Planification-Organisation-Publications Systèmes (POPS) Ltée v. 9054-8181 Québec Inc.

Planification-Organisation-Publications Systèmes (POPS) Ltée v. 9054-8181 Québec Inc.
Court (s) Database
Federal Court Decisions
Date
2013-04-25
Neutral citation
2013 FC 427
File numbers
T-583-09
Decision Content
Date: 20130617
Docket: T-583-09
Citation: 2013 FC 427
Ottawa, Ontario, June 17, 2013
PRESENT: The Honourable Chief Justice
BETWEEN:
PLANIFICATION-ORGANISATION-PUBLICATIONS SYSTÈMES (POPS) LTÉE
and ELIZABETH POSADA
Plaintiffs
and
9054-8181 QUÉBEC INC,
PHILIPPE CHAPUIS and
BENOIT BAZOGE
Defendants
AMENDED REASONS FOR JUDGMENT AND JUDGMENT
[1] This proceeding has its roots in an apparent misunderstanding that has had a sad outcome for the three individuals identified above, who were once very dear friends. The manner in which they have chosen to resolve that misunderstanding has also been very costly. It is likely that the legal costs alone that each of them has incurred in connection with this proceeding far exceeds the value of the interests they assert.
[2] At its heart, this case is about whether the Defendants have a right to use a business simulation software product, and adaptations of that product, in respect of which the Plaintiffs have registered and claim to own copyright.
[3] Among other things, the Plaintiffs seek:
i) a declaration that copyright subsists in those software products, that the Plaintiff PLANIFICATION-ORGANISATION-PUBLICATIONS SYSTÈMES (POPS) LTÉE [POPS] is the owner of copyright in those products, and that such copyright has been infringed by the Defendants;
ii) a permanent injunction to restrain the Defendants from infringing POPS’ copyright in those products; and
iii) all of the Defendants’ profits arising from their alleged infringing activities, an accounting of revenues obtained therefrom, certain damages and pre-and post-judgment interest.
[4] By way of counterclaim, the Defendants seek:
i) an expungement of POPS’ Certificates of Registration from the Register of Copyright, together with a declaration that Ms. Posada is not the author of one of the adaptations of the software (known as “Epsilon”);
ii) punitive and exemplary damages in the amount of $10,000;
iii) $100,000 in solicitor-client costs; and
iv) confirmation that they hold a perpetual licence to use the software and certain of its adaptations for all purposes related to IDP Inc’s professional activities.
[5] For the reasons set forth below, I have determined that:
i) copyright subsists in the above-mentioned software products;
ii) POPS is at least one of the rightful owners of copyright in those products;
iii) the Defendant 9054-8181 QUÉBEC INC, which also does business as IDP Inc [collectively, IDP] has at least an implied licence to use those products;
iv) the Plaintiffs were not entitled to revoke that licence;
v) the Defendants did not infringe the Plaintiffs’ copyright and therefore are not liable to pay any damages, or to account for any profits, to the Plaintiffs;
vi) the Defendants have not demonstrated that the Plaintiffs’ conduct warrants the imposition of punitive and exemplary damages, or an award of solicitor-client costs;
vii) apart from what is mentioned in subparagraphs 3(i) and 3(ii) above, the Plaintiffs are not entitled to any of the other relief that they sought in this proceeding;
viii) the Defendants are entitled to all of the fixed lump sum amount of $20,000 that the parties agreed should be the legal costs awarded in this proceeding.
[6] This was a bilingual (English and French) proceeding. In the reasons below, all translations of testimony given in the other official language and of passages in documents written in that language are my own.
I. The Parties
[7] The Plaintiff, POPS, is a federally incorporated company engaged in the business of software development and commercialization, consulting and professional training since 1985.
[8] The Plaintiff, Elizabeth Posada, is the sole shareholder, director and officer of POPS. She is also employed at the Université du Québec à Montréal [UQAM] as a Professor in the Department of Strategy. She holds a PhD in business administration and has been intimately involved in the development of the above-mentioned software products since 1984. In addition, from approximately February 1, 2007 until at least October 1, 2008, she was a shareholder, director, officer and employee of IDP.
