Docket: T-759-16
Citation:
2016 FC 612
Ottawa, Ontario, June 1, 2016
PRESENT: The Honourable Madam Justice
Tremblay-Lamer
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BETWEEN:
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BELL CANADA
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BELL EXPRESSVU
LIMITED PARTNERSHIP
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BELL MEDIA INC.
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VIDÉOTRON
S.E.N.C.
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GROUPE TVA INC.
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ROGERS COMMUNICATIONS
CANADA INC.
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ROGERS MEDIA
INC.
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Plaintiffs
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and
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1326030 ONTARIO
INC. dba ITVBOX.NET
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2368120 ONTARIO
INC. dba MY ELECTRONICS
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ANDROID BROS
INC.
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WATCHNSAVENOW
INC.
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VINCENT WESLEY dba
MTLFREETV.COM
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Defendants
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REASONS FOR ORDER AND ORDER
I.
Preliminary Issue
[1]
A preliminary issue arose as to whether the May
25, 2016 hearing in Ottawa was on the motion for an interim injunction pursuant
to Rule 374 of the Federal Courts Rules, SOR/98-106, or for an
interlocutory injunction pursuant to Rule 373. The Court held that proceedings
would continue on the issue of the interlocutory injunction, as this motion was
neither urgent nor ex parte.
II.
Nature of the Matter
[2]
The Plaintiffs are seeking an interlocutory
injunction primarily to restrain the Defendants from:
a)
communicating works for which the copyright is
owned by the Plaintiffs [the Programs];
b)
manufacturing, importing, distributing, leasing,
offering for sale, selling, installing, modifying, operating or possessing
pre-loaded set-top boxes that are used or intended to be used to receive the
Plaintiffs’ subscription programming signal after it has been decoded without
authorization from the Plaintiffs;
c)
inducing or authorizing anyone to initiate acts
of infringement of the Plaintiffs’ rights to communicate their own programs to
the public or reproduce the programs or communication signal on which the
programs are carried, including by configuring, advertising or selling
pre-loaded set-top boxes including set-top boxes that permit users to
permanently download the content they access;
d)
advertising, offering for sale or selling
subscriptions to Private Internet Protocol Television [IPTV] Services.
III.
Facts
[3]
The Plaintiffs Bell Media Inc., Rogers Media
Inc., and Groupe TVA Inc. [collectively the Media Plaintiffs] are well-known
Canadian broadcasters that own and operate a number of television stations
throughout Canada broadcasting a variety of television programs, for which they
own the Canadian rights.
[4]
The Plaintiffs Bell Canada, Bell Expressvu
Limited Partnership, Rogers Communications Canada Inc. and Vidéotron s.e.n.c.
[collectively the Distribution Plaintiffs] are broadcast distribution
undertakings, which receive broadcasts from a number of television stations and
retransmit them to subscribers by various means of telecommunication.
[5]
The Defendants are individuals and businesses
which sell set-top boxes, electronic devices that can be connected to any
standard television set in order to provide additional functionalities to that
television, on which they have previously installed and configured a set of
applications. This distinguishes the Defendants’ “pre-loaded”
set-top boxes from those generally found in retail stores, which do not contain
any pre-loaded applications, or contain only basic applications, such that the
user must actively seek out and install the applications he or she wishes to
use.
[6]
Around April 2015, the Bell Plaintiffs became
aware that pre-loaded set-top boxes were an emerging trend and began
investigating them. Vidéotron also became aware of the trend sometime in 2015
and the Rogers Plaintiffs began their own investigation in 2016.
[7]
Between April 2015 and April 2016, the
Plaintiffs’ experts on fraud, piracy and technology investigated the trend and
tested the Defendants’ products. They found that the devices sold by the
Defendants could be used to access protected content produced and/or
retransmitted by the Plaintiffs using online streaming websites, and that the
Defendants advertised their products as a way to access free television content
and avoid cable bills. They also noticed a significant increase in the
prominence of pre-loaded set-top boxes, the product appearing at trade shows
and sold at dedicated brick-and-mortar locations.
