Barbeau, Evans & Goldstein – Law Blog

Estate of James Brown  v. LAC Music – Jack Bart c/o Gregory J. Chamberlain and jamesbrown.com

A recent decision[1] rendered by the National Arbitration Forum in accordance with ICANN’s Uniform Domain Name Dispute Resolution Policy (the “Policy”), highlights the limitations of the Policy when it comes to matters that fall outside the scope of the Policy.

LAC Music (also known as LAC Management, Inc.), was allegedly contacted by the Estate of James Brown (the “Estate”) and offered to sell the jamesbrown.com domain (the “Domain Name”) to the Estate. [N.B.  LAC Management, Inc. manages the RJ & The James Brown Band, the group which performed with James Brown up until his death in 2006[2]].

The Estate proceeded to file a complaint with the National Arbitration Forum in accordance with the Policy.  In their complaint, the Estate stated that they held the common law and federal rights to the trademark “James Brown”.  They asserted that LAC Music had no rights or legitimate interest in the Domain.

In order to be successful in a Policy complaint, the Estate had to prove three elements, in accordance with Paragraph 4(a) of the Policy:

(1)          the domain name registered by the Respondent is identical or confusingly similar to a trademark or   service mark in which Complainant has rights; and

(2)          Respondent has no rights or legitimate interests in respect of the domain name; and

(3)          the domain name has been registered and is being used in bad faith.

The Estate was able to prove the first element, however, they had some trouble when it came to the third element of bad faith.  LAC Music contended that the registration of the Domain Name was obtained with the consent of James Brown and was used for legitimate business purposes during the lifetime of James Brown.

The Estate responded to LAC Music’s response with arguments surrounding the laws of agency and how they apply to LAC Music’s relationship with the late James Brown. The Estate also applied estate law to the evidence presented by LAC Music.

The panel, of three arbitrators, disregarded the agency and estate law arguments and declared that these were outside the scope of the Policy and not applicable to the arbitration proceeding.  They then continued with their analysis of the three elements and found that the Complainant had failed to prove that the Domain Name was registered in bad faith, as even the Estate admitted in their own evidence that LAC Music had registered and used the Domain Name during James Brown’s lifetime with his consent.

Where does this leave the Estate?  Although the ICANN dispute resolution process was unable to address their arguments regarding agency and estate law, a court of competent jurisdiction may still be able to consider these.  For now the Domain Name will continue to be owned by LAC Music.

Should you have any trademark or domain name queries, we would be pleased to discuss them with you.

As of January 9, 2012, it will be possible to establish an Individual (Single-Member) Limited Liability Company (“EIRELI”) in Brazil, following an amendment to the Brazilian Civil Code (Law No. 12.441).  While the EIRELI represents an improvement in simplifying corporate formation in Brazil, by allowing the separation of assets (i.e. assets of the company versus personal assets) and by eliminating the legal requirement of a minimum of two partners/shareholders (i.e. one shareholder is now permitted), it does not address the greater issues of effective and varied restrictions on foreign access to the Brazilian market, and makes no change to the stifling bureaucratic burden imposed on Brazilian business generally.  By way of background, the World Bank ranks Brazil 120^th out of 183 countries, on the issue of ease of commencing business.  As the economic expansion in Brazil continues, further economic liberalization will inevitably and necessarily follow.

Many United States (“US”) citizens living around the world may not be aware of the US tax reporting requirements that every US citizen, regardless of where they live in the world, has an obligation to file a federal US income tax return declaring their worldwide income (apart from a few exceptions).

The United States income tax requirements are different to other countries, such as Canada, which require residents to file income tax returns only if they are resident in that country.  The US requires every citizen who earns over an exemption amount (currently around USD$10,000) to file a Form 1040 every year, reporting their total worldwide income to the Internal Revenue Service (the “IRS”).  If you are a US citizen living outside of the United States, this will likely mean that you will need to file two income tax returns, one in the United States and one in the country you are resident in.

