Home Copyright Case analysis of the case Pourshian vs Walt Disney

Case analysis of the case Pourshian vs Walt Disney

October 19, 2021

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This article is written by Vritant Dua, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Prashant Baviskar(Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Brief history and introduction

The present case under study pertains to copyright infringement by the defendants in the jurisdiction of Ontario, Canada. The specific allegation against the defendants is that the plaintiff, Mr Damon Pourshian, while he was in high school in the year 1998, conceived of an idea of a short film wherein the five of the protagonist’s organs become personified and guide his behaviour. When the plaintiff was in Sheridan College, Oakville, Ontario in the year 2000, he wrote a screenplay and produced a short movie titled “Inside Out” based on his idea. The defendants, on the other hand, released a film titled “INSIDE OUT” on June 19, 2015 wherein the protagonist is an 11-year-old girl whose five basic human emotions become anthropomorphised and guide and influence her behaviour and which film was reproduced, distributed and screened in Ontario, Canada, where the plaintiff resides and works as a filmmaker. The said film won various awards including the coveted Academy Award for being the Best Animated Feature Film at that particular time.

The plaintiff who lives in Toronto, Ontario and is a filmmaker by profession, subsequently filed his claim for copyright infringement against the defendants under Section 3 and 27 of the Copyright Act of Canada, 1985 (latest version accessible here), seeking a declaration that he owns the copyright to the screenplay, live theatrical production and short film titled “Inside Out” and a declaration that the defendants infringed his copyright through their production, reproduction and distribution of their film titled INSIDE OUT and also seeking a permanent injunction against the defendants and damages.

Initially, the claim was filed before the lower court (Court of Master Graham, Ontario), which decided that the claim stands against only three of the defendants namely Pixar Animation Studios, Walt Disney Pictures Inc and Disney Merchandise Inc and stayed the action against all the other six defendants citing that there is no concrete arguable case and no connection between the claim and the jurisdiction of Ontario.

For reference purposes, the film made by the plaintiff is referred to as Inside Out and the film made by the defendants is referred to as INSIDE OUT.

Parties involved in the case

DAMON POURSHIAN …Appellant/Respondent by cross-appeal

-and-

(i) WALT DISNEY COMPANY

(ii) WALT DISNEY PICTURES INC.

(iii) PIXAR ANIMATION STUDIOS

(iv) DISNEY ENTERPRISES INC.

(v) DISNEY SHOPPING, INC.

(vi) WALT DISNEY STUDIOS HOME ENTERTAINMENT

(vii) DISNEY CONSUMER PRODUCTS AND INTERACTIVE MEDIA

(viii) WALT DISNEY STUDIOS MOTION PICTURES

(ix) AMERICAN BROADCAST COMPANY, INC.

… Respondents/Appellants by cross-appeal

Arguments put forth in his claim by the plaintiff, the defence of the defendants and the judgment by the lower court (Court Of Master Graham, Ontario, Canada):

The plaintiff describes the role and general corporate responsibilities of each of the defendants in his claim such as place of incorporation and the role and responsibilities it carries out. Details of the same can be read in the judgment available here and are not repeated herein for the sake of brevity.

Arguments put forward by the plaintiff

Plaintiff describes how he conceived the idea of the film Inside Out and how it was produced and shown in the Sheridan College.
He argues that the defendants had access to his film through various screenings held at Sheridan College. Further, Pixar and Disney, which are undefined terms, had a ‘close relationship’ with Sheridan College and that some of the students who were at Sheridan College in early 2000 ended up working on the production of the film INSIDE OUT.
The plaintiff also states that he intended to further develop his film Inside Out after leaving Sheridan College but did not have an opportunity to do so before the release of Defendants’ film INSIDE OUT and that the defendants released the said film without the consent and authorization of the plaintiff due to which he suffered damages.
He further argues that the service of the claim is permitted outside Ontario, Canada as per the sub-sections (a), (i), (n), and (p) of Rule 17.04 of the Rules of Civil Procedure of Canada, on the grounds that the claim relates to:
1. Real property in Ontario
2. An injunction against the defendants preventing them from doing certain things or affecting the real or personal property in Ontario.
3. Authorization by or under the Copyright Act of Canada.
4. Persons carrying on business in Ontario.

