Friday, July 14, 2017

Access Copyright v. York U – And All Eyes Over to York U for What's Next

The Good News and the Bad News

The only good news for the Canadian educational community about the recent Federal Court decision in Access Copyright v. York University is that the judgment is, with respect, so clearly and consistently wrong that there is a strong likelihood of a successful appeal – assuming that York decides to appeal. An application for a stay of the judgment is presumably being considered. Otherwise, it is very bad news. It could prove to be very disruptive very quickly not only to York University but to the entire educational community in Canada. Moreover, unless the decision is overturned and preferably stayed in the meantime, there will be greatly increased costs, chill on innovation and education, and potential chaos.

I am getting a lot of questions about this decision and requests for a blog comment. Unfortunately, I do not have a lot of time at the moment to do a lengthy analytical blog by my usual measure. So, here are some quick observations. Some of this is recycled from my many previous blogs, which can be retrieved by searching for “mandatory tariff” or “York University”, etc.  Here is one of my more detailed postings from March 22, 2016.

The Judgment

The Court’s conclusion that the interim tariff is mandatory and enforceable is incorrect. York made a very narrow and technical argument on why an interim tariff is it is not mandatory, which essentially entailed that it was not an “approved” tariff within the meaning of s. 68.2 and it was not published in the Canada Gazette, as required for an “approved tariff” pursuant to s. 68(4).  The Court stated in para. 234 that “York’s position, if accepted, would be a triumph of form over substance. That argument is unsustainable.”

York had chosen not to rely heavily on the CBC v. SODRAC case decided on November 26, 2015 in which the Supreme Court of Canada (“SCC”) ruled that licenses fixed by the Board under s. 70.2 are not mandatory, having accepted the argument I made on behalf of Professors Ariel Katz and David Lametti (whose McGill institute was an intervener and who is now an MP and Parliamentary Secretary to the Minister of ISED).  York said in its written argument that the decision is “very instructive” and that the principles are “equally applicable” here. However, York’s lead counsel said repeatedly in oral argument that the Court need not decide whether a final tariff would be “mandatory”.

This issue should clearly be appealed and all possible arguments should be made to the Federal Court of Appeal, which will hopefully be more attentive to the reasoning of the SCC and where interveners can make additional useful and possibly essential arguments that would assist the court. For the convenience of readers, I reiterate from previous postings that Justice Rothstein stated as follows in the CBC v. SODRAC decision:
(112) I conclude that the statutory licensing scheme does not contemplate that licences fixed by the Board pursuant to s. 70.2 should have a mandatory binding effect against users.

(113) I find that licences fixed by the Board do not have mandatory binding force over a user; the Board has the statutory authority to fix the terms of licences pursuant to s. 70.2, but a user retains the ability to decide whether to become a licensee and operate pursuant to that licence, or to decline.

To those hung up upon a possible distinction between s. 70.2 and s. 68.2, in fact, s. 68.2 was specifically referred to twice in our SCC factum. We also referred to universities several time in our factum and oral argument at the SCC. The case before the SCC involved s. 70.2 but the arguments are actually even better for s. 68.2 – the more general regime.

Indeed, if a tariff is not mandatory when parties voluntarily come to the Board to “arbitrate” a dispute, it should be all the more (“a fortiori” as lawyers say) non-mandatory when parties are dragged kicking and screaming before the Copyright Board and would prefer to clear their copyright needs in other ways.

The Court did not appreciate the nature of a tariff – which is that it is mandatory on the provider of a service but not on a user who doesn’t need the service. As I’ve said before, for those not familiar with or interested in the technical details of our argument in the SCC factum  that Ariel Katz, David Lametti and I submitted to the Supreme Court, consider this simple layperson’s analogy. In the old days, there were “tariffs” for passenger travel on railroads. Such tariffs would set a maximum cost of, say $10, to travel from Ottawa to Toronto and required that CN Rail run four trains every day and stop in certain places, or whatever, etc. But such tariffs did not require the passenger to buy a Canada-wide all year pass for $3,000 if they only needed to travel to Toronto or Montreal or Smith’s Falls a few times each year. And above all, such tariffs did not prevent any passenger from using a plane, car, a Greyhound bus or even a bicycle to get there from here. That is how “tariffs” work. In return for some degree of privilege from the government, the regulated party providing the service and seeking to be paid must submit to upper limits on what can be charged and accept other terms and conditions, such as the nature and quality of services that must be offered. Moreover, except in very rare examples such as a sole bridge crossing with no practical alternatives, there are usually competitive substitutes available.

