Class Action for Copyright Infringement Certified against Publisher

Thomson through its publishing branch, Carswell, copies court documents that have been authored by lawyers and reproduces them on an electronic data base and search and retrieval service known as “Litigator.” In his proposed class action, the plaintiff alleged that Thomson infringes the copyright of the class members by making available, without permission and for a fee, copies of court documents authored by the lawyers and the law firms. The Court ruled that the plaintiff’s action satisfied the criteria for certification, with some modifications to the class definition and to the common questions.

Waldman v. Thomson Reuters Corporation, 2012 ONSC 1138 (CanLII)

Injunction granted for Non-disclosure of Confidential Information, refused for Non-competition and “Non-solicitation

On a pre-trial application for an injunction, the B.C. Supreme Court refused to grant preliminary injunction to enforce “non-competition” and “non-solicitation” provisions in employment contracts of two key employees. Court ruled that the provision prohibiting defendants from soliciting people with whom they have had no prior dealings and who they would not necessarily have any way of identifying as customers of the plaintiffs was unclear and lacking in certainty.
The plaintiffs were in the business of sale of prescriptions and other medical supplies. The Court stated that a duty of fidelity, including a duty not to use or disclose the employer’s confidential information, is generally implied in employment contracts and survives the termination of those contracts. The Court granted an injunction restraining and enjoining the defendants from: a) directly or indirectly soliciting or enticing any employee of the plaintiffs to leave their employment with the plaintiffs for a period of one year; b ) using or disclosing confidential information, including customer lists and contact information, and information concerning packaging, marketing and distribution of the plaintiffs’ products.

6180 Fraser Holdings Inc. v Ali, 2012 BCSC 247 (CanLII)

Non-Competition vs. Non-Solicitation Covenants

A non-competition clause restrains the departing employee from conducting business with former clients and customers whereas a non-solicitation clause merely prohibits the departing employee from soliciting their business. Generally, the courts will not enforce a non-competition clause if a non-solicitation clause would adequately protect an employer’s interests. A non-solicitation clause – suitably restrained in temporal and spatial terms – is more likely to represent a reasonable balance of the competing interests than is a non-competition clause.

 H.L. Staebler Company Limited v. Allan

What is a “Restrictive Covenant”?

A restrictive covenant in a contract is a restraint of trade. A restrictive covenant precludes the vendor in the sale of a business from competing with the purchaser and, in an employment contract; the restrictive covenant precludes the employee, upon leaving employment, from competing with the former employer.

Preemptively restrictive covenants are prima facie unenforceable; however a reasonable restrictive covenant will be upheld.  To be reasonable, the terms of the restrictive covenant must be unambiguous. Next, the geographic coverage of the covenant, the period of time in which it is effective, and the extent of the activity sought to be prohibited is also relevant. A court will not rewrite a restrictive covenant in an employment contract in order to reflect its own view of what the parties’ consensus ad idem might have been or what the court thinks is reasonable in the circumstances.

In an employment context, to establish that a covenant is reasonable, an employer must be able to prove to the court that the contractual restraint has the following characteristics:

• It protects a legitimate proprietary interest of the employer;
• The restraint is reasonable as between the parties, in terms of temporal length, geographic area, nature of activities prohibited and overall fairness;
• The terms of the restraint are clear and certain; and,
• The restraint is reasonable in terms of the public interest, with the onus of proof on the party seeking to strike out the restraint.

Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, [2009] 1 SCR 157

What Is “Confidential Commercial Information”?

Confidential Commercial Information means information that:

1. relates or pertains to matters of finance, commerce, science or technical matters as those terms are commonly understood;
2. need not have an inherent value, such as a client list might have, however, the value of information is dependent upon the use that may be made of it, and its market value will depend upon the market place, who may want it, and for what purposes, a value that may fluctuate widely over time; and
3. administrative details such as page and volume numbering, dates and location of information within the records are not scientific, technical, financial or commercial information.

Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3.

What Is a “Trade Secret”?

