Federal Court Weighs In On Copyright and Trademarks Rights in Metatags

In Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca), the Federal Court had occasion to consider whether using metatags could constitute copyright infringement, trademark infringement, passing off or depreciation of goodwill. Justice Manson dismissed all of these claims. This decision is of particular interest since the reasons (partly) extend beyond the facts of the case and make a broader legal statement on the status of metatags as IP in Canada.

A metatag is a piece of information contained in a webpage’s code. Its purpose is to describe the contents of the page to help search engines place the page in search results based on the search terms used. In this case, the Defendant used metatags that were either identical or very similar to the Plaintiff’s registered trademarks. It also evidently copied these metatags from the source code on the Plaintiff’s website. 

On the copyright claim, the Court had to determine whether the Defendant’s metatags met the originality requirement and, if so, whether a substantial part of the Plaintiff’s ‘work’ was copied. Justice Manson surveyed some cases that have addressed metatags. He cited Justice Hughes in Netbored Inc v Avery Holdings Inc in which, without speaking determinatively on the issue, Justice Hughes casted doubt onto whether metatags were protected by copyright.       

    

Justice Manson did not pronounce definitively on whether metatags were susceptible to being protected by copyright in general. Rather, he found that there was no copyright infringement because of a lack of originality on the facts of the case. The metatags used by the Plaintiff were largely copied from a Google keyword list. There was therefore insufficient skill and judgement exercised for the Plaintiff’s metatags to merit copyright protection. 

Even if the Plaintiff’s metatags did benefit from copyright protection, the Court found that the Defendant did not copy a substantial part of the overall work. The record showed that the Defendant copied the metatags on 48 individual pages of the 180,000 pages that make up the Plaintiff’s website. While recognizing that substantiality in copyright law is a qualitative and not quantitative measure, the Court refused to find infringement based on the small number of words copied even though they were identical to the metatags found on the Plaintiff’s site. 

On the passing-off and trademark infringement claims, the Court found that there was no likelihood of confusion. Even though using the metatags may have caused consumers to be presented with the option of navigating to the Defendant’s website, the website itself did not masquerade as the Plaintiff’s. This makes it unlikely that a user would be confused into thinking the Defendant was actually the Plaintiff. This reasoning applies more broadly to any instance in which a defendant, though using the plaintiff’s trademarks as metatags, does not represent itself as the plaintiff on its actual website. 

The Court refused to import the so called “initial interest confusion” doctrine applied by some United States courts. Under this theory, an infringement may be found when a potential customer’s initial interest is drawn away from the plaintiff’s offering and towards those of the defendant through use of the plaintiff’s trademark. The Court noted that even if it were disposed to consider initial interest confusion, the doctrine did not apply in the present case. This is because there must ultimately still be confusion as to the source of the goods. Once a person navigates to the Defendant’s website, it is immediately apparent that the site is not affiliated with the Plaintiff’s business. 

The claim for depreciation of goodwill under Section 22 of the Trade-marks Act was also rejected. Citing Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée., the Court found that the Plaintiff’s trademarks were not being used as registered and that the claim under Section 22 must fail on that basis.

Whether metatags should be copyrightable is an open question. Some may say that they should be in principle, so long as they are original either in content or in their organization. For my part, I am doubtful as to whether they should qualify as a work. While it is settled law that a work need not be in a human readable format to attract copyright protection, the metatags are never really viewed in any format. They do not appear as an image or colour or effect on a website; they exist solely as a tool to help search engines index webpages.

Consider a fishing analogy: the website (the actual work) is the fish. The search engine is like a sonar fish finder and the metatags are sonar reflections that give away the positions of the fish. The sonar reflections are not the fish themselves. Likewise, the website is the protected work, not the metatags which simply help one find the website. 

While this is an interesting point of debate, I think the implications on trademark law are far more important. This decision demonstrates how the current trademark legal regime is ill-equipped to address an unfair business practice relating to the use of trademarks. 

I am not certain that it should. At the heart of trademark law is the effort to eliminate consumer confusion and allow consumers to be reasonably certain as to the origin of the goods and services they purchase. As the Court found here, that goal is not served by rending use of a trademark as a metatag infringement. While some may consider it a dubious business practice, the absence of confusion takes this scenario out of the realm of trademark law and into the realm of unfair competition. As the Federal Government has learned, it must be careful in how it attempts to address those issues under the Trade-marks Act lest the provision be struck down on constitutional grounds like Section 7(e).

