Recent Copyright Decisions - Summer 2022
In this blog entry we deal with copyright developments in the last few months
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 was 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. These 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 Site Blocking Orders
In Rogers Media Inv. v. John Doe #1 2022 FC 775 the plaintiffs sought a dynamic site blocking 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 relating to trying to follow and block unlawful streaming as it moved. The 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 were 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 the GoldTV FC the court accepted that it was appropriate to seek guidance from United Kingdom jurisprudence on site-blocking orders, in particular the factors set out in Cartier International AG v British Sky Broadcasting Ltd.,  EWCA Civ 658 [Cartier]. The Cartier factors considered were:
Necessity –the extent to which the relief is necessary to protect the plaintiff’s rights. The relief need not be indispensable, but the court may consider whether alternative and less onerous measures are available;
Effectiveness –whether the relief sought will make infringing activities more difficult to achieve and discourage Internet users from accessing the infringing service;
Dissuasiveness –whether others not currently accessing the infringing service will be dissuaded from doing so;
Complexity and Cost –the complexity and cost of implementing the relief sought;
Barriers to legitimate use or trade –whether the relief will create barriers to legitimate use by unduly affecting the ability of users of ISP services to access information lawfully;
Fairness –whether the relief strikes a fair balance between fundamental rights of the parties, the third parties and the general public;
Substitution –the extent to which blocked websites may be replaced or substituted and whether a blocked website may be substituted for another infringing website; and
Safeguards –whether the relief sought includes measures that safeguard against abuse.
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. Regarding 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 then underway, that meant that the burden on the Third-Party Respondents will last for less than two months, following which all parties can 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 it 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 affect 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 included sufficient measures to mitigate the risk of over-blocking. Requiring real-time monitoring and validation of implementing the order by an independent, third-party expert, combined with a reporting requirement on the results, will help to allay the 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 cause 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 specific details set out in the order, and it will 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.
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 and statutory damages and costs from each.
The Judge noted that the issue of authorization in a BitTorrent framework was 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 ordered that the action to proceed to trial.
Copyright in a Character
In Shazam Productions Ltd. v. Only Fools The Dining Experience Ltd  EWHC 1379 (IPEC) a Judge of the UK High Court concluded there was no English case law which found that copyright could not subsist in a character. The Judge determined that copyright could subsist if two conditions existed. First, there was an originality requirement. Which is satisfied if 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 work "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 expressed 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.
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. The change is not yet in force, but it is anticipated it will be brought into force before the end of 2022.
Statutory Interpretation and Treaty Obligations
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 the treaty to which it relates. 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.
The Court also referred to the presumption of conformity, that is, 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 (federally and provincially) 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.
Making a Work Available
In Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association 2022 SCC 30 the Supreme Court of Canada unanimously rejected the Board’s interpretation of subsection 2.4(1.1) and interpreted the subsection.
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 rights are 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 rights are engaged. A reproduction gives a user a durable copy of a work. Authors lose more control over their works when they are 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 pre-existing 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 streamlining. “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 whether or not 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 is made available for streaming and later streamed, subsection 3(1)(f) is only engaged once.
Judicial review of Copyright Board Decisions
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 Canada (Minister of Citizenship and Immigration) v. Vavilov 2019 SCC 65, 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 the correctness review accords with legislative intent and promotes the rule of law.
Proposed Copyright Board Rules of Practice and Procedure
New proposed Copyright Board Rules of Practice and Procedure have been published in the Canada Gazette for consultation. The proposed text and the Regulatory Impact Assessment Statement have been published in the Canada Gazette. An overview of the Rules, developed by the Board.
These rules reflect the Board’s commitment toward effective and expeditious tariff-setting procedures, transparency, and access to justice, and are a key part of the Board’s Modernization Initiative. They were developed with a view to increase the predictability of Board tariff-setting proceedings and clearly guide Parties on how to engage with the Board. The final version of the Rules, which may include changes based on the feedback received during the consultation period, will be published in the Canada Gazette in the coming months.
Toronto, September 2022
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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.