The main argument of the defendants against the above said claim of the plaintiff was that the claim is barred by jurisdiction or is ex juris as Ontario court has no jurisdiction to try and adjudicate the claim against the defendants. However, the defendants admitted that the Ontario court has jurisdiction only over Disney Shopping, Inc. as it has sold the movie merchandise directly to the customers in Ontario.

Evidence filed on record by the parties

Affidavit sworn and filed by Jonathan A. Garson, Senior VP of Worldwide marketing of Pixar, describing the development and success of their movie and also stating the various sources of inspiration for their film and a list of films with the same title.
Affidavit sworn and filed by Michael Salama, VP, Walt Disney Company stating that Walt Disney Company is the parent company of all the other defendants and has nothing to do with the creation or distribution of the movie in question. He further states that none of the defendants including the parent company carry on or are engaged in any business in Ontario. He also refers to an action brought by the plaintiff against the defendants in California which was terminated by “Notice of Voluntary Dismissal” vide order dated August 15, 2018.

The only evidence by way of affidavit filed on behalf of the plaintiff was sworn by Jason Dinelle, a law clerk in his lawyers’ office. The said affidavit mentions various websites showing the distribution of the movie by various companies in Canada.

The decision by the master

Mainly referring to the Supreme Court of Canada’s decision in Club Resorts Ltd. V. Van Breda, 2012 SCC 17, the Master while reviewing the claim and the applicable law, rejected the claim against all the defendants except the two of them, namely Walt Disney Pictures Inc. and Pixar.

With regard to the carrying on business by the defendants in Ontario, the court held that Walt Disney Pictures Inc and Pixar are liable as the film was released in Canada for public viewing, thereby implying that the area of release and viewing of the film also presumably included Ontario and required the actual physical presence of the people to actually buy tickets and go to the theatres to watch the film. This as per the Master, created a “good arguable case” against the defendants. Further the court, while referring to para 30 of the claim of the plaintiff that the above named defendants are the producers of the film in question, reasonably implied that the defendants made the film in the expectation that the people would pay to watch it which in turn required that the film be shown in movie theatres.

The court further observed that Pixar by releasing the film in Ontario, to be shown in theatres, even though through another entity, was in substance offering it for sale to the movie-going public of Ontario, therefore creating a “good arguable case” against the above named two defendants.

Accordingly, the court held that Walt Disney Pictures Inc and Pixar by producing and releasing the film for distribution in Ontario movie theatres were basically carrying on business in Ontario.

The Master then went on to consider whether the claim in question is in respect of a tort committed in Ontario. Reaching to the affirmative conclusion, the court held that the claim is indeed in respect of a tort committed in Ontario as per Section 27(2) of the Copyright Act.
The Court then went on to consider whether there are any other connecting factors giving the court of Ontario jurisdiction and held that the claim is in respect of property in Ontario because of the claim of the plaintiff. However, the court rejected the argument of the plaintiff that the action was authorized by the statute, while holding that the Copyright Act does not apply to copyright infringement outside of Canada.

Analysis of this judgment

Coming to the applicable law in the present case, I would like to first discuss the main provisions of the law applicable to the present case under discussion.

Section 3(1) of the Copyright Act clearly defines what constitutes a copyright and gives an exhaustive list of ten points of what rights a copyright gives to its owner. Section 55 and 56 of the said act states the procedure for applying for copyright registration and states that copyright can be applied either by the owner of the copyright or by a person to whom the copyright has been assigned by the owner or by the author of the work or by a licensee of the work. Section 13(1), however, states that the author of a work shall be the first owner of the copyright therein, which gives the plaintiff Mr Pourshian the ownership of the copyright in his above named film. Further, the plaintiff also states in his claim that he didn’t have the opportunity to develop his film until the release of Disney’s INSIDE OUT, which I think is not a strong argument as he had 15 long years to do so.

