Ch. 4: Commercial Information ITSS Legal Issues Working Group 11/8/96 4-4 Chapter 4 Securing Government-Held Commercial Information A. Sources of Government-held proprietary information 1 B. Avoiding violations of intellectual property rights 3 C. Theft of information; fraudulent use of information 8 D. Protecting proprietary information within and outside the Access to Information Act 10 E. Summary 12 The Government of Canada, through its information resources, is the holder of an enormous cache of trade secret and other commercial confidential information (proprietary information), both on its own behalf, as well as on behalf of third parties. Such information has traditionally been protected through the application of intellectual property law. The purpose of this Chapter is to examine the sources of the proprietary information, explain the basic kinds of intellectual property law, the way that the Access to Information Act protects proprietary information and to recommend some specific security measures for its protection. It is important to note that proprietary information should not be disclosed except in accordance with law and government policy generally, and that intellectual property laws protect disclosure of proprietary information in situations where the Access to Information Act might not apply (for example, where there is no formal request under that Act). A. Sources of government-held proprietary information Government-generated proprietary information The operations of government result in the development of vast amounts of proprietary information, both as an end in itself (as, for example, through the research and development (R&D) work of numerous government laboratories), and also as a by-product of knowledge-based business applications incidental to other government operations. Government-sponsored R&D is big business. A total of $7 billion is invested annually in science and technology, including $1.8 billion for performing R&D in federal laboratories and another $2.2 billion for conducting and contracting related scientific activity.1 As an example of one agency's activities, over the past five years CANMET (Natural Resources Canada) invested $78 million and its "partners" another $227 million, in 121 projects, from which it has been estimated that nearly $1 billion in benefits have been generated.2 The technology transfer and other activities relating to government R&D involve holding large amounts of proprietary information. Moreover, the government is committed to the information and knowledge-based society3 and is making efforts to become a learning organization itself.4 The government also, on occasion, develops and markets products which result from its learning- organization activities, i.e., it engages in knowledge-based business. Those products often include databases and computer software programs and are replete with valuable proprietary information, e.g., the former Secretariat of State's TERMIUM, a French-English translation database containing over one million entries. Third Party proprietary information The government is also the custodian of a wealth of proprietary information belonging to others. Confidential third party commercial information comes into the government's possession in a number of ways, including: (a) applications for patents under the Patent Act, (b) applications for regulatory and marketing approval under other statutes, and (c) arrangements for product testing for purposes of government purchase and use. The Patent Act requires that applications be filed for the protection of "inventions", a defined term.5 Such information is considered to be very valuable to the individual or company who files for the patent, and indeed, great fortunes have been made through the monopoly protection afforded to numerous useful inventions over the years. Patent offices receive literally thousands of such applications each year, e.g., in the USA, around 300 new patents are issued every day.6 Thus, the Patent Office is custodian of a wealth of information, all of which must be kept secret for lengthy periods of time. All "old Act"7 applications must be kept secret until the patent is issued, in accordance with section 10 of that Act8 and section 13 of the Patent Rules.9 All "new Act"10 applications are kept secret for a period of eighteen months after the first filing of an application for an invention anywhere in the world, in accordance with new subs. 10(2).11 In the Uruguay Round of the General Agreement on Tariffs and Trade (GATT12), a discrete agreement was reached on Trade-Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods (TRIPS). Article 39(3) of TRIPS requires the protection of data which is submitted to a government as a condition of approving the marketing of pharmaceutical or agricultural chemical products.13 This is similar to, but not as onerous as, Article 1711(5) to (7) of the North American Free Trade Agreement (NAFTA).14 These international treaty obligations have, to the extent that protection does not already exist in Canadian law, been implemented legislatively in section 5 of the Fertilizers Act,15 in section 30 of the Food and Drugs Act,16and section 6 of the Pest Control Products Act.17 The government intends to proclaim these provisions (as amended) in force, effective January 1, 1996.18 Pharmaceutical products comprise an extremely important part of the economy in developed countries. For example, prescription drugs in Japan carry an annual cost of US$180 billion;19 in 1992, Glaxo's pre-tax profits on the drug Zantac amounted to US$2.5 billion;20 and "(m)aking new medicines has been the most consistently profitable big business in America for over a decade."21 The government, in receiving this industry's "crown jewels," by way of its trade secrets, must take great care that such information