T-3016-92
Milliken & Company and Milliken Industries of Canada Ltd. (Plaintiffs)
v.
Interface Flooring Systems (Canada) Inc. (Defendant)
T-1212-95
Milliken & Company (Plaintiff)
v.
Interface Flooring Systems (Canada) Inc. (Defendant)
Indexed as: Milliken & Co.v. Interface Flooring Systems (Canada) Inc. (T.D.)
Trial Division, Tremblay-Lamer J."Ottawa, November 17, 1997; February 5, 1998.
Copyright — Infringement — Plaintiffs say defendant infringed copyright in Mangrove design by supplying, installing carpet tiles — Whether Mangrove design entitled to copyright protection depending on design's date of creation — Designs created prior to June 1988 subject to original version of Copyright Act, s. 64 — No mention of date of creation of design in assignment of copyright — Plaintiffs' failure to adduce evidence as to creation date leading Court to conclude design created prior to June 1988, governed by former Act, s. 64 — Not protected by copyright — Primary infringement conceded by defendant at trial — But for Court's finding as to applicable legislation, corporate defendant liable for secondary copyright infringement.
Practice — Parties — Standing — Whether plaintiffs had standing to sue under Copyright Act, s. 36(1) — Plaintiff Milliken & Co. basing right to sue on ownership of Mangrove design — Act, s. 13(4) allowing owner of copyright to assign rights — Whether stamp affixed on invoice sufficient to satisfy requirement of s. 13(4) — Mark, facsimile of signature accepted if customary way of identification of person — First assignment not valid, could not be redeemed by confirming assignment — Plaintiff Milliken Canada claiming standing as licensee — Non-exclusive licensee deriving no right, title, interest in copyright — Having no right to sue alone in copyright infringement action.
Industrial design — Actions for copyright infringement concerning carpet tiles of Mangrove design — Plaintiff Milliken claiming rights to design through assignment by author of artistic work — Designs created after June 8, 1988 subject to current Copyright Act, s. 64 — Design created when artistic work created — Plaintiffs failing to adduce evidence of creation date, Court concluding Mangrove design created prior to June 1988 — Not protected by copyright as capable of registration under Industrial Design Act, used as pattern to be multiplied by industrial process.
In these two actions for copyright infringement, the plaintiffs alleged that the defendant infringed their copyright in the Mangrove design by supplying and installing carpet tiles at the Calgary International Airport in February 1991 and September 1992 in the first case, and in 1995 in the second case. The Mangrove design is an artistic work created in France by Claire Iles under the name "Harmonie". Plaintiff, Milliken & Company, claimed to have purchased the rights to this design in 1989 through an assignment, executed by Claire Iles, which confirmed that she was the author of "Harmonie" and that she had sold her work to Milliken, including copyright and other intellectual property rights in the work, for valuable consideration. It was said that the defendant was notified of Milliken's rights in the copyright both in fact and by the notice affixed to the carpet tiles manufactured and sold in Canada by Milliken Canada. Three issues were raised: (1) whether the Mangrove design is entitled to copyright protection; (2) whether the plaintiffs had standing to sue under the Copyright Act , and (3) whether there was infringement of plaintiffs' copyright.
Held, the actions should be dismissed.
(1) Whether the Mangrove design is entitled to copyright protection or should be denied such protection by virtue of section 64 of the Copyright Act hinges on the design's date of creation. Designs created prior to June 8, 1988 were subject to section 64 of the Act in its original version. It was provided then that copyright could not be used to protect industrial designs which were capable of registration under the Industrial Design Act, and were used or intended to be used as a model or pattern to be multiplied by industrial process. Designs created after that date come under industrial design protection subject to certain exceptions in which cases both copyright and indusrial design protection are available. The date of creation of the impugned design was a material fact to the plaintiffs' case and as such, they had an obligation to prove it, but failed to do so. There was no mention of the date of creation in the assignment signed by Claire Iles in September 1992, nor was the latter called to testify at trial. The definition of "article" in the amended Act is not restricted to a "finished article". Any artistic work such as a painting or drawing is an "article". The words "in a finished article" only mean in a physical embodiment as opposed to a mere scheme or preliminary conception of an idea. Therefore, the design was created when the artistic work was created. Plaintiffs' failure to adduce evidence on such a material fact as the date of creation of the design lead the Court to draw an adverse inference and conclude that the design was created before June 1988. Under section 64 of the Copyright Act , as it read before the legislative amendments, the impugned design could not be protected by copyright because it was capable of registration under the Industrial Design Act and was used as a pattern to be multiplied by an industrial process. The Mangrove design fell squarely within the definition of the term "design", being a pattern which appeals to the eye and is applied to a manufactured article such as carpet tiles.
