2023 Year in Review: Canadian Copyright
In 2023, not only did the Canadian Courts order jail time for contempt of a copyright-related interim order, but our Justices had an opportunity to grapple with the defence of “misuse of copyright”, the availability of reverse class action copyright proceedings, while also dabbling with the rarely tested provisions of the Copyright Act such as the s.64(2) “useful article defence”, not to mention revisiting the scope of what constitutes “authorizing infringement” since the SCC’s 2022 ruling in ESA, amongst other topics.
Below are some of the most notable Copyright developments in Canada from 2023, including links to our articles on these developments and decisions written throughout the year.
Legislative Changes and Consultations
The Government of Canada launched a (i) consultation on the implications of generative artificial intelligence for copyright and a (ii) survey on resale rights for Canada
The Canadian government, recognizing the need to update legislative frameworks in response to evolving technologies, particularly artificial intelligence (AI), proposed the Artificial Intelligence and Data Act in Bill C-27. To further explore the impact of rapid AI advancements, the government launched a consultation seeking public input on generative AI tools. This consultation aimed to address issues such as the use of copyrighted works in training AI systems, authorship and ownership rights of AI-generated content, and liability issues related to potential copyright infringements by AI-generated content. An update on the consultation findings will be posted online in 2024 and will contribute to Canada’s copyright policy development. Read more on this topic here.
The Canadian government also launched a 2023 survey to help support the development of resale rights for artists which would allow visual artists to be rewarded as their reputation grows. This survey was being conducted against the backdrop that more than 90 countries worldwide have adopted resale rights and the recognition that the full value of a work of art is often not realized at the first sale.
Bill C-244, An Act to amend the Copyright Act (diagnosis, maintenance, and repair)
This private member bill, currently at the second reading of the Senate, seeks to amend the Copyright Act to permit the circumvention of Technological Protection Measures (TPMs) for the sole purpose of maintenance, repair and related diagnosis, with the goal of fostering sustainable consumerism and facilitating after-market repair.
Bill C-11: Online Streaming Act Receives Royal Assent
Bill C-11, otherwise known as the Online Streaming Act, received Royal Assent and will require online streaming services to contribute to the creation, production, and distribution of Canadian content, with the Canadian Radio-television and Telecommunications Commission (CRTC) becoming responsible for its implementation.
Old problems, new solutions? Court considers the Defence of ‘Misuse of Copyright’, acknowledges the potential of reverse class proceedings, and grants a rolling order for a whack-a-mole case
Defence of “Misuse of Copyright” is Tested in the context of Canada’s Notice and Notice Regime
Millennium Funding, Inc. v. Bell Canada, 2023 FC 764
In the case of Millennium Producers v. Bell Canada and Bell Aliant, several issues were tackled, including the obligations of ISPs under the Notice and Notice Regime, the availability of the misuse of copyright defence, and the applicability of various legal doctrines like champerty, maintenance, and abuse of process in the context of copyright enforcement.
The broader case involves a copyright dispute between film studios (Millennium Producers) and an internet service provider (ISP), Bell Canada and Bell Aliant (collectively, Bell). It was alleged that Bell’s customers infringed on their copyrights by distributing films via BitTorrent, and the studios were suing Bell for not delivering infringement notices to their customers, as required by the Copyright Act‘s Notice and Notice Regime.
Bell appealed against an order which struck parts of Bell’s defence and counterclaim. These defences included that the Millennium Producers (and, for certain grounds, their counsel) misused their copyright, abused process, engaged in champerty and maintenance and unlawful means conspiracy through their use of a Copyright Enforcement Program (“CEP”) to enforce the Notice and Notice Regime.
The Court indicated that “misuse of copyright” (which has yet to be adjudicated under Canadian law) could be a viable defence to a copyright holder seeking to enlarge its monopoly improperly. Specially, misuse does not require that the defendant be prejudiced by the conduct in question, it is enough that a public policy consideration embodied in the grant of copyright is violated. Turning to the context of section 41.26 action (ISP), the Court stated that it was an error to conclude that the doctrine of misuse of copyright could never extend to this context. Although the underlying action was not one for infringement, the Court acknowledged that Bell was nonetheless affected by the enforcement of copyright under the CEP and could be subject to damages as a result of that enforcement pursuant to section 41.26 of the Copyright Act. However, whether the doctrine could extend to an action under section 41.26 of the Act was not plain and obvious to the Court. Ultimately, the Court did not overturn the order striking its defence as Bell did not plead sufficient material facts to support its allegation.