The Court’s reasoning on fair dealing is lengthy and largely oblivious to the teaching of the SCC in its fair dealing trilogy and particularly in the Alberta decision of the SCC, which accepted the point I made on behalf of Prof. Katz’s intervener institute that is absolutely vital to the educational context, which is that a teacher can decide what is useful for a student and provide excerpts – or in some cases the whole of a work – for such legitimate fair dealing purposes. In Alberta, the SCC stated:
[23]                          In the case before us, however, there is no such separate purpose on the part of the teacher.  Teachers have no ulterior motive when providing copies to students.  Nor can teachers be characterized as having the completely separate purpose of “instruction”; they are there to facilitate the students’ research and private study.  It seems to me to be axiomatic that most students lack the expertise to find or request the materials required for their own research and private study, and rely on the guidance of their teachers.  They study what they are told to study, and the teacher’s purpose in providing copies is to enable the students to have the material they need for the purpose of studying.  The teacher/copier therefore shares a symbiotic purpose with the student/user who is engaging in research or private study.  Instruction and research/private study are, in the school context, tautological. 

Michael Geist has a good posting on some of the many other problems in the reasoning on fair dealing. See also Lisa di Valentino’s comments on the fair dealing issues.

The Court’s failure to appreciate the significance of the three Supreme Court Canada fair dealing decisions since 2004 is clear in the following comment:

[272] It is evident that York created the Guidelines and operated under them primarily to obtain for free that which they had previously paid for. One may legitimately ask how such “works for free” could be fair if fairness encompasses more than one person’s unilateral benefit.

While York’s Guidelines are not perfect and there are better guidelines elsewhere, that comment is not only harsh but shows a lack of understanding of the basis of fair dealing. Indeed, the fair dealing provisions (“users’ rights” that must be given a large and liberal interpretation according to the SCC) are there precisely to allow “free” use under certain circumstances of material where permission and/or payment might otherwise be required. That has always been a cornerstone of copyright law in common law countries and has been codified in Canadian law since 1924 and American law since 1976.

What’s Next?

In any case, the main question on everyone’s mind at the moment is what comes next.

The immediate issue is how this will affect whatever submissions are made by way of objection to the Access Copyright’s proposed post-secondary tariff. Objections are due on July 19, 2017. Presumably, Universities Canada and others are looking at filing objections and what to say. It will be interesting to see who represents whom on these objections and what the objections will contain. Obviously, there is precious little time to factor in the impact of the decision rendered just one week in advance of this deadline.

Naturally, everyone is wondering whether York will appeal this decision. The educational ecosystem from Kindergarten to Post-Doctoral studies is at stake. One cannot overstate the importance of an appeal in this case, which would no doubt attract the attention of interveners on both sides of the fence.

However, it cannot simply be assumed that York will appeal. It will be recalled that AUCC (now Universities Canada) failed to seek judicial review (“JR”, i.e. an appeal in layperson’s terms) of the December 23, 2010 Interim Tariff decision from the Copyright Board that gave rise to the present proceedings. This is an important point emphasized by the Judge in the current case and was definitely not helpful to York’s cause. See paras 226 to 231 of the decision.

I have blogged about this on numerous occasions including right after the interim decision was imposed on December 23, 2010.  

A JR application at the time might very well might have succeeded and would have cost a tiny fraction of all the money that has been spent since on the Board proceedings and on this current case, not to mention all of the ensuing cost and chaos in the post-secondary world with opting out, model agreements, etc.  The worst thing that could have happened would have been the Court could have said no at that time. AUCC withdrew a couple of years later, having spent at least $1.7 million that we know about. Although no explicit explanation of AUCC’s withdrawal was ever publicly provided, presumably the well ran dry. AUCC was represented then by the same firm that has represented York U in the current case that has just been decided. The current court case has presumably already cost at least $1,000,000 or so according to a 2015 estimate by York University counsel. It is now 2017. So, it may have now cost a lot more. We don’t know.

