Three Copyright Cases to be Heard by Supreme Court of Canada - More To Come?

UPDATE OF PREVIOUS POSTING:

March 25, 2011

The Supreme Court of Canada has somewhat surprised several observers by granting leave to appeal in the ESA and Rogers applications (see below) involving "communication" arising from the SOCAN Tariff 22 case and ordered that they be heard together with the SOCAN iTunes "previews" case, also involving Tariff 22.  Counsel for the ESA and the ISPs deserve congratulations for getting the Court to hear these cases, given the rather uphill battle that was involved in terms of previous jurisprudence and an early surprising  concession in ringtones case  - later withdrawn - by wireless companies that electronic delivery of ringtones was indeed a "communication".

Tariff 22 in its latest iteration from the Copyright Board was broken down into several separate cases for judicial review purposes last year in the Federal Court of Appeal. Tariff 22 had already been to the Supreme Court of Canada once. It deals generally with music on the internet and has provided substantial remuneration for several lawyers since 1995. The end game is still nowhere in sight.

This will be an interesting hearing -  since the two "communications" cases have, apart from the fact that they involve copyright and "standard of review" issues and Tariff 22, little in common in terms of essential and important issues with with the "previews" case. The latter is is all about fair dealing. 

It will also be a potentially very busy day, especially if there are interveners - as one may expect.

On March 21, the CMEC leave application - which is also all about fair dealing but has nothing to do with SOCAN's Tariff 22 - was finally referred to a panel. It is a different panel that the one that ruled on the other three applications. There is no ruling yet on the CMEC leave application. For whatever reason, the CMEC case is on a different and slower track. It will be interesting to see if leave is granted in the CMEC case, and if so whether it is to be dealt with along with the above three matters or whether it will have its own day in the Court.

In many respects, the CMEC case would have seemed the most likely of all these cases to be granted leave to appeal. It is the natural counterpart to the SOCAN previews case - coming to an apparently inconsistent conclusion and emanating from the same Court at about the same time. It arguably involves a far more general and important issue - namely the parameters of fair dealing in education - than the iTunes "previews" case. However, it is the one that is being held in suspense - as are the many observers watching it with great interest.

A possible explanation of what is transpiring is that the Supreme Court of Canada has decided to deal with the Tariff 22 internet cases together and is treating the CMEC case as a stand alone matter. The CMEC case does not directly involve the internet.

The Court also granted leave to appeal yesterday on another internet related case yesterday involving whether ISPs can be "broadcasters".

HK

From March 21, 2011:

Two cases bubbling up from last years' round of judicial review decisions concerning the apparently never ending SOCAN Tariff 22 saga concern whether certain activity on the internet constitutes a "communication to the public by telecommunication". These applications are brought by the ESA and Rogers et al.

Both leave applications involve the issue of whether the delivery of copyrighted material as a download over the interenet to the public based upon one at a time request constitutes a "communication to the public by telecommunication" - thus invoking an additional payments on top of other payments that would have to be made. Thus, the proverbial and quintessentially Canadian notion of multiple layering of rights and costs - as reinforced by the Copyright Board's consistent decisions - is involved, along with a fundamental question of technological neutrality. That is, why should it cost more to deliver the same song from the same party to the same consumer via the internet rather than on a a plastic CD?

While this sounds like a perfect case for the Court to grant leave, one problem may be that that there is now a lot of water already under the bridge stemming from the rather surprising concession a few years ago by the wireless companies in the Copyright Board's ring tone case that "downloading a ringtone is a communication by telecommunication".

In any event, we shall learn this Thursday, March 24, 2011 whether these leave to appeal applications will be granted.

Meanwhile, still no word on whether CMEC's leave to appeal on fair dealing in the educational context will be granted. Curiously, this application has still not not gone forward to a panel for a decision. One would expect that this case would be heard by the Court, along with the SOCAN "previews" case, to which it is the other side of the coin and for which leave has already been granted.

HK

Comparing Proposed Class Action Settlements - Estate of Chet Baker v. Google Book

My 2011 New Year’s predictions have been unfolding with mixed success.

But I was right on the mark with my fifth prediction regarding to the US Class action against Google and the so-called Google Book Settlement (“GBS”):

    5.    Judge Chin will deliver his judgment on the Google Book Settlement approval case in the early part of the year. It will be dramatic. Google will not be happy.

There will be no end of competent analysis of Judge Chin’s landmark decision - and I won’t go into any detail here. The immediate purpose of this posting is to deal with a potentially pressing and interesting  question in Canada.

What comparisons can be drawn between the GBS situation in the USA and the Chet Baker Class Action settlement in Canada that is due to be heard for approval by the Supreme Court of Ontario on Monday, March 28, 2011, having already been once adjourned under unusual circumstances? I have blogged before about this case here and here and here.

First, what do the lawsuits have in common?

The US Google litigation is about Google’s business plan that might be called “scan now - pay later” - or, as Judge Chin quoted an objector’s characterization, 'So, sue me.'” The settlement agreement called for a US $45 million payment to authors and publishers.    
   
