Nicholas v. Environmental Systems (International) Limited

Nicholas v. Environmental Systems (International) Limited
Court (s) Database
Federal Court Decisions
Date
2010-07-12
Neutral citation
2010 FC 741
File numbers
T-949-05
Decision Content
Federal Court
Cour fédérale
Date: 20100712
Docket: T-949-05
Citation: 2010 FC 741
Ottawa, Ontario, July 12, 2010
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
FREDERICK L. NICHOLAS
Plaintiff
and
ENVIRONMENTAL SYSTEMS
(INTERNATIONAL) LIMITED;
BRIAN G. COOK; REIF WINERY INC.
(c.o.b. as “REIF ESTATE WINERY”);
KLAUS REIF;
and RE/DEFINING WATER INC.
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
THE CLAIMS
[1] The Plaintiff originally sought a range of relief for breach of copyright and breach of moral rights by the Defendants in a document entitled “Technical Evaluation and Report on the Patented ESIL Process” which the Plaintiff authored between May 30 and June 3, 2003 (Report).
[2] The Report is an evaluation of the patented water purification technology of the Defendant Environmental Systems (International) Limited (ESIL) and was prepared by the Plaintiff for Mr. Charles Vollmer and VII Inc., neither of whom is a party to this action.
[3] The Plaintiff says that the Defendants ESIL and/or Cook have copied, published and distributed the original and/or modified versions of the Report as part of information packages sent to prospective investors and licensees of ESIL’s water purification technology.
[4] The Plaintiff also initially alleged that Defendants Cook and/or ESIL have modified the original Report by changing the Plaintiff’s personal opinions, making some minor changes to the text, and substituting non-standard and unknown chemical terminology for standard chemical nomenclature. He says that because he has continued to be identified as the author of the Report and the modified versions of it, these changes have caused, or will cause, knowledgeable readers to question his technical competence to the prejudice of his honour and reputation. At trial, however, the Plaintiff acknowledged that there was no evidence to support this aspect of his claim.
[5] The Plaintiff also says that the Defendants Reif and the Braun Group (The Braun Group being Defendants Reif, Reif Estate, Sabine Reif, Braun Estate Winery and Alfred Braun of Germany) have reproduced and distributed original and modified versions of the Report.
[6] As regards Defendant Re-defining Water Inc. (Re-defining Water), the Plaintiff says it has been publishing and making available on its website the original Report to support its sales of technology sub-licences as well as sales of bottled water that is treated, bottled and distributed at its place of business in St. Catherines, Ontario.
[7] Finally, the Plaintiff says that all of the Defendants have illegally used his Report, as well as modifications, to successfully sell their licensed patented water purification systems and related technology to buyers for sums in excess of $23,000,000.00 (USD), or the Canadian equivalent of $27,000,000.00.
[8] As a result of the alleged infringing activity by the Defendants, the Plaintiff began by seeking the following relief:
i. Permanent injunctions restraining the Defendants, their employees, agents, officers, directors or assigns, as the case may be, by themselves or in combination with any other person, from directly or indirectly:
i. infringing copyright in the Report; and
ii. producing, reproducing, publishing, communicating to the public by telecommunication, using or distributing the Report, or any substantial part thereof, in any material form whatsoever, or authorizing any other person to do so;
ii. A declaration that copyright subsists in the Report and that the Plaintiff is the owner thereof;
iii. A declaration that by copying, reproducing, distributing, distorting, and modifying the Report, without the permission, consent, or license of the Plaintiff, the Defendants Cook and ESIL have infringed the Plaintiff’s copyright and moral rights in the Report;
iv. A declaration that in reproducing and distributing the Report or any modified versions of the Report without leave or license and in association with the Plaintiff’s name, Defendant Reif Estate and Defendant Reif have infringed the Plaintiff’s copyright and moral rights in the Report;
v. A declaration that by reproducing, distributing, making available, and communicating to the public by telecommunication the Report in association with the Plaintiff’s name, the Defendant Re/defining Water Inc. has infringed the Plaintiff’s copyright and moral rights in the Report;
vi. Damages for copyright infringement and moral rights infringement;
vii. An accounting of the Defendant’s profits;
viii. Delivery up to the Plaintiff of all copies of the Report and any modified versions;
ix. Statutory damages pursuant to the Copyright Act at the election of the Plaintiff;
x. Punitive, aggravated and exemplary damages;
xi. Pre and post-judgment interest;
xii. Goods and services tax on monetary awards as appropriate;
xiii. Costs of this action; and
xiv. Such further and other relief as this Court may deem just.
