Now more expensive to sue multiple online infringers

Copyright owners will find it more costly to sue multiple online infringers following the Supreme Court of Canada’s decision in Rogers Communications Inc. v. Voltage Pictures, LLC requiring copyright owners to compensate internet service providers for some of their costs.

Now more expensive to sue multiple online infringers
David Zitzerman says a recent SCC decision was a ‘practical one.’

Copyright owners will find it more costly to sue multiple online infringers following the Supreme Court of Canada’s decision in Rogers Communications Inc. v. Voltage Pictures, LLC requiring copyright owners to compensate internet service providers for some of their costs.

“Voltage wanted to sue over 50,000 copyright infringers and Rogers wanted to charge $100 for finding each name,” says David Zitzerman, head of the entertainment law group at Goodmans LLP in Toronto. “So, we’re talking serious money here.”

The Supreme Court, however, refused to accept Rogers $100 fee at face value, leaving the precise amount to a future decision from the Federal Court.

“The decision was a practical one based on the court’s conclusion that more information was required to determine just how Rogers came up with the $100 figure and whether that was reasonable,” Zitzerman says.

While copyright owners can often identify the ISPs that infringers are using and their IP addresses, they generally require the co-operation of the ISPs to obtain their identities.

Copyright owners seeking identities of alleged infringers, then, commonly resort to the “notice-and-notice” regime mandated by the Copyright Act. The regime requires ISPs that receive notices from copyright owners that they are facilitating infringement to forward the notice to their customers.

But the regime does not require ISPs to reveal identities. Getting them to do that requires a court order called a Norwich order directing the ISP to disclose the information.

Here, Voltage, a movie production company, obtained such an order compelling Rogers to disclose the identity and personal information of 55,000 alleged infringers in support of a “reverse class action” against the infringers. The Federal Court granted the order but also granted Rogers’ request for a $100-per-hour fee for assembling, verifying and forwarding the information.

Voltage appealed to the Federal Court of Appeal and disputed the fee. The company based its argument on certain provisions in the notice-and-notice regime in the Copyright Act that prohibited ISPs from charging fees for forwarding the notice to customers and for retaining records that allowed the identification of the customers.

The FCA allowed the appeal, ruling that the trial court erred in approving the $100 fee without assessing its reasonableness and finding that the costs incurred by Rogers over  and above the costs incurred in complying with its statutory obligations were reasonable. Rogers obtained leave to appeal from the Supreme Court of Canada.

As the high court saw it after hearing the appeal, the notice-and-notice regime was not a complete code for dealing with copyright infringement. There was a distinction between an ISP’s obligation to keep the appropriate records and forward the infringement notice to its customers and an ISP’s obligation in response to a Norwich order requiring it to identify individuals.

“As I have explained, the statutory notice and notice regime, as I read it, does not require an ISP to maintain records in a manner or form that would allow copyright owners or a court to discern the identity and physical address of the person to whom notice was sent,” wrote Justice Russell Brown on behalf of eight of the nine judges who heard the appeal.

“In response to a Norwich order requiring it to furnish such information (or other supporting information), an ISP is therefore entitled to the reasonable costs of steps that are necessary to discern a person’s identity from the accurate records retained under s. 41.26(1)(b) [of the Copyright Act].

“While these costs, even when combined, may well be small, I would not assume that they will always be ‘negligible,’ as the Federal Court of Appeal anticipates.”

So while ISPs could charge for the costs incurred above what was required by their statutory obligations, the charges had to be reasonable.

Jay Kerr-Wilson, the Ottawa-based co-leader of Fasken Martineau Dumoulin LLP’s technology, media and telecommunications practice, who appeared for a number of intervenors, including Bell and Cogeco, says the decision represents a sensible middle ground.

“What the trial judge said was that courts should take ISPs at their word and name a rate, while the FCA went to the other end of the spectrum and concluded that, after the ISP did all the things it had to do under the notice-and-notice regime, there was nothing much else to do following the Norwich order,” he said.

“The Supreme Court, on the other hand, looked and this and said, ‘Let’s get real here’ and hear evidence to establish exactly what extra work is caused by the Norwich order and determine a reasonable fee for that work.”

Whether the decision will affect the deluge of lawsuits that sprang up in the 12 months before the decision arose remains to be seen, and it could well depend upon the Federal Court’s finding as to what constitutes a reasonable fee. According to the National Post, at least 17 copyright infringement lawsuits naming a total of more than 1,000 Canadians were brought in that period. Intellectual property lawyers and telecom companies told the Post that the volume and type of activity was unprecedented in Canada.

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