Albian Sands Energy Inc. v. Positive Attitude Safety System Inc., 2005 FCA 332

Date: 20051017

Docket: A-407-04

Citation: 2005 FCA 332

CORAM:        DESJARDINS J.A.

ROTHSTEIN J.A.

PELLETIER J.A.

BETWEEN:

                                               ALBIAN SANDS ENERGY INC. and

                                                               JEFF STIBBARD

                                                                                                                                         Appellants/

                                                                                                          Respondents by Cross-Appeal

                                                                           and

                                      POSITIVE ATTITUDE SAFETY SYSTEM INC.

                                           JAMES S. BURNS and CLAIRE BURNS

                                                                                                                                     Respondents/

                                                                                                              Appellants by Cross-Appeal

                                  Heard at Vancouver, British Columbia, on April 14, 2005.

                               Judgment delivered at Ottawa, Ontario, on October 17, 2005.

REASONS FOR JUDGMENT BY:                                                                    PELLETIER J.A.

CONCURRED IN BY:                                                                                     DESJARDINS J.A.

                                                                                                                             ROTHSTEIN J.A.

Date: 20051017

Docket: A-407-04

Citation: 2005 FCA 332

CORAM:        DESJARDINS J.A.

ROTHSTEIN J.A.

PELLETIER J.A.

BETWEEN:

                                               ALBIAN SANDS ENERGY INC. and

                                                               JEFF STIBBARD

                                                                                                                                         Appellants/

                                                                                                          Respondents by Cross-Appeal

                                                                           and

                                      POSITIVE ATTITUDE SAFETY SYSTEM INC.

                                           JAMES S. BURNS and CLAIRE BURNS

                                                                                                                                     Respondents/

                                                                                                              Appellants by Cross-Appeal

                                                    REASONS FOR JUDGMENT

PELLETIER J.A.

INTRODUCTION

[1]                This is an appeal and a cross-appeal from a decision of the Federal Court, reported at 2004 FC1022, (2004) 258 F.T.R. 30, in which it granted partial summary judgment in a copyright and trade-mark infringement action. Both sides argue that the Court misapprehended the nature of the questions before it. For ease of reference, where there is a reference in these reasons to a party's status, i.e., appellant or respondent, it is by reference to their status in the appeal.

FACTS

[2]                The respondents, James S. and Claire Burns (collectively "Burns"), developed an industrial safety system which they called Positive Attitude Safety System or PASS. They incorporated the corporate respondent, Positive Attitude Safety System Inc. (PASS Inc.), and assigned all of their intellectual property rights to the system to the corporate respondent. The respondents' system (the PASS system) consists of a series of written materials which are used by workers in a continuous work safety program.

[3]                 The respondents exploit their intellectual properties by licensing industrial enterprises to use their system, which they say is protected by the law of copyright and trade-mark. In 1996, they entered into a licensing agreement with BHP World Minerals for the implementation of their system at their Cannington mine in Australia (BHP Cannington). BHP Diamonds, a subsidiary of BHP World Minerals, operates the Ekati diamond mine in Canada which, for these purposes, will be referred to as BHP Ekati.

[4]                In June 1997, the appellant Jeff Stibbard (Stibbard) who was then the Mining Manager at BHP Etaki toured the BHP Cannington mine where he learned of the PASS system. Some months later, a BHP Cannington official left a copy of the PASS Cannington handbook with Stibbard. In late 1997 and 1998, Stibbard implemented the PASS system at BHP Etaki, by reproducing and distributing the PASS materials internally, without obtaining a licence from the respondents.

[5]                Stibbard was seconded by BHP Diamonds to the Muskeg River Project in November 1998. He implemented PASS at that project using copies of the material he had developed at BHP Etaki. In September 1999, when BHP terminated its interest in the Muskeg River Project, Stibbard became an employee of Western Oil Sands Inc., one of the joint venturers which continued to develop the Muskeg Lake property under the name Albian Sands Energy Inc. (Albian), the other appellant in these proceedings.

