Promoting Canadian Intellectual Property on World Intellectual Property Day

Today, April 26th, is World Intellectual Property Day.  This year’s theme is shining a light on the critical role of small and medium-sized enterprises (SMEs) in the economy and how they can use intellectual property (“IP”) to build stronger, more competitive and resilient businesses.

On April 19th, 2021, the Canadian government released its first budget under the COVID pandemic (“Budget 2021”).  Budget 2021 addresses the Government of Canada’s fight against COVID-19 and its desire to ensure a robust economic recovery.  As part of the latter, Canada is investing in innovation.

As the most highly educated country in the OECD, Canada is full of innovative and entrepreneurial people with great ideas. Those ideas are valuable intellectual property that are the seeds of huge growth opportunities. Building on the National Intellectual Property Strategy announced back in 2018, the government proposed further support to Canadian innovators, start-ups, and technology-intensive businesses.

Budget 2021 proposed the following

  • $90 million over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert intellectual property services.
  • $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert intellectual property services.

These direct investments would be complemented by a Strategic Intellectual Property Program Review that will be launched. It is intended as a broad assessment of intellectual property provisions in Canada’s innovation and science programming, from basic research to near-commercial projects. This work will make sure Canada and Canadians fully benefit from innovations and intellectual property.

Federal Court clarifies that proper process for bringing a claim under the notice-and-notice regime—somewhat

Internet Service Providers (ISPs) have seen an increase in litigation related to Canada’s notice-and-notice regime since it was added to the Copyright Act in 2012. Plaintiffs, generally the owners of copyright in films, have brought claims in Federal Court using various procedures. The Court recently released a decision offering guidance on the proper way to do so although there is still some uncertainty on this point.

The notice-and-notice regime set out in sections 41.25 and 41.26 of the Copyright Act, requires ISPs to forward notices of alleged infringement that they receive from copyright owners to subscribers. The ISPs also need to provide confirmation the copyright owners that the notices have been forwarded (or explaining why one could not be forwarded if that is the case), and to keep the information necessary to allow the subscribers’ identities to be determined. Failure by an ISP to comply with the notice obligations can result in statutory damages..

Plaintiffs have brought claims against several ISPs alleging that they have failed in their obligations to forward these notices for various reasons.

The most recent decision, TBV Productions, LLC v. Doe. found that the proper procedure by which a copyright owner can bring a claim for statutory damages for failure to forward a notice is to start an action. This finding, however, departs from a previous decision of the Federal Court, ME2 Productions Inc. v. Doe, which found that such a claim could proceed by way of motion.

Let’s look at TBV Productions v. Doe. first.

In this case, the plaintiff TBV Productions alleged that three ISPs had failed in their obligations to forward notices to its subscribers.

TBV Productions tried to have its claims against the various ISPs heard by way of a “show cause” motion. The claim was originally part of a Norwich motion by which TBV Productions sought the disclosure of the identities of allegedly infringing subscribers.  The Norwich portion of the motion was no longer at issue by the time of this hearing.

In its decision, the Court found that, in this case, the plaintiff copyright owner would have to bring a claim for damages for failure to forward a notice against an ISP by way of an action. The plaintiff in this case cannot bring it as part of a Norwich motion and will have to bring a separate own claim for damages.

This decision is certainly helpful although there is still some ambiguity in the law given the Federal Court’s earlier decision in ME2 Productions.

In that case, the Court allowed the claim for statutory damages to proceed by way of a motion in an effort to simplify and accelerate the process. Crucially, in that case, the Court was considering an appeal of a decision of a Prothonotary that had created this process and so was reviewing that decision on the standard of palpable and overriding error. The Court concluded that the Prothonotary did not make a reviewable error in reaching their decision and so the claim was allowed to proceed by way of motion.

The Court in TBV specifically addresses the ME2 case in its decision, distinguishing it on the grounds that, in ME2, the claim for damages was tied to the ISP’s alleged failure to keep proper records and so the disclosure and statutory damages issue were intertwined. TBV differed in that the parties had settled the issue of disclosure and so the issue remaining before the Court related only to the damages claim. The Court also emphasized that the ME2 decision was an appeal of a decision of a Prothonotary and so the standard of review played a key role in that decision. Ultimately, the Court found that the circumstances in TBV were sufficiently different from those in ME2 to justify a requirement to pursue a damages claim by way of action.

