Focus: File-sharing cases sent down narrow path

While observers have suggested a recent Federal Court decision ordering Ontario-based Internet service provider TekSavvy Solutions Inc. to release the names of 2,000 of its customers to film production company Voltage Pictures LLC was a victory for copyright holders, it sends file-sharing cases down such a narrow path that it may not be profitable to follow.

Nicholas McHaffie of Stikeman Elliott LLP, who represented TekSavvy in Voltage Pictures LLC v. John Doe and Jane Doe, makes it clear his client didn’t oppose the motion to produce the names but sought protection for its clients from abuse of the court system.

“TekSavvy’s primary interests were that their customers should get notice of the proceedings as it went along and that the form of the order included customer protections to protect them from receiving inappropriate threatening letters.”

In fact, TekSavvy’s initial reaction to the motion was to comply. That was until its customers began receiving letters threatening them with lawsuits for illegal downloading for amounts in excess of the legislative cap on damages.

The situation reflected a phenomenon that has long played out in the United States and Britain where companies construct a business model to obtain revenue through mass mailing of letters threatening litigation.

David Fewer of the Canadian Internet Policy and Public Interest Clinic, which intervened in the case, says the judge had to provide intellectual property rights holders with access to the court but not for illicit or improper purposes. “The court had to walk a tightrope — provide access to IP claimants but not let it be misused in an extortion scheme or business model. The decision has done this. Voltage have got their order but will be subject to supervised proceedings. The court will be involved all the way.”

In fact, prothonotary Kevin Aalto specified the appointment of a case management judge, who in this case will be prothonotary Roza Aronovitch. One of her responsibilities will be to vet the wording of any demand letter sent to ensure there’s no inappropriate language or exaggerated claim for damages. It must clearly state that no court has made a determination that a subscriber has infringed or is liable in any way for the payment of damages.

“The court was clearly interested in the suggestions that TekSavvy made,” says McHaffie.

“The overarching case management structure prescribes the involvement of the court in a number of steps so it doesn’t expose TekSavvy customers to inappropriate threats of litigation. There will be oversight procedurally and substantively. Our client is happy with the protections put in place.”

Fewer calls the decision “perfect.”

“We are delighted. It’s exactly what we wanted in terms of process. The decision says it will not permit an improper purpose to manifest itself. It gave them some rope but just enough to hang themselves.”

In fact, Voltage counsel James Zibarras of Brauti Thorning Zibarras LLP was also happy with the appointment of a case management judge. “It is great to have one judge involved all the way along to hear arguments and assess the issues,” he says.

He also anticipates a benefit from receiving the court’s stamp of approval on the demand letter. “The approval of the case management judge will protect us as well.”

Zibarras is very aware that his client is carving a new path. “Every time we have to jump through a hoop, it will have to be adjudicated,” he says. “It would be very frustrating for both sides to be starting from scratch every time. It is a continuum.”

The next legal battle will be over the cost to the ISP of producing the names. “ISPs have taken the position that the costs are very high,” says Zibarras.

“This is a self-serving means of interfering and creating a barrier to potential actions. We will see where it lands after that issue is resolved.”

Zibarras emphasizes that his client is merely enforcing long-recognized rights.

“We are doing nothing that infringes anyone’s rights. Stealing is stealing and it always will be stealing. We are not standing by and allowing the diminution of property rights but we knew there would be a lot of legwork involved. We are carving new ground.”

Fewer gives Voltage the backhanded compliment of calling it the best of the copyright trollers.

“Many others are tremendously deceptive. I think the court had half an eye cocked towards all the really bad actors watching to see if Canada is open for business.”

In fact, the prothonotary talked in terms of “fence posts” inserted in the process to restrain the conduct of the plaintiffs. “This is reflected in a limitation on the extent of the information, a limitation to control the use of the information, control over the letter to be sent out, costs to be paid and prepaid, and the case management of the proceedings,” says McHaffie.

He believes the measures will be very effective. “This set of protections will make those considering mass copyright trolling to think twice before proceeding. It will not be an easy entry for anyone sending out a broad array of threatening letters in hopes of reaping a reward.”

The decision accords with the government’s treatment of the issue in capping damages for non-commercial copyright infringement at $5,000 with judges directed to make awards proportionate to the breach. “Parliament made an explicit direction that it doesn’t want copyright used this way,” says Fewer.

McHaffie agrees. “No one is condoning copyright infringement, but the structure of the act makes it clear that it is not designed to create lawsuits against individual users regardless of the context.”

Fewer anticipates that even if Voltage does locate the alleged infringers and proves the infringement, the amount of damages may be negligible. “They can’t prove thousands of dollars in damages. It’s hard to show any damages at all. They are out of the cost of a DVD rental or a paid movie download. This decision has shut the door on copyright trolling in Canada.”

Zibarras contends that the damages sought by Voltage are reasonable. “We are not out to destroy someone because they stole a movie. You have to keep it in perspective. It doesn’t matter whether the damages are $100 or $5,000. It’s the message it sends out. If someone stole a T-shirt or running shoes, the amount viewed as a detriment is something more than it would have cost for the shoes.”

Zibarras believes Aalto’s decision has already sent out a message that illegal downloaders are exposing themselves to penalty.

“We hope that someone will hesitate when before they wouldn’t have and as we go down the track, we hope that even more people will hesitate. We are paving the way for all copyright holders.”

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