Parody Cannot be Relied on as a Defence to Copyright Infringement if it Causes Marketplace Confusion

Parody has been a fair dealing exception to copyright infringement in Canada since 2012. However, the scope that this defence would be afforded in Canadian law has been uncertain. This issue came under the spotlight in the 2017 case of  United Airlines, Inc. v. Cooperstock.

It all began with a series of unpleasant flights in the spring of 1996. A frustrated Dr. Cooperstock shared his unpleasant experiences on his website, which soon garnered the attention of other disgruntled United passengers. As the website’s popularity grew, it evolved into UNTIED.com, a parody website dedicated to lodging complaints against and listing the failings of United Airlines.

In 2011, Dr. Cooperstock redesigned UNTIED.com to intensify his spoof of the United website, mimicking both United’s logos and its webpage layout. From there on, Dr. Cooperstock updated UNTIED.com regularly to mirror the latest design of United’s website. In 2012, responding to demands made by United, Dr. Cooperstock made minor alterations to the spoof logos and added disclaimers. However, unimpressed with Dr. Cooperstock’s effort, United launched a lawsuit for both trademark and copyright infringement.

Justice Phelan decided the case and found in favour of United on both trademark and copyright infringement. Regarding trademark infringement, Justice Phelan concluded that the spoof marks were confusingly similar to United’s original marks, as there was evidence consumers believed the had properly submitted complaints to United for resolution via the UNTIED.com website. Moreover, the marks on Dr. Cooperstock’s website were used in connection with the service of lodging and resolving complaints, which was a service notwithstanding that no money changed hands. Furthermore, Justice Phelan reiterated the principle that parody and satire are not defences to trademark infringement.

Regarding copyright infringement, Justice Phelan had no difficulty in finding that the elements of the offence were met. There had clearly been substantial copying, and the only issue was whether Dr. Cooperstock could rely on the fair dealing exception of parody. To do so, Dr. Cooperstock had to establish that his UNTIED.com is a parody and that his dealing was fair. He succeeded on the first element but failed on the second.

In particular, Justice Phelan questioned whether the parody exception may successfully be invoked when there is confusion, since parody depends on the recipient recognizing that the work in question is a spoof. As Justice Phelan observed, this has direct implications for the effect of parody. Although harmful commercial consequences due to negative commentary inherent in a parody is fair, harmful consequences arising from the public being confused between the copyright owner and the parody is not. Justice Phelan made clear that a parody should use alternatives that do not cause confusion to be able to rely on the fair dealing exception, and indeed Dr. Cooperstock had made use of such alternatives prior to the 2012 redesign of his website.

Other factors that weighed against Dr. Cooperstock were the purpose of the dealing and the amount of the dealing. With regard to the purpose of the dealing, a parody is less likely to be fair if its real purpose is to defame and punish rather than to mock with humour. Likewise, the dealing is less likely to be fair if the amount is excessive.

In summary, if you are making parodies, it is prudent to clearly distinguish the spoof from the original to avoid a likelihood of confusion. On the other hand, if you are a rights holder wishing to stop a parody, it may help to highlight unwarranted harms due to the parody or malevolent intent on the part of the parodist.

By Kevin Wang and Jennifer A. Marles

 

CIPO Releases IP Canada Report for 2019

The Canadian Intellectual Property Office (CIPO) has released its IP Canada Report for 2019, presenting current statistics and trends on the use of intellectual property in Canada and internationally by Canadians.

 The Report can be viewed on CIPO’s website, and key insights include that the use of the Canadian IP system continued to increase in 2018, with patent applications increasing by 3% and trademark applications increasing by 7% over 2017.  The top countries in which Canadians file abroad include the United States, China and Europe, and correspondingly those regions are the largest sources of incoming foreign applications into Canada.

 

Starbucks Trademark Trouble Brewing For Small Alaskan Apparel Company

Mountains & Mermaids, a small Alaskan online clothing retailer is clashing with coffee giant Starbucks over the use of the term “Siren” in their respective businesses.  Many of the Alaskan company’s casual wear products sport a design featuring a siren holding a coffee cup.  The company recently began using the design on coffee.

