Leave to Appeal Granted in Access Copyright v. York U

Both sides have been granted Leave to Appeal.

Here were my observations about the decision from the Federal Court of Appeal decision from April 22, 2020.

Interveners, start your engines.

HPK

Access Copyright v. York University - Update on Supreme Court - Replies Have Been Filed

 

Here's Access Copyright's Reply.

Here's York's Reply. 

The materials were submitted to the Judges on September 14, 2020,

We will learn sooner or later whether leave has been granted to either or both sides.

Meanwhile, potential interveners should be watching.

HPK

Access Copyright and York U File Responses in SCC

(Canadian Encyclopedia)

Here's Access Copyright's Response to York's Leave to Appeal Application.

Here's York U's Response to Access Copyright's Leave to Appeal Application.

HPK

Access Copyright v. York University – Some Thoughts on the Federal Court of Appeal’s Judgment

https://dev.to/riccardo_cardin/optional-is-the-new-mandatory-c9m

On April 22, 2020 the Federal Court of Appeal (FCA) in a unanimous judgment by Pelletier, J.A., released its long-awaited decision in the appeal of the Federal Court’s July 12, 2017 decision of Phelan, J. Here’s the judgment of the FCA: York University v. The Canadian Copyright Licensing Agency (Access Copyright), 2020 FCA 77 (CanLII), <http://canlii.ca/t/j6lsb> In a nutshell, the FCA ruled that:

Re whether tariffs are mandatory:

[204]  As a result, I conclude that a final tariff would not be enforceable against York because tariffs do not bind non-licensees. If a final tariff would not be binding, the conclusion can hardly be different for an interim tariff.

[205]  Acts of infringement do not turn infringers into licensees so as to make them liable for the payment of royalties. Infringers are subject to an action for infringement and liability for damages but only at the instance of the copyright owner, its assignee or exclusive licensee. In the course of the hearing before this Court, Access Copyright candidly admitted that, given its agreement with its members, it cannot sue York for infringement in the event that some or all of the copies made by York are infringing copies. However, Access Copyright claims the right to enforce the tariff against non-licensee infringers; yet if the tariff is not mandatory then there can be no right to enforce it.

[206]  As a result, the validity of York’s Guidelines as a defence to Access Copyright’s action does not arise because the tariff is not mandatory and Access Copyright cannot maintain a copyright infringement action. Therefore, I would allow York’s appeal from the judgment of the Federal Court with costs, set aside the Federal Court’s judgment, and dismiss Access Copyright’s action with costs.

Re: York’s Fair Dealing Guidelines

[309]  The prayer for relief of York’s counterclaim seeks a declaration that “any reproductions made that fall within the guidelines set out in York’s “Fair Dealing Guidelines for York Faculty and Staff (11/13/12)” … constitute fair dealing pursuant to sections 29, 29.1, or 29.2 of the Copyright Act”. It is apparent from this that the Guidelines are the heart of York’s position in this litigation.

 [310]  Given the relief which York sought, it was incumbent on it to justify the Guidelines themselves so as allow the Court to declare that reproductions that fall within the Guidelines are fair dealing. It has not done so.

[311]  The Federal Court ruled that, having regard to the fairness factors set out in CCH, as developed in SOCAN and Alberta Education, York’s Guidelines did not ensure that copying that complied with them was necessarily fair dealing. In most instances, the Court found that fairness factors pointed in the direction of unfairness, markedly so in some cases.

[312]  York has not shown that the Federal Court erred in law in its understanding of the relevant factors or that it fell into palpable and overriding error in applying them to the facts. As a result, I would dismiss York’s appeal from the Federal Court’s judgment with respect to the counterclaim with costs.

