Supreme Court Blow: ISP Bill Payers Aren’t Piracy Police or Instantly Liable

When settlement-focused rightsholders spot a pirated movie being shared, they want to hold someone liable. Internet bill payers are regular targets, also in Canada where a movie studio painted 30 subscribers as 'authorizers' of movie piracy on BitTorrent. Hopes of a favorable ruling at the Supreme Court are now dead after the studio's appeal was denied. In its place, greater clarity for bill payers and an increased evidential burden for piracy settlement factories.
Voltage Pictures and parent Voltage Holdings are among the most active companies in the file-sharing settlement market, and by now, the model is well known.

1. Begin by monitoring BitTorrent swarms where the companies’ movies are being shared without authorization.

2. After capturing the IP addresses and other relevant data relating to alleged infringers, persuade a court to order local ISPs to hand over their customers’ personal details.

3. Apply pressure until the infringer pays or find someone else to hold liable.

It’s only when settlement letters begin landing on mats that the traditional settlement model has a chance of generating revenue. In some countries, the system runs like a finely tuned machine. In others, Canada for example, some courts have taken a keen interest in fundamental matters that should’ve been more critically examined elsewhere.

Voltage Holdings LLC vs. Doe: Background

Following the model outlined above, Voltage Holdings filed a claim at Canada’s Federal Court alleging that a number of internet users had been observed downloading and sharing the 2017 sci-fi movie ‘Revolt‘ using BitTorrent. From a list of over 100 ‘Doe’ defendants, Voltage boiled things down to focus on 30. “The worst of the worst,” Voltage said, citing data scooped up by anti-piracy tracking company Maverickeye.

Since none of the thirty filed a defense, Voltage sought default judgments, statutory damages, and costs against all of them. If the Canadian Internet Policy and Public Interest Clinic (CIPPIC) hadn’t intervened, that could’ve led to considerable misery for those involved. As it turns out, CIPPIC’s involvement appears to have provided the type of balance these types of cases have been crying out for; not least, a welcome review of the basics.

Evidence is Quite Important

There was no question that the Doe defendants were in default for not responding to the complaint, but they had something else in common too. All were identified as ISP account holders; their names were on file as those who pay the bills, and the IP addresses observed sharing the movie were allocated to their respective accounts at the time of the alleged infringements.

They had another thing in common too. Not one shred of evidence was presented to identify these people as the actual infringers, something CIPPIC argued was fatal to the claimant’s case. Voltage wasn’t unprepared; the company pointed out that its allegations of repeat infringement were backed up by infringement notices previously sent to the Doe defendants via their ISPs.

Since they had failed to stop the infringement after receiving the notices, Voltage said the burden should shift. The defendant internet bill payers should be required to disprove their association with the alleged infringement, instead of Voltage having to prove they were involved.

The Federal Court disagreed. Voltage had provided no evidence to show that the 30 Doe defendants were the infringers, or that they had sufficient control over the actual infringers to be seen as authorizers of their infringing behavior.

Unsurprisingly, Voltage took its case to the Federal Court of Appeal, ⁣but fared no better. In a highly-detailed judgment, a panel of three judges concluded that mere association with an IP address is simply not enough to show, on the balance of probabilities, that any of the Doe internet subscribers also shared its movie online.

Voltage Requests a Hearing at the Supreme Court

In short, the evidence underpinning the entire case was so weak it couldn’t fulfil its most basic task. Instead, guesswork attempted to fill in the gaps, and failed while doing so.

Hoping that the Supreme Court would somehow see things differently, Voltage requested leave to appeal. Late last week, the request was denied.

For reasons that aren’t being made clear by the Supreme Court, the case is subject to a publication ban. That means no transparency on why Voltage’s request was rejected, which at this late stage is somewhat disappointing. Nevertheless, CIPPIC has published its memorandum in opposition to the Voltage request (pdf) along with a summary of what the rejection means for those involved, and what could happen moving forward.

“The Supreme Court has denied leave to hear the appeal in Voltage v Doe #1, a case in which CIPPIC has played a central role. The case raised questions about the burden of proof borne by copyright owners and the nature of the duties copyright’s authorization right imposes on internet subscribers,” CIPPIC reports.

As a result of the refusal to hear the appeal, CIPPIC says that its successful arguments last year before the Federal Court of Appeal stand.

Plaintiffs must have direct evidence that Internet subscribers authorize infringing file-sharing through their accounts; liability cannot be inferred on the basis of notice and continued infringement alone.

• Authorization does not impose on subscribers a duty to police their internet accounts to enforce copyright owners’ rights on the basis of a notice alleging infringement. The well-settled standard of authorization (‘sanction, approve and countenance’) from CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, stands: an alleged authorizer must exercise a degree of control over a primary infringer.

The matter remains alive,” CIPPIC notes. “Voltage must now attempt to gather more evidence about the nature of the internet subscribers’ relationship to the infringing activity before it can return to the Federal Court to seek default judgment.”

That is likely to present challenges, especially so given the age of the case. With the knowledge that additional evidence will be required in future cases, expect that to be forthcoming. Every day, tens of thousands of Canadian IP addresses can be observed sharing movies, despite a decade of cases like this periodically making the headlines.