Mapeze Inc. v. Destination Ontario Inc., 2006 FC 25

Date: 20060113

Docket: T-130-03

Citation: 2006 FC 25

Ottawa, Ontario, January 13, 2006

PRESENT:      THE HONOURABLE MADAM JUSTICE HANSEN

BETWEEN:

MAPEZE INC.

Plaintiff

and

DESTINATION ONTARIO INC. AND

MR. GARY B. CLARKE, MR. BLAKE CRAM

AND MR. NEIL DICK

Defendants

REASONS FOR ORDER AND ORDER

Overview

[1]         This is a motion by the Plaintiff, Mapeze Inc., for summary judgment under Rule 213(1) of the Federal Courts Rules, SOR/98-106 against the corporate Defendant, Destination Ontario Inc. The Plaintiff clarified at the hearing that it is not seeking summary judgment against the individual Defendants.

[2]         The action is about two web applications software, one called MAPEZE SOFTWARE (MAPEZE) and the other MAPMAESTRO MAPPING SOFTWARE (MAPMAESTRO). The Plaintiff claims that MAPMAESTRO is a copy of MAPEZE and therefore, the Defendants are infringing the Plaintiff's copyright in MAPEZE and at the same time, the Defendants are passing off MAPEZE.

[3]         The Plaintiff seeks the following relief:

1. An Order pursuant to Rules 213(1) and 216(1) granting the Plaintiff summary judgment on the claim of copyright infringement and/or the claim of passing off against the corporate Defendant;

2. A permanent injunction to restrain the corporate Defendant, its officers, directors, employees, agents, licensees and anyone else over whom it exercises direct or indirect control from infringing the Plaintiff's copyright in the MAPEZE and/or from directing public attention to their wares, services or business in such a way as to cause or be likely to cause confusion; or aiding, abetting, authorizing or assisting others to do so;

3. An Order, pursuant to Rules 216(2) and 153, that the amount of damages and profits to be awarded to Plaintiff be referred to a judge or other person designated by the Chief Justice;

4. An Order requiring the corporate defendant to deliver up all MAPEZE and any other software that would infringe the copyright of the Plaintiff in the possession, custody or control of the corporate defendants or under the direct or indirect control of the corporate Defendant;

5. Or in the alternative to 1-4 above, an Order pursuant to Rule 216(3) granting the Plaintiff summary judgment on the issue of whether the corporate Defendant has copied in whole, or in substantial part, Plaintiff's MAPEZE; and

6. Costs of this motion and the action.

Facts

[4]         The Plaintiff is a Nova Scotia corporation engaged in the business of developing software and the registered owner of MAPEZE. MAPEZE consists of a suite of proprietary computer programs and incorporates third party software that provides geographic information systems (GIS) and mapping capabilities. Licensees use MAPEZE utilities and templates to build, maintain and present an extensive database of their business offerings on the Internet.

[5]         The corporate Defendant, an Ontario corporation, is in the business of operating a tourism website. It is the registered owner of MAPMAESTRO, an internet-driven, map-based, GIS interactive mapping solution. MAPMAESTRO also uses third party software.

[6]         In December 2000, the Plaintiff and the corporate Defendant entered into a Memorandum of Understanding (MOU) that licensed the corporate Defendant to use MAPEZE for an initial cost of $100,000 and an annual licensing fee of $10,000.    The initial cost of $100,000 includes software support and upgrades for the first year. Maintenance/support fees are optional after the first year. The term of the MOU is 10 years.

[7]         The corporate Defendant completed developing MAPMAESTRO around November 1, 2002 and used MAPMAESTRO on its website beginning November 8, 2002.

[8]         The Plaintiff commenced an action for copyright infringement and the claim of passing off on March 21, 2003. On October 15, 2003, the parties met for a software review meeting (software review) where copies of MAPEZE and MAPMAESTRO were stored on CDs and given to the parties' respective experts for analysis. The Plaintiff filed a motion for summary judgment on August 30, 2004.

Issues

[9]         1.          Whether there is a genuine issue for trial with respect to the following claims:

                                    i)           Has the corporate Defendant infringed the Plaintiff's copyright in MAPEZE?

                                    ii)          Has the corporate Defendant passed off MAPEZE as and for its MAPMAESTRO?

2.                   If there is a genuine issue for trial, is there sufficient evidence to decide that the corporate Defendant has copied, in whole or substantial part, of MAPEZE?

