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Ryan Erdman is an��IPilogue��Writer and a 2L JD Candidate at��Osgoode��Hall Law .

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In 2015, Inside Out captivated audiences with its creative insight into the emotional landscape of a pre-teen girl named Riley. The film’s main characters are manifestations of young girl’s internal emotions that attempt to help her navigate various experiences and challenges in her life. The brilliance of the film’s storytelling was realized through its depth and the way it resonates with individuals of all ages. Winning the that year, it has grown to be regarded as one of the best animated films of all time.

While the general and critical response was overwhelmingly positive, one individual who did not experience the same initial “joy” was , a graduate of Sheridan College in Oakville, Ontario. In July 2018, Pourshian commenced an action against Walt Disney Pictures Inc., Pixar Animation Studios, and four other subsidiaries claiming that they infringed on his copyright to a film he initially conceived as a high school student. The claim was brought under��sections 3��and��27��of Canada’s��

In 2000, Pourshian, then a film student at Sheridan College, wrote the screenplay and produced a short movie similarly titled Inside Out, where the protagonist was guided by their personified internal organs. According to Pourshian, the film was “widely shown” at the school, and the defendants, having a “close relationship” with Sheridan College, would have had access to his film on numerous occasions. Further, he claims former students at the college now working with Disney and Pixar were tied to the production.

The recent did not surround the substance or efficacy of the infringement claims, but revised a preliminary jurisdictional order. The U.S.-based defendants initially brought a motion to stay the action on the basis that Ontario lacked jurisdiction. In October 2019, a Master granted the order against all defendants, except for Pixar, Walt Disney Pictures Inc., and Disney Shopping Inc.

Pourshian appealed, and the remaining defendants cross-appealed the decision on the basis that the Master erred in applying the test for determining if the court has jurisdiction over claims against foreign defendants. The test, as established by the Supreme Court of Canada in , looks to determine if there is a “real and substantial connection” between the subject matter of the litigation and the chosen forum. To do so, the court will determine whether there is a presumptive connecting factor (established or novel) between the claim and the jurisdiction. As noted in Van Breda regarding tort claims, connecting factors that��prima facie entitles a court to assume jurisdiction include the defendant residing or carrying out business in the province, the tort being committed in the province, or a contract connected to the dispute being made in the province.

The court found that the Master made at minimum three legal errors, including failing to analyze the meaning of “carrying on” business in Ontario and disregarding evidence filed by the parties. Seeing no utility in sending the case back, the court proceeded to determine jurisdiction in relation to each individual defendant. Pourshian argued that Ontario had jurisdiction because it was the “jurisdiction of reception” for��the movie, the claim was in respect of (intellectual) property in Ontario, and some of the defendants carry on business in Ontario.

Most significantly, the court clarified that copyright infringement is “essentially a statutory tort,” such that the Van Breda analysis is correctly applied, and the analogous connecting factor is whether the alleged copyright infringement occurred in the jurisdiction where the action was brought. Relying on , they note that the infringement can occur both where the communication was transmitted from and where it was received. Subsequently, the court looked to the main issue of whether Pourshian’s claim established a “good arguable case” that each defendant played a role in authorizing the “transmission” or distribution of��the film in Ontario.

Ultimately, the court found sufficient evidence that Ontario had jurisdiction in relation to six of the defendants, largely due to direct connections to the film’s production or its distribution to third-party providers. This reversed the original decision in relation to three defendants. The two remaining defendants, Walt Disney Company (the parent company to the remaining defendants) and American Broadcasting Companies, Inc., successfully rebutted the presumption by proving a lack of involvement in the production and distribution of the film in Ontario.

In what should be an extremely intriguing copyright case moving forward, Pourshian seeks a declaration that he owns the intellectual property to the screenplay, live theatrical production, and the short film Inside Out, and that the defendants infringed his copyright through their production and distribution of��the Disney film. In addition, he is seeking a permanent injunction and damages, which would be significant given that Inside Out more than $850 million worldwide. Interestingly, Pourshian has been in a similar U.S. claim, voluntarily withdrawing a 2018 California lawsuit two months after it was filed.

The post Judge Partially Flips Decision “Inside Out” as "Pourshian v Walt Disney Company" Moves Forward in Ontario appeared first on IPOsgoode.

A.���������� “Dude, Where Are We?” - A Quick Review of The European Court of Justice

The (Court of Justice) is the highest court in the European Union on matters involving European Union law (“Union law”). It is responsible for interpreting Union Law and ensuring that it is equally applied across all EU member states. While the Court of Justice is the supreme guardian of Union legality, many provisions of Treaties signed by Member States directly confer individual rights on nationals of Member States, which national courts are bound to uphold. Thus, national courts can be thought of as “the first guarantors” of Union law.

To ensure the effective and uniform application of Union legislation and to prevent divergent interpretations, national courts may turn to the Court of Justice and ask for clarification on a point concerning the interpretation of Union law. Those national courts that receive replies are bound by the interpretation given by the Court of Justice. Other national courts facing problems of the same nature are also bound by the decision. Although requests for references may only be raised by a national court, all the parties involved may take part in proceedings before the Court of Justice.

