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Leuthold v CBC: ‘industry practice’ in interpreting contracts

By Bob Tarantino

When, if ever, can ‘industry practice’ be used in interpreting contracts? That question is of particular relevance in the entertainment industries, as each facet of those industries (such as film, TV, music, book publishing and videogames) has its own jargon, standards and conventions, some of which are, if not contradictory, at least not obviously compatible (as an example, the term ‘publishing’ has very different connotations as between the ‘worlds’ of music, book publishing and film). If the parties to a contract come to the contract from different ‘worlds’, and they have different understandings of what a term in a contract means, whose understanding should prevail?

A couple of years ago, in a post entitled Leuthold v CBC: damages for copyright infringement, I noted the Federal Court decision in Leuthold v CBC (2012 FC 748). As the title of that post indicated, the post focused on how the court in that case calculated the damages payable for copyright infringement when the CBC made unauthorised use of photographs in a documentary. I wrote at the time that the ‘decision goes into great detail about the various negotiations and conflicting understandings of the parties — potentially interesting in their own right but of limited application beyond the bounds of these particular disputants’. I think I got that wrong, and I’d like to revisit the case now with particular reference to the issue of industry standards. A couple of weeks ago, the Federal Court of Appeal released its decision in the appeal of the matter (2014 FCA 173) (spoiler alert: the CBC won again), and in reading the decision of the appeals court I was struck by the fact that a portion of the decision seems to turn in large part on how to handle ‘industry practice’ when interpreting contracts…

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