Despite COVID-19, 2020 was an eventful year, chock full of impactful legal developments in e-commerce, technology, privacy, anti-spam, and intellectual property law. Here is a summary of my picks for the top legal developments.
Standard form online agreements and unconscionability
Online and in-App agreements are typically presented to users as “standard form”, “take it or leave it”, “boiler plate” forms. Most common are some variation of a “click-wrap”, “sign-in wrap”, or “browsewrap” agreement. They are used pervasively on websites and on Apps, among other locations. These agreements are the online incarnations of what had previously been the ubiquitous “shrink-wrap” agreements included with the purchase of physical copies of software products.
These online and in-App agreements frequently contain dense and one-sided terms including clauses dealing with choice of law and venue, arbitration, exclusions of warranties and conditions, privacy, and limitations of liability. Many of these agreements are used in the B2C context between large businesses and individual consumers. In the gig economy many of these standard form agreements are also used with independent contractors.
The Supreme Court of Canada in Uber Technologies Inc. v. Heller, 2020 SCC 16 sent a stark warning to businesses that these agreements, or at least harsh terms in them, may not be enforceable. It did so finding Uber’s standard form arbitration clause void on the ground of unconscionability.
Under the Court’s ruling an agreement (or clause) can be found to be unconscionable where there is an “an inequality of bargaining power, stemming from some weakness or vulnerability affecting the claimant and . . . an improvident transaction”. The case extended the Court’s prior ruling in Douez v. Facebook Inc., 2017 SCC 33 where Court refused to enforce a forum selection clause in a standard form consumer contract that would have required a privacy claim to be brought in California.
The reasons provided by the majority of the Court leave no doubt about its potential applicability to standard form online and in-App agreements. For example, when expounding on the conditions associated with inequality in bargaining power, the Court referred “cognitive asymmetry” associated with “the presence of dense or difficult to understand terms in the parties’ agreement.” The Court made satisfying the “inequality of bargaining power” condition easier by stating that “proof of a manifestly unfair bargain may support an inference that one party was unable adequately to protect their interests” and “[I]t is a matter of common sense that parties do not often enter a substantively improvident bargain when they have equal bargaining power.”
The Court also made satisfying the “improvident bargain” condition potentially low with its statement that “terms are unfair when, given the context, they flout the “reasonable expectation” of the weaker party…or cause an ‘unfair surprise’”.
The Court also went out of its way to highlight the applicability of its ruling to boilerplate or standard form contracts.
 Our point is simply that unconscionability has a meaningful role to play in examining the conditions behind consent to contracts of adhesion, as it does with any contract. The many ways in which standard form contracts can impair a party’s ability to protect their interests in the contracting process and make them more vulnerable, are well-documented. For example, they are drafted by one party without input from the other and they may contain provisions that are difficult to read or understand. The potential for such contracts to create an inequality of bargaining power is clear. So too is their potential to enhance the advantage of the stronger party at the expense of the more vulnerable one, particularly through choice of law, forum selection, and arbitration clauses that violate the adhering party’s reasonable expectations by depriving them of remedies. This is precisely the kind of situation in which the unconscionability doctrine is meant to apply.  This development of the law of unconscionability in connection with standard form contracts is not radical. On the contrary, it is a modern application of the doctrine to situations where “the normative rationale for contract enforcement . . . [is] stretched beyond the breaking point”… The link between standard form contracts and unconscionability has been suggested in judicial decisions, textbooks, and academic articles for years… It has also been present in the American jurisprudence for more than half a century…  Applying the unconscionability doctrine to standard form contracts also encourages those drafting such contracts to make them more accessible to the other party or to ensure that they are not so lop-sided as to be improvident, or both.
The Uber case portends a progeny of follow on cases – and class actions. 2021 may well be a propitious time to review online and in-App agreements.
Enforceability of agreements formed by trading algorithms (electronic agents)
In todays high velocity transactional world, online transactions including trading in securities and other assets are frequently conducted solely by the use of trading algorithms or electronic agents. Occasionally, this results in unexpected results, at least for one of the parties.
