Docket: A-197-13
Citation: 2014 FCA 185
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CORAM:
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BLAIS C.J.
GAUTHIER J.A.
MAINVILLE J.A.
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BETWEEN:
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PLANIFICATION-ORGANISATION-PUBLICATIONS SYSTÈMES (POPS) LTÉE
and
ELIZABETH POSADA
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Appellants
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and
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9054-8181 QUÉBEC INC.
and
PHILIPPE CHAPUIS
and
BENOÎT BAZOGE
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Respondents
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REASONS FOR
JUDGMENT
GAUTHIER J.A.
[1]
This is an appeal from a judgment of Chief
Justice Crampton of the Federal Court (judge), dated April 25, 2013, and
amended on June 17, 2013 (2013 FC 427) dismissing the action for damages of
PLANIFICATION-ORGANISATION-PUBLICATIONS SYSTÈMES (POPS) LTÉE (POPS) and
Elizabeth Posada for infringement of their copyright on software that is
described in more detail below (paragraph 13) and called Ceres, Omega, Epsilon
and Comex.
[2]
POPS and Elizabeth Posada (the appellants)
dispute most of the judge’s findings and, in particular, the amendments to the
reasons for judgment made on June 17, 2013, following a motion by the
appellants pursuant to subsection 397(1) of the Federal Courts Rules,
SOR/98-106 (Rules).
[3]
Among other things, according to the appellants,
the judge granted 9054-8181 Québec Inc. (IDP) a licence that goes far beyond
what was requested in the respondents’re-re-amended statement of defence and
counterclaim dated January 11, 2013.
[4]
For the following reasons, I would dismiss the
appeal except with regard to the scope of IDP’s licence because, in my view,
the judgment indeed granted a broader licence than that sought by IDP.
I.
FACTS
[5]
The facts in this case are complex and many were
disputed. The judge described them in detail in his amended reasons (reasons).
In my opinion, it will suffice, for the purposes of this appeal, to note the
following facts (some of which were not disputed while others had to be
determined by the judge on the basis of contradictory evidence).
[6]
As stated by the judge in paragraph 1 of his
reasons, the action “has its roots in an apparent
misunderstanding that has had a sad outcome for the three individuals” involved,
that is, Elizabeth Posada, Philippe Chapuis and Benoît Bazoge, “who were once very dear friends”.
[7]
Around 1984, Elizabeth Posada, then a student,
developed simulation software that allowed users, generally university students
or business executives, to vary certain inputs to produce marketing, sales,
financial, production, inventory and other reports, or outputs. It permitted
users to learn business concepts in an interactive manner (reasons at
paragraphs 16 and 17).
[8]
To do so, Elizabeth Posada used a program known
as Business Game, which was developed by Andrew Szendrovits, a professor at McMaster University (reasons at paragraph 18). This program was circulating widely in
academic circles in Ontario and Quebec (reasons at paragraph 15).
[9]
Given that all of Andrew Szendrovits’
mathematical formulas and calculation routines were programmed in Fortran for
use on mainframe computers, Elizabeth Posada developed an interface in DOS so
that the software could be used on microcomputers (reasons at paragraphs 12, 15
and 16). She called this version Ceres.
[10]
In 1985, POPS, the company incorporated by
Elizabeth Posada in December 1984 and for which she is the sole officer and
shareholder, entered into an agreement entitled
“Contrat de promotion”, which
may be translated as “Promotion Contract”, with the authors described in the
said document: Andrew Szendrovits, Elizabeth Posada, Jérôme Doutriaux and
Jean-Paul Sallenave (reasons at paragraph 20). They conferred upon POPS a very
broad and exclusive licence to, among other things, distribute, market, sell
and adapt Ceres (reasons at paragraph 54). In 1998, Andrew Szendrovits wrote a
letter clarifying and adding to the agreement (reasons at paragraphs 58 to 61).
However, it was not until October 28, 2008, that POPS was assigned the copyright
of Andrew Szendrovits’ copyright from his successors (reasons at paragraphs 62
to 71). On October 29, 2008, POPS obtained confirmation that McMaster University had only a user licence and was not claiming to be the owner of any
copyright in Ceres (reasons at paragraphs 72 to 82).
[11]
The main actors in this case, that is, Elizabeth
Posada, Philippe Chapuis and Benoît Bazoge, met each other in 1987, at a
time when they were doctoral students (reasons at paragraph 23). They
became close friends. All three of them used the Ceres software as part of
their duties as professors or lecturers at the Université
du Québec à Montréal (UQAM). In 1989, Benoît Bazoge
purchased a licence to use Ceres on behalf of UQAM
for $2,000 and Philippe Chapuis did the same on behalf of the École Supérieure de Commerce in Tours in
1990 (reasons at paragraph 24).
