Rogers can recover some costs to disclose customer info, SCC rules

OTTAWA --- In a decision that could serve as a deterrent to copyright infringement lawsuits against Canadians, the Supreme Court of Canada said Friday that internet service providers (ISPs) can charge “reasonable” costs to comply with court orders requiring them to divulge the personal information of Canadians who allegedly engage in piracy. The unanimous judgment means telecommunications companies -- who over recent months have been forced by court orders to hand over, without charging a fee, personal information that has led to recent lawsuits against Canadians -- can once again put a barrier in front of rightsholders seeking to reveal the personal information behind IP addresses they allege have been linked to downloading their movies for free. The ruling “will have an impact on the Voltages of the world,” said Barry Sookman, an intellectual property lawyer at McCarthy Tétrault, in a phone interview. “What this means is that kind of cottage industry -- what some people refer to as ‘copyright trolls’ -- is I think going to be stemmed,” he said. That’s because of the added cost of pursuing alleged infringers plus the limited damages that can be recovered for non-commercial infringement -- a maximum of $5,000. Last month, The Wire Report discovered an unprecedented number of Canadians were settling with movie studios for the maximum amount after being sued for allegedly downloading movies from BitTorrent illegally. Seventeen movie studios, some with links to each other, have been vigorously going to court with IP addresses and getting disclosure orders, many occuring after the May ruling. Rogers said that following the May 2017 Appeal court decision that quashed the ability of ISPs to charge money to comply with the disclosure orders, the company saw an exponential increase in notice requests. It also said it expects to see a decrease in the number of subscribers being sued as a result of this decision because of the unwillingness of Voltage Pictures LLC, the movie studio that began pursuing Canadians in 2011 and who was opposite Rogers in this case, to put forward costs for litigation in the past. Fees have been a bit of an Achilles heel for Voltage. In early 2017, in a separate case, a Federal Court judge ordered the studio to pay a deposit of $75,000 in a court fund to cover defendant Robert Salna’s fees in the event that he won a reverse class action certification motion brought by Voltage. It had not put that money up and despite its appeal, the SCC declined to hear its case. The motion to certify the class action, targeting multiple thousands of Canadians, has since stalled on that. “This is an important win for our customers and millions of Internet subscribers facing open season on their personal information,” David Watt, senior vice-president of regulatory at Rogers, said in an emailed statement. On Friday, the Supreme Court determined that the Federal Court of Appeal failed to make a distinction between the extra steps Rogers took to procure the personal records and the ones required by it under the law. That means that while Rogers can’t charge for what it is must do under the notice-forwarding regime, like making sure its information is accurate, it could charge for things like connecting the IP address to the real person, something that’s only required when the ISP is asked to disclose the information. “Any work required to determine an alleged infringer’s identity and to disclose that identity pursuant to a Norwich order is not subsumed within the notice and notice regime and can therefore be subject to compensation,” the decision read. The court also recognized the fact that customer information can change over time, requiring an extra level of verification on the part of ISPs where automated notice systems may falter. There are two regimes that matter in this case: the notice-and-notice rules that require ISPs to automatically forward warnings to subscribers identified by rightsholders to have allegedly infringed on their copyright; and the Norwich regime, which governs the disclosure of personal information tied to the identifying IP addresses. The Supreme Court made a clear distinction between the two in its reasoning, stating that the notice regime only requires the telecoms to tie the IP address to an email address to deliver the warning electronically, whereas disclosure requires a matching name and address -- a crucial additional step that needs to be taken to ensure accuracy. As such, the notice regime “does not require an ISP to identify that person by name or physical address, but merely to determine that person as the person to whom the impugned IP address belonged,” the court reasoned. Sookman noted that had there not been that distinction, the burden on the telecoms would’ve been great. It “would’ve required ISPs to have spent a ton of money to put together data that wouldn’t necessarily be used in 99 per cent of the cases,” he noted, pointing to the thousands upon thousands of notices that are sent every month, with only a fraction culminating into disclosure orders. To be sure, Rogers said it receives about 200,000 to 300,000 notices a month and upwards of two million a year -- or more than 5,000 a day, according to court records. Voltage will end up having to pay to pursue the information of alleged infringers, though how much is unknown. The SCC sent the case back to the Federal Court to make that determination. The Federal Court will now have to determine what diligence ISPs need to assume at the notice stage and from that, figure what’s left over to be completed at the disclosure stage. This will determine what costs remain in the latter portion, since the court can’t order costs to be recovered at the notice level. One point of concern, however, is the Supreme Court’s determination that the retention of records identified at the notice stage be held “in an accurate manner and form in order to ensure prompt identification.” Otherwise, the decision said, the ISP could be at risk of statutory liability “for failing to actually forward notice to that person.” “That is an area that is potentially problematic,” Sookman said. The lawyer contemplated situations where the ISP can’t accurately pinpoint an IP address to an email address, which, for example, may not be up-to-date. “Does this mean now that they will have to go back and check or do they have to do some other checking to ensure they accurately send it out?” Tamir Israel, staff lawyer at the Canadian Internet Policy and Public Interest Clinic (CIPPIC), agreed with the issue being a potential concern. He said it would be disproportionate to dedicate all the resources to accurate match records at the notice stage only to have so few make it through the disclosure step. “The proportionate impact of a potential lawsuit is much more serious and it inherently entails a much more rigorous quality assurance process that just isn’t proportionate at that notice-forwarding stage,” he said in a phone interview. If the Federal Court decides that a more rigorous process be put in place at that first stage before the government sets a fee ceiling, the costs for ISPs could be very high given the number of notices they get, Israel said. The government is currently reviewing the Copyright Act, and this decision could find its way into that. “If the federal court does impose some fairly high obligations on ISPs to have a certain level of accuracy that wasn’t envisioned at the notice-forwarding stage, I think that might require the copyright review process to clarify what was intended there,” Israel said. In 2016, when a lower court said Voltage must pay to get information on subscribers, it said the payments would represent a “multi-million dollar barrier” for their legal proceedings because of the “tens of thousands” of suspected infringers. Israel said that while he thinks Friday’s decision will make Voltage “maybe a little bit more cautious” about pursuing infringers now that they have to pay for information, “it doesn’t deter it completely.” That’s because he said that in other jurisdictions where Voltage has been successful, those upfront costs for information also exist. Jay Kerr-Wilson, an intellectual property lawyer at Fasken Martineau DuMoulin, said in an email that the decision “struck the appropriate balance between the interests of ISPs who need to comply with Norwich Orders and the interests of rights owners who are seeking to enforce their rights through litigation.” As such, Kerr-Wilson said “there’s no reason to believe that the Court’s decision will create a barrier to rights holders enforcing their rights,” pointing to the decision to only entitle ISPs to reasonable costs associated with the disclosure orders. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Rogers can recover some costs to disclose customer info, SCC rules

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