Date: 20121018
Docket: T-2055-11
Citation:
2012 FC 1219
Toronto, Ontario, October 18, 2012
PRESENT: The Honourable Mr. Justice Campbell
BETWEEN:
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ADOBE SYSTEMS INCORPORATED,
MICROSOFT CORPORATION, AND ROSETTA STONE LTD.
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Plaintiffs
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and
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DALE THOMPSON DBA APPLETREE
SOLUTIONS
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Defendant
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REASONS FOR JUDGMENT
AND JUDGMENT
[1]
In
the present action launched under the Copyright Act, RSC 1985, c C-42
(the Act ) the Plaintiffs claim that the Defendant infringed their
copyright in a number of works through the unauthorized reproduction and sale
of counterfeit copies of the Plaintiffs’ computer software products and the
reproduction of cover art used on their software program packaging.
I. Summary
Judgment
[2]
The
Plaintiffs argue that summary judgment is appropriate for the following
reasons: the evidence of the Defendant’s infringing conduct is overwhelming;
the Defendant’s Statement of Defence has no substantive merit; and, apart from
filing the Statement of Defence, the Defendant has not participated in the
action, including not appearing for the hearing of the summary judgment motion
although duly served with notice. I agree with this argument.
[3]
On
the uncontested evidence of copyright infringement on the record of the summary
judgment motion, I find the following facts: the Plaintiffs are all well-known
US companies and developers of popular software programs who own copyrights in
various software programs, and license these rights to a wide range of
licensees; the Defendant, a resident of Toronto, Ontario, engaged in
unauthorized reproduction of the Plaintiffs’ software programs and cover art
and offered the counterfeit reproductions for sale on the internet under the
name Appletree Solutions through the popular Kijiji and Craigslist websites since
at least the spring of 2011; and the Defendant directly assisted purchasers of
the pirated software by supplying detailed instructions and product keys for
activating the counterfeit software programs. In my opinion, with respect to
criteria for granting summary judgment pursuant to Rule 215 of the Federal
Courts Rules, I find that in the present case there is no genuine issue for
trial with respect to the claim or defence.
II. Deterrent
Relief
[4]
The
Plaintiffs argue that the Defendant’s conduct warrants deterrent relief by way
of an injunction, and orders for maximum statutory damages, punitive damages,
prejudgment interest, post-judgment interest, and solicitor client costs. I
also agree with this argument because I find that the Defendant’s infringing
conduct, and his response to being held accountable for this conduct, is
particularly egregious and requires a clear deterrent message to the Defendant,
and anyone else of like mind.
[5]
The
Defendant has failed to acknowledge any wrongdoing, rather his reaction to the
current proceedings has been to blame the Plaintiffs. In my opinion, the
following statements made by the Defendant in the Statement of Defence
discloses a misguided attitude of entitlement with respect to his infringing
conduct: the Plaintiffs erred by not issuing a cease and desist letter before
commencing the infringement action; the Plaintiffs are participants to a
“network effect” which the Defendant describes as an economic practice by which
the Plaintiffs establish market dominance and maximize their profits, while
also allowing and tolerating copyright infringement and piracy; and copyright
infringement and piracy actually lead to financial gains for the Plaintiffs,
which is why they fail to install protective measures in their software. It
appears that the Defendant’s knowledge and attitude towards theft of
intellectual property was gained in the course of working for a business law
firm in downtown Toronto. In my opinion, the evidence of the Defendant’s strong
intention to infringe requires the application of the law to deliver strong
deterrent measures.
A. Declaratory
and Injunctive Relief
[6]
I
find that the Plaintiffs are entitled to declarations regarding the subsistence
of copyright in the identified software programs and cover art, the ownership
of the copyright and the infringement of the copyright by the Defendant. An
injunction is appropriate to issue to protect these rights from continuing
infringement by the Defendant.
B. Statutory
Damages
[7]
Pursuant
to s. 38.1 (1) of the Act statutory damages may be awarded “in a sum of not less than $500 or
more than $20,000 as the court considers just”, with the proviso that, pursuant
to s. 38.1 (3), even the minimum amount can be lowered on the basis of
proportionality of damages to the infringing activity, “as the court considers
just”. Pursuant to s. 38.1(5), the following factors are to be taken into
consideration in awarding statutory damages: the good faith
or bad faith of the defendant; the conduct of the parties before and
during the proceedings; and the need to deter other infringements of the
copyright in question.
[8]
Given
what I consider to be a bad faith attitude on the part of the Defendant, his
conduct as recounted above, the need for deterrent relief as I have expressed,
and given that no argument has
been advanced by the Defendant on any these question, I find no reason not to
award maximum statutory damages in the amount of $340,000, being
$20,000 per work infringed for each of the three Plaintiffs.
