ME2 Productions, Inc. v. Doe

ME2 Productions, Inc. v. Doe
Court (s) Database
Federal Court Decisions
Date
2019-02-21
Neutral citation
2019 FC 214
File numbers
T-2177-16, T-463-17, T-480-17
Decision Content
Date: 20190221
Dockets: T-2177-16
T-463-17
T-480-17
Citation: 2019 FC 214
Toronto, Ontario, February 21, 2019
PRESENT: The Honourable Mr. Justice Pentney
Docket: T-2177-16
BETWEEN:
ME2 PRODUCTIONS, INC.
Plaintiff
and
DOE #1 ET AL. (SEE SCHEDULE 1 FOR LIST OF DEFENDANTS)
Defendants
and
AMANAH TECH INC., BELL CANADA, ROGERS COMMUNICATIONS INC., TEKSAVVY SOLUTIONS INC., PRIMUS TELECOMMUNICATIONS CANADA
Non-Party Respondents (Disclosure Motion Only)
Docket: T-463-17
AND BETWEEN:
WWE STUDIOS FINANCE CORP.
Plaintiff
and
DOE #1 ET AL. (SEE SCHEDULE 1 FOR LIST OF DEFENDANTS)
Defendants
and
AMANAH TECH INC., BELL ALIANT REGIONAL COMMUNICATIONS INC., BELL CANADA, CIK TELECOM INC., EASTLINK, DISTRIBUTEL COMMUNICATIONS LTD., ROGERS COMMUNICATIONS INC., TEKSAVVY SOLUTIONS INC., VIANET, VMEDIA INC.
Non-Party Respondents (Disclosure Motion Only)
Docket: T-480-17
AND BETWEEN:
I.T. PRODUCTIONS, LLC
Plaintiff
and
DOE #1 ET AL. (SEE SCHEDULE 1 FOR LIST OF DEFENDANTS)
Defendants
and
AMANAH TECH INC., BELL ALIANT REGIONAL COMMUNICATIONS INC., BELL CANADA, EASTLINK, DISTRIBUTEL COMMUNICATIONS LTD., ROGERS COMMUNICATIONS INC., TEKSAVVY SOLUTIONS INC., VMEDIA INC., PRIMUS TELECOMMUNICATIONS CANADA, START COMMUNICATIONS, XPLORNET COMMUNICATIONS INC.
Non-Party Respondents (Disclosure Motion Only)
ORDER AND REASONS
I. INTRODUCTION
[1] ME2 Productions, Inc. (ME2), WWE Studios Finance Corp., and I.T. Productions, LLC (the Plaintiffs), say they have evidence that some TekSavvy Solutions Inc. (TekSavvy) subscribers have illegally downloaded and shared movies over which the Plaintiffs have copyright. Under the “notice and notice” regime enacted by the Copyright Modernization Act, SC 2012, c 20, the Plaintiffs sent notice to TekSavvy of this activity, which in turn required TekSavvy to forward that notice to the subscribers.
[2] The Plaintiffs say they have evidence that even after receiving this notice, some of these subscribers continued to unlawfully download and share their movies. The Plaintiffs want the names and addresses of these subscribers in order to pursue action against them for breach of copyright. To obtain those names, the Plaintiffs sought a disclosure order from this Court (known as a Norwich order). They also claimed that TekSavvy had not complied with its obligations under the Copyright Act, RSC 1985, c C-42 [the Act], and they sought statutory damages for non-compliance.
[3] TekSavvy objected, arguing that the Plaintiffs had not been forthright with the Court about which customers had received the notices and had not provided the evidence needed to obtain a Norwich order. TekSavvy also argued the claim for damages must proceed separately, rather than as part of the disclosure motion. The Case Management Judge (CMJ) who heard the matter, Prothonotary Kevin Aalto, granted the Norwich order and set out the procedure for dealing with the statutory damages question (the Prothonotary’s Order).
[4] This is TekSavvy’s appeal of that decision.
[5] Two questions lie at the core of this appeal:
What is the proper evidence and procedure to be followed in obtaining a Norwich order in a case which relates to the notice and notice regime established by the Copyright Modernization Act?
Can a claim of statutory damages in relation to an alleged breach of these provisions be dealt with in the context of an application for a Norwich order, or does it have to proceed as a separate matter?