Test for Summary Judgment

[10]       The rules pertaining to summary judgment are Rules 213-216 of the Federal Courts Rules, which read in part:

[11]       It is well settled that the purpose of the summary judgment provisions in the Federal Court Rules is to allow the Court to summarily dispense with cases that should not proceed to trial because there is no genuine issue to be tried.

[12]       The Federal Court of Appeal has interpreted Rule 216 in two cases. In both cases, Trojan Technologies, Inc. v. Suntec Environmental Inc., 2004 FCA 140 and MacNeil Estate v. Canada (Department of Indian and Northern Affairs), 2004 FCA 50, the Federal Court of Appeal stated that issues of credibility are not to be decided on summary judgment applications. For example, when a motions judge prefers the evidence of one expert to the evidence of the other on critical issues, the motions judge is making determinations based upon the motions judge's assessment of the expert witnesses' credibility. Such determinations are best left to a judge who has an opportunity to hear all the evidence viva voce. (Trojan Technologies, supra, at paras. 28-29)

[13]       Given that the volume and the form of evidence available during motions and at trials are significantly different, a motions judge should not assume the role of a trial judge by resolving the issues between the parties on a motion for summary judgment. In MacNeil Estate, supra, at paragraphs 36-38, the Federal Court of Appeal recognized that the party responding to a summary judgment motion is only required to put its best foot forward by setting out facts showing that there is a genuine issue for trial. The Federal Court of Appeal also referred to Aguonie v. Galion Solid Waste Material Inc. (1998), 38 O.R. (3d) 161 at 173-174 with approval wherein the Ontario Court of Appeal stated that the motions judge's role is narrowly limited to assessing the threshold issue of whether a genuine issue exists as to material facts requiring a trial. The tasks of evaluating credibility, weighing evidence and drawing factual inferences are reserved for the trial judge.

[14]       Finally, a summary judgment motion is not a replacement for a trial and should only be granted in the clearest of cases. In Positive Attitude Safety System Inc. v. Albian Sands Energy Inc., 2004 FC 1022, Noël J. reviewed the jurisprudence on summary judgment and concluded that as long as a real triable issue exists in relation to essential facts, the strength or weaknesses of a claim or a defence does not have to be taken into consideration. He also emphasized at paragraphs 24 and 25 that the motion for summary judgment should be granted in clear cases where all facts and law are known and presented by the parties. To do otherwise would be unfair and would likely be prejudicial to one or both parties.

Law Applicable To Copyright Infringement

[15]       The Copyright Act, R.S.C. 1985, c. C-42 is a code setting out specific rules about copyright infringement. With regards to copyright infringement, subsections 3, 27(1) and (2) of the Copyright Act provide:

[16]       The Copyright Act also sets out exceptions to copyright infringement. The relevant sections read:

Submissions

[17]       There is no dispute that the corporate Defendant paid a total sum of $110,000 to the Plaintiff by November 8, 2002. However, there is a disagreement between the parties regarding when the second term of the MOU started and when the MOU was terminated.

[18]       The Plaintiff submits that the MOU was a contract of development and license use with the first term starting in December 2000. The Plaintiff argues that the payment of $10,000 was for the second term of the MOU, which was from December 2001 to December 2002.

[19]       The Plaintiff further submits that the corporate Defendant terminated its license to use MAPEZE when the corporate Defendant wrote a letter to the Plaintiff on November 8, 2002 (the Letter). The Plaintiff argues that after the termination of the MOU, the corporate Defendant had no right to use MAPEZE, reproduce, sell or by way of trade distribute, expose, exhibit, licence or even to possess for the above mentioned purposes, a copy of MAPEZE. The Plaintiff contends that MAPMAESTRO incorporates the source code of MAPEZE and reproduces a number of unique and idiosyncratic features of MAPEZE. The Plaintiff maintains that the corporate Defendant's continued possession of MAPEZE in the name of MAPMAESTRO and its public launch and offering of MAPMAESTRO for license contravene the Copyright Act and as a result, constitute copyright infringement.

[20]       In support of its motion for summary judgment, the Plaintiff filed affidavits of its president, Mr. Nelson, and of its employee, who is also the author of MAPEZE. The Plaintiff also relies on the findings of its expert, Mr. Batalov, as evidence of infringement. The Plaintiff produced two affidavits of Mr. Batalov in which he deposed that he was retained to conduct a comparative design and code analysis of the two web applications. In both of the reports attached to his affidavits, Mr. Batalov stated that based on the sole analysis of the two CDs labelled "Confidential Plaintiff Destination Ontario Web 10/27/01 3/8/02 Databases Misc" and "Confidential Defendant Real Ontario March 2003", "the database tables and the original source code found on the [Plaintiff's CD and on the corporate Defendant's CD] share sufficient code and design elements to conclude that a substantial portion of the design and implementation of one was copied from the other." Mr. Batalov also concluded that MAPEZE and MAPMAESTRO were not developed independently.