[8]
The Plaintiffs specifically identified three
types of pre-installed applications which they submit could be used to access
copyrighted content:
A.
KODI: with the proper add-on(s), the open-source
media player KODI could be used to access online streaming websites;
B.
Showbox: the media player software Showbox could
be used to access online streaming websites and permanently download content
such as television programming or motion pictures; and
C.
Private IPTV Services: these are private
Internet servers which re-transmit television broadcasts over the Internet,
usually for a monthly fee.
IV.
Issue
[9]
Should an interlocutory injunction be issued?
V.
Submissions of the Parties
A.
The Plaintiffs
[10]
The Plaintiffs submit that there is a serious
issue to be tried because they have made out a strong prima facie case
for copyright infringement by the Defendants. The Defendants’ products enable
and facilitate unauthorized access to the Media Plaintiffs’ programs through
applications which seed them from illegal streaming sites and allow the
consumers to view and/or download them on their own device, thus infringing
their copyright as understood per section 27 of the Copyright Act, RSC
1985, c C-42. Because the Defendants are directly engaged in the selection of
the content to which users will have access, they are not shielded from
liability by section 2.4 of the Copyright Act.
[11]
The Plaintiffs also contend there is a strong prima
facie case that the sale of pre-loaded set-top boxes constitutes the sale
of equipment or devices intended to be used to receive illegally-decrypted
programming, contrary to paragraph 10(1)(b) of the Radiocommunication Act,
RSC 1985, c R-2. This would be the case, for instance, where users access
streaming sites that rebroadcast the Distribution Plaintiffs’ programming
without authorization. Both the Media Plaintiffs and Distribution Plaintiffs
allege significant loss and damages as a result.
[12]
The Plaintiffs further submit that in cases of
blatant copyright infringement such as this one, they do not need to show
irreparable harm in order to obtain an interlocutory injunction. A strong case
on one of the three factors can also lower the threshold for the remaining
factors (Geophysical Service Incorporated v Canada-Nova-Scotia Offshore
Petrolium Board, 2014 FC 450 at para 36 [Geophysical Service Inc]).
Nevertheless, the Plaintiffs argue that they will suffer irreparable harm if
the injunction is not granted because pre-loaded set-top boxes represent an
existential threat to the Plaintiffs’ line of business as piracy is one of the
top causes for declining subscriptions for television services in Canada and
leads to annual decreases in revenue. It is also unlikely that the Defendants
or any defendant who may be added to the action would have the financial
resources to compensate the Plaintiffs by way of damages for the prejudice that
they suffer as a result of lost subscribers and the vast amount of infringement
caused by the use of pre-loaded set-top boxes.
[13]
On the balance of convenience issue the
Plaintiffs submit that whereas the sale of pre-loaded top-set boxes pose a
significant existential threat to their operations and erodes their business,
the Defendants would not suffer harm from being enjoined to cease their illegal
activities. Moreover, their otherwise lawful activities will be unaffected by
the issuance of an interlocutory injunction.
[14]
The Plaintiffs further submit that an injunction
is necessary in light of the growing number of lost customers due to the
pre-loaded set-top boxes sold by the Defendants. The injunction would also have
a dissuasive effect on other individuals or business currently engaged in the
same illegal activities as the Defendants, and would dissuade others from
engaging in these activities.
VI.
The Defendants
[15]
Of the five Defendants only Mr. Vincent Wesley
doing business as MtlFreeTV.com, filed a record and appeared at the injunction
hearing.
[16]
Mr. Wesley submits that there is no serious
question to be tried because the Plaintiffs have not made a prima facie
case for copyright infringement. He argues that pre-loaded set-top boxes are a
piece of hardware, operating in the same manner as a tablet or a computer, on
which anyone can install applications which are freely available to the public
though the Apple Store, Google Play or the Internet. He does not develop,
produce, service or maintain the software that is pre-loaded on the set-top
boxes. Set-top boxes are nothing more than a conduit with substantial
non-infringing uses. Moreover, he argues that the inducement doctrine has not
been recognized in Canadian copyright law.
