TRIPS and the WTO Decision: Challenges and Paper Promises in a Perpetual Developing-World Disease Crisis

March 31, 2008 by Essien Udokang

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) is a comprehensive multilateral agreement setting minimum uniform standards of IP protection and enforcement in all WTO Member States.[1] Its provisions require a substantive degree of IP protection for all members, including a twenty year term of protection[2] that confers the exclusive right to prevent third parties from capitalizing in any way on a product that is the subject of the patent.[3]  

While TRIPS is a benefit to Member States with the manufacturing capacity to sustain drug production, it represents a substantial barrier for developing and least developed countries ((L)DCs) in the context of access to medicines.  By insisting that Member States implement strict patent protection, TRIPS ensures that patentees (largely situated in developed countries) can charge monopoly prices in markets of their choosing, and exclude generic manufacturers from producing cheaper versions for use in markets patentees have conscientiously preferred to avoid. This places a deadlock restriction on access to medicines in poor countries whose consumers substantially cannot pay monopoly prices. Additionally, these countries largely lack the manufacturing infrastructure to support domestic drug production. It is no surprise that patentees argue the impact of TRIPS will be minimal in this regard; many others insist on the contrary.[4] Clearly, strategies need to be implemented to prevent the TRIPS status of (L)DCs from castrating humanitarian drug access regimes. 

Article 31 of TRIPS does permit compulsory licensing on domestic soil. Compulsory licensing occurs when government overrides a patent and allows a generic manufacturer (GM) to produce and sell that drug without patentee approval; it is only sanctioned for acute reasons such as emergencies or crises,[5] is limited to the purpose for which it is authorized and is to be terminated when the motivating circumstances cease.[6] Article 31 only permits manufacturing and distribution domestically however, and so is of no use to (L)DCs, which lack the capacity to produce their own generics. It also fails to address chronic global disease issues faced by these nations. 

Patents arguably have little to no value in poor nations. Since patentees have deliberately avoided these markets, they derive comparatively miniscule revenue from them, if any at all. Flexible patents legislation in these regions would afford little to no economic loss for them.[7] However, Western governments and patentees continue to push for full TRIPS compliance in (L)DCs by 2016 at the latest. This lobby effort is ominous for countries and NGOs working to solve the disease crises in these nations; already anorexic humanitarian efforts will be further impeded, and the aggressive tone of patentees does not suggest that there will be any flexibility or creativity on their part in helping to support a continued global effort.  

Certainly, the Doha Declaration (November 2001) and subsequent WTO August 2003 Decision have paved the way for Member States to issue compulsory licences for generic manufacturers to make drugs for export to (L)DCs.  But these “relief valve” provisions, and any Western legislation that has implemented them to date,[8] are onerous, prohibitive and functionally impotent. In fact, no (L)DC has requested the use of these provisions to date, even though the need is glaringly apparent, signaling the failure of these provisions to even closely represent an efficacious solution to the access to medicines problem. On the contrary, the alleged solutions are designed for the full TRIPS intent to remain in force, while providing placating paper promises to “persistent” humanitarian parties. The horizon is bleak for many (L)DCs. Canada must make a concerted effort to fulfill its international humanitarian obligations by amending its “access to medicines” legislation to be more accessible, inviting to (L)DCs and GMs, and able to achieve its objective; it must also press the international community to guard against the impending consequences TRIPS will pose to disadvantaged nations and the collective humanitarian access to medicines effort.  



[1] Maxwell R. Morgan, “Medicines for the Developing World: Promoting Access and Innovation in the Post-TRIPS Environment” (2006), 64 U.T. Fac. L. Rev. 45 at para. 19 [Morgan].

[2] Michael J. Trebilcock & Robert Howse, The Regulation of International Trade, 3d ed. (
London: Routledge, 2005) at 413 [Trebilcock].

[3] Morgan, supra note 1 at para. 20.

[4] Ibid., at para. 46.

[5] Trebilcock, supra note 2 at 413.

[6] Morgan, supra note 1 at para. 22.

[7] Ibid., at para. 17.