Arguably the Court’s decision on the Section 22 claim was fact specific and leaves the door open to claims of depreciation when the trademark is used by the Defendant exactly as registered. In the absence of a claim in passing-off or trademark infringement, trademark owners may yet be able to avail themselves of that remedy when their competitors use their trademarks as metatags.

One Broadcast = One Infringement: Leuthold v. CBC et. al. (FCA)

On June 27, 2014, the Federal Court of Appeal affirmed a decision of the Federal Court denying the Plaintiff's appeal on the quantum of damages for the CBCs admitted infringement of the copyright in five of the Plaintiff’s works.             
 

Catherine Leuthold, a professional photo-journalist, sued the CBC for multiple acts of copyright infringement stemming from its use of her photographs of the September 11, 2001 terrorist attacks in a documentary. In 2002, the CBC wanted to use five of the Plaintiff’s photos for a documentary to be aired on its network. The parties entered into negotiations. 

There was some ambiguity as to whether the license negotiated by the parties allowed the CBC to use the images on its “Newsworld” specialty channel in addition to the CBC network. The CBC and Leuthold re-entered negotiations in which the CBC was granted the right to broadcast the images for “…one broadcast on CBC’s Network and Regional TV stations.” However, the CBC broadcasted the documentary containing the images on September 10 (on CBC and Newsworld) and September 11 (on Newsworld alone), 2002. Despite the limited nature of the license, and a CBC official’s direction to remove the images form the documentary, a version of the documentary including the Plaintiff’s images was broadcast again in 2003 and 2004. 

At the Federal Court, CBC admitted to infringing Ms. Leuthold’s copyright. The difference of opinion between the parties turned on the number of infringements committed and the quantum of damages due.

The Plaintiff asked for $22,000,000 in damages. She argued that the licenses only permitted CBC to broadcast the images once, on only one network, and in only one time-zone. The Federal Court disagreed and awarded her $22,000. Scott J. found not only that the licenses agreements implied the right to broadcast the images in multiple time-zones, but also that the language of the agreements included the right to broadcast on both CBC and Newsworld. This determination was based on the following: 

1) CBC’s practice was to always include Newsworld when it was clearing rights;

2) It was not commercially sensible to conclude that CBC would have agreed to terms which ran counter to its normal usage; and

3) The contra proferentum rule does not apply because any ambiguity can be resolved with reference to industry practice.

The Federal Court of Appeal determined that the standard of review of the Trial Judge’s decision should be the more deferential “palpable and overriding error” standard. As to whether the Newsworld broadcasts were contemplated by the license, the Court found that the Trial Judge “reached a conclusion that was reasonably open to him”. 

With regards to the number of infringing broadcasts that took place, the Court did not disturb Scott J.’s finding that there were only six such broadcasts. The Plaintiff argued that each transmission to a Broadcast Distribution Undertaking (BDU) by the CBC amounted to a discreet act of infringement. This argument was based on s.2.4(1)(c)(i) if the Copyright Act:

For the purposes of communication to the public by telecommunication,

(c) where a person, as part of:

(i) a network, within the meaning of the Broadcasting Act, whose operations result in the communication of works or other subject-matter to the public

…

transmits by telecommunication a work or other subject-matter that is communicated to the public by another person who is not a retransmitter of a signal within the meaning of subsection 31(1), the transmission and communication of that work or other subject-matter by those persons constitute a single communication to the public for which those persons are jointly and severally liable.

The Court, rejecting the Plaintiff's argument, read this to mean that when a work is transmitted by the network to the public by way of an intermediary (the BDU), a “single network-wide infringement” for which both the broadcast and the BDU are jointly and severally liable. In other words, one communication to the public equals one instance of infringement, regardless of whether the transmission is direct or via an intermediary.

Thoughts

The Court’s decision with reference to the number of infringements that took place seems to be sound. s.2.4(1)(c) states unambiguously that when a broadcaster transmits a work to a BDU which then communicates the work to the public, a single communication of the work has occurred. The Plaintiff’s argument is clearly unsupported by this provision.

