One of the more interesting exchanges during Wednesday’s C-32 Legislative Committee hearing involved questions on the bill’s reforms to statutory damages. The bill proposes to establish a maximum statutory damages penalty of $5,000 for infringement that the court considers to be non-commercial. That contrasts with commercial infringement, which carries a $20,000 per infringement maximum. Note that the minimums are roughly the same – non-commercial infringement has a $100 minimum, while commercial infringement’s minimum is $200.
Liberal MP Dan McTeague questioned the change, suggesting that it could send the wrong message about infringement and be viewed as a licence to steal. I disagreed with his position, pointing out that $5,000 was still enormous cost for most Canadians and that it is potential multi-million dollar liability for non-commercial file sharing that sends a bad message about Canadian justice.
I also made the point that statutory damages are relatively rare on the international scene, a point that I think is worth expanding upon. Perhaps because both Canada and the U.S. have statutory damages, many MPs might be under the mistaken impression that most countries have them. In fact, the opposite is the case.
According to an unpublished study by Tara Wheatland of the Berkeley Center for Law & Technology, the overwhelming majority of countries do not have any statutory damages. Wheatland could only find 19 countries with them, a small percentage of overall WIPO membership. The paper notes that of the 37 developed economy countries at WIPO, 32 do not have statutory damages. These include Australia, Austria, Belgium, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, South Korea, Luxembourg, Malta, Netherlands, New Zealand, Norway, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom. The five countries that do have them are Canada, Greece, Israel, Singapore, and the U.S. There are an additional 14 countries with statutory damages, primarily from the post-Soviet republics: Azerbaijan, Bahamas, Belarus, Bulgaria, China, Kazakhstan, Kyrgyzstan, Liberia, Lithuania, Moldova, Morocco, Russia, Ukraine, and Vietnam.
Even among those countries with statutory damages, many have taken steps to limit potential awards. Bulgaria, China, and Vietnam all provide that statutory damages are only appropriate where it would be difficult to prove actual damages. Several countries, including Israel, have no minimum statutory damage, allowing a court to decline to award them where appropriate.
The lack of support for statutory damages was in evidence earlier this year as part of the Anti-Counterfeiting Trade Agreement negotiations. While the U.S. sought to establish mandatory statutory damages within the agreement, most ACTA countries rejected the approach, reflecting the fact that the overwhelming majority do not have domestic statutory damages requirements.
The reality is that Canada is out-of-touch with most of its trading partners on this issue, who do not believe that statutory damages are an appropriate remedy nor necessary deterrent. Moreover, the statutory damages provision was never intended to apply to non-commercial cases (few would have envisioned tens of thousands of lawsuits against individuals). The changes in Bill C-32 do not eliminate statutory damages, but rightly recognize that multi-million dollar liability threats are neither appropriate nor necessary for non-commercial infringement cases.