[6] As has been acknowledged by the CMJ and the parties, this is an emerging area of the law and the practices and procedures are still being developed. An overarching consideration in this case is the degree of “elbow room” that should be given to a CMJ in making orders under this relatively new legal regime.
[7] When the CMJ considered the matter, the governing authority was the decision of the Federal Court of Appeal (FCA) in Voltage Pictures, LLC v John Doe, 2017 FCA 97 [Voltage Pictures]. When this matter was argued before me, that case was on appeal to the Supreme Court of Canada (SCC); in the intervening period, the SCC has released its decision: Rogers Communications Inc v Voltage Pictures, LLC, 2018 SCC 38 [Rogers Communications]. I have received further submissions from the parties on the relevance of that decision to this case, and it sets the framework for my analysis.
[8] Finally, on November 17, 2017, the Court granted an order governing a number of procedural matters during the period pending the appeal. The law firm representing the Plaintiffs was permitted to serve the statement of claim on eight TekSavvy subscribers but was otherwise prohibited from disclosing their names or addresses to anyone, including to the Plaintiffs. In addition, the order requires these subscribers to preserve any documents or records relevant to the claim for copyright infringement.
II. BACKGROUND
[9] This case is about allegations of illegal downloading and sharing of movies. The SCC provided a succinct description of how this works in Rogers Communications:
[1] Online infringement of copyright has become commonplace. Using peer to peer file sharing networks, Internet subscribers can download copyrighted content such as films and music, while simultaneously uploading that content for download by others who are thereby able to do the same. Through this concurrent downloading and uploading, peer to peer networks facilitate the rapid sharing of copyrighted content with multiple Internet subscribers simultaneously. And, due to the anonymity of the Internet, the identity of Internet subscribers who participate in this illegal sharing of copyrighted content is concealed from copyright owners.
[10] The Plaintiffs are movie production companies that own copyright in several films. They are concerned about illegal distribution of their films, so they hired a company called Maverickeye UG (Maverickeye) to monitor the Internet for illegal sharing of their films. The Plaintiffs received a report from Maverickeye about suspected illegal downloads which included the date and time of the activity together with the Internet Protocol (IP) addresses associated with the downloads. These IP addresses were correlated to numbers that were held by several different Internet Service Providers (ISPs). The IP addresses at issue here had been allocated to TekSavvy – each ISP is allocated a bank of IP addresses, and these are available for search, so it was possible for Maverickeye to link a particular IP address with a specific ISP.
[11] It was not possible, however, for Maverickeye to link the particular IP address with the name of the individual customer. That information is held by the ISP and is not otherwise available for search by other parties. Pursuant to the notice and notice regime established by the Copyright Modernization Act (described more fully below), the Plaintiffs sent notices to TekSavvy alleging that its customers infringed their copyright and providing the relevant information as to the date and time of the alleged illegal activity, as well as the associated IP address. Under the regime, TekSavvy had to forward such notices to its subscribers, and to retain certain information about the subscribers and their activity.
[12] The Plaintiffs then initiated copyright infringement actions against the unnamed individual defendants associated with the IP addresses in Maverickeye’s report. In support of these actions, the Plaintiffs brought motions naming TekSavvy and other ISPs as non-party respondents, seeking Norwich orders – orders directing third parties to proceedings to disclose information in their possession, named after the case which recognized them in modern law: Norwich Pharmacal Co v Customs & Excise Commissioners (1973), [1974] AC 133 (UK HL). Such orders are provided for in Rule 238 of the Federal Courts Rules, SOR/98-106 [the Rules] (see also Rule 233 regarding disclosure from third parties).
[13] The motions sought to compel TekSavvy and the other ISPs to disclose the names and addresses of individual customers associated with various IP addresses at particular times. The Plaintiffs alleged that these individuals, identified as numbered “John Doe” defendants, engaged in illegal file sharing of their movies, thereby infringing their copyright. The materials filed by the Plaintiffs identified hundreds of IP addresses, and were served on several ISPs. Eighteen of these IP addresses were associated with TekSavvy.