[12]
The business relationship between POPS and IDP,
the company incorporated by Philippe Chapuis and Benoît Bazoge to develop
and give seminars in conjunction with their university career, evolved over the
years (reasons at paragraphs 26 and 108 to 122). Prior to the dispute that led
to the action brought before the Federal Court by the appellants, Elizabeth
Posada became a shareholder in IDP and, for all practical purposes, ceased
POPS’ commercial operations and even granted IDP the right to use POPS’ trade
name (long and short version) (reasons at paragraph 100) (A.B., Vol. II, Tab
23, page 273). Even though she continued to carry out her duties at UQAM,
Elizabeth Posada was paid as an employee of IDP starting in early 2007 to
develop the adaptations of Ceres and the enhancements sought by IDP. Her
responsibilities included completing work on the software called Omega that the
parties had jointly pursued since at least 1998 and developing the software
that would become known as Comex and Epsilon (reasons at paragraph 103).
[13]
Furthermore, to respond to the many
technological changes since the early 1990s, several versions and products
derived from Ceres were developed. Omega is the Windows version of Ceres that
the parties have been collaborating to develop since at least 1998. Omega
enables users to conduct simulations in four markets. Epsilon (also known as
Epsilon 2) is a scaled-down version of Omega, which only permits users to conduct
simulations in two markets, while Comex (also known as Epsilon 1) is a further
scaled-down version confined to a single market. Comex and Epsilon were
developed for use in relation to small and medium sized businesses. Each of
these versions was developed to work with IDP’s pedagogical approach (reasons
at paragraph 113).
[14]
After Elizabeth Posada stopped collaborating
with IDP as a result of a dispute concerning her compensation and resigned as a
shareholder (reasons at paragraph 27), counsel for POPS and for POPS’ director,
Elizabeth Posada, demanded, on October 20, 2008, that IDP cease using Ceres,
Epsilon and Comex. In addition, counsel maintained that IDP had publicly stated
that it was the owner of the copyright in Ceres and the other above-mentioned
products and that IDP did not have and has never had any right to use that
software (A.B., Vol. I, Tab 8, pages 151 to 152).
[15]
Because the parties were unable to amicably
resolve their dispute, the appellants commenced their action before the Federal
Court on April 14, 2009. The dispute on the terms of Elizabeth Posada’s exit
from IDP is also the subject of a proceeding before the Superior Court of
Quebec (reasons at paragraph 27).
[16]
After the proceeding was filed in the Federal
Court, POPS obtained, on July 29, 2010, a Certificate of Registration of
Copyright in respect of Omega. And, on August 24, 2010, POPS obtained a
Certificate of Registration of Copyright in respect of the work entitled
“Epsilon a.k.a Comex”.
[17]
The Federal Court hearing took place in January
2013 and the judgment was rendered on April 25, 2013. As I have indicated,
further to a motion by the appellants, the judge held a teleconference with the
parties and the judgment was amended in accordance with the joint proposal
submitted by the parties. Indeed, the judge had asked them to submit the
amendments required to give full effect to the formal judgment dated April 25,
2013.
II.
FEDERAL COURT DECISION
[18]
In his reasons, the judge examines the
contradictory evidence submitted by the parties in detail. He summarizes his
main findings as follows in paragraph 5 of his reasons:
i) copyright
subsists in the above-mentioned software products;
ii) POPS is at
least one of the rightful owners of copyright in those products;
iii) [the
respondent] [IDP] has at least an implied licence to use those products;
iv) the
[appellants] were not entitled to revoke that licence;
v) the
[respondents] did not infringe the [appellants’] copyright and therefore are
not liable to pay any damages, or to account for any profits, to the
[appellants];
vi) the
[respondents] have not demonstrated that the [appellants’] conduct warrants the
imposition of punitive and exemplary damages, or an award of solicitor-client
costs;
vii) apart from
what is mentioned in subparagraphs 3(i) and 3(ii) above, the [appellants] are
not entitled to any of the other relief that they sought in this proceeding;
viii) the
[respondents] are entitled to all of the fixed lump sum amount of $20,000 that
the parties agreed should be the legal costs awarded in this proceeding.
[19]
The judge also struck POPS’ Certificate of
Registration of Copyright in respect of “Epsilon a.k.a.
Comex” bearing registration number 1079833 from the Register of
Copyrights (reasons at paragraph 144).
[20]
To avoid repetition, I will discuss some of the
judge’s other relevant findings in my analysis. However, it is important to
immediately note his comments on the weight he generally attached to the
testimony of the three main actors. At paragraph 86 of his reasons, he stated
the following:
In my view, the evidence establishes the
[respondents’] version of events in relation to this and other issues addressed
below, except where otherwise indicated. Where there are inconsistencies
between, on the one hand, the testimony of Ms. Posada and, on the other hand,
the testimony of Messrs. Chapuis and Bazoge, I have generally accepted the
latter over the former, because I found Messrs. Chapuis and Bazoge to be much
more straightforward, forthcoming and generally reliable than Ms. Posada, who
was sometimes evasive, at other times unable to recollect specific facts and on
occasion took positions that strained credulity.