Coming to the facts, by the arguments put forward by the parties and the evidence placed on record by the parties, it is clear that nowhere it is mentioned as to when and through whom the plaintiff legally and formally applied for the copyright registration for his work/idea. Secondly, the only evidence placed on record on his behalf is an affidavit that too is sworn by the law clerk of his lawyers’ office. Thirdly, he states that he didn’t have the opportunity to develop his film until the release of the defendant’s film.

The Master failed to consider the weak evidence placed on record and the arguments put forward by the plaintiff were also not so solid but following the principles of order, fairness and comity (in contrast to the principles of justice, equity and fair play followed in India), the Master gave good and logical reasons against the two defendants namely Pixar and Walt Disney Pictures Inc., though he could have followed the same in regard to other defendants also but failed to do so.

The appeal and the decision of the Superior Court

The Superior court of justice (hereinafter referred to as SCJ) while awarding damages, partly allowed the claim of the plaintiff holding that the claim stands good against six of the defendants and stayed the action against the other three defendants, namely Walt Disney Pictures Inc, American Broadcasting Company.

The SCJ while observing that the Master erred in applying his mind to the facts in the claim and the evidence placed on record and the arguments of the parties, held that the Master committed at least three legal errors. And then the court goes on to discuss the case and the evidence against each of the defendants in its judgment, which is discussed later on in the paragraphs below.

Firstly, the court observed that the Master held that the defendants Walt Disney Pictures Inc and PIXAR are liable as they carry on business in Ontario based on the statement of claim of the plaintiff, but the Master failed to analyze and give reasons as to what “carrying on business” means and its implications in the present case. Referring to para 87 of the Van Breda judgment of the Supreme Court of Canada relied on by the Master, the SCJ reiterated that, “…The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction…” [emphasis added].

The SCJ further observed that there is no mention in the statement of claim of the plaintiff that the above-named defendants had some form of actual presence in Ontario. The plaintiff relied on the judgment titled Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265 in support of his argument that the defendants carried on business in Ontario as they targeted customers there. In response to this, the SCJ observed and held that the said judgment mainly dealt with the scope of Google’s activities online, specifically in British Columbia. Google entered into various contracts with the residents of British Columbia and gathered information through its proprietary software in British Columbia. But in the present case under discussion, no such analysis similar to the one conducted in the Equustek Solutions case was conducted by the court nor did the Master have any regard to the ratio of the Van Breda case as discussed above regarding the necessity of the actual presence of the parties in a particular jurisdiction for the court to have authority over it.

Secondly, the Master’s court completely discarded the evidence placed on record by the parties in reaching its conclusions.

Thirdly, the Master rightly identified the “property” in Ontario as one of the connecting factors but did not specify or give any reasons as to which of the defendants the said factor applied to.

Defects/deficiencies in the pleadings pointed out by the defendants

The SCJ then goes on to observe the following defects in the pleadings of the plaintiff as pointed out by the defendants:

Plaintiff’s arguments rely on the allegations that the defendants “authorized” the copyright infringement but the said authorization is not properly pleaded in the claim by the plaintiff.
Even if properly pleaded, such allegations are impermissible as per law as the Copyright Act does not allow filing of claims based on the authorization of a secondary infringement.
Plaintiff relies on activities of some of the defendants in relation to merchandise and products with INSIDE OUT branding but on the other hand the statement of claim only alleges copyright infringement based on the production and distribution of the film INSIDE OUT, not branded merchandise.
Defendants have pointed out that at various places/instances, the plaintiff has not stated the correct and exact name of the corporate defendants.

In response to the above defects pointed out by the defendants, the SCJ observed while referring to the judgment of the Court of Appeal in Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353 at para 106 and reiterated that “It is not the proper role of the court in the context of a jurisdiction motion to analyze the finer points of the pleading to determine whether it discloses a cause of action for copyright infringement or whether the claim meets all necessary requirements for a claim for a claim for copyright infringement. So long as a statement advances the core elements of a cause of action known to law and appears capable of being amended to cure any pleadings deficiencies such that the claim will have at least some prospect of success, the issue for the motion judge is whether the claimant ass established a good arguable case that the cause of action is sufficiently connected to Ontario to permit an Ontario court to assume jurisdiction.”