The Court also concluded that Bell’s allegations of champerty, maintenance, and abuse of process lacked sufficient factual basis.
This decision provides helpful guidance on the untapped potential of the “misuse of copyright” defence and the critical role of setting out “what” the misuse is and “how” the conduct complained of is contrary to public policy when making out such a defence.
Reverse class copyright proceedings rear their head again, but the bar remains high
Voltage Pictures, LLC v. Salna, 2023 FC 893
Reverse class proceedings remain a viable method for pursuing copyright infringement claims against large numbers of unknown parties. However, there must be some factual basis for concluding that such a proceeding is preferable, and the litigation plan must disclose a workable organizational plan to advance the litigation. Here, the Court declined to certify a reverse class proceeding by the Applicant film companies against 874 unknown individuals whose IP addresses were allegedly used to upload and download the plaintiffs’ films. The Applicants’ litigation plan was deficient in a number of respects, including its failure to address the funding of class counsel and heavy reliance on the Notice and Notice Regime to facilitate service and advance the prosecution of the proposed class proceeding. The Court clarified that copyright owners cannot use the regime to notify an ISP’s subscribers of the certification of a class action, nor can it be used to offer subscribers a deal.
Whack-a-mole cases obtain a sympathetic rolling order from the Court
Burberry Limited v. Ward, 2023 FC 1257
This decision is a catalogue of the different types of injunctive and monetary relief that successful rightsholders may be able to obtain in what the plaintiffs and the Court call “whack-a-mole” cases. After granting the plaintiffs’ motion for default judgment against the two defendants for importing and selling counterfeit goods, the Court granted an injunction, an order for the delivery up and destruction of the goods, and orders requiring the defendants to identify the suppliers of the goods and prohibiting third parties with notice of the judgment from assisting the defendants. The Court went further by granting an order requiring third parties to provide information regarding the defendants’ infringing activities, provided the plaintiff brought an informal ex parte motion. In addition, the Court granted a rolling order to address the defendants’ persistent attempts to avoid detection through frequent name changes. Finally, each plaintiff received damages for trademark infringement in the amount of $197,000, while Burberry received $120,000 in statutory damages for copyright infringement and $100,000 in punitive damages.
Infringement in the context of retransmission, and set-top boxes, and websites – oh my!
Voltage Holdings, LLC v. Doe #1, 2023 FCA 194
Voltage appealed the Federal Court’s decision to dismiss the motion for default judgment (please see our article here), finding insufficient evidence to establish that the respondents either directly infringed or authorized infringement of the appellant’s copyrighted work, “Revolt”.
The key issues involved understanding what constitutes direct and authorizing infringement and the burden of proof in such cases, especially regarding drawing adverse inferences. The appellant argued that the respondents directly infringed by making the work available online via BitTorrent and authorized infringement by allowing an unknown person to infringe the copyright. However, the Court emphasized that the burden of proof lies with the plaintiff to prove infringement claims, and mere association with an IP address does not prove infringement.
The Court also discussed the legal definition of “authorization” in copyright law, drawing heavily from the Supreme Court’s 2022 decision in ESA, noting that providing equipment or technology capable of infringement does not constitute authorizing infringement. The Court found that the appellant had not proven any activity beyond the respondents’ sharing of their internet accounts, and there was no evidence linking the respondents to the actual uploading of the copyrighted work. The FCA dismissed the appeal, finding that linking an IP address involved in infringing activities to the identity of an internet account holder was insufficient to prove that the account holder was the person responsible for the infringing activity associated with their account. Further, the FCA found that there was insufficient evidence to conclude that the account holders authorized the infringement of the works. Rather, the authorizers of the copyright infringement would be internet users who uploaded the works online and not necessarily the internet account holders.
