Some may think that 2020 was the year of the world changed by COVID-19. However, we would like to pivot and reframe 2020 as the year that Canada's copyright laws evolved. With USCMA's legislative changes implemented by Parliament and interesting jurisprudential interpretations of issues surrounding fair dealing, 2020 resulted in a new normal for copyright law in Canada.

1) COPYRIGHT LEGISLATION

In 2020, the notable legislative changes to the Copyright Act (the "Act") came in the form of: (a) Bill C-209, a Parliamentary response to the Supreme Court of Canada's decision in Keatley Surveying Ltd. v. Teranet Inc., 2019 SCC 43 ("Keatley"), which we reported on in 2019; and (b) the Canada-United States-Mexico Agreement Implementation Act, S.C. 2020, c. 1, which received Royal Assent on March 1, 2020.

In both our 2018 and 2019 Copyright year-in-review articles, we discussed the government's legislative reviews of copyright, specifically the changes to copyright as a result of the ratification and implementation of USCMA, and the consultations by, and recommendations put forth by the Standing Committee on Industry, Technology and Science ("INDU") and Canadian Heritage. For your ease of reference, we have reproduced the recommendations made by (c) INDU and (d) Canadian Heritage below.

A – Bill C-209

On September 23, 2020, Bill C-209 An Act to amend the Copyright Act (Crown copyright) was introduced in response to the Supreme Court of Canada's decision in Keatley. Bill C-209 aims to amend the Act to clarify that no copyright subsists in any work that is, or has been, prepared or published by or under the direction or control of Her Majesty or any government department, without prejudicing any rights or privileges of the Crown. Mr. Masse, the Bill's sponsor, stated during the first reading that "the government has a closed door when it comes to government publications, research and a number of published periodicals. This costs taxpayers a significant amount of money. It is against open government and is based upon a law that Canada enacted in 1921, which was based on a law from 1911 in the U.K.". Mr. Masse's objective with this legislative amendment to s. 12 of the Act is to save taxpayers money providing for "open government for educators and innovators, and it would bring accountability" and "bring Canada in line with so many other countries that have information available for business or civil society for national advancement." The Bill does not speak to moral rights of authors, and with its stated goals, it would strip the Crown of copyright in any works prepared or published by or under the direction or control of the Crown, not requiring any amendments to the moral rights provisions of the Act.

In our review of Keatley, we noted the spectre of possibility that if left unchecked by Parliament, as Justice Abella (writing for the majority) stated in her decision, Crown copyright could end up applying to more works than it should. While it is reasonable for the Crown to own copyright in its works (as s. 12 of the Act is written and interpreted by the Supreme Court of Canada) these changes could result in copyright claims for works that the Crown would never have thought to claim, including works of independent contractors in the creative industries, as well as affecting copyright terms, namely either: (1) shortening copyright terms in Crown copyrights to 50 years from the end of the year in which the work was first published, instead of 50 years from the end of the year in which the author died: or (2) lengthening copyright terms for unpublished works prepared under the direction or control of government, since the term of Crown copyright starts with the date of the first publication of the work. Furthermore, given that s. 12 is a deeming provision, meaning that copyright "belongs" to the Crown, rather than being "assigned" or otherwise "transferred", the government is in a position to expropriate the ownership of copyright by virtue of its publication of them. Not addressed in Keatley was the issue of moral rights, which would not be waived by the author of the work without a written waiver of such. If Bill C-209 becomes law, it would obviate any issue arising with the Crown owning copyright in works prepared and/or published under its direction and control and the moral rights of such works' authors.

B – Canada-United States-Mexico Agreement (CUSMA/UCSMA)

On March 13, 2020, the Canada–United States–Mexico Agreement Implementation Act S.C 2020, c.1 (the "CUSMA/UCSMA Act") received Royal Assent. The CUSMA/UCSMA Act implements the Agreement between Canada, the United States of America, and the United Mexican States, as amended by the subsequent Protocol. The Agreement came into force on July 1, 2020.

The CUSMA/UCSMA Act introduces the following amendments to the Act:

  • The term of protection of copyright is extended in some situations to the life of the author plus 70 years, and in the case of anonymous, pseudonym, and cinematographic works, the term has now been extended to the earlier of the end of 75 years following the end of the calendar year in which the first publication occurs and 100 years following the end of the calendar year in which the work was made:

    • sound recordings (ss. 23(1) of the Act);

    • anonymous and pseudonymous works (including works of joint authorship) (ss. 6.1 and 6.2 of the Act)); and

    • cinematographic works (s. 11.1 of the Act);

  • Changes to ss. 6.1, 6.2, 11.1, 23(1) and 23(1.1) of the Act, do not revive copyright or create a right to remuneration in any work, performer's performance fixed in a sound recording or sound recording in which the copyright or the right to remuneration had expired;

  • Subsection 42(3.2) of the Act is a new criminal offence added relating to the removal or altering of rights management information (subject to an exception for a person who is acting on behalf of a library, archive or museum or an educational institution);

  • Section 44.01 of the Act dealing with detention of copies by a customs officer has been amended to delete the exception relating to copies in customs transit control or customs transshipment control in Canada; and

  • Canada's Criminal Code was also amended to add a new offense relating to trade secrets.

C – Standing Committee Report: The Standing Committee on Industry, Technology and Science ("INDU") Statutory Review of the Act

  • We reported on INDU's recommendations in 2018 and in 2019, and it remains to be seen whether any of them will be implemented in a further amendment to the Act, including to provide clarity around ownership of computer-generated works (e.g., works created with the assistance of artificial intelligence (AI))and amend s. 29 of the Act to provide that the list of allowable fair dealing purposes that is illustrative, as opposed to exhaustive.

We will continue to wait and see if the recommended legislative and policy changes will be made into law. Stay tuned!

D – Standing Committee Report: The Standing Committee on Canadian Heritage ("CHPC") Statutory Review of the Act: "Shifting Paradigms"

The CHPC conducted its own review of the Act and those creative industries principally affected, including the music, film & television, writing & publishing and visual arts industry. The major themes covered were: (1) the increasing value gap between creatives, distributors and others; (2) the decline in the artistic middle class; (3) the impact of technology on creative industries; (4) the changes in consumer culture; and (5) indigenous perspectives on copyright.

For a full discussion on the issues, a copy of the report can be accessed here. As with INDU's recommendations, we continue to wait and see if Heritage's recommended legislative and policy changes will be made into law. Stay tuned!)

E – Time Limits in Respect of Matters Before the Copyright Board Regulations, SOR/2020-264

On December 4, 2020 Time Limits in Respect of Matters Before the Copyright Board Regulations (the "Regulations") came into force. The regulations address delays in the Copyright Board decision making processes. As a result royalties determined by the Board were often payable retroactively creating a number of challenges for rights holders and creators (as detailed in the Regulatory Impact Analysis Statement released on April 27,2019). The Regulations specify deadlines by which the Board must render final decisions in its proceedings:

  • within 12 months after the day the parties present their final submissions in a tariff proceeding where a hearing on the matter is held; and

  • in any other case, before the day on which the effective period of the proposed tariff begins in a tariff proceeding with no hearing.

