Nintendo of America Inc. v. King

Nintendo of America Inc. v. King
Court (s) Database
Federal Court Decisions
Date
2017-03-01
Neutral citation
2017 FC 246
File numbers
T-245-16
Notes
A correction was made on June 6, 2018.
Reported Decision
Decision Content
Date: 20170301
Docket: T-245-16
Citation: 2017 FC 246
Ottawa, Ontario, March 1, 2017
PRESENT: The Honourable Mr. Justice Campbell
BETWEEN:
NINTENDO OF AMERICA INC.
Applicant
and
JERAMIE DOUGLAS KING AND
GO CYBER SHOPPING (2005) LTD.
Respondents
JUDGMENT AND REASONS
[1] In 2012, Parliament amended the Copyright Act, RSC 1985, c C-42 (the Act) to add prohibitions against circumventing technological protection measures (TPMs) and trafficking in circumvention devices. In doing so, Parliament explicitly recognized the importance of TPMs for protecting copyrighted works, particularly in the video game industry. The present Application engages novel issues arising from this important legislation.
[2] By the Application as filed on February 9, 2016, the Applicant, Nintendo of America Inc., seeks, among other things, a declaration that the individual and corporate Respondents have circumvented, offered services to circumvent, and trafficked in devices which circumvent the Applicant’s TPMs contrary to s. 41.1(1)(a)-(c) of the Act, and that the Respondents have infringed the Applicant’s copyright in certain works contrary to s. 27(2) of the Act.
[3] Upon a finding that the Respondents are jointly and severally liable for circumvention and/or infringement under the Act, the Applicant seeks statutory damages under s. 38.1 of the Act, its costs, as well as an injunction restraining the Respondents from further infringement and circumvention.
[4] The Applicant also sought a declaration of infringement under ss. 19 and 20 of the Trade‑marks Act, RSC 1985, c T-13. However, at the hearing of the present Application, the Applicant discontinued these claims.
[5] Accordingly, the issues for determination on the Application as filed are whether the Respondents are liable under the asserted provisions of the Act, and, if so, the appropriate remedies.
I. The Process Leading to the Present Determination
[6] The Application came on for hearing before me on October 18, 2016. On that date, Counsel for Applicant presented a highly detailed argument in support of the Application as filed, but, due to insufficiency of time, the matter was adjourned to November 22, 2016 for Counsel for the Respondents to present reply argument. On the continuation date, only Counsel for the Applicant appeared to advise that the Applicant and the individual Respondent, Jeramie Douglas King (King), had reached a settlement agreement on all issues, including liability and quantum of damages, which will be the subject of a separate consent order.
[7] Counsel for the Applicant stated that, regardless of the settlement, the Applicant maintains all its claims against the corporate Respondent, Go Cyber Shopping (2005) Ltd. Counsel for the Applicant also advised that Counsel for the corporate Respondent would not be making a personal appearance to make oral argument in defence of the continuing claim, but would rely solely on written representations first filed in response to the Application.
[8] As argued by Counsel for the Applicant, it is trite law that the party asserting a cause of action bears the burden of proving each required element of the cause of action, while the party raising an affirmative defence bears the burden of proving all the elements of the defence. A party may choose not to lead evidence on any issue and elect to argue that the cause of action has not been proven on a balance of probabilities. However, an adverse inference may be drawn from a party’s failure to lead evidence that was in its power to produce (R v Jolivet, 2000 SCC 29 at paras 24-25, [2000] 1 SCR 751).
[9] To prove the claims made in the present Application, the Applicant tendered extensive affidavit evidence from three expert witnesses. However, in defence of the Application the Respondents filed no evidence and did not cross-examine the Applicant’s witnesses. Instead, as addressed in the reasons below, the Respondents merely advanced arguments, unsupported by evidence, in what I find to be a failed attempt to establish that the Applicant has failed to prove its claims. I agree with Counsel for the Applicant that the Applicant’s evidence stands un-contradicted and unchallenged, and in my opinion, is unassailable in fully proving the claims made.
[10] In response to the advice provided by Counsel for the Applicant on the continuation date, I stated my opinion that, on the basis of the evidence and arguments as filed by both sides to the litigation, and including the oral argument presented by Counsel for the Applicant on the first day of the hearing of the Application, the Applicant is wholly successful in its claim against the corporate Respondent.
