Geophysical Service Incorporated v, 2016 ABQB 356

Court of Queen ’ s Bench of Alberta Citation: Geophysical Service Incorporated v 612469 Alberta Limited (CalWest Printing & Reproductions), 2016 ABQB 356 Date: 20160628 Docket: 1101 15306 Registry: Calgary Between: Geophysical Service Incorporated Plaintiff - and - 612469 Alberta Limited Carrying on Business Under The Trade Name CalWest Printing & Reproductions Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice K.M.

Eidsvik _______________________________________________________ [ 1 ] Geophysical Service Incorporated (GSI) seeks compensation from the Defendant CalWest (612469 Alberta Limited Carrying on Business Under The Trade Name CalWest Printing & Reproductions) for copying its seismic data that CalWest accessed from the National Energy Board’s offices in 2010.

[ 2 ] In many separate actions, GSI brought claims against the National Energy Board, two Atlantic oil and gas regulatory boards, oil companies, seismic companies and other copying companies for infringing its copyright and other intellectual property rights in the marine seismic data it collected, or owns, from these Atlantic and Artic marine waters. [ 3 ] The trial of two common issues in all of these actions was ordered by Chief Justice Wittmann to be heard in conjunction with the trial of this action as against the Defendant CalWest (the “Calwest Action”).

The common issues trial was heard and my decision was rendered April 21, 2016 ( GSI v Encana Corporation 2016 ABQB 230 – “the Common Issues Decision”). As mentioned in para 12 of the Common Issues Decision, all of the evidence led in the common issues trial and my findings in that Decision apply to the CalWest Action. [ 4 ] The questions and answers to the two common issues were briefly the following: 1. Can copyright subsist in seismic material of the kind that is the subject matter of GSI’s claims? Answer: Yes 2. What is the effect of the Regulatory Regime on GSI’s claims?

Answer: The Regulatory Regime allows the Defendants in these actions to access and copy GSI’s seismic data deposited with the Boards without infringing GSI’s copyright rights in the data. [ 5 ] The CalWest Action involves the copying of seismic data collected in 1982 from the Gulf of St Lawrence and Sable Island areas (the 1982 Data).

In January 2010, employees of CalWest accessed and copied the 1982 Data from the National Energy Board’s offices in Calgary and forwarded the microfiches that the 1982 Data was reproduced on, to its customer, the Ministry of Natural Resources and Wildlife of the Government of Quebec (the “Quebec Ministry”). [ 6 ] The trial specific questions in the CalWest Action are the following: 1. Do copyright and other intellectual property rights subsist in the 1982 Data? 2. Is GSI the lawful owner of the 1982 Data? 3.

If the answer is yes to Q. 1 and 2, did CalWest infringe any of GSI’s intellectual property rights in its 1982 Data by copying it in 2010? 4. If yes, does the Regulatory Regime apply to the 1982 Data to exempt CalWest from liability? 5. Can CalWest amend its Defence to include the defence of fair dealing, and if so, does it apply here? 6. What damages did GSI suffer from the copying of the 1982 Data by CalWest? [ 7 ] The independent defence of Crown immunity raised by CalWest in its Defence was not advanced at trial. 1.

Do copyright and other intellectual property rights subsist in the 1982 Data? [ 8 ] The 1982 Data that CalWest copied was marked as Exhibit 3 in this action. It consists of the original processed seismic sections of two surveys: one in the Gulf of St Lawrence and one in the Sable Island area. [ 9 ] I heard evidence about the design, collection, processing and confidential measures taken surrounding the 1982 Data from Mr. Davey Einarsson, who was the worldwide marine operation and processing VP for GSI Delaware in 1982and a principal with GSI until his retirement. I also heard from Mr.

Johnny Anderson, an experienced seismic creator, Mr. Jerold Harmann, a geological engineer who amongst other things designed the software that was used in the processing of the 1982 Data and from Mr. George Lau, the geologist/geophysicist who oversaw the processing and signed off on the 1982 sections in question. [ 10 ] Mr. Einarsson testified that at the time, there was no seismic data in the Gulf of St Lawrence area and GSI Delaware, an American seismic company, wanted to determine if there was any hydrocarbon in the area.

Around the same time they also wanted to research the area around Sable Island which had a different type of soft bottom geology. [ 11 ] A permit was obtained from COGLA (Canada Oil and Gas Lands Administration – the predecessor to the present Boards) with the estimated cost of $900,000 to shoot the data and $519,000 to process it. [ 12 ] Mr. Anderson described the design decisions and the details in the exhibits dealing with the creation of the data. He was not directly involved in the acquisition of the 1982 Data as he was working in Asia overseeing the creation of seismic data in that area.

