The Canadian Version of the Voltage Pictures Copyright Mass Litigation Picture

Like many others, I’m grateful for the excellent stream of tweets from Paul Anderson (@panderson) and others available here  concerning the #Voltage hearing in Toronto on June 25, 2013 presided over by Prothonotary Kevin Aalto. That said, even excellent tweets such as these are nowhere close to a transcript – for which we await in the hopefully reasonably short fullness of time, if a transcript was taken. So, not having been at the hearing, my impressions from the tweets may or may not be well founded. 

Reading the tweets and having read most of the record in this case, I could not help but think about the BMG case, in which I acted as lead counsel for CIPPC in both the Federal Court and Federal Court of Appeal back in 2004-2005. I and Richard Naiberg, one of the very able opposing counsel in that case were asked to provide a balanced analysis, which we did and which can be seen here and which is still useful. My comments are below are in light of BMG and are of a general nature. Unless specifically indicated, I’m not commenting on this particular Voltage case at this time.

The BMG decision is presumably still the applicable law in Canada. The main takeaway from the BMG case was quite simply this. In order to invoke the extraordinary “equitable jurisdiction” of the Court to grant a very unusual “Norwich order” for disclosure of the names and street addresses of those behind the IP addresses in question, a plaintiff must come to court at the very minimum able to satisfy two sine qua non thresholds: 

1. The first is that the plaintiff must have substantial, admissible, non-hearsay, and reliable evidence to link the alleged IP address to the alleged infringer and to establish that it has correctly identified the IP address in the first place.
2. The second is that the Plaintiff must show “a bona fide claim, i.e. that they really do intend to bring an action for infringement of copyright based upon the information they obtain, and that there is no other improper purpose for seeking the identity of these persons.”

The question, therefore, is whether both of these sine qua non thresholds have been met in the present case. On the first threshold, in the BMG case, Justice Sexton of the Federal Court of Appeal said in 2005:

[21] Much of the crucial evidence submitted by the plaintiffs was hearsay and no grounds are provided for accepting that hearsay evidence. In particular, the evidence purporting to connect the pseudonyms with the IP addresses was hearsay thus creating the risk that innocent persons might have their privacy invaded and also be named as defendants where it is not warranted. Without this evidence there is no basis upon which the motion can be granted and for this reason alone the appeal should be dismissed. (emphasis added)

The evidence in the BMG case was found to be insufficient to warrant a disclosure order, because it failed to meet this perfectly reasonable and not particularly demanding threshold. The door was left open to the record industry to come back with better evidence. However, they were apparently unable or unwilling to do so and that was thus the end of that litigation. But the door has never been locked to such litigation in Canada, if a plaintiff can pass the basic thresholds.

If it should turn out in the present situation that the evidence is no better or even worse than it was in BMG (and I make no comment on this point at this time), then that would be the end of the matter. There would then be simply no need to address privacy concerns, the wording of any order, supervision of settlement letters, etc. There would not even be, strictly speaking, any need to examine the next and other threshold requirement, which concerns the bona fide intention to commence litigation – although Courts sometimes provide helpful obiter dicta when appropriate.

In any event, I thought it might be useful to include some excerpts of some recent cases in the US District Courts, which are the equivalent of Canada’s Federal Court. These decisions were indeed mentioned by CIPPC in its memorandum and they both involve Voltage Pictures as a plaintiff. While these decisions on not binding in Canada, and US law differs in certain respects from that of Canada, these decisions are nonetheless interesting and do involve Voltage Pictures.

In this April decision from the District Court for the Northern District of Ohio, the Court took it upon itself to deny joinder of 197 claims into four lawsuits. Here is some of what the Court said. The entire decision – with my highlights – is available here:

Because IP addresses are the only identifiers of peers within a BitTorrent system, it is difficult, if not impossible, to learn the true identities of the peers in a swarm. To pursue litigation, plaintiffs in BitTorrent suits must attempt to get early discovery to learn of the actual identities of the unnamed defendants.22 The requests have been the subject of much criticism, for the lawsuits are rarely litigated. Rather, plaintiffs seek to take advantage of the resources of federal courts to force small, individual settlements.23

…

Courts have been troubled by what amounts to be a new business model employed by production companies “misusing the subpoena powers of the court, seeking the identities of the Doe defendants solely to facilitate demand letters and coerce settlement, rather than ultimately serve process and litigate the claims.”41 This unseemly practice is made worse by the frequent practice of joining hundreds or thousands of defendants in a suit, saving plaintiffs tens of thousands of dollars in filing fees. It is in this environment where courts must take every caution to ensure that the keys to the doors of discovery are not blithely given to parties with other intentions.