[8] For example, Canada’s Access to Medicines Regime (CAMR), now implemented as ss. 21.01-21.2 of the Patent Act, R.S.C. 1985, c. P-4.

The beginning of the end of net neutrality?

March 31, 2008 by Tony Pak

Recently, I received a letter from my internet service provider, Rogers Communications, informing me that my internet service will be changing. Not only will I have a cap on the amount of information I can download and upload a month, I will also be inflicted with caps on my internet speed. Thankfully, they also provided me with an option to avoid these problems – pay more money. I am certain I am not the only one who was outraged by the new terms of the contract, but with Bell and Rogers owning a virtual monopoly to Canada’s access to high-speed internet, what could I do?

I have always known that ISPs impose limitations on certain programs or websites. There generally hasn’t been much of an outcry, but last week, Canada’s patience reached a boiling point. On Tuesday, it was revealed that Bell Canada planned to further expand its traffic shaping policies to the point where businesses that rent bandwidth from them would be restricted as well. The following day, numerous users who attempted o download a TV show made available by the CBC through the torrent system, experienced tremendous slow-downs. On Friday, the National Union of Public and General Employees officially wrote to the CRTC and urged them to investigate the practice of traffic shaping and its impact on users. It is worth noting that the CRTC, in 1999, had refused to regulate the internet. [1] Perhaps it is time to revisit that decision.

Bell Canada defended its position on Friday that traffic shaping was necessary in that it was preventing “small portions of bandwidth hogs from slowing speeds down for all customers.” This goal seems noble enough and if it were their sole motivation and necessary, I don’t think there would be much of an issue. However, they further admit that they actually do have the capacity to accommodate all users, but engage in the practice anyway to limit programs that could be potential “threats to their own business.” [2] I submit that this second line of reasoning can lead down a very dangerous path. The internet has always been about free access to information. The fact that ISPs are allowed to place limits based on their own business interests can severely restrict Canadian’s access to that information. (I should also point out that this story was not available on, a Rogers owned subsidiary.)

Even if both Rogers and Bell are running out of bandwidth, wouldn’t it still be in Canada’s best interest to encourage them to upgrade their systems rather than allow them to impose limits? In a study conducted last year, it was predicted that internet slowdowns could occur as early as 2010. It concluded that demand was simply outpacing capacity and that in order to close that gap, ISPs would have to spend about 60-70 percent more than what they currently have budgeted. [3] I see no motivation for a company to expand their bandwidth if they can arbitrarily limit the amount of information their customers have access to instead.

I also must wonder why demand is outpacing capacity at such an incredible rate. When I subscribed to Rogers (over 5 years ago), I was told that I would have unlimited capacity every month. Such a practice seems equivalent to one where an airline purposely overbooks their flights except in that situation, the customer is usually given some form of compensation. Do we really want to encourage this practice? I also submit that if we are running out bandwidth, then it can be attributed to the ISP’s own poor planning and allowing them to impose limits would not improve
Canada’s internet infrastructure.

In the short term, maybe limits are necessary in order to ensure consistent internet access, but it cannot be the ISPs who prescribe these limits. The internet has become a large and perhaps even the dominant source for information and any limit prescribed by an ISP would severely affect Canada’s access. The CRTC must step in and regulate the industry in order to ensure there is fair and consistent access for all consumers.

[1] Union Urges CRTC to Curb Interference by Bell, Rogers.

[2] ibid.

[3] Internet Slowdown on Horizon, Study Claims.

The Multinational Pharmaceutical Companies – are they greedier than us?

March 31, 2008 by khshin

Let’s say I want to sublet my on-campus room for the summer. I’m paying $1,000/month. Because staying on campus is extremely convenient for whatever reason, but it is difficult to find a place, someone proposed me $1,200/month for the sublet, while others proposed less than $1,000/month. Which offer should I choose? And, if there is one offer of $500/month from a handicapped person who really needs on-campus housing, should it make my decision any different? If I decide to take the highest bid, am I being greedy or am I making a rational decision? Would you call me unethical?

One of the presumptions of economics is that people are rational beings. By implication, people are expected to act in their best interest. Does it apply to pharmaceutical industry? The multinational pharmaceutical companies may seem to earn a lot of money using their patent on medicine. But what if in reality, they barely make enough to survive?

