A fascinating though somewhat sleepy area of the law, copyright reform has garnered a great deal of attention in the last several years. In 2005, the governing Liberals introduced a copyright reform bill that died when a federal election was called. The Conservative party made copyright reform part of their 2006 election campaign platform; after taking office, their October 2007 Throne Speech promised that copyright reform would be part of the government’s agenda for that year. The government subsequently indicated a bill would be introduced in December.

However, copyright law advocates quickly mobilized a campaign against the planned legislation, suspicious that the bill would undermine the “fair use” rights of citizens. Seemingly fearful of public backlash, Industry Minister Jim Prentice decided not to introduce the bill until the legislation was in a form he “could take pride of,” striking a balance between “consumer interests, the interests of creators and users and all of that.”

Prentice’s reference to balancing the rights of creators and users was not new — but was important. In a 2004 decision, the Supreme Court of Canada issued a landmark decision in Canadian copyright law, commonly referred to as the “CCH decision” (CCH Canadian Ltd. v. Law Society of Upper Canada [2004] 1 S.C.R. 339). In CCH, a unanimous Court agreed that the underlying purpose of copyright legislation was — and had to be — to balance the public interest in promoting the encouragement and dissemination of works of the arts and intellect with the desire to obtain a just reward for the creator. Given this, in its decision, the Court spoke of the rights of users, hitherto largely seen as mere exceptions to creators’ rights. In CCH, the Court confirmed that the rights of users were to be accorded the same value of the rights of creators, in order for copyright law’s purpose to be achieved.

In early June 2008, the Conservative government decided it had found the proper balance with its reform bill, and introduced the long-awaited legislation into the House in the form of Bill C-61. Minister Prentice proudly described the Bill as a “unique, made-in-Canada approach to copyright reform that is truly a win-win situation for Canadian consumers who use digital technology, and for everyone who creates material that becomes digitally accessible.”

A thoughtful review of the Bill, however, leaves one less sure. The Bill proposes to clarify a number of areas that have lacked clarity in Canadian law, crystallizing many “user rights.” It permits Canadians to engage in time shifting (recording a broadcast to watch it at a more convenient time), platform shifting (porting content to use it on another device) and private copying (making a single copy of audio materials you’ve already purchased on recordable media, and transferring them to a digital device).

However, while these rights codify and confirm the rectitude of widespread current Canadian practices, they fail to go far enough: for example, limitations to the platform shifting right would preclude someone from shifting a DVD they had purchased in a store to be viewed on their iPod video or other portable device. Similarly, the scope of the time shifting provisions are vague: the proposed legislation permits keeping the time-shifted recording “no longer than necessary in order to listen to or watch the program at a more convenient time.” Yet, it is not clear how long the material may be kept before the legislation has been violated, suggesting an ever-shifting standard based on the lifestyle of the person.

Worse than this is the fact that these consumer rights provisions are wholly undermined by two other factors: the Bill’s technology protection measure (TPM) provisions and the Bill’s contractual paramountcy provisions.

Technology protection measures are digital locks that allow the creator / distributor to limit the end user’s use of the associated content. Simple examples of TPMs include Apple’s FairPlay (attached to most songs purchased from the iTunes store) and the Content Scramble System or CSS (attached to nearly all commercially available DVDs). These locks restrict consumers’ use of the purchased content.

Under the proposed Bill, TPMs trump the consumer rights described above. So, if a creator / distributor decided that it did not want its content used in time shifting, platform shifting or private copying situations, it could design a lock to preclude this. The Bill makes overcoming such locks illegal, and renders the provision, marketing or import of the tools to overcome such locks (eg. PlayFair for Apple’s FairPlay, and deCss for the CSS) similarly illegal — even if those tools are sought only for the purposes of defeating the locks strictly for privacy-related reasons.