The Chet Baker proposed settlement also involves a proposed CDN $45 million payment to composers and publishers for unpaid amounts arising from the multinational record industries' practice of making and selling sound recordings, often compilation CDs,  without obtaining  necessary permissions and making required payments. The industry apparently kept “pending lists” of payments that should have been  made -  eventually. The practice has been called "exploit now, pay later if at all."  Not unlike the “So, sue me” description of Google’s business plan. At least Google could claim to have the loftier motive of trying to create a digital "great library of Alexandria". The record companies had no such excuse.

From this $45 million, at least 10% and doubtless a lot more after legal and other fees are approved, will be deducted. We don’t know what the total deductions will be because the amount of legal fees and disbursements has not yet been disclosed. The 10% we know about would be deducted to pay CSI (CMRRA + SODRAC, namely the publisher’s collectives, in which the record companies have considerable interest) for their ”commissions” for their troubles in distributing the proceeds.

The GBS coincidentally involves about the same amount of proposed payment to authors, although there would be no deductions from the proposed $45 million amount. Instead, Google would have paid about $15 million for the legal costs of publishers, about $30 million for legal costs of authors, and about $34.5 million for the establishment of registry to implement the complex settlement.

The fact that $45 million is involved in both cases is interesting, because CDN $45 million translates to approximately half a billion in US dollars in terms of comparative economic significance, given the usual 10:1 comparison and the current virtual parity in currency.

Moreover, speaking of comparisons:       

•    The GBS settlement approval process has been going on for several years. After many early objections, an amended settlement agreement was developed and Judge Denny Chin of the Southern District of New York (“SDNY”) held a fairness hearing just over a year ago on February 18, 2010. More than 500 briefs were filed, almost all of them opposing the GBS.

•    There has been enormous notice and publicity given to the GBS proceedings. All credit to Google, all one had to do was to “google” the Google Book Settlement to receive an avalanche of information in exquisite - perhaps too much - detail. Very important information was readily available and well organized on Google’s website - such as the amount of compensation sought by the class action lawyers and details about opting in, opting out and future administration. Morever, to credit Access Copyright - which is something I don’t often do - it conducted very informative webinars for Canadians on the implications for Canadians. No doubt AC had its reasons for doing so that were far from altruistic, but the result was still useful.

•    In contrast, the Chet Baker litigation has been conducted in virtual secrecy. It was announced with much fanfare by Michael Geist, the father of CIPPIC. CIPPIC is the subsidized legal clinic at the University of Ottawa that Michael founded. CIPPIC has had some considerable but undisclosed involvement in this Chet Baker case.  CIPPIC has been listed as counsel on the Amended Statement of Claim, but not as lead counsel. Two class action firms have also been involved.

•    In comparison the GBS situation, there has been virtually no notice of the settlement approval hearing in the Chet Baker matter. The sum total of readily available information is available at the lead counsel’s website, namely here. The site is apparently not up to date with respect to the Court’s latest adjournment order.

•    There has been minor press coverage in Canada, and limited blog coverage, mostly initially by Michael Geist and lately by myself.

•    On January 10, 2011 Harrison Pensa - the lead class action counsel -  issued a press release announcing the approval hearing on February 15, 2011. There was very little press coverage and incomplete information on the Harrison, Pensa website.

•    Apparently, the only objection filed to the Chet Baker settlement was from Chet Baker’s son, Paul Baker who sent a letter to the Court reportedly questioning his mother’s authority to bind the Estate and himself.  This, of course, if a potentially very serious and clearly unusual allegation that could go to the basis of the settlement. Indeed, it is rather odd that this Canadian litigation would be led by a party with an apparently tenuous connection to Canada. The Judge has adjourned the hearing until March 28, 2011 and suggested that Mr. Baker either appear himself or through counsel.

•    Many of the issues addressed by the 500 or so parties who wrote to Judge Chin’s court and which were considered in some detail by Judge Chin could well be relevant to the Chet Baker litigation, i.e.:

1. Adequacy of Class Notice
2. Adequacy of Class Representation
3. Scope of Relief Under US Rule 23. As Judge Chin puts it, certain parties were concerned that the settlement would be used “to shape a "forward looking" business arrangement that would release claims not before the Court. They contend that the case is about the scanning of books and the display of "snippets," while the ASA will release claims regarding the display and sale of entire books.”
4. Copyright Concerns
5. Antitrust Concerns
6. Privacy Concerns
7. International Law Concerns

The only one of these concerns that would seem fairly obviously inapplicable in the Canadian context is that of “privacy”. Civil liberties groups in the USA were concerned that “the digitization of books would enable Google to amass a huge collection of information, including private information about  identifiable users, without providing adequate protections regarding the use of such information.”

Whatever the big four record companies have done or will do in Canada, the “pending lists” proposed settlement would appear to have obvious privacy implications - other perhaps than efforts to seek out deserving payees. Presumably, such efforts would not be unwelcome and are probably long overdue.

A brief glance at the amended Chet Baker Estate statement of claim (there is apparently no statement of defence) suggests the possibility of the following potential issues of interest to the various potential class members and, indeed, the general public in terms of overall copyright law and policy (assuming that the allegations are well founded, which has not been admitted or proven):

•    The parties are arguably asking the Court to, in effect, bless a massive retroactive compulsory license at what appears on its face to be a highly discounted rate. This is nothing if not ironic, considering the CMRRA, whose role is clearly central to this litigation and will benefit greatly if the settlement is improved, lobbied very hard and successfully to eliminate the compulsory mechanical license in Canada.

