LEGAL_1:29245128.3

COPYRIGHT AND INDUSTRIAL DESIGN DEVELOPMENTS – 2013

Presented by

Glen Bloom Barry Sookman

Osler, Hoskin & Harcourt LLP McCarthy Tétrault LLP

Barristers & Solicitors Barristers & Solicitors

Patent & Trade-mark Agents Patent & Trade-mark Agents

Ottawa, Ontario Toronto, Ontario

INTELLECTUAL PROPERTY – THE YEAR IN REVIEW

LAW SOCIETY OF UPPER CANADA

Toronto: January 16, 2014

Ottawa, January 17, 2014

© 2014 Glen Bloom and Barry Sookman

TABLE OF CONTENTS

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INTRODUCTION ......................................................................................................................... 1

JURISPRUDENCE ........................................................................................................................ 3

COPYRIGHT ................................................................................................................................. 3

1. Supreme Court of Canada ...................................................................................... 3

(a) Cinar Corporation v. Robinson, 2013 SCC 73 ........................................... 3 2. Federal Court of Appeal....................................................................................... 10

(a) Nautical Data International, Inc. v. C-Map USA Inc., 2013 FCA 63 ...... 10 (b) National Gallery of Canada v. Canadian Artists’ Representation /

Le Front Des Artistes Canadiens, 2013 FCA 64...................................... 10

(c) Manitoba v. Access Copyright, 2013 FCA 91 ......................................... 13

(d) Leuthold v. Canadian Broadcasting Association, 2013 FCA 95 ............. 14 (e) Doris Tremblay v. Orio Canada Inc., 2013 FCA 225 .............................. 14 (f) Domenic Pub v. Premium Sports Broadcasting Inc., 2013 FCA 288 ...... 15

3. Other Appellate Decisions ................................................................................... 16

(a) R. v. Strowbridge, 2013 NLCA 57 .......................................................... 16 (b) Nova Scotia v. Roué, 2013 NSCA 94 ...................................................... 16

4. Federal Court ....................................................................................................... 17

(a) Doris Tremblay v. Orio Canada Inc., 2013 FC 109 ................................. 17 (b) The Spangler Candy Company v. 3651410 Canada Inc., 2013 FC

253............................................................................................................ 18 (c) Planification-Organisation-Publications Systèmes (POPS) Ltée v.

9054-8181 Québec Inc., 2013 FC 427 ..................................................... 18

(d) Pinto v. Bronfman Jewish Education Centre et al., 2013 FC 945 ........... 19 (e) Distrimedic Inc v. Dispill Inc, 2013 FC 1043 .......................................... 19

(f) Twentieth Century Fox Film Corporation v. Nicholas Hernandez et

al., T-1618-13 (Unreported) .................................................................... 20 5. Other Decisions of First Instance ......................................................................... 21

(a) Roué v. Nova Scotia, 2013 NSSC 45 ....................................................... 21 (b) Roué v. Nova Scotia, 2013 NSSC 254 ..................................................... 21 (c) Canada (United States of America) v. Equinix Inc., 2013 ONSC

193............................................................................................................ 22 (d) Delta Hotels v. Backus-Naur, 2013 ONSC 582 ....................................... 23

(e) A.G.C. v. Madeleine Rundle c.o.b. NEC Plus Ultra, 2013 ONSC

2747.......................................................................................................... 23 (f) Rains v. Molea, 2013 ONSC 5016 ........................................................... 24

(g) Spanski Enterprises, Inc. et al. v. IMB+ Records Inc., 2013 ONSC

5382.......................................................................................................... 26 (h) Mobin v. Stephens, 2013 ONCJ 53 .......................................................... 26 (i) Oakcraft Homes Inc. v. Ecklund, [2013] O.J. No. 3215 (OSCJ) ............. 26

(j) Pelchat v. Zone 3 Inc., 2013 QCCS 78 .................................................... 27

TABLE OF CONTENTS (continued)

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(k) Biocad Medical Inc. v. Panthera Dentaire Inc., 2013 QCCS 905 ............ 28

(l) Boire v. Lefebvre, 2013 QCCQ 921 ........................................................ 28 (m) Tency Music SAS v. Lefrançois, 2013 QCCS 1947 ................................ 29 (n) Isle-Principia (USA) Inc. v. Guimond, 2013 QCCS 3730 ....................... 30 (o) Bell Media Inc. v. Société du Droit de Reproduction des Auteurs

Compositeurs et Editeurs au Canada, 2013 QCCS 5203 ......................... 30

(p) Gestion Reper Inc. v. Brassard, 2013 QCCS 5453 .................................. 31

(q) Stoyanova v. Disques Mile End, 2013 QCCS 5631 ................................ 31 (r) Éditions Québec Amérique Inc. v. Druide Informatique Inc., 2013

QCCS 5693 .............................................................................................. 32 (s) Chélin v. Girouard, 2013 QCCQ 8742..................................................... 33 (t) (AOM) NA Inc. et al. v. Reveal Group, 2013 ONSC 8014 ..................... 33

6. Copyright Board................................................................................................... 34

(a) Society For Reproduction Rights Of Authors, Composers And

Publishers In Canada v. Canadian Broadcasting Corporation,

Copyright Board of Canada, January 16, 2013 ........................................ 34 (b) Statement Of Royalties To Be Collected By Access Copyright For

The Reprographic Reproduction, In Canada, Of Works In Its

Repertoire (Education Institutions – 2005-2009), Copyright Board

of Canada (Redetermination), January 18, 2013 ..................................... 35 (c) Statement Of Royalties To Be Collected By Access Copyright For

The Reprographic Reproduction, In Canada, Of Works In Its

Repertoire (Educational Institutions – 2010-2015), Copyright

Board of Canada, May 29, 2013 .............................................................. 36

(d) Statement Of Royalties To Be Collected For The Retransmission

Of Distant Television And Radio Signals For The Years 2009 to

2013, Copyright Board of Canada, November 29, 2013 ......................... 37

(e) Statement of Royalties to be Collected by ERCC from Educational

Institutions, in Canada, for the Reproduction and Performance of

Works or Other Subject-Matters Communicated to the Public by

Telecommunication for the Years 2012 to 2016, Copyright Board

of Canada, December 19, 2013 ................................................................ 38

(f) Interim Tariff For The Retransmission Of Distant Television And

Radio Signals, 2014-2018, Copyright Board of Canada, December

19, 2013.................................................................................................... 38 (g) Tariff of Levies to be Collected by CPCC in 2012, 2013 and 2014

on the Sale of Blank Audio Recording Media, in Canada, in

Respect of the Reproduction for Private Use of Musical Works

Embodied in Sound Recordings, of Performer’s Performances of

Such Works Or of Sound Recordings in Which Such Works and

Performances are Embodied (Private Copying 2012, 2013 and

2014), Copyright Board of Canada, August 30, 2013 ............................. 38

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(h) Statement Of Royalties To Be Collected By SOCAN For The

Public Performance Or The Communication To The Public By

Telecommunication, In Canada, Of Musical Or Dramatico-Musical

Works (Tariff No. 24 – Ringtones (2003-2005), Ringtones and

Ringbacks (2006-2013), Copyright Board of Canada, January 18,

2013.......................................................................................................... 40

(i) Statement Of Royalties To Be Collected By SODRAC For The

Reproduction, In Canada, Of Musical Works Embodied Into

Cinematographic Works For The Purposes Of Distribution Of

Copies Of The Cinematographic Works For Private Use Or Of

Theatrical Exhibition For The Years 2009 To 2012 (SODRAC

Tariff No. 5), Copyright Board of Canada, July 5, 2013 ......................... 41 INDUSTRIAL DESIGNS ............................................................................................................ 42

1. Federal Court ....................................................................................................... 42 (a) Zero Spill Systems (Int’l) Inc. v. 614248 Alberta Ltd. (Lea-Der

Coatings), 2013 FC 616 ........................................................................... 42

(b) Bodum USA, Inc. v. Trudeau Corporation (1889) Inc., 2013 FC

128............................................................................................................ 43

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COPYRIGHT AND INDUSTRIAL DESIGN DEVELOPMENTS – 2013

Glen Bloom,1 Barry Sookman,

2 John Cotter,

3 Barry Fong,

4

Martin Brandsma,5 Keith Rose

6, and Vanessa Cotric

7

Presented by Glen Bloom and Barry Sookman

INTRODUCTION

The developments in Canadian copyright law in 2013 pale in comparison with those in 2012

which, in our paper for the last Intellectual Property – The Year in Review, we described as a

banner year. It is unlikely that in any one year we will ever see the proliferation of decisions of

the Supreme Court of Canada that we saw in 2012. 2012 brought us copyright reform through

the passage of the Copyright Modernization Act. 2013 brought no new legislative reform and the

sections of the Copyright Modernization Act that had not come into force at the end of 2012 have

still yet to come into force.

Nevertheless, with the release by the Supreme Court of Canada on December 23, 2013 of its

decision in Cinar Corporation v. Robinson (“Robinson”), 2013 has proved to be an important

year for the development of Canadian copyright law. In the last decade, the Supreme Court has

canvassed many important issues in copyright law, including the scope of the rights of

reproduction and authorization, what makes a work original, and how to apply the fair dealing

defense. In Robinson, a unanimous Supreme Court released an important precedent dealing with

many other core areas of copyright including the framework for how to assess if a “substantial

part” of a work has been reproduced, the assessment of damages for infringement including

1 Glen Bloom is a partner of Osler, Hoskin & Harcourt LLP, and practises in the Ottawa office.

2 Barry Sookman is a partner of McCarthy Tétrault LLP, and practises in the Toronto office.

3 John Cotter is a partner of Osler, Hoskin & Harcourt LLP, and practises in the Toronto office.

4 Barry Fong is an associate in the Ottawa office of Osler, Hoskin & Harcourt LLP.

5 Martin Brandsma is an associate in the Ottawa office of Osler, Hoskin & Harcourt LLP.

6 Keith Rose is an associate in the Toronto office of McCarthy Tétrault LLP.

7 Vanessa Cotric is an articling student in the Toronto office of Osler, Hoskin & Harcourt LLP.

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accounting of profits, non-pecuniary damages and punitive damages, the use of experts in a

copyright case, and the vicarious liability of directors for infringement. For copyright lawyers,

this case is a goldmine – a treasure trove – of important copyright holdings by the Supreme

Court.

In 2013 the Supreme Court of Canada also granted leave to appeal the decision of the Federal

Court of Appeal in National Gallery of Canada v. Canadian Artists’ Representation / Le Front

Des Artistes Canadiens. In 2014 the Supreme Court will be grappling with the relationship

between the Copyright Act and the Status of the Artist Act.

The Ontario Superior Court issued its decision in Rains v. Molea which, like Robinson, dealt

with the issue of what constitutes a substantial part of a copyright protected work. It is perhaps

unfortunate for the plaintiff Rains that his counsel and the Court did not have the benefit of the

Supreme Court’s decision in Robinson before Rains’ claim was tried and decided.

Consistent with recent years, the Copyright Board of Canada issued a number of decisions in

2013. The decisions, although important to the participants, do not address issues of broad

significance for copyright law in general, as had been the case in prior years. The cases in 2013

deal with more technical issues including issues relating to an interim license, redetermination,

the treatment of interest, the truncation of the term of a certified tariff and the extension of a

certified tariff on an interim basis.