So while the TBV case offers guidance, ISPs still have to face some uncertainty regarding the proper procedure to defend such a claim in addition to the claim itself. This will likely result in an initial discussion (and potentially disagreement) between the copyright owner and the plaintiff to try and determine if the claim for statutory damages should proceed by way of an “ME2 process” or a “TBV process”.

Fasken acts for several ISPs and advises them on their obligations under the notice-and-notice regime. Let us know how we can help you with notice-and-notice regime compliance and litigation.

Mind the GAP: The PMPRB Changes Definition of GAP Medicines and Reduces Compliance Timeline

On January 15, 2021, the Patented Medicines Prices Review Board (“PMPRB”) initiated a consultation on two proposed amendments to the new PMPRB Guidelines (“Guidelines”): (1) the definition of Gap medicines; and (2) the compliance timeline for Grandfathered and Gap medicines. 

According to the PMPRB, the two amendments were required due to the change in the coming-into-force date of the Regulations Amending the Patented Medicines Regulations (“Regulations”), which was pushed from January 1, 2021 to July 1, 2021.

And so, on March 17th, the PMPRB rendered its decision.

Definition of Gap Medicines.

Under the Guidelines, Gap medicines were defined as those which were assigned a DIN was on or after August 21, 2019 (the date the Regulations were adopted) and were first sold in Canada prior to January 1, 2021. Following the consultation, the PMPRB has extended the date of first sale to July 1, 2021. This means the Gap medicine provisions in the Guidelines will now apply more broadly.

Gap medicines are subject to the harshest price standards under the Regulations. More specifically, the Maximum List Price (“MLP”) for this category of medicine is  the lower of:

• the median international price for the medicine in the PMPRB11; and

• the medicine’s ceiling under the previous Guidelines.

In contrast, the MLP for Grandfathered medicines (i.e. those launched prior to August 21, 2019) is the lower of:

• the highest international price; and

• the medicine’s ceiling under the previous Guidelines.

By contrast, the MLP of new medicines (i.e. those with a first sale after July 1, 2021) is determined only by reference to the median international price for the medicine in the PMPRB11.

The revised definition of Gap medicines works against the interests of patentees, as medicines that were launched between January 1, 2021 and March 17, 2021 (i.e., today) will now be subject to more stringent limits on the MLP set out above.

New Compliance Timelines.

The PMPRB has also modified the compliance timeline for Gap medicines and grandfathered medicines. The initial version of the Guidelines stated that patentees of these products would have two reporting periods (i.e. until July 1, 2022) to ensure the MLP was consistent with the median international price. This timeline has been shortened to December. 1, 2021

While the federal government delayed the coming into force of the Regulations “to minimize the imposition of new administrative burden on industry as patented drug manufacturers face increased demands related to supply chains and shortages of existing products and, potentially, new treatments and vaccines in response to COVID-19”, patentees of Gap medicines who are now subject to more stringent price regulation may be wondering whether the administrative burden was actually minimized at all.

Video Game Streamers: Free promotion, copyright infringement, or both?

Just before New Year, a controversial piece of US legislation tucked into a COVID-19 relief package had people who stream video gameplay online concerned that their livelihood was about to be criminalized. While a careful reading of the legislation reveals that the initial reaction was unwarranted and perhaps overblown, it does raise some interesting questions about the legal status of “streamers” and the interplay between game publishers and online video content creators.

Streamers use internet platforms such as Twitch and YouTube to broadcast videos of themselves to their fans and followers. Some of the most popular streamers will play videos games on camera during the streams. These gameplay videos are sometimes referred to a “Let’s Play” videos (as in, “Let’s Play Animal Crossing” or “Let’s Play Assassin’s Creed”). They earn revenue by offering subscriptions, accepting donations from fans, promoting products and services, and selling merchandise. The videos are live streamed so viewers can interact in real time with the streamer using a chat function. Many of the videos are also stored and can be viewed on-demand later.

Protection Lawful Streaming Act

The US legislation, which is known as the Protecting Lawful Streaming Act, was sponsored by Sen. Thom Tillis and was rolled into the $2 trillion COVID relief package. Tillis’ bill is intended to make the commercial streaming of infringing content a felony offense. It was aimed at streaming services that offer pirated movies and illegally broadcast live professional sporting events. Sen. Tills claims it is narrowly tailored to target criminal organizations and not to criminalize the activity of individual streamers.

