CANADIAN COPYRIGHT, DESIGN AND RELATED LEGISLATION AND JURISPRUDENCE – 2010

Presented by Glen Bloom
Osler, Hoskin & Harcourt LLP Barristers & Solicitors Patent & Trade-mark Agents Ottawa, Ontario

Barry Sookman
McCarthy Tétrault LLP Barristers & Solicitors Patent & Trade-mark Agents Toronto, Ontario

Authored by Glen Bloom, Barry Sookman, Barry Fong, Jeremy Brisset, Christopher Scotchmer, and Mekhriban Mamedova © 2011 Glen Bloom and Barry Sookman

INTELLECTUAL PROPERTY – THE YEAR IN REVIEW LAW SOCIETY OF UPPER CANADA January 13 and 14, 2011

TABLE OF CONTENTS

INTRODUCTION .............................................................................................................. 1 1 – INTERNET .......................................................................................................................... 2 1.1 Internet Service Providers.................................................................................... 2

2 – ORIGINALITY .................................................................................................................... 2 2.1 Artistic Works ..................................................................................................... 2

3 – INFRINGEMENT ................................................................................................................ 3 3.1 3.2 3.3 Substantial Part of Work...................................................................................... 3 Causal Connection............................................................................................... 4 Counterfeiting ..................................................................................................... 4

4 – EXCEPTIONS AND DEFENCES TO INFRINGEMENT .................................................... 4 4.1 4.2 4.3 Fair Dealing ........................................................................................................ 4 Tests or Examinations ......................................................................................... 5 Implied Consent .................................................................................................. 5

5 – REGISTRATION ................................................................................................................. 6 5.1 Application to Expunge ....................................................................................... 6

6 – PROCEDURE ...................................................................................................................... 6 6.1 6.2 6.3 Default Judgment ................................................................................................ 6 Successful Summary Judgment Motions.............................................................. 6 Unsuccessful Summary Judgment Motions.......................................................... 7

7 – CIVIL REMEDIES............................................................................................................... 8 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 Interlocutory Injunctions ..................................................................................... 8 Permanent Injunctions ......................................................................................... 9 Statutory Damages ............................................................................................ 11 Accounting of Profits ........................................................................................ 11 Compensatory Damages .................................................................................... 11 Punitive Damages.............................................................................................. 11 Costs ................................................................................................................. 12 Contempt........................................................................................................... 12 Class Action ...................................................................................................... 13

8 – COLLECTIVE ADMINISTRATION OF COPYRIGHT .................................................... 14

8.1 8.2 8.3 8.4 8.5 8.6 8.7

Pay Audio Services ........................................................................................... 14 Private Copying................................................................................................. 14 Commercial Radio............................................................................................. 16 Media Monitoring ............................................................................................. 18 Reprographic Reproduction............................................................................... 18 Unlocatable Copyright Owners.......................................................................... 19 Judicial Review of Copyright Board Decisions .................................................. 19

9 – OTHERS JUST FOR INTEREST....................................................................................... 24 10 – SIGNIFICANT FOREIGN DECISIONS .......................................................................... 24 10.1 10.2 10.3 10.4 10.5 10.6 Australia............................................................................................................ 24 Europe............................................................................................................... 28 United Kingdom................................................................................................ 31 Ireland............................................................................................................... 37 Singapore .......................................................................................................... 38 United States ..................................................................................................... 39

11 - INDUSTRIAL DESIGNS.................................................................................................. 46 CONCLUSION ................................................................................................................ 46

CANADIAN COPYRIGHT, DESIGN AND RELATED LEGISLATION AND JURISPRUDENCE – 2009 Glen Bloom,1 Barry Sookman,2 Barry Fong,3 Jeremy Brisset,4 Christopher Scotchmer,5 and Mekhriban Mamedova6 Presented by Glen Bloom and Barry Sookman

INTRODUCTION The highlight for copyright law in 2010 in Canada was the introduction into Parliament of Bill C-32, the Copyright Modernization Act. Bill C-32 has been given second reading and is now being considered by the Parliamentary Committee of the House of Commons on Bill C-32. Whether Bill C-32 will pass into law will likely depend on the timing of the next federal election. Bill C-32 seeks to amend the Copyright Act to enable Canada to ratify the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. In addition, there are a number of new exceptions including an extension of fair dealing to cover users for the purposes of education, parody and satire and new exceptions for educational institutions. A discussion of Bill C-32 is however beyond the scope of this paper. Based upon the jurisprudence, the year 2010 can be known as the year of judicial review. There were seven decisions of the Federal Court of Appeal on multiple applications for judicial review of decisions of the Copyright Board. On the whole, the decisions of the Board stood up to judicial scrutiny. Only one application was fully successful, but only in part. Internationally, organizations creating computer generated works such as directories suffered a major setback in the Australian Telsta case where the Full Court of Australia denied protection for computer generated works. The Pirate Bay, FTB, Newzbin, and LimeWire were found liable in Sweden, Netherlands, UK and US for contributing to illegal file sharing. YouTube prevailed against Viacom on the liability for infringements taking place on YouTube's UGC site. There were also conflicting decisions on whether headlines are protected by copyright with a UK court finding protection in the Meltwater case and an Australian court finding no protection in the Fairfax case. This paper follows the format of the Law Society’s copyright update in prior years with an exception in comparison with more recent years. This year the paper includes decisions of the Copyright Board of Canada, as there is no separate paper on those decisions.
1 2

Glen Bloom is a partner of Osler, Hoskin & Harcourt LLP, and practises in the Ottawa office. Barry Sookman is a partner of McCarthy Tétrault LLP, and practises in the Toronto office. 3 Barry Fong is an associate in the Ottawa office of Osler, Hoskin & Harcourt LLP. 4 Jeremy Brisset is a student-at-law in the Montréal office of Osler, Hoskin & Harcourt LLP. 5 Christopher Scotchmer is an articling student in the Toronto office of McCarthy Tétrault LLP. 6 Mekhriban Mamedova is an articling student in the Toronto office of McCarthy Tétrault LLP.

-21 – INTERNET 1.1 Internet Service Providers Broadcasting under the Broadcasting Act is not directed at retail ISPs, which is similar to an earlier finding that ISPs do not communicate for purposes of the Copyright Act: Broadcasting Act (Can.) (Re).7 The Canadian Radio-television and Telecommunications Commission referred to the Federal Court of Appeal the question “Do retail Internet service providers (ISPs) carry on, in whole or in part, "broadcasting undertakings" subject to the Broadcasting Act when, in their role as ISPs, they provide access through the Internet to "broadcasting" requested by endusers?”. The Court answered no. Retail ISPs do not carry on “broadcasting undertakings” under the Broadcasting Act. Drawing on an analogy on the word “communicate” under the Copyright Act, “broadcasting” is directed at the person who transmits a program. A retail ISP’s sole involvement is to provide the mode of transmission not to transmit the program. 2 – ORIGINALITY 2.1 Artistic Works Sufficient originality was found in the plaintiff’s architectural plans to benefit from protection under the Copyright Act: Constructions Première Classe inc. c. Gestion 117 inc.8 The Quebec Superior Court held that architectural plans for the house in question included certain substantial characteristics which conferred originality upon the entirety of the work and allowed them to benefit from the protection under the Copyright Act. The Court noted that all transfers of copyrighted material must be made in writing and signed by the author. No evidence of such was demonstrated in the case at bar. The plaintiff was awarded damages calculated as the profit made by the defendant, as well as punitive damages of $5,000 and extrajudicial fees of $16,000. The plaintiff also obtained an injunction against the defendant to cease to reproducing, copying, modifying or adapting the plans. Sufficient originality was found in the plaintiff’s house design plan to benefit from protection under the Copyright Act: Constructions Première Classe inc. c. Beaulieu.9 A house designed and built by Construction Première Classe included certain substantial characteristics which conferred originality upon the entirety of the work and allowed them to benefit from protection under the Copyright Act. No transaction was demonstrated which would have assigned or given a right to use the copyrighted material to the defendant. The Quebec Court (Civil Division) held in favour of the plaintiff and awarded $25,000 as compensatory damages and $6,000 for judicial and extrajudicial fees. Moreover, the Court limited punitive damages to
7 8

2010 FCA 178. 2009 QCCS 6392. 9 2010 QCCQ 1710.

-3$1,000, as the defendant only used the plans for the construction of his own residence. An artistic design is original when it is the personal product and judgment of the author: Construction Denis Desjardins inc. c. Jeanson.10 Construction Denis Desjardins sought to overturn a judgment by the Quebec Superior Court finding that the architectural plans in question presented insufficient originality to be covered by the Copyright Act. The Quebec Court of Appeals held in favour of the appellant by finding that the architectural plans were artistic works protected under the Copyright Act. A design is original when it is the personal product and judgment of the author. In this case, the plans were copied intentionally and deliberately by the defendant, an illustration of bad faith, and thus the defendant was liable for $12,500 for compensable damages and $5,000 for punitive damages. Insufficient originality in architectural plans compared to other existing plans precluded protection under the Copyright Act: Nova Construction plus (JeanPierre Rioux) inc. c. Gagnon.11 The Quebec Superior Court rejected a motion brought by the plaintiffs alleging that the defendants had, without consent or authorization, used their architectural plans to build a house, thereby infringing copyright under the Copyright Act. The Court considered that the plans in question presented no distinctive traits conferring upon them the originality required, as compared to other existing model houses. Furthermore, the plans were not the product of the talent of the plaintiff. 3 – INFRINGEMENT 3.1 Substantial Part of Work An action for infringement of copyright and passing off was successful because copyright subsisted in the plaintiff’s market site plan, despite its functionality: Target Event Production Ltd. v. Cheung.12 From 2004 to 2007 the plaintiff had run a night market, a public event at which vendors sold food products and merchandise, in Vancouver’s Chinatown. The lease expired in 2007. The defendant signed a lease on the same property and opened a night market in 2008. The defendant had substantially copied the plaintiff’s market site plan (which showed the location of food and merchandise booths, sponsors’ booths, washrooms, the office and the stage), and vendor applications forms and rules. The Court held that copyright subsisted in the market site plan and that the defendant had infringed that copyright. The Court also found the defendant liable for passing off. Damages for copyright infringement and passing off were limited to $15,000 because the plaintiff did not have plans to continue its market and was not harmed financially.

10 11

2010 QCCA 1287. 2010 QCCS 4463. 12 2010 FC 27.

-4An allegation of copyright infringement was dismissed where there was no substantial similarity between the works when viewed as a whole: Philip Morris Products S.A. v. Marlboro Canada Limited.13 The plaintiffs in this action sought, among other things, a declaration that the defendants’ Canadian Marlboro cigarette packaging infringed copyright in its Marlboro Red Roof cigarette package designs. The Federal Court held that there was no substantial similarity between the works when viewed as a whole. The cigarette package designs each used different colours and fonts. The only common element was the use of a crest design, which was only one of six main characteristics of the plaintiff’s cigarette package design. The defendants’ crest was not however substantially similar to that of the plaintiff’s. In addition, the Court held that there was no evidence to establish a causal connection such that the plaintiff’s cigarette package design could be considered the source of the defendant’s cigarette package designs. The plaintiff’s allegation of copyright infringement was dismissed. 3.2 Causal Connection An allegation of copyright infringement was dismissed where there was no substantial similarity and no causal connection between the works: Philip Morris Products S.A. v. Marlboro Canada Limited.14 See Section 3.2 ‘Infringement – Substantial Part of Work’. 3.3 Counterfeiting A fine of $4000 and a six-month conditional sentence was imposed for a guilty plea to breach of section 42(1)(b) of the Copyright Act: R. v. Hirani.15 The accused plead guilty to an indictment of offering for sale an infringing copy of a work contrary to section 42(1)(b) after electing to be tried in the Provincial Court. A shipping container with boxes of fake brand name watches, purses, shoes and other items was seized by Canadian Border Services Agency, and an undercover officer attended at the store of the accused to purchase items and certificates of authenticity. The accused had no criminal record, was remorseful, had had her life adversely affected by the loss of her business, was not living off significant profits made from illegal activity, and was unlikely to reoffend. The sentence included a fine of $4,000 and a six-month conditional sentence to be served in the community. 4 – EXCEPTIONS AND DEFENCES TO INFRINGEMENT 4.1 Fair Dealing The Copyright Board was reasonable in concluding that a onetime free preview download was research and subject to the exception for fair dealing:
13 14

2010 FC 1099. 2010 FC 1099. 15 2010 BCPC 205.

-5Society of Composers, Authors and Music Publishers of Canada v. Bell Canada.16 See Section 8.7 ‘Collective Administration of Copyright – Judicial Review of Copyright Board Decisions’. An application for judicial review of the Copyright Board’s K to 12 decision was allowed in part; the Board made no reviewable error on the issue of fair dealing, but failed to engage in the required analysis on the issue of the exception under Section 29.4 of the Copyright Act: Alberta (Minister of Education) v. Canadian Copyright Licensing Agency (c.o.b. Access Copyright).17 See Section 8.7 ‘Collective Administration of Copyright – Judicial Review of Copyright Board Decisions’. 4.2 Tests or Examinations An application for judicial review of the Copyright Board’s K to 12 decision was allowed in part; the Board made no reviewable error on the issue of fair dealing, but failed to engage in the required analysis on the issue of the exception under Section 29.4 of the Copyright Act: Alberta (Minister of Education) v. Canadian Copyright Licensing Agency (c.o.b. Access Copyright).18 See Section 8.7 ‘Collective Administration of Copyright – Judicial Review of Copyright Board Decisions’. 4.3 Implied Consent Quebec Court dismissed an action for copyright infringement on grounds that the plaintiff had implicitly consented to use of the plaintiff’s photographs: Jam c. Éditions Trois-Pistoles.19 The Quebec Court (Civil Division) rejected a motion brought by plaintiff alleging that the defendant had violated the Copyright Act by publishing in her book, certain photographs taken by the plaintiff without her consent. The Court found that the plaintiff had implicitly consented to the use of her photographs. The plaintiff had knowledge that the pictures would be published and showed no objections. She took the photographs and gave them to the defendant, knowing that the defendant would use them in her book. Moreover, the plaintiff even advised the defendant on which photos to use and attended the book launch party. The plaintiff had ample opportunity to clarify the situation and let it be known that she did not consent to the use of her photographs. The plaintiff had tacitly agreed to have her photographs used in the book.

