Docket: T-467-14
Citation:
2014 FC 450
Ottawa, Ontario, May 9, 2014
PRESENT: The
Honourable Mr. Justice Annis
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BETWEEN:
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GEOPHYSICAL SERVICE INCORPORATED
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Applicant
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and
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CANADA-NOVA SCOTIA OFFSHORE PETROLEUM BOARD
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Respondent
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ORDER AND REASONS
I.
Factual Background
[1]
The applicant, Geophysical Service Incorporated
[GSI], brings a motion for an interlocutory injunction requiring the
respondent, Canada-Nova Scotia Offshore Petroleum Board [CNSOPB or the “Board”], to remove from its websites materials over
which the applicant claims copyright pertaining to its work product from
seismic surveys GSI conducted in the Nova Scotia Offshore Area [Offshore Area],
in addition to other related remedies.
[2]
GSI is a geophysical service company
headquartered in Calgary, Alberta. It conducted onshore and offshore seismic
surveys, which it describes as “Non-Exclusive
Surveys” or speculative surveys.
[3]
GSI claims intellectual property rights in the
data from the surveys. It licenses to clients— typically oil and gas
exploration and production firms [“EAPs”]—access
to the data, for a fee. GSI is registered owner of copyright in respect of data
produced on Non-Exclusive Surveys which is the subject matter herein.
[4]
The Board is jointly created by section 9 of the
federal Canada-Nova Scotia Offshore Petroleum Resources Accord
Implementation Act, SC 1988, c 28 and section 9 of the provincial Canada-Nova
Scotia Offshore Petroleum Resources Accord Implementation (Nova Scotia) Act,
SNS 1987, c 3 [collectively, the “Acts”].
[5]
The Board has extensive duties and powers
prescribed in the Acts regarding the regulation of oil and gas exploration and
development in the Offshore Areas and other activities related to such
exploration and development.
[6]
Between 1998 and 2003 the Board issued
“Geophysical/Geological Work Authorizations” [“GWAs”]
to GSI to conduct speculative seismic surveys in the Offshore Area. Pursuant to
the Nova Scotia Offshore Area Petroleum Geophysical Operations Regulations,
NS Reg 191/95 (“the Regulations”), the GWAs
prescribe requirements and conditions, including the requirement to comply with
the “Geophysical and Geological Programs in the
Nova Scotia Offshore Area Guidelines for Work Programs, Authorizations &
Reports” [the “Guidelines”].
[7]
GSI conducted surveys in the Offshore Area in
accordance with the Guidelines and thereafter submitted to the Board
geophysical data and other information resulting from the surveys. This data is
described as final migrated seismic lines in digital [SEG-Y] format for
programs NS24-G005-2P and NS24-G5-4P.
[8]
Raw or “field”
seismic data is first collected in a format called “SEG-D”.
This raw data is then processed into a more easily viewable and manipulable format
called “SEG-Y”. Thus, SEG‑Y data represents
a fully processed and “migrated” seismic line,
typically viewed as a cross-section image of the subsurface geology over the
length of the seismic line.
[9]
The final migrated seismic lines submitted to
the Board by GSI for the NS24-G5-4P program bear the corporate name “CGG-Data Processing Services”
[CGG] for “Canadian Superior Energy Inc”.
[10]
In April 2013, the CNSOPB published on its
website and in paper format its call for bids numbered NS13-1 [the “2013 Call for Bids”]
offering six parcels in the Offshore Area for bidding by E&Ps.
[11]
Among the information contained in the 2013 Call
for Bids was the Board’s assessment of “Potential
Traps and Reservoirs” within the offered parcels.
This section contains 12 Figures created by the Board based on information
submitted to it by various E&Ps and seismic operators, including GSI,
pursuant to the Regulations and Guidelines. These are labelled Figures 5.1
through 5.12 [the Figures].
[12]
The applicant contends that the publication of
the Figures on the website and by other means infringed GSI’s copyright, as the
Figures were created using Non-Exclusive Data for which GSI is the registered
owner.
[13]
The Figures were created by the Board’s seismic
interpreters, based on final, migrated seismic lines in SEG-Y format submitted
by one or more of the 10 seismic service providers and E&Ps, including GSI,
collected during one or more of 20 seismic work programs.
[14]
Final migrated seismic lines submitted by GSI to
the Board in respect of work programs NS24-G005-2P and NS24-G5-4P were used by
the Board to create only Figure 5.5. It is only Figure 5.5 in the alleged
infringing materials that used the data submitted by GSI.
