CAN-TECH Newsletter/Bulletin
May 31, 2018/31 mai 2018

Exclusion Clauses and Negligence in Upgrades

Software Agreement also applies to upgrades to programs

The Ontario Superior Court of Justice has concluded that a loss of profits resulting indirectly from upgrades to a computer program were not a compensable source of loss under a contract between the parties with its decision in MediaLinx Printing Ltd. v. United Parcel Service Canada Ltd. Medialinx was a printing and graphics company which also provided processing, labelling, warehousing and shipping services to its clients. It entered a contract (the “Software Agreement”) with UPS, allowing it to ship products for its clients using the UPS service: it added a 0.7% mark-up on UPS’s rates in order to still make a profit while doing so. Technologically, this was achieved by two steps. First, UPS upgraded Medialinx to a program called “UPS Worldship”. Second, UPS created custom programming integrating UPS Worldship into the processes used by MediaLinx, which allowed for the automatic addition of the 0.7% mark-up. The two parties drew up a second agreement (the “Master Consulting Agreement”) covering this further work.

Several years later UPS upgraded the system installed at Medialinx, because of the need to switch from Windows XP to Windows 7. Subsequently Medialinx had some problems with the software not performing properly, and a UPS technician made further repairs. For purposes of the case it was accepted that during these later repairs the technician deleted the 0.7% mark-up, though Medialinx did not notice that at the time. It was only close to two years later that the deletion was noticed, by which time Medialinx had lost about $450,000 in profits by not charging the mark-up.

The central issue in the case related to the Software Agreement, which included a limitation of liability clause which applied to claims for lost profits arising from negligence claims. Medialinx’s argument was that that limitation clause did not apply, because it related to the Software Agreement: the losses were caused by the actions relating to work on the custom software, which they argued was not bound by that clause. UPS brought an application for summary judgment dismissing the claim, and was successful.

The application judge was unpersuaded by the argument that the Software Agreement applied only to the original software, and therefore did not include the custom work done to allow for the automatic mark-up. The judge noted:

[36]           Reading the Software Agreement as a whole, I find that the Software Agreement encompassed the mark-up capability.  The purpose of the Software Agreement was to grant MediaLinx a non-exclusive licence to use UPS’s proprietary software.  Section 1 of the agreement identifies the “Licensed Program” as “Maxiship or other UPS-provided Software System and any updates to it provided by UPS to Customer.”  Based on this broad language, it is clear that the Software Agreement applied to MediaLinx’s ongoing use of UPS’s software systems, irrespective of whether this was the version that existed at the time the parties entered into the agreement or to upgraded versions.

Once it was concluded that the exclusion clause continued to apply, it was not difficult for the judge to conclude that the summary judgment application should be granted.

Removal of YouTube Video not Libellous

Violation of terms of service not a basis for hatred or contempt.

The United States District Court (Northern District of California) granted summary dismissal of a libel action in Song Fi Inc. v Google Inc. Song Fi had produced a music video about two five year olds going to a restaurant on Valentine’s Day and had placed it on YouTube. Eventually YouTube concluded that artificial means were being used to boost the view count of the video, which was in violation of its Terms of Service. As a result YouTube took down the video and moved it to a new URL, resetting its view count. At the old URL YouTube placed a message reading:

“This video has been removed because its content violated YouTube’s Terms of Service… Sorry about that.”

Song Fi brought an action arguing that this was libellous: the application judge disagreed. To succeed in a libel claim the plaintiff would have to show that the impugned words would expose the person to hatred, contempt, ridicule, or obloquy, cause him to be shunned or avoided, or have a tendency to injure him in his occupation. The notice here merely referred to a violation of the terms of service, which covered many different possibilities, and so could not expose the plaintiff to hatred or contempt.

Song Fi had argued that, since their video involved two five year olds, a person seeing the notice and consulting the terms of service was likely to conclude that the video had included inappropriate content about children. The trial judge rejected this argument. In any case it was unlikely that a reasonable viewer would reach that conclusion, but this was made especially improbable given that the original video was no longer there: a viewer would see only the take-down notice, and not know that there had been children in the video.

Evidence of Flat Earth

Court prefers static images of earth to interactive Google Earth as evidence

In Yahey v. British Columbia, Justice Burke of the British Columbia Supreme Court presided over a pre-trial application made in preparation for an upcoming 100-day trial of a treaty infringement claim made by a First Nation (identified as “Blueberry River”). Blueberry River sought to be allowed to use Google Earth interactively as demonstrative evidence at trial, in order to allow witnesses to mark locations on images and then to tender those images as exhibits. It also sought an order “authorizing the application of shape files to the version of Google Earth used in the courtroom depicting the Blueberry River First Nation Traditional Territory as depicted in the Notice of Civil Claim, as well as watersheds and rivers.”

