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Internet - Copyright. Bell Canada v. Millennium Funding, Inc.
In Bell Canada v. Millennium Funding, Inc. (Fed CA, 2025) the Federal Court of Appeal allowed an appeal, here from a dismissed Federal Court appeal by Bell, that from a successful Millenium case management "motion brought by the respondents in the Federal Court to strike parts of Bell’s [SS: the defendant] pleadings in an action brought against Bell by the Millennium Producers ... without leave to amend".
Here the court considers the Copyright Act s.41.25 ['Provisions Respecting Providers of Network Services or Information Location Tools'] and 41.26 ['Obligations related to notice'] and how the use of these provisions by the plaintiff Millenium might constitute a ground of statutory damage for 'copyright misuse':[6] In their amended statement of claim, the Millennium Producers allege that Bell, as the internet service provider (ISP), failed to comply with the requirement to deliver notices to potential defendants pursuant to sections 41.25 and 41.26 of the Copyright Act, R.S.C. 1985 c. C-42 [Act] (herein, notice and notice regime, or regime). The notice and notice regime is designed to deter copyright infringement by permitting a copyright owner to provide a "“notice of claimed infringement”" to an ISP. In turn, the ISP must forward the notice to the person associated with the IP address that is alleged to have infringed copyright (Decision at para. 4).
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[10] The impugned pleadings allege that the respondents’ copyright enforcement program (CEP) improperly used the notice and notice regime by, among other things, automatically generating large numbers of notices that were sent to ISPs. Bell alleges that the CEP was not used as a legitimate effort to protect copyright. Instead, the respondents’ conduct had two main purposes: (1) to intimidate alleged infringers into settling claims for amounts much larger than the damages suffered; and (2) to claim exorbitant amounts from ISPs alleged to not be forwarding notices. Bell pleads that the respondents’ use of the CEP constitutes the tort of misuse of copyright, and alleges that this is a viable defence to the Millennium Producers’ action.
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Issue 1: Did the FC judge err in not interfering with the CM judge’s decision to strike the copyright misuse pleadings?
[31] Bell asserts that the CEP is a misuse and abuse of the notice and notice regime, and this constitutes copyright misuse by the respondents. Bell specifically alleges that the respondents used the notice and notice regime for improper purposes, namely, to harass and intimidate alleged infringers, and to make exorbitant claims against ISPs. Bell pleads that it should not be liable for statutory damages in these circumstances.
[32] The FC judge commented that the defence of copyright misuse has not yet been adjudicated under Canadian law, and is developing in the United States. The misuse is said to occur "“when a copyright holder attempts to extend his copyright beyond the scope of his exclusive rights in a manner that violates antitrust law or the public policy embodied in copyright law”" (Decision at paras. 30-31, referring to Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37 at para. 98).
[33] As mentioned above, the FC judge disagreed with the CM judge as to whether copyright misuse could ever be pleaded as a defence to a section 41.26 action. The FC judge concluded that it could. However, the FC judge also concluded that the CM judge did not err in law or make a palpable and overriding error in striking the copyright misuse pleadings on the ground that insufficient material facts were pleaded. The FC judge explained that "“[t]he pleading does not provide sufficient foundation for what constitutes the alleged improper behavior”" (Decision at paras. 47-48).
[34] As mentioned, this Court can interfere with this finding only if the FC judge made an error of law or a palpable and overriding error in refusing to interfere with the CM judge’s order.
[35] It would be an error of law if the FC judge had applied the incorrect legal test. However, whether the pleading contains adequate material facts is subject to the deferential palpable and overriding error standard of review: Adelberg at para. 39, citing Jensen v. Samsung Electronics Co. Ltd., 2023 FCA 89 at para. 38.