Needless to say, if York doesn’t appeal, there can be no appeal. That is the way the procedural law and rules work. Even though other universities and colleges will be directly affected, only York can launch an appeal in this instance.  This is not “judicial review”, where directly affected parties may in principle have standing in certain circumstances to initiate review. If York fails to step up to the plate now for any reason, the game is over for everyone in terms of an appeal of the current decision.

It is also apparent that the decision may cause immediate problems for York, given that the Judge issued this very unusual invitation for Access Copyright to apply immediately for an injunction:
3. The Plaintiff may apply for an injunction prohibiting the Defendant from reproducing or authorizing reproduction of all copyright protected works falling within the Approved Tariff and offering such reproduction for sale, rent or distribution until all amounts of royalties plus interest are paid.
7. The Court shall remain seized of this matter to address issues arising from this Judgment and Reasons including but not limited to the calculation of amounts which are due or may become due.
(emphasis added)

How this can be squared with the fact that Phase II - which was supposed to deal with issues of what is actually in Access Copyright’s repertoire and questions relating to quantum – is potentially years away? Indeed, paragraph 219 of the judgment says that:

[219] The copying of works in Access’s repertoire, the scope of that repertoire, and the accounting and payment by York for such copying by its employees is deferred to Phase II of this action (the Damages Phase).

So, it’s not clear that there is any basis at this time to determine “all amounts of royalties”.

Given the potential for chaos at York as the fall semester approaches and if there is an injunction in place, not to mention at countless other campuses if Access Copyright succeeds in getting a new interim tariff from the Copyright Board based on this decision, one would assume that some urgent thought is presumably being given to seeking a stay of this judgment. Stays of judgments pending appeal are unusual. But here is a case where there are clearly serious issues, a strong likelihood of success, irreparable harm and even chaos in the educational sector and where the balance of convenience clearly favours the academic community carrying on with the status quo. Potential interveners may be also interested in this, but the first move has to come from York.

Normally, a Notice of Appeal must be filed within 30 days. However, days in July and August do not count for this calculation. So, York technically has until October 2, 2017 to file any notice of appeal. However, one hopes that York will file it as soon as possible along with any motion for a stay, so that the rest of the academic community in Canada can have some confidence and hopefully some degree of certainty as to how it should proceed.

Not only is the content of this decision, which is seriously disparaging to York in innumerable ways, unfortunate. The timing could hardly be worse. It comes more than a year after the final argument that took place on June 22-24, 2016. It comes after the holiday weekend, which means that a large number of people in the academic community will be on holidays or off campus for other reasons during July and August. It comes less than two months before the fall term. It comes well after the six month norm for judges to issue decisions.

This is potentially the most disruptive copyright decision we have ever seen in Canadian jurisprudence. Whatever happens at the Copyright Board on the new proposed tariff will likely take many years to determine, given past experience – except of course for another interim tariff, which the Board has shown remarkable alacrity in granting in this instance on the day before Christmas eve in 2010.  If the Federal Court of Appeal won’t or worst of all is not even asked to fix this situation immediately, some kind of legislative fix may become necessary.

Access Copyright naturally issued a very quick “feel good” press release about the current case stating that:
Access Copyright would welcome the opportunity for all interested stakeholders to entertain a meaningful dialogue with a view to resolving any outstanding issues between them and establish a relationship that emphasizes the common ground between those who create and those who teach and learn.

However, with its windfall victory that will presumably be undone on appeal and even stayed in the meantime (assuming that York University steps up to the plate), now is not likely a very propitious time for the academic community to resolve any outstanding issues with Access Copyright anywhere but in the Courts. The resolution that might work would be for Access Copyright to offer a useful license at a sufficiently low rate that would attract post-secondary institutions. Not to mention refraining from suing its clients. That is unlikely to happen as long as the current decision is in place.  

Let’s hope that those in the educational copyright community can somehow enjoy what’s left of the summer.


