The Law & Technology Institute Dalhousie Law School

Dalhousie University

The Law & Technology Institute Dalhousie Law School: The Influence of American Law on Canadian Copyright Law Affecting Technology

Wednesday, October 15, 2003 Barry Sookman, Partner, McCarthy Tétrault Chair, Internet and Electronic Commerce Law Group (Toronto) [email protected] (416) 601-7949 www.mccarthy.ca Dalhousie University

Need to Scrutinize U.S. Cases

¾ “As Estey J. noted in Compo Co., supra, at p. 367: ¾ ...United States court decisions, even where the factual situations are similar, must be scrutinized very carefully because of some fundamental differences in copyright concepts which have been adopted in the legislation of that country.” ¾ “I should note that while there is no explicit and independent concept of ‘derivative work’ in our Act … To the extent, however, that the respondent seeks to enlarge the protection of s. 3(1) by reading in the general words ‘recast, transformed or adapted’ as a free-standing source of entitlement, his remedy lies in Parliament, not the courts.” Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.)

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Need to Scrutinize U.S. Cases

“’While the American case is most fascinating from both a cultural and legal perspective, I have not found it to be persuasive authority in the context of Canada's particular copyright regime. Chief Justice Laskin in Morgentaler v. The Queen, [1976] 1 S.C.R. 616, held at page 629 that a Court should be prudent in applying American precedents to the Canadian context and should take into consideration the particular rules of each system of law: … ‘they do not carry any authority beyond persuasiveness according to their relevance in the light of context, with due regard to the obvious differences that exist… American decisions are only persuasive to the extent that the laws in both jurisdictions are similar . . .’” Cie générale des éstablissements Michelin-Michelin & Cie v. C.A.W-Canada. (1996), 71 C.P.R. (3d) 348 (Fed. T.D.) (emphasis added)

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Refusal to Apply U.S. Cases

“For their part, American precedents are numerous. However, the important distinctions that exist between American and Canadian copyright law on issues such as distribution rights and contributory infringement, coupled with the detailed statutory provisions that now address the liability of ISPs mean that American cases are of little relevance in determining the application of Canadian legal principles in these matters.” Public Performance of Musical Works 1996, 1997, 1998 (1999), 1 C.P.R. (4th) 417 (Copyright Board) (Tariff 22 Case)

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“However, case law, both domestic and foreign, guides this Court's interpretation of the Act . This Court might be guided by British jurisprudence, since Canadian copyright law was historically based upon, and still closely resembles British law… On the other hand, the Supreme Court of Canada has indicated that American jurisprudence must be carefully scrutinized, because there are important differences between Canadian and American copyright policy and legislation (Compo , supra at 367). Canadian courts must always be careful not to upset the balance of rights as it exists under the Canadian Act .” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.) (emphasis added)

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U.S. Cases Have Been Influential

¾ “American copyright law is quite similar to Canadian law, and reference to American jurisprudence in this area is helpful.” Matrox Electronic Systems Ltd. v. Gaudreau, [1993] R.J.Q. 2449 (Que. S.C.)

¾ “In the United States both the size of the computer industry and the extent of litigation have generated a considerable number of decisions involving the application of copyright law in computer cases. These decisions are not binding on courts in Canada but they are entitled to both consideration and respect where they touch on areas which have not been considered or on issues that are similar in both American and Canadian legislation.” Prism Hospital Software Inc. v. Hospital Medical Records Institute (1994), 57 C.P.R. (3d) 129 (B.C.S.C.)

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Effect of International Treaties

“This is not to say that Canadian copyright law lives in splendid isolation from the rest of the world. Canada has adhered to the Berne Convention for the Protection of Literary and Artistic Works (1886) and subsequent revisions and additions, and other international treaties on the subject including the Universal Copyright Convention (1952). In light of the globalization of the so-called ‘cultural industries’, it is desirable, within the limits permitted by our own legislation, to harmonize our interpretation of copyright protection with other like-minded jurisdictions.” Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.)

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Effect of International Treaties

“Another impact of the 1993 amendments may well be that more assistance can henceforth be sought from authoritative decisions of the United States courts when interpreting these very provisions that were amended or added in the Copyright Act in order to implement NAFTA. I do not wish to be interpreted as saying that Canadian courts, when interpreting these provisions, should move away from following the Anglo-Canadian trend. I am only suggesting that where feasible without departing from fundamental principles, Canadian courts should not hesitate to adopt an interpretation that satisfies both the Anglo-Canadian standards and the American standards where, as here, it appears that the wording of Article 1705 of NAFTA and, by extension, of the added definition of ‘compilation’ in the Canadian Copyright Act, tracks to a certain extent the wording of the definition of ‘compilation’ found in the United States Copyrights Act.” Tele-Direct (Publications) Inc. v. American Business Information, Inc., (1997), 76 C.P.R. (3d) 296 (Fed. C.A.)

