Date:
20120403
Dockets: T-1219-04
T-1220-04
Citation: 2012 FC 300
Toronto,
Ontario, April 3, 2012
PRESENT: The Honourable Mr.
Justice Zinn
Docket: T-1219-04
BETWEEN:
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NAUTICAL
DATA INTERNATIONAL, INC.
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Plaintiff
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and
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C-MAP
USA INC. AND DOE CO.
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Defendants
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and
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HER MAJESTY IN
RIGHT OF CANADA
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Copyright
Owner
added pursuant to
s.36(2) of the Copyright Act
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Docket: T-1220-04
AND BETWEEN:
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NAUTICAL DATA
INTERNATIONAL, INC.
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Plaintiff
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and
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NAVIONICS INC.
AND DOE CO.
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Defendants
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and
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HER MAJESTY IN
RIGHT OF CANADA
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Copyright Owner
added pursuant to s.36(2) of the Copyright Act
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PUBLIC
REASONS FOR ORDER AND ORDER
(Confidential
Reasons for Order and Order released March 13, 2012)
[1]
The defendants ask the Court to dismiss these two actions, with costs,
on the basis that there is no genuine issue for trial because Nautical Data
International, Inc. (NDI) lacks the standing required by the Copyright Act,
RSC 1985, c C-42 to bring an action for copyright infringement in relation to
the works at issue.
[2]
These actions have been litigated for nearly eight years. They are
parallel actions, the summary judgment motions were argued together, and
accordingly one set of reasons will be issued applicable to both and a copy
placed in each Court file.
Background
[3]
Canadian Hydrographic Service (CHS), a federal government agency in the
Science Sector of the Department of Fisheries and Oceans, produces hydrographic
charts in paper format, containing data that is owned by Canada and maintained
by the CHS (the CHS Works). CHS also produces electronic navigation charts in
S-57 compliant digital vector format, containing data that is owned by Canada
and maintained by the CHS (the Additional CHS Works).
[4]
In 1993 NDI entered into an agreement with CHS with respect to the data
used to produce these navigation charts. In 1998 and 2000, CHS and NDI revised
their agreement. The agreement between NDI and CHS will be referred to in
these reasons as the Agreement or the Licence.
[5]
By virtue of the Licence, CHS provided the raw data and data source
materials used in the preparation of the CHS Works and the Additional CHS Works
for conversion into electronic charts and updates. After CHS verified the
accuracy of its electronic charts, NDI would reproduce them in a variety of
digital formats (the NDI Works) which it licensed directly to end-users, and
indirectly to end-users through distributors, value-added licensees, and
resellers.
[6]
The defendants sell electronic hydrographic charts in proprietary data
and media formats for use in their equipment. Specifically, they produce
electronic vector charts and charting systems for use in marine, aeronautical,
and land navigation. The defendants admit to using CHS Works to produce their
digital charts and recognize that CHS has the authority to produce hydrographic
charts in Canada.
[7]
When these actions were commenced, they related to claims of
infringement of copyright of three categories of works related to hydrographic
charts: the NDI Works, the CHS Works, and the Additional CHS Works. However,
the parties agree that the claims now relate only to one category - the CHS
Works. NDI agrees that it is appropriate to grant summary judgment in favour
of the defendants with respect to all claims, save those relating to the CHS
Works.
[8]
It is agreed that CHS owns the copyright in the CHS Works which is
defined in paragraph 4 of the Re-Amended Statement of Claim as “hydrographic
charts in paper format, containing data that is owned by Canada and maintained
by the CHS.”
[9]
The position of the defendants is that NDI does not have standing to
enforce the copyright of the CHS Works because it is not the exclusive licensee
with respect to those works. Therefore, it is said, there is no genuine issue
for trial. NDI submits that it was granted an interest in the copyright of the
CHS Works, that it is a person deriving a “right, title or interest by
assignment or grant in writing from the owner” as provided for in section 36 of
the Copyright Act, and it is therefore entitled to its remedies.