Wednesday, July 12, 2017

Access Copyright v. York University - the Actual Terms of the Judgment

Date: 20170712
Docket: T-578-13
Citation: 2017 FC 670
Ottawa, Ontario, July 12, 2017
PRESENT: The Honourable Mr. Justice Phelan
Defendant by Counterclaim
Plaintiff by Counterclaim

1. The Plaintiff is entitled to a declaration that the Defendant, York University, either directly or vicariously, from September 1, 2011 to at least December 31, 2013, reproduced and authorized the reproduction of copyright protected works, in whole or in substantial part, the reproduction and authorized reproduction of which obliges the Defendant to pay royalties to the Plaintiff under the Access Copyright Interim Post-Secondary Education Institutions Tariff 2011-2013 [the Approved Tariff].
2. The Defendant shall pay the royalties specified in the Approved Tariff for the periods specified therein.
3. The Plaintiff may apply for an injunction prohibiting the Defendant from reproducing or authorizing reproduction of all copyright protected works falling within the Approved Tariff and offering such reproduction for sale, rent or distribution until all amounts of royalties plus interest are paid.
4. The Defendant shall pay pre-judgment and post-judgment interest on all royalty amounts that are due in accordance with the Federal Courts Act, RSC 1985, c F-7.
5. The Plaintiff is entitled to costs to be determined at a later date.
6. The Defendant’s counterclaim and claim for declaratory relief is dismissed.
7. The Court shall remain seized of this matter to address issues arising from this Judgment and Reasons including but not limited to the calculation of amounts which are due or may become due.

“Michael L. Phelan”

(highlight added)


(highlight added)

Ottawa, July 12, 2017 – A judgment was issued today by the Honourable Michael L. Phelan of the Federal Court in file T-578-13:
Summary: This was an action by The Canadian Copyright Licensing Agency (“Access Copyright”) [Access] against York University [York] to enforce an Interim Tariff first issued by the Copyright Board of Canada on December 13, 2010 (as subsequently varied during its term) in respect to copying activities engaged in by its employees in the period September 1, 2011, to December 31, 2013. York counterclaimed seeking a declaration that any such reproductions made fell within the Fair Dealing Guidelines it issued and therefore constituted the “fair dealing” exception under s 29 of the Copyright Act [Act]. The declaration sought covered all reproductions of all copyright-protected works made prior to April 8, 2013, and thereafter regardless of whether such works were part of Access’s repertoire. In the main action, the issue was “whether the interim tariff issued by the Copyright Board on December 23, 2010 as amended is enforceable against York”. In the counterclaim, the issue is: “was York’s dealings fair for the purposes of s 29 of the Act”? The net effect would be that if the Interim Tariff was enforceable and hence royalties payable, York would be exempt because of “fair dealing”.

In the main action, the Court concluded that the Interim Tariff is mandatory and enforceable against York. It found that to hold otherwise would be to frustrate the purpose of the tariff scheme of the Act and the broad powers given to the Copyright Board to make an interim decision pursuant to s 66.51 of the Act.   Furthermore, the Interim Tariff arose because of the objections to the proposed final tariff governing the photocopying at York and other post-secondary educational institutions. All interested parties had actual notice of the Interim Tariff by virtue of their participation in the tariff application process, and the Interim Tariff was never judicially reviewed.

In the counterclaim, the Court concluded that Fair Dealing Guidelines [Guidelines] do not withstand the application of the two-part test laid down by Supreme Court of Canada jurisprudence. York’s dealings with copyrighted material meets part one of the test in that it falls within the named activities in s 29 – education, research and private study. However, the Court found that the Guidelines fail an analysis of “fair dealings” and a consideration of the fairness factors. The declaration requested was therefore denied with costs to the Plaintiff.

The decision is available in English only, as delay of its issuance would be prejudicial to the public interest.  A French language summary of the conclusions is available.  A certified translation will be provided at the earliest possible time.

A copy of the judgment can be obtained via the Web site of the Federal Court:

Tuesday, July 11, 2017

Access Copyright v. York University Decision Expected Wednesday, July 12, 2017

After an extraordinary and very unusual request by York's counsel for a 48 hour advance copy of the decision and another delay beyond the "no earlier than July 7, 2017" date, the Court announced today:

Oral directions received from the Court: The Honourable Mr. Justice Phelan dated 11-JUL-2017 directing that the Court's decision in this matter will be issued on Wednesday July 12, 2017. (Direction called out to the parties) placed on file on 11-JUL-2017

(highlight added)

Watch this space.


Tuesday, July 04, 2017

My ABC 2017 Presentation and Update on Access Copyright v. York University

On June 30, 2017, I presented a Copyright Law Update at Queen’s University to the wonderful ABC group, which consists mostly of copyright librarians and officers at the post-secondary level. There were also observers from important associations interested in Canadian post-secondary education. It was a good program and I was very pleased to be invited back. Naturally, I focused mainly on fair dealing and other copyright issues and events of interest to the educational community.