While the legislation will not criminalize the practice of streaming videogame play online, it does highlight the tension between businesses who create video games and individuals who use those games on streaming platforms to earn revenue, often without the consent of the copyright owner. According to industry research an average “professional” streamer can make between $3,000 to $5,000 (US) a month playing 40 hours a week. This does not include advertising revenue, which can generate another $250 for every 100 subscribers, paid sponsorship deals or the sale of merchandise like t-shirts.

Canadian Law

Under Canadian copyright law, when a streamer plays a computer game online and transmits the video to the public (the audience), she is engaged in the communication of the game to the public by telecommunication, which is a form of public performance, one of the exclusive rights granted to copyright owners under section 3 of the Copyright Act.

Video games, like movies and television shows, are complex bundles of copyright-projected subject matter. The computer code and any text elements are literary works, the graphics are artistic works, the score is a series of musical works. Many games include voice-acting and those voice files are considered performers’ performances that are also protected by copyright. Copyright in these diverse elements is typically owned by the publishers which earn revenue from the sale of the game, monthly subscriptions, in-game transactions, or some combination of all these elements.

While the streamer is not transmitting a copy of the game code when she plays online for an audience, she is communicating the graphics, the text, the music, and the voice actors’ performances. If this is done without the consent of the copyright owner, it could give rise to a claim of copyright infringement with the potential for statutory damages.

If its infringing, why no litigation?

So, if streamers are engaged in widespread copyright infringement, why haven’t we seen the game industry unleash a wave of litigation to stop streaming like the music industry tried to do in the early days of Napster and other file-sharing platforms? There are two possible answers: the “legal” answer and the “business” answer.

We’ll get to the “legal” answer below, but the “business” answer arises from the symbiotic nature of the streamer/game publisher relationship. Successful streamers can attract hundreds of thousands or millions of fans and generate a lot of publicity and demand for the games they play online. For a smaller, indie developer without a large marketing and promotion budget, that kind of positive attention can turn a relatively unknown title into a viral sensation selling hundreds of thousands of copies. Rather than trying to discourage online gameplay, many developers nurture their relationship with the streaming community by giving them exclusive advance access to new releases, offering free copies of games for streamers to give away to fans, and even appearing on the stream to talk about the game.

However, not all game publishers benefit equally from having their titles streamed. Watching a streamer enjoy a challenging fighting or racing game likely has a positive impact on the sales of that title. However, the same might not be true of shorter, story-driven adventure games which can often share many attributes with movies. If a streamer plays through the full story online, the audience who watches the stream might not be as likely to purchase the game themselves once they know how the story ends, especially if the nature of the game is that each gameplay experience is the same or similar each time so there is limited replay value, or if an important part of the story is based on surprise or twist endings.

This has recently led to a discussion in the industry of whether streamers should pay for licenses from game publishers to use their titles online as a way to share the revenue earned by this ancillary activity. This suggestion is generally met with a strong negative reaction, usually on Twitter, from the streaming community who point out the enormous benefit to game publishers from the promotional effect of streaming and who wave the banner of “fair use” (or “fair dealing” for those of us in Canada).

It’s copyright, so it’s complicated

The application of copyright law to streaming is certainly not straightforward. In Canada, it is not an infringement of copyright to use a work in a way that is fair dealing for the purpose of research, private study, education, parody, satire, criticism or review. It is not enough that the use is for one of these purposes; the use also has to be “fair” which is a contextual fact-specific question. Courts have developed a fairness test that looks at certain factors to determine if a particular use is fair or not. These factors include the purpose of the dealing, the character of the dealing, the amount of the dealing, alternatives to the dealing, the nature of the work, and the effect of the dealing on the work.

Not all streaming is equal under a fair dealing analysis. A 30-minute stream of a sports game with commentary about the playability would likely be found to be fair dealing for the purpose of criticism or review. A four-hour stream of the full play-through of a story-driven adventure game which offers little commentary by the streamer and reveals the twist ending, and which is carried out for profit by a commercial streamer would be less likely to be considered fair by the Court. Most actual video game streaming falls somewhere in between these two examples.