[11] As to the nature of the decision to be rendered in conclusion of the litigation, Counsel for the Applicant stated the Applicant’s interest in developing the law with respect to TPMs, their circumvention, statutory damages, and enforcement measures to the benefit of the industry concerned in Canada and globally. Given the high precedential value of this expected outcome, at my request, Counsel for the Applicant agreed to supply a final consolidated written argument stating the terms that the Applicant would prefer to be the substance of the final determination of the litigation, to be served and filed on Counsel for the corporate Respondent to allow a potential reply.
[12] The argument was prepared, served, and filed, and by letter dated December 19, 2016, Counsel for the corporate Respondent replied “kindly be advised that the Respondent will not be filing additional representations…”.
[13] In the result, to fairly and appropriately acknowledge the precise, clear, well supported, and effectively uncontested final argument prepared by Counsel for the Applicant, with which I fully agree, I find that the Applicant is entitled to have the final argument, as stated below, as my reasons for decision in the present litigation.
II. The Claim Against the Corporate Respondent (Respondent)
A. The Parties
[14] The Applicant, Nintendo of America Inc., is a famous video game company. It sells and distributes popular and well-known video games and video game consoles in Canada. The popularity and success of its video games are a result of substantial innovation, creativity, and financial investment into product development, intellectual property, and marketing. Each of the Applicant’s video games can take years and millions of dollars to develop (First Affidavit of Dylan Rhoads, “Rhoads 1”, Applicant’s Record, pp. 82-83).
[15] The Respondent, Go Cyber Shopping (2005) Ltd., is a registered Ontario corporation. It operates a retail location in Waterloo, Ontario and several commercial websites including www.gocybershopping.com and www.gocybershop.ca. The Respondent also appears to carry on business under the name “Modchip Central Ltd.” (which is neither a registered corporation nor business name) through the same retail location and through the website www.modchipcentral.com (Affidavit of Robert Hunter, “Hunter”, Applicant’s Record, pp. 1088‑1091).
[16] King is the sole director and officer of the corporate Respondent (Hunter, Applicant’s Record, pp. 1111-1113).
B. The Applicant’s video game products
[17] The Applicant sells video game consoles in Canada. At issue in this Application are the handheld video game consoles known as the Nintendo DS and 3DS, and the Wii home video game console.
[18] The Applicant also sells hundreds of video games for its consoles in Canada. These video games are sold as game cards (in the case of DS and 3DS games) and discs (in the case of Wii games). Purchasers of genuine Nintendo video games can play these games on the appropriate Nintendo console by inserting the game card or disc into the corresponding console. The Applicant does not and has never authorized downloading of its games onto devices that mimic its game cards or discs and which circumvent its TPMs (Rhoads 1, Applicant’s Record, p. 83).
C. The Applicant’s copyrights
[19] There are two types of copyrighted works at issue in this Application: computer code and data used by the Applicant as part of its TPMs (“Header Data”) and the video games developed for the Applicant’s video game consoles (“Nintendo Games”).
(1) Copyright in Header Data
[20] The Header Data consist of three works in which the Applicant has registered copyright:
Reg. No.
Title
Short Title
1,051,042
NINTENDO DS BOOT CODE (a.k.a. NINTENDO DS HEADER CODE)
“DS Header Data”
1,094,948
NINTENDO 3DS STARTUP SEQUENCE
“3DS Header Data”
1,110,536
GAME BOY ADVANCE BOOT CODE WITH NINTENDO LOGO DATA FILE
“Nintendo Logo Data File”
[21] Each genuine game card sold by the Applicant contains two of the Header Data works. Authorized DS game cards each contain a copy of the DS Header Data and the Nintendo Logo Data File. Authorized 3DS game cards each contain a copy of the 3DS Header Data and the Nintendo Logo Data File.
[22] The Header Data works serve two relevant functions for the purpose of this Application.
[23] First, the Header Data contains code that represents the Applicant’s logos, which are used by the Nintendo DS and 3DS consoles to display the logos on the screen when the device is turned on with a genuine game card inserted.
[24] Second, the Header Data is used by the Nintendo DS and 3DS consoles as part of the Applicant’s TPM system. In particular, the Header Data must be present on an inserted game card (whether genuine or not) in order for the Nintendo DS or 3DS console to play a video game (Rhoads 1, Applicant’s Record, pp. 82-89).