This occurred in the Singapore case, Quoine Pte Ltd v B2C2 Ltd.  SGCA(I) 02. In this case, B2C2 and two other users of the Quoine Trading platform traded cryptocurrencies. B2C2 sold one type of cryptocurrency, Ethereum (“ETH”), for another type, Bitcoin (“BTC”), at a rate of either 9.99999 BTC or 10 BTC for 1 ETH. The rates at which these trades were concluded were approximately 250 times the then going rate in the market of around 0.04 BTC for 1 ETH. The trades were automatically settled by the platform operator, Quoine. But when it became aware of the trades, it considered the rates at which the trades were concluded to be highly abnormal and unilaterally proceeded to cancel the trades. B2C2 who gained substantially from them sued Quoine claiming a breach of contract and/or breach of trust.
The International Judge who heard the matter initially rejected all of Quoine’s defences and allowed B2C2’s claims for both breach of contract and breach of trust, B2C2 Ltd v Quoine Pte Ltd  SGHC(I) 03A. The Court of Appeal affirmed the decision finding that the pure algorithmic driven offer and acceptance interchanges formed binding contracts and rejected the defenses of unilateral and common mistake.
96 What is clear in our case is that the Trading Contracts had been entered into pursuant to the parties’ respective deterministic algorithms… the contracting parties and Quoine did not know beforehand that the Trading Contracts would be entered into; and they were also unaware of the specific terms on which the contracts would be concluded. These factors… did not here prevent the formation of a contract at the point of time when an offer made by one algorithm was accepted by the other.
97 This was also the view of the Judge and it drove him, in our judgment, inevitably, to adopt a certain analytical model when considering the issue of unilateral mistake… We agree with this characterisation of the parties’ method of contracting and we think it would be wholly artificial to recast the relevant matrix of fact, which was one where the contracting parties did not in fact know beforehand that they were going to enter into the Trading Contracts or their terms, and were content to abide by what the relevant algorithms did at least as long as this was within the ambit of their programmed parameters…
The prices that the Disputed Trades were concluded at were arrived at by operation of the parties’ respective algorithms, and it was common ground that these had operated as they were meant to. In fact, the precise mistake in this case was a mistaken assumption on the part of the Counterparties as to how the Platform would operate. In other words, their real belief was that the Platform would not fail; and as the Judge found, the premise for the Second Mistaken Belief was that the Platform would either always operate as intended or, alternatively, there would be adequate error identification and protection systems to prevent trading from continuing if the Platform operations deviated from this assumed state of affairs… However, we do not see how this can assist Quoine because the Second Mistaken Belief was not a mistake as to the terms of the Trading Contracts, but instead was a mistaken assumption as to the circumstances under which the Trading Contracts would be concluded. This is not an operative mistake at least in the context of unilateral mistake at common law…
Quoine argued that the trading contracts were also void for common mistake, since B2C2 and the counterparties had entered into the trades under a shared mistaken assumption that they were transacting at or around the going market rate for ETH. The Court of Appeal rejected this defense since B2C2 had placed its sell orders to take advantage of the intentionally pre-programmed deep price as part of its trading strategy.
The decision of the Court of Appeal is consistent with an earlier U.K. case, Software Solutions Partners Ltd) v Her Majesty’s Commissioners for Customs and Excise  EWHC 971 (Admin) in which a contract of insurance was automatically agreed to once the broker had input the required data to generate an agreement with the insurer.
Crytocurrencies as property
The B2C2 case also raised the important question as to whether cybercurrencies are “property”.
Cryptocurrency is a form of decentralized digital money, based on blockchain technology. Examples are bitcoin and Ethereum, but there are more than thousands of different cryptocurrencies in circulation. Given the increasing importance of cryptocurrencies, whether they are considered “property”, and for what purposes, has important implications. This categorization is important, for example, for recovery of coins or their value when they are stolen or transferred by fraud. Property can be the subject of transactions, can be offered as security, can be bequeathed in wills, can be the subject of a trust, and is necessary to pursue proprietary injunctions like tracing, and for claims in restitution and conversion.
In November 2019, a UK Jurisdiction Taskforce published a Legal Statement on Cryptoassets and Smart Contracts expressing the opinion that cryptoassets should be regarded as property. It relied heavily on Lord Wilberforce’s opinion in National Provincial Bank Ltd v Ainsworth 1965] AC 1175 (H.L.), which contains a classic statement of the characteristics of “property”. There, his Lordship postulated a broad test saying:
Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.
