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Teksavvy vs Voltage File Sharing Case Back in Court This Week

November 9, 2015 Leave a comment

Teksavvy and Voltage were back in court today exclusively over costs.  As some of you may remember, movie studio Voltage is seeking the identity of ISP Teksavvy users who allegedly shared the movie “The Buyers Club” over peer to peer file sharing networks.  Voltage wants to sue the Teksavvy users over copyright infringement, and Teksavvy was ordered to provide the info of users identified by Voltage sharing their movie.

This case will set a precedent for the telecom industry in Canada on how copyright complaints will be dealt with in the future.  As many of you remember I’ve commented a great deal on this case.  A summery of the policy debate I was a part of regarding this case, and how Teksavvy should have done a lot more to protect it’s customers privacy is here.

In this latest development, it appears that no technical challenge (or any legal challenge) of the evidence is going to be argued by Teksavvy.  Instead “new evidence” is apparently being filed to justify Teksavvy’s costs to take no position in court on the case.  Costs that the court found were excessively high.  IP Lawyer Howard Knopf’s most recent blog on this, is again another must read if you are following the case.  In it Knopf not just criticizes Teksavvy’s legal position but also questions CIPPIC’s role in the case stating:

Although CIPPIC is no longer actively involved on the file, the appeal material was eventually posted here by CIPPIC  late last week and this will be helpful to the public discussion generally and to law students in particular.  It will be recalled that CIPPIC stepped in earlier as an intervener, after Teksavvy took the position that it took no position, and sought adjournments so that CIPPIC could enter the fray. CIPPIC’s role was never entirely clear. It explicitly disclaimed any role in acting for Teksavvy or for the John or Jane Does. It did conduct some cross- examination and referred to the “hearsay” issue – the giant elephant in the room – in its written material in the disclosure motion but did not do so explicitly even once in its oral submissions before Prothonotary Aalto as confirmed by the transcript Teksavvy is trying to file. This may somewhat explain why Prothonotary Aalto’s decision does not once mention the word “hearsay”.

Knopf also went on to say:

According to the transcript of the substantive hearing before Prothonotary Aalto, CIPPIC was apparently more concerned more with broad “public policy” issues than with the more practical question of whether, in light of the BMG decision, there was arguably insufficient substantial, admissible, non-hearsay, and reliable evidence to justify denial of the disclosure motion and thereby stopping the case from even moving forward.

Questions on both Teksavvy and now CIPPIC as to why this case has gone this far when it didn’t have to, and Teksavvy customers privacy assured.

Judge Issues Scathing Decision on Costs in Teksavvy vs Voltage

March 18, 2015 1 comment

The judgement around costs in the Teksavvy vs Voltage court case is now in.  This is one of the first copyright file sharing cases in Canada to make it to the courts since our new copyright laws were passed.  As some of you may remember Teksavvy was asking for court costs of $346,480.68 for the disclosure of subscribers names, while Voltage was asking to pay Teksavvy for just under $900 for those names.  Both parties also brought up this blog in court.  Teksavvy added time in its costs docket for reading it, while Voltage couldn’t look past one post I had criticizing the costs associated with IP correlation. I had some choice words in December for both parties, and today the Judge in this case weighed in ordering Teksavvy only $21,557.50 in total costs.

Micheal Geist wrote today on the cases in a blog titled: “Defending Privacy Doesn’t Pay: Federal Court Issues Ruling in Voltage – TekSavvy Costs“:

With TekSavvy now bearing all of those motion costs (in addition to costs associated with informing customers), the decision sends a warning signal to ISPs that getting involved in these cases can lead to significant costs that won’t be recouped. That is a bad message for privacy. So is the likely outcome for future cases (should they arise) with subscribers left with fewer notices and information from their ISP given the costs involved and the court’s decision to not compensate for those costs.

I disagree with this statement when looking at the whole picture and decision.   This seems to be a balanced decision on how both parties acted in this case. I believe Teksavvy could have done a much better job at defending its customers privacy than it has to date.  This decision seems to be a rather scathing view from the courts on the evidence, merits, and costs argued by Teksavvy. I don’t see how defending hearsay evidence can be beneficial to promoting subscribers privacy in court by both parties!  The judge in my view acted in a very balanced way as a result of the evidence presented in the case and the law in place surrounding costs.

The full judges decision is here.  Below I will be posting some points I found interesting in the decision with some commentary.

The prosiding judge was Prothonotary Aronovitch.  In her opening statement on the decision Aronovitch wrote:

 [9] TekSavvy’s interpretation of the Order’s meaning is too expansive, Voltage’s too narrow. Neither position, in my view, is justifiable on the evidence or at law.