[21]       The corporate Defendant argues that the MOU was a contract of use. Therefore, the corporate Defendant contends that the license started when the fully tested and approved MAPEZE software was delivered to the corporate Defendant, the earliest time being November 2001. The payment of $10,000 was the annual mapping fee for the second term of the MOU, which was from November 2002 to November 2003. Moreover, the corporate Defendant submits that it had only terminated the license for maintenance/support on November 8, 2002 and by paying $10,000 for the mapping license, it was entitled to use MAPEZE until November 2003.

[22]       The corporate Defendant also argues that its CD contains the content of its website server as at March 2003, which included both MAPMAESTRO and MAPEZE. The corporate Defendant submits that MAPMAESTRO was created independently and that the files identified by Mr. Batalov to be copied were the natural result of the corporate Defendant's authorized use of MAPEZE and concurrent development of a replacement software. The corporate Defendant further submits that its incidental inclusion and inadvertent omission to delete the MAPEZE files do not constitute copyright infringement under s. 30.7 of the Copyright Act. Even if the corporate Defendant was not licensed to use MAPEZE after November 8, 2002, the corporate Defendant submits that mere possession, without evidence of use, does not constitute copyright infringement.

[23]       In reply to the motion for summary judgment, the Defendants filed the affidavits of its president, Mr. Clarke, and of its expert, Dr. Morrison. Dr. Morrison deposed that his mandate was to conduct a software analysis of the corporate Defendant's March 2003 MAPMAESTRO, to assess the allegations made in Mr. Batalov's affidavit and to determine whether portions of MAPEZE embedded in MAPMAESTRO were in use and operational. In his report, Dr. Morrison concluded that all the files outlined in Mr. Batalov's affidavit that were alleged to be copied by the corporate Defendant and the files in the corporate Defendant's directory were either not being used by and do not comprise the March 2003 MAPMAESTRO or originated from a third party source.

[24]       The Plaintiff also filed cross-examination transcripts of Mr. Nelson, Mr. Batalov, Mr. Clarke and Dr. Morrison.

Analysis

[25]       The heart of this litigation is copyright infringement. The crux of the Plaintiff's submission is that given the evidence of copying, there is no genuine issue for trial because MAPMAESTRO is a copy of MAPEZE. Conversely, the corporate Defendant submits that there are genuine issues for trial with respect to its defence to the allegation of copyright infringement. The corporate Defendant's primary defence is that 1) the inclusion of some MAPEZE's files in the March 2003 MAPMAESTRO is incidental and unintentional due to its authorized use of MAPEZE under the MOU and, 2) the files that the Plaintiff alleges to be copied by the corporate Defendant are not used by MAPMAESTRO and therefore, those files are merely present in the corporate Defendant's server as at March 2003. The Plaintiff does not dispute that the mere proof of possession of a computer program is not copyright infringement under the Copyright Act.

[26]       I agree with both parties that copyright infringement cases are largely fact-driven. I am also mindful that a motions judge only makes findings of fact provided that there is clear evidence available on the record and that the trial judge's function is not usurped. It is not the role of a motions judge to consider the strength of the corporate Defendant's arguments, but rather to determine whether there are specific facts showing that there is a genuine issue for trial. Therefore, before a summary judgment would be granted in this case, I must be satisfied that the facts clearly demonstrate that there is an infringement of copyright and that there are no genuine issues with respect to the corporate Defendant's defence. In my view, there are three key issues with respect to the corporate Defendant's defence that must be examined to determine whether a genuine issue for trial exists.

a)                   The content of the corporate Defendant's CD exchanged at the software review.

[27]       The precise content of the CD provided by the corporate Defendant for the software review is important. The Plaintiff's case for copyright infringement is based primarily on Mr. Batalov's conclusions from the CDs. Mr. Batalov stated in his report that he was told that the files on the CD labelled "Confidential Defendant Real Ontario March 2003" make up the corporate Defendant's web application as of March 2003. Mr. Nelson deposed in his affidavit that "the defendants provided the plaintiff with code that was created in March 2003" for the software review.

