Written By Martin P.J. Kratz, QC
The seismic industry is of considerable significance to Canada's oil and gas business. In Geophysical Service Incorporated v Encana Corporation, 2016 ABQB 230 the Alberta Court of Queen's Bench had an opportunity to assess both claims to copyright in seismic data and the power of certain regulatory boards to release copies of such data to the public.
The Court of Queen's Bench found seismic data was protectable under copyright law but also found that the conduct of the applicable boards under the legislative schemes authorized their conduct and legitimized their dealing with the copyright works. The decision pertaining to the Regulatory Regime was subsequently appealed to the Alberta Court of Appeal, Geophysical Service Incorporated v EnCana Corporation, 2017 ABCA 125. The appeal by GSI to the Supreme Court was denied so the Alberta Court of Appeal decision is the final word on these points.
The detailed analysis of both the copyright aspect of the Queen's Bench decision and the Appeal Court's decision regarding the Regulatory Regime should be of interest to the oil and gas industry.
Introduction to Seismic
Seismic exploration works, in simplified terms, by the creation of seismic waves through the earth's surface and assessing how those waves engage various geological formations. Very sophisticated technology has been developed in order to seek to extract more meaningful data from seismic analysis. The term seismic data is not sufficiently nuanced to cover the different types of data generated in this industry. A preliminary and simplified analysis is that, at a first level, certain raw data is collected in response to the seismic waves moving through a geological formation. A second level of analysis is to consider the data as it is processed by sophisticated techniques and technology after being collected. As well, considerable data is generated identifying locations of seismic events, map and navigation data and interpretive comments on seismic results. Very sophisticated tools are used to visualize geologic formations in two or three dimensions.
The challenge for the Court was to consider this factual setting in the context of Canada's copyright law.
Introduction to the Boards
In order to promote exploration especially in Canada's Arctic and offshore regions a number of boards have been set up under legislation, including the National Energy Board, the Canada Newfoundland and Labrador Offshore Petroleum Board and the Canada Nova Scotia Offshore Petroleum Board (the boards). The boards grant licences to those who conduct seismic operations and require a deposit of the seismic data as a condition of the licence. The deposit arrangements provided the seismic operators with a confidentiality period after which copies of the seismic data are made available to the public by the boards.
The issue in this case was to assess that regime in the context of a copyright claim by an active seismic operator, Geophysical Services Incorporated (GSI).
The Action and Common Issues
GSI is a Canadian company that conducted offshore marine seismic surveys in the Canadian Atlantic and Arctic and grants licences of the seismic data to oil and gas companies mainly for exploration purposes. GSI brought 25 actions against the various boards and numerous oil and gas exploration companies, rival seismic companies and others. The actions were brought together in this case to address two common issues:
- Is there a copyright in the seismic data?
- What is the effect of the legislative regimes on the copyright infringement claim?
The position of the plaintiff is that it has a copyright in the seismic data and that the conduct of the defendants infringed that copyright.
The defendant's position is that GSI does not have a copyright in the materials deposited with the boards or at all. They also argued that to conduct seismic surveys on the Canadian frontier, and its use thereafter, including the deposit of the material, the term of confidentiality and public access to it, is strictly regulated by legislation which governs and supersedes any property rights that GSI may have (the Regulatory Regime).
The Time Frames in Question
Madam Justice Eidsvik of the Court of Queen's Bench commenced the analysis noting that the issues of the time limit of protection was a core issue in the dispute. The Regulatory Regime protects the confidentiality of the seismic material deposited for a period which may range from 5 to 15 years. Under copyright law she noted that the term of protection may subsist for 50 or more years.
The Copyright Analysis
Justice Eidsvik commenced the copyright analysis to seek to identify if the seismic data may be "works" for copyright law purposes. GSI argued that the seismic data is original and qualifies as a work "in that it is created by the involvement of human skill and judgment with the aid of computers". GSI claimed the seismic data is a "literary and/or artistic ‘production’ in the scientific domain" and noted the data is fixed in many tangible forms. The defendants claim that the data are computer generated and not the product of skill and judgment by human authors.
Justice Eidsvik considered the different types of seismic material claimed to be subject of copyright. The types of seismic data at issue included:
- raw seismic field data, or raw seismic, magnetic, and gravity data;
- seismic related navigation data;
- processed and reprocessed seismic data;
- selections, arrangement and compilations of raw, processed and reprocessed seismic data;
- productions and reproductions of seismic data in various forms and media including physical, electronic, magnetic and digital works;
- interpretations, derivations and translations of the seismic data; and
- related seismic data materials.
Justice Eidsvik began her analysis relying on section 34.1 of the Copyright Act (Canada) which provides a rebuttable presumption that copyright subsists in a work where the defendant puts that existence in issue.
The key case on originality in Canada is CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13, where the Chief Justice, speaking for the court, noted that Canada's position on whether a work falls between the earlier standard which would recognize mere labour or effort to create the right and the higher U.S. creativity standard. She stated:
For a work to be “original” within the meaning of the Copyright Act, it must be more than a mere copy of another work. At the same time, it need not be creative, in the sense of being novel or unique. What is required to attract copyright protection in the expression of an idea is an exercise of skill and judgment. By skill, I mean the use of one’s knowledge, developed aptitude or practised ability in producing the work. By judgment, I mean the use of one’s capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work. This exercise of skill and judgment will necessarily involve intellectual effort. The exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise. For example, any skill and judgment that might be involved in simply changing the font of a work to produce “another” work would be too trivial to merit copyright protection as an “original” work. [Emphasis by the Court]
The evidence noted that the seismic data should also be considered in a further context. This case was about non-proprietary data, namely, that is data shot on speculation by the seismic operator. By contrast, proprietary data arises when a seismic operator is engaged by an exploration company where the expert geophysicists and other scientists of the exploration company might direct decisions about the acquisition and processing of the seismic data so that it could be their “skill and judgment” that is being called upon.
With the above context, the Court considered the types of data.
After examining the various decisions made in the set-up of a seismic shoot, the Court found that "the raw seismic field data and written reports are a literary work or a compilation of a literary work." Similarly, she found seismic sections to be an artistic work, noting "seismic sections, i.e., the squiggly or zebra lines, fit within the definition of an artistic work, similar to a map, plan or chart, or a compilation of an artistic work since the product is the result of selection or arrangement of the data, or sound recordings, from the geology of the subsurface."
The Court noted that the data becomes a "work" when it is compiled. She noted, "One ping from a hydrophone would not suffice; it is the collection, arrangement, distillation and compilation that creates the work—both at the raw data level and then at the more refined processed data level."
Having found the applicable data were works, the Court considered if they were original. On the raw data she found that raw data was original for copyright purposes stating, "Judgment is evident in the production of field data through the multitude of decisions made by the seismic crew. The crew must have the ‘capacity for discernment or ability to form an opinion or evaluation by comparing different possible options.’… the field data is analysed as it is being acquired and checked for its quality. To the extent that there are problems that could affect the quality beyond certain parameters, the collection process may have to be restarted with different parameters. Only skilled experts are able to make these decisions."
Similarly, on the processed data the Court readily found this was original as "the processors exercise skill and judgment in the decisions they make to create a usable product from the field data. The raw data is not simply pumped into a computer and a useful product comes out. The evidence is clear that the processed product can be quite different depending on the skill of the processor and that exploration companies have their favourite processors who create the best quality product for their purposes."
The Court rejected the defendant's arguments including their effort to import the U.S. "idea expression" principle into Canadian law and relying on the tests for originality in CCH. The Court also rejected the defendant's argument that there was no human input. Rejecting cases dealing with highly automated processes finding that "seismic data produced through this exercise of skill and judgment is ‘tailored and unique’ to the author."
On the issue of authorship and ownership, the Court noted, "the author is the one who ‘clothes the work with form,’ or ‘expresses the idea,’ or uses their skill to fix the work in tangible form. So in this situation, the creator or ‘human’ author of the field data is likely the head of the seismic crew on the ship (the ‘party chief’) and the ‘human’ author of the processed data is the person in charge of the processing (who, early on, was called ‘the computer’). It is he who will sign the seismic section"... "For ownership purposes, the author will be GSI, since s 13 of the Copyright Act provides that the employer will be the owner when an employee is retained to do the work."
The Court similarly rejected a series of other technical attacks by the defendants such as that the work was trivial and purely mechanical, or were facts or ideas, or were merely utilitarian expressions.
Importantly, the Court also declined to follow obiter comments on the existence of copyright in seismic data in Geophysical Service Inc v Canada-Nova-Scotia Offshore Petroleum Board, 2014 FC 450, as there was very limited evidence before that Court.
On the copyright issue, the plaintiffs were successful. This part of the decision was not appealed and helps to create certainty about the existence of copyright in certain types of seismic data for the exploration companies, the seismic industry and those who engage in transactions involving seismic data.
The Regulatory Regime
Having decided there was a copyright in the seismic data the Court Queen's Bench then considered the impact of the Regulatory Regime on any liability of the defendants in their dealings with GSI's seismic data.
GSI's view was that the Regulatory Regimes should be interpreted in a manner that promotes recognition of the copyright and not be interpreted as infringing on copyright. The defendants argued that the Regulatory Regime confers a statutory authority on the boards to act as they did with the seismic data and represent a balance between the protection of the seismic operator's economic interest with the confidentiality period and the public policy objective of "stimulating natural resource exploration and development by making such information publicly available."
The Court considered the Canada Petroleum Resources Act, RSC 1985, c 36 (2nd Supp) (CPRA) and found that it "allows for disclosure without restriction after a defined period of time. It is a complete and specific code that applies to all oil and gas property in the offshore and frontier lands, including seismic data. Its provisions supplant any more general pieces of legislation, such as the Copyright Act… to the extent that they conflict."
While the CPRA does not use the express words permitting the boards to "copy" the seismic data that the disclosed, the Court found that the only reasonable interpretation of the provisions that permit disclosure of geophysical work performed on the frontier lands was to give the boards "the statutory authority to the regulatory boards to disclose material without restriction and without the consent of the owner of such material, once the confidentiality period has expired."
The plaintiff also argued that the Copyright Act has an exemption permitting copying pursuant to the Access to Information Act and that regime (including its protections and exemptions for trade secrets and confidential information) should be the regime by which disclosure requests should be processed. The Court found that the Access to Information Act was another more general legislative scheme whose procedures were supplanted by the more specific CPRA.
The Court went on to assess if the boards who disclosed copies of the GSI seismic data and the recipients who received the copies of the data had liability under copyright law.
The Court found that the Regulatory Regime provided a balance between the public and private rights stating "The Regulatory Regime preserves the rights of seismic operators until after the expiry of the privilege period, thereby achieving an internal balance between allowing for commercialization of the information and the public interest in the wider dissemination of that information." The Court found that the "CPRA creates a separate oil and gas regulatory regime wherein the creation and disclosure of exploration data on Canadian territory is strictly regulated" and therefore acts as an exception to the rights of the copyright owner to control the dissemination of its seismic data.
The Appeal on the Regulatory Regime
GSI appealed to the Alberta Court of Appeal on the Regulatory Regime issue.
For the appeal, the parties did not dispute that section 101 of the CPRA was the operative provision governing disclosure by the National Energy Board. GSI's main argument was the proper interpretation of section 101 and whether the CPRA overrides the Copyright Act.
The Court of Appeal assessed the parties' arguments and applied the modern approach to interpretation of the CPRA. The Court of Appeal found "that the findings of fact and statutory interpretation reached by the Trial Court are rational and correct, and otherwise reveal no error warranting appellate intervention."
On the key issue that section 101 of the CPRA does not refer to copying, only disclosure, the Court of Appeal held that "the Regulatory Regime confers on the Boards the unfettered and unconditional legal right after expiry of the privilege period to disseminate, in their sole discretion as they see fit, all materials acquired from GSI and collected under the Regulatory Regime. The correct interpretation of “disclose” also confers on these Boards the legal right to grant to others both access and opportunity to copy and re-copy all materials acquired from GSI and collected under the Regulatory Regime."
Ultimately the Court of Appeal dismissed the appeal finding that the trial judge had made no errors of law in the trial decision. The appeal by GSI to the Supreme Court was denied so the Alberta Court of Appeal decision is the final word on these points.
The decision is important in two respects. The decision affirms the existence of copyright protection for the many types of seismic data considered and this provides a framework within the rights of those who shoot, process, use and disseminate seismic data can be assessed. The existence of copyright protection ought to encourage more investment in the creation of valuable seismic data.
The decision is also important in balancing and limiting the rights of copyright holders in seismic data with the public policy favouring orderly dissemination of seismic data under the specific Regulatory Regime thereby encouraging exploitation and development of applicable frontier and offshore resources.