Copyright Law Developments of 2015
April 25, 2016
By Jill Tonus, Tamara Céline Winegust, and Anastassia Trifonova
Last year saw a flurry of copyright activity, both from the Canadian courts, and legislators, ranging from the Supreme Court’s update on the principle of technological neutrality to the Trans-Pacific Partnership (TPP). Below are our top picks for 2015’s most significant copyright developments.
1. Technological Neutrality
Canadian Broadcasting Corp v SODRAC 2003 Inc, 2015 SCC 57
In 2015, the Supreme Court of Canada sent a clear message that technological neutrality is an important principle that guides interpretation of the Copyright Act (“the Act”). However, it does not override statutory language and purposive construction.
At issue was whether “broadcast-incidental” copies, (i.e. temporary copies that current broadcasting technology renders necessary in the course of broadcasting a work to the public) engage the reproduction right under the Act. If so, how are these copies to be valued in determining compensation to copyright holders? In 2012, the Copyright Board held that CBC had to pay additional royalties for broadcast-incidental copies to the copyright collective, SODRAC, because these copies engaged the reproduction right under s. 3(1)(d) of the Act. The Federal Court of Appeal upheld that broadcast incidental copies required a separate licence. The CBC appealed to the Supreme Court of Canada.
The majority of the Supreme Court affirmed that broadcast-incidental copies engaged a reproduction right and were subject to a separate royalty payment from that covering the broadcast activity itself. After extensive discussion about the nature and importance of technological neutrality, the majority also held that the Board did not adequately consider this principle or copyright balance in setting the value of CBC’s broadcast-incidental copies. It remitted the matter of valuation back to the Board.
In her strong dissent, Justice Abella adopted a functional approach to technological neutrality, finding that, broadcast-incidental copies do not engage the reproduction right. She criticized the majority’s “literal” approach to statutory interpretation, noting that it effectively penalized broadcasters for implementing technological advancements by creating extra liability under the Act for incidental activities. Although both the majority and minority stressed the importance of technological neutrality, the majority’s decision has significant implications for valuation of licensing and royalty fees.
2. Procedural Fairness
Netflix Inc v SOCAN, 2015 FCA 289
In 2014, Netflix applied to the Federal Court of Appeal for Judicial Review of the decision issued by the Copyright Board concerning proposed SOCAN royalties. In 2012, the Board certified a tariff agreement for audiovisual webcasts for the period 2007-2013. The original proposed tariff did not charge users fees for free trials. Subsequently, the Copyright Board invited parties to make submissions in respect of a revised agreement, not published in the Canada Gazette, that included provisions for extra royalties during free trials. As Netflix was not a party to the original proceeding, it was not invited to participate in the process. Since it offered free trials, however, Netflix made submissions to the Board in opposition, arguing that its free trials were fair dealings and should not be subject to royalties. Ultimately, the Board certified the settlement tariff with payments for free trials without regard to Netflix’s submissions.
On Appeal, Netflix alleged the Board violated its right to procedural fairness by refusing to allow Netflix to provide information with respect to fair dealing and technological neutrality. The Court of Appeal reviewed the Board’s certification process on the standard of correctness. It set aside the Board’s decision insofar as it pertained to royalties for free trials and returned it for redetermination. The Court concluded that Netflix should be given the opportunity to put its case forward since the tariff provision opposed by Netflix arose during the settlement discussions and was not in the original proposed tariff.
3. Copyright and the Internet
Red Label Vacations Inc (redtag.ca) v 411 Travel Buys Limited (411travelbuys.ca), 2015 FC 19, affirmed 2015 FCA 29
The plaintiff, Red Label Vacations, operated a travel business that offered online travel information services and bookings through its website, redtag.ca. Red Label alleged that the defendant, 411 Travel Buys’, website infringed the copyright in metatags of redtag.ca. The Federal Court dismissed Red Label’s claims. Although it found that 411 Travel copied metatags from Red Label’s website, copyright did not subsist in the metatags, which were merely the operation of an algorithm, lacking skill or judgement. As such, the metatags failed to meet the “originality” threshold required to trigger copyright protection. Moreover, even if copyright could subsist in the metatags, there was no substantial copying. The Federal Court further held that the reproduction of metatags was inadvertent and constituted innocent infringement. In December 2015, the Federal Court of Appeal upheld the trial judge’s decision but noted that it must be read in light of the specific facts before the trial judge. Consequently, copyright infringement claims from copying metatags might be successfully asserted in the future. (This case was also covered in the “Top Trademark Cases from the Canadian Courts in 2015” available here).
