(https://www.blacklocks.ca)
Blacklock’s will be back in the Federal Court tomorrow on December 12,
2018 at 90 Sparks St. in Ottawa at 9:30 AM with a “mega” motion record of
almost 3,000 pages. Blacklock’s is certainly very determined.
It badly lost a Federal Court case alleging copyright infringement in
2016, which it did not appeal. It was then ordered to pay costs of $65,000 – a ruling which it appealed and badly lost.
Excerpts from these rulings and links are provided below.
Following these
defeats in 2016, there have been innumerable “docket” events in the active
cases – see T-2090-14 for example culminating
in the current massive motion filed on August 27, 2018. Blacklock’s changed
counsel – but only on January 10, 2018. Note that Blacklock’s former counsel
was Yavar Hameed, a well respected and experienced public interest Federal
Court litigator. Its new counsel is Scott Miller
of MBM Intellectual Property Law LLP.
Now, more than four years after the beginning of the “litany of litigation”, as I have called it, that has comprised 17 cases
against the Federal government and its agencies, Blacklock’s is seeking in the motion
returnable on December 12, 2018 to:
·
Amend
old pleadings to add a new cause of action involving circumvention of technical
protection measures. This comes more than two years after Justice Barnes ruled
during the trial of the first case in 2016 that circumvention of TPMs has not
been pleaded and allegations and arguments based on this would not be heard by
the Court. Frankly, even if circumvention had been properly pleaded at the original
trial, it’s very likely, as explained below, that it would have failed on the
facts before the Court and any correct interpretation of the law;
·
Convert
these “simplified actions”, which had an upward limit of $50,000 in terms of
liability, into normal actions with an enormous theoretical damage potential
based, inter alia, upon the assertion that “Statutory damages for
circumvention of a TPM may include statutory damages for the library of works
behind the TPM. The Locked Articles subject to potential statutory damages in
each of the Blacklock's cases is in the 1000's.” (footnote omitted); and,
·
To
seek punitive damages based upon extraordinarily unusual and even “personal allegations”
and “personal attacks” (according to the Attorney General of Canada) on the Government’s
lead senior counsel up to now, Alexandre Kaufman, which might have resulted in his
removal from the file.
Here are some excerpts from the key documents, which are on the public
record, for the December 12, 2018 motion:
1. Blacklock’s Notice of Motion and draft amended
pleading re Health Canada;
2.
Blacklock’s Written reps;
3.
Attorney General of Canada Factum; and,
4.
Blacklock’s supplemental reps.
As the Attorney General of Canada (“AGC”) summarizes Blacklock’s Motion:
1. There are two parts to
this motion, one that deals with allegations made by plaintiff's counsel
against Mr. Kaufman as it relates to his handling of freelancers that provided
affidavits and another that deals with amendments to the pleadings, amendments
that are largely time-barred. Both parts of the motion should, for the most
part, be rejected by this Court.
2. As it relates to the first part of this motion, the plaintiff
alleges that Mr. Kaufman breached his professional obligations by asking
freelance journalists to either attend for cross-examination or withdraw their
affidavits on consent. Mr. Miller contends that the act of putting an affiant
to an election is the suppression of evidence for which his client is entitled
to punitive damages. These facts form the basis of his amendment. There is
nothing improper with asking affiants if they are prepared to stand behind an
affidavit. An affiant must be prepared to face cross-examination on their
evidence. The amendments in relation to Mr. Kaufman's conduct arc improper and
irrelevant to any cause of action. They should not be permitted by this Court.
3. As for the second part of this motion, the plaintiff seeks to
amend the various statement of claims to: (a) add a claim that the plaintiff
owns copyright in all of the articles; (b) add a new cause of action of the
circumvention of a technological protection measure ("TPM") under
section 41.1of the Copyright Act; (
c) add a claim that the defendant's activities were for a commercial purpose; (d)
expand the claim to cover all articles that were available on Blacklock's
website during the relevant time and not just the specific articles that were
allegedly shared; (e) change the relief sought, including adding new
declarations, a permanent injunction, and changing its damages claims to one
where the plaintiff may elect either damages or statutory damages. These amendments,
which were not brought at the first opportunity, change the nature and
substance of the claim.
Below are some comments based upon my concerns as an experienced copyright
lawyer who cares about copyright policy and jurisprudence and also as a
taxpayer observing the potentially very large claims against the Canadian
government and the costs of defending this litany of litigation. First, here’s some
background.
Blacklock’s won a
Small Claims Court victory in 2015 against the Canadian Vintners Association for
$11,470 plus punitive damages of
$2,000 plus costs in a judgment that
was clearly wrongly
decided
but not appealed for obvious practical reasons – and which was, in any event, of
virtually no precedential value, being a Small Claims Court decision.