[17]
On the issue of irreparable harm, Mr. Wesley
contends that the Plaintiffs have not demonstrated in any way that any decrease
in subscriptions to the services they offer is due to the sale of pre-loaded
set-top boxes. The Plaintiffs merely refer to piracy as a whole. The
jurisprudence makes it clear that irreparable harm must be clear and not simply
rest on conjecture.
[18]
Finally, he submits that the balance of
convenience rests in his favour because set-top boxes have substantial legal
uses and constitute the only source of his business revenue.
VII.
Analysis
[19]
It is trite law that for an interlocutory
injunction to be granted three conditions must be reunited: (a) there must be a
serious question to be tried; (b) there must be irreparable harm; and (c) the
balance of convenience must weigh in the favour of the person requesting the
injunction (RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR
311, 54 CPR (3d) 114).
A.
Serious Issue
[20]
In the present case, I am satisfied that the
Plaintiffs have demonstrated that there is a serious issue to be tried.
[21]
Sections 2.4, 3 and 21 of the Copyright Act
give the Plaintiffs the exclusive rights to communicate their programs to the
public by telecommunication via television broadcast, including the right to
make these programs available in a way that allows a member of the public to
access them at a time and place chosen by him or her, the right to reproduce
the programs or any substantial of the programs, and the right to authorize
such acts. The Plaintiffs also have the sole right to fix their communication
signals and to reproduce any fixation thereof.
[22]
The devices marketed, sold and programmed by the
Defendants enable consumers to obtain unauthorized access to content for which
the Plaintiffs own the copyright. This is not a case where the Defendants
merely serve as the conduit, as was argued by Mr. Wesley. Rather, they
deliberately encourage consumers and potential clients to circumvent authorized
ways of accessing content – say, by a cable subscription or by streaming
content from the Plaintiffs’ websites – both in the manner in which they
promote their business, and by offering tutorials in how to add and use
applications which rely on illegally obtained content. The statutory defence
provided in paragraph 2.4(1)(b) of the Copyright Act does not apply to
the Defendants who go above and beyond selling a simple “means of telecommunication”. They also engage in acts
related to the content of the infringed communications (Society of
Composers, Authors and Music Publishers of Canada v Canadian Assn of Internet
Providers, 2004 SCC 45 at para 92). Consumers can consequently stream or
download the Plaintiffs’ programs and store them on their device without
authorization from the Plaintiffs. This constitutes prima facie
copyright infringement pursuant to section 27 of the Copyright Act.
[23]
The Plaintiffs claim that the Defendants induce
and authorize consumers to infringe their copyright constituting an additional
serious issue to be tried. The Defendant Mr. Wesley argues that the test for
inducement in MacLennan v Produits Gilbert Inc, 2006 FCA 204 on which
the Plaintiffs rely, only applies in patent cases.
[24]
This is an issue to be determined at trial and
not at this interlocutory stage. In my view, the only reason why many users
have access to infringing content is because set-top boxes pre-loaded with KODI
(and the proper add-ons), Showbox or a private IPTV service make it extremely
easy to do so. While some consumers might have the desire and technical
knowledge to seek out and download such applications, many others might not.
The Defendants market themselves to consumers specifically on the basis that
their “plug-and-play” set-top boxes make it easy
to eliminate the need for a cable subscription:
- The iTVBox Defendant declares itself to be the “Original Cable Killer” and provides detailed
instructions to users on how to access copyright infringing content;
- The Android Bros Defendant assures users that they can “cancel cable today” and still watch all of their
television programs for free;
C.
The WatchNSaveNow Defendant declares itself to
be an expert in helping users cut their cable dependency;
D.
