Date: 20060510
Docket: T-1402-05
Citation: 2006 FC 584
Ottawa, Ontario May 10,
2006
PRESENT: The Honourable Mr. Justice Lemieux
BETWEEN:
TELEWIZJA
POLSAT S.A. and
TELEWIZJA POLSKA CANADA INC.
Plaintiffs
and
RADIOPOL INC. and
JAROSLAW BUCHOLC
Defendants
REASONS FOR ORDER AND ORDER ON
STATUTORY DAMAGES
[1]
On
January 19, 2006, I granted the plaintiffs default judgment in their action
against the defendants on account of the defendants’ failure to file a
statement of defence within the time set out in rule 204 of the Federal
Courts Rules,1998. (the Rules)
[2]
In
granting default judgment, I did not assess damages since the plaintiffs were
seeking statutory damages pursuant to section 38.1 of the Copyright Act (the
Act) in the maximum allowable amount of $20,000 per work in respect of 2,009
works, which, if granted, would amount to a damage award of over $40,000,000.
Considering section 38.1 of the Act was new legislation which had not
previously been substantively interpreted and which conferred upon this Court
substantial discretion in the assessment of statutory damages, I was of the
view the defendants should have an opportunity to address that issue.
[3]
Consequently,
I referred the issue of all damages and costs flowing from the default judgment
for consideration at the show-cause contempt hearing scheduled before me in Toronto, commencing
Monday, January 30, 2006 at 9:30 a.m. I directed the plaintiffs serve the
defendants by mailing a copy of the default judgment to the address in Montreal
where Radiopol Inc.’s corporate documents show its registered head office to be
and by mailing a copy of the default judgment to a post office box in Airdrie,
Alberta, a suburb of Calgary, where Jaroslaw Bucholc, the directing mind of
Radiopol Inc. is said to be residing. In addition, I directed a copy of the
default judgment be served upon the defendants by e-mailing a copy to radio@radiopol.com and jarek@radiopol.com.
[4]
The
defendants did not appear on the show-cause contempt hearing, nor did they
appear in connection with the assessment of statutory damages. After hearing
from witnesses on behalf of the plaintiffs on the technicalities related to
service by e-mail and the opening and reading of e-mails, I am satisfied both
the show-cause contempt order and the plaintiff’s motion for default judgment
had come to the attention of the defendants. This determination is consistent
with Justice Kelen’s validation of service by e-mail at those addresses of
motion materials for the interlocutory injunction he granted against the
defendants on August 29, 2005 (see 2005 FC 1179).
[5]
The
plaintiffs’ statement of claim was served and filed on August 12, 2005. In
essence, it alleges that Radiopol Inc., a corporation incorporated pursuant to
the laws of Quebec, and its directing mind, Jaroslaw Bucholc, breached, inter
alia, Telewizja Polsat S.A. (Polsat) copyrights by selling, in their
operation of the Internet website at www.tvpol.com
subscriptions, upon payment of a monthly fee of $5.00 to $6.00, which allows subscribers
to view individual television program episodes including news, sports games and
movie programming which is produced by Polsat. Polsat’s programming is
packaged in the Polsat 2 international television signal (Polsat 2) and broadcast
by Polsat from Poland in an encrypted form via satellite.
[6]
The
plaintiffs claim without authorization from Polsat, the producer of the
programming on Polsat 2, and without authorization from Telewizja Polska
Canada, Inc., (Polska Canada), the exclusive licensee in Canada of the Polsat 2
programming, the defendants decode the Polsat 2 signal, reproduce it without
authorization, edit it, and make individual episodes available on a
video-on-demand format to the public from their Internet website www.tvpol.com.
