APPEAL ALLOWED

Rogers Communications Inc. v. Voltage Pictures, LLC, 2018 SCC 38 (Copyright — Infringement — Norwich order)

On appeal from a judgment of the Federal Court of Appeal (Stratas, Gleason and Woods JJ.A.), 2017 FCA 97 setting aside the order of Boswell J., 2016 FC 881

The respondents are film production companies that allege that their copyrights have been infringed online by unidentified Internet subscribers who have shared their films using peer to peer file sharing networks. They sued one such unknown person and brought a motion for a Norwich order to compel his Internet service provider (“ISP”), Rogers, to disclose his contact and personal information. The respondents sought that the disclosure order be made without fees or disbursements payable to Rogers, relying on ss. 41.25 and 41.26 of the Copyright Act. These provisions, referred to as the “notice and notice” regime, require that an ISP, upon receiving notice from a copyright owner that a person at a certain IP address has infringed the owner’s copyright, forward that notice of claimed infringement to the person to whom the IP address was assigned. They also prohibit ISPs from charging a fee for complying with their obligations under the regime.

The motion judge granted the Norwich order and allowed Rogers to recover the costs of all steps that were necessary to comply with it. He found that while the statutory notice and notice regime regulates the process by which notice of claimed copyright infringement is provided to an ISP and an Internet subscriber, as well as the retention of records relating to that notice, it does not regulate an ISP’s disclosure of a subscriber’s identity to a copyright owner. The Federal Court of Appeal agreed with the motion judge that the statutory notice and notice regime does not regulate the disclosure of a person’s identity from an ISP’s records, but it confined Rogers’ recovery to the costs of complying with the Norwich order that did not overlap with the steps that formed part of Rogers’ implicit obligations under the statutory regime. Rogers appealed.

Held (9-0): The appeal should be allowed and the matter remitted to the motion judge to determine the quantum of Rogers’ entitlement to its reasonable costs of compliance with the Norwich order.

Per Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Brown, Rowe and Martin JJ.:

An ISP can recover its costs of compliance with a Norwich order, but it is not entitled to be compensated for every cost that it incurs in complying with such an order. Recoverable costs must be reasonable and must arise from compliance with the Norwich order. Where costs should have been borne by an ISP in performing its statutory obligations under the notice and notice regime, these costs cannot be characterized as either reasonable or as arising from compliance with a Norwich order, and cannot be recovered.

The notice and notice regime was enacted to serve two complementary purposes: to deter online copyright infringement and to balance the rights of interested parties including copyright owners, Internet users and Internet intermediaries such as ISPs. It was not intended to embody a comprehensive framework by which instances of online infringement could be eliminated altogether, and it does not go so far as requiring an ISP to disclose the identity of a person who has received notice to a copyright owner. Therefore, an owner who wishes to sue a person alleged to have infringed copyright online must proceed outside the notice and notice regime and 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.

Similarly, the notice and notice regime has not displaced the copyright owner’s burden, at common law, of bearing the ISP’s reasonable costs of compliance with the Norwich order. However, the statutory regime prohibits an ISP from charging a fee for performing any of its obligations arising under the regime. Accordingly, an ISP should not be permitted to recover the cost of carrying out any of the obligations, express or implicit, that will have arisen under the regime, even if it carries out the obligations only after having been served with a Norwich order. Otherwise, the distribution of financial burden which Parliament decided upon would be undermined by imposing upon copyright owners an obligation which was specifically allocated to ISPs in the notice and notice regime.

The three express obligations contained in ss. 41.26(1) (a) and 41.26(1) (b) of the Copyright Act carry with them several implicit obligations that an ISP must satisfy under the notice and notice regime. Since these implicit obligations are steps which are necessary to see that those express statutory obligations are discharged, an ISP will not be permitted to recover costs at the stage of complying with a Norwich order. Specifically, s. 41.26(1)(a) requires an ISP to determine, for the purpose of forwarding notice electronically, the person to whom the IP address belonged. It also requires an ISP to take whatever steps that are necessary to verify that it has done so accurately. Similarly, the records that an ISP must retain under s. 41.26(1) (b) must be accurate. Any steps which are necessary to verify the accuracy of those records therefore form part of an ISP’s obligations.