A “trade secret” is a subset of confidential commercial information and not patented, and means a plan or process, tool, mechanism or compound which possesses each of the four characteristics below:

1. the information must be secret in an absolute or relative sense (is known only by one or a relatively small number of persons);
2. the possessor of the information must demonstrate that he has acted with the intention to treat the information as secret;
3. the information must be capable of industrial or commercial application; and
4. the possessor must have an economic interest worthy of legal protection.

Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3.

Federal Court of Appeal Upholds Copyright Infringement Finding Lack of Consent

In Tajdin and Jiwa v. Aga Khan, the Federal Court of Appeal dismissed the Appellants’ appeal of Federal Court’s decision in Aga Khan v. Tajdin and Jiwa following a summary judgment proceeding holding that the Appellants infringed the Plaintiff’s literary works known as Farmans and Talikas (collectively “Speeches”) reproduced in whole or in part in a book (the “Golden Edition”).

While the decision is correct on the facts, unfortunately it fails to correct and clarify the issue of burden of proof to establish consent in copyright infringement cases and evidentiary standards for summary judgment proceedings.

The Background

The Plaintiff is the Imam of the Shia Imami Ismaili Muslims and gives advice and guidance to followers on both religious and temporal matters by such Speeches. The Defendants admitted the plaintiff’s ownership over the Speeches. The primary issue for determination in the cross motions for summary judgment was consent. The Defendants alleged that the Plaintiff personally gave his consent to the publication of present and future Speeches at a religious event in Montreal in August 1992. Further, they alleged that the Plaintiff gave his implied consent to the Defendants, and to others, based on a reading of changes to the Ismaili Constitution, and through Speeches and interviews the Aga Khan has given over the years.

In December 2009, the Defendant Tajdin published the Speeches. The Plaintiff, through his representatives, and by two letters to the Defendant Tajdin communicated to Tajdin that he did not consent to the unauthorized publication and distribution of the Speeches. The Defendants maintained that these letters were a forgery.

Federal Court Proceedings

In April 2010, the Plaintiff commenced this action. Subsequently, the Plaintiff signed an affirmation pursuant before a notary public in Boston, Massachusetts that he had not consented to the publication of the Speeches and that he had authorized the action for copyright infringement against the Defendants.

In the cross motions for summary judgment, the letters and the affirmation by the Plaintiff were attached to the affidavits of Defendant Tajdin and deponents on behalf of the Plaintiff. In addition, an affidavit by a lawyer in Boston deposing that he had verified the identity of the Plaintiff and witnessed the signing of the affirmation by the Plaintiff was filed before the Court Justice Harrington of the Federal Court  and granted summary judgment in favour of the Plaintiff and issued orders for injunction, delivery up of infringing copies and damages.

On the issue of consent, the Defendants stated that the Plaintiff had to establish lack of consent  relying upon a previous Federal Court of Appeal decision in Albian Sands Energy Inc. v. Positive Safety Systems Inc. The Defendants alleged that at a religious ceremony in Montreal in 1992, a friend of one of the Defendants presented a book containing the Speeches to the Aga Khan and sought guidance. The Plaintiff had put his hand on the book but did not open it and told him to carry on what he was doing. The Federal Court held that given the ordinary meaning of the words used in the exchange between the Aga Khan and this individual, there could not be a finding of consent for the defendants’ endeavours. Furthermore, relying upon the decision in Slumber-Magic Adjustable Bed Co. v. Sleep-King Adjustable Bed Co., even if consent were given at all, it could only be for that particular volume of Speeches in existence and not for future Speeches.

The Federal Court also rejected the implied consent argument by the Defendants that they were authorized to publish the Speeches because the Plaintiff had urged his followers to read the Speeches and the Institutions established under the Ismaili Constitution had failed to publish the Speeches.

The Defendants had previously complained that they were unable to cross-examine the Aga Khan on his solemn affirmation because it was not directly in the record. Rather, it was an exhibit to the affidavits of the Boston lawyer and notary public. However, when the Aga Khan attended at the examination for discovery requested by the Defendants, the Defendants did not ask proper questions relating to the issue of consent. The Court drew an adverse inference from the failure to ask these questions. Since the Court had ruled that the burden to establish consent was upon the defendants, the Court found that they had failed to discharge it.

