Canada: Canadian Copyright Law Updates

A. Introduction

This article reviews material developments in Canadian legislation, case law, and practice in the area of copyright in 2021. All references in this article to the "Act" refer to the Copyright Act, R.S.C. 1985, c. C-42, as amended. This article was originally published by The Continuing Legal Education Society of British Columbia in their "Annual Review of Law & Practice - 2022".

B. Law and Policy

For most people, 2021 was not the year one had hoped for after 2020. The ongoing global pandemic continued to have a day-to-day impact on our lives, including on the law and legislation. On the political front, the Federal election meant that non-pandemic related legislative developments were scarce.

There were some government consultations relating to copyright, notably in relation to the copyright term, online intermediaries and artificial intelligence ("AI")/the internet of things ("IoT"), but it remains to be seen if or when there may be changes in the law as a result. The courts were open, but the pace was not frenetic; nonetheless, there were some interesting decisions.

As always, some of the more interesting cases from years past continue to make their way through the appeal process and we'll undoubtedly return to some of them in future years, when further judicial pronouncements are made. For now, let's start our review of 2021 with a look at developments on the legislative side, or more accurately, the policy and pre-legislative side.

1. Consult, Consult and Consult Again

While actual legislative developments were stalled in 2021, both due to the ongoing pandemic and the Federal election, there were several consultations touching on copyright.

First, running from February 11, 2021 to March 31, 2021, was a consultation on how to implement Canada's commitments to extend the general term of copyright. Readers will recall from previous editions of this article that Canada had reached a new free-trade agreement in 2019 with the United States and Mexico (usually abbreviated and referred to as "CUSMA" (in English) or "ACEUM" (in French) in Canada, "USMCA" in the United States, and "T-MEC" in Mexico), intended to replace the North American Free Trade Agreement.

Most significantly for copyright, CUSMA was meant to generally extend the term of copyright protection under the Act from 50 to 70 years following the author's death. While we did see some changes earlier, in 2020, to the term when not tied to an author's life, we have not seen the general term change yet: Canada has two-and-a-half years from CUSMA in which to implement this. Thus in 2021, the consultation looked at how the general term increase could be implemented, in consideration of its impacts (to both owners of copyright, current and future, and those that may rely on the use of works, whether during or after copyright has expired). In particular, the government solicited comments on the potential implications of term extension, including for orphan works and out-of-commerce works, and whether Canada should extend the term of protection by 20 years without any accompanying measures, for example, whether some form of registration could be required.

Next, running from April 14, 2021 to May 31, 2021, the government held consultations on Canada's copyright framework for online intermediaries. As online intermediaries have grown in importance, questions have arisen regarding their liability and obligations. To address this, Canada's copyright framework currently seeks to balance liability for these intermediaries while also giving them certain protections. As part of this consultation, the government sought comments on several options for reform to this digital space, including clarifying intermediaries' safe harbour protections; clarifying the permitted involvement of qualifying intermediaries; compelling remuneration through collective licensing; clarifying or strengthening enforcement tools against online infringement; and establishing a statutory basis and procedure for injunctions against intermediaries.

Last, running from July 15, 2021 to September 17, 2021, there were consultations on the suitability of Canada's copyright framework for AI and the IoT, in particular whether their continued development required changes to that framework. The consultation looked at, among others, authorship and ownership of works generated by AI, and infringement and liability regarding AI. In respect of IoT, consideration was given to how to address technological protection measures ("TPMs"), and how to incorporate related provisions within the Act. TPMs have gained traction and are now commonly used to protect software incorporated within IoT products. As part of Canada's obligations under CUSMA, Canada must prohibit (a) circumventing TPMs, and (b) dealing in circumvention services or technology. This must be balanced with other aspects, such as provisions to facilitate third-party repair and interoperability of TPMs.

All in all, there was much policy energy expended, with a wide range of stakeholders consulted, during the various consultations in 2021. There have not yet been any formal 'responses' by the government as to how they may proceed on these fronts, but stay tuned for what will likely be legislative changes flowing from each in the years to come.