B.���������� Peter Pinckney’s Problem: Keeping his Fight in France

was a British rock band that enjoyed short-lived success in the 1970s. Peter Pinckney is the author, composer and performer of 12 songs recorded by that group. In the early 2000s, he discovered that his songs had been reproduced without his authority on CDs in Austria by Mediatech and marketed by the UK company Crusoe.

In 2006, Pinckney ��(para 10) for copyright infringement in the Toulouse Regional Court. Mediatech challenged the jurisdiction of the French courts on this matter. The Regional Court of Toulouse dismissed the Austrian jurisdictional challenge on the grounds that Mr. Pinckney had been able to purchase the infringing records from a website that was widely accessible to the French public. This, the Court ruled, was sufficient to establish the substantial connection between the facts and the alleged damage to grant jurisdiction to the French courts.

The Toulouse Court of Appeal ��(para 13), ruling that the French court had no jurisdiction since the defendant was domiciled in Austria and because there was no way damage to Pinckney could have occurred in France given that the CDs were marketed in the UK.

C.���������� Pinckney’s Appeal and the French Court’s Request for a Ruling on Article 5(3)

Pinckney brought ��(para 14) against the Toulouse judgment, relying on Article 5(3) of the which states that:

“A person domiciled in a Member State may, in another Member state, be sued:
(3) In matters relating to tort*, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.”

In light of Pinckney’s appeal, the French court of cassation decided to stay its proceedings and for a preliminary ruling on the correct interpretation of 5(3).

D.���������� Court of Justice’s Ruling: Reiterated Melzer, Applied eDate and Wintersteiger

The Court of Justice by restating the interpretation of Article 5(3) it outlined in (Melzer), (eDate) and (Wintersteiger).

In Melzer, the Court of Justice established that Article 5(3) should be interpreted to mean that a defendant may be sued in the place where the damage occurred (locus damni) and, if different, where the action or inaction leading to that damage occurred (locus delicti commissi).�� The Court of Justice conceded however that one limitation of Melzer was that it did not cover the possibility of suing an alleged perpetrator of the alleged damage before the court seised on the basis that it is the place of the event giving rise to the damage.

In this case, it was common ground that the allegedly infringing action did not take place within France. ��The question at hand was whether or not the court had jurisdiction, given that it was the location where the alleged damage occurred.��

In eDate and Wintersteiger, the Court of Justice developed three principles for the interpretation of Article 5(3) when applied to allegations of infringement committed via the internet.�� These were:

(1)���� That the place where the alleged damage occurred within the meaning of that provision may vary according to the nature of the right allegedly infringed (, paras 21 to 24);

(2)���� That the likelihood of the damage occurring in a particular Member State is subject to the requirement that the right in respect of which infringement is alleged is protected in that Member State (��at para 25); and

(3)���� In order to attribute jurisdiction to a court to hear an allegation of infringement in matters of tort, the identification of the place where the alleged damage occurred also depends on which court is in the best position to determine whether the alleged infringement is well founded ( at para 48 and at para 27).

To identify the place where damage caused by actions on the internet occurred, the Court of Justice applied these principles. ��Consequently it distinguished between the infringement of personality rights and the infringement of intellectual and industrial property rights.

The Court then reiterated that victims of personality right infringement (protected in all EU Member States) may bring his or her action in the court of the Member State where the harmful event occurred. ��Moreover, if the offending work has been placed online he or she may bring an action in the territory of any Member State where the action is accessible. However, those courts only have jurisdiction with respect to the damages caused in the territory of the court seised (��at��para 52).

The Court of Justice further specified that the allegation of an infringement of an intellectual and industrial property right (which is typically vests through registration) is limited to the territory of the Member State of registration and may only be brought before the court of that State. ��This is because the Court of Justice has deemed that these are the courts best placed to ascertain whether the right at issue has been infringed (Wintersteiger at paras 25 to 28).

Based on these principles, the Court of Justice ruled that,

In the event of alleged infringement of copyrights protected by the Member State of the court seised [in this case France], the latter has jurisdiction to hear an action to establish liability brought by the author of a work against a company established in another Member State [in this case Austria] and which has, in the latter State, reproduced that work on a material support [in this case by pressing CDs] which is subsequently sold by companies established in a third Member State [in this case the UK] through an internet site also accessible with the jurisdiction of the court seised [in this case France]. However that court has jurisdiction only to determine the damage caused in the Member State within which it is situated [in this case France].

In other words, the Court of Justice constructed a very narrow interpretation of article 5(3) to allow the Toulouse Court to hear Pinckney’s suit against Mediatech while restricting its assessment of damages to those damages that would have occurred in France.

E.������������ An Unresolved Matter: Did Mediatech Actually Violate Copyright?

Of course, the question left hanging by the Court of Justice is whether or not a company in another Member State making CDs for a second Member State is in fact a violation of French copyright law.�� This question will now be for the French courts to determine.