[36] The FC judge determined that Bell’s pleading does not provide sufficient material facts with respect to copyright misuse. In particular, the pleading does not "“set out ‘what’ the misuse is and ‘how’ the conduct complained of is contrary to public policy under the Act”" (Decision at para. 46). The FC judge further explained (at para. 47) that the pleaded facts are deficient with respect to:. how the CEP is set up to intimidate and harass alleged infringers and in turn to claim exorbitant amounts from ISPs (such as Bell);
. how the CEP is used to generate notices to members of the public who do not infringe or who are wrongfully accused of infringing; and
. the basis for asserting that the notices are unreliable and unlawful and what proportion of the notices the allegation relates to. [37] The requirement for material facts was considered in depth by this Court in Mancuso. Justice Rennie, writing for the Court, described that "“the pleading must tell the defendant who, when, where, how and what gave rise to its liability”" (Mancuso at para. 19). This is the test that was applied by the FC judge.
[38] Bell submits that the FC judge made a legal error by effectively requiring evidence to be pleaded. I disagree. In general, the pleadings must "“define the issues with sufficient precision to make the pre-trial and trial proceedings both manageable and fair”" (Mancuso at para. 18). The FC judge found that the pleading did not provide a sufficient foundation for the allegations of improper conduct. Bell was required to succinctly plead what the improper conduct consisted of, and how this was contrary to the public policy in the Act. Bell was not required to plead evidence showing how this foundation would be proved.
[39] In my view, the FC judge made no legal error in identifying the proper test.
[40] The next question is whether the FC judge made a palpable and overriding error in not interfering with the decision of the CM judge that there was a lack of material facts pleaded. The palpable and overriding error standard is a high threshold – the error must be obvious or plain to see, and it must be capable of affecting the outcome.
[41] The high threshold to intervene is accentuated in this case by the fact that the test for adequacy of material facts is not black and white. As stated in Mancuso, "“[t]here is no bright line between material facts and bald allegations, nor between pleadings of material facts and the prohibition on pleading of evidence”" (at para. 18).
[42] I conclude that the FC judge did not make a palpable and overriding error in not interfering with the CM judge’s decision on this issue. Bell pleads that the CEP "“is used for the purpose of extracting disproportionate and unjustified settlements from innocent parties.”" It was not a palpable error for the FC judge to require more justification for this assertion. It was open to the FC judge to conclude that this was necessary in order to make the proceedings manageable and fair.
[43] Bell also submits that the sufficiency of material facts can depend on the relative knowledge of the parties, citing Enercorp Sand Solutions Inc. v. Specialized Desanders Inc., 2018 FCA 215 at para. 36. While this principle may have a bearing on the extent of additional material facts that are required, it is not a sufficient basis to overcome the FC judge’s concern with the existing pleading. . Voltage Pictures, LLC v. Salna
In Voltage Pictures, LLC v. Salna (Fed CA, 2025) the Federal Court of Appeal dismissed an appeal, here from the dismissal "(for the second time) [of] the appellants’ motion to certify this proposed reverse class proceeding".
Here the court considers the "notice-and-notice regime contained in the Copyright Act (which) allows a copyright owner to require internet service providers (ISPs) and other digital service providers to forward notices to subscribers of a claimed online infringement of the owner’s copyright in a work that subscribers share online", and illustrates some attendent litigation procedures:[7] The notice-and-notice regime contained in the Copyright Act allows a copyright owner to require internet service providers (ISPs) and other digital service providers to forward notices to subscribers of a claimed online infringement of the owner’s copyright in a work that subscribers share online. The notice-and-notice regime was adopted in 2012 via the Copyright Modernization Act, S.C. 2012, c. 20 as part of a suite of amendments to the Copyright Act which sought to modernize the Canadian copyright regime to, among other things, "“address the challenges and opportunities of the Internet”" (Copyright Modernization Act, Summary).
[8] Under the notice-and-notice provisions, set out in sections 41.25 to 41.27 of the Copyright Act, copyright holders who believe that their copyright in a work has been violated via an online sharing may send a notice of the claimed violation to the ISP or other digital service provider that operates the network over which the violation is alleged to have occurred. Upon receipt of the notice, the service provider is required to forward the notice to the subscriber of the account identified by the copyright owner as being the account used to allegedly violate their copyright. The service provider must also retain information about the subscriber for six months after receipt of the notice from the copyright holder, or if litigation is commenced in respect of the alleged violation, for one year from receipt of the notice from the copyright holder.
