The Unintended Consequences of Fighting Online Piracy

When the Copyright Modernization Act was passed in 2012 with Bill C-11, most observers acknowledged that stronger enforcement mechanisms were needed for online piracy. However, even at that time there were concerns about the measures undertaken to address these concerns.

Most controversial were the notice-and-notice provisions that came into force on Jan. 2, 2015, which require ISPs and website hosts to convey notices of copyright infringement allegations to customers using their services.

The almost immediate effect was thousands of these notices being provided to Canadian consumers, many of them making demands for monetary settlement. The system was also subject to abuse, with copyright trolls sending out mass letters in hopes of some easily scared consumer paying up to avoid any legal entanglements.

Perhaps fortunately, the vast majority of these notices were ignored from a legal perspective, possibly resulting in some behavioural modification. There was an assumption that some of the concerns with the new regime about creating an unnecessary chill may have been blown out of proportion.

With the first major digital lock copyright ruling last year in Nintendo of America Inc. v. King, the $11.7 million damages and additional million in punitive damages demonstrated that the anti-circumvention rules can be applied expansively, with a very narrow interpretation of the exceptions. It was described as an indication that Canada has the toughest anti-privacy laws in the world.

The respondent in this case was a retail company that operated several commercial websites, who offered for sale devices that appeared intended to circumvent the digital locks. The clearly commercial nature of these activities may have led to the conclusion that these provisions would be largely enforced against major corporate infringers, and not the average consumer.

Legal actions over the year seem to suggest otherwise. The Financial Post reports a sharp uptick in litigation activity over copyright infringement, with over a dozen individuals ordered to pay statutory damages of $5,000 each,

Even more have paid undisclosed settlements in “John Doe” lawsuits, where one lawsuit is filed against an unlimited number of “Does” who allegedly infringed copyright.

Intellectual property lawyers and telecom companies say the volume and type of activity is unprecedented in Canada

Observers are also waiting for a determination as to whether these costs will be shifted to the ISP, with the upcoming hearing of Rogers Communications Inc, v. Voltage Pictures before the Supreme Court of Canada.

The Federal Court of Appeal’s decision last year found that a fee proposed by Rogers for providing infringement  identification was cost prohibitive and inherently unreasonable, overturning the Federal Court’s decision siding with the ISP and approving the fee. Although the regulations under the Copyright Act allow for the Minister of Industry to fix a maximum fee for this service, no such regulation has been passed.

The court rule that where a maximum fee has not been prescribed, the ISP cannot charge a fee to discharge their obligations under the Act. Justice Stratas described the actions of the legislature to assist the media company through Bill C-11 in their proposed reverse class action as follows,

[1] Under the cloak of anonymity on the internet, some can illegally copy, download, and distribute the intellectual property of others, such as movies, songs and writings. Unless the cloak is lifted and identities are revealed, the illegal conduct can continue, unchecked and unpunished.

The role of the ISP in this proposed action is to forward the notice of claimed infringement on the suspected infringer, but also may take actions to cease their infringing activity. Presumably this would result in denial of Internet, or at least a restriction of its use for certain purposes. These measures would be justified to limit the damages incurred by the ISP.

In Much Ado About Five Hundred Dollars, Colin Hyslop suggests this decision has the potential to disrupt entirely the manner in which Canada handles online copyright infringement. In addition to suggesting the court misinterpreted how notice-and-notice was intended to be used in Canada, he indicates that the decision has privacy implications as well,

Even in instances where the alleged infringer and the subscriber are one and the same, the Voltage decision still places the privacy of internet users at too great a risk. Copyright owners identify alleged infringers by finding IP addresses that are engaged in alleged copyright infringement on the internet. The same tools for detecting allegedly infringing activities on the internet can be extended to practically all activities on the internet.  Consequently, when copyright owners receive the personal information associated with an IP address, they can then discern other online activities associated with a particular subscriber. In theory, when copyright owners come into possession of this kind of information through a Norwich Order, they are required to restrict their use of this information to the immediate proceedings. However, without clear statutory procedural rules defining the scope of Norwich Orders, there remains a large risk for abuse of this private information. This will especially be the case if the FCA’s decision prompts an increase in the number of copyright owners seeking disclosure of the identities of alleged infringers.

The legislature has had several opportunities since 2012 to revise Canada’s copyright provisions even further, especially in light of changing landscapes of technology and public policy. An approach which pits consumers directly against their own ISPs is unlikely to be a model that will effectively protect copyright interests, and is more prone to even greater adoption of privacy and circumvention of technological controls.