Canada: Supreme Court Of Canada Addresses Important Issues In Canadian Copyright Law

On December 23, 2013, a unanimous Supreme Court of Canada issued its decision in Cinar Corporation v Robinson. The decision provides clarification on a number of important issues in Canadian copyright law, including (but not limited to): (i) the appropriate test for determining if a substantial part of a copyrighted work has been reproduced; (ii) when expert evidence in respect of substantial taking should be adduced in copyright infringement cases; and (iii) several issues in respect of the calculation of damages and accounting of profits.

The Supreme Court decision is the last word in a case that has its genesis in actions undertaken decades ago. Claude Robinson began developing an idea for a children's television show, The Adventures of Robinson Curiosity (Curiosity), in the early 1980's. He spent more than a decade after that trying to get the project developed. During this time, Robinson shared his work (which included detailed sketches, storyboards, scripts and synopses), with several of the individual and corporate defendants (including Cinar Corporation).

In 1995, Robinson watched the first episode of a new children's television show called Robinson Sucroë (Sucroë). He was stunned to see that the program was (in his view) "a blatant copy" of Curiosity.  He then found out that several parties to whom he had given access to his Curiosity project materials were involved in the production of Sucroë, and Robinson and his production company (Les Productions Nilem Inc.) commenced an action for copyright infringement.

Robinson was largely successful at trial: the trial judge concluded that the creators of Sucroë had infringed Robinson's copyright and awarded damages and costs on a solicitor-client basis.  The decision on infringement was upheld by the Court of Appeal, but some changes were made to the damages awards. The Supreme Court of Canada also upheld the copyright infringement claim, but made some changes to the damages awards. A summary of some of the key parts of the Supreme Court's decision in respect of the further appeals from the Quebec Court of Appeal is set out below.

The Test for Copyright Infringement

Copyright infringement occurs when a copyrighted work, or any substantial part of a copyrighted work, has been reproduced without the consent of the owner of the copyright. In considering what constitutes a "substantial part" of a work, the Supreme Court noted that it is a "flexible notion", which is "a matter of fact and degree".  In fact, the Copyright Act protects authors against both literal and non-literal copying, so long as the copied material forms a substantial part of the infringed work. However, the Supreme Court again cautioned about the need to strike an appropriate balance between giving appropriate protection to the skill and judgement of authors in their expression of ideas, and leaving ideas and elements in the public domain free to all to draw upon.

The trial judge had found that the Cinar appellants copied a number of features from Curiosity, including the character's visual appearance, personality traits of the main character and other characters in the series, visual aspects of the setting, and recurring scenographic elements. He concluded that, considered as a whole, these features constituted a substantial part of Robinson's work.

The Supreme Court noted that the trial judge's conclusion on that point was entitled to appellate deference, since the issue of substantiality is one of mixed fact and law.  Following its decision in Housen v. Nikolaisen (Housen), the Supreme Court confirmed that an appellate court should defer to the trial judge's findings on substantiality, unless those findings are based on an error of law or palpable and overriding errors of fact. The Supreme Court held that the trial judge committed no reviewable errors in finding that Sucroë reproduced a substantial part of Curiosity

The Cinar appellants had argued that the trial judge erred in not applying a three step approach requiring him to (i) determine what elements of Curiosity  were original, within the meaning of the Copyright Act; (ii) exclude non-protectable features of Robinson's work, such as elements drawn from the public domain, and generic elements common place in children's television; and (iii) compare what remains of Curiosity  after this "weeding-out" process to Sucroë, and determine whether a substantial part of Curiosity was reproduced.

While not ruling out the possibility that this approach might be useful in determining if other types of works, such as computer programs, have been copied, the Supreme Court noted that many types of works do not lend themselves to that type of reductive analysis. Rather, a qualitative and holistic approach must be adopted to assess substantiality, and a piecemeal approach should be avoided. To determine whether a substantial part of Robinson's work was copied, the copied features must be considered cumulatively, to determine whether they amount to a substantial part of Robinson's skill and judgement expressed in his work as a whole. In short, the substantiality analysis should focus on whether the copied features constitute a substantial part of the plaintiff's work,and not whether they amount to a substantial part of the defendant's work. "The alteration of copied features or their integration into a work that is notably different from the plaintiff's work does not necessarily preclude a claim that a substantial part of a work has been copied", because the Copyright Act states that infringement includes "any colourable imitation" of a work. That said, if differences are so great that the work viewed as a whole is not an imitation, but rather a new and original work, then there is no infringement.  Adopting the words of the Court of Appeal, the Supreme Court noted that "[e]verything is therefore a matter of nuance, degree and context".

Use of experts in a copyright case:

The Supreme Court affirmed that the test for admissibility of expert evidence from R. v. Mohan applies equally to trials for copyright infringement (and other intellectual property cases). To be admitted, the evidence must be (a) relevant; (b) necessary; (c) not offend any exclusionary rule; and (d) involve a properly qualified expert.