It is expected that Canada will ratify the WIPO Copyright Treaty and the WIPO Performances

and Phonograms Treaty in 2014. With the ratification most of the remaining provisions of the

Copyright Modernization Act will come into force. In 2014 we might also expect the Supreme

Court to issue its decision in the National Gallery case extending to three number of consecutive

years in which that court has decided a copyright case.

The format of this paper has been changed from the format that we have used in prior years. We

have provided below summaries of the decisions of the courts and the Copyright Board of

Canada that were released in 2013 and that addressed copyright matters. The summaries are

ordered in accordance with the level of court. We have concluded with summaries of the Board

decisions and the two court decisions that addressed industrial design matters in 2013.

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JURISPRUDENCE

COPYRIGHT

1. Supreme Court of Canada

(a) Cinar Corporation v. Robinson, 2013 SCC 73

This case involved an educational children’s television show, “The Adventures of Robinson

Curiosity” (“Curiosity”) created by Robinson. He developed characters, drew detailed sketches

and storyboards, wrote scripts and synopses, and designed promotional materials for his

Curiosity project. The infringement action was against Cinar and several of its officers and

directors and co-producers who produced and distributed a children’s show named “Robinson

Sucroë” (“Sucroë”). Robinson claimed that Sucroë was a blatant copy of Curiosity. His claim,

however, was largely based on the presence of many non-literal similarities including similarities

in characters such as their personalities and interactions, and their environment. He sued for

infringement and was awarded substantial damages by a Quebec court. The decision was mostly

affirmed by the Quebec Court of Appeal.

A summary of the major holdings of the Court is set out below.

The Scope of the Protection Afforded by the Copyright Act

It is a basic principle of copyright law that the Act protects only original expression in a work

and not mere ideas, stock devices, or elements in the public domain. If a substantial part of the

original expression is reproduced, infringement may result.8 The Court re-affirmed these

principles.

It is also a fundamental tenet that copyright does not protect all copying from a work. Unless all

or a substantial part of a work is reproduced the copying will not be considered an infringement.

A substantial part is measured by its quality rather than its quantity. Whether qualitatively a

substantial part of a work has been taken is assessed by determining whether a substantial

portion of the originality in the work, a substantial portion of the author’s skill and judgment

8 CCH Canadian Ltd. v. Law Society of Upper Canada (2002), 18 C.P.R. (4th) 161 (Fed. C.A.), Newspaper

Licensing Agency Ltd. (The) v. Marks & Spencer Plc, [2002] 3 All E.R. 977 (H.L.), IceTV Pty Ltd. v. Nine

Network Australia Pty Ltd., [2009] HCA 14 (H.C. Aust.).

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expressed in the work, has been copied. It is also fundamental that copyright infringement can be

made out by literal or non-literal copying of a substantial part of a work.

The Standard of Review

Before delving into the merits of the case, the Court confirmed that the standard of review on a

finding of whether a substantial part of a work has been infringed is one of mixed fact and law

which is entitled to appellant deference.

The Correct Approach to Assessing Whether a “Substantial Part” of a Work is Reproduced

Until the Robinson case, there were different approaches used by the courts in Canada for

comparing the infringed and the allegedly infringing works to determine if a substantial part had

been copied.

Some cases had assessed whether there is an “objective similarity” between the two works. This

test examines whether there are similarities in the expression of an idea and not merely a

representation of a general idea in a different form. It was formulated in the leading UK case,

Francis Day & Hunter Ltd. v. Bron, [1963] Ch. 587 (Eng. C.A.). In the case of artistic works, a

test that was sometimes applied was a purely visual one. The two works are compared oculis

subjecta fidelibus.9 In Hanfstaengl v. Baines & Co. the English House of Lords applied a test that

requires that the two works be compared as a whole.10

9 King Features Syndicate (Inc.) v. Kleemann (O. & M.) Ltd., [1941] 2 All E.R. 403 (H.L.).

10 Hanfstaengl v. Baines & Co. Ltd., [1895] A.C. 20 (H.L.); See also Designers Guild Ltd. v. Russell Williams

(Textiles) Ltd., [2001] 1 All E.R. 700 (H.L.) per Lord Scott “The judge, in rejecting that argument, said, at p.

828: “In my judgment there has been copying of a substantial part.” He went on to emphasize that it was “the

whole work” that had to be looked at “to determine whether the alleged infringing material [had] adopted the

essential features and substance of the original”. He said:”The right approach is to look at the end result of the

acetate, the striped artwork, the modifications made by Mrs. Williams (especially making the stripes less harsh)

and her selection of colour ways, and the printed fabric. That end result is an infringement of the painting on

which Ixia was based.” In my opinion, the judge’s approach in comparing Ixia (“the whole work”) with

Marguerite (“the end result”) was correct. And having made the comparison he expressed his conclusion that:

“It is the design which was copied and has been reproduced” (emphasis added). So, what had been copied was

the design, and the design was a substantial part. In dealing in this way with the “substantial part” argument that

had been addressed to him by counsel, the judge was re-affirming his conclusion that the Ixia design had been

copied.”

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The Ontario Court of Appeal in the Delrina case,11

had favorably commented on the

“abstraction-filtration-comparison” methodology, which is commonly applied in computer

program infringement cases in the U.S. to weed out unprotectable portions of a work before

comparing the two works.12

The appellants had argued that this test should have been applied by

the trial judge.

The Court did not rule out that abstraction-filtration-comparison methodology could be applied

in a different type of case, such as a computer program infringement case. However, instead the

Supreme Court adopted principles from the leading UK cases requiring a “qualitative and

holistic” approach to assessing substantiality.

Despite declining to apply the abstraction-filtration-comparison test, the Court noted that the trial

court had correctly taken the unprotectable elements of Robison’s work into account in doing the

comparison between the two works.

Relevance of differences between the copyright and allegedly infringing work

Under well-established law, when examining substantiality the focus is on the similarities and

not on the differences. A defendant is not exonerated from infringement by adding substantial

new features to its work. The dissimilarities are irrelevant if in other respects a substantial part of

the original work has been copied.13

However, since the converse of similar is different, the courts regularly as part of the

substantiality analysis evaluate the similarities and differences to determine if the part of the

plaintiff’s work that is alleged to have been copied is really manifest or evident in the

defendant’s work or is really just a different mode of expressing the same idea. If the points of

11

Delrina Corporations v. Triolet Systems Inc. (2002), 17 C.P.R. (4th) 289 (Ont. C.A.).

12 See, Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2nd Cir. 1992).

13 Designers Guild, supra note 10.

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dissimilarity not only exceed the points of similarity, but indicate that the remaining points of

similarity are of minimal importance to the plaintiff’s work, then there can be no infringement.14

The respondents contended that the trial judge had failed to take into account the substantial

differences between the two works in assessing infringement. The Court, consistent with well-

established law, noted that what is important in a copyright case is the extent of the similarities

not the extent of the differences.

The Court also noted that the differences could be so extensive as to make the allegedly

infringing work a new original work. An infringing work may also be an original work.

Accordingly, this statement by the Court might be interpreted to mean that substantial

differences in two works may suggest that the defendant has not reproduced all or any substantial

part of the allegedly infringed work.

The scope of copyright in a TV series

The appellants argued that even though there had been coping in creating Sucroë, what was

copied were unprotectable ideas or stock devices or materials that were otherwise not original or

in the public domain. The Court rejected these arguments finding that the trial judge had based

his decision on copying expression of ideas and not the ideas themselves.

In so holding, the Supreme Court implicitly accepted that copyright in a TV series can extend to

the graphic appearance and personality traits of characters, interactions between characters, and

the graphic appearance of settings.

Whose perspective is used in determining if a substantial part has been copied

A question that has bedeviled courts, particularly in the U.S. where the concept of substantial

similarity is central to a finding of infringement, is the question of whose perspective is to be

used in making the comparison between the two works.

14

See, Hanfstaengl v. Baines, Designers Guild, Hutton v. Canadian Broadcasting Corp., 1992 ABCA 39, Grignon

v. Roussel (1991), 38 C.P.R. (3d) 4.

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Anglo-Canadian courts have not generally canvassed this question in detail. In Francis Day, a

music case, Lord Wilberforce suggested the perspective should be an assessment of an ordinary

reasonable experienced listener who might think that one work had come from another. Other

authorities have suggested that the assessment is to be done by the person to whom the work is

normally addressed. Many cases are silent on the test. However, a test that has often been applied

is the perception of the judge assisted by evidence, almost invariably by expert evidence, that is

helpful to identify objective resemblances.15

There is a great deal of case law on this issue in the U.S. where the courts use a variety of

different tests including a “lay or ordinary observer” test, the “actual or intended audience” for

the work test, and a more “discerning intended audience” for the work test. In general, and at a

very high level, the “ordinary observer” test attempts to gauge the reaction of the ordinary man

on the street to the two works. The intended audience test asks if the audience to whom the

works are directed would consider them substantially similar based on their spontaneous and

immediate impression. In the more discerning test the fact finder attempts to extract the

unprotectable elements from consideration and considers whether the protectable elements as a

whole are substantially similar.16

Without referring to any Anglo-Canadian or U.S. cases on the point, the Supreme Court

expressed the opinion that the proper perspective is the “intended audience for the works at

issue”. However, because similarities can be patent or latent or difficult to appreciate, it may

sometimes be necessary to go beyond this to call upon an expert versed in the relevant art or

technology to help the trial judge.

Admissibility of expert evidence

Expert evidence is regularly admitted in copyright cases. It is especially important in cases to

avoid under protecting or over protecting works, where the expert evidence is outside of the

knowledge of the judge who may not be able to appreciate what is commonplace, a stock device,

15

Garnett, Copinger and Skone James on Copyright, 16th ed., London: Sweet & Maxwell, 2011 at P.477, Designers

Guild Ltd. v. Russell Williams (Textiles) Ltd., [1999] E.W.J. No. 1422 (Eng. C.A.), Francis Day, Grignon.

16 See generally, Nimmer on Copyright at 13.03[A][1], [E][2], [E][3][a] IA72,

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or what is original. In music cases, for example, expert evidence is invariably called to educate

the court in the nuances of melody, rhythm, orchestration, and even lyrics and to identify and

explain common or unusual musical features.17

Despite the importance of expert evidence in copyright cases, no appellant Canadian case had

authoritatively canvassed the admissibility of such evidence. The appellants had challenged the

use of the evidence of a semiologist, Dr. Charles Perraton. Dr. Perraton offered evidence that,

quite apart from the surface meaning of the works at issue, there were latent similarities in how

the two works used atmosphere, dynamics, motifs, symbols, and structure to convey meaning.

The trial judge relied on this evidence in concluding that the Cinar appellants had copied a

substantial part of Robinson’s work. The Court explained that expert evidence can be admitted to

help the trial judge in areas outside of his/her expertise. The court went further and held the

evidence of Dr Perraton was admissible in accordance with generally applicable principles

related to admissibility of experts in intellectual property cases.

