The Federal Court has issued its ruling on the costs in the Voltage – TekSavvy case, a case involving the demand for the names and address of thousands of TekSavvy subscribers by Voltage on copyright infringement grounds. Last year, the court opened the door to TekSavvy disclosing the names and addresses, but also established new safeguards against copyright trolling in Canada. The decision required Voltage to pay TekSavvy’s costs and builds in court oversight over any demand letters sent by Voltage.
The issue of costs required another hearing with very different views of the costs associated with the case. TekSavvy claimed costs of $346,480.68 (mainly legal fees and technical costs associated with complying with the order), while Voltage argued the actual costs should be $884. The court disagreed with both sides, settling on costs of $21,557.50 or roughly $11 per subscriber name and address. The decision unpacks all the cost claims, but the key finding was that costs related to the initial motion over whether there should be disclosure of subscriber information was separate from the costs of abiding by the order the court ultimately issued. The motion judge did not address costs at the time and the court now says it is too late to address them.
That approach seemingly does not reflect how the parties viewed the case given that this was an unprecedented action. 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.
The big question now is whether Voltage will proceed with the case. Given their expense to date, they will likely pay the costs and obtain the names. However, they must be committed to going to court over the claims, since the court made it clear that merely sending threats would be viewed as copyright trolling for future claims. Yet with the cap on liability for non-commercial infringement, the further costs of litigating against individuals, the actual value of the works, and the need to obtain court approval on demand letters, it is hard to see how this is a business model that works. Indeed, that is what the court initial noted, stating that “damages against individual subscribers even on a generous consideration of the Copyright Act damage provisions may be miniscule compared to the cost, time and effort in pursuing a claim against the subscriber.”
Further, the market has shifted in Canada with rights holders using the new notice-and-notice system to accomplish much the same thing. Their personal information is not disclosed but the demands for payment still make it through to the subscriber. That has left Canadians facing a barrage of notices and demands for settlements. It points to why the government needs to address the costs and loopholes in the notice-and-notice system, which is now being used to circumvent the courts by pressuring subscribers to pay settlement demands with ISPs bearing all the costs of forwarding notifications.