On August 15, 2013, the Supreme Court of Canada (SCC) declined to hear an appeal from the Federal Court of Appeal (FCA)’s decision to reverse a summary judgement dismissal of two copyright infringement cases. In Nautical Data International, Inc (“NDI”) v. C-Map USA Inc. et al., 2013 FCA 63, NDI had successfully challenged a summary judgment by the trial court ruling that NDI lacked an interest in the copyright works in issue. The FCA ruling held that the license agreement under which NDI claimed to have an exclusive interest in the relevant copyrights was ambiguous as to whether it granted an interest; therefore, there was a genuine issue for trial.

The claim is under a licensing agreement between NDI and the Canadian Hydrographic Service (“CHS”). The CHS is a federal government agency that collects and maintains raw data (the “CHS Data”) used to create paper marine charts, including navigational charts (the “CHS Works”). NDI is a Canadian company that was licensed by the CHS to produce, manage, and distribute electronic charts and other digital marine information based on the CHS Data. The defendants, C-Map USA, Inc. and Navonics, Inc, are American companies that also produce electronic navigational charts.

Beginning in 1993, the CHS granted a sole license to NDI to use the CHS Data to produce electronic versions of the CHS Works. The relevant agreements (the “CHS License”) stated that CHS had “sole authority in Canada to produce nautical charts for Canadian territorial waters,” and that it held exclusive copyright in its paper charts and any digital products produced for the agency. NDI was granted “sole worldwide right and license” to use the CHS Data and to produce “Products and Product updates,” defined in another section as “any digital data product based on CHS Data.” Importantly, the copyright section of the agreement provided that copyright in the “CHS Data” (defined in the contract as “any data owned by Canada and maintained by CHS”) would remain with CHS, and that copyright in any NDI developed product would be automatically assigned to the agency upon compensation to NDI.

Between 2001 and 2007, C-Map USA and Navonics used existing CHS Works to produce their own digital vector charts and charting system for use in their navigational products. NDI sued, claiming that such use infringed copyright in the CHS Works.

Under subsection 36(1) of the Copyright Act, a person who is granted a right, title, or interest in a copyright work by the owner may sue in their own name to protect and enforce that right, title, or interest. Such a grant is exclusive within the meaning of section 2.7 of the Act if the rights holder can exercise its right to the exclusion of all others, including the owner. Pursuant to section 13(7) of the Copyright Act, an exclusive license in copyright is deemed to constitute the grant of an interest in that copyright.

At the trial level, the defendants had moved for summary judgement, arguing that the CHS is the owner of any copyrights at issue, not NDI, and that NDI is not an exclusive licensee of any copyrights in the CHS Works and therefore has no interest in the relevant copyrights. The trial judged had dismissed the action on that basis.

In a unanimous decision, the FCA overturned the lower court. The FCA concluded that there was a genuine issue for trial as to whether NDI had an exclusive license in relation to the CHS Works.

First, while the plain language of the agreement appeared to limit NDI rights to use of the “CHS Data”, since there is no copyright in information per se, the judges reasoned that the parties must have intended the agreement extended to the CHS Works created based on the data. They stated: “Either the parties were unaware that copyright could not subsist in information (which we would not presume), or they understood the phrase “CHS Data” by necessary implication to mean or at least include the CHS Works, even though the definition of “CHS Data” in the License seems to limit its meaning to “data”.”

Second, the FCA found the NDI-CHS agreement was ambiguous enough that it could have created an exclusive license in relation to the CHS Works. The Court commented that: (1) the license gave NDI the “sole worldwide right and license to use the CHS Data;” (2) the parties must have intended the CHS Works to fall under the definition of “CHS Data;” and (3) the reservation section of the agreement did not expressly preserve any Crown right to make digital copies of the paper charts. This evidence was held to be consistent with an intention to grant an exclusive license to NDI. Discovery evidence to the contrary did not govern the Court’s interpretation of the written agreement.

Having survived this motion for summary judgement, it will be interesting to see whether NDI is able to successfully enjoin the defendants’ use of the paper copies of the CHS Works to produce competing electronic products embodying the underlying data collected by the CHS.