Vicarious liability of officers and directors

In many copyright cases, and in particular, in cases of copyright piracy, officer and directors, the

directing minds of the corporate defendant, are sued for infringement. The Court applied the

reasoning in Mentmore, stating that, for a director or officer to be personally liable, it must be

reasonable to conclude that there was a deliberate, willful and knowing pursuit of a course of

conduct that was likely to constitute infringement or reflected an indifference to the risk of it.18

Accounting of profits

Pursuant to s. 35 of the Copyright Act, the trial judge awarded both compensatory damages to

account for Robinson’s losses (including non-pecuniary damages) and 50 percent of the profits

made by the infringers, against all the Cinar appellants, on a solidary (joint and several) basis.

On the facts of the case, the appellants had used a soundtrack created by Robinson in Sucroë.

Robinson had claimed the profits from Sucroë based on the use of the soundtrack. The appellants

17

Copinger at p. 430.

18 Mentmore Manufacturing Co. v. National Merchandising Manufacturing Co. (1978), 89 D.L.R. (3d) 195 (F.C.A.),

at pp. 204-5, per Le Dain J.

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had argued that the profits had to be apportioned and that profits earned from the use of the

soundtrack should not have awarded. The Court refused to apportion the profits based on the

factual finding of the trial judge that the music revenues could not be disassociated from the

overall work.

Joint and several liability for accounting of profits

Another issue in the case was whether the remedy of accounting of profits can be assessed on a

joint and several basis. The Court explained the purposes of the accounting of profits remedy and

held that it cannot be imposed on a joint and several basis, at least not under Quebec civil law.

Non-pecuniary damages

The trial judge awarded Robinson $400,000 in non-pecuniary damages as compensation for his

psychological suffering. He analogized Robinson’s psychological suffering to the injury

sustained by a victim of defamation. The Court agreed with the trial judge that damages for

Robinson’s psychological suffering could be assessed under principles analogous to those used

in assessing damages for defamation.

Punitive damages

The trial awarded $1,000,000 in punitive damages on a joint and several basis against Cinar and

a number of the other appellants. The Court of Appeal reduced the award to $250,000. The Court

increased the award to $500,000. In doing so the Court reviewed the statutory basis for the award

as well as the proper approach to awarding punitive damages for copyright infringement.

In Quebec, punitive damages can only be awarded where they are provided for by a specific

enabling enactment. The Court found such a basis in the Quebec Charter of human rights and

freedoms. In particular, the Court found that copyright infringement violated two of Robinson’s

Charter rights. First, the infringement violated his rights under s. 6 of the Charter which

provides that “[e]very person has a right to the peaceful enjoyment and free disposition of his

property, except to the extent provided by law”. In addition, the infringement of copyright

interfered with Robinson’s personal rights to inviolability and to dignity, recognized by ss. 1 and

4 of the Charter.

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Finally, the Court determined that it was not permissible under Quebec law to assess punitive

damages on a joint and several basis.

2. Federal Court of Appeal

(a) Nautical Data International, Inc. v. C-Map USA Inc., 2013 FCA 63

The appellant (plaintiff) appealed from a summary judgment decision dismissing its actions for

copyright infringement for lack of standing (see summary of Federal Court decision below at

4(a)). The plaintiff produced digital navigation charts from data licensed from the Canadian

Hydrographic Service (CHS), a federal government agency. The defendants admitted to

producing electronic charts incorporating CHS data. The defendants argued that the plaintiff had

no right to claim damages in respect of the CHS works, as copyright in those works vested solely

in the Crown.

The Court allowed the appeal and dismissed the motion for summary judgment. Although the

license agreement between the plaintiff and the Crown referred only to the CHS data, which

might refer only to information which was not subject to copyright, the agreement referred to

Crown copyright in the CHS data. This suggested that the plaintiff and CHS understood the

license as applying to the works, on the basis that the plaintiff’s digital charts could be said to

reproduce the CHS works in substantial part. The evidence on the record was not sufficient to

determine whether or not the plaintiff had an exclusive license to reproduce the CHS works in

digital form, and consequently the defendants had not met their burden to prove there was no

genuine issue for trial.

(b) National Gallery of Canada v. Canadian Artists’ Representation / Le Front Des

Artistes Canadiens, 2013 FCA 64

The applicant, a producer within the meaning of that term under the Status of the Artist Act (the

“SA Act”), brought an application for judicial review of a decision of the Canadian Artists and

Producers Professional Relations Tribunal (the “Tribunal”) finding that the applicant had failed

to bargain in good faith a scale agreement with the respondents in respect of existing artworks.

The respondents, certified by the Tribunal as representative organizations for Canadian visual

artists, had given notice to the applicant to bargain a scale agreement and advised the applicant

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of a list of items which the respondents wished to bargain. The list included minimum fees for

the use of existing artworks (e.g., fees for exhibition and reproduction of such works).

Over a four year period the applicant and the respondents negotiated the issue of the fees for the

use of such works. The applicant then secured a legal opinion on whether it was required to

negotiate copyright-related issues in a scale agreement under the SA Act. The opinion concluded

that a representative organization that is not authorized by a copyright holder cannot deal with

issues related to the copyright because, under section 3 of the Copyright Act, only the copyright

holder can authorize others to do the acts that fall within the rights of copyright. The opinion also

concluded that the SA Act confers on representative organizations the exclusive right to negotiate

with respect to labour relations, but not with respect to copyright-related issues. The applicant

shared the legal opinion with the respondents and then presented to them a revised draft scale

agreement from which all reference to minimum fees had been removed. The applicant also

advised the respondents that it was not prepared to consider the respondents’ position that the

scale agreement include a minimum fee schedule for existing works.

The respondents then filed a complaint with the Tribunal that the applicant had failed to bargain

in good faith. The Tribunal resolved the complaint in favour of the respondents finding that: (1)

the right to use an existing work is a service that the artist who holds copyright may provide to a

producer and that therefore copyright matters may be negotiated in scale agreements; and (2) in

the circumstances of the negotiation over previous four years, the failure of the applicant to

negotiate or discuss matters relating to copyright created a rigid stance resulting in the failure to

conclude an agreement and that therefore the applicant had violated its obligation under section

32 of the SA Act to bargain in good faith. In its decision the Tribunal excluded from the

obligation to negotiate copyright-related matters any copyright represented by copyright

collectives such as SODRAC.

The applicant claimed that the Tribunal erred in declaring that copyright could be the subject of a

scale agreement under the SA Act and in concluding that the applicant had not negotiated in good

faith.

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The Court allowed the application for judicial review and set aside the decision of the Tribunal,

Pelletier, J.A. dissenting.

Per the majority (Noel, J.A. and Trudel, J.A.): the Tribunal has no authority to compel

negotiations in a scale agreement in matters relating to copyright and therefore the applicant’s

refusal to negotiate such matters cannot be attributed to a failure to negotiate in good faith.

Under the SA Act a scale agreement means an agreement “for the provision of artists’ services

and other related matters”. Where a scale agreement relates to commissioned works no copyright

is involved; the agreement involves the provision of artists’ services to produce the

commissioned works. In such circumstances, there is no conflict between the SA Act and the

Copyright Act. Where however there is an attempt to extend a scale agreement to works other

than commissioned works, such a conflict arises. A mandatory royalty under a scale agreement

for the use of a pre-existing work, even a mandatory minimum, restricts the right of the copyright

holder under the Copyright Act to set a royalty rate less than the minimum specified in a scale

agreement.

In extending the SA Act to cover copyright-related matters in pre-existing works the Tribunal

distorted the words in the statute. An assignment of copyright cannot be described as a

“provision of artists’ services” in the definition of scale agreement. An assignment of rights is a

transfer of property, not a provision of a service. The “provision of ... services” has a plain

meaning when read contextually in the SA Act, and in particular with section 6(2)(a). That

section applies the relevant part of the statute to certain producers “that engage one or more

artists to provide an artistic production”. Read in context, a “scale agreement” contemplates the

provision of such services and for compensation for the works thereby created.

Per Pelletier, J.A. (dissenting): whether the “provision of services” includes authorizing others to

do only what the copyright holder has the exclusive right to do is a question of law for the

Tribunal to decide in the course of construing its home statute. In view of Dunsmuir and other

recent jurisprudence of the Supreme Court of Canada, the standard of review is reasonableness.

The Tribunal’s position was that, once the applicant had agreed to negotiate minimum fees, it

could not refuse to continue to do so. This position was not dependent on whether the applicant

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could be compelled to negotiate such fees. The Tribunal’s conclusion on the question of law was

reasonable.

The fact that copyright is property does not preclude a finding that granting another the right to

use that property is not a service. The service is the provision of the right by the artist. The

setting of fees is not one of the matters specifically and exclusively reserved to the artist in the

Copyright Act. The Tribunal’s interpretation of the provision of services was reasonable.

On August 15, 2013 the Supreme Court of Canada granted leave to appeal the decision of the

Federal Court of Appeal (SCC docket 35353). The appeal is tentatively scheduled to be heard

May 14, 2014.

(c) Manitoba v. Access Copyright, 2013 FCA 91

The governments of the Provinces of Manitoba, New Brunswick, Nova Scotia, Prince Edward

Island and Saskatchewan (the Applicants) sought judicial review of the decision of the Copyright

Board of Canada (the “Board”), which held that the Board had jurisdiction to establish a tariff

that would apply to them in respect of the reprographic reproduction of copyrighted works in the

repertoire of the Canadian Copyright Licensing Agency (“Access”). The Board had dismissed

the Applicants’ argument that they are immune from the Copyright Act (the “Act”) pursuant to

section 17 of the Interpretation Act, which provides that “[n]o enactment is binding on Her

Majesty or affects Her Majesty or Her Majesty’s rights or prerogatives in any manner, except as

mentioned or referred to in the enactment”. On judicial review, the Applicants argued the Board

erred in four separate points of law. The Respondent, The Canadian Licensing Agency

(“Access”), argued, inter alia, that any other interpretation of the Act contrary to the Board’s

determination, would result in a breach of Canada’s international obligations under NAFTA,

TRIPS or any other intentional convention ratified and implemented in Canada.

The application was dismissed. The Federal Court of Appeal found that, on a standard of

correctness, the Board understood and applied the proper approach to determine whether section

17 of the Interpretation Act could apply. In addition, the Court found that the references in the

Act to very strict conditions, to tariffs fixed by the Board, to the consent of the copyright owners,

and to the power of the court when the defendant is an “educational institution”, including a

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federal or provincial government department, all pointed to only one logical and plausible

conclusion, namely, that the Crown is bound by the Act. The Court found it unnecessary to

address Access’ argument regarding international agreements and conventions.

(d) Leuthold v. Canadian Broadcasting Association, 2013 FCA 95

The respondent (defendant) brought a motion for security for costs under Rule 416 of the

Federal Courts Rules in an appeal of the award limiting the appellant’s (plaintiff’s) damages to

$19,200 for unauthorized communication to the public of her photograph of the September 11,

2001 attack on the World Trade Center in New York. The appellant was impecunious and asked

the Court to exercise its discretion under Rule 417 to decline to order security.

The Court declined to order security for costs. Although Justice Noël was skeptical that the

appellant would receive anywhere near the recovery she sought, the appeal might lead to an

award that was more favourable to her. Consequently, it could not be said that the appeal was

without merit.

