CAN-TECH Newsletter/Bulletin
January 10, 2019/10 janvier 2019

Blog Posts and YouTube Videos Inadequate Evidence

Leave Not Granted in Application against Trustee in Bankruptcy on Allegation of Breach of Privacy

The value of evidence arising from blog posts and YouTube videos was considered in Re Netlink Computer Inc. Netlink had been a company selling computers and related equipment until it went bankrupt in 2017. The Trustee in Bankruptcy had, in the course of the bankruptcy proceedings, sold Netlink’s assets, but this had given rise to some online controversy. In particular, a blog post had appeared on a site called “privacyflyby.com”, written by Travis Doering. The blog post alleged data breaches in the sale, by the Trustee, of equipment owned by Netlink. That led to a former customer of Netlink’s, Kipling Warner, to seek leave to sue the Trustee, and indeed to commence a class action. Warner alleged that the Trustee was negligent in selling Netlink’s assets, breached its service contract with Warner, breached the Personal Information Privacy Act, SBC 2003, c 63 [PIPA], the Personal Information Protection and Electronic Documents Act, SC 2000, c 5 [PIPEDA], and the Privacy Act, RSBC 1996, c 373, and that the negligence of the trustee is in respect of a duty of care was owed to a class, for which Warner sought certification.

Warner claimed, on behalf of the class:

  1. Damage to credit reputation;
  2. Mental distress;
  3. Costs incurred in preventing identity theft;
  4. Costs incurred in paying for credit monitoring services;
  5. Out of pocket expenses;
  6. Wasted time, inconvenience, frustration, and anxiety associated with taking precautionary steps to reduce the likelihood of identity theft or improper use of credit information, and to address the credit flags placed on their credit files; and
  7. Time lost engaging in precautionary communications with third parties such as credit card companies, credit agencies, banks, and other parties to inform them of the potential that the Class member’s Private Information may be misappropriated and to resolve delays caused by flags placed on Class members’ credit files.

The issue before the Master was whether Warner had established a prima facie case against the Trustee. It did not, because of the frailties in the evidence presented.

In Warner’s own affidavit, he relied on a number of other sources, including a blog post and a YouTube video posted by two different people who said they had attended the sale. The Master pointed out that there was no explanation as to why those two people had not been asked to provide their own affidavits, and that the “double hearsay” of Warner’s report about what they had posted online was not admissible.

Further, although Warner swore in his own affidavit that he believed Doering’s statements in his privacyflyby blog to be a faithful and accurate account, he possessed no personal knowledge of any of the facts, and integrated elements of his own belief (that were not included in the Doering blog post) that amounted only to conjecture.

In addition the Master found unpersuasive the affidavit provided by Doering himself:

[49]        Mr. Doering has a commercial interest in what he alleges to be the exposure of the Netlink data breach. In addition, Mr. Doering has limited direct knowledge of the facts forming the basis of the proposed action. The Doering Affidavit was not drafted for the purpose of being tendered as evidence in a court proceeding. Rather, it is a blog post with a jurat attached to it.

Ultimately the Master concluded that the low evidentiary threshold had not been met and denied leave.

Who Pays to Screen Computers for Privilege?

Nova Scotia court decides deceased lawyer’s estate should fund discovery referee

In Medjuck v. Medjuck, Justice Peter Rosinski of the Nova Scotia Supreme Court dealt with a discovery motion that arose out of civil litigation among members of a family, in which one brother (Harold) was suing two of his brothers, one of whom (Franklyn) was a deceased lawyer. Lawyer G, who was representing the living defendant brother and the Executrix of Franklyn’s estate as to Franklyn’s individual capacity, had come into possession of two computers which were reasonably thought to have been used by Franklyn for his legal work. He had put them aside and not reviewed their contents because he suspected there was privileged information on them. The plaintiff was of the view that the contents of the two computers needed to be reviewed because it was quite likely that documents and other information potentially relevant to the civil claim was on the hard drives. This was uncontroversial since, as Justice Rosinski noted, the Nova Scotia Civil Procedure Rules compelled the disclosure of relevant and non-privileged documents, and Rule 16 in particular mandated the disclosure of electronic data. Previous case law had established that disclosure of a hard drive for forensic analysis fell squarely into this discovery regime. It was also uncontroversial that, because it was likely that privileged information was on the computers, an independent referee should be appointed to review the computers and screen them for anything privileged. In fact, the parties agreed on the individual who should be appointed referee.

The contentious issue on the motion was determining who was to pay for the services of the referee. Lawyer G, as well as lawyer R who was representing the estate as regarded Franklyn’s work as a lawyer, argued that the Estate should not have to pay any of the cost for the referee, and that the plaintiff brother should have to pay at least 50% of the cost. The need to appoint the referee, it was argued, was the responsibility of the plaintiff, who created the uncomfortable situation of potentially privileged materials having to be reviewed and the deceased’s personal representative being unable to do it; moreover, were Franklyn still alive, he would not be able to do this himself because he would be a party and thus in a conflict of interest. However, Justice Rosinski rejected these arguments, noting that the necessity for protecting the privilege of Franklyn’s former clients via his computer had been created by Franklyn himself, while he was still alive, and it was up to the estate to address it now.