not be unwittingly disclosed to unauthorized recipients. The government commonly executes non-disclosure agreements for beta-testing22 software and other products, usually with a view to eventual purchase or approval for government use. In such instances, formal requirements are made of the government with respect to disclosing such information to unauthorized recipients. In the context of the Internet, careful procedures must be developed to prevent disclosure contrary to such requirements. Moreover, as the government engages in consultations and negotiations with many corporations and organizations, it receives information which such bodies consider to be their confidential business information. B. Avoiding violations of intellectual property rights The government's proprietary information holdings could come into contact with the Internet in one of two ways: (a) as information comes directly in to the government's data banks through the Internet, and (b) as information goes out from the government to the public, via the Internet. At present, there are no known examples of the former (electronic filing of income tax is not done through the Internet by via dedicated lines), although it is possible that in the future patent information might come into the government's possession via the Internet, since amendments to the Patent Act have been passed (not yet proclaimed) so as to allow for the electronic filing of patent applications.23 The efforts of numerous government departments to offer their services on FTP, Gopher and World Wide Web sites, as well as through electronic bulletin board services (BBSs), are examples of the latter. Traditionally, proprietary information has been protected either through intellectual property law or trade secrecy; however, the former has not had a very satisfactory experience on the Internet. Intellectual property consists of the expression of intangible mental processes used to create a useful, artistic or entertaining product as well as the rights (intellectual property rights: IPRs) that assure monopoly protection in respect of that product, as opposed to the tangible product itself. In Canada, they consist of patents, trademarks, copyright, plant breeders rights, industrial designs, integrated circuit topographies, and trade secrets. All but the last category are provided by federal legislation. The principal IPRs of interest to this discussion of the Internet are copyright, trademarks, patents and trade secrets. Copyright law is a creature of statute and therefore all rights and remedies available are those set out in the Copyright Act. Copyright law is concerned with achieving a balance between disseminating ideas and promoting public discussion with the objective of providing economic incentives and rewards for authors by limiting the dissemination of their original forms of expression (original expression of ideas, not ideas or facts per se, are protected by copyright law). Copyright law offers protection of literary, artistic, dramatic and muscial works. This protection reserves to the copyright holder, the right to make copies and at the same time, to restrain others from making copies. Copyright protection for computer programs is afforded by the definition of "literary work" which specifically includes computer programs.24 Similarly, copyright protection for databases is provided by the definition of "literary work" which includes "compilations." Copyright consists of two main groups of rights: economic rights (in the Anglo-Canadian tradition) and moral rights (in the European tradition). The latter includes the right to preserve the integrity of the work and the right to have one's name associated with a work. The former includes the right to prevent reproductions, translations, modifications or performances of a work. In the USA, it also includes the right to prevent the public distribution of the work. There are two common opportunities for copyright infringement on the Internet: uploading and downloading. "Uploading" consists of taking someone else's material and putting it on the Internet. In Playboy Enterprises Inc. v. Frena, 839 F. Supp. 1552, the defendant was a BBS operator where Playboy bunny photographs were available to subscribers on his BBS. The court held that whether or not the BBS operator knew that the infringing photographs were there, the BBS operator was liable for copyright infringement.25 "Down-loading" is the act of taking something off the Internet through making a copy on to one's individual PC or other storage medium. Most major computer software programs are available illicitly through Internet BBSs. Currently in the USA, the Software Publishers Association has approximately 2,000 BBSs under surveillance.26 As government employees research issues through the resources available on the Internet, care must be taken not to download copyrighted information without permission. Similarly, in distributing Government information products, care must be taken not to upload someone else's copyrighted work without consent. A trademark consists of a mark (i.e., a word or phrase,27 a trade name,28 a symbol,29 a device,30 or a service mark31) which is used to distinguish the goods or services of a vendor from those of another vendor.32 In Canada, trademark rights are acquired through four separate legal regimes: the common law relating to passing off, the Quebec law regarding civil responsibility,33 section 7 of the Trade-marks Act.34 and the registration provisions of section 12 of the Trade-marks Act.35 The Internet (TCP/IP) address offers an opportunity for trademark infringement, through confusion regarding the origin of the goods or services made available. For example, an individual named Joshua Quittner applied for and was issued the TCP/IP address of "ronald@mcdonalds.com," and another