Federal Court of Canada Interprets S. 38.1 Copyright Act Regarding Statutory Damages
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FEDERALCOURTOFCANADAINTERPRETSS.38.1COPYRIGHTACTREGARDING
STATUTORYDAMAGES
AlexandraSteele*
LEGERROBICRICHARD,LLP
Lawyers,Patent&TrademarkAgents
CentreCDPCapital
1001Victoria-Square–BlocE–8
thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242–Fax(514)8457874
info@robic.com-www.robic.ca
Foronlythefourthtimesincethecomingintoforcein1999ofsection38.1
CopyrightAct,(R.S.C.1985c.C-42)regardingstatutorydamages,theFederal
CourtofCanadawascalledupontointerpretthisprovisioninorderto
decideonanawardofsuchdamagesforinfringementofthePlaintiffs’
copyrightsinvarioustelevisionprogramsandcommunicationssignals.
[TelewizjaPolsatCanadaInc.v.RadiopolInc.,2006FC584(LemieuxJ.,May
10,2006)].
TheFacts
InAugust2005,TelewizjaPolsatS.A.,aPolishtelevisionproductioncompany,
anditsexclusiveCanadianlicensee,TelewizjaPolskaCanadaInc.,
(hereinafterthe“Plaintiffs”),initiatedanactionagainstaCanadiancompany,
RadiopolInc.anditspresidentJaroslawBucholc,(hereinafterthe
“Defendants”).TheDefendantsallegedlyoperatedanInternetwebsitewhich
allowedsubscriberstoviewtelevisionprogramswhichwereownedand
producedbythePlaintiffsandwerenormallybroadcastinanencryptedform
viasatellite.TheevidencerevealedthattheDefendantshaddecodedthe
Plaintiffs’signalsandreproducedandeditedtheminordertomakeindividual
episodesavailabletothepublicviatheInternet.
Plaintiffsthereforeclaimedcopyrightinfringement,aswellasabreachofthe
CanadianRadioCommunicationsAct(R.S.C.1985c.R-2),aswellaspassing
offofthePlaintiffs’trade-markandlogoundersection7Trade-marksAct
(R.S.C.1985c.T-13).ThePlaintiffsfurtherclaimedstatutorydamagespursuant
tosection38.1CopyrightAct,aswellaspunitivedamages.
©CIPS,2006.*Lawyer,AlexandraSteeleisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrademarkagents.Publication142,190.
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TheDefendantssystematicallyfailedtoappearbeforetheCourtinall
preliminaryandinterlocutorystagesoftheproceedings.Theydidnoteven
appearontheshow-causecontemptofCourthearingwhichwasscheduled
aftertheDefendantsbreachedaninterlocutoryinjunctionoftheCourt.Inlight
oftheDefendants’completefailuretodefendthecaseagainstthem,the
CourtgrantedthePlaintiffs’motionfordefaultjudgement.Uponrendering
defaultjudgment,thePlaintiffselectedstatutorydamagesascompensation
fortheDefendants’actsofinfringement.JusticeLemieux,whowasseizedof
thefile,directedareferencefortheevaluationofthequantumofsuch
statutorydamagesandnoticeofsuchreferencewasgiventotheDefendants
inordertoallowthemtoaddressthisissue.Despitereceivingthe
aforementionednotice,theDefendantsonceagainfailedtoappearbefore
theCourt.
Section38.1CopyrightAct
Therelevantportionsofthestatutereadasfollows:
Statutorydamages
38.1(1)Subjecttothissection,acopyrightownermayelect,atanytimebeforefinal
judgmentisrendered,torecover,insteadofdamagesandprofitsreferredtoinsubsection
35(1),anawardofstatutorydamagesforallinfringementsinvolvedintheproceedings,with
respecttoanyoneworkorothersubject-matter,forwhichanyoneinfringerisliable
individually,orforwhichanytwoormoreinfringersareliablejointlyandseverally,inasumof
notlessthan$500ormorethan$20,000asthecourtconsidersjust.
Wheredefendantunawareofinfringement
(2)Whereacopyrightownerhasmadeanelectionundersubsection(1)andthedefendant
satisfiesthecourtthatthedefendantwasnotawareandhadnoreasonablegroundsto
believethatthedefendanthadinfringedcopyright,thecourtmayreducetheamountofthe
awardtolessthan$500,butnotlessthan$200.
Specialcase
(3)Where
(a)thereismorethanoneworkorothersubject-matterinasinglemedium,and
(b)theawardingofeventheminimumamountreferredtoinsubsection(1)or(2)would
resultinatotalawardthat,inthecourt’sopinion,isgrosslyoutofproportiontothe
infringement,
thecourtmayaward,withrespecttoeachworkorothersubject-matter,suchlower
amountthan$500or$200,asthecasemaybe,asthecourtconsidersjust.[…]
Factorstoconsider
(5)Inexercisingitsdiscretionundersubsections(1)to(4),thecourtshallconsiderallrelevant
factors,including
(a)thegoodfaithorbadfaithofthedefendant;
(b)theconductofthepartiesbeforeandduringtheproceedings;and
(c)theneedtodeterotherinfringementsofthecopyrightinquestion.[…]
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Exemplaryorpunitivedamagesnotaffected
(7)Anelectionundersubsection(1)doesnotaffectanyrightthatthecopyrightownermay
havetoexemplaryorpunitivedamages.
