Canada: Notable Copyright Decisions In 2021

Notable Copyright Decisions in 2021

It has been a busy year for copyright law. The Supreme Court of Canada has released one decision concerning copyright and two decisions concerning sealing orders. The Federal Court of Appeal has written two decisions relating to remedial matters. The Ontario Divisional Court has written a decision concerning jurisdiction for infringement. The Québec Court of Appeal has released a decision dealing with a claim for an accounting for profits. Finally, the Federal Court has released a number of decisions. This paper provides an overview of the decisions.

The economic factors driving the 2021 decisions do not appear to have changed, and it is very likely that 2022 will see a similar number of decisions. In particular, the desire of rights holders to obtain appropriate and effective remedies will likely result in additional decisions concerning more dynamic site-blocking orders and other injunctive relief.

Anton Piller/ Mavera Orders

In Warner Brothers Entertainment Inc. v. White 2021 FC 53, the court heard a review motion relating to an Anton Piller order. The interim order was continued. There was a genuine risk of the disappearance of assets and a real risk of the assets being removed from the jurisdiction, depriving the plaintiffs of the fruits of a judgment. A Mavera injunction was issued restraining the defendants from selling, assigning, alienating, transferring, or otherwise disposing of assets, pending trial.

Claims Against an ISP for Statutory Damages

In Me2 Productions, Inc. v. Doe 2019 FC 214, an application was made for a Norwich order. The judge decided that a claim against the ISP involved for statutory damages could proceed concurrently with the application. This decision was considered in TBV Productions, LLC v. Doe2021 FC 181. The judge said that the result in ME2 was determined by the facts and, in particular, the order was discretionary and made by a case management judge. In TBV, the judge said that it is not clear that a free-standing claim of damages under the notice-and-notice regime could be initiated by application. A claim for damages for non-compliance with the notice-and-notice scheme is not identified as a proceeding that can be determined in a summary way by application or action, and the procedure for advancing such a claim is not specified in the Act. The general rule is that liability and damages should be decided by way of an action applied.

The Scope of a Defence to a Statutory Damage Claim

In August Image, LLC v. Airg Inc. 2021 FC 272, the Judge accepted that subsection 38.1(5)(b) of the Copyright Act permitted defences to a statutory damage claim to include reference to the plaintiff's conduct before litigation.

Issue Estoppel

In Rogers Communication's Canada Inc. v. Society of Composers, Authors and Music Publishers of Canada 2021, FC 207 plaintiffs sued for the repayment of royalties paid under tariff 24 after a subsequent decision concluded that related tariffs were invalid. The action was dismissed on the basis of issue estoppel. The plaintiff made a business decision to stop fighting over Tariff 24 after a loss on their judicial review application and move on, despite the fact that the download issue was being debated at the time before the Copyright Board in relation to Tariff 22. The circumstances surrounding the execution of the 2010 Agreement relating to Tariff 24 lead to the conclusion that all parties viewed the agreement as settling any potential litigation before the Board regarding ringtone royalties to minimize risk and achieve long-term certainty. The plaintiffs, by their execution of the Agreement and compliance with the agreement, caused SOCAN to believe that the 2010 Agreement had fully and finally settled the ringtones proceedings for the years 2006 to 2013. SOCAN altered its position based on this belief and distributed the ringtones royalties to its members.

Inferring Infringement

In Patterned Concrete Mississauga Inc. v. Bomaite Toronto Ltd. 2021 FC 314, it was confirmed that a court may infer infringement if a) there is substantial similarity such that the allegedly infringing work could be considered a copy or reproduction of the protected work; and b) the defendant had access to the protected work, sometimes referred to as a "casual connection."

Copyright in Historical Facts

In John Winkler v. Nate Hendley, 2021 FC 498, the Court followed the Francis, Day & Hunter [1939] 4 All E.R.192 (Eng. P.C.) decision when considering the definition of a "work" in section 2 of the Copyright Act. The section states that a "work includes the title thereof when such title is original and distinctive." This does not make the title a separate work. Rather, it forms only part of the work as a whole. In addition, the requirement that a title is "distinctive" under the Copyright Act does not engage the same issues as it does in trademark law.