[9] The Defendant, IDP, was formed under the laws of the Province of Quebec in 1997. It is primarily engaged in the business of conducting learning seminars in Canada and abroad for university students and corporations, sometimes with the aid of the simulation software products that are the subject of this proceeding.
[10] The Defendant, Philippe Chapuis, is a shareholder, director, officer and employee of IDP. He holds a PhD in business administration and has been a lecturer in the Department of Strategy and Social Responsibility at UQAM for over 10 years.
[11] The Defendant, Benoît Bazoge, is a shareholder, director, officer and employee of IDP. He holds a PhD in business administration, is a Professor in the Department of Strategy and Social Responsibility at UQAM, and is currently academic Vice-Dean of the Management School of Business.
II. Background
[12] In the 1970s and perhaps earlier, Andrew Szendrovits, a Professor at McMaster University [McMaster], developed a software product alternately known as “Business Game” and “Business Simulation”, which was programmed in Fortran and operated on mainframe computers.
[13] By all accounts, the software was built around a core of sophisticated mathematical formulas and “calculation routines” that permitted users to simulate business outcomes based on inputs that were reduced to what were then known as punch-cards, which were “read” by mainframe computers.
[14] In the early 1980s, when Ms. Posada was a student at the University of Sherbrooke, she assisted a Professor there who used another simulation software product known as Compete. It appears that Compete was very cumbersome and difficult to use in the classroom environment. Accordingly, when she first came into contact with Business Game in approximately 1984, she became interested in the possibility of switching to that product.
[15] At that time, it appears that Business Game was circulating widely in academic circles in Ontario and Quebec as virtually an open source product. Contemporaneously, the first microcomputers had started to become available and Ms. Posada began to investigate the possibility of adapting Business Game to the microcomputing environment. After discovering that Fortran for microcomputers was available, she began to develop a microcomputer interface for Business Game.
[16] According to her uncontested testimony, after several months of extensive work, Ms. Posada was successful in developing the microcomputer interface for the simulation software, which she began to call “Ceres”. Among other things, an important and novel feature of Ceres was that it permitted users to learn business concepts in an interactive manner.
[17] For example, among other things, the software allowed users, typically university students or business executives, to vary certain inputs to produce marketing, sales, financial, production, inventory and other reports, or “outputs”.
[18] Notwithstanding Ms. Posada’s substantial work on the software, which resulted in her having contributed slightly more lines of the software’s code than Mr. Szendrovits, its “core”, namely its mathematical formulas and “calculation routines”, remained virtually unchanged from what was developed by Mr. Szendrovits (Transcript, January 8, 2013, at p 94).
[19] Soon after developing Ceres, Ms. Posada contacted Mr. Szendrovits to inform him of what she had done with the software. It appears that he took a great interest in her work and that they soon became good friends.
[20] In 1985, Mr. Szendrovits, Ms. Posada, Jérôme Doutriaux and Jean-Paul Sallenave entered into an agreement [the 1985 Agreement] to cede certain rights in Ceres to POPS.
[21] According to Ms. Posada, Mr. Doutriaux was a party to that agreement because he had translated certain lines of code to permit certain outputs to be displayed in French (e.g., he adapted the software to enable the words “balance sheet” to be displayed as “bilan”). Ms. Posada also testified that Mr. Sallenave was a party to the agreement because he wrote the instruction, pedagogical and other manuals that were distributed with Ceres during the years that it was sold, in the 1980s and 1990s.
[22] Given that neither Mr. Doutriaux nor Mr. Sallenave participated in this proceeding, this decision will not address the full extent of their contribution to Ceres or its manuals, or the nature of the rights, if any, that they may have in Ceres or its adaptations. Accordingly, any conclusion reached regarding the ownership of the copyright in Ceres, its adaptations or any manuals that may continue to include material authored by Mr. Sallenave will be couched in terms of such ownership being at least “partial” in nature.
[23] In approximately 1986, Mr. Bazoge met Mr. Chapuis while they were both doctoral students. They met Ms. Posada the following year, while she too was a doctoral student. Over time, they developed a close friendship.
[24] In 1989, Mr. Bazoge purchased Ceres from POPS on behalf of UQAM for $2,000. The following year, Mr. Chapuis purchased Ceres for the same amount on behalf of the École Supérieure de Commerce in Tours, France.
