Copyright - 2016 Year in Review
February 16, 2017
Authors: Jill Jarvis-Tonus and Catherine Lovrics and Tamara Céline Winegust and Andrew Ngo
Below are our selections of the most interesting developments in Canadian copyright law in 2016 … from documentaries, toys, building plans, surveys, and software, to treaties, alleged copyright trolls and reverse class actions.
Limits of copyright protection: facts, non-fictional characters and useful articles
Two cases from the past year addressed the limits on copyright protection.
First, Maltz v Witterick, 2016 FC 524, affirmed that copyright does not protect facts, irrespective of whether the facts are “large” (e.g. Germany invaded Poland in World War II) or “small” (e.g. a soldier’s diary entry disclosing a specific event during World War II). The decision involved whether copyright in a documentary film was infringed by a book that took the “core story” from a documentary based on historical facts, with differences in expression, content, form, feel and experience, and without a substantial taking of structure, tone, theme, atmosphere and dialogue. The respondent in Maltz v Witterick prevailed by arguing that her fictionalized version of the appellant’s compiled history (i.e. that formed the subject of the appellant’s documentary) did not infringe upon any protected work. The decision confirms that copyright only protects the expression of facts: “Facts are facts; and no one owns copyright in them no matter what their relative size or significance … The particular means, method, and manner the Applicants used to tell [the] story, such that instances of verbatim copying – i.e. transcription of the Documentary – may well constitute copyright infringement. However, using an actual fact from the Documentary is not infringement no matter how large or small, significant or insignificant, such a fact may be.” As an adjunct to copyright not protecting facts, the decision also limits the scope of protection afforded to well-delineated characters to fictional characters: “there are only real people or references to and recollection of once real persons, and there cannot be copyright over a real person, whether dead or alive”.
Documentary filmmakers and non-fiction authors may take comfort in the decision since it confirms that compiling facts, even obscure facts from a single source, does not carry an inherent risk of infringement, despite a holistic approach to infringement. At the same time, though, the decision limits the ability to enforce non-fiction copyrights against a subsequent teller of a true story, irrespective of who uncovered the facts.
Second, Corocord Raumnetz GMBH v. Dynamo Industries Inc, 2016 FC 1369, affirms that once 50 copies of a useful article have been sold anywhere, copyright is no longer enforceable. There are only a handful of Canadian cases that discuss the scope of the Copyright Act provision that deems it non- infringement to copy useful articles. The decision is noteworthy, not only because it confirms that the threshold number of 50 sales applies to global sales, and not Canadian sales, but also because it sheds light on what “useful” means. In a prior case, the Federal Court of Appeal made obiter comments that “useful” works must have a practical use in addition its esthetic value, and drew a line between useful jewellery (a tie clip or cufflinks) and non-useful jewellery (purely ornamental brooch or earrings). Play structures were at issue in this case, and the Court found that their being designed to be played on is “clearly useful, and … more than just a work of art to be merely observed and admired.” Toy manufacturers are likely to note the decision, since it remains an open question under Canadian law whether children’s toys are “useful” articles. This decision supports the argument that toys are useful articles, at least those toys and playthings whose design is not guided by aesthetic purposes, but by security concerns and safety standards.
Injunction against devices that enable acts of infringement and “induce” copyright infringement
In Bell Canada v 1326030 Ontario Inc, 2016 FC 612, an interlocutory injunction was issued against vendors of pre-loaded set-top boxes. These boxes were “pre-loaded” with apps that allow consumers to download or stream pirated content for viewing on that television – including the plaintiffs’ content.
The case is noteworthy because action was successfully taken against the party selling the devices, not the party creating the apps who is truly providing the service that results in direct access to the pirated content. Canadian copyright laws were recently amended to introduce infringement by "services" (not devices) that primarily enable acts of infringement, with enumerated factors to assess this type of infringement. It is interesting that the Court found infringement by the party who sold the devices, without formally canvassing the factors to determine if a service is "primarily for the purpose of enabling acts of infringement”. It is also worth mentioning that the Court referred to infringement based on "inducing" infringement. This is a US concept, different from the Canadian concept of “authorizing” infringement. The defendants were denied the protection of the “conduit” exception. Evidently, using slogans such as “Original Cable Killer” and offering tutorials on how to use the set-top boxes “went above and beyond” providing merely the hardware.
The Court accepted the plaintiff’s argument that the continued proliferation of these boxes would lead to the irreparable harm of consumers permanently cancelling their subscription to the plaintiffs’ services (the plaintiffs including, among others, Bell, Rogers, and Vidéotron). The Court was unmoved by a defendant’s claim that the interlocutory injunction would injure his only source of revenue (i.e. advertising and selling these set-top boxes), since the defendants were not actually barred from selling and advertising the legal aspects of their products.
