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LEGISLATION

Copyright Modernization Act, SC 2012, c 20. [(1) This is an amending Act to the Copyright Act (see below). Section 31.1 expands the exemption granted by section 2.4(1)(4) of the Copyright Act and is essentially a codification of the holdings from SOCAN v CAIP (see below). Section 31.1(1) states that ISPs, provided that they are content neutral, cannot be held liable by providing any means for Internet access. The fact that “any means” for telecommunication is used instead of “the means” necessary for telecommunication, which appears in section 2.4(1)(b), signifies that this provision is intended to cover a wider range of intermediaries that provide access to third party content such as bloggers, video and social networking websites. Moreover, whereas section 2.4(1)(b) is only applicable in cases where the intermediary is involved in the communication of copyright materials, section 31.1(1) covers both communication and reproduction of those materials.  (2) The protection granted by section 31.1 also applies to hosting and caching activities. By virtue of sections 31.1(2) and 31.1(3), ISPs are protected from copyright infringement as a result of caching or other “incidental” acts that provide more efficient Internet services.  Further, under section 31.1(4), ISPs are immune from copyright liability related to hosting unless they know the content provider has been found by a court to infringe copyright. One exception to section 31.1 exists however; it is not available to intermediaries whose primary function is to enable copyright infringement (see section 27(2.3) below). (3) Another key provision this Act sets out is the “notice and notice” regime. Since 2000, many major ISPs have successfully dealt with copyright infringement claims using the informal notice and notice system put in place by the Canadian Association of Internet Providers (CAIP) and the music and cable industry. Therefore, sections 41.25 – 41.27 outlines a system are already familiar to major SPIs (note: sections 41.25 and 41.26 are not yet in force). Under the notice and notice regime, a copyright holder can report an infringement by sending a notice to the SPI. The notice must be in writing and include the claimant’s name and address, the material relating to the alleged infringement, the claimant’s interest in the copyright, the type of infringement as well as the location and time of the alleged infringement. Once the ISP receives the notice, it must promptly forward it to the accused subscriber. ISPs are also required to maintain a record of the user who owns the electronic location at which the alleged copyright infringement occurred. This record must be retained for six months but can be extended to one year if an action is commenced. Where the ISP fails to carry out its obligations, it will be liable for statutory damages ranging from $5,000 to $10,000.  However, an exception has been made for search engines or what the Act refers to as “information location tools”. According to section 41.27, as long as search engines are content neutral and not guilty of enabling infringement (see section 27(2.3) below), remedies against them are limited to injunctions. (4) One area the Act is unclear about is under what circumstance will ISPs be held liable for authorizing copyright infringement. According to the decision in SOCAN v CAIP (see below), an ISP may be liable for authorizing infringement if it has notice of a potential copyright infringement and did not take remedial action. Aside from hosting, where liability seem to follow only if the ISP is aware of a court decision confirming the copyright infringement, it remains to be seen whether forwarding a notice to the content provider will be sufficient to meet the “remedial action” requirement or whether more is needed to avoid liability as an authorizer. (5) The Copyright Modernization Act introduces a new basis for ISP liability. According to section 27(2.3), an SPI can incur secondary liability if its service is primarily intended for enabling copyright infringement. What constitute as “enabling” will be determined in light of numerous factors such as how the service was marketed by the ISP and whether it has other functions aside from enabling acts of copyright infringement.  Copyright Act, RSC 1985, c C-42 [(1) The most pertinent parts of this Act for intermediaries are sections 2.4(1)(b), 27 and 29. Section 2.4(1)(b), known as the “Common Carrier Exemption”, states that an intermediary is not liable for copyright infringement by merely providing “the means of telecommunication necessary” for others to communicate digital content.  (2) Section 27 pertains to secondary infringement. Pursuant to section 27(1), the copyright owner holds the exclusive right to authorize any activities that involves his/her work. One issue, therefore, is whether intermediaries may be held liable for authorizing infringing acts carried out by their users. Section 27(2) addresses secondary infringement (e.g., when a person sells, imports or distributes illegal copies of material).  (3) Provisions related to fair dealing are also relevant. As per section 29, an intermediary is exempt from copyright infringement if the work is used for research or private study. After the Copyright Modernization Act came into effect (see below), fair dealing also includes works used for education, parody or satire. Under sections 29.1 and 29.2, there are exceptions to fair dealing with works for the purposes of news reporting, criticism or comment.]