[15]
Several hundred seismic lines submitted by
numerous seismic companies and E&Ps were used to create Figure 5.5. Data
contained in GSI’s seismic lines from the NS24-G005-2P and NS24-G5-4P programs
were used to create only about 8.4 percent of Figure 5.5. The remaining data was
based on seismic lines submitted by other seismic operators and E&Ps—approximately
91.6 percent of the data in Figure 5.5.
[16]
The Board announced publicly that it intended to
use a renewed Call for Bids in April 2014 in the Offshore Area.
[17]
In its application, GSI claims damages for
infringement of copyright and a permanent injunction restraining the Board from
future publication of material similar to the alleged infringing materials in
the 2013 Call for Bids.
[18]
For the purposes of this motion both parties
filed extensive written materials, including affidavits. However, no cross
examination of any affidavit was conducted.
II.
Statement of Issues
[19]
The issues raised on this motion are as follows:
a.
Whether an
interlocutory injunction should be issued, and if so on what terms;
b.
If an Order is granted
whether certain materials in the applicant’s affidavit should be removed and
sealed.
III.
Interlocutory Injunction – Generally
[20]
It is common ground that RJR-MacDonald Inc. v
Canada (Attorney General), [1994] 1 S.C.R. 311, [1994] SCJ No. 17 is the
governing authority, generally requiring the party seeking an interlocutory
injunction to demonstrate (paraphrased from RJR-MacDonald at paras 78-80):
1) the preceding raises a “serious
question to be tried”;
2) the
moving party would suffer “irreparable harm” if interlocutory injunction is not
granted; and
3) the
moving party would suffer greater harm if the interlocutory injunction is not
granted than would responding party if it is not - the “balance of convenience”
assessment.
IV.
Analysis
A.
Serious Issues
a.
Establishing Copyright
[21]
Pursuant to section 53(2) of the Copyright
Act, RSC 1985, c C-42, GSI relies upon its certificate of registration as
presumptive evidence that copyright subsists in the data and that GSI is the
owner of the copyright. It acknowledges however that copyright registration
does not create, but only declares the right, and that in the absence of proof
to the contrary, the person registered is deemed to hold the right claimed by
him. See Grignon v Roussell, [1991] FCJ No 557, 44 FTR 121.
[22]
The respondent argues that the evidence
submitted by GSI suggests that CGG exercised skill and judgment in transforming
the raw seismic data [SEG-D] into the compilation [SEG-Y] provided to the Board
used in the preparation of its Figures. According to the respondent, this is
not enough to establish copyright; it is a mere suggestion of copyright.
[23]
The respondent refers to the notation on the .PDF
version of GSI seismic line SG 01-0137 from the NS24-G5-4P program, which bears
the name of CGG-Data Processing Services. There is no indication of who this
entity is and whether GSI has a license from it.
[24]
No copyright can subsist in geophysical data or
seismic data. The copyright must exist in the compilations analysis thereof (see
Tele-Direct (Publications) Inc v American Business Information, Inc,
[1997] FCJ No 1430 [CA] at paras 28 and 29, 221 NR 113).
[25]
The applicant points out that the evidence on
this issue consists of a single paragraph from GSI’s affidavit inferring that
its employees exercise “good judgment, selection, creativity, knowledge, effort
and imagination”.
[26]
Despite the paucity of evidence from the applicant,
and evidence that another entity was involved in the production of the work
product provided the Board, I think that at best, from the applicant’s point of
view, there remains at least a serious issue over copyright ownership given all
the facts that otherwise demonstrate GSI’s ownership of the data and major role
in its collection and compilation.
[27]
In other words, CGG’s name on the material is
insufficient to overcome the serious issue that the presumption of copyright
applies.
b.
Infringement
[28]
However, I agree with the respondent that there
appears to be no serious issue about the alleged infringement by the Board,
given the lack of any objective similarity between the infringing work and the
copyrighted work, or at least a substantial part thereof, for Figure 5.5 to be
described as a copy, reproduction or adaptation of the latter.
[29]
Figure 5.5 is a geographical map upon which the
location of certain seismic lines used by the Board for other Figures is
superimposed. None of these other Figures with seismic lines have any
connection to GSI.
[30]
The only use of GSI’s materials was to create
the color-coded map [J150 map] of a seismic event 150 million years ago. The
respondent’s witness deposed that the main purpose of Figure 5.5 is to show the
approximate geographic location in the 2013 Call for Bids area of the seismic
lines and diagrams in other figures and states that “This
could have been done by the Board’s geoscientists without using the J150 map;
however that map was included to make Figure 5.5 more visually appealing and to
provide some general geological context of the reader”.
