Written by Dominique T. Hussey, L.E. Trent Horne and Jeilah Y. Chan

Although it happens all the time, reproducing photographs found on the internet for use in business is fraught with risk.  Businesses should only copy images where there is clear permission to use them—or face a substantial damages award.

Case

Trader Corporation v. CarGurus, Inc., 2017 ONSC 1841

IP Type

Copyright

Summary

CarGurus is the second largest online digital platform for new and used vehicles in the United States. In early 2015, CarGurus entered the Canadian market and became a direct competitor of Trader Corporation, known for its AutoTrader website.

When CarGurus entered the Canadian market, it continued some of the business practices it used in the United States. This included "indexing" or "scraping" dealer websites to obtain photographs of vehicles to post on its own website. CarGurus' evidence was that it had been following this practice for years without encountering problems from dealers.

CarGurus’ competitor, Trader Corporation, offers to dealers a "capture" service. This involves Trader's own photographers going to dealerships and taking photographs of vehicles to include in listings. The photographs then appear on the dealers’ own websites, and on autotrader.ca. By scraping the websites of Canadian dealers, CarGurus reproduced photographs taken and owned by Trader.

The court ruled that the photographs were protected by copyright. The fact that Trader photographers followed standardized procedures to create the photographs did not eliminate the use of skill and judgment needed for copyright protection; capturing the images was not a simple mechanical exercise. 

Through affidavits from the photographers, Trader proved that it owned copyright in about 150,000 different images. By posting these photographs on its website, even just by “framing” photographs located on remote servers, CarGurus, without consent, made them available to the public by telecommunication and therefore infringed Trader's copyright.  

CarGurus unsuccessfully argued the defence that it had merely provided an “information location tool”. It also argued its use of the copyrighted works was fair dealing, which the court rejected. While from a consumer’s perspective the use of the photographs was fair-dealing research, CarGurus had alternatives to posting the Trader photos (e.g., taking its own) and was using them to squarely compete with Trader.

Trader elected to receive statutory damages  and asked for more than $76 million in compensation, a number derived from simple math–152,532 photographs times $500 (the lowest end of the statutory range). The court exercised its discretion to reduce the amount, finding that it would be grossly out of proportion to the infringement. The court awarded $2 per photo, an amount determined having regard to fees normally charged by Trader, the absence of actual damages, CarGuru's profits in Canada (none) and the need for deterrence. In the end, CarGuru was ordered to pay more than $300,000 in damages, and may also be liable to pay Trader’s litigation costs.

For further information on how to protect and enforce your intellectual property rights, contact Dominique Hussey, Trent Horne, Jeilah Chan, or another member of the Intellectual Property Litigation team.

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