You can Google it: Supreme Court of Canada grants leave to appeal global injunction

Alex Sarabura - 

The Supreme Court of Canada has granted leave to hear an important case respecting the ability of Canadian courts to enjoin the behaviour of organizations with respect to their operations outside of Canada.

On February 18, 2016, the Supreme Court of Canada granted Google Inc. leave to appeal the judgment of the British Columbia Court of Appeal in Equustek Solutions Inc. v. Google Inc., in which the BCCA upheld an interlocutory injunction prohibiting Google from including specific websites in its search results worldwide.

The plaintiff’s request for the injunction against Google arose from a lawsuit in which the plaintiff alleged that the defendant was passing off its goods as those of the plaintiff.

After the plaintiff commenced the proceeding, the defendant left BC while still selling the knock-off goods over the internet, relying on search results to reach customers.  The plaintiff alleged that it lacked an effective way of stopping the defendant’s conduct, and sought an interlocutory injunction prohibiting Google from displaying the defendants’ websites in its search results anywhere in the world.  The Supreme Court of British Columbia deemed the injunction necessary to ensure that the orders against the defendants were effective, and granted the injunction.

Google appealed, arguing that the injunction represented an impermissible exercise of extra-territorial jurisdiction; improperly ensnared an innocent third-party (Google); and exceeded the Court’s jurisdiction.  Google also argued that the injunction violated Google and the public’s right to freedom of expression.

The BCCA rejected every one of Google’s arguments:

  • The Court found that it had jurisdiction over Google, both because the underlying action was connected to BC and because Google conducted business in BC (in response to Google’s concern that this meant that Google conducted business everywhere, the Court responded that if so, it was because of Google’s business model and was therefore Google’s problem);
     
  • The Court found that it had the right to act globally, both based on historical precedent, and because doing so would not offend international comity;
     
  • The Court found that the fact that Google was a third-party didn’t allow it to avoid the Court’s reach, based on precedent related to Norwich orders (whereby third‑parties are ordered to provide assistance to the Court); and
     
  • The Court dismissed Google’s arguments related to free speech, asserting that speech designed to allow the infringement of intellectual property would rarely be protected.

In seeking leave to appeal, Google generally argued that the BCCA did not focus sufficiently on the public interest, particularly in respect of freedom of speech.  Beyond that, Google highlighted three issues raised by the BCCA decision.

  1. When should a court be able to block search results, given the importance of freedom of expression, and what limits should be imposed?
     
  2. Do Canadian courts have the authority to block extra-jurisdictional search results?
     
  3. When is a litigant entitled to an interlocutory injunction against an innocent third-party?  Should the current approach to granting injunctions against parties to litigation be properly applicable to non-parties to the litigation?

It is not clear why the SCC granted leave; however, it is interesting to note that the BCCA decision came out before the SCC’s decision in Chevron Corp. v. Yaiguaje, in which the SCC considered the scope of Canadian courts’ jurisdiction (albeit in the context of an action to enforce a judgment).  It is possible that the SCC will take the Google appeal as an opportunity to further clarify Chevron; it is also possible that the SCC simply sees a need to craft jurisdictional guidance for the internet age.  Whatever the result, both intellectual property owners and internet-based organizations will be watching closely.

Ontario Superior Court creates new privacy tort in revenge porn case

Justine Johnston -

On January 21, 2016, the Ontario Superior Court released its decision in Doe 464533 v D, 2016 ONSC 541, recognizing for the first time the new privacy tort of public disclosure of private facts. The Court’s decision explicitly expands the common law protection of privacy and demonstrates how courts can recognize and provide relief to victims of cyberbullying.

The public disclosure of private facts tort arose from an egregious case of revenge porn cyberbullying. The defendant posted a sexually explicit video of the plaintiff under the user submission section of a pornographic website. When the plaintiff became aware that the video had been posted online, the defendant admitted to uploading it and removed it from the website. Although the video was “removed”, the Court acknowledged that there is no way to know how many times it was viewed or downloaded or if and how many times it may have been copied onto other media storage devices or recirculated. 

 In reaching its decision, the Court recognized the important role technology plays in everyday life, how predators and bullies can use technology to victimize others and the devastating impact cyberbullying has on victims. These ideas were similarly addressed in the 2012 Ontario Court of Appeal decision Jones v Tsige, where privacy rights were identified as worthy of Charter protection and the tort of invasion of privacy in the context of the tort of intrusion upon seclusion was recognized. Following Jones v Tsige, the Court deemed William L. Posser’s American legal article “Privacy” as authoritative and adopted his tort of “public disclosure of embarrassing private facts about the plaintiff,” with minor modifications.

Accordingly, the tort of public disclosure of private facts contains the following three elements: One who gives publicity to a matter concerning the private life of another is subject to liability to the other for invasion of the other’s privacy, if the matter publicized or the act of the publication would be highly offensive to a reasonable person, and is not of legitimate concern to the public.

Here, the Court found the cause of action was made out because  the defendant posted a privately-shared and highly, personal intimate video recording of the plaintiff on the Internet, thereby making a private aspect of the plaintiff’s life public, such that a reasonable person would find highly offensive and there was no legitimate public concern for him to do so. The Court also found the defendant committed the existing torts of breach of confidence and intentional infliction of mental distress. The Court awarded the plaintiff $105,500 in damages and interest, and granted a permanent injunction prohibiting the defendant from contacting the plaintiff or members of her immediate family.

The continuing integration of technology into everyday life has many implications for privacy. The Court’s decision and recognition of the public disclosure of private facts tort covers a gap in the law that will offer recourse to victims of egregious forms of cyberbullying, including revenge porn. 

Voltage meets resistance from Federal Court: new safeguards imposed on disclosure order to combat copyright trolling

David Elder -

In a ground-breaking order, the Federal Court of Canada has for the first time included, in an order compelling third party disclosure of subscriber information, new conditions intended to better balance subscriber privacy rights and dissuade abuse of disclosure orders by copyright owners.

