Copyright is an important part of content creation, and licensing and distribution of content can often be critical for the creator’s commercial success. It is thus important that copyright ownership is clear and well-defined, and that any exemptions to licensing requirements are properly bounded. In a recent decision, the Federal Court confirmed that copyright ownership is presumed for makers of cinematographic works, the limits to certain exceptions surrounding the retransmission of broadcasts, and established a new method of calculating damages.
Vidéotron Ltée v. Konek Technologies Inc., 2023 FC 741, is a decision regarding copyright infringement for the retransmission of the plaintiff’s television channels within a commercial solution. The Federal Court imposed an injunction and ordered the Defendant to pay $553,000 in damages.
The defendant Konek Technologies sold a system that provided a range of functions to hotels, including retransmission of television channels in hotel rooms. Rather than entering into a typical copyright license agreement, the defendants decided to rely on the exception to infringement provided by section 31 of the Copyright Act, which allows for retransmissions that are lawful under the Broadcasting Act. To do so, they set up a separate corporation that was structured in such a way as to be eligible for a licensing exemption as being a broadcasting distribution undertaking (BDU) with fewer than 20,000 subscribers. As a result, the defendants never obtained consent from the plaintiffs, Vidéotronand TVA Group, to retransmit the TVA and TVA Sports channels.
The Plaintiffs sued the defendants. Five issues were decided at trial: TVA’s ownership of copyright, TVA’s obligation to grant a license, waiver of rights, the extent of infringement, and damages.
Ownership of Copyright
The plaintiffs asserted copyright in a collection of cinematographic works, which prompted contention from the defendants that the plaintiffs were not the copyright owners of the works. The Court held that the plaintiffs, as “makers” of the television programs, benefited from the presumption established by paragraph 34.1(1)(b) of the Copyright Act that they were the copyright owners of the works in question. Since there was no evidence to the contrary, the plaintiffs were held to be owners of the copyright in the works that were retransmitted by the defendants.
Obligation to Grant a License
The defendants also argued that the Broadcasting Act and its regulations impose on TVA Group an obligation to grant a license to the defendant BDU to broadcast the TVA Sports channels. Their argument was primarily based on vertical integration (TVA Group and Vidéotron, a BDU, belong to the same company), arguing that TVA Group should afford equal treatment to all other BDUs, such as the defendants’ BDU. The Court held there is no regulatory requirement to compel TVA Group to negotiate a license with other BDUs.
Waiver of Rights
The defendants also argued that, based on discussions between the defendants and a third party acquired by the plaintiff Vidéotron, and based on short email exchanges with Vidéotron and TVA Group employees, the plaintiffs had waived their rights. This argument was summarily dismissed as being “completely absurd”.
Extent of Infringement — Director’s Liability
Generally, a director or officer of a corporation cannot be held personally liable for copyright infringement merely on the basis of his hierarchical status as a director or officer. The test for personal liability is stringent: “there must be circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his relationship to it but the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it.”
One of the defendants in this case (Mr. Rousseau) was found to be personally liable for copyright infringement. The Court held that Mr. Rousseau was the architect of Konek’s and the BDU’s network, played a major role in designing and programming the Konek set-top boxes, and was in charge of all regulatory compliance. His role, therefore, went beyond being merely an officer of the company.
In deciding what damages the plaintiffs had suffered, the Court considered the legitimacy of the defendants’ products and the defendant’s conduct. The Konek product was found to be legitimate in the sense that the defendants’ business was not a clandestine operation. However, the Court noted that the defendants were operating before they obtained the necessary rights and authorizations, were willfully blind in the hopes they would be authorized to retransmit TVA Sports’ programs, and subscribed to streaming services that are probably illegal after Vidéotron revoked their subscription.
The damages suffered by the plaintiffs were found to be about $100,000. The Court also awarded statutory damages in the amount of $500 for each TVA Sports program that had been retransmitted, and a token $1 for the other TVA channel programs, for a total of $553,000. The Court thus was sufficient deterrence against future copyright infringement and thus refused to award punitive damages.