Federal Court awards $29M in statutory damages for copyright infringement in media case

The Federal Court has found in favour of a group of media broadcasters -- including Bell Canada, Videotron, TVA Group and Rogers Communications Canada -- in ordering a group of retailers to stop distributing and selling set-top boxes that allow unauthorized or illegal access to Canadian television content. The court also ordered the retailers to pay $29.3 million in damages.

In Bell Canada v. L3D Distributing Inc., Federal Court Justice Janet Fuhrer found the defendants had infringed the plaintiffs’ statutory rights under the Copyright Act. This included the right to communicate a work to the public by telecommunication, and the making available right, as well as authorizing such acts without consent.

She also found that the defendants – L3D Distributing Inc., Morcor Computers 2000 Ltd., Ottawa Tek Corp., and Raheel Rafiq – “knowingly induced” copyright infringement.

“The area of this decision that is garnering a fair amount of discussion is the order of the court relating to inducement,” says Panagiota Dafniotis, an intellectual property partner in Dentons Canada LLP’s Montreal office.

“While liability for inducing or procuring another person to infringe a patent is recognized in Canada under a three-part test, we have not really seen this application of inducement in copyright law in Canada,” she adds.

Background

In her overview of the case, Justice Fuhrer noted that “The advent of pre-loaded set-top boxes and internet protocol television (or IPTV) services has facilitated unauthorized access by Canadian users to content, including the Plaintiffs’ content, such as live television broadcasts, on-demand television programming, and live sporting events.”

In this case, the plaintiffs’ investigations discovered that through the sale of the pre-loaded set-top boxes and unauthorized IPTV service, the defendant INL3D previously provided access to a selection of the plaintiffs’ programs representing at least 386 individual works. Other defendants likewise were found to have advertised and offered for sale pre-loaded set-top boxes, including (for one defendant) at least 1,408 individual works that were plaintiffs’ programs.

The plaintiffs also pointed to a decline in subscriptions to television services in Canada between 2015 and 2018 of about 518,000 -- an average rate of decline of about 1.14 per cent. Specialty and pay television services saw average percentage declines of about double that amount, they reported.

The defendants did not defend the action in court.

Inducement

In addition to the statutory causes of action available under the Copyright Act, the Federal Court also found the defendants guilty of inducement.

“I am satisfied that the common law cause of inducement also is available to [the plaintiffs] in the circumstances and further, that the Respondent Defendants knowingly induced infringement of the Media Plaintiffs’ copyright in the Plaintiffs’ Programs by offering for sale and selling pre-loaded set-top boxes that facilitate the infringement by the users and the streaming sites,” wrote Justice Fuhrer her reasons.

“Inducement occurs when someone does something that leads another person to infringe an intellectual property right,” she explained.

The three-part test for inducement is:

1. the act of infringement was completed by a direct infringer;
2. completion of the act of infringement was influenced by the acts of the inducer, without which influence the infringement otherwise would not have taken place; and
3. the inducer seller knowingly exercised the influenced; that is, the seller knew their influence would result in the completion of the act of infringement.

As well, “the pre-loaded set-top boxes offered for sale and sold by the Respondent Defendants provide the means to enable substantial infringement by providing a user-friendly interface and curated sets of preinstalled applications that facilitate or encourage users to request and receive streams of infringing content,” Justice Fuhrer found.

“In other words, the infringement was influenced by, and otherwise would not have taken place without, the actions of the Respondent Defendants.”

The decision is “quite a significant development to see this application of inducement in a copyright case, and it will be interesting to see how it will impact IP liability and risk discussions in Canada moving forward,” says Dafniotis.