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posted August 29, 2013 by Terry Hart.
On Tuesday, a Ninth Circuit panel heard oral arguments in a case brought by television broadcasters against internet retransmission service FilmOn X (née Aereokiller). You can listen to audio of the hearing. The appeal arose over a preliminary injunction against FilmOn that was granted late last year by district court judge George Wu, who held that there was a likelihood that FilmOn X infringed the broadcasters’ public performance rights through its operation of a subscription based service that retransmits broadcast television over the internet.
On appeal, FilmOn X argues, essentially, that the Ninth Circuit should reverse the lower court’s decision and instead follow the lead of the Second Circuit, which, earlier this year, affirmed similar service Aereo as not infringing the public performance right. That decision followed the Circuit court’s Cablevision precedent, which adopted a non-statutory “unique copy” element to distinguish between non-infringing private performances and infringing public performances.
What we’re really talking about is the definition of “to the public” in the Transmit Clause, and we know that “to the public” includes receipt of the performance at different times and at different places. I understand your point is “this is one antenna per person.” But let me give you two hypotheticals and ask you if they come out differently. One is the antenna goes to a house full of people, friends, alright, so it’s kind of public, it seems to me. And the other is it goes to a bar, which charges admission for everybody to come in and watch your signal from that one antenna to the bar. Are you still okay in that, even though the ultimate recipients of your retransmitted signal may not be? When I say “are you okay”, I mean are you violating the statute at that point, because you’re sending something to, in my extreme example, a commercial establishment, which is then selling it to the public?
Baker begins by correctly pointing out that the bar would be liable for publicly performing the broadcast, but then speculates that the worst FilmOn X could face is secondary liability, depending on its level of awareness of the bar’s activities and whatever specific facts are present.
Baker is wrong on this second point. FilmOn X would be liable for publicly performing works under Judge Cogan’s hypothetical. What’s more, it would be liable even under the Cablevision/Aereo “unique copy” interpretation of the Copyright Act’s public performance provisions that FilmOn X is relying on to escape liability. This is just one more reason why the Ninth Circuit should reject the argument.
Prior to the 1976 Copyright Act, the Supreme Court had held that CATV services, which picked up broadcast television signals and retransmitted them to subscribers, did not implicate the broadcasters’ public performance rights. 1Fortnightly v. United Artists Television, 392 U.S. 390, (1968);Teleprompter v. Columbia Broadcasting System, 415 U.S. 394 (1974). Congress changed this with the new Act, bringing retransmissions within the scope of public performance (subject to several limitations and exceptions). Since then, courts have consistently held that this covers every intermediary that retransmits a performance.
The earliest and leading case comes from the Seventh Circuit. In WGN Continental Broadcasting v. United Video, the court began its analysis of the dispute by disposing of a threshold argument: whether United Video, a satellite common carrier, could be liable for publicly performing television superstation WGN’s works even though it was only an intermediary retransmitting the signal to other cable providers. 2693 F.2d 622 (7th Cir. 1982). The court said it could, in part because the Copyright Act contained a passive carrier exemption that would be rendered superfluous if all intermediary carriers were exempt from liability as a matter of rule. WGN ultimately held that a service “cannot be immune just because [it] does not retransmit [a] signal directly to the public” but instead transmits the signal to an actor who, in turn, publicly performs the broadcast.
The Second Circuit came to the same conclusion in NFL v. PrimeTime 24 Joint Venture. 5211 F.3d 10 (2nd Cir. 2000). There, it said that “the most logical interpretation of the Copyright Act is to hold that a public performance or display includes ‘each step in the process by which a protected work wends its way to its audience.'” 6Quoting David v. Showtime/The Movie Channel, 697 F.Supp. 752, 759 (S.D.N.Y.1988).
That gives us three circuits (and at least one additional district court in a separate circuit 7National Cable Television v. Broadcast Music, Inc., 772 F.Supp. 614, 651 (D.DC 1991). who have considered the issue and come to the same conclusion.
But what about the Ninth Circuit, whose holdings are binding on the FilmOn X litigation? The Circuit does not appear to have weighed in on the topic. Unless you ask the Second Circuit.
But the Second Circuit read Allarcom wrong. According to the Second Circuit, when Allarcom was considering whether the Copyright Act preempted the state law at issue, the court said that “copyright infringement does not occur until the signal is received by the viewing public.” That’s not what Allarcom said. Allarcom actually said that the Copyright Act does not preempt extraterritorial acts of infringement. And under Ninth Circuit precedent, an act of infringement that does not occur entirely within the United States is considered extraterritorial. In other words, Allarcom didn’t say the retransmission was not infringing because it was not a public performance, it said it was not infringing because it was not received within the United States. Luckily, the Ninth Circuit is not bound to follow the Second Circuit’s interpretations of its own precedent.
[U]nder the transmit clause, we must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is “to the public.” And because the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber, we believe that the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission.
Cablevision assumes that the single subscriber equals a single person, making the transmission a private performance. But as Judge Cogan noted in the above quote, that single subscriber could be a bar full of people from the general public — and under WGN, Hubbard, and PrimeTime 24, that makes Cablevision, Aereo, and FilmOn X’s performances public ones.
So FilmOn X cannot escape liability for public performances even under the convoluted, inexplicably narrow interpretation of the public performance provisions that it wants the Ninth Circuit to accept. This provides only all the more reason for the court to instead rely on the plain meaning of the Copyright Act.
1. ↑ Fortnightly v. United Artists Television, 392 U.S. 390, (1968);Teleprompter v. Columbia Broadcasting System, 415 U.S. 394 (1974).
2. ↑ 693 F.2d 622 (7th Cir. 1982).
3. ↑ 593 F.Supp. 808 (D. Minn. 1984).
4. ↑ 777 F.2d 393 (8th Cir. 1985).
5. ↑ 211 F.3d 10 (2nd Cir. 2000).
6. ↑ Quoting David v. Showtime/The Movie Channel, 697 F.Supp. 752, 759 (S.D.N.Y.1988).
7. ↑ National Cable Television v. Broadcast Music, Inc., 772 F.Supp. 614, 651 (D.DC 1991).
8. ↑ 69 F.3d 381 (9th Cir. 1995).
9. ↑ Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008).
So if I buy a Slingbox, install it at home, and use it to watch A’s games while I travel, no one’s infringing. But if I move that Slingbox to my bar and hook it to a TV, Sling (Dish) is now a direct infringer. Isn’t that the result of your interpretation?
No, Dish has a license to publicly perform the programming it retransmits.
Aren’t the networks claiming that the Slingbox is infringing, as part of the Ad Hopper suit? Anyway, leave licenses aside and assume Sling only sells the box. Does Sling’s liability then depend on where its customers install the box and who the customers allow to use it?
Fox argued in its complaint that Dish “exceeded the scope of its license agreements with Fox by streaming and/or distributing copies of the Fox programs over the Internet via the Sling Adaptor in direct contravention of Fox’s contractual rights” — and a licensee infringes the owner’s copyright if its use exceeds the scope of its license (I don’t believe the claims relating to the Slingbox were briefed for the preliminary injunction motion, so they haven’t been addressed by the court yet).
If Sling only sells the box, then it would not be the one transmitting a performance. If it is instead providing a service where it transmits performances to customers using a Slingbox, then it would be liable for the public performance absent a license. There are only limited circumstances where a business can employ the legal fiction that it is merely “standing in the shoes” of its customers.
Well, that’s one of the real questions in the Internet TV cases. Nothing in the words of the Copyright Act – including the public performance right and the “transmit clause” – distinguishes a product from a service. What you seem to be saying is that any transmission from point A to point B is a public performance if it’s done as a commercial service. But that’s not what the statute says, it says “to the public.” Any correct interpretation of the transmit clause has to allow for the possibility of a “transmission” that is not “to the public,” or else those words are superfluous. And “to the public” is not the same as “for profit.” The statute allows for private, personal transmissions done as a commercial service on behalf of a customer from a legal source. No matter whether you call it a bug or a feature, copyright just doesn’t touch those transmissions.
The Copyright Act doesn’t explicitly distinguish between a product and a service, but it’s implicit since “performing” is an act, and it is rarely the case that someone who sells a product that is used in an act is said to be engaged in that act. For example, employees at a carwash use a hose when they wash a car. But it would be weird to say the company that sold the hose they use is also washing the car.
And while I agree that the statute obviously recognizes private or personal performances, I disagree that there is such a thing as “private, personal transmissions done as a commercial service on behalf of a customer from a legal source.” If you’re transmitting to yourself, that’s private. If you’re transmitting to your family, your friends, or your intimate social group, that’s private. But if you’re transmitting to customers — to anyone who signs up for your service — that’s public. Your service is available to any member of the general public. To say otherwise is just very clever legal gymnastics.
But “sign up for service” is a critical aspect of the situation. Aerokiller and similar services do not simply say “hey anyone in the world, point your browser to http://www.aereokiller.com/foxtv to see what’s on FOX right now”. To return to the bar example, saying that Aerokiller is responsible for infringing behavior by the participants is like saying that a bar owner is responsible for drunk people on the sidewalk in front of his shop.