individual named Adam Curry (an ex-MTV employee), "mtv.com". The latter was sued by MTV for trademark infringement.36 As the Government posts addresses to offer its services on the Internet, care must be taken to ensure that it does not interfere with the "level playing field," i.e., that it does not compete with private brands which are already "in play" in Canadian commerce. Occasionally, trademark infringement also accompanies copyright infringement, e.g., in the Frena case, not only did the BBS have infringing copies of Playboy photographs, the photographs also displayed the Playboy bunny rabbit-ear logo in such a way as to create market confusion as the source of the BBS. Patents relate to new and useful inventions and represent an implicit contract between the inventor and the state whereby the state confers a monopoly on the inventor with respect to the manufacture and sale of the invention, in consideration of the inventor's disclosure of the description of the invention. Statutory conditions for the issue of a patent include inventiveness,37 non-obviousness, novelty and utility. A patent application consists of a description, drawings and claims.38 Unlike copyright, patents protect the ideas themselves, not merely the expression of those ideas, although the ideas must be functional ones which have been reduced to useful inventions. Of particular interest to a discussion of the Internet are computer software patents, as their subject matter may be easily reproduced, being reduced to digital bit streams.39 Software patents have not had a happy fate on the Internet. An example is the patented RSA public key encryption algorithm, an export control product, the source code of which is freely available on various BBS sites. Moreover, the popular Internet privacy tool called Pretty Good Privacy (PGP), contains the patented RSA algorithm. PGP's owner, Phil Zimmerman, describes the program as "guerilla freeware" and has made it available on BBS sites across the Internet. RSA Data Security Inc., the licensee of the patented RSA algorithm, has pressured service providers such as CompuServe and America Online, to take copies of PGP off their systems.40 CompuServe was also involved in another alleged patent infringement matter with respect to GIF, or "graphics interchange format." GIF was accepted by CompuServe and the Word Wide Web as the standard for storing graphic images. However, GIF files allegedly infringe a patent owned by Unisys Corp., and the latter has taken steps to enforce its monopoly, with the result that CompuServe required a royalty of 15 cents on the sale of every copy of software containing GIF, a move which has encountered severe resistance from Internet users and which has resulted in an alternative interchange format not involving the use of the patented technology.41 The above examples illustrate the fact that in major areas of intellectual property law (i.e., copyright, trademarks and patents), infringement on the Internet is a problem, from the point of view of the right holder. Indeed, IPRs have received such weak protection as to lead John Perry Barlow, songwriter to the Grateful Dead and co-founder of the Electronic Frontier Foundation, to make the following notorious statement: "Intellectual property law cannot be patched, retrofitted or expanded to contain digital information."42 Many would agree with him; certainly the Net culture itself is antithetical to copyright, with traditions of easy access, anarchy, and slogans such as "information wants to be free," "tools not rules" and "legal rights are checked at the gateway."43 These realities must be factored into any strategy or procedure involving the holding or transferring of technology, with the result that even information which is otherwise protected by intellectual property law may require confidential handling procedures. Moreover, the government is frequently not even the holder of IPRs in such information, particularly as the information arises in R&D contracts,44 but rather is only a licensee of the proprietary information. This frequently requires some form of confidentiality obligation on the government's part. Such obligations of confidentiality have long been a part of the law of trade secrets, which is discussed in the next section. Trade Secrecy Protection Trade secrets have been described as: ... information including but not limited to a formula, pattern, compilation, program, method, technique or process, or information contained or embodied in a product, device or mechanism which (i) is or may be used in a trade or business, (ii) is not generally known in that trade or business, (iii) has economic value from not being generally known, and (iv) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.45 "Trade secrecy law is of value to the computer industry because it represents a means of protecting underlying ideas, algorithms and processes and not just their expression such as in the form of computer programs."46 In addition, the government comes into possession of many items of confidential business information, which has been defined as follows: Potentially any information that a firm or its employees produces or acquires for the purposes of the firm's business can constitute a trade secret or, at least, confidential information that courts are willing to protect. Thus, internal office memoranda dealing with the firm's business are obviously protected from disclosure as confidential information, whether or not they contain any 'trade secret'.47 As custodian of trade secret/commercial confidential information, the Government could face liability for its unauthorized disclosure under the following well-established legal actions: (a) breach of express provision of a contract, (b) breach of an implied provision of a contract, and (c) breach of confidence apart from