The Federal Court Orders Teksavvy to Release Customer Identities to Film Production Company

On 20 February 2014, the Federal Court of Canada (“FCC”), in Voltage Pictures LLC v John Doe, 2014 FC 161, ordered that Teksavvy Solutions Inc. (“Teksavvy”), an Internet Service Provider, must release the names and addresses of 2,000 customers who allegedly downloaded copyrighted films. Voltage Pictures LLC (“Voltage”), a film production company that produced the Oscar-winning film The Hurt Locker, sought this order on a motion to the FCC. Arguing that the customers who are alleged to have downloaded the films are prima facie liable under the Copyright Act, RSC, 1985, c C-42 for infringement, Voltage made this motion to the FCC with the intention of pursuing claims against these customers once the information is released.

This case is the latest contribution to a growing body of jurisprudence on the Norwich order—an order that a non-party to a litigation be subject to discovery or compelled to provide information. More importantly, this case shows the FCC’s latest thinking on the proper balance between the copyright and privacy interests that are engaged in a time when Peer-to-peer (“P2P”) and BitTorrent technologies are enabling internet users unprecedented online access to copyright materials.

Voltage May Know Your IP, but Not Who You Are

Voltage targeted Teksavvy after receiving a list of IP addresses that allegedly downloaded its copyrighted material. It received this list from Canipre, a company that specializes in investigating internet piracy. Canipre compiled the list by conducting a forensic investigation that identified the IP address of a user who downloaded a copyrighted file and the date and time that the file was downloaded. Its investigation was limited to Ontario.

Teksavvy took no position on this motion, but the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (“CIPPIC”) was granted leave to intervene. CIPPIC argued against making the order requested by Voltage.

Voltage argued that the customers connected to the IP addresses have infringed its copyright and that it requires the names and addressed of those customers to pursue civil claims against them. CIPPIC argued that releasing this information would infringe the privacy rights of the customers and that Voltage is engaging in “copyright trolling,” a business model geared toward coercing payments from individuals who do not wish to incur the cost of defending a lawsuit.

Show the Court a Bona Fide case for a Norwich Order

This case turns on the FCC’s formulation of the test that a plaintiff must satisfy under Rule 238 of the Federal Court Rules, SOR/98-106, which allows a non-party to a litigation be subject to discovery or compelled to provide information—known as a Norwich order.

The leading case on Norwich orders is BMG Canada Inc v Doe, 2005 FCA 193 [BMG], which dealt with the conflict between the privacy rights of internet users and copyright holders of music that was alleged to have been illegally downloaded. BMG established a five-prong test for when Norwich orders can be granted:

(a) a plaintiff must have a bona fide case;

(b) a non-party must have information on an issue in the proceeding;

(c) an order of the court is the only reasonable means of obtaining the information;

(d) fairness requires the information be provided prior to trial;

(e) any order made will not cause undue delay, inconvenience or expense to the third-party or others.

Voltage argued that the BMG test is the governing law on the use of Norwich orders, and that its forensic investigation and statement of claim establish that it has a bona fide case. CIPPIC disagreed, arguing that the use of Norwich orders is a new development in Canada and that BMG is just one element in the developing jurisprudence. The chief point of contention here centers on the first rung of this test—whether a bona fide standard is the appropriate threshold.

CIPPIC argued that a plaintiff must meet the higher standard of establishing a prima facie case because it achieves a better balance “among the interests of the plaintiffs, the defendants, third parties and justice.”

The FCC did not see a jurisprudential basis for shifting from a bona fide to a prima facie standard. Most recently, the Ontario Court of Appeal rejected the use of a prima facie standard in the Stewart case because the five-step Norwich analysis already incorporates the balancing of competing interests.

Therefore, the FCC held that the five-prong BMG test is binding. Applying the test, the FCC further found that Voltage’s motion for a Norwich order should be granted: “The enforcement of Voltage’s rights as a copyright holder outweighs the privacy interests of the affected internet users.”

Limiting Norwich Orders to Filter Out “Copyright Trolls”

Despite granting the Norwich order in this case, the FCC was careful to place limitations on the order to ensure that the internet users’ “privacy rights are invaded in the most minimal way possible… .” Voltage argues that there is no reasonable expectation of privacy when internet users use P2P networks because this entails publically revealing one’s IP address and the files being copied. However, the FCC was concerned that about the “spectre” of the “copyright troll,” which is the practice of a company attempting to coerce settlement payments from people through the threat of litigation.

In order to mitigate the possibility that Voltage may act like a copyright troll in its dealings with the users whose information will be released pursuant to the order, the FCC imposed several limitations on the order that keep the court involved. The FCC will appoint a Case Management Judge to “monitor, as necessary, the conduct of Voltage in its dealings with the alleged infringers.” Also, the FCC held that any draft demand letter that Voltage is planning on sending to the alleged infringers must first be submitted to the court for review.

While internet users who pirate content will surely decry this decision, its imposition of limitations on the Norwich order does establish a useful precedent for preventing future cases of copyright trolls. Court oversight of a party’s use of information granted through a Norwich order should be sufficient to prevent the kind of coercion and intimidation that characterize copyright trolling. It also serves as a deterrent for would be copyright trolls requesting a Norwich order in the first place.

Vaulting the Statutory Ceiling

Another potential deterrent for copyright trolling in Canada is statutory—the maximum amount of damages that can be awarded in infringement claims is $5,000. Copyright holders may not pursue Norwich orders if they have such a low statutory ceiling on the damages that they can collect in subsequent litigation.

However, pursuing litigation against copyright infringers may become more cost effective for copyright holders despite this damages limit if enough IP addresses can be linked to infringements. Voltage is attempting to pursue claims against only 2,000 Teksavvy customers, all in Ontario. But the total amount of infringers in Canada is certainly higher than this sample. This means that the number of potential claims a copyright holder could make through the court-supervised Norwich order process that has been established in this case is limited only by the number of alleged infringers that can be tracked through forensic investigations.

A Green Light for Combatting Internet Piracy?

This decision does seem to establish an effective filter on Norwich order motions made with a view to copyright troll potential infringers. But in ordering the release of information about the identities of Teksavvy users, the FCC has given the green light to other companies following the same path as Voltage—gather IP information, establish a bona fide case, and aggregate enough potential claims to make the claims cost effective despite the statutory ceiling on individual damages.

In effect, this decision establishes a process for copyright holders to pursue claims against alleged infringers. Copyright trolls may be barred from compelling ISPs to release their customers’ information through Norwich orders, but copyright holders who are serious about commencing litigation now have an important precedent to use against alleged infringers.