Canada: Developments In Technology - July 2004

Last Updated: August 31 2004

Edited by Louis R. Benoit and Katerina Kouretas


  • Canadian Music Industry Appeals File-Sharing Ruling
  • Microsoft Awarded $4 Million Judgment Against Spammers
  • Violent Video Games Protected by Constitution
  • Bush Stiffens Sentences for Identity Theft
  • Service by E-Mail Ruled Insufficient
  • Airline Security System Dismantled Over Privacy Concerns
  • 11th Circuit Asserts Copyright Jurisdiction
  • Governor Schwarzenegger Introduces Law for Better Auditing of Record Labels
  • Senate Panel Guts VoIP Bill
  • Judge Says VoIP to Be Governed by Feds, Not States
  • Kazaa and Ticketmaster Win Domain Name Disputes

Canadian Music Industry Appeals File-Sharing Ruling

On Monday July 12, 2004, the Canadian Recording Industry Association (CRIA) appealed a Federal Court of Canada decision that ruled sharing copyrighted works on peer-to-peer networks was legal. The CRIA is attempting to sue file-swappers who trade copyrighted music online.

In the decision now being appealed, Justice Finckenstein stated that "[t]he mere fact of placing a copy on a shared directory in a computer where that copy can be accessed via a P2P service does not amount to distribution." The CRIA brief filed upon appeal contends that the court should not have blocked its ability to obtain the identities of alleged file traders, and that the act of uploading copyrighted files without permission does constitute illegal distribution of works.

Most recently, the Federal Court of Appeal denied a request by the Canadian Motion Picture Distributors Association and the Business Software Alliance to intervene in the appeal. The court ruled that the two associations did not offer a sufficiently different perspective on the general copyright issues in question.

More information available at:

Microsoft Awarded $4 Million Judgment Against Spammers

In early July 2004, Judge Manuel Real of the U.S. Central District Court of California awarded the world's largest software company, Microsoft Corporation, $4 million US in damages and attorneys fees. Judge Real found that the defendants, Pointcom Inc. and Daniel Khoshnood had violated several laws against using deceptive e-mail and Web addresses. The defendants had sent spam, to users of the MSN and Hotmail services to get them to download a toolbar onto their computer desktops.

Microsoft has won many legal victories in an effort to deter the illegal activity caused by spammers. According to Microsoft, over $54 million US in judgments have been handed down against spammers. Microsoft's general counsel said that legal action against spammers is part of a broader strategy to stop spam, which also involves the use of technology, regulation and partnerships with other technology providers.

More information available at:;?storyID=5685779

Violent Video Games Protected By Constitution

A federal judge struck down a law passed last year in Washington, which restricted the sale of violent video games to minors. The law imposed a $500 US fine on any retail clerk caught selling video games depicting violence against "law enforcement officers" to youths under the age of 17. The court held that this law was too vague to enforce and violated freedom of speech. Mary Lou Dickerson, the Democrat who wrote the law, responded to the decision by stating that "the fight was far from over," adding that psychology reports indicate that such games have harmful effects on children. However, for the time being, violent video games are constitutionally protected as a form of expression and therefore, children under the age of seven have full access to their purchase.

More information available at:

Bush Stiffens Sentences For Identity Theft

The fact that identity theft is currently one of the fastest-growing financial crimes, coupled with the knowledge that al-Qaeda and other terrorist organizations frequently use stolen identities to shield themselves from law enforcement, is the driving force behind President Bush's decision to stiffen punishments related to identity theft in relation to terrorist acts. On July 15th, President Bush signed into law the identity theft bill, which imposes mandatory prison terms for criminals who use identity theft in committing terrorist acts and other offences. A criminal will serve an extra five years in prison for using a false passport in connection with a terrorism-related crime whereas two years would be added for ID theft in connection with other types of crimes.

The law is meant to take away a judge's discretion to give probation, reduced sentences or concurrent sentences for identity theft in connection with other felony crimes.

More information available at:

Service By E-Mail Ruled Insufficient

A ruling was handed down on July 13, 2004, from the United States District Court of Connecticut denying plaintiffs the ability to serve a suit on defendants via e-mail. Plaintiffs in this case have sued the persons alleged to be behind two Web domains but had yet to provide service of the claim.

Plaintiffs sought to rely on the judgement in Rio Properties, Inc. v. Rio International Interlink, 284 F. 3d 1007 (9th Cir. 2002) where the court approved e-mail as a means of service. The test for e-mail service derived from the case was to "balance the limitations of e-mail service against its benefits in any particular case."

However, in the ruling, the judge distinguished the case from Rio Properties on the basis that in this instance he could not be convinced that the messages to any of the proposed e-mail addresses (of which there were six) were likely to reach the defendants. Also, the judge was not convinced that email was the only possible method of serving the defendants.

