First time such an action filed in court, experts say
By Ahmad Hathout
Correction: A previous version of this story misquoted James Plotkin as saying the court has discretion to go below the statutory damage guidelines for violations of the notice regime. In fact, Plotkin was speaking about the court’s discretion with respect to statutory damages for copyright infringement, not notice violations, which is dealt with separately in the Act. The quote has been removed from the story.
SOME MOVIE STUDIOS – who are now making their names in Canada not necessarily for their films but because they have laboured to bring alleged copyright infringers to court – are suing Bell for allegedly not fulfilling its obligations under the notice-and-notice regime.
The regime requires that internet service providers forward warning notices to subscribers who are alleged by the studios to be illegally sharing or downloading their movies without paying. Implemented in 2015, the regime allows for two warning notices before the studio can ask the court to order the ISPs to provide the personal information of the alleged infringers behind the IP addresses they collect, after which the studios can sue the individuals. The ISPs, in the meantime, must retain subscriber identification and must notify the rightsholder when it forwards the notices.
On Monday, five movie studios, responsible for films such as Hellboy and The Outpost, filed a lawsuit against Bell claiming the ISP has abrogated its legal responsibilities under the regime. They are seeking $397.9 million as compensation, an amount that equals the sum of the number of times Bell is alleged to have failed its notice obligations – the studios claim that number is 39,791 – multiplied by $10,000, the maximum the law allows for said violations.
It is the first time that a stand-alone lawsuit has been filed in court claiming damages due to alleged violations of notice-and-notice rules, according to David Fewer, executive director of the University of Ottawa’s Canadian Internet Policy and Public Interest Clinic, and James Plotkin, a lawyer for Ottawa-based Caza Saikaley.
Plotkin, who has represented clients sued for this type of alleged infringement, noted that a previous such case was brought by a studio in a similar matter, but was denied a review by the court. CIPPIC has engaged on these issues as intervenors in similar cases.
The studios – Millennium Funding, Outpost Productions, Bodyguard Productions, Hunter Killer Productions, and Rambo V Productions – allege Bell’s system for forwarding notices to subscribers included five major violations: the company allegedly did not include a response to the notices, did not confirm if the notices were forwarded or why they were not, did not forward the notices within the required 30 days of receiving them, could not match IP information with subscribers and thus failed to maintain records, and allegedly denied sending multiple notices because it had already processed a notice to the same individual for the same claimed infringement.
“The Millennium Producers sent over 81,000 notices to the Defendants between February 9, 2019 and June 15, 2021,” the July 5 statement of claim said. “The Defendants forwarded fewer than 40% of the notices sent to it during these times.” That is about 40,000 notices the studios said were “actionable failures.”
The studios said in the claim that they approached Bell about the issues starting in February 2018 and claimed they were going to work on it together to avoid legal action.
“Despite extensive correspondence and meetings, as of the date of this claim, the Defendants continue to fail to forward many of the Millennium Producers’ notices to their subscribers,” the claim said.
Bell spokeswoman Jacqueline Michelis only said in an emailed statement that the company is “studying the claim.”
The lawsuit comes at a peculiar time: less than a month after the country’s largest internet service providers recommended the Copyright Act include provisions that cap the damages due to notice-and-notice infringements to $10,000 per claimant, rather than per notice violation. Otherwise, the ISPs said, allowing each alleged notice violation would create “legal uncertainty and risk for ISPs and the potential for excessive statutory damages.”
Plotkin said while the large ISPs, like Bell, may be able to absorb high costs of violations as proposed by the movie studios, “that might not be so for smaller ISPs,” alluding to a precedent this case could set for future alleged violators.
It has been traditionally thought that movie studios would have a hard-time getting much out of the Canadian copyright system because the compensation damages – at a maximum of $5,000 for individual infringers and $20,000 for commercial infringers – was too low for the effort needed to pursue them.
Now, it appears the studios are trying another way to make back what they claim to have lost. “These aggressive statutory damages provisions represent a means for larger, more sophisticated content owners to find another litigation-based revenue stream,” Plotkin said.
Fewer agrees, citing other ways movie studios – represented by lawyer Ken Clark of Aird and Berlis – have sought to get money from infringers while limiting their financial exposure. Clark sought to merge over 50,000 defendants into a single class of defendants to sue at one time, which was unsuccessful, and challenged the notion that ISPs can charge reasonable fees to identify alleged infringers at the Supreme Court of Canada.
“I think the plaintiffs are being a bit ambitious,” Fewer said of the nearly $400 million they are asking for. “This is a compliance regime, not a compensatory regime: Parliament provided for a limited statutory damage scheme so that ISPs would be incentivized to participate in the scheme, not to provide copyright owners with a windfall in the event performance issues arise.”
The ISPs have said that crafting a system to comply with the notice-and-notice regime won’t be without faults, as a system that processes multiple thousands of notices a month must be done through automation. In their submission to amend copyright legislation, they said they should not be penalized for not sending notices due to error. They also said that they should be able to charge a “nominal fee” per notice to “discourage abuse by the copyright owners and their agents that send very large numbers of duplicative notices.”
“There is a limit to the volume of resources ISPs could be expected to commit to making the system work,” said Fewer.
“If the government is considering opening up the Copyright Act,” Fewer added, “it presents an opportunity for addressing shortcomings of the Act for both copyright owners and users, including addressing copyright misuse issues.”
