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Notable Copyright Developments in 2023

It has again been a busy year in the copyright world with important legislative changes and numerous decisions from the courts to consider.


The new Copyright Board Rules of Practice and Procedure have been brought into force. Hopefully this will lead to better and quicker decisions.


The Online Streaming Act has amended Canada’s broadcasting policy and requires that online streaming services are subject to the amended policy. The process of change has been highly contentious, and we will have to see how things work out.


Decisions from the courts have considered the breach of a protective order, the effect of a consent by the parties to an action to a summary trial, what is a useful article under subsection 64(2) of Copyright Act, alleged misuse of copyright as a defence to an action, mandatory interlocutory injunctions, the requirement for fixation to protect a literary work, the effect of paragraph 2.4(1)(b) of the Act, class actions, authorizing infringement in an online context, protecting a graphical user interface and Copyright Board practice.


Breach of a Protective Order

Violating a protective order is a serious matter. It can cause harm to the party whose confidential information was unlawfully disclosed. It can also have grave consequences for the party and the persons who breached the order. They may be subject to contempt proceedings, and liable to fines or imprisonment. In Molo Design Ltd. v. Chanel Canada ULC 2023 FC 140, without prejudice to bringing contempt proceedings, the party in breach was ordered to comply with the Protective Order that had been issued. This required the party in breach to:

a) immediately bring all pertinent facts relating to the disclosure to the attention of the Producing Party who designated the Information as Confidential Information and make every effort to prevent further disclosure of the Information; and

b) promptly notify in writing all inadvertent recipients of the Information in question. The recipients of the document shall then promptly request all persons to whom the Information was disclosed to refrain from reading or viewing the Information and return it and all copies thereof to the Party who disclosed it, or destroy the Information and all copies thereof.


The party in breach has a clear duty to “make every effort” to prevent further disclosure of the information it unlawfully disclosed. How this is achieved is its own business, but it must provide all relevant facts to the Producing party, including confirmation of how it has fulfilled its obligation and, if any element cannot be met, to disclose the efforts it made and why they have failed.


Amendments to Copyright Board Rules of Practice and Procedure

Effective March 1, 2023, the final version of the Rules was published. (Copyright Board Rules of Practice and Procedure: SOR/2023-24) The objective of the Rules is to implement the new statutory framework and modernized mandate set out in the amended Copyright Act; address specific issues raised by the INDU Committee and by stakeholders regarding the timeliness, efficiency, predictability and transparency of Board procedures; and detail how the Board will sequence its proceedings to respect the timelines for decision-making introduced in the Time Limits in Respect of Matters Before the Copyright Board Regulations.


The Rules replace the existing Model Directive, provide clearer guidance to parties on how to engage with the Board, and establish specific requirements for their participation in tariff-setting proceedings. These requirements relate to the timing of filing and service of documents, the format of documents and exhibits, as well as the confidentiality and choice of language of communication.


a) Notices of Grounds

The Rules require a collective management society to explain the grounds (notice of grounds) for its tariff proposal within seven days of filing.  Objecting parties also need to include more robust information on their objections by filing a notice of grounds for objection. There is a 14-day time limit after the notice of grounds was filed for objection for the collective management society to file a reply.


b) Joint statement of issues

For proposed tariffs where an objection has been filed, the Rules introduce the requirement to file a joint statement of issues within 90 days of commencement of proceedings or when ordered by the Board. If parties cannot agree on the joint statement of issues, they must file separate submissions with the Board, identifying the issues on which they cannot agree, and their positions on those issues.


c) Case Management

The Rules lay out the details of the Board’s case management authority set out in section 66.504 the Act. The Rules clarify how the Board may use its case management authority as defined under subsection 66.6(1.1) of the Act. The case manager at the Board may issue binding orders on procedure following a case management conference and in other situations, where appropriate.


d) Treatment of Information and Evidence

The Rules require that documents be filed by parties electronically, unless otherwise provided. This practice was covered by a practice notice.

