{"id":6188,"date":"2022-07-24T21:18:14","date_gmt":"2022-07-24T21:18:14","guid":{"rendered":"https:\/\/rdo-olr.org\/?p=6188"},"modified":"2026-02-22T19:22:30","modified_gmt":"2026-02-22T19:22:30","slug":"starving-off-copyright-trolls-an-approach-to-non-commercial-statutory-damages-reform","status":"publish","type":"post","link":"https:\/\/rdo-olr.org\/fr\/starving-off-copyright-trolls-an-approach-to-non-commercial-statutory-damages-reform\/","title":{"rendered":"Starving Off Copyright Trolls: An Approach to Non-Commercial Statutory Damages Reform"},"content":{"rendered":"

By: Giovanni Giuga*<\/em><\/h4>\n

I. INTRODUCTION<\/strong><\/h4>\n

A copyright troll is a plaintiff who seeks damages for infringement upon a copyright it owns, not to be made whole, but rather as a primary or supplemental revenue stream \u2026 [They] found that enforcing copyrights with a statutory penalty could be more profitable than creating new works.[i]<\/sup><\/a><\/p>\n

Since 1997, Canada\u2019s copyright regime has allowed a copyright holder to choose statutory damages instead of compensatory damages for copyright infringement.[ii]<\/sup><\/a> The reason the Copyright Act<\/em>[iii]<\/a> provides \u201cfor statutory damages in lieu of damages and profits is because actual damages are often difficult to prove and it is only the promise of statutory damages that will induce a copyright owner to invest and enforce his copyright and only the threat of a statutory award will deter infringers by preventing their unjust enrichment.\u201d[iv]<\/sup><\/a> Statutory damages award ranges differ based on whether the copyright infringement was for commercial or non-commercial purposes.[v]<\/sup><\/a><\/p>\n

Statutory damages as a remedy are uncommon globally and in Canada\u2019s legal system. Statutory damages are not universally accessible in jurisdictions across the globe with only 24 out of 179 countries in the World Intellectual Property Organization having them.[vi]<\/sup><\/a> The United States was the first jurisdiction to have a statutory damages regime, with Canada and Liberia following suit, years later, in 1997.[vii]<\/sup><\/a> Notably, countries such as \u201cthe Netherlands, the United Kingdom, Australia, Germany, and France\u201d lack a statutory damages regime.[viii]<\/sup><\/a> Statutory damages are not often available in other circumstances; actual damages are more common.[ix]<\/sup><\/a><\/p>\n

Copyright trolls take advantage of the copyright regime\u2019s protection. In Voltage Picture LLC v John Doe<\/em>, Canada\u2019s first case to mention copyright trolls, the Court characterized them as plaintiffs filing \u201cmultitudes of lawsuits solely to extort quick settlements,\u201d and stated that a troll lawsuit \u201crequires courts to ensure that the litigation process and their scarce resources are not being abused.\u201d[x]<\/sup><\/a> A copyright holder\u2019s ability to elect for statutory damages has \u201cundoubtedly enabled copyright trolls to flourish\u201d because copyright trolls will scare individuals into settling the claim.[xi]<\/sup><\/a> For example, Voltage <\/em>was about individuals who were downloading a copy or sharing a Voltage movie.[xii]<\/sup><\/a><\/p>\n

Copyright holders can elect for either actual or statutory damages as a remedy, and copyright trolls will often elect for statutory damages because the damage award is higher and actual damages are hard to prove. Jo\u00e3o Velloso and Mistrale Goudreau effectively illustrate the problem with statutory damages:<\/p>\n

The regime is also very severe for a one-time infringer. In 2012, iTunes charged $1.29 CAD for the downloading of a single Justin Bieber song and his CDs were on sale at HMV for $12.99 CAD. Assuming that a song is a single work, the minimum award, even taking into account the good faith of a non-commercial infringer and the range set in the 2012 legislative modifications, would be $100 per proceeding, so seventy-seven times<\/u> the actual damages.[xiii]<\/sup><\/a><\/p>\n

I argue that copyright troll practices will be less effective when the courts routinely award statutory damages for non-commercial<\/em> purposes below the statutory minimum, especially in default judgment proceedings.<\/p>\n

II. <\/strong>THE EXISTING STATUTORY DAMAGES REGIME HAS SUFFICIENT STATUTORY PROVISIONS BUT LIMITED CASE LAW FOR COURTS TO ALLOW STATUTORY DAMAGE AWARDS LOWER THAN THE NON-COMMERCIAL MINIMUM<\/strong><\/h4>\n

