Canada: Copyright And Piracy: The Immunity Of Website Operators?

The Federal Court of Appeal (the "FCA") recently rendered an important decision1 for the fight against copyright piracy, in which it ruled that a website knowingly facilitating the circumvention of legal means to watch television programs cannot benefit from the immunity afforded to neutral conduits under paragraph 2.4(1)(b) of the Copyright Act (the "Act"), even though it may be possible to circumvent such legal means through other legitimate sites like Google. 

The FCA also reviewed the application criteria for interlocutory injunctions and Anton Piller orders seeking, as in this case, to close down such sites and obtain incriminating evidence against their directing minds and other persons involved.

The facts

The appellants alleged that the respondent was infringing their copyrights by communicating and making available to the public the television programs they broadcast, through the website he operated, called TVAddons, which the appellants characterized as a platform for copyright piracy. The respondent's website was a repository of "add-ons", a type of software that can be used to supplement other applications with additional functions or features. Several add-ons promoted on the respondent's website allow users to illegally access content protected by copyright. TVAddons also offered "Indigo", a tool that facilitates and automates the installation of add-ons, as well as the "Free Telly" application, which is a customized version of KODI preconfigured with a selection of principally infringing add-ons. 

On June 9, 2017, following ex parte and in camera motions, Justice LeBlanc of the Federal Court issued an interim injunction enjoining the respondent from communicating or making available to the public the appellants' programs, or inducing or authorizing anyone to infringe the appellants' rights, and ordering him to provide a computer forensics expert with his login credentials for the domains and sub-domains that hosted the TVAddons website, and for various social media sites associated with it. 

The judge also issued an Anton Piller order allowing the appellants' lawyers to inspect the respondent's residence, make copies of documents pertaining to his website as well as its financial records, remove certain materials, make mirror images of certain digital devices, and question the respondent regarding the location of information and the names of third parties involved in the development of the TVAddons website, the Free Telly" and "Indigo" tools and similar software applications, the whole under the supervision of an independent supervising counsel.

The contested decision

On June 29, 2017, after hearing a motion for a de novo assessment of the Anton Piller order and for the conversion of the interim injunction into an interlocutory injunction, Justice Bell of the Federal Court vacated the Anton Piller order and dismissed the motion for an interlocutory injunction. 

Justice Bell concluded on the basis of the prima facie evidence that the respondent's activities fell under the defence to copyright infringement set out in paragraph 2.4(1)(b) of the Act. That provision affords protection to intermediaries who participate in the retransmission of copyrighted content solely as content neutral conduits, such as Internet service providers. Since the infringing content to which TVAddons gave access could also be found through a Google search, Justice Bell accepted the respondent's argument that the add-ons hosted by his website can be assimilated to "mini Google" and thus to a neutral conduit. 

In regard to the interim injunction, Justice Bell found that while the appellants' might suffer irreparable harm were the injunction not issued, the balance of convenience favoured the respondent, as he had an arguable case and TVAddons was his only source of income.

The decision of the FCA

On February 28, 2018, the FCA concluded that Justice Bell had erred in vacating the Anton Piller order and dismissing the motion for an interlocutory injunction, and it overturned his decision. According to the FCA, while Justice Bell correctly identified the application criteria for Anton Piller orders and interlocutory injunctions, he made palpable and overriding errors in construing the facts, and misapprehended the case law as well as paragraph 2.4(1)(b) of the Act. 

The Anton Piller order

With regards to the application criteria for Anton Piller orders2, the FCA found that Justice Bell erred in concluding that the appellants had not established a strong prima facie case of copyright infringement:

While Google is an indiscriminate search engine that returns results based on relevance, as determined by an algorithm, infringing add-ons target predetermined infringing content in a manner that is user-friendly and reliable. [...] the respondent, by hosting and distributing infringing add-ons, is making the appellants' programs and stations available to the public by telecommunication in a way that allows users to access them from a place and at a time of their choosing, thereby infringing paragraph 2.4(1.1) and section 27 of the Copyright Act.3

As for the immunity provided under paragraph 2.4(1)(b) of the Act, the FCA canvassed the reasoning of the Supreme Court of Canada4 according to which a neutral intermediary that only provides software or hardware for accessing the Internet cannot be considered to be infringing copyright. However, the FCA noted that the available evidence showed that the respondent's website did much more than this, and was far from being neutral:

We have already seen that one of the categories into which the add-ons are organized on the website is called "Featured", within which most of the add-ons are infringing. This is akin to providing embedded links or automatically precipitating a path to copyrighted content.  [...] Nor can the respondent claim that he had no knowledge of the infringing content of the add-ons hosted on his website. The description of the infringing add-ons explicitly states that they are developed and/or supported by TVAddons. The respondent cannot credibly assert that his participation is content neutral and that he was not negligent in failing to investigate, since at a minimum he selects and organizes the add-ons that find their way onto his website.5

Consequently, the FCA took the view that had Justice Bell not committed the above-mentioned errors, "he would have had no choice but to find that the appellants met all the criteria for the issuance of an Anton Piller order", as the respondent did not seriously contest the fact that the appellants had suffered serious harm as a result of his activities, and the evidence clearly showed "that the respondent had compromising evidence in his possession" and "that there was a real risk that the respondent would destroy evidence before the discovery process".6 

The interlocutory injunction

In regard to the application criteria for interlocutory injunctions7, the FCA essentially concluded that to the extent the respondent did not have a defence under paragraph 2.4(1)(b) of the Act, he did not have an arguable case that he was not in contravention of section 27 of the Act. Consequently, the appellants would necessarily suffer irreparable harm if the injunction was not issued. 

Regarding the respondent's financial means, the FCA noted that he had gone to great lengths to conceal his identity on the Internet and had used offshore bank accounts and business entities. In addition, it was practically impossible to trace the ultimate beneficiaries of the donations that users were invited to make on his website. Given those circumstances, it was extremely difficult to gauge his true financial means. Even if the respondent were to be taken on his word, that would not be sufficient, as otherwise an interlocutory injunction could only be granted where the respondent has the financial means to weather it, effectively creating a two-tiered justice system.

Comments

This is a reassuring decision in a world where copyright piracy is a growing problem. In January 2018, FairPlay Canada ("FPC"), a coalition of more than 25 organizations involved in every aspect of Canada's film, TV, radio, sports entertainment and music industries, asked for the creation of an "Independent Piracy Review Agency" whose mission would be to identify websites blatantly engaged in online piracy. According to FPC, the CRTC could then require Internet service providers to block access to such sites in Canada, under the supervision of the Federal Court of Appeal. While some see this proposal as a way to modernize anti-piracy tools, others are of the view that such measures would go too far, and threaten net neutrality. FPC counters that the concept of net neutrality implies the free circulation of legal content, and cannot be invoked to defend illegal websites. Critics of FPC's initiative also point out that a website can be reactivated in another form and with a new Internet address. In that regard, existing tools – like injunctions and Anton Piller orders – continue to be relevant. As the TVAddons example shows, such tools are effective to compel the complete deactivation of an illegal website operated in Canada, and for the implementation of measures that significantly reduce the possibility of it being reactivated elsewhere.

Footnotes

Bell Canada v. Lackman, 2018 FCA 42 ("Lackman")

2 Established by the Supreme Court of Canada in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36 and British Columbia (Attorney General) v. Malik, 2011 SCC 18.

3 Lackman, paras. 20 to 22

4 See Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45.

5 Lackman, paras. 29 to 33

6 Lackman, para. 38

7 Set out in Manitoba (A.G.) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110, and RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311.

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