Follow Up on Bill C-86 – The Omnibus Bill that Amends Canadian IP Law

Bill C-86 has already been given second reading and is at the Finance Committee of the House of Commons. Yesterday, November 7, 2018, in the Finance Committee, there were about 10 minutes in total testimony by Grant Lynds, past President of the Intellectual Property Institute of Canada(“IPIC”) and Michael Geist in his own capacity on There were some subsequent questions. This takes place in the second hour of the webcast.

IPIC is the main professional association that represents intellectual property lawyers and agents in Canada. (I have been a member of IPIC forever and have spoken at many IPIC annual meetings). Michael Geist needs no introduction.

Mr. Lynds made some important points about file wrapper estoppel and how an immediate change may impact pending prosecutions and litigation. He also raised some important points about the proposed College of Patent and Trademark agents.

Michael Geist was largely positive about the package but concerned about the need for regulations re patent and copyright trolling notices and a need for an exception for informational analysis for text and data mining exception.  Michael did not deal at this time with the issue of whether the existing copyright law is adequate to implement the necessary regulations to prohibit the inclusion of settlement demands in s. 41.25 and 41.26 notices. In my humble opinion, it is, and it is inexplicable that this hasn’t been done in the last six years.  The question of patent trolling notices and demand letters is potentially much more complex and controversial and may yet not be ripe for specificity in the form of a detailed statutory requirement or even a regulation.

Both Grant and Michael were invited to provide “one line” drafts of amendments about their concerns.

Their concerns are not necessarily susceptible to one-line cures – at least not without considerable potential controversy. And both have many concerns that go way beyond one-line solutions. And needless to say, these two people – able as they are – can hardly speak for all in the IP community.

Neither Grant nor Michael were critical of the omnibus process of this bill, which was disappointing. Even if they mostly like this bill – apart from the serious concerns both raised which are not fixable by one-line amendments – this sets a dreadful precedent for the future. I’m surprised that neither made that point.

It was noted, if I heard correctly, that amendments must be proposed by November 15, 2018 and “clause by clause” will take on November 20, 2018.

There’s no downside in carving out the 100 pages or so of IP provision in C-86 and putting them into a separate IP bill – for which there are many precedents – which could get a few days worth of necessary, dedicated, and informed committee hearings and debate.

Instead, it looks like this will get literally only a few minutes – with perhaps of couple of “one line” token amendments… that may well be controversial and will certainly deal only with the tip of the iceberg.

There is no precedent in Canadian IP history for this massive bypass of parliamentary democracy. There is no urgency here to justify this departure from democracy.

While none of the provisions are obviously “evil”, some are potentially complicated and fraught with uncertainty and unintended consequences.

On the good news front, the LEGISinfo site indicated that the Senate Banking, Trade and Commerce Committee, which include Senator Joe Day – a former IP practitioner – and which has done good IP work before, for example on the Copyright Board, will hold hearings on the IP part of his bill even before it gets to the Senate.

On the bad news front, it also is unusual for the Senate to do is review in advance and this confirms the unseemly and completely unnecessary haste inherent in this unprecedented and unwarranted omnibus approach to IP law review in Canada.

HPK

Will the Canadian Voltage Reverse Class Action Now Fizzle?

I have been writing about Voltage, copyright trolls,  and mass litigation in Canada and elsewhere for almost seven years (beginning on September 9, 2011  here).

On August 9, 2018 the Supreme Court of Canada dismissed Voltage Pictures et al’s application for leave to appeal from a judgment from the Federal Court of Appeal (FCA) affirming the Federal Courts’ February 2, 2017 order regarding security for costs but for very different reasons. That order required that Voltage must pay $75,000 into court for security for costs “forthwith” pursuant to Federal Courts Rule 416.  This case is the very controversial “reverse class action” in which Voltage and  a few others are trying to sue more than 50,000 individuals at once. This is an unprecedented and arguably completely unforeseen and unintended use of the relatively new Federal Courts rules permitting class actions.

