A new lawsuit was
launched on September 11, 2019 in the “Federal Court of Canada” [sic] by an
entity known as ALLARCO, a.k.a. Super Channel, against four of Canada’s best
known, most successful and most prestigious electronics retailers, i.e. Best
Buy, Computers Canada, London Drugs and Staples. Here’s the Statement of Claim. The suit is also against Does 1 to
50,000, presumably some of the customers of these retailers whose privacy could
be at stake if Allarco gets its wishes. 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. It refers to copyright infringement in unspecified
works, circumvention, making available, unspecified “pirate devices”, trademark
infringement, the Criminal Code, the Radio Communications Act, circumvention,
theft, stealing, interference with the economic and business relations of the
Plaintiff, and conspiracy, etc. (I may have missed some of the very many allegations
in the very lengthy Statement of Claim), without getting very specific about anything.
For those who wish to track this case, Here’s the docket.
The
Statement of Claim alleges, inter alia,
that the stores “have offered for sale,
sold, leased and continue to sell or lease Pirate Devices to John Doe Customers
and advised, educated, counseled, encouraged, directed, induced, enabled and
authorized John Doe Customers to achieve, download, install and operate
services that result in the operation of the Pirate Devices and/or that enable
and allow the John Doe Customers to access the Infringing Content”.
This is not the
time or the place to comment in any detail on this Statement of Claim. Suffice
it to say that it would hardly be surprising if it were to be tested vigorously
pursuant to Federal Courts Rule 221 on such issues as lack particulars,
lack of Federal Court jurisdiction, failing to state a cause of action, etc.
Most challenges to pleadings at this stage result in leave to
amend to some extent. However, this pleading is, as I said, very unusual
indeed. If it is attacked, it will be interesting to see how much if any of it
survives and whether leave to amend is granted and in what respect. That said,
it should be noted that the lawyer behind this pleading has an interesting background.
His name is Bill McKenzie and he’s been practising for ~40 years. Here’s his law firm. He does have one
Supreme Court of Canada victory to his credit involving copyright to some extent on behalf of Bell ExpressVu
from 2002 that is sometimes cited. See Bell ExpressVu
Limited Partnership v. Rex, [2002] 2 SCR 559, 2002 SCC 42 (CanLII). Allarco has also engaged in a systematic and apparently expensive
publicity campaign involving a press release and a dedicated website that
interestingly enough includes a cross reference to the controversial FairPlay campaign launched
by Bell, Rogers and others. The Allarco litigation website entitled “A Culture
if Theft” also includes a video replete with dire and
demonic “musical” sound effects and the trademarks of the corporate retailers apparently
alleging illegal activity by them. It will be interesting to see whether this video
may result in counterclaims in the Federal Court or one or more separate
actions in the superior courts of one or more provinces.
Speaking of Bell and Rogers, they started a lawsuit in the Federal
Court earlier this year in the GoldTV case aimed
at site blocking and pursued unsuccessful aspirations to date in persuading the
CRTC or the government to enable through means short of an actual court
proceeding. Bell and Rogers have managed to get an interim injunction
essentially against themselves. However, it looks like Teksavvy is involved
here and may resist the sweep of this litigation. Why it is apparently the case
that Bell and Rogers are unable to determine who is behind GoldTV is an
interesting question. In the absence of the involvement of GoldTV, this case is
effectively proceeding by default unless TekSavvy is able to resist the
momentum of Rogers and Bell. Bell and Rogers, lest we ignore the obvious, are
highly vertically integrated entities with substantial content owner interests that
have historically shown little if any regard for their customers privacy in this
kind of litigation.
Whether or not the
above two initiatives are somehow related or merely coincidental remains to be
seen, although the reference by Allarco to the FairPlay initiative may raise
eyebrows.
There has also
been litigation under way for some time against some small operators for
selling Kodi boxes.
Not to mention the
19 or so mass litigation lawsuits against thousands of individual Does in the
Federal Court launched by Voltage and related actions – and above all the
so-called “reverse class action” against ~55,000 or so individuals who have no
idea whatsoever that they are being sued and whose worst sin may be that of
paying for internet service so that they can do their banking online and their
children can do their homework.
