Date: 20000126
Dockets: A-120-98, A-121-98
CORAM: ISAAC J.A.
ROTHSTEIN J.A.
McDONALD J.A.
Court No. A-120-98 (T-3016-92)
BETWEEN:
MILLIKEN & COMPANY and
MILLIKEN INDUSTRIES OF CANADA LTD.
Appellants
(Plaintiffs)
and
INTERFACE FLOORING SYSTEMS (CANADA) INC.
Respondent
(Defendant)
Court No. A-121-98 (T-1212-95)
BETWEEN:
MILLIKEN & COMPANY
Appellant
(Plaintiff)
and
INTERFACE FLOORING SYSTEMS (CANADA) INC.
Respondent
(Defendant)
REASONS FOR JUDGMENT
ROTHSTEIN J.A.
INTRODUCTION
[1] This is an appeal from a February 5, 1998 judgment1 of Tremblay-Lamer J. of the Trial Division dismissing the appellants' claims for copyright infringement. The learned Trial Judge's reasons for dismissing the claims were:
| 1) the work in question could not be protected by copyright by reason of subsection 64(1) of the Copyright Act applicable to designs created prior to June 8, 1988; and |
| 2) even if the work could be protected by copyright, the appellant Milliken & Company was not, at the relevant time, an assignee of the copyright and the appellant Milliken Industries of Canada Ltd. was only a non-exclusive licensee of Milliken & Company and in that capacity did not have a right to sue for copyright infringement. |
[2] The Trial Judge also found that if she was in error on these preliminary points, that there was indeed copyright infringement. However, in view of her preliminary findings, she dismissed the infringement claims.
FACTS
[3] The relevant facts as found by the Trial Judge, and as taken from the transcript and exhibits when no express finding of fact was made by her, are these: Claire Iles was a French designer who brought her artwork to the Hantex Steel Exhibition at Frankfurt, Germany in January 1989. This annual exhibition is the most important interior textiles exhibition in the world. Ms. Iles' artwork consisted of a portfolio of designs. On January 11, 1989, at the exhibition, she met Richard Stoyles, Director of Styling and Design for the commercial carpet business of Milliken & Company. On behalf of Milliken & Company, Stoyles purchased six designs from Ms. Iles, one of which was the subject of the action before the Trial Judge. That design was called "Harmonie" by Ms. Iles, but after it was purchased by Milliken & Company, it was renamed "Mangrove". In 1990, the respondent Interface Flooring Systems (Canada) Ltd., won a bid to supply carpet tiles at the Calgary airport. The carpet tiles were installed by Interface at the Calgary Airport 1991 and 1992 and in 1995.2 For its carpet tile product, the respondent Interface copied the Harmonie (Mangrove) design, thus giving rise to this litigation.
[4] It should be noted that the appellants did in fact register the Mangrove design under the Industrial Design Act3 on November 6, 1990. However, the Industrial Design Act at the time restricted industrial design protection to proprietors of designs, and did not recognize assignees (as Milliken was) as proprietors.4 The legislation was changed in 19935 to allow assignees to register industrial designs as proprietors, but the amendments also provided that assignees could not bring infringement actions based on claims arising before those amendments came into force.6 Because claims on the basis of the registration under the Industrial Design Act could not be asserted for the 1991 and 1992 carpet installations, the appellants resorted to an action for copyright infringement. The appellants also allege infringement of copyright with respect to the 1995 carpet installation.
RELEVANT STATUTORY PROVISIONS
[5] The relevant statutory provisions are:
A) Subsection 64(1) Copyright Act in force prior to June 8, 1988
| 64(1) This Act does not apply to designs capable of being registered under the Industrial Design Act, except designs that, though capable of being so registered, are not used or intended to be used as models or patterns to be multiplied by any industrial process. |
B) New section 64 of the Copyright Act7 in force June 8, 1988
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| Interpretation
64. (1) In this section and section 64.1,
"article" "objet"
"article" means any thing that is made by hand, tool or machine;
"design" "dessin"
"design" means features of shape, configuration, pattern or ornament and any combination of those features that, in a finished article, appeal to and are judged solely by the eye;
"useful article" "objet utilitaire"
"useful article" means an article that has a utilitarian function and includes a model of any such article;
"utilitarian function" "fonction utilitaire"
"utilitarian function", in respect of an article, means a function other than merely serving as a substrate or carrier for artistic or literary matter.