For reasons that are not apparent, the FCA’s decision has only just been posted very belatedly on August 13, 2018, although it was rendered on November 15, 2017. I presume that this was an oversight. It’s unfortunate, because this proceeding was a major milestone in the ongoing efforts by Voltage and others to sue tens of thousands of individuals through this reverse class action and in approximately 15 current mass litigation law suits naming hundreds of “Does”. For example, one such action, that of Bodyguard Productions, has 726 “Doe” defendants. Another, Morgan Creek, as 352 Doe Defendants. Both of these strategies – namely the “reverse class action” and the 15 or so mass litigation lawsuits – are being pursued by the law firm of Aird and Berlis, LLP. The lead counsel is Mr. Kenneth “Ken” Clark, whose name has arisen before on this blog. Interestingly, most of these 15 mass litigation proceedings began after the Federal Court ordered the payment into court “forthwith” of $75,000 for security for costs on February 2, 2017.

I do not know at this time what connection, if any, Voltage has with these 15 or so mass litigation actions. However, there are at least some connections. There is apparently a possible connection between Voltage and Morgan Creek in action T-71-18. There is also an apparent possible connection between Voltage and Dallas Buyers Club in action T-1674-16. 

The SCC’s refusal to grant leave to appeal to Voltage will come as good news to the potential 50,000 or so defendants in this very unusual and indeed unprecedented “reverse” copyright class action. One person, Mr. Robert Salna, was singled out by Voltage to represent thousands of potential class members. As luck would have it, Voltage chose quite possibly the very worst possible representative person from Voltage’s standpoint, Mr. Robert Salna, who is a landlord whose internet account allegedly “was used (likely by his tenants) to unlawfully distribute all of the films at issue in the underlying proceeding.”  Mr. Salna clearly has some means, has stood on principle and has good counsel.

I have previously written about how Voltage’s attempt to use a “reverse class action” in the USA was tossed by a federal district court judge in Oregon in 2013.

Naturally, each of the 50,000 or so defendants in this “reverse class action” may have had a different factual story to tell. Moreover, as any copyright lawyer in Canada knows, there is no Canadian case law establishing liability involving the use of BitTorrent technology by individuals.  In any event, even if there is liability in such a case, the amount of actual damage by any individual is likely to be minimal – since the cost of streaming or buying a movie is at most a few dollars. The range of statutory minimum damages for non-commercial activity is $100 to $5,000 and Canadian courts are consistent in ruling that statutory minimum damages must bear a correlation to actual damages. Even $100 is arguably far more than any reasonable measure of actual damage attributable to one individual in the circumstances as alleged.

There are approximately 50,000 class members as estimated by the plaintiffs in this proposed class action. If each of them is held liable for the maximum statutory damages amount of $5,000 for infringement of one work, that could lead to damages of $250,000,000. Even at the $100 low end of the range, the judgment could be in the realm of $5,000,000. In fact, several works are involved in this proposed class proceeding

In this instance, Voltage is attempting to sue at least 50,000 individuals for a total court filing fee of $50 for an “application.”  This is in contrast to a normal “action”, which would normally require a filing fee of either $150 or $50 for each separate lawsuit, the latter being available only for a “simplified action” when the amount claimed does not exceed $50,000.

So, if Voltage pursues its strategy and succeeds in getting this reverse class action certified, it will get to sue at least 50,000 individuals for a court filing fee of less than $0.001each – that’s less than a tenth of a cent.

Voltage and the other plaintiffs were unwilling to put up any security for costs, which is a very normal step at the outset of any Federal Court litigation when, inter alia, the plaintiff is a non-resident entity or when it does not provide an address. See Federal Courts Rule 416.

Voltage had argued the Federal class action regime was designed to prevent costs awards, including any “security for costs” requirement.

334.39 (1) Subject to subsection (2), no costs may be awarded against any party to a motion for certification of a proceeding as a class proceeding, to a class proceeding or to an appeal arising from a class proceeding, unless

·        (a) the conduct of the party unnecessarily lengthened the duration of the proceeding;

·        (b) any step in the proceeding by the party was improper, vexatious or unnecessary or was taken through negligence, mistake or excessive caution; or

·        (c) exceptional circumstances make it unjust to deprive the successful party of costs.

Voltage wanted to argue that the class action mechanism in the Federal Courts Rules is intended to immunize plaintiffs from costs except in very limited circumstances. However, the Federal Court of Appeal ruled that the nature of a reverse class action may well be an example of when “exceptional circumstances make it unjust to deprive the successful part of costs”. The motions judge in this instance, Justice Boswell, awarded $75,000 security for costs because he reasoned that the certification motion had not yet been filed.