Under this definition, cryptocurrencies, or at least some of them, can be classified as property. This was the holding of the Independent International Judge who heard the B2C2 case initially. The Court of Appeal made similar comments but declined to rule on the issue. Similar opinions were expressed in the UK case, AA v Persons Unknown & Ors, Re Bitcoin  EWHC 3556 (Comm) (13 December 2019) and the New Zealand case, Ruscoe v Cryptopia Limited (in liquidation)  NZHC 728 (8 April 2020). There are also other authorities where crypto currencies have been treated as property, albeit these authorities did not consider the issue in depth. See, Vorotyntseva v Money-4 Limited, trading as Nebeus.com  EWHC 2598, and the B.C. case, Copytrack Pte Ltd v Wall,  BCSC 1709.
Among the issues associated with cryptocurrencies is whether they should be treated as “money” for various regulatory or criminal law purposes. This issue was recently considered in the U.S case, U.S. v Harmon 2020 WL 4251347 (D.D.C. July 24, 2020). The court summarized prior cases and academic literature and had no difficulties concluding that Bitcoin fell within the ordinary meaning of the term money.
The term “money,” as detailed below, commonly means a medium of exchange, method of payment, or store of value. Bitcoin is these things. Indeed, defendant never disputes that bitcoin is money as that term is ordinarily used, and he concedes that bitcoin is a form of currency…
Where a statute does not define a term, courts “look first to the word’s ordinary meaning…Money, in common parlance, is a medium of exchange — that is, a token that can be traded for goods or services….
Bitcoin is just that — a medium of exchange, method of payment, and store of value… Bitcoin can be used to pay for goods or services… Bitcoin can also be exchanged for conventional currency… In addition, bitcoin is viewed by many as holding value, even though that “value has been known to fluctuate.”…
Undoubtedly, given the value of cryptocurrencies, they have been and will be the subject of various securities offerings to which provincial securities act legislation may apply. See, for example, 3iQ Corp (Re), 2019 ONSEC 37. In this regard, in January 2020 the CSA issued Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets.
Honest performance and good faith in contracts
Many technology procurements involve the development and implementation of complex systems. I can tell you from personal experience, including very recent experience, that agreements for these transactions are characterized by heavily negotiated terms including terms which provide various grounds for termination such as terminations for convenience. These agreements often include detailed governance processes at both working, technical, and executive levels. The goals for governance are, among others, to ensure the parties work together collaboratively and to create expedient and effective processes for resolving the inevitable disputes that arise from such transactions and risks associated with them.
The governance processes in technology procurements and what is, or is not, disclosed in them must be carefully managed. In 2014, the Supreme Court released its landmark decision in Bhasin v. Hrynew, 2014 SCC 7 in which it held that the duty of honest performance, which applies to all contracts, requires the parties to be honest with each other in relation to the performance of their contractual obligations. In C.M. Callow Inc. v. Zollinger, 2020 SCC 45, the Supreme Court explained that this duty requires that all rights and obligations must be exercised and performed honestly and reasonably and not capriciously or arbitrarily.
In Callow, the defendant Baycrest had a right, but no obligation, to renew a maintenance contract. It had through it’s conduct led Callow to believe that the contract would be renewed. However, Baycrest decided not to renew it. Baycrest was found liable for breach of contract – not because it was not entitled to not renew the agreement, but rather because it breached the duty of honest performance. The duty did not constrain the decision to terminate the contract but, “the duty of honest performance attracts expectation damages where the manner in which the right was exercised was dishonest”.
The dishonesty by Baycrest was not any outright lie as to whether the contract would be renewed. Rather, it was sufficient that Mr Callow was misled as to whether it would be. According to the Court:
Requiring a party to speak up in service of the requirements of good faith where nothing in the parties’ contractual relationship brings a duty to do so could be understood to confer an unbargained-for benefit on the other that would stand outside the usual compass of contractual justice. Yet where the failure to speak out amounts to active dishonesty in a manner directly related to the performance of the contract, a wrong has been committed and correcting it does not serve to confer a benefit on the party who has been wronged…
I recognize that in cases where there is no outright lie present, like the case before us, it is not always obvious whether a party “knowingly misled” its counterparty. Yet, Baycrest is wrong to suggest that nothing stands between the outright lie and silence. Elsewhere, as in the law of misrepresentation, for instance, one encounters examples of courts determining whether a misrepresentation was present, regardless of whether there was some direct lie (see A. Swan, “The Obligation to Perform in Good Faith: Comment on Bhasin v. Hrynew” (2015), 56 Can. Bus. L.J. 395, at p. 402). As Professor Waddams has written, “[a]n incomplete statement may be as misleading as a false one, and such half-truths have frequently been treated as legally significant misrepresentations.” Ultimately, he wrote, “it is open to the court to hold that the concealment of the material facts can, when taken with general statements, true in themselves but incomplete, turn those statements into misrepresentations” (The Law of Contracts (7th ed. 2017), at No. 441). Similarly, where a party makes a statement it believes to be true, but later circumstances affect the truth of that earlier statement, courts have found, in various contexts, that the party has an obligation to correct the misrepresentation.
