Canada: Federal Court Of Appeal Approves Website Seizure And Anton Piller Order Against Online Copyright Piracy Platform

On February 20, 2018, the Federal Court of Appeal issued its judgment in Bell Canada v Lackman (2018 FCA 42), declaring that an interim injunction authorising the shutdown and seizure of piracy websites and an Anton Piller order were legal and had been properly executed. The Court also granted an interlocutory injunction to remain valid until trial against the owner and operator of these websites, which hosted and distributed a number of add-ons for the popular Kodi media player. The Court noted that these add-ons were "clearly designed to facilitate access to infringing material" and could not benefit from the "merely a conduit" exception to infringement.

The Appellants, part of the Bell, Rogers and Québecor media groups, were successfully represented by François Guay and Guillaume Lavoie Ste-Marie of Smart & Biggar's Montreal office and Mark Biernacki of Smart & Biggar's Toronto office.

Background

The Appellants (Plaintiffs in the Court below) are broadcasters and broadcast distribution undertakings that own and retransmit television programming in Canada.

The Respondent (Defendant), Mr. Adam Lackman, owns and operates the TVAddons website, on which he promotes and distributes a large number of "add-on" applications for the Kodi media player, including add-ons that are specifically configured to provide users with unauthorised access to a vast amount of television programming owned and distributed by the Appellants.

Procedural history

Given the infringing nature of TVAddons and the Respondent's known past illegal activities, the Appellants sought and obtained an ex parte interim injunction and Anton Piller order before the Honourable Mr. Justice LeBlanc on June 9, 2017. The interim injunction restrained the Respondent from further engaging in the operation of the TVAddons website and, notably, authorised bailiffs and computer technicians to shut down and take custody of the TVAddons servers and domain names to ensure that they would not be transferred outside of the Court's jurisdiction. The Anton Piller order authorised the bailiffs to seize or make copies of relevant evidence and the Appellants' solicitors to ask questions to the Respondent on topics related to the operation of TVAddons. 

On June 21, 2017, after the execution of these interim orders, the Appellants brought a motion before the Honourable Mr. Justice Bell for a declaration that the execution was lawfully conducted and to convert the interim injunction into an interlocutory injunction. In his judgment issued on June 30, 2017 (2017 FC 634), Mr. Justice Bell reviewed the Appellants' case de novo and held that the Appellants' evidence did not support a strong prima facie case of infringement against the Respondent, thus failing at the first prong of the Anton Piller test. Specifically, he found that the add-ons hosted and distributed by the Respondent were akin to "mini Google" search engines and, as such, that they could benefit from the "conduit" exception to infringement provided at s. 2.4(1)(b) of the Copyright Act. He also held that issuing an injunction would cause undue financial harm to the Respondent.

Mr. Justice Bell therefore dismissed the Appellants' motion in its entirety, revoking the Anton Piller order and the interim injunction order and ordering that the TVAddons online assets and all articles seized or copied during the execution of the June 9 order be returned to the Defendant. 

The urgent stay pending appeal

Because of the risk that control over Internet websites and servers could easily be taken out of the Court's jurisdiction and that crucial electronic evidence could be destroyed or hidden, the Appellants urgently requested a stay from the Federal Court of Appeal immediately following the decision on July 2, 2017, the Sunday of a holiday weekend. Later that day, the Honourable Mr. Justice Stratas granted an interim stay of the June 30 order, which he then renewed until a formal motion could be heard by the Federal Court of Appeal, noting that he was persuaded that the Appellants had an arguable case on appeal. Within two weeks, the Honourable Mr. Justice Scott granted a formal stay pending appeal (2017 FCA 154). 

The Federal Court of Appeal Decision

In its judgment, the Federal Court of Appeal held that the conclusions of Mr. Justice Bell (the "Judge") were based on a misapprehension of the case law and of the Copyright Act and on overriding and palpable errors in construing the evidence. The Court set aside the entirety of the Judge's order, declared that the interim injunction and Anton Piller order were lawfully executed and issued the interlocutory injunction sought by the Appellants. 

On the issue of the Anton Piller order, the Federal Court of Appeal first concluded that the Judge misconstrued the Respondent's activities in holding that the add-ons distributed by TVAddons were akin to a "mini Google" and noted the important difference between an indiscriminate search engine like Google and infringing add-ons, which are designed to target predetermined content in a manner that is both user friendly and reliable.

The Court therefore held that the Appellants made out a clearly strong prima facie case of infringement of their exclusive right to make their programming available to the public by telecommunication, and that the Respondent could not benefit from the s. 2.4(1)(b) "conduit" exception and "cloak himself in the shroud of an innocent disseminator, when his website clearly targets those who want to circumvent the legal means of watching television programs and the related costs." 

The Court then held that the Judge "would have had no choice but to find that the appellants met all the [other] criteria for the issuance of an Anton Piller order", namely the risk that the Appellants would suffer serious harm, possession of incriminating evidence and the risk that evidence would be destroyed. On these points, the Court held that the Judge should have considered the Respondent's history of satellite television signal piracy and sale of "jailbroken" set-top boxes. The Court also found that some aspects of the Respondent's untrustworthy character were relevant, including that he had previously been found guilty of lying to a police officer, and that he attempted to conceal crucial evidence and lied to the independent solicitors during the execution of the interim order. 

Finally, because of the clearly infringing nature of TVAddons and the lack of evidence on the Respondent's alleged lack of financial resources – which was partly due to the fact that the Respondent went through great lengths to conceal his identity and operated TVAddons through offshore businesses and bank accounts – the Court found that the Judge's findings were fatally flawed and that an interlocutory injunction should be issued.

Importantly, the Court also held that because online assets such as websites can easily be moved and reactivated elsewhere, it was justified for the Appellants to seek, obtain and execute an interim injunction that authorised computer technicians to completely shut down the TVAddons websites, servers and social media, and to transfer them to the custody of bailiffs.

Conclusion

This decision confirms that the Federal Court is ready to issue extraordinary remedies to curb the effects of media piracy and that these remedies are flexible and can include website shutdowns and transfers when necessary.

The Federal Court acknowledges the harm that results from the dissemination of software that provides unauthorised access to infringing content and had already issued an interlocutory injunction against retailers of set-top boxes loaded with such software (see our June 7, 2016, IP Update). In its February 20, 2018, decision, the Federal Court of Appeal confirmed  that offering the same service through a website is also sanctionable because "the means through which access is provided to infringing content is different (one relied on hardware while the other relied on a website), but they both provided unauthorised access to copyrighted material without authorisation of the copyright owners" and, therefore, "there is no principled reason to distinguish one from the other."

Rights holders in the media industry who are victims of piracy should therefore consider enforcing their rights before the Federal Court, which demonstrates an understanding of the piracy ecosystem and which can issue effective remedies when the infringer can be identified and is located in Canada.

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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