[9] Sections 41.25 and 41.26 of the Copyright Act are of particular relevance to this appeal. They provide (and at the times relevant to this appeal provided) as follows:"Notice of claimed infringement"
"Avis de prétendue violation"
"41.25 (1) An owner of the copyright in a work or other subject-matter may send a notice of claimed infringement to a person who provides"
"41.25 (1)"" Le titulaire d’un droit d’auteur sur une œuvre ou tout autre objet du droit d’auteur peut envoyer un avis de prétendue violation à la personne qui fournit, selon le cas :"
"(a) the means, in the course of providing services related to the operation of the Internet or another digital network, of telecommunication through which the electronic location that is the subject of the claim of infringement is connected to the Internet or another digital network;
"a)"" dans le cadre de la prestation de services liés à l’exploitation d’Internet ou d’un autre réseau numérique, les moyens de télécommunication par lesquels l’emplacement électronique qui fait l’objet de la prétendue violation est connecté à Internet ou à tout autre réseau numérique;"
"(b) for the purpose set out in subsection 31.1(4), the digital memory that is used for the electronic location to which the claim of infringement relates; or"
"b)"" en vue du stockage visé au paragraphe 31.1(4), la mémoire numérique qui est utilisée pour l’emplacement électronique en cause;"
"(c) an information location tool as defined in subsection 41.27(5)."
"c)"" un outil de repérage au sens du paragraphe 41.27(5)."
"Form and content of notice"
"Forme de l’avis"
"(2) A notice of claimed infringement shall be in writing in the form, if any, prescribed by regulation and shall"
"(2)"" L’avis de prétendue violation est établi par écrit, en la forme éventuellement prévue par règlement, et, en outre :"
"(a) state the claimant’s name and address and any other particulars prescribed by regulation that enable communication with the claimant;"
"a)"" précise les nom et adresse du demandeur et contient tout autre renseignement prévu par règlement qui permet la communication avec lui;"
"(b) identify the work or other subject-matter to which the claimed infringement relates;"
"b)"" identifie l’œuvre ou l’autre objet du droit d’auteur auquel la prétendue violation se rapporte;"
"(c) state the claimant’s interest or right with respect to the copyright in the work or other subject-matter;"
"c)"" déclare les intérêts ou droits du demandeur à l’égard de l’œuvre ou de l’autre objet visé;"
"(d) specify the location data for the electronic location to which the claimed infringement relates;"
"d)"" précise les données de localisation de l’emplacement électronique qui fait l’objet de la prétendue violation;"
"(e) specify the infringement that is claimed;"
"e)"" précise la prétendue violation;"
"(f) specify the date and time of the commission of the claimed infringement; and"
"f)"" précise la date et l’heure de la commission de la prétendue violation;"
"(g) contain any other information that may be prescribed by regulation."
"g)"" contient, le cas échéant, tout autre renseignement prévu par règlement."
"Prohibited content"
"Contenu interdit"
"(3) A notice of claimed infringement shall not contain"
"(3)"" Toutefois, il ne peut contenir les éléments suivants :"
"(a) an offer to settle the claimed infringement;"
"a)"" une offre visant le règlement de la prétendue violation;"
"(b) a request or demand, made in relation to the claimed infringement, for payment or for personal information;"
"b)"" une demande ou exigence, relative à cette prétendue violation, visant le versement de paiements ou l’obtention de renseignements personnels;"
"(c) a reference, including by way of hyperlink, to such an offer, request or demand; and"
"c)"" un renvoi, notamment au moyen d’un hyperlien, à une telle offre, demande ou exigence;"
"(d) any other information that may be prescribed by regulation."
"d)"" tout autre renseignement prévu par règlement, le cas échéant."