III.
ISSUES
[21]
As previously stated, the appellants are
disputing practically all of the judge’s conclusions that are not in their
favour. For the purposes of this appeal, I will summarize the issues raised as
follows:
a) Did the judge err by confirming
that IDP has a licence on the software identified and all future adaptations
and that said licence gives it access to the source code and includes the right
to modify it?
b) Did
the judge err by finding that the appellants did not validly repudiate that
licence? Did the judge err by finding that the implied licence granted to the
respondents was non-revocable? If the Court responds in the affirmative to the
questions stated above, what compensation are the appellants entitled to?
c) Did
the judge err by striking the Certificate of Registration of Copyright bearing
number 1079833 dated August 24, 2010, from the Register?
d) Did
the judge err by awarding costs in the amount of $20,000 to the respondents
even though the appellants obtained confirmation that there was copyright in
the products at issue and that POPS was the owner at least in part of the said
copyright in Ceres?
[22]
At the hearing, the appellants confirmed that
they are no longer disputing that IDP had a licence to use the products known
as Ceres, Omega, Epsilon and Comex before the end of the collaboration between
IDP and Elizabeth Posada in October 2008. It is the conditions of the right to
use those products that are at issue. Indeed, the damages that the appellants
are seeking are limited to the use of the products after that date.
IV.
ANALYSIS
[23]
There is no issue regarding the applicable
standard of review. The judge’s conclusions with respect to questions of law
are subject to the standard of correctness. To intervene on questions of mixed
fact and law (except with respect to an extricable question of law) or
questions of fact, the appellants must establish a palpable and overriding
error (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).
A.
The scope of the licence with respect to future
adaptations and access to the source code
[24]
At the hearing, the appellants insisted that the
judge made two fundamental errors warranting the intervention of this Court
with respect to the judge’s conclusions on the scope of the licence for future
adaptations and access to the source code (formal judgment as amended on June
17, 2013, paragraphs ii) and viii); see paragraph 31 below).
[25]
First, the appellants argue that the judge erred
in the interpretation of the rights granted by POPS or Elizabeth Posada to IDP.
The appellants submit that the judge did not apply the correct principles of
law to determine the scope of the implied licence granted to IDP. They insist
that the judge should have followed the systematic approach (five conditions)
adopted in English case law, such as the English Court of Appeal’s decision in Griggs
Group Ltd. v. Evans, [2005] EWCA Civ. 11 at paragraph 13, which, even
though not yet expressly followed in Canada, is consistent with the general
principles adopted by the Supreme Court of Canada in cases like Bishop v.
Stevens, [1990] 2 S.C.R. 467 and Netupsky et al. v. Dominion Bridge Co.
Ltd., [1972] S.C.R. 368. According to the appellants, if the judge had
adopted this approach, he would have had no choice but to conclude that IDP
only had a licence on the software products as they existed before the
collaboration between IDP and Elizabeth Posada ended.
[26]
Furthermore, by adopting such an approach, the
judge could not have concluded that the appellants had granted a licence that
allowed access to the source code of these products and the right to modify it.
[27]
Second, the appellants submit that the judge
nonetheless acted ultra petita because the respondents had only requested a licence to use the
products in question, namely, Ceres, Omega, Epsilon and Comex. In their view,
the respondents never requested to have access to the source code or to have
the right to modify the aforementioned products. I will deal solely with the
appellants’ second argument, as it is determinative of the issues raised under
the present heading.
[28]
It is clear that it was not until January 11,
2013, namely, after the presentation of the evidence and prior to the final
argument, that the respondents applied for leave to amend the latest version of
their defence and counterclaim in order to make it conform to the evidence
adduced before the judge. The relevant amendments read as follows:
[translation]
150. IDP’s contribution through Philippe
Chapuis and Benoît Bazoge and through staff hired and paid by IDP to develop
and improve CÉRÈS, OMEGA, EPSILON and COMEX software surely constitutes
sufficient contribution to confirm the granting of a perpetual licence to use
said software;
…
CONFIRM that IDP, Benoît Bazoge and Philippe
Chapuis benefit from a perpetual licence for the use of the CÉRÈS, OMEGA,
EPSILON and COMEX software for all purposes related to IDP’s pedagogical
activities.
(A.B., Vol. I, Tab 3, pages 139 and 140)
[29]
The appellants raised no objection to this late
request for amendments, given that it involved merely a user licence, a subject
on which they planned to make submissions before the judge on the basis of the
evidence adduced at the hearing. Leave to amend was therefore granted.