As of this time, some of the defendants have appealed the order; this case remains ongoing in the Federal Court of Appeal.
Proportionality of statutory damages
Two 2016 decisions confirmed that statutory damages should not be disproportionate to profits, while still serving as a deterrent.
In Microsoft Corporation v Liu, 2016 FC 950, statutory damages for five counts of infringement were assessed at $10,000 each – half the statutory maximum – for a total of $50,000. The statutory maximum – which would have brought the total to $100,000 – was thought to have been disproportionate to the amount of profit the defendant may have made by the infringing activity. Punitive damages in the amount of $50,000 were also awarded, bringing the total to $100,000. The requested $250,000 in punitive damages was not considered reasonable because the amount exceeded the amounts awarded in other cases where the nature and extent of the misconduct by the individual defendants was more egregious than that of the defendant in this case. There was also little justification offered for why the amount of punitive damages should significantly exceed the statutory damages amount being sought.
In Royal Conservatory of Music v Macintosh (Novus Via Music Group Inc), 2016 FC 929, statutory damages were assessed at the lowest end of the commercial range ($500 for each work, for a total of $10,500 in damages), largely because there was limited evidence tendered as to the probable damages. The case confirms that there must be some correlation or relationship between actual damages and statutory damages for the award to be fair and proportionate. The court reasoned that, in light of “poor record-keeping and rights management on the part of both parties”, a large damage award would not actually deter further copyright infringement. The decisions affirms that the more evidence of probable damages, the easier it will be for the Court to arrive at a fair and proportionate award of statutory damages (even though any estimation of probable damages will not be determinative).
Trolls, fair dealing, browsewrap agreements and technological protection measures
In Blacklock’s Reporter v Canada (AG), 2016 FC 1255, the Federal Court found that staffers at the federal Department of Finance were fair dealing for research purposes when they copied a pair of Blacklock’s articles protected by a paywall and shared them internally. To protect its content, Blacklock’s relies on a paywall (a “technological protection measure” requiring a password by a paid subscriber to access content), as well as a browsewrap agreement (rather than a clickwrap agreement) that prohibits subscribers from distributing the articles. Neither the Department, nor the staffers had a subscription, and the articles were sent by a paid subscriber (notably, unsolicited). The Department admitted it used the articles without payment or consent. The Court found that the Department’s activities constituted fair dealing. It is important to note that the “fair” analysis turned on specific facts, including that (a) the articles were sent to the Department unsolicited,(b) there was limited distribution of the articles within the Department for a legitimate business purpose to address concerns regarding information being misrepresented, (c) no commercial advantage was being taken, and (d) no republication occurred. Also, with respect to the browsewrap agreement, the Court found that there was insufficient notice to subscribers of the Terms and Conditions. Blacklock’s was ordered to pay $65,000, plus interest, in costs to the Attorney General. The Court did not go so far as to resolve an allegation that the litigation was a form of copyright abuse by a copyright troll, but it did acknowledge there were some “troubling aspects to Blacklock’s business practices”. The Court further stated that “[w]hile the public interest is served by the vigilance of the press, copyright should not be a device that serves to protect the press from accountability for its errors and omissions.” At this time, part of the case continues before the Federal Court of Appeal.
In an earlier case before the Small Claims Court (1395804 Ontario Limited (Blacklock’s Reporter) v. Canadian Vintners Association, 2015 CanLII 65885), Blacklock’s successfully argued that there could be no fair dealing if a technological protection measure was circumvented and a browsewrap agreement breached. In the Small Claims Court case, the Defendants, the Canadian Vintners Association (an association representing Canadian wine producers) and its President and CEO, were found liable for copyright infringement and ordered to pay over $13,000 in damages (including $2,000 in punitive damages) for accessing and copying an article from an electronic newsletter published by the Plaintiff, Blacklock’s Reporter, that was protected behind a subscriber paywall. The Defendants obtained the copy by having an outside contact, who did subscribe to the Plaintiff’s publication, cut and paste a copy of the article and send it to the Defendants. The Defendants claimed they required the copy to consider whether the article, which contained statements about them, was truthful. They took the position that while they were not subscribers, the article was lawfully accessed by a subscriber, and that, in any event, the Defendants’ use amounted to fair dealing.