"Obligations related to notice"
"Obligations"
"41.26 (1) A person described in paragraph 41.25(1)(a) or (b) who receives a notice of claimed infringement that complies with subsections 41.25(2) and (3) shall, on being paid any fee that the person has lawfully charged for doing so,"
"41.26 (1) ""La personne visée aux alinéas 41.25(1)a) ou b) qui reçoit un avis conforme aux paragraphes 41.25(2) et (3) a l’obligation d’accomplir les actes ci-après, moyennant paiement des droits qu’elle peut exiger :"
"(a) as soon as feasible forward the notice electronically to the person to whom the electronic location identified by the location data specified in the notice belongs and inform the claimant of its forwarding or, if applicable, of the reason why it was not possible to forward it; and"
"a) ""transmettre dès que possible par voie électronique une copie de l’avis à la personne à qui appartient l’emplacement électronique identifié par les données de localisation qui sont précisées dans l’avis et informer dès que possible le demandeur de cette transmission ou, le cas échéant, des raisons pour lesquelles elle n’a pas pu l’effectuer;"
"(b) retain records that will allow the identity of the person to whom the electronic location belongs to be determined, and do so for six months beginning on the day on which the notice of claimed infringement is received or, if the claimant commences proceedings relating to the claimed infringement and so notifies the person before the end of those six months, for one year after the day on which the person receives the notice of claimed infringement."
"b) ""conserver, pour une période de six mois à compter de la date de réception de l’avis de prétendue violation, un registre permettant d’identifier la personne à qui appartient l’emplacement électronique et, dans le cas où, avant la fin de cette période, une procédure est engagée par le titulaire du droit d’auteur à l’égard de la prétendue violation et qu’elle en a reçu avis, conserver le registre pour une période d’un an suivant la date de la réception de l’avis de prétendue violation."
"Fees related to notices"
"Droits"
"(2) The Minister may, by regulation, fix the maximum fee that a person may charge for performing his or her obligations under subsection (1). If no maximum is fixed by regulation, the person may not charge any amount under that subsection."
"(2) ""Le ministre peut, par règlement, fixer le montant maximal des droits qui peuvent être exigés pour les actes prévus au paragraphe (1). À défaut de règlement à cet effet, le montant de ces droits est nul."
"Damages related to notices"
"Dommages-intérêts"
"(3) A claimant’s only remedy against a person who fails to perform his or her obligations under subsection (1) is statutory damages in an amount that the court considers just, but not less than $5,000 and not more than $10,000."
"(3) ""Le seul recours dont dispose le demandeur contre la personne qui n’exécute pas les obligations que lui impose le paragraphe (1) est le recouvrement des dommages-intérêts préétablis dont le montant est, selon ce que le tribunal estime équitable en l’occurrence, d’au moins 5 000 $ et d’au plus 10 000 $."
"Regulations — change of amounts"
"Règlement"
"(4) The Governor in Council may, by regulation, increase or decrease the minimum or maximum amount of statutory damages set out in subsection (3)."
"(4) ""Le gouverneur en conseil peut, par règlement, changer les montants minimal et maximal des dommages-intérêts préétablis visés au paragraphe (3)." [10] No regulations have been passed under either paragraphs 41.25(2)(g) or 41.25(3)(d) of the Copyright Act.
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[16] Even though the appellants have the IP addresses of the members of the proposed class, the appellants do not know who the subscribers associated with these addresses (other than Mr. Salna) are nor where they live. This sort of information would be maintained by the subscribers’ ISP when the account is active and must be held by the subscribers’ ISPs for six months if a notice is delivered by the copyright holder to the ISP under the notice-and-notice regime in the Copyright Act. By virtue of paragraph 41.26(b) of the Copyright Act, the retention period is extended by a further six months when litigation is commenced within six months following the date on which notice of the claimed infringement is provided by the ISP to the subscriber.
