Nobody gets sued for illegally downloading movies, right? — Think again, Canada

[Len]

And the writs could really fly once the top court rules on who pays to identify the pirates

People tend to ignore warnings from their internet service providers that they face imminent legal action for illegally distributing a movie. They’re skeptical a copyright holder would actually follow through and sue them for merely downloading a film, something millions of people do every day.

But these threats are no longer empty. Movie rights holders over the past year and a half have launched at least 17 copyright infringement lawsuits naming a total of more than 1,000 Canadians, and, in some cases, have won damages hundreds of times higher than the cost of renting or buying an online movie or streaming it legally on Netflix.

The federal court has ordered at least a dozen people to pay statutory damages of $5,000 apiece to rights holders including Headhunter LLC and LHF Productions LLC, respective owners of movies A Family Man and London Has Fallen.

Even more have paid undisclosed settlements in “John Doe” lawsuits, where one lawsuit is filed against an unlimited number of “Does” who allegedly infringed copyright.

Intellectual property lawyers and telecom companies say the volume and type of activity is unprecedented in Canada. But they expect even more consumers to get caught up — whether they intentionally distributed a movie or their internet account was unwittingly used to do so — depending on a forthcoming Supreme Court of Canada decision on who pays the cost of chasing content pirates.

The top court is poised to rule on a dispute between movie production company Voltage Pictures LLC and Rogers Communications Inc. over who should foot the bill for identifying customers who allegedly infringe copyrights, a process Rogers said costs about $100 per hour.

Voltage, the studio behind films such as The Hurt Locker and Dallas Buyers Club, has ties to all 17 of the movies involved in the copyright lawsuits cited above. Toronto law firm Aird & Berlis LLP represents all the plaintiffs in those lawsuits.

If the Supreme Court sides with Rogers — a verdict is expected by year-end — it could become prohibitively expensive to sue thousands of people simultaneously. But if Voltage wins, lawyers expect even more legal action.

“This could be the tip of the iceberg,” said Toronto-based intellectual property lawyer Graham Honsa, who noticed a “torrent of claims” earlier this year.

“The lower the cost for the plaintiff up front, the easier for them to increase the number of defendants. That can make the difference between naming a lot of defendants and a few.”

But though it is economically efficient for a plaintiff to sue all the Does at once, each individual could have vastly different circumstances that the court may have to weigh separately, said James Plotkin, an associate at Caza Saikaley, who has represented a few Does accused of infringing copyright.

“This is all really untested in court. It’s pretty novel,” he said.

But even though each lawsuit is separate, legal action typically unfolds in a similar way, Aird & Berlis lawyer Ken Clark said.

First, his clients use software called Maverickeye to identify infringing activity on BitTorrent, a peer-to-peer sharing service where files are automatically distributed as soon as a user starts to download them. It reveals the internet protocol (IP) address used at the time of the alleged infringement.

The client then files a statement of claim against “Doe #1 et al.” — a type of lawsuit where the plaintiff doesn’t know the identity of the defendants. It can add additional Does at any time.

Next, it notifies the internet service provider (ISP) of the violation. Under Canada’s “notice-and-notice” copyright system, the ISP must send notices to users accused of infringement.

The first notice states an account has been detected giving away a movie and gives the user a week to stop. The second notice, sent only if the activity continues, states the copyright holder reserves the right to take legal action.

Clark said he has sent nearly 300,000 such notices since early 2017.

“You’ve got massive infringement,” he said.

Some account holders may not be responsible for the infringement — perhaps a teen downloaded a movie unbeknownst to their parents or a neighbour illegally used an open Wi-Fi network — and others may not understand that BitTorrent automatically distributes downloaded files.

But Clark argued neither scenario matters from a legal standpoint.

“If we send you a notice telling you that your internet account is being used illegally and you do nothing to stop it from being used illegally, then you become primarily liable,” he said. “Ignorance is no excuse.”

The client then files a statement of claim against “Doe #1 et al.” — a type of lawsuit where the plaintiff doesn’t know the identity of the defendants. It can add additional Does at any time.

His clients, however, need to identify suspected infringers in order to actually sue them. To do so, they apply to the court for Norwich orders, which compel ISPs to disclose the name and address associated with an IP address.

Canadian courts have ordered ISPs to hand over this information in a series of decisions since 2011. The ISPs have complied, but argue they shouldn’t have to hand the information over for free given the labour involved.

In July 2016, the federal court ruled Rogers should be able to recoup its costs for finding the information, which takes a qualified person about 30 minutes at a cost of $100 per hour. Most internet accounts have changing IP addresses, so finding a particular user is not necessarily a simple process.

But the Federal Court of Appeal overturned that decision in May 2017, ruling that Voltage shouldn’t have to pay. Rogers has appealed that decision to the Supreme Court of Canada. Meantime, movie rights holders have started identifying the Does and taking them to court.

The $100 disclosure fee seems small, but the cost quickly adds up considering the 17 lawsuits so far have named at least 1,300 defendants. Rogers alone has seen the number of Norwich orders related to alleged copyright infringement rise to 274 in 2016 from 13 in 2015 and zero in 2014, according to court documents.

Then there’s the cost for the Does themselves, since intellectual property proceedings are designed for sophisticated parties, IP lawyer Honsa said.

“Now you have these cases where there are hundreds of defendants who really don’t know anything about the process,” he said.

Since maximum damages for non-commercial copyright infringement are relatively low at $5,000, Honsa said people accused of infringement have to decide whether it’s worth the money to hire a lawyer to fight the charges or to settle out of court.

“It’s difficult to do the math if it’s worth fighting one of these,” he said.

Tamir Israel, a lawyer at the Canadian Internet Policy and Public Interest Clinic, said the structure of these lawsuits encourages people accused of copyright infringement to simply pay up.

CIPPIC, which intervened in some of the Voltage cases, has noticed smaller movie studios around the world using lawsuits — or the threat of them — as a way to make more money from their films rather than actually deter people from pirating content.

“The idea of copyright damages is really to deter copyright infringement,” Israel said. “That doesn’t seem to be what’s happening. It seems geared more towards an ongoing compensation mechanism and less towards this deterrence.”

Voltage has previously used a similar tactic in the United States District Court of Oregon, but it didn’t work. The court acknowledged that the ease of sharing movies online has a negative effect on the paid content market, but it refused to allow Voltage to lump all the Does together.

“Even though it makes a good deal of sense to start these cases initially by joining all Does so that the process of discovering them can be economized, it has now become apparent that plaintiffs’ counsel seeks to abuse the process and use scare tactics and paint all Doe users, regardless of degree of culpability in the same light,” United States District Judge Ann Aiken wrote in 2013.

Nevertheless, Clark said legal action is necessary to stop infringements since people don’t pay attention to the notices.

“This notice-and-notice system isn’t solving anything. That’s why we’ve had to go to the step to actually sue people,” he said, adding they grant confidentiality as much as possible to try to treat people fairly.

“People have to understand that there’s no such thing as a free lunch.”

Indeed, defendants named in these lawsuits can expect to take on the cost of slogging through federal court, whether they hire a lawyer to fight the charges or settle. If a person doesn’t respond, courts tend to award higher damages to the plaintiff.

“Take it very seriously when you get a statement of claim,” Honsa said. “Until a few years ago, it was sort of common knowledge you could just ignore these and they would go away. Now we’re seeing that might not be so true anymore.”