2021 FCA 176, 2021 FCA 176

A-439-19 2021 FCA 176 Robert Salna, James Rose and Loridana Cerilli, proposed representative respondents on behalf of a class of respondents ( Appellants/Respondents on cross-appeal ) v. Voltage Pictures, LLC, Cobbler Nevada, LLC, PTG Nevada, LLC, Clear Skies Nevada, LLC, Glacier Entertainment S.A.R.L. of Luxembourg, Glacier Films 1, LLC, and Fathers & Daughters Nevada, LLC ( Respondents/Appellants on cross-appeal ) and Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic ( Intervener ) Indexed as: Salna v.

Voltage Pictures, LLC Federal Court of Appeal, Nadon, Rennie and Rivoalen JJ.A.—By videoconference, April 28; Ottawa, September 8, 2021.

Practice — Class Proceedings — Appeal, cross-appeal from order of Federal Court — Appellant appealing award of costs in motion to certify respondent class proceeding (reverse class application) under Federal Courts Rules , rr. 334.14(2), 334.14(3), 334.16 — Respondents cross-appealing dismissal of that motion — Respondents seeking certification of respondent class proceeding alleging infringement of their copyright protected work by appellants — Targeted online copyright infringement of five of their films (Works) — Respondents identifying Internet protocol (IP) address of BitTorrent users who downloaded Works — Triggering notice and notice procedure under Copyright Act — Respondents obtaining Norwich order compelling Rogers Communications Inc. to disclose identity of subscriber with IP address in question — One of appellants, Robert Salna, identified as Internet account subscriber — Respondents filed application in Federal Court against Mr.

Salna alleging copyright infringement online — Alleged three different acts of infringement including making film available for download by means of BitTorrent network offering file for uploading or actually uploading film — Appellant Mr.

Salna owner of rental property who provides Internet access to tenants — Federal Court acknowledging five conjunctive criteria that must be met to certify class proceeding pursuant to Rules, r. 334.16(1) — Concluding that respondents not meeting their onus respecting any of five criteria — On cross-appeal, respondents claiming Federal Court making reviewable error in each of five criteria specified in r. 334.16(1) — Whether Federal Court making reviewable error in refusing to certify class action; whether Federal Court erring in decision to award costs, to refuse to release security for costs — Rules allowing for certification of both plaintiff, defendant applicants (when underlying proceeding is action), applicant, respondent applicants (when underlying proceeding is application) for class proceedings (rr. 334.14(2), 334.14(3)) — Judge must certify proceeding if five criteria in r. 334.16(1) met — Federal Court making reversible errors in relation to each criteria — In particular, Federal Court’s reasons with respect to fourth, fifth criteria (r. 334.16(1)(d), (e)) insufficient to provide basis for appellate review, motion for certification returned to Federal Court for consideration of r. 334.16(1)(d), (e) — Both parties right in taking issue with various aspects of Federal Court’s ruling on costs, arguing that reasons given not permitting appellate review — In this instance, Federal Court awarded costs, contrary to presumption that class proceeding is no-cost regime unless one of circumstances in r. 334.39 met, without explaining why — Such conclusion both legally, factually deficient — On issue of refusal to release funds set aside as security for costs, Federal Court erred in ordering that they not be released following its decision not to certify class action — Following outcome of motion for certification, funds should have been released — However, given respondents’ success on appeal, such error of no consequence — As certification motion returned to Federal Court, question of security for costs would follow outcome Federal Court decision on that motion — In conclusion, Federal Court’s costs award, decision set aside — Certification motion returned to Federal Court for consideration of Rules, rr. 334.16(1)(d), 334.16(1)(e) — Appeal allowed, cross-appeal allowed in part.

Copyright — Practice — Appellant appealing award of costs in motion to certify respondent class proceeding (reverse class application) under Federal Courts Rules ( Rules ), rr. 334.14(2), 334.14(3), 334.16 — Respondents cross-appealing dismissal of that motion — Respondents seeking certification of respondent class proceeding alleging infringement of their copyright protected work by appellants — Identifying Internet protocol (IP) address of BitTorrent users who downloaded Works — Triggering notice and notice procedure under Copyright Act — Obtaining Norwich order compelling Rogers Communications Inc. to disclose identity of subscriber with IP address in question; one of appellants, Robert Salna, identified as Internet account subscriber — Respondents filed application in Federal Court against Mr.