[7]
According
to the plaintiffs’ statement of claim, the defendants’ activities also violate
paragraph 9(1)(c) of the Radiocommunications Act which provides no
person shall decode an encrypted subscription programming signal otherwise than
under and in accordance with an authorization from the lawful distributor of
the signal or feed. Section 18 of the Radiocommunications Act provides a
person who has suffered loss or damage as a result of conduct, inter alia,
contrary to paragraph 9(1)(c) of the Act, may, in any court of competent
jurisdiction, sue for and recover damages from the person who engaged in the
conduct, or obtain such other remedy, by way of injunction, accounting or
otherwise, as the court considers appropriate.
[8]
Plaintiffs
also assert violation of section 7 of the Trademarks Act because the
defendants’ Internet site displays the Polsat trademark and logo (the
trademark) on its home page. This trademark is also displayed in the corner of
the screen during the viewing of the programming. Moreover, the defendants’
website also uses the trademark associated with various individual programs for
which the plaintiffs are the authorized licensees. In addition, plaintiffs say
the domain name of the infringing site is, itself, a violation of Polska
Canada’s trademark because that company is the owner in Canada of the trademark
TV Polonia in respect of which an application for trademark registration in
Canada is pending. Plaintiffs say the defendants’ unauthorized use of “TV.
Pol” in the domain name is confusing to the public and constitutes a
passing-off in contravention of the Trademarks Act.
[9]
In
the alternative to statutory damages, the plaintiffs seek general damages for
breach of the Copyright Act, the Radiocommunications Act, and for
trademark infringement. Plaintiffs say the defendants’ activities are
interfering with Polska Canada’s ability to enter into distribution agreements
with licensed Canadian broadcasting distribution undertakings (BDUs) and its
own plans to distribute Polsat 2 to Canadian subscribes via the Internet. They claim
this is the very heart of Polska Canada’s business and the
Polsat 2 agreement which took over two years to finalize. They claim this has
resulted in a substantial loss of revenue to Polska Canada.
[10]
Plaintiffs
also seek punitive damages of $500,000 on the basis such damages are generally
awarded to express outrage at the “outrageous conduct of the defendants”. They
say conduct warranting punitive damages is harsh, vindictive, reprehensible and
malicious, oppressive conduct and “so extreme in its nature and such that by
any reasonable standard it is deserving of full condemnation and punishment”
relying upon the decision of the Federal Court of Appeal in Lubrizol Corp.
v. Imperial Oil, Ltd., [1996] 3 F.C. 40, at paragraph 30.
[11]
They
also rely upon the following factors supporting a finding of punitive damages:
(a) the clear and
intentional breach by the defendants of the plaintiffs’ intellectual property
rights;
(b) the profits
made by the defendants are the direct result of these breaches, aggravated by
the inability to determine the extent of these profits;
(c) the ongoing
continuation of breaches in the face of repeated written requests to cease and
desist, service of a statement of claim, service of injunctive motion materials
and service of Justice Kelen’s interim injunction as well as the show-cause
order issued by this Court;
(d) the
modifications and improvements the defendants have made to Radiopol’s website
since the injunction was served;
(e) the flagrant
avoidance of service exhibited by the defendants demonstrating a clear attempt
to flout the processes of the Court.
[12]
The
plaintiffs request the injunction granted by Justice Kelen should be extended
for a permanent injunction on a go-forward basis.
[13]
Finally,
plaintiffs seek their costs in the default proceedings on a solicitor-client
basis.
[14]
In
their motion for default judgment Polsat elected for statutory damages based on
section 38.1 of the Copyright Act which reads:
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38.1
(1) Subject to this section, a copyright owner may elect, at any time before
final judgment is rendered, to recover, instead of damages and profits
referred to in subsection 35(1), an award of statutory damages for all
infringements involved in the proceedings, with respect to any one work or
other subject-matter, for which any one infringer is liable individually,
or for which any two or more infringers are liable jointly and severally, in
a sum of not less than $500 or more than $20,000 as the court considers just.
