It has again been a busy year for copyright law. The Supreme Court of Canada has released a decision concerning the “making available right”, the effect of a treaty on the interpretation of the Copyright Act and judicial review from decisions of the Copyright Board. The Federal Court of Appeal has written decisions dealing with summary trial and statutory damages. The Federal Court has released several decisions. Finally, the Ontario Supreme Court and the UK High Court have made contributions.
The economic factors driving the 2022 decisions do not appear to have changed from 2021 and it is likely that this will continue in 2023. The economic considerations affecting larger rights holders provides the incentive to litigate cases. Blocking orders, whether dynamic or not, will likely be sought more frequently.
Summary judgment and trial continue to be popular, and their use is encouraged by the Federal Court. I have included recent decisions notwithstanding the actions did not relate to copyright.
Summary Judgment
In Google LLC v. Sonos, Inc. 2021 FC 1462 the Judge said that while both parties to a motion for summary judgment are expected to “put their best foot forward,” the moving party has the legal onus to establish all the facts necessary to obtain a summary judgment. The party responding to the motion need not prove all the facts of the case. Rather, its burden is to set out specific facts and adduce evidence showing there is a genuine issue for trial.
Summary Trial
In Steelhead LNG (ASLNG) Ltd. v. ARC Resources Ltd. 2022 FC 998 the Judge said that in addition to the conditions set out in Federal Court Rules there are other factors to be considered on a motion for summary trial. These include, among others, the complexity and urgency of the matter; any prejudice likely to arise by delay; the cost of taking the case forward to a conventional trial in relation to the amount involved; whether credibility is a crucial factor and the deponents of the conflicting affidavits have been cross-examined; whether the summary trial involves a substantial risk of wasting time and effort, and producing unnecessary complexity; and any other matters which arise for consideration.
In Mud Engineering Inc. v. Secure Energy (Drilling Sciences) Inc. 2022 FC 943 the court said on a motion for summary trial, the usual burden in a civil action applies; the party making an assertion must prove it by relevant evidence and the application of law. The burden of proof pertains to what is raised on the motion, not to what is raised in the underlying action.
In VIIV Healthcare Company v. Gilead Sciences Canada, Inc. 2021 FCA 122 the Federal Court of Appeal said on a motion for summary trial there is “no genuine issue for trial” where the judge has “the evidence required to fairly and justly adjudicate the dispute” on a summary basis, i.e., where “the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result”. A case should not proceed to trial unless a genuine issue can only be resolved through the full apparatus of a trial.
The Court also said that a respondent to a motion seeking summary trial can move to quash if the motion for summary trial has little merit but it is harmful in terms of the time and the expense it will cause. When brought early and dealt with quickly before time is wasted and the resources of the Court and the parties are squandered, such a motion proactively advances the objectives of the Rules and stops harmful litigation conduct in its tracks. In this way, motions to quash are analogous to motions under the Rules concerning scheduling, case-management and the restraining of abuses of process.
The Effect of Access to Confidential Information protected by Privilege
In Continental Bank of Canada v. Continental Currency Exchange Canada Inc. 2022 ONSC 647 it was shown that an opposing party or its lawyers had access to relevant confidential information protected by privilege. Prejudice was presumed and the onus rests on the recipient of the information to rebut the presumption of prejudice. The recipient could not overcome the onus and the action was stayed.
Statutory Damages
In 24224508 Ontario Ltd. v. Rallysport Direct LLC 2022 FCA 24 the Federal Court of Appeal confirmed that a copyright owner seeking statutory damages need not establish a link between the statutory damages sought and the damages suffered by it because of the infringement. The trial Judge agreed with the principle that probable damages were not determinative and the use of such estimates in determining statutory damages was but one means of ensuring that any damages award is fair and proportionate. This was not in error and the appeal was dismissed.
What is a New Media Retransmitter
In Videotron Ltd. v. Konek Technologies Inc. 2022 FC 256 the Federal Court considered whether the retransmission services in issue were those of a “retransmitter “or a “new media retransmitter”. The defendants designed a system making it possible to offer technological services in hotel rooms. These services included the retransmission of television content, in particular content from the TVA and TVA Sports stations, by means of a private network. The plaintiffs claimed that the defendants violated their copyright by retransmitting content from the TVA and TVA Sports television stations without their authorization. The defendants alleged their retransmission services were within the exemption provided for in section 31.
