Tuesday, January 15, 2013

Some Clarity on the Voltage and Teksavvy Disclosure Motion to Date

There was another hearing yesterday, January 14, 2013 in the Voltage case in which Voltage is seeking disclosure from Teksavvy of the names behind more than 2,000 IP addresses. Mr. Justice Leonard Mandamin of the Federal Court (whose has a degree and background in electrical engineering) further adjourned the matter and made some notably important comments.

The only reliable information about this hearing comes not from the blogosphere, where there have unfortunately recently been some sometimes uncivil, sometimes inaccurate, and sometimes very difficult to understand pronouncements from pundits. This is not helpful.

Rather, the reliable and quality information comes from Christine Dobby, a journalist with the National Post/Financial Post who is also a lawyer. She understands judicial proceedings and has followed this case closely from an early point.  She was present in the Court yesterday and her report entitled “Judge Grants new adjournment in Teksavvy illegal file sharing case”  includes the following:
Federal Court judge Leonard Mandamin made the order to allow enough time for a public interest group to have its own motion to intervene in the case to be heard before proceeding with the motion for disclosure on its merits.
Hearing a motion on a one-sided basis is risky,” Judge Mandamin said Monday.
However, Teksavvy does not plan to oppose the substance of the motion for disclosure of the names.
But, if granted status as an intervener in the case, CIPPIC, the public interest legal clinic based out of the University of Ottawa, does intend to challenge the evidence Voltage has provided.
Although the judge made no comment on the merits of that motion Monday, he did suggest that it would be useful to have the opposing side of the case before the court in deciding Voltage’s motion for disclosure.
Judge Mandamin also said that since the courts are still in the early stages of dealing with new copyright legislation (which just came into force in November), it is “important to get it right,” and a motion without representations from different points of view does not help.
(emphasis and highlight added)

To restate the obvious, there is no “opposing side” in this case at this time. Teksavvy, the Respondent to the disclosure motion, could oppose it and arguably should oppose it. However, for reasons that many find unconvincing, it has chosen not to oppose it.

Even if CIPPIC is allowed to intervene, its role may be limited both by the Court and by practical considerations. In 2004 in the ground breaking BMG v. Doe case, CIPPIC was allowed limited intervener status that specifically precluded it from cross-examining the Plaintiffs’ affidavit material or filing of further evidence.

Interveners can sometimes have considerable influence in proceedings ranging from circumstances very similar to this (e.g. CIPPIC’s intervention in 2004 and 2005 in the BMG case) and even in the Supreme Court of Canada. But interveners in court proceedings are rarely if ever in the same position in a hearing as an actual party and their role is not to duplicate or substitute for parties or respondents with full standing. In this instance, Teksavvy is not a party to the actual infringement litigation but clearly is the one and only Respondent on the Rule 238 disclosure motion. It would have had full rights to cross-examine and introduce its own evidence, should it had chosen to do so.

The BMG case would assuredly have turned out very differently if Shaw and Telus had not rolled up their sleeves and taken all reasonable steps to vigorously oppose the disclosure motion, including cross-examining on the affidavit evidence that was found to be clearly inadequate both by the Federal Court and the Federal Court of Appeal. CIPPIC did not have the status or the resources or the practical ability to do what Shaw and Telus did, even if were permitted to do so – which it wasn’t.

In any event, CIPPIC obviously does not have access to the technical information held by Teksavvy that might be relevant to the reliability of Voltage’s material and might otherwise assist the Court on the issues with which the Court is clearly concerned, such as Justice Mandamin’s reported comment that “the court needs to be well informed of the connection between IP addresses and the information Voltage has on alleged infringers.” 

Ms., Dobby also reports, interestingly, that:
Lawyer Nicholas McHaffie said Monday his client [Teksavvy] has also incurred about $190,000 in legal fees and other costs dealing with the motion for third-party disclosure brought by the California-based film studio Voltage.

Based upon the above, the following seems to be clear at this time:
·         Teksavvy has spent about $190,000 on this motion, has appeared in Court twice and asked for adjournments, but is still apparently not opposing it, which presumably means that it will not be cross-examining on Voltage’s material and not putting in any evidence of its own, and not make any representations
·         CIPPIC may or may not be given intervener status, but an intervener rarely if ever is in the same position as a respondent, especially in terms of cross-examining or introducing further evidence. In any case, CIPPIC does not have access to Teksavvy’s internal information;
·         The Court is clearly attuned to the importance of the proceeding and that “it is “important to get it right,”; and,
·         The Court is clearly of the view that “a motion without representations from different points of view does not help”.

