E-TIPS® Newsletter’s “2023: Year In Review”

Thank you for your readership over the last year and welcome to what we hope will be a fantastic 2024!  

In this year’s first issue of the E-TIPS® Newsletter, we will recap our most noteworthy reports from 2023, covering developments in intellectual property (IP) and information technology (IT) law under the following categories: (1) Legislative, Treaty and Policy Developments, (2) Patents, (3) Trademarks, (4) Copyright, (5) Privacy and Cybersecurity, (6) Contracts and (7) Artificial Intelligence.

This issue of E-TIPS® Newsletter’s “2023: Year in Review” is brought to you by Michelle Noonan, M. Imtiaz Karamat, and Victoria Di Felice.  Remember, all of our past coverage – over 20 years’ worth – is accessible in our archive. 

1.  Legislative, Treaty and Policy Developments

Bill C-11: Online Streaming Act Receives Royal Assent

In April 2023, Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts, also known as the Online Streaming Act, received Royal Assent.  Bill C-11 constitutes the first major reform to the Broadcasting Act since 1991 and will require online streaming services to contribute to the creation, production, and distribution of Canadian content.  The Canadian Radio-television and Telecommunications Commission (CRTC) will be responsible for the implementation of Bill C-11, which is currently targeted for late 2024.  Click here for our full summary, and please see here for more information about the CRTC’s phased regulatory plan.

Quebec Bill 3 Receives Royal Assent And Signals Major Reform For Handling Of Health And Social Services Information

In April 2023, Quebec’s health information privacy bill, An Act respecting health and social services information and amending various legislative provisions (Bill 3), received royal assent, and is set to establish a new legal framework for both public and private sector health and social service bodies in Quebec, relating to the protection of health and social services information while optimizing its use and timely communication.  The provisions of Bill 3 will come into force on a future date as set by government decree.  Our full report can be found here.

Government Of Canada Proposes Significant Amendments To Bill C-27, The Digital Charter Implementation Act

In Fall 2023, the Government of Canada proposed significant amendments to Bill C-27, the Digital Charter Implementation Act.  The amendments were aimed at Part 1 of Bill C-27, the Consumer Privacy Protection Act (CPPA), with proposed changes recognizing the right to privacy as a fundamental right, recognizing and reinforcing protections afforded to children, and increasing the flexibility for the Office of the Privacy Commissioner of Canada (OPC) to reach “compliance agreements” with organizations.  The amendments also targeted Part 3 of Bill C-27, the Artificial Intelligence and Data Act (AIDA), which addressed the categorization of high-impact systems, clarified obligations across the artificial intelligence (AI) value chain, and attempted to align the legislation with similar frameworks around the world.  Please see our reports here and here.

CIPO Announces Measures To Reduce Delays Experienced By Canadian Trademark Applicants

The Canadian Intellectual Property Office (CIPO) continued to experience significant delays in examining Canadian trademark applications in 2023.  For our most recent report on CIPO’s attempts to tackle this backlog, including hiring new examiners, adopting automated solutions, and increasing the list of pre-approved terms for goods and services, please see here.

In addition, changes to trademark opposition and summary cancellation proceedings came into effect on December 1, 2023, which shortened the amount of time available for extensions of time.  Deadlines already fixed and extension requests made prior to December 1st, 2023, were not affected by these changes.  Click here for our full report on these changes.

2.  Patents

Federal Court Of Appeal Clarifies Test For Induced Infringement

In 2023, the Federal Court of Appeal of Canada (FCA) confirmed that the test for induced infringement requires that: (1) the act(s) of infringement must have been completed by the direct infringer; (2) the completion of the act(s) of infringement were influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place; and (3) the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement.

In March, in Teva Canada Limited v Janssen Inc., 2023 FCA 68, the FCA found that the Federal Court of Canada (FC) erred in its analysis of the second element of the test, dismissing Teva’s appeal and granting Janssen’s cross-appeal declaring that the making, constructing, using or selling of Teva’s paliperidone palmitate product would induce infringement of Janssen’s patent.  The FCA found liability for inducing infringement on the basis that the product monograph encouraged physicians to use Teva’s paliperidone palmitate product in accordance with the patent claims.  Click here for our full report on this decision.

