Vidéotron Ltée v. Konek Technologies Inc.

Vidéotron Ltée v. Konek Technologies Inc.
Court (s) Database
Federal Court Decisions
Date
2023-05-26
Neutral citation
2023 FC 741
File numbers
T-374-21
Decision Content
Date: 20230526
Docket: T-374-21
Citation: 2023 FC 741
Ottawa, Ontario, May 26, 2023
PRESENT: Mr. Justice Sébastien Grammond
BETWEEN:
VIDÉOTRON LTÉE
TVA GROUP INC TVA PRODUCTIONS II INC
Plaintiffs Defendants by Counterclaim
and
KONEK TECHNOLOGIES INC
COOPÉRATIVE DE CÂBLODISTRIBUTION HILL VALLEY
LIBÉO INC
LOUIS MICHAUD
JOÉ BUSSIÈRE
JEAN-FRANÇOIS ROUSSEAU
Defendants Plaintiffs by Counterclaim
PUBLIC JUDGMENT AND REASONS
[1] The defendants developed an integrated technological solution for their hotel clients. As part of this service, they have been retransmitting the TVA and TVA Sports television channels without having obtained the authorization of the plaintiff TVA Group Inc. The plaintiffs brought an action in order to stop this retransmission and obtain damages. For the reasons that follow, the defendants have failed to show that the regulatory framework flowing from the Broadcasting Act, SC 1991, c 11, authorizes them to retransmit the TVA Sports channels. I therefore grant an injunction prohibiting the retransmission of the TVA Sports channels, and I order the defendants Konek Technologies Inc, Coopérative de câblodistribution Hill Valley, Libéo Inc and Jean-François Rousseau to pay $553,000 in statutory damages. I also dismiss the claims that the parties have filed against each other under section 7 of the Trademarks Act, RSC 1985, c T‑13, mainly because they have not established causation between the opposing party’s alleged conduct and their alleged damage.
I. Background A. The Facts [2] The plaintiffs Vidéotron limitée [Vidéotron] and TVA Group Inc [TVA Group] are subsidiaries of Quebecor Media Inc [Quebecor Media]. TVA Group is a broadcaster that operates a number of television channels, including TVA and TVA Sports, and that produces—either itself or through its subsidiaries, including the plaintiff TVA Productions II Inc [TVA Productions]—several programs that are broadcast on these channels. Vidéotron is a company that offers a range of telecommunications services, including cable television services.
[3] The defendant Libéo inc [Libéo] is a company that operates in the networking and information technology sector and that employs approximately 75 people. It was founded in 1996 by the defendant Jean-François Rousseau, who remained its chief executive officer until 2019. The defendant Joé Bussière has been the president of Libéo since 2016. Mr. Rousseau and Mr. Bussière have a long‑standing business relationship and work together at various other IT companies.
[4] In 2016, Mr. Rousseau began collaborating with the defendant Louis Michaud in order to design new technological solutions for hotels. To that end, they formed the defendant Konek Technologies Inc [Konek] in September 2017. Konek designed a system that, using an internal network and boxes connected to the television in each room of a hotel, offers a wide range of functions to hotel guests, such as WiFi and IP telephony, while also providing various marketing tools to the hotel.
[5] One of the features of this system is the retransmission of television channels in hotel rooms. In this regard, the Konek system is an alternative to traditional cable television. This dispute relates to the manner in which the defendants sought to obtain the rights required to retransmit TVA Group’s television channels.
[6] The defendants set up a hybrid corporate structure in order to benefit from the exemption set out in section 31 of the Copyright Act, RSC 1985, c C-42. This provision allows a cable operator, also called a “broadcasting distribution undertaking” or “BDU”, to retransmit the signal of certain television channels without the consent of the copyright owner.
[7] This is why, in February 2020, Mr. Rousseau and the other individual defendants created the defendant Coopérative de câblodistribution Hill Valley [Hill Valley]. According to Mr. Rousseau, the purpose of creating Hill Valley was to provide a broader range of television channels to hotels receiving Konek services (Transcript no 5 of February 21, 2023, at 106–107). On December 30, 2020, Hill Valley applied to the Canadian Radio-television and Telecommunications Commission [CRTC] in order to be recognized as an exempt BDU pursuant to Order CRTC 2017-320, which I will call the Small BDU Order. Through this order, the CRTC exempted BDUs with fewer than 20,000 subscribers from the requirements of the Broadcasting Act, and subjected them to a more limited set of obligations. The CRTC approved Hill Valley’s application for exemption on February 3, 2021.