The broadcast of television content to the general public requires various forms of regulatory approval issued by the CRTC under the Broadcasting Act. In addition, the broadcaster must either own the copyright in the broadcast content or obtain a license from the copyright owner. Section 31 excludes a “new media retransmitter’ from the retransmission regime. In this instance the defendant, Hill Valley Cable Cooperative (Hill Valley) had obtained an order listing it as an exempt broadcasting distribution undertaking from the CRTC. As a result, this defendant could qualify as a retransmitter and claim the benefit of Section 31, provided it was not a "new media retransmitter", that is its content was not "distributed and accessible through the Internet".
Parliament delegated to the CRTC the power to decide which broadcasting undertakings would be exempt from the usual regulatory requirements. The role of the Court is to apply the distinctions established by the CRTC and not to impose its own views.
The term” Internet” does not designate a physical communication infrastructure, but a protocol, known by the acronym TCP/IP, which allows for the exchange of data packets on a network of interconnected computers. There are networks that use other types of protocols. These networks are not part of the Internet, although they may share the same physical infrastructure.
In Broadcasting Order 2012-409, the CRTC acknowledged that IPTV technology does not use the public Internet and is not covered by the New Media Order. Even if they use the same physical connections, IPTV services are not distributed through the Internet, because they use the UDP/IP protocol rather than the TCP/IP protocol. In a subsequent decision, Broadcasting Decision 2015-184, the CRTC ruled that other technologies that do not rely on the IPTV protocol can also use a private network, excluding them from the definition of “new media retransmitter”.
To determine whether Hill Valley was a “new media retransmitter’, the real question was whether its services were distributed over the public Internet or a private network. The use of the IPTV protocol is one form of private network, but it is not the only one. Insofar as the VMedia decision suggests that there is a binary relationship between the public Internet and IPTV, the Judge refused to follow it, since this would be contrary to the CRTC decisions.
The television content transmitted by Hill Valley used a “tunnel” established using the L2TP and IPSec protocols. This tunnel simulates a direct connection between two private networks, in a way that makes any interception impossible. In addition, the data is encrypted. Other transmissions were through connections to the Hill Valley head-end server through a point-to-point link. These links are physically separate from those used for the public Internet. Theses transmissions were not "distributed and accessible via the Internet" and the architecture of the Hill Valley network was that of a "retransmitter" within the meaning of Section 31. As of the date of the order of the CRTC, Hill Valley was a retransmitter that could rely on the exemption provided by Section 31.
Dynamic Blocking Orders
In Rogers Media Inv. v. John Doe #1 2022 FC 775 the plaintiffs sought a more dynamic type of order building on the decisions of the court in the Bell Media Inc. v GoldTV (GoldTV FC). The plaintiffs own and operate several television stations and online subscription services in Canada. The focus was live NHL games. They requested a “dynamic” site blocking Order to follow and block unlawful streaming as it moved. The type of order issued in GoldTV FC would not work because the pirates adopted new measures to avoid detection and defeat site blocking, including moving their infringing content from site to site regularly. Court approval would be impossible before each new blocking step because these efforts need to happen in real time to be effective.
The Court issued a mandatory interlocutory injunction to the plaintiffs, although not on the terms they had proposed. They established a strong prima facie case that the unknown defendants were engaging in an ongoing breach of their copyright in the broadcasts of live NHL games. The plaintiffs will suffer irreparable harm if this is allowed to continue. Finally, appropriate conditions can be imposed to minimize the risk of over-blocking of legitimate content and to reduce the burdens imposed on the innocent third-party respondents, who control the vast majority of access to the Internet in Canada.
The Judge applied the three-part test for determining whether a court should exercise its discretion to grant an interlocutory injunction: is there a serious issue to be tried; would the person applying for the injunction suffer irreparable harm if the injunction were not granted; and is the balance of convenience in favour of granting the interlocutory injunction or denying it. The fundamental question is whether granting an injunction is just and equitable in the circumstances of the case. This is necessarily context specific.
Based on GoldTV FC the court accepted that it was appropriate to seek guidance from relevant United Kingdom jurisprudence on site-blocking orders, in particular the factors set out in Cartier International AG v. British Sky Broadcasting Ltd., [2016] EWCA Civ 658. The Cartier factors considered were Necessity, Effectiveness, Dissuasiveness, Complexity and Cost, Barriers to legitimate use or trade, Fairness, Substitution and Safeguards.