16 17

2010 FCA 123. 2010 FCA 198. 18 2010 FCA 198. 19 2010 QCCQ 9886.

-65 – REGISTRATION 5.1 Application to Expunge An appeal of a decision dismissing application to expunge a copyright registration was allowed in part on the issue of costs only: Neugebauer v. Labieniec.20 The appellant, Neugebauer, appealed a decision of the Federal Court, which dismissed his application to expunge a copyright registration. The application before the Federal Court concerned a book in which the appellant claimed to be the sole author. The registration listed both the appellant and the respondent, Labieniec, as joint authors of the book. The Federal Court of Appeal held that the trial judge disclosed no error of law or any other error that warranted intervention on the issue of the validity of the registration. The trial judge’s decision was largely dependent upon her assessment of the evidence and was entitled to significant deference in the absence of palpable and overriding error. The appeal, however, was allowed in part on the issue of costs. The trial judge’s costs order was set aside and costs were fixed at $3,000. 6 – PROCEDURE 6.1 Default Judgment Motions to set aside default judgments were dismissed where the defendants failed to provide a reasonable explanation for their failure to file statements of defence in a timely manner and bring their motions within a reasonable time: Society of Composers, Authors and Music Publishers of Canada v. 564163 Ontario Ltd. (c.o.b. Studio 4 Tavern).21 The defendants brought motions to set aside default judgments granted by the Federal Court on January 22, 2009. The default judgments were granted in actions commenced by the plaintiff seeking to recover unpaid royalties for unlicensed use of musical works in adult entertainment clubs operated by the defendants. The Court held that the defendants failed to satisfy the three conjunctive elements of the test to be applied on a motion to set aside a default judgment. There was no reasonable explanation for the defendants’ failure to file statements of defence in a timely manner and the Court was not persuaded that the motions to set aside the default judgment were brought within a reasonable time. The motions were dismissed. 6.2 Successful Summary Judgment Motions Summary judgment was granted where there was no genuine issue for trial with respect to an allegation of copyright infringement in seven karaoke songs: Entral Group International Inc. v. Mcue Enterprise Corp. 22 The plaintiffs brought a
20 21

2010 FCA 229. 2010 FC 905. 22 2010 FC 606.

-7motion for summary judgment in an action in the Federal Court for copyright infringement. The plaintiffs owned copyright in seven karaoke songs, and would enter into licence agreements with various international record labels for exclusive rights in exchange for licence fees. The defendant karaoke entertainment company installed the songs on a specialized computer system without the consent of the plaintiffs. Several cease and desist letters were sent, but aside from asking for particulars, the defendant took no steps to licence the songs but continued to use the works without authorization. As the defendants did not file materials in response, there was nothing that questioned the accuracy or truthfulness of the plaintiffs' account of the dispute. The evidence established infringement by the defendants, and the declaratory and injunctive relief sought was appropriate in the circumstances. The plaintiffs were awarded statutory damages of $105,000 on the basis of $15,000 for each work infringed, plus punitive or exemplary damages of $100,000. This was appropriate as the defendants engaged in extreme bad faith both before and during the proceedings, and had persisted in ongoing and deliberate infringement despite the receipt of several cease and desist letters. 6.3 Unsuccessful Summary Judgment Motions A motion for summary judgment brought by the defendants was dismissed where the defendants had not established that the plaintiff's claim was so doubtful that it did not deserve consideration by the trier of fact at a future trial because of questions of fact, issues of credibility, scrutiny of possible inferences and a serious question of law: Canadian Private Copying Collective v. J & E Media Inc.23 The plaintiff sought damages equal to unpaid private copying levies under the Copyright Act on sales of blank audio recording media. In the defendant’s motion for summary judgment the plaintiff alleged that the defendants had ceased operations after the plaintiff demanded payment of the private copying levies, and established a successor company that acquired and sold the blank media from the same premises. The defendants argued that they neither manufactured nor imported blank media into Canada, and were not liable for the unpaid levies. On the motion for summary judgment, the Federal Court held that the plaintiff had shown that the case involved issues of credibility and a serious question of law pertaining to the jurisdiction of the Federal Court to adjudicate a tort claim for conspiracy. The corporate changeover and relationships between all the parties were the subject of much dispute and could not be resolved on summary judgment. A motion for summary judgment was dismissed where there was a genuine issue for trial on the liability of the defendant and whether some claims were statute barred: Society of Composers, Authors and Music Publishers of Canada v. Maple Leaf Sports and Entertainment.24 SOCAN had sued the defendant, Maple Leaf Sports and Entertainment, for failure to pay royalties for 40 concerts held at the Air Canada Centre. The defendant brought a motion for summary judgment on the
23 24

2010 FC 102. 2010 FC 731.

-8grounds that some of the plaintiff’s claims were outside the limitation periods, the plaintiff did not have the rights claimed, and the defendant was not liable to make these payments if the Court found that the plaintiff held the rights claimed. The Federal Court held that there were genuine issues for trial regarding the plaintiff’s claims for infringement of copyright and for payment of tariff royalties, and the applicability of limitation periods and the principle of discoverability. There were evidentiary and credibility determinations best suited to a trial on the merits. A motion for summary judgment was dismissed where there were issues best left to a trial judge for determination: Concept Developments Ltd. v. Webb.25 The plaintiffs brought a motion for summary judgment in an action for copyright infringement. The plaintiff, a creator of home building designs, has registered copyrights in plans and building designs for a bi-level home. The plaintiff alleged that the defendant, Webb, authorized a third party, High Grade Homes Inc., to build a home that was substantially similar to the plaintiff’s design. The motion for summary judgment was dismissed for several reasons: (1) the necessary facts had not yet been established and the issue of whether the defendant’s home design was substantially similar to the plaintiff’s design was an issue of fact best left to a trial judge; (2) there were serious issues of credibility; (3) the question of “authorization” was legally and factually complex and best left to a trial judge to determine; and (4) the measure of damages had not yet been established and the plaintiff had raised a novel proposition for damages. 7 – CIVIL REMEDIES 7.1 Interlocutory Injunctions A rolling Anton Pillar order was inappropriate where there was no evidence that the actual or potential damage specifically related to Canada and was not very serious, there was no evidence that the defendants would be likely to hide or destroy relevant items, and some of the defendants were known before the ex parte order was sought: Vinod Chopra Films Private Ltd. v. John Doe.26 Some of the named defendants, who were small shopkeepers, sought a review of a rolling Anton Piller order. The plaintiffs, Vinod Chopra Films and Reliance Mediaworks, the copyright owner and licensee of a film entitled "3 Idiots”, had been successful in obtaining and executing an ex parte rolling Anton Piller order, a form of civil search warrant where all the defendants are not known at the time of issue. A handful of unauthorized copies of the film were seized. The plaintiffs had submitted on the ex parte application that the potential or actual damage was very serious as the Indian economy had suffered job losses and revenue losses as a result of piracy, because piracy would lead to the loss of sales of video products, and there was a real possibility that the defendants would destroy any incriminating evidence in their
25 26

2010 FC 1315. 2010 FC 387.

-9possession. The Anton Pillar order was set aside because none of the evidence regarding actual or potential damage specifically related to Canada, the motion picture "3 Idiots" or the defendants. The handful of unauthorized copies of the film that were seized sold at approximately one or two dollars per copy. The plaintiffs failed to establish that the damage was or would be very serious. There was no evidence that the defendants would be likely to hide or destroy relevant items, and some of the defendants were known before the ex parte order was sought. A motion for injunctive relief restraining the plaintiffs from preventing the televising of a documentary was granted: Warner Chappell Music France c. Beaulne.27 The plaintiffs sought damages for violation of copyrighted material and a permanent injunction to prohibit the defendant from televising a documentary on the life of Michel Legrand. The defendants alleged a breach of contract and sought an injunction to restrain the plaintiffs from preventing the diffusion of the movie. The Quebec Superior Court held in favour of defendants. The plaintiffs had not demonstrated any clear proof with respect to the copyright violation, nor did the plaintiffs demonstrate that Michel Legrand’s reputation would be jeopardized. Since the movie was not then being shown, there was no violation of copyright. The damages alleged by the plaintiffs were only potential damages, whereas those alleged by the defendants were real and necessitated an immediate intervention. A motion for an interlocutory injunction restraining the defendants from publicly showing, exhibiting or performing sports events was granted on grounds that the plaintiff had established irreparable harm and that the balance of convenience favoured granting injunctive relief: Premium Sports Broadcasting Inc. v. 1682211 Ontario Inc. (Studio 10).28 The plaintiff brought an action against the defendants, operators of several sports bars, claiming infringement of the Copyright Act and the Radiocommunication Act by publicly showing, exhibiting or performing Ultimate Fighting Championship (UFC) sport events licensed to or by the plaintiff. The plaintiff then moved for an interlocutory injunction. The only evidence before the Court was the plaintiff’s unchallenged evidence. The Court was satisfied that the plaintiff had raised a serious issue to be tried, had established irreparable harm and that the balance of convenience favoured the granting of an interlocutory injunction. An order was issued restraining the defendants from, among other things, publicly showing, exhibiting or performing UFC events until December 31, 2011 without the written authorization and consent of the plaintiff. 7.2 Permanent Injunctions A motion for a permanent injunction was granted on grounds that it was warranted to cease copyright infringement: Sixty Spa v. 3127885 Canada Inc.29 The defendant store imported 90 T-shirts into Canada bearing an almost identical
27 28

2010 QCCS 2632. 2010 FC 1267. 29 2010 QCCS 2754.

- 10 reproduction of a picture from the plaintiff’s catalogue of pictures of models wearing the plaintiff’s clothing and accessories. The plaintiff sought a permanent injunction restraining the defendant from reproducing the copyrighted works and importing the infringing wares into Canada, as well as statutory damages under section 38.1(1) of the Copyright Act between $500 and $20,000. The Quebec Superior Court held that the defendant’s infringement of the plaintiff’s copyright warranted granting a permanent injunction in order to require the defendant to cease its illegal activity, but as only 90 T-shirts were imported, full statutory damages would be grossly out of proportion to the infringement. The Court awarded a sum of $150 as statutory damages. A moral rights claim, a permanent injunction for copyright infringement and punitive damages were all denied where there was no evidentiary foundation for them and where the plaintiff failed to prove copyright infringement except for a technical breach: Nicholas v. Environmental Systems, (International) Ltd.30 The plaintiff alleged that the defendants copied, published and distributed a report he wrote that evaluated the defendant’s patented water purification technology. The plaintiff conceded that the moral rights claim that his reputation had been prejudiced was without evidentiary foundation. The alleged acts of copyright infringement were limited to the posting of the report on a website, and the making of a few modifications and one copy of the report. The Federal Court found that the plaintiff’s assertions of copyright were only made after-the-fact, but that, as there was no license or implied consent to post the report on the website and use it to solicit sales, this was a technical breach of copyright. The plaintiff elected to pursue statutory damages, but the plaintiff failed to prove either infringement or lack of consent for anything other than posting the report on the website. The plaintiff was awarded $500 in statutory damages. Punitive damages were denied as there was no high-handed conduct worthy of condemnation. There was no basis for granting declaratory or injunctive relief, as the defendant had removed the report from its website. Trial judge’s order of injunctive relief was amended on the grounds that the Copyright Act does not contemplate prohibitions against “use” or “operation”: Target Event Production Ltd. v. Cheung.31 The appellants appealed a decision of the Federal Court which held, among other things, that the appellants had infringed the respondent’s copyrights in association with a Chinese night market operated by the respondent in British Columbia. The trial judge enjoined the appellant from “operating” a market which is a substantial reproduction of the respondent’s market site plan. On appeal, the appellants submitted that the trial judge erred in granting the injunctive relief because the only remedies available for copyright infringement are those provided for under the Copyright Act. The statute does not contemplate prohibitions against “use” or “operation”. The respondent agreed and suggested that the injunction be amended. The Federal Court of Appeal held that the trial judge’s injunction was too broad and amended the injunction to prohibit the appellants from
30 31

2010 FC 741. 2010 FCA 255.

- 11 “further infringing the copyright of [the respondent] in the Market Site Plan by reproducing it, or any substantial part thereof, in any material form whatever”. 7.3 Statutory Damages Plaintiff sought an award of statutory damages between $500 and $20,000, which the Court held would be grossly out of proportion to the infringement; statutory damages in the amount of $150 was awarded: Sixty Spa v. 3127885 Canada Inc.32 See Section 7.2 ‘Civil Remedies – Permanent Injunctions’. Plaintiff entitled to only $500 in statutory damages for the defendant’s action in posting a copyrighted report on website: Nicholas v. Environmental Systems, (International) Ltd.33 See Section 7.2 ‘Civil Remedies – Permanent Injunctions’. 7.4 Accounting of Profits Quebec Superior Court award included an accounting of profits made from the defendant’s infringement of the plaintiff’s architectural plans: Constructions Première Classe inc. c. Gestion 117 inc. 34 See Section 2.1 ‘Originality – Artistic Works’. 7.5 Compensatory Damages Plaintiff awarded $25,000 in compensatory damages for copyright infringement in a house design plan: Constructions Première Classe inc. c. Beaulieu.35 See Section 2.1 ‘Originality – Artistic Works’. On appeal, the plaintiff was awarded compensatory damages in the amount of $12,500 for copyright infringement in an architectural design plan: Construction Denis Desjardins inc. c. Jeanson. 36 See Section 2.1 ‘Originality – Artistic Works’. 7.6 Punitive Damages Plaintiff awarded punitive damages in the amount of $5,000 for copyright infringement of the plaintiff’s architectural design plans: Constructions Première Classe inc. c. Gestion 117 inc.37 See Section 2.1 ‘Originality – Artistic Works’. Quebec Court limited punitive damages to $1,000 where the defendant’s infringing use of the plaintiff’s protected house design was only used to construct

