Copyright year in review 2020

22 minute read
04 February 2021

This article highlights noteworthy developments in Canadian copyright law for 2020 including key court decisions and legislative changes.

Case law updates

Enforceability of Tariffs

York University v The Canadian Copyright Licensing Agency ("Access Copyright"), 2020 FCA 77

In a sea changing decision affecting the copyright licensing regime, the Federal Court of Appeal ruled that Copyright Board approved tariffs are not mandatory and do not bind non-licencees.

York University ("York") and Access Copyright had a licence agreement permitting York professors to copy portions of textbooks and other works from Access Copyright's repertoire. Uncertain if the licence agreement would renew before its expiry, Access Copyright, to ensure continued remuneration, applied for and was granted an interim tariff ("Interim Tariff") to cover the copying of protected works by postsecondary educational institutions for the years 2011-2013. York "opted out" of the Interim Tariff, instead deciding to rely on its "Fair Dealing Guidelines for York Faculty and Staff" (the "Guidelines") in order to avoid any claims of copyright infringement.

Access Copyright brought a claim for enforcement of the Interim Tariff against York. In response, York filed a counterclaim seeking a declaration that any reproductions made in compliance with its Guidelines constitute fair dealing.

The case centered on the two related issues: 1) is the Interim Tariff mandatory and enforceable against York, and 2) do reproductions made in accordance with the Guidelines constitute fair dealing.

At trial, the Federal Court answered the first question in the affirmative and the second question in the negative.

On appeal, Justice Pelletier performed a detailed historical analysis of tariff legislation and jurisprudence which led to his finding that "the collective society/tariff regime is a means of regulating licensing schemes which, by definition, are consensual".[1] Justice Pelletier determined that a tariff is only binding on those parties who accept the terms of the licence that the tariff sets out. For this reason, the Court concluded that the Interim Tariff is not enforceable against York.

However, York could still be liable for infringement for using copyright-protected works without a licence. An infringement action may be brought by the copyright owner, its assignee, or an exclusive licensee. In this case, since Access Copyright's agreement with its members did not amount to an exclusive licence or an assignment, Access Copyright itself did not have standing to bring an infringement action against York. Only Access Copyright's members could sue York for infringement. This suggests that under different circumstances where the collective society acts as the assignee or the exclusive licensee for its members, the collective society may have standing to sue.

Next, the Court of Appeal went on to decide whether the Guidelines came within the fair dealing exception for infringement. Following a review of the lower court's fair dealing analysis, Justice Pelletier concluded that York had failed to prove that the Federal Court erred in law.

Not surprisingly, both parties appealed this decision to the Supreme Court of Canada which has granted the leave applications. The saga is set to continue in 2021 – stay tuned.  

Tariffs under the "Making Available Provision"

Entertainment Software Association v SOCAN, 2020 FCA 100

The Federal Court of Appeal considered the interpretation of subsection 2.4(1.1) of the Copyright Act which is also referred to as the "making available provision" ("MAP"). The provision reads as follows[2]:

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.

Parliament enacted the MAP as part of the Copyright Modernization Act, which was intended in part to implement the WIPO Copyright Treaty,[3] Article 8 of which obligates Parties to implement a right of making-available.

Before the Copyright Board, SOCAN argued for an interpretation of subsection 2.4(1.1) that expanded the right of communication to include the act of making a work available on a server regardless of whether that work is later streamed or downloaded by end-users. The Board accepted this interpretation.

The practical implications of the Board's determination meant that the act of putting a copyright-protected work on the Internet creates two distinct protected events. First, the bare act of making the work available to the public is a communication to the public by telecommunications regardless of whether that work was subsequently downloaded or streamed. Second, any subsequent act of transmission is itself a protected event. The Board held that SOCAN could set a tariff rate for each of these events.

Justice Stratas, in an at-times scathing review of the Board's decision, held that the Board's interpretation of subsection 2.4(1.1) could not stand even on a reasonableness standard for two reasons: first, the Board relied on an unacceptable approach to legislative interpretation, and second, the Board misapprehended the interrelationship between international law and domestic law.

Justice Stratas found that the Board provided no meaningful reasons to support the idea that the MAP created two separate tariff-triggering rights. Moreover, Justice Stratas criticized the Board's interpretative analysis for failing to apply the ruling of the Supreme Court in ESA[4] that the Copyright Act should be interpreted so as to avoid additional layers of protection based only on the method of delivery.

