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.

SCC Copyright Pentalogy 4 of 5: Alberta (Education) v. Access Copyright

In December 2011, The Supreme Court of Canada heard five major copyright cases. All five cases are appeals from decisions of the Canadian Copyright Board. The Court released its decisions in these five cases on July 12^th, 2012. This series will analyse each of the five decisions in turn. 

           In Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), the Supreme Court of Canada decided 5-4 that photocopies of educational materials made at the initiative of teachers for students constitute a fair dealing and therefore not compensable under Access Copyright’s proposed tariff. 

Image by Renjith Krishnan

            In 2004, Access Copyright- the copyright collective that represents authors and publishers of literary and artistic works- proposed a tariff covering the copying of published texts in elementary and high schools across Canada (except for Quebec). The photocopies made by the schools were classified into five categories. There was no dispute that the first three categories qualified as fair dealing. Category 5 copies were not even discussed in the decision. Category 4, however, proved to be a point of contention. This category dealt with those photocopies made by teachers on their own initiative for students.

           The Copyright Board decided that though the copies made by teachers for their students fall under the allowable purposes of “research” or “private study”, they did not constitute fair dealing under the CCH fairness analysis. On judicial review, while the Federal Court of Appeal ordered the Copyright Board to reconsider another ground of opposition, they found the Board’s decision on fair dealing to be reasonable. 

            As I wrote in my analysis of the companion decision SOCAN v. Bell, fair dealing is a doctrine of copyright law that protects certain uses (or dealings) of copyright protected works that, but for the fair dealing doctrine, would constitute copyright infringement. Fair dealing is considered to be a limitation on the scope of the copyright in favour of the public interest. 

The Majority Opinion

Writing for the majority, Justice Abella concluded that the Copyright Board erred in its assessment of the fairness factors laid out in CCH. Strangely, the majority did not specifically address the “character of the dealing” although it is tacitly addressed in the assessment of the “amount of the dealing”. The “nature of the work” was also not assessed as the majority likely didn’t find it relevant in the case at bar.

•    Purpose of the dealing

The Copyright Board analysed the purpose of the dealing from the perspective of the copier (the teacher) rather than that of the user (the student). The majority wrote that while the perspective of the copier may be a valid consideration to keep in mind during the fairness analysis, the predominant point of reference should be that of the student. From that perspective, the purpose (or motive) of the dealing should be considered to be fair. 

Access Copyright also advanced an argument that the purpose of “private study” necessarily precludes the classroom setting. Justice Abella found this argument unconvincing. While university level students are expected to conduct research on their own, elementary and high school students are not. At these levels, part of a teacher’s job is to guide the student in their research. In Justice Abella’s words: “By Focusing on the geography of the classroom instruction rather than the concept of studying, The Board again artificially separated the teachers’ instruction from the students’ studying” (Emphasis in the original).

•    Amount of the dealing

The Board assessed the amount of the dealing based on the aggregate number of copies made by the teachers. As the Court opined in SOCAN v. Bell, this is the wrong approach. In considering the amount of the dealing, the decider must look at the quality rather than the quantity of the work taken. In this case, the Board itself found that the excerpts taken by the teachers were relatively short. The Board based itself on a passage from CCH written in obiter saying that had the same person submitted several requests for documents from the same series or collection in a short timeframe, the dealing may be unfair. 

The Court points out that the teacher is not making multiple copies for himself, but a single copy for each student. Again, if analysed from the perspective of the user, this factor militates in favour of a finding of fairness.  

•   Alternatives to the dealing

This factor assess whether or not it is truly necessary for the copies to be made or if there are other viable alternatives. The Board found that there were viable alternatives such as the purchasing of additional text books for each student. 

The majority makes clear that while an alternative, buying several different textbooks for each student is hardly viable. The cost of doing so would be astronomical and the schools would be forced to make do without those texts. As a result, the students would suffer by being forced to rely on only the textbook provided for and whatever materials may be found in the public domain. 

• Effect of the dealing on the work

At the Copyright Board, Access Copyright was unable to show a negative effect on the published works in its catalogue that was due to the category 4 photocopying. Instead, they relied on figures showing a decline in textbook sales of 30% over 20 years without showing a causal link between those figures and the category 4 copies. The Board nevertheless found the effect of the dealing on the work to weigh in favour of Access Copyright.

The majority exposed this finding as unjustified by the evidence. Furthermore, Justice Abella found it hard to believe that the copying of these short excerpts would compete with the sale of the entire textbook. As mentioned above, she found it more likely that if the copies aren’t made, the students will simply go without.

The Dissenting Opinion

            Writing for the dissenting Judges, Justice Rothstein disagreed with the majority stressing that more deference for the Copyright Board’s decision was warranted. He found that the Board’s analysis of the fair dealing factors was not unreasonable and therefore not a reviewable error.

            Justice Rothstein goes on to write that he does not view the Board’s assessing the purpose of the dealing from the teacher’s perspective to be unreasonable. He found that as much as the dealing was focused on the learning of the student, so too was it focused on the act of teaching. More specifically, the careful selection and copying of excerpts was done for the purpose of “instruction” as much as it was for study.

            The dissenting opinion also sided with access copyright on the distinction between “private” and “non-private” study.  Agreeing with the Federal Court of Appeal, Rothstein felt that even with a large and liberal interpretation, private study excludes study in a classroom setting.

            Justice Rothstein also disagreed with the majority regarding the Board’s assessment of the remaining factors, namely: the character of the dealing, the nature of the dealing, the amount of the dealing, alternatives to the dealing and the effect of the dealing on the work.

Conclusion

            As far as judging the case de novo is concerned, I find myself agreeing with the majority’s reasons. In spite of that, I believe Justice Rothstein was correct in showing deference to the Copyright Board’s decision. As a matter of administrative law, the Supreme Court’s decision in Dunsmuir v. New Brunswick requires that administrative tribunal decisions contain: “justification, transparency and intelligibility within the decision making process”.

On the question of standard of review, the majority in Rogers v. SOCAN decided that the correctness standard applies where a court and administrative tribunal have concurrent jurisdiction in first instance. Unfortunately, this isn’t helpful to the majority in this case because the fair dealing analysis is entirely fact based. While I think the Copyright Board came to the wrong conclusion, I don’t know that the majority made out a case for unreasonableness.

In sum, while I’m happy with the outcome of the Court’s decision, I feel that the dissenting Judges were more faithful to the prescriptions of Dunsmuir. And after all, don’t we all prize administrative law above all else? Sigh...