Under the proposed Bill, private contracting also trumps the consumer rights described above. The consumer rights provided by the proposed Bill can be wholly vitiated if contradicted by a contract entered into by the consumer. To this end, consumers may find it difficult to properly understand their obligations: no matter how hard we work as lawyers to make legal agreements short and accessible, the practical reality is that few people actually ever read the many standard form contracts which they regularly enter into — whether when browsing a website for information, downloading a song or movie from an online retailer, or opening a software or video game package. In addition, it is not clear what effect private contracting provisions that purport to expand consumer rights over those offered by the Bill would have on the Bill’s provisions that limit consumer rights.

Changing gears slightly, the legislation also contains a variety of provisions which Minister Prentice claims add clarity for the benefit of the educational community. In the Bill, educators and librarians obtained confirmation of the acceptability of certain practices (eg. librarians providing a patron located in another centre with electronic access to an article) but the limitations attached thereto (eg. that the library can only provide the article where access to it can be terminated within 5 days of distribution) are somewhat impractical. Similarly, schools are permitted to digitally distribute course materials to students, but must take steps to ensure those students cannot copy or further distribute those materials. Further, material from the internet cannot be used for an educational purpose if it contains a notice advising it cannot be so used, or a TPM precluding such use. These provisions do not reflect current practices of many educators under Canadian law and actually derogate from rights enjoyed under existing legislation.

The proposed Bill contains a number of other provisions of interest: reversing the long-standing provision that provided ownership of a photograph to the person who commissioned and paid for it; extending copyright for certain types of sound recordings, providing a new “making available” right for creators, and creating a set of moral rights for performers.

Overall, this attempt to balance the rights of owners and users appears to fall short of its intended purpose. The Minister’s spin notwithstanding: owners are clearly given an upper, unbridled hand to vitiate user rights.

However, there is no need to adjust one’s business or personal practices to these new rules quite yet: the Bill must go through several stages of review in the House this fall — and given the heat the minority Conservatives have been taking over it, there is reason to believe they will not push it forward without a majority government. That being said, if you have a vested interest in the Bill’s provisions, we would be pleased to discuss the proposed amendments with you in further detail.

A patent owner has the right to prevent anyone else from (a) making, (b) selling or (c) using products that embody an invention claimed in his patent. The doctrine of patent exhaustion is a hefty counterbalance to these patent rights, designed to maintain competition in the marketplace.

In the absence of this doctrine, a patent owner that authorized (licensed) a manufacturer to make and sell products embodying his patented invention would still be entitled to exercise his patent product claims over all others that subsequently interacted with those products, for example suing intermediaries in the value chain (wholesalers, distributors, retailers) for selling the products and suing end-users for using the products.

This arrangement would be economically inefficient and so the doctrine of patent exhaustion provides that a patent owner’s patent product claims are exhausted after the first authorized sale. Anyone who acquires a patented product that was first sold in an authorized sale is fully entitled to use or resell the product as he sees fit, without obtaining further authorization from the patent owner.

This doctrine has been clear for 150 years as applied to products; however, there has been confusion over how it applies to methods. Many patents are granted, not for inventive products, but for inventive methods of doing something useful. A method patent owner has the right to prevent anyone else from (a) using a method, or more indirectly, (b) making or (c) selling, or (d) using a product that implements the method claimed in his patent.

The Supreme Court of the United States recently considered patent method claim exhaustion in the case of Quanta Computer, Inc., et al. v. LG Electronics Inc.

LG had a portfolio of patents protecting methods of improving the efficiency of low-level operations in computer systems. The patents taught better methods of refreshing main memory from cache memory, prioritizing memory read and write requests, and prioritizing bus access among competing devices.

LG licensed this portfolio to Intel Corporation and Intel created microprocessors programmed to implement these methods when the microprocessors were incorporated into a computer system having additional components (for example main memory, buses, and devices that competed for bus access).

The license recognized that such computer systems would be subject to the doctrine of exhaustion if all the components that interacted according to the method were provided by Intel. However, the license expressly stated LG’s expectation that Intel’s customers would need to negotiate separate licenses with LG for computer systems built with Intel microprocessors but with interacting components from other manufacturers. To this end, LG required Intel to advise its customers of this expectation.

Quanta purchased microprocessors from Intel and was advised by Intel about LG’s requirement to negotiate a license. Quanta then built and sold computer systems with Intel microprocessors and third-party components, but without obtaining a license from LG.