 

2) COPYRIGHT JURISPRUDENCE

Standing to Sue & Copyright Infringement

Lickerish, Ltd. v. Airg Inc., 2020 FC 1128

The Plaintiff, a UK-incorporated syndicated photography agency, brought an action under the Federal Court's simplified procedure for the Defendant's unauthorized use of two photographs of Meghan Markle on its website. The Plaintiff argued that it had entered an exclusive agency contract to act on behalf of the photographer. The Court held that the Plaintiff lacked standing to bring the action as it provided no evidence that it either authored or owned the copyright in the two photographs, including by way of assignment or exclusive license.

The Plaintiff provided no direct evidence from the photographer regarding authorship or the supposed contract with the Plaintiff, and instead relied on an affidavit from the Plaintiff's Director. The Court found the Plaintiff's evidence amounted to inadmissible hearsay and was not satisfied that any specific or general hearsay exception applied. Consequently, the Plaintiff lacked standing as it had not established that the photographer in fact owned the copyright at issue, or that the Plaintiff received an exclusive license from the owner of the copyright.

Interestingly, the Plaintiff attempted to introduce into evidence a US Certification of Registration under the certified copies provision of the Canada Evidence Act (s. 24). The Court found the evidence inadmissible as they were not in fact certified copies, and in any event, the Plaintiff provided no authority to suggest that s. 24 of the Canada Evidence Act applied to foreign documents. The Court also found that the Plaintiff failed to provide any authority that suggested s. 53 of the Act, which provides that the register of copyrights is evidence of the particulars entered in it, applies to a foreign certificate of registration.

Notwithstanding the findings on ownership, the Court proceeded to find that even if the photographer was the copyright owner, the Plaintiff still failed to establish the existence of an exclusive licence. The licence agreement in question was mired with problems: it was supposedly countersigned by the photographer by email but that email was not produced; the photographer's name appeared nowhere in the licence agreement; the agreement was not attached as an exhibit to an affidavit; and there was no evidence that the photographer in fact signed the agreement (which was blank).

The Court also considered the issue of infringement. The Plaintiff's main infringement evidence was based on website screen captures. To prove authenticity of the captures, the Plaintiff relied on the statutory presumption contained in ss. 31.3(b) of the Canada Evidence Act, which provides that, in the absence of evidence to the contrary, the integrity of an electronic document system by or in which an electronic document was recorded or stores is proven if it is established that the electronic document was recorded or stores by a party who is adverse in interest to the party seeking to introduce it. The Court found the screen captures inadmissible. In particular, the presumption in ss. 31.3(b) did not apply as the captures were not taken by a party adverse in interest to the Plaintiff. There was no evidence of who recorded and stored the original screen captures, or whether the captures accurately reflected what appeared on the Defendant's website when the captures were taken. The Court also found that even if the screen captures were admissible, the Plaintiff failed to demonstrate a "real and substantial connection" between the Defendant's website and the jurisdiction of Canada. There was no evidence that the website was controlled by the Defendant, that the website was hosted on a server in Canada, or that anyone accessed the Defendant's website from within Canada.

Interlocutory Injunction

Equustek Solutions Inc v Jack, 2020 BCSC 793

This case stems from a complex, lengthy litigation where Equustek (the Plaintiff) claimed an intellectual property infringement against Datalink (represented through Defendants including Morgan Jack). Equustek alleged that Datalink re-branded Equustek's goods and sold them as competing products using the plaintiffs' trade secrets. This dispute resulted in a number of proceedings including several interlocutory injunctions which required Google to "de-index" Datalink's websites which would remove all links to Datalink-affiliated websites from its search engines.

 This decision by the Supreme Court of British Columbia asses the merits of the underlying action which brought a number of claims against the Plaintiff, in civil conspiracy, passing off, breach of confidence, breach of contract, unjust enrichments and various breaches under the Copyright Act.

The plaintiffs claimed the following violations of the Act: 1) that the Defendants used, altered and reproduced Equustek's DL3500 manual to create the GW1000 manual by deleting references to Equustek and its products and replacing them with reference to Datalink and its product; 2) the Plaintiffs claimed the same with Equustek's DL3500 application note. The trial judge found that the similarities between the Plaintiff's manual and note were obvious, and that certain Defendants had knowingly and intentionally copied a vast quantity of Plaintiff's manual and application notes to save time and effort.

On various findings for the Plaintiff the court ordered damages of $1million CAD based on an assessment of Equustek's loss of sales prior to trial. The court stated that the plaintiff's claim for future losses and/or injunctive relief would be determined at a post judgment hearing. Equustek has filed for appeal, we will continue to wait and see if the trial judge's finding for breach of copyright with be upheld.

While the SCC's decision to grant a worldwide interlocutory injunction against Google Inc. in Google Inc v Equustek Solutions Inc, 2017 SCC 34 was unprecedented, this decision is significant as it highlights the potential and extent of damages for lost profits for vendors when in the context of online intermediaries such as Google.

Facts and Information

Albo v The Winnipeg Free Press et al, 2020 MBCA 50

The Plaintiff, Dr. Albo, appealed a judgment of the Manitoba Queen's Bench that dismissed his action for damages against The Winnipeg Free Press for copyright infringement and breach of contract. The appeal was dismissed with costs.

As we reported in 2019 regarding the lower court judgment, the Plaintiff, Dr. Frank Albo, had a prior working relationship with the Defendant newspaper. The parties had collaborated on a series of articles about the history of Winnipeg that were later published as a book. Dr. Albo then agreed to consult for research on a new series of articles, to be written by a staff writer at The Press. The articles were expressly not intended for book publication. However, after the new series of articles was released, The Press was approached by a third party with a cost-sharing proposal to publish the articles as a book (the "New Book"). Dr. Albo initiated a claim for copyright infringement and breach of contract, stating that the New Book reproduced a substantial part of Dr. Albo's research, and that this was outside the scope of his consulting agreement with The Press. The lower court held that while Dr. Albo might have copyright in certain compilations of the products of his research, this did not allow him to control the use of any particular historical facts included in his research compilations. The lower court dismissed the action, also noting that copyright protection in Canada is assessed on the basis of originality and an author's skill and judgment, and not the "sweat of the brow" standard.

The Appellant did not appeal the lower court's finding that there was nothing in the New Book in which the Appellant could claim copyright. Rather, the appeal centered on three issues: (1) contractual interpretation of the consulting agreement between Dr. Albo and The Press; (2) whether the lower court adjudicated the contract claim independent of the copyright claim; and (3) whether The Press performed the contract in good faith. The Appeals Court found the Appellant failed to established that the lower court had made a palpable and overriding error on each issue, and dismissed the appeal.  

Applicable Law & Time Limitations

Trout Point Lodge Limited v. Automattic Inc., 2020 NSSC 212             

This motion for a summary judgement was brought by the defendant in response to an action commenced by the plaintiff in 2012. The claims brought before the Supreme Court of Nova Scotia included promissory estoppel, copyright infringement, fraudulent misrepresentation, breach of agreement/contract and breach of duty of honesty in contractual dealings.