(e) Doris Tremblay v. Orio Canada Inc., 2013 FCA 225

The appellant, Tremblay appealed a summary trial decision of the Federal Court concerning

alleged copyright infringement in a computer program called Service Appointment Monitor

(“SAM”), which Tremblay won in part as the plaintiff and defendant to counterclaim. The

appellant did not challenge the trial judge’s conclusion that the respondent, Orio Canada, had an

implied license to use the modified SAM software owned by the appellant. However, the

appellant argued that the trial judge erred in extending the scope of the implied license beyond

the right to market the modified SAM software to include the right to copy and further modify

the software. The respondent argued that the broad reach to the implied license recognized by the

trial judge was justified by the wording of the unsigned (and therefore ineffective) written

assignment clause that the appellant had included in a tender document provided to the

respondent.

The Court dismissed the appeal. There was no doubt from the unsigned written assignment

clause that the parties intended for any development work on the SAM software done by the

appellant to become the exclusive property of the respondent. The Court stated that it seemed to

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be “exaggerated formalism” to make ineffective an assignment clause that had been written by

the owner of copyright himself, in a case where it had been recognized in court that the owner

had consented to the transfer of ownership, for the simple reason that the assignment was

unsigned. The Court noted that, in the particular circumstances of this case, “the form should not

prevail over substance”. However, the Court declined to amend the trial judge’s decision with

respect to this issue since it had not been raised on appeal by the parties. As for the implied

license to use inferred by the trial judge, the Court saw no error in the trial judge’s decision.

Given the circumstances, the appellant had consented not only to an implied marketing license

for the modified SAM software, but also to further modifications to be made to the software in

order to improve its marketing. The implied license inferred from the conduct of the parties

therefore allowed the respondent to copy the source code of the modified SAM software to be

further modified by the respondent or its designated third parties.

(f) Domenic Pub v. Premium Sports Broadcasting Inc., 2013 FCA 288

The appellant appealed a decision of the Federal Court dismissing its motion pursuant to Rule

399(1) of the Federal Courts Rules (the “Rules”) to set aside a default judgment dated August

26, 2011, which was rendered against the appellant for failure to file a statement of defence. In

its default judgment, the court found that the appellant knowingly infringed the respondent’s

copyright in Ultimate Fighting Championship (UFC) pay-per-view matches and events by

broadcasting them at its venue without the respondent’s authorization, and had ordered $20,000

in damages and costs of $1,500. The appellant argued, inter alia, that it had only learned of the

amended statement of claim nearly two years later, in September 2012.

The Court dismissed the appeal. The Court found that the trial judge’s reasons were clear and

comprehensive, revealed no error warranting intervention in the exercise of her discretion, and in

particular, that there was ample evidence to enable the trial judge to find that the amended

statement of claim had been served in accordance with the Rules.

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3. Other Appellate Decisions

(a) R. v. Strowbridge, 2013 NLCA 57

The appellant applied for judicial interim release and leave to appeal a criminal sentence

including a term of six months’ imprisonment for copyright and trade-mark infringement. The

appellant argued that the sentence did not fit within the appropriate range of sentences, where the

typical disposition of a conviction for copyright or trademark infringement was a fine. The

Crown agreed that most cases resulted in a six month conditional sentence, but none of the

previous cases involved as extensive a prior criminal record as the appellant’s and none of them

were cases in which the crime was committed in breach of an existing probation order.

The Court granted leave to appeal. Where there was no authoritative decision establishing the

need for a prison term or the range of sentence applicable to the circumstances, the appellant

should have the opportunity to make submissions about the appropriate range. The appeal had

sufficient merit that it should not be rendered nugatory by having the custodial detention begin

before it was heard.

(b) Nova Scotia v. Roué, 2013 NSCA 94

The respondents appealed the denial of their motion to convert an application into an action, as

well as the alternative motions to strike pleadings or order particulars. The respondents argued

that the judge below had failed to consider the seriousness of the allegations against them and

had construed the legal issues and mischaracterized the evidence before him.

The Court granted leave to appeal only on the conversion issue, but upheld the decision to deny

the motion. The conversion issue was novel and warranted consideration for that reason.

However, the Court concluded that the judge had correctly set out the applicable law. There was

nothing wrong in either the careful and comprehensive analysis or the result. The decision was

discretionary and, provided the proper factors were considered, an appellate court should

generally be loath to interfere.

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4. Federal Court

(a) Doris Tremblay v. Orio Canada Inc., 2013 FC 109

The plaintiff and defendant to counterclaim (“Tremblay”) brought a motion for summary trial in

a copyright infringement action concerning a computer program called Service Appointment

Monitor (“SAM”) that Tremblay had, under contract, programmed for the defendant and plaintiff

to counterclaim (“Orio Canada”). Tremblay alleged ownership of copyright in the developments

and improvements that were made to the SAM software between April 2006 and June 2009 (the

“modified SAM program”) and alleged that Orio Canada infringed his copyright by allowing the

software to be copied and modified, and by installing, selling, and distributing the program to its

clients. Tremblay sought a declaration to that effect and also sought an order directing Orio

Canada to delete and destroy its copies of the modified SAM program and enjoin it from selling

and installing the software. Orio Canada argued that it was the owner of the modified SAM

program and, by counterclaim, sought summary judgment in its favour and an order dismissing

Tremblay’s motion, among other things. In the alternative, Orio Canada sought an order

declaring that it held a licence to use the modified SAM program and that licence authorized it to

sell and reproduce the software freely in perpetuity.

The Court held that Tremblay was the copyright owner, but that there was no infringement as

Orio Canada had an implied licence from Tremblay authorizing it to use the modified SAM

program. Tremblay, through the work of his employees, was the author of the modified SAM

program. While Tremblay had included an assignment clause in his work tenders to Orio

Canada, the written document containing the clause had not been signed and the Court could

only conclude that Tremblay had not assigned his copyright. The Court noted that the Copyright

Act “requires not only that an assignment of copyright be in writing to be valid, but also that the

writing be signed.” However, the Court did conclude that Tremblay granted an implied licence of

use to Orio Canada, which the Court inferred from the parties’ conduct. The implied licence did

not need to be made in writing. Accordingly, there was no infringement of Tremblay’s copyright

since there was consent to Orio Canada’s use of the modified SAM program. The decision was

appealed (see summary of the decision at 2(a) above).

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(b) The Spangler Candy Company v. 3651410 Canada Inc., 2013 FC 253

The defendants brought a motion under subsection 51(1) of the Federal Courts Rules appealing a

decision of a prothonotary denying their motion to strike the plaintiff’s statement of claim. The

claim arose from the termination of a long-standing contractual relationship under which the first

defendant (Regal) distributed and sold the plaintiff’s candy canes. The plaintiff purported to

terminate the contract; Regal contended this was a breach of the terms of the contract and, to

mitigate their losses, second-sourced the plaintiff’s product from the second defendant. The

defendants brought a motion for dismissal for want of jurisdiction or, in the alternative, for a stay

in favour of a comprehensive action in a provincial court. The prothonotary dismissed this

motion, on the basis that the plaintiff’s statement of claim was entirely based on intellectual

property issues even though some contractual issues might have to be considered.

The Court dismissed the appeal. The plaintiff’s claims related exclusively to trade-mark and

copyright infringement and all of the remedies sought arose under the Trade-marks Act or

Copyright Act. There was no privity of contract between the plaintiff and the second defendant.

An injunction on a national scale would not be available from a provincial court. The fact that

the defendants’ counterclaim was outside the jurisdiction of the Court was not a ground for

excluding the plaintiff’s intellectual property claim.

(c) Planification-Organisation-Publications Systèmes (POPS) Ltée v. 9054-8181 Québec

Inc., 2013 FC 427

The plaintiffs brought an action seeking damages, inter alia, against the defendants for copyright

infringement regarding a business simulation software product and certain of its adaptations. The

defendants brought a counterclaim seeking, amongst other things, expungement of the plaintiffs’

registered copyright in the software and confirmation that they held a perpetual license to use the

software at issue. A central issue before the Court was the interpretation of various alleged

copyright assignments.

The Court dismissed the plaintiffs’ action and allowed the defendants’ counterclaim in part. The

Court found that the plaintiff was the owner of the copyright in the software since, inter alia, the

language in one of the alleged assignments was more consistent with a promotion or distribution

agreement than with an assignment of copyright. However, the Court found that the defendant

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did have a non-revocable licence to use the software, any of its adaptations, and any future

adaptations it developed. As a result, the defendant did not infringe the plaintiffs’ copyright in

the software. The Court also struck a certificate of registration of copyright in respect of an

adaptation of the software registered by the plaintiffs on the grounds that the defendants’ had

rebutted any presumption of the plaintiffs’ ownership in the software.

(d) Pinto v. Bronfman Jewish Education Centre et al., 2013 FC 945

The plaintiff brought an action seeking damages from the defendants for copyright infringement

of his work composing, performing, producing and recording music for TaL AM, a curriculum

for teaching Jewish language, religion, culture and history in elementary schools, developed by

the defendants and others. The defendants agreed that the plaintiff owned the copyright to his

original compositions, but argued the plaintiff gave permission for the use of his music, as part of

the contract for his services.

The Court dismissed the action. The Court found that the plaintiff did provide consent to the use

of his music, granting an implied licence to the defendants, and that the defendants had not

exceeded the scope of this licence. The Court reasoned that an implied licence may be found

when an artistic work was created as part of a freelance contract at the request of the purchaser,

and that in such cases, the freelance contract is construed as including an implied licence for the

purchaser to use the work for the purpose it was created. The Court concluded that where a

licence is granted in exchange for consideration, as was the case before the Court, it cannot be

unilaterally revoked. In the alternative, the Court went on to determine the amount of statutory

damages the plaintiff would have been entitled to had infringement been established, finding that

relevant considerations, including the defendants’ acting in good faith, indicated an award of

damages at the low end of the spectrum: $300 for each of the 58 works, for an award of $17,400.

(e) Distrimedic Inc v. Dispill Inc, 2013 FC 1043

The plaintiff by counterclaim claimed infringements of patent, trade-mark and copyright, in

response to a suit for a declaration of non-infringement. The original suit was subsequently

discontinued, but the counterclaim continued. The claims related to a system for preparing

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customized pill dispenser trays to organize medication according to when it is to be taken. The

copyright claim related solely to the software forms used to generate labels for the trays.

The Court dismissed the copyright infringement claim. The forms did not meet the standard of

originality, because most of the label contents were dictated either by provincial regulations or

by utility. No evidence had been presented that the layout or arrangement of the user interface

was particularly different from what was commonly in use in the relevant time period. In any

case, the original DOS software had been replaced by a Windows version created by a third party

and there was no evidence that anything other than functionality had been reproduced from the

original DOS software. Furthermore, the plaintiff by counterclaim was admittedly not the author

of either work and had failed to prove a valid chain of title for any copyright. The asset purchase

agreement transferring the original business made no reference to any copyright, and there was

no evidence of any other assignment. Moreover, even if there was any valid copyright in the

form, and the plaintiff by counterclaim could establish ownership of it, there was no

infringement by the defendants. The defendants by counterclaim used software created by the

author of the Windows software, who was not a party to the action. The original DOS software

had been abandoned before the main defendant of the counterclaim had been incorporated. If

there was any reproduction of the original form in the current Windows software, it was not a

substantial part and, in any case, none of the defendants had authorized any such reproduction.