The province argued that despite possible issues with authenticity and accuracy, it did not object to using “static” Google Earth images so long as they were disclosed in accordance with the civil procedure rules. However, the interactive use of Google Earth at trial would result “an indefinite number of undisclosed images,” and the province would not know what images would be used by the witnesses prior to trial. Also, the province would not be able to test the images in advance in order to see whether they were accurate depictions of the land represented: “Some images may show disturbance to the landscape that no longer exists because of restoration or regrowth.” Previous cases had admitted either a single Google Earth image that had been disclosed in advance or had been used to prove notorious facts of which judicial notice could be taken.

Blueberry River argued, on the basis of an expert report, that given the nature of the Google Earth technology it was a reliable enough representation of any given part of the world to be used in the courtroom as an aid to the witnesses. The parties also discussed how the use of Google Earth would affect the trial record, Blueberry Hill noting that while the use of the images (e.g. zooming in/out) could not be captured on the record, the witnesses could describe for the record what they were seeing, and an image with the electronic “pins” placed on the map by witnesses could be printed or saved as an image file. The province argued that significant issues would be created both for trial process and the creation of the record; problems could crop up for using Google Earth in cross-examination and the Court of Appeal would have trouble accessing the record properly.

In her ruling, Justice Burke concluded that the concerns raised by the province were persuasive. The use of undisclosed images would create procedural unfairness, and the confusion that could emerge from trying to base evidence on Google Earth images had, in fact, already been demonstrated in affidavits filed on the motion. Uncertainty in the record was not desirable. Hard copy Google Earth screen shots, taken in advance and disclosed to the province, would achieve the desired results. In the midst of the ruling the judge provided a useful summary of cases where the admissibility of Google Earth has been considered:


[23]        A number of cases exist where courts have either relied on Google Earth to take judicial notice of a location or admitted Google Earth images into evidence as proof of fact. Such images have been admitted: to establish the location of a driveway relative to a school in convicting the accused (R. v. De Bortoli, 2012 BCSC 1957 (CanLII)); as evidence of the scene of the alleged offence (R. v. Hardenstine, 2010 BCSC 899 (CanLII)); as part of an expert report (Carson v. Henyecz, 2012 BCSC 314 (CanLII)); to identify the location of cell towers (R. v. Oland, 2015 NBQB 244 (CanLII)); and to dispute an easement claim by overlaying an easement plan on the image to demonstrate its location (Hollander v. Wormell, 2017 BCSC 1207 (CanLII)).

[24]        The Court used Google Earth on its own initiative to determine in which municipality a particular intersection was located (R. v. Robinson, 2010 ONCJ 576 (CanLII)), and the Ontario Court of Appeal held that a similar approach was not an error (R. v. Calvert, 2011 ONCA 379). A US appellate court accepted Google Earth images into evidence as proof that an arrest of the accused by US immigration officers took place on the US side of the Mexico-US border: see United States of America v. Lizarraga-Tirado, No. 13-10530 (9th Cir. 2015).

[25]        These cases, however, reflect the use of static images only.

Right to Be Forgotten Less than Half the Time

Google provides information about delisting requests

Google released a transparency report providing data on the volume of delisting requests it has received in the wake of Court of Justice of the European Union’s May 2014 ruling establishing the right to be forgotten. The report provides data on the volume of requests, the URLs delisted, the individuals submitting requests, and the content of websites and URLs identified in requests.

The report revealed that Google has received 683,938 delisting requests related to 2,551,686 different URLs since July 2014. Google delisted 43.8% of the requested URLs.
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Google also provided a few common material factors involved in their decision not to delist pages, which include the existence of alternative solutions, technical reasons, or duplicate URLs. Google also might determine that the page contains information which is strongly in the public interest.

Property vs. Privacy vs. Porn

US Court permits subpoena to ISP of alleged copyright breacher, but with protective order

In Strike 3 Holdings, LLC v Doe, the plaintiff company, Strike 3, owned the copyright in several particular adult films. It alleged that the defendant had been streaming these films (via Bittorrent) without permission and thus violating the Copyright Act. It also submitted that it had used geolocation technology to trace the address used by the Defendant to a physical address in the District of Columbia. At the District Court for the District of Columbia, Strike 3 sought a third-party subpoena to be served on the Defendant’s ISP in order to determine his identity and serve process on him. The court was prepared to issue the subpoena, on the basis that Strike 3 had satisfied it that the Defendant’s ISP was the only source of information which would allow for the identification of the Defendant. The court was also satisfied that it had personal jurisdiction over the Defendant, given that the geolocation technology had identified the streaming as having occurred within its territorial jurisdiction.

While it was prepared to issue the subpoena, at the Plaintiff’s urging the court noted that due to the adult content involved, a protective order was desirable. “The fact that a copyrighted work was illegally downloaded from a certain IP address does not necessarily mean that the owner of that IP address was the infringer.” Citing previous case law, the Court noted that “the true infringer could just as easily be a third party who had access to the internet connection, such as a son or daughter, houseguest, neighbor, or customer of a business offering an internet connection,” and “[t]here is a real risk that defendants might be falsely identified and forced to defend themselves against unwarranted allegations.”

In light of these considerations, the Plaintiff was permitted to serve early discovery by serving a Rule 45 subpoena on the identified ISP, seeking information sufficient to identify the “John Doe” subscriber’s assigned IP address.