Based upon Ms. Dobby’s report, it would seem to be reasonably apparent that the Court wants and needs as much assistance as is necessary on what it clearly sees as an important matter that will require a special hearing of at least one day and that it may be expecting Teksavvy to actually make representations that go well beyond simply “not opposing” the motion.

Once again to be completely clear, an ISP respondent to a Rule 238 disclosure motion is fully entitled to test the adequacy of the evidence and the other factors related to privacy and PIPEDA as laid down by the Federal Court of Appeal in BMG v. Doe more than seven years ago. This includes the right to cross-examine and, if advisable, and to file its own affidavit evidence, which in turn is subject to cross-examination. Arguably, if the material is problematic, the ISP should test it and, if necessary, should oppose it. In opposing it on the BMG v. Doe grounds, there is absolutely no implication that this entails any “comment on the merits of the case” or “making a case against the merit” with respect to copyright infringement.

Hopefully, the above will restore some clarity to the public’s understanding of this potentially very important proceeding.


Sunday, January 13, 2013

Update re Voltage & Teksavvy

For a whole lot of reasons, I don’t have a whole lot of time to spend on David Ellis’ lengthy and largely inaccurate posting about the Voltage case and Teksavvy’s role – or lack thereof - in the current case. Let me simply say:

  • There isn’t much difference between not opposing and supporting a motion. Whatever the difference is, it really doesn’t normally matter for practical purposes. A motion that is not opposed will usually be granted; 
  • Asking for an adjournment is hardly equivalent to “challenging” a motion; and, 
  • The reference to an “anonymous” opinion that there is a risk to an ISP’s “safe harbor” and “”neutrality” status by standing up for its customers’ privacy under PIPEDA is not helpful. It would be very interesting if any knowledgeable lawyer were to make such a point in their own name.

 In the BMG case, the Court was very concerned that inaccurate and unreliable evidence could lead to innocent persons being sued. In paragraph 21, the Court dealt with the problem of hearsay evidence:

Much of the crucial evidence submitted by the plaintiffs was hearsay and no grounds are provided for accepting that hearsay evidence. In particular, the evidence purporting to connect the pseudonyms with the IP addresses was hearsay thus creating the risk that innocent persons might have their privacy invaded and also be named as defendants where it is not warranted. Without this evidence there is no basis upon which the motion can be granted and for this reason alone the appeal should be dismissed. (Emphasis added)

In paragraph 43 of its decision, the Court stated in the context of dated information that:

 If there is a lengthy delay between the time the request for the identities is made by the plaintiffs and the time the plaintiffs collect their information, there is a risk that the information as to identity may be inaccurate. Apparently this is because an IP address may not be associated with the same individual for long periods of time. Therefore it is possible that the privacy rights of innocent persons would be infringed and legal proceedings against such persons would be without justification. Thus the greatest care should be taken to avoid delay between the investigation and the request for information. Failure to take such care might well justify a court in refusing to make a disclosure order. (Emphasis added)

If, as Mr. Ellis states, there was in the current instance such a “problem of cleaning up the many false positives and other errors in the primary evidence, Voltage’s numeric IP file”, then one might well ask why this alone would not be enough to easily and successfully oppose the disclosure motion. 


Friday, January 11, 2013

Voltage Pictures Mass Litigation: What is Teksavvy's Task?

Richard Westall's Sword of Damocles, 1812
In the current Voltage Pictures litigation pending in the Federal Court, it’s remarkable but understandable that the focus has shifted from Voltage to Teksavvy.  It’s a fair question as to why Teksavvy won’t oppose the Voltage motion for disclosure en masse of the names and addresses of 1 or 2 thousand of their customers. Shaw and Telus successfully stood up for their customers in 2004.

And why am I concerned about all of this now? It’s because we have a good balance in Canada in terms of the interplay of the Copyright Act, PIPEDA, and the Federal Court Rules. Many people, including me, put in a lot of effort in 2004 and 2005 to achieve this balance. It has apparently succeeded in discouraging to date the kind of unsavoury "troll" activity that we have seen in the USA and UK. But this balance only works if everyone plays their part.