(2) Copyright in Nintendo Games
[25] The Applicant also owns copyright in 585 video game works. Copyrights in 217 of the Nintendo Games are registered in Canada. These video game works include, for example, the New Super Mario Bros. and Pokemon X (Rhoads 1, Applicant’s Record, p. 98; Rhoads 2, Applicant’s Record, pp. 920-921).
[26] Copyrights in the remaining 368 Nintendo Games are not registered in Canada but are registered in the United States. By virtue of the Berne Convention for the Protection of Literary and Artistic Works (1886), 828 UNTS 221 and s. 5 of the Act, these copyrighted works are also subject to copyright protection in Canada (Rhoads 1, Applicant’s Record, pp. 98, 359-363).
[27] The Respondent does not challenge the subsistence or ownership by the Applicant of the asserted copyrights.
D. The Applicant’s technological protection measures
[28] The popularity of the Applicant’s video game systems have made it a target of intellectual property “pirates” who benefit from the Applicant’s investments by making unauthorized copies of its video games or by creating means to enable users to play such unauthorized copies of its video games on its consoles (Rhoads 1, Applicant’s Record, p. 83).
[29] To prevent or deter these activities, the Applicant employs measures on its video game systems to protect and control access to its copyrighted works. The Applicant’s measures prevent users from playing unauthorized copies of video games and from installing unauthorized software, including counterfeit games and software, on its consoles (Rhoads 1, Applicant’s Record, p. 84).
[30] On the Nintendo DS and 3DS consoles, the Applicant uses at least three distinct measures to control access to its copyrighted works (Rhoads 1, Applicant’s Record, pp. 84-94):
Physical Configuration: the Applicant’s DS and 3DS game cards utilize a specific shape, size, and arrangement of electrical connections designed specifically for use with each respective console;
Boot up Security Checks: the Applicant’s DS and 3DS game cards contain the copyrighted Header Data described above, that the console checks to confirm are present and identical to reference copies stored on the console—failure to pass the security check prevents users from accessing and playing any Nintendo Game stored on the game card; and
Encryption and Scrambling: the Applicant’s DS and 3DS game cards and DS and 3DS consoles contain technology to encrypt and scramble communications between the console and game card.
[31] On the Wii console, the Applicant uses at least two distinct measures to control access to its copyrighted works (Rhoads 2, Applicant’s Record, pp. 921-923):
Format TPM: a proprietary unique data format designed to be used only on Wii discs; and
Wii Copy Protection Code: a code on Wii game discs which cannot be copied using commercially available tools and which must be present in order for users to access a Nintendo Game.
E. The Respondent’s activities and devices
[32] Since at least 2013, the Respondent has advertised and offered for sale, either through its websites or at its retail store, certain devices which the Applicant contends are designed to circumvent TPMs employed on the Applicant’s Nintendo DS, 3DS, and Wii gaming consoles (Hunter, Applicant’s Record, pp. 1090-1096).
[33] The Applicant uses the term “Game Copiers” to refer to such devices. The Applicant takes issue with the following models of Game Copiers sold by the Respondent:
R4i 3DS
R4 Revolution R4DS
R4 Gold
SuperCard DSTWO
Sky3DS
Gateway 3DS
Acekard2i
CycloDS iEvolution
DSTTi
Edge
[34] A user in possession of a Game Copier can use it to play unauthorized copies of Nintendo DS or 3DS video games in the following manner (Rhoads 1, Applicant’s Record, p. 93):
a user downloads an illegal copy of a DS or 3DS game from the internet in a computer file format commonly known as “ROMs”;
the user saves the ROM onto a memory card;
the user inserts the memory card into the Game Copier;
the Game Copier is inserted into the game card slot in the DS or 3DS console;
when the Nintendo DS or 3DS is switched on, the Game Copier mimics a genuine game card (using copies of the Header Data and encryption/scrambling circuitry)and enables the DS or 3DS console to access the illegally copied ROM on the memory card and play the pirated copy of the Nintendo Game.
[35] The Respondent also offers for sale certain devices, referred to as “mod chips”, which the Applicant contends are designed to circumvent TPMs employed on the Wii console.