On November 10, 2016 Blacklock’s badly lost its first
and thus far only Federal Court trial – the substantive result which it did
not appeal.
It was seeking $17,209.10 plus costs. Let us recall some of what Justice Barnes, a very
experienced Federal Court judge, had to say about Blacklock’s in his judgment:
[45] Blacklock’s maintains that this case challenges the viability of
its business model including its right to protect news copy behind a
subscription-based paywall. The suggestion that Blacklock’s business cannot
survive in the face of the minor and discrete use that took place here is
essentially an admission that the market places little value on Blacklock’s
work-product. All subscription-based news agencies suffer from work-product
leakage. But to customers who value easy, timely and unfettered access to news
that may not be readily available from other sources, the price of a
subscription is worth paying. It also goes without saying that whatever
business model Blacklock’s employs it is always subject to the fair dealing
rights of third parties. To put it another way, Blacklock’s is not entitled to
special treatment because its financial interests may be adversely affected by
the fair use of its material. Nothing in these reasons should however be taken
as an endorsement of arguably blameworthy conduct in the form of unlawful
technological breaches of a paywall, misuse of passwords or the widespread
exploitation of copyrighted material to obtain a commercial or business
advantage.
Blacklock’s is now presumably but arguably very belatedly placing high
hopes on the last sentence, which appears to be meant as a general comment for
future litigants and not as an invitation or encouragement to Blacklock’s. Justice Barnes came to the right decision
based upon the evidence before him, which included Blacklock’s use of a paywall
and password protection. Litigants always have an obligation to put their “best
foot forward at the first opportunity”.
Soon thereafter on December 21, 2016 Blacklock’s got a very unpleasant surprise
just in time for Christmas of 2016 in the form of a harsh – though it could
easily have been even worse – costs award of $65,000 from Judge Barnes, which I then characterized
as a “lump of coal” coming as it did just before Christmas. Here’s some of what I said at that time:
In an unusually trenchant costs award, Justice Barnes of the Federal Court has ruled that
Blacklock’s must pay the taxpayers of Canada an “all-inclusive amount of
$65,000 plus interest….” This follows decisively upon Blacklock’s clear loss in the
first case of what I have
called a “litany of litigation” of 11 lawsuits against the Government of Canada
and/or its agencies, not to mention several other cases against other parties
in the Federal and Ontario courts.
The Court accepted that the Government was entitled to costs
based on the mid-level of Column III and double the otherwise payable costs
from the date of its early settlement offer of $2,000, which was “...more than
double the cost of individual subscriptions for each of the Department of
Finance officials who received and read the subject articles over which
Blacklock's claimed copyright protection.”
The Court observed that:
[7] …I also reject the Plaintiff's argument that this case
raised "strong public interest considerations". Rather, this case was
about the Plaintiff's attempt to recover
disproportionate damages without any apparent consideration to the legal merits
of the claim or to the costs that it imposed on the taxpayers of Canada.
[8] Any reporter with the
barest understanding of copyright law could not have reasonably concluded that
the Department's limited use of the subject news articles represented a
copyright infringement. Indeed, the fair dealing protection afforded by section
29 of the Copyright Act, RSC, 1985, c C-42, is so obviously applicable to the
acknowledged facts of this case that the litigation should never have been
commenced let alone carried to trial.
(highlight added)
The Court went on to say that:
[9] I am also troubled by Plaintiff's attempt to claim an
excessive amount of damages beginning with its demand for compensation
completely divorced from the Department's limited use of the two articles. In
no circumstances would Blacklock's losses have exceeded the cost of individual
subscriptions by the six officials who read the articles; yet Blacklock's
demanded a license fee equivalent to its bulk subscription rate of over
$17,000.00. This practice appears to be
consistent with Blacklock's usual approach which is to hunt down, by Access to
Information requests, alleged infringers and then demand compensation based on
an unwarranted and self-serving assertion of indiscriminate and wide-spread
infringement. The record discloses that in several instances government
departments acquiesced for business reasons and paid the full amounts demanded.
In this instance the Department appropriately took a hard line and succeeded in
its defence. (highlight added)
The Federal Court of
Appeal (“FCA”) heard Blacklock’s appeal of Justice Barnes’ costs ruling on
September 12, 2017 and perfectly predictably dismissed the appeal with costs.
The FCA not only ruled “from the bench” but, as I understand, did not even call
upon the Attorney General of Canada to respond. As practicing lawyers well
know, this means that Blacklock’s did not raise any issues that even needed an
oral response. This was a decidedly decisive disposition.