Test for Summary Judgment
[10]
The principles applicable to a motion for summary judgment are well
established and may be summarized as follows:
1.
The Court can grant a motion for summary judgment only if satisfied that
there is no genuine issue for trial: Rule 215(1) of the Federal Courts
Rules, SOR/98-106; Canada (Attorney General) v Laneman, 2008
SCC 14 at para 10 [Laneman]; Granville Shipping Co v Pegasus Lines
Ltd, [1996] 2 FC 853 at para 8 [Granville]; Premakumaran v Canada,
2006 FCA 213 at para 8 [Premakumaran]; Wenzel Downhole Tools Ltd v
National-Oilwell Canada Ltd, 2010 FC 966 at paras 22 and 26 [Wenzel];
Fero Holdings Ltd v Les Entreprises Givesco Inc, [1999] FCJ No 1310 at
para 10 [Fero Holdings]; and Grossman Holdings Ltd v York Condominium
Corp No 75, [1999] OJ No 3289 at para 7 [Grossman].
2.
Summary decisions serve the important purpose of preventing claims and
defences which have no likelihood of success at trial: Laneman at para
10. It is crucial for the proper operation of our judicial system and for
parties that such claims are weeded out early on, while those disclosing real
issues proceed to trial: Laneman at para 10; Wenzel at para 27.
For this reason, the Federal Courts Rules dealing with summary judgment
need to be interpreted and applied in a manner that secures the just, most
expeditious and least expensive determination of every proceeding on its
merits: Teva Canada Ltd v Wyeth LLC, 2011 FC 1169 at para 30 [Teva].
3.
The moving party on a summary judgment motion has the burden of proving
the futility of a trial: Laneman at para 11; Fero Holdings at
para 10; and Grossman at para 7.
4.
The Court’s decision on the motion must be based on the pleadings and
evidence: Laneman at para 12. However, the judge hearing the motion is
entitled to make inferences of fact based on undisputed facts before the
Court: Laneman at para 11 citing Guarantee Co of North America v
Gordon Capital Corp, [1999] 3 S.C.R. 423. The Court may also determine
questions of fact and law if such determinations can be made based on the
material before it: Granville at para 8.
5.
There is no determinative test to apply in order to grant a summary
judgment: Granville at para 8 ; and Wenzel at para 31.
Rather, the question turns to whether the case is so doubtful that it does not
deserve consideration at trial: Granville at para 8; and Premakumaran
at para 8. The issue is not whether the claim can possibly succeed at trial,
but rather whether it is “clearly without foundation:” Premakumaran at
para 8. It must be evident that a trial is unnecessary: Grossman at
para 7. It is not the Court’s function on a motion for summary judgment to
resolve an issue of fact but rather to determine whether such a genuine issue
exists: Grossman at para 7.
6.
Summary judgment cannot be granted if the necessary facts cannot be
found or if it would be unjust: Granville at para 8. Rather, such a
judgment is granted where the evidence is uncontested, or uncontroversial, or
where there is no serious issue as to credibility: Teva at para 32.
7.
Before granting summary judgment, the Court must weigh the various
competing interests, namely those of the defendant in avoiding needless
litigation, those of the plaintiff having his “day in court,” and those of the
judicial system in not wasting resources: Wenzel at para 22. In doing
this weighing one must exercise caution: Wenzel at para 29; and Canadian
Private Copying Collective v J & E Media Inc, 2010 FC 102 at para 15.
However, a court has discretion over its own process and the Federal Courts
Rules are to be used, not avoided, and where warranted, summary judgment
should be granted, even if there is a serious legal issue, provided it can be
dealt with summarily: Teva at paras 32 and 33.
[11]
In Teva, summary judgment was said to be warranted based on the
following factors as enumerated in para 34:
a.
the issues are well defined and, while
a disposition of the issues may not resolve every issue in the action, they are
significant issues and their resolution will allow the action or whatever
remains, to proceed more quickly or be resolved between the parties acting in
good faith;
b.
the facts necessary to resolve the
issues are clearly set out in the evidence;
c.
the evidence is not controversial and
there are no issues as to credibility; and
d.
the questions of law, though novel, can
be dealt with as easily now as they would otherwise have been after a full
trial.