[14] The motions were supported by affidavits sworn by law clerks employed by counsel for the Plaintiffs. Attached to these affidavits were Solemn Declarations by Daniel Arheidt (the Arheidt Declaration), a consultant who works in Maverickeye’s technical department. He described how the Maverickeye software monitors peer-to-peer networks to identify acts of distribution of certain materials, in this case several movies subject to copyright. Mr. Arheidt describes how the proprietary software used by Maverickeye operates both to verify that the file sharing of the copyright material is being done, and to link that activity to a particular IP address. This address is then linked to an ISP using publicly available data.
[15] The Arheidt Declaration includes background information on how peer-to-peer file sharing works, with a particular emphasis on the BitTorrent protocol, a popular peer-to-peer “file sharing” protocol that enables the decentralized distribution of computer files over the Internet. The Arheidt Declaration also includes a table showing the IP address for each numbered John Doe Defendant, as well as the dates and times of the first and second notices of alleged infringement that were sent to various ISPs.
[16] The law clerks’ affidavits state that they “repeat and rely on [Daniel Arheidt’s]… declaration” and “believe it to be true.” They indicate that, pursuant to the notice and notice regime, it is the policy of the Plaintiffs to send a “first notice” to the subscriber which gives a one-week timeline for the individual to remove the copy of the copyrighted material from their computer. The first notice provides that no action will be taken against the individual if the material is removed.
[17] In accordance with the Plaintiffs’ practice, if the material has not been removed by the subscriber after at least a week, a second notice is sent. This notice declares that the Plaintiffs reserve their right to bring a copyright infringement proceeding against the subscriber, including a request to compel the ISP to disclose their identity. The affidavits state that first and second notices were sent to the individual defendants, or that they “should have had the notices forwarded to them” by their ISP, in accordance with the Act. In response to the motions brought by the Plaintiffs for disclosure, TekSavvy filed material opposing the motions. The Plaintiffs also filed written material, and the matter was argued before the CMJ.
[18] TekSavvy argued that the affidavits and attached Arheidt Declarations filed by the Plaintiffs were not sufficient to warrant the granting of a Norwich order. TekSavvy also argued that the Plaintiffs had failed to make full and frank disclosure regarding their knowledge that many of TekSavvy’s subscribers had not received the first and second notices, contrary to the statements in their affidavits. It further argued that the Plaintiffs had failed to comply with their obligations to TekSavvy’s subscribers, because the Plaintiffs had not followed their one week “grace period” policy. Finally, TekSavvy submitted that the amended motion seeking statutory damages for alleged breaches of its obligations under the Act should be dealt with in a separate proceeding, where it was a proper party before the Court, rather than – as here – a non-party respondent. It also argued that a claim for damages could not proceed by way of a motion.
[19] The Plaintiffs contended that their evidence was sufficient to support the granting of the Norwich order, and that similar evidence had been accepted in prior cases. They pointed out that TekSavvy was mistaken about certain of the alleged errors in disclosure – the material was, in fact, included in the motion material, but TekSavvy had missed it. Any remaining errors related to background or supporting information and were innocent mistakes which had been corrected by the time of the hearing. The Plaintiffs stated these omissions were not intended to mislead the Court. Finally, they argued that the claim for statutory damages should be dealt with in this proceeding, because the alleged breaches of statutory obligations arose in the context of this matter and TekSavvy was an active participant in the proceeding before the Court.
[20] The CMJ rejected TekSavvy’s arguments. He noted that the FCA set out comprehensive guidance on the objectives of the notice and notice regime in Voltage Pictures. The Court in Voltage Pictures found that the purpose of the regime was to impose obligations on ISPs that require them to assist copyright owners who seek to vindicate their rights in the face of the type of anonymous infringement that the Internet has enabled. In particular, the regime seeks to ensure that copyright owners can identify alleged infringers quickly and efficiently.
[21] In light of this guidance, the CMJ found that the evidence was sufficient to warrant the granting of the Norwich order. The evidence submitted by the Plaintiffs was similar to the type of evidence that had been accepted in many other similar cases, and it was sufficient for the purposes of the disclosure order. Regarding the failure to make full and frank disclosure, the CMJ acknowledged that a few mistakes had been made. However, he noted that the Plaintiffs had responded in a forthright manner and had corrected the record by the time the matter was argued before him. He also noted that TekSavvy had experienced some practical and technical challenges in providing the notices to its customers, and that it had apparently deleted some of the information in relation to some of its subscribers.
