A torrent of claims: preparing for a new era in copyright
It might start with a notice or two. There is a first Doe, and another, and then a Norwich order or two. Finally, a statement of claim arrives at your client’s doorstep. Another torrenting action is launched, and your client must respond.
This used to be an unlikely scenario. Now, the Supreme Court is set to hear a case about $150 that could change the trend of copyright enforcement in Canada.
Under the “notice-and-notice” system set out in Canada’s Copyright Act, Internet service providers (ISPs) — like Bell, Rogers and TekSavvy — must forward copyright infringement notices to their Internet subscribers. ISPs do this millions of times per year at the request of copyright owners who monitor the Internet for uploads of their content. Owners can detect uploaders’ IP addresses and their respective ISPs, but not their identities.
The “notice-and-notice” system allows content owners to issue infringement notices to ISPs, who forward those notices to subscribers without revealing their subscribers’ identities. That is why copyright owners in these cases name unidentified “Doe” defendants associated with a list of IP addresses. Copyright owners must seek Norwich orders compelling the ISPs to disclose the identities of the Doe defendants.
In Rogers Communications Inc. v. Voltage Pictures, LLC (Supreme Court File No. 37679), Voltage obtained a Federal Court Norwich order compelling Rogers to disclose the identity of one of its subscribers in such a copyright infringement action. The court held that because the notice-and notice system did not contemplate such disclosure, Rogers was entitled to claim compensation for its hourly fee to retrieve, verify and provide the information (Voltage Pictures, LLC v .John Doe 2016 FC 881). Rogers sought $150 from Voltage. The Federal Court of Appeal set aside the order granting compensation, reasoning that the Copyright Act already required Rogers to retrieve and verify the information, and Parliament had not made provision for reimbursement.
The dollar amount involved sounds trivial — but not in the aggregate. Rogers says it was ordered to disclose subscriber identities for 274 IP addresses in 2016 and 13 identities in 2015. On the other hand, Voltage has identified 55,000 Canadians who might eventually join a class of defendants in the novel proposed “reverse” class copyright proceeding that Voltage is seeking to certify. The cost of identifying that many subscribers is a significant barrier to Voltage and other copyright owners.
If the Supreme Court decides for Voltage, the result would almost certainly be explosive growth in the number and scope of Internet-based copyright infringement cases.
The mere fact of receiving a statement of claim or notice of application in an Internet copyright case is disruptive. Recipients are exposed to thousands of dollars of potential liability and legal fees, regardless of the merits of their case. Clients can reduce their exposure by securing their wireless networks against unauthorized access. Landlords, retailers, cafes and other businesses with public networks should impose terms of service on network users.
When your client is named in a torrent lawsuit, preparation is key to an effective settlement.
If a client must respond to one of these claims, recognize the unique dynamics that set them apart from more conventional cases. Although disruptive, the liability to each defendant is low relative to the cost of representation. Statutory damages in most cases run from $100 and are capped at $5,000; other remedies are possible, but less certain. Although the legal issues are new, untested and complex, clients will want to minimize legal fees.
Unless the proceedings are certified as class proceedings, individual defendants have little incentive to mount a full defence. Most will settle. You will need to quickly and efficiently build a strong case to present to the plaintiff. That starts with a brief investigation. Enlist your client’s assistance to keep costs low. The following items should be routine and low cost:
- Confirm with the ISP that the IP address listed in the statement of claim was actually assigned to your client at the relevant times. If not, your client might not be properly be a defendant.
- Determine whether the ISP issued the alleged notices and confirm whether your client received them. The notice-and-notice step might not have been completed. That step is not necessarily a prerequisite to liability, but its absence can provide leverage in negotiations.
- Obtain the court file. If your client was served following disclosure under a Norwich order, your client will be arriving after documents have been filed without being served on your client. For example, the court file may contain notices of discontinuance or draft judgments on consent filed against other defendants. The contents of any Norwich or confidentiality orders on file are relevant for advising a client who fears being named publicly. Other defendants may have filed statements of defence or replies that highlight weaknesses in the case.
- Have your client explain the situation to identify any potential defences or mitigation opportunities. Your client might have been the subscriber but not the person who used the network at the listed IP address. For example, your client may own a café that offers guest WiFi. Liability would be less clear in that case, particularly if your client did not receive infringement notices (see e.g., CCH Canadian Ltd v. Law Society of Upper Canada 2004 SCC 13 at paras 37-46).
- Finally, consider whether your client’s case merits investigating chain-of-title issues that undermine the plaintiff’s standing. However, that may be expensive unless the plaintiff provides the information voluntarily or ownership is registered in the Copyright Register maintained by the Canadian Intellectual Property Office.
Once armed with the facts from your investigation, present the copyright owner with your client’s case and a reasonable offer. A well-reasoned case demonstrates respect for the proceedings, the plaintiff and intellectual property rights in general (which is relevant for assessing statutory damages quantum under Federal Court jurisprudence), while underscoring any obstacles the plaintiff faces to the efficient resolution of its claim.
Plaintiffs are likely to prefer pursuing lower-hanging fruit in the face of sub-$5,000 statutory damages awards and uncertain non-statutory awards. A reasonable offer from your client can trigger cost consequences under the Federal Courts Rules that will encourage the plaintiff to co-operate.
Torrent-based claims are new and uncertain. Defending against them demands efficiency, legal innovation and strong advocacy, the very skills copyright owners have demonstrated in pioneering them.
A version of this article was published on January 15, 2018 in Lawyer’s Daily, prior to the judgment of the Supreme Court of Canada.