The person in charge of the Canadian operations, was the late Mr. Reed Johnson. [ 13 ] I found Mr. Anderson very knowledgeable. It is clear that there were a multitude of highly skilled decisions and judgments made by experts in the seismic area that were used in the acquisition of the 1982 Data. Mr. Reed Johnson would have been the main person in charge of making those acquisition decisions for the 1982 Data. I will not repeat all of the types of decision here – basically this appears to have been a textbook type of acquisition as described by Dr. Evans and Mr.

Vasey, the experts called in the common issues trial, and I refer the reader to that portion of the common issues decision for details. [ 14 ] The data was acquired on board of two different ships: the Polar Prince which did the surveys of the Gulf and Sable Island area in September 1982, and aboard the Java Seal which surveyed more of the Sable Island area in November 1982.

[15] Mr. Harmann wrote the software that was used to process the data in Calgary in 1982. It was called the TIPEX system. Hewas not directly involved in the processing however since at the time he was working for the GSI Delaware headquarters for Europe,Africa and the Middle East, in England. He described the software that was used and how the “processing or party chief” would beresponsible for the multitude of processing choices to obtain the best product.

He indicated that there was “an infinite” number ofchoices to be made, the steps were not always the same, and that even once chosen they may have to be changed during the processing.Again, his testimony mirrored that of Dr. Wren and Mr. Vasey. [16] Mr. Lau, as the party chief in charge of the 1982 Data processing in 1982, described the different steps that he and his teamundertook to process the raw data that was obtained from the Gulf and Sable Island seismic data acquisition. He described how, in 1982,many of the steps were done manually using coloured pencils and splicing film together.

Once everything was “kosher” he signed hisname to the sections (now Ex 3). [17] Exhibit 1, tabs 4, 5, and 6, show that the 1982 Data was submitted to COGLA in 1985,, to its office in Halifax, Nova Scotia. Itwas archived in the NEB library in Calgary and that is where CalWest accessed it in 2010. Copyright [18] The 1982 Data consists only of the original processed data created in Calgary from the raw data collected in the Gulf andSable Island areas (not the logs, raw data, or re-processed data).

For the reasons I discuss in my common issues decision, the creation ofthe 1982 Data meets the Canadian skill and judgment test laid out by the Supreme Court of Canada in CCH Canadian Ltd. v LawSociety of Upper Canada, 2004 SCC 13 and should be considered original artistic or literary compilation productions in the scientificdomain, and therefore copyright works. The “human author” of this data was Mr. George Lau and his team. The owner of the 1982 Datawas GSI Delaware, the employer of Mr.

Lau and his team. [19] GSI argued that American law applies to determine whether copyright exists in the 1982 Data since the author of the 1982Data was American when it was created. It asserts that under the Berne Convention for the Protection of Literary and Artistic Works,article 5(4) the country of the author of an unpublished work is the “country of origin” of the work and that its laws govern the eligibilityfor copyright protection. GSI argued that GSI Delaware, as the employer, is the author of the work. [20] CalWest submitted that

article 5 allows a foreign author to protect its rights abroad and rely on the applicable copyright law ofthe country in which he or she wishes to act to enforce copyright (which is Canada). Article 5(2) makes it clear that the protection rightsare “independent” of the existence of protection in the country of origin. [21] CalWest also argues that GSI failed to plead foreign law. If foreign law is not plead or proven, then the court must apply thelaw of the forum, Canadian law here.

It relies on Phillips v Avena 2006 ABCA 19, leave to appeal refused, [2006]SCCA No. 95 [22] I prefer CalWest’s argument about the applicability of the Berne Convention and what law applies. As stated at page 30-10 of McKeown, John S., Fox Canadian Law of Copyright and Industrial Designs, 4th Ed: Protection in the country of origin is governed by domestic law.

However, when the author is not a national of the country of origin ofthe work for which he or she is protected under the Convention they shall enjoy in that country the same rights as national authors.(Article 5 (3)) [23] I also accept that Article 5(4) is not a choice of law rule and has no bearing on this Action: Fox at 30:5, see also Wing v VanVelthuitzen (2000) (FC), 9 CPR (4th) 449 where the subsistence of copyright in a book written by an Americanin the US was determined using Canadian copyright law. [24] In any event, foreign law was not plead, and accordingly Canadian law, the law of the forum, applies.