(2) The plaintiffs must have the required standing to sue under paragraph 36(1) of the Copyright Act. Plaintiff Milliken & Co. based its right to sue on its ownership of the Mangrove design. Subsection 13(4) of the Act allows the owner of a copyright to assign his rights. The assignment must be in writing and signed by the owner of the right or his authorized agent. The issue was whether the stamp affixed by Claire Iles on a pre-printed form was sufficient to satisfy the requirement of subsection 13(4). A mark or facsimile of a signature is accepted if it is the customary way of identification of the person. There was no evidence to prove that it was Claire Iles' practice or custom to authenticate a document by means of her stamp. Her confirming assignment could not be used to validate the first assignment. One cannot validate something that did not exist. Plaintiff Milliken Canada, which claimed standing as a licensee, had a non-exclusive licence to use, reproduce, modify and exercise the copyright associated with the Mangrove design in Canada. A non-exclusive licensee does not derive any right, title or interest in the copyright that could give it the standing to sue. It has no right to sue alone in a copyright infringement action.
(3) Under section 27 of the Copyright Act, infringement could be primary or secondary. At trial, primary infringement was conceded by the defendant and, therefore, was not an issue. Secondary infringement is prohibited by subsection 27(4) of the Act which deems a person to be an infringer if, for example, that person sells any work that, to his knowledge, infringes copyright or would infringe copyright if it had been made within Canada. Knowledge is to be inferred from the facts of the case and the burden of proving it rested upon the plaintiffs. The designer who developed the defendant's carpet tile design for the Calgary International Airport project did have knowledge that the defendant's carpet tile infringed plaintiffs' Mangrove design. She was aware that the design was protected by copyright and she should have known that she was illegally copying it while developing the pattern to be supplied to the airport. Despite her knowledge of the infringement of the plaintiffs' copyright, she went ahead and developed the infringing carpet tile. Since she made that decision within her assigned area of responsibility, her knowledge could be attributed to the corporate defendant. Were it not for the Court's finding as to application of the Act, the defendant would have been liable for secondary infringement of copyright.
statutes and regulations judicially considered
Copyright Act, R.S.C., 1985, c. C-42, ss. 13(4), 27(4), 34(3)(a), 36(1) (as am. by S.C. 1994, c. 47, s. 63), 64 (as am. by R.S.C., 1985 (4th Supp.), c. 10, s. 11).
Industrial Design Act, R.S.C., 1985, c. I-9.
Industrial Designs Rules, C.R.C., c. 964, s. 11.
Patent Act, R.S.C. 1927, c. 150, s. 32.
Patent Act, R.S.C. 1970, c. P-4, s. 57.
Solicitors Act, (U.K.), 1932, c. 37, s. 65(2)(i).
Trade-marks Act, R.S.C., 1985, c. T-13, s. 50(1) (as am. by S.C. 1993, c. 15, s. 69).
cases judicially considered
applied:
Canadian Dredge & Dock Co. et al. v. The Queen, [1985] 1 S.C.R. 662; (1985), 19 D.L.R. (4th) 314; 19 C.C.C. (3d) 1; 45 C.R. (3d) 289; 59 N.R. 241; 9 O.A.C. 321; Cimon Ltd. et al. v. Bench Made Furniture Corpn. et al., [1965] Ex. C.R. 811; (1965), 30 Fox Pat. C. 77.
distinguished:
Armstrong Cork Canada v. Domco Industries Ltd., [1982] 1 S.C.R. 907; (1982), 136 D.L.R. (3d) 596; 66 C.P.R. (2d) 46; 42 N.R. 254.
considered:
Heap v. Hartley (1889), 42 Ch.D. 461 (C.A.); Bayliner Marine Corp. v. Doral Boats Ltd., [1986] 3 F.C. 421; (1986), 9 C.I.P.R. 311; 10 C.P.R. (3d) 289; 67 N.R. 139 (C.A.); Levesque v. Comeau et al., [1970] S.C.R. 1010; (1970), 5 N.B.R. (2d) 15; 16 D.L.R. (3d) 425; Goodman v. Eban (J.) Ltd., [1954] 1 All E.R. 763 (C.A.); R. v. Fox (1958), 120 C.C.C. 289; 27 C.R. 132 (Ont. C.A.); Eli Lilly and Co. v. Novopharm Ltd. (1997), 73 C.P.R. (3d) 371 (F.C.T.D.).
referred to:
Apple Computer Inc. v. Mackintosh Computers Ltd., [1987] 1 F.C. 173; (1986), 28 D.L.R. (4th) 178; 8 C.I.P.R. 153; 10 C.P.R. (3d) 1; 3 F.T.R. 118 (T.D.); Murray v. Saskatoon, [1952] 2 D.L.R. 499; (1951), 4 W.W.R. (N.S.) 234 (Sask. C.A.); Morton v. Copeland (1855), 139 E.R. 861 (C.P.); Electric Chain Co. of Canada Ltd. v. Art Metal Works Inc. et al., [1933] S.C.R. 581; [1933] 4 D.L.R. 240; Albert v. S. Hoffnung & Co. Ltd. (1921), 22 S.R. 75 (N.S.W.S.C.); Clarke, Irwin & Co. v. C. Cole & Co., [1960] O.R. 117; (1960), 22 D.L.R. (2d) 183; 33 C.P.R. 173; 19 Fox Pat. C. 143 (H.C.); Simon & Schuster Inc. et al. v. Coles Book Stores Ltd. (1975), 9 O.R. (2d) 718; 61 D.L.R. (3d) 590; 23 C.P.R. (2d) 43 (H.C.).
authors cited
Keane, Adrian. The Modern Law of Evidence, 3rd ed. London: Butterworths, 1994.
