Canada: Battling The Dragons: Would Moral Rights Have Made A Difference In Recent Dragons’ Den Case?

On May 22, 2014, the Supreme Court of Canada ("SCC") refused to grant leave to appeal to Quebec lawyer Marc Ribeiro and his company MHR Board Game Design Inc. in an Ontario lawsuit that Mr. Ribeiro and his company brought against the national public broadcaster, the Canadian Broadcasting Corporation ("CBC"). Mr. Ribeiro sued the CBC after he appeared on an episode of the CBC reality television show Dragons' Den and was unhappy with the show's portrayal of his business idea, a board game named Pick 'N' Choose. The SCC's recent decision marks the second time in the past three years that it has been asked (and has refused) to hear a Dragons' Den case. The decisions are important reminders about special limitation periods and the enforceability of signed waivers. They are also interesting because of the intellectual property issues that lurked in the background but were not raised.

The Dragons' Den  Consent and Release

Dragons' Den features would-be entrepreneurs peddling their business ideas to a panel of potential investors, the Dragons, who are famously blunt when they conclude that a proposal lacks merit. Potential Dragons' Den participants are required to sign a six-page "Consent and Release" that contains 33 paragraphs of dense, single-spaced text. Participants are required to acknowledge that they "may reveal, and other parties may reveal, information about [them] that is of a personal, private, embarrassing or unfavourable nature, which information may be factual and/or fictional," and that the CBC may edit the participants' appearance in its sole discretion. In the Consent and Release, participants agree that they will not sue the CBC for any damage, loss or harm to them or their property "howsoever caused" arising out of or in connection with their preparation, participation or appearance on Dragons' Den. They also promise not to assert against the CBC or the Dragons any claim or action based on plagiarism, idea theft or infringement of intellectual property.

Related Turmel Defamation Case

In 2009, John Turmel of Brantford, Ontario was invited by a Dragons' Den producer to pitch a business proposal to the Dragons. It appears that Mr. Turmel's proposal asked for $100,000 from the Dragons to set up a local currency system for Brantford based on poker chips. The proposal apparently left the Dragons confused. There was evidence that one Dragon invited Mr. Turmel to "burst into flames" and that another told him that he was "blowing air up a dead horse's [backside]." The episode aired on January 13, 2010. Mr. Turmel sued for defamation a week later.

Unfortunately for Mr. Turmel (who represented himself), he had failed to comply with an important Ontario procedural requirement in defamation cases. Ontario's Libel and Slander Act requires a potential plaintiff in an action for libel in a newspaper or a broadcast to provide the potential defendant, within six weeks after the alleged libel has come to his or her attention, with written notice specifying the matter of which the plaintiff complains. The purpose of this notice requirement is to provide an opportunity to newspapers and broadcasters to investigate the alleged libel and consider whether to correct, retract or apologize. Ontario courts have held that compliance with this notice requirement is mandatory. An Ontario Superior Court judge therefore dismissed Mr. Turmel's claim on a summary judgment motion. The judge added that even had Mr. Turmel's statement of claim clearly pleaded breach of contract, the Consent and Release would have barred that claim. Mr. Turmel sued again after the episode was rerun; this action was summarily dismissed on the basis that the issues had already been decided.

The Ontario Court of Appeal dismissed Mr. Turmel's appeal from those decisions, observing that Mr. Turmel had "voluntarily agreed to go on the show" and that the Consent and Release was not unconscionable. The SCC declined to hear a further appeal by Mr. Turmel.

Ribeiro Case: Court Rules Consent and Release was Crystal Clear

Enter Mr. Ribeiro, a Montreal lawyer, who appeared on Dragons' Den to request a $50,000 investment in his board game. His episode aired in January 2012 with a voice-over that described his concept as one which "hit the mat – immediately." Mr. Ribeiro was of the view that this improperly portrayed his idea as a "complete flop." He sued on the basis that the short segment that actually aired was a "complete misrepresentation" of the original recording and that the CBC's conduct amounted to gross and reckless negligence, intentional misconduct, malice and bad faith. Mr. Ribeiro also alleged breach of contract and defamation. He alleged that the broad wording of the Consent and Release meant that the CBC was under an implied duty to edit his appearance reasonably and in good faith. Like Mr. Turmel, Mr. Ribeiro represented himself.

His claim, like Mr. Turmel's before him, was dismissed on a summary judgment motion. An Ontario Superior Court judge held that the Consent and Release, which was "crystal clear," expressly and unambiguously barred all of the claims being asserted. On the issue of whether the Consent and Release was unconscionable, the judge held this very issue had been decided in the CBC's favour by the Court of Appeal in Mr. Turmel's case. The Superior Court judge's decision was upheld by the Court of Appeal, which observed that there is no stand-alone duty of good faith independent of the terms of a contract. As the SCC has declined to hear any further appeal, this litigation has fully concluded.

Were Intellectual Property Rights Considered?

The reported decisions in the cases of Mr. Turmel and Mr. Ribeiro do not suggest that intellectual property rights received much consideration. One interesting IP question that arises relates to copyright and moral rights in participants' business plans. The CBC Consent and Release requires participants to represent and warrant that they are, to the best of their knowledge, the sole author of, and rights holder in, their "Business Proposal," which means "any and all information, data, ideas, presentations, and strategies, whether copyrighted, trademarked or not, relating to the business idea proposed, including but not limited to the business plans, the products and/or services the business provides, the prototype and the models." Assuming these plans are "fixed" in some way (digitally saved, for example) and are original, the authors automatically enjoy copyright and moral rights in them for their lifetime plus fifty years under the Copyright Act.

Authors' moral rights in their work include the right of integrity, which means the right not to have the work distorted, mutilated or otherwise modified to the prejudice of their honour or reputation. Authors' moral rights in their works are personal rights which cannot be assigned; however, they can be waived. Contracts in the film and recording industries will almost always require authors to waive their moral rights in perpetuity. The CBC Consent and Release, despite its remarkable length and detail, does not contain any mention of moral rights, much less any explicit waiver of them. Furthermore, since the Copyright Act was amended in 2012, performers of live and recorded performances have a moral right to the integrity of their performances.

Could the cases of Mr. Turmel and Mr. Ribeiro have survived summary judgment had moral rights been put in issue? Possibly. The CBC Consent and Release contains no mention of moral rights, but Canadian courts have held that these rights may be waived by implication. The language in the Consent and Release may be specific enough to amount to an implied waiver of moral rights; for example, participants agree that they will not be entitled to any "wages, benefits, fees, compensation or other consideration" arising out of the telecast or any exploitation of their appearance or Business Proposal "as the same may be edited, cut, altered, rearranged, adapted, dubbed or otherwise revised" by the CBC. Disgruntled participants might argue that this clause merely removes any right to compensation but does not wholly waive their moral rights in their business plans as they would retain the ability to claim non-monetary remedies (such as injunctions) if their moral rights are infringed.

The CBC would also likely rely on its "sole discretion to edit" clause, but this clause relates to "appearances, depictions or portrayals" (which participants are warned may be defamatory, embarrassing, disparaging or unfavourable), not to the participants' business plans.

If the Consent and Release were held not to contain a waiver of participants' moral rights, the CBC would likely point to the participants' promise not to sue – specifically, not to assert "any claim or action based on...infringement of intellectual property." However, this is a promise not to assert IP infringement claims "arising out of [the CBC's] or the Dragons' examination of the Business Proposal or any alleged use or exploitation by [the CBC] of the Business Proposal or any elements of [it]." It appears that this clause is directed at foreclosing any claims by participants that the CBC appropriated their intellectual property; in that sense, it may not prevent participants from invoking their moral right to the integrity of their works.

The "moral" of the story appears to be that people should be very careful with what they sign, and that all parties should be careful to consider the unique nature of moral rights, especially since their scope has recently been expanded in the constantly changing world of copyright.

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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