This article was prepared with contribution from articling student Eric Saragosa.
Recently, in Wiseau Studio, LLC et al v Harper et al, 2020 ONSC 2504, the Ontario Superior Court of Justice dismissed an action for copyright infringement brought against the makers of a documentary that used clips from the notorious movie The Room. The Court found that use of the clips fell under the fair dealing exception to copyright infringement.
Notably, the Court also awarded the defendants $550,000 USD in damages resulting from an injunction that prevented the release of the documentary at a commercially critical time, and $200,000 CDN in punitive damages.
The decision is significant in its recognition of the robust fair dealing exception carved out for content creators in the scheme of the Copyright Act. The decision also serves as a cautionary tale for overly aggressive litigants.
Background and procedural history
The Room is a 2003 movie notorious for its poor acting, writing and production quality. Over the years, it has gained a cult-like following and, to this day, screenings of the movie are organized at repertory cinemas around the world. The cultural phenomenon surrounding The Room has grown to include a fascination with its eccentric and secretive creator, Tommy Wiseau.
In 2016, the defendants completed Room Full of Spoons, a documentary examining The Room, its fans and its creator. The defendants initially approached Wiseau about participating in the project, then attempted to obtain a licence from Wiseau, but Wiseau demanded large sums of money for each clip as well as “final cut” privileges. Nonetheless, the defendants believed their use of the clips would fall under the fair dealing exception to copyright.
Room Full of Spoons was screened at a limited number of film festivals, receiving positive reviews from critics. Wiseau began threatening litigation against potential exhibitors of the documentary, sent the defendants cease and desist letters, and demanded that changes be made to the documentary.
In June 2017, shortly before the scheduled release of the documentary, Wiseau brought a motion in the Ontario Superior Court of Justice, without notice, for an injunction preventing the documentary’s release. The hearing proceeded on an ex parte basis and an interim injunction was granted.
In October 2017, once the defendants had the opportunity to retain counsel and file materials, the injunction was lifted. In its decision lifting the injunction, the Court found that the disclosure provided by the plaintiffs fell seriously short of the standard required for an ex parte injunction. The Court also found that the plaintiffs had misled the Court, including with respect to the nature and content of the documentary.
Although the injunction was lifted in October 2017, the defendants were unable to release the documentary to coincide with the release of The Disaster Artist, a major Hollywood movie about the making of The Room, in December 2017. Discussions on an agreement with a respected film distribution company also fell through as a result of the litigation. The documentary still has not been released.
Claims for copyright infringement and breach of moral rights
The plaintiffs claimed that the use of clips from The Room in Room Full of Spoons constituted copyright infringement. Justice Schabas dismissed the claim and held that, while the seven minutes-worth of clips amounted to a “substantial part” of The Room, the use fell under the fair dealing exception to copyright infringement.
At the outset of his fair dealing analysis, Justice Schabas noted that fair dealing is an exception to copyright infringement, rather than a defence. He cited Supreme Court of Canada jurisprudence characterizing fair dealing as a “user’s right” that must be interpreted generously in order to maintain the balance provided in the Copyright Act between the interests of copyright owners and the public interest in encouraging creativity and innovation.
In order for the fair dealing exception to apply, the original work must be used for one or more of the allowable purposes listed in the Copyright Act, and the use must be fair.
Justice Schabas found that the use of clips from The Room was for the allowable purpose of criticism or review, given the documentary’s discussion and analysis of the movie. He also found that the clips were used for the allowable purpose of news reporting, given the cultural phenomenon surrounding the movie and its creator. Although the plaintiffs attempted to characterize Room Full of Spoons as a “hit piece” intended to prejudice Wiseau, rather than a documentary, Justice Schabas found that this was not a relevant consideration, as it could nevertheless be considered criticism or review. Justice Schabas also concluded that the documentary’s use of the “most popular and most iconic” scenes from The Room did not preclude the finding that they were used for the purpose of criticism or review, as opposed to some other commercial purpose.
Moreover, Justice Schabas found that the documentary’s use of clips was fair. Pursuant to Supreme Court jurisprudence, he considered the question of fairness from the perspective of the purpose, character and amount of the dealing, alternatives to the dealing, the nature of the original work, and the effect of the dealing on the work. In assessing the character of the dealing, he found that each of the clips were accompanied by commentary either before, after or during, which he found was a common technique in documentary filmmaking. In assessing the amount of the dealing, he found that the seven minutes-worth of clips from The Room was “not trivial”, but was also “not excessive”, as the use was “limited and linked to the objectives of the documentary”. With respect to the effect of the dealing on the work, Justice Schabas found that “Room Full of Spoons is not an alternative to The Room and does not replicate or replace the unique experience of attending a showing of the original work”. Despite evidence from two witnesses that the documentary could be a competitive product, Justice Schabas was of the view that the documentary was complementary to, and could entice people to seek out, The Room.
The plaintiffs also claimed that the defendants’ use of clips from The Room constituted a breach of Wiseau’s moral rights. Moral rights protect the integrity of the work, and may be breached if the work is distorted, mutilated or otherwise modified, or used in association with a product, service, cause or institution, in a manner that prejudices the author’s honour or reputation. Justice Schabas explained that a moral rights inquiry involves a combination of objective and subjective considerations, and thus cannot be based solely on the feelings or opinions of the author. Although the plaintiffs argued that Wiseau did not wish to be associated with what they viewed as a “hit piece”, Justice Schabas found that nothing in the documentary would lead the public to believe that Wiseau was involved with or endorsed the documentary. In any event, Justice Schabas found that the documentary did not prejudice Wiseau’s honour or reputation because the criticisms of The Room were nothing new.
Claims for misappropriation of personality and intrusion upon seclusion were also dismissed.
Counterclaims for damages from the injunction and punitive damages
As part of their motion for an injunction in June 2017, the plaintiffs undertook to compensate the defendants if it was found that the injunction was improperly issued. Given the Court’s findings of material non-disclosure in the October 2017 decision lifting the injunction, Justice Schabas was tasked with assessing the damages resulting from the injunction.
He found that the injunction had prevented the defendants from releasing the documentary at a commercially critical point in time, in 2017, when interest in The Room and Wiseau would have been at its peak given the release of The Disaster Artist. An expert for the defendants estimated that the documentary would have earned approximately $1.1 million USD, based on a comparison to other documentaries about feature films and the success of The Disaster Artist. Of this amount, the expert estimated the defendants would have received about $660,000 USD. Justice Schabas arrived at a damages award of $550,000 USD after accounting for the revenue the documentary could still generate once released.
In addition, the defendants were awarded $200,000 CDN in punitive damages. Punitive damages are exceptional, and are intended to penalize conduct that is malicious, oppressive and high-handed, or that offends the Court’s sense of decency. Justice Schabas deemed that punitive damages were justified in this case because of the plaintiffs’ “oppressive and outrageous” conduct towards the defendants over many years. In particular, Justice Schabas noted the plaintiffs’ bad faith negotiations with the defendants, the misleading and incomplete evidence presented on the motion to obtain an injunction, the misrepresentations made to third parties about the illegality of screening the documentary, and the repeated attempts to delay the trial. In Justice Schabas’ opinion, the action “was brought for the improper purpose of preventing the release of a documentary disliked by Tommy Wiseau. None of his causes of action had any merit”.
Justice Schabas’ reasons for judgment provide a thorough application of the law on fair dealing to the facts of the case, which will help guide documentarians and other content creators who may wish to incorporate portions of other copyrighted works. In addition, the decision serves as a cautionary tale for litigants to avoid engaging in oppressive and outrageous conduct.
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