In the case of Voltage v. Doe, film production company Voltage Pictures LLC had sought from internet service provider TekSavvy Solutions Inc. the disclosure of the contact information of some 2,000 internet service customers that Voltage alleged had illegally downloaded movies in which it holds copyright.  TekSavvy refused to disclose the records in question, and Voltage brought a motion for an order requiring TekSavvy to disclose the information in question.

Orders requiring an ISP to disclose the contact information of subscribers alleged to have improperly downloaded copyright-protected material are not new in Canada; however, the order sought by Voltage requested identity information for an unprecedented number of subscribers, and raised serious concerns about “speculative invoicing,” a practice whereby internet subscribers are pressured or misled into quick, and sometimes excessive settlements of infringement claims, even if they were not involved in infringement.

The Reasons for Order and Order in the Voltage case address important issues with respect to the applicable test for granting such disclosure orders, as well as the limitations that a court should impose to protect or minimize the privacy rights of subscribers.

The leading case in Canada for dealing with such disclosure orders is BMG Canada Inc. v. Doe, which suggests that an order is generally warranted where a plaintiff has a bona fide claim and meets other requirements of the Federal Court Rules. 

The Samulelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), which was granted leave to intervene in the Voltage motion, argued that in more recent jurisprudence, Canadian courts have refined the BMG test so as to require copyright owners seeking disclosure to meet the higher evidentiary standard of establishing a prima facie case of copyright infringement. The Court rejected the argument that the courts have moved to the higher standard, and applied the bona fide test from the BMG case.

CIPPIC further argued that Voltage’s true intentions were not motivated by simple enforcement of copyright, but rather by a business model of “speculative invoicing”, which seeks to intimidate individuals into settlements by way of demand letters and threats of litigation.  It was alleged that under this approach, the cost, uncertainty and stigma often coerces individuals into making payments, often well in excess of any amounts that would likely be recovered in damage awards for copyright infringement, and often from individuals that were not involved in the unauthorized copying and distribution of films on the internet.  TekSavvy argued that, as is the case in other jurisdictions, safeguards were required to help ensure that copyright owners did not misuse court-ordered discovery mechanisms

While the Court found some evidence that Voltage “had been engaged in litigation which may have an improper purpose,” it declined to make any definitive finding to that effect in the case at hand.  However, after reviewing the approaches of courts in the U.K. and the U.S. to the phenomenon of “copyright trolls”, the Court added a number of significant new conditions to its disclosure order that are intended to balance the rights of internet users who are alleged to have downloaded copyrighted works against the rights of a copyright owner to enforce its rights in those works.  Conditions to the order include the following:

  • Only names and addresses are required to be disclosed (Voltage had also sought disclosure of phone numbers and email addresses)
  • The names and addresses in question are to remain confidential, not be disclosed to any other parties with further order of the Court, and be used by Voltage only in connection with the copyright claims in question
  • Any correspondence sent by Voltage to any TekSavvy customer must include a copy of the order, and must clearly state that the no court has yet made a determination that the subscriber has infringed or is liable in any way for payment of damages
  • Such correspondence is subject to prior review and approval by the Court
  • Upon request, Voltage must provide any subscriber with a full copy of the Reasons for Order and Order, at no charge to the subscriber
  • Voltage’s action for copyright infringement, and any other actions it may commence against any of the subscribers will continue as a specially managed proceeding, subject to ongoing oversight by a Case Management Judge, who takes active role in supervising the conduct of proceedings, so as to improve efficiency and encourage fair and timely resolution

The foregoing conditions would appear likely to discourage the practice of “speculative invoicing,” particularly due to restrictions imposed on the content of any demand letters and the ongoing supervision of the Court. 

The decision promises to be significant not only for ISPs, but for a range of other third party service providers from which litigants in copyright and other civil causes may seek disclosure of customer identity information.

Nicholas McHaffie and David Elder of Stikeman Elliott LLP represented TekSavvy with respect to the Voltage demand and subsequent proceeding.

Supreme Court of Canada says reasonable expectation of privacy for workers continues on employer-supplied laptops

David Elder -

Employees in Canada retain some reasonable expectation of privacy in personal data stored on an employer-supplied laptop, even where workplace policies and practices provide that all information stored or generated on such devices is the property of the employer, says the Supreme Court of Canada. However, the implications of this criminal law case remain unclear for private sector employers.

In its judgement in R. v. Cole, on appeal from a decision of the Ontario Court of Appeal, the Court considered the case of an Ontario high-school teacher, on whose school board-supplied laptop a school technician found nude images of a student. The technician copied the photos in question onto a disk for the school’s principal, who seized the laptop and informed police, who took possession of the laptop and disks, then examined their contents. The police did not obtain a warrant before seizing the equipment or examining the contents.

For employers, it is important to note that the real focus of the decision is on criminal law: the guarantee in the Canadian Charter of Rights and Freedoms against unreasonable search and seizure and the failure of police to obtain judicial authorization before accessing the laptop in question -- not on the rights or powers of private sector employers to audit employee use of company equipment. In fact, the majority decision explicitly notes that it leaves “for another day the finer points of an employer’s right to monitor computers issued to employees.”

However, notwithstanding this Charter focus, the decision may nonetheless provide important guidance to private sector employers as well.

In its judgement, the Supreme Court drew an important distinction between the search and seizure of the laptop by school officials, and its subsequent search and seizure by police. The Court found that school officials had a statutory duty to maintain a safe school environment, and therefore, by necessary implication, a reasonable power to seize and search a board-issued laptop. However, while it found that the school was legally entitled to inform the police of its discovery, this entitlement, and the lawful authority of the employer to seize the device, did not extend to provide authorization to the police to examine the contents of the laptop – an act that is prima facie unreasonable without prior judicial authorization.