[8] A prototype of the Konek system was tested at a hotel in the summer of 2018. Other hotels subscribed to the services provided by Konek and Hill Valley starting in 2019, cancelling in the process their subscriptions to the cable television services offered by Vidéotron or its competitors. The defendants have been broadcasting the TVA channels to their clients since July 2018, and the TVA Sports channels since March 2020.
[9] The defendants never obtained the plaintiffs’ consent to retransmit the TVA and TVA Sports channels. On February 26, 2021, Vidéotron and TVA Group commenced this action, seeking various declarations; an injunction prohibiting, in particular, the defendants from retransmitting TVA Group’s programs; and damages.
[10] It should be emphasized that Konek and Hill Valley initially obtained the signals that they were retransmitting by subscribing to Vidéotron’s services. When the action was commenced, Vidéotron cancelled this service. To obtain the signal for the TVA Sports channels, Konek and Hill Valley then subscribed to Internet streaming services. TVA Group never authorized these services to retransmit the signal for the TVA Sports channels, and according to the evidence submitted at the trial, these services are likely illegal.
B. The Summary Judgment [11] In June 2021, the plaintiffs filed a motion for summary trial in order to obtain judgment on certain issues. It can be said, simplifying somewhat, that these issues aimed to define the scope of the exemption set out in section 31 of the Copyright Act and determine which of the corporate defendants were liable for copyright infringement. I rendered judgment on this motion in February 2022: Vidéotron Ltée v Technologies Konek inc, 2022 FC 256 [the Summary Judgment].
[12] The first issue concerned section 31 of the Copyright Act, which provides that certain forms of retransmission of television signals by a BDU do not constitute copyright infringement. The plaintiffs’ initial position was that this provision did not authorize the defendants to broadcast either the TVA channels or the TVA Sports channels. The defendants argued the exact opposite. At the hearing, the defendants recognized that section 31 could not apply to the TVA Sports channels because these channels are not broadcast over the air. The plaintiffs, for their part, acknowledged that an exempt BDU using technology similar to that of the defendants could claim the benefit of section 31 with regard to the TVA channels, but they contended that Hill Valley could not benefit from this exemption because it was merely a front.
[13] In the Summary Judgment, I gave effect to the mutual concessions of the parties and found that section 31 of the Copyright Act does not allow for the retransmission of the TVA Sports channels. In addition, I found that Hill Valley was not merely a front and that, since its registration with the CRTC on February 3, 2021, it could broadcast the TVA channels by relying on the exemption set out in section 31.
[14] With regard to the second issue, I found that Konek and Hill Valley were solidarily liable for any copyright infringement arising from the retransmission of the TVA and TVA Sports channels. However, I found that Libéo was not liable for such infringements because it benefits from the exemption that sections 2.4 and 31.1 of the Copyright Act confer on Internet service providers.
C. Subsequent Decisions [15] Shortly after the Summary Judgment was issued, Quebecor Media asked the CRTC to revoke the exemption that had been granted to Hill Valley on the grounds that the latter’s activities infringed its copyright. In response, Hill Valley requested that the CRTC initiate a dispute resolution process with the goal of reaching an agreement that would allow it to broadcast the TVA Sports channels.
[16] On December 21, 2022, in Broadcasting Decision CRTC 2022-346, the CRTC denied Quebecor Media’s request. The CRTC first observed that Hill Valley was eligible for an exemption under the Small BDU Order and that there were no grounds to revoke that exemption. The CRTC found that Hill Valley was authorized to retransmit the TVA channels. The CRTC also suggested that the retransmission of TVA Sports was contrary to the Copyright Act, although it noted that this issue did not fall within its jurisdiction. The CRTC therefore denied Quebecor Media’s requests. With respect to Hill Valley’s request, the CRTC stated that distributing TVA Sports channels was not a regulatory requirement. Nevertheless, the CRTC encouraged the parties to negotiate a mutually acceptable agreement, while clarifying that it was not condoning any breach of the Copyright Act.