The defendant, Automattic Inc., owns and operated a blog web-hosting service, WordPress.com (WordPress), that hosts blog content on its servers located in the United Sates, providing a platform for others to create and post blog content. The plaintiff is a restaurant and resort, True Point Lodge Limited, and its principals, who alleged that various entities and content on blog hosted by WordPress infringed the Plaintiff's copyright.

With respect to the claim of copyright infringement, the Plaintiffs asserted the Act applied, while the defendant argued that US copyright law applied. Ultimately on the issue of applicable law the court determined that the defendant was exempt from liability under either jurisdiction.

In determining whether to grant the summary judgment and dismiss the Plaintiffs' claims against the defendant for copyright infringement the court considered the following issues:

  • Is Automattic an Internet Service Provider and pursuant to the provisions of the Canadian and U.S. copyright  legislation, thereby, immune for any copyright  infringement by the  blog creator?

  • Should the Plaintiff's copyright infringement claims against Automattic be dismissed because the applicable limitation periods have expired?

  • Should the claims of copyright infringement be dismissed as an abuse of process?

The summary judgment with respect to the Plaintiff's claims of copyright infringement against the defendant were denied for the following reasons: 1) The court held that Automattic did  not  advance any arguments that there was an issue with ownership in relation to the Trout Point Lodge photos; 2) as the choice of law question remained to be determined, so did a determination on the applicable limitation period; and 3) the Defendant did not meet the burden of proof with respect to the assertion that the Plaintiff's claims of copyright infringement were an abuse of process.

Copyright Infringement; Importance of Copyright Assignments/Waiver of Moral Rights

Derek Mailhiot (dba The Junk Guy) v. 1095148 B.C. Ltd., 2020 BCCRT 945

In this British Columbia Small Claims Court matter, the Applicant claimed the Respondent used his logo in commercial advertisements without his permission, thereby infringing the copyright in his business logo. The Applicant sought $5,000 for the alleged infringement.

The case centered on the issue of copyright ownership. The Applicant retained the services of a graphic designer to create the logo. The Court found that some of the logo's design elements were derived from an "iStock" photo, but it was unclear from the evidence whether the designer held copyright in the "iStock" elements. As for the logo's original design elements, the Court found that the designer was the author and first owner of the copyright in the logo under s. 13 of the Act. However, there was no evidence that ownership ever transferred to the Applicant. Consequently, while the Court found that the Respondent had "substantially copied" the logo, the Applicant's claim was dismissed for lack of standing.

This case highlights the importance of always obtaining a copyright assignment and moral rights waiver from any third party creating a logo for one's business. In Canada, unlike in the U.S., there is no corporate authorship outside of the employer-employee context. Even though an employer owns the copyright in works made during the course of employment, the Act does not provide for an automatic waiver of the employee's moral rights. Thus, it is prudent to ensure that all employee agreements, as well as all independent contractor agreements, always have a copyright assignment and waiver of moral rights from the author of the work to ensure that the person or entity engaging the author for the creation of that work owns the copyright and won't have to contend with any moral rights claims from the author.

Copyright Infringement; Costs

Drouin (Succession de Côté-Drouin) c. Pépin, 2020 QCCS 1424

This matter was subject of a split proceeding, where the issue on infringement was heard first and a subsequent hearing would be held on damages, if necessary. With respect to copyright infringement, the trial judge declared that some of the works in question, the National Dictionary of French Canadians (volume 3) and the family genealogies produced by Gabriel Drouin are original works within the meaning of the Act and that the Estate of the late Jeanne Côté-Drouin holds the related copyright, and ordered the defendants to cease all reproduction, communication to the public and exploitation, in whole or in part, of these works.

This decision pertains to the damages to be awarded and the legal costs. The Plaintiff chose to claim statutory damages, which under the Act can range from $500 to $20,000 per work infringed, except that the court may reduce the damages to $200 if it is convinced that the Defendants were not aware and had no reasonable ground to believe that they were infringing copyright. Observing the conduct of the Defendants (e.g. they were convinced that they had purchased copyright in the works), the court concludes that the Defendants acted in good faith, and therefore held that they were entitled to a reduction of the statutory damages to $200 per work. Moreover, under the Act, the court, may further reduce the amount with respect to each work if the award even of the minimum amount would result in a total award that would be grossly out of proportion to the infringement. In this case, the court awarded $200 for copyright infringement in the National Dictionary of French Canadians (volume 3) and $25 for each of the family genealogies, for a total of $31,225. The court, however, did not order punitive damages since there was no malicious intent from the part of the Defendants. The court further ordered the Defendants to destroy copies of the infringed work as requested by the plaintiff.

Interestingly, the Defendants had filed a counterclaim alleging that the Plaintiff's action was abusive, and requested $225,000 in damages.  The court found that their counterclaim amounted to unnecessary time and efforts spent by the plaintiff to defend it and awarded $8,880 as damages to the plaintiff for the extra costs that they suffered in connection with this counterclaim.

Biofert Manufacturing Inc. v. Agrisol Manufacturing Inc., 2020 FC 379

In this action for copyright and trademark infringement, the Plaintiff, Biofert Manufacturing Inc., was a subsidiary of a larger company that acquired the assets of a bankrupt competitor that included various intellectual property relating to the "BioFert" name including trademarks, copyright in a logo, along with all domain names and associated email addresses. The Plaintiff alleged infringement of its trademarks and copyright when the Defendants began to use the "BioFert" name and trademarks in conjunction with their business. The Plaintiff sought declarations, injunctions, costs, and damages, including statutory damages and punitive damages under the Act. This summary focuses on the copyright aspects of the decision.

The Plaintiff claimed it owned copyright in a "BioFert" logo and the "About Us" section of the BioFert.ca website, both alleged to have been infringed. Despite conflicting evidence on who was the original author of the logo, the Court was satisfied that ownership of the copyright in the logo was transferred to the Plaintiff by way of a proper assignment. As for the "About Us" page, the parties agreed that the Plaintiff owned copyright content on an older BioFert.net website. The Court found the wording on the older website near identical to the page later featured on the Plaintiff's website, and like the logo, copyright in the "About Us" page was transferred to the Plaintiff when it acquired the assets of the bankrupt competitor.

On the issue of infringement, the Court found that the logo used by the Defendant on display materials, podiums, business cards, pamphlets, and a catalogue, was substantially similar to that of the Plaintiff, amounting to infringement under s. 27 of the Act. As for the "About Us" content on the Defendants' website, the Court found it was near identical to the content owned by the Plaintiff. While the Court acknowledged "slight differences" in the wording, it found these "minor differences...do not affect the finding of copyright infringement". This is helpful to illustrate that minor changes to another's copyright protected work will not insulate the user from a possible finding of copyright infringement.

The Court also considered whether the individually named Defendants should be held personally liable for the infringing conduct of the corporate Defendants. In doing so, it applied the Mentmore test, namely whether there are "circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his/her relationship to it but the deliberate, wilful, and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it". The Court found that the actions of one of the four individual Defendants gave rise to personal liability for the conduct of the corporations for his "knowing or reckless course of conduct that was likely to constitute infringement".

