Canada: Federal Court Of Canada Determines ISPS' Reasonable Costs Of Compliance With Norwich Orders

Last Updated: September 10 2019
Article by Jayde Wood

Due to a perceived cloak of anonymity on the Internet, Internet users may consider their activities online to be anonymous. This sense of anonymity is erroneous as copyright holders can seek Norwich orders, a form of pre-trial discovery, to compel Internet Service Providers ("ISPs") to disclose identifying information about the alleged intellectual property infringers so that lawsuits can be brought against them. ISPs are entitled to be paid reasonable costs to comply with Norwich orders. In a recent decision, the Federal Court of Canada assessed what reasonable costs are.

In 2016, the Federal Court granted a group of film production companies ("Voltage") a Norwich order compelling Rogers Communications Inc. ("Rogers") to disclose the name and address of one of its Internet subscribers who was alleged to have infringed Voltage's copyright: 2016 FC 881. This Internet subscriber, then identified as John Doe and now the defendant Robert Salna, is the proposed representative respondent in a "reverse" class action lawsuit being brought by Voltage against about 55,000 other unidentified Internet subscribers. Voltage alleged these subscribers infringed copyright in motion pictures owned by Voltage or its related companies through unauthorized file sharing over the Internet.

The Federal Court allowed Rogers to charge Voltage $100 per hour (plus HST) for assembling, verifying, and forwarding the Internet subscriber information. The Federal Court of Appeal allowed Voltage's appeal and held that Rogers was not entitled to charge a fee for discharging its statutory obligations under the notice-and-notice regime set out in the Copyright Act but could recover reasonable costs for complying with the Norwich order: 2017 FCA 97.

The Supreme Court of Canada allowed Rogers' appeal. The Supreme Court of Canada agreed with the Federal Court of Appeal that Rogers was not entitled to charge a fee for discharging its statutory obligations and found that the requirement under the Norwich order for Rogers to provide information identifying a particular customer falls outside the scope of Rogers' statutory obligations: 2018 SCC 38. The Supreme Court of Canada sent the case back to the Federal Court to assess Rogers' reasonable costs to comply with the Norwich order. On August 6, the Federal Court released its decision assessing what costs are reasonable.

How much time in responding to the Norwich order is reasonable?

To comply with the Norwich order, Rogers is required to verify which Rogers' Internet subscriber the IP address belonged to in five different instances, i.e. "at five time stamps".

Rogers' evidence shows that to look up ten IP addresses and their associated subscriber information at two time stamps, Rogers follows six steps and spends about 247 minutes to:

  1. review the court order and identify the relevant Rogers IP addresses (33 minutes);
  2. log the request to permit it to be tracked through the workflow process, and also to ensure that the screenshots and information generated and saved during the search can be found in the future if needed (14 minutes);
  3. search IP address logs in the Dynamic Host Configuration Protocol [DHCP] database to find an alphanumeric identifier [MAC address] of the cable modem that was linked to that IP address at the relevant date and time (31 minutes);
  4. use the MAC address to search a separate Rogers database, Super System Graphic Interface [SGI], to find the customer associated with the cable modem at the relevant time (97 minutes);
  5. compile all of the information into an Excel file (26 minutes); and
  6. have an investigator review the information collected by the security analysts as a quality assurance measure, check the information against a "duplicate modem list", and finalize the Excel file containing the required information (46 minutes)(at paragraph [35]).

The Federal Court noted that under the notice-and-notice regime, Rogers has the following statutory obligations under subsection 41.26 of the Copyright Act:

(1) determining, for the purposes of forwarding notice electronically, who was assigned the IP address at the time of the alleged infringement; (2) taking all steps necessary to verify the ISP has done so accurately; and (3) taking all steps necessary to verify the accuracy of records to permit the ISP to identify the name and physical address of the person to whom notice was forwarded (at paragraph [52]).

The Federal Court found that some of the six steps that Rogers took to comply with the Norwich order overlap with Rogers' statutory obligations. Such overlapping steps are not compensable because they are not directly related to the Norwich order.

The Court found that only the following steps are compensable and Rogers is entitled to recover a total of 23.05 minutes per time stamp (or a total of 23.05 minutes x 5 = 115.25 minutes for five time stamps to identify one subscriber):

  1. reviewing the order and identifying the relevant Rogers IP addresses; this step takes 1.65 minutes per time stamp;
  2. logging the request to permit it to be tracked through the workflow process, and also to ensure that the screenshots and information generated and saved during the search can be found in the future if needed; this step takes 0.7 minutes per time stamp;
  3. linking between the cable modem and the customer name and current address on file in Rogers' billing system; this takes 19.4 minutes per time stamp; and
  4. compiling all of the information into an Excel file; this step takes 1.3 minutes per time stamp(at paragraph [64]).

What hourly fee is reasonable?

The Federal Court undertook a detailed analysis and calculation based on employee costs and found that a reasonable hourly fee for Rogers' compliance with the Norwich order is $35 pertaining to the wages paid to an employee at the Lawful Access Response Department at Rogers: at paragraph [86].

The Federal Court concluded that Rogers' reasonable costs to comply with the Norwich order are about $67.23 (plus HST) for searching and disclosing one single subscriber's name and address information ($35 x 115.25 minutes/60 minutes = $67.23).

Concluding Remarks

As copyright owners increasingly seek Norwich orders to peek under the perceived cloak of Internet anonymity, ISPs play an important function in policing IP infringement, albeit as an intermediary that holds relevant information rather than as a directly involved party.

The costs charged by ISPs to respond to a Norwich order are not uniform: at paragraphs [78]-[79]. For example, Bell spends about 20-45 minutes per IP address and charges $50. Shaw spends between 30 minutes and several hours per IP address and charges $250 per hour. This decision may have important ramifications for such fees charged by ISPs as it sets out the relevant factors to consider in assessing what costs are reasonable and may in future lead to more uniform costs charged by ISPs for taking these steps. Lower costs to obtain the identity of allegedly infringing subscribers may encourage more copyright holders to pursue legal action directly against such subscribers.

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