Hollywood Is Setting Up a Legal ‘Machine’ to Sue Pirates In Canada

A groundbreaking lawsuit is underway in Canada that will test key elements of the country’s copyright regime. If successful, it would set up what one prominent intellectual property lawyer called a legal “machine” for cheaply and easily getting cash settlements from scores of people who illegally download movies online.

“This case is a game changer,” said David Fewer, director of the Canadian Internet Policy and Public Interest Clinic (CIPPIC) at the University of Ottawa. It’s the first lawsuit of its kind in Canada, he said. Every Canadian internet user should be paying attention, especially if they’ve illegally downloaded a movie before.

The novel case is being brought by Voltage Pictures, the American production company behind Oscar-winning films like Dallas Buyers Club and The Hurt Locker. Voltage has brought lawsuits against pirates in Canada before, but its last litigation attempt in 2012 was withdrawn. Now, the company is after more than settlements from a few individuals who downloaded a movie once—much, much more.

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Voltage Pictures and its legal representation, Toronto-based firm Aird & Berlis LLP, are presently engaged in a “reverse” class action lawsuit. Normally, a class action lawsuit involves a large group of individuals (a “class”) suing a single entity. In a reverse class action suit, one company sues a class of people—in this case, people who illegally downloaded Voltage’s films. Reverse class action suits are rare, but not unheard of in Canada or the US. But, according to Fewer, Voltage’s case is the first having to do with intellectual property in Canada.

Voltage filed a request with the courts in 2016 to get Rogers (one of the “big three” telecom companies in Canada) to identify a single Canadian to be the representative defendant in the lawsuit. If legal liability is established for this one person, then the court will set fines for everybody else who pirated Voltage’s films. It’s not clear how many individuals will be swept up in the reverse class action, but a federal appeals court judge stated in May that Voltage had estimated “tens of thousands of suspected infringers.”

“What Voltage effectively wants to do is create a cheap little troll machine that churns out settlements cheaper than a federal court case, cheaper than any mechanism you can imagine,” Fewer said over the phone.

In an emailed statement, Ken Clark of Aird & Berlis said that the goal of the litigation is to “reduce legal expenses for everyone caught up in a copyright lawsuit—creators and infringers alike.” Clark said that if the litigation is successful, pirates in Canada will be paying settlements “in the order of magnitude of a speeding ticket.” The idea isn’t simply to extract settlements from people, Clark said, but to change their behaviour.

“We want people to pay for the movies that they watch, instead of feeling entitled to watch them for free,” Clark wrote.

But first, Voltage has to go through the courts to settle a few thorny legal questions. One key issue, which would lower the cost of suing a class of people from potentially millions of dollars to zilch, is proceeding to the Supreme Court of Canada. That hearing is tentatively scheduled for late April of 2018.

Historically in Canada, learning the identity of an alleged pirate isn’t cheap for copyright holders. Service providers in the past charged a fee to reveal a customer’s identity, and that cost would be multiplied by the number of defendants to be sued.

However, this changed in 2015, when Canada began employing a “notice-and-notice” system for copyright infringement. Under this regime, a copyright holder sends an ISP a notice of infringement, which the ISP passes on to the consumer. To get the alleged infringer’s identity, the copyright holder still has to file for a Norwich order with the courts, but notice-and-notice left the question of fees for Norwich orders up in the air since the federal government has not yet set any rates in legislation.

With notice-and-notice leaving fees an open question, Voltage Pictures and Aird & Berlis saw an opportunity to get people’s identities from service providers for free. “We are trying to take advantage of the new regime,” Clark wrote me in an email.

ISPs in Canada want the fee because, they argue, it takes more work to confirm someone’s identity with enough certainty to drag them into litigation. “Making a mistake with a notice? Not a big deal,” the CIPPIC’s Fewer said. “Making a mistake with a Norwich order? You can really fuck up somebody’s life.”

A federal appeals court agreed that Voltage should not pay Rogers fees for its Norwich order in May of this year, calling the fees “a multi-million dollar barrier between [Voltage] and the starting gate for their legal proceedings.” But Rogers is now fighting back against that ruling—all the way up to the Supreme Court.

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In its written submission to the Supreme Court of Canada, Rogers stated that the case “impacts all internet-using Canadians, including the vast majority who do not engage in copyright infringement.” The core of their argument is that the multi-million dollar cost of producing Norwich orders will be passed onto consumers.

If the Supreme Court rules that ISPs can’t charge fees to identify someone they already served a notice to, it will be a new dawn in Canada for copyright enforcement: The financial barrier for suing pirates will be significantly lowered.

And once that hurdle is cleared, Voltage will go for its real prize: a cheap mechanism for taking small settlements from scores of Canadians who downloaded a movie for free.

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