Voltage Pictures Canadian Reverse Class Action - An Update to June 6, 2017 - Further Update: Leave to Appeal to SCC Granted November 23, 2017

Important Update November 23, 2017 to my original blog of June 6, 2017 below.

The Supreme Court of Canada today - November 23, 2017 - granted leave to appeal in this case. Here is the docket.

HPK

 *****
The Voltage Pictures long saga to sue thousands of Canadians who have allegedly have IP addresses that are allegedly connected to allegedly illegal downloading of its films has recently taken on a new twist. Voltage has changed law firms and tactics. It is now pursuing a “reverse class action”, in which one individual by the name of Robert Salna is being forced to defend not only himself but a class of potentially thousands of supposedly similarly situated defendants. As far as I know, this has never been done before in the Federal Court or in Canadian copyright law, and rarely in other cases.  It is certainly not clear that it can, should, or will be done here. However, it is interesting that, apparently, nobody has yet challenged the very possibility that it even can or should be done in this instance.

In the USA, an attempt by Voltage to use a “reverse class action” was tossed by a federal district court judge in Oregon in 2013. According the AP report as carried in US News and World Report:

A federal judge has dismissed a movie company's Internet piracy complaint against 34 Oregonians, saying the company was unfairly using the court's subpoena power in a "reverse class-action suit" to save on legal expenses and possibly to intimidate defendants into paying thousands of dollars for viewing a movie that can be bought or rented for less than $10.

…

The judge said cases such as Voltage's allow plaintiffs to "use the courts' subpoena powers to troll for quick and easy settlements." She cited a letter sent to defendants that asks $7,500, saying that amount would increase up to $150,000 without prompt payment.

The case is Voltage Pictures LLC v. Does,  2013 WL 1907059. The judge uses some blunt language to point out the potential for prejudice to defendants in joining together all users at once in a “reverse class actin”

The court agrees that technological advances have resulted in anonymous and stealthy tools for conducting copyright infringement on a large scale. The court further agrees peer-to-peer sharing technologies, such as BitTorrent, have a serious impact on the profitability of the commercial production of films and music. But, the need to discover copyright infringers, who conduct their activities relatively anonymously, through peer-to-peer networks, must be balanced against the rights of Doe defendants who share no more of a connection than merely committing the same type of act in the same type of manner. While these are indeed the type of cases in which discovery, pre-service, is merited, the use of a reverse class action is not. This is especially true given the proliferation of the use of the courts’ subpoena powers to troll for quick and easy settlements.

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.

…

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 reduce litigation costs and obtain, in effect, $7,500 for its product which, 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.”

Footnote 2: I, however, note that even this justification is muted because it is not clear if the account holders of a given IP address is the actual infringer. Moreover, mere participation in a given swarm may not result in a full download.

(highlight added)

However, even before the current Canadian reverse class action certification motion can proceed, Voltage must come up with $75,000 to pay into court as security for costs to get through to the certification motion following the Federal Court’s curiously unreported order of February 2, 2017 requiring the payment of the $75,000 amount for security for costs “forthwith”. In my view, this is not really very much money for such a novel and potentially very complicated matter and is barely more than half of what Salna asked for. Ironically, there likely would not have been a security for costs order if Voltage were a Canadian entity. The rule that was used applies to non-resident entities. Therefore, this begs the question of what might happen in a hypothetical future case when a technically Canadian entity tries to force one unlucky soul into defending a potentially abusive reverse class action trolling case.

Despite the “forthwith” aspect, Voltage has apparently not yet paid the money into Court. Indeed,  it has appealed. There  is also a cross appeal underway, which would suggest that Mr. Salna wants even more money for security of costs, which is not surprising. This all may suggest that this entire effort will fizzle, as did Voltage’s previous effort against Teksavvy’s customers. It appears that the certification motion that had long been scheduled for June 7 and 8, 2017 has been postponed pending determination of the appeal and cross appeal as to the security for costs order.

This time, Voltage is going after Rogers’ customers. Once again, Rogers has apparently shown no interest in defending its customers’ privacy or resisting the controversial concept of a “reverse class action”, or in challenging the adequacy of the evidence that led to the disclosure order – as Shaw and Telus did successfully in the first of these cases back in 2004, in which I was very much involved.  Rogers sole interest seems to be is in getting paid for its efforts in complying with the order to disclose the identities of the customers that Voltage wants to sweep into the reverse class action.

