Voltage Turns Up the Voltage & Appeals the Rogers Reimbursement Ruling

(Wikimedia)

I recently reported on the Federal Court’s ruling on the Federal Court’s August 6, 2019 ruling, which was determined after being remitted by the Supreme Court of Canada, on reimbursement payable to Rogers in the Voltage v. Salna reverse class action. I suggestedthat, if Voltage wants the names and street addresses of the ~55,000 defendants in the class, this could potentially cost over $870,000.

Justice Boswell concluded that each timestamp lookup entitled Rogers to reimbursement for 12 minutes of time at $35 an hour plus HST. Since there will normally be two timestamp lookups for each defendant in this mass litigation cases, that suggests reimbursement of 24÷60 X $35 which is $14 plus HST. See para. 87 of the Order and Reasons.

There are apparently approximately 55,000 potential defendants in this reverse class action, if it is allowed to proceed. More on that below. Accordingly, it would appear that if Voltage wants the names and addresses of all of these potential defendants the cost will be at least $14 times 55,000 or $770,000 plus HST, which comes to $870,100. It took some time and a failed attempt to appeal to the Supreme Court of Canada, but Voltage finally paid the sum of $75,000 into court in this reverse class action to keep it alive.

Voltage filed a Notice of Appeal on August 16, 2019 within the ten days period applicable to interlocutory rulings, since the reimbursement ruling came on August 6, 2019. 

I won’t comment at any further on this at this time this time.  I may have more to say if Rogers files a cross-appeal, which would presumably be due on August 26, 2019.

It will also be interesting to see if Salna or CIPPIC seek to get involved on this aspect of this complex and controversial proceeding.

Stay tuned.

HPK

Blacklock’s Tendentious and Tenacious Litany of Litigation – the Latest (Lack of) Developments

Here’s an update since my last blog concerning Blacklock’s “litany of litigation” (as I have described it)  against the Attorney General of Canada (“AGC”) and several federal agencies. On July 2, 2019 the Case Management Judge, Prothonotary Sylvie Molgat, directed that ‘"The parties are to provide, by no later than July 22, 2019, (i) a jointly proposed timetable leading up to the hearing of the Defendant's motion for summary judgment; (ii) their joint availability for a case management conference; and (iii) an agenda of the issues to be discussed at the CMC."’ Here’s a link to the main docket in the long litany of litigation.

However, Blacklock’s appears to be resisting. On July 17, 2019 Blacklock’s filed a letter, attached, from its counsel, Scott Miller, seeking to change the channel from the process that had apparently been agreed to for the determination of the AGC’s summary judgment motion in the Parks Canada action. Blacklock’s sought, instead, to proceed with another file involving Health Canada. Mr. Miller’s letter includes the following:

Blacklock's instructions are to proceed to the case management conference without a timetable for the summary judgment motion in Parks Canada (T-1862-15). As such, MBM is not able to provide a timetable leading to the hearing of the Defendant's motion. MBM has advised the AG accordingly.

Blacklock's instructions are to proceed to the case management conference (CMC) on the basis that the consent to summary judgment motion was only to answer the question of law: Does fair dealing (s.29) apply to circumvention of a TPM (s.41)? (see letters to the April 5, 2019, April 5, 2019, April 18, 2019 and June 26, 2019).

Therefore, Blacklock's continues to maintain that it cannot agree to the timetable for the motion which would include findings of fact which ultimately would not need to be determined if s.29 does not apply to s. 41.

Blacklock's asks the agenda for the CMC to address the aforementioned and a determination of whether Health Canada (HC) (T-117-17) may proceed. Blacklock's has continually sought to have HC proceed and was led to believe that the summary judgment motion in Parks Canada would ultimately merely accelerate same. If HC proceeds, the AG has been advised that it is their prerogative to proceed with a summary judgment motion in that matter.

…

(highlight added)

The AGC was clearly displeased with Blacklock’s submission and replied the same day in the attached filed letter from counsel Alexander Gay, which includes the following paragraphs:

To the Attorney General's surprise, counsel for the Blacklock’s has now proposed an agenda for the next Case Management Conference where he wished to discuss a timetable in relation to the Health Canada action and not the Parks Canada action. He has requested that the Attorney General bring the motion for summary judgment in the Health Canada action and not the Parks Canada action. This is after he had apparently consented to having a motion for summary judgment heard in the Parks Canada action and after having had the benefit of the Attorney General's Affidavit evidence for months in the Parks Canada action.

