Docket: T-646-15
Citation:
2016 FC 294
Ottawa, Ontario, March 29, 2016
PRESENT: The
Honourable Mr. Justice Manson
BETWEEN:
|
CANADIAN
STANDARDS ASSOCIATION
|
Applicant
|
and
|
P.S. KNIGHT CO.
LTD. AND GORDON KNIGHT
|
Respondents
|
AMENDED JUDGMENT AND REASONS
I.
Introduction
[1]
This is an application under Rules 61 and 300 of
the Federal Court Rules, SOR/98-106, and the Copyright Act, RSC
1985, c C-42 [the Copyright Act] by the Canadian Standards
Association [“the CSA”] for the following relief relating to an alleged
copyright infringement by
P.S. Knight Co. Ltd. and Gordon Knight [collectively “Knight”] of the 2015
version of the Canadian Electrical Code Part I [“the CSA Code” or “the
Code”]:
(a) a declaration that Knight has infringed copyright in the CSA Code;
(b) an injunction restraining Knight (and related companies, employees,
officers, directors, etc.) from doing any act in relation to the CSA Code
(specifically those enumerated in the Copyright Act sections 3 and 27)
without permission;
(c) delivery up of all copies of the alleged copy pursuant to section 38
of the Copyright Act;
(d) damages including profits, or in the alternative, an award of
statutory damages in the sum of $20,000 per work infringed pursuant to section
38.1 of the Copyright Act;
(e) aggravated, exemplary and punitive damages;
(f) pre- and post-judgment interest;
(g) costs; and
(h) such further and other relief as this Honourable Court may deem
just.
II.
Background
[2]
The Applicant CSA is a standards development,
testing and certification organization with headquarters in Rexdale, Ontario
that develops standards in fields such as health and safety, preserving the
environment and facilitating trade. The CSA claims copyright ownership in its
publication, the 2015 CSA Code. The 23rd edition of the CSA Code, published in
early 2015, is the subject of this application and is allegedly being infringed
[the “2015 CSA Code”].
[3]
The Respondents, P.S. Knight Co Ltd. [“Knight
Co”] and its president and director Gordon Knight are commercial competitors of
the CSA based in Alberta. Prior to the company’s incorporation in British
Columbia in 1985, Peter Knight, Gordon Knight’s father, published the Electrical
Code Simplified book [the “ECS”] and publication of subsequent editions of
this book has continued under Knight Co.
[4]
Peter Knight is no longer involved with Knight
Co, and due to health reasons did not provide evidence in this proceeding.
[5]
The CSA Code and the ECS are different
publications that serve different purposes. The CSA Code is a complete code of electrical
standards, some 700 pages in length, while the ECS is an annotated, shorter,
simplified version of those standards, and is intended to be an instructional
guide. The ECS quotes excerpts from the CSA Code.
[6]
The CSA Code is written in consultation with
various stakeholders. The CSA has obtained assignments of copyright from a
number of authors since at least 2010, although Knight disputes the
completeness of these assignments. Editions of the Code are repetitive and
based on previous versions, and therefore Knight’s position is that the CSA did
not obtain valid copyright over the entire work, given the lack of assignments
from earlier contributors. Further, Knight asserts that since 2010 not all
contributors as authors have provided written assignments.
[7]
The CSA has registered the copyright for the
2015 edition of the Code and a Copyright notice is made by the CSA in the
publication.
[8]
When the first ECS book was developed in the
1960’s by Peter Knight, he had a good working relationship with CSA: he was
provided with advanced copies of changes to the CSA Code, and he in turn
provided CSA with copies of the ECS. The ECS focussed on the residential market
in British Columbia.
[9]
In letters dated November and December 1968, the
CSA advised Peter Knight to avoid any infringement of the CSA’s copyright in
the Code and to ensure that attribution of CSA copyright ownership of the
excerpts from the CSA Code used in the ECS was included in Peter Knight’s
versions of the ECS.
[10]
In one of the letters, Peter Knight wrote that
he was “very careful to avoid any infringement of C.S.A.’s
copyright”.