[30]
Paragraphs 4(iv) and 142(ii) of the judge’s
reasons accurately reflect the scope of the conclusion sought by the
respondents. At paragraph 120 of his reasons, the judge concludes:
Given all of the foregoing, I am satisfied that
Ms. Posada, on behalf of POPS, granted at least an implied, non-exclusive,
licence to IDP to use Ceres and the various variations and adaptations of Ceres
that have been developed or partially developed by or on behalf of IDP, or in
collaboration with IDP …
[Emphasis
added.]
[31]
However, in the judgment as amended, the
following conclusions appear:
ii) [The respondent] 9054-8181 QUÉBEC
INC. (IDP) has a non-revokable licence to use Ceres,
the adaptations of Ceres known as Omega, Epsilon 1, Epsilon 2 and Comex, and
any future adaptations of those software products that may be developed by or
on behalf of IDP, for all purposes related to IDP’s pedagogical activities, namely,
pedagogical seminars. For greater certainty, pedagogical activities for this
purpose do not include the assignment, licensing or other transfer of, or
access to, such software to anyone other than IDP and those of its principals,
managers, employees or independent contractors who need to have access to the
aforementioned software products to give effect to this Order.
…
viii) The [appellants] shall provide to
IDP within 30 days of the date of this Judgment copies of the most recent
versions of Ceres, Omega, Comex and Epsilon, including the source code,
that were developed between 1998 and the effective date on which Ms.
Posada ceased to be an employee of IDP, and any prior versions of such
software that the [respondents] may identify and request in writing from the
[appellants] within 30 days of the date of this Order, and that are reasonably
available to the [appellants].
(Emphasis added to the amendments of June 17,
2013.)
[32]
The respondents’ argument to the effect that the
user licence sought necessarily included access to the source code is in no way
supported by the evidence adduced at the hearing. The respondents concede in
their memorandum that the judge did not indicate in his reasons that such
access was a condition of the implicit user licence or that such access was
necessary for the use requested. Although I agree that by submitting a joint
proposal for amendments to the judgment, the appellants acknowledged that
access to the source code was essential to give effect to the judgment as it
was worded on April 25, 2013, this does not allow me to conclude that such
access is also essential if the scope of the licence is limited to that which
was requested in the re-re-amended defence and counterclaim dated January 11,
2013.
[33]
I understand that according to the respondents,
this conclusion may pose difficulties if there are still “bugs” in the various existing versions and if the “cases” used for
pedagogical purposes must or may change over time. However, neither the judge
nor this Court can award more that what was sought in the proceeding by the
respondents.
[34]
Indeed, as our Court stated in Canadian
Private Copying Collective v. Canadian Storage Media Alliance, 2004 FCA 424
at paragraphs 173 and 174, the ultra petita principle, namely, that a Court will not
make a ruling beyond what is requested by the parties, is codified in article
468 of the Quebec Code of Civil Procedure. At common law, it is
generally recognized by the case law.
[35]
I therefore find it necessary to reformulate the
judgment to limit the scope of the licence to the use of all versions of Ceres,
Omega, Epsilon and Comex existing at the end of the collaboration between
Elizabeth Posada and IDP and for all purposes related to IDP’s pedagogical
activities as described in the judgment. It is also necessary, in my view, to
remove the reference to the source code from paragraph viii) of the judgment and
to amend it so that it requires that only the versions described above be
provided.
V.
REVOCABILITY OF LICENCE AND REPUDIATION
[36]
In their memorandum, the appellants address both
of these issues under a single heading. Therefore, I will do the same
(appellants’ memorandum at paragraphs 70 and following).
[37]
With respect to the scope of the user licence,
the appellants submit, at paragraph 71 of their memorandum that the judge erred
in law in determining that it was non-revocable. In their view, in order for
such a term to be implicitly included in the agreement, five conditions
developed in English case law and to which I referred to earlier (see paragraph
25 above) would have to be met. Among other things, the appellants argue that
such a term is neither reasonable nor equitable, as the respondents no longer
collaborate with Elizabeth Posada and there is therefore no consideration. They
add that such a term would also conflict with the fact that the licence was
effectively conditional upon continued collaboration between the parties.
[38]
The appellants further argue that the judge
erred in law because his conclusion is contrary to the principles enunciated in
Sookman, Computer, Internet and Electronic Commerce Law, Thomson
Carswell, 2014, Rel. 3 at pages 2-76.1. In this passage, the author indicates
that if a software licence supported by consideration that does not expressly
state the tenor of the licence, may include an implied term that as long as the
licensee does not misconduct himself, he can continue to use it.
[39]
I agree with the appellants when they indicate
in their notice of appeal that the contractual relationships between the
parties must be examined in light of the civil law even if certain aspects are
also regulated by the Copyright Act, R.S.C. 1985, c. C-42 (the Act). It
should be noted, however, that the appellants (and the respondents) asked the
judge to take into account various decisions issued in common law jurisdictions
and that they continue to rely on those decisions in this proceeding. This
explains the reference to such authorities in the judge’s decision.