(highlight and emphasis  added)

For those not familiar with the “mandatory tariff” debate – which goes back almost a decade – here it is in simplified terms. According to Access Copyright (“AC”), if a university is responsible for the making of even one inadvertently infringing copy of one work in its very limited repertoire – perhaps a newspaper article or a poem or a short story or a chapter of a book  – that university would be liable for payment of the Copyright Board’s FTE rate (initially pegged at $45 per annum per FTE) for ALL the students in the university for the entire term of the tariff.  So, for a university with 50,000 FTE students, that single copy could cost $2,250,000 for each year – i.e. the entire period – of the tariff as certified by the Copyright Board. The initial tariff was proposed for 3 years – so that would mean $6,750,000 for that one cursed copy. This would be in addition to the tens of millions per annum that such a university would be paying for site licenses and the acquisition of traditional paper copies of books and journals. Not to mention what students would be paying for their own textbooks and course packs purchased through AC licensed copy shops. Naturally, it’s very possible and maybe even likely that there could be a few instances of inadvertent copyright infringement in works that may actually be in AC’s very limited repertoire during an academic year giving rise to perhaps a few dollars’ worth of actual damages.  But is that any reason to impose a tariff worth many millions of dollars on an unwilling institution for one inadvertently infringing copy of one work?

Absurd? Ridiculous? Absolutely! But that was what AC believed and spent millions to put in place – with a lot of help from the Copyright Board in the early days and not a lot of explicit and effective opposition until it was almost too late from Universities Canada (“UC”) and York University, which finally made the necessary points at the appeal hearing.

Here’s a simple analogy. In the old days, when train fares were regulated by tariffs, there was a tariff that set the maximum amount for a ticket from, for example, Ottawa to Toronto at, say, $10. But nobody was forced to take the train. You could choose to fly and pay more. Or take the bus and pay less. Or ride a bicycle and pay nothing. There was choice. But travelers were protected by a maximum amount in the form of a regulated tariff that could be charged for train travel on the trains that were controlled by two providers and eventually only one.  But once again – and of prime importance – nobody was forced to take the train to get there from here.

This concept of a “mandatory tariff” is, of course, ridiculous – which is why I, Prof. Ariel Katz, Prof. David Lametti, as he then was, and ultimately many universities decided to fight against this theory. Not only is it bad policy and bad economics. It is and always has been bad law. The Supreme Court of Canada got this right in 2015. Phelan, J.  got it very wrong in 2017. Finally, the FCA in a unanimous judgment from Justice Pelletier has got it right again.

Below are some of my current observations on Justice Pelletier’s decision, and later some references to some of my many past comments on this case. Needless to say, I am very pleased that the FCA completely embraced the arguments that I made in the Supreme Court of Canada on behalf of Prof. Ariel Katz and Prof. David Lametti, as he then was, on behalf of his McGill institute. Here’s the webcast of the oral argument, where we were heard at the 1:02 mark. Here’s our factum. That resulted in the landmark 2015 SCC ruling in Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57 (CanLII), [2015] 3 SCR 615, <http://canlii.ca/t/gm8b0> that resulted in Rothstein, J.’s ruling that tariffs are not mandatory for users. That result was very much influenced by Ariel Katz’s extremely important Spectre I paper  which was then forthcoming, and which has finally received the explicit recognition it deserves from Pelletier, J.A. (see para. 32 of the FCA judgment). Interesting, the CBC judgement and Prof. Katz’s paper were mentioned but downplayed by York at the trial before Phelan, J. Fortunately, more attention was brought to bear by York at the appeal – but the real credit here belongs to Prof. Katz whose analysis is reflected and made very accessible in the long but very logical and lucid reasons of Pelletier, J.A.

I’m also very pleased to note that the same arguments that my client the Canadian Association of Research Libraries (CARL), which was refused leave to intervene in the FCA because the motion judge thought that final approved tariffs were not in issue, have now found their way into the FCA judgment. The motion judge wrongly denied leave in my view, on the basis that “Any arguments that CARL would wish to make in relation to any final approved tariff are outside the issues that are before this Court and do not justify granting CARL leave to intervene.” Fortunately, the FCA panel with Justice Pelletier presiding ruled that the issue of “any final approved tariff” was indeed the essence of the issues at stake and got it right.

I will not say much now beyond the obvious about what this all currently means and where this all may be headed because a lot of parties, some of whom may or may not be or become my clients, are or will be studying this very carefully as the presumptive date of June 22, 2020 approaches for leave to appeal (“LTA”) applications to the Supreme Court of Canada (“SCC”). By the way, that date may get pushed out to September 13, 2020 if a draft bill recently circulated by the Minister of Justice becomes law soon.