[25] In the last several years, various updated versions of Ceres, known as Epsilon 1, Epsilon 2 [collectively, Epsilon], Comex and Omega [collectively, the Software], were developed by one or more parties to this proceeding.
[26] The parties’ longstanding informal working relationship was formalized on or about February 1, 2007, when Ms. Posada became a shareholder, director, officer and employee of IDP.
[27] In October 2008, a dispute arose between the parties. Initially, it appears to have primarily concerned the compensation that Ms. Posada was receiving from IDP, relative to that which Messrs. Chapuis and Bazoge were receiving. However, that dispute quickly expanded to include the terms of Ms. Posada’s exit from IDP. That dispute is the subject of another proceeding that is currently before the Superior Court of Québec.
[28] By approximately October 20, 2008, after Ms. Posada came to believe that the Defendants had begun to assert ownership rights in the copyright to the software, the dispute further expanded to include the Defendants’ right to use the Software, and, at least in Ms. Posada’s mind, POPS’ copyright in the Software. The following year, after attempting to resolve their dispute over the course of several months, the Plaintiffs instituted this proceeding.
III. The Issues
[29] The issues to be determined in this proceeding can be conveniently summarized as follows:
i) Does POPS and/or Ms. Posada own the copyright in Ceres or any of its adaptations, including Comex, Epsilon 1, Epsilon 2 and Omega?
ii) Was Ms. Posada hired by IDP to develop any of Comex, Epsilon or Omega?
iii) If so, what rights, if any, do the Plaintiffs and IDP have in respect of those versions of the Software, and in Ceres?
iv) Were the Plaintiffs entitled to revoke any rights that they may have granted to IDP to use the Software?
v) Did the Defendants infringe any copyright that POPS may have held in any versions of the Software?
vi) If so, what profits were made by, or should be imputed to, the Defendants in respect of their allegedly infringing activities and awarded to the Plaintiffs?
vii) What remedies and legal costs, if any, should be awarded to the Plaintiffs or the Defendants?
[30] Although the foregoing statement of issues differs somewhat from the issues identified by Prothonotary Morneau in his Order dated April 25, 2012, and by the parties themselves in the Joint List of Issues To Be Determined At Trial, I am satisfied based on the parties’ pleadings and the issues jointly addressed during the proceeding that the foregoing list accurately reflects and summarizes the issues in this proceeding.
IV. Relevant Legislation
[31] It is not disputed between the parties that software falls within the following definition of “every original literary, dramatic, musical and artistic work” that is set forth in section 2 of the Copyright Act, RSC, 1985 c C-42 [the Act]:
“every original literary, dramatic, musical and artistic work”
« toute oeuvre littéraire, dramatique, musicale ou artistique originale »
“every original literary, dramatic, musical and artistic work” includes every original production in the literary, scientific or artistic domain, whatever may be the mode or form of its expression, such as compilations, books, pamphlets and other writings, lectures, dramatic or dramatico-musical works, musical works, translations, illustrations, sketches and plastic works relative to geography, topography, architecture or science;
« toute oeuvre littéraire, dramatique, musicale ou artistique originale »
“every original literary, dramatic, musical and artistic work”
« toute oeuvre littéraire, dramatique, musicale ou artistique originale » S’entend de toute production originale du domaine littéraire, scientifique ou artistique quels qu’en soient le mode ou la forme d’expression, tels les compilations, livres, brochures et autres écrits, les conférences, les oeuvres dramatiques ou dramatico-musicales, les oeuvres musicales, les traductions, les illustrations, les croquis et les ouvrages plastiques relatifs à la géographie, à la topographie, à l’architecture ou aux sciences.
[32] Section 2 of the Act also defines “infringing” to mean, “in relation to any work in which copyright subsists, any copy, including any colourable imitation, made or dealt with in contravention of this Act.”
[33] Pursuant to section 3 of the Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof. Pursuant to paragraph 3(1)(a), this includes the sole right to produce, reproduce, perform or publish any translation of the work.