32 33

2010 QCCS 2754. 2010 FC 741. 34 2009 QCCS 6392. 35 2010 QCCQ 1710. 36 2010 QCCA 1287. 37 2009 QCCS 6392.

- 12 his own residence: Constructions Première Classe inc. c. Beaulieu.38 See Section 2.1 ‘Originality – Artistic Works’. Plaintiff awarded punitive damages in the amount of $100,000 for copyright infringement of seven karaoke songs; the defendants engaged in extreme bad faith and persisted in ongoing and deliberate infringement despite several cease and desist letters: Entral Group International Inc. v. Mcue Enterprise Corp.39 See Section 6.2 ‘Procedure – Successful Summary Judgment Motions’. On appeal, the plaintiff was awarded punitive damages in the amount of $5,000 for copyright infringement in an architectural design plan: Construction Denis Desjardins inc. c. Jeanson.40 See Section 2.1 ‘Originality – Artistic Works’. Punitive damages were denied where there was no high-handed conduct on the part of the defendant that was worthy of condemnation: Nicholas v. Environmental Systems, (International) Ltd.41 See Section 7.2 ‘Civil Remedies – Permanent Injunctions’. 7.7 Costs An award of solicitor-and-client costs was set aside where the trial judge failed to provide explanation: Target Event Production Ltd. v. Cheung.42 The appellants appealed a decision of the Federal Court which included, among other things, an award of solicitor-and-client costs. The trial judge failed to provide an explanation for awarding solicitor-and-client costs and there were no references in the reasons to any reprehensible, scandalous or outrageous conduct on the part of the appellant. The Federal Court of Appeal substituted the trial judge’s award of solicitorand-client costs with an award of party-and-party costs. See Section 27.3 ‘Civil Remedies – Permanent Injunctions’ for additional discussion. 7.8 Contempt An appeal of a contempt order of the Federal Court was dismissed on grounds that the sentence was not demonstrably unfit and the appellant had acted in bad faith: Microsoft Corp. v. 9038-3746 Quebec Inc.43 The appellant appealed the penalty imposed on him after he pled guilty to two charges of contempt of court which arose out of selling and possessing counterfeit copies of Microsoft software. The sentencing judge had ordered that the appellant pay a fine of $50,000 for each offence, within 120 days from the date of the order. The sentencing judge found that the appellant had acted in bad faith in having little regard for the truth at
38 39

2010 QCCQ 1710. 2010 FC 606. 40 2010 QCCA 1287. 41 2010 FC 741. 42 2010 FCA 255. 43 2010 FCA 151.

- 13 discovery, and had failed to provide records despite being ordered to do so. The Federal Court of Appeal dismissed the appeal, holding that the sentence was not demonstrably unfit. The appellant's unlawful acts were violations of the Trade-marks Act and the Copyright Act. 7.9 Class Action Permission to institute a class action alleging copyright infringement was granted to a group representing independent journalists in Quebec: Association des journalistes indépendants du Québec (AJIQ-CSN) c. Journal Voir. 44 The Quebec Superior Court granted permission to institute a class action in favour of the plaintiff Association which alleged violation of various copyrights in literary works reproduced electronically without authorization or compensation. The Court held that prima facie the allegations established a cause of action. Access to justice and concerns about efficiency warranted a communal trial. The Association had demonstrated an authentic interest to advance the cause of their members and its representative, Bélanger, was able to adequately represent those members. A motion to stay or sever third and fourth party proceedings in a class action for copyright infringement was dismissed where the only prejudice was delay and expense: Robertson v. Proquest Learning and Information LLC.45 In a class action alleging infringement of the class members’ copyrights and moral rights by the defendant print publishers, the plaintiffs brought a motion to severe or stay third and fourth party proceedings. The defendants alleged that there were licensed by the class members to publish electronically, and the third and fourth parties intended to rely on express consents and licences given by the plaintiffs as well as licences to be implied from the context provided by the nature and purpose of their particular publications. The plaintiffs sought to stay or severe the third and fourth party proceedings on the grounds that these proceedings would cause unnecessary delay. The Ontario Superior Court of Justice dismissed the motion because there was no prejudice other than additional delay and expense. This could be kept in check by effective case management. Further, the third and fourth parties’ claims were relevant to the issue of the terms of the licences between the class members and the defendants. An appeal of a Quebec Superior Court decision authorizing a class action was allowed on grounds that the class action had no basis in law and that the decision to institute the class action was contrary to the objectives of class action proceedings: Apple Canada Inc. c. St-Germain.46 The Quebec Court of Appeal overturned a judgment of the Quebec Superior Court granting the defendants the permission to institute a class action against Apple. In 2003, the Copyright Board of Canada ordered Apple to pay private copying levies to the Canadian Private Copying Collective (CPCC) for the sale of iPods. As a result, Apple increased the sale price of
44 45

2010 QCCS 1574. [2010] O.J. No. 3261. 46 2010 QCCA 1376.

- 14 its iPods from $15 to $25. The decision of the Copyright Board was subsequently overturned by the Federal Court of Appeal. Apple then instituted an internal policy to reimburse consumers who had purchased iPods during the period in which it was required to pay the levies. Despite the policy, a class action was instituted for all consumers who purchased iPods during that period. The trial judge erred on numerous counts. First, the class action had no basis in law. Apple’s decision to reimburse consumers had no legal bearing on the consumers. Apple was rather only legally obligated towards CPCC. Moreover, Apple demonstrated that its internal policy was in fact the best solution and presented sufficient information to the consumers, an adequate period to make a claim and a possibility for revision in instances where a claim was rejected. Finally, instituting a class action in this case would be contrary to the objectives of a class action which are: to manage the judicial system, favour the access to justice and encourage change on the part of defendants. Permitting a class action in this case, when Apple had already taken the best possible means necessary to solve the issue, would go against those objectives. 8 – COLLECTIVE ADMINISTRATION OF COPYRIGHT 8.1 Pay Audio Services A tariff for pay audio services was certified at the existing rate: Statement of Royalties to be Collected by SOCAN and NRCC in respect of Pay Audio Services for the Years 2007-200947. SOCAN and NRCC proposed tariffs for the communication to the public by telecommunication of sound recordings of musical works by pay audio services. The collectives and objectors to the proposed tariff agreed to maintain, for 2007 to 2009, the status quo of the previous tariff for pay audio services for 2003 to 2006. The Copyright Board certified the tariff for 2007 to 2009 in accordance with the agreement. 8.2 Private Copying A tariff of levies to be collected on the sale of blank audio recording media, including professional CDs but not including minidiscs, was certified for 2010: Tariff of Levies to be Collected by CPCC in 2010 on the Sale of Blank Audio Recording Media, in Canada, in respect of the Reproduction for Private Use of Musical Works Embodied in Sound Recordings, of Performers’ Performances of Such Works or of Sound Recordings for which Such Works and Performances are Embodied48. CPCC proposed a tariff of levies for the sale of blank audio cassettes, CDs and minidiscs for 2010. The levies sought were 24¢ for audio cassettes and 29¢ for CDs and minidiscs. The objector Z.E.I. Media Plus Inc. (“ZEI”) challenged the levies for professional CDs promoted for business applications. The Copyright Board found that professional CDs could not be isolated as a separate type of medium. The evidence did not establish one or more characteristics that were sufficiently stable to
47 48

Copyright Board, January 15, 2010 Copyright Board, May 29, 2010

- 15 draw the distinction between professional CDs used for business applications and CDs used by consumers to make private copies. As long as a non-marginal number of consumers use a type of CD for private copying in a fashion that is not marginal, that type of CD will be leviable. The Board found that the percentage of copying using audiocassettes had continued to decrease with the percentage of Canadians using audiocassettes falling to 3 per cent in 2008-2009. The use of audiocassettes to copy music had become marginal and therefore they no longer met the definition of audio recording media. The tariff levies did not extend to audiocassettes. In calculating the levy rate for CDs at 29¢ the Board made an upward adjustment of 32 per cent to reflect the fact that 80 per cent of all tracks copied were selected from one or more albums. The selection of an individual track provided additional value to the tracks. A tariff of levies to be collected on the sale of blank audio recording media but not including audio cassettes or minidiscs was certified for 2011: Tariff of Levies to be Collected by CPCC in 2011 on the Sale of Blank Audio Recording Media, in Canada, in respect of the Reproduction for Private Use of Musical Works Embodied in Sound Recordings, of Performers’ Performances for Such Works or of Sound Recordings in which Such Works and Performances are Embodied49. CPCC proposed a tariff of levies for the sale of blank audiocassettes, CDs and minidiscs for 2011. In view of the Copyright Board’s decision on tariff levies for 2010 excluding audiocassettes from the levies, CPCC filed no evidence relating to audiocassettes. Based on the evidence, the Board found that minidiscs were no longer subject to the tariff because their use had declined to such an extent that they were no longer used by consumers for making private copies. In certifying the levy rate for CDs at the same 29¢ rate as for 2010, the Board observed that the blank CD is reaching the end of its technology life cycle. The costs of an audit and unpaid private copying levies plus interest were awarded where an audit revealed under-reporting by an importer of black audio recording media: Canadian Private Copying Collective v. Data Media Products Inc.50 The Canadian Private Copying Collective (“CPCC”) claimed unpaid levies and audit costs under sections 34(4)(c)(i) and 88 of the Copyright Act. The defendant, Data Media, was an importer and seller of blank audio recording media. CPCC sought unpaid levies of $10,797 and interest on sales of 80,170 units of blank audio recording media that Data Media had not reported. CPCC also sought the costs of an audit conducted to calculate this under-reporting of sales, along with a penalty under section 88(2) of the Act of five times the amount of the unpaid levies. The Federal Court allowed the application, and ordered Data Media to pay levies of $10,797 and interest of $268 and awarded CPCC its audit costs and interest. The Court was not
49 50

Copyright Board, December 17, 2010 2009 FC 1277.

- 16 satisfied that, taking into account the considerations listed in section 88(4) of the Act, the maximum penalty was appropriate, but in light of the need for deterrence, a penalty of two times the unpaid levies was appropriate. 8.3 Commercial Radio Tariffs for the reproduction of musical works, performers’ performances and sound recordings and for communication to the public for telecommunication of musical works and sound recordings was certified following a consolidated hearing: Statement of Royalties to be Collected by SOCAN, Re:Sound, CSI, AVLA/SOPROQ and ArtistI in respect of Commercial Radio Stations51. Five different collectives filed proposed tariffs for the use of musical works, performers’ performances and sound recordings by commercial radio stations. SOCAN filed a proposed tariff for the communication of musical works to the public by telecommunication. Re:Sound filed a proposed tariff for the communication of sound recordings to the public by telecommunication. CSI filed a proposed tariff for the reproduction of musical works. AVLA/SOPROQ filed a proposed tariff for the reproduction of sound recordings. ArtistI filed a proposed tariff for the reproduction of performers’ performances. The AVLA/SOPROQ and ArtistI proposed tariffs were inaugural tariffs. The Canadian Association of Broadcasters (“CAB”) opposed the proposed tariffs and the Copyright Board consolidated the proceedings concerning the five proposed tariffs in a single hearing. CAB proposed that the existing tariff royalties payable to SOCAN, Re:Sound and CSI be reduced with a cap for all royalties at 2.9 per cent of advertising revenue in reliance upon the economic model adopted by the Copyright Board in respect of the previous SOCAN and Re:Sound tariffs with certain exceptions. The evidence showed that radio stations now rely upon electronic music delivery systems (“MDS”) to source the sound recordings they use in their broadcasts. The predominant system used, DMDS, allows radio stations to download digital releases in encrypted form through its website. After decrypting the electronic files radio stations make additional copies in their playback systems. Record labels and some independent artists decide what material is made available for downloading. The licences that a MDS obtains from a record label does not however obviate the need for a radio station to secure a licence from CSI for the musical work or from ArtistI for the performers’ performance. The agreements that record labels have with DMDS authorizes radio stations to audition recordings and download tracks for the purpose of adding them to their playlist. The rights are however limited to the initial encrypted and decrypted copies. Subsequent copies made are not covered by the DMDS agreements with the record labels and therefore radio stations must comply with the AVLA/SOPROQ’s tariff with respect to subsequent copies. Performers outside Quebec almost invariably grant to makers of sound recordings their exclusive rights to use the fixations of their performances for all purposes.
51

Copyright Board, July 9, 2010

- 17 Certain of the Quebec performers represented by ArtistI are however in a different position by reason of the provisions of the Quebec Status of the Artist Act and certain collective agreements with performers. The Board concluded that ArtistI members who were subject to the collective agreement between UDA and ADISQ retained the reproduction rights that were in play in the proceedings and transferred those rights to ArtistI. ArtistI owned the rights of such performers to authorize the making of copies of performers’ performances after the initial download from a MDS. On the other hand, ArtistI members who were parties to the Guilde agreements cannot have assigned their reproduction rights to ArtistI. Accordingly, ArtistI’s repertoire does not include the performers’ performers of those members. The AVLA/SOPROQ tariff took effect January 1, 2008. The Board could not certify an AVLA/SOPROQ tariff for the use of a sound recording reproduced prior to that date. The remedy that the collective had with respect to those recordings was to negotiate a licence or sue the radio stations for copyright infringement. Although the Board had previously certified Re:Sound commercial radio tariffs with a rate base of advertising revenues, it was not restricted to do so by section 68.1 of the Copyright Act. In certifying the tariffs the Board decided not to use any of the methodologies advanced by the parties in order to maintain stability in the royalty rates. Although the music use study conducted by SOCAN and Re:Sound showed an increase in music use, the evidence did not establish that the increase was sufficiently permanent to warrant an adjustment to their previously certified rates. The previous CSI tariff rate was based upon the SOCAN rate prior to the Board’s increase in the SOCAN rate for the period 2003 to 2007. The factors behind the increase in the SOCAN rate also applied to CSI and therefore the Board increased CSI’s rate with a further repertoire adjustment. With respect to the AVLA/SOPROQ and ArtistI tariffs, the Board held that the value to radio stations of the reproduction, right of musical works was equal to that of the sound recording which encompasses both the makers’ and performers’ rights. The Board therefore used the CSI rate for calculating the AVLA/SOPROQ and ArtistI rates and then adjusted those rates as required in the circumstances. For all five tariffs the Board adopted gross income as the rate base and rejected a very low use rate category. The effective total royalty rate, taking into account the reduced payment of $100 per year to Re:Sound on the first $1.25 million of advertising revenue specified in section 68.1 of the Copyright Act, was 5.7 per cent with the five tariffs generating in total $85 million for 2009. The Regulations Defining “Advertising Revenues”, SOR/98-447 permits radio stations to exclude from “advertising revenues” any revenues that they derive from the productions of advertisements in calculating commercial radio tariffs. The fact that radio stations incur costs in the production of advertisements

