Date: 20130925
Docket: A-86-13
Citation: 2013 FCA 225
CORAM: NOËL
J.A.
TRUDEL J.A.
MAINVILLE
J.A.
BETWEEN:
DORIS TREMBLAY
Appellant
and
ORIO CANADA INC.
Respondent
REASONS FOR JUDGMENT
MAINVILLE J.A.
[1]
This
is an appeal from a decision of Justice Boivin of the Federal Court (“the
judge”) dated January 31, 2013, citation number 2013 FC 109, pertaining to
the copyright in a program software known as the modified SAM program. The
judge ruled that the appellant owned the copyright and had not assigned it to
the respondent (Orio), but he nevertheless granted the latter an implied user
licence authorizing it not only to market the software, but also to copy and
modify it.
Facts and proceedings
[2]
The
background of the dispute is straightforward, and the facts are admitted by the
parties. For the past several years, Orio has been marketing an appointment
management software tool for the auto mechanics industry. This program is known
by the acronym SAM (Service Appointment Monitor). Orio entered into a contract
of service with the appellant’s company (which operates under the name Service Informatique
Professionnel)
in order to improve its SAM program. Since August 2009, Orio sells and installs
copies of the reworked modified SAM program to its clients. The appellant and
his employees worked on the software from April 2006 to June 2009, and
Orio paid the appellant for this work. The new version of the software
resulting from this work (the modified SAM program) was almost twice the size
of the original version of SAM, and several complementary models were added.
[3]
The
parties’ business relationship ended in June 2009. In July 2009, Orio began
working with another company, Groupe
Énode, to
continue developing the modified SAM program, and it provided that company with
a copy of the source code to rework the software, thus creating the “reworked
modified SAM program”. This program contains a substantial part of the source
code developed by the appellant’s company.
[4]
The
appellant submits that he owns the copyright in the modified SAM program. He
acknowledges that he granted Orio a licence to use the software, but he submits
that this licence did not allow Orio to copy the source code so that it could
be reworked by Groupe
Énode. The
appellant is therefore seeking the destruction of the reworked modified SAM
program and an injunction ordering Orio to cease selling and installing that
piece of software.
[5]
Orio
submitted before the judge that it was the sole holder of all of the rights
connected with the modified SAM program because the copyright in the program
was assigned to it by the appellant in his written bids, which include the
following clause:
[translation]
Any development done for Orio Canada Inc. shall
become the exclusive property thereof and may not therefore be marketed or
reused by Service
Informatique Professionnel
or any other party.
[6]
The
appellant submits that this assignment cannot be set up against him given that
he did not formally sign these bids. He acknowledges that this clause governed
his relationship with Orio, but he relies on the requirements of
subsection 13(4) of the Copyright Act, R.S.C. 1985, c. C-32, which states
that no assignment is “valid unless it is in writing signed by the owner of the
right in respect of which the assignment or grant is made, or by the owner’s
duly authorized agent”.
The trial judge’s reasons
[7]
The
judge held that the appellant owned the copyright in the improvements made to
the SAM program. He wrote the following at paragraph 34 of his reasons: “in
light of the case law stating that the author is the one who clothes the work
with form and not the one who has the idea without making it concrete, I must
find that it is the [appellant], through his employees, who is the author for
the purposes of this case.”
[8]
As
to the assignment of copyright issue, the judge held at paragraph 44 of
his reasons that the wording of the clause inserted by the appellant into his
bids amounted to an assignment to Orio of copyright in the modified SAM
program. However, given that these bids had not been formally signed by the
appellant, the judge held that this assignment could not be set up against him
in the light of the requirements of subsection 13(4) of the Copyright
Act. The judge therefore refused to accept that the appellant’s testimony
to the effect that this clause governed all of his contracts with Orio was
equivalent to a formal signature on the bids. He wrote the following at
paragraph 49 of his reasons:
Accepting the defendant’s argument and making the
opposite finding solely on the basis of the plaintiff’s testimony would render
meaningless the requirement imposed by Parliament. This finding may appear
rigid, but it complies with the formal requirements of the Act.
[9]
The
judge nevertheless concluded, on the basis of the wording of this clause, that
the appellant had granted Orio an implied licence to use the modified SAM
program. In rejecting the appellant’s application, the judge recognized that
this licence allowed Orio to use the modified SAM program for the purpose of
copying the source code and having it reworked by another programming company.
Positions of the parties on
appeal
[10]
The
appellant submits that although the judge correctly ruled that Orio held an
implied licence to use the modified SAM program, he erred in extending the
scope of that licence beyond the marketing of the software so as to include a
right to copy the source code and rework it to create the reworked modified SAM
program. According to the appellant, it [translation] “would
be contrary to the letter and spirit of the Copyright Act for the scope
of a marketing user licence to have the effect, in practice, of conferring on
the licensee the right to act for all intents and purposes as though it owned
the copyright, thereby preventing the owner of the copyright from exercising
his rights in the other aspects of copyright” (Memorandum of the Appellant at
para. 41).