•    The proposed settlement will affect tens of thousands of foreign rights owners, many if not most of which will not even be aware of the litigation.

•    The level of disclosure compared to the GBS documentation is minimal. Even the detailed CSI “term sheet”, the absence of which I noted on my blog of February 9, 2011, is minimal compared to the GBS documentation. It was only added recently to the settlement website, and it is not known if and when it was put before the Court.   

•    The “opt out” provisions of the Chet Baker settlement are to be submitted to the court on a confidential basis.

•    The lawyers’ fees and disbursements sought to be recovered and to be paid by the class members out of the settlement trust have not been disclosed. This is in complete contrast to the US situation, where the fees were disclosed and were to be paid directly by Google. Depending on what the Canadian class action counsel and, presumably, CIPPIC will receive after approval, this amount could run into millions. The record companies have already agreed to pay $750,000 between them towards plaintiffs’ costs. The statement of claim was filed just over two years ago and there has apparently been no statements of defence or discovery.

•    As I mentioned in my recent blog, there are interesting and substantial questions arising on the face of this matter as to whether there has been a substantial discount over the face value of a $500 minimum statutory damages award per infringed work. While it is theoretically possible that various very limited circumstances would warrant such a reduction, there is nothing on the public website record to hint at what such factors may be.  It can often be a dilemma for class counsel as to whether to recommend a quick and discounted settlement or to hold out for more and press forward and potentially go trial. The Canadian Robertson case was clearly an example of the latter - it took more than a dozen years to get a judgement worth only about a third of that which is sought to be approved in this instance.

•    There may be other issues that we will not learn about if the matter does not go to trial. For example, if these claims potentially go back more than 20 years, as has been suggested, why hasn’t action been taken earlier and what about limitation provisions? Should CMMRA and SODRAC have done something a long time ago, and, if so, why are they being let off the hook now?

We may never get answers to these questions. But that is how class actions sometimes work.

However, Judge Chin, for one, is not prepared to bless any settlement put before him.

HK

Google Book Settlement Deal Derailed by US District Court

Judge Denny Chin of the US District Court for the Southern District of New York has, today, rejected the Google Book Settlement deal, ruling that it is not "fair, adequate and reasonable."


There is considerable discussion of the interests of foreigners and international law.


Here is is - comment to follow...


And here's an even clearer link...


HK

“Volume Discounts” in CDN Statutory Minimum Damages Cases: When Available? A "License to Steal"?

?

?

In my recent blog on the proposed Chet Baker $45 million class action settlement which has yet to be approved by the Ontario Superior Court of Justice, I touched on the issue of whether there might be a “volume discount” in a case allegedly involving the infringement of more than 300,000 different songs. The “normal” minimum of statutory damages in Canada is $500 per work (not per copy). At that rate, the case would have presumably been worth at least $150 million, assuming that the allegation of 300,000+ infringements would be provable and had it gone to trial.


A court does have the discretion to reduce the normal minimum statutory damages amount of $500 per work below the said minimum under very limited circumstances. Here are the relevant provisions from legislation:


*************************
Statutory damages
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for all infringements involved in the proceedings, with respect to any one work or other subject-matter, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $500 or more than $20,000 as the court considers just.


Where defendant unaware of infringement


(2) Where a copyright owner has made an election under subsection (1) and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200.


Special case


(3) Where
(a) there is more than one work or other subject-matter in a single medium, and
(b) the awarding of even the minimum amount referred to in subsection (1) or (2) would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement,
the court may award, with respect to each work or other subject-matter, such lower amount than $500 or $200, as the case may be, as the court considers just.


Collective societies


(4) Where the defendant has not paid applicable royalties, a collective society referred to in section 67 may only make an election under this section to recover, in lieu of any other remedy of a monetary nature provided by this Act, an award of statutory damages in a sum of not less than three and not more than ten times the amount of the applicable royalties, as the court considers just.


Factors to consider


(5) In exercising its discretion under subsections (1) to (4), the court shall consider all relevant factors, including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the proceedings; and
(c) the need to deter other infringements of the copyright in question.


No award


(6) No statutory damages may be awarded against
(a) an educational institution or a person acting under its authority that has committed an act referred to in section 29.6 or 29.7 and has not paid any royalties or complied with any terms and conditions fixed under this Act in relation to the commission of the act;
(b) an educational institution, library, archive or museum that is sued in the circumstances referred to in section 38.2; or
(c) a person who infringes copyright under paragraph 27(2)(e) or section 27.1, where the copy in question was made with the consent of the copyright owner in the country where the copy was made.


Exemplary or punitive damages not affected


(7) An election under subsection (1) does not affect any right that the copyright owner may have to exemplary or punitive damages.


1997, c. 24, s. 20.


(Emphasis added)


******************************
Clearly, in a case such as the Chet Baker case, there could be no reasonable argument that the defendants were "not aware" or that there were “no reasonable grounds to believe that the defendant had infringed copyright”.


This leaves s. 38.1(3) which deals with the situation where:


Special case


(3) Where
(a) there is more than one work or other subject-matter in a single medium, and
(b) the awarding of even the minimum amount referred to in subsection (1) or (2) would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement,
the court may award, with respect to each work or other subject-matter, such lower amount than $500 or $200, as the case may be, as the court considers just.