Justice Stratas also chastised the Board for what he saw as an overreliance on international law rather than domestic law. Justice Stratas concluded that, while domestic law might be presumed to conform with international law in certain contexts, international law cannot override the text of the domestic statute. In the view of Justice Stratas, the Board started with the WIPO Copyright Treaty and interpreted the MAP to conform to that treaty.

Although the Court held that the Board's interpretation of subsection 2.4(1.1) was unreasonable, it chose not to make a declaration as to the proper interpretation. Nonetheless, Justice Stratas concluded that the MAP does not create a new exclusive right.

Both SOCAN and Music Canada have filed applications for leave to appeal to the Supreme Court of Canada.

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

Released on the same day as ESA v SOCAN above, Justice Stratas, writing again for the Court, upheld the Copyright Board's determination on the rates to set for the use of music in an online music service (such as Spotify or iTunes).

Justice Stratas took the view that the judicial review was essentially a complaint that the Board preferred one set of economic experts over another. After giving little credence to the argument that there were questions of jurisdiction that attracted a standard of correctness, Justice Stratas dismissed the "plethora of issues" attempting to demonstrate unreasonableness noting that the "Board has just about the widest discretion known to law".[5]

Contracts Involving Copyright

Druide Informatique Inc c Editions Quebec Amerique Inc, 2020 QCCA 1197

Druide Informatique Inc's ("Druide") and Editions Quebec Amerique Inc's ("QA") entered into an oral agreement for the integration of the latter's dictionary software (the "Works") into the former's writing aid software (the "Software") which had three versions deployed. After their business relationship deteriorated, QA sought to revoke its authorization to use the Works in the Software and filed suit against Druide claiming copyright violation.

The lower court ruled that while QA had consented to Druide using the Works in the first version of the Software, this consent did not extend to the two subsequent versions. In making this finding, the trial judge rejected Druid's argument that QA granted a non-exclusive, irrevocable license of unlimited duration. Instead, the trial judge found that any further uses of the Works were contingent on a written agreement.

Justice Rancourt, writing for the Quebec Court of Appeal, held that the trial judge erred both with regard to the classification of the contract entered into between the parties and its interpretation. After surveying the different types of contracts in copyright law (assignment, exclusive license and non-exclusive license), Justice Rancourt concluded that the contract entered into by the parties must have been a grant of a non-exclusive license and for an indefinite period but subject to a reasonable notice to stop using the Works. Since the reasonable notice was provided after the launch of the two subsequent versions of the Software, the Court reversed the trial judge's judgment on copyright infringement.

QA has filed for leave to appeal to the Supreme Court of Canada.

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

This case involved a contract between the appellant Frank Albo, a historian, and the respondent The Winnipeg Free Press, a newspaper publishing company. Albo argued that the respondent, as part of a contract to secure Albo's expertise for a series of articles, agreed not to republish the articles into a future book. After the respondent republished the articles, Albo brought a claim for copyright infringement and breach of contract both of which were dismissed at trial.

Albo appealed only the breach of contract ruling arguing that the trial judge misapprehended the nature of the contract. In particular, Albo argued that the contract was a "limited licence contractual agreement" which from a copyright perspective, amounted to a non-proprietary licence. The Copyright Act draws a distinction between a proprietary licence and a non-proprietary licence with the former being a licence granting an interest in the right, and the latter being a licence operating as a mere permission to do a certain thing. Justice Mainella opined that Albo's limited licence argument mixes concepts of copyright law and contract law, which have differences that must be respected.

In the result, the appeal was dismissed with Justice Mainella unconvinced that the trial judge erred in finding that the parties' contract was not a limited licence but a "consulting contract".

Infringement and Damages

Rallysport Direct LLC v 2424508 Ontario Ltd, 2020 FC 794

Following a summary judgment motion that held the defendants infringed the plaintiff's copyright in 1430 photos and 3 product descriptions by electronically reproducing and displaying the works on a website, the Court in this case had to assess damages for copyright infringement.