To update, here’s an article in today’s National Post by Christine Dobby, with quotes from me and David Fewer, of CIPPIC. David is quoted as saying about Voltage’s material:
“It’s hearsay evidence. There’s very little in that affidavit that they’ve filed in support that gives us confidence that they’ve met the legal burden,” Mr. Fewer said.
If David is right, it would likely be simple, straightforward inexpensive and even easy for Teksavvy to successfully oppose this disclosure motion. This would be a win/win for Teksavvy and its customers. This would not mean that Teksavvy is getting involved in the “merits” of the case. Protecting privacy in no way amounts to endorsing piracy.

Teksavvy’s customers are indeed very “savvy”.  See the hundreds of questions and comments, many of them very perceptive and well informed, on Teksavvy’s CEO Marc Gaudrault’s statement as to why his company won’t oppose the disclosure motion

Generally speaking, the real issue now is under what circumstances, if any, an ISP is expected or maybe even required to take reasonable steps to safeguard its customers' privacy. If an ISP can successfully and inexpensively oppose an inadequately documented attempt to breach its customers’ privacy, then why should it be able to walk away and leave its customers on their own and just tell them they can hire their own lawyers? It’s the ISP’s duty under the PIPEDA federal privacy legislation to protect its customers’ privacy. That presumably does not mean simply telling them that their privacy is about to breached, that they are on their own and are free to get a second mortgage and hire their own lawyer.

ISPs are paid a lot for their services, and one part of their job is to live up to their PIPEDA obligations. ISPs customers pay $25, $50, $60, $80 or more a month and part of their expectation, beyond fast and reliable service, is an expectation of privacy and an expectation that their privacy will be safeguarded – especially if an ISP promotes this aspect to get and retain customers.

In the current case, at the very least and to be as polite as possible, it’s completely unrealistic to suggest that those who may be sued by Voltage should retain their own counsel at this stage. Any such person has no legal status at this point in the litigation and the legal and procedural issues they would have to deal with (such as preserving their anonymity at the peremptory state) are unmapped and much more complicated than anything Teksavvy would need to deal with. Indeed, Teksavvy’s task would apparently be quite simple if CIPPIC is substantially right as quoted today and in its earlier submissions to the Court in its letter dated December 14, 2012 here and its December 21, 2012 motion to intervene.

All that Teksavvy would need to do  – and the road map is very clear and the road well paved - is simply to demonstrate to the court, if it is the case,  that Voltage’s material is inadequate from an evidentiary standpoint and that Voltage does not sufficiently demonstrate the requirement of a bona fide intention to actually litigate.

Generally speaking, it is an interesting question as to whether any putative mass litigator can seriously intend to start 2,000 actions, which would mean 2,000 statements of claim, with a registry filing fee of $150 each, if the claims are of the nature set forth by Teksavvy in the initial statement of claim so far. It would be astonishing if the Court were to allow one plaintiff to sue hundreds or thousands of individuals at once in this type of action, since there will be different facts, different defences and different damages (if liability is proven) in each situation. And the damages would max out at $5,000 for each defendant for non-commercial activity.

It is sufficient if they show a bona fide claim, i.e. that they really do intend to bring an action for infringement of copyright based upon the information they obtain, and that there is no other improper purpose for seeking the identity of these persons. (emphasis added).

This presumably does not mean simply getting names and addresses and using the insincere threat of an action as a faux Sword of Damocles to extract substantial settlements en masse.

In this or any other similar situation to that of the BMG case, the party seeking disclosure must show that it meets the “bona fide” test and that it has sufficiently reliable non-hearsay evidence to justify the provision of thousands of names and addresses of persons whose privacy will be sacrificed and the consequences of wrongful identification can be enormous.

Is the material adequate in this case? I make no comment on that issue. That’s for the Court to decide. CIPPIC has indicated its position on this. But CIPPIC can at most be an intervener, and even if allowed to intervene, may be permitted only a limited role with no right to cross-examine. Anyway, CIPPC cannot play this role in every case.  That’s not CIPPIC's job.  It’s an ISPs job to under the PIPEDA privacy legislation to safeguard its customers' personal information.  And ISPs get well paid to do so.

To sum up, if the material does not provide adequate, non-hearsay evidence to show the reliability of the investigation and if there is not a bona fide intention of pursuing litigation, then the names and addresses should not be provided.

If Teksavvy could successfully oppose this motion and does not do so, its customers are going to have lots of questions. This could also send a signal that if an ISP as savvy as Teksavvy won’t ever oppose these types of disclosure motions in order to stand up for its customers rights under PIPEDA, then other ISPs also needn’t do so. And then, it could be open season for mass litigation and “troll” activity in Canada.