[36] Mod chips generally operate by modifying the firmware of the Wii console’s disc drive or by disabling certain security routines. Mod chips are usually installed as an after-market internal component on a Wii console. Installation may require disassembling the console and removing components. Mod chips may also be sold in kits along with other components such as hard drives. (Rhoads 2, Applicant’s Record, p. 922-923).
[37] Mod chips allow users to play unauthorized copies of Wii video games, such as pirated copies downloaded from the internet. For example, users may download unauthorized copies of video games from the internet onto hard drives. When these hard drives are connected to a “modded” Wii console, the mod chip allows the user to access the pirated video games without owning a genuine Wii game disc (Rhoads 2, Applicant’s Record, 923-925).
[38] The Applicant takes issue with the following models of mod chips, kits, and related tools sold by the Respondent:
Wiikey 2
Wode Jukebox v2.0
Wiikey Fusion
DriveKey Wii Modchip
Wasabi DX Wii Modchip
Solderless Wiikey2
Wasabi Zero Wii Modchip
Premodded D2C/D2E drive
D2Pro SPI Flash Quicksolder
DriveKey Programmer
Infectus JTAG/Argon Programmer
[39] In addition to selling mod chips, the Respondent also offers mod chip installation services online and at its retail store, whereby a customer may drop off a Wii console to be “modded” (i.e., installed) with a mod chip (Affidavit of Gavin Phillips, Applicant’s Record, pp. 1075-1077).
F. The Respondent’s websites and social media
[40] The Respondent actively promotes its activities through social media. These include product announcements, discussions on social media regarding the status of new product shipments, and taking pre-orders for next generation devices (Hunter, Applicant’s Record, pp. 1191-1199).
[41] On its websites, the Respondent provides various descriptions of its products. For example, it describes the “Sky3DS” as a device that can “play 3DS ROMs on ALL 3DS versions […] the Sky3DS card works and plays 3DS backups, and like a genuine game!” (Hunter, Applicant’s Record, pp. 1187).
[42] The Respondent also provides an “FAQ” for the Sky3DS, providing a “compatible game list”, instructions on how to “build” Header Data, and mentions examples of the Applicant’s Nintendo Games such as Animal Crossing and Pokemon X and Y (Hunter, Applicant’s Record, pp. 1187-1189).
G. Other facts regarding the Respondent
[43] In its written submissions, the Respondent asserts certain facts, such as offering other legitimate services and the relatively small size of its business, in support of certain affirmative defences. However, since the Respondent has adduced no evidence in support of these assertions, they are unsubstantiated and do nothing to satisfy the Respondent’s burden on its affirmative defences.
III. Issues
[44] During the course of submissions, the issues have been narrowed. The remaining issues for determination are:
Has the Respondent infringed the Applicant’s copyrights contrary to s. 27(2) of the Act?
Has the Respondent contravened the anti-circumvention provisions under s. 41.1(1) of the Act?
If so, what remedies are appropriate?
IV. Analysis
A. S. 27(2): Secondary copyright infringement
[45] Section 27 of the Act defines copyright infringement as follows:
Infringement generally
27 (1) It is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that by this Act only the owner of the copyright has the right to do.
Règle générale
27 (1) Constitue une violation du droit d’auteur l’accomplissement, sans le consentement du titulaire de ce droit, d’un acte qu’en vertu de la présente loi seul ce titulaire a la faculté d’accomplir.
Secondary infringement
(2) It is an infringement of copyright for any person to
Violation à une étape ultérieure
(2) Constitue une violation du droit d’auteur l’accomplissement de tout acte ci-après en ce qui a trait à l’exemplaire d’une oeuvre, d’une fixation d’une prestation, d’un enregistrement sonore ou d’une fixation d’un signal de communication alors que la personne qui accomplit l’acte sait ou devrait savoir que la production de l’exemplaire constitue une violation de ce droit, ou en constituerait une si l’exemplaire avait été produit au Canada par la personne qui l’a produit :
(a) sell or rent out,
a) la vente ou la location;
(b) distribute to such an extent as to affect prejudicially the owner of the copyright,
b) la mise en circulation de façon à porter préjudice au titulaire du droit d’auteur;
(c) by way of trade distribute, expose or offer for sale or rental, or exhibit in public,
c) la mise en circulation, la mise ou l’offre en vente ou en location, ou l’exposition en public, dans un but commercial;
(d) possess for the purpose of doing anything referred to in paragraphs (a) to (c), or
d) la possession en vue de l’un ou l’autre des actes visés aux alinéas a) à c);
(e) import into Canada for the purpose of doing anything referred to in paragraphs (a) to (c),
a copy of a work, sound recording or fixation of a performer’s performance or of a communication signal that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.