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Effect of International Treaties

¾ “I refer also to the World Trade Organization (“WTO”) Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”) which was incorporated into Canadian law by S.C. 1994, c. 47, s. 8. It provides in Art. 9.2 that “[c]opyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.” (Emphasis added.) I refer to the emphasized words as showing what, authoritatively, falls outside the scope of protectable expression.” Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.) ¾ Will cases interpreting Section 1.02(b) of U.S. Act be persuasive?

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Principles of Statutory Construction

¾ “The words of the Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.” Bell ExpressView Limited Partnership v. Rex 2002 S.C.C. 42 (emphasis added) ¾ The courts views of the “object of the Act” and “the intention of Parliament” can be critical to construing copyright legislation.

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Purpose of Copyright - U.S.

“Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” Art. I, 8, cl. 8. U.S. Constitution

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Purpose of Copyright - U.S.

“…we have described the Copyright Clause as both a ‘grant of power and a limitation,’ … and have said that [t]he primary objective of copyright is [t]o promote the Progress of Science. The ‘constitutional command,’ we have recognized, is that Congress, to the extent it enacts copyright laws at all, create a ‘system’ that ‘promote[s] the Progress of Science.’” Eldred v Ashcroft 537 U.S. (2003)

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Purpose of Copyright – U.S. ¾ “The limited scope of the copyright holder's statutory monopoly . . . reflects a balance of competing claims upon the public interest: creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an ‘author's’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.” Twentieth Century Music Corp. v. Aiken, 422 U.S. 15, 156 (1975). ¾ ‘The primary objective of copyright is not to reward the labor of authors, but ‘[t]o promote the Progress of Science and useful Arts.’ To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work.” Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 349-350 (1991)

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Purpose of Copyright – U.S.

“The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts… When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose." Universal City Studios v. Sony Corp. of America (The Betamax Case), 464 U.S. 417 (1984)

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Purpose of Copyright- U.S.

¾ “We have recognized that these twin purposes of encouraging new works and adding to the public domain apply to copyrights as well as patents… we have clearly identified the overriding interest in the ‘release to the public of the products of [the author’s] creative genius.’” ¾ “But as our cases repeatedly and consistently emphasize, ultimate public access is the overriding purpose of the constitutional provision.” Eldred v Ashcroft 537 U.S. (2003) per Stevens J., dissenting

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Purpose of Copyright – U.S.

“For present purposes, then, we should take the following as well established: that copyright statutes must serve public, not private, ends; that they must seek ‘to promote the Progress’ of knowledge and learning; and that they must do so both by creating incentives for authors to produce and by removing the related restrictions on dissemination after expiration of a copyright’s ‘limited Tim[e]’” … Eldred v Ashcroft 537 U.S. (2003) per Breyer J., dissenting

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Purpose of Copyright-U.S. “JUSTICE STEVENS’ characterization of reward to the author as ‘a secondary consideration’ of copyright law… understates the relationship between such rewards and the ‘Progress of Science.’ As we have explained, ‘[t]he economic philosophy behind the [Copyright] [C]lause . . . is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors.’ … Accordingly, copyright law celebrates the profit motive, recognizing that the incentive to profit from the exploitation of copyrights will redound to the public benefit by resulting in the proliferation of knowledge. . . . The profit motive is the engine that ensures the progress of science. … Rewarding authors for their creative labor and ‘promot[ing] . . . Progress’ are thus complementary…” Eldred v Ashcroft 537 U.S. (2003) per Ginsberg J.

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Purpose of Copyright – Canada - Historical

“Copyright, like patent right, is a monopoly restraining the public from doing that which, apart from the monopoly, it would be perfectly lawful for them to do. The monopoly is itself right and just, and is granted for the purpose of preventing persons from unfairly availing themselves of the work of others, whether that work be scientific, literary, or artistic. The protection of authors, whether of inventions, works of art, or of literary compositions, is the object to be attained by all patent and copyright laws. The Acts are to be construed with reference to this purpose.” CAB v SOCAN (1994) 58 C.P.R. (3d) 190 (Fed.C.A.)