[11]
In 1969, a letter sent to Peter Knight gave him
permission to quote from the CSA Code, provided he recognizes the CSA as the
source. This permitted right to use excerpts from the Code was purportedly
assigned from Peter Knight to Knight Co after it was incorporated in the 1970’s
to 1980’s. The CSA did not have knowledge or approve of this assignment at the
time of the alleged assignment. The only evidence of such an assignment was
given by Gordon Knight in his affidavit.
[12]
In 1974, the ECS was expanded to include the
industrial market and the ECS was split into two books: ECS Book I covered
residential electrical code and ECS Book II covered industrial electrical code.
[13]
The CSA began to sell its own annotated version
of the Code in 1990.
[14]
In 2004, negotiations between Knight Co and the CSA
resulted in an offer by the CSA to purchase Knight Co for what Gordon Knight
claimed was “a mere 20% of the value of Knight Co.’s
inventory at the time of the offer”. The offer was refused.
[15]
Following these negotiations, the relationship
between the parties deteriorated. The CSA stopped providing advanced copies of
the CSA Code to Knight and sent letters reminding Knight of their copyright in
the Code. By letter dated July 12, 2007, the CSA offered to grant a license to
Peter Knight personally to reproduce excerpts from the Code, subject to certain
conditions, that could not be assigned or transferred to any other person or
legal entity. The proposed license terms were “limited,
personal (to P. Knight), revocable, non-transferable, non-divisible,
non-sublicensable, non-assignable, non-exclusive, royalty free and
consideration free”, constituting a “bare
permission”.
[16]
No response to that letter was received by the CSA.
[17]
Peter Knight retired in 2010 and sold Knight Co
to Gordon Knight. In 2011, the CSA wrote to Knight Co to make clear that any
license that may have existed was terminated.
[18]
The next edition of the CSA Code was published
in 2012. The CSA learned that Knight was intending to put out a new version of
the ECS, which is the subject of a related action in Court file T-1178-12, yet
to be scheduled for a hearing. After that action was commenced, the
relationship between the parties worsened, and Gordon Knight started a website
that criticizes the CSA. The CSA launched a defamation proceeding in the
Ontario Superior Court, which is currently pending.
[19]
The CSA Code has been incorporated by reference
in the laws of most, if not all, provinces. In particular, Knight points to the
Electrical Code Regulations, Alta Reg 209/2006, s 3(a) made under the Safety
Codes Act, RSA 2000, c S-1. Those regulations declare the CSA Code in force
in the Province of Alberta in respect of electrical systems. In Ontario, the
CSA Code has been declared in force, with some amendments, and other provinces
have also adopted the CSA Code into their legislation.
[20]
In 2013, Gordon Knight lobbied a Member of
Parliament to ask questions in the House of Commons relating to how the federal
government viewed the CSA. In response, the Minister of Industry stated that the
CSA is not a regulatory entity, but rather a not-for-profit-membership-based
association. The Minister also stated that standards belong to the CSA and that
they may need to be purchased unless an agreement is made with the CSA for free
public access.
[21]
Knight has now produced and threatens to
distribute, as of March 1, 2016, what the CSA claims is essentially an
identical copy of the CSA Code [“the Knight Code”]. This is the alleged
infringing work at issue. Knight does not deny that the Knight Code is a
substantial copy of the CSA Code.
[22]
Knight has admitted that Knight’s interest in
publishing the Knight Code is purely commercial, and offers to sell the Knight
Code at about one third of the price the CSA charges for the CSA Code.
[23]
The evidence in this application consists of two
affidavits and cross-examinations on those affidavits. The CSA’s affiant is Doug
Morton, Director, Government Relations and Standards Policy &
Accreditation, CSA Standards. Knight’s affiant is Gordon Knight, President,
owner, and sole shareholder of Knight Co.
III.
Relevant legislation
[24]
The relevant provisions of the Act are attached
hereto as Annex A.
IV.
Issues
[25]
The issues are:
- Does copyright subsist
in the 2015 version of the CSA Code?
- If copyright
does subsist in the 2015 CSA Code, does the CSA own valid copyright in
that Code?
- Does Knight have
a defence either:
- because of a
license, or
- because the
reproduction is a fair dealing?
- What, if any,
remedies should be granted to CSA?
V.
Analysis
A.
Does copyright subsist in the 2015 version of
the CSA Code?