e) l’importation au Canada en vue de l’un ou l’autre des actes visés aux alinéas a) à c)
[46] The Supreme Court in CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13 [CCH] at paragraph 81, [2004] 1 SCR 339, set out the following three-part test for establishing secondary infringement: (1) the copy must be the product of primary infringement; (2) the secondary infringer must have known or should have known that he or she is dealing with a product of infringement; and (3) the secondary dealing must be established within one of the enumerated acts in s. 27(2).
[47] The Applicant contends that the Respondent infringes its copyright in the three Header Data works contrary to s. 27(2), in that: (1) unauthorized copies of the works are either contained on Game Copiers when they are sold or are obtained by following the instructions provided by the Respondent; (2) the Respondent knew, ought to have known, or was wilfully blind to the fact that the Game Copiers contained such works; and (3) the Respondent sold, distributed, offered for sale, and possessed the Game Copiers for the purpose of those activities.
[48] In support of this cause of action, the Applicant adduced evidence of testing for three models of Game Copiers purchased from the Respondent’s online store (Rhoads 1, Applicant’s Record, pp. 95-97).
[49] In its defence, the Respondent contends that the impugned devices are “fundamentally blank discs”. Nonetheless, the Respondent admits infringement of one of the three Header Data works, namely, the DS Header Data. However, the Respondent denies infringing the other two works, namely, the Nintendo Logo Data File and the 3DS Header Data (Respondents’ Memorandum of Fact and Law, paras. 39-45).
[50] With respect to the Nintendo Logo Data File, the Respondent asserts that it does not infringe because it does not sell any devices for use with the Game Boy Advance System (Respondents’ Memorandum of Fact and Law, para. 45).
[51] This implies that the Nintendo Logo Data File is only used on devices sold for the Game Boy Advance System. However, that is not supported by the evidence. The evidence clearly establishes that an unauthorized copy of the Nintendo Logo Data File is present on the devices sold by the Respondent for use on DS consoles (Rhoads 1, Applicant’s Record, pp. 85, 95). This satisfies the first element of the test for secondary infringement.
[52] The second element of the secondary infringement test may be inferred from the Respondent’s admission of infringement in respect of the DS Header Data. Given that the Respondent admits knowing that its Game Copiers contain unauthorized copies of the DS Header Data, it is reasonable to infer that it knows, or ought to know, that its Game Copiers similarly contain unauthorized copies of the Nintendo Logo Data File.
[53] As for the third element, there is no dispute that the Respondent sells Game Copiers.
[54] Accordingly, the Respondent also infringes copyright in the Nintendo Logo Data File contrary to s. 27(2).
[55] With respect to the 3DS Header Data, the Respondent asserts that the work is not present on the Sky3DS device when it is sold. The Applicant does not assert otherwise. Indeed, the evidence establishes that a “template file” containing the 3DS Header Data work must be downloaded from a third party website to provide the Sky3DS device with its functionality (Rhoads 1, Applicant’s Record, p. 97).
[56] Nonetheless, the evidence also shows that the third party website for downloading the 3DS Header Data is listed on the packaging of the Sky3DS device sold by the Respondent. Moreover, the Respondent’s website directs users to instructions on how to obtain the file containing the copyrighted 3DS Header Data work (Applicant’s Record, pp. 97, 1186-1188).
[57] This is sufficient to establish the existence of primary infringement. Subsection 3(1) of the Act gives the copyright owner “the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever […] and to authorize any such acts.” In Apple Computer Inc. v. Mackintosh Computers Ltd., [1987] 1 F.C. 173, (1986) 10 C.P.R. (3d) 1 (T.D.) (Apple FC), aff’d [1988] 1 F.C. 673, (1987), 18 C.P.R. (3d) 129 (C.A.), aff’d [1990] 2 S.C.R. 209, this Court held at page 46 [in 10 C.P.R. (3d) 1 or at page 208 in [1987] 1 F.C. 173:
Insofar as copyright infringement is concerned a person infringes by virtue of subsection 17(1) [now s. 27] and section 3, if they “authorize” or purport to authorize the doing of any act which is reserved to the owner of the copyright. “Authorize” has been defined by the jurisprudence as meaning “sanction, approve, and countenance” [Falcon v. Famous Players Film Co., [1926] 2 K.B. 474 at p. 491]. [Footnote omitted.]