This is great, Terry! I love the public performance right, though it can be really confusing at times. Just look at Judge Posner’s opinion in Flava Works or the Second Circuit’s opinion in Cablevision for examples of reasoning that leaves you scratching your head and wondering what the heck is going on.
I finally listened to the oral arguments, and I think that the lawyer for the plaintiffs did a good job but that he should have better driven home the point why Cablevision is just plain wrong. And it’s not just wrong as a matter of policy, it’s wrong as a matter of statutory construction. The defendants just can’t get around the “separate places” and “different times” part of the Transmit Clause which proves that what matters is the performance of the work, not the individual transmissions. It’s counterintuitive, but several distinct transmissions can constitute one performance.
The Second Circuit in the Aereo appeal had to do some impressive mental gymnastics to get around the plain meaning of the Transmit Clause, reading into the statute Nimmer’s unfounded “unique copies” argument. I think the Clause is simply referring to video-on-demand services, which is exactly what services such as Aereo and FilmOn X are. It matters not how many copies are used in their Rube-Goldberg machinces since infringement turns on the performance of the work. Whether the work is embodied in one copy or ten thousand copies is irrelevant.
Your post is great too because it brings home another aspect of the public performance right that I think is wildly misunderstood. I think of a performance as a chain, and whether it’s public or not depends on the last link in the chain. If the last link in the chain is a public performance, then every link in the chain is a public performance. But the chain can be broken such that upstream links in the chain aren’t publicly performing the work even if someone downstream is.
Working off of Mitch’s example, if I use my Dish DVR to record a game at home and then use a Slingbox to transmit the game to my private office computer, that’s a private performance. I’m privately transmitting the game to myself. But if I instead use the Slingbox to transmit the game to the televisions in my bar that’s full of patrons, then I’m publicly performing the game. I agree with Terry that Dish wouldn’t be an infringer for this since it has a public performance license, but I also think that it’s possible for the chain to have been broken such that Dish is no longer in the particular chain at issue.
For example, if the game was recorded three months earlier, it’s hard to see how Dish is still a link in the chain of my public performance. Dish’s chain ended when it publicly performed the work to me, and I began a new chain of public performance when I used a Slingbox to transmit the work three months later to my bar patrons. I think the example the judge gave during the oral argument was that of a chain that had not been broken since the transmissions were all contemporaneous, in which case Terry is correct that Dish’s license absolves it of liability that it would otherwise have for directly infringing the public performance right.
And this is exactly Terry’s point when it comes to FilmOn X. Even if we buy their argument that they’re not publicly performing a work when they transmit it to their subscribers, they nevertheless would be a link in the chain should that subscriber turn around and publicly perform that work. I’m not really sure how or if FilmOn X’s contractual agreement with its subscribers could relieve it of liability, which is what their lawyer alluded to during oral arguments. They would be publicly performing the work without a license, and their contract with their subscribers wouldn’t and couldn’t change this fact. The subscriber might indemnify them, I suppose, but they would still be an infringer.
Anyway, great post as always, Terry!
Congratulations, you’ve proven that all cable internet service providers are liable for contributory infringement and should be shut down, because there’s nothing that stops me getting a Comcast subscription and then using Hulu or some similar service to let people in my restaurant watch TV.
Oh, radio stations are infringing too, because they don’t do anything to ensure that I’m not tuning the radio in my restaurant to their station and allowing the customers in the restaurant to hear it.
The ISP would be a truly passive conduit, so under Netcom and its progeny, codified in the DMCA, it wouldn’t be liable. Radio stations have blanket licenses.
Radio stations have blanket licenses for rebroadcast to individual listeners in a private setting, not for rebroadcast wherever whenever and under any circumstances the radio owner chooses.
And yes, some rightsholders have sued shops for playing the radio.
How are Aereo and FilmOnX not a “passive conduit”? They don’t do anything but hold the data until the subscriber requests their release.
That doesn’t seem right to me since I would think the blanket license just says the licensee can broadcast the covered works publicly. Do you have a particular example of a blanket license in mind?
Right, because those shops presumably were publicly performing the works without a license. But I don’t see how a bar that tunes in a radio station for its customers without a license could lead to liability for the radio station that has a license to broadcast publicly.
Your ISP provides dumb tubes that have no control over the selection of the content that travels over them. Aereo and FilmOn X have control over the content they provide. In fact, their entire business model is to provide that very content.
Because unless I’ve completely misunderstood Aereo’s business model–unless Aereo is stripping out commercials and similar content, or adding in its own content in such a way that it seems to be part of the original work–all Aereo does is time-shift. The service does nothing your DVR doesn’t already do. Indeed, most modern cable services let you watch recorded content from your DVR on a mobile device; isn’t that exactly what Aereo is doing?
Unless what’s happening is that content providers are saying “over-the-air broadcasts are not intended for receipt by the general public, but are in fact only licensed for subscribers to a cable-TV service”, which seems to be kind of a bold statement.
The argument brought up by the judges is if you charge patrons to see the public performance. Not necessarily having a public performance available, and then charging for concessions (i.e.: beer, wine, peanuts, and dates).
The big kick I got from the audio was all of the snickers, and quite laughs, in the background when the counsel for FilmOn X claimed that subscribers would have to abide by their Terms of Service; hence, at that point FilmOn X is not liable.
I think both FilmOn X are liable. In Aereo’s case, Bloomberg Television grants their broadcast by contract; however, because of that, Bloomberg Television, as a news-source, comports the silencing of opinions against (while all of the other stolen signals have no agreements)—and that’s not good.
Right, but I don’t think the money part matters. A bar could charge no admission and could give out food and drinks for free, but it would still be a public performance to show the copyrighted telecast of a game to a group of patrons.
That’s true. Therefore, public performances, like restaurants, bars, pool-halls, etc., must have a licensed agreement with Direct-TV or a local cable provided to do so. Otherwise it’s an analog rabbit ear (like in “Rocky” when Apollo Creed hit the mat and the reaction in the fictitious Philly bar). But now the analog signal has been removed, the televisions for analog have all been destroyed….the signals are now digital, and a decoder box (or a new monitor) is required.
Thus FilmOn X and their “Terms of Service” excuse for a “third-party” unauthorized public performance (while pirating the digital signals claimed as “freely over-the-air”, and then charging to have the service without licensing the copyrighted content) really holds no moment.
So charging admission could make a difference.
Isn’t that the same thing that the DMCA argues when it defines the Safe Harbor provision for service providers?
If I don’t put up a sign saying “no trespassing”, and someone moves onto my unused land and builds a house, then I can’t come along later and say “hey wait I didn’t say you could build a house here”. Adverse Possession. If the broadcasters didn’t want people viewing their broadcasts for free, then, well, maybe they shouldn’t have made them available for free.
On the other hand, all I *have* to do is put up a sign saying “no trespassing” and I’m legally protected. And all the broadcasters need to do is put a blipcard after the credits for each show saying “this broadcast presented by so-and-so under license from such-and-such. Unauthorized rebroadcasting , retransmission, or storage are prohibited.” Bam, Aereo’s killed.
Adverse possession has no application whatsoever to copyright law. The broadcasters do want people viewing their broadcasts for free, which is why they broadcast them, but what they don’t want is people rebroadcasting them publicly without a license. There’s no need for the broadcasters to explicitly withhold the rights as you suggest since those rights are already withheld by default.

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In Wormald v. Chiarot, the Plaintiff was involved in a motor vehicle accident, and consequently advanced an ICBC claim for physical and psychiatric injuries. Prior to trial, ICBC’S lawyer had made two formal offers to settle, the first one being for $20,000.00. The second formal offer to settle was made two weeks later, which was three days before the start of trial, and which was double the amount of the first offer. The Plaintiff did not respond in any way to the first offer made by ICBC’S lawyer. The Plaintiff sought approximately $250,000.00 at trial, however was awarded just over $5,000.00 in damages.
At a later costs hearing, ICBC’S lawyer sought an order for double costs from the date of the first offer, to the date of the trial, however the Court refused to make such an order, citing relevant portions of the recent Court of Appeal decision in C.P. v. RBC Life Insurance Company, which stand for the proposition that double costs cannot be awarded to a Defendant where an award has been made in favour of the Plaintiff, even if such an award is lower than the Defendant’s formal offer to settle. This is because a Plaintiff in such circumstances is already subject to costs sanctions in that a Plaintiff can be stripped of his or her post offer costs and disbursements, and also may be required to pay the Defendant’s post offer costs and disbursements.
However, the Court was of the view that the initial formal settlement offer made by ICBC’S lawyer should have been accepted by the Plaintiff, given the inherent difficulties in the Plaintiff’s case at the time the offer was made. As such, and as the Court award was less than the amount of the Defendant’s formal offer, the Court ruled that the Defendant was entitled to costs from the date of the first formal offer to settle, up until the date of trial. The Plaintiff was awarded costs only for the time period up until the first formal offer to settle.
The case is a stark reminder of the serious costs consequences that can be faced by a Plaintiff who, even though successful at trial, does not beat the amount of the formal settlement offer made by ICBC before trial. In this particular case, the Plaintiff ended up owing ICBC more than the amount that she received at trial.