Copyright infringement in Ontario

The plaintiff argued before the SCJ that the Van Breda judgment relied upon by the Master as stated above is of little assistance in the present case as the said judgment deals with a tort claim whereas the claim of the plaintiff is filed under the Copyright Act and he instead relied on the Supreme Court of Canada’s judgment in the case titled SOCAN v. Canadian Association of Internet Providers, 2004 SCC 45 which the Master as per the plaintiff failed to consider, and wherein the Court held that the country where the transmission originated and the country where the transmission was received of content may have jurisdiction to try the case and since the case of the plaintiff was that the film INSIDE OUT was received in Canada, the courts of Canada have jurisdiction to try the case. In their defence, the defendants counter-argued that the Master was correct in his judgment and that the SOCAN judgment had no application in the present case because the Copyright Act of Canada has no extra-territorial application.

Justice Favreau, speaking for the court (SCJ) held that both Van Breda and SOCAN cases have applicability to the present case as Copyright Infringement is essentially a statutory tort. Referring to the SOCAN case, the court pointed out paras 56-57 of the said judgment wherein it was held that “Canadian copyright law respects territorial distinctions, the applicability of the Copyright Act to foreign participants depends on whether there is sufficient connection between this country and the communication in question.” The court further refers to para 63 of the said judgment wherein the Court stated that Canadian Courts will generally have jurisdiction where Canada is the “country of transmission” or “the country of reception”

The plaintiff further relied on the court of Quebec’s judgment titled Robinson c. Films Cinar inc., 1997 CanLII 8974 (Q.C.C.S.) in support of his argument that the Ontario court has jurisdiction to try the case. The Judge observed that the Cinar case dealt with the copyright infringement by a German film-maker of a work of another person made in Quebec as his film was showcased in Quebec and it was held in that case that the foreign defendant permitted the film to be broadcast in Quebec and therefore copyright infringement arguably took place in Quebec.

The defendants in response mainly argued that the Copyright Act has no extra-territorial application which the Superior Court of Justice rejected as being over simplistic and observed that any activities which the defendants undertook outside Ontario that resulted in the communication of their film in Ontario are not protected simply because they took place outside Ontario and which was amply clear from the principles laid down in SOCAN.

Property in Ontario as presumptive connecting factor

The SCJ held that property in Ontario as a presumptive connecting factor connecting the claim and Ontario is a strong argument and reiterated the observation of the Court of Appeal of Ontario at para 21 of Knowles v. Lindstrom, 2014 ONCA that “While a tort may occur in more than one jurisdiction, real property is permanently located in only one jurisdiction. The location of the property clearly links any dispute over ownership to the courts of that jurisdiction.”

Referring to citations and arguments raised by the plaintiff in support of his claim, the SCJ held that since the plaintiff lives in Ontario, he created his film Inside Out in Ontario, the courts of Ontario have jurisdiction to try his claim.

Whether the plaintiff has established a good arguable case for jurisdiction over each defendant

The Superior Court of Justice considered in detail the evidence and the statement of claim against each of the defendants and whether the defendants have individually rebutted the same successfully:

Walt Disney Company

Action against this defendant was stayed by the Master and the Superior Court also upheld the same. Observations of the Superior Court against this defendant are as follows:

It is the parent company of all the other defendants.
No specific allegation against this defendant as to the making or distribution of the film INSIDE OUT.
Affidavit filed by Mr Salama on behalf of this defendant states that the correct name of the party is The Walt Disney Corporation and it further states that the said company never engaged in any business in Canada before and has no role in either creating or distributing the film in Canada or elsewhere and that it is the parent company of all the other defendants.

The Court held that being a parent company is not sufficient to establish the case against this defendant and that the claim was properly rebutted by this defendant by the evidence on record.

Walt Disney Pictures Inc.

Though the action was not stayed against this defendant by the Master, however, the Superior Court also arrived at the same conclusion but in a different and a more detailed manner.