Schiff, Stanley. Evidence in the Litigation Process, Vol. 1, 4th ed. Toronto: Carswell, 1993.
Sopinka, John and Sidney N. Lederman. The Law of Evidence in Civil Cases. Toronto: Butterworths, 1974.
Tapper, Colin. Cross on Evidence, 8th ed. London: Butterworths, 1995.
Wigmore, John Henry. Evidence in Trials at Common Law, revised by James H. Chadbourn, Vol. 2. Boston: Little, Brown & Co., 1979.
ACTIONS for copyright infringement of plaintiffs' Mangrove design by supplying and installing carpet tiles bearing said design. Actions dismissed.
counsel:
G. Alexander Macklin, Q.C., Jane E. Clark and Lise M. Patry for plaintiffs.
Robert H. C. MacFarlane and Michael E. Charles for defendant.
solicitors:
Gowling, Strathy & Henderson, Ottawa, for plaintiffs.
Bereskin & Parr, Toronto, for defendant.
The following are the reasons for judgment rendered in English by
Tremblay-Lamer J.: These are two actions for copyright infringement. The plaintiffs in the first action, file T-3016-92, are Milliken & Company (Milliken) and Milliken Industries of Canada Ltd. (Milliken Canada). Milliken is a U.S. corporation organized and carrying on business under the laws of the State of Delaware. Milliken Canada is a wholly owned subsidiary of Milliken. It is incorporated under the laws of Canada. Milliken Canada was voluntarily wound up on March 24, 1997.
The defendant, Interface Flooring Systems (Canada) Inc. (Interface Canada), is incorporated under the laws of Ontario and is a wholly owned subsidiary of the American corporation, Interface Inc.
The plaintiffs claim that the defendant infringed their copyright in the Mangrove design by supplying and installing carpet tiles of a certain design at the Calgary International Airport in February 1991 and September 1992.
A counterclaim in this action was dismissed with costs.
The second action, file T-1212-95, was brought by Milliken alone. It alleges that the defendant infringed its copyright in the Mangrove design and its rights in Industrial Design Registration No. 67420, by supplying and installing carpet tiles at the Calgary International Airport in 1995. At trial, the defendant consented to judgment with respect to infringement of Milliken's industrial design rights.
The Mangrove design is an artistic work which was created in France by Claire Iles under the name "Harmonie". Milliken claims to have purchased the rights to this design in 1989. The purchase is evidenced by a document in writing dated the day of the purchase.1 The design was first published under the name Mangrove by Milliken in the U.S., on May 23, 1989, as a textile design for carpet tile. Milliken obtained the registration rights in Canada on November 10, 1992.2 An accompanying assignment dated September 25, 1992 was also recorded in the Canadian Copyright Office. The assignment, which was executed by Claire Iles, confirmed that she was the author of "Harmonie" and that she had sold her work to Milliken including copyright and other intellectual property rights in the work for valuable consideration.
The plaintiffs submit that the defendant incorporated the Mangrove design, or a substantial part thereof, in carpet tile it manufactured, supplied and installed at the Calgary International Airport in February 1991 and September 1992. In fact, the defendant had tendered and obtained a contract to supply and install three thousand square yards of carpet tile at the airport in February 1991. It obtained a second contract to supply and install another two thousand square yards in September 1992.
The plaintiffs add that the defendant knowingly reproduced the Mangrove design. The plaintiffs allege that the defendant was notified of Milliken's rights in the copyright both in fact and by the notice affixed to the carpet tiles manufactured and sold in Canada by Milliken Canada.
As it is indicated later in these reasons, the plaintiffs' allegations of infringement are founded. However, the outcome of this action ultimately depends on the plaintiffs being able to surmount two major legal hurdles.
I. Application of the Copyright Act
The first issue is whether the Mangrove design is entitled to copyright protection or whether it should be denied such protection by virtue of section 64 of the Copyright Act3 (Act). The answer to this question hinges on the design's date of creation.
Under subsection 64(4) of the Act, there exists two separate legal regimes governing the availability of copyright as a form of protection for industrial design. It is the design's date of creation which determines which regime applies. The subsection reads as follows:
64. . . .
(4) Subsections (2) and (3) apply only in respect of designs created after the coming into force of this subsection, and section 64 of this Act and the Industrial Design Act, as they read immediately before the coming into force of this subsection, as well as the rules made under them, continue to apply in respect of designs created before that coming into force.