For the last couple of years the IRS has been cracking down on US citizens living abroad and allowing several amnesty reporting periods for people to bring themselves into compliance with the United States tax reporting requirements.

Although the amnesty periods have now passed, it is up to the discretion of the IRS to decide if penalties will be imposed for failure to file federal income tax returns or to pay tax.  Individuals making late filings or tax payments must show that their failure to file was due to “reasonable cause and not wilful neglect”. Reasonable cause can be considered based on the circumstances of each case.  An IRS official will look at the individual’s education, if they have previously been subject to the tax, if they have been penalized before, if there have been any changes in the tax forms or law that they could not be reasonably expected to know and the level of complexity of a tax or compliance issue.

It is important for US citizens to note that there is an earned income exclusion which exempts a certain amount of income from taxation in the United States.  In 2011 the amount of foreign income excluded from taxation may be up to USD $92,900.00 if certain conditions are met.

Any United States citizens who are living out of the United States and who have not attended to filing income tax returns in the United States in prior years, should consult a cross-border tax specialist and attend to those filings as soon as possible. The 2011 federal tax return is due on April 31, 2012 and a two month extension may be possible if you are living outside of the United States.

More information can be found at the IRS website here.

What do you do when you find that someone has obtained the same domain name as you and is using it to compete or drive customers away from your website?

In this situation, the results or outcome of any action you take against the other party will depend on if you have a registered trademark which is the same or very similar to the domain name in question (the “Infringing Domain”).

Having a registered trademark allows you to effectively use the procedure set out under the Internet Corporation for Assigned Names and Numbers (“ICANN”).  This is an international body set up to protect, amongst other things, the unlawful registration of domain names.  When every domain name is registered with an accredited registrar (such as Godaddy, Tuscows, etc) the person registering the domain agrees to following the mandatory ICANN’s dispute policy procedure should a dispute arise following the registration.

This procedure is an arbitration dispute resolution process which is run by ICANN providers.  These providers follow the ICANN’s rules and procedure to resolve domain name disputes.

What is the ICANN dispute procedure?

If you find that someone has registered an Infringing Domain, you can submit a complaint to a ICANN’s service provider.  That provider runs the dispute procedure. They ensure that the registered owner of the Infringing Domain is provided with a copy of the complaint and gives them a time limit to respond.  Your complaint must prove that the registered owner of the Infringing Domain has breached your registered (or common-law) trademark and that the Infringing Domain name is:

a)      Identical or confusingly similar to the trademark or servicemark that you have rights in;

b)      The registered owner of the Infringing Domain Name has no rights or legitimate interest in the Infringing Domain; and

c)      The Infringing Domain has been registered and is being used in bad faith.

All three of these elements must be proven to reach a finding in your favour.  If you are successful then you can request either that the Infringing Domain is cancelled or transferred to you.  The only way to protect the Infringing Domain from being registered to someone else is to request that it is transferred to you if the panel reaches a decision in your favour.

The transfer process is relatively straightforward as the registrar of the Infringing Domain contacts you directly to arrange the transfer.  The original registered owner does not have to consent to the transfer.

There are several advantages of following the ICANN’s procedure, the main advantage being that once you have filed a complaint it places a ‘freeze’ on the registration of the Infringing Domain, so the owner is unable to transfer it until the complaint has been resolved.  In addition, the process is timely.  Most complaints seem to be resolved within two months of filing the original complaint.  This is significantly quicker than taking legal action through the courts.  The cost of the process is relatively inexpensive compared to commencing litigation.

We have recent experience using the ICANN dispute resolution process to successfully transfer a Infringing Domain to our clients.  This result was mainly due to their ownership of a trademark that was part of the Infringing Domain.

Should you have any trademark or domain name queries, we would be pleased to discuss them with you.

The application of the Federal legislation encroaching on solicitor-client privilege has, in recent years, become a more significant issue for lawyers and their clients.  In that regard, a recent British Columbia Supreme Court decision has upheld the importance of solicitor-client privilege, as a fundamental aspect of the lawyer and client relationship.

