Introduction
In analyzing recent copyright developments in the digital area and assessing their practical applications in Canada and abroad, a traditional copyright concern emerges: namely, what is proper balance between the rights of owners and the rights of users. This paper examines a potpourri of judicial and legislative initiatives within the last year or so, which have further shaped copyright law in the digital environments. On a practical level, these initiatives have made it somewhat clearer when a user, who controls the digital transmission of copyrighted materials must act in order to protect the owners and when the owners must stand back and not, through technological means and otherwise, overreach the boundaries of their monopoly. Overreaching would inevitably cripple reasonable access to copyrighted materials in digital mediums and thus defeat one of the main purposes behind copyright protection.
I turn first to the U.S. and a review of the proliferation of litigation that has been brought in respect of Peer to Peer file sharing services.
Peer to Peer File Sharing Systems
United States case law concerning copyright infringement of music through Peer to Peer ("P2P") file sharing systems has focused on the concepts of (a) control, (b) a provider's ability to deny access and (c) constructive knowledge of the infringement. Where such elements exist, liability has been found.
On balance, U.S. record companies and their trade association, Recording Association of America ("RIAA") have been quite successful in obtaining court orders where these three factors can be shown. A summary of the key cases follows.
MP3.COM
Early on in this saga, RIAA scored a victory in stopping the popular website, MP3.com. This site permitted users to download their favourite sound recordings. To provide this service, MP3.com created a large database of hundreds of thousands of recordings, compressed into MP3 format. RIAA sued MP3.com for copyright infringement.
The company argued that its activity was legal because the business was simply a storage and retrieval service for its users’ own music files. Before downloading, a user had to either provide indicia that it owned the recording requested (the so-called “Beam-It” service) or that he/she would order the recording for delivery (the so-called “Instant Listening” service). Providing a storage service for a music listener’s personal library of recordings, MP3.com submitted, fit within “fair use” under the U.S. Copyright Act.
The court rejected this defence stating that the storage/retrieval analysis was strained at best and a sham at worst, given that it was not legitimately purchased recordings, owned by MP3.com’s users, that were stored in digital copies but rather the stored recordings were obtained from the unauthorized copies on MP3.com’s database.
In awarding RIAA statutory damages of $25,000 per CD copied, the court found MP3.com liable for “willful” infringement in that it knew from the early stages of the business’ development that there were serious questions of legality. Due to the secrecy with which the service was launched, the only advice the company received was from its own law firm, which advice MP3.com declined to enter into evidence. The court held, therefore, that MP3.com, with knowledge of the risk, but recklessly indifferent to the consequences, proceeded quickly and secretively to launch its business, amounting to willful infringement.
Given that the equivalent defence, under Canadian law, of “fair dealing” , is even more limited in its application , there appears little doubt that MP3.com’s defence would similarly fail if the case had been tried in Canada. Given that the copying of the music was done by MP3.com and not the user, for the purposes of a commercial undertaking, there seems little scope to argue the activity is legitimate because it was for a user’s personal study, research or review as contemplated by the fair dealing provisions.
Faced with the potential for staggering amounts of damages, MP3.com was acquired by Vivendi Universal and has remained active on the Net.
Even more contentious and passionately argued was the dispute over the wildly popular Napster software program, whose owner was sued by RIAA members for copyright infringement and “contributory infringement” . A user downloaded free software from the Napster site enabling him/her to connect with other users’ computers for the purpose of sharing and copying each other’s music files. Napster, unlike MP3.com, did not itself copy any recordings - it merely provided software which connected the user to other users and then that user decided if he/she wished to copy a music file. The site included a policy that warned the user that copying copyrighted materials was illegal and that liability for infringement lay with the user.
Napster argued that its activities, including posting this policy, brought it within “safe harbour” exemptions recently added to the U.S. Copyright Act by the Digital Millennium Copyright Act (discussed later in this paper). These sections give limited liability for Internet Service Providers (“ISPs”), who act as “mere conduits” of data between users.
This defence, however, was flatly rejected by the U.S. District Court of the Northern District of California. Justice Patel ruled that, although it operates a server, Napster does not act as an ISP to connect people. The software permits the users to connect to each other. Therefore, the “safe harbour” provisions do not apply.
In granting an interim injunction against further distribution of the plaintiffs’ musical recordings, Judge Patel found that the Napster technology’s primary function was to facilitate the unlawful copying of sound recordings and any lawful uses it provided, such as chat rooms, were minor. In essence, she held, the development of the software and the business were for the purpose of infringement.
This fact, she felt, distinguished Napster from Sony in the Sony Corp v. Universal City Studios Inc. case where the court found that the mere supply of a technology, capable of being used for infringing purposes, was not sufficient to prove “contributory infringement” where the technology was also capable of non-infringing uses. In that case, Sony’s BetaMax machines were used by the consumer to record and time shifting television programming, an activity the court found lawful within the ambit of fair use.
Arguably, Judge Patel is right that a technology that permits the time shifting of television programs, which are unlikely to be retained once viewed, is qualitatively different from a service that enables users’ to hook up to virtually millions of other computers (at its height, there were approximately sixty million Napster users) and swap unlimited commercial music files, which are likely to be retained as substitutes for purchasing the CD. Therefore, in addition to failing in its attempts to qualify for the “safe harbour” provisions as an ISP, Napster could also not avail itself of the fair use provisions under the U.S. Act.
Although Canada does not yet have similar “safe harbour” provisions in its Copyright Act, Anglo-Canadian jurisprudence on what constitutes “authorizing” infringement (the Canadian equivalent of “contributory infringement”) takes the same general approach as codified in the U.S. “safe harbour” provisions, namely, was the alleged authorizer actively involved in the infringing activity itself or did it merely act as a passive conduit in a technological process that enabled the user to infringe. Did the authorizer exercise control over the user’s use of the technology?
Under Canadian law, a person will be liable for “authorizing” another to infringe a copyright where such person’s actions either amount to “sanctioning” the infringing use of a technology or displaying a willful blindness about the infringing activity, coupled with some benefit to the authorizing party arising from the infringement itself, and not just from supplying a technology capable of being used to infringe.
For example, where a business sold double decker tape decks and blank tapes but made no profit from distributing bootleg recordings made by such tape decks, no infringement was found. It was significant in avoiding liability that the tape deck could also be used for substantial non-infringing purposes and that the vendor had no control over how the user used the tape decks after the sale. In Napster’s case, the court found no substantial non-infringing uses for the service.
A decision in the appeal from Justice Patel’s order granting the preliminary injunction against Napster issued February 12, 2000. The Ninth Circuit Appeals court affirmed the ruling, in part, and reversed it in part. It agreed with the District court that a fair use defence by Napster would not likely succeed at trial and that the plaintiff had proven sufficient knowledge on Napster’s part of the activities of its users that a claim of contributory infringement would likely succeed. Napster’s defence of permissible “non-commercial” use under the U.S. Audio Home Recording Act was also rejected by the Appeals court because that Act had been held not to apply to the downloading of MP3 files to computer hard drives .
However, the Appeals court did not agree that the “safe harbour” provisions brought in under the Digital Millennium Copyright Act would necessarily never be available to overcome claims of “contributory infringement” in specific circumstances. More significantly, the court found the original injunction order too broad in that it placed the entire burden on Napster to identify and delete recordings from its service which were owned by RIAA members. The court shifted the burden giving RIAA a specific amount of time to provide a list of infringing recordings to Napster. Then Napster had a certain period of time to insure the recordings on the list were deleted.
Napster has worked to comply with the court order, resulting in a significantly reduced service.
Another music giant, BMG Entertainment, after investing heavily in the service, attempted to purchase Napster, which recently declared bankruptcy. However, the sale was blocked by the Bankruptcy Court and the service is dormant at the moment.
AudioGalaxy
The AudioGalaxy.com service was essentially a Napster-like clone, which tried to step into the breach and appropriate some of the Napster users when the court order enjoining that service was issued.
AudioGalaxy provided users with a fully integrated infrastructure and facilities, including a "hub" of central computer servers to which users connected and a continuously updated database and index of available sound recordings, information about the file sizes, popularity and download speed and provided for downloading proprietary software called "the Satellite", which allowed users to efficiently identify, copy and distribute recordings with other users. Like Napster, AudioGalaxy planned to make its income by cultivating an extensive user base to attract investment dollars as well as advertising dollars.
Technologically speaking, the service operated as follows: AudioGalaxy used a standard Internet browser and its own proprietary satellite software to allow users to connect their computers to the defendants' hub of computer servers by logging on to its website. Once connected, users could perform searches for artists, songs, or albums of interest. The music files of users who had connected to the system and made files available for copying were uploaded via the "Satellite" software onto AudioGalaxy's File Index Server.
The server created an index based on a collective directory of files available to be transferred, either presently or at sometime in the past. However, the system did more than simply advise users of the availability of certain recordings, it also created a connection to each music file so that it could be downloaded to the user who has selected that music file for copying.