In November, the FCA in Apotex Inc. v Janssen Inc., 2023 FCA 220, found that the marketing and sale by Apotex Inc. of its apo-macitentan product would induce infringement of Janssen Inc’s patent.  In reaching its decision, the FCA restated the three prongs of the legal test in determining inducement of infringement and clarified that explicit instruction and intention of direct infringement may be relevant but is not required to satisfy the second prong of the test.  Our report on the decision can be found here.

Federal Court Of Appeal Strikes Test Prescribed By The Federal Court For Assessing Patentable Subject Matter For Computer-Implemented Inventions

In July 2023, the FCA in Canada (Attorney General) v Benjamin Moore & Co., 2023 FCA 168, allowed the Attorney General’s appeal from an order from the FC directing the Commissioner of Patents (the Commissioner) to adopt a specific legal framework in its assessment of the patentability of computer-implemented inventions.  The FCA reviewed the legal framework set out by the FC for assessing the patentability of computer-implemented inventions and found that it was not in line with applicable jurisprudence.  Although the FCA declined to set a new test for the Commissioner to follow, it ordered that the Commissioner re-examine Benjamin Moore’s applications on an expedited basis.  Click here for our full report on this decision.

Federal Court Of Appeal Issues Decisions On Patent Validity

In May 2023, the FCA in dTechs EPM Ltd. v British Columbia Hydro and Power Authority, 2023 FCA 115, dismissed an appeal relating to an action for patent infringement, but allowed the appeal in part regarding the validity of the patent.  The FCA noted that the new evidence on appeal was not conclusive of anything other than the fact the respondent’s expert at issue did not write the first drafts of his reports.  The FCA found that the new evidence did not affect any of the FC’s findings except as they related to the validity of claim 4 of the patent.  Notably, the FCA cautioned that “litigators involved in patent cases ought to be alert and alive to their duty to verify … [that] the opinion presented by the expert is truly their own objective opinion.”  Click here for our full report on this decision.

In June 2023, the FCA in Eli Lilly Canada Inc. v Apotex Inc., 2023 FCA 125, dismissed an appeal relating to a decision of the FC finding that a patent relating to the use of oral pharmaceutical unit dosage forms containing tadaladil for the treatment of erectile dysfunction was invalid on the basis of obviousness and anticipation.  The appellants challenged the FC’s invalidity findings, arguing that the FC erred in its construction of the patent’s inventive concept, leading to errors in the obviousness analysis.  The FCA applied the ‘obvious to try test’ and found that the FC’s analysis would not change in light of the appellant’s proposed new inventive concept and upheld the FC’s finding on obviousness.  Click here for our full report on this decision.

In November 2023, the FCA in Sandoz Canada Inc. v Janssen Inc., 2023 FCA 221, dismissed a patent validity appeal relating to the macitentan drug.  The issue on appeal was whether the FC applied the incorrect legal test for sound prediction when assessing lack of utility by failing to consider the requirement for a “prima facie reasonable inference of utility”.  The FCA held that the FC’s failure to cite the wording “a prima facie reasonable inference of utility” when applying the threshold for sound prediction was not remarkable and did not amount to an error of law.  Click here for our full report on this decision.

3.  Trademarks

Federal Court Of Canada Finds Duracell’s Use Of Energizer’s Registered Trademarks In Comparative Advertising Likely To Depreciate Goodwill

In July 2023, the FC in Energizer Brands, LLC v Gillette Company, 2023 FC 804, found that the defendants’ use of the plaintiffs’ registered trademarks ENERGIZER and ENERGIZER MAX in comparative advertising on battery packaging stickers depreciated the value of the goodwill attaching to the trademarks.  In applying the test for depreciation of goodwill, the FC held that the stickers bearing Energizer’s registered trademarks, ENERGIZER and ENERGIZER MAX, were contrary to section 22 of the Trademarks Act, and that the stickers were “examples of an owner’s trademarks being bandied about resulting in lost control for the owner and lesser distinctiveness”.  Click here for our full report on this decision.