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Purpose of Copyright – Canada

“The Copyright Act is usually presented as a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator (or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated).” Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.); see also SOCAN v. Canadian Association of Internet Providers (2002) 19 C.P.R. (4th) 289 (Fed.C.A.)

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Purpose of Copyright – Canada

“The proper balance among these and other public policy objectives lies not only in recognizing the creator's rights but in giving due weight to their limited nature. In crassly economic terms it would be as inefficient to overcompensate artists and authors for the right of reproduction as it would be self-defeating to under compensate them.” Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.)

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Purpose of Copyright – Canada

“Copyright law should recognize the value of disseminating works, in terms of advancing science and learning, enhancing commercial utility, stimulating entertainment and the arts and promoting other socially desirable ends. In order to realize these benefits, however, creators must be protected from the unauthorized exploitation of their works to guarantee sufficient incentives to produce new and original works.” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.)

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Purpose of Copyright

“An argument for adopting a more permissive interpretation is that, given the rapid and recent development of Internet communication, the Act should not be interpreted in a way that would obstruct improvements in the quality of Internet communication, or reductions in the price at which data can be made available, made possible by rapid and fundamental technological advances. On the other hand, a relatively strict interpretation of “necessary” may be indicated by the fact that paragraph 2.4(1)(b) reduces the range of potential sources from whom authors and composers can recover a royalty for the unauthorized communication of their work by removing entities that benefit commercially from the availability on the Internet of copyright music, virtually free of charge to the end user…” SOCAN v. Canadian Association of Internet Providers (2002) 19 C.P.R. (4th) 289 (Fed.C.A)

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Summary Regarding Objects of Acts

¾ Both U.S. and Canadian law recognizes dual role of copyright ¾ Anglo-Canadian copyright has long history of interpreting copyright legislation to protect author’s rights ¾ Recent cases don’t give clear view as to which principle dominates- See Théberge (narrowing author rights) Tariff 22 case (expanding author rights) ¾ U.S. cases have long history of promoting public interest and limiting author rights (see esp. fair use cases) ¾ Eldred case may signal movement to further protect author rights.

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“… the American threshold for copyright protection, which the Trial Judge mistakenly adopted, does contain requirements of both originality and creativity... In Feist the U.S. Supreme Court stated (at 345) that ‘original, as the term is used in copyright means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.’” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.)

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“In my view, the Trial Judge misinterpreted this Court's decision in Tele-Direct … and other jurisprudence as shifting the standard of originality away from the traditional Anglo-Canadian approach. Neither Article 2 of the Berne Convention … nor Article 1705 of the North American Free Trade … require a more onerous standard for copyright protection than already contained in the Act . Whether or not the Publishers' works are "original" depends upon the meaning of that term in its statutory context, as explained by existing Anglo- Canadian jurisprudential principles.” CCH Canadian Ltd. v. Law Society of Upper Canada, (2002) 18 C.P.R. (4th) 161 (Fed. C.A.)

25 McCarthy Tétrault LLP Dalhousie University U.S. Cases’ Usefulness to Determining Originality “As noted above, the Supreme Court of Canada has warned that ‘United States Court decisions ... must be scrutinized very carefully because of some fundamental differences in copyright concepts ...’ ( Compo , supra at 367). The wisdom in that advice is well demonstrated in this case, where the American principle sought to be imported is based upon an unstable foundation that has not yet been tested thoroughly. Although the Trial Judge prefaced his remarks with a disclaimer that he proceeded with some trepidation, he failed to conduct any substantive analysis of the American standard of originality. Therefore, he inadvertently entangled the standard set out in Feist and applied in Bender v. West with the Canadian touchstone of originality. As discussed above, there is no universal requirement of ‘creative spark’ or ‘imagination’ in Anglo-Canadian copyright law.” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.)

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Whose Law will Apply Anyway?

¾ “Decisively for the present case, there is no principle that the labour and expense of collecting, verifying, recording and assembling (albeit routinely) data to be compiled are irrelevant to, or are incapable of themselves establishing, origination, and therefore originality; on the contrary, the authorities strongly suggest that labour of that kind may do so…” Desktop Marketing Systems Pty Ltd. v. Telstra Corporation Limited [2002] FCAFC 112 (15 May 2002) ¾ What will the Supreme Court of Canada hold the law to be?