The Rules also provide guidance on how the Board generally considers the confidentiality of information provided in a proceeding and the conditions attached to using expert witness evidence provided by parties or independently by the Board.


e) Non-Party Participation in Board Proceedings

The Rules address the current lack of clarity regarding non-party participation (e.g. an individual consumer or creator) in Board proceedings by explaining how an interested person can request leave to intervene in a proceeding. They also standardize the way these requests are generally considered by the Board.


f) Legal Certainty and Flexibility

The Rules apply to all relevant proceedings, including those that have started before their coming into force. However, they do not invalidate any actions taken in accordance with the Model Directive up to that point.


The practice notices previously referred to have been updated and will continue to be applicable under the Rules of Practice and Procedure.

Federal Court Creates a Specialized Chamber to Hear Intellectual Property Cases

The Federal Court has announced the launching of a pilot project creating a specialized Chamber of the Court to hear intellectual property matters with a subspeciality for copyright. See NOTICE TO THE PARTIES AND THE PROFESSION Pilot Project: Chambers of the Court


Consent to Summary Trial

In Dermaspark Products Inc. v. Patel 2023 FC 388 the court said the consent of the parties to a summary trial was not determinative, but it was an important factor in assessing whether it was “suitable” and “just” to proceed in this fashion. The court should be reluctant to require the parties to incur the further cost and delay of proceeding to a full trial.


The Online Streaming Act

The Online Streaming Act, S.C.2023, c. 8 previously Bill C-11, (“OSA”) received royal assent on April 27, 2023, after nearly 3 years of regulatory hurdles and public contention.


The OSA is aimed at ensuring increasingly popular social media platforms and streaming services such as Netflix, Crave, Spotify, Amazon Prime Video, Disney+ and YouTube are subject to Canadian content requirements and regulations comparable to traditional broadcasters. The policy change may come with a requirement that these platforms spend money to invest in Canadian content and creators to satisfy Canadian content requirements.


The OSA amends the Broadcasting Act (the “Act”). These are the first substantive amendments to the Act since 1991. The Act sets out the broadcasting policy for Canada, and the role and powers of the Canadian Radio-television and Telecommunications Commission (the “CRTC”) in regulating and supervising the broadcasting system. The Act plays an important role in supporting Canada’s cultural industries and ensuring Canadian content is available and accessible. The Act, as amended, clarifies that online streaming services fall under it and ensures that the CRTC has the proper tools to put in place a modern and flexible regulatory framework for broadcasting.


The CRTC, is responsible for determining the regulatory requirements to be imposed on broadcasting undertakings to implement the policy established by the Act, and for enforcing those requirements.


The Act adds “online undertakings” as a distinct class of broadcasting undertaking subject to the Act. An online undertaking is defined as an undertaking for the transmission or retransmission of programs over the Internet to the public by means of broadcasting receiving apparatus.


Individual social media users are generally not subject to the Act. Subsection 2(2.1) as added by the Act provides that a person who uses a social media service to upload programs for transmission over the Internet and reception by other users of the service — and who is not the provider of the service or the provider’s affiliate, or the agent or mandatary of either of them — does not, by the fact of that use, carry on a broadcasting undertaking for the purposes of the Act.


The Act provides the CRTC with new powers to regulate online services and updates the CRTC’s regulatory powers as they relate to traditional broadcasters. Subsection 9(1)(a) amends the CRTC’s licencing powers and excludes online undertakings from licencing. Subsection 31.1(1) provides that a person shall not carry on a broadcasting undertaking, unless they do so under a licence, or they are exempt from the requirement to hold a licence. Despite this provision a person may carry on as an online undertaking without a license and without being exempt.


Section 9.1(1) replaces the CRTC’s power to impose conditions on a licence with a power to make orders imposing conditions on the carrying on of broadcasting undertakings that the CRTC considers appropriate for implementing the broadcasting policy set out in subsection 3(1), including conditions, among others, respecting:


(a) the proportion of programs to be broadcast that shall be Canadian programs and the proportion of time that shall be devoted to the broadcasting of Canadian programs;

(b) the proportion of Canadian programs to be broadcast that shall be original French language programs, including first-run programs;

(c) the proportion of programs to be broadcast that shall be original French language programs;

(d) the proportion of programs to be broadcast that shall be devoted to specific genres, to ensure the diversity of programming;

(e) the presentation of programs and programming services for selection by the public, including the showcasing and the discoverability of Canadian programs and programming services, such as original French language programs.