The FCA convincingly ruled that Justice Boswell got the right result but for the wrong reason:

[8] Notwithstanding this, I believe that the Federal Court’s order should nonetheless be upheld as there is an alternate basis for finding that the Court possessed the jurisdiction to make it. In the exceptional circumstances of this case, which involve a proposed reverse class proceeding brought by foreign corporations with no significant assets in Canada against a proposed class potentially comprised of thousands of individuals resident in Canada, it is entirely possible that, if he is successful, the respondent might be awarded costs under Rule 334.39(1)(c). This paragraph allows for costs in respect of a certification motion, a class proceeding or an appeal arising from a class proceeding if “exceptional circumstances make it unjust to deprive the successful party of costs”. Such circumstances could well be found to exist in the present case, but that issue will not be addressed unless and until the Federal Court dismisses the certification motion.

[9] The circumstances in Rules 416(1)(a) and (b) apply, and, therefore, but for this being a proposed class proceeding, the Federal Court would be empowered to make an order for security for costs. I do not believe that the fact that this is a proposed class proceeding forecloses the Federal Court from making such an order in the present case. More specifically, I do not believe that a determination under Rule 334.39(1)(c) is a condition precedent to the exercise by the Federal Court of its discretion under Rule 416 to order security for costs in a case such as this, and there is nothing in the Rules or the case law of this Court that would require such a conclusion.

…

[11] If the appellants were correct in the interpretation they urge, an order for security for costs could never be made in the case of a class proceeding involving exceptional circumstances as a determination under Rule 334.39(1)(c) cannot be made until a determination on the merits is made. In my view, such an interpretation is untenable as it could well deprive a representative defendant like Mr. Salna of any realistic hope of recovering the costs he might eventually be awarded.

[12] Moreover, it appears that none of the access to justice concerns that motivate the prima facie no-costs regime enshrined in the Rules for class proceedings militates against the order for security in the instant case. The appellants appear to be fully able to bring their action, and, indeed, had two lawyers gowned before this Court on this appeal. In addition, they declined to file any evidence detailing their financial means to retain and instruct counsel or to post the required security for costs. On the other hand, the respondent and other members of the proposed class will likely face difficulty in funding representation. Thus, there is no principled basis for finding that an order for security for costs should not be made in the present case and there is no binding authority that indicates that the Federal Court erred in making such an order. I therefore believe that it was open to the Federal Court to make the impugned order for security for costs.

[13] Nor do I see any basis to interfere with the quantum of the security set by the Federal Court, a discretionary factual determination that this Court cannot interfere with in the absence of palpable and overriding error. The appellants can point to no such error here, particularly in light of the magnitude of the expenses incurred to merely litigate the motion for security. Further, if the appellants are right and the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic will be intervening in the certification motion and carrying the bulk of the argument, it would be possible for the appellants to seek to have the Federal Court vary its order and decrease the amount of the security for costs they are required to provide. Indeed, in its reasons, the Federal Court commented on just such a possibility.

[14] Thus, I would dismiss this appeal.

The Supreme Court of Canada is not going to hear Voltage’s appeal regarding the security for costs order. As usual, they don’t provide reasons. The bottom line is that the FCA decision stands as controlling precedent.

Thus, the takeaway from all this is arguably as follows:

• A “reverse class action” is indeed an “exceptional circumstance” and any foreign plaintiff must be prepared to put up potentially substantial security for costs at an early stage and potentially even more to follow at later stages if such an action ever gets certified, which is far from being clearly likely, for reasons beyond the scope of this blog

• Voltage may also be liable for reasonably substantial costs for the motion for security for costs.

It will be extremely interesting to see whether Voltage now proceeds in this controversial “reverse class action”. If it wishes to proceed, it must put up $75,000 now and may be liable for substantial costs of the vigorously opposed security for costs motion in due course. I have previously noted how a prior Voltage foray in the Federal Court against Tekksavy customers fizzled when it was ordered to pay substantial costs. In fact, notwithstanding the Federal Court’s order of February 2, 2017 that the $75,000 for security for costs be paid into court “forthwith” (which means in a matter of days, not months or years), it apparently has still not been done, which seems rather odd. That order was not stayed by the unsuccessful appeal to the FCA or the subsequent unsuccessful leave to appeal application to the SCC.