[31]
To create Figure 5.5, all SEG-Y data available
to the Board from the 20 seismic programs, including the GSI programs, was
interpreted by the Board’s geoscientists, then coarsely gridded and smoothed
using computer software to fill data gaps, to average the interpretive values
generated during seismic interpretation. It represents only “one possible interpretation of the data”. Nor does Figure 5.5 in any way resemble the
cross-section view of a final migrated seismic line.
[32]
Given the limited contribution of the
applicant’s data to Figure 5.5 and its extensive manipulation and reworking by
the Board, with the overwhelming majority of the data being provided from other
sources, I do not find that Figure 5.5 constitutes a reproduction or adaptation
such as to constitute an infringement of GSI’s copyright.
V.
Irreparable Harm
[33]
The applicant urges the Court to rely upon Diamant
Toys Ltd v Jouets Bo-Jeux Toys Inc, 2002 FCT 384 at para 56, 218 FTR 245 [Diamant
Toys], for the proposition that where “the
plaintiffs have established… a prima facie case of copyright
infringement… they need not establish that they will suffer irreparable harm in
order to obtain injunction”.
[34]
In that case, the Court described the copying as
“blatant”. The
applicant submitted that this Court should consider copying blatant if it could
conclude that it was clear that copying had occurred. In my view “blatant” goes beyond an objective finding of clear
copying. While the situation of clear copying would meet the prima facie
test referred to in the cited passage, I tend to think that using such strong
language as blatant is intended to impute some degree of knowledge or
recklessness in the conduct of the respondent.
[35]
Moreover, the three prongs of the interlocutory
injunction test are to some degree to be treated together and not as separate
silos: Robert J. Sharpe, Injunctions and Specific Performance,
loose-leaf (Aurora: Canada Law Book, 2010 at para 2.600) as quoted in Morguard
Corporation v InnVest Properties Ottawa GP Ltd, 2012 ONSC 80 at para 12:
The terms 'irreparable harm', 'status quo' and
'balance of convenience' do not have a precise meaning. They are more properly
seen as guides which take colour and definition in the circumstances of each
case. More importantly, they ought not to be seen as separate, water-tight
categories. These factors relate to each other, and strength on one part of the
test ought to be permitted to compensate for weaknesses on another.
[36]
There exist situations where the applicant’s
case is sufficiently strong that the threshold for meeting the other two
factors can be set so low as to be irrelevant. I believe that this may have
been the approach underlying the statement in Diamant Toys, above, that it
was not necessary to establish irreparable harm where copying is blatant.
[37]
These are not the facts in this case. Figure 5.5
is the result of extensive reworking and adaptation of materials originating
not just from the applicant, but from many other contributors to produce a
document that bears very little resemblance or content to that of the
copyrighted material.
[38]
Accordingly, I conclude that the applicant must
demonstrate by clear and non-speculative evidence that it will suffer
irreparable harm, not compensable in damages, between now and the outcome of
the trial if the injunction is not granted.
[39]
The applicant’s argument of sustaining
irreparable harm is based upon the following supposition described in paragraph
27 of its supporting affidavit:
27. Had any oil and gas exploration firms
desired to assess prospectivity in order to consider responding to CNSOPB’s
Call for Bids No. NS13-1, and but for publication of the Infringing Materials
by CNSOPB, those firms could have, and should have, entered into non-exclusive
licence agreements with GSI under which those potential bidders would
themselves have obtained access to GSI’s proprietary data for those firms’ own
manipulations and analyses and assessment of prospectivity of the Parcels of
submarine lands which were the subject of that Call for Bids as is the normal
process in exploration. No oil and gas exploration firms have made any inquiry
of GSI seeking to licence any of GSI’s data related to the Nova Scotia Offshore
Area during the period March 18, 2013 to the date of this affidavit.
[40]
I agree with the respondent that GSI has failed
to provide clear and non-speculative evidence of damage. There is, for
instance, no statistical evidence or sales information that would permit some
suggestion of a correlation between conducting Calls for Bids and the extent of
licencing of GSI’s seismic data information.
[41]
The fact that no oil and gas exploration firms
made inquiry of GSI during the 2013 Call for Bids process raises no plausible
inference of damages. No bids were received by the Board, indicating that the
industry had little interest in this area. There is nothing in the evidence
that raises an inference that GSI would have received inquiries from companies
even if Figure 5.5 had been omitted from the 2013 call for bids.
