Legal Interest Tangled in a Web of Licence Agreements

2006-01-01

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LEGALINTERESTTANGLEDINAWEBOFLICENCEAGREEMENTS

LaurentCarrièreandLorraineLaquerre*
LEGERROBICRICHARD
,L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242-Fax(514)8457874
info@robic.com-www.robic.ca
InCloseUpInternationalLtdv1444943OntarioLtd(2006CanLII32925;2006-
09-27)theSuperiorCourtofOntariohasruledthatarighttobringanaction
toenforcecopyrightcannotbegrantedbymeansoflicenceagreementif
interestinthecopyrightitselfwasnotalsograntedtothelicensee.The
agreementneedstoincludespecificlanguageregardingtheassignmentof
IPrightsforalicenseetohavestandinginaCanadiancourtinacopyright
enforcementcase.
UScompanyCloseUpInternationalLtd(CUI)institutedproceedingsagainst
twonumberedcompanies,1444943OntarioLtdand1179464OntarioLtd,
andtwoCanadianresidentspersonallyforinfringingitscopyrightinfilms.It
allegedthatthedefendantsunlawfullyreproduced,sold,rentedand
distributeditsfilmswithoutlicenceorauthorization.CUI,throughamazeof
licenceagreementsbetweenseveralRussianfilmstudios,hadexclusiverights
toreproduceanddistributethecopyrightedworksthroughouttheUnited
StatesandCanada.
CUIsoughtadeclarationthatthedefendantsinfringedthecopyrightinits
works,aswellasadeclarationthattheybreacheditsexclusivelicenceand
therebyinfringeditscopyright.ItalsorequestedaninjunctionunderSection
34(1)oftheCopyrightActtorestrainthedefendantsfromsellinginfringing
worksandreproducinglabels.CUIalsoaskedfordamagesandsoughtto
enforceitstrademarkrightspertainingtothewords”CloseUp”.
CUIpleadedthatithad”grantedarightofactionforenforcementof
intellectualpropertyrightspursuanttosub-licenceagreements”totwo
companiesincorporatedinCanadaalsoreferredtoasCUCandCUO.It
maintainedthatthesecompanieshadacquireddistributionandotherrights

©CIPS,2006.*Lawyerandtrade-markagent,LaurentCarrière,isaseniorpartnerwithLEGERROBIC
RICHARD
,L.L.P.,amultidisciplinaryfirmoflawyers,andpatentandtrademarkagents.
LaorraineLaquerreisanarticlingstudentwiththefirm.Publishedinthe2006-11-30issueof
WorldCopyrightLawReport.Publication328.028.

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toanexclusivelicence,whichgavethemarighttoenforcethecopyright
throughlegalaction.
ThedefendantsopposedtheadditionofthetwoOntariocompaniesas
plaintiffsonthebasisthattheyhadnointerestinandnostandingtoenforce
thecopyrightownedbyCUI.Further,theyarguedthatthemotiontoadd
residentcompaniesasplaintiffsshouldberejectedonthebasisthatit
constitutedanabuseofprocessgiventhatthemotionwasmadeshortly
afteracourtordertopaysecurityforcosts.
Thecourtrefusedtointerpretthelicenceagreementasgivinganexclusive
licencetothetwoCanadiancompanies.Givinganarrowinterpretationto
thewords”licencetosell,distributeandrent”foundintheagreements,the
courtinsistedonthefactthatbothagreementsdidnotprovideforanyright
toreproducethefilms,althoughthecompaniesweregrantedtheexclusive
righttowholesaledistributionofthefilmsinCanada.Thelicenseeswerealso
giventhe”fulllegalrightsforjointactionswiththedealertoenforceand
protectallrightsofthedealerinanycourt”inCanada.Theagreementswere
silentonCUOandCUCenforcingtheirowndistributionrights.
MasterRDashruledthatthelicencegiventothetwoCanadiancompanies
wasonlyasolelicence,giventhatnothingintheagreementspreventedCUI
fromdistributingthefilmsinOntarioitself.Atmost,theagreements
“recommended”or”encouraged”retailerstopurchasedirectlyfromthe
Ontariocompaniesandprovidedthattheywouldgettheprofitintheevent
thatsaleswouldbemadedirectlybyCUI.
TheCopyrightActprovidesthatonlyacopyrightowneroranexclusive
licenseeisentitledtothereliefclaimedinthestatementofclaimsfor
infringementdamages,injunctionandrecoveryofinfringingproperty.The
SuperiorCourtruledthatbecauseinterestinthecopyrightwasnotgranted
toCUCandCUObymeansofalicenceagreement,therighttobringan
actiontoenforcesaidcopyrightcouldnotbegranted.Asaresult,CUCand
CUOdonothavestandinginaCanadiancourt.
Further,thecourtruledthataddingunnecessaryOntarioresidentsas
plaintiffs,inorderthattheUS-basedCUImightavoidsecurityforcostsonthe
basisthatanyliabilityforcostswillbeajointobligation,constitutesabuseof
process.GiventhatanordertopaysecurityforcostswasissuedagainstCUI
ontheeveofthemotiontoaddtwoCanadianplaintiffs,thecourt
consideredittobeanattempttoavoidfurtherordersforsecurityforcosts.
Thejudge’sdecisionconfirmsonceagainthatitisimpossibletoread
betweenthelinesofacontract.Intentmustbeputintowords.

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