Decision available at:

Airline Security System Dismantled Over Privacy Concerns

A once touted system of U.S. airline security is being dismantled because of criticism and concerns over privacy and effectiveness.

The Computer Assisted Passenger Pre-screening System (CAPPS II) was a $100 million US initiative that would have required each airline passenger to provide detailed personal information to an airline or travel agent. The government would then verify identity using a combination of marketing databases, public records and terrorist watch lists. Colour coding would indicate any potential threat with "red" meaning the passenger could not fly, "yellow" indicating extra security and "green" providing for regular airport security.

Homeland Security Secretary Tom Ridge cited privacy concerns as one of the main reasons for the "death" of the government plan. Critics in Congress also cited the programs vulnerability to terrorists using fake identities as a lethal flaw.

More information available at:

11th Circuit Asserts Copyright Jurisdiction

The 11th Circuit Court of Appeals recently ruled that it can assert jurisdiction over a copyright infringement case, despite the fact that some of the infringing activities occurred outside the U.S.

The case involved a former student of an educational instructor who taught and authored a course in how to explore one's consciousness. The former student, after taking the course, wrote and marketed his own version of the course on the Internet, which he entitled "The Source Course."

Although most of the materials for "The Source Course" were drafted in the U.S., it was ultimately finished in France. The Web site used was maintained in the U.S., and over 25 copies were sold and shipped to residents of the U.S. from France.

In holding that the federal court does indeed have subject matter jurisdiction over the Plaintiff's copyright claim, the court focused on the Copyright Act's requirement that an "infringing act" must occur in the U.S. Earlier cases were cited which found that an infringing act includes "contributing to the act within the U.S." (despite the act being completed in a foreign jurisdiction), and more importantly, the importation of infringing work.

Since the defendant contributed to the infringing materials in the U.S., and subsequently imported them into the U.S., the court affirmed the lower court's decision and asserted its jurisdiction over the case.

Decision available at:

Governor Schwarzenegger Introduces Law For Better Auditing Of Record Labels

California Governor Arnold Schwarzenegger recently gave recording artists greater flexibility to audit record companies' finances in search of potentially unpaid royalties. On Friday, July 16, Schwarzenegger signed a law that would go into effect on January 1st of 2005, which would allow artists to conduct annual audits of any record companies doing business in California. The law allows a single auditor to work for several artists on the same label simultaneously, thereby reducing the cost of audits.

The enactment of this law comes in the wake of a settlement in May between major recording companies and New York state Attorney General Eliot Spitzer, in which the recording companies had agreed to return nearly $50 million US in unclaimed royalties to artists. The investigation by Spitzer's office found that many artists were not being paid royalties because record companies lost contact with the performers and stopped making required payments.

More information available at:

Senate Panel Guts VOIP Bill

On July 22, 2004, the U.S. Senate Commerce Committee gutted the Regulatory Freedom Act of 2004, a bill introduced by Senator John Sununu, that was originally intended to exempt VoIP technology from state laws and regulation. The committee adopted a number of amendments including one by Senator Byron Dorgan, that permits states to levy taxes to pay for universal service and compensate traditional telecom companies for the use of their networks by way of access charges. Other amendments include a three-year expiration date for the bill, reporting requirements on problems encountered by police with respect to VoIP wiretaps, and the power by states to tax VoIP providers for 911 services. Furthermore, the bill was originally supposed to only regulate VoIP providers that link to the public telephone network. However, the new version of the legislation allows states to impose universal service and access charges on any provider that employs "multidirectional voice communications over the public Internet or a private network utilizing Internet protocol."

More information available at:

Judge Says VOIP To Be Governed By Feds, Not States

U.S. District Judge Douglas Eaton has handed down an order allowing state utility commissions to act in conjunction with Vonage to resolve customer complaints, but the commissions are restricted from regulating or taxing Vonage in any way. Moreover, Eaton noted that regulation of VoIP is to remain in the hands of the FCC. This decision comes only three weeks after he refused to allow the New York Public Service Commission from requiring Vonage to apply for a telephone operator licence. Eaton is the second judge to restrict the application of state licensing and tax regimes from applying to VoIP providers. A similar ruling was made by a federal judge in Minnesota last October.

More information available at:

Kazaa And Ticketmaster Win Domain Name Disputes

Sharman Networks and Ticketmaster have prevailed in recent domain name disputes involving multiple names. A WIPO panellist ruled that, and were confusingly similar to Kazaa and were registered and used in bad faith in order to profit on the popularity of the Kazaa mark. The Board agreed to transfer the domains to Sharman Networks Ltd.

Ticketmaster won the transfer of 108 domains that included the company name and various misspellings (known as "typosquatting") that were used in bad faith to profit from the famous Ticketmaster mark. The disputed domain names attracted users to various Web sites to show them advertising for commercial gain. The Board ordered the domains transferred to Ticketmaster Corporation.

Decisions available at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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