Designs created prior to June 8, 1988 are subject to section 64 of the Act as it read before the enactment of the previous subsection. Section 64 then provided that copyright could not be used to protect industrial designs which (i) were capable of registration under the Industrial Design Act,4 and (ii) were used or intended to be used as a model or pattern to be multiplied by industrial process:
64. (1) This Act does not apply to designs capable of being registered under the Industrial Design Act, except designs that, though capable of being so registered, are not used or intended to be used as models or patterns to be multiplied by any industrial process.
Under section 11 of the Industrial Designs Rules,5 a design was considered to be used as a model or pattern to be multiplied by industrial process where the design was reproduced in more than 50 articles or where it was applied to certain specified articles:
11. (1) A design shall be deemed to be used as a model or pattern to be multiplied by any industrial process within the meaning of "section 64〉 of the Copyright Act ,
(a) where the design is reproduced or is intended to be reproduced in more than 50 single articles, unless all the articles in which the design is reproduced or is intended to be reproduced together form only a single set as defined in subsection 2; and
(b) where the design is to be applied to
(i) printed paper hangings,
(ii) carpets, floor cloths, or oil cloths manufactured or sold in lengths or pieces,
(iii) textile piece goods, or textile goods manufactured or sold in lengths or pieces, and
(iv) lace, not made by hand.
As for designs created after June 8, 1988, they are subject to section 64 of the Act as it currently reads. Section 64 of the Act now provides that certain designs which are created in quantities of more than fifty and applied to "useful articles" or plates, engravings or casts used for more than fifty "useful articles" are not protected by copyright but instead come within the purview of industrial design protection:
64. . . .
(2) Where copyright subsists in a design applied to a useful article or in an artistic work from which the design is derived and, by or under the authority of any person who owns the copyright in Canada or who owns the copyright elsewhere,
(a) the article is reproduced in a quantity of more than fifty, or
(b) where the article is a plate, engraving or cast, the article is used for producing more than fifty useful articles,
it shall not thereafter be an infringement of the copyright or the moral rights for anyone
(c) to reproduce the design of the article or a design not differing substantially from the design of the article by
(i) making the article, or
(ii) making a drawing or other reproduction in any material form of the article, or
(d) to do with an article, drawing or reproduction that is made as described in paragraph (c) anything that the owner of the copyright has the sole right to do with the design or artistic work in which the copyright subsists.
Exceptions to this general rule are set out in subsection 64(3) [as am. by R.S.C., 1985 (4th Supp.), c. 10, s. 11] of the Act where both copyright and industrial design protection are available:
64. . . .
(3) Subsection (2) does not apply in respect of the copyright or the moral rights in an artistic work in so far as the work is used as or for
(a) a graphic or photographic representation that is applied to the face of an article;
(b) a trade-mark or a representation thereof or a label;
(c) material that has a woven or knitted pattern or that is suitable for piece goods or surface coverings or for making wearing apparel;
(d) an architectural work of art that is a building or a model of a building;
(e) a representation of a real or fictitious being, event or place that is applied to an article as a feature of shape, configuration, pattern or ornament;
(f) articles that are sold as a set, unless more than fifty sets are made; or
(g) such other work or article as may be prescribed by regulation of the Governor in Council.
The plaintiffs submit that the Mangrove design is entitled to copyright protection by virtue of paragraph 64(3)(c) of the amended Act, which provides that artistic works applied to surface coverings are deemed to be entitled to copyright protection.
They maintain that it is section 64 of the amended Act which applies because the defendant did not adduce evidence showing a date of creation of the Mangrove design prior to June 8, 1988. Under paragraph 34(3)(a) of the Act, copyright is presumed to exist in an action for copyright infringement and it is the defendant's burden to produce evidence to rebut this presumption. Since the defendant did not adduce any evidence at trial to rebut this presumption, the plaintiffs argue that copyright is presumed to exist in the Mangrove design.
In any event, in their view, the date of creation of the design is irrelevant. The word "design" in subsection 64(1) of the amended Act is defined to mean "features of shape, configuration, pattern or ornament and any combination of those features that, in a finished article, appeal to and are judged solely by the eye". Thus, an artistic work is not properly characterized as a "design" until it is applied to a finished article. The evidence establishes that the first time the artistic work created by Claire Iles was adapted for use on functional articles, i.e. carpet tiles, was in March 1989, that is after June 8, 1988.
On the other hand, the defendant submits that it is section 64 as it was prior to the legislative changes which should be applied in the case at bar. According to the defendant, subsections 64(2) and (3) of the amended Act only arise in respect to designs created after the coming into force of the legislative amendments. As a result, the date of creation is a material fact to the plaintiffs' case and as such, the plaintiffs had an obligation to adduce evidence proving it.
No such evidence was lead by the plaintiffs. There is no mention of the date of creation in the assignment signed by Claire Iles in September 1992,6 nor was Ms. Iles called to testify at trial. In light of these circumstances, the defendant urges the Court to draw an adverse inference against the plaintiffs and find that the design was created prior to June 8, 1988.