Last year the Alaskan company filed US trademark applications for SIREN’S BREW in respect of certain clothing items and coffee beans.  Earlier this year Starbucks applied to register the trademark SIREN’S BLEND for coffee products. The US Trademark Office rejected Starbucks’ application, citing “likelihood of confusion” with the Alaskan company’s earlier-filed trademark application for SIREN’S BREW in respect of coffee beans.

Starbucks is now opposing the Alaskan company’s SIREN’S BREW trademark application on the basis of Starbucks’ longstanding association of coffee with a siren through its famous green logo.

Read more here.

 

Federal Court of Canada Determines ISPs’ Reasonable Costs of Compliance with Norwich Orders

Due to a perceived cloak of anonymity on the Internet, Internet users may consider their activities online to be anonymous. This sense of anonymity is erroneous as copyright holders can seek Norwich orders, a form of pre-trial discovery, to compel Internet Service Providers (“ISPs”) to disclose identifying information about the alleged intellectual property infringers so that lawsuits can be brought against them. ISPs are entitled to be paid reasonable costs to comply with Norwich orders. In a recent decision, the Federal Court of Canada assessed what reasonable costs are.

In 2016, the Federal Court granted a group of film production companies (“Voltage”) a Norwich order compelling Rogers Communications Inc. (“Rogers”) to disclose the name and address of one of its Internet subscribers who was alleged to have infringed Voltage’s copyright: 2016 FC 881. This Internet subscriber, then identified as John Doe and now the defendant Robert Salna, is the proposed representative respondent in a “reverse” class action lawsuit being brought by Voltage against about 55,000 other unidentified Internet subscribers. Voltage alleged these subscribers infringed copyright in motion pictures owned by Voltage or its related companies through unauthorized file sharing over the Internet.

The Federal Court allowed Rogers to charge Voltage $100 per hour (plus HST) for assembling, verifying, and forwarding the Internet subscriber information. The Federal Court of Appeal allowed Voltage’s appeal and held that Rogers was not entitled to charge a fee for discharging its statutory obligations under the notice-and-notice regime set out in the Copyright Act but could recover reasonable costs for complying with the Norwich order: 2017 FCA 97.

The Supreme Court of Canada allowed Rogers’ appeal. The Supreme Court of Canada agreed with the Federal Court of Appeal that Rogers was not entitled to charge a fee for discharging its statutory obligations and found that the requirement under the Norwich order for Rogers to provide information identifying a particular customer falls outside the scope of Rogers’ statutory obligations: 2018 SCC 38. The Supreme Court of Canada sent the case back to the Federal Court to assess Rogers’ reasonable costs to comply with the Norwich order. On August 6, the Federal Court released its decision assessing what costs are reasonable.

How much time in responding to the Norwich order is reasonable?

To comply with the Norwich order, Rogers is required to verify which Rogers’ Internet subscriber the IP address belonged to in five different instances, i.e. “at five time stamps”.

Rogers’ evidence shows that to look up ten IP addresses and their associated subscriber information at two time stamps, Rogers follows six steps and spends about 247 minutes to:

  1. review the court order and identify the relevant Rogers IP addresses (33 minutes);
  2. log the request to permit it to be tracked through the workflow process, and also to ensure that the screenshots and information generated and saved during the search can be found in the future if needed (14 minutes);
  3. search IP address logs in the Dynamic Host Configuration Protocol [DHCP] database to find an alphanumeric identifier [MAC address] of the cable modem that was linked to that IP address at the relevant date and time (31 minutes);
  4. use the MAC address to search a separate Rogers database, Super System Graphic Interface [SGI], to find the customer associated with the cable modem at the relevant time (97 minutes);
  5. compile all of the information into an Excel file (26 minutes); and
  6. have an investigator review the information collected by the security analysts as a quality assurance measure, check the information against a “duplicate modem list”, and finalize the Excel file containing the required information (46 minutes)(at paragraph [35]).