[12]
Applying these factors to the matter before me, I find that the summary
judgment motion before the Court is appropriate because the issues are well
defined, the facts are clearly set out in the evidence, the evidence is
uncontroversial, there is no issue as to credibility and any questions of law
can be dealt with easily. Although it is necessary in this case for the Court
to engage in contract interpretation to evaluate NDI’s standing, this does not
preclude summary judgment because the Court may make determinations of fact and
law based on the material before it: Granville at para 8.
Analysis of the Issue of
Standing
[13]
Whether there is a genuine issue for trial turns on whether or not NDI
has standing to sue for infringement under the Copyright Act. If NDI
does have standing, the motion must be dismissed and the actions proceed to
trial. If NDI does not have standing, the motion must be granted and the
actions dismissed.
[14]
Subsection 36(1) of the Copyright Act provides the basis for a
person to bring suit in order to protect their copyright or their interest in a
copyright:
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36. (1) Subject to this
section, the owner of any copyright, or any person or persons deriving any
right, title or interest by assignment or grant in writing from the owner,
may individually for himself or herself, as a party to the proceedings in his
or her own name, protect and enforce any right that he or she holds, and, to
the extent of that right, title and interest, is entitled to the remedies
provided by this Act.
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36. (1) Sous réserve des autres
dispositions du présent article, le titulaire d’un droit d’auteur, ou
quiconque possède un droit, un titre ou un intérêt acquis par cession ou
concession consentie par écrit par le titulaire peut, individuellement pour
son propre compte, en son propre nom comme partie à une procédure, soutenir
et faire valoir les droits qu’il détient, et il peut exercer les recours
prévus par la présente loi dans toute l’étendue de son droit, de son titre et
de son intérêt.
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[15]
Where, as here, the suit is being brought by a person other than the
copyright owner, a grant of interest is necessary. A copyright owner may
“grant any interest” in writing to whomever it so wishes, either wholly or
partially: Copyright Act, s. 13(4).
[16]
The parties are in agreement that only an exclusive licence constitutes
a grant of interest sufficient to grant a licensee standing to bring a claim
for copyright infringement. The Supreme Court of Canada in Robertson v
Thomson Corp, 2006 SCC 43 at para 56 [Robertson], stated:
We are
satisfied that Weiler J.A. was correct in concluding that only an exclusive
licence must be in writing. If Parliament intended for any type of
non-exclusive licence to be deemed a "grant of an interest" requiring
a written contract, it could have explicitly provided so just as it did for
exclusive licences in s. 13(7). In our view, the following passage from the
Ontario Superior Court of Justice decision in Ritchie v. Sawmill Creek Golf
& Country Club Ltd. (2004), 35 C.P.R. (4th) 163, correctly states the
matter:
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) ...
[para. 20] [emphasis added].
In Euro-Excellence Inc v Kraft
Canada Inc, 2007 SCC 37 at paragraph 28 [Euro-Excellence], the
Supreme Court held that “[a] non-exclusive licensee has no property rights in
the copyright, and enjoys only contractual rights vis-à-vis the
owner-licensor. As a result, it cannot sue for infringement.”
[17]
The defendants submit that NDI was granted a sole licence and not
an exclusive licence. They submit that CHS, in its licence agreement
with NDI, has retained its right to produce or reproduce the CHS Works.
[18]
Section 2.7 of the Copyright Act defines “exclusive licence” as
follows:
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2.7 For the purposes of this Act, an
exclusive licence is an authorization to do any act that is subject to
copyright to the exclusion of all others including the copyright owner,
whether the authorization is granted by the owner or an exclusive licensee
claiming under the owner.
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2.7 Pour l’application de la
présente loi, une licence exclusive est l’autorisation accordée au licencié
d’accomplir un acte visé par un droit d’auteur de façon exclusive, qu’elle
soit accordée par le titulaire du droit d’auteur ou par une personne déjà
titulaire d’une licence exclusive; l’exclusion vise tous les titulaires.
