A Concrete Reason to Consider Template Contracts: Patterned Concrete Mississauga Inc v Bomanite Toronto Ltd
May 21, 2021
Many businesses use template forms for quotations, purchase orders, warranties and other types of documents. Those encountering such template forms may assume that they simply contain boilerplate language or industry standard terms and conditions and therefore pay little attention. However, it is important to consider that such forms, no matter how simple they may seem, are often carefully designed to curate a business advantage. This point was highlighted in the recent case of Patterned Concrete Mississauga Inc v Bomanite Toronto Ltd, 2021 FC 314, where the Federal Court found that certain template forms were the product of skill and judgment such that copyright subsisted in them. Furthermore, a competitor’s use of similar forms was found to infringe such copyright.
Patterned Concrete Mississauga Inc v Bomanite Toronto Ltd
The plaintiff in this case, Patterned Concrete Mississauga Inc. (“Patterned Concrete”), builds decorative concrete patios, paths, and driveways. It commenced an action alleging that its competitor, Bomanite Toronto Ltd. (“Bomanite”), infringed the copyright subsisting in a quotation form, a contract form, and a limited warranty certificate used in connection with Patterned Concrete’s business (collectively, the “Works”). Patterned Concrete moved for summary judgment, seeking an order to stop Bomanite from infringing copyright in the Works and requiring Bomanite to pay damages for past infringement.
Patterned Concrete alleged that copyright subsisted in the Works as they resulted from the exercise of considerable skill and judgment by the author, a co-owner of the company. It further alleged that approximately two years after one of its long-time employees accepted a position with Bomanite, it learned that Bomanite was using a quotation form, contract form, and limited warranty certificate that substantially reproduced the Works.
In defence of the summary judgment motion, Bomanite argued that Patterned Concrete failed to establish that the Works originated from the author or that they were the product of a non-trivial exercise of skill and judgment. On the latter point, Bomanite submitted that the Works were standard business forms lacking sufficient originality for copyright to subsist. It also argued that the content of the contested Bomanite forms can be traced to earlier versions of Bomanite’s own forms.
Justice Pallotta heard and granted the motion finding that there were no genuine issues that would require a trial and that summary judgment was an appropriate process to achieve a just result.
Copyright Subsists in the Works
A key question was whether copyright did in fact subsist in the Works and, if so, whether Patterned Concrete was the owner. In support of its position Patterned Concrete relied on both affidavit evidence, as well as copyright certificates of registration and the statutory provisions that apply thereto. Justice Pallotta first addressed the parties’ arguments regarding the certificates and statutory provisions.
Section 53(2) of the Copyright Act states that a “certificate of registration of copyright is evidence that the copyright subsists and that the person registered is the owner of the copyright”. Bomanite argued that given the timing and circumstance in which such certificates were obtained, Patterned Concrete was not entitled to rely on the statutory provisions. Patterned Concrete’s copyright applications were not filed when the Works were published, but rather at the time that it instructed counsel to put Bomanite on notice of the alleged infringement. Bomanite argued that the certificates were obtained in contemplation of litigation, rather than in the ordinary course of business. Citing the case of P.S. Knight Co Ltd v Canadian Standards Association, 2018 FCA 222 (“P.S. Knight (FCA)”), it argued that Patterned Concrete accordingly cannot rely on section 53 of the Act.
Justice Pallotta disagreed, holding that P.S. Knight (FCA) does not establish a general rule that section 53 of the Copyright Act will only apply if a certificate of registration was obtained in the ordinary course of business, and not in contemplation of litigation. Furthermore, she was not satisfied that the circumstances of this case warranted giving no effect to the certificates as evidence of the subsistence of copyright and its ownership. Rather, the circumstances that led Patterned Concrete to apply for registrations are factors that should be considered in weighing all of the evidence tending to prove or disprove the subsistence of copyright and its ownership.
Justice Pallotta also found that section 34.1 of the Copyright Act supported the position that copyright subsisted in the Works and that Patterned Concrete was the owner. Section 34.1(2) of the Copyright Act provides that where a name purporting to be that of the owner is printed on a work, the person whose name is printed is presumed to be the owner of the copyright in question unless the contrary is proved. In this case, the evidence established that Patterned Concrete’s name was printed on the Works at all material times.
Patterned Concrete’s affidavit evidence also provided that the Works were authored in the course of employment and that the author exercised considerable skill and judgment in the expressive element of the Works. Bomanite argued that the examples of older Bomanite forms demonstrated that the Works did not originate from the purported author. Bomanite also argued that: (i) the Works simply reflected standard terms and conditions in the industry and were simply reorganized iterations of the same one-page document forms used widely in the stamped concrete industry; and (ii) the skill and judgment involved in preparing the Works were trivial and did not amount to more than a mere mechanical exercise of a mere copying of another work.
Justice Pallotta disagreed, however, finding that the co-owner of Patterned Concrete was the author of the Works. She held that while the author likely did not draft the full content of previous versions of the quotation and contract forms at issue from the beginning, she was not satisfied that significant aspects of the Works were not his work. Based on the evidence, she was satisfied that the Works originated from the author and that he exercised sufficient skill and judgment for copyright to subsist. Specifically, the expression in the Works resulted from an exercise of the author’s skill (use of his knowledge, developed aptitude or practised ability) and judgment (use of his capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work) sufficient to satisfy the originality requirement.
Justice Pallotta therefore found there was no genuine issue for trial on the issues of whether copyright subsisted in the Works and whether copyright was owned by Patterned Concrete.
Infringement and Remedies
On the question of infringement, Justice Pallotta likewise found that there was no genuine issue for trial. Patterned Concrete established that Bomanite had access to the Works and the substantial similarity between the Works and Bomanite’s forms was sufficient to infer copying. Furthermore, the evidence was inconsistent with the similarities arising from a commonality of terms in the industry or an independent creation.
With respect to remedies, Justice Pallotta ordered: (i) an injunction to restrain Bomanite from making substantial reproductions or copies in material form of the Works; (ii) delivery up or destruction under oath of all material in Bomanite’s possession that would offend the injunction; and (iii) statutory damages in the amount of $24,000. Justice Pallotta found, however, that punitive and exemplary damages were not warranted.
This case cautions that not all template contracts are created equal. Businesses adopting template forms should take care to ensure that such forms are original works specifically tailored to meet their commercial needs and interests. Moreover, they should seek legal advice before adopting any non-original forms or terms. Counterparties being presented with template forms should not simply assume that the terms are standard boilerplate. Rather, they should engage in a careful review and consider the implications before signing on the dotted line.
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