Callow counsels prudence in how parties act as part of their governance processes in technology transactions. Care must be taken, at very least, not to mislead counterparties about a party’s intentions about its contractual rights and obligations and these rights and obligations must be exercised and performed honestly and reasonably and not capriciously or arbitrarily.
My firm, McCarthy Tétrault (Brandon Kain, Adam Goldenberg, Vivian Ntiri, Miriam Vale Peters) represented Callow in the appeal
The Supreme Court also confirmed this year in Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, a case that mostly dealt with recovery of damages, that while good faith “is an organizing principle in Canadian contract law”, “it manifests itself in specific circumstances” and in particular, “its application is generally confined to existing categories of contracts and obligations”. My firm, McCarthy Tétrault (Brandon Kain, Gillian P. Kerr, Adam Goldenberg) represented the intervener the Canadian Gaming Association in this case.
Liability in negligence for dangerous products
We are in the midst of the 4th industrial revolution (aka Industry 4.0 or I4). It has no historical precedents in terms of velocity, disruption, scope, or systems impact. Modern products are increasingly being controlled by computer algorithms and artificial intelligence systems. Many of these products such as autonomous vehicles can cause death, personal injuries, or property damage should things go awry. Some products, if they do not operate properly, may be dangerous.
There has been considerable study internationally on whether legal frameworks associated with product liability need to be changed because of the use of AI based products. See for example, European Parliament News, Parliament leads the way on first set of EU rules for Artificial Intelligence.
Manufacturers of computer and other technologically based products frequently also make representations to potential customers (with whom they have no contractual privity) to induce them to purchase those products. Sometimes – and there are many reported cases involving this – the representations are untrue or misleading and are made negligently.
The debate in Canada about the potential liability of manufacturers who place a dangerous product into the channels of trade, or for liability for negligent misrepresentations about those products, can be informed by the decision of the Supreme Court in 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35. On the facts of the case, franchisees of Mr. Sub unsuccessfully sued Maple Leaf for their financial losses arising from the sale of listeria infected (tainted) meat that was purchased via a contract with Mr Sub.
The Maple Leaf case focused on the scope of liability for negligence for economic damage caused by dangerous products. In determining whether Maple leaf was liable the Court used the opportunity to review the framework used for assessing liability both for negligent misrepresentations and for economic losses associated with negligence. In so doing, the Court applied the Anns/Cooper framework which focuses on the requirements of both proximity of the relationship and foreseeability of injury for the cause of action to arise. The Court, relying on prior jurisprudence, highlighted the defendant’s “undertaking of responsibility” as limiting the foreseeability requirement.
A good deal of the decision dealt with liability for the negligent supply of “shoddy goods” that cause economic damage. The Court expanded upon its prior precedent in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC), which provided a remedy in negligence for a loss arising from the negligent supply of a structure. The Court held that the same principle could apply to the supply of a shoddy product. However, the recoverable damages for such a claim are limited to the costs of averting a real and substantial danger of personal injury or damage to other property and not to the costs of repairing defects in the product per se.
One can readily imagine a future case of a maker of an autonomous potentially dangerous product making inaccurate statements about the capabilities of the product and then being sued when the product causes or threatens to cause economic damages to ultimate purchasers, third persons, or other property. The Maple Leaf case provides food for thought for analyzing these scenarios and for considering whether the current law is adequate to address these situations.
Supply of non-genuine or counterfeit goods
It is not uncommon for manufacturers and distributors of tech products to sell non-genuine products. Sometimes they may be counterfeit; in other cases the products may be made off the same assembly line as the genuine products, but not be authorized by the producer of the product. An example of this occurred in Computron Systems International Inc. v. Ladhani et al., 2020 ONSC 3188 in which Apple/Beats headphones were sold as “OEM” products. They were made to the same specifications as the genuine products and had identical packaging to the genuine products.