As for remedies for copyright infringement, the Plaintiff elected statutory damages at the upper limit of $20,000 per infringement. While the Plaintiff argued that the bad faith of the Defendants supported the highest maximum statutory damages award, the Court found that precedent supported finding the award to be on the lower end of the scale. The evidence showed that the Defendants took down the content upon receipt of the Plaintiff's cease and desist notice. Moreover, the Defendants' website underwent maintenance that resulted in the copyright protected content being hidden from view. Noting the short period of time during which the copyright infringement occurred, the Court awarded the Plaintiff $500 per each of the two acts of infringement for a total of $1000. The Court also found that facts of the case did not merit punitive damages. The Defendants' infringement, although calculated, resulted in minimal profit at best during the short period of copyright infringement, and the Defendant had complied immediately with the cease and desist notice.

The decision highlights two important issues: (1) the importance of ensuring that a purported IP owner actually owns the IP at issue; and (2) the importance of assessing the possible scope of remedies before commencing a claim for copyright infringement. Here the Court found that the Plaintiff owned the copyright in the logo and "About Us" content by virtue of the sale of all intellectual property as the term was used in the asset sale agreement. As well, the Plaintiff had a copyright assignment from the graphic designer who created the logo. It is crucial that such a copyright assignment always be obtained when engaging a third party to create a logo, character mark, design mark, or sound mark to be registered as a trademark to ensure complete ownership and clean chain of title and complete intellectual property ownership of the mark, which includes the copyright therein. Secondly, the damages awarded for trademark infringements ($81,000) far exceeded those recovered for copyright infringement ($1000). It generally makes sense to claim copyright infringement in tandem where a trademarked logo has been infringed, as copyright may subsist in the logo. However, if the Plaintiff's claim in this instance was limited to copyright infringement, it may not have been worthwhile to commence the claim. It is important to engage in a cost benefit analysis prior to pursuing a copyright infringement action to determine if the claim is worth the cost and time.

Biofert v. Agrisol, 2020 FC 501

Having found the Defendants liable jointly and severally for trademark and copyright infringement in Biofert Manufacturing Inc. v. Agrisol Manufacturing Inc., 2020 FC 379, this case considered the Plaintiff's costs. The Plaintiff sought $183,147.33 for their costs, or $915,945.83 in the alternative reflecting anticipated costs and disbursements less costs already awarded. The Court noted that the Plaintiff's costs far exceeded what was recovered in damages at trial ($82,000), and ultimately awarded the Plaintiff a lump sum of $80,000 for costs. This further reaffirms the importance, whenever possible, of undertaking a cost benefit analysis as part of a litigation strategy.

Copyright in Architectural & Engineering Drawings & Plans

1422986 Ontario Limited v. 1833326 Ontario Limited, 2020 ONSC 1041

The Court was tasked with determining whether there was copyright infringement of the Plaintiff's architectural designs and drawings. The Plaintiff was hired by the Defendant, Syncor Contracting Limited ("Syncor"), to design townhomes. Several years later, Syncor hired another architect (Gammond, another Defendant) to design a different project. The Plaintiff claimed that Syncor and Gammond copied its original design prepared for Syncor, thus infringing its copyright. The Plaintiff sought declaratory relief, an injunction, statutory and punitive damages and other remedies for the alleged copyright infringement. While the Defendants admitted that copyright subsisted in the architectural drawings, they denied having infringed the Plaintiff's copyright. They argued that the "Gammond design and drawings were sufficiently different from those of the Plaintiff to warrant a finding that there was no infringement", and that to the extent they bore any similarities to the Plaintiff's designs, such similarities are common elements to designing townhomes. It is well-established in copyright law that scene a faire or tropes specific to a creative work are not protected by copyright, and this has been reiterated in copyright jurisprudence in the architecture industry. The Court rejected the defence and found that copyright in the Plaintiff's work was infringed and awarded $6,500 in statutory damages.

While the existence of copyright was not in dispute, the Court stated that house designs and drawings have been recognized as being subject to copyright protection. The Court also reaffirmed that for an architectural work to be protected by copyright it need not be unique—it may contain previously used elements common to a particular type of design, provided that the architect, in compiling and arranging these elements engage their skill and judgment in doing so, the work may be afforded copyright in the whole design (not in the individual elements).

As the Defendants conceded copyright subsisted in favour of the Plaintiff, the sole issue centered on infringement. The Court reiterated that the Plaintiff has the onus to prove a copyright of the work by the Defendant, or a substantial part thereof. As the Plaintiff conceded the Defendants' works were not an exact replica of its works, the question for the Court was whether the Defendants' drawings were "substantially the same". In citing Cinar Corporation v. Robinson, 2013 SCC 1168 ("Cinar"), the Court stated that what constitutes a "substantial part" of the work is a question of fact, determined in relation to the originality of the work that warrants protection under the Act. The Court stated that "[u]sing architectural plans as a basis to prepare a version that is substantially the same but in a modified form is a breach of copyright". Conducting "a holistic analysis" as directed in Cinar, the Court found the Defendants' works to be substantially similar to those of the Plaintiff. While there were differences between the designs, they were strikingly similar, with both parties' experts agreeing on various similarities.

Having found a substantial reproduction, the Court proceeded to reject the defence of independent creation. It was clear that the Defendants had access to the Plaintiff's work given the nature of their prior working relationship. The Defendants argued their design was not a copy but rather "a reflection of the fact that there are limited options for the arrangement of the common design features and layout for a narrow lot three-bedroom townhome". The Court disagreed finding that it was not simply the fact that both drawings had similar features in common that lead to the conclusion of a substantial reproduction, but rather, it was the arrangement of all these details compiled by the Plaintiff into an overall design concept using skill and judgment. The Court also rejected the Defendants' argument that copyright infringement should not be found on public policy grounds because to do so would mean that the "common-cab" design used by the Plaintiff would no longer be available to the general public. The Court found that the Plaintiff had not sought copyright over this one "cab-over" design feature, but rather it was the Plaintiff's entire design concept that was being protected.

The Plaintiff requested $20,000 in statutory damages and $20,000 in punitive damages, neither of which were awarded. As the Plaintiff was unable to show that he would have charged more than $6,500 for use of the design, and there was no evidence of bad faith warranting a higher amount, the Court awarded statutory damages of $6,500. The Court also rejected the Plaintiff's claim for punitive damages as there was no evidence of malicious conduct by the Defendants.

In 2019, an Alberta court in Proline Pipe Equipment Inc v Provincial Rentals Ltd., 2019 ABQB 983 confirmed that copyright exists in engineering drawings but it does not protect the mechanical process that created them. Our colleague and patent lawyer, Noel Courage, reported on this decision earlier this year in his article entitled "Copyright Can't Bend Far Enough to Be Used Like a Patent." The Defendant had argued that no copyright existed in the drawings as they were a mere copy, but this was disregarded by the Court on the basis of inadmissible hearsay. While the Court found that copyright existed in the drawings, it did not find  infringement because the Plaintiff could not establish that the Defendant had made the unauthorized copies. The Plaintiff argued unsuccessfully that copyright extended to the machines used to make the drawings. The Court reiterated the long-standing principle of copyright law, that copyright protects only original expressions of ideas fixed to a substrate, and does not include the machines or processes that are used to make them.

