The Court granted the motion for interlocutory injunction relief with respect to the emerging phenomenon in the Canadian market of pre-loaded "plug-and-play" set-top boxes. Set-top boxes are electronic devices that can be connected to any standard television set in order to provide additional functionalities to that television. The Defendants were individuals and businesses selling set-top boxes on which they have previously installed and configured a set of applications. The Plaintiffs submitted that these pre-installed applications could be used to access copyrighted content. Only one Defendant, Mr. Wesley doing business as MtlFreeTV.com, filed a record and appeared at the injunction hearing.
The Court was satisfied that the Plaintiffs established a strong prima facie case of copyright infringement and that an injunction would prevent irreparable harm without unduly inconveniencing the Defendants.
The Plaintiffs demonstrated that there was a serious issue to be tried, namely the prima facie copyright infringement pursuant to section 27 of the Copyright Act. Contrary to Mr. Wesley's argument, the Court found that the Defendants did not merely serve as a conduit, but rather, they deliberately encourage consumers and potential clients to circumvent authorized ways of accessing content both in the manner in which they promote their business, and by offering tutorials in how to add and use applications which rely on illegally obtained content. Further, the statutory defence provided in paragraph 2.4(1)(b) of the Copyright Act did not apply to the Defendants who went beyond selling a simple "means of telecommunication". The Court also found that the allegations of inducement to infringe constituted a serious issue to be determined at trial and not at the interlocutory stage.
The Court did not agree with the Plaintiffs' submission that they do not need to show irreparable harm in cases involving blatant copyright infringement, such as this one. However, the Court acknowledged that a strong finding on one prong of the tripartite injunction test, such as the serious issue above, may lower the threshold for the remaining factors. The Court was satisfied that the Plaintiffs established that they would suffer irreparable harm if this injunction were not granted. For example, the purchase of a pre-loaded set-top box provides the user with an incentive to permanently cancel their subscription to a distribution service such as those offered by some of the Plaintiffs. Further, the Court noted that the market for pre-loaded set-top boxes will keep growing if left unchecked and the Defendants, or any future defendants, are unlikely to have the financial resources required to compensate the Plaintiffs for their losses if they are ultimately successful.
The Court acknowledged that the Defendants' products display numerous legal applications. However, in the face of the prima facie copyright infringement, the Court found that the balance of convenience in this case favours the Plaintiffs. Further, the Court noted that the Defendants' businesses will not unduly suffer from being restricted to selling and advertising only legal, non-copyright-infringing applications until the decision on the merits.
Finally, the Court refused to approve an injunction of the type approved by the Supreme Court of Canada in MacMillan Bloedel Ltd v Simpson,  2 SCR 1048, which enjoined activities from all persons, including non-parties, having notice of the Court's Order. The Court concluded that this type of injunction would be overbroad in this case, preferring that any new co-Defendant will have fourteen days from the date they were added to bring a motion to challenge the issuance of the interlocutory injunction as it applies against them.