The service also went further than Napster, in that it organized its File Index Library by aggregating all files related to a particular artist or song into a single index. These specialized indexes facilitated even easier illicit copying and distribution of copyrighted works. It is also clear that AudioGalaxy monitored its users to keep track of when they logged on and off. Furthermore, they had a feature to their software called "the Satellite Auto Resume Function" that would permit a connection to an alternate user who had the same song file as requested, in the event that the initial file from which a download had been requested logged off in the middle of the transfer.
As in Napster it is likely that RIAA could have prevailed in its lawsuit against the AudioGalaxy service in that it would have been able to show the requisite knowledge on the part of AudioGalaxy, in that, all of the recordings most requested were top 40 hits, in which rights were clearly owned by RIAA members. Furthermore, the service hosted various bulletin boards and chat rooms where users openly discussed infringing conduct that was occurring on its system and gave advice on how to circumvent a very paltry filtering system that the defendants had instituted in an effort to pretend that they were screening out copyrighted works.
RIAA had also given them express notice of the infringing activity.
Based on this activity, RIAA sued AudioGalaxy for both contributory and vicarious infringement related to the direct infringement done by users of the service. The lawsuit filed May 24, 2002 requested an interlocutory injunction.
However, this action was short lived. In June 2002, RIAA and another plaintiff, The National Music Publishers Association, settled with AudioGalaxy.com by allowing it to operate a "filter-in" system which required that for any music available, the song writer, music publisher, and/or recording company must first consent to the use and sharing of the work. In addition, AudioGalaxy was to pay the music publishers and recording industry a substantial sum, based on its assets.
Aimster.Com (now Madster)
More recently, RIAA and various Music Publisher Associations have pursued the P2P service, Aimster.com, (later changed to Madster.com, due to a domain name dispute with AOL), and its principle, John Deep, for running a similar type of file trading system but with further enhancements. Aimster provides a P2P file sharing infrastructure, which piggybacks on AOL's instant messaging system. The messaging system, once installed on an AOL user's computer, allows the user to connect to AOL's instant messaging network and specify "buddies" at other computers, who have also installed the AOL software. One feature offered by the messaging software is the ability, in real time, to transfer files to other buddies, including MP3 music files.
The Aimster service allows users to send messages and files to other users through a series of P2P networks. Aimster applies an encryption technology so there is complete privacy as to the data sent, including the identities of the transferring users. Accordingly, the Aimster owner, John Deep, claimed he had no knowledge of the files exchanged or by whom. Mr. Deep characterized his service as an "innocent provider of infrastructure services to end users", being merely an ISP, like AOL.
RIAA's position was that Aimster was a highly integrated system that connects people throughout the world (who otherwise would likely have had no contact with one another) and encourages and enables them to make music files and other copyrighted works available for copying and distribution through a single database index.
At page 7 of its decision granting an interim injunction, the court described the system as follows:
"In order to use Aimster, prospective users must download the Aimster software from its website. Downloading and using the software (known as Classic Aimster) is free. Once the software is installed and executed, Aimster piggybacks onto America Online's IM (i.e. instant messaging) Network and allows its users to communicate and share files with any other Aimster user currently online. Essentially, Aimster greatly expands the file transferring capability of AOL IM, described above, by designating every Aimster user as the buddy of every other Aimster user. In this way, every Aimster user has the ability to search for and download files contained on the hard drives of any other Aimster user (provided that the user has previously designated those files to be available for searching). The Aimster website also posts Terms of Service to which every Aimster user putatively agrees before using Aimster. The terms of service specifically state that Aimster will disable the access of users who repeatedly violate copyright law.
The method by which Aimster accomplishes its purpose is quite simple. Once logged onto the Aimster system, a user need only type in a file search to be presented with a list of all Aimster users currently online (up to 500) who have files meeting the search criteria on their hard drive available for download…users have the ability to do more advance searches as the Aimster software allows searching to be restricted by file type and bit rate. The search results provided the Aimster software show the file name and other file characteristics directly pertinent to the distribution to MP3 files (such as file size, bit rate, frequency and song length) notably the software also provides the unique screen name of the buddy who currently possesses the file.
Once the search for a suitable file is complete, a user need only click the file name title and then click on the download button to obtain a copy of the song. At that moment, the Aimster system facilitates the connection of its two users through a private, encrypted network and the file is transferred between them. During the copying of a file, the Aimster system provides a constant update about the status, including the progress, the rate of transfer, the time remaining (of each download or upload).
While any Aimster user is on the Aimster system, the files that user previously designated available for transfer are available for searching and downloading by any other Aimster users. Thus, while an Aimster user is searching for files to transfer on to his/her hard drive, other Aimster users are able to search and download files from that users hard drive…All of the searching for and transfer of files on the Aimster system is accomplished without a searching user needing to know the location or identity of any other individual or specific Aimster users.
In addition, Aimster provided several other features of its website which indicated its involvement and facilitating of infringement of copyrighted files. First, for some period of time, now discontinued, Aimster offered the "Guardian Tutorial" feature which was a section of its website which methodically demonstrated how to transfer and copy copyrighted works through the Aimster system using illustrative on-screen examples of some of the copyrighted works that defendants had previously been notified were being infringed on the Aimster system.
In addition, Aimster hosted several chat rooms and bulletin boards which, when reviewed, indicated that participants openly discussed swapping and transferring copyrighted songs belonging to the plaintiffs along with various rhetoric about cheating the music industry".
Finally, and most damning, in and around November 2001, Aimster launched as part of its service, "Club Aimster" which repackaged the basic Aimster service to greatly enhance the ability of its members to locate and download copyrighted music. For a $4.95 monthly fee, users were given access to a list of "the Aimster Top 40" which was the 40 hot new releases, most frequently downloaded by users, virtually all of which were owned by the plaintiffs.
This top 40 list offered a play button feature that would begin to automatically copy and transfer a particular song from the list onto a member's computer. Through this club, Aimster seamlessly allowed for the distribution of copyrighted music without even the inconvenience of having to type in an Aimster search request.
The court was also persuaded by this addition to the service that there were commercial aspects to the service in that Club Aimster required a $4.95 monthly membership fee. Furthermore, the site also offered merchandise for sale, related to Aimster, such as jeans, fragrances, nutritional supplements. The site also solicited users to donate a $10 payment to help offset the costs of fighting the RIAA litigation and which provided the user with an Aimster "Fight for Freedom" poster.
Having reviewed these facts, the court turned to the standard the plaintiff needed to show to obtain an interim relief, namely, (a) that its contributory and vicarious infringement claims, had a likelihood of success, (b) no other adequate remedy at law existed and (c) the plaintiff would suffer irreparable harm if the injunction was not granted. The court would then review where the balance of convenience lay between the parties.
The court held that the plaintiffs were likely to succeed on both infringement claims. Regarding contributory infringement, it had to be shown that there was a direct infringement that Aimster was "enabling" and "facilitating". It was without question that the end users of the Aimster system were infringing the plaintiff's sound recordings, copyright in which had been registered
The court rejected that the Aimster users were protected from liability under the Audio Home Recording Act of 1992 ("AHRA") which forbids actions to be brought based on the "non-commercial use" of a device to record digital analog music recordings for "personal, private use". The court, as in the RIAA v. Diamond Multi-Media case, which involved the manufacture of Rio MP3 Player (see discussion of this case below), rejected the applicability of the AHRA on the basis that the Aimster system did not meet the definition of a "digital audio recording device". Furthermore, its use was not for the creation of single copies of music for personal use through a time shifting facility.
More specifically, in the Diamond Multi-Media case, the Rio MP3 player was a device that transferred music files stored on a computer into a hand held device that could be taken away so the music could be played in other locations. It did not permit a mass distribution online of multiple copies, as did the Aimster system. Therefore, the AHRA was not available as a defence to a finding of direct infringement by users of the Aimster system.
Having shown direct infringement by Aimster users, the plaintiffs would also likely be successful in demonstrating that the defendants were liable for contributory infringement because they had "with knowledge of the infringing activity, induced, caused, or materially contributed to the infringing conduct of another".
The court found that the defendants had actual knowledge arising from (a) the various demand letters sent by RIAA with enclosures of screen shots showing actual sound recordings they owned being transferred, (b) the Guardian Tutorial feature, which specifically used copyrighted works as examples as of how to transfer, (c) the chat rooms, which included comments about specifically stealing copyrighted materials and cheating the recording industry, and (d) the Club Aimster feature, which made it even simpler to locate the top, commercially most valuable, recordings and download them directly with a click of a button.
The court flatly rejected the defendants' technical argument that, although it may have known that infringement per se was occurring, it could not, because of its own encryption system, identify which individuals were actually transferring specific files at a specific time. The plaintiffs may be able to point to specific users on the Aimster system that have copyrighted material "available" on their individual hard drives, but could not show that actual transfers of such materials between Aimster users actually occurred.
