Recent copyright developments: Too early to draw adverse inference

Law360 Canada (July 26, 2024, 11:06 AM EDT) --

John McKeown

Voltage Holdings, LLC has been trying to assert claims against a mass group of Internet subscribers who used or authorized the use of the BitTorrent peer-to-peer network to unlawfully make the plaintiff’s film available for distribution. The plaintiff unsuccessfully sought default judgment in its action in the Federal Court.

An appeal from this decision was also dismissed in Voltage Holdings, LLC v. Doe #1, 2023 FCA 194. The Federal Court did not err in concluding that it was premature to draw an adverse inference against the defendants. The plaintiff had not yet attempted to compel discovery of the defendants and their potential evidence. But the Federal Court was also right not to close the door on that possibility; otherwise, there is a risk of creating a zone of immunity around online infringement.

The decision on appeal supports the shifting of the burden of proof or drawing adverse inferences when, as here, there is an informational imbalance or key evidence is uniquely in the hands of the defendant. Gaps in a plaintiff's evidence may be filled by an adverse inference or by the failure of a defendant to meet an evidentiary burden. The question is not whether a court can shift the burden, but when and in what circumstances.

The existing jurisprudence does two things: it prescribes certain facts that must be established to prove infringement, and it allows for drawing adverse inferences of infringement based on the overall state of the evidence.

A defendant’s failure to file a defence means that no allegations of fact in a pleading are admitted. The plaintiff in the Federal Court bears the legal or persuasive burden of leading sufficient evidence to prove the necessary elements of its claim on a balance of probabilities. The evidential burden, in contrast, refers to a party’s obligation to establish, through sufficient evidence, the existence or non-existence of a particular fact or issue, so a particular argument is live before the court. Unlike the party with the legal burden, the party with an evidential burden is not strictly required to convince the trier of fact of anything since an issue can be put into play without being proven.

The Federal Court did not err in its application of the legal principles relevant to adverse inferences or in its weighing of the evidence before it. The Federal Court’s decision not to draw an adverse inference in this context is a question of fact justifying deference on appeal, subject to the correctness of the legal principles guiding its assessment of the claims.

Consultations on artificial intelligence

In 2021, the government of Canada launched a consultation on Canada’s copyright framework to gather Canadians’ insights on how to adapt it for the digital age.

In October 2023, the rapid development of generative artificial intelligence (AI) tools, like ChatGPT, prompted the government to launch a further consultation to reconsider some of the issues previously studied. While these new tools offer significant promise, there are also potential risks and impacts that should be appropriately considered, including in the context of protecting the rights of creators through Canada’s copyright framework.

Both consultations are closed, and we are waiting to hear from the government.

Artist’s resale rights

On Nov. 9, 2023, Canadian Heritage and the Ministry of Innovation, Science and Industry launched a survey to help support the development of resale rights for artists. Resale rights for artists would help visual artists and their heirs when their work is resold. The full value of a work of art is rarely realized at the first sale. Resale rights would let visual artists be rewarded as their career progresses and their reputation grows. Over 90 countries worldwide have adopted resale rights.

This is the first of a three-part series.
 
John McKeown, counsel at Goldman Sloan Nash & Haber LLP, is certified by the Law Society of Ontario as a specialist in intellectual property law (trademarks/copyright). He is the author of Canadian Intellectual Property Law and Strategy: Trademarks, Copyright and Industrial Designs. He can be reached at mckeown@gsnh.com.

The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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