For it’s part, Teksavvy presented to the court as a defense of costs, that the case generated huge amounts of public interest.  Teksavvy wanted compensation as a result of their decision not to oppose the order, to which seemingly generated a huge uptake in calls into Teksavvy by angry subscribers:

[23] TekSavvy’s provides evidence to the effect that Voltage’s motion generated considerable interest and concern among TekSavvy’s then-current subscribers, potential subscribers, and the general public. This resulted in a massive increase in telephone and online inquiries, comments and complaints to TekSavvy. Gaudrault says that in the days before the December 17, 2012 return date of the motion, at one point TekSavvy was receiving 4,000 to 6,000 calls per day, of which 90 percent were related to Voltage, had as many as 200 telephone calls in queue for response, and had employees working overtime to field inquiries.

The above should be of concern to all ISPs.  Subscribers are very concerned about their privacy and how each ISP handles it.  It seems as though not opposing the court order really pissed off Teksavvy customers.  A wound in my opinion that was self inflicted.

Something that came out of this ruling as well, is that all three parties Teksavvy, Voltage, and Canipre were subjected to a DDoS attack on December 15th, 2012.  Teksavvy attributes this to the public interest generated in the case, thus has asked for compensation for it:

[24] Gaudrault attests to the fact that the attention and interest generated by Voltage’s motion was also manifested in a much more negative way. TekSavvy, Voltage, and Canipre were each victims of distributed denial-of-service (DDoS) attacks, in which hackers disable a website or online business by manipulating a huge number of computers to flood a targeted host with communication requests. Given the targets (TekSavvy, Voltage, and Canipre) and the timing of the attacks (which started on December 15, 2012), Gaudrault attributes the DDoS attack to the Voltage motion.

I strongly disagree with anyone who would use DDoS attacks to express frustration about this case.  Anyone disagreeing with the way all three parties have handled things, should speak up.  That’s what I’ve been doing throughout this whole process providing alternate views to the public on the case, which is something Openmedia started to do, then retracted.  I think those supporting Openmedia, should have voiced their strong concerns to this consumer group, and put this consumer group (who is supported by Teksavvy) in a position to negotiate with the ISP on it’s stance as it relates to public interest.  That is a much more proactive approach, and consumer groups need to learn they should not be influenced in any way by telecom providers!

The next bit is a bit of legalese.  From paragraphs 36-39 of the decision Teksavvy is trying to make an argument within law that they should be compensated for ALL costs associated with this case, not just the order to produce. Aronovitch stated:

[41] I find no support for that view in the jurisprudence or Prothonotary Aalto’s Order. More to the point, TekSavvy has produced no cases where, in similar circumstances, costs have been ordered to be paid, or assessed to be paid, on that basis.

So essentially Teksavvy’s lawyers didn’t convince the judge they should be entitled to all costs associated with this case within law.  On the now infamous Norwich orders, in which some Teksavvy supporters have stated publicly in the past was the reason why this case was different, and why Teksavvy could not oppose the motion (my emphasis added):

[49] While a Norwich order remains a discovery remedy that is out of the ordinary, orders requiring ISPs to provide contact information for their subscribers are not new or uncommon, whether in the context of the posting of defamatory materials (York University v Bell Canada Enterprises (2009), 99 OR (3d) 695 (Sup Ct) (York University); Pierce v Canjex Publishing Ltd., 2011 BCSC 1503, 27 BCLR (5th) 397 (Pierce)), or of alleged infringement of intellectual property rights (BMG; Voltage Pictures LLC v Jane Doe, 2011 FC 1024, 395 FTR 315 (Voltage 2011)). Indeed, TekSavvy acknowledges that the only uncommon aspect of Voltage’s motion is in the number of IP addresses that are identified.

Presumably, if the Norwich orders are not uncommon regarding subscribers information, there should be ample amount of case law out there to defend against them as well.

Paragraphs 54 – 55 the judge explains that the previous judge who ordered Teksavvy to disclose the information did not state that Teksavvy was entitled to full costs outside of the court order:

[54] I ascribe no special significance to the fact that Prothonotary Aalto identifies three heads of costs to be reimbursed. The legal costs, the administrative costs, and the disbursements he identifies are not independent costs, they are recoverable only insofar as they are directed to and incurred for the purposes of “abiding by this Order” to produce the requested subscriber information. There is no basis in the jurisprudence or in Prothonotary Aalto’s reasons to give any broader scope or meaning to the plain language of his order.
[55] Had Prothonotary Aalto intended TekSavvy to be compensated, in full, for any costs that it would have incurred “but for the motion” or “in connection with the motion,” I am confident he would have so ordered.

