A.   Introduction

This article reviews material developments in Canadian legislation, case law, and practice in the area of copyright in 2017. All references in this article to the “Act” refer to the Copyright Act, R.S.C. 1985, c. C-42, as amended. This article was originally published by The Continuing Legal Education Society of British Columbia in their “Annual Review of Law & Practice – 2018”.

B.   Law and Policy

The past twelve months were quiet (in a relative sense) in the copyright realm, marking a break from a frenetic trend that started in 2012 when the Supreme Court of Canada (“SCC”) released the copyright pentalogy, and the bulk of the Copyright Modernization Act came into force. While we received no new copyright-focused pronouncements from the highest court this past year, lower courts did release a slew of interesting decisions and this included appeal court decisions on some of the cases noted last year, and as discussed below. There were also no changes to domestic copyright law in 2017, though, as discussed below, there may be some activity on this front in 2018.

Notably, while Parliament was scheduled to commence a review of Canada’s copyright legislation in 2017 (as required under section 92 of the Act), there has been relatively little formal activity on this front aside from many stakeholders readying their submissions. Additionally while the government did hold consultations in relation to the Copyright Board in 2017, no decisions on reform have been communicated to the public. These portend an active 2018 for the world of copyright in Canada.

But those are matters for next year; for now, let’s start our review of 2017 with a look at the consultations that did occur that may lead to policy developments or procedural reforms.

1.   Consultations on Reform to the Copyright Board

On August 9, 2017, the government announced a consultation on possible reform of the Copyright Board, with the formal consultation period ending in late September. Though it received many submissions, the government has not yet made any formal response, let alone indicated if there will be any changes, or what those changes might be. A seeming focus of the consultations and potential area for reform relates to the problem of delay before the Board—which can be acute where the pace of technological changes mean that technology can become outmoded and new paradigms emerge in the time it can take for the tariff-setting process to be completed. To address such concerns, the government identified four broad categories of possible action as part of the consultations:

1. Better enable the Board to deal with matters expeditiously
   1. Streamline certain aspects of the Board’s decision-making framework
   2. Implement case management
   3. Empower the Board to award costs between parties
   4. Require parties to provide more information at the outset of tariff proceedings
2. Reduce the number of matters that come before the Board each year
   1. Expand the existing option for some collective societies to establish individual licensing agreements with prospective users independently of the Board
   2. Lengthen the effective time periods of tariffs
3. Prevent the retroactivity of tariffs or limit the impact of retroactivity
   1. Require longer lead times in tariff filing
   2. Allow for copyrighted content use and royalty collection pending the approval of a tariff in all cases
4. Clarify the Board’s framework, mandate and decision-making processes
   1. Codify specific Board procedures
   2. Include a mandate for the Board in the Act
   3. Specify decision-making criteria for the Board to consider
   4. Harmonize different tariff-setting regimes

Interestingly, the government expressly indicated that its consultation was not intended to “directly address the issues of funding for the Board, collective management generally or other statutory responsibilities of the Board”. Though these obviously have an interplay with delay, it remains to be seen what the final impact of any reform may be, if these issues are not also addressed. That said, as the government went on to note when starting the consultations, “[a] determination of the Board’s funding can only be made following consideration of its role and structure in the digital era. Broader, significant policy issues, such as collective management, may be raised in the context of the upcoming five-year Parliamentary review of the Act”.  In short: stay tuned!

C.   Case Law

The discussion below encompasses a selection of interesting copyright cases from 2017. For the most part, the discussion excludes ‘copyright’ cases that are only notable for reasons other than copyright—i.e. for developments in law relating to civil procedure, administrative review, or otherwise.

  1.   Subject Matter and Originality

In Geophysical Service Incorporated v. Encana Corporation, 2017 ABCA 125, the Alberta Court of Appeal affirmed Geophysical Service Inc. v. Encana Corp., 2016 ABQB 230, a related case which was discussed in last year’s article. Specifically, the court held that the trial decision was correct in holding that the legislature can create an implied exception to general rights such as those provided in the Act. In particular, the court confirmed a provision contained in the Canada Resources Petroleum Act (“CRPA”) was applicable, and that it was both more recent and more specific than the Act. In the result, Geophysical Service Incorporated’s (“GSI”) exclusivity to its seismic data (while subject to copyright) ended at the expiry of the mandated privilege period in the CRPA and GSI could not rely upon its rights under the Act. GSI’s application for leave to appeal was subsequently denied by the SCC and so this story ends here.