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Infringement General Principles

Whether activity infringes depends on – nature of exclusive right and whether activity falls within the wording of right – whether a statutory exemption applies – applicability of U.S. cases depends on similarity of statutory language, interpretation given to underlying concepts, and similarities in methodologies to determine infringement – in tough cases application of “policy” considerations underlying Act

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Historical Anglo - Canadian Policy

¾ “In the end what must be demonstrated is that either directly or indirectly through his actions the defendant has taken the fruits of the plaintiff's labour." Prism Hospital Software Inc. v. Hospital Medical Records Institute (1994), 57 C.P.R. (3d) 129 (B.C.S.C.) Per, Mr. Justice Parrett ¾ “… one man must not be permitted to appropriate the result of another's labour". L. B. (Plastics) Ltd. v. Swish Products Ltd., [1979] R.P.C. 551 (H.L.) per Lord Wilberforce

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Historical Anglo - Canadian Policy

“In determining whether there has been infringement of copyright, the courts frequently look to see if the allegedly infringing activity had the effect of or would if repeated on a wide scale have the effect of lessening the value of the copyright owner's statutory monopoly such as by reducing the demand for the work or the performance thereof or the profit which the owner of the copyright could expect to earn from the work.” Harms (Inc.) Ltd. v. Martans Club, Ltd., [1927] 1 Ch. 526 (C.A.); Messager v. BBC, [1927] 2 K.B. 543, reversed on other grounds [1928] 1 K.B. 660 (C.A.); Jennings v. Stephens, [1934] 1 Ch. 469 (C.A)

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U.S. Infringement Methodology

¾ U.S. case law uses a “substantial similarity” analysis to determine if there has been copying of protected expression. ¾ U.S. courts often apply an “abstraction”, “filtration” “comparison” methodology to separate “ideas” from “expression” and to compare the infringing work to a “core of protectable expression”. See, Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2nd Cir. 1992)

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Canadian Infringement Methodology “The trial judge in his reasons (at pp. 57-65) referred extensively to Computer Associates International Inc. v. Altai Inc., 23 U.S.P.Q. 2d 1241 (2nd Cir. 1992) which discussed and applied the ‘abstraction – filtration – comparison’ method. However, following this, he said at (p. 37) ‘[w]hether a Canadian court should adopt the abstraction – filtration – comparison method in deciding an action for copyright infringement or some other similar method’ it was clear that ‘some method must be found to weed out or remove from copyright protection those portions which, for the various reasons already mentioned, cannot be protected by copyright’. This indicates that the trial judge did not necessarily apply the abstraction – filtration – comparison method, assuming it, for the moment, to be ‘wrong.’ Further, I see nothing wrong with his general ‘weeding-out’ observation.” Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.)

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Similarities in Infringement Methodology

“It can be seen from the foregoing that there are differences of view on the method or process to be followed in performing a substantial reproduction analysis. I do not think that a hard-edged question of law is necessarily involved.” Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.) Is the Delrina case misunderstood?

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What is a Substantial Part

¾ "Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement.” Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.) quoting Ladbroke (Football) Ltd. v. William Hill (Football) Ltd., [1964] 1 All E.R. 465 (H.L.) per Lord Pearce ¾ Methodology depends on conceptual clarity regarding meaning of what is “original” and what is and is not protected by copyright.

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Idea/Expression Dichotomy

¾ U.S. methodology assumes “ideas” can be separated from expression”. ¾ “Although the idea/expression dichotomy is a common feature of copyright law in the three countries, it has been observed that it is applied with greater rigour in the United States, with the effect of enlarging the idea aspect of a work and, correspondingly, reducing the expression aspect. The result is a narrowing of the scope of copyright protection. The submitted wider protection afforded under the English/Canadian approach is based on some recognition of the skill and labour in the creation of the work. Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.) ¾ Are English cases that distinguish between an “idea” and the “elaboration of an idea” consistent with TRIPS? Does labour count?

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U.S. Merger Doctrine

“The merger notion is a natural corollary of the idea/expression distinction which, as I have said, is fundamental in copyright law in Canada, England and the United States. Clearly, if there is only one or a very limited number of ways to achieve a particular result in a computer program, to hold that that way or ways are protectable by copyright could give the copyright holder a monopoly on the idea or function itself.” Delrina Corp. v. Triolet Systems Inc. (2002) 58 O.R. (3d) 339 (C.A.)

