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Copyright - Infringment. Voltage Holdings, LLC v. Doe #1
In Voltage Holdings, LLC v. Doe #1 (Fed CA, 2023) the Federal Court of Appeal considered an appeal from a dismissed Federal Court default motion, here in a copyright infringement case. In these quotes the court extensively considers the law of 'authorizing' infringement:IV. The law of authorizing infringement
[21] The result of the appellant’s action depends on the legal parameters of copyright infringement and the evidentiary principles guiding what is required to satisfy a trier of fact that the circumstances before him or her constitute infringement. This motion adds a further dimension: whether adverse inferences can be drawn at this point in the litigation. Because of this, the Federal Court’s decision and the disposition of this appeal are more easily assessed when first framed by the state of the law on authorizing infringement.
[22] First, subsection 3(1) of the Act grants a copyright owner the exclusive right to produce (or reproduce), perform, or publish their work. It also grants a copyright owner the sole right to “authorize any such acts.” Accordingly, anyone who authorizes any of these expressions of the copyrighted work, absent a licence to do so, infringes the copyright owner’s exclusive authorization right (the Act, ss. 3(1) and 27(1)).
[23] Second, and relatedly, authorizing infringement requires that the authorizer hold themselves out as capable of granting one of the copyright owner’s exclusive rights (Barry Sookman, Steven Mason & Carys Craig, Copyright: Cases and Commentary on the Canadian and International Law, 2nd ed. (Toronto: Carswell, 2013) at 1001):To authorize an act, the alleged infringer must grant or purport to grant, either expressly or by implication, the right to do the act complained of. Further, the grantor must have some degree of actual or apparent right to control the actions of the grantee before he will be taken to have authorized the act. An act is not authorized by somebody who merely enables or possibly assists or even encourages another to do that act, but who does not purport to have any authority which he can grant to justify the doing of the act. [24] Third, in copyright law, to “authorize” means to “sanction, approve and countenance” (CCH at para. 38). Although “countenance” in this definition may initially appear to include some degree of passivity within the scope of “authorization”, the Supreme Court has confirmed that the term “countenance” here “must be understood in its strongest dictionary meaning, namely, ‘[g]ive approval to; sanction, permit; favour, encourage’” (CCH at para. 38).
[25] Fourth, there are certain objective factors that, on their own, do not amount to authorizing infringement. An individual who provides the means or equipment to infringe another’s copyright has not necessarily authorized the infringement, for example (ESA at para. 106; CCH at para. 38). Similarly, upon receiving a warning notice, an internet subscriber is not automatically assumed to have been responsible for the asserted copyright infringement; the mere association with an IP address is not conclusive of guilt (Rogers at para. 41).
[26] Fifth, the law of authorizing infringement relies in part on a subjective standard. The knowledge that someone might be using neutral technology for infringing activity is not necessarily sufficient to establish authorization, and courts presume that an individual who authorizes an activity does so only so far as it is in accordance with the law (SOCAN at para. 127; CCH at para. 38; Sookman at 1002). In some cases, however, a “sufficient degree of indifference” may allow a court to infer that the individual has indeed authorized the infringement (CCH at para. 38; SOCAN at para. 127).
[27] Sixth, in authorization analyses, courts have historically considered the relationship between the alleged authorizer and the person who infringes as a result of the authorization. A “certain relationship or degree of control” existing between these parties may rebut the presumption that a person who authorizes an activity has only authorized lawful forms of that activity (CCH at para. 38). Control over the means by which the infringement occurred may also warrant a finding of implicit authorization; additionally, authorization may be inferred where the supply of such means was “bound to lead to an infringement and was made specifically for that purpose” (Sookman at 1002). These factors suggest that the alleged authorizer played an active role in leading the other party to infringe the copyright owner’s exclusive rights under subsection 3(1) of the Act.
Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30, 471 D.L.R. (4th) 391
[28] My final preliminary observation, and to foreshadow my reasoning, is that the jurisprudence on authorization, particularly the Supreme Court’s decision in ESA, provides a clear answer against the appellant’s argument that the respondents have authorized infringement.
[29] “Authorization” is a statutory term of art, integral to the operation of the Act and the identification of copyright infringement. The scope of authorizing infringement has been considered by the courts in different contexts, from a library’s provision of self-service photocopiers to an ISP’s knowledge of infringing content on their facilities. However, the plain and ordinary meaning of the word “authorization” also evokes a different response—a simple grant of permission. The premise of the appellant’s argument relies on this plain and ordinary meaning of the word “authorization”, which leads it to assert that there are two groups of infringers in the present appeal: internet users who have directly infringed its copyright, and internet subscribers who enable, or authorize, the infringement. The argument before the Federal Court and the Federal Court’s reasons were framed on this understanding as well, which results in a conflation of these two concepts of “authorization” with respect to copyright infringement.
[30] The decision of the Supreme Court in ESA—rendered six weeks after the release of the decision under appeal—illustrates this conflation. ESA is clear that authorization, in the context of online copyright infringement, is directed to and only possible in respect of those who make the copyrighted material available for downloading. While the appellant’s argument takes a two-track approach to establish infringement, either direct or authorizing, the law with respect to authorization requires that its position distill to only a single argument of infringement; the appellant’s arguments with respect to authorizing infringement are, in essence, evidentiary arguments in support of its claim of direct infringement. As I will explain, the appellant’s theory of what I will characterize as “third party authorization”—which involves a subscriber’s consent to sharing access to their internet account, and indifference to the purposes for which it is used—does not fit into the law of copyright as it is currently understood.
[31] The Supreme Court in ESA reiterated that, pursuant to subsection 3(1) of the Act, authors have only three copyright interests in their works: the right to produce or reproduce a work in any material form; the right to perform a work in public; and the right to publish an unpublished work (ESA at para. 54). An activity that engages one of the three copyright interests under subsection 3(1) is an infringement of copyright, pursuant to subsection 27(1) of the Act, since the activity would be something that only the owner of the copyright has the exclusive right to do (ESA at para. 104). On the other hand, an activity that does not engage one of the three copyright interests under subsection 3(1), or the author’s moral rights, “is not a protected or compensable activity under the [Act]” (ESA at para. 57). This distinction confirms that non-infringing activities end, and infringing activities begin, upon the triggering of a copyright interest in subsection 3(1).
[32] The Supreme Court then linked various infringing activities to the specific copyright interest triggered by each infringement, by examining what that activity does to the copyrighted work (ESA at para. 56). As Rowe J. explained, if a work is streamed or made available for on-demand streaming, the author’s performance right is engaged; if the work is downloaded, the author’s reproduction right is engaged; and, importantly, “if the work is made available for downloading, the author’s right to authorize reproductions is engaged” (ESA at paras. 8, 103, 106-108).
[33] The Supreme Court endorsed the Copyright Board’s determination that “it is the act of posting [the work] that constitutes authorization”, because the person who makes the work available “either controls or purports to control the right to communicate it”, and “invites anyone with Internet access to have the work communicated to them” (ESA at para. 106). The authorizer is the individual directly engaging with the copyrighted material. This close relationship between the authorizer and the copyrighted material is emphasized and repeated throughout the Supreme Court’s reasons (ESA at paras. 8, 103, 106-108).
[34] There is no question, based on ESA, that the person using the respondents’ internet accounts to make the Work available for download via BitTorrent is authorizing infringement. This situation is the precise example of authorizing infringement described throughout ESA (ESA at paras. 8, 103, 106-108). However, the appellant’s claim of authorizing infringement does not mirror this example. ESA says that an authorizer permits reproduction; the appellant says that an authorizer is someone who permits someone to permit reproduction. And, as Rowe J. observes, subsection 3(1) of the Act “exhaustively” sets out the scope of copyright interests (ESA at para. 54).