 … A plaintiff who obtains a judgment for less than an offer to settle is already subject to sanctions: R. 9-1(6)(a) allows the court to deprive the successful plaintiff of costs to which it would otherwise be entitled. Rule 9-1(5)(d) provides an even more punishing outcome as the plaintiff is not only deprived of costs he or she would otherwise receive, but must also pay the defendant’s costs subsequent to the offer to settle. To also allow a defendant double costs would skew the procedure in favour of defendants and unfairly penalize and pressure plaintiffs.
 In the case at bar, the Court rejects the defendants’ argument that because the defendants were substantially successful that they should be viewed as the successful party with double costs awarded. The defendants urged the Court to distinguish C.P. on the basis that in the case at bar, there were multiple issues. With respect, the Court does not read C.P. as restricted to cases where there are only a few issues. Further, in the case at bar, the evidence at trial intertwined the various heads of damages.
 In the case at bar, the first offer should have been accepted. The first offer sets forth the defendants’ observations as to the weaknesses of the plaintiff’s case which, when compared with the Reasons for Judgment, were prescient. As noted, the plaintiff did not respond to the offer. The plaintiff had two weeks to consider the defendants’ first offer and the rationale provided in support. One week was sufficient time for the first offer to be analyzed and discussed with the plaintiff and instructions given, particularly taking into account the upcoming trial date.
In Miller v Boughton, the Plaintiff failed to beat ICBC’S final offer before trial, and was awarded only $3,880. She was ordered to pay ICBC’S costs and disbursements, which came to $42,000.
 I am of the view that the first offer, the one made December 23, 2008, ought to have been reasonably accepted, at least by June of 2009. By June of 2009, the plaintiff could have had a reasonable opportunity to seek another opinion as to the origin of her pericarditis as it related to the motor vehicle accident.
 There was an opportunity to accept the defendant’s last offer of $65,000.00 just before trial. At this time, both the plaintiff and the defendant knew the plaintiff had no medical evidence to support her alleged injuries and medical conditions.
 The final judgment was substantially less than the offers presented by the defendant to the plaintiff. The jury assessed damages in the amount of $7,600.00. This is before discounting the amount for liability. The plaintiff gambled that she could go before the jury without medical evidence and be awarded amounts larger than any of the offers made by the defendant.
 There is no evidence as to the defendant’s financial circumstances. I believe it is safe to assume that the defendant was covered by an insurer.
 On the other hand, the plaintiff’s financial condition is modest. At the time of trial, this Aboriginal woman was not employed. Throughout most of her adult life she was employed. At the time of trial, she was attending university. She owns a residence on the Simpcw First Nation Reserve. She also owns an automobile.
 At the time of trial, she was engaged to be married. Her fiancé is employed. The plaintiff has health problems that at times are physically debilitating.
 I appreciate that the plaintiff’s health problems, from which the plaintiff suffered initially, might have caused a reasonable person to link them to the motor vehicle accident. However, upon learning that they were not linked to the motor vehicle accident, common sense should have caused the plaintiff to consider her chances of beating any of the offers put to her by the defendant.
How Do You Win Your Case, Yet Still Owe ICBC Money ?
An award of costs by the Court is discretionary, as the Court can take many factors into account when arriving at their decision. Generally speaking, if you are unsuccessful at trial, or if you are successful yet do not beat ICBC’S last formal settlement offer, then you are exposing yourself to potentially serious costs consequences.
Rules 9-1(5) and (6) of the British Columbia Supreme Court Civil Rules outline the options at a court’s disposal with respect to awarding costs, and what factors they consider when doing so.
In Dempsey v Oh, ICBC’S lawyer made a formal settlement offer of $165,000, however this offer was rejected by the Plaintiff. The Plaintiff was successful at trial, but was only awarded $20,000. As a result of not beating ICBC’S offer, the Plaintiff was required to pay ICBC’S costs, meaning that the Plaintiff, although successful at trial, ended up owing ICBC more money than was recovered at trial.
 The fact that a second offer was made, does not mean that a prior offer is to be ignored: ICBC v. Patko,2009 BCSC 578 (CanLII), 2009 BCSC 578. The reasonableness of the decision of the plaintiff not to accept the offers is to be assessed on the basis of the state of affairs existing at the time of the respective offers.
 The plaintiff also submitted that if he is denied his costs, his modest recovery will be eradicated and that if he is ordered to pay the defendant’s costs he will end up owing it money. The plaintiff says that was not the intent of the Rules. I do not agree. It is not the court’s function to ensure that a plaintiff makes a net recovery from an action when it has ignored a reasonable offer. That would defeat the purpose of the Rule and does not accord with common sense.
In Brooks v Gilchrist, the Plaintiff’s claim was dismissed at trial. The Plaintiff was then hit with a double costs penalty for taking an “extremely weak” case to trial.
 In terms of the relationship between the terms of settlement offered and the final judgment of the court, the offer was better than the result, but the offer was only for the sum of $1 plus disbursements. Ordinarily I would think that a nominal offer of one dollar may not attract orders for double costs but I know that in some cases even nominal offers may attract orders of double costs. See for example MacKinlay v. MacKinlay Estate,2008 BCSC 1570 (CanLII), 2008 BCSC 1570; Ludwig v. Bos, 2010 BCSC 695 (CanLII), 2010 BCSC 695.
 This is a case where there had been expenditures on medical and expert reports. I think that where it becomes clear that liability will be extremely difficult to establish a nominal offer that has the effect of allowing the plaintiff to recover disbursements and avoid liability for the other party’s disbursements may nevertheless be a substantial offer.
 In considering whether the offer ought reasonably to have been accepted, I think it was quite clear that the plaintiff’s original theory that she had been sideswiped as a result of the collision involving the other two adjacent cars was not maintainable once each side had filed their expert reports. This was not merely a case where the plaintiff had a claim that was difficult to prove at trial; this was a unique case where on the evidence available to her before trial the plaintiff should have realized that she did not have a realistic position on liability.
 The relative financial circumstances of the parties are a factor that weighs against awarding double costs in this case, although in appropriate circumstances double costs clearly may be awarded to ICBC.
 I do not think the fact that the defendant drivers may have been dishonest with ICBC about the circumstances involving the collision between the Beynon and the Gilchrist vehicle has any bearing on whether costs should be awarded to other parties, the owner of the vehicle and ICBC.
 Although it may have been difficult for the plaintiff to reconsider her position after the experts’ reports were exchanged, it was incumbent on her, notwithstanding any earlier settlement offer, to make a realistic assessment of her prospects of success in the litigation.
 Accordingly, my decision as to costs is as follows.
 In the circumstances, I think that the ICBC defendants should be awarded costs with respect to the main action. I have estimated the main action consumed 90% of the time at trial. The defendants were clearly successful and, in my view, it is not an appropriate order for each side to bear its own costs.
 In terms of whether I should award double costs, I think that, in exercising my discretion, the offer reasonably ought to have been accepted in the days prior to trial. Although the offer was modest, the circumstances at that time were clear that her case was extremely weak, she would have avoided liability for disbursements, and in fact recovered the disbursements she had incurred.
 I award double costs for the period after two days prior to trial.
 Because ICBC had denied coverage, the defendant James Gilchrist, appeared on his own behalf and attended the proceedings at trial. Essentially, he left it to Mr. Hulley to defend the plaintiff’s claim at trial. As to costs, he is entitled to claim them given that the action against him was dismissed. Mr. Gilchrist took a relatively modest position, seeking only costs to compensate him for some of his lost time in attending trial. In the circumstances, I make a lump sum order for costs in his favour of $1,750.
 I award costs to the plaintiff for the second action up to seven days after the offer to settle and thereafter ICBC is entitled to ordinary, but not double, costs. For purposes of apportionment of costs between the actions, the main action took up 90% of the time at trial.
In Chen v Beltran, the Plaintiff’s claim was dismissed at trial, and the Plaintiff was ordered to pay ICBC $75,000 in costs and disbursements, despite the crippling effect this would have on the Plaintiff’s family.
 The first basis upon which the plaintiff says the defendants should be denied costs is that Allan suffered significant injuries in the Accident and will require ongoing medical and psychological care throughout his life. His ongoing care will involve significant cost to both his parents. Allan’s parents have already incurred substantial debt to prosecute the lawsuit, have limited financial resources and will have difficulty providing for Allan’s future care even if they are successful on this application. The plaintiff says that an order for costs will financially “cripple” the family. While I have great sympathy for Allan’s parents the case law is clear that the financial circumstances of a litigant, standing alone, are not to be taken into consideration as a factor in the awarding of costs.
 In Robinson v. Lakner 1998 CanLII 5206 (BC CA), (1998),159 D.L.R. (4th) 191, 107 B.C.A.C. 64 (C.A.) the Court of Appeal allowed an appeal from a decision by the trial judge to limit costs awarded to a successful defendant to $1,500 because of the plaintiff’s “difficult financial circumstance”. The Court held, at para. 5, that “financial hardship in itself is not a sound basis for departing from the usual rule with respect to costs”.
