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| John McKeown |
Facts
Maier was a citizen of the United States of America who worked as a nanny in the Chicago, Ill., area. She was also a photographer who took many thousands of film photographs, the vast majority of which were not printed during her lifetime. Maier stored the negatives in five storage lockers in Chicago.
In 2007, a Chicago auctioneer purchased the negatives and other photographic works made by Maier from a storage company that had repossessed the materials for outstanding locker rental payments. The purchased works were divided into several lots and auctioned to several individuals.
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Two of the individuals who purchased negatives produced, exhibited and sold prints made from the negatives at public exhibitions throughout the United States. The defendants collaborated with one of the individuals to publicize Maier’s works. The defendants hosted an exhibition in Toronto called Photographs of Children that ran from July 17 through Sept. 13, 2014, at which prints made from the black and white negatives were exhibited, offered for sale and sold until Jan. 16, 2015.
On July 1, 2014, the Circuit Court of Cook County (Probate Division) issued an order opening the Estate of Maier and appointing the Public Administrator for Cook County as the supervised administrator. The supervised administrator is responsible for the identification of an heir to the Estate and is empowered to bring legal action to enforce and protect the assets of the estate, including any copyright interests. At the trial, no heir had been identified.
On Aug. 19, 2014, a “litigation hold” letter from counsel for the estate to the defendants was sent in which the estate advised the defendants that counsel was “investigating the potential misuse and infringement of copyrighted works whose rights are held by the Estate” and said the defendants might “have documents or information … relevant to [the] investigation with regard to third parties who could be liable to the [E]state.” The letter advised the defendants of their obligation to preserve and retain documents that might be relevant to the investigation.
At the same time, there were rumours that an heir had been found but nothing materialized. By email dated Sept. 6, 2014, one of the individuals who first purchased the negatives told the defendants that they were no longer producing, exhibiting and selling prints because of concerns about copyright.
Action
The estate is the owner of copyright in the original works made by Maier, including those included in a collection of 15,172 black and white negatives and 1,471 colour slides and transparencies.
The estate alleged that the defendants infringed copyright by commissioning, exhibiting, offering for sale and/or selling prints made from the black and white negatives; offering for sale, selling and/or exporting a hard drive made of scans of the positive images from the black and white negatives to a Swiss company; authorizing infringement through the sale and exportation of the black and white negatives and the hard drive to the Swiss company; and making a copy of the hard drive and exporting the copy to the Swiss company for the purpose of offering for sale and selling the original hard drive.
Primary or direct infringement
Primary or direct Infringement occurs when any person, without consent of the copyright owner, does anything that only the copyright owner has the right to do under the Copyright Act. Subsection 3(1) of the Act sets out the rights available to a copyright owner, which includes the right to produce or reproduce, perform or publish the work. It also grants the sole right to authorize any such acts.
The corporate defendant admitted liability and infringement regarding commissioning prints made from 40 unique works embodied in the black and white negatives.
Secondary or indirect infringement
Subsection 27(2) of the Act deals with “secondary infringement” or “indirect infringement” of copyright.
The section provides:
It is an infringement of copyright for any person to
(a) sell or rent out,
(b) distribute to such an extent as to affect prejudicially the owner of the copyright,
(c) by way of trade distribute, expose or offer for sale or rental, or exhibit in public,
(d) possess for the purpose of doing anything referred to in paragraphs (a) to (c), or (e) import into Canada for the purpose of doing anything referred to in paragraphs (a) to (c),
a copy of a work, … that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.
To establish secondary infringement, three elements must be established: (i) this copy must be the product of primary infringement; (ii) the secondary infringer must, or should have known, that they were dealing with a product of infringement; and (iii) the secondary infringer must have sold, distributed or exposed for sale the infringing copy.
The burden of proving “knowledge” in item (ii) above rests on the plaintiff. But the burden does not require proof that actual knowledge exists as knowledge may be established when the conduct of the defendant amounts to wilful blindness through a deliberate choice not to know something, despite being given reason to make further inquiries.
The defendants did not deny that the prints made were unauthorized reproductions but asserted that, at the time of the alleged infringing activities, they did not have an honestly held belief of infringement.
The judge reviewed the evidence relating to various exhibitions and other events and concluded the corporate defendant should not have continued with the exhibition after Sept. 6, 2014. Once they did so, they became liable for infringement for the prints it continued to exhibit and all sales made after Sept. 6, 2014.
Based on this time frame, the judge concluded that the total number of unique works infringed through the defendants’ activities relating to the importing, printing, exhibiting, offering for sale and selling of prints from the black and white negatives was 97.
Infringement relating to the images on the hard drives
The estate alleged the defendant’s infringing activities also included all 15,172 positive images scanned from the black and white negatives onto the Goldstein HD and reproduced from the Goldstein HD onto the watermarked HD.
The defendants alleged that the Goldstein HD was not infringing. They understood that their supplier had the right to make the hard drive. The scanned images on the Goldstein HD were not used in the same way as the black and white negatives. They did not have a resolution that could make prints, and the scanned images were used primarily as a “contact sheet,” sales catalogue or an inventory list of the negatives. The judge found that the export to the Swiss company of the Goldstein HD was not an infringing activity.
The Swiss company advised the defendant that it needed to see the images before deciding to purchase the black and white negatives. To satisfy this request, the defendant saved lower-resolution and watermarked versions of the image files from the Goldstein HD to a second hard drive, the watermarked HD, and sent the watermarked HD to the Swiss company. By marking the images with a watermark and reducing their resolution, the images on the watermarked HD could not be used for any purpose other than to count and preview the images from the black and white negatives. The judge concluded the reproduction of the scans of the Goldstein HD onto the watermarked HD falls within fair dealing exception and without an act of primary infringement, there was no secondary infringement.
Authorizing infringement
The plaintiff asserted that the defendants authorized infringement by selling and exporting the B&W negatives and the Goldstein HD to the Swiss for the purpose of permitting others to reproduce, publish, offer for sale, sell and exhibit unauthorized and infringing copies of the Maier Works.
Authorization is a distinct right granted to copyright owners. To “authorize” means to sanction, approve and countenance. A person infringes the authorization right where, without the consent or a licence from the copyright owner, they hold themselves out as capable of granting one of the copyright owner’s exclusive rights.
Authorization infringes copyright only if the authorized act is itself an act of infringement. The act of authorizing in Canada is not actionable under the Act where the primary infringement occurs outside Canada. For this reason and others the claim for authorizing infringement was dismissed.
Relief granted
A claim for personal liability of the sole shareholder of the corporate defendant was dismissed as all of his actions were made in his role as the director of the corporate defendant and in the ordinary course of its normal operations of buying, exhibiting, offering for sale and selling artistic works and prints.
The plaintiff elected for the recovery of statutory damages for each of the 97 infringements established. The judge considered the factors under subsection 38.1(5) of the Act, the financial realities, the specific circumstances of this case and the jurisprudence and concluded that a just award would be more than the minimum amount per work, but a magnitude less than the maximum amount and should be set at $2,000 per work for a total of $194,000. In addition, the corporate defendant was enjoined from future infringing all the works of the estate and ordered to deliver up under oath all unauthorized reproductions
Comment
The decision illustrates the ownership of copyright must be distinguished from the ownership of the physical object that is the vehicle for the work subject to copyright. The purchase of the negatives and the hard drives did not affect the ownership of copyright in the photographs.
Copyright in Canada subsists automatically without any formalities. The judge’s finding that liability for indirect infringement did not arise for indirect infringement until September 2014 seems favourable to the defendants.
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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