Tech Law update

I have been blogging less because I am working on a technology & law related project (more information soon). In the meantime:

Online Defamation

Kiwiblog noted an interesting Canadian defamation case (Baglow v Smith) involving defamation on political blog sites:

On 30 August 2011 the Ontario Superior Court of Justice handed down judgment in the case of Baglow v. Smith, 2011 ONSC 5131. The decision suggests that an allegedly defamatory statement made in a debate on a blog or internet forum may not be found to be defamatory if the plaintiff previously engaged in the debate but did not respond to the statement despite having the opportunity to do so.

Canadian law firm Heenan Blaikie has a summary of the case here:

At the risk of over-simplifying the matter, the court’s decision can be summarized as this: there is something meaningfully different about online statements, particularly those which are made on political blogs and discussion forums, which militates that they be treated differently for purposes of defamation law. Put somewhat differently (and, again, with the qualification that this over-simplifies matters): impugning someone’s name on the broadcast evening news is different from impugning their name on a blog.

New Zealand courts give weight to Canadian judgments, and it will be interesting to see whether this case is raised in a New Zealand defamation proceeding in due course.

Amazon’s “one click” patent reaffirmed in NZ

Amazon’s infamous “one click” patent has been reaffirmed in New Zealand by a decision of the Commissioner of Patents, Amazon.Com, Inc v Patrick Ryan Costigan [2011] NZIPOPAT 12 (21 July 2011). The opposition to the patent does seem to have been somewhat quixotic – the opponent was not represented at the hearing, whereas Amazon had a team headed by a QC appear to defend its patent, as well as evidence from US and Australian patent experts. The Commissioner also noted that the patent had been upheld in Australia.

Google cleared in Australian ad-word case

The Australian Competition and Consumer Commission – the equivalent of NZ’s Commerce Commission (but rather tougher, it has to be said) – has lost a case it brought against Google alleging that Google engaged in misleading and deceptive conduct by mixing ads into its search results. The Court also found Google had not breached trade practices law by using (or allowing the use of) competitors’ names and trademarks in sponsored links. The full 73 page judgment is here.

UK Govt asks for Search Engine De-optimisation

Computerworld reports:

Google and other search engines, including Microsoft Bing and Yahoo, will be asked by the UK government to push copyright-infringing websites down their search results under new plans.

Which sounds like it could open a can of worms… The article also notes:

… it is understood that there could be forthcoming legislation, within the Communications Bill, if an industry-run solution is not found.

Which will certainly be a can of worms.

Watch the UK Supreme Court live

In what is understood to be a first, the UK Supreme Court (which in 2009 replaced the House of Lords as the UK’s highest court) now transmits a live coverage of hearings. This is a good step forward for open justice, because while most court hearings are open to the public, they are usually rather inaccessible. The Supreme Court coverage is available here streamed via Sky UK.

New High Court rules and the impact on electronic discovery

The Rules Committee of the High Court has released its final draft of new rules on civil discovery. This is the final stage of a long-running process to update the often troublesome rules relating to discovery, in particular electronic discovery. The latest rules are available here (pdf).


For those who are lucky enough not to have been involved in civil litigation, discovery is a legal process that requires each side in the case to “discover” all relevant documents to the other side – the legal equivalent of laying your cards on the table. That doesn’t just mean documents that support your case – parties are also obliged to produce damaging documents. There are only limited grounds for refusing to disclose documents, such as legal privilege, and even then certain steps must be followed.

Unfortunately, discovery has become often a very difficult and time-consuming (and therefore expensive) part of modern commercial litigation. The general rules of discovery were laid down in the nineteenth century, when most documents could only be produced by hand or at significant cost. It was also a lot more obvious what a “document” was back then – usually ink on paper.

In recent years there has been an explosion in the amount, and type, of documents in business. The most obvious are computer documents (Word docs, spreadsheets, etc) and email. Most significant businesses are now heavily reliant on electronic communications. Documents still include paper files, faxes, and accounts, but also include modern documents such as databases, text messages, and even tweets, and huge amounts of documents can be created during the course of an ordinary day. As a result, parties to litigation are often required to handle huge volumes of documents. In large litigations I am involved in, it is common to have tens of thousands of emails and other electronic documents in play.


