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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.

Stéphane Dion Using Copyright Complaint Stifle Criticism

Techdirt is reporting that former Liberal leader Stéphane Dion has launched a copyright complaint on a Conservative attack ad, to try and stifle criticism of the Liberal party.  The complaint Mr. Dion has put forth to the Commissioner of Canada Elections:

Recently, the CPC used footage owned by the Huffington Post and CTV in a television advertising campaign directed at the Liberal Party of Canada. These advertisements are being aired nationally, including in Labrador where a by-election is currently being held. I understand from media reports that the CPC is using this footage without the copyright holders’ permission and presumably without paying the copyright holders to license the material. I understand that the licensing of copyrighted materials ordinarily comes at a cost.

I am raising my concerns with you because the CPC’s unauthorized use of this material, while inconsistent with our country’s copyright laws, may also be non-compliant with the Canada Elections Act (the “Act”). In my view, the unpaid use of copyrighted material is a “non-monetary contribution” to the CPC, as defined in s.2(1) of the Act.

Not a very good idea since a lot of Teksavvy (pun intended) internet users are looking to see what direction copyright might take under Liberal leadership.  Using copyright for political trolling purposes, and attacking fair use provisions, is not a good start.  If Trudeau was smart he’d whip Dion back in line before the damage is done.  Also if Dion really wants to cry about something, it should be the “high school production” address to the nation a few years ago.  Liberal party owns the rights to that I would assume.  That did far more damage to the Liberal party than what the Conservatives drummed up against him.

Collective Thoughts on User Rights, and Canadian Copyright

February 17, 2013 Leave a comment

There are two different camps when it comes to copyright on both sides of the copyright debates.  Those that believe in copyright enforcement, and those that believe industry needs to adapt.  I’m in the middle of these two with my perception of things.  However when it comes to copyright in law, there’s a lot of politics, reputations, and ego’s in Canada rather than applied economics when dealing with changing copyright law.  We have yet to see an actual independent judicial economic test thrown on industry as to the actual damage (if any) that has been caused by a download from a file sharing network.  In fact the in the US, the Obama admin is trying it’s best to ensure that doesn’t happen with a file sharing case that’s made it to their supreme court.  I think we’re all owed an explanation as to what the actual damages are caused by a P2P user.  Is it piracy, or is it ideology driving the copy “right” side of the debate?  If actual harm cannot be proven, than I believe we need not have laws governing deterrence of use within a newly formed medium.

The Canadian Government has reduced the statutory damages for non-commercial infringement in the new copyright act to $100 – $5000. Those damages are not set up to reflect actual damages, meaning they are set up as a deterrent on the P2P networks.  Even if no damages have occurred as a result of P2P download/upload, consumers are still on the hook for not just legal costs but damage awards that are disproportionate to actual harm (if any) caused.  This could mean that these damage awards are purely meant to punish users, rather than reflect actual economic harm.

At the time of the copyright consultations in 2009, those supporting the notice to notice trolling approach felt that a threat of a $5000 law suit would be enough to “deter” users from using a medium that industry has yet to prove any actual damages have occurred as a result of a user download/upload. We have laws in place as a result that threaten and harass users, for no other proven stated purpose than the lack of adaptively, and lack of meeting market demands by industry. I’m strongly opposed to this, and those that support this approach regardless of their backgrounds.

Users and consumers represent the market. In a free market society we should not be trying to dictate on how the market adapts to technological advances. That slows down innovation, puts unfair advantages on new emerging businesses (especially in the digital economy), and as a result can cause economic harm.  Those in industry and abroad that think government needs to dictate how industry works and adapts to technological change stems from an ideology that should not be accepted in today’s applied economics, or even be considered socially acceptable. Putting preference within law on those who refuse to adapt can be a very dangerous approach to take with an economy going through a transition and revolution. That also presents a moral hazard on those entities that should be innovating around market needs, and are choosing not to due to the protections afforded to them within law and regulations. Maybe the delay in the governments Digital Economic Strategy is a result of discovering this?

Users and consumers should not be harassed, threatened or punished by industry because they have chosen different and innovative distribution models within media that industry has issues with.  Users that upload pictures or share media online through social media (an accepted use of file sharing) are just as guilty in the eyes of the law for “piracy” as those downloading off of the file sharing networks. Every single socially savvy internet user is responsible for copyright infringement several times a day. So what are we do? Harass and sue the population because they are using the Internet?  I don’t know about you, but something doesn’t sit right with me on that.  The internet, industry and market has now evolved around the sharing of media. It’s time the law reflects this as well on the user side.

I do believe however that industry itself needs fair rules, and still very much believe that commercial copyright enforcement is needed. However that system is a mess right now and not innovator friendly especially within media. Copyright is extremely complex, often with overlapping licensing fees (due to years of industry lobbying). Sometimes no licensing fees exist for certain things and it’s extremely expensive to innovate around copy protected works in the current system. The copyright board needs to be open to public submissions in order to change this.

I have very strong convictions against undue prosecution and prejudice within society.  As Canadians, we have a very long and well documented history of having the courage to stand up to fight those who present such ideologies. If history has taught us anything, it’s to keep questioning those responsible and who assist with undue prosecution and prejudice on members of our society.  If we do not question the facts surrounding prejudice, than history would have taught us nothing.  There will be a lot of people that will disagree with my views, both in and outside the pro-internet community.  That’s fine, however if there is justification for the prosecution and prejudice on users for non-commercial copyright infringement that’s based on fact not ideology, I’m all ears.

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