Thursday, July 12, 2012

Copyright Litigation Mathematics in Canada: How to Turn $21,554,954.25 into $19,368.74

Aspiring copyright litigants in Canada from the largest of corporations to the lowliest little guy should take sobering note of the case of Leuthold v. CBC 2012 FC 748 decided on June 14, 2012.

In case anyone was not already aware, Canadian copyright litigation is not a lottery. One cannot necessarily expect to receive $21.5 million from the proceeds of a lawsuit against a public broadcaster involving a mistaken re-use – or even six such re-uses - of 18 seconds worth of still photographs in a feature length CBC documentary, when the original license was given for $2,500.

However, an American photographer named Catherine Leuthold sought $21,554,954.25 from the CBC and one of its employees personally for the mistaken re-uses of a few of her stills from 9/11.

At the end of the day, the Court quite predictably rejected her frankly astonishing suggestion that each transmission from each of the CBC’s hundreds of “distribution undertakings” warranted separate claims for damages, and awarded $3,200 for each of six unauthorized broadcasts, to which the CBC had admitted – i.e. $19,200. Even this amount was arguably generous under the circumstances and given the evidence.

The Court reduced Ms. Leuthold’s claim of $92,998 for her alleged entitlement to a share of Newsworld’s revenue to $168.74.

It declined to award exemplary and punitive damages or to find the individual personally liable.

It did order the CBC to remove the offending 18 seconds worth of stills, except for one archival copy.

It has reserved judgment on costs, having noted the rules dealing with cost awards when a settlement offer has been made. It will be very interesting to see, at the end of the day, who will have to pay costs to whom and how much. It would not be surprising if Ms. Leuthold were to be in store for a very unpleasant surprise when costs are determined. 

The story by Don Butler reports as follows on statements by Ms. Leuthold's counsel and a CBC spokesman:
O'Connor said Leuthold is "quite devastated" by the outcome of the case. "We thought that the arguments were sound."

The decision was not what his client had expected "in terms of both her and my analysis of the situation, the facts and the law," he said. "But the judge is the trier of those matters, and the decision says what it says." The decision, he added, "may have significant effects in both Canadian copyright and broadcasting law."

An appeal is under serious consideration, O'Connor said. "There may be room for interpretation, and conceivably there may have been an error made. It may not be the final chapter in this lengthy saga."

Because an appeal is still possible, a CBC spokesman would only say the broadcaster is "satisfied" with the decision.

It's not yet clear what will happen with legal costs in the case, which began in 2005. Costs could be awarded against Leuthold if the CBC made an offer to settle that was greater than the amount awarded by the court, O'Connor said. "That may come into play."
This trial took place over the course of six days.

The plaintiff was awarded about 0.0009 or less than one thousandth of what she was seeking. And she has yet to learn what the costs order will be. Her counsel apparently acknowledges in the above quote that costs could be awarded against her.

If this decision is to indeed have “significant effects in both Canadian copyright and broadcasting law” as her counsel suggests, I suspect that it will be to remind potentially aspiring litigants and their counsel that litigation is in Canada is not like a lottery and Canadian judges do not hand out gigantic jackpots like American juries sometimes do. One can normally expect that Canadian Courts will follow the maxim as stated by Justice Scott of the Federal Court in this case that: 
Fundamentally, the Court‘s discretion is broad but its assessment of damages must be based on common sense.


PS - July 26, 2012 
There is an appeal underway by Ms. Leuthhold.


  1. Clearly the plaintiff thought she was a patent plaintiff in the East District of Texas, or a funeral home operator in Louisiana. I am delighted to learn that she was wrong (subject to appeal, but sometimes no technical law can overcome common sense.) Glad to have the 'English' costs rule apply here too.

  2. Wow - thanks for the summary. I read the whole judgement, and I thought the Court did a fairly thorough parsing and assessment of the claims, legislation and jurisprudence.

    I wonder what the basis of the appeal will be - misinterpretation of 'network' or the number of infringement-attracting broadcasts? (!)

    Given the amounts most photographers receive for the images via the photo agencies (no knock on them, its the market and the way it works these days) it seems that Leuthold got a fair and reasonable award from the Federal Court. CBC got a deserved rebuke for copyright infringement, and the award was based on realistic market evaluations of her photos the proportional share 18 seconds of display time was worth in each of the 6 deemed broadcasts.

    What I am really curious about now is how much this litigation is costing the plaintiff/appellant. She got less than $20K in awards after a 7 years of litigation, and is still facing a costs assessment? Ouch. Methinks she's going to need some serious East Texas luck to get out of costs and win enough on appeal to cover her legal bills.

    Looking forward to following this case as it moves forward - I wonder if the FC/FCA posts pleadings and submissions online.

    Hmm... comparing her award and the arguments/consideration in this case here vs. similar cases in the USA, and examining/extrapolating the bases of differences in considerations and valuations could make for a good LLM thesis...

  3. To Anon at 2:22:

    The Court does not post arguments, but I'll try to get some of this material and post it.

    Anyone wishing to track this case on appeal can do so here:

  4. Those wishing to track what is happening on the costs front can do so to some extent here here:

  5. @Howard - thanks for the links, and I'd love to see any other links to materials you can find as this one progresses.

    Still having a hard time wrapping my head around who/how she came up with that novel theory of infringement occurrences and damages calculation. One friend in the US suggested she may have been led on by dollar-driven attorneys, but I noted that here in Canada its not the same risk-free high-value litigation lottery here on IP cases. I'm assuming her attorneys apprised her of the way things work here (English system, the effects of pre-trial settlement offers etc.) - and yet the plaintiff is still appealing. Really looking forward to reading those appeal factums. Excess copyright indeed.

    Anon 2:22