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A bad day for copyright trolls

Recent Federal Court case sets out new digital content principles
By John Simpson
March 28 2014 issue

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In Voltage Pictures LLC v. John Doe and Jane Doe [2014] FC 161, the Federal Court of Canada struck a balance between the rights of copyright holders in digital content, the privacy interests of individuals who download content without paying for it and, to a large extent, the integrity of the judicial process.

The issue before the court was whether to require Teksavvy, an Ontario-based internet service provider, to disclose the names and addresses of approximately 2,000 of its customers to the plaintiff, Voltage Pictures, the producer of The Hurt Locker, Dallas Buyers Club and other movies.

Voltage had obtained the internet protocol (IP) addresses of Teksavvy’s customers from an investigation into unauthorized downloading of its movies through peer-to-peer networks. But without the actual names and addresses of these individuals, Voltage had no one to sue for copyright infringement (which is why the action was brought against “John Doe” and “Jane Doe”). Teksavvy, not surprisingly, would not disclose this information voluntarily, so Voltage asked the court to compel Teksavvy to disclose it.

Prothonotary Kevin Aalto granted Voltage’s request, but not lightly. In nearly 60 pages of reasons he expressed concerns over Voltage’s possible motives for seeking the information, the privacy interests of Teksavvy’s customers, and potential abuses of the judicial process. These concerns were based on submissions from the Samuel-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), which intervened to represent the interests of the unidentified defendants.

At the outset of his reasons, prothonotary Aalto quoted a U.S. decision about the dangers of “copyright trolls,” which was the focus of CIPPIC’s submissions. “Copyright trolls” (much like “patent trolls”) are parties who file multitudes of lawsuits or send multitudes of demand letters of dubious substance with the sole object of extorting quick settlements from alleged infringers. One of the tactics they often employ is “speculative invoicing,” where the demand letter includes an invoice for several times what the alleged infringer would have had to pay for authorization to use or download the copyrighted content.

Prothonotary Aalto also took into account the privacy interests of Teksavvy’s customers, and noted that the person associated with an IP address is not always the unauthorized downloader. But his view was that these privacy interests should ultimately yield to a copyright owner’s good faith interests in enforcing its rights.

The more difficult issue in this case, he found, was determining whether Voltage’s interests in enforcing its rights were in good faith: “The difficulty in this case is that it is not clear that the protection of copyright is the sole motivating factor supporting Voltage’s claim in this court … Voltage may have ulterior motives in commencing this action and may be a copyright troll.”

While Voltage was ultimately granted its request in this case, ensuring that courts will not become an unwitting tool for copyright trolls in Canada is the overarching theme of prothonotary Aalto’s reasons. Referring to jurisprudence from the U.S. and the U.K. and evidence submitted by CIPPIC, he described “the very real spectre of [a party such as Voltage] flooding the court with an enormous number of cases” against alleged infringers, “many of whom have perfectly good defences.” While not specifically mentioned, these defences would include that the downloading was for the purposes of fair dealing such as criticism, private study or review.

To that end, Aalto set out principles to be applied in future cases. The basic principle he articulated is that where there is evidence that an “improper motive may be lurking” in the actions of the plaintiff, the more stringent the order to identify alleged infringers should be, if an order should be granted at all. Where there is compelling evidence that the plaintiff is a copyright troll, the motion can be denied in its entirety. In other words, the terms of the order should depend on how strong is the whiff of a copyright troll.

In this particular case, Aalto found that while there was “some evidence” that Voltage may be a copyright troll, the evidence was not conclusive. On that basis, he granted an order requiring the disclosure of the Teksavvy customers but with a number of restrictions, including that Voltage will have to submit to the court for its approval drafts of any demand letters and that the whole process will be specially managed by the court.

Orders such as this will impose limits on the tactics that prospective copyright trolls can use to coerce individual defendants to settle (i.e. it’s unlikely “speculative invoicing” will be allowed). They will also add litigation costs that will likely make it uneconomical for a plaintiff to pursue alleged infringers for any less than $5,000, which is the Copyright Act’s new maximum statutory damages award for non-commercial infringement (which would include the vast majority of unauthorized downloaders). Needless to say, even the sum of $5,000 will evaporate quickly under this court-supervised process.

If nothing else, the case raises serious doubts about the viability of “copyright trolling” as a business model in Canada.

John Simpson is the principal of Shift Law, an intellectual property and new media law boutique.

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