BILLS AND PENDING PROPOSALS

Trans Pacific Partnership Intellectual Property Rights Chapter [confidential text leaked on August 30, 2013][Canada is partecipating in the negotiation of this international agreement including a section on Internet service provider liability, with countries lining up either in favour of a general notification obligation or a notice-and-takedown system with the prospect of terminating subscriber Internet access and content blocking. Canada favors the former approach.] [See M. Geist Blog post]

DECISIONS

Superior Courts

Supreme Court of Canada, Google Inc. v. Equuestek Solutions Inc., 2017 SCC 34, June 28, 2017[trademark, search engine] [The dispute involved links to the website of a company that had been found to have stolen trade secrets from a competitor and used unfair competition tactics to lure customers into purchasing the copied products. The lower court issued an injunction ordering Google to remove search results for specific websites. The Supreme Court upheld this order, that is unprecedented for Canada as it forces Google to remove links for search queries coming from anywhere in the world, rather than only from the search results available through Google.ca.] [See also M. Geist Blog.] [See also CIS Blog Post] Supreme Court of Canada, Douez v. Facebook Inc., 2017 SCC 33, June 23, 2017 [Recognizing the unequal bargaining power between companies and consumers, the Supreme Court rejected a forum selection clause requiring that legal actions taken against Facebook should be taken in California. The Supreme Court decision stroke down a B.C. Court of Appeal decision that ruled that a privacy class action could not proceed because the company terms and conditions provided the disputes must be resolved in Santa Clara, California.] [See also M. Geist Blog]  Supreme Court of Canada, Society of Composers, Authors and Music Publishers of Canada (SOCAN) v Bell Canada, 2012 SCC 36, July 12, 2012[copyright, liability, hosting providers, fair dealing] [Companies who allowed their subscribers to preview musical works via online streaming before making a purchase were found to not have infringed the copyright in those works. The Court held that these previews constitute fair dealing because 1) their purpose constitutes “research” under section 29 of the Copyright Act (e.g., research by consumers) and 2) their use is fair according to the six factors laid out in CCH Canadian v LSUC (see below).] Supreme Court of Canada, Crookes v. Newton, 2011 SCC 47, October 19, 2011[defamation, article, publication, hyperlink] [This case involved hyperlinks in an online article that directed its readers to defamatory materials. The issue is whether this constituted a publication for the purposes of defamation law. For a defamation case to succeed in Canada, the plaintiff must prove that the defamatory statement is “published”. Here, the Court held that, unless the hyperlink itself communicates defamatory meaning in the context, the act of hyperlinking is so passive that it does not amount to publication. (paras 21 & 40). That is, to satisfy the publication element, the plaintiff must prove that the intermediary had “knowing involvement in the publication of the relevant words (para 21).] Supreme Court of Canada, Society of Composers, Authors and Music Publishers of Canada (SOCAN) v Canadian Assn. of Internet Providers (CAIP), 2004 SCC 45, June 30, 2004[copyright, defamation, liability, access provider, ISP, conduit, authorization, defence, jurisdiction] [(1) Also known as the Tariff 22 case, this is the leading decision on ISP liability and copyright infringement. The Court denied the claimants royalties for copyrighted materials that were transferred on the Internet. It interpreted section 2.4(1)(b) of the Copyright Act (the “common carrier exception”) and found that ISPs are not liable as long as they are “conduit” for information (para 32). That is, if an intermediary remains content neutral, they are considered not to have communicated the content at all (para 111). For this reason, intermediaries are also immune from defamation liability (para 89). Whether an intermediary is regarded a conduit for information and thus qualifying for immunity under this section will primarily depend on its function. (2) To successfully use the “innocent disseminator” defence in a defamation action, an intermediary must show that it a) did not know about the publication of the libel; b) did not have any reason to suspect its presence (e.g., by receiving a notice); and c) was not negligent in detecting it. (3) For the purpose of s. 2.4(1)(b), “necessary” means of telecommunication is a means that is “reasonably useful