[35] Two questions on authorizing infringement therefore remain for this Court: first, whether as a factual matter the appellant has shown, on a balance of probabilities, that the respondents are themselves the individuals who made the Work available for download via BitTorrent (following the example of authorizing infringement from ESA); and second, whether the appellant has shown the respondents to have otherwise authorized infringement, based on the meaning of the jurisprudence set out above. As I previously mentioned, these questions engage evidentiary considerations, in light of the shifting burdens and adverse inferences urged upon the Court by the appellant.
[36] I conclude that the appellant has not shown any reversible error in the Federal Court’s decision. This conclusion is based, in part, on my earlier observation that the thrust of the appellant’s arguments before this Court are inconsistent with the Supreme Court’s decision in ESA. I highlight as well that the first question described in the paragraph above reveals how the appellant’s claim of direct infringement collides with the law on authorizing infringement following ESA. This collision is made abundantly clear when paragraph 2 of the appellant’s memorandum of fact and law is juxtaposed with the direction from ESA that making a work available for downloading engages an author’s authorization right:Voltage has two theories of copyright infringement against the [respondents]: (a) infringement by the [respondents] making the Work available for download online (“Direct Infringement”); and (b) infringement by a respondent who authorized the direct infringement of the Work by an unknown person by not responding to warning notices indicating the Work was being infringed, and allowing the infringement to continue (“Authorizing Infringement”).
[Bold characters in original, underlining added.] . Voltage Holdings, LLC v. Doe #1
In Voltage Holdings, LLC v. Doe #1 (Fed CA, 2023) the Federal Court of Appeal considers the Copyright Modernization Act, 2012, and briefly illustrates some of it's modern infringement procedures:[1] The appellant sought default judgment against the respondents for two types of copyright infringement: direct infringement and authorizing infringement. In respect of the first, the appellant asserted that the respondents directly infringed its copyright by making a protected work available for download online (by posting or uploading the work); in respect of the latter, the appellant asserted that the respondents authorized an unknown person to directly infringe the appellant’s copyright. The Federal Court (2022 FC 827, per Furlanetto J.) dismissed the motion brought under Rule 210(1) of the Federal Courts Rules, S.O.R./98-106 (the Rules). This is an appeal from that decision.
[2] The appeal engages two issues. The first concerns the jurisprudence with respect to what constitutes direct infringement and authorizing infringement. The second issue is the burden of proof and the circumstances under which it can be discharged by drawing an adverse inference.
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[5] In 2012, Parliament enacted the Copyright Modernization Act, S.C. 2012, c. 20 (the CMA), to amend the Copyright Act, R.S.C. 1985, c. C-42 (the Act) and respond to new technological pathways that facilitate online copyright infringement. The summary accompanying the CMA states that the amendments to the Act aim to “update the rights and protections of copyright owners to better address the challenges and opportunities of the Internet, so as to be in line with international standards.” The summary also notes that the amendments seek to “clarify Internet service providers’ liability and make the enabling of online copyright infringement itself an infringement of copyright.”
[6] The CMA established a system by which copyright owners may send a notice to internet service providers (ISPs), alleging online copyright infringement occurring at a particular electronic location called an Internet Protocol address (an IP address). On receipt, the ISP must forward a notice to the Internet subscriber corresponding to the IP address identified by the copyright owner. This is known as the “notice and notice” regime (the Act, ss. 41.25 and 41.26).
[7] The appellant, Voltage Holdings, LLC, is a movie production company and the owner of the copyright to the film Revolt (the Work). The appellant detected that internet users at certain IP addresses were making the Work available using BitTorrent software, a protocol for distributing files on a peer-to-peer network. BitTorrent is particularly well suited for transferring large files such as movies, music, or computer software due to its capacity to upload and download files from a group of hosts instead of from a single source server. Using this software, internet users at the flagged IP addresses were uploading and offering copies of the Work without the appellant’s consent.