Section 43 of the Copyright Act – Limitation Period

Bedi v. Roer, 2020 BCCRT 170

This was a small claims matter from the Civil Resolution Tribunal of BC. The issue was whether the Applicant was statute barred from bringing his claim against the Respondents for their wrongful conversion and copyright infringement of his "dowsing charts". The Applicant's claim was dismissed for exceeding the limitation period. Under s. 43.1 of the Act, the limitation period for a civil remedy is three years from the date the applicant discovered or reasonably ought to have discovered the act or omission. The Court found that the clock on the limitation period began to run when the Applicant discovered in 2013 the alleged unauthorized use of his charts by the Respondents. The Applicant commenced his claim in March 2019, six years after he first became aware of the alleged copyright infringement and was therefore statute barred.

Making Available Right

Entertainment Software Assoc. v. Society Composers, 2020 FCA 100

On this application for judicial review, the Federal Court of Appeal quashed the Copyright Board of Canada's (the "Board") decision which found that ss. 2.4(1.1) of the Act deems the act of making a work available to the public a "communication to the public" within ss. 3(1)(f) and thus, an act that triggers tariff entitlement.

In Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34 ("ESA"), the Supreme Court of Canada held that the transmission of a musical work over the Internet that results in a download of that work is not a communication by telecommunication, and thus, did not attract royalties under SOCAN's tariff regime. However, a few days before the Supreme Court's decision in ESA, the new "making available provision" in ss. 2.4(1.1) was added to the Act, which provides:

For the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.

In a tariff proceeding before the Board, SOCAN subsequently argued that new ss. 2.4(1.1) rendered the ESA decision irrelevant and obligated persons, such as online music services, to pay royalties to SOCAN when they post musical works on their Internet servers in a way that allows access to them by their end-user customers, regardless of whether the musical works are later transmitted to end-users by way of downloads, streams, or not at all. The Board agreed, finding ss. 2.4(1.1) makes a work available to the public via a communication to the public pursuant to ss. 3(1)(f) of the Act triggering a right to collect a tariff for that use. As a result, SOCAN was entitled to collect royalties both for: (1) the making available right; and (2) any subsequent transmission or download of the musical work. There was no merger of the two acts into one.

The Federal Court of Appeal ultimately quashed the Board's decision. After a lengthy discussion on the standard of review—beyond the scope of this summary—the Court of Appeal held that it was "unnecessary to consider the standard of review in much more detail" and simply, that "the decision of the Board cannot stand". The Court framed its analysis into two general features of why the Board's decision was unacceptable: (2) unacceptable legislative interpretation; and (2) misapprehension of the interrelationship between international law and domestic law.

In respect of legislative interpretation, the Court of Appeal found that the Board engaged in an "unacceptable legislative interpretation" in that it did not consider "contextual elements such as the Supreme Court's decision in [ESA]" and that it made unjustifiable leaps in its reasoning, fatal to its interpretation. The Court of Appeal also found the Board's interpretation ran counter to the Supreme Court's warning against supplicative layers of regulation and fees that would cause inefficiency and needless costs, citing Théberge for the proposition that proper balance between copyright owners and users requires a consideration of regulatory efficiency.

In respect of the interrelationship between international law and domestic law, the Court of Appeal found the Board's decision suffered from a misunderstanding of the relationship between Canadian domestic law and international law, emphasizing that where the two differ, domestic law always prevails. The Court of Appeal found the Board went to article 8 of the WIPO Copyright Treaty (the making available provision), asserted its view of that article's meaning without any supporting reasoning, and then made ss. 2.4(1.1) of the Act "conform to its view", which the Court of Appeal called "a misuse of international law".

While the Board's decision was overturned, the Court of Appeal declined to offer its own interpretation of ss. 2.4(1.1), citing the parties lack of putting forward a comprehensive view of the authentic meaning as its reason for not offering guidance. However, it did state that ss. 2.4(1.1) of the Act does not create a new exclusive right. Consequently, there was only one right at play (i.e., the communication to the public) that triggered royalties. The Court of Appeal found no point in sending the matter back to the Board for re-consideration because it would not change the result on the merits since no tariff would be set for the "making available" activity.

As of November 10, 2020, and November 12, 2020, SOCAN and Music Canada, respectively, filed leave to appeal the Court of Appeal's decision to the Supreme Court. Hopefully we will get a definitive meaning of whether a "making available" right exists under the Act. Stay tuned!

CMRRA-SODRAC Inc. v. Apple Canada Inc., 2020 FCA 101

In a companion decision to Entertainment Software Assoc. v. Society Composers, 2020 FCA 100, the Applicants applied to the Federal Court of Appeal for judicial review of the Board's decision in which it declined to set a tariff for online music services for "making available" under ss. 2.4(1.1) of the Act because the evidence before it was inadequate.

The Court of Appeal upheld that Board's decision as reasonable. While the Court of Appeal noted that the Board is generally unconstrained to set equitable tariffs, it found that the Applicants' case mostly amounted to complaints about how the Board favoured the analyses of one set of experts over another, which the Court of Appeal said must be eschewed. The Court of Appeal made it abundantly clear that its role in relation to Board decisions is one of a reviewing role, and that the Applicants' efforts to have the Court of Appeal replace the Board's decision with their own is not in its jurisdiction. The Court of Appeal acts as a reviewer and must carry out that role with "considerable deference" to the Board. The application was dismissed with costs.

Statutory Damages; Punitive Damages

Rallysport Direct LLC v. 2424508 Ontario Ltd., 2020 FC 794

In this case, the Federal Court assessed the Plaintiff's damages stemming from its decision in Rallysport Direct LLC v 2424508 Ontario Ltd, 2019 FC 1524, wherein the Defendant brought a motion for summary judgment against the Plaintiff's copyright infringement claim for copyright infringement in 1430 photographs. In the summary judgment decision, the court found that copyright subsisted in the Plaintiff's photographs and product descriptions and that the Defendants had infringed those works by reproducing them on its website. In this damages case, the Plaintiff elected statutory damages at $500 per work ($716,500 in total). The issues before the Court were whether a reduction of the amount was justified and whether the Plaintiff was entitled to punitive damages

Ultimately, the Court found that a lower statutory award of $250 per work for 1430 works was appropriate. The Court began its assessment by reiterating that statutory damages compensate for actual damages, which are often difficult to prove, and that they involve a balancing of the interests of incentivizing copyright owners to enforce their rights in their work while acting as a deterrent for infringers from being unjustly enriched. The Court noted that the prescribed range of $500 to $20,000 for statutory damages can be reduced where there where there is more than one work in a single medium and where awarding the minimum per work would yield a total award that is grossly out of proportion to the infringement. The defendant has the burden of establishing that the total award would be "grossly out of proportion to the infringement".

