The Three Reasons Why Statutes Require Interpretation (Using IP Examples)

I am currently writing a book on Statutory Interpretation, to be published in late 2018 by Lexis Nexis. Enough books have been written on the topic both in Canada and elsewhere, so why do I feel the need to add another? For one thing, existing literature on the subject spends far too little time (if at all) on two fundamental questions: (1) why do statutes need to be interpreted and (2) what is the appropriate institutional role for the judiciary? In my opinion, we can not understand how to approach the task of interpretation without answering these two questions. More to the point, we can better assess the legitimacy of what courts are doing by answering these two questions.

Why statutes require interpretation?

There are three categories of reasons for why statutes need to be interpreted: (1) drafting errors (2) changed circumstances and (3) incomplete rules.

Drafting errors: I include here not just typos or grammatical errors (exceedingly rare) but also errors arising from textual inference. For example, in Kirkbi v. Ritvik Holdings, the makers of lego blocks (whose patent had expired) attempted to extend its monopoly indefinitely through unregistered trade-marks protection for shape of the lego block. A prior statute barred trade-marks protection over functional or utilitarian features (e.g. lego blocks) in respect of all trade-marks. When the Trade-marks Act was drafted in 1953, this prohibition applied only to registered trade-marks leading the reasonable inference that unregistered trade-marks were excluded from the rule. Of course this was an error since it was absurd to grant stronger protections to unregistered over registered marks.

Changed Circumstances: Like drafting errors, this does not happen very often. Once in a while, though, an appellate court will update and radically change the interpretation of a statutory provision. In CCH v. Law Society of Upper Canada, for example, a long standing restrictive interpretation of the Copyright Act’s fair dealing provisions was seismically changed. Fair dealing was no longer conceptualised as narrow exceptions but as “user rights”; moreover, the fair dealing categories were to be given broad and liberal construction.

Incomplete Rules: This is the big one. And it is comprised of three subcategories (a) unanticipated cases (b) implied delegation and (c) implicit law. The first subcategory of incomplete rules was best articulated by HLA Hart who argued that legislatures cannot foresee all possible circumstances or cases that a statute will encounter. Accordingly, there will be unanticipated cases for which the statute will not have a clear answer. This is very common. In Euro Excellence a highly fractured court scrambled to resolve whether the incidental copyright of a chocolate bar wrapper design could be used to block the legitimate trade of the underlying product. Of course, the regulation of parallel imports under the Act was directed toward works qua works and the legislature did not anticipate the use of the provision as a means of frustrating legitimate trade of non-copyrighted products. The category of implied delegation is common and uncontroversial. For example, when the legislature creates a fair dealing exception for copyright, but does set out criteria for its determination, we infer that the legislature has delegated to the judiciary the task of interpreting what it means. The last category, implicit law, recognizes that statutes do not exist as an isolated body of law. Courts must sometimes determine, for example, whether common law rules supplement the terms of a statute.

What is the appropriate institutional role of the judiciary?

The answer to this second question depends, to some extent, on the first. We know that the legislature’s role is to write the laws and that judges are to interpret that legislation as applied to facts in the case before them. Once we diagnose the need for why rules require interpretation, we can better assess the legitimacy of the judicial function. For example, most cases before courts are of the unanticipated kind, meaning that inexact rules are being applied to an unusual case. It is indisputably part of the judicial function that courts interpret legislation to resolve these cases as best it can according to legislative intent. In so doing, the law is developed.

Similarly, drafting errors should be corrected by courts. We do not want courts to render absurd interpretations of the law due to an apparent legislative error. However, we should be concerned about the judiciary re-writing statutes other than in cases of absurdity since this could become a backdoor for judges to implant their own policy preferences over that of the legislature.

Finally there is the case of changed circumstances. Defenders of the judicial role in this regard point to legislative inertia as the need for why statutes need to be updated by courts. For example, critical elements of the Patent Act have not been updated since 1869, nor the Copyright Act since 1921. Moreover broadly worded provisions such as “composition of matter” or “fair dealing” have never been (nor likely will be) legislatively elaborated. Arguably then it is for courts to develop the meaning of these broadly based concepts. The problem is that sometimes – as in the case of fair dealing – a court radically departs from a long line of precedent and effectively changes the law. This is the least legitimate of the three reasons for interpreting a statute. I do not foreclose the possibility that sometimes statutes should be updated since legislative inertia is a fact of life, but there should be a compelling reason to do so.

In my next post, I will summarize my views on how courts should approach the task of interpreting statutes.