The My Electronics Defendant advertises its
pre-loaded set-top boxes as providing free on-demand access to international
channels and television programming;
- The MtlFreeTV Defendant advertises its pre-loaded set-top boxes
as providing access to “Every Movie Ever Made”,
“Every TV Show Ever Made” and “Live Sports and Events” and operates a YouTube
channel on which it shares video tutorials instructing users on how to use
its set-top boxes and the applications installed thereon.
[25]
For the above reasons, I am satisfied that the
allegations of inducement constitute a serious issue.
[26]
Similarly, with regard to the issue of
authorization, many consumers may not realize that the content they are
accessing infringes copyright law. The Plaintiffs make a strong prima facie
case that the Defendants, through their products and advertising, sanction and
encourage accessing copyrighted content through streaming sites or private IPTV
services.
[27]
I also find that the Plaintiffs have made a
strong prima facie case that the devices sold by the Defendants are used
to access content that may contravene paragraph 9(1)(c) of the Radiocommunication
Act. Streaming sites that rebroadcast the Distribution Plaintiffs’
programming are not authorized to communicate those works to the public. A user
who accesses these works might also contravene the Radiocommunication Act.
B.
Irreparable Harm
[28]
The jurisprudence recognizes that allegations of
copyright infringement demand special consideration and that if substantial or
complete copying is established, the Plaintiffs should succeed both at the
interlocutory stage and at trial (Somerville House Books Ltd v Tormont
Publications Inc (1993), 50 CPR (3d) 390 (FCTD)).
[29]
Contrarily to what the Plaintiffs submit relying
on Gianni Versace SPA v 1154979 Ontario Ltd, 2003 FC 1015 at para 28 [Versace],
this special consideration does not relieve them from the burden of
establishing that they would suffer irreparable harm that could not be
compensated with damages. In Versace, Prothonotary Lafrenière adopted
the reasoning of Justice Nadon in Diamant Toys Ltd v Jouets Bo-Jeux Toys Inc,
2002 FCT 384 [Diamant Toys]. Diamant Toys has subsequently been
read by this Court as being restricted to cases where there is a finding of
blatant copyright infringement (Geophysical Service Inc at para 34; Western
Steel and Tube Ltd v Erickson Manufacturing Ltd, 2009 FC 791 at paras
11-12).
[30]
That being said, I agree with the statement by
Justice Annis in Geophysical Service Inc that a strong finding on one
prong of the tripartite injunction test – as is the case here – may lower the
threshold on the other two prongs:
[35] Moreover, the three prongs of the
interlocutory injunction test are to some degree to be treated together and not
as separate silos: Robert J. Sharpe, Injunctions and Specific Performance,
loose-leaf (Aurora: Canada Law Book, 2010 at para 2.600) as quoted in Morguard
Corporation v InnVest Properties Ottawa GP Ltd, 2012 ONSC 80 at para 12:
The terms 'irreparable harm', 'status
quo' and 'balance of convenience' do not have a precise meaning. They are more
properly seen as guides which take colour and definition in the circumstances
of each case. More importantly, they ought not to be seen as separate, water-tight
categories. These factors relate to each other, and strength on one part of the
test ought to be permitted to compensate for weaknesses on another.
[36] There exist situations where the
applicant’s case is sufficiently strong that the threshold for meeting the
other two factors can be set so low as to be irrelevant. I believe that this
may have been the approach underlying the statement in Diamant Toys,
above, that it was not necessary to establish irreparable harm where copying is
blatant.
[31]
I find that the Plaintiffs have established that
they would suffer irreparable harm if this injunction were not granted. The
market for pre-loaded set-top boxes is rapidly and steadily growing, in a way
that cannot be precisely quantified at the moment. The continuing sale of
pre-loaded set-top boxes will “place devices in the
hands of consumers which the plaintiffs, even if successful at trial, will not
be able, in most cases, to locate or to effectively restrain” from
accessing copyrighted content (Titan Linkabit Corp v SEE See Electronic
Engineering Inc, [1993] FCJ No 208, 48 CPR (3d) 62 at 78-79 (FCTD)). Each
user who purchases a pre-loaded set-top box has an incentive to permanently
cancel his or her subscription to a distribution service such as those offered
by the Distribution Plaintiffs. The loss of actual and potential customers
constitutes irreparable harm, as recognized in Telewizja Polsat SA v
Radiopol Inc, 2005 FC 1179 at para 22.
