Canada: Quarterly Copyright Blog #4

Last Updated: December 18 2018
Article by John McKeown

For those who are interested in recent cases and developments relating to copyright and related matters there have been a number of developments since the last entry. They are set out below:

  • The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement among the original parties to the Trans-Pacific Partnership (TTP) after the withdrawal of the United States. On October 25, 2018 Canada ratified the CPTPP. The CPTPP comes into force when six of the members have ratified it. This seems to be happening fairly quickly.
  • The United States-Mexico-Canada Agreement (USMCA) – Canada, the United States and Mexico have agreed to sign a new trade agreement to replace the existing North American Free Trade agreement. The scope of the agreement is broad but there are provisions dealing with copyright and trade secrets, among other matters, which may require amendment of Canadian laws:

a) Term of Protection – The term of protection for works subject to copyright must be extended to the life of the author and seventy years. There are additional equivalent provisions for extending the term of protection for works where the term is not based on the life of the author.

b) Safe Harbours – The USMCA establishes under Article 20.J.11 copyright safe harbours to provide protection for legitimate online enterprises operating as intermediaries that do not directly benefit from infringement. The Annex to Section J appears to permit Canada to maintain its current notice-and-notice regime but additional changes may be required.

c) Rights Management Information – Each Party shall provide that any person that, without authority, and knowing, or having reasonable grounds to know, that it would induce, enable, facilitate or conceal an infringement of the copyright or related right of authors, performers or producers of phonograms: (i) knowingly removes or alters any Rights Management Information (RMI); (ii) knowingly distributes or imports for distribution RMI knowing that the RMI has been altered without authority; or (iii) knowingly distributes, imports for distribution, broadcasts, communicates or makes available to the public copies of works, performances or phonograms, knowing that RMI has been removed or altered without authority, is liable and subject to civil and administrative procedures and remedies. Broader remedies than presently available will be required.

d) Trade Secrets – Each party shall ensure that persons have the legal means to prevent trade secrets lawfully in their control from being disclosed to, acquired by, or used by others (including state-owned enterprises) without their consent in a manner contrary to honest commercial practices. In addition, each party shall provide for criminal procedures and penalties for the unauthorized and willful misappropriation of trade secrets.

In addition, each Party shall provide for criminal procedures and penalties to be applied if any person is found to have engaged willfully and for purposes of commercial advantage or financial gain in any of the above activities.

Each Party has also confirmed that the enforcement procedures shall be available to the same extent with respect to acts of trademark infringement, as well as copyright or related rights infringement, in the digital environment. Broader remedies will be required, particularly a new criminal offence.

e) Border Measures for Counterfeit Goods – Each Party shall provide that its competent authorities may initiate border measures ex officio against suspected counterfeit trademark goods or pirated copyright goods under customs control that are: (a) imported; (b) destined for export; (c) in transit; and (d) admitted into or exiting from a free trade zone or a bonded warehouse. An "in-transit" good means a good that is under "Customs transit" or "transshipped". Amendments will be required relating to "in-transit" goods.

When the USMCA was negotiated, the US Republican party controlled both the House of Representatives and the Senate. After the elections the US Democratic Party controls the House of Representatives. The House and the President disagree on virtually every issue. It has been suggested that, in order to obtain democratic support for the USMCA, additional assurances and perhaps changes may be required.

  • Bill C-86 – The Government has very recently introduced Bill C-86 which is a lengthy budget bill that includes amendments to the Copyright Act and the Bankruptcy legislation relating to licenses of intellectual property.

The changes to the Copyright Act include excluding settlement demands from the copyright Notice and Notice regime and modernizing the legislative framework relating to the Copyright Board.

Sections 243 to 246 amend the Copyright Act in order to specify that an offer to settle and other prescribed information is not permitted to be included in a notice under the notice and notice regime and to provide for a regulation-making power to prohibit further types of information from being included within such a notice.

Sections 280 to 302 amend the Copyright Act in order to modernize the legislative framework relating to the Copyright Board so as to improve the timeliness and clarity of its proceedings and decision-making processes.

Sections 265 to 271 amend the Bankruptcy and Insolvency Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of in an insolvency proceeding or when the agreement relating to such property rights is disclaimed in such a proceeding. It also amends the Companies' Creditors Arrangement Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of.