[6]                After Stibbard left BHP Etaki, his successor, who had worked at BHP Cannington, took steps to regularize the use of the PASS system. As a result, PASS Inc. entered into a license agreement with BHP Diamonds on March 3, 1999, covering the BHP Etaki mine and other BHP Diamond locations in Canada.

[7]                Meanwhile, Albian and its contractors continued to use the PASS system at the Muskeg River site during October and November 1999 without being licensed to do so by the respondents.

[8]                Albian ultimately refused to seek a license to use the PASS materials at its site so Stibbard and others produced a workplace safety system which they called ALBIAN SANDS ENVIRONMENT AND SAFETY SYSTEM or ASESS. Stibbard has admitted that he had the PASS materials open in front of him as he developed his system. The new system reproduced key features of the PASS system.

[9]                In March 2000, an employee of a contractor on the Albian site was introduced to ASESS. Having worked at BHP Etaki, he was familiar with PASS and thought that ASESS was, in fact, PASS. When he inquired, he was told that ASESS was properly licensed. However, the same employee later contacted Jim Burns and was told that ASESS was not licensed.

[10]            In June 2001, PASS Inc. commenced this action against Albian and Stibbard. PASS Inc. alleges that it owns the unregistered trade-marks POSTIVE ATTITUDE SAFETY SYSTEM and PASS. It also alleges that the printed materials which describe its system and which are used in connection with it, are subject to copyright and that it owns the copyright. PASS Inc. alleges that Albian and Stibbard have infringed its trade-marks by passing off their goods as those of PASS, contrary to paragraphs 7(b) and (c) of the Trade-marks Act, R.S.C. 1985, c. T-13. It also alleges that Albian and Stibbard have infringed its copyright by selling or distributing the works in which it holds the copyright, and by copying them under the name ASESS.

[11]            Albian and Stibbard brought a motion for summary judgment. In that motion they sought the following relief:

An order pursuant to Rule 216 for summary judgment dismissing:

a. the Plaintiff's claim of passing off by the corporate Defendant Albian Sands Energy Inc. ("Albian Sands"), as alleged in paragraphs 1 and 28 of the Plaintiffs' Amended Statement of Claim;

b. the Plaintiffs' claim of copyright infringement based on the Plaintiffs' allegation that the Defendants have sold, rented out, exposed and offered for sale or rental the PASS Materials or a substantial portion of one or more of the PASS Materials, as alleged in paragraphs 1 and 27 of the Plaintiffs' Amended Statement of Claim;

c. the Plaintiffs' claim of copyright infringement based on the Plaintiffs' allegation that the Defendants have performed or have caused Albian Sands' employees to perform substantial portion of one or more of the PASS Materials in public, as alleged in paragraphs 1 and 27(d) of the Plaintiffs' Amended Statement of Claim; and

d. the Plaintiffs' claim of copyright infringement with respect to each of or any of the following works:

i. ASESS Daily Action Form;

ii. ASESS Daily Quality Check Form;

iii. ASESS Daily Meeting Notes Form;

iv. ASESS HSE Tool #3;

v. ASESS Barrel Discussion Charts; and

vi. Albian Sands General Hazard Awareness & Recognition Handbook.

[12]            The motion judge's reasons say that, in response to the appellants' motion, the respondents sought an order dismissing the motion for summary judgment as well as summary judgment in their favour declaring that the appellants had infringed the respondents' copyright in the PASS system and that they had contravened paragraphs 7(b) and 7(c) of the Trade-marks Act. The Appeal Book does not contain a cross-motion for summary judgment by the respondents, nor does the motion judge purport to dispose of such a motion. I infer from this that the respondents' request for an order was made in the context of their suggested disposition of the appellants' motion.

THE DECISION UNDER APPEAL

[13]            The motion judge began by setting out the issues as identified by the parties and then restated them as a single issue: "Is there a genuine issue to be tried with respect to the parties' submissions in this motion?"

