The decision might originate with Small Claims but is nonetheless making big waves, drawing the attention of my colleagues Teresa Scassa and Michael Geist, as well as that of Canadian intellectual property lawyers Howard Knopf and Barry Sookman. The case made Slaw’s October 28th “What’s Hot” list as one of CanLII’s three most viewed English Canada decisions for the previous week. The Globe and Mail has reported on the case. Even American media have taken note, with TechCrunch writer Glyn Moody calling the case “extraordinary,” proof of “the inherent ridiculousness of anti-circumvention laws” and “a perfect demonstration of where the anti-circumvention madness leads.”
What’s the fuss about? Properly styled 1395804 Ontario Limited (Blacklock’s Reporter) v. Canadian Vintners Association, 2015 CanLII 65885 (ON SCSM), the case addressed the legal consequences of requesting and receiving by email an article cut and pasted from a subscription-based source. The judge concluded that:
- in merely receiving an email, the defendants had infringed copyright despite having neither made nor distributed any copies themselves;
- the defendants had circumvented a technological protection measure - the plaintiff’s paywall despite having received the article from a paying subscriber who simply cut and paste the article into an email; and
- the plaintiff was owed a total of $13,470 in compensatory and punitive damages plus costs and pre-judgement interest despite having already offered to settle the matter for $314 plus HST.
That was one expensive email.
Facts
The plaintiff, Blacklock’s Reporter is a news company providing subscription-based material to its customers. Blacklock’s testified that its individual use subscriptions cost $157.00, and that “typical institutional membership” costs $11,470.00. Interestingly, no documentary evidence was before the Court substantiating the “institutional member” fee.
The individual defendant, Dan Paszkowski, is President and CEO of the institutional defendant, the Canadian Vintners Association (the “CVA”). Blacklock’s alleged that the defendants infringed copyright in a single article concerning Mr. Paszkowski’s testimony on behalf of his employer before a Commons Committee. Blacklock’s “baited the hook,” as it were, by forwarding a “bulletin” about the article to the CVA, “as a courtesy and an advisory.” As the CVA did not have a subscription to Blacklock’s, Mr. Paszkowski instructed another employee of the CVA to obtain a copy of the article from an acquaintance working for an organization that did. And that is where things got interesting.
Blacklock’s discovered that the CVA had the article, and, observing that Mr. Paszkowski’s correspondence with Blacklock’s was copied on another CVA employee, presented the CVA with an invoice for two annual subscriptions to Blacklock’s totalling $314 plus taxes. Mr. Paszkowski denied that CVA had done anything wrong, and testified that “I did not reproduce, duplicate nor distribute the article in question.”
On these facts - receiving a copy of a single article cut and pasted into an email from a third party subscriber - the Court found the Canadian Vintners Association liable for copyright infringement, awarded $11,470.00 in damages plus costs and pre-judgement interest, and awarded $2,000 in punitive damages.
Issues
The case raises numerous copyright policy issues that merit discussion.
Approach to Statutory Interpretation. The case has the feel of a throwback, a decision from another time and place in copyright. Since the turn of the millennium and the Supreme Court of Canada’s decision in Théberge v Galerie d'Art du Petit Champlain Inc [2002] 2 S.C.R. 336, copyright’s objective has usually been described as achieving a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator. The decision doesn’t even pay lip service to this objective.
Infringement Analysis. The decision contains no infringement analysis. Despite thoroughly canvassing the facts before it, the judge found liability without undertaking an analysis of how the facts supported that conclusion. Instead, the Court concludes that the defendant “breached” copyright by gaining access to a work that was behind a technical protection measure: a paywall. This is troubling, as the evidence before the Court showed that the defendant had simply requested, received and read an email, but did not further copy or distribute it. While a third party may have reproduced the article in the email, that was not an act of the defendant. Instead, the infringement seems based on a finding of circumvention of a technical protection measure - the paywall - a ground for liability not actually pleaded in the Statement of Claim.
Fair Dealing. Having failed to convince the Court that it had not actually undertaken any action prohibited by copyright, the defendant was forced to rely on the fair dealing defence. Again, the case for fair dealing looked strong: the defendant wished to critically evaluate the plaintiff’s statements about the defendant with a view to correcting any misstatements and inaccuracies. The Court disagreed, pointing to the defendants’ failure to actually demand any such corrections. The Court also stated circularly that the defense requires that one obtain content lawfully, and so content distributed behind a paywall could never be dealt with fairly unless one had paid to access the paywall.