[40]
It is of little use to dwell on the possible
application of English cases, particularly those that favour a step-by-step
approach (five conditions), to determine the implicit terms of a contract. Indeed,
I further note that at the hearing, the judge had specifically requested that
the appellants submit to him the most relevant case law for determining the
implicit terms of a licence. The English case law now cited by the appellants
to say that the judge erred in his approach was not brought to his attention.
This was confirmed at the hearing before us. Under such circumstances, the
appellants’ argument that the judge erred in law by failing to apply such case
law and the five conditions set out therein is somewhat surprising.
[41]
I am not convinced that the judge committed an
error of law that is extricable from his analysis concurring the true intention
of the parties and the terms of the implicit licence.
[42]
The rules for interpreting contracts in civil law
are well known. They are codified, inter alia, in articles 1426-1428 and
1432 of the Civil Code of Quebec. As the Supreme Court of Canada
indicated recently in Union Carbide Canada Inc. v. Bombardier Inc., 2014
SCC 35 at paragraphs 59 and 60, in Quebec, the interpretation of contracts is
centred on the intention of the parties. Once a valid contract is concluded, it
is recognized that there may be cases where the review of the elements
generally relevant to determine the intention of the parties shows that there
was no real common intention on a specific issue. Then, the Court has no choice
but to adopt the interpretation that can best be reconciled with the rest of
the contract and the circumstances in which it was concluded.
[43]
In this context and as consistently held by the
Quebec Court of Appeal, the conclusions of a trial judge with respect to the
interpretation of the intention of the parties is reviewable on the standard of
palpable and overriding error: Samen Investments Inc. c. Monit Management
Ltd., 2014 QCCA 826 at paragraph 52; Régie de
gestion des matières résiduelles de la Mauricie c.
Serres du St-Laurent Inc., 2013 QCCA 1607 at
paragraph 64; Primmum, compagnie d’assurances
c. Société d’assurances collective Sodaco, 2013 QCCA 1516 at paragraph 33; Compagnie
canadienne d’assurances générales Lombard c. CIT
Financial Ltd., 2012 QCCA 1811 at paragraph
18; Compagnie de chemin de fer du littoral nord de
Québec et du Labrador Inc. c. Sodexho Québec Ltée, 2010 QCCA 2408 at paragraph 81.
[44]
As he was required to do, the judge took into
account the nature of the written argument, and their wording and the nature of
the oral agreements throughout the relevant years during which the parties had
collaborated. He clearly examined the circumstances in which these agreements
had been concluded and the interpretation that the parties had given to these
by their conduct and in their exchanges (reasons at paragraphs 88, 89, 98 to
102, 108 to 120, 124, 128, 130 to 132).
[45]
In my opinion, there is no generally applicable
rule of law that would preclude a non-exclusive user licence from being
non-revocable when the licensee has provided consideration. Neither the law nor
the Act restrict the parties’ contractual freedom in this regard. In every
case, it is for the trial judge to determine the terms that are implicit in the
contract in light of all of the relevant contextual elements in civil law.
[46]
This is exactly what the judge did in this case
and the appellants have not established the existence of any palpable or
overriding error in this regard. Naturally, and as the appellants argue, the
expression “non-revocable” must not be understood
in its strictly narrow sense. It certainly means, as the judge indicated, that
the appellants cannot repudiate the licence unilaterally or wantonly. It is not
necessary to attempt to define the situations in which such a licence could be
repudiated because in this case and for the reasons that follow I am satisfied
that the appellants had no such right, whether the licence was revocable for misconduct
or non-revocable.
[47]
However, before discussing this issue, a few
brief comments on the other two submissions of the appellants (see paragraph 37
above) are in order.
[48]
First, I cannot accept the appellants’
submission that it is somehow unreasonable or unfair for IDP to no longer be
providing consideration after the collaboration ended. There is nothing unusual
about such an agreement, especially when one considers the price of the
licences granted by POPS at that time (namely, $2,000 for licences that are,
after all, perpetual (A.B., Vol. IV, Tab 42, pages 670-671)), and the fact that the parties had come to an understanding at
the beginning of 2007 that POPS would wind up its activities or at least become
dormant and would cease activities with respect to Ceres and its adaptations
(reasons at paragraph 100).
[49]
The judge concluded that IDP had provided
substantial consideration for the right to use all of the software products in
question (reasons at paragraphs 107(ii), 118 and 119).
[50]
Given the obsolete nature of the DOS version of
Ceres, the conditions set by the judge are perfectly reasonable in light of the
evidence that it was initially a cross-licence::POPS
or Elizabeth Posada could use IDP’s didactic material and IDP could use the
software for its training sessions and seminars.
[51]
As for the Windows version of Ceres (Omega), the
judge was perfectly aware of the appellants’ submission to the effect that the
first written agreement in 1998 included the words “à titre gracieux”, which the appellants interpret as “without
consideration” (reasons at paragraphs 124 and 126). However, in my
opinion, those words are not all that clear, given that IDP did commit to
collaborate on developing the Windows version.
