Intellectual Property Litigation: Recent Developments Of Importance

Canadian Trade-Mark and Copyright Litigation

There have been a number of recent judicial decisions of interest in this area, which we highlight below.

Copyright Pentalogy

The Supreme Court of Canada issued decisions in five copyright cases in July 2012. The copyright bar was buzzing with excitement over the concentration of attention the Supreme Court was giving copyright law.

Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC34

This case dealt with the collection of royalties for musical works when these works were part of video games and, specifically, whether a separate tariff was applicable for the right to "communicate" musical works on behalf of copyright owners in this context.

The Court stated that the royalties for the reproduction of any musical works that are incorporated into video games are negotiated before the games are packaged for public sale. The question in this appeal was whether the rights are revived when the work is sold over the Internet instead of through a bricks-and-mortar store.

The Copyright Board concluded that video games containing a musical work were subject to a new fee when sold over the Internet, a decision that was upheld on appeal to the Federal Court of Appeal.

Adivided Supreme Court (5-4) overturned this decision and allowed the appeal, basing its decision on a principle of "technological neutrality", which requires the Copyright Act to apply equally between traditional and technologically advanced forms of the same media. The majority determined that musical works are not "communicated" by telecommunication when they are downloaded.

In a strongly worded dissent, Justice Rothstein stated that "technological neutra-lity is not a statutory requirement capable of overriding the language of the Act and barring the application of the different protected rights provided by Parliament."

Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC35

The Copyright Board determined that downloads and streams over the Internet came within the scope of the exclusive right of copyright holders to communicate to the public by telecommunication, and hence are subject to a tariff. Given the finding in the companion case, Entertainment Software Association, that downloading is not "communication", this left the question of whether "streaming" was a communication to the public. The focus on the analysis was whether streaming was "to the public".

Ultimately, the Court determined that "[a]lthough they occur between the online music provider and the individual consumer in a point-to-point fashion, the transmissions of musical works in this case, where they constitute 'communications', can be nothing other than communications 'to the public'". The Court cited with approval a portion from Professor Vaver's text:

If the content is intentionally made available to anyone who wants to access it, it is treated as communicated "to the public" even if users access the work at different times and places.

(D. Vaver, Intellectual Property Law: Copyright, Patents, Trade-Marks, 2nd ed. 2011, at p. 173)

Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC36

This case dealt with whether a royalty was applicable for music previews when commercial online music stores allowed 30-90 second excerpts of music works that can be listed to be consumers prior to purchasing the work. In the Board's view, the use of previews was not an infringement of copyright since it was "fair dealing" for the purpose of research, and, accordingly, no royalties were owed. This decision was upheld by the Federal Court of Appeal. The Supreme Court agreed and dismissed the appeal.

The test for fair dealing was previously articulated by the Supreme Court as a two-part test:

The first is to determine whether the dealing is for the purpose of either "research" or "private study". The second step assesses whether the dealing is "fair". The onus is on the person invoking "fair dealing" to satisfy both aspects of the test. The Court previously set six fairness factors for guidance: the purpose, character, and amount of the dealing; the existence of any alternatives to the dealing; the nature of the work; and the effect of the dealing on the work.

The court considered the American defense of "fair use", which did not involve a two-part test. The Supreme Court further cautioned against "the automatic portability of American copyright concepts into the Canadian arena, given the "fundamental differences" in the respective legislative schemes.

The Supreme Court agreed with the Board that the purpose of the "research" was to be considered from the user perspective, and that previews were for the purpose of conducting research to identify which music to purchase. This was found to satisfy the first part of the test.

The court conducted its analysis with respect to the six factors and determined that previews were fair, and thus the online service providers do not infringe copyright, and therefore no royalties were owed.

Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC37

This case dealt with whether it would be copyright infringement for a teacher to copy extracts from texts and other works for use by students. This case hinged on whether such activities were saved by the fair dealing exception. The Supreme Court was divided (5-4) in finding that such activities were indeed fair.

The Court considered prior case law and determined that "copiers cannot camouflage their own distinct purpose by purporting to conflate it with the research or study purposes of the ultimate...