Docket: T-172-15
Citation:
2016 FC 929
Ottawa, Ontario, August 12, 2016
PRESENT: The
Honourable Mr. Justice Diner
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BETWEEN:
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ROYAL
CONSERVATORY OF MUSIC
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AND THE
FREDERICK HARRIS MUSIC CO., LIMITED
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Applicants
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and
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CLARKE
MACINTOSH DOING BUSINESS AS NOVUS VIA MUSIC GROUP INC.
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AND
CONSERVATORY CANADA
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Respondents
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JUDGMENT AND REASONS
I.
Nature of the Matter
[1]
This is an application brought under the summary
judgment proceedings provision in paragraph 34(4)(a) of the Copyright
Act, RSC 1985, c C-42 [the Act] and pursuant to Rule 300(b) of the Federal
Court Rules, SOR/98-106. The Applicants allege that they own or control the
copyright to 21 musical works and the Respondents have published those works
without permission. The Applicants also assert the Respondents made a number of
changes to the look of their publications to make those publications
confusingly similar to those of the Applicants, improperly passing off their
wares.
[2]
The Respondents deny both claims and allege that
this application was brought with an ulterior motive.
[3]
For the reasons below, I agree with the
Applicants that the Respondents have infringed their copyright. I do not agree,
however, that there has been any passing off.
II.
Facts
[4]
The Royal Conservatory of Music [the Royal
Conservatory] is a registered charity under the Income Tax Act, RSC
1985, c 1 (5th Supp), with its principal place of business in Toronto. It was
originally incorporated in 1886 as the Toronto Conservatory of Music, and
assumed its current form as an independent legal entity in 1991 by a special
act of the Ontario legislature (Royal Conservatory of Music Act, 1991,
SO 1991, c Pr17, as amended by Royal Conservatory of Music Act, 2013, SO
2013, c Pr4). The Royal Conservatory is one of the largest music education institutions
in the world; among several other activities, it publishes various series of
graduated instructional music books for a variety of instruments. The Royal
Conservatory has overall revenues of approximately $35 to $40 million per year.
[5]
Frederick Harris Music Co., Limited [Frederick
Harris] is a non-profit Ontario corporation, first incorporated in 1940. The
Royal Conservatory is Frederick Harris’s sole registered shareholder, and Frederick
Harris is the Royal Conservatory’s exclusive publisher for its series of
instructional music books.
[6]
Clarke MacIntosh is the former President and CEO
of Frederick Harris. Mr. MacIntosh began working for Frederick Harris in 1992
as Director of Marketing. He was promoted to Vice President in 1999 and then President
and CEO from 2002 to 2006.
[7]
While Mr. MacIntosh was at Frederick Harris, the
Applicants developed a colour-coded system for their graduated music books. Mr.
MacIntosh, however, states that he was not directly involved with this process.
He left the company on February 28, 2006, and on September 1, 2006,
incorporated Novus Via Music Group Inc. [Novus].
[8]
Not long thereafter, Frederick Harris brought
suit against Mr. MacIntosh and Novus, alleging that Mr. MacIntosh had breached
his contractual and fiduciary obligations to Frederick Harris in publishing a
series of level-based piano books that were similar to another series
developed, but never published, by Frederick Harris during his tenure there.
That suit was ultimately discontinued on July 26, 2007.
[9]
Novus was dissolved on June 30, 2014, for
failure to file corporate tax returns. Nonetheless, Mr. MacIntosh continues to
carry on business under the name. He alleges that the current proceedings have
prevented him from reinstating Novus’s corporate status.
[10]
Conservatory Canada is a registered charity and
a not-for-profit corporation incorporated under the Canada Not-for-Profit
Corporations Act, SC 2009, c 23. Conservatory Canada’s first predecessor
organization, the London Conservatory, was founded in 1891, and Conservatory
Canada assumed its current form in 1997.
[11]
Conservatory Canada, like the Royal Conservatory,
is a musical education institution that, among other things, develops series of
graduated instructional music books. Unlike the Royal Conservatory, Conservatory
Canada is a small institution, with only three administrative staff, a Board of
Directors composed of volunteers, and annual revenues of just over $500,000.
Conservatory Canada, in developing musical study programs, compiles syllabi and
materials and then finds a publisher to manage those materials. It does not
have a dedicated publisher like Frederick Harris.
[12]
In 1999, Conservatory Canada published an
eleven-level series of graduated musical books for the piano under the name “The New Millennium Series” [the Series]. It chose Waterloo
Music Company Ltd [Waterloo] to be the publisher of the Series. As will be
explained, over time, other publishers became involved in the printing of the
series, and two subsequent editions of the series were published – one in 2012,
and one in 2014.
[13]
The Series consists of approximately 450 musical
pieces. Twenty-one of these pieces – about 5% of the total – were licensed from
Frederick Harris, pieces for which Frederick Harris had either obtained an
assignment of the copyright or retained the exclusive publishing rights in
Canada. These works, which form the basis of this litigation, and their
composers, are appended as Schedule B to these Reasons.
[14]
Negotiation for the permission to publish these
21 pieces took place between Mr. MacIntosh, who was at the time employed by Frederick
Harris, and Waterloo, Conservatory Canada’s publisher at the time. The
Respondents allege that Waterloo undertook these negotiations on behalf of Conservatory
Canada, but unfortunately, neither the Applicants nor the Respondents were able
to locate a physical copy of this agreement [the 1999 Agreement] which was therefore
not in evidence before the Court.
[15]
Included in the record, on the other hand, are certain
royalty reports and payments to Frederick Harris from Waterloo, for the
publication of the works. The last one of these payments was made by Waterloo
for $1,405.81 in April 2006 for the 2005 calendar year. Under
cross-examination, Debbie Morrissey, the controller responsible for accounting
and financial records for both Royal Conservatory and Frederick Harris admitted
that the Applicants were aware that they had not been paid royalties for the
works since 2006, but did not act to collect further royalties owing.
[16]
According to Patricia Frehlich, Chair of Conservatory
Canada’s Board of Directors, Waterloo was acquired by St. John’s Music Ltd.
[St. John’s], another music publisher, in or around 2004. St. John’s continued
to publish the Series on Conservatory Canada’s behalf until 2007, when Mayfair
Music Publications [Mayfair] became Conservatory Canada’s publisher. Mayfair
continued to publish the Series until 2014, when Novus took over. As with the
original 1999 Agreement, the Respondents have been unable to locate any
agreement between Conservatory Canada and Mayfair.
[17]
In 2011, Conservatory Canada began planning for
a “120th Anniversary Edition” of the Series [the
Anniversary Edition]. Conservatory Canada decided to change the cover of the
Series from the original 1999 design, which had featured a black border, an
open grand piano, and a colour surrounding the piano, corresponding to
particular grade levels. The new covers featured a reference to Conservatory
Canada’s 120th anniversary and replaced the black border cover with
a fully coloured one, corresponding to different grades.