- 18 under turn-key contracts does not prove that broadcasters have production revenues which must be excluded from “advertising revenues”: AstralMedia Radio Inc. v. Society of Composers, Authors and Music Publishers of Canada.52 The appellant appealed summary judgement granting to the respondent a declaration that a radio station is permitted to exclude the fair market value of production services that the station provides to advertisers under turn-key contracts from the revenues it generates from the broadcast of advertisements in calculating commercial radio tariffs. Radio stations pay a tariff for playing sound recordings of musical works based on the amount of advertising revenue earned. The evidence showed that, in general, radio stations did not charge an additional fee for their production services on top of the cost of their advertising services. On appeal, it was held that advertising revenue did not include production revenues. The fact that a cost, such as the cost of the production services, had been incurred did not mean that revenue had been earned. Whether in a specific instance a broadcaster that had produced an advertisement that had generated production revenues was a factual issue to be determined at trial, and not on a summary judgment motion. 8.4 Media Monitoring A tariff for the fixation and reproduction of programs and communication signals of private broadcasters by media monitors was certified at the existing rate: Statement of Royalties to be Collected by CBRA for the Fixation and Reproduction of Works and Communication Signals, in Canada, by Commercial and Non-Commercial Media Monitors for the Years 2009 and 201053. CBRA proposed a tariff for the fixation and reproduction of programs and communication signals of private broadcasters by media for the years 2009 and 2010. The tariff was essentially the same as the previous tariff for 2006 to 2008. The Copyright Board certified the tariff as proposed. 8.5 Reprographic Reproduction An interim tariff was issued by the Copyright Board in proceedings for an inaugural tariff of Access Copyright for the reprographic reproduction of works in its repertoire by post-secondary educational institutions: Interim Statement of Royalties to be Collected by Access Copyright for the Reprographic Reproduction, in Canada, of Works in its Repertoire (Post-Secondary Educational Institutions, 20012013)54. The Copyright Board issued an interim decision in the form of an interim tariff in proceedings for an inaugural tariff of Access Copyright for the reprographic reproduction of works in its repertoire by post-secondary educational institutions. The tariff was issued to maintain the status quo, to the extent possible, of existing licence agreements between Access Copyright and post-secondary educational

52 53

2010 FCA 16. Copyright Board, February 12, 2010 54 Copyright Board, December 23, 2010

- 19 institutions pending certification of Access Copyright’s inaugural tariff. Reasons for the interim decision will be released in 2011. 8.6 Unlocatable Copyright Owners The Copyright Board refused to grant a licence to use a sound track of an unlocatable copyright owner because no licence was required in view of the exception in section 23.4(2) of the Copyright Act: Licence Application by the Ministère de L’Education, Du Loisir et du Sport Québec (MELS) for the use of the Soundtrack of a Video Recording of a Speech Delivered by Severn Cullis-Suzuki55. MELS applied to the Copyright Board pursuant to section 77(1) of the Copyright Act for a licence to use the soundtrack of a video recording of a speech delivered by Severn Cullis-Suzuki. MELS had been unable to locate the owner of copyright in the soundtrack. MELS desired to use the soundtrack in the course of a test. The Board refused to issue a licence because no licence was needed in view of the exception in section 29.4(2) of the Copyright Act for an educational institution to reproduce and perform in public a work required for a test or examination. 8.7 Judicial Review of Copyright Board Decisions The Copyright Board was reasonable in concluding that a onetime free preview download was research and subject to the exception for fair dealing: Society of Composers, Authors and Music Publishers of Canada v. Bell Canada.56 SOCAN applied for judicial review of a decision of the Copyright Board finding that samples of musical works listeners could preview prior to purchasing sound recordings of the works over the Internet constituted fair dealing. The Board broadly interpreted the word "research" in section 29 of the Copyright Act to conclude that it was fair to permit Internet users to hear a preview of a musical work prior to paying anything for it. The Court dismissed the application holding that the Board's interpretation of the word "research" to encompass a consumer seeking and finding a desired musical work was not unreasonable or in error. There was nothing unreasonable about the Board’s conclusion that the free downloading of a onetime preview to allow a user to decide whether to purchase a sound recording of the work for repeated listening constituted fair dealing. SOCAN applied to the Supreme Court of Canada for leave to appeal the decision of the Federal Court of Appeal. On December 23, 2010 leave was granted. The Copyright Board is within its jurisdiction to refuse to certify a tariff where there was a lack of necessary probative evidence, and only mere guesses, speculations and approximations: Society of Composers, Authors and Music Publishers of Canada v. Bell Canada.57 SOCAN applied for judicial review of a decision of the Copyright Board refusing certification of a provision in a SOCAN
55 56

Copyright Board, April 23, 2010 2010 FCA 123. 57 2010 FCA 139.

- 20 tariff for the communication of musical works over the Internet. SOCAN sought to quash the Board's decision with respect to the proposed tariff dealing with the residual category of "Other Sites." The Federal Court of Appeal held that the Board was justified in refusing the tariff in respect of “Other Sites” as SOCAN had proposed an ill-defined category of persons to whom the auditing, accounting and reporting obligations associated with the tariff apply, and there was little evidence to enable the Board to approve the tariff. An application for judicial review of the Copyright Board’s K to 12 decision was allowed in part; the Board made no reviewable error on the issue of fair dealing, but failed to engage in the required analysis on the issue of the exception under Section 29.4 of the Copyright Act: Alberta (Minister of Education) v. Canadian Copyright Licensing Agency (c.o.b. Access Copyright).58 The objectors applied for judicial review of the decision of the Copyright Board approving a tariff setting the royalty rate to be paid for the reprographic reproduction of literary works made by K to 12 educational institutions. At issue was whether the Board had erred in holding that photocopies of copyright materials made at a teacher’s request for classroom instruction is not covered by the fair dealing exception for private study. The Federal Court of Appeal held that the Board made no reviewable error on the fair dealing issue. The Board applied the appropriate test as laid out in the Supreme Court of Canada’s decision in CCH Canadian Ltd. v. Law Society of Upper Canada, provided clear and comprehensible reasons, and came to a justifiable conclusion. As the Board and the parties had accepted that the copies at issue were made for an allowable purpose, the Court only considered whether the dealing was fair. Focusing primarily on the purpose of the dealing, the Court failed to accept the applicants’ argument that “private” study should be equated with “non-commercial”. “Private study” means “study by oneself”. The Court held that the Board was reasonable to take into consideration whether the student had requested the copies or whether the teacher made the copies. Furthermore, the Board was entitled to find that when a student is instructed to read the material, it is likely that the purpose of the copying was for classroom instruction rather than the student’s private study. With respect to the other CCH factors, the Court held that the Board’s findings were also reasonable. The application was allowed in part, however, on the issue of whether the copying was exempt under section 29.4 of the Copyright Act as a “work or other subjectmatter as required for a test or examination” where the work is not “commercially available in a medium that is appropriate for the purpose”. The Court held that the Board had failed to interpret the words “in a medium appropriate for the purpose” and remitted the issue back to the Board. The applicants have applied to the Supreme Court of Canada for leave to appeal the decision of the Federal Court of Appeal. A decision on the leave application is pending.

58

2010 FCA 198.

- 21 An application by video game publishers for judicial review of the Copyright Board’s Tariff 22.A decision was dismissed; the Board’s decision to certify a tariff setting the royalty rate for the use of music on game sites was reasonable: Entertainment Software Assn. v. Society of Composers, Authors and Music Publishers of Canada.59 An objector applied for judicial review of the decision of the Copyright Board approving a tariff setting royalty rates to be paid for use of music on the Internet. The objector, which represented most of the video game software publishers in North America, advanced three arguments before the Court: (1) that the Board erred in finding that the download of a video game which includes music is a communication of that music to the public by telecommunication; (2) that the Board erred in certifying the tariff when SOCAN submitted no evidence to show that the requested tariff was fair and equitable; and (3) that the Board erred in rejecting or failing to give effect to evidence regarding industry practice with respect to securing rights to the musical content of video games. The Federal Court of Appeal relied on its concurrently released decision in Shaw Cablesystems G.P. v. Society of Composers, Authors and Music Publishers of Canada and held that the download of a music file or a stream constitutes a communication of that musical work to the public by telecommunication. The first of the remaining issues was whether the Board erred in finding that video game sites were subject to a tariff with respect to the communication of musical works to the public, given the minor role which music plays in video games. The Court held that the Board’s decision to impose a tariff was reasonable regardless of how insignificant the use of music might be. The de minimis rule does not apply in relation to the certification of copyright tariffs. The second of the remaining issues was whether the Board erred in certifying a tariff when SOCAN failed to present adequate evidence to justify the reasonableness of the proposed tariff. The Court held that the Board’s decision was reasonable. The collective administration regime seeks to balance the rights of creators and users. SOCAN was not required to prove the reasonableness of the tariff. Furthermore, the Court noted that the royalty rate set by the Board was initially suggested by the objector. The last of the remaining issues was whether the Board erred in failing to consider the objector’s evidence of the contractual agreements between the objector’s members and rights holders to secure rights to the musical content of video games. The Court held that it was reasonable for the Board to certify a tariff since not all video game publishers take the necessary steps to secure all the applicable rights to music used in their games. In practice, the certified tariff would not apply to those that had the right to communicate the music to the public. The application for judicial review was therefore dismissed.

59

2010 FCA 221.

- 22 The objector has applied to the Supreme Court of Canada for leave to appeal the decision of the Federal Court of Appeal. A decision on the leave application is pending. An application by Internet service providers for judicial review of the Copyright Board’s Tariff 22.A decision was dismissed; a communication is “to the public” when the sender intends it to be received by the public and at least one member of the public receives it: Shaw Cablesystems G.P. v. Society of Composers, Authors and Music Publishers of Canada.60 These were three applications by several Internet service providers for judicial review of the decision of the Copyright Board approving a tariff setting royalty rates to be paid for the communication of musical works on, or by means of, the Internet. The issue before the Federal Court of Appeal was whether the Board erred in finding that the transmission of a musical work to an individual by an on-line music service is a communication of that work to the public by telecommunication within the meaning of section 3(1)(f) of the Copyright Act. The Court held that the Copyright Board was reasonable in concluding that a download of a musical file from an on-line music service to a single user is a communication of that musical work to the public by telecommunication. The Board laid out its reasons in a transparent and intelligible fashion and its decision was one which fell within the range of possible acceptable outcomes. In dismissing the application for judicial review, the Federal Court of Appeal surveyed past jurisprudence on the issue and agreed with the Board’s determination that transmissions are "to the public" when the communicator intends the communication to be received by the public, even if the sender reaches only one person with a communication. Beyond a single recipient, the actual number of recipients is not relevant to determining whether the communication is made to the public. The Board had correctly identified intention as a critical factor. Furthermore, nothing precluded communications to the public by telecommunications from occurring one person at a time. The applicants have applied to the Supreme Court of Canada for leave to appeal the decision of the Federal Court of Appeal. A decision on the leave application is pending. An application by the Canadian Recording Industry Association for judicial review of the Copyright Board’s Tariff 22.A decision was dismissed; the Copyright Board was not bound by the rules of evidence and the Board’s reliance on its own expertise did not make its reasons inadequate: Canadian Recording Industry Association v. Society of Composers, Authors and Music Publishers of Canada.61 An objector applied for judicial review of the decision of the Copyright Board approving a tariff setting the royalty rate to be paid for downloading music files (in the form of permanent downloads, limited downloads and on-demand streaming) from a website. The objector represented the interests of its members who
60 61

2010 FCA 220. 2010 FCA 322.

- 23 create, promote, market and distribute recorded music. The objector did not challenge the legal basis on which the Board claimed the right to impose the tariff. Rather, the issue was whether the Board erred in applying the wrong standard of proof in relation to the determination of certain costs in the digital music business, in accepting inadmissible expert evidence, in calculating the royalty rate on a faulty basis, and in failing to provide adequate reasons for its decision. The Federal Court of Appeal held that the Copyright Board was not bound by the rules of evidence and did not err by failing to apply those rules to the evidence which was put before it. It was clear from the Board’s reasons that CRIA enjoyed full rights of procedural fairness with respect to the evidence; the Board simply preferred the evidence of the respondent’s expert. Thus, there was no basis in procedural fairness to challenge the manner in which the Board dealt with the evidence. In addition, the Court held that the right of communication to the public by telecommunication and the right of reproduction were independently compensable. The Board did not err in establishing a value of each right independently. Finally, the Board’s reliance on its own expertise, which it applied to elements of the respondent’s expert evidence, did not make the Board’s reasons inadequate. The application for judicial review was dismissed. Two applications for judicial review of the Copyright Board’s satellite radio decision were dismissed; the presumption against the authorization of an infringing act was rebutted by the degree of control exercised by satellite radio providers: Sirius Canada Inc. v. CMRRA/SODRAC Inc.62 The collective CSI and an objector (“Sirius”) applied for judicial review of the decision of the Copyright Board approving a tariff setting royalty rates to be paid by subscription satellite radio services. CSI collectively administered certain reproduction rights for musical works in Canada. The issue in Sirius’ application was whether the Board erred in law in finding that a satellite radio service provider, by supplying a subscriber with a receiver having an extended buffer or a block recording feature, necessarily authorized the subscriber to copy musical works. The Court considered past jurisprudence giving a narrow meaning to authorization within the context of section 3(1) of the Copyright Act, including the Supreme Court of Canada’s decision in CCH Canadian Ltd. v. Law Society of Upper Canada. Following CCH, the Court held that satellite radio service providers are presumed to authorize their subscribers to use all the features of the radio receivers with which they are supplied. The presumption was however rebutted by the degree to which the satellite radio providers controlled the use of the receivers they supplied to their subscribers. The element of automatic copying by the satellite receivers was determinative. Only the satellite radio providers knew what was being broadcast and when, and what broadcast content was subject to copyright. The radio receivers did not allow the subscriber to turn off the copying functions of the equipment. The presumption against the authorization of an infringing act was rebutted by the degree of control exercised by the satellite radio providers over their broadcast content and the features included in the radio receivers supplied to their subscribers. Sirius’ application was therefore dismissed.