However, a decision of May 9, 2017 from the Federal Court of Appeal “FCA”) in the Voltage reverse class action litigation holds that, absent regulations, ISPs cannot require any reimbursement for the costs of forwarding notices or disclosing the identity of allegedly infringing subscribers pursuant to a court order. The Court concluded:

[79]  Again, if Rogers and other internet service providers consider this level of compensation for their work to be unfair, they can ask the Minister to pass a regulation setting a maximum fee. As explained, this would permit them to charge a fee not just for the act of delivery, but also for the discharge of their subsection 41.26(1) obligations.

Even though some were “shocked” by the ruling and are predicting “floodgates” of trolling activity, the decision is not really surprising given the wording of the statute and the legislative history as described by the Court.

Nevertheless, CIPPIC’S Director, David Fewer, has been quoted by the Financial Post on May 26, 2017  as criticizing this decision in unusually outspoken and even strident language:

“It’s a horrific decision from a policy perspective and it’s bad news for consumers, it’s bad news for Internet service providers, it’s bad news for Canada,” said David Fewer, director of the Canadian Internet Policy and Public Interest Clinic.

“Your costs of engaging in trolling activity have just plummeted to the floor. This is the Federal Court of Appeal throwing the floodgates wide open.”

The ruling misconstrued the purpose and the function of Canada’s “notice and notice” regime, he said. The system, introduced in 2015, enables copyright owners to alert Internet providers of alleged infringement and requires providers to send notices to subscribers. While most copyright owners use these as an educational tool, some use them to demand sums around $3,500. Others, such as Voltage, take the next step to identify offenders in order to launch lawsuits.

(highlight added)

Other than this reported media comment, CIPPIC has had very little visible role in this case. It was notably absent in this appeal  in which it could have applied for leave to intervene , which would likely have been granted in view of CIPPIC’s intervener role below.  Indeed, it appears that CIPPIC did not even follow up on its earlier stated intention in a letter to the Federal Court of December 13, 2016 that it “anticipates” seeking leave to intervene in the certification motion – for which the hearing dates of June 7 and 8, 2017 are now “vacated” for the time being. In view of Mr. Fewer’s dire assessment of the implications of this ruling, one would have thought that CIPPIC would have intervened as forcefully as possible at every appropriate opportunity in this case, which indeed does have the potential to further facilitate aggressive trolling litigation in Canada. CIPPIC has also not sought leave to intervene in the security of costs appeal.

The good thing about this current FCA decision is that it should – and clearly is intended to – get the immediate attention of the Government and ISPs such as Rogers who presumably know their way around Ottawa. Ironically, if the decision is correct, then regulations should solve the ISPs problem, at least going forward. However, “A regulation can take effect before it is made (i.e., be retroactive) only if the enabling act clearly authorizes the retroactivity and the text of the regulation specifies the date”. Whether the Supreme Court of Canada would even grant leave in this case or whether a legislative amendment is needed are questions that are no doubt being urgently considered.

There may be an interesting “Catch 22” problem here. If the FCA is right that the Government could implement regulations to provide for payment to Rogers and other ISPs for the costs of complying with Norwich disclosure orders, then the Government presumably can and should do so. However, if the FCA is wrong, as Rogers apparently argued in court and CIPPIC is arguing in the media, then the Government may have no authority to implement such regulations. New legislation would be required, which would open up the entire “notice” regime. No doubt, the lobbyists representing the American film and music industries would salivate at the opportunity to turn our made-in-Canada (albeit incomplete) "notice & notice" regime into an American style "notice and takedown" regime.

However, unless and until the Supreme Court grants leave to appeal and ultimately overturns this FCA decision, it has the status of “stare decisis”, i.e. binding precedent.  In principle, the Minister thus has the authority, through the Governor in Council, to implement regulations giving Rogers what it wants – at least on a going forward basis. Thus, Rogers, CIPPIC and others who may want to try to get this case to the Supreme Court of Canada may wish to be careful what they wish for.