 The principle which has emerged from recently decided authorities is that, in general, the unfortunate personal circumstances and characteristics of a litigant are not to be taken into account by the court in exercising its discretion in making an award of costs. Such personal circumstances would encompass a party’s needy financial situation (Brown v. Black Top Cabs Ltd. 1997 CanLII 4042 (BC CA), (1997), 43 B.C.L.R. (3d) 76 (C.A.); Zelenski Estate v. Fairway 1998 CanLII 4229 (BC CA), (1998), 60 B.C.L.R. (3d) 76 (C.A.); Churchland v. Gore Mutual Insurance Co. (unreported), September 23, 1999, No. SO-9912, Vancouver (S.C.). There is also authority that the financial hardship of a litigant who would otherwise be responsible to pay costs should not, standing alone, justify a departure from the ordinary rule. (Robinson v. Lakner 1998 CanLII 5206 (BC CA), (1998), 159 D.L.R. (4th) 191 (B.C.C.A.)).
 It is clear based on the above authorities that this Court is unable, on any principled basis, to take the plaintiff’s financial circumstances into account in determining whether to award costs.
 However, while financial hardship standing alone does not warrant mitigation of an award of costs, there are other circumstances raised by the plaintiff which I now turn to consider.

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Over the last several decades, the United States Supreme Court has heard a series of cases dealing with federal preemption. Federal preemption is rooted in the Supremacy Clause of Article VI of the United States Constitution, which provides that the laws of the United States are “the supreme Law of the land; . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” In practical terms, this means that Congress (or administrative agencies which have had certain powers delegated to them by Congress), subject to the limits on the federal government’s own power imposed by the Constitution, has authority to preclude – or “preempt” – any state law that conflicts with federal law.
At least once in every term in recent memory, the Court has considered whether some federal statute interdicts some body or other of state law. There have been more than a dozen cases discussing the preemptive scope of the Employee Retirement Income Security Act (ERISA) in the last l30 years, as well as cases addressing preemption under the National Bank Act, the Food and Drug Act, the Federal Communications Act, the Home Owner’s Lending Act, the National Traffic and Motor Vehicle Safety Act, the Airline Deregulation Act, the Boat Safety Act, and our personal favorite, the Federal Insecticide Fungicide and Rodenticide Act, among many other federal statutes.
This year is no exception. Indeed, there are at least five cases pending on the United States Supreme Court’s docket for its 2007-2008 term that deal with whether federal law preempts state law in a particular area. The two cases that have attracted the most national attention from both lawyers and the media involve claims that Food and Drug Act law preempts state tort laws involving products liability claims. The first of these cases, Riegel v. Medtronic, Inc., No. 06-179, concerns injuries caused by medical devices that have received premarket approval from the Food and Drug Administration. The second case, Warner-Lambert v. Kent, No. 06-1498, raises the issue of whether state laws may permit product liability suits to proceed against drug manufacturers who have defrauded the FDA.
What lessons can be drawn from, or predictions be made about, all of these pending cases? If one reads the briefs of the parties (and, in most of these cases, the briefs of a number of amici on one or sometimes both sides of the cases), and the transcripts of the oral arguments in the cases (the Riegel case was argued on December 4, 2007, for example, with Public Citizen’s Allison Zieve ably representing the family bringing the product liability claim and former Solicitor General Ted Olson representing Medtronic), one surprising thing becomes clear: the arguments being made in these cases are almost completely different in each case. To a very large degree, the outcome in each of these five cases will turn upon a detailed examination of the language of statutes that are surprisingly unlike each other, or upon a history of administrative regulations (or, in the case of the Federal Arbitration Act, court decisions) that have resulted from very brief and oblique statutory language. These five cases will almost certainly not be decided based upon some single broad principle that will govern the outcome in each matter or establish a rule of general application. It would not be at all surprising if the Court were to find preemption in two or three of the pending cases and to find no preemption in the other two or three pending cases, and for each case to be decided in an opinion that does not cite any of the other four cases.
The experienced preemption lawyer will also understand the enormous difference between the different types of preemption as a defense – express preemption (where the direct language of a statute or federal regulation preempts state law), field preemption (where the Congress intended federal regulation to be so comprehensive that all state law in an entire field of law is overridden), and implied/conflict preemption (where federal law preempts state laws that either (a) make it impossible for federal law to operate; or (b) frustrate the objectives of federal law). (E.g., Crosby v. National Foreign Trade Council (2000) 530 U.S. 363, 371.) The types of arguments that can and should be made in opposing a claim of federal preemption vary a great deal depending upon whether the preemption claim is based upon field preemption, for example, as opposed to conflict preemption.
Nonetheless, the key point to recognize about the diversity of the legal arguments set forth in the five pending United States Supreme Court cases is that federal preemption issues tend to be decided based upon a very detailed and painstaking analysis of the particular body of federal and state law that relates to a dispute, and practitioners should not hope to win these cases by relying upon generalized statements of law that are generated in different settings.
One point in particular should be noted about generalized statements that are often bandied about with respect to federal preemption. There are a number of cases where the Supreme Court has held that there is a strong presumption against federal preemption.4 In a number of other cases, however, the Court makes no mention of the presumption against preemption. It is not clear the extent to which this doctrine is actually regularly a decisive element of the Court’s consideration of claims of federal preemption, or whether it has sometimes become a doctrine that is invoked when the Court intends to rule against a claim of federal preemption and is ignored in cases where the Court intends to rule the other way.
As a telling indication of the extent to which the Supreme Court has become the forum of choice for the Administration to expand the scope of federal law at the expense of state law, the United States Solicitor General has filed briefs supporting the pro-preemption provision of the corporate party in all but one of the five cases that are currently pending before the United States Supreme Court that involve assertions that federal law preempts state laws. (The only case in which it has not done so is Preston v. Ferrar, the Federal Arbitration Act case. Unlike most other statutes that have been given preemptive force, no federal agency plays any role in implementing the FAA.) While there are no guarantees that the corporate pro-preemption position will prevail in each of these cases, it is likely that the government’s position helps the position of the corporate side.
The Supreme Court will not give deference to a government agency’s interpretation of a matter in every circumstance. Where there is no ambiguity in a statute, an agency’s attempt at reinterpretation is entitled to no deference.8 Before a court will consider an agency’s interpretation, a party must show that there is ambiguity warranting the agency’s involvement.
There are several additional exceptions where courts will refuse to defer to agency interpretations or regulations. For example, just a few years ago, by a 7-2 vote, the U.S. Supreme Court refused to give deference to a federal agency’s position where it represented a change from the agency’s prior position.9 The significance of consistency has long been an important factor in how the U.S. Supreme Court views agency positions.
The format in which the agency opinion is issued is a factor in whether deference is granted. For example, the Supreme Court has rejected the rule of traditional Chevron deference for “policy statements, interpretive rules, agency manuals and enforcement guidelines lacking the force of law.”10 Where the agency has not engaged in a formal process, such as formal and public rule-making, the Supreme Court has denied deference. Courts also look to the authority granted the agency by congress as a factor into determining the appropriateness of deference.11 U.S. v. Mead, 533 US 218 (2001). In contrast, where the issue involves the interpretation or application of an agency’s own published federal regulations, the Court will defer to the agency. Long Island Care at Home, Ltd. v. Coke (2007) 127 S.Ct. 2339, 2550.
There are some indications that the Supreme Court gives less weight to the Government’s position when it senses that the Government has changed its position for apparent political purposes. See, e.g., Bates, 544 U.S. at 449, (rejecting the Solicitor General’s position as “particularly dubious given that just five years ago the United States advocated the interpretation that we adopt today.”).
The Supreme Court has not yet decided any of the five federal preemption cases pending on its docket for the 2007-2008 term. It is not only impossible to predict the outcome of these individual cases at this point; it is impossible to predict with any degree of certainty whether any particular significant trend will emerge from the Court’s decisions. One thing is clear, however: the current Administration is energetically advocating in favor of reducing the liability of corporations through expanded preemption of state laws, and the Solicitor General is strongly and consistently coming in on behalf of corporate defendants and against individual consumers and injury victims.
F. Paul Bland, Jr. is Executive Director of Public Justice, overseeing its docket of consumer, environmental and civil rights cases. He has argued or co-argued and won more than 25 reported decisions from federal and state courts across the nation, including cases in six of the federal Circuit Courts of Appeal and at least one victory in nine different state high courts. He has been counsel in cases which have obtained injunctive or cash relief of more than $1 billion for consumers. He was named the “Vern Countryman” Award winner in 2006 by the National Consumer Law Center, which “honors the accomplishments of an exceptional consumer attorney who, through the practice of consumer law, has contributed significantly to the well being of vulnerable consumers.” In 2013, he received the Maryland Consumer Rights Coalition’s “Legal Champion” award. In 2010, he received the Maryland Legal Aid Bureau’s “Champion of Justice” Award. In the late 1980s, he was Chief Nominations Counsel to the U.S. Senate Judiciary Committee. He graduated from Harvard Law School in 1986, and Georgetown University in 1983.
2 The same is true, for example, in cases involving motions to compel arbitration and motions to strike under California’s anti-SLAPP statute, Code of Civil Procedure section 425.16, et seq.