C. Case Law

The discussion below encompasses a selection of interesting copyright cases from 2021. For the most part, the discussion excludes 'copyright' cases that are only notable for reasons other than copyright - i.e., for developments in law relating to civil procedure, administrative review, or otherwise.

1. Infringement and Fair Dealing

School was back in session for the Supreme Court of Canada in York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32. In this case, the Canadian Copyright Licensing Agency (operating as Access Copyright; herein referred to as "Access") had appealed a decision of the Federal Court of Appeal holding that Access's interim tariff was not mandatory. At the same time, York University ("York") had cross-appealed the same decision dismissing York's claim that its use of the works at issue, pursuant to its "Fair Dealing Guidelines for York Faculty and Staff" (the "Guidelines") was protected by fair dealing rights.

The origins of the dispute between Access and York date back to 2010. Access, a copyright collective, was re-negotiating its license agreement with, among others, York, though the parties did not reach an agreement before the previous license agreement expired. As a result, Access applied to the Copyright Board of Canada (the "Board") for an interim tariff. The Board granted the tariff, but York (among other parties) indicated it was 'opting out' of the tariff. York then developed its own Guidelines for copying purposes. Access then started a claim in the Federal Court to enforce its interim tariff against York, and York counterclaimed, arguing that any copying of materials done in compliance with the Guidelines would constitute fair dealing, allowable under section 29 of the Act. At trial, the Federal Court found the interim tariff to be mandatory and denied York's application for a declaration that copying pursuant to the Guidelines constituted fair dealing. York appealed. Next at the Federal Court of Appeal, the interim tariff was found to be not mandatory, but that court did not provide the declarations sought by York on the Guidelines either. Not surprisingly, the results did not fully satisfy either party.

The Supreme Court of Canada unanimously affirmed the Federal Court of Appeal on the result for both the two key points at issue, but with a twist on the fair dealing issue.

In dismissing Access's claim that its tariff was mandatory, the Supreme Court of Canada noted that section 68.2(1) of the Act allowed collective societies to secure royalties for tariffs, and recover them in a court of competent jurisdiction. The court then relied on legislative intent, stating that if Parliament intended to make tariffs mandatory, then it would have expressed such intention in clear language, as is the case with section 19 of the Act, which states that performers and makers are entitled to be paid equitable remuneration and users are liable to pay royalties. As there is no such language that Access could point to, the court concluded that there is no duty to pay tariffs to a collective society: they only bind those that opt-in to the tariff. This did not mean that a party that did not opt-in to a tariff could not then be found liable for infringement (subject to fair dealing), but in this particular case Access, for the works at issue, would not be the proper party to bring such a claim (at para. 74).

Turning to fair dealing and York's counterclaim, the court held that because it had concluded that the interim tariff was not mandatory, there was no live dispute between the parties. Therefore, it did not entertain York's arguments for fair dealing substantively. However, the court emphasized that such a dismissal did not mean it was endorsing the reasoning of the Federal Court and Federal Court of Appeal on fair dealing. It noted that the lower courts conducted the fairness analysis exclusively from the perspective of the institution, thus ignoring the perspectives of the students. The court noted that 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" (at para. 89), and that "[b]oth perspectives should be taken into account" (at para. 98). This was a key 'win' by York and for user rights, and arguably consistent with prior jurisprudence on fair dealing, which speaks of an expansive consideration of fair dealing, and a consideration from the perspective of not just the intermediary facilitators (here York), but the ultimate users (here the students).

While this may be the end of the road for the litigation, expect both camps to refocus during their summer holidays on pushing for government action to aid their cause. Of course, it is also possible that the parties here come to an agreement, as ultimately the question of whether York's use is 'fair' remains open, and while fair dealing is always a possible answer, a license is the only way for each side to have certainty.