Evans and Hong v. Upward Construction, 2017 BCPC 247 was a BC Provincial Court Small Claims action involving claimant homeowners who had engaged the services of the defendant contractor. The homeowners provided the contractor with an un-editable electronic version of their proposed designs, and an employee of the contractor created an editable electronic version of the designs in a digital design program. The employee made changes to the electronic drawings provided, as well as adding further changes suggested by the claimants. The claimants ultimately terminated the contract and requested an editable electronic version of the designs. The contractor refused and provided a un-editable electronic version of the plans.

In court, the contractor asserted copyright over the electronic house plans. The judge accepted that the defendant’s electronic editable plans deserved copyright protection, noting that a house plan can be subject to copyright protection, as long as it is original. Original need not mean unique, but simply that the work is a product of the author’s skill and judgment. Given this framework, the judge pointed to the fact that the contractor’s employee did not rely on inaccurate measurements provided by the claimants, she re-measured the entirety of the home and did her own design according to the budget and design elements given by the claimants. Given this finding of copyright in the plans, the court found that the defendant had a right to the integrity of its work and, given the discrepancy of the original measurements, held that prejudice to the defendant’s reputation would occur if the plans were relied upon and modified. Finally, the court found that the claimants had an implied licence to use the renovation plan, but any reproduction (and presumably editing) would require consent of the defendant.

In Lainco Inc. c. Commission Scolaire des Bois-Francs, 2017 CF 825, the Federal Court recognized the physical layout of a building structure as an ‘architectural work’ as defined under the Act. The plaintiff, Lainco, had built a distinctly designed complex called the “Artoplex” in a Quebec town. The defendants (a school board, municipality, architectural firm, and general contractor) collaborated to build a similar structure in another town, and Lainco alleged that the structure infringed upon its copyright in Artoplex’s layout.

The court first held that designing and building the Artoplex required more than simply a mechanical exercise, it required talent and judgment and should therefore enjoy the protection that similar architectural works receive under the Act. Then the court considered whether the infringement fell under the exception of s. 64.1(1)(a) of the Act, because the work was argued to be purely utilitarian. Ultimately the court found the exception does not apply to features that also contain an architectural or aesthetic element.

On the issue of infringement the court considered numerous examples of other buildings with similar structural elements, but found in the end that a picture comparing the two complexes convincingly demonstrated the uncontroverted similarities between the two complexes and held there had been infringement. Damages were awarded the amount of $700,000. As an appeal was filed late in 2017, we may return to this case next year.

2.   Ownership

Keatley Surveying Ltd. v. Teranet Inc., 2017 ONCA 748 is the appeal decision to a case discussed in last year’s iteration of this commentary. As a reminder: the Province of Ontario had licensed Teranet Inc. (“Teranet”) to manage the Province’s electronic land registry system (“ELRS”) and to provide the public with online copies of registered plans of survey for a fee. On behalf of the land surveyors (who received no royalties from province for the use of their surveys), Keatley Surveying Ltd. (“Keatley”) had brought a class action proceeding alleging breach of copyright and unlawful appropriation via the digitizing, storing, and copying of plans deposited in the ELRS. The class action proceeding judge had declined to certify the action and both Keatley and Teranet moved for summary judgment. The motion judge had granted Teranet’s motion and dismissed the action, holding that ownership of property in plans, including any copyright, was transferred to province. Keatley appealed, arguing that the motion judge erred in finding that land surveyors did not maintain copyright.