In the same decision, the court affirmed there is no copyright in historical facts. The Court stated that where an author presents work as historically factual, they cannot complain in a copyright infringement action that a subsequent author has taken them at their word and relied on the facts they presented as being true. An author cannot seek to disprove their historical account and purport to claim copyright over the "facts" contained in it because those facts are not true.

Such an approach is not helpful in light of the following comment made by the House of Lords in the Ladbroke [1964] 1 All E.R. 465 at 481 (U.K.H.L.) decision:

Did the defendants reproduce a substantial part of it? Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright, and therefore the courts will not hold its reproduction to be an infringement. It is this, I think, which is meant by one or two judicial observations that "there is no copyright" in some unoriginal part of a whole that is copyright. They afford no justification, in my view, for holding that one starts the inquiry as to whether the copyright exists by dissecting the compilation into component parts instead of starting it by regarding the compilation as a whole and seeing whether the whole has copyright. It is when one is debating whether the part reproduced is substantial that one considers the pirated portion on its own.

Notwithstanding the parties' focus on "historical facts," the Trial Judge correctly dealt with the observations set out above from Ladbroke.

Fair Dealing for the Purpose of Criticism

In Canadian Broadcasting Corporation v. Conservative Party of Canada, 2021 FC 425, it was confirmed that a video recording is protected as a cinematographic work when expressed by a process "analogous to cinematography." Cinematography is the art of making and producing films.

Here the defendant used brief references to the plaintiff's works which consisted of less than 0.5 % on average of the underlying work from which it was taken. It was asserted this was not a substantial taking. The court concluded that the defendant had taken a substantial part of the plaintiff's works. However, the defendant successfully relied on the exception for fair dealing for the purpose of criticism or review.

The purpose of the provision is met if the source is identified or identifiable to a reasonably informed watcher.

The court said a party is entitled to criticize not only the literary style but also the doctrine or philosophy as expounded in the work. Criticism, satire and review are intellectual challenges to particular thoughts, words and actions.

The two-step process and applying the six non-exhaustive factors developed in the case law apply to this exception. The purpose of engaging in a legitimate political purpose so long as the other factors are considered can result in a finding of fair use.

Enforceability of Tariffs and Fair Dealing for the Purpose of Education

In Canadian Copyright Licensing Agency v. York University, 2021 SCC 32, on further appeal to the Supreme Court of Canada, the appeal became moot as the Agency could not enforce the tariff.

The combined effect of ss. 68.2(1) and 70.17 creates a dichotomy between users who choose to be licensed pursuant to the terms of a Board-approved tariff and those who choose not to acquire a licence but may be liable for damages for infringement.

A review of the text, legislative context, purpose and supporting jurisprudence all lead to the conclusion that s. 68.2(1) does not make tariffs approved by the Copyright Board under s. 70.15 mandatory against users who choose not to be licensed on the approved terms.

In addition, the court clarified it did endorse the reasoning of the Federal Court or the Federal Court of Appeal on the fair dealing issue and sought to correct the errors made.

The Courts below approached the fairness analysis exclusively from an institutional perspective. This error tainted their analysis of several fairness factors. By anchoring the analysis in the institutional nature of the copying and York's purported commercial purpose, the nature of fair dealing as a user's right was overlooked, and the fairness assessment was over before it began.

The modern fair dealing doctrine reflects a general move away from an author-centric view focused on the exclusive right of authors and copyright owners to control how their works are used in the marketplace, to interpret copyright law as a balance between copyright rights and user rights. Fair dealing is not an exception and is one of the tools employed to achieve the proper balance between protection and access in the Act.

When assessing fairness, the Courts below approached the analysis from an institutional perspective only, leaving out the perspective of the students who use the materials. Both perspectives should be considered. In the educational context, instructors are facilitating the education of each of their individual students who have fair dealing rights. However, courts do not have to completely ignore the institutional nature of a university's copying practices and adopt the fiction that copies are only made for individual isolated users. When an institution is defending its copying practices, its aggregate copying is necessarily relevant, for example, to the character of the dealing and the effect of the dealing on the work.