[22] In the end, the CMJ found that almost all of the TekSavvy subscribers had received notice, and that TekSavvy itself had contributed to some of the confusion and delay in providing the notices. He further found that the Plaintiffs had admitted certain errors in their materials, but these were “errors of inadvertence” which were promptly corrected, rather than any effort to mislead the Court. These errors related to backup documents that supported the main claim of copyright infringement and were not fatal to the claim. This was all part of the “learning curve” associated with implementing the new notice and notice regime. The CMJ ordered that TekSavvy disclose the requested information to the Plaintiffs.
[23] Concerning the Plaintiffs’ claim for statutory damages against TekSavvy for alleged breaches of its obligations under the Act, the CMJ again drew inspiration from the guidance provided by Voltage Pictures that the process is meant to be quick and efficient. He rejected TekSavvy’s argument that the claim must proceed by way of a new application or action to which it was a full party. He found that requiring a separate process, “with the full panoply of litigation steps including pleadings, production and discovery” would defeat the purpose of the Act and was not necessary to ensure procedural fairness to TekSavvy. He noted that “[t]he alleged violation[s] occurred in this proceeding and thus should be determined in this proceeding.”
[24] The CMJ found that “[c]ommon sense and efficiency requires a more truncated procedure. That can be accomplished by following, at least in this case, the type of procedure involved in contempt/show cause proceedings.” He therefore directed the Plaintiffs to serve on TekSavvy all of the evidence they intended to rely upon in support of the alleged violations. This evidence was to be set out by way of affidavit. At the hearing, TekSavvy would be permitted to cross-examine the affiants, and to lead its own viva voce evidence which would be subject to cross-examination. This would permit the Court to have a full evidentiary record, and for TekSavvy to raise any and all defences it wished to assert against the claim for damages.
III. ISSUES
[25] There are four issues in this appeal:
Did the CMJ err in dealing with the issue of full and frank disclosure?
Did the CMJ err in finding that the evidence satisfied the requirements for a Norwich order?
Did the CMJ err in respect of the procedure for pursuing statutory damages for an ISP’s alleged breach of its obligations under the Act?
Did the CMJ err in making findings indicating a pre-judgment of the merits of the damages claim against TekSavvy?
[26] The Plaintiffs submit that there are two preliminary or “threshold” issues that must be determined prior to dealing with the main issues:
Does TekSavvy have standing to advance issues 1 and 2 above?
Is the appeal premature in respect of issues 3 and 4 above?
[27] I will address these in relation to the issues to which they relate, rather than as separate threshold questions.
IV. ANALYSIS
[28] This part will begin with a brief review of the appropriate standard of review, followed by an overview of the notice and notice regime and Norwich orders, before turning to the issues raised in the case.
A. Standard of Review
[29] The FCA ruled in Hospira Healthcare Corporation v Kennedy Institute of Rheumatology, 2016 FCA 215 [Hospira] that the standard of review of a discretionary decision of a Prothonotary is the usual appellate standard from Housen v Nikolaisen, 2002 SCC 33. Under this standard, absent an error on a question of law or an extricable legal principle, intervention is warranted only in cases of palpable and overriding error.
[30] The FCA elaborated upon the meaning of “palpable and overriding error” in Mahjoub v Canada (Citizenship and Immigration), 2017 FCA 157, explaining that it is a “highly deferential standard of review” and that when “arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall” (see also Benhaim v St-Germain, 2016 SCC 48 at para 38). The FCA went on to explain that an error must be both obvious, and of sufficient importance that it affects the outcome of the case. It may be a single error, or the cumulative impact of a series of errors.
[31] That is the standard that I will apply in this case. I am also guided by the admonition in Hospira (at para 103) that:
[T]he case managing prothonotary is very familiar with the particular circumstances and issues of a case, and that, as a result, intervention should not come lightly. This does not mean, however, that errors, factual or legal, should go undetected. In the end, “elbow room” is simply a term signaling that deference, absent a reviewable error, is owed, or appropriate, to a case managing prothonotary – no more, no less.
B. The Notice and Notice Regime
[32] In recent years, copyright protections in Canada, as with many areas of the law, were straining to keep up with developments in technology – a legal framework designed for another age was in need of reform. One aspect of this challenge was the online, anonymous sharing of copyright material facilitated by the rise of the Internet, described in the passage from Rogers Communications quoted earlier.