[18]
The Anniversary Edition, published by Mayfair,
was released for sale in 2012. Like the first edition of the Series published
in 1999, the Anniversary Edition also contained the 21 musical works.
[19]
By the spring of 2014, Conservatory Canada and Mayfair
were on strained terms. Conservatory Canada took the position that it was owed a
considerable amount in unpaid royalties.
[20]
On May 20, 2014, Steven Loweth, General Manager
of Mayfair, acknowledging “that there is an outstanding
debt of royalties owed to Conservatory Canada”, put forward a proposal
to maintain the publishing relationship, offering, among other measures, to
assign to Conservatory Canada “all rights for
Conservatory Canada related books currently copyrighted under Waterloo
Publications”.
[21] Conservatory Canada rejected this offer, stating in a reply letter that
“Conservatory Canada is the author of said
publications, and through moral rights, authors always have the claim to their
creations. Mayfair Music Publications was our publisher, but is in breach of
contract for failure to pay royalties. When a publisher fails to pay royalties
for any protracted period, rights typically revert to the author”.
[22] In April 2014, Mr. MacIntosh became a “special
advisor” to Conservatory Canada’s Board and a member of its Executive
Committee. In July 2014, after the relationship between Conservatory Canada and
Mayfair disintegrated, Novus, Mr. MacIntosh’s company, became Conservatory
Canada’s publisher. Novus then published a new 2014 edition of the Series [the 2014
Edition]. The Respondents assert that the 2014 Edition is unchanged from the
2012 Anniversary Edition, because it simply comprises a digitized scan of the
earlier 2012 Edition with very minor, non-material changes.
[23]
In August 2014, the Applicants learned that Conservatory
Canada’s Series was going to be published by Novus. On November 17, 2014,
Elaine Rusk, Vice President of the Royal Conservatory and Publisher of Frederick
Harris, emailed Victoria Warwick, Executive Director of Conservatory Canada, to
advise her that Frederick Harris had not been contacted to reproduce the 21
works in the most recent edition, stating as follows:
Are the contents the same as previous
edition? If so, you should know we have not yet been contacted regarding
permission to reprint FHMC [Frederick Harris] copyrights that appear in the
series.
[24]
Ms. Rusk received no response from Ms. Warwick
or Conservatory Canada. She wrote to Ms. Warwick again on December 9, 2014,
forwarding a copy of her earlier November 17 email. In this December 9
follow-up email, Ms. Rusk added:
Just so you know, nobody has contacted us
regarding permission to reprint Frederick Harris copyrighted pieces in the
Millenium [sic] Series to be published by Novus Via.
[25]
On December 10, 2014, Derek Oger, the new
Executive Director of Conservatory Canada, stated that he would investigate and
provide clarification to Frederick Harris, explaining the situation as follows
in his email reply to Ms. Rusk:
My name is Derek Oger and I have taken over
as Executive Director of Conservatory Canada. Victoria [Warwick] is no longer
with us. I will take this up with our new publisher and get back to you as soon
as I get clarification on what needs to happen here.
[26]
There were no further communications between the
parties regarding the matter, until the Applicants filed this application on February
5, 2015.
A.
The Missing 1999 Agreement
[27]
As noted above, none of the parties were able to
locate a copy of the 1999 Agreement between Frederick Harris and Waterloo. Without
this key document, the Court has been left to reconstruct, on the best
available evidence, the financial and contractual arrangements that took place
between the parties.
[28] Mr. MacIntosh, who was involved in the negotiations at the time as
an employee of Frederick Harris, asserts that Waterloo negotiated the 1999
Agreement on behalf of Conservatory Canada. In his affidavit before this
Court, he asserts that there is a distinction in the music publishing industry between
“compilers” and “publishers”:
Conservatory Canada is a compiler, which he states typically retains the grant
or permission for the copyrighted work, while the publisher (Waterloo at the
relevant time) typically negotiates and administers the various rights involved
in publishing the compiler’s works, but, unlike the “compiler”,
does not acquire rights in the work(s).
[29]
Mr. MacIntosh also asserts that the 1999
Agreement was for the life of the publication on a pro-rata royalty basis. He interprets
this to mean that “as long as a publisher maintains a
reasonable inventory of the publication for sale, it is considered to be ‘in
print’, it is considered to be ‘alive’ for the purposes of any contract
commitments”.
[30]
The Respondents note that the last royalty payment
that Waterloo sent to Frederick Harris was a “Pro-rata
royalty for 2005” and contend that this confirms Mr. MacIntosh’s
interpretation of the contract.
[31]
The Applicants, by contrast, draw the Court’s
attention to a 1999 permission agreement between Waterloo and a composer,
Beverly Porter [the Porter Agreement], in which Ms. Porter granted Waterloo,
the then-publisher, the right to publish and use her piece ‘Chromatic Rag’, “in all editions of [the Series] repertoire currently in
production”. The Porter Agreement makes no mention of Conservatory Canada
and states that “[c]opyright owners will receive an
equal share of a pro-rata royalty based on the annual sales of the series over
a period of 10 years”.
B.
The Passing Off Claim
[32]
In 1987, the Royal Conservatory began publishing
an instructional series for piano, the “Celebration
Series Perspectives” [the Celebration Series]. The Celebration Series
has eleven levels of increasing difficulty. Each level is composed of
repertoire books and technical (studies) books. The covers of those books are
designed so that each level is associated with a specific colour.
[33]
The colour-code system for the 4th
edition of the Celebration Series, from Preparatory to Level 10, is as follows:
yellow (0), orange (1), red (2), light purple (3), light blue (4), green (5),
navy (6), dark red (7), dark purple (8), light brown (9), and dark green (10).
This colour-coding system was developed in 2001 by Frederick Harris’s marketing
team, which was, at that time, led by Mr. MacIntosh, and has since been applied
to other Royal Conservatory series and publications. Ms. Rusk (of Frederick
Harris) states that this colour scheme is distinctive to the Royal Conservatory
and “makes it easy for teachers and students to simply
look for the colour they want and easily select all the necessary books for a
particular level”.
III.
Parties’ Positions
[34]
As will be explained in greater detail below, the
Applicants raise two issues in this application, claiming that (i) the
Respondents did not have permission to publish the 21 works controlled by
Frederick Harris in the 2014 Edition; and (ii) the Edition infringes Royal
Conservatory’s rights per subsection 7(b) of the Trade-marks Act, RSC
1985, c T-13 [the Trade-marks Act] on the basis of passing off. The
Respondents reject both of these claims. They raise an additional issue, namely
that this application was brought with an ulterior motive, and is abusive.
A.
The Applicants
[35]
The Applicants contend that there is no legal
basis to conclude that the permission granted to Waterloo under the 1999
Agreement could apply to the 2014 Edition for the following reasons.
[36]
First, the Applicants argue that each of the
1999, Anniversary, and 2014 Editions of the Series required separate
permission.