Where
defendant unaware of infringement
(2)
Where a copyright owner has made an election under subsection (1) and the
defendant satisfies the court that the defendant was not aware and had no
reasonable grounds to believe that the defendant had infringed copyright, the
court may reduce the amount of the award to less than $500, but not less than
$200.
Special
case
(3)
Where
(a)
there is more than one work or other subject-matter in a single medium,
and
(b)
the awarding of even the minimum amount referred to in subsection (1) or (2)
would result in a total award that, in the court’s opinion, is grossly out
of proportion to the infringement,
the
court may award, with respect to each work or other subject-matter, such
lower amount than $500 or $200, as the case may be, as the court considers
just.
Collective
societies
(4)
Where the defendant has not paid applicable royalties, a collective society
referred to in section 67 may only make an election under this section to
recover, in lieu of any other remedy of a monetary nature provided by this
Act, an award of statutory damages in a sum of not less than three and not
more than ten times the amount of the applicable royalties, as the court
considers just.
Factors
to consider
(5)
In exercising its discretion under subsections (1) to (4), the court shall
consider all relevant factors, including
(a)
the good faith or bad faith of the defendant;
(b)
the conduct of the parties before and during the proceedings; and
(c)
the need to deter other infringements of the copyright in question.
No
award
(6)
No statutory damages may be awarded against
(a)
an educational institution or a person acting under its authority that has
committed an act referred to in section 29.6 or 29.7 and has not paid any
royalties or complied with any terms and conditions fixed under this Act in
relation to the commission of the act;
(b)
an educational institution, library, archive or museum that is sued in the circumstances
referred to in section 38.2; or
(c)
a person who infringes copyright under paragraph 27(2)(e) or section 27.1,
where the copy in question was made with the consent of the copyright owner
in the country where the copy was made.
Exemplary
or punitive damages not affected
(7)
An election under subsection (1) does not affect any right that the
copyright owner may have to exemplary or punitive damages. [emphasis
mine]
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38.1
(1) Sous réserve du présent article, le titulaire du droit d’auteur, en sa
qualité de demandeur, peut, avant le jugement ou l’ordonnance qui met fin au
litige, choisir de recouvrer, au lieu des dommages-intérêts et des profits
visés au paragraphe 35(1), des dommages-intérêts préétablis dont le montant,
d’au moins 500 $ et d’au plus 20 000 $, est déterminé selon ce que le
tribunal estime équitable en l’occurrence, pour toutes les violations — relatives
à une oeuvre donnée ou à un autre objet donné du droit d’auteur —
reprochées en l’instance à un même défendeur ou à plusieurs défendeurs
solidairement responsables.
Cas
particuliers
(2)
Dans les cas où le défendeur convainc le tribunal qu’il ne savait pas et
n’avait aucun motif raisonnable de croire qu’il avait violé le droit
d’auteur, le tribunal peut réduire le montant des dommages-intérêts
préétablis jusqu’à 200 $.
Cas
particuliers
(3)
Dans les cas où plus d’une oeuvre ou d’un autre objet du droit d’auteur sont
incorporés dans un même support matériel, le tribunal peut, selon ce qu’il
estime équitable en l’occurrence, réduire, à l’égard de chaque oeuvre ou
autre objet du droit d’auteur, le montant minimal visé au paragraphe (1) ou
(2), selon le cas, s’il est d’avis que même s’il accordait le montant minimal
de dommages-intérêts préétablis le montant total de ces dommages-intérêts
serait extrêmement disproportionné à la violation.
Société
de gestion
(4)
Si le défendeur n’a pas payé les redevances applicables en l’espèce, la
société de gestion visée à l’article 67 — au lieu de se prévaloir de tout
autre recours en vue d’obtenir un redressement pécuniaire prévu par la
présente loi — ne peut, aux termes du présent article, que choisir de
recouvrer des dommages-intérêts préétablis dont le montant, de trois à dix
fois le montant de ces redevances, est déterminé selon ce que le tribunal
estime équitable en l’occurrence.