Turning to Canadian Broadcasting Corporation v. Conservative Party of Canada, 2021 FC 425, we find that not all politics is local, but rather national (TV)! The plaintiff Canadian Broadcasting Corporation (the "CBC") alleged that the Conservative Party of Canada (the "CPC") infringed on their copyright over several clips (collectively, the "CBC Works"), which CPC had taken from various CBC programs and the Federal leadership debate. The CPC used the CBC Works in political campaign videos or what are commonly referred to as 'attack ads', and as part of certain tweets, criticizing the Liberal government and Justin Trudeau, and making the case to vote for the CPC during the 2019 Federal election. The Federal Court first considered mootness, given the election at issue had long gone, but noted that this was a "matter which is reasonably likely to occur again" (at para. 30), and so a determination would be useful for the parties in the case (and indeed, all political parties too!).

Aside from two clips, it was quickly determined that the CBC did own copyright in the CBC Works, and so the court dealt with two key issues: First, did the CPC's use constitute taking a substantial part of the CBC Works? Second, if so, does the CPC's actions constitute fair dealing (or put another way: was CPC infringing the CBC Works)?

On the issue of the taking of a substantial part, the court relied on Cinar Corporation v. Robinson, 2013 SCC 73 ("Cinar"), where the Supreme Court of Canada set out that determining what is a substantial part is a qualitative and holistic process. A key determination is the quality and quantity of the appropriation. The court held that although the CPC only took quantitatively minor portions of the CBC Works, it had taken a substantial part of the CBC Works that CBC expressed skill and judgment in creating.

Since there had been the taking of a substantial part, the court went on to discuss whether the CPC's use was allowable under fair dealing. The court looked at the two step test as set out in, inter alia, Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36 ("SOCAN"): (1) the dealing must be for an allowable purpose; and (2) the dealing must be fair.

In interpreting words of the Act, the court adopted a large and liberal construction, and ultimately found the only allowable purpose seriously at issue was 'criticism'. It held that the CBC's interpretation of the Act was too narrow and technical on the ambit of this purpose, and the court rejected CBC's argument that the purpose of criticism must be restricted to criticism of the work itself. Citing previous case law, it concluded that Canadian jurisprudence has allowed for criticism to include the ideas set out in the work, and its social or moral implications. Looking at the CBC Works and the use made by the CPC, the court concluded that there was criticism in the use of the clips to portray Justin Trudeau's political shortfalls.

Having found an allowable purpose at issue, the court had to consider whether the dealing was fair. Following SOCAN, the court set out the six factor fairness inquiry that flows from the earlier Supreme Court of Canada decision in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13.

First, the court found that the purpose of the dealing was to ultimately engage in the democratic process, which pointed to fairness. Second, on character, as there was little detail on distribution and viewing, it found the CPC had failed to establish fairness here. Third, on amount of the dealing, the court found that while the CPC had used important footage of the CBC, their use had also contained elements from other media sources and the absolute quantum used was minimal, which pointed to fairness. Fourth, on alternatives, the court held that this was a neutral factor. While there were alternatives that CPC could have relied on to portray the same message, such as encouraging its audience to watch the debates, the court acknowledged that it was difficult to find reasonable alternatives that were as "effective as direct statements or actions of the targeted politicians" (at para. 101). Fifth, on the nature of the work, the court found, with the CBC being a public broadcaster, its "content is clearly designed for public viewing" (at para. 104) and the "news or news-like content" (at para. 105) at issue leaned to fairness. Sixth and lastly, on the effect of the work, while CBC expressed concerns about the CPC use affecting the CBC's journalistic integrity and reputation for neutrality, and the court acknowledged that the "CBC's concern for its neutrality is reasonable" (at para. 109), the court found that there was no objective evidence to support any reputational damage. In sum, the court concluded that CPC's use of the CBC Works was fair, and therefore dismissed the claim.

