Federal Court of Appeal rejects Bell, Videotron, Rogers’ request to increase fine in copyright case

The case stemmed from a lawsuit against the sellers of pre-loaded Android set top boxes

Federal Court of Appeal rejects Bell, Videotron, Rogers’ request to increase fine in copyright case

The Federal Court of Appeal has denied Bell, Videotron, and Rogers’ appeal to increase the fine imposed against the defendants in a copyright infringement case for violating the court’s injunction order.

In 2016, Bell, Videotron, and Rogers sued the sellers of pre-loaded set-top boxes or Android TV boxes for copyright infringement. The media companies alleged that the ready-made device permitted unauthorized access to their television programming. As a result, these sellers violated broadcasters’ exclusive right to make their programming available to the public.

The federal court issued an interlocutory injunction to prevent the defendants from manufacturing, advertising, selling, or offering for sale these set-top boxes. Red Rhino Entertainment and its sole director, Eric Adwokat, were among these defendants. The media companies alleged that between December 2016 and March 2018, Red Rhino and Awokat continued to configure, market and sell set-top boxes in breach of the court’s interlocutory injunction.

The federal court was satisfied beyond a reasonable doubt that Red Rhino and Adwokat’s activities were in breach of the interlocutory injunction and constituted contempt of court. In a 2021 decision, the federal court imposed a fine of $40,000 against Red Rhino and Adwokat, who were held jointly liable for payment of this fine.

Appeal to increase fine

Bell, Videotron, and Rogers appealed to the Federal Court of Appeal, requesting the court to increase the fine imposed against Red Rhino and Adwokat. However, the appeal court found no error that would permit it to intervene to vary the penalty imposed by the federal court.

The appeal court explained the limits of permissible appellate review of penalties for contempt, noting that the criminal sentencing principles apply. The court emphasized that an appellate court cannot intervene because it might have imposed a different sentence or weighed the relevant factors differently.

The court said, “Absent an extricable error of law, intervention is only warranted where an appellate court is convinced that the penalty is demonstrably unfit or unreasonable.”

The appeal court is satisfied that the federal court applied the correct principles in determining the appropriate penalty. The court is not convinced that the federal court needed to say more about the need for general deterrence or inappropriately disregarded this factor. The court noted that the plaintiffs mixed, to a certain extent, the purposes of penalties for contempt with the civil remedy of damages available for copyright infringement.

The court explained that the purpose of a sentence for contempt is to foster compliance with court orders by sanctioning those who defy them. On the other hand, civil damages for copyright infringement seek to compensate plaintiffs whose copyright is infringed and to dissuade infringement more generally. The court pointed out that the plaintiff’s evidence spoke to the alleged prevalence of copyright infringement as opposed to the apparent frequency of breach of the court injunction.

Penalty is not disproportionate

The court did not find the federal court’s penalty so disproportionate that it could not stand when the evidence before the court was considered. The appeal court found that the federal court was only aware that the respondents were operating on a commercial basis, had a bricks-and-mortar office, and had offered for sale and presumably sold the infringing products at several trade and home shows, flea markets over the internet and through their bricks and mortar location. The federal court also had evidence of the lifestyle enjoyed by Adwokat, which included stays in expensive hotels and first-class air travel. However, the federal court had no information as to the actual magnitude of Red Rhino’s sales made in violation of the injunction.

The appeal court further noted that the range of penalties imposed by the federal court in many previous and subsequent cases for acts of contempt for breach of an injunction issued to protect a plaintiff’s intellectual property rights range, in 2023 dollars, from a little over $1,500 to $190,000. The court imposed the maximum sum on a large corporate defendant who earned several million dollars in breach of a judgment, but most fines imposed were at the lower end of the range. The court ultimately dismissed Bell, Videotron, and Rogers’ appeal.

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