The year 2020 was very interesting in the copyright world with several significant decisions being released.

Fair Dealing for the Purpose of Research

In Stross v. Trend Hunter2020 FC 2011 the court concluded that a computerized form of market research that measured consumer interaction and preferences to generate data for clients was "research" for the purpose of the exception. However, after reviewing the six factors established as relevant in previous decisions the court was not convinced the dealing was "fair".

Enforceability of a Tariff and Fair Dealing for the Purposes of Education

In York University v. The Canadian Copyright Licensing Agency 2020 FCA 77 the Federal Court of Appeal considered the rights of a collective society to collect royalties specified in a tariff against a user who had not taken a license from the collective society. The Court reviewed legislative history related to subsection 68.2(1). The court concluded that the rights of a collective society had always been limited to collecting royalties from those who had agreed to take a license. To assert rights against a user who had not taken a license it was necessary to bring an action for infringement. There was little or no previous case law concerning this point. Enforcement of the tariffs had taken place in the past but without considering the issue and confounding the enforcement of the tariff with awarding damages based on tariff amounts. This appears to have led to the mistaken view that tariffs are mandatory since the measure of damages for infringement has been held to be the amounts prescribed by the tariff.

The Court concluded that the General Regime followed the structure of the Performing Rights Regime closely and the same result was arrived at for the General Regime. A final tariff would not be enforceable against York because tariffs do not bind non-licensees. If a final tariff would not be binding, the conclusion can hardly be different for an interim tariff.  

Acts of infringement do not turn infringers into licensees and make them liable for the payment of royalties. Infringers are subject to an action for infringement and liability for damages but only at the instance of the copyright owner, its assignee or exclusive licensee.

The court also agreed with the judge at first instance that York's Fair Dealing Guidelines based on guidelines developed by the Association of Universities and Community Colleges were not fair in either their terms or their application.

Leave to appeal to the Supreme Court of Canada has been granted relating to both issues.

Protective Orders and Confidentiality Orders

The Federal Court of Appeal in Canadian National Railway Company v. BNSF Railway Company 2020 FCA 45settled the law concerning granting protective orders and confidentiality orders. Protective orders prescribe the treatment of confidential information between the parties to an action during the discovery process but do not address filing confidential information with the Court. Confidentiality orders cover filing confidential information with the Court and granting sealing orders. Hybrid orders contain provisions that govern both confidential information exchanged between parties and confidential information filed with the Court. The underlying interests in seeking protective orders and confidentiality orders are different. A protective order has no deleterious impact on the principle of open and public courts unlike confidentiality orders.

The test for issuing a protective order is well established as set out below:

"Before issuing a protective order relating to information to be produced, the Court must be satisfied that "the moving party believes that its proprietary, commercial and scientific interests would be seriously harmed by producing information upon which those interests are based" [citing AB Hassle v. Canada (Minister of National Health and Welfare) (1998), 161 F.T.R. 15, 83 C.P.R. (3d) 428 at paras. 15, 20-30, affirmed in AB Hassle v. Canada (Minister of National Health and Welfare), [2000] 3 F.C. 360, 5 C.P.R. (4th) 149 (Fed. C.A.); See also Sierra Club at para. 14]. In the event a party challenges a confidential designation made by the other party, in determining whether information is confidential, the Court must be satisfied that it "has been treated by the party at all relevant times as confidential," and that "on a balance of probabilities, [the disclosing party's] proprietary, commercial and scientific interests could reasonably be harmed by the disclosure of information" (the "AB Hassle test"). (Footnotes omitted.)"

The test for granting a confidentiality order has been determined by the Supreme Court of Canada in Sierra Club of Canada v. Canada (Minister of Finance) 2002 SCC 41, [2002] 2 S.C.R. 52. The Supreme Court said that the determination of whether a confidentiality order is required by the first prong of the test is as follows

"At this stage, it must be determined whether disclosure of the Confidential Documents would impose a serious risk on an important commercial interest of the appellant, and whether there are reasonable alternatives, either to the order itself, or to its terms. [Emphasis added.] "

There is no justification for applying the same onerous Sierra Club test applied to confidentiality orders to protective orders. It was an error of law to consider alternative measures concerning a protective order.