[34] Pursuant to subsection 5(1), copyright subsists in every original literary, dramatic, musical and artistic work if certain conditions are met. It is not contested by the parties that the requisite conditions in respect of the Software are met in this proceeding. Accordingly, as requested by the Plaintiffs, a declaration to this effect will be made in the attached judgment and it is not necessary to address that issue in these reasons.
[35] Subsection 13(1) of the Act states that the author of a work shall be the first owner of the copyright therein. However, subsection 13(3) states:
Work made in the course of employment
(3) Where the author of a work was in the employment of some other person under a contract of service or apprenticeship and the work was made in the course of his employment by that person, the person by whom the author was employed shall, in the absence of any agreement to the contrary, be the first owner of the copyright, but where the work is an article or other contribution to a newspaper, magazine or similar periodical, there shall, in the absence of any agreement to the contrary, be deemed to be reserved to the author a right to restrain the publication of the work, otherwise than as part of a newspaper, magazine or similar periodical.
Oeuvre exécutée dans l’exercice d’un emploi
(3) Lorsque l’auteur est employé par une autre personne en vertu d’un contrat de louage de service ou d’apprentissage, et que l’oeuvre est exécutée dans l’exercice de cet emploi, l’employeur est, à moins de stipulation contraire, le premier titulaire du droit d’auteur; mais lorsque l’oeuvre est un article ou une autre contribution, à un journal, à une revue ou à un périodique du même genre, l’auteur, en l’absence de convention contraire, est réputé posséder le droit d’interdire la publication de cette oeuvre ailleurs que dans un journal, une revue ou un périodique semblable.
[36] Subsection 13(4) of the Act deals with assignments and licences. That provision states:
Assignments and licences
(4) The owner of the copyright in any work may assign the right, either wholly or partially, and either generally or subject to limitations relating to territory, medium or sector of the market or other limitations relating to the scope of the assignment, and either for the whole term of the copyright or for any other part thereof, and may grant any interest in the right by licence, but no assignment or grant is valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by the owner’s duly authorized agent.
Cession et licences
(4) Le titulaire du droit d’auteur sur une oeuvre peut céder ce droit, en totalité ou en partie, d’une façon générale ou avec des restrictions relatives au territoire, au support matériel, au secteur du marché ou à la portée de la cession, pour la durée complète ou partielle de la protection; il peut également concéder, par une licence, un intérêt quelconque dans ce droit; mais la cession ou la concession n’est valable que si elle est rédigée par écrit et signée par le titulaire du droit qui en fait l’objet, ou par son agent dûment autorisé.
[37] Pursuant to subsection 27(1), it is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that only the owner of the copyright has the right to do under the Act. Subsection 27(2) specifically states that it is an infringement of copyright for any person to:
Secondary infringement
(2) It is an infringement of copyright for any person to
(a) sell or rent out,
(b) distribute to such an extent as to affect prejudicially the owner of the copyright,
(c) by way of trade distribute, expose or offer for sale or rental, or exhibit in public,
(d) possess for the purpose of doing anything referred to in paragraphs (a) to (c), or
(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.
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 œuvre, 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) la vente ou la location;
b) la mise en circulation de façon à porter préjudice au titulaire du droit d’auteur;
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) la possession en vue de l’un ou l’autre des actes visés aux alinéas a) à c) ;
e) l’importation au Canada en vue de l’un ou l’autre des actes visés aux alinéas a) à c).
[38] Pursuant to section 34(1) of the Act, where copyright has been infringed, the owner of the copyright is, subject to other provisions in the Act, entitled to all remedies by way of injunction, damages, accounts, delivery up and otherwise that are or may be conferred by law for the infringement of a right.
[39] It is also pertinent to note that, pursuant to paragraph 34(1)(b), in any civil proceedings taken under the Act, the author is presumed to be the owner of copyright. In addition, pursuant to subsection 53(2), a certificate of registration of copyright is evidence that the copyright subsists and that the person registered is the owner of the copyright.
V. Analysis
A. Does POPS and/or Ms. Posada own the copyright in Ceres?
[40] The Plaintiffs submit POPS owns the copyright in Ceres by virtue of either:
i) the 1985 Agreement;
ii) a letter dated March 25, 1998 [the 1998 Szendrovits Letter], in which Andrew Szendrovits purported to grant certain rights to POPS;
iii) an assignment to POPS dated October 28, 2008, from Mr. Les Szendrovits [the Les Szendrovits Assignment], acting on behalf of his mother and the estate of Andrew Szendrovits;
iv) an assignment to POPS, dated October 29, 2009, by Elsie Quait-Randall, on behalf of McMaster [the McMaster Assignment].
