Osler Hoskin Harcourt LLP Copyright Update for Technology

Osler, Hoskin & Harcourt LLP Copyright Update for Technology Law Practitioners 2019 CAN-TECH LAW ANNUAL CONFERENCE Barry Fong Partner, National Intellectual Property Department October 28, 2019

A look back at the past year…

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS NAFTA 2. 0 and Copyright • Canada-United States-Mexico Agreement (CUSMA) signed on November 30, 2018 to replace the North American Free Trade Agreement (NAFTA) • Canada agrees to extend general term of copyright protection to life of the author + 70 years ◦ Same as current term of copyright in the US; Mexico is Life + 100 years ◦ Canada will have up to 2 ½ years from the date CUSMA enters into force to amend the Copyright Act to implement the extended term 3

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Bill C-86, Budget Implementation Act, 2018, No. 2 • On October 29, 2018, the Government introduced Bill C-86, a lengthy budget bill that included amendments to the Copyright Act and other aspects of Canada’s intellectual property regime • Bill C-86 received Royal Assent on December 13, 2018 Copyright Act amendments included: (1) Changes to “Notice and Notice” to address concerns that copyright owners were abusing the regime by including settlement demands ◦ Prohibited notices from containing offers to settle or demands for personal information ◦ Provided Governor in Council with ability to make further prescriptions on the content and form of a notice 4

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Bill C-86, Budget Implementation Act, 2018, No. 2 Copyright Act amendments included: (2) Modernizing the legislative framework relating to the Copyright Board ◦ Objective: To improve the timeliness and clarity of its proceedings and decision-making processes ◦ (a) Codified the Board’s mandate and established a list of criteria it must consider to set “fair and equitable” royalty and levy rates (including market rates and the public interest) ◦ (b) Established new and shorter timelines for the process of proposing and approving tariffs ◦ (c) Streamlined procedural steps and formalized case management of Board proceedings ◦ (d) Reduced the number of matters that must be considered by the Board 5

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Shifting Paradigms: Report of the Standing Committee on Canadian Heritage • Report released May 15, 2019 following completion of the study on remuneration models for artists and creative industries • 19 meetings, 115 witnesses, 75 written briefs • 22 recommendations for consideration by the House of Commons or the Government • Some major themes: the increasing “value gap”, decline in the artistic middle class, and the impact of technology on creative industries 6

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Shifting Paradigms: Report of the Standing Committee on Canadian Heritage The impact of technology on creative industries • Opportunities and challenges offered by the Internet: ◦ Growth of online streaming platforms = ↑ ↑ access to content ◦ Remuneration has not kept pace due to remuneration models and online piracy (i. e. rise of illegal file-sharing software) 7

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Shifting Paradigms: Report of the Standing Committee on Canadian Heritage • Recommendations: ◦ #1 – Increase support for creators and creative industries in adapting to new digital markets ◦ #2 – Develop mechanisms by which streaming services will develop and promote Canadian content ◦ #5 – Review the safe harbor exceptions and laws to ensure ISPs are accountable for their role in distribution of content ◦ #6 – Increase efforts to combat piracy and enforce copyright ◦ #8 – Regulate music streaming services like other Canadian music services ◦ #9 – Copyright Board review of online music services tariffs to ensure royalty payments provide fair compensation to artists 8

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology • Report released June 3, 2019 following completion of the five-year review of the Copyright Act required by Section 92 • 52 meetings, 263 witnesses, 192 written briefs, over 6, 000 emails/ letters • 36 recommendations for consideration by the House of Commons or the Government • First recommendation was to repeal Section 92 requiring five-year reviews of the Copyright Act 9

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology OWNERSHIP OF AI-GENERATED WORKS • Should copyright protection be granted to works created by or with the help of artificial intelligence (AI)? • “Yes”: denying copyright protection would “produce a chilling effect on investment and advancement in the nascent Canadian AI sector” (Dessa) ◦ Protection could be granted to works created without a human author in certain circumstances ◦ UK legislation grants copyright in a computer-generated work to “the person by whom the arrangements necessary for the creation of the work are undertaken” 10

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology OWNERSHIP OF AI-GENERATED WORKS • Should copyright protection be granted to works created by or with the help of artificial intelligence (AI)? • “No”: copyright legislation is meant to encourage human beings to create and disseminate works ◦ If human being has exercised skill and judgment in the creation of an original work using AI, they should be able to claim copyright 11

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology OWNERSHIP OF AI-GENERATED WORKS • Should copyright protection be granted to works created by or with the help of artificial intelligence (AI)? • Committee Observations: ◦ “Parliament should enact legislation to help Canada’s promising future in artificial intelligence become a reality” ◦ Legislation can be adapted to distinguish works made by humans with the help of AI-software from works created by AI without human intervention… 12

Recommendation #14: That the Government of Canada consider amending the Copyright Act or introducing other legislation to provide clarity around ownership of a computer-generated work.

