Taming the Beast Beneath the Keyboard: Bill C-86 and Copyright Trolling in the Digital Age

De temps en temps nous partageons des travaux « IP News » exceptionnels, écrits pour la classe de Propriété intellectuelle (BUS 502). Vous trouverez celui de Simon Rollat et Anthony Portulese ci-dessous.  

On December 13, 2018, Division 7, Subdivision C of the omnibus Budget Implementation Act, 2018, No. 2 (“Bill C-86”) received royal assent. [1] Coming into force the following June,[2] this bill ushered in significant changes to the Copyright Act. Among its amendments was a provision designed to seal a gap in the copyright notice system, through which some rightsholders hitherto legally conducted the pejorative behaviour known as copyright trolling.[3] In critique of this legislative copyright reform, this essay will ask how copyright trolling is an abusive practice under copyright law and how it differs from “legitimate”[4] copyright enforcement. It will then offer a detailed examination of the relevant amendment—subsection 41.25(3)—brought forth by Bill C-86. Lastly, it will evaluate whether Bill C-86’s amendment to the Copyright Act will prove an effective countermeasure against copyright trolling in Canada.

Legal scholars agree that copyright trolling is, in essence, a “business of litigation,” whereby copyright holders habitually dispatch notices of alleged infringement in which they threaten lawsuits, in the hope that recipients will concede to a direct offer of settlement to avoid both the high costs of defending the claim in court and possible damages.[5] Copyright trolling was first tackled in Canada at the Federal Court with Voltage Pictures LLC v John Doe, in which copyright trolling is explained as “a business model to coerce payments from individuals who do not wish to incur the cost of defending a lawsuit.”[6] This phenomenon has proliferated with the Internet era, wherein digitized copyrighted content—like digital artworks, films, music and photographs—has never been easier to access and distribute through peer-to-peer file-sharing between online subscribers.[7]  

Guised under the enforcement of copyright holders’ rights, the harmful consequences of copyright trolling are difficult to differentiate from taking legitimate action for online copyright infringement. The law of copyright is designed to incentivize and protect the production of creative works in a commercial market, to afford authors rights over how their creations are reproduced, used and exploited.[8] This incentive structure heavily depends on statutory enforcement of an author’s rights through legal action should any of those rights be violated, such as through injunctions or statutory damages where the author incurred losses due to the infringement.[9] Lending from patent law, trolls are often “non-practicing entities”: individuals or institutions, seldom the authors of the works in question, but rather licensees, assignees or mandators of the copyright owner.[10] They may acquire a “partial” interest over the copyrighted material from the author,[11] but exploit copyright law’s broad definition of a copyright  “owner”[12] and present themselves as exclusive rightsholders in infringement notices.[13] Copyright trolling questions the balance between copyright enforcement mechanisms and copyright law’s fundamental purpose of inducing creativity and innovation.[14] Its motivation is not to protect the integrity of the copyrighted work itself, but to extract fees by using the threat of litigation.[15] 

When a copyright holder enforces its rights indiscriminately against as many parties as possible,[16] it abuses legal channels paved under copyright law, channels meant to preserve the integrity of those rights. Defendants oftentimes do not possess the requisite financial resources to fight infringement claims in court. This is particularly problematic in cases where defendants are factually innocent (such as a situation where the online “IP address” subscriber is not the actual infringer)[17] or legally innocent (where a rightsholder’s evidence of infringement is too weak or where an exception exists),[18] and thus not liable for infringement. Trolls ultimately promote a culture of fear that could stifle authors from creating new works (through exceptions to copyright infringement, like fair use[19] and fair dealing[20]). Copyright trolling is thus a conundrum of intellectual property market misbehaviour that demands prompt legislative modulation.

