The Robinson Case: The Final Chapter

January 1, 2014

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Last December 23, the Supreme Court of Canada partially overturned the decision of the Quebec Court of Appeal in the case of Cinar Corporation v. Robinson¹ and reinstated most of the conclusions of the Quebec Superior Court.

BACKGROUND
In the 1980s, Claude Robinson (“Robinson”) developed a project for a television series entitled “The Adventures of Robinson Curiosity” (“Robinson Curiosity”). He partnered with Pathonic to whom he had presented his project. His copyright was registered shortly afterward and Productions Nilem Inc. (“Nilem”), of which he was the sole shareholder, was named owner of the copyright. In 1986, Pathonic partnered with Cinar so that Cinar could represent Pathonic’s interests in the United States. Cinar’s directors, Micheline Charest and Ronald Weinberg, were provided with a copy of all of the documents for the Robinson Curiosity project. However, the project never saw the light of day.

In parallel with Robinson’s activities, during the 1990s, a producer with France Animation, Christophe Izard, presented a project for a televised series whose main character was named Robinson Sucroë (“Sucroë”). Cinar was involved as early as 1992 in the production of this project, and, as of 1993, in the writing and co-script writing under contracts with France Animation.

Robinson continued his work on his Curiosity project during 1994. In August 1995, Cinar registered copyright to the Sucroë project which was first broadcast in September 1995. Robinson immediately noticed similarities between the Sucroë project and his Curiosity project.

In July 1996, Robinson and Nilem Inc. brought an action for damages and an injunction against Cinar, Charest, Weinberg, France Animation, Izard and other European partners, including Ravensburger and the BBC, alleging plagiarism of their work.

DECISION OF THE SUPERIOR COURT OF QUÉBEC
After 83 days of trial, Justice Claude Auclair concluded that the defendants had had access to the Robinson Curiosity project and work during the 1980s.

The judge found that even though the Robinson Curiosity work had not been completed, it was nevertheless an original work because it was sufficiently developed and advanced. There were many similarities between the characters and drawings of Sucroë and the original Robinson Curiosity project, despite some misleading changes. According to the Court, a layperson would have been convinced of the similarity, which gave rise to a presumption of infringement that was not rebutted by the defendants.

The Court found the defendants solidarily liable and that Cinar and its two directors, Charest and Weinberg, had violated their obligations of good faith and loyalty. Therefore, Charest and Weinberg could not hide behind the corporate veil to escape their liability.

The injunctions issued applied against the BBC preventing it from broadcating Sucroë. The Court also ordered that the copies be returned, followed by their destruction within 60 days.

As for the damages, Justice Auclair ordered the defendants to pay a total of $5,224,293, detailed as follows:

$607,489 in compensatory damages for pecuniary loss;
$1,716,804 in loss of profits (50% of the profits earned by the Sucroë project, given the plaintiffs’ partnership with Pathonic);
$400,000 for the psychological harm suffered by Robinson;
$1,000,000 in punitive damages;
$1,500,000 for costs on a solicitor-client basis, since the defendants tried to exhaust the plaintiffs in their conduct of the proceeding.

COURT OF APPEAL’S DECISION
The Court of Appeal allowed the appeal in part. It upheld the trial judge’s decision on the infringement of Robinson’s work, finding that there was no error in the trial judge’s reasoning. The Court also affirmed the liability of Cinar and of Weinberg, both personally and in his capacity as liquidator of the estate of the deceased, Micheline Charest as well as of Izard.

However, the Court of Appeal reduced the damage award to a total of $2,736,416. As for the loss of profits, the Court set aside the awards against Weinberg and Izard because only Cinar and France Animation benefited from the use of the Sucroë work. The Court also set aside the award of $1,117,252 relating to the musical rights, based on the finding that the Robinson Sucroë musical work was original and dissociable from the Curiosity project. According to the judgment, there was therefore no violation of Robinson’s copyright in this respect.

Finally, according to the Court of Appeal, the psychological harm suffered by Robinson was a bodily injury of a non-pecuniary nature for which compensation was limited by the cap set by the Supreme Court of Canada.² Since the present value of this cap was $242,700, the Court awarded 50% of this amount, or $121,350, in light of the circumstances and the seriousness of the psychological harm.

The Court of Appeal also reduced the amounts awarded in punitive damages and assessed them individually at $100,000 for Cinar and $50,000 each for Weinberg, Charest and Izard. It further declared that these awards were not solidary.