62

2010 FCA 348.

- 24 In considering the various issues in the CSI application for judicial review, the Court made two important rulings. First, the Copyright Act does not apply to acts of reproduction that take place outside of Canada, even if the authorization took place in Canada. The “real and substantial connection” test does not apply to acts that take place wholly within another country. Second, the copying of small amounts of buffered content was not a copy of an entire work or a substantial part of a work. CSI’s application was therefore dismissed. 9 – OTHERS JUST FOR INTEREST Copyrights and trade-marks are not exigible property subject to execution under the Saskatchewan Executions Act: Wira v. Jubilee Enterprises Ltd.63 The plaintiff/judgment creditor obtained consent judgment against the defendant/judgment debtor and a writ of execution issued. As a result of the writ, the Regina Sheriff seized trade-marks and copyrights owned by the judgment debtor. The judgment debtor brought an application to have the Saskatchewan Court of Queen’s Bench determine whether trade-marks and copyrights are exigible property under a writ of execution in Saskatchewan. The Court held that the definition of “choses in action” in the Executions Act was not wide enough to include copyrights and trade-marks. On the other hand, patents were explicitly recognized in the Act as “personal property” and not “choses in action”. The Act also explicitly recognized patents as exigible to execution, but the legislature did not afford the same recognition to copyrights or trade-marks. An order was issued directing the Regina Sheriff to release seizure of the copyrights and trade-marks. 10 – SIGNIFICANT FOREIGN DECISIONS 10.1 Australia

Copyright did not subsist in yellow and white page directories: Telstra Corporation Limited v. Phone Directories Company Pty Ltd [2010] FCAFA 149. Telstra, the publisher of the Yellow Pages Directory and the White Pages Directory, appealed the trial judge’s decision that copyright does not subsist in the two directories. The directories were the work of numerous individuals, but the compilation of each of the directories was brought into form by an automated computerised process. Telstra, the applicant, did not claim to own copyright in the rules or software that produced the directories. The Court held that the directories cannot be regarded as a work of joint authorship as the individuals did not collaborate and their work was not part of the actual compilation. The Court also held that the directories would have been protected by copyright had they been created by human beings. But, they were not authored by human being, but by an automated computer process. Accordingly, they were not protected by copyright.
63

2010 SKQB 320.

- 25 According to the court” “The difficulty in this case is not that the efforts which might have gone into the production of the galley file could not be sufficient acts of an appropriate quality to count as acts of authorship. Rather, the difficulty is that those tasks were not carried out by humans but by computer programs. The trial judge found – and it is not disputed – that the production of the galley file was almost entirely automated. There were some minor aspects of checking which subsequently occurred after the production of the galley file but even these too were largely automated...” Copyright was found to subsist in electronic information sheets with respect to hazardous substances and dangerous goods where the sheets were generated using software but with sufficient human control over the use of the software to meet the authorship requirement in copyright: Acohs Pty Ltd v. Ucorp Pty Ltd [2010] FCA 577. The applicants and respondents were both producers of electronic material safety data sheets (“MSDS”) required by regulation for manufacturers, importers and suppliers of dangerous or hazardous substances. The respondents Ucorp kept an electronic library of its MSDS, while the applicants Acohs kept a large relational database in which all raw data is stored and which the computer program calls upon in response to a user request to compile or regenerate the report required. When Acohs authors an MSDS, a member of its professional services group enters data into the centralized database in response to prompts given by the computer program which controls the database. The Infosafe System, which Acohs used to author its MSDSs, gives each MSDS a unique number. The respondents Ucorp allegedly infringed copyright in the layout, presentation and appearance of their MSDS. The issue before the court was whether copyright subsisted in electronic MSDS information sheets with respect to hazardous substances and dangerous goods where the sheets are generated using software called Infosafe from data in a computer database based on the selection of parameters by users? The Federal Court of Australia held that the source codes to the HTML generating routines produced by Infosafe that produced the pages were not protected by copyright. They were computer generated and the authorship requirement was not met. Whether the source codes for the MSDS files were authored or transcribed by Acohs staff, they were not computer programmers, and there was no suggestion that they either understood or ever saw the source code for each MSDS on which they worked. There was copyright in each MSDS, however. Each Acohs employee was the copyrightauthor, and the work created by him or her was original. Even in a case in which every verbal and numerical element of an MSDS created by an author was to be found in the centralised database, the author was still required to select from the menu of sub-headings those that would be used and those that would be irrelevant. The electronic documentary entity thereby brought into existence was not merely the result of copying from something else. Providing a service which contains the headlines and by-lines of newspaper articles published elsewhere did not infringe copyright, as the applicant failed to prove that the ten selected headlines amounted to literary works in which copyright can subsist: Fairfax Media Publications Pty Ltd v Reed International Books Australia

- 26 Pty Ltd, [2010] FCA 984. The applicant publisher of The Australian Financial Review, published in print and electronically in digital form to subscribers, sought a declaration of infringement of its copyright and injunctions against further infringement by the respondent, who provided abstracts of articles published in various newspapers and magazines. Each abstract included the headline of the article, the by-line of the journalist, and a short summary of the article. The applicant alleged that copyright subsisted in each individual newspaper headline, in an article with its headline, in the compilation of all the articles and headlines in a newspaper edition and in the compilation of the edition as a whole. The respondent argued that if copyright did subsist, the abstracts did not reproduce a substantial part of the articles, and raised the defences of fair dealing and estoppel. The Federal Court of Australia held that there was no copyright in headlines as a class, as there was an established practice of denying copyright protection to titles. A headline is meta-information about the work, not the work itself. As a proper citation of a newspaper article requires reproduction of the headline, affording published headlines as a class copyright protection as literary works would tip the balance too far against the interest of the public to refer to articles by their headlines. Even if the headlines constituted a substantial part of works in which copyright subsists, reproducing and communicating the headlines as part of abstracts was a fair dealing for the purpose of reporting news such that this would not constitute an infringement. Copyright did not subsist in patient records and consultation notes: Primary Health Care Ltd. v. Commissioner of Taxation, [2010] FCA 419. The respondent Commissioner of Taxation denied the applicant Primary Health Care entitlement to claim tax deductions with respect to copyright in patient records allegedly acquired by the applicant after its purchase of medical and dental practices. The Income tax Assessment Act permits a deduction for depreciating or writing off an interest in copyright that was acquired and used or made available for use in the course of carrying on a business. As part of assessing whether the applicant held rights as the owner of copyright, the Federal Court of Australia considered whether copyright subsists in patient records and consultation notes. There was little evidence to support a finding that copyright subsists in the patient records of the sample practices. Although intellectual effort and professional skill was needed to form the diagnoses, select methods of treatment and understanding the significance of clinical data that is recorded, copyright protects a form of expression in a work and not this underlying expertise. The consultation notes, as a class, were not original literary works in which copyright subsists. The entries in the notes are largely restricted to notations of the names of medical conditions and medications as well as physiological and pathological data such as blood pressure and blood count readings. Their expression did not display the independent intellectual effort in their expression necessary for copyright protection. Copyright was found only in the referral letters and consultation notes for one patient, but there was no evidence that were assigned to or acquired by the applicant. The applicant was not entitled to the tax deductions claimed.

- 27 A flute riff that included two of the four bars of a round amounted to a reproduction of a substantial part of that round because there was a sufficient degree of objective similarity between the two: Larrikin Music Publishing Pty Ltd v. EMI Songs Australia Pty Ltd, [2010] FCA 29. Greg Ham, a member of the band Men at Work, improvised a flute riff on the song “Down Under”, which alleged included two of the four bars of the round “Kookaburra sits in the old gumtree”. Larrikin Music Publishing brought copyright infringement proceedings against the composers of “Down Under”, the owner and licensee of the copyright in the work, EMI Songs Australia, and against EMI Australia for the use of the orchestral version of “Down Under” in advertisements for Qantas. Larrikin Music publishing also brought a claim that the respondents misrepresented their entitlement to income from the Australasian Performing Rights Association and that “Down Under” did not infringe any other copyright work. The Federal Court of Australia held that there was a sufficient degree of objective similarity between the bars of Kookaburra in Down Under to amount to a reproduction of a substantial part of that work. This was based on an aural and visual comparison of the songs, as well as expert evidence, and in respect of the melody, key, tempo, harmony and structure. The difference in rhythm and harmony and the separation of the musical phrases from the round in “Down Under” did not negate the finding that this was a reproduction. The failure of the respondents to call as a witness Greg Ham, the musician who incorporated the flute riff in “Down Under”, lead to an adverse inference that Ham deliberately included the bars from the round to evoke an Australian flavour. The advertisements for Qantas only contained one bar of the round, and that bar could not be considered to be taking a substantial part of the round. The proceeding raised the question whether an internet service provider or ISP authorises the infringement of copyright of its users or subscribers when they download cinematograph films in a manner which infringes copyright: Roadshow Films Pty Ltd v. iiNet Limited (No. 3) [2010] FCA 24. The 34 applicants (claimants) represented the major motion picture studios both in Australia and the US. They brought the proceeding against iiNet, which was the third largest ISP in Australia. The AFACT (Australian Federation against Copyright Theft) was one of the claimants and employed a company – DtecNet – to investigate copyright infringement occurring by means of a peer-to-peer system known as the BitTorrent protocol by subscribers and users of iiNet’s service. The critical issue was whether iiNet, by failing to take any steps to stop infringing conduct, authorised the copyright infringement of certain iiNet users. The Court answered such question in the negative for three reasons: first, because the copyright infringement occurred directly as a result of the use of the BitTorrent system, not the use of the Internet, and the respondent did not create and did not control the BitTorrent system; second, because the respondent did not have a relevant power to prevent those infringements occurring; and third, because the respondent did not sanction, approve or countenance copyright infringement.

- 28 10.2 Europe

Is the Spanish copyright regime in compliance with the EU Directive?: PADAWAN SL v Sociedad General de Autores y Editores (SGAE) (Case C-467/08) 21 October, 2010. This reference for a preliminary ruling concerns the interpretation of the concept of “fair compensation” in article 5(2)(b) of Directive 2001/29/EC (the “Directive”) on the harmonization of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10) paid to copyright holders in respect of the “private copying exception.” The reference was made in the course of proceedings between Padawan SL (“Padawan”) and Sociedad Geleral de Autores y Editores (“SGAE”) concerning the “private copying levy” allegedly owed by Padawan in respect of CD-R, CD-RW, DVD-R and MP3 players marketed by it. It was held that the EU Member States that make use of the option provided in Article 5(2)(b) of the Directive must provide for the payment of fair compensation to authors affected by the application of “private copying exception.” The concept of “fair compensation” within the meaning of the Directive is an autonomous concept of EU law which must be interpreted uniformly in all the Member States that have introduced a “private copying exception,” irrespective of the power conferred on them to determine, within the limits imposed by EU law and in particular by the Directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation. The authors should be compensated “adequately” for the use made of their protected works without their authorization, the determination of “adequately” meaning “fair compensation” linked to the harm resulting for the author from the reproduction for private use of his/her protected work. Finally, Article 5(2)(b) of the Directive must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy is incompatible with the Directive. The interpretation of Article 1(2) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs and of Article 3(1) of Directive 2001/29/EC of 22 May 2001 on harmonisation of certain aspects of copyright and related rights in the information society: REFERENCE for a preliminary ruling under Article 234 EC from the Nejvyšší správní soud (Czech Republic) ECJ 22 December, 2010. BSA applied to the Ministerstvo kultury for authorisation for the collective administration of copyrights to computer programs, under Para 98 of the Copyright Law. The application was refused. Later, on 27 January 2005, the Ministerstvo kultury rejected the application again on the ground that the Copyright Law protects only the object code and the source code of a computer program, but not the result of the display of the program on the computer screen, since the graphic user interface was protected only against unfair competition. BSA appealed against that decision, the appeal being dismissed on 6 June 2005. BSA appeal further. The court of appeal stayed the proceeding and referred the two questions to ECJ for a preliminary ruling.

- 29 As per the first question, whether the graphic user interface of a computer program is a form of expression of that program within the meaning of Article 1(2) of Directive 91/250 and is thus protected by copyright as a computer program under that directive, the ECJ ruled that the object of the protection conferred by that directive was the expression in any form of a computer program, which permitted reproduction in different computer languages, such as the source code and the object code. Thus, the object of protection under the directive includes the forms of expression of a computer program and the preparatory design work capable of leading, respectively, to the reproduction or the subsequent creation of such a program. However, the graphic user interface does not enable the reproduction of a computer program, for it is an interaction interface which enables communication between the computer program and the user. Therefore, the Court concluded that the graphic user interface does not constitute a form of expression of a computer program within the meaning of Article 1(2) of Directive 91/250. It went further to consider Directive 2001/29 and its application to the circumstances of this case and concluded that the graphic user interface (“GUI”) can, as a work, be protected by copyright if it is its author’s own intellectual creation, as long as the GUI is not constrained by technical limitations. As per the second question, whether TV broadcasting of a graphic user interface constitutes communication to the public of a work protected by copyright within the meaning of Article 3(1) of Directive 2001/29, the Court concluded that, in principle, TV broadcasting of a work is a communication to the public which its author has the exclusive right to authorise or prohibit. However, if, in the context of such broadcasting, a graphic user interface is displayed, TV viewers receive a communication of that graphic user interface solely in a passive manner, without the possibility of intervening, and thus, there will be no communication to the public of the graphic user interface within the meaning of Article 3(1) of Directive 2001/29. Copyright crime of file-sharing (“transmission to the general public”) via the Internet: The Pirate Bay Appeal, Svea Court of Appeal, 26 November 2010. It was alleged that between July 2005 and May 2006, the accused individuals together and in concert with each other and with another individual were responsible for the organization, administration, systematisation, programming, financing and operation of the file sharing site The Pirate Bay (the “TPB”). It was also alleged that the accused had received and stored the torrent files which were particularly designed to be used to aid violations of the Act on Copyright in Literary and Artistic Works (SFS 1960: 729). Svea Court first underlined the concept of copyright: it covers such exclusive rights which vest in the producers of sound and graphic recordings. The Court then dealt with the law applicable to the copyright offences and whether the alleged offences were proven under the applicable law. Although the Court agreed that the question of how to localise geographically an act which included communications via the Internet and according to which country’s law must be adjudicated was complex, it, nevertheless, held that the Swedish law (Penal Code, Chapter 2) was the applicable law to the circumstances of this case. “[T]he aiding and abetting acts to be determined, […] the principal offences (the act of making the copyright-protected work available to the public, which the users are alleged to have engaged in, must […] be criminal under Swedish law”, therefore, the

