Federal Court Of Canada Strikes Wiseau Studio’s Copyright Infringement Action, Finding Cause of Action Estoppel

On April 20, 2022, the Federal Court of Canada (the Federal Court) issued its decision in Wiseau Studio, LLC v Harper, 2022 FC 568, finding that Wiseau Studio, LLC’s (the Plaintiff) action for copyright infringement was barred by the application of cause of action estoppel.

The Plaintiff claimed to own rights to the film “The Room”. The six defendants in this action made a documentary entitled “Room Full of Spoons”, which was alleged to contain more than seven minutes of footage from “The Room”.

In December 2021, after a series of unsuccessful motions and adverse costs awards, the Ontario Superior Court of Justice stayed the Plaintiff’s action for fraudulent misrepresentation and intentional infliction of mental suffering. However, the Ontario Superior Court of Justice declined to stay the Plaintiff’s action before the Federal Court, which claimed breach of Section 41.1(1) of the Copyright Act, as previously reported by the E-TIPS® Newsletter here.

The defendants therefore brought a motion to dismiss or permanently stay the proceedings in Federal Court on the grounds of cause of action estoppel and abuse of process.

The Federal Court set out the four preconditions for a finding of cause of issue estoppel, citing Grandview v Doering, [1976] 2 SCR 621 (Grandview):

1. there must be a final decision of a court of competent jurisdiction in the prior action;
2. the parties to the subsequent litigation must have been the parties to or in privy with the parties to the prior action;
3. the cause of action in the prior action is not separate and distinct; and
4. the basis of the cause of action in the subsequent action was argued or could have been argued in the prior action if the party bringing the subsequent action had exercised reasonable diligence.

The Federal Court first found that the prior decisions of the Ontario courts were finally concluded, as the leave application to the Supreme Court of Canada was dismissed in April 2022.

Second, the Federal Court stated that it was not contested that the parties are the same.

The Federal Court then found that the causes of action in the Ontario and Federal court proceedings were not separate and distinct. The Federal Court noted that the prior Ontario claim also included allegations of copyright infringement and relied on other sections of the Copyright Act. In addition, both proceedings involved the same original works and the same documentary. The Federal Court maintained that the Plaintiff’s multiple filings for the same general cause of action (i.e., copyright infringement) based on the same works constituted “precisely the kind of mischief that cause of action estoppel was designed to prevent”.

Lastly, the Federal Court held that there was no evidence or explanation as to why allegations of infringement based on a breach of technological protection measures were not raised in the Ontario claim. The Federal Court concluded that the Section 41.1 claims could have been made in the Ontario claim with the exercise of reasonable diligence.

Ultimately, the Federal Court found that each of the four Grandview factors were met. The Federal Court therefore held that the Plaintiff’s action was barred by cause of action estoppel and struck it on that basis.

Summary By: Steffi Tran