[41] In addition, the Plaintiffs assert that POPS’ registration of its ownership interest in Ceres on September 25, 1991 gave rise to a presumption that it is the rightful owner of that software.
[42] The recitals to the Les Szendrovits Assignment and the McMaster Assignment make it clear that they were executed for the purpose of resolving any doubt that may have existed regarding the ownership of copyright in Ceres. In the case, of the McMaster Assignment, the document also confirmed McMaster’s right to continue to use Ceres and the updated versions thereof.
[43] The Defendants submit that from the outset of their relationship with Ms. Posada until the time their dispute with her arose in October 2008, they accepted on good faith Ms. Posada’s representations concerning POPS’ ownership of the copyright in Ceres.
[44] For various reasons, they maintain that none of the documents listed above effectively transferred ownership of the copyright in Ceres to POPS.
[45] For the reasons set forth below, I disagree.
i. The 1985 Agreement
[46] It is common ground between the parties that Andrew Szendrovitz was the author of the core source code of Ceres. However, the Defendants submit that he developed Ceres in his capacity as an employee of McMaster, and that pursuant to subsection 13(3) of the Act, McMaster was the original owner of the copyright in Ceres and has never properly ceded that copyright to POPS or Ms. Posada.
[47] Accordingly, the Defendants maintain that the copyright in Ceres could not have been assigned by the 1985 Agreement, because McMaster was not a party to that agreement. That particular submission will be dealt with in part V.A(iv) of these reasons below.
[48] In any event, the Defendants assert that the 1985 Agreement did not assign ownership of the copyright in Ceres to POPS. I agree.
[49] The 1985 Agreement is entitled “Contrat de Promotion,” which may be translated as “Promotion Contract”. Nowhere in that document is there an assignment of the copyright in Ceres to POPS.
[50] Instead, the first paragraph of the agreement states: “The undersigned, co-authors of the business simulation CERES, cede by the present document to the company POPS Ltée, of Sherbrooke, Québec, the rights to promote CERES in all languages and in all countries.” Consistent with POPS’ status under the agreement as a promoter, it is referred to throughout the agreement as “the promoter.” In addition, in addressing the scope of the rights granted under the agreement, Article II(1) states that “the authors expressly and exclusively cede to the promoter the rights to translate in all languages and all countries, to market, to adapt and to reproduce [Ceres] by all existing and future visual, audio [and] electronic means, without exception or reserve.” There is no language in that article which assigns the copyright in Ceres to POPS.
[51] Also, in Article II(3), an obligation is imposed upon POPS to communicate to the authors the results of any negotiations with third parties. In my view, in the context of the 1985 Agreement, that provision is more consistent with a promotion or distribution agreement than it is with an outright assignment of copyright. The intention of the authors to retain their ownership of the copyright in Ceres is further reflected in, Article I(1), which deals with the duration of the agreement and states that it is intended “to have effect for the entire period during which the literary interest of the authors, or their [ayants droit] or representatives, shall last.”
[52] The Plaintiffs rely upon the use of the word “cession” in the second paragraph of the agreement, in the titles of Articles I and II, and in the opening words of both of those articles, to support their argument that the document was intended to function as an assignment of the copyright in Ceres to POPS. However, the second paragraph simply served to make clear that the rights being granted under the agreement were subject to the conditions set forth in Articles I, II and III. In addition, the headings of Articles 1 and II have no legal effect, and the opening words of those articles were simply introductory in nature and served no other purpose.
[53] The Plaintiffs and the Defendants each asserted that their view of the 1985 Agreement was supported by the provisions of Article III, which requires POPS to forward to the authors, (i) in equal parts, the totality of net proceeds received from sales of the Ceres user’s manual; and (ii) 10% of the net revenues received from the sale of computer disks and the instructor’s manual. In my view, Article III is not particularly helpful in determining whether the 1985 Agreement either effectively conveyed, or was intended to convey, the copyright in Ceres to POPS. However, it does convey the parties’ view that they intended their agreement to include the right for POPS to distribute Ceres. That view is reinforced by Article 1(3) of the Agreement, which prevents the authors from distributing the Software or its adaptations without the prior written agreement of POPS.