On appeal, the Ontario Court of Appeal held that the motion judge properly dismissed the action based on the finding that the provincial Crown held copyright in the plans, with ownership by the Crown flowing from s. 12 of the Act. In rendering their decision, the Court of Appeal noted that s. 12 applies to “any work” that was “prepared or published by or under the direction or control of Her Majesty.” However, the mere publication by the Crown, as the Court of Appeal noted, does not itself trigger Crown copyright under s. 12. For Crown copyright to be triggered under this section, the publication must be “by or under the direction or control of Her Majesty”. The Court of Appeal held that the statutory regime in Ontario gives the Examiner of Surveys, a government official, broad authority to review plans to ensure compliance with the required form and content. Changes, as the Court of Appeal noted, can be required before the plan will be accepted for registration or deposit and such exclusive power to alter the deposited documents without author’s knowledge or approval is compelling evidence that the publishing of the plans was done under “direction or control of the Crown”. Further, the Court of Appeal noted that where statutory provisions place an obligation on the Crown to make available certified copies of plans upon request, such obligations are fundamentally inconsistent with a claim by an author to a right to control such reproduction. Moreover, such statutory obligations, compelling the making of copies, speak loudly to the nature and extent of the Crown’s control over such publication. As such, the provincial legislation informed the copyright inquiry mandated by s. 12 of the Act, and the court held that the Act bestowed copyright on the Crown. Keatley has applied for leave to appeal to the SCC, so this story may continue next year!

3.   Assignments and Licences

Continuing the theme of plans and related drawings, the BC Supreme Court considered copyright in the context of architectural drawings in Ankenman Associates Architects Inc. v. 0981478 B.C. Ltd., 2017 BCSC 333. The petition by Ankenman Associates Architects Inc. (“Ankenman”) was for damages and breach of copyright. Ankenman had created plans for Murray’s Walk Development Ltd (“MWDL”), which later went bankrupt mid-construction, and left a large amount owing to Ankenman for their work. In the course of the foreclosure proceedings, the respondent 0981478 B.C. Ltd. (“Newmark Group”) purchased all of MWDL’s property, which allegedly included the plans for the development.

Justice Burke first confirmed the nature of the right owned by MWDL in the drawings, confirming that in such a case, while the client obtains a right to use the plans, the architect retains the copyright (as in a typical contractor as author scenario). In this case, the court held that the right to use the plans was conditional on full payment, and when Ankenman was not paid and filed a lien on the property, they revoked their consent for the use of the plans. The court then considered the alternative argument that  an implied licence to use the drawings did transfer to the Newmark Group as part of their purchase. After canvassing the case-law, Justice Burke held at para 51 that “an implied licence is not transferrable without the copyright holder’s consent […], except if payment in full has been made.” Recognizing that there was no established method for determining damages in a case such as this, the court chose to measure damages according to what the corporate respondent would have had to pay Ankenman in order to use the drawings, totalling $52,527.07.

4.   Infringement and Fair Dealing

In Canadian Copyright Licensing Agency v. British Columbia (Ministry of Education), 2017 FCA 16, the Canadian Copyright Licensing Agency operating as Access Copyright (“Access”) sought judicial review of a decision of the Copyright Board certifying royalty rates to be paid by elementary and secondary educational institutions represented by the twelve Canadian territorial and provincial ministries of education except Quebec (collectively the “Consortium”). Access, of course, is a copyright collective that represents copyright owners throughout Canada, except in Quebec.

Two tariffs were in issue, one covering the period of 2010-2012 (the “First Tariff”) and one from 2013-2015 (the “Second Tariff”). Save for a discreet issue sent back to the Board for redetermination regarding Access’ repertoire, the Federal Court of Appeal dismissed the appeal with costs. The royalty rates of $2.46 per full-time equivalent student (“FTE”) for the First Tariff, and $2.41 per FTE for the Second Tariff remained.

Justice Gauthier grouped the issues raised by Access into two broad categories: repertoire and fair dealing. Under repertoire, the court first considered if the Board had erred “in ignoring expert evidence provided by Access to correct and clarify the breadth of its repertoire as described in the volume study.” Here, the court doled out Access’ only win by holding that the Board indeed failed to recognize relevant expert evidence, and that the explicit wording of the Board’s decision rebutted the presumption that a decision-maker has considered all the evidence before it. Next, the court considered if the Board erred in restricting the “substantiality” of compensable exposure under s. 3 of the Act. Access had the burden of proof to establish that all impugned copying involved reproducing a substantial part of a book (magazines, newspapers and periodicals were not included in this sub-issue). Given the impossibility of such a task, Access led evidence to allow the Board to draw an inference into the ‘substantiality’ of the copying. The Board expressly had rejected this approach, and the Federal Court of Appeal concurred that the copying of one or two pages from a book did not amount to a substantial amount.

