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]
|
|
5.
|
|
ME2 PRODUCTIONS, INC. v. DOE #1 ET AL
|
|
Copyright Infringement [Actions]
|
|
|
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]
|
|
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
|
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