The year in review for Canadian copyright law

The 'notice and notice' provisions of the Copyright Modernisation Act have now come into force (SC 2012, c 20 Section 47 was brought into force by Statutory Instrument 2014-58). The provisions allow a copyright owner to provide an internet service provider (ISP) with a notice of alleged copyright infringement and to require the ISP to forward it to the subscriber. They also require the ISP to maintain its records relating to the subscriber for a certain period so that the rights holder may seek to obtain the information for the purpose of litigation.

Court decisions
Disclosure of ISP subscriber identities
In Voltage Pictures LLC v John Doe (2014 FC 161) the Federal Court granted Voltage Pictures LLC a Norwich order compelling a third-party ISP (TekSavvy Solutions Inc) to disclose the identities of approximately 2,000 of its subscribers whom Voltage had a bone fide reason to believe may have engaged in peer-to-peer file sharing of its copyrighted films. The court was concerned about the potential for such orders to be abused and for this reason attempted to introduce some safeguards. First, the court required Voltage to pay TekSavvy’s reasonable costs to comply with the order. Second, the court required that any correspondence to be sent by Voltage to these subscribers be reviewed and approved by the court, and make clear that there has been no finding of copyright infringement by subscribers as yet.

Threshold of originality for protection
Copyright does not protect ideas or concepts. Rather, it protects 'original' works, which may be expressions of ideas or concepts. To qualify as an original work, the work must be created through an exercise of non-mechanical skill and judgement. A review of 2014 case law shows that disputes continue to arise over the application of these fundamental principles of copyright.

For example, in Denturist Group of Ontario v Denturist Assn of Canada ( 2014 FC 989) the parties disagreed as to whether copyright subsisted in five-digit numerical procedure codes used to identify denturist services to insurance companies. The Federal Court concluded that these particular codes served a functional purpose and lacked sufficient originality to attract copyright protection. Similarly, in J(I) v J (MA) (2014 BCSC 89) the British Columbia Supreme Court denied copyright protection to a business solution or system. On the other hand, in Geophysical Services Inc v Canada-Nova Scotia Offshore Petroleum Board (2014 FC 450) the Federal Court concluded that copyright protection was available for a work product relates to data from seismic surveys.

Technological neutrality
In 2012, in the course of rendering its 'pentalogy' of copyright decisions, the Supreme Court enunciated what many consider a new principle of statutory interpretation for copyright law in Canada – namely, 'technological neutrality' (Entertainment Software Association v Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34). In the absence of evidence of a contrary parliamentary intention, the Copyright Act should be interpreted with technological and media neutrality in mind. For example, it may be argued that, in the absence of evidence of a contrary parliamentary intention, the act should be interpreted so as to avoid imposing different royalties according to different methods (real world versus telecommunication) of delivery of a protected work.

The application of these principles is not always straightforward. In Canadian Broadcasting Corporation v SODRAC 2003 Inc (2014 FCA 84) the Federal Court of Appeal was asked to reconsider (in light of this new principle of statutory interpretation) earlier case law from the Supreme Court (Bishop v Stevens, [1990] 2 SCR 467) which determined that ephemeral copies of a musical work made by broadcasters during production required the payment of royalties. The Canadian Broadcasting Corporation argued that under this principle of interpretation, royalties should not be imposed in relation to ephemeral musical works created purely as part of the technology used by producers and broadcasters. The Court of Appeal, while noting the challenges associated with application of technological neutrality, affirmed the Copyright Board’s decision that ephemeral copies continue to attract royalties. Leave to appeal to the Supreme Court of Canada has been granted (2014 CarswellNat 2092).

Fair dealing
The defence of fair dealing has undergone something of a transformation since the Supreme Court decision in CCH Canadian Ltd v Law Society of Upper Canada (CCH Canadian Ltd v Law Society of Upper Canada 2004 SCC 13), which described the defence as a 'user right'. Ever since, users have attempted to assert an increasingly broad scope of rights. At the same time, commercial entities which use protected works to provide goods and services to customers (who may then engage in research or other protected purposes with the work) have attempted to avoid payments to rights holders by invoking the defence.

For example, in 2012 the Supreme Court concluded that Apple’s iTunes service was engaged in fair dealing with musical works by offering short, lower-quality and streamed samples for consumers to listen to before making their purchasing decisions (Society of Composers, Authors and Music Publishers of Canada v Bell Canada, 2012 SCC 36). In 2014 Netflix attempted to invoke a similar defence in different circumstances (Public Performance of Musical Works (Re), 2014 CarswellNat 2616 at para 30).

In Public Performance of Musical Works Netflix objected to proposed tariffs for works that it provided in the course of the free trial period offered to customers. Netflix argued that a one-month free trial was fair dealing because ultimately consumers were engaged in a form of research before making their ultimate decision of whether to subscribe to the service. The Copyright Board rejected this defence. Unlike in the iTunes case, Netflix’s free trial period streamed at least one full copy of each of the various works to consumers. They were also not in a lower-quality or degraded form.

Interestingly, Netflix also argued unsuccessfully that the imposition of royalties on free trials of its streaming service ran contrary to principles of technological neutrality.

Statutory damages awards
An unreported decision of the Federal Court demonstrated that in appropriate circumstances, the court is prepared to impose significant awards of statutory damages and punitive damages.

Following a default judgment motion in Twentieth Century Fox Film Corporation v Hernandez (T-1618-13, December 3 2013), the defendant was found to have intentionally and repeatedly infringed and communicated to the public by telecommunication, for his own bad-faith and commercial purposes, large numbers of episodes from popular television series The Simpsons and Family Guy. Among other relief awarded, the plaintiff received $10,000,000 in statutory damages and $500,000 in punitive damages.

Canadian copyright law continues to grapple with the ongoing technological revolution, and parties continue to grapple with the legislative and judicial tools that attempt to keep up with it.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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