In a September 2011 decision, the B.C. Supreme Court held that provisions of the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act and related regulations are constitutionally invalid to the extent that they apply to legal counsel and law firms. At issue was a government proposal to require lawyers to collect and maintain records on the identity of their clients when acting as financial intermediaries on behalf of clients.

The decision underscores the importance of solicitor-client privilege and confidence in our system of justice. It also serves to strengthen the role of self-regulation, recognizing that law societies are best situated to regulate the conduct of lawyers because they can do so in the public interest, while at the same time maintaining protections for solicitor-client privilege.

While it is highly likely that this issue will receive further judicial consideration, this decision is a very significant and positive one, upholding a basic legal right for the protection of client confidentiality privilege.

Changes are on the horizon for those operating in the “not-for-profit” sector in Canada.  Although the Canada Not-for-profit Corporations Act (the “CNCA”) received Royal Assent on June 23, 2009, it has not yet been proclaimed into force. The Government of Canada is currently engaged in a regulatory approval process regarding the implementation of the CNCA, with the anticipated introduction into force of the CNCA to take place in the Fall of 2011.  To ensure that your not-for-profit organization (“NPO”) is prepared for the CNCA, and that a timely and informed decision can be made regarding continuance under the CNCA, NPOs should be aware of the requirements for continuation under the CNCA.

A NPO may apply for a certificate of continuance if it is so authorized and if the NPO satisfies the requirements for incorporation under the CNCA.  In that regard, the following corporations may continue under the CNCA:

i)      corporations incorporated under Part II of the Canada Corporations Act (the “CCA”)[1];

ii)    Canadian Special Act Corporations; and,

iii)  corporations formed under provincial, territorial or foreign law (if so authorized by the laws of their jurisdiction).

If an NPO wishes to continue under the CNCA, without making any amendments to their charter[2], the NPO would require only the approval of its board of directors to apply for a certificate of continuance. A special resolution of members authorizing the directors to apply for a certificate of continuance will however be required where the NPO makes any further amendment to its charter that is permitted under the CNCA.

In addition to the articles of continuance, a NPO must file a notice of registered office and a notice of directors. There is no requirement to file the by-laws of the NPO with the articles of continuance and there will be no fee for filing the articles. On receipt of the articles of continuance, Corporations Canada will issue a certificate of continuance.

The information required in the articles of continuance, as set out below, mirrors that of the articles of incorporation:

i)      The name of the corporation;

ii)    The province where the registered office is to be situated;

iii)  The classes, or regional or other groups, of members that the corporation is authorized to establish and, if there are two or more classes or groups, any voting rights attaching to each of those classes or groups;

iv)   The number of directors or the minimum and maximum number of directors;

v)     Any restrictions on the activities that the corporation may carry on;

vi)   A statement of the purpose of the corporation; and

vii) A statement concerning the distribution of property remaining on dissolution.

While some NPOs will carry most of the content of their letters patent over to the articles of incorporation, others will want to take the opportunity to implement overdue corporate or governance changes.

It will also be necessary for the NPO to consider the classes, or regional or other groups of members of the NPO, the number of directors or the minimum and maximum number of directors of the CNCA corporation, as well as inclusion in their articles regarding limitations on the activities they may carry on for the purpose of evidencing their non-profit status or maintaining their charitable registration under the Income Tax Act (Canada), and revisions to their by-laws (although the bylaws will no longer to subject to ministerial approval).

With regard to the application of the Income Tax Act (Canada), CRA is expected to release a policy directive or other information to explain how the agency proposes to deal with federally incorporated entities continuing under the CNCA and what will be required of them in respect of the preparation and filing of their articles of continuance.

Once a NPO is continued under the CNCA, the articles of continuance will be deemed to be the articles of incorporation of the continued corporation and the certificate of continuance will replace the letters patent (or other form of charter or incorporation instrument). Thereafter, the NPO is subject to the CNCA as if it had been incorporated under the CNCA.

We would be happy to assist your NPOs transition from the CCA to the new CNCA.  If you require assistance in this regard, please feel free to contacts us to discuss your needs in further detail.

