Nearly two years ago, I wrote that the Federal Court had issued a major decision on the relationship between fair dealing and digital locks, concluding that copyright’s anti-circumvention rules do not trump user rights (podcast on the case here). That decision, Blacklock’s Reporter v. Attorney General of Canada, was a big win for user rights because, for the first time, a court ruled that Canada’s anti-circumvention rules (aka digital lock rules) were subject to fair dealing. Last month, the Federal Court of Appeal set aside that judgment, ruling that the declarations in the lower court decision should never have been issued in the first place because they lacked “practical utility.” In basic terms, the case was “moot” since Blacklock’s had tried to withdraw the lawsuit and did not require a ruling. But while rights holders seem ready to celebrate, the reality is that the new ruling does not say the Federal Court was wrong on any of the substantive copyright questions.
The case arises from years of litigation between Blacklock’s Reporter, a paywalled news service based in Ottawa, and the Canadian government. Blacklock’s had launched a series of lawsuits against various government departments, arguing that some of its articles were distributed within departments beyond the limits of its licences. The Federal Court ruled against it in 2016, concluding that fair dealing applied to two articles sent to department officials by a non-government paying subscriber and then shared among several media personnel in the department.
The company continued to press ahead with other cases, with the latest decision involving 15 articles that were distributed to media personnel at Parks Canada. The department had an individual subscription to the service, but Blacklock’s argued that allowing anyone other than the original subscriber to access articles constituted copyright infringement. The court found that Blacklock’s legal language associated with its licensing was confusing and that fair dealing applied here as well. The Federal Court of Appeal set aside that ruling on entirely procedural grounds, applying the Supreme Court of Canada’s test from Daniels v. Canada, which holds that a declaration can only be granted if it will have “practical utility” by settling a “live controversy” between the parties. This case did not meet that standard because Blacklock’s had sought to discontinue it.
In other words, the party now claiming victory is the one that started this legal fight and tried abandon it when challenged by the government. Indeed, years into the litigation, the government anticipated that Blacklock’s might try to stop the case and seek discontinuance. So it moved first by counterclaiming and asking the court to issue ten declarations. The next day, Blacklock’s did in fact discontinue its action. The one-day gap between the government’s move and discontinuance proved crucial as Associate Judge Molgat ruled in April 2021 that because the counterclaim had been served before the discontinuance was filed, it survived. Blacklock’s was then forced to defend declarations arising from a lawsuit it had tried to walk away from. When the Federal Court ultimately ruled in June 2024, it rejected Blacklock’s substantive arguments: the licensing language was confusing, fair dealing applied, the TPM provisions and fair dealing must coexist, and using a validly obtained password does not constitute circumvention.
The Federal Court of Appeal has now vacated those declarations, but it has not disturbed a word of the Federal Court’s underlying reasoning. At best, the decision puts Blacklock’s back to where it was before it launched the Parks Canada case. But the argument that it is actually worse off is hard to dismiss. The Federal Court’s detailed reasoning on fair dealing, passwords, and TPMs remains on the record as the most thorough judicial treatment of these questions in Canadian copyright law. If any of the other pending Blacklock’s cases against government departments proceed to trial on similar facts, that reasoning will provide a detailed roadmap for the government’s defence. None of that existed before Blacklock’s started this litigation.
The decision has generated a notable split in the commentary, revealing just how differently the same procedural outcome can be read depending on where you sit on the copyright balance. CIPPIC, the University of Ottawa public interest clinic that intervened in the case, frames the outcome as “reversed on other grounds” and emphasizes that the Federal Court’s digital lock analysis was “left standing.” On CIPPIC’s reading, the Federal Court of Appeal did not endorse or reject the trial court’s reasoning on fair dealing and TPMs. Howard Knopf similarly characterized the outcome as a “pyrrhic victory” for Blacklock’s, and Tamara Winegust of Smart & Biggar observed that future courts may still rely on the underlying reasoning to reach similar conclusions.
On the other side, Hugh Stephens declared this a “real and substantive” victory for rights holders, arguing that the declarations have been “nullified” rather than merely set aside on procedural grounds. Kevin Siu of Anand & Siu offered a practitioner’s analysis, suggesting that the appeals court appeared skeptical of the Federal Court’s findings, reading the Court’s disclaimer at paragraph 42 that nothing should be interpreted as endorsing or criticizing the trial judge’s comments on the paywall as a signal of doubt rather than neutrality.
That strikes me as an odd conclusion. The disclaimer is the kind of thing appellate courts write when they want to preserve a question for future adjudication rather than resolve it in passing. It is a signal of restraint, not skepticism. Indeed, the Court went out of its way to avoid saying anything about the merits, which is precisely what you would expect from a panel that concluded the declarations should not have been issued in the first place. Reading skepticism into that restraint requires inferring a view the Court chose not to express. What is clear is that the appeals court did not find the Federal Court’s copyright reasoning to be wrong, but rather found the declarations to be procedurally unwarranted.
The irony of this outcome is hard to miss. Blacklock’s discontinued its own infringement action, which created the very mootness that ultimately allowed it to get the declarations tossed on appeal. But the victory is hollow given that the substantive analysis that Blacklock’s fought so hard to overturn was never actually addressed by the appellate court and remains a valuable judicial statement on the relationship between fair dealing and digital locks in Canadian law, even without a declaration to anchor it.
