A recent decision of the Federal Court ofAppeal has interpreted the Copyright Act,in way that protects the rights of copyright owners on the Internet.
The Facts
VoltagePictures, LLC and other related companies are producers of movie films. They launched an action – a proposed reversedclass action - against persons they say have downloaded their moviesillegally. However, unless theplaintiffs can determine the identities of the persons they believe haveinfringed their copyrights, they cannot advance the action.
In 2012 the Copyright Act was amended to add a “noticeand notice” system relating to providers of Internet services and others. This system was a compromise and less robustthan the U.S. Notice and Takedown system. Under the system the owner of copyright may send a notice of claimedinfringement to an Internet service provider. The provider on receipt of the notice from a claimant must:
a) assoon as feasible, forward the notice electronically to the person to whom theelectronic location identified by the location data specified in the noticebelongs and inform the claimant that it isforwarding the message; and
b) retainrecords that will allow the identity of the person to whom the electroniclocation belongs to be determined and to do so for six months from the date the notice is received.
This systemdoes not directly provide for disclosing the information required to berecorded.
Using thissystem, the plaintiffs sought information identifying suspected infringersincluding John Doe #1, who was joined as a defendant on behalf of a class ofrespondents who had engaged in similar activities. Rogers Communications Inc. (“Rogers”)assembled the identifying information but claimed that they were not preparedto disclose it without an order of the court.
The new systemdoes not provide for disclosure of identifying information and an applicationmust be made to a court for an order authorizing the release of the information.Such orders are granted under the court’s jurisdiction to order equitablediscovery and are referred to as Norwich orders. Such orders grant a plaintiff discovery priorto bringing an action against a personinvolved in the infringing actions of others, even if innocently, because sucha person is under a duty to assist theplaintiff injured by those acts by giving full information by way of discoveryand disclosure of the identity of the infringer.
In grantingsuch orders courts balance the benefit to the applicant against the prejudiceagainst the alleged wrongdoer in releasing the information. Factored into theequation are the nature of the information sought, thedegree of confidentiality associated with the information and the degreein which the order curtails the use to which the information can be put. In addition, the courts can order that theperson from whom discovery is sought be reasonably compensated for the expensesarising out of compliance with the order.
Inthis case ajudge of the Federal Court granted an order requiring the information to bedisclosed to the plaintiffs. Rogers wasprepared to disclose it so long as it was paid a fee. The judge ordered that Rogers disclose therecords but on condition that the plaintiffs pay the fee requested by Rogersfor the work to assemble, verify and forward the identifying information to theplaintiffs to be billed at $100 per hour plus HST.
The Appeal
The plaintiffsappealed to the Federal Court. They allegedthere were tens of thousands of suspected infringers whose identifyinginformation could only be had at the same fee. They assert that Rogers fee, as approved by the court, set up amulti-million dollar barrier between them and the information necessary to continue with the action.
In interpretingthe Act, the court said that the overallaim was to ensure that in the age of the Internet, the balance betweenlegitimate access to works and a just reward for creators was maintained. The Internet must not become a collection ofsafe houses from which pirates with impunity can pilfer the products of other’sdedication, creativity and industry. Ifthis was allowed to occur the incentive tocreate works would decline or the price of proper users to access works wouldincrease. All the laudable aims of the Act – protecting creator’s and maker’srights, fostering the fair dissemination of ideas and legitimate access tothose ideas, promoting learning, advancing culture, encouraging innovation,competitiveness and investment and enhancing the economy, wealth and employment– would be nullified. The Act must be interpreted to allowcopyright owners to protect and vindicate their rights as quickly, easily andefficiently as possible while ensuring fair treatment for all.
Overall, whenconsidering obligations under the system, the internet service provider mustmaintain records in a manner and form that allows it to identify suspectedinfringers, to locate the relevant records, toidentify the suspected infringers, to verify the identification work it hasdone (if necessary), to send the notices to the suspected infringers and thecopyright owner, to translate the records (if necessary) into a form thatallows them both to be disclosed promptly and to be used by copyright ownersand later the courts to determine the identity of the suspected infringers,and, finally, to keep the records ready for prompt disclosure.
In addition,given the legislative history, no fees may be charged by a service provider forcarrying out these statutory services. This interpretation is driven by a legislative choice that, at least forthe time being, priority is given to the considerations of access toidentifying information to allow copyright owners the ability to protect andvindicate their rights over the economic interest of service providers. This also follows the broader purposes of theCopyright Act.
The system wasenacted against the backdrop of the Norwichorder process which includes the act of disclosure. Disclosure is not regulated and the equitablejurisdiction in relation to Norwichorders continues to be in place.
When the courtconsidered this aspect of the matter they said that typically the costsassociated with a motion for a disclosure order, asfar as a service provider is concerned, should be minimal.
Withrespect to thetrial judge’s order a legal error had been made since under the notice andnotice system no compensation could be ordered for the activities that relateto it and any expenses should be limited to the costs relating todisclosure. Since Rogers provided noevidence concerning the costs associated withdisclosure this would typically be nominal.
Asa result, the courtallowed the appeal and given the positions taken by Rogers, denied them anylegal costs and required Rogers to pay the plaintiffs the costs of the motion and the appeal. The court said that if Rogers and otherinternet service providers considered the level of compensation for the work wasunfair, they should ask the Minister to pass a regulation setting fees.
Comment
While thisdecision deals with a relatively narrow issue it also deals with the rights ofcopyright owners in a broader sense. Thedecision is consistent in a number of earlierdecisions directed at infringement. Thecomments are all the more poignant since the plaintiffs are not angels and havebeen accused of being copyright trolls.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
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