[33] To address this challenge, Parliament adopted the Copyright Modernization Act, which established the notice and notice regime through amendments to the Act. The Act now provides that a copyright owner may send a notice of claimed infringement to an ISP, and sets out the basic requirements for such a notice:
Form and content of notice
Forme de l’avis
41.25 (2) A notice of claimed infringement shall be in writing in the form, if any, prescribed by regulation and shall
41.25 (2) L’avis de prétendue violation est établi par écrit, en la forme éventuellement prévue par règlement, et, en outre :
(a) state the claimant’s name and address and any other particulars prescribed by regulation that enable communication with the claimant;
a) précise les nom et adresse du demandeur et contient tout autre renseignement prévu par règlement qui permet la communication avec lui;
(b) identify the work or other subject-matter to which the claimed infringement relates;
b) identifie l’œuvre ou l’autre objet du droit d’auteur auquel la prétendue violation se rapporte;
(c) state the claimant’s interest or right with respect to the copyright in the work or other subject-matter;
c) déclare les intérêts ou droits du demandeur à l’égard de l’œuvre ou de l’autre objet visé;
(d) specify the location data for the electronic location to which the claimed infringement relates;
d) précise les données de localisation de l’emplacement électronique qui fait l’objet de la prétendue violation;
(e) specify the infringement that is claimed;
e) précise la prétendue violation;
(f) specify the date and time of the commission of the claimed infringement; and
f) précise la date et l’heure de la commission de la prétendue violation;
(g) contain any other information that may be prescribed by regulation.
g) contient, le cas échéant, tout autre renseignement prévu par règlement.
[34] The Act then sets out the obligations on the ISP upon receipt of such a notice:
Obligations related to notice
Obligations
41.26 (1) A person described in paragraph 41.25(1)(a) or (b) who receives a notice of claimed infringement that complies with subsection 41.25(2) shall, on being paid any fee that the person has lawfully charged for doing so,
41.26 (1) La personne visée aux alinéas 41.25(1)a) ou b) qui reçoit un avis conforme au paragraphe 41.25(2) a l’obligation d’accomplir les actes ci-après, moyennant paiement des droits qu’elle peut exiger :
(a) as soon as feasible forward the notice electronically to the person to whom the electronic location identified by the location data specified in the notice belongs and inform the claimant of its forwarding or, if applicable, of the reason why it was not possible to forward it; and
a) transmettre dès que possible par voie électronique une copie de l’avis à la personne à qui appartient l’emplacement électronique identifié par les données de localisation qui sont précisées dans l’avis et informer dès que possible le demandeur de cette transmission ou, le cas échéant, des raisons pour lesquelles elle n’a pas pu l’effectuer;
(b) retain records that will allow the identity of the person to whom the electronic location belongs to be determined, and do so for six months beginning on the day on which the notice of claimed infringement is received or, if the claimant commences proceedings relating to the claimed infringement and so notifies the person before the end of those six months, for one year after the day on which the person receives the notice of claimed infringement.
b) conserver, pour une période de six mois à compter de la date de réception de l’avis de prétendue violation, un registre permettant d’identifier la personne à qui appartient l’emplacement électronique et, dans le cas où, avant la fin de cette période, une procédure est engagée par le titulaire du droit d’auteur à l’égard de la prétendue violation et qu’elle en a reçu avis, conserver le registre pour une période d’un an suivant la date de la réception de l’avis de prétendue violation.
[35] Finally, the Act provides at subsection 41.26(3) that “[a] claimant’s only remedy against a person who fails to perform his or her obligations under subsection (1) is statutory damages in an amount that the court considers just, but not less than $5,000 and not more than $10,000.”
[36] The notice and notice regime enables a copyright owner who has reason to believe that an ISP’s customers are breaching its copyright to send a notice to the ISP, and this in turn obligates the ISP to forward that notice to its customer(s), and to maintain certain records regarding the matter. The notice is meant to serve as a warning, to allow the customer to take steps to cease the allegedly infringing activity (Rogers Communications at para 23). The notice can also serve as a precursor to the launch of a claim for copyright infringement. In this regime, the ISP is viewed as merely a conduit between the copyright owner and the subscriber – it is not, itself, liable for the infringement. However, an ISP that fails to fulfil its obligations under the Act may be subject to statutory damages.
