T-3224-74
Fly by Nite Music Co. Limited, Paul Hoffert
Limited and Two Saggitarians Limited, carrying
on business under the firm name and style of
Meadiatrix Publishing Company, GRT of Canada
Limited, Skip and Paul Productions Limited and
H.P. & Bell Management Limited (Plaintiffs)
v.
Record Wherehouse Ltd. (Defendant)
Trial Division, Mahoney J.—Toronto, February
18; Ottawa, March 14, 1975.
Copyright—Infringement—Defendant importing albums
from U.S. for resale in Canada—Whether plaintiffs have
copyright in albums—Whether infringement—Copyright Act,
R.S.C. 1970, c. C-30, ss. 2, 3, 4, 17 and 45.
Records come within the definition of "work" under section
2 of the Copyright Act. The infringement provisions of section
17(4) of the Act apply to the unlawful distribution in Canada
of records, which, though lawfully made and purchased outside
Canada, had been deleted from sales offerings and dumped on
the Canadian market. Further, as to the application of the
infringement provisions, copyright subsists not only in the
masters, but in the records as well. Under section 4(3) of the
Act, copyright subsists in "contrivances by which sounds may
be mechanically reproduced."
Albert v. Hoffnung & Company Limited (1921) 22
S.R.N.S.W. 75, agreed with.
ACTION.
COUNSEL:
B. H. Solomon for plaintiffs.
R. G. Slaght for defendant.
SOLICITORS:
Bernard H. Solomon & Associates, Toronto,
for plaintiffs.
McCarthy & McCarthy, Toronto, for
defendant.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: This claim for an alleged
infringement of copyright arises out of the impor
tation into Canada by the defendant of a quantity
of record albums for resale. The albums, entitled
"Can You Feel It" by a musical group known as
"Lighthouse", consisted of a single 12", 331/2
r.p.m. record disc with ten separate numbers. The
music and lyrics of four of these had been com
posed by Ralph Cole; five had been composed by
Skip Prokop and one by Dale Hillary. Cole,
Prokop and Hillary had assigned all of their rights,
throughout the world, in the musical compositions,
to Meadiatrix Music and C.A.M.—U.S.A., Inc. in
consideration of stipulated royalties.
Meadiatrix Music is an alias for Meadiatrix
Publishing Company (hereinafter called "Meadia-
trix"). C.A.M.—U.S.A., Inc. is a corporate entity
serving no other purpose than to perform the
function of Meadiatrix in the United States of
America. At the expense of some precision, but
with a view to minimizing the confusion inherent
in the facts as I find them, I will hereafter simply
refer to Meadiatrix although, strictly speaking,
what was done in Canada was done by Meadiatrix
itself while what was done in the United States
was done by its corporate creature, C.A.M.—
U.S.A., Inc.
Meadiatrix is owned by the plaintiffs, Fly by
Nite Music Co. Limited, Paul Hoffert Limited
(hereinafter respectively called "Fly by Nite" and
"Hoffert") and Two Saggitarians Limited and is
the registered owner, in Canada and the United
States, of the copyright to both lyrics and music of
all the musical works recorded on the album.
The right to reproduce the copyright material
mechanically in Canada was assigned by Meadia-
trix to the plaintiff, GRT of Canada Limited. The
right to reproduce the copyright material mechani
cally in "the United States, its territories and
possessions" was assigned by Meadiatrix to Poly-
dor Incorporated (hereinafter called "Polydor").
These rights could not be exclusive rights because
of the compulsory licensing provisions of the copy
right laws of both Canada and the United States.
However, the performance of the copyright ma
terial by Lighthouse was amenable to exclusive
arrangements.
The plaintiffs, Skip and Paul Productions Lim
ited and H.P. & Bell Management Limited (here-
inafter respectively called "Skip and Paul" and
"H.P. & Bell") are entirely owned by Fly by Nite
and Hoffert. Skip and Paul had entered into ser
vice contracts with the individuals making up
Lighthouse whereby it had the exclusive right to
produce records wherein Lighthouse performed. It
had assigned that right "for the territory of the
world excluding Canada" to H.P. & Bell. Skip and
Paul granted the exclusive right to manufacture
and market the records it produced to the plaintiff,
GRT of Canada Limited (hereinafter called
"GRT"). H.P. & Bell had granted the exclusive
right to manufacture and market the records it
produced to Polydor.
