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.