Moreover, it will also be very interesting to see whether the possibly greater awareness amongst lawyers and even self-represented defendants about Federal Courts Rule 416  and “security for costs” will have any impact on the 15 or so mass litigation lawsuits against thousands of “Doe” defendants that were also launched by Mr. Clark.

Stay tuned.

HPK

Further Update on the Blacklock’s “Litany of Litigation” - First Trial Set For September 19, 2016

It is been a while since I’ve updated readers on the “litany of litigation” launched by Blacklock’s. What follows is an update of my earlier postings. See here and here.

Blacklock’s is the very  litigious and controversial “subscription based news Corporation that covers politics, bills and regulations, reports and committees, as well as the Federal Court and Public accounts in Canada”, according to the reasons for judgment dated June 27, 2016 of Justice Denis Gascon in a recent Federal Court ruling dismissing an appeal by Blacklock’s of earlier orders staying all but one of the 10 cases launched in that Court against various federal departments and agencies. One action, (the “Finance Action”) which is the most advanced, will proceed with a trial beginning on Monday, September 19, 2016 for five days here in Ottawa. I’m guessing it will be well attended and I hope that the Court schedules it in a large enough room.  The other nine cases will be stayed “until 45 days following the determination of the Finance Action”.

Justice Gascon’s ruling states:

 [8]   Blacklock alleges that the Defendants have unlawfully distributed its articles within their respective departments or agencies and have breached its copyright after having obtained the articles by way of single-use subscriptions or through third-party sources. According to the Defendants, Blacklock employs a pattern of writing misleading or inaccurate articles about an organization with the expectation that these articles would be accessed and shared internally. Blacklock then makes Access to Information Act requests for evidence of distribution, and claims damages through various means, including litigation.

As they say, none of these allegations have been proven in court.

It is certainly not obvious from a practical or costs standpoint why Blacklock’s would have wanted separate trials on 10 cases against the Federal entities. Alternatively, Blacklock’s wanted to:

"allow all actions to proceed until the pre-trial conference, and only then to consider how to manage the trials."

Perhaps Blacklock’s wanted to pursue each case separately in order to send a message to current and potential defendants that it is serious about litigating and that it expects substantial settlements in order to forestall or stop the litigation. However, that is only my speculation.

Here are Blacklock’s arguments on the appeal of the stay ruling. Here are the arguments of the Attorney General of Canada (“AGC”).

The damage claims in each case are relatively modest as these things go, “ranging from $10,000 to $55,000 when they are specified”. Justice Gascon noted that:

[11]           In her decisions, Prothonotary Tabib acknowledged that the facts of each case are different as both the alleged copyrighted materials and the specific alleged acts of infringement are distinct to each case. However, she stressed that “commonality and similarities” reside in the defences raised in the ten actions. These common defences are: whether Blacklock owns the copyright in the articles alleged to have been infringed; the novel defence of abuse of copyright; the defence of fair dealing when articles are copied/used for internal government reporting purposes; the proper assessment of damages (whether they be loss of profit apportioned per article or the value of an institutional licence); and the availability of punitive damages. Prothonotary Tabib also noted that the amounts claimed in the actions filed by Blacklock are modest, ranging from $10,000 to $55,000 when they are specified. 

From Blacklock’s standpoint, the cost consequences of losing or even winning these cases could conceivably far exceed the upside of winning, given the way the Federal Courts costs rules can work with strategic and timely settlement offers where only modest amounts of money are recovered or recoverable. The most obvious cautionary tale is that of Catherine Leuthold, who sued the CBC for more than $22 million but recovered only US $19,200 damages and $168.74 by way of disgorgement of profits.  While she technically “won” her lawsuit, she was ordered to pay the CBC some $80,000 in costs, which included double costs pursuant to Rule 420, due to her refusal to accept a timely settlement offer of US $ 37,500. The costs order was upheld on appeal.  Needless to say, I have no knowledge of whatever settlement offers may or may not have been made by any party in the Blacklock’s litigation. Even the trial judge will not know about any such offer(s), if they exist, before he or she delivers judgment and will only know afterwards if double costs pursuant to Rule 420 become an issue to be determined by the Trial Judge pursuant to the Rules.  However, all experienced Federal Court litigators are aware of these costs rules. Presumably, the calculations have been done and the bets have been placed, so to speak.