Under section 64 of the former Act, the Mangrove design would be excluded from the realm of copyright protection because it is a design capable of registration under the Industrial Design Act.
I agree with the defendant that subsections 64(2) and (3) of the amended Act will only arise in respect to designs created after the legislative changes of June 8, 1988. Thus, the issue of the date of creation has to be dealt with first.
I reject the plaintiffs' argument which suggests that the Mangrove design cannot be characterized as a design until it is applied to a "finished article". The plaintiffs seem to limit the scope of the definition of "article" to "functional articles" (i.e. carpet tiles). However, the amended Act defines "article" as anything that is made by hand, tool or machine.7 Hence, any artistic work including paintings, drawings, maps, charts, plans are within the ambit of the definition of "article".
Therefore, in my opinion, the words "in a finished article" only mean in a physical embodiment , divorcing the design from a mere scheme or preliminary conception of an idea. Consequently, the design was created when the artistic work was created.
Thus, the question remains: When was the Mangrove design created? The plaintiffs allege that it was created in September 1988. However, they lead no evidence to support their contention. Claire Iles did not testify at trial, nor was the date of creation mentioned in the assignment of September 19928 where it would have been within the plaintiffs' reach to have Ms. Iles confirm the date when she created the work. The evidence at trial only indicates that the design was created before January 11, 1989, that is the day when Richard Stoyles acquired the design from Ms. Iles at a trade show in Frankfurt, Germany.9
In my opinion, the failure to adduce evidence on such a material fact leaves it open to me to draw an adverse inference and come to the conclusion that the design was created prior to June 1988. It is a well established rule that an adverse inference may be drawn if, without reasonable explanation, a party fails to adduce evidence available to him which could have resolved the issue.10 The principle is enunciated in the following passage from Wigmore on Evidence:
The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted.11
Counsel for the plaintiffs submitted that I ought to not draw an adverse inference on the basis that Ms. Iles, a citizen of France, is absent from the jurisdiction. He also added that she was equally available to both parties and could have been called by the defendant.
In Levesque v. Comeau et al.,12 the Supreme Court of Canada held that the absence of a witness from the jurisdiction is not a valid explanation because of the availability of the evidence by way of commission or Letters Rogatory. In the case at bar, I am offered no indication of any attempt by the plaintiffs to obtain evidence from Ms. Iles for the purpose of trial or that she refused to attend or submit to commission evidence being taken.
But what is even more significant is that Claire Iles had already been made available to the plaintiffs in September 1992 when she signed the confirming assignment. It would have been reasonable for the plaintiffs to obtain from her, at that time, the information regarding the date of the design's creation.
Therefore, I find that in these circumstances, the Mangrove design was created prior to June 8, 1988 and as such, is governed by section 64 of the Act as it read prior to the legislative amendments. I also hold that under that section, the impugned design cannot be protected by copyright because (i) it is capable of registration under the Industrial Design Act and (ii) it was used as a pattern to be multiplied by an industrial process.
In Bayliner Marine Corp. v. Doral Boats Ltd.,13 the Federal Court of Appeal held that the expression "capable of being registered" signifies that a design need only to fall within the definition of "design" under the Industrial Design Act [R.S.C. 1970, c. I-8], irrespective of whether or not it is in fact registerable:
The only question to be considered is whether the subject-matter of the claimed copyright is a design within the meaning of the Industrial Design Act. If it is, it is subject to section 46 [now section 64] of the Copyright Act as something capable of being registered under the Industrial Design Act.14
Prior to the legislative amendments of 1988, the term "design" was not defined under the Industrial Design Act . In Cimon Ltd. et al. v. Bench Made Furniture Corpn. et al.,15 Jackett P. defined the term as follows:
The sort of design that can be registered is therefore a design to be "applied" to "the ornamenting" of an article. It must therefore be something that determines the appearance of an article, or some part of an article, because ornamenting relates to appearance. And it must have as its objective making the appearance of an article more attractive because that is the purpose of ornamenting. It cannot be something that determines the nature of an article as such (as opposed to mere appearance) and it cannot be something that determines how an article is to be created. In other words, it cannot create a monopoly in "a product" or "a process" such as can be acquired by a patent for an invention . . . .
. . .
The fact that a design relates to shape or configuration of an article is not, in itself, an objection to its registration. As long as it is a design to be applied "to the ornamenting" of an article, it is eligible for registration even though it requires that its purpose of "ornamenting" be accomplished in whole or in part by constructing the article, or parts of it, in a certain shape or shapes.16
Applying these principles to the facts of this case, I cannot do otherwise but conclude that the Mangrove design falls squarely within the definition of the term "design", since it is a pattern which appeals to the eye and which is applied to a manufactured article, i.e. carpet tiles.
Consequently, the actions are dismissed with costs.