By analogy, private sector employers would also have clear duties to maintain safe, non-discriminatory workplaces, and to protect the interests of their workforce and shareholders generally – and may therefore also have reasonable powers of search and seizure to protect these interests, as well as the legal authority to advise law enforcement authorities of employee device usage that may be in breach of law. However, language in the ruling suggests that such authority by employers may extend only to content and behaviour that is reasonably connected to these objectives; not necessarily to all personal data that may be contained on an employer supplied device or network.

The case also underlines the importance of employers having clear, documented polices for the use of workplace computers and networks, particularly if employees are permitted some personal use, as well as communications and compliance programs to regularly remind employees of these policies. For the purposes of a Charter analysis, the Supreme Court found that such policies and practices served to diminish, but not eliminate, the reasonable expectation of privacy that an employee would otherwise have in personal content stored on an employer-supplied computer. From the perspective of Canadian private sector privacy laws, such policies help to establish the requisite knowledge and consent of employees to the collection, use and disclosure of their personal information.

Finally, although the Court stresses that device ownership is not a determining factor in assessing the reasonable expectation of privacy that an employee may have on stored personal data, the Court’s decision may nevertheless have important implications for the increasing trend toward “Bring Your Own Device”, whereby employers allow employees to use their own devices for work purposes and to access employer networks. If employees retain even a diminished expectation of privacy in personal data stored on an employer-supplied device, employees who own the devices they use for work purposes might enjoy an even higher expectation of privacy in such stored information.

Previews of musical works do not infringe copyright

As we've discussed in a number of recent blog posts, the Supreme Court of Canada this week released a number of major copyright-related decisions. In one of these cases, Society of Composers, Authors and Music Publishers of Canada v. Bell Canada (SOCAN), the Supreme Court considered whether there would be a tariff for the communication of previews of musical works over the internet.

Online music previews are short extracts of musical works and assist a consumer in deciding musical purchases. The Copyright Board concluded that those who make previews available, and the users that listen to previews, were entitled to avail themselves of the fair dealing exception under section 29 of the Copyright Act, as listening to the previews constituted research of a purchasing decision (see our previous post). The Federal Court of Appeal upheld the Copyright Board’s decision and SOCAN sought leave to appeal to the Supreme Court of Canada.

In upholding the decisions below, the Supreme Court concluded that the previews constituted fair dealing, applying the test articulated by the Court in CCH Canadian Ltd v. Law Society of Canada (CCH).

In applying the first step of the test and determining whether the previews are provided for the purpose of “research”, the Court rejected arguments limiting the definition of “research” and affirmed that the term be given a “large and liberal interpretation”. Whether the dealing constitutes “research” should be analyzed from the perspective of the user or consumer rather than the online service provider since it is the consumer who uses the preview for the purpose of conducting research to identify which musical work to purchase. As a result, the Court concluded that the previews were provided for the purposes of research.

The second step of the test required determining whether the use of the previews was “fair” in accordance with the six CCH factors: (i) the purpose, (ii) character and (iii) amount of the dealing, (iv) the existence of any alternatives to the dealing, (v) the nature of the work, and (vi) the effect of the dealing on the work. The Court concluded that: (i) the main purpose to provide previews was to facilitate the consumer’s research purposes; (ii) the previews were streamed and not downloaded, after listening, the preview was automatically deleted from the user’s computer, and copies could not be duplicated or further disseminated; (iii) regarding the quantity, the Court confirmed the “amount” meant the “quantity of the work taken”, the proportion of the excerpt used in relation to the whole work; (iv) previews were found to be reasonably necessary to help consumers research what to purchase since there were no other reasonable alternatives that could effectively preview the musical work; (v) previews were also necessary in disseminating the work because dissemination required a consumer to be able to locate and identify a work he or she wanted to buy; (vi) since the previews served to increase the sale of the work, they could not be said to be in competition with it, and thus the dealing did not adversely affect the work.

Free delivery! Supreme Court rules no copyright royalties for internet transmission of downloads

David Elder -

In a major, but slim, victory for proponents of electronic commerce, a majority of the Supreme Court of Canada has ruled that online sellers of music and video game downloads are not required to pay more copyright royalties than their “bricks and mortar” counterparts, solely because the products from the virtual stores are delivered via the internet.

In addition, although not considered by the Court, these rulings would also suggest that another copyright tariff, for the delivery of ringtones to mobile phones, may be invalid.

In two decisions that form part of the unprecedented “copyright pentalogy” of copyright tariff appeals heard by the top court last year, the Supreme Court considered whether a download of a recording of a musical work, either on its own or when incorporated into a video game, constituted a “communication to the public by telecommunication,” such that a download could attract a distinct copyright royalty, in addition to the royalty payable to the copyright holder for the reproduction of the work on the buyer’s computer or device. 

In overturning decisions of the Federal Court of Appeal, which had upheld decisions of the Copyright Board, a five Justice majority found that using the internet to transmit to a buyer a permanent reproduction of a work did not amount to a “communication” under the statute.

Among other rights, the Copyright Act grants rights holders both the sole right to reproduce and authorize the reproduction of their works, as well as the right to communicate their works to the public by telecommunication and to authorize such communication. Under these provisions, the Copyright Board of Canada had approved tariffs requiring royalty payments to the Society of Authors, Composers and Music Publishers of Canada (SOCAN) for the communication of downloads of recordings of musical works and for the communication of downloads of recordings of musical works incorporated into video games; as well as a separate tariff, payable to different copyright collective societies, for the reproduction of musical works in permanent downloads, limited downloads and on-demand streams of music transmitted over the internet. Royalties for the reproduction of musical works incorporated into games are individually negotiated with rights holders.

In the view of objectors to the SOCAN tariff at issue, the tariff amounted to “double dipping” in that both a communication royalty and a reproduction royalty arose from the same act or transaction (the downloading of a work), whereas only the reproduction royalty was payable with respect to a tangible copy of the work (such a CD or game cartridge) in a retail store.