Counsel for the plaintiff is resiling from an agreement to have a motion for summary judgment heard in the Parks Canada action. The position advanced by plaintiff’s counsel is that he never agreed to having the Attorney General file affidavit evidence in support of a motion for summary judgment, even though it is contemplated by the Rules. Rather, he contends that the motion should be on a point of law only. With the greatest of respect, there is a distinction between a motion for summary judgment and the preliminary determination of a legal issue. What was agreed upon was a motion for summary judgment which calls for evidence.

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(highlight added)

Readers may wish to read the entire unusual exchange in full. The letters are short and trenchant.

It will be interesting to see how the Court responds to this apparent stalemate that appears to be contravention of the Court’s directions. On April 11, 2019 the Court had issued a direction containing the following unusual language that appears to suggest some degree of exasperation even then:  ''Directions having been issued during the case management conference of April 4, 2019, the Court expects them to be complied with.” (highlight added)

Blacklock’s appears to be both very tendentious and tenacious in its “litany of litigation” against the federal government in the Federal Court, which has been going on since 2014. I have been blogging about it off and on since 2015. Here are my Blacklock's blogs in reverse chronological order.

I will report on the Court’s response as soon as it is publicly available to the correspondence noted above.

HPK

Retransmission – Mission Accomplished?

After nearly 6 ½ years, on August 2, 2019 the Copyright Board of Canada has finally issued its retransmission tariff and reasons for its decision for the years 2014 to 2018. Spoiler alert: the maximum rate for each Canadian cable subscriber will increase from the previous amount of $.98 to $1.17. This seems like a relatively modest amount that will not likely be noticed by any Canadians who are still cable subscribers at arguably outrageous rates and have not become part of the increasing horde of cord cutters. It is virtually certain that all of this increase will be passed along to the subscribers along with the enormous cost of these hearings, which resulted in a 157-page decision. It could have been worse from the objectors’ standpoint, since the collectives attempted after some interrogatories two years or so into the process to more than double the amount. If the collectives had gotten what they wished for, it would have been worth about another $100 million a year – for the past several years and going forward.

This is the only substantial or substantive decision of the Copyright Board so far in 2019. It is one of the longest decisions that I can recall from the Board, although not quite as long as the first-ever retransmission decision which ran to 178 pages and which set the stage for an unexpectedly high tariff right out of the gate. Here’s what I said about the origins of this tariff in the context of the current hearing:

Canada, unlike the USA, did not spell out a formula in the legislation for what was to be a distant signal and left the mechanics of it all to the then new Copyright Board. Distant signals were eventually defined by regulation in an ultra-complex manner potentially much more generous to copyright owners than the US mechanism. The Board’s first tariff in 1990, following an extremely long “inaugural” tariff hearing, was worth about $53 million p.a., an amount about 9 times more than anyone ever expected at the time – even including the proponents of the tariff. A rather tepid subsequent “criteria” regulation resulted in a very modest cutback of about $3 million a year in 1993. For twenty years, Canadian cable subscribers paid $0.70 per month that was included in their cable or satellite bill for access to “distant” signals. This amount was increased to $0.98 per month in 2013 and so certified by the Board pursuant to a negotiated agreement. 

Interestingly, the Board’s first retransmission tariff decision – and its first ever major decision under the new Copyright Board regime established in 1989 that replaced the old, honourable and very efficient Copyright Appeal Board regime that lasted for six decades or so – was delivered in less than 14 months from the time of publication of the proposed tariff in the Canada Gazette. That was in the good old days under the leadership of the very esteemed and long since retired Michel Hétu as Vice Chair, who was a distinguished lawyer and expert advisor in his days in the Department of Justice before his appointment to the Board.

This is the first full retransmission hearing since the 1990 decision, apart from a proceeding that result in a small downward adjustment in 1993 following the implementation of “criteria” by way of regulations intended to respond to the outcry over the unexpectedly high tariff set in 1990. This hearing featured abundant new expert evidence and suggested approaches. In the end, the Board adopted what appears to a blend of what the parties presented and the Board’s own approach.

Probably the most interesting part of the current decision is a Board’s discussion about the arcane doctrine of “non ultra petita”, which roughly entails the notion that a court or board should not give a party more than it initially asks for, since opponents who might have objected may have remained silent in reliance on the initial demands.