[26]
Knight attacks the subsistence of copyright in
the CSA Code on a number of grounds.
(1)
Section 53 presumption of the Copyright Act
[27]
Knight’s position is that the CSA cannot rely on
the presumption in section 53 of the Copyright Act, given that the
registration is dated three days after this action was commenced, and three
months after publication of the 2015 CSA Code. Accordingly, Knight argues that
there is no evidence that registration was obtained in the normal course of
business.
[28]
The CSA relies on the presumptions in sections
34.1 and 53 of the Copyright Act and cites Planification-Organisation-Publications
Systèmes (POPS) Ltée v 9054-8181 Québec Inc, 2014 FCA 135 at para 68 [POPS],
which states that the Court can rely on the certificate of registration as
evidence of a copyright in the absence of credible evidence to the contrary. The
CSA states that they obtained the copyright registration in the ordinary course
of business and not on the eve of trial, a tactic criticised by the Federal
Court of Appeal in CCH Canadian Ltd v Law Society of Upper Canada, 2004
SCC 13 [CCH].
[29]
I find that the CSA is not entitled to rely on
the presumptions of validity and ownership under the copyright registration obtained.
The Copyright was not registered until three days after this application was
started. No previous copyright registration in earlier versions was made. This
registration of the 2015 CSA Code can hardly be said to have been made in the
ordinary course of business.
[30]
That being said, even without any presumption
arising from registration, for validity or ownership, section 34.1(2)(a) of the
Copyright Act provides that if the name of the author is indicated on
the work in the usual manner, there is a presumption that the author owns valid
copyright. The inside cover of the CSA Code contains such information and given
the evidence discussed below, I find that the CSA has the benefits of the presumption
of ownership, and has also proven valid copyright subsisting in the 2015 CSA
Code.
(2)
Skill and judgment
[31]
Knight argues as well that the CSA did not
exercise sufficient skill and judgment in compiling the works of others in the
form of the Code and that the Code is not sufficiently original to justify
copyright protection. In More v Bauer Nike Hockey Inc, 2010 BCSC 1395 [Bauer],
the British Columbia Supreme Court discussed at paragraphs 77-83 that the CSA
develops their standards by using technical committees consisting of volunteer
members, to which the CSA provides non-voting, consultative or administrative
support.
[32]
However, the affidavit evidence of Mr. Morton
demonstrates that developing the CSA Code does in fact involve significant skill
and judgment (CCH, above, at para 16). Moreover, Peter Knight
acknowledged copyright in a letter dated December 3, 1968, where he stated that
in the development of the ECS he was “very careful to
avoid any infringement of C.S.A.’s copyright.”
[33]
Moreover, the 2015 CSA Code is an improvement
over a previous work. An improvement is an original work and capable of
separate copyright when the additions and improvements to a previous work are
substantial (DRG Inc v Datafile Ltd, [1988] 2 FC 243 (FCTD); aff’d
[1991] FCJ No 144 (FCA), quoting from Fox, The Canadian Law of Copyright and
Industrial Design, (2nd ed 1967), at p. 4). The evidence of Mr.
Morton is that thousands of hours went into the production of the latest
edition of the CSA Code. This constitutes a substantial undertaking of skill
and judgment. Given the evidence that the CSA has obtained the assignments from
many, if not all, the authors who contributed to those improvements, the CSA
owns the copyright in the current 2015 edition to the extent these authors’
additions and improvements are manifest in the 2015 CSA Code.
(3)
Legislation Bar
[34]
Knight also argues that the CSA is a government
organization and that because the Code is incorporated by reference into the Provincial
laws, the Crown owns the copyright, not the CSA. Knight relies on the decision
in Bauer, above, where the B.C. Supreme Court held, at paragraphs 72-73,
that the CSA is accredited and supervised by the Standards Council of Canada, a
federal Crown corporation.
[35]
The Program Requirements for the accreditation
of Standards Development Organizations and for the Approval of National
Standards of Canada states that standards development organizations (including
the CSA) must have a process for standards development and keep the Standards
Council updated on these procedures. The standards must only be published with
approval in accordance with the requirements of the standards development organization.
As such, Knight submits the CSA is controlled by the Standards Council and section
12 of the Copyright Act does apply, as Ontario published the Code.