Dumouchel c. Nonveiller, 2023 QCCQ 3453
Photographer Dumouchel, the plaintiff, clashed with Nonveiller, the defendant, over the unauthorized use of Dumouchel’s photographs on the platform 514Blog.ca. Dumouchel alleged infringement of his creative works and sought $6,900 in damages. Since copyright protection was assumed in the work, the case turned on whether Nonveiller, in fact, owned the website. Nonveiller denied affiliation with the site, claiming that he did not know who hosted the site and who paid for its hosting. However, the Court found that, among other things, Nonveiller’s power to remove the photos from the website suggested that it was possible he had enough control to publish the photos to the website as well. Ultimately, the Court concluded that, although Nonveiller’s actions were likely not in bad faith, Nonveiller was still liable for copyright infringement.
Summary Proceedings Remain a Popular Litigation Vehicle
The Federal Court provides stamps of approval for summary trials
Dermaspark Products Inc v. Patel, 2023 FC 388
This decision continues the recent upswing in summary trial decisions relating to intellectual property, as litigants seek more timely and cost-effective ways to resolve IP disputes. The plaintiff’s skincare companies claimed that the defendants, Balsam Day Spa and its owner, Ms. Patel, purchased and used a counterfeit of the plaintiffs’ OxyGeneo facial treatment machine from Alibaba and used marketing materials that infringed the plaintiffs’ copyright and trademark rights. The Court ordered a permanent injunction restraining the defendants’ conduct, awarding $5,000 in statutory damages for copyright infringement in five works, $20,000 in nominal damages for infringing multiple trademarks, and another $20,000 in punitive damages for a total of $45,000. The Court dismissed the defendants’ claims that the plaintiffs were bullying and extorting a small business through litigation, recognizing that the defendants were careless and irresponsible in acquiring and using a counterfeit medical device.
Techno-Pieux Inc. v. Techno Piles Inc., 2023 FC 581
In the case of Techno-Pieux Inc. v. Techno Piles Inc. et al, Chief Justice Crampton presided over a copyright dispute involving Techno-Pieux Inc. and former distributors rebranded as “TECHNO PILES.” This case, illustrating the use of summary trial motions in Federal Court, delved into copyright infringement among other claims. The summary trial sought to efficiently resolve contested factual disputes using affidavit evidence and cross-examination transcripts. Despite an earlier motion addressing certain aspects, unresolved issues concerning copyright infringement persisted. During the trial, the Court disallowed new evidence on settled matters and concluded that the defendants’ use of copyrighted material infringed upon Techno-Pieux Inc.’s rights. Remedially, the Court issued declarations, injunctions, and awarded $10,000 CAD in damages for copyright violations. This case highlights the Federal Court’s commitment to expeditiously resolving copyright disputes through focused motions, emphasizing the importance of adhering to copyright law in commercial ventures.
Interim Injunctions Remain Challenging to Obtain
If monetary damages are a likely adequate remedy, the Court reminds us that they are unlikely to grant an interim injunction
Sheppard v. C S Design Inc, 2023 FC 413
Here the central issue was copyright infringement related to art installations involving luminous seesaws and sound arrangements. The plaintiffs, a Toronto-based architecture practice (“LO”), filed for an interim injunction against the defendants, including a Montreal-based architecture firm (“CSD”), alleging that their “WIP WAP” installation infringed upon LO’s similar work “Impulse”. Impulse, a successful project of luminous seesaws, sound arrangements, and video projections, led to another collaborative work named Wave-Field. LO contended that WIP WAP, a new production by the defendants with differently arranged luminous seesaws and new sounds, replicated key elements of both Wave-Field and Impulse, constituting copyright and moral rights infringement. However, the Court was hesitant to grant an interim injunction due to the plaintiffs’ inability to present a strong prima facie case, emphasizing the lack of compelling evidence of irreparable harm.