Regardless of the dubious practices of others, Plaintiffs may have legitimate claims which deserve litigation. Nevertheless, unnamed Defendants are improperly joined, and in order to continue with their actions, Plaintiffs will need to pay the requisite filing fee per suit.42 Otherwise, Plaintiff has saved over $67,500 by consolidating its claims into four separate actions. If Plaintiffs seek to use the powers of this Court to vindicate its rights, it must pay the requisite fees like every other Plaintiff.

(footnotes omitted, emphasis added)

And here are some excerpts from a ruling from May, 2013 from the District Court of Oregon, again involving Voltage Pictures:

…Thus, it is apparent that plaintiff seeks to place all users with the same degree of culpability regardless of intent, degree of sharing or profit. For instance, the grandparents whose young grandchild used their computer to download what looks like an entertaining Christmas movie, to his innocent mind, through their IP address, are the same as an organization intentionally decrypting and duplicating DVDs en masse while planting stealth viral advertising, or more nefarious Trojan horses, into the upload stream. By being lumped together, the Doe defendant who may have a legitimate defense to the allegedly infringing activity is severely prejudiced. 

Indeed, while plaintiff earnestly claims to be defending against the plague of peer-to-peer copyright infringement and protect the hardworking men and women who produce movies right to down to the gaffer and grip, appears to be employing a somewhat underhanded business model of its own to raise profits for what maybe a less than profitable, unpopular movies. The court has a sample demand letter plaintiffs' counsel has been sending to the persons associated with the IP address upon their discovery. In the letter, threats regarding severe punitive damages are made along with the not so subtle implication that liability is a foregone conclusion:

you have been identified as the party responsible for the[IP] address used to illegally copy or share our client's copyright motion picture through ... BitTorrent. Thisletter is a courtesy before we are required to take more formal legal action which would involve adding you as named defendant to the lawsuit

Copyright infringement is very serious problem forthe entertainment industry [and our] client takes theenforcement of its copyright seriously and will use all
legal means available to protect its rights. 

The law ... allows the copyright owner to recover
attorney fees, and seek damages of up to $150,000 perwork.... While it is too late to undue the illegal filesharing you have already done, we have prepared an offer to enable our client to recoup the damages incurred by
your actions and defray the costs of preventing this type
of activity in the future .... 

In exchange for a comprehensive release of all legal claims which will enable you to avoid becoming a named defendant in the lawsuit, our firm is authorized to accept the sum of Seven Thousand Five Hundred Dollars ($7,500) as full settlement for its claims. This offer will expire in two weeks. Thereafter, if our client chooses to settle, the demand shall be Ten Thousand Dollars ($10,000) and this amount will continue toincrease as litigation expenses accrue.

[I]f you do not comply with the above request we intend
to name you as a defendant to the lawsuit and proceed
against you either individually in a severed suit if you request, or jointly ... we leave the election of how to proceed up to you, though we note costs and fees to sever and proceed against you individually in a separate suit are notable and we will demand that all such costs and fees be added to any settlement. 

If forced to proceed against you, our client reserves the right to recover the maximum amount of damages, costs and attorney fees ... which is $30,000 and up to $150,000 ... .In light of the known facts of this case we have no doubt this infringement was intentional. Exhibit B attached to Answer and Cross Complaint (#2) in Voltage Pictures, LLC v. Does 1-321, 3:13-cv-295-AA at pp. 1-2 (emphasis added [by the Court]).

 The letter goes on to make threats against attempts to deletefiles with assertions that plaintiff's experts will find it anywayand the costs associated with that will also be added to theassessment. 

Accordingly, plaintiff's tactic in these BitTorrent cases
appears to not seek to litigate against all the Doe defendants, but to utilize the court's subpoena powers to drastically reducelitigation costs and obtain, in effect, $7,500 for its productwhich, in the case of Maximum Conviction, can be obtained for $9.99 on Amazon for the Blu-Ray/DVD combo or $3.99 for a digital rental.