[54] Given all of the foregoing, I agree with the Defendants that even if Mr. Szendrovits owned the copyright in Ceres in 1985, the 1985 Agreement did not transfer that ownership interest to POPS. However, it was effective in conferring upon POPS a very broad and exclusive licence to, among other things, distribute, adapt and sell Ceres.
[55] Given Ms. Posada’s confirmation on cross-examination (Transcript, January 8, 2013, at pages 191-195) that POPS’ registration of its purported ownership interest in Ceres on September 25, 1991 was based solely on her belief that POPS obtained such “ownership interest” pursuant to the 1985 Agreement, I am satisfied that any presumption that such registration may have created in favour of POPS’ ownership of Ceres has been rebutted (Samsonite Canada Inc v Costco Wholesale Corporation, [1993] FCJ No 302) [Samsonite]; Oakley Inc v Shoppers Drug Mart Inc, [2001] FCJ No 415, at para 33 [Oakley]).
[56] One implication of the above finding is that Ms. Posada remained an owner of Ceres, in her capacity as one of its authors.
ii. The 1998 Szendrovits Letter
[57] The Plaintiffs asserted in their pleadings that the 1985 Agreement “was, to the degree necessary, confirmed or perfected through the [1998 Szendrovits Letter].” I disagree.
[58] That short letter, which was sent by Andrew Szendrovits to POPS, simply stated the following:
The undersigned hereby authorize and give [sic] exclusive right to POPPS LTEE [sic] for using [sic] the original sources of the above named simulation, in any language, as well as exclusive rights to negotiate all relevant issues and matters in the names of Elizabeth Posada and Andrew Z. Szendrovits.
[59] In cross-examination, Andrew Szendrovits’ nephew, Les Szendrovits, testified in a forthright and credible manner that his uncle was someone who would certainly have understood the meaning of the words he used in his correspondence. In particular, according to his nephew, he would have understood the difference between giving something and giving permission to use something (Transcript, January 8, 2013, at p 141).
[60] The language quoted above does not in any way convey any ownership interest in the core source code of Ceres, or anything else, to POPS. Instead, for the present purposes, the key language used was “for using,” and “exclusive rights to negotiate all relevant issues and matters in the names of Elizabeth Posada and Andrew Z. Szendrovits.”
[61] With this in mind, and given the above-mentioned testimony of Mr. Les Szendrovits, I am satisfied that the 1998 Szendrovits Letter did not convey to POPS Mr. Andrew Szendrovits’ ownership interest in the core source code of POPS.
iii. The Les Szendrovits Assignment
[62] The Plaintiffs submit that the Les Szendrovits Assignment effectively assigned any residual rights that Andrew Szendrovits may have held in Ceres at the time of his death. I agree.
[63] Mr. Les Szendrovits’ forthright and uncontested testimony was that he was very close to Andrew Szendrovits and his spouse, Margaret Szendrovits. Based on his understanding of “the family’s knowledge,” and specific conversations that he had with other members of the family prior to testifying in this proceeding, he believed that Andrew Szendrovits “had handed over basically the running of [Ceres] to Dr. Posada” and that the effect of the 1985 Agreement was to convey all rights in Ceres to Ms. Posada (Transcript, January 8, 2013, at pp 130-131, and 137). Given that understanding, he had “no qualms signing” the Les Szendrovits Assignment, to assist Ms. Posada to establish the ownership interest in Ceres that he believed his uncle had previously transferred to her (Transcript, January 8, 2013, at pp 147-148).
[64] There was no mention of the Business Game, Ceres or other software in Andrew Szendrovits’ Will. Nevertheless, pursuant to paragraph 3(e1) of the Will, the residue of Andrew Szendrovits’ estate was transferred to Margaret Szendrovits for her own use absolutely.
