Copyright Watch-An Update on Recent Copyright Developments

Generative Artificial Intelligence

The US Copyright Office released a Report on Copyright and Artificial Intelligence Part 3: Generative AI Training Currently available at Copyright and Artificial Intelligence Part 3 Generative AI Training Report Pre Publication Version in a prepublication version which addresses the use of copyrighted works in the development of generative AI systems.

The release of the report seems to have been driven by political considerations. On May 8, 2025, the Librarian of Congress in the US, who oversees the US copyright Office, was fired by President Donald Trump. On May 9, 2025, the Copyright Office took the unusual step of releasing the report on a “pre-publication basis”.

The report provides a useful technical background describing how and why copyrighted works are used in the development of generative AI models. The report also deals with the US concept of fair use. The report emphasizes that whether a fair use defence would be available depends on the specific facts of each case. This approach may favour copyright owners.

Subsistence of Copyright

Section 5 of the Copyright Act sets out clear conditions for the subsistence of copyright. The first condition is that the author was, at the date of making the work, a citizen or subject of, or a person ordinarily resident in, a treaty country. “treaty country” means a Berne Convention country, UCC country, WCT country or WTO Member.  The definition is broad but there are still countries that are outside the definition.  In Gold line Telemanagement Inc. v. Ereele GMBH  2025 FC 904 the defendant did not prove the conditions of subsection 5(1) of the Act existed for cinematographic works apparently created in Iran, which is not a treaty country.

Works Made in the Course of Employment

Subsection 13(3) of the Act states that an employer will be the first owner of the copyright of a work created by an employee in the course of their employment. Because the subsection generally only applies if the author is an employee and not a freelancer or independent contractor, a determination of whether the employer owns the copyright requires recourse to labour law principles.  The relationship between the parties must be analysed to determine if the author is an independent contractor or under the control of whoever is paying him or her.

The court applied the “Integration test” that is, under a contract of service, a person is employed as part of the business, and his or her work is done as an integral part of the business; whereas, under a contract for services, the work, although done for the business, is not integrated into it, but is only accessory to it. Nexus v. Krougly 2025 ONSC 1346

Statutory Damages 

The Federal Court of Appeal has confirmed that statutory damages can be awarded even if no monetary damages are suffered by the copyright holder and no business is lost 2424508 0ntario Ltd v. Rallysport Direct LLC 2022 FCA 24. However, where actual damages can be quantified, they are a relevant factor in the analysis.  Similar considerations apply to the defendant’s earnings or profits. Yelda Haber Ve Görsel Yayincilik A.S. v. GLWiZ Inc. 2025 FC 1107  

Bad faith in this context refers to conduct that is contrary to community standards of honesty, reasonableness or fairness. What constitutes bad faith is contextual and may include: (i) ignoring a cease-and-desist letter, (ii) repeatedly infringing different products, (iii) scraping or copying photos directly from a website, (iv) ignoring offers not to litigate if they cease infringement, and (v) using a false name to avoid being detected. Yelda Haber Ve Görsel Yayincilik A.S. v. GLWiZ Inc. 2025 FC 1107

If a copyright owner has made an election for an award of statutory damages and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200 for each work. A defendant cannot rely on this reduction where they have received information that their activities could be copyright infringement and still carry on with their activities. Yelda Haber Ve Görsel Yayincilik A.S. v. GLWiZ Inc. 2025 FC 1107

Similar Fact Evidence 

In Yelda Haber Ve Görsel Yayincilik A.S. v. GLWiZ Inc. 2025 FC 1107 at para 261 and following the court reviews the admissibility of similar fact evidence. 

Scope of a Redetermination When Ordered by a Court

If after an application for judicial review of a decision of the Copyright Board, a redetermination is ordered, the scope of the Board’s decision on the redetermination is constrained by the decision of the Court and the focus should be on the decision of the Court to determine which parts of the original Board determination can be revisited in the redetermination. Aside from the court’s decision concerning the redetermination, the Board’s power to change its original decision is essentially limited to (i) slips in drawing up the formal judgment and errors in expressing the Board’s manifest intention; and (ii) material changes in circumstances since the original decision under section 66.52 of the Copyright Act. Copyright Collective of Canada v. Bell Canada 2025 FCA 92.

Reinstating Expired Industrial Design Registrations

In Poseidon v. Canada (Commissioner of Patents) 2025 FC 225 the applicant sought to reinstate two industrial design registrations in Canada that expired due to unpaid maintenance fees. The applicant claimed that attempts to pay fees were prevented by the Canadian Intellectual Property Office's (CIPO) online payment system. The Judge confirmed that the Court has jurisdiction to rectify an entry in the Register of Industrial Designs made "without sufficient cause" if there is material new evidence that is "sufficiently substantial and significant" and "of probative value" in a fashion like appeals under the Trademarks Act.

However, the application was dismissed since the failure to pay the maintenance fees arose from human error by the applicant’s agents, and not due to a failure of CIPO's processes or systems. Further the Court has no jurisdiction to retroactively grant registration to designs that, by the operation of the statutory provisions, are expired. 

Breach of Confidence 

When there are multiple claims of breach of confidence, each claim may be a separate cause of action, particularly if the claim is raised by an amendment to the statement of claim. In addition, the limitation period relating to each claim may be different.

A limitation defence will apply to a cause of action asserted after the expiry of the applicable limitation period. In this context, “cause of action” refers to “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”, rather than the legal label attached to a claim (such as “breach of confidence or fiduciary duty”). In considering whether an amendment raises a new cause of action, the court must consider whether the original pleading already contains the factual matrix – the acts or omissions said to give rise to liability – to support the claim in the proposed amendment, or whether the proposed amendment seeks to put forward additional facts that are necessary to a new and different claim. Total Meter Services Inc. v. GVM Integration, 2025 ONCA 321  

If you have questions, please contact me at mckeown@gsnh.com 

John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1700 

Toronto, Ontario MSG 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370

This article is of general nature and is not intended to provide specific legal advice as individual situations will differ. Specialist advice should be sought about your specific circumstances.