The finding that the license agreements should be read to include use on the Newsworld Network is another matter. I will deal with each of the three grounds listed above in turn:

1) The relevant part of the license agreement granted to CBC the “right… to broadcast the [images] on Canadian television for one broadcast on CBC’s Network & Regional TV stations (emphasis added). 

The evidence at trial showed that Mr. Leuthold was unaware of Newsworld at the time the agreements were negotiated. The fact that it was CBC’s practice to clear rights for Newsworld and the CBC Network simultaneously is irrelevant. To illustrate this, take the following example:

 Jimmy contracts with Stevie Ray to lend the latter his cream colored 1967 Fender Stratocaster for a show. The terms of the contract read “Jimmy grants Stevie Ray the right to use his cream colored 1967 Fender Stratocaster to play one show on one stage”. Stevie Ray meets his friend Slash from the band opening for him. Slash asks him if he can use Jimmy’s guitar for his set; Stevie Ray agrees.

When Jimmy sues Stevie Ray for breach of contract, Stevie Ray argues that it is and has always been his practice to share guitars with his fellow musicians. He proffers compelling evidence to that effect. If the evidence shows that Jimmy was not only unaware of this practice of Stevie Ray’s, but also that he did not even know Slash existed, can it really be said that the contract has not been breached? 

A fundamental principle of contract law is that there must be a “meeting of the minds” between the parties to the contract. It is apparent from this example that Jimmy and Stevie Ray had entirely different things in mind regarding the use of the guitar. Since that is the case, the objective intent of the parties must be construed through the words of the contract (with the help of legal interpretive principles to resolve ambiguities). Since the contract makes no mention of allowing others besides Stevie Ray to use the guitar, that permission cannot be implied simply because “that’s just the kind of guy that Stevie Ray is”. 

As the Court noted, the Plaintiff holds an exclusive right. A license grants an individual the right to do a select category of things that, but for the agreement, would constitute infringement. Ms. Leuthold’s failure to exclude Newsworld from the terms of the license does not mean Newsworld can therefore use the images simply because CBC is in the habit of clearing rights for both networks at the same time. By the terms of this license, they failed to do so here. 

Finally on this point, I would argue that the Trial Judge’s choice to favour CBC’s common business practices over the evidence that the Plaintiff did not know Newsworld existed at the time the agreements were being negotiated is an error of law. An error of law would have been reviewed on the non-deferential correctness standard.  This could have entirely changed the outcome given that the Court it did not endorse the Trial Judge’s decision as correct, only as reasonable. 

The Court wrote that since Ms. Leuthold had the wherewithal to sue CBC for the Newsworld infringement, she herself considers them to be a common entity: “…the fact that Ms. Leuthold seeks damages form the CBC for unauthorized broadcasts of the image by Newsworld suggests that she does not view Newsworld as a separate legal entity”. 

With deference to the Court, this is a misleading statement. It is true that at the time she brought the Action before the Federal Court, Ms. Leuthold had become aware of the connection between CBC and Newsworld. This does not lead to the conclusion, however, that she knew of that connection at the relevant time (the negotiation of the license agreements in 2002). 

2) This reason rests heavily on 1) above. While considering the commercial viability of a transaction to determine the intent of the parties can often be a valuable tool, it is the incorrect approach here for the reasons set out above. Ms. Leuthold cannot be expected to have been aware of CBC’s practices. Since she didn’t know of Newsworld at the time, it would be impossible for her to assess the “commercial reasonableness” of CBC’s licensing practices. 

3) I agree with the Court’s finding that the contra proferentum maxim should not apply in this case based on Ms. Leuthold’s apparent bargaining power. However, to say that contra proferentum should be trumped by industry practices (as a matter of law) I think misses the point of that interpretive tool. 

The contra proferentum maxim of interpretation is meant to protect the weaker party to a contract when there is a serious imbalance in bargaining power between the parties. The evidence showed that this was not in fact a contract of adhesion and that the Plaintiff was able to negotiate to some degree with the CBC. However, this rule exists to prevent the injustice that may result from “industry practices”, such as writing ambiguous and confusing terms in a contract to the detriment of the adhering (weaker) party. To say that industry practice trumps this principle in all cases renders it nugatory.

Rightscorp Heads North: Will Canadian ISP Subscribers Start Receiving Settlement Demands?