Federal Court Of Canada Expunges Trademarks On The Basis Of Confusion With Prior Registrations And Bad Faith

In February 2023, the FC in Cheung’s Bakery Products Ltd. v Easywin Ltd., 2023 FC 190, expunged two Chinese character trademark registrations on the basis of confusion with prior trademark registrations and bad faith.  On the question of bad faith, the FC noted that, at the time of filing, the defendant was familiar with the plaintiff and knew that they targeted the same consumers and sold the same types of bakery-related goods and services.  Further, the defendant was aware of a dispute between a related corporate entity and the plaintiff regarding similar issues, and therefore, the FC concluded that the defendant could not have been satisfied that it was entitled to apply for the trademarks.  The FC declared the defendant’s registrations invalid and ordered the Registrar to expunge the registrations.  Our full report on the decision can be found here.

US Courts Issue Decisions On Non-Fungible Tokens (NFTs)

In February 2023, a nine-person jury in the US District Court for the Southern District of New York in Hermès International, et al. v Rothschild, S.D.N.Y., No. 1:22-cv-0038 found “MetaBirkin” NFTs infringed Hermè’s trademark rights.  A digital artist named Rothschild created and sold “MetaBirkin” NFTs, each depicting a colourful, fur-covered handbag in the silhouette of a BIRKIN handbag.  The jury concluded that Rothschild was liable to Hermès for trademark infringement, trademark dilution, and cybersquatting and awarded $133,000 in total damages.  This decision was the first to consider the nexus of IP law and NFTs.  Click here for our full report on this decision.

Following the above jury verdict, in June 2023, the US District Court in Hermès International, et al. v Rothschild, S.D.N.Y., No. 1:22-cv-00384 granted Hermès a permanent injunction against “Metabirkin” NFT Artist, Rothschild.  Click here for our full report on this decision.

4.  Copyright

Federal Court Of Canada Issues Decisions In Copyright Infringement Cases Relating To Online File-Sharing

In June 2023, the FC in Voltage Pictures, LLC v Salna, 2023 FC 893, refused to certify a reverse class action proceeding for the second time in relation to a claim for file-sharing copyright infringement.  Voltage Pictures LLC along with several other movie production companies (collectively, Voltage), commenced an application in 2016, alleging copyright infringement against over 800 unknown class members whose IP addresses were used to upload and download films produced by Voltage without authorization.  The FC refused to certify the proposed class proceeding finding that Voltage’s proposed use of the notice-and-notice regime to advance the class proceeding was inconsistent with the Copyright Act.  The FC held that the notice-and-notice regime could not be used to notify an Internet service provider’s subscribers of the certification of a class action, the subsequent steps in the proceeding, or provide subscribers an opportunity to opt out of the proceeding.  Click here for our summary of this decision.  Voltage has since appealed the decision, so stay tuned to the E-TIPS ® Newsletter for future developments in 2024.

In September 2023, the FCA in Voltage Holdings, LLC v Doe #1, 2023 FCA 194, dismissed an appeal, finding that linking an IP address involved in infringing activities to the identity of an internet account holder was insufficient to prove that the account holder was the person responsible for the infringing activity associated with their account.  Further, the FCA found that there was insufficient evidence to conclude that the account holders authorized the infringement of the works.  The FCA concluded that the authorizers of the copyright infringement would be internet users who uploaded the works online and not necessarily the internet account holders.  Click here for our full report on this decision.