Facteurs
(5)
Lorsqu’il rend une décision relativement aux paragraphes (1) à (4), le
tribunal tient compte notamment des facteurs suivants :
a)
la bonne ou mauvaise foi du défendeur;
b)
le comportement des parties avant l’instance et au cours de celle-ci;
c)
la nécessité de créer un effet dissuasif à l’égard de violations éventuelles
du droit d’auteur en question.
Cas
où les dommages-intérêts préétablis ne peuvent être accordés
(6)
Ne peuvent être condamnés aux dommages-intérêts préétablis :
a)
l’établissement d’enseignement ou la personne agissant sous l’autorité de
celui-ci qui a fait les actes visés aux articles 29.6 ou 29.7 sans acquitter
les redevances ou sans observer les modalités afférentes fixées sous le régime
de la présente loi;
b)
l’établissement d’enseignement, la bibliothèque, le musée ou le service
d’archives, selon le cas, qui est poursuivi dans les circonstances prévues à
l’article 38.2;
c)
la personne qui commet la violation visée à l’alinéa 27(2)e) ou à l’article
27.1 dans les cas où la reproduction en cause a été faite avec le
consentement du titulaire du droit d’auteur dans le pays de production.
Dommages-intérêts
exemplaires
(7)
Le choix fait par le demandeur en vertu du paragraphe (1) n’a pas pour effet
de supprimer le droit de celui-ci, le cas échéant, à des dommages-intérêts
exemplaires ou punitifs.
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[15] The
plaintiffs called two witnesses to testify at the proceedings in Toronto: the
first witness was Baguslaw Pisarek, Polska Canada’s President.
The second witness was Thomasz Gladkowski, a consultant to Polska Canada. It
is he who developed and maintains a web site named TV Polonia.com. I summarize
their testimony relevant to the issue of statutory damages.
[16] Polska
Canada was first established in 1995 after it became the exclusive licensee in
Canada of TV Polonia, one of the channels of the Polish Broadcasting
Corporation which is State owned and may be compared in status to the CBC in Canada. In
1997, it became licensed by the CRTC when placed on the CRTC’s list of eligible
satellite services. Since that time, TV Polonia programming has been
distributed to Canadian subscribers through BDUs.
[17] In
June of 2005, Polska Canada became the exclusive Canadian licensee
of the programming of Polsat which is fed through Polsat 2. Polsat is not
owned by Poland. It is a commercial joint stock
company. The rights and obligations of the plaintiffs are found in an
agreement entered into on June 23, 2005.
[18] Polska
Canada then applied, through a Canadian BDU, to have the Polsat programming
listed for distribution to Canadian subscribers by being placed on the list of
eligible satellite services. That application to the CRTC was made on July 28,
2005.
[19] It
is clear from the evidence I heard on Polsat’s programming, which consists of
TV programs of all types (news, sports, sitcoms, reality TV and movies) it was
not distributed to Canadian subscribers because Polska Canada and
Polsat had not yet received permission from the CRTC. In addition, while a
website for Polsat programming is contemplated, the web site had yet to become
operational.
[20] The
measure of damages to the plaintiffs attributable to the defendants’ illegal
offerings of the Polsat 2 programming on their website www.tvpol.com focused on comparing the
activities of the defendants with Polska Canada’s known experience with the
distribution of TV Polonia’s signal in Canada.
The testimony was to the effect in terms of prices, Canadian revenues and number
of subscribers derived from number of hits or visitors to the defendants’
Internet site, the activities of the defendants were comparable in scope and
scale to the activities of Polska Canada for
its distribution of the programming of TV Polonia. Both witnesses added,
however, Polsat’s programming would be more attractive than the programming of
TV Polonia.