[9] During the course of the trial, however, the Plaintiff elected to claim statutory damages under section 38.1 of the Copyright Act in lieu of damages and profits which he could not prove. In addition, instead of claiming damages for breach of moral rights, the Plaintiff asked the Court to take into account the modifications to the Report made by the Defendants when assessing punitive damages.
CONCESSIONS AND ELECTIONS
[10] For the purposes of this action, the Defendants have conceded that:
a. The Report attracts copyright protection;
b. The Plaintiff is the owner of the copyright in the Report; and
c. Insofar as moral rights adhere to the Report, the Plaintiff is the owner of those moral rights.
[11] During the course of the trial the Plaintiff conceded that, as far as moral rights were concerned, he could not adduce evidence to show that any reputation he might enjoy as a consultant has been damaged or prejudiced by the modifications made to the Report by any of the Defendants. Consequently, he withdrew his claim for damages for breach of moral rights but asked the Court to take into account the conduct of the Defendants in modifying the Report when assessing any punitive damages to which he might be entitled.
[12] The Plaintiff also failed to adduce evidence at trial to show that he had suffered any damage as a result of breach of copyright, or that any profits had been earned by the Defendants as a result of any breach of the copyright in the Report. Consequently, the Plaintiff elected to pursue statutory damages under section 38.1 of the Copyright Act.
EVIDENCE OF INFRINGEMENT OF COPYRIGHT
[13] Generally speaking, the evidence adduced concerning infringement of copyright suggests that the Plaintiff’s claims are disproportionate and opportunistic.
[14] Based upon modifications made to the Report by Mr. Cook and ESIL, the Plaintiff initially alleged a breach of his moral rights but was unable to demonstrate or prove how any reputation he might enjoy as a consultant has been, or could be, prejudiced by those modifications. He merely asserted that any technically competent person reading the modified Report would question his technical competence. However, the evidence is clear that the version of the Report that went on Re-defining Water’s website was the original, so that there could be no prejudice to the Plaintiff’s reputation as a result of anyone seeing the original Report, unless that damage was caused by what the Plaintiff had himself put in the original Report. As regards any modified version of the Report, the evidence from the Plaintiff himself is that no one has contacted him to question his technical competence and he was at a loss to show the Court how his reputation has been prejudiced or affected in any way. This is hardly surprising, given the evidence of an extremely restricted distribution of any modified version of the Report.
[15] In relation to breach of copyright, the Plaintiff entered the trial seeking $27,000,000.00 (CD) as compensation for acts that, even if proved, would be fairly contained and/or inconsequential forms of infringement. He says that the Defendants have used his Report without his consent to raise significant sales and investment receipts but, once again, he has failed to adduce evidence to show how, even if his allegations of infringement are accepted, the Defendants have caused him any damage or have made a profit from the unauthorized exploitation of his copyright in the Report. As with his allegations of breach of moral rights, the Plaintiff has not placed his assertions in their full context or provided the Court with the evidence it needs to fully assess the compensation and other relief he seeks. As a consequence, the Plaintiff modified this aspect of his claim at the trial to a claim for statutory damages under section 38.1 of the Copyright Act in the amount of $20,000, which he then sought to supplement by an inflated and unsubstantiated claim for $750,000 by way of punitive damages to punish conduct on the part of the Defendants that has, by and large, been a fairly conventional response to the Plaintiff’s opportunistic demands for large and disproportionate sums of money.