Derivative versus distinctly different architectural works
A Nova Scotia case, MacNutt v Acadia University, 2016 NSSC 160, addressed the scope of copyright protection granted to architects and building designers in “concept plans”, and to what extent copyright can be used to prevent further designs being created from those plans, i.e. derivative works. Acadia University hired Ms. MacNutt/ Pier101 Home Designs Inc. to create concept plans for an expansion of Alumni Hall, which were presented to the public and used to secure funding. Once funding was secured, Acadia retained another architect to proceed with the project. The Nova Scotia Trial Court found that Ms. MacNutt’s “concept plans” were “distinctly different” from the design ultimately used for Acadia University’s “Wu Welcome Centre”, and that any similarities were a consequence of the constraints on the design (“Georgian style”). The architect that completed the plans denied using Ms. MacNutt’s drawings, and maintained that her drawings were deficient and did not account for building code requirements. This appears to have been accepted by the Court, which found no unauthorized taking of the original early-stage architectural drawings. The Court further found there was no implied agreement for Ms. MacNutt to continue with the project beyond the concept phase, irrespective of Ms. MacNutt’s testimony that if she had charged typical design rates for the concept plans, her fee would have been nearly 10 times higher than what was charged.
It is noteworthy that the concept of a “derivative work” is not expressly provided for in the Canadian Copyright Act. In Théberge v Galerie d'Art du Petit Champlain Inc, 2002 SCC 34, the Supreme Court of Canada confirmed that, while Canadian law provides certain limited protection for derivative works, that protection is not as expansive as in the US which extends to “any other form in which a work may be recast, transformed, or adapted”. Theberge addressed derivative works from a different angle than this case, and it will be interesting to see whether the concept will be further expounded upon on appeal of this decision.
Canadian liability for erroneous DMCA takedown requests
In Whyte Potter-Mäl c Topdawg Entertainment Inc, 2016 QCCQ 11725, the Quebec Court found Topdawg Entertainment, Interscope Records, and Universal Music Group liable for damages arising from the two month removal of the plaintiff’s song from YouTube and SoundCloud. The take-down resulted from the defendants’ submission of Digital Millennium Copyright Act (DMCA) takedown requests that later turned out to be false. This is the first case where liability was awarded in Canada against a copyright owner for issuing a DMCA takedown request.
A comparative approach to copyright protection for databases
The Commissioner of Competition v. The Toronto Real Estate Board, 2016 CACT 7, deals principally with competition issues relating to the Toronto Real Estate Board placing restrictions on distribution of certain data from its Multiple Listing Service® database. However, the decision also addressed copyright in databases. The Competition Tribunal found there was not sufficient evidence advanced by the Toronto Real Estate Board to demonstrate copyright subsists in its MLS® database as a result of the arrangement of data. The Tribunal held, in part, that the arrangement was common place, and, therefore, not protectable. The latter finding follows the decision in Tele-Direct (Publications) Inc. v. American Business Information, Inc.,  2 FCR 22, and is inconsistent with the skill and judgment test set by the Supreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, since it introduces a requirement to show that database arrangements are “unique” for copyright to subsist. The decision has been appealed, and the Tribunal’s approach to originality to assess the subsistence of copyright in TREB’s MLS® database is among the issues raised on appeal.
Reverse class action with ISP ordered to disclose identity of P2P users
Voltage Pictures selected a customer of Rogers (a Canadian ISP) as the representative defendant in a proposed “reverse” class action proceeding, alleging that the Defendant (and others like him/her) engaged in illegal file sharing, infringing the copyright of Voltage Pictures and other applicants. The Rogers Customer was identified only by IP address, and Voltage et al sought disclosure of the customer’s identity from Rogers.
The Federal Court, in Voltage Pictures, LLC v John Doe, 2016 FC 881, ordered Rogers disclose the contact information to Voltage et al. (a Norwich order). To balance privacy interests, however, the court also ordered that Voltage et al not make the identity of the unlucky individual known to the public in advance of it becoming part of the public record of the proceeding.
Voltage et al. attempted to ground their disclosure request in Canada’s recently implemented “notice-and-notice” regime, an approach that did not work. The Court found that the regime does not provide any detailed or comprehensive mechanism for copyright owners to enforce rights. The Court also found that, while ISPs are not permitted to levy a fee or seek compensation for forwarding a notice of claimed infringement, and retaining records, they may seek the costs of complying with a disclosure order. The Court, therefore, allowed Rogers’ request for such compliance costs with the order.
Class actions and academic copying
In May 2014, Laval University did not renew a global license with Copibec (a collective rights agency for authors in Quebec) concerning payments for reproductions of copyrighted works in compiled texts sold to students or made available on the Internet. Laval claimed it did not require the license, as the copies covered by the license constituted “fair dealing” for the purposes of private study, research and education. Copibec, sought to launch a class action on behalf of the authors it represented. In February 2016, the Quebec Superior court, in Société québécoise de gestion collective des droits de reproduction (Copibec) c Université Laval, 2016 QCCS 900, refused to certify the class action brought by Copibec against Laval University for copyright infringement. The court concluded that Copibec’s proposed action failed to raise identical, similar or related questions of law or fact, and that it would fail to adequately represent the interests of the class members—two preconditions to class certification. Copibec appealed. Laval’s motion to dismiss the appeal was denied (2016 QCCA 955) without a hearing or costs. The substantive appeal was heard November 23, 2016 in the Quebec Court of Appeals. A decision is expected in 2017, as is the decision in Access Copyright’s lawsuit against York University, a case involving similar allegations of copyright infringement and fair dealing.