[21] At page 108 of the transcript of the proceedings of January 30,
2006, the president of Polska Canada measured at $300,000.00 US the annual
revenues derived from Canadian subscribers to the TV Polonia programming which
he equated to what the defendants would derive from Canadian subscribers to
illegal Polsat programming offered on their website because, as noted, they
were broadly similar in terms of subscribers, programming and subscription
fees. The apportionment is necessary because both TV Polonia and Polsat
programming is offered in the United States through exclusive licenses to Polska U.S.
[22] It
was Mr. Gladnowski’s testimony which explained how the plaintiffs arrived at
the total number of 2009 Polsat programs or clips available on the defendants
website. This figure arrived at from calculations of regularly-aired programs
is based on a run between March, 2005 and November 25, 2005, i.e. a period of
249 days or 35 weeks (see Exhibit “B”, Tab S of the plaintiffs Document brief
filed at the January 30, 2006 hearing).
[23] Mr. Gladnowski confirmed he had verified the Polsat programming
during this period and confirmed Polsat’s copyright in all programs or clips
listed in Exhibit “B”, Tab S. He testified Polska Canada had fourteen thousand Canadian subscribers for its TV Polonia
programming, and to the fact, after Justice Kelen had issued the interim
injunction, the defendants continued their offerings of Polsat programming and
even improved the layout of its www.tvpol.com’s
home page and programme offerings. He further testified as to the confusion
which had arisen among subscribers to www.tvpol.com
who thought they were subscribing to TV Polonia.com programming.
[24] Finally, Mr. Gladnowski was able to discover the source code to
the programming on the defendants’ website. He confirmed that the defendants
website was operated by RadioPol and that the copyright content was provided by
Mr. Bucholc. (see, Document brief, Tab M)
[25] As counsel for the plaintiffs put it, the nub of their case in
damages rests on the wrongful appropriation of the Polsat material through the
decoding by the defendants of the Polsat 2 signal containing that programming.
The figure of 2009 programs appropriated by the defendants assumes the Polsat 2
signal was decoded because those programs were available to subscribers on the
defendants’ website. In this context, the basis for damages is not focused on
how many Canadian subscribers may view Polsat programming on the
defendants’website.
[26] As noted the plaintiffs have elected for statutory damages pursuant
to section 38.1 of the Act in lieu of damages and profits.
[27] The plaintiffs seek the
maximum $20,000 for 2,009 program clips illegally decoded from Polsat 2 and illegally
reproduced, edited and made available on their website.
[28] The
jurisprudence interpreting section 38.1 of the Act is sparse. This
provision came into force only on October 1, 1999. The notion of statutory
damages in lieu of damages and profits (provided for in section 34 and
35 of the Act) is derived from U.S. legislation. Two
decisions of this Court are relevant. First, there is the decision of Wing
v. Velthuizen (2001), 9 C.P.R. (4th) 449, a decision of Justice
Nadon, as he then was. The second is the case of L.S. Entertainment Group
Inc. v. Formosa Video (Canada) Ltd., 2005 FC 1347,
a decision of Justice Gibson.
[29] I need not refer to a third decision, that of Ritchie v. Sawmill
Golf & Country Club Ltd. [2003] O.J. No. 3144, a decision of Ducharme,
J. of the Ontario Superior Court of Justice. That case applied subsection
38.1(2) of the Act to award the sum of $ 200 for each of 9 photographs
and 5 enlargements. This subsection has no application in this case. $200 per
work is less than the range provided for in paragraph 38.1(1) which is between
$500 and $20,000 per work.
[30] In
Wing, supra, it appears the plaintiff was seeking the maximum statutory
award of $20,000 based on one infringing publication of a diary which
the plaintiff had been willed by the author.
[31] Justice
Nadon’s decision focussed on paragraph 38.1(5). He wrote the following at
paragraphs 72, 73 and 74 of his decision:
[72] The Applicants request statutory
damages pursuant to section 38.1 of the Act, in the amount of $20,000. The
provisions on statutory damages came into force on October 1, 1999. For this
reason, there is no case law on these provisions at this point.