[16] Behind the claims, there are suggestions in the evidence of a former business and personal relationship between the Plaintiff and Mr. Cook that has gone sour. Mr. Cook was the person who secured for the Plaintiff the opportunity to produce the Report and to form a contact with Mr. Vollmer of VII Inc. In order to secure Mr. Vollmer’s assistance in raising investment dollars for ESLIN, Mr. Cook recommended that Mr. Vollmer use the Plaintiff to produce the Report that dealt with ESLIN’s water purification technology. But the relationship between the Plaintiff and Mr. Cook turned confrontational and, by the time of the trial, it was apparent that the breach of copyright and breach of moral rights allegations were symptomatic of a deeper frustration and disappointment that goes well beyond the facts and legal concepts invoked by the Plaintiff. The other Defendants have been caught in the fallout from a failed relationship that has not yielded the rewards to which the Plaintiff believes he is entitled. The Plaintiff may or may not have good grounds for his complaints about Mr. Cook, but breach of moral rights and breach of copyright in the Report cannot be exaggerated in order to cover the Plaintiff’s general grievances, whatever they may be. This is why, at the trial, the Plaintiff was reduced to asking the Court to punish the Defendants for conduct towards him that he perceives as high-handed and unconscionable but which, in reality, is little more than an attempt by the Defendants to resist and defend themselves against the excessive nature of the Plaintiff’s claims.
[17] My review of the evidence suggests the following limited dealings with the Report by the Defendants:
a. The Plaintiff provided a copy of the Report to ESIL/Mr. Cook upon its completion in June, 2003;
b. In February 2004, Mr. Cook contacted the Plaintiff to advise that he needed another copy of the Report and the Plaintiff obliged by sending Mr. Cook an electronic copy by e-mail;
c. Mr. Cook made modifications to the text of the Report he received from the Plaintiff in February 2004;
d. Shortly after making modifications to the Report in February 2004, Mr. Cook provided a modified copy of the Report to Mr. Klaus Reif, one of the Defendants who, at the time, was an existing investor in ESIL and who was considering an additional investment in ESIL that did not occur. Mr. Cook originally thought that Mr. Reif forwarded this copy of the Report to Germany, but Mr. Reif clarified that he had not done this;
e. Mr. Reif made one copy of the modified Report and provided it to his friend and business contact, Mr. Wayne Cardiff, another investor in ESIL who wished to identify possible additional investors. There is no evidence that Mr. Cardiff made any copies of the Report and it seems clear that the copy provided to Mr. Cardiff was returned to Mr. Reif within a very short space of time and was eventually returned to the Plaintiff. Mr. Reif says he also downloaded on June 3, 2005 a copy of the Report from the Re-defining Water website after the litigation started. He says he did not use this copy and retained it to show, after the law suit began, that the Report was “in public domain”;
f. In 2004, Re-defining Water, one of the Defendants and a company that licences ESIL technology to produce and distribute bottled water products, posted the original Report (without modifications) on its Internet website where it remained until it was removed upon commencement of this litigation. There is no evidence that the Report on Re-defining’s website was ever downloaded by anyone or was even viewed during the time it remained on the website, except by Mr. Reif.
[18] The Plaintiff speculates that further use was made of the Report but there is no evidence before me to support anything more than the limited uses outlined above. For example, I can find no evidence to suggest that Reif Winery Inc. (c.o.b. Reif Estate Winery) did anything with the Report that could be construed as an infringing act.
[19] Also, I can find no evidence that multiple copies of the Report were made and disseminated. Those that were made were either returned to Plaintiff by Mr. Reif when the Plaintiff demanded (except for the copy that Mr. Reif downloaded for purpose of the lawsuit) or were produced as part of the discovery process. The Plaintiff has pointed to and read into evidence a portion of Mr. Cook’s examination for discovery where Mr. Cook says that “ESIL or I made, about four, five something like that,” but it is clear to me that, when these remarks are read in full context, Mr. Cook is here referring to “modifications to one report,” not multiple reports.
[20] The only action that could have resulted in broader dissemmation occurred when Re-defining Water placed the original version of the Report on its website, but there is no evidence before me, apart from Mr. Reif’s downloading of a single copy for purposes of this lawsuit, that anyone either viewed the Report on the website or downloaded it.
[21] I can find no evidence that any of the Defendants made any money, or gained any other advantage, from either copying or using the Report or any modified version of the Report, or that they have deprived, or could deprive, the Plaintiff of any profits that the Plaintiff might earn from the Report. In fact, the Plaintiff does not even allege that the Defendants sold copies of the Report or that the conduct of the Defendants prevented him from selling or otherwise exploiting the Report with someone else, and it is difficult to see how the Plaintiff might make money from any such activities given the limited purpose of the Report and the context in which it was produced.
[22] There is no evidence to demonstrate that either ESIL or Mr. Cook were able to use the Report to sell licences in the ESIL technology or to sell the ESIL patent portfolio. The negotiations with the Braun Group, for instance, did not result in a sale of the portfolio.