Early on in this 107-page 312 paragraph judgment, Justice Pelletier makes the following very important statement:

[33] I will begin with the issue of the enforceability of the tariff. The question of fair dealing only arises if the tariff applies to York. It is only if a final tariff is “mandatory” that York must rely on its Guidelines to show that compliance with them is fair dealing, a user’s right.

This, along with the above quoted paras. 204 – 206 might suggest that the ruling on York’s fair dealing guidelines can be disregarded, given that Justice Pelletier spent the better part of 73 pages and 206 paragraphs totally vindicating the proposition that final – and obviously interim – Copyright Board tariffs are not mandatory. However, things may not quite that simple. The decision on York’s fair dealing guidelines arose because York made the initial strategic decision in 2013 to affirmatively seek such a ruling by way of a formal counterclaim – in effect, a separate but related lawsuit.  As Justice Pelletier states:

[309] The prayer for relief of York’s counterclaim seeks a declaration that “any reproductions made that fall within the guidelines set out in York’s “Fair Dealing Guidelines for York Faculty and Staff (11/13/12)” … constitute fair dealing pursuant to sections 29, 29.1, or 29.2 of the Copyright Act”. It is apparent from this that the Guidelines are the heart of York’s position in this litigation.

Perhaps York should have been rather more careful about what it wished for. Both the Federal Court and the FCA had to respond to the counterclaim, which they did as asked. I am on record from the beginning as having questioned not only the guidelines themselves, which emanate from AUCC (now UC) guidelines but York’s decision to needlessly, in my view, put them on trial. Essentially, I had suggested that York get a summary ruling on whether the tariff was mandatory – which should have been very easy at least after the 2015 SCC judgment – and not unnecessarily “bet the farm” on the controversial fair dealing guidelines. Here are some of my blogs in reverse chronological order.

All I will say at this point about possible SCC proceedings at this point is this:

• It would seem very likely that AC will seek leave to appeal on the mandatory tariff ruling. It is an existential threat to what remains of its long obsolete and unwelcome business model. After all the presumably millions it has spent to date on this litigation and at the Copyright Board, the relatively small cost of a SCC proceeding and the hope, however faint and remote, of a  successful “Hail Mary Pass” would suggest that such an attempt to get leave to appeal will almost certainly be made. How York will respond and whether leave will even be granted remain to be seen.
• How York deals with the ruling on its fair dealing guidelines is a much more complex question both substantively and procedurally that many well-paid minds are presumably now addressing.
• Only actual parties can seek leave to appeal. Theoretically, others can seek leave to intervene in the leave to appeal process – but this is extremely unusual and very rarely successful.
• If this case gets to the SCC, there are likely going to be a lot of potential interveners lined up. The recent practice of the Supreme Court, unlike the Federal Court of Appeal, is to be very liberal in allowing leave to intervene but very restrictive in permitting time for oral argument – i.e. only five minutes per intervention.

As for the longer-term future, whether or not the mandatory ruling stands, it is now explicitly clear that AC cannot sue any university. But we knew that long before the FCA confirmed  it. That point cannot be in issue. Even AC admits that this is the case.

Will there now be litigation – by some publishers as we saw in CCH with funding provided by AC in whole or in part as we saw in CCH v. LSUC? Perhaps even class actions as someone who should know better has rashly predicted – against one or more universities? Such class actions might be on behalf of many copyright owners – ranging from big publishers to individual authors.  And potentially even a “reverse class action” against one university who would be called upon to defend all universities.

These are theoretical possibilities. For many procedural and substantive reasons, which I won’t deal with here, such mass litigation will likely not happen – and in the remote event that it happens, would likely be a very costly mistake on the part of whoever is responsible. So – the litigation threat may be empty or at least underwhelming. AC and any publishers who put their name on such litigation may have much more to lose than to win. Besides, suing one’s best customers is seldom a good idea in the long run – as AC is hopefully finally learning.