[36]
In reply, the CSA points out that the Ontario publication
is an amended version and not the CSA Code in issue, and that it is actually the
CSA who publishes even the Ontario Code. The CSA also notes that the provinces
seek permission from the CSA before referencing or reproducing the CSA Code.
Section 12 of the Copyright Act provides that ownership of copyright
belongs to Her Majesty when it “is, or has been,
prepared or published by or under the direction or control of Her Majesty or
any government department”. Absent these conditions, copyright does not
belong to the Crown.
[37]
The CSA is not a government organization or
under government control. Mr. Morton provides cogent evidence that the CSA is an
independent association in the form of a corporate profile. Moreover, the House
of Commons has commented that the CSA is independent of the government. Provincial
governments also ask permission from the CSA before referencing or reproducing
the CSA Code.
[38]
Further, there is no evidence that any level of
the Crown claims ownership. In addition to the statements made in the House of
Commons, Gordon Knight has provided no evidence that the Crown can be
reasonably found to own the 2015 CSA Code. There is also no evidence the CSA is
controlled by any level of government, or that the standards in the CSA Code
are not approved by the Standards Council of Canada. The CSA is accredited by
the Standards Council, which is different than being under their control.
[39]
Copyright is a creature of statute, and the
rights and remedies provided in the Copyright Act are exhaustive (CCH).
Copyright in the CSA Code therefore only belongs to the Crown if the
requirements set out in section 12 of the Copyright Act are met; namely,
the Code must have been “prepared or published by or
under the direction or control of Her Majesty or any government department”,
which is simply not the case. Reference to the CSA Code in legislation does not
constitute preparation or publishing by the government or under their
direction.
[40]
In considering the above evidence in light of the
fact that the CSA has undertaken significant effort and expense produce and
publish the CSA Code, it would be contrary to a purposive construction of the Copyright
Act to strip the CSA of its rights in the 2015 CSA Code simply because
certain provinces have incorporated it into law.
B.
Public Policy
[41]
Knight also advances a public policy argument. In
R v Edwards, A Unit of SPX Canada Inc, 2002 CarswellOnt 2083 (WL Can)
(Ont Ct J) [Edwards], the Ontario Court of Justice held the CSA Code is
law and that a violation of it would constitute an offence. In BC Jockey
Club v Standen (Winbar Publications), (1985) 22 DLR (4th) 467 (BC CA), the
concurring judgement added that there may be situations where material becomes
part of the public domain: a judge’s reasons may be such an example. By
extension, Knight argues that law incorporated by reference would form part of
the public domain and could not be copyrighted. Knight also points to an Order
of the federal government that anyone may, without charge or request for
permission, reproduce federal law (Reproduction of Federal Law Order,
SI/97-5, (1997) C Gaz II, 444).
[42]
The CSA has invested significant resources into
developing the Code. While the amount of money they recover in selling the Code
may exceed those costs, excess revenue is used in the development of other
Codes, an activity that is in the public interest of society. Further, the CSA
Code is a voluntary standard and legislatures are not required to enact it as
law.
[43]
Not only has the federal Crown acknowledged in
open Parliament that the CSA is the owner of copyright in its Code and other
standards, even when referenced in legislation, but there is also no evidence
whatsoever that the Crown in the Right of Alberta, or any other Province, claims
to own copyright in the CSA Code. Provincial government authorities request the
CSA’s permission to copy portions of the CSA Code.
C.
If copyright does subsist in the 2015 CSA Code,
does the CSA own valid copyright in that Code?
[44]
Knight submits that the copyright in the CSA
Code belongs to third parties. The CSA is a corporation that only facilitates
creation of the Code. Accordingly, the only way the CSA owns copyright is if it
was assigned to the CSA or if it was developed by employees. Given it was
developed by volunteer committees and there was no evidence of assignment in
the 83 years preceding 2010, only 5% of the authors have been named.
[45]
Knight provides two examples of unnamed authors.
Gordon Knight affirmed that his father had contributed to the CSA Code and
argues that the Court should infer this is true, even in the absence of Peter
Knight’s testimony. The second example given is Ms. Annie Pereira, who is
acknowledged in the front of the 2012 CSA Code for her contributions in eight
editions. However, the evidence fails to prove either person contributed as
author; there is no non-hearsay evidence regarding Peter Knight’s contribution,
and Ms. Pereira’s contributions are not specified.