contract.48 The remedies which could be ordered against the Government include injunction, delivery-up, destruction under oath and damages.49 Trade secrecy and commercial confidential information require special handling procedures, given the ease with which they can be duplicated and distributed on the Internet. As has been said: "(a)ny college kid with a tuition-paid account can readily copy any digital work and send it to thousands of places online for no fee."50 And as another writer put it: "Sharper tongues and wits than this author have observed that the Internet should really be called The National Copy Machine -- for, in the present reality, that is what it is."51 Someone has referred to the estimated 30,000 companies that have flooded to the Internet and reflected on what is holding back the rest: ... at the moment most are simply showing their faces but soon they hope to be selling their wares. Perhaps the strongest tie holding them back is the knowledge -- reinforced with every report of Internet break-ins and security breaches -- that criminals are better at the discovery of secrets than most people are at hiding them.52 The Government, through the offering of more and more information and other services electronically, is also showing its "wares" on the Internet. Proper procedures must be implemented in order that this new way of doing business does not lead to espionage or misappropriation of the important proprietary information which the Government holds. To ensure against such threats, a number of recommendations are made. Recommendations Proprietary information in the nature of confidential commercial information or works in respect of which the Government desires to protect copyright (e.g., reports, databases, maps and other compilation works) should be handled with security measures equal to those used to protect the privacy of individuals in respect of whom the government also possesses information. Proprietary information in the nature of trade secret information (e.g., computer software and patentable technologies) should be handled with strong security measures, including where practicable: a) departmental security procedures, including the use of non-disclosure agreements for employees who handle such information in situations where that information would not be covered by the employee's oath of office or where the company originator of the information requests it b) a sign-out record for those who access such information c) destruction or return-to-originator procedures (including certificates of destruction) where the information is no longer needed d) if stored or otherwise handled electronically, the use of firewalls and gateways (including security procedures to prevent the by-passing of those firewalls and gateways), electronic authorization and authentication, and double data encryption e) periodic audit procedures. C. Theft and fraudulent use of information Related to the issue of the protection of proprietary information is the question of whether or not it is an offence to steal information under the Criminal Code or whether some uses of copyrighted information constitute fraudulent use of that information. The Supreme Court of Canada, in R. v. Stewart53, held that whatever the legal classification might be for the purposes of the civil law, information per se (as distinct from the medium upon which it might be recorded) is not property for the purposes of the criminal law and, as a matter of policy, confidential information should not be property for the purposes of the theft provisions of the Criminal Code. Moreover, even assuming that information could be considered as property for the purposes of the criminal law, in the view of the Supreme Court of Canada, the offence of theft in the Criminal Code would not apply to the misappropriation of information. For example, where information is merely copied or taken cognizance, there has been no deprivation of the holder of that information. It or a copy may still remain intact with the holder. Additionally, the Court held that neither was copyright a traditional form of property such that the offence of theft could apply. A copyright holder was not deprived of his or her copyright by an unlawful copier. The holder still possessed the copyright. However, the theft of a document (or other media) containing confidential information has been held to amount to theft in some cases. Although the value of the paper may be minimal, the value of the information can provide and increase the economic value of the document for the purposes of the offence of theft and sentencing.54 Although the offence of theft may not be applicable either to misappropriation of information per se or copyright infringement, the offence of fraud can be committed if, by the dishonest unauthorized acquisition of information, a person suffers a financial or commercial detriment or deprivation. By section 380 of the Criminal Code, everyone is guilty of fraud who by deceit, falsehood or other fraudulent means defrauds the public or any person, whether ascertained or not, of any property, money, or valuable security. While the Criminal Code does not define the term "defraud," its meaning was elaborated by the Supreme Court of Canada in R. v. Olan, Hudson and Hartnett.55 The Court, in that case, determined that the two essential elements of fraud were "dishonesty" and "deprivation." In the case of R. v. Kirkwood,56 the accused was prosecuted for fraud for the unlawful distribution of pirated videotapes of the MGM Star Wars series. Kirkwood establishes that a conviction for fraud does not require proof of a relationship between the accused and the copyright owner where the Crown rests on proof of "other fraudulent means" as long as the accused is aware that his or her dishonest activities could subject the copyright owner