The Federal Court noted that under the notice-and-notice regime, Rogers has the following statutory obligations under subsection 41.26 of the Copyright Act:

(1) determining, for the purposes of forwarding notice electronically, who was assigned the IP address at the time of the alleged infringement; (2) taking all steps necessary to verify the ISP has done so accurately; and (3) taking all steps necessary to verify the accuracy of records to permit the ISP to identify the name and physical address of the person to whom notice was forwarded (at paragraph [52]).

The Federal Court found that some of the six steps that Rogers took to comply with the Norwich order overlap with Rogers’ statutory obligations. Such overlapping steps are not compensable because they are not directly related to the Norwich order.

The Court found that only the following steps are compensable and Rogers is entitled to recover a total of 23.05 minutes per time stamp (or a total of 23.05 minutes x 5 = 115.25 minutes for five time stamps to identify one subscriber):

  1. reviewing the order and identifying the relevant Rogers IP addresses; this step takes 1.65 minutes per time stamp;
  2. logging the request to permit it to be tracked through the workflow process, and also to ensure that the screenshots and information generated and saved during the search can be found in the future if needed; this step takes 0.7 minutes per time stamp;
  3. linking between the cable modem and the customer name and current address on file in Rogers’ billing system; this takes 19.4 minutes per time stamp; and
  4. compiling all of the information into an Excel file; this step takes 1.3 minutes per time stamp(at paragraph [64]).

What hourly fee is reasonable?

The Federal Court undertook a detailed analysis and calculation based on employee costs and found that a reasonable hourly fee for Rogers’ compliance with the Norwich order is $35 pertaining to the wages paid to an employee at the Lawful Access Response Department at Rogers: at paragraph [86].

The Federal Court concluded that Rogers’ reasonable costs to comply with the Norwich order are about $67.23 (plus HST) for searching and disclosing one single subscriber’s name and address information ($35 x 115.25 minutes/60 minutes = $67.23).

Concluding Remarks

As copyright owners increasingly seek Norwich orders to peek under the perceived cloak of Internet anonymity, ISPs play an important function in policing IP infringement, albeit as an intermediary that holds relevant information rather than as a directly involved party.

The costs charged by ISPs to respond to a Norwich order are not uniform: at paragraphs [78]-[79]. For example, Bell spends about 20-45 minutes per IP address and charges $50. Shaw spends between 30 minutes and several hours per IP address and charges $250 per hour. This decision may have important ramifications for such fees charged by ISPs as it sets out the relevant factors to consider in assessing what costs are reasonable and may in future lead to more uniform costs charged by ISPs for taking these steps. Lower costs to obtain the identity of allegedly infringing subscribers may encourage more copyright holders to pursue legal action directly against such subscribers.

Amgen to Purchase Otezla® (apremilast) from Celgene Corporation

Amgen has announced that it has agreed to purchase worldwide rights to Otezla® (apremilast) from Celgene Corporation for US $13.4 billion. Otezla® provides an oral therapy for the treatment of psoriasis and psoriatic arthritis and is seen by Amgen as a strategic acquisition that complements its existing line of products directed at treating inflammatory conditions. In particular, Otezla® is a non-biologic medication, while Amgen’s existing Enbrel® (etanercept) is a biologic and AMGEVITA® is an adalimumab biosimilar.  Both of these existing products are also marketed for the treatment of various inflammatory diseases.

This agreement follows the announcement by Britsol-Myers Squibb Company of its intent for the divestiture of Otezla® to allow for the timely completion of its merger with Celgene Corporation in light of the U.S. Federal Trade Commission’s review.

In 2018, Otezla®’s sales were $1.6 billion. Amgen’s announcement of the $13.4 billion deal cites Otezla®’s patent exclusivity through at least 2028 in the U.S., suggesting patent protection for Otezla® created greater value for the product and helped secure the significant amount of the deal.

Read more here.

Singapore Launches Mobile App for Trademark Applications

The Intellectual Property Office of Singapore (IPOS) has recently released the world’s first mobile application for filing trademark applications. The app, IPOS Go, provides an AI search function for similar image marks and allows applicants to submit trademark applications within about 10 minutes. The introduction of IPOS Go is timely as the number of trademark application in Singapore has been on a steady rise over the past few years.