Tuesday, January 08, 2013

Mass Copyright Litigation in Canada: Some Observations on the Roles and Responsibilities of ISPs and their Customers

Here are some observations of about certain aspects of possible mass copyright litigation in Canada. In some instances, mass copyright litigation has aptly been referred to as “troll” litigation. Nothing in what follows is necessarily a comment about any particular case or situation, unless it is explicitly so indicated. Above all, nothing that follows endorses copyright infringement by individuals in the form of illegal downloading or file sharing (sometimes called “piracy”, although this term is seriously inappropriate and misleading when applied to individuals who are engaged in non-commercial activity). 

Let us be clear. No responsible copyright lawyer would ever encourage activity that flouts or undermines the purpose of copyright law. But that said, serious damage can also be done and disrespect for the law will inevitably result if privacy laws are breached, ignored or not adequately observed in situations where innocent persons who may even have been mistakenly identified are dragged into litigation or into a “machine” designed to use the threat of litigation to extract large “settlements”. Such settlements will frequently be paid because it will almost invariably seem cheaper  to “settle” than to fight, due to the normally insurmountable difficulties of finding competent and cost-beneficial access to justice in such circumstances. Even if the defendants have been accurately identified, it is highly questionable whether Parliament intended the Canadian courts to become a part of an aggressive en masse settlement extraction scenario that has proven futile elsewhere in inhibiting infringement. Even the RIAA (Recording Industry Association of America), which started this type of litigation in the USA and is not known for being particularly sensitive to public opinion, has now abandoned the pursuit of any new mass litigation or “settlement” activity.

Other matters should be also made clear.  There is no reason to believe that the taking of active, reasonable and responsible steps by an ISP to safeguard and preserve its customers’ privacy would in any way jeopardise the ISPs cherished “neutrality” status. There is nothing in existing Canadian law or the still un-proclaimed provisions of Bill C-11 that would point to the contrary.   What is apparent, however, is that ISPs are subject to PIPEDA privacy law and cannot divulge customer’s private information in a mass copyright litigation  case without the customers’ consent or a court order. In the BMG decision in 2005, the Federal Court of Appeal (“FCA”) made it clear that:
Pursuant to PIPEDA, ISPs are not entitled to "voluntarily" disclose personal information such as the identities requested except with the customer's consent or pursuant to a court order.

Defending privacy is in no way whatsoever tantamount to encouraging or even tolerating piracy.

The only real question is how far an ISP should be expected to go to protect its customers’ privacy by ensuring that a court order is warranted in the circumstances.   Indeed, that is the front-line and threshold question. This is because there will be cases where copyright owners seek to engage in “trolling” activity and clearly or arguably do not have an adequate basis to obtain a court order disclosing the names of dozens, hundreds or thousands of subscribers. This was precisely the case in the BMG v. Doe case in 2004 and nothing has materially changed since then and the resulting landmark 2005 ruling from the FCA upholding the requirement that there must be, inter alia, a bona fide intention of suing and that there must be reliable, admissible, timely and non-hearsay evidence to warrant such a disclosure order.  More about the BMG decision below.

Shaw and Telus bravely paved the path for timely and straightforward challenges by ISPs when disclosure material was inadequate. CIPPIC played a key role in that case and I was honoured to be CIPPIC”s lead counsel. The path is now paved and the process is now clear and potentially even be easy in some cases. In appropriate cases, it would be a simple, inexpensive and risk-free effort for an ISP to actively step up to the plate to safeguard its customers’ privacy.  Indeed, it is conceivable that in some cases there may be a real risk in not challenging the adequacy of the disclosure order material, both in terms of a business and even, conceivably, a legal sense.

It is a legitimate question to ask whether an ISP, rather than categorically deciding a priori not to resist disclosure motions, should at least be expected to review the supporting documentation, to get an expert opinion as to whether it meets the requirement of the law as laid down by the courts and Parliament, to notify all of its customers of the  proceeding  (if it is too burdensome to notify only those whose IP address has been singled out by the would-be plaintiff), to post copies of these documents, and to explain why, if it is the case, that it believes that there is no reasonable basis to challenge the disclosure motion on privacy grounds.