The Bill seeks to balance the rights of consumers and creators in the modern age of new technology and bring Canada in line with its international obligations under the WIPO Internet Treaties.

On June 2, 2010 the proposed Copyright Modernization Act (the “Bill”) was introduced into parliament by the Honourable Tony Clement, Minister of Industry and the Honourable James Moore, Minister of Canadian Heritage and Official Languages.  The purpose of the Bill, as the short title suggests, is to bring Canada’s copyright laws into the twenty-first century and also to ratify the World Intellectual Property Organization’s Copyright Treaty and Performances and Phonograms Treaty (the “WIPO Internet Treaties”), both of which enhance the protection of copyright works on the internet.

The Bill introduces the terminology Technological Protection Measures (the “TPM”), which refer to ways in which owners of digital copyright protect their work through the use of digital locks.  The Bill recognises the importance of the protection of digital content and the protection of Canadian online businesses.  Circumvention of TPM is prohibited under the Bill along with providing services to the public, or manufacturing technology or devices that circumvent TPM.

However, there are several exceptions to the blanket prohibition on circumventing TPM  including some interesting exceptions for software developers.  They will be allowed to ‘reverse engineer’ digital locks for the purpose of research and development.  In addition TPM can be circumvented for other reasons including for the purposes of  law enforcement and national security, unlocking wireless devices and there are exceptions for persons with perceptual disabilities. The Government will retain the ability to regulate in this area and to create new exceptions.

Several concerns about the Bill have been raised;  the Consumers Council of Canada and the Canadian Consumer Initiative have jointly voiced concern that consumers could easily be caught in contravention of the Bill.  They specifically refer to the TPMs which restrict everyday uses of technology, such as making a backup copy of a DVD for private purposes.  Although making a backup copy of copyright material is expressly allowed in the Bill, it is not allowed if the original work is protected by a TPM.  This contradiction is something that needs to be clarified before the Bill comes into force.

The Bill also contains several exceptions for consumers who will be able to use media, audio and digital content for private use as long as it does not contain TPMs. These exceptions include being able to record television, internet and radio broadcasts for enjoyment at a later date.  There are also provisions to allow consumers to copy content that they acquire legally onto other devices that they own.  This will allow, among other things, for music to be copied onto devices such as MP3 players for personal use.

The main concern from consumer groups is that the use of TPM  leaves consumers to the mercy of media companies, who can control the majority of online commercial content through the use of TPM.  Ultimately this will restrict the use of much of the content and leave consumers in breach of the Bill if they were to use any of the content in a way that is restricted by the copyright owner, i.e media companies.  Therefore, the Bill creates a situation where media companies can control much of the content the correlating use of that content in Canada.

The role of Internet Service Providers  (“ISP”) in policing copyright infringements is formalized under the Bill.  ISPs will not be held liable for the copyright infringements for consumers who use their service.  However, the Bill includes the “notice and notice” regime which is currently being used.  This system allows Copyright holders to contact an ISP and provide them with notice that a consumer has infringed on their copyright.  The ISP can then forward the notice to the consumer.   The identity of the consumer can then be released with a court order.  A failure on behalf of the ISP to co-operate with the copyright holders can result in civil damages.

The Bill also includes several provisions relating to the use of copyright material in educational settings, generally referred to as the “Fair Dealing Exception”. However, the Canadian Bar Association has pointed out that further refinement of the Fair Dealing Exception related to education is required to provide clarification and certainty for educational users.

Infringement of copyright under the Bill is reduced significantly from what it is currently.  As it stands now courts can award penalties of between $500 to $20,000 per infringement of copyright, regardless of if it was for personal or commercial use.  The Bill reduces the penalty for non-commercial infringement to between $100 and $5,000 in total damages, however; there is no change to the penalties for commercial infringement.

As of the Dissolution of Parliament, the Bill was at its second reading and referred to a committee in the House of Commons, it awaits to be seen as to what changes can be expected to the Bill as it goes through the parliamentary process in 2011 with the new Government.