While the Plaintiff argued $500/work was appropriate, if the Court found the matter to be a "special case" per s. 38.1(3) of the Act (which provides the Court discretion to reduce a statutory award below prescribed minimums), the Plaintiff argued that $250/work ($359,750) was appropriate, which represented all relevant factors, including the Court's previous judgments:

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The Court accepted the Plaintiff's argument for a $250/work statutory damage award. In doing so, the Court considered the Plaintiff's labour costs as well as deterrence and the other ss. 38.1(5) factors in the Act. In this instance, there was no evidence that the Plaintiff ever licensed, or considered licensing, the works at issue. Instead, the works were created to sell another product, and not to be sold themselves. In such instances, the Court held that looking to the associated production costs to determine the quantum of damages was appropriate, finding no other reliable way to calculate the damages the Plaintiff had suffered. Looking at production costs, the Court determined from the evidence each photo cost on average $146.93, for total labour costs of $210,109.90. After finding other factors under ss. 38.1(5) of the Act in favour of the Plaintiff, namely the good or bad faith of the defendant and the need to deter future infringements, the Court held the $250/work amount appropriate.

The Court found punitive damages in the amount of $50,000 appropriate. The Court noted the distinction between punitive damages (awarded where there has been high-handed, malicious, arbitrary or highly reprehensible conduct that departs to a marked degree from the ordinary standards of decent behaviour" and aggravated damages (awarded for intangible injury such as distress and humiliation". While the Court found aggravated damages were not warranted, punitive damages were justified by reason of the Defendants' efforts to judgment-proof their actions through the use of various companies, which was "high-handed" and tantamount to "stonewalling while they continued to exploit the Plaintiff's rights".

In a follow up to this decision, Rallysport Direct LLC v . 2424508 Ontario Ltd., 2020 FC 1115, the Court ordered the Defendants to pay the Plaintiff a lump sum of $139,023.26 for costs with post judgment interest .

Fair Dealing

Bjørnsen v. Sharpe, 2020 BCCRT 1425

These small claims matters were heard together before BC's Civil Resolution Tribunal. In both disputes, the Applicant alleged that the Respondent infringed his copyright in two artworks by posting them on the Respondent's Facebook page, claiming $9,999 in damages for both infringements. The disputes centered on the issue of infringement, with the Court ultimately finding that the Applicant failed to prove the Respondent infringed copyright in the artworks.

The Applicant argued he authored a book originally written in Old Norse and published in Norway. The works at issue concerned two illustrations found in the book, which both had logos and watermarks applied. The Court found that copyright exists in each of the subject illustrations as separate artworks (as opposed to copyright in the book itself). The Court also found the Applicant held the copyright in the artworks as author of the book where the artworks appeared.

The Respondent had a Facebook page called "Vikingverse" on which both of the subject artworks were posted. The illustrations were posted without the logo and watermarks. The Respondent argued he found the artworks on the Internet, without the logo and watermarks, and with no copyright information attached, and consequently, believed they were in the public domain and free to use. The Court accepted the Applicant's submission that there were no authorized copies of the artworks posted on the Internet without a watermark, logo, or copyright information attached and therefore, the "clean" copies posted to the Respondent's Facebook page were the product of primary infringement. However, because the Applicant admitted the artworks were publicly available on Instagram, Pinterest, and other social media pages and websites dedicated to the book, the Court found that the watermarks, logos, and copyright information on the artworks could have been removed by anyone and posted "clean" on Pinterest or any other website. There was no evidence that the Respondent himself altered the works before posting them on his Facebook page.

While finding the Respondent not responsible for primary copyright infringement, the Court proceeded to consider whether use of the works constituted secondary infringement under ss. 27(2) of the Act. The Court found no secondary infringement as it was unlikely that the Respondent knew the works were copyright protected, particularly as there were "clean" versions of the artworks posted elsewhere on the Internet lacking the copyright information. The Court also found that once notified about potential infringement in one of the illustrations, the Respondent immediately removed the post. The Applicant's claim was subsequently dismissed.

The Respondent also brought a counterclaim against the Applicant for publication of various photographs of the Respondent on social media and other websites. The Court dismissed the counterclaim, finding no evidence that the Respondent owned the copyright in the photographs, or that the Applicant used or published the photos on that site or that the Applicant wrote the articles for which the photos were used.

West Edmonton Mall Property Inc v Proctor, 2020 ABQB 161

In this case the Plaintiffs (West Edmonton Mall Property Inc and David Ghermezian) sought an Injunction against a former tenant, Dana Proctor (the Defendant) preventing her from defaming them through videos and online posts. In this action the Alberta Court of Queen's Bench considered a number of defences to defamation. One of these included "Fair Use" which the court noted is an American exception to copyright infringement under the U.S. Copyright Act. The court found that the equivalent sections in the Act (Sections 29, 29.1 and 29.2- which creates the fair dealing exception to copyright for the purposes of research, private study, education, parody or satire) "protect the user of copyrighted material in an action for copyright infringement and do not confer a license on a user to engage in defamation". The court therefore dismissed this fair dealing defense. This case has served to reinforce the proper scope and application of Canada's fair dealing provisions.

Stross v. Trend Hunter Inc., 2020 FC 201

This was a copyright infringement action brought under the Federal Court's simplified procedure. The Plaintiff photographer alleged the Defendants reproduced six of his photographs  in an article on their website. The Defendants argued that their use of the photographs was covered by the fair dealing exceptions to infringement under ss. 29 and 29.2 of the Act. The Court found that the use of the works did not constitute fair dealing and that the Defendants were liable for copyright infringement, awarding $3,983.40 in non-statutory damages.

There was no dispute as to copyright subsisting in the photographs or that the Plaintiff was the author of such photographs. However, there was an issue over whether the Plaintiff had the authorization right to bring the infringement claim, or whether that right had been licensed to a US-based copyright enforcement agency, named "ImageRights". On the face of the Plaintiff's agreement with ImageRights, the Court found no express language that indicated a waiver of any of the Plaintiff's rights under the Act, and consequently, the evidence supported the Plaintiff as the owner of the photographs.

There was no dispute that the Plaintiff's copyright was infringed by the Defendants' posting of the photographs on its website. Instead, the analysis centered on whether the Defendants' use was allowed under the fair dealing exceptions for research (s. 29 of the Act) or alternatively news reporting (s. 29.2 of the Act). The Court found that the Defendants' website activities were analogous to a computerized form of market research that measured consumer interaction and response to market trends, and therefore fell within the "research" exception to copyright infringement. The Court noted that the term "research" has a large and liberal meaning that must evolve with technological advances. The dealing did not qualify as "news reporting."

As to whether the dealing was fair, the Court applied the six-part test from CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13:

  1. Purpose of the dealing: the Court found the ultimate goal was commercial in nature, solely for the benefit of the Defendants and their clients.

  2. Character of the dealing: the Court found that the dealing of the photographs on the website should be considered more extensive than a single use in print advertising, but not sufficient to be considered to be in wide circulation based on the 168 views made.