Federal Court of Appeal

On appeal, the Defendants also argued that the Motions Court erred by admitting and relying upon “inadmissible hearsay evidence”. The Court of Appeal confirmed that the requirement for consent under the Copyright Act can be either express or implied. The Court of Appeal correctly stated that the inference of consent must come from the person holding the particular right alleged to be infringed (at para. 15).

With respect to the evidence on the issue of consent, the Court of Appeal held that, “Things might have been simpler if the solemn affirmation in the name of the Aga Khan had been filed on its own instead of being filed as an exhibit to the affidavits of two witnesses present when it was solemnly affirmed in Boston. However, here again, this is not a fatal flaw as suggested by Mr. Tajdin and Mr. Jiwa, particularly given the context in which this evidence was filed and the fact that Mr. Tajdin and Mr. Jiwa are still doubting its genuineness, even after they actually met the Aga Khan at the examination for discovery in Toronto.”

Nevertheless, the Federal Court of Appeal concluded that “…having concluded that there are no facts capable of constituting consent, one can only infer that the publication by Mr. Tajdin and Mr. Jiwa of the Golden Edition was done without the consent of the Aga Khan. To come to that conclusion, one need not accept, or even refer to, the affidavits filed in support of the Aga Khan’s motion which are said to contain only hearsay statements. In fact, in the very particular circumstances of this case, the inference of the absence of consent is the only possible conclusion. This is so whoever bears the ultimate burden of proving the absence of consent.” (at para. 22).

Unfortunately, the above statements confuse the legal burden of establishing consent (which is necessary element for an action for copyright infringement) with the evidentiary requirement for satisfying this requirement, especially in summary proceedings. Professor David Vaver has argued that it is not correct to place the burden of proof on a defendant (Consent or No Consent: The Burden of Proof in Intellectual Property Infringement Suits, (2011) 23 I.P.J. 147). In his view, a plaintiff who wants to show infringement of an intellectual property right has to say that the defendant is doing something only the plaintiff is entitled to do, and the plaintiff has not granted consent to the defendant to do that. This approach was followed by the Federal Court in Harmony Consulting Ltd. v. G.A. Foss Transport Ltd. where the Federal Court held that the plaintiff must not only prove that the defendant infringed or authorized infringement but must also prove lack of consent to the act that is alleged to be copyright infringement. The Harmony Consulting case is under appeal, and the Court of Appeal will have another opportunity to clarify the issue of burden of proof to establish consent in intellectual property infringement cases.

Implications

As noted above, the decision is undoubtedly correct on the facts. However, given the increased use of summary judgment proceedings in intellectual property cases, a clearer statement of the evidential requirements by the Court of Appeal would have been helpful. Persons dealing with intellectual property rights of others should ensure that the consent to use the intellectual property rights is clearly obtained. Similarly, holders of intellectual property rights should clearly communicate the scope of the consent and authorization granted with respect to the use and of their intellectual property rights.

Copyright and Infringement of Photographs

The recent decision by the U.K. Patents County Court in Temple Island Collections Ltd v New English Teas Ltd & Nicholas John Houghton, raises an interesting (and troubling) issue relating to copyright and infringement of photographs. The Court found that the defendant had infringed the claimant’s copyright of which subsisted in a black and white photograph of a red Routemaster London bus travelling across Westminster Bridge with the House of Parliament in the background, by producing a similar image using these iconic London landmarks and with the same general form: grey scale Houses of Parliament and a red bus on the bridge.

The claimant’s intention was to create a single, modern and iconic scene of London. He stood on on Westminster bridge, where many tourists also stand with their cameras, and captured the image of a bus heading to the south side of the river and also including the other landmarks, i.e. Parliament, Westminster Bridge, and the river. Once the photograph was taken, the claimant manipulated it on his computer using Photoshop.  The red colour of the bus was strengthened; the sky was removed completely; the rest of the image was turned to monochrome save for the bus; some people present in the foreground of original photograph were removed; and the whole original image was stretched somewhat to change the perspective so that the verticals in the buildings were truly vertical. The defendants took four separate photographs of different aspects of the Houses of Parliament and a red Routemaster bus, and combined and manipulated these images to produce the resulting image.  The resulting claimant’s and defendants’ images were as follows:

Claimant's Work

Defendants' Work

The claimant contended the defendants’ work infringed its copyright in its image. The defendants denied infringement but did not advance a case of independent design. They contended that the question of infringement could be decided objectively based on a consideration of what is original about the claimant’s copyright work and second by conducting an objective comparison between the claimant’s and the defendants’ works. The defendants stated that for there to be infringement, a substantial part of that (i.e. the things in which the claimant has rights) must have been reproduced by the defendants.