The plaintiffs argued that the defendants’ actions constituted “blatant” copyright infringement, causing irreparable harm such as loss of control over their works, dilution of value, and damage to artistic integrity. Conversely, the defendants maintained that WIP WAP was distinct from Impulse in design, sound, and arrangement, claiming sole copyright ownership of the Impulse luminous seesaws. They attributed LO’s role in Wave-Field to their expertise in exhibit arrangements rather than any copyright ownership. The Court found the plaintiffs’ evidence of non-quantifiable and non-compensable harm insufficient. Moreover, the balance of convenience was deemed to favour the defendants, as an injunction could lead to significant financial and reputational losses, resulting in the potential closure of their business. Consequently, the Court dismissed the plaintiffs’ motion, considering monetary damages a likely adequate remedy should the plaintiffs succeed at trial.
Scope of copyright protection and what constitutes an infringing activity
Court concludes that a toy is a “useful article” and thus defendant could avail itself of the s.64(2) useful article defence to infringement
French v. Royal Canadian Legion, 2023 FC 749
This decision will be of interest to manufacturers of toys and other types of useful consumer products. Section 64(2) of the Copyright Act creates a defence to copyright and moral rights infringement in relation to a design or feature applied to a “useful article” that has been reproduced more than 50 times under the copyright owner’s authority. The defendant, which sells poppy-branded goods in Canada, used this defence to shield itself from infringement and moral rights claims brought by its former supplier, the creator of a plush toy called the “Poppy Puppy”. The plaintiff claimed that the defendant induced a third-party supplier to manufacture the same toy and falsely attributed its creation to the defendant in product catalogues. In finding for the defendants, the Court noted that the “Poppy Puppy” was a “useful article” because it was made to be played with by children. The Court also found that the infringement claims were brought outside of the limitation period, but that some of the moral rights claims could have succeeded if not for the “useful article” defence because the defendant should not have falsely claimed that it created the “Poppy Puppy”.
“But I found it online” remains, unsurprisingly, an ineffectual defence
Linkletter v. Proctorio, Incorporated, 2023 BCCA 160
The dispute between Proctorio, Incorporated (“Proctorio”) and one Ian Linkletter is a continual reminder that content is not free for use or “in the public domain” simply because it is available online. In 2022, the BC Supreme Court allowed Proctorio to proceed with copyright infringement claims against Mr. Linkletter, who publicly criticized the company and allegedly posted URLs to Proctorio’s unlisted YouTube videos on social media. Mr. Linkletter had sought to dismiss the claims under provincial anti-SLAPP legislation. Notably, the Court dismissed Mr. Linkletter’s argument that sharing URLs to copyrighted content is not infringement, explaining that the alleged wrong lied in sharing access to works without the owner’s authorization. For a more detailed summary of the decision from 2022, please see our article here.
In upholding the decision, the BC Court of Appeal stated that whether sharing a controlled link to an unlisted video constitutes publication rather than a mere reference was a novel question that should not be ruled out early in the proceeding. Further, the Court agreed with the trial judge’s fair dealing analysis and accorded deference to the finding that Mr. Linkletter’s criticism would have been equally effective without the URLs.
Sufficiency of Pleadings for a copyright-based claim
The Court leaves no ambiguity as to what it specifically wants pleaded in copyright proceedings
Fox Restaurant Concepts LLC v. 43 North Restaurant Group Inc., 2022 FC 1149
In this decision, the Federal Court spelled out exactly what it wants to be pleaded in order to entertain a copyright infringement claim. The plaintiff, operating popular U.S. restaurants Culinary Dropout and Doughbird, alleged that the defendants opened two copycat restaurants in Ontario replicating not just the names but also slogans, website content, and overall restaurant themes. The plaintiff claimed copyright infringement and passing off and the defendants responded by serving a motion to strike.
In assessing the motion to strike the copyright claim, the Court first noted that the plaintiff failed to provide a closed and specific list of the works being infringed. On the sufficiency of the pleadings for the question of ownership, the Court was not swayed by the plaintiff’s pleading which stated that the plaintiff owned the works as they constituted “works for hire” under U.S. copyright law. The Court unequivocally stated that the status of the work’s ownership under US law was “immaterial”; what was material was whether the plaintiff could demonstrate ownership pursuant to the terms of the Canadian Copyright Act. The Court pointed to the fact that copyright is a statutory scheme, with copyright legislation simply creating rights and obligations upon the terms and in the circumstances set out in the statute. The legislation speaks for itself and the actions of a party must be measured according to the terms of the statute (i.e. the Canadian statute).