The Access Copyright v. York University case was of great interest to everyone. The Court had earlier tantalizingly indicated the decision would be released “Shortly after July 1 weekend”. However, we learned at the last minute that York University had asked for a delay. Here’s their letter in which York’s counsel actually asked to get the decision 48 hours before its public release. Frankly, I’ve never heard of such a request. Even Supreme Court of Canada “lockups, which are extremely rare, give counsel at the most a one hour and fifteen minute “heads up” before decisions are released to the public at 9:45 AM and counsel cannot even communicate the contents to their client. In any event, this extraordinary request was denied but the Court did agree to delay the release until no earlier than July 7, 2017, when hopefully we all find out what the Court ruled in Phase I.

The timing here is very important to the public interest because, of course, the deadline for filing an objection to Access Copyright’s proposed tariff for 2018-2020 is July 19, 2017. Naturally, everyone wants to know what the Federal Court will have to say about whether York’s fair dealing guidelines are viable and whether York succeeds on its narrow argument that the “interim” tariff imposed at the end of 2010 is “mandatory”. For whatever reasons, York expressly told the Court that it was not necessary to rule on the whether a “final” tariff could be mandatory. I have written at length about this issue and how the Supreme Court of Canada has ruled that Copyright Board tariffs are not mandatory and the potential implications of this ruling for the York University case.

The Copyright Board has yet to rule on the seven-year-old application for a tariff for 2011 onward, and whatever happens in the York University case is likely to be appealed. So, the next hearing may be a long time getting underway. It makes little sense for it to proceed while the seven-year-old application from 2010 is still undecided and the Federal Court decision can be and likely will be appealed, whatever the outcome.

Whether in spite or because of this uncertainty, there was a lot of interest in the filing objections with the Copyright Board by July 19, 2017. One point that came up repeatedly is whether associations that have many members need to answer interrogatories on behalf each member. The answer is clearly that this is not necessarily necessary. If the association asks the Board to allow for a representative sample of members to file responses to interrogatories, such a request would likely be positively received. The Board even said so last time around – only this came too late. The request had not been made. Such requests are routine when radio or TV stations are involved, because there are hundreds of them and they obviously don’t all answer interrogatories. In any case, these points are touched on in my slides for the ABC event, which are available here and which provide some hopefully useful clickable links.


Wednesday, June 28, 2017

Re:Sound Resoundingly Loses Judicial Review of Copyright Board Tariff 8 Decision

The Re:Sound Tariff 8 Judicial Review Federal Court of Appeal decision is out. Spoiler alert – Re:Sound lost. Resoundingly.

After a very lengthy and careful discussion of “standard of review”, the Court concluded that the Board is entitled to deference when dealing with s. 19 of the Copyright Act – which deals with equitable remuneration and not the kind of infringement issues that come before the superior courts. Hence, its review was done on a reasonableness rather than correctness basis. The result is hardly surprising - though the nature and depth of the reasoning will no doubt be of great interest to copyright and administrative law types.

This was a very rich decision in terms of jurisprudence, harkening back to Roncarelli v. Duplessis. It was up to date with scholarly references including to the work of David Lametti, now Parliamentary Secretary to the Minister of ISED.

There was much good discussion about “balance”, technological neutrality and evidence or lack thereof in in this instance, treaty law, the difference between exclusive rights and equitable remuneration, etc. It took about 16 months for the FCA to render this careful and learned decision. It will take a while for copyright scholars to analyze it with the care that it deserves.

The Court concluded with some unusual language that can be seen as praiseworthy of the Copyright Board:
[100] The reiterate, overall the Board was entitled to a broad margin of appreciation in considering the complex and specialized issues in this case. The applicant has not persuaded me that the Board’s decision was outside of that margin of appreciation.
(highlight added)

The word “appreciation” is perhaps unusual in this context and may, indeed, be appreciated by the Board in the circumstances.

Though there was no reference, of course, and the Court was presumably unaware of it, all Canadian copyright lawyers are very aware of the shameful behaviour of Music Canada in 2015 in attacking the Copyright Board with respect to this case and attempting to lobby its then new Chairman though a letter writing campaign.

More to come from me and others without doubt. Between this and Equustek – it’s been a busy IP day in Canada.