Statutory damage awards under s. 38.1 of the Act<\/em> must be reasonable in the circumstances to \u201cyield a just result.\u201d[xiv]<\/sup><\/a> Lemieux J. stated that \u201c[t]here should be some correlation between actual damages and statutory damages even though section 38.1 does not speak of actual damages.\u201d[xv]<\/sup><\/a> However, they clarify that \u201c[a]ctual and statutory damages should not be conflated. Statutory damages are not intended to be 1:1 proportional with provable \u2018but-for\u2019 losses; rather, they can encompass both provable economic losses and additional factors such as deterrence.\u201d[xvi]<\/sup><\/a><\/p>\n

For non-commercial purposes, the Court can reduce a statutory damages award after considering certain factors. Under s. 38.1 of the Act<\/em>, the Court has the discretion to make proportionate awards after considering \u201call relevant factors, including\u201d:<\/p>\n

(a)\u00a0the good faith or bad faith of the defendant;<\/p>\n

(b)\u00a0the conduct of the parties before and during the proceedings;<\/p>\n

(c)\u00a0the need to deter other infringements of the copyright in question; and<\/p>\n

(d)\u00a0in the case of infringements for non-commercial purposes<\/u>, the need for an award to be proportionate to the infringements, in consideration of the hardship the award may cause to the defendant, whether the infringement was for private purposes or not, and the impact of the infringements on the plaintiff.[xvii]<\/sup><\/a><\/p>\n

These factors are considered contextually by the decision-maker. For example, in Bell Canada v L3D Distributing Inc (INL3D)<\/em>, the Court found a need to deter the defendant\u2019s conduct and bad faith since its operations contributed to \u201cthe growth of the illicit pre-loaded set-top box industry.\u201d[xviii]<\/sup><\/a> Fuhrer J. elaborated on what constituted bad faith in other cases, such as a party \u201cignoring a cease and desist letter\u201d or \u201cscraping or copying photos directly.\u201d[xix]<\/sup><\/a><\/p>\n

There are no Canadian reported non-commercial purpose infringement cases but existing case law promotes reducing statutory damages below the statutory minimum.[xx]<\/sup><\/a> In Telewizja Polsat SA v Radiopol Inc<\/em>, the Court outlined that this provision was enacted to ensure statutory damage awards are proportionate:<\/p>\n

Parliament was alive to the problem which might arise in the case of the infringement of multiple works pirated from satellite signals. This is why Parliament wrote in an adjustment factor in subsection 38.1(3) of the Act which enables the assessment of damages per work below $200 in order to make damages proportionate to the infringement.[xxi]<\/sup><\/a><\/p>\n

Telewizja <\/em>was decided before statutory damage awards were separated between commercial and non-commercial purposes.<\/p>\n

The Court has jurisdiction to make statutory damage awards below the minimum range. Under s. 38.1(3), the Court can make a lower award for commercial purposes when the total award\u2019s result is \u201cgrossly out of proportion to the infringement.\u201d[xxii]<\/sup><\/a> For example, an infringer acting in good faith saw their statutory damages for each work reduced from $500 to $2.[xxiii]<\/sup><\/a> However, Fuhrer J. acknowledges that \u201c[t]here is little discussion in copyright jurisprudence about what constitutes \u2018grossly out of proportion.\u2019\u201d[xxiv]<\/sup><\/a> This statutory provision does not<\/em> apply to non-commercial purposes. The defendant has the burden of showing that the statutory damages would be grossly disproportionate relative to the infringement.[xxv]<\/sup><\/a> For example, in Bell<\/em>, a $20,000 award was seen as grossly disproportionate, and the Court settled on a $10,000 award per work after considering \u201cthe Plaintiffs\u2019 intention to pursue default judgment against more defendants in this matter and in light of the Plaintiffs\u2019 admission that declines in subscriptions result only partly from content piracy.\u201d[xxvi]<\/sup><\/a><\/p>\n

III. <\/strong>CANADA\u2019S LEGISLATIVE HISTORY AND DISCUSSION OFFER ADDITIONAL SUPPORT FOR LOWER DAMAGE AWARDS BEING EFFECTIVE\u00a0<\/strong><\/h4>\n