  3. Amount of the dealing: the Court rejected the Defendants argument that the reduced quality and resolution of the photographs the Defendants used should be interpreted as a reduced percentage of use of the photographs, finding the argument not "persuasive".

  4. Alternatives to the dealing: the Court noted the Defendants' copyright policy and compliance policy that included a DMCA notice-and-takedown system, but concluded that the Defendant failed to adhere to these protocols. Furthermore, the Court found that the photographs at issue were not essential to the Defendants' "research", and that alternatives to the dealing were available and should have been used.

  5. Nature of the work: the Defendants argued that the photographs were already "viral" as a result of an episode of NBC's the "Today Show", and consequently, this factor ought to be afforded limited weight. The Court agreed, finding the nature of the work a neutral factor, with the fact that the photographs already widely distributed on the internet going to the effect of the dealing and the likelihood of there being a reduced impact on the Plaintiff from the reproduction on the Defendants' website.

  6. Effect of the dealing: the Court was unable to find on the evidence that the Plaintiff's ability to license the photographs had been affected by the use at issue.

Holistically, the Court found that the Defendant's use of the photographs did not amount to fair dealing when looking at "the circumstances of the use, and the ultimate purpose of the dealing". Since the Plaintiff did not elect statutory damages, the Court evaluated the Plaintiff's actual damages pursuant to ss. 35(1) of the Act. The Court found that there was insufficient evidence to evaluate a standard license fee for the photographs and awarded a nominal damage award based on the evidence provided in the amount of $3000 USD or $3,983.40 CAD. Furthermore, the Court held that there was at best de minimis profit made by the Defendant using the photographs and there was no basis to grant a punitive damages award.

This decision is notable in that: (1) if you have a robust copyright policy and fail to follow it, that may be held against you if you are found to have infringed copyright; and (2) it is crucial for copyright owners to know the value of their work, otherwise resources can be spent on legal fees to commence a copyright claim that may have minimal financial return.

Wiseau Studio, LLC et al. v. Harper et al., 2020 ONSC 2504

The Plaintiffs in this action alleged the Defendants' documentary, titled "Room Full of Spoons" infringed copyright in their film "The Room". While numerous other causes of action were at issue including passing off, misappropriation of personality and intrusion upon seclusion, this summary focuses on the claim for copyright infringement and the application of fair dealing. Ultimately the Court dismissed the Plaintiffs' claim in its entirety, and granted judgment in favour of the Defendants on their counterclaim which was based on the improper obtaining of a previous injunction, and for other wrongful acts taken in the litigation, and to prevent the release of Room Full of Spoons. The Court awarded the Defendants $550,000 USD in general damages and an additional $200,000 CDN in punitive damages.

As described in the decision, The Room was a "box office flop" that "received terrible reviews". Notwithstanding, the film became a cult classic. One of the Defendants (Harper) became a fan of the film after attending a screening. After meeting and spending time with the film's creator (Wiseau), Harper created the Room Full of Spoons documentary. The documentary included seven minutes of short clips from The Room, along with various commentary. The Plaintiffs asserted the documentary breached copyright in The Room, including Wiseau's moral rights. Previously, Wiseau was granted an interim injunction on an ex parte basis to prevent the release of Room Full of Spoons . The injunction was later lifted in a subsequent decision.

On the issue of copyright infringement, the Court proceeded to determine the owner of the copyright. The Plaintiffs alleged that the Plaintiff Wiseau Studio LLC was the owner of the work. However, the Court found no evidence of an assignment of copyright to the Studio, and as such, it had no claim for copyright infringement. Notwithstanding, the Court found the Plaintiff Wiseau was the creator of The Room, citing s. 34.1 of the Act which provides a presumption that the author is presumed the owner, unless the contrary is proved. While the Court found the Plaintiffs consequently had standing, it stated little turned on the issue as the claim for copyright infringement failed on other grounds.

The Court's copyright infringement analysis began with consideration of whether there was substantial infringement of The Room by virtue of the filmmakers use of seven minutes worth of clips. The Court found that Room Full of Spoons did reproduce a "substantial part" of The Room within the meaning and intent of s. 3 of the Act, finding that though the amount was not large compared to the length of the film, the documentary would not have been the same without the number of clips used, and that this amount of use was not "trivial". Interestingly, the Court noted that it reached "this conclusion with some reluctance" since the documentary did not seek to replace or copy The Room. Nor did the documentary purport to copy Wiseau's skill or judgment, or diminish the value of his work. However, the Court found that the issue of whether the use of the Plaintiffs' material infringes copyright was best address in the context of fair dealing.

On the issue of fair dealing, the Defendants relied on s. 29.1 (criticism and review) and s. 29.2 (news reporting) of the Act arguing the purpose of the documentary was to critique and review The Room. The Court found that to the extent a documentary uses copyrighted material for the purposes of criticism, review or news reporting, then such use is for an allowable purpose under the fair dealing provisions, and that the documentary met each of those purposes. The Court then applied the six fair dealing factors from CCH to determine whether the dealing was fair:

  1. Purpose of the dealing: The Court found that the copying was not for a commercial purpose but simply to make a documentary and that the Defendants had no expectation when making the documentary that they would profit from it, nor did they appropriate The Room to their benefit. The Court also noted that a documentary commenting on another work is unlikely to be as popular as the original work.

  2. Character of the dealing: The Court found that the copyrighted material was almost invariably accompanied by commentary illustrating or supporting points made by the narrator or interviewees, a common technique in documentaries and in providing review and criticism, which supported a finding that the dealing was fair.

  3. Amount of the dealing: The Court found that while the documentary's use of footage from The Room was not trivial, it was also not excessive (the 109 minute long documentary used 7 minutes of footage from The Room in 69 short clips, amounting to less than 7% of the source work). The Court also held that the use was linked to the objectives of making the documentary, informing the viewers of the experience of making The Room, not to replace it.

  4. Alternatives to the dealing: The Court found this factor had little application as the documentary was about The Room—there was not alternative to the copyrighted material. The Court also found it was "impossible" for the Defendants to obtain licenses.

  5. Nature of the work: The Court found there was no impact on the original film as The Room had been widely available for twenty years and had over one million free views of it online. Furthermore, there was no evidence that Wiseau ever tried to stop the public access to his film.

  6. Effect of the dealing on the work: The Court held that the documentary was not a substitute or alternative for The Room. Rather, the watching the documentary was more likely to create interest in The Room than to compete with it.  

The Court found in favour of the Defendants and held that their use of the clips of The Room constituted fair dealing under the Act.

As to Wiseau's claim for breach of moral rights, the Court held that he failed to meet the burden of proof for establishing breach of such rights. The Court noted that moral rights involve a consideration of both the subjective views of the plaintiff and objective evidence, and that "[m]oral rights are not, and cannot be, determined solely on the feelings or opinions of the creator of a work". The Court stated that because Wiseau would not license any clips without full editorial control it was impossible for the Defendants to gain access to a master recording. As such, "Wiseau might have only himself to blame for his view that his work was somehow not presented in the way he would have liked". The Court also noted that even if Wiseau was associated with the documentary, it did not prejudice his honour and reputation. The Court failed to see how a documentary that is negative in tone—if that was the case—infringes moral rights.  