[65] Margaret Szendrovits signed a Continuing Power of Attorney for Property dated November 2, 1994, which was tendered into evidence by the Plaintiffs. Pursuant to paragraph 1 of that document, she appointed her husband, Andrew Szendrovits to be her attorney for property. In the event that he became unable to act by reason of death, incapacitation or resignation, she substituted and appointed her son, William Szendrovits to be her attorney for property in her husband’s place. In turn, in the event that William became unable to act for those same reasons, she substituted and appointed her sister Hayna Szendrovits. In turn, in the event that she became unable to act for those reasons, Hayna’s son, Les Szendrovits was substituted and appointed to be Margaret’s attorney for property.
[66] Les Szendrovits testified that since his aunt Margaret became incapacitated, he has had the power of attorney [POA] to act on her behalf, because William has “lost the power to look after himself” (as reflected by the fact that his daughter looks after his affairs), and Hayna is 89 years old and “signed over her powers” to him (Les). Les Szendrovits also testified that William has been a schizophrenic since the 1970s.
[67] In final argument, the Defendants invited the Court to question the validity of the above-mentioned Will and POA, given that William’s parents gave him important responsibilities under those documents, which were executed in 1995 and 1994, respectively, notwithstanding that he had been a schizophrenic since the 1970s. However, based on Les Szendrovits’ testimony that William’s condition has “gotten progressively worse,” I am not persuaded that it would be appropriate to question the validity of those documents, solely on the basis suggested by the Defendants.
[68] Among other things, the recitals in Les Szendrovits Assignment state that, “in a simple document” Andrew Szendrovits “intended to assign all of his rights” in the software known as Ceres to POPS and that “there may be some doubt as to the completeness or efficacy of” the simple document. It is not entirely clear whether the document in question is the 1985 Agreement or the 1998 Szendrovits Letter. However, given that the 1985 Agreement is mentioned at paragraph 3 of the Les Szendrovits Assignment, I am inclined to infer that it is the “simple document” in question.
[69] Given the aforementioned doubt, the recitals proceed to state that “for greater certainty, the Assignor wishes to assign and transfer unto POPS Ltée (the “Assignee”) the Assignor’s entire right, title and interest to copyright in the Work, and wishes to further waive in favour of the Assignee all of the Assignor’s moral rights related to the Work.” The “Assignor” was defined to be “Margaret Szendrovits and the Estate of Andrew Szendrovits.” The “Work” was defined to be Ceres.
[70] Paragraph 2 of the document then states:
In return for the Royalty, defined hereunder, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Assignor hereby assigns and transfers in perpetuity to the Assignee the Assignor’s entire right, title and interest, worldwide, in and to all ownership, intellectual property and all other property rights including, without limitation, the copyright, in the Work authored in whole or in part by [Andrew Szendrovits], including all rights of action, powers and benefits relating thereto.
[71] In my view, the language of paragraph 2 clearly and unequivocally transferred any and all residual interest that Andrew Szendrovits continued to have in Ceres, including his copyright, after he executed the 1985 Agreement and the 1998 Szendrovits Letter. In passing, I would simply add that, pursuant to paragraph 4, the document also expressly assigned all of the assignor’s moral rights in Ceres to POPS.
iv. The McMaster Assignment
[72] The Defendants submit that the Les Szendrovits Assignment could not have legally assigned to POPS the copyright in the core source code of Ceres that was written by Andrew Szendrovits, because Andrew Szendrovits was employed by McMaster when he wrote that source code. In support of that position, the Defendants rely on subsection 13(3) of the Act, which deems an employer to be the first author of a work created by an employee in the course of his or her employment. I disagree with the Defendants’ position on this point.
[73] In the months following the dispute that led to this proceeding, Ms. Posada contacted one or more representatives of McMaster to confirm that it did not assert any rights to the copyright in Ceres. After an internal investigation, Ms. Elsie Quaite-Randall, Executive Director of McMaster’s Industrial Liaison Office [ILO], executed an assignment to POPS, dated October 29, 2008, of McMaster’s “entire right, title and interest, worldwide, in and to all ownership, intellectual property and other proprietary rights including, without limitation, the copyright in the Work authored in whole or in part by Dr. Szendrovits, including all rights of action, powers and benefits relating thereto.”