Contrary to the Federal Court of Appeal's view, in the educational context, it is not only the institutional perspective that matters. When teaching staff at a university make copies for their student's education, they are not hiding behind the shield of the user's allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair.

The Trial Judge's criticism of York's Guidelines because different portions of a single work could be distributed to different students, such that an author's entire work could be distributed in the aggregate, was contrary to the Court's previous decisions. Those decisions concluded in similar circumstances that since fair dealing is a 'user's' right, the 'amount of the dealing' factor should be assessed based on the individual use, not the dealing in the aggregate.

Jurisdiction for Copyright Infringement

In Pourshian v Walt Disney Company, 2012 ONSC 4840, the Ontario Divisional Court allowed in part the plaintiff's appeal and reviewed the appropriate approach to determining when a court has jurisdiction concerning alleged copyright infringement.

The court referred to two decisions of the Supreme Court of Canada. First, in Van Breda 2012 SCC 17, it was established that when dealing with tort claims, the following framework applied to determine whether a court has jurisdiction over a claim brought against foreign defendants.

"a. First, the court must determine whether there is a presumptive connecting factor between the claim and the jurisdiction. In the context of a tort action, the Supreme Court identified the following presumptive factors:

i. The defendant is domiciled in the province;

ii. The defendant carries on business in the province;

iii. The tort was committed in the province; or

iv. A contract connected with the dispute was made in the province."

Second, in SOCAN v. Canadian Association of Internet Providers 2004 SCC 45 the Supreme Court of Canada considered the jurisdiction of Canadian courts over the foreign entities that transmit music. The Court concluded that, while Canadian copyright law respects territorial distinctions, the applicability of the Copyright Act to foreign participants depends on whether "there is a sufficient connection between this country and the communication in question."

The real and substantial connection test should apply to determine whether Canadian courts have jurisdiction over a breach of copyright claim. The Court said that Canadian courts will generally have jurisdiction where Canada is the "country of transmission" or "the country of reception."

While SOCAN was decided before Van Breda, SOCAN continues to be relevant and to assist in the analysis. It is not helpful to suggest that Van Breda dealt with tort claims and SOCAN deals with claims for copyright infringement. Copyright infringement is essentially a statutory tort. One of the presumptive connecting factors established by Van Breda is whether the tort was committed in the jurisdiction where the action is brought. When dealing with a claim for copyright infringement, the analogous presumptive factor is whether the alleged copyright infringement occurred in the jurisdiction where the action was brought.

In an action for copyright infringement as established by the Supreme Court in SOCAN, the infringement can occur where the communication was transmitted from and where it was received. Based on SOCAN and analogous analysis concerning tort claims, if the communication or product originated in another jurisdiction but is ultimately made available in Ontario, Ontario is one place where copyright infringement can occur.

The court also considered the location of the plaintiff's copyright as a presumptive factor. While the Supreme Court in Van Breda did not explicitly list property in the jurisdiction as a presumptive connecting factor, the Ontario Court of Appeal has recognized the location of the property as a presumptive connecting factor. The judge said copyright should be recognized as having the same status as real property to determine jurisdiction.

In Glofish LLC v. Oceanview Enterprise 2021 FC 837, it was confirmed that jurisdiction could not be conferred by the consent of the parties to an action.

Site Blocking Orders

In Teksavvy Solutions Inc. v. Bell Media Inc., 2021 FCA 100, the Federal Court of Appeal dismissed an appeal and found no error in the Judge's conclusion that the Federal Court has the power to grant a site-blocking order and his analysis of the applicable legal test. Section 4 of the Federal Courts Act provides that the Federal Court is a court of equity, and section 44 provides that the Federal Court may issue an injunction "in all cases in which it appears to the court to be just or convenient to do so." As stated by the Supreme Court of Canada in the Equustek 2017 SCC 34, the powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited.

In addition, subsection 34(1) of the Copyright Act intentionally provides broad discretionary powers to address copyright infringement, including granting injunctions. Nothing in sections 41.25 to 41.27 of the Copyright Act suggested an intention to deny copyright owners the benefit of a site-blocking order, and nothing in such an order conflict with these provisions. That Parliament has put in place a regime to notify an alleged copyright infringer that its activities have come to the attention of the copyright owner does not suggest this represents a limit on the remedies to which the copyright owner is entitled.