The court responded to this argument at page 22:
"Defendants encryption argument, clever though it may be, does not convince us that they lack actual knowledge of infringement. It may be true that, due to Aimster's encryption scheme, defendants are unaware of the actual specific transfers of specific copyrighted music between the specific users of the Aimster system. However, there is absolutely no indication in the precedential authority that such specificity of knowledge is required in the contributory infringement context. Furthermore, even if the encryption system was such that it prevented the defendants having actual knowledge of infringement, the surrounding factors, referred to above, it certainly would have given Aimster constructive knowledge, which was sufficient to meet the requirements under contributory infringement claims.
In respect of inducing, causing, or materially contributing to the infringing activity, it was shown that the defendants did contribute to the direct infringement by providing systems that would support such infringements, such as the proprietary software, and other support systems that facilitated the transfers. Again, the Club Aimster feature most impressed the court as demonstrating the extent to which the defendants contribute to infringing activity. The Aimster top 40 catalogues and presents for Aimster users the top copyrighted music available to transfer, it comments upon that music and in some cases, even suggests that the user should have it. Aimster predicates its entire service upon furnishing a road map for users to find, copy and distribute copyrighted music".
The court also rejected a policy argument that finding Aimster liable for contributory infringement would have an overreaching effect, making every Internet Service Provider liable when infringing material went over its service. Such argument ignored the reality of the defendants' service compared to search engines and instant messengers, such as AOL, which simply did not entice users to infringe others' copyrights. They also do not index, rank or comment upon MP3 music for its users to browse and copy.
Finally, in respect of contributory infringement, Aimster's defence based on the case Sony v. Universal City Studios (i.e. there would be no liability since the system was capable of substantial non-infringing uses), was also rejected. The Sony case revolved around the movie industry's attempt to enjoin the sale of Betamax videocassette recorders on the basis of contributory copyright infringement by manufacturers and distributors who knew purchasers could use them to make illegal copies of films.
However, no liability was found because there was a primary, non-infringing use made of the Betamax machines, namely, time shifting television programming on a temporary basis to allow a viewer to watch the program at a more convenient time. Such time shifting was found to be a "fair use" under the U.S. Copyright Act. Therefore, the device itself and its sale were non-infringing.
In the case before the court, there was no evidence that Aimster's service was actually used for the non-infringing purposes put forward in its arguments, such as connecting users of similar interests to share information and develop clubs or to allow the transfer of non-copyrighted materials, such as business records, from one user to another.
Finally, the court stressed another important factor, namely, that there was no ongoing relationship between the manufacturers of the Betamax machines and the ultimate users. Once a machine was sold, there was no control that could be exercised by the manufacturer/distributor over lawful/unlawful use of the device by the purchaser.
On the other hand, the Aimster service was not a discreet product, like a Betamax VCR, but rather a service that was ongoing to its users, providing them with software maintenance for transfers and continuing control of editorial content on Club Aimster. Therefore, Aimster, unlike Sony, continued to influence and encourage unlawful copying.
The court found that the plaintiffs had a likelihood of success on the claim of vicarious infringement as well. Vicarious copyright infringement is established when a defendant has (a) the right and ability to supervise infringing activity and (b) a direct financial interest in such activity. In the case at hand, i.e. Aimster had the right and ability to supervise its users, i.e. its own posted Terms of Use stated that it had the right to terminate individual users who violated copyright repeatedly. The Terms further stated that Aimster would take down infringing material.
Aimster also clearly controlled the access of users since they were required to log on, after paying a monthly fee to join Club Aimster, and had to supply a member name and password.
The court was also dubious of Aimster's claims that, due to its encryption system, it could not block an individual user's access without shutting the whole system down. Finally, there was nothing concerning the right and ability to control, which required Aimster to know the precise identifying information of each user before acting to stop infringement.
As an aside, the court rejected that Aimster could rely on any of the liability limitations provided under the Digital Millennium Copyright Act ("DMCA"), which shields ISPs, who act as mere conduits for the transfer of files through passive and automatic technological processes.
In addressing this issue, the court set out that the DMCA provides ISPs with four possible "safe harbours" from liability in respect of direct, vicarious and contributory copyright infringement claims. The first, which was potentially applicable to Aimster, called the Transitory Communication Safe Harbour, applies in situations where liability would otherwise arise from the service provider providing connections for infringing materials through its network. The second, the System Caching Safe Harbour, provides immunity in circumstances where there is an intermediate or temporary storage or caching of material on the service provider's system. The third safe harbour that might apply, the Informational Location Tool Safe Harbour, provided limited liability for service providers who, under certain circumstances, refer or link users to infringing material or infringing activity.
Before a service provider can rely on any of these provisions, however, they must meet two threshold determinations, namely, they fit within the definition of a "service provider" and they adopt and reasonably implement a policy which terminates access of users who are identified as repeat infringers.
On the issue of qualifying as a service provider, the court pointed out that the DMCA provides two very broad definitions which are applicable depending on which safe harbour provision is being relied upon. For the purpose of the Transitory Communication Safe Harbour provision, a service provider is defined as "an entity offering the transmission, routing or providing of connections for digital online communications, between or among parties specified by a user, of material of the user's choosing, without modification of the content of the material as sent or received".
For any other safe harbour provision, a service provider is defined even more broadly as "a provider of online services or network access or the operator of facilities therefor".
Given the broad scope of these definitions, the court, unlike the ruling in the Napster case, believed that Aimster could qualify, even though it was not traditionally what one would think of as an ISP, such as an AOL or MSN.
However, the defendants failed miserably on the second prong of the test i.e. adopting and reasonably implementing a disabling policy for repeat infringers.
Although, as previously stated, Aimster had adopted a "repeat infringer policy" in its Terms of Use and had made comments to the effect that it respected copyright law and expected its users to do the same by providing a detailed form on the site where copyright owner could fill out and identify a work that was being infringed. Aimster failed to implement this policy.
The defendants' position was that it didn't implement it because it couldn't be implemented given the encryption feature. The court rejected this position for two reasons, namely, (1) requirements under the DMCA that specified a copyright holder must provide an ISP with notice of an infringement did not require that owner to provide the internet protocol address of a particular copyright infringer, but rather, generally stated, that the service provider must implement a policy that provides for termination of access to repeat infringers in appropriate circumstances and (2) the court did not feel that the defendants should be able to set up an encryption system voluntarily to absolve themselves of responsibility and then rely on it to plead that it was impossible to implement their own policy.
The Aimster system also did not qualify for the caching exception because the service provider must be dealing with infringing material that is routed or transmitted through its system. As pointed out, Aimster's P2P technology permits two users to connect directly and transfer materials from one to the other without going through Aimster's infrastructure. Therefore, Aimster did not act as a conduit through which the data passed but rather it connected two users directly. Since Aimster could also facilitate completion of a transfer by having an automatic resumption feature where the download was interrupted, it also did not act as a "passive" conduit, but had the ability to intervene in the transfer.
Finally, in respect of Informational Location Tool Safe Harbour, the defendants did not qualify since they had actual knowledge of the infringing activity that was passing through its linking system, and, with this actual constructive knowledge, failed to expeditiously remove or disable access to the material. A service provider relying on this exemption must also not receive a financial benefit attributable to the infringing activity in a case where the service provider has a right and ability to control such activity. As noted above, Aimster did receive financial benefit and had a right and ability to control it.
In summary, then, the court found that the plaintiffs had established a prima facie case of both contributory and vicarious copyright infringement arising from the Aimster system. They also convinced the court that injunction was the only adequate remedy at law and that they would suffer irreparable harm, if Aimster was not enjoined. An injunction was ordered in September 2002.
However, my recent review of the Madster.com site indicates that the service is still operating. In fact, in November 2002, the plaintiffs brought proceedings to have Aimster found in contempt of the order and a show cause hearing was held on December 19, 2002. In January, 2003, the court ruled that Madster was indeed in contempt. Accordingly, the struggle continues.
KaZaA
The KaZaA company, based in Holland, is one of several P2P services (i.e. among them Grokster and Streamcast Technologies), which operate via technology provided by a company called Fastrack Inc., by providing downloadable software, which allows users to independently connect with each other. It is in the middle of numerous lawsuits. Among them is one involving the Dutch music licensing body Buma/Stemra. The case originally stemmed from a suit by KaZaA asking the Dutch court to force Buma/Stemra to continue negotiations about licensing its streaming music-on-demand service. KaZaA won that suit as the court found the copyright holders negotiated in bad faith. The conflict was exacerbated when Buma/Stemra asked for and won a shutdown order of KaZaA in its counter suit.
The Amsterdam district court initially ruled that the KaZAA P2P service was acting unlawfully by making software available that allowed users to download music files and must shut down, within 14 days, or face $40 000 US a day in fines. Regardless, and perhaps, arguably, because it needed to be open in order to comply with the negotiation order, KaZaA chose to ignore the shutdown order, and to appeal the decision.
Surprisingly, the Amsterdam Appeals Court overturned the District Court decision and ruled that the making available of the means only for publishing or copying of copyrighted materials was not, by itself, publishing or copying. Furthermore, if any infringement took place, it would be the user's responsibility, not KaZaA's.
