For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Wednesday, 15 January 2014

$10.5m in damages might make Canadian pirates think twice

Canada: better known for
tracking villains than for
deterring them -- till now?
Some people complain that, while the rewards for copyright infringement are great, the cost of infringing is usually not. This in turn means that, where infringement is plentiful and easy to achieve, while detection and legal retribution is expensive and cumbersome, any business model that is based on serial infringement is likely to pay.  However, at the point at which any given infringer is making pots of money, particularly where he is continually infringing copyrights of the same owner(s), he becomes an attractive target for a lawsuit.  In this context the IPKat brings you a note on an infringer who has become successful enough to be well worth suing in Canada -- and on what happened when he was sued.  The author of this note is Melanie Hayes, who describes herself in detail at the foot of this post.

This is what Melanie has to say:
A Federal Court of Canada default judgment from December of last year, Fox v Hernandez (not yet in public repositories but posted here via Alan Macek of Dimock Stratton) has awarded an injunction and an extremely large sum of damages to Twentieth Century Fox against an online pirate of Family Guy and The Simpsons.
The Simpsons have a cat ...
The defendant, Nicholas Hernandez, infringed the copyrights held by Twentieth Century Fox in several ways: by copying, uploading, providing streaming and downloading, and in making a profit from the sites to which he uploaded the episodes [Goodness, exclaims Merpel,  the judge says "Hernandez’ infringement has been in bad faith and for commercial purposes and he has received revenue from his infringing activities on the false pretence that such activities are lawful" -- but does Canadian copyright law recognise "false pretences" as a head of damages?]. The Honorable Mr Justice Campbell awarded $10,000,000 to Fox in statutory damages, an additional $500,000 in punitive damages, as well as final costs of $78,000 plus interest. It was established that Fox held the copyright in each individual episode of the programmes. Since the Canadian Copyright Act imposes a cap of $20,000 per work for maximum statutory damages in commercial infringement (s. 38.1), this leads to the inference that the defendant uploaded at least 500 individual episodes. That the damages are so large demonstrates that Canadian courts will not tolerate piracy; the means to enforce large fines are available to them, and your case is not helped by you failing to show up in court.
The Honourable Mr Justice Campbell made it very clear that such large damages were necessary not only to  punish the defendant adequately but also to deter further actions by others that would infringe copyrights:
“Statutory damages, elected by Twentieth Century Fox in this case, would be insufficient to achieve the goal of punishment and deterrence of the offense of copyright infringement in this case. Hernandez's repeated, unauthorized, blatant, high-handed and intentional misconduct, and his callous disregard for the Plaintiff's copyright rights, is deserving of the penalty of punitive damages.”  
Before  this case, a good example of the awarding of damages in an undefended infringement case can be found in 2012's Adobe v Thompson (here). Unauthorized sales of counterfeit Adobe, Microsoft and Rosetta Stone software sold online led to an award of maximum statutory damages. A separate consideration and fine was also awarded for the unauthorized copying of the cover art from the original packages of software. In this case, the judge also explicitly included the consideration for the defendant's response to the problem, and the need for the damages to deter further infringements: 
“...his response to being held accountable for this conduct, is particularly egregious and requires a clear deterrent message to the Defendant, and anyone else of like mind.”
In both cases, the Federal Court recognized that infringement of a copyright can occur through a series of steps when assisted by the internet. Justice Campbell found infringement in the actions of the initial copying, copying onto a computer system, uploading the copies to servers, making links to the servers, communicating the copies to the public, and enabling the public to infringe through downloading, streaming and/or copying on internet enabled devices. 
... which is more than can
be said for Family Guy
These cases help establish the fact that Canadian courts are aware of the impact awarding large financial damages can have on the potential for future copyright infringement, including through actions that are internet-mediated. Copyright owners might therefore feel a little safer in the knowledge that if they bring action against an infringer, the courts are willing to consider each infringed work and action taken to infringe each work on an individual basis, potentially resulting in larger financial remuneration.  
Thanks, Melanie, for telling us -- and there's a discreet katpat for the sweet soul who told the Kats about this award but wished to remain anonymous.

Melanie says she's an art law nerd without the legal degree. Her main loves are the intersections of visual art, law and public policy, comparative copyright, open access and access to information rights. She holds a special place in her heart for issues surrounding appropriation art, plagiarism and artist rights, and is writing about derivative art works in Canada to complete her thesis in Art History and Visual Culture at the University of Guelph. Sometimes she tweets about interesting IP and art under the handle of @melkhayes.

1 comment:

Uncle Wiggily said...

My dear Jeremy:

This was a default proceeding. The judgement has not been given an official "neutral citation" and will very likely not be formally reported.

Apart from a rhetorical flourish rather like Merpel might puff up her tail if she purrceives an infringement of her territory, it would be unwise to read very much into this.

Your respectfully,

Uncle Wiggily

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