(f) Twentieth Century Fox Film Corporation v. Nicholas Hernandez et al., T-1618-13

(Unreported)

The plaintiff brought a motion for default judgment against the defendant, who operated the

websites “Watch The Simpsons Online” and “Watch Family Guy Online”. The plaintiff, owner

of copyright in the television programs “The Simpsons” and “Family Guy”, alleged that the

defendant infringed its copyright by, among other things, copying the programs from television

broadcasts or other media, uploading the unauthorized copies to computer servers,

communicating the programs to the public by telecommunication, and enabling the public to

infringe the plaintiff’s copyright.

The Court granted the motion and awarded the plaintiff $10 million in statutory damages. The

defendant’s actions had been in bad faith and for commercial purposes. Accordingly, the Court

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found that the statutory damages elected by the plaintiff would be insufficient to achieve the goal

of punishment and deterrence and also awarded $500,000 in punitive and exemplary damages,

plus substantial indemnity costs and interest. In addition, the Court ordered an injunction against

any future infringement by the defendant and an order for delivery up of any infringing copies,

documents, materials and equipment. No reasons were issued by the Court.

5. Other Decisions of First Instance

(a) Roué v. Nova Scotia, 2013 NSSC 45

The respondents brought motions under Rules 6.01, 13.03 and 38.10 of the Civil Procedure

Rules to have an application converted into an action or, in the alternative, to have the claim

struck or an order for particulars. The respondents owned the Bluenose II; the applicants,

descendants of the designer of the original Bluenose, claim that the respondents’ restoration of

the Bluenose II infringed copyright or moral rights which they own. The proceeding is on-going,

and the respondents contest the claim on multiple substantive grounds, however this motion was

procedural.

The Court declined to convert the application into an action. Neither an application nor an action

was presumptively favoured. In the particular case, the parties had been aware of the legal

controversy for several years and many of the important witnesses had been identified, so the

parties could be ready for trial in months rather than years. Most of the core factual issues in the

case would likely be addressed by experts. If it was necessary to present viva voce evidence to

adequately assess credibility, this could be accommodated within the application procedure. The

new Application in Court procedure was designed to be flexible and efficient. The respondents

bore the onus to prove that it would not be adequate; they had not met that onus. The Court also

declined to strike the pleadings or order particulars.

(b) Roué v. Nova Scotia, 2013 NSSC 254

The applicants brought three discovery motions: requesting that the respondents produce an

index and description of the documents over which they claimed privilege, requesting a

discovery subpoena for a particular witness, and requesting production of certain contracts, all in

connection with their claim for copyright or moral rights infringement in the restoration of the

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Bluenose II. The applicants argued that the disclosure obligations applicable to actions must be

satisfied in an Application in Court, even though the Rules did not specify how a privilege claim

is to be asserted in that context. They also argued that the witness they sought to examine was a

key employee who was involved in meetings in which instructions were provided to use the

original Bluenose plans in the restoration. Finally, they argued that the respondents had

implicitly conceded that the contracts were relevant documents, since they had referred to them

in their pleadings; they could not be permitted to selectively disclose certain portions of the

contracts without producing the documents.

The Court ordered the respondents to produce a list of the documents over which it claimed

privilege along with a brief description of the subject matter and the basis for the privilege claim.

The Court also ordered production of the contracts. These were relevant documents and the

respondents could not shield them from production merely by claiming that they had admitted all

material facts that could be extracted from them. However the Court declined to issue the

subpoena. This was a discretionary decision and the burden was on the applicants to convince

the Court that it was necessary. At this stage it was not clear that the evidence they sought could

not be obtained by other means, so a subpoena would be premature at that point.

(c) Canada (United States of America) v. Equinix Inc., 2013 ONSC 193

The Attorney General of Canada brought an application under section 15 of the Mutual Legal

Assistance in Criminal Matters Act for an order authorizing the sending of mirror image copies

of 32 computer servers to U.S. prosecutors, in connection with a criminal copyright infringement

and conspiracy charges against Megaupload Ltd. The respondents opposed the order on the

basis that the request was overbroad, given the volume of data involved and the scant evidence

connecting the servers in question to the alleged crimes. The respondents asked for the order to

be denied or, in the alternative, for an order under section 15(2) that the servers be brought

before the court in the form of an independent forensic report as to the contents of the servers.

The Crown indicated that, if such an order was made, counsel would consult to determine

whether it was possible to reach a consensus on how to sort the irrelevant data from the

potentially relevant data.

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The Court issued an order under section 15(2) for the servers to be (metaphorically) brought

before the court. While a broad range of information would potentially be relevant evidence in

the case, and there was no dispute that the search warrant was properly executed, authority to

search a computer did not convey unfettered access to all of the data located on it.

Consequently, the appropriate balancing of the state interest in gathering evidence and the

privacy rights at stake required some refinement of what evidence was to be sent to U.S.

prosecutors.

(d) Delta Hotels v. Backus-Naur, 2013 ONSC 582

The plaintiff brought a motion pursuant to Rule 26.01 of the Ontario Rules of Civil Procedure to

amend its statement of claim, which included allegations pertaining to the ownership of

copyright and other proprietary rights by the plaintiff and the assignment of ownership of

copyright in inventions by the corporate defendant. The defendants claimed that they would be

prejudiced by the amendment and that therefore the amendment should be disallowed. The

defendants also argued, inter alia, that the plaintiff’s claim of equitable ownership of copyright

was an untenable plea and, as such, should be disallowed.

The Court dismissed the plaintiff’s motion. The Court found that the amendment would not

prejudice the defendants because, inter alia, examination for discovery of the plaintiff’s

representative had not yet been conducted, the mediation had not been held nor scheduled, and

the proceedings had not been set down for trial. While the Court accepted that there is no

precedent in Canadian law that addresses equitable ownership of copyright, it does not

necessarily follow that, on the specific facts of any given case, a claim of equitable ownership of

copyright could never be established.

(e) A.G.C. v. Madeleine Rundle c.o.b. NEC Plus Ultra, 2013 ONSC 2747

The plaintiff brought motions to strike the defence, for summary judgment for copyright

infringement and breach of confidence, and for a permanent injunction, all in relation to the

public service Second Language Examinations (SLEs). The defendant had reportedly not shown

any interest in defending the suit after her counsel obtained an order removing them as solicitors

of record.

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The Court granted all relief requested. The affidavit evidence indicated that the defendant had

questioned students as to the content of the tests, including about specific questions. The

defendant’s “practice” tests were virtually identical to the official tests and reproduced the vast

majority of the official test questions. The tests were literary works which satisfied the original

expression standard. The defendant had access to the works, through her students. Indirect

copying, including from memory, infringed the copyright in the work. Where infringement was

established, the onus was on the infringer to show why a permanent injunction should not be

granted, even where there was no proof of damages. The defendant had not satisfied that onus.

(f) Rains v. Molea, 2013 ONSC 5016

The plaintiff commenced an action against the defendant for infringement of copyright in the

plaintiff’s artist works, namely, paintings featuring white crumpled paper in still life form against

a dark background. The plaintiff commenced to create a series of such paintings in 1991 which

he titled “Classical Series”. The series, comprising over 200 works, had met with commercial

success.

The defendant, a Romanian-born artist, immigrated to Canada in 1999. Prior to immigrating to

Canada the defendant painted paintings in an expressionistic style that primarily emphasized

human figuration, particularly the nude female form. In 2000, the defendant began painting

realistic still life works featuring crumpled paper. The plaintiff claimed that the defendant’s

works infringed copyright in 17 of the plaintiff’s works and infringed compilation copyright in

the Classical Series as a whole. The plaintiff claimed a declaration, nominal damages, and

accounting of profits and an injunction.

The Court dismissed the plaintiff’s claim. Each image in the plaintiff’s Classical Series

originated from the plaintiff, was not copied from another work and was the product of the

plaintiff’s skill and judgment. The images are therefore original. The fact that many elements of

the images are not unique to the plaintiff in that he used common place tropes used by painters

for centuries does not render the images less original. The Classical Series is not however a

compilation as defined in the Copyright Act. There is no evidence that the plaintiff exercised skill

and judgment to select a crumpled page image and arrange it with others such that copyright

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subsists in the series as a whole. The gestalt or the feeling of the series is not sufficient for the

series to be protected as a compilation.

Copyright is infringed if a defendant has produced a substantial copy or a colourable imitation of

a plaintiff’s work. The similarities between the plaintiff’s and defendant’s paintings are not

unique to the plaintiff but are common, long-established artistic techniques. While the

similarities represent a substantial part of the respective works they have no originality and do

not enjoy copyright protection. Other than the shape of the crumpled paper, the plaintiff relies on

the comparison of the use of crushed white paper against a dark or earth-tone background on a

lighter flat base with, on occasion, a Mediterranean tile. Although the plaintiff’s paintings are

original works, they are thoroughly conventional employing a practice that has been in place for

at least 200 years. In determining whether similarities between works are sufficiently close to

render one substantially similar to another, similarities that are common place, unoriginal or

consist of general ideas may be disregarded. After disregarding the unoriginal elements in the

plaintiff’s works, all that remained as similarities between the parties’ works was the shapes of

the crumpled paper. The shapes are not however sufficiently similar. They are the result of a

coincidence and randomness, but limited by the original pre-crumpled rectangular shape of the

paper.

Although the evidence shows that the defendant had access to some images in the Classical

Series, the evidence was insufficient to establish direct access to the images allegedly copied.

Furthermore, the evidence was that the defendant had no reference to any of the plaintiff’s

images in creating his works. The defendant painted his works from photographs that he made of

crumpled paper. The defendant furnished copies of the photographic model for each of his art

works at issue. The defendant had therefore established that his works were independently

created from the plaintiff’s works.

If infringement had been found, the Court would have granted declaratory relief, the defendant’s

profits earned from the infringement and an injunction limited to the 17 existing works. There

was no evidence to support even a nominal damage award.

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(g) Spanski Enterprises, Inc. et al. v. IMB+ Records Inc., 2013 ONSC 5382

The defendants brought a motion under section 106 of the Courts of Justice Act to stay the

portion of the action under the Copyright Act until such time as the owners of the copyright in

question were added as parties to the action or delivered their consent to be bound by the

decision in the action. Under paragraph 41.23(2)(c) of the Copyright Act, the plaintiffs had the

onus to prove that it was in the interest of justice that the copyright owner not be added as a

party.

The Court dismissed the motion. The plaintiffs had the authority and, in some cases, the

contractual obligation, to represent the legal rights of the owners. At least one of the owners was

aware of the proceedings and had chosen not to participate. Furthermore, there had been delay in

bringing the motion. Pleadings were closed; affidavits of documents had been served; and

examinations for discovery had been conducted. To add the owners as parties would delay the

proceedings, which were otherwise close to being set down for trial.

(h) Mobin v. Stephens, 2013 ONCJ 53

The respondent father brought a motion for summary determination under Rule 16(12) of the

Family Law Rules that a sum of $175,000 paid in settlement of a copyright infringement claim

was not income for the purposes of the Child Support Guidelines and a corresponding reduction

of his child support obligations.

The Court held that the settlement funds were income for the purpose of the Child Support

Guidelines, whether or not they were considered taxable income. The Court reasoned by

analogy to damage awards for motor vehicle accidents, which were treated as income for child

support purposes, although they were not taxable. The father would be entitled to a deduction

for reasonable expenses incurred to recover the settlement, but the onus to prove those expenses

lay with him.