[14]            After reviewing the relevant statutory provisions and the parties' submissions, the motion judge began his analysis with an examination of the allegation of passing off under paragraphs 7 (b) and (c) of the Trade-marks Act, reproduced below:

[15]            The motion judge noted that no issue was raised as to whether PASS and Positive Attitude Safety System were actually trade-marks, or that they were unregistered. He acknowledged the appellants' admission that they had used the trade-marks during October and November 1999 when the PASS system was used on the Albian site without a licence.

[16]            The motion judge concluded that there was a genuine issue for trial with respect to the allegations under section 7 of the Trade-marks Act. He noted the acknowledged use of the respondent's trade-marks PASS and Positive Attitude Safety System during two months of 1999. He also queried whether the distribution of the PASS system under the ASESS name amounted to a violation of paragraph 7(b). Finally, the motion judge commented on the appellants' argument that they were not in the business of selling safety systems.

[17]            On the issue of copyright infringement, the motion judge began by noting that the appellants did not orally, or in writing, question the validity of the copyright in the PASS system. The judge also noted that there was clear evidence that the appellants "reproduced textually and distributed the PASS System under a modified name for a period of two months in the Fall of 1999" . There was also evidence of reproduction of PASS by the respondent Stibbard at the BHP Etaki project in 1997 and 1998, and of its distribution to employees and contractors during that time. The appellants claimed that some or all of this use was subject to a license granted to BHP Diamonds by PASS Inc. The judge noted the respondents' intention of calling the official who signed the licence agreement on behalf of BHP Diamonds as a witness at the trial of the matter to dispute the appellants' claim that they were licensed.

[18]            The motion judge looked for evidence that "the defendants [appellants] have sold, rented out or offered for sale or rental the PASS system." He was unable to find such evidence. He concluded that "the defendants did not sell, rent out, expose, nor offer for sale or rental the PASS System or a substantial portion thereof." (para. 60).

[19]            Based on his findings as to the reproduction and distribution of PASS in October and November 1999, the motion judge concluded that there was copyright infringement of the PASS system, subject however to the possibility that the appellants' conduct was authorised by a license. On the other hand, he found that the daily huddles which are a part of the PASS system, in which workers run through a series of pre-defined questions, did not constitute a public performance of the copyrighted material.

[20]            The motion judge then considered the issue of whether the ASESS system was a substantial replica of the PASS system so that its production and reproduction was an infringement of the copyright in PASS. He found that the PASS system was an original work created by the use of skill, judgment and labour. Unlike PASS, ASESS was not independently created. It contains elements which are "a slightly modified expression of the same topics used under the PASS system" and which employ "synonymous vocabulary or form." (para. 69).

[21]            The motion judge then compared various forms from both systems and concluded that the ASESS system contains "a certain amount of PASS components". He found that ASESS "bears a certain resemblance both in terms of quantity and quality of the methodology, to the PASS system." (para. 71). In the end however, the judge left the question as to whether ASESS is a substantial copy of PASS to be decided by the trial judge. He was of the view that not all relevant material was before the Court, as indicated by the intention of the parties to call witnesses. He also commented that not all "substantive legal material for such an issue was presented by the parties." (para. 74).

[22]            The judge concluded that there was a genuine issue for trial with respect to trade-mark infringement which he was unable to resolve. He made three findings with respect to copyright, namely:

a) the respondents had a valid copyright with respect to the PASS system;

b) there was prejudicial reproduction, distribution and exhibition of the PASS system materials, subject to the question of licencing; and

c) there was no sale, renting out, exposition or offering for sale or rental by the appellants of the PASS system.

[23]            The motion judge then set out a detailed list of issues to be resolved by the trial judge, many of which are outside the scope of the matters raised in the motion for summary judgment. In the end, the appellants' motion for summary judgment was granted in part.