5.  Privacy and Cybersecurity

Federal Court Of Appeal Finds Google Search Engine Subject To Canada’s Federal Privacy Law

In September 2023, the FCA in Google LLC v Canada (Privacy Commissioner), 2023 FCA 200, found Google LLC’s (Google’s) search engine to be subject to the Personal Information Protection and Electronic Documents Act (PIPEDA) as it does not fall under PIPEDA’s journalistic purposes exemption.  The FCA found that regardless of the test adopted in considering what constitutes a journalistic purpose, “Google Search does not collect, use, or disclose personal information for a journalistic purpose and, even if it does, it does not do so solely for that purpose.”  The FCA noted that the purpose of Google Search is to display responses to a user search query ranked in the order that Google considers of most relevance to the user, as determined by algorithms, and that in that process, “Google is agnostic as to the nature of that content: nothing turns on whether or not it is journalistic.”  Click here for our full report on the decision.

British Columbia Courts Issue Decisions In The Areas Of Privacy and Employment: Certifying Privacy Class Action And Upholding Vicarious Liability Finding

In March 2023, the British Columbia Supreme Court (BCSC) in Burke v Red Barn at Mattick’s Ltd, 2023 BCSC 367, certified a class action lawsuit against an assistant manager (the Defendant) at the grocery store, Red Barn at Mattick’s Ltd (RBM), for breach of privacy, and against RBM for negligence.  During his employment with RBM, the Defendant secretly took photographs of the proposed class representatives (collectively, the Plaintiffs) in a state of undress or semi-undress while using the washroom or staff room at RBM, then uploaded those images to pornographic websites.  The Plaintiffs sought class certification for an action based on the tort of breach of privacy under the Privacy Act.  They also claimed that RBM should be vicariously liable for the Defendant’s invasion of privacy.  The BCSC found that the Plaintiffs met the requirements for class certification.  Click here for our full report on this decision.

In August 2023, the British Columbia Court of Appeal (BCCA) in Insurance Corporation of British Columbia v Ari, 2023 BCCA 331, upheld the BCSC’S finding that the Insurance Corporation of British Columbia (ICBC) was liable for its employee’s violation of its customers’ privacy under the British Columbia Privacy Act.  An ICBC employee wrongfully accessed the personal information of several ICBC’s customers, linked their motor vehicle license plates to their names and home addresses, and sold the information to persons who then targeted several of the same customers in arson and shooting attacks.  The BCCA found that ICBC materially created the risk and provided the opportunity for its employee to commit the wrong and the employee’s conduct was sufficiently related to her authorized duties to justify the imposition of vicarious liability.  Click here for our full report on this decision.

Investigations Conducted By The OPC

In 2023, the OPC released the results of several recent investigations, including the following:

• In January 2023, the OPC found that Home Depot forwarded customer information to Meta without customers’ knowledge or consent.  The OPC noted that Home Depot was cooperative throughout the investigation, agreed to implement the OPC’S recommendations, and stopped sharing customer information with Meta in October 2022.  Our full report can be found here.
• In September 2023, the OPC found that Canada Post did not obtain individuals’ authorization to indirectly collect personal information from outside envelopes and parcels for use in its marketing program, which violated section 5 of the Privacy Act.  Canada Post did not comply with the OPC’s recommendation, choosing instead to implement its own solution by increasing public transparency around its marketing services.  Our full report can be found here.

Canadian Guidance On Privacy Protection Measures

Privacy was a top concern among organizations in 2023, prompting Canadian authorities to release comprehensive guidance on privacy protection measures, including the following:

• In May 2023, the OPC published new guidance on workplace privacy for employers that are subject to federal privacy legislation.  The OPC’s guidance, titled “Privacy in the Workplace”, discusses, among other things, key privacy considerations for the management of employee personal information in the workplace, whether employees can waive their privacy rights, and employee monitoring.  Our full report can be found here.
• In August 2023, the Government of Canada published its “Privacy Implementation Notice 2023-03: Guidance pertaining to the collection, use, retention and disclosure of personal information that is publicly available online” (the Privacy Implementation Notice) pursuant to paragraph 71(1)(d) of the Privacy Act.  The Privacy Implementation Notice is directed towards government institutions as defined in Section 3 of the Privacy Act (excluding the Bank of Canada) and provides guidance on fulfilling requirements under the Privacy Act and related policy instruments.  Our full report can be found here.
• In August 2023, the OPC issued a joint statement on data scraping and the protection of privacy (the Joint Statement).  The Joint Statement outlines privacy concerns involving the use of scraped data and provides examples of best practices that should be implemented by social media companies and other websites.  The Joint Statement also sets out measures that individuals can take to minimize associated privacy risks.  Our full report can be found here.