Despite the ethical concerns it raises, prior to Bill C-86 coming into effect, copyright trolling operated in full legality within the “notice-and-notice” regime established by sections 41.25 and 41.26 of the Copyright Act. Introduced in 2012, this mechanism exonerates Internet Service Providers (“ISPs”)[21] of liability for their subscribers’ copyright infringements, but requires they electronically forward notices of claimed infringement from copyright owners to subscribers (through their IP address).[22] The regime also imposes that ISPs must archive the personal information of their customers in the event that a copyright holder wishes to personally contact the online subscriber to pursue litigation.[23] The notice-and-notice regime controlled how these notices are transmitted, but did not provide much guidance regarding the content of said notices. This interpretive gap permitted abuses of the regime by certain copyright holders.[24] Until recently, pursuant to subsection 41.25(2), the regime only provided for what information must be included in a valid notice of claimed infringement.[25] However, Bill C-86 introduced the addition of subsection (3) to section 41.25, which provides that a copyright holder’s notice cannot contain, among other elements, an offer of settlement, or requests for payment or for an alleged infringer’s personal information.[26] This addition seems strict when juxtaposed with similar provisions of the American Copyright Act’s “Notice and Takedown” regime,[27] which imposes no restrictions on notifications of claimed infringement akin to those of subsection 41.25(3). However, while the amendment modifies neither the procedure of the notice-and-notice regime nor the obligations of the ISP within said regime, it strives to regulate the tone of the claims relayed from copyright holders to alleged infringers in order to prevent abuses of copyright law.

One technique to identify a potential copyright troll is to set a higher burden of proof for copyright holders who are not the author of the copyrighted material in question. Following this logic, Professor Shyamkrishna Balganesh suggests that any non-author plaintiff seeking statutory damages for copyright infringement would need to establish that the defendant’s actions could have caused actual damages such as lost profits, the type of injury that copyright law’s statutory damages allowance aims to remedy.[28] Relatively unexamined in Canadian jurisprudence, American cases like Righthaven and Malibu Media have indirectly applied Balganesh’s rationale. Here, the courts dismissed the plaintiffs’ claims, given neither held exclusive or any rights over the copyrighted material in question, nor incurred lost profits, reducing their infringement claims to mere cash-grabbing ploys.[29] This reasoning is not far removed from the aforementioned definition of copyright trolling.

Identifying the rightsholder’s financial motives in enforcing an infringement claim could be useful to expose a copyright troll once in the courtroom. However, it does little to deter them from issuing threatening notices to extort settlements from frightened recipients, beyond the court’s reach, before the alleged infringement can ever be examined by a judge. Any solution to the problem of copyright trolling, made through legislative amendment to copyright law, must hence strip copyright holders of the authority to intimidate alleged infringers into unjust settlements.[30] One proposed method of achieving this objective would be to diminish the accessibility of statutory damages made to copyright holders.[31] For instance, jurist Gregory Mortenson explains that copyright trolls often make reference to the upper limit of $150,000 per infringement set out by the American Copyright Act[32] in their notices to scare recipients into accepting their settlement offers without putting up any legal resistance.[33] 

In response to this problem, Bill C-86’s new subsection 41.25(3) to the Canadian Copyright Act precludes mention of settlement offers or other demands for payment in notices of claimed infringement, and in consequence removes the conspicuous ultimatum inherent to these menacing letters. However, nowhere does subsection 41.25(3) explicitly prohibit mention of statutory damages—up to $20,000 per infringement[34]—in these notices. Without a legislative ban on written mention of statutory damages entitled to a copyright holder, the effectiveness of subsection 41.25(3) to mitigate intimidation and quash pressure exerted upon defendants to settle may prove precarious. The strict approach expressed by Prothonotary Aalto in Voltage would perhaps be most productive: copyright holders, in dispatching notices to alleged infringers, must “clearly state in bold type that no Court has yet made a determination that [the online subscriber] has infringed or is liable in any way for payment of damages.”[35] Aalto’s order—which dealt primarily with whether the notice-and-notice regime contravenes ISP subscribers’ privacy rights[36]—only applied to the claims sent by the plaintiff of the dispute over which he presided. However, a similar rule, if integrated into either subsection 41.25(2) or 41.25(3), may be useful in quelling abuses of copyright trolls’ authority under current Canadian copyright law.