The Board held that:

[233] These proceedings do not attract the application of non ultra petita, however. All participants are well aware of the Collectives’ revised rates and what they are requesting. The entire hearing, and the expert and other evidence presented, revolved around the revised request. The issue is whether the Board should permit the revised claim to be considered and, if so, to what extent. That is a matter of procedural fairness and the Board’s power to amend or vary a proposed tariff.

Interestingly enough, the Board ruled on the one hand that it can override or avoid the application of the “non ultra petita” doctrine but effectively achieved a similar result based upon an apparently newly enhanced sensitivity to the retroactivity issue:

[238] In the circumstances of this case, we think it unlikely that Retransmitters – in the face of such a significant potential retroactive increase in royalties over such an extended period of time – would be able to find reasonable ways in which to retroactively collect from their customers and/or otherwise set aside funds necessary to pay the difference, along with interest, between the royalties originally proposed and published in the Canada Gazette on June 1, 2013, and the royalties sought in the revised proposed tariff. This may be particularly relevant for smaller, independent and less financially-robust Retransmitters.

In a recent blog, I posted the following on the issue of retroactivity:

This has led to a persistent pattern of hearings that often take more than four years to happen, decisions that take three more years to render, and tariffs that are consequently retroactive for several years. Then, there is the almost inevitable and often successful judicial review. This inexplicable, inexcusable and unique pattern exists notwithstanding explicit Supreme Court of Canada jurisprudence going back to 1954 that says that his shouldn’t be happening. On the issue of retroactivity caused by delay, I have previously pointed to:

“….the potential invalidity of retroactive tariffs in light of the venerable 1954  Maple Leaf Broadcasting v. Composers, Authors and Publishers Association of Canada Ltd., [1954] SCR 624 (“Maple Leaf”) decision from the Supreme Court of Canada (“SCC”). That decision was concerned with a tariff on radio stations that was retroactive by less than three months and the SCC – with some rather explicit reluctance – permitted it as a “practical necessity” but stated clearly that it was the "implied duty" of the Board to proceed with "all possible expedition" in cases where tariffs may have a retroactive effect. In the recent CBC v. SODRAC 2015 SCC 57 case in the SCC, I cited this same Maple Leaf case in the factum prepared along with Prof. Ariel Katz and Prof. David Lametti (as he then was). There was considerable interest during the oral argument in the retroactivity issue and the SCC commented on it very explicitly in this unusual footnote – which may be seen as a warning signal to collectives and an invitation to users seeking judicial review of retroactive tariffs:

[2] During the hearing before this Court, counsel for the interveners the Centre for Intellectual Property Policy and Ariel Katz briefly raised concerns regarding the Board’s power to issue retroactively binding decisions in general. That issue was not squarely before this Court in this case, and I do not purport to decide broader questions concerning the legitimacy of or limits on the Board’s power to issue retroactive decisions here.”

It is also interesting that the Board emphasizes at paragraph 239 the importance of timely notices in the Canada Gazette is an essential means “to inform parties of the possibility to object to such a proposal”. This is not without irony, given that the new Vice Chair of the board, Nathalie Theberge, recently spoke at length about what she regarded as the positive aspects of the elimination of the decades-old requirement to post proposed tariffs in the Canada Gazette. Mme. Theberge was not a member of the panel that decided retransmission, since the file was opened, and the hearings took place long before her own appointment last year.

There is also considerable discussion of the concept of “competitive market”, which is something of an oxymoron in any discussion of de facto mandatory tariffs that are built upon highly prescribed regulations in a context where the costs will almost certainly be passed along 100% to those Canadian consumers who have not taken the initiative to “cut the cord”. Indeed, there was some discussion about “cord cutting”. One of the great frustrations and illustrations of the dysfunctionality of the Copyright Board is that, while it attempts valiantly to analyse massive amounts of presumably relevant and expert evidence, such evidence can become manifestly irrelevant and unreliable in the face of a rapidly changing economic and technological environment when hearings in the decision-making process takes so long – in this case 6 ½ years. That is a very long time in Internet time when one considers the rapid proliferation of OTT services such as Netflix and the increasing proliferation of cord cutting. The use of VPN, Facebook and other tools enables many consumers to get all the basic news and entertainment they may want online legally for free or for much lower costs than Canadian cable companies have imposed for so many years.