The law in Canada, based upon the 2005 BMG decision in the FCA , is really quite simple. A list of names and addresses of alleged infringers should not be handed over by an ISP to a plaintiff unless certain conditions are met. As I wrote in 2005, closely tracking the actual FCA language: 

- The plaintiff must show that it has “a bona fide
claim” against the proposed defendant, “...i.e.,
that they really do intend to being an action…
based on the information they obtain, and that
there is no other improper purpose for seeking
the identity of these persons”.

- The bona fide claim must be based on admissible
evidence linking the IP address(es) with the
impugned action(s).

- “There should be clear evidence to the effect
that the information cannot be obtained from another
source such as the operators of the named

- “...[T]he public interest in favour of disclosure
must outweigh the legitimate privacy concerns
of the person sought to be identified if a disclosure
order is made”.

- The information on which a request for identification
is made (e.g., IP address) must be timely;
no undue delay between investigation and motion
for disclosure.

- The plaintiffs must not collect more personal
information than necessary for the purpose of
their claim.

- Re: disclosure orders, “…caution must be exercised
by the courts in ordering such disclosure,
to make sure that privacy rights are invaded in
the most minimal way”.21 In particular, “...if a
disclosure order is granted, specific directions
should be given as to the type of information
disclosed and the manner in which it can be
used”. In addition, the court should consider
making a confidentiality order or identifying the
defendant by initials only.
(footnotes omitted, emphasis added)

One paragraph from the BMG decision should be quoted its entirety:
21]            Much of the crucial evidence submitted by the plaintiffs was hearsay and no grounds are provided for accepting that hearsay evidence. In particular, the evidence purporting to connect the pseudonyms with the IP addresses was hearsay thus creating the risk that innocent persons might have their privacy invaded and also be named as defendants where it is not warranted. Without this evidence there is no basis upon which the motion can be granted and for this reason alone the appeal should be dismissed.

Anyone wanting to drill deeper can read the BMG case, and my  own short article here. By the way, the Canadian subsidiaries of the multinational record companies either could not or chose not to come back to the Court with the required evidence. The BMG litigation  just quietly faded away without any names being handed over and nobody was ever sued.

In the USA, the record companies pressed further and longer, and in couple of notorious cases achieved enormous jury awards of hundreds of thousands (in the Jamie Thomas Rasset case almost $2 million now cut back to $222,000)  for the illegal downloading of a few songs worth $0.99 each on iTunes. The Thomas-Rasset case may yet reach the US Supreme Court on the constitutionality of these enormous statutory damage awards. Canada has wisely attenuated the upper end of such statutory damage awards to $5,000 where the activity is non-commercial.  

Electing to seek this $5,000 statutory damage award will have the interesting effect of barring the plaintiff and any other copyright owners from seeking any statutory damages for any other non-commercial  infringing activity that took place before that litigation commenced. It would seem unlikely to the point of being inconceivable that any one plaintiff could prove actual damages or any other head of damages that would exceed the $5,000 cap on statutory damages for non-commercial activity. Damages for loss of profits would be negligible and the possibility of damages for conversion has long since been abolished.

If any mass litigation gets to the point of actual law suits, there could be any number of possible legitimate procedural steps that defendants could take to safeguard their interests that would render the pursuit of such en masse litigation uneconomical for the plaintiff. I will come back to this point, if it ever becomes necessary. 

Flash forward from 2005 to 2011 when Voltage Pictures sought disclosure of customers’ private information from certain Quebec-based ISPS, one of which, Vidéotron, was actively on side with BMG in 2004. In any event, the ISPs simply took no position and did not oppose the order or even appear at the hearing of the motion. The Federal Court was apparently satisfied with the paper work that was presented and left unchallenged.  The proper parties had been served. Understandably, the court  granted the order. It is not the court’s role nor is the court equipped to conduct its own investigation, which might even require cross-examination, into the adequacy of such material.

Unopposed rulings rarely set important precedents and this one breaks no new ground and is no exception. However, it does tend to confirm that if a plaintiff presents the court with paper work that at least appears to be adequate and in apparent good order and is left unchallenged, it will get its disclosure order. That does not mean that ISPs should shirk their responsibilities where the material may not appear to be adequate. To the contrary, it confirms that an ISP cannot necessarily assume that a court can or will take it upon itself to reject inadequate material, if the material is indeed inadequate. (I make no comment on the material in that particular case.)