The FCA’s judgment,
which is somewhat surprisingly specific for a judgment from the bench, is available here. Notably,
the FCA:
·
Agreed with Justice
Barnes that the issues – primarily the fair dealing issue – were “well-settled
in the jurisprudence and, thus, neither novel nor of public significance”
(para. 5)
·
Ruled that Justice
Barnes’ costs award was “amply supported” by the factors in the rules and that
the Federal Court considered, among other things:
o the
respondent’s success in the litigation and the one-sided nature of the outcome,
o the
appellant’s litigation strategy,
o the
existence of a settlement offer,
o the
complexity of the litigation, and
o the
actual costs of the respondent.
(para7)
Flashing forward to the current motion and nearly two years of
inconclusive proceedings before two Case Management Judges of the Federal Court,
here are some further comments on the current mega motion.
If Blacklock’s somehow succeeds in getting its proposed amendments
allowed, its troubles may seriously increase. It will have to convince one or
more trial judges and potentially the FCA and SCC that that the law and the facts
are on its side, despite the fact it chose to go forward with the facts that have
already been presented to Justice Barnes – who clearly ruled adversely. In this
country, we have principles known as “issue estoppel” and “res judicata” – and
in common English for litigants to put their “best foot forward at the first
opportunity”.
Blacklock’s has a tough road ahead. It faces a potentially very large costs
award – even if it wins this pleadings amendment motion – and far more if it succeeds
on the motion but loses at the trials.
Regarding the substance of Blacklock’s proposed amendments, many if not
most copyright lawyers would be surprised and, indeed, upset if Blacklock’s
succeeds. Blacklock’s theory of circumvention is based on the assertion that:
Circumvention of the Blacklock’s TPM
includes:
(i) sharing of a unique subscriber
password with someone who is not
authorized to have the unique
subscriber password;
(ii) sharing of a Locked Article
accessed from a single user subscription to
any party; or
(iii) unauthorized person(s) or
entity(s) requesting and thereafter receiving a
Locked Article from anyone having
access either directly or indirectly to
the Locked Article.
Even if these facts can be proven, it’s arguably extremely unlikely that
any court could correctly conclude that they amount to actionable “circumvention”.
This will not be decided on this motion
– where Blacklock’s needs only to establish a “reasonable prospect of success.”
However, it’s very arguable that Blacklock’s has no “reasonable prospect of
success” on the circumvention claims - which is the required threshold it must
meet according to the case law to amend at this late stage – even leaving aside
other issues, such a limitation periods. Even if it somehow succeeds Blacklock’s
will have a very uphill battle going forward if it crosses this threshold.
Recall that Justice Barnes made it clear in para. 45 of this substantive
judgement quoted above that: “It also goes without saying that whatever business model
Blacklock’s employs it is always subject to the fair dealing rights of third
parties. To put it another way, Blacklock’s is not
entitled to special treatment because its financial interests may be adversely
affected by the fair use of its material.” That statement is NOT obiter dicta. It is the heart of the “ratio
decidendi” of this decision and is a binding and very precedential.
If the Court ultimately concludes that the mere copying of material or
even an entire article behind a paywall in a manner that amounts to fair
dealing is actionable circumvention, the legislation will need to be changed.
However, when one looks at the legislation and the difference between “access”
and “copy” control, the legislation is sufficiently clear to show that what is
going on here is not actionable circumvention. Even if there is circumvention
leading to unauthorized copying, the government departments are not engaged in
a “service” of offering unauthorized copying – which is what s. 41.1 requires.
Leaving aside proper interpretation of the statute for the moment
(which, of course, the Court cannot avoid), consider from a common-sense point
of view how incongruous it would be for a court to find that merely cutting and pasting from
– or even copying an entire article behind a paywall
- is actionable circumvention. This happens countless millions of times a day
when people share information for fair dealing purposes that may be on a
password protected newspaper website such as the New York Times, The Economist,
the Toronto Star, the Globe and Mail and even much smaller niche media such as
Hill Times and the Wire Report, which may use password protected paywalls of varying sophistication
and be more or less “effective” as a putative TPM. But they don’t sue their
customers – who subscribe because they value the utility of the information and
may actually need to conveniently share it for research purposes, for example.
Above all, the intention of the legislation is stop hacking, decrypting, bypassing
or “breaking” of digital locks or other devices to gain unauthorized “access” (none
of which is happening here) – not to nail anyone who shares or reads any
material behind a paywall – especially when such activity is “fair dealing”. In
any case, “reading” is not something that is even covered by the Copyright
Act.
I wrote about that decision extensively on my blog here. The decision should not only not be given “high precedential
value”. With all respect to the learned trial judge, the Nintendo
decision should be given little if any precedential value. As I said in my blog:
After the individual
Respondent agreed to a consent judgment against him for $70,000, the case was
“effectively uncontested”, as the Court noted. This was an “application” and
not an “action”, which means that evidence can only be put in by affidavit and
there are no “live” witnesses. The Respondents had filed written
representations before the commencement the hearing but provided no evidence
and did not cross-examine any of Nintendo’s witnesses on their affidavits.