GRT thus had the exclusive right in Canada,
inter alia, to manufacture, produce, advertise,
publicize, sell, distribute, license or otherwise use
or dispose of the copyright material as played by
Lighthouse. Polydor had the same exclusive right
for "the world excluding Canada". The effect of
the Polydor agreement was that Polydor had com
plete discretion as to what it would delete from its
current offerings to the trade and was not liable to
pay royalties in respect of "deletes".
During 1973, Lighthouse performed the copy
right material, Skip and Paul and H.P. & Bell
produced master discs or laquers for production of
record discs and delivered the required numbers of
copies of the masters to GRT and Polydor who
proceeded to manufacture records for sale. The
record discs, as manufactured, were intended to be
offered to the public, in Canada and elsewhere, by
GRT and Polydor respectively, as the album "Can
You Feel It".
The record discs of the album manufactured in
Canada by GRT and in the United States by
Polydor are identical being produced from coun
terpart masters. The jackets in which the albums
were presented to the public are identical in all
respects except as to a space about one inch square
in the lower righthand corner of both sides of the
jacket. In that space the Canadian jacket contains
the GRT logogram over the numerals 9230-1039;
the American jacket contains the letters and
numerals PO 5056 over the Polydor logogram.
The album was very well received in the Canadi-
an market; it appears, however, that Polydor soon
deleted the album. In its summer '74 catalogue,
Scorpio Music Distributors, an American firm spe
cializing in the wholesaling of deleted records,
offered the album in a warehouse clearance of
stereo LP's at a price of $1.00 (U.S.) each. From
the date of its release, through the summer of 1974
and up to the date of the trial of this action, GRT
had maintained prices of $3.67 to distributors and
$4.29 to dealers. The suggested retail price in
Canada was, and still is, $7.29 but the actual retail
price in most markets has been $5.99 throughout.
The defendant is a wholesale distributor of
records and tapes. From a base in Toronto, it sells
those products throughout Canada primarily by
catalogue advertising to the trade. It also retails
from its Toronto outlet. On or about July 10, 1974
the defendant purchased a quantity of records
from Scorpio Music Distributors, including 2,175
"Can You Feel It" albums at $1.00 (U.S.) each. It
imported these into Canada, paying 20% duty and
12% federal sales tax. It immediately put them on
display and offered them for sale at $1.99 each in
its retail outlet and advertised their availability
through its catalogue and otherwise to the whole
sale market.
The defendant sold 110 albums at wholesale for
$1.55 each and 159 at retail for $1.99 each. The
remaining 1,906 have, since the commencement of
this action, been sold to a purchaser in Belgium for
50 cents each. The invoice is dated January 16,
1975. It is acknowledged that the defendant did
not realize a profit on the transactions.
The limited acceptance of the offer in the whole
sale trade may be accounted for by the fact that
this was not the first time that Lighthouse albums
had been "dumped", to use the plaintiffs' ter
minology, in Canada. In April, 1974, the following
letter was sent by Skip and Paul to some 300
retailers and wholesalers in Canada:
SUBJECT: IMPORTATION OF DUMPED OR DELETED LIGHTHOUSE
ALBUMS FROM THE U.S.
Recently, there have been a large number of Lighthouse
albums that were sold at dump prices in the U.S. and imported
into Canada. As we own the Canadian copyright on this
material any person, firm or corporation which has either
offered for sale, sold, distributed or imported into Canada these
albums has infringed on our Canadian copyright. Such
infringement with prior knowledge is a federal offense, similar
to that of handling bootleg or pirate produce.
The illegal albums in question so far include "One Fine Morn
ing", "Thoughts Of Movin' On", "Lighthouse Live" and "Sun-
ny Days" all on the Evolution label. The albums of the same
names on the GRT label, are of course, still legitimate.
As you may appreciate, the existence of Lighthouse depends
upon our receipt of our record royalties. We receive no royalties
on deleted or dumped U.S. product. Further, the sale of these
albums seriously hurts the legitimate Canadian GRT albums,
therefore, continuation of sales of the dumped U.S. product in
Canada poses a serious threat to the future of Lighthouse.
We have very much appreciated the excellent support that our
GRT albums have received from the Canadian rack jobbers
and retailers. We are also aware that the majority of record
merchandisers have refused to handle the illegal product. We
would like to thank you for this support. However, if some
Canadian persons or firms continue to handle the Lighthouse
product on the Evolution label we are prepared to take legal
action.