Canadian Copyright Licensing Agency (Access Copyright) v Alberta, 2015 FCA 268
Access Copyright brought an application for judicial review to quash the Copyright Board’s decision setting certain royalties to be collected for the reproduction of works in Canada by employees of provincial and federal governments. Pursuant to Rule 317 of the Federal Courts Rules, Access Copyright requested the materials that were before the Board. The Board rejected this request. Subsequently, Access Copyright included the material it purported was before the Board into its application record without providing a covering affidavit. The employees brought a motion to remove that material.
The Federal Court of Appeal concluded that Access Copyright should have served an affidavit explaining that the material was before the Board when it made its decision. Although, an innocent error, the employees were denied their right to cross-examine. The Court rejected the respondents’ submission that Access Copyright should be barred from including an affidavit appending the materials in the application record and held that the impugned material should be struck from the record. However, Access Copyright could still serve an affidavit appending the materials that were before the Board.
5. Costs Awards and Norwich Orders
Voltage Pictures LLC v John Doe and Jane Doe, 2015 FC 1364
In 2014, Voltage Pictures LLC, brought a motion under Rule 238 of the Federal Courts Rules seeking a Norwich Order against internet service provider, TekSavvy, to produce the names and addresses of subscribers associated with 1,140 IP addresses that Voltage identified as engaging in copyright infringement of the film “The Hurt Locker” through illegal file sharing. TekSavvy decided that it was appropriate to notify the affected subscribers of the pending proceedings and notified more than 200,000 of its subscribers. The notice generated a high volume of inquiries and administrative costs for TekSavvy. TekSavvy sought to recover these costs, which it assessed to be at $321,277.
The Prothonotary issued a costs order of $21,577.50. On appeal, the Federal Court awarded TekSavvy an additional $11,822.50. It held that TekSavvy had no reasonable basis to give notice of the pending motion to all 200,000 subscribers, so the costs arising out of these activities could not be recovered. However, the Prothonotary erred in failing to consider all of TekSavvy’s legal costs and disbursements, which the Court cited as reason to adjust the costs award.
6. Recovering Tariff Payments
Rogers Communications Partnership et al v SOCAN, 2015 FC 286, reversed in part 2016 FCA 28
This case dealt with the validity of a Copyright Board tariff that required the plaintiffs, including Rogers Communications Partnership, to pay royalties to SOCAN for the transmission of downloadable ringtones and ringbacks to subscribers over the Internet. At the trial level, Rogers sought to invalidate the tariff arguing this activity did not constitute communications of musical works to the public that would trigger section 3(1)(f) of the Act. The tariff, originally covering 2003-2005, was extended to cover 2006-2013. However, in light of decisions rendered by the Supreme Court of Canada in Rogers Communications Inc v SOCAN (“Rogers”) and Entertainment Software Association v SOCAN (“ESA”), that downloads of videogames and musical works were not communications of works to the public, Rogers took the view that the tariff was no longer valid.
In addition to determining issues of res judicata and estoppel, the Court considered whether internet transmissions of ringtones to mobile devices were “communications” that implicated the section 3(1)(f) right. The Court held that the principles espoused in the Rogers and ESA decisions supported a finding that such transmissions were reproductions of musical works but not public communications.
Rogers further argued that, given these Supreme Court’s decisions, the Board should have never certified the tariff. The Court, however, indicated that the tariff was not beyond the Board’s jurisdiction, although it became unenforceable after the Rogers and ESA decisions. The plaintiffs further raised an unjust enrichment claim against SOCAN, but the Court rejected it and denied an order tracing distribution of the tariff royalties.