[42]
It is equally plausible that had the 2013 Call
for Bids elicited interest, there would have been requests to turn to the
applicant for more detailed data or other related services.
[43]
In addition, it is not clear to me that damages
in respect of any future disclosures would not be capable of calculation. GSI
introduced evidence in its affidavit that a single user licence would have been
leased for $1,245,231.65. Thus, the damages are quantifiable in terms of lost
profits from lost business, assuming a causal link could be demonstrated
between an infringement and a demand for licenses from the applicant.
[44]
Damage principles admit some degree of
speculation in assessing future and other indeterminate losses. This principle
is described by M. Waddams, The Law of Damages, Second Edition
(loose-leaf ed), at p 13-2,
where the author says:
In Anglo-Canadian law, on the other hand,
perhaps because of the decline in the use of the jury, the courts have
consistently held that if the plaintiff establishes that a loss has probably
been suffered, the difficulty of determining the amount of it can never excuse
the wrongdoer from paying damages. If the amount is difficult to estimate, the
tribunal must simply do its best on the material available, though of course if
the plaintiff has not adduced evidence that might have been expected to be
adduced if the claim were sound, the omission will tell against the plaintiff.
This principle is supported by a myriad of
jurisprudence dating back to the nineteenth century.
[45]
Assuming that CGI could introduce background
sales evidence and that qualified experts from the industry were engaged, the
applicant should be able to provide some statistical and probability analysis
for lost sales in support of an award of damages from an infringement of its
copyrighted materials.
[46]
Accordingly, the applicant has not demonstrated
that it would sustain irreparable harm were the injunction not ordered.
VI.
Balance of Convenience
[47]
The applicant argues that because no bids were
received pursuant to the 2013 Call for Bids, there is no inconvenience to the
Board in being required to now remove the alleged infringing materials from the
Internet for the 2014 bid process.
[48]
As the respondent points out, there would be
significant inconvenience if it was precluded from continuing to use operators’
seismic data as part of future calls for bids packages. This refers not only to
the applicant’s position, but the fact that other geophysical service operators
would demand the same treatment, thus undermining the bid process.
[49]
This suggests that the purpose of the
infringement action is to force the Board to pay to use its information, as
opposed to obtaining greater sales of its licenses. Moreover, I find that the
applicant has greatly overreached in the scope of the injunction sought. It
seeks to enjoin the publication of all 12 Figures, despite the evidence
demonstrating that its data was specific only to Figure 5.5.
[50]
The objectives of the Canada-Nova Scotia accord
include achieving the early development of petroleum resources in the Nova
Scotia Offshore Area for the benefit of Canada as a whole and Nova Scotians in
particular. They include ensuring continuance of a stable offshore regime for
industry and ensuring that Nova Scotia receives financial benefits from the
development of the Offshore Area.
[51]
It is clear that the geo-scientific
interpretations made by the Board such as Figure 5.5 are integral to the Board
achieving its mandate.
[52]
In addition, during argument, the applicant
indicated that the restriction should also apply to limit public access to
studies carried out by the Board that make reference to data supplied to it by
geophysical service operators. This would inconvenience the Board and interfere
with its mandate to ensure that the education and training, and of research and
development, in relation to petroleum resource activities in the offshore area
is achieved.
[53]
In light of the speculative and largely
unsupported potential loss claims in an area where development of offshore oil
and gas resources has not occurred, priority must be given to attempts to
achieve the Board’s mandate for the benefit of Nova Scotians and Canadians.
VII.
Conclusion
[54]
The motion for an interlocutory injunction
requiring the Board to remove from its websites the alleged infringing
materials, being Exhibit “H” to the affidavit of
Paul Einarsson, is dismissed, as is the injunction to restrain the Board from
placing on its websites materials similar to those contained in Exhibit “H” and the applicant’s request to seal Exhibit “H” pending further order of the Court.
[55]
On consent and pursuant to Rule 373(4), it is
ordered that the affidavits of Paul Einarsson sworn January 28 and February 20,
2014, served and filed in support of this motion shall be considered as
evidence submitted at the hearing of the Application herein and, in particular,
that service on the Board of the motion record for purposes of this motion
shall be considered service on the Board of both those affidavits for purposes
of Rule 306.
[56]
The respondent is to have its costs of the
motion. If the parties are unable to agree on costs, the respondent should file
written submissions not greater than three pages, with its bill of costs,
within 14 days of this Order; the applicant to reply within 14 days thereafter.
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