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Canipre Admits It's Behind Voltage-TekSavvy File Sharing Lawsuits With Speculative Invoicing Scheme

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Tuesday March 12, 2013

Canipre, a Montreal-based intellectual property rights enforcement firm, has admitted that it is behind the Voltage file sharing lawsuits involving TekSavvy in what is described as a "speculative invoicing" scheme. Often referred to as copyright trolling, speculative invoicing involves sending hundreds or thousands of demand letters alleging copyright infringement and seeking thousands of dollars in compensation. Those cases rarely - if ever - go to court as the intent is simply to scare enough people into settling in order to generate a profit.

Canadian Business reports that Canipre's goal is to import the speculative invoicing strategy to Canada and that it found a willing partner in Voltage Pictures. Canipre collected thousands of IP addresses that are alleged to have downloaded Voltage films and Voltage is now asking the Federal Court to order TekSavvy to disclose the subscriber names linked to the IP addresses.

The Canipre admission is important because it is consistent with arguments that the case involves copyright trolling and that the Federal Court should not support the scheme by ordering the disclosure of subscriber contact information.

CIPPIC's December letter to the court raised this possibility, arguing that "such a purpose is improper and bars the applicant from establishing a bona fide claim." CIPPIC followed up with an affidavit that identified 22 file sharing cases involving Voltage in the United States. Distributel raised similar arguments in its challenge against NGN Prima Productions, which also involves Canipre. Distributel argued:

The Moving Parties appear to be engaged in a practice to profit by engaging in zealous copyright enforcement, a practice referred to as "copyright trolling". It involves sending letters to customers demanding significant financial compensation for the alleged copyright infringement. The amount of money demanded far exceeds any potential damages to the Plaintiff arising from the alleged breach. The customers are threatened with legal action if they do not comply. Following the November Motion, at least one Distributel customer received such a letter.

The speculative invoicing practice has faced serious criticism from courts in other countries. In the UK, the practice has led to findings of professional misconduct for several lawyers and adverse court rulings. For example, in the ACS case the court considered the possibility of banning the practice, with the lawyer ultimately suspended from practice for two years. In the Golden Eye case, the UK court ruled against sending thousands of letters with set payment demands and sought to discourage speculative invoicing schemes, stating:

I do not consider that the Claimants are justified in sending letters of claim to every Intended Defendant demanding the payment of £700. What the Claimants ought to do is to proceed in the conventional manner, that is to say, to require the Intended Defendants who do not dispute liability to disclose such information as they are able to provide as to the extent to which they have engaged in P2P filesharing of the relevant Claimants' copyright works. In my view it would be acceptable for the Claimants to indicate that they are prepared to accept a lump sum in settlement of their claims, including the request for disclosure, but not to specify a figure in the initial letter. The settlement sum should be individually negotiated with each Intended Defendant.

U.S. courts have also raised questions about copyright trolling practices, with concerns that the lawsuits constitute a "fraud on the courts" and some courts rejecting demands for subscriber disclosures. In fact, just yesterday a U.S. court ordered copyright trolls to appear in court to face allegations of misconduct.

Canipre's admission could have a major impact on the TekSavvy and Distributel cases as it removes any lingering doubt that these lawsuits involve copyright trolling that are unlikely to proceed to trial. Alongside copyright reforms that cap statutory damages in Canada for non-commercial infringement, the Federal Court may think twice before ordering the disclosure of personal information of thousands of subscribers in support of what is now acknowledged to be a speculative invoicing scheme.

Comments (29)add comment

Scott said:

TROLLS
if we can use what's happening in the U.S. with these trolls of late there success may be zero. in my opinion what these people do is underhanded and criminal.
March 12, 2013

Grunt said:

Not to mention it doesn't work
Canpire's software cannot guarantee they've got the right person either so naturally it's in their interest to shoot the shotgun as wide as they can in hopes that they'll catch enough actual infringers.

And hey, if they get innocent people to cough up cash rather than go to trial, that's just a bonus.

I think it's safe to say at this point Voltage has slunk off and that the Trolls have found the Canadian climate unfavourable.