(i) Oakcraft Homes Inc. v. Ecklund, [2013] O.J. No. 3215 (OSCJ)

The plaintiff is a builder of custom homes and brought an action for copyright infringement in

house plans. The plaintiff alleged that the defendants Ecklund took house plans designed by the

plaintiff to another builder, Toscana, which in turn used those plans to build the Ecklunds a

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home. The defendants Ecklund and Toscana both asserted that there was nothing original in the

plaintiff’s house plans, that they were common plans, that they were unmarked as to ownership

and copyright claims, and that in any event the plaintiff’s house plans were not the ones used by

the defendants. In addition, the defendant Toscana alleged that the plaintiff was not the owner of

the house plans, but rather that the owner was Brent Thompson, the principal, directing mind,

officer and owner of the plaintiff, but not a named party to the action. Toscana also alleged that it

had no knowledge as to the source of the house plans when it received them from the defendants

Ecklund.

The Court held that the plaintiff’s house plans were deserving of copyright protection, that the

defendants infringed the plaintiff’s copyright, and awarded the plaintiff damages in the amount

of $11,600. The Court cited numerous authorities supporting the conclusion that house plans are

subject to copyright protection, so long as the originality requirement is met. The evidence

showed that the plaintiff’s plan was an original artistic work deserving of copyright protection.

The defendant Toscana’s modifications to the plaintiff’s house plans that it received from the

defendants Ecklund were so minor they could not satisfy the test of originality. The Court also

held that the plaintiff was the owner of the house plans and the proper party to bring the action,

since Thompson created the work while employed by the plaintiff as principle and owner. The

plaintiff’s failure to mark the house plans with ownership and copyright claims did not defeat the

right to copyright. In the absence of cogent proof of value of the plaintiff’s house plans, the

Court set damages at $11,600 being the midpoint between the amount claimed by the plaintiff

and the proper value alleged by the defendant Toscana. The defendants Ecklund and the

defendant Toscana were held jointly and severally liable for the damages award since the Court

was unable to determine the respective degree of fault between them.

(j) Pelchat v. Zone 3 Inc., 2013 QCCS 78

The plaintiff brought suit infringement of copyright in a television series. The plaintiff had been

involved in various beauty and fashion-related television programs and series, dating back to

1971. The plaintiff claimed that a series produced by the defendants between 2002 and 2008

infringed his copyright in the “framework” defining his earlier works.

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The Court dismissed the action. The plaintiff had no copyright in the idea underlying his works.

The Court followed the Quebec Court of Appeal decision in Robinson to apply the ordinary

observer standard and rejected expert evidence which it considered unhelpful. The two series

were not even remotely similar, aside from the underlying ideas of beauty and transformation.

The plaintiff’s works had a contest format and a high-glamour setting; the shows were shot in a

studio, with an audience; the shows featured extensive product placement and emphasized the

idea of luxury far more than the transformation itself, which occupied relatively little air-time.

By contrast, the defendants’ series was shot on location, with no audience; product choices were

driven by the preferences of the candidate; and the focus was on the candidate and her reasons

for wanting to undergo a transformation. Furthermore, even if there was any similarity between

the works, the Court rejected the plaintiff’s evidence on access or copying and found that the

defendants’ series was an independent creation.

(k) Biocad Medical Inc. v. Panthera Dentaire Inc., 2013 QCCS 905

The applicants sought an order ancillary to a writ of pre-judgment seizure of allegedly infringing

software, to permit certain experts to examine the defendant’s computer systems, to assist bailiffs

in identifying the software in question and to make copies of it.

The Court granted the motion. The suggested procedure was reasonable, in that it would

preserve evidence but would not deprive the defendant of possession of its computers before the

application for the interlocutory injunction could be heard.

(l) Boire v. Lefebvre, 2013 QCCQ 921

The plaintiff, a sculptor, sought $1,325 in damages for the use of a photograph of his sculpture

by the owner of an art gallery in which the work was being exhibited on consignment. The

defendant had included a photograph of the gallery, in which the sculpture was visible, in a

promotional document. The defendant claimed this was part of the promotion which she

performed on behalf of, and to the benefit of, all the artists whose work was offered for sale

through the gallery. The defendant had obtained the plaintiff’s consent to include images of the

plaintiff’s work on the gallery’s web site; she believed that consent extended to the promotional

document at issue.

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The Court found for the plaintiff, but reduced the damage award to $500. The promotional

document was a distinct use of the work from the web site and the uncontested evidence was that

the defendant did not have the plaintiff’s authorization for that use. Although the decision does

not mention the plaintiff ever electing to claim statutory damages, the Court assessed the

damages by reference to the range of statutory damages for commercial infringement in

subsection 38.1(a) of the Copyright Act. The Court noted that this was unquestionably a

commercial use, but offered no other explanation for the award.

(m) Tency Music SAS v. Lefrançois, 2013 QCCS 1947

The plaintiff, a French vendor of karaoke recordings, sued the defendant for copyright

infringement. The plaintiff operated a web site through which it offered karaoke recordings for

personal use. The defendant downloaded at least 987 separate recordings from this web site and

then offered derivative works for sale through his own website, included in a catalog of more

than 8,000 titles purchased from different sources. The plaintiff sought statutory damages of

$493,000, plus punitive damages.

The court found for the plaintiff, but awarded reduced statutory damages of $12,000. The Court

concluded that, prior to being contacted by the plaintiff, the defendant had mistakenly but in

good faith believed that his transformational use of the works was not infringing. The damages

sought by the plaintiff would be disproportionate given the defendant’s total income from the

complete catalog was only on the order of $2,000 per month and the plaintiff’s work consisted

only of 12% of the total. Moreover, the plaintiff’s insistence that the defendant completely shut

down his web site went beyond any remedy that the plaintiff was entitled to by law, justifying a

defence of the claim. However, the defendant had continued to make commercial use of the

plaintiff’s work after he could no longer reasonably claim to have no cause to suspect that his use

of the works was infringing. The Court considered damages of $100 for each of the

approximately 120 works downloaded after the defendant had notice of the claim to be equitable

under the circumstances.

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(n) Isle-Principia (USA) Inc. v. Guimond, 2013 QCCS 3730

This case involved two related actions by the producer and the author and director of a film, in

which the producer claimed that a licensing contract was valid and binding, and which the author

considered rescinded. The author had multiple claims involving different areas of law including

the Charter, constitutional law and civil law. The author challenged the creation of the film,

including images used, the display of his name in the credits, and the producer’s lack of

authorization to use the author’s personal photos.

The Court allowed the producer’s motion to institute proceedings, declaring the licensing

contract valid and binding. The Court determined that when an author assigns copyright by way

of a licence, which was the case here, the licence replaces the Copyright Act and is subject to the

general rules of contract interpretation.

The film in large part respected the parameters of the licensing contract. The Court ordered the

producer to remove unauthorized images from the film and the author’s name from the credits of

the film and to pay damages to the author. To succeed at his argument of unauthorized images,

the author was required to show that the producer had used his work outside of the licensing

contract or, within the parameters of the licensing contract, that the producer perverted the

author’s work by disrespecting his moral rights. The Court emphasized that although the author

assigned the copyright in the licensing contract, he did not waive his moral rights.

(o) Bell Media Inc. v. Société du Droit de Reproduction des Auteurs Compositeurs et

Editeurs au Canada, 2013 QCCS 5203

This was a motion by the defendant to dismiss the plaintiff’s action pursuant to section 165 of

the Code of Civil Procedure of Québec. The defendant had already engaged the Copyright Board

of Canada with the same questions about the Copyright Act as the plaintiff raised in the Superior

Court. At issue was a royalty agreement, in which the plaintiff was to pay royalties to the

defendant for broadcasting the defendant’s musical works. The Board determined that for the

period of 2008 to 2012 the plaintiff was to pay a certain percentage of royalties to the defendant.

The plaintiff is appealing this decision to the Federal Court of Appeal.

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The plaintiff and defendant are attempting to negotiate a licence for a new period (2012- 2016).

According to the plaintiff, there is no obligation to pay royalties to the defendant for this period

due to new exemptions in the Copyright Act which have been in force since November 2012.

The defendant applied to the Board to set the royalties for the new period, and the plaintiff

requested that the Board suspend the motion until the Federal Court of Appeal issued its decision

on the previous period. The plaintiff also applied to the Superior Court for a declaratory

judgment on the period of 2012 to 2016.

The defendant’s motion was allowed. The Court acknowledged the Superior Court’s jurisdiction

to interpret the Copyright Act. However, the Court decided that it was more appropriate and cost

efficient to allow the procedure before the Board to continue.

(p) Gestion Reper Inc. v. Brassard, 2013 QCCS 5453

The plaintiffs, creditors in a bankruptcy, sought an order that a piece of software and related IP

formed part of the estate and damages. The plaintiffs alleged that the defendant, a co-founder of

the bankrupt company, had engaged a third party to create an unauthorized derivative of the

company’s software in order to continue using it after the bankruptcy. The defendant argued that

the new software was not completed until after the bankruptcy and denied that it was a derivative

of the original work.

The Court found for the plaintiffs; it declared any conveyance of the software or related IP to be

invalid and found the defendant personally liable for damages. The project to create the new

software began long before the bankruptcy and the Court did not accept the defendant’s evidence

of independent creation. Expert evidence indicated that the “new” software was highly similar to

the older software. The evidence did not support a conclusion that the “new” work was a

wholly-original creation, distinct from the older work. The Court found that the purported bill of

sale for the new software was a fraudulent attempt to deprive the creditors of value to which they

were entitled.

(q) Stoyanova v. Disques Mile End, 2013 QCCS 5631

The plaintiff moved, under Articles 54.1 and 165.4 of the Code of Civil Procedure, to strike the

defence against a claim for, among other things, infringement of copyright in song lyrics and a

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vocal performance for being clearly unfounded, frivolous, vexatious and dilatory or made in bad

faith. One of the defendants was another artist with whom the plaintiff had been romantically

involved. The plaintiff alleged that the defendant included part of a recording of her original

song, as well as a sample from an unauthorized intimate recording of the two of them, in a

musical recording commercially released by the co-defendant record company. The defendants

argued the commercial release of the song was authorized, and relied, in part on an email

exchange discussing how the plaintiff should be credited on the record.

The Court declined to strike the defence. Taking the defendants’ evidence at its highest, there

was a reasonable prospect that an implied license to use the plaintiff’s song might have existed.

Moreover, even if there was no authorization, the defendants’ denial of any damages to the

plaintiff was not unreasonable, on the record. There was no indication of bad faith or

blameworthy conduct on the part of the defendants in defending the claim.

(r) Éditions Québec Amérique Inc. v. Druide Informatique Inc., 2013 QCCS 5693

The defendant brought a motion to remove from the Court file an expert report produced by the

plaintiff. The originating litigation involved the plaintiff requesting an injunction against the

defendant, who claimed damages after the alleged illegal use of illustrations belonging to the

plaintiff in the software program Antidote created by the defendant. In his report, the expert

described the editor’s obligations by referring to international conventions and the Copyright

Act, namely, the requirement of written authorization to use illustrations and photographs created

by others. The plaintiff stated its preference that the report be entirely removed rather than

partially, and requested the opportunity to produce a new report in the future notwithstanding the

removal of the report in question.