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology INFORMATIONAL ANALYSIS • Should the Copyright Act include an exception to copyright infringement for informational analysis / machine learning? • “Yes”: new exception would prevent copyright legislation from hindering the development of AI software ◦ UK legislation includes exception for making copies for text and data analysis for non-commercial research (Section 29 A of the. UK Copyright, Designs and Patents Act 1988) ◦ Exception limited to the use of lawfully accessed copyrighted content 14

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology INFORMATIONAL ANALYSIS • Should the Copyright Act include an exception to copyright infringement for informational analysis / machine learning? • “No”: authors and publishers should not be “unpaid suppliers to technology developers” (Brush Education) ◦ Collective societies should be allowed to licence uses made for the purpose of informational analysis ◦ Very few witnesses opposed an exception for informational analysis 15

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology INFORMATIONAL ANALYSIS • Should the Copyright Act include an exception to copyright infringement for informational analysis / machine learning? • Committee Observations: ◦ Evidence persuasive that “facilitating the informational analysis of lawfully acquired copyrighted content could help Canada’s promising future in AI become a reality”… 16

Recommendation #23: That the Government of Canada introduce legislation to amend the Copyright Act to facilitate the use of a work or other subject-matter for the purpose of informational analysis.

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology TECHNOLOGICAL PROTECTION MEASURES (TPMs) • Recognized that the effective use of TPMs is important in some creative industries and that Canada has international obligations to have digital lock provisions • Agreed that “the circumvention of TPMs should be allowed for noninfringing purposes, especially given the fact that the Nintendo case provided such a broad interpretation of TPMs” • Recommendation #19: Go. C examine measures to modernize copyright policy with digital technologies; relax TPM provisions to ensure they do not restrict non-infringing uses 18

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology SITE BLOCKING & DE-INDEXING • “Site-blocking” – requiring OSPs to block end-user access to an infringing website • “De-indexing” – requiring search engines to remove infringing websites from their search results • Raises concerns of censorship of legitimate content and violation of freedom of expression and net neutrality protections • Recommendation #27: Go. C consider evaluating tools to provide injunctive relief in a court of law for deliberate online copyright infringement (with paramount importance to net neutrality) 19

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology STATUTORY DAMAGES • Proponents both for and against increasing the quantum of statutory damages • Currently, Section 38. 1 of the Copyright Act provide: ◦ Commercial purposes: $500 to $20, 000 per work ◦ Non-commercial purposes: $100 to $5, 000 per work • Recommendation #28: Go. C increase upper and lower limits of statutory damages to account for inflation, based on the years when they were originally set 20

Notable Copyright Decisions

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS P. S. Knight Co. Ltd. v. Canadian Standards Association • Citation: 2018 FCA 222 (December 7, 2018) • CSA, a not-for-profit corporation – develops, tests and certifies over 3, 000 voluntary standards, including the CSA Electrical Code • P. S. Knight, a commercial competitor – reproduced and threatened to distribute copies of 2015 CSA Electrical Code at 1/3 rd the price • CSA sued for copyright infringement and won at trial level • Knight appealed to FCA, argued that the Code is the law, there can be no copyright, and citizens have the right to unimpeded access 22

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS P. S. Knight Co. Ltd. v. Canadian Standards Association • Knight relied heavily on U. S. copyright law: “Copyright protection…is not available for any work of the United States Government” (§ 105) • No similar prohibition in Canada – copyright subsists in every original work • Majority held the Code does not constitute “the law” • Alternative argument of Crown copyright also failed: the Code was not “prepared or published by or under the direction or control of Her Majesty or any government department” (s. 12) • No fair dealing defence • Appeal dismissed; leave to appeal to the SCC dismissed 23

