In one of the first claims seeking damages against an ISP for failure to comply with the "notice and notice" obligations in the Copyright Act, the Federal Court has ruled that the claims are not an abuse of copyright.

Millennium Producers allege that between February 9, 2019, and June 15, 2021, they sent Bell Canada and Bell Aliant (collectively, Bell) over 81,000 notices and that Bell had failed to forward the almost 40,000 notices properly under the Copyright Act. Millennium is seeking approximately $400 million in damages, $10,000 for each asserted failure to deliver a notice.

Bell acknowledges that it did not deliver certain notices but for various legitimate reasons including:

  • the notices were not sent to or received by Bell;
  • the notices contained inaccurate information;
  • the notices were duplicates;
  • the notices were not compliant;
  • Bell did not have a viable customer email to forward the notices to; or
  • Bell was otherwise unable to forward the notices despite diligent efforts.

Critically, Bell pleaded in defence that plaintiffs and their counsel had misused and abused the Notice and Notice Regime by using the copyright enforcement program ("CEP") as a "tool of harassment and intimidation"1, which constituted a misuse of copyright. CEP uses software and services to send out notices of allegedly infringing acts to ISPs for forwarding to customers.

Millennium brought a motion to strike the counterclaim of all of Bell's allegations. The case management judge granted the motion to strike, effectively striking down all of Bell's allegations.

Bell appealed the CMJ's decision to the Federal Court.

Issues on Appeal

The issues addressed on appeal were:

  1. Did the CMJ err in striking the allegations relating to misuse of copyright?
  2. Did the CMJ err in striking the allegations against AB?
  3. Did the CMJ err in striking the allegations relating to champerty and maintenance?
  4. Did the CMJ err in striking the abuse of process and unlawful means conspiracy allegations?
  5. Did the CMJ erred in striking the Charter allegation?
  6. Should Bell have been granted leave to amend its pleading?

Striking allegations from a statement of defence is not taken lightly, as to not deprive people from mounting their case in court, especially novel claims. Still, the reviewing judge found that the CMJ identified the correct principle that it is only in the clearest of cases where a pleading is incapable of proof or mere speculation that it should be struck down.

The applicable standard of review was found to be the correctness standard relating to questions of law and questions of mixed fact and law.

First Time Assertions Against an Internet Service Provider

Millennium asserts copyright for five films in alleging that Bell internet customers have infringed the copyright of their films by illegally distributing the films via the BitTorrent peer-to-peer network. In sum, Bell customers had been allegedly reproducing and sharing the films Millennium holds copyright for without permission and Millennium took action against Bell as the ISP to these users.

What Is the Notice and Notice Regime?

The Notice and Notice Regime is intended to deter people from infringing copyright over the internet. It is not a framework intended to eliminate copyright infringement altogether. In tandem with the notice regime, a Norwich order can be obtained to compel the ISP to disclose a person's identity to facilitate the ability to sue that person who receives notices under the regime.

The Act sets out in section 41.25:

  • When and to whom a notice may be sent under the Notice and Notice Regime.
  • The content and form of the notice.
  • What would be considered prohibited content.

Additionally, Section 41.26 lays out obligations related to notice such as:

  • If a notice meets what is required under section 41.25 then an ISP is required to forward the notice electronically to the location specified in the notice and inform the claimant of its forwarding as soon as possible.
    • If forwarding is not possible the ISP must give reasons as to why.
  • Remedy for when a notice is not forwarded under statutory damages is between $5000-$10,000.

The Defence of Misuse of Copyright

The defence of misuse of copyright, although mentioned within the Canadian jurisprudence, has not yet been adjudicated under Canadian law. Misuse of copyright as a developing doctrine can be interpreted to act as a kind of equitable defence in contexts where a copyright holder acts beyond the scope of given exclusive rights in violation of public policy or antitrust laws reflected in the Act.

The defence of misuse of copyright is often applied when:

  • There is a violation of the antitrust laws;
  • The copyright owner has extended its monopoly illegally; or
  • The copyright owner has violated the public policies underlying copyright laws.

The reviewing judge did take issue with the limited approach to the defence of misuse of copyright, taken by the CMJ. The reviewing judge found error in how the CMJ limited the approach to defence when finding that arguments raised involving policy matters could not be asserted in support of the misuse of copyright defence. However, the reviewing judge found there was no error in finding a lack of material facts from Bell to support the allegation of misuse of copyright.

Intricacies of Copyright Misuse

The reviewing judge also found issue with conclusions that the doctrine of misuse of copyright in effect can never extend to an action under section 41.26. Allegations of copyright misuse are based on US doctrine that recognizes the violation of public policies underlying copyright law by a copyright owner. The judge argues that due to "the full merits and intricacies of the doctrine"2 a motion to strike, such as this one, is beyond the scope.

Here, Bell is affected by the enforcement of copyright under the CEP even though the underlying action is not one of infringement. So, Bell is still subject to damages resulting from the enforcement of section 41.26 of the Act. The reviewing judge makes no solid conclusions about whether the doctrine can extend to an action under section 41.26 of the Act due to it not at this time being "plain and obvious."3

The Facts Do Not Allege Successfully a Misuse of Copyright

The reviewing judge finds that the facts alleged do not sufficiently support Bell's claim that CEP functions to intimate and harass alleged infringers, which resultingly enables the claiming of large sums from ISPs. In a limited manner, the pleading sets out how CEP sends out large numbers of generated notices to ISPs.

The judge found that the pleading does not explain:

  • How CEP generates notices to those who do not infringe or who are wrongfully accused of infringing activity.
  • How the notices are unreliable and unlawful.
  • What proportion of the notices the allegation relates to.

Thus, the pleadings were found not to have satisfactory grounds for alleging improper behaviour has occurred on the part of Millennium.

Conclusions and Take-Aways

The reviewing judge found no fundamental errors in the CMJ's decision and did not grant Bell leave to amend its pleading.

The decision provides helpful context to the defence of misuse of copyright, including that arguments may contain policy matters. It remains unsettled whether the doctrine of misuse of copyright can extend to an action under section 41.26.

Footnotes

1. Millennium Funding, Inc v Bell Canada, [2023] FCJ No 776, 2023 FC 764 at para 11.

2. Ibid, at para 45.

3. Ibid, at para 20.

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