The Act is also amended to take greater account of Indigenous cultures and languages and of Canada’s diversity.  Subsections 3(1)(o) to (s) update the broadcasting policy by specifying that the Canadian broadcasting system should provide opportunities for Indigenous persons to produce programming and carry on broadcasting undertakings and should provide programming that reflects Indigenous cultures and programming in Indigenous languages. The amendments also state that through its programming and employment opportunities, the Canadian broadcasting system should serve the needs and interests of all Canadians including Canadians from racialized communities and of diverse ethnocultural backgrounds. Section 5(2) further updates the regulatory policy by adding that the broadcasting system should be regulated and supervised in a manner that considers Indigenous language broadcasting and programming and the specific needs and interests of Indigenous peoples and facilitates the provision of Canadian programs created and produced in Indigenous languages.


The Department of Canadian Heritage has presented proposed regulations to implement to the OSA. 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 Policy directions have been finalized (Order Issuing Directions to the CRTC (Sustainable and Equitable Broadcasting Regulatory Framework) SOR 2023-239 in force December 18, 2023.


The Activities Subject to the Exception under the Online Streaming Act

Under the Act as amended the definition of retransmitter and new media retransmitter are amended to read:

  • new media retransmitter means a person whose retransmission would be lawful under the Broadcasting Actas that Act read immediately before the day on which section 31.1 of that Act comes into force— only by reason of the Exemption order for digital media broadcasting undertakings, issued by the Canadian Radio-television and Telecommunications Commission as the appendix to Broadcasting Order CRTC 2012-409, as it read immediately before that day;

  • retransmitter has the meaning assigned by the regulations;


As part of the amendments the Governor in Council may make regulations defining “retransmitter” for the purposes of section 31. To date the regulations have not been passed.


Subsection 64(2)

In French v The Royal Canadian Legion 2023 FC 749 the plaintiff asserted a copyright relating to a stuffed animal modelled after a Dalmatian dog with black-centered red poppies in place of the Dalmatian’s usual simple black spots. The copyright right subsisted in the entire toy. The judge found there was a functional and practical use for the toy as it was a plush toy made to be played with by children. As such the toy was a useful article of which more than fifty had been produced subsection 64(2) applied.


The Effect of Paragraph 2.4(1)(b)

In Videotron Ltd v. Konek Technologies Inc. 2023 FC 741 the court summarized the effect of paragraph 2.4(1)(b) as follows:

“an intermediary who is in fact content to act as a "conveyor ", unaware of the content and who allows others to communicate without having an impact on the content, will be considered an "agent" and as such, will benefit from the protection conferred by s. 2.4(1)(b) of the Act and will therefore not be unfairly caught by the definition in s. 3(1)(f).”


An appeal from this decision unrelated to the issue of Hill Valley’s status as a retransmitter was allowed, see Videotron ltd. v. Konek Technologies Inc 2023 CAF 92.


Misuse of Copyright

In Millennium Funding Inc. v. Bell Canada 2023 FC 764 the defendant unsuccessfully attempted to raise a defence based on misuse of copyright and other novel defences.


Class Actions

In Voltage Pictures, LLC v Salna, 2023 FC 893 on a re-hearing of the motion to certify the class proceeding the court found that Voltage discharged its onus of demonstrating “some basis in fact” for the conclusion that a class action was the preferable procedure for resolving its claims of copyright infringement against hundreds of unidentified Class Members.


Subject to a reasonable assurance of funding for Class Counsel, Mr. Salna was a suitable Representative Respondent. The risk that Class Members may opt out in sufficient numbers to undermine the viability of the proceeding was speculative and can be addressed through case management as the proceeding unfolds.