(Emphasis added)


The word “and” would appear to be clearly “conjunctive”, which means that both the conditions in s. 38.1(3)(a) and (b) both must be met before a court could reduce damages below $500 per work by then taking into account, in turn,  the factors in s. 38.1(5) i.e.


 including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the proceedings; and
(c) the need to deter other infringements of the copyright in question.


The really interesting question is what is meant by “a single medium”. There is no equivalent expression in the USA, which is the only other country to have a comparable statutory minimum damages regime. Canada imitated it with a slightly watered down version, for which the CMRRA (closely involved in the Chet Baker case)  was, ironically, a prime source of pressure.


It surely cannot mean a single type of medium - such as all books or all CDs or DVDs from one defendant  containing multiple works. That would potentially create a “license to steal” for record company that releases thousands of CDs, for example,  each containing one or more infringing works. A pop music commercial CD typically holds 12-14 or so single song tracks - but can hold up to two dozen or so three minute songs, if and when the record company chooses to be more generous.


It would seem likely that the provision would allow for a reduction, in theory, only  if several songs were included on each single medium  - as in each released CD or LP, or whatever in a record company’s catalogue. And NOT as in the entire CD medium catalogue of a single record company. 


And even then, the amount would have to be “grossly out of proportion” to the infringement. This does not seem likely if several infringing songs - up to 12-14 or so  are used per CD album. That would only be $6,000 to $7,000 for one album that could have substantial sales at a putative mechanical rate of about $1.00 for each copy of such an album.


We have very little jurisprudence on the discretion of a Canadian court to reduce statutory minimum damages. The closest ruling I know of involved a case in which the defendant posted 2,009 infringing works on the internet copied by decoding satellite signals. This was the decision of Justice Lemieux of the Federal Court in Telewizja Polsat S.A. et al. v. Radiopol Inc. et al. 52 C.P.R. (4th) 445. 


There was a default judgment and the damages hearing was undefended. Thus, the presidential value of this decision is somewhat imited. The Plaintiffs sought more $40 million, based upon the maximum statutory damages of $20,000 per work and the number of 2,009 works. Nonetheless, the Court took it upon itself to reduce the amount to $150 each, given the large number of works. It is implicit - though not explicit - that the Court considered that the defendant had used a “single medium” - presumably its subscription-based internet website.


So - what if the release of thousands or tens of thousands of infringing CDs each containing one or more infringing works must be considered as thousands or tens of thousands of single “media” and not “a single medium”.  Then, it would appear that the Court does NOT have the discretion to reduce the amount of the minimum statutory damages below $500 per work.


We do not have an answer to the “important questions” raised by Justice Lemieux in the Polsat decision. If the Chet Baker settlement is approved, we will not know how these issues played out behind the scenes in that case in the settlement negotiations - or how a court might have ruled if required to do so.


Is the result of the proposed settlement - namely $45 million for allegedly 300,000 works - or about $150 per work, which is the same as in the default judgment and undefended Polsat damages decision (but before deductions for legal fees, CSI commissions, etc.) - a serious and appropriate remedy for the composers and reflective of the “need to deter other infringements of the copyright in question”? Or is it an example of what these same record companies might call in the context of infringement by non-commercial downloaders (i.e. fans) a “license to steal”?


We won’t know if the settlement is approved and the case never goes to trial. 


The settlement approval hearing has been adjourned to March 28, 2011 - at which time we may or may not have a ruling on whether they Court is satisfied with the settlement being presented to it. In view of previous developments, this is not a foregone conclusion.

HK

UPDATE - LEAVES GRANTED on March 24, 2011 on Leave to Appeal re "Communication" Right

UPDATE OF POSTING BELOW:

March 24, 2011

The Court has just granted leave to appeal in the ESA and Rogers applications involving "communication" and ordered that they be heard together with the SOCAN previews case.  

This will be an interesting hearing -  since the two "communications" cases have, apart from the fact that they involve copyright and likely "standard of review", little to do on the surface with the "previews" case. The latter is is all about fair dealing. 

It will also be a potentially very busy day, especially if there are several interveners - as one may expect, assuming leave to intervene is granted.

On March 21, the CMEC leave application - which is also all about fair dealing - was finally referred to a panel. This is a different panel that the one that ruled on the other three applications. There is no ruling yet on the CMEC leave application. For whatever reason, the CMEC case is on a different and much slower track. It will be interesting to see if leave is granted in the CMEC case, and if so whether it is to be dealt with along with the above three matters or whether it will have its own day in the Court.

HK

Two cases bubbling up from last years' round of judicial review decisions concerning the apparently never ending SOCAN Tariff 22 saga concern whether certain activity on the internet constitutes a "communication to the public by telecommunication". These applications are brought by the ESA and Rogers et al.

Both leave applications involve the issue of whether the delivery of copyrighted material as a download over the interenet to the public based upon one at a time request constitutes a "communication to the public by telecommunication" - thus invoking an additional payments on top of other payments that would have to be made. Thus, the proverbial and quintessentially Canadian notion of multiple layering of rights and costs - as reinforced by the Copyright Board's consistent decisions - is involved, along with a fundamental question of technological neutrality. That is, why should it cost more to deliver the same song from the same party to the same consumer via the internet rather than on a a plastic CD?