[37]
Second, they submit that the original permission
in the 1999 Agreement was granted to Waterloo and not to Conservatory Canada. Waterloo
then passed those rights to St. John’s Music, which then passed them to Mayfair,
and when Conservatory Canada terminated its relationship with Mayfair in 2014,
the chain of permission connecting Conservatory Canada and the Applicants was
broken.
[38] Either way, the bottom line for the Applicants is that all Waterloo
acquired in 1999 was permission to publish the 21 works in the 1999 Edition of
the Series, and since Frederick Harris granted permission to Waterloo, and not
Conservatory Canada, Conservatory Canada acquired nothing. The Porter Agreement,
the Applicants assert, is consistent with this position. They contend that it
is the “one and only piece of physical evidence we have
that gives us an idea what the permission might have looked like” (Hearing
Transcript at 25 [Transcript]) and that the 1999 Agreement would have contained
exactly the same terms of permission (Transcript at 28).
[39]
The Applicants also argue that the Respondents
were aware that they lacked the necessary permission to publish the 2014 Edition.
When they realized they were owed money from Mayfair but that they lacked any
documentation of the Mayfair publishing agreement, they should have realized
that they did not have the authorization to publish the new edition. Beyond
that, Conservatory Canada was formally put on notice by Ms. Rusk’s emails of
November and December 2014 that they had neither sought, nor secured,
permission to reproduce the 21 impugned works in the 2014 Edition.
[40]
As for the claim under subsection 7(b) of the Trade-marks
Act, the Applicants allege that Conservatory Canada adopted the Celebration
Series colour-coding scheme for the 2014 Edition of the Series. They also note
that their books are staple-bound and that Conservatory Canada shifted from
spiral binding in the 1999 Edition of the Series to staple binding when the
Anniversary Edition was published. The Applicants cite Iona Appliances Inc v
Hoover Canada Inc (1988), 32 CPR (3d) 304 for the proposition that the
changes to the appearance of the Anniversary Edition make it so similar to the
2008 Edition of the Celebration Series that it is reasonable to infer the
intent was to deceive and that it leads to a likelihood of confusion.
[41]
As for remedies, the Applicants claim statutory
damages under subsection 38.1(a) of the Act. They assert that the copying of
their 21 musical works was for commercial purposes and thus they should receive
somewhere between $500 and $20,000 in damages for each of the pieces. In
justifying their request, they note that the Respondents, despite notice that
they lacked the requisite permission to publish, nonetheless continued to
market and promote the works anyway. They drew the Court’s attention in
particular to Mr. MacIntosh’s attendance at the March 2015 Music Teachers
National Association [MTNA] Conference in Las Vegas, where, shortly after these
proceedings were commenced, he marketed the 2014 Series.
[42]
In addition to statutory damages, the Applicants
seek the following:
A.
A declaration that the Respondents have directed
public attention to the Series in such a way as to cause or be likely to cause
confusion between their wares and the wares of the Applicants;
B.
A declaration that the Respondents have
infringed their copyright in each of the 21 works;
C.
An injunction restraining the Respondents from
passing off;
D.
Delivery up of any copies of the 2014 Edition of
the Series;
E.
Prejudgment interest on the requested statutory
damages; and
F.
Costs for bringing this application.
B.
The Respondents
[43]
The Respondents offer various arguments as to
why this application should be denied, including three procedural objections:
(i) this claim is barred by the three-year limitation period set out in
subsection 43.1(1) of the Act; (ii) the Applicants lack the standing to sue for
at least 5 of the 21 works at issue; and (iii) this Court lacks the
jurisdiction to hear this matter since this case is in reality about an
unintentional breach of contract.
[44]
As for their substantive arguments, the Respondents
contend that the Applicants have not validly revoked their permission and are
thus estopped from doing so. Because there was consideration for the
permission, it cannot be revoked unilaterally. Revocation would have had to
have been explicit and with reasonable notice, and neither were provided.
[45]
The Respondents deny the passing off claim and object
to the Applicants’ submission of actual copies of the Celebration Series books
at issue as evidence, arguing that parties cannot adduce physical evidence in
an application.
[46]
On remedies, the Respondents assert that if
there is any merit to the infringement claim, it is worth at most $1,405.81 –
the amount listed in the last royalty payment from Waterloo to Frederick Harris
in 2006.
[47]
Finally, the Respondents submit that that this
application is abusive, in that it was brought for ulterior motives relating to
residual hostility towards Mr. MacIntosh. The Respondents assert that it was
only after the Applicants learned that Mr. MacIntosh was associated with Conservatory
Canada that they took issue with the 2014 Edition of the Series. The
Respondents also argue that the decision to litigate against Conservatory
Canada was made in mid-January to cause maximum disruption at Conservatory
Canada’s offices. They contend that the combined effects of the ulterior
motive, the high quantum of damages sought, and the lack of due diligence,
militate in favour of a significant costs award to them.
IV.
Analysis
A.
Procedural objections
(1)
Can this Court accept physical evidence if this
is an application?
[48]
The Applicants requested leave from the Court to
introduce certain hard copies of the 2008 Edition of the Celebration Series and
hard copies of the 1999 and Anniversary Editions of the Series. They contended
that these physical books would assist the Court in its deliberations.
[49]
The Respondents objected to this request,
arguing that (a) the books were not provided with the documentation that was
properly and timely filed, and (b) since this is an application, not an action,
there are no witnesses through whom to introduce the various books as exhibits.
[50]
The Court granted the Applicants’ request to
introduce the materials at the hearing, rather than simply rely on the
photocopies of the books that had been earlier provided in the Record. The
Court so ruled for three reasons.
[51]
First, the Federal Court Rules,
SOR/98-106 [the Rules] make clear that bringing physical exhibits is
entirely possible. Rule 309(2)(g), for example, states that “[a]n applicant’s record shall contain, on consecutively
numbered pages and in the following order… a description of any physical
exhibits to be used by the applicant at the hearing”.
[52]
While the Applicants
did not technically comply with Rule 309(2)(g), the Rules also permit
this Court to identify such errors and rectify them. Rule 60 states that “[a]t any time before judgment is given in a
proceeding, the Court may draw the attention of a party to any gap in the proof
of its case or to any non-compliance with these Rules and permit the party to
remedy it on such conditions as the Court considers just”.
[53]
Second, the Applicants
had already adduced photocopies of all the books they wished to present to the
Court in hardcopy in advance of the hearing. Submitting the books as separate
evidence therefore did not fundamentally change the Court record in any way.
[54]
Finally, it is in the
interests of all parties that the Court examines physical copies of the books to
acquire an accurate sense of the degree of similarity between the works at
issue. Since the colours of the covers of the books are directly at issue for
the passing off claim, I see no reason to rely on potentially unfaithful printouts.
(2)
Do the Applicants have standing to bring this
application for all of the works?
