Bell loses satellite piracy lawsuit to Quebecor, must pay $600,000 in damages

The Quebec Superior Court ordered BCE Inc. to pay nearly $1 million in damages and costs to Quebecor Media Inc. as part of a civil lawsuit between the companies related to satellite piracy. Quebecor subsidiaries Videotron Ltée. and Groupe TVA Inc. had launched four related legal actions against Bell. Quebecor said Bell took a negligent approach to fighting piracy on its Bell ExpressVu satellite TV system (now called Bell TV), arguing that the company deliberately ignored satellite piracy in an effort to increase its market share and ramp up the presence of Bell satellite equipment in Quebec. In a decision issued Monday, court Justice Joel A. Silcoff concluded Bell did not take appropriate measures to prevent the illegal decoding of its satellite television signals despite having the technology to address it and knowledge of the extent of the piracy. The judge ruled that Bell must pay damages of $262,000 to TVA and $339,000 to Videotron plus interest since 2005 as well as Quebecor's expert witness costs of about $386,000 to Vidéotron and $42,800 to TVA. Bell must also pay Quebecor's court costs. The damages are considerably lower than Quebecor's claim for almost $300 million in damages, which included $248 million in future lost subscribers between March 2005 and December 2015 and $41 million in losses related to subscriptions between September 2002 and February 2005. Serge Sasseville, a spokesman for Quebecor, said the company is happy with the findings of the decision but that it may appeal the damages awarded. “We're considering appealing the judgment, but only regarding the damages,” he said. The lawsuit alleged wrongdoing on the part of Bell in grey and black market satellite piracy; cable splitting (the splitting of TV signals to receive them at more than one home); and “account stacking” (using active satellite TV equipment at multiple locations under a single customer account). Black market piracy involves tampering with television reception equipment or software to receive unauthorized access to satellite broadcast signals. Grey market piracy is the sale of American satellite TV receivers or decoding equipment to Canadians so that they can receive U.S. signals. Silcoff ruled in Quebecor's favour in two of the lawsuits but dismissed others related to account stacking and one seeking an injunction. Pierre Karl Peladeau, president and CEO of Quebecor, said in a statement Tuesday that he is glad to see the Superior Court condemn Bell for resorting to “illegal means” that weakened its competitors and for failing to meet its obligations to protect the integrity of the Quebec and Canadian broadcasting sectors. “It appears inconceivable that a company that benefited for decades from being a monopoly could have resorted to practices so detrimental to the rest of the broadcasting industry as to be condemned by law," Peladeau said. He said the CRTC is now faced with an "ethical" decision on whether to approve Bell's $3.38-billion acquisition of Astral Media Inc. and the creation of a "virtual monopoly" in Quebec. "If such practices were to go unsanctioned, Canadians' slowly eroding confidence in its regulatory authorities would only be further undermined," Peladeau said. Quebecor said in a release that the decision ends a seven-year legal battle between the companies. Silcoff said a key factor in the evaluation of Bell's efforts to combat signal piracy included whether it was “fully aware of the serious breaches of its and the consequent damages of such breaches to itself and others”; whether it had “the technological and administrative means available to address this problem” and whether it failed “to act in a timely manner to rectify the situation.” The decision said Bell “failed to meet” those standards. “It cannot be disputed that BEV was well aware that this was happening and that damages were being caused as a direct and immediate consequence of its failure to adequately secure its signal. Initially, it chose to ignore the gravity of the problem. It then unduly delayed taking appropriate measures to rectify the situation until well into May 2004 when final approval of the necessary funding to perform the card swap was obtained,” Justice Silcoff wrote. “In my opinion, BEV acted negligently in the management and operation of its system in an environment where it was known that piracy was or would become a major issue. This negligence and the incompetence of the BEV management team led to significant piracy of its system." Silcoff added that Bell knowingly reported incorrect information to the CRTC about the extent of satellite TV piracy. "We must deplore such a lack of respect towards the laws and institutions that are supposed to protect our broadcasting system. We wish for the CRTC to look into this matter and to take all appropriate measures under the circumstances," Peladeau added in the statement. The court calculated that the number of satellite “pirates” in Vidéotron's territory at the end of period under evaluation in the lawsuit was 67,000. Bell argued during the case that it implemented anti-piracy measures following the creation of an anti-piracy task force in 2002. The company argued in court those measures included legal action against people engaged in piracy, programs to encourage pirates to becomes subscribers, a “zero-tolerance policy” approach, a public education campaign, investigations and collaboration with law enforcement authorities, and smart card swaps on its equipment. Jacqueline Michelis, a spokeswoman for Bell, said in an emailed statement that the case dealt with TV piracy "from a decade ago" and that piracy was a broad problem faced by all satellite TV providers. "The Court did not conclude that Bell ExpressVu used illegal means or acted in bad faith in any way. That's underlined by the fact that no punitive damages were awarded," Michelis said. "Indeed the Court reduced the damages sought by our competitor by 99.85%—to $600,000 from the $387 million that TVA/Vidéotron demanded." She said the judge did not find that Bell's anti-piracy measures were inappropriate and he concluded "only that one of our piracy countermeasures, a Bell program to swap out cards in set-box boxes, should have been done more quickly." Michelis said the case has "no connection" to Bell’s acquisition of Astral, which will reduce Quebecor’s "longstanding market dominance" in the province. sdoyle@thewirereport.ca

Bell loses satellite piracy lawsuit to Quebecor, must pay $600,000 in damages

Broadcast | July 24, 2012

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Bell loses satellite piracy lawsuit to Quebecor, must pay $600,000 in damages

Broadcast | July 24, 2012

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