While SCC considers key statutory interpretation, FCA tosses alleged pirater's interim-order appeal

Interpretation of s. 2.4(1.1) of Copyright Act was key factor in case: law prof

While SCC considers key statutory interpretation, FCA tosses alleged pirater's interim-order appeal

Facing a copyright action brought by a collection of the most prominent companies in the entertainment industry, the alleged operators of an unauthorized digital streaming service recently failed at the Federal Court of Appeal in their challenge of the plaintiffs’ interim injunction, which had been obtained through an ex parte motion.

White (Beast IPTV) v. Warner Bros Entertainment Inc. dealt with one of the defendants’ appeals of the Federal Court orders, but a court has yet to rule on the merits of the Copyright infringement allegations. Among the key issues in the case was whether s. 2.4(1.1) of the Copyright Act places infringement liability on the shoulders of participants in a pirating scheme who are not, themselves, transmitting the stolen signal, says Ariel Katz, an associate professor at the University of Toronto Faculty of Law.

Tyler White and Colin Wright, the alleged operators of the internet protocol television (IPTV) service, Beast IPTV, are being sued for copyright infringement by Warner Bros., Amazon, Bell Media, Columbia Pictures, Disney, Netflix, Paramount Pictures, Sony Pictures Television and Universal Pictures. The plaintiffs allege Beast IPTV streamed their copyrighted works without authorization to tens of thousands of subscribers around the world.

While Katz says the Beast IPTV service is almost certainly illegal, it is not clear that White and Wright are the correct defendants.

The plaintiffs allege the defendants are liable under s. 3(1)(f) of the Copyright Act. The section gives the owner of copyright on “any literary, dramatic, musical or artistic work” the sole right to “communicate the work to the public by telecommunication.”

The question, says Katz, is whether White and Wright are the ones responsible for communicating the plaintiff’s work by telecommunication. “From what I understand the facts as described in the statement of claim and the plaintiff’s material, it's clear to me that White and Wright, they are not the ones who do that.”

IPTV services such as Beast will subscribe to Netflix and other services, take the signal they receive, circumvent the protection measures, and use their technology to transmit those signals to their subscribers.

It is “pretty clear” White and Wright do not transmit the signals, but are intermediaries who sell subscriptions to the service, says Katz.

The plaintiffs claim that liability still rests with White and Wright because of the definition in s. 2.4(1.1), under which communication of a work includes “making it available to the public… in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.”

Whether s. 2.4(1.1) – which is a recent addition to the Act – broadens Copyright in a way in which those not directly communicating the work are still liable, is a question that was heard by the Supreme Court of Canada in January, says Katz.

That decision is pending, and concerns the appeal of the Federal Court of Appeal’s ruling in Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2020 FCA 100. In his case in front of the same court, White argued that while they were obtaining the ex parte interim injunction order, the plaintiffs had improperly failed to disclose the Entertainment Software Association ruling.

The plaintiffs argued – and the Federal Court of Appeal agreed – the decision was not decisive to the orders under scrutiny, but Katz says the case is “very relevant.” The plaintiff’s theory rested on an interpretation of s. 2.4(1.1) which the appeal court rejected in that case, he says.

While challenging the injunction order at the Federal Court, the defendants argued the orders contained an Anton Piller order and a Mareva injunction, for which the requisite elements had not been met. At the appeal court, White (Wright had dropped his appeal) argued the Federal Court had erred in selecting the applicable test. To issue the order, he said, the court must be satisfied there was an extremely strong prima facie case, not a strong prima facie case, as the court had required. But the appellate court agreed with the Federal Court that only a strong prima facie case was necessary.

White also alleged counsel for the plaintiffs failed their duty of candour by not disclosing the Entertainment Software Association decision. But the court rejected the idea that the undisclosed case was “so decisive” that the ex parte orders should be set aside.

Finally, White argued the Federal Court erred by relying on the hearsay and double hearsay evidence of confidential sources. The plaintiffs had hired a private investigator to monitor Beast IPTV services during the injunction’s execution. The investigator found the plaintiffs attempted to conceal evidence, that they coordinated with each other directly after, and transferred and/or deleted Beast IPTV Service domains and subdomains. The investigator also reported to the Federal Court that the plaintiffs had lied about their involvement with Beast IPTV and the investigator described how they had tried to evade enforcement and conceal assets.

White’s argument on the inadmissibility of the hearsay evidence failed because the impugned evidence was aligned with the Federal Court’s interpretation of Rule 81 of the Federal Courts Rules. Two conditions were required for the affidavit evidence: that it be filed on an interlocutory motion and that the deponent state the grounds for their belief in their affidavit.

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