In Andrews v McHale, 2016 FC 624, the court stopped short of finding that authorship of software under the Copyright Act requires that the author write the code; however, the ruling does seem to imply that authorship in software, for the purposes of the Copyright Act, does not arise from performance of non-coding, industry-specific modifications to pre-existing software – for example, obtaining and inputting industry-specific information to the program, including content, calculations, organization, structure, reporting functions, tables, cross-references and overall guidance; streamlining the import of user information; coordinating and streamlining between different elements of the program; developing cross-referencing algorithms to streamline client services. It is noteworthy, though, that there was little detail surrounding these contributions, and no evidence as to the linkage between them and their possible expression in the software.
The Court left the door open to authorship by contributing to software, beyond the act of creating code text, by contributing to program structure and design features. Such a view is not unique in copyright law, and might be seen as similar to the approach given to cinematographic works, where authorship extends not just to the person who actually films the work, but also to those involved in preparing the camera angles, scripts, soundtracks, lighting, etc. However, the modifications and input by the Plaintiff in this case were found to “fall into the category of ideas, methods, procedures, algorithms or other categories of contributions which, while perhaps valuable, fall outside the type of intellectual effort protected by copyright law”. The decision also confirms that a copyright registration certificate merely creates a presumption of copyright ownership, which can be negated by contradictory evidence (although the Court’s power to expunge a copyright registration must be grounded in a party’s pleading to explicitly invoke the Court’s jurisdiction to do so).
Section 12 of the Copyright Act addresses the term of government (Her Majesty’s) ownership of copyright in any work “prepared” or “published” by or under the control of government. Keatley Surveying v Teranet, 2016 ONSC 1717 is one of a handful of cases to look at this provision. The case determined a long running copyright dispute between land surveyors and Teranet, a private company that manages Ontario’s electronic land registry system as a service provider to the government. Teranet provides copies of surveys to the public upon payment of a fee, without paying any royalties to the land surveyors who prepared the surveys. The system is governed by law, which prescribes the fee levied by Teranet. Keatley brought a class action on behalf of 350 land surveyors, alleging that Teranet infringed the surveyors’ copyright, and unlawfully appropriated the benefit of the surveyor’s work.
The Ontario Court expressed doubt that Section 12 of the Copyright Act applied to determine ownership per se of the plans, noting that “[j]ust because the federal or provincial government publishes or directs the publication of someone else’s work (as opposed to governmental material) cannot mean that the government automatically gets the copyright in that work.” Instead, the Court concluded that provisions of the Ontario Registry Act and Land Titles Act resulted in property in surveys, including copyright, being transferred to the province once surveys are registered and deposited with the Ontario Land Registry System. Once that occurs, the further publishing of the plans is by the direction or control of the government, and Section 12 of the Copyright Act applies to determine the term of copyright.
The finding that the government owned copyright in the plans determined the dispute - the copying and distribution of the plans by Teranet did not violate the exclusive rights of the authors of surveys.
Canada became the 20th nation to accede to the Marrakesh Treaty To Facilitate Access to Published Works by Visually Impaired Persons and Persons with Print Disabilities, bringing the Treaty into force. Canada’s Copyright Act is now amended to facilitate access to copyrighted materials for “persons who are blind, visually impaired, or otherwise print disabled”. For example, it is no longer an infringement for not-for-profit organizations, including governments, to make a copy specifically designed for persons with a print disability provided that the work is not commercially available in a similar format. The legislative changes are intended to help the more than 800,000 Canadians that live with a visual impairment and the approximate 3 million Canadians with an impairment related to comprehension (e.g. autism) or the inability to hold or manipulate a book (e.g. Parkinson’s disease). Regulations will be introduced to identify an authority to whom not-for-profits must report under the regime, and possibly to set royalties.
A number of other international developments are also worth mention, even if there is no immediate impact on Canadian copyright. Leaked drafts of the Trans-Pacific Partnership (TPP) Agreement suggested that Canada was fighting to retain a copyright term for artistic works of life of the author and 50 years; however, the finalized proposal signed by Canada shows that acceding to the TPP would require Canada to change that term to life of the author and 70 years. Since Donald Trump’s election has seemingly ended US involvement in the TPP, it is unclear whether Canada will proceed to ratify the Agreement. Meanwhile, Canada and several European nations signed the Comprehensive Economic and Trade Agreement (CETA), a free-trade agreement between Canada and the European Union. It is not expected that ratifying CETA will require any material amendments to the Copyright Act, due to the changes to Canadian law already brought about by the 2012 Copyright Modernisation Act.
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