[55]
The Respondents submit that, with respect to at
least 5 of the 21 pieces at issue – “Bozo’s
Flippity-Flop”, “Butterflies”, “Peacock”, “Masquerade”,
and “Sneaky” (see Schedule B to these Reasons) –
the Applicants were never assigned an interest in the copyright but only a grant
of an exclusive licence. They thus lack the standing to bring an infringement
claim under subsection 41.23(1) of the Act.
[56]
I also disagree with the Respondents about this
procedural objection. The language of each of the agreements for those five
pieces states that “[b]y this letter you grant and
assign to us exclusively the right to publish (i.e. print, publish and sell)
the Work throughout the world”. While this language is different from the
language in the agreements for the other 16 works (see Schedule B), the
agreements at issue nonetheless convey the necessary interest to bring this
application: subsection 13(7) of the Act makes it clear that “a grant of an exclusive licence in a copyright constitutes
the grant of an interest in the copyright by licence”.
[57]
Furthermore, per subsection 13(5) of the Act, “[w]here, under any partial assignment of copyright, the
assignee becomes entitled to any right comprised in copyright, the assignee,
with respect to the rights so assigned, and the assignor, with respect to the
rights not assigned, shall be treated for the purposes of this Act as the owner
of the copyright, and this Act has effect accordingly”.
[58]
The Applicants therefore (i) have standing to
bring this application for all 21 pieces, and (ii) having received at least
partial assignment of copyright, are considered “owners” for the purpose of
publishing due to their assigned rights. They need not have added any other
parties to properly bring the claims against the five pieces. In having
negotiated exclusive licenses (i.e. grants of an interest from the copyright
holder), the Applicants had more than simply obtained permission to publish. As
the Supreme Court held in Robertson v Thomson Corp, 2006 SCC 43 at para
56, quoting with approval the Ontario Superior Court in Ritchie v Sawmill
Creek Golf & Country Club Ltd (2004), 35 CPR (4th) 163:
The “grant of an interest” referred to in s.
13(4) is the transfer of a property right as opposed to a permission to do a
certain thing. The former gives the licensee the capacity to sue in his
own name for infringement, the latter provides only a defence to claims of
infringement. To the extent there was any uncertainty as to the meaning
of “grant of an interest” and whether this section applied to non-exclusive
licences, the issue was resolved in 1997 when the Copyright
Act was amended to include s. 13(7).
(3)
Jurisdiction of this Court
[59]
The Respondents suggest that since what is
ultimately at issue is a “purely contractually based
permission whereby whoever was the third party publisher at the time would make
required permission payments to Frederick Harris”, this Court lacks the
jurisdiction to hear that element of this dispute. The Respondents rely on Netbored
Inc v Avery Holdings Inc, 2005 FC 490 at para 24 [Netbored], where
Justice Gibson upheld a prothonotary’s order striking a number of provisions in
the plaintiff’s Statement of Claim for the following reasons:
This is an action
for infringement of the plaintiff's copyright. The plaintiff's allegations in
the impugned paragraphs of the Statement of Claim relating to breach of contract
and breach of fiduciary duty and the like are not advanced for the purpose of
establishing infringement. Rather, they are advanced for the purpose of
obtaining relief in respect of those breaches themselves. As such, this Court
lacks jurisdiction to entertain them.
[60]
As Justice Gibson noted in para 12 of Netbored,
however, subsection 20(2) of the Federal Courts Act, RSC 1985, c F-7 is
clear that:
The Federal Court has concurrent
jurisdiction in all cases, other than those mentioned in subsection (1), in which
a remedy is sought under the authority of an Act of Parliament or at law or in
equity respecting any patent of invention, copyright, trade-mark, industrial
design or topography referred to in paragraph (1)(a).
[61]
The Applicants are seeking statutory damages
under section 38.1 of the Act, as well as remedies listed in subsection 34(1).
They are seeking these damages because they allege that their copyright over
the 21 works has been infringed. They are not claiming that the Respondents
breached the terms of the 1999 Agreement in publishing the Anniversary Edition
(i.e. that the pieces were published and that they are, per the terms of the
1999 Agreement, owed compensation). Rather, they are claiming that the
publication of the Anniversary Edition took place without their permission – in
other words, that there was no contract in place to be breached in the first
place.
[62]
I consequently find that this Court has the
jurisdiction to hear the copyright infringement claim.
[63]
Having dispensed with all three procedural
objections, I now turn to the substantive merits of the application.
B.
Copyright Infringement
[64]
Copyright is the sole right to produce or
reproduce a work or any substantial part of it (section 3 of the Act). A
copyright holder may assign the copyright entirely to someone else, or grant an
interest in it and retain the copyright. Either way, the Act requires that the
grant or assignment be made in writing (subsection 13(4) of the Act). As stated
in subsection 27(1), “[i]t is an infringement of
copyright for any person to do, without the consent of the owner of the
copyright, anything that by this Act only the owner of the copyright has the
right to do.”
[65]
With respect to the 21 works in question, Frederick
Harris either owns the copyright to, or has an exclusive licence to publish, each
of the pieces in issue. Thus, for the purposes of the Act, Frederick Harris
owns their copyright, insofar as publication is concerned. Per the Act, then, Frederick
Harris’ consent was necessary for another entity – whether that was Waterloo,
St. John’s, Mayfair, Novus, Mr. MacIntosh, or Conservatory Canada itself – to
publish the works in question. To do otherwise constituted an infringement.
[66]
It is accepted by all parties that, in the 1999
Agreement, the Applicants gave their consent to publish those works in the
Series. Beyond that, there is no consensus. Since neither the Applicants nor
the Respondents could find a copy of the 1999 Agreement, each offered the Court
their interpretation of what that Agreement most likely said.
[67]
The Applicants contend that it is reasonable to
assume that the 1999 Agreement contained equivalent terms to those in the
Porter Agreement – a grant of permission to publish for 10 years, and an annual
royalty payment.
[68]
The Applicants also argue that there is no
suggestion that the 1999 Agreement was negotiated on behalf of Conservatory
Canada. Instead, the permission was granted to Waterloo, transferred to St.
John’s Music, and then transferred again to Mayfair. At no point did Conservatory
Canada, Mr. MacIntosh, or Novus have any rights over the work.
[69]
The Respondents, by contrast, rely on Mr.
MacIntosh’s recollections of the 1999 Agreement’s contents. Mr. MacIntosh states
that the 1999 Agreement was a grant of permission for “the
life of the publication” on a “pro-rata royalty
basis”, explaining that:
[…] as long as a publisher maintains a
reasonable inventory of the publication for sale, it is considered to be “in
print”. As long as a publication is “in print”, it is considered to be “alive”
for the purposes of any contract commitments.
[70]
Since the Respondents assert that all three Editions
–1999, 2012 and 2014 – constitute one continuous publication of the Series, and
that that publication has been for sale from 1999 until today, the permission
granted in the original 1999 Agreement remains alive and active.