No application toamend GSI’s pleading in the CalWest Action was made. Further, based on Mr. Greenberg’s evidence and opinion on Americancopyright law, which I allowed to be entered in the event that I am wrong on the above conclusions, the 1982 Data would be copyrightprotected. Confidential Information [25] GSI argues that the 1982 Data is “confidential information” that is protected by common law. It argues that it also is a “tradesecret”, a subset of “confidential information”.

It relies on Pharand Ski Corp. v Alberta (1991) (AB KB), 116 AR326, amongst other cases. [26] CalWest agreed with the basic test, which has been summarised more recently in Aram System Ltd. v Novatel Inc 2009ABCA 262. CalWest says that the test is not satisfied here. The three elements that must be satisfied are : 1. That the information is “confidential” 2. That the information must have been imparted in circumstances that imported an obligation of confidence (or received by a thirdparty who acquired the information with knowledge of its confidentiality); and 3.

That there must be an unauthorised use of the information by the party to whom it was communicated to the detriment of the partywho communicated it. [27] I agree with GSI that the 1982 Data is confidential in that it is information of a very technical nature that was guarded veryclosely, stored in locked highly secure areas, and only released under strict conditions.

[ 28 ] However, in these circumstances, the 1982 Data was not imparted to CalWest with an obligation of confidence – CalWest accessed the material from the NEB’s offices, not from GSI. Further, although Mr. Al Visram, the President of CalWest, testified that he may have had some concern about the fact that it may be copyrighted because of a sign he saw at the NEB’s offices, he did not understand that the material was “confidential”, but presumed that it was open to the public to access legally.

Also, the labels on the material itself that assert GSI’s propriety, would not have been visible in the microfiche format. As Mr. Pham, the person who did the actual copying at CalWest, said, “I don’t have ex-ray vision”. [ 29 ] Finally, in my view, there was not an “unauthorised” use of the 1982 Data, since it was available for copying at the NEB offices. [ 30 ] Accordingly, the 1982 Data accessed by CalWEst was not “confidential information”. 2. Is GSI the lawful owner of the 1982 Data? [ 31 ] GSI Delaware was the original owner of the 1982 Data.

Through a series of transactions GSI argues that the 1982 Data was transferred to the Plaintiff in this action, GSI, a Canadian company. Initially, the Defendant was not satisfied with the proof of the chain of title to the 1982 Data and pointed out that under s 13(4) of the Copyright Act, RSC 1985, c C-42, assignments of copyright work must be in writing.

However, at trial GSI provided substantial evidence to show that the title to the 1982 Data was transferred ultimately to GSI and the Defendant withdrew its objection. [ 32 ] I reviewed the material entered, mainly in Exhibit 1 which included many of the sale documents between companies and the helpful, lengthy chart prepared by GSI’s counsel, along with the testimony of Mr. Davey Einarsson who was involved in the transfers, and I am satisfied that the chain of title to the 1982 Data was properly transferred to GSI, along with its copyright rights in the 1982 Data.

It is interesting to note that the word “copyright” is not used in the documents that were entered in evidence, however, the fees from licencing were transferred and the licences themselves, which of course refers to the copyright in the seismic data: see for example the sale agreement at tab 60 of Exhibit 1, para 1.1 (c). This is sufficient in my view to satisfy the requirements of s 13(4) of the Copyright Act . 3.

If the answer is yes to Q. 1 and 2, did CalWest infringe any of GSI’s intellectual property rights in its 1982 Data by copying it in 2010? [ 33 ] CalWest agreed that, on its face, since it copied the 1982 Data, it infringed GSI’s copyright rights in the data. It relies however on the Regulatory Regime as an answer to any infringement claim. More on that in the next section. [ 34 ] GSI also raised several other types of breaches caused by the copying; unjust enrichment; breach of confidentiality; conversion; and tortious interference with business relations.

In my view, none of these apply to the facts in the CalWest Action. [ 35 ] It cannot be said that there is an unjust enrichment when material is public to be copied. There cannot be a breach of confidence when the material copied was not confidential at the time. The 1982 Data was never wrongfully converted to CalWest’s use. It was properly borrowed from NEB’s offices for copying purposes and returned. And finally, there is no evidence that CalWest interfered with anyone’s contractual relationship on the facts.

