Author: Gerald Kerr-Wilson and Stacey Smydo

About Gerald Kerr-Wilson and Stacey Smydo

Jay Kerr-Wilson is the co-leader of the Technology, Media and Telecommunications group and practices primarily in the areas of communications and public law, with a particular emphasis on copyright.

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.

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.

Moving Your Business Online Could Raise Copyright Issues

Canadians have made it through the first four weeks of social distancing and are now settling into new routines as much as possible. For many, that means turning to online resources for our business, social, entertainment, educational, and fitness needs.

In response to the COVID-19 pandemic, there is a proliferation of innovative online offerings that are enabling our businesses to continue operating, offering a sense of community, continuing education, or even just providing ways for busy parents to entertain their kids for a couple of hours. In a time of extreme isolation, the internet is bringing Canadians together and helping us to stay connected.

One thing that has not changed, however, is copyright law. Although the states of emergency declared across Canada and around the world are disrupting many things, the Copyright Act remains in force.

Developing new online services that attempt to replicate in-person interactions and transactions may trigger some unexpected copyright obligations.

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Minority Report: How Canada’s Electoral System Disrupts Copyright Reform

Canadian elections have a tendency to disrupt copyright reform initiatives and the 2019 contest which resulted in a minority Liberal government under Prime Minister Justin Trudeau is no exception.

The trend started in 2005, when the Liberal Government of Prime Minister Paul Martin introduced Bill C-60, An Act to Amend the Copyright Act, which was Canada’s first attempt at adopting the comprehensive amendments required to ratify the two WIPO internet treaties that had been negotiated in 1996 and signed by Canada in 1997.

The minority Liberal government was defeated by a vote of no confidence in November 2005, killing Bill C-60.

After the general election in January 2006, the defeated minority Liberal government was replaced by a minority Conservative government under Prime Minister Stephen Harper. The Conservatives tabled Bill C-61, An Act to Amend the Copyright Act, in June 2008. The bill was substantially similar to the Liberals’ copyright reform legislation.

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