Justice Fuhrer ultimately assessed statutory damages at a rate of $250 per work. Notably, this is less than the $500-$20,000 range for statutory damages for infringement for commercial purposes as set out in subsection 38.1(1) of the Copyright Act. In coming to this figure, Justice Fuhrer considered what was fair and proportionate taking into account the plaintiff's labour costs, the defendants' bad faith, deterrence generally, and the factors set out in s. 38.1(5) of the Copyright Act.

Justice Fuhrer also made clear that statutory damages is separate from actual damages and are not meant to be 1:1 proportional with provable "but-for" losses; they can instead encompass provable economic losses as well as factors such as deterrence.

In addition to the award of $250 per work which amounted to a total of $357,500 for 1430 works, Justice Fuhrer awarded a further $50,000 in punitive damages against the defendants for their efforts to judgment-proof their actions by transferring assets to a newly created company before declaring bankruptcy.

An appeal of this decision has been filed and is currently pending at the Federal Court of Appeal.

Equustek Solutions Inc v Jack, 2020 BCSC 793

This decision is the latest in the legal battle between the parties that led to the Supreme Court of Canada upholding a worldwide injunction order against Google.[6]

The plaintiffs made several allegations against the defendants, including conspiring to steal the plaintiffs' confidential material, using this stolen information to create a competing product and advertising the plaintiffs' product to draw customers to the defendants' website. From a copyright perspective, the plaintiffs alleged that the defendants used, altered and reproduced the plaintiffs' manuals by deleting references to the plaintiff Equustek Solutions Inc. and replacing them with references to Datalink and its competing product. The product at issue is a protocol converter and its associated technical documents.

With the assistance of comparative tables, the BC Supreme Court had little trouble finding the "obvious" similarities between the plaintiffs' manual and the defendants' manual. The real issue was who, amongst the many named defendants, was responsible for the copying. The Court ultimately held that two of the named individual defendants were liable for knowingly and intentionally copying a vast quantity of the plaintiffs' manual and application notes.

The Court awarded the plaintiffs CAD $1 million in damages for past sales, but deferred the claim for damages for future losses and injunctive relief to a post-judgment hearing.

Stross v Trend Hunter, 2020 FC 201

The plaintiff, a professional photographer, alleged copyright infringement over six photographs that were reproduced on the website of the defendant, a market research company. 

The defendant first argued that the plaintiff was not authorized to bring its copyright claim because, through an agreement with a US-based copyright enforcement agency, the plaintiff had licensed away his section 3 rights under the Copyright Act. The defendant also argued that its use of the photographs fell under the fair dealing exceptions to infringement.

The Federal Court rejected both of these arguments. First, the Court found no express language in the plaintiff's agreement with the enforcement agency that would support any transfer of his section 3 rights. As for fair dealing, the Court found that although the defendant's use fell under the acceptable purpose of research, on a balance of the CCH factors, the defendant's use of the photographs was not fair.

Taking into consideration the lack of proof of actual damages, the short time that the photographs were posted and the immediate steps taken by the defendant to take down the photographs, the Court awarded nominal damages assessed at $500USD/photograph or $3,983,40 CAD total.

An appeal of this decision was heard in November 2020 with judgment currently under reserve.

1422986 Ontario Limited v 183326 Ontario Limited, 2020 ONSC 1041

The plaintiff had created a design for three townhome projects (the "Drawings") for the defendant, Syncor Contracting Limited ("Syncor"). Syncor later asked a different architect, Gammond, to create a design for a different townhouse project (the "Gammond Design") which was displayed on a billboard advertising the townhomes. The plaintiff claimed that the Gammond Design was substantially the same as the Drawings with only minor modifications.

At issue was whether the plaintiff had copyright in the Drawings, and, if so, whether the defendants infringed that copyright.

With the defendants apparently conceding to the first issue, Justice Nieckarz, held that copyright in the Drawings subsisted in favour of the plaintiff. The plaintiff's work was original, and the designs included various architectural components that the plaintiff chose using skill and judgment.

Turning to the issue of infringement, Justice Nieckarz determined that, based on the drawings filed as exhibits and the expert evidence, the Gammond Design was substantially similar to the Drawings and this would have been notable even to a lay person seeing the drawings. Justice Nieckarz also found that the defendants failed to demonstrate that the Gammond Design was a product of independent creation.

