Date: 20050829
Docket: T-1402-05
Citation: 2005 FC 1179
OTTAWA, Ontario, August 29th, 2005
Present: THE HONOURABLE MR. JUSTICE KELEN
BETWEEN:
TELEWIZJA POLSAT S.A. and
TELEWIZJA POLSKA CANADA, INC.
Plaintiffs
and
RADIOPOL INC. and
JAROSLAW BUCHOLC
Defendants
REASONS FOR ORDER AND ORDER
[1] This is a motion by the plaintiffs for an interim, interlocutory or permanent injunction restraining the defendants from decoding the plaintiffs' encrypted television programming signals and reproducing the programs on the internet. Specifically, the plaintiffs seek the following relief from the Court:
(i) an order enjoining Jaroslaw Bucholc and Radipol Inc. by itself and by its officers, directors, employees and agents, from:
(a) decoding the plaintiffs' encrypted subscription programming signals without authorization; and
(b) further infringing the plaintiffs' copyright and trademarks;
(ii) an order compelling the defendants to deliver up to the plaintiffs all of the plaintiffs' copyrighted works in their possession, control or custody, or in the alternative, an order that all such materials be destroyed under oath and under the supervision of this Honourable Court;
(iii) an order validating service upon the defendants;
(iv) an order dispensing with service or allowing substituted service, if necessary; and
(v) costs for this motion on a substantial indemnity basis.
FACTS
[2] The plaintiff, Telewizja POLSAT S.A., (Polsat) is a Polish producer of television programs and the owner of the POLSAT 2 INTERNATIONAL television signal (Polsat Signal). Polsat transmits its television programming through the Polsat Signal which is broadcast in an encrypted form via satellite. The plaintiff, Telewizja Polska Canada Inc., (Polska Canada) has the exclusive right to distribute the Polsat Signal in Canada. It seeks out Canadian distributors interested in broadcasting the television programming and enters into distribution agreements with those distributors to permit the Polsat Signal to be received legally in Canada. Polska Canada also distributes the Polsat Signal via the internet directly to subscribers in Canada.
[3] The defendants are Radiopol Inc. (Radiopol), a Quebec company, and Jarolslaw Bucholc, its administrator. They operate an internet website, www.tvpol.com. The plaintiffs claim that the defendants are decoding the Polsat Signal without authorization, editing it, and making the individual program episodes available to the public, for a fee, via their website. The plaintiffs state that the programs clearly originate from their signal because the Polsat Signal logo appears on the top right-hand corner of the screen while the programs are playing.
[4] Polsat states that it has copyright ownership in the Polsat Signal as well as in several of the individual programs broadcast via the signal. For the programs in which copyright is owned by independent producers, Polsat is the exclusive broadcast licensee, with the sole right to broadcast the programming outside of Poland. The plaintiffs also state that they have common law trademark rights in respect of the Polsat and Polsat Signal logos.
[5] The plaintiffs have made numerous written demands that the defendants cease decoding the Polsat Signal without authorization and reproducing the programs on their website. To date, the defendants have not complied with those demands.
ISSUES
[6] The following issues are raised in this motion:
1. Whether the service of the Statement of Claim and Motion Record should be validated and an order for substituted service or dispensing with service be granted?
2. Whether an interim, interlocutory and permanent injunction should be granted?
ANALYSIS
Issue No. 1
Whether the service of the Statement of Claim and Motion Record should be validated and an order for substituted service or dispensing with service be granted?
[7] The plaintiffs state that they have attempted to serve the defendants personally with their Statement of Claim and motion materials, but have been unsuccessful. In particular, the plaintiffs arranged to have the materials delivered by bailiff to 2221 Walkley Avenue in Montreal, Quebec on August 16, 2005. This is the address listed for Radiopol and Mr. Bucholc on corporate records and is the address that a Radiopol representative provided to the plaintiffs over the telephone. The owner of the building reported to the plaintiff and an RCMP Officer that this apartment was vacated in May 2005.
[8] The plaintiffs also sent the materials by courier to a post office box in Alberta on August 16, 2005. This is an address that the RCMP was able to obtain for Mr. Bucholc. A status report confirmed that the package had been delivered to the post office box, but has yet to be picked up.
[9] The plaintiffs submit that they have made diligent and reasonable efforts to effect personal service on the defendants and request, in the circumstances, that substituted service via e-mail be allowed. Copies of the Statement of Claim and motion materials have already been sent to the following two e-mail addresses:
(i) jarek@radiopol.com on August 16, 2005. This e-mail address was confirmed by Radiopol to be Mr. Bucholc's address and the e-mail was confirmed by a trace to have been read at 1:58 pm on August 16, 2005; and
(ii) radio@radiopol.com on August 17, 2005. This e-mail address is listed as the contact e-mail for Radiopol on its website. This e-mail was confirmed by a trace to have been delivered.