However, there is a distinction between an ISP’s obligation under the notice and notice regime to ensure the accuracy of its records that allow the identity of the person to whom an IP address belonged to be determined, and an ISP’s obligation under a Norwich order to actually identify a person from its records. While the records an ISP must retain under s. 41.26(1)(b) must be kept in a form and manner that allows an ISP to identify the name and address of the person to whom notice is forwarded under s. 41.26(1)(a), s. 41.26(1)(b) does not require that they be kept in a form and manner which would permit a copyright owner or a court to do so. The copyright owner would, however, be entitled to receive that information from an ISP under the terms of a Norwich order — which process falls outside the ISP’s obligations under the notice and notice regime. As such, an ISP is entitled to the reasonable costs of steps that are necessary to discern a person’s identity from the accurate records retained under s. 41.26(1)(b).

Given the statutory prohibition on the recovery of costs arising from the notice and notice regime, motion judges should carefully review an ISP’s evidence when assessing costs of compliance with a Norwich order, to determine whether an ISP’s proposed fee is reasonable, in light of its obligations under the notice and notice regime. In the instant case, Rogers is entitled to its reasonable costs of compliance with the Norwich order. However, the motion judge failed to interpret the full scope of an ISP’s obligations under s. 41.26(1) and failed to consider whether any of the eight steps in Rogers’ manual process to disclose the identity of one of its subscribers overlap with Rogers’ statutory obligations for which it was not entitled to reimbursement. Since it is impossible on the record to determine Rogers’ reasonable costs of compliance, the matter should be returned to the motion judge.

Per Côté J.:

There is agreement with the majority that the appeal should be allowed. However, there is disagreement with the proposition that any implied obligations in s. 41.26(1) of the Copyright Act categorically preclude an ISP from verifying aspects of its records at the time that a Norwich order is received and then seeking compensation for that work.

Taken together, ss. 41.26(1) (a) and (b) make clear that an ISP need not actually determine the identity of an alleged infringer. Thus, any work required to determine an alleged infringer’s identity and to disclose that identity pursuant to a Norwich order is not subsumed within the notice and notice regime and can therefore be subject to compensation in accordance with the common law. The common law Norwich regime permits an ISP to be compensated for reasonable costs of compliance.

None of the eight steps that Rogers undertakes in response to a Norwich order is supplanted by the notice and notice regime, since they do not involve verifying the accuracy of records which it was required by s. 41.26(1) to retain. Rather, Rogers follows this process in order to determine and verify the identity of an alleged copyright infringer (which it does not already know) based on those records. Assuming that this eight‑step process is otherwise reasonable, Rogers is thus entitled to full compensation for the steps it takes to identify an account holder and to disclose that information to a copyright claimant.

There is also disagreement with the proposition that any implied obligations in s. 41.26(1) of the Copyright Act categorically preclude an ISP from verifying aspects of its records at the time that a Norwich order is received and then seeking compensation for that work, for two reasons. First, customer information can change over time, and a Norwich order may be received well after the notice of infringement is first sent to the account holder. The accuracy of that information must still be verified at the time the account holder’s identity is requested by the copyright holder, since it is the account holder’s current identifying information that a claimant must obtain in order to initiate a legal proceeding for copyright infringement, not the identifying information as it may have existed when the notice was first sent. Second, it is possible that not all infringement notices are sent to the correct account holder in accordance with s. 41.26(1) (a). Therefore, and even if some steps in Rogers’ Norwich process could be characterized as verifying pre‑existing information or records, there is no irresistible clearness in the Copyright Act to justify displacing a sensible approach as to what is reasonable on the basis of a purported implied obligation in s. 41.26(1) . In these circumstances, there may be good justifications for Rogers to conduct more vigorous verifications. That said, judges are empowered to deny the costs of verifications by an ISP that are unnecessarily extensive or duplicative.

In the case at bar, the motion judge did not make an independent finding as to the reasonableness of Rogers’ eight‑step process. Accordingly, this matter should be remitted for such a determination.

Reasons for judgment by Brown J. (Wagner C.J. and Abella Moldaver, Karakatsanis, Gascon, Rowe and Martin JJ concurring)

Concurring Reasons by Côte J.

Court File Number: 37679

https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/17254/index.do