The Ontario court held that the sale of non-genuine products breached the Ontario Sale of Goods Act implied condition that where a product is sold by description it will correspond to that description. The sale of the non-genuine headphones was found to breach that condition. The Computron case reached a similar result as the Ontario Court of Appeal decision in Hearn v. McLeod Estate, 2019 ONCA 682.
It should be noted that Computron did not address the liability, if any, for selling genuine grey marketed goods. There is quite a body of law dealing with this. For those interested, the decision from the Quebec Court of Appeal in Costco Wholesale Canada Ltd. c. Simms Sigal & Co. Ltd., 2020 QCCA 1331 addresses whether selling grey market goods with knowledge that the sales may breach an exclusive distribution agreement can constitute the fault of contractual interference under Quebec law.
Canada’s anti-spam law, CASL, is by far the most draconian anywhere worldwide. See, Barry Sookman, CASL: the unofficial FAQ, regulatory impact statement, and compliance guideline; Barry Sookman, Michael Geist’s defense of Canada’s indefensible anti-spam law CASL.
In 3510395 Canada Inc. v. Canada (Attorney General), 2020 FCA 103 Compufinder challenged both CASL’s constitutionality, and the various interpretations of CASL made by the CRTC, before the Federal Court of Appeal. The Court of Appeal, incredibly, found that CASL does not violate the Charter’s right of freedom of expression. It also found that CASL is valid within the Federal powers.
Just as concerning were the Court’s interpretation of three of CASL’s key exceptions for sending commercial electronic messages (CEMs) without express consent. In this regard, the Court stated that:
- The existing business relationship (EBR) exception, according to the Court, is restricted to providing an implied consent only for sending CEMs to the individual within an organization who purchased a product or service. It does not, as everyone believed, permit sending CEMs to other persons within the organization that purchased a product or service. (See. Para. 236). This interpretation of CASL radically narrows the intended scope of the EBR exception, contrary to most organizations’ CASL compliance policies.
- The B2B exception, according to the Court, does not necessarily arise by virtue of contracts entered into between one business and another business. (See paras 237-244)
- The conspicuous publication exception permits CEMs to be sent to an individual within an organization that has conspicuously published his/her contact details, but only if the message is relevant to the person’s business, role, functions or duties in a business or official capacity. The Court of Appeal held, surprisingly, that sending CEMs based on a person’s published job title does not meet the relevance condition. Somehow, persons relying on the exception need to go further and obtain evidence of the actual roles of the individuals. The Court of Appeal did not explore or expressly consider the impracticality of this ruling.
A leave to appeal application from Compufinder decision to the Supreme Court has be applied for. Compufinder is represented by my firm, McCarthy Tétrault (Barry Sookman, Dan Glover, and Adam Goldenberg).
Legislative reforms to privacy laws
The most important developments in privacy in 2020 are efforts to reform federal and provincial privacy laws.
Bills have been tabled in Parliament and in the Legislature of the Province of Quebec that would introduce substantial changes to our laws. Other provinces including Ontario and B.C. are also studying whether to make changes to their provincial privacy laws. I have written extensively about these developments. See, Hello CPPA & PIDPT: The Federal Government Proposes Dramatic Evolution of PIPEDA (Barry Sookman, Dan Glover, Charles Morgan, Mike Scherman, Jade, Buchanan, and Karin Joizil), Barry Sookman, Canada’s Digital Charter privacy law, Barry Sookman, CPPA: transfers of personal information to service providers, Barry Sookman, CPPA: identifying the inscrutable meaning and policy behind the de-identifying provisions, Barry Sookman, Business Growth and Trade in Intangibles – Digital Trade, Data Governance, Intellectual Property. See also, Dan Glover, Jade Buchanan, and Kelsey Franks, CPPA: Welcome Clarification on Contractual and Other Duties on Cross-Border Transfers of Personal Information.
We need to update our privacy laws for a variety of reasons. One reason is to maintain the adequacy of our privacy laws with those in the EU. We clearly want to avoid the Schrems debacles (including the recent one in 2020) that has impacted cross border transfers of personal data between the United States and the EU. See, Barry Sookman, EU-US Privacy Shield invalid: Schrems II, Barry Sookman, Schrems, what the CJEU decided and why it is a problem for Canadian and other non-EU businesses. Also, Mike Scherman and Keith Rose, Schrems II: The Saga Continues.