In any event, it would be somewhat surprising if the SCC were to grant leave in this case, since the FCA decision is only interlocutory and there is an apparently simple solution in sight to the issues raised – which is that of implementing regulations.

HPK

Voltage, TekSavvy and The Cost of Taking a Position to Take “No Position” - "Nice Work If You Can Get It"?

The long awaited decision by Prothonotary Roza Aronovitch of the Federal Court regarding TekSavvy’s claim to entitlement to $346,480.68  “on a full indemnity basis to make it whole for the costs it says it incurred as a result of Voltage’s motion” has now been released. Spoiler alert – TekSavvy got only $21,557.50 – about 6% of what it asked for overall. And of that, only $4,500 was for legal costs, which were sought in the amount of $178,820.98.  That’s 2.5% of what was asked for in legal costs. Further spoiler alert: both Voltage and TekSavvy are appealing Prothonotary Aronovitch's ruling. Here’s the docket and here’s the notice of motion for the TekSavvy appeal dated March 27, 2015. I’ve been waiting on this posting partly because I didn’t want to say anything prior to the appeal deadline. And since it is now being appealed by both sides and the appeal has not yet been heard, I will say less about this case at this time than I might otherwise. In any event, I’ve had lots to say about this case in the past.  However, I should at least bring readers up to date.

It will be recalled that TekSavvy took the position that it “took no position” on the Voltage disclosure motion. This appears to have been a key factor in the Federal Court’s refusal to reward TekSavvy and its counsel with almost $180,000 in legal fees.

Ironically, if TekSavvy had actually opposed Voltage’s motion, it may well have been in a much better position to successfully seek costs.  Prothonotary Aronovitch cites Justice von Finckenstein’s ruling on costs in a similar case where two the ISPs actively opposed the disclosure motion:

[44] Justice von Finckenstein goes on as follows at para 35:

[35] Clearly the process that is sought to be imposed on the ISPs

would be costly and would divert their resources from other tasks.

Given that the ISPs are in no way involved in any alleged

infringement, they would need to be reimbursed for their

reasonable costs for furnishing the names of account holders, as

well as the legal costs of responding to this motion.

[Emphasis added]

[45] In that case, the Court ultimately denied the motion but awarded the costs of the motionto the third party ISPs who had opposed it.

(emphasis added)
 

I must respectfully and explicitly disagree, which I rarely do, with Prof. Michael Geist; however, I must do so about this case. He has been very supportive of TekSavvy throughout. He had a blog the other day entitled “Defending Privacy Doesn’t Pay”.  In my view, it would be more accurate to say that defending privacy can and does pay if done vigorously and out of principle – both in terms of legal costs and subscriber good will. Moreover, full indemnity legal costs are very rarely recovered in Canadian litigation. Responsible ISPs should expect to incur some non-recoverable legal costs for defending their customers’ privacy as part of their “cost of doing business”. Indeed, speaking generally and not necessarily about this case, it’s arguable that ISPs have a positive duty to actually oppose ill-founded motions for disclosure and that failing to do so could expose them to liability - but that’s another topic for another day.
 
There is also the explicit suggestion in Prothonotary Aronovitch ruling that TekSavvy should have put its cards on the table regarding TekSavvy’s costs much earlier:

[73] Whatever the reason, the parties’ failure to address the costs of the motion is an oversight that cannot now be remedied by subsuming them within the legal costs of abiding by the Order. This applies equally to the legal costs claimed on account of TekSavvy’s attendances at the motion to intervene and the various motions to adjourn. In that connection, counsel for TekSavvy conceded at the hearing of this motion that the costs of appearing before Justice Mandamin for a further adjournment could not be claimed as Justice Mandamin explicitly determined that no costs should be awarded in respect of the adjournment.

Prothonotary Aronovitch was rather obviously displeased with both sides, as her conclusion on costs of the costs motion reveals:

[129] …It may be said that success is divided and that costs should therefore not be awarded. Rather, no costs of the assessment will be awarded because neither party should be rewarded for its conduct: TekSavvy, without justification, has greatly exaggerated its claim, while Voltage has unreasonably sought to trivialize it based on unreliable and largely irrelevant evidence.