It is said that it takes around 15 years to introduce a new chemical into a market place. Although the company starts with many candidates, some are dropped in the 2nd year, some in the 5th year, and some just a month before commercialization due to various reasons, such as chronic mammal toxicity, harmful environmental profile, or newly established regulations. Very few candidates survive, but the company has to pay for the cost for all of them. Is the whole process expensive? Definitely. Is it more expensive than it was before? Sure. How high is the success rate? It depends, but now it is far lower than it was before. Why is it like this? Could the high cost and low success rate justify the “greedy-looking” behaviour of pharmaceutical companies?

I think the demand for a higher safety standard in the developed countries is one of the prime reasons of the high cost and low success rate of new medicine development. The people in those countries are getting more sensitive about their health. From our grandparents’ view point, we are just being hypersensitive. The result of increased sensitivity, at least in the pharmaceutical industry, is more regulation and higher potential of liability. In turn, it means more money for more scientific tests to meet more stringent regulations, more time for preparing more data with higher uncertainty of getting a marketable chemical. Usually people living in the developed countries like
Canada are those who lead this trend to the extreme where only a few companies could meet the standard and survive and where people in developing countries cannot afford. Are we willing to accept lowering safety standard to the level of 20 years ago for a new medicine if it could help people in desperate need of a certain medicine by faster and cheaper development and production of medicines?  If we wouldn’t, are the companies still to blame?

Acquiring a patent in pharmaceutical industry requires a lot of investment, which continues to increase, prior to any actual return. This urges the companies to try to get their investment back more quickly than before. Around 15 years ago, the target pay-back-period (the time for recovering all the money invested) was roughly 10 years. Now many companies apply 5 years. The high rate of Mergers & Acquisitions (M&A) for the last 15 years in this industry tells me that the companies were going through a difficult time to produce enough profit to survive or to satisfy shareholders’ request. Some suggests that these companies needed access to quick cash. But M&A usually resulted among leading players in the industry such as Hoechest, Zeneca, Russell etc. Who are the owners of the firms and who gets the money? The managerial people there are just one of the employees, and the number of those managerial positions will be reduced by half by the M&A. Then why merge? One explanation is that the companies had seen little opportunity to survive on their own, probably by the lack of profit to support continuous business in that field or lack of budget to invest for new medicines. They were driven to merge without a choice.

It is true that they want more control over the market with their patent for more money. Some may label their actions as “greedy”, but I would say that they are being “rational”. It does not seem like we can call them greedier than any one of us. The profit gained by the commercialization of new patented medicines alone cannot in itself be the basis for our judgment.  (Kwang Hoon SHIN)

Standing Up to U.S. Copyright Bullying

March 31, 2008 by Matthew Lippa

Once again on February 11th 2008, the International Intellectual Property Alliance (IIPA) released its annual recommendations which it submits to the United States Trade Representative (USTR). The name taken by the IIPA may be misleading, as it can hardly be considered “international” in scope. The IIPA is essentially a US lobby group which aims to protect the interests of a handful of entertainment groups. Specifically IIPA represents around 1,900 U.S. companies producing and distributing materials protected by copyright laws throughout the world [1]

The purpose of the report is simply to influence another report, the “Special 301” which is released by the USTR (a branch of the US government). The Special 301 report analyzes the effectiveness of intellectual property right laws in various countries around the world. Unlike the IIPA report, the special 301 report has teeth and places the most egregious offenders on watch lists which could result in accelerated investigations and possible trade sanctions.

This year, as in previous years, IIPA claims that many countries are not doing enough to ensure US copyright laws are protected; in other words costing their industry money. And quite a bit of money indeed; according to IIPA, losses due to piracy of U.S. copyrighted materials around the world are estimated to reach $30-$35 billion annually[2]. Once again the IIPA has some harsh words for Canada stating that it had “taken no meaningful steps toward modernizing its copyright law to meet the new global minimum standards of the WIPO Internet Treaties” The report [PDF] goes on to claim that Canada alone costs the IIPA’s interests 611 million in trade losses due to piracy, and recommends placing Canada on the priority watch list. [3]

Among the recommendations is that Canada enact legislation to comply with WIPO and clarify copyright in Canada. However the report goes further to claim that Canada must fulfill its pledge by enacting laws that deal with technological protection measures (TPMs), specifically aimed at banning the circumvention of TPMs, a hotly contested issue in Canada. For IIPA banning TPM circumvention would result in a windfall.

