Alberta Oil and Gas Clean Technology News: Expander Energy's FTCrude

A recent article in the Business Financial Post, The Energy Frontier: Expander’s Quest to turn Carbon into Cash, highlighted an impressive clean technology, the ability to convert refinery waste into synthetic diesel, invented by Expander Energy, Inc., a small Calgary start-up.

The new technology, referred to as FTCrude, cuts down carbon dioxide emissions and increases output by gasifying carbon-heavy refinery waste and blending it with natural gas. This process results in synthetic diesel, naphtha and other oil products. Expander Energy, Inc. secured a patent for partial and full heavy oil and bitumen upgrading and not surprisingly, they are seeking to obtain more.

Jim Ross, Expander Energy CEO, explains, “The real advantage of Expander is that you maximize all the carbon that is available in the system. The bottom line is a minimum 50% reduction in CO2, and we think we can see a reduction of as much as 80%.”

Expander Energy is currently engaged in contract negotiations with David Black’s proposed $16-billion oil refinery in Kitimat, British Columbia. If all goes well, a licensing agreement would enable FTCrude to process 400,000 to 500,000 barrels a day. The six-staff Calgary start-up will be well on their way to both entrepreneurial and environmental success.

The Alberta Oil Sands are the number one source of greenhouse gas emissions in Canada. Implementation of Energy Expander’s clean energy technology would assist Canada meet its international climate commitments under the Copenhagen Accord, which would also keep U.S. policy makers happy aka more business.

Expander Energy is discussing FTCrude with several oil companies. Paul Sharpe is a Registered Patent Agent representing Expander Energy and specializes in clean energy technologies. Paul can be reached at 613.567.0762 or psharpe@mbm.com.

Faulkner Estate loses copyright infringement suit over use of one line from Requiem for a Nun

In Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., the estate of William Faulkner sued Sony Pictures over use of a single line from Faulkner’s book, Requiem for a Nun, even though the character attributed the line to Faulkner in the scene of the film. The film in question was Midnight in Paris which was written and directed by Woody Allen. Chief Judge Michael P. Mills of the US District Court for the Northern District of Mississippi granted Sony’s motion to dismiss the suit for lack of a reasonable cause of action (roughly equivalent to a motion to strike in Canada).

At the heart of this case was the following sentence from Faulkner’s novel: “The past is never dead. It’s not even passed”. In Allen’s film, the protagonist Gil Pender says: “The past is not dead. Actually, it’s not even past. You know who said that? Faulkner, and he was right. I met him too. I ran into him at a dinner party.” As can be seen from this quote, the character actually attributes the slightly modified line to Faulkner in the movie itself. This was apparently insufficient for the Faulkner Estate who decided to sue Sony for copyright infringement and for some form of trademark/appropriation claim based loosely on the Lanham Act (the United States federal statute dealing with trade-marks and unfair competition).

Among the issues the Court was tasked with deciding was the question of de minimis copying. The Latin maxim de minimis non curat lex stands for the proposition that the law does not concern itself with the very minor or insignificant. This doctrine has been accepted as applicable in the copyright context in both the Unites States and Canada.

Given the Fifth Circuits thin case law on the matter of de minimis copying, the Court chose to examine the question under the ambit of the fair use analysis- which Sony put forward as an affirmative defense to the claim. The third factor in the fair use analysis is: “the amount and substantiality of the portion used in relation to the copyrighted work as a whole”. This factor mirrors the “substantiality test” used by several US jurisdictions to determine if there was a copyright infringement in the first place.

Originating in the 2nd Circuit, the substantiality test was first applied in Marks v. Leo Feist, Inc. In that case, the Court wrote that: “To constitute an infringement of the [Plaintiff’s] composition, it would be necessary to find a substantial copying of a substantial and material part of it.” This test derives from the equitable doctrine of substantiality. Historically, a plaintiff would not succeed in their claim at equity if the injury suffered was not deemed substantial enough for the law to take an interest.

The Plaintiff argued that since the test for substantial similarity is a qualitative and not quantitative analysis, the two sentence quote is enough to constitute copyright infringement in theory. They further claimed that the quote in question described “the essence of Requiem”. The Court did not find this argument persuasive. Even if the quote encapsulated the theme of the book, it is the expression- i.e. the text itself- that is protected by copyright law. The argument failed because of the idea-expression dichotomy at the heart of copyright law. Expressions are protectable; ideas are not.

The Plaintiff’s claim based on the Lanham Act was sketchy at best, referring to state tort law by analogy to make its point. The Court rejected this argument out of hand, writing that the Plaintiff was unsuccessful in clearly laying out the law upon which its complaint relied. In a nutshell, the Plaintiff argued that use of the line in the movie would cause confusion as to its origin. They argued further that use of the line without permission amounted to a misappropriation of Faulkner’s identity. Though the Court declined to deal fully with this argument because of the way it was brought, Chief Judge Mills noted in passing that Sony’s 1st amendment right must trump the Plaintiff’s claim under the Lanham Act.