2. Subsistence of Copyright

The Federal Court had to consider whether truth was stranger than fiction, when fiction allegedly masqueraded as the truth, in Winkler v. Hendley, 2021 FC 498. Here plaintiff John Winkler, acting as the executor of the estate of his mother Theresia Winkler, claimed copyright infringement in Thomas Kelley's 1954 book The Black Donnellys (the "First Book") and its 1962 sequel Vengeance of The Black Donnellys (the "Second Book", collectively with the First Book, the "Kelley Books"), against the defendants Nate Hendley and his publisher James Lorimer & Company Ltd. The plaintiffs alleged the Kelley Books contain fictional events, and that they are works of "historical fiction or biographical fiction: [they tell] a fictional tale against the backdrop of real world events and individuals, adding characters, events, and details to enliven the story for the reader" (at para. 71).

Hendley, and his publisher, admitted that he used parts of the Kelley Books in doing research for his own 2004 book The Black Donnellys: The Outrageous Tale of Canada's Deadliest Feud, but argued that Kelley represented the First Book as a work of historical non-fiction, and therefore his successors cannot claim copyright in the events or characters in it, and that there was no taking of any original expression, or a substantial part thereof.

In ruling for Hendley, the court noted that copyright subsists in an original literary work, either fiction or non-fiction. However, copyright will only extend to original expression, not to mere facts or pure ideas. The court noted Canadian jurisprudence has long established that there is no copyright in facts. Moreover, while both the Kelley Books were "presented as telling the true story of the infamous Donnelly family" (at para. 13), the Second Book "is a more fanciful story, whose predominantly fictional nature can be seen from its subtitle: Canada's Most Feared Family Strikes Back From the Grave" (ibid.).

Ultimately, the court found, on the basis of how the First Book was presented, that "where an author presents a 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" (at para. 97). Thus, to the extent any events or facts are 'taken', there can be no copyright in them, only in respect of a substantial taking of any expression of same. While the Second Book may have been more fictional, the consideration is still ultimately about whether a substantial taking had occurred (which may, in the fictional context, include a combination of non-literal copying, such as the elements of the plot, etc.).

Ultimately, the court did not find any substantial taking (as per the framework in Cinar, supra.) of either of the Kelley Books had occurred and dismissed the claims.

3. Ownership

Dunn's Famous International Holdings Inc. v. Devine, 2021 FC 64, showed that you can't have your smoked meat sandwich, and eat it too. The plaintiff, Dunn's Famous International Holdings Inc. ("Dunn") operated a consumer food, licensing and wholesale distribution business in relation to the eponymous DUNN'S FAMOUS brand. Dunn commenced various trademark and copyright related claims against a range of corporate and individual defendants. On the copyright aspect, Dunn alleged that certain defendants reproduced its logo and certain pages of Dunn's website. Dunn alleged that this reproduction constituted copyright infringement.

The Federal Court dismissed Dunn's claim relating to copyright as Dunn had not adduced sufficient evidence to prove that it had ownership, or had been assigned ownership by the author(s), of the copyright in the logo or relevant portions of the website, even if these were part of Dunn's website. Thus, while the common refrain may be that possession is nine-tenths of the law, that isn't sufficient to prove you own the copyright in what you possess.

In Patterned Concrete Mississauga Inc. v. Bomanite Toronto Ltd., 2021 FC 314 (additional reasons in 2021 FC 792), we learn that skill and judgment is involved in both pouring concrete, and in creating forms. In this Federal Court case, the plaintiff Patterned Concrete Mississauga Inc. ("Patterned Concrete") was in the business of building concrete patios, paths and driveways for residential customers. It alleged that the defendant Bomanite Toronto Ltd. ("Bomanite") was using a quotation form, contract form and limited warranty certificate (collectively, the "Works") that were substantially similar to, and infringing, those of Patterned Concrete's.