The discovery reform aims to modernise the rules to improve the discovery process for the benefit of litigants, and better reflect the modern realities of business and society. I have submitted on the first draft rules, and note a few highlights and changes in the proposed final draft:

  • Parties must co-operate on discovery (oh, were it always that way!) and ensure “technology is used efficiently and effectively”. (8.2)
  • Parties “must take all reasonable steps to preserve [relevant documents]”, including ensuring that “documents in electronic form which are potentially discoverable [be] preserved in readily retreivable form even if they would otherwise be deleted in the ordinary course of business” (8.3). This is a significant and powerful rule that imposes an express duty to preserve electronic records (see below for more details). When a dispute arises, it may be a prudent strategy to put the other party on express notice of this duty.
  • The rules introduce two types of discovery – standard and tailored (8.6). Thankfully, the proposed threshhold of 200 documents for tailored discovery (previously called non-standard discovery) has been dropped. Even small commercial litigations tend to have far more than 200 documents these days!
  • Parties must undertake a “reasonable search” for electronic documents, which includes some room for negotiation over whether it is or isn’t unduly costly to do so in certain cases (8.14).
  • Original native files (that are discoverable) are to be provided on request (8.27(4)). While I had proposed clearer language here, the rule is still to that effect.
  • Documents are to be exchanged by way of PDF where possible (sched 9, clause 1).
  • The proposed requirement of chronological ordering is not mandatory – a different order may be applied if more convenient (sched 9, clause 2).
  • Exchanged documents should be DRM free (well, it’s not quite as explicit as I had proposed but it’s a start) (sched 9, clause 6.8).

Duty to preserve documents

The most notable change for non-lawyers is the duty to preserve evidence, in particular electronic records. Unlike in the US, there is no tort of “spoilation of evidence” in New Zealand. There can still be serious consequences for destroying evidence, but the threshhold is unclear and there has not generally been a positive duty to preserve documents for the purposes of potential litigation.

The proposed rule 8.3 will change that. It requires a person who knows that a document is “reasonably likely” to be relevant to a legal dispute (whether or not any dispute has arisen) to take “all reasonable steps to preserve that document”. The term “knows” here is likely to be taken as meaning “ought reasonably to know”.

In particular, the rule will require that potentially relevant electronic documents “must be preserved in readily retrievable form even if they would otherwise be deleted in the ordinary course of business”.

The most obvious type of document here is email. Many businesses let their users fully manage their own emails. If a user deletes an email from their inbox, it may be impossible to recover. This new rule will require prudent businesses to ensure there are proper processes in place for retaining important emails. Under the new Limitation Act, it may be necessary to ensure retention of some records for up to 15 years, which is the duration of the new law’s “longstop” limitation period.

The proposed rules do not set out a penalty for failing to preserve documents, but a Court may make adverse findings, or even impose more serious sanctions such as contempt of court, against a party who fails to preserve documents.

While it is far from Sarbanes-Oxley, this change is welcome and good for the interests of justice.

The rules are expected to be implemented by early 2012.

Tech law update 11 July 2010

NZ developer wins worldwide-injunction

(Disclosure: with a little help from a New Zealand law firm) New Zealand high-availability software firm Maximum Availability has won an injunction in a United States court against a US competitor that (it alleges) made false claims about MA’s products. The interim order prevents the competitor from further distributing the specific materials anywhere in the world, and requires them to send a clarification to all parties who received the information. More details are here.

YouTube defeats Viacom – a boost for NZ’s safe harbour?

A US judge has dismissed Viacom’s massive copyright claim against YouTube, saying that YouTube was protected by the “safe harbour” provisions of the US’s Digital Millennium Copyright Act. The DMCA safe harbour provisions are similar to New Zealand’s own, found in section 92B of the Copyright Act (see my Computerworld article here).

The question with safe harbour laws such as New Zealand’s and the DMCA, is at what point is does the ISP “leave the harbour”? What is the “something more” that an ISP must do to lose that protection? The YouTube case provided a perfect opportunity to test those rules. The judge said that YouTube remained in the safe harbour, despite having considerable knowledge of infringing activities:

[The judge] disagreed with Viacom’s claims that YouTube had lost the so-called “safe harbor” protection under the DMCA. Viacom … maintained Google did not qualify, because internal records showed Google was well aware its video-hosting site was riddled with infringing material posted by its users. [The judge] ruled that YouTube’s “mere knowledge” of infringing activity “is not enough.”

