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Copyright Infringement Case Allowed to Proceed

Published in the July 2010 issue of Litigation Notes - View Article

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The Society of Composers, Authors and Music Publishers of Canada (“SOCAN”) brought an action against Maple Leaf Sports & Entertainment “MLSE”), claiming licence fees in respect of performances at Toronto’s Air Canada Centre. A motion for summary judgment brought by MLSE was dismissed.

The Society of Composers, Authors and Music Publishers of Canada (“SOCAN”) is a collective society under section 67 of the Copyright Act, (the “Act”). It administers the performance rights of virtually all copyright protected musical works in Canada. SOCAN also has agreements with other performing rights organizations in other countries. When a performance takes place in Canada, SOCAN licences the performances, collects royalties/fees and pays out the royalties to the members whose works have been performed.

Maple Leaf Sports & Entertainment (“MLSE”) owns and operates the Air Canada Centre in Toronto, which is used for various sporting events, concerts and other entertainment.

SOCAN brought an action in the Federal Court of Canada against MLSE for failure to pay royalties for more than 40 concerts. SOCAN alleged that they were the owners of the works preformed at the concerts and that MLSE allowed the performances without obtaining a licence from SOCAN and without paying the applicable fees. SOCAN claimed a declaration of failure to report and pay and of infringement, and an order for payment of royalties plus interest, damages, statutory damages and ancillary relief.

MLSE denied that SOCAN held the rights claimed, denied knowledge of the works performed and denied that they were responsible for payments, asserting that any liability rested with the concert promoters. MLSE claimed that they merely rent or lease the space for the concerts and that they are therefore not responsible to obtain the licence or pay royalties as they do not authorize the performance of specific works. MLSE brought a motion for summary judgment to have the action dismissed.

The Court reviewed the general principles that apply to summary judgment applications in the Federal Court of Canada, as outlined in Granville Shipping Co. v. Pegasus Lines Ltd.:

1. the purpose of the provisions is to allow the Court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried; 2. the test is not whether a party cannot possibly succeed at trial, but whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial; 3. each case should be interpreted in reference to its own contextual framework; 4. provincial practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, can aid in interpretation; 5. the Federal Court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the Court (this is broader than Rule 20 of the Ontario Rules of Civil Procedure); 6. on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so; 7. in the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge. The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a “hard look” at the merits and decide if there are issues of credibility to be resolved.

The Court determined that there were three central issues to the litigation: 1. Insofar as it related to concerts held before December 16, 2002, was the action barred by any limitation period ? 2. Could SOCAN show the requisite elements for copyright infringement, including but not limited to ownership, performance of the works at issue, absence of consent of the owner and applicability of its tariffs to the concerts? 3. Had MLSE authorized or allowed infringing performances in such manner as to render it liable for royalties?

An important factor parties must consider in a summary judgment motion is making sure they put their “best food forward”. This requires putting forth the best evidence to satisfy the test on a summary judgment, without turning a summary judgment motion into a trial. MLSE claimed that SOCAN did not put their “best foot forward” because they relied on hearsay evidence, consisting of grainy Youtube.com videos and Wikipedia entries in relation to what works were played. SOCAN attributed this to its inability to have meaningful discovery of MLSE’s evidence.

Rule 81 of the Federal Court Rules requires evidence in affidavit form, but Rule 55 gives the court flexibility to allow hearsay on a principled basis. The Court in this case held that to preclude evidence that may be admissible at a trial would be contrary to the intent of the summary judgment rules, especially where SOCAN’s case was dependent on hearsay, because neither party had direct personal experience on what happened at the concerts. It will be the responsibility of SOCAN to persuade the trial judge that the hearsay evidence is reliable and necessary. Determining who had the obligation to maintain evidence of performances will have an impact on this decision by the trial judge.

A central point of this litigation was the scheme of SOCAN’s mandate and the rights and obligations which flow from the interpretation. SOCAN argued that the responsibility of reporting and record-keeping falls to those who may be liable for obtaining a license and reporting royalties – in this case MLSE. MLSE argued that SOCAN had the obligation to prove all the elements of the case and that they were not responsible for any of the reporting or record- keeping.

Section 27(5) of the Act provides that it is an infringement of copyright “…for any person, for profit, to permit a theatre or other place of entertainment to be used for the performance in public of a work or other subject-matter without the consent of the owner of the copyright unless that person was not aware, and had no reasonable ground for suspecting, that the performance would be an infringement of copyright.”

Section 41(1) of the Act provides that a court may not award a remedy in relation to an infringement unless “(a) in the case where the plaintiff knew, or could reasonably have been expected to know, of the infringement at the time it occurred, the proceedings for infringement are commenced within three years after the infringement occurred; or (b) in the case where the plaintiff did not know, and could not reasonably have been expected to know, of the infringement at the time it occurred, the proceedings for infringement are commenced within three years after the time when the plaintiff first knew, or could reasonably have been expected to know, of the infringement.” MLSE’s knowledge, expectation or reasonable belief was therefore crucial to its limitation defence. MLSE’s obligation to report as well as SOCAN’s obligation to monitor performance were also key issues. The resolution of those issues was at least in part fact driven and dependant on the quality of the evidence and the credibility of the respective positions. Assessing the credibility of witnesses must be left to the trial judge.

The motion for summary judgment was dismissed with costs to the Plaintiff.

Society of Composers, Authors and Music Publishers of Canada v. Maple Leaf Sports and Entertainment, 2010 FC 731 (CanLII)