Non-infringement re certain designs
(2) Where copyright subsists in a design applied to a useful article or in an artistic work from which the design is derived and, by or under the authority of any person who owns the copyright in Canada or who owns the copyright elsewhere,
(a) the article is reproduced in a quantity of more than fifty, or
(b) where the article is a plate, engraving or cast, the article is used for producing more than fifty useful articles,
it shall not thereafter be an infringement of the copyright or the moral rights for anyone
(c) to reproduce the design of the article or a design not differing substantially from the design of the article by
(i) making the article, or
(ii) making a drawing or other reproduction in any material form of the article, or
(d) to do with an article, drawing or reproduction that is made as described in paragraph (c) anything that the owner of the copyright has the sole right to do with the design or artistic work in which the copyright subsists.
Exception
(3) Subsection (2) does not apply in respect of the copyright or the moral rights in an artistic work in so far as the work is used as or for
(a) a graphic or photographic representation that is applied to the face of an article;
(b) a trade-mark or a representation thereof or a label;
(c) material that has a woven or knitted pattern or that is suitable for piece goods or surface coverings or for making wearing apparel;
(d) an architectural work that is a building or a model of a building;
(e) a representation of a real or fictitious being, event or place that is applied to an article as a feature of shape, configuration, pattern or ornament;
(f) articles that are sold as a set, unless more than fifty sets are made; or
(g) such other work or article as may be prescribed by regulation.
Idem
(4) Subsections (2) and (3) apply only in respect of designs created after the coming into force of this subsection, and section 64 of this Act and the Industrial Design Act, as they read immediately before the coming into force of this subsection, as well as the rules made under them, continue to apply in respect of designs created before that coming into force.
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Définitions
64. (1) Les définitions qui suivent s'appliquent au présent article et à l'article 64.1.
"dessin" "design"
"dessin" Caractéristiques ou combinaison de caractéristiques visuelles d'un objet fini, en ce qui touche la configuration, le motif ou les éléments décoratifs.
"fonction utilitaire" "utilitarian function"
"fonction utilitaire" Fonction d'un objet autre que celle de support d'un produit artistique ou littéraire.
"objet" "article"
"objet" Tout ce qui est réalisé à la main ou à l'aide d'un outil ou d'une machine.
"objet utilitaire" "useful article"
"objet utilitaire" Objet remplissant une fonction utilitaire, y compris tout modèle ou toute maquette de celui-ci.
Non-violation : cas de certains dessins
(2) Ne constitue pas une violation du droit d'auteur ou des droits moraux sur un dessin appliqué à un objet utilitaire, ou sur une oeuvre artistique dont le dessin est tiré, ni le fait de reproduire ce dessin, ou un dessin qui n'en diffère pas sensiblement, en réalisant l'objet ou toute reproduction graphique ou matérielle de celui-ci, ni le fait d'accomplir avec un objet ainsi réalisé, ou sa reproduction, un acte réservé exclusivement au titulaire du droit, pourvu que l'objet, de par l'autorisation du titulaire " au Canada ou à l'étranger " remplisse l'une des conditions suivantes :
a) être reproduit à plus de cinquante exemplaires;
b) s'agissant d'une planche, d'une gravure ou d'un moule, servir à la production de plus de cinquante objets utilitaires.