As for necessity the alternative measures proposed by the Third-Party Respondents were speculative and unproven. The plaintiffs established irreparable harm, and that the order was necessary to stop or at least reduce the unlawful streaming of live NHL games over which they hold copyright.
As for the balance of convenience the remaining Cartier factors were considered. As for complexity and cost the Judge was satisfied that the Third-Party Respondents each have the capacity to engage in the dynamic site blocking sought. While this will impose new obligations on each ISP, and certain additional risks, the ISPs have the technical capability to engage in dynamic IP address site blocking. It was also relevant that the plaintiffs only requested an order to run until the end of the current NHL season. Given that the playoffs were underway, that means that the burden on the Third-Party Respondents will last for less than two months, following which all parties will have an opportunity to examine the costs and benefits of the blocking undertaken.
As for effectiveness based on the evidence in the record, and the experience in other countries, the Judge accepted that the order will be effective in making the infringing activities more difficult and will discourage users from accessing the infringing services. He noted that the same conclusion had been reached in GoldTV FC, for largely similar reasons.
As for the issues of dissuasiveness/substitution, the order was likely to have at least some dissuasive effect and that substitution will not undermine its effectiveness. As has been found in similar cases elsewhere and in GoldTV FC, blocking access to unauthorized content is likely to have an impact on the individuals affected, and they face costs and complexity in seeking to evade the effects of a blocking order. This may dissuade them from continuing, and it may persuade others who may be tempted that it is not worth the effort. Further substitution will not be so easily done as to defeat the purpose of the order or to render it disproportional to the effort required by the Third-Party Respondents.
As for barriers to legitimate use or trade, this factor considers whether the measures adopted by ISPs are strictly targeted, so they do not affect users who seek to access content in a lawful manner. This factor’s purpose is to prevent over-blocking. This was a significant factor, because of the dynamic nature of the order being sought, and the absence of ongoing judicial oversight in its daily operation.
The Judge was satisfied that the terms of the order granted include sufficient measures to mitigate the risk of over-blocking. Requiring real-time monitoring and validation of the implementation of the order by an independent, third-party expert, combined with a reporting requirement on the results, will help to allay concerns and provide a stronger evidentiary foundation for any future case.
The fairness factor considers whether the relief strikes a fair balance between fundamental rights of the parties, including the third parties, and the public. It is a key element in the assessment of the overall proportionality of the remedy and was of particular importance.
Several matters were considered relating to the fairness factor. First, it was important to consider there was a strong prima facie case that the unknown defendants were engaged in blatant, ongoing infringement of the plaintiffs’ copyright in the live NHL broadcasts. These defendants had also organized their affairs to make it virtually impossible for the plaintiffs to pursue the traditional remedies for copyright infringement to put an end to the unlawful streaming.
Second, the impact of any order on freedom of expression was important. However, it was of limited significance to the outcome, given the restraints in the order granted and that the focus of the activity was on unlawful blatant infringement.
Third, while net neutrality may be affected by the order the Judge was not persuaded that any impact should prevent the limited blocking required by the order. The safeguards put in place by the order, including the specific requirements imposed on the plaintiffs regarding the selection of the services to be identified for blocking and the extent to which this will result in under-blocking rather than over-blocking, will sufficiently protect net neutrality.
Fourth, any impact of the order on freedom of expression was far outweighed by the need to prevent irreparable harm to the plaintiffs. In addition, the nature, scope and duration of the blocking was limited and subject to a specific and detailed order. The order seeks to limit its impact on the interests of any member of the viewing public who wants to access legitimate content and extends only to those who seek access to unauthorized content subject to the specific terms of the blocking order. Further, the order requires independent expert monitoring and verification of the steps taken under it. Although that is a post-facto measure (i.e. it will not prevent any infringement of freedom of expression), it will encourage all parties to pay scrupulous attention to the requirements of the order, and ensure a degree of transparency for the parties, the Court and the wider public.
As for the safeguards factor, numerous safeguards were included in the order.
The plaintiffs undertook to indemnify the Third-Party Respondents for their costs of implementation up to a maximum of $50,000 each, and a term to this effect was included in the order.
The order is temporary and terminates at the end of the 2021-2022 season unless the Court orders otherwise. The order is important as other orders modeled on it may be sought for future NHL seasons and by other copyright owners faced with similar infringement.