[11]
According
to the appellant, only an assignment of copyright or an exclusive licence could
confer such rights upon Orio. In either of those cases, under subsections 13(4)
and (7) of the Copyright Act, the assignment or exclusive licence
must be in writing and signed by the owner of the copyright. However, the judge
held that the appellant’s signature did not appear on the documents that
included the assignment clause.
[12]
Strangely,
in its appeal, Orio is no longer challenging the appellant’s ownership of
copyright in the modified SAM program. Orio is content with its implied
licence, which, in its view, includes the right to copy the source code of the
modified SAM program for the purposes of developing and marketing the reworked
modified SAM program (Memorandum of Orio at para. 10).
[13]
However,
Orio continues to invoke the assignment clause contained in the appellant’s
bids. It submits that, in the light of this clause, the appellant’s actions are
[translation] “immoral and
dishonest [and] purely motivated by resentment” (Memorandum of Orio at
para. 24).
[14]
During
his argument before the Court, counsel for Orio added that there was, indeed,
an assignment of copyright in Orio’s favour, and that, but for the fact that
the appellant had tricked his client by failing to add a formal signature to
the bids, this assignment could indeed have been set up against the appellant.
In Orio’s view, to the extent that the assignment agreed upon by the parties
cannot be set up against the appellant in the light of the formal requirements
of the Copyright Act, the Court must take into account the language of
this written assignment to give a broad scope to the implied user licence recognized
by the judge.
Analysis
[15]
There
is no doubt that the parties’ intent was that any development by the appellant
of the SAM program would become the exclusive property of Orio. The clause
reproduced above and included in the bid documents cannot be interpreted in any
way other than as an assignment to Orio of the copyright in the modified SAM
program. When the [translation]
“exclusive property” in the development of a piece of software is assigned,
this necessarily includes the ownership of the copyright in such development.
[16]
In
this respect, the appellant testified as follows upon examination:
[translation]
Q There you are, ownership:
[translation]
“Any development done for Orio Canada Inc. shall
become the exclusive property thereof and may not therefore be marketed or
reused by Service
Informatique Professionnel or
any other party.”
Did you take the initiative of inserting that clause?
A
Yes.
Q Why?
A Because it’s an annotation that has been used in
earlier contracts, for exclusivity, to protect against competition.
Q Did it apply to all contracts you received from
Orio Canada?
A Yes, the established bids, there, yes, of course.
(Appeal Book at p. 340, lines 7 to 25)
[translation]
Q. O.K. And did I
understand correctly from your response that all of your dealings with Mr.,
with Orio Canada, were governed by the spirit of that clause, the spirit and
the letter of that clause?
A Yes.
(Appeal Book at p. 342, lines 13 to 18).
[17]
The
judge, therefore, correctly decided that the parties had agreed to assign the
copyright in the modified SAM program to Orio. However, the judge was of the
view that this assignment could not be set up against the appellant given the
requirements of subsection 13(4) of the Copyright Act, which reads
as follows:
|
13.
(4) The owner of the copyright in any work may assign the right, either
wholly or partially, and either generally or subject to limitations relating
to territory, medium or sector of the market or other limitations relating to
the scope of the assignment, and either for the whole term of the copyright
or for any other part thereof, and may grant any interest in the right by
licence, but no assignment or grant is valid unless it is in writing
signed by the owner of the right in respect of which the assignment or grant
is made, or by the owner’s duly authorized agent.
[Emphasis
added.]
|
13. (4) Le
titulaire du droit d’auteur sur une œuvre peut céder ce droit, en totalité ou
en partie, d’une façon générale ou avec des restrictions relatives au
territoire, au support matériel, au secteur du marché ou à la portée de la
cession, pour la durée complète ou partielle de la protection; il peut
également concéder, par une licence, un intérêt quelconque dans ce droit;
mais la cession ou la concession n’est valable que si elle est rédigée par
écrit et signée par le titulaire du droit qui en fait l’objet, ou par son
agent dûment autorisé.
(Je
souligne.)
|
[18]
The
purpose of the Copyright Act is to strike a fair balance between the
public interest in the creation and dissemination of works of the arts and the
intellect, on the one hand, and obtaining a just reward for the creator, on the
other hand: CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC
13, [2004] 1 S.C.R. 339 at para. 23. It was with this objective in mind that
Parliament required that an assignment of copyright not be valid unless it is
in writing signed by the owner of the copyright. This principle applies equally
to an outright assignment of copyright (subsection 13(4) of the Act) and
to an exclusive licence with respect to a copyright (subsection 13(7) of
the Act).
[19]
What
distinguishes an assignment or an exclusive licence from a non-exclusive licence
is the transfer of a right of ownership in the copyright. In the words of
Justice Rothstein in Euro-Excellence Inc. v. Kraft Canada Inc.,
2007 SCC 37, [2007] 3 S.C.R. 20 at para. 28: “An assignee possesses full
ownership rights in the copyright with respect to the rights assigned. A
non-exclusive licensee has no property rights in the copyright, and enjoys only
contractual rights vis-à-vis the
owner-licensor. . . . An exclusive licensee, on the other
hand, has a limited property interest in the copyright.”
[20]
Subsections 13(4)
and 13(7) of the Copyright Act deal with the transfer of a property
right: Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363 at
para. 56, citing Ritchie v. Sawmill Creek Golf & Country Club
Ltd. (2004), 35 C.P.R. (4th) 163 at para. 20. In order
to protect copyright owners, the statute requires that they consent clearly to
the assignment of their interest in their right. That is why the Copyright
Act requires the holder of the copyright to indicate his or her informed consent
to the transfer of the property right in writing bearing his or her signature.
[21]
Therefore,
the case law consistently holds that an assignment or a grant of an exclusive
licence cannot be set up against the owner of a copyright unless it is in
writing signed by the owner of the right in question: see e.g. Motel 6 Inc. v.
No. 6 Motel Ltd. (1981),
[1982] 1 F.C. 638, 56 C.P.R. (2d) 44; Guillemette v. Centre coopératif de
Loisirs & de Sports du Mont Orignal (1986), 12 F.T.R. 51, 15 C.P.R.
(3d) 409; J.L. de Ball Canada Inc. v. 421254 Ontario Ltd. (1999), 5 C.P.R. (4th)
352, 179 F.T.R. 231.
[22]
However,
those cases do not involve copyright owners who have admitted before the court
that they have consented to the transfer of ownership of the right in question.
It strikes me as excessively formalistic not to set up against an assignor a
copyright assignment clause that he himself has drafted and that he has
recognized before the court as governing his relationship with the assignee,
merely because the clause is unsigned. As I noted above, the purpose of
subsections 13(4) and (7) of the Copyright Act is to protect copyright
owners against assignments of copyright to which they have not clearly
consented. When the assignor himself recognizes before the court the assignment
clause governing the relationship, the objective of the Act, in my view, is
met.
[23]
In
the particular circumstances of this case, in which the owner of the right has admitted
before the court deciding the issue that the assignment clause governs his
relationship with the assignee, form ought not to prevail over substance. I
also not that this dispute arose in Quebec and that article 7 of the Civil
Code of Québec, S.Q. 1991, c. 64, sets out that “[n]o right may be
exercised with the intent of injuring another or in an excessive and
unreasonable manner which is contrary to the requirements of good faith.”
[24]
Orio,
however, did not cross-appeal the judge’s holding that the assignment of
copyright could not be set up against the appellant. In the circumstances, it
is not for this Court to alter this aspect of the judge’s decision.
[25]
As
for the implied user licence, I see no error in the judge’s holding that, in
the circumstances, the appellant had consented not only to an implied licence
to market the modified SAM program, but also to the possibility of further
modifications by Orio in order to increase sales. In this respect, Netupsky v.
Dominion Bridge, [1972] S.C.R. 368, a Supreme Court of Canada case, seems
to be analogous to this case. In that case, the SCC recognized an implied
licence to modify plans for a civil engineering work. At pages 377-78 of that
case, Justice Judson adopted the following statement of the Supreme Court
of New South Wales in Beck v. Montana Construction Pty. Ltd. (1963), 305
F.L.R. 298 at pages 304-5:
. . . that the engagement for reward
of a person to produce material of a nature which is capable of being the
subject of copyright implies a permission or consent or licence in the person
making the engagement to use the material in the manner and for the purpose in
which and for which it was contemplated between the parties that it would be
used at the time of the engagement.
[26]
I
have absolutely no doubt that the intent of the parties was that the modified
SAM program could be not only marketed, but also further improved in the future
at Orio’s request, and that these improvements could be carried out either by
the appellant or by a third party designated by Orio. By explicitly recognizing
that “[a]ny development done for Orio Canada Inc. shall become the exclusive
property thereof”, the appellant renounced any exclusive rights he might have
had to develop future improvements to the program in question. This means that
the implied licence resulting from the relationship between the parties allows
Orio to copy the source code of the modified SAM program in order to have it
reworked by a third party. The trial judge therefore did not err in so deciding.
[27]
For
these reasons, I would dismiss the appeal with costs awarded to Orio.
“Robert M. Mainville”
“I
agree.
Marc Noël J.A.”
“I
agree.
Johanne Trudel J.A.”
translation
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