Read more here.

Proposed United States Copyright Small Claims Program Receives Additional Support

Proposed legislation that would create a small claims program to quickly and economically adjudicate copyright small claims within the United States Copyright Office has received the support of the American Bar Association. Under the proposed program, parties to the proceedings could participate by telephone or videoconference and the proceedings could be decided by experienced lawyers rather than judges.  Read more here.

 

Upcoming Changes to the Patent Drug Pricing System

The Canadian Federal Government has recently announced new regulations pertaining to the evaluation of pricing for newly patented drugs. These regulations aim to protect Canada from excessive drug pricing at a time when, according to Health Canada, Canada has some of the highest patented drug prices in the world. These regulations prevent the Patent Medicine Prices Review Board (the “Board”) from conducting a comparison with the drug’s pricing in the United States and in Switzerland to set Canadian pricing. This restriction has been put into place because the United States and Switzerland currently have some of the highest drug prices worldwide. Instead, when determining pricing, the Board can conduct comparisons to drug pricing in France, Germany, Italy, Japan, Spain, Norway, Australia, Belgium and the Netherlands. These regulations come into effect in July 2020 and Health Canada forecasts they could save Canada billions of dollars over a ten-year period.

Read more about the changes here.

Can AI stand for Artificial Inventorship?

Researchers from the University of Surrey and the inventor of Dabus AI, an artificial intelligence algorithm, have stoked discussion around whether a machine can be recognized as an inventor for the purpose of securing patent protection. The group, as part of The Artificial Inventor Project, recently filed two patent applications with the US, UK, and European patent offices on behalf of Dabus AI, arguing that the algorithm should be credited with inventorship because it was not trained to perform specific tasks and independently invented in areas beyond the background of its programmer.

The patent applications describe food containers handled by robotic arms and a warning light that flickers in a manner that is difficult for a person to ignore, respectively.

A European Patent Office spokesperson commenting on the Dabus AI patent applications stated that “it is a global consensus that an inventor can only be a person who makes a contribution to the invention’s conception”. Indeed, in the U.S., the Constitution states that patents are to be granted to inventors, and an inventor is a person who contributes to at least one claim of a patent application. UK patent law similarly requires human inventorship for patent protection. In Canada, although the term inventor is not defined in the Patent Act, the Supreme Court of Canada has interpreted the term as “the person or persons who conceived of” the invention1 by contributing to the inventive concept of at least one claim of the patent application.

Requiring human inventorship precludes AI from being recognized as an inventor and any legal rights flowing to the programmer or owner of the AI algorithm. As a result, inventions created by machines are effectively not patentable if AI is not recognized as an inventor.

The researchers point out this issue extends to other fields of intellectual property such as copyright protection for works authored by AI. However, they also acknowledge that it is a complex issue that will likely require many years for lawmakers to appropriately address.

1Apotex Inc. v. Wellcome Foundation Ltd. 2002 SCC 77 at para 96

 

Katy Perry’s “Dark Horse” copied a Christian rap song, California jury finds

On 30 July 2019, a Los Angeles jury reached the verdict that Katy Perry’s 2013 hit song “Dark Horse” copied a Christian rap song called “Joyful Noise”.

Despite Katy Perry and her co-writer Dr. Luke’s testimony that they had never heard the song “Joyful Noise”, the jury was persuaded by the plaintiff’s argument that the song was widely disseminated given the fact that “Joyful Noise” had millions of views on YouTube and Myspace and that the song had a degree of critical success (including a Grammy nomination). As a result, the jury found that there was a reasonable possibility that the defendants, who are experienced professional songwriters, had access to the work.

In terms of similarity, the plaintiffs argued that its “descending ostinato 8 figure” instrumental beat was substantially similar to that of “Dark Horse” and that this beat served as “the primary formal building block for both tracks”. In response, the defendants argued that such basic musical patterns are not entitled to copyright protection and that the plaintiffs are effectively trying to own “basic building blocks of music”. Ultimately, the jury sided with the plaintiffs and found that the beat is entitled to copyright protection and that there is substantial similarity between the two songs.  Read more here.

 

 

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