standard is about to change or whether the countries would have two different standards for treating well-known marks.

GEOGRAPHICAL INDICATIONS

The parties agreed that subject to any prior rights, Korea must protect the names “Canadian Whisky” and “Canadian Rye Whisky”, and Canada must protect the names “Goryeo Hongsam”, “Goryeo Baeksam”, “Goryeo Susam”, and “Icheon Ssal” and their translations, respectively, “Korean Red Ginseng”, “Korean White Ginseng”, “Korean Fresh Ginseng” and “Icheon Rice”^14..

CKFTA establishes no new general rules for geographical indications, so its effect on Canadian laws will be rather limited.

COPYRIGHT

The Agreement reaffirms that both parties shall comply with the Rome Convention, the Berne Convention, WCT and WPPT^15.. Each party must provide that authors “have the right to authorize or prohibit all reproductions of their works.^16.” Yet, there is no indication how this provision corresponds with massive expansion of circumstances where it is legal in Canada to use works without permission and despite prohibitions from the copyright owner.

CKFTA also sets forth that the parties must provide adequate legal protection and effective legal remedies against the circumvention of technological measures used by copyright owners to prevent unauthorized use of their IP^17.. Unfortunately, however, this provision contains a qualification that a party may exclude from such protection instances where the measures are circumvented to do that which may be permitted through an applicable copyright exception. This is how the law stands in Canada, which completely defeats the idea behind the rules about technological measures. The point of these provisions is to give IP owners an effective way to deal with piracy by deeming that the very act of circumventing technological measures is an infringement. In Canada, only an act of circumventing technological measures for infringing purposes is deemed an infringement, so it is not enough to prove the fact of the circumvention.

PATENTS

This section affirms the standard requirements for patent protection—the invention must be new, involve an inventive step (be non-obvious), and be capable of industrial application (be useful)^18.. The parties may exclude from patentability inventions related to cloning, methods of medical treatment of people and animals, and otherwise if providing patent protection to an invention would go against public order and morality^19..

ENFORCEMENT

CKFTA contains provisions imposing an obligation on the parties to provide effective enforcement procedures against IP infringements and ensure that such procedures “are not unnecessarily complicated or costly” and that they do not “entail unreasonable time-limits or unwarranted delays.” It is open to a debate whether Canadian court system meets these requirements^20..

The Agreement also prescribes that certain provisions must be implemented to ensure that adequate damages are available to an IP owner whose rights have been infringed, including award of “appropriate lawyer’s fees” to the party who prevailed in trial^21..

CKFTA deals with several procedural matters. It contains a provision requiring both countries to have mechanisms to compel disclosure of information that may possess an alleged infringer that would be required for an IP owner to prove their case^22.. It specifically addresses various preliminary orders and injunctions that may be available to IP owners.^23.

BORDER MEASURES

The measures prescribed by the Agreement are in line with the Canada’s existing regime as proposed to be amended by the Combatting Counterfeit Products Act, which is due for its third hearing in parliament.

CRIMINAL PROCEDURES AND REMEDIES

CKFTA requires each party to provide for criminal procedures and penalties for the unauthorized copying of a cinematographic work from a performance in a movie theatre. Interestingly, this is the only infringement that the parties agree must be punishable criminally.

INTERNET INFRINGEMENTS

Unlike a more rigorous and effective “notice and takedown” approach, Canada has recently implemented what’s called a “notice and notice” system of dealing with internet infringements. In Canada, to avoid being held in violation of IP rights, ISPs must forward an IP owner’s notice to the subscriber (the actual infringer), but they are not required (without a court order) to disclose the subscriber’s personal information nor to ensure that the infringing materials are removed.

CKFTA does not require Canada to change this regime, but provides that a party may require that an ISP expeditiously disclose to an IP owner information sufficient to identify a subscriber whose account was allegedly used for infringement if the owner has filed a legally sufficient claim for copyright infringement^24..

CONCLUSION

While the chapter on intellectual property is one of the more extensive in CKFTA it hardly adds much to the regime already established through other international treaties, such as TRIPS, WCT and WPPT.

While free trade between countries is certainly desirable, to present the IP-related chapter of CKFTA as a legal breakthrough for either Canada or South Korea would be a serious exaggeration.

This is to let you know that you can now view Canadian Copyright, Trademarks and Patent Regulations on our website:

Copyright Regulations

– Book Importation Regulations

– Certification of Countries Granting Equal Copyright Protection Notice

– Cinematographic Works (Right to Remuneration) Regulations

– Definition of “Small Cable Transmission System” Regulations

– Definition of “Wireless Transmission System” Regulations

– Educational Program, Work and Other Subject-matter Record-keeping Regulations

– Exceptions for Educational Institutions, Libraries, Archives and Museums Regulations

– Limitation of the Right to Equitable Remuneration of Certain Rome Convention Countries Statement

– Local Signal and Distant Signal Regulations

– Programming Undertaking Regulations

– Regulations Defining “Advertising Revenues”

– Regulations Establishing the Period Within Which Owners of Copyright not Represented by Collective Societies Can Claim Retransmission Royalties

– Regulations Prescribing Networks

– Copyright Regulations

Industrial Designs Regulations

– Industrial Design Regulations

Patent Designs Regulations

– Patented Medicines (Notice of Compliance) Regulations

– Patented Medicines Regulations

– Use of Patented Products for International Humanitarian Purposes Regulations

– Patent Rules

And so, round one of Apple v. Samsung court saga is over.

A jury of nine Americans have unanimously handed Apple a victory in the form of a verdict for $1,049,343,540.00 in damages. Imagine a cheque for this amount: “One Billion Forty Nine Million Three Hundred Forty Three Thousand Five Hundred Forty Dollars and 00 Cents.”