[71]
As for the Porter Agreement, the Respondents
interpret that document as a grant for “all editions of
the New Millennium Series of piano repertoire currently in production”,
meaning that the grant extends to cover the entire series, regardless of which
edition is in production. Since the 1999, 2012, and 2014 printings of the
Series have identical content, the permission thus remained in force.
[72]
The Respondents also argue that the 1999
Agreement was a grant to Conservatory Canada, negotiated on its behalf by
Waterloo. Consequently, the grant extended from Conservatory Canada to any
publisher it may have been working with for any given printing of the Series,
rather than to Waterloo specifically.
[73]
Mr. MacIntosh states that while it is typically
the responsibility of the author/compiler to obtain the necessary permissions,
the publisher will assist with the administrative work involved in that task:
[Conservatory Canada] has changed its
publisher three times since 1999. It is not uncommon for an author to use
multiple publishers, sometimes splitting their catalogue of works across
several publishers, sometimes moving everything they’re authored from one to
another. In or around 2004, the publisher of [Conservatory Canada] materials
changed from Waterloo Music to St. John’s Music. In or around 2007, the
publisher of [Conservatory Canada] materials changed again, this time from St.
John’s Music to Mayfair Music. Most recently, in August 2014, the publisher of [Conservatory
Canada] materials changed from Mayfair Music to [Novus]. There is nothing
unusual or inappropriate in this. All permissions to use copyrighted works in
the New Millennium Series for piano were granted to [Conservatory Canada], as
the compiler. And as negotiated by Waterloo Music, [Conservatory Canada]
retains those permissions for the life of the publication, irrespective of the
publisher they choose to do business with to print, distribute and sell their
materials.
[74]
The Respondents also point out that Ms. Rusk of
the Royal Conservatory, in cross-examination, testified on three occasions that
the 1999 and 2014 Editions are “identical”, in that they have the same content.
[75]
Finally, Conservatory Canada asserts that it,
rather than any of the four publishers, held copyright through the compiling of
the works in the Series.
[76]
Assessing both the Applicants’ and Respondents’ interpretations
of the 1999 Agreement and in the absence of any physical evidence of this
central document, I find the Applicant’s interpretation – that the grant was to
Waterloo, and not Conservatory Canada – to be more persuasive for three
reasons.
[77]
First, the copyright notices throughout all three
editions of the Series list Waterloo, and not Conservatory Canada, as
the copyright owner.
[78] Second, Ms. Porter’s agreement with Waterloo makes no mention
whatsoever of Conservatory Canada. Rather, the Porter Agreement purports to grant
to Waterloo permission to reprint her work (Chromatic Rag) for a period of 10
years in the New Millennium Series, a permission through which Copyright owners
will receive an equal share of a pro-rata royalty rate based on the annual
sales of the series over a period of 10 years, covering the territory of
Canada. It seems entirely plausible – and there is nothing before me to suggest
otherwise – that these terms would naturally also appear in the 1999 Agreement between
Waterloo and Frederick Harris.
[79]
Third, when the relationship between Mayfair and
Conservatory Canada began to deteriorate, Mayfair made it clear that it,
and not Conservatory Canada, retained the grant to publish the works. See, for
example, its 2014 proposal to Conservatory Canada, where Mayfair suggested that
it would transfer “all rights for Conservatory Canada
related books currently copyrighted under Waterloo Publications” if Conservatory
Canada would continue to use Mayfair as its publisher. This is entirely in
keeping with the Applicants interpretation of what the 1999 Agreement said –
that the rights went to Waterloo, and not to Conservatory Canada: by the time
of the publication of the 120th Anniversary Edition, the 1999
Agreement had lapsed.
[80]
Even if the 10 year validity presumption is
incorrect, as explained above, the 1999 Agreement was between Frederick Harris
and Waterloo. The grant outlined in the 1999 Agreement then moved from Waterloo
to St. John’s to Mayfair. As such, Conservatory Canada’s decision to terminate
their publishing relationship with Mayfair terminated any contractual link
between them and Frederick Harris and its works. Conservatory Canada thus had
no right to negotiate with Mr. MacIntosh and/or Novus to publish the works, and
neither Mr. MacIntosh nor Novus had any right to publish them.
[81]
Indeed, I assign low probative value to Mr.
MacIntosh’s recollections of the contents of the 1999 Agreement. As the
Respondents have noted several times in their submissions, Frederick Harris and
the Royal Conservatory had significant yearly revenues of which the income from
this contract would play only a miniscule role. It is not clear how Mr.
MacIntosh, who was employed by Frederick Harris at the relevant time, could
remember so specifically the terms of an agreement negotiated approximately 18
years ago for a sum of money his employer at the time clearly did not think was
particularly important.
[82] Furthermore, The Respondents contend that the Applicants were aware
that they had not been paid by Waterloo since 2006 and that their decision not
to take action and demand payment amounts to an “implied
permission” to the Respondents to continue publishing.
[83]
I do not find this to be the case. As noted
above, the 1999 Agreement was between Waterloo and Frederick Harris. If there
were any implied permission resulting from the Applicants’ inaction, it would
have accrued to the benefit of Waterloo (or its successors) and not the
Respondents.
[84]
The Respondents also argue that there is ample
evidence to suggest that it was Mayfair’s responsibility to pay these
royalties, not Conservatory Canada’s. Further, the Respondents point out that
the Applicants continued to conduct business with Mayfair throughout the eight
and a half years of default, paying Mayfair on other unrelated permissions
issues. The Respondents suggest that, since the Applicants were aware of the
default, they could have set off the unpaid annual royalties from the Series
from the amounts they owed Mayfair.
[85]
However, it is important to note that the
Applicants, in this proceeding, do not take issue with the unpaid royalties.
Their claim lies in the publication of the works without permission – not any
contractual breach that may have occurred in relation to the 1999 Agreement.
[86]
Finally, the Respondents argue that there is no
evidence that the permission granted in the 1999 Agreement has ever been
revoked. The November and December 2014 emails sent by Ms. Rusk to Victoria
Warwick, and subsequently to Derek Oger, merely state that she had not been
contacted “regarding permission” – not that the
permission had been denied.
[87]
I find it difficult to interpret Ms. Rusk’s email
statements as the Respondents would like. Why would Ms. Rusk contact Conservatory
Canada regarding permission if she believed nonetheless that permission had
been granted? It seems unreasonable to require that she say something to the
effect of “I revoke Conservatory Canada’s permission to
the works in question” if she did not believe there was any underlying
grant in the first place. The emails, in my view, are quite clear that no
permission exists for the printing: Ms. Rusk, on behalf of the Royal
Conservatory, did not approve of the status quo.