[73] According to subsection 38.1(5), in
exercising its discretion to award statutory damages, the Court should
consider all relevant factors, including 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.
[74] In my opinion, statutory damages
should be granted. The infringement in this case was blatant; the
Respondent reproduced the Diary in its entirety. Although the Respondent
was not publishing the Diary in bad faith from the start, she was warned
several times that her conduct was infringing the Applicants' copyright. She
refused repeatedly to cease infringing the copyright, and attempted to
sell "her" copyright to the Applicants for the sum of US
$125,000. In my opinion, as of the moment she received notice of her
infringement, her conduct was reprehensible. In addition, with regard to
the third criteria, and considering the Respondent's behaviour, there is a
definite need to deter further infringement of the copyright in question.
Consequently, in my view, the Applicants are entitled to a sum of $10,000 on
this count. [emphasis mine]
[32] In
L.S. Entertainment Inc., supra, the infringement in respect of which
statutory damages were claimed related to fourteen films seized during the
execution of an Anton Piller order. The plaintiff’s Asian language motion
picture films had been reproduced in video-cassette tape format and VCD and DVD
formats. I cite paragraphs 61 through 66 of Justice Gibson’s decision:
¶ 61 Turning to subsection 38.1(1),
the Plaintiffs' election here was clearly made before final judgment. The
Plaintiffs seek statutory damages in the amount of $1,000 for each of the
fourteen (14) seized films, an amount toward the lower end of the range
provided in subsection 38.1(1).
¶ 62 Counsel for the Plaintiffs
urges that subsection 38.1(2) is inapplicable on the facts of this matter. In
support of this submission, counsel cites the affidavit of Michael Leung sworn
the 28th of September 2001 and filed in support of the application for an Anton
Piller Order herein. More particularly, counsel refers to paragraphs 27 to 39
of that affidavit wherein Mr. Leung details the manner in which the Plaintiffs'
alleged copyrights in the films in issue were brought to the attention of the
Defendants. This evidence remains uncontradicted in substance on the material
before the Court. I accept counsel's submissions in this regard.
¶ 63 Subsection 38.1(3) provides for
circumstances in which the minimum award of statutory damages may be reduced.
Counsel for the Plaintiffs urges that the Court not exercise its discretion under
this subsection. Once again, I accept counsel's submission in this regard.
¶ 64 Subsection 38.1(4) is clearly
not applicable on the circumstances of this matter.
¶ 65 I turn then to the factors
to be considered by a court in exercising its discretion regarding the award of
statutory damages. Subsection 38.1(5) details three factors: the
good faith or bad faith of the Defendants; the conduct of the parties before
and during the proceedings; and the need to deter other infringements of the
copyrights in question, while noting that a court should consider all relevant
factors. I have accepted that the Plaintiffs' claimed copyrights in the films
in issue were brought to the attention of the Defendants. The Defendants
nonetheless continued to display and rent out copies of the films in issue and
would appear to have also made copies of the films in issue without the
authorization of the Plaintiffs. I am satisfied that, in advance of the
commencement of these proceedings, the Defendants acted in bad faith. Further,
as discussed earlier in these reasons, I am satisfied that the conduct of the
Defendant Chen, both on her own behalf and on behalf of Formosa, during the
course of these proceedings, has been reprehensible. Finally, given the nature of
the business in which the Defendants are engaged and the nature of the films in
issue and other films and like material in which the Plaintiffs claim
copyright, I am satisfied that deterrence is a significant factor.
¶ 66 In Wing v. Van Velthuizen …,
Justice Nadon, then of this Court, wrote at paragraph [74] of his reasons:
. . .
