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

Access Copyright v York University: York Wins re "Mandatory Tariff" and Loses re Fair Dealing Guidelines

Very big news today from Federal Court of Appeal:

• Victory on "mandatory tariff" issue for York
• Loss for York on fair dealing guidelines.

Here's the formal judgment:

https://www.scribd.com/document/457774992/A-259-17-20200422-J-E-O-OTT-20200422122454-PLT-pdf

Here's the Reasons:

https://www.scribd.com/document/457774994/A-259-17-20200422-R-E-O-OTT-20200422130400-PLT-DE2-WDS-2020-FCA-77-pdf

Analysis to follow. 

Very likely both sides will try to get leave to appeal in Supreme Court of Canada.

HPK

UPDATE ON THE “MANDATORY TARIFF” ISSUE, FAIR DEALING AND COPYRIGHT ADVOCACY IN CANADA

This seems like such a long time ago - but it was on February 26. 2020 in Edmonton. We were hoping to have heard from the Federal Court of Appeal by then on the Access Copyright v. York U. case, but that did happen and still hasn't happened.

UPDATE ON THE “MANDATORY TARIFF” ISSUE,

FAIR DEALING AND COPYRIGHT ADVOCACY IN

CANADA

February 26, 2020

UNIVERSITY OF ALBERTA

CHATHAM HOUSE RULE

HOWARD P. KNOPF, M.S., LL.M.

Counsel

MACERA & JARZYNA, LLP

OTTAWA, CANADA

(some of this material has appeared before on my blog and/or in presentations elsewhere)

(views are personal and not necessarily those of my firm or clients and are not legal advice)

Here's the slide show.

Simple Solutions Simply Don’t Suffice to Solve the Slew of Song Infringement Substantial Similarity Suits

(Rogers & Hammerstein - "Do-Re-Mi")

Damien Riehl and Noah Rubin have released this interesting TEDx talk https://youtu.be/sJtm0MoOgiU entitled “Copyrighting all the melodies to avoid accidental infringement”. It has gotten lots of attention.

Their well-meaning but unconvincing concept is to algorithmically generate every possible melody contained within an octave with no chromatic notes and create a huge database and dedicate it to the public domain.

At the risk of oversimplifying their research and conclusion, this concept frankly seems even more simplistic than the apparently nonsensical "expert" opinions behind some bad court decisions. There are 12 - NOT just 8 - notes in a scale and often more than one octave + rhythm and harmony involved - not to mention the "independent creation" doctrine. They say they are working on including all 12 notes in the scale.

Obviously, songwriters are not likely to succeed in defending an infringement lawsuit simply because a tune may turn out to be found in their limited data base that is substantially similar to the plaintiff’s tune and the allegedly infringing tune. Copyright law doesn’t work that way.

Here are some well known examples that fall outside the simplistic Riehl/Rubin TEDx talk concept:

• Bernstein - Maria: https://youtu.be/DyofWTw0bqY (incredible use of "augmented fourth"  or tritone - "the devil in music")
• Beatles "Something" - https://youtu.be/MZ3Vh8jZFdE  Some surprising "modulation"
• Rogers & Hammerstein "Do-re-mi" - that most diatonic of all tunes throws in a B Flat at the end if you play it in C major. https://youtu.be/drnBMAEA3AM

Indeed, many great tunes contain "accidentals" and may modulate quickly and span octaves.

Sorry for the OK Boomer examples that date back even earlier than my Juilliard School days - but today's so-called tunes are - to the extent that they even include so-called melody - so simple minded that it's no wonder that so many seem the same.

Once upon a time, music really did consist of melody, harmony and rhythm.  It has often been said that Mozart's genius was to start with something apparently very simple and diatonic and to then throw in some chromatic complexity and turn it into extreme genius...

A great example is Mozart - Piano Concerto kv467 no21 (Alfred Brendel) - 2nd movement https://youtu.be/45drOlTTTA8 (aka the "Elivra Madigan" concerto)

This not only contains some delicious chromaticism but also goes beyond the octave range.

Sometimes some things are just not so simple.