After dismissing the Plaintiffs' action in its entirety, the Court proceeded to grant the Defendants' counterclaim for damages resulting from the Plaintiffs' lifted injunction. The Court found that the Defendants lost out on distribution opportunities as a result of the injunction. The Court assessed that loss at USD$550,000, based on the its best "guesswork". While the Court found that Wiseau engaged in defamatory conduct about the documentary and its filmmakers, it determined that such claim was best dealt with by awarding punitive damages in the amount of CDN$200,000 on the basis of Wiseau's oppressive and outrageous conduct towards the Defendants (including a threat of an anti-SLAPP motion to prevent the documentary's release).

York University v. Copyright Licensing Agency, 2020 FCA 77

This appeal stems from York University's ("York") appeal of the Federal Court's decision in Canadian Copyright Licensing Agency v. York University (2017), 2017 FC 669, which upheld and enforced an interim tariff and dismissed York's counterclaim for a declaration that the copying was protected by fair dealing. We reported on the lower court decision that the mandatory interim tariff and York's Fair Dealing Guidelines did not relieve York from paying royalties to Access Copyright its staff and student copying of books governed by Access Copyright's tariffs. In overturning the lower court, the Court of Appeal held that the interim tariff was not mandatory, but upheld the lower court's ruling that York's Guidelines are not fair.

From 1994-2010, Access Copyright and York were parties to a license agreement enabling York professors to make copies of portions of textbooks and other published works. Access Copyright is the royalty collective society that administers the reproduction rights and distributes royalties to copyright holders of those published works. Knowing that the licensing agreement was set to expire, Access Copyright applied for and was granted an interim tariff, which incorporated the existing agreement's royalty rate. York decided to opt out of the interim tariff, prompting Access Copyright to start an action to enforce the interim tariff under ss. 68.2(1) of the Act. Access Copyright alleged that York had infringed copyright in its repertoire governed by their licensing agreement and that unauthorized copies were being made. York counterclaimed seeking a declaration that any reproductions made were in compliance with its Guidelines, which constituted fair dealing under s. 29 of the Act.

We reported on the Court of Appeal's decision in April 2020. The appeal centered on two issues: (a) whether Access Copyright's interim tariff is mandatory; and (2) whether York's Fair Dealing Guidelines constitute fair dealing. On the mandatory tariff issue, the Court of Appeal found that York was not bound by the interim tariff "because tariffs do not bind non-licensees". Furthermore, Access Copyright admitted that under its agreement with its members, it had no standing to sue for infringement on their behalf because its members do not assign their rights to the royalty collective society. This is a key issue as the Act permits only a person (including a legal entity) with an ownership interest in the copyright to sue for copyright infringement.

On the issue of York's Fair Dealing Guidelines, the Court of Appeal affirmed that in cases where an institution, like York, acts as a copier-for-others (i.e., students), the institution can invoke fair dealing either by showing: (1) its users actually dealt with the copies in a fair dealing manner; or (2) by relying on a "general practice" to establish fair dealing. The Court of Appeal found that the institution's perspective matters when fair dealing is based on a general practice. Ultimately, the Court of Appeal found that while the copying met the allowable purpose of fair dealing for educational use, the Guidelines failed on the fairness test, including in part because from York's perspective of the dealing, it was trying "to obtain for free that which it had been previously paid for", which was a "clear indication of unfairness".  

On October 15, 2020, Access Copyright was granted leave to appeal by the Supreme Court of Canada. It will be interesting to see what the highest court in Canada will say about the Board's role in tariff setting, whether tariffs are mandatory or not, and provide more insight into fair dealing and how the exception to copyright infringement can be relied upon when guidelines are created for its use in an institutional or other setting to create policy for reliance on fair dealing as part of a business' practices.

Canadian Broadcasting Corporation v. Conservative Party of Canada, 2020 FC 1164

The Respondents' brought a motion under ss. 34(6) of the Act to convert an application for copyright infringement to an action. In the underlying application, the Canadian Broadcasting Corporation (CBC) alleged that the Respondents, the Conservative Party of Canada (CPC), had made unauthorized use of CBC programing clips (including those from the 2019 Federal Leaders Debate) on CPC's Facebook page, YouTube page and website, and in CPC's online tweets, prior to the 2019 Federal election.

Subsection 34(4) of the Act provides that proceedings for copyright infringement may be commenced by way of application or action. Subsection 34(6) of the Act gives the court wide authority to convert an application to an action where appropriate. The Respondents' argued that the procedural limitations of an application prejudiced their ability to mount and frame a proper defence, particularly the complexity of the copyright ownership, substantial use, and fair dealing claims. The Court disagreed and dismissed the motion. In particular, the Court noted that the case had been ongoing for more than a year and was only months away from hearing. The Court cited ss. 34(4) of the Act noting that if a party chooses to proceed by way of application, such application must be "heard and determined without delay and in a summary way". The Court also dismissed the Respondents' evidentiary concerns noting that the general scheme of evidence provided under the rules governing an application was sufficient to allow the Respondents to properly defend the application. Stay tuned for further developments.

Copyright &  Licensing Agreements

Druide Informatique inc. c. Éditions Québec Amérique inc., 2020 QCCA 1197()

This is an appeal from a Québec Superior Court decision (2017 QCCS 4092) allowing the respondent's application for a permanent injunction and for damages and dismissing the appellant's counterclaim. The issues on appeal were whether there was an implied license to the copyright protected software and if the court was right to award $25k in punitive damages. The Court of Appeal analysed the implied consent to determine what type of contract it was. The characterization of this agreement requires an analysis of the common intention of the parties. As such, the Court found that the agreement was a non-exclusive license. A non-exclusive license needs not  be in writing. The Court noted that the term of the non-exclusive license was  indefinite. A reasonable notice is required before termination of an indefinite contract. In this case, the period of time that covered the alleged infringed was sufficient notice. The Court of Appeal therefore reversed the decision and the award of damages.

This decision reiterates that there are basically three types of contracts relating to use of copyrighted material: (1) an assignment, (2) an exclusive license, and (3) a non-exclusive license. From a practical point of view, this decision also serves as a good reminder to reduce agreements, including permissions or consents to use intellectual property rights, to writing to reduce risks of the interpretation of what the parties agreed to, especially if the intent of the parties is expressed verbally or is scattered over multiple emails. Rights and obligations should be clearly stated in writing in an executed formal agreement. Contractual relationships may be complex, and there are several terms that govern contracts—either under common law or the Civil Code of Quebec, under the relevant statute, e.g. the Copyright Act, or as may be determined by case law—even for verbal contracts, that parties may not be aware of. In this matter, the consent granted was in fact a non-exclusive license, with the facts showing that it covered more than an earlier version of the Plaintiff's software, and there was no right to terminate the agreement without a reasonable notice of termination.

The Respondent has requested leave to appeal the decision before the Supreme Court of Canada.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.