The plaintiffs appealed and SOCAN cross-appealed the decision. On January 27, 2016 the Federal Court of Appeal allowed in part both the appeal and cross-appeal as regards to issue estoppel and Federal Court’s authority over certain questions of mixed fact and law. However, the finding that ringtones engaged only the reproduction right was not an issue before the Court. As such, that part of the trial judgement still remains.
7. Class Actions
Last year, the Ontario Courts considered two copyright infringement class action lawsuits. Although, the decisions discussed below concerned particular procedural issues, they are both underlaid with important copyright claims.
In Keatley Surveying Ltd v Teranet Inc, 2015 ONCA 248, the Ontario Court of Appeal upheld the Divisional Court’s decision to allow class certification. The proposed class consisted of land surveyors asserting copyright in survey plans they prepared and registered in the land registry system. Teranet, who manages Ontario’s electronic land registry system for the government, provides electronic copies of registered plans to the public for a fee set by statute, but pays no royalties to the land surveyors. Teranet took the position that the surveys, once registered, become property of the Crown. They relied on various provincial statutes and section 12 of the Act. The lead plaintiff, Keatley, argued that these provisions could not override federal copyright protection. The Court of Appeal did not comment on the merits of the case, but merely upheld the class certification.
In Waldman v Thomson Reuters, 2015 ONSC 3843, the Court granted the plaintiffs leave to appeal to the Divisional Court from a judgement of the Superior Court concerning a settlement approval. A class action had been commenced by Waldman, claiming Thomson infringed copyright of the Class Members by making available copies of court documents authored by Class Members and their law firms, to subscribers of Thomson Carswell’s “Litigator” service without the Class Members’ permission, and for a fee. The Class Members comprised all the Canadian attorneys whose documents appeared in the “Court Document Collection” of the “Litigator” service. The Parties reached a settlement agreement and sought court approval. However, the trial judge refused to approve the settlement agreement, on the basis it was not beneficial or fair to the copyright owners in the class. This prompted the parties to seek leave to appeal.
8. Fair Dealing and Technological Protection
1395804 Ontario Limited (Blacklock’s Reporter) v. Canadian Vintners Association, 2015 CanLII 65885 (ON SCSM)
The plaintiff, Blacklock’s Reporter, provides access to online articles for a fee, through a paid subscription service. The defendants, Canadian Vintner’s Association, sought access to an article about the Association published by Blacklock’s and hidden behind the subscriber paywall, it obtained a copy of the article through a third party subscriber to the Blacklock’s service. Blacklock’s discovered the Association’s actions, and brought an action in Small Claims Court for copyright infringement and circumvention of a technological protection measure contrary to section 41 of the Act. The Association claimed the article was obtained to review it for any inaccuracies about the Association, and took the position that such use did not infringe because it constituted fair dealing for research and private study. The Court disagreed, found the paywall a “technological protection measure” that was circumvented by the Association’s activities, and that fair dealing was not available because the article had not been legally obtained. Further, the Court held that, in any event, the Association failed to establish the dealing was for the purpose of research/private study, since no further action was taken (i.e., after the review, they did not lodge any complaints about inaccuracies with Blacklock’s). The Court awarded Blacklock’s damages of $11,470 (the cost of a corporate subscription to the service) and $2,000 punitive damages, based on several factors, including “trivializing the value of the Plaintiff’s work and its efforts at protecting its copyrighted material”.