TekSavvy’s position of taking “no position” effectively meant that it did virtually nothing to protect its subscribers’ privacy other than to play for time to send out an arguably unnecessary notice to its potentially affected customers and attend for adjournments in order to let a law school clinic, CIPPIC, seek leave to and eventually intervene in the case. TekSavvy may not be Bell or Rogers but it is a very successful commercial entity with about $5- $10 million a month in estimated cash flow.  As to the notices, Prothonotary Aronovitch commented:

[64] While the Court has the discretion to order a party to give notice, the Rules do not require TekSavvy to have provided notice of the motion to its affected clients. TekSavvy acted voluntarily and on its own initiative. Whether it acted out of altruism or self-interest is irrelevant.

I have been insistent, persistent and consistent in the past in challenging TekSavvy’s “no position” position.  Indeed, it may have been arguable that the evidence in this case was no better and perhaps even worse than the evidence in the BMG case  (in which I was counsel for CIPPIC) over a decade ago, where Shaw, Telus and CIPPIC were successful in stopping the plaintiff American record companies in in their tracks because their evidence was essentially all hearsay and unreliable. The plaintiffs then were unable or unwilling to provide reliable non-hearsay evidence sufficient to justify piercing the privacy rights of the ISPs subscribers. The roadmap in the current case was perfectly clear based on the BMG case. Indeed, the landmark ruling of Justice Von Finckenstein was upheld in all essential respects by the Federal Court of Appeal. Here’s a balanced discussion of the rulings.

In the end, TekSavvy did nothing in the current case to challenge the adequacy of Voltage’s arguably inadequate evidence and to stop the disclosure motion from proceeding. It did not cross-examine on Voltage’s affidavit material in connection with the actual disclosure motion. Instead, TekSavvy chose to vigorously cross-examine to recover its alleged costs of $346,480.68 – for legal and other technical costs resulting from having taken no position and complying with the order.

Defending privacy is not remotely equivalent to supporting piracy. It is an ISP’s job under PIPEDA to ensure that disclosure in situations such as this happens only pursuant to a court order. As I said earlier, if that order is not warranted, for example because the evidence may be clearly inadequate, it is arguably the ISPs job to oppose the motion. Anyway, it can’t be “CIPPIC to the rescue” every time there’s a mass litigation attempt and it’s absurd to expect one or more individual subscribers to shoulder this responsibility of fighting for the privacy of themselves and thousands of others. They pay good money to their ISPs to do that, and ISPs generally do very well indeed finically in Canada.

CIPPIC ended up doing a good job on the policy side about the negative aspects of trolling and speculative invoicing. However, although it did mention the “hearsay” issue in its Memorandum, it is unclear to what extent if any “hearsay” was raised by CIPPIC during the oral hearing before Prothonotary Aalto. It is not even mentioned by CIPPIC, at least according to the “unofficial” transcript of the oral argument on CIPPIC’s website. However, I have no way of knowing how complete or accurate that transcript may be and there are several references in it to the microphone being off for various periods of time. Ironically, hearsay was briefly mentioned by Voltage’s lawyer according to this unofficial transcript.

In any event, Prothonotary Aalto’s learned and lengthy decision following CIPPIC’s intervention and TekSavvy’s “no position” appearance does not mention the word “hearsay”. The rule against hearsay evidence (i.e. where the witness has personal knowledge and relies on statements from others) might have been Voltage’s potential “Achilles Heel”, but nobody seemed interested in going for that kind of victory. Arguably, if a victory is just, it should be taken where it can be found.

TekSavvy clearly went to great lengths, including extensive cross-examination, to pursue its alleged entitlement to “reasonable costs” in the amount of $346,480.68. Arguably, for much less expense, it might have instead stopped the arguably deficient and hearsay-based Voltage application from going forward at all. And as the Court pointed out, as noted above, TekSavvy would have been in a better position to recover costs.