The parties agreed that under both U.K. and European Union law, copyright may subsist in a photograph if it is the author’s own “intellectual creation”. With respect to the scope of photographic copyright, the Court cited and relied upon the commentary in the text book Laddie Prescott & Vitoria (4th Ed.) for the proposition that while the mere taking of a photograph is a mechanical process involving no skill at all and the labour of merely pressing a button, there is room for originality in photography in the following aspects:

(i) Residing in specialities of angle of shot, light and shade, exposure and effects achieved with filters, developing techniques and so on;

(ii) Residing in the creation of the scene to be photographed; and

(iii) Deriving from being in the right place at the right time.

The Court held that the claimant’s work was original because it was the result of the claimant’s intellectual creation both in terms of his choices relating to the basic photograph itself: the precise motif, angle of shot, light and shade, illumination, and exposure and also in terms of his work after the photograph was taken to manipulate the image to satisfy his own visual aesthetic sense. The fact that it was a picture combining some iconic symbols of London did not mean the work was not an original work in which copyright subsists. The court considered the manipulations by the claimant to constitute a fourth category of works to which copyright would attach.

With respect to infringement, the Court applied the principle that copyright is infringed by reproducing the whole or a substantial part of a work in a material form. A “substantial part” is a matter of quality not quantity. The Court found that the defendants’ work infringed the claimant’s copyright because the common elements between the defendants’ work and the claimant’s work were causally related and had been copied. The Court summarized its view of what had been substantially reproduced in terms of composition and visual elements. The Court noted that elements of the overall composition of the claimant’s image which had been reproduced were: a Routemaster bus, driving from right to left with Big Ben on the right of the bus, and the riverside facade of the Houses of Parliament. Further, the element of a bright red bus against a black and white background has been reproduced, including the element of the blank white sky, which creates a strong sky line.

Canadian Copyright Law

Under Canadian law, photographs are “artistic works” and are entitled to copyright under the Copyright Act. Generally, there is no infringement of a copyright in a photograph without reproduction of a photograph. An original photograph of a similar object, or even the same object, does not constitute copyright infringement (see decision of the Federal Court in Ulextra Inc. v. Pronto Luce Inc.). However, in Ateliers Tango Argentin Inc. v. Festival d’Espagne et d’Amerique Latine Inc., (1997), 84 C.P.R. (3d) 56, the defendant reproduced a photograph originally taken for the plaintiff for use in its promotional material. The defendant’s photograph was taken at the same location, taken from the same angle, used the same layout of the subject and positioned the four models in the same choreographic positions as the plaintiff’s photograph. The Quebec Superior Court had no difficulty in coming to the conclusion that the defendant intended to and succeeded in imitating the plaintiff’s photograph and therefore had infringed the plaintiff’s copyright.

In this regard, Canadian law is similar to the U.K. law prior to the decision in Temple Island Collections.

Implications

What is troubling about the decision in Temple Island Collections is that this decision blurs the distinction between an idea and an expression of that idea. When one compares the two images, the defendants’ image is clearly not a reproduction of the other. While the images share similar elements, the taking of two photographs of the same scene, especially where that scene is somehow iconic or distinctive, has not previously lead to infringement. In this case, the photographs were further manipulated by computer software by each party.