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[23] In the final version of their proposed litigation plan (dated January 20, 2023), the appellants proposed that the notice under section 41.25 of the Copyright Act would be sent to known members of the respondent class after the proceeding was certified by the Federal Court. The appellants further proposed that, in addition to the matters set out in subsection 41.25(2) of the Copyright Act, the notices sent by the ISPs under the Copyright Act would provide known members of the respondent class with notice of the class proceeding, would contain a hyperlink to contact class counsel, and would notify them that to opt out of the class proceeding they would need to send an email to class counsel. The proposed notice also contained a request to send an email to class counsel, providing evidence that the alleged copyright infringement had ceased and details about the steps the class member had taken to mitigate their damages.
[24] The appellants’ proposal contemplated that the identities of the recipients of these notices would at least initially remain anonymous and that they would be identified by a reference number to be generated by the ISPs. However, class members likely would have identified themselves (or at least provided an email address) to class counsel if they contacted class counsel, opted out of the class proceeding, or provided information about their mitigation efforts and cessation of allegedly infringing activities to class counsel. The appellants also proposed that the certification order would require the ISPs, at the option of the appellants, to retain contact information for class members until the final determination of the appellants’ reverse class proceeding, including final decisions on any appeals. Under the appellants’ proposal, the ISPs would have been required to maintain records for much longer than the statutory retention period.
[25] The appellants accordingly sought to have the ISPs provide notice of the class proceeding to class members via the notice-and-notice regime in the Copyright Act and through that notice facilitate the opt-out process and communication with class counsel. Were this permitted, the appellants would have been able, at least for a time, to bypass the need for (and costs associated with) obtaining a Norwich order to disclose the identities and contact information for members in the proposed class other than Mr. Salna.
[26] The ISPs, who were granted leave to intervene in the certification motion by the Federal Court in the instant case, filed evidence detailing the burden they alleged the applicants’ proposed litigation plan would have placed on them. This included the claimed need to design complex software databases or to adopt manual data retention policies as well as the possible requirement to respond to questions from subscribers, which the ISPs claimed could have led to customer loss.
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A. Rogers Communications Inc. v. Voltage Pictures, LLC, 2018 SCC 38, [2018] 2 S.C.R. 643
[29] In Voltage SCC, the Supreme Court of Canada concluded that ISPs are entitled to be compensated for any work required to identify recipients of notices sent under section 41.26 of the Copyright Act for purposes of a Norwich order where the work in question goes beyond the tasks necessary for the ISPs to comply with the notice-and-notice provisions in the Copyright Act.
[30] The Supreme Court of Canada also noted that a copyright owner who wishes to sue a person alleged to have infringed copyright online must proceed by way of a Norwich order to obtain details about them and cannot use the notice-and-notice regime in the Copyright Act for this purpose. In this regard, Justice Brown, writing for the majority, stated at paragraph 24 of Voltage SCC that:“[the] notice and notice [regime in the Copyright Act] is … just the first step in a process by which rights holders can go after those they allege are infringing. … Then the rights holder can use that when they decide to take that alleged infringer to court” [citing from the testimony of an ISP before the House of Commons, Legislative Committee on Bill C-32, Evidence, No. 19, 3rd Sess., 40th Parl., March 22, 2011, at p. 10]. This is why … a copyright owner who wishes to sue a person alleged to have infringed copyright online must obtain a Norwich order to compel the ISP to disclose that person’s identity. The statutory notice and notice regime has not displaced this requirement, but operates in tandem with it. This is affirmed by s. 41.26(1)(b), which contemplates that a copyright owner may sue a person who receives notice under the regime, and fixes the ISP’s obligation to retain records which allow that person’s identity to be determined for a period of time after such notice is received.
(emphasis added.) [31] I note that the version of the Copyright Act considered in Voltage SCC has since been amended. Notably, in 2018, Parliament added subsection 41.25(3) to the Copyright Act, which lists several matters that cannot be included in a notice of claimed infringement sent by a copyright owner to an ISP. At paras 69-101, the court further considers the 'notice of claimed infringement' and the 'notice-and-notice' regimes of the Copyright Act.
. 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.
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