Section 36 of the Telecommunications Act contemplates net neutrality by ISPs and provides that exceptions thereto must be approved by the CRTC. However, the section does not displace the Federal Court's equitable powers of injunction, including the power to impose a site-blocking order.

Finally, the Equustek decision was a binding authority concerning the availability of a site-blocking order, notwithstanding that decision involved a de-indexing order, which removed one tool for finding a website. While a site-blocking order denied access to a website and was broader, the issues were similar.

The Court agreed with the Trial Judge's conclusion that freedom of expression did not require the facilitation of unlawful conduct.

The Court pointed out that where a mandatory interlocutory injunction is sought, the appropriate inquiry at the first stage of the RJR - MacDonald test was whether the applicants have shown a strong prima facie case. However, they concluded that the plaintiffs' case exceeded the requirement to show a strong prima facie case or a strong likelihood of success.

The Court agreed it was appropriate for the Judge to look to the decision of the UK Court of Appeal and factors considered by it for inspiration when faced with a motion for an order unprecedented in Canada. There was no indication that the Judge, in referring to these factors, fettered his discretion or felt compelled to follow them.

The order in issue contained mechanisms that made it dynamic to deal with future infringements. The Court was not convinced there was any palpable and overriding error in making such an order.

Tariffs

In Pay Audio Tariff (2007-2016), 2021 CB 5I, the Board referred to the Supreme Court of Canada's observation that "it would be as inefficient to overcompensate artists and authors for the right of reproduction as it would be self-defeating to undercompensate them."

In SOCAN Tariffs 12. A & 12. B (2018-2022), 2021 CB 4, the Board confirmed that modifications to the Act that came into force on April 1st, 2019, require the Board to consider in fixing royalty and levy rates and any related terms and conditions that are fair and equitable, among other things,

a) what would have been agreed upon between a willing buyer and a willing seller acting in a competitive market with all relevant information, at arm's length and free of external constraints;

b) the public interest.

On December 17, 2021, the Board released its decision concerning proposed levies to be collected in 2022-2024 on the sale of blank audio recording media. The Board concluded that blank CDs will be "ordinarily used" to copy music in 2022, 2023, and 2024 and that a levy of $0.29 was appropriate during these years. CPCC -Private Copying Tariff (2022-2024) 2021 CB 12.

Sealing Orders

In Sherman Estate v Donovan 2021 SCC 25, the Supreme Court of Canada considered the impact of "privacy" on granting orders excluding the public from a hearing of a matter. In this case, the estate trustees sought to stem the intense press scrutiny prompted by the events that had occurred by seeking sealing orders of the probate files. At the first instance, an order was granted, and the matter eventually proceeded to the Supreme Court.

The court concluded the initial order was not justified. The important public interest in privacy, as understood in the context of the limits on court openness, is aimed at allowing individuals to preserve control over their core identity in the public sphere to the extent necessary to preserve their dignity. The public has a stake in openness, but it also has an interest in the preservation of dignity: the administration of justice requires that where dignity is threatened in this way, measures be taken to accommodate this privacy concern. Although measured by reference to the facts of each case, the risk to this interest will be serious only where the information that would be disseminated as a result of court openness is sufficiently sensitive such that openness can be shown to meaningfully strike at the individual's biographical core, so it threatens their integrity. Recognizing this interest is consistent with this Court's emphasis on the importance of privacy and the underlying value of individual dignity but is also tailored to preserve the strong presumption of openness.

Inducing Copyright Infringement

In Bell Canada v L3D Distributing Inc. 2021 FC 832, in the context of a motion seeking default judgement, the Judge concluded there was a common-law cause of action for inducement of copyright infringement.

Reverse Class Actions

In Salna v. Voltage Pictures LLC 2021 FCA 176, the initial decision was reversed, and the action was allowed to proceed. The Court said that the proposed reverse class action tests the limits of what constitutes copyright infringement. It was also an innovative development in the means by which authors could attempt to protect their work in a digital environment. The novelty of the proposed class action was not a reason to deny an application to certify the proceeding. The law must be allowed to evolve.