Now they'll have to make money by making movies people want to watch, I imagine that's harder than sending extortion letters.
March 12, 2013

Crockett said:

...
Let's not forget the very current (and fame-palm worthy) example of Prenda law.

http://arstechnica.com/tech-policy/2013/03/angry-judge-blasts-porn-trolls-someone-has-an-awful-lot-to-hide/
March 12, 2013

Grunt said:

Pretenda I think
Yeah, I've be following that with glee, they're running out of pooches to screw.

I wonder if Canpire, Voltage and their helper monkeys are still monitoring and AstroTurfing these blogs?

If so, suck it douchebags, looks like your gravy train has wrecked, go get real jobs.
March 12, 2013

Arthur Goldsmith said:

Was there any doubt?
I am surprised to see that there was any doubt that the eventuality was copyright trolling. There would be little incentive to proceed to try and collect subscriber info en-masse otherwise.
March 12, 2013

billy_o said:

Where is Cease and Desist letter? No letter = extortion scheme
It looks like these "copyright" trolling arseholes are not going to send out Cease and Desist letters. Absence of C&D letter proves that they are not after stopping "piracy" (whatever the f..k "piracy" means) but they are after a money from anyone they can scare.

Hell, they could grab entire subnet "just because" and claim that everyone "profits" from their sh..ty "works". I wonder what kind of profit can you get from a bullshit.
March 12, 2013

Crockett said:

Have a read of a movie producers world view ...
Does piracy have an effect on profits? The answer is obviously yes, to some degree, but to what degree exactly?

http://www.canadianbusiness.com/technology-news/battling-bit-torrent/

Piracy, I don't personally participate in it, nor condone others who do. It is in the cause, effects and best way to mitigate it that I disagree with the gentleman in this article. A few times the article mentions a carrot often works better than a stick, yet bizarrely the most reviled of all tactics " speculative invoicing" is the decided end game.

You will also notice a thread of frustration and resignation, and some of that has been rightly earned. Locals selling bootlegged DVDs in the home town the movie was shot has to be a demoralized as well as a pretty scummy thing to do. I was actually disappointed that the perpetrators where only halted rather than apprehended by the RCMP.

So while reverting to copyright trolling might offer some type of catharsis, is it going to be anything but a counter productive disaster? I think not.

The pirated film in question was "... at 624 pixels across by 336 pixels down, mercifully it was not high definition. But it was good—good enough to watch on a big-screen TV." I had to wonder at this, would someone watching such a poor blotchy flick actually have bothered to pay for the real thing in the first place? Not to condone it, but if you are desperate enough to resort down to this level I don't think there was much interest or desire to invest oneself in the experience in the first place.

So that brings us to the point of what to do then? I suppose the first place is to realize that piracy will never be stamped out, only mitigated. Next, to go back to that earlier realization that carrots work better than sticks. Finally, I think the best solution is to build a community.

What I mean by this is provide an experience that is conducive to customer loyalty and participation. I am reminded this weekend of the story of two software producers. One released a product (Simcity) with the worst type of DRM available, which as often is the case, came crashing down around their heads with spectacular technical failure. What was a highly anticipated launch turned into a classic case of shortsightedness and an almost comical case of customer service failure.

At the same time two highly anticipated software titles were launched on Kickstater. Both set out to draw their audience in and treat them with respect. Their goals were reached withing days, with an invested and appreciative audience that would continue to be engaged.

Can this success be replicated in the movie industry? Well, it already has, one Kickstarter film already won an Emmy! The world is a-chagin' folks. Its said so many times as to loose meaning but, old business models no longer work like they used to. The ability to adapt and innovate is the only productive way to combat the scourge of piracy. Will it be quick, painless, or easy to do so? I doubt it, but who promised you such a life? Success comes to the bold.
March 12, 2013

Montreal Frodo said:

How to force people to pay for entrainment excrement?
The problem remains: how to force people to pay for bad movies, music and other entrainment excrement that people do not want to consume.
March 12, 2013

Montreal Frodo said:

correction: entertainment excrement
correction: entertainment excrement

Another interesting point is entertainment excrement =/= a tangible product such as cars, energy etc. How producers of a bad intangible product (entertainment excrement) calculate their profit if their product is literally an excrement that no one wants?
March 12, 2013

Lost in Japan said:

Clarification of Canadian Business article
Just want to put this out here.