to economic loss. The Crown can establish the element of deprivation with proof of a detriment, a prejudice, or a risk of prejudice to the economic interests of the victim. Proof of actual economic loss is not essential. In order to establish the victim's economic loss in Kirkwood the Crown introduced evidence of the inferior quality of the counterfeit video tapes which, it submitted, would negatively affect the viewer's opinion of the movie. As well, it was argued that those persons purchasing the counterfeit tapes would not likely procure the originals. Additionally, the Crown argued that the widespread piracy of counterfeit video tapes resulted in the curtailment of the legitimate video market. Similar principles can be applied in respect of prosecutions for fraud arising out of software piracy.57 These principles can also be applied to the misappropriation of information, if the elements of fraud exist. In Stewart, the Court held that fraud would have been applicable in that case, but for the fact that the victim-hotel would suffer no economic deprivation or risk thereof with the unauthorized copying of the employee list. The list had no commercial value that was intended to be exploited by the hotel. Canada's relatively free market system fosters competition. From competition, inevitably flows economic deprivation to another competitor. Increased sales in a particular word processing software programme, for example, will cause some financial loss to its competitors as consumers generally choose one product over its competitors. The offence of fraud proscribes dishonest competition. Dishonesty is at the root of fraud. Hence, dishonesty and deprivation are prerequisites to a conviction for fraud. In Kirkwood, the Court found dishonesty because the accused knew that he was in breach of copyright; as well, economic deprivation existed. In Stewart, there was no economic deprivation, although there was dishonesty. In 1983, a Parliamentary Subcommittee on Computer Crime recommended that Parliament would be ill-advised to try to protect information by granting a proprietary interest in it. Recognizing the dual criminal (federal) and civil (provincial) aspects of the issue, it recommended that joint federal- provincial studies be undertaken to examine this issue.58 A federal-provincial study was undertaken by the Department of Justice and the Alberta Institute of Law Research and Reform and a final report was issued in 1986, which recommended that both civil and criminal legislation be enacted to address the unauthorized acquisition, disclosure and use of trade secrets and confidential business information.59 D. Protecting proprietary information within and outside the Access to Information Act The Access to Information Act protects government commercial information from disclosure when there is a formal request for information in section 18 of the Act: The head of a government institution may refuse to disclose any record requested under this Act that contains (a) trade secrets or financial, commercial, scientific or technical information that belongs to the Government of Canada or a government institution and has substantial value or is reasonably likely to have substantial value; (b) information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution; (c) scientific or technical information obtained through research by an officer or employee of a government institution, the disclosure of which could reasonably be expected to deprive the officer or employee of priority of publication; or (d) information the disclosure of which could reasonably be expected to be materially injurious to the financial interests of the Government of Canada or the ability of the Government of Canada to manage the economy of Canada or could reasonably be expected to result in an undue benefit to any person, including, without restricting the generality of the foregoing, any such information relating to currency, securities, land or property, bank rate, tariffs, taxes, etc. In the normal course of events, when there is no formal request under the Access to Information Act, the government information can disclose or not disclose its proprietary information as it sees fit, subject to intellectual property laws, specific legislative provisions, any applicable court orders (such as subpoenas and injunctions), perhaps at the demand of a Parliamentary committee, and Treasury Board policies concerning cost recovery, disposal of Crown assets, etc. Section 20 of the Act protects third party commercial information and is a mandatory exemption, which means that government institutions must refuse to disclose certain commercial information. 20(1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains (a) trade secrets of a third party; (b) financial, commercial,scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party; (c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party; or (d) information the disclosure of which could reasonably be expected to interefere with contractual or other negotiations of a third party. The exceptions to this rule generally relate to environmental, health and safety information where the public interest "clearly outweighs" the interests of the third party. Generally, these provisions have worked well to balance the public's right to government information with the need to protect commercial interests under the Act. However, this section has been one of the more contentious during the history of the Act and in the view of some, the procedures that allow third parties to object to disclosure and ultimately to challenge the disclosure in court has been used to delay disclosure of information that should have been disclosed in a more timely fashion. Another issue concerns the disclosure of the terms of contracts between the government with third parties should