The federal court has released its much anticipated decision in Voltage Pictures v. Does, a case involving demands that TekSavvy, a leading independent ISP, disclose the identities of roughly 2,000 subscribers alleged to have downloaded movies without authorization. The case attracted significant attention for several reasons: it is the first major “copyright troll” case in Canada involving Internet downloading (the recording industry previously tried unsuccessfully to sue 29 alleged file sharers), the government sought to discourage these file sharing lawsuits against individuals by creating a $5,000 liability cap for non-commercial infringement, TekSavvy ensured that affected subscribers were made aware of the case and CIPPIC intervened to ensure the privacy issues were considered by the court. Copies of all the case documents can be found here.

The court set the tone for the decision by opening with the following quote from a U.S. copyright case:

“the rise of so-called ‘copyright trolls’ – plaintiffs who file multitudes of lawsuits solely to extort quick settlements – requires courts to ensure that the litigation process and their scarce resources are not being abused.”

The court was clearly sensitive to the copyright troll concern, noting that “given the issues in play the answers require a delicate balancing of privacy rights versus the rights of copyright holders. This is especially so in the context of modern day technology and users of the Internet.”

So how did the court strike the balance?

In short, by issuing a split decision. The court ruled that Voltage Pictures had met the legal standard for an order to disclose subscriber names and addresses, but it established a series of conditions and protections that extend far beyond previous cases. The conditions include court oversight of the “demand letter” that will be sent to subscribers, with a Case Management Judge assigned to review and approve its contents before being sent to any subscriber. Moreover, the letter must include a message in bold type that “no Court has yet made a determination that such subscriber has infringed or is liable in any way for payment of damages.”

The win for Voltage Pictures is the order to disclose the subscriber names and addresses. The court felt bound by the Federal Court of Appeal Sony BMG case, which established that a “bona fide” claim is the standard needed for a court order (CIPPIC had argued for a higher “prima facie” standard). The court found that Voltage met the bona fide standard based on its statement of claim.

While Voltage argued that should be the end of the issue and privacy issues should not be a concern, the court was extremely troubled by the prospect of copyright trolling. It stated:

“This [Voltage’s position] would be an acceptable position but for the spectre raised of the ‘copyright troll’ as it applies to these cases and the mischief that is created by compelling the TekSavvy’s of the world to reveal private information about their customers. There is also the very real spectre of flooding the Court with an enormous number of cases involving the subscribers many of whom have perfectly good defences to the alleged infringement. Finally, the damages against individual subscribers even on a generous consideration of the Copyright Act damage provisions may be miniscule compared to the cost, time and effort in pursuing a claim against the subscriber.“

Having cited the dangers of copyright trolling (and noted the limited damages available in these cases), the court canvassed the caselaw in the U.S. and the U.K. and identified principles that go beyond prior Canadian caselaw. First, where there is compelling evidence of “improper motive” of a plaintiff, the court might consider denying the motion entirely. Second, if such evidence is unavailable, there are numerous safeguards that can be established.

In this case, the court ruled that there is some evidence that Voltage has been engaged in litigation which may have an improper purposes, but not enough to deny the motion altogether. Instead, the court ordered release of the subscriber names and addresses with the following safeguards:

the case will be managed by a Case Management Judge

TekSavvy will only disclose subscriber name and address information

Voltage will pay all reasonable legal costs incurred by TekSavvy before the release of any information

the demand letter to subscribers will include a copy of the court order and “clearly state in bold type that no court has yet made a determination that such subscriber has infringed or is liable in any way for payment of damages”

the contents of the demand letter will be approved by the parties (including CIPPIC) and the Case Management Judge

any further cases brought against subscribers will also be case managed

the information released by TekSavvy will remain confidential, will not be disclosed to other parties, and will not be used for other purposes. The information will not be disclosed to the general public or the media.

The safeguards are significant, since they ensure the active involvement of the courts in the sending of demand letters and likely eliminate unwarranted scare tactics about potential liability. Moreover, given the cap on liability and the increased legal costs the court involvement will create, it calls into question whether copyright trolling litigation is economically viable in Canada. The federal court was clearly anxious to discourage such tactics and its safeguards certainly make such actions less likely.