It’s very difficult to predict what will happen now. Voltage may have already invested a lot of money on this case, unless there is a contingency arrangement with its consultants and/or its counsel – which would hardly be surprising. The small 6% fractional recovery by TekSavvy of its claim for costs is no doubt a victory for Voltage, but the costs of proceeding any further may still be very high. This case is still under Court supervision – and the Court has strongly indicated in the original decision from Prothonotary Aalto that it won’t allow the names and addresses of TekSavvy’s customers to be used simply as a database for uncontrolled speculative invoicing. Indeed, the Court must approve any proposed demand letter to be sent by Voltage to subscribers and is clearly contemplating that any actions commenced must be “separate” actions to be case managed by the Court. But will TekSavvy and/or CIPPIC step up to the plate to follow through on the possibly complicated and time-consuming future steps? If not, are TekSavvy’s customers going to be on their own and out there all alone?

According to an article published on April 2, 2015, it seems that Voltage’s lawyer now has a theory that he can sue for actual damages that will be greater than the statutory damages limit of $5,000 in cases of non-commercial infringement. The article is not entirely clear on what this theory is based but this is what it says:

Zibarras explained that plaintiffs in piracy cases can opt for statutory damages or actual damages. The former are awarded automatically once it’s been proven in court the defendant actually did download the movie. The latter, actual damages, take into account how much money the production company may have lost due to the downloading and subsequent distribution.

However, assuming that Mr. Zibarras’ theory is being stated accurately, that is just not the way things work. Statutory damages for non-commercial infringement (if proven) could be as much as $5,000 but also as little as $100. It’s up to the Judge. True, a plaintiff need not elect statutory damages and can go for “actual damages”. However, it’s a real stretch and “extremely far-fetched”, as I was quoted in the article, to suggest that a typical “ non-commercial” Bittorent user could be liable for any losses supposedly resulting from subsequent distribution via a Bittorent "swarm" of hosts “that upload to/download from each other simultaneously”, if that is indeed Voltage’s current theory.

To use such theory to ratchet up “actual damages” for downloading one movie (which might have cost $10 or so from iTunes or Amazon and from which Voltage would receive even less) to actual damages of more than $5,000 is “extremely far-fetched” indeed from every factual and legal standpoint, and that’s an understatement. Clearly, there would be immense if not insurmountable difficulty in proving how many,  if any, actual “lost sales” were the results of a particular customer’s individual infringement (if proven) by downloading and what damages, if any can be proven. Clearly too, a typical downloader has no “profits” for which to account.

If I understand this theory correctly, it is rather reminiscent of and perhaps even more “far-fetched” than Catherine Leuthold’s extremely longshot and so far very unsuccessful attempt to parlay a $19,200 claim into a $22,000,000 claim by trying to hold the CBC liable for separate acts of infringements for transmissions from each of the CBC’s 800 or so participating affiliated stations and Broadcasting Distribution Undertakings [BDUs].  An application for leave to appal her case is pending in the  Supreme Court of Canada and the result is expected shortly. It would be surprising if leave to appeal were to be granted.

It will also be very interesting indeed to see what happens with respect to Voltage’s presumptive obligation as a non-resident of Canada to post “security for costs” pursuant to the Federal Court Rules, and who – if anyone – will raise that issue and when. If Voltage gets around to actually suing anyone and doing so in separate lawsuits,  which is the Court’s clear expectation, that may be the first thing that knowledgeable counsel would address. And in this case, the security for costs motion may prove to be anything but routine.

If Voltage’s strategy is to avoid actual litigation, it may find itself in some trouble with the Court – because Prothonotary Aalto at para. 40 of his reasons  and the Federal Court of Appeal before him have made it very clear that the essential “bona fide” threshold requirement for disclosure means “that they really do intend to bring an action for infringement of copyright based upon the information they obtain”.

In one sense at least, the fact that the hearsay issue was not even mentioned in the proceedings to date is good news. This means that, in the future, another ISP may well challenge a disclosure motion the way that Shaw and Telus did in BMG, if the evidence is based upon hearsay or is otherwise inadequate. Indeed, another Canadian indie ISP, Distributel recently stood up to a plaintiff successfully, as I have pointed out, and stopped the disclosure motion even before it went forward.

So, we still have an uncertain future with respect to trolling and speculative invoicing in Canada. But one thing is certain – which is that door is now appears to be a little bit more open than it was before TekSavvy took the position that it would take “no position”.

