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Broadcasters obtain injunction in bid to stem “emerging trend” of pre-loaded set-top boxes

The Federal Court of Canada recently granted three large broadcasters an order for an injunction* against retailers of pre-loaded “plug-and-play” set-top boxes.  The apps pre-loaded on the boxes allow consumers to access TV programs and movies without cable or other subscriptions.  As Madam Justice Tremblay-Lamer observed:

These boxes have several uses for consumers, some of which are perfectly legal and some which skirt around the fringes of copyright law.  This is not the first time a new technology has been alleged to violate copyright law, nor will it be the last.

In her view, the allegations in this particular instance were strong enough to support a prima facie case of copyright infringement and the injunction order.  The matter will proceed to trial at a later date to resolve the various copyright and related issues.

A focus on the copyright issues

Bell, Rogers and TVA/Videotron each have exclusive rights under the Copyright Act to – in lay terms – broadcast, deliver and copy a range of TV programs and movies in Canada.  The television business model relies on broadcasters’ ability to exploit these rights.  The Plaintiffs argued that

pre-loaded set-top boxes represent an existential threat to [their] line of business as piracy is one of the top causes for declining subscriptions for television services in Canada and leads to annual decreases in revenue.

A central question before the Court was whether the set-top box retailers were simply the “conduit” for consumers’ infringing activities, or were instead themselves infringing copyright.  The Copyright Act does provide a limited shield for “conduit” services that provide only the means to deliver copyright-protected programs, images or music:

(1) For the purposes of communication to the public by telecommunication, […] (b) a person whose only act in respect of the communication of a work or other subject-matter to the public consists of providing the means of telecommunication necessary for another person to so communicate the work or other subject-matter does not communicate that work or other subject-matter to the public.

The Court found that this statutory defence was not available to the Defendants.  They had, said the Court, deliberately encouraged consumers to use the set-top boxes to circumvent the broadcasters’ subscription-based services.  They had promoted their set-top boxes to consumers as a means to cancel their cable subscriptions (using slogans such as “Original Cable Killer”), and had also offered tutorials on how to use the pre-loaded apps to obtain “free” programming.   The Court said that these activities “went above and beyond” selling a simple piece of hardware, and instead related to the content of the copyright-protected programming.  This constituted prima facie infringement.

The Court also agreed with the broadcasters that inducing and authorizing consumers to infringe copyright was an additional serious issue to be tried.

The Court’s order not only enjoins the five named retailers from continuing to configure, market and sell the pre-loaded set-top boxes; it allows the broadcasters to serve the order on other retailers who are engaged in the same activities.

 *Thanks to Smart & Biggar for making the link to the decision available online.

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Broadcasters obtain injunction in bid to stem “emerging trend” of pre-loaded set-top boxes

Ottawa Launches Overhaul of Cultural Policy

The Department of Canadian Heritage has launched a review of the federal government’s cultural policy toolkit that could bring significant changes to the governance framework that underpins the broadcasting, media and cultural industries.

Announced this past weekend by Heritage Minister Mélanie Joly, the review is a response to the digital shift that is transforming the creative sector. The stated goal of the review is to ensure that Canadian content is positioned to succeed in an increasingly global marketplace which, as stakeholders well know, has been buffeted by the rapid evolution of new technologies that have changed the ways content is created and consumed.

Minister Joly made it clear in an interview with the Globe and Mail that each of the main governance levers – laws, policies, institutions and programs – will be evaluated. She told the Globe that she believes “the current model is broken, and we need to have a conversation to bring it up to date” and that “everything is on the table”.

Beyond a generally “digital approach”, it’s anyone’s guess as to what the policy outcomes of the review will be. The minister has indicated that she doesn’t want to go into consultations with preconceived notions of what they might yield, and has refused to speculate about eventual changes. However, the “drivers of change” articulated in the announcement of the review provide some sense of the likely focus:

  1. A fluid environment that blurs traditional categories like “creator” and “user”, “artists” and “audience”, and “professional” and “amateur”;
  2. The emergence of new players and intermediaries that have disrupted traditional business models;
  3. An increasingly open and interconnected world in which access to a global marketplace comes at the price of stiff competition in formerly local cultural markets; and
  4. Changes in consumer expectations driven by increased digital connectivity and mobility.

The consensus from the commentariat is that the review will be the most comprehensive re-evaluation of the industry since the Mulroney government revised the Broadcasting Act in 1991.