It is a fundamental principle of copyright law that copyright does not protect an idea, only the expressions of the idea (see University of London Press, Ltd. v. University Tutorial Press, Ltd., [1916] 2 Ch. 601, Designer Guild Limited v. Russell Williams (Textiles) Limited (Trading As Washington Dc) [2000] UKHL 58; [2001] 1 All ER 700; [2000] 1 WLR 2416 (H.L..), see also CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 SCR 339). This principle holds that if an idea can be expressed in only one or in a very limited number of ways, then copyright of that expression will be refused for it would give the originator of the idea a virtual monopoly on the idea. In such a case, it is said that the expression merges with the idea and thus is not copyrightable: Delrina Corp. v. Triolet Systems Inc., 2002 CanLII 11389 (ON CA).

The Temple Island Collections decision lowers the threshold for suing potential defendants who may have been inspired by an idea to create their own expressions of such an idea.  It will be interesting to see if this decision is followed by other courts, or if it will be restricted to its particulars facts.

Ontario Court Recognizes Civil Action For Invasion Of Personal Privacy

The Ontario Court of Appeal is the first appellant court to recognize a civil right of action for intrusion upon seclusion for invasion of personal privacy.

Until now, there has been no definitive statement from an appellate court on the issue of whether there is a common law right of action corresponding to the intrusion on seclusion. The trend in Ontario case law was to leave open the possibility that such a cause of action does exist.

In this case, the plaintiff Jones and the defendant Tsige worked at different branches of the Bank of Montreal. Tsige had formed a common-law relationship with Jones’ former husband. Jones discovered that Tsige had been surreptitiously looking at Jones’ banking records, contrary to the bank’s policy, at least 174 times over a period of four years. The information displayed included transactions details, as well as personal information such as date of birth, marital status and address. Tsige did not publish, distribute or record the information in any way. Jones’ action for breach of privacy against Tsige was dismissed by the motions judge on a motion for summary judgment. However, the Court of Appeal allowed the action and awarded Jones damages in the amount of $10,000.

The Court noted that the Charter of Rights jurisprudence identified privacy as being worthy of constitutional protection and integral to an individual’s relationship with the rest of society and the state. While the Charter did not apply to common law disputes between private individuals, the Court ruled that the explicit recognition of a right to privacy and the principle that the common law should be developed in a manner consistent with Charter values, supported the recognition of a civil action for damages for intrusion upon the plaintiff’s seclusion.

The Court rejected the view it was not open for the courts to adapt the common law to deal with the invasion of privacy given the extensive legislative framework addressing the issue of privacy both federally and provincially and that any expansion of the law relating to the protection of privacy should be left to Parliament and the legislature. The Court ruled that the existing legislation did not provide a sound basis to refuse to recognize the emerging tort of intrusion upon seclusion and deny the plaintiff a remedy. While four common law provinces (BC, Manitoba, Saskatchewan and Newfoundland) and Quebec currently have a statutorily created tort of invasion of privacy , the Court stated that these Acts established a limited right of action, and the plaintiff’s privacy entitlement was circumscribed by what is “reasonable in the circumstances”. The Court concluded that the existing provincial legislation indicated that the legislatures, when they had acted, simply proclaimed a sweeping right to privacy and left it to the courts to define the contours of that right.

 The Court examined the jurisprudence in other jurisdictions outside Canada and noted that most American states had recognized a right of action for invasion of privacy rights. In England, privacy was expressly protected by the Convention for the Protection of Human Rights and Fundamental Freedoms. However, the House of Lords in Campbell v. MGN Ltd. stated the tort of breach of confidence had evolved into a form of privacy protection – described by the court as a tort of misuse of private information about one’s private life and the right to the esteem and respect of people. A similar common law right to privacy had been recognized by the courts in Australia and New Zealand.

The Court formulated the elements for the civil action in Ontario based on the American formulation as, “One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.”

The Court added that the defendant’s conduct must be intentional (or reckless); the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. With respect to damages, the court stated that given the intangible nature of the interest protected, damages should be measured by a modest conventional sum up to $20,000.

While this decision is binding in Ontario, it is likely to be highly persuasive in other provinces. Although the damages awarded are modest, the effect of this decision is likely to ensure that individuals who may be exposed to such liability for invasive conduct may be more cautious once they are reminded of their exposure for personal liability. This will likely assist employers who require employees to comply with internal privacy policies. Where a person has intentionally or recklessly intruded upon the seclusion rights of many individuals, for example by improperly accessing personal information within corporate websites, such persons could face significant liability and potential class actions for damages.