[32]
The market for pre-loaded set-top boxes will
keep growing if left unchecked and the Defendants, or any defendant that may be
added to the present claim, are unlikely to have the financial resources
required to compensate the Plaintiffs for their losses should the latter
succeed on the merits. I am therefore satisfied that they have established that
they will suffer irreparable harm.
C.
Balance of Convenience
[33]
On the question of balance of convenience, I
take note of the fact that the Defendants’ products display numerous legal
applications and generally have the effect of turning a standard television set
into a “smart TV”. However, given the prima
facie copyright infringement case made out by the Plaintiffs, I find that
in this case the balance of convenience favours the Plaintiffs and the
Defendants’ businesses will not unduly suffer from being restricted to selling
and advertising only legal, non-copyright-infringing applications until this
Court’s decision on the merits.
[34]
Finally, I note that all Plaintiffs have
provided undertakings to abide by any damage award made by this Court arising
out of any improper execution of the requested orders.
VIII.
Additional Defendants
[35]
The Plaintiffs request that the interlocutory
injunction apply not only to the known Defendants, but also to any other
individuals or businesses that advertise, offer for sale or sell pre-loaded
set-top boxes. They contend this is necessary given the steadily growing number
of individuals or businesses selling pre-loaded set-top boxes [Packagers] and
their ever-evolving activities.
[36]
The Plaintiffs cite the Supreme Court of Canada’s
decision in MacMillan Bloedel Ltd v Simpson, [1996] 2 S.C.R. 1048 [MacMillan
Bloedel], as authority that non-parties can be bound to respect injunctions
on pain of being held in contempt of court. That case involved an injunction
which specifically enjoined “all persons having notice
of th[e] Order” from impeding MacMillan Bloedel’s logging operations (MacMillan
Bloedel at para 5).
[37]
However, the circumstances in the present case
are quite different. The Court is not being asked to “restrain
large-scale public action violative of private rights” or a “mass obstruction” of property (MacMillan Bloedel at
paras 33, 11). Thus, I believe an injunction of the type approved in MacMillan
Bloedel would be overbroad in this case. The injunction will only enjoin
parties which the Plaintiffs have identified as Defendants. Any new
co-Defendants will have fourteen (14) days from the moment they are added as
co-Defendants to bring a motion to the Court to challenge the issuance of the
interlocutory injunction as it applies against them.
IX.
Conclusion
[38]
This is a motion for injunctive relief with
respect to an emerging phenomenon in the Canadian market, that of pre-loaded “plug-and-play” set-top boxes. These boxes have
several uses for consumers, some of which are perfectly legal and some which
skirt around the fringes of copyright law. This is not the first time a new
technology has been alleged to violate copyright law, nor will it be the last.
These are questions for the Court to resolve at trial rather than at this
interlocutory stage. For the time being, I am satisfied that the Plaintiffs
have established a strong prima facie case of copyright infringement and
that an injunction would prevent irreparable harm without unduly
inconveniencing the Defendants.
[39]
The Plaintiffs having met each part of the
three-prong test, I grant the Plaintiff’s motion for an interlocutory
injunction until the final disposition of the case. The injunction will be
issued with different terms than those sought by the Plaintiffs for the reasons
stated above. Costs shall be in the cause.
ORDER
THIS COURT ORDERS
that:
1.
The motion for an interlocutory injunction order
valid until such time as this Court renders a final Judgment on the merits is
granted;
2.
The Defendants, their agents, employees,
associates, and representatives, are enjoined and restrained from directly or
indirectly:
a.
Communicating works for which the copyright is
owned by the Plaintiffs [the Plaintiffs’ Programs] to the public by
telecommunication, including by configuring, advertising, offering for sale or
selling set-top boxes that are adapted to provide users with unauthorized
access to the Plaintiffs’ Programs [Pre-loaded Set-top Boxes];
b.