One critical difference between this case and those of Napster and Aimster is that KaZaA's software technology does not require a central server in order to work and thus, KaZaA would not be able to shut down the network. As argued by the defendants in a motion for partial summary judgment in a U.S. lawsuit launched by various recording companies, the KaZaA operator does not "operate" the Morpheus user network nor does it operate a file-indexing service. It was pointed out that, (i)n even starker contrast to Napster, Morpheus software program users can (and in fact do) take advantage of that program's full communication functionality without KaZaA's continuing involvement. Even when KaZaA's own servers have been down, Morpheus use has been ongoing, with Morpheus users able to find and download files on their own.
The defendants further pointed out that the KaZaA system is capable of numerous non-infringing uses such as searching, obtaining and disseminating a wide variety of digital content: software, video, audio, graphics, and documents. As a note of interest, they also contended that this case had implications for many technologies that might be used for infringing purposes, especially digital technologies, some of which may be used in conjunction with Morpheus such as: high speed communications devices, such as DSL and cable modems, favored by those who want to download video or sound files; browser software (such as MS Internet Explorer or AOL's Netscape Communicator), for viewing, editing, and copying files that are posted to the Web; server software such as MS Internet Information Server and Apache http Server, for distributing content across the Internet; media player software (such as MS Media Player), for viewing and displaying media files; email and instant messaging software, favoured by those who want to send or receive files privately; Internet Relay Chat servers, commonly used for file sharing activities; newsgroup software (often bundled into email software), favoured by those who want to choose and download music and video files from newsgroups; FTP (File Transfer Protocol) software for obtaining files over the Internet; scanners, fax modems, and printers, for those who want to copy and/or transmit images over the Internet and otherwise; and large-capacity storage devices such as hard drives, CD-ROM burners, DVD burners, and Zip drives, and their recording media, favoured by those who want to keep libraries of video or sound files.
The defendants argued, therefore, that a ruling against KaZaA on this motion could apply just as easily to, and would jeopardize, all of these technologies.
KaZaA's success in Holland may be short lived and its validity is suspect. For example, it was argued in the press that KaZaA's success in the Dutch court was largely because of the summary nature of the proceeding and the fact that only one 'expert' witness adduced evidence, which was false. In the U.S. actions, it is hoped, more evidence will be considered.
Further in that regard, in the United States, KaZaA, along with Grokster and Streamcast Networks, who use the same software technology, is facing copyright infringement lawsuits from RIAA and several major Hollywood movie studios. The U.S. case has been complicated because KaZaA's parent company, Sharman Networks, based in Australia and incorporated in Vanuatu Island, is arguing that it should not be subject to a U.S. lawsuit, as Sharman has no jurisdictional connection to California.
However, on January 10, 2003, a California Federal judge disagreed by ruling that these plaintiffs could proceed with a lawsuit against Sharman. He based his jurisdictional finding on a substantial enough connection with California because the KaZaA software was downloaded frequently by California residents and many of the defendant record companies were based in California.
Accordingly, the issue of control is also central to the issue of jurisdiction on the Internet. It appears that the courts will not accept the validity of "sham" corporate transactions by corporate entities in distant countries, who try to avoid liability by arguing they have no control or participation in their subsidiaries' infringing activities in the chosen forum.
ISP Liability in Canada
To date, Canadian courts have not had to rule on copyright infringement through a P2P service originating in Canada. However, similar issues, such as ISP liability for infringement concerns in the online environment generally have popped up in Canada in other circumstances.
A predominant case, which arose from the judicial review of a decision by the Copyright Board, concerns the Internet Tariff, #22, filed by the leading music rights licensing collective in Canada, SOCAN, for compensation for the use and dissemination over the internet of music. The issues of control and ability and responsibility of ISP's to police their services for infringing music files also were key elements in this matter.
Tariff 22 was an attempt by SOCAN to fill in what it believed to be a yawning gap in revenue sources for its members. In the early 1990's, SOCAN recognized that the Internet was growing at a prodigious rate and that the musical works of SOCAN members would be a highly valued and exploited resource.
So in 1995, in order to protect its members’ rights, SOCAN filed Tariff 22 for approval before the Copyright Board. Tariff 22 seeks royalties for the public performance and telecommunications of musical works by means of any telecommunication service. The primary target of this tariff was Internet access and service providers.
The Copyright Board decided to conduct hearings for Tariff 22 in two phases. Phase one, completed in the fall of 1999, dealt with legal issues pertaining to the tariff such as who is liable and what actions are liable under the Copyright Act. Phase two will deal with the tariff structure and amount claimed. As yet, the date for the hearing of phase two at the Copyright Board level has not been set.
Summary of PHASE I Decision
The Copyright Board
SOCAN argued that a communication to the public occurs when the end user can access a musical work from a computer connected to a network and maintained that virtually everyone involved in the Internet transmission chain is liable for the communication, including those who provide the transmission services, operate equipment or software used for transmissions, provide connectivity, provide hosting services or post content. SOCAN's view was that no one in that chain was entitled to rely on a "common carrier" exemption in 2.4(1)(b) of the Copyright Act, which states:
"a person whose only act in respect of the communication of the work…to the public consists of providing the means of telecommunication necessary for another person to so communicate the work…does not communicate that work…to the public".
Those who opposed Tariff 22, primarily, the Canadian Association of Internet Providers, and Canadian Association of Broadcasters contended that Internet transmissions involve a reproduction of data, not a communication by telecommunication and that such transmissions are not simultaneous and occur on an on-demand basis. They argued that they were, therefore, not communications of musical works to the public. They argued that what was communicated was not a musical work but packets of compressed data which, in any event, also did not represent a substantial part of the work. Finally, even if there were communications to the public of musical works over the Internet, liability should not be imposed on Internet Service Providers (ISP) or other entities acting as mere intermediaries, who were entitled to rely on the "common carrier" exemption, set out above.
The Canadian Association of Broadcasters (CAB) took the position that even if Internet transmissions triggered copyright liability, its members should not bear the cost either because (a) they do not provide a telecommunications service or (b) they are already licensed to undertake such communications.
After analyzing all parties' arguments, the Copyright Board held as follows:
a) Application of the Copyright Act: Internet transmissions are "communications by telecommunication" within the meaning of the Copyright Act, ss. 2 and 3(1), and a work is communicated when transmitted over the Internet even though the process may involve data compression and decompression, data encoding and decoding, and the disassembly and re-assembly of a series of data packets which may be sent and received out of order. Copyright protection should not be dependent upon the technology employed and the technical exigencies of the Internet.
b) Posting Liability: The person who posts a work to the Internet is responsible for the posting and "communicates" it, regardless of whether the transmission originates from a source, cache, or mirror server.
c) Internet Intermediary Liability: Copyright Act, s. 2.4(1)(b), which exempts from liability a person whose only act in respect of the communication of a work to the public consists of providing the means of telecommunication, is available to Internet intermediaries, which includes internet service providers, in most circumstances, where they merely provide the means necessary to allow data initiated by other persons to be transmitted over the Internet.
However, an Internet intermediary, such as an ISP, is no longer acting as an intermediary and is not entitled to s. 2.4(1)(b) protection if it posts the work, associates itself with others to offer the infringing work, creates embedded links to the work, moderates a newsgroup that contains the work, creates a cache of the work for reasons other than improving system performance, or modifies the content of the cached work.
An Internet intermediary is entitled to presume that its facilities will be used in a lawful manner, and the mere possibility that those facilities may be used for copyright-infringing purposes does not give rise to liability. To be liable, an Internet intermediary must sanction, approve or countenance more than the mere use of equipment that may be used for infringement, but sanction, approve or countenance the actual infringement. This part of the decision follows the reasoning given by the courts in determining when a party "authorizes" infringement.
d) Linking: There is a distinction between user-activated links and embedded links that automatically transmit content from an Internet resource without any activation by the user. User-activated links do not give rise to liability for copyright infringement because they simply represent an electronic address. The creation of such a link does not in itself involve a communication to the public of any linked work. In contrast, embedded links may give rise to liability for authorizing an infringing communication of a copyright-protected work because the creator of an embedded link makes itself a party in interest to the communication by warranting the right to communicate.
e) Jurisdiction: To be subject to the proposed tariff, a communication must occur in Canada. This requires that a communication originate from a server located in Canada on which a work has been posted. The place of origin of the request, the location of the person posting the content, and the location of the original website are irrelevant. The issue of whether an entity "communicates" a work in Canada if it intends to communicate a work located on a server outside Canada, to recipients in Canada, was raised as a possible exception to this rule, but was not determined.
There is an important limitation to note on s 2.4(1)(b), namely, that section excludes liability for infringing the right of communication to the public, but does not appear to exempt liability for other copyright infringements, such as unauthorized copying and reproduction, which are also inherent in an operation of the Internet website.
The Board's decision raises a number of controversial issues. The black and white liability distinction drawn by the Board between user-activated links and automatic embedded links appears to depart from the general rule that whether an infringement was authorized can be determined only on the basis of specific facts in each case.