The bulk of the decision was dedicated to the issue of fair dealing. There, the Consortium attempted to advance its case in two ways. It first relied on copying guidelines widely distributed to K-12 teachers in 2012 (the “Guidelines”), asserting that any copy following the Guidelines would be ‘fair’. In the alternative, the Consortium also adduced evidence to meet the fairness factors from CCH Canadian Ltd. v. Law Society of Upper Canada [2004] 1 SCR 339 (“CCH”).

Since the Board had found that it could not reasonably rely on the Guidelines to conclude that uniform practice existed in K-12 institutions, they did not attract much attention. (A more fulsome analysis of similar guidelines was undertaken by Justice Phelan later in 2017 in the Canadian Copyright Licensing Agency v. York University case, which is discussed next.)

The court addressed certain sub-issues raised by Access in the Appeal, with the most central being whether the Board erred in its application of the burden of proof. Access argued that because the Board made a comment that “neither party adequately addressed Fair Dealing” that the Consortium had not adequately met its legal burden of proving the copying fell under the statutory exemption. Access’ argument was premised on the fact that the Board was not prepared to accept either parties’ assumptions and calculations, and chose instead to come to its own conclusion based on the evidentiary record before it. The court held that this was within the Board’s purview, and that drawing inferences from the record before it was reasonable. Connected to this sub-issue was the assertion by Access that the Board breached its duty to act fairly by deciding to develop its own methodology for determining the tariff. This argument was also dismissed, the court upholding the Board’s justification that a) the evidentiary record was complete enough to make a decision and b) both parties had ample opportunity to cross examine the factors and data used by the Board to come to the conclusion.

Finally, in assessing the CCH fairness factors, the court found that the decision of the Board was reasonable. Most notably as considering the character of the dealing, the court commented that the Board was correct in not solely relying on the aggregate and absolute number of copies, but that the overall copies represented about 90 pages per student per year. The court also supported the Board’s finding that declining book sales could be caused by the open educational resources movement, digital sharing, and the general emergence of new technologies (as opposed to infringing copying). This, in turn led the court to conclude that the Board’s assessment of the compensable exposure was reasonable.

In The Canadian Copyright Licensing Agency v. York University, 2017 FC 669, Access brought an action against York University (“York”) to enforce its Interim Tariff issued by the Copyright Board for the period of time between September 1, 2011, to December 31, 2013. York counterclaimed, seeking a declaration that any reproductions made by its employees were permitted under the “fair dealing” exemption of s. 29 of the Act.

          Facts and Background

This case stems from a longstanding dispute between Access and Canadian post-secondary institutions. Until 2010, Canadian universities had collective licences to reproduce certain amounts of works (where the owner is represented by Access). This amounted to a fee per page copied and a flat rate per FTE. In 2010 this was $0.10 per page and a flat rate of $3.38 per FTE.

With the change from textbooks to coursepacks (a bound assembly of individual works and digital learning platforms), Access sought to update their tariff rate. Access filed a proposed tariff with the Copyright Board in 2010 and for the years covering 2011 to 2013 of a flat $45.00 per FTE. The Copyright Board granted Access’s application on December 23, 2010, and York was informed of the terms of the Interim Tariff on that same day. York complied with the Interim Tariff for 8 months but on July 4, 2011, York gave notice that it intended to “opt out” of the Interim Tariff, taking the position that it was voluntary and preferring to develop its own fair dealing guidelines (the “York Guidelines”).

The issue in the main action was identified at para 5 as “whether the interim tariff issued by the Copyright Board on December 23, 2010 as amended is enforceable against York.” The main issue on counterclaim was also identified at para 5 as whether “York’s dealings [were] fair for the purposes of s. 29 of the Act.” The court allowed the main action and dismissed the counterclaim.

          Reasons – Main Action

Phelan J held that the Interim Tariff is mandatory and enforceable against York, and that concluding otherwise would frustrate the purpose of the tariff scheme of the Act and the broad powers given to the Board to make an interim decision. In his reasons, he considered the meaning of the word “tariff” and determined that it connoted at least a form of compulsion. He then dismissed York’s reliance on CBC v. SODRAC 2003 Inc., 2015 SCC 57, distinguishing the case on the basis that the SCC was dealing with a different regime: licensing royalties under s. 70.2 of the Act, rather than tariffs under ss. 70.1-70.191 of the Act. The language of the two statutory regimes “…evidenced a clear legislative intent to separate tariff fixing from arbitrary licence terms. One is compulsory, and the other is permissive” (para 217).