3 E.g., Beneficial National Bank v. Anderson (2003), 539 U.S. 1, 8 (“when a federal statute wholly displaces the state-law clause of action through complete preemption,” a case may be removed to federal court.”) The Court has so far announced only a few statutes to which complete preemption applies – ERISA, the Labor Management Relations Act, the National Bank Act with respect to usury claims, and the Price Anderson Act.
5 The Solicitor General’s recommendation is not always accepted by the U.S. Supreme Court, however. In the Rowe v. New Hampshire Motor Transport Association case now pending decision this term, for example, the Solicitor General urged the Supreme Court not to take the case (because it believed, naturally for this Solicitor General), that the pro- preemption position of the U.S. Court of Appeals for the First Circuit was correct. Notwithstanding the Solicitor General’s position, the Supreme Court decided to grant certiorari and hear the case.
6 This fact has been criticized and bemoaned by a number of commentators. Historically, there was a broad consensus that the Solicitor General was supposed to be a non-political, even-handed and scholarly figure in the government. While this notion was always perhaps an ideal rather than a description, humans being humans, there are many who argue that the Solicitor General has become an increasingly political figure in this Administration who regularly takes positions (and particularly pro-tort reform positions) that advance the political agenda of the current President.
8 Christensen v. Harris County (2000) 529 U.S. 576, 588 (where the agency’s regulation is not ambiguous, “defense is unwarranted”).
9 Bates, 544 U.S. at 449 (the Solicitor General’s position was held to be “particularly dubious given that just five years [previously] the United States advocated the interpretation that we adopt today”).
10 See, Christensen, 529 U.S. 576.
11 See, e.g., U.S. Mead (2001) 533 U.S. 218.
12 See generally, Bravin & Beckett, Friendly Watchdog: Federal Regulator Often Helps Banks Fighting Consumers - Depending on Lenders’ Fees, the OCC Takes Banks’ Side Against Local, State Laws, Wall St. J., Jan. 28, 2002.

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Copyright (c) Cem Kaner. All rights reserved.
This was originally published in Software QA, Volume 3, #4, p. 23.
Malpractice is a widely discussed type of lawsuit. Unfortunately, it is also widely misunderstood, with misinformation spread in private discussions, in the press, and in political discussions. For example, several people have insisted to me that software developers are sued "all the time" for malpractice. This is absolutely untrue. Depending on what you're willing to count as a "computer malpractice" case, the number of successful computer malpractice lawsuits in the United States is between one (1) and five (5).
For the moment, computer malpractice is a losing lawsuit because to be sued for malpractice (professional negligence), you must be (or claim to be) a member of a profession. Software development and software testing are not professions as this term is usually used in malpractice law. Therefore, malpractice suits against programmers and testers fail.
Negligent breach of the duty. If you gave bad advice, you might or might not have been negligent. To prove negligence, the plaintiff has to show that no reasonable person in your situation would have given the advice that you gave. Similarly, if a data archiving service loses its client's data, it has probably committed a breach of contract, but it might or might not have committed negligence. To prove negligence, the plaintiff would have to prove that the service didn't take reasonable measures to safeguard the data.
Consider this example of software support advice. People call you when they have problems running their software. One day, you advise a caller that her problems come from an insufficiently-compatible video card. Actually, the caller has set one of the program's display options incorrectly and replacing the video card won't help. Have you committed negligence? Maybe. We can't tell, just based on these facts, because we don't know what a reasonable support advisor would have done.
Let's add three facts. First, suppose that you have a database of common problems and this problem was in the database. Second, suppose that the caller's description was specific enough that you would have easily found the problem (and the solution) in the database if you looked. Third, suppose that most software support providers would have used this database if they had it. This last point establishes a standard of care - most support advisors would have checked the database. If you don't check the database, and you provide expensive bad advice, you can be accused of acting unreasonably.
If someone sues you for ordinary negligence, they will compare your behavior to what any reasonable person would have done under the circumstances.
If they sue for malpractice, they will compare your behavior to what a reasonable member of your profession would have done. Professional standards are much higher and much better documented. (For example, they might be written down in ANSI standards documents.) Therefore, if you act negligently in a professional capacity, it will be easier to prove your negligence by comparing you to other professionals than by comparing you to any reasonably bright and careful person who might undertake to provide the services that you provided.
In complex situations, different reasonable people will collect and evaluate information very differently. This makes the plaintiff's task difficult but the principle is the same. She'll have to show that you didn't approach the problem in any of the ways that reasonable people do, or that no reasonable person would have approached it in the way that you did.
Few published court cases involve claims of computer malpractice. Of those that exist, most involve a brief statement by the Court that there is no such thing in the law as "computer malpractice." Therefore, that aspect of the lawsuit is rejected and the Court moves on to discuss more interesting parts of the case. Here are the main American cases that discuss malpractice in detail.
The novel concept of a new tort called 'computer malpractice' is premised upon a theory of elevated responsibility on the part of those who render computer sales and service. Plaintiff equates the sale and servicing of computer systems with established theories of professional malpractice. Simply because an activity is technically complex and important to the business community does not mean that greater potential liability must attach. In the absence of sound precedential authority, the Court declines the invitation to create a new tort.
This refusal to recognize the validity of a lawsuit for computer malpractice has been widely quoted.
The next interesting case was Invacare Corp. v. Sperry Corp. 4 Invacare claimed that it had relied on advice of Sperry employees when it leased a Univac computer and sued for fraud, breach of contract, and negligence. Sperry argued that the negligence suit couldn't succeed because there is no cause of action for computer malpractice. Bowing to the Chatlos decision, the Court agreed that there is no such thing as computer malpractice. But, the Court said, Invacare wasn't claiming that Sperry's acts constituted malpractice. Invacare's claim was that the system was so inadequate for the job that no reasonable person would have recommended it. This is just a lawsuit for ordinary negligence, not professional negligence, and the Court allowed it to proceed.
In 1985, the Internal Revenue Service ruled that if a program goes beyond purely mechanical assistance in the preparation of a tax return, the author of the program is a tax return preparer.5 The IRS can fine a tax preparer who acts negligently, or participates in fraud on the IRS.
When an individual or a company sells a software program to a customer to aid in the preparation of a tax return, IRS noted, a customer may be unaware that the program is incomplete or inadequate and therefore may use it to create an erroneous return.
This IRS ruling is not a malpractice ruling, but it addresses an important point in the larger area of professional misconduct, and it reflects a well accepted principle of malpractice. Someone who provides bad legal advice can be sued for legal malpractice whether they're a lawyer or not. Someone who provides bad medical care can be sued for medical malpractice whether they're a doctor or not. Someone who provides bad engineering while claiming to be a professional engineer can be sued for engineering malpractice, whether they are licensed as a professional engineer or not. The IRS ruling extended this principle to computer programs that provide professional services. I haven't seen such a lawsuit yet, but it seems likely that a software company can be sued for legal, medical, engineering, architectural, or other malpractice if it claims to provide these professional services and provides them incompetently.
the preparation of legal documents for others to present in . . . court constitutes the practice of law when such preparation involves the giving of advice, consultation, explanation, or recommendation on matters of law. Further, instructing other individuals in the manner in which to prepare and execute such documents is also the practice of law.
If your company provides a program that promises legal, medical, dental, architectural or other professional engineering services and advice, think carefully about what you provide and what your marketing materials claim that you provide. If your program appears to be providing professional services, your company might be sued not for computer malpractice but for legal or medical or dental (etc.) malpractice.
Those who hold themselves out to the world as possessing skill and qualifications in their respective trades or professions impliedly represent they present the skill and will exhibit the diligence ordinarily possessed by well informed members of the trade or profession.
(a) DPS represented it had the necessary expertise and training to design and develop a system to meet the needs of Smith; (b) DPS lacked the requisite skills and expertise to do the work; (c) DPS knew it lacked the skill and expertise; (d) DPS should have known Smith was dependent upon DPS's knowledge and abilities; and, (e) DPS should have foreseen Smith would incur losses if DPS did not perform as agreed.
Diversified Graphics, Ltd. v. Groves (1989) 9 was the next successful malpractice case. Diversified hired the accounting firm of Ernst & Whinney (E & W) to help choose a computer system. Diversified sued for professional negligence & won. In its appeal, E & W argued that Diversified had failed to define the professional standard of care or to show how E & W had violated the standard. Though the Court explicitly stated that this was a computer case (not an accounting case), it determined the standard of care from E & W's own "Guidelines to Practice" which included management advisory practice standards that had been incorporated by the American Institutes of Certified Public Accountants (AICPA). It's not a big stretch to hold an accounting firm liable for computing consulting malpractice when the proof of the malpractice is proof of failure to follow AICPA standards.
In 1991, Wang Laboratories was sued for negligence and gross negligence.10 Wang sold a computer and a service contract to Orthopedic & Sports Injury Clinic. While attempting to fix the computer, Wang's employee used, and corrupted, the Clinic's last backup disk, thereby losing five years of the clinic's medical and accounting data. (Oops.) The contract limited the amount of damages that Orthopedic could collect from Wang, but Louisiana law (and many other States' laws) allows the plaintiff to recover all damages if the defendant committed gross negligence. The Court ruled that Orthopedic hadn't proved that this use of the backup disk was gross negligence. However, it did allow the lawsuit to go forward as a suit for ordinary negligence. This is another example of a case in which a Court allowed a negligence suit (not malpractice, but ordinary negligence) to proceed against a computer (service or software) seller.