POSITIONS OF THE PARTIES

[24]                 The appellants, the moving parties in the motion for summary judgment, appealed from the judge's conclusion that the respondents had a valid copyright in the PASS materials, saying that the issue was not before him. They also allege that he erred in failing to recognize that paragraph 7(c) of the Trade-marks Act required the substitution of one product for another and in the absence of evidence of such a substitution, he should have dismissed the respondents' claim under that subsection of the Trade-marks Act. Finally, the appellants argue that in the absence of confusion arising from use of a trade-mark in the normal course of trade, there can be no finding of passing off contrary to paragraph 7(b) of the Trade-marks Act so that the judge ought to have dismissed this element of the claim as well.

[25]                 The respondents argue that the judge's conclusion that there is a genuine issue for trial with respect to passing off is a discretionary decision and to which considerable deference is owed. The respondents also argue that it is specious for the appellants to say that the question of validity of copyright was not before the judge when the question of infringement was before him. There can be no infringement if there is no valid copyright.

[26]                 In so far as the cross-appeal is concerned, the respondents Pass and Burns challenge the motion judge's conclusion that there was no public performance of the copyrighted works. They say that the daily safety huddles were an acoustic representation of the PASS materials, which constituted a performance. Pass and Burns also cross- appeal from the motion judge's conclusion that there was a genuine issue for trial as to whether the licence granted to BHP Diamonds would extend to the use of the PASS materials at the Muskeg River Project site in October and November 1999 since BHP Diamonds had pulled out of the Muskeg River Project by then and Stibbard was no longer its employee.

[27]                 In response to the cross-appeal, Albian and Stibbard say that, to the extent that the daily safety huddles involve discussion of certain flow charts, any comments made are a spontaneous, unscripted, response to the material and are not a performance. In any event, the flow charts are akin to a set of instructions; there can be no copyright in an idea or in a set of instructions.

ISSUES

[28]                 For reasons which will become apparent, I prefer to deal with the issues raised by the parties in the following order, as opposed to the order in which they were raised in the parties' materials:

1- Did the judge err in concluding that there was a genuine issue for trial with respect to the allegations of trade-mark infringement? (appeal)

2- Did the judge err in concluding that there was a genuine issue for trial with respect to the allegations that the appellants sold, rented out, exposed, or offered for sale or rental the PASS materials? (appeal)

3- Did the judge err in finding that there was a genuine issue for trial with respect to the licensing of the appellants' use of the PASS system and materials? (cross-appeal)

4-Did the judge err in finding that the respondents had a valid copyright when the issue was not before him? (appeal)

5- Did the judge err in concluding that the ASESS safety huddle was not a public performance of the PASS safety huddle? (cross-appeal)

ANALYSIS

1- Did the judge err in concluding that there was a genuine issue for trial with respect to the allegations of trade-mark infringement?

[29]                 The motion judge made certain factual determinations with respect to the appellants' dealings in the PASS system. At paragraph 50 of his reasons, the motion judge noted that any use of the PASS Inc.'s trademarks was exclusively internal to the appellants. Later, at paragraph 58 he reported that he had not been able to find evidence indicating that the appellants had sold, rented out or offered for sale or rental the PASS system while at paragraph 60, he concluded that the appellants did not sell, rent out, expose, nor offer for sale or rental the PASS system or a substantial part thereof.

[30]                 Before there can be a contravention of paragraph 7(b) of the Trade-marks Act, there must be evidence of confusion or the likelihood of confusion. Confusion in relation to trade-marks is defined at subsection 6(2) of the Trade-marks Act:

[31]                 Confusion arises from the use of a trade-mark. The definition of "use" of a trade-mark in relation to goods is found at section 4 of the Trade-marks Act:

[32]                 Use of a trade-mark in association with wares requires the transfer of property in goods in the course of trade. Consequently, if no goods are transferred in the course of trade, there can be no confusion. The motion judge's factual conclusions as to the appellants' dealing with the PASS system establish that the appellants were not engaged in trading with regard to that system. There is nothing in the record to suggest that the appellants use of ASESS, considered as a trade-mark, caused any confusion with the respondents' trade-marks.