624x336 is a pretty standard post crop value for a DVD disc, as the original source material, pre-anamorphic resize is 640x480. So just like any non-hd signal but digital signal, it's probably amazingly watchable.
March 12, 2013

Jason K said:

...
Non-commercial infringement should be legal as far as I'm concerned. It should be up to the market as far as what preferred distribution model is used, not industry. That in turn effects innovation, and new models of income for creative talent.

Plus this new notice to notice troll approach in the copyright act pretty much set us all up for this "speculative invoicing scheme". What do you expect them to do? Not take advantage of it. What happens when notice to notice kicks in. We all get nailed for $100+ legal costs on a $20 movie? Isn't that pretty much the same idea as "speculative invoicing"?
March 12, 2013

Me said:

...
A notification of infringement should be required because the account holder associated with that IP address may not be aware that their kid, grandkid, friend, neighbour, etc. has been downloading. People should be given the opportunity to secure their wi-fi network, or reset their password, or have a stern talk with the likely infringer.

In the case of Voltage's movies which, frankly, the majority are terrible, then any settlement should be for the equivalent of a movie rental ($1-$2 from a Zip kiosk, or $5-$6 from your favourite streaming service).
March 12, 2013

Jason K said:

@Me
"In the case of Voltage's movies which, frankly, the majority are terrible, then any settlement should be for the equivalent of a movie rental ($1-$2 from a Zip kiosk, or $5-$6 from your favourite streaming service)."

I completely agree with that point of view. I think that it's high time we put an economic test to non-commercial infringement, and develop policy that accurately reflects actual damage (if any) has occurred due to non-commercial infringement. Maybe take that one step further, and keep it free for consumers and start fairly licensing bittorrent sites. Develop embedded ads in the video files. If Canprie can track downloads, than industry can make profits off of these downloads through investments and advertising. Bittorrent is set up specifically to allow producers to track their productions.
March 12, 2013

Uncle Wiggily said:

...
So - it'll be interesting to see what if anything CIPPIC does with this in the Voltage court case, now that CIPPIC is standing in for Teksavvy, which has left its customers high and dry, or to be more blunt, “up the creek without a paddle”.

Will CIPPIC get this info on the record? Will CIPPIC cross-examine Barry Logan of Canpire and ask him about this? Will CIPPIC connect the dots?

That could be very informative and even amusing.
March 12, 2013

Jason K said:

@Uncle Wiggily
Teksavvy has a legal responsibility to it's customers under privacy legislation. No matter what the CIPPIC does with any of this is neither here nor there if that legal responsibility isn't upheld.

Myself and many academics and lawyers including Geist believe that ISPs need to be held to account with respect to requests for private information. I think no matter what happens with this latest development, Teksavvy will in fact be held to account on the position they have taken, if they don't rectify it. This leaves a lot of insecurity and uncertainty in the market place on what some commentators have put it, as a misuse of the "safe harbor" provisions of the new copyright act. Only natural that those who misuse this provision be tested in a court of not just law, but public opinion.
March 13, 2013

Brent said:

Please clarify Jason K
@Jason K
Could you elaborate on what the Teksavvy responsibility is and how they have not lived up to that responsibility?

What misuse of the "safe harbor" provisions has taken place?
March 13, 2013

London Surfer said:

Time for some Canadian justice
I think that is the point Distributel made in their arguments when they stood up and fought, that the inflated invoice rather than cease and desist letters was a misrep and abuse of the courts. T/S should have done the same instead of letting CPIC carry the fight.
March 13, 2013

Jason K said:

@Brent
This has been discussed in the blogosphere a lot over the past few months.