While this sounds like a perfect case for the Court to grant leave, one problem may be that that there is now a lot of water already under the bridge stemming from the rather surprising concession a few years ago by the wireless companies in the Copyright Board's ring tone case that "downloading a ringtone is a communication by telecommunication".

In any event, we shall learn this Thursday, March 24, 2011 whether these leave to appeal applications will be granted.

Meanwhile, still no word on whether CMEC's leave to appeal on fair dealing in the educational context will be granted. Curiously, this application has still not not gone forward to a panel for a decision. One would expect that this case would be heard by the Court, along with the SOCAN "previews" case, to which it is the other side of the coin and for which leave has already been granted.

HK

Sookman on Knopf on Atwood - Words Matter

Barry Sookman has a lengthy blog today about my recent blog about Margaret Atwood’s pronouncements at the Bill C-32 Committee hearings on copyright law - and specifically fair dealing and the notion of “theft”.


Unfortunately, Barry’s incomplete analysis and the inapposite and irrelevant cases he lists omit the obvious leading Canadian case on point, which is that of R. v. Stewart, [1988] 1 S.C.R. 963 from the Supreme Court of Canada in 1988. The direct relevance of this decision to this discussion was pointed out by Prof. Ariel Katz in a comment on my blog posting above.


In this judgement, written by the late Justice (later Chief Justice) Lamer, the Court "settled the issue" and "stated unequivocally that infringement of a copyright does not amount to theft under the Code” (see below). Infringement is infringement.  It is not “theft”.  Only under certain extraordinary circumstances involving commercial scale activity and intent, which would virtually never arise in the educational sector, would infringement ever give rise to prosecution as an “offence” in Canada - and even then, it would not arise under the Criminal Code, which is where “theft” is dealt with. The words “theft” and “steal” do not occur in the Copyright Act. They both occur in the Criminal Code, which is where Parliament has decided that they belong.


Needless to say, the CCH decision in the Supreme Court of Canada made it very clear that:
• “User rights are not just loopholes.  Both owner rights and user rights should therefore be given the fair and balanced reading that befits remedial legislation.” and.
• “ The fair dealing exception under s. 29 is open to those who can show that their dealings with a copyrighted work were for the purpose of research or private study.  “Research” must be given a large and liberal interpretation in order to ensure that users’ rights are not unduly constrained.”


“Theft” is a very serious allegation and the word should be used with the greatest of  care and caution, especially by accomplished writers and lawyers. Words matter. Bill Patry has written a wonderful book about the misuse of words and metaphors such as "theft" entitled Moral Panics.


In any case, here is a good scholarly discussion of the importance of the Stewart decision in Canadian copyright law. Although the author is writing in the context of a book on computer law, the analysis applies to all works protected by copyright, including Ms. Atwood’s literary works. This analysis confirms that unauthorized reproduction may be infringement but it is not “theft”.   This  analysis is, in fact,  by none other than Mr. Sookman himself. This is from his book entitled “Computer, Internet, and Electronic Commerce Law”. Footnotes have been omitted and emphasis has been added.

**************************
§ 7 (3)(b)(ii) — Theft of Copyright in Computer Programs and Data
In R. v. Stewart[FN32], Cory J.A. of the Ontario Court of Appeal expressed the opinion that the compilation of information in issue was a work in which copyright subsisted, and that the copyright therein was property within the meaning of the theft provision of the Criminal Code. His opinion was followed in R. v. Wolfe[FN33], a case in which the unauthorized reproduction of artistic works was considered to constitute the offence of theft under the Code.


The opinion of Cory J.A. in Stewart had been contrary to previous opinions expressed by other judges. In Rank Film Distributors Ltd. v. Video Information Centre[FN34], a case in which it was alleged that the defendants pirated copies of films and sold unauthorized video cassettes of them, both Lord Fraser of Tullybelton and Lord Wilberforce were of the opinion that the infringement of a copyright would not constitute theft under the Theft Act 1968.[FN35] Lord Wilberforce stated unequivocally that "infringement of copyright is not theft."


In R. v. Kirkwood[FN36] Lacourciere J.A. of the Ontario Court of Appeal also doubted that infringement of copyright amounted to theft under the Code. Lamer J. of the Supreme Court of Canada settled the issue in R. v. Stewart. He stated unequivocally that infringement of a copyright does not amount to theft under the Code: 

Copyright is defined as the exclusive right to produce or reproduce a work in its material form (s. 3). A mere copier of documents, be they confidential or not, does not acquire the copyright nor deprive its owner of any part thereof. No matter how many copies are made of a work, the copyright owner still possesses the sole right to reproduce or authorize the reproduction of his work. Such copying constitutes an infringement of the copyright under s. 17 [now s. 27] of the Act, but it cannot in any way be theft under the criminal law. While one can, in certain circumstances, steal a chose in action, the rights provided in the Copyright Act cannot be taken or converted as their owner would never suffer deprivation. Therefore, whether or not copyright is property, it cannot, in my opinion, be the object of theft under s. 283(1) [now s. 322] of the Code.[FN37]

In view of the opinion  expressed by Lamer J., the unauthorized reproduction of a computer program does not constitute theft under the Criminal Code.


