Eight Mile Style, the company copyright-holder of “Lose Yourself” an action on copyright infringement against the National Party for copying an original musical work protected by copyright. In response, the National Party agreed that “Eminem Esque” borrows certain chords from the composition “Lose Yourself”. The National Party admitted that such borrowing might have resulted in the similarities between the two musical compositions. However, according to the National Party, such borrowing is not tantamount to copyright infringement. The court that to resolve the dispute; one must first distinguish between “illegitimate copying and permissible borrowing”. Such distinction is crucial for upholding , which is to provide a just reward for the creator and to encourage creative process.

IP Osgoode's Prof. emphasizes that is an . Musicians often experiment with previously known chords and tunes to develop original compositions, a process that often results in the emergence of whole new genres of . For example, such genres as jazz and blues represent the result of cross-fertilization of Western European and African traditions. Expansive copyright protection may if it penalizes borrowing in the . In this case, any musician aspiring to create a composition will second-guess herself in fear of a potential lawsuit for copyright infringement. Limited copyright protection may not only strip the copyright holder of her reward but also result in the situation when the creators will borrow from already known compositions without adding any creative value. Such an outcome is problematic for creators, users, the and public at large. The reason is that over a period of time such borrowing can produce a creative desert when all songs in the music charts sound alike. Copyright law is thus charged with striking a between the competing interests of the stakeholders.

In the Eight Mile Style case, the court agreed that musicians could be inspired by previous musical compositions and even use similar chords and melodies as building blocks for their own works. However, the unique compilation of these blocks in the musical work provides for distinctiveness and originality of the composition. Accordingly, to establish copyright infringement, the claimant must show either that . The analysis is therefore as the court looks beyond how many elements (chord-by-chord) of the original composition were replicated. The court accordingly ruled that “Lose Yourself” and “Eminem Esque” are “” and the latter “” in a way that makes the tracks “”. Such an alteration of original musical work constitutes infringement when “”.

The court ruled that the National Party used (including copying and reproduction) the song “Lose Yourself” without any authorization in its advertising campaigns. These actions constitute infringement under the . The court assessed the damages according to the user principle i.e., “”. In assessing damages, the court examined a number of factors such as, for example, the conditions under which the licenses for “Lose Yourself” have been previously granted by the Eight Mile Style and the territorial coverage of the broadcasting for Eminem Esque. After examining these factors, the court concluded that the license fee award against the National Party constitutes NZ $ 600 000. The court also noted that the National Party included Eminem Esque in its political campaign after obtaining professional advice from the third parties. The second hearing will determine whether the third parties will carry on the ultimate liability. Now we can only speculate whether the third parties will pay damages and at what amount. Yet it is clear that in assessing the third parties’ liability for professional advice, the court has to analyse the nature of relationship between the third parties and the National Party, to what extent the National Party relied on the given professional advice.

Ksenia Polonskaya is an IPilogue Editor and a PhD Candidate at Queen's University, Faculty of Law.

The post “You Own It, You Better Never Let It Go”: Distinguishing Permissible Borrowing from Copyright Infringement in Music appeared first on IPOsgoode.

brought its claim after the Canadian courts revoked two of the company’s patents on the basis that these patents lacked utility. The courts applied “” to invalidate the patents on the basis that the patents lack . In ISA,   argued that the Canadian test for utility of the patent is arbitrary “judge-made law” and thus constitutes a violation of Canada’s international obligations under NAFTA. The company advanced its challenge against Canada on two accounts. First, Eli Lilly claimed that the judicial interpretation of utility in Canada (the so-called “promise doctrine”) contradicts the meaning “capable of industrial application” under NAFTA, Chapter 17. Second, the company alleged that Canada’s utility standard has abruptly changed over the years. According to Eli Lilly, such “dramatic” change in the judicial interpretation of the utility standard is problematic because it violates Chapter 11 of NAFTA. Both arguments questioned the traditional role of the domestic courts in interpreting and applying the patentability criteria. Ultimately, Eli Lilly’s argument failed in ISA. In short, the ISA arbitrators concluded that failed to produce sufficient evidence to support its allegations.

For the Government of Canada, however, it may be too early to celebrate this victory. The reasons become evident after appreciating the context of the Eli Lilly’s claim. First, the Eli Lilly’s dispute lasted more than five years. NAFTA does not provide parties to a dispute with procedural mechanisms to dismiss the claims early, akin to the summary judgment or a failure to state a claim provisions in common law jurisdictions. Accordingly, NAFTA permits claims that may eventually lack any legal or factual foundations without providing an opportunity to  curb such claims early to minimize the costs. Second, the tribunal did not explicitly address whether a change in the judicial interpretation of the state’s patent law can potentially violate this state’s international legal obligations, including those under IIAs. In practice, it means that the doors for claims similar to Eli Lilly’s remain open. The consequences are significant for states parties to ISAs. to defend the investment claims average at US 5 million dollars per one dispute. Losing such a claim is an even more expensive option for states for two reasons. First, the monetary costs may be substantial. For example, Eli Lilly demanded in damages. Second, losing a claim may result in reputational harm for a state as a potential destination for foreign investment. As a result, some states prefer a settlement of the dispute over facing a foreign investor in the ISA process.

These factors combined create a structure that encourages foreign investors to bring IP claims in ISA against states in hope to achieve a favourable settlement in a fashion similar to the “patent trolls”.  The claims similar to Eli Lilly’s can become a tool for speculation. In particular,  the claimants can allege that the states’ patent laws dramatically change and such change constitutes a violation of an applicable IIA. If an effective mechanism for the early dismissal is not available, a state has to defend its claim for a prolonged period of time and face substantial costs. Some states, however, lack financial or expert capacity to uphold such defence. From a policy perspective, the concern the Eli Lilly’s type claims may inspire foreign investors to file claims against states not to vindicate their property rights, but rather to use such claims as a bargaining chip to achieve profitable settlements. Such procedural use of IP rights (and particularly patents) fundamentally contradicts the purpose of the national IP systems that  grant IP rights for the benefit of society and not merely “”.

The post Eli Lilly v. Canada: Investor-State Arbitration Is an Open Gate for the “Patent Trolls” appeared first on IPOsgoode.