[37] The objectives of the statutory reform are discussed at length in Rogers Communications, which finds that the notice and notice regime serves “two complementary purposes: (1) to deter online copyright infringement; and (2) to balance the rights of interested parties” (at para 22).
[38] The SCC found that “by requiring notice of a claimed infringement to be forwarded to the person who was associated with the IP address that is alleged to have infringed copyright, the regime is aimed at deterring that person, or others who are using the IP address, from continuing to infringe copyright (see Canada, Office of Consumer Affairs, Notice and Notice Regime (online))” (Rogers Communications at para 23).
[39] In relation to the second objective, the SCC finds that the regime sought to balance “not only… the rights of copyright owners and Internet users who may infringe those rights, but also the interests of Internet intermediaries such as ISPs…” (Rogers Communications at para 25).
[40] The decision finds that Parliament intended the notice and notice regime to serve as a deterrent, with the backstop of the Courts and the opportunity for copyright owners to pursue their rights by seeking to obtain a Norwich order, if the notice to the subscriber did not halt the allegedly unlawful activity:
[24] The notice and notice regime was not, however, intended to embody a comprehensive framework by which instances of online copyright infringement could be eliminated altogether. As a representative of Rogers explained before the House of Commons committee considering what would become the Copyright Modernization Act, “notice and notice is not a silver bullet; it’s just the first step in a process by which rights holders can go after those they allege are infringing. . . . Then the rights holder can use that when they decide to take that alleged infringer to court” (House of Commons, Legislative Committee on Bill C-32, Evidence, No. 19, 3rd Sess., 40th Parl., March 22, 2011, at p. 10). This is why, as I have explained, a copyright owner who wishes to sue a person alleged to have infringed copyright online must obtain a Norwich order to compel the ISP to disclose that person’s identity. The statutory notice and notice regime has not displaced this requirement, but operates in tandem with it. This is affirmed by s. 41.26(1)(b), which contemplates that a copyright owner may sue a person who receives notice under the regime, and fixes the ISP’s obligation to retain records which allow that person’s identity to be determined for a period of time after such notice is received.
[41] In view of the SCC’s finding that the notice and notice regime did not displace the requirement to obtain a Norwich order to compel disclosure, “but operates in tandem with it” (Rogers Communications at para 24), it is necessary to set out a brief summary of the prior jurisprudence on Norwich orders, which will set the stage for my analysis of the issues.
C. The Law on Norwich Orders
[42] A Norwich order is extraordinary equitable relief; it is derived from the equitable bill of discovery and is a means of obtaining necessary information from a third party. Cases are generally brought ex parte, and so the applicant is under a duty to make full and frank disclosure of all relevant information (United States of America v Friedland, [1996] OJ No 4399 (QL) (ON Ct J (Gen Div)) [Friedland]; Canada (National Revenue) v Cormark Securities Inc, 2011 FC 1472).
[43] This type of order has been employed in cases involving alleged online copyright infringement prior to the enactment of the notice and notice regime. The test to obtain such an order in this Court was set out in BMG Canada Inc v Doe, 2005 FCA 193 [BMG]:
The applicant must establish a bona fide claim against the unknown wrongdoer;
The person against whom the disclosure order is sought must be in some way involved in the matter under dispute – they must be more than a mere witness;
The person must be the only practical source of the information;
The person must be compensated for reasonable expenses incurred in complying with the order; and
The public interest in favour of disclosure must outweigh the legitimate privacy interests.
[44] The test has been stated by other courts, with minor differences: see, for example: Leahy v B (A), 113 NSR (2d) 417, 1992 CanLII 2798 (SC (TD)); GEA Group AG v Ventra Group Co (2009), 96 OR (3d) 481 (CA) [GEA Group]; 1654776 Ontario Limited v Stewart, 2013 ONCA 184, leave to appeal to SCC denied (case no 35394). The BMG test was cited with approval in Rogers Communications.
