Copycat Caught – Fair dealing is no defence when 100% of work is copied

On March 8, 2016, Justice Manson held that PS Knight Co Ltd infringed copyright in the Canadian Standards Association’s 2015 CSA Code. This is the latest decision in an ongoing legal battle between Knight and the CSA. See our previous blog post here.

The CSA is an organization that develops standards. The CSA claims copyright in the 2015 CSA Code, a complete code of electrical standards. Knight produced and threatened to distribute a substantial copy of the 2015 CSA Code (“Knight Code”). The issues before the Court were (1) whether copyright subsists in the 2015 CSA Code and if so, whether the CSA owns that copyright, (2) whether Knight had a defence based on a licence or fair dealing and (3) what, if any, remedies should be granted.

Justice Manson found that copyright subsists in the 2015 CSA Code as it is an improvement over previous versions that required a substantial undertaking of skill and judgment to create:

An improvement is an original work and capable of separate copyright when the additions and improvements to a previous work are substantial (DRG Inc v Datafile Ltd, [1988] 2 FC 243 (FCTD); aff’d [1991] FCJ No 144 (FCA), quoting from Fox, The Canadian Law of Copyright and Industrial Design, (2nd ed 1967), at p. 4). The evidence of Mr. Morton is that thousands of hours went into the production of the latest edition of the CSA Code. This constitutes a substantial undertaking of skill and judgment. Given the evidence that the CSA has obtained the assignments from many, if not all, the authors who contributed to those improvements, the CSA owns the copyright in the current 2015 edition to the extent these authors’ additions and improvements are manifest in the 2015 CSA Code.

The CSA’s ownership of the copyright was established based on section 34.1(2)(a) of the Copyright Act, which provides that if the name of the author is indicated on the work there is a presumption that the author owns valid copyright.

In attempting to refute the CSA’s ownership, Knight argued that any copyright belonged to third parties since the CSA simply created the code based on contributions from independent authors and did not produced assignments from those authors. Knight also argued that the CSA is a government organization and that because the 2015 CSA Code is incorporated by reference into provincial law the Crown owns the copyright. Knight also attempted to argue that law incorporated by reference forms part of the public domain and could not be copyrighted. Justice Manson rejected all of these arguments, noting that the CSA is not a government organization or under government control and that there was no reasonable evidence before the Court to dispute the CSA’s ownership in the 2015 CSA Code.

In considering whether Knight had a valid defence to copyright infringement because of a licence or because the Knight Code is a fair dealing Justice Manson held there was no licence and that Knight could not rely on fair dealing as the Knight Code is a complete copy of the 2015 CSA Code:

Knight cannot rely on fair dealing as the allegedly infringing Knight Code work is a complete copy of the 2015 CSA Code. One of the considerations enunciated by the Supreme Court of Canada in CCH, above, was the extent of the copying. When 100% of a work is copied, the dealing cannot be fair. Further, the argument that it is for educational purposes has no merit. The Knight Code is clearly a competitive commercial undertaking by Knight to compete with the 2015 CSA Code, and they have no valid claim to fair dealing.

With respect to remedies, Justice Manson awarded the CSA a permanent injunction enjoining Knight from infringing the CSA’s copyright, an order for delivery up of all copies of the Knight Code and statutory damages in the amount of $5,000.

A copy of Justice Manson’s amended judgment and reasons can be found here.