The defendant’s motion was allowed and the expert’s report was removed from the litigation file.

The Court found that only two short phrases in the report corresponded with the document’s

stated mandate. The Court confirmed that this decision must not harm the plaintiff’s rights to put

forward evidence in relation to its claim.

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(s) Chélin v. Girouard, 2013 QCCQ 8742

The plaintiff claimed damages in the amount of $6,560.77 for unauthorized use of a photograph

of her on a website. The plaintiff was one of four co-founders of a municipal political party in

Montreal. After the photograph was taken and posted to the party’s website, the plaintiff

resigned from the party and requested that the photograph be removed. The party did not

remove the photograph, but did add a note stating that the plaintiff had resigned her position.

The plaintiff then claimed to have purchased the copyright in the photograph from the

photographer and demanded compensation.

The court dismissed the action. The plaintiff had not proven title to the copyright in the

photograph. The purported assignment to the plaintiff was invalid because the photographer was

not the owner of the copyright at the time. The original photograph was taken on behalf of a

newspaper, which presumptively owned the copyright. In any event, even if the plaintiff could

establish ownership of the copyright, the Court concluded that she had suffered no damages.

(t) (AOM) NA Inc. et al. v. Reveal Group, 2013 ONSC 8014

The defendant brought a motion to strike certain paragraphs from the statement of claim or

alternatively a motion for particulars. The plaintiffs had brought an action for, inter alia, for

breach of copyright, alleging that the defendant had copied its software and method related to the

management of processing centres and incoming contact centres. The defendant claimed that the

pleading for breach of copyright was deficient because the plaintiff failed to plead material facts

permitting it to assert a claim of copyright infringement under the Copyright Act.

The Court granted the motion to strike the claim for copyright infringement with leave to amend,

but dismissed the balance of the motion on the allegations not relating to copyright as the

defendant had sufficient particulars to plead. The Court agreed with the defendant that the chain

of title and the particulars of the “grant in writing” as stated in section 41.23 of the Copyright

Act, must be pled because they are a constituent part of the statutory right of action. The Court

identified that the pleading was vague about what was subject to copyright and what was alleged

to have been the breach of copyright as copyright cannot attach to an idea such as a method or to

what a computer program does. The Court also held that it was not clear from the pleading

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whether one of the plaintiffs had a “right, title or interest” in specific copyright pursuant to an

“assignment or grant in writing from the owner” as required by section 41.23 of the Copyright

Act and whether any such assignment is valid under section 13(4).

6. Copyright Board

(a) Society For Reproduction Rights Of Authors, Composers And Publishers In

Canada v. Canadian Broadcasting Corporation, Copyright Board of Canada,

January 16, 2013

The collective, SODRAC, representing the reproduction rights of authors, composers and music

publishers in Canada, brought an application before the Copyright Board for an interim license

for the use of its repertoire by the Canadian Broadcasting Corporation/Société Radio-Canada

(CBC/SRC). The request by SODRAC was for the Board to apply the rates recently established

for the 2008-2012 licence period on an interim basis pending the Board’s final decision

concerning SODRAC’s licence application for the 2012-2016 licence period. In addition,

SODRAC also suggested an additional interim royalty of $1 per month for activities related to

CBC/SRC’s Explora channel, which was not part of the 2008-2012 licence but was part of a

prior interim licence application by SODRAC. SODRAC argued that the 2008-2012 licence

represented the status quo.

CBC/SRC argued that the 2008-2012 licence did not represent the status quo for a number of

reasons: (1) the 2008-2012 licence imposed a significant retroactive increase and that faced with

financial constraints, CBC/SRC was in the process of reviewing and adjusting its operations; (2)

that copyright case law in Canada had evolved, noting the recent decisions of the Supreme Court

of Canada; and (3) the coming into force of the Copyright Modernization Act, which introduced

new exceptions. CBC/SRC claimed that only four of its activities would result in royalties

payable to SODRAC going forward: (1) the sale of physical or digital copies of a program; (2)

the sale or licensing of a program; (3) archival copies; and (4) synchronization copies. With

respect to synchronization, CBC/SRC noted that it intended to negotiate transactional licences

going forward, rather than obtain a blanket licence.

The Board set the interim royalties for the sale or licensing of programs at the rates established in

the 2008-2012 licence, which CBC/SRC had consented to. The Board also maintained the

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nominal $1 per month interim royalty for the Explora channel activities. With respect to

CBC/SRC’s incidental radio, television and Internet reproduction activities and synchronization

activities, the Board disagreed with CBC/SRC’s claim that the 2008-2012 licence did not

represent the status quo. The Board noted that CBC/SRC’s arguments on the impact of recent

legislative and jurisprudential changes and its ability to rely on certain new exceptions or rights,

were best considered at the full hearing and not at the interim stage. The Board held that the

2008-2012 licence rates were to continue on an interim basis for incidental reproductions.

Finally, the Board addressed synchronization reproductions and the CBC/SRC’s claim that its

intention was to negotiate transactional licences going forward. The Board noted that “[t]he fact

that CBC intends to modify its operations in no way guarantees that this is indeed what will

happen.” There was no evidence before the Board that would have allowed it to assess the extent

and impact of CBC/SRC’s potential changes on its use of SODRAC’s repertoire. SODRAC

sought maintenance of the status quo, which was a lump-sum synchronization licence. However,

the Board had previously expressed concerns with respect to lump-sum synchronization licences

and had also previously recognized the suitability of transactional licensing for music use in

television programs. To balance these concerns and the interests of the parties on an interim

basis, the Board extended the existing lump-sum synchronization licence but applied a 20 per

cent discount. The Board noted that such a solution communicated the Board’s “firm intention to

consider, if not encourage, transactional dealings in the relevant rights”, among the several

advantages of the Board’s adopted approach.

(b) Statement Of Royalties To Be Collected By Access Copyright For The Reprographic

Reproduction, In Canada, Of Works In Its Repertoire (Education Institutions –

2005-2009), Copyright Board of Canada (Redetermination), January 18, 2013

The Copyright Board of Canada (the “Board”) redetermined the royalties pursuant to the Access

Copyright Elementary and Secondary School Tariff, 2005-2009, which the Board previously set

at $5.16 per full-time equivalent (“FTE”) student on June 26, 2009. On July 23, 2010, the

Federal Court of Appeal remitted the decision to the Board to determine the meaning of the

words “in a medium that is appropriate for the purpose” as found in subsection 29.4(3) (the

“carve-out” provision) of the Copyright Act (the “Act”) and the assess whether copies made for

the purpose of examinations came within the meaning of these words (Alberta (Education v.

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Access Copyright, 2010 FCA 198). The Canadian Copyright Licensing Agency (“Access”)

argued that if it offers a licence to copy a work, the work is commercially available in an

appropriate medium. The Objectors argued that the carve-out provision only applied to a work

already in a physical form the teacher would use to administer a test or examination (e.g.,

standardized tests that are sold to educational institutions) and that whatever an institution needs

must be available in the marketplace exactly as it needs it for examinations if the carve-out is to

apply.

In addition, on July 12, 2012, the Supreme Court of Canada held that the Board had erred in its

application of the principle of fair dealing to certain of the copies at issue, namely “Category 4

copies” (Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012

SCC 37 (“Access (SCC)”)).

Following Access (SCC) on September 19, 2012 the Board ruled that the Category 4 copies

constitute fair dealing for an allowable purpose and as such, are non-compensable, therefore

requiring a reduction in the FTE rate. After omitting the Category 4 copies, the Board, in its

redetermination, reduced the FTE rate from $5.16 to $4.81. On the issue of subsection 29.4(3),

the Board held that if the tariff authorizes an institution to copy a work onto a medium that will

be used to administer a test or examination, the work is available “in a medium that is

appropriate for the purpose” of that test or examination, and therefore, the work need not be

available in the marketplace in a format exactly as required for an examination for the carve-out

to apply as had been argued by the objectors. As a result of its redeterminations, the Board held

that licensees who complied with the tariff certified on June 27, 2009 overpaid Access by 31.5

cents per FTE student in 2005 to 2008 and by 35 cents per FTE student in 2009.

(c) Statement Of Royalties To Be Collected By Access Copyright For The Reprographic

Reproduction, In Canada, Of Works In Its Repertoire (Educational Institutions –

2010-2015), Copyright Board of Canada, May 29, 2013

The Canadian Copyright Licensing Agency (“Access”) applied to the Copyright Board of

Canada (the “Board”) for an interim tariff that would continue the Access Copyright Elementary

and Secondary School Tariff, 2005-2009 (the “K-12 Tariff”), certified in 2013, from January 1,

2013 until the final tariffs are certified for 2010 to 2015 (the “Interim Tariff”). Access sought the

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Interim Tariff to counteract the objectors’ decision to stop paying royalties under the K-12 Tariff

as a result of recent changes to the Copyright Act (the “Act”), recent decisions of the Supreme

Court of Canada, and because compensable copies were being licensed through other channels.

The objectors opposed the application, arguing that the K-12 Tariff continued to operate on an

interim basis until the Board certified the final tariff for the relevant period.

The Board allowed the application. The Board found that the only reason to adopt a new interim

tariff was as a result of recent amendments to section 29.4 of the Act, which provided that

examination copies that were once compensable by the sole reason that Access offered a licence,

no longer attracted royalties. The Board reasoned that the record of the proceedings that led to

the K-12 Tariff showed that approximately 15 cents of the rate of $4.81 was attributable to such

examination copies and that since Access proposed to cease collecting those 15 cents pursuant to

its Interim Tariff, that this was precisely the sort of change in status quo that ought to be

reflected in an interim tariff.

(d) Statement Of Royalties To Be Collected For The Retransmission Of Distant

Television And Radio Signals For The Years 2009 to 2013, Copyright Board of

Canada, November 29, 2013

A group of collectives filed proposed tariffs for the retransmission of television signals under

section 71(1) of the Copyright Act, covering the period from 2009 to 2013. Prior to finalizing

this tariff, the retransmitters had paid interim royalties by agreement with the collectives. The

allocation of these royalties was subject to adjustment, based on the allocation formula certified

in the final tariff. The main substantive issue for this decision was whether interest should be

paid on these allocation adjustments.

The Board certified the tariff and imposed interest obligations based on the Bank of Canada’s

published prime rate. A delay in collecting tariffs entailed an opportunity cost for both the

collectives and their members. This was a loss that should be compensated through interest.

However there was no basis to increase the interest rate above the Bank rate; higher interest

might encourage a user to pay royalties promptly but would be unlikely to affect reallocations

between collectives who were subject to trust obligations to their members and who had less

incentive to delay payment since they were required to invest their reserves conservatively.

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(e) Statement of Royalties to be Collected by ERCC from Educational Institutions, in

Canada, for the Reproduction and Performance of Works or Other Subject-Matters

Communicated to the Public by Telecommunication for the Years 2012 to 2016,

Copyright Board of Canada, December 19, 2013

The Educational Rights Collective of Canada (“ERCC”) applied to the Copyright Board of

Canada (the “Board”) to vary its Educational Rights Tariff, 2012-2016, certified on December

24, 2011, to eliminate the years 2014 to 2016 from the current certified tariff such that the tariff

ends on December 31, 2013. The ERCC collects royalties for radio and television programs

within its repertoire used and copied by educational institutions. The ERCC’s application came

as a consequence of the ERCC’s board of directors’ decision to dissolve the ERCC, as the cost of

receiving royalties had been and was expected to continue to be higher than amounts received.