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U.S. Externalities Doctrine (scenes a faire doctrine) ¾ “The Court in Mitel agreed, stating that the ‘traditional copyright doctrine [of scenes a faire has been extended] to exclude from protection against infringement those elements of a work that necessarily results from external factors inherent in the subject matter of the work.’ Mitel, 124 F.3d at 1375. The rationale is rather straightforward: Because those external factors dictated the creation of the allegedly infringed work, ‘it is lacking the originality that is the sine qua non for copyright protection’…” ¾ “Dewar’s explanation of the need to interoperate two programs, and industry practice and custom, do not justify unauthorized accessing and copying Geac’s copyrighted code. The Court in Mitel specifically rejected the analysis of the district court in that case which focused on whether external factors such as market forces and efficiency considerations justified the copying… We also reject the doctrine of externalities, including interoperability, as justification for using the Copy and Call commands to access Geac’s copyrighted software in violation of the License Agreements and the Copyright Code.” Dun & Bradstreet Software Services, Inc. v Grace Consulting, Inc. 64 U.S.P.Q. 2d 1705 (3rd Cir. 2002)

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Causation

“These parties, who are liable under plaintiffs' theory, do no more than operate or implement a system that is essential if Usenet messages are to be widely distributed. There is no need to construe the Act to make all of these parties infringers. Although copyright is a strict liability statute, there should still be some element of volition or causation which is lacking where a defendant's system is merely used to create a copy by a third party.” Religious Technology Center v. Netcom On-Line Communications Services Inc. 37 U.S.P.Q. (2d) 1545 (N.D. Cal. 1995)

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Causation

“It is no defence for a person copying an item to assert that he did not know he was infringing a copyright. The reasons for that are self evident. Obviously when strict liability is pushed to its boundaries absurd results can arise. It would be absurd if the recipient of a fax over which he has no control could be said to be infringing it merely because his machine is the one that prints the transmission. Generally, the owner of a fax machine cannot stop material being sent. He is an involuntary copier. The same occurs in relation to the Internet Service Provider.” Sony Music Entertainment (U.K.) Limited v. Easyinternetcafe Limited [2003] E.W.H.C. 62 (Ch.D.)

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Causation

“By contrast, attempts at relying on notions of volition or causation to avoid liability will be met with the same skepticism as in other situations, as there is no ‘prerequisite of knowledge’ of the existence of the violated copyright or that the action in question amounts to infringement. Infringement is the single act of doing something which ‘only the owner of the copyright has the right to do'”. Public Performance of Musical Works 1996, 1997, 1998 (1999), 1 C.P.R. (4th) 417 (Copyright Board) What will the SCC say?

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U.S Contributory Infringement

One who, with knowledge of the infringing activity induces, causes, or materially contributes to the infringing conduct of another, may be liable as a contributory infringer. A & M Records Inc. v. Napster Inc., 57 U.S.P.Q. 2d 1729 (9th Cir. 2001)

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Joint Liability ¾ “It is well settled that a man is liable for wrongful acts which have been done according to his command or request . . . Infringement of copyright is infringement of a proprietary right, and a trespasser may be "not only he who does the Act but who commands or procures it to be done . . . who aids or assists in it". . . Chappell & Co. Ltd. v. Associated Radio Co. of Australia Ltd., [1925] V.L.R. 351 (Vict. S.C.). ¾ “A defendant may procure an infringement by inducement, incitement or persuasion.” CBS Songs Ltd v. Amstrad Plc, [1988] 2 All ER 484 (H.L.). ¾ See also, De Tervagne v. Beloeil (1993), 50 C.P.R. (3d) 419 (T.D.); Canadian Cable Television Assn. v. Canada (Copyright Board) (1993), 46 C.P.R. (3d) 359 (Fed. C.A.); Re SOCAN Settlement of Royalties, 1990-1995 (Tariff 17) (1996), 70 C.P.R. (3d) 501 (Copyright Bd.)

McCarthy Tétrault LLP Dalhousie University Historical Applicability of U.S. Fair Use Principles ¾ “In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit education purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." Section 107. ¾ Because of the statutory differences between the "fair use" exception in the United States act and the "fair dealing" exception in the Canadian Act, cases interpreting the United States fair use exemption have traditionally been cautiously read in attempting to apply them to the Canadian Act. See Cie générale des éstablissements Michelin-Michelin & Cie v. C.A.W-Canada (1996), 71 C.P.R. (3d) 348 (Fed. T.D.).