[17] The defendants reacted to this decision by applying again to the CRTC, in order to obtain a final offer arbitration regarding the distribution of the TVA Sports channels. On March 27, 2023, in Broadcasting Decision CRTC 2023-99, the CRTC denied this request. It found that the requirements for holding such an arbitration were not present. It also reiterated that:
There is no regulatory requirement for Quebecor to provide its discretionary programming service to Hill Valley for distribution. Conversely, there is no requirement for Hill Valley to distribute TVA Sports, or for TVA Sports to be offered by Hill Valley.
[18] Moreover, the plaintiffs appealed the part of the Summary Judgment in which I found that Libéo was not liable for infringements of the Copyright Act committed by Konek and Hill Valley. On May 3, 2023, the Federal Court of Appeal reversed this part of the judgment and found that Libéo was solidarily liable for the infringements of the Copyright Act at issue in this proceeding. The Federal Court of Appeal’s decision settles this issue and I need not address the submissions made by the parties at trial in this regard.
II. Analysis [19] After the Summary Judgment was rendered, a certain number of issues remained to be decided and proceeded to trial. It is helpful to begin the analysis by providing an overview of these issues and my findings with respect to each of them.
[20] Several of these issues pertain to the plaintiffs’ claim for copyright infringement. Firstly, the defendants argue that the plaintiffs failed to show that they own the copyright on the works at issue. They also assert that the CRTC is about to compel TVA Group to license them to distribute the TVA Sports channels and that it would be unfair to grant an injunction in the meantime. Lastly, they allege that the plaintiffs have implicitly waived their rights. For the following reasons, I reject these submissions and find that Konek, Hill Valley and Libéo infringed the plaintiffs’ copyright.
[21] The appropriate remedies must therefore be determined. Given that the copyright infringement is ongoing, an injunction is in order. I also allow the claim for statutory damages, but for a lower amount than the amount claimed by the plaintiffs. In this regard, I am of the view that a lump sum of $553,000 is sufficient to compensate for the damage that the copyright infringement caused the plaintiffs, to denounce the defendants’ stubbornness in asserting a right to retransmit the TVA Sports channels, and to deter other businesses from engaging in similar conduct. In addition to Konek, Hill Valley and Libéo, Mr. Rousseau will be solidarily liable to pay these damages given the central role that he played in the copyright infringement.
[22] Furthermore, the parties claimed damages against each other pursuant to section 7 of the Trademarks Act, which prohibits discrediting a competitor or making false or misleading statements. I dismiss these claims because the parties have not shown causation between the statements in question, assuming that they were false or misleading, and the alleged damage.
[23] I will therefore address the issues in the following order: ownership of copyright; TVA Group’s alleged obligation to grant a licence; TVA Group’s supposed waiver of its rights; the extent of the copyright infringement; the appropriate remedies; and the claims under section 7 of the Trademarks Act.
A. Does TVA Group Own the Copyright? [24] As in any action for infringement, the first issue is to determine whether the plaintiffs have proven that they are the owners of the copyright on the works that have been reproduced or, at the very least, are the exclusive licensees. In this respect, the plaintiffs are not asserting a copyright in a communication signal, as set out in section 21 of the Copyright Act; instead, they are asserting a copyright in a collection of cinematographic works, namely, certain daily or weekly programs broadcast on the TVA and TVA Sports channels. TVA Group or TVA Productions, as the case may be, state that they are the makers of these works and are claiming the benefit of the presumptions established by paragraphs 34.1(1)(b) and 34.1(2)(c) of the Copyright Act, which read as follows:
34.1 (1) In any civil proceedings taken under this Act in which the defendant puts in issue either the existence of the copyright or the title of the plaintiff to it,
34.1 (1) Dans toute procédure civile engagée en vertu de la présente loi où le défendeur conteste l’existence du droit d’auteur ou la qualité du demandeur :
…
[…]
(b) the author, performer, maker or broadcaster, as the case may be, shall, unless the contrary is proved, be presumed to be the owner of the copyright.
b) l’auteur, l’artiste-interprète, le producteur ou le radiodiffuseur, selon le cas, est, jusqu’à preuve contraire, réputé être titulaire de ce droit d’auteur.