As for costs, the Court of Appeal upheld the trial judge’s decision, but did not allow the solicitor-client costs incurred in the appeal proceedings.

THE SUPREME COURT’S DECISION
In a unanimous judgment the reasons of which were written by Chief Justice McLachlin, the Supreme Court upheld the judgment of the Court of Appeal on the issue of the defendants’ liability. It stated that one must determine the cumulative effect of the copied features of the Curiosity project in deciding whether they amount to a substantial part of Robinson’s skill and judgment expressed in his work as a whole. To determine whether a substantial part has been copied, one must conduct a qualitative and holistic assessment of the similarities between the works, taking into account the relevant resemblances and differences. In the absence of a palpable and overriding error in both the trial judge’s and Court of Appeal’s assessment of the facts, the Supreme Court refused to intervene and affirmed the defendants’ liability.

On the assessment of damages, the Court noted that the Court of Appeal could not intervene unless there was a palpable and overriding error in fact by the trial judge and reassessed each head of damages. It set the amount to which Robinson and Nilem was entitled at $4,379,293. With respect to the loss of profits, the Supreme Court found that the trial judge had committed no error in allowing the amount for the soundtrack to the work on the basis that it was indissociable from the work itself, and reinstated the holding of the trial judgment on this point. However, it found that this award must not be solidary since its aim was the disgorgement of the profits illegally obtained by each of the defendants personally. Accordingly, Charest, Weinberg and Izard were not personally bound to disgorge the profits since they did not benefit therefrom.

As regards the non-pecuniary damages, the Supreme Court held that the application of the cap on claims should not be extended beyond those stemming from bodily injury. In this case, the non-pecuniary damages suffered by Robinson did not stem from a bodily injury. It should rather be characterized as psychological suffering stemming from material injury, i.e. the infringement of his copyright which is equivalent to a breach of his property rights. The Court reinstated the trial judgment and confirmed that Robinson was entitled to the amount of $400,000 under this head.

The Court also confirmed that punitive damages cannot be awarded on a solidary basis. However, it found that, while the Court of Appeal was correct in reassessing the amount thereof, it did not give sufficient weight to the gravity of the defendants’ conduct. In the Court’s view, the amount of $500,000 achieved an appropriate balance between the overarching principle of restraint that governs the awarding of such damages and the need to deter conduct of such gravity. It apportioned the liability for these damages, awarding $200,000 against Cinar and $100,000 against each of Weinberg, Charest and Izard.

COMMENTS
This decision finally brings to a close this dispute between the parties which has lasted nearly 18 years, and largely upholds the trial judge’s analysis of the case.

The judgment will certainly have a significant impact on subsequent case law not only on copyright, but also on other areas of the law, particularly the characterization of psychological damages based on their source and the refusal to apply the cap on non-pecuniary damages for psychological harm stemming from material prejudice. The judgment will also guide the courts in the awarding of punitive and exemplary damages and on the principles of solidarity applicable thereto.
_________________________________________
¹ 2013 SCC 73.
²According to the trilogy of cases, i.e. Andrews v. Grand & Toy Alberta Ltd. [1978] 2 S.C.R. 229, Thornton v. Board of School Trustees of School District No. 57 [1978] 2 S.C.R. 267, and Arnold v. Teno [1978] 2 S.C.R. 287, which set this cap at $100,000 in 1978.

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Jonathan Lacoste-Jobin
Partner, Lawyer