- 30 court must adjudicate on the basis of that law, ”if a crime has been committed here in the country (the “territoriality principle”).” The Court based its finding of applicable law on the EU Directive 2000/31/EC (“e-commerce Directive”), in particular, the direct exception to the “origin principle,” and on the Swedish “e-commerce Act,” stating that Swedish law applies to the information society services which are provided by service providers with Sweden as the country of establishment. Finally, it was held that, although the fact that it was possible for the general public to obtain access to the works in Sweden could not alone form the basis for the conclusion that the principal offences were to be deemed to have been committed in Sweden, however, a crime could be localised to Sweden as soon as a part of the criminal act was undertaken within the county’s borders, which, effectively, happened in this case. The Court explained that it was probably insufficient that the uploader (the original seeder) created a torrent file which referred to the work which he or she stored on his or her hard drive. “In order for the public to actually obtain access to the work, it must normally be required that the seeder presents the torrent file in such a manner that individual users in wider circles can find it via search engines or collections of links. The claims relating to the respective principal copyright offences must be deemed to include placing torrent files in TPB’s database. Thus, according to the Court of Appeal’s approach regarding the construction of the main criminal acts, the placement of the torrent files in TPB’s database (through its search functionality – uploading and storage possibilities for torrent files – and tracker, which brokered contact between individual file sharers) constituted an essential element of the main perpetrators’ criminal act. The Court also found the site operators criminally liable for aiding and abetting infringement. “The Court of Appeal shares the District Court’s conclusion that TPB’s website, through its search functionality (uploading and storage possibilities for torrent files, and tracker which brokered contact between individual file sharers), contained a service which facilitated the principal offences. Even if the service was not a necessary condition for the individual principal offences to occur, it has made it simpler and quicker for the users to transmit the works to the general public through file sharing. Thus, any person who provides such a service furthers the crime, which gives rise to liability for aiding and abetting under the wording of Chapter 23, section 4 of the Penal Code.” The court also rejected the argument that the operators were not liable for aiding and abetting infringement because some non-infringing content could be shared using the Pirate Bay site. The decision on liability raised a question of balancing multiple interests. Here the massive level of infringement compelled a finding of liability. According to the Court: “...irrespective of the share of legally presented works in the database, the file sharing of protected works, which were not covered by the rights holders’ consent, constituted the dominant activity amongst TPB’s users. In this respect, the users’ actions involved an attack on the fundamental values of our legal culture... No safety measures were taken and torrent files which referred to protected works were not removed even after requests and warnings. In a weighing between the social benefit of providing a service for file sharing of lawfully-provided material and the entirely obvious risk that the activities, to a massive extent, would lead to infringement of copyright holders’ constitutionally protected rights, the Court of Appeal finds that a release from liability on

- 31 the grounds of unwritten exception rules regarding social benefits and lack of criminal intent cannot be relevant.” Accessorial (secondary) liability of online site operators: FTD B.V. v. Eyeworks Film & TV Drama B.V., Court of Appeal of the Hague, 15 November 2010. The Court stated that FTD did not commit any copyright infringement (Articles 1 and 12 of the Copyright Law), nor was it an intermediary within the meaning of Article 26d of the Copyright Law, this statement being consistent with reading of Article 3 of Directive 2001/29 EC. However, it was also held that FTD acted wrongfully vis-à-vis Eyeworks by encouraging the illegal uploading of the movie entitled ‘’Komt een Vrouw bij de Dokter” from Eyeworks: “The alternative application by Eyeworks, insofar as it is based on the action of FTD with regard to encouraging uploading, is therefore admissible on the basis of Article 6:162 of the Civil Code.” Finally, the Court concluded that downloading from an illegal source was permitted under Dutch law, meaning that facilitating the downloading of the film could not be viewed as an unlawful act by FTD. The Court ordered FTD to desist from and continue to desist from having spots present for Eyeworks’ movie via its FTD application, and also ordered FTD to pay a penalty of €10,000.00 for each day or part thereof that it failed to comply with the Court’s order. 10.3 United Kingdom

Scope of protection of computer programs: SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch) (23 July 2010). The case deals with the issues of infringement of copyright in computer programs. The claimant, SAS Institute Inc. (“SAS”), is a developer of analytical software known as SAS System, which is an integrated set of programs enabling users to carry out a wide range of data processing and analysis tasks. The defendant, World Programming Ltd (“WPL”) created an alternative product – World Programming System (“WPS”) – to be able to execute application programs written in the SAS Language. It is not an infringement of the copyright in the source code of a computer program for a competitor of the copyright owner to study how the program functions and then to write its own program to emulate that functionality. SAS challenges this view of the law. Its claim that WPS infringes the copyrights in the SAS Components raised three questions: (i) the extent to which copyright protects ideas, procedures, methods of operation and math concepts as distinct from expression of those ideas; (ii) the extent to which copyright protects the functionality and interfaces of computer programs and the programming languages; and (iii) the test to be applied to determine what amounts to reproduction of a substantial part in cases such as this. Having considered domestic and EU law (Directives), as well as international treaties, the Court held that: (i) copyright in computer programs does not protect programming languages from being copied; (ii) copyright in computer programs does not protect computer to computer interfaces from being copied where this can be achieved without decompiling the object code; and (iii) copyright in computer programs does not protect the functions of the programs from being copied. Therefore: (i) WPL did not infringe SAS’s copyright in the SAS Components by producing WPS; (ii) WPL did not infringe SAS’s copyright in the SAS Manuals by producing or testing WPS; (iii) WPL infringed the copyrights in the SAS Manuals by substantially reproducing them in the WPL

- 32 Manual; and (vii) WPL did not infringe the copyrights in the SAS Manuals by producing the WPS Guides. A preliminary issue concerned with whether the annual fixture lists produced and published for the purposes of the English and Scottish (football) Premier Leagues and football leagues (the “Fixture Lists”) are protected by copyright as a database under the DCPA 1988: Football Dataco Ltd v Brittens Pools Ltd, [2010] EWHC 841 (Ch) (23 April 2010). This case dealt with preliminary issue in three copyright and database right infringement actions. The issue was to establish what rights, if any, subsisted in the annual fixture lists produced and published for the purposes of the English and Scottish Premier Leagues and football leagues. The claimants contended that the fixture lists were protected by copyright as a database under ss. 3 and 3A of the Copyright, Designs and Patents Act 1988, by the sui generis database right under the Copyright and Rights in Database Regulations 1997, and by copyright irrespective of whether they were a database. All three cases were entities that were alleged to be using the fixture lists without a license from the claimants. The defendants admitted that each of the fixture lists was a collection of independent works. On the evidence, the judge held that the process of preparing the fixture lists, whether in England or in Scotland involved very significant labour and skill in satisfying the multitude of often competing requirements of those involved. It was held that: (i) following the definition of database in Art. 1 of Council Directive 96/9, that Directive was seeking to harmonize copyright protection for systematically arranged, individually accessible collections of independent works, data or other materials, at the same time recognizing that the whole or parts of the contents might be protected in their own right, independently of any reliance on the collection and arrangement of independent works, data or other materials; (ii) there was a relevant selection or arrangement, namely proceeding from the starting materials of the clubs in the league and the dates of the rounds of matches, to produce an arrangement which brought them together; (iii) the requirement of the “author’s intellectual creation” did not mean that the reader of database had to be able to identify the author; (iv) the fixture lists were the subject of database copyright; and (v) there was no scope for any other form of copyright protection for the fixture lists. In short, the Court concluded that the work of putting together the fixture lists was not mere “sweat of the brow”: “In my judgment the selection or arrangement required by Art. 3(1) [of Council Directive] is not confined to selection or arrangement performed after the data is finally created… I see no reason why selection decisions made about the contents of the database in the course of arriving at the final version should not properly be described as selection or arrangement… Nevertheless, it is necessary to focus on skill and labour which is actually concerned with selection and arrangement, and to exclude that which is not… More fundamentally, the database must, when these two factors [selection and arrangement] are considered, constitute its author’s own intellectual creation.” Headlines are capable of protection by copyright as literary works: The Newspaper Licensing Agency Ltd v Meltwater Holding BV [2010] EWHC 3099 (Ch) (26 November

- 33 2010). The defendant, Meltwater provides a commercial media monitoring service called “Meltwater News” to business customers. That service is provided on-line only. The issue in this case is whether the members of Public Relations Consultants Association Limited (“PRCA”) require a license from the claimants in order to lawfully receive and use Meltwater News. The sub-issues are framed as follows: (i) whether a headline is, or is capable of being, a free-standing original literary work; and (ii) whether a text extract constitutes a ‘substantial part’ of the article as a literary work. In the Court’s opinion, headlines are capable of being literary works, whether independently or as part of the article to which they relate. The Court referred to and followed the ECJ “Infopaq” case. As per text extracts, the Court held that on the basis of the “Infopaq” case that the text extracts, excluding the headline, are capable of being a substantial part for the purposes of s. 16 of the Act [the Copyright Designs and Patents Act 1988 – “CDPA”]. In fact, the effect of “Infopaq” is that even a very small part of the original work may be protected by copyright if it demonstrates the stamp of individuality reflective of the creation of the author or authors of the article. Whether it does so, remains a question of fact and degree in each case. Further, the Court stated that the “temporary copies exception” provided in s. 28A of CDPA cannot have been intended to legitimise all copies made in the course of browsing, “or users would be permitted to watch pirated films and listen to pirated music.” Therefore, the Court concluded that s. 28A CDPA (together with Article 5 of InfoSoc Directive) is inapplicable to permit the End Users to make copies with impunity. Therefore, the Court found that without a license from the Publishers there was infringement of the Publishers’ copyright by the End Users in receiving and using Meltwater News. Are headlines protected by copyright?: Nintendo Company Ltd v. Playbles Ltd, [2010] F.S.R. 36 (July 20 and 28, 2010). The claimants [Nintendo] contended that the copyright in the source code for the boot up software was infringed because when a user inserted the defendant’s [Playbles] device into the console a copy of the boot up software was copied into RAM.. Infringement was alleged on the basis of authorisation of infringement and on the basis of s. 24 of the Copyright Designs and Patents Act 1988 (the “Act”) which related to distributing in the course of a business articles which were specifically designed or adapted for making copies of the source code, and which the defendants had reason to believe would be used to make infringing copies. The court granted summary judgment in part, stating that s. 24 of the Act created a tort of strict liability. It was no defence to show that the defendant did not know and no reason to believe that the devices, in fact, would be used to make infringing copies. Two important points were made in the decision: (i) the jurisdiction point; and (ii) “ordinary copyright” point. The jurisdictional point was raised by the defendants claiming that the accused devices were export sales, and therefore, they would only be put to use in the country to which they were exported. The Court considered Sony Computer Entertainment Inc. v. Ball [2005] F.S.R. 9 where it was stated that the rights

- 34 afforded by s. 296 and s. 296ZD of the Act were not infringed when the “circumvention” took place abroad, for in s. 296 there is a requirement that the person dealing in the device knows or has reason to believe that it will be used to make infringing copies. The Court then concluded that s. 296ZD of the Act was concerned with dealing in the UK in devices capable of circumvention, whenever they may ultimately end up. It follows that I consider that Nintendo is entitled to summary judgment on export sales under this section. As per the “ordinary copyright” issue, the alleged infringement, the Court noted that each game card has the code relevant to the Nintendo installed on it. Therefore, it was impossible for the Court to conclude that Nintendo authorised the copying of this into RAM, and as a result, there was no authorisation of infringement as well as liability under s. 24 of the Act found. Is offering an on demand web service a communication of a broadcast?: ITV Broadcasting Ltd v TV Catch Up Ltd [2010] EWHC 3063 (Ch) (25 November 2010). The claimants are responsible for the transmission of a wide range of television programmes on major television channels. The defendant operates a website at www.tvcatchup.com which allows members of the public to watch live UK television, including the claimants’ channels, on their computers, iPhones and games consoles. Any member of the public wishing to access the service must first become a member. He can then select one of over 50 channels by pressing on the appropriate icon, whereupon he is taken to a new screen on which the defendant provides a stream of the programme being broadcast on that channel. The Court held that it was clear that the right of communication of a work to the public must be interpreted broadly so as to cover all communications to the public not present where the communication originates. It includes, but is not limited to, broadcasting and access on demand. It then went further to state that the protected work, the broadcast, was the transmission of visual images, sounds and other information for reception by or representation to members of the public. The restricted act is the communication to the public by electronic transmission of all of those images, sounds and other information. In the same way, s. 17 [of the Copyright Designs and Patents Act 1988] prohibits the making of a copy of broadcast and s. 18 prohibits the issuing of copies of broadcast to the public. There is no requirement that the copy itself must be a broadcast. Indeed, it may be no more than a photograph (s. 17(4)). Does permitting another person to use your Internet connection to make unlicensed copes constitute authorizing infringement?: Media C.A.T. Ltd. v A [2010] EWPCC 17 (01 December 2010). The claimant is a company incorporated in England and Wales and representing various owners or exclusive licensees of copyrighted works (“Rights Owners”) to monitor and protect their copyrighted works from acts of infringement. The defendant, someone authorised by him to use his internet connection, or someone who gained access to the defendant’s Internet connection due to the router was a user of the peer-to-peer (“P2P”) file sharing software known as BitTorrent 6.1.2, which allows the user to share digital media content files on a network with other users (“P2P network”). Defendant is alleged to have committed a number of acts without the

- 35 license of the claimant: (i) reproducing the Work (or a substantial part of it) by copying it onto their computer hard drive; (ii) making copies available on the Internet to third parties for downloading using a P2P network; and (iii) operating, at the time of the identified infringement an Internet connection router that was not secured either adequately or at all, so as to enable another to carry out an act of copyright infringement of the claimant’s Work via the Internet connection of the defendant. The Court held that the claimant’s right to bring the claims at all may be entirely proper but that did not emerge clearly from the statement of case. A key part of the plea of infringement rests on an assertion that “allowing” others to infringe is itself an infringing act, when it is not. There is no plea that the works qualify for copyright protection at all: “[P2P] sharing which involves copyright infringement is an important and serious matter and claimants with a proper claim are entitled to use the full machinery of the courts to enforce their rights.” Jurisdiction: Where is a work made available?: Football Dataco Ltd v Sportradar GmbH, [2010] EWHC 2911 (Ch) (17 November 2010). The proceedings are for infringement of copyright and database right. The rights are alleged to subsist in a database known as Football Live complied by the claimants which comprises the statistics from UK football matches. GmbH provides a competing service to the claimants. This data is called “Sport Live Data.” The data is stored on web servers in Germany and Austria, but can be accessed via links from elsewhere, including from the UK. The claimants say that, in assembling their data, GmbH and AG are copying data from Football Live, and are therefore liable for infringement of UK copyright and database right. The Court held that it was common ground that, where authorization of an act of infringement of UK copyright was relied on, the act of authorisation did not have to occur in the UK, provided that the primary act of infringement so authorised did. It was clear that complete control was exercised by GmbH over the content of the pop-up windows. This was not the case of mere supply, leaving it to the customer to choose what use was made of the data. As per infringement of database right, the court focused its discussion on the so-called concept of “making available” [to customers]. “[N]either side suggested that there was or could be any sensible distinction between the interpretations of making available to the public of the work by an electronic or online transmission […].” The Court concluded that ”the better view is that the act of making available to the public by online transmission is committed and committed only where the transmission takes place. It is true that the placing of data on a server in one state can make the data available to the public of another state but that does not mean that the party who has made the data available has committed the act of making available by transmission in the State of reception. I consider that the better construction of the provisions is that the act only occurs in the state of transmission.” Jurisdiction to determine international copyright ownership of a work: Crosstown Music Company 1,LLC v Rive Droite Music Ltd [2010] EWCA Civ 1222 (02