(2) Where any matter referred to in subsection (1) is at issue and no assignment of the copyright, or licence granting an interest in the copyright, has been registered under this Act,
(2) Dans toute contestation de cette nature, lorsque aucun acte de cession du droit d’auteur ni aucune licence concédant un intérêt dans le droit d’auteur n’a été enregistré sous l’autorité de la présente loi :
…
[…]
(c) if, on a cinematographic work, a name purporting to be that of the maker of the cinematographic work appears in the usual manner, the person so named shall, unless the contrary is proved, be presumed to be the maker of the cinematographic work.
c) si un nom paraissant être celui du producteur d’une œuvre cinématographique y est indiqué de la manière habituelle, cette personne est présumée, jusqu’à preuve contraire, être le producteur de l’œuvre.
[25] In addition, the plaintiffs rely on the definition of “maker” that is set out in section 2 of the Copyright Act:
maker means
(a) in relation to a cinematographic work, the person by whom the arrangements necessary for the making of the work are undertaken, or
(b) in relation to a sound recording, the person by whom the arrangements necessary for the first fixation of the sounds are undertaken;
producteur La personne qui effectue les opérations nécessaires à la confection d’une œuvre cinématographique, ou à la première fixation de sons dans le cas d’un enregistrement sonore.
[26] The plaintiffs rely on several decisions in which this Court stated that the maker of a television program benefits from the presumption established by paragraph 34.1(1)(b) of the Copyright Act because a program of this nature is considered to be a cinematographic work. The maker is therefore presumed to be the copyright owner: Interbox Promotion Corp v 9012-4314 Québec Inc, 2003 FC 1254 [Interbox] at paragraph 24; Bell Canada v L3D Distributing Inc (INL3D), 2021 FC 832 [L3D] at paragraphs 47–49; Canadian Broadcasting Corporation v Conservative Party of Canada, 2021 FC 425 [Conservative Party] at paragraph 33; Voltage Holdings, LLC v Doe#1, 2022 FC 827 [Voltage Holdings] at paragraph 28. The plaintiffs add that without such a presumption, it would be difficult to bring proceedings against persons or entities pirating television signals.
[27] In order to establish that they benefit from these presumptions, the plaintiffs relied on the testimony of Martin Picard, Vice President and Chief Operating Officer of TVA Group. Mr. Picard explained in great detail that the programs in which the plaintiffs are asserting a copyright were created by executive producers, directors, hosts and technical personnel who are all employees of TVA Group or TVA Productions (Affidavit of July 7, 2021, Exhibit 10; Confidential Transcript no 2 of February 20, 2023, at 4–16; exhibits 32–69). This evidence is intended to demonstrate that TVA Group or TVA Productions were, “in relation to a cinematographic work, the person[s] by whom the arrangements necessary for the making of the work [were] undertaken”. In addition, he submitted screenshots of samples of these programs, in which the name of one of the plaintiffs appears in the credits, in order to claim the benefit of the presumption in paragraph 34.1(2)(c) (Transcript no 1 of February 20, 2023, at 135–145; exhibits 70–85). It must be emphasized that the plaintiffs do not claim to be the authors of the works in question. Indeed, the plaintiffs argue that a cinematographic work does not necessarily have an author.
[28] The defendants, on the other hand, allege that the decisions of this Court that apply the presumption of paragraph 34.1(1)(b) to the maker of a cinematographic work were wrongly decided. Relying on an article by Professor David Vaver entitled “Owning Copyright of Movies and Films in Canada: May I Presume?” (2022) 34 IPJ 233, the defendants contend that only the maker of a sound recording benefits from the presumption and that, with respect to a cinematographic work, it is the author and not the maker who is presumed to be the copyright owner. They base their argument on the scheme of the Copyright Act, which contemplates distinct systems for works (including cinematographic works) and sound recordings, and on commentary that substantiates their reading of section 34.1: John S McKeown, Fox on Canadian Law of Copyright and Industrial Designs, 4th ed (Toronto: Carswell, 2003) at paragraphs 11.7 and 17.28; Laurent Carrière, ROBIC Canadian Copyright Act Annotated (Toronto: Thomson Reuters, 2021) at paragraph 34.1:5.2.1; Roger T Hughes and Susan J Peacock, Hughes on Copyright and Industrial Design, 2nd ed (Scarborough: LexisNexis Butterworths, 2005) at paragraphs 11 (“author”) and 37 (“ownership-general”); Normand Tamaro, The 2023 Annotated Copyright Act (Toronto: Thomson Reuters, 2023). Lastly, they note that a bill tabled in Parliament would have added to the Copyright Act a provision stating explicitly that the maker of a cinematographic work is the first owner of the copyright, but that the provision in question was never adopted: Bill C-115, 34th Parliament, 3rd session.
