Tuesday, October 02, 2018

NAFTA/USMCA is Even Worse Than You Thought on Intellectual Property: CETA Victory is Now Forfeited & Long Live Life + 70 etc.




(What Goes Up Must Come Down - Except in the case of IP in treaty law)

A possibly unintended and certainly unwelcome consequence of the sad capitulation of Canada in the IP Chapter of NAFTA/USMCA is that the positive aspects of CETA – holding the line on copyright term of life + 50, the effective 8-year term of protection of market exclusivity for biologics, etc. - have been thrown under the bus. 

The extension of the copyright term to life + 70 and the period of market exclusivity for biologics to 10 years will cost Canada billions and are effectively irreversible policy errors that should have been avoided.

This is because of the operation of national treatment and most favoured nation (“MFN”) provisions in CETA itself and the tangled web of other treaties and agreements to which Canada is bound. Indeed, Canada may now have effectively made these concessions to at least the other 163 members of the WTO, except perhaps where the Berne Convention rule of the shorter term may apply in the case of copyright.

National treatment is the golden rule of international IP law. Every country must provide nationals of other treaty countries the same rights as their own nationals.

The MFN principle holds that each country must provide investors, for example, with treatment no less favourable than the treatment it accords in like situations.

This means that the stronger protection now conceded by Canada to Trump’s USA will apply to the EU, thus vitiating Canada’s successful negotiation where we held the line on Canada’s existing regimes for copyright term and market exclusivity for biologics.

It is sad to see Canada’s proud history of 150 years of being a smart middle power on IP and acting largely in our own interest and even leading the world in some respects fade so quickly.

As I and many others never cease to remind, IP is a one-way ratchet. Needless increases in IP protection are not only bad for free trade and innovation. They cannot be reversed.

Both I and Ton Zuijdwijk discussed these principles in our CIGI Papers that formed the IP substantive component of the recent book publication Reflections on Canada’s Past, Present and Future in International Law.

Our papers are here:

Canada is now worse off in terms of IP than we were before and under CUSFTA, NAFTA and WTO TRIPS. It will be interesting to find out – if we ever do – why this happened.

And, in this case, contrary to that great golden oldie hit of Canadian David Clayton Thomas and Blood, Sweat and Tears, what goes up can’t come down.

HPK

Monday, October 01, 2018

The Cost of Canadian IP Capitulation in NAFTA.



(Wikimedia)

Here are a few quick initial points on the IP chapter in the new NAFTA and Canada’s capitulation to US lobby groups, their Canadian surrogates and American bluffing and bullying.

The extension of the copyright term to life + 70 was a very unfortunate, gratuitous, unnecessary and costly mistake. This could cost Canada more than  $450 million a year and most of this would be outflows to the USA.  It will make research and education more expensive and chill innovation. And, according to at least a couple of respected Canadian academics, namely Ariel Katz and Graham Reynolds, it may well be unconstitutional.

The extension of criminal penalties is alarming and dangerous. This could affect employment relationships and even reach into class rooms, especially if the Federal Court’s decision in Access Copyright v. York University is not convincingly overturned on appeal.

It is of little or no use or comfort to say that Canada can reassess this in the future. Increasing IP rights is a one-way ratchet. There is rarely if ever a legally or politically acceptable way to back down from vested rights, no matter how improvidently bestowed.

This is a significant setback to the multilateral liberal order in free trade. Canada has now become a victim by capitulating to a bluffing bully regime bent on weakening or destroying institutions such as the WTO and WIPO. I have written about how Canada was smart and managed to mostly punch well above its weight and in its own best interests and even positively influence and show leadership on the world stage involving trade and IP for 150 years. It seems that those days are sadly over.

I have no doubt that Canada’s negotiators did their homework and did their best. But there will no doubt be lots of questions about whether there was adequate consultation and transparency, whether Canada should have called the American’s bluff and waited until the mid-terms are over, why we retreated from victories in CETA and CPTPP, etc. But for now, regarding the IP chapter, all that can be said is that Canada caved and capitulated “bigly”.

HPK

PS: Here's the statement of  Canadian Generic Pharmaceutical Association (CGPA), on the pharmaceutical intellectual property aspects of the United States-Mexico-Canada Agreement (USMCA). 