One threshold issue that the court dealt with was whether Patterned Concrete had copyright in the Works. In this case, Patterned Concrete had registered for copyright in the Works, but not when they were first authored (or revised) in around 2008/2009, nor when published at around the same time. It had filed to register copyright at the same time it put Bomanite on notice for the allegedly infringing activities, via demand letter, only in 2017. Based on this timing, Bomanite argued that Patterned Concrete could not rely on section 53 of the Act (which reads, in part, that a "certificate of registration of copyright is evidence that the copyright subsists and that the person registered is the owner of the copyright") because it obtained the certificates for registration in contemplation of litigation rather than in the ordinary course of business. Bomanite supported its argument by citing P.S. Knight Co. Ltd. v. Canadian Standards Association, 2018 FCA 222 ("P.S. Knight"). The court dismissed Bomanite's argument on this point, finding that P.S. Knight did not create a general rule that section 53 of the Act only applies if the registrant obtained a certificate of registration in the ordinary course of business, since that was not even a live issue in the cited case (where it was held that the registration had been obtained in the ordinary course of business). Ultimately, the court found that the question becomes one of weight to be given to the registrations, and stated that "the circumstances that led to Patterned Concrete's applications for registration are factors that should be considered in weighing all of the evidence tending to prove or disprove the subsistence of copyright and its ownership" (at para. 15), since a registration for copyright is not a 'requirement' in Canada at all. On the totality of the evidence, the court had no trouble finding that Patterned Concrete had copyright in the Works, that they were original and required sufficient skill and judgment so as to be capable of having copyright subsist.

Having determined that there was copyright and that it was owned by the plaintiff, the court had to consider whether there had been infringement. The court noted that Mr. Schipani, a long-time employee of Patterned Concrete, had resigned in 2015 to join Bomanite. Therefore the court was prepared to accept that Bomanite had access to the Works. While Bomanite argued that its forms were based on common industry terms and language, there was no evidence as to such commonality for its 2017 forms. The court compared Bomanite's 2017 forms and the Works side-by-side. It found that the progression of changes of Bomanite's forms in 2017, when Bomanite was alleged to have begun infringing on Patterned Concrete's copyright, was significant. Many new phrases appeared in Bomanite's 2017 forms which were strikingly similar to the Works. The court therefore concluded on the evidence that Bomanite had failed to establish that the similarities were due to commonality of terms in the industry, and held that it had infringed Patterned Concrete's Works.

On remedies, the court granted an injunction in favour of Patterned Concrete to prevent Bomanite from infringing its works, also ordering the defendant to deliver up or destroy infringing copies, and awarded $8,000 per work in statutory damages, for a total statutory damages award of $24,000 (which was considerably less than the $584,000, based on a per copy or per infringement calculation, that the plaintiff had sought). The court found no basis for, and denied any award for punitive or exemplary damages. In its additional reasons, the court also awarded Patterned Concrete a further $45,000 for legal fees and $2,851.84 for disbursements for the motion and the action.

4. Damages and Injunctions

Trimble Solutions Corporation v. Quantum Dynamics Inc., 2021 FC 63 was a default judgment issued by the Federal Court. While the judgment was rendered in 2D text, and relating to the infringement of 3D modelling software, the end result was liability in very real dollars and cents. The plaintiffs Trimble Solutions Corporation ("Trimble") and BuildingPoint Canada Inc. ("BuildingPoint") had brought suit against Quantum Dynamics Inc. and its principal Sharbel Tannus for copyright infringement. At issue was Trimble's software Tekla Structures, which was alleged to have been used without license by the defendants. Trimble was a Finnish company, while BuildingPoint was its exclusive Canadian reseller. In, or around, February 2018, the plaintiffs became aware of the unlicensed use of Tekla Structures, which they ultimately determined related to the defendants; they also determined this related to unlicensed use going back to at least 2015, and use on at least six discrete devices (at para. 18). They attempted to contact the defendants with a view to an amicable resolution by way of a license, but this did not ultimately lead anywhere. In the end, the plaintiffs therefore sought recourse through this suit, which was not defended.

On the issue of infringement, the court accepted the evidence of the plaintiffs and found it had been made out. The key issue was then the quantum of damages, with the plaintiffs seeking "general damages reflecting the cost of six perpetual licences and annual subscriptions for the period during which unlicensed copies were executed on each of the six discrete devices" (at para. 69), particularly given that there was no information as to what profit (if any) the defendants had made from their infringing activities, and as the plaintiffs did not opt for statutory damages. The court generally agreed with this approach (at paras. 68 and 70). Given the circumstances and conduct of the defendants, it also agreed that punitive damages were appropriate (at para. 78):

In the end, Trimble was awarded general damages of $212,931 and punitive damages of $50,000, and costs in the lump-sum amount of $5,000, for which the defendants were jointly and severally liable. In addition, an injunction was issued to prevent the defendants from continuing to infringe the copyright in the software at issue.