Moreover, Blacklock’s has already faced some significant costs consequences. It lost at first instance with costs payable to each defendant in ten different actions on its efforts to oppose the Government’s stay motion and proceed with separate trials for all ten federal cases, and lost the appeal of Prothonotary Tabib’s ruling of March 3, 2016 before Justice Gascon as noted above. This has resulted in some fairly harsh costs awards as far as these things go against Blacklock’s to date. See here for Justice Gascon’s costs award from August 16,  of 2006 which calls for costs of $10,500 payable within 30 days of the Order and here’s the Court’s Order dated October 26, 2015 which awarded  costs to  the Government of $4,000.  This Order indicates rather strong language and a very significant costs order as far as these things go. Here’s the Court’s Order dated October 26, 2015:

 The motion was contested, it was contested extensively and it took a lot of time. There was a need for cross-examination. In the course of the argument, I made comments to the effect that the Plaintiff’s argument and choice of the way in which it chose to understand questions or construed questions was obtuse to the point of being obstructive. 

Justice Gascon commented on the decision below from Prothonotary Tabib regarding the stay motion: 

[43] In her Orders, Prothonotary Tabib concluded that it was in the interests of justice to stay the Nine Actions given that 1) the issues raised by the various actions significantly overlapped, 2) a stay would avoid costly duplication of judicial and legal resources, 3) a real risk of contradictory decisions existed, 4) Blacklock would not suffer prejudice, and 5) proceeding with the ten actions would cause prejudice to the Defendants. I am of the view that each of these five considerations fall well within the discretion of Prothonotary Tabib and that none of them reflects a reliance on a wrong legal principle or a misapprehension of the facts in granting the stays of proceedings sought by the Defendants.
  [44] In fact, I am convinced that Prothonotary Tabib was right to take these factors into account in her assessment of the interest of justice at stake in this case and in ensuring the just, most expeditious and least expensive determination of the Nine Actions and the Finance Action.
  [45] First, I agree with the Defendants and Prothonotary Tabib that there is a significant overlap of issues and facts between the Nine Actions and the Finance Action, and that this was a proper consideration to retain. This overlap includes the ownership of copyright by Blacklock, the defences of copyright misuse and fair dealing, as well as the proper assessment of damages and the availability of punitive damages. Blacklock tries to distinguish the Finance Action from the other actions because the distributed articles were obtained from a third party and not through its subscription. However, the Finance Action concerns the same pattern of conduct and core issues as the other actions. In addition, the issue of copyright ownership in the Finance Action relates to the defence of abuse of copyright raised in all actions. Lastly, the assessment of Blacklock’s actual damages and availability of punitive damages is a recurring theme in all actions.
… 

[47] Second, Prothonotary Tabib was not clearly wrong in relying on the avoidance of costly duplication of judicial and legal resources in support of her decisions. The Orders considered the judicial resources that would be saved by the stay, such as a multiplicity of pre-trial conferences and likely procedural motions, and several separate trials resulting in weeks of hearings. Prothonotary Tabib further estimated that even a consolidated trial would require at least three weeks and would delay the determination of even the most advanced actions.

 … 

 [54] I emphasize that there are numerous common legal issues raised by the Defendants in the ten actions. The Defendants rely on the doctrine of abuse of copyright as a basis to justify their assertion that Blacklock’s actions in a given context amount to copyright trolling. While this matter will be ultimately determined on the facts adduced in each specific case as to whether there has been copyright misuse, there are nonetheless common underlying legal issues being raised. Similarly, while the questions relating to damages, the value of Blacklock’s license for its product and the defence of fair dealing are questions where the factual assessment of the evidence will play a role, they raise comparable underlying legal questions that can be determined and that could be narrowed in the Finance Action.

(highlight added) 

Blacklock’s is clearly the underdog in terms of resources. It is apparently a family business up against 10 Federal Government departments or agencies. And, notwithstanding its legal victory in an earlier decision from the Ottawa Small Claims Court in 1395804 Ontario Limited (Blacklock’s Reporter) v Canadian Vintners Association (“CVA”), 2015 CanLII 65885 (ON SCSM), it must frankly be said that it faces an uphill battle in the Federal Court. From what I’ve seen of the pleadings, which are linked to below, the Feds would seem to have a very strong case in many ways, including but not limited to fair dealing. After all, if a government department can’t avail itself of the fair dealing users’ rights provisions in the Copyright Act for the purpose of research into or criticism of what the media are saying about its public policy positions and the law itself, then what is the purpose of s. 29 of the Copyright Act?  Moreover, the Government apparently has a serious case on copyright misuse and abuse. The Government explicitly alleges that “The Plaintiff is a copyright troll”.