In the end, while there was little in the way of relevant precedent, a solution had to be crafted to deal with the privileged material, since it was reasonable for all parties to think that there was material relevant to their cases on the hard drives. The equities of the situation led the court to the conclusion that the Estate should bear the cost of the referee, 50% being allocated to each of the personal aspect and business aspect of the estate.

Distracted Driving Penalties Increase in Ontario

Mandatory licence suspensions added to increased fines

Ontario has stiffened the penalties for its distracted driving laws. Under the Highway Traffic Act it was already an offence for any person to drive a motor vehicle “while holding or using a hand-held wireless communication device or other prescribed device that is capable of receiving or transmitting telephone communications, electronic data, mail or text messages.” In the Cannabis, Smoke-Free Ontario and Road Safety Statute Law Amendment Act, which came into force on January 1 2019, the penalties have been significantly increased.

The offence now carries a fine of between $500 and $1000 for a first offences, with the maximum increasing to $2000 for a second offence, and $3000 for subsequent offences. In addition, conviction now carries a mandatory licence suspension: three days for a first offences, seven days for a second offences, and 30 days for any subsequent offences.

Willie Memes Can Get You in Trouble

U.S. Court refuses to dismiss copyright infringement claim over Willie Nelson image

In Philpot v. ALTERNET MEDIA, INC., the California District Court heard a motion to dismiss claims against Alternet, an “alternative news website” with a companion Facebook page, by Philpot, a photographer whose work focuses on US concert events. Philpot had taken a photo of singer Willie Nelson, for which he registered a copyright in 2012, and uploaded it to the Wikimedia website. In June 2015 Alternet posted on its Facebook page a meme that superimposed a quotation from Nelson over Philpot’s photo, which received 14,000 likes, 33,000 shares and 306 comments. Alternet did not seek or receive Philpot’s permission to use the photo, and ignored his requests to cease and desist. Philpot brought claims against Alternet framed in infringement of copyright and violation of the US Digital Millennium Copyright Act (DCMA). Alternet moved to dismiss the claims.

Alternet argued that the “fair use” defence barred Philpot’s claim. The court described that defence:

When determining whether a use constitutes a "fair use," courts consider several factors, including (1) the purpose and character of the use, including whether the use is commercial or for non-profit educational purposes, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion of the work used in relation to the work as a whole, and (4) the effect of the use on the potential market for or value of the work. Id.; Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 576-77 (1994).

The main issue for the court was the one raised by the first factor: whether and to what extent the photo as it had been used by Alternet was “transformative,” i.e. “whether the new work merely `supersedes the objects' of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning or message.” The court reasoned as follows:

On this motion to dismiss, there are not enough facts alleged in the Complaint to allow the Court to determine whether or not Alternet's use of the Willie Nelson photo was transformative. First of all, there are almost no allegations concerning Philpot's purpose in taking the photo. Second, it is not clear as a matter of law what Alternet's purpose was in reproducing the photo. Philpot does allege that Alternet is an alternative news website whose purpose is "to influence its readers' political leanings, and consists of opinion pieces, purportedly newsworthy information, and sensationalized current events." Compl. ¶ 7. However, taken at face value, the Court reads this to be merely a description of Alternet's operational model rather than an allegation of Alternet's purpose in using the photo.

Attached to the Complaint as an exhibit is a snapshot of the Facebook post by Alternet featuring an image of Willie Nelson with the quote: "Rednecks, hippies, misfits—we're all the same. Gay or straight? So what? It doesn't matter to me. We have to be concerned about other people, regardless. I don't like seeing anybody treated unfairly. It sticks in my craw. I hold on to the values from my childhood." Compl. Ex. E, ECF No. 1-5 at 2. Alternet argues that by adding the quote, it used the photograph to provide political commentary and that this use of the photograph supersedes Philpot's original purpose. Mot. to Dismiss, ECF No. 19 at 12.

While that is possible, at this stage of the pleadings, Philpot credibly argues that the photograph, as used by Alternet, was merely for the purpose of identifying who the quote came from, thus leaving the purpose unchanged: to identify Willie Nelson. In order to make a determination as to Philpot's argument, the Court would need additional facts. For example, whether or not Alternet's purpose in using the photograph was to identify Willie Nelson's connection to the quote or to transform it into a political poster. The latter is a factual question more appropriate for the summary judgment phase. As evident based on the above analysis, the facts, as alleged in the complaint, are simply insufficient to conduct a thorough analysis of transformative use at this time. Accordingly, this factor weighs in favor of denying dismissal.

The questions raised by the other three criteria, similarly, could not be answered on the pleadings and required some form of evidence to be led. The court therefore refused to dismiss the copyright infringement claim. However, it dismissed the DMCA claim because the plaintiff was required to plead facts that could lead to the conclusion that Alternet possessed the required mental state to make out a breach of the act, “the mental state of knowing, or having reasonable grounds to know, that his actions will induce, enable, facilitate, or conceal infringement to be liable for removing copyright management information (CMI) metadata and distributing images knowing that CMI was removed.” However, the plaintiff had simply provided conclusions on this point without pleading facts, leading to the claim being struck.