Exception
(3) Le paragraphe (2) ne s'applique pas au droit d'auteur ou aux droits moraux sur une oeuvre artistique dans la mesure où elle est utilisée à l'une ou l'autre des fins suivantes :
a) représentations graphiques ou photographiques appliquées sur un objet;
b) marques de commerce, ou leurs représentations, ou étiquettes;
c) matériel dont le motif est tissé ou tricoté ou utilisable à la pièce ou comme revêtement ou vêtement;
d) oeuvres architecturales qui sont des bâtiments ou des modèles ou maquettes de bâtiments;
e) représentations d'êtres, de lieux ou de scènes réels ou imaginaires pour donner une configuration, un motif ou un élément décoratif à un objet;
f) objets vendus par ensembles, pourvu qu'il n'y ait pas plus de cinquante ensembles;
g) autres oeuvres ou objets désignés par règlement.
Idem
(4) Les paragraphes (2) et (3) ne s'appliquent qu'aux dessins créés après leur entrée en vigueur. L'article 64 de la présente loi et la Loi sur les dessins industriels, dans leur version antérieure à l'entrée en vigueur du présent article, et leurs règles d'application, continuent de s'appliquer aux dessins créés avant celle-ci.
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ANALYSIS
Issue
[6] The new section 64 of the Copyright Act was brought into force on June 8, 1988. As will be made evident in these reasons, the new section 64 is the only potential source of copyright protection for the work in question. By reason of subsection 64(4), whether the new section 64 applies in this case depends upon the date on which the Harmonie work was created, and if it was created before June 8, 1988, whether it was created as a design. If the design was created on or after June 8, 1988, the new section 64 applies; if before, the former subsection 64(1) continues to apply. Thus, if the Harmonie work was created as a design prior to June 8, 1988, copyright protection is not available and the appeal cannot succeed.
Position of the Parties
[7] The appellants say that Ms. Iles' work was not a design but rather was an "artistic work" as that term is defined in section 2 of the Copyright Act.
| "Artistic work" includes works of painting, drawing, sculpture and artistic craftsmanship, and architectural works of art and engravings and photographs. |
They say a design is not created until it is applied to a useful article, e.g. a carpet, and that this did not occur until some time after the appellants acquired the artistic work on January 11, 1989. Therefore, the new section 64 applies, and by reason of subsection 64(3), they may claim copyright protection in the work.
[8] The respondent argues that the Harmonie work was a design and that it was created prior to June 8, 1988. The Trial Judge, on the basis of an adverse inference she drew from the fact that the appellants had not adduced evidence as to the date when the Harmonie work was created, found that it was created as a design prior to June 8, 1988. Accordingly, the former subsection 64(1) applied. As she found that the work was capable of being registered under the Industrial Design Act and was intended to be used as a pattern to be multiplied by an industrial process, she found that the Harmonie design was not entitled to copyright protection under the law which was applicable to designs created prior to June 8, 1988. The respondent says the Trial Judge was correct in so finding.
When was the Harmonie Work Created and was it a Design?
[9] The first question is: when was the Harmonie work which the appellants purchased from Ms. Iles created? The Trial Judge, on the basis of the adverse inference she drew, concluded that it was created prior to June 8, 1988. The reasons for her drawing an adverse inference were:
| 1) the appellants pleaded that the Harmonie work was created in September 1988 but led no evidence to support that allegation; |
| 2) Ms. Iles did not testify at the trial, although it would have been within the appellants' reach to have her confirm the date when she created the work; |
| 3) the appellants gave no indication of any attempt to obtain evidence from Ms. Iles for the purposes of trial or that she refused to attend or submit to commission evidence being taken where she was located outside of Canada; and |
| 4) On September 25, 1992, the appellants obtained from Ms. Iles a confirming assignment of copyright in the Harmonie work. The Trial Judge found it would have been reasonable for the appellants to obtain from Ms. Iles at that time, the information regarding the date of creation, but they did not. |
[10] The appellants say that the Trial Judge erred because:
| 1) she failed to have regard for the presumption that copyright exists in any action for copyright infringement; |
| 2) the onus was on the respondent to adduce evidence to displace the presumption and none was adduced; and |
| 3) it was incorrect to draw an adverse inference against the appellants when the independent witness was not within the power of the appellants, that she was outside the jurisdiction and was equally available to both parties. |
[11] As to the presumption, the issue here is when, for purposes of subsection 64(4), the design was created and not whether copyright subsists. For that reason alone, I think the presumption cannot assist the appellants. However, even if the presumption was applicable, the failure to call Ms. Iles to testify as to the creation date indicates as the most natural inference, that the appellants were afraid to call her and this fear is some evidence that if she were called, she would have exposed facts unfavourable to the appellants. In drawing an adverse inference, the learned Trial Judge relied on the following passage from Wigmore on Evidence8 which is relevant to the issue.