Here is the Statement of Claim and Amended Statement of Defence in T-1391-14, the “Finance” action which has emerged as the lead case. Both of these pleadings are surprisingly brief and general in nature. However, both sides have very able counsel – and hopefully the issues with be dealt with fully and on the merits.

Commentary on Small Claims Court decisions is rare, given that they have no precedential status in higher courts. However, in this case there was a lot of commentary. See, for example the views of Canadian law professor Teresa Scassa here and the redoubtable Mike Masnick on the internationally widely read Techdirt website.  See also other legal commentary that seems mostly negative or deeply sceptical about the decision, e.g. here and here,  here and  here, and a good comment from an IP Osgoode student here. I’m only aware of one commentator who thinks that the Small Claims Court got it right – and she is not a copyright lawyer or expert, as far as I know. See here.

The fact that the Small Claims Court ruling was not appealed likely results from pragmatic considerations.  Moreover, the Canadian Vintners Association presumably has more compelling concerns from its viewpoint than copyright law. Whatever the reason, one can’t fault the Vintners from not appealing this Small Claims Court decision. In any case, the decision not to appeal doesn’t really matter anyway because the Small Claims Court decision – while it got a lot of media attention – has no precedential effect in the Federal Court or the Ontario Superior Court.

Interestingly, I am advised that Blacklock’s has launched at least three actions in the Ontario Superior Court. One of them is being defended by David Fewer, not in his capacity as Director of CIPPIC, but rather in his personal capacity. See the Fillmore Statement of Claim here and the Statement of Defence here. It is not known where these three matters stand and whether there is any serious possibility of future developments that may conflict with the Federal Court decision(s).

Given the apparently litigation-based strategy of the plaintiff on the one hand and the resources and the apparent concern for public policy on the part of the Government, it seems likely that the outcome of the trial set to begin on September 19, 2016 may very well be appealed by one side or the other. That appeal would be heard by the Federal Court of Appeal, which is normally very receptive to helpful interventions.

I agree with Prof. Teresa Scassa that this is an important case to watch this fall.

HPK

Copyright Trolling in Canada: Is Blacklock’s a Copyright Troll & "Frequent Flyer" Litigator?

(Wikemedia)

A recent decision from the Ottawa Small Claims Court in 1395804 Ontario Limited (Blacklock’s Reporter) v Canadian Vintners Association (“CVA”), 2015 CanLII 65885 (ON SCSM) is raising some notable eyebrows, for example with  Canadian law professor Teresa Scassa here and the redoubtable @glynmoody on the internationally widely read Techdirt website.

The decision deals with the issues of whether a person without an account to a pay-walled website who receives a “teaser” by email from the website publisher about an article of potential concern to that person or his/her organization and who requests a copy of the work in question from that website from a third party who does have an account is infringing copyright, circumventing a Technical Protection Measure (“TPM”) and can invoke a fair dealing defence in these circumstances. There was also a claim for inducing breach of contract and punitive damages.  The Court came down heavily on the defendants on all issues. The Court found that the defendants were liable for the cost of an institutional subscription in the amount of$11,470 plus punitive damages of $2,000 plus costs.

A few points must be made at the outset:

-          Decisions of the Ontario Small Claims Court, even if correctly decided, have minimal, if any,  precedential status  – other than perhaps in a limited sense of “comity” or “collegiality” amongst other small claims court judges in Ontario. Under the doctrine of “stare decisis”, courts are bound to follow decisions of higher courts to which their decision could be appealed. So, the Federal Court, the Copyright Board and even the Ontario Superior Court are clearly not bound by a decision of an Ontario Small Claims Court.