It should be noted that there is no cause of action for professional malpractice in the field of computer consulting. . . . [We] decline to create a new tort applicable to the computer industry. Nor does the fact that Ernst & Whinney was the certified public accountant firm engaged by the plaintiff during the same period add a dimension to the computer or management consulting services separate from the subject of plaintiff's breach of contract claim.
Professionals may be sued for malpractice because the higher standards of care imposed on them by their professions and by state licensing requirements engenders trust in them by clients that is not the norm of the marketplace. When no such higher code of ethics binds a person, such a trust is unwarranted. Hence, no duties independent of those created by contract or under ordinary tort principles are imposed on them.
Why does it matter if we can be sued for malpractice?
A non-professional service provider's contract might limit the damages that it must pay the customer. The customer's losses might be much more than the limited amount of damages that the contract allows. These limits might be enforced in a simple negligence case, but they are rejected in malpractice suits because they are deemed to violate public policy.15 For example, as an attorney in California, I can be charged in a State Bar Court with violating the profession's Code of Professional Responsibility if I even attempt to put a clause in a contract of representation of a client that limits my liability for malpractice.
Malpractice lawsuits sometimes provide plaintiffs with procedural benefits. For example, the plaintiff might be able to file the suit after it is too late to file a negligence or contract suit, or in a different State, or under a different State's laws. The plaintiff might also be able to avoid an arbitration clause or certain defense arguments (such as comparative negligence) that might be available in negligence or contract suits.
Professionals are held responsible for their advice under a broader range of circumstances. A paying customer might have a hard time proving that a non-professional consultant intended her to take the consultant's advice seriously and to follow it immediately. In contrast, as an attorney, I risk malpractice liability if I make a dumb suggestion to a non-paying stranger at a cocktail party.
A malpractice plaintiff might also be more able to collect punitive damages.
Over the years, several people have advocated the licensing and professionalization of computer specialists. There are benefits to this, but we should approach this idea with open eyes. Becoming a professional carries significant additional legal responsibilities that are enforced by malpractice liability.
Why judges don't classify computer experts as "professionals"
Few or none of these apply in computing. Therefore, we should not be subject to malpractice liability.
What about people who call themselves engineers?
Several people are considering taking the ASQC examination to become Certified Software Quality Engineers (CSQE). Others of us have become ASQC-Certified Quality Engineers (CQE). A lawyer can make a persuasive argument that a CQE or CSQE should be subject to malpractice liability, even though we are not members of a recognized profession. The problem is that by using the word "engineer" on our stationery or resume, we can be accused of representing ourselves as professionals. Engineering is a licensed profession, and engineers are subject to malpractice liability.
I'm an ASQC-CQE. I became aware of the risk of malpractice liability in 1993 when my legal malpractice insurance carrier pointed out that my policy covered me for legal malpractice but not for engineering malpractice. That didn't bother me much because I generally like the idea of holding people accountable for incompetent work, whether they are members of a licensed profession or not. I continued to list my ASQC-CQE on my stationery since I received it, in 1992.
It is unlawful for anyone other than a professional engineer registered under this chapter, to . . . use the title . . . "quality engineer."
As I read Section 6787(f), calling myself a "quality engineer" is a misdemeanor (a crime), subject to a penalty of not more than a $1000 fine and three months in the county jail. My understanding is that other States also restrict the use of the word "engineer" to licensed professionals. Obviously, the phrase "Certified Quality Engineer" is coming off of my stationery immediately.
If you are considering taking one of the ASQC exams, you might consider writing the ASQC and asking them to change the title on the certificate.
1 If you provide a product, you have a legal responsibility (duty) to design and manufacture a product that doesn't pose an unreasonable risk of injury or property damage. For discussion of negligence that results in personal injury or property damage, see my paper, "Software negligence and testing coverage" in Software QA Quarterly, Vol. 2, #2, p. 18, 1995.
2 The classic discussion of this is in W.P. Keeton, D.B. Dobbs, R.E. Keeton, & D.G. Owen, Prosser & Keeton on Torts, West Publishing, Fifth Edition (Hornbook Series, pp. 185-193).
3 Chatlos Systems v. National Cash Register Corp., Federal Supplement, Vol. 479, p. 738, United States District Court for the District of New Jersey, 1979.
4 Invacare Corp. v. Sperry Corp., Federal Supplement, Vol. 612, p. 448, United States District Court for the Northern District of Ohio, 1984.
5 "Revenue Ruling 85-189: Return preparers; sale of computer program. A person who prepares a computer program and sells it to a taxpayer to use in preparing the tax-payer's income tax return may be an income tax return preparer." Internal Revenue Cumulative Bulletin, volume 1985-2, p. 341.
6 "IRS announces that companies who sell return preparation computer software and programs may be considered return preparers subject to penalties." I.R.S. News Release, IR-86-92 (May 6, 1986).
7State v. Despain, South Eastern Reporter, Second Series, Vol. 460, p. 576, Supreme Court of South Carolina, 1995.
8 Data Processing Services, Inc. v. L.H. Smith Oil, Corp., North Eastern Reporter, Second Series, Vol. 492, p. 314, Court of Appeals of Indiana, 1986.
9 Diversified Graphics, Ltd. v. Groves, Federal Reporter, Second Series, Vol. 868, p. 293, United States Court of Appeals for the 8th Circuit, 1989 (Missouri).
10 Orthopedic & Sports Injury Clinic v. Wang Laboratories, Inc., Federal Reporter, Second Series, Vol. 922, p. 220, United States Court of Appeals for the Fifth Circuit (Louisiana).
11 RKB Enterprises, Inc. v. Ernst & Young, New York Supplement, Second Series, Vol. 582, p. 814, New York Supreme Court, Appellate Division, 1992.
12 Hospital Computer Systems v. Staten Island Hospital, Federal Supplement, Vol. 788, p. 1351, United States District Court for the District of New Jersey, 1992.
13 Individual testers and programmers who work as employees will rarely be sued for negligence or malpractice, but consultants and businesses that provide programming and testing services can face such suits. If there's enough interest in the question (write me at kaner@kaner.com), I might explore the general question of liability of employees in another article.
14 T.C. Galligan's article, "Contortions along the boundary between contracts and torts," Tulane Law Review, Vol. 69, p. 457, is an interesting discussion. See R.L. Bernacchi, P.B. Frank, & N. Statland, Bernacchi on Computer Law, Section 3-40 for additional examples of malpractice issues.
15 See Harris v. National Evaluation System, Inc. for a representative discussion of this issue. Federal Supplement, Vol. 719, p. 1081, United States District Court for the Northern District of Georgia, 1989.
16 K.S. MacKinnon, "Computer malpractice: Are computer manufacturers, service bureaus, and programmers really the professionals they claim to be?" Santa Clara Law Review, Volume 23, p. 1065, 1983 quotes these (on p. 1078) as part of an argument favoring application of malpractice rules to professionals. E.B. Galler, "Contracting problems in the computer industry: Should computer specialists be subjected to malpractice liability" Insurance Counsel Journal, October, 1983, p. 574 works through the same characteristics on the other side of the argument.


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A company can be described as a legal entity or a body corporate, having perpetual succession and also a common seal, as well as the ability to sue and be sued in its own corporate name. Suffice to state, also that the company upon its incorporation can acquire property in its corporation name. This corporate personality, gives the company the status of a person; albeit artificial, having all the qualities of a normal human being.
It should be noted, that a company is by virtue of the celebrated case of Salomon V. Salomon & Co. (1897) A.C. 22, an entity separate from its members having the capacity to own assets, properties, liabilities, right and obligations incidental to the activities of the company done, giving it responsibilities for all its acts and not its members and/or officers.
The effect of this, is that the members or officers of the company are not in any way under any form of liability for acts done in course of discharging their duties but the company (a legal person) bears all such liability; even though its activities are carried out by human beings whose acts are of paramount importance to the company.
At this juncture, it would not be out of place to state with particular reference to this project work that the acts of directors as officers of the company are also accruable to the company. Be that as it may; the meaning and nature of a director is without a universally acceptable definition, neither could it lend itself an easy definition and a much easier understanding. However, directors can be defined as managers of the company. They are not employed by the company and as such cannot be said to be employees of the company, servants or members there to but they can be seen as officers of the company, for the purpose inter alia of making the company vicariously liable for their acts and omissions while engaged in the business of the company.
In essence, this project work has as its sole aim; the consideration of the liabilities of a company for the acts of its agents, with particular reference and emphasis on the director of a company and it shall also consider, the position of the law, as it relates to the above issue of liability of a director with reference to a company.
The need to keep pace with the realities of commerce and industry and comply with the stipulations of the law may result in the carrying out of commercial activities or business ventures by more than one person. This, when done in the main with a view to profitability, which naturally results from the pulling together of resources; money or money‟s worth by investors, the creation of an entity, a vehicle called the company is underscored.
