Copyrights

Earlier this month, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-18 (Online News Act) in Parliament. This bill, which was largely inspired by similar legislation in Australia, aims to reduce bargaining imbalances between online platforms and Canadian news outlets in terms of how these “digital news intermediaries” allow news content to be accessed and shared on their platforms. If passed, the Online News Act would, among other things, require these digital platforms such as Google and Facebook to enter into fair commercial agreements with news organizations for the use and dissemination of news related content on their platforms. Bill C-18, which was introduced on April 5, 2022, has a very broad scope, and covers all Canadian journalistic organizations, regardless of the type of media (online, print, etc.), if they meet certain eligibility criteria. With respect to the “digital news intermediaries” on which the journalistic content is shared, Bill C-18 specifically targets online communication platforms such as search engines or social media networks through which news content is made available to Canadian users and which, due to their size, have a significant bargaining imbalance with news media organizations. The bill proposes certain criteria by which this situation of bargaining imbalance can be determined, including the size of the digital platform, whether the platform operates in a market that provides a strategic advantage over news organizations and whether the platform occupies a prominent position within its market. These are clearly very subjective criteria which make it difficult to precisely identify these “digital news intermediaries.” Bill C-18 also currently provides that the intermediaries themselves will be required to notify the Canadian Radio-television and Telecommunications Commission (“CRTC”) of the fact that the Act applies to them. The mandatory negotiation process is really the heart of Bill C-18. If passed in its current form, digital platform operators will be required to negotiate in good faith with Canadian media organizations to reach fair revenue sharing agreements. If the parties fail to reach an agreement at the end of the negotiation and mediation process provided for in the legislation, a panel of three arbitrators may be called upon to select the final offer made by one of the parties. For the purposes of enforceability, the arbitration panel’s decision is then deemed, to constitute an agreement entered into by the parties. Finally, Bill C-18 provides digital platforms the possibility of applying to the CRTC for an exemption from mandatory arbitration provided that their revenue sharing agreements meet the following criteria: Provide fair compensation to the news businesses for news content that is made available on their platforms; Ensure that an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content; Do not allow corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets; Contribute to the sustainability of Canada’s digital news marketplace; Ensure support for independent local news businesses, and ensure that a significant portion of independent local news businesses benefit from the deals; and Reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models. A bill of this scope will certainly be studied very closely by the members of Parliament, and it would not be surprising if significant amendments were made during this process. We believe that some clarifications would be welcome, particularly as to the precise identity of businesses that will be considered “digital information intermediaries” for the purposes of the Online News Act.

Ahead of the 2021 holiday season, as children dream about the toys that Santa Claus will bring them, let’s take a look back at a landmark decision that reviews what is copyrightable under the Copyright Act. As visual artist Claude Bouchard (“Bouchard”) learned from the outcome of her legal action against Ikea Canada (“Ikea”),1 the Copyright Act2 does not protect the ideas, styles or methods developed and used by artists to create their works, even if their work is exhibited in museums and marketed internationally. From 1994 to 2005, Bouchard sold in a Montreal’s Unicef store soft toys that she designed based on children’s drawings. In September 2014, Ikea held a drawing competition for children and made 10 soft toys from the winning entries, marketed as part of the “Sogoskatt” collection. A portion of the profits were donated to UNICEF. Originally, Bouchard was seeking a monetary award against UNICEF and Ikea for copying her toys, alleging that they had used, in particular, her idea, her original style and her methods. In 2018, the Superior Court ruled on the case for the first time, dismissing the legal action against UNICEF based on the privileges and immunities of the United Nations.3 UNICEF’s immunity from suits is in this case absolute since Bouchard’s legal action is directly related to the organization’s mission.4 In January 2021, Justice Patrick Buchholz of the Superior Court put an end to the dispute between Bouchard and Ikea, dismissing the legal action for infringement of Bouchard’s works based on the Copyright Act as being ill-founded, destined to fail and unreasonable, thus opening the door to its dismissal for abuse of process.5 Why was Bouchard’s infringement action ill-founded? The Court first examined the arguments put forward by Ikea to the effect that two essential elements giving