[28]       Here, the corporate Defendant argues that the files on the CD contain the content of the corporate Defendant's website server, which includes both MAPEZE and MAPMAESTRO. Dr. Morrison deposed that he was told and believed that the CD provided by the corporate Defendant were copies of files located on the corporate Defendant's computers to host its website in March 2003. He also deposed that the CD contained the corporate Defendant's MAPMAESTRO as at March 2003 and "March 2003 Not Used Computer Files". Mr. Clarke deposed that the copy of the CD provided by the corporate Defendant and referred to in Dr. Morrison's affidavit "contained computer files which were on the computers used by [the corporate Defendant] to host its website as at March 2003." Therefore, the corporate Defendant submits that Mr. Batalov did not take into account that not all the files on the corporate Defendant's CD make up MAPMAESTRO.

[29]       While the Plaintiff argued at the hearing that the content of the CD cannot comprise all the files on the server because there were other things on the corporate Defendant's server that were not on the CD, the Plaintiff in its Memorandum of Fact and Law referred to Mr. Clarke's affidavit in support of its statement that the "Defendants brought their March 2003 version of the MAPMAESTRO" to the software review without any qualifications.

[30]       In my view, the question of what was contained in the corporate Defendant's CD remains unanswered. It is not for this Court to prefer the Plaintiff's evidence to the evidence of the corporate Defendant or vice versa on this critical issue. This is an essential factual determination that should be brought before a trial judge because this finding will have a significant impact on both the Plaintiff's claim of copying and the corporate Defendant's defence of mere possession.

b) When was the corporate Defendant licensed to use MAPEZE.

[31]       While both parties agree that the corporate Defendant renewed the second term of the license and that a payment of $10,000 was made for the second term of the MOU, the parties disagree on when the second term of the MOU started and when the MOU was terminated.

[32]       From the evidence, it is unclear whether the corporate Defendant intended to terminate the MOU. The Plaintiff relies on the phrase "we have concluded that we cannot rely on your system. As a result, we will be putting an alternate solution in place on our website" in the Letter and the clause in the MOU stating that both parties "agree to jointly promote the MAPEZE tool set" as evidence of termination. The Plaintiff argues that the effect of the Letter amounts to a termination of the MOU because the license to use MAPEZE is contingent on the corporate Defendant operating in compliance with the terms of the agreement. In this case, the requirement for the corporate Defendant to jointly promote MAPEZE is a term of the agreement.

[33]       It is unclear from the MOU what joint promotion entails; however, Mr. Nelson deposed that the general understanding is that the corporate Defendant would display the MAPEZE trademark and the descriptor "powered by MAPEZE" on its website. If that is the case, then the Plaintiff's conduct after November 8, 2002 creates uncertainty as to whether the MOU was still in effect. For example, the Plaintiff's counsel at that time wrote a letter to the corporate Defendant dated December 5, 2002 demanding the corporate Defendant to cease using the Plaintiff's computer program in conjunction with any name other than the Plaintiff's and stating that if the corporate Defendant has any problems with the services provided under the MOU, the corporate Defendant should commence legal proceedings.

[34]       In addition, it is unclear from the evidence whether the amount of $10,000, which the corporate Defendant paid to the Plaintiff, was for the annual mapping license fee or whether it was for maintenance/support. Mr. Clarke, in his cross-examination, stated that $10,000 was for renewing the mapping license for the second year. In the Letter, Mr. Clarke referred to "the [Plaintiff's] attempt to bill [the corporate Defendant] for mapping and maintenance well before the one year anniversary of the final delivery" and demanded that the amount of $110,000 which it paid for the purchase cost and "mapping fees" to be returned to the corporate Defendant.

[35]       The Plaintiff argues that the $10,000 reflects a partial payment of the maintenance/support fees for the second term. The Plaintiff argues that the corporate Defendant never waived support in the second term and refers to various documentary evidence, such as e-mails and handwritten notes, written by the corporate Defendant to the Plaintiff in June 2002. As well, the MOU requires maintenance fees to be payable one year in advance. The Letter also indicates that the corporate Defendant "concluded that there was no value in continuing the maintenance agreement" and that it was within its rights under the MOU to discontinue the maintenance agreement.

[36]       Aside from the Letter indicating that the corporate Defendant had paid $10,000 by November 8, 2002 and Mr. Clarke's cross-examination where he was unable to recall the date of the cheque, there is no evidence regarding the date of the $10,000 payment. Both parties admitted to this at the hearing.