[45] The BMG decision confirms that this remedy is available in the Federal Court, pursuant to subsection 238(1) of the Rules, which governs examination of non-parties (see also Rule 233 regarding production of documents from non-parties, discussed in Hospira Healthcare Corporation v Kennedy Institute of Rheamatology [sic], 2018 FC 992 at paras 17-20). BMG involved a case similar to this one – a copyright owner claimed to have evidence of unlawful downloading of its songs, but it could not identify the individual offending subscribers. So, it went to court to seek a Norwich order forcing the ISPs to turn over the names.
[46] The FCA confirmed that a Norwich order is available but found that the evidence provided by the copyright owner was not sufficient to merit the granting of the order. The Court found that the unnamed subscribers had important privacy interests that had to be respected. This is discussed in more detail below.
[47] Norwich orders have been granted in a wide variety of circumstances and courts have emphasized the importance of maintaining the flexibility inherent in equitable relief, while guarding against potential abuse. The point is expressed in the following way in GEA Group at para 85: “The important point is that a Norwich order is an equitable, discretionary and flexible remedy. It is also an intrusive and extraordinary remedy that must be exercised with caution.”
[48] An illustration of the potential for misuse of Norwich orders in this type of case – namely, the rise of the “copyright troll” – has been described in some detail in another decision by Prothonotary Aalto, Voltage Pictures LLC v John Doe, 2014 FC 161 [Voltage Pictures (2015)]. This has been a particular concern in the United Kingdom and the United States. The phenomenon is described in the following passage:
[103] As in the UK, Courts in the U.S. appear to accept that identifying alleged infringers for purposes of pursuing copyright infringement claims is merited, but the Courts have expressed concern with the use of the courts’ subpoena powers to “troll” for quick and easy settlements.
[104] U.S. courts have not shied away from using strong language to admonish the “low-cost, low-risk revenue model” tactics of copyright owners, and in particular adult film companies: “It has become clear in many cases that the companies have no intention of pursuing litigation, but rather initiate a lawsuit to hold a proverbial guillotine over the accused downloaders’ heads to extract settlement because of the fear of embarrassment over being accused of downloading pornography” (see, for example, Patrick Collins, Inc., v John Doe 1, 2012 US Dist LEXIS 71122 (ED NY, 2013) at p. 5).
[49] In Voltage Pictures (2015), Prothonotary Aalto established a non-exhaustive list of considerations for the granting of a Norwich order in order to prevent any such abuse. These included putting safeguards in place to avoid intimidation of the recipient of the order, limiting the information that would be provided pursuant to the order, and requiring court approval of any proposed demand letter prior to the correspondence being sent.
[50] These considerations are meant to ensure that valid efforts to enforce copyright are not stymied, but also that the integrity of the court process is not impaired by abusive conduct, and most importantly, that individuals are not subject to inappropriate pressures. I should note here that there is no allegation of inappropriate behaviour by the Plaintiffs in the case before me.
[51] As the SCC noted in Rogers Communications at para 45: “Parliament knew that the regime was only a first step in deterring online copyright infringement, and that a copyright owner who wished to sue an alleged infringer would still be required to obtain a Norwich order to identify that person.” It is therefore necessary to consider whether the rules established by Norwich order jurisprudence which pre-date the Copyright Modernization Act amendments need to be amended or refined to take into account the new legislative framework. That will be done in the following sections.
D. The Four Issues
(1) Did the CMJ err in dealing with the issue of full and frank disclosure?
[52] Did the CMJ err in issuing the order, despite the finding that there had been mistakes and omissions in the material originally filed in support of the motion for the Norwich order?
[53] I will deal first with the Plaintiffs’ argument that TekSavvy does not have standing to advance this argument before considering the merits. To understand the issue, it is necessary to provide more detail regarding the alleged failure to make full disclosure.
[54] In their affidavits in support of the Norwich order, the Plaintiffs asserted that “[t]he Defendants in this action were all sent first and second notices, as set out herein at Exhibit “C” for each unknown Defendant.” The affidavits also state: “[i]t is my understanding that each of these Defendants [the numbered, unnamed “John Doe” defendants] have [sic] had these first and second notices sent to them by their ISP at or about the date of the sending of these notices.” In a subsequent affidavit, this was modified to state that the Defendants “had, or should have had” the notices sent to them. The affidavits further state: “[a]ttached hereto… are all the communications from the Non-Party Respondents [the ISPs] indicating that the notices were forwarded.”