[29] Whatever their persuasive value, the defendants’ arguments run up against the binding force of precedent. In R v Sullivan, 2022 SCC 19 [Sullivan], the Supreme Court of Canada recently reiterated that trial courts must follow their own decisions, except in certain very narrow circumstances that Justice Nicholas Kasirer summed up as follows at paragraph 75:
Trial courts should only depart from binding decisions issued by a court of coordinate jurisdiction in three narrow circumstances:
1. The rationale of an earlier decision has been undermined by subsequent appellate decisions;
2. The earlier decision was reached per incuriam (“through carelessness” or “by inadvertence”); or
3. The earlier decision was not fully considered, e.g. taken in exigent circumstances.
[30] The binding force of Interbox, L3D, Conservative Party and Voltage Holdings is not affected by a subsequent decision of the Federal Court of Appeal or Supreme Court of Canada. Nor can it be said that these decisions were not fully considered because they were taken in exigent circumstances that prevented the judges from consulting the appropriate sources.
[31] It remains to be determined whether these decisions were reached per incuriam, that is to say, “without considering a relevant statute or binding authority”: Sullivan, at paragraph 77. In substance, the defendants state that my colleagues failed to take into consideration the interpretive arguments raised by the doctrinal sources cited above, in all likelihood because the parties did not bring them to their attention. However, doctrinal sources are only persuasive sources; they are not binding. A decision has not been reached per incuriam solely because it fails to address a doctrinal source. In the same way, failing to consider certain interpretive arguments does not mean that a decision was reached per incuriam: Chandi v Atwell, 2013 BCSC 830 at paragraph 57, reversed on other grounds by 2014 BCCA 446; Higgins v Arseneau, 2013 NBQB 332 at paragraph 49. If that were the case, any interpretive disagreement would allow a judge to depart from his or her colleagues’ previous decisions. However, the Supreme Court has clearly stated that decisions reached per incuriam are rare: Sullivan, at paragraph 77. In short, a decision is reached per incuriam only in the two scenarios mentioned in Sullivan: failure to consider a relevant legislative provision or failure to consider a “binding authority”, that is to say, a judicial decision binding on the judge. The defendants are not arguing that such is the case. Consequently, I am bound by Interbox, L3D, Conservative Party and Voltage Holdings.
[32] The defendants submit that I am not bound by L3D because it is a default judgment. However, there is no basis on which I can conclude that a default judgment lacks the force of precedent. Before rendering this type of judgment, this Court carries out a comprehensive analysis of the file and must be convinced that the plaintiff has established their claims and is entitled to the relief that they are requesting: NuWave Industries Inc v Trennen Industries Ltd, 2020 FC 867 at paragraphs 16–21. In any event, Interbox and Conservative Party were not default judgments, and an intervener argued a position that was opposed to that of the plaintiff in Voltage Holdings.
[33] The defendants also allege that I should not follow Interbox, L3D, Conservative Party and Voltage Holdings because there was no true adversarial debate regarding the scope of section 34.1. However, at least in the first three cases, the Court’s finding on this matter formed part of the ratio decidendi of the decision, meaning that it was a necessary step in the Court’s reasoning. I cannot ignore a part of the ratio decidendi on the grounds that the issue was purportedly not subject to a sufficiently robust debate. A decision’s binding force does not vary based on the quality of the arguments presented by the parties.
[34] In fact, there is every indication that the defendants are relying on the more flexible application of the doctrine of stare decisis to trial decisions that is advocated by Justice Robert J. Sharpe of the Court of Appeal for Ontario in his book Good Judgment: Making Judicial Decisions (Toronto: University of Toronto Press, 2018) at 155. However, in Sullivan, the Supreme Court of Canada explicitly closed the door on such an approach.
[35] I will therefore assume that, for the purposes of this case, paragraph 34.1(1)(b) of the Copyright Act sets out a presumption in favour of the maker of a cinematographic work. On that basis, I find that Mr. Picard’s testimony establishes that TVA Group or TVA Productions, as the case may be, are the makers of the television programs at issue because they undertook the arrangements necessary for their making. Moreover, TVA Group or TVA Productions, as applicable, benefit from the presumption set forth by paragraph 34.1(2)(c) because their names appear in the programs in the usual manner, i.e., in the credits. The plaintiffs have therefore proven that they are the owners of the copyright in the works that have been retransmitted by the defendants.
