In this blog entry we deal with copyright developments in the last few months.
Too Early to Draw an Adverse Inference
Voltage Holdings, LLC has been trying to assert claims against a mass group of Internet subscribers who used or authorized the use of the BitTorrent peer-to-peer network to unlawfully make the plaintiff’s film available for distribution. The plaintiff unsuccessfully sought default judgement in its action in the Federal Court.
An appeal from this decision was also dismissed Voltage Holdings, LLC v. Doe #1 2023 FCA 194. The Federal Court did not err in concluding that it was premature to draw an adverse inference against the defendants. The plaintiff had not yet attempted to compel discovery of the defendants and their potential evidence. But the Federal Court was also right not to close the door on that possibility, otherwise there is a risk of creating a zone of immunity around online infringement.
The decision on appeal supports the shifting of the burden of proof or drawing adverse inferences when, as here, there is an informational imbalance or key evidence is uniquely in the hands of the defendant. Gaps in a plaintiff's evidence may be filled by an adverse inference or by the failure of a defendant to meet an evidentiary burden. The question is not whether a court can shift the burden, but when and in what circumstances.
The existing jurisprudence does two things: it prescribes certain facts that must be established to prove infringement, and it allows for drawing adverse inferences of infringement based on the overall state of the evidence.
A defendant’s failure to file a defence means that no allegations of fact in a pleading are admitted. The plaintiff in the Federal Court, bears the legal or persuasive burden of leading sufficient evidence to prove the necessary elements of its claim on a balance of probabilities. The evidential burden, in contrast, refers to a party’s obligation to establish, through sufficient evidence, the existence or non-existence of a particular fact or issue so a particular argument is live before the Court. Unlike the party with the legal burden, the party with an evidential burden is not strictly required to convince the trier of fact of anything, since an issue can be put into play without being proven.
The Federal Court did not err in its application of the legal principles relevant to adverse inferences or in its weighing of the evidence before it. The Federal Court’s decision not to draw an adverse inference in this context is a question of fact justifying deference on appeal, subject to the correctness of the legal principles guiding its assessment of the claims.
Consultations on Artificial Intelligence
In 2021, the Government of Canada launched a consultation on Canada's copyright framework to gather Canadians' insights on how to adapt it for the digital age.
In October of 2023 the rapid development of generative artificial intelligence (AI) tools, like ChatGPT, prompted the Government to launch a further consultation to reconsider some of the issues previously studied. While these new tools offer significant promise, there are also potential risks and impacts that should be appropriately considered, including in the context of protecting the rights of creators through Canada's copyright framework.
Both Consultations are closed, and we are waiting to hear from the Government.
Artist’s Resale Rights
On November 9, 2023, Canadian Heritage, and the Ministry of Innovation, Science, and Industry, launched a survey to help support the development of resale rights for artists. Resale rights for artists would help visual artists and their heirs when their work is resold. The full value of a work of art is rarely realized at the first sale. Resale rights would let visual artists be rewarded as their career progresses and their reputation grows. Over 90 countries worldwide have adopted resale rights.
Eye Appealing Features Applied to Useful Articles
Based on statements and debates from around the time that subsection 64(2) was introduced into the Copyright Act, the broad purpose of the provision was to limit the scope of copyright and moral rights for designs applied to certain products reproduced in industrial quantities. The general idea was that such designs should instead be protected by registration of an industrial design, which has a much shorter life than copyright.
In French v. The Royal Canadian Legion 2024 FCA 63 the Federal Court of Appeal said the wording Parliament chose for subsection 64(2) was more nuanced than the broad purpose and general idea described above. Parliament did not simply provide that a design that is, or could be, the subject of an industrial design could not be enforced through the Copyright Act. The text of subsection 64(2) does not simply state there can be no copyright or moral rights infringement of a design. Rather, Parliament chose to exclude certain activities from infringement and carefully crafted wording both for the kinds of designs that are covered by subsection 64(2) and for the activities shielded from infringement.
The plaintiff also asserted a false claim of authorship had been made concerning his work which infringed his right to be associated with his work as its author or to remain anonymous. He claimed this claim did not come within paragraph 64(2) (c) or paragraph 64(2)(d). While there was some technical merit in this argument the court disagreed said the answer was in section 14.1.