Salna alleging copyright infringement online — Alleged three different acts of infringement — Classified persons as either as “direct infringers” or “authorizing infringers” — Respondents claimed that infringers violated Act, s. 27(1) as primary infringers or s. 27(2) as secondary infringers —Federal Court accepting, as conclusive, expert evidence on nature of distinction between “uploading”, “downloading” on BitTorrent — This was error of law affecting Federal Court’s findings on both primary infringement, secondary infringement causes of action — Respondents not successfully pleading material facts necessary to ground their claim to secondary infringement — Federal Court concluding that respondents’ proposed use of notice and notice regime under Act, s. 41.26 overburdened ISPs, appropriated Parliament’s intention to balance rights of interested parties for their own purposes — Federal Court’s analysis, conclusions in relation to notice and notice regime, its potential use as communication tool to support administration of proceeding could not be sustained — It did not conduct statutory

interpretation analysis required to answer this question — In absence of specific proposed uses, Federal Court’s conclusion that use of s. 41.26 notices was outside legislative remit, would overburden ISPs was premature, speculative.

This was an appeal and cross-appeal from an order of the Federal Court. The appellants appealed the Federal Court’s award of costs in a motion to certify a respondent class proceeding (reverse class application) under subsections 334.14(2) , 334.14(3) and rule 334.16 of the Federal Courts Rules ( Rules ). The respondents cross-appealed the Federal Court’s dismissal of the motion to certify. The respondents sought certification of a respondent class proceeding alleging infringement of their copyright protected work by the appellants.

They targeted the online copyright infringement of five of their films (the Works). BitTorrent is a peer-to-peer file sharing protocol that enables the decentralized and simultaneous distribution of computer files over the Internet. Forensic software deployed by the respondents identified the Internet protocol (IP) addresses of BitTorrent users who downloaded any of the Works. The software also collected information on the BitTorrent users offering to upload these films. This included the IP address used by the uploader. The respondents triggered the notice and notice procedure under the Copyright Act .

The respondents determined that a particular IP address offered to upload all five of its films at various times. The respondents obtained a Norwich order compelling Rogers Communications Inc. to disclose the identity of the subscriber with this IP address. Robert Salna was identified as the Internet account subscriber. The respondents filed an application in the Federal Court against Mr. Salna, alleging that their copyrights had been infringed online. They alleged three different acts of infringement: (

i) making a film available for download by means of the BitTorrent network offering the file for uploading or actually uploading a film; (ii) advertising by way of the BitTorrent protocol that a film is available for download; and (iii) authorizing the infringement by failing to take reasonable steps to ensure that the first and second unlawful acts did not take place in respect of an Internet account controlled by an Internet account subscriber. They classified persons committing either (

i) or (ii) as “direct infringers” and persons committing (iii) as “authorizing infringers”. Among direct infringers, the respondents claimed that those who committed (

i) were primary infringers (persons who infringed their copyright in the Works pursuant to subsection 27(1) of the Act), and those who committed (ii) were secondary infringers (persons who infringed their copyright in the Works pursuant to subsection 27(2) of the Act). The appellant Mr. Salna is the owner of a rental property who provides Internet access to his tenants at his rental property. He claimed it was his tenants who performed the alleged unlawful activities but they denied this.

At the hearing of the motion, the respondents advised that the proposed class of respondents would only comprise direct infringers and/or authorizing infringers who are also Internet account subscribers that had received a notice of certification from their Internet Service Provider (ISP) in the last six months. The Federal Court acknowledged that, pursuant to subsection 334.16(1) of the Rules , five conjunctive criteria must be met to certify a class proceeding: (

a) the pleadings disclose a reasonable cause of action; (

b) there is an identifiable class of two or more persons; (

c) the claims of the class members raise common questions of law or fact, whether or not those common questions predominate over questions affecting only individual members; (

d) a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law or fact; and (

e) there is a representative plaintiff or applicant who, in particular, would fairly and adequately represent the interests of the class. The Federal Court concluded that the respondents had not met their onus in respect of any of the five criteria. It also concluded that another strategy, the joinder of multiple individual actions, was preferable over certifying a class. The Federal Court awarded the respondents costs but refused to release the $75,000 previously posted by the respondents as security for costs in the class action.