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July 9, 2024

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Although in his testimony at trial,5 he claimed not to know that this information could have had an impact on the insurer’s decision, Justice Germain did not side with this version. For Justice Germain, the evidence presented by the insurer demonstrated that it had been Paul-Hus’s intention to deceive Sun Life. This being said, in accordance with the requirements of article 2408 C.C.Q., Sun Life had to demonstrate not only that it would not have covered this risk had it been aware of the new information resulting from the claim, based on its own underwriting standards, but that any reasonable insurer would have refused to issue the serious illness insurance policy under the circumstances. Sun Life also discharged this burden and completed this “evidence of materiality” by presenting the testimony of an underwriting expert. Finally, and in addition to the above, Paul-Hus claimed that he had been diagnosed with amyotrophic lateral sclerosis (ALS), which he was unable to support with evidence. Under cross-examination, Paul-Hus admitted that he had never received any such diagnosis. Instead, he suffered from a lower motoneuron disease, which did not qualify as a “serious illness” under the policy. In conclusion, in the Court’s opinion, the policyholder knowingly misled the insurer and falsified his risk assessment in order to obtain coverage. Moreover, given that Paul-Hus was not insurable for serious illness coverage in the eyes of a reasonable insurer, the Court concluded that the contract should be nullified ab initio and terminated. This decision reminds us of how important it is for policyholders to answer insurers’ questionnaires honestly when making their initial declaration of risk : [TRANSLATION] [55] In the Court’s opinion, Paul-Hus failed to answer the questionnaire sincerely. He did not act as would have a reasonable insured. He was aware of the importance of giving honest answers to the questions asked during the telephone interview. An insurance contract is one requiring the utmost good faith, particularly as far as the assessment of risk is concerned. It is of interest that in this matter, Paul-Hus gave his testimony at the hearing by way of videoconference, which Justice Germain comments as follows: [TRANSLATION] [49] One notes that, while giving his testimony via videoconference at the hearing, Paul-Hus referred to a document, which would be obtained and filed by Sun Life. The document is Sun Life’s letter of refusal of December 28, 2018, which he annotated with the words “good faith” and “answered no in all good faith I was not awaiting anything no results”. It seems odd, to say the least, that he should make the effort to write down these words as a reminder and should feel the need to repeat them several times during his testimony and when cross-examined. [50] However, it is not enough to repeat that one acted in good faith to justify such omissions. Paul-Hus appealed Justice Germain’s decision. Sun Life filed a Motion to Dismiss the appeal, which was dismissed on January 15th, 20246. We will therefore have to wait and see what happens before the Court of appeal. To sum up… Insurance contracts are essentially characterized by the risks they cover and by what risks the insurer is willing to tolerate for a given premium. The Civil Code of Québec recognizes two specific instances in which the actual declaration of risk is fundamental: the initial declaration of risk before the contract is drawn up7 and any increase in the risk level during the term of the contract.8 The declaration of risk is essential to the insurer when it comes to accurately determining the extent of the risk and the premium that will be charged if the insurer agrees to provide coverage. As a general rule, the policyholder’s utmost good faith should be in evidence during the initial declaration stage given that this declaration paves the way for the prospective contractual relationship and its various terms and conditions. A policyholder will be deemed to have properly met their obligation “if the representations are such as a normally provident insured would make, if they were made without material concealment and if the facts are substantially as represented.”9 Since Policyholders are responsible for informing the insurer about any relevant factors that might change its risk assessment, i.e., a positive disclosure requirement, it stands to reason that the Civil Code sets out consequences in the event that this requirement is not fulfilled by the policyholder. A policyholder who makes false statements can therefore see his insurance contract nullified ab initio.10 In other words, the contract would be deemed to have never existed because the basis on which it rests, the initial declaration of risk, was flawed. It should also be noted that nullification will only be relative and that the insurer may elect not to assert it. Consequently, the Court, after having heard the evidence, cannot rule ex officio that the contract is null and void. The insurer has two (2) years after the effective date of the contract to request nullification ab initio based on false statements or unwillingness to fully disclose risk.11 Set against that backdrop, the insurer’s burden of proof amounts to demonstrating that the policyholder made false statements or concealed relevant facts. Insurance fraud Once the two (2) year window of opportunity has closed, the insurer faces an additional burden of proof: it must also demonstrate that the policyholder committed fraud.12 Fraud is distinguished from false declarations or concealment. Among other things, it results from the misrepresentation or omission of a fact in the knowledge that, if the truth were disclosed, the insurer would not issue the policy under the negotiated conditions. Therefore, the policyholder must have intentionally deceived the insurer in order to obtain an advantage that would not have otherwise been obtained. Insurers, therefore, have a heavy burden of proof if the two-year threshold has been crossed. This is because fraud cannot be presumed; it must be established on the balance of probabilities. Burden of proof Whether or not the two (2) year period is still running, the insurer must (1) demonstrate that it would not have entered into the contract based on its own underwriting criteria; and (2) that a reasonable insurer in the same circumstances (i.e., dealing with false declarations, concealment or fraud) would have also declined to issue coverage.13 To recap, before the expiry of the two (2) year period, insurers seeking a contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. After the expiry of the two (2) year period following the effective date of the policy, insurers requesting the contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk AND intended to deceive the insurer. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. Judgment handed down on October 3, 2023; the hearing was held on May 25 and 26, 2023. 2023 QCCS 3890; this ruling was appealed from (200-09-010693-239). A motion to dismiss the appeal was filed by the insurer and arguments were heard on January 15, 2024. That same day, the Court of Appeal dismissed the insurer’s motion to dismiss the appeal. The matter therefore continues before the Court of Appeal. Art. 2410 C.C.Q. Art. 2424 C.C.Q. Via videoconference. Paul-Hus v. Sun Life Canada, compagnie d'assurance-vie, 2024 QCCA 46 Arts. 2408 and 2409 C.C.Q. Arts. 2466 et seq. C.C.Q. Art. 2409 C.C.Q. If the false statement deals exclusively with the policyholder’s age, the contract cannot be declared null and void (art. 2410 C.C.Q.) unless the policyholder’s actual age is outside the insurable range established by the insurer (art. 2411 C.C.Q.). Art. 2424 C.C.Q. Civil Code, art. 2424, para. 1 C.C.Q. CGU compagnie d’assurance du Canada v. Paul, 2005 QCCA 315, para. 2 and art. 2408 C.C.Q.