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[19]
In Euro-Excellence at para 26, Justice Rothstein outlined the
three requirements of an exclusive licence:
An exclusive
licence under copyright law exists when the following conditions are met: (a)
the copyright owner (the licensor) permits another person (the licensee) to do
something within the copyright; (b) the licensor promises not to give anyone
else the same permission for the duration of the licence; and (c) the licensor
itself promises not to do those acts that have been licensed to the licensee
for the duration of the licence.
Does NDI’s license agreement satisfy the requirements
of an exclusive licence?
(a) Permission
to do something within the copyright
[20]
NDI submits that by virtue of its agreement with CHS, it is permitted it
to do something within the copyright. NDI relies on section 2.1 of the
Agreement which provides:
2.1. Subject
to the rights reserved in Sections 2.4 and 2.5 below, Canada grants to NDI a
sole worldwide right and license (the “License”) to use the CHS Data to
produce Products and Product Updates, to integrate these Products
with other products or services (provided that such integrated offerings do not
derogate in any respect from the availability or reliability of the Products or
Product Updates) and to distribute same directly or through third
parties to whom a sublicense is granted in accordance with the terms hereof. Except
as expressly set out herein, CHS shall have no right to distribute the Products
or Product Updates to any person [emphasis added].
[21]
The defendants submit that section 2.1 of the Agreement merely gives NDI
the right to use certain information owned by CHS; namely, the CHS
Data. They submit that section 2.1 of the Agreement does not refer to or grant
NDI any right relating to the copyright of CHS Works.
[22]
NDI claims that three permissions were given to it under the Agreement:
the right to produce, to integrate and to distribute. Only two of these three
rights, the right to produce and the right to integrate, are protected under
the Copyright Act. The right to distribute is not protected because
subsection 3(1) of the Copyright Act does not mention distribution as a
protected right. A number of decisions have held that an exclusive right to
distribute is not an interest in the copyright: Mobilevision Technology Inc
v Rushing Water Products Ltd, [1984] FCJ No 1199 at para 3 [Mobilevision
Technology]; Tele-Metropole Inc v Bishop, [1987] 18 CPR (3d) 257
(CA) at 263 [Tele-Metropole], aff’d (without reference to this issue)
[1990] 2 S.C.R. 467; 955105 Ontario Inc v Video 99 (1993), 48 CPR (3d) 204
at 208 [955105]; Jeffrey Rogers Knitwear Productions Ltd v RD.
International Style Collections Ltd (1986), 19 CPR (3d) 217 at 221-222 [Jeffrey
Rogers Knitwear Productions]; and Close Up International Ltd v 1444943
Ontario Ltd, [2006] OJ No 3857 at para 24 [Close Up]. I agree with
the submission of the defendants that “a collateral interest to distribution … is
not actionable under the Copyright Act:” Mobilevision Technology
at para 3. This principle is supported by Tele-Metropole at 263; 955105
at 208; Jeffrey Rogers Knitwear Productions at 221-222; and Close
Up at para 24.
[23]
CHS having permitted NDI to produce and integrate CHS Works as protected
by the Copyright Act, one must next ask whether CHS promised not to give
anyone else permission to produce or integrate the CHS Works for the duration
of the licence.
(b) Promise not to
give anyone else the same permission
[24]
The defendants do not contest that CHS promised not to give the right to
produce or integrate the CHS Works to anyone else for the duration of the
licence.
[25]
One must next ask whether CHS promised not to itself produce or
integrate the CHS Works for the duration of the licence.
(c) Does CHS itself
promise not to do the acts it has licensed?
