Canadian Technology & IP Law : Canadian Technology Lawyers & Attorneys : Stikeman Elliott Law Firm : IP Law in Toronto, Montreal, Calgary, Ottawa & Vancouver

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.

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.

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.

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.

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.

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.

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:

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.