[58] Thus, the Respondent’s authorization of infringing acts by providing its customers with instructions on how to copy the 3DS Header Data is sufficient to meet the first element of the secondary infringement test.
[59] Further, by authorizing the infringing acts, it may be inferred that the Respondent had actual or constructive knowledge of the infringement. Alternatively, the Respondent had notice of such facts that would have led a reasonable person to think that a breach of copyright was being committed, which is sufficient to establish the second element of secondary infringement (Apple FC at pp. 47-48).
[60] The Respondent does not dispute offering for sale and selling the Sky3DS device.
[61] Accordingly, the Respondent has also infringed the Applicant’s copyright in the 3DS Header Data work contrary to s. 27(2) of the Act.
B. S. 41.1(1): Circumvention of Technological Protection Measures
[62] The Applicant relies on the provisions prohibiting circumvention of TPMs under ss. 41 and 41.1 of the Act.
[63] Parliament introduced these provisions into the Act in 2012, under the Copyright Modernization Act, SC 2012, c 20. In over four years since their enactment, this Court has yet to consider and apply these provisions. Under the circumstances, a brief summary of the legislative background is warranted.
[64] The Summary section of the Copyright Modernization Act provides that:
This enactment amends the Copyright Act to
(a) update the rights and protections of copyright owners to better address the challenges and opportunities of the Internet, so as to be in line with international standards; […]
Le texte modifie la Loi sur le droit d’auteur pour :
a) mettre à jour les droits et les mesures de protection dont bénéficient les titulaires du droit d’auteur, en conformité avec les normes internationales, afin de mieux tenir compte des défis et des possibilités créés par Internet; […]
(c) permit businesses, educators and libraries to make greater use of copyright material in digital form; […]
c) permettre aux entreprises, aux enseignants et aux bibliothèques de faire un plus grand usage de matériel protégé par le droit d’auteur sous forme numérique; […]
(g) ensure that it remains technologically neutral; […].
g) éliminer la spécificité technologique des dispositions de la loi; […].
[65] Parliament evidently considered TPMs to be an important tool to achieve its stated goals. The Preamble of the Copyright Modernization Act states:
Whereas the Copyright Act is an important marketplace framework law and cultural policy instrument that, through clear, predictable and fair rules, supports creativity and innovation and affects many sectors of the knowledge economy;
Attendu :
que la Loi sur le droit d’auteur est une loi-cadre importante du marché et un instrument indispensable de la politique culturelle qui, au moyen de règles claires, prévisibles et équitables, favorise la créativité et l’innovation et touche de nombreux secteurs de l’économie du savoir;
Whereas advancements in and convergence of the information and communications technologies that link communities around the world present opportunities and challenges that are global in scope for the creation and use of copyright works or other subject-matter;
que le développement et la convergence des technologies de l’information et des communications qui relient les collectivités du monde entier présentent des possibilités et des défis qui ont une portée mondiale pour la création et l’utilisation des oeuvres ou autres objets du droit d’auteur protégés;
Whereas in the current digital era copyright protection is enhanced when countries adopt coordinated approaches, based on internationally recognized norms;
que la protection du droit d’auteur, à l’ère numérique actuelle, est renforcée lorsque les pays adoptent des approches coordonnées, fondées sur des normes reconnues à l’échelle internationale;
Whereas those norms are reflected in the World Intellectual Property Organization Copyright Treaty and the World Intellectual Property Organization Performances and Phonograms Treaty, adopted in Geneva in 1996;
que ces normes sont incluses dans le Traité de l’Organisation mondiale de la propriété intellectuelle sur le droit d’auteur et dans le Traité de l’Organisation mondiale de la propriété intellectuelle sur les interprétations et exécutions et les phonogrammes, adoptés à Genève en 1996;
Whereas those norms are not wholly reflected in the Copyright Act;
que ces normes ne se trouvent pas toutes dans la Loi sur le droit d’auteur;
Whereas the exclusive rights in the Copyright Act provide rights holders with recognition, remuneration and the ability to assert their rights, and some limitations on those rights exist to further enhance users’ access to copyright works or other subject-matter;
que les droits exclusifs prévus par la Loi sur le droit d’auteur permettent à ceux qui en bénéficient d’obtenir une reconnaissance et une rémunération et leur donnent la faculté d’exercer leurs droits et que les restrictions relatives à ceux-ci servent à faciliter aux utilisateurs l’accès aux oeuvres ou autres objets du droit d’auteur protégés;
Whereas the Government of Canada is committed to enhancing the protection of copyright works or other subject-matter, including through the recognition of technological protection measures, in a manner that promotes culture and innovation, competition and investment in the Canadian economy;
que le gouvernement du Canada s’engage à améliorer la protection des oeuvres ou autres objets du droit d’auteur, notamment par la reconnaissance de mesures techniques de protection, d’une façon qui favorise la culture ainsi que l’innovation, la concurrence et l’investissement dans l’économie canadienne;
And whereas Canada’s ability to participate in a knowledge economy driven by innovation and network connectivity is fostered by encouraging the use of digital technologies for research and education; […].