Turning next to, Teksavvy Solutions Inc. v. Bell Media Inc., 2021 FCA 100, the Federal Court of Appeal had occasion to look at the novel remedy of site-blocking orders issued to stop online infringement (see Bell Media Inc. v. GoldTV.Biz, 2019 FC 1432, covered in an earlier edition of this article). While a number of issues, relating to other Federal legislation and Charter rights, were discussed in the decision, we will stick with just the copyright issues and the Act here. The appellant Teksavvy Solutions Inc. ("Teksavvy") argued that the Federal Court did not have jurisdiction to issue a site-blocking order, and argued that several provisions in the Act exclude the granting of a site-blocking order as a remedy. Specifically, Teksavvy argued that copyright law is wholly statutory in Canada, and that sections 41.25 to 41.27 of the Act implement a specific notice-and-notice regime in relation to entities such as internet service providers ("ISPs"). This, Teksavvy suggests, was a choice by Parliament to limit remedies available vis-à-vis ISPs, and precludes courts from granting something like a site-blocking order. The Federal Court of Appeal ultimately rejected this argument, stating (at para. 29):

It went on to state that "[s]ubsection 34(1) of the [Act] intentionally provides broad discretionary powers to address copyright infringement, including injunction" (at para. 30).

Therefore, the appellate court concluded that a site-block order is within the possible remedies contemplated under section 34 of the Act, and further that it was appropriate in the circumstances of the case. Perhaps not surprisingly, an application for leave to appeal to the Supreme Court of Canada was filed in late 2021 by Teksavvy, and so please stay tuned to this channel, er, website!

Lastly, the Federal Court had no choice but to watch television again in Bell Canada v. L3D Distributing Inc. (INL3D), 2021 FC 832. The plaintiffs included a variety of broadcasters in Canada (collectively, the "TV Companies"), which sought default judgment against a number of respondent defendants (collectively, the "Set Top Parties") for copyright infringement. This related to the Set Top Parties' advertisement and sale of pre-loaded set top boxes and internet protocol television ("IPTV") services (collectively, the "Box and Services") in Canada, which provided unauthorized access to the TV Companies' content (the "Works"). The Box and Services were offered online and through brick-and-mortar stores in Canada.

The court accepted that the set top boxes and IPTV services, such as the Box and Services, are a serious issue and concern for the TV Companies: "To say that the Plaintiffs, by their litigation, are playing a long game of "whack-a-mole" in attempting to address the infringements and the attendant harm to their respective businesses occasioned by the pre-loaded set-top box industry is an understatement" (at para. 27).

There was no serious issue that the Set Top Parties had infringed the Works, and there was no participation by the Set Top Parties in the litigation. Perhaps not surprisingly, the lights, camera and action focussed on remedies and damages.

The TV Companies were seeking a permanent injunction, maximum statutory damages of $20,000 per work infringed, punitive damages of $1,000,000 and costs of $50,000 as against each of the Set Top Parties.

The court considered the bad faith and conduct of the Set Top Parties, and also the need to deter infringement given the 'whack-a-mole' nature, and whether the maximum statutory damages would be grossly out of proportion (at issue were some 2,930 works, i.e. the TV Companies were seeking a total of $58,600,000 under this head).

In the result, the court determined that $10,000 per work infringed was appropriate for statutory damages. In addition to an injunction, the court awarded, in aggregate, $29,300,000 in statutory damages, $300,000 in punitive damages, and $75,000 in costs-clearly a blockbuster result!

The author would like to acknowledge the helpful assistance of Jimmy Zhang, an articled student with Clark Wilson LLP, in the preparation of this article.

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.