The test for granting a hybrid order is the same as the test for granting a protective order. Hybrid orders also address materials that might be filed with the court with a confidential designation. However, a party who wishes to have the court treat documents subject to the hybrid order as confidential must bring a motion under Rule 151 of the Federal Courts Rules immediately after filing the documents. When the court is being asked to seal documents, the Sierra Club test, will apply.

Although the Federal Court is not obliged to grant a protective order, there have been no significant and compelling changes to the law that justify the refusal to grant a protective order on consent (or not) if (i) the AB Hassle test is met and (ii) the protective order submitted to the Federal Court is in accordance with the protective order template jointly developed over the years between the Intellectual Property Bar and the Federal Court. To facilitate the Court's review, the parties should provide sufficient evidence to support their motion for a protective order. The parties should also adopt the practice of identifying the portions of their draft protective order added to the template or removed from it.

Protective orders are useful for intellectual property litigants and there is no justification, legal or otherwise, for stifling this long-standing practice of granting them. Protective orders provide "structure and enforceability in ways the implied undertaking, or private agreements, cannot."

Interpreting Legislation Implementing International Obligations

In Entertainment Software Assoc. v. Society Composers 2020 FCA 100 the court, in interpreting legislation implementing international obligations, said that, if after interpreting the domestic legislation under the modern approach to statutory interpretation, the Court concludes that the legislation is clear and has no patent or latent ambiguities, the Court must give it its authentic meaning and apply it. This must be done even if it conflicts with international law.  Given the Canadian constitutional arrangements, international law cannot be used to displace or amend the authentic meaning of domestic legislation. The consideration of international law in legislative interpretation, like legislative interpretation itself, must be done in a neutral, non-results-oriented, non-tendentious way.

Interpreting Subsection 2.4(1.1)

The section says that for the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public. Because of this subsection 3(1)(f) and other sections which refer to the right to the communication of a work or other subject matter to the public by telecommunication must be read to include the broader meaning.

Socan (Society of Composers, Authors and Music Publishers of Canada) successfully filed tariffs to be collected for the communication to the public by telecommunication or reproduction in Canada of musical works. After subsection 2.4(1.1) was added to the Act Socan then filed separate tariffs relating to the making available of musical works. The Copyright Board agreed with this approach.

In Entertainment Software Assoc. v. Society Composers 2020 FCA 100an application for judicial review was allowed and the decision of the Copyright Board was quashed. The Court said that looking at the reasons, whether it intended to do so or not, the Board skewed its analysis in interpreting subsection 2.4(1.1) in favour of one particular result.

The Court said that the subsection 2.4(1.) does not create a new exclusive right. The Board used a "deeming provision" to create a right which, simultaneously, was and was not part of the communication right. When the deeming provision is set aside, all that is left is what the Board itself described as a "preparatory act". This is consistent with Parliament's use of the word "includes" in subsection 2.4(1.1). It would be contrary to the policy of the Act to establish a tariff relating to a preparatory step as this would constitute disaggregating rights to add an additional layer of royalties.

If there is no new exclusive right, there was no basis for the Board's conclusion that a stream did not merge with the making-available which preceded it to justify payment of two separate fees. Since there is only one right at stake, the only issue is whether the right has been triggered, and the only fees payable are those payable for exercising the right.

The Court suggested that leave to appeal to the Supreme Court of Canada should be sought since the proper interpretation of subsection 2.4(1.1) is an important issue.

Fair Dealing for the Purpose of Criticism

In Wiseau Studio, LLC v. Harper 2020 ONSC 2504 it was said that if the fair dealing was for the purpose of criticism, the criticism may be strongly expressed and unbalanced without forfeiting the fair dealing defence; an author's remedy for malicious and unjustified criticism lies (if it lies anywhere) in the law of defamation, not copyright. Like the term "fair comment" in defamation law, "fair dealing" is a misleading term, as it is not determined by the plaintiff's, or the court's, sense that something is "unfair," but is based on a range of factors that respect the rights of speakers and users to communicate information and views to the public without undue restrictions. A documentary can be many things and can be positive or negative about its subject. If a documentary uses copyrighted material for the purposes of criticism, review or news reporting, such use is for an allowable purpose under the fair dealing provisions of the Act.