Regardless of any truth to the recommendations, one must be mindful of the source. It must be remembered that IIPA is a US lobbyist group, supported by US business, and should have no influence on our Canadian parliament and democratic process. However, we should be cautious because the report may have this desired effect. After its release world media jumped on the recommendations claiming “Canada a top copyright violator”. These negative impressions could greatly influence proposed copyright reform. Canada must set the record straight, and we may want to take a lesson from Israel in this regard.

Israel recently replied to the IIPA report which stated that Israel’s protection of copyright was lacking and recommended they be placed on USTR’s watch list. In a response letter [PDF], Israel defended its copyright laws, which were recently amended and modernized in late 2007. Israel clearly states that protection of copyright does not have to mirror that of the US and that their legislation is adequate. The Israeli letter emits a tone of irritation and also notes the IIPA report contained “usual inaccuracies and hyperbole”. Clearly Israel is wary of the interests surrounding the IIPA. Canada has yet to respond.

At least one Canadian MP has pointed out Canada can meet its goals under WIPO without resorting to US style TPM or DRM. New Democratic Party MP Charlie Angus has written an open letter to Industry Minister Jim Prentice, arguing that Canada can ratify a key WIPO treaty without passing draconian DRM legislation. For Mr. Angus Canada has a choice whether to follow in the footsteps of our southern neighbour.

When will a private lobbyist such as the IIPA ever claim there is enough copyright protection? The interests they represent seek to profit from an ever increasing numbers of protections. There are many other sides to the copyright debate. It is clear that Canadian copyright legislation needs to be amended, but interests such as the IIPA should be taken with a dose of healthy scepticism. Whats important to remember is that Canadian copyright must be reformed for Canadians and not subject to pressures from those who have other interests in mind.

[1] IIPA homepage -
[2] IIPA homepage
[3]Chart on losses due to copyright piracy -

One Size Does Not Fit All

March 28, 2008 by Dan Hartrell

Under Canadian patent law, the scope of patentable subject matter is still expanding. But under U.S. patent law, “anything under the sun made by man” is patentable. This has come to include patents for computer software.

Software patents raise a debate over which algorithms are novel, and which are non-obvious. Some algorithms may arguably have no utility, particularly in computer games and interactive entertainment.

These are important legal questions. But as patents begin to affect entire segments of the software industry, the question turns to whether it is helpful to fit new technology into old law.

Read the rest of this entry »

What is in a Title?

March 26, 2008 by Devorah Katz

The notion of originality in copyright seems to reinforce an outdated assumption of author as a singular creator. Today, there are a plethora of cases that defy this notion. Most notably is act of collaboration and collective production. The notion of collective production is clearly illustrated in the example of current mainstream popular music production. With increased use of technological tools to record and manufacture sound, the act of writing and performing is but one stage in a much larger, much more intricate and complex process of creation. In fact, the process of production is so multi-layered, that it has become difficult to reduce the work down to its ‘original’ form. Put simply, there is so much of a musical work that is added to, subtracted to and, manipulated throughout the various levels of production that the attempt to ascertain the ‘first mover’ or ‘author’ of a work becomes merely an act of semantics.

Let’s take the example of Britney Spears. Her music is far from being the culmination of work from a singular author. The rough breakdown of the production process is as follows: First her producer, Max Martin, writes or licenses a work from another song writer for Britney to sing. Martin then brings her into the studio and, together with the sound engineer(s), records her voice singing this song. After this stage is completed, both the producer and engineer, take her voice and manipulate the sound, usually to the extent that the actual band will not be able to replicate it live. The question then remains who is the person to which we can attribute the natural title of author? Who deserves the credit for the finished work we consume.