In cross-appealing the Federal Court’s decision, the respondents claimed that the Federal Court made a reviewable error in each of the five criteria specified in subsection 334.16(1) of the Rules . The issues were whether the Federal Court made a reviewable error in refusing to certify the class action and whether it erred in its decision to award costs and to refuse to release the security for costs. Held , the appeal of the costs award should be allowed and the cross-appeal should be allowed in part.

The Rules allow for the certification of both plaintiff and defendant applicants (when the underlying proceeding is an action) and applicant and respondent applicants (when the underlying proceeding is an application) for class proceedings (subsections 334.14(2) and 334.14(3) of the Rules ). A judge must certify a proceeding if the criteria in subsection 334.16(1) are met. The Federal Court made reversible errors in relation to each conjunctive criteria. The conclusions that the Federal Court should have made on the first three criteria under paragraphs 334.16(1) (a), (

b) and (

c) were made. However, as the reasons of the Federal Court with respect to the fourth and fifth criteria ( paragraphs 334.16(1) (

d) and (e)) were insufficient to provide a basis for appellate review, the motion for certification was returned to the Federal Court for consideration of paragraphs 334.16(1) (

d) and (e). On the first criteria, the test is the same as it would be in any motion to strike: the pleadings must disclose a reasonable cause of action, assuming that the facts as pled are true. The Federal Court erred in its application of the test. Rather than taking the facts pled to be true, in this case the respondent’s pleading that Mr. Salna himself was a direct infringer, the Federal Court concluded that the respondents had not pled how it was that Internet account subscribers were direct infringers.

The Federal Court assessed the strength of the evidence underlying the plea and then made findings of mixed fact and law and drew conclusions with respect to the merits of the claim, including Mr. Salna’s plea that he was not a direct infringer. This was an error of law as there was no burden on the respondent, at this stage, to prove that Mr. Salna was a direct infringer. The Judge also accepted, as conclusive, expert evidence on the nature of the distinction between “uploading” and “downloading” on BitTorrent.

This was an error of law affecting the Federal Court’s findings on both the primary infringement and secondary infringement causes of action. A judge should not engage in an assessment of expert evidence in assessing whether there is a reasonable cause of action. The test for secondary infringement is threefold: (

i) primary infringement occurred; (ii) the secondary infringer knew or should have known that he or she was dealing with a product of infringement; and (iii) the secondary infringer sold, distributed or exposed for sale the infringing good. The respondents pled the necessary facts to support a claim for direct infringement also succeeded in pleading the material facts necessary to support their claim based on a reasonable

interpretation of authorizing infringement. However, they did not successfully plead the material facts necessary to ground their claim to secondary infringement. Despite this, since the respondent’s pleadings disclosed a reasonable cause of action with respect to the direct and authorizing infringement claims, paragraph 334.16(1)(

a) of the Rules was satisfied. With respect to the second criteria, (identifiable class of two or more persons) evidence was sufficient to show that the proceeding would not collapse for want of a “class of two or more persons”. In this instance, the evidence indicated that Mr. Salna’s IP address had been chosen. This suggested that more than one IP address was identified, meaning there was more than one Internet account subscriber in the proposed class.

Regarding the third criteria of whether there are common questions of fact and law, this test asks a court to examine whether the resolution of a question is common to the proposed class members. It does not ask a court whether the outcome or answer to that question is common to the proposed class members. The primary question to be answered was whether the class proceeding would be a fair, efficient, and manageable method of advancing the claim.

While an overwhelmingly large number of individual fact assessments pose challenges to the management of a class action, these differences must be viewed through the lens of whether certifying the class will advance the three principal goals of class proceedings: judicial economy, behaviour modification, and access to justice. Speculative concern about misidentification or that there may be a number of potentially different factual scenarios was not persuasive.

Second, flexibility is infused into the Rules ’ class proceedings rules in that the Rules provide numerous avenues to resolve individual issues that may arise. As to the fourth criteria, an applicant has the onus of showing that there is some basis in fact that a class action is the preferable procedure for resolving the common issues. Courts are to conduct this assessment through the lens of the three principal goals of class actions and keep a sharp focus on the governing principles. In applying the governing principles to an individual case, all relevant matters should be considered.

The Federal Court did not conduct this analysis. It directed its attention to the respondent’s litigation plan after briefly mentioning a concern about the extent to which respondent class members potentially differed from each other. After an examination of the litigation plan, the Federal Court concluded that joinder was the preferable procedure. This conclusion could not be sustained. It is an error of law to merge concerns with the litigation plan into the consideration of the preferability test.