From:
B. Sookman:  Computer, Internet and Electronic Commence Law; © Thomson Reuters Canada Limited, 2011
*********************************************


HK

Bad news for Canadians about "All the News That's Fit to Print" (and to Paywall)

Today is paywall day for the New York Times - at least for Canadians, who are the doubtless ungrateful beta testers to ensure that the paywall will work as intended.

I'm sure that I won't be the first or last to notice that we are the last to get the good news internet rollouts, such as Pandora or Hulu. 

But we are the first for the bad news, it seems. According to The Times:

The 20-article limit begins immediately for readers accessing NYTimes.com from Canada, which allows the company time to work out any software issues before the system goes live in the United States and the rest of the world. The prices and other terms will be the same worldwide, and users will be able to pay with credit cards or by PayPal.

The new scheme seems to entail a 20 article per month limit - or five articles per day if the articles are accessed via Google. Nice catch, Google ;-)

It will be interesting to see if this experiment works - or whether people will shift to downloading articles rather than accessing them online for repeat visits. There may even be an increase in exchanging downloaded articles by email  rather than forwarding links - and thus lessening advertising revenue.

Newspapers do have a problem these days.  It remains unclear if paywalls are the solution.

We wish the NY Times well - since it is indispensable in the world of  news, journalism and commentary. We hope that there is a better way than a paywall to ensure its survival. I seem to recall that the NY Times did this before - and had to backtrack.

Anyway, speaking of Pandora - the very popular internet radio service unavailable at all in Canada - it is doing something about engaging here. Let's see if  it can can afford the Canadian collective system, which often imposes multiple tariffs for the same transaction involving essentially the same rights owners, each with its own separate valuation  and expensive hearing process from the Copyright Board. Here's Pandora's recent application to intervene at the Copyright Board. 

HK

Approval of $45 million Estate of Chet Baker Estate class action settlement is somewhat unsettled

 

  

The fate of the potentially largest Canadian copyright class action lawsuit may be in limbo.

Here's an update on the class action law suit against the four big multinational record companies led by the Estate of Chet Baker. This update follows upon a report from March 8, 2011 by Drew Hasselback, himself a lawyer and the legal post editor of the National Post/Financial post. Here is my original blog about this from February 8, 2011. 

It seems that certain matters had not been finalized at the time of the settlement approval hearing scheduled for February 15, 2011. I don't know whether these may have  included some of the issues I raised in my earlier posting. Moreover, Paul Baker, the son of Chet Baker had raised an issue concerning the right of his mother, Carol Baker, one of the representative plaintiffs, to enter into an agreement on behalf of the estate. 

The class action settlement web site has been updated since my last blog, which noted the absence of the apparently important CSI Term sheet. The site now includes the very important term sheet agreed upon by the Estate and Chet Baker Enterprises LCC and an amended cooperation and minutes of settlement agreement agreed upon by Carol Baker as Personal Representative for the Estate of Chesney Henry "Chet" Baker Junior and Chet Baker Enterprises LLC. Both documents were executed on behalf of these parties by Jon Foreman, who I assume is the same Jonathan Foreman who is one of the lead class action counsel. These two documents are dated January 31, 2011, i.e. about two weeks before the originally scheduled settlement approval hearing date of February 15, 2011. I don't know when they were posted on the settlement website but it appears that they were scanned on February 14, 2011. The Term Sheet is very complex.  

If approved by the Court, the settlement would be by far the largest copyright class action settlement in Canada to date - about three times bigger than the Robertson case, which took years to resolve and went all the way to the Supreme Court of Canada.  Indeed, it would entail more than one third of the total face value of the settlement in the proposed Google Book Settlement, the mother of all copyright class actions that may or may not get approved by a US Court. It is about the same as the US $45 million that Google agreed to pay rights holders, apart from other payments for legal fees and establishment of a registry that would bring the Google total to about $125 million. However, legal fees and other significant costs will be deducted from this proposed Canadian settlement.

The Robertson case took at least a dozen years from the statement of claim until the payout cheques were finally mailed just the other day and had to go to all the way to the Supreme Court of Canada, where judgment was rendered in 2006. The Google class action is now about 5.5 years old and has probably not even reached the "end of the beginning" stage. Indeed, Judge Denis Chin - one of the most highly regarded and decisive trial judges in the USA (he was entrusted with Bernie Madoff) - has been deliberating on a decision on the amended proposed settlement for over a year. Few expect that his decision will be the end of the matter. Here's a possible flow chart for the aftermath.

By contrast, this "pending lists" matter will have been resolved -  if indeed it does get approved by the Court as requested - relatively extremely quickly in about 2 1/2 years and without most of the normal and time consuming litigation stages. In fact, there is no reference on the settlement website to even a statement of defence having been filed. So, presumably there was no discovery. The publicly available documentation in support of the approval hearing is available here, and is not very extensive - though as noted above it now finally includes the important 36 page "term sheet" which is described on the settlement website as "Key Terms of Settlement". Presumably very few potential class members would have had a chance to see this essential document prior to it being posted.  Some other significant aspects of the settlement have not been made public at all, as I noted earlier. One of the more interesting aspects of the settlement was that the opt-out threshold is to be provided to the Court on a confidential basis. The total fees sought for class action counsel have also not been disclosed. By way of contrast, the posted Google documentation is vastly more detailed, voluminous and informative.