It is my feeling that the fundamental problem with the underlying assumptions of singularity in copyright is that it seems to miss the mark by overlooking the role of ‘external’ contributors in the production process. The notion of individuality and originality of authorship establishes a single route towards ownership and the propertization of creative achievement. The current notion of authorship elevates an idea of genius in originality which necessitates isolation in the inspiration and production process.

The difficulty in enabling this one-dimensional approach to understanding authorship is that in many cases the creative process involves more than just the creator working in the solitary confines of her private quarters. By encasing a notion of creative expression in the language of personal property, both the law and the courts fail to account for other sources of inspiration and contribution that might have been instrumental to the materialization of creative work like the one we looked at above. In the majority of cases, the creative process is a far more textured and nuanced than the simplistic idea of one individual creating in a vacuum. At the heart of the notion of authorship lies an ongoing and arguably inherent contradiction engendered by the initiation of copyright law and its subsequent implementation.

But how could the laws possibly reflect this more nuanced, more textured articulation of the creative process? The change, if any, must be driven by a shift in focus of the law itself. Instead of trying to confine the protection of creative works to a narrow and strict definition of what creation is, we must leave enough room within the laws for a more malleable and more adaptive treatment of the current context of creative expression and distribution. As we saw in the Britney Spears example, a modern understanding of copyright involves a realization that creative works are inter-textual and often involve multiple creators. New legislative efforts could begin responding to this by weakening the test for proving joint or multiple authorship and thereby making it less difficult for rightful stakeholders to claim recognition in a work.

This is but one suggestion. However, whereas the direction of future copyright law remains unclear, what is unequivocal is the fact that the philosophical premises on which current copyright laws are based need adjustment — we can not assume a singular author as a starting point for attribution of title.

Perspectives from a former scientist-in-training: If I knew then, what I know now…

March 24, 2008 by Tamsin Thomas

In its Strategic Plan published in 2006, Ontario’s Ministry of Research and Innovation called for the generation of an “innovation culture” in Ontario with one goal of increasing the commercialization of research taking place at universities. I could not help but think of my own experience as a grad student in a cell biology research laboratory. The extent to which universities should be commercializing their research is an interesting issue on its own but I instead wish to point out the circumstances in which budding scientific researchers are being trained and emphasize that any commercialization of research needs to consider the view points of the grad students who are generating a large proportion of the research. It is essential that grad students are educated regarding their IP rights.

From the moment I became a graduate student, the emphasis was on generating data in order to publish a paper, submitting an abstract to a scientific meeting (which was hopefully somewhere exotic!) or adding data to my faculty supervisor’s research grant application. We were given orientation regarding the student union, the local pub and our health plan as examples but nothing regarding our IP rights. I remember being mildly surprised when we had a manuscript accepted and had to sign all our rights away. Not knowing any better at the time, I didn’t question it. Even if I had questioned this assignment of rights, there would be little I could have done. After all, in order to gain a reputation in science and get a good post-doctoral position and eventually a faculty position, the publication record is the main assessment factor. Furthermore, in order for faculty supervisors to obtain research funding from agencies such CIHR and NSERC, a strong publication record is vital.

Aside from building a reputation and getting research dollars, there is little commercial value in most publications that come out of a scientific research lab. To increase the commercialization of research coming out of universities, there would have to be a change in the emphasis. While publications are important, it will preclude the granting of a patent of anything of commercial value contained within a particular publication. Thus it is important that graduate students (as well as their faculty advisors) are educated regarding the different areas of IP, especially patents. For example, most of my colleagues at the time did not even contemplate a patent and appeared to be of the view that a patent was somehow out of reach. While this education might decrease “missed opportunities to patent”, there is the increased potential for exploitation of grad students. A MSc takes about two years to complete while a PhD in sciences takes about 4-5 years. Thus it is possible to have multiple students working on a project that leads to a patent. Conflicts can arise when determining who to include on the patent application. It is understandably difficult for a student to hear that she might have no commercial interest in a patent involving work to which she contributed 60 hours a week over a few years, and for which she received little pay. Grad students need to be aware of their IP rights to avoid these sorts of issues.