Also, the Board's approach to jurisdiction (focusing on the location of the web server) is inconsistent with the approach taken by Canadian courts in other circumstances involving Internet communications, in which they have held that the location of the web server is not solely determinative, but rather, other factors are relevant, as for example, whether a website located on a server outside Canada, actively offered or targeted music services to Canadians .
Grounds of Appeal
SOCAN appealed the decision, and the primary findings of the Federal Court of Appeal were as follows:
1) Does a server operator and entity supplying the ultimate recipient with access only provide "the means of telecommunications necessary to communicate" as required under s. 2.4(1)(b)?
Three things must be established for an intermediary's activity to fall within the exemption under s. 2.4(1)(b), namely, (1) the intermediary's activities must amount to the provision of "the means of telecommunication"; (2), these means must be "necessary" for enabling another person to communicate a work to the public; and (3), the activities in question must constitute the intermediary's "only act" with respect to the communication.
The role of Internet intermediaries is generally passive in nature, because they do not have the practical capacity to exercise control over the content of the material that is transmitted. Consequently, their activities should be regarded as constituting only the "means" of telecommunication. An important indicator that a person is providing the means to enable others to communicate by telecommunication is that the person lacks the practical ability to control and monitor content, and hence plays only a passive role in the communication.
Whether something is "necessary" should be determined when the transmission of material from the server occurs, and not when the content provider chooses the means through which to communicate by posting the material.
An Internet intermediary who caches material is not providing the means necessary for another to communicate it. Further, a cache operator selects which material will be cached, and programs the computer to transmit it from the cache when it is requested. The operator of a cache is thus not merely a passive transmitter of data, and not eligible for the exemption.
2) Does communication to public occur only at the location of the transmitting server, which must be in Canada?
The location of the host server alone cannot determine where the communication occurs. There must be a "real and substantial connection" with the location where the infringing activity of authorizing a communication is alleged to have occurred when a content provider posts copyright material on a host server.
Since the policy of the Act is to protect copyright in the Canadian market, the location of the end user is also a particularly important factor in determining if an Internet communication has a real and substantial connection with Canada. On the other hand, in the absence of an end user, the location of the server will be a weightier factor in determining whether the authorization of a communication has a real and substantial connection with Canada
Issue 3: Does host operator "authorize" communication of stored music or communicated music?
Authorizing a communication by telecommunication is a separate and discrete infringement under ss. 3(1). Section 2.4(1)(b) does not apply to the act of authorizing any of the infringing acts set out in ss. 3(1). Even though the core activities of operators of servers and Internet access providers do not constitute communication, by virtue of s. 2.4(1)(b), they may still be required to pay a royalty if they can be said to be authorizing the content provider to communicate the material. However, determining whether they are "authorizing" (i.e. sanctioning the infringement, by their activities) is to be decided on a factual basis. For example, access providers by performing their core functions, do not authorize content providers to communicate infringing material from a website at the request of their customers, the end users. Similarly, it cannot be inferred from their activities that Internet intermediaries offering hosting services "sanction, approve or countenance" the communication of infringing material stored by others on their servers.
However, since host server operators can examine the content of material posted on their servers, and remove offensive material, an implicit authorization to communicate infringing material can be inferred in situations where they fail to remove it after they have been advised of its presence on the server, have had a reasonable opportunity to take it down, and appear to benefit from the infringement. This reasoning is consistent with the structure of the safe harbour provisions in the DMCA, discussed below, and may be largely codified into the Canadian Act in the next round of legislative reforms.
The Court held that an operator of a 'cache' "communicates by telecommunication" to public and thereby infringes the exclusive right of the author or composer to communicate a musical work to the public. An operator of a cache is not merely a passive transmitter of data and the 'Common carrier' exemption does not apply.
The court also held that the determination of jurisdictional location must have a "real and substantial" connection to the location of the infringing activity. Subject to these modifications, the Appeal was dismissed in respect of the Board's decision.
It is being appealed to the Supreme Court of Canada.
DATABASE PROTECTION
Databases which meet a certain level of originality in their selection and/or arrangement are protected by copyright in many countries of the world, including Canada and the United States. The required level of originality required to attract copyright can vary from country to country. A good example of this variation is between Canadian and U.S. copyright law, which has been reviewed and analyzed in great detail in Canadian jurisprudence within the last few years.
There is also limited protection for non-original databases, largely available in Europe, at the moment, which will also be briefly discussed.
Copyright Protection
Compilations were only recently expressly defined within the Canadian Act, in response to Canada's obligations under the North American Free Trade Agreement ("NAFTA"), to clearly protect such works, especially collections of data. Prior to 1997, compilations were expressly mentioned within the section 2 definition of "every original literary, dramatic, musical and artistic work", but not further defined.
In 1997, the following definition was added to section 2 of the Act:
"compilation" means
(a) a work resulting from the selection or arrangement of literary, dramatic, musical or artistic works, or parts thereof, or
(b) a work resulting from the selection or arrangement of data;
As a practical matter, the courts in evaluating the new definition found that it merely codified the earlier caselaw on protectible compilations and did not change this area of the law.
In recent years, any attack on the status quo as established by the Canadian courts concerning compilations, such as databases, has come from south of the border, where the level of originality required for a compilation under U.S. law was examined and raised in the landmark case of Feist Publications Inc. v. Rural Telephone Services Co. Inc. . Before examining this case in detail and its effect in Canada, one must first review the Canadian caselaw prior to Feist.
THE PRIOR LAW
As with all works under the Copyright Act, compilations must be original; in this case, in their selection and/or arrangement. The level of originality required, however, has been subject of much debate in Canada. A good summary of the test of originality for compilations was given by Madam Justice McLaughlin in Slumber-Magic Adjustable Bed Co. Ltd. v. Sleep King Adjustable Bed Co. Ltd. .
"So long as work, taste and discretion have entered into the composition, that originality is established. In the case of a compilation, the originality requisite to copyright is a matter of degree depending on the amount of skill, judgment or labour that had been involved in making the compilation".
In support of this test, she relied on U.K. caselaw, including Ladbrooke (Football), Ltd. v. William Hill (Football), Ltd., in which a plaintiff's efforts in arranging statistical information on football coupons was sufficient to have created an original literary work. She also noted that there were limitations to the copyright in a compilation, namely, (a) the compiler could claim no copyright, unless he/she had a right to use the materials making up the compilation and (b) any component or idea contained in it could be copied without breaching the compiler's copyright, which rests not in the individual components, but the overall arrangement.
Finally she noted, at page 85 of the decision that:
"The result and arrangement was the product of its (i.e. the Plaintiff's work) and industry and is protected by copyright".
On balance, the U.K. law and the Slumber Magic case indicated that the level of originality lay primarily in the arrangement and need not be high, so long as some work, taste and discretion were involved. However, as some of the judiciary's comments focused more on the industriousness and effort put into preparing the compilations, the test began to evolve, in some cases, to protect compilations, which were the result of significant labour, but where it was questionable whether the work required any skill or discretion.
The high watermark case, espousing this so-called "sweat of the brow" theory, was British Columbia Jockey Club v. Standen. The plaintiff, B.C. Jockey Club, published a daily printed sheet of horse racing information, called "The Overnight", which included items such as the date of the race, the race day number, the order of races, their length, the classes of eligible horses, positions at the post, the last date which each horse ran, assigned weight and assigned jockeys, weather and track conditions and the time of the first race each day.
The plaintiff had sued the defendant, who published a competitive product called "The Special News" in which he reproduced certain information from the Plaintiff's publication, namely, the order of races, the distance of the races, the list of horses, the jockeys for each horse and the assigned weights. Both parties agreed that the Plaintiff owned a copyright in "The Overnight" publication, as a whole, but the defendant argued it had not made a substantial use of anything except the essential facts compiled by the club.
The court held that, even though the defendant had adapted that copied information to his own style and added information of his own, he had still appropriated a substantial amount of the "work, skill, judgment and knowledge" of the Club. The court maintained that although the defendant had rearranged and republished the information in a different style, he still infringed.
Although the case suggests it applied the same test (i.e. skill, judgment and labour), it appears, based on a review of the publications in issue, that the court really was protecting the plaintiff from having its labour of compiling factual information appropriated.
More specifically, the court looked favourably on a prior judgement concerning the same Plaintiff, wherein the same publication was found a copyrightable work. In that earlier case, the court stated:
"Now the layout or arrangement of data in "The Overnight" is not distinctive and indeed it is, if not in universal, certainly in general use at North American race tracks. By doing the things I have listed, the Plaintiff produced an entirely novel list of horses and other information for each race. In settling the conditions of the races, some knowledge, experience and exercise of judgement were required. In carrying it through the subsequent steps, stating it conservatively, an appreciable amount of time and labour was involved". (emphasis added)
This statement by the prior court, although paying lip service to the necessity of knowledge, experience and judgement, in fact, seems to focus more on "the appreciable amount of time and labour that was involved", particularly, given the courts admission that the actual formatting and layout was not particularly unique to the Plaintiff, but was a commonly used way of arranging items.