We look forward to your continued help',
Sincerely,
(signed) (signed)
Paul Hoffert Bruce Bell
At the same time, the trade and general press were
apprised of the problem. An article in the July
1974 issue of Billboard dealt with it as did the
issues of RPM throughout the spring and summer
of 1974. Billboard is a trade paper published in
the United States and widely circulated in the
trade in Canada. RPM is a trade paper published
in Canada. The defendant was aware of the prob
lem and of Skip and Paul's position prior to
acquiring the albums from Scorpio.
' Prior to the events giving rise to this action, the plaintiffs
had terminated arrangements with another company in the
United States, which issued records under the Evolution label,
and had entered into the agreement with Polydor.
The plaintiff in its statement of claim seeks a
reference to the Registrar or a Deputy Registrar of
the Court for an assessment of damages. Prior to
the trial, counsel for the parties agreed that the
evidence to be adduced would be directed to ,the
establishment of liability and the bases upon which
damages might be awarded and not to quantum. It
became apparent during the course of the trial
that, because of the complexity of the arrange
ments among the plaintiffs and the diverse streams
through which royalties flow to them, a reference
to anyone other than the Trial Judge would
present serious difficulties. I therefore indicated
my intention to undertake any reference myself.
For that reason, I do not intend at this time, to
deal with the evidence presented at the trial which
related primarily to damages.
The real issue in this case is whether or not the
plaintiffs or any of them have a copyright in the
2,175 albums brought into Canada by the defend
ant and, if so, whether that copyright has been
infringed.
Copyright in Canada is entirely a creature of
statute. The Copyright Act, R.S.C. 1970, c. C-30,
provides:
45. No person is entitled to copyright or any similar right in
any literary, dramatic, musical or artistic work otherwise than
under and in accordance with this Act, or of any other statu
tory enactment for the time being in force, but nothing in this
section shall be construed as abrogating any right or jurisdic
tion to restrain a breach of trust or confidence.
There is no question of a breach of trust or confi
dence in this case nor is it suggested that any
legislative enactment other than the Copyright Act
would give rise to a right of action by the plaintiffs
against the defendant on the facts.
The relevant provisions of the Copyright Act
which might create a copyright in the album and
which define what that copyright means and what
constitutes infringement of that copyright follow:
3. (1) For the purposes of this Act "copyright" means the
sole right to produce or reproduce the work or any substantial
part thereof in any material form whatever, to perform, or in
the case of a lecture to deliver, the work or any substantial part
thereof in public; if the work is unpublished, to publish the
work or any substantial part thereof; and includes the sole right
(a) to produce, reproduce, perform or publish any transla
tion of the work;
(b) in the case of a dramatic work, to convert it into a novel
or other non-dramatic work;
(c) in the case of a novel or other non-dramatic work, or of
an artistic work, to convert it into a dramatic work, by way
of performance in public or otherwise;
(d) in the case of a literary, dramatic, or musical work, to
make any record, perforated roll, cinematograph film, or
other contrivance by means of which the work may be
mechanically performed or delivered;
(e) in the case of any literary, dramatic, musical or artistic
work, to reproduce, adapt and publicly present such work by
cinematograph, if the author has given such work an original
character; but if such original character is absent the
cinematographic production shall be protected as a
photograph;
(J) in case of any literary, dramatic, musical or artistic work,
to communicate such work by radio communication;
and to authorize any such acts as aforesaid.
4. (1) Subject to this Act, copyright shall subsist in Canada
for the term hereinafter mentioned, in every original literary,
dramatic, musical and artistic work ....
(3) Subject to subsection (4), copyright shall subsist for the
term hereinafter mentioned in records, perforated rolls, and
other contrivances by means of which sounds may be mechani
cally reproduced, in like manner as if such contrivances were
musical, literary or dramatic works.
(4) Nothwithstanding subsection (1) of section 3, for the
purposes of this Act "copyright" means, in respect of any
record, perforated roll or other contrivance by means of which
sounds may be mechanically reproduced, the sole right to
reproduce any such contrivance or any substantial part thereof
in any material form.
17. (1) Copyright in a work shall be deemed to be infringed
by any person who, without the consent of the owner of the
copyright, does anything that, by this Act, only the owner of
the copyright has the right to do.
(4) Copyright in a work shall also 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 his knowledge infringes copyright or would
infringe copyright if it had been made within Canada.
I am unable, on the evidence, to find that the
plaintiff, H.P. & Bell, had any rights in the album
arising out of the Copyright Act. Its rights, in so
far as the subject matter of the action are con
cerned, exist outside Canada and any remedies it
may be entitled to must be sought elsewhere. I do
not, however, see that the fact it was a plaintiff
was in any way material to the defense of the
action. The action by H.P. & Bell is therefore
dismissed without costs.