9. Evidence of Infringement
Miguna v Walmart Canada et al, 2015 ONSC 5744, affirmed 2016 ONCA 174
Applying the secondary infringement test, the Court granted the defendants’ motion for summary judgement to dismiss an action. The plaintiff, Miguna, wrote a book about his experiences in Kenya that was published by a U.K.-based publisher, Gilgamesh Africa Ltd. In 2014, the plaintiff became aware that his book was being offered for sale on Walmart’s website, which identified a different entity, Consortium, as the publisher. The plaintiff brought action against Walmart and Consortium for breach of copyright, claiming that he did not consent to any publication, production, reproduction or release of his book, as well as for secondary infringement. The Court applied the three required elements of secondary infringement established in Euro Excellence Inc v Kraft Canada Inc (1. there is primary infringement, 2. the secondary infringer should have known that he or she was dealing with a product of infringement, and, 3. the secondary infringer sold, distributed or exposed for sale the infringing goods), and found there was no direct or indirect infringement by the defendants. As such, there could be no secondary infringement either. Moreover, there was no connection between the plaintiff’s claims and Canada, since Miguna provided no evidence of sales or of the product being offered for sale by the defendants in Canada. Consequently, the Act could not be applied. The plaintiff appealed this order. On March 1, 2016 the Ontario Court of Appeal upheld the motion judge’s decision and dismissed the appeal.
10. Quality of Infringing Copies
Geophysical Service Inc v Antrim Energy Inc, 2015 ABQB 482
In recent years, the plaintiff, Geophysical Services Incorporated (“GSI”), has commenced numerous actions in Canada against various companies and government bodies, including for alleged copyright infringement, based on use of the plaintiff’s seismic data without a licensing agreement. This case involved the Canada Newfoundland and Labrador Offshore Petroleum Board (“CNLOPB”), a regulatory board operating a regime for the exploration and development of oil and gas. Third parties, like GSI, are required to provide CNLOPB with seismic data. Antrim, the defendant, contacted GSI in 2011, seeking access to certain seismic data. GSI proposed Antrim pay a licensing fee to access the data. Antrim refused and subsequently requested public information in possession of CNLOPB. CNLOPB provided Antrim with the requested data, which included two lines of seismic data produced by GSI. GSI discovered Antrim obtained that data, and commenced an action for breach of copyright. Antrim sought summary judgement, and argued, among other things, that the poor quality of the photocopies obtained from CNLOPB made them unusable, and therefore, there was no infringement. The Court rejected this argument, and held that unauthorized acts of copying constituted infringement since the Act did not require the “infringing work [to] compete in the marketplace with the infringed”. The purpose of obtaining the copy was to assess the likelihood of a resource discovery. The fact that Antrim determined the data received was not useful did not excuse the copying. The Court also dismissed Antrim’s argument that, since it had made no use of the data, there should be no damages. Consequently, the application for summary dismissal was denied.
11. Update on Amendments to the Copyright Act
Canada’s “Notice-and-Notice” regime came into full force on January 2, 2015. The Notice-and-Notice provisions represent the last of the major changes to the Copyright Act to be proclaimed in force that were contained in the Copyright Modernization Act. That Act received Royal Assent on November 7, 2012. Under the Notice-and-Notice regime, internet intermediaries, such as ISPs and website hosts, who receive notices of alleged infringement from a copyright owner, are legally required to forward those notices to the alleged infringer.
On June 23, 2015 the Bill C-59, the Economic Action Plan 2015, Part 1 received Royal Assent. Among several notable changes to the intellectual property framework, it amended the Copyright Act by extending the term of copyright protection for sound recordings and performances from 50 years to 70 years. Longer protection will be afforded for sound recordings and performances fixed in sound recordings that are published within 50 years of first fixation to the earlier of (a) the end of 70 years after the sound recording is published or (b) the end of 100 years after the recording is first fixed. The extended protection will not apply to unpublished sound recordings or performances not fixed in sound recordings, which are protected for 50 years from the date of the first performance. These amendments, however, will not apply retroactively and will not revive copyright if protection ended before the changes were implemented.
Finally, on October 5, 2015 the Canadian Federal government announced that Canada has become one of the members of the TPP, a trade agreement between 12 Pacific Rim countries. The summary of the text was released to the public in November, and among various intellectual property amendments it proposed a general extension of the copyright term from 50 to 70 years plus the life of the author(s). Canada signed the agreement on February 4, 2016.
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