and proper” to achieve the benefits of enhanced economy and efficiency’’ and “of greater or lesser benefit or convenience” (para 91). Previously, the Federal Court of Appeal found that a means is “necessary” only if “communication in that medium of telecommunication would not be practicable or, in all probability, would not have occurred’’ without it (para 113). However, the Supreme Court rejected this high threshold due to the chilling effects it might have on ISPs’ efforts to expand their operations and develop more efficient means of telecommunication. (4) The “means” of telecommunication was held not to be limited to routers and hardware. Rather, it includes all “software connection equipment, connectivity services, hosting and other facilities and services without which such communications would not occur” (para 92). Therefore, this section protects the providers of these means of telecommunication as well. (5) The protection offered by section 2.4(1)(b) also extends to caching and hosting activities. Caching technology was found to be content neutral. Applying the new threshold, caches were found to be a necessary means of telecommunication since they were developed for the very purpose of enabling a more economical way of transmitting large files.  With regards to hosting, ISPs are generally not liable for copyright infringement by contents stored on their servers because the user, and not the intermediary, is deemed to be the content provider. Given the large amount of data being transmitted through the Internet, the Supreme Court noted that it would not be feasible for intermediaries to detect all the material that infringes copyright. However, where an ISP has knowledge of copyrighted content but fails to take remedial steps (para 124), liability may ensue since a failure to respond may constitute authorizing the infringement.  (6) Further, the Court confirmed the findings in CCH Canadian v LSUC (see below) that liability for authorizing copyright infringement will only follow if ISPs “give approval to; sanction, permit; favour, [or] encourage” the infringing conduct (para 127). That is, simply knowing that a neutral technology, such as hosting, might be used to violate copyright laws is not sufficient to support a finding of authorization.  (7) Finally, the case discussed the issue of jurisdiction of the Copyright Act. To determine whether the infringing activity occurred in Canada, the “real and substantial connection” test should be used. Where there is a real and substantial link between the infringing activity and Canada, the Copyright Act will apply. Whether such a connection exists will depend on the specific facts of each case so that the location of the host server will not be determinative. Therefore, an intermediary may not necessarily be liable under the Copyright Act because its host servers are located in Canada. Conversely, an intermediary may not escape liability simply because its host servers are in located abroad.]  Supreme Court of Canada, CCH Canadian Ltd v Law Society of Upper Canada (LSUC), 2004 SCC 13, March 4, 2004[copyright, liability, library, LSUC, fair dealing, authorization] [(1) The LSUC operated a library, and was accused of copyright infringement by providing photocopying services to its patrons. The Supreme Court ruled that the LSUC did not infringe copyright because its dealings with the claimants’ work were for the research purpose of its patrons and was fair. The courts will consider six factor to determine whether a dealing is indeed “fair”: (i) the purpose of the dealing; (ii) the character of the dealing; (iii) the amount of the dealing; (iv) the nature of the work; (v) available alternatives to the dealing and (vi) the effect of the dealing on the work (para 53). (2) Further, the Court held that a finding of authorization of infringement requires proof that the intermediary has done something beyond providing a neutral technology that could be used for copyright infringement. That is, it must be shown that the intermediary acted in a way that gave approval to, sanctioned, permitted; favoured, or encouraged the copyright infringement (para 38). Therefore, the LSUC was not liable for authorizing infringement by virtue of providing photocopiers. The Court further stated that even if an intermediary did authorize the reproduction of copyrighted materials, there is a presumption that it did so in compliance with the law. However, this presumption is rebuttable where there is a relationship between an employer-employee or other similar relationship between the authorizer and the accused or the authorizer has a degree of control over the accused’s actions (Ibid).]