          Reasons – Counterclaim

Phelan J applied the usual two-step process for considering fair dealing: (1) looking first at whether the dealing was done for an allowable purpose under the Act, and (2) then engaging the six CCH factors to determine if the dealing was ‘fair’. The court had no issue with the first step, holding that the use was for education, which is specifically enumerated. Moving on to the second step, the court applied the six factors as against both the individual copying and the York Guidelines. On balance, the court concluded that the York Guidelines are not ‘fair’ for the purposes of the exemption under the Act and dismissed the counterclaim. Among other findings, the court held that while education was a ‘principal’ goal as to the purpose of the dealing, a secondary goal, was to keep enrolment up by keeping student costs down. On the amount of dealing, the court focused on a portion of the York Guidelines that set out a fair dealing copying threshold of 10% , but did not account for the fact that the entirety of a work could be copied, as long as the copying was divided up between courses. The court accepted that there was no real way to measure the effect of the dealing on the revenues of Access (and ultimately the owners of the works). In this case, it was sufficient in the court’s view for Access to prove that the market for the works had decreased because of the York Guidelines along with other factors. As York has sought leave to appeal, we may be revisiting this decision next year.

          Commentary

This was not an uncontroversial decision, and there has been much commentary on its correctness. First, for the main action, commentary has focused on the court’s holding that a tariff is mandatory on the end user. The nature of a tariff, many argue, is to set the rate that a utility (or service provider) is permitted to charge. If a user does not want to use the service, then they should not be forced to pay for it. The provider then still has the enforcement mechanisms present within the Act to bring an action against any user who uses the service/product, but does not pay. Second, for the counterclaim, there has been criticism of the court’s interpretation of the relevant SCC jurisprudence regarding fair dealing, especially as it relates to the use. Specifically, the SCC in Alberta (Education) v. Access Copyright, 2012 SCC 37, had held that when a teacher copies for her students, there is no ulterior motive at play.

United Airlines, Inc. v. Cooperstock, 2017 FC 616 is both a trade-mark and copyright infringement action brought forward by United Airlines, Inc. (“United”) against Dr. Jeremy Cooperstock, the owner-operator of the website www.untied.com (“UNTIED.com”).

Cooperstock has run an iteration of UNTIED.com since 1997, which has served as a vehicle for visitors to find information, submit complaints, and read complaints dating back to 1998 in relation to United. The design of UNTIED has mirrored the design of the United website since 2011. Perhaps unsurprisingly, all of this displeased United.

As regarding the copyright issues, the Federal Court found that there was significant copying of United’s logo and the general design of its website. The assessment then turned to whether the copying fell under any exemption, namely fair dealing for the purposes of parody or satire.

As part of its CCH-informed analysis, the court considered what definition should be used for the new parody exception found under s. 29 of the Act—and, borrowing from the European Court of Justice, held that the appropriate definition has two elements: “the evocation of an existing work while exhibiting noticeable differences and the expression of mockery or humour” (para 119). The court found that UNTIED.com falls within the definition of parody, and as such the first stage of the CCH test was made out.

At the second stage of the CCH test, however, the court found that Cooperstock’s dealing was not fair after considering the six factors outlined by the SCC. In particular, when considering the purpose of the dealing, the court held at para 125 that the “real purpose or motive in appropriating the copyrighted works was to defame or punish the Plaintiff, not to engage in parody.” The court also held that the character and amount of the dealing tended towards unfairness, as the website was public and the substantially the entirety of United’s homepage was reproduced. The court recognized that for parody, the alternatives factor cannot be weighed too heavily because available alternatives may not be as effective in meeting the goals of parody. The court held that the correct question to ask in such cases of parody under this factor is: would the defendant’s use of alternative logos and website design be as effective in mocking and criticizing the plaintiff? Under this factor, Phelan J concluded that the “mean-spirited” (para 133) use of the Plaintiff’s works was both not humorous and did not achieve the purported goal of UNTIED.com of collating complaints, being a resource to passengers, and pressuring the Plaintiff to provide better customer service. Finally, the court found that the effect of the copying was having a harmful impact on the Plaintiff, while being careful to state that the source of the harm was not the criticism found on the parodic website, but the fact that the website could mislead consumers. The court ultimately held that Cooperstock had infringed both the trade-mark and copyright rights owned  by United, and that the airline was entitled to an injunction to restrain further infringement. Cooperstock has appeal this decision so this is another case we may revisit next year.