[55] TekSavvy points to e-mail exchanges with the law firm representing the Plaintiffs that pre-date the swearing of these affidavits. These exchanges make clear that due to a variety of technical and practical issues, some of TekSavvy’s subscribers received the second notice before they were sent the first notice, while a few had not been sent notices at all because their IP addresses could not be correlated to the information provided by the Plaintiffs or that information was no longer available. The CMJ found that in regard to four subscribers, the Plaintiffs had not received confirmation from TekSavvy that it had sent any notice. TekSavvy claims that this information contradicted the categorical statements in the sworn affidavits and that this information was in the possession of the Plaintiffs but not disclosed to the Court. It further states that some of its e-mail correspondence was not included, which contradicted the statements in the affidavits.
[56] The Plaintiffs replied that some of the information was, in fact, disclosed to TekSavvy and the Court, but admitted that some of the background information regarding its exchanges with TekSavvy had not been included in the original material. They filed supplementary material prior to the hearing before the CMJ, which included clarification of the record as well as further information about the timing of the notices and its exchanges with TekSavvy.
[57] In essence, the Plaintiffs argued that some of the difficulties regarding the timing of the notices were due to TekSavvy’s failings, and that the errors were simply due to inadvertence in dealing with a large volume of information about hundreds of subscribers and several ISPs. There was no intention to mislead the Court, and with the filing of the supplementary material the CMJ was not, in fact, lacking any relevant information at the time of the hearing. The Plaintiffs also contended that the missing documents were simply background material, which did not affect the substance of their claim.
(a) Does TekSavvy have standing to advance this argument?
[58] The Plaintiffs argued that TekSavvy’s allegations relating to the failure to make full and frank disclosure rest on an estoppel argument. They say that the alleged disclosure failure related to “background information” regarding the e-mail exchanges between TekSavvy and the law firm for the Plaintiffs about the delays and difficulties in forwarding the notices to subscribers. Since TekSavvy cannot claim that it relied to its detriment on the Plaintiffs’ policy of a one-week grace period, it does not have an interest in the matter, and it therefore lacks standing to advance this argument.
[59] TekSavvy denies that it is relying on an estoppel argument. It takes no position as to the merits of the underlying copyright infringement action. It does assert, however, that it has a role in reviewing the evidence put forward in support of the Norwich motion to assist the Court in determining whether the criteria have been met, and thereby ensuring the proper balance between its subscribers’ important privacy interests and the interests of copyright owners in pursuing infringement claims.
[60] I reject the Plaintiffs’ argument that TekSavvy lacks standing to advance this claim. The duty to make full and frank disclosure is owed to the Court, not to any party (see the discussion of the issue by Justice Sharpe in Friedland at paras 26-29). In the circumstances of this case, TekSavvy is in possession of information which is relevant to whether the Plaintiffs met their obligation to the Court. Nothing more is required.
(b) Did the Plaintiffs fail to make full and frank disclosure?
[61] As noted earlier, the CMJ found that the Plaintiffs had no intention to mislead the Court, and any lapses in their disclosure related to background information which was not provided due to inadvertence. He attributed it more to “growing pains” associated with adjusting to the requirements of the notice and notice regime.
[62] The duty of full and frank disclosure has been found to apply to Norwich order motions, since such proceedings are generally conducted on an ex parte basis. The rationale for the obligation rests largely upon the idea that in an ex parte proceeding the party before the Court has to disclose all relevant information – whether in favour or against its position – in order to enable the judge hearing the matter to act properly and judicially: Canada (National Revenue) v RBC Life Insurance Company, 2013 FCA 50 at para 31; Friedland at paras 26-27.
[63] The failure to meet this duty does not require any intention to mislead the Court, although the intentional withholding of relevant information – and, in particular, information which would tend to be adverse to the applicant’s position – is of particular concern to the Court: see, for example MacLachlan v Nadeau, 2017 BCCA 326 [MacLachlan].
[64] However, the cases make clear that the judge hearing the matter has discretion in the face of a non-disclosure – it does not automatically result in a dismissal of the ex parte proceeding. Among the relevant considerations in exercise of this discretion, courts have found that the nature of the failure and the degree and extent of the applicant’s culpability, are highly material factors: