Federal Court of Appeal Upholds Site-Blocking Order
by Ashley Chu
The Federal Court of Appeal (FCA) has upheld an unprecedented site-blocking order issued by the Federal Court.
In 2019, the Federal Court issued an order requiring a number of Canadian Internet service providers (ISPs) to block access to certain websites that were alleged to infringe the plaintiffs’ copyright. In addition to being the first of its kind in Canada, this order was notable because the ISPs were not defendants in the underlying copyright action. Teksavvy Solutions Inc. (Teksavvy), one of the ISPs, appealed the order.
In dismissing the appeal, the FCA held that the Federal Court did indeed have the power to grant the site-blocking order, finding that it is one of the possible remedies contemplated in the Canadian Copyright Act. The FCA disagreed with Teksavvy’s contention that the Telecommunications Act displaces the Federal Court’s equitable powers of injunction, which includes the ability to impose a site-blocking order.
The FCA also declined to consider whether freedom of expression, as set out in the Canadian Charter of Rights and Freedoms, was engaged by the order. It noted that it was not necessary for the judge to engage in a detailed Charter rights analysis separate and distinct from the balance of convenience analysis that is already considered when determining whether an interlocutory injunction should be issued. With respect to the judge’s analysis of the legal test for interlocutory injunctions, the FCA found no error in his analysis.
Therefore, Teksavvy’s appeal was dismissed.
This decision is significant for copyright owners, who will now have available to them site-blocking orders as a remedy for copyright infringement.
The Federal Court of Appeal’s decision is published as Teksavvy Solutions Inc. v Bell Media Inc. et al., 2021 FCA 100 and can be accessed at this link: Teksavvy Solutions Inc. v. Bell Media Inc. et al.
For more information about copyright protection in Canada, please contact the professionals at Moffat & Co.
Federal Court Provides Guidance on Fair Dealing in Copyright Law
by Jaimie Bordman
The Federal Court has recently provided guidance on the issue of fair dealing with copyright works, dismissing a claim of copyright infringement brought by Canada’s national broadcaster against one of Canada’s major political parties.
During the federal election campaign of 2019, the Conservative Party of Canada (the “Conservative Party”) produced an “attack” ad criticizing the performance of the incumbent Prime Minister, whom the Conservative Party was trying to unseat. In its ad, the Conservative Party used relatively brief clips (a few seconds in length each) from the Canadian Broadcasting Corporation’s (the “CBC”) news broadcasts. The CBC claims copyright in its news broadcasts.
In dismissing the CBC’s copyright claim, the Federal Court found that the CBC did own copyright in the news broadcasts and that the clips that were used by the Conservative Party were sufficient in quality and quantity to qualify as a “substantial part” of those broadcasts. However, the Court found that the Party’s use of the clips constituted “fair dealing”, and was not an infringement of CBC’s copyright. The doctrine of fair dealing provides users of copyright protected material with a right to use the protected material in certain circumstances. Copying protected works in a manner that constitutes fair dealing does not infringe the owner’s copyright.
In order to constitute fair dealing, the copying of a protected work must be for one of several purposes identified in the Copyright Act, such as “research”, “private study”, and “criticism”. As well, the nature of the copying and use of the work must be “fair”, which is determined on a case by case basis, with reference to several criteria.
In this case, the Court found that the ad was made, and the news clips were used, for the purpose of “criticism”. The Court found that the fair dealing purposes listed in the Copyright Act should be interpreted broadly. Using the copyright protected clips to criticize a third party (the Prime Minister) was acceptable, even though the criticism did not relate to the works themselves, or the CBC.
With regard to whether the use of the clips was “fair”, the CBC argued that the Conservative Party’s use would create the appearance that the CBC was biased in favour of the Conservative Party, which would damage the CBC’s reputation as a politically neutral provider of news. The Court agreed that this concern could be valid, and could favour a finding that the use was not fair. However, the Court found that there was no evidence showing that the ad actually had this effect in this case.
The Federal Court’s decision illustrates that the doctrine of fair dealing, often referred to as a “user’s right”, is to be given a relatively large, liberal interpretation to permit the use of copyright works by all, for the enumerated purposes, and in a manner that is fair. The decision also serves as a reminder that the question of fairness is factual in nature. Factors to be considered in the analysis must be grounded in fact, and supported by evidence.
