Notice-and-Notice Regime Is Not a ‘Litigation Support Tool’. The Federal Court Refuses to Certify a Class Action That Contemplates ISPs Assisting in the Enforcement of Copyright

In Voltage Pictures, LLC v. Salna, 2023 FC 893, the Federal Court has once again refused to certify a reverse class action for online copyright infringement based on the sharing of movies via the internet.^[1]  In the proposed proceeding, a landlord named Richard Salna whose internet account had been used to share five (5) movies produced by the plaintiffs would have been a representative defendant on behalf of hundreds of unidentified internet account holders.  These account holders were alleged to have continued to allow others to use their internet accounts to share the plaintiffs’ movies despite having received a notice from their internet service provider (ISP) alerting them to the infringing activity.  The claim alleged, among other things, that such account holders were liable for “authorizing” infringement of copyright in the movies, even if they themselves were not the ones that downloaded or shared the movies.

Voltage Pictures and related companies had produced the movies and were seeking statutory damages for copyright infringement from those responsible for sharing the movies online. Using internet search technologies, Voltage Pictures had identified hundreds of IP addresses associated with the sharing of movies online using Bit Torrent file sharing software. Among the hundreds of subscribers associated with these IP addresses, the plaintiffs had obtained a Court order (known as a Norwich order) compelling Rogers to disclose the name and contact information for Mr. Salna, as the subscriber whose account was associated with an IP address that had been used to share five (5) of the plaintiffs’ movies online.

Voltage Pictures was hoping that by bringing a class proceeding in which Mr. Salna was the representative defendant for all the account holders associated with the IP addresses it had identified, it could avoid the expense of having to bring further Norwich proceedings to learn the names and contact information for the other alleged infringers, and the expense of separate cases and potential proceedings against each alleged infringer.  Instead, Voltage Pictures “litigation plan” for the class action involved requiring the various internet service providers (ISPs) that had assigned the IP addresses to their customers to deliver a “Certification Notice” notifying the class members (the ISPs customers) of the class action and to also send “Order Notices” to their class member customers to facilitate communication with the class members for the purposes of the action.  In this way, Voltage Pictures could more efficiently collect damages from many alleged online infringers in one proceeding.

Justice Fothergill rejected Voltage Pictures’ argument that this proposed “litigation plan” was contemplated by the notice-and-notice regime under sections 41.25 and 41.26 of the Copyright Act.  The notice-and-notice sections require ISPs to send “notices of claimed infringement” to their customers by email when they receive them from copyright owners.  However, these notices cannot contain offers to settle, requests or demands for payment or personal information, or links to such offers, request or demands.

Justice Fothergill held that the “litigation plan” was not legally permissible under the notice-and-notice regime, which requires that a copyright owner must first obtain a Norwich order to learn the identify of potential infringers before they can bring claims for copyright infringement.  Therefore, the class action could not be certified.

^[81] In Rogers, the Supreme Court of Canada reviewed the legislative history of the notice-and-notice regime and concluded that it was intended to serve two complementary purposes: (1) to deter online copyright infringement; and (2) to balance the rights of interested parties (at para 22). The Supreme Court continued (at para 24):

The notice and notice regime was not, however, intended to embody a comprehensive framework by which instances of online copyright infringement could be eliminated altogether. As a representative of Rogers explained before the House of Commons committee considering what would become of the Copyright Modernization Act, “notice and notice is not a silver bullet; it’s 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” (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, as I have explained, 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.

[82] Voltage’s proposed use of the notice-and-notice scheme as a litigation support tool represents a departure from the two purposes identified by the Supreme Court of Canada in Rogers. Voltage’s litigation plan changes the deterrence function to one of enforcement, thereby disrupting the regime’s balance.

[^83] The Supreme Court’s language is mandatory: 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 (Rogers at para 24). The statutory notice-and-notice regime has not displaced this requirement.

[^84] Justice William Pentney recognized this in ME2 Productions, Inc v Doe, [ME2], holding that a notice is meant to serve as a warning to cease infringing activity and as a “precursor to the launch of a claim for copyright infringement” (at para 36). Justice Pentney also emphasized the Supreme Court’s finding that “the notice and notice regime did not displace the requirement to obtain a Norwich order to compel disclosure, ‘but operates in tandem with it’” (ME2 at para 41).

^[85] Voltage’s proposed use of the notice-and-notice regime is contrary to s 41.25(3) of the Copyright Act, rendering the litigation plan unworkable. In particular, the proposed “Certification Notice” contains prohibited text that cannot be sent pursuant to the notice-and-notice regime. The “Certification Notice” contains:

(a) a demand that recipients click on a “hyperlink” to visit a website, which will presumably require disclosure of personal information to enable Class Counsel to communicate with notice recipients;

(b) a demand that recipients send personal information to an email account in order to opt-out of the class, which will disclose not only their email addresses but also their names and any metadata that might be imbedded in the email;

(c) a demand that recipients contact Class Counsel to provide evidence that the alleged infringement has ceased, coupled with a threat that any failure to do so will be used against the recipient; and

(d) an opportunity to opt-out of the litigation and provide evidence that infringement has ceased and steps have been taken to mitigate damages, contrary to the prohibition on offering settlement in a notice.

[^86] The motion for certification must therefore be refused on the ground that the litigation plan does not set out a workable method of advancing the proceeding on behalf of the Class, and of notifying Class Members of how the proceeding is progressing (Rule 334.16(1)(e)(ii)).

The motion to certify was dismissed, and Voltage Pictures was ordered to pay the representative defendant over $50,000 in legal costs.

This decision illustrates some of the complexities in addressing online infringements, including the need to properly identify the persons responsible for online accounts associated with the infringements.  The members of the Bereskin & Parr LLP Copyright and Digital Media group have experience with dealing with online infringements.