Canada’s Copyright Act offers one more wrinkle to consider – the “user-generated content exception” found in section 29.21. Under this exception, it is not an infringement of copyright for an individual (the streamer) to use an existing work (the computer game) in the creation of a new work (the Let’s Play video) and for the individual (streamer) to authorize an intermediary (YouTube or Twitch) to disseminate it (transmit it online). However, for this exception to apply the use must be for a non-commercial purpose. This means amateur streamers might be able to rely on it, but people who earn their living from the activity cannot. The use cannot also have a “substantial adverse effect” on the exploitation of the existing work (the game). In other words, if your highly popular but unmonetized Let’s Play of a game has a harmful effect on the sale of the game, the exception would not apply. The most likely case of harming sales of a game would be by spoiling plot points or twist endings, but other possibilities could exist as well.

For the time being, it looks as if most of the gaming industry will continue to tolerate and even encourage the streaming community, while the discussion of whether licensing is appropriate will continue.

Cloud Contracts: The Impact of Common Terms of Service Provisions on Intellectual Property Rights

Many people have a great deal of digital content stored “in the cloud”, often through email, social media platforms, file storage and other related services. Whether it is the storage of user-created content, such as photos, videos or documents, or content that users pay to access, such as music and e-books, the use of such services is governed by the Terms of Service (“ToS”)[1] of the relevant company (“online service provider”).  

Despite the often monetary or emotional value of such user-created content, ToS tend to be contracts of adhesion; if a person wants to use an online service provider, they generally have no option but to agree to that online service provider’s ToS. As ToS are almost always unilaterally-generated contracts where the individual has no negotiating power vis-à-vis the online service provider, the reality is that most people usually accept ToS without actually reading them. As a result, many are unaware of how the ToS affect their rights to the accounts with these service providers and the content stored in association with them, or the rights their heirs might have in this regard after they die.[2] This is particularly the case for an individual’s copyright with respect to the content that they create through or store with the online service provider.

This post provides an overview of the findings of a study from the Cloud Legal Project at Queen Mary University of London (the “study”) on some of the most common ToS provisions across major online service providers,[3] specifically with respect to the copyright that users of such online service providers have in the content that they store and/or produce with such online service providers.

ToS Terms Relating to Copyright

According to the Canadian Intellectual Property Office:

A copyright is the sole right to produce or reproduce a work or a substantial part of it in any form. It includes the right to perform the work or any substantial part of it or, in the case of a lecture, to deliver it. If the work is unpublished, copyright includes the right to publish the work or any substantial part of it

Copyright can be created in many ways. A common example is someone taking a photograph with their smartphone. Once the person creates the photo, that person holds the copyright to the photo as an artistic work. Another example could be an .mp3 file that someone creates using audio recording and production software.

In the digital world, many people store the works that they create through cloud-based online service providers, including Facebook, Dropbox and Google Drive. In its analysis of the way the ToS of major online service providers address users’ intellectual property rights, the study distinguishes between a license of copyright, which grants a temporary right to produce or reproduce the work, and an assignment of a copyright, which is an actual transfer of the copyright such that its original owner no longer retains that copyright.

The study analyzed a total of 22 ToS for online service providers that allow users to upload files to their platforms. Some of the study’s most salient findings include:

  • only 10 of the 22 ToS explicitly acknowledged that the user retains their copyright in uploaded works;
  • however, none of the ToS indicated that the user assigns any copyright to the online service provider;
  • 19 of the 22 ToS explicitly provided that the user granted a license of the copyright in uploaded works to the online service provider; and
  • of the 19 ToS that provided such licenses, 16 allowed the online service provider to re-assign the license to a third party;

In addition, the study found that the various ToS took differing approaches to the terms of such licenses. Some granted an “irrevocable” or “perpetual” license to the online service provider, while others provided that the license is terminated when a user’s account is deleted.

Copyright Exclusivity

A question in this area remains: when a user grants licenses to their copyright through an online service provider’s ToS, do such terms encumber the copyright in a way where the user can no longer grant an exclusive right to that work? While many ToS seem to indicate that the user grants a “non-exclusive” license in this regard, the problem arises when the user hopes to grant exclusive licenses to third parties.

