Higher Stakes for Copyright Infringers

Article by Daphne Maravei, ©2006, Blake, Cassels & Graydon LLP

This article was originally published in Blakes Bulletin on Intellectual Property - May 2006

In Canadian Copyright Licensing Agency v. U-Compute, a significant amount of evidence leads to a finding of guilt on a criminal law standard — beyond a reasonable doubt — in regard to an illicit copying operation.

Students often look for ways to save a buck. One such way is to resort to purchasing illegally copied textbooks. U-Compute, a local copy and computer supply store in Montréal, provided that service: illegally copying textbooks and printing study guides "on-demand".

This case involved an action brought by The Canadian Copying Licensing Agency (Access Copyright). Access Copyright exercises and manages the rights of authors and publishers and collects royalties from a variety of organizations it licenses, which it then distributes to the authors and publishers concerned.

Access Copyright had a long history of problems with U-Compute and Riaz A. Lari (the directing mind of U-Compute). Access Copyright had been in and out of court with Lari for various violations of copyright since 2000. Two separate raids on the copyshop led the Federal Court to impose significant fines on U-Compute and Lari. On both occasions, however, Lari subsequently resumed his illicit copying operation.

Access Copyright brought this further proceeding for a finding of contempt for failure to obey numerous orders enjoining Lari from reproducing textbooks for which copyright holders had licensed Access Copyright. Access Copyright also sought relief because Lari and U-Compute refused to comply with an order requiring Lari to provide Access Copyright access to his premises for the purposes of enforcing the injunction orders, i.e., permitting Access Copyright to search for and remove works and inspect hard drives for infringing works.

In order to find that Lari was guilty of contempt of court for breaching the orders, Access Copyright had to prove either directly or by circumstantial evidence that, during the relevant periods, Lari continued to make and sell unauthorized copies of certain works.The only direct evidence implicating Lari was that he sold to an investigator one photocopied textbook that infringed the plaintiff’s copyright. A search of Lari’s office and his computer resulted in the production of a book list containing an inventory of thousands of books. However, Lari would not permit access to the basement premises to confirm the accuracy of that inventory list or to conduct other inspections to enforce the earlier court orders.

The Federal Court Rules, 1998 specify that "a finding of contempt shall be based on proof beyond a reasonable doubt". Access Copyright called seven witnesses. Mr. Lari did not testify and the defence called no witnesses.

The defence argued that the lack of direct evidence made it impossible to establish that Lari was guilty beyond a reasonable doubt. This required the Court to determine the extent to which circumstantial evidence can be used to establish guilt on the criminal law standard. The Court noted that the Supreme Court of Canada has consistently held that circumstantial evidence can lead to a finding of guilt beyond a reasonable doubt. The Court held that "circumstantial evidence is proof of subordinate facts from which a tribunal may reasonably draw the inference that the principal or material facts vital to the case have been established".

The evidence established, among other things, that:

• Lari and his company had extensive inventory lists of computer-scanned unauthorised works available for copy;

• execution of a previous Anton Piller order resulted in the seizure of thousands of copies of textbooks, many of which were titles from Access Copyright publishers;

• Lari’s employees were observed selling what appeared to be copied textbooks to students; and

• there was considerable traffic to and from Lari’s premises, consisting of students entering empty-handed and leaving with packaged bundles.

Applying the rationale of the Supreme Court of Canada, the Court found Lari guilty of contempt. The Court concluded that there was a "massive amount of circumstantial evidence that Lari was operating a high throughput copying enterprise targeting students studying at nearby Concordia University". For this reason, and because he prevented Access Copyright’s attempt to search his basement for copied works, the Court was convinced beyond any reasonable doubt that Lari had "substantially breached" the permanent injunction during the relevant periods.

While Lari did not testify, as was his right, he was given an opportunity to address the Court in respect of an appropriate penalty. Lari informed the Court that since the sale of one of his business premises after September 2004, he had not engaged in illegal copying. Lari also informed the Court that he was currently employed as a manager of an Indian restaurant, earning approximately CAD 500 a week, and is the sole income earner for his family. Mr. Lari apologized for his past behavior stating that his past conduct had been a grave error and that he regretted it.

In assessing the penalty for contempt, the Court summarized the relevant factors to be considered such as the seriousness of the contempt, deterrence of similar conduct, whether the contempt offence is a first offence, past conduct of the accused and the presence of any mitigating factors, for instance, an apology.

The Court was not impressed by Lari’s testimony and held that all of these factors weighed heavily against him. The Judge concluded that Lari failed to substantiate many of his statements, for instance relating to the value of his assets or the salary he was earning, and that on the whole he was not a credible witness. The lack of credibility of Lari’s testimony, the seriousness of the offence, and the need for general deterrence and special deterrence due to Lari’s past contempt, led the Court to impose a substantial penalty.

The Judge sentenced Lari to a suspended sentence of six months’ imprisonment and to pay the costs in the proceeding. Based on a solution proposed by Access Copyright, Lari’s incarceration would remain suspended so long as he (i) complied with the terms of the injunctions and (ii) performed 400 hours of community service within 13 months.

This case represents the Federal Court’s harshest sentence for contempt relating to the breach of court orders enjoining copyright infringement.

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