II. Standing
In the event that I have wrongly decided the issue of the application of the Copyright Act, there is still another legal hurdle for the plaintiffs to overcome in order to be able to pursue their claim of infringement. The plaintiffs must have the required standing to sue pursuant to subsection 36(1) [as am. by S.C. 1994, c. 47, s. 63] of the Act. The section reads:
36. (1) The author or other owner of any copyright or any person or persons deriving any right, title or interest by assignment or grant in writing from any author or other owner may each, individually for himself, in his own name as party to a suit, action or proceeding, protect and enforce such rights as he may hold, and to the extent of his right, title and interest is entitled to the remedies provided by this Act.
a) Milliken & Company
Milliken bases its right to sue on its ownership of the Mangrove design. It claims to have acquired the rights to the design from Claire Iles on January 11, 1989. As proof of its purchase, it submitted an invoice handwritten by Claire Iles on a pre-printed form signed by Mr. Stoyles and Mr. Willomer on behalf of Milliken and then stamped by Claire Iles with a stamp which included her name. The invoice is reproduced below:17
Exhibit 11, to the Examination for Discovery of
Milliken & Company
judge's copy
The defendant submits that the invoice does not constitute a valid assignment pursuant to subsection 13(4) of the Act, in that it does not have the handwritten signature of the author of the design. As a result, Milliken only acquired the rights to the design as of September 25, 1992, the date of the assignment, and only has the required standing to sue for conduct occurring subsequently to that date.
The defendant adds that the confirming assignment is not retroactive and cannot be used to validate the first assignment. There cannot be confirmation of what does not already exist.
Subsection 13(4) of the Act allows the owner of a copyright to assign his rights. For the assignment to be valid, it must be in writing and signed by the owner of the right or his authorized agent:
13. . . .
(4) The owner of the copyright in any work may assign the right, either wholly or partially, and either generally or subject to territorial limitations, and either for the whole term of the copyright or for any other part thereof, and may grant any interest in the right by licence, but no assignment or grant is valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by his duly authorized agent. [Emphasis added.]
The issue is whether the stamp affixed by Claire Iles is sufficient to satisfy the requirement of subsection 13(4) of the Act. The plaintiffs argue it is. They submit that the owner does not actually have to handwrite his signature on the assignment. It is sufficient for him to affix a facsimile or any other representation of his name, even an "X", so long as it is clear that he was performing a solemn act.
The plaintiffs claim to find support for their position in several cases. For example, in Goodman v. Eban (J.) Ltd.,18 the English Court of Appeal held that the stamping of the facsimile of a solicitor's signature on a bill of costs is sufficient to comply with the Solicitors Act19 which requires the bill to be "signed". Similarly, the Ontario Court of Appeal in R. v. Fox20 held that a stamped facsimile of the signature of a Justice of the Peace on a summons is a valid expression of the Justice's intention of authenticating the document.
However, what the plaintiffs overlook is that the case law also indicates"and in my opinion, more importantly so"that a mark or a facsimile of a signature is accepted if there is evidence to prove that it is the customary way of identification of the person.21 This element gives the facsimile the authenticity needed.
In the case at bar, there is no evidence to support that it was Claire Iles practice or custom to authenticate a document by means of her stamp. Thus, it remains unclear whether the stamp was used with the intention of authenticating the document. In fact, the stamp is in the name of both her husband and herself and is affixed twice on the invoice. Could it be said that the stamp on the top is also her signature? Further, it would have been easy for the plaintiffs to have Claire Iles confirm her intention to assign all her rights in the work from the date of the invoice in her confirming assignment. However, no date is indicated.
Finally, the confirming assignment cannot be used to validate the first assignment. In Eli Lilly and Co. v. Novopharm Ltd.,22 the Federal Court Trial Division was confronted with an agreement which purported to have a retroactive effect. The problem arose when the plaintiff's subsidiary concluded a sub-licence agreement with a generic drug company to market a generic version of a specified drug using the same appearance as the original drug in which the plaintiff claimed to have trade-mark rights. However, the original licence agreement between the plaintiff and its subsidiary did not authorize the subsidiary to sub-licence its rights as user of the trade-mark. To correct this defect, the plaintiff concluded with its subsidiary another agreement amending the original licence to allow the subsidiary to sub-licence its rights. The amendment was declared to be retroactive to the date of the sub-licence agreement in order to validate it.
The plaintiff argued that subsection 50(1) of the Trade-marks Act23 together with the amending agreement operated to cure any defect that might have existed. Reed J. did not agree. She held that subsection 50(1) could not deem "use [of the trade-mark] prior to the granting of a licence to be use that enures to the benefit of the owner".24
In the case at bar, the first assignment was not valid and as such, it cannot be redeemed by the confirming assignment. One cannot validate something that did not exist.
b) Milliken Canada
As for Milliken Canada, it claims standing as a licensee. At all material times, Milliken Canada had a non-exclusive licence to use, reproduce, modify and exercise the copyright associated with the Mangrove design in Canada. The plaintiffs submit that a non-exclusive licensee has the required standing to sue for copyright infringement. Counsel for the plaintiffs cited the case of Armstrong Cork Canada v. Domco Industries Ltd.,25 in which the Supreme Court of Canada held that a non-exclusive licensee could maintain an action in patent infringement to recover damages it had suffered as a result of the infringement.
