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Use of Copyrighted Materials in Market Research is not Fair Dealing

Stross v. Trend Hunter Inc., 2020 FC 201 was a simplified action dealing with copyright infringement and fair dealing.

The Plaintiff, Alexander Stross, is a professional photographer. The Defendant, Trend Hunter, operates a website which generates market research data by crowdsourcing content and measuring users’ interaction with that content. Six of Stross’ photographs were used, without permission, in an article posted on the website. Trend Hunter argued fair dealing for the purpose of research or new reporting.

The first part of the fair dealing test (established in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13) considers whether the dealing falls within one of the allowable purposes of the Copyright Act, in this case “research”. Stross argued that Trend Hunter’s purported research was in fact data analysis for developing a product to be sold to clients for profit. Prothonotary Furlanetto held that the use was a computerized form of market research that measures consumer interaction and preferences for the purpose of generating data for clients. Since the threshold for establishing a research purpose is low, this was sufficient to satisfy the first part of the test.

The second part of the test considers whether the dealing was “fair”. The Court assessed the CCH factors and held the use was not fair. The Court seemed to rely on the fact that the purpose of the dealing was ultimately commercial and that alternatives were available that should have been used instead. The Defendants asserted that they had a copyright policy to be followed by content providers before uploading content. The Court found that “the fairness of the policy relies on the practices under the policy”, which were not followed in this case. Accordingly, the existence of a copyright policy is not itself sufficient to support fair dealing.

After finding infringement, the Court awarded nominal damages plus an accounting of profits. The total amount awarded, however, was less than the $9,493 in costs awarded to the Plaintiff. The Plaintiff received $3,983 CAD as an accounting of the Defendants’ profits (the photographs generated only minimal advertising revenue).  The Court also awarded nominal damages of $500 USD per photo (for a total of $3,000 USD) since the Plaintiff provided insufficient evidence to establish a standard licensing fee that could be applied. The Plaintiff produced three previous license agreements. The first involved license fees of $500 to $1000 USD per photo. The second was as settlement agreement for $8,000 but which the Court held not representative due to a lack of evidence of the context of the settlement. In the third, Stross licensed a photograph in exchange for architectural design services valued at $15,000. The Court held this was “far from standard, and more in line with a trade of time.” Accordingly, it is important for copyright holders to put forth sufficient evidence establishing the value of their copyright.

A copy of the decision can be found here.