The Court requested
and received further written final supplemental written submissions before the
conclusion of the hearing. The respondents did not, although entitled, reply. Indeed, the
Respondent’s counsel did not appear for the final oral argument.
The Court proceeded on
this basis to render a
judgment in which all but the introductory 14 paragraphs of this 181 paragraph
51-page judgment are a virtually verbatim reproduction of Nintendo’s final supplemental written submissions. Paragraphs 14
and thereafter until the conclusion of the judgment track paragraphs 14 and
thereafter of Nintendo’s supplemental written submissions.
There is nothing
necessarily improper about a judge copying material from a party’s memorandum.
The learned and very experienced trial judge provided
acknowledgement of his request for the supplemental written submissions and how
they were used. That satisfies a requirement that has been dealt with by the
Federal Court of Appeal in Apotex Inc. v. Janssen-Ortho Inc., 2009 FCA 212 (CanLII),
where the need for explicit “acknowledgment” of the adoption of a party’s
written submissions was addressed. For those further interested in jurisprudence
on what the Supreme Court of Canada recently referred to as “the long tradition
of judicial copying”, see Cojocaru v. British Columbia Women’s Hospital and Health
Centre, [2013] 2 SCR 357, 2013 SCC 30.
The real issue here is that the judgment makes some
sweeping pronouncements and awards an enormous amount of very likely
uncollectable damages based upon “effectively uncontested” arguments and unchallenged
evidence that, in the result, leaves the Court with something not much
different than a default proceeding. This left the Court without the benefit
of full submissions and argumentation on some of the key issues and relevant
case law. That is not the way the adversarial process normally works when we
depend on it to generate binding precedents. In this case, we now have a
judgment that, with respect, may be wrong in certain important aspects because
the Court did not have the benefit of opposing arguments.
Nintendo’s argument,
as adopted into the decision resulted in an enormous – by Canadian
standards – unprecedented
award of statutory damages in respect of circumvention of TPM measures. It is
based upon the Court’s conclusion that Nintendo is entitled to the maximum
level of $20,000 of statutory damages are due “for each of
the 585 Nintendo Games to which the Respondent’s circumvention devices provide
unauthorized access” (para 141 if Judgement). (emphasis added).
However, it is very
doubtful that Nintendo was entitled to damages for “each” of
these 585 works when there was no evidence that any of
them were actually illegally copied by anyone. Moreover, it appears that the Court was not provided with
arguably very relevant case law that might have at least resulted in an award
of a nominal fraction the maximum statutory damages of $20,000 per work. One
can only begin to imagine the absurd result if such an approach to damages were
used, for example, against a researcher (e.g. a university professor or
student) who somehow gains unauthorized access to a newspaper website or other
research database, perhaps reads a single article, is found to have
“circumvented” a TPM, and is then held liable for $20,000 for each the
tens or hundreds of thousands of individual articles that were never downloaded
or even read on the website.
(highlight added)
Coincidentally,
the defendants’ law firm in the Nintendo case was the same firm now
representing Blacklock’s – namely MBM Intellectual Property Law LLP.
Blacklock’s also faces significant hurdles if it hopes to win a pot of
gold at the end of the rainbow based on large damages award either from
copyright infringement or circumvention of all of the articles in its database,
or even the thousands of locked articles. Even if liability is somehow established
based upon the proposed new pleadings, the amount of statutory minimum damages
can be reduced, depending on the circumstances, to an effectively nominal amount and there is ample
case law establishing that statutory minimum damages must bear some correlation
to actual damages, which in these cases would likely be at most the cost of a one-year
institutional subscription, i.e. $15 to $17 K or so for each of the government
departments. The government is under no obligation to have multiyear subscriptions
to Blacklock’s.
Blacklock’s also faces some very serious procedural problems on this
motion. For example:
·
It
waited a very long time to bring this motion – almost two years after Justice
Barnes ruled that circumvention needed to be specifically pleaded;
·
Most
if not all the facts that Blacklock’s would presumably rely on, including the
presence of password protection and how it operates, were before Judge Barnes in
the first trial. The principles of stare
decisis, issue estoppel and the need to put one’s “best foot forward at the
first opportunity” could presumably be in play not only now but even if
Blacklock’s gets to go forward;
·
Many
if not most of the cases under consideration are now said by the defendants to
be statute barred because of the expiration of the applicable limitation period;
and,
·
Even
if Blacklock’s succeeds in amending the pleadings in some of these case, it
could face very large costs consequence because of, inter alia, prejudice to the defendants and the sheer scope of this
motion, including the very serious and even “personal” nature of the allegations
and attacks against former AGC counsel Alexandre Kaufman – now Master
Kaufman.
Will this turn out for Blacklock’s to be an example of the old adage
about “be careful what you wish for”?
HPK
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