Friday, September 14, 2018

Rogers v. Voltage - My comments today September 14, 2018 on CTV



Here's the judgment and SCC summary.

My further comments will follow.

HPK

Rogers Wins in Supreme Court of Canada

From the head note:


                   The respondents are film production companies that allege that their copyrights have been infringed online by unidentified Internet subscribers who have shared their films using peer to peer file sharing networks. They sued one such unknown person and brought a motion for a Norwich order to compel his Internet service provider (“ISP”), Rogers, to disclose his contact and personal information. The respondents sought that the disclosure order be made without fees or disbursements payable to Rogers, relying on ss. 41.25 and 41.26 of the Copyright Act. These provisions, referred to as the “notice and notice” regime, require that an ISP, upon receiving notice from a copyright owner that a person at a certain IP address has infringed the owner’s copyright, forward that notice of claimed infringement to the person to whom the IP address was assigned. They also prohibit ISPs from charging a fee for complying with their obligations under the regime.
                   The motion judge granted the Norwich order and allowed Rogers to recover the costs of all steps that were necessary to comply with it. He found that while the statutory notice and notice regime regulates the process by which notice of claimed copyright infringement is provided to an ISP and an Internet subscriber, as well as the retention of records relating to that notice, it does not regulate an ISP’s disclosure of a subscriber’s identity to a copyright owner. The Federal Court of Appeal agreed with the motion judge that the statutory notice and notice regime does not regulate the disclosure of a person’s identity from an ISP’s records, but it confined Rogers’ recovery to the costs of complying with the Norwich order that did not overlap with the steps that formed part of Rogers’ implicit obligations under the statutory regime. Rogers appealed.
                   Held: The appeal should be allowed and the matter remitted to the motion judge to determine the quantum of Rogers’ entitlement to its reasonable costs of compliance with the Norwich order.
https://scc-csc.lexum.com/scc-csc/news/en/item/6360/index.do


More later.....

Wednesday, September 12, 2018

Two New Copyright Board Appointments: Nathalie Théberge and Adriane Porcin


The Governor in Council has recently made the following long awaited appointments to the Copyright Board:
  • Nathalie Théberge of Gatineau, Quebec, [Director General, Creative Marketplace and Innovation, Canadian Heritage] to be Vice-Chairman of the Copyright Board, to hold office during good behaviour for a term of five years and fixes her remuneration and certain conditions of employment as set out in the annexed schedule, which salary is within the range GCQ 5, effective October 1, 2018.
  • Adriane Porcin  of Winnipeg, Manitoba [Assistant Professor of Law, University of Manitoba], to be a part-time member of the Copyright Board, to hold office during good behaviour for a term of four years.
I’m sure that all members of the copyright community in Canada wish these new members well and thank Claude Majeau, former Vice-Chairman, for his many years of service at the Board. He is widely respected for his corporate memory, wisdom and impartiality. There is a glowing tribute to Claude Majeau currently here at the Board’s website. For convenience and to keep it readily available, I’ll copy it here:

On August 3, 2018, the term of Claude Majeau as Vice-Chair and CEO of the Copyright Board of Canada expired. In a sense it is the end of an era at the Board, and we wish to acknowledge his extraordinary contribution to the Board’s work, and our deep appreciation for it.

Mr. Majeau has been a key contributor to the important role the Board plays in the cultural and creative industries in Canada since 1993, and no more so than in his capacity as Vice-Chair and CEO these past nine years. Prior to 1993, he was a distinguished civil servant in the communications area.

As Vice-Chair and CEO, Mr. Majeau’s vision, his skill and facility in every aspect of the Board’s economic regulatory function, his corporate knowledge, his wisdom and impartiality as a member, and his deft managerial touch, have all enabled him to lead the Board and staff through rapidly changing and challenging times. We and the staff all agree that “CM” is a terrific person to work with and for.

We at the Board are all indebted to Mr. Majeau, as are the public service and the public generally, for the enormous impact he has made in carrying out his various roles. He has been the quintessential public servant – in the finest sense of those words – and we extend our full appreciation and thanks, personally and on behalf of all at the Board, for all that he has done.
Thank you again, Claude.