Google Suffers Severe Setback from the Supreme Court of Canada

Google lost today in the Supreme Court of Canada (“SCC”), which held that a trial judge in British Columbia can, on an interlocutory motion, order Google world-wide to de-index sites alleging violating IP law in BC. As the minority points out, this is effectively a permanent injunction and a permanent remedy for all practical purposes.

Watching the webcast of the hearing helps to explain what went so wrong here. It becomes apparent early on.

The best argument apparently wasn’t sufficiently emphasized – namely that this was an IP case and the IP rights in issue, namely trademark and trade secrets were tenuous at best and unestablished outside of Canada and that TM and trade secrecy law differ dramatically outside of Canada and from country to country.

Curiously enough, INTA of all folks was ready to ably make and focus on those arguments – but the Court refused to hear from them as interveners and heard, instead, from the record and film industries.

This is going to create a lot of problems. I don’t see how this is consistent with the SCC’s 2011 decision in Crookes v. Newton, which held that merely linking to a defamatory site is not defamation. Google made that point, but perhaps it wasn’t sufficiently emphasized. It didn’t find its way into the judgment.

I can just see the RIAA and MPAA salivating at the thought of getting world-wide injunctions against Google at an interlocutory hearing from a trial judge in British Columbia. Will the mere fact that copyright subsists in BC - as it does virtually everywhere - be sufficient to get the injunction? One can imagine that few if any defendants would appear in such proceedings.

At least, we have competent trial judges in Canada and the rule of law. However, if other countries become emboldened in this way, perhaps worldwide injunctions against Google will emanate from unsavoury jurisdictions at little cost and with little justice.


Friday, June 23, 2017

Facebook Must Face the Fact That Its Forum Selection Clause is Unenforceable in Canadian Privacy Class Action

The Supreme Court of Canada today released a landmark decision in Douez v. Facebook  holding that the the forum selection clause in the click wrap Facebook agreement to which nearly two billion people have "agreed" but likely nobody but a few lawyers have ever read is unenforceable in a privacy class action launched in British Columbia.

The conspicuous references to such concepts as “gross inequality of bargaining power”, “consumer contracts of adhesion”, “grossly uneven bargaining power” are very encouraging for consumers’ rights in an age when, as Justice Abella asks in her concurring opinion:
[99] “What does “consent” mean when the agreement is said to be made by pressing a computer key? Can it realistically be said that the consumer turned his or her mind to all the terms and gave meaningful consent?”
Justice Abella goes on to say:
[104] In general, then, when online consumer contracts of adhesion contain terms that unduly impede the ability of consumers to vindicate their rights in domestic courts, particularly their quasi-constitutional or constitutional rights, in my view, public policy concerns outweigh those favouring enforceability of a forum selection clause.

Any knowledgeable copyright lawyer is going to be asking now whether and how the majority opinion and particularly Justice Abella’s concurrence might impact copyright licence agreements that purport to limit users’ fair dealing rights. There is already other Supreme Court of Canada jurisprudence that indicates that consumers cannot contract out of or relinquish important statutory rights, such as the right to pay off a mortgage at the end of any given five‑year period.


Tuesday, June 06, 2017

Voltage Pictures Canadian Reverse Class Action - An Update to June 6, 2017

The Voltage Pictures long saga to sue thousands of Canadians who have allegedly have IP addresses that are allegedly connected to allegedly illegal downloading of its films has recently taken on a new twist. Voltage has changed law firms and tactics. It is now pursuing a “reverse class action”, in which one individual by the name of Robert Salna is being forced to defend not only himself but a class of potentially thousands of supposedly similarly situated defendants. As far as I know, this has never been done before in the Federal Court or in Canadian copyright law, and rarely in other cases.  It is certainly not clear that it can, should, or will be done here. However, it is interesting that, apparently, nobody has yet challenged the very possibility that it even can or should be done in this instance.

In the USA, an attempt by Voltage to use a “reverse class action” was tossed by a federal district court judge in Oregon in 2013. According the AP report as carried in US News and World Report:
A federal judge has dismissed a movie company's Internet piracy complaint against 34 Oregonians, saying the company was unfairly using the court's subpoena power in a "reverse class-action suit" to save on legal expenses and possibly to intimidate defendants into paying thousands of dollars for viewing a movie that can be bought or rented for less than $10.
The judge said cases such as Voltage's allow plaintiffs to "use the courts' subpoena powers to troll for quick and easy settlements." She cited a letter sent to defendants that asks $7,500, saying that amount would increase up to $150,000 without prompt payment.