LG sued Quanta for infringing patents on its inventive methods. In defending itself against LG’s allegations, Quanta asserted the doctrine of exhaustion.

LG argued that, unlike patent product claims, patent method claims are not subject to the doctrine of exhaustion. LG asserted that exhaustion of patent product claims is sensible because products are distinct physical items that can be individually made, sold and used. In contrast, because methods are intangible instructions for doing something and are not limited by physical scarcity, it is not sensible to exhaust rights in patent method claims.

The Court refused to rule that method claims are never exhaustible. Instead, it adopted a test for method claim exhaustion. The Court concluded that an authorized sale of a product will exhaust a method claim even if the product is, on its own, incapable of performing the method, if:

(a) the product incorporated all of the essential features of the method; and

(b) the product had no reasonable use except for performing the method in cooperation with other components.

In the case before it, the Court observed that the Intel microprocessors were programmed to implement all essential features of LG’s patented methods, but could only implement the methods once incorporated into computer systems having additional components such as main memory, buses, and devices that competed for bus access. The Court observed that the microprocessors had no reasonable use other than being incorporated into computer systems. As a result, the Court concluded that LG’s patent method claims were exhausted when Intel first sold its microprocessors as authorized by its license with LG, and purchasers such as Quanta could use or sell the microprocessors however they wished, without seeking authorization from or making payment to LG.

For patent owners, this case means they have to be even more careful in planning their patent claims and the revenue model for their patent portfolio. For patent claim drafting, the owner will want to consider the two-part test described above and decide whether it wants to seek at least some method claims that are not exhausted by the test. For revenue modelling, the patent owner will want to consider how to optimize its extraction of revenue from the value chain at or before the first authorized sale.

Canadian law on patent exhaustion is exceedingly sparse, and so it is difficult to predict how a Canadian court would rule in similar circumstances. There are important differences between US and Canadian exhaustion law; however, the US Supreme Court’s fundamental reasoning in this case is persuasive and would likely be carefully considered by any Canadian court considering the issue of method claim exhaustion.

For over a decade, health-care and technology advocates have called for the accelerated adoption of electronic health information systems and health records throughout Canada to aid in the management and delivery of health care services. In his final report for the Commission on the Future of Health Care in Canada, Roy Romanow noted that good information systems were “essential to a high quality health care system.” He went on to recommend the development of a personal electronic health record for each Canadian, and for the development of a pan-Canadian interoperable electronic health record framework, built upon provincial systems.

However, Romanow also seemed to recognize the risks to patient privacy inherent in such systems — whether through the failure of electronic safeguards, the general loss of ‘privacy through obscurity’, or the over-eagerness of custodians to use the assembled information for other research or commercial purposes. Accordingly, Romanow also recommended Canadians be given ownership over their personal health information, be provided ready access to their personal health records and be afforded clear protection of the privacy of those records.

In the last issue of Knowledge Bytes (May 2008) we noted that the BC government had proposed new legislation designed to promote the further development of a provincial electronic health record framework. Bill 24 was introduced April 10, 2008, and while it was thought the bill was not likely to be passed before the legislature adjourned for the summer, the government rushed the Bill through the legislature at the end of May.

Titled “E-Health (Personal Health Information Access and Protection of Privacy) Act”, it represents BC’s attempts at building on the recommendations set out in Romanow’s report. The Act received Royal Assent just prior to the legislature’s adjournment for the summer, and certain of its provisions are already in force: provisions amending other Acts (including the Adult Guardianship and Planning Statutes Amendment Act, 2007, the Pharmacists, Pharmacy Operations and Drug Scheduling Act and the Pharmacy Operations and Drug Scheduling Act) came into force upon Royal Assent, on May 29, 2008. However, the bulk of the provisions are due to come into force by regulation of the Lieutenant Governor in Council — which as of the date of writing, has not yet occurred.

These provisions fall into three general sets: those providing for the creation and oversight of Health Information Banks; those relating to the creation and administration of patient disclosure directives; and those supporting the establishment and authority of a “data stewardship committee.” This article examines each of these in turn.