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Keatley Surveying Ltd. v. Teranet Inc. • Citation: 2019 SCC 43 (September 26, 2019) • Long-running dispute between professional land surveyors and Teranet, which manages Ontario’s electronic land registry system • Land surveyors create plans, often deposited with public land registries, prepared and filed pursuant to legislation/regulations • Plans were copied and sold to the public without the consent of the surveyors who prepared them • Class action copyright infringement; parties moved for summary judgment on issue of whether copyright in the survey plans belongs to Ontario pursuant to Section 12 of the Copyright Act 24

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Keatley Surveying Ltd. v. Teranet Inc. • Section 12 of the Copyright Act: Where copyright belongs to Her Majesty Without prejudice to any rights or privileges of the Crown, where any work is, or has been, prepared or published by or under the direction or control of Her Majesty or any government department, the copyright in the work shall, subject to any agreement with the author, belong to Her Majesty and in that case shall continue for the remainder of the calendar year of the first publication of the work and for a period of fifty years following the end of that calendar year. 25

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Keatley Surveying Ltd. v. Teranet Inc. • The Ontario Superior Court and Court of Appeal both held that copyright in the surveys belonged to the provincial Crown; Keatley granted leave to appeal to the Supreme Court of Canada • First time that Crown copyright has been considered by the Supreme Court since it was enacted in 1921 • Supreme Court issued a 4 -3 split judgment: ◦ All 7 judges agreed that copyright in the survey plans belonged to the Crown ◦ Majority and Minority differed on the appropriate test to determine scope and application of Section 12 26

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Keatley Surveying Ltd. v. Teranet Inc. Majority (per Abella J. ): • Section 12 as two prongs: 1. the “prepared” prong; and 2. the “published” prong The prepared prong: the Crown will own copyright in a work that is prepared by an employee or agent of the Crown, as well as by an independent contractor commissioned by the Crown to create a work The published prong: mere publication is not enough… “a work will only be published by or under the direction or control of the Crown when it can be said that the Crown exercises direction or control over the publication process, including both the person publishing the work and the nature, form and content of the final, published version of a work” 27

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Keatley Surveying Ltd. v. Teranet Inc. Minority (per Côté and Brown JJ. ): • “Prepared or published by or under the direction or control” of the Crown should be interpreted according to its ordinary meaning: the act of preparing or publishing the work must be done either by the Crown itself or under the Crown’s direction or control • Criticized the Majority’s approach that both the “prepared” prong and the “published” prong entail inquiring whether the Crown has sufficient direction or control in the work • Section 12 should only apply to “government works” defined as “a work that serves a public purpose and in which vesting the copyright in the Crown furthers that purpose” 28

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Damages Cases • Thomson v. Afterlife Network Inc. , 2019 FC 545 (May 1, 2019) ◦ The “Obituary Piracy” Case – class action proceeding against Afterlife, which reproduced > 1 million obituaries online without authorization ◦ Afterlife website was monetized by selling flowers and virtual candles and hosting third party advertisements ◦ Section 38. 1 prescribes minimum statutory damages of $500 per work infringed for commercial purposes • Approximately 2 million works infringed = $1 billion (!!!) • “grossly disproportionate” ◦ Judge relied on Section 38. 1(3) which gives the courts discretion to award lower amounts than the prescribed minimums ◦ Award: $10 million statutory damages + $10 million aggravated damages 29

2019 COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Statutory Damages Cases • Young v. Thakur, 2019 FC 835 (June 20, 2019) ◦ Applicant is singer/songwriter, created a musical work and sound recording called “Secrets”; hired Respondents to create music video ◦ Respondents posted the music video online as part of portfolio on website and Vimeo ◦ Applicant sought statutory damages at the maximum of $20, 000 per infringement; argued that every “view” of the music video was a separate infringement (82 views) ◦ Court correctly held that Section 38. 1 prescribes the range of statutory damages per work, for all infringements ◦ No aggravating factors; awarded $1, 000 per work infringed x 2 works 30

Thank you

COPYRIGHT UPDATE FOR TECHNOLOGY LAW PRACTITIONERS Barry Fong Partner, Intellectual Property Registered Trademark Agent BFong@osler. com 613. 787. 1097 DIRECT 613. 235. 7234 MAIN 613. 235. 2867 FACSIMILE Osler is a leading business law firm practising internationally from offices across Canada and in New York. Our clients include industry and business leaders in all segments of the market and at various stages in the growth of their businesses. We have built our reputation on our commitment to our clients' success and the experience, expertise and collaborative approach for which we are recognized. 32