[52]
The judge indicated that this collaboration
required a very significant investment of time and money (reasons at paragraphs
118 and 119). In my view, the judge’s finding that IDP had provided
consideration does not contravene the 1998 agreement. Indeed, the phrase “à titre gracieux”, read in its context, merely indicates that, at that time, the
parties were in agreement that no royalties or lump sum were payable for the
right to use the software developed through this collaboration.
[53]
Moreover, as the judge explained, this first
agreement was amended several times by means of subsequent agreements, which he
describes in detail in his reasons. I am satisfied that the judge made no
palpable or overriding error in concluding as he did at paragraph 107.
[54]
With respect to the second issue raised by the
appellants, the judge also expressly dismissed as not credible the testimony by
Elizabeth Posada that IDP’s licence was conditional on her continued
involvement in IDP (reasons at paragraph 130). He was satisfied that there had
always been an understanding between the parties that the respondents would
continue to have the right to use the programs (reasons at paragraphs 107i) and
112). Moreover, the judge indicated that from IDP’s perspective, it would not
have made sense, given its considerable investment in the development of Omega,
Epsilon and Comex over the course of many years, to find itself vulnerable to
the risk of having its user licence revoked by a unilateral decision on the
part of Elizabeth Posada (reasons at paragraph 130).
[55]
I will now address the issue of the breach of
the licence, whether it be a serious and egregious breach or even a fundamental
one. Once again, in their written and oral submissions, the appellants really
ask this Court to substitute its own assessment of the evidence for that of the
judge which is, as stated above, not the applicable standard of review. The
appellants had to demonstrate a palpable and overriding error and, in my
opinion, they failed to meet their burden in that respect.
[56]
First, at paragraph 131 of his reasons, the
judge found that IDP respected the terms of its agreement. In my view, that
finding is unassailable.
[57]
I am also satisfied that the judge did not
commit a palpable and overriding error when he found that IDP was not guilty of “misconduct” before being
demanded, on October 20, 2008, by counsel for the appellants to cease any and
all use of the software (reasons at paragraphs 123 to 139).
[58]
To arrive at that conclusion, among other
things, the judge rejected Elizabeth Posada’s interpretation of an e-mail dated
October 9, 2008, which, according to the evidence in the record, seems to have
led to the intervention of counsel for the appellants. The judge’s assessment
based on the probative value of the testimonies heard and the documentary
evidence before him is once again unassailable (reasons at paragraphs 133 and
134). That is surely why the appellants insisted on the judge’s interpretation
of an e-mail from Philippe Chapuis to Elizabeth Posada dated October 23,
2008.
[59]
First, I note that this e-mail was
subsequent to the demand made on October 20, 2008, and that it was sent in
response to an e-mail from Elizabeth Posada on that same date. In that e‑mail,
Elizabeth Posada alleges that Philippe Chapuis [translation] “publicly stated that he had rights to the simulation”. Evidence
of such statements in the normal course of events was not submitted.
[60]
Second, contrary to what
the appellants are suggesting, in my view, the judge did not disregard the fact
that Philippe Chapuis stated, among other things, that it is consistent with the
Act to maintain that the tools developed by employees of IDP and consultants
paid by IDP belong to the company (reasons at paragraph 137). It is also
relevant to note that Philippe Chapuis confirmed that he is not disputing the
ownership rights in Ceres, contrary to what Elizabeth Posada implied in her
e-mail, but that he would like counsel for Elizabeth Posada to provide him with
documentation attesting to her rights, particularly with respect to the
participation of Andrew Szendrovits.
[61]
Before receiving the letter dated October 20,
2008, the evidence shows that the respondents had always assumed in good faith
that Elizabeth Posada or POPS was the owner of all rights in Ceres. However, as
stated by the judge, that was not accurate. Elizabeth Posada was only one of
the authors of Ceres and POPS had only the rights granted to it by the authors
under the Promotion Contract (see paragraph 10, above).
[62]
The comment made regarding the ownership of the
programs developed by IDP employees was completely appropriate, especially
considering the context in which the e-mail was sent. The judge provided a good
explanation of this context in paragraphs 132 to 139 of his reasons. It should
be pointed out that, in the negotiations that followed, counsel for the
appellants limited their request to recognition of POPS’ rights in respect of
the source code developed before February 2007 (see letter by counsel dated
October 24, 2008 (A.B., Vol. I, Tab 8, pages 159‑160)).
[63]
There is nothing here to warrant the
intervention of this Court.
VI.
INFRINGEMENT OF COPYRIGHT
[64]
In light of the foregoing, it was clearly open
to the judge to conclude that there was no infringement of POPS or Elizabeth
Posada’s copyright because IDP did not use the various programs that are the
subject of the appeal without the appellants’ consent (subsection 27(1) of the
Act).