In a didactic move, the Court requested that any amended pleading include: (a) a closed list of the “Works” that are in issue; (b) the authors of each work; (c) whether the plaintiff’s claimed ownership in the works arises by operation of law or assignment (or both); and (d) how or where each of the copyrighted works are alleged to have been reproduced, in whole or in substantial part, by the defendants.
Have we seen this before? Court tackles questions of res judicata
The Court confirms that new/updated works means a new case, while also acknowledging the principle of res judicata
IMS Incorporated v. Toronto Regional Real Estate Board, 2023 FCA 70
Parties pleading ownership and subsistence of copyright should be prepared to distinguish any past decisions or judgments making a final decision on these issues in relation to either the work in question or older versions of the same work. The underlying action in this appeal involved claims by the Toronto Regional Real Estate Board (the “TRREB”) that copyright subsisted in the Multiple Listing Service or “MLS” System and that IMS Incorporated unlawfully accessed and monetized information in the System. At IMS’s request, a prothonotary struck the copyright claims based in part on a previous decision of the Court finding that there was no copyright in the MLS System (though there were also judgments recognizing the contrary). A motion judge granted the TRREB’s appeal, holding that the prothonotary should not have used judicial notice to assume that the works in both decisions were the same.
The Federal Court of Appeal upheld the decision of the motions judge, clarifying that in copyright infringement cases, it must be determined whether the works at issue in a previous case were the same and thus whether a party is attempting to re-litigate a decided matter. It went on to hold that the works dealt with in the earlier proceeding were not entirely the same, as those works did not incorporate elements such as detailed unique property and neighbourhood descriptions and were also several years old in relation to the works in the present case. The Court also held that the comments regarding the work in the previous decision were obiter.
Wiseau Studio, LLC v. Harper, 2023 FC 354
In a recent ruling, the Federal Court of Canada upheld a prior decision that dismissed Wiseau Studio, LLC’s (plaintiff) appeal on grounds of cause of action estoppel. This followed the plaintiff’s unsuccessful attempts in various Courts regarding copyright infringement linked to their film “The Room” and the documentary “Room Full of Spoons” containing footage from it.
Initially rejected in the Superior Court of Ontario, the plaintiff pursued multiple legal avenues, including actions in both the Ontario Court and the Federal Court. However, these efforts failed, culminating in the 2022 Federal Court ruling that barred the plaintiff’s action based on cause of action estoppel. In contesting this decision on appeal, the plaintiff argued that the Federal Court erred in determining the separateness of the causes of action in the Ontario and Federal Court proceedings.
The Federal Court, in its recent decision, emphasized that the evaluation of whether similar causes of action exist in multiple proceedings involves both legal principles and factual considerations. Applying the “palpable and overriding” standard of review, it supported the 2022 decision, noting that the parties, wrongdoing, and harm were identical in both cases. The Court affirmed that the plaintiff’s claims were rooted in substantially similar facts, affirming the application of cause of action estoppel to bar the Federal Court action.
Jurisdiction of the Federal Court: Questions raised in the context of contractual interpretation and arbitration
Society of Composers, Authors and Music Publishers of Canada v. Vidéotron Ltée, 2023 FC 1385
In Society of Composers, Authors and Music Publishers of Canada v. Vidéotron Ltée, the Federal Court asserted its jurisdiction over a dispute regarding unpaid royalties. Quebecor and Vidéotron sought to either strike SOCAN’s claim or move the proceedings to the Superior Court of Quebec, contending that the Federal Court lacked jurisdiction due to uncertainties or plain contractual issues.
SOCAN, a collective society under the Copyright Act, filed a claim seeking royalties owed for the use of musical works by Quebecor. While Quebecor acknowledged owing royalties for 2018, it contested alleged overpayments from 2014 to 2018, basing its position on a 2018 agreement. Quebecor argued that the dispute primarily revolved around contractual interpretation and equitable set-off, falling under provincial law, not copyright. However, the Federal Court disagreed, stating that while contract interpretation might be involved, the core of SOCAN’s claim pertained to collecting royalties as authorized by the Copyright Act. The Federal Court emphasized its competence in interpreting agreements within federal jurisdiction, including intellectual property matters, and found no clear grounds to shift the case to the Superior Court. Thus, it dismissed Quebecor’s motion, affirming its jurisdiction over the royalties’ dispute.