(1)
Limitation period
[88]
The Respondents submit that the last royalty
payment was made by Waterloo in 2006 and that, while the Applicants were aware
that they were owed payments for the series, made no effort to address this issue
until 2014. As such, if the infringing act giving rise to the remedy at issue is
the continued publication of the works without the Applicants’ permission, then
the Applicants should have pursued this litigation by 2009 at the very latest, pursuant
to paragraph 43.1(1)(b) of the Act.
[89]
The Applicants, by contrast, reiterate that this
application concerns only the 2014 Edition, and since each edition
constitutes a new publication, the limitation period does not apply.
[90]
I do not, however, need to decide whether each
edition constitutes a new publication for the purposes of paragraph 43.1(1)(b),
because as explained in Wall v Horn Abbott Ltd, 2007 NSSC 197 at para
474:
[A]lthough claims relating to breaches that
occurred more than three years preceding the commencement of this proceeding
are barred, ongoing breaches within the three years and following the
commencement of this proceeding are not.
[91]
Therefore, regardless of whether the publication
of the 2014 Edition was a separate infringement from the publication of the
Anniversary Edition, there is no limitation period issue. Either the
Anniversary and 2014 Editions are considered part of one continuous publication
of the Series and hence one ongoing breach , bringing this application within
the limitation period, or else the 2014 Edition, which the Applicants have
stated clearly is the infringement they take issue with, is a separate
publication, and has been addressed in a timely manner.
C.
Abusive Claim Allegation
[92]
The Respondents allege that the Applicants have
engaged in copyright abuse, for which they primarily rely on Euro-Excellence
Inc. v Kraft Canada Inc. 2007 SCC 37, [2007] 3 S.C.R. 20 [Toblerone],
and Access International Automotive Ltd v Volkswagen
Canada Inc, [2001] 3 FC 311, 2001 FCA 79 [Volkswagen].
[93]
I do not agree with the Respondents that the
Applicants have engaged in copyright misuse, or abuse. I neither find Toblerone
nor Volkswagen helpful to their case: the theory of copyright misuse
is not well-developed in Canada, and more importantly, even if it were, the
facts simply do not support any malfeasance or wrongdoing on the Applicants’
part.
[94]
As for the Respondents’ argument that the
Applicants unduly delayed in bringing the application, the Applicants provided
notice in a reasonable amount of time after Ms. Rusk, their VP, received a
Conservatory Canada email regarding an upcoming edition with a new publisher. She
first saw the physical evidence of the 2014 Edition some four months later at
Remenyi House of Music, a store across from the Respondents’ premises in
Toronto.
[95]
Ms. Rusk then twice attempted to contact the
person she believed to be the Respondents’ Executive Director, Ms. Warwick, in
the fall of 2014, to provide notice of lack of permission for the 2014 Edition.
After the new Executive Director, Mr. Oger, replied to the said notice, he
failed to follow-up, and the Applicants ultimately filed this application approximately
two months later. I do not find this timeline, and/or the notice given, to be
abusive.
[96]
Indeed, in previous litigation involving some of
the same parties, Justice van Rensburg of the Ontario Superior Court denied to
issue the remedy sought by the same Applicants, due in part to a delay of three
months in bringing that matter.
[97]
In the present case, the applicants acted more
expeditiously, and they can hardly be faulted for their conduct, particularly
in light of the previous litigation: see The Frederick Harris Music Co Ltd v
Clarke MacIntosh and Novus Via Music Group Inc, Court File NO
CV-07-00000-383-00, 200/03/22, RR at 213.
[98]
There was some question in discoveries and then
references during the hearing by the Respondents as to why the 1999 Agreement
was never found. The Applicants pointed out, on the other hand, that Justice
van Rensburg raised similar concerns vis-à-vis Mr. MacIntosh at para 19 of her
decision:
While Mr. MacIntosh has offered explanations
of those communications which might suggest an innocent motive, he has refused
at this stage to provide access to his email communications from and to his
personal email address during that timeframe, notwithstanding that such records
would be relevant to the issues, and would either corroborate or contradict the
assertions in his affidavit about what he was discussing. In addition, there is
evidence that, prior to his departure from Frederick Harris, Mr. MacIntosh
shredded a large volume of his files and attempted to delete most of his
computer files.
[99]
I see no evidence of bad faith by either party on
the issue of deliberate misplacement or spoliation of evidence, because there
is simply no conclusive evidence before the Court. By the same token I have no
evidence on which to base a finding that the Applicants engaged in any abuse or
misuse of their copyright. As the Federal Court of Appeal held in Levi
Strauss & Co v Roadrunner Apparel Inc, 76 CPR (3d) 129, at para 16, “the difficulties for a defendant of proving a misuse or
perversion of the process on the part of a plaintiff seeking to enforce its
trademark through the legal process cannot be underestimated.”
[100] In sum, while the Respondents made best efforts to assert their
defence of abuse of process or misuse of copyright, there is insufficient
evidence in either regard.
D.
Implied Permission
[101] The Respondents rely on Pinto v Bronfman Jewish Education Centre,
2013 FC 945 [Pinto] for the proposition that they had implied permission
to continue with the publication rights granted to them in 1999, and the
Applicants failed to prove otherwise.
[102] I am not swayed by this line of attack. To quote Justice Rennie in Pinto
at para 158, citing Professor Vaver whose article Respondents’ counsel also
relied on:
In Harmony Consulting, the Federal
Court of Appeal quoted with approval from an article by David Vaver, “Consent
or No Consent: The Burden of Proof in Intellectual Property Infringement Suits”
(2011) 23 IPJ 147 at 148-49:
It is rarely a chore for a plaintiff
to prove he gave no express consent: he knows best whether he did or not … If,
on weighing the evidence, the court is satisfied the plaintiff gave no implied
consent, he wins. If the defendant does show implied consent, the plaintiff
fails to discharge his onus and loses. In theory, if the evidence is left in a
state where the court is unsatisfied that the plaintiff did not grant
implied consent, the plaintiff also loses. [emphasis in original]
[103] Here, I have neither seen evidence that the Applicant gave any
implied consent to publish the works in the 2014 Edition, nor that the
Respondents showed evidence of implied consent. Rather, the Applicants made it
clear, shortly after learning about the 2014 Edition, that there was no
permission to publish.
E.
Passing Off
[104] At the hearing, Applicants’ counsel conceded that they would not
focus on this issue, because the infringement issue constituted “99.99%” of their focus. Nonetheless, they assert that
since the colour-coding scheme for levels one to five of the 2014 Edition of
the Series is identical to the colour-coding scheme for levels one to five of
the 2008 Edition of the RCM Celebration Series, and since the 2014 Edition of
the Series uses saddle-stitch binding (like their Celebration Series but unlike
the 2012 Anniversary Edition of the Series), the Respondents are trying to pass
off their books as the Applicants’.