[37]       In my view, additional evidence is required to demonstrate 1) whether the corporate Defendant paid $10,000 for the mapping license or as a partial payment for maintenance/support, and 2) when the corporate Defendant terminated the MOU. These facts are essential to the critical issue of when the corporate Defendant was licensed to use MAPEZE after November 8, 2002. The evidence before this Court surrounding this question does not clearly point to a conclusion. A trial judge would be in a better position to determine the period of when the corporate Defendant was licensed by weighing and determining the credibility of the evidence. Therefore, the determination of whether or not a license was in effect for the corporate Defendant to use MAPEZE after November 8, 2002 is a genuine issue for trial.

c) Expert evidence on copying and non-use

[38]       The Plaintiff argues that Dr. Morrison's expert evidence is irrelevant to the issue of copyright infringement. I disagree. Dr. Morrison's evidence in relation to the issue of use is relevant to the corporate Defendant's defence that MAPEZE files were incidentally present in the corporate Defendant's server and that they were not being used by MAPMAESTRO. With respect to the Plaintiff's arguments regarding the reliability of Dr. Morrison's evidence, such as Dr. Morrison's ability to fulfill his mandate, it is not the role of this Court to weigh evidence in a motion for summary judgment.

[39]       In this case, both parties presented expert evidence to demonstrate the existence, or the lack, of an infringement. The experts, based on different mandates, employed different methodologies in reaching their opinion. However, the expert findings are not so different or distinct in that both evidence could be accepted by this Court without any concerns of contradictory evidence. For example, Dr. Morrison's mandate was to assess the allegations made in Mr. Batalov's affidavit regarding "copied files" and to determine whether those files were used by MAPMAESTRO. In this case, Dr. Morrison's opinion is inconsistent with Mr. Batalov's opinion by concluding that those "copied files", which Mr. Batalov relies on to arrive at his conclusion that MAPEZE and MAPMAESTRO were not developed independently, are not part of MAPMAESTRO. I am not satisfied that the expert evidence presented in this case is so clear that there is an obvious conclusion regarding infringement.

[40]       Moreover, the experts do not agree on the reason for similarities in the style of code between MAPEZE and MAPMAESTRO. Mr. Batalov attributed the similarity to copying while Dr. Morrison stated that similarities in code is not necessarily proof of copying given that both sets of code were translated from a common third party software. In my view, disagreements between expert methodologies and expert opinions require the matter to proceed to trial.

Conclusion

[41]       In light of the conflicting evidence and the absence of evidence pointing to clear factual conclusions, I find that there is a genuine issue for trial with respect to the defence of copyright infringement. Therefore, the motion for summary judgment on the claim of copyright infringement is dismissed.

[42]       For the Plaintiff's claim of passing off, this issue is dependent on a positive finding that MAPMAESTRO is a copy of MAPEZE. I am not satisfied that there is sufficient evidence before me to decide whether the Defendants copied, in whole, or in part, of MAPEZE. Instead, given the amount of uncertainty surrounding the facts of this case, it is in the interest of justice for the issues to be tried before a trial judge where the trial judge is able to assess credibility, weigh the viva voce evidence and resolve the genuine issues raised at trial. Accordingly, the motion for summary judgment on the claim of passing off against the corporate Defendant is dismissed.

[43]       Finally, although the Plaintiff argues that the corporate Defendant should be putting its best foot forward in this motion, it is also well settled that the corporate Defendant is only required to put its best foot forward by setting out facts showing that there is a genuine issue for trial. Contrary to the Plaintiff's assertion, the corporate Defendant is not required to provide its best evidence on a motion for summary judgment. Rule 216 of the Federal Court Rules only requires sufficient evidence to establish that there is a genuine issue for trial, which I am satisfied that the corporate Defendant provided in this case.

ORDER

THIS COURT ORDERS that the motion for summary judgment is dismissed with costs to the Defendants.

"Dolores M. Hansen"

** AMENDED **

FEDERAL COURT

NAME OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                           T-130-03

STYLE OF CAUSE:                         MAPEZE INC. v. DESTINATION ONTARIO INC. AND

MR. GARY B. CLARKE, MR. BLAKE CRAM

AND MR. NEIL DICK

PLACE OF HEARING:                     Ottawa, Ontario

DATE OF HEARING:                       October 17, 2005

REASONS FOR ORDER:                HANSEN J.

DATED:                                              January 13, 2006

APPEARANCES:

Mr. John Macera	FOR THE PLAINTIFF
Ms. Lynn Cassan Ms. Lillian Camilleri	FOR THE DEFENDANTS

SOLICITORS OF RECORD:

MACERA & JARZYNA LLP	FOR THE PLAINTIFF
CASSAN MACLEAN	FOR THE DEFENDANTS