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Fair Dealing – General Principles

“Excessive control by holders of copyrights and other forms of intellectual property may unduly limit the ability of the public domain to incorporate and embellish creative innovation in the long-term interests of society as a whole, or create practical obstacles to proper utilization. This is reflected in the exceptions to copyright infringement enumerated in ss. 29 to 32.2, which seek to protect the public domain in traditional ways such as fair dealing for the purpose of criticism or review and to add new protections to reflect new technology, such as limited computer program reproduction and ‘ephemeral recordings’ in connection with live performances.” Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.)

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Fair Dealing – General Principles

“An overly restrictive interpretation of the exemptions contained in the Act would be inconsistent with the mandate of copyright law to harmonize owners' rights with legitimate public interests… Instead, courts should employ the usual modern rules of purposive construction in the context. As Professor Vaver has pointed out, ‘User rights are not just loopholes. Both owner rights and user rights should therefore be given [a] fair and balanced reading’ … Simply put, any act falling within the fair dealing exemptions is not an infringement of copyright.” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.) at par. 126

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Fair Use Purpose

¾ “The fair use doctrine thus ‘permits [and requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.’” Stewart v. Abend, 495 U.S. 207 (1990) ¾ “From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright's very purpose, ‘[t]o promote the Progress of Science and useful Arts’. . . . U.S. Const., Art. I, 8, cl. 8” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)

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Usefulness of U.S. Fair Use Cases

“I realize the differences in the American legislation as compared to our own Act . Generally, American law is more favourable to copyright users than is Canadian law. In particular, 17 U.S.C. § 107 leaves open the types of purposes that may constitute fair use, unlike our Act , which specifies allowable purposes (see Hager , supra at 309; Michelin , supra at 379; and Vaver, Copyright Law , supra at 190). However, this fact alone does not mean that we cannot ‘find some assistance in examining the experience in the United States’, as Estey J. suggested, and consider these factors in an analysis of fair dealing (see Compo , supra at 367). Importantly, the distinction between Canadian and American law regarding allowable purposes has limited bearing on a discussion of the factors that influence whether dealing is fair.” CCH Canadian Ltd. v. Law Society of Upper Canada (2002) 18 C.P.R. (4th) 161 (Fed. C.A.)

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¾ “But the public policy which includes [original works] within the granted monopoly excludes from it all that is not embraced in the [original expression]. It equally forbids the use of the [copyright] to secure an exclusive right or limited monopoly not granted by the [Copyright] Office and which it is contrary to public policy to grant.” Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990).

¾ The equitable defense of copyright misuse can apply if the copyright holder somehow illegally extends its monopoly or otherwise violates the public policy underlying copyright law. See, DSC Communications Corporation v. DGI Technologies, Inc., 38 U.S.P.Q. 2d 1699 (5th Cir. 1996); Alcatel USA, Inc. v. DGI Technologies, Inc, 49 U.S.P.Q. 2d 1641 (5th Cir. 1999), Practice Management Information Corporation v. The American Medical Association, 45 U.S.P.Q. 2d 1780 (9th Cir. 1997) .

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¾ In Canada, the extent to which a defendant can raise “copyright misuse” as a defence to an infringement action remains uncertain. ¾ The cases suggest that some form of misuse defence may be available in Canada, but the scope and nature of the defence has not been authoritatively addressed.1 For cases which have addressed the issue see, See, Richard Austin, “Misuse of Copyright” (1991), 8 Canadian Computer Law Reporter 53. ¾ Cases pre-date Théberge v. Galerie d’ Art du Petit Champlain Inc. (2002) 17 C.P.R. (4th) 161 (S.C.C.)

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Summary

¾ U.S. cases have to be scrutinized before being used ¾ Broad policy objections are similar through perhaps out of sync ¾ Difficult to know which policy objective dominates ¾ U.S. cases especially useful where statutory language is similar; based on common treaty or convention ¾ U.S. cases on “originality” will depend on what SCC does in the CCH v. Law Society case ¾ U.S. cases on “causation” will depend on what the SCC does in the Tariff 22 case. ¾ U.S. cases on “idea expression” dichotomy, methodology for determining infringement, “contributory infringement”, and “fair use” will increasingly be cited ¾ U.S. cases on “copyright misuse” may be cited in test case

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The Law & Technology Institute Dalhousie Law School: The Influence of American Law on Canadian Copyright Law Affecting Technology

Wednesday, October 15, 2003 Barry Sookman, Partner, McCarthy Tétrault Chair, Internet and Electronic Commerce Law Group (Toronto) [email protected] (416) 601-7949 www.mccarthy.ca

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