With the exception of the reference to
the Defendant or Respondent there herself claiming copyright and attempting to
sell "her" copyright, I am satisfied that all of the foregoing is
equally applicable here. Justice Nadon reduced the amount of statutory
damages claimed by half, to $10,000 for infringement of a single copyrighted
work. I am satisfied that the amount claimed here, $1,000 in respect of each of
the fourteen (14) seized films in issue, some or all in multiple copies, is
entirely reasonable. I will award statutory damages in favour of the Plaintiffs
and against the Defendants Formosa and Chen, jointly and
severally, in the aggregate amount of $14,000. [emphasis mine]
[33] The assessment of the plaintiffs’ statutory damages at the maximum
amount per work of $20,000 for 2009 clips raises important questions both in
terms of the proper statutory interpretation of various provisions in
subsection 38.1 of the Act as well as the selection of the appropriate
amount of statutory damages per work.
[34] I say this for the following reasons:
1. Subject to other
subsections in section 38.1 of the Act, an award of statutory damages is
for “all infringements involved in the proceedings”.
2. Those statutory
damages are in respect to “any one work or other subject-matter for which any
one infringer is liable individually …”.
3. The range cannot be less than $500 or
more than $20,000 “as the Court considers just”. This range is subject to
discretionary reductions identified below.
4. In the case of an innocent infringer,
the Court may reduce the amount of the award of statutory damages to less than
$500 but not less than $200 as provided for in subsection 38.1(2).
5. As provided for in subsection 38.1(3),
where “there is more than one work or other subject-matter in a single medium
and the awarding of even the minimum amount previously referred to would result
in a total award that, in the Court’s opinion, is grossly out of proportion to
the infringement, the Court may award with respect to each work or other
subject-matter, such lower amount than $500 or $200 as the Court considers
just”.
6. The defined three factors referred to
in subsection 38.1(5) do not seem to be exclusive relevant factors.
7. Subsection 38.1(7) provides an
election for statutory damages does not affect the right of the copyright owner
to have exemplary or punitive damages.
[35] The defendants did not appear before the Court on January 30, 2006 on the
assessment of statutory damages. The Court was deprived of the benefit of
their representations on the proper application and interpretation of the
statutory damages provided in section 38.1 of the Act.
[36] As noted, this section of the Act is based on a substantially
similar provision found in US
legislation first enacted in 1909 and then revised in 1976. This provision has
been the subject of many judicial decisions in the United
States. Counsel for the plaintiffs did not refer
me to appropriate
American jurisprudence or American textbooks. In my view, an analysis of US law is important for proper appreciation of section 38.1
of the Canadian Statute.
[37] When examining section 38.1 of the Act as a whole, it is
evident to me the over-arching mandate of a judge assessing statutory damages
in lieu of damages and loss of profits is to arrive at a reasonable assessment
in all of the circumstances in order to yield a just result.
[38] Such a mandate clearly flows from the structure of subsection 38.1
which provides an initial range per work of statutory damages from a minimum of
$500 to a maximum of $20,000 per work.
[39] This initial range may be cut back in two circumstances: first, in
the case of an innocent defendant which is not the case here and second in the
case where there is more than one work in a single medium and where awarding
the minimum per work would yield a total award that is grossly out of
proportion to the infringement.
[40] The purpose of providing for statutory damages in lieu of damages
and profits is because actual damages are often difficult to prove and it is
only the promise of statutory damages that will induce a copyright owner to
invest and enforce his copyright and only the threat of a statutory award will
deter infringers by preventing their unjust enrichment (see Goldstein, on
Copyright, Third Edition, Aspen Publishers at page 14-38).
[41] Professor Goldstein indicates at page 14-41 of his text one of the
benchmarks
or guide American Courts
use at arriving at a just statutory damage award is the amount of actual
damages the plaintiff would have probably received had he been able to prove
them and elected for statutory damages.
[42] Professor Goldstein states at page 14-43 of his text one of the
factors used in assessing statutory damages is the profit reaped by a
defendant.