At trial, Robinson introduced the evidence of a professor of semiology (the study of signs and symbols and how they create meaning). The expert opined that there were latent similarities in how the two works used atmosphere, dynamics, motifs, symbols and structure to convey meaning. The trial judge relied on this evidence in finding copyright infringement.

The Cinar appellants had argued that the expert evidence did not meet the necessity criterion because the question of whether a substantial part has been copied must be assessed from the perspective of the lay person in the intended audience for the works at issue.

In holding that the expert evidence was admissible, the Supreme Court noted that it was sometimes necessary to go beyond a rigid application of the lay person standard.  Here, the works at issue were intended for a young audience. A rigid application of the standard would shift the question to whether the copied features were apparent to a five-year-old. Second, the works at issue – an unrealized submission compared to a finished product – were not easily compared without an expert's help.  Lastly, the works had both patent and latent similarities. Expert evidence was necessary to help distill and compare the "intelligible" aspects that affect a viewer's experience indirectly, such as atmosphere, dynamics, motifs, and structure.  As a result, the Supreme Court held that the trial judge did not err in admitting the expert evidence.

Personal Liability of Directors for Copyright Infringement

The Supreme Court affirmed prior jurisprudence of the Federal Court of Appeal that held that for a director and/or an officer of a corporation to be held personally liable for his or her company's infringement of a copyright, "there must be circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his relationship to it but the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it."  An officer cannot be held personally liable merely on the basis of his hierarchical status as officer of a corporation.

Disgorgement of Profits

Under section 35 of the Copyright Act, a defendant can be ordered to disgorge its profit to the extent that such profit is caused by the infringement.  Disgorgement of profits is designed mainly to prevent unjust enrichment, although it can also serve the goal of deterrence. The necessity of a causal link between infringement and profit may require that profit be apportioned between that which is attributable to the infringement and that which is not.  In some cases, however, the two works may be so interwoven that separation is impossible. The Supreme Court affirmed that the apportionment of profits between infringing and non-infringing components of a work is a factual determination subject to judicial discretion. Under Housen, an appellate court may only disturb a trial judge's findings on apportionment if there are errors of law or palpable and overriding errors of fact.

The Supreme Court found that the Court of Appeal erred in interfering with the trial judge's conclusion that the profits from the soundtrack could not be dissociated from the profits derived from the infringing material.  There was no evidence that the soundtrack could have been commercialized as a separate product if Curiosity had not been infringed.  As a result, the Supreme Court upheld the trial judge's conclusion that it was inappropriate to apportion profits to the soundtrack as a non-infringing component of the work.

In contrast, the Supreme Court overturned the trial judge's finding that profits be disgorged on a solidary basis, holding that a defendant can only be made to disgorge profits that it made, as opposed to the profits of other defendants with whom it participated in an infringement.

Non-Pecuniary Damages and the Application of the Andrews Cap

Prior Supreme Court case law in the context of bodily injury set a cap on the non-pecuniary losses that can be recovered following bodily injury.  Non-pecuniary loss is a broad category that covers elements such as loss of enjoyment of life, physical and psychological pain and suffering, and inconvenience. The Cinar appellants had argued that this cap on non-pecuniary damages should be extended and imposed on all non-pecuniary damages, regardless of whether they stem from bodily injury.  

Holding that the policy concerns specific to bodily injury cases (the socially burdensome inflation of amounts awarded as non-pecuniary damages) was not made out in the context of copyright infringement cases, the Supreme Court declined to apply a cap on the non-pecuniary damages awarded to Robinson. Moreover, the Supreme Court confirmed that damage to physical health arising as a consequence of copyright infringement is not sufficient to allow characterization of the loss as one arising from bodily injury.

Punitive Damages:

In Quebec, punitive damages can only be awarded where they are provided for by statute. In this case, the evidence established unlawful and intentional interference with several of Robinson's Charterrights, and therefore the Supreme Court agreed with the Court of Appeal that punitive damages were justified.  However, since there was no statutory basis to justify the award of punitive damages on a solidary basis, they must be individually tailored to each defendant against whom they are ordered.

In assessing the quantum of punitive damages awarded, the Supreme Court held that the gravity of the conduct was an important factor. The award must strike an appropriate balance between the overarching principle of restraint that governs punitive damages and the need to deter conduct of this gravity. As a result, the Supreme Court overturned the Court of Appeal's reduction in damages and increased the award to $500,000, which was still $500,000 less than the trial judge's original award of punitive damages.

Cost Awards

The Supreme Court noted that there were serious points of law to be argued in the appeals, and therefore declined to award solicitor-client costs for the appeals before the Quebec Court of Appeal and the Supreme Court. However, the Supreme Court allowed the trial judge's award of $1,500,000 in solicitor-client costs for the proceedings at the trial level to stand.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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