The defendant suggests that a non-exclusive licensee does not derive any right, title or interest in the copyright that could give it the standing to sue. I agree. The Armstrong Cork case deals with section 57 of the Patent Act.26 The wording of that section is specific. It gives a right of action to a patentee and to "all persons claiming under him".27 This expression was held to be sufficient to confer to a non-exclusive licensee the right to sue. No equivalent expression is found in the Copyright Act.
Further, the Court of Appeal of England held in Heap v. Hartley28 that an exclusive licence does not confer sufficient interest in the right to allow the licensee standing to sue alone for infringement. This case was approvingly cited by the Supreme Court of Canada in Electric Chain Co. of Canada Ltd. v. Art Metal Works Inc. et al.29 which was decided prior to the amendment of section 57 of the Patent Act when only the patentee had a right of action.30
In light of the above, it would be incorrect to assert that a non-exclusive licensee has a right to sue alone in a copyright infringement action. Accordingly, this is a second ground for dismissal of the actions.
III. Infringement
Finally, in case I am wrong on both the issues of the application of the Copyright Act and the plaintiffs' standing, I will decide the question of infringement.
Under section 27 of the Act, infringement can be characterized as primary and/or secondary infringement. The plaintiffs submit that the defendant is liable for both types. At trial, primary infringement was conceded by the defendant and therefore, is not an issue.31
As for secondary infringement, it is prohibited under subsection 27(4) of the Act. Subsection 27(4) deems a person to be an infringer if, for example, he sells any work that to his knowledge infringes copyright or would infringe copyright if it had been made within Canada:
27. . . .
(4) Copyright in a work shall be deemed to be infringed by any person who
(a) sells or lets for hire, or by way of trade exposes or offers for sale or hire,
(b) distributes either for the purposes of trade or to such an extent as to affect prejudicially the owner of the copyright,
(c) by way of trade exhibits in public, or
(d) imports for sale or hire into Canada,
any work that to the knowledge of that person infringes copyright or would infringe copyright if it had been made within Canada.
The defendant has admitted that it sold to the Calgary International Airport carpet tile which infringes the plaintiffs' copyright in the Mangrove design. The issue is whether it had the knowledge that its carpet tile infringed the plaintiffs' copyright.
The test for determining whether an alleged infringer has the knowledge within the meaning of subsection 27(4) was stated by Reed J. in the following manner:
Those cases conclude that "knowledge" in comparable contexts means notice of facts such as would suggest to a reasonable man that a breach of the copyright law was being committed""notice, which would put a reasonable man on enquiry".32
Knowledge is to be inferred from the facts of the case and the burden of proving it rests upon the plaintiffs, unless the copyright in the work was duly registered under the Act.
The plaintiffs argue that the defendant had the notice required to give rise to its knowledge of infringement through Sue Madsen, the designer who developed the defendant's carpet tile design for the Calgary International Airport project. I conclude that Ms. Madsen did indeed have knowledge that the defendant's carpet tile infringed the plaintiffs' Mangrove design.
First, she was aware that the Mangrove design was protected by copyright.33 Second, I find that she was also familiar with the design. She had previously worked as a senior design specialist at Milliken34 and as such, she had attended the NEOCON show in 1989 where the Mangrove design was prominently displayed and where she had assisted in promoting it.35 As a result, considering her expertise, Ms. Madsen should have known that she was illegally copying the design when she was developing the pattern to be supplied to the airport. After all, she had been provided two small samples of the original Milliken carpet tile by Richard Hayashi, whose firm had been retained by Transport Canada and the Calgary Airport Authority to act on its behalf in preparing the design for the project.36 She knew these samples were from the design submitted by Milliken37 and that they bore a resemblance to what she herself was designing.38
Further, she certainly should have known that she was infringing the plaintiffs' copyright when in a letter dated February 25, 1991,39 Mr. Hayashi confirmed that the samples he gave her were a "take off on the Milliken sample". In fact, she testified that she was concerned that the Interface design could be infringing Milliken's copyright.40 Although she did attempt"but failed"to get a hold of the whole carpet tile from Mr. Hayashi to determine whether she was copying the Milliken design, she did not take any further steps to ensure that there was no infringement.41
However, the question remains whether Ms. Madsen's knowledge of the copyright infringement can be equated to the knowledge of the corporate defendant itself. It has been recognized that the acts of certain employees deemed to be the "directing minds" of a corporation can be treated as those of the company itself. An employee is considered to be the company's "directing mind" when the corporation has given him the actual authority to decide matters related to a specific area. As stated by Estey J. in Canadian Dredge & Dock Co. et al. v. The Queen :42
The learned trial judge, in directing the jury, expressed it more accurately: ". . . so long as he was acting within the scope of the area of the work assigned to him." . . . . The essence of the test is that the identity of the directing mind and the company coincide so long as the actions of the former are performed by the manager within the sector of corporation operation assigned to him by the corporation. The sector may be functional, or geographic, or may embrace the entire undertaking of the corporation.43
Ms. Madsen was delegated the task of designing a pattern for carpet tile to be installed at the Calgary International Airport. As such, it is reasonable to infer that she was given permission to make decisions related to the development of the design. Despite her knowledge of the infringement of the plaintiffs' copyright, she went ahead and developed the infringing carpet tile. She made this decision within her assigned area of responsibility. As a result, her knowledge can be attributed to the corporate defendant. Thus, were it not for my previous finding regarding the application of the Copyright Act, I am satisfied that the defendant would be liable for secondary infringement of the plaintiffs' copyright.