HPK

PS - an internationally respected and tenured musicologist friend of mine has pointed out there is more than just the B flat chromaticism in "Do-re-mi":

The Copyright Board’s Access Copyright Post Secondary Decision: The Incorrect Correction

(Federal Court of Appeal)

In the very fraught file concerning Access Copyright’s quest for a post-secondary tariff, the Copyright Board issued a decision on December 6, 2019 and certified a tariff dated December 7, 2019. The tariff application was almost a decade old. It had been almost 4 years since an effectively uncontested hearing had taken place in January of 2016. As I’ve indicated, the timing was nothing if not interesting and, for whatever reasons, there has been no attempt at judicial review. That may be in part because the Board explicitly took no position on whether the tariff is “mandatory” and that question, as everyone knows, is pending in the Federal Court of Appeal and may be headed once again to the Supreme Court of Canada, which will presumably, if necessary, confirm that it said what it meant and meant what it said in 2015 about tariffs not being mandatory for users in the CBC v SODRAC case argued  by yours truly on behalf of Prof. Katz and Prof. David Lametti as he then was, and his CIPP institute at McGill.

The Board’s certified tariff dated December 7, 2019 contained a serious arithmetical error that would have doubled the tariff, which the Board corrected on December 28, 2019.

However, the Board’s decision of December 6, 2019 contained other errors that the Board has attempted to correct by means of an email – NOT a formal notice – on Wednesday, February 12, 2020. Essentially:

1. The Board mistakenly referred to the Federal Court rather than the Federal Court of Appeal. This is very embarrassing for whoever drafted the decision and whoever was responsible for proof-reading it. The Board has a very large staff considering its very limited caseload. This staff includes five lawyers and an articling student. It has been about three decades since the Federal Court, in contrast to the Federal Court of Appeal, has been involved in any review of Copyright Board matters. Even first year law students quickly learn the difference between the Federal Court and the Federal Court of Appeal. Surely everyone at the Board knows the difference. That makes it even more astonishing that this error wasn’t caught.
2. More seriously, the Board had erroneously referred in its December 6, 2019 decision to a non-existent attempt by Prof. Ariel Katz to ask the Federal Court of Appeal to review the Board’s refusal of his request for a reference to the Federal Court of Appeal on a question of law. That was not only false and misleading. It cast Prof. Katz in a less than flattering light and showed the Board’s lack of familiarity with an important milestone in this long and still very much unresolved file.
3. The Board has confessed to the first error – but notably ignores the second and far more serious one in its emailed notice.

These errors involve none other than Prof. Katz, who provides full details of all of this on his blog entitled Oops, the Board did it again, and again, and again,  along with details of the more serious substantive error of the Board in completely ignoring in its decision the important evidence that Prof. Katz had duly provided to the Board on the crucial issue of Access Copyright’s repertoire – and notable lack thereof.

The Copyright Board apparently doesn’t even deem it necessary to indicate that the decision has now been corrected and revised. To date, there has to date been no official “Notice” on the Board’s website. The failure of the Board to deal adequately with these errors has now resulted in the existence and likely persistence of two “official” versions of this decision, one of which contains on its face a rather significant error that the Board has not even acknowledged and apparently doesn’t wish to acknowledge.

HPK

Two New Mass Copyright Lawsuits – Rambo: Last Blood & Angel Has Fallen

Here two more mass copyright lawsuits involving films in Canada:

• Action T-196-20 involves RAMBO: LAST BLOOD. There are 1,218 John Doe defendants.
• Action T-198-20 involves ANGEL HAS FALLEN. There are 2,130 John Doe defendants.

Both actions are from the usual law firm – Aird and Berlis, LLP.

Presumably, “Norwich Orders” will be sought in both cases for the internet service providers (“ISPs”) to disclose the actual names and addresses behind the IP addresses.

It will be interesting to see if any of the ISPs will step up to the plate to determine if the Norwich Orders are indeed justified and, if appropriate, to stand up for the privacy interests and rights of their subscribers.