Parliament identified reduced statutory awards for non-commercial purposes. In 2012, the Copyright Act <\/em>was amended to create two different statutory damage ranges based on whether the infringement was for commercial ($500\u2013$20,000) or non-commercial purposes ($100\u2013$5,000), instead of the previous single statutory damages range for all infringers ($500\u2013$20,000).[xxvii]<\/sup><\/a> Parliament intended for \u201cindividuals who download music from peer-to-peer file-sharing services\u201d (p2p) to pay a \u201creduced damage award\u201d for infringements.[xxviii]<\/sup><\/a> Another amendment made was to include a \u201cproportionality requirement for damages for non-commercial infringement\u201d which became s. 38.1(5)(d).[xxix]<\/sup><\/a> In Parliament, an opposition Member of Parliament questioned the non-commercial purposes damage awards\u2019 effectiveness at stopping p2p piracy but noted \u201cdamages must be commensurate with the severity of the infringement.\u201d[xxx]<\/sup><\/a> During the consultation period, Access Copyright raised concerns that these \u201cstatutory damages [reforms] may have little or no deterrent effect on potential infringers,\u201d including individuals.[xxxi]<\/sup><\/a> Instead they proposed that the courts have \u201cgreater discretion in non-commercial cases to reduce the statutory damage awards.\u201d[xxxii]<\/sup><\/a><\/p>\n

Parliament has sought to reduce copyright trolling. The notice-and-notice regime was amended to prohibit copyright holders from including information such as offers to settle or demands for personal information.[xxxiii]<\/sup><\/a> Future Justice Minister David Lametti explained that these amendments were meant to standardize costs and make the regime fairer and \u201cprevent[] [copyright] trolls from taking advantage of the system.\u201d[xxxiv]<\/sup><\/a> This illustrates that Parliament and the courts are seeking to reduce copyright trolling.<\/p>\n

IV. <\/strong>AUSTRALIA, NEW ZEALAND, AND THE UNITED STATES OFFER EXAMPLES WHERE COPYRIGHT INFRINGEMENT DAMAGE AWARDS ARE LOWER AND MORE RELATIVE FOR NON-COMMERCIAL PURPOSES<\/strong><\/h4>\n

In Australia\u2019s Dallas Buyers Club LCC v iiNet Ltd (No 4)<\/em>, copyright holders were unsuccessful in having a stay lifted that prevented the internet service providers from providing a list of infringing account holders because they might engage in \u201cspeculative invoicing.\u201d[xxxv]<\/sup><\/a> Perram J. found that the DVD rental price should be a factor considered in the damages award:<\/p>\n

ultimately the rental price will turn out to be what most infringers would have paid if they had not downloaded the Film using BitTorrent. Maybe the evidence will ultimately show that some of the infringers were true pirates and, sailing under the Jolly Roger, would only ever have acquired a copy of the Film if they did not have to pay for it. Maybe some regard will eventually need to be taken of the difference between the prices charged by retail outlets and the size of the revenue streams flowing to DBC [Dallas Buyers Club<\/em>]. But even taking account of all of those future possibilities, the idea that DBC\u2019s damages should equal the value of what was taken from it without its permission is not, self-evidently, a ridiculous claim and, indeed, has a certain biblical charm.[xxxvi]<\/sup><\/a><\/p>\n

Perram J. explained that:<\/p>\n

[h]ere the Court would seek to put DBC back in the position it would have been in if the infringements had never occurred. But there are many different ways in which the infringements might not have occurred. One counterfactual is that the infringer might not have used BitTorrent at all but instead rented the Film legitimately from another source. Another is that the infringer might have foregone watching the Film altogether. Yet another is that the infringer might have seen the Film at the cinema\u2026 All of these differ[ent] scenarios are theoretically available ways of calculating DBC\u2019s damages.[xxxvii]<\/sup><\/a><\/p>\n

Australian courts have shown that non-commercial infringements, like DVD piracy needs, need to be considered relative to actual costs like Telewizja<\/em>.<\/p>\n

New Zealand has two BitTorrent infringement cases where the courts awarded low damage awards. In Recording Industry Association of New Zealand Inc v Enforcement Number: Telecom NZ 2592<\/em>, Glover J. awarded the copyright holder $616.57 for four infringed sounds where $360 was intended as a deterrent for the BitTorrent infringer.[xxxviii]<\/sup><\/a> In Recording Industry Association of New Zealand Inc v TCLE[A]-T5877102<\/em>, the Court awarded the copyright holder $557.17 from the BitTorrent infringer for three songs in which $300 was for deterrence (or $100 for each infringement).[xxxix]<\/sup><\/a> In both cases, the BitTorrent infringer was an individual who downloaded music through BitTorrent and the damage award included cost mechanisms such as application fees.<\/p>\n