The evidence did not support that CalWest interfered with a potential licencing contract with the Quebec Ministry. 4. If yes, does the Regulatory Regime apply to the 1982 Data to exempt CalWest from liability? [ 36 ] Both parties agree that the 1982 Data had to be submitted to COGLA pursuant to the Canada Oil and Gas Regulations , CRC, c 1518 (the “ 1978 COGL Regulations ”) and that this was done in 1985.

There were also Guidelines in place at the time (referenced as exhibits 6, 7 and 8 in Samual Miler’s affidavit in the common issues proceedings), but ultimately it was the 1978 COGL Regulations that applied for the submission rules. [ 37 ] There is a difference of opinion about what disclosure legislation applies. GSI argues that it was disclosed pursuant to s. 101 of the Canadian Petroleum Resources Act RSC 1985 , c 36 ( CPRA ).

CalWest suggests that the disclosure occurred under the Canadian Oil and Gas Act , SC 1980-81-82, c 81 ( COGA 1982 ) since the right to disclose had cristalised under that Act even though it was later repealed. [ 38 ] I set out the history of the legislation in question between paras 144 and 212 in the Common Issues Decision. In my view, the 1982 Data was disclosed pursuant to s 101 of the CPRA . No issue was raised about this at the common issues trial.

I am of the view that the 1982 Data was disclosed pursuant to s 101 since the original material was submitted pursuant to the 1978 Regulations that survived into the CPRA , pursuant to s. 112 , and are therefore included in the “information and documentation” affected by that section. In any event, both parties agree that the confidentiality period had long expired by the time that the NEB provided the 1982 Data to CalWest in 2010. [ 39 ] GSI made the same arguments in this Action about why the Regulatory Regime did not apply to affect its copyright in the 1982 as it did in the Common Issues Trial.

I dealt with those arguments at length in my reasons in the Common Issues Decision so will not repeat them here. All to say , that in my view, the Regulatory Regime does apply to the 1982 Data and any copying by CalWest did not make it liable for any infringement of copyright or other tortious claims as the material was public and available to be disclosed without restrictions by 2010.

5. Can CalWest amend its Defence to include the defence of fair dealing, and if so, does it apply here? [40] CalWest argued in the alternative, that the material was reproduced for the Quebec Ministry for specific research purposesand as such the ultimate use is protected from an infringement action because of the “fair dealing” defence in s 29 of the Copyright Act. [41] GSI argued that this defence was not open to CalWest because it was not plead. CalWest therefore bought an application foran amendment in its Defence.

GSI argued that it would be prejudiced by this amendment as it would have sought further discovery andresearch on this issue had it known that it was going to be argued in this action. [42] In my view, the application, and need to resort to this defence of fair dealing is not necessary considering my findings on theapplicability of the Regulatory Regime to CalWest’s liability. Accordingly, I will forego making any decisions on these points. [43] In the alternative, if I am wrong on the Regulatory Regime finding, this defence becomes more important.

In this regard, onthe evidence, it is likely in my view that this defence could have succeeded. However, considering that CalWest did not give appropriatenotice to GSI that it was going to be relying on this defence during this trial, I agree with GSI that an amendment during trial would notbe appropriate. [44] GSI referred to Internet information in reply to the application to amend that suggested that the Quebec Government wasmaking seismic data available on-line to the public.

This alleged fact was never entered into evidence, but was pointed out to showprejudice, in that this area could have been pursued had this defence been pled. [45] CalWest first mentioned that it was going to raise the defence of fair dealing at the pre-trial on October 30, 2015 and it wasonly when it filed its pre-trial brief on November 25, 2015, after the trial had started that the full defence was laid out. GSI’s counsel saidthey were questioning Mr.

Theriault on these issues for the first time and felt prejudiced by the fact that it didn’t have time to thoroughlyinvestigate the situation. [46] I am cognisant that in the common issues case management hearings, fair dealing has been raised as one of the defences thatmay have been in common to all defendants. Nonetheless, the pleadings in each action govern and no such defence is available now inthe CalWest action. 6. What damages did GSI suffer from the copying of the 1982 Data by CalWest? [47] Considering my finding that CalWest is not liable for copying the 1982 Data, the remedy issue need not be decided.

If I amwrong on this finding however, I will briefly summarise my views on what remedies would have been appropriate on the evidence led inthis case. [48] GSI claims for a permanent injunction that restrains CalWest from copying the 1982 Data again and for an order that CalWestdeliver up the infringing material. [49] I would have issued an injunction to restrain CalWest from further copying the 1982 Data.