HPK

Update on Allarco Litigation – Allarco’s Potential Exit Costs in the Federal Court

As I wrote earlier on January 29, 2020,  Allarco is liable to pay costs arising from its discontinuance of its “unusual” (as I described it) Federal Court action. Moreover, Allarco is liable to pay costs of the lengthy motion hearing of January 23, 2020 supported by a reportedly very large amount of documentation in which is sought unsuccessfully to punt on the Federal Court costs issue and kick it over to Alberta or, alternatively. to adjourn or stay the costs matter and a “laundry list” of other requests for relief. As the Case Management Judge Furlanetto noted in an unusually blunt order dated January 27, 2020:

The evidence that the Plaintiff filed on the adjournment motion was lengthy and included five affidavits, including two from experts, the vast majority of which was not relevant to the requested adjournment and related to issues involving the merits of the proceeding. None of the affidavits were previously filed in the proceeding, although one asserted it was in support of a motion for interlocutory injunction, which had never been brought in the proceeding and was not pending before the Court.

As I noted, Allarco has discontinued its Federal Court action and started a new one – including an application for an interlocutory injunction – in the Alberta Court of Queen’s Bench. This is presumably because the Alberta court in theory has a wider jurisdiction to rule on some of the more unusual claims being advanced, such as conspiracy, intentional interference, etc.

Pursuant to the Order of the Case Management Judge, the “4Stores” retailers (as they are being called), have submitted material on February 3, 2020 to substantiate their costs demands. Here is my summary of the bottom line of the amounts they are seeking:

Allarco adjournment etc. motion heard January 23, 2020 – costs sought by 4Stores:                       $74,123.70
Costs following discontinuance sought by 4Stores:	$453,033.03
Total Costs sought by 4Stores in Federal Court as of February 3, 2020:	$527,156.73

Here is the 4Stores complete submission as filed in the Federal Court on February 3, 2020.

Allarco will have until February 13, 2020 to respond and the 4Stores will have until February 18, 2020 to reply.  The Court indicated that “The Defendants’ motion for costs shall thereafter be dealt with based on the written record filed. Should the parties be of the view that additional oral submissions are needed, such request shall be dealt with through case management.”

This is an unusually large amount of costs being sought upon discontinuance at such an early stage of litigation in the Federal Court. That said, this is very “unusual” litigation and the proceedings to date have been very unusual. All the parties are sophisticated, and all the counsel are experienced. So, this is bound to be interesting and potentially important.

I’ll update as soon as I have further useful information.

HPK

PS - May 14, 2020

Here's the Federal Court Docket entry  from May 13, 2020.

Order dated 13-MAY-2020 rendered by Angela Furlanetto, Prothonotary Matter considered without personal appearance The Court's decision is with regard to Motion Doc. No. 19 Result: 1) Defendant Staples Canada awarded costs of $19,700.28; 2) defendant Best Buy Canada awarded costs of $19,978.50; 3)defendant Canada COmputers awarded costs of $2,066.93; 4) defendant London Drugs awarded costs of $17,671.16; 5) Costs shall be paid by plaintiff within 60 days of end of suspension period under 29-APR-2020 Practice Direction (re: Covid-19). Filed on 13-MAY-2020 copies sent to parties entered in J. & O. Book, volume 1453 page(s) 386 - 402 Interlocutory Decision

That's a total of $59,416.87‬ - much less than the total amount sought. I am trying to determine whether there's still more to come and to obtain any written reasons that the Court may have provided. This is not easy at this time due to COVID.

PPS - May 20, 2020

Here's the Court's Order of May 13, 2020 regarding costs. 

Update on Allarco’s “Unusual” Litigation

Here’s an update on the Allarco’s copyright + countless other alleged causes of action and claims against four of Canada’s most prestigious retailers and 50,000 John Doe Customers for selling unspecified devices from unspecified suppliers and somehow infringing copyright in unspecified works and trademark rights in unspecified trademarks, conspiracy, circumvention, stealing, intentional interference, etc., etc., etc…. Here’s my earlier post on how the retailers had predictably attacked Federal Court pleading. Here once again is the Federal Court docket.

Allarco (aka Super Channel) discontinued its lawsuit in the Federal Court on January 6, 2020. Meanwhile, Allarco had started a similar action in the Court of Queen’s Bench in Alberta on December 6, 2019. Here’s that newer Statement of Claim, which adds unspecified John Doe suppliers as defendants and seeks $50,000,000 in damages and has a few other differences from the Federal Court action.