Content producers and other stakeholders should note that an online “pre-consultation questionnaire” can be accessed on the ministry’s website until May 20, 2016. The pre-consultation will help define the scope of the public consultation which will begin this summer and wrap up by the end of the year. An expert advisory group will be struck to shepherd the review, which is officially called Strengthening Canadian Content Creation, Discovery and Export in a Digital World.

Ottawa Launches Overhaul of Cultural Policy

Producing in Canada Released!

We in the Dentons Canada Media and Entertainment Group are very happy to announce the release of the latest version of our popular Producing in Canada guide to film, TV and interactive digital media incentive programs.

The guide is a comprehensive overview of the most popular film, television, visual effects and digital media incentive programs available across the country. It covers federal, provincial and private programs, providing useful information about Canadian content production requirements, production services incentives, international treaty co-productions and CRTC co-ventures.

We think Producing in Canada is an essential reference for anyone looking to understand the myriad of filmed and digital entertainment incentive programs offered in Canada – and we think you’ll feel the same.

Producing in Canada is available now for download.

Producing in Canada Released!

Ontario “Grandfathers” Tax Credit Rate Changes

When Ontario announced its 2015 budget (for earlier Signal coverage see here), one particular proposed change was met with… well, let’s call it “concern” from the Ontario film and television production community: the reduction of the OPSTC and OCASE tax credits from 25% and 20% to 21.5% and 18%, respectively, was effective immediately (i.e., on April 23, 2015). In a production environment which prides itself on the stability of its tax credit regime, and given the long lead-times by which production scheduling occurs, a reduction with immediate effect would have had significant, in some cases even catastrophic, impact on film and TV projects (to say nothing of sending a cold wind blowing through the accountants’ offices where decisions about whether to film in Ontario are made). Following vigorous lobbying, however, the Ontario government has implemented a “grandfathering” mechanism which will apply the old rates to certain productions.

Grandfathering of OPSTC (Ontario Production Services Tax Credit)

The rate of 25% will apply to qualifying production expenditures  incurred after April 23, 2015 and before August 1, 2016 if the following criteria are satisfied:

  1. The production company must have entered into at least one qualifying written agreement in respect of a qualifying production expenditure.
  2. The qualifying written agreement must be entered into with a person at arm’s length with the production company.
  3. The qualifying written agreement must satisfy one of the following criteria: (a) an agreement for the services of a producer, a director, a key cast member, a production crew or a post-production crew; (b) an agreement in respect of a studio located in Ontario or a location in Ontario; or (c) the agreement “demonstrates, in the opinion of the Minister of Tourism, Culture and Sport, that the corporation has made a significant commitment to production activities in Ontario”.
  4. The production company must apply to the OMDC for a certificate in respect of the production.
  5. Principal photography or key animation must commence before August 1, 2015.

Grandfathering of OCASE (Ontario Computer Animation and Special Effects Tax Credit)

The rate of 20% will apply to qualifying production expenditures  incurred after April 23, 2015 and before August 1, 2016 if the following criteria are satisfied:

  1. The production company must have entered into at least one qualifying written agreement in respect of a qualifying production expenditure.
  2. The qualifying written agreement must be entered into with a person at arm’s length with the production company.
  3. The qualifying written agreement must satisfy one of the following criteria: (a) it is in respect of digital animation or digital visual effects for use in the eligible production; or (b) the agreement “demonstrates, in the opinion of the Minister of Tourism, Culture and Sport, that the corporation has made a significant commitment to production activities related to the eligible production in Ontario”.
  4. Before August 1, 2015, the corporation has notified the Ontario Media Development Corporation in writing of its intent to apply for a certificate in respect of the eligible production. (NB: note the difference here between OPSTC and OCASE on this point – for OPSTC the application itself must actually have been filed by August 1, 2015, but for OCASE there only must be written notice of intent to apply for a certificate)
  5. Before August 1, 2016, the corporation has applied to the Ontario Media Development Corporation for a certificate in respect of the eligible production.
  6. Principal photography or key animation must commence before August 1, 2015.

“Transitional Grant” Program

The government also announced that productions which commence principal photography/key animation on or after August 1, 2015 (i.e., too late to access the grandfathered rates noted above) but before December 1, 2015 (i.e., the last day on which principal/key can be commenced is November 30, 2015), and which otherwise meet the criteria identified above, will have access to “a separate transitional mechanism outside of the Taxation Act” – details to follow.

