Law Times

Law Times • December 5, 2016 Page 13 www.lawtimesnews.com Court endorsement of fair dealing rights splits bar BY MICHAEL MCKIERNAN For Law Times T he copyright bar is split over a Federal Court en- dorsement of fair deal- ing rights in a dispute between a government depart- ment and a subscription news service. Blacklock's Reporter sued the federal government for more than $17,000 after an official in the Department of Finance got hold of two articles from behind the online publication's paywall, before reading and distributing them to colleagues without pay- ment or authorization. The damages requested by Blacklock's equated roughly to the cost of a bulk subscription for around 700 of the department's employees, but in 1395804 Ontario Ltd. (Blacklock's Re- porter) v. Canada Attorney General, Federal Court Justice Robert Barnes dismissed the claim, finding the government's use of the copyrighted material was protected by the fair dealing provisions in the Copyright Act. Howard Knopf, counsel to Ottawa-based intellectual prop- erty law boutique Macera & Jarzyna LLP, says it would have shocked him to see the case go the other way, but he was partic- ularly pleased by Barnes' finding that "whatever business model Blacklock's employs it is always subject to the fair dealing rights of third parties." "That's something that con- stantly needs to be reinforced. These are rights for people under the Copyright Act, not excep- tions or loopholes," Knopf says. "The Supreme Court of Canada gets it, the Copyright Board gets it and this judge gets it." However, Barry Sookman, co-chairman of McCarthy Té- trault LLP's technology law group in Toronto, says the deci- sion represents bad news for the newspaper industry in Canada, as well as other services that rely on paid subscriptions for sur- vival. "The reason that I'm critical of the decision is that it gets fair dealing wrong. But it's also be- cause of the underlying problem that if exceptions are read more broadly than they should be to reach a result that means freer and easier access to copyrighted material, it will ultimately un- dermine very important busi- ness models that support indus- tries that are critical to Canada," Sookman says. "If it becomes widespread that a person can go through a paywall to download material and send it to others, then there is less incentive and less revenue available to invest in original material. That has the potential to undermine the newspaper industry and the critical role they play in a de- mocracy." But "the sky is not falling on journalism," according to Knopf. "People share stuff for le- gitimate fair dealing reasons all the time from news sources like The Economist, The New York Times and Ottawa's Hill Times. These are successful news or- ganizations, and probably part of the reason is that they know there is going to be a certain amount of leakage through their paywalls," he says. "They have more responsive business mod- els, and they don't sue their cus- tomers or potential customers." The case has its roots in a 2013 Blacklock's article on sugar tariffs that quoted Sandra Mars- den, president of the Canadian Sugar Institute. When Tom Kor- ski, the site's managing editor, emailed Marsden a summary version of the story under the headline "$30,000,000 Sugar Tax Is Averted," she worried about the accuracy of the story, according to Barnes' judgment. Fearing her statements could be linked to an unf lattering characterization of the Depart- ment of Finance, damaging her relationship with officials in the office, Marsden signed up for a $148 Blacklock's subscription to read the full article. She then cop- ied the story and forwarded it to a contact in the finance depart- ment, noting that she disagreed with Korski's "spin" on the story. Marsden did the same thing with a second story on the same subject, and copies of one or both articles ended up with six departmental officials as they considered a possible response. "I am satisfied that the De- partment's acknowledged use of the two Blacklock's articles constituted fair dealing," Barnes wrote in his Nov. 10 judgment. "There is no question that the circulation of this news copy within the Department was done for a proper research pur- pose. There is also no question that the admitted scope of use was, in the circumstances, fair." Marsden forwarded the ar- ticles for a "legitimate business reason," Barnes concluded, while the Finance department received and read them "for a legitimate business purpose." All six department employees who viewed the article needed to be in the loop in case further action was deemed necessary, and no commercial advantage was sought or gained as a result, Barnes added. Korski said he couldn't comment on the case, which has resulted in a costs claim of $115,000 from the victorious defendants. The fate of nine further actions by Blacklock's against the Crown, stayed pend- ing the outcome of this one, is also up in the air while the ap- peal window remains open. David Fewer, director of the Canadian Internet Policy and Public Interest Clinic, says he welcomes the decision's "robust defence of fair dealing." "The purpose of the Copy- right Act is to protect these kinds of use, and Canada is a better place for having copyright laws that allow them," Fewer says. However, Sookman says he has problems with Barnes' rea- soning on the issue of fair deal- ing. "The Supreme Court of Can- ada has said that research ought to be interpreted broadly, but the judge here has essentially said that any reading is research, which is fundamentally wrong," he says. In addition, he says, Mars- den's initial distribution of the article was illegal, since it violat- ed Blacklock's terms of service. "You can't deal fairly with an infringing copy, especially as Canada would have known that articles are only available under subscription," Sookman says. Mark Evans, Toronto man- aging partner at intellectual property law boutique Smart & Biggar, says that while Barnes declined to rule on Canada's al- legation that Blacklock's action was a misuse of copyright, he expects that issue to return in future litigation. "He doesn't spend much time on copyright trolls, as it wasn't key to the decision, but it's not an insignificant issue here in Cana- da," Evans says. Blacklock's had previously had some success before the courts, winning a small claims case in late 2015 against the Ca- nadian Vintners Association af- ter the group's non-subscribing president had a friend forward him a copy of an article that quoted him. In that case, the deputy judge ruled fair dealing did not apply because of the pay- wall circumvention. Jill Tonus, head of the copy- right and digital media prac- tice group at Bereskin & Parr LLP, says she was happy to see a higher court take on some of the copyright issues presented by Blacklock's legal actions. "There are some differing facts, but I think the Federal Court decision is much more consistent with what you would expect when it comes to fair dealing," she says. LT Untitled-2 1 2016-11-29 2:17 PM INTELLECTUAL PROPERTY LAW Mark Evans says that while a Federal Court justice declined to rule on the federal gov- ernment's allegation that an online pub- lication's court action was a misuse of copyright, he expects that issue to return in future litigation. The Supreme Court of Canada gets it, the Copyright Board gets it and this judge gets it. Howard Knopf

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