The judge goes on to explain that her decision on costs will than be based on evidence provided and what she deems as reasonable:

[56] I will proceed on the basis that the costs which Voltage is required to reimburse are limited to those incurred in abiding with the Order, that is, to locate and produce the required contact information of the subscribers identified by their IP addresses. It remains to be determined, on the evidence, what those costs are and whether they are reasonable, by which I mean “reasonably necessary” to give effect to the Order (Fontaine v Canada (Attorney General), 2012 ONSC 3552 at para 7).

Teksavvy provided notice to affected customers.  Teksavvy supporters noted that the notice provided was separate from what other ISPs were doing and the ISP should be patted on the back for it.  Well, Teksavvy tried to claim costs on those notices stating that it was essential to weed out any false accusations, and to let affected customers obtain legal council.  Based on the evidence the judge disagreed with Teksavvy, however awarded Teksavvy for the costs of “rechecking” the IP addresses only if the identity of the affected subscriber can be proven (my emphasis added):

[64] While the Court has the discretion to order a party to give notice, the Rules do not require TekSavvy to have provided notice of the motion to its affected clients. TekSavvy acted voluntarily and on its own initiative. Whether it acted out of altruism or self-interest is irrelevant.

[65] I do not accept the argument that the notice served to verify the correlation as it led to a more accurate identification of affected customers, and that the resulting costs should therefore Page: 19 be subsumed in the costs of abiding with the Order. This appears to be an explanation after the fact. Notice was not given to ensure the accuracy of the correlation. There is nothing in the notices or in the exchanges of counsel to suggest that the purpose of the notice was anything other than to inform subscribers of the motion and to provide them with an opportunity to seek legal advice, or to appear at the motion.

[66] That said, the costs incurred from rechecking and correcting information following the notice would be recoverable, if identified and proven.

Teksavvy should be applauded for notifying its customers, however the court disagreed that they should be awarded full compensation for such.  That’s going to have interesting results going forward with future cases.  This is the only privacy concern I can see, however what sets apart others from the rest of the pack (and the more noble thing to do) on privacy should be those that incur costs to do the right thing, rather than leaving their subscribers in the dark. Unfortunately the telecom industry is increasingly less likely to do that as a whole, so this does become a concern.

Regarding Teksavvy’s legal costs.  The judge took exception of how Teksavvy’s lawyers were billing, and award only $4,500 in legal fees (my emphasis added):

[77] Finally, I need not comment on the entries to Stikeman Elliot’s bill that are on account of “Reviewing draft and revised press releases,” “Reviewing and revising draft blog posts,” and “Review talking points; interviews; conference call re media lines,” to name a few. These and other similar items are irrelevant to the implementation of the Order and not recoverable.

I’m glad that the court agrees that Teksavvy isn’t entitled to costs for reading my blog!

[78] I also need not comment on the evidence of Philpott taking issue with the manner in which TekSavvy or its counsel allegedly drove up these costs as I have had no reference to the evidence.
[79] Having reviewed the bill of legal costs, I am satisfied that the following legal costs alone fall within the scope of the Order: the costs of McHaffie’s communication with counsel for Voltage concerning time zones or timestamp information necessary to carry out the correlation and those of reviewing and providing advice on Prothonotary Aalto’s Order. I fix these at $4,500.00.

The judge goes on to question the administrative costs associated with the order, citing only “estimates” were provided, and a lot of those costs were not related to the implementation of the court order.

[81] Gaudrault says that Tacit’s retainer by TekSavvy “in the relevant period” was monthly rather than hourly. Tacit did not himself provide a bill of costs or time sheets in relation to his services. Rather, Gaudrault attaches “estimates” of Tacit’s monthly costs for advice with respect to Voltage’s motion, including representing TekSavvy in the litigation as co-counsel, and giving advice related to customer communication, IT issues, call centre issues, and privacy matters. Neither specific tasks, nor the time at which they were performed or the length of time it would have taken to complete them, are identified.

[82] Most of the items identified are unrelated to the implementation of the Order. Tacit’s advice or involvement related to the performance of the look-up or correlation exercise required to locate accurate contact information for TekSavvy subscribers cannot be identified or determined on the evidence. I do not comment on whether any cost items might be excluded due to overlap with items also claimed by Stikeman Elliott. VI.

Voltage had objected to the “estimates” provided by Teksavvy on administration costs.  Teksavvy employee’s apparently didn’t submit time sheets (my emphasis added):

[97] On the first ground regarding hearsay, Voltage makes several points. First, Gaudrault and Tellier did not themselves do the work of correlating the IP addresses. As revealed on crossexamination, it was Misur, not the affiants, who created the appendix setting out the hours of work. Gaudrault’s and Tellier’s evidence is therefore inadmissible hearsay. Additionally, the times noted in the appendix as well as the hourly rates are merely estimates as TekSavvy employees did not keep time sheets or time logs of the work that was done. Finally, the individuals who carried out the work did not produce their own evidence even though they had direct personal knowledge of the facts.