[46]
Knight relies primarily on three cases to have
the Court find that the CSA does not own copyright. In Kennedy v Ruminski,
2014 FC 526, the parties had entered into a written agreement that provided for
a sharing of intellectual property relating to software programs. The
respondent employee obtained copyright registrations relating to software that
did not reflect the applicant employer’s interest and refused to tell the
applicant what the certificate of registration covered. In discussing the
evidentiary burden, the Court found that the applicant had established an
interest in the certificates, and therefore the respondent was required to show
that the certificates only covered the portion of the work that pre-dated his
employment. The respondent could not do so, and the Registrar of Copyrights was
directed to amend the register to reflect joint ownership in the software.
[47]
In POPS, above, the Court found that a
certificate could be struck because it contained the incorrect first author. In
Kelley Estate v Roy, 2002 FCT 950, the Court expunged a registration
where the balance of the evidence overcame the presumptions in the Copyright
Act.
[48]
Knight invites the Court to draw an adverse
inference from all the evidence, including the lack of assignments, and either expunge
the certificate of registration relied upon by the Applicant or at least
discount the certificate as evidence of copyright. In reply, the CSA submits
that at most the above case law relied on by Knight would not invalidate the
copyright, but only relate to the question of joint ownership. While the
certificate may need to be amended, it does not mean that the CSA does not have
valid ownership of copyright in the 2015 CSA Code.
[49]
Knight also states that because they have raised
arguments about the propriety of the assignment evidence, which consists only
of a bald statement by Mr. Morton, the onus is on the CSA to produce the
assignments. Knight relies on Eli Lilly & Co v Nu-Pharm Inc, [1997]
1 FC 3 (FCA) [Eli Lilly] for the proposition that while the general rule
is that the party who asserts must prove, the onus shifts if the subject-matter
lies within the knowledge of the other party. As the CSA has not produced the
affidavits proving assignment, the Court should draw an adverse inference.
[50]
In reply, the CSA submits that the purpose of
such an evidentiary onus is so that the party having control over the documents
is obliged to produce them. In this case, the CSA had provided the assignments
to Knight in discovery in related litigation, and because Knight could have
just as easily presented them as evidence, there should be no adverse inference
drawn.
[51]
Mr. Morton has affirmed that the CSA has
obtained executed assignments from those authors who contributed to
improvements in the 2012 and 2015 editions, which were provided to Knight in
discovery. The only evidence to the contrary provided by Knight relates to
uncertain and unsubstantiated assertions that Peter Knight, and possibly Annie
Pereira, may have contributed to earlier editions of the CSA Code, although
neither contributed to the 2015 CSA Code. Knight has not presented any reliable
evidence to challenge the authorship provided by the CSA of additions to the
2015 CSA Code made by authors who assigned their rights in their contributions to
the CSA in order to trigger reversing the onus as discussed in Eli Lilly,
above. Even if Knight had provided some evidence, disclosure of the assignments
to Knight during discovery makes Knight the most appropriate party to have put those
facts and arguments into evidence, and they failed to do so.
[52]
The CSA argues that there is no credible
evidence to dispute the CSA’s ownership. Gordon Knight’s evidence is qualified
with phrases such as “it is my belief” and “it appears”, and contains no direct personal
knowledge. Gordon Knight acknowledged that his belief was based on “intellectual and experiential understanding”, not on
any direct or substantial facts. Gordon Knight was not present at the drafting
of the CSA Code and is not in a position to be able to question the
assignments. I agree that based on the evidence before the Court, the CSA has
established its ownership of copyright in the 2015 CSA Code, at least insofar
as the subject matter contributed by the authors to the 2015 CSA version of the
Code was assigned to the CSA.
[53]
Accordingly, I find that on a balance of
probabilities there is no reasonable evidence before the Court to dispute the
validity of ownership by the CSA in the original content in the 2015 CSA Code
assigned to the CSA.
D.
Does Knight have a defence (1) because of a
Licence, or (2) because the Knight Code reproduction is fair dealing?