Manufacturing, importing, distributing, leasing,
offering for sale, selling, installing, modifying, operating or possessing
Pre-loaded Set-top Boxes that are used or intended to be used to receive the
Plaintiffs’ subscription programming signal after it has been decoded otherwise
than under and in accordance with an authorization from the Plaintiffs;
c.
Inducing or authorizing anyone to infringe the
Plaintiffs’ rights to communicate the Plaintiffs’ Programs to the public by
telecommunication, including by configuring, advertising, offering for sale or
selling Pre-loaded Set-top Boxes;
d.
Inducing or authorizing anyone to infringe the
Plaintiffs’ rights to reproduce the Plaintiffs’ Programs or the communication
signal on which the Plaintiffs Programs are carried, including by configuring,
advertising, offering for sale or selling Pre-loaded Set-top Boxes that permit users
to permanently download the content to which they have access;
e.
Advertising, offering for sale or selling
subscriptions to Private Internet Protocol Television [IPTV] Services, as
described in these Reasons for Order and Order, including by advertising,
offering for sale or selling of Pre-loaded Set-top Boxes that permit users to
access Private IPTV Services;
f.
As more particularly applicable to the Defendant
1326030 Ontario Inc. dba iTVBox.net, configuring, advertising, offering for
sale or selling any Pre-loaded Set-top Box having the characteristics listed at
paragraphs 2(a) to 2(e), including the iTVBox Premium Edition Pre-loaded
Set-top Box;
g.
As more particularly applicable to the Defendant
2368120 Ontario Inc. dba My Electronics, configuring, advertising, offering for
sale or selling any Pre-loaded Set-top Box having the characteristics listed at
paragraphs 2(a) to 2(e), including the BTV Box, the HiMedia Q3, the M8 Android
Box, the MXIII Android Box, the Shava Box, the Jadoo4, the Himedia H8, the MXQ
Amlogic S805 Quad-Core TV Box, and the Zoomtak T8 Pre-loaded Set-top Boxes;
h.
As more particularly applicable to the Defendant
Android Bros Inc., configuring, advertising, offering for sale or selling any
Pre-loaded Set-top Box having the characteristics listed at paragraphs 2(a) to
2(e), including the ABX6 and ABX7 TV Pre-loaded Set-top Boxes;
i.
As more particularly applicable to the Defendant
WatchNSaveNow Inc., configuring, advertising, offering for sale or selling any
Pre-loaded Set-top Box having the characteristics listed at paragraphs 2(a) to
2(e), including the AVOV TVOnline IPTV Set-top BoxV2, the Zoomtak T8 Plus
Quadcore Android Box, the Zoomtak K5 Quadcore 4.4 Android Box, and the OTT M8S
Quad Core 4K 4.4 Android Box Pre-loaded Set-top Boxes;
j.
As more particularly applicable to the Defendant
Vincent Wesley dba MtlFreeTV.com, configuring, advertising, offering for sale
or selling any Pre-loaded Set-top Box having the characteristics listed at
paragraphs 2(a) to 2(e), including the MXQ, MXIII and Minix X8-H Plus
Pre-loaded Set-top Boxes.
3.
Should the Plaintiffs identify additional
individuals or businesses selling Pre-loaded Set-top Boxes having the
characteristics listed at paragraphs 2(a) to 2(e), they may serve this Order
upon these individuals or businesses;
4.
Should the Plaintiffs serve this Order upon
additional individuals or businesses pursuant to paragraph 3, they may amend
their pleadings to include these individuals or businesses as co-Defendants
within ten (10) days of such service.
5.
Any individuals or businesses who have been
added as a co-Defendants pursuant to paragraph 4 of this Order may bring a
motion before the Court to seek any variation of this Order as it applies
against them, if they so choose, within fourteen (14) days of being added as a
co-Defendants; and
6.
Costs shall be payable in the cause.
"Danièle Tremblay-Lamer"
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