Kyle Vanhemert has a great day-by-day rendition of the trial.

Wall Street Journal has an equally great chart showing the mutual patent and design patent claims of Apple and Samsung, and the jury’s decision as to each of these claims with respect to each of the allegedly infringing phone models.

Apple spokeswoman Katie Cotton in a statement to the New York Times said:

“We are grateful to the jury for their service and for investing the time to listen to our story and we were thrilled to be able to finally tell it. The mountain of evidence presented during the trail showed that Samsung’s copying went far deeper than even we knew. The lawsuits between Apple and Samsung were about much more than patents or money. They were about values. At Apple, we value originality and innovation and pour our lives into making the best products on earth. We make these products to delight our customers, not for our competitors to flagrantly copy. We applaud the court for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right.”

Samsung Electronics issued the following statement:

“Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer. It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies. Consumers have the right to choices, and they know what they are buying when they purchase Samsung products. This is not the final word in this case or in battles being waged in courts and tribunals around the world, some of which have already rejected many of Apple’s claims. Samsung will continue to innovate and offer choices for the consumer.”

Google, the force behind Android OS, released the following statement:

“The court of appeals will review both infringement and the validity of the patent claims. Most of these don’t relate to the core Android operating system, and several are being re-examined by the US Patent Office. The mobile industry is moving fast and all players – including newcomers – are building upon ideas that have been around for decades. We work with our partners to give consumers innovative and affordable products, and we don’t want anything to limit that.”

A great comment came from Al Sabawi, a former IBM executive, who wrote:

“To all the lazy copycats out there who think cutting and pasting is an intellectual achievement, that hard work, sweat and tears don’t matter, that ideas, designs, and innovations can be stolen willy-nilly with no consequences: This is to you.”

It comes as no surprise that Samsung will now appeal the decision, and this is the decision of the appelate courts that would be of extreme interest to everybody – IP lawyers, innovators, copy-cats and consumers alike.

For now, I would like to share a couple of observations and comments about this case.

First of all, despite all today’s attacks against intellectual property and the forced “let’s all share” mentality, we have a unanimous decision of 9 non-lawyers who confirmed that patents as tools for protecting innovation are still worth something. In this case, they were worth a Billion bucks. In my opinion, Apple’s statement was very on point. The verdict is about values, it is about sending the message, as clearly as it gets, that taking something that’s not yours is improper.

Second, I’m baffled (although, not really) to read a great number of comments to the effect that Apple’s patents and the jury’s verdict will kill competition and rip off consumers of legitimate options. By definition, patents are about building a monopoly based on something you managed to invent, which had not existed before. Granted, there are tons of nonsense patents out there and a great number of patent trolls, we all know that. The real issue is that legitimate patents always create a monopoly, and there is absolutely nothing wrong with that monopoly.

Just because iPhones had tremendous success does not mean that the monopoly should be destroyed. This goes back to my argument on copyright laws when I reject that public interest should have a role in copyright protection: we don’t have copyright laws to protect works that no one wants to use, while creating loopholes for unauthorized use of works that are popular with the public. If no one wants to use a work, there is no need to have laws to protect it.

I remember the day when the first iPhone was released and all the usual Apple fans vs. Anti-Apple fan battles raging with renewed force. Essentially, after that day the world was divided into three groups: those who owned or dreamed of owning an iPhone; those who had no money or desire to buy an iPhone but wanted their phone to have an interface resembling the one of an iPhone as closely as possible; and those who for one reason or another disliked anything that Apple might put out on the market, didn’t want their phones to be like an iPhone but wanted them to have similar functionality.

The iPhone became and still is the measure of comparison for all cell phones on the market.

Apple knew the value of the innovation that it brought to the market with the release of the iPhone, and so it spent a lot of money in an attempt to protect this innovation. Its efforts have paid off – first with the massive acceptance by the market, and now when the jury confirmed the validity of its patents.

Is this a loss for consumers? Even if so, it is a loss of illegitimate advantage. To avoid an analogy with theft of tangible goods, imagine a situation when somebody came up with a way to trick PayPal into adding $10 a day to everyone’s balance. If at some point PayPal decided to fix the problem, would that be a loss to those who would stop receiving the undeserved benefits? Of course!

Samsung is a serious competitor with a pile of patents of its own. They certainly know how to innovate. Otherwise, it would be difficult for Samsung to win a record almost 20% market share for all LCD TVs sold worldwide. Don’t tell me they can’t come up with technologies that wouldn’t infringe on other company’s patents. At least, don’t tell me they can’t properly license such technologies from those who invented them first.

This is what competition in the XXI century is all about. It’s not about who can manufacture the best and cheapest version of a gadget, it’s about who can come up with a gadget that will redefine the way people live their lives.

Love it or hate it, but this is exactly what Apple did when it released the iPhone and the iPad.

And Apple didn’t precisely intend to prevent Samsung from selling competing phones. Apple actually offered Samsung to license its patents at $30 per smartphone and $40 per tablet.

Finally, and I’ve commented on this issue already, in my opinion, the litigation between the giants (especially, after it will have gone through all available appeals) gives us all a great benefit of having a better understanding of the limits of the modern patent system. Very few patent owners can afford to go out and start a full-blown patent litigation war. So we have been left with a plurality of lawyers’ opinions as to what should be considered obvious, what should be considered novel, and what is the proper subject-matter for a tech patent.

We will soon find out.

PS. Full disclosure: I don’t have an iPhone because it’s too heavy and too big for my taste. However, I’m slowly getting fed up with my current phone and will be investigating my options soon.

Would I, as a consumer, benefit from someone making a 3” version of an iPhone? Absolutely! Do I have a right to expect Apple to allow others to manufacture versions of Apple’s patented products simply because Apple does not see a big enough market for 3” iPhones? Absolutely not!