Norwich Orders and the Notice and Notice Regime: The SCC Splits the Bill for Compliance Costs Between Copyright Owners and ISPs
On September 14, 2018, the Supreme Court of Canada (“SCC”) rendered its decision in Rogers Communications Inc. v Voltage Pictures, LLC.1 In sum, the SCC decided that copyright owners must compensate Internet service providers (“ISPs”) for some – but not all – costs incurred in identifying alleged online infringers.
As online infringement becomes increasingly widespread, copyright owners face mounting obstacles to enforcing their rights. Due to the relative anonymity of the Internet, victims of piracy often lack critical information needed to initiate a lawsuit, not least the identity of the perpetrator.
In this context, infringement victims have increasingly sought Norwich orders, a form of pre-trial discovery that compels third party intermediaries (such as ISPs and social media companies) to disclose the identity of persons who use their services to commit wrongful acts such as copyright infringement. In order to obtain a Norwich order, a plaintiff must fulfill certain criteria, as was discussed here.2 For one, the intermediary from whom such disclosure is sought “must be reasonably compensated for his expenses arising out of compliance with the discovery order in addition to his legal costs.”3
More recently, in an attempt to arm copyright owners with another tool against online infringement, the Canadian government enacted the so-called “notice and notice regime” by amending the Copyright Act.4 Under that regime, when a copyright owner notifies an ISP that an unidentified person who has a given IP address has infringed the owner’s copyright, the ISP is obliged to forward that notice to the person with that IP address. Unlike a Norwich order, the notice and notice regime currently prohibits an ISP from charging a fee to comply with the requirements of the regime.
That said, the Canadian notice and notice regime does not require the ISP to disclose the identity of the infringer to the copyright owner. To identify the infringer, a copyright owner can proceed by way of a Norwich order, and, in that case, it will be required to reasonably compensate the ISP.
While sometimes complementary, the notice and notice regime and Norwich orders create different compliance obligations for ISPs. In Rogers v. Voltage, the SCC addressed the relationship between these two remedies and the implications of that relationship for the recovery of compliance costs by ISPs.
The facts in Rogers v. Voltage are relatively straightforward. A group of film production companies brought a motion for a Norwich order seeking to compel an ISP, Rogers Communications Inc., to disclose the identity and personal information of an unidentified person (“John Doe”), who had allegedly illegally shared their films using peer-to-peer file sharing networks. The producers ultimately sought to have a “reverse class action” certified against 55,000 unknown copyright infringers. The film producers argued that the disclosure order should be made with no fees payable to Rogers, relying on the notice and notice provisions of the Copyright Act.
The motions judge in the Federal Court granted the Norwich order, which was not contested by Rogers, and ordered the disclosure of the person’s name and address. The motions judge accepted that Rogers was entitled to recover the costs ($100 per hour plus HST) for the steps necessary to comply with the order. He found that the notice and notice regime did not regulate an ISP’s disclosure of a subscriber’s identity to a copyright owner.
The Federal Court of Appeal overturned the decision of the motions judge, finding that he had erred by allowing Rogers to recover costs for work that it was either expressly or implicitly required to carry out under the notice and notice regime. The appellate court found that there was insufficient evidence on record to determine the reasonable costs of compliance, and so Rogers was not entitled to any reimbursement.
On appeal to the SCC, that court determined that, in order for the costs incurred by an ISP to be recoverable, they must be reasonable and must arise from its compliance with a Norwich order. Conversely, ISPs cannot recover costs incurred, whether expressly or implicitly, in performing its statutory obligations under the notice and notice regime. For instance, the notice and notice provisions of the Copyright Act require that, in addition to providing the notice, an ISP:
- determine, for the purpose of forwarding notice electronically, the person to whom the IP address was assigned;
- take whatever steps are necessary to verify that it has done so accurately in order to avoid statutory liability; and
- retain accurate records, in the form and manner set out in the Act and take all steps necessary to ensure their accuracy. Any steps necessary to verify the accuracy of those records therefore form part of an ISP’s obligations.
That said, the SCC also found that the notice and notice regime does not require an ISP to determine the name and physical address of a person where a notice is sent electronically. Also, while the records kept by the ISP must allow it to identify the person to whom a notice is forwarded, it does not require that they be kept in a manner that would permit a court or a copyright owner to identify that person.
The SCC stated that, in order to determine whether an ISP’s can recover its compliance fees, motions judges must carefully assess an ISP’s evidence of its reasonable costs of compliance with a Norwich order alongside its obligations under the notice and notice regime, to determine which is which.
In this case, the SCC found that the motions judge had erred by failing to consider whether the steps in Rogers’ internal process to disclose the identity of its subscribers overlap with its statutory obligations under the notice and notice regime. It therefore remitted the matter to the Federal Court for redetermination.
In addition to clarifying the evidentiary requirements for determining the reasonable costs arising from complying with Norwich orders, the SCC’s decision also notes the inherent limits of the notice and notice regime in combating online infringement: the SCC recognized that this regime is not a “silver bullet” and is just one step in the process of prosecuting online copyright infringement.5
The SCC further pointed out that the notice and notice regime sought to balance the rights of various stakeholders, including copyright owners, Internet subscribers, and intermediaries such as ISPs. In this regard, the SCC noted that, in order to strike a balance among those rights, Parliament had opted against adopting a “notice and takedown” regime such as exists in the United States, which requires online intermediaries to remove or block access to allegedly infringing material upon receiving a notice.
1 Rogers Communications Inc. v. Voltage Pictures, LLC, 2018 SCC 38 (“Rogers v. Voltage”)
2 Danielle Ferron, Mathieu Piché Messier and Lawrence Poitras, L’injonction et les ordonnances Anton Piller, Mareva et Norwich, Montréal, LexisNexis, 2009.
3 Rogers v. Voltage, para. 18.
4 Sections 41.25 and 41.26 of the Copyright Act, R.S.C. 1985, c. C-42
5 Rogers v. Voltage, at para. 24.