[26]
Section 2.1 of the Agreement provides that “[e]xcept as expressly set
out herein, CHS shall have no right to distribute the Products or Product Updates
to any person [emphasis added].” The exceptions are found in sections 2.4
and 2.5 of the Agreement, which provide:
2.4 CHS may
provide CHS Data, Products that are CHS Certified, and Product Updates that are
CHS Certified directly, for non-commercial purposes, to any Canadian
(Federal or Provincial) Government Department or Agency, to any Canadian
university or other educational institution, to any Hydrographic Office with
which CHS has bilateral arrangements, or, in case of a national emergency, as
defined in the Emergencies Act, to any other third party. CHS will use its best
efforts to ensure that all requests for CHS Data, Products, and Product Updates
are routed through NDI [emphasis added].
2.5 In the
event of a national emergency, as defined in the Emergencies Act, and on
written notification from CHS, NDI will immediately cease, to the extent and
under any conditions specified in the notification, the distribution of any CHS
Data, Products that are CHS Certified, or Product Updates that are CHS
Certified. NDI will not renew distribution of any CHS Data, Products that are
CHS Certified, or Product Updates that are CHS Certified without written
notification from CHS. In this Section, notification shall come from the
Director General of CFIS or any supervisory officer of the Director General of
CHS.
[27]
NDI submits that CHS is not permitted to distribute digital data
products for commercial purposes and that CHS has therefore promised not
to do the licensed acts. I do not agree.
[28]
The Agreement does not explicitly state that CHS promises not to produce
or integrate CHS Works. All that CHS has promised in section 2.1 of the
Agreement is not to “distribute the Products or Product Updates to any
person [emphasis added].” As previously noted, the right to distribute is not
a right under the Copyright Act. Therefore, although NDI may be correct
that it has an exclusive licence to distribute the CHS Works for commercial
purposes, it does not follow that the Agreement gives it an exclusive licence in
copyright because the right to distribute is not a protected right under
the Copyright Act.
[29]
Having canvassed the three requirements set out in Euro-Excellence,
the Court must now consider the circumstances surrounding the Agreement in
order to interpret and characterize it: Prism Hospital Software Inc v
Hospital Medical Records Institute, [1994] BCJ No 1906; 3869130 Canada
Inc v ICB Distribution Inc, 2008 ONCA 396 at para 32 [ICB Distribution];
and Justice Roger Hughes, Martin Kratz & Gordon Sustrik, Canadian Forms
and Precedent: Commercial Transactions- Licensing, Markham: LexisNexis,
2007 at para 1.88 [Licensing].
(d) Other factors
[30]
NDI submits that other factors such as its entitlement to commence a
legal action under the Agreement, the surrounding circumstances indicating the
contracting parties’ intent, its right to sublicense, and the subsequent
conduct of CHS all point to it having been granted an exclusive license.
[31]
NDI points to its right to bring a suit in its own name for infringement
as provided in subparagraph 6.2(d)(i) of the Agreement and submits that this
should lead to the conclusion that it was given an exclusive licence. However,
section 6.2 of the Agreement provides that it is only if CHS or a government
authority does not institute an action for infringement that the plaintiff may
“bring suit in its own name.” Accordingly, NDI’s right to sue is not
exclusive. In fact, the section indicates that CHS has retained the right, as
the copyright owner, to sue.
[32]
NDI relies on subsection 13(7) of the Copyright Act which
provides that: “For greater certainty, it is deemed always to have been the law
that a grant of an exclusive licence in a copyright constitutes the grant of an
interest in the copyright by licence.” Hence, it says, there is no doubt that
a licensee of an exclusive licence is allowed to bring an action in its own
name: Robertson. NDI relies on authorities which found an exclusive
licence where the licensee had a sufficient grant of interest to preserve and
enforce its rights protected under the Copyright Act: Bouchet v
Kyriacopoulos (1964), 45 CPR 265 and Close Up. However, those
authorities do not say that the contractual right to sue will necessarily lead
to an exclusive licence. In my view, even if a licensee has been given a right
to sue in its own name by means of an agreement, it does not necessarily lead
to a characterization of the licence as exclusive.
[33]
I am further of the view that NDI’s ability to sublicense digital data
products derived from CHS Works is not indicative of an exclusive licence.
