International Breach of Copyright

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Copyright in Canada is a function of the Copyright Act - without that law, there would be no copyright. How does Canadian copyright law interact with the copyright law in other countries?

In Active Operations Management (AOM) NA Inc. et al v. Reveal Group, 2013 ONSC 8014 (CanLII) (a law-school-exam-question of a case if ever there was one), the court dealt with a claim by an Ontario company of infringement within Canada of UK copyright, by another Ontario company controlled by an Australian resident, Mr. Crouch.

The claim by AOM reads like a software vendor’s nightmare. AOM is the Canadian distributor of certain software developed in the UK. According to the allegations by AOM, Mr. Crouch copied elements of the software and a business method when he worked for an Australian licensee of the UK software. Mr. Crouch started a company in Canada and then allegedly used that as a vehicle to market a replica version of the UK software and the corresponding method in Canada. With this (Canadian) copied version of the (UK) software, Mr. Crouch allegedly lured customers away from AOM. AOM filed a lawsuit alleging breach of copyright, misappropriation of trade secrets, interference with contractual relations, unjust enrichment and misappropriation of goodwill.

Remember, AOM was not the owner of the (UK) copyright - it was merely a distributor. The question for the court was whether AOM could maintain a copyright infringement lawsuit in Canada. To complicate matters, the “software” and the “method” were owned by two different (UK) owners. AOM added these owners to the lawsuit, but did not make the specifics clear in their claim.

As the court put it: “Copyright is a very specific right attaching to a ‘work’… Copyright cannot attach to an idea such as a method. It can of course attach to the manuals or other material in which the method is described. Similarly with computer software, copyright can attach to source code, to a graphic user interface, to manuals and to other material as defined in the Act. Copyright cannot attach simply to what a computer program does. The plaintiff must specify what it is that is covered by copyright and what it alleges has been done that gives rise to the statutory remedies.

The lessons for business?

  • Software vendors from outside Canada should know that, by virtue of international copyright conventions and treaties, international copyright can be enforced under Canadian copyright law;
  • The Canadian Copyright Act permits someone other than the copyright owner to sue for infringement of copyright - as long as that person has appropriate rights (such as a local distributor, as in this case). Here, AOM appeared to have rights to maintain the copyright infringement lawsuit, but did not specify its rights with enough clarity in the claim. Ensure that the chain-of-title is clear in the claim itself;
  • Regarding the additional claims - in particular, the trade-secret misappropriation - the court had this guidance: “It would be ludicrous…to compel a plaintiff to set out a trade secret with precision in the pleading. To do so would destroy the secret itself. A trade secret is valuable precisely because it is secret.  It may be that information will have to be provided at the production and discovery stage but at that point the proprietor of the secret may seek confidentiality orders and to the extent that those details must be put into evidence may seek a sealing order.”

Topics:  Canada, Copyright, Copyright Infringement, The Copyright Act

Published In: Business Torts Updates, General Business Updates, Intellectual Property Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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