The Honourable Robert A. Blair
Chair
Mr. Gilles McDougall
Secretary General
M. Sylvain Audet

HPK


Wednesday, September 05, 2018

More On Mass Copyright Litigation in Canada – Part II


I have recently been writing about copyright litigation directed at BitTorrent users in Canada which I have been doing since my posting almost exactly seven years ago on September 7, 2011 on Voltage Pictures  attempt at that time to launch mass lawsuits against individuals in its Hurt Locker litigation. There have been several changes in strategy and law firms involved on the mass litigation front since then. Two of my recent posts deal with:
  •        The refusal of the Supreme Court of Canada to grant leave to appeal to Voltage Pictures regarding the Federal Court’s order of February 2, 2017 – as upheld by the Federal court of Appeal – to pay $75,000 into court for security of costs forthwith. Since the payment has not been made, that litigation is presumably stalled if not dead. This litigation was launched by Mr. Kenneth (“Ken”) Clark of Aird & Berlis LLP.
  •        The series of 16 lawsuits (attached below for reader’s convenience and reference purposes*) launched by various film companies against thousands of individual “Doe” defendants. Each of these lawsuits was filed as a “simplified action” with a filing fee of only $50.00 These were also started by Mr. Clark.

All that said, the following is, as usual on this blog but even more so, not to be taken as legal advice or to be relied upon by anyone for any particular purpose and is certainly not directed specifically at the above litigation. It is relevant to copyright ligation generally and may hopefully be of interest and assistance to lawyers who are not fully familiar with copyright law and certain provisions of the Federal Courts rules. I am pleased that lawyers are probably the most frequent readers of this blog.

Anyone who has been implicated in any copyright litigation and who does not know how to or does not wish to represent themselves should quickly consult with a lawyer who is fully familiar with this area of law and practice. I am aware of instances in which lawsuits against BitTorrent users have been dismissed with no settlement payment with the help of knowledgeable counsel at a very low cost. On the other hand, I and other knowledgeable copyright lawyers are asking what circumstances could result in any experienced IP lawyers consenting to judgments as high as $5,000 against an individual, presumably plus whatever fee they charge their clients for negotiating such high-end settlements.  On this point, I’ve been quoted on August 22, 2018 in the very paywalled WireReport as follows:
“I can’t comment on any particular settlement because I don’t know the
specific facts,” Howard Knopf, a lawyer at Macera and Jarzyna, said in an
email. “However, $5,000 is the maximum statutory damages amount that
could ever be awarded for non-commercial activity in these types of cases
even in a contested proceeding.”

 He added: “Canadian courts are clear that statutory damages must somehow
correlate to actual damages, which in these en masse BitTorrent situations
are arguably less than $10 for infringement of one work by one individual.
The minimum statutory damage award for non-commercial infringement is
$100. Generally speaking, even if a settlement amount has to be paid – which
is far from clear in these situations — one would expect that it would be at the
lower end and not the upper limit.”
(highlight and emphasis added)

References in the following to Rules are to the Canadian Federal Courts Rules  are not directed specifically at any particular cases and are potentially applicable to any copyright BitTorrent litigation  brought in the Federal Court of Canada:
1.     Service of a statement of claim can be done by registered mail but is only legally effective if the individual being sued actually signs a post office receipt. (Rule 128(1)(e). Nobody is required to sign a post office receipt for an unexpected envelope from a law firm or any other party. Other methods of service are possible but will be more expensive and time consuming for the plaintiff.
2.     When a plaintiff, such as a film company “is ordinarily resident outside Canada” or has not provided an address in the statement of claim, or has provided an incorrect address therein, and has not satisfied the Court that the omission or misstatement was made innocently and without intention to deceive”, the Federal Court may order the plaintiff to give security for defendant’s costs. (Rule 416).  Security for costs orders involving non-resident plaintiffs are routine and may require the plaintiff to pay several thousand dollars into court in order to proceed with the litigation against any individual who brings the appropriate motion. Normally such payments into court are made based on a consent order. Sometimes, foreign plaintiffs decide not to proceed when the security for costs issue is even raised. The recent refusal by the Supreme Court of Canada to hear on appeal of the order that Voltage Pictures post $75,000 for security of costs in a “reverse class action” underlines the importance of this rule. There is no reason why Rule 416 could not be applied by individual defendants in litigation targeting several hundred “Doe” defendants at a time. I have seen security of costs used as both a sword and shield. It can be effective in both respects - and any competent lawyer should be fully aware of the possibilities.
3.     There are no judicial precedents in Canada establishing liability on the part of a BitTorrent user for copyright infringement. Moreover, there are no judicial precedents establishing liability on the part of an internet services account holder for someone else’s activity using that account, even if such activity may have infringed copyright. Moreover, many households have multiple users of an internet connection, including children, babysitters, etc. An unsecured router may provide access to many unknown persons. Indeed, there’s a recent very important decision in the USA – which though not binding in Canada – could be very influential. I recently wrote about this very important American appellate decision from the influential 9th Circuit Court of Appeals in   Cobbler Nevada v. Gonzales, wherein the Court stated:

The district court properly dismissed Cobbler Nevada’s claims. The direct infringement claim fails because Gonzales’s status as the registered subscriber of an infringing IP address, standing alone, does not create a reasonable inference that he is also the infringer. Because multiple devices and individuals may be able to connect via an IP address, simply identifying the IP subscriber solves only part of the puzzle. A plaintiff must allege something more to create a reasonable inference that a subscriber is also an infringer. Nor can Cobbler Nevada succeed on a contributory infringement theory because, without allegations of intentional encouragement or inducement of infringement, an individual’s failure to take affirmative steps to police his internet connection is insufficient to state a claim.

4.     The US Court’s stance on contributory infringement is consistent with the Supreme Court of Canada’s position on “authorization” in the 2004 decision in CCH Canadian v Law Society of Upper Canada, in which the SCC held that:
a person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright. Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law. (para 38).

5.     Here is a recent important law review article entitled “Defense Against the Dark Arts of Copyright Trolling”   the lead author of which, Matthew Sag, is a prominent American copyright law professor and the co-author Jake Haskell is a Chicago practitioner. While this article is based upon American law and practice, much of it may be of interest and potential utility in the Canadian context. Law review articles are often provided as an “authority” in a court case, if relevant to the issues before the court. It would not be surprising if this article were to be put on the record in any Canadian litigation involving BitTorrent litigation, if the litigation proceeds any distance. This article shows, among many things, that virtually none of these proceedings ever go to trial – which raises some very interesting questions about the intentions of the plaintiffs. As the abstract says, “The plaintiffs bringing these cases target hundreds or thousands of defendants nationwide and seek quick settlements priced just low enough that it is less expensive for the defendant to pay rather than to defend the claim, regardless of the claim’s merits.”
6.     Even when liability can be proven, unless a plaintiff can establish substantial actual damages, the usual recourse is to “statutory minimum damages”, which under Canadian law must bear some correlation to what actual damages would have been. Where the activity is “non-commercial”, the maximum amount of statutory minimum damages is $5,000 and the minimum is $100. There are no reported binding precedents establishing any particular amount of damages on the part of an individual for non-commercial BitTorrent activity in Canada. The plaintiff’s actual loss for the cost of any given stream or download would likely be a few dollars at the most, so even $100 seem like a stretch – but Parliament has made this minimum if this provision is invoked. Moreover, use of this provision in a judgment – even a consent judgment, will have the following effect:
 If a copyright owner has made an election under subsection (1) with respect to a defendant’s infringements that are for non-commercial purposes, every other copyright owner is barred from electing to recover statutory damages under this section in respect of that defendant for any of the defendant’s infringements that were done for non-commercial purposes before the institution of the proceedings in which the election was made. (Copyright Act, s. 38.1(1.20)
7.     There is a mechanism in the Federal Court rule that is intended to encourage strategic settlement offers. If a strategic settlement offer is made in a timely and proper manner, and the plaintiff does not ultimately recover at least as much as that offer, the plaintiff will be liable for double the defendant’s legal costs calculated according the Court’s formula after the date of the offer. In a case of non-commercial copyright infringement on the part of an individual, the starting point of damages that a court could award is $100. Here’s what the Federal Court Rules say:
Consequences of failure to accept defendant’s offer
420(2) Unless otherwise ordered by the Court and subject to subsection (3), where a defendant makes a written offer to settle,
·        (a) if the plaintiff obtains a judgment less favourable than the terms of the offer to settle, the plaintiff is entitled to party-and-party costs to the date of service of the offer and the defendant shall be entitled to costs calculated at double that rate, but not double disbursements, from that date to the date of judgment; or
·        (b) if the plaintiff fails to obtain judgment, the defendant is entitled to party-and-party costs to the date of the service of the offer and to costs calculated at double that rate, but not double disbursements, from that date to the date of judgment.
 General Observations on Mass Litigation
As the study by Sag and Haskell above shows, the plaintiffs in most mass litigation cases have no intention of proceeding to trial and are hoping to extract the highest possible settlement at the lowest possible cost. A number of lawyers in Canada are beginning to look at these types of lawsuits and possible steps to protect the interests of individual defendants at an early stage and with a minimum amount of expense. There are concerns about how mass copyright litigation has been dealt with by Federal Court. More to follow at a later date…