Copyright in a Character
In Shazam Productions Ltd. v. Only Fools The Dining Experience Ltd. [2022] EWHC 1379 (IPEC) a Judge of the UK High Court concluded there was no English case law which had held the copyright could subsist in a character. The Judge determined that copyright could subsist if two conditions existed. First, there was an originality requirement. For it to be met it was both necessary and sufficient that the subject matter reflects the personality of its author, as an expression of his/her free and creative choices. Second, there was an identifiability requirement. To satisfy this requirement 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". The expressed features must be external to the perceiver and objectively identifiable by third parties and the courts.
On the facts the Judge concluded that the character in issue was the original creation of the author which was the expression of his free and creative choices. In addition, the character was clearly and precisely identifiable to third parties in the scripts to the television series of which the character was an integral part.
Authorization in a BitTorrent Framework
In Voltage Holdings, LLC v. Doe #1 2022 FC 827 a movie production company alleged that a mass group of internet subscribers used or authorized for use the BitTorrent peer-to-peer network to unlawfully make the plaintiff’s science-fiction film, Revolt, available for distribution. The plaintiff sought default judgment against thirty internet subscribers as well as statutory damages and costs from each.
The Judge noted that the issue of authorization in a BitTorrent framework was currently pending in the proposed reverse class action proceeding involving the plaintiff and an intervener. The decision of the Federal Court of Appeal suggested that the plaintiff would have evidence to establish that the internet subscriber “possessed sufficient control over the use of his or her internet account and associated computers and internet devices such that they authorized, sanctioned, approved or countenanced the infringements particularized”.
The Judge said that to establish authorization in this context, consideration must be given to not only whether each defendant in default knew of the alleged infringing activity, but also the relationship and extent of control over the user and whether the internet subscriber had some ability to prevent the act of concern. The plaintiff had provided no such evidence and there was insufficient evidence to grant default judgement and the Judge ordered that the action proceed to trial.
This decision has been appealed to the Federal Court of Appeal but the appeal has not yet been heard.
The Making Available Right
In Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association 2022 SCC 30 the Supreme Court of Canada interpreted subsection 2.4(1.1). The Court unanimously did not accept the Board’s interpretation of subsection 2.4(1.1). The Court concluded the act of “making a work available” is a separate physical activity from the act of a user downloading or streaming a work, but it is not a separately compensable activity.
The Act does not exist solely to benefit authors. Its overarching purpose is to balance authors’ and users’ rights by securing just rewards for authors while facilitating public access to works. When this balance is achieved, society is enriched. Authors are encouraged to produce more works, and users gain access to works which they can use to inspire their own original artistic and intellectual creations.
The principle of technological neutrality helps balance the rights of authors and users. Absent parliamentary intent to the contrary, the Act should not be interpreted to favour or discriminate against any form of technology. It protects authors and users by ensuring that works attract the same rights and give rise to the same royalties regardless of the technological means used to distribute the works.
The Board’s interpretation departed from the principle of technological neutrality. It required that users pay additional royalties to access works online. Requiring that users pay additional royalties based on the mode of the work’s distribution violates the principle of technological neutrality and shifts the balance between users’ and authors’ rights decisively in favour of authors.
The starting point to understanding the application of the subsection is the basic scheme of the Act. The opening paragraph of subsection 3(1) of the Act exhaustively sets out three copyright interests that authors have in their works: the right to (1) produce or reproduce a work in any material form; (2) perform a work in public; or (3) publish an unpublished work. The specific rights set out in subsections 3(1)(a) to (j) are “illustrative” of these three broad copyright interests.
The rights enumerated in subsection 3(1) are distinct. A single activity can engage only one of the three copyright interests. When a song is downloaded, for example, only the author’s reproduction right is engaged. Similarly, when a work is streamed, only the author’s performance right is engaged. Authors are entitled to royalties for use of their works when an activity engages one of the copyright interests.
To determine which copyright interest is engaged by an activity, one must examine what that activity does to the copyrighted work. A performance is impermanent - when it is over, only the memory remains. Performances also allow authors to retain more control over their works than reproductions, as performed works can be withdrawn from the user after the performance is over. Typically, when an activity allows a user to experience a work for a limited period, the author’s performance right is engaged. A reproduction gives a user a durable copy of a work. Authors lose significantly more control over their works when reproduced. Once reproduced, authors cannot limit when, how, or the number of times a user experiences the work. Typically, activities that give users a durable copy of a work engage the author’s reproduction right.