General Entertainment and Music Inc. v. Gold Line Telemanagement Inc., 2023 FCA 148
The Federal Court of Appeal recently affirmed a decision favouring arbitration over litigation in the case of General Entertainment and Music Inc. v. Gold Line Telemanagement Inc. This upheld ruling clarified key aspects related to arbitration clauses in commercial agreements. The dispute between GEM Inc. and Gold Line involved allegations of copyright and trademark infringement and violation of rights under the Radiocommunication Act. Gold Line initiated arbitration proceedings in Bermuda and requested a stay of the Federal Court proceedings after filing its defence. Initially dismissed, the Federal Court eventually granted the stay, prompting GEM Inc.’s appeal. The appeal Court stressed two key aspects: firstly, challenges to an arbitrator’s jurisdiction should initially be referred to the arbitrator, unless they are purely legal questions. This was based on the complexity of the agreements and disputes at hand. Secondly, the Court addressed the timing of seeking a stay, dismissing GEM Inc.’s argument that Gold Line’s prior Court defence filing negated their right to a stay. This ruling highlights the judiciary’s tendency to respect arbitration clauses in commercial agreements and indicates that initiating Court proceedings does not necessarily negate the right to arbitration, barring specific legislative requirements.
Contempt of Court can translate to jail time, but the bar is high
Warner Bros. Entertainment Inc. v. White (Beast IPTV), 2023 FC 907
In a rare move, the Federal Court imposed a sentence of imprisonment for 60 days in a copyright infringement case. The underlying action was brought by several entertainment companies against two individuals for operating an online streaming service. Both defendants were sentenced to contempt for violating the interim injunction obtained by the plaintiffs. In particular, one of the defendants communicated with third parties to frustrate the purpose of the order and disposed of his assets. He boasted on Internet forums about how much money he made from the IPTV service and that he was unfazed by what the Court might do. In his decision, Justice Lafrenière referred to several aggravating factors, questioned the timing and sincerity of Mr. White’s apology to the Court, and determined that merely imposing a fine would not deter others from behaving as Mr. White did. The decision opens the door to the Federal Court’s more serious consideration of imprisonment as a penalty for contempt in copyright infringement cases. For a more detailed summary of this decision, please see our article here.
Bell Canada v. Adwokat, 2023 FCA 106
Plaintiffs seeking to hit those in contempt with increased fines in copyright infringement actions will need to bring the evidence required to justify a more severe penalty. In the underlying dispute, Bell, Videotron, and Rogers brought an infringement action against the defendants Red Rhino Entertainment and its sole director, Mr. Adwokat, for manufacturing and selling set-top boxes permitting unauthorized access to copyrighted material. The defendants (the Respondents) were found to be in contempt of Court and fined $40,000 for breaching an interlocutory order, and the plaintiffs (the Appellants) requested an increased fine on appeal. In dismissing the appeal, the Court found that the penalty was not demonstrably unfit or clearly unreasonable and that the plaintiff’s evidence went more to the alleged frequency of infringement rather than the frequency of breaching Court orders. While the plaintiffs led evidence of Mr. Adwokat’s extravagant lifestyle, which included expensive hotels and first-class flights, the trial Court had little information about the true magnitude of the defendants’ profits made in violation of the injunction.
Challenges of self-representation
Johnson v. Canadian Tennis Association, 2023 FC 483
Given the complexities of copyright law and the civil litigation process, the decision to represent oneself in a copyright-related dispute should not be made lightly. This decision involved copyright infringement claims by a self-represented journalist and photographer, who appealed the decision of an associate judge. The plaintiff’s motion failed to comply with numerous provisions of the Federal Court Rules and disclosed a misunderstanding of the discovery process. The Court dismissed the motion with costs and called it “an example of the unfortunate consequences that may arise when individuals are self-represented,” explaining that the Court cannot provide legal advice to parties nor exempt them from procedural rules.