[The foregoing information is taken from an OMDC bulletin circulated on Monday, May 25, 2015, and available online here.]

Ontario “Grandfathers” Tax Credit Rate Changes

I Didn’t Say That – The Ability of Actors to Control Their Performances Under Canadian Copyright Law

When the United States Ninth Circuit Court of Appeals issued its 2014 opinion in Garcia v Google (the original order and opinion is here; the amended order and opinion is here), its tentative conclusion that actors might enjoy copyright protection in their on-screen performances was met with vociferous criticism from movie producers and online content providers – the criticism was so fierce, and the arguments marshaled so convincing that on May 18, 2015 the US Ninth Circuit Court of Appeals en banc reversed the earlier decision (the May 18, 2015 opinion is available here). But Canadian copyright law has protected performer’s performances for nearly two decades, without much trouble or even attention – is there an explanation for the discrepancy in reactions?

Garcia v Google – Facts and Procedural Background

The May 18, 2015 decision  brings to an apparent close one of the stranger copyright cases in recent memory. The decision appears to definitively state that, under US copyright law, actors are not entitled to copyright in their on-screen performances – a conclusion which was vigorously argued over by a remarkably long list of intervenors in the case. The facts in Garcia are fairly straightforward: an actor responded to a casting call for movie titled “Desert Warrior” and appeared on-screen uttering two lines in the low-budget movie; unbeknownst to the actor, the producers of the movie dubbed her lines in the final version of the movie so that she appeared to be saying words she didn’t actually speak and re-titled the movie to “Innocence of Muslims“; worse, the movie, the trailer for which was uploaded to YouTube, proved to be incredibly controversial – in the words of the court, “the film fomented outrage across the Middle East, and media reports linked it to numerous violent protests”. The procedural history of the case is a bit more convoluted. The actor, seeking to have her participation in the trailer and film excised, sued Google and the producers of the movie and issued DMCA take-down notices, arguing, amongst other claims, that the defendants had infringed her copyright. Seeking an injunction forcing the removal of the footage from YouTube, she was unsuccessful in the district court, but a panel of the Ninth Circuit Court of Appeal reversed and granted the injunction. The court’s reasons seemed to indicate that Garcia had a protectable copyright interest in her performance as captured in the producer’s movie. That conclusion excited much debate and the case was re-heard by the Ninth Circuit Court of Appeal sitting en banc, which, as noted above, reversed the earlier Court of Appeal decision (Judge Alex Kozinski, who authored the original, controversial decision, stuck to his guns and dissented from the reasons of the en banc majority).

The initial 2014 Ninth Circuit Court of Appeals decision was controversial because it seemed so incongruous with established American copyright practice. American copyright law has historically not recognized any copyright interest on the part of an actor in their performance; indeed, when Garcia tried to register a copyright claim with the United States Copyright Office, the Office rejected the application, explaining that “longstanding practices do not allow a copyright claim by an individual actor or actress in his or her performance contained in a motion picture”. There seemed to be doctrinal and practical obstacles to recognizing performances as copyrightable, not least of which would be that, to again quote the Ninth Circuit’s en banc decision, “treating every acting performance as an independent work would … be a logistical and financial nightmare”.

In any event, for purposes of US copyright law, the “nightmare” now appears to be over (at least until the Supreme Court decides to take up the matter…). All that being said, Canadian copyright law does offer copyright protection to actor’s performances – so how have we avoided the “nightmare”?

Performer’s Performances in Canadian Copyright Law

As an initial observation, the Canadian Copyright Act required some significant amendments, introduced in 1997, in order to enable the protection of what the Act terms “performer’s performances”. Prior to those 1997 amendments, performances were not protected by Canadian copyright law, as they failed to constitute a “work” for purposes of copyright law; post-1997, they still aren’t a “work”, but rather are protected as other subject-matter.

Sections 15(1) and 15(1.1) of the Copyright Act state that (subject to various threshold matters, found in Sections 15(2), (2.1) and (2.2), such as where the performance occurred) “a performer has a copyright in the performer’s performance”. “Performer’s performance” is a defined term in the Act (found in Section 2), and it means:

(a) a performance of an artistic work, dramatic work or musical work, whether or not the work was previously fixed in any material form, and whether or not the work’s term of copyright protection under this Act has expired,

(b) a recitation or reading of a literary work, whether or not the work’s term of copyright protection under this Act has expired, or

(c) an improvisation of a dramatic work, musical work or literary work, whether or not the improvised work is based on a pre-existing work;

“Performance” itself as also defined in Section 2 and means “any acoustic or visual representation of a work, performer’s performance, sound recording or communication signal, including a representation made by means of any mechanical instrument, radio receiving set or television receiving set”.