rise to the infringement action6 could not be demonstrated by Bouchard: There is no evidence that Ikea had access to Bouchard’s work.7 There is no evidence that Ikea reproduced a substantial part of the plaintiff’s work. Therefore, Ikea argues that there was no infringement of the copyright of Bouchard, who was seeking a monopoly on an idea, style or method, which is not protected under the Copyright Act8 Lack of access to Bouchard’s works The Court did not accept Ikea’s first argument that there was a lack of access to Bouchard’s works. It ascertained that the proceedings were at a too preliminary stage to make a determination.9 The Honourable Justice Buchholz pointed out that section 51 of the Code of Civil Procedure is not [our translation] “a free pass to bypass the judicial process and prematurely set aside otherwise allowable claims” when the evidence is still incomplete.10 The Court also noted the seriousness of the links between Ikea and UNICEF, which may have made access to Bouchard’s works possible and likely.11 In this context, only a hearing on the merits could have clarified the question of access to Bouchard’s works by making it possible to test, more precisely, the credibility of the witnesses at trial.12 Lack of reproduction of a substantial part of the work Bouchard alleged that the toys designed by Ikea incorporate eight essential features of her soft toy concept, namely [our translation]: Round eyes cut from non-fraying fabrics and sewn around the edges; Thinly cut linear mouths sewn into non-fraying fabrics; iii. Polyester fibre stuffing; iv. The toy is proportionate to the size of children’s hands; v. Soft toy faithful to the child’s drawing; vi. Child’s name and age on the tag; vii. Everything is solid (head, body, legs, and tail), in the same plane and stuffed; viii.  Use of textiles, plush, and the original colours of the drawings.”13 However, the Court accepted Ikea’s second argument that Ikea’s soft toys did not reproduce a substantial part of Bouchard’s work. Since Bouchard’s works and Ikea’s works did not share a resemblance, this means that a substantial part of the works was not reproduced.14 How to determine if a “substantial part” of a work has been reproduced? Under the Copyright Act, copyright, “in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof”.15 The Supreme Court defined “substantial part” of the work in the Cinar decision,16 stating that it is a flexible notion to be interpreted based on the facts. The assessment is holistic and qualitative in nature. The criteria to be used by the courts to determine whether there has been a reproduction of a “substantial part” of a work are as follows: The originality of the work, which must be protected under the Copyright Act;17 The part “represents a substantial portion of the author’s skill and judgment”;18 The nature of the two works as a whole, without looking at isolated passages;19 “[T]he cumulative effect of the features copied from the work”.20 Although there are some similarities between the Bouchard and Ikea soft toys, the soft toys are completely different and do not look the same because they are designed from the drawings of different children. Bouchard even admitted that [our translation] “a toy made from a unique child’s drawing is in itself a unique toy”.21 Can the Copyright Act protect an idea, a concept or a body of work? Bouchard instead claimed that Ikea illegally reproduced her idea, concept, style or methods.22 She ultimately argued that Ikea did not copy a specific work, but instead copied her “work” in a broader sense.23 Bouchard’s arguments highlight issues that often come up in the court system and demonstrate a misunderstanding of what is protected by copyright. Copyright of an idea, concept, style or method In 2004, the Supreme Court pointed out that copyright protects the expression of ideas in a work and not the ideas themselves.24 Justice Buchholz rightly pointed out that an artist can be inspired by another artist without infringing the rights protected by the Copyright Act. He noted, for example, that if styles were protected, Monet could not have painted in the Impressionist style.25 The Court also noted that the soft toys made by Bouchard correspond to a generic style dictated by safety standards for the manufacture and sale of toys.26 Thus, the Copyright Act does not offer any protection for ideas, concepts, styles or manufacturing methods and techniques. Copyright of an artistic legacy, corpus, or collection The Court specified that the Copyright Act does not protect a body of work or an artistic legacy, but rather each individual work.27 Bouchard c. Ikea Canada, 2021 QCCS 1376. R.S.C. 1985, c. C-42. Bouchard c. Ikea Canada, 2018 QCCS 2690. Idem, para. 24–25. Section 51, Code of Civil Procedure, CQLR c. C-25.01. Section 2, “infringing”, Copyright Act. Bouchard c. Ikea Canada, supra, note 1, para. 16–17. Idem, para. 15. Idem, para. 34. Idem, para. 28. Idem, para. 37–39. Idem, para. 40. Idem, para. 49. Idem, para. 55. Section 3, Copyright Act. Cinar Corporation v. Robinson, 2013 SCC 73, para. 26, 35–36. Idem, para. 26. Idem. Idem, para. 35. Idem, para. 36. Bouchard c. Ikea Canada, supra, note 1, para. 53. Idem, para. 56. Idem, para. 69. CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, para. 8. Idem, para. 67. Toys Regulations, SOR/2011-17, adopted under the Canada Consumer Product Safety Act, S.C. 2010, c. 21, s. 29, 31–32. Bouchard c. Ikea Canada, supra, note 1, para. 69–71.

