Canada: Federal Court Issues Interlocutory Injunction Directed at Retailers of Set-Top Boxes Loaded With Copyright Infringing Applications

On June 1, 2016, Madam Justice Tremblay-Lamer of the Federal Court issued an interlocutory injunction against retailers of set-top boxes that are configured, or "pre-loaded", with various applications that provide their users with unauthorized access to copyrighted television content. Noting that the availability of these set-top boxes is an "emerging phenomenon in the Canadian market," the Court's Order in Bell Canada et al v 1326030 Ontario Inc dba ITVBox.net et al, 2016 FC 612, also authorizes the Plaintiffs to expand the scope of the interlocutory injunction by impleading additional Defendants.

The Plaintiffs were successfully represented by François Guay and Guillaume Lavoie Ste-Marie of Smart & Biggar's Montreal office.

Background

The Plaintiffs are Canadian broadcasters and broadcast distribution undertakings that own and retransmit television programming in Canada.

The Defendants are Canadian businesses and individuals that configure and sell "pre-loaded set-top boxes" on the Canadian market, which they advertise as a way to access free television content and avoid cable bills. Pre-loaded set-top boxes are electronic devices that can be connected to a standard television set, on which various applications are preinstalled and configured. These preinstalled applications allow users to access unauthorized streams of content owned and/or broadcasted by, inter alia, the Plaintiffs, and/or to permanently download that content.

Finding of the Federal Court

The only issue before the Court was whether an interlocutory injunction should issue in light of the widely recognized three-part test established by the Supreme Court of Canada, namely that:

  1. there must be a serious question to be tried;
  2. there must be irreparable harm; and
  3. the balance of convenience must weigh in favour of the person requesting the injunction.

 a) Serious question to be tried

The Plaintiffs raised causes of action grounded both in direct and indirect copyright infringement under the Copyright Act, as well as in provisions of the Radiocommunication Act that forbid the sale of devices that can be used to contravene that Act. One of the Defendants defended the motion and argued, on the other hand, that pre-loaded set-top boxes were simply means of communication, that they have non-infringing uses, and that he was not involved in the development of the applications he preinstalls on these set-top boxes.

Recognizing that the Defendants deliberately encourage consumers to access illegal content and to consequently, and perhaps unknowingly, infringe copyright law, the Court held that the Plaintiffs presented a strong prima facie case for all causes of actions raised. Interestingly, the Court noted that the statutory defence provided at paragraph 2.4(1)(b) of the Copyright Act (providing the means of telecommunication does not amount to a communication) was not available to the Defendants because they also engage in acts related to the content of the illegal communication.

b) Irreparable harm

Having considered precedent standing for the proposition that irreparable harm need not be proven in cases of blatant copyright infringement, the Court nonetheless held that the Plaintiffs were not relieved from fulfilling that prong of the test in the case at hand, though it recognized that a strong finding on one prong may lower the threshold on the other two.

In light of the evidence on the record, the Court found that the Plaintiffs would suffer irreparable harm if the injunction were not granted, notably on the basis that each additional pre-loaded set-top box user has an incentive to permanently cancel its subscription with the Plaintiffs. This harm was compounded by the fact that the Canadian market for pre-loaded set-top boxes is growing and that it "will keep growing if left unchecked."

c) Balance of convenience

On this prong of the test, the Court noted that pre-loaded set-top boxes contain applications that have legal uses, but that the Plaintiffs' strong prima facie case supported a finding that the balance of convenience weighed in their favour because the injunction does not enjoin the Defendants from selling set-top boxes on which no copyright infringing applications are installed.

Justice Tremblay-Lamer therefore issued the interlocutory injunction sought by the Plaintiffs, which will also apply to any additional Defendant the Plaintiffs may implead in the action until a trial on the merits.

Conclusion

While the Federal Court has certainly never shown any tolerance for blatant intellectual property infringers, this decision clearly illustrates that it is also willing to issue interlocutory injunctions against those who participate in copyright infringement through newly emerging technologies (the Court aptly writes that "[t]his is not the first time a new technology has been alleged to violate copyright law, nor will it be the last"). Rights holders should therefore be mindful that interlocutory relief may be available against those who disseminate new technologies that infringe their rights and damage their business, and that such relief can have pan-Canadian application when issued by the Federal Court.

For further information regarding this case or litigation in the Canadian Federal or Provincial Courts, please contact a member of our firm's Litigation Group.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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