Mass Copyright Litigation in Canada: Some Observations on the Roles and Responsibilities of ISPs and their Customers

http://excesscopyright.blogspot.ca/2013/01/mass-copyright-litigation-in-canada.html

Also: http://www.davidellis.ca/cippi...racy-fight

"Second, much of the discourse till now has focussed on TekSavvy’s role as pig in the middle. The very legal provisions that have spared TekSavvy any liability for infringement have also put the company into a very awkward position: be a hero or be excoriated for not “standing up” to Voltage."

March 13, 2013

shlomo said:

...
It's all simple really. Wallet equals a vote. Personally if this case (Voltage / TSI) goes south I am going to cancel my TSI contract just because I can and frankly I think I should. TSI is very well suited to cross-examine Canipre "evidence" and kick these trolls in the nutz. Combined effort of TSI + CIPPIC can send these crap producing hollywood morons packing and forget the road to Canada.
March 13, 2013

Marnie M said:

Speculative Invoicing
FreePlay Music LLC (a music distributor) and TuneSat LLC (a copyright enforcer) have gone a step farther. TuneSat has some sort of a web-spider which finds music distributed by FreePlay, scrapes the website for an email address and sends its demand letters directly by email, without going anywhere near an ISP. The first letter demands proof of licence or other permission within 5 days or payment of $1000 per URL for a “retroactive licence,” also within 5 days. A handy PayPal button is included. The second letter extends the “right” to purchase the retroactive licence on payment of an additional “late fee” of 20%.
March 13, 2013

Simply Canadian said:

Solution - Subscription based on-line video services
@Marnie M

Solution is simple. Subscription based on-line video services will put everything into its rightful place that's why makers of worthless "works" do not want to change business model, they choose to sue in attempt to cover their losses (incurred while producing worthless "works").

I bet these greedy monsters wish there was no internet in a first place. Little do they know that people actually can recognize bad product and do not buy it anyway.

Solution -> Subscription based on-line video services
March 14, 2013

Irving said:

Canipre's address, in case anyone's interested in sending them a message
15400 Pierrefonds Blv
Suite 307
Montreal, Quebec
March 14, 2013

Larry said:

Just Larry
I simply don't understand how it can be legal to buy a used version of the product, which doesn't benefit the original distributor in any way, but its illegal to get the same thing for free.

March 14, 2013

Jason K said:

@Simply Canadian
I agree that's where we are headed, what I strongly oppose is consumers being tagged through harassing letters from ISP's or studios, or users being sued for a failure of industry to meet market demands. That's not how free market principles work. It's also not how the free market works to inhibit innovation through public policy that puts control in incumbent hands rather than fair rules to allow new models and sources of income to emerge for creative talent, and new business to be born.

Under our current copyright system, how long do you figure it's going to be before the need for subscription based on-line video services is fully met by industry? What are going to be the economic costs to industry and creative talent due to this market need not being met? Maybe we should be less concerned about punishing users for non-commercial infringement IMO, and look deeply into how current ideology around copyright is hurting innovation within the current marketplace.
March 16, 2013

Grunt said:

@Just Larry
The problem is copyrights, when you buy a used DVD from someone no copyright is being violated but when you download a movie that version was not authorized by the copyright holder.

It's not a question of the owners getting paid it's their stuff being distributed in a way they don't approve of.

It is an issue that the entertainment industry must deal with but letting idiot trolls off their leash is clearly not the answer. All that's done is boosted the use of VPNs driving the whole thing further underground.
March 18, 2013

bonnie said:

Time for some Canadian justice
Under our current copyright system, how long do you figure it's going to be before the need for subscription based on-line video services is fully met by industry? What are going to be the economic costs to industry and creative talent due to this market need not being met?
cardrecovery
March 20, 2013

Marc said:

Whos Voltage!
Wolves dressed in sheeps clothing ,Its really the isp crooks them self them the big players ,the way these people operate it sure wont surprise me and alot of other people.Hmm.
March 25, 2013

Anon said:

Canipre
I highly recommend reviewing Quebec records see if Canipre has a business license to operate in the province. Here's a hint: they don't. Therefore, is this a legitimate business?
May 06, 2013

Juan said:

Any update?
It has been several months now and there doesn't seem to be any new news on how this lawsuit is proceeding. Has anyone heard anything new?
October 17, 2013

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