B. Does TVA Group Have an Obligation to License the Defendants? [36] Throughout the proceedings, the defendants argued that the Broadcasting Act and its regulations impose on TVA Group an obligation to license Hill Valley to broadcast the TVA Sports channels. In all fairness, the plaintiffs would not be able to seek an injunction if the alleged copyright infringement stemmed from their refusal to grant such a licence. For their part, the plaintiffs deny that they are under any such obligation. For the reasons that follow, I agree with the plaintiffs that no obligation of this nature exists.
[37] In terms of economic principles, the defendants’ position is based on the concepts of vertical integration and undue disadvantage. Because TVA Group, a broadcaster, and Vidéotron, a BDU, are vertically integrated, that is, they belong to the same parent company, TVA Group should afford equal treatment to Vidéotron and all other BDUs, such as Hill Valley. It should therefore grant a licence to broadcast TVA Sports to all BDUs that request it. By refusing Hill Valley’s request, TVA Group would be imposing an undue disadvantage on Hill Valley.
[38] While the defendants’ position can be understood from an economic perspective, it must nonetheless have some foundation in law in order for me to accept it. In this regard, the defendants’ position has changed over time and has not always been put forward in a coherent manner. For the sake of exhaustiveness, I will attempt to analyze all the submissions made by the defendants at one time or another. The defendants’ position seems to originate in the following excerpts from the regulatory framework relating to vertical integration (Broadcasting Regulatory Policy CRTC 2011-601):
9. Historically, the Commission has permitted programming undertakings such as conventional television stations and specialty services to acquire exclusive rights to broadcast programs. As such, individual programming undertakings may be the only ones that broadcast a particular program or series.
10. However, the Commission requires through its regulations that programming services be offered to all BDUs (e.g. cable and DTH services). In this way, most Canadians have access to broadcast programs that have been acquired on an exclusive basis. This serves to implement the objectives set out in section 3(1)(d) of the Act.
[39] The defendants did not explain how their situation is captured by the paragraphs above. A full reading of this section of the regulatory framework suggests that the CRTC instead had in mind various types of exclusivity agreements. In any event, the regulatory framework alone does not create any rights or obligations. Indeed, at paragraph 24, the CRTC states that it will publish draft regulations in order to implement its intentions. The defendants did not indicate whether such regulations were adopted.
[40] In fact, a review of the regulatory framework currently in force under the Broadcasting Act reveals no obligation to grant a licence to broadcast the TVA Sports channels. In order to fully understand this, the difference between mandatory and discretionary channels must be clarified. A channel is said to be mandatory when all BDUs are required to distribute it. The TVA channels are mandatory. On the other hand, a channel is said to be discretionary if a BDU is not required to distribute it. The TVA Sports channels are discretionary. In that case, each BDU must negotiate a licence with the broadcasters for the channels that it wants to distribute.
[41] Even though the TVA Sports channels are discretionary in theory, the defendants put forward three possible sources of an obligation on the part of TVA Group to license the defendants to distribute these channels. First, the defendants rely on the “standstill rule” set out in section 15 of the Discretionary Services Regulations, SOR/2017-159. Pursuant to this provision, during a dispute between a broadcaster and a BDU, the broadcaster must continue to provide its programming services at the existing rates and based on the existing terms and conditions. However, it is clear that this provision only applies when an agreement already exists between the broadcaster and the BDU, which is not the situation in this case.
[42] Second, the defendants rely on section 11 of the Discretionary Services Regulations, which states that a broadcaster “shall not give an undue preference to any person, including itself, or subject any person to an undue disadvantage.” However, the defendants did not clearly explain how TVA Group’s refusal to grant them a licence amounts to an undue disadvantage, considering that they had distributed the TVA Sports channels without TVA Group’s consent.
[43] In this regard, a recent CRTC decision, Broadcasting Decision CRTC 2021-341, runs counter to the defendants’ submissions. With respect to the standstill rule, the CRTC wrote the following:
42. Given its purpose, the Standstill Rule was clearly never intended to be used to compel the distribution of services and functionalities that had not been previously authorized under a valid and enforceable contract by the programming undertaking.
