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| John McKeown |
Generative artificial intelligence
The U.S. Copyright Office released a report, “Copyright and Artificial Intelligence — Part 3: Generative AI Training,” currently available here in a pre-publication version, which addresses the use of copyrighted works in the development of generative AI systems.
The release of the report seems to have been driven by political considerations. On May 8, 2025, the Librarian of Congress in the U.S., who oversees the U.S. Copyright Office, was fired by President Donald Trump. On May 9, 2025, the Copyright Office took the unusual step of releasing the report on a “pre-publication basis.”
Alena Butusava: ISTOCKPHOTO.COM
Legislative approach
The U.S. approach seems to be a more decentralized, sector-specific and state-level approach allowing different industries and jurisdictions to develop guidelines suited to their needs. Individual states have also developed their own AI regulations.
The EU has taken a different approach. In April 2012, the European Commission proposed the first EU AI law, which led to the Artificial Intelligence Act. The Act adopts a risk-based approach with treatment depending on the risk level. The approach emphasizes ethical AI, transparency and accountability.
It remains to be seen what approach the Canadian government will take.
Subsistence of copyright
Section 5 of the Copyright Act sets out clear conditions for the subsistence of copyright. The first condition is that the author was, at the date of making the work, a citizen or subject of, or a person ordinarily resident in, a treaty country. “Treaty country” is defined as meaning a Berne Convention country, UCC country, WCT country or WTO member. The definition is broad, but there are still countries that are outside the definition. In Gold line Telemanagement Inc. v. Ereele GMBH, 2025 FC 904, the defendant did not prove the conditions of subsection 5(1) of the Act existed for cinematographic works apparently created in Iran, which is not a treaty country.
Obtaining a copyright registration is frequently advantageous. In addition to potential impact on remedies in the courts, a copyright owner has the right to exercise takedown rights on public websites as a result of contractual takedown policies implemented by the operators of such sites. The policies are specific to each website but there are commonalities. They often meet the U.S. Digital Millennium Copyright Act requirements and require a registration.
Presumptions
In any proceeding for infringement of copyright, if the defendant puts in issue the existence of copyright or the plaintiff’s title thereto, copyright shall be presumed, unless the contrary is proved, to subsist in the work, performer’s performance, sound recording or communication signal. The presumption does not apply on a motion seeking a Norwich order where the information is sought regarding unknown potential defendants as no defendant puts in issue the existence or title of the copyright. Similar considerations apply to the presumption relating to the name of the maker (Hellboy Productions, Inc. v. Doe #1, 2025 FC 1766).
Works made in the course of employment
Subsection 13(3) of the Act states that an employer will be the first owner of the copyright of a work created by an employee in the course of their employment. Because the subsection generally only applies if the author is an employee and not a freelancer or independent contractor, a determination of whether the employer owns the copyright must be made. The relationship between the parties must be analyzed to determine if the author is an independent contractor or under the control of whoever is paying him or her.
In Nexus v. Krougly, 2025 ONSC 1346, the court applied the “Integration test” to make the determination. Under a contract of service, a person is employed as part of the business, and his or her work is done as an integral part of the business; under a contract for services, the work, although done for the business, is not integrated into it, but is only accessory to it.
Statutory damages
The Federal Court of Appeal has confirmed that statutory damages can be awarded even if no monetary damages are suffered by the copyright holder and no business is lost (2424508 Ontario Ltd. v. Rallysport Direct LLC, 2022 FCA 24). However, where actual damages can be quantified, they are a relevant factor in the analysis. Similar considerations apply to the defendant’s earnings or profits (Yelda Haber Ve Görsel Yayincilik A.S. v. GLWiZ Inc., 2025 FC 1107).
Bad faith in this context refers to conduct that is contrary to community standards of honesty, reasonableness or fairness. What is bad faith is contextual and may include: (i) ignoring a cease-and-desist letter, (ii) repeatedly infringing different products, (iii) scraping or copying photos directly from a website, (iv) ignoring offers not to litigate if they stop infringement, and (v) using a false name to avoid being detected (Yelda Haber).
If a copyright owner has made an election for an award of statutory damages and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200 for each work. A defendant cannot rely on this reduction where they have received information that their activities could be copyright infringement and still carry on with their activities (Yelda Haber).
Similar fact evidence
In Yelda Haber, the court reviewed the admissibility of similar fact evidence.
The failure to timely disclose of a settlement with co-defendants
In Peninsula Employment v. Castillo, 2025 ONSC 1121, the plaintiff failed to disclose that it settled its claims with co-defendants resulting in an order permanently staying the action.
The Online Streaming Act
In Broadcasting Regulatory Policy CRTC 2025-299, the CTRC has provided a new definition of “Canadian program” and certification framework for Canadian programs, artificial intelligence, data collection and publication, and reporting requirements.
This is part one of a two-part series.
John McKeown, partner at Loopstra Nixon, is certified by the Law Society of Ontario as a specialist in intellectual property law (trademarks/copyright). He is the author of Canadian Intellectual Property Law and Strategy: Trademarks, Copyright and Industrial Designs. He can be reached at jmckeown@Ln.Law.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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