The very strong and likely “bullet proof” nature of the FCA ruling on mandatory tariffs should – but  likely won’t – induce AC to do something obvious that it has refused to do before, which is offer licenses with some real value  that don’t entail double payment and that really provide rather than discourages “access” for the repertoire it had actually has, and not the repertoire it pretends to have, at an attractive price – say $2 or $3 per FTE for universities and less for colleges and K-12 in turn. That way, AC could survive and serve a useful, albeit limited, function. AC should have done this long ago. I had previously suggested a $5 price point. But AC’s bargaining position is now much worse because it’s very clear that educators don’t need their licenses if they don’t want them and their tariffs are NOT mandatory. And if, as I expect, the SCC denies leave on the mandatory issue or upholds the FCA’s ruling that tariffs aren’t mandatory, AC’s position will be even worse still. Indeed, most if not all educational institutions could then readily conclude that AC no longer has anything useful to offer at any price unless its business model is somehow drastically and positively transformed – if that is even possible.

And, of course, AC and many powerful content owners and collectives will renew lobbying efforts to make tariffs effectively mandatory. A bullet was dodged not long ago when a senior official at ISED tried to usher though just such an amendment that would harmonize statutory damages regimes and thereby effectively make tariffs mandatory through the threat of terror and effective extortion. To his credit, he did consult, and he got an earful and the proposal never saw the legislative light of day. But he is now even higher the chain of command at ISED and the stakes are now even higher.

Finally, from the perspective of the academic community, it would seem that it’s a good time to revisit fair dealing guidelines and safeguard procedures in any event. Even if the fair dealing part of the ruling somehow survives any appeal process in whole or in part, it may have very limited effect on many institutions that have long ago departed from the AUCC (now UC) model. Besides, much has changed in the last decade. Paper course packs have largely disappeared. Site licenses have become much more important. We have three very positive and clear fair dealing decisions from the SCC since 2004 – and the addition of the word “education” in s. 29 of the Copyright Act. We have other positive fair dealing case law, such as the April 23, 2020 decision of Justice Schabas of the Ontario Superior Court in Wiseau Studio, LLC et al. v. Harper et al., 2020 ONSC 2504 (CanLII), <http://canlii.ca/t/j6w8w> which deals with documentary films but will have broader application, unless it is somehow overturned on any appeal, which frankly seems very unlikely.

And last but not least, we have the dreadful cloud of COVID-19. Part of the silver lining on that cloud will likely be the recognition that educators will need to increasingly rely on virtual electronic provision of essential educational material. The SCC has made it clear that the “geography” of teaching and learning doesn’t matter per se:

[27] With respect, the word “private” in “private study” should not be understood as requiring users to view copyrighted works in splendid isolation.  Studying and learning are essentially personal endeavours, whether they are engaged in with others or in solitude.  By focusing on the geography of classroom instruction rather than on the concept of studying, the Board again artificially separated the teachers’ instruction from the students’ studying.  (emphasis added)

Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 (CanLII), [2012] 2 SCR 345, <http://canlii.ca/t/fs0v5>

Any copyright owner or collective that gets too greedy as a result of COVID is unlikely to evoke any sympathy from politicians or judges.

What About the Copyright Board?

Interestingly, the Copyright Board’s decision on AC’s post-secondary tariff that was nearly a decade in the making and which contained seriously embarrassing errors that required correction did get one thing more or less right:

The mandatory nature of the tariff

[357] The Tariffs are silent on whether compliance with a tariff is mandatory for users who do not seek to benefit from the licence offered thereby. We are aware that related issues have been raised in recent judicial proceedings [FN Canadian Broadcasting Corp v SODRAC 2003 Inc, 2015 SCC 57] and it is not necessary for us to opine on the issue at this point.

[358] To the extent it might be appropriate for a tariff to include wording whereby its benefits and obligations would only apply on an opt-in basis, we would appreciate a more complete record before including such a provision and invite affected persons to participate in the proceedings on the next occasion the Board considers proposed tariffs for these users.

(highlight added)

It might have made more sense to speak of  users who do not need to utilize the licence rather than “users who do not seek to benefit from the licence” – since users who don’t need a license because they see no net benefit from it clearly must be able to choose not to utilize it. QED.

Of course, para. 358 is now moot unless the SCC unexpectedly reverses Justice Pelletier’s decision – or Parliament unexpectedly succumbs to  AC and friends’ lobbyists.

However, in any event, if the Copyright Board is to serve any useful purpose and justify its very large budget and overcome the chorus of criticism that it is “dysfunctional”, it is going to have to:

• come up with tariffs that offer sufficient value and convenience to Canadian users
• do so in a way that doesn’t cost creators and objectors millions of dollars
• do so in a way that doesn’t take 7 to 9 years or so.