. . .
45. The Standstill Rule does not require a programming undertaking to authorize the distribution of new services or functionalities in the context of a dispute in the absence of an agreement. Where a BDU has never distributed the services or functionalities of a programming undertaking and such services or functionalities were not included during the term of the contract, the Standstill Rule cannot be used by a BDU to impose new legal obligations on programming undertakings. Doing so would grant an effective right to distribute contrary to the purpose of the Standstill Rule.
[44] With respect to the prohibition from giving undue preference, the CRTC stated that it does not have the effect of compelling a broadcaster, in that case Bell Media, to provide a discretionary service in the absence of an agreement to that effect:
60. The Commission considers that Bell Media should not be obliged to provide services and functionalities that were not already provided prior to the dispute and the expiry of the agreements. Bell Media is within its rights to refuse to provide the services and functionalities in question in the absence of a contract covering those services and functionalities. CCSA members have not been prevented from concluding alternate carriage agreements for new services or functionalities.
[45] Third, the defendants rely on section 15.02 of the Broadcasting Distribution Regulations, SOR/97-555, which provides that a BDU can broadcast a new programming service while waiting for an agreement to be reached with the broadcaster. However, this provision does not apply in this case because TVA Sports is not a new service as it has been broadcast since 2011. Furthermore, section 15.02 is inconsistent with the idea that broadcasters would have an obligation to grant a licence to distribute a discretionary service to any BDU that requests it. Indeed, if such a general obligation existed, there would have been no need to provide for an obligation for the specific case of new services.
[46] In addition, the defendants made their submissions to the CRTC, but were unsuccessful. Shortly after the Summary Judgment was issued, Quebecor Media, the parent company of TVA Group and Vidéotron, requested that the CRTC revoke the exemption allowing Hill Valley to carry on a BDU. In response to this request, Hill Valley requested that the CRTC order TVA Group to negotiate an agreement regarding the distribution of the TVA Sports stations within 90 days, failing which the CRTC would decide the matter. In support of its request, Hill Valley relied on the abovementioned provisions of the regulatory framework, the notion of undue preference and the fact that it was broadcasting TVA Sports “pending the signing of a distribution agreement”.
[47] In Broadcasting Decision CRTC 2022-346, which was rendered on December 22, 2022, the CRTC denied Quebecor Media’s request because Hill Valley was in compliance with the terms and conditions governing its exemption. Although it found that Hill Valley had carried on its undertaking without authorization until February 3, 2021, it did not deem it necessary to impose sanctions.
[48] Moreover, the CRTC considered Hill Valley’s obligation to retransmit TVA and TVA Sports. It found that such an obligation existed with regard to TVA, but not with regard to TVA Sports:
39. . . . In general, unless they are mandatorily distributed under paragraph 9(1)(h) of the Act, discretionary services are normally negotiated between a BDU and a programming service and are provided under an agreement between the two parties.
. . .
49. Given that the programming service declined to participate in a staff-assisted mediation, Hill Valley proposed as an alternative that the Commission indicate in its decision that it expects Quebecor to engage in expedited and good-faith negotiations.
50. The Commission notes that there is no regulatory requirement to distribute discretionary services, including TVA Sports.
51. Despite this, the Commission notes that Hill Valley is a small business that offers an innovative alternative to the hotel industry. Accordingly, and given the conclusions set out above, the Commission encourages the parties to negotiate a mutually acceptable agreement.
[49] There is therefore no basis to the defendants’ argument that the regulatory framework arising from the Broadcasting Act imposes on TVA Group an obligation to authorize them to broadcast the TVA Sports channels. Paragraph 39 of the CRTC’s decision, which I have reproduced above, leaves no doubt in that respect. Additionally, paragraphs 49 and 50 of that decision explicitly deny Hill Valley’s request to compel TVA Group to negotiate a licence. The CRTC reaffirmed these conclusions once more in its decision 2023-99.
[50] A recurring theme in the defendants’ submissions is that the CRTC can use its dispute resolution powers in order to confer on them the right to distribute TVA Sports channels or in order to compel TVA Group to grant them a licence to this effect. However, as the CRTC stated in decision 2023-99, arbitration can only relate to monetary issues and cannot compel a broadcaster to consent to the distribution of a discretionary service.
