Monthly Archives: April 2021

Statutory Damages Awarded for Copyright Infringement Through Summary Proceedings

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The Federal Court recently provided us with a decision, in Patterned Concrete Mississauga Inc. v. Bomanite Toronto Ltd. (2021 FC 314), awarding both an injunction and damages through summary proceedings rather than the more complex (and costly) type of pleadings before this court. The decision at issue stems from the alleged copying by a competitor of certain forms used to contract with customers. Faced with the apparent copying of its forms by a competitor, the plaintiff requested that the Federal Court not only enjoin such copying but also that it grant the petitioner statutory damages. Fortunately for the plaintiff, it successfully proved its employee’s creation of the original forms, coupled with the transition of a long-time employee to the defendant’s organization, which explained how the documents were likely passed between the businesses at issue. Faced with such facts, the judge accepted the plaintiff’s position that its copyrights in those works had been adequately demonstrated, as was the copying by the defendant. The judge did so in the context of summary proceedings which may allow resolution of a claim, before the Federal Court, in months rather than years, at a fraction of the cost. It seems worth mentioning that the judge did so notwithstanding an attempt by the defendant to set aside the registration certificates obtained by the plaintiff immediately prior to its filing of legal proceedings. Indeed, the judge held such certificates could be taken into consideration upon ascertaining the copyrights of a plaintiff, even in cases where they were obtained concomitantly with the filing of proceedings, especially in the absence of evidence by the defendant contradicting ownership of copyright by the plaintiff, as had been the case here. The court in this case also easily concluded that the forms at issue qualified as works protected by copyright owned by the plaintiff, notably because of testimony from the actual creator of the original forms. This allowed the court to find infringement, including by side-by-side comparison of the documents at issue, which showed clear acts of reproduction. This allowed the court to award an injunction coupled with statutory damages of $24,000, namely $8,000 for each work that had been copied. This case is part of a trend showing a growing willingness by the Federal Court to award both injunctions and damages in matters of copyright, even through summary proceedings.

Québec Copyright Infringement Decision About the Photograph of a Sculpture Serves Valuable Lesson Regarding Risk of Relying on a Mere Permission from the Author

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A Québec court issued a copyright infringement decision this week which seems worth mentioning even though it’s merely a small claims court decision. Not too surprisingly, the decision at issue, Gadbois v. 2734-3540 Québec Inc. (2020 QCCQ 11186), concludes that a photograph circulated by email did infringe the copyright of the author of the sculpture shown therein. Even though we’re dealing with a small claims decision and a simple fact pattern, the decision seems worth discussing a little this morning, if only for the lesson it serves us as to copyright-related permission.

This decision stems from the holding of a 1995 art exhibition which the organizer then sought to promote through email messages that included a photograph of one of the sculptures shown at the event. Twenty-five (yes, 25) years later, the sculptor sues the organizer of the exhibition for copyright infringement based on the alleged failure of the organizer to obtain his authorization to circulate photographs of his work.

Before the court, the organizer of the event claimed that the sculptor had given his permission, even though the company was unable to produce a copy of the writing through which such an authorization had allegedly been given. Unfortunately for the defendant, this prompted the judge to refuse to even entertain the possibility that permission had been given, something the judge may have been somewhat harsh about.

At any rate, this case illustrates that even though the Copyright Act does not require that reproduction permission be granted in writing (as opposed to assignments), relying on an authorization that was not documented in writing may prove hazardous once in front of a judge. Even though legally it does works, in principle, if litigation occurs, you may not be able to demonstrate adequately that sufficient permission really was granted by this particular author in those particular circumstances.

Even though this decision isn’t exactly revolutionary nor precedent-setting, it does serve as a good reminder that getting copyright permission in writing is a useful precaution, and may well avoid unnecessary litigation later. Failing to do so may well the author to later claim they had not in fact consented to whatever was done (such as sending photographs by email) and, thus, that they’re allowed damages because of the copyright infringement.

As to such writings, one should note that they need not be complicated or lengthy documents to prove effective for this purpose. Heck, a simple paragraph (or even one sentence) may sometimes be all you need to show that permission did exist. Contrary to what some may think, such permission need not be described in long-winded documents with numerous complicated provisions. What you want to avoid is simply being involved in eventual litigation where you end up having to testify that the author did authorize you to do X, where the author himself testifies to the contrary—this is not something that will normally require producing complex documentation.

Even though, in the case of Mr. Gadbois’s sculpture, we’re dealing with a fairly insignificant damage award ($1,000), the defendant may well have been better off retaining a writing showing the author’s permission. This decision also shows that such problems may materialize years after the events, like here, with events dating back to 1995. Given how long copyrights remain protected for, failing to document permission may come back to haunt you years and years later—one more reason to avoid this problem, especially through something as cheap and easy as a written permission.

Coinsquare to Disclose to the CRA the Identity of Certain Sellers of Cryptocurrency

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We learned this week that the Federal Court recently ordered Coinsquare Ltd., a cryptocurrency trading platform, to disclose the identity of some of its clients to the Canadian tax authorities.

After a similar fight between this company and the IRS, Canadian taxation authorities have also been trying to get Coinsquare to disclose who its clients are, so as to ascertain tax liability of profit-making users, something Coinsquare has so far refused to do. For the Canada Revenue Agency (the “CRA”), given how difficult it is to determine which taxpayers are making profits by selling cryptoassets, platforms such as Coinsquare should be required to report to the authorities any transaction allowing Canadians to generate taxable profits, whenever transacting intangible assets of this kind, so as to avoid allowing such taxpayers to avoid tax liability too easily.

Even though the CRA initially requested that Coinsquare disclose the identity of all its customers since 2013, Coinsquare managed to negotiate much less onerous disclosure obligations. According to the recently issued Federal Court order, the company is only required to disclose the identity and assets of its biggest clients, those who meet a certain threshold. This corresponds to about 10% of Coinsquare users.

For the CRA, this was a first foray into the realm of cryptocurrency platforms, including to get them to cooperate with Canadian tax authorities in a way that increases the odds of collecting tax on profits made through the sale of cryptoassets by Canadians. Given the substantial profits now being made by some cryptocurrency traders, one can certainly understand the CRA’s motivation in attempting to get trading platforms like Coinsquare to collaborate.