The Federal Court also concluded, in its assessment of the litigation plan, that the ability to opt-out of the class proceeding was a further reason not to certify the proceeding. This was an error of law. The ability to opt-out is codified in the Rules (e.g., paragraph 334.17(1) (

f) and rule 334.21 ) and is not a reason to refuse certification. In circumstances such as these, where there are multiple respondents, each potentially liable for small amounts of money, a class action was a fair, efficient and manageable method of advancing the claim. Finally, it was difficult, on the evidence, to do any meaningful analysis of whether a class proceeding was preferable to individual actions or a single action with multiple defendants. In sum, this was not a situation where it was possible to review the evidence and conduct the preferability analysis that the Judge did not do.

The fifth criteria concerning a suitable representative respondent four sub-criteria: that the representative respondent (

i) would fairly and adequately represent the interests of the class; (ii) has prepared a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members as to how the proceeding is progressing; (iii) does not have, on the common questions of law or fact, an interest that is in conflict with the interests of other class members; and (iv) provides a

summary of any agreements respecting fees and disbursements between the representative plaintiff or applicant and the solicitor of record. The paucity of analysis on these issues presented challenges on appellate review. The Federal Court determined the respondents did not meet the representative class member criteria on the basis that the respondents failed to show that Mr. Salna had an incentive to defend the class application.

This reasoning led to the conclusion that no respondent class proceedings would ever have a suitable representative respondent in circumstances where the monetary consequence for each class member was low. This logic was against the raison d’être of class proceedings where it is precisely when individual damage awards may be low that a class action becomes the preferable mechanism that truly ensures access to justice. The Federal Court concluded that the respondents’ proposed use of the notice and notice regime under

section 41.26 of the Act overburdened ISPs and appropriated Parliament’s intention to balance the rights of interested parties for their own purposes. The Federal Court’s analysis and conclusions in relation to the notice and notice regime and its potential use as a communication tool to support the administration of the proceeding could not be sustained. It did not conduct the statutory

interpretation analysis required to answer this question. In the absence of specific proposed uses, the conclusion of the Federal Court that the use of

section 41.26 notices was outside the legislative remit and would overburden the ISPs was premature and speculative. Both parties took issue with various aspects of the Federal Court’s ruling on costs, arguing that the reasons given do not permit appellate review. They were right. In this instance, the Federal Court awarded costs, contrary to the presumption that a class proceeding is a no- cost regime unless one of the circumstances in rule 334.39 is met, without explaining why.

This conclusion was both legally and factually deficient as it could not be understood neither why the decision was made nor whether an error had been committed. On the issue of the refusal to release the $75,000 set aside as security for costs, the Federal Court erred in ordering that it not be released following its decision not to certify the class action. The security for costs was awarded “up to and including” the motion for certification. Following the outcome of that motion, the funds should have been released. However, given the respondents’ success on appeal, this error was of no consequence.

As the certification motion was being returned to the Federal Court, the question of security for costs would follow the outcome of the decision of the Federal Court on that motion. In conclusion, the appeal was allowed and the Federal Court’s costs award set aside. The cross-appeal was allowed in part and the Federal Court’s decision set aside. The certification motion was returned to the Federal Court for consideration of paragraphs 334.16(1) (

d) and 334.16(1) (

e) of the Rules . STATUTES AND REGULATIONS CITED Budget Implementation Act, 2018, No. 2 , S.C. 2018, c. 27, s. 244 . Copyright Act , R.S.C., 1985, c. C-42, ss. 3 , 27 , 38.1(1) (b), (5) , 41.25 , 41.26 . Criminal Code , R.S.C., 1985, c. C-46 . Federal Courts Rules , SOR/98-106 , rr. 334.14(2),(3), 334.16, 334.17(1)(f), 334.18(a), 334.19, 334.21, 334.26, 334.27, 334.39. Order Fixing the Day that is Six Months after the Day on which this Order is published as the Day on which Certain Provisions of the Copyright Act Come into Force , SI/2014-58, C. Gaz. 2014 . II.2121. CASES CITED APPLIED:

Canada v. John Doe, 2016 FCA 191, 486 N.R. 223; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R.477; Brake v. Canada (Attorney General), 2019 FCA 274, [2020] 2 F.C.R. 638; AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R949; Wenham v. Canada (Attorney General), 2018 FCA 199, 429 D.L.R. (4th) 166; R. v. G.F., 2021 SCC 20, 454 D.L.R. (4th) 1, 2021CarswellOnt 6892; R. v. Audet, (SCC), [1996] 2 S.C.R. 171, (1996), 135 D.L.R. (4th) 20, . CONSIDERED: CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339; Voltage Pictures, LLC v.