Several years ago when I entered into graduate studies, I didn’t even know what IP was and the words certainly wouldn’t have even caught my interest. In the unlikely event that I had done law school first and then my degrees in science, I would have had a completely different outlook. Would this knowledge have changed how I developed my research project? I was lucky enough to be in a lab where I had significant input regarding the development of my research and while I may not have been successful, I might have approached my project slightly differently with a goal of obtaining a patent for my work as well. On the other hand, I might well have decided that innovation was better served by making my IP freely available to all researchers. Regardless, surely the individuals generating IP need to have at least a basic understanding of their rights. I think it is essential for students to possess the knowledge to perhaps prevent “missed opportunities” to commercialize their work, possibly prevent themselves from being exploited by their supervisors and the university and even to simply assess the costs and benefits of commercialization of their IP in the first place. One way to do this is to include some IP classes during the first few weeks of every graduate program. Considering the interesting IP questions I have received upon visiting my former department, this would be a welcome idea. Grad students play a vital part in developing an “innovation culture” and need to be considered and educated in any scheme designed to increase the commercialization of their research.

Protecting Trade-mark Distinctiveness: The Risk of Dilution as Illustrated by the Genericism of Geographical Indicators

March 23, 2008 by Virginia Torrie

The proposition that consumers are confused by the use of geographical indicators (GIs) by producers other than those from the specified geographic region is arguably a weak one. Evidence that GIs have become generic terms in many countries bolsters this argument because consumers generally do not consider generic marks to be indicia of source. However, authentic producers of GI products have suffered dilution of their marks. “Dilution” is defined as “the lessening of the capacity of a famous mark to identify goods or services” in the American Lanham Act.[FN1] As discussed below, protection against dilution appears to be a logical and necessary component of trade-mark law, beyond the concept of depreciation found s. 22 of the Canadian Trade-marks Act.

There are two types of dilution codified in American law: blurring of distinctiveness and tarnishment. In this post I will deal only with the former. This type of dilution occurs when there is “a blurring of the mental associations evoked by the mark, such that the ability of the mark to uniquely evoke the cognitive network originally associated with that mark has been whittled away or diluted”.[FN2] To illustrate, a mark such as COCA-COLA is indicative to consumers of a single producer of a certain product. In contrast, DIJON is not. DIJON is indicative to consumers of a type of mustard generally. In fact, DIJON might bring to mind other famous brand names associated with mustard, such as French’s. Thus, while the mark COCA-COLA is quite distinctive, the distinctiveness of DIJON has been blurred by the use of this mark by those other than the authentic producers of this specific mustard in Dijon, France.

Blurring can occur even when the second user of the mark is engaged in a completely different business than the original trade-mark owner. The reasoning for this type of protection is that even though a consumer may be unlikely to be confused by the use of DIJON for mustard and the concurrent use of DIJON for lampshades, there is a “weakening of associations, whittling away or lessening of the capacity of the famous mark to identify goods and services”.[FN3]

Where there is competition between the original trade-mark owner and the second party, however, blurring becomes “a step along the path to mere descriptiveness and possibly genericism”.[FN4] GIs have arguably succumbed to genericism in many countries due to dilution through use of the mark by both authentic producers and competitors.

Dilution is not simply an added trade-mark right, it is a concept that enables owners of famous marks to protect the distinctiveness of their trade-marks. Trade-mark law is premised on the notion of distinctiveness. Inherent or acquired distinctiveness is an essential requirement for registration under the Trade-marks Act.[FN5] If trade-mark owners, however, are unable to protect the distinctiveness of their mark against dilution, it seems paradoxical to protect only distinctive marks, since, once registered, distinctiveness can subsequently be lost along with statutory trade-mark protection.

The tale of GIs is illustrative of the need for statutory safeguards against trade-mark dilution by demonstrating the susceptibility of strong marks to competing use ultimately resulting in genericism. Once distinctive of high-quality products emanating from certain regions that resulted (in a number of cases) in the unique characteristics of the final product, GIs now merely serve to identify a broad class of products of varying quality, made by dozens of different producers. Thus, many GIs have been diluted to the point of genericism.