Copyright trolling was once an unjust albeit legal practice in Canada, permitting the intimidation of alleged infringers. It was a “litigation for profit” tool for rightsholders. While the enacted amendment brought forth by Bill C-86 is a step in the right direction, whether it will seal the gap of the notice-and-notice regime and combat copyright trolling remains to be seen. As subsection 41.25(3) will be adopted into the practice of copyright enforcement in the coming years, legal scholars and legislators alike must be vigilant to discern if it will carry tangible consequences for copyright holders, online subscribers and courts. Given its infancy, only future jurisprudence revolving around this key amendment to the Copyright Act will determine whether its purpose—to tame copyright trolling—shall, in effect, come to fruition.

References:

1. See Gerald J Kerr-Wilson & Michael Shortt, “Government Proposes Streamlining Copyright Board Proceedings and Improving Online Copyright Notice System” (15 November 2018), online (blog): Fasken <www.fasken.com/en/knowledge/2018/11/copyright-board-proceedings-and-improving-online-copyright-notice-system/>; Steven Tanner, Daniel GC Glover & Fred Wu, “Bill C-86 Update” (3 April 2019), online (blog): McCarthy Tétrault <www.mccarthy.ca/en/insights/blogs/snipits/bill-c-86-update#>.
2.  See Government of Canada, “Notice – Bill C-86 receives Royal Assent” (14 January 2019), online: <https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08123.html>.
3.  See Nick Kirmse, “Copyright notices can no longer demand payment for alleged piracy” CTV News (27 January 2019), online: <www.ctvnews.ca/sci-tech/copyright-notices-can-no-longer-demand-payment-for-alleged-piracy-1.4271132>.
4.  For the purpose of this essay, the term “legitimate” denotes any claim acting within the intended purposes of the Copyright Act, as shall be further elaborated.
5.  See Matthew Sag, “Copyright Trolling, An Empirical Study” (2015) 100:3 Iowa L Rev 1105 at 1108; Brad A Greenberg, “Copyright Trolls and Presumptively Fair Uses” (2014) 85:1 U Colo L Rev 53 at 56; and Shyamkrishna Balganesh, “The Uneasy Case Against Copyright Trolls” (2013) 86:4 S Cal L Rev 723 at 732 [Balganesh, “Copyright Trolls”].  See also Elif Sonmez, “Copyright Troll or Ugly Rights Holder? The Spread of Troll-Tactics and Solutions to the Abuse of the Courts and Degradation of the Copyright Protection Scheme” (2015) 19:2 IPL Bull 137 (copyright trolling tactics were arguably first modeled as early as 2003 by the Recording Industry Association of America, which would send out settlement demand letters to as many defendants as possible and “wait for either acquiescence to the letters or default judgments against no-show defendants” at 149).
6.  2014 FC 161 at para 24 [Voltage] (while the act of copyright trolling was explained in the Federal Court’s reasoning, it was not the focal point or main issue in this case).  
7.  See Gregory S Mortenson, “BitTorrent Copyright Trolling: A Pragmatic Proposal for a Systemic Problem” (2013) 43:3 Seton Hall L Rev 1105 at 1106–07 (copyright trolling first emerged as a serious legal concern though the adult film industry, as many alleged infringers agreed to settle out of fear of their consumption of pornography being revealed and publicized through litigation).
8.  See ibid at 1106; and Shyamkrishna Balganesh, “Foreseeability and Copyright Incentives” (2009) 122:6 Harv L Rev 1569 at 1577.
9.  See Copyright Act, RSC 1985, c C-42, s 34(1) [Copyright]; and Balganesh, “Copyright Trolls”, supra note 5 at 730.
10.  See Nicholas Douglas, “Non-Practicing Entities & Patent Reform” (2018) 38:2 Pace L Rev 608 at 615.