C. Punitive
Damages
[9]
The
Plaintiffs seek punitive damages in the amount of $15,000 per Plaintiff for a
total of $45,000. Section 38.1(7) of the Act provides that an award of
statutory damages does not preclude the Plaintiffs from punitive and exemplary
damages. The leading case on punitive damages remains the Supreme Court of
Canada’s decision in Whiten v Pilot Insurance Co., 2002 SCC 18, [2002] 1
SCR 595 (SCC). The Court in Whiten ruled that punitive damages are
appropriate when a party’s conduct has been malicious, oppressive and high-handed,
offends the court’s sense of decency, and represents a marked departure from
ordinary standards of decent behaviour (Whiten v Pilot Insurance Co., supra
at para 36). Furthermore, punitive damages are to be awarded only when all
other penalties have been taken into account and are deemed inadequate to
accomplish the objectives of retribution, deterrence and denunciation (Whiten
v Pilot Insurance Co., supra at para 123).
[10]
Judges
have not shied away from awarding punitive damages in cases that present
similar circumstances to those in the current action. In fact, in recent years
punitive damages against individual defendants for copyright infringement have
ranged from $50,000 to $200,000 (Microsoft Corp. v PC
Village Co., 2009 FC 401 (FC); Louis Vuitton
Malletier S.A. v Yang, 2007 FC 1179 (FC), Louis Vuitton
Malletier S.A. v 486353 B.C. Ltd. [2008] BCSC 799,
[2008] BCWLD 5075 (BC SC [In Chambers])]. It is worth nothing that in Louis Vuitton Malletier S.A. v Yang, supra Justice Snider awarded $100,000 in punitive in damages on top of the
maximum statutory damages award.
[11]
It appears that if a defendant’s conduct can be
characterized as “outrageous”, “highly unreasonable” or showing a callous
disregard for the rights of the plaintiff, punitive damages will be warranted (Louis Vuitton
Malletier S.A. v Singga Enterprises (Canada) Inc., 2011 FC 776 (FC) at para 168).
When assessing whether conduct can be characterized in such terms, the
following factors are helpful to consider: (i) the scale and duration of the
infringing activities; (ii) cooperation of the infringing party during court
proceedings and willingness to admit wrongdoing; (iii) whether the infringing
party’s actions were knowing, planned and deliberate; (iv) whether the
infringing party attempted to conceal and cover up wrongdoings; (v) whether the
infringing party continues to infringe the copyright in question; and (vi)
whether the conduct of the infringing party in the course of the proceedings
has resulted in the additional costs to the Plaintiffs (Louis Vuitton
Malletier S.A. v Singga Enterprises (Canada) Inc., supra at para 170-176).
[12]
While
there is no evidence of recidivist activity on the part of the Defendant,
nevertheless, I am of the opinion that he is on the negative side of each of the
other factors. Considering the quantum of punitive damage in the
comparable cases, I find that the Defendant’s conduct and attitude as described
in paragraphs 4 to 6 of these reasons certainly qualify for an award of
punitive damages. I find that the amount sought by the Plaintiffs is most
reasonable.
D. Pre-judgment
and Post-judgment Interest
[13]
Pursuant to s.128 (1) and s.129 (1) of the Act,
I find that the Plaintiffs are entitled to both pre-judgment and post-judgment
interest in accordance of the laws of Ontario being the locus of the pirating. The prescribed rate of pre-judgment
interest is 1.3%, and the prescribed rate of post-judgment interest pursuant to
s.127(2) of the Ontario Courts of Justice Act, as published by the
Deputy Attorney General for orders issued in the fourth quarter of 2012, is
3.0% (see:
http://www.attorneygeneral.jus.gov.on.ca/english/courts/interestrates.asp).
E. Costs
[14]
Finally,
the Plaintiffs request an award of costs on a solicitor client basis within the
Court’s discretionary powers set out in Rule 400(1) of the Federal Court
Rules. Such costs are appropriate where a party has acted in a
reprehensible, scandalous or outrageous manner (Louis Vuitton Malletier S.A. v Yang, supra; Young
v Young,
[1993] 4 S.C.R. 3 (SCC) at para 66; Rice v. New Brunswick, [2002] 1 S.C.R. 405
(SCC) at para 86). In my opinion, this is such a case. In the course of oral
argument in the hearing of the present action, Counsel for the Plaintiffs
advised that the Plaintiffs have suffered costs of at least $60,000 to
prosecute this action against the Defendant. In my opinion there is no reason
why the Plaintiffs should bear any of these costs given the Defendant’s conduct
as detailed in these reasons. As a result I grant the Plaintiffs’ request.