In Entertainment Software Association v. SOCAN, which considered the application of the “communication by telecommunication” right to downloads of video games incorporating musical works, the majority of the court found that the Act must be interpreted in light of the principle of technological neutrality, avoiding the imposition of additional layers of protections and fees based solely on the method of delivery of the work to the end user. In this regard, the majority found that the internet was simply an alternative form of delivery. The majority also found that the legislative history of the Act demonstrated that the right to “communicate” was connected to the right to perform a work, not to the right to reproduce permanent copies of the work, and that the performance right did not contemplate the delivery of permanent copies of the work.

ICANN publishes applications for new generic top-level domain names

Justine Whitehead and Anne MacIsaac -

On June 13, 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) published a list of the 1,930 applications for new generic Top-Level Domain Names (gTLDs) it had received during its recent January to May 2012 application period. The influx of applications was due to new rules approved in June 2011 by ICANN, the body which oversees the registration and coordination of the Internet’s system of unique domain names. The rules transform naming conventions for Internet Web sites by removing restrictions on allowable suffixes for domain names. Currently, Web site domain names end in either a country code (such as .ca or .uk) or in one of only twenty-two gTLDs, such as “.com” or “.org”.  Now organizations can apply to register any character string as a gTLD. This will allow companies to register their brands as gTLDs or to select other unique domain names for marketing purposes, drastically increasing the number of available domains. Applications were received from sixty countries, including sixty-six requests to register geographic names as gTLDs, and 116 requests for strings in non-Roman characters (called Internationalized Domain Names, or IDNs), such as Chinese, Arabic, and Cyrillic.

ICANN will consider a number of factors when reviewing the applications. For example, they will evaluate whether a proposed gTLD is confusingly similar to an existing gTLD, to a reserved character string or to another proposed gTLD; whether it is a geographic name requiring government support; and whether it contributes to domain name system (DNS) instability. They will also look at whether the applicant possesses adequate technical, operational and financial resources with respect to the registry services they will be required to provide.

As part of a public review process, the public will have an opportunity to comment on proposed gTLDs during the 60 days following the June 13 posting. Interested parties will also be able to file one of several types of objections during a formal seven month objection period. Bases for objection include: “string confusion”, where the proposed string is confusingly similar to that of an existing gTLD or to another application; “limited public interest”, where an application is contrary to generally accepted legal norms of morality and public order; “community”, where there is substantial opposition among a significant proportion of the community targeted by the proposed gTLD; and “legal rights”, where rights-holders, such as owners of registered or common law trademarks, may oppose a gTLD which infringes on their legal rights. Trademark owners should review the list of proposed gTLDs to ensure that none infringe upon their trademark, and submit comments or file an objection if appropriate.

The new rules also mean that there is now a greater variety of domain name extensions which could be used in combination with trademarks in an infringing way, requiring continuing vigilance by trademark owners to protect their legal rights. To help address this concern, ICANN will operate a Trademark Clearinghouse - a centralized database where trademark owners can deposit their trademark information in order to support future infringement claims.  The Clearinghouse can also be used to support Sunrise claims, allowing mark holders to register domain names in a TLD before the name is available to the general public.  

While marketing opportunities exist for trademark owners who can afford to invest in the chance to register their marks as a new gTLDs, the resulting proliferation of new domain names will present challenges for others. To protect their marks, trademark owners should monitor applications for gTLDs, file objections when problems are identified, and register their trademarks with the Trademark Clearinghouse.

A number says a thousand words: Data Privacy Day 2012

Ontario’s Information and Privacy Commissioner, Dr. Ann Cavoukian, recently issued a press release  warning consumers that new technology has the potential to build individually-detailed profiles based on IP addresses, social insurance numbers and even license plates. Her comments highlight a growing trend that the anonymity of personal information is becoming increasingly scarce, especially for online consumers.

The Commissioner’s comments are timely considering that Data Privacy Day  is January 28, 2012, a day when awareness of online privacy and data protection is brought to the forefront. Recognized in Canada, the United States and most of Europe, Data Privacy Day is organized by the National Cyber Security Alliance, who seeks to educate the general public about data privacy and to encourage dialogue about data protection among consumers, businesses and governments.

No liability for defamation for basic hyperlinks, says Supreme Court

David Elder and Lindsay Gwyer -

Bloggers, tweeters, webpage owners and other providers and hosts of internet content can breathe a little easier today following a decision of the Supreme Court of Canada that ruled that merely providing hyperlinks to defamatory content cannot make them liable for defamation.

That said, while the decision provides clear support from the highest court in the land for both free expression and the preservation of the nature and benefits of the internet as whole, it stops short of giving hyperlinkers a “Get Out of Jail Free” card for all uses and presentations of links to defamatory material. 

The much-anticipated decision in Crookes v. Newton, 2011 SCC 47concerned a defamation action grounded on the posting by a website operator of two simple hyperlinks to defamatory content located on other sites. The website operator refused to remove the links upon request by the plaintiff, and the plaintiff brought an action in defamation in British Columbia, where he was unsuccessful both at trialand at a subsequent appeal to the B.C. Court of Appeal. At issue before the Supreme Court was the question of whether a simple hyperlink reference to defamatory information could constitute a “publication,” a key element of the tort of libel.

The case had been very closely watched by the internet community, as a negative ruling had the potential to impose an unprecedented chilling effect on the way content is shared online, effectively subverting one of the fundamental underpinnings of the design of the World Wide Web.

While the majority acknowledged in their judgement that the internet is a potentially powerful vehicle for defamatory expression, they also explicitly recognized the indispensability of hyperlinks in facilitating access to online information, and ruled so as to preserve the ability of users to provide basic links to third party content without fearing that they will become legally responsible for that content. The majority likened simple hyperlinks (which merely reference the existence and location of content) to footnotes or references, noting that both are necessarily content-neutral, with the poster having no control over the content to which they refer, and that both require some act on the part of the reader before the content can be accessed.   This type of basic link, the Court ruled, does not amount to an expression of meaning and cannot possibly be a publication of defamatory material.