5.   Technological Protection Measures

Nintendo of America Inc. v. King et al., 2017 FC 246 was the first time that a court dealt expressly with circumvention of technological protection measures (“TPMs”) since the relevant provisions of the Act came into force in 2012. This landmark case saw the Federal Court awarding $12,760,000 in damages against the corporate respondent, Go Cyber Shopping (2005) Ltd. (“Cyber Shopping” or the “Respondent”) for the circumvention of TPMs and infringement of the copyrights of Nintendo of America Inc. (“Nintendo”).

Cyber Shopping sold and installed various devices that allowed their customers to effectively bypass the TPMs used by Nintendo to prevent pirated or copied games from being played on their video game consoles, namely the Nintendo DS, 3DS, and Wii. These circumvention devices included the physical replication of game cards that mimicked those used by genuine Nintendo games, and ‘mod chips’ that were installed in the Wii console that tricked the system into thinking a pirated copy of a game was actually genuine. The result was that customers of Cyber Shopping had the ability to play hundreds of illegally downloaded video games.

It’s worth noting that the substantiality of the decision was an adoption by the court of the Applicant’s written submissions, as acknowledged by the court and with which Justice Campbell “fully agree[d]” (para 13). Finally, this decision was largely uncontested, as the personal defendant settled this matter for $70,000.

There were three major issues for consideration: (a) was there secondary copyright infringement contrary to s. 27(2) of the Act; (b) was there circumvention of the TPMs under s. 41.1(1) of the Act ; and (c) if so, what is the appropriate remedy?

The court dispensed with the first issue fairly quickly. Following CCH, it noted at para 46 that there is a “three-part test for establishing secondary infringement: (1) the copy must be the product of primary infringement; (2) the secondary infringer must have known or should have known that he or she is dealing with a product of infringement; and (3) the secondary dealing must be established within one of the enumerated acts in s. 27(2)” of the Act. There were three individual copyrighted codes or ‘header data’ at issue and the court accepted, on the first-part, that either these were included (i.e. copied) in the products sold by the Respondent, or obtainable by following the instructions provided by the Respondent on packaging or on its website (i.e. authorizing the copying). The court accepted that an inference could be made on the second-part and that there was no dispute that the Respondent was selling the circumvention products in question. Accordingly, the court found secondary infringement on all three header data codes, contrary to s. 27(2) of the Act.

The second issue garnered the most attention from the court as it was first time the anti-circumvention provisions of the Act have been judicially considered. The first step for the court was to determine what was and was not a TPM under the Act, and Go Cyber only contested the assertion by Nintendo that the physical shape of the game cards was itself a TPM. The court agreed with Nintendo, holding that the language in the act of “any effective technology” included the physical shape and configuration of cards, which were effectively a “lock and key” measure of protection. Second, the court rejected Go Cyber’s argument that it did not circumvent TPMs, but simply replicated Nintendo’s protection measures by copying their layout and encryption circuits. The court held that the wording of “to otherwise avoid, bypass, remove, deactivate or impair” in s. 41 of the Act was broad enough to capture the activities of the Respondent. Finally, Go Cyber advanced the argument that the presence of “homebrew” software (non-Nintendo software that could be played using or operated on the console systems) allowed it to raise the defence of ‘interoperability’ under s. 41.12 of the Act. Essentially, because the products sold by Go Cyber could be used for non-Nintendo games or programs, the Respondent should not be held liable for its customers using their products for circumvention. The court did not agree, and held that the primary purpose of the products was circumvention, noting that not a single piece of “homebrew” software was available on the website of the Respondent.

The court arrived at the monetary judgment by determining whether the award should be based on the number of TPMs circumvented, or the number of copyrighted works infringed upon. The court opted to calculate damages based on the number of games that could be pirated, which totaled 585, plus the three header data works, and assessed each of them at the statutory maximum of $20,000 given the egregious infringement at issue. The court also awarded punitive damages of $1,000,000, for a total monetary award of $12,760,000. The court also granted a wide-ranging injunction, and ordered delivery of the remaining devices held by the Respondent.