[10] Substituted service is governed by Rule 136(1) of the Federal Court Rules, 1998 (the Rules), which reads:
136.(1) Where service of a document that is required to be served personally cannot practicably be effected, the Court may order substitutional service or dispense with service.
136. (1) Si la signification à personne d'un document est en pratique impossible, la Cour peut rendre une ordonnance autorisant la significtion substitutive ou dispensant de las signification.
[11] In Clipper Ship Supply Inc. v. Samatour Shipping Co., [1984] F.C.J. No. 949 (F.C.T.D.), Mr. Justice Dubé discussed when an order for substituted service would be appropriate:
¶ 7 The provision in Rule 310(1) [predecessor to Rule 136] for substitutional service is an exception to the general requirement for personal service. There is no automatic right to substitutional service whenever there is some difficulty in effecting personal service. The applicant must show to the Court that he has taken reasonable steps to effect personal service and that he has not been successful. He must also show that the substitution is an acceptable and reasonable one, bearing in mind that the object of the order for substititional service is to bring notice of the proceedings to the attention of the defendant.
[12] Pursuant to Rule 147, the Court may also validate service that has not been effected in the normal manner:
147. Where a document has been served in a manner not authorized by these Rules or by an order of the Court, the Court may consider the document to have been validly served if it is satisfied that the document came to the notice of the person to be served or that it would have come to that person's notice except for the person's avoidance of service.
147. Lorsqu'un document a été signifié d'une manière non autorisée par les présentes règles ou une ordonnance de la Cour, celle-ci peut considérer la signification comme valide si elle est convaincue que le destinataire en a pris connaissance ou qu'il en aurait pris connaissance s'il ne s'était pas sous-trait à la signification.
[13] In this case, the Court concludes that service has been effected on the defendants by
e-mail, and that this is valid service pursuant to the Rules.
Issue No. 2
Whether an interim, interlocutory and permanent injunction should be granted?
[14] The tripartite test for interim and interlocutory injunctions was set out by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at page 334 as follows:
Metorpolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.
(i) Serious Issue
[15] The plaintiffs submit that they meet the low threshold for serious issue in that they have demonstrated a clear breach of their rights under the Radiocommunication Act, R.S.C. c. R-2, the Copyright Act, R.S.C. 1985 c. C-42 and the Trade-marks Act, R.S.C. c. T-13.
[16] Paragraph 9(1)(c) of the Radiocommunication Act states that it is an offence to "decode an encrypted subscription programming signal...otherwise than under and in accordance with an authorization from the lawful distributor of the signal...". Any person who holds an interest in a subscription programming signal is entitled to seek damages or other remedies (including an injunction) pursuant to section 18 of the Radiocommunication Act. The plaintiffs submit that the defendants are in contravention of paragraph 9(1)(c) by decoding the Polsat Signal and that the plaintiffs, as copyright owner and exclusive licensee, are entitled to seek relief under section 18 of the Act.
[17] Section 21 of the Copyright Act provides a "broadcaster" with copyright in the signals that they broadcast. The plaintiffs claim that the defendants are infringing their broadcasting rights (contrary to section 27 of the Act) by:
(i) reproducing, adapting and communicating the Polsat Signal and programs;
(ii) creating derivative works based on the Polsat Signal and programs; and
(iii) authorizing retransmission of the Polsat Signal and programs to subscribers of the defendants' website.
[18] The plaintiffs state that the defendants are also guilty of passing off (contrary to section 7of the Trade-marks Act) by displaying the Polsat Signal logo on the homepage of their website, by displaying the Polsat Signal logo on the corner of the screen while the programs are playing and by using the confusingly similar mark "tvpol" in their domain name.
[19] The Court agrees with the plaintiffs that the possible infringement by the defendants of the Radiocommunication Act, the Copyright Act and the Trade-marks Act raises a serious question to be tried. Accordingly, the first element of the tripartite test is satisfied.
(ii) Irreparable Harm
[20] In order to meet the second element of the tripartite test, the plaintiffs must adduce "clear and non speculative" evidence that irreparable harm will follow if the defendants' activities are permitted to continue. See Centre Ice Ltd. v. National Hockey League, [1994] 166 N.R. 44 (F.C.A.).
[21] The plaintiffs submit that the defendants' activities are interfering with Polska Canada's ability to enter into distribution agreements with Canadian distributors. Mr. Boguslaw Pisarek, affiant for the plaintiffs, deposes that although negotiations have commenced, it will be extremely difficult to reach any agreement with Canadian distributors while the defendants are unlawfully making the most popular programs from the Polsat Signal available to the public in a manner that is beyond the plaintiffs' control and cannot be governed by the distribution agreements. In other words, the inability to contract with Canadian distributors is causing the plaintiffs to lose potential customers as well as credibility in the market place. The plaintiffs submit that this "loss of industry opportunity" cannot be quantified and that an injunction is the most appropriate remedy.