- 36 November 2010). This appeal dealt with the ownership of the UK and foreign copyrights in 119 songs. The claimant was an American music publishing company seeking a declaration of title. It acquired the copyright in 2006 by purchase from the defendant publishing company, to which the writers had initially assigned their copyrights under a succession of song-writing agreements between 1994 and 1998. The agreements were expressed to be subject to English law. They conferred exclusive jurisdiction on the English courts. The contractual term at the heart of this case made provision for an automatic reverter of the copyrights to the writers in the event of material breaches of the relevant agreement that had been notified. The trial judge drew no distinction between the UK copyrights and the foreign copyrights. The appeal turned to two principal points of law: (i) interpretation of s. 90(2) of the Copyright, Designs and Patents Act 1988 (the 1988 Act), which governs transmissibility of rights under the 1988 Act; and (ii) to what extent are disputes relating to foreign copyright justiciable in the English courts? The Court started with the discussion of the nature of copyright, which was declared to be central to the case: “It is property. It is the offspring of the 1988 Act, not an obligation created by a contract... It does not limit valid legal assignments of copyright to absolute assignments. It expressly permits assignments to be for part of the period of copyright [which is] an assignment of less than the whole of the copyright. It is commonly called a partial assignment… As an item of property, copyright can, in principle and in the absence of an express restriction on its assignability, be disposed of in any lawful way that the owner of it wants.” As a result of this analysis, the Court upheld the trial judge’s decision that the automatic reverter provisions in the song-writing agreements were compatible with the partial nature of the assignments of copyright permitted under s. 90 of the 1988 Act. As per the second issue of justiciability of foreign copyright disputes, the Court stated that the issue arises only in connection with the foreign copyrights. To support its statement, the Court turned to the authorities, notably Lucasfilm, which was concerned with the justiciability of claims for infringement of foreign copyright, they do not support Crosstown’s submissions on the non-justiciability of the title issues to foreign copyrights. “The issue of ownership of copyright as between the parties in this case turns on the legal effect of contractual documents that, according to their express terms, have to be construed according to English law and are subject to the exclusive jurisdiction of the English courts, [for] a term in a contract which deals with copyright throughout the universe, which has an express English law clause and exclusive English courts jurisdiction clause, is binding on the question of the appropriate jurisdiction and the applicable law.” As a result, the Court held that Lucasfilm did not compel it to hold that a dispute arising out of an English contract as to the assignment of foreign (non-EU) copyrights was not justiciable in an English court. Therefore, the Crosstown’s appeal in relation to foreign copyrights was dismissed. Internet piracy and accessorial liability doctrines: Twentieth Century Fox Film Corporation v. Newzbin Ltd., [2010] EWHC 601 (Ch) (29 March 2010). The action was brought for infringement of copyright arising from the operation of a website called Newzbin on a worldwide Internet discussion system called Usenet. The claimants are all well known makers and distributors of films. The defendant is the company that owns

- 37 and operates Newzbin, access to which is restricted to members on two basic levels of membership (fee-based). The Court found that the main activity of Newzbin was focused on the binary content and that the functionality of the web-site in relation to text content was still at an early stage of development. This led to the conclusion that there was necessary “knowledge of infringement” on behalf of the defendant, and that the defendant was liable to the claimants for infringement of their copyrights because it has authorised the copying of the claimants’ films, has procured and engaged with its premium members in a common design to copy the claimants’ films, and has communicated the claimants’ films to the public. 10.4 Ireland

Copyright as a human right and Internet piracy: EMI Records & Ors v Eircom Ltd, [2010] IEHC 108. This decision dealt with enforcement of a settlement between the plaintiff and defendant regarding diminishing the theft of copyright material over the Internet. The judgement concerns the compatibility of what the parties have agreed in relation to data protection legislation. The substance of the original case concerned the infringement of copyright-protected sound and video recordings over the Internet, mainly by peer-to-peer sharing groups. The issues considered in this decision were three-fold. Firstly, whether, for the purposes of Data Protection Acts, 1988-2003, collection of IP addresses by EMI or its agents must comply with the specific requirements of the Data Protection Act 1988, as amended, as they constitute “personal data” for the purposes of the Act. In answering this question, the Court concluded that none of the plaintiffs had any interest in personally identifying any living person who was infringing their copyright by means of the settlement and protocol. Therefore, the entire purpose of this litigation was to uphold the law, and the question at the issue was answered in the negative. Secondly, whether the settlement furthers any legitimate interest pursued by Eircom and asserts a possible conflict with the fundamental rights and freedoms of the data subject. The Court interpreted the Copyright and Related Rights Act 2000 as extending to the making of an injunction against an innocent third party in order to block the wholesale illegal destruction of the right to livelihood through creative effort which copyright is designed to defend and to vindicate. Thirdly, whether the processing by Eircom through warning and through cutting Internet access involves sensitive personal data, thus, constituting a civil or criminal offence. The Court was satisfied that neither the plaintiffs as owners or assignees of valuable copyright, nor Eircom as the Internet service provider, are in any way interested in the detection or prosecution of criminal offences. As a result, it was considered to refer this issue, if necessary, to “an investigation by an authorised body, or a determination made by a court of competent jurisdiction, following the conduct of a fair and impartial hearing.” Based on the analysis above, the Court authorised enforcement of the orders made in the settlement between the parties.

- 38 In the course of giving reasons for decision the Court held that protection of copyright was a human right. According to the Court: “In dealing with this aspect of data protection entitlement, I feel I must return, for a moment, to some basic principles of law. There is fundamental right to copyright in Irish Law. This has existed as part of Irish legal tradition since the time of Saint Colmcille. He is often quoted for his aphorism: le gach bó a buinín agus le gach leabhar a chóip (to each cow its calf and to every book its copy). The right to be identified with and to reasonably exploit one’s own original creative endeavour I regard as a human right. Apart from legal tradition, the rights now enshrined in the Copyright and Related Rights Act, 2000 were, under their previous legislative incarnation, identified in Phonographic Performance Ireland Limited v. Coady, [1994] I.R. 504 by Keane J. at 511 has having a pre-legislative origin and super-legislative effectiveness as part of the unenumerated fundamental rights under the Constitution” Internet piracy and graduated response: EMI Records (Ireland) Ltd v UPC Communications Ireland Ltd [2010] IEHC 377. The plaintiffs sought injunctions against the defendant, an Internet service provider, to prevent the infringements of their copyrights by third parties illegally downloading it over the Internet. The application sought to require UPC to implement a graduated response regimes to address online file sharing. The Court declined to make the order. It would have granted the relief, but found that Ireland had not properly implemented its obligations under EU law. 10.5 Singapore

The operator of an Internet DVR service for free-to-air television programming was not liable for copyright infringement, either on the grounds of infringement by reproduction or communication to the public: RecordTV Pte Ltd v. MediaCorp TV Singapore Pte Ltd and others, [2010] SGCA 43. RecordTV, an Internetbased provider of a service that allowed registered users to request the recording of MediaCorp’s free-to-air broadcasts in Singapore, appealed a High Court decision dismissing its claim against MediaCorp for making groundless threats to bring copyright infringement proceedings, and holding that RecordTV was liable for copyright infringement for its use of its Internet-based digital video recorder. RecordTV’s “iDVR” functioned like a traditional digital video recorder, but the recording was made at RecordTV’s premises with the registered user operating the iDVR remotely from home. The registered user would request a recording, and the recording would be streamed to the registered user’s computer, rather than downloaded. MediaCorp, the copyright owner of the free-to-air broadcasts, alleged that this infringed its copyright. The Court of Appeal of the Republic of Singapore held that RecordTV did not copy the MediaCorp shows, but rather the registered users requesting these shows did so. This affirmed the High Court’s decision which followed the reasoning in Cartoon Network LP v. CSC Holdings Inc., 536 F .3d 121 (2nd Cir. 2008), and found that if the end-user of the maker of this time-shifted recording for the purposes of the VCR, it must remain that the end-user is the maker of the recording in the context of the DVR, remote or local. The Court of Appeal affirmed this conclusion because there was no material difference in

- 39 recording shows on a traditional VCR/DVR and RecordTV’s iDVR, and that the iDVR is a significant technological improvement on the VCR/DVR. The Court of Appeal reversed the High Court’s decision that streams transmitted to subscribers are communicated to “the public”, holding that RecordTV did not communicate the MediaCorp shows to the public. The only MediaCorp shows that were “communicated” were those shows that appeared on each registered user’s playlist, and since the exact make-up of each playlist depended on the specific shows which the Registered user in question had requested to be recorded, the person responsible for determining the content of the communication at the time the communication was made would be that Registered User himself. Each transmission was not to a “public” and the aggregate transmissions were not to ‘the public” for the purposes of the Copyright Act. Further, the communication to end users were not made by RecordTV. RecordTV did not authorize the doing of any act comprised in MediaCorp’s copyright. reproductions or communications. RecordTV’s Terms of Use granted a right to the registered users limited to the right to use the iDVR for non-infringing purposes. There was no evidence that RecordTV granted or purported to grant the right to copy or communicate to the public any of the MediaCorp shows. 10.6 United States

The download of a musical work does not constitute a public performance of that work: US v. ASCAP 2010 WL 3749292 (2nd. Cir. Sept. 28, 2010). One of the questions raised in this case was whether a download of a digital file containing a musical work constituted a public performance of that musical work. The Court considered public performance rights as applied to downloads, which confers by the Copyright Act (§101) upon the owners of a copyright “bundle of discrete exclusive rights,” each of which may be transferred or retained separately by the copyright owner. It was undisputed that downloads created copies of the musical works, for which the parties agreed the copyright owners must be compensated. Having considered the definition of “to perform” provided for in the Copyright Act, the Court concluded that downloads were not musical performances that were contemporaneously perceived by the listener. They are simply transfers of electronic files containing digital copies from an on-line server to a local hard drive: “The downloaded songs are not performed in any perceptible manner during the transfers; the user must take some further action to play the songs after they are downloaded. Because the electronic download itself involves no recitation, rendering, or playing of the musical work encoded in the digital transmission,” the Court held that such a download was not a performance of the work, as defined by §101. Therefore, the downloads did not constitute public performances of the downloaded musical works. First-sale doctrine – when a transaction constitutes a license rather than a sale: Vernor v. Autodesk Inc. 621 F.3d 1102 (9th.Cir. 2010). The plaintiff purchased several used copies of defendant’s AutoCAD Release 14 software from one of the

- 40 defendant’s direct customers and resold the Release 14 computer-aided design software copies (used by architects, engineers, and manufactures) on eBay. The declaratory judgment action was brought to establish that these re-sales did not infringe the defendant’s copyright in Release 14 software copies. This case required the Court to decide whether the defendant sold Release 14 copies to its customers or licensed them instead. If the initial customer (Cardwell/Thomas & Associates, Inc. – CTA) owned its copies of Release 14, then both its sales to the defendant and defendant’s re-sales were non-infringing under the “first sale” doctrine. The US “first sale” doctrine states that a copyright owner’s exclusive distribution right is exhausted after the owner’s first sale of a particular copy of the copyrighted work. Further, in order to decide whether a software user is a licensee, there are a number of factors: (i) whether the copyright owner specifies that a user is granted a license; (ii) whether the copyright owner significantly restricts the user’s ability to transfer the software; and (iii) whether the copyright owner imposes notable use restrictions. The Court held that a software user was a licensee rather than an owner of a copy, where a copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions on the software user. The Court, therefore, concluded that CTA was a licensee rather than an owner of the copies of Release 14, and thus, was not entitled to invoke the first sale doctrine or the essential step defence. As a result, both CTA’s and the defendant’s sales infringed the plaintiff’s exclusive right to distribute copies of its works. In order to constitute copyright infringement by a licensee’s violation of a contract, there must be a nexus between the condition and the licensor’s exclusive right of copyright: MDY Industries, LLC v Blizzard Entertainment, Inc. 2010 WL 5141269 (9th.Cir.Dec 14, 2010). Blizzard is the creator of World of Warcraft (“WOW”), a popular multiplayer online role-playing game, in which players interact in a virtual world while advancing through the game’s levels. MDY and its sole member – Michael Donnelly (“Donnelly”) developed and sold Glider, a software program that automatically plays the early levels of WOW for players. MDY brought this action for a declaratory judgment to establish that its Glider sales did not infringe Blizzard’s copyright or other rights. The Court considered the distinction between contractual covenants and license conditions. Contractual terms are the terms that limit a license’s scope as “conditions,” the breach of which constitute copyright infringement. All the other license terms are considered to be “covenants” (contractual promise, manifestation of intention to act or refrain from acting in a particular way). To establish a copyright infringement, Blizzard must demonstrate that the violated term (TOU §4(B)) is a condition rather than a covenant. For a licensee’s violation of a contract to constitute copyright infringement, there must be a nexus between the condition and the licensor’s exclusive rights of copyright. Having considered the principles above, the Court concluded that TOU §4 contained certain restrictions that were grounded in Blizzard’s exclusive rights of copyright and

- 41 other restrictions that were not. Here, WOW players did not commit copyright infringement by using Glider in violation of the TOU. Thus, MDY was not liable for secondary copyright infringement, which required the existence of direct copyright infringement. Scope of the US Copyright Act to claims for infringement that involves foreign elements: Columbia Pictures Industries Inc v. Fung, 2:06-cv-005578-SVW-JC (C.D. Cal. May 20, 2010). The Permanent Injunction granted on May 20, 2010, prevents the defendants from taking various actions that would cause the plaintiffs’ Copyrighted Works to be infringed by third parties, and requires the plaintiffs to identify the Copyrighted Works to the defendants by title of the works, and represent to the defendants that, based on a reasonable review and good faith belief, a plaintiff owns or controls a valid and subsisting exclusive right under the US Copyright Act, 17 U.S.C. §§101 et seq. in the works. The list of titles of over 23,000 of the plaintiffs’ Copyrighted Works was served on the defendants. The injunction enjoined the conduct of defendants wherever they may be found, including without limitation in Canada. The scope of the injunction was in the following terms: “The Court further clarifies that this injunction covers any acts of direct infringement, as defined in 17 U.S.C. § 106, that take place in the United States. To the extent that an act of reproducing, copying, distributing, performing, or displaying takes place in the United States, it may violate 17 U.S.C. § 106, subject to the generally applicable requirements and defences of the Copyright Act. As explained in the Court’s December 23, 2009 Order, “United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringement liability.”...Each download or upload of Plaintiffs’ copyrighted material violates Plaintiffs’ copyrights if even a single United States-based user is involved in the “swarm” process of distributing, transmitting, or receiving a portion of a computer file containing Plaintiffs’ copyrighted content.” Idea expression dichotomy - Depicting of similar characters in dolls (young, stylish girls with big heads and an attitude) cannot be considered “substantially similarity” to the author’s preliminary sketches: Mattel, Inc. v. MGA Entertainment, Inc., 616 F. 3d 904 (9th.Cir.2010). The dispute arose within the doll industry: Barbie dolls were leading the fashion-doll market throughout the latter half of the 20th century. But in 2001 Bratz dolls came out to the market. Mattel, Barbie dolls producer, did not relish the competition. It also learned that its former employee- Carter Bryant – was “the man behind Bratz.” Mattel brought an action against Bratz (producing Bratz dolls). It won virtually every point. The district court imposed a constructive trust over all trademarks of Bratz, including the terms “Bratz” and “Fade,” essentially transferring Bratz trademark portfolio to Mattel. As to the copyright claim, the district court issued an injunction prohibiting MGA from producing or marketing virtually every Bratz female fashion doll. Bratz appealed. Thus, the main question raised on this appeal is “who owns Bratz”? The analysis of the copyright infringement turned to the consideration of “substantial similarity” for copyright infringement, which required a similarity of expression, not