(1)
The Licence
[54]
Knight believes that the correspondence between the
CSA and Peter Knight in the 1960’s constitutes a subsisting perpetual license
to reproduce any version of the CSA Code. Knight argues that because it was
granted for consideration, the dissemination and promotion of the Code cannot
be unilaterally revoked.
[55]
I disagree. The letters (the purported license)
only allowed Peter Knight to quote from the Code and not to reproduce it in its
entirety. They also do not relate to future versions of the Code and there is
no evidence of any valid license in writing having been assigned to Knight Co
or Gordon Knight. Even if there were a license, the CSA put Knight on notice
that any such license would be terminated at least as early as 2005 and
repeatedly thereafter.
[56]
Moreover, as the CSA rightfully points out,
Peter Knight’s purported letters with the CSA in 1969:
(a) are addressed to a non-party, Peter Knight;
(b) do not purport to confer on Peter Knight any right to assign his
alleged permission to these Respondents, nor was the CSA ever provided with
notice that Peter Knight purported to assign it, nor is there any written
record that such assignment ever took place;
(c) pertain to a handmade booklet Peter Knight was making in 1969 and
not a copy-cat Code book of these Respondents in 2015/2016;
(d) the 1969 letters at best provided a permission to “quote from” CSA’s
1969 Code provided the source is properly given; not to “copy the entirety of”
CSA’s 2015 Code while passing it off as their work;
(e) the 1969 letters are not capable of being read as a perpetual and
non-revocable license. The CSA provided notice of termination in both 2007 and
2011 to Knight, which constitutes reasonable notice of termination for a
permission, particularly one given without consideration in return.
[57]
There is no valid defence of licence.
(2)
Fair Dealing
[58]
Knight also submits it is entitled to the
defence of fair dealing. Knight advocated for a broad interpretation of
research and private study and submits that the Court should look to the
ultimate user: it is fair dealing because end users would use the CSA Code to
research and understand the law. As well, given that research can be conducted
with a view to profit, the commercial aspect is irrelevant, and due to the high
CSA revenues from the 2015 Code relative to the cost of producing it, the CSA
will not be adversely affected.
[59]
Knight cannot rely on fair dealing as the
allegedly infringing Knight Code work is a complete copy of the 2015 CSA Code. One
of the considerations enunciated by the Supreme Court of Canada in CCH,
above, was the extent of the copying. When 100% of a work is copied, the
dealing cannot be fair. Further, the argument that it is for educational
purposes has no merit. The Knight Code is clearly a competitive commercial
undertaking by Knight to compete with the 2015 CSA Code, and they have no valid
claim to fair dealing.
VI.
Remedies
[60]
The CSA is only entitled to damages from the
date following the date of the written assignments from the authors of the 2015
CSA Code (Denturist Group of Ontario v Denturist Association of Canada,
2014 FC 989 at para 68).
[61]
Nevertheless, given that I find that copyright
subsists in the 2015 CSA Code, that the CSA owns the copyright in that Code,
and that Knight has admitted it produced the Knight Code knowingly and wilfully
as a substantial infringement of the 2015 CSA Code, I find that the CSA is
entitled to:
(a) a permanent injunction, enjoining the Respondents from infringing
the CSA’s copyright in the 2015 CSA Code;
(b) an order for delivery up of all copies of the Knight Code produced
to the date of this judgment or hereafter, and any plates or electronic files
of the Knight Code;
(c) statutory damages in the amount of $5,000, given the wilful and
knowing conduct of the Respondent Knight Co.
[62]
While Gordon Knight is the sole directing mind
of the corporate Respondent and responsible for day-to-day activities of the
Respondent Corporation, there is no evidence before the Court that he acted
outside his duties as a director and officer of PS Knight Co Ltd. and no real
argument was presented at the hearing on this issue. I do not find personal
liability by Gordon Knight, but his public commentary on the CSA, which is the
subject matter of a separate law suit in the Ontario Superior Court, is a
matter for that Court to decide and this decision should have no bearing on
that case independent of the findings of copyright ownership and infringement.
[63]
Costs are awarded to the CSA. If no agreement on
costs can be reached between the parties, I ask that each party submit their
written submissions on costs within two (2) weeks of the date of this Judgment.