In any event, subject to the outcome of judicial review, we now know more than six years after the proposed tariff was filed what the cost of the cable retransmission tariff will be for 2014 to 2018. No doubt the cable companies have set aside a reserve for the relatively modest increases and will surely be able to pass the costs along to their consumers. The Board’s apparently enhanced concern for retroactivity when it can impose potentially extreme consequences is a welcome development but begs the question of the obvious overall retroactivity of the entire process.

Once again, the the lawyers and expert witnesses have no doubt done very well in this long process. Moreover, it ain’t over till it’s over as Yogi Berra famously said. Indeed, because the parties wanted an early ruling on the overall quantum so that they could better determine its allocation, the Board – in an unusual move – announced the rates for this tariff back on December 18, 2019 – which immediately triggered two judicial review applications 30 days later.  These applications were ordered to be “held in abeyance pending the release of the Copyright Board's reasons for the Decision”. Well, that movement has now arrived.

It would seem likely that the judicial review applications will be pursued, given the amount of money involved that is, on its face, ~ $100,000,000 PER YEAR going back to 2014 and going forward. The chance of success may  not be high, considering that the Court normally defers to the Board on number crunching – but there are some legal issues involved and the SCC will presumably any time now release a major decision on standard of review which could provide surprises. Thus, we can look forward to another year or two of activity in the Federal Court of Appeal, with a possible remand to the Copyright Board and/or a possible appeal, if leave is granted, to the Supreme Court of Canada – with a possible remand after all the to the Copyright Board. So, it could be several years before this over. Who knows how many cable customers will be left at that point? But that’s another matter?

Like a broken old vinyl record, I keep reminding everyone that the PMNOC (Patented Medicines Notice of Compliance)  proceedings, which can often involve comparably enormous if not even more amounts of money than may be at stake in this case, MUST be dealt with from start to finish including the Court’s decision within 24 months.

HPK

Canadian Copyright Mass Litigation – Reasonable Reimbursement for Norwich Order Compliance

I have earlier written about the Voltage reverse class action in which Rogers was able to persuade the Supreme Court of Canada to remit to the Federal Court the question of  its reasonable costs of compliance with the Norwich order to disclose the names and addresses of alleged copyright infringers.

Another important chapter in the mass copyright litigation saga has just been written. The Federal Court, on remand from the Supreme Court of Canada based on its decision of September 14, 2018, has just provided the apparent answer to how much Voltage Pictures and presumably others will have to pay for the disclosure pursuant to a Norwich order of individual names and addresses. In this particular case, Justice Boswell concluded in Voltage v. Salna 2019 FC 1047 after considering a great deal of evidence that Rogers is entitled to compensation of $67.23 plus GST quote “for searching and disclosing the customer name and address associated with the five timestamps in the Norwich order”.

The fact that there were five timestamps involved in this particular situation presumably resulted from the fact that the IP address turned out to belong to a Mr. Robert Salma, who was a landlord whose IP address was presumably allegedly used by others. This, of course, will not be the normal situation. In the more normal situation, there will likely be a need for only two timestamp lookups

Justice Boswell concluded that each timestamp lookup entitled Rogers to reimbursement for 12 minutes of time at $35 an hour plus HST. Since there will normally be two timestamp lookups for each defendant in this mass litigation cases, that suggests reimbursement of 24÷60 X $35 which is $14 plus HST. See para. 87 of the Order and Reasons.

There are apparently approximately 55,000 potential defendants in this reverse class action, if it is allowed to proceed. More on that below. Accordingly, it would appear that if Voltage wants the names and addresses of all of these potential defendants the cost will be at least $14 times 55,000 or $770,000 plus HST, which comes to $870,100. It took some time and a failed attempt to appeal to the Supreme Court of Canada, but Voltage finally paid the sum of $75,000 into court in this reverse class action to keep it alive.

The certification motion is scheduled to be heard in Toronto on September 23 and 24^th, 2019. Presumably, some very important issues will be addressed at that time. These might include the very basic question of whether a “reverse class action” can even proceed in the Federal Court in a case like this and whether there is even a cause of action against those whose only involvement is being the subscriber and paying the bill for Internet service. The Supreme Court of Canada has specifically stated that this alone does not give rise to liability. There are many other issues which will hopefully be addressed. It remains to be seen whether there will be an active intervention in the certification process.

As I wrote earlier about the SCC decision:

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.

Meanwhile, other chapters are being written in this saga and there will be important developments in September.   More about all that later.

HPK