The court will follow the majority of other courts in declining to condone this practice of en masse joinder in BitTorrent cases and orders all Does beyond Doe one severed and dismissed from the cases. While the ease with which movies can be copied and disseminated in the digital age no doubt has a deleterious effect on the paying market for such entertainment,just as a mass of plaintiffs harmed through separate, but similar acts of one defendant must generally seek redress individually, so should a plaintiff seek redress individually against a mass of defendants who use similar tactics to harm a plaintiff. Even though it makes a good deal of sense to start these cases initially by joining all Does so that the process of discovering them can be economized, 2 it has now become apparent that plaintiffs' counsel seeks to abuse the process and use scare tactics and paint all Doe users, regardless of degree of culpability in the same light. This practice does not "comport with the principles of fundamental fairness." 

Participation in a specific swarm is too imprecise a factor,absent additional information relating to the alleged copyright infringement, to support joinder under Rule 20(a). Moreover, the result is logistically unmanageable cases involving unique defenses in addition to fundamental unfairness. Accordingly, the courtquashes all outstanding subpoenas and dismisses all Doe defendantsbeyond the first Doe in each case. Plaintiff shall have 10 days tosubmit amended complaints. All other pending motions are denied as moot.

CONCLUSION For the reasons stated above, Doe defendants are orderedsevered and dismissed in these cases beyond Doe #1 in each case.All outstanding subpoenas are quashed and all other pending motionsare denied as moot.((highlight and emphasis added, footnote omitted)

It should be noted that US procedure in these types of cases is different than in Canada. The USA does not have the equivalent of Canada’s PIPEDA legislation or the BMG decision. This is why things have gotten as far as they have in the USA and thousands of lawsuits have been pursued, one of which resulted in the recent affirmation by the First Circuit Court of Appeals of a $675,000 damages award against a college student for downloading thirty (30) songs. (In American law this award is apparently non-dischargeable in bankruptcy.) While the major record companies have curtailed their mass litigation campaign in the USA, others have not shown such restraint. However, the American Courts have begun to rein in the phenomenon of mass copyright litigation. The above two cases are recent and specifically involve Voltage Pictures. As critical as the Courts are in these two cases, there have been far more harsh recent rulings in other cases, including severe consequences for the lawyers involved. As I recently posted:

Anyone following American copyright law will be aware that trolling litigation has recently been dealt severe blows in the USA.  The lawyers behind the Prenda law firm face disbarment and other severe sanctions for the troll tactics involving porno websites. See this devastating ruling from a US District Court invoking The Wrath of Khan but deadly serious in all respects and almost certainly career ending for the troll lawyers involved. The Righthaven litigation, which is not porno based but also involves very aggressive lawyering and artificial attempts to assert standing, appears to be finally dead. Troll litigation in England appears to be at and end, along with the careers of some of the lawyers behind it.

Thus, mass litigation can sometimes get to be quite messy for all concerned. In any event, we can only await the ruling of the Federal Court of Canada in the Canadian version of the Voltage Pictures picture, wherein we will get some indication of whether Canada will now see mass copyright litigation. It would not be surprising if the Court were to rule on Voltage’s request in the present case on fairly narrow reasons primarily concerning the evidence (or lack thereof, if that is the case) concerning either one of the two “threshold” issues mentioned above, since courts must rule on the evidence properly before them and generally avoid making any legal rulings that aren’t strictly necessary – though sometimes some helpful obiter dicta may be provided for future guidance. Broader questions, such as whether the current Federal Courts Act and Rules (not to mention resources) can even accommodate mass copyright litigation, may not require an immediate decision. In any event, if the system cannot accommodate such litigation, it may fall to Parliament, if it so chooses, to change the system.

What will very likely be left undecided are other troubling questions, such as the role and responsibilities of ISPs such as Teksavvy with respect to their customers’ privacy. Teksavvy has consistently, vigorously and inexplicably taken the position in this case that it takes no position. Apparently, Teksavvy’s counsel did make some brief spoken submissions towards the end of the recent oral hearing. Whether or not these submissions were effective and, if so in what respect, remains to be seen.Based upon the Court's online docket, it does not appear that Teksavvy filed any written material for this hearing.

It should – but apparently does not – go without saying that defending ISP customers’ privacy is hardly equivalent to promoting piracy. Some ISPs such as Shaw and Telus (both of which took vigorous pro-privacy positions in the BMG case) and Distributel know the difference. Teksavvy is apparently not so savvy. Meanwhile, Teksavvy has spent a great deal of money – presumably well over $200k - which is arguably more than would have been required to simply deal head on with this disclosure motion – to seek adjournments and buy time for a small law school clinic to actually take a position. Teksavvy appears to have revenues in the order of $5 to $10 million per month. So, even if CIPPIC succeeds this time in protecting Teksavvy’s customers’ interests, what about the next time? And the time after that?

HPK