File sharing lawsuits involving the movie the Hurt Locker have been big news in the United States for months as tens of thousands of lawsuits have been filed against individuals alleged to have illegally downloaded the movie. The lawsuits have now made their way into Canada as the Federal Court of Canada has ordered the identification of subscribers at Bell Canada, Cogeco, and Videotron who face similar copyright infringement claims.

Late last month the court ordered the three ISPs to disclose the names and addresses of subscribers linked to IP addresses alleged to have copied the movie. The ISPs complied last week as lawyers for the Hurt Locker copyright owner moved to have their case treated as a “specially managed proceeding” that would put the case on a rocket docket.

My weekly technology law column (Toronto Star version, homepage version) argues the lawsuits hurt seemingly everyone.

The dozens of targeted Canadians will feel the greatest pain given the prospect of paying thousands of dollars in copyright damages, settlement fees, or legal costs for downloading a single movie. Canada is in the distinct minority of countries worldwide since it has statutory damages that allow a court to impose damages as high as $20,000 per infringement irrespective of the actual damages (most countries require evidence of the actual damages).

The targeted individuals will therefore face two unappealing options: settle the lawsuit for thousands of dollars (U.S. cases typically settle for approximately US$4000) or spend thousands in legal fees to fight the claim with the risk of a $20,000 damage award looming at the end. Even if a court awards far less (or the defendant wins), the legal costs will still likely be larger than simply settling the case.

The movie industry also comes out a loser in this case since file sharing lawsuits have done little to curb copyright infringement. Indeed, the experience in other jurisdictions demonstrates that offering reasonably priced, legal alternatives is a far better method of persuading the public to move from free to fee.

Moreover, the lawsuits now make the industry look untrustworthy given its earlier insistence that it had no plans to launch file sharing claims in Canada. At a House of Commons hearing earlier this year, NDP MP Charlie Angus specifically asked industry representatives about the prospect of Hurt Locker lawsuits migrating north. Their response: “We’re not interested in sweeping up the John Does.” Despite those assurances, months later dozens of Canadians have had their personal information disclosed and face thousands in liability.

The Internet providers look bad here as well. Bell Canada, Videotron, and Cogeco have acknowledged revealing their subscribers’ information, maintaining that they simply complied with a valid court order. Yet when the music industry launched similar lawsuits several years ago, providers such as Shaw and Telus raised concerns before the court could issue the order. In doing so, they ensured that the court considered the privacy implications of mandated disclosure and gave the individuals an opportunity to challenge the industry’s demands. In this instance, the three providers stood quietly on the sidelines, leaving their subscribers without representation.

Finally, the government now finds itself in a bind. Already facing Wikileaks disclosures that demonstrate U.S. influence over its copyright bill, it must now also address public concern that current Canadian law could lead to thousands of similar lawsuits.

Bill C-32 tried to address the issue by creating a $5,000 cap on liability for non-commercial infringement, yet the Hurt Locker case suggests that does not go far enough. A better approach would be to eliminate statutory damages in non-commercial cases altogether. That change, which would bring Canada into line with most of its trading partners, would allow for full $20,000 per infringement liability for commercial infringement, while requiring claimants to offer evidence of actual damages in non-commercial cases.