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October 19, 2023

Smart product liability: issues and challenges

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Interconnectivity capabilities, meaning that they can collect and analyze data from their surroundings. Autonomy capabilities, meaning that they can adapt their behaviour to perform an assigned task more efficiently (optional criterion).2 These capabilities are specific to what is commonly referred to as artificial intelligence (hereinafter referred to as “AI”). Applying general law rules of liability to smart products Although Canada prides itself on being a “world leader in the field of artificial intelligence,”3 it has yet to enact its first AI law. The regulation of smart products in Quebec is still in its infancy. To this day, apart from the regulatory framework that applies to autonomous vehicles, there is no legislation in force that provides for distinct civil liability rules governing disputes relating to the marketing and use of smart products. There are two factors that have a major impact on the liability that applies to smart products, namely transparency and apportionment of liability, and both should be considered in developing a regulatory framework for AI.4 But where does human accountability come in? Lack of transparency in AI and product liability When an autonomous product performs a task, it is not always possible for either the consumer or the manufacturer to know how the algorithm processed the information behind that task. This is what researchers refer to as “lack of transparency” or the “black box” problem associated with AI.5 The legislative framework governing product liability is set out in the Civil Code of Québec6 and the Consumer Protection Act.7 The provisions therein require distributors, professional sellers and manufacturers to guarantee that the products sold are free from latent defects. Under the rules governing product liability, the burden of proof is reversed, as manufacturers are presumed to have knowledge of any defects.8 Manufacturers have two means to absolve themselves from liability:9 A manufacturer may claim that a given defect is the result of superior force or a fault on the part of the consumer or a third party; or A manufacturer may argue that, at the time that the product was brought to market, the existence of the defect could not have been known given the state of scientific knowledge. This last means is specifically aimed at the risks inherent to technological innovation.10 That being said, although certain risks only become apparent after a product is brought to market, manufacturers have an ongoing duty to inform, and how this is applied depends on the evolution of knowledge about the risks associated with the product.11 As such, the lack of transparency in AI can make it difficult to assign liability. Challenges in apportioning liability and human accountability There are cases where the “smart” component is integrated into a product by one of the manufacturer’s subcontractors.In Venmar Ventilation,12 the Court of Appeal ruled that the manufacturer of an air exchanger could not be exempted from liability even though the defect in its product was directly related to a defect in the motor manufactured by a subcontractor. In this context, it would be reasonable to expect that products’ smart component would be likely to result many similar calls in warranty, resulting in highly complex litigation cases, which could further complicate the apportionment of liability. Moreover, while determining the identity of the person who has physical custody of a smart product seems obvious, determining the identity of the person who exercises actual control over it can be much more difficult, as custody and control do not necessarily belong to the same “person.” There are two types of custodians of smart products: The person who has the power of control, direction and supervision over a product at the time of its use (frontend custody); The person who holds these powers over the algorithm that gives the product its autonomy (backend custody)13. Either one of these custodians could be held liable should it contribute to the harm through its own fault. As such, apportioning liability between the human user and the custodians of the AI algorithm could be difficult. In the case of a chatbot, for example, determining whether the human user or the AI algorithm is responsible for defamatory or discriminatory comments may prove complex. C-27: canadian bill on artificial intelligence Canada’s first AI bill (“Bill C-27”) was introduced in the House of Commons on June 16, 2022.14 At the time of publication, the Standing Committee on Industry and Technology was still reviewing Bill C-27. Part 