[8] Warning notices were sent to the internet subscribers through the notice and notice regime, advising that infringing activity had been detected at the internet subscribers’ IP addresses. If a second instance of infringement occurred at the same IP address within seven days of the first notice, the appellant sent a second warning notice to the subscriber at the offending IP address. The appellant subsequently obtained Norwich orders requiring ISPs to provide it with information about the internet subscribers’ identities based on the IP addresses at which the infringement was occurring. The appellant then served the respondents, a subset of all the internet subscribers who had received two warning notices, with a statement of claim. No defences were filed.
[9] The appellant next filed a motion for default judgment against the respondents. The Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC) was granted leave to intervene and provided written submissions and oral argument at the hearing of the motion. . Pyrrha Design Inc. v. Plum and Posey Inc.
In Pyrrha Design Inc. v. Plum and Posey Inc. (Fed CA, 2021) the Federal Court of Appeal considered basics of copyright infringment and the doctrine of originality:[38] In Phillip Morris Products SA v. Marlboro Canada Ltd., 2010 FC 1099, 374 F.T.R. 213 (Philip Morris FC) (affirmed on appeal on the issue of copyright 2012 FCA 201 (Philip Morris FCA), 434 N.R. 207, leave to appeal refused [2012] SCCA No. 413, [2012] C.S.C.R. No. 413), the Federal Court held, at paragraph 315, that in order to establish infringement, two essential elements must be established:First, there must be a sufficient similarity between the works in question such that the allegedly infringing work could be considered a copy or reproduction of the protected work. In other words, there must be proof of substantial similarity between the original work and the allegedly infringing work. Whether the Defendants have infringed copyright by taking a substantial part of a copyrighted work is essentially a question of fact. Second, the Plaintiffs must prove that the Defendants had access to the work protected by copyright; that is to say, that the copyrighted work was the source from which the allegedly infringing work was derived. This is sometimes referred to as a “causal connection”. [39] In Cinar Corporation, cited above, the Supreme Court considered what is required to demonstrate that a "“substantial part”" of a work has been reproduced. At paragraph 26 the Court held:A substantial part of a work is a flexible notion. It is a matter of fact and degree. “Whether a part is substantial must be decided by its quality rather than its quantity”: Ladbroke (Football), Ltd. v. William Hill (Football), Ltd., [1964] 1 All E.R. 465 (H.L.), at p. 481, per Lord Pearce. What constitutes a substantial part is determined in relation to the originality of the work that warrants the protection of the Copyright Act. As a general proposition, a substantial part of a work is a part of the work that represents a substantial portion of the author’s skill and judgment expressed therein. [40] A reviewing court is required to engage "“in a qualitative and holistic assessment of the similarities between the works”" (Cinar Corporation, paragraph 41). The perspective of a layperson was said in Cinar Corporation to be a "“useful”" perspective, however the question of whether a substantial part of a plaintiff’s work has been copied "“should be answered from the perspective of a person whose senses and knowledge allow him or her to fully assess and appreciate all relevant aspects — patent and latent — of the works at issue. In some cases, it may be necessary to go beyond the perspective of a lay person… and to call upon an expert to place the trial judge in the shoes of “someone reasonably versed in the relevant art or technology””" (Cinar Corporation, paragraph 51).
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[62] In Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R 363, the Supreme Court wrote at paragraph 81:In CCH, originality was held to encompass the exercise of “skill and judgment” by an author: see para. 16. Every copyrighted work — individual or collective — is the product of the exercise of skill and judgment. In determining, therefore, whether a work like a newspaper, or “any substantial part thereof”, has been reproduced, what will be determinative is the extent to which the item said to be a reproduction contains within it, in qualitative rather than quantitative terms, a substantial part of the skill and judgment exercised by the creator of the work: see Édutile Inc. v. Automobile Protection Assn., 2000 CanLII 17129 (FCA), [2000] 4 F.C. 195 (C.A.), at para. 22.
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