Car Ad Websites Slightly “Scraped” in Copyright Case, Court Puts Brakes on Statutory Damages Minimums

by Blake, Cassels & Graydon LLP
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On April 6, 2017, the Ontario Superior Court of Justice (Court) provided insight into how courts will approach the scraping of websites and assessing statutory damages for copyright infringement in Trader v. CarGurus. The Court used its discretion to lower the presumptive minimum statutory damages per work to avoid a purely arithmetic calculation that would have been disproportionate to the infringement in question.

BACKGROUND

Trader Corporation (Trader) and CarGurus, Inc. (CarGurus) are competitors in the marketplace for online ads for new and used vehicles. Trader’s photographers go to car dealerships and take photos of the dealers’ vehicles to include in online listings. CarGurus’ practice in the United States was to source information for vehicle listings from third parties that feed dealers’ car listing information and by indexing or “scraping” dealers’ websites.

In 2015, CarGurus entered the Canadian market. Trader sued CarGurus for infringement of copyright in approximately 200,000 photographs that Trader’s employees or contractors had allegedly taken and which had been reproduced on CarGurus’ website. Trader was able to establish its ownership of copyright in approximately 150,000 of the photographs by leading evidence from the photographers who were able to identify the photos and confirm that copyright was owned by Trader.

The Court had no difficulty finding that the photos in question were protected by copyright and that the copyright therein was owned by Trader. The Court was not, however, prepared to find that Trader owned copyright in photographs where there was no direct evidence that particular photographs were taken by Trader employees or contractors.

CarGurus raised several defences, namely:

  • It did not infringe copyright in at least some of the works because it did not reproduce them on its website but only framed them
  • Its activities amounted to defensible “fair dealing”
  • If liability for infringement were found, its activities were protected from statutory damages on the basis that it was only providing an “information location tool”
  • If statutory damages were to be awarded, it should be less than the C$500 per work demanded

DECISION

On the “framing” defence, CarGurus argued that although certain of the images from the dealers’ websites appeared to be part of CarGurus’ website, they were not physically present on CarGurus’ server and were actually located on servers hosting the dealers’ websites. The Court rejected this argument and held that CarGurus was still making these photos available to the public by telecommunication and therefore infringed copyright.

On the “fair dealing” defence, the Court found that, even if the dealing with the photos constituted “research”, CarGurus’ use of the photos was not “fair”. The Court noted that CarGurus purposes were strictly commercial and that the effect of the dealing in the photos was to compete directly with Trader.

Having found that copyright in all of the approximately 150,000 photographs in which Trader was able to prove ownership of copyright was infringed and not subject to a fair dealing defence, the Court turned its attention to damages.

The Court had to consider for the first time section 41.27(1) of the Copyright Act, which provides that a copyright owner is not entitled to any remedy other than an injunction against a provider of an “information location tool” so long as certain conditions are met.

An “information location tool” is defined as “any tool that makes it possible to locate information that is available through the Internet or another digital network”. This “safe harbour” protection was introduced in Canada’s copyright law in 2012 to providers of network services and information location tools, i.e., providers of services that enable the public to use and navigate the Internet. The Court noted that while the legislation does not specifically refer to indices or search engines, the “crux” of the term was the “locating” of information and that Parliament intended to afford protection to intermediaries that provide tools enabling users to find information and that it did not intend to protect a provider like CarGurus that gathers information from the Internet and makes it available to users on its own website.

The Court noted background documents to the legislation, which referred to exempting from liability Internet service providers (ISP) and search engines “when they act strictly as intermediaries”. Here, the Court found that CarGurus was not acting merely as an intermediary in the way an ISP or search engine provider might.

Having found that CarGurus was not entitled to the protection of the “safe harbour” and was subject to damages, the Court turned its attention to the appropriate amount. While the presumptive minimum statutory damages are C$500 per work, the statute provides a Court with discretion to award a lower amount per work in certain circumstances. The Court had little difficulty in rejecting the claim for C$500 per work, noting that an award of over C$75-million would be grossly out of proportion to the infringement in the case. The Court noted that the purpose of statutory damages is merely intended to ease the evidentiary burden on a copyright owner given the difficulty oftentimes of proving damages. The Court cited with approval previous case law that there should be some correlation between actual damages and statutory damages.

In considering the appropriate amount of statutory damages to award, the Court canvassed several factors, including the fact that: there was no allegation that CarGurus itself scraped or copied photos from Trader’s websites; CarGurus obtained legal advice before entering the Canadian market; and CarGurus had used a similar business model in the United States before, without issue. The Court also seemed concerned that Trader did not raise its claim of copyright ownership in the photographs until just shorty before starting the lawsuit. The Court also had regard to what Trader charged its syndication partners for a licence fee and what Trader’s competitors charged. It also considered Trader’s own cost of creating the photographs and the extent of CarGurus’ profits and gross revenues in Canada. The Court ultimately awarded statutory damages of C$2 per work, for a total of approximately C$300,000 in damages.

Overall, the Court took a common sense approach, both in finding that the definition of “information location tool” was for genuine intermediaries and not to be used as a safe harbour by direct competitors and in using its discretion to lower the statutory damages per work to avoid a purely arithmetic calculation that would have been grossly disproportionate to the infringement in question.

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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