  • In Bell Canada v. 7265921 Canada Ltd., 2018 FCA 174 the Federal Court of Appeal heard an appeal by Bell Canada and Bell Media Inc. from decisions made by the Canadian Radio-television and Telecommunications Commission (CRTC). It was argued, among other things, that the decisions violated the appellant's copyright interests. In dismissing the appeal the court made two important observations. First, the rights granted under the Copyright Act, such as in paragraph 3(1)(f) and subsection 13(4) are not unequivocal. They may be conditioned by other legislation with which the copyright intersects. Second, that the owner of a copyright is not immune or exempt from laws of general application. While they enjoy the benefit of market exclusivity, they must nevertheless abide by the rules governing the particular market in which they have chosen to participate. These observations are very similar to the approach taken by numerous courts with respect to attacks based on interference with trademark rights brought by tobacco companies concerning legislation implementing plain packaging for tobacco products.
  • In Rogers Communications Inc. v. Voltage Pictures, LLC 2018 SCC 38 the Supreme Court of Canada said that the notice and notice regime was enacted to serve two complementary purposes: (1) to deter online copyright infringement; and (2) to balance the rights of interested parties. The second purpose involves not only balancing the rights of copyright owners and Internet users who may infringe, but also the interests of Internet intermediaries such as ISPs.

A Norwich order is a type of pre-trial discovery which, among other things, allows a rights holder to identify wrongdoers. In order to obtain such an order, among other requirements, the person from whom discovery is sought must be reasonably compensated for the expenses arising out of compliance with the discovery order in addition to his legal costs.

The statutory notice and notice regime has not displaced the necessity of a copyright owner obtaining a Norwich order in order to compel an ISP to disclose the identity of a person who is alleged to have committed an infringement of copyright. There is a distinction between an ISP's obligation under the notice and notice regime to ensure the accuracy of its records that allow the identity of the person to whom an IP address belonged to be determined, and an ISP's obligation under a Norwich order to actually identify a person from its records

  • In Toronto Real Estate Board v. Commissioner of Competition, 2017 FCA 236, leave to appeal to the S.C.C. refused, the Federal Court of Appeal considered the intersection of rights available under the Copyright act and prohibitions contained in the Competition Act. Subsection 79(5) of the Competition Act seeks to protect the rights granted by Parliament to copyright holders and, at the same time, ensure that the exclusivity rights created are not exercised in an anti-competitive manner. The language of subsection 79(5) is unequivocal. The subsection insulates copyright rights from allegations of anti-competitive conduct in circumstances where the right is the sole purpose of the exercise or use. Anti-competitive behaviour cannot shelter behind a claim of copyright unless the use or protection of the copyright is the sole justification for the practice.
  • Amendments to the Industrial Design Act and regulations were brought into force November 5, 2018. There are numerous changes in practice which have allowed Canada to become a party to the Hague Agreement. The Industrial Design Office Practices have been replaced by the Industrial Design Office Practice Manual effective November 5, 2018. The manual has been updated to reflect the changes to the Act and regulations.
  • In Seedlings Life Science Ventures, LLC v. Pfizer Canada Inc., 2018 FC 956 a judge of the Federal Court said that a protective order governs the way in which parties may designate information as confidential and handle such information during the pre-trial disclosure phase of an action. A confidentiality order, on the other hand, allows parties to file confidential information under seal with the court registry. There may also be hybrid orders that deal with both disclosure and filing.

The test for issuing a protective, confidentiality or hybrid order is the same. The applicant must show that: 1) the information has been treated at all relevant times as confidential and that on a balance of probabilities the applicant's proprietary, commercial and scientific interests could reasonably be harmed by the disclosure of the information, and 2) the information is of a confidential nature in that it has been accumulated with a reasonable expectation that it be kept confidential.

  • in Arkipelago Architecture Inc. v. Enghouse Systems Ltd., 2018 FCA 192 the Federal Court of Appeal confirmed that that counsel's-eyes only protective orders should only be granted in unusual circumstances. This type of order deals with the designation of information as confidential and limits its disclosure to counsel for the parties. The parties are not allowed to have access to the designated information. Each case where such an order is sought must be decided on its own merits on the basis of the two pronged test described above. In the context of harm to a commercial business interest, such an order is warranted where the disclosure of the confidential information at issue presents a "serious threat" that is "real, substantial, and grounded in the evidence".

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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John McKeown
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