Although one person can profitably carry on business alone, it is however not guaranteed that the business would long continue especially if he becomes incapacitated or dies1. The threat to the continuity of even the most viable business in an economy as a result of death, inability to raise necessary funds, incapacity of mind or other frailties of the sole proprietor recommend the incorporation of a company which ensures ownership and participation in the management of the business by more than one person for mention. The reasons for the preference of a company to other forms of business organizations hinge extensively on the fact that a company is an artificial person recognized by law. It is within the limits of law detached from those hinge extensively on the fact that a company is an artificial person recognized by law. It has its duties, rights and obligations, which it attends to, through the instrumentality of natural persons. To this end, the law recognizes any company formed in accordance with the law of the land.
The Companies and Allied Matters Act has commendable provisions on how accounts of the company are to be controlled as well as how Directors who manage the affairs could be controlled. Furthermore, liability and penalty have become enshrined statutorily as a means of checking erring directors and officers of a company.
Therefore, this long essay will address the liabilities of a company for the acts of its directors especially on issues relating to the Directors, in carrying out his duties and responsibilities as a company Director.
A company, being a corporate entity, can sue and be sued in its corporate name. As a matter of law, it has separate existence, identity from the brains, minds, and hands operating it to commercial functionality. The law therefore draws a clear cleavage between the company as the artificial person and the natural persons with life and limb who can operate it.
in Delta Steel (Nigeria) Ltd v. American Computer Technology Inc,5Aderemi,JCA, referring to acts imputed to the company, explained as follows „In cases where the law requires the personal acts or faults of an individual so as to make a legal fiction like a company to be liable, the directors, the manager or the managing director are, in the eyes of the law, the directing mind and the will of the company; they control what the company does; the state of mind of this special class of employees is the state of mind of the company‟.
The objectives of this essay is to extensively discuss the duty and study the position of the law as stated in the Companies Allied Matters Acts,2004 on the powers and the proceedings of Directors and their personal liabilities. The duties and responsibilities of directors etc, would be discussed, with a view to letting the directors know the extent to which the company can be liable. This project work would also aim at ensuring that the company is liable for the acts of its directors during the operation of carrying out duties. Furthermore, it is also aims at ensuring the position of CAMA, 2004 as it relates to when the company would be liable for the acts of its Director and why?
This long essay will focus very importantly on the liabilities of a company for the acts of its officers and agents for acting on its behalf, and also instances when the company will not be liable for such acts of its agents and officers.
The long essay will give account of the origin of company law, definition of a company, types, formation and the sources of powers of a company. Reference will also be made to the study of directors of a company, their types, appointment, powers, proceedings as well as their liabilities. Not leaving out the main purpose of the study which is the liabilities of a company on the acts of its directors (both civil and criminal liabilities).
This write up, which has its motivation mostly from lectures delivered by my lecturer on company law as well as the personal interest of the writer, It will be based on primary and secondary sources. The primary source will include the Companies And Allied Matters Act Cap 20 LFN 2004.The secondary source which would include lecture notes, journals and relevant law reports on the subject matter and issues to be addressed in the course of completing the project work.
(b) Those acts of its agent and officers, duly authorized, in respect of which the company is liable on the basis of respondent superior.
Also, J.Olakunle Orojo8; is of the view that when a director contracts as agent on behalf of the company, like any other agent, he is not personally liable on the contract. This is the application of the general principle of agency. So also under those principles, the director may be personally liable where he contracts in such a manner as to assume personal liability. Where the director expressly makes himself liable, no difficulty arises, but he may be liable without express assumption of liability as where he contracts in his own name without disclosing that he is acting for a principal, in which case, he is personally liable to third parties on the contract as in the case of Elkington and Co v. Hunter9. Even where he contracts as a director but without using words that bind the company, he will be personally liable.
Furthermore, Pennington’s Company Law by Robert.R.Pennington10 is of the view that the company will be liable for the acts of its agents and officers if their acts are in utmost good faith i.e. in the benefit of the company and not in the officer‟s interest then the liability will be that of the company‟s.
Considering the fact that the main focus of this essay is company law; it is trite at this time to define the following viz. company, liability, director, act etc.
The word “Company” is generally used to refer to a body or an association of persons with distinct legal personality. Sometimes, however, it is used to refer to a body without legal personality such as a partnership. Therefore, Lord Justice James defines a Company as an association of persons formed for a common object. Lord Lindley in his own contribution defines a company as a voluntary association or an organization of many persons who contribute money or money‟s worth to a common stock and employ it in some trade or business and who shares profit or loss arising therefrom.
Felix C. Amadi11 defines company as a business entity with clear objects made up of a body or association of persons who contribute to the capital of the business with a view to, generally speaking, making profit or in rare cases, where they so choose, pursuing only the promotion of the objects but in whichever case sharing in the loss of the organization.
Learners Dictionary12 simply defines a company as “A number of persons united for business or commerce whose partners are not named in the title”. Black’s Law Dictionary further puts it as a „Joint stock union or association of persons for carrying on a commercial or industrial enterprise, a partner‟s corporation, association or company‟.
Company according to L.C.B.Gower13 implies an association of a number of people for some common objects the number need not be more than two and the interest of one need not be more than nominal as in the so called one man company.
Liability can be described according to the Osborn’s Concise Law Dictionary14 defines liability as subjection to a legal obligation; or the obligation itself. The person who commits a wrong or breaks a contract or trust is said to be liable or responsible for it. Liability is civil or criminal according to whether it is enforced by the civil or criminal courts.
The term director does not have a precise and accurate definition owing to complexities of legal definitions. However, owing to various definitions given to a director, it becomes therefore pertinent to examine this term under three heads, broadly grouped thus by the courts, by statutes and the legal writers.
CHARLSWORTH AND CAIN15 states that since a company has no physical but only a legal existence, it becomes imperative to entrust the management of its affairs to human instrument who are called “directors”, whose exact position in relation to the company is rather hard to define. Furthermore, they asserted that directors are not servants of the company, but that they are rather managers who in some certain circumstances may be said to be in a position of quasi trustees and agent of the company. To buttress this point Lord Johnstone’s dictum was cited in Milintock v. Campbell16 where he stated that, “the directors‟ functions are in one vein those of an agent and in another, those of a trustee” but the former predominates over the latter.
Vincent Power and Smith17 hold the view that a director, as the name implies, is one who directs. Although, they used short Oxford dictionary as basis of their definition offered therein is a member of a board appointed to direct the affairs of a commercial corporation.
Lord Cranworth L.C. in Aberdeen Railway Company v. Blaike Bros.19 stated thus, the directors are a body to whom is delegated the duty of managing the general affairs of the company. However, the most instructive definition of director is one offered by Sir Jessel M.R. in Re Forest of Dean Coal Mining Company20 thus Directors have sometimes been called trustees or commercial trustees and sometimes they have been called managing partners. It does not matter what you call them so long as you understand what their true position is, that they are commercial men managing a trade for the benefit of themselves and all other shareholders of the company.
The law recognizes that although a company is a living person, it has no natural body or organs, thus, an artificial person. As an artificial person, a company can only act through the instrumentality of human beings who constitute the organs, officers and agents of the company. In Trenco (Nigeria) Ltd v. African Real Estate Ltd25, The Supreme Court recognized this position by observing „…a company, although having a corporate personality is deemed to have human personality through its officers and agents.‟ It is no doubt therefore, that for the company to carry out its activities, it needs a living person to act on its behalf. The acts of such persons during the operation of carry out its functions or duties, where liability comes to play such company would be liable for the act as if he carried out the act himself. As long as the person i.e. director can prove the act was done in the process of carry out his duty.

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I’m on a state between sleep and consciousness, so forgive me if (or when) I will make or have made mistakes in this post. I just want to set things straight before I finally pass out. I still keep on testing different download managers, and I don’t know why. Somehow I’m hoping that my Internet speed will be boosted, even if I know that it won’t and it couldn’t. I tried an updated version of Download Accelerator Plus Premium again. It still gave me the same results: it couldn’t handle links from Rapidshare properly and failed to handle other URLs as well, so I uninstalled it again. For something that expensive, I had expected the program to perform a little better.
I also tried a program which supposedly upgraded the BitTorrent Protocol. It was known as Warez Pro. When I tried download with the program, however, it just hung up on me and ultimately froze. It was stupid, and I uninstalled it with full force. Among the week’s trials the only program I found worth enough to keep was Star Downloader Pro. I think it was last updated on 2004; nevertheless, it still remained a robust program and a good one at that. I don’t know why I’m so addicted to testing software once again; I thought I had gotten over this, but it seems like I haven’t.
Anyway I do hope people would try the program I helped figure out, even if the program is quite old: I’m talking about NetPumper v. 1.0 with Banner Killer, the program I featured the previous post. I hope I could get over this hump. I’m glad that I made this other blog, though, because I wanted to avoid further corrupting my anime blog with technological material such as this.
I was wondering whether I was going to post on my other blog or in here. I haven’t definitively decided (I’m still vacillating), but I decided to post here because the title of both the blog and the site reflect my obsessios: this obsession is merely a fool’s inebriation (with nostalgia); yet it is also a dissemination of meanings. Compared to The Crescent Moon, writing here seems more relevant.