| The failure to bring before the tribunal some circumstance, document or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstances or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions: and they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the parties fear of exposure. But the propriety of such an inference in general is not doubted. |
I think this is sufficient to displace any presumption. It was not necessary for the respondent to call evidence on the point.
[12] In addition to the reasons of the Trial Judge for drawing an adverse inference, which I think are sufficient on their own, it is noteworthy that the appellants refused to disclose their witnesses in advance of trial. As the creation date of September 1988 was pleaded by the appellants, and the respondent in its statement of defence put the appellants to the strict proof thereof, it was reasonable for the respondent to expect that the appellants would lead evidence on the point. In these circumstances, it is no answer for the appellants to say that the witness was equally available to the respondent. Nor is it an adequate excuse that the witness was outside the jurisdiction. See Lévesque v. Comeau et al.9
[13] I can find no fault in the approach and the finding of the learned Trial Judge. She was entitled to draw an adverse inference in these circumstances and to conclude that the Harmonie work was created prior to June 8, 1988.
[14] Accepting the pre-June 8, 1988 creation date, the Harmonie work was ultimately registered under the Industrial Design Act by the appellants. The work was displayed by Ms. Iles at a trade show of interior textiles including floor coverings. The evidence is that she attended these exhibitions on at least five or six occasions. She obviously was displaying her work at such shows with the intention of selling it to purchasers who produce interior textiles such as carpets by industrial processes. As found by the Trial Judge, the work which the appellants purchased from Ms. Iles on January 11, 1989 was: i) capable of registration under the Industrial Design Act, and ii) used as a pattern to be multiplied by an industrial process. Therefore, the Harmonie work was a design capable of being registered under the Industrial Design Act and was intended to be used as a pattern to be multiplied by an industrial process and was not subject to copyright protection by operation of subsection 64(1) of the Copyright Act which applied to industrial designs created prior to June 8, 1988. Although Ms. Iles purported to convey a copyright interest in the work to the appellant in the confirming assignment executed on September 25, 1992, it follows from subsection 64(1) applicable to designs created prior to June 8, 1988 that she did not have a copyright to assign.
Application of the New Section 64
[15] Subsection 64(4) of the amended Copyright Act provides that the former subsection 64(1) of the Copyright Act and the Industrial Design Act and the rules made under those Acts continue to apply to designs created before June 8, 1988. Nonetheless, counsel for the appellants argues that the Harmonie work was not a design for the purposes of the amended Copyright Act. He says that no design was created until after Milliken acquired the Harmonie work from Ms. Iles and applied it to a useful article, in this case, carpet tiles, after January 11, 1989. The appellant relies on subsections 64(1), (2) and (3) of the amended Copyright Act which apply to designs created on or after June 8, 1988.
[16] I cannot agree with the appellants. First, whether a work is a design is determined by application of the relevant law. For work created prior to June 8, 1988, the relevant law is the former subsection 64(1) and not the new section 64. Therefore, on the facts of this case, resort to the new section 64 is misplaced.