Ultimately, the Court declared that the plaintiff's copyright had been infringed and granted the plaintiff a permanent injunction preventing the defendants from using the Drawings and the Gammond Design, as well as $6,500 in statutory damages.

Fair Dealing

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

The plaintiffs, Tommy Wiseau ("Wiseau") and Wiseau Studio, LLC, claimed that Room Full of Spoons, a documentary focusing on Wiseau and his film The Room, violates Wiseau's copyright in his film, including Wiseau's moral rights. The documentary itself is 109 minutes long and contains seven minutes of clips from The Room, all of which are short and used before, after, or along with commentary. The documentary takes a critical look at The Room, especially Wiseau's shortcomings in his manifold roles with the film (director, producer, lead actor, writer, etc.), as well as the cult following that the film has amassed.

Justice Schabas found that Room Full of Spoons reproduced a "substantial part" of The Room within the meaning of s. 3 of the Copyright Act. While Justice Schabas did not consider the amount of reproduction to be large compared to the entire length of the film, it also was not "trivial".

On fair dealing, Justice Schabas found that irrespective of whether the documentary depicted Wiseau positively or negatively, use of the copyrighted materials was for the allowable purposes of review, criticism and news reporting. When assessed on the CCH factors, the Court found that the dealing was fair.

Turning to Wiseau's moral rights, Justice Schabas was unconvinced that a documentary that is negative in tone about a work necessarily violates a copyright owner's moral rights in that work. Furthermore, the Court found that the documentary did not prejudice Wiseau's honour and reputation.

While Wiseau put forward a number of other arguments including misappropriation of personality and invasion of privacy, the Court dismissed the plaintiffs' action. The Court found in favour of the defendants on their counterclaim alleging that the plaintiffs improperly obtained an ex parte injunction preventing the defendants from releasing Room Full of Spoons and for other wrongful acts that the plaintiffs committed. The Court awarded the defendants USD $550,000 in compensatory damages and CAD $200,000 in punitive damages.   

Evidence to Prove Standing

Lickerish, Ltd v Airg Inc, 2020 FC 1128

The plaintiff, a photographic syndication agency, had purportedly entered into an exclusive agency contract with Mr. Loiseau, a photographer, to act as Loiseau's agent for the syndication of his photographs. The plaintiff asserted that Mr. Loiseau had taken two photographs of Duchess of Sussex, Meghan Markle (the "Photographs") which were reproduced on the defendant's website.

Prothonotary Aylen found that the plaintiff lacked admissible evidence to prove that Loiseau was the owner of the copyright in the Photographs or that the plaintiff had an exclusive licensing agreement with Loiseau for the Photographs. On that basis, the Court found that the Plaintiff had not established that it had standing to bring its copyright infringement action, and even if it did, the Plaintiff had not proven infringement.

Legislative updates

Copyright Act, RSC 1985, c C-42

Bill C-4, An Act to implement the Agreement between Canada, the United States of America and the United Mexican State (the "Implementation Act") received royal assent on March 13, 2020. The Implementation Act implemented some but not all of the commitments that Canada agreed to under the Canada-United States-Mexico Agreement ("CUSMA") signed in 2018 and amended in 2019.

Among other changes, the Implementations Act amended the Copyright Act to extend the terms for copyright protection for anonymous and pseudonymous works, cinematographic works, performances fixed in sound recordings and sound recordings.

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

In force since December 4, 2020, the Time Limits in Respect of Matters Before the Copyright Board Regulations specify time limits by which the Board must render its final decision:

  • In a tariff proceeding with no hearing, the Board is required to make its final decision before the effective period of the proposed tariff begins.
  • In a tariff proceeding where a hearing on the matter is held, the Board is required to make its final decision within 12 months after the final day on which the parties may present their submissions to the Board.

[1] York University v The Canadian Copyright Licensing Agency ("Access Copyright"), 2020 FCA 77 at para 202.

[2] Copyright Act, RSC 1985, c C-42 at s 2.4(1.1).

[3] WIPO Copyright Treaty, 20 December 1996, Can. T.S. 2014/20.

[4] Entertainment Software Association v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34.

[5] CMRRA-SODRAC Inc. v. Apple Canada Inc., 2020 FCA 101 at para 12.

[6] Google Inc v Equustek Solutions Inc, 2017 SCC 34

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