Subsection 14.1(1) contemplates two aspects of moral rights: integrity of the work and authorship. The text relevant to authorship is limited to a right “in connection with an act mentioned in section 3”. Section 3 of the Copyright Act defines the rights associated with copyright, including the sole right to produce, reproduce, perform and publish the work, and to authorize any of the foregoing activities. The reference in subsection 14.1(1) to these rights ties an author’s moral rights to copyright in the work in much the same way that subsection 64(2) is tied to a use of copyright. This suggests that the defence to infringement of moral rights provided for in subsection 64(2), including paragraph 64(2)(d), is intended to cover any infringement of the author’s moral rights. For there to be an infringement of moral rights, it must be in connection with the copyright; if there is no act in connection with copyright, there is no infringement of moral rights. This interpretation of subsection 64(2) and the scope of moral rights is also consistent with the broad purpose and general idea of subsection 64(2).
Either paragraph 64(2)(d) benefited the Legion as a defence to infringement of moral rights (if the false statement was associated with a reproduction of the Poppy Puppy), or there was no infringement of moral rights in the first place (because the false statement was not associated with a reproduction of the Poppy Puppy). Either way, the Legion is not liable for infringement of moral rights.
The Subsistence of Copyright in Canada for Foreign Authors is Determined under the Canadian Copyright Act
In GE Renewable Energy Canada Inc v. Canmec Industrial Inc 2024 FC 322 the author of the work in issue created it in France during his employment. In determining whether the law of France or Canada applied, the court said section 5 sets out conditions for the subsistence of copyright in Canada, including that the author be a citizen, subject or ordinary resident of a Berne Convention or other treaty country at the time of creation: -Copyright Act, -s 5(1)(a). There is no requirement in section 5 that copyright in the work be recognized in its country of origin. Whether Canadian copyright subsists in a work is a matter expressly dictated by the Canadian Copyright Act, without reference to the law of the jurisdiction in which the work is created. It is also clear that the Copyright Act is expressly intended to govern the works of foreign authors. This is consistent with the statement in Article 5(2) of the Berne Convention that the enjoyment and exercise of copyright is independent of the existence of protection in the country of origin of the work. The text, context, and purpose of subsection 13(1) indicate that Parliament intended the first ownership rule to apply to all works, no matter where they were authored.
Injunctions at Trial
The Federal Court in Vidéotron Ltée v. Konek Technologies Inc.2023 FC 741, summarized the obligations on a plaintiff seeking an injunction as follows.
“In a nutshell, the plaintiff must prove an infringement of their rights, that there is sufficient risk that this infringement will continue, that there is no adequate alternative remedy, and that there are no discretionary considerations that weigh against granting the injunction.”
In that case the plaintiff asserted copyright in specific programs and not its television signal. They sought a wide injunction prohibiting the retransmission of the signal itself which would include additional works and future works. Absent challenge to the injunction was granted relating to the signal.
Statutory Damages
In Vidéotron Ltée v. Konek Technologies Inc. 2023 FC 741,202 C.P.R. (4th) 311 the Court said the purpose of the subsection 38.1 is to prevent a mechanical application of the section from leading to the awarding of disproportionate sums. It would be paradoxical if the purpose of the provision could be frustrated by interpreting it in a too technical or mechanical fashion. The concept of “medium” must be applied while considering the wide variety of types of works that can be subject to copyright and the growing diversity of technological means of reproducing or retransmitting these works. A pragmatic approach is called for.
In addition, nothing in subsection 38.1(3) requires works to be present simultaneously on a single medium, such as a hard drive or RAM. A “single medium “includes any technological infrastructure that makes it possible to reproduce, display or retransmit several works one after another.
Equitable Remedies Can’t Be Used to Turn Copyright Regime on Its Head
Before the Supreme Court’s decision in York University, the Ministries of Education of 10 Canadian provinces and territories (excluding British Columbia, Ontario and Québec) and each of the school boards in Ontario commenced an action against Access Copyright seeking, among other relief: (a) a declaration that Access Copyright’s tariffs as certified by the Board were not mandatory; (b) a declaration that the plaintiffs overpaid Access Copyright for the years 2010, 2011 and 2012 by an amount equal to $2.35 per full time equivalent (FTE) student; and (c) payment by Access Copyright of a refund or monetary damages to the plaintiffs in the amount of the overpayment, namely $25,493,109.36. The claimed refund represented the difference between the FTE rate of $4.81 paid in 2010 through 2012 and the $2.46 FTE rate that was ultimately certified in accordance with the approved 2010-2015 Tariff. Access Copyright defended the proceedings on multiple grounds including that the plaintiffs had no right to opt out of the tariffs because they voluntarily engaged in the tariff process beginning in 2010, including after January 1, 2013, and made use of works in Access Copyright’s repertoire. Having made their election to engage in the tariff process, and having paid royalties from 2010 to 2012, the plaintiffs were voluntary licensees.