[17] However, even if the new section 64 was applicable, it does not assist the appellants. The definition of "design" in the amended subsection 64(1) is: a "pattern...that, in a finished article, appeal(s) to and is judged solely by the eye." The term "finished" is not defined. The appellants argue that the drawing of a pattern on a substrate such as paper is the creation of an artistic work only and not the creation of a design. They contend that a design is only created "when an artistic work is adapted and applied to a finished useful article."10 The appellants say that in the context of section 64, a "finished article ... relates to a 'useful article'."11
[18] With respect, the appellants' argument ignores the words of the definition of "design" in subsection 64(1) and its relationship to the scheme of the section. The words in the definition of design are "in a finished article" not, as the appellants argue, in a "finished useful article." The omission of the word "useful" in the definition of design was not accidental. The words "article" and "useful article" are separately defined, "article" being quite general and "useful article" being more specific. "Useful article" means an article that has a "utilitarian function". "Utilitarian function" is defined, in part, as a "function other than merely serving as a substrate or carrier for artistic or literary matter." It is clear that the general term "article" includes useful articles and articles that are not useful articles. Thus a finished article in the definition of design need not be a useful article. Therefore, whether an artistic work is or is not a design is not dependent upon it having been applied to a useful article. Had that been the case, I think the adjective "useful" would have been included in the definition of "design" rather than the adjective "finished".
[19] This conclusion is consistent with subsection 64(2), which states that it will not infringe copyright to reproduce designs which are applied to useful articles in specified circumstances. The opening words of subsection 64(2) that "Where copyright subsists in a design applied to a useful article ..." show, first, that copyright may subsist in a design and, second, that contrary to the appellants' argument, the creation of the design may pre-exist its application to a useful article. By necessary implication, if a design may be applied to a useful article, the existence of that design may be independent of the useful article. Had Parliament intended that for the purposes of subsection 64(2), a design does not come into existence until is actually applied to a useful article, words to that effect would have been used.
[20] The appellants point to the words in subsection 64(2) "... or in an artistic work from which the design is derived ..." to argue that the artistic work and the design are necessarily different and that prior to application to a useful article, the work is an artistic work and only becomes a design when applied to the useful article. While these words indicate that the artistic work and design may be different, they are not necessarily so. These words contemplate the situation in which a design applied to a useful article is not the artistic work itself but is derived from the artistic work. The words "in an artistic work from which the design is derived" do not mean that a design does not come into existence until applied to a useful article.
[21] The appellants' argument on the application of the new section 64 appears to be directed solely at avoiding the clear intention of Parliament, expressed in subsection 64(4), that the law prior to June 8, 1988 was to continue to apply to designs created before that date.
CONCLUSION
[22] The Trial Judge was correct in concluding that the design in question was not protected under the Copyright Act by reason of the former subsection 64(1) of the Copyright Act. It is, therefore, not necessary to address the other issues canvassed by the learned Judge. The appeal will be dismissed with costs.
[23] By order of McDonald J.A. dated 29 October 1998, this appeal was consolidated with the appeal in Court File A-121-98 and it was heard at the same time as that appeal. A copy of these reasons shall therefore be filed in file A-121-98 and shall be considered a disposition of the appeal in that file.
"Marshall Rothstein"
J.A.
"I agree
F.J. McDonald"
__________________
1 [1998] 3 F.C. 103.
2 It is not clear whether the 1992 and 1995 contracts to install carpet tiles were pursuant to the original tender for bids in 1990, but nothing turns on this point.
3 R.S.C. 1985, c. I-9.
4 As per section 4 and section 12 of the Industrial Design Act in effect at the time. To have had a valid registration under the Act, Ms. Iles would have had to register the design as proprietor which she then could have assigned to Milliken.
5 S.C. 1993, c. 15 ss. 13, 19.
6 S.C. 1993 c. 15 s. 30(2).
7 R.S.C. 1985 (4th supp.), c. 10, am. S.C. 1988, c. 15.
8 James H. Chadbourn, ed. Wigmore on Evidence , vol. 2 (Boston: Little, Brown & Company, 1979) at 192.
9 [1970] S.C.R. 1010">[1970] S.C.R. 1010, at 1012-1013.
10 Appellants' Memorandum, para. 34.
11 Appellants' Memorandum, para. 37.
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