Anti-Circumvention Analysis. The most troubling aspect of the decision is its analysis - or lack thereof - of the anti-circumvention provisions of the Act. First, the Court offered little to no analysis of the anti-circumvention provisions of the Act or how and why Blacklock’s paywall met them. Instead, the Court seemed to assume that the paywall itself was a “technological protection measure,” and that merely acquiring content initially distributed to a third party through a paywall was an infringement. This analysis is particularly troubling as the plaintiff had not sought damages for circumvention pursuant to s.44, but rather for “unauthorized use and/or distribution” - itself a problematic claim since copyright law offers owners no exclusive rights to “use” a work. The plaintiff did not even plead that its paywall constituted a “technical protection measure” under the Act.
Damages. The damages award is similarly troubling, on a number of fronts. Recall: damages awards are intended to be compensatory in nature, putting a plaintiff in the position it would have held had the wrong not occurred. First, the Court did not look to a “reasonable royalty” as a measure of damages - what one might have thought the obvious measure of damages for an infringement finding for a single article. Instead, the Court looked to annual subscription fee for the service as a whole for a full year - a much larger figure. Second, the plaintiff had earlier offered to settle the dispute by demanding payment of two individual annual subscriptions to its service. The Court paid no heed to this admission of the scale of damages the plaintiff could conceivably have suffered, and instead imposed damages on the scale the plaintiff described as its “typical institutional membership” of $11,400 per year. However, there is no evidence that any entity had actually voluntarily paid this rate in the absence of coercion. To add insult to injury, the Court awarded punitive damages of $2,000 for conduct that it found to be “high-handed, malicious, vindictive and oppressive.” In support of this, the Court pointed to the defendant’s deliberate attempt to view the article via a third party rather than purchasing an annual subscription, the defendants’ view that the publication was not worth the subscription fee, and for “asserting that the purpose in obtaining the material was for educational and research purposes.” The Court also took a dim view of the defendants’ refusal to disclose to Blacklock’s the identity of the article provider. The Court had stated (at para. 42) that it was “unnecessary to cite the cases well establishing the applicable principles of law to be considered if an award of punitive damages is to be made.” Given this astonishing analysis, it is suggested that perhaps a review of the applicable principles would have been instructive.
Consequences
The decision is remarkable and extra-ordinary for a number of reasons - its conclusion that merely receiving an email is copyright infringement, its restrictive fair dealing analysis, its expansive view of anti-circumvention laws - all of which provide ample grounds for an appeal. Even if not appealed, the decision is unlikely to prove influential. As Howard Knopf points out, decisions from small claims courts lack precedential value and in any event the decision is such an outlier on so many well-established copyright doctrines - the purpose of copyright, infringement analysis, fair dealing analysis, the proper calculation of damages - that it is unlikely to be followed by subsequent courts. Nonetheless, the decision may prove consequential for non-copyright reasons that should cause concern.
The Tyranny of Terms of Use
The Court made a fundamental error in confusing the plaintiff’s intent in adopting a particular business model with Parliament’s intent in structuring the Copyright Act as it has. Parliament has granted copyright owners certain exclusive rights, but has limited those rights in number, scale and scope. There is no exclusive right to “use” a work, nor an exclusive right to “read” a work. Instead, Parliament has reserved to users certain rights. These include both those user rights explicitly enumerated in the Act, such as fair dealing rights, user generated content rights and other usage rights, but also rights to engage in dealings not explicitly granted to copyright owners. We will never infringe copyright in a song by singing it in the shower. Reading a book does not infringe its copyright. This fundamental feature of copyright’s structure appears to have escaped the Court.
Instead, the Court appears to have assumed that the defendants’ dealings with a Blacklock’s article is controlled by the Terms and Conditions of Blacklock’s website. For example the judge asks, “Did the Defendants know that access to the website and through the paywall was subject to Terms and Conditions?” The proper question to ask was “could Blacklock’s website terms and conditions control the defendants’ dealing with the article?” The judge instead conflated the work at issue - an article first published on a website - with the website itself and erroneously believed that Blacklock’s website Terms and Conditions could control dealings with both and that those terms could also control the dealings of both contracting customers and third parties.
A publisher’s chosen business model cannot determine the scope of user rights under copyright law. While contract law could alter Parliament’s initial allocation of entitlements to works under the Copyright Act, the defendant was not under contract to the plaintiff, and in any event such contractual arrangements cannot extend copyright law where Parliament has chosen otherwise. For consideration, I might agree not to exercise fair dealing rights, but my failure to abide by that agreement does not turn what would otherwise be a fair dealing into an infringement. Instead, an aggrieved plaintiff’s remedy lies in contract. Parliament did not intend for copyright owners to enjoy the kind of control over works that such a theory implies. Society relies upon the activities of whistleblowers, journalists, and downstream creators, and these rely on copyright’s grant of rights to users.