Nicola Collins, LLB, BCA — Articling Student

Canada has passed new Anti-Spam Bill (the “Act[1]“) which is expected to come into effect later this year and is going to affect how Canadian businesses conduct themselves in their online communications.  The Act prohibits sending commercial electronic messages[2] [3]without the prior consent of the receiver.  This includes a variety of online media such as e-mails, instant messaging, text messaging and social media postings.  The underlying purpose of the Act is to cut down on the amount of electronic spam received by business and consumers alike.

In order to stay compliant with the Act businesses must ensure that they have “prior consent” from the recipient of their commercial electronic message before sending it.  The burden of proof is on the sender to prove that consent has been granted by the recipient and businesses will need to keep records of consent from recipients who receive their electronic communications.

There are several exceptions to the requirement for obtaining prior consent, they include if the communication provides a quote or estimate, facilitates a commercial transaction that the recipient has previously agreed to enter into, provides warranty, recall, safety or security information about a product or service or delivers information related to an employment relationship or benefit plan which the recipient is a member of.

In addition consent is deemed to have been implied in situations where there is an existing relationship and where the recipient has conspicuously published their email address online without indicating that they do not wish to receive unsolicited commercial electronic messages.

Violations of the Act could be met with stiff penalties, the penalties for individual violations can be up to as much as $1,000,000 per violation and the penalty for other persons can be up to as much as $10,000,000 per violation.  Another interesting factor is that private individuals have the power to commence proceedings under the Act, should they feel that the Act has been breached.

The Act is going to affect the way Canadian businesses conduct their electronic communication and specifically how they conduct their promotional activities.  The costs involved in compliance with the Act are going to be significant in regards to monitoring, record keeping and storage. Outsourcing promotional activities could be a cost effective solution to compliance.  Although care has to be taken with outsourcing as persons can also be liable for agent actions in cases of violations.

[1] An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act.

[2] An  “electronic message” is defined to include any “message sent by any means of telecommunication, including a text, sound, voice or image message.”

[3] A “commercial electronic message” is a message where it would be reasonable to conclude that its purpose is to “encourage participation in a commercial activity”  including offers to purchase, sell , barter or lease a product and advertising or promoting any product, person, goods, service, land, business, investment or gaming opportunity.

On October 27, members of Parliament rejected Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries.

In voting against the bill, MPs demonstrated the courage to stand with the men and women who work in Canada’s extractive sector in the face of fierce attacks that tarred the reputation of the whole sector. This poorly-constructed private member’s bill would have severely hobbled Canadian extractive companies’ international competitiveness and reputations, while doing little to further the interests of people in developing countries.

Canada’s mining, oil and gas companies are world leaders and know that responsible behaviour at home and abroad makes good business sense. Their reputation for good citizenship wherever they operate in the world is an invaluable asset that they work hard to maintain.

We first raised the issue of Bill C-300, back in early June of 2010, and questioned its purpose and effectiveness, given its extra-territorial reach and poorly focused objectives.  That, combined with the high level of practice of the Canadian mining industry generally, and the potential for competitors to the Canadian mining industry utilizing this legislation against the Canadian industry in market distorting ways, means that the defeat of Bill C-300 is both good for Canada and good for the Canadian mining industry.

In the recent case of Re Icahn Partners LP and Lions Gate Entertainment Corp., the British Columbia Securities Commission rejected any deviation from the orthodox position of the Canadian regulators, as set out in prior poison pill case law from the first case in 1991 through to 2007, when the Alberta Securities Commission allowed a poison pill to block a hostile bid indefinitely. The Ontario Securities Commission made a similar decision to that of Alberta in 2009. Prior to 2007, poison pills were only permitted, at most, to delay completion of a hostile bid on a temporary basis.  The British Columbia Securities Commission has declined to adopt the somewhat more target-friendly approach to the regulation of shareholder rights plans (poison pills) indicated in decisions of the Alberta and Ontario securities regulators in the past three years.