The internet is not a law-free zone where anything goes.  A recent decision by the Supreme Court of British Columbia, Century 21 Canada Limited Partnership v. Rogers Communications Inc., 2011 BCSC 1196, serves to reinforce this fact.

Century 21 and two individual real estate brokers sought an injunction and damages against Zoocasa and its parent Rogers due to Zoocasa’s indexing and “webcrawling” of Century 21’s real estate listing. 

Century 21 operated a website featuring its brokers’ property listings.  Zoocasa operated a website that indexed property listings from a number of real estate websites and operated as a “vertical” search engine with respect to such listings.  In so doing, Zoocasa copied property descriptions and photographs from the Century 21 Website for use on the Zoocasa Website, a violation of Century 21’s website’s Terms of Use.

The Court found Zoocasa liable for copyright infringement and for breach of contract, namely the breach of the Terms of Use.  Rogers was not found liable for its subsidiary’s actions, as it had not sufficiently authorized the specific conduct complained of.

The Court dismissed Zoocasa’s argument that the Terms of Use were but a failed attempt to create a unilateral contract without acceptance or consideration.  The Court found instead that the Terms of Use alone, absent any kind of “click-through” licence or other active step, constituted an enforceable contract between the parties due to the special circumstances of the case.  In particular, the Court noted that Zoocasa was a sophisticated commercial entity who had not only been given notice of the Terms of Use, but who had also relied on similar terms of use on its own Website with the knowledge that such terms were the industry standard.

The Court found that the photographs and property descriptions, reproduced from the Century 21 Website and posted on the Zoocasa Website, constituted “a substantial portion of each real estate listing page on the Century 21 Website, not only with respect to quantity but also in their overall significance respecting the property listing described.” 

The Court further held that Zoocasa could not rely on the defence of fair dealing.  In particular,   the Court held that the amount of Zoocasa’s dealing exceeded what was fair and that there were other means of sourcing the copied materials.  The Court also rejected the “transformative use” defence as not being applicable to the Canadian law of fair dealing, even though Zoocasa’s thumbnail images as posted were a lower quality than the original images.  The Court therefore concluded that Zoocasa could not rely on the fair dealing exception and was liable for copyright infringement. 

The Court awarded nominal damages for breach of contract in the amount of $1,000 and statutory damages of $32,000, only $250 per infringed work.  In our view, this amount is very small, in particular given the competing nature of Zoocasa’s use.  It serves to highlight the industry’s concern regarding low damages awards, despite widespread infringement (over 125 proven infringements in this case).  It is baffling how the Court found that this infringement was wilfully blind or negligent (at best), and yet failed to significantly punish such behaviour.  An award of less than $35,000 in damages for a trial that must have cost in the hundreds of thousands is going to deter most people from defending their rights.

The Court also granted a permanent injunction against Zoocasa, given the difficulty in this case of assessing damages and Zoocasa’s repeated violations of the Terms of Use.  Interestingly, in the case of certain works that the Court held were no longer being infringed, the Court decided to not grant a permanent injunction.  Our position is that, barring equitable defences, a Plaintiff is entitled to a permanent injunction once infringement is proven, and in this case the reasoning of the Court is somewhat suspect (what if the works were to be infringed tomorrow?). 

Another interesting tidbit of copyright law discussed in the decision related to the assignment of “future created works,” an area of Canadian law that is murky at best.  The Court followed case law from the House of Lords and stated that a copyright assignment could not assign “future works” (i.e. works created in the future that do not currently exist), although an equitable assignment may result.  The Court did not go into an analysis of the requirement in the Copyright Act for a signed, written assignment, however, in making this determination.  Employment lawyers take note! 

The Court also made a somewhat interesting finding that Century 21, as a licensee of the copyright in the infringed works, could not bring an action against the infringers itself, but rather had to rely on the author’s rights to sue (and luckily for Century 21, these authors were included as plaintiffs).  The Court did not enter into a discussion of s. 36 of the Copyright Act, however, and the ability to sue based on the grant of an interest in writing.  It is our view that Century 21  should have been able to pursue its own claim under the provisions of that section.

The case is quite interesting, in particular given its upholding of Terms of Use that do not demand an active acquiescence to their terms.  We question whether this finding would apply to an ordinary consumer who was not aware of industry norms and did not run a competing business.