Supreme Court of Canada Decision in Rogers v Voltage Clarifies Role of ISPs in Copyright Infringement

| September 14, 2018

The Supreme Court of Canada issued its ruling in Rogers Communications Inc v Voltage Pictures LLC, 2018 SCC 38, today, the latest installment in a long series of ongoing efforts by Voltage to establish a controversial mass copyright litigation model in Canada and the first decision to meaningfully interpret Canada's notice-and-notice regime. As CIPPIC argued in its intervention, which was ably prepared by our external counsel, Jeremy de Beer and Bram Abramson, the decision under appeal discouraged ISPs from conducting rigorous quality assurance checks necessary to reduce mis-identification of customers accused of copyright infringement. It also placed the cost burden of increasingly expansive copyright litigation models on customers of ISPs. All this, in turn, jeopardizes privacy rights of mis-identified customers; exposes innocent individuals to legal threats and costly lawsuits; raises Canada's Internet access fees (already amongst the highest in the world) even higher; and undermines competition by disproportionately impacting smaller ISPs who are less able to diffuse the costs of robust quality assurance.

The ruling narrowed a prohibition, imposed by the Federal Court of Appeal, on any cost recovery for quality assurance protocols employed by ISPs when compelled to identify customers in the context of a copyright lawsuit. The court held that ISPs will be permitted to recover some (but not all) of these costs, sending the matter back to the Federal Court for determination of what specific quality assurance protocols are reasonable and non-duplicative. This, in turn, removes cost-based disincentives to adopt robust quality assurance protocols by ISPs.

Specifically at issue in Voltage was the level of rigour ISPs must undertake when identifying customers accused of copyright infringement at various stages of the copyright enforcement process. In Canada, ISPs are typically implicated at two stages of this process. At the first stage (the 'notice-forwarding' stage), ISP subscribers accused of infringement are not identified, but an ISP will forward a notice to the customer associated with an IP address accused of infringing activity. At the second stage (the litigation or 'Norwich' stage [CIPPIC, para 23]), some rights holders will seek a court order compelling ISPs to disclose the identity of accused subscribers, punitively for the purpose of initiating a lawsuit (or, more commonly, to send threatening legal demands). ISP costs will be recoverable in court for second or 'Norwich' stage identification processes. But under the Copyright Act first stage identification processes are only cost recoverable at a rate set by the government, which has so far declined to set such a rate. The Federal Court will now be called upon to determine which quality assurance steps must occur at each of these two stages.

The manner in which the Federal Court ultimately aligns accuracy assurance obligations at the two stages might have far-reaching implications. Imposing too rigorous of an accuracy obligation at the first, notice-forwarding stage will lead to crippling costs for ISPs given the volume of notices. On the other hand, finding that rigorous identification protocols are unreasonable or duplicative at the second or 'Norwich' stage will lead to lawsuits against innocent individuals.

ISPs are collectively called upon to forward millions of notices each month. This notice-forwarding stage typically entails a cursory level of identification by the ISP - enough to match the IP address with a customer email or mailing address so the notice of infringement can be forwarded. At such scales, false positives are almost inevitable and can, to some degree, undermine the objectives of the notice and notice regime. Receiving a notice of alleged infringement has been shown to be an effective deterrent against repeat infringement [CIPPIC, para 24] but, of course, this deterrent value does not arise if the notice is sent to the wrong account. [Brown, J, para 34] In addition, some notices inaccurately imply liability and entice the ISPs' customers to self-identify and settle at extreme rates (the government can easily fix these defficiencies by formalizing the notice process).* Nonetheless, an automated process can achieve relatively high levels of accuracy meaning that only a small percentage of notices reach the wrong destination and the global deterrent affect remains high. On the other hand, imposing rigorous or absolute accuracy under threat of legal penalty [Brown, J, para 33] at the notice-forwarding stage will entail exorbitant human resources and significant delays given the scale of notices handled on a daily basis by major ISPs. The marginal benefits of undertaking these astronomical costs does not appear proportionate.

By contrast, relatively few ISP customers are implicated in the second or 'Norwich' stage, in that only a few thousand ISP customers are included in lawsuits each year. Identifying customers under the Norwich stage has historically been an involved process, with multiple staff conducting, confirming and cross-checking details in various databases to ensure with a high degree of confidence that the correct person is identified. Given the relatively low volume of individuals implicated at this stage, rigorous identification remains costly, but not to crippling degrees. Moreover the negative impact of a false positive at this second stage - an innocent person gets sued - far eclipses the negative impact that arises if a notice of infringement is forwarded to the wrong person at the first stage. Madam Justice Côté eloquently captured this state of affairs in her concurring opinion:

"Given that Rogers receives more than two million notice and notice requests each year, the fraction of cases in which a notice is not sent to the correct account holder by the automated platform may not justify adopting the degree of manual verifications that Rogers employs in response to Norwich orders. But, in the Norwich context — where there are substantially fewer requests and a higher cost if an error is made — there may be good justifications for conducting more rigorous verifications. It is therefore reasonable for Rogers to undertake such verifications, recognizing that the sheer number of the notice and notice requests it receives may make perfect compliance an illusory goal in that context." - Côté, J, concurring, para 71

The damage wrought by multiple false positives at the litigation or Norwich stage will only increase as mass litigation models take hold in Canada.

It is now incumbent on the Federal Court to establish identification standards that are 'just right'. That is, standards that recognize the 'illusory' nature of perfect accuracy at the notice-forwarding stage, while equally cognizant of the hazards that can flow to the falsely accused if identification standards at the Norwich stage are not robust enough.

* The following text was added in response to input following publication: "In addition, some notices inaccurately imply liability and entice the ISPs' customers to self-identify and settle at extreme rates (the government can easily fix these defficiencies by formalizing the notice process)."

Image credits (left to bottom right): smileycreek, "Don't Feed The Trolls", October 4, 2014, Flickr, CC-BY-NC-SA 2.0; h0us3s, "Hazard Warning-Electricity", September 11, 2006, OpenClipart, CC-0 1.0; jaschon, "Padlock Icon", July 25, 2010, OpenClipart, CC-0 1.0.

By Tamir Israel, Staff Lawyer, CIPPIC