F. �� �� ����Significance��of this Decision?��

This particular ruling would appear to only be of use to a copyright holder who (1) is seeking jurisdiction in his or her home state that is (2) an EU Member state which has (3) copyright protection and (4) has had his/her copyrights violated in another EU Member state (5) wherein the alleged violation involved the reproduction of the work "on a material support" (6) and was then sold by parties in another EU Member state (7) through an internet site (8) wherein that site was accessible from the author's home state.

The extremely narrow interpretation provided by the Court of Justice is understandable, given that ��in Europe,��like most places in the world, copyright vests without the requirement of formal registration (). ��A broad interpretation of article 5(3) fling national court doors open��to artists clamoring for damages against actors in other states on the broad grounds of the violation of personality rights.��However, given��the European Court of Justice's����in the Union, the Court of Justice was likely mindful of creating too wide of a doorway when crafting this decision.

As a small technical point, one could argue that the European Court of Justice relied too heavily on a trademarks case (Wintersteiger) in crafting its decision with respect to copyright. ��In so doing, it could be argued that the Court of Justice misapplied a set of principles originally crafted for a formality-based regime to a formality-free question. ��However, in light of the broader policy concerns outlined above, it is not likely that this would compel any future proceeding before the Court of Justice.

This decision then is a somewhat uninteresting legal end to an otherwise exciting news story.��Still, for non-European practitioners, this decision provides some insight into copyright protection in the European Union.

Beatrice Sze is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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Synopsis of the Law

The new law, , or Bad Faith Assertions of Patent Infringement, is to be codified at 9 V.S.A. § 4195-4199. It is the first piece of state legislation in the United States that cracks down on patent trolling. ��of patent trolling is “the practice of making deceptive claims of patent infringement in the hopes of collecting licensing or settlement money.” Simply put, patent trolling means alleging patent infringement against an individual or business for the purpose of extorting money, where a legitimate case is not likely to exist. The new law is an amendment to the state’s ��which is, arguably, a quiet way to introduce a patent law without seeming to encroach on federal jurisdiction.��How does the new law work?�� It basically sets out a list of guidelines for judges to determine whether an assertion for a patent is legitimate or illegitimate. For example, to weed out bad faith assertions, a judge may consider whether the claimant is demanding too quick a response or too much money, or whether the potential litigant is making meritless assertions with little factual basis. Conversely, a judge may find that an assertion of patent infringement is legitimate if the claimant is the original inventor or if the individual has successfully enforced the patent in a different court. In lieu of providing hard and fast definitions, the new law essentially sets out a list of factors against which a court might assess the particulars of a case to see whether the allegation is being made in good faith.

Question of Authority – The Limits of Federalism

One of the more debated issues is whether Vermont has legal authority to regulate patent activity. On the one hand, Vermont is stepping right into federal jurisdiction. That is, due to federal pre-emption laws, states are not allowed to enact their own patent laws. As such, Vermont’s new law may be struck down in its nascent stage.�� Furthermore, the new law is arguably not entering uncharted territory either. Congress has already taken significant steps with cracking down on patent trolling at the federal level by introducing additional bills such as the , the and the .�� Simply put, if Vermont’s new law oversteps its boundaries and overlaps in purpose or effect, it may have a challenge ahead in terms of establishing its legitimacy. On the other hand, it could also be argued that the new state law fills a gap that has yet to be addressed in the existing federal legislation. Legal scholar Camilla Hrdy takes this route in suggesting that the does not directly address threats from “patent trolling” by Patent Assertion Entities (PAEs) and that the Federal Circuit has sanctioned “baseless” lawsuits in the past which indicates a potential need for a tighter net, perhaps at the state level. She argues that while federalism may benefit patent law to a certain extent, states must also be given enough autonomy to “use state law to grow local innovation ecosystems, like California has with Silicon Valley.” In short, the new VT law has created at least two distinct camps: one side seems to champion a traditional approach through federalism, whereas the other side proposes an alternative vision of federalism that is, arguably, closer to a bottom-up approach to anti-patent trolling law.

A Canadian Perspective

How might such a situation play out in Canada, which has ? Federals courts do not have inherent jurisdiction, whereas provincial superior courts do, which may potentially give the latter lee-way to overlap in subject matter jurisdiction with the federal courts. Generally though, in Canada, like in the US, patent law is under the jurisdiction of federal power and cases are decided at the federal court level which has statutory authority to hear intellectual property disputes. from Canadian IP firm, MBM Intellectual Property Law, suggests that it is generally “” the effects of a state law in the IP sphere given the lack of precedent both in the US and in Canada. Tracy points out that a likely consequence will be that cease and desist letters will become more expensive to come by, going forward, in the state of Vermont. As such, potential litigants are likely to take more time at the front-end considering whether to enforce their rights. On the one hand, the law would likely disincentive frivolous and vexatious lawsuits; on the other hand, rights holders with bona fide claims will see the cost of litigation increase, contrary to Hrdy’s prediction, as previously discussed. What is certain is that industry players, academics and bloggers on both sides of the border will keep an eye on how the new Vermont law interacts with existing federal legislation as an indicator of the way in which similar legislation might play out in other provinces and states. In the meantime, happy hunting Vermont.

Ying Cheng is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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