The settlement is for less than the face amount of $50 million allegedly admitted to be owing by the record companies.

Out of that, there will be a request for approval of what will likely be several million dollars in legal fees, disbursements and commissions deducted before any money reaches music composers. The total amount of deductions that will be sought has not been disclosed on the settlement website. While $45 million or so is indeed an impressive amount, it is a very small fraction of the originally estimated liability figure of more than $6 billion based upon potential statutory minimum damages. This $6 billion figure was originally announced and explained by Prof. Michael Geist, who who founded and oversees CIPPIC (the legal clinic located at and supported in part by by the University of Ottawa), that has been closely involved in this very big stakes case.

It is expected that few potential class member claimants will receive more than a few hundred or a few thousand dollars at most. The class action lawyers and CSI will receive several millions if the settlement is approved. The record companies will have gotten off for less than the allegedly admitted face value of the amount owing.

It would all work out to something less than $135 per song net in the hands of composers  after deductions. The record companies apparently didn't pay for the necessary rights over the years, thereby allegedly infringing their own artists' and other artists' copyrights. The normal minimum statutory damages amount that a court would award is $500 per title, though the court has discretion to reduce this figure.There were allegedly more than 300,000 works in issue. So, a "volume" discount would have been conceivable if the court were to have found that application of the minimum of $500 was "grossly out of proportion to the infringement".

Interestingly, these are the very same commercial record companies that are saying that a proposed $5,000 cap on statutory damages per individual for non-commercial copying in Bill C-32 is a "license to steal".

Here is the Judge's recent order and endorsement, which is rather unusual for a matter involving a settlement worth almost $50 million dollars. This recent order and the adjournment is not currently reflected on the class action settlement website.

HK

*******************

ENDORSEMENT AND DIRECTION

[1]               This motion for certification of this action as a class proceeding under the Class Proceedings Act 1992, S.O. 1992, c. 6, and for approval of a settlement agreement made between the representative plaintiffs and the defendants, was originally returnable on February 15, 2011. On that date, counsel reported that certain aspects of the settlement had not been finalized and the motion was adjourned to this date.

[2]               On the appearance before me today, counsel advised me that the final settlement documentation will likely be completed in the next few days and that a further adjournment is requested. All parties agree to an adjournment. 

[3]               There is a further issue. A letter was sent to the court by Paul Baker, the son of Chet Baker, who claims a one-eighth interest in the estate. Mr. Baker raises an issue concerning the right of his mother, Carol Baker, one of the representative plaintiffs, to enter into an agreement on behalf of the estate. A copy of Mr. Baker’s letter was forwarded to all counsel. Mr. Baker was informed by my assistant that his letter would be raised at the hearing today and he was asked to direct further correspondence to counsel and not to the court.

[4]               Counsel for the plaintiffs is considering the appropriate response to the concerns raised by Mr. Baker. This may include the production of further evidence (if available) to satisfy the court and counsel for the defendants that Carol Baker has authority to enter into an settlement agreement on behalf of the estate and on behalf of the corporate plaintiff. It may include a motion to substitute or add another representative plaintiff. It may include some other form of relief.

[5]               In view of the foregoing, I adjourn the motion for settlement approval, and any other motions the plaintiffs wish to bring, to Monday, March 28, 2011, at 10:00 a.m. in Courtroom #6, Osgoode Hall, 130 Queen Street West, Toronto Ontario.

[6]               I give the following additional directions with respect to the issues raised by Mr. Baker:

(a)               Mr. Baker shall be provided with all material in support of the motion for settlement approval and all material in support of any other motions to be heard on March 28, 2011.

(b)               Mr. Baker shall be provided with PDF copies of material previously filed and shall be referred to the location of such material on the web site of plaintiffs’ counsel. Mr. Baker shall be served with both paper copies and electronic copies of any new material to be filed on the motion(s).

(c)               Service shall be effected by either registered mail or by courier to the address shown on Mr. Baker’s letter of February 6, 2011 and by email addressed to the internet address shown on that letter.

(d)               Mr. Baker shall also be served with a copy of this endorsement, in both paper and electronic form.

(e)               Mr. Baker shall be informed, by letter from plaintiffs’ counsel enclosing a copy of this endorsement, that (i) he is entitled to appear on the motion(s) in person or by counsel; (ii) he is entitled to file sworn evidence on the motion(s); (iii) he is entitled to make written submissions on the motion(s); and (iv) if he fails to appear on the motion(s), or fails to instruct counsel to appear on his behalf, the court may proceed in his absence. Any evidence or submissions made by Mr. Baker shall be delivered to plaintiffs’ counsel and to counsel for the defendants. Plaintiffs’ counsel is directed to provide the court with a copy of any evidence or submissions made by Mr. Baker.

---

                 G.R. Strathy J.

Date: March 7, 2011

A Watched Pot Never Boils

Two important copyright events that one might have expected to have happened by now have still not happened.