[33]                 There is a suggestion that the similarity between the content of the ASESS system and the PASS system caused confusion between them but confusion, for trade-marks purposes, is confusion between trade-marks and between trade-marks and trade-names. See subsections 6(2), 6(3) and 6(4). As a result, if the appellants were not trading in the PASS system, and if no issue of confusion arises with respect to ASESS considered as a trade-mark, there can be no confusion and no contravention of paragraph 7(b).

[34]                 In the same way, the conclusion as to the absence of any trading activity with respect to the PASS system is fatal to the claim of passing off contrary to paragraph 7(c). In order for there to be a violation of paragraph 7(c), there must be trade involving trade-marks. Specifically, there must be a substitution of one trader's goods "as and for those ordered or requested". If there was no trading in the PASS system, there could have been no substitution of the appellants' "infringing" copies of PASS as and for those ordered or requested. There is no allegation that the appellants provided ASESS to persons who ordered or requested PASS. Consequently, this claim cannot succeed.

[35]                 As a result, the motion judge's conclusions with respect to the absence of any trading activity meant that the allegations under paragraphs 7(b) and 7(c) were bound to fail and summary judgment should have been granted accordingly. As a result, I would allow the appeal and make the order with respect to these claims which the motion judge should have made.

2- Did the judge err in concluding that there was a genuine issue for trial with respect to the allegations that the appellants sold, rented out, exposed, or offered for sale or rental the PASS materials?

[36]                 The appellants' motion for summary judgment was very specific in terms of the relief it sought with respect to dismissal of the claim for copyright infringement. It specifically targeted the allegation that, of all the possible forms of secondary infringement, the appellants had infringed the respondents' copyright by selling, renting out, exposing, or offering for sale or rental the respondents' PASS system. As noted above, the judge made a specific finding "that the defendants [appellants] did not sell, rent out, expose, nor offer for sale or rental the PASS System or a substantial portion thereof." This conclusion disposed entirely of the question which the appellants had put before the motion judge so that they were entitled to summary judgment on that issue as they requested.

3- Did the judge err in finding that there was a genuine issue for trial with respect to the licensing of the appellants' use of the PASS system and materials?

[37]                 The respondents take the position that there is no genuine issue for trial with respect to the issue of licensing of the appellants' use of the PASS system and materials. The question of licensing arises in the context of the motion judge's conclusions that there was infringement by reproduction and distribution of the PASS system at the Muskeg River Project in October and November 1999, subject to the effect of a license agreement between PASS Inc. and BHP Diamonds. The judge left the issue of copyright infringement in other circumstances to be decided subject to the same caveat.

[38]                 It is to be noted once again that the motion judge was dealing with a motion for partial summary judgment with respect to very precise questions. The question of copyright infringement "at large" was not before him. Consequently, in embarking upon this enquiry, the motion judge was already outside the scope of the motion before him.

[39]                 However, even if one assumes that the motion judge was right to consider the question, the difficulty is that copyright is defined in terms of the absence of the consent of the owner of the copyright:

Consequently, proof of copyright infringement requires proof of lack of consent. It is therefore illogical to conclude that there has been infringement, subject to the effect of a purported license. It may be that a party has done something which, by the terms of the Copyright Act, R.S.C. 1985, c. C-42, only the owner of the copyright may do. But, before that conduct can be defined as infringement, the judge must find that the owner of the copyright did not consent to that conduct.

[40]                 As a result, the motion judge was not in a position to conclude, as he did, that the appellants infringed the respondents' copyright subject to the effect of a purported license. Until the issue of consent was dealt with, there could be no finding of infringement.

[41]                 Seen in this light, the judge did not err in sending the question of the effect of the license on for decision at trial. To the extent that he erred, he did so in purporting to send only that question forward, as opposed to the issue of infringement for he was not in a position to decide the question of infringement without also deciding the question of the effect of the license. Given that other issues of infringement remain be decided, and the question of the effect of the license is common to those issues (see para.'s 59 and 60 of the judge's reasons), I would set aside the motion judge's finding of infringement and leave the question of copyright infringement to be decided by the trial judge. It follows from this that I would dismiss this ground of the cross-appeal.