The matter moved forward by way of summary trial Province of Alberta v. The Canadian Copyright Licensing Agency 2024 FC 292 The first issue was whether the plaintiffs were bound by the licences in issue. This issue was resolved based on whether they had paid or offered to pay the royalties due under the licences in issue under section 70.17 of the Act. It was observed that paying or offering to pay is a permissive act triggering licence acquisition which must be interpreted considering the voluntary nature of the licensing regime.
“Offer to pay” must also be interpreted in accordance with the Supreme Court’s finding that a licensee must be able to review the terms and conditions of a tariff before agreeing to its terms, which is a critical component of what it means to be a voluntary licensee.
The Court did not consider that any conduct by the plaintiffs, on its own or viewed collectively, constituted a clear and unequivocal offer to pay for a statutory licence.
The second issue was whether the plaintiffs were liable in equity to pay Access Copyright an amount equivalent to the tariff for 2013-2015. Access Copyright asserted that it was entitled to equitable relief based on unjust enrichment, estoppel by representation, common law and equitable election, issue estoppel, abuse of process and/or collateral attack.
The Court said:
“To interpret the Copyright Act as allowing equitable remedies that permit recovery of a remedy provided for under subsection 68.2(1), but not otherwise available to Access Copyright under the Copyright Act (because the plaintiffs were not licensees), would be incompatible with the object of the Copyright Act and result in absurdity. Parliament has struck a careful balance between users’ and creators’ rights, as well as with respect to the risk of collective societies developing monopolistic powers. In striking that balance, Parliament chose to make statutory licenses voluntary. To permit Access Copyright to obtain through equity what it cannot obtain under the Copyright Act would turn the copyright regime on its head, by effectively making voluntary statutory licences mandatory through the use of equitable remedies. Under the circumstances, it is “irresistibly clear” that the statutory scheme precluded Access Copyright from seeking the equitable remedies it claims.
Dr Wright and Bitcoin
Dr Wright succeeded in establishing in an interlocutory matter that the Bitcoin file format was sufficiently fixed to be subject to copyright. At the trial of a subsequent action, it was found that Dr Wright was not the pseudonymous Satoshi Nakamoto, had not written bitcoin’s foundational White Paper and had not developed the Bitcoin software Crypto Open Patent Alliance v Wright [2024] EWHC 1198 (U.K. Ch)
Privacy Rights and IP addresses
In BMG Canada Inc. v. John Doe 2005 FCA 193 the Court of Appeal said that privacy rights are significant and must be protected. But privacy concerns must yield to public concerns for the protection of intellectual property rights in situations where infringement threatens to erode those rights. These comments may need to be further considered in light of the decision of the Supreme Court of Canada in R. v. Bykovets 2024 SCC 6. In a criminal context the court by a majority of five to four concluded that section 8 of the Canadian Charter of Rights and Freedoms protects IP addresses. An IP address is the crucial link between an Internet user and their online activity. Viewed normatively, it is the key to unlocking a user’s Internet activity and, ultimately, their identity. An IP address attracts a reasonable expectation of privacy. Accordingly, a request by the state for an IP address is a search under section 8 of the Charter. The burden imposed on the state by recognizing a reasonable expectation of privacy in an IP addresses is not onerous. This recognition adds another step to criminal investigations by requiring that the state show grounds to intrude on privacy online. But in the age of telewarrants, this hurdle is easily overcome where the police seek the IP address in the investigation of a criminal offence.
TPMs do not Defeat Fair Dealing
In 1395804 Ontario Ltd. v Canada (Attorney General) 2024 FC 829 the court said the purpose of the TPM measures was to better enable digital copyright owners to enforce copyright in the online environment. They provide an additional remedial arrow in the copyright owner’s quiver where an infringement occurs in a digital context “to better address the challenges and opportunities of the Internet”. They were not intended to effectively enlarge copyright protection for digital works by letting owners employ TPMs to defeat fair dealing, an inherently non-infringing activity.
The court also declined to determine whether a password could be a technological protection measure since there was no evidence of its effectiveness.
Industrial Designs and Buildings and Structures
As of June 14, 2024, the Industrial Design Office takes the position that buildings and structures, including those constructed on site, may be acceptable finished articles to which a design can be applied. This revised practice applies to all pending applications, regardless of their filing date.
If you have questions, please contact me at mckeown@gsnh.com
Goldman Sloan Nash & Haber LLP 480 University Avenue, Suite 1600 Toronto, Ontario M5G 1V2 Direct Line: (416) 597-3371 Fax: (416) 597-3370 Email: mckeown@gsnh.com
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.
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