-          In any event, and with all due respect to the clearly well-intentioned and lengthy reasons of the Deputy Judge (who is not an actual “Judge” but a lawyer who serves part-time as Deputy Judge in the Small Claims Court) who wrote the decision, there are many reasons to doubt that this particular decision was correctly decided in all or even any material respects. It’s arguably an unwarranted and unprecedented stretch of the law to conflate either asking someone for a copy or providing someone with a copy with illegal “circumvention” of a TPM just because the work is behind a paywall.  It’s not even clear that the Blacklock’s paywall constituted a TPM, as defined in the Copyright Act or that there was any circumvention, as defined, in this instance or that any of the activity alleged was prohibited by the legislation. Above all, as Prof. Scassa states succinctly here, “Receiving and reading a copy of an article sent by another person is not per se copyright infringement.” Her conclusion is that “This decision is so entirely lacking in the balance mandated by the Supreme Court of Canada that one can only hope it is nothing more than a strange outlier.”  There are other problems with the decision as well, but I won’t get into them here and now. There’s no need for the moment because it’s a Small Claims Court decision and is of virtually no precedential consequence.

-          In any event, the Supreme Court of Canada made it very clear in the 2004 CCH v. LSUC decision that:

o   “As an integral part of the scheme of copyright law, the s. 29 fair dealing exception is always available.” (para 49)

o   “The availability of a licence is not relevant to deciding whether a dealing has been fair.” (para 70)

-          Much else could be said about the problems with the decision, but now is not the time or place. Anyway, once again with all respect, it’s just a Small Claims Court decision.

There have been a number of instances in which small claims court judges have written long decisions in Canadian copyright cases. This is interesting, but ironic – because these decisions don’t really count, for better or for worse. However, this is understandable because these cases are probably much more interesting to these judges than the usual types of cases that are handled in their courts. And given the relative paucity of copyright jurisprudence in Canada, they are clearly trying to be helpful.

An interesting question is why this particular case wasn’t brought in the Federal Court – either as an application or a simplified action. Given the amount of money at stake, it could have been brought in either court. Moreover, the Federal Court has procedures for dealing with applications and “simplified actions” that can be fast and economical, while still allowing for adequate document production, cross-examination or discovery as appropriate in advance of a hearing.

Indeed, Blacklock’s has brought several other cases in the Federal Court. Here are 10 cases filed since mid-2014, mostly against the Federal Government or its agencies and a couple of NGOs:

Court Number	Style of Cause	Nature of Proceeding	'RE'
T-1234-15	1395804 ONTARIO LTD. (Blacklock's Reporter) v. ATTORNEY GENERAL OF CANADA	Others - Crown (v. Queen) [Actions]	RE
T-1085-15	1395804 ONTARIO LTD., operation as Blacklock's Reporter v. AGC	Others - Crown (v. Queen) [Actions]	RE
T-897-15	1395804 Ontario LTD. v. Canadian Transportation Agency	Copyright Infringement [Actions]	RE
T-745-15	1395804 Ontario Ltd, operating as Blacklock's Reporter v. Bank of Canada	Copyright Infringement [Actions]	RE
T-477-15	1395804 ONTARIO LTD. ET AL v. CANADIAN FOOD INSPECTION AGENCY	Copyright Infringement [Actions]	RE
T-269-15	1395804 ONTARIO LTD. ET AL v. ATTORNEY GENERAL OF CANADA	Admiralty - Damage (Property & Facilities)	RE
T-2090-14	1395804 ONTARIO LTD v. CANADA (AG)	Copyright Infringement [Actions]	RE
T-1674-14	1395804 ONTARIO LTD. v. SIERRA CLUB CANADA FOUNDATION ET AL	Copyright Infringement [Actions]	RE
T-1613-14	1395804 ONTARIO LTD. v. FRIENDS OF CANADIAN BROADCASTING	Copyright Infringement [Actions]	RE
T-1391-14	139504 ONTARIO LTD., OPERATING AS BLACKLOCK'S REPORTER v. AGC	Copyright Infringement [Actions]	RE

Some of these have been discontinued, which may – though does not necessarily - mean that there was a settlement. However, the cases against the Government are being apparently vigorously defended – and some interesting defences are emerging.

It appears, on the basis of the Government of Canada's amended pleading (see below), that it is going to fight these cases on the basis, inter alia, that Blacklock’s is allegedly a “copyright troll”, uses “teaser emails that are designed to interest the department in reading and distributing the Plaintiff’s articles”, engages in “speculative invoicing” and is engaged in copyright “misuse”.  The Government of Canada has just won a clear and convincing procedural victory on a motion to amend its statement of defence to plead along these lines – along with a costs order of $4,000 against Blacklock’s on a procedural motion and a comment from the Court that:

The motion was contested, it was contested extensively and it took a lot of time. There was a need for cross-examination. In the course of the argument, I made comments to the effect that the Plaintiff’s argument and choice of the way in which it chose to understand questions or construed questions was obtuse to the point of being obstructive.