What about Writers’ Recourse?

Will writers be left without a remedy if the decision stands? The answer is clearly no. Copyright infringement remedies remain available against educational institutions when there is enough infringement and damage to warrant proceedings. These are the same remedies that all copyright owners have against all infringers, if there is infringement. Unlike older and wiser collectives, AC assumes that all Canadian educational institutions are infringers. They are not – they pay hundreds of millions of dollars a year to publishers and writers. SOCAN, the oldest collective in Canada, doesn’t force licenses on background music users, such as barber shops or restaurants, for example who don’t need licenses. Some don’t use any SOCAN repertoire – perhaps they play only public domain music such as Bach and Mozart. Or, in the case of my beloved barber, he uses an old fashioned FM radio in his little shop, for which there is an historically important exemption in s. 72.1(1) that I fought successfully to preserve while in government in the face of heavy lobbying and senior officialdom at the time who knew very little about copyright law. AC must learn to work within the system – and not against it. If AC is to serve any useful purpose, it must learn to survive by being useful – and not by threats and coercion.

Conclusion:

Speaking of coercion, our courts long ago absorbed and embraced the lesson from the famed Hanfstaengl case as cited in Vigneux v. Canadian Performing Right Society Ltd., 1943 CanLII 38 (SCC), [1943] SCR 348, <http://canlii.ca/t/fslvq>:

Lord Justice Lindley in Hanfstaengl v. Empire Palace ^[2]:—

Copyright, like patent right, is a monopoly restraining the public from doing that which, apart from the monopoly, it would be perfectly lawful for them to do. The monopoly is itself right and just, and is granted for the purpose of preventing persons from unfairly availing themselves of the work of others, whether that work be scientific, literary, or artistic. The protection of authors, whether of inventions, works of art, or of literary compositions, is the object to be attained by all patent and copyright laws. The Acts are to be construed with reference to this purpose. On the other hand, care must always be taken not to allow them to be made instruments of oppression and extortion.

(highlight added)

[2] [1894] 3 Ch. 109, at 128.

The Vigneux case loomed large in Justice Pelletier’s judgment. Even if the SCC grants leave to appeal, it would be extremely astonishing if it were to undo Justice Pelletier’s convincing judgment that tariffs do not bind non-licensees and that  AC’s tariff is not mandatory, given the long lineage from of its own jurisprudence from Vigneux in 1943 to CBC v. SODRAC in 2015 that led to the FCA decision.

HPK

Voltage Pictures and the Massive Mass Litigation Mess in Canada

Voltage Pictures has been trying to sue 55,000 Canadians all at once through an unprecedented federal “reverse class action” in which one defendant was singled out and expected to defend the interests of the entire so-called class. Voltage seems to have picked its fight with the wrong defendant – Mr. Robert Salna - who is a landlord and who is sufficiently principled and financially able to have retained capable counsel. In the course of this quest, Voltage Pictures also managed to fight with Rogers as an ISP from which it sought disclosure of names and addresses. Both of the fights found their way to the Supreme Court of Canada, which recently declined to hear Voltage's appeal in one case and ruled against Voltage in the other. 

The Supreme Court of Canada (“SCC”) ruled on September 14, 2018 in   Rogers Communications Inc. v. Voltage Pictures, LLC, 2018 SCC 38 (CanLII), that Rogers is entitled to be reimbursed for “its reasonable costs of compliance with the Norwich order” to disclose the names and addresses of alleged copyright infringers. Here is the webcast of the SCC hearing that took place on April 26, 2018. This was in the context of the controversial “reverse class action” by Voltage Pictures against 55,000 or so individuals. The ruling will clearly affect future mass litigation and should have a serious and chilling impact on other pending mass litigation, of which there are at least 17 examples in the Federal Court involving thousands of individual “Doe” defendants. These 17 or so actions are not reverse class actions but typically sweep in hundreds of “Doe” defendants alleged to have infringed the same movie using BitTorrent.  All of these cases have been launched by Mr. Kenneth Clark of Aird and Berlis LLP

These costs – to be determined by the motions judge and this time with an adequate evidentiary record – can include only the steps above and beyond those already required by the Copyright Act pursuant the Notice and Notice regime. The SCC decision is notable for many reasons.

