Canada: Everything To Code: The Federal Court Of Appeal In PS Knight Co Ltd v CSA

Last Updated: December 17 2018
Article by James Green and Kevin Sartorio

Does copyright subsist in a work created by a private party but which is subsequently incorporated by reference into regulations by legislatures? Or, once a work has been incorporated by reference, is the work public domain such that anyone can freely publish and sell copies of it?

In a recent decision (P.S. Knight Co. Ltd. v Canadian Standards Association, 2018 FCA 222) the Federal Court of Appeal addressed these and an assortment of other interesting issues.

Background

The Canadian Standards Association (CSA) is a not-for-profit standards development organization, well-known in Canada and around the world for developing voluntary standards in  various fields and industries. One of the most important standards developed by CSA is the Canadian Electrical Code, Part I (the Code), which sets out voluntary safety standards for installation and maintenance of electrical equipment. The first version of the Code was published by CSA in 1927, and updated and revised versions of the Code have been published continuously ever since. CSA sells copies of the Code and uses the income from these sales to finance the development of the Code as well as other voluntary standards. In 2015, CSA published the 2015 version of the Code.

Over the years, the Code has been adopted by federal, provincial and territorial governments in Canada and incorporated by reference into regulations relating to electrical safety in those jurisdictions.

P.S. Knight Co. Ltd. (Knight Co.) is a book publisher and commercial competitor of CSA. In 2016, in the midst of a related dispute between CSA and Knight Co., Knight Co. published and threatened to distribute a complete "copy-cat" version of the 2015 Code, to be sold at one-third the price that CSA charges for its Code publication.

In response, CSA initiated an application for copyright infringement in the Federal Court seeking to enjoin Knight Co.'s distribution of its "copy-cat" Code publication. The Federal Court granted CSA's application, enjoined Knight Co. from further infringing activities, ordered delivery up of all copies of the "copy-cat" Code, and awarded CSA statutory damages and costs totalling roughly $100,000.

On appeal, Knight Co. argued that the Federal Court had erred in concluding that the Code could be the subject of copyright. Relying principally on American case law, Knight Co. argued that because the Code has been incorporated by reference into regulation the Code is "the law" and there cannot be any copyright in "the law".

Cooperative Federalism at its Best

The Court of Appeal found that the American authorities relied on by Knight Co. had no relevance in Canada, given the differences in copyright legislation and the important historical and constitutional differences between the two countries. Under the American Copyright Act, there is no copyright protection for "any work of the United States Government". However, in Canada, there is no similar prohibition. As the Court noted, as long as it is original, any work may be the subject of copyright in Canada.

More fundamentally, the Court also concluded that the Code does not constitute "the law". After reviewing the matter in detail as a question of statutory interpretation, the Court concluded that the Code is not itself a regulation and is not subject to the Reproduction of Federal Law Order or similar provincial provisions which permit the reproduction of federal and provincial Acts or other enactments.

Knight Co. also invoked various "public policy" rationales in support of their position, asserting that "the rule of law" requires that there be no copyright in the Code because citizens ought to have "unimpeded access to the law". The Court rejected these arguments noting that Knight Co. was in no position to invoke these arguments given that they merely sought to protect a competing commercial interest in selling their "copy-cat" version of the Code. The Court also noted that anyone faced with prosecution for violation of a law based on non-compliance with a regulation that incorporates the Code by reference would have statutory and common law defences if the Code had been inaccessible to that person.

To the contrary, the Court determined that public policy militates in favour of recognizing CSA's copyright in the Code. The Court observed that the collaborative process for developing the Code, which is then extended through incorporation by reference into legislation across Canada, was "an example of cooperative federalism at its best". The Court also recognized that impairing CSA's ability to sell the Code and generate revenue to finance the maintenance of the Code and other national standards might well negatively impact the continued existence of common national standards in areas where consistency is important, as is the case with electrical maintenance and installation.

Crown Copyright

The Court next considered whether the Code was owned by the Crown or otherwise subject to "Crown prerogative" and therefore unenforceable by CSA against Knight Co.

Under s. 12 of the Canadian Copyright Act, Crown copyright (or a similar kind of right) may arise either by virtue of the rights or privileges of the Crown outside of the Copyright Act (Crown prerogative), or by virtue of a work having been "prepared or published by or under the direction or control of Her Majesty or any government department."

As to the latter basis for Crown ownership of copyright, the Court concluded that there was no evidence of any "direction or control" by government over CSA, as CSA is independent of government, and there was no evidence of de facto control exercised by any level of government over the Code development process. The Court also noted that no government claims ownership of copyright in the Code in any event. Nor is the Code published by the Crown, as the Court found that the mere fact of incorporation by reference does not require that the Code be published.

As to Crown prerogative, the Court found that the Crown's unique and historical rights and privileges in the nature of copyright do not lend themselves to being raised as a defence by anyone other than the Crown itself. In any event, the Court found that Knight Co.'s claim that the Crown's common law right to print and publish certain works extends to any works incorporated by reference into regulation, thereby depriving the copyright holder of the "sole right" to reproduce the work under the Copyright Act, would amount to an impermissible broadening of Crown prerogative.

Originality, Fair Dealing, and Licence

Knight Co. also made various arguments in defence of its dealings with its "copy-cat" Code including that the Code lacked originality, that its dealings with the Code constituted "fair dealing," and that the defence of licence was available to it, all of which were rejected by the Court.

Conclusion

For the foregoing reasons, Justice Gleason writing for the majority of the Federal Court of Appeal dismissed the appeal, and affirmed the Federal Court's prior judgment and awards of damages and costs.

*Kevin Sartorio and James Green acted for the successful Respondent CSA

Read the original article on GowlingWLG.com.

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