The notice-and-notice regime under the Act cannot be used to notify Class Members of the class action or subsequent steps in the proceeding. Nor can it be used to give Class Members an opportunity to opt out of the proceeding in exchange for proof of ceasing to infringe or mitigating damages.


Voltage’s proposed use of the notice-and-notice scheme as a litigation support tool represents a departure from the two purposes identified by the Supreme Court of Canada in Rogers Communications Inc v Voltage Pictures, LLC, 2018 SCC 38. Voltage’s litigation plan changes the deterrence function to one of enforcement, thereby disrupting the regime’s balance.


In addition, a copyright owner who wishes to sue a person alleged to have infringed copyright online must obtain a Norwich order to compel the ISP to disclose that person’s identity. The statutory notice-and-notice regime has not displaced this requirement.


Given the deficiencies in the litigation plan, the proposed class proceeding could not be certified. But Voltage may present a revised litigation plan that does not depend on the notice-and-notice regime in the Act to identify and communicate with Class Members, and that makes adequate provision for the funding of Class Counsel.


An Interlocutory Injunction which is Mandatory in Nature

Another exception, which is becoming more popular, relates to the granting of an interlocutory injunction which is mandatory in nature. In such a case the appropriate criterion for assessing the strength of the applicant’s case at the first stage of the RJR — MacDonald test is not whether there is a serious issue to be tried, but rather whether the applicant has shown a strong prima facie case. A mandatory injunction directs the defendant to undertake a positive course of action, such as taking steps to restore the status quo, or to otherwise “put the situation back to what it should be”, which is often costly or burdensome for the defendant and which equity has long been reluctant to compel. Such an order is also difficult to justify at the interlocutory stage, since restorative relief can usually be obtained at trial. The potentially severe consequences for a defendant which can result from a mandatory interlocutory injunction, including the effective final determination of the action in favour of the plaintiff, demand what the Court described in RJR — MacDonald as an “extensive review of the merits” at the interlocutory stage.


The Bitcoin File Format

In Wright v BTC Core [2023] EWCA Civ 868 the plaintiff claimed he owned the copyright in the Bitcoin file format. The Court found that the file format was sufficiently fixed to be protected as a literary work. 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, 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 –– in the process of identifying the protected subject matter means that the latter must be capable of being expressed in a precise and objective manner.


Authorizing Infringement

In Voltage Holdings, LLC v. Doe #1 2023 FCA 194 Voltage Holdings, LLC, a movie production company, and the owner of the copyright in the film Revolt detected that internet users at certain IP addresses were making the film available using BitTorrent software, a protocol for distributing files on a peer-to-peer network. BitTorrent is 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 the 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 an 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.” Accordingly, 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 To authorize an act, the alleged infringer must grant or purport to grant, either expressly or by implication, the right to do the act complained of. Further, the grantor must have some degree of actual or apparent right to control the actions of the grantee before he will be taken to have authorized the act. An act is not authorized by somebody who merely enables or possibly assists or even encourages another to do that act, but who does not purport to have any authority which he can grant to justify the doing of the act.


Third, 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 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 Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30, 471 D.L.R. (4th) 391(“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.


An appeal from this decision was dismissed. 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 drawing 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 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.


Voltage Holdings, LLC has applied for leave to appeal to Supreme Court of Canada concerning this decision (SCC 41026)


A Graphical User Interface Protected as an Artistic Work

In THI Systems Ltd v. Sheridan [2023] EWCA Civ 1354 the UKCA agreed that a graphical user interface which enables communication between the computer program in use and a user can be protected as an artistic work, independently from the software which created it if the requirements relating to originality of the graphical user interface are satisfied.

The Copyright Board Will Not Approve Royalties Higher Then Sought in the Proposed Tariff

The Board will refuse to approve royalties which are higher than the rates disclosed in the proposed tariff on the grounds that this could result in prejudice to affected persons and undermine procedural fairness. Socan Tariff 21- Recreational Facilities Operated by a Municipality, School, College, University, Agricultural Society or Similar Community Organizations (2023-2025) 2023 CB 11.


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

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.


A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.


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