And we also now have a potentially “perfect storm” about to hit Canada in the form of Bill S-4, which if enacted, could effectively take away the need for court approval of a disclosure motion. I wrote about this at length almost a year ago, and the timing and other coincidences with the Voltage case, TekSavvy’s “no position” response to it, and the coming into force, without regulations, of the problematic notice and notice regime. It’s a perfect storm of immense magnitude for those who care about privacy. All of this may also be a perfectly appealing opportunity for those entities who wish to engage in speculative invoicing and trolling, and lawyers who may wish to engage in pursuing this type of activity. And it may not even be too cynical a stretch to think that some ISPs in this new regime could be tempted to monetize the private information they have concerning their customers’ potentially infringing activities, along with their names and contact information – all without the bother of worrying about a court order.

But in the meantime and unless there’s a successful appeal by TekSavvy’s concerning its alleged entitlement to full indemnity costs, including legal fees, for a total of $346,480.68 for "for the costs it says it incurred as a result of Voltage’s motion" and for taking “no position” on the motion, TekSavvy’s “no position” position  would have been  “Nice work if you can get it”.  However, up until now TekSavvy didn’t get it and about 2,000 or so of its subscribers could soon be getting into a lot of trouble by being thrown into an uncertain but almost certainly unsettling settlement demand process.

HPK 

Distributel Shows & Tells How an Indie ISP can Defend its Customers' Privacy Rights Against Alleged “Copyright Trolling”: Teksavvy Take Note

It’s good to see that competition is alive and well at least amongst the indies in the Canadian ISP market.  An indie ISP by the name of Disbtributel is stepping up to the plate and doing something that one of its indie competitors is apparently unwilling to do – which is to actively and effectively actually oppose a copyright mass litigation disclosure motion. Distributel believes this to be an inadequately supported motion that does not demonstrate good faith and which is being brought for an improper purpose. Indeed, Distributel explicitly alleges that the plaintiff NGN is engaged in “copyright trolling” and provides a copy of a letter seeking to “settle” for $1,500 and “misrepresenting and exaggerating” the possible potential upper end of any statutory damages award and implying that the award could reach a total of $25,000. According to Distributel, “This is a misrepresentation of the law”.  

It may be noted that the upper end of statutory damages is now $5,000 for any non-commercial infringement covered by the law that was proclaimed in force on November 7, 2012 - as any lawyer should know. No lawyer should ever suggest otherwise.  

Here is Distributel’s Motion record which shows a clear and concerted intent to resist the NGN motion. Distributel has filed two affidavits of its own from two of its employees (apparently, no expensive third party experts were considered necessary). These affidavits potentially seriously undermine the reliability of the affidavit evidence provided by Barry Logan of Canpire, who is also the deponent in the Voltage/Teksavvy matter.

Distributel had earlier chosen to “rely on the Court” to protect the privacy rights of individuals. It claims to have changed its position based upon becoming aware of NGN’s representation to a customer of a potential liability of up to $20,000 and a lack of key evidence to support NGN’s claims. Even if belatedly, Distributel is now stepping smartly, competently and confidently up to the plate to do what Teksavvy has controversially failed to do to date.

Teksavvy’s position on why it “does not oppose” the Voltage disclosure motion has been unconvincing. Yet, it claims to have somehow spent at last report at least $190,000 to not oppose and to seek two adjournments with the apparent goal of buying time to let a law school clinic try to get what could be at best limited status as an intervener. Teksavvy would of course have had full rights to bring evidence of its own, as did Distributel, and to cross examine Barry Logan of Canpire, if it chose to do so.  Ironically, it might have been much less expensive for Teksavvy to have simply engaged decisively at the outset than to have persisted in its apparent strategy to vigorously “not oppose” Voltage’s motion.  Teksavvy is not exactly impecunious. It is understood that it has between one and two hundred thousand subscribers. If its average revenue per subscribers is $50 per month, that’s cash flow of between $5 and $10 million per month. Teksavvy doesn’t need to rely, however indirectly, upon a law school clinic to take care of its customers, its business model and the public interest.