Lower CourtsSupreme Court of British Columbia, Equustek Solutions Inc. v. Jack, 2014 BCSC 1063, June 13, 2014[trade secrets, unfair competition, serch engines, Google, links, de-listing, worldwide] [The Supreme Court of British Columbia issued an order requiring Google to remove websites from its worldwide index.  The dispute involved links to the website of a company that had been found to have stolen trade secrets from a competitor and used unfair competition tactics to lure customers into purchasing the copied products. The court order is unprecedented for Canada as it forces Google to remove links anywhere in the world, rather than only from the search results available through Google.ca.] [See also M. Geist Blog.] [See also Global FoE] Federal Court of Canada, Voltage Pictures v Does, 2014 FC 161, February 20, 2014[copyright, ISPs, privacy] [(1) This case is an application of the principles laid out in BMG Canada v John Doe (see below) with respect to disclosure orders. Here, the claimant sought the identities of 2,000 users from TekSavvy, an independent ISP. Voltage argued that by downloading movies produced by their company via P2P file-sharing networks, these users infringed copyright in those works and their identities were needed to start legal proceedings.  (2) Although the Court expressed concerns about “copyright trolls”, the disclosure order was ultimately granted because the claimant showed that it had a bona fides claim and privacy rights of the users did not outweigh the interests of the copyright holders. However, numerous safeguards against possible invasions of privacy were attached. For example, users’ information could not be released to the public or be used for any other purposes and Voltage was required to pay TechSavvy the legal costs it incurred in complying with the order. Further, court is required to review any demand letter sent by Voltage to subscribers.] Ontario Superior Court, Morris v Johnson, 2011 ONSC 3996, July 20, 2011[disclosure, pre-action discovery, website, defamation] [This is another instance where the court applied the Warman factors (see above) to a case concerning online defamation. Here, the plaintiff brought an action against the host of a political blog and its moderators for defamatory comments posted by anonymous commenters. However, the application failed because the plaintiff could not demonstrate that the comments were defamatory and thus, could not establish a prima facie case. Therefore, interests in protecting the freedom of expression and users’ privacy rights outweighed the public benefits that may flow from granting the order.] Ontario Superior Court, Warman v Fournier et al, 2010 ONSC 2126 (Div Ct)[disclosure, pre-action discovery, defamation, web operator, message board, privacy, freedom of expression]. [(1) The plaintiff sued the operator of a message board and eight anonymous participants who allegedly posted defamatory statements. In accordance with the Rules of Civil Procedure (76.03), the plaintiff sought an order requiring the intermediary to reveal the identities of those participants.  (2) The court ruled that disclosure of users’ identities should not be automatic. Rather, the unknown user’s expectation of privacy and the freedom of expression must also be weighed. Four factors that should guide the court are: 1) whether the unknown users could have a reasonable expectation of anonymity given the context; 2) whether the complaint has established a prima facie case against the unknown wrongdoers and is acting in good faith; 3) whether the complaint has taken reasonable steps to identify the unknown party; and 4) whether the public interests favouring disclosure outweigh the legitimate interest of freedom of expression and right to privacy (para 34).  (3) The prima facie standard under Rule 76.03 is thus lower than the bona fide standard required for a Norwich order (see York University v Bell Canada below). Given that a defamed plaintiff may compel an intermediary to disclose subscriber information either by going through a pre-action discovery process or by applying for a Norwich order, it has yet to be seen whether the court will reconcile these two standards in the future.] Ontario Superior Court, York University v Bell Canada Enterprises, 2009 99 OR (3d) 695 (ONSC)[disclosure, Norwich order, defamation, ISPs] [This case involves a defamatory email and web posting written by a faculty group at York University. The plaintiff was granted a Norwich order compelling two ISPs, Bell Canada Enterprises and Rogers Communications, to disclose information about the owner of a specific IP address so that a libel action could be served. To determine whether a Norwich order should be granted in an online defamation case, the court will consider 1) whether the applicant has provided evidence sufficient to raise a valid, bona fide or reasonable claim; 2) whether the applicant has establish a relationship with the third-party from whom the information is sought, such that it establishes that the third party is somehow involved in the acts complained of; 3) whether the third party is the only practicable source of the information available; 4) whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure and 5) whether the interest of justice favour obtaining the disclosure (para 13).] Court of Appeal for British Clolumbia, Carter v. B.C. Federation of Foster Parent Assn., 2005 BCCA 398, August 3, 2005[defamation, defence, web operator] [The court held an operator of a discussion forum liable for the defamatory remarks posted by its participants because he did not contact his ISP and remove them within a reasonable time after being notified by the complainant. The court further confirmed that the defence of innocent disseminator (see SOCAN v CAIP above), is not available to a website operator once he has received a notice about the offending content. This case suggest that there is effectively a “notice and take down” regime that intermediaries must follow in order to avoid liability in a cyber-libel action.] Federal Court of Canada, BMG Canada Inc v John Doe, 2004 FC 488, March 31, 2004[copyright, ISPs, privacy, P2P file-sharing, authorization] [Representatives from the recording industry sought an order to compel various ISPs to disclose the identity of those who used P2P file-sharing networks (KaZaA and iMesh) to share and download over 1000 music files that were protected by copyright. The court held that an order for the release of subscriber information may be granted if the copyright holder can show a bona fide claim and different interests including the subscribers’ privacy rights must be be balanced. Here, the order was denied because privacy concerns outweighed the benefits of disclosure. It was also noted that even if a disclosure is granted, the court could place certain restrictions on the order to protect the privacy interests of the accused.]  Ontario Superior Court, Irwin Toy v Doe, 2000 OJ No 3318, September 8, 2000[defamation, disclosure, ISP] [This case demonstrates a successful application for a disclosure order under the Ontario Rules of Civil Procedure (30.10 and 31.10). Defamatory emails were sent to 75 employees working at the plaintiff’s company. The plaintiff was able to trace those emails to particular IP addresses belonging to the ISP company iPrimus. Given that the plaintiff established a prima facie case, the ISP was required to reveal the owners of the IP addresses in question. The court also noted that ISPs does not have an obligation to disclose user information without a court order.]

OTHER RESOURCES

Center for Law Technology and Society, University of Ottawa, http://www.commonlaw.uottawa.ca/en/programs/technology-law/home.htmlMichael Geist, http://www.michaelgeist.ca

CONTRIBUTORS

Shelley HanEmail: sheng.han at uottawa.ca[personal page]

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