11.  See Copyright, supra note 9, s 13(4) (this provision explains that copyright holders may assign or licence their ownership right, “either wholly or partially,” to other parties for an extended period of time or for a fixed term).
12.  See Sonmez, supra note 5 at 157.
13.  See Matthew Sag & Jake Haskell, “Defence Against the Dark Arts of Copyright Trolling” (2018) 103:2 Iowa L Rev 571 at 580; Balganesh, “Copyright Trolls”, supra note 5 at 727.
14.  See Balganesh, “Copyright Trolls”, supra note 5 at 764.
15.  See ibid at 765.
16.  See Sag, supra note 5 at 1110 (multi-defendant John Doe cases, in which a copyright holder brings a claim of infringement against many defendants collectively and simultaneously, is a signature strategy of a copyright troll).
17.  See James DeBriyn, “Shedding Light on Copyright Trolls: An Analysis of Mass Copyright Litigation in the Age of Statutory Damages” (2012) 19:1 UCLA Ent L Rev 79 at 99–100; and Mortenson, supra note 7 at 1133.
18.  See Sag & Haskell, supra note 13 at 609.
19.  See Copyright Act, 17 USC § 107 (1976) [US Copyright] (the use of copyrighted material for the purpose of research, scholarship, comment, criticism, or teaching does not infringe copyright).
20.  See Copyright, supra note 9, ss 29–29.21 (granted certain criteria, fair dealing for the purpose of research, private study, education, parody, satire, criticism, review, news reporting or some other non-commercial purposes does not infringe copyright).
21.  See ibid, s 41.25(1)(a).
22.  See ibid, s 41.26(1)(a).
23.  See ibid, s 41.26(1)(b). See also Rogers Communications Inc. v Voltage Pictures, LLC, 2018 SCC 38 at para 3 (while a notice of claimed infringement can be sent out to the IP address that infringed the copyright, the copyright holder still needs to be granted a Norwich order by the Federal Court in order to retrieve the personal and contact information of an alleged infringer from their ISP).
24.  See House of Commons, Statutory Review of the Copyright Act: Report of the Standing Committee on Industry, Science and Technology (June 2019) (Chair: Dan Ruimy) at 21.
25.  See Copyright, supra note 9, s 41.25(2).
26.  See Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, 1st Sess, 42nd Parl, 2018, cl 243 (assented to 13 December 2018); and Copyright, supra note 9, ss 41.25(3)(a)–(b) (in addition, a notice of copyright infringement must also not contain “a reference, including by way of hyperlink, to such an offer, request or demand; and any other information that may be prescribed by regulation”, ss 41.25(3)(c)–(d)).
27.  See US Copyright, supra note 19, § 512(c)(3)(A)(i)–(vi).
28.  See Balganesh, “Copyright Trolls”, supra note 5 at 769–70. See also Sonmez, supra note 5 at 155.
29.  See Righthaven LLC v Democratic Underground LLC, 791 F Supp (2d) 968 (D Nev 2011) at 976; and Malibu Media, LLC v Does, 950 F Supp (2d) 779 (ED Pa 2013).  See also Ian Polonsky, “You Can’t Go Home Again: The Righthaven Cases and Copyright Trolling on the Internet” (2012) 36:1 Colum J L & Arts 71 at 86–87; and Sonmez, supra note 5 at 147–48.
30.  See Balganesh, “Copyright Trolls”, supra note 5 at 769.
31.  See DeBriyn, supra note 17 at 108.
32.  See US Copyright, supra note 19, § 504(c)(2) (this provision states that this limit of $150,000 is applicable only in cases of “wilful” copyright infringement, and it is unsurprising that this detail may be omitted from notices of infringement, where the alleged infringement may prove to be accidental rather than intentional, and render the defendant liable, under this Act, for merely “not less than $200”).
33.  See Mortenson, supra note 7 at 1132.
34.  See Copyright, supra note 9, s 38.1(1)(a).
35.  See supra note 6 at order 8.
36.  See ibid at paras 1, 20, 22.

This content has been updated on January 27, 2020 at 20:00.