In the United States, some of its courts and scholars have adopted an approach to deterring copyright trolls by awarding the statutory minimum to BitTorrent infringers, especially in default judgement proceedings.[xl]<\/sup><\/a> For example, Wake J. ordered some BitTorrent infringers pay the statutory minimum ($750) for sharing and downloading a movie.[xli]<\/sup><\/a><\/p>\n

V. <\/strong>CONCLUDING REMARKS<\/strong><\/h4>\n

Judicial decision-makers can remove the punitive effect of statutory damages and better balance the statutory damages regime between copyright holders and consumers.[xlii]<\/sup><\/a> Scholars have offered alternative solutions to address the copyright troll statutory damages concern.[xliii]<\/sup><\/a> A common option is to remove statutory damages as a remedy.[xliv]<\/sup><\/a> The courts cannot remove statutory damages as a remedy, but they can award copyright trolls damages reduced below the statutory minimums to ensure they receive no more than their just desserts.<\/p>\n

—<\/p>\n

Acknowledgements: The author would like to thank David Fewer for their helpful comments and feedback on an earlier version of this blog post. All errors and omissions remain the author’s own.<\/strong><\/p>\n

*Giovanni Giuga has Juris Doctor from the University of Ottawa, a Master of Arts from McGill University, and a Bachelor of Arts from Wilfrid Laurier University.<\/strong><\/p>\n

The opinions expressed in this text belong solely to the author.<\/i><\/strong><\/p>\n

[i]<\/a> James DeBriyn, \u00ab\u00a0Shedding Light on Copyright Trolls: An Analysis of Mass Copyright Litigation in the Age of Statutory Damages\u00a0\u00bb (2012) 19:1 UCLA Ent L Rev 79 at 86.<\/p>\n

[ii]<\/a> See David Vaver, Intellectual Property Law: Copyright, Patents, Trade-Marks<\/em>, 2nd ed (Toronto: Irwin Law, 2011) at 643.<\/p>\n

[iii]<\/a> RSC 1985, c C-42.<\/p>\n

[iv]<\/a> Telewizja Polsat SA v Radiopol Inc<\/em>, 2006 FC 584 at para 40 [Telewizja<\/em>].<\/p>\n

[v]<\/a> Copyright Act<\/em>, supra <\/em>note iii, s 38.1(1).<\/p>\n

[vi]<\/a> Pamela Samuelson, Phil Hill & Tara Wheatland, \u00ab\u00a0Statutory Damages: A Rarity in Copyright Laws Internationally, but for How Long?\u00a0\u00bb (2013) 60:4 J Copyright Society USA 529 at 534. See especially ibid <\/em>at 532\u2013536.<\/p>\n

[vii]<\/a> Ibid <\/em>at 530\u201331.<\/p>\n

[viii]<\/a> Ibid <\/em>at 535.<\/p>\n

[ix]<\/a> See e.g. Consumer Protection Act<\/em>, RSA 2000, c C-26.3, s 98; Personal Property Security Act<\/em>, RSO 1990, c P.10, s 56(4).<\/p>\n

[x]<\/a> 2014 FC 161 [Voltage<\/em>], citing TCYK, LLC v Does<\/em> 1-88<\/em>, 2013 US Dist LEXIS 88402 at 3 (US District Court for the Northern District of Illinois).<\/p>\n

[xi]<\/a> Gregory S Mortenson, \u201cBitTorrent Copyright Trolling: A Pragmatic Proposal for a Systemic Problem\u201d (2013) 43:3 Seton Hall L Rev 1105 at 1132.<\/p>\n

[xii]<\/a> Voltage<\/em>, supra <\/em>note x at para 3.<\/p>\n

[xiii]<\/a> Jo\u00e3o Velloso & Mistrale Goudreau, \u201cPunishment, Private Style: Statutory Damages in Canadian Copyright Law\u201d in B Courtney Doagoo et al, eds, Intellectual Property for the 21st Century: Interdisciplinary Approaches<\/em> (Toronto: Irwin Law, 2014) 268 at 271\u2013272 [citations omitted, emphasis added].<\/p>\n

[xiv]<\/a> Telewizja<\/em>, supra <\/em>note iv at para 37.<\/p>\n

[xv]<\/a> Ibid<\/em> at para 45. See also Nicholas v Environmental Systems (International) Ltd<\/em>, 2010 FC 741 at para 105.<\/p>\n

[xvi]<\/a> Rallysport Direct LLC v 2424508 Ontario Ltd<\/em>, 2020 FC 794 at para 9 [Rallysport<\/em>].<\/p>\n