Ransomware has wreaked so much havoc in recent years that many people forget about other cybersecurity risks. For some, not storing personal information makes them feeling immune to hackers and cyber incidents. For others, as long as their computers are working, they do not feel exposed to no malware. Unfortunately, the reality is quite different. A new trend is emerging: malware is being released to collect confidential information, including trade secrets, and then such information is being sold to third parties or released to the public.1 The Pegasus software used to spy on journalists and political opponents around the world has been widely discussed in the media, to the point that U.S. authorities decided to include it on their trade blacklist.2 However, the use of spyware is not limited to the political sphere. Recently, a California court ordered a U.S. corporation, 24[7].ai, to pay $30 million to one of its competitors, Liveperson.3 This is because 24[7].ai installed competing technology on mutual client websites where LivePerson’s technology already is installed. Liveperson alleged in its lawsuit that 24[7].ai installed spyware that gathered confidential and proprietary information and data regarding Liveperson’s technology and client relationships. In addition, the software which 24[7].ai allegedly installed removed some features of Liveperson’s technology, including the “chat” button. In doing so, 24[7].ai interfered in the relationship between Liveperson and its clients. This legal saga is ongoing, as another trial is scheduled to take place regarding trade secrets related to a Liveperson client.4 This legal dispute illustrates that cybersecurity is not only about personal information, but also about trade secrets and even the proper functioning of business software. A number of precautions can be taken to reduce the risk of cybersecurity incidents. Robust internal policies at all levels of the business help maintain a safe framework for business operations. Combined with employee awareness of the legal and business issues surrounding cybersecurity, these policies can be important additions to IT best practices. In addition, employee awareness facilitates the adoption of best practices, including systematic investigations of performance anomalies and the use of programming methods that protect trade secrets. Moreover, it may be advisable to ensure that contracts with clients provide IT suppliers with sufficient access to conduct  the necessary monitoring for the security of both parties. Ultimately, it is important to remember that the board of directors must exercise its duty with care, diligence and skill while looking out for the best interests of the business. Directors could be held personally liable if they fail to meet their obligation to ensure that adequate measures are implemented to prevent cyber incidents or if they ignore the risks and are wilfully blind. Thus, board members must be vigilant, be trained in and aware of cybersecurity in order to integrate it into their risk management approach. In an era in which intellectual property has become a corporation’s most important asset, it goes without saying that it is essential to put in place not only the technological tools, but also the procedures and policies required to adequately protect it! Contact Lavery for advice on the legal aspects of cybersecurity. See Page, Carly, “This new Android spyware masquerades as legitimate apps,” Techcrunch, November 10, 2021. https://techcrunch.com/2021/11/10/android-spyware-legitimate-apps; Page, Carly, “FBI says ransomware groups are using private financial information to further extort victims,” Techcrunch, November 2, 2021. https://techcrunch.com/2021/11/02/fbi-ransomware-private-financial-extort. Gardner, Frank, “NSO Group: Israeli spyware company added to US trade blacklist,” BBC News, November 3, 2021. https://www.bbc.com/news/technology-59149651. Claburn, Thomas, “Spyware, trade-secret theft, and $30m in damages: How two online support partners spectacularly fell out,” The Register,June 18, 2021. https://www.theregister.com/2021/06/18/liveperson_wins_30m_trade_secret. Brittain, Blake, “LivePerson wins $30 million from [24]7.ai in trade-secret verdict,”Reuters, June 17, 2021. https://www.reuters.com/legal/transactional/liveperson-wins-30-million-247ai-trade-secret-verdict-2021-06-17.

