Paywall Copyright Succumbs to "Right to Read" in Highly Anticipated Federal Court Case

The Federal Court released its decision in the Blacklock’s Reporter case regarding the fair dealing provisions of the Copyright Act in the context of third party use of content protected by a paywall.

The Plaintiff, Blacklock’s Reporter contended that in October 2013, officials in the Department of Finance had violated its copyright by obtaining, reading, and distributing (within the Department) two of its news articles without its consent and without payment for a required subscription.

In response, the Attorney General argued that Blacklock’s conduct was a misuse of copyright, and that the conduct Blacklock’s complains of constitutes and falls under the fair dealing exception under section 29 of the Copyright Act. For this alleged infringement, Blacklock’s sought damages in the amount of $17,209.10.

Blacklock’s, an online news agency based in Ottawa, employs a paywall to protect its news content. In order to gain access to the full content of its news articles, a paid subscription and a password are required.

In this case, one of Blacklock’s reporters interviewed the President of the Canadian Sugar Institute, Sandra Marsden, for an article that Blacklock’s was to feature on changes to sugar tariffs. Before publication of the final article, teasers were released and sent to Marsden. Subsequently, Marsden took issue with the accuracy of the article, and was concerned that statements included in the article might be able to be linked to her and cause damage to her working relationship with the Department officials. As a result, Marsden purchased an individual subscription to Blacklock’s in order to access and read the article in full. Using her subscription password, Marsden obtained a copy of the article and a copy of a follow-up piece written by the same Blacklock’s reporter, and sent it by email to the Department of Finance, and to Patrick Halley in the International Trade Policy Division. The two articles were then circulated to and between six Department employees who, as a result of receiving and reviewing the articles, discussed whether any confrontation with Blacklock’s was required. At the time of receiving the articles, the Department did not have its own Blacklock’s subscription.

An application for a single Blacklock’s subscription does not require a subscriber to acknowledge and accept any terms of use before the transaction is completed. It does, however, refer to the purchase of custom bulk rates for institutional subscribers who would like to distribute or share Blacklock’s content in-house. Marsden testified that she was unaware of Blacklock’s Terms and Conditions for use, and stated that it had never crossed her mind that by sending the articles to Halley that she could be infringing Blacklock’s copyright.

For the Federal Court, it was not disputed that the Department had used Blacklock’s paywalled and copyright-protected material without payment or authorization; at issue for the Court was whether the conduct Blacklock’s impugns is protected under section 29 and the fair dealing exception of the Copyright Act.

In its analysis, Justice Barnes for the Court reviewed the Supreme Court of Canada’s two leading cases dealing with section 29 of the Copyright Act: CCH Canadian v Law Society of Upper Canada and SOCAN v Bell Canada. In doing so, the Federal Court concluded that the Department’s acknowledged use of the two Blacklock’s articles constituted fair dealing. In doing so, the Court cited Chief Justice McLachlin in CCH Canadian v Law Society of Upper Canada(para 54): “in order to maintain the proper balance between the protection of and access to copyrighted materials in the Act, the fair dealing provision must not be interpreted restrictively” (para 48). Justice Barnes held that everyone involved had legitimate concerns about the fairness and accuracy of the articles, and had a legitimate need to be aware in the event that further action was deemed necessary. Thus, there was no question that the circulation of the articles within the Department was done for a proper research purpose and that the admitted scope of use was, in the circumstances, fair (para 35).

In finding the scope of the use of the article to constitute fair dealing, Justice Barnes considered the following factors, stating that all of which favoured the Defendant (para 36):

• The articles were legally and appropriately obtained by Marsden who was a paid subscriber to Blacklock’s; Blacklock’s website was not hacked or accessed by illicit means; in the result, the articles were no longer behind Blacklock’s paywall when the Defendant obtained them;

• Marsden sent the articles to Halley for a legitimate business reason (i.e., to protect her business reputation and to manage her working relationship with the Department);

• The Department received the articles unsolicited and used them (i.e., read them) for a legitimate business purpose (i.e., to consider whether the stories required a response or correction);

• The articles were circulated among only six Department officials, all of whom had a reason to see them;

• No commercial advantage was sought or obtained by the Department’s use of the articles, nor were they republished in any form;

• The two articles represented only a small fraction of the protected news copy on Blacklock’s website and one of them was shortly-after publicly exposed on Blacklock’s website;

• The articles contained information obtained from the Department in response to queries; as a source, the Department had direct and immediate interest in their content; a finding of copyright infringement against a news source for the simple act of reading the resulting copy is likely to have a chilling effect on the ability of the press to gather information; such a result cannot be in the public interest;

• Halley had a reasonable basis for his concern that the articles misrepresented some of the information he conveyed and that a correction might be warranted; the involvement of his colleagues in a possible follow-up was, in the circumstances, reasonable;

• What occurred here was no more than the simple act of reading by persons with an immediate interest in the material; the act of reading, by itself, is an exercise that will almost always constitute fair dealing, even when it is carried out solely for personal enlightenment or entertainment; and

• While the public interest is served by the vigilance of the press, copyright should not be a device that serves to protect the press from accountability for its errors and omissions; the Department had a legitimate interest in reading the articles with a view to holding Blacklock’s to account for its questionable reporting.

• Neither Marsden nor the Department were aware of, nor agreed to, Blacklock’s Terms and Conditions

The Federal Court stated that Blacklock’s failed to ensure that its subscribers were aware of the Terms and Conditions it sought to impose, which is deficient and potentially misleading; Marsden, therefore, had no reason to think that by sharing the two articles she was breaching Blacklock’s copyright or facilitating a breach by others. The Court referenced precedent case law (Kobelt Manufacturing Co v Pacific Rim Engineered Products (1987) Ltd, 2011 BCSC 224 at para 124, 84 BLR (4th) 189) stating that at minimum, the party to be bound must be shown to have been aware of the Terms and Conditions at the time of the purchase. The Court noted that in any event, Blacklock’s provisions did not unambiguously prohibit the circulation of Blacklock’s copy for personal or non-commercial purposes; the Terms and Conditions were found to contain a material ambiguity concerning downstream distribution. Justice Barnes stated that on the one hand, they seemingly prohibit distribution by subscribers but, on the other, they permit it for personal or non-commercial uses; thus, subscribers like Marsden have unlimited rights of use of copyrighted materials. The Court concluded that if Marsden, a subscriber, had the right to use and distribute the articles for a non-commercial purpose those who received the articles lawfully could reasonably expect to enjoy the same privilege;

While Blacklock’s argued that a finding of fair dealing would undermine its business model (providing news online through a subscriber-only paywall service), the Court was not particularly receptive to this argument; the Court responded that “all subscription-based news agencies suffer from work-product leakage…whatever business model Blacklock’s employs, it is always subject to the fair dealing rights of third parties.” (para 45).

In this case, the Court took a liberal approach and non-restrictive interpretation of section 29 and fair dealing. In doing so, the Court affirmed the right to read in the context of granting and protecting user rights against business models of content distribution.