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ISPs Won’t Work (Entirely) for Free: SCC holds ISPs entitled to reasonable costs of compliance with Norwich order
Posted in Copyright, Media

In Rogers Communications Inc. v. Voltage Pictures, LLC (2018 SCC 38), a unanimous Supreme Court of Canada recently held that Rogers Communications Inc., an Internet service provider (“ISP”), was entitled to recover reasonable costs of complying with a Norwich order from Voltage Pictures LLC, the copyright owner. The Court remitted the matter to the motion court to determine the quantum of costs. While eight judges held that an ISP would only be entitled to recover the costs for work not covered by its obligations under the “notice and notice” regime set out in the Copyright Act, Côté J went a step further in finding that an ISP’s existing obligations under the Act did not necessarily preclude it from recovering certain costs from the copyright owner.

Background

To address the increasing ubiquity of copyright infringement online, Parliament introduced the “notice and notice” regime in 2015, set out in ss. 41.25 and 41.26 of the Act. Section 41.25 allows a copyright owner to give notice to an ISP that a certain IP address had infringed the owner’s copyright. The ISP is then required, under s. 41.26, to give notice of that infringement to the IP address holder. Section 41.26(2) provides that an ISP may not charge a fee for complying with its obligations under s. 41.26 unless the Minister has fixed a maximum fee. Since the Minister has not yet fixed a maximum fee, ISPs are currently unable to charge a fee for the work undertaken to fulfil their obligations under the notice and notice regime.

The notice and notice regime, as acknowledged by the Court in this case, only goes so far. Its intention is to balance the rights of interested parties, including the rights of innocent users. Instances of copyright infringement are not taken down (as they are under the U.S. Digital Millennium Copyright Act), nor are ISPs required to disclose the identities of those responsible for the infringement.

Thus, a copyright owner seeing to sue someone for uploading material online that infringes their copyright must seek out a Norwich order, a type of pre-trial discovery that requires an ISP to determine and disclose the identity of the person who was responsible for the copyright infringement. The Court confirmed in Rogers that the notice and notice regime has not displaced the necessity of a Norwich order.

Rogers Communications v Voltage Pictures

Voltage is a film production company that has financed and produced films such as The Hurt Locker (2008), Dallas Buyers’ Club (2013), and Colossal (2016). Voltage claims that thousands of its films have been unlawfully shared online by unidentified persons. It sued one such person, “John Doe”, for copyright infringement and obtained a Norwich order compelling Rogers, John Doe’s ISP, to disclose the contact and personal information of John Doe. Voltage intends to eventually launch a “reverse” class-action against approximately 55,000 people who have similarly infringed its copyright.

The issue in this case was whether Rogers should be entitled to recover from Voltage the costs of the work it had to do in order to comply with the order.

To resolve this question, the Court identified several sub-questions: do Rogers’ obligations in complying with the Norwich order overlap entirely, in part, or not at all with its obligations as an ISP under the notice and notice regime? And,

  • If the obligations overlap entirely, is an ISP prevented by s. 41.26(2) from recovering the reasonable costs of compliance with the Norwich order?
  • If the obligations overlap in part, to what extent can Rogers charge a fee for the reasonable costs of compliance with such overlapping steps?

If there was no overlap between the steps Rogers was required to take under the Copyright Act and the steps Rogers would take to comply with the Norwich order, the Court acknowledged that, at common law, Rogers would be entitled to recover costs of all steps that were necessary to comply with the Norwich order. In this case, Rogers had claimed a fee of $100/hour + HST. 

Rogers entitled to costs for identification and disclosure

Brown J., writing for Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Rowe and Martin JJ. , decided that an ISP’s obligations in complying with a Norwich order do not entirely overlap with its obligations under s. 41.26, and an ISP is entitled to recover reasonable costs for work pertaining to these steps. However, the Court found that ISPs are not able to recover the cost of carrying out any of its obligations, whether express or implicit, under the notice and notice regime.

In reaching this decision, the Court first addressed the question of implicit versus express obligations under the notice and notice regime. Implicit obligations are those steps that are necessary in order to discharge an ISP’s express duties. For example, in order to discharge the express duty of forwarding a notice of infringement to an IP address holder, it is implicit that an ISP must determine the IP address holder and verify that information. Since implicit obligations are contained within an ISP’s express obligations, Brown J held that 41.26(2) bars ISPs from charging copyright owner for costs incurred in satisfying both express and implicit obligations under s. 41.26.

However, the Court went on to note that compliance with a Norwich order requires more than compliance with s. 41.26. For instance, an ISP is not required under s. 41.26 to identify the name and address of a person receiving notice; nor does it require an ISP to disclose the identity of a person receiving notice. Under s. 41.26, an ISP is only required to retain records that would allow such a person to be identified. This duty of retention does not include the duty to retain the records in a form that allows a court or copyright owner to determine identity. For instance, an ISP may keep its records in a digital form that is usable to the ISP but not readable to other parties. The duty of an ISP to actually disclose its records, which may include converting or translating its records to a form readable by a court or a copyright owner, is a duty required by the Norwich order and not s. 46.21(1)(b).

The Court held that Rogers is entitled to recover the costs of these steps.

In reaching this decision, the Court noted that this result is consistent with the fact that the notice and notice regime was not meant to supplant the need for a Norwich order: the regime requiring an ISP to ensure the accuracy of its records that allow the identity of a person to whom an IP address belonged to be identified, and Norwich orders requiring the ISP to identify a person from its records. Furthermore, the Court reminded the parties that only reasonable costs are recoverable.

Justice Côté—a step further

Côté J. wrote a separate, concurring,  judgement. While she agreed that the appeal should be allowed, she went further than the rest of the Court in finding that Rogers was entitled to recover costs of all of the steps it took in response to the Norwich order. Further, she disagreed that any implicit obligations contained within s. 41.26 would categorically exclude an ISP from recovering costs related to those obligations. She noted that since a copyright holder is not required to proceed through the notice and notice regime, the obligations of an ISP under s. 41.26 are not necessarily duplicative of the obligations of an ISP under a Norwich order. In addition, even if certain steps are duplicative, customer information can change, so an ISP should not be precluded from seeking compensation for verifying existing information or records. 

With thanks to articling student Sophia Ma for her assistance in drafting this article.

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