[51] The defendants have therefore failed to demonstrate that the Broadcasting Act or its regulations excuse the unauthorized retransmission of the TVA Sports channels.
C. Did the Plaintiffs Waive the Assertion of their Copyright? [52] The defendants also rely on the principle of issue estoppel to oppose the various claims made by the plaintiffs. In substance, they allege that the plaintiffs, through their conduct or statements, waived the assertion of their rights, tacitly consented to their conduct, or implicitly committed to granting them a licence.
[53] It is not necessary to clarify the legal basis of these submissions (in particular, as regards the application of issue estoppel—a common law principle—in Quebec) because they are entirely devoid of factual basis.
[54] The defendants first point to discussions with employees of Fibrenoire inc [Fibrenoire], a company offering high-volume connectivity services. Fibrenoire was acquired by Vidéotron in 2016. Fibrenoire’s operations were gradually integrated with those of Vidéotron between 2019 and 2021.
[55] In August 2019, Konek retained Fibrenoire’s services to install point‑to‑point links in certain hotels. At trial, Mr. Rousseau stated that he had explained his business plan to Fibrenoire’s employees and that they had expressed their agreement and even shown enthusiasm (Transcript no 5 of February 21, 2023, at 103–104).
[56] No conclusions of any kind can be drawn from these exchanges. The Fibrenoire employees did not testify. There is no basis to find that they became aware of the copyright infringement that would result from the defendants distributing the TVA Sports channels. Moreover, these employees had no authority whatsoever to grant a licence on behalf of TVA Group. It is important to bear in mind that TVA Group is a separate legal entity from Vidéotron and that at that time, the integration of Fibrenoire’s operations with Vidéotron’s operations had only just begun.
[57] The defendants also refer to certain attempts to initiate a dialogue with Vidéotron or TVA Group representatives. In 2019, Mr. Michaud requested a meeting with Mr. Robert Cabana of Vidéotron (Confidential Transcript no 9 of February 22, 2023, at 84–85). Despite email exchanges showing a certain level of interest, the planned meeting never took place. In the summer of 2021, Mr. Rousseau sent an email to Ms. Josiane Nader of TVA Group to ask for permission to distribute the LCN channel (Transcript no 5 of February 21, 2023, at 126; Exhibit 182). According to Mr. Picard’s testimony, no one followed up on this email because the employee in question was on leave (Confidential Transcript no 4 of February 20, 2023, at 32–33). In both cases, no actual discussion between the parties took place. It is completely absurd to claim, on the basis of these events, that the plaintiffs waived their rights in any way.
D. The Extent of the Copyright Infringement and the Persons Liable [58] Where the section 31 exception does not apply, it is not seriously disputed that the copyright owner, pursuant to paragraph 3(1)(f) of the Copyright Act, has the sole right to engage in the retransmission of TVA and TVA Sports channels, that is, “in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication”.
[59] The findings of the Summary Judgment help determine the extent of the copyright infringement committed by the defendants. I found that the retransmission of the TVA channels benefited from the exemption set out in section 31 as of February 3, 2021. Moreover, the Federal Court of Appeal concluded that Konek, Hill Valley and Libéo are liable for the copyright infringement at issue.
[60] The issues that remain to be disposed of are the following. Firstly, were Konek and Hill Valley de facto BDUs that could claim the benefit of section 31 of the Copyright Act prior to Hill Valley’s registration with the CRTC on February 3, 2021? Secondly, at the summary trial, the parties agreed to postpone until the trial the issue of the personal liability of the Konek, Hill Valley and, if applicable, Libéo directors.
(1) Were Konek and Hill Valley De Facto BDUs Before February 3, 2021? [61] The defendants argue that, prior to February 3, 2021, Konek and Hill Valley benefited from the exemption set out in section 31 of the Copyright Act. They argue that Hill Valley, and possibly Konek, were not required to register with the CRTC because some of the hotels served by Hill Valley and Konek were located in regions that did not have BDUs. Therefore, Hill Valley and Konek would have been “de facto” BDUs, even before Hill Valley registered with the CRTC. I reject this contention. To understand why, it is necessary to recall, in broad strokes, the reasons for the Summary Judgment with respect to this issue.
[62] Section 31 of the Copyright Act sets out that, in certain circumstances, the retransmission of a signal for a television channel does not constitute copyright infringement provided that the retransmi