While the decision provides clear immunity for providing simple hyperlinks to defamatory content, the three separate judgements that underlie the decision (either concurring or concurring in the result) leave the door open to potential liability for hyperlinking in other ways and contexts. Moreover, the decision may have significant implications with respect to liability for hyperlinking other types of prohibited or unauthorized content

Beyond the scenario of simple hyperlinking, which the Court found will not attract liability, things get murkier. The majority appears to conclude that for those hyperlinking to third party content, only repetition of the defamatory statement in the link or associated text will attract liability; however, in joint concurring reasons, Chief Justice McLachlan and Justice Fish purported to “clarify” that, notwithstanding the apparent bright line test set out in the majority judgement, defamation would also be possible where the text indicates adoption or endorsement of the hyperlinked content, even if it doesn’t repeat the defamatory statement. In a separate judgement that concurred in the result, Justice Deschamps favoured a more nuanced approach, where content posters would attract liability for defamation if they deliberately make the defamatory information readily available to a third party in a comprehensible form (although the defence of innocent dissemination may still be available). In light of these varying approaches, it will be interesting to see how Canadian courts may deal with hyperlinking liability issues on different facts and in different contexts.

The majority also noted that, in an era of rapidly evolving technologies, it may become necessary to consider in the future the liability that could be attracted by other types of links, which are or may become available, such as embedded or automatic links. (The facts before the Court involved one “shallow” link to a site’s homepage and one “deep” link to a specific page further down in the site’s hierarchy of content).

Finally, while the Crookes decision dealt exclusively with publication in the context of defamation, it may have broader implications for liability for hyperlinking to other types of prohibited or unauthorized content. For example, some commentators have argued that the Court’s interpretation of publication may have implications for the meaning of “publication” or “reproduction” under the Copyright Act.  

The approach could also conceivably raise implications for criminal liability. For example, the offence of public incitement of hatred focuses on the act of “communicating statements” in a public place.Bill C-51, introduced in the last session or Parliament, but yet to be reintroduced, following the spring election, included a provision that would have amended the offence to indicate that “communicating” would include “making available,” which, as pointed out by the accompanying Legislative Summary, would include providing a hyperlink to the offending material.

Although the Crookes ruling is an important victory for content posters and internet supporters generally, there are still many aspects of the legal implications of linking to unauthorized or illegal content that remain to be definitively settled in Canadian law.

That's a wrap: BC Supreme Court enforces website terms of use and validates "browse wrap" agreements in Century 21 v Zoocasa

Amy Hu and Michael D. Smith -

In Century 21 Canada Limited Partnership v Rogers Communications Inc., the BC Supreme Court upheld the validity of the so-called “browse wrap” agreements and awarded damages against Zoocasa and its parent Rogers for Zoocasa’s breach of the Century 21 website terms of use when it pulled listings from the Century 21 website for use on its own real estate listing search engine. The BC court confirmed that industry standard browse wrap agreements (i.e. a website’s posted terms of service) can form valid contracts without being brought to the attention of users or requiring any review/acknowledgement by the user before accessing the website.

The conflict between the parties arose in 2008 when Zoocasa, a search engine and aggregator of real estate listings, began “scraping” images, descriptions, and property details from the Century 21 website and reproducing them on its own site. Century 21 claimed that Zoocasa’s scraping was in breach of the terms of use of its website (the Terms of Use), and made additional claims that Zoocasa had both trespassed and violated Century 21’s copyright over the images and descriptions.

The court found Zoocasa liable for copyright infringement and for breach of contract, and dismissed Zoocasa’s claim that the Terms of Use lacks proper acceptance or consideration, ingredients which make a contract valid. Unlike its shrink wrap and click wrap predecessors, browse wrap agreements such as the Terms of Use lack the “click-through” license (e.g. in click wrap agreements, user acceptance is indicated by clicking on the “yes” or “accept” bottom) or active step taken by the user (e.g. in shrink wrap agreements, users signal their acceptance of software licensing terms by removing the plastic wrap from a software package) which signal the user’s acceptance of the terms of use. Zoocasa argued that there is no proper acceptance for browse wrap agreements and claimed that the terms of use on a website were like a billboard, where the user has no opportunity to accept or reject the terms. The court rejected this analogy, finding that “[t]here is nothing the observer of a billboard does that is capable of indicating consent. The observer merely views the billboard. A user of a website can respond by accessing deeper layers (pages) of the website.”

The court in Century 21 v Zoocasa found there to be proper acceptance in browse wrap agreements where there is continued access of a website by a user with notice of the terms of use, thereby indicating its acceptance of those terms. Century 21 also gave consideration by providing access to the information on its web site. The court specifically noted that Zoocasa is a sophisticated commercial entity who has not only been given notice of the Terms of Use, but who had also relied on similar terms of use on its own website with the knowledge that such terms were the industry standard. Zoocasa’s scraping of the Century 21 website after notice of these terms of use was found to be a breach of its contract with Century 21.

Century 21 was awarded a permanent injunction against Zoocasa preventing further breaches of the Terms of Use, damages of $1,000 for breach of contract, and $32,000 for copyright infringement ($250 per infringement for 128 infringements). While the decision marks an important step in the evolution of browse wrap agreements, the facts of this case were somewhat unique: Zoocasa was a sophisticated internet business which was aware of the terms of use, and the court recognized that those terms were reasonable. Whether the courts will be as willing to find the existence of a contract between a less sophisticated individual, or perhaps in a situation of more egregious terms of use, remains to be seen.

Who was that masked man? Court protects anonymity of Internet users

David Elder -

In the latest chapter in a $6 million defamation suit by a former mayor, an Ontario court has refused to order the disclosure of the identities of three individuals who used pseudonyms to post to an online forum.

The case of Morris v. Johnson should provide some comfort to those who post commentary anonymously, while serving as a cautionary tale to plaintiffs seeking to get behind the pseudonyms of their critics and detractors.