Voltage was given a timetable pursuant to which it was expected by the Court to identify the potential defendants in the litigation, etc.  For unknown reasons, Voltage did not follow through on this and  it never actually sued anyone in that case. Its counsel advised the Court on March 28, 2012 that the case was being discontinued. It is not known whether any “settlements” were ever sought or procured prior to the discountenance.

Individual users who fear that their names will be handed over are essentially helpless at the outset – both for economic and legal reasons.  It is simply not viable for individuals to put their name on the record and to retain counsel in order to stop this process before they are even sued – even if it is clear that it could and should be stopped. The individuals in these cases are not RIM or isoHunt, who have sufficient resources and have successfully used peremptory proceedings to advantage to deal with threatened copyright litigation.
It’s not just remaining anonymous that could be a problem, and which might very well be a problem for any individual seeking to engage at a peremptory stage. The problem will be the disproportionate expense that would be incurred and the long-shot odds of being able to recover anything close to reasonable legal costs. Any lawyer thinking of getting involved on a pro bono or discounted basis at this pre-litigation or even early litigation stage on the assumption that the involvement will be short should realize that getting off the record may be very difficult if the proceedings continue, even if the client refuses to pay.

Obviously, ISPs are not required or expected to fight to the finish or even at all on each and every disclosure application. However, if the material served on an ISP is clearly deficient, or even arguably deficient in light of  the BMG case, the ISP must then decide if it should object to the disclosure order. Leaving aside whether there is any legal obligation on the ISP to do so, there may be good business reasons to do so. The main one would be that of keeping its customers happy – and even keeping them at all. Then, of course, there is the question of what is “the right thing to do”.

Suppose that an ISP promises in its advertising, terms of service or otherwise that customers have a right to have their privacy safeguarded and that it will not use or disclose personal information for purposes other than those for which it was collected, except with the consent of the individual or as required by law.

Then, it is arguable that customers would, at the very least, expect that ISP to scrutinize any disclosure motion material very carefully and to oppose it if it appears to be clearly or even arguably deficient.  Whether this an issue of privacy law requirements, contract law, consumer protection law, or simply a question of being “the right thing to do”, there will be an expectation that an ISP should step up to the plate when the material is not sufficient to warrant disclosure.

Many would argue forcefully that it’s not only the right thing to do but it’s an ISP’s job and duty to guard against clearly (or even arguably) inadequate attempts to open the door to mass litigation against its customers. That has enormous privacy implications. Shaw and Telus fought hard for this in 2004, with Bell and Rogers at least somewhat supportive. An ISP that stands up in this type of situation is not taking sides in the copyright wars; it is only defending its customer privacy – which is arguably, at the very least, not only the right thing to do but the smart thing to do.

Our judicial process is based upon the “adversarial system”. If nobody steps up to the plate to oppose a proceeding, and the paperwork is in order, the Court cannot be expected to conduct its own inquiry as to the adequacy of the paper work. A non-profit organization such as CIPPIC cannot be expected to intervene in  every instance of inadequately framed mass litigation disclosure motions simply because others who could or should do so are unwilling or don’t care.  In any event, it cannot be assumed that an intervener such as CIPPIC would be given the right to cross-examine on an apparently problematic affidavit, if this were in fact the situation.

ISPs are the only entities in the system that are in a position to efficiently assist the court in these situations and, at the same time safeguard their customers’ privacy by challenging the sufficiency of a disclosure motion when warranted.  As in so many aspects of the Canadian copyright system, there is a delicate balance here. Deserving copyright plaintiffs are entitled to adequate, effective and efficient remedies under appropriate circumstances. However, when they cannot make their case because they cannot or will not provide adequate evidence to warrant the disclosure of massive numbers of defendants’ identities, the required balance of the system requires that someone needs to step forward to make that point.

In most cases, for ISPs to step up to the plate at the preliminary disclosure stage will involve only a modest expenditure to assess the material and to proceed, if the material is clearly or arguably deficient. Doing so at this stage may even pay substantial dividends in good will. Doing the right thing is often the right thing to do, both for legal and business reasons.


Thursday, January 03, 2013

What to Watch for in Canadian Intellectual Property Law in 2013

A soothsayer in front of a king: (Olaus Magnus 1555)

Here are a few things to look out for this year. These are essentially in the form of questions – for most of which there is no easy answer to predict. So, I’ll refrain from predicting.