[74] Among other things, the recitals to the McMaster Assignment state that Andrew Szendrovits was employed by McMaster during the period in which he authored his contribution to Ceres, that he used that software as one of his teaching aids, that POPS wished to confirm that there to do not exist competing claims to the ownership of Ceres, that POPS was prepared to grant to McMaster a licence to continue to use Ceres and updated versions of Ceres, and that the university “has, and makes, no claim whatsoever to the title to, nor any rights in, [Ceres]”. The recitals conclude by stating that the university (defined as the “Assignor”) wished to “assign and transfer into POPS Ltd (the “Assignee”) all of the Assignor’s entire right, title and interest in and to the copyright and other rights in [Ceres].”
[75] In the absence of Ms. Quaite-Randall, who was on sabbatical in the Philippines at the time of the trial, her colleague Ms. Gay Yuyitung testified on behalf of McMaster. Ms. Yuyitung is a Business Development Manager in the ILO at the university. She reports to Ms. Quaite-Randall.
[76] Ms. Yuyitung testified in a straightforward and credible manner. Among other things, she stated that the ILO handles the patenting, licensing and commercialization of all intellectual property that is developed at McMaster. In addition, she stated that she was the one who investigated and determined that Andrew Szendrovits had developed the Software “as part of his teaching materials at the university.” She noted that Ms. Quaite-Randall typically does not conduct an extensive review of the documents that she signs, but rather relies on her staff – in this case, Ms. Yuyitung and one other person – to conduct the required review. She also testified that she helped to review the McMaster Assignment prior to its execution, that she recognized the signature on the McMaster Assignment as being Ms. Quaite-Randall’s signature, and that she was told by Ms. Quaite-Randall in an e-mail that she had signed that assignment.
[77] Ms. Yuyitung further testified that her understanding “has always been that instructional materials – teaching materials are owned by the professor.” In this regard, she identified the applicable policy as being a document entitled Distribution of Income from the Sale of Instructional Materials [the DISIM Policy] applied to the software. She stated that she satisfied herself that the DISIM Policy applies to the software developed by Andrew Szendrovits. She also noted this policy came into effect on March 16, 1981, and that “[t]he intent of the policy is that the copyright is owned by the professor.” She added that prior to the issuance of the DISIM Policy, the University’s position was that the copyright in any instructional materials developed by a professor was held by the professor. In support of the latter view, section D.1.1 of the DISIM Policy states: “The University affirms the traditional practice that copyright in instructional materials produced by faculty members belongs to those faculty members, except in the special cases listed below.” None of those special cases applies to the facts at issue in this case. Significantly, Section B.3 of that policy also states that the DISIM Policy “is intended to serve as the ‘agreement to the contrary’ on behalf of McMaster University and its academic and non-academic staff,” within the meaning of what is now subsection 13(3) of the Act.
[78] On cross-examination, Ms. Yuyitung was presented with another policy, entitled Intellectual Property Policy, dated May 27, 1998, together with a policy entitled Joint Intellectual Property Policy [JIPP], which “Supersedes/Amends” the 1998 policy and governs all matters related to intellectual property at the institutions covered by that policy, after its coming into force on January 1, 2005.
[79] Ms. Yuyitung acknowledged that she was aware that, pursuant to Article 9.1 of the JIIP, “the University shall be the nominal owner of all newly created or discovered Intellectual Property arising at any of the institutions.” She also acknowledged that Article 2.7 of the JIIP specifically includes “computer software recorded in any format” within the definition of Intellectual Property, and that there is no reference to “computer software” in the DISIM Policy.
[80] In the absence of any further testimony on behalf of McMaster or otherwise regarding the interplay of the DISIM Policy and the JIIP, I accept Ms. Yuyitung’s view that the DISIM Policy applies to the software that was created by Andrew Szendrovits and that now forms part of the Software. Her position on this point would appear to be supported by the fact that while the DISIM Policy explicitly affirms that copyright in instructional materials produced by faculty members belongs to those faculty members, except in cases that are not applicable in the case at bar, the JIIP does not mention copyright and establishes ownership rights only in “newly created or discovered intellectual property” (Articles 1.3(d), 9.1 and 9.2). In addition, both the JIPP and the 1998 Intellectual Property Policy exclude from their application any