Ring In the Ringtones Litigation Redux – Over to the Federal Court

I have previously written about how Rogers et al are trying to get a refund of their “ringtone” payments made to SOCAN going back to 2003 in light of the SCC’s July 12, 2012 decision in ESA v. SOCAN, which held that the internet delivery of a permanent copy of a video game containing musical works is not a “communication” under s. 3(1)(f) of the Copyright Act.

The “communication” right was precisely the basis for the ringtone tariff in the first place. Interestingly, for reasons that were never apparent, the Objectors had conceded the point about “communication” – i.e. that there was a communication, though not to the public - at the inaugural Board hearing. Not surprisingly, given that concession, they lost. They then had a change of heart and a change of counsel and sought judicial review. Although their volte face was apparently not an issue per se in the Federal Court of Appeal, that Court nonetheless upheld the Board (CWTA v. SOCAN  2008 FCA 6) on this point and leave to appeal was refused by the SCC in 2008.  Of course, refusal of leave to appeal cannot be taken as an affirmation of the decision below, but rather like chicken soup, it normally doesn’t hurt.

We then move to the “pentalogy” decisions rendered by the SCC on July 12, 2012. In what may ultimately prove to be the costliest loss of all to the collectives on that memorable day, and at the able behest of Barry Sookman arguing for the ESA, the Court ruled in the ESA v. SOCAN case noted above that the process of delivering a permanent file containing music over the internet was not a communication. The Court also made other very important pronouncements about efficiency in the collective administration of copyright and about technological neutrality.

So, Rogers et al thereupon took steps both at the Copyright Board and in the Federal Court to get their ringtone money back.  Are the factual circumstances involving delivery of game files containing music and those involving ringtones containing music similar?

The FCA said in 2008 that there are two ways in which additional ringtones to those already on the phone can be obtained by customers:

[11]           Either method of acquiring a ringtone for a cellphone involves a transmission of the digital audio file from the wireless carrier to the customer’s cellphone, upon payment of a fee. Once the file is stored in the cellphone memory, the customer can access the file to play the ringtone or to use the ringtone as a signal for incoming calls. Neither of the transmission methods described permits the ringtone to be played or heard simultaneously with the transmission.

On the surface, it looks as if the SCC’s  pronouncement in 2012 would apply to the very activity that involves the delivery of ringtones. However, some interesting and difficult questions immediately arose concerning procedural issues. So, what is to become of a decision of the Federal Court of Appeal, for which leave to appeal was refused four years earlier?, though, as noted above, refusal of leave to appeal is not an affirmation.

When is a tariff “final”? Does the Board have the jurisdiction to vary or rescind a tariff going back ten years on the basis that the SCC has now come to a legal conclusion that is arguably 100% inconsistent with that of the Board and the FCA several years earlier, assuming that the factual underpinnings of the earlier decision are extremely similar to those considered by the SCC in the later decision? What about res judicata, stare decisis, and practical issues such as refunding money to those who ultimately paid in the end – namely consumers? Does the new legislation – namely the so-called “making available right” (which may or may not be a “new” right) make any difference?

These are many difficult questions. But there is a sufficient amount of money on the table –  supposedly about $15 million – to make the effort to recoup apparently worthwhile. And very capable counsel all the way around.

SOCAN had moved to stay the Federal Court action, pending the outcome of the Copyright Board proceeding. The Board has now ruled – at least in part. It will not vary or rescind theringtone tariffs for the period between 2003 to November 6, 2012. That, of course, is the day before the new legislation was proclaimed in force. The question as to what happens on and after November 7, 2012 is still open according to the Board.

Interestingly, the Board seems to doubt that the factual underpinning of the ringtones delivery process is sufficient similar to that of the video games process that the Board can make a ruling on whether SOCAN controls the applicable rights, if any.

[41] This is not the process to determine whether

the uses covered in the tariffs engage the rights

controlled by SOCAN. The extent to which the

underlying facts in ESA and Rogers are

sufficiently similar to what occurs when a ringtone

is transmitted is far from clear. ESA and Rogers

stand for the proposition that the Internet delivery

of a permanent copy does not involve the

communication right; however, neither decision

provides directives that would allow us to

determine what is a permanent copy and what is

not. Importantly, we have no factual base on

which to determine whether, today, six years after

hearing the matter, ringtones are permanent copies

within the meaning of ESA.

Still, the Board has no difficulty ruling that the new so-called “making available” right warrants what will undoubtedly be a major new hearing about Ringtones, should it go forward:

[44] On November 7, 2012, amendments dealingwith the so-called making available right ofCanadian authors, performers and makers cameinto force. To the extent that the 2006-2013 tariffis not otherwise enforceable, these amendmentsmay validate SOCAN’s royalty claimnotwithstanding ESA. For this reason, and thisreason alone, we will consider the application tovary the 2006-2013 tariff, but only from that date.

The Board’s decision not to vary or rescind its Ringtones tariff is complex, nuanced and important and must be read verbatim by any interested parties. There are many other aspects I haven’t even mentioned. It was notably issued very quickly by the Board’s usual measure for a decision of this complexity and importance.