This is harsh language and a very significant costs order as far as these things go. Here’s the Court’s Order dated October 26, 2015.

Here is the Statement of Claim and Amended Statement of Defence in T-1391-14. This seems to emerging as the lead case.

Blacklock’s appears to have become one of the most "frequent flyers", as it were, in Canadian copyright litigation in the short time of just over one year. I cannot recall any single party bringing ten lawsuits in the Federal Court in just over one year.

For those who are unfamiliar, Blacklock’s is a relatively new online high priced media service ($157 for a personal subscription and $11, 470 for an institutional one) that, according to itself, “…covers news you won’t find anywhere else: bills and regulations; reports and committees; Federal Court and public accounts. We’re the only reporter-owned and operated newsroom in Ottawa that finds the facts needed by business, labour and associations.”

I have been interviewed by Blacklock’s on at least one occasion. I must say that I will now become rather reluctant to be interviewed again by Blacklock’s again, if the allegations in the Federal Government’s amended statement of defence are true.

The business model of a subscription based media service with a narrow and relatively small audience with a timely need to know is a tricky one. It has been practiced to a high level of apparent success and respect by the family owned Hill Times organization in Ottawa, since 1989, for a mostly Ottawa-centric  audience of “Cabinet ministers, MPs, Senators, political staffers, lobbyists, 'backroomers,' political junkies, and some of the top decision-makers in the country, including influential players in Parliament, Cabinet, the Prime Minister's Office, the Privy Council, the Finance Department, Treasury Board, the Department of National Defence, the Justice Department, and more.”

The Hill Times organization seems to know how to successfully balance paper and online publication and free and pay-walled material.  I’m not aware of the Hill Times ever having sued anyone for copyright infringement.  I’m always happy to be interviewed by and occasionally write for the Hill Times and its various specialized offshoots such as the Wire Report or Embassy News.  Nor have I ever heard of large media organizations such as The Economist or the New York Times ever suing anyone for sharing the occasional article that is behind a paywall.

Speaking generally and not about this or any other particular case, suing one’s customers – or potential customers – is rarely a good business model, whether it be for deterrence or, worse still, as a source of revenue or a business model. Ask the RIAA how their campaign against a 12 year old child, a 71 year old grandfather and a dead grandmother worked out. Likewise, and again speaking generally and not about this or any other particular case, there have been recent examples in the USA and UK where some “troll” litigation has backfired badly.

Needless to say, if any of these Blacklock’s Federal Court cases result in a judgment, this would be something worthy of notice because it would potentially have significant precedential value.

If CVA appeals the Small Claims Court decision, things could get very interesting. The appeal would go the Ontario Divisional Court, which, as copyright lawyers should know, delivered an excellent pro-fair dealing ruling in 1997 in the Allen v. Toronto Star case involving the reproduction on the front page of a Toronto Star edition with a major article about Sheila Copps of a whole magazine cover from Saturday Night Magazine featuring a picture of Sheila Copps. It’s not clear that it would be cost beneficial for CVA to appeal the current decision, even if they win. But if it does, it’s reasonable to expect some interest on the part of potential interveners – on both sides of the fence. A decision of the Ontario Divisional Court is one that could indeed have some precedential value.

In any event, interested eyes are – or should be - on the Federal Court cases. If anyone becomes aware of any other Blacklock’s litigation or threatening letters, please feel free to let me know and pass along details, anonymously if you so wish.

Anyway, speaking of alleged copyright trolls, the hearing of Teksavvy’s quest in the Voltage case to appeal the  decision by Prothonotary Roza Aronovitch of the Federal Court regarding TekSavvy’s claim to entitlement to $346,480.68 in which Teksavvy was awarded only $21,557.50 – about 6% of what it asked for overall coming up on November 9, 2015. Although CIPPIC is no longer active in this matter, it would be helpful if CIPPIC would update its website regarding this case soon and post the most pertinent of the obviously voluminous material filed in the Court so that folks who may wish to follow or attend the hearing on November 9, 2015 can be better informed.

More to follow without doubt on both Blacklock’s and Teksavvy soon.

HPK