que le Canada accroîtra sa capacité de participer à une économie du savoir axée sur l’innovation et la connectivité si l’on favorise l’utilisation des technologies numériques dans le domaine de la recherche et de l’éducation,
[Emphasis added.]
[Non souligné dans l’original.]
[66] Contemporaneous papers authored by the Government of Canada also set out the rationale for protecting TPMs (Government of Canada, “What the New Copyright Modernization Act Says About Digital Locks”, Fact Sheet on Bill C-11, as reproduced in Barry Sookman, Computer, Internet and Electronic Commerce Law, loose-leaf, (Toronto: Carswell, 2016), ch 3.10 at 3-923):
Innovative companies, such as video game developers, will have the legal tools to protect the investments they have made in order to reinvest in future innovation and jobs.
Protecting digital locks gives copyright industries the certainty they need to roll out new products and services, such as online subscription services, software and video games, if they choose to use this technology. Not only will this promote investment and growth in Canada’s digital economy, it will also encourage the introduction of innovative online services that offer access to content. Such services are increasingly available in other countries.
The Bill recognizes that certain protections, such as restricted content on news websites or locked video games, are important tools for copyright owners to protect their digital works and are often an important part of online and digital business models.
Introducing legal protections for digital locks brings Canada in line with international partners, as it is one of the requirements of the World Intellectual Property Organization Internet treaties.
While the music industry has moved away from digital locks on CDs, they continue to be used in many online music services. Software producers, the video game industry and movie distributors also continue to use digital locks to protect their investments. Canadian jobs depend on their ability to make a return on their investment. Businesses that choose to use digital locks as part of their business models will have the protection of the law.
[Emphasis added.]
[67] S. 41 of the Act defines “technological protection measure” and “circumvent” as follows:
technological protection measure means any effective technology, device or component that, in the ordinary course of its operation,
mesure technique de protection Toute technologie ou tout dispositif ou composant qui, dans le cadre normal de son fonctionnement :
(a) controls access to a work, to a performer’s performance fixed in a sound recording or to a sound recording and whose use is authorized by the copyright owner; or
a) soit contrôle efficacement l’accès à une oeuvre, à une prestation fixée au moyen d’un enregistrement sonore ou à un enregistrement sonore et est autorisé par le titulaire du droit d’auteur;
(b) restricts the doing — with respect to a work, to a performer’s performance fixed in a sound recording or to a sound recording — of any act referred to in section 3, 15 or 18 and any act for which remuneration is payable under section 19.(mesure technique de protection)
b) soit restreint efficacement l’accomplissement, à l’égard d’une oeuvre, d’une prestation fixée au moyen d’un enregistrement sonore ou d’un enregistrement sonore, d’un acte visé aux articles 3, 15 ou 18 ou pour lequel l’article 19 prévoit le versement d’une rémunération. (technological protection measure)
circumvent means,
(a) in respect of a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure, to descramble a scrambled work or decrypt an encrypted work or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner; and
contourner
a) S’agissant de la mesure technique de protection au sens de l’alinéa a) de la définition de ce terme, éviter, supprimer, désactiver ou entraver la mesure — notamment décoder ou déchiffrer l’oeuvre protégée par la mesure — sans l’autorisation du titulaire du droit d’auteur;
(b) in respect of a technological protection measure within the meaning of paragraph (b) of the definition technological protection measure, to avoid, bypass, remove, deactivate or impair the technological protection measure. (contourner)
b) s’agissant de la mesure technique de protection au sens de l’alinéa b) de la définition de ce terme, éviter, supprimer, désactiver ou entraver la mesure. (circumvent)
[68] The Applicant relies on paragraph (a) of each definition, which relate to TPMs used to control access to copyrighted works (“access control TPMs”). The definitions under paragraphs (b), which relate to TPMs used to restrict infringing acts (sometimes referred to as “copy control TPMs”), are not at issue in the present Application, but are provided for context and assist in statutory interpretation below.