Common law developments in privacy
In parallel with legislative initiatives, the courts have been recognizing the need for the common law to develop to meet pressing challenges associated with privacy.
Courts in the Province of Ontario have now adopted all four of Prosser’s “four-tort catalogue” as embraced by the American Law Institute in the Restatement (Second) of Torts (2010). These are (1) intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs; (2) public disclosure of embarrassing private facts about the plaintiff, (3) publicity which places the plaintiff in a false light in the public eye, and (4) appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness. The last of the four, “publicity which places the plaintiff in a false light in the public eye”, was adopted in Ontario in December 2019 in Yenovkian v. Gulian, 2019 ONSC 7279.
Several cases in B.C. had suggested that the tort of intrusion upon seclusion was not part of the B.C. common law. In Tucci v. Peoples Trust Company, 2020 BCCA 246 the Court of Appeal ruled that PIPEDA was not a bar to bringing common law claims for breach of privacy. In rendering its opinion, the Court went out of its way to signal that it was time to revisit whether the tort of intrusion upon seclusion should be recognized in that province. The Court stated:
It may be that in a bygone era, a legal claim to privacy could be seen as an unnecessary concession to those who were reclusive or overly sensitive to publicity, though I doubt that that was ever an accurate reflection of reality. Today, personal data has assumed a critical role in people’s lives, and a failure to recognize at least some limited tort of breach of privacy may be seen by some to be anachronistic.
There was also an interesting case in 2019, Haikola v. The Personal Insurance Company, 2019 ONSC 5982, casting doubt as to whether class actions are available under PIPEDA. The defendants in the case were represented by McCarthy Tetrault (Christine L. Lonsdale, Gillian Kerr, Caroline H. Humphrey).
What is surprising is that the common law courts in Canada have not yet recognized the generalized tort of misuse of private information that has been developing in the U.K. for two decades since the decision of the Court of Appeal in Douglas v. Hello! Ltd.  F.S.R. 40 (Eng. C.A.). The Canadian Supreme Court opened the window to the development of the common law in this direction in Nevsun Resources Ltd. v. Araya, 2020 SCC 5. In this case, the Court reconfirmed the importance of the development of the common law “to keep the law aligned with the evolution of society”.
The Federal government and Quebec’s proposed privacy law reforms changes would, among other things, introduce very significant penalties for privacy breaches and provide new private rights of action. It remains to be seen whether Parliament and the legislatures will see fit to limit remedies for privacy breaches to those under the existing or updated laws or will permit claims to be brought also under the overlapping and developing causes of action available under the common law (or civil law). This is a question of great importance that needs to be addressed in the law reform efforts.
Vicarious liability for privacy breaches
Privacy breaches are often caused by “rogue” employees. It has often just been assumed that employers are vicariously liable for these acts including common law torts and under data protection legislation. However, a decision of the U.K. Supreme Court in WM Morrison Supermarkets plc v Various Claimants  UKSC 12 (01 April 2020) found for an employer on vicarious liability principles when one of its employees had posted personal data of the company’s employees on the dark web. The court dismissed both the common law claim for misuse of private information and breach of the U.K. Data Protection Act (DPA).
In 2012 the Supreme Court released five copyright decisions, dubbed the “pentology”. Based on recent decisions, we may soon be heading for a new copyright “trilogy”.
In 2020, the Federal Court of Appeal released its decision in York University v. Copyright Licensing Agency, 2020 FCA 77. It ruled that tariffs certified by the Copyright Board are not mandatory; in other words, users have the option of opting in (or out) of a tariff, even after opposing the tariff before the Board. The Court also confirmed that York could not avail itself of the fair dealing defense for copying of books and other works within Access Copyright’s repertoire. The Supreme Court granted leave to appeal in both the appeal and cross appeal. See, York University, et al. v. Canadian Copyright Licensing Agency (“Access Copyright”), et al. Docket 39222.