Furthermore, the court also paid lip service to the idea that there can be no copyright in information, but only in the composition or language chosen to express it, but then went ahead to find that the defendant had done more than copy information by appropriating "the labours and skills of the Club" which had gone into compiling the daily information. They again focused on the "pain-staking tasks" which had been performed by the Club in assembling that information.
Accordingly, this case stands in support of the "sweat of the brow" theory, i.e. even if you take information from another's compilation, you are still required to retrace the same assembly steps to find the information independently in order to avoid copyright infringement.
This, arguably, misapplication of the test of skill, judgment and labour was criticized by many copyright experts as crossing the line of protecting expression to protecting facts and information. Accordingly, when the U.S. case of Rural Telephone Services Co. Inc. v. Feist Publications Inc. came along, Canadian copyright law was ripe for a review of the "sweat of the brow" theory.
The Feist Case
In Feist, the plaintiff company, Rural Telephone, sought copyright protection for its White Pages Directory, which listed telephone subscribers' phone numbers, for a certain area in alphabetical order by surname, against being appropriated by Feist, who had reproduced the alphabetical listings in its own guide.
Rural Telephone annually published an alphabetized telephone directory for its service area consisting of the usual White and Yellow Pages. Feist sought to publish an area wide listing including 11 different service areas. The plaintiff was the only local phone company that refused to grant Feist a licence to use its subscriber listings. Feist, therefore, proceeded to copy the listings from the plaintiff’s directory. Some 1300 listings were copied from Rural’s 7700, including four fictitious ones included by Rural to trap potential copiers. Rural sued Feist for copyright infringement and both District and Appeal courts sustained the claim. They upheld the standard doctrine that White Page listings were copyrightable. By copying a substantial number of listings, instead of independently obtaining those listings, Feist was infringing Rural’s copyright.
In reviewing the case, the U.S. Supreme Court sought to reverse a line of U.S. jurisprudence concerning telephone listings and other types of factual collections which had also seemed to favour the "sweat of the brow" or "industrious collection" tests for originality, thereby extending copyright protection to the facts themselves, rather than the compilation's selection and arrangement.
The court denied protection to Feist's White Page Directory on the basis that its alphabetized order for the listings was highly mundane and lacked even a minimum level or "spark of creativity". The added requirement of a "spark of creativity" could be traced, the U.S. Supreme court reasoned, to both the U.S. Copyright Act and the U.S. Constitution. More specifically, the U.S. definition of a compilation in Section 101 of its Copyright Act reads as follows:
"A collection of pre-existing materials or data that are selected, coordinated, or assembled so as to constitute an original work of authorship"
The definition, then, specifically brought in an originality component as a statutory requirement. It also referred to authorship.
Furthermore, the United States Constitution, in Article 1 (8)(viii), gives Congress the power to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries". The court interpreted the use of the term "authors" in this constitutional clause as meaning that originality was an indispensable element of authorship.
Accordingly, the U.S. Supreme Court formulated a test of originality somewhat different and arguably higher than the standard in Canada by requiring "a modicum of creativity", which seemed not to be synonymous with the test of "skill, judgement and labour".
The Tele-Direct Case
A few years after Feist, in 1996, a Canadian court looked at a somewhat similar situation, which paved the way for an in-depth review of the test of originality for factual compilations. In Tele-Direct (Publications) Inc. v. American Business Information Inc., Tele-Direct, a producer of Yellow Page directories for Québec and Ontario, sued a database company, American Business Information ("ABI"), who had taken certain information and data from the plaintiff's Yellow Page directories, including business listings of names, addresses and phone numbers and the Headings that these various business types were compiled under, for use in ABI's database. ABI's database was used to generate information products, such as mailing lists and labels, categorized by certain business sectors.
In the litigation, both parties had made concessions, namely, Tele-Direct admitted that there was no copyright in the raw subscriber data (i.e. names and phone numbers) that it received, under licence, from Bell Canada and ABI admitted that the plaintiff's Yellow Pages directories, in terms of their page layouts, were subject to copyright.
ABI took only the listings and the Heading categories prepared by Yellow Pages, but did not reproduce any layouts, graphics, logos or ads that Yellow Pages had devised.
Accordingly, the issue boiled down to whether the subscriber data, as arranged by Yellow Pages under Headings, was a copyrightable compilation or merely unprotected data.
In arriving at its conclusion, the trial judge relied squarely on the Slumber Magic Adjustable Bed case and Madam Justice McLaughlin's comments, set out earlier in this paper, as the appropriate test. The court stated at page 138:
"In particular, the facts must be examined with a view to determining the degree to which Tele-Direct exercised skill, judgement or labour in the overall arrangement of the compilation of the information in its directories"
Having done so, the court found that a large percentage of the information in the Yellow Page directories was not subject to copyright (i.e. the subscriber information) and that despite the significant labour Yellow Pages expended to sell ads in addition to the initial subscribers listings and to verify the listings' accuracy and update them, there was not a sufficient level of skill and judgment for the compilation to be protectible.
For example, when reviewing the various business headings used by Yellow Pages, it was noted that (a) many telephone and directory companies across the U.S. used the same Headings, (b) only 981 of the Headings were unique to Canada and (c) out of those, only 254 were used in the Tele-Direct directories in Ontario and Québec. Therefore, Tele-Direct's Headings were found to be virtually indistinguishable from the headings in all Yellow Pages directories in the United States and Canada.
Accordingly, the court was lead to conclude at page 139:
"…Tele-Direct arranged its information, the vast majority of which is not subject to copyright, according to accepted common place standards of selection in the industry. In doing so, it exercised only a minimal degree of skill, judgement or labour in its overall arrangement, which is insufficient to support a claim of originality in the compilation so as to warrant copyright protection".
Interestingly, the trial judge, finding no copyright after applying the Canadian standard, did not feel he had to consider the Feist case, nor whether the American approach ought to be followed in Canada.
Not surprisingly, Tele-Direct was appealed to the Federal Court of Appeal and it was at this level that the effect of the Feist case was felt.
The Tele-Direct Appeal Decision
On appeal, Mr. Justice Décary began by accepting the facts and the trial judge's application of the Slumber Magic case to those facts as correct. However, instead of ending the appeal at that point, he then went on to comment on the amendments to the Act, which had added a definition of compilation into copyright law after the Tele-Direct litigation had commenced, and to compare the Canadian and U.S. law on this point.
Although, he concluded ultimately that the amendments did not alter Canada's state of the law, he ruled that the requirement for a minimal "spark of creativity", in addition to the skill, judgement and labour test, was also part of the Canadian test of originality.
He stated at page 303-304 of the decision:
"I have come to the conclusion that the 1993 amendments did not alter the state of the law of copyright with respect to compilations of data. The amendments simply reinforce in clear terms what the state of the law was, or ought to have been: the selection or arrangement of data only results in a protected compilation if the end result qualifies as an original intellectual creation".
The importation of this new language (i.e. "original intellectual creation"), came from Article 1705 of the North American Free Trade Agreement, ("NAFTA") which stated that signatory countries will protect works covered by Article 2 of the Berne Convention, including, in particular: "compilations of data or other materials, whether in machine readable or other form, but which by reason of the selection or arrangement of their contents constitute intellectual creations, shall be protected as such". (emphasis added)
This article in NAFTA was also the bridge used by the judge to more closely align U.S. and Canadian law concerning compilations. He states at page 304:
"Another impact of the 1993 amendments may well be that more assistance can henceforth be sought from authoritative decisions of the United States courts when interpreting these very provisions that were amended or added in the Copyright Act in order to implement NAFTA. I do not wish to be interpreted as saying that Canadian courts, when interpreting these provisions, should move away from following the Anglo-Canadian trend. I am only suggesting that where feasible, without departing from fundamental principles, Canadian courts should not hesitate to adopt an interpretation that satisfies both the Anglo-Canadian standards and the American standards where, as here, it appears that the wording of Article 1705 of NAFTA and, by extension, the added definition of compilation in the Canadian Copyright Act, attracts, to a certain extent, the wording of the definition of compilation found in the United States Copyright Act.
In reestablishing that the level of originality goes beyond labour, even under the traditional Canadian test, Mr. Justice Décary states at page 307 that the word "or" should be used conjunctively:
"It is true that in many of the cases we have been referred to, the expression "skill, judgement or labour" has been used to describe the test to be met by a compilation in order to qualify as original and, therefore, to be worthy of copyright protection. Seems to me, however, that whenever "or" was used instead of "and", it was in a conjunctive rather than a disjunctive way. It is doubtful that considerable labour combined with a negligible degree of skill and judgement will be sufficient in most situations to make a compilation of data original… While not defined in the Act, the word "author" conveys a sense of creativity and originality. I do not read these cases, which have adopted the "sweat of the brow" approach in matters of compilations of data, as having asserted that the amount of labour would in itself be a determinative source of originality. If they did, I suggest that their approach was wrong and it is irreconcilable with the standards of intellect and creativity that were expressly set out in NAFTA and endorsed in the 1993 amendments to the Copyright Act and were already recognized in Anglo-Canadian law".