Phyllis Morris is the former mayor of the Town of Aurora, Ontario. During her unsuccessful re-election campaign in 2010, the individuals in question allegedly made defamatory postings to the Aurora Citizen, a website featuring a blog and user forum centred on issues of interest to citizens of Aurora. Ms. Morris sued the anonymous posters, their counsel and a number of alleged moderators, writers and hosts of the site. She also brought a motion to reveal the identities of the anonymous defendants.

The case focused on how to best balance the a plaintiff’s need to obtain the identities of the anonymous defendants (in order to proceed with a defamation suit) and the public interest in promoting the administration of justice, weighed against the competing rights of privacy of the defendants and the underlying values of freedom of expression and political speech.

In cases of alleged defamation by anonymous parties, the courts in Ontario have taken the approach that, where privacy interests are involved, disclosure is not automatic, even if the plaintiff establishes relevance and the absence of any recognized form of legal privilege; rather, plaintiffs will be required to establish the elements of defamation on a prima facie basis before courts will consider ordering the production of identity information for the anonymous parties. 

In her judgement in the present case, Justice Brown of the Ontario Superior Court of Justice affirmed that the appropriate test to be used in such cases is the one set out in Warman v. Fournier, an earlier case involving alleged defamation by anonymous Internet users. Adapting the principles set out in the seminal U.K. case on pre-action discovery, Norwich Pharmacal Co. v. Comrs. of Customs and Excise, Warman set out the following factors to be considered in deciding to order disclosure of the identities of anonymous Internet users:

  • Whether the anonymous user could have a reasonable expectation of anonymity in the circumstances
  • Whether the plaintiff has established a prima facie case against the anonymous party and is acting in good faith
  • Whether the plaintiff has taken reasonable steps to identify the anonymous party, but has been unsuccessful in doing so
  • Whether the public interest favouring disclosure outweighs the interests of freedom of expression and the right to privacy

In the Morris case, the court found that the plaintiff had not made out a sufficient case to justify the reasonable expectation of anonymity of the defendants; in fact, the plaintiff had not pleaded the specific words that comprised the alleged defamation, nor had she adduced any evidence whatsoever in support of her contentions that the statements in question harmed her reputation, caused her emotional distress of caused her to fear for her safety. The court also found that she had not taken reasonable steps to identity the anonymous defendants.

The case is a further demonstration that courts will be reluctant to unmask anonymous posters in defamation cases, based on assumed defamation, or a simple identification of allegedly defamatory statements. Plaintiffs must provide sufficient particulars to allow the court, in determining whether a prima facie case of defamation exists, to conduct a contextual analysis of each defamatory statement. The court also hinted that the bar for revealing the identities of anonymous commentators may be even higher in political matters, such as a “hard-fought” mayoral campaign.

Apparently, Ms. Morris has indicated that she intends to appeal Justice Brown’s ruling.

UPDATE:  It was reported on October 18, 2011 that Phyllis Morris has discontinued her action against all defendants, including the anonymous defendants, putting an end to the case.

How much is that Tweet in the window?

A Tweet may represent a mere 140-characters; however a recent investigation in the UK is exposing that those 140-characters can represent big money. In July, 2010, the Office of Fair Trading (UK) (OFT) launched an investigation on its own initiative into Handpicked Media (Handpicked), a self-described “Collective of independent sites and blogs with a focus on publishers”, due to suspicion that it was engaging and paying individuals for online promotional activity in circumstances where such remuneration was not clearly disclosed to consumers. It was the OFT’s view that Handpicked was operating in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPUTR) which prohibits the use of editorial content in the media, including Twitter, blogs and other social networking websites, for the purpose of product promotion where the promoter has been paid, unless such payment is clearly identifiable to the consumer.

Sections 5(1) and 5(2)(a) of the CPUTR state that “A commercial practice is a misleading action if it … causes or is likely to cause the average consumer to take a transactional decision he would have not taken otherwise” and such action is prohibited. The regulations also include prohibitions against “misleading omissions” which may be triggered where a Tweeter, Blogger or the like fails to indicate that he or she has been paid to publish their opinion of a particular product. The OFT investigation into Handpicked’s practices was closed on December 13, 2010.  Handpicked was forced to sign undertakings prohibiting it from engaging in any future promotion without clearly identifying that the promotion has been paid for or otherwise remunerated.

The UK is not alone in its crusade against misleading marketing practices through digital media. In Canada, the Competition Act (the Act) contains provisions addressing false or misleading material representations and deceptive marketing practices in promoting the supply or use of a product. Representations are considered to be material where the statement would affect a consumer’s decision to buy or use a particular product or service. The Act provides for both criminal and civil adjudication of misleading representations, with penalties including fines and imprisonment. Online marketing, including the use of Twitter, is captured under the Act.

In the United States, the Federal Trade Commission (FTC) has also recently revised its Endorsement Guides (the Guides) so as to reflect modern truth-in-advertising principles. The Guides, which were originally written in 1980, were revised to address new social media, although the FTC states that the legal principles have not changed.  The general principle is that if there is a connection between the endorser of a product and its manufacturer/marketer that would affect how consumers evaluate the endorsement, such connection should be disclosed in the statement. 

Companies should exercise caution to ensure that they do not accidentally violate any of these laws or regulations.

How "the public" can equal one person

In early September 2010, the Federal Court of Appeal concurred with an earlier decision of the Canadian Copyright Board "(Board)" holding that the download by a single user of a music file from an online music service is a communication of the musical work to the public by telecommunication.

In Bell Canada, et. al. v. SOCAN the Court of Appeal was asked to determine whether the transmission of a musical work to an individual by an on-line music service should be considered to be a communication of that work to the public by telecommunications within the meaning of paragraph 3(1)(f) of the Copyright Act. The question of whether the download was in and of itself a communication was not at issue, as it had been previously held by the Supreme Court of Canada in SOCAN v. Canadian Association of Internet Providers that a music file is communicated when it is recreated on the recipient computer. Such a communication was also held to qualify as a communication by telecommunication.