6.   Providers of Network Services or Information Location Tools

In Voltage Pictures, LLC v. John Doe, 2017 FCA 97, the Federal Court of Appeal overturned a Federal Court decision that allowed Rogers Communications Inc. (“Rogers”) to charge $100 per hour, plus HST, for compliance with requests from Voltage Pictures and other co-plaintiff movie studies (the “Studios”). Stratas JA held that absent any regulations, ss. 41.25 and 41.26 of the Act mandate that an Internet Service Provider (ISP) cannot require any reimbursement for the costs of forwarding notices or disclosing the identity of allegedly infringing subscribers pursuant to a court order. The court held that while the Act regulates the process of collecting the records of users, it is silent on the process for disclosure; and, therefore, leaves open the possibility that a court can allow actual, reasonable, and necessary costs associated with the production. However, the court held that this would likely be negligible, and reversed the trial judge’s holding on compensation to Rogers. Leave to appeal was filed and granted by the SCC, so stay tuned for more.

In Trader v. GarGurus, 2017 ONSC 1841, the phrase “information location tool” in the Act was judicially considered for the first time in the context of one company ‘scraping’ photos from various sources on the internet. In terms of background, Trader Corporation (“Trader”) operated a ‘Capture Service’ for Canadian car dealerships whereby they would send photographers to dealerships to take photographs of cars for sale to include in Trader’s listings. CarGurus, Inc. (“CarGurus”) is an American company that entered the Canadian market in 2015. Its practice in the United States was to use an online ‘web-crawler’ to ‘scrape’ photos from various sources (mostly car dealership websites) for use on the CarGurus website. CarGurus did not know that the photographs contained on certain individual dealership websites were actually taken by Trader, and when Trader sent a demand letter requesting the removal of over 150,000 photos for which Trader claimed to own copyright in, CarGurus removed all identified photos. Trader subsequently brought an application alleging copyright infringement for a total of 197,740 photos.

There was no issue at trial as to whether the photographs were protected by copyright and owned by Trader. Instead, CarGurus raised three defences: that the photos were merely framed on their website, and not reproduced; that the use was permitted under fair dealing; and that the CarGurus website was an “information location tool” and therefore exempt from damages by the operation of s. 41.27 of the Act (which, subject to conditions, provides that only injunctive relief is available against the providers of such tools). The first two issues were dispensed with quickly. First, the Ontario Superior Court found that by placing the photos on their website, CarGurus was making the photos available to the public by telecommunication and thus prima facie violating an exclusive right of a copyright owner. Second, the court found that the dealing was not fair, focusing primarily on the commercial nature of CarGurus’ operations.

The last issue involved interpretation of s. 41.27(5) of the Act which defines information location tool as “any tool that makes it possible to locate information that is available through the Internet or another digital network.” Essentially, CarGurus’ defence was that it was operating a search engine, and should be exempt. In interpreting the definition, the court distinguished between a search engine that allows users to navigate and find information on the internet (like Google or Yahoo!), and websites like CarGurus, which gather information from the Internet and make it available on their own website. The rationale behind the exemption, the court reasoned, was that intermediaries should not be punished for providing and reproducing information when they act strictly as intermediaries (which is consistent with the conditions for the exemption to damages found in ss. 41.27(2) of the Act). In this case, CarGurus did not provide for a direct way for the user to link to a dealer’s website. The court held that this was enough for it to conclude that Car Genius was not acting as an intermediary and therefore failed to establish that it was the provider of an information location tool under the Act.

As far as damages go, Trader elected to receive statutory damages and claimed over $76 million in compensation, calculated by taking the minimum $500 and multiplying it by the 152,532 infringements found. The court exercised its discretion under s. 38.1(3) of the Act to reduce the amount of damages below the $500 minimum and awarded $2 per infringement, holding that to award the minimum would be grossly disproportionate and citing the fact that CarGurus did not appear to be acting with any bad faith.

The authors would like to acknowledge the helpful assistance of Ethan Plato, an articled student with Clark Wilson LLP, in preparation of this article.