An American rights management company called Rightscorp has decided to break into the Canadian market. Rightscorp has adopted a business model whereby it sends settlement demand letters for relatively small sums to people it believes have infringed the copyright in the works of its clients. It does this through software that identifies the internet protocol (IP) addresses of users that download a (or several) specific media file(s). The software then sends an automated letter to the ISP to which that IP address is associated once the same IP address "repeatedly infringes".

Image by Renjith Krishnan

From a review of its corporate site, Rightscorp appears to operate more or less exclusively in the music industry. One finds it hard to believe, however, that upon demonstration of a viable business model, other rights management companies dealing with film and software will not dive into the fray.

In the US, Rightscorp relies on §512of the Digital Millennium Copyright Act (DMCA) which sets out conditions that an ISP must meet to be eligible for the “safe harbor” exemptions from liability afforded by that Act. 512(i)(1)(A) says that the ISP shall only qualify if it:

“…has adopted and reasonably implemented, and informs subscribers and account holders of the service provider’s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers; …”

By informing the ISP of a subscriber’s repeated infringement, Rightscorp assures that the ISP will pass on the settlement demand backed by the threat of termination of the subscriber’s internet service. If the ISP fails to do so, it risks losing its safe harbor status. 

But Canada’s Copyright Act does not contain an analogous provision to 512(i)(1)(A) of the DMCA. How then does Rightscorp expect its business model to work in Canada? One potential incentive to move north could be the Federal Court's recent decision in Voltage Pictures LLC. v. Does, 2014 FC 161 in which it granted a Norwich order compelling the ISP Teksavvy to turn over the identities of over 2000 subscribers alleged to have downloaded the film "Hurt Locker".

In Voltage, Voltage Pictures relied on Rule 238 of the Federal Court Rules which reads as follows:

Examination of non-parties with leave

    238. (1) A party to an action may bring a motion for leave to examine for discovery any person not a party to the action, other than an expert witness for a party, who might have information on an issue in the action.

         ...

Where Court may grant leave

(3) The Court may, on a motion under subsection (1), grant leave to examine a person and determine the time and manner of conducting the examination, if it is satisfied that:

(a) the person may have information on an issue in the action;

(b) the party has been unable to obtain the information informally from the person or from another source by any other reasonable means;

(c) it would be unfair not to allow the party an opportunity to question the person before trial; and

(d) the questioning will not cause undue delay, inconvenience or expense to the person or to the other parties.

In BMG Canada Inc. v. Doe, 2005 FCA 193, the Federal Court of Appeal set out a two prong test to determine if a motion made under Rule 238 should be granted in copyright infringement cases like Voltage where the interest of the copyright holder must be balanced against the privacy interests of individuals: 

1)  The moving party must actually intend to bring an action for infringement based on the information they obtain; and 

2)    There is no other improper purpose for seeking the identity of those persons.

The goal of this test is to assure that the copyright holder has a bona fide claim of infringement before personal information is released.

The Intervener, the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC) argued that the subscribers' personal information was protected by the Personal Information Protection and Electronic Documents Act (PIPEDA) and Sections 8 and 9 of the Canadian Charter of Rights and Freedoms.

PIPEDA sets out the instances in which an organization may produce personal information of individuals in its possession without the consent of those individuals. S.7(3)(c) says that an organization "may disclose personal information without the knowledge or consent of the individual only if the disclosure is...(c) required to comply with a subpoena or warrant issued or an order mad by a court...". S.7(3)(i) says that the organization may release the information when “required by law”. Voltage Pictures was therefore required to obtain a court order.

Prothonotary Kevin Aalto ruled in favour of Voltage Pictures finding from the case law that while the privacy concerns of individuals must be considered (not only in determining whether the order should be granted, but also in carving out the scope of the order), privacy rights cannot be asserted as a standalone defense against wrongdoing. The Order of the Court in that case was very specific and included court oversight to assure that the wording of the letters sent to Teksavvy’s subscribers were proper. The Order specifically allowed for the subscribers to receive the full reasons for the judgement and required that the letter make clear that the court has neither ruled on infringement nor on the subscriber’s liability therefor.

It is unclear how Rightscorp would fair if it attempted to use the same strategy. Remember that the test in BMG requires the moving party to convince the court that it actually intends to bring an action. Rightscorp’s entire business model has (to date) been predicated on issuing demand letters rather than proceeding with actual litigation. This would seem to imply that Rightscorp would not meet the bona fide standard required by BMG for a copyright holder to obtain subscriber information from an ISP.