As to the other plaintiffs, section 4(3) of the Act
clearly declares that copyright subsists in the
albums. One way or another, each of them, on the
evidence, has a piece of that copyright.
While these plaintiffs do have a copyright in the
albums, the only exclusive right to which the Act
entitles them is, by virtue of section 4(4), the right
to reproduce the album. That is not what the
defendant did or sought to do and so there was no
infringement of copyright within the contempla
tion of section 17(1).
The defendant argues further that the albums
are not "works" and that there was therefore no
infringement of copyright within the contempla
tion of section 17(4). The word "work" is not
really defined in the Act which provides merely:
2. In this Act
"work" includes the title thereof when such title is original and
distinctive.
I accept the defendant's proposition that a phono
graph record, which is nothing more than a con
trivance by means of which sounds may be
mechanically reproduced, does not fit comfortably
within the meaning of the word "work" as that
word is used in ordinary parlance. Nevertheless, its
meaning must be determined in the context of the
statute. I find that the word "work" as used in the
Copyright Act includes each and every thing in
which the Act says copyright shall subsist, be that
thing a product of the arts or a product of manu
facture and technology. If it were otherwise, the
result would be that the Act would declare that
copyright subsists in a particular thing but is not
open to infringement in any circumstances because
of the use of the word "work" throughout sections
17 and 19.
The opening portion of section 3(1) clearly
implies that, for the purposes of the Act, a lecture
is a work. Likewise, it may be noted that, in
section 18 of the Act, Parliament found it neces
sary to make express provision to preclude the
infringement of copyright in a public political
speech: an unlikely beneficiary of the appellation
"work" in ordinary parlance.
The defendant also argues that because the
albums were not masters by means of which the
record discs could be reproduced there was no
infringement within the contemplation of section
17(4). This is based on the proposition that, since
the sole exclusive right of the owner of the copy
right in a record is the right to reproduce it or a
substantial part of it, it is the means by which the
exclusive right might be breached that is subject to
the deemed infringements enumerated in section
17(4). The plain words of the Act lead to a
contrary conclusion.
Section 4(3) declares that copyright subsists in
"contrivances by which sounds may be mechani
cally reproduced". No reasonable interpretation of
that section would limit the copyright to the means
by which the contrivances may be manufactured.
The copyright subsists in the records not just in the
master discs. Section 4(4) then declares what the
exclusive rights of the owner of that copyright are
and section 17 (1) says that, if anyone else does
what the copyright owner has the exclusive right to
do, the copyright is deemed to be infringed. Sec
tion 17(4) sets out circumstances, in addition to
those provided by section 17(1), in which the
copyright is deemed to be infringed.
The defendant, with the knowledge that the
section requires, infringed the plaintiff's copyright
under the heads of paragraphs (a), (c) and (d) of
section 17(4).
Finally, the fact that the albums were lawfully
made and purchased outside Canada is no defense
to an action for infringement based on section
17(4). This precise point, in very similar circum
stances, was dealt with in the Australian case of
Albert v. S. Hoffnung & Company Limited 2 . In
that instance, records lawfully manufactured and
purchased in England were imported and sold in
Australia. The applicable legislation was the Brit-
ish Copyright Acta of 1911, which had been adopt
ed in Australia 4 .
I find no material difference between the appli
cable provisions of the present Canadian Act and
the British Act then in force in Australia. The
learned judge at page 80, held:
The making of these records in Australia would, in my
opinion, be an infringement unless notice had been given to the
plaintiff and royalties paid to him. I see no indication in the
Act whatever of any intention that provided records are lawful
ly made in any part of the British Empire they can be sold in
the way of trade or imported for sale into every part of the
Empire which has adopted the copyright Act. Although the
defendant company might quite lawfully purchase these records
in England... it by no means follows that they can bring them
into Australia; any more than it would follow that because they
might legally acquire records made in a foreign country they
could import them into Australia.
The plaintiffs, other than H.P. & Bell, are
entitled to the declaratory and injunctive relief
sought in their statement of claim. They are at
liberty to apply to fix a time and place for the
reference in respect of damages. The plaintiffs are
entitled to costs and an order in respect thereof
will be made following assessment of damages.
The plaintiffs may move for judgment accordingly.
2 (1922) 22 S.R.N.S.W. 75, a decision of Harvey J. of the
Supreme Court of New South Wales.
a1 & 2 Geo V, c. 46.
4 The Copyright Act, 1912; Australia, Commonwealth Acts,
Vol XI, No. 20, s. 8.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.