The Bell Canada case stemmed from the Board’s decisions relating to SOCAN’s application for a tariff with respect to the performance and communication of musical works on or by means of the Internet. After reviewing the prior jurisprudence and drawing analogies to the concept of selling goods to the public, the Court of Appeal found that there are two factors which are to be considered in determining whether a communication is one that is made to the public: First, the communicator’s intention must be that of communicating the work to the public at large, and second, at least one member of the public must receive the communication. If these two conditions are met, then there has been a communication to the public.

The Court of Appeal noted that the number of actual recipients of a communication is irrelevant so long as there is at least one such recipient. It was further noted that multiple transmissions of the same work could constitute evidence of an intention to communicate to the public, and a transmission, coupled with such an intention, would constitute a communication to the public. Once it has been found that there is an intention to communicate the work to the public, every communication of such work, beginning with the first communication, is a communication to the public, even if ultimately there is only one recipient.

On an interesting side note, the Court of Appeal explicitly stated in this decision that it would afford the Board great deference in its decisions: “The Board is a specialist tribunal which deals exclusively with copyright matters…[and] is therefore entitled to deference with respect to its interpretation of … [the Copyright] Act.” This deference applies to both matters of law and findings of fact.

Theft, Pie and the Public Domain

The power of social media was on full display this past week, as the unauthorized publication of a recipe for apple pie drew a quick and virulent online response. The story begins on November 3, when blogger Monica Gaudio announced on her blog that Cooks Source, a small New England magazine, had republished an article on the history of apple pie (she had previously written it for another publication) without permission. While Gaudio was credited for her work, she never consented to, nor was she compensated for, the use of the article. After emailing the magazine’s editor, Gaudio received a response informing her that the internet is “public domain”. The email, which Gaudio published on her blog, sparked a fierce response from an online community that quickly coalesced on Facebook to disparage the magazine’s conduct.

Contrary to what Gaudio was told, works are not considered to be in the public domain simply because they are published on the internet. Rather, works are considered to be in the public domain if they are not protected by intellectual property rights, if such rights have expired or if the rights have been forfeited. The fact that a work is published on the internet rather than on paper does not change the definition of the public domain and, while there are public domain works on the internet, such works are not in the public domain simply because of their publication on the Internet.

Under the Berne Convention for the Protection of Literary and Artistic Works and the Copyright Act (Canada), copyright protection is automatically provided to a work as soon as the original work is written down, recorded or entered as a computer file. Under the “fair dealing” provisions of the Copyright Act, individuals may use original works without infringing upon the works’ copyright only if used for specific purposes: criticism and review, news reporting, and private study or research. The Copyright Act also exempts certain categories of users, such as non-profit educational institutions. Republishing a work that first appeared on the internet does not provide for a fair dealing exception simply because the work first appeared online.

Beyond the public domain issues, the Cooks Source case also provides a good example of the power and influence that social media can have on a business. As discussed above, online reaction to allegations of copyright infringement was swift, with Cooks Source’s Facebook page quickly overrun with derogatory posts. According to a statement by Cooks Source, its Facebook page was hacked and fake Facebook and Twitter accounts were created to spread word of the uproar. Facebook users also began publishing links to other articles that Cooks Source had allegedly copied, and a list of the magazine’s advertisers was soon posted online (with contact information), prompting Cooks Source to issue a plea that users stop bombarding their advertisers with “distasteful messages”.

In this age of social media, therefore, businesses must be more careful than ever to ensure the propriety of their actions to avoid the type of response seen in this case. While Cooks Source may be a small regional magazine, the response to its actions came from across the online universe and the story was widely reported in the mainstream press. Thus, while the internet and social media can be invaluable in building a business and a brand, this case provides an example of how powerful social media can be when going the other direction.

CSI proposes tariffs for non-commercial radio stations (2011), online music (2011), and satellite radio (2011-2013)

On July 17, 2010, CSI, the company formed as a royalty-collection vehicle by the Canadian Musical Reproduction Rights Agency (CMRRA)  and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) , proposed three new tariffs which would apply to the reproduction of music (which can include broadcasting, streaming and downloading) by non-commercial radio stations, online music providers, and satellite radio providers.

In the proposed CMRRA-SODRAC Inc. Non-Commercial Radio Tariff, 2011, CSI is requesting that the Copyright Board of Canada  certify a tariff of 0.63% of the annual gross operating costs of radio stations that are either owned or operated by not-for-profit corporations, excluding the Canadian Broadcasting Corporation.  In the case of such a non-commercial radio station that is a “low use station” (generally, a station that plays music for less than 20% of its broadcast time), the tariff would be lower, at 0.23% of its annual gross operating costs.  In exchange for the payment of the tariff, the non-commercial radio stations would receive a license to broadcast music contained in CSI’s repertoire as often as desired, including the streaming of the broadcast over the Internet.

The CMRRA’s two previous applications for a tariff on the reproduction of music by non-commercial radio are CMRRA Non-Commercial Radio Tariff, 2008  and CMRRA Non-Commercial Radio Tariff, 2009 and 2010,  but no decisions on those applications have yet been made.  In the proposed 2008 and 2009-10 tariffs, the tariff percentage was different for English and French stations, and in addition, a station’s gross operating costs were divided into three tiers, with different tariff rates applicable to each tier. Below is a table comparing the rates requested by the CMRRA in the 2008 and 2009-10 tariffs with the new CSI 2011 tariff:

Levels of Music Use

Tiers of gross operating costs (applicable in 2008-2010 only)

2008 and 2009-10 Proposed Tariffs

2011 Proposed Tariff

Low-use

up to $625,000

0.06% (English)

0.03% (French)

0.23% (both languages)

from $625,0000 to $1,250,000

0.12% (English)

0.05% (French)

above $1,250,000

0.18% (English)

0.08% (French)

Non Low-use

up to $625,000

0.14% (English)

0.06% (French)

0.63% (both languages)

from $625,0000 to $1,250,000

0.28% (English)

0.12% (French)

above $1,250,000

0.42% (English)

0.18% (French)

An important difference between the 2008 and 2009-10 tariffs and the 2011 tariff which may partly explain why CSI is seeking substantial increases in the tariff rates is that the proposed 2011 tariff would cover the simulcast (streaming) of the broadcast online, whereas the 2008 and 2009-10 tariffs excluded all kinds of transmissions over the Internet.

