Canada: Canadian Copyright & Breach of Technological Protection Measures (TPMs): $12.7 million in Damages

Last Updated: March 29 2017
Article by Richard Stobbe

It's always exciting when there's a new decision about an obscure 5-year old subsection of the Copyright Act! Back in 2012, Canada changed its Copyright Act to try and drag it into the 21st century. Among the 2012 changes were provisions to prohibit the circumvention of TPMs. In plain English, this means that breaking digital locks would be a breach of the Copyright Act.

In Nintendo of America Inc. v. King and Go Cyber Shopping (2005) Ltd. the Federal Court reviewed subsections 41 and 41.1 of the Act. In this case, the defendant Go Cyber Shopping was sued for circumvention of the TPMs which protected Nintendo's well-known handheld video game consoles known as the Nintendo DS and 3DS, and the Wii home video game console.  Specifically, Nintendo's TPMs were designed to protect the code in Nintendo's game cards (in the case of DS and 3DS games) and discs (in the case of Wii games).

The defendants were sued for copyright infringement (for the copying of the code and data files in the game cards and discs) and for circumvention of the TPMs. Interestingly (for copyright lawyers), the claim was based on "secondary infringement" which resulted from the authorization of infringing acts when Go Cyber Shopping provided its customers with instructions on how to copy Nintendo's data.

The Court agreed that Nintendo's digital locks qualified as "technological protection measures" for the purposes of the Act. The open-ended language of the TPM definition permits copyright owners to protect their business models with "any technological tool at their disposal." This is an important acknowledgement for copyright owners, as it expands the range of technical possibilities, based on the principle of "technological neutrality" which avoids discrimination against any particular type of technology, device, or component. To put this another way, a copyright owner should be able to fit into the definition of a TPM  fairly easily since there is no specific technical criteria, aside from the general reference to an "effective technology, device or component that, in the ordinary course of its operation, controls access to a work..."

Next, the court agreed with Nintendo that Go Cyber Shopping has engaged in "circumvention" which means "to descramble a scrambled work or decrypt an encrypted work or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure..."

Lastly, Nintendo sought statutory damages, which avoids the need to show actual damages, and instead relies on automatic damages at a set amount. The court has a range from which to pick.  Nintendo suggested statutory damages between $294,000 to $11,700,000 for TPM circumvention of 585 different Nintendo Games, based on a statutorily mandated range between $500 and $20,000 per work. For copyright infringement, the evidence showed infringement of 3 so-called "Header Data" files. The court was convinced to award damages at the highest level of the range.

In the end the court made an award in favour of Nintendo, setting statutory damages at $11,700,000 for TPM circumvention in respect of its 585 Nintendo Games, and of $60,000 for copyright infringement in respect of the three Header Data works. This shows that TPM circumvention, as a remedy for copyright owners, has real teeth and may, in the right circumstances, easily surpass the damages awarded for copyright infringement. On top of this, the court awarded punitive damages of $1,000,000 in light of the "strong need to deter and denounce such activities." Total... $12.7 million.

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