[23] Re-defining Water posted the original Report on its website but there is no evidence before the Court that anyone reviewed the Report or made decisions to invest in, or otherwise deal with Re-defining Water and/or ESIL, in reliance on the Report, or that Re-defining Water and/or ESIL or Mr. Cook earned any revenues or sold rights in the ESIL technology in connection with the Report. The Plaintiff speculated at trial that Re-defining Water had been able to secure investments and loans as a result of posting the Report on its website, but no evidence was offered to show that anyone reviewed the Report on the Re-defining Water website or made investment decisions in reliance on the Report, or that Re-defining Water earned any revenue or profits as a result of anyone reviewing and/or relying upon the Report.
[24] From the foregoing, it appears to me, with breaches of moral rights no longer in the picture, that the possible infringing acts proved that fall within the scope of the claims are as follows::
a. Re-defining Water’s posting of the Report on its website;
b. Mr. Cook’s giving a modified version of the Report to Mr. Reif;
c. Mr. Reif’s making of one copy of the Report to give to Mr. Cardiff.
[25] Mr. Reif eventually returned the modified version of the Report he had provided to Mr. Cardiff to the Plaintiff.
[26] Restricted as these uses of the Report are, the Plaintiff still alleges infringement of his copyright. In order to succeed in this regard, it is necessary for him to show that the copying of the Report by Mr. Cook and Mr. Reif, as well as the posting of the Report by Re-defining Water on its website, occurred without the Plaintiff’s consent. The Defendants say that both the copying of the Report and the website posting were done with the Plaintiff’s consent. The Plaintiff denies this.
CONSENT
Mr. Cook and Mr. Reif
[27] The issue of consent is complicated in this case by the indirect way in which the Report was produced originally for Mr. Vollmer and VII Inc. and by the fact that, in the contemporaneous documentation, the Plaintiff did not assert or make clear any restrictions he wished to place upon the use of the Report. He says that his intentions in this regard were “understood,” but an examination of the documentation and the full context suggests otherwise. As the lawsuit has preceded both sides have staked out their positions on this issue. However, the Court has paid close attention to the contemporaneous documentation and the context within which the Report was created and made available to both Mr. Vollmer and Mr. Cook by the Plaintiff.
[28] The Plaintiff initially produced the Report for Mr. Charles Vollmer of VII Inc. Mr. Vollmer lives in Virginia, U.S. VII Inc. is Mr. Vollmer’s consulting firm and some time in 2003 he became interested in ESIL’s water purification technology.
[29] Mr. Vollmer’s evidence is that he decided to work with Mr. Cook “to find out if the U.S. Government would be interested in this technology.” Mr. Vollmer “also had some contacts in the Middle East that were in desperate need of water … purification, and this might be a possibility for them as well.”
[30] Mr. Vollmer says he needed the Report for fairly obvious reasons:
I was preparing a package to go to potential clients, both investors, U.S. Government, and – and overseas. And I needed to have a – an engineering analysis that verified that this – this technology was what it was, and from an engineering viewpoint then it was what it said it advertised to be and it was in fact as unique as Mr. Cook had represented it to be.
[31] Mr. Cook referred Mr. Vollmer to the Plaintiff, who was then engaged by Mr. Vollmer and/or VII Inc. to provide the Report for $500. Mr. Vollmer never met the Plaintiff but they spoke once or twice on the phone and communicated through e-mail.
[32] The Plaintiff says he produced the Report for Mr. Vollmer and VII Inc. for the sole purpose of facilitating Mr. Vollmer’s possible investment in ESIL. Mr. Vollmer’s evidence is that this is not so:
a. [Mr. Vollmer] Well, he had sent me the statement of work electronically that I – that is one that is a faxed copy of it, and then he sent it to me on the e-mail. I responded, I said: Please go ahead and start with this effort. As we discussed, I’m looking for a compelling story to tell my investors why ESIL is unique, you know, is good and why isn’t it in the field already and mobile applications, and then I’d like to have this document in a – week or two and – because I was scheduled to tell my story to investors.
And when I say investors, I also mean the U.S. Government. We were looking to invest in the program as well, you know, from a bargaining point of view.
Q. In -- in addition to private companies.
A. Uh-huh.
Q. Okay.
A. But this – this thing is – it was telling him that I needed – I’m going to – I’m going to shop this information around. I’m going to give it around to a lot of people.