be disclosed to the public. It can be argued that disclosing such terms could harm the competitive position of the contracting party (especially by revealing unit pricing and potentially profit margins to competitors who would use the information the next time the contract came up for bid). On the other hand, if the intent is to protect commercial information that properly belongs to a third party, it is difficult to argue that a contract with the government belongs to the third party. Further, it might be in the government's interest to disclose terms of contracts precisely to encourage greater price competition. A third issue that has generated considerable concern by some departments relates to the procedures surrounding section 20. Generally, when information is requested that the government institution has reason to believe might give a third party concern about the effect of disclosure, the government institution notifies the third party and asked the third party to justify why the information should not be disclosed. There have been cases where there are broad, sweeping requests for information relating to potentially thousands of third parties. This creates a tremendous consultation burden on the government institution (and on the third parties). In addition, in some cases the third parties will not respond to the requests for justification from the government institutions. This may be for a variety of reasons, including a failure to understand the procedure under the Access to Information Act. There is no simple solution to this problem. Section 20 (and the rest of the Access to Information Act provisions) only applies, when a person make a request under the Act. Nonetheless, government institutions do use the Act as a guide for information disclosure practices generally. Further, if government institutions routinely disclosed confidential third party information, it could be more difficult to get third parties to submit important information that helps government administer its programs. This is a strong self-interested reason for the government not to disclose confidential commercial information. In addition, it can be argued that the government has a duty, consistent with section 20 of the Access to Information Act, not to disclose such information, even when there is no formal request under the Act.60 The Government Security Policy notes at Ch. 2-1, p. 12 that There is an expectation on the part of this third party, and an obligation on the part of the government departments, to protect this type of information adequately. It should therefore be designated as other sensitive information and marked PROTECTED. In addition, as custodian of confidential commercial information, the government could face liability if it makes an unauthorized disclosure under the following well-established legal actions: (a) breach of express provision of a contract, (b) breach of an implied provision of a contract, and (c) breach of confidence apart from contract.61 The remedies which could be ordered against the Government include injunction, delivery-up, destruction under oath and damages.62 (It is important to note that a court would likely not enforce a contractual provision that exempted the Access to Information Act, because it is a law of public order and the general rule is that parties cannot contract out of laws of public order. Thus, third parties who provide confidential commercial information would not be able to contract out of the disclosures authorized under the Act for reasons of public health or safety and protecting the environment.) It is also possible that a business could sue the Crown for breach of confidence under the common law should a federal Department disclose this information to another government department or a third party outside of the federal government without the consent of the business and without legislative authority. However, a few years ago the Information Law and Privacy Section asked all Justice regional offices and legal service units if they were aware of any instances where businesses had complained about such a breach and commenced a court action. All replies were in the negative. (Note: the question was not whether or not there were decided cases, but whether any business had actually commenced an action, though not necessarily carried the action to conclusion.) Generally, the Access to Information Act has a done a good job balancing the need to protect confidential commercial information with the public's right to access to government-held information. E. Summary Proprietary information in the nature of confidential commercial information or works in respect of which the Government desires to protect copyright (e.g., reports, databases, maps and other compilation works) should be handled with security measures equal to those used to protect the privacy of individuals in respect of whom the government also possesses information. Proprietary information in the nature of trade secret information (e.g., computer software and patentable technologies) should be handled with strong security measures, including where practicable: a) departmental security procedures, including the use of non-disclosure agreements for employees who handle such information in situations where that information would not be covered by the employee's oath of office or where the company originator of the information requests it b) a sign-out record for those who access such information c) destruction or return-to-originator procedures (including certificates of destruction) where the information is no longer needed d) if stored or otherwise handled electronically, the use of firewalls and gateways (including security procedures to prevent the by-passing of those firewalls and gateways), electronic authorization and authentication, and double data