Standard of Review for Administrative Decision-Making

In Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) (Vavilov) the Supreme Court of Canada recalibrated the approach to the standard of review of the substantive merits of administrative decision-making.

The court in Vavilov discusses the situations in which a reviewing court should derogate from the presumption of a reasonableness review and perform a correctness review. Vavilov identifies only five situations of this sort: legislated standards of review, statutory appeal mechanisms, constitutional questions, general questions of law of central importance to the legal system and questions regarding the jurisdictional boundaries between two or more administrative bodies.

In Vavilov, the Supreme Court effectively adopted the view that administrative decisions are easier or harder to set aside depending on certain contextual factors that liberate or constrain the decision-maker. As a practical matter, some decisions are more likely to survive reasonableness review because they are relatively unconstrained. But other decisions may be less likely to survive because they are relatively more constrained.

For example, in Entertainment Software Assoc. v. Society Composers, previously discussed, the Board was heavily constrained in what it could acceptably do by

  • the text, context and purpose of subsection 2.4(1.1) and the accepted methodology for considering these elements,
  • case law decided in this area such as Entertainment Software Association and Rogers Communications Inc. concerning the meaning of a "communication to the public by telecommunication",
  • case law concerning the interrelationship between domestic law and international law and the general primacy of the former over the latter.

In its interpretation of subsection 2.4(1.1), the Board offended these constraints and reached an unreasonable decision.

Jurisdiction of the Federal Court

In Salt Canada Inc. v Baker 2020 FCA 215 the Federal Court of Appeal confirmed that the Federal Court can interpret contracts between private citizens if it is done under a sphere of valid federal jurisdiction vested in the Federal Court. Absent a specific statutory grant of jurisdiction to the Federal Court, parties cannot assert a contractual claim in the Federal Court against another private party to obtain a remedy. But where a grant of jurisdiction is present, parties can claim a remedy even if their entitlement turns on interpreting an agreement or other instrument.

Who is a Properly Qualified Expert?

In Rallysport Direct LLC v 242508 Ontario Ltd 2020 FC 794 the Federal Court has confirmed based on existing case law that a properly qualified expert is someone "who is shown to have acquired special or peculiar knowledge through study or experience in respect of the matters on which he or she undertakes to testify". They also must provide an impartial, independent, and unbiased opinion and not advocate for a particular party.

Concerns related to the independence and impartiality of an expert can diminish the weight of the expert's evidence, and in some extreme cases justify excluding it. But the admissibility threshold is "not particularly onerous" and is met by the otherwise-qualified expert testifying under oath they recognize and accept their duty to the Court.

Determining the Amount of Statutory Damages

In Rallysport Direct LLC v 242508 Ontario Ltd 2020 FC 794the Federal Court said the actual and statutory damages should not be conflated. Statutory damages are not intended to be 1:1 proportional with provable "but-for" losses; rather, they can encompass both provable economic losses and additional factors such as deterrence. Determining the quantum of damages is not a precise science.

The Copyright Act protects the right of copyright owners to control who uses their works. Any actions that infringe this right, resulting in an unquantifiable loss of control, are best addressed in the context of deterrence, rather than in estimated license fees.

Deterrence ensures misconduct does not go unpunished simply because but-for causation cannot be proven for each infringement. Statutory damages "must be sufficiently high to serve a salutary message and deter future infringements on the part of the defendants and other parties". This is especially so where technology makes it easy to infringe. Where a defendant continues to infringe a plaintiff's works for at least two years despite repeated warnings to cease, there is a need to deter not only the defendant's infringements, but also those of others in similar circumstances.

The onus will be on the defendant to establish that an award of the minimum prescribed amount would cause a total award grossly out of proportion to the infringement. In making such a determination an analysis must be carried out relating to the alleged gross disproportionality which considers the facts of the case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.