- 42 ideas. The key question to be answered is: Are the works substantially similar beyond the fact that they depict the same idea? The Court found that MGA’s Bratz dolls could not be considered substantially similar to Bryant’s preliminary sketches simply because the dolls and sketches depict young, stylish girls with big heads and an attitude. Yet, this appeared to be how the district court reasoned. The Court went on to hold that it might have been reasonable to hold that some of the Bratz dolls were substantially similar to Bryant’s sketches, especially those in the first generation. The decision of the district court was vacated, and the case was sent for re-trial. Idea expression dichotomy - Where there was not substantial similarity between two plastic pacifier holders beyond the basic anatomical features common to all teddy bears, there was no copyright infringement: Baby Buddies, Inc. v. Toys “R” Us, Inc., 2010 WL 2853720 (11th.Cir.July 22, 2010). Baby Buddies sued Toys R US for copyright infringement of its pacifier holder, and the district court granted Toys R US’s motion for summary judgment dismissing the claim. The Baby Buddies pacifier holder was a small, moulded plastic teddy bear, with a clip, and a colourful ribbon as a tether, and a matching ribbon bow for decoration. Toys R US carried the appellant’s pacifier holder for a time, but then sought out its own design: a one-and-one-half inch tall moulded plastic bear, predominantly white with a red heart on its stomach. Toys R Us phased out the Baby Buddies pacifier holder, and when it was discontinued, Baby Buddies sued for copyright infringement. The United States Court of Appeals, Eleventh Circuit held that there was no copyright infringement. The Toys R US pacifier holder was not substantially similar to the protected elements of the Baby Buddies pacifier. An average lay observer would not recognize the alleged copy as having been appropriated from the copyrighted work. While both bears shared the basic anatomical features common to all teddy bears, there were almost no similarities between the two pacifier holders beyond the general ideas of including a teddy bear (with the requisite ears, eyes, nose, mouth, arms, and legs), a ribbon bow, and a pastel-based color scheme on a baby's pacifier holder. Any reasonable jury, properly instructed, would pick up on these differences and their cumulative effect on the noticeably different aesthetics embodied in the two pacifier holders. Because no reasonable jury could conclude that the pacifier holders were substantially similar at the protected level, the district court had properly granted Toys R US's motion for summary judgment on the copyright infringement count. Idea expression dichotomy - “Substantial similarity” requires plaintiffs to prove substantial similarity of copyright-protected elements of copyright work: Benay v. Warner Bros. Entertainment, Inc., 607 F. 3d 620 (9th.Cir.2010). The question raised by this case was whether the defendants’ motion picture “The Last Samurai” infringed a screenplay with the same name. The Court held that the defendants’ motion picture was not substantially similar to plaintiffs’ copyrighted screenplay under the US extrinsic test, despite the works’ shared title “The Last Samurai,“ and the shared premise of an American war veteran who travels to Japan in 1870s to train the Imperial Army in modern Western warfare in order to combat samurai uprising. In coming to the

- 43 conclusion on this point, the Court considered Funky Films, 462 F.3d: “At a very high level of generality, both works share certain plot similarities”. The Court also referred to Berkic, 761 F.2d: “But general plot ideas are not protected by copyright law; they remain forever the common property of artistic mankind.” The Court found that alleged similarities between the screenplay and the motion picture (i.e., both works are based on the same historical events, take place at the same time and in the same country, and share similar themes) were largely between unprotected elements, such as historical facts, characteristics that flow naturally from their shared premise, and scenes-a-faire. Therefore, the Court concluded that the district court was correct in granting summary judgment to the defendants. Idea expression dichotomy - “Substantial similarity” test applied to determine if God of War video game reproduced plaintiffs’ works: Sony Computer Entertainment America, Inc v Jaffe, 2010 WL 816651 (N.D.Cal, 2010). “An examination of articulable similarities between the plot, themes, dialogue, mood, settings, pace, characters and sequence of events of God of War and plaintiffs’ works reveals far less similarity than would be required to overcome summary judgment, even if plaintiffs had proven access. Plaintiffs have pointed to no persuasive similarity in dialogue or narration that would suggest actual copying. As in Berkic v. Crichton, 761 F.2d at 293, there is some degree of similarity between the plots at an extremely generalized level. Yet, as that court admonished, “No one can own the basic idea for a story. General plot ideas are not protected by copyright law; they remain forever the common property of artistic mankind.” This is particularly true when virtually all of the elements comprising plaintiffs’ works are stock elements that have been used in literary and artistic works for years, if not millennia. As noted, the particular sequence in which an author strings a significant number of unprotectable elements can itself be a protectable element. Metcalf 294 F.3d at 1074. Here, the sequences of elements, and the relationships between them, are entirely dissimilar. No reasonable trier of fact could conclude that God of War is substantially similar to any of plaintiffs’ works.” Copyright protection for algorithms - Copyright Act did not provide protection for the mathematical model; the mathematical model was not property that would support a conversion claim; mathematical model was not a trade secret at time it was allegedly misappropriated: Ho & Huang v. Taflove & Chang, 696 F. Supp. 2d 950 (N.D.Ill.2010). The plaintiffs alleged, among other claims, that the defendants infringed their copyright in a mathematical model the former originated, which the defendants allegedly had copied and used in various publications. The defendants moved to dismiss the claim and for summary judgment on all counts. The summary judgment was granted and the motion to dismiss was denied as moot. Both Ho and Taflove were professors of engineering at Northwestern University. During the relevant period, Huang and Chang were engineering graduate students at Northwestern. In 1998, Ho first conceived and formulated a “4-level 2-electron atomic model with Pauli Exclusion Principle for simulating method (the “Model”).” The Model is an advance relative to earlier models that did not include the Pauli Exclusion Principle of certain “pumping dynamics” among other things.

- 44 The plaintiffs argued that the defendants copied the formers’ “expression of a complicated physical phenomenon, consisting of 1) the Model formulation, 2) the related full derivation of equations, and 3) two figures…” The Court considered the conversion claim: “In Illinois, to establish a claim for conversion a plaintiff must show: 1) defendant’s unauthorised or wrongful assumption of control, dominion, or ownership over a plaintiff’s personal property; 2) plaintiff’s right in the property; 3) plaintiff’s right to immediate possession of the property; and 4) plaintiff’s demand for possession of the property.” The Court considered evidence available (defendants only had copies of some of plaintiffs’ works) and concluded that the plaintiffs’ claim for conversion of tangible goods could not survive summary judgment: (FMC Corp. v. Capital Cities/ABC, Inc., 915 F.d 300) “possession of copies of documents – as opposed to the documents themselves – does not amount to an interference with the owner’s property sufficient to constitute conversion… the owner is in no way being deprived of the use of his property. The only rub is that someone else is using it as well.” The Court also concluded that the Copyright Act did not provide protection to the plaintiffs’ alleged copyright in the Model: “in no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work” (17 U.S.C. §102). Scope of the DMCA safe harbour provision for a UGC site like YouTube: Viacom v. YouTube, 718 F.Supp.2d 514 (S.D.N.Y. June 23, 2010). Defendant YouTube, owned by defendant Google, operates its website (www.youtube.com) onto which users upload video files free of charge. YouTube is considered a service provider for the purposes of Digital Millennium Copyright Act’s (“DMCA”), 17 U.S.C. §512. The defendants moved for summary judgment that they were entitled to the, “safe harbor” §512(c) of DMCA protection against all of the plaintiffs’ direct and secondary infringement claims, including claims for “inducement” contributory liability, because they had insufficient notice, under the DMCA, of the particular infringements in suit. The plaintiffs cross-moved for partial summary judgment that defendants are not protected by the statutory “safe harbor” provision, but “are liable for the intentional infringement of thousands of Viacom’s copyrighted works…” The critical issue was whether the statutory phrases “actual knowledge that the material or an activity using the material on the system or network is infringing,” and “facts or circumstance from which infringing activity is apparent” in §512(c) of the DMCA mean a general awareness that there are infringements or rather mean actual or constructive knowledge of specific and identifiable infringements of individual items. The Court examined the “safe harbor” provisions of the DMCA, which required that the service provider “not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity…” “The right and ability to control” the activity requires, in turn, knowledge of

- 45 it, which must be item-specific. The provider need not monitor or seek out facts indicating such activity. If “red flags” identify infringing material with sufficient particularity, it must be taken down. The Court also considered three arguments that did not affect YouTube’s safe harbour coverage: (i) YouTube has implemented a policy of terminating a user after warnings from YouTube that the user has uploaded infringing matter (“three strikes”); (ii) in its “Claim Your Content” system, YouTube used Audible Magic, a fingerprinting tool which removed an offending video automatically if it matched some portion of a reference video submitted by a copyright owner who had designated this service. It also removed a video if the rights-holder operated a manual function after viewing the infringing video; and (iii) although the statute states that the “works” may be described representatively, it also requires that the identification of the infringing material that is to be removed must be accompanied by “information reasonably sufficient to permit the service provider to locate the material.” As a result, the Court granted summary judgment to the defendants stating that they qualified for protection under 17 U.S.C. §512 against all of the plaintiffs’ claims. Internet piracy – scope of contributory infringement doctrines: Arista Records, LLC v Lime Group LLC, 2010 WL 1914816 (S.D.N.Y.2010). The plaintiffs are 13 major record companies, who raised several claims for secondary copyright infringement against LimeWire, a file-sharing program that utilizes peer-to-peer technology (BitTorrent protocol and Gnutella network) and permits users to share digital files via an Internet-based network. The parties moved for summary judgment. The plaintiffs moved for partial summary judgment on their claims of inducement of infringement, contributory infringement, and common law infringement and unfair competition. The defendants moved for summary judgment on each of these claims and on the plaintiffs’ claim of vicarious copyright infringement, as well as for the plaintiffs’ fraudulent conveyance and unjust enrichment claims. The Court found inducement liability based on the fact that the defendant engaged in purposeful conduct that encouraged copyright infringement with the intent to encourage such infringement. The evidence supported that the defendants, in fact, conducted themselves with the purposes that fostered infringement, including that LimeWire created and distributed the LimeWire software, which “users employ to commit a substantial amount of infringement.” It was found that the defendants’ “intent to foster infringement can be established by evidence of a defendants’ ‘clear expression’ of such intent, or of affirmative steps taken to foster infringement.” Having considered several factors (the defendants’ awareness of substantial infringement by users, efforts to attract infringing users, efforts to enable and assist users to commit infringement, dependence of infringing use for the success of its business, and failure to mitigate infringing activities), the Court found that the test for inducement had been satisfied and that LimeWire infringed the plaintiffs’ copyright. Therefore, the plaintiffs’ motion for summary judgment on the claim against LimeWire of inducement of copyright infringement was granted. However, the plaintiffs’ claim for summary judgment for contributory infringement was denied, stating that “a defendant who distributes a product that materially contributes to

- 46 copyright infringement will not be liable… if the product also is widely used for legitimate, unobjectionable purposes or is merely capable of substantial non-infringing use.” LimeWire presented evidence of non-infringing content on the file sharing server, and as a result, the Court found that it was not possible to determine whether the system [LimeWire] was capable of such non-infringing use. The motion for summary judgment on the issue of vicarious infringement was also denied: the second part of the two-part test was not satisfied here (LimeWire had the right and ability to supervise the infringing activity; but did not exercise any meaningful supervisory control, and failed to provide a legitimate reason for not doing so). Finally, the LimeWire’s founder and chairman were found jointly liable for infringement: individuals who had “the ability to supervise infringing activity and ha[d] financial interest in that activity, or who personally participate[d] in that activity [were] personally liable for infringement.” Internet piracy – privacy of users and fair use defense: Arista Records, LLC v. Doe 3, 604 F. 3d 110 (2nd.Cir.2010). The defendant contended that the allegations against him (that the defendant’s downloading and/or distributing music over the Internet in violation of the plaintiffs’ copyright and the plaintiffs’ need for the information in order to enforce their rights) were not sufficient to overcome the defendant’s First Amendment right of anonymity. There was found no merit in Doe 3’s contentions. The Court considered the First Amendment principles as providing protection for anonymous speech. The First Amendment, however, does not provide a license for copyright infringement: it is “not a license to trammel on legally recognized rights in intellectual property.” Thus, to the extent that anonymity is used to mask copyright infringement or to facilitate such infringement by other persons, it is unprotected by the First Amendment. Therefore, the Court concluded that the defendant’s contention had no merit. Finally, the Court considered the copyright doctrine of “fair use” defence, the applicability of which presented mixed questions of law and fact: “Fair use presupposes good faith and fair dealing,” and one consideration is “whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” It was found that three out of four elements (second to fourth) of the “fair use” doctrine were present in Doe 3’s actions (the purpose and character of use, the nature of the copyrighted work, the substantiality of the portion used in relation to the copyrighted work as a whole, and the effect on the potential market for or value of the copyrighted work), and therefore, his actions could not be defended by the doctrine. 11 - INDUSTRIAL DESIGNS There were no judicial decisions in 2010 relating to industrial designs. CONCLUSION As this paper shows, developments in copyright jurisprudence continue to be dominated by the Copyright Board. 2010 saw numerous unsuccessful applications for judicial review of Board decisions. The Supreme Court of Canada will have the opportunity to issue its second decision

- 47 arising from a decision of the Board in SOCAN’s Tariff 22, but perhaps not until into 2012. Leave applications are outstanding for two other matters that originated in the Board. The big question for 2011 is whether this Parliament will survive long enough for Bill C-32 to pass. If so, 2011 may be a year of adjustment for copyright owners and users.

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