Although this litigation was at an early stage in the Federal Court in terms of procedural steps, the retailers have clearly already been put to considerable trouble and expense and are understandably seeking substantial costs arising on a solicitor and client (i.e. substantial indemnity) basis arising upon the discontinuance. Motions and countermotions were heard on this on January 23, 2020 which resulted in this lengthy and unusually blunt order dated January 27, 2020 which suggests that the retailers will indeed be awarded substantial costs arising from the discontinued Federal Court action.

As the Court correctly noted:

Rule 402 expressly provides that the Defendants are entitled to their costs payable forthwith upon discontinuance. Pursuant to Rule 412 these costs may be assessed upon filing of the notice of discontinuance. The Plaintiff has not displaced this presumption.

Meanwhile, back in Alberta, Allarco had scheduled an injunction hearing on January 22, 2020 – the day before the long-scheduled January 23, 2020 Federal Court hearing mentioned above. That injunction hearing has now been adjourned to May 7 and 8, 2020 and a schedule has been set for cross examinations, etc.

It will be interesting to see what happens in the Alberta Court of Queen’s Bench. While the Alberta court in principle can cast a wider jurisdictional net than the Federal Court in terms of weird causes of action such as conspiracy, intentional interference with business, contractual and economics interests, relations, etc., that won’t make any difference if the underlying facts, particulars, and ultimately the evidence, if it gets that far,  are just not there.

Among the more inexplicable aspects of the first pleading was a reference to s. 420 of the Criminal Code – which refers to buying, receiving, or detaining …”any military stores that are owned by Her Majesty or for which the member, deserter or absentee without leave”. That is now gone from the new pleading. Some of the colourful language in the earlier pleading that reappears in the new one includes: 

59. The actions of the 4Stores constitute a public nuisance in that they encourage a culture of dishonesty and theft within the general public in Canada which is promoted by 4Stores. The 4Stores fashion and promote themselves as industry leaders and educators in the promotion, education, and guidance of Canadians in the electronic devices market while acting to the contrary.60. The actions and omissions of the 4Stores as pleaded herein are high handed and advertently misleading in the pursuit of profit and unreasonably interfere with the public's interest in questions of honesty, conscience and morality and preservation of Canadian Culture., including ethnic and indigenous Canadian culture. As such they merit the award of punitive damages or the maximum level of statutory damages prescribed in the Copyright Act.(highlight added)

I said in my earlier blog that “I can safely say that in nearly four decades of being an intellectual property lawyer, I have never seen a more unusual Statement of Claim.” That may have been an understatement. If anything, I would say that the new Statement of Claim with its addition of the “John Doe Suppliers” as defendants seems even more “unusual”.

Allarco is asking for “costs of this action on a solicitor and client basis, plus GST, or HST, including all disbursements and costs of tracking and communicating with Customers”. Of course, there’s an old adage about "Live by the sword, die by the sword". If this new litigation goes badly for Allarco and Allarco becomes liable for solicitor and client costs, it is not difficult to imagine such costs rather quickly amounting to six or even seven figures.

Meanwhile, let’s keep tabs on how much Allarco will be on the hook for costs to date in the Federal Court, including the costs of its apparently forceful and lengthy but predictably unsuccessful attempt to punt on the Federal Court costs issue and kick it over to Alberta or, alternatively. to adjourn or stay the costs matter and a “laundry list” of other requests for relief. As for Allarco’s motion of January 23, 2020, the Court ordered that “Costs of this motion are awarded to the Defendants in an amount to be fixed and payable forthwith with the remainder of the costs for the action.”

I’ll post more about the forthcoming injunction proceeding and/or other developments when I get copies of the basic publicly filed documents. It would hardly be surprising if the defendant retailers attack this highly “unusual” Alberta Statement of Claim for the similar reasons that they were poised to proceed with in the Federal Court. Indeed, it would be surprising if they do not do so.

It’s too early to speculate about what Allarco will attempt do and what the Court might let it do about the 50,000 John Doe Customers or the now added John Doe Suppliers and how their interests will be represented if things ever get anywhere near that far.

HPK