Q. And in your discussions with him did you ever discuss what you were going to do with the Report?
A. It was on the e-mail that I was going to use it to – it was a due diligence and I was going to use this to – with investors and different groups to see if I could raise funding for – for this – for this technology.
[33] Mr. Vollmer used the Report, along with other information about ESIL from other sources, as part of his power-point briefing to potential investors who might be interested in the ESIL water purification technology and/or investing in ESIL.
[34] The Plaintiff now says that he made it clear to Mr. Vollmer that he was not to show the Report to anyone else. Mr. Vollmer is clear that this was not the case:
Q. And did Mr. Nicholas ever tell you that you could not show the report to anyone else?
a. Absolutely not. I mean, he – when he sent me the report it came with no proprietary, no confidentiality, no copyright markings. It was explicitly said by me in the thing that I needed this to give out to people as a – a document, you know, verifying the integrity of – of the system and – and a little technical description of what it really – what does electrolysis really mean.
----------------------------------
Q. No restrictions in terms of – of making copies?
A. Of copies or – or any restrictions whatsoever.
Q. Okay.
A. He provided me the – the thing in the Word document, and the indication about him providing that thing is that I was free to – to do what – I mean, I said in my statement of work that I would distribute this to many people, and – but I never edited any of his – other than deleting those seven paragraphs. It – it went as – as he – as we agree.
[35] Although the Plaintiff now says otherwise, the Court accepts Mr. Vollmer’s account of the arrangements for various reasons:
a. He is not a party to this lawsuit and there is no suggested reason why he would not be truthful;
b. There is no contemporaneous documentation that supports the Plaintiff’s position. Mr. Vollmer is correct in stating that there were no copyright, confidential, proprietary or other restrictions evidenced in the written exchanges with the Plaintiff. The Plaintiff now says that his copyright in the Report is a “cherished asset,” but he failed at the material time to take even the most basic precautions of claiming copyright, confidentiality and restricted use in writing;
c. The whole context renders it highly implausible that Mr. Vollmer was expected not to use the Report in his package to shop around to investors. Investors require information from independent sources;
d. If the Plaintiff’s account were correct, then Mr. Vollmer would be in breach of both copyright and contract and, although the Plaintiff threatened to sue him, he has not done so;
e. The Plaintiff declined to attend Mr. Vollmer’s commission evidence examination to test the truthfulness or accuracy of Mr. Vollmer’s evidence. The Plaintiff has consistently declined to meet with Mr. Vollmer face to face.
[36] Mr. Vollmer did not succeed in selling any licences for ESIL technology and did not invest in ESIL. Nor is there any indication that anyone else did as a result of his efforts.
[37] Although Mr. Vollmer is not a party to this lawsuit and although the Report was initially produced for him and VII Inc., for the reasons given his testimony has a significant bearing upon the way the Report was used by Mr. Cook, ESIL and Re-defining Water.
[38] Although moral rights are no longer an issue, except in so far as they might have a bearing upon the Plaintiff’s claim for punitive damages, Mr. Vollmer makes it clear in his evidence that the Plaintiff authorized him to make modifications to the Report and sent the Report to him electronically in Word so that this could be done.
[39] It is also clear from Mr. Vollmer’s testimony that the Plaintiff’s assertions of copyright, confidentiality and other restrictions were only made after-the-fact and were not part of the contractual arrangements.
[40] In addition, after the Plaintiff had voluntarily provided Mr. Cook with a copy of the Report in February 2004 and had later threatened Mr. Cook and ESIL with a lawsuit over their use of the Report, Mr. Cook contacted Mr. Vollmer to ascertain whether Mr. Cook had misused the Report. Here is what Mr. Vollmer says he advised Mr. Cook:
Q. I’m going to show you [Mr. Vollmer] a copy of what looks to be an e-mail from you to Klaus Reif at Reif Winery, Inc. Have you seen this before?
a. Yes.
Q. And what is this document?
A. After some period of time that – that I got a call from Brian Cook, said that Fred Nicholas was going to sue him and – and he asked me if I had given him permission to use this package of stuff including this. So I said yes. I gave it to – I gave it to investors. I gave it to you. And he said would you send an e-mail to Klaus, who I have not met, saying that – that I authorized using – the electro capital that I – that I either both developed or bought.
