Canada: Canadian Court Denies Motions to Compel ISPs to Disclose Identities of Peer to Peer File Swappers

Published in MLRC MediaLawLetter, April 2004

On March 31, 2004, Ontario Federal Court Justice von Finckenstein denied motions to compel Internet service providers (ISPs) to reveal the identities of 29 alleged "uploaders" of copyrighted musical works using popular peer-to-peer .(P2P) file-sharing programs, such as KaZaA. BMG Canada v. John Doe, No. T-292-04 (Ont. Fed. Ct.).

In addition to finding that the evidence lacked the required reliability to justify invading the privacy of Internet users, the Court held that the applicant music companies had failed to make out a prima facie case of copyright infringement under Canadian law.

The Canadian Recording Industry Association (CRIA) – following the lead of its U.S. counterpart, the Recording Industry Association of America (RIAA) – took the first step in its strategy to file suit against individual users of P2P file-sharing programs by attempting to obtain from ISPs the names of alleged infringers.

CRIA invoked the traditional procedure of seeking a court order for disclosure (sometimes called a Norwich order) – not having the benefit of the streamlined subpoena procedure under section 512(h) of the Digital Millennium Copyright Act, 17 U.S.C. (DMCA) (a procedure that was, until the recent decision in Recording Industry Ass’n of America, Inc. v. Verizon Internet Services, Inc., 351 F.3d 1229 (D.C. Cir.2003), widely used by the RIAA). The Electronic Frontier Foundation and the Canadian Internet Policy and Public Interest Clinic intervened in the case.

In denying the applicant’s motion to compel the ISPs to divulge the names of Internet users, the Court called into question the reliability of the applicant’s evidence on several fronts.

First, the Court found that there was insufficient evidence linking the pseudonyms of the P2P users with the Internet protocol addresses that ISPs were in turn asked to link to account holders. The Court also noted that the ISPs were limited in their ability to reliably retrieve older data from their systems. The Court acknowledged that retrieving data was not easy and that the costs of doing this should be borne by the party making the request.

Similarly, the Court found that while ISPs may be able to generate the names of account holders, this would not necessarily reveal the actual computer users responsible for file sharing. The widespread practice of sharing an Internet connection and the increasing popularity of wireless networks mean that the account holder’s identity may no longer be a reliable indicator of the Internet user.

With respect to the role of the Internet intermediary, the Court held that the person from whom discovery is sought must be the "only practical source of the information" and that the applicants had not provided sufficient evidence to allow the Court to make this determination. It suggested that the operators of the KaZaA and iMesh websites were another possible source.

With regard to the privacy of Internet users, the Court acknowledged the privacy interest of the individual (particularly in the context of the Internet and in light of Canada’s new federal privacy legislation [the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5]) and found that these concerns outweighed the public interest in favor of disclosure in this case, where the reliability of the evidence and the requested information was in question.

The Court noted that third parties have in the past been compelled to disclose the name of a defendant identified by an Internet protocol address and that "in no [other] case have privacy or other concerns weighing against disclosure outweighed the interest in obtaining documents and information necessary to identify the defendants," making this case the first to tip the balance in favor of Internet privacy.

The Court further held that a prima facie case of copyright infringement had not been proved. Citing section 80 of the Canadian Copyright Act, R.S.C. 1985, c. C.-42, the Court found that downloading a song for personal use was not an infringement.

Section 80 imposes a levy on the manufacturers and importers of blank recording media (e.g., recordable compact discs) and in exchange exempts from copyright infringement the reproduction of a musical work onto an audio recording medium for private use. The levy, which has been in place since 1999, is collected by the Canadian Private Copying Collective and redistributed to authors, performers and makers of musical works.

This so-called private copying regime was Canada’s solution to the difficult enforcement challenge posed by widespread copying of music. Although largely expected, the Court’s decision removed any doubt that the exemption applied to digital music copied from the Internet.

The Court went on, however, to consider whether uploading infringed copyright. It found that the "mere fact of placing a copy on a shared directory in a computer where that copy can be accessed via a P2P service" (so-called uploading) does not amount to reproducing, or authorizing the reproduction, or to distributing unauthorized copies under the Copyright Act.

Citing the recent decision of the Supreme Court of Canada in CCH Canada Ltd. v. Law Society of Canada (2004 SCC 13) (holding that a library does not authorize copyright infringement by providing self-service photocopiers for use by its patrons), the Court held that simply setting up facilities that allow copying does not amount to authorizing infringement. The Court held that "distribution" requires some positive act by the user (such as sending out copies or advertising that they are available for copying).

Moreover, making copies available was not a right recognized under Canadian copyright law. Finally, the Court rejected the claim of secondary infringement, finding that users lacked the necessary knowledge of infringement. In short, uploading was not an infringement of Canada’s distinctive copyright laws.

CRIA has filed an appeal. The decision will therefore be considered by the Federal Court of Appeal, and may have important implications for the future of Canadian copyright law in the digital environment.

For the moment, the decision appears to have blocked the Canadian music industry’s enforcement efforts through this avenue. It may also force copyright policymakers to once again rethink the way the Copyright Act balances interests in the digital era.

Indeed, a broader Canadian copyright reform agenda for the digital era is already on the horizon. Proposals for copyright reform that were first introduced in 2001 include protection for digital rights management technologies and the expansion of copyright holders’ rights (including the addition of a "making available" right) to comply with World Intellectual Property Organization treaties (which have been signed by Canada but have yet to be implemented), as well as establishing safe harbors for ISPs that participate in enforcement efforts.

These proposals largely track reforms that have already been instituted in the United States (e.g., DMCA). However, the process of legislative reform has been slow and appears to be stalled in debate and controversy.

Also eagerly awaited is the Supreme Court of Canada’s decision (expected this summer) in the appeal of Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2002] 19 C.P.R. (4th) 289 (F.C.A) (the "Tariff 22" case). Tariff 22 was proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), which is the Canadian copyright collective for the public performance of musical works.

It sought to compensate copyright owners by charging ISPs a royalty for the communication of musical works over the Internet. The Canadian Copyright Board found, however, that ISPs were not liable for royalties (SOCAN Statement of Royalties, Public Performance of Musical Works 1996, 1997, 1998 (Tariff 22, Internet) (Re) (1999), 1 C.P.R. (4th) 417) and the Federal Court of Appeal largely agreed (except with respect to ISPs’ caching activities). Now under appeal to the Supreme Court, the case is expected to clarify the liability of ISPs and further define the roles and responsibilities of Internet intermediaries.

The Canadian response to the digital music conundrum is unquestionably unique. The focus to date (unlike its American counterparts) has largely been on developing a broadbased tariff and levy structure to compensate rights holders, not on strengthening enforcement tools to prevent online infringements.

In essence a form of compulsory license or tax, the initial Canadian response attempts to balance 1) the concern of the creative industries that the enforcement challenges and economic realities of P2P file sharing endanger the industry – and with it creative production; 2) the public interest in preserving the openness of the Internet and in safeguarding an Internet user’s ability to speak and associate anonymously; and 3) the interests of the Internet intermediaries that are caught in the middle.

As a testing ground for a novel solution, Canada’s experience will undoubtedly be closely watched in the United States.

Dimock Stratton Clarizio LLP represents the applicant.

Rebecca Brackley is an associate at Torys LLP in Toronto, Canada. Torys LLP represents one of the respondents (an ISP).