What I will say
now is to remind my blog readers of some extremely fundamental IP principles
that are too easily forgotten in the Crusades against piracy, theft, stealing
and all of the other alleged sins of many if not most consumers of electronic
products and users of the Internet.
The first
fundamental principle is that of the “staple item of commerce” doctrine. This was set forth in the
landmark 1984 decision of the United States Supreme Court in Universal v. Sony. In that
case, the Hollywood studios tried to make the VCR illegal. The US Supreme Court
in a landmark opinion written by the recently deceased iconic Justice Stevens
ruled that a device should not be declared illegal merely because it is
possible to use it illegally. If it has a substantial noninfringing use, the courts
should not intervene. An obvious down to earth example is that of a kitchen
knife. It can be used to slice vegetables or carve a turkey. It can also be
used as a murder weapon. Nobody would dream of bringing a court case to outlaw
the sale of kitchen knives.
Another iconic
principle is that providers
of services and equipment are entitled to presume that such services and
equipment will be used legally. This was the key aspect of the landmark CCH v. LSUC decision of the
Supreme Court of Canada in 2004. It will be recalled that the law publishers
were incensed that the Law Society of upper Canada provided a library full of
books along with self-service photocopiers. Needless to say, that argument
failed.
That case also
emphasized in Canada that “Absent
primary infringement, there can be no secondary infringement.” (CCH v. LSUC)
And even more recent
principle as enunciated by the Supreme Court of Canada in Rogers v. Voltage and at the appellate level in the
United States which is consistent with the foregoing is that those who merely pay for an
Internet service account are not thereby liable for that reason alone for any
infringing activities that may take place by those who use such
accounts, who are typically children, visitors, babysitters or even customers
of businesses that provide Wi-Fi. Could it be seriously argued that a hotel,
library or coffee chain is liable for the bit torrent activity of one of its
guests or patrons?
Above all, it must
be remembered that that war on piracy seems inevitably to lead to a war on
privacy in which there can be a lot of collateral damage. I was involved in one
of the first landmark Canadian decision, namely BMG Canada Inc. v. Doe, 2005 FCA 193 (CanLII), < > which Judge Von Finckenstein, as he then was, and the Federal Court
of Appeal established that:
“...[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”.
See a balanced and
still timely – indeed VERY timely - analysis of this case by Richard Naiberg
and myself (we were opposing counsel) here.
Unfortunately, the
general understanding of what constitutes both piracy and privacy is getting
murkier rather than clearer as time goes by. This is the case even by some judges,
though they can hardly be completely blamed in view of the often absent or inadequate
presence of the “public interest” in these types of cases. The appointment of “amicus curiae” may be
appropriate in in some of these instances. Even Voltage has so suggested.
“Piracy” is not be
encouraged and, in some cases, may require vigorous enforcement by courts to
stamp it out. But the piracy drift net must not cause collateral damage to the
innocent, who can suffer both serious financial and indeed emotional consequences. Being sued in the Federal Court and being
served with lengthy and complex legal documents merely for paying for internet
service is not something any normal Canadian would reasonably expect. Many people
are rightly terrified by Federal Court lawsuits and should not suffer any
emotional or financial distress in the vast majority of cases in having to deal
with them. There is an immense access to justice chasm here.
Above all, it must
always be remembered that “piracy” is not an absolute concept. If anything, it
is arguably rather like “obscenity” or “pornography” – i.e. Justice Stewart’s famous statement in
the US Supreme Court in Jacobellis v Ohio
378 U.S. 184 (1964)
I
shall not today attempt further to define the kinds of material I understand to
be embraced within that shorthand description ["hard-core
pornography"], and perhaps I could never succeed in intelligibly doing so.
But I know it when I see it, and
the motion picture involved in this case is not that. [highlight added]
Nobody should forget that only a few years ago, YouTube was sued by Viacom
for a billion dollars. The lawsuit alleged that “that the
site had engaged in "brazen" copyright infringement’…
The rest is history.
HPK
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