Ironically, the Board discusses at some length why it is not the appropriate place to deal with some of these legal issues, which it feels would be best dealt with in the Courts. This may come as something of a surprise to those who have followed Board cases in the past where the Board has taken on very important issues of law that happen to overlap with a copyright issue. Examples that come to mind include the application of the Official Languages Act at Board proceeding, the meaning of a “tax” as opposed to a tariff, competition law, crown immunity, and the meaning of such ordinarily used words such as “ordinarily”.

Another concerns the great reluctance – indeed refusal – of the Board to go back in time to vary or rescind a tariff, in the absence of explicit statutory authority to do so, citing other tribunals with such authority. Such a practice admittedly might call into doubt the availability of collectives to distribute their revenues and the finality of Board tariffs. Nonetheless, the Board has never hesitated – even without any explicit statutory authority – to impose new tariffs retroactively for several years. These often come as great shock to those affected who may never have known about the proposed tariffs, or who may be shocked by their magnitude and had no obvious reason to budget for their retroactive imposition or to spend significant resources opposing them.

Another interesting irony of the Board’s refusal to grant this application to vary or rescind concerns its reasoning that that Rogers et al need not be concerned if they are right because royalties are only payable where a collective has an enforceable right with respect to works in its repertoire:

[19] The 2003-2005 tariff is identical in allrelevant respects. Royalties are payable only if aSOCAN licence is required. If the transmission ofa ringtone does not trigger a protected use of theSOCAN repertoire, no SOCAN licence isrequired; the applicants need not comply with thetariff. In other words, what the applicants seek toachieve through their application is already builtinto the tariff. The language of the tariff is clear.The reasons for which a licence is not required areunimportant; the only fact that matters is that alicence is not required.[20] Second, if, as the applicants maintain, thetariffs are void ab initio, nothing is achieved bythe Board declaring it to be so…

 This could be interpreted so as to be of some comfort to the universities whose interests are no longer being represented in the Board’s post-secondary tariff. As one reads the above pronouncement from the Board, a tariff that has no legal basis or that “does not trigger a protected use of the [collective’s] repertoire” can be safely ignored. Ariel Katz and I have voiced considerable concern that the Board will issue a “one copy of one work” tariff that will effectively be “mandatory” for post-secondary institutions, and that although such a tariff may be very dubious for any number of reasons, it could still cause significant headaches, copyright chill and potential expense and an uncertain outcome in defending it if it ever gets that far. The Board may have just provided another possible argument why tariffs without sufficient jurisdictional foundation can be ignored. 

In any event, since the Board has somewhat surprisingly declined to get involved in this matter and expressly suggested that the Courts are the best forum, it looks as if the Federal Court action will proceed, now with a counterclaim from SOCAN – presumably for unpaid ringtone royalties.  Here’s the docket.

HPK

Distributel Shows & Tells How an Indie ISP can Defend its Customers' Privacy Rights Against Alleged “Copyright Trolling”: Teksavvy Take Note

It’s good to see that competition is alive and well at least amongst the indies in the Canadian ISP market.  An indie ISP by the name of Disbtributel is stepping up to the plate and doing something that one of its indie competitors is apparently unwilling to do – which is to actively and effectively actually oppose a copyright mass litigation disclosure motion. Distributel believes this to be an inadequately supported motion that does not demonstrate good faith and which is being brought for an improper purpose. Indeed, Distributel explicitly alleges that the plaintiff NGN is engaged in “copyright trolling” and provides a copy of a letter seeking to “settle” for $1,500 and “misrepresenting and exaggerating” the possible potential upper end of any statutory damages award and implying that the award could reach a total of $25,000. According to Distributel, “This is a misrepresentation of the law”.  

It may be noted that the upper end of statutory damages is now $5,000 for any non-commercial infringement covered by the law that was proclaimed in force on November 7, 2012 - as any lawyer should know. No lawyer should ever suggest otherwise.  

Here is Distributel’s Motion record which shows a clear and concerted intent to resist the NGN motion. Distributel has filed two affidavits of its own from two of its employees (apparently, no expensive third party experts were considered necessary). These affidavits potentially seriously undermine the reliability of the affidavit evidence provided by Barry Logan of Canpire, who is also the deponent in the Voltage/Teksavvy matter.

Distributel had earlier chosen to “rely on the Court” to protect the privacy rights of individuals. It claims to have changed its position based upon becoming aware of NGN’s representation to a customer of a potential liability of up to $20,000 and a lack of key evidence to support NGN’s claims. Even if belatedly, Distributel is now stepping smartly, competently and confidently up to the plate to do what Teksavvy has controversially failed to do to date.