While this right to sublicense does indicate that NDI was given the right to
“use CHS Data and to produce Products and Product Upgrades” to the exclusion of
others, this does not necessarily qualify the licence as exclusive because for
a license to be exclusive, CHS would also have had to promise not to do those
acts defined in the license; it would have to be to the exclusion of the
copyright owner: Euro-Excellence at para 26; and section 2.7 of the Copyright
Act.
[34]
NDI is correct in its submission that courts are not limited to the
terms of the agreement, but must be mindful of the intention of the parties at
the time the agreement was entered into: Licensing at para 1.85. This
Court must consider all the surrounding circumstances to properly characterize
the agreement: ICB Distribution at para 32; and Licensing at para
1.88. These circumstances include facts that were known or reasonably capable
of being known to the parties when they entered into the Agreement: ICB Distribution
at para 53. The subsequent conduct of the parties may also be helpful in
determining the meaning the CHS and NDI attached to the Agreement after its
execution: ICB Distribution at para 55 citing Montreal Trust Company
of Canada v Birmingham Lodge Limited (1995), 24 OR (3d) 97
(CA) at 168.
[35]
The defendants presented evidence from the written discovery wherein CHS
was questioned and gave the following responses:
Q: Did
CHS understand that, pursuant to any of the signed agreements, CHS had granted
an exclusive license to NDI in respect of CHS’ copyright?
A: No.
Q: If
so, which works or categories of works were subject to the exclusive license?
A: NDI
did not have an exclusive licence.
Q: In
particular, did CHS understand that, pursuant to any of the signed agreements,
CHS had granted an exclusive license to NDI in respect of CHS’ copyright in CHS
paper charts?
A: NDI
did not have an exclusive licence in CHS paper charts.
[36]
I agree with the defendants that these responses provide clear evidence
of the intent of CHS. Its intent was that NDI not have an exclusive licence.
Whatever license NDI has, it does not have standing to bring an action in
respect of any alleged copyright infringement relating to the CHS Works.
[37]
NDI submits that one must consider the backdrop when the Agreement was
entered into by the parties. It claims that the intent of CHS was to find a
private company to take over the exclusive distribution of digital data
products. Paragraphs 3 and 6 of the Agreement indicate that CHS was
“interested in supplementing its standard paper chart with electronic
navigation charts and other digital data products” and that NDI was “interested
in acquiring the marketing and distribution rights to CHS electronic charts and
other digital data products.” Under section 14 of the Agreement, CHS and NDI
stated that their intention was that it be a “‘Showcase Contract’ for the
production and marketing of digital products.”
[38]
I agree with NDI that it appears that CHS did not intend to distribute
digital data products itself and was seeking to contract with someone for that
distribution. However, while NDI alleges its intent was to conclude an
exclusive agreement, the real question is whether CHS intended to grant such an
exclusive right. As I have previously stated, the intent of CHS is forcefully
found in the evidence it gave on discovery. NDI was not to have an exclusive
licence. While under the Agreement CHS may have referred anyone seeking
digital data products to NDI, this alone is not an indication that NDI had an
exclusive licence under the Copyright Act.
Conclusion
[39]
For these reasons, the Agreement does not qualify as an exclusive
licence. Consequently, NDI does not have the grant of interest necessary to
bring an action for copyright infringement with respect to the CHS Works under
the Copyright Act. Since the plaintiff does not have standing to
advance the claims in these actions, there is no genuine issue for trial.
Accordingly, these motions for summary judgment are granted and the actions are
dismissed in their entirety, with costs in favour of the defendants. If the
parties are unable to agree on costs, the Court will provide further directions
at the request of any party.
[40]
Confidential Reasons issued on March 13, 2012, together with a Direction
to the parties to inform the Court by March 23, 2012, end of business hours, if
any portions of those Reasons ought to be deleted or modified in its public
version. Nothing has been received from either party within the time provided
and accordingly, the public Reasons contain no deletions or modifications from
the confidential Reasons previously issued to the parties.
ORDER
THIS COURT ORDERS
that the defendants’ motions for summary judgment are granted and the
actions are dismissed with costs in accordance with these reasons.
"Russel
W. Zinn"
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