4- Did the judge err in finding that the respondents had a valid copyright when the issue was not before him?

[42]                 The appellants' position is that because their motion was for partial summary judgment, the motion judge was limited to deciding the issues raised by their notice of motion. The appellants say that they were putting into issue the facts giving rise to infringement so that the issue of validity of copyright was not in issue. As a result, they did not put before the Court their evidence, or their argument, with respect to the issue of the validity of the respondents' copyright.

[43]                 The respondents say that once the appellants put the question of infringement in issue, they also put in issue the question of validity for the simple reason that one can only infringe a valid copyright. As a result, the motion judge was entitled to deal with validity, even if it was not explicitly raised in the appellants' notice of motion.

[44]                 It is important to understand the limited scope of the appellants' motion for partial summary judgment. It sought only the dismissal of the claim of copyright infringement by sale, rental, exposition or offer of sale or rental on the ground that there were no facts in support of that claim. The motion judge found that, in effect, there were no facts to support that claim. He was therefore bound to grant the motion for summary judgment with respect to that claim.

[45]                 When the motion judge ventured into the issue of validity of copyright, he was putting the appellants in an untenable position. They were the moving parties and they had not raised the issue of validity. They had not come to argue that the respondents' copyright was invalid and therefore did not expect to have to face an argument that it was. It may be that in another case a judge will have to decide upon the validity of the copyright in order to decide the question of infringement, but given the motion judge's findings of fact, and the limited relief sought in the notice of motion, it was not a question which he was called upon to decide. In doing so, he deprived the appellants of the opportunity to make their case on the issue.

[46]                 I would therefore allow the appeal and set aside the motion judge's finding that the respondents have a valid copyright.

5- Did the judge err in concluding that the ASESS safety huddle was not a public performance of the PASS safety huddle?

[47]                 The motion judge decided that a safety huddle was not a performance within the meaning of the Copyright Act and therefore the safety huddle could not constitute an infringement of the respondents' copyright. The motion judge's conclusion appears to have been based on his understanding that while the questions asked at a safety huddle may have been "scripted", the answers were not so that the huddle, taken as a whole, was something other than the work in which copyright subsists. The authorities to which we were directed in the respondents' Memorandum of Fact and Law deal with the public performance of unpublished lectures, which does not assist in the resolution of this issue.

[48]                 I see no reason to interfere with his conclusion on this aspect of the case. This ground of the cross-appeal is dismissed.

CONCLUDING REMARKS

[49]                 In the end result, the appeal should be allowed with costs. There should be an order setting aside the decision of the Federal Court judge, dismissing the claims under the Trade-marks Act, as set out in paragraphs 1(d), 30(c) and 30(d) of the Amended Statement of Claim and dismissing as well, the claim that the appellants have infringed the respondent's copyright by selling, renting, exposing or offering to sell or rent the respondents' works, or causing them, or substantial portions thereof to be performed in public, as set out in paragraphs 1(b)(ii) and (iii) and 27(b) and (d) of the Amended Statement of Claim. There should also be an order setting aside the finding that the respondents have a valid copyright in the PASS system.

[50]                 The cross-appeal should be dismissed with costs.

                                                                            "J.D. Denis Pelletier"            

                                                                                                  J.A.

"I agree

     Alice Desjardins j.a."

"I agree

     Marshall Rothstein j.a."

                          FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                          A-407-04

(Appeal from Reasons for Order and Order of the Federal Court dated July 23, 2004, Docket No. T-1052-01)

STYLE OF CAUSE:              Albian Sands Energy Inc. and Jeff Stibbard and Positive Attitude Safety System Inc., James S. Burns and Claire Burns

PLACE OF HEARING:                    Vancouver, British Columbia

DATE OF HEARING:                      April 14, 2005

REASONS FOR JUDGMENT BY:                      PELLETIER J.A.

CONCURRED IN BY:                                        DESJARDINS J.A.

                                                                               ROTHSTEIN J.A.

DATED:                                             October 17, 2005

APPEARANCES:

SOLICITORS OF RECORD: