snIP/ITs Insights on Canadian Technology and Intellectual Property Law

Information location tool and fair dealing copyright defenses rejected: Trader v CarGurus

Posted in Copyright, Intellectual Property
Barry B. Sookman

If you’ve ever shopped for a used car, you likely know the two popular services, autotrader.ca and CarGurus. In a decision released earlier this week in Trader v CarGurus, 2017 ONSC 1841, Trader (the owner and operator of autotrader.ca) was awarded statutory damages of $305,604 against CarCurus for infringements of its copyrights in photographs of vehicles. The decision written by Justice Conway of the Ontario Superior Court contains some important interpretations of the Copyright Act including in relation to the scope of the new making available right, the copyright defenses for information location tools and fair dealing, and the calculation of statutory damages.

The facts are relatively straightforward. Trader was the owner of the copyright in over 150,000 photos of vehicles that were displayed on websites of auto dealers. CarGurus scraped the photos from dealer sites and used them in providing its services which included displaying the photos on its website and through a mobile application. It did so without Trader’s permission.

CarGurus made many arguments to avoid liability, none of which were accepted by the applications judge.

CarGurus contended that the photos weren’t original because Trader’s employees and contractors were instructed to follow standardized processes in taking the pictures. The court rejected this and found that it’s employees and contractors that took the photos still exercised skill and judgement, and hence the photos were original artistic works protected under the Act.

CarGurus also contended that it did not reproduce over 34,000 of the photos. Rather, it contended that it merely “framed” them on its site and could not be liable for doing so. The court rejected this argument holding that the act of framing the photos constituted making them available to the public, a right that was expressly added to the Act in 2012 to clarify the scope of the communication to the public right.

Under s. 2.4(1.1) of the Act, “communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public” (my emphasis added).

Under s. 27(1) of the Act, it is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that only the owner of the copyright has the right to do.

CarGurus’ only argument on infringement is that for 34,185 of the Trader Photos, it did not actually reproduce them but rather “framed” them – that is, although the images from Dealers’ websites appeared to be part of CarGurus’ website, they were not physically present on CarGurus’ server, but located on servers hosting the Dealers’ websites.  I reject that argument.  In my view, when CarGurus displayed the photo on its website, it was “making it available” to the public by telecommunication (in a way that allowed a member of the public to have access to it from a place and at a time individually chosen by that member), regardless of whether the photo was actually stored on CarGurus’ server or on a third party’s server.

The decision in this regard is consistent with the recent holding in the Bell Canada v. 1326030 Ontario Inc. (iTVBox.net), 2016 FC 612 aff’d  Wesley dba MTLFREETV.com v Bell Canada et al 2017 FCA 55 case in which an interlocutory injunction was granted to restrain the  sale of Kodi boxes that were configured to enable members of the public to illegally access streamed content.[1]

CarGurus also claimed it’s copying and making the photos available without consent was a fair dealing. The court accepted that the purpose of the dealing may have been research, but easily rejected that the dealing was fair.

However, I am not persuaded that CarGurus’ use of the Trader Photos is “fair”.  At this stage of the analysis, CarGurus’s own purpose may be considered – that purpose was strictly a commercial one.  The character of the dissemination of the Trader Photos was unfair, in that they were widely disseminated through the Internet for the entire life of the vehicle listing.  The entire photo was displayed, not just a portion of it.

CarGurus had alternatives to copying and making the Trader Photos available online.  CarGurus could have taken its own photos of the vehicles or arranged for others to do so.  The nature of the works is commercial photography, which is being used to further CarGurus’ commercial interests.  The effect of the dealing in the Trader Photos was to compete squarely with Trader in the Canadian digital marketplace arena.

Considering all of these factors, I find that CarGurus has not met its onus of establishing that its dealing in the Trader Photos was fair.  The fair dealing defence fails.

CarGurus also relied on the new defense in the Act for information location tools (aka search engines). Here again, the court also easily rejected this defense . It found that the defense only applies to intermediaries who enable users to get to the location of the online content and not to service providers that collect information for the purpose of making that content available on its own website.

The crux of the defined term “information location tool” in the Act is the locating of information – it is a tool that it “makes it possible to locate information that is available through the Internet.”  In my view, Parliament intended to afford protection to intermediaries that provide tools that enable users to navigate and find information where it is located on the Internet.  It did not intend to afford that protection to providers like CarGurus that gather information from the Internet and make it available to the user on the provider’s own website.

The Background document released by the Government of Canada along with Bill C-11 (The Copyright Modernization Act) explained that “the bill will clarify that Internet service providers (ISPs) and search engines are exempt from liability when they act strictly as intermediaries in communication, caching, and hosting activities.”[10] (my emphasis added)

This is reflected in the way that s. 41.27 works.  If the provider of an information location tool caches (i.e. temporarily stores) information and meets the other conditions of s. 41.27(2) in facilitating a user’s navigation to the location of that online information, the provider is protected from liability for copying that information.[11]  The rationale, in my view, is that the provider is enabling the user to get to the location of the online information and therefore should not be liable simply for acting as an intermediary.

In this case, CarGurus was not acting as an intermediary to facilitate the user’s navigation to the location of online information.  The evidence is that from the date of the launch in May 2015 until September 2015, CarGurus only had a basic plan for Dealers, in which the vehicle listings did not contain the name of the Dealer, its address, its Internet address, or any hyperlink to any part of the Dealer’s website.  While CarGurus may have located information about a vehicle and provided it to the user through its website, it did not enable the user to find this information where it was located on the Internet (i.e. the Dealer’s webpage for that vehicle listing).  If the user was interested in a particular vehicle, the user was required to contact CarGurus, which in turn acted as a liaison between the user and the Dealer.

The evidence is that at some point after September 2015, the Dealer’s name and contact information, including the Dealer’s website address, appeared on the CarGurus website for Dealers on the basic plan.[12]  However, in my view, while the addition of that information might have assisted the user in conducting its own additional searches or contacting the Dealer where the vehicle was located, CarGurus was still not providing a tool that enabled the user to get to the online location of that vehicle information (the Dealer’s webpage for the listing).

I therefore cannot conclude that CarGurus acted as an intermediary as contemplated by s. 41.27 during the infringement period.  CarGurus has failed to establish that it was the provider of an “information location tool” and is not entitled to protection from statutory damages.

The court’s interpretaton of the ILT exemption is also consistent with the decision in the ITVBox.net case and the Supreme Court of Canada decision in the Tariff 22 case which held that the common carrier exemption in para 2.1(4)(b) of the Act only applies to neutral intermediaries and not to service providers that control the content on a site.[2]

Trader sought statutory damages in an amount of $500 per photo infringed. The court, however, held that it had the authority to reduce those damages to a lesser amount under s.38.1(3) of the Act concluding that all of the photos were made available from CarGurus’ website, something it concluded was a “single medium” for the purposes of the subsection. It awarded $2 in statutory damages per photo infringed to reach  the final award of $305,064.

First published on barrysookman.com.

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[1]  According to the court:

Sections 2.4, 3 and 21 of the Copyright Act give the Plaintiffs the exclusive rights to communicate their programs to the public by telecommunication via television broadcast, including the right to make these programs available in a way that allows a member of the public to access them at a time and place chosen by him or her, the right to reproduce the programs or any substantial of the programs, and the right to authorize such acts. The Plaintiffs also have the sole right to fix their communication signals and to reproduce any fixation thereof.

The devices marketed, sold and programmed by the Defendants enable consumers to obtain unauthorized access to content for which the Plaintiffs own the copyright. This is not a case where the Defendants merely serve as the conduit, as was argued by Mr. Wesley. Rather, they deliberately encourage consumers and potential clients to circumvent authorized ways of accessing content – say, by a cable subscription or by streaming content from the Plaintiffs’ websites – both in the manner in which they promote their business, and by offering tutorials in how to add and use applications which rely on illegally obtained content.

[2] See, Bell Canada v. 1326030 Ontario Inc. (iTVBox.net), 2016 FC 612 :

ITV The statutory defence provided in paragraph 2.4(1)(b) of the Copyright Act does not apply to the Defendants who go above and beyond selling a simple “means of telecommunication”. They also engage in acts related to the content of the infringed communications (Society of Composers, Authors and Music Publishers of Canada v Canadian Assn of Internet Providers2004 SCC 45 (CanLII) at para 92)