Canada’s new copyright notice-and-notice system has been in place for less than a week, but rights holders are already exploiting a loophole to send demands for payment citing false legal information. Earlier this week, a Canadian ISP forwarded to me a sample notice it received from Rightscorp on behalf of BMG Rights Management. The notice, which is posted below with identifying information removed, must be forwarded to the subscriber or the ISP faces the possibility of statutory damages of between $5 – 10,000. Rightscorp announced that it was entering the Canadian market last year, so its participation in the notice-and-notice system is not a surprise. What is surprising is that the company has brought its model of issuing demands for payments to Canada by warning of U.S. damage awards and Internet termination in order to stoke fear among Canadians that they could face massive liability if they refuse to pay.

The notice falsely warns that the recipient could be liable for up to $150,000 per infringement when the reality is that Canadian law caps liability for non-commercial infringement at $5,000 for all infringements. The notice also warns that the user’s Internet service could be suspended, yet there is no such provision under Canadian law. Moreover, given the existence of the private copying system (which features levies on blank media such as CDs), some experts argue that certain personal music downloads may qualify as private copying and therefore be legal in Canada (Howard Knopf explains the applicability when the music is copied to “audio recording medium”).

In addition to misstating Canadian law, the notice is instructive for what it does not say. While a recipient might fear a lawsuit with huge liability, there is very little likelihood of a lawsuit given that Rightscorp and BMG do not have the personal information of the subscriber. To obtain that information, they would need a court order, which can be a very expensive proposition. Moreover, this is merely an allegation that would need to be proven in court (assuming the rights holder is able to obtain a court order for the subscriber information).

The full notice states:

Subject: Unauthorized Use of Copyrights RE:

Date: Fri, 2 Jan 2015 00:00:00 -0600 (CST)

From: DMCA@DigitalRightsCorp.com

To: abuse@isp.com



**NOTE TO ISP: PLEASE FORWARD THE ENTIRE NOTICE***



Re: Unauthorized Use of Copyrights Owned Exclusively by BMG Rights Management (US) LLC



Reference#:



Dear Sir or Madam:



Your ISP has forwarded you this notice.

Your ISP account has been used to download, upload or offer for upload copyrighted content in a manner that infringes on the rights of the copyright owner.

Your ISP service could be suspended if this matter is not resolved.

You could be liable for up to $150,000 per infringement in civil penalties.



The file BMG Artist – BMG Song.mp3 was infringed upon by a computer at IP Address 192.—.—.— on 2015-01-02 00:00:00.0 GMT.



We represent the copyright owner.

This notice is an offer of settlement.

If you follow the link below and login to the Rightscorp, Inc. automated settlement system, for $20 per infringement, you will receive a legal release from the copyright owner.



Follow this link or copy and paste into your browser:

https://secure.digitalrightscorp.com/settle/



Rightscorp, Inc. represents the following ‘copyright owner(s)’ BMG Rights Management (US) LLC (‘BMG’). BMG is the exclusive owners of copyrights for BMG Artist musical

compositions, including the musical compositions listed below. It has come to our attention that ISP Internet Services Provider is the service provider for the IP address listed below, from which unauthorized copying and distribution (downloading, uploading, file serving, file ‘swapping’ or other similar activities) of BMG’s exclusive copyrights listed below is taking place.



This unauthorized copying and/or distribution constitutes copyright infringement under the U.S. Copyright Act. Pursuant to 17 U.S.C. 512(c), this letter serves as actual notice of infringement. We hereby demand you immediately and permanently cease and desist the unauthorized copying and/or distribution (including, but not limited to downloading, uploading, file sharing, file ‘swapping’ or other similar activities) of recordings of BMG Artist compositions, including but not limited to those items listed in this correspondence.



BMG will pursue every available remedy including injunctions and recovery of attorney’s fees, costs and any and all other damages which are incurred by BMG as a result of any action that is commenced against you. Nothing contained or omitted from this letter is, or shall be deemed to be either a full statement of the facts or applicable law, an admission of any fact, or a waiver or limitation of any of BMG’s rights or remedies, all of which are specifically retained and reserved. The information in this notification is accurate.



We have a good faith belief that use of the material in the manner complained of herein is not authorized by the copyright owner, its agent, or by operation of law. I swear, under penalty of perjury, that I am authorized to act on behalf of the owner of the exclusive rights that have been infringed. While BMG is entitled to monetary damages from the infringing party under 17 U.S.C. Section 504, The BMG believes that it may be expeditious to settle this matter without the need of costly and time-consuming litigation.



In order to help you avoid further legal action from BMG, we have been authorized to offer a settlement solution that we believe is reasonable for everyone. To access this settlement offer, please copy and paste the URL below into a browser and follow the instructions for the settlement offer:



https://secure.digitalrightscorp.com/settle/



Very truly yours,



Christopher Sabec

CEO

Rightscorp, Inc.

3100 Donald Douglas Loop, North,

Santa Monica, CA 90405

Telephone: (310) 751-7510



** For any correspondence regarding this case, please send your emails to DMCA@DigitalRightsCorp.com and refer to Notice ID:



If you need immediate assistance or if you have general questions please call the number listed above.



Infringement Source: Torrent

Timestamp: 2015-01-02 00:00:00.0 GMT

Infringers IP Address: 192.—.—.—-

Infringers Port: 12345

Listing of infringement(s) (Title/Filename/Timestamp/Hash): BMG Artist

BMG Song | BMG Artist – BMG Song.mp3 | 2015-01-02 00:00:00.0 | SHA1 |

In a nutshell, Rightscorp and BMG are using the notice-and-notice system to require ISPs to send threats and misstatements of Canadian law in an effort to extract payments based on unproven infringement allegations. Many Canadians may be frightened into a settlement payment since they will be unaware that some of the legal information in the notice is inaccurate and that Rightscorp and BMG do not know who they are.

The government could have avoided this misuse of the system had it issued regulations specifying the precise content of the notices. Despite months of discussions on the regulations, Industry Minister James Moore abandoned the process, implementing the system with no additional information requirements and no sanctions for the inclusion of false or misleading information. The government’s backgrounder says that the law “sets clear rules on the content of these notices”, however, it does not restrict the ability for rights holders to include information that goes beyond the statutory minimum. Rightscorp and BMG are exploiting this loophole to send demands for payment accompanied by false information on Canadian law.

These actions necessitate two responses. First, Internet service providers should add their own information to the notices, advising their subscribers on the true state of Canadian law and reassuring them that they have not disclosed their personal information to the notice sender. The law does not prohibit ISPs from adding additional information within the forwarded notice and they should begin doing so immediately.

Second, the government should quickly implement regulations prohibiting the inclusion of settlement demands within the notices and creating penalties for those companies that send notices with false or misleading information. The Canadian government has frequently defended the notice-and-notice system as a balanced approach, but its fairness is being undermined with Canadians now facing the prospect of misleading settlement demands.