If legislatures are serious about protecting trade-marks then there is arguably the need for some sort of protection against dilution, as dilution wears away at the essential qualification for trade-mark registration. While it is likely too late to save “generic” marks, statutory protection against dilution would enable existing trade-mark owners to protect the distinctiveness of their marks on a going-forward basis. As trade-mark and brand equity continue to increase, so do the financial and business reasons for protecting the distinctiveness, and thus the trade-mark rights, of famous marks. Something akin to the prohibition against blurring found in American legislation might be a useful place to start.[FN6]

[FN1] Lanham Act, 15 U.S.C. § 1127 (1946).
[FN2] Jacob Jacoby, “The Psychological Foundations of Trademark Law: Secondary Meaning, Genericism Fame, Confusion and Dilution” (2001) 91 Trademark Rep. 1013.
[FN3] Ibid.
[FN4] Ibid.
[FN5] Trade-marks Act, R.S.C. 1985, c. T-13 s. 12.
[FN6] The Federal Trademark Dilution Act, 15 U.S.C.S. § 1125 (2002).

19.6 Billion Dollars for a Slice of Thin Air

March 22, 2008 by Julian Ho

Open Access, Competition, and Spectrum Auctions

This past week, the Federal Communications Commission (FCC) in the US announced the winners of their 700Mhz spectrum auction, with Verizon and AT&T being the big winners. In bidding 19.6 billion dollars in the process, the winners secured rights to broadcast on a very desirable swath of radio frequency that penetrates deeper into buildings with less energy. Moving forward, the telecommunication giants will be able to fulfill increasing demand for data-intensive wireless communications services.

Of particular note, Verizon secured the rights to what was known as the ‘C’ - block of spectrum in the auction. This block of spectrum has conditions that require the telecommunications provider to allow any device to connect to its network, and to allow any application to run on these devices. Currently, in the US, as it is in Canada, the wireless service provider controls the type of device a customer can use, and the applications that can run on those devices. This creates problems with portability, as switching carriers often means not being able to take your phone with you or run the applications which you’ve already purchased. This new C-block spectrum will thus undoubtedly reshape the wireless landscape in the US as the current bottleneck of the network operator will be loosened with resultant increased competition in handset manufacturers, application providers, and carriers. (For further discussion of the way things currently are, see Tim Wu, “Wireless Carterfone” . International Journal of Communication, Vol. 1, p. 389, 2007 Available at SSRN:

A little closer to home, this past week, Industry Canada announced the participants in a spectrum auction of our own set to take place in May. As Professor Geist noted, the Canadian government will not mandate open access rules on the use of this spectrum. While this is disappointing from a consumer perspective, the rules about new entrants and mandatory roaming agreements should nevertheless inject more competition to the Canadian wireless space.

Are auctions even necessary?

Despite all the excitement surrounding open access for telecommunications services, a nagging question still remains, i.e., should we be having spectrum auctions anyway?

With the advent of ’smart’ radio receivers, which are able to “determine instantaneously when and where a bit of spectrum is going unused and switch their communications accordingly to avoid interference” (effectively ‘navigate the noise’ so to speak), is it even necessary to parcel off spectrum anymore? Why not just have unlicensed ‘white space’, since the resource is no longer necessarily scarce? Is this just a cash grab for the government? Professor Lessig articulates the argument this way:

The argument is that we deregulate spectrum. “Deregulate” not in the sense that we auction spectrum. Auctions require a gov’t created property right; that’s a form of spectrum regulation. “Deregulate” in the sense that we set off large swaths of spectrum for unlicensed use. Congress has made this impossible in the short term for any significant chunk of spectrum. But we do have an important opportunity to set free “white space.”

The argument might be best introduced with the following hypothetical:

Imagine the government nationalized the hotdog market, and then sold to the highest bidder the “right to sell hotdogs” at in a particular place for a particular period of time. These rights — the right to sell hotdogs — could be structured to be a kind of property. The market would thus allocate them to the highest valued use. And the initial sale would raise lots of money for the federal treasury.

Are you in favor of that? And if not, then why are you in favor of spectrum auctions? “Because certain uses require regulation,” you say. But then why not push towards uses that don’t require regulation?