The ERCC required the variation to begin arrangements with debtors and creditors.

The Board granted the application. The Board agreed with the ERCC’s reasoning, and found that

from a practical point of view, the variation would not prejudice education institutions, who

would now be entitled to make the relevant protected uses for free, nor rights holders, since there

was not, and would never be, anything to distribute among them.

(f) Interim Tariff For The Retransmission Of Distant Television And Radio Signals,

2014-2018, Copyright Board of Canada, December 19, 2013

Various collective societies and objectors sought an extension from the Copyright Board of

Canada (the “Board”), on an interim basis, of the application of the Television Retransmission

Tariff, 2009-2013 and of the Radio Retransmission Tariff, 2009-2013.

The Board granted the application. The Board did not provide a detailed analysis in its decision.

(g) Tariff of Levies to be Collected by CPCC in 2012, 2013 and 2014 on the Sale of

Blank Audio Recording Media, in Canada, in Respect of the Reproduction for

Private Use of Musical Works Embodied in Sound Recordings, of Performer’s

Performances of Such Works Or of Sound Recordings in Which Such Works and

Performances are Embodied (Private Copying 2012, 2013 and 2014), Copyright

Board of Canada, August 30, 2013

This decision concerned the certification of the private copying tariff filed by the Canadian

Private Copying Collective (“CPCC”). CDs and microSD cards were the media in question.

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The case raised a number of issues as a result of the declining use of CDs, as well as regulations

that came into effect excluding microSD cards from the definition of “audio recording medium”

in section 79 of the Copyright Act. The Board divided the proceeding into two phases and this

decision related to Phase I. The issues considered by the Board included: whether a CD is still

an “audio recording medium”; if so, what should be the levy on blank CDs; whether a microSD

card is an “audio recording medium” (for the time period prior to the regulations coming into

force); and if so, whether the circumstances were such that it would not be fair and reasonable to

set a tariff on microSD cards.

The Board concluded that CDs continue to be an “audio recording medium”. The issue arose

because the definition of “audio recording medium” in section 79 of the Copyright Act includes a

threshold requirement, namely that the recording medium “is of a kind ordinarily used by

individual consumers” for the purpose of reproducing sound recordings. The Board concluded

that “blank CDs will continue to meet the threshold of “ordinary use” until the tariff ends with

the year 2014”. The Board noted that in “2011-2012, Canadians copied 373.5 million music

tracks onto 14.3 million CDs”. The Board also noted that these numbers will fall, but that even

if they were to fall by 70% during the tariff, the threshold requirement would still be met.

In considering the levy to be set, the Board noted that it had used a particular model

intermittently since 1999 in determining the levy. The Board went on to conclude that when “a

technology reaches the end of its lifecycle, the information that can be obtained, especially from

surveys, will tend to be sufficiently unstable to become unreliable”. The Board held that the use

of blank CDs is in decline and “will almost certainly have reached the end of its technology

lifecycle by the end of 2014”. As a result, the Board decided that it would no longer use the

particular model in question. The Board referred to evidence relating to foreign rates and noted

that it “will continue its practice of reviewing foreign rates with caution”. The Board opted to

continue the existing levy of $0.29 per blank CD.

On the issue of whether a microSD card fell within the definition of “audio recording medium”,

the Board concluded on the record before it that a microSD card fell within the definition (in

Phase I only CPCC provided evidence on microSD cards; the objectors were to provide their

evidence on microSD cards in Phase II). As a result, the Board concluded that barring

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exceptional circumstances, and any evidence that might be filed in Phase II, “CPCC would be

entitled to royalties on microSD cards”. However, in certifying a tariff the Board “shall satisfy

itself that the levies are fair and equitable” (as per the wording in subsection 83(9) of the

Copyright Act). The Board concluded that exceptional circumstances existed and that “any tariff

we set would be, under these very special circumstances, manifestly unfair and inequitable”. As

a result, the Board declined to certify a rate for microSD cards. The exceptional circumstances

referred to by the Board included the following. MicroSD cards had not previously ever been

the subject of a private copying levy and after October 18, 2012, because of the regulations noted

above, could not be subject to a levy. Any levy certified would only be for the period January 1

to October 17, 2012 (a period of less than 10 months). The cost to the parties of creating the

additional record necessary to decide whether a microSD card is an “audio recording medium” in

Phase II of the proceedings would be significant. In addition, the royalties generated “would

most likely be relatively modest”. Further the “time, effort and money associated with creating

reporting systems, reporting, auditing and anything else that may be required to comply with the

tariff and to assess such compliance would be nonrecoupable”. The Board also noted that the

tariff would be “short-lived and totally retroactive”.

(h) Statement Of Royalties To Be Collected By SOCAN For The Public Performance

Or The Communication To The Public By Telecommunication, In Canada, Of

Musical Or Dramatico-Musical Works (Tariff No. 24 – Ringtones (2003-2005),

Ringtones and Ringbacks (2006-2013), Copyright Board of Canada, January 18,

2013

This was an application to the Board to vary, and in effect, to repeal, SOCAN’s Tariff 24 relating

to ringtones for the years 2003 to 2005 and 2006 to 2013.

The basis for the application was the Supreme Court of Canada’s decisions in Entertainment

Software Association v. Society of Composers, Authors and Music Publishers of Canada and in

Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada

which, according to the Board, “stand for the proposition that the Internet delivery of a

permanent copy does not involve the communication right”.

Although the Board made a preliminary determination that the above-noted Supreme Court of

Canada decisions constituted a material change in circumstances within the meaning of Section

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66.52 of the Copyright Act (the section permitting an application to vary), the Board denied the

application to vary Tariff 24 for the years 2003 to 2005. It also denied the application to vary the

2006 to 2013 Tariff for the period from January 1, 2006 to November 6, 2012. The Board

concluded that it would consider in due course the application to vary the 2006 to 2013 Tariff

from November 7, 2012 (the date amendments to the Copyright Act came into force dealing with

the making available right), and invited the parties to apply for a decision making interim the

certified 2006 to 2013 Tariff as of November 7, 2012.

With respect to whether the Board’s power to vary a tariff includes the power to rescind or repeal

its initial decision, the Board concluded that the “power to vary may include the power to

substitute”, but that it does not have the power to rescind or repeal tariffs already certified.

The Board also concluded that, based on the wording of the tariffs, the application would achieve

nothing. The Board stated that the wording of the tariff is such that royalties are payable only if

a SOCAN licence is required and if “the transmission of a ringtone does not trigger a protected

use of the SOCAN repertoire, no SOCAN license is required; the applicants need not comply

with the tariff”.

The Board also found that the application was really about “whether the applicants are entitled to

a refund for the past and whether SOCAN can invoke the 2006-2013 tariff to get paid for the

future”. It was of the view that this was an enforcement issue and as such, outside the power of

the Board.

The Board was also of the opinion that a court rather than the Board, was the best forum to deal

with the issues raised.

(i) Statement Of Royalties To Be Collected By SODRAC For The Reproduction, In

Canada, Of Musical Works Embodied Into Cinematographic Works For The

Purposes Of Distribution Of Copies Of The Cinematographic Works For Private

Use Or Of Theatrical Exhibition For The Years 2009 To 2012 (SODRAC Tariff No.

5), Copyright Board of Canada, July 5, 2013

This decision involves the redetermination by the Board of the tariff for reproducing music on

DVDs for private use under SODRAC’s Tariff 5 for the years 2009-2012. The Board had

previously certified the tariff and then, subsequently, as a result of an application by the

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Association of Film Distributors and Exporters (“CAFDE”), the Board suspended the application

of the tariff on the basis that: its earlier decision contained an error that the Board had the power

to correct; and the decision was rendered in breach of procedural fairness with the result that the

tariff was null and void. As a result, the tariff for reproducing music on DVDs for private use

had to be redetermined (theatrical copies were not in issue).

In setting the tariff, the Board had to choose between two competing proposals, one put forward

by SODRAC and the other put forward by CAFDE, and this was the focus of the decision.

SODRAC requested that the distributors targeted in Tariff 5 pay the same royalties that had

already been certified for CBC. The CBC rates were cents-per-minute, per-copy rates, and

differentiated between feature music and background music. The rates proposed by CAFDE

were cents-per-copy, and did not distinguish between feature music and background music. In

addition, the rates proposed by CAFDE were much lower. Both proposals included tiered rates.

The Board held that the CAFDE proposal was “unreasonably low and the proposal is slipshod”.

The Board held that the CBC rate schedule was prima facie fair since the Board had already

certified it and that it was fair to “import the CBC rate schedule into SODRAC Tariff 5”.

However, in order to accommodate CAFDE as a result of certain issues it raised, the Board

decided to provide distributors with an option, which could be exercised once a year, in advance,

to either be bound by the CBC rate schedule, or alternatively, a tiered rate schedule with a single

rate (CAFDE had been proposing a single rate). The Board then went on to develop a tiered rate

schedule containing a single rate based on the rates in the CBC schedule. An application for

judicial review of the Board’s decision was filed on August 6, 2013 by the Canadian Association

of Film Distributors & Exporters (Court File No. A-265-13).

INDUSTRIAL DESIGNS

1. Federal Court

(a) Zero Spill Systems (Int’l) Inc. v. 614248 Alberta Ltd. (Lea-Der Coatings), 2013 FC

616

The plaintiffs brought an action for infringement of a number of patents and an industrial design

registration, all for products related to oil field fluid containment. With respect to the industrial

design, the design at issue was for a fluid catchment tray or line pipe tray that would capture

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escaping fluid in a tray cavity located beneath supported sections of drill pipe as they were

disconnected on the ground (the “793 Design”). In addition to the allegations of patent

infringement made against the various defendants, the plaintiff alleged that the defendant Bill

Heide and his companies (the “Heide Defendants”) had infringed the 793 Design by selling a

product that was substantially similar in appearance. The Heide Defendants were businesses in

the plastics industry selling competing products, which they alleged did not infringe the

plaintiff’s patents or the 793 Design.

The Court dismissed the action and held that one of the patents at issue was invalid. With respect

to the allegations concerning the 793 Design, the Court found that the plaintiff’s industrial design

had not been infringed. While the Heide Defendants’ competing pipe tray product bore a close

resemblance to the 793 Design, the common features were all fundamentally functional. None of

the distinctive non-functional features of the 793 Design had been copied.

(b) Bodum USA, Inc. v. Trudeau Corporation (1889) Inc., 2013 FC 128

The defendant in an unsuccessful Industrial Design infringement suit sought a costs award under

Rule 400 of the Federal Courts Rules. The defendant sought a lump sum of $250,000,

representing 50% of its costs, plus disbursements of slightly over $40,000. The plaintiff argued

this amount was disproportionate and that costs should be assessed based on Column III of Tariff

B of the Rules.

The Court awarded a lump sum of $90,000, inclusive of disbursements and taxes. The Court

considered that it was bound by a previous decision in the case that the defendant’s settlement

offer satisfied the requirements of Rule 420. The plaintiff did not formally abandon its unfair

competition argument until the last day of the trial, so the defendant could not be faulted for

preparing to respond to that argument. However, the case was not particularly long or complex

and the fees claimed by the defendant were excessive.