The issuance of the decision followed unusually quickly – less than five months after the April 26, 2018 oral hearing. The Court usually takes about six months or so.

It follows the major SCC setback for Voltage when on August 9, 2018 the SCC dismissed Voltage Pictures et al’s application for leave to appeal from a judgment from the Federal Court of Appeal (FCA) affirming the Federal Courts’ February 2, 2017 order regarding security for costs but for very different reasons. Voltage had been ordered to pay $75,000 into court for security for costs forthwith – which dates back to February 2, 2017 – more than 19 months ago. This payment apparently still has not been made, so the “reverse class action” has presumably fizzled fatally and finally. The reverse class action never got to the “certification” stage, where it would very likely have failed. The astonishing concept of forcing one individual chosen by the plaintiff to retain counsel and defend a class of 55,000 others - each of whom may have a different story to tell – was apparently predicated upon an untested reading of the Federal Courts Rules, which have not been and almost certainly were never meant to be used in the reverse mode as contemplated in this way.

This hearing was about an interlocutory procedural matter involving an apparently very small amount of money with an inadequate evidentiary record and very little explanation by the motions judge of why he thought $100/hour was appropriate – or a suggestion as to how many hours would be required. The SCC rarely gets involved in such matters but obviously saw the importance of this issue. Given the inadequate record below, the SCC hearing at times resembled a motion in the Federal Court with experienced lawyers and justices at times seeming to speak the language of systems analysis.

Oral arguments can and do matter - and Voltage said some things discussed below that may have backfired in this case and may cause it problems in the future beyond the obvious fact that it and others will now have to pay an amount – not necessarily “negligible” – for the details of each alleged infringer’s name and address.

It is clear that the SCC is concerned about the torrent of BitTorrent litigation in Canada. It has been clear since 2011 that Voltage and some apparently related entities are trying to unleash a Torrent of “BitTorrent” litigation. There have been changes in lawyers and strategies along the way in the quest to bring what many would call “copyright trolling” litigation – or worse - to Canada.

Justice Abella challenged Mr. Kenneth Clark, the counsel from Aird & Berlis LLP, for Voltage in the SCC hearing, as to whether his concerns that “The sky isn't necessarily fallen, but it has certainly caused a lot of damage” was based upon actual evidence or “just anecdotal.” He had no good answer. Indeed, he told her that “The United States has been complaining about Canada's position as a copyright infringer for a long time and in our materials we included a 2017 report saying Canada is still a haven for copyright pirates.” Voltage placed a lot of reliance on anecdotal and unreliable secondary sources – such as an IIPA report from 2017.   That report was  an IIPA report from 2017, which is an annual report from an American lobbying firm used to heavily influence USTR “301” reports. These reports are argumentative, mostly anecdotal and virtually devoid of scholarly rigor or actual evidence.  As I said in 2010 about these IIPA reports, the IIPA is the powerful Washington lobbying organization that is highly influential in the content of the notorious annual USTR “Special 301" report - which provides predictable and perennial negative commentary about Canada that our own Government says "lacks reliable and objective analysis". They are not taken seriously by the Canadian government. It is hardly a legal authority and should never have been filed as an authority in the SCC. Clearly, the SCC wisely ignored it.

In this case, Voltage’s counsel told the Supreme Court that he was trying “to make copyright infringement akin to a parking ticket” and that he was looking for “$100 or $200, in the ballpark…” per defendant. So, why has he been looking for $5,000 settlements in the 17 other mass litigation BitTorrent actions he has been pursuing in the Federal Court beginning in 2016? $5000 is quite a parking ticket. It’s the maximum the statute allows for statutory damages for non-commercial infringement and 50 time more than the minimum of $100. And why would anyone ever agree to settle at the max at the beginning of a process that is extremely unlikely to go to trial?

Voltage and other will now have to come up with real money when the Federal Court determines reasonable costs of compliance with Norwich orders. In the past, Voltage fizzled when it came to paying $33,380 costs in the TekSavvy case and now has failed to pay $75,000 into court for security of costs in this reverse class action case.