[41] The e-mail from Mr. Vollmer to Mr. Reif (D-10) is dated March 15, 2004 and reads as follows:
Brian Cook asked me to send you this e-mail. You are free to use all or in part the report written by Fred Nichols [in his evidence he says he meant Nicholas] under contract to VII Inc.
[42] It is clear from Mr. Vollmer’s evidence that he was of the view that his contractual arrangements with the Plaintiff gave him full scope to use the Report to raise money from investors who might be interested in ESIL and its technology and to authorize Mr. Cook and Mr. Reif to use it for the same purpose.
[43] For reasons already given, other than the Plaintiff’s assertions to the contrary after the fact, there is nothing to suggest that Mr. Vollmer’s understanding of the arrangements and the permissible uses of the Report was not correct. At the very least, then, this accounts for Mr. Cook’s and Mr. Reif’s understanding that Mr. Vollmer did have the right to authorize their use of the Report with potential investors and that the Plaintiff had no proprietary or contractual rights that stood in the way of their doing this.
[44] Mr. Vollmer reiterates in his evidence what he told Mr. Cook:
When Mr. Cook queried me about – about my understanding of the restrictions on this document, he asked for information I sent and said here’s the invoice that I just – we just talked about that I sent to him, and I told him that I told Mr. Nicholas specifically that I wanted to use the technology for – to market the system to a number of my clients and that it was not marked proprietary or any terms or conditions restricted or mentioned on its uses. There was no markings on the report of any kind of restrictions, and it – and I intended to use it marketing without conditions or restrictions.
[45] Mr. Vollmer’s evidence, which the Plaintiff declined to cross-examine him on, suggests the following conclusions:
a. That the Plaintiff was fully aware that in producing the Report for Mr. Vollmer and/or VII Inc. it would be used widely and shown to potential investors to try and raise money for investment in ESIL and/or the ESIL technology;
b. That the Plaintiff placed no restrictions on its use for this purpose;
c. That Mr. Vollmer was of the view that he could authorize Mr. Cook and Mr. Reif to use the Report for the same purpose and that he did so;
d. That once the Plaintiff threatened to sue Mr. Cook, Mr. Cook took the precaution of checking with Mr. Vollmer to ensure that his and Mr. Reif’s use of the Report in relation to ESIL and the ESIL technology was contemplated by the arrangements that Mr. Vollmer had entered into with the Plaintiff at the time when the Report was produced.
[46] On September 18, 2006, the Plaintiff sent an e-mail to Mr. Vollmer in which he asked Mr. Vollmer to sign a document which, in part, read as follows:
Mr. Nicholas did not signed (sic) over his copyright to the above referenced report through any written agreement of contract for services. In fact, a signed written agreement between Mr. Nicholas and myself for services does not exist.
I did not provide Brian G. Cook, or any of the defendant named in Mr. Nicholas’s copyright infringement action (Federal Court of Canada, File No.: T-949-05), with a copy of the above referenced report.
[47] Mr. Vollmer refused to sign this document. In retrospect, its contents are non-controversial. The Defendants now agree that the Plaintiff does own the copyright in the Report and the Plaintiff himself provided Mr. Cook with a copy of the Report. But this does not qualify Mr. Vollmer’s evidence that the Plaintiff was fully aware of the way the Report was to be used and that Mr. Vollmer authorized Mr. Cook and Mr. Reif to use the Report in ways that were consistent with that use.
[48] In return for the confirmation that the Plaintiff asked from Mr. Vollmer (and which Mr. Vollmer refused to give), the Plaintiff threatened as follows:
In return for receipt of the above letter, I will provide you with a letter releasing you from any civil or criminal liability with respect to this report.
In the absence of the above letter, I will have no choice but to act on my attorney’s advice and amend the claim to include VII Inc. and yourself as defendants in the above named Federal Court of Canada copyright infringement action. Of course, you aware (sic) based on our previous discussions that my intention was/is not to involve you.