The importance of copyright’s allocation of user rights, and their primacy over the wishes of distributors, is obvious on reflection. Books have long contained a variation of a prohibition against any reproduction “in whole or in part.” This is an absurd claim of rights that bears no relation to the scope of rights copyright owners enjoy under the law. Users enjoy numerous rights under the law, including the right to read and to fairly copy aspects of the work for lawful purposes. The Court’s approach, in contrast, replaces copyright law’s careful balance of rights with website terms and conditions, replaces user rights with publishers’ permissions, and subjugates freedom of expression to the obligation to pay.
Technological Neutrality & the Right to Read
The Court effectively confuses copyright - supplemented by technological protection measures and website terms of use - with the right to control all use of a work. Copyright is a limited set of rights that permit a copyright owner to exploit the commercial value of a work. It is not an absolute right to control all uses of that work. Indeed, as content increasingly goes digital and online, there is a corresponding need to constrain the reach of copyright owners into activity controlled by users’ rights. The Supreme Court of Canada has recently reminded us that copyright is neutral as to the technology employed.
The key to understanding the Court’s take on the facts lies the statement (at para. 44):
"What is evidentially clear is that access to the full article was obtained without colour of right and without permission from the author or publisher.... [T]he Defendants took steps which they knew or ought to have known were contrary to the process required by the paywall and to the terms and conditions which were extant and applicable."
The problem is that a publisher has no right to prevent anyone from reading its published works. A newspaper publisher may prefer that we subscribe to its paper, or at least purchase a copy from a newsstand or box; however, it can have no complaint if one reads a copy in a coffee shop, or borrows a colleague’s paper, or goes to the library to read one. The right to read is the user’s right, and this is true in both paper and digital format.
Blacklock’s may have preferred that the Vintners purchase an annual subscription to read the one article, but it could have no complaint if the Vintners chose another avenue to read the article. The Vintners in fact obtained a copy of the work from a lawful subscriber. There is an argument that the subscriber, in cutting and pasting the article into an email, could have infringed copyright (setting aside fair dealing arguments for the moment). The Vintners treated the article as a clipping service might. Libraries, for example, have long offered clipping services for identifying and preserving articles on particular topics. A neutral reading of such activities in the digital context would protect users against liability for similar activities. To hold otherwise would to chill critical inquiry.
Feeding the Trolls
Perhaps the most significant feature of this decision is the damages award: the Court awarded over $13,000 in damages for what amounts to reading an email. Quite apart from the merits of this particular case, judgements like these fuel the phenomenon of copyright trolls.
Copyright trolls are copyright holders who use the threat of litigation to generate revenue rather than actively using or licensing their intellectual property. Typically, a troll will identify grounds for threatening litigation and demand payment of an amount calculated to be less than the cost of a legal defense, but enough to make the venture profitable. The cost and uncertainty or stigma of litigation coerces most individuals into making payments, regardless of actual liability.
In practice, the settlement amounts demanded by trolls tend to grossly exceed what they could expect at trial, even if a troll could win a contested matter in court. Cases such as the present one lend cover to this practice. Trolls in Canada will inevitably point to this decision in support of outrageous settlement demands. Lawyers counselling trolls’ targets will point to this case in support of the wisdom of settling. Journalists, academics and whistleblowers relying on fair dealing will look to this case as a warning against using another’s work in support of their activities. The award of punitive damages on top of the finding of liability can only chill critical inquiry and expressive activity. The profitability of Blacklock’s venture against the Vintners can only encourage more spurious claims.
Copyright trolls monetize their victims’ aversion to litigation rather than exploit their copyright. As this case well demonstrates, actual copyright infringement need not be involved; a mere allegation of infringement will suffice to support the scheme. In this way, copyright trolls both subvert copyright law and misuse the taxpayer funded court system. Copyright trolls are a species of copyright misuse, and this decision feeds the trolls.
Conclusion
As of the publication date of this comment, no appeal has been filed. If that remains the case, we will be stuck with this decision on the books. While the Court’s musings on copyright are not binding, the case will nonetheless be used in support of the activities of copyright trolls, in support of expansive claims of infringement on the flimsiest of bases, and in support of expansive liability claims resting on the circumvention of a business model. But while the jurisprudential reach of this case may well prove meagre, its practical effects in motivating trolls may prove more damaging by far.
* David Fewer is the Director of CIPPIC. He has taught and written extensively on intellectual property and technology law issues, and is a frequent commentator in the media on such issues.