[69] The prohibited acts respecting TPMs are set out in s. 41.1(1) of the Act:
Prohibition
Interdiction
41.1 (1) No person shall
41.1 (1) Nul ne peut :
(a) circumvent a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure in section 41;
a) contourner une mesure technique de protection au sens de l’alinéa a) de la définition de ce terme à l’article 41
(b) offer services to the public or provide services if
b) offrir au public ou fournir des services si, selon le cas :
(i) the services are offered or provided primarily for the purposes of circumventing a technological protection measure,
(i) les services ont pour principal objet de contourner une mesure technique de protection,
(ii) the uses or purposes of those services are not commercially significant other than when they are offered or provided for the purposes of circumventing a technological protection measure, or
(ii) les services n’ont aucune application ou utilité importante du point de vue commercial si ce n’est le contournement d’une mesure technique de protection,
(iii) the person markets those services as being for the purposes of circumventing a technological protection measure or acts in concert with another person in order to market those services as being for those purposes; or
(iii) il présente — lui-même ou de concert avec une autre personne — les services comme ayant pour objet le contournement d’une mesure technique de protection;
(c) manufacture, import, distribute, offer for sale or rental or provide — including by selling or renting — any technology, device or component if
c) fabriquer, importer, fournir, notamment par vente ou location, offrir en vente ou en location ou mettre en circulation toute technologie ou tout dispositif ou composant si, selon le cas :
(i) the technology, device or component is designed or produced primarily for the purposes of circumventing a technological protection measure,
(i) la technologie ou le dispositif ou composant a été conçu ou produit principalement en vue de contourner une mesure technique de protection,
(ii) the uses or purposes of the technology, device or component are not commercially significant other than when it is used for the purposes of circumventing a technological protection measure, or
(ii) la technologie ou le dispositif ou composant n’a aucune application ou utilité importante du point de vue commercial si ce n’est le contournement d’une mesure technique de protection,
(iii) the person markets the technology, device or component as being for the purposes of circumventing a technological protection measure or acts in concert with another person in order to market the technology, device or component as being for those purposes.
(iii) il présente au public — lui-même ou de concert avec une autre personne — la technologie ou le dispositif ou composant comme ayant pour objet le contournement d’une mesure technique de protection.
[70] The Act also provides certain exceptions to s. 41.1(1), such as s. 41.12 (interoperability of computer programs). These are further discussed below.
[71] The framework of the Act therefore requires the Court to consider the following questions: (1) whether the Applicant’s technology, device, or component is a TPM within the definition of s. 41; (2) whether the Respondent has engaged in circumvention activities prohibited by s. 41.1(1); and, if raised, (3) whether any exception applies.
(1) The Applicant’s TPMs
[72] The Applicant submits that each of its measures described above are “technological protection measures” within the meaning of the Act.
[73] The Applicant relies on the broad definition of “technological protection measures” in s. 41, which covers “any effective technology, device or component”. The open-ended language of this definition reflects Parliament’s intention to empower copyright owners to protect their business models with any technological tool at their disposal.
[74] The Applicant also relies on the principle of “technological neutrality” to argue that apart from being “effective”, there is no basis to discriminate against any particular type of technology, device, or component, such as physical configuration. As the Supreme Court noted in Canadian Broadcasting Corporation v SODRAC 2003 Inc, 2015 SCC 57 at paragraph 66:
The principle of technological neutrality is recognition that, absent parliamentary intent to the contrary, the Copyright Act should not be interpreted or applied to favour or discriminate against any particular form of technology. It is derived from the balancing of user and right-holder interests discussed by this Court in Théberge [Théberge v Galerie d’Art du Petit Cham