“To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA,” the judge wrote.

He said that YouTube had no way of knowing whether a video was licensed by the owner, was a “fair use” of the material “or even whether its copyright owner or licensee objects to its posting.”

New Zealand’s s92B is undergoing further amendment (as part of the tortuous reform process mainly centred on s92A), but the general process remains. The YouTube case is already under appeal, but whatever the final outcome, will be of interest in New Zealand due to the similar (though not identical) safe harbour provisions in New Zealand’s Copyright Act.

Judge Harvey gives NZ’s first multimedia judgment

Judge David Harvey has delivered what is said to be NZ’s first digital judgment, a 9MB PDF including embedded images and YouTube links. (New Zealand still hasn’t sorted out online publication of all judgments, but fortunately the Herald is hosting the DIA v TV Works judgment here.)

Judge Harvey is widely known as New Zealand’s most tech-savvy jurist, and uses his knowledge and interest in technology to push the odd boundary (in a judicious manner, of course). His ruling in this case is being celebrated in online circles (admittedly pro-gambling sites) and we can be grateful that Judge Harvey heard this case, as he was able to bring his understanding of not just internet technology but also online custom to bear. Let’s hope other judges follow his lead. Also, if digital judgments are now en vogue, surely it is time for e-filing?

As a point of contrast, I’m reminded of this story from a few years back:

Judge Peter Openshaw, 59, brought an Internet terror trial to a halt when he admitted he struggled to cope with basic terms like “website”. The Judge said he was completely lost by the terminology during the questioning of a witness about a Web forum used by alleged Islamist radicals. He told stunned prosecutors at Woolwich Crown Court in south east London: “The trouble is I don’t understand the language. I don’t really understand what a website is.”

E-dealing: get over it

The Herald recently reported on a lawyer’s “negligent or incompetent” use of the Landonline e-dealing system that was said to “imperil the electronic system” of land titles. The incident prompted another lawyer to warn that the e-dealing system was insecure.

While any improper or irregular dealings with something as important as land titles is a serious matter, is the integrity of the Landonline system – or the concept of e-dealing for land titles generally – called into question based on one, or even several, such incidents? No – at least not before a proper comparison with the rate of mistakes/problems/fraud under the old system before such a comparison is made.

There were of course occasional issues with old, paper-based land title system. It is too early to tell if the new system (which was only fully phased-in in 2009) is, statistically, more or less secure than the old system. In the meantime, the Registrar-General of Land, Robbie Muir, has defended the new system, making the point that an electronic register is more secure than the old paper-based one:

[The old system had] the potential for forgery and the land registry did not have reliable means of verifying the authenticity of land owners’ signatures or establishing that proper identity checks had been undertaken.

Muir is right. The reality is that modern technology is usually far superior to an “ink and paper” equivalent. Technology can implement mathematically-verifiable encryption and validation methods to confirm certain transactions and events have occurred. The idea that mashed-up pieces of wood stained with ink provides superior integrity and efficiency to a well-designed electronic system is quaint, but plainly wrong. Of course, the key requirement in the previous sentence is “well-designed”. A system with crucial flaws may be completely insecure. Replacing a good paper-based system with a poor electronic one is a recipe for disaster.

Technology is, and for a long time yet will be, subjected to a double standard when compared with a non-technical equivalent. For example, there are thousands of instances of mail stolen from letterboxes, mail-rooms and post offices each year. Generally, none of this is particularly newsworthy. However, if an ISP has some emails “stolen” by a hacker or staff member, it would likely be reported. In the same vein, credit card fraud is common in the physical world, yet often reported with alarm if the same thing happens online.

The recent incident with the e-dealing system highlights this. As Robbie Muir points out:

Given the large volume of land transactions registered each year, there will inevitably be isolated cases where things go wrong. The same was true of the paper-based system. However, under the Landonline system it is possible to quickly establish what has occurred and who is responsible.

