Canada: Norwich Orders And Copyright Trolls

Last Updated: March 14 2014
Article by Martin P.J. Kratz

The decision of the Federal Court in Voltage Pictures LLC v John Doe and Jane Doe, 2014 FC 161, provides insight into the collision of Norwich Orders, means used to identify unknown infringers, and the growing business model of copyright trolls giving rise for the Courts to be more mindful of playing a role in potentially abusive behaviour of the trolls.

The development of this business model has troubled the Courts in the United States and the United Kingdom. In Voltage the Federal Court sought to address this trend in Canada quoting from Judge Guzman in TCYK LLC v Does 1-88, 2013 US Dist. LEXIS 88402 (US DC ND Ill.) "... the rise of so-called 'copyright trolls' – plaintiffs who file multitudes of lawsuits solely to extort quick settlements – requires courts to ensure that the litigation process and their scarce resources are not being abused."

To bring some context to the discussion it is important to note that over the past few decades there has been a continuing drive to expand copyright protection with new and additional rights, longer terms and increasingly to provide for statutory damages that bear no resemblance to the actual damage caused. With the increase in rights of copyright owners there has begun a new troubling development, copyright trolls.

Copyright trolls refer to a business model where an alleged copyright holder sends demand letters to a large number of alleged defendants and asserts infringement of copyright and seeks to assert a claim for fairly significant damages which it offers to settle the case. Such demand letters were described as speculative invoicing. The plaintiffs obtain details of the alleged defendants often under Norwich Orders. In many cases the third party (often an ISP) does not defend and so there is no one looking at the interests of the alleged defendants who may in fact be innocent of the alleged infringement, for example, as the account holder of an IP address may not in fact be the infringer or the taking may not in some cases be infringement.

In the Voltage case, however, while the ISP did not participate in the proceeding, the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC) was granted leave to intervene and opposed the motion, filing evidence as to copyright trolling behavior and directed the Court's attention to US and UK jurisprudence.

The CIPPIC evidence was that in a number of cases the demand letters may be misleading and may misstate the rights or positions of the parties. Often the alleged defendant will pay the demanded amount or settle for some payment as they do not want to incur the cost of litigation, or are embarrassed (in the case of allegations pertaining to infringement of pornographic videos) or unwilling to put in the effort to consult with legal counsel.

Norwich Orders

A copyright owner may not know the identity of an infringer and may require the assistance of a third party to obtain that key information. The rules for seeking either an equitable bill of discovery apply to a plaintiff seeking an order under the Rule 238 of the Federal Court Rules and these requirements were identified by the Federal Court of Appeal in BMG Canada Inc v Doe, 2005 FCA 193.

Such an order is an extraordinary order and is discretionary. In BMG the Court identified the following principles govern a decision to grant such relief:

  • A plaintiff must have a bona fide case,
  • A non-party must have information on an issue in the proceeding,
  • An order of the Court is the only reasonable means of obtaining the information,
  • That fairness requires that the information be provided prior to trial, and
  • Any order made will not cause undue delay, inconvenience or expense to the third party.

While CIPPIC asserted that the higher, prima facie case standard should apply, the Court noted the case law supported the bona fide case standard.

The Court also addressed CIPPIC's privacy arguments by noting that the enforcement of the plaintiff's copyrights outweighs the privacy interests of affected Internet users. The Court did note that the Court must ensure that in granting a Norwich Order the Court must ensure privacy rights are invaded in the most minimal way possible.

Limitations On A Norwich Order

The Court reviewed the principles arising from US and UK jurisprudence dealing with similar orders and the abuses and egregious tactics identified where no safeguards were put in place in such orders. Judicial reaction to the copyright troll behavior has included this observation from Ingenuity 13 LLC v John Doe, 2013 WL 1898633 (CD Cal, 2013) "So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry."

The Court also noted that the damage claims in these mass infringement cases often far exceed any actual damage that may have occurred.

After summarizing the US and UK decisions the Court identified, at para. 134, a non-exhaustive list of considerations for a Court which flow from the jurisprudence:

  • The moving party must demonstrate a bona fide case,
  • Putting safeguards in place so that alleged infringers receiving any "demand" letter from a party obtaining an order under Rule 238 or a Norwich Order not be intimidated into making a payment without the benefit of understanding their legal rights and obligations,
  • When issuing a Norwich Order the Court may retain authority to ensure that it is not abused by the party obtaining it and can impose terms on how its provisions are carried out,
  • The party enforcing the Norwich Order should pay the legal costs and disbursements of the innocent third party,
  • Specific warnings regarding the obtaining of legal advice or the like should be included in any correspondence to individuals who are identified by the Norwich Order,
  • Limiting the information provided by the third party by releasing only the name and residential address but not telephone numbers or email addresses,
  • Ensuring there is a mechanism for the Court to monitor the implementation of the Norwich Order,
  • Ensuring that the information that is released remains confidential and not disclosed to the public and be used only in connection with the action,
  • Requiring the party obtaining the order to provide a copy of any proposed "demand" letter to all parties on the motion and to the Court prior to such letter being sent to the alleged infringers,
  • The Court should reserve the right to order amendments to the "demand" letter in the event it contain inappropriate statements,
  • Letters sent to individuals whose names are revealed pursuant to Court order must make clear that the fact that an order for disclosure has been made does not mean that the Court has considered the merits of the allegations of infringement against the recipient and made any finding of liability,
  • Any "demand" letter should stipulate that the person receiving the letter may not be the person who was responsible for the infringing acts,
  • A copy of the Court order or the entire decision should be included with any letter sent to an alleged infringer, and
  • The Court should ensure that the remedy granted is proportional.

The Court noted that the remedy was discretionary and, while there was some evidence that Voltage had been engaged in litigation which may have an improper purpose, the evidence was not sufficiently compelling for the Court to make a definitive determination of Voltage's motive, and hence, with the BMG factors being met, the Court granted the order, albeit with safeguards.

The rise of copyright trolling behavior has resulted in the Court balancing privacy and principles of justice to put in place safeguards while still providing a remedy available for plaintiffs pursing infringements of their rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Martin P.J. Kratz
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