JUDGMENT
ACCORDINGLY,
THIS COURT’S JUDGMENT is that:
It is declared that:
1.
Copyright
subsists in the computer software programs and cover art identified in the
evidence filed in support of the Plaintiffs’ motion, namely:
a.
Adobe
Acrobat X;
b.
Microsoft
Word for Mac 2011; Microsoft Excel for Mac 2011; Microsoft PowerPoint for Mac
2011; and Microsoft Outlook for Mac 2011 (hereinafter, collectively “Microsoft
software”);
c.
Rosetta
Stone Japanese Level 1, 2, and 3;
d.
nine
unique works of cover art used with Adobe InDesign CS; Adobe Creative Suite 4
Master Collection; Adobe Creative Suite 5 Master Collection; Adobe Acrobat X;
Adobe After Effects CS5; Adobe InCopy CS5; Adobe Lightroom 2; Adobe Lightroom
3; and Adobe Font Folio 11 (hereinafter, collectively “Adobe cover art”); and
e.
two
unique works of cover art used with Rosetta Stone Arabic Levels 1-3; Rosetta
Stone Chinese Mandarin Levels 1-3; Rosetta Stone English (American) Levels 1-5;
Rosetta Stone French Levels 1-3; Rosetta Stone German Levels 1-3; Rosetta Stone
Greek Levels 1-3; Rosetta Stone Hebrew Levels 1 & 2; Rosetta Stone Hindi
Levels 1-3; Rosetta Stone Italian Levels 1-3; Rosetta Stone Japanese Levels
1-3; Rosetta Stone Korean Levels 1-3; Rosetta Stone Persian Levels 1-3; Rosetta
Stone Portuguese Levels 1-3; Rosetta Stone Russian Levels 1-3; Rosetta Stone
Spanish (Spain) Levels 1-3; and Rosetta Stone Spanish (Latin America) Levels
1-5 (hereinafter, collectively “Rosetta Stone cover art”);
2.
the
Plaintiff Adobe Systems Incorporated is the owner of copyright in the Adobe
Acrobat X software and the Adobe cover art, the Plaintiff Microsoft Corporation
is the owner of copyright in the Microsoft software, and the Plaintiff Rosetta
Stone Ltd. is the owner of copyright in the Rosetta Stone Japanese Level 1, 2,
3 software and the Rosetta Stone cover art; and
3.
the
Defendant has infringed the Plaintiffs’ copyright in the Adobe Acrobat X
software, the Adobe cover art, the Microsoft software, the Rosetta Stone
Japanese Level 1, 2, 3 software, and the Rosetta Stone cover art, and has
authorized, induced and procured infringement of the Plaintiffs’ copyright in
the identified computer software programs by his customers.
It is FURTHER ADJUDGED that:
1.
Permanent
injunctions hereby issue to restrain the Defendant from:
a.
infringing
copyright in the software programs, cover art or any other works in which the
Plaintiffs own copyright, and from authorizing or inducing and procuring others
to do so including, without limitation, from directly or indirectly:
(i)
reproducing
or communicating to the public by telecommunication all or a substantial part
of the computer software programs listed in Appendix A to the Statement of
Claim, and Adobe or Rosetta Stone cover art identified in the evidence;
(ii)
authorizing,
directing, assisting, inducing and procuring others to infringe copyright in
any of the computer software programs listed in Appendix A to the Statement of
Claim;
b.
selling,
distributing, exposing for sale, offering for sale or importing any infringing
copies of any of the computer software programs listed in Appendix A to the
Statement of Claim, or any other works in which the Plaintiffs own copyright;
and
c.
infringing
copyright in works the Plaintiffs own copyright in, including any such works
which come into existence after the commencement of these proceedings.
2.
The
Defendant is directed to forthwith pay to the Plaintiffs:
a.
statutory
damages in the maximum amount prescribed by section 38.1 of the Copyright
Act in respect of the infringement of copyright in the software programs
and cover art, namely:
(i)
$80,000
to the Plaintiff Microsoft Corporation;
(ii)
$200,000
to the Plaintiff Adobe Systems Incorporated; and
(iii)
$60,000
to the Plaintiff Rosetta Stone Ltd.
b.
punitive
damages in the amount of $15,000 to each of the Plaintiffs;
c.
pre-judgment
interest in the prescribed amount of 1.3% on the award of statutory damages
calculated from April 8, 2011;
d.
post-judgment
interest in the prescribed amount of 3.0% on the award of statutory damages
calculated from the date of judgment;
e.
costs
in the amount of $60,000.
“Douglas
R. Campbell”
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