[105] The Respondents make the following observations by way of rebuttal:
A.
there is no evidence that the colour scheme or
the binding used by the Applicants for the Celebration Series Perspectives have
been used as a trade-mark by the Applicants in any way;
B.
the Applicants have varied their colour schemes
over the years;
C.
the colour scheme that appears to be in question
was developed in 2008, not before;
D.
the colour scheme is functional in nature,
permitting students and teachers to identify which books form a set and which
set to purchase once a student has advanced. The colours, then, refer not to
source but to levels, and are used by several other publications;
E.
there is no evidence to suggest that the
Applicant’s colour scheme has anything to do with the Applicants’ goodwill
among music students and teachers;
F.
there is no evidence that anyone could be
confused or deceived by the covers. Instead, there is evidence that music
stores frequently separate different series out when selling them in-store to
ensure that students and teachers do not confuse them;
G.
there is no evidence of damage to the Applicants
arising from the Respondents’ use of a colour scheme;
H.
there is no evidence of confusion over the
saddle-stitch binding that the Applicants have adopted. Binding is a functional
choice and no student would make a purchase based on binding – millions of
other publications use staples as binding;
I.
“Conservatory Canada” is a registered trade-mark and that this appears prominently on all
publications in question, further reducing the possibility of confusion; and
J.
the Series actually underwent its “face lift” in the 2012 Anniversary Edition, rather
than in the 2014 Edition, as is alleged by the Applicants. In other words, the
changes to the appearance of the cover took place more than two years before
Mr. MacIntosh and Novus got involved. The Respondents argue that this demonstrates
a fundamental lack of due diligence by the Applicants.
[106] The test for passing-off comes from Kirkbi AG v Ritvik Holdings
Inc, 2005 SCC 65 at para 66: “The three necessary
components of a passing-off action are: the existence of goodwill, deception of
the public due to a misrepresentation and actual or potential damage to the
plaintiff.”
[107] It is clear that this part of the claim should be denied. The
Applicants provided no evidence of deception of the public, nor any evidence of
the existence of goodwill associated with their colour-coded scheme. Without proof
of these two necessary components, the Applicants have not established that any
passing off occurred.
F.
Remedy
(1)
Damages
[108] The Applicants, in their submissions, stressed the commercial nature
of the Respondents’ book sales, noting that their books are sold at retail
outlets at prices ranging from $17.95 to $24.95. They argue, as a result, that
this is a commercial venture, the Respondents have profited from the
infringement, and thus they should be ordered to pay the upper end of the
$500-$20,000 per work range stipulated for commercial infringement by paragraph
38.1(1)(a) of the Act.
[109] The Respondents, by contrast, stress the fact that Conservatory
Canada is an educational institution, a not-for-profit, and a registered
charity. Since the sales of the Series are intrinsic to Conservatory Canada’s
educational and charitable activities, they are inherently non-commercial in
nature, and should be evaluated under paragraph 38.1(1)(b) of the Act. Furthermore,
the Respondents argue that since the Applicants are only claiming infringement
since 2014, or approximately one year before the filing of this application,
the actual amount owing could be no more than $1,405.81, the amount paid by
Waterloo for all of 2005.
[110] When determining statutory damages under the Act, the first question
to answer is whether the infringement at issue was commercial in nature or not,
given the lower statutory range for non-commercial activities, of between $100
and $5000 per infringement (see subs. 38.1(1) of the Act), as opposed to the
much higher range for commercial activities.
[111]
Once the proper range of potential damages is
identified under subs. 38.1(1) of the Act, the Court must then determine the
appropriate level of damages per work. To make this determination, subs.
38.1(5) of the Act stipulates that the Court must consider:
|
(5) In exercising
its discretion under subsections (1) to (4), the court shall consider all
relevant factors, including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the proceedings;
(c) the need to deter other infringements of the copyright in
question; and
(d) in the case of infringements for non-commercial purposes, the
need for an award to be proportionate to the infringements, in consideration
of the hardship the award may cause to the defendant, whether the
infringement was for private purposes or not, and the impact of the
infringements on the plaintiff.
|
(5) Lorsqu’il
rend une décision relativement aux paragraphes (1) à (4), le tribunal tient
compte notamment des facteurs suivants :
a) la bonne ou mauvaise foi du défendeur;
b) le comportement des parties avant l’instance et au cours de
celle-ci;
c) la nécessité de créer un effet dissuasif à l’égard de violations
éventuelles du droit d’auteur en question;
d) dans le cas d’une violation qui est commise à des fins non
commerciales, la nécessité d’octroyer des dommages-intérêts dont le montant
soit proportionnel à la violation et tienne compte des difficultés qui en
résulteront pour le défendeur, du fait que la violation a été commise à des
fins privées ou non et de son effet sur le demandeur.
|
[112]
I find, as a starting point for this analysis, that
the infringement was commercial in nature, as the books were being sold
commercially, presumably to as wide and large an audience as possible – even if
the ultimate sales may have been modest. I come to this conclusion
notwithstanding Conservatory Canada’s status as a not-for-profit entity, for
the following reasons.
[113]
First, there is no question that Novus and Mr.
MacIntosh were operating for profit, unlike Conservatory Canada. Furthermore, there
was a substantial change in the 2014 Edition – other than the change in
publishers from Mayfair to Novus – namely that Hal Leonard took over its distribution.
The testimony before this Court situates Hal Leonard among the largest – if not
the largest – of international sheet music distributors and publishers in the
world (AR at 498-499). No comparable international distributer had been
involved in any of the prior editions. Moreover, the 2014 Edition was unique in
Conservatory Canada’s Series, being the first of the publications to list the
price in both American and Canadian dollars (the latter listing naturally being
higher, given the exchange rate).
[114] As I indicated to the parties at the hearing, the present
circumstances, when considered in their totality, weigh in favour of damages at
the low end of para. 38.1(1)(a) spectrum.
[115] On the first factor in subs. 38.1(5), I do not find that the
Respondents acted in bad faith, despite the Applicants’ assertions to the contrary
– for instance their allegations of poor conduct such as Mr. MacIntosh’s attendance
at the MTNA Conference in Las Vegas. However, the evidence indicates that this
attendance was nothing unusual: Mr. MacIntosh has attended and taken a booth at
MTNA annually for approximately a decade. Therefore, there was nothing
untoward in his attendance at the 2015 Conference.
[116] Regarding the conduct of the parties -- the second factor under
subs. 38.1(5) -- the Applicants erroneously insinuated that Mr. MacIntosh was
involved in Conservatory Canada’s decision to change its Series’ colour-scheme
and binding format; in reality, these changes occurred before Mr. MacIntosh and
Conservatory Canada began their publishing relationship. I do not find that
the allegations of impropriety have held up to scrutiny.
[117] Third, in evaluating the subs. 38.1(5) deterrence factor, it is
unclear what effect a large damages award would have in deterring further
copyright infringement, when the infringement at issue here appears to be the
product of poor record-keeping and rights management on the part of both
parties. If anything, this case is instructive that the failure to keep
crucial contracts muddies the waters around rights, and any resulting
infringement claims. The Respondents should not alone bear the brunt of this laxity,
because the Applicants played an equal part in the inability to provide to the
Court the key document at issue.