This year, the Federal Court of Appeal released its long awaited reasons in Entertainment Software Assoc. v. Society Composers, 2020 FCA 100 in the “making available right” reference. The Court, surprisingly and despite an extensive record before it and despite detailed reasons by the Copyright Board reversed the Board decision and appeared to rule that the making available right was merely a “preparatory act”. It did so notwithstanding the clear intention of Parliament to implement the WIPO Copyright Treaties (WCT and WPPT), the “presumption of conformance” interpretation principle recently confirmed by the Supreme Court in Quebec (Attorney General) v. 9147-0732 Québec inc., 2020 SCC 32, and other cases that recognized and found defendants liable based on the making available right. See, Trader v. CarGurus, 2017 ONSC 1841, Bell Canada v. Lackman, 2018 FCA 42, Bell Canada v. 1326030 Ontario Inc. (iTVBox.net), 2016 FC 612, aff’d 2017 FCA 55. The decision of the Court of Appeal also raises questions about the standard of judicial review from decisions of the Copyright Board and whether the Court properly applied the new framework set out by Supreme Court in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 and Bell Canada v. Canada (Attorney General), 2019 SCC 66 (Bell was represented by McCarthy Tétrault (Steven Mason, Brandon Kain and Richard Lizius). Both Music Canada and SOCAN filed leave to appeal applications to the Supreme Court. Music Canada is represented by McCarthy Tétrault (Barry Sookman, Dan Glover, and Connor Bildfell).
Last year the Federal Court granted a copyright website blocking order in Bell Media Inc. v. GoldTV.Biz, 2019 FC 1432. This remedy is widely available in other countries. The only ISP to oppose the order appealed the case to the Federal Court of Appeal. See, Teksavvy Solutions Inc. v. Bell Media Inc., et al, Case A-440-19. Because of the importance of the case, the Court granted numerous parties leave to intervene in the appeal. Interveners include International Publishers Association, International Association of Scientific, Technical and Medical Publishers, American Association of Publishers, The Publishers Association Limited, Canadian Publishers’ Council, Association of Canadian Publishers, The Football Association Premier League Limited, and DAZN Limited. These interveners are represented by McCarthy Tétrault (Barry Sookman, Steve Mason and Dan Glover). The case may not end at the Court of appeal.
Other copyright cases
Statutory damages recognize that actual damages often are difficult to prove; they incentivize copyright owners to invest and enforce their copyrights on the one hand, and deter infringers by preventing their unjust enrichment on the other. Last year (as well as in 2019) there were important decisions providing guidance on how statutory damages should be assessed. See, Rallysport Direct LLC v. 2424508 Ontario Ltd., 2020 FC 794, Trout Point Lodge Limited v. Automattic Inc., 2020 NSSC 212, Biofert Manufacturing Inc. v. Agrisol Manufacturing Inc., 2020 FC 379, Thomson v. Afterlife Network Inc., 2019 FC 545, Louis Vuitton Malletier S.A. v. Wang, 2019 FC 1389, Young v. Thakur, 2019 FC 835.
The Ontario Superior Court also released an important fair dealing decision in Wiseau Studio, LLC et al. v. Harper et al., 2020 ONSC 2504. The court found that there had been copying of a substantial part of the plaintiff’s work, The Room. However, the copying was not infringing because the copying was excused by fair dealing for the purpose of criticism and review.
The Federal Court released an important decision dealing with how to assess patentable subject matter. In Choueifaty v. Canada (Attorney General), 2020 FC 837 the applicant applied for a patent for “Method and Systems for Provision of an Anti-Benchmark Portfolio”. The application was rejected by the examiner and the Board.
The Court allowed the appeal and rejected the “problem solution” approach that had been followed in the examination of the application and which was based on the then current Manual of Patent Office Practice (MOPOP). The Appellant submitted, and the Court agreed, that using the problem-solution approach to claims construction is akin to using the “substance of the invention” approach discredited by the Supreme Court of Canada in Free World Trust v Électro Santé Inc, 2000 SCC 66. The application was remitted back to the examiner. Following the release of the decision, CIPO issued new guidance related to patentable subject matter including for computer-implemented inventions.
Developments in e-commerce, technology transactions, privacy and data protection, and intellectual property continue at a dizzying pace. Many of these are driven by changes in technology, new business models, developments in the law, and an increased focus of the adequacy of regulatory frameworks to address these changes.
This post focuses only on the top 2020 highlights. My book on Computer, Internet, and e-Commerce law has much more detailed analysis of these issues and the jurisprudence discussed here. My annual talk to the Toronto Computer Lawyers’ Group will include many more of the developments since my last talk including many of the international developments not included here. My slides from my last talk can be accessed here.
The best to everyone for the new year.