Some lawyers I know or have dealt with – young and old – remain curiously uncomfortable, and even suspicious, of email, electronic data, online dealings, and the like. On several occasions I have had lawyers refuse to correspond by email supposedly because of “problems previously encountered” with this new-fangled technology. So I send them emails, and they reply with snail-mail and faxes (yes, in 2010).

A particular hang-up is the occasional insistence on “originals”. Back in the days when important documents were drawn up by hand (really important documents were on goatskin parchment), it was fairly obvious what was the original document, and what was a copy. The need for requiring an original was clearer. And when there is a piece of paper, it is usually easy to tell whether it has been physically signed, photocopied, or had a computer printed signature applied. But with electronic files, concepts such as the “original document” quickly lose meaning, as does the need for an “original” and signing at all. However, a suitable “original” (if insisted upon) can usually be made by printing off a file and signing it. Whether this is necessary at all – other than for “ceremonial” purposes – is questionable.

It comes down to the perceived comfort of having a piece paper – something physical that can be put into a folder and filed in a filing cabinet. But the reality is that digital documents and digital signatures are capable of achieving a much higher level of security than a signature.

Tech Law news 25 March 2010

Not a never ending licence

A UK court has ruled, and a customer found out the hard way, that what was described as a “perpetual” software licence was not a “never ending” licence. In BMS Computer Solutions v AB Agri Ltd (UK High Court, 10 March 2010) the customer was granted a “UK-wide perpetual licence” for a program. However, the contract granting the licence also required the customer to keep buying support from the developer:

In the event that the software technical support agreement is terminated for any reason whatsoever this agreement shall terminate.

The customer wanted to terminate the support agreement, but keep using the software. Terminating the support agreement would terminate the contract which had granted the licence. It is quite common for specific terms of a contract (including software licences) to survive termination (assuming that is what the parties intended). The question in this case was whether the grant of the “UK-wide perpetual licence” intended to create a never-ending licence that would survive termination of the main contract. The judge said:

The word “perpetual” can carry different shades of meaning. It can, for example, mean “never ending” (in the sense of incapable of being brought to an end) or it can mean “operating without limit of time”.

The judge found that in this instance, the “perpetual licence” meant a licence “operating without limit of time”, i.e. it continued until either party terminated it for some valid reason (such as ending the support agreement).

The ruling does not mean that every “perpetual licence” is perpetual until terminated. A contract (such as a licence) is always interpreted according to its terms and intentions of the parties. In some cases, “perpetual” will clearly mean “never ending” (in which case it may be a good idea to record it as “perpetual, irrevocable licence”). In this case, the “perpetuality” was trumped by the tied support requirement, and could not have been intended as never-ending – either a case of poor drafting by the customer, or good (or fortuitous) drafting by the developer.

Smoking gun emails

The major court battle over copyright infringement between YouTube and Viacom currently underway in the US has turned up some pretty damaging internal emails between the founders. E.g. this from YouTube co-founder Steve Chen to Jawed Karim:

“jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.”

While the founders probably aren’t too concerned (having long since cashed out), the evidence may yet cause YouTube’s owner Google a headache. Another reminder not to put damaging comments in writing – in litigation, almost everything is potentially discoverable.

More audio/visual technology in NZ courts

“A bill that will allow greater use of audio visual links in courtrooms passed its first reading in Parliament yesterday.” more…

Nestlé trade marks Kit Kat shape

Nestlé has won an appeal allowing it to trade mark (in Australia) the shape of a Kit Kat bar (or as the application prosaicly calls it, “Chocolate confectionary being chocolate-coated confectionary blocks or bars and chocolate-coated wafer biscuits”). Trade marking shapes is permitted in New Zealand and other countries (for example Toblerone chocolate in some countries). In fact, many “non-lexical” things can be trade marked, including (in New Zealand) colours, smells, sounds, and tastes.

Strangely, chocolate has long been a major battle-ground for trade mark disputes. In New Zealand, Cadbury lost a 2008 Court of Appeal battle to trade mark the word “purple” (though not the colour, which it already trade marks). Last month in Australia, Guylian lost a Federal Court battle to trade mark its seahorse shaped chocolates, which the court found “not sufficiently inherently distinctive”.  In contrast, two years ago a Japanese court allowed Guylian the same trade mark in Japan, finding that the shape was sufficiently distinctive.