For example, if a food photographer has posted a photo on their Instagram page, and then looks to grant a meal delivery company an exclusive license to use that photo of their food, the photo on the Instagram page would, according to Instagram’s ToS, be licensed to Instagram such that it could “host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works” of the photo (subject to the photographer’s privacy settings).[4] This could impact the ability of the food photographer to offer an “exclusive” license to the photo, or, even worse, they could be violating the representations and warranties an existing “exclusive” license by virtue of the photo being on Instagram prior to such granting such license.

Although Instagram’s ToS state that such a “non-exclusive” license ends  when the user’s content is deleted from their systems (i.e. when the user deletes the content individually or deletes their account),[5] this is not the case for all online service provider’s ToS, as indicated above with “irrevocable” or “perpetual” licenses. Therefore, it is possible that certain content already hosted on certain websites may never be able to be exclusively licensable, unless the copyright owner chooses to dispute such an “irrevocable” or “perpetual” license. As we all know, such disputes might be costly to resolve (i.e. through a court).

In Regulating Content on Social Media, Corinne Tan argues that “the ‘ownership’ conferred on a user over his or her content under the ToS is not meaningful, as it does not mirror the exclusive rights to which a copyright holder is ordinarily entitled”.[6] After considering the above example, a user may want to consider the scope of the licenses they are granting to online service providers, both with respect to the duration of such license and the capabilities it grants to the licensor (although often such capabilities are limitless).

Other Issues with ToS

The topic of licenses in ToS highlights, as I suggested earlier in this post, another major issue with ToS: they are almost always unilaterally produced and non-negotiable. Furthermore, it is often the case where an online service provider amends its ToS, for example, to reflect developments in its business or the law. The study found that, rather than seeking the consent or agreement of users to such changes, online service providers’ standard practice is to simply notify users of material changes and effect them without consent. A user’s continued use of the service will then be inferred to constitute assent to the amended terms. 

This issue is particularly magnified when considering that in most instances there is a significant power disparity between an online service provider, often as a large corporation with its own legal team, and the user, often as an individual with little to no legal experience.

However, courts have specifically mentioned and recognized these issues. In Canada, there is at least some jurisprudence to suggest that certain clauses in ToS are unenforceable as a result. In Douez v. Facebook Inc.,[7] the Supreme Court of Canada (“SCC”) determined that a “forum selection” clause in a ToS was unenforceable. In Douez, the clause at issue was a provision in Facebook’s Terms of Use that stated that any disputes between it and a user were to be resolved under California law. The plaintiff in Douez sought to sue Facebook under British Columbia privacy legislation, and thus sought to set aside this clause. The SCC sided with the plaintiff, citing, among other reasons, the inequality and unfairness that inherently exist with ToS.

Concluding Thoughts

The findings of the study highlight some of the issues that ToS may create for users. With an increasing number of people and organizations now storing some of their most important things on the cloud, particularly as remote work arrangements due to the COVID-19 pandemic have quickly pushed many to “go paperless”, some may, for example, not feel comfortable with providing a “perpetual” copyright license to an online service provider. So, with respect to the storage of particularly valuable intellectual property with an online service provider, it would be important to review its ToS to ensure that they do not contain any undesirable clauses.

I would like to thank Yvonne Mazurak, Student-at-Law at Fasken, for helping me write this post.


[1] Also sometimes referred to as “Terms of Use”.

[2] I have written specifically on issues around digital assets and estate planning. For example, please see my three-part series on All About Estates regarding the challenges executors, trustees face in accessing the digital assets of the deceased, as well as another series of posts on this site discussing estate planning considerations for individuals with intellectual property. 

[3] Johan David Michels, Christopher Millar and Srishti Joshi, “Beyond the Clouds, Part 1: What Cloud Contracts Say about Who Owns and Can Access Your Content” (May 11, 2019). Queen Mary University of London, School of Law Legal Studies Research Paper No. 315/2019.

[4] Instagram, “Terms of Use”, online: Instagram (20 December 2020) <https://help.instagram.com/1215086795543252>.

[5] Ibid.

[6] Corinne Tan, “Application of the Terms of Service” in Corinne Tan, Regulating Content on Social Media (London: UCL Press, 2018) 98 at 120.

[7] 2017 SCC 33, [2017] 1 SCR 751.