While I don’t often disagree with my friend Michael Geist, I respectfully cannot agree with his characterization that “TekSavvy has fought for the right to notify its customers and to allow CIPPIC to intervene in a case involving thousands of subscriber names”. First of all, Teksavvy always had the “right to notify its customers”. There was nothing to fight for here, except perhaps a brief delay – which would have inevitably taken place in any event and would have likely been far from brief if Teksavvy had only actually opposed the motion, and especially if it had filed evidence and/or cross-examined on  Voltage’s evidence. In any event, what exactly were Teksavvy’s customers supposed to do with this information? If they knew that they had downloaded some of Voltages’ films listed in the publicly available documentation, they might have guessed that their alleged IP address might have been on the Voltage’s hit list. What were they to do if their alleged IP address was alleged to be implicated? Hire a lawyer? Hardly.

The economics of troll litigation and the requirements of the Federal Court Rules make it completely unfeasible for an individual to retain counsel when the upper limit of what’s at stake is realistically only $5,000 per individual – however disproportionate an award of that magnitude might be. That’s why the economics of mass litigation threats attract copyright trolls and why ISPs need to be vigilant and diligent to defend their customer’s privacy.

It is an ISP’s role – and arguably its legal responsibility – to positively defend its customers’ privacy in the face of a motion for a court order that is arguably inadequate or fails to meet the “bona fide” test. This need not be an expensive exercise. Distributel is relying on evidence from its own employees. It is using only one law firm and not several sources of counsel.  After BMG, this is all well known territory with detailed maps, guidelines and guideposts. Nothing about the new legislation or subsequent case law has made anything more complicated in any material respect.  For whatever reason, Teksavvy may end up spending far more money not opposing the disclosure motion rather than actually opposing it, which reliable news reports indicate is indeed the wish of the Court.

As for CIPPIC’s role, CIPPIC itself says that it “represents consumer and other public interests in such areas as intellectual property, consumer protection in e-commerce, domain name governance, personal information protection and privacy”. It’s job is not to step in for business organizations that can hire their own law firms.  That puts CIPPIC in a very difficult position because its mandate is not be a law firm engaging in litigation that can and should be handled by the directly involved parties and their law firms.  CIPPIC relies on generous public and charitable funding from such benefactors as the Samuelson-Glushko Foundation. CIPPIC was never intended to substitute for commercial law firms or to directly or indirectly provide legal services to parties that can well afford such law firms.

CIPPIC has already done more than its duty in serving the public interest with respect to the mass litigation issue – with its first and best known victory to date, namely as an intervener  in the BMG litigation in 2004 -2005. I had the honour of being CIPPIC’s lead counsel in that case aided by the indispensable and very able help of Alex Cameron who handled the privacy issues with the clarity that proved to be so useful to the Court. There were very many important uncharted de novo public interest points to be made at that time and it was essential that CIPPIC be there to make them. As a result of CIPPIC’s intervention and the extremely competent opposition by Shaw and Telus, Canada has been immune from mass and troll litigation up until now.  With the excellent decisions of the Federal Court and the Federal Court of Appeal, the whole matter of disclosure motions in mass copyright litigation is now well understood and well-travelled ground and the map can be followed by anyone. That is exactly what Distributel seems to be doing and what Teksavvy won’t do, for whatever reason.

It is not apparent at this point when the hearing on the NGN/Distributel motion will take place and what may happen in the interim. Nor is it clear how Distributel’s strong opposition may impact the apparently similar situation in the Voltage matter, in which Canpire is also crucially involved. 

So – Distributel has now decided to fight to win for its customers' privacy rights.  It is doing what an ISP should do in these circumstances – which is to defend its customers’ privacy in the face of a disclosure motion that it believes is seriously inadequate. Several comments on Michael Geist’ blog suggest that this is not only the right thing to do but the smart thing to do from a business standpoint, since some readers are openly musing about switching from Teksavvy to Distributel.  Maybe Bell and Rogers will stand up and fight to win if and when their time comes around again and material is inadequate, as Shaw and Telus did earlier in 2004 and 2005. That is how the system should work and now seems, at last, to be working.

HPK

PS - Here is a copy of Judge Mandamin's Reasons for Order dated January 31, 2013 in the Voltage/Teksavvy confirming that "The Court is better served in coming to a proper decision having heard from differing sides." The other statements from the Court are also very important.