3 of Bill C-27 enacts the Artificial Intelligence and Data Act. If adopted in its current form, the Act would apply to “high-impact AI systems” (“Systems”) used in the course of international and interprovincial trade.15 Although the government has not yet clearly defined the characteristics that distinguish high-impact AI from other forms of AI, for now, the Canadian government refers in particular to “Systems that can influence human behaviour at scale” and “Systems critical to health and safety.”16 We have reason to believe that this type of AI is what poses a high risk to users’ fundamental rights. In particular, Bill C-27 would make it possible to prohibit the conduct of a person who “makes available” a System that is likely to cause “serious harm” or “substantial damage.”17 Although the Bill does not specifically address civil liability, the broad principles it sets out reflect the best practices that apply to such technology. These best practices can provide manufacturers of AI technology with insight into how a prudent and diligent manufacturer would behave in similar circumstances. The Bill’s six main principles are set out in the list below.18 Transparency: Providing the public with information about mitigation measures, the intended use of the Systems and the “content that it is intended to generate”. Oversight: Providing Systems over which human oversight can be exercised. Fairness and equity: Bringing to market Systems that can limit the potential for discriminatory outcomes. Safety: Proactively assessing Systems to prevent “reasonably foreseeable” harm. Accountability: Putting governance measures in place to ensure compliance with legal obligations applicable to Systems. Robustness: Ensuring that Systems operate as intended. To this, we add the principle of risk mitigation, considering the legal obligation to “mitigate” the risks associated with the use of Systems.19 Conclusion Each year, the Tortoise Global AI Index ranks countries according to their breakthroughs in AI.20 This year, Canada ranked fifth, ahead of many European Union countries. That being said, current legislation clearly does not yet reflect the increasing prominence of this sector in our country. Although Bill C-27 does provide guidelines for best practices in developing smart products, it will be interesting to see how they will be applied when civil liability issues arise. Jean-Louis Baudouin, Patrice Deslauriers and Benoît Moore, La responsabilité civile, Volume 1: Principes généraux, 9th edition, 2020, 1-931. Tara Qian Sun, Rony Medaglia, “Mapping the challenges of Artificial Intelligence in the public sector: Evidence from public healthcare”, Government Information Quarterly, 2019, 36(2), pp. 368–383, online EUROPEAN PARLIAMENT, Civil Law Rules on Robotics, European Parliament resolution of 16 February 2017 with recommendations to the Commission on Civil Law Rules on Robotics (2015/2103(INL)), available online at TA (europa.eu). GOVERNMENT OF CANADA, The Artificial Intelligence and Data Act (AIDA) – Companion document, online. EUROPEAN COMMISSION, White Paper on Artificial Intelligence: a European approach to excellence and trust, COM. (2020), p. 3. Madalina Busuioc, “Accountable Artificial Intelligence: Holding Algorithms to Account”, Public Administration Review2020, online. Civil Code of Québec (CQLR, c. C-1991, art. 1726 et seq. Consumer Protection Act, CQLR c. P-40.1, s. 38. General Motors Products of Canada v. Kravitz, 1979 CanLII 22 (SCC), p. 801. See also: Brousseau c. Laboratoires Abbott limitée, 2019 QCCA 801, para. 89. Civil Code of Québec (CQLR, c. CCQ-1991, art. 1473; ABB Inc. v. Domtar Inc., 2007 SCC 50, para. 72. Brousseau, para. 100. Brousseau, para. 102. Desjardins Assurances générales inc. c. Venmar Ventilation inc., 2016 QCCA 1911, para. 19 et seq. Céline Mangematin, Droit de la responsabilité civile et l’intelligence artificielle, https://books.openedition.org/putc/15487?lang=fr#ftn24; See also Hélène Christodoulou, La responsabilité civile extracontractuelle à l’épreuve de l’intelligence artificielle, p. 4. Bill C-27, An Act to enact the Consumer Privacy Protection Act, the Personal Information and Data Protection Tribunal Act and the Artificial Intelligence and Data Act and to make consequential and related amendments to other Acts, Minister of Innovation, Science and Industry. Bill C-27, summary and s. 5(1). The Artificial Intelligence and Data Act (AIDA) – Companion document, Government of Canada, online. The Artificial Intelligence and Data Act (AIDA) – Companion document canada.ca. Bill C-27, s. 39(a). AIDA, Companion document Bill C-27, s. 8. TORTOISE MEDIA, The Global AI Index 2023, available at tortoisemedia.com.

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