Above all, the SCC has made it explicitly clear that merely “being associated with an IP address that is the subject of a notice under s. 41.26(1)(a) is not conclusive of guilt”.  The SCC also clearly stated in the 2004  CCH v. LSUC decision that liability for “authorization” must entail “sufficient control” over the person doing the infringing, which is surely an oxymoron when it comes to teenage children and their friends using the household Wi-Fi with numerous devices. So, it’s open to question now whether there can even be any massive drift net type of action based upon any sustainable one-size-fits- all pleading – especially by way of a simplified action involving BitTorrent activity.

The Court’s judgment should put the brakes on some of the arguably overly informal procedures and accommodating rulings in the name of efficiency by the Federal Court in these 17 actions. This approach has apparently been based upon the sweeping dicta of Justice Stratas in the FCA decision below that culminated in his urging that these cases be dealt with “as quickly, easily and efficiently as possible while ensuring fair treatment of all.” Hopefully, more attention will now be paid on the “fair treatment for all” rather than the “quickly” and “easily” wording.

Here are perhaps the two most consequential paragraphs in the judgment – which put a severe chill on all the legal basis of the outstanding mass BitTorrent cases:

[35] I acknowledge that there will likely be instances in which the person who receives notice of a claimed copyright infringement will not in fact have illegally shared copyrighted content online. This might occur, for example, where one IP address, while registered to the person who receives notice of an infringement, is available for the use of a number of individuals at any given time. Even in such instances, however, accuracy is crucial. Where, for example, a parent or an employer receives notice, he or she may know or be able to determine who was using the IP address at the time of the alleged infringement and could take steps to discourage or halt continued copyright infringement. Similarly, while institutions or businesses offering Internet access to the public may not know precisely who used their IP addresses to illegally share copyrighted works online, they may be able, upon receiving notice, to take steps to secure its internet account with its ISP against online copyright infringement in the future.

[41] It must be borne in mind that being associated with an IP address that is the subject of a notice under s. 41.26(1)(a) is not conclusive of guilt.  As I have explained, the person to whom an IP address belonged at the time of an alleged infringement may not be the same person who has shared copyrighted content online. It is also possible that an error on the part of a copyright owner would result in the incorrect identification of an IP address as having been the source of online copyright infringement. Requiring an ISP to identify by name and physical address the person to whom the pertinent IP address belonged would, therefore, not only alter the balance which Parliament struck in legislating the notice and notice regime, but do so to the detriment of the privacy interests of persons, including innocent persons, receiving notice.

(highlight and emphasis added)

Even if these comments from the SCC go beyond the narrow “ratio decidendi” (what is actually decided and what is generally rooted in the facts) to the those that are “obiter dicta”, the latter type of comments can still be authoritative if they are closely related to “ratio decidendi”.  Those who are curious about the role of SCC “obiter dicta” may want to read the SCC’s own important 2005 decision regarding this issue. See  R. v. Henry.  In this instance, these comments were arguably closely related to the “ratio” and should now be regarded as binding authority.

Hopefully, these statements from the SCC will send a clear signal to the case management prothonotaries and judges in the Federal Court to proceed with caution, to ask the necessary questions in default proceedings, and not to inappropriately sign default judgments or even consent judgments that do not appear to be appropriate in individual cases. Above all, the SCC judgment may serve to prevent hundreds or thousands of unsuspecting individuals having judgments entered against them en masse in default proceeding for up to $5,000 each– with all the attendant consequences that could follow.

We are, unfortunately, seeing American-style mass litigation in Canada predicated upon the notion that few defendants will retain counsel to fight a “parking ticket” but will settle for some portion or, inexplicably in some cases apparently even all -  of the maximum amount of $5,000. This is being fueled by lack of access to justice. Sadly, the law school clinics are not stepping up to the plate. In some cases, lawyers may be giving questionable advice. All of this will hopefully somehow soon stop. Presumably, the Federal Court will get the message from the SCC.

HPK

PS - update of January 2, 2019

Voltage has paid the required $75,000 into court on November 9, 2018 and steps are being taken to determine Rogers' "reasonable costs", pursuant to the ruling of the SCC. Here's the docket: http://apps.fct-cf.gc.ca/pq/IndexingQueries/infp_RE_info_e.php?court_no=T-662-16&select_court=T