Finally, Mr. Justice Décary at page 309 of the decision summarizes the application of the test to the compilation under review in Tele-Direct, in language highly similar to that of the U.S. Supreme Court in Feist, namely:
"In the case at bar, it can hardly be said that the sub-compilation was a "new product of inventive labour", to use the learned professor's words or that it amounted to an "intellectual creation" within the meaning of Article 1705 of NAFTA. The compilation of the in-column listings is of such an obvious and commonplace character as to be unworthy of copyright protection. Certain compilations of routine data are so mechanical as to devoid of a creative element".
He also reconciles earlier U.S. cases raised with him, that appeared to protect "sweat of the brow", by finding that their facts actually involved works where some creative element was involved. He also suggests, on the basis of the U.S. case of Key Publications Inc. v. China Town Today Publishing Enterprises Inc., that works that would likely lack originality would be those arranged in alphabetical, chronological and sequential order or other listings of data as mechanical groupings.
Interestingly, although the appeal decision in Tele-Direct seems to indicate that a higher standard of originality has been adopted than previously thought, the actual application of the new test has still resulted in works of arguably minimal skill and creativity receiving protection. For example, in an appeal decision also delivered my Mr. Justice Décary, namely, Edutile Inc. v. Automobile Protection Associations (A.P.A.) a small portion of an Automobile Price Guide, developed for consumers by the plaintiff, was found sufficiently creative in its selection and arrangement even, though, arguably, only a negligible amount of skill and judgment was involved. The Guide included three columns, which tracked prices in three different markets for automobiles, namely, the trade-in value to a dealer, the value upon private resale and the retail sale price (i.e. what you would pay at a dealership). The defendant had copied this feature in its own guide and had been sued by the plaintiff. At trial, the work was found not sufficiently original to be afforded copyright protection. The plaintiff appealed.
In an appeal, Mr. Justice Décary cited his recent decision in Tele-Direct as dispositive of the test to be applied but found that there was originality, not so much in the fact that the plaintiff chose three columns or that there were various markets selected, but rather the originality arose from the plaintiff combining the private sale column with the retail price column and placing them side by side.
In support of his view that this was an innovative and creative step in the arrangement, he relied on the defendant's own testimony, wherein a representative expert in the field, admitted that such a combination had not been done in the marketplace before and, in his view, was quite a "brilliant" and "innovative" idea.
In addition, this "higher" test did not preclude copyright being found in the listings for a specialized directory for Italian speaking people and businesses. The subscriber list of names and phones numbers and addresses was compiled by the plaintiff by selecting from the usual telephone listings those personal names and business names, which appeared to be Italian in origin. This subscriber base was taken by the defendant but not any of the other clearly protectible aspects of the plaintiff's directory, such as the page layouts, advertisements, research on regions of Italy, photographs etc.
Therefore, in large part, the addition to Canadian law of a "creative spark" element to the test of originality has not had a profound effect on the types of compilations found to be copyrightable.
Furthermore, it appears that the "spark of creativity" test has been short lived in Canada, given the recent Federal Court of Appeal decision in CCH et al. v. Law Society of Upper Canada , which reversed Mr. Justice Décary's judgement, by finding that, under Canadian law, no element of creativity or innovation was required to meet the standard of originality.
CCH Canada Limited et al. v. The Law Society of Upper Canada ("LSUC")
A group of publishers, CCH, Thomson Canada Limited, and Canada Law Book ("Publishers") were the creators of various legal materials, such as case reporting series and textbooks. They had sued the LSUC for copyright infringement on the basis that the LSUC, through its Great Library, (a) operated a non-profit custom photocopying service whereby the Library made single copies of the plaintiff's materials upon receiving individual requests from patrons and (b) allowed patrons to make copies of the Publisher's materials at freestanding photocopiers placed in the Great Library.
The specific works in issue in this case were: (a) three reported judicial decisions; (b) the head notes for these judicial decisions; (c) one case summary, i.e. a concise, point form summary of the facts, reasons and conclusions of the case; (d) the Consolidated Topical Index from Canada GST Cases (1997) G.S.T.C.; (e) an annotated statute (i.e. Martin's Ontario Criminal Code Practice 1999); (f) a textbook (i.e. "Economic Negligence: The Recovery of Pure Economic Loss"); and (g) a monograph entitled "Dental Evidence" from a textbook.
The trial judge had held that (a) copyright did not subsist in the reported judicial decisions, the head notes, the case summary and the topical index and (b) LSUC did infringe the copyright subsisting in the other above-mentioned works of the Publishers' by (i) reproducing the works and (ii) knowingly distributing and possessing infringing copies of the works.
On appeal, CCH claimed that the judge erred in not finding copyright in the reported judicial decisions, the head notes, case summary, and topical indexes.
Mr. Justice Linden, in the appeal, reaffirmed that, to be subject to copyright under the Act, the work must be "original". The trial judge in CCH, relying on the Tele Direct case and referring to Section 1705 of NAFTA, (which required protection for compilations, which are "intellectual creations"), had held that to be original a work must involve "imagination or creative spark". The Publishers' works, although they entailed significant skill, judgment and labour, lacked this "imaginative creative, spark" in the trial judge's opinion and, therefore, were not subject to copyright.
Justice Linden disagreed that "imagination" or "creative spark" were essential to a finding of originality under Canadian law. He stressed that these were not statutory requirements under our Act, (i.e. there was no reference in our Act to intellectual creations) and neither the Berne Convention nor NAFTA required a more onerous standard for protection than that set out in the Canadian Act. He also noted that there were significant differences between the U.S. and Anglo-Canadian standards on the issue of originality.
In determining a definition for "original" he reviewed substantial UK and Canadian caselaw and summarized the traditional Canadian standard as follows: "The requirement of originality means that the product must originate from the author in the sense that it is the result of a substantial degree of skill, industry or experience employed by the author…the effective meaning of the requirement of originality is that the work must not be copied from another"
This standard was relatively low and meant, he stressed, that, although, there need not be any novelty or a high level of skill involved, in most cases, mere labour would not meet the test because any work created simply through labour usually points to slavish copying. The definition of originality indicates that the work must not be copied from that of another, but rather must create some new material.
Therefore, Justice Linden held that the trial judge erred in his application of the Tele Direct case by stating that it supported a view that a higher standard of originality was now required, based on the U.S. Feist case and NAFTA. He reaffirmed that Canada's obligations under NAFTA were not intended to alter the standard of originality of Canadian copyright law.
In conclusion, he also cautioned against adopting U.S. copyright principles "holus bolus", as there were significant differences between the two countries' laws.
"As noted above, the Supreme Court of Canada has warned that "United States court decisions…must be scrutinized very carefully because of some fundamental differences in copyright concept…(Compo). The wisdom in that advice is well demonstrated in this case, where the American principle sought to be imported is based upon an unstable foundation that has not been tested thoroughly. Although, the trial judge prefaced his remarks with a disclaimer that he preceded with some trepidation, he failed to conduct any substantive analysis of the American standard of originality. Therefore, he inadvertently entangled the standards set out in Feist and applied in Bender v. West with the Canadian touchstone of originality. As discussed above, there is no universal requirement of "creative spark" or "imagination" in Anglo-Canadian copyright law".
He also re-emphasized that the definition of the word "original" is not closed nor statutory in nature, and is often determined on a case-by-case basis in association with a host of words and phrases, such as "labour", "judgment", "skill", "work", "industry", "effort", "taste" or "discretion".
Having realigned the originality test, Mr. Justice Linden then went on to find the case summaries, topical index, annotated statute and textbook were sufficiently original to be protected.
PROTECTION OF NON-ORIGINAL DATABASES BEYOND COPYRIGHT LAW
Copyright law remains the primary means for seeking protection of databases in Canada. B & S Publications Inc v Max-Contacts Inc. is a recent example of how the court's consideration of database protection is limited to the domain of copyright law.
Given that a comprehensive scheme for protection of "non-original" databases in Canada is currently not in place, the question arises as to whether there exists alternative grounds for protecting "non-original" databases against piracy. In response, two remote possibilities exist: (a) a claim under s.7 of the Trade-Mark Act, governing "Unfair Competition" and; (b) a claim under breach of confidential information. Neither of the two, however, have been or are likely to be highly successful in Canada.
The claim of unfair competition under s.7 of the Trade-Mark Act has not succeeded in Canada in the context of protecting databases from infringement. The attempt was recently addressed (and repudiated) in ITAL-Press Ltd. v Sicoli. It is unlikely that this section could provide protection against the "taking" of data from a database or compilation, given the most applicable provision, 7(e) is unlikely constitutionally valid. The court further stated that the remaining provisions of "section 7 of the Trade-marks Act can only be invoked where a "trade marks scheme is pleaded and established by evidence."