encryption e) periodic audit procedures. With respect to the question of whether there is or should be a criminal offence of "theft of information," it may be appropriate to re-examine the recommendations of a 1986 federal- provincial study undertaken by the Department of Justice and the Alberta Institute of Law Research and Reform which recommended both civil and criminal legislation to address the unauthorized acquisition, disclosure and use of trade secrets and confidential business information. With respect to the ability of the Access to Information Act to protect commercial information, it has generally done a good job. However, the past 12 years experience with the Act has demonstrated areas where section 20 could be improved to clarify if not alter the balance between the government, public and commercial interest to certain kinds of information (such as terms of contracts signed between third parties and the government). ENDNOTES _______________________________ 1 Building a Federal Science and Technology Strategy. Canada: Secretariat for Science and Technology Review, Industry Canada, June 1994, p. 8 2 Evaluating the Impact of Publicly Funded R & D. Canada: Proceedings of an External Review Workshop, Ottawa, December 9, 1994. Prepared by the Ron Freedman Impact Group, p. 4. 3 "In the economy of the 1990s, it is the information and knowledge-based industries with their new products, new services, new markets for both old and new products, and new processes for existing businesses that are providing the foundation for jobs and economic growth." Creating Opportunity: The Liberal Plan for Canada, (the "Red Book"), p. 29. 4 i.e., one which engages in systematic problem solving, experimentation with new approaches, learning from its own experience and past history, learning from the experience and best practices of others, and transferring knowledge quickly and efficiently throughout the organization. See Garvin, David A. "Building a Learning Organization". Harvard Business Review. July-August 1993, p. 78 at p. 81. 5 "...any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter." (s. 2) 6 "Patents: Hidden Agenda". The Economist, November 20, 1993, p. 100. 7 i.e., the Patent Act, as it existed prior to October 1, 1989 8 All specifications, drawings, models, disclaimers, judgments, returns and other papers, except caveats, and except those filed in connection with applications for patents that are still pending or have been abandoned, shall be open to the inspection of the public at the Patent Office under such regulations as are adopted in that behalf. 9 Except as provided by section 11 of the Act or by these Rules, the Office shall not provide any information respecting an application that is not open to the inspection of the public, to any person other than the person with whom the correspondence relating to the application is being conducted or a duly constituted successor of that person or a person authorized by the applicant or the agent of the applicant to receive the information. 10 i.e., the Patent Act, after the major amendments which took effect on October 1, 1989 11 Except with the approval of the applicant, no application for a patent or document filed in connection with an application for a patent shall be open to the inspection of the public before the expiration of eighteen months after (a) the priority date of the application, in the case of an application to which section 28 applies; or (b) the date of filing of the application in Canada, in any other case. 12 now called the World Trade Organization (WTO) Agreement 13 Members, when requiring, as a condition of approving the marketing of pharmaceutical or agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use. 14 5. If a Party requires, as a condition for approving the marketing of pharmaceutical or agricultural chemical products that utilize new chemical entities, the submission of undisclosed test or other data necessary to determine whether the use of such products is safe and effective, the Party shall protect against disclosure of the data of persons making such submissions, where the origination of such data involves considerable effort, except where the disclosure is necessary to protect the public or unless steps are taken to ensure that the data is protected against unfair commercial use. 6. Each Part shall provide that for data subject to paragraph 5 that are submitted to the Party after the date of entry into force of this Agreement, no person other than the person that submitted them may, without the latter's permission, rely on such data in support of an application for product approval during a reasonable period of time after their submission. For this purpose, a reasonable period shall normally mean not less than five years from the date on which the Party granted approval to the person that produced the data for approval to market its product, taking account of the nature of the data and the person's efforts and expenditures in producing them. Subject to this provision, there shall be no limitation on any Party to implement abbreviated approval procedures for such products on the basis of bioequivalence and bioavailability studies. 7. Where a Party relies on a marketing approval granted by another Party, the reasonable period of exclusive use of the data submitted in connection with obtaining the approval relied on shall begin with the date of the first marketing approval relied on. 15 (2) Without limiting the authority conferred by subsection (1), the Governor in Council may make such regulations as the Governor in Council deems necessary for the purpose of implementing, in relation to fertilizers or supplements, Article 1711 of the North American Free Trade Agreement or paragraph 3 of Article 39 of the Agreement on Trade-related Aspects of Intellectual Property Rights set out in Annex 1C to the WTO Agreement. 