Teksavvy’s position on why it “does not oppose” the Voltage disclosure motion has been unconvincing. Yet, it claims to have somehow spent at last report at least $190,000 to not oppose and to seek two adjournments with the apparent goal of buying time to let a law school clinic try to get what could be at best limited status as an intervener. Teksavvy would of course have had full rights to bring evidence of its own, as did Distributel, and to cross examine Barry Logan of Canpire, if it chose to do so.  Ironically, it might have been much less expensive for Teksavvy to have simply engaged decisively at the outset than to have persisted in its apparent strategy to vigorously “not oppose” Voltage’s motion.  Teksavvy is not exactly impecunious. It is understood that it has between one and two hundred thousand subscribers. If its average revenue per subscribers is $50 per month, that’s cash flow of between $5 and $10 million per month. Teksavvy doesn’t need to rely, however indirectly, upon a law school clinic to take care of its customers, its business model and the public interest.

While I don’t often disagree with my friend Michael Geist, I respectfully cannot agree with his characterization that “TekSavvy has fought for the right to notify its customers and to allow CIPPIC to intervene in a case involving thousands of subscriber names”. First of all, Teksavvy always had the “right to notify its customers”. There was nothing to fight for here, except perhaps a brief delay – which would have inevitably taken place in any event and would have likely been far from brief if Teksavvy had only actually opposed the motion, and especially if it had filed evidence and/or cross-examined on  Voltage’s evidence. In any event, what exactly were Teksavvy’s customers supposed to do with this information? If they knew that they had downloaded some of Voltages’ films listed in the publicly available documentation, they might have guessed that their alleged IP address might have been on the Voltage’s hit list. What were they to do if their alleged IP address was alleged to be implicated? Hire a lawyer? Hardly.

The economics of troll litigation and the requirements of the Federal Court Rules make it completely unfeasible for an individual to retain counsel when the upper limit of what’s at stake is realistically only $5,000 per individual – however disproportionate an award of that magnitude might be. That’s why the economics of mass litigation threats attract copyright trolls and why ISPs need to be vigilant and diligent to defend their customer’s privacy.

It is an ISP’s role – and arguably its legal responsibility – to positively defend its customers’ privacy in the face of a motion for a court order that is arguably inadequate or fails to meet the “bona fide” test. This need not be an expensive exercise. Distributel is relying on evidence from its own employees. It is using only one law firm and not several sources of counsel.  After BMG, this is all well known territory with detailed maps, guidelines and guideposts. Nothing about the new legislation or subsequent case law has made anything more complicated in any material respect.  For whatever reason, Teksavvy may end up spending far more money not opposing the disclosure motion rather than actually opposing it, which reliable news reports indicate is indeed the wish of the Court.

As for CIPPIC’s role, CIPPIC itself says that it “represents consumer and other public interests in such areas as intellectual property, consumer protection in e-commerce, domain name governance, personal information protection and privacy”. It’s job is not to step in for business organizations that can hire their own law firms.  That puts CIPPIC in a very difficult position because its mandate is not be a law firm engaging in litigation that can and should be handled by the directly involved parties and their law firms.  CIPPIC relies on generous public and charitable funding from such benefactors as the Samuelson-Glushko Foundation. CIPPIC was never intended to substitute for commercial law firms or to directly or indirectly provide legal services to parties that can well afford such law firms.

CIPPIC has already done more than its duty in serving the public interest with respect to the mass litigation issue – with its first and best known victory to date, namely as an intervener  in the BMG litigation in 2004 -2005. I had the honour of being CIPPIC’s lead counsel in that case aided by the indispensable and very able help of Alex Cameron who handled the privacy issues with the clarity that proved to be so useful to the Court. There were very many important uncharted de novo public interest points to be made at that time and it was essential that CIPPIC be there to make them. As a result of CIPPIC’s intervention and the extremely competent opposition by Shaw and Telus, Canada has been immune from mass and troll litigation up until now.  With the excellent decisions of the Federal Court and the Federal Court of Appeal, the whole matter of disclosure motions in mass copyright litigation is now well understood and well-travelled ground and the map can be followed by anyone. That is exactly what Distributel seems to be doing and what Teksavvy won’t do, for whatever reason.

It is not apparent at this point when the hearing on the NGN/Distributel motion will take place and what may happen in the interim. Nor is it clear how Distributel’s strong opposition may impact the apparently similar situation in the Voltage matter, in which Canpire is also crucially involved. 

So – Distributel has now decided to fight to win for its customers' privacy rights.  It is doing what an ISP should do in these circumstances – which is to defend its customers’ privacy in the face of a disclosure motion that it believes is seriously inadequate. Several comments on Michael Geist’ blog suggest that this is not only the right thing to do but the smart thing to do from a business standpoint, since some readers are openly musing about switching from Teksavvy to Distributel.  Maybe Bell and Rogers will stand up and fight to win if and when their time comes around again and material is inadequate, as Shaw and Telus did earlier in 2004 and 2005. That is how the system should work and now seems, at last, to be working.

HPK

PS - Here is a copy of Judge Mandamin's Reasons for Order dated January 31, 2013 in the Voltage/Teksavvy confirming that "The Court is better served in coming to a proper decision having heard from differing sides." The other statements from the Court are also very important.

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.

HPK

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. 

See also Jason Koblosvky's response to Mr. Ellis.

HPK

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.

In 2005, in the BMG case, the Federal Court of Appeal stated that:

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.

HPK

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

websites”.

- “...[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.

 HPK