[118] For these reasons, per work damages will be set at the lowest end of
the commercial range, or $500 per work, for a total award of $10,500 in damages,
in addition to pre-judgment interest. As also discussed at the hearing, there
was very limited evidence of sales presented to the Court, namely sales figures
of both the Applicants’ and Respondents’ publications from one Vancouver store.
These sales figures did not provide an accurate picture of sales across Canada,
or internationally (if any). According to this limited sales data, the
Respondents appeared to have a small fraction of the music book sales relative
to the Applicants’ sales of its Celebration Series.
In short, while not
formally required under subs. 38(1) of the Act, the Applicants provided no
statements accounting for profits, or any other financial data as to the actual
or probable impact of the infringements on the Applicants. By way of obiter,
I provide some brief observations about evidence in the area of statutory
damages.
[119] In Telewizja Polsat SA v Radiopol Inc, 2006 FC 584 at para 45, Justice Lemieux,
citing John S. McKeown, Fox on Canadian Law of Canadian Copyright and
Industrial Design, 4th ed (Scarborough: Thomson Carswell,
2003 at 24.77), noted that “[t]here should be some
correlation between actual damages and statutory damages even though section
38.1 does not speak of actual damages”. (See also Nicholas v Environmental Systems (International) Ltd, 2010 FC 741 at para 105: “[s]tatutory damages require an assessment of the reality of the
case and a just result”; and Pinto at
para 195: “[t]here should be
some relationship between the actual damages and statutory damages.” In this matter, no such relationship or guidance on damages was
provided to the Court.
[120]
Commenting on the
inherent difficulty in the realm of statutory damages, Ronald E. Dimock, in
Intellectual Property Disputes: Resolutions & Remedies (Toronto, ON:
Thomson Reuters Canada, 2016) (loose-leaf revision 5), ch 3 at 3-38, noted that
a correlation between probable and statutory damages is helpful in ensuring
fairness and proportionality:
While statutory damages are meant to
compensate a party for losses that are difficult to quantify, the Court in Telewizja
Polsat S.A. v. Radiopol Inc. stated that, in attempting to establish the
amount of any statutory damages award, the amount of actual damages the
plaintiff would have probably received should be considered. In looking at
probable losses, Justice Lemieux was guided by American jurisprudence and
commentary in Fox on Canadian Copyright and Industrial Design. On first
glance, this focus on probable losses blurs the distinction between statutory
damages and damages at large, which are otherwise available. However, any
estimation of probable damages is not determinative and the use of such estimates
in determining statutory damages is likely intended as one means of ensuring
that any damages award is fair and proportionate. [emphasis added]
[121]
Most recently, Justice Labbé of the Superior
Court of Québec, commented on the statutory damages quandary in Paré c Taxis Coop de la Mauricie 1992,
2015 QCCQ 11581 at paras 35-36, noting:
L’article 38.1 LDA mentionné plus haut
prévoit des dommages préétablis qui se situent entre 500 $ et
20 000 $ que le Tribunal doit fixer de façon équitable. Le Tribunal
peut donc exercer une certaine discrétion, mais évidemment de façon judiciaire
selon la preuve faite.
C’est de cette disposition [art 38.1] dont
se prévaut le demandeur de sorte qu’il n’a pas le fardeau d’établir des
dommages réels. Le minimum prévu dans le cas de violation à des fins
commerciales est de 500 $.
[122]
In short, the more evidence of probable damages,
the easier it will be for the Court to arrive at a fair
and proportionate award.
(2)
Other remedies
[123] Given the finding of infringement, the Court’s Judgment will also contain
the following:
i.
An injunction, enjoining the Respondents and/or
their publisher from publishing any of the 21 pieces - at least until such time
as the appropriate authorization has been granted by the Applicants; and
ii.
Delivery up, such that the Respondents shall, at
their cost, ensure that all physical or digital copies of any infringing
volumes of the 2014 Edition currently for sale in any channels of distribution
are returned to the Respondents, and then delivered to the Applicants.
G.
Costs
[124] The Respondents request that this Court award them costs on a
solicitor-and-client basis. They present several grounds in asking for this
exceptional cost award.
[125] First, the Respondents submit that the Applicants were aware that
they were owed royalies for eight and a half years, but made no effort
throughout that period to seek payment. Instead, it was only after they became
aware of the relationship between Mr. MacIntosh and Conservatory Canada that
they took action, most likely because of lingering hostilities over his
departure from Frederick Harris, and the litigation that ensued several years
ago.
[126] Second, the Respondents contend that the Applicants pursued this
litigation in an unfair fashion – that they were aware that Ms. Warwick had
been dismissed, and that this had caused major disruptions within Conservatory
Canada, for instance they brought this application notwithstanding the fact
that Conservatory Canada’s employees had left for December holidays during the
exchange with Mr. Oger. Since the decision to litigate was made in mid-January
2015 and the litigation was commenced “without further
notice or warning” on February 5, 2015, the Applicants put the
Respondents at a considerable disadvantage.
[127] Third, the Respondents allege that because this litigation was
rushed, due diligence was not done – the Applicants “assumed”
without verifying that a new publication had taken place, rather than a new
edition of an existing publication, and didn’t take steps to check previous
editions of the Series to ascertain whether the contents were substantively the
same or not.
[128] While I have sympathy for the Respondents’ position at large, and
while there is undeniably bad blood between the parties, I do not see any basis
for providing costs to the Respondents, let alone on a solicitor-and-client
basis. I agree that the passing off claim is weak, but that was not the main
thrust of this application as counsel for the Applicants made eminently clear
at the hearing, where the focus was almost exclusively on infringement.
[129] In short, I do not see any reason to take the unusual step of ordering
costs against the winning party. As the Applicants’ conduct was not abusive, they
should not be penalized because one or some of the points they advanced failed to
persuade the Court (Johnson & Johnson Inc v Boston Scientific Ltd,
2008 FC 817 at para 3).
[130] Furthermore, I do not find any merit in the Respondents’ contention
that there were exceptional circumstances that would justify costs on a
solicitor-and-client basis (see Canada (Attorney General) v Chrétien,
2011 FCA 53 at para 3).
V.
Conclusion
[131] This application should be granted in part. The Respondents have
reproduced the 21 works without the Applicants’ permission. Statutory damages for
infringement are set at the lowest end of the range for commercial infringement.
[132] The passing off claim is denied. The Applicants have provided no
evidence to suggest that the particular colour-coding scheme used by the
Celebration Series is sufficiently distinct, nor have they demonstrated that
the Celebration Series and the Anniversary Edition are similar enough to lead
to confusion.
[133] Despite the valiant efforts of Respondents’ counsel to convince the
Court otherwise, I see no reason to depart from the normal rule that the
Applicants should be entitled to costs.
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