16 (3) Without limiting or restricting the authority conferred by any other provisions of this Act or any Part thereof for carrying into effect the purposes and provisions of this Act or any Part thereof, the Governor in Council may make such regulations as the Governor in Council deems necessary for the purpose of implementing, in relation to drugs, Article 1711 of the North American Free Trade Agreement or paragraph 3 of Article 39 of the Agreement on Trade-related Aspects of Intellectual Property Rights set out in Annex 1C to the WTO Agreement. 17 (2) Without limiting the authority conferred by subsection (1), the Governor in Council may make such regulations as the Governor in Council deems necessary for the purpose of implementing, in relation to control products, Article 1711 of the North American Free Trade Agreement or paragraph 3 of Article 39 of the Agreement on Trade-related Aspects of Intellectual Property Rights set out in Annex 1C to the World Trade Organization Agreement. 18 Canada Gazette, Part I, December 31, 1994, page 1996. 19 "Japan's drugs industry: Medicinal madness". The Economist, March 27, 1993, p. 73. 20 "Glaxo: Life after Zantac". The Economist, July 3, 1993, p. 61. 21 "America's drug industry: New prescriptions." The Economist, December 5, 1992, p. 74. 22 the trial use of a product by selected key users before its general release on the market 23 8.1(1) Subject to the regulations, any document, information or fee that is authorized or required to be submitted to the Commissioner under this Act may be submitted in electronic or other form in any manner specified by the Commissioner. 24 In addition, patent protection may be given to computer software programs which form an integral part of a product or process which, on its own merits, is determined to be an invention. 25 This case is discussed in greater detail in Chapter 5 on the issue of BBS operator liability generally. 26 Rose, Lance. "The Emperor's Clothes Still Fit Just Fine, Or, Copyright is dead. Long live copyright!" Wired, February 1995, p. 103. 27 e.g., "Here's Johnny". See Carson v. Here's Johnny Portable Toilets Inc., 698 F. 2d 831 1983. 28 e.g., Ford 29 e.g., the Nutra-Sweet swirl 30 e.g., the Pillsbury Doughboy 31 e.g., Certi-gard 32 Trade-marks Act, s. 2 33 Articles 1457 and 1458 of the Civil Code of Quebec, formerly article 1053 of the Civil Code of Lower Canada 34 which essentially codifies the common law of passing off 35 See MacOdrum, Donald H. "Acquisition of Trade-mark Rights". In Trade-marks Law of Canada, edited by Gordon F. Henderson, p. 129. 36 Johnson-Laird, Andy. "Taking the Internet to the New World of Cyberia." In The Internet and Online Services. The Canadian Institute (Toronto: 1995), p. 49. 37 i.e., "inventive ingenuity" or the "flash of creative genius" 38 i.e. the extent of the monopoly being claimed 39 As noted earlier, patent protection may be given to computer software programs which form an integral part of a product or process which, on its own merits, is determined to be an invention. 40 Garfinkel, Simson L. "Cypher Wars: Pretty Good Privacy Gets Pretty Legal". Wired, November 1994, p. 129. 41 Lenk, Frank. "Innocent GIF file stirs dispute". The Globe and Mail, March 14, 1995, p. C2. 42 In "The Economy of Ideas, a Framework for Rethinking Patents and Copyright in the Digital Age (Everything You Know About Intellectual Property is Wrong)". Wired, March 1994. 43 See Wisebrod, Dov. "Controlling the Uncontrollable: Regulating the Internet". In The Internet and Online Services. The Canadian Institute (Toronto: 1995). 44 See 1991 Treasury Board Policy "Title to Intellectual Property arising under Crown Contracts". 45 Institute of Law Research and Reform, Report No. 46. Protection of Trade Secrets. University of Alberta. 1986, p. 6. 46 Mann, J. Fraser. Computer Technology and the Law in Canada. Carswell (Toronto: 1987), p. 115. 47 Vaver, David. ""What is a Trade Secret?" In Trade Secrets, edited by Roger T. Hughes, p. 17. The Law Society of Upper Canada, 1990. 48 Lac Minerals Ltd. v. International Corona Resources Ltd. (1989), 61 D.L.R. (4th) 14; 26 C.P.R. (3d) 97 (S.C.C.) 49 See Kokonis, James. D, Morrissey, John R. and Macchione, Alfred A. "Litigation as to Trade Secrets -- Confidentiality Orders". In Trade Secrets, edited by Roger T. Hughes, p. 137 - 239. The Law Society of Upper Canada, 1990. 50 Rose, Lance. Op cit. 51 Johnson-Laird, Andy. Op cit., p. 33. 52 "Don't Tell It To The Spartans". The Economist, February 18, 1995, pp. 81 - 82. Cited in "Can Privacy be Protected on the Internet? Privacy Through the Eyes of Employees, Online System Users, and Consumers", by Duncan C. Card, in The Internet and Online Services, The Canadian Institute, (Toronto: 1995). 53.[1988] 1 S.C.R. 963. 54.R. c. Desroches (1992), 51 Q.A.C. 188 (C.A.). 55.(1978), 86 D.L.R. (3d) 212 (S.C.C.). 56.(1983), 73 C.P.R. (2d) 114 (Ont.C.A.). 57.E.g. R. v. Leahy (1988), 21 C.P.R. 3d 422 (Ont. Prov. Ct.). 58.Report of the Sub-Committee on Computer Crime, being the Ninth Report of the Standing Committee on Justice and Legal Affairs, 1st Session, 32nd Parliament, 1980-81-82-83 (June 1983). 59.Trade Secrets, Report No. 46, July 1986, of the Institute of Law Research and Reform of Alberta. 60 See Mann, Bruce. Keeping the Secrets In: Exempting Trade Secrets and other Confidential Commercial Information from Disclosure under the Access to Information Act. Unpublished, November 16, 1990, Department of Justice. 61 Lac Minerals Ltd. v. International Corona Resources Ltd. (1989), 61 D.L.R. (4th) 14; 26 C.P.R. (3d) 97 (S.C.C.) 62 See Kokonis, James. D, Morrissey, John R. and Macchione, Alfred A. "Litigation as to Trade Secrets -- Confidentiality Orders". In Trade Secrets, edited by Roger T. Hughes, p. 137 - 239. The Law Society of Upper Canada, 1990.