With respect to the Order to deliverhowever, the evidence is that the material was wiped from its copying machines so in fact, I accept that CalWest does not have any of the1982 Data to deliver. [50] In terms of damages, GSI argues that reference should be made to the Copyright Act , s 35 (1) with respect to thequantification of damages in this case.

It reads: s.35 (1) Where a person infringes copyright, the person is liable to pay such damages to the owner of the copyright as the owner hassuffered due to the infringement and, in addition to those damages, such part of the profits that the infringer has made from theinfringement and that were not taken into account in calculating the damages as the court considers just. [51] All foreseeable losses can be recuperated: Prism Hospital Software v Hospital Medical Records Institute (1994) (BC SC), 57 CPR (3d) 129. [52] The parties did not disagree on the law surrounding the quantification of damages in copyright cases, which I will not repeat indetail, but rather its application in this case. [53] In that regard, GSI attempted to prove that this material was used by the Quebec government in a joint venture it entered into(the Anti Costi Joint Venture).

The area of the joint venture covered some of the area that had been surveyed by GSI and formed part ofthe 1982 Data in question. [54] The evidence on this allegation fell far from proving that the data copied by CalWest was ever reproduced again, let alone forthe Anti-Costi Joint Venture project. I accept the evidence of Robert Theriault that the 1982 Data was obtained to be referenced in abibliography of geophysical material available for oil and gas exploration and development.

Reference to the lines only was made in thisbibliography and there is no evidence that the microfiches in the Quebec’s government’s possession have ever been reproduced. Indeed,Mr. Theriault testified that, until 2011 they had not.

He left his position after that, so he could not say what happened thereafter. [55] GSI complains that it lost control of its 1982 Data and that to be compensated for this loss an appropriate way would be tolook at what it would cost to licence the data properly ($236,000 Can $), what the future income stream might have been ($1.5 million),and the replacement cost today ($8.5 million – if it could obtain all of the permits required).

Other indices of the value of this data is thefact that it was transferred in 1993 as part of the GSI library of data for $450,000, that it cost $1.4 million to create in 1982 and the fact

that GSI has obtained revenue in the amount of approximately $400,000 on this data since 1993. [ 56 ] CalWest did not seriously question the quantification of the various ways of calculating potential damages except to point out that the data that was copied was 1982 data and that the data that is presently licenced is re-processed data so theoretically the value of the earlier processed data may not be the same. Further, that its profit from the copying was only $55.

Its argument centered on the fact that none of these damages were proven. [ 57 ] In my view, had I to assess damages in this case, considering the lack of proof of actual damages, beyond the loss of control of the data which could be remedied by an injunction potentially, I would have had to resort to nominal or statutory damages to be assessed. I agree that on the evidence before me, none of the methods proposed by GSI would apply here. [ 58 ] In assessing nominal damages, I would also have looked at the culpability of CalWest.

Certainly in that regard, CalWest did make immediate efforts, when contacted by GSI to be helpful and forthright about who it had copied the material for etc. It was one of the few parties contacted by Mr. Paul Einarsson who actually replied to GSI’s complaint of copyright infringement. [ 59 ] Having said that, Mr. Visram may have been somewhat more diligent before he copied the material. He said that he noticed the sign at the NEB warning that the material could be copyright protected and the vague reply he got from the Quebec Government should not have been reassuring.

Of course, the other confusing issue is that the law surrounding the NEB’s right to copy was itself in dispute, so it is unclear what kind of response would have been correct. Perhaps that the question is in litigation? In any event, I note that CalWest did make some efforts, and this is not a case where it copied knowing that copyright was being infringed. [ 60 ] Further, although the loss of control may have meant that through the copying of the microfiches of this data licensing fees could have been avoided however, the better evidence is that this never happened.

The microfiches, as far as the evidence before this court can tell, are undisturbed. [ 61 ] As such, I would have awarded only nominal damages of $25,000. Conclusion [ 62 ] In conclusion, I dismiss the action by GSI against CalWest. CalWest did not breach any copyright rights or other tortious duties it may have owed GSI when it copied the 1982 Data for the Quebec Ministry in 2010. [ 63 ] Costs may be spoken to. Heard on various days between the 25 th day of November and 10 th day of December, 2015. Dated at Calgary, Alberta this 28 th day of June, 2016.

K.M. Eidsvik J.C.Q.B.A. Appearances: M. Lemmens and F. Tosto for the Plaintiff D.R. McKinnon for the Defendant With monitoring by various Defendants’ counsel in the Common Issues Trial