Copyright decisions fall 2023
In this blog entry we deal with copyright developments in the last few months.
The Online Streaming Act. The Government (Department of Canadian Heritage) has presented proposed regulations to help implement the Online Streaming Act. According to the Regulatory Impact Analysis Statement the Government is proposing to issue policy directions to the Canadian Radio-television and Telecommunications Commission (the Commission) under section 7 of the Broadcasting Act. The proposed directions would give binding, high-level direction to the Commission as it engages Canadians and all interested parties to design and implement a new regulatory framework through an open, public dialogue.
The proposed directions articulate key priorities and support important outcomes for Canadian audiences, creators, and broadcasters. Key elements of the proposed directions include:
Ensuring the meaningful participation of Indigenous persons in the broadcasting system;
Excluding social media users and creators and their content from regulation;
Supporting greater inclusion of equity-seeking groups in the broadcasting system;
Supporting Canadian creators and media, including independent and community-run elements;
Implementing discoverability requirements in a way that minimizes the need to alter algorithms of broadcasting undertakings and that, where possible, increases choice for users;
Redefining Canadian programs; and
Creating an equitable, flexible and adaptable regulatory framework.
The proposed directions outline the appropriate scope of regulation and where flexibility should be part of the framework.
The Government has said that the proposed regulatory framework will come into force December 19, 2023.
The Court of Justice for the European Union has reached a result concerning “fixation” similar to the Canadian position- Wright v BTC Core  EWCA Civ 868. The plaintiff claimed he owned the copyright in the Bitcoin file format. The Court noted that under Article 2(1) of the Berne Convention, literary and artistic works include every production in the literary, scientific and artistic domain, whatever the mode or form of its expression may be. In addition, under Article 2 of the WIPO Copyright Treaty and Article 9(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights, copyright protection may be granted to expressions, but not to ideas, procedures, methods of operation or mathematical concepts as such. For there to be a 'work' the subject matter protected by copyright must be expressed in a manner which makes it identifiable with sufficient precision and objectivity, even though that expression is not necessarily in permanent form. That is because, first, the authorities responsible for ensuring that the exclusive rights inherent in copyright are protected must be able to identify, clearly and precisely, the subject matter so protected. The same is true for individuals, who must be able to identify, clearly and precisely, what is the subject matter of protection which third parties, especially competitors, enjoy. Second, the need to ensure that there is no element of subjectivity–– given it is detrimental to legal certainty –– when identifying the protected subject matter means that the latter must be capable of being expressed in a precise and objective manner.
In Voltage Holdings, LLC v. Doe #1, 2023 FCA 194, the appellant, a movie production company, and the owner of the copyright in the film Revolt detected that internet users at certain IP addresses which were making the film available using BitTorrent software, a protocol for distributing files on a peer-to-peer network. BitTorrent is particularly well suited for transferring large files such as movies, music, or computer software due to its capacity to upload and download files from a group of hosts instead of from a single source server. Using this software, internet users at the flagged IP addresses were uploading and offering copies of the film without the appellant’s consent. The Federal Court dismissed a motion for default judgment. It found that the respondents were in default of filing a defence but determined that the appellant had not provided sufficient evidence to establish that the respondents either were the direct infringers themselves, or possessed sufficient control over those who posted the film to have authorized the infringement.
The Federal Court of Appeal dismissed the appeal and provided its view of the law on authorizing infringement.
First, subsection 3(1) of the Act grants a copyright owner the exclusive right to produce (or reproduce), perform, or publish their work. It also grants a copyright owner the sole right to “authorize any such acts.” Anyone who authorizes any of these expressions of the copyrighted work, absent a licence to do so, infringes the copyright owner’s exclusive authorization right (the Act, ss. 3(1) and 27(1)).
Second, and relatedly, authorizing infringement requires that the authorizer hold themselves out as capable of granting one of the copyright owner’s exclusive rights.
Third, in copyright law, to “authorize” means to “sanction, approve and countenance. Although “countenance” in this definition may initially appear to include some degree of passivity within the scope of “authorization”, the Supreme Court has confirmed that the term “countenance” here “must be understood in its strongest dictionary meaning, namely, ’[g]ive approval to; sanction, permit; favour, encourage’”.