 Jones v. Tsige, 2012 ONCA 32

http://bit.ly/xzdycD

Domain Names are Personal Property says Ontario Court of Appeal

A recent decision by the Ontario Court of Appeal in Tucows.Com Co. v. Lojas Renner S.A. confirms that domain names are “personal property” and a party may seek declaratory relief from Courts in Ontario to enforce their rights to internet domain names.

Until now, the legal status of domain names in Canada at the appellate level has been undetermined. In the absence of clear legislation dealing with the innovation of domain names, courts are forced to grapple with whether existing property concepts can be applied to them. A domain name is an intangible or ideational thing consisting of two parts, one being numerical and the other being a distinctive readable address, that enables an internet user to access a web page. While other types of intellectual property such as patents and trade-marks, have been held to be property, there has been little analysis as to what constitutes property when it comes to intangible rights.

The Court accepted the dominant view emerging from international jurisprudence and academic commentary that domain names are a new type of intangible property. The United States Court of Appeals, Ninth Circuit held in Kremen v. Cohen, 337 F.3d 1024 (9th Cir. 2003), that a domain name is intangible property because it satisfies a three-part test for the existence of a property right:  (i) it is an interest capable of precise definition; (ii) it is capable of exclusive possession or control; and (iii) it is capable of giving rise to a legitimate claim for exclusivity. In the U.K., the House of Lords has also ruled in OBG Ltd. v. Allan, [2008] 1 A.C. 1 (H.L.), that a domain name may be intangible property, like a copyright or trademark”.

The Court accepted the definition of property as a collection of rights over things that can be enforced against others comprising: (1) ownership and quasi-ownership interests in things (tangible or ideational); (2) other rights over such things which are enforceable against all-comers (non-ownership proprietary interests); (3) money; and (4) cashable rights.

In this case, Tucows and Renner had a dispute about Tucows’s right to keep the domain name “renner.com” in the face of Renner’s registered trademark “Renner”. Tucows is a technology corporation located in Toronto, Ontario. Renner is a Brazilian company operating a series of retail department stores in Brazil and is the registered owner in Brazil and other countries of the trademark “Renner”. The domain name system is overseen by ICANN.  ICANN has adopted a private Uniform Domain Name Dispute Resolution Policy and Rules (the “UDRP”) for mandatory administrative proceedings before an approved dispute resolution service provider when a trade-mark owner initiates a complaint.

Renner selected the World Intellectual Property Organization (“WIPO”) Arbitration and Mediation Center for resolution of the complaint. WIPO notified Tucows of Renner’s complaint that it was using the domain name “renner.com” in bad faith. Tucows did not respond to the substantive merits of the complaint. It commenced an action in the Ontario Superior Court of Justice for a series of declarations including that Tucows has rights or legitimate interests in respect of the domain name “renner.com”.

The following issues were raised in this case. In order to ground jurisdiction in an Ontario, the Court had to consider whether the domain name dispute should have remained with the WIPO administrative panel. Next, the Court also had to determine not only whether a domain name was “property” but also whether it was located “in Ontario”.

With respect to the first question, the Court concluded that the UDRP rules contemplated the possibility of litigation before domestic courts and that the assumption of jurisdiction by the Ontario courts would therefore not undermine the administrative process. Next, the Court concluded that a domain name, as intangible property, was property.

Finally, for the purposes of jurisdiction, the court followed the principle stated by the Supreme Court of Canada in its decisions in Williams v. Canada, [1992] 1 S.C.R. 877, to assess the “connecting factors” in which the situs of intangible property is determined by where it has the strongest contacts, and in Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2004] 2 S.C.R. 427, to determine there is a sufficient connection between this country and the communication in question for Canada to apply its laws consistent with the principles of order and fairness. In terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user. Applying this principle, the Court ruled that the domain name “renner.com” was a business asset of Tucows and a form of intangible property, and had its maximum contacts with Ontario.

Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548