The Federal Court’s decision is published as Canadian Broadcasting Corporation v. Conservative Party of Canada, 2021 FC 425, and can be viewed at this link: Canadian Broadcasting Corporation v. Conservative Party of Canada – Federal Court (fct-cf.gc.ca)
Contact the professionals at Moffat & Co. for more information regarding copyright protection in Canada, and the doctrine of fair dealing.
Jaimie Bordman has prepared a summary of two recent Practice Notices published by the Canadian IP Office. You can read the summary LEARN MORE.
CANADA IP UPDATE:
CIPO PRACTICE NOTICES RE: TM BACKLOG
Since 2019, when the Trademarks Branch of the Canadian Intellectual Property Office (CIPO) began implementing major revisions to Canada’s Trademarks Act and Trademarks Regulations, lead times for examination have been steadily growing. Currently, applicants for trademark registrations in Canada can expect to wait over two years from filing for a first examination report!
On May 3, 2021, CIPO published two practice notices intended to help reduce lead times in examination.
The first notice reintroduces the practice of expedited examination, in certain circumstances. For several years now, CIPO had not permitted the advancement of trademark applications out of sequence, for any reason. With the publication of CIPO’s practice notice, applicants can now request expedited examination in the following circumstances:
- A court action in Canada, relating to the applied for mark, is underway or expected;
- The applicant is in the process of combating counterfeit products at the Canadian border;
- The applicant requires registration of its trademark in order to protect its intellectual property rights from being “severely disadvantaged” in online marketplaces such as Amazon; or
- The applicant requires registration of its trademark in order to preserve its claim to priority within a defined deadline, and following a request by a foreign intellectual property office.
In all cases, an affidavit or statutory declaration will be required to establish the presence of one of the above circumstances.
The second notice is entitled “Measures to improves timeliness in examination” and contains several provisions to this effect:
- If terms in the statement of goods and services are objected to in a first examination report, examiners will no longer provide suggestions of alternative, acceptable terms;
- If the goods and services of an application are defined exclusively using terms from CIPO’s Goods and Services Manual (GSM), the application will be examined more quickly, and possibly ahead of prior filed applications that do not exclusively use terms from the GSM;
- Perhaps most significantly, CIPO will aim to issue fewer examination reports before refusing an application. In particular, examiners will only consider and respond to an issue raised in examination once. Additional argument or evidence submitted in a second response by an applicant will not be considered before the application is refused.
CIPO’s practice notices provide several useful ways in which brand owners can obtain trademark registrations in Canada more quickly. Taking the time to define goods and services using terms from the GSM at the outset of the application process can now lead to faster examination. And for brand owners dealing with infringement or counterfeiting issues in Canada, expedited examination will be a great option for obtaining a registration relatively quickly, allowing them to move forward with enforcement.
The practice notices also provide incentives for trademark applicants to put their best foot forward as soon as possible in examination. Applicants can no longer expect to have multiple chances to make their case on an issue, as was the case in past CIPO practice.
Contact Moffat & Co. today for more information and advice on how to expedite your Canadian trademark application.
Links to CIPO’s Practice Notices:
On April 19, 2021, Canada tabled its first Budget in two years. The budget titled A Recovery Plan for Jobs, Growth, and Resilience is clearly responding to the economic impacts of the pandemic on many sectors across the country. The Budget includes new IP related programs, the details of which are to be worked out over the next several months as the government seeks to create action plans to implement the strategy.
The following is a brief summary of the IP related programs that were announced in Budget 2021.
IMMEDIATE EXPENSING OF IP
Allow immediate expensing of up to $1.5 million of eligible investments by Canadian-controlled private corporations made on or after Budget Day and before 2024. Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations.
This incentive targets short- and medium-term capital investments that can accelerate our recovery. This includes investments in a broad range of assets, including, helping to further incentivize businesses to transition to a more productive, knowledge-intensive economy and will include digital assets and intellectual property.
These larger deductions will help businesses—particularly small and medium sized businesses—by making it more attractive to invest in assets that drive growth. Larger deductions will also free up capital that businesses can use to create more good middle class jobs.
SUPPORT USE OF IP BY SMALL BUSINESSES
To make sure small business and independent entrepreneurs can access the capital they need to recover, innovate, and grow in the long-term Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses. They include:
- expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses
- increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
- Expanding borrower eligibility to include non-profit and charitable social enterprises.
- Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.
PROMOTING CANADIAN IP SERVICES
To further support Canadian innovators, start-ups, and technology-intensive businesses, Budge 2021 proposes
- Spending $90 million, over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert intellectual property services.
- Spending $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert intellectual property services.
These direct investments will be complemented by a Strategic Intellectual Property Program Review that will be launched by the Government. It is intended as a broad assessment of intellectual property provisions in Canada’s innovation and science programming, from basic research to near-commercial projects. This work will make sure Canada and Canadians fully benefit from innovations and intellectual property.
Moffat & Co. will stay involved in the process and continue to keep you updated on the developments. Please contact us should you have questions or want to learn more.
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“No challenge” clauses called into question in Canada –
Ontario Superior Court finds such clauses are not in the public interest, and should not be enforced
An interlocutory decision from the Ontario Superior Court could have far-reaching implications for IP licensing and the settlement of IP disputes in Canada.
Earlier this year, the Ontario Superior Court declined to issue an interlocutory injunction in Loops, LLC v. Maxill Inc., 2020 ONSC 971. The Court’s reasons for doing so could have a substantial impact in the area of “no challenge” clauses, contractual clauses often included in IP license agreements and in settlements of IP disputes.
“No challenge” clauses purport to bind one party to an agreement not to challenge the validity of the other party’s intellectual property rights. The clauses appear routinely in IP license agreements, (preventing the licensee from challenging the validity of the rights they are licensing), trademark co-existence agreements (preventing each party from challenging the validity of the other’s trademark registrations), and in many other contexts within the IP world. These clauses have received judicial consideration in other jurisdictions, particularly the United States, but to date the issue of whether “no challenge” clauses are enforceable has not been considered by the courts in Canada.
The history between the parties in this case is long, and rather complex. The parties, who are both in the business of toothbrushes, had previously settled a patent infringement dispute between them. As part of that settlement, Maxill agreed to a “no challenge” clause, namely, that it would not directly or indirectly assist any person in attacking the validity of Loops’ patents for the relevant invention, in any country.
After finalizing the agreement, Maxill set out to “design around” Loops’ patent, and released a new toothbrush product that it believed did not infringe. Loops disagreed, and commenced an action to enforce its settlement agreement with Maxill before the Ontario Superior Court. Loops also sued Maxill in the United States for infringement of its equivalent patent in that country.
In response to the US infringement action, Maxill denied that it infringes Loops’ US patent, and denied the patent’s validity. Importantly, Maxill did not seek an order cancelling Loops’ patent because of the alleged invalidity. It simply denied that it was infringing Loops’ patent, and denied that the patent was valid in any event. However, since Maxill had agreed to a “no challenge” clause in its settlement agreement with Loops, Loops sought an injunction from the Ontario Superior Court to prevent Maxill from denying the patent’s validity before the American courts.
The Court declined to issue the injunction for several reasons. The most significant of these was the Court’s finding that the “no challenge” clause in the Loops / Maxill settlement agreement is not reasonable in the public interest, and is not enforceable. The Court found that, to preclude a defence to patent infringement for the personal gain, profit or protection of one party to an agreement would run counter to the proper administration of justice, regardless of the consent of the other party to that agreement. In contracts that contain “no challenge” clauses, the price paid by one party is access to a potentially valid legal position that has potential to affect the public at large, since the patent claims can be enforced against any infringer so long as they are deemed valid. The Court found that this price was simply too high if public trust and confidence in the administration of justice are to be maintained.
Accordingly, the Court’s view appears to be that “no challenge” clauses should not be enforceable as a matter of law. This is a significant development in Canadian contract law, as no Canadian court had previously found such provisions to be unenforceable, and in practice, IP-related agreements such as settlements and licenses routinely include such clauses.
It is significant that Maxill only asserted invalidity as a “shield”, in defence of an infringement action, and not as a “sword”, seeking an order that the patent be cancelled. It means that the door may still be open for “no challenge” clauses that prohibit the use of validity challenges as a “sword”.
But for the moment, the view of Ontario’s primary trial court is clear. Contractual provisions limiting a party’s ability to assert invalidity as a defence to IP infringement are not in the public interest, and should not be enforceable.
Written by Jaimie M. Bordman