The first is a ruling on CMEC's Leave to Appeal application from last summer's Federal Court of Appeal decision that held that the use of multiple copies  or anything prescribed by a teacher cannot be "fair".  As I've indicated, this is a very important case and makes the perfect counterpart to the SOCAN v Bell case involving 30 second iTunes  "previews", which the Supreme Court of Canada has already decided quite decisively to hear. Indeed, it has been tentatively scheduled for hearing  on December 6, 2011. The former is very restrictive of fair dealing in a way that will have enormous implications on the entire educational sector at a minimum. The latter is very permissive - and it arguably arises out of rather particular fact situation and rather unusual in that the Copyright Board made the initial ruling on its own, without being urged by any party.

Moreover, both of these cases would provide an opportunity to review - yet again but perhaps necessarily - the "sempiternal" issue of standard of review, which is becoming less rather than more clear as time goes by. (I should disclose my involvement as counsel for the Intervener CAUT in the appeal hearing).

Even Marion Hebb, a passionate spokesperson for writers, acknowledged in her testimony on Bill C-32 on March 10, 2011 that the Supreme Court would "probably" take this case. The transcript is not yet available but her remarks are available on the webcast just after the 11:47 mark. 

So, we watch with interest. Hopefully, both case will be heard.

The second is the long expected release of the Copyright Board's reasons for decision in the Access Copyright Interim Tariff decision, rendered without reasons on December 23, 2010 - almost three months ago.  Certain subsequent proceedings that might have affected the interim tariff at least at the margins have not even been ruled upon. In the meantime, the file is proceeding and interrogatories are being prepared - all without the benefit of the Board's reasoning.  So, once again, we stand and wait.


HK 

PS - the Board's decision was indeed posted a few minutes ago here....comments may follow.

To Margaret Atwood: Copyright and Cars Cannot Conflate

(Vanwaffle)

Margaret Atwood, C.C.,  is rightly renowned as a Canadian doyenne of the arts, crusader for CanLit, and fiction writer. However, her views on copyright law have been consistently controversial, often just wrong and, dare I say,  even fictional. She is back in the news again for her creative, eloquent, passionate but inaccurate and overwrought comments at the C-32 Committee hearing on March 8, 2011.

She reportedly said that her definition of fair dealing is:

"Number one, it is fair; and number two it means that some form of dealing is taking place between two sides who reach an agreement -- that's what fair dealing means to the ordinary person."

That may well be her definition, but there is no basis in any statute or any court case anywhere that would back it up. On the contrary, fair dealing is inherently a user’s right to engage in certain activity without reaching an agreement or even “dealing” at all with the author or a collective. “Dealing” is used in the law in with respect to the work itself in the sense of “using” it for an allowed purpose in a fair way - not in the sense of negotiating with an author or her representative for the right to do so. When the law allows for "fair dealing", there is no need for an “agreement”.

Also, according to news reports:

Atwood testified that she feared the fair dealing reforms proposed under Bill C-32 harmed authors by opening a loophole that would let educators copy works without paying to do so.

"They are being negatively affected by this because property is being taken away without consent and without compensation," she told MPs via video conference from Dubai.

"If someone took something from your house without compensation, you would call it theft."

Mr. Dean Del Mastro, a Conservative committee member, was on the mark when he referred to some of Ms. Atwood’s exaggerated accusations and assertions as “outrageous”.  The exchange took place here at about the 11:46 mark of the hearing.

Ms. Atwood still doesn’t "get" certain basic facts about law and economics. Stealing cars or diamond rings gives the thief additional tangible possessions and deprives the owner of these possessions. Indeed, society cannot function if such “theft” of tangible objects is tolerated.

On the other hand, copying some of Ms. Atwood’s work in the course of fair dealing deprives her of nothing and may even create additional sales if readers like what they read. This is the elementary distinction between “rivalrous” and “non-rivalrous” property rights and is at the heart of fair dealing. 

When a thief steals a car or a diamond ring or a bill of exchange, such an act is to the obvious detriment of the rightful owner and, indeed, to society itself. However, the whole world can possess an idea or a fairly copied exceprt and even in some cases the whole of a work without any loss to anyone and with a gain to society. The creator can be very much enriched as a result of such widespread access. Fair dealing is not stealing. It is not theft, or expropriation, or confiscation. It is a vital part of the “quid” for the “quo” of why copyright exists.

In fact, Thomas Jefferson, the Thomas Jefferson, hardly a pirate at heart, said this best in his celebrated letter to Isaac McPherson in 1813:

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody.

Exactly why Ms. Atwood does not want scholars, teachers, and students to have large and liberal rights to engage in fair dealing with respect to her works is unclear. She and her colleagues  - and their current and potential readership - can only benefit if the purpose is reasonable and the dealing is fair. The very generous "fair use" doctrine in the USA, with its explicit inclusion of the fair use of multiple copies for class room teaching use, has hardly hurt the cause of American literature or publishing. Accordingly, Ms. Atwood's campaign against the explicit inclusion of "education" as a legitimate example of fair dealing - subject of course to hurdles of the the Supreme Court's six part fairness analysis - is incomprehensible.

Ms. Atwood’s copyright canards, such as likening exceptions to car theft, go back to the first Bill C-32 in 1996.  At those committee hearings, she opined that:

Exceptions to copyright are an expropriation of our property against our will. If copyrights were cars, this would be car theft..

Here’s a blog I did in 2006. For better or worse, some things never change. Fortunately, the Supreme Court of Canada and countless others recognize that copyright and cars cannot conflate.


HK