An activity that does not engage one of the three copyright interests or the author’s moral rights is not a protected or compensable activity under the Act.
Subsection 2.4(1.1) is in the “Interpretation” Division of the Act. It modifies the scope of an author’s performance right by modifying the definition of subsection 3(1)(f). While the act of “making a work available” is a separate physical activity from the act of a user downloading or streaming a work, it is not a separately compensable activity. If Parliament intended to treat the act of making available as a new separately compensable activity, “making available” would have to be added as a fourth copyright interest in the opening paragraph of subsection 3(1), rather than as a modification to the scope of subsection. 3(1)(f).
Article 8 of the WIPO Copyright Treaty obliges member countries to do two things: (1) protect on demand transmissions and (2) give authors the right to control when and how their work is made available for downloading or streaming. It does not tell member countries how to give effect to these obligations. To accommodate different legal traditions and different drafting techniques among member countries, the WIPO Copyright Treaty adopted an “umbrella solution”: each state can decide how to fulfill its article 8 obligations. Member countries can provide for article 8 protections through “an explicit making available right or provide effective coverage of the right through a combination of preexisting rights.”
Subsection 2.4(1.1), when correctly interpreted, clarifies that (1) subsection 3(1)(f) applies to on-demand streams, and (2) a work is performed as soon as it is made available for on-demand streaming. Authors have the right to control the act of offering their work for downloading or streaming. “Making available” includes incipient and effected communications. This interpretation gives effect to Canada’s obligations under article 8 through a combination of the performance, reproduction, and authorization rights set out in subsection 3(1). It also respects the principle of technological neutrality as it ensures that authors retain the same rights and royalties over their works regardless of whether the works are distributed online or offline.
If works are streamed or made available for streaming, the author’s performance right as illustrated by subsection 3(1)(f) is engaged. A user cannot stream a work or make a work available for on-demand streaming without engaging the author’s performance right in subsection 3(1).
Since downloads do not engage subsection 3(1)(f) or the author’s performance rights, the Act protects downloads through a different set of rights: the reproduction and authorization rights. If a work is downloaded, the author’s reproduction right is engaged; if the work is made available for downloading, the author’s right to authorize reproductions is engaged.
Like offline distributions, downloading or streaming works will continue to engage only one copyright interest and require paying one royalty — a reproduction royalty for downloads or a performance royalty for streams. If a work is downloaded or made available for downloading, subsection 3(1)(f) is not engaged. If a work if made available for streaming and later streamed, subsection 3(1)(f) is only engaged once.
Judicial Review
In Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association 2022 SCC 30 the Supreme Court of Canada considered the application of the Vavilov formulated standard of review to a decision of the Copyright Board. The Court observed that none of the five recognized categories for correctness review justified applying a correctness standard of review to situations of concurrent administrative and court first instance jurisdiction. The Court determined that it was appropriate to apply a correctness standard of review to the Board’s decision.
In Vavilov the court said in rare and exceptional circumstances, new correctness categories can be recognized when applying reasonableness would undermine legislative intent or the rule of law in a manner analogous to the five recognized correctness categories. The review of the Board’s decision was one of those rare and exceptional circumstances where it was appropriate to recognize a new category of correctness review: when courts and administrative bodies have concurrent first instance jurisdiction over a legal issue in a statute. Applying a correctness review accords with legislative intent and promotes the rule of law.
The Effect of a Treaty on Statutory Interpretation
In Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association 2022 SCC 30 the Supreme Court of Canada confirmed there was no need to find textual ambiguity in a statute before considering a relevant treaty. The modern approach to statutory interpretation requires interpreting the statute’s text in its “entire context”. The statute’s context includes any relevant international legal obligations.
There is a presumption of conformity, and where the text permits, legislation should be interpreted to comply with Canada’s treaty obligations. However, while a treaty can be highly relevant it cannot overwhelm clear legislative intent. The court’s task is to interpret what the legislature (Federal or Provincial) has enacted and not subordinate this to what the Federal Executive has agreed to internationally. It is always the domestic statute that governs because international law cannot be used to support an interpretation not permitted by the words of the statute.
The Term of Protection
On June 23, 2022, the Budget Implementation Act, 2022, No. 1 was passed which includes amendments to the Act to extend the basic term of protection for copyright works in Canada from the life of the author plus 50 years to life plus 70. This amendment comes into force on
Toronto, December 2022
If you have questions, please contact me at mckeown@gsnh.com.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
These comments are general in nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.