VII.
EXPUNGEMENT OF CERTIFICATE OF REGISTRATION OF
COPYRIGHT NUMBER 1079833
[65]
As previously stated, the judge struck the
Certificate of Registration of Copyright that identifies Elizabeth Posada as the
sole author and POPS as the sole owner of the rights in respect of the literary
work described as follows: Epsilon a.k.a Comex—approximately 20 lines of source
code or data, used in conjunction with business simulation software.
[66]
First, the appellants submit that the judge
failed to provide adequate reasons for his decision to expunge the certificate.
They argue that since the judge recognized that POPS was the owner of the
copyright in Omega, Epsilon and Comex, he could not come to this conclusion
given the evidence in the record.
[67]
In addition, the appellants argue that the work
covered by the certificate is a compilation in which only POPS may claim to be
the owner of copyright (appellants’ memorandum at paragraphs 106 to 111).
[68]
Such a certificate of registration is evidence that the
copyright subsists and that the person registered is the owner of the
copyright. The presumption created by the certificate can be rebutted by
credible evidence to the contrary (Fox on Canadian Law of Copyright
and Industrial Designs, 4th ed. (Toronto: Carswell, 2014) at page 20-6; Hughes
on Copyright & Industrial Design, 2nd ed. (Markham: LexisNexis Canada, 2005) at pages 422 and 423).
[69]
It is important to note that the formal judgment
contains only one paragraph with respect to POPS’ rights—that it is the owner
of the copyright in Ceres subject to the rights that Jérôme Doutriaux and
Jean-Paul Sallenave may have. As previously stated, the judge in his reasons
simply concluded that POPS is one of the owners of the other products (see
paragraph 18, above).
[70]
Furthermore, with respect to Epsilon and Comex,
the judge was satisfied that the respondents rebutted the presumption created
by the registration of the certificate (reasons at paragraph 122) and that, for
the reasons stated in section C. (reasons at paragraphs 104 to 122 and, given
the reference in paragraph 107, reasons at paragraphs 85 to 103), the
respondents’ request that the certificate be struck should be granted (reasons
at paragraph 144). Like any other decision, these reasons must be read in their
context and in view of all of the evidence in the record.
[71]
In my opinion, although it would have been
preferable for the judge to group the main elements that supported his
conclusion under the same heading, this is not a satisfactory reason to
invalidate his decision to expunge because I am satisfied that this conclusion
is cogent considering the evidence in the record and the judge’s findings of
fact.
[72]
Indeed, even though the respondents never asked
the judge, in their re-re-amended statement of defence and counterclaim, to
issue a declaration that they are the owners of the copyright in Epsilon or
Comex, the fact remains that the judge had the duty to consider all of the
evidence before him in order to determine whether their request that the
certificate be struck should be granted.
[73]
It is far from clear that the certificate
relates to a compilation rather than the 20 lines of source code to which it
specifically refers. The description that follows the reference to these lines
of code appears instead to explain or illustrate the context in which they are
used.
[74]
From this perspective and in view of the judge’s
factual finding that Elizabeth Posada was working for IDP when these lines of
code were written and that her job included developing Epsilon and Comex, the
rule set out at subsection 13(3) of the Act applied and unless otherwise
stipulated, IDP (the employer) was the first owner of the copyright.
[75]
The judge therefore could not ignore that under
this provision neither Elizabeth Posada (the author) nor POPS (her dormant
company) could claim to be the sole owners of the copyright in the absence of a
specific agreement to that effect with IDP.
[76]
It is clear to me that the judge was not
satisfied that such an agreement existed with respect to Epsilon and Comex
(reasons at paragraph 132). On this point, the appellants had the burden of
proof, as IDP benefited from the rule provided at subsection 13(3) of the Act.
I am satisfied that the evidence in the record was therefore sufficient for the
judge to strike the certificate that contained an erroneous description of the
copyright owner.
[77]
Similarly, if, as the appellants assert, the
certificate refers to a compilation (the software as a whole), I am satisfied
that the evidence in the record was sufficient for the judge to strike the
certificate.
[78]
The appellants devoted only one paragraph in
their memorandum to this point (appellants memorandum at paragraph 111).
Further, the evidence they offered regarding this compilation is thin. It
amounts to little more than a few pages of Elizabeth Posada’s testimony (A.B.,
Vol. VI, Tab 45, pages 1039 to 1040 and 1109 to 1112). No expert was called to
testify. According to Elizabeth Posada, Epsilon is a complete software package
that includes the Windows interface and the same calculation libraries as
Omega, with the exception of the 20 lines of code described in the certificate.