TheFederalCourtJudgement
ThereferenceproceededwithoutanyinputwhatsoeverfromtheDefendants.
JusticeLemieuxheardvivavoceevidencefromtwowitnessesonbehalfof
thePlaintiffs.ThePlaintiffssoughtthemaximumawardof$20,000.00foreach
ofthe2,009programsillegallydecodedfromtheirsignalsandillegally
reproduced,editedandmadeavailabletothepublicontheDefendants’
website.
Thereasoningbehindstatutorydamagesisthattheactualdamagetoa
plaintiffresultingfromaviolationofitscopyrightisoftendifficult,ifnot
impossible,toprove,whichoftendiscouragescopyrightownerstoenforce
theirrights.Theavailabilityofstatutorydamagesshouldthatcantherefore
induceacopyrightownertoinvestintheenforcementofitscopyrightsand
thethreatofstatutorydamagesmaydeterpossibleinfringersbypreventing
theirunjustenrichment.
TheCourtnotedthatdecisionsinterpretingsection38.1CopyrightActwere
fewandfarbetween:sinceitsenactmentin1999,onlythreejudgements
discussedtheinterpretationofsaidsection.TheCourtthereforerevertedto
thelanguageofsection38.1CopyrightActinordertomakeitsdiscretionary
ruling.
Paragraph38.1(5)CopyrightActstatesthatinawardingstatutorydamages,
theCourtshouldconsiderallrelevantfactors,includingthegoodfaithorbad
faithoftheDefendants,theconductofthepartiesbeforeandduringthe
proceedingsandtheneedtodeterotherinfringementsofthecopyrightin
question.Sinceawardsofstatutorydamagescanrangebetween$500.00
and$20,000.00perworkforallactsofinfringement,theCourtisleftwitha
widearrayofpossibleawards.UnabletofindanyguidancefromCanadian
jurisprudence,theCourtnotedthattherewasaprovisionsimilartosection
38.1CopyrightActinthecorrespondingUnitedStateslegislation,butthatthe
PlaintiffsfailedtoadducetheproperAmericancaselawandtextbookson
thesubject.AccordingtoJusticeLemieux,ananalysisoftheU.S.lawwould
havebeenimportantforaproperappreciationofsection38.1CopyrightAct.
Underthecircumstances,JusticeLemieuxhadnoalternativebuttoturnback
tothewordingofthestatuteitselftorenderhisdecision,which,heconcluded,
gavetheCourtamandateto“[…]arriveatareasonableassessmentinallof
thecircumstancesinordertoyieldajustresult.”
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TheevidenceshowedthatthePlaintiffs’programminghadnotairedin
CanadawhentheDefendantsbegandecodingthesignalsandwhenthey
beganofferingtheinfringingprogrammingtoCanadiansubscribersonthe
Internet.JusticeLemieuxruledthatitwouldbeinappropriateandoutof
proportionwithnotonlywiththeactualinfringingacts,butalsowiththeinjury
sufferedbythePlaintiffs,orareasonableassessmentoftheprofitsearnedby
theDefendants,toawardthemaximumsoughtbythePlaintiffs.TheCourt
thereforeappliedtheadjustmentfactorofparagraph38.1(3)CopyrightAct.
Takingintoconsiderationtheneedfordeterrence,theDefendants’badfaith
andcompletedisregardforthePlaintiffs’litigation,theiroffersofsettlement
andtotheCourtprocess,theJusticeLemieuxassessedstatutorydamagesin
theamountof$150.00perwork.Atotalawardof$301,350.00wastherefore
grantedtothePlaintiffsforall2,009worksinfringedbytheDefendants.
TheCourtconcludedthattherewasnoneedforanawardofpunitive
damagessincetheDefendantshadalreadybeenfoundincontemptofcourt
andfined,andJaroslawBucholc,thepresidentofRadiopolInc,punishedby
imprisonmentifRadiopolInc.’swebsiteisnotdismantled.However,inlightof
theDefendants’reprehensibleandunreasonableconductthroughoutthe
proceedings,thePlaintiffswereawardedsolicitorandclientcosts.
Conclusion
TheCanadianCopyrightActpurportstogivecopyrightownersthesecurityof
knowingthateveniftheyareunabletodemonstratetheirdamagesorprove
theprofitsoftheinfringer,theycanelectstatutorydamagesatanytimeprior
tofinaljudgement,whichwillguaranteesomecompensationfortheactsof
infringement.Itclearlyappearsfromthisdecision,andfromtheother
decisionsconsideredbyJusticeLemieux,thatthequantumofstatutory
damageswillbekeptquitelowinmostcircumstances,includingwherea
copyrightownermaynothaveactuallysufferedanimportantlossofrevenue.
Oneislefttowonder:underwhatcircumstanceswilltheCourtmakean
awardofstatutorydamagesclosertothemaximumallowablebylaw?
TheCourtsaresensitivetothedifficultiesthatacopyrightownerfacesin
provingdamages,andinthisregard,section38.1CopyrightActappearsto
beaninvaluabletoolforboththecopyrightownerandtheCourt;however,it
remainstobeseenifthisprovisionwillbeusedtoitsfullestpotential.
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