Cybersecurity

Institutions and organizations continue to face cybersecurity concerns and public authorities are acting to better define and manage cybersecurity risks.  Some notable developments in this area include:

• In April 2023, the Office of the Superintendent of Financial Institutions (OSFI) published its final revised Guideline B-10: Third-Party Risk Management (the Guideline).  The Guideline sets out associated risk management expectations for federally regulated financial institutions.  Our full report can be found here.
• In August 2023, the Canadian Centre for Cyber Security (the Centre) released its cyber security guidance document entitled “Baseline Cyber Threat Assessment: Cybercrime” (the Assessment).  The Assessment describes the historical and current threat that global cybercrime poses to Canada and Canadians.  The Centre predicts that, during the next two years, cybercrime activity in Canada will likely increase and will remain a national security concern.  Our full report can be found here.

6.  Contracts

Amendments To Canada’s Federal Competition Act

In June 2023, certain amendments to Canada’s federal Competition Act came into effect.  The amendments introduce several notable changes, including the prohibition of wage-fixing, non-solicit, and no-hire agreements.  To view our client advisory which provides an overview of these changes as well as the defences and penalties associated with violating these prohibitions, click here.

Ontario Introduces New Consumer Protection Act

In October 2023, Ontario introduced Bill 142, Better for Consumers, Better for Businesses Act, 2023 (Bill 142), which would repeal the Consumer Protection Act, 2002 and enact the Consumer Protection Act 2023, (the New CPA) as well as amend the Consumer Reporting Act, 2002.  Notably, the New CPA involves various initiatives that may affect the drafting of contracts, with initiatives that ease consumers’ understanding of contractual language and address the jurisdiction of contractual disputes.  Please see our full report here.  Bill 142 was passed on December 6, 2023.

Saskatchewan Court Rules That The Use Of A “Thumbs-Up” Emoji Can Signify Acceptance Of A Contract

In June 2023, the King’s Bench for Saskatchewan (the Court) in South West Terminal Ltd v Achter Land & Cattle Ltd, 2023 SKKB 116, ruled that the “thumbs-up” emoji sent via text was a valid form of acceptance of a contract.  The Court analyzed the nature of the relationship between the parties and found that, while a “thumbs-up” emoji is a non-traditional way to “sign” a document, under the circumstances it was a valid way to convey the two purposes of a “signature”- to identify the signatory and to convey the acceptance of the contract.  Click here for our full report on the decision.

7.  Artificial Intelligence

In 2023, AI issues dominated the legal conversation, with significant developments in areas like AI system regulation, copyright law, employment, and privacy.  Some of the major events in each of these areas are outlined below.

Voluntary Codes And Other Actions To Regulate AI Systems

Those in Canada and around the world took steps to regulate the operational management of AI systems.

In September 2023, Innovation, Science and Economic Development Canada (ISED) published Canada's Voluntary Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems (the ISED Code).  The ISED Code is intended to provide voluntary guidance for those developing or managing the operations of generative AI systems before future AI-specific regulation comes into force.  Our full report can be found here.

Later in December 2023, the FC addressed its use of AI systems by publishing interim principles and guidelines.  The FC stated that it will not use AI, specifically automated decision-making tools, in making its judgements and orders, without first engaging in public consultations.  Further, the FC published a Notice, which requires parties to make a declaration and consider certain principles when using AI to create or generate content in documents filed with the FC.

