2014: The year in review for Canadian copyright law

Legislation

“Notice and Notice”

The “notice and notice” provisions of the Copyright Modernization Act have now come into force. These provisions allow copyright owners to provide Internet Service Providers (ISPs) with a notice of alleged copyright infringement and require the ISP to forward it to the ISP’s subscriber. They also require the ISP to maintain its records relating to the subscriber for a period of time so that the rights holder may seek to obtain the information for the purpose of litigation.¹

Court Decisions

Disclosure of ISP Subscriber Identities

In Voltage Pictures LLC v. John Doe,² the Federal Court granted the Plaintiff film company a “Norwich Order,” compelling a third party ISP (TekSavvy Solutions Inc.) to disclose the identities of approximately 2,000 of its subscribers whom Voltage Pictures had a bone fide reason to believe may have engaged in peer-to-peer file sharing of its copyright films. The Court was concerned about the potential for such Orders to be abused and for this reason attempted to introduce some safeguards. First, the Court required Voltage to pay TekSavvy’s reasonable costs to comply with the Order. Second, the Court required that any correspondence to be sent by Voltage to these subscribers would be reviewed and approved by the Court, and should make clear that there has been no finding of copyright infringement by the subscriber as yet.

Threshold of Originality for Protection

Copyright does not protect ideas or concepts. It protects “original” works, which may be expressions of ideas or concepts. To qualify as an “original” work, the work must be created through an exercise of non-mechanical skill and judgment. A review of case law in 2014 shows that disputes continue to be raised over the application of these fundamental principles of copyright.

For example, in Denturist Group of Ontario v. Denturist Assn of Canada,³ the parties disagreed as to whether copyright subsists in five-digit numerical procedure codes used to identify denturist services to insurance companies. The Federal Court concluded that these particular codes serve a functional purpose and lack sufficient originality to attract copyright protection.

Similarly, in J(I) v. J (MA) the British Columbia Supreme Court denied copyright protection to a business solution or system.⁴

On the other hand, in Geophysical Services Inc v. Canada-Nova Scotia Offshore Petroleum Board,⁵ the Federal Court concluded that copyright protection was available for a work product that related to data from seismic surveys.

Technological Neutrality

In 2012, in the course of rendering its “pentologypentalogy” of copyright decisions, the Supreme Court of Canada enunciated what many consider a new principle of statutory interpretation for copyright law in Canada, namely “technological neutrality.”⁶ Absent evidence of a contrary Parliamentary intention, the Copyright Act should be interpreted with technological and media neutrality in mind.

For example, it may be argued that (absent evidence of a contrary Parliamentary intention) the Copyright Act should be interpreted so as to avoid imposing different royalties according to different methods (real world vs. telecommunication) of delivery of a protected work.

The application of these principles is not always straightforward.

In Canadian Broadcasting Corp v. SODRAC 2003 Inc,⁷ the Federal Court of Appeal was asked to re-consider (in light of this new principle of statutory interpretation) earlier case law from the Supreme Court of Canada⁸ which determined that ephemeral copies of a musical work made by broadcasters during production required the payment of royalties. The CBC argued that, under this principle of interpretation, royalties should not be imposed in relation to ephemeral musical works created purely as part of the technology used by producers and broadcasters.

The Court of Appeal, while noting the challenges associated with application of “technological neutrality” affirmed the Copyright Board’s decision that ephemeral copies continued to attract royalties.

Leave to appeal to the Supreme Court of Canada has been granted.⁹

Fair Dealing

The defence of fair dealing has undergone somewhat of a transformation beginning since the Supreme Court of Canada’s decision in CCH Canadian Ltd v. Law Society of Upper Canada,¹⁰ which described the defence as a “user right.” Ever since, users have attempted to assert a broader and broader scope of rights. At the same time, commercial entities who use protected works to provide goods and services to customers (who may then engage in research or other protected purposes with the work) have attempted to avoid payments to rights-holders by invoking the defence.

For example, in 2012, the Supreme Court of Canada concluded that Apple’s iTunes service was engaged in fair dealing with musical works by offering short, lower quality and streamed samples for consumers to listen to before making their purchasing decisions.¹¹ In 2014, Netflix attempted to invoke a similar defence in different circumstances.¹²

In Performance of Musical Works,¹³ Netflix objected to proposed tariffs for works it provided in the course of its free trial period offered to customers. Netflix argued that a one-month free trial was “fair dealing,” because ultimately consumers were engaged in a form of research before making their ultimate decision to subscribe or not to the service. The Copyright Board rejected the defence. Unlike the iTunes decision, Netflix’s free trial period streamed at least one full copy of each of the various works to consumers. They were also not in a lower quality or degraded form.

Interestingly, Netflix also argued unsuccessfully that to impose royalties on free trials of its streaming service ran contrary to principles of technological neutrality.

Statutory Damages Awards

An unreported decision of the Federal Court demonstrated that in appropriate circumstances the Court is prepared to impose huge awards of statutory damages and punitive damages.

Following a default judgment motion in Twentieth Century Fox Film Corporation v. Nicholas Hernandez,¹⁴ the Defendant was found to have intentionally and repeatedly infringed and communicated to the public by telecommunication, for his own bad faith and commercial purposes, large numbers of episodes from the popular television series The Simpsons and Family Guy. Among other relief awarded, the Plaintiff received $10,000,000 in statutory damages along with $500,000 in punitive damages.

In summary, Canadian copyright law continues to grapple with our ongoing technological revolution, and parties continue to grapple with the legislative and judge-made tools that attempt to keep up with it.