John Doe, 2016 FC881, 141 C.P.R. (4th) 136, affd Rogers Communications Inc. v. Voltage Pictures, LLC, 2018 SCC 38, [2018] 2 S.C.R. 643; Chippewas ofSarnia Band v. Canada (Attorney General) (1996), (ON SC), 29 O.R. (3d) 549, 137 D.L.R. (4th) 239, [1996] O.J. No.2475 (QL) (Gen. Div.); Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158; Society of Composers, Authors and MusicPublishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427; Association of Chartered CertifiedAccountants v.

Canadian Institute of Chartered Accountants, 2011 FC 1516, 2011 CarswellNat 5412 (WLNext Can.)?; Hunt v. CareyCanada Inc., (SCC), [1990] 2 S.C.R. 959, (1990), 74 D.L.R. (4th) 321; Voltage Pictures, LLC v. Salna, 2017 FC 130,2017 CarswellNat 553 (WLNextCan.)?, affd 2017 FCA 221. REFERRED TO: Tiller v. Canada, 2019 FC 749, 2019 CarswellNat 2360; Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2S.C.R. 534; Sauer v. Canada (Agriculture), , 169 A.C.W.S. (3d) 27 (Ont. Sup. Ct.); Samson Cree Nation v.

SamsonCree Nation (Chief and Council), 2008 FC 1308, [2009] 4 F.C.R. 3, affd 2010 FCA 165, 320 D.L.R. (4th) 629; Atlantic Lottery Corp.Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, 447 D.L.R. (4th) 543; York University v. Canadian Copyright Licencing Agency(“Access Copyright”), 2020 FCA 77, [2020] 3 F.C.R. 515, 448 D.L.R. (4th) 456, revd 2021 SCC 32, 460 D.L.R. (4th) 414; Century 21Canada Limited Partnership v. Rogers Communications Inc., 2011 BCSC 1196, 338 D.L.R. (4th) 32; Sirius Canada Inc. v.CMRRA/SODRAC Inc., 2010 FCA 348, [2012] 3 F.C.R. 717; Microsoft Corporation v.

Liu, 2016 FC 950, 140 C.P.R. (4th) 327, [2017] 2F.C.R. D-2; Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460; Merck & Co., Inc. v. Apotex Inc., 2012 FC 454,106 C.P.R. (4th) 325; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45; Jiang v. Peoples Trust Company, 2017BCCA 119, 408 D.L.R. (4th) 1; Berry v. Pulley, (ON SC), [2001] O.J. No. 911 (QL), (2001), 197 D.L.R. (4th) 317,[2001] O.T.C. 156 (Sup. Ct.); Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, (1998), 154 D.L.R. (4th) 193,; 1704604 Ontario Ltd. v.

Pointes Protection Association, 2020 SCC 22, [2020] S.C.R. 567,449 D.L.R. (4th) 1. APPEAL from an order of the Federal Court awarding costs in a motion to certify a respondent class proceeding under subsections334.14(2), 334.14(3) and rule 334.16 of the Federal Courts Rules (2019 FC 1412, [2022] 1 F.C.R. D-13) and CROSS-APPEAL from thedismissal of that motion. Appeal allowed, cross-appeal allowed in part. APPEARANCES Sean N. Zeitz and Ian J. Klaiman for appellants/respondents by cross-appeal. Kenneth R. Clark and Lawrence Veregin for respondents/appellants by cross-appeal. David Fewer for intervener.

SOLICITORS OF RECORD Lipman, Zener, Waxman, LLP, Toronto, for appellants/respondents by cross-appeal. Aird & Berlis LLP, Toronto, for respondents/appellants by cross-appeal. Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic, Ottawa, for intervener. The following are the reasons for judgment rendered in English by [1] Rennie J.A.: This is an appeal and cross-appeal from an order of the Federal Court (2019 FC 1412, [2022] 1 F.C.R. D-13, perBoswell J.). There has been a modification to the style of cause in this matter to correct a clerical error.

