Written By Jl D. Watson

On May 19th the Canadian Federal Court of Appeal released its decision in BMG Canada Inc. et al. v. John D et al. All sides immediately declared victory; the legal pundits began spinning their marketing efforts to become counsel on the next round of motions; the government moved to change the Copyright Act.

Although there may be shades of grey in some of the decision, the Canadian Recording Industry Association's (“CRIA”) appeal was dismissed and the personal information of the Internet customers allegedly file sharing was not released. CRIA had filed insufficient evidence, and lost both the motion and the appeal as a result. While CRIA can start over, it has now been made clear that they must come to court with real and admissible evidence; approach the file sharing services first; really intend to sue the proposed defendants and then, must compensate the Internet Service Providers (“ISPs”) for the searches.

The claim itself was one of alleged copyright infringement: The central legal issue was whether individuals who permit others to access their computers over the Internet and, through the use of file sharing software (whether they know it or not) to make further copies of the music files, infringe copyright in the sound recording owned by the record producers. The motion that was the subject matter of the appeal, however, was much more limited. The motion was a classic litigation issue about the standard of proof required before the court would interfere with the privacy of the ISPs and their customers, to aid CRIA pursuing a civil action. The motion concerned the production of the names of the proposed defendants by a non-party so they could be sued, not the final decision as to whether they had infringed copyright.

It is because of this limited nature that the Court of Appeal dismissed the appeal on the hearsay issue alone:

Much of the crucial evidence submitted by the plaintiff s was hearsay and no grounds are provided for accepting that hearsay evidence. In particular, the evidence purporting to connect the pseudonyms with the IP addresses was hearsay thus creating the risk that innocent persons might have their privacy invaded and also be named as defendants where it is not warranted. Without this evidence there is no basis upon which the motion can be granted and for this reason alone the appeal should be dismissed.

Of importance to litigators litigating these issues as well as the parties in intellectual property cases is the need to educate the court on the technology being used. Especially with new technology, it cannot be assumed that the court will be even passingly familiar with that technology.

Whereas CRIA's affidavits were sparse and contained unsupported and unexplained conclusions, several of the responding ISPs delivered technically detailed affidavits and cross-examined. As a result, Justice von Finckenstein found that CRIA's primary affiant had not done the work himself and had not even listened to the music files. The only way one could tell that a music file was possibly infringing was to listen to it, because there were many misnamed decoy files on the Internet. Moreover, CRIA had not given any evidence as to how they purported to link the pseudonyms to the IP addresses in the first place. Finally, CRIA failed to answer whether it had even approached the file sharing services (i.e. Kazaa) to determine whether they had the required information. In other words, CRIA had not explained to the court the technology of file sharing, why the ISPs should be involved at all, or of how CRIA gathered their purported evidence.

The Court of Appeal did reverse two findings. First, the court reiterated that it would only require the moving party to show a bona fide as opposed to a prima facie case. Second, the Court of Appeal held that Justice von Finckenstein went too far in considering whether there had been copyright infringement at such an early stage in a proceeding: While the Court of Appeal identified potential problems with Justice von Finckenstein's conclusion on this issue, they did not substitute their own.

Thus, the danger of making such findings at the early stages of this case can be seen. I make no findings here and wish to make it clear that if this case proceeds further, it should be done on the basis that no findings to date on the issue of infringement have been made.

Justice von Finckenstein had felt that downloading music from the Internet was not an infringement of copyright due to the private copying exemptions in the Copyright Act. Contrary to the views expressed by some commentators, the Court of Appeal did not say Justice von Finckenstein was wrong. Rather, the Court said that his decision on copyright infringement was unnecessary given the hearsay issue, premature given the bona fide issue, and did not address potential arguments against some of his findings.

Another significant aspect of the motion and appeal was consideration of Canada's privacy law, the Personal Information Protection and Electronic Documents Act S.C 2000, c. 5 (“PIPEDA”). Both courts noted that section 7(3)(c) of PIPEDA permitted disclosure of personal information upon court order. Significantly, however, both courts also held that whether a court should order such disclosure should be informed by the significant privacy interest at stake. Thus, while in balancing the property right of the owner of copyright and the privacy right of the Internet user, the privacy right may need to yield, the Court must be cautious, and if the order is granted, the order must be limited to protect the privacy right.

Accordingly, (i) there cannot be a lengthy delay between the gathering of information and the application; (ii) the information gathered, both to obtain the order and as a result of the order must be limited only to that necessary to continue the action; and (iii) it must be shown that there is no alternative method of proceeding.

The Court of Appeal has placed a significant burden on the moving party, both in terms of the evidence used to bring the motion and in what information it can obtain on such a motion. It also affirmed that the moving party would be responsible for the costs of the subsequent investigation. In other words, the road map the Court provided has not eliminated any of the tollbooths and speed traps.

One other important aspect of these decisions is the finding that Rule 233, concerned with the production of documents, did not apply. In so doing, the Courts held that raw computer data does not comprise a “document in the possession of a person.” This finding is likely to have a significant impact as computer data is increasingly in uncorrelated form, only accessible through data management software or requiring significant processing to be meaningful.

In conclusion, whether CRIA can prove that the acts of uploading and downloading of music files constitutes copyright infringement is yet to be determined and may ultimately be answered by changes to the Copyright Act. Until then, the only clear direction in technology cases is to come to court with real evidence and be prepared to educate the court.