[xvii]<\/a> Copyright Act<\/em>, supra <\/em>note iii, s 38.1(5) [emphasis added].<\/p>\n

[xviii]<\/a> 2021 FC 832 at paras 99\u2013104 [Bell<\/em>].<\/p>\n

[xix]<\/a> Rallysport<\/em>, supra <\/em>note xvi at para 10 [citations omitted] (\u201c(i) ignoring a cease and desist letter; (ii) repeatedly infringing different products; (iii) scraping or copying photos directly from a website; (iv) ignoring offers not to litigate if they cease infringement; and using a false name to avoid being detected\u201d). For the quantum of damages calculation analysis, see ibid<\/em> at paras 24\u201331.<\/p>\n

[xx]<\/a> See e.g. Trader v CarGurus<\/em>, 2017 ONSC 1841 at paras 66\u201367 [CarGurus<\/em>] (Court exercised its discretion to reduce each work to $2 for 152,532 infringing photos).<\/p>\n

[xxi]<\/a> Telewizja<\/em>, supra <\/em>note iv at para 48.<\/p>\n

[xxii]<\/a> Copyright Act<\/em>, supra <\/em>note iii, s 38.1(3).<\/p>\n

[xxiii]<\/a> CarGurus<\/em>, supra <\/em>note xx.<\/p>\n

[xxiv]<\/a> Rallysport<\/em>, supra <\/em>note xvi at para 12.<\/p>\n

[xxv]<\/a> Nintendo of America Inc v King<\/em>, 2017 FC 246 at para 146.<\/p>\n

[xxvi]<\/a> Bell<\/em>, supra <\/em>note xviii at paras 105\u2013106.<\/p>\n

[xxvii]<\/a> Canada, Library of Parliament, Legislative Summary of Bill C-11<\/em>, by Dara Lithwick & Maxime-Olivier Thibodeau (Ottawa: Library of Parliament, 2012) at 17 [Bill C-11 Leg<\/em>].<\/p>\n

[xxviii]<\/a> Ibid<\/em>.<\/p>\n

[xxix]<\/a> Ibid<\/em>.<\/p>\n

[xxx]<\/a> House of Commons Debates<\/em>, 40-3, No 92 (2 November 2010) at 5660 (Bonnie Crombie).<\/p>\n

[xxxi]<\/a> Access Copyright, \u201cSubmission to the House of Commons Legislative Committee on Bill C-11\u201d (7 March 2012) at 10, online (pdf): House of Commons<\/em> <www.ourcommons.ca\/Content\/Committee\/411\/CC11\/WebDoc\/WD5459877\/411_C11_Copyright_Briefs\/AccessCopyrightE.pdf >.<\/p>\n

[xxxii]<\/a> Ibid<\/em>.<\/p>\n

[xxxiii]<\/a> See Canada, Library of Parliament, Legislative Summary of Bill C-86, (Ottawa: Library of Parliament, 2019) at 35.<\/p>\n

[xxxiv]<\/a> House of Commons Debates<\/em>, 42-1, No 359 (27 November 2018) at 24020 (David Lametti).<\/p>\n

[xxxv]<\/a> [2015] FCA 838 at paras 1\u20133.<\/p>\n

[xxxvi]<\/a> Ibid<\/em> at para 17.<\/p>\n

[xxxvii]<\/a> Ibid<\/em> at para 21.<\/p>\n

[xxxviii]<\/a> [2013] NZCOP 1 at para 39.<\/p>\n

[xxxix]<\/a> [2013] NZCOP 2 at para 87.<\/p>\n

[xl]<\/a> Mortenson, supra <\/em>note xi at 1133.<\/p>\n

[xli]<\/a> See K-Beech Inc v Does 1-54, No 2<\/em>, 11-cv-01604-NVW (D Arizona 10 February 2012), ECF No 46.<\/p>\n

[xlii]<\/a> See Th\u00e9berge v Galerie d’Art du Petit Champlain inc<\/em>, 2002 SCC 34 at para 30 (\u201c[t]he Copyright Act<\/em> is usually presented as a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator (or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated)\u201d). See also Sande Buhai, \u00ab\u00a0Statutory Damages: Drafting and Interpreting\u00a0\u00bb (2018) 66:3 U Kan L Rev 523 at 563.<\/p>\n

[xliii]<\/a> See generally Mortenson supra <\/em>note xi.<\/p>\n

[xliv]<\/a> See e.g. Samuelson, Hill & Wheatland, supra <\/em>note vi.<\/p>\n","protected":false},"excerpt":{"rendered":"

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