The appellants, Robert Salna,James Rose and Loridana Cerilli, appeal the Federal Court’s award of costs in a class proceeding certification motion. The respondentsVoltage Pictures, LLC, Cobbler Nevada, LLC, PTG Nevada, LLC, Clear Skies Nevada, LLC, Glacier Entertainment S.A.R.L. ofLuxembourg, Glacier Films 1, LLC, and Fathers & Daughters Nevada, LLC (Voltage), cross-appeal the Federal Court’s dismissal of themotion to certify. [2] Voltage sought certification of a respondent class proceeding alleging infringement of its copyright protected work by theappellants.

Known colloquially as a “reverse class action”, Voltage targeted the online copyright infringement of five of its films: TheCobbler, Pay the Ghost, Good Kill, Fathers and Daughters, and American Heist (the Works). [3] The factual foundation for the allegation of copyright infringement in this case is far removed from that which was before theSupreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339 (CCH)).

There, articlingstudents walked across the creaking and worn wooden floors of the Great Library at Osgoode Hall, placed a nickel in the single, oftenbroken, photocopying machine and copied, page-by-page, law reports. Much has changed in the 17 years since the decision in CCH. Thecontent and channels of artistic creation and expression have evolved in ways that were beyond contemplation in 2004.

To remainrelevant, the law must adapt to the evolving digital environment, the channels through which artistic endeavour is expressed and themeans by which copyright may be infringed. [4] The proposed reverse class action tests the limits of what constitutes copyright infringement. It is also an innovative developmentin the means by which authors attempt to protect their work in a digital environment. The novelty of the proposed class action is not,

contrary to what the Federal Court held, a reason to deny an application to certify the proceeding. The proposed class proceeding may ultimately flounder, for reasons which I will identify, but the Judge erred in presuming that to be the case at so early a stage. The law must be allowed to evolve. [ 5 ] I have reached the conclusion that the cross-appeal should be allowed in part.

Before elaborating on the reasons as to why I have reached this conclusion, three observations are in order. [ 6 ] First, the Federal Court erred in the application of the test of whether a reasonable cause of action was disclosed in the certification application. [ 7 ] Second, if the Federal Court’s reasoning prevailed, Voltage, and those similarly situated, would, in many cases, be without any remedy for violation of their copyright: a respondent class proceeding is not available and the joinder of thousands of individual actions simply not feasible. [ 8 ] Third, I acknowledge that the proposed respondents have raised a number of substantive concerns as to whether the class proceeding is, in the end, legally and administratively viable.

It was premature, however, to presume that they would materialize and be fatal to the certification application. There may be problems down the road and decertification always remains an option “if the conditions for certification are no longer satisfied with respect to the proceeding” ( Federal Courts Rules , SOR/98-106, rule 334.19 ; Tiller v. Canada , 2019 FC 749 , 2019 CarswellNat 2360 (WLNextCan.)?, at paragraph 21). I.

Background [ 9 ] I begin with the background to the infringement allegation described in the certification application. [ 10 ] BitTorrent is a peer-to-peer file sharing protocol that enables the decentralized and simultaneous distribution of computer files over the Internet. The decentralized nature of the protocol keeps individual expenses and bandwidth usage low (appeal book, at page 105; Perino affidavit, at paragraph 2(j)). [ 11 ] The users of each BitTorrent software are connected to each other.

Once connected, each user downloads segments of the files available in small pieces, or data packets; the file may be analogized to a completed puzzle, and the packets, the pieces of the puzzle. Once downloaded, the data file can be uploaded for the download of other BitTorrent users, known as “peers” (Voltage amended notice of application, at paragraph 17).

In this way, the peers can download data packets, or pieces of the puzzle, from various sources while simultaneously uploading that content for download by others (appeal book, at pages 105 and 519–520; Perino affidavit, at paragraph 2(h); Lethbridge affidavit, at paragraph 11). [ 12 ] Each data packet and file has its own unique and identifiable “hash” number, created using a mathematical algorithm (Voltage amended notice of application, at paragraph 18). Ultimately, an entire file can be obtained by downloading all the required packets from various peers.

The peers from whom the downloader received the file and/or packets are considered “uploaders”. A particular uploader may provide to the downloader anything from only a small portion of the entire file to the entire file (appeal book, at page 105; Perino affidavit, at paragraph 2(h)). However, it is rare for a downloader to receive an entire file from a single uploader (appeal book, at page 105; Perino affidavit, at paragraph 2(i)).

Eventually, the entire file, puzzle, or