  1. The year will no doubt kick off with the Voltage Pictures “mass litigation” campaign. It might be noted that a similar effort by Voltage involving Quebec based ISPs that did not oppose the motion to disclose their clients’ identities fizzled last year for unknown reasons – and with no individuals actually being sued. This time around, some seem to think that Voltage is more determined. Will feisty, progressive Teksavvy, the ISP that has built its reputation on being customer-friendly, actually stand up and fight for its customers’ “privacy” without taking sides on “piracy”? That’s what Shaw and Telus did vigorously and successfully in 2004, with Bell and Rogers onside if not quite as actively. What should/will Teksavvy do if it turns out to be relatively easy for it to challenge the adequacy of Voltage’s material for the motion that seeks disclosure of the names and addresses of potentially thousands of Teksavvy’s customers? The law on this, including the evidentiary concerns that could arise, was clearly laid out in the BMG case by the Federal Court of Appeal in 2005 and the background is all there on CIPPIC’s website. If Voltage’s widely circulated current material is indeed inadequate (upon which I make no comment) and an ISP as savvy as Teksavvy doesn’t challenge its adequacy at the outset, what signal will this send to future potential mass litigators and copyright “trolls”? And to Canadian ISP customers generally and Teksavvy’s customers in particular? What could CIPPIC do if it is permitted to intervene? Is this something that CIPPIC will have to do on a regular basis? What will happen if the names and addresses are eventually provided to Voltage? Will there actually be lawsuits, or will there simply be high pressure settlement demands en masse? To be continued on January 14, 2013 in the Federal Court.
  2. Will the Copyright Board impose a retroactive levy on microSDs from January 1, 2012 to November 7, 2012, when the microSD exclusion regulations were published in the Canada Gazette Part II?
  3. Will the Access Copyright (“AC”) post-secondary tariff hearing continue unabated towards what may be a “mandatory” tariff, despite the many “opt-outs” from the interim tariff and the widespread decision by institutions ranging from school boards to research universities that they don’t need and don’t want what they perceive as an expensive and unnecessary blanket license from AC anymore? If so, who will represent the interests of Canada’s universities, who have reportedly spent almost $2 million on this case (not counting immeasurable internal “interrogatory” and management time) and now have no ongoing role or representation in this hearing, which could turn out very badly for them?
  4.  Will U of T and Western exercise their options not to extend their agreements with Access Copyright beyond 2013 by providing notice to AC before the end of June, 2013?
  5. How will the various fair dealing “guidelines” be received and used by those who were intended to benefit from them? The main ones emanate so far from U of T and ACCC. The AUCC guidelines are essentially identical to those of ACCC, but do not yet appear to have been yet officially deployed. In fact, AUCC has been virtually silent on the copyright front since before C-11 was given Royal Assent on June 29, 2012 and the Supreme Court of Canada delivered its “pentalogy” on July 12, 2012.
  6. Will the copyright chill in Canadian classrooms and libraries continue to thaw and will Canadian teachers, librarians, and administrators now get back to their real roles and “just do it” when it comes to education, as they have been empowered to do by Parliament and the Supreme Court of Canada?
  7. Will AC actual make good on its threats of litigation, and if so, will AC finally achieve success against anyone other than “Mom and Pop” copy shops?
  8. Will Rogers et al get their “ring tones” tariff payments back, either via the Copyright Board or the Federal Court or both or neither?
  9. How will the SCC “pentalogy” results play out at the Copyright Board and the Federal Court of Appeal, particularly concerning the strong substantive messages about technological neutrality, layering and fair dealing – not to mention the “sempiternal” issue of “standard of review”?
  10. Wll the Board allow SOCAN to continue with its quest for a new tariff for what SOCAN considers to be a new “making available right” that, in its view, renders moot and inapplicable the recent conclusion reached by the Supreme Court of Canada in ESA v. SOCAN, 2012 SCC 34? Will other collectives such as Access Copyright jump on board if this train leaves the station? What would the Federal Court of Appeal and, potentially the Supreme Court of Canada, do with this if the Board lets go forward?
  11. How will the Supreme Court deal with the Cinar v. Claude Robinson case, which will be heard on February 13, 2013 and argued by some very prominent counsel, which deals, inter alia with “steps and tests for determining whether substantial part of work reproduced within meaning of ss. 2 and 3 of Copyright Act” according to the SCC summary?
  12. How will Canada fare in the TPP and CETA negotiations? Can our negotiators at least “do no harm” on the copyright front? Can they resist the pressure from foreign interests to inject harmful red herrings such as “three step test” language and harmful concepts, such as term extension, into Canadian law?
  13.  Are we going to see any further attempts to convince the Board and the Courts that a word such as “excludes” really means “includes”?
  14.  What will happen in the Warman v. Fournier appeal, which appears to be back on track following the Fourniers’ attempt to have it dismissed? Will the Fourniers continue to be self-represented, now that the National Post is weighing in as a party on the other side with experienced and prominent copyright counsel? There are important issues at stake re what is “substantial” and what is “fair dealing”. Will there be interventions that may assist the Court in a  case involving an unusual fact situation that that could have far reaching results?
  15. Will Catherine Leuthold succeed on appeal in getting $21 million+ from the CBC and recovering her legal costs or least not having to pay CBC twice its costs because she refused a settlement worth almost twice as much as the just over $19,000 that she was awarded by the Court?
  16.  Will the “Canadian” record and film industries sue isoHunt under the new post C-11 law, now that their much sought after legislation is in place? What, if anything, will happen with the existing and apparently dormant litigation commenced by both sides a few years ago under the former law?
  17. Will we see the beginning of a measurable correction and perhaps even a tipping point – whether through Copyright Board decisions, the Courts, the market, or ultimately the Government’s regulatory power – with respect to the increasing powers of Canadian collectives and the increasing and already enormous costs of opposing their proliferating and increasing demands?
  18.   Will we see the demise of one or more of Canada’s three dozen or so collectives resulting from such factors as changes in technology (e.g. a shift from paper course packs to digital delivery, the demise of blank CDs, etc.), increased sophistication of users (e.g. educators), and legislation from Parliament and jurisprudence from the Supreme Court of Canada?
  19.  Will Canada re-appear at or near its recently achieved high ranking on the “Priority Watch List” of the USA’s “Special 301” list of IP malefactors and will anyone, except some lobbyists and USTR officials, actually care?
  20. Will WIPO be successful in its high-stakes effort to secure a good copyright treaty for the blind, and what role will Canada play in this effort, which is not only important for the future of blind people everywhere but for the future of WIPO?
  1. Will Pfizer succeed in its very unusual attempt to get the Supreme Court of Canada (“SCC”) to change its mind following the recent ruling in the Viagra case that rendered its patent “void”- period - and not just invalid as against Teva for Notice of Compliance purposes?
  2.  Will the generic drug industry suffer as a result of the CETA negotiations?
  3. Will the Government use the CETA agreement – if there is to be one – as an opportunity to reform the PMNOC regime, which is taking up enormous amounts of the time of the Federal Court and the Federal Court of Appeal and is creating serious problems and immense expense for both the “innovative” and generic sides? Will we see a movement toward the American Hatch-Waxman model, which is a one-stop mechanism?
  4.  Will Canada remain an island of calm in the global smart-phone patent wars?
  5.  Will patent “trolls” try to bring their business model to Canada?