The case is Voltage Pictures LLC v. Does,  2013 WL 1907059. The judge uses some blunt language to point out the potential for prejudice to defendants in joining together all users at once in a “reverse class actin”
The court agrees that technological advances have resulted in anonymous and stealthy tools for conducting copyright infringement on a large scale. The court further agrees peer-to-peer sharing technologies, such as BitTorrent, have a serious impact on the profitability of the commercial production of films and music. But, the need to discover copyright infringers, who conduct their activities relatively anonymously, through peer-to-peer networks, must be balanced against the rights of Doe defendants who share no more of a connection than merely committing the same type of act in the same type of manner. While these are indeed the type of cases in which discovery, pre-service, is merited, the use of a reverse class action is not. This is especially true given the proliferation of the use of the courts’ subpoena powers to troll for quick and easy settlements.
Thus, it is apparent that plaintiff seeks to place all users with the same degree of culpability regardless of intent, degree of sharing or profit. For instance, the grandparents whose young grandchild used their computer to download what looks like an entertaining Christmas movie, to his innocent mind, through their IP address, are the same as an organization intentionally decrypting and duplicating DVDs en masse while planting stealth viral advertising, or more nefarious Trojan horses, into the upload stream. By being lumped together, the Doe defendant who may have a legitimate defense to the allegedly infringing activity is severely prejudiced.
Accordingly, plaintiff’s tactic in these BitTorrent cases appears to not seek to litigate against all the Doe defendants, but to utilize the court’s subpoena powers to drastically reduce litigation costs and obtain, in effect, $7,500 for its product which, in the case of Maximum Conviction, can be obtained for $9.99 on Amazon for the Blu–Ray/DVD combo or $3.99 for a digital rental.
 The court will follow the majority of other courts in declining to condone this practice of en masse joinder in BitTorrent cases and orders all Does beyond Doe one severed and dismissed from the cases. While the ease with which movies can be copied and disseminated in the digital age no doubt has a deleterious effect on the paying market for such entertainment, just as a mass of plaintiffs harmed through separate, but similar acts of one defendant must generally seek redress individually, so should a plaintiff seek redress individually against a mass of defendants who use similar tactics to harm a plaintiff.
Even though it makes a good deal of sense to start these cases initially by joining all Does so that the process of discovering them can be economized,2 it has now become apparent that plaintiffs’ counsel seeks to abuse the process and use scare tactics and paint all Doe users, regardless of degree of culpability in the same light. This practice does not “comport with the principles of fundamental fairness.”

Footnote 2: I, however, note that even this justification is muted because it is not clear if the account holders of a given IP address is the actual infringer. Moreover, mere participation in a given swarm may not result in a full download.
(highlight added)

However, even before the current Canadian reverse class action certification motion can proceed, Voltage must come up with $75,000 to pay into court as security for costs to get through to the certification motion following the Federal Court’s curiously unreported order of February 2, 2017 requiring the payment of the $75,000 amount for security for costs “forthwith”. In my view, this is not really very much money for such a novel and potentially very complicated matter and is barely more than half of what Salna asked for. Ironically, there likely would not have been a security for costs order if Voltage were a Canadian entity. The rule that was used applies to non-resident entities. Therefore, this begs the question of what might happen in a hypothetical future case when a technically Canadian entity tries to force one unlucky soul into defending a potentially abusive reverse class action trolling case.

Despite the “forthwith” aspect, Voltage has apparently not yet paid the money into Court. Indeed,  it has appealed. There  is also a cross appeal underway, which would suggest that Mr. Salna wants even more money for security of costs, which is not surprising. This all may suggest that this entire effort will fizzle, as did Voltage’s previous effort against Teksavvy’s customers. It appears that the certification motion that had long been scheduled for June 7 and 8, 2017 has been postponed pending determination of the appeal and cross appeal as to the security for costs order.

This time, Voltage is going after Rogers’ customers. Once again, Rogers has apparently shown no interest in defending its customers’ privacy or resisting the controversial concept of a “reverse class action”, or in challenging the adequacy of the evidence that led to the disclosure order – as Shaw and Telus did successfully in the first of these cases back in 2004, in which I was very much involved.  Rogers sole interest seems to be is in getting paid for its efforts in complying with the order to disclose the identities of the customers that Voltage wants to sweep into the reverse class action.

