Federal Court Allows Sharing Access to Copyrighted Services

The Federal Court (the “Court”) recently considered the copyright implications of password sharing (i.e., allowing multiple users to access content or services licensed for only one user).^[1] At issue was whether Parks Canada infringed copyright or violated technological protection measures (“TPM”) laws by sharing a password to a subscription news website where the articles were behind a paywall. Parks Canada purchased a single subscription but shared the account’s password with several individuals internally to access news articles commenting on Parks Canada.

Even though sharing account access was prohibited by the subscription’s terms and conditions, the Court held that Parks Canada’s internal sharing of news articles from behind the paywall was fair dealing and that use of a licitly acquired password did not constitute circumventing a TPM. However, the Court did not condone “password sharing” generally, as whether the practice is permissible as fair dealing will depend on the facts. To ensure restrictions are enforceable, licensors and service providers should make sure restrictions on access and use are communicated clearly to users, and users expressly acknowledge these terms.

Terms and Conditions Restricting Use Apply

Blacklock’s Reporter is a subscription-based news website. Most of its articles are behind a paywall. The subscription’s Terms and Conditions only allowed one subscriber to access the content and prohibited any further distribution. Blacklock’s Reporter had only one membership level, though users could contact Blacklock’s Reporter to discuss a bulk or institutional subscription. The price for a single subscription was $148, but bulk subscription fees could be over $17,000. This licensing format is common: many software, service or data providers license content or access on a “users,” “devices,” “seats” or “accounts” basis.

The Court refused Parks Canada’s request to declare the Terms and Conditions unenforceable or rectify a mistake. While the Court noted that Blacklock’s Reporter could have made the Terms and Conditions clearer and more conspicuous, they were clearly visible. Terms and conditions are not a novelty, and even without an “I accept” button, Parks Canada understood the concept. While Parks Canada may have made an honest mistake, this did not warrant striking the licensing terms.

Fair Dealing Despite Licensing Restrictions

Notwithstanding subscribers’ express agreement to not share or distribute content in the Terms and Conditions, the Court held that Parks Canada’s limited internal sharing of Blacklock’s Reporter articles from behind the paywall was fair dealing for research purposes and therefore did not infringe copyright. The Court held the following factors weighed in favour of fair dealing:

• The ambiguities in the sharing restrictions in the Terms and Conditions should be construed in favour of the subscriber (Parks Canada), including that the references to “distribution” and “bulk subscription” were a prohibition on large magnitude sharing rather than any sharing at all
• Parks Canada licitly attained the password
• The number of articles shared was limited
• Only a few officials with business reasons to read the articles (e.g., media relations officers) had access

In effect, Parks Canada was able to rely on fair dealing for a dealing that it contracted to not do. This creates some uncertainty about the enforceability of licences and what recourse licensors and service providers have.

Password Sharing Is Not Circumventing a TPM

Without expert evidence, the Court was not prepared to rule on whether a “paywall” or “password” system themselves were TPMs under s. 41 of the Copyright Act.

However, the Court held that the Copyright Act’s prohibitions under s. 41.1 on circumventing TPMs would not extend to sharing a licitly obtained password. A legitimate password cannot circumvent a TPM when the password is acquired and used as intended. Further, circumvention of a TPM must be for infringing copyright; if copyright would not be infringed (such as if there is fair dealing), then there cannot be circumvention of a TPM, as this would effectively extend copyright protection where there is none. In contrast, hacking, decrypting or illegitimately obtaining a password may be different.

Takeaways for Licensors

The Court’s decision highlights potential obstacles to enforcing licensing restrictions on users’ use and access. Content and service licensors can employ practices to improve the enforceability of licensing restrictions, such as the following:

• Make prospective licensees aware of all licensing options, including the existence of “custom” licences for use outside of standard licences
• Provide a hyperlink on sign-up to terms of use and require licensees to acknowledge the terms (e.g., by a checkbox)
• Bring terms restricting sharing access and content to prospective licensees’ attention in plain language, especially if there are restrictions on sharing internally
• Maintain archives of what the terms of use were at any point in time and how these terms were communicated to licensees (including how the sign-up process appeared and any materials explaining licensing options)
• Offer licences on a firm-wide basis rather than an account or user basis where the service could be easily shared (e.g., library or data services)

Please contact a member of the Intellectual Property Group at Aird & Berlis LLP if you have any questions or require assistance in regards to copyrighted services or licensing.