It was purely by accident that I rediscovered the fun and beauty of download managers. After seeing a download for Download Accelerator Pro, I recalled the enjoyment I had in the past playing with those download managers. With that I recalled the different programs I tried in the past and sought once more to enjoy them and their capabilities as download boosters.
I first remembered NetPumper Pro. About three years ago I utilized the program to download on Anti-Leech sites, a proprietary technology by the same creators of NetPumper to prevent leechers. It was useful as a technology, but it rapidly became infamous because the plug-ins for Anti-Leech also were conductors of spyware and adware. At times, the price to pay for hassle-free anime downloading was simply too much until it came to a point where no one wanted to use Anti-Leech downloads any longer. It was also to the downfall of the software that the BitTorrent protocol rapidly came to rise and dominate the distribution scene.
I never forgot about how bad the program was and how its only redeeming factor was that it was able to download from Anti-Leech sites, but I also loved the program in a perverse way. Having remembered about it, I hastened to download it and use it. The Pro version was good, especially so despite its age, but what was astounding was the very first version of the free version: by this, I pertain to NetPumper v. 1.0. I tracked the different implementations of people to escape the bane of adware, and in crack sites I found there were three. One were cracks of older Pro versions; the two were patches and fixes to two NetPumper versions, and these were v. 1.0 and v.1.10.2.
The patch for v.1.10.2 worked, but it did not hinder the display of pop-under advertisements and Cydoor and WhenU were still installed. It did well to prevent the banners within the program itself, but it didn’t solve the rest of the adware problems. However, the patch for v. 1.0 totally worked: the banners were totally removed from the interior of the program, and with the deletion of four useless files spyware no longer was a problem: I’ve used the program for more than a week and I’ve yet to see a pop-under or any form of advertising from any site while using the program. While the Pro version was good because it performed despite its age, NetPumper v. 1.0 (with Banner Killer) worked like a charm. Despite being seven years old, it still worked well with my Internet connection and maximized my bandwidth.
As it stands, DownThemAll is currently the best among all the download managers I’ve managed and tried, while NetPumper v. 1.0 with Banner Killer was the most unexpectedly stable and good. I’m going to keep both of them truly because they exceeded my initial expectations and are both free programs at that (!).
To utilize NetPumper v. 1.0 with Banner Killer without fear and reprehension, follow the instructions below.
1. Download the .zip archive from the link provided.
2. Open and install netpumper-1.0-setup.exe.
4. Extract BannerKill.exe (found in the archive as well) into the NetPumper folder, and open. (If you’re an administrator be sure to ‘run as administrator’ for the program to work.) Open the program, and click OK.
5. Open NetPumper. If everything’s followed correctly, the program will open as NetPumper – Banner Free.exe. There will be no more adware or spyware and the program will run as desired.
Please reply if you encounter any problems. In my week’s use of the program it has been top-notch and clean.
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Art. 1. The quality audit for accounting services provided by the members of the Body is conducted according to the Regulation regarding the quality audit for accounting services and has as a main goal the observance of the professional standards and pronouncements and of the National Code of Ethics for professional accountants issued by CECCAR in order to meet the needs of the public interest.
Art. 2. Starting with the quality audit for accounting services provided in 2008, in order to encourage the members to observe the professional standards and pronouncements and the National Code of Ethics for the professional accountants of Romania, a „quality certificate”, according to the attached model, is being issued for the audited practices and companies – members of the Body – that have received the qualification A following the quality control.
Art. 3. The quality certificate for accounting services is issued by a Decision of the Standing Board of the Superior Council, based on the report elaborated by the Special Department of the Body, which is based on the quality audit file that was provided by the auditors.
Art. 5. The quality certificate for accounting services may be withdrawn or cancelled at the request of the branch or of the Department supervising the observance of professional pronouncements and the quality audit within the Body, if the operating license for that practice or company is withdrawn or cancelled and also if during a subsequent control that member has received the qualification D or E.
Art. 6. The management and inventory of the quality certificates for accounting services is ensured by the Department supervising the observance of the professional pronouncements and the quality audit within the Body.
Art. 7. The quality certificates for accounting services are printed unitarily and are subject to special registration through the care of the General Secretariat of the Body.
Art. 8. The Department for supervising the observance of the professional pronouncements and the quality audit within the Body shall ensure the observance of the present pronouncements.
Art. 9. On the effective date of these pronouncements, the Pronouncements no. 10043/26.07.2004 concerning the certification of the quality audit for accounting services, that were approved through the Decision of the Standing Board no. 04/113 from 31 July 2004, are being recalled.
* Approved through the Decision no. 08/194 from the 1st of July 2008 of the Standing Board of the Superior Council of the Body of Licensed and Expert Accountants ofRomania.

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Before: BROWN, BOGGS and NORRIS, Circuit Judges.
Randolph Muhammad Talley Bey appeals from the judgment dismissing his civil rights suit filed under 42 U.S.C. § 1983 as frivolous within the meaning of 28 U.S.C. § 1915(d). The case has been referred to a panel of the court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination, this panel unanimously agrees that oral argument is not needed. Fed. R. App. P. 34(a).
Randolph Muhammad Talley Bey is a Michigan inmate. He filed a civil rights action against Diann Louise Fox in which he sought monetary damages and other relief for an alleged infringement of his First Amendment right of access to the courts. The district court initially ordered the complaint dismissed as frivolous under Sec. 1915(d).
The court construed a subsequent document as a motion to reconsider and directed Talley Bey to submit a short statement of the operative facts underlying his claim. Talley Bey thereafter filed a notice of appeal and submitted a series of lengthy, rambling pleadings. The court found that these pleadings were not responsive to its earlier directive and denied the motion to reconsider. Talley Bey filed a second notice of appeal that is the vehicle by which the present appeal is before the court. Talley Bey is proceeding without benefit of counsel and has briefed the issues.
Talley Bey sought damages and other relief from a Michigan resident, Diann Fox, for her alleged improper receipt and retention of some of Talley Bey's legal documents pertinent to his "multimillion" dollar action against an unnamed entity. Fox is said to be demanding $2,000 from Talley Bey for the return of the documents. The complaint contains little else in the way of operative facts, Fox's status and relationship to Talley Bey or the exact nature of the "multimillion" dollar case.
The district court noted that the complaint does not contain any information from which a federal civil rights case may be distilled and concluded that it should be dismissed as frivolous pursuant to 28 U.S.C. § 1915(d). Talley Bey responded within 10 days with a motion to amend the complaint which the district court construed as a Fed. R. Civ. P. 59 motion to reconsider. The court clearly directed Talley Bey to set forth the operative facts of his complaint in a supplemental pleading, not to exceed 10 pages in length, or have his motion to reconsider denied.
Talley Bey responded with a series of rambling, incoherent pleadings amounting to more than 50 pages. The district court concluded that Talley Bey failed to comply with the earlier directive and, consequently, denied the motion to reconsider. Talley Bey brought the present appeal from this order.
The record supports the district court's characterization of the action as frivolous. An indigent plaintiff who states an arguable claim is entitled to service of process even though it appears that he may not ultimately prevail. Neitzke v. Williams, 490 U.S. 319, 329-30 (1989). A complaint may, however, be dismissed as frivolous under 28 U.S.C. § 1915(d) if it is premised on a non-existent legal interest or a delusional factual scenario. Id. at 327-28. In this situation, the complaint may be dismissed without service of process as lacking an arguable basis in law or fact. Id. at 325. A decision to dismiss a complaint for this reason will not be disturbed absent an abuse of discretion. Denton v. Hernandez, 504 U.S. 25, 33 (1992). An abuse of discretion exists when the reviewing court is firmly convinced that a mistake has been made. In re Bendectin Litigation, 857 F.2d 290, 307 (6th Cir. 1988), cert. denied, 488 U.S. 1006 (1989).
Talley Bey's complaint and accompanying documents reflect that the present claim for relief is premised upon a non-existent legal interest. A defendant's liability under 42 U.S.C. § 1983 must be fairly attributable to the state. Rendell-Baker v. Kohn, 457 U.S. 830, 838 (1982). That is, the challenged action must have been taken under color of state law. NCAA v. Tarkanian, 488 U.S. 179, 191 (1988). Talley Bey's claim for relief is grounded in his assertion that defendant Fox, allegedly affiliated with the Michigan Department of Corrections, unlawfully obtained his legal documents and that her connection with that Department provides the necessary nexus simpliciter for Sec. 1983 liability. A careful reading of his rambling pleadings shows, however, that Fox is said to have obtained the documents in 1990 and 1991 in her capacity as a private legal secretary while apparently engaged to be married to Talley Bey. Fox is not alleged to have joined the Michigan Department of Corrections until April 1993. It is clear that, even according Talley Bey's pleadings a generous interpretation, there is absolutely no indication that he was deprived of a constitutional right by a "state actor." This appeal lacks merit.
Accordingly, the district court's judgment is affirmed. Rule 9(b) (3), Rules of the Sixth Circuit.