However, a decision of May 9, 2017 from the Federal Court of Appeal “FCA”) in the Voltage reverse class action litigation holds that, absent regulations, ISPs cannot require any reimbursement for the costs of forwarding notices or disclosing the identity of allegedly infringing subscribers pursuant to a court order. The Court concluded:
[79]  Again, if Rogers and other internet service providers consider this level of compensation for their work to be unfair, they can ask the Minister to pass a regulation setting a maximum fee. As explained, this would permit them to charge a fee not just for the act of delivery, but also for the discharge of their subsection 41.26(1) obligations.

Even though some were “shocked” by the ruling and are predicting “floodgates” of trolling activity, the decision is not really surprising given the wording of the statute and the legislative history as described by the Court.

Nevertheless, CIPPIC’S Director, David Fewer, has been quoted by the Financial Post on May 26, 2017  as criticizing this decision in unusually outspoken and even strident language:
“It’s a horrific decision from a policy perspective and it’s bad news for consumers, it’s bad news for Internet service providers, it’s bad news for Canada,” said David Fewer, director of the Canadian Internet Policy and Public Interest Clinic.
“Your costs of engaging in trolling activity have just plummeted to the floor. This is the Federal Court of Appeal throwing the floodgates wide open.”
The ruling misconstrued the purpose and the function of Canada’s “notice and notice” regime, he said. The system, introduced in 2015, enables copyright owners to alert Internet providers of alleged infringement and requires providers to send notices to subscribers. While most copyright owners use these as an educational tool, some use them to demand sums around $3,500. Others, such as Voltage, take the next step to identify offenders in order to launch lawsuits.
(highlight added)

Other than this reported media comment, CIPPIC has had very little visible role in this case. It was notably absent in this appeal  in which it could have applied for leave to intervene , which would likely have been granted in view of CIPPIC’s intervener role below.  Indeed, it appears that CIPPIC did not even follow up on its earlier stated intention in a letter to the Federal Court of December 13, 2016 that it “anticipates” seeking leave to intervene in the certification motion – for which the hearing dates of June 7 and 8, 2017 are now “vacated” for the time being. In view of Mr. Fewer’s dire assessment of the implications of this ruling, one would have thought that CIPPIC would have intervened as forcefully as possible at every appropriate opportunity in this case, which indeed does have the potential to further facilitate aggressive trolling litigation in Canada. CIPPIC has also not sought leave to intervene in the security of costs appeal.

The good thing about this current FCA decision is that it should – and clearly is intended to – get the immediate attention of the Government and ISPs such as Rogers who presumably know their way around Ottawa. Ironically, if the decision is correct, then regulations should solve the ISPs problem, at least going forward. However, “A regulation can take effect before it is made (i.e., be retroactive) only if the enabling act clearly authorizes the retroactivity and the text of the regulation specifies the date”. Whether the Supreme Court of Canada would even grant leave in this case or whether a legislative amendment is needed are questions that are no doubt being urgently considered.

There may be an interesting “Catch 22” problem here. If the FCA is right that the Government could implement regulations to provide for payment to Rogers and other ISPs for the costs of complying with Norwich disclosure orders, then the Government presumably can and should do so. However, if the FCA is wrong, as Rogers apparently argued in court and CIPPIC is arguing in the media, then the Government may have no authority to implement such regulations. New legislation would be required, which would open up the entire “notice” regime. No doubt, the lobbyists representing the American film and music industries would salivate at the opportunity to turn our made-in-Canada (albeit incomplete) "notice & notice" regime into an American style "notice and takedown" regime.

However, unless and until the Supreme Court grants leave to appeal and ultimately overturns this FCA decision, it has the status of “stare decisis”, i.e. binding precedent.  In principle, the Minister thus has the authority, though the Governor in Council, to implement regulations giving Rogers what it wants – at least on a going forward basis. Thus, Rogers, CIPPIC and others who may want to try to get this case to the Supreme Court of Canada may wish to be careful what they wish for.

In any event, it would be somewhat surprising if the SCC were to grant leave in this case, since the FCA decision is only interlocutory and there is an apparently simple solution in sight to the issues raised – which is that of implementing regulations.