Federal Court orders defendants to pay over $6M in private copying levies withheld from the Canadian private copying collective

F
EDERALCOURTORDERSDEFENDANTSTOPAYOVER$6MINPRIVATE
COPYINGLEVIESWITHHELDFROMTHECANADIANPRIVATECOPYING
COLLECTIVE

LAURENTCARRIÈREANDIANAALEXOVA*
LEGERROBICRICHARD,
LLP
L
AWYERS,ANDPATENTANDTRADE-MARKAGENTS
InCanadianPrivateCopyingCollectivev.FirstChoiceRecordingMediaInc.,(2008
FC636HugessenJ.;2008-05-21),theFederalCourtofCanada,inamotionfor
defaultjudgment,orderedfivedefendantstopayover$6Minprivatecopyinglevies
owedtotheCanadianPrivateCopyingCollective(hereinafterCPCC),inadditionto
aharshpenaltyequalingfivetimestheamountdueinsaidlevies.
Initsclaim,plaintiffallegedthatthedefendants,FirstChoiceRecordingMedia
Inc.
(hereinafterFirstChoice),M3TechnologyInc.(hereinafterM3),AM/FMMarketingLtd.
(hereinafterAM/FM),IonTechLtd.(hereinafterIon),ShiGuangPhanandHarryCheung,
haveelaboratedaschemetoavoidthepaymentofleviesrequiredbyPartVIIIofthe
Copyright
Act,
whileimportingblankmediaintothecountry.PlaintiffalsoallegedthatM3shouldbe
consideredastheactualimporteroftheblankmediaintroducedinthecountrybyIon,seen
thatitwasactingasitsagent.
Moreover,plaintiffsubmittedthatthecorporateveilshouldbeliftedinorderforM3tobe
heldaccountableforIon’sdisregardoftheapplicablelegalprovisionsandthatthetwo
defendantsshouldbejointlyliable.
Inaddition,plaintiffarguedthatShiGuangPhanandHarryCheungshouldalsobe
responsiblefortheunpaidleviesowedbythecorporatedefendants,seenthatassole
directorsofthecorporationsinquestion,they“actedwithfraudulentintenttofrustratethe
CPCC’slegitimatestatutoryrights”.Finally,plaintiffrequestedthatthedefendantsbe
orderedtopayapenaltypursuanttosection88(2)ofthe
CopyrightAct,alongwithintereston
theowedamounts.
IntheCourt’sopinion,FirstChoiceandAM/FMhadimportedblankmediaintoCanadaand
subsequentlyfailedtoreportsameandtopayanyoftherequiredlevies.Consequently,they
wererespectivelyfoundliablefor$1,737,809.22and$1,427,181.AsforIon,theJudge

©CIPS,2008.*Lawyerandtrade-markagent,LaurentCarrière,isaseniorpartnerwithLEGERROBICRICHARD,
LLP
amultidisciplinaryfirmoflawyers,andpatentandtrademarkagents.IanaALexovaisanarticling
studentwiththefirm.PublishedintheJuly2008issueofWorldMediaLawReport.Publication
328.046.

2
concludedthatithadbeensupplyingblankmediaunitstoM3whichhadnotoriginatedfrom
thecountryandforwhichnolevieshadbeenpaid.Therefore,Ionwasheldresponsiblefor
$3,203,539.50inunpaidlevies.
However,theJudgerejectedplaintiff’sargumentaccordingtowhichM3wasthereal
importerofblankmediaandIon,merelyhisactingagent.JusticeHugesseninsistedonthe
factthattheterm“importer”,asdefinedinthePrivateCopyingTariff,wasputinplaceto
ensurethatalevyisactuallypaidtocompensatetheeligibleauthors,makersandperformers
forthecopyingoftheirworkontoblankmedia.ThepossibilitythatM3mayhavetakenpart
orsomehowcontributedtotheimportsinquestionwasnotsignificantanddidnotmakeit
accountablefortheleviesowedbyIon.
TheCourtrefusedtoliftthecorporateveilregardingM3,sinceplaintiffhadnotallegednor
provedthatIonwasindeedcontrolledbysaidentity.Inaddition,itseemsthatshouldinfact
thecorporateveilhavebeenpierced,itwouldnotpersehaverenderedM3liableforIon’s
duesintermsoflevies.Inspiteoftheirconspicuousconduct,therequestpertainingtothe
jointliabilityofM3andIonwasalsodiscardedbytheJudge.
Fortheirpart,theindividualdefendantswerefoundresponsibleforthesumsowedbytheir
respectivecorporations,beingtheonlypeopletohaveactedasdirectors.Hence,the
corporateveilwasliftedintheirregardinorderfortheplaintifftobeabletorecoverthe
amountsdue,sincethecorporatedefendantswereinactiveandapparentlywithoutassets.
Lastly,theconductofthedefendantsandtheneedtofurtherdiscouragefromsamejustified
theCourttoimposeanadditionalpenaltyandthereforeorderthemtopayfivetimesthesum
thateachwasindebtedfor.Interestontheleviesowedwasalsodeemedappropriate.

3
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