In broad terms, the Federal Court made three errors. First, the Court erred in applying the test of concerning whether a reasonable cause of action was disclosed in the certification application.

Second, if the Federal Court's reasoning prevailed, Voltage, and those similarly situated, would, in many cases, be without any remedy for violation of their copyright: a respondent class proceeding is not available and the joinder of thousands of individual actions simply not feasible.

Third, while several substantive concerns as to whether the class proceeding is legally and administratively viable were raised, it was premature to presume that they would materialize and be fatal to the certification application.

The Court referred to the objectives of class proceedings: (i) facilitating access to justice through distributing legal fees across a large number of class members; (ii) conserving judicial resources by reducing unnecessary duplication in the fact-finding and legal-analysis process; and (iii) modifying harmful behaviours by ensuring that actual and potential wrongdoers take into full account the harm they are causing or might cause.

These advantages exist not only in a typical plaintiff class proceeding but also with a reverse class proceeding, where specific plaintiffs bring a proceeding against a class of defendants. Defendant/respondent class proceedings provide plaintiffs with an enforceable remedy where it was otherwise impractical to secure the attendance of all potential defendants while ensuring those affected by the lawsuit, although absent, are sufficiently protected.

The primary question is whether the class proceeding would be a fair, efficient, and manageable method of advancing the claim. While an overwhelmingly large number of individual fact assessments pose challenges to the management of a class action, these differences must be viewed through the lens of whether certifying the class will advance the three principal goals of class proceedings: judicial economy, behaviour modification, and access to justice. At this point, speculative concern about misidentification or there may be several potentially different factual scenarios was not persuasive.

The Trial Judge's comments concerning the preferability of joinder were speculative and not supported by evidence or analysis. This issue was referred back to the Federal Court for a re-hearing.

The Trial Judge's conclusions concerning the notice-and-notice regime were premature and speculative. In addition, the judge also erred in concluding that the ISPs would be over-burdened and refuse to send notices. There was no evidence to support the conclusion. If the ISPs have a concern as to how the notice-and-notice regime is used, they can intervene and speak to the issue in the Federal Court. This issue was referred back to the Federal Court for a re-hearing.

The Trial Judge's analysis concerning the suitability of a representative was deficient, and this issue was referred back to the Federal Court for a re-hearing.

Retaining Jurisdiction to Control Sealing Orders

In Canadian Broadcasting Corp. v. Manitoba, 2021 SCC 33, the Supreme Court of Canada said that even when a court has lost jurisdiction over the merits of a matter because of having entered its formal judgment, it retains jurisdiction to control the court record regarding proceedings generally understood to be an ancillary but independent matter. Important decisions about the openness of the court record, such as rendering, varying or vacating publication bans and sealing orders, may need to be taken after the proceeding on the merits is over. Recognizing that a court's jurisdiction to control its record survives the end of the underlying proceeding is not inconsistent with the purposes of finality and stability of judgments as the doctrine of functus officio was never intended to restrict the ability of lower courts to control their own files.

Accounting of Profits

In Constellation Brands US Operations Inv. V. Société de Vin Internationale Ltée2021 QCCA 1664 the court considered and refused a claim for an accounting of profits. The court said, "The goal of an accounting of profits is not to remit the increase in profits, but to force the wrongdoer to disgorge all profits made by the defendant as a result of (the) infringement." It is not the increase in revenues that must be proven but that the infringer's profit is causally attributable to the infringement. A review of the case law shows that different terms have been used interchangeably to describe this requirement for a causal link: the profits must be "attributable to," "derived from," "generated," or "caused by" the infringement. The assessment of causation is an integral part of - and a prior condition for - the determination of whether profits can be disgorged. Where there is no causal connection between the wrongful use of the plaintiff's intellectual property rights and the defendant's profits, the accounting remedy is simply not available. This means that causation is a preliminary issue, which is distinct from "apportionment," even though the two issues often overlap. Considering causation requires a fact-sensitive analysis.

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.