In the proposed CSI Online Music Services Tariff, 2011, CSI is requesting that the Copyright Board certify new tariffs for 2011 for webcasting, streaming and downloading of music from the Internet (this does not apply to streaming of music in radio broadcasts that are the subject of other CSI tariffs, such as the non-commercial radio tariff described above).  CSI has requested:

  1. for webcasting where consumers cannot influence the selection of music which is transmitted, a tariff equal to 3.5% of monthly gross revenue, in proportion to the amount of CSI-controlled music played in the month, with a minimum of 0.05¢ for each play of a CSI-controlled musical work; 
     
  2. for webcasting where consumers are able to influence the selection of music which is transmitted, a tariff equal to 4.5% of monthly gross revenue, in proportion to the amount of CSI-controlled music played in the month, with a minimum of 0.065¢ for each play of a CSI-controlled musical work;
     
  3. for on-demand streaming of music files that does not include the ability to download, a tariff equal to the greater of either (1) 6.8% of monthly gross revenue (excluding any amounts paid for downloads), in proportion to the amount of CSI-controlled music played in the month, and (2) the same percentage payable to the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the same service pursuant to the SOCAN Tariff 22.A (2011).  This tariff would also be subject to a minimum equal to the greater of (1) 43¢ per subscriber, (2) 0.15¢ for each play of CSI-controlled music, and (3) the minimum amount payable to SOCAN for the service pursuant to the SOCAN Tariff 22.A (2011);
     
  4. for limited downloads (downloads where the file becomes unusable upon the happening of a certain event), a tariff equal to the greater of either (1) 9.9% of monthly gross revenue (excluding any amounts paid for permanent downloads), in proportion to the number of limited downloads of CSI-controlled music in the month, and (2) twice the percentage payable to the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the same service pursuant to the SOCAN Tariff 22.A (2011).  This tariff would also be subject to a minimum equal to the greater of (1) 96¢ per subscriber if the limited download can be transferred to a device other than the one used to receive it (portable downloads), and 63¢ per subscriber if they are not portable, (2) 0.20¢ for each play of CSI-controlled music, and (3) twice the minimum amount payable to SOCAN for the service pursuant to the SOCAN Tariff 22.A (2011); and
     
  5. for permanent downloads, a tariff equal to the greater of either (1) 9.9% of monthly gross revenue, in proportion to the number of permanent downloads of CSI-controlled music in the month, and (2) twice the percentage payable to the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the same service pursuant to the SOCAN Tariff 22.A (2011).  This tariff would also be subject to a minimum equal to the greater of (1) 4.4¢ per permanent download in a bundle that contains 15 or more files and 6.6¢ per permanent download in all other cases, and (2) twice the minimum amount payable to SOCAN for the service pursuant to the SOCAN Tariff 22.A (2011).

CSI’s proposed 2011 tariff differs from its proposed 2010 tariff by introducing the concepts of interactive and non-interactive webcasting, which are distinguished from on-demand streaming. Further, the minimums for on-demand streaming and limited downloads in 2010 only contemplated an amount per subscriber, not per play.  Otherwise, the rates in the 2011 application remain unchanged from the 2010 levels.  The Copyright Board’s most recent certification of a CSI tariff for online music was its March 2007 decision regarding the tariff for the years 2005-2007.

Finally, in Satellite Radio Services Tariff (CMRRA-SODRAC Inc. 2011, 2012, 2013), CSI is requesting that the Copyright Board certify a tariff for 2011-2013 for the provision of music to subscribers through a satellite radio service.  The proposed tariff would be one of the following percentages applied to the satellite radio service’s monthly revenues from subscription fees, advertising and promotional activities, sales of goods and services and commissions on third-party transactions:

  1. for all satellite radio broadcasts to receivers that are not enabled for either extended buffer or replay or for storing individual songs for playback later, 1% or a minimum of 10¢ per subscriber who owns such a receiver;
     
  2. where the broadcast is sent to receivers enabled for extended buffer or replay, a percentage equal to 1.87 times the proportion of subscribers who own receivers enabled for extended buffer or replay, but not able to store individual songs or blocks of programming for playback at another time, to the total number of subscribers (subject to a minimum of 19¢ per subscriber who owns such a receiver); 
     
  3. where the broadcast is sent to receivers enabled to store individual songs or blocks of programming for playback at another time, a percentage equal to 2.90 times the proportion of subscribers who own receivers enabled to store individual songs or blocks of programming for playback at another time to the total number of subscribers (subject to a minimum of 29¢ per subscriber who owns such a receiver).

CSI’s requested tariff for satellite radio services for 2011-2013 matches the amounts in the Satellite Radio Services Tariff (SOCAN: 2005-2009; NRCC: 2007-2010; CSI: 2006-2009)  which was certified by the Copyright Board in a decision  issued in April 2009.

Enforceability of browsewrap agreements called into question

The United States District Court (Eastern District of New York) released its decision in Hines v. Overstock.com today, which held that a browsewrap agreement that was only available by scrolling to the bottom of the website is not enforceable.

The terms and conditions of Overstock.com, governing all online customer purchases, are contained in a link at the bottom Overstock’s homepage. The notice that “Entering this Site will constitute your acceptance of these Terms and Conditions” was only available within the terms and conditions.

Ms. Hines was not prompted to or advised of the terms and conditions and could not see the link to them without scrolling down to the bottom of the screen, an action that was not necessary to complete her purchase. As a result, the court held that the terms and conditions of Overtock.com’s site were not enforceable.