[43] Finally, Professor Goldstein discusses at pages 14-52 to 14-56 of
his book the concept of multiple works in cases where the court action involves
infringement of more than one separate and independent work. The accepted test
in the United States is whether each
expression has an independent economic value and is, in and of itself, viable.
Based on this test he cites US
caselaw to the effect each episode of a TV programme produced and used
independently constituted separate works and is not limited to the series as a
whole.
[44] I have already mentioned the interpretation of the statutory damages
provided for in section 38.1 of the Act is in its infancy.
[45] I note, however, that John McKeown in the 4th Edition of
Fox on Canadian Copyright and Industrial Design published by Thomson/Carswell
would appear generally to endorse the principles which Professor Goldstein has
identified in U.S law on such points as:
1. There should be some correlation
between actual damages and statutory damages even though section 38.1 does not
speak of actual damages (see page 24.77)
2. If a defendant copies several
different works the plaintiff is entitled to statutory damages for each work
infringed (p.24.77)
3. Statutory damages are not a bar to
punitive damages but if deterrence has already been factored in, punitive
damages should not be awarded. (p. 24.78)
[46] Based on the evidence
received during the January hearing, the wording of section 38.1 of the Act
in its context as well as how similar US law has been applied, I arrive at the following conclusions.
[47] The level of
statutory damages sought by the plaintiffs is clearly inappropriate. While I
am prepared to accept each of the 2009 programmes or clips appropriated by the
defendants constitutes a separate work which has been infringed, I find the
application of the per work statutory maximum would yield an unjust result
disproportionate to any injury suffered by the plaintiffs or any reasonable
assessment of profits earned by the defendants in their infringement.
[48] Parliament was
alive to the problem which might arise in the case of the infringement of
multiple works pirated from satellite signals. This is why Parliament wrote in
an adjustment factor in paragraph 38.1(3) of the Act which enables the
assessment of damages per work below $200 in order to make damages
proportionate to the infringement.
[49] The evidence shows
the plaintiffs’ Polsat programming was not being aired in Canada when the Polsat 2 signal was being decoded in the United States and being offered to Canadian
subscribers on the defendants’website. The reason for this is because the
plaintiffs had yet to be licensed for the distribution of Polsat programming in
Canada. In these circumstances,
the plaintiffs’ loss of revenue is minimal but such factor does not isolate the
defendants from an award of damages because of the provisions contained in
subsection 38.1(5) of the Act.
[50] The evidence clearly
demonstrates a need for deterrence, the defendants’ bad faith in ignoring the
plaintiffs’offer not to litigate if the infringement ceased, and the
defendants’ conduct during the proceedings which is to ignore the Court’s
process while at the same time enhancing their product-offerings of Polsat
programming.
[51] In all of the
circumstances, my view is that a per work assessment at $150 per work for 2009
works strikes an appropriate balance in arriving at a just damage award in the
framework called for by section 38.1 of the Act.
[52] I decline to award
punitive damages. The defendants have been found guilty of contempt and
fined. The individual defendant has been sentenced to imprisonment if the
offending website is not dismantled. This and the other factors mentioned by
the Supreme Court of Canada in Whiten v. Pilot Insurance Company
[2002] 1 S.C.R. 595 lead to the conclusion that punitive damages would be
inappropriate.
[53] I also decline to
award damages to the plaintiffs on account of breach under the Radio
Communications Act, on the grounds such an award would constitute double
recovery as would damages under the Trademarks Act.
[54] On the other hand
I award the plaintiffs solicitor-client costs. It seems to me the conduct of
the defendants has been totally unreasonable and reprehensible.
ORDER
THIS COURT ORDERS that
1. The plaintiffs are awarded the sum of
$301,350 as statutory damages payable jointly and severably by the defendants;
2. Justice Kelen’s interim injunction
against the defendants is made permanent;
3. The plaintiffs are awarded
solicitor-client costs in their action.
“Francois
Lemieux”
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