Health Information Banks

The notion of a Health Information Bank (HIB) is not a new concept in British Columbia law: HIBs were introduced into BC’s health care scene through amendments to the Health Act in 2006 — which amendments are themselves repealed by and replaced with the provisions of this Act.

The new provisions provide that HIBs can only be created pursuant to an order of the Minister of Health. Such orders are to exhaustively address issues relating to the information contained in the HIB. These issues include describing the purposes for the collection, use and disclosure of personal information in the HIB, and defining the parties from whom and by whom such information may be collected, used or disclosed. To this end, the Act sets out a rather broad list of acceptable purposes for which the information may be collected, used or disclosed pursuant to an order. In addition, the Act also compels the provision of information in the possession of a health care body or other prescribed person to any person authorized to collect such information under an order (absent some other legislative constraint on disclosure).

Disclosure Directives

In addition to the restrictions contained in an order, information in a HIB may also be subject to a patient disclosure directive. Disclosure directives are written documents by which patients can restrict the collection, use or disclosure of personal information by information type, purpose, or class of persons seeking access or disclosure.

Even in circumstances where disclosure directives may be made, they are not absolute: the Act prescribes a range of limitations. Most notably, the Act provides that a directive need not be followed where two health care providers conclude the information may be required to promptly provide care to a patient (a) in order to preserve their life, to prevent serious physical or mental harm or to alleviate severe pain; (b) where the patient is unable to provide or refuse consent; and (c) where no other substitute decision maker is available to and capable of making a decision.

Beyond this, a patient’s right to make a disclosure directive at all is not guaranteed: if the Minister (in consultation with the data stewardship committee, discussed below) decides it is not appropriate in respect of a particular HIB to allow patients to place limitations on the collection, use or disclosure on some or all of their personal information contained therein, the patient will not be permitted to make a directive.

Data Stewardship Committee

As noted above, the ability to easily access patient information for planning, research or commercial purposes is a significant driver for the adoption of electronic health information systems and health records. To temper this, the responsibility for managing the disclosure of information contained in a HIB for planning or research purposes is given to a data stewardship committee. As previously noted, such committee can also advise the Minister whether or not to permit disclosure directives to be issued in respect of a particular HIB.

The Act sets out that such committee will be made up of individuals from government, the professional colleges, the health research field and the general public. People who wish to acquire information from a HIB for a planning or research purpose must make their request to the committee, and the committee can only approve the request in limited circumstances. Absent the committee’s consent, the information may not be disclosed. If consent is provided, it may be made subject to conditions set by the committee — and in all cases, the use and disclosure of personal information is subject to an information sharing agreement to be made between the administrator of the HIB and the requesting party.

Miscellaneous Provisions

The Act also contains a variety of other miscellaneous provisions: allowing individuals to access any information about them stored in a HIB; providing whistle-blower protection for individuals who act in compliance or who report non-compliance by others with the Act; setting fines for violations of the Act including failing to comply with an order or a disclosure directive. Such offences can result in fines as high as $200,000.

Impressions

It is somewhat difficult to judge the Act at this stage: significant latitude is provided to the Lieutenant Governor to make regulations, and to the Minister to set the terms of HIBs and to define the scope of disclosure directives. Accordingly, it remains to be seen if the Act successfully strikes the appropriate balance between using new technologies to improve health care management and delivery, and maintaining and protecting the personal privacy rights of patients.

However, several interesting developments can already be seen. For example, it appears that health care representatives clearly outnumber those from the government and public on the data stewardship committee; similarly, the rights of patients to issue disclosure directives is contingent upon the committee’s approval and is subject to the Minister’s limitations. In addition, as a practical matter, the Act will burden privacy-sensitive individuals with the responsibility to actively file and maintain disclosure directives on relevant HIBs (to the extent permitted), lest their information be collected, used or disclosed against their wishes.

Whether or not BC residents will view these inconveniences as fair trade-offs for enhanced access for caregivers to their medical information remains to be seen when the Act’s provisions are implemented. Press reports suggest the Northern Health Authority will begin using the electronic record system in November, 2008.

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