Paragraphs 107 – 113 deal with the judge basically throwing out Voltages notion on the very low cost amount of administration costs of close to $900, stating that Voltages experts were not familiar with Teksavvy’s systems.  One of the main admin costs I objected to on this blog that Teksavvy filed for what was the purchase of a new computer system to handle the court order.  The judge on that:

[114] The Order does not distinguish between the correlation and the systems necessary to carry it out. The adaptations to TekSavvy’s look-up process were necessary to effect the required correlation and, in my view, its costs are thereby encompassed by the Order. Put another way, in this respect Voltage has to take TekSavvy as it finds it.
[115] While TekSavvy may have derived a benefit from the situation, TekSavvy will not be able to claim the costs of its upgraded correlation process again in the context of future requests. What’s more, if such costs are to be excluded, it is up to the parties to see that the cost order reflects their intentions.

Finally the court arrived at a sum of $17, 057.50 for administration costs provided to the court by Teksavvy, and flat out rejected the notion that Teksavvy be allowed to recover costs associated with not opposing the motion and having to deal with upset consumers.  The court finds that to be a regular business expense:

[118] In sum, having reviewed TekSavvy’s claim for technical administrative costs, I find that it has proven costs in the amount of $17,057.50. In arriving at this sum I have excluded costs of “Preparation of information for court” and one half of the costs of “Second check/QA verification” as these were not identified and supported by evidence. Moreover, at the hearing of the motion, TekSavvy failed to explain what was meant by “QA verification.”

A. The “operational” administrative costs of implementing the Order
[119] Under this heading, TekSavvy seeks to recover the sum of $81,524.12 for expenses incurred in communicating with affected and non-affected subscribers and the public; creating an online portal tool for the use of subscribers; and responding to a higher volume of inquiries and complaints. The claim, including overtime, is on account of the work performed by supervisors and staff in the e-services department, at the call centre, and in the marketing department.

[120] These tasks, which Gaudrault refers to as “work relating to TekSavvy’s reputational impact,” are, in effect, TekSavvy’s costs of marketing, promotion, and customer relations, which I consider to be TekSavvy’s costs of doing business. Consequently, I disallow these costs. I do not consider them recoverable as they are unrelated to the identification and production of the required customer information, and fall outside the ambit of the Order.

In conclusion the court has found that both parties were way out there on their costing of disclosure.  It’ll be interesting to see how or even if there will be an appeal and on what basis.  The court quite clearly called out Teksavvy here for the evidence provided for costs.  To my non-lawyer eyes, the judgement on costs (while low) seems to fit with the evidence provided in the case, and the decision seems balanced within that respect.

Copyright Notice Scheme Fails in 8 Days Due to Trolls

January 8, 2015 1 comment

Since January 1st 2015, Canadians that download off of bit-torrent started to get “copyright infringement” notices.  I’ve even questioned the amount of money Canadian Internet providers could make on the process.  The questions I raised ended up being used in court.  Today however, many Canadian Internet users are not getting notices of infringement from music publisher BMG. They are receiving legal threats through this system only eight days in.  As Micheal Geist (emphasis added) reports:

The notice falsely warns that the recipient could be liable for up to $150,000 per infringement when the reality is that Canadian law caps liability for non-commercial infringement at $5,000 for all infringements. The notice also warns that the user’s Internet service could be suspended, yet there is no such provision under Canadian law. Moreover, given the existence of the private copying system (which features levies on blank media such as CDs), personal music downloads may qualify as private copying and therefore be legal in Canada.

BMG is using a company called Rightscorp to track infringing users online.  Rightscorp is a well known name in the US for helping launch massive copyright lawsuits against internet users, and is on the brink of bankruptcy.

The notice sent by BMG/Rightscorp (which is viewable on Geist’s post) also threatens to cut off infringing users Internet access (which the law doesn’t permit) and falsely informs Canadian Internet users on the new law.   Users that receive these notices are also asked to pay a $20 fee to make these problems go away.  It’s important to note that if you have received this notice or any other through e-mail, your identity is not currently known.  Geist summarizes:

In a nutshell, Rightscorp and BMG are using the notice-and-notice system to require ISPs to send threats and misstatements of Canadian law in an effort to extract payments based on unproven infringement allegations. Many Canadians may be frightened into a settlement payment since they will be unaware that some of the legal information in the notice is inaccurate and that Rightscorp and BMG do not know who they are.

With Canadian Internet providers making a nice profit off of disclosing their customers information with a court order, will Canadian ISPs stand up to this abuse of the system, or as the case with US telecom, leave Internet users to their own devices and cash in on disclosing their users identities?

Users should not respond to these types of notices or attempt to settle.  It would provide information about you to copyright holders that they don’t currently have, which could include financial information, your address and phone number.

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