[22] I am satisfied, based on the evidence before me, that the plaintiffs will suffer irreparable harm if the defendant is permitted to continue its activities. Loss of actual and potential customers has been recognized as irreparable harm not compensable by damages. See Church & Dwight Ltd. v. Sifto Canada Inc. (1990), 20 O.R. (3d) 483 (Ont. Gen. Div.). Accordingly, the second element of the tripartite test is satisfied.
(iii) Balance of Convenience
[23] The plaintiffs submit that the balance of convenience weighs strongly in their favour given the defendants' infringing conduct. Further, the plaintiffs undertake to pay damages if it is determined at trial that the defendants should succeed on the merits of the claim.
[24] The Court is prepared to accept that the balance of convenience favours the plaintiffs. The plaintiffs have established a strong prima facie case of infringement and have demonstrated that they will suffer irreparable harm if the defendants are permitted to continue their infringing activities. As discussed by Mr. Justice Walsh in Universal City Studios, Inc. v. Zellers Inc. (1983), 73 C.P.R. (2d) 1 (F.C.T.D.) at 7:
[I]t is not in my view acceptable for an alleged infringer (and there is a strong prima facie case of this in these proceedings) to contend that it should be allowed to continue to do so, as it will suffer financial loss if it is prevented from continuing allegedly infringing sales, or that it may be doing Plaintiffs a favour by providing additional advertising for their product.
[25] Moreover, I am inclined to agree with the plaintiffs that, given the difficulties that they have experienced in attempting to contact the defendants, there are serious grounds to believe that the plaintiffs would have difficulties collecting damages from the defendants should the Court so order at trial.
[26] As the plaintiffs have satisfied all three elements of the tripartite test, the plaintiffs' motion for an interim injunction will be granted until one or both of the defendants come before this Court seeking to set aside or vary this interim injunction.
ORDER
THIS COURT ORDERS THAT:
1. Service of the Statement of Claim, Notice of Motion, and the Affidavits of Boguslaw T. Pisarek and Tomasz Gladkowski was validly effected as of August 16, 2005.
2. An interim injunction is granted enjoining Jaroslaw Bucholc and Radiopol Inc. from decoding the plaintiffs' encrypted subscription programming signals without authorization, and from further infringing the plaintiffs' copyright and trademarks.
3. Jaroslaw Bucholc and Radiopol Inc. are to deliver up to the plaintiffs all of the works in which the plaintiffs have copyright or trademark rights that are in their possession, control or custody, or in the alternative, destroy all such material under oath and under the supervision of this Court.
4. This Order shall remain in effect until one or both of the defendants appears before this Court and obtains an order setting aside or varying the injunction.
5. The plaintiffs shall provide notice of this Order to the defendants by:
(a) mailing a copy of this Order to 2221 Walkley Avenue, Montreal, Quebec;
(b) e-mailing a copy of this Order to radio@radiopol.com and jarek@radiopol.com; and
(c) publishing a notice in the following form in the Polish language newspaper, Wiadomosci:
The Federal Court has granted an interim injunction against Radiopol Inc. and Jaroslaw Bucholc ordering that these parties cease decoding and distributing encrypted subscription programming signals from Telewizja Polsat S.A. and Telewizja Polska Canada Inc. and ordering Radiopol and Jaroslaw Bucholc to deliver up all of the plaintiffs' works in their possession, control or custody, or in the alternative, destroy all such material under oath and under the supervision of this Court.
This Order will be in effect until either or both of Radiopol Inc. and Jaroslaw Bucholc come before the Federal Court at 330 University Avenue, 7th Floor, Toronto, Ontario, M5G 1R7, telephone (416) 973-9181 seeking to set aside or vary the Order.
6. The costs of this motion shall be in the cause.
"Michael A. Kelen" _______________________________
JUDGE
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1402-05
STYLE OF CAUSE: TELEWIZJA POLSAT S.A. and TELEWIZJA POLSKA CANADA, INC.
Plaintiffs
and
RADIOPOL INC. and JAROSLAW BUCHOLC
Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: AUGUST 22, 2005
REASONS FOR ORDER
AND ORDER BY: THE HONOURABLE MR. JUSTICE KELEN
DATED: AUGUST 29, 2005
APPEARANCES:
Julie Thorburn
Emily Larose FOR PLAINTIFFS
SOLICITORS OF RECORD:
Cassels Brock & Blackwell LLP
Barristers and Solicitors
Toronto, Ontario FOR PLAINTIFFS
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