IP Owners Level Up

[grimm]

Nintendo wasn’t expecting a major payout when it sued a small retailer for copyright infringement. What it expected was far more valuable — to redefine the law around media piracy.

EARLIER THIS YEAR, the International Intellectual Property Alliance (IIPA), which includes the largest US music and film industry groups, placed Canada on a watch list of 16 countries that are the top places of origin for internet piracy. That had to be disappointing for lawmakers in this country, especially since they adopted changes to the Copyright Act in 2012 that introduced new technological protection measures, or TPMs for short, that some are calling among the toughest anti-piracy laws in the world.

And yet, for years they remained largely untested. “In the five years after those amendments came in, it was amazing to me how quiet it was,” says Bruce Green, an IP lawyer at Oyen Wiggs Green & Mutala LLP in Vancouver.

That changed last fall when Nintendo of America Inc. filed an application in the Federal Court of Canada complaining that a Waterloo, Ont., retailer was selling devices to circumvent its technological protection measures. Nintendo claimed Go Cyber Shopping Ltd. was trafficking in game copiers that allowed people to play pirated Nintendo games on a Nintendo console, as well as so-called “mod chips,” which let users modify Nintendo consoles to also play other company’s games. The gaming giant asked for a declaration that the retailer had circumvented its TPMs and infringed on its copyrighted material. It asked for statutory damages and an injunction preventing the retailer from continuing to do so.

Less than two weeks after Canada was criticized in the IIPA report, Justice Colin Campbell released his ruling in Nintendo v. King (2017 FC 246), wherein he found the Ontario retailer guilty of selling illegal circumvention software and of copyright infringement.

It’s a decision that’s making legal experts stand up and take notice. Firing a shot across the bow at would-be pirates, the decision holds that proving actual infringement of copyright is not necessary for an award of statutory damages for TPM circumvention. It also takes the harshest possible view on calculating statutory damages, awarding Nintendo $12.76 million.

Many pirates are small-timers who operate online stores out of their basements. These people probably never think about the high cost of paying to defend themselves, nor the possibility of a court award taking away everything they have if they get caught — but they should, says Jennifer Davidson, an associate at Deeth Williams Wall LLP. “This was a warning.”

As a precedential decision, the reasons — written by Nintendo’s counsel at the court’s request — address some novel and important issues in Canadian copyright law including the scope of the anti-circumvention rules, what constitutes a technological protection measure, and the way damages will be calculated for wronged copyright owners.

While the decision answers several questions, it also raises a few. For instance, what can be considered “technology” in a TPM, and can we expect more instances in the realm of piracy and new technology in which the reasons are written by the applicant company itself? (Smart & Biggar, which acted for Nintendo, declined an interview request.)

By the time Nintendo was over, the message on TPMs couldn’t have been clearer: in a fast-changing digital universe, going forward, pirates using Canada as a base can expect the country’s courts to apply the new anti-piracy laws to the maximum.