[49] Mr. Vollmer did not provide the letter requested by the Plaintiff, and the Plaintiff did not follow through on this threat. In this regard the Plaintiff has revealed that he is quite capable of taking up legal positions as a matter of expediency in order to try and secure a particular result. As I shall point out, this is also revealed at other places in the evidence. Mr. Vollmer and VII Inc. were not joined as defendants in this lawsuit. If what the Plaintiff alleges about the limitations he placed upon the use of the Report is true, then there is no satisfactory reason why Mr. Vollmer and VII Inc. are not also defendants in this claim or in some claim made in the U.S.. In fact, when Mr. Vollmer was examined for commission evidence the Plaintiff declined to attend to cross-examine him. The Plaintiff has still never met Mr. Vollmer. The Plaintiff’s conduct shows a marked reluctance to follow through on his threats or to confront and challenge Mr. Vollmer to his face about Mr. Vollmer’s account of their arrangements and his understanding of how the Report would be used. The Plaintiff has simply denied in Court that he consented to any such use. The Court cannot accept the Plaintiff as credible on this issue. Mr. Vollmer’s account of the arrangements and his understanding of how the parties contemplated that the Report would be used are to be preferred. This suggests that any use Mr. Cook and Mr. Reif made of the Report to raise investment monies was within the contemplation of the Plaintiff and Mr. Vollmer when the Report was produced and the Plaintiff was paid $500 for his work. The Plaintiff did not assign his copyright in the Report but he cannot now say he did not consent to the uses of the Report made by Mr. Cook and Mr. Reif in their dealings to find investors and/or arrive at a deal for the ESIL patent portfolio. And even if the Plaintiff did not consent to the use of the Report by Mr. Cook and Mr. Reif, Mr. Vollmer’s evidence makes it clear that there was no high-handed or unconscionable use of the Report by Mr. Cook or Mr. Reif that would justify a significant award of statutory damages in accordance with the criteria laid down in subsection 38.1(5) of the Copyright Act, or an award of punitive damages.
[50] The Plaintiff says that Mr. Vollmer’s and Mr. Cook’s version of how the Report was to be used is belied by the fact that, on February 27, 2004, Mr. Cook revealed that ESIL was negotiating to sell its patent portfolio to “the Braun Group of Germany” and offered to pay the Plaintiff a significant sum of money if the sale went through (P-9). Mr. Cook wrote to the Plaintiff as follows:
Although the documents are not signed yet, they are well into the due diligence phase which includes a “slightly” modified version of your June 3, 2003 independent report on the ESIL Technology.
Fred, you and I have been friends for a long time and you of all people know that I have tried my best to bring this technology to the world. I am out of money, health and everything else it takes.
If and when this patent sale happens, I will pay to you the sum of $225,000.00 U.S.D. plus the $25,000.00 U.S.D. that I feel I owe you, for a total of $250,000.00.
I was going to do this anyway, but this letter makes it official.
[51] In discovery, which the Plaintiff read into evidence, Mr. Cook explained that he made this offer for purposes of “goodwill” and “for the purpose of bringing to an end, the Plaintiff’s interference with the potential deal.”
[52] So the offer to pay the Plaintiff money at this time is not an acknowledgment that Mr. Cook’s use of the Report in relation to the Braun Group or other investors was outside of what was contemplated when the Report was produced. The Plaintiff became assertive about his copyright upon learning that Mr. Cook was negotiating with the Braun Group to sell the ESIL patent portfolio for a significant sum of money. Mr. Cook’s offer to buy the Plaintiff off “[i]f and when this patent sale happens” makes sense for someone in his position. $25,000.00 of the offer related to some old debt and the $225,000.00 is an obvious attempt to placate someone who could interfere with negotiations at a crucial stage. This can hardly be seen as an acknowledgment by Mr. Cook that he knew he was not legitimately using the Report or that Mr. Vollmer’s account of his arrangements with the Plaintiff is either untrue or incorrect.
[53] The Plaintiff’s own re-draft of Mr. Cook’s offer and his attempt to secure better terms for himself (P-11) make this clear:
If and when this patent sale happens, (or the patent sale to any of the party occurs) immediately upon receipt of the funds form the buyer I will pay you the sum of $225,000.00 (United States Dollars) for technical services, expertise and advice provided by you over the past ten years or so plus the $25,000.00 (United States Dollars) for payment of the outstanding note that I owe you for a total lump sum payment of $250,000.00 (Two Hundred and Fifty Thousand United States Dollars) payable by bank draft, certified check or cashiers check. The transaction of funds shall occur in a Caribbean country of your choice.