All in all this decision was unsurprising. While the Plaintiff was correct in asserting that the relevant measure for determining what constitutes a substantial part of a copyright protected work is quality and not quantity, its arguments were patently absurd in the context. To purport that nine words out of a 240 page novel constitutes the qualitative heart of the work is a serious stretch. Even if they were able to make this argument convincingly, this is still a cut and dried instance of fair dealing. Woody Allen used the line in a novel and transformative way that in no way affects the commercial value of the source work.

By James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com

Author Resale rights in Canadian Copyright Law

On May 29th, Liberal MP Scott Simms (Bonavista—Gander—Grand Falls—Windsor) introduced a private members bill, bill c-516, that proposes to modify the Copyright Act to create an “artist resale right” for authors of copyright protected works.

The resale rights (also known as a “droit de suite”) would allow an author to be remunerated not only for the first purchase of a copy of their work, but for every subsequent resale of that work. The droit du suite came about at the end of the 19th century in France as a response to a case in which the owner of a painting sold it for a hefty sum while the artist who painted it lived in poverty.

The droit de suite is a theory that runs directly counter to the “first sale doctrine”. This Common Law doctrine dictates that a copyright owner’s right to remuneration is extinguished after the first sale of a copy of a protected work. The first sale doctrine comes from the Common Law principle that restraint on the alienation of tangible property is to be avoided. The doctrine was first cited by the US Supreme Court in Bobbs-Merrill Co. v. Straus (1908) and was later codified in the American Copyright Act of 1909.

Today, the European Union, Australia and the Philippines have resale rights legislation. The State of California also had a resale right law on the books until it was struck down by the U.S. District Court (Central District of California) on May 17, 2012. Judge Jacqueline H. Nguyen found the law to be unconstitutional because it encroached on the Federal power over interstate commerce. This decision is currently being appealed to the 9th Circuit Court of Appeal.

The bill is presently in its first reading before Parliament. It proposes to grant authors the right to capture a 5% royalty in any subsequent sales of a work where the value of the transaction is $500 or more. This resale right is not limited to the first subsequent sale, but to all subsequent sales of the work while the work remains in copyright. The resale right may not be waived by the author and is not transferable. The onus is on the seller of the work to report and pay out the royalty. The bill mandates that royalty collection be carried out by a collective licensing society.

One interesting feature of the bill is that its provisions only apply to:  

• Authors who were Canadian citizens or residents at the time of the sale; and
• Authors in other countries that offer similar resale rights to Canadian authors in their home jurisdictions (namely the EU as mentioned above). 

Though the resale right is not transferable inter vivos, the right is transmissible upon the death of the author. The right passes to the person to whom it was expressly bequeathed; or, failing that, the person to whom the copyright in the work has been bequeathed.

While the chances of this legislation passing are slim, this initiative represents a potential shift in Canadian copyright policy towards the EU. This proposed change to the Copyright Act is more than likely related to the ongoing negotiations taking place between Canada and the EU on the “Canada-EU Trade Agreement” (CETA) in which the EU is putting pressure on Canada to once again amend its intellectual property laws to come into line with their own.

Though this iteration of the resale right may not pass, interested parties should keep watch as the negotiations over CETA progress. It is quite possible that a similar amendment may be introduced in the near future; though next time, it may come from the government’s side of the aisle.

By: James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com

New development in Google Books saga: Google will get its chance to argue fair use

The latest salvo in the Google Books saga promises to be a big one. On July 1, the United States 2nd Circuit Court of Appeals issued an order decertifying the plaintiff class, the Authors Guild et al. The Court found that District Judge Denny Chin’s June 11, 2012 order certifying the plaintiff class was made in error.

In 2004, Google undertook its massive “Library Project”. Google, in cooperation with a number of libraries, began scanning, digitizing and indexing millions of books. At the time my last post on this case was published, the total number of books digitized was estimated at 15 million. The 2nd Circuit’s decision puts that number at 20 million today. A group of plaintiffs- eventually settled into a class headed up by the Authors Guild- instituted a copyright infringement action.

The 2nd Circuit found Judge Chin’s class certification to be premature in light of Google’s fair use argument on the merits. The Court wrote that allowing the statutory fair use defense to be affirmatively argued may render some or all of the issues moot, thereby eliminating the need for the costly, complex class action to go forward.

Notable authority on the Google Books saga Professor James Grimmelmann has opined that the wording of the 2nd Circuit’s ruling, though not directly dealing with the fair use argument, suggested that the argument would be compelling. Grimmelmann explains that the normal procedure when the certification of the plaintiff class is itself (in whole or in part) contingent on the merits, the court will usually consider the merits only insofar as they aid in determining if the plaintiff class is appropriate. In this decision however, the 2nd Circuit gave express instructions in its remand to the District Court to consider the fair use issue specifically and to its end.

Professor Grimmelmann wrote that this unorthodox, if not pragmatic order may not only be a signal that the 2nd Circuit finds Google’s fair use argument to be meritorious; they may believe it to have a fair chance of success.

I’ve read a couple interesting breakdowns of Google’s fair use argument and while not all the case law is neatly on their side, the argument is tenable and persuasive; but that’s another post.


By: James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com