Prothonotary Aalto did allude, however, that it may be enough to show that the moving party plans on “enforcing” its copyright. Read broadly, this could include the issuing of demand letters (these being a standard “self-help” remedy).

Rightscorp may also be seeking to rely on the Copyright Act’s yet un-enacted “notice and notice” provisions. Under this regime, a copyright holder believing its rights to be infringed may send a letter to that effect to an ISP. The ISP will in turn forward the letter to its subscriber (without revealing the subscriber’s identity to the copyright holder). 

Since this new regime will come into force by regulations that have not yet been written, it is unclear as to what the content of the notice letters will be. In an article on TorrentFreak, Professor Michael Geist noted that the notice and notice provisions of the Act say nothing about whether settlement information may be included in the notices. It is also unclear whether the content of the notices will be strictly governed by the regulations or whether additional content (i.e. settlement information) will be permitted to be included. 

One thing is certain, IP lawyers, rights holders, public interest groups and academics will all have an eye closely trained on Rightscorp’s Canadian expansion.

Chanel gets TRO against 700 sites alleged to be selling counterfeited products infringing Chanel's Marks

A Federal Court judge sitting in the State of Nevada sided with Chanel when it asked to have approximately 700 domain names seized.  The sites allegedly contained counterfeit luxury goods including those of the plaintiff Chanel.  

Not only did the judge order the seizure of these domains, ha also ordered major social media sites like Google+ and Facebook and Twitter as well as search engines such as Google, Bing and Yahoo to de-index the targeted sites from their databases.

It seems that most of the investigatory work was done in house, though according to Ars-Technica, Brandon Tanori, a Nevada based private investigator, was called in to investigate a few of the sites in question.

Chanel is the owner of some 22 registered trademarks covierng a number of incarnations of is logo and company name. examples of some of the site names include: cheapchanelreplica.com, replicachanelhandbag.net, and replicachanelshoes.com.

While the case has not yet gone to trial, Judge Kent Dawson granted the TRO (Temporary restraining order) requested by Chanel.  The TRO orders the domain name registrars currently in possession of the domain names in question to transfer those domains to an American registrar, GoDaddy.com who has been tasked with holding the domain names in trust for the court until conclusion of the pending action.

As mentioned above, the TRO also ordered search engines and social media sites to de-index the sites in question from their data-bases. The order makes no mention of the plaintiffs obligation to re-reimburse these 3rd party sites for the operational costs associated with the de-indexation.

While some have criticized the decision and evidence considered as being “one sided”, it should be noted that this judgement was rendered ex parte (meaning without all the parties present).  Normally, the rules of fundamental justice require that a party have the opportunity to appear and make it’s arguments known (the principle of Audi Alterem Partem).  The complaining party must at least serve notice of the action on the defendants.  

Given the nature of the case and the fact that the defendants are located around the world and that the information they provided to their respective registries may be false, the judge allowed for service by posting of a website: http://servingnotice.com/sdv/index.html.  Here, defendants can access PDF versions of all the court proceedings taken up to this point. This is a rather interesting new take on service by publication which many jurisdictions often use as an alternative when “personal” or “substitute” service are impossible. Service by publication usually requires leave of the court.

As pointed out by Ars Technica’s Nate Anderson (link above), decisions like this one may challenge the significance of the hotly debated Stop Online Piracy Act (SOPA). After all, the scope of the injunction in this case is incredibly broad.  

The judge is essentially commanding a host of large third parties to engage in a fair bit of work to enforce the court’s order. While the plaintiff was required to post a $20,000 bond, this sum is not slated to cover third party costs but represent a security on the damages that may be awarded the defendant should the court find them successful in arguing a wrongful injunction or restraint. If decisions like this one are to become the norm, one questions the need for strong legislation like SOPA.  

With respect, I tend to disagree in part with this view in so far as SOPA contains a number of other powerful measures such as restraining third party payment providers like PayPal or Moneybookers, and online advertising firms from supporting a given site or sites.  While the above mentioned point is well taken, it seems a little bit early to discount the eventual impact that SOPA and it’s sister the Protect IP Act will have on the legal landscape of the US, and by extentiton, the Internet as a whole.