The actions are dismissed with costs.
1 Exhibit P-9.
2 Exhibit P-2.
3 R.S.C., 1985, c. C-42 [as am. by R.S.C., 1985 (4th Supp.), c. 10, s. 11].
4 R.S.C., 1985, c. I-9.
5 C.R.C., c. 964.
6 Exhibit P-2.
7 Supra, note 3, s. 64(1).
8 Exhibit P-2.
9 Testimony of Richard Stoyles, at p. 78; Exhibit P-9.
10 See Murray v. Saskatoon, [1952] 2 D.L.R. 499 (Sask. C.A.), at pp. 506-507; Levesque v. Comeau et al., [1970] S.C.R. 1010. See also Adrian Keane, The Modern Law of Evidence, 3rd ed. (London: Butterworths, 1994), at p. 13; Colin Tapper, Cross on Evidence, 8th ed. (London: Butterworths, 1995) at pp. 38-40; John Sopinka & Sidney N. Lederman, The Law of Evidence in Civil Cases (Toronto: Butterworths, 1974), at pp. 535-537; Stanley Schiff, Evidence in the Litigation Process, Vol. 1, 4th ed. (Toronto: Carswell, 1993), at p. 452.
11 Wigmore, John Henry. Evidence in Trials at Common Law, revised by James H. Chadbourn, Vol. 2 (Boston: Little, Brown & Co., 1979), at p. 192.
12 Supra, note 10, at p. 1013.
13 [1986] 3 F.C. 421 (C.A.).
14 Id., at p. 431.
15 [1965] 1 Ex. C.R. 811.
16 Id., at pp. 831-833.
17 Exhibit P-9.
18 [1954] 1 All E.R. 763 (C.A.).
19 (U.K.), 1932, c. 37, s. 65(2)(i).
20 (1958), 120 C.C.C. 289 (Ont. C.A.).
21 Morton v. Copeland (1855), 139 E.R. 861 (C.P.), per Maule J.
22 (1997), 73 C.P.R. (3d) 371 (F.C.T.D.).
23 R.S.C., 1985, c. T-13 [as am. by S.C. 1993, c. 15, s. 69].
24 Supra, note 22, at p. 418.
25 [1982] 1 S.C.R. 907.
26 R.S.C. 1970, c. P-4.
27 In its entirety, s. 57 reads:
57. (1) Any person who infringes a patent is liable to the patentee and to all persons claiming under him for all damages sustained by the patentee or by any such person, by reason of such infringement.
(2) Unless otherwise expressly provided, the patentee shall be or be made party to any action for the recovery of such damages.
28 (1889), 42 Ch.D. 461 (C.A.).
29 [1933] S.C.R. 581.
30 It was decided under s. 32 of the Patent Act, R.S.C. 1927, c. 150, s. 57's predecessor. It provides:
32. Every person who, without the consent in writing of the patentee, makes, constructs or puts in practice any invention for which a patent has been obtained under this Act or any previous Act, or who procures such invention from any person not authorized by the patentee or his legal representatives to make or use it, and who uses it, shall be liable to the patentee or his legal representatives in an action of damages for so doing; and the judgment shall be enforced, and the damages and costs that are adjudged shall be recoverable, in like manner as in other cases in the court in which the action is brought.
31 Transcript, at p. 339.
32 ;Apple Computer Inc. v. Mackintosh Computers Ltd., [1987] 1 F.C. 173 (T.D), at p. 209. See also Albert v. S. Hoffnung & Co. Ltd. (1921), 22 S.R. 75 (N.S.W.S.C.), at p. 81; Clarke, Irwin & Co. v. C. Cole & Co., [1960] O.R. 117 (H.C.), at p. 123; Simon & Schuster Inc. et al. v. Coles Book Stores Ltd. (1975), 9 O.R. (2d) 718 (H.C.), at p. 720.
33 Supra, note 31, at p. 312.
34 Id., at p. 311.
35 Id., at pp. 287-288 and 311-314.
36 Id., at p. 298.
37 Id., at pp. 328-329.
38 Id., at p. 329.
39 Exhibit P-27.
40 Supra, note 31, at pp. 318, 321.
41 Id., at pp. 329-331.
42 [1985] 1 S.C.R. 662.
43 Id., at pp. 684-685.