Professor Lessig has a great video further elucidating his argument: link

Since the auctions are already completed in the US, and are already in full swing in Canada, this preliminary question may indeed be moot for this round of auctions. Moving forward however, this may be a relevant issue to consider. Is giving a monopolistic property right necessarily the best way to derive the most value from this public good anymore? Or, since technology has progressed to a point where it is no longer necessary, might it be better to just deregulate the use of radio frequencies altogether?

Protection of famous marks in Canada

March 18, 2008 by Tamsin Thomas

In late 2007, Virgin Enterprises successfully opposed the registration of “VIRGIN CANDLES” in Israel. The applicant sought to register the TM in association with candles. The Israel Patent and Trademark Office accepted that because Virgin is a famous TM and had a large range of products and widespread international distribution, a likelihood of confusion did exist [1]. Would such a claim succeed in Canada?

One of the leading Supreme Court of Canada cases regarding famous marks is the Mattel case [2]. The makers of Barbie dolls and accessories opposed the TM application for registration of “BARBIE’s and design” by the owners of a “bar-and-grill” type restaurant named Barbie’s. If in the opposition proceedings the applicant could prove that there was no likelihood of confusion between the applicant’s mark and the opposing party’s mark, the applicant was entitled to registration. The Mattel case, therefore, involved an analysis of s. 6 of the Trade-marks Act and the potential impact the status as a famous mark has on the determination of likelihood of confusion.

S. 6(5) lists out the relevant factors for determining whether TMs are confusing and instructs the court or registrar to consider “all the surrounding circumstances” including a list of five factors (a) through (e). The court concluded that in considering confusion the totality of circumstances dictates the weight to attach to each consideration. Fame of the mark is but one consideration which could have more or less weight depending on the other circumstances. After considering the factors in s. 6(5), the court turned to an analysis of the other surrounding circumstances including the fame of the mark as well as the absence of any actual confusion and concluded that the TM Registrar had not been unreasonable in the weighing of considerations and dismissed Mattel’s appeal.

Given the undeniable widespread fame of the Barbie mark, no matter what people might say about the impossible body dimensions and empty-headed blonde image, it is surprising that this fame was not enough for the court to grant extra protection. After all, as a casual consumer somewhat in a hurry, I might hear Barbie’s restaurant and think it was a Barbie doll-themed restaurant, especially in a culture where licensing of brands for use on everything from clothes to toys to restaurants is commonplace.

It was accepted in the Barbie case, that one of the purposes of 1953 amendments to TM legislation was to give, and indeed did give, greater protection to famous marks. Certainly there does seem to be something unfair about the fame of a mark being able to transcend other factors in the confusion analysis, but if fame is but one factor, in what manner do famous marks receive the broader ambit of protection? One important fact was that the Barbie TM was only famous in the limited field of dolls and accessories. In Mattel, the court specifically mentioned Virgin Enterprises as being an example of a famous TM which has been used in connection with an almost limitless diversity of wares and services but because such an example was not before the court, no pronouncement was made. A quick search of the CIPO TM database reveals Virgin has registered TMs for such diverse wares and services including soft-drinks, mobile phones and telecommunication services, transportation of goods and passengers by air, road, rail and sea and the arrangement of such travel, wines and entertainment services. If fame in a limited field is not sufficient, then surely fame in such a broad variety of wares and services would surely provide justification to attribute a lot of weight to the fame of this mark just as the Israel Office did.

While I might agree Virgin should be granted extra protection from a legal perspective, it is important to ask whether such a result would be a good thing from a policy perspective. The owners of famous marks have invested very large amounts of time and money into developing the reputation and goodwill in their brands and should be entitled to greater protection. One of the underlying principles of TM law, however, is to protect TM owners from unfair competition. It seems unlikely that the businessman who names his candle business Virgin candles because the candles are made from olive oil could be said to be unfair competition to Virgin Enterprises. It seems more unfair to preclude small-scale business owners from using a TM which has a similar name to a famous mark, especially where the TM lends itself to their particular products and services.

[1] See for brief comment.

[2] Mattel, Inc. v. 3894207 Canada Inc., [2006] 1 SCR 772.