On an international level, in October 2023:

• the G7 leaders published the International Guiding Principles for Organizations Developing Advanced AI Systems (the Principles) and the International Code of Conduct for Organizations Developing Advanced AI Systems (the G7 Code), which are intended to support organizations when developing and using advanced AI technologies, such as advanced foundation models and generative AI systems; and
• the US Government announced a landmark Executive Order that establishes new standards to promote secure and trustworthy AI, including addressing the security risks associated with AI, ensuring AI-generated content is appropriately detected, and protecting privacy and intellectual property.

Our full report on the G7 publications and US Government Executive Order can be found here.

AI’s Impact On Copyright Law

The rapid development and use of generative AI technologies has resulted in questions relating to copyright law and prompted US and Canadian authorities to act accordingly.

In March 2023, the US Copyright Office (the Office) issued a statement of policy, describing how the Office examines human authorship under copyright law for applications to register works containing content generated with AI technology.  In the statement of policy, the Office affirms that copyright may only protect material that is the product of human creativity, specifying that the term “author” excludes non-humans.  Click here for our full report.

In October 2023, in taking its own approach to address growing concerns in the area, the Government of Canada launched a Consultation on Copyright in the Age of Generative Artificial Intelligence (the Consultation), inviting stakeholders to submit feedback on matters related to copyright and AI, such as authorship and ownership of works generated by AI, and infringement and liability regarding AI.  The Consultation period has been extended to January 15, 2024.  Click here for more information and stay tuned to the E-TIPS® Newsletter for any updates from this consultation in 2024.

AI And The Workplace In Ontario

The integration of AI systems in the workplace has led Ontario’s regulatory authorities to consider new issues like data privacy, algorithmic bias, and ethical considerations surrounding automated decision making.

In October 2023, the Office of the Information and Privacy Commissioner of Ontario announced two resolutions: the (i) Resolution on Artificial Intelligence and Employment (AI Employment Resolution); and (ii) Resolution on Generative Artificial Intelligence Systems (Generative AI Resolution), which it co-sponsored with fellow data protection and privacy authorities at the 45^th Global Privacy Assembly.  The AI Employment Resolution addresses, among other things, the importance of implementing data protection and privacy principles in the development and use of AI tools for employment matters.  The Generative AI Resolution addresses the need for generative AI to be developed and used responsibly with data protection and privacy principles in mind.  A summary of these resolutions can be found here.

In November 2023, the Ontario Government tabled Bill 149, Working for Workers Four Act, 2023 (Bill 149), which proposes legislative amendments to certain employment statutes in Ontario.  If passed, Bill 149 will amend the Employment Standards Act to require publicly advertised job postings to disclose whether the employer is using AI in the hiring process to screen, assess, or select applicants.  Currently, Bill 149 is at the second reading and making its way through the legislative process with the potential for further revisions before receiving Royal Assent.  Stay tuned to the E-TIPS® Newsletter for future updates on Bill 149 in 2024.

AI’s Impact On Cyber And Privacy Risks

Last but not least, AI made waves in both the privacy and cybersecurity sectors, with regulatory authorities highlighting associated risks and proposing mitigation measures.

In July 2023, the Centre published a guidance document (the Guidance) on the potential cyber risks associated with generative AI and possible mitigation measures for organizations and individuals.  The Guidance references phishing, privacy risks, malicious codes, and loss of intellectual property as risks posed by generative AI.  The Guidance also proposes steps both organizations and individuals should take to protect personal data.  Click here for our summary.

On the privacy front, in late March 2023, Italy’s Data Protection Authority (the Italian Regulator) issued a press release detailing its order for an immediate ban on the AI platform, ChatGPT (the Order).  The Order required the US-based company behind ChatGPT, OpenAI, LLC, to temporarily cease processing Italian users’ data until it rectified its privacy practices, which resulted in ChatGPT being temporarily unavailable for users in Italy.  Open AI subsequently implemented privacy protection measures relating to areas such as transparency, and user rights, which led the Italian Regulator to lift the ban at the end of April 2023.

Following the Italian Regulator’s initial press release, other regulators began investigating OpenAI LLC, including the OPC, which launched an investigation on April 4, 2023.  See here for our complete report.