Do you have the right to copy source code written and developed by someone else? The answer to this question depends on the situation; however, even in the context of open innovation, intellectual property rights will be the starting point for any analysis required to obtain such an answer. In the software industry, open-source licences allow anyone to access the source code of corresponding software, free of charge and with few restrictions. The goal is generally to promote the improvement of this code by encouraging as many people as possible to use it. Linus Torval, the programmer of the Linux kernel (certainly one of the most well-known open-source projects) recently stated that without the open-source approach, his project would probably not have survived.1 However, this approach has legal consequences: Vizio was recently hit with a lawsuit alleging non-compliance with an open-sourceGPL licence used in the SmartCast OS software embedded in some of its televisions. It is being sued by Software Freedom Conservancy (“SFC”), an American non-profit promoting and defending open-source licences. As part of its lawsuit, SFC alleges, among other things, that Vizio was required to distribute the SmartCast OS source code under the above-mentioned open-source GPLlicence, which Vizio failed to do, thereby depriving consumers of their rights2. In Canadian law, section 3 of the Copyright Act3 gives the author the exclusive right to produce or reproduce all or any substantial part of an original work. This principle has been adopted by all signatories of the 1886 Berne Convention, i.e., almost every country in the world. A licence agreement, which may inter alia confer the right to reproduce the work of another person, can take different forms. It also establishes the extent of the rights conferred and the terms and conditions of any permitted use. However, not all open-source licences are equivalent. Many allow creators to attach various conditions to the right to use the code that has been made available. Under these licences, anyone may use the work or software, but subject to the following constraints, depending on the type of licence in effect: Obligation to display: An open-source licence may require disclosure of certain information in the software or in the source code itself, such as the following: The author’s name or pseudonym, or even maintaining the anonymity of the author, depending on their wishes, and/or a citation of the title of the work or software; The user licence of the redistributed open-source work or software; A modification note for each modified file; and A warranty disclaimer. Contribution obligations: Some licences require the sharing of any modifications made to the open-source code, with said modifications being under the same licence conditions. In some cases, this obligation extends to any software that incorporates the open-source code. In other words, code derived from open-source material can itself become open-source. This obligation to contribute can generally be categorized as follows: Any redistribution must be done under the original licence, making the result open-source as well; Any redistribution of the code, modified or not, must be done under the original licence, but other code may be associated or added without being subject to the open-source licence; or Any redistribution is done without any sharing constraints. Ban on commercialization: Some licences prohibit any use for commercial purposes. Apache v2 Level of obligation to contribute upon redistributionAny redistribution of the software, modified or not, or with added components, must be done under the terms of the original licence. Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer Commercial use permittedYes BSD Level of obligation to contribute upon redistributionAny redistribution of the software can be done without any obligation to share. Mandatory elements to display Copyright notice Warranty disclaimer Commercial use permittedYes CC BY-NC 4.0 Level of obligation to contribute upon redistributionAny redistribution of the software can be done without any obligation to share. Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer Commercial use permittedNo CC0 1.0 Level of obligation to contribute upon redistributionAny redistribution of the software can be done without any obligation to share. Mandatory elements to display Licence of the redistributed open-source software Commercial use permittedYes GPLv3 Level of obligation to contribute upon redistributionAny redistribution of the software, modified or not, or with added components, must be done under the terms of the original licence Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer Commercial use permittedYes, but sub-licensing is not allowed LGPLv3 Level of obligation to contribute upon redistributionAny redistribution of the software, modified or not, must be done under the terms of the original licence. New components can be added, but not integrated, under other non-open-source licences Mandatory elements to display Licence of the redistributed open-source software Identification of any changes made to the code Copyright notice Warranty disclaimer Commercial use permittedYes MIT Level of obligation to contribute upon redistributionAny redistribution of the software can be done without any obligation to share. Mandatory elements to display Licence of the redistributed open-source software Copyright notice Warranty disclaimer Commercial use permittedYes It is important to make programming teams aware of the issues that can arise when using modules governed by what are known as “viral licences” (such as the CC BY-NC 4.0 licence) in the design of commercial software. Such software could lose significant value if such modules are incorporated, making it difficult or even impossible to commercialize said software. In the context of open innovation where developers want to share their code, in particular to encourage collaboration, it is important to understand the scope of these different licences. The choice of the appropriate licence must be made based on the project’s objectives. Also, keep in mind that it is not always possible to change the licence used for the distribution of the code once said distribution has commenced. That means the choice of licence can have long-term consequences for any project. David Cassel, Linus Torvalds on Community, Rust and Linux's Longevity, The NewStack, Oct. 1, 2021, online: https://thenewstack.io. See the SFC press release: https://sfconservancy.org/copyleft-compliance/vizio.html. RSC 1985, c. C-42.