It has been noted, that on a provincial level, any "province may create a statutory tort or delict in the nature of unfair competition that may provide relief for misappropriation values, which could include the unauthorized taking of data from a database." However, "this has not been done," and "such a tort is broad and difficult to define or limit."
While theoretically databases may be protected as confidential information or trade secrets, in practice, this claim faces at least two legal difficulties. First, as Professor Robert Howell notes in his comprehensive study of the database protection issue, "the contents of data if accessible to the public cannot be said to possess the requisite 'quality of confidence'." Moreover, the stipulation that breach of confidence proceedings apply "to situations where information is 'imparted' to another (rather than being 'acquired' by that other)" further limits the doctrine's applicability to the "taking" of data.
THE CANADIAN GOVERNMENT'S PROPOSAL FOR REFORM
In June 2001, the federal government addressed the issue of database protection in its report, A Framework for Copyright Reform :
In Canada "original" databases are protected under copyright law. However the Federal Court of Appeal has held that "non-original" databases are not protected. The issue is therefore whether non-original databases should be protected under the Copyright Act and, if so, what form that protection should take. Also at issue is whether such databases ought to be protected under traditional copyright principles or according to other principles.
Accordingly, the issue of whether non-original databases should be accorded a separate form of protection is on the agenda but, based on a later government report, does not appear to be one of the issues that will be given immediate attention when a first Bill is drafted .
PROTECTION OF NON-ORIGINAL DATABASES BEYOND COPYRIGHT LAW
The court in Feist recognized that protection for "unoriginal" compilations requiring substantial time and effort, may in certain circumstances be available under the doctrine of unfair competition. Nimmer in his text presents the current state of US law on this matter as follows:
…there is room for litigants to seek to protect factual compilations of data even the post-Feist era – a secret list of customers and hot news, to name two examples. But such efforts must be limited to circumscribed situations, to avoid swallowing the Supreme Court's ruling that the public is generally free to reproduce factual materials that have been widely disseminated. Those courts have ruled correctly that have checked the attempts of some overreaching litigants to avoid this ruling altogether under guise of legal rubrics outside the copyright gambit.
However the current debate in the United States is whether the doctrine of unfair competition is sufficiently protective, or whether further protection for makers of databases should be granted by adopting a distinct set of property rights. Proponents of the latter view advocate for implementation of sui generis rights, in accordance with the EU Database Directive, discussed below. Various steps, including the introduction of draft legislation, have been taken in the effort to advance sui generis rights for database makers in the United States, but the government has yet to implement any new statutory scheme of protection.
THE EU DATABASE DIRECTIVE: COPYRIGHT PROTECTION
The EU Database Protection Directive , covering member countries of the European Economic Community, established that databases can be afforded copyright protection so long as the selection and/or arrangement involved in the compiling of the data meets the minimum creativity threshold and can accordingly be viewed as the author's own intellectual creation. This position is roughly analogous to that set out in Feist, in the US, and/or Tele-Direct, in Canada.
THE EU DIRECTIVE: SUI GENERIS DATABASE PROTECTION
More significantly, the Database Directive introduced a unique sui generis right for non-original databases intended to function independently from any copyright. As stated in Article 1(1), the Directive "concerns the legal protection of databases in any form." The purpose of the right is to grant protection to makers of databases whose compilations, though the product of "substantial investment," do not possess the requisite "originality" factor and were previously left unprotected.
Under this scheme, the maker of a database has the right to prevent extraction and/or re-utilization of the whole or of a substantial part of the contents of the database. This "taking" is to be evaluated qualitatively and/or quantitatively. The taking of an insubstantial part of the database is permitted under the Directive.
Unlike the term of protection under copyright, the grant of protection under the Directive is potentially perpetual. More specifically, while the right is granted for a limited period of 15 years, substantial changes to the database, amounting to a new substantial investment, qualify the resulting database for a further 15 year protection period.
The date for the EEC countries to implement the Directive in their domestic legislation was December 22, 2002, but, not surprisingly, many EEC countries have not yet complied. The European Union is scheduled to release its report on implementation of the Directive by December 2004.
U.S. DIGITAL MILLENNIUM COPYRIGHT ACT
The Digital Millennium Copyright Act ("DMCA") was signed into law by President Clinton on October 28, 1998 in part to implement the two 1996 WIPO treaties, WIPO Copyright Treaty ("WCT") and WIPO Performances and Phonograms Treaty ("WPPT"). The DMCA addresses a number of significant copyright-related issues in the context of online and digital technology.
The DMCA is divided into five titles, but the fifth title, relating to the protection of vessel hulls, will not be discussed in this paper.
TITLE I
In general, this title deals with amendments required to comply with the above-noted Treaties. Of particular significance, Title I creates two new prohibitions in the US Copyright Act [USCA]. One prohibits the circumvention of technological measures used by copyright owners to protect their works and one prohibits tampering with copyright management information. Civil remedies and Criminal penalties for violating the prohibitions are provided.
Technological Protection and Copyright Management Systems – The DMCA added a new chapter 12 to the USCA to implement the obligation to provide adequate and effective protection against circumvention of technological measures used by copyright owners to protect their works.
Interestingly, many experts and academics now argue that after several years, the anti-circumvention provisions of the DMCA have not been used as intended by the Congress. The Congress intended to stop copyright pirates from defeating anti-piracy protections added to copyright works, and to ban "black box" devices intended for that purpose. In practice, however, they argue that the anti-circumvention provisions have been used to stifle a wide array of legitimate activities, rather than to stop copyright piracy. It was argued that, as a result, the DMCA had developed into a serious threat to three important public policy priorities: chilling of free expression and scientific research; jeopardy of fair use; and impedition of competition and innovation.
In any event, chapter 12 of the DMCA divides technological measures into two categories. One category consists of measures that prevent unauthorized access to a copyrighted work and the second category is of measures that prevent unauthorized copying of a copyrighted work, or any unauthorized exercise of the other exclusive rights comprising the copyright. For example, a technological measure that prevents unauthorized distribution or public performance of a work would fall in this second category.
Making or selling devices or services that are used to circumvent either category of technological measure is prohibited in certain circumstances. As to the act of circumvention, in and by itself, the provision prohibits circumventing the first category of technological measures (i.e. those which block access to the work), but not the second, (i.e. those that prevent unauthorized copying).
This distinction is to ensure that the public will continue to have the ability to make fair use of the copyrighted works. Since copying of a work may be a fair use under appropriate circumstances, the chapter does not prohibit the act of circumventing a technological measure that prevents copying. By contrast, since the fair use doctrine is not a defense to the act of gaining unauthorized access to a work, the act of circumventing a technological measure in order to gain access is prohibited.
As for the devices or services to circumvent either category mentioned above, the three categories are: 1) those primarily designed or produced to circumvent; 2) those that have only limited commercially significant purposes or uses other than to circumvent; or 3) those that are marketed for use in circumventing.
Section 1201 of Title I contains two general savings clauses. First, section 1201(c)(1) states that nothing in section 1201 affects rights, remedies, limitations or defenses to copyright infringement, including fair use. Second, section 1201(c)(2) states that nothing in section 1201 enlarges or diminishes vicarious or contributory copyright infringement.
Section 1201 also contains exceptions to the prohibitions. For example, law enforcement, intelligence and other governmental activities are exempted from the operation of the entire section. Other exceptions relate to the category of technological measures that control access to works. The broadest of these exceptions establishes an ongoing administrative rule-making proceeding to evaluate the impact of the prohibition against circumventing access-control measures. This section came into effect in 2000 and it is an exception for users of a particular class of works, if they are or, are likely to be, adversely affected by virtue of the prohibition, from making non-infringing uses. The applicability of the exemption is determined through a periodic rulemaking by the Librarian of Congress, on the recommendation of the Register of Copyrights, who is to consult with the Assistant Secretary of Commerce for Communications and Information.
Other exemptions are for 1) nonprofit libraries, archives and educational institutions if they circumvent solely for the purpose of making a good faith determination as to whether they wish to obtain authorized access to the work; 2) reverse engineering of computer programs solely for the purpose of identifying and analyzing elements of the program necessary to achieve interoperability with other programs, to the extent that such acts are permitted under copyright law; 3) encryption research in order to identify flaws and vulnerabilities of encryption technologies; 4) protection of minors; 5) personal privacy where the technological measure is capable of collecting or disseminating personally identifying information about the online activities of a natural person; and finally 6) security testing for the purpose of testing the security of a computer, computer system or computer network, with the authorization of its owner or operator.
Section 1202 implements the WCT and WPPT provisions to protect the integrity of Copyright Management Information [CMI]. Subsection (c) defines CMI as "identifying information about the work, the author, the copyright owner, and in certain cases, the performer, the writer or director of the work, as well as the terms and conditions for use of the work, and such other information as the Register of Copyrights may prescribe by regulation". Information concerning users of works is explicitly excluded.
In relation to CMI, the scope of the protection is set out in subsection (a) which (a) prohibits the knowing provision or distribution of false CMI, if done with the intent to induce, enable, facilitate or conceal infringement; and subsection (b) which bars the intentional removal or alternation of CM