Readers will note that the definitions are impressively broad: virtually any motion or sound created by the human body seems to qualify as a “performer’s performance”, including dance, mime, recitations of lines or extemporaneous utterances – clause (c) of the definition, which allows for the protection of “improvisations” seems particularly expansive. Further, it should be highlighted that there is no requirement that any performer’s performance be “original” – thus, even that low bar does not apply and thereby restrict the scope of protection for performer’s performances.

The exact nature of the rights accorded to performer’s in their performances are found in Sections 15(1) and (1.1): the copyright in the performance includes the rights to fix the performance and to reproduce the fixation of the performance.

At first glance, then, the situation under the Canadian Copyright Act seems like a particularly robust example of what the full Ninth Circuit was concerned about: if copyright protection extends that far, it seems designed to make for logistical nightmares in the administration of copyright. But the Canadian film and television production industry has not ground to a halt in the face of this tsunami of copyright claims – why not?

I think there are two partial answers. On a practical level, most of the problems are addressed by simple contractual arrangements – producers ensuring that everyone who appears on-screen signs some kind of waiver/release/transfer of rights. But if that doesn’t happen (which is more often the case in small budget projects – the Garcia reasons state “low-budget films rarely use licenses”), there remains a “fail-safe” mechanism in the Canadian Copyright Act: Section 17(1). What the Act gives with one hand (Section 15), it takes away with another: Section 17(1) states that when a performer “authorizes the embodiment of [his or her] performer’s performance in a cinematographic work, the performer may no longer exercise … the copyright [in that performance]”. In other words: if a performer authorizes the inclusion of their performance in an audio-visual project, the performer loses the right to control the exploitation of their performance in that project. And note what the language does not say: it does not say that the performer has to “authorize” the embodiment in writing. Thus, if there’s no need for the performer to memorialize their authorization in a written instrument, it becomes much easier to conclude that a performer authorized the embodiment of their performance simply by agreeing to be present in front of the camera (of course, that argument works only when the performer is aware that the camera is present and recording).

One final consideration which bears mention, and which is the more troubling: what about moral rights? The Copyright Modernization Act, enacted in 2012, added Sections 17.1 and 17.2 to the Copyright Act, which extended moral rights to some performances (for earlier Signal commentary on the topic, see Moral Rights Extended – But How Far?). It’s not immediately clear whether moral rights apply to an actor’s performance (or all actor’s performances) – the language of Section 17.1 states that it gives moral rights to “a performer of a live aural performance or a performance fixed in a sound recording”; that seems to indicate an intention to grant moral rights to what we might call “musicians”, and possibly “singers”… but actors? Most actors do generate an “aural performance” (by speaking lines) but is what they do a “live aural performance”? (What is a “live” performance anyways? What role is “live” playing in that phrase? What would a “non-live” performance look like? Is there a distinction for these purposes to be drawn between actors performing on the theatrical stage and actors performing for embodiment in a film?) The easier position is to conclude that the moral rights provisions in Sections 17.1 and 17.2 don’t extend to film/TV actors. But if that is incorrect, and actors do enjoy moral rights in their performances, then the position of producers becomes more complicated. Moral rights cannot be assigned, but they can be waived (Section 17.1(2)); there is no requirement that the waiver be in writing, but presumably for there to be a waiver there must be some turning of the mind to the matter – which, I think it’s safe to conclude, isn’t something that happens very often on set. One could try to rely on industry practice resulting in an implied waiver of moral rights, but even that seems a bit of a stretch. More fruitful might be the inherent limitations on moral rights: the right of association (i.e., the right to be identified as the performer of the performance) is limited to when it is “reasonable in the circumstances”; the right of integrity (i.e., the right to control the distortion, mutilation or modification of a performance and the right to control the use of the performance in association with a product, service, cause or institution) is limited to uses which “prejudice” the performer’s honour or reputation. Interestingly, Garcia might have had more luck with her claims under Canadian law, relying on moral rights infringement on the basis that, when the producers dubbed her lines and included her performance in a motion picture which was apparently different from what she originally understood herself to be participating in, her performance had been modified in a manner which prejudiced her honour or reputation.

I Didn’t Say That – The Ability of Actors to Control Their Performances Under Canadian Copyright Law