[79]
I note that the originality of a work is not
measured by the number of lines. Indeed, Elizabeth Posada confirmed that the
new links between the equations that these 20 lines of code represent took a
lot of time and were difficult to create. As for the additional comments of the
witness on the three main components of simulation software, they seem to apply
as much to Omega as to Epsilon, which is in large part a product that was
derived from Omega. I therefore examined the evidence on the record as to who
the authors of the compilation are and who are the owners of the copyright
based on its simplest description, namely, that it is Omega plus the 20 lines
of code. This holds true, even though the certificate itself does not refer
directly to Omega but instead includes a generic reference to simulation
software.
[80]
As I have stated, Elizabeth Posada obtained a
Certificate of Registration of Copyright for Omega on July 29, 2010 (A.B.,
Supplementary Book 1, Tab 50, page 14).
[81]
This certificate describes Omega’s authors as
being:
Elizabeth Posada
Andrew Szendrovits (author’s death:
November 22, 1999)
Fernando Romero
[82]
Omega is described as “a
Windows software adaptation of the Ceres business simulation software”. It
is therefore, according to Elizabeth Posada, also a compilation, but without
the adjustments and the 20 lines of code developed for Epsilon when she was
employed by IDP.
[83]
It is therefore obvious that the Epsilon
certificate, if it does in fact refer to the three main components Omega and
the 20 lines of code, should include other authors such as Fernando Romero who,
according to the contract in the record (A.B., Supplementary Book 1, Tab 49,
page 8) effectively programmed the Windows interface of Ceres. Regardless of
whether or not this author transferred ownership of his copyright to POPS, it
in no way alters the fact that he remains an author. He should therefore have
been included as an author, along with Andrew Szendrovits, on certificate
number 1079833 referring to Epsilon a.k.a. Comex.
[84]
Furthermore, it matters little whether Elizabeth
Posada is the sole author or one of several authors of Epsilon a.k.a. Comex.
Indeed, according to Elizabeth Posada’s testimony, the 20 lines of code that
were written when she was employed by IDP are what distinguish Epsilon from
Omega. Therefore, even if she were the sole author of Epsilon, it appears to me
that this compilation could only have been created in the context of that
employment and at a time when POPS was dormant. Under subsection 13(3) of the
Act, IDP is, in the absence of an agreement to the contrary, the first owner of
the copyright (see paragraphs 74 to 76 above).
[85]
Due to the erroneous or incomplete information
contained in the Epsilon certificate, it was open to the judge to strike it
even if Epsilon is considered to be a compilation.
VIII.
COSTS OF $20,000
[86]
The appellants submit that the judge erred in
law by awarding $20,000 in costs solely to the respondents when the appellants
had nonetheless obtained confirmation that they held the copyright for Ceres.
In cases in which neither party can claim an outright victory, the rule is that
each party is expected to bear its own costs.
[87]
The allocation of costs is a discretionary
decision of the judge. In the judge’s view, the respondents were the party that
was primarily successful. Furthermore, he added that Philippe Chapuis had
confirmed in October 2010 that the respondents were not claiming copyright over
Ceres and this is the only finding in the appellants’ favour (reasons at
paragraphs 167 and 169). The judge further noted at paragraph 152 of his
reasons that the appellants’ conduct throughout the proceeding unquestionably
caused the costs incurred by the respondents in their defence to increase
significantly. Such considerations are relevant under subsection 400(3) of the
Rules. The appellants have not established the existence of any error that
would warrant the intervention of this Court, especially if one considers the
fact that the $20,000 lump sum awarded to the respondents represents only a
small fraction of the actual costs incurred.
[88]
In addition, there is no need to change the
allocation of the trial costs even if, for reasons set out above, some parts of
the formal judgment mostly those amended as a result of the appellants’ motion
should be reformulated. However, with respect to the appeal costs, given that
each party had at least some degree of success, I propose that each party bear
its own costs.
IX.
CONCLUSION
[89]
In conclusion, I propose that the appeal be
dismissed, except for that part of the judgment relating to the scope of the
licence, which should be reformulated as follows:
ii) [The
respondent] 9054-8181 QUÉBEC INC. (IDP) has a
non-revokable licence to use Ceres, the adaptations of Ceres known as Omega,
Epsilon 1, Epsilon 2 and Comex, for all purposes related to IDP’s pedagogical
activities, namely, pedagogical seminars. For greater certainty, pedagogical
activities for this purpose do not include the assignment, licensing or other
transfer of, or access to, such software to anyone other than IDP and those of
its principals, managers, employees or independent contractors who need to have
access to the aforementioned software products to give effect to this Order.
viii) The [appellants] shall provide to
IDP within 30 days of the date of this Judgment copies of the most recent
versions of Ceres, Omega, Comex and Epsilon, that were developed before the
effective date on which Ms. Posada ceased to be an employee of IDP, and any
prior versions of such software that the [respondents] may identify and request
in writing from the [appellants] within 30 days of the date of this Order, and
that are reasonably available to the [appellants].
"Johanne Gauthier"
“I agree
Pierre Blais C.J.”
“I agree
Robert M. Mainville J.A.”
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