Canadian trade-marks law works remarkably well – which is quite understandable for those who know its history.  However, Canada is not immune from foreign and even domestic pressures to make it work  much less well:
  1. Will Canada agree via CETA or TPP to permit “ex officio” border enforcement actions – i.e. officials acting on their own with their limited legal training and without judicial oversight – to stop alleged “counterfeit” products, thereby putting legitimate parallel imports at great risk of seizure? If the nine justices of Supreme Court of Canada can’t agree on what is a legitimate “parallel import”, should customs officials be given the power to tie up millions of dollars worth of goods – perhaps even life saving medicines - on the spot on their own initiative?
  2. Will Canada ban the use of “geographic indications” such as “Parmesan cheese” by Canadian consumers for the sake of a trade deal with Europe? If so, what will we ask for with our pizza or pasta in the future?
  3. Will major retailers such as Wal-mart, Costco, etc. be permitted to use their federally registered trade-marks “as is” in Quebec? Or will they have to adopt trade-marks such as “Le Magasin Wal-Mart”?
  4. Will Canada join the Madrid Protocol, a one-stop shop international filing process operating through WIPO that is much favoured by large international brand owners and much feared by Canadian trade-mark practitioners?

There is no doubt that we “live in interesting times” in the IP world. I should disclose that I have or have had or may have some involvement in some of the above matters. If that seems rather vague, it’s more disclosure than some of my friends in other firms and institutions are providing these days…

Welcome to 2013. And a Happy New Year to one and all….