Fourth, there are certain objective factors that, on their own, do not amount to authorizing infringement. An individual who provides the means or equipment to infringe another’s copyright has not necessarily authorized the infringement. Similarly, upon receiving a warning notice, an internet subscriber is not automatically assumed to have been responsible for the asserted copyright infringement; the mere association with an IP address is not conclusive of guilt.
Fifth, the law of authorizing infringement relies in part on a subjective standard. The knowledge that someone might be using neutral technology for infringing activity is not necessarily sufficient to establish authorization, and courts presume that an individual who authorizes an activity does so only so far as it is in accordance with the law. In some cases, however, a “sufficient degree of indifference” may allow a court to infer that the individual has indeed authorized the infringement .
Sixth, in authorization analyses, courts have historically considered the relationship between the alleged authorizer and the person who infringes as a result of the authorization. A “certain relationship or degree of control” existing between these parties may rebut the presumption that a person who authorizes an activity has only authorized lawful forms of that activity. Control over the means by which the infringement occurred may also warrant a finding of implicit authorization; additionally, authorization may be inferred where the supply of such means was bound to lead to an infringement and was made specifically for that purpose. These factors suggest that the alleged authorizer played an active role in leading the other party to infringe the copyright owner’s exclusive rights under subsection 3(1) of the Act.”
The court also referred to the decision of the Supreme Court of Canada in ESA. The Supreme Court endorsed the Copyright Board’s determination that “it is the act of posting [the work] that constitutes authorization”, because the person who makes the work available “either controls or purports to control the right to communicate it”, and “invites anyone with Internet access to have the work communicated to them”. The authorizer is the individual directly engaging with the copyrighted material. This close relationship between the authorizer and the copyrighted material is emphasized and repeated throughout the Supreme Court’s reasons.
There is no question, based on ESA, that the person using the respondents’ internet accounts to make the Work available for download via BitTorrent is authorizing infringement. This situation is the precise example of authorizing infringement described throughout ESA. However, the appellant’s claim of authorizing infringement does not mirror this example. ESA says that an authorizer permits reproduction; the appellant says that an authorizer is someone who permits someone to permit reproduction. As Rowe J. observed, subsection 3(1) of the Act “exhaustively” sets out the scope of copyright interests.
The Federal Court did not err in concluding that it was premature to draw an adverse inference against the respondents. The appellant had not yet attempted to compel discovery of the respondents and their potential evidence. But the Federal Court was also right not to close the door on that possibility, otherwise there is a risk of creating a zone of immunity around online infringement.
The decision on appeal supports the shifting of the burden of proof or drawing adverse inferences in circumstances where, as here, there is an informational imbalance or key evidence is uniquely in the hands of the defendant. Gaps in a plaintiff's evidence may be filled by an adverse inference or by the failure of a defendant to meet an evidentiary burden. The question, therefore, is not whether a court can shift the burden, but when and in what circumstances.
The existing jurisprudence does two things: it prescribes certain facts that must be established to prove infringement, and it allows for the drawing of adverse inferences of infringement based on the overall state of the evidence.
A defendant’s failure to file a defence means that no allegations of fact in a pleading are admitted. The plaintiff in the Federal Court, bears the legal or persuasive burden of leading sufficient evidence to prove the necessary elements of its claim on a balance of probabilities. The evidential burden, in contrast, refers to a party’s obligation to establish, through sufficient evidence, the existence or non-existence of a particular fact or issue so that a particular argument is live before the Court. Unlike the party with the legal burden, the party with an evidential burden is not strictly required to convince the trier of fact of anything, since an issue can be put into play without being proven.
The Federal Court did not err in its application of the legal principles relevant to adverse inferences or in its weighing of the evidence before it. In any event, the Federal Court’s decision not to draw an adverse inference in this context is a question of fact warranting deference on appeal, subject to the correctness of the legal principles guiding its assessment of the claims.
Misuse of Copyright Defence
See Millennium Funding Inc. v. Bell Canada 2023 FC 764 at para 20 and following concerning the unsuccessful attempt to raise a defence based on misuse of copyright and other novel defences.
Effect of an Extraterritorial Confidentiality Order
Commissioner of Competition v Google Canada Corporation 2023 FC 1038 The fact that another court outside Canada has granted a previous confidentiality order is not determinative. International comity requires that respectful attention be paid to the sealing order and the reasons provided for granting it. In such a case the court must apply the principles established in Sierra Club of Canada and Sherman Estate.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.