Anyone who has actually been served with a lawsuit is foolish to ignore it. The result may be a default judgment for a substantial amount of money that may be difficult, if not impossible, to set aside. Therefore, it is important to consult counsel who are experienced in both copyright law and the Federal Court Rules.  It is legitimate for any person involved in mass litigation to ask any lawyer who is recommending substantial settlements – especially at the high end of non-commercial statutory minimum liability, namely $5,000 –  why he or she is making such a recommendation.

HPK


*AIRD & BERLIS LLP “DOE” CASES 
2016-2018
As of August 29, 2018 (Revised August 31, 2018)

FCT File #
Style of Cause
Type of Case
Date
1.       
VOLTAGE PICTURES ET AL v. JOHN DOE ET AL (Salna)
Copyright Infringement [Applications] [note – $75,000 security for costs remains unpaid]
2016-04-26
2.       
CELL FILM HOLDINGS LLC v. DOE #1 ET AL
Copyright Infringement [Actions]
27-SEP-2016
3.       
DALLAS BUYERS CLUB, LLC v. DOE #1 ET AL
Copyright Infringement [Actions]
2016-10-05
4.       
HYBRID, LLC v. DOE #1 et.al.
Copyright Infringement [Actions]
2016-10-07
5.       
ME2 PRODUCTIONS, INC. v. DOE #1 ET AL
Copyright Infringement [Actions]
2016-12-19
6.       
LHF PRODUCTION INC v. DOE #1 ET AL
Copyright Infringement [Actions]
2017-02-24
7.       
CRIMINAL PRODUCTIONS v. DOE#1 ET AL
Copyright Infringement [Actions]
2017-02-24
8.       
WWE STUDIOS FINANCE CORP. v. DOE #1 et.al.
Copyright Infringement [Actions]
2017-03-31
9.       
UN4 PRODUCTIONS, INC. v. DOE #1 et.al.
Copyright Infringement [Actions]
2017-06-21
10.    
COLOSSAL MOVIE PRODUCTIONS, LLC v. DOE #1 et.al.
Copyright Infringement [Actions]
2017-06-21
11.    
HEADHUNTER LLC v. DOE #1 ET AL
Copyright Infringement [Actions]
2017-07-24
12.    
JUSTICE EVERYWHERE PRODUCTIONS LLC v. DOE #1 ET AL
Copyright Infringement [Actions]
2017-07-24

13.    
VENICE PI, LLC v. DOE #1 et. al.
Patent [Sic?] Infringement
2017-07-24
14.    
BODYGUARD PRODUCTIONS, INC. v. DOE #1 et.al.
Copyright Infringement [Actions]
2017-12-18
15.    
WIND RIVER PRODUCTIONS, LLC v. DOE #1 ET. AL.
Copyright Infringement [Actions]
2017-12-18
16.    
MORGAN CREEK PRODUCTIONS, INC. v. DOE #1 et.al.
Copyright Infringement [Actions]
2018-01-12
17.    
POW NEVADA, LLC v. DOE #1 ET AL
Copyright Infringement [Actions]
2018-03-16