[54] Mr. Cook did not accept this counter-offer and withdrew his original offer. However, the Plaintiff’s re-drafting of the original offer makes it clear that he was fully aware that the monies offered by Mr. Cook were “for technical services, expertise and advice provided…over the past ten years or so … .” The Report is not even mentioned and the Plaintiff reveals that, at this time, with Mr. Cook trying to find a buyer for the ESIL technology, his focus is not upon copyright in the Report, but in securing compensation for services rendered over 10 years. All of this supports the Defendants’ contention that the copyright and moral rights issues surrounding the Report were only raised by the Plaintiff as a pretext for leveraging monies out of Mr. Cook or ESIL from any deal they struck to sell the ESIL technology.
[55] Mr. Cook was not called to testify at the trial but the Plaintiff chose to read-in as part of the Plaintiff’s own evidence a portion of Mr. Cook’s examination for discovery in which Mr. Cook says clearly that the Plaintiff authorized him to make any changes he wanted to the original report that the Plaintiff had prepared for Mr. Vollmer and VII Inc. The Plaintiff’s position is that he gave no such authorization and merely forwarded copies of the Report to Mr. Cook in 2003 and 2004 for use by Mr. Cook and ESIL in their negotiations with Mr. Vollmer and VII Inc. The Plaintiff was closely cross-examined on this issue.
[56] It is clear from the Plaintiff’s own testimony that at the times when he provided original copies of the Report to Mr. Vollmer and to Mr. Cook he did not impose any restrictions in writing on the use of the Report. There were no copyright notices on the Report, no confidentiality requirement was asserted, and there were no written limitations regarding its use. The Plaintiff simply asserts that all such restrictions and limitations were understood and that it is the ownership of copyright in the Report that grants him complete control over its uses:
Q. You believe copyright prevents somebody from showing a document that you created to someone else?
A. It depends on the purpose of it, of showing that.
Q. It is not the copyright law per se, it is the other aspects of the agreement that you might have with somebody?
A. No, it is the copyright, and I don’t know what you mean by the other aspects of the agreement.
[57] So the Plaintiff appears not to fully understand that if he wanted to impose confidentiality restrictions and/or limit the people to whom Mr. Vollmer and Mr. Cook might show the Report he needed to do so at the time when he provided them with copies of the Report. His position now is that he did not do this at the time because confidentiality and use restrictions were understood and/or are an inherent part of his copyright in the Report. This is a significant problem for the Plaintiff in this lawsuit because neither Mr. Vollmer nor Mr. Cook (at least by the time of the trial) now dispute the Plaintiff’s copyright in the Report, but they say that when they were provided with copies of the Report it was clear then, both as a result of what the Plaintiff said and the necessary inferences demanded by the whole context and the purpose for which the Report was produced and copies provided to Mr. Vollmer and Mr. Cook, that they were free to use the Report in the way they used it.
[58] The Plaintiff says that the actual exchanges and the context make it clear that the Report provided to VII Inc. could only be used by VII Inc. to do due diligence prior to a possible investment in ESIL. As far as other investors are concerned, the Plaintiff says that Mr. Vollmer could only use the Report to “tell a compelling story,” by which he seems to mean that Mr. Vollmer could not show other people the Report, or any extract from the Report, but was limited to giving investors his own story about ESIL and its technology. Mr. Vollmer says otherwise and I have already given reasons why the Court prefers Mr. Vollmer’s account concerning the authorization of changes to the Report and the understanding that he would shop the Report around to possible investors.
[59] Mr. Cook’s position (from the evidence read in by the Plaintiff) appears to be the same as that of Mr. Vollmer. He says the Plaintiff authorized him to make modifications to the Report and to use it, not only in negotiations with VII Inc., but as a general tool to find investors in ESIL or purchasers of ESIL technology.
[60] It is clear from the record that, as with Mr. Vollmer, the Plaintiff did not clearly claim copyright, or impose a confidentiality or limited use requirement when he provided Mr. Cook with copies of the Report.
[61] In cross-examination, the Plaintiff asserted the following:
a. That on or about June 6, 2003 the Plaintiff sent Mr. Cook and ESIL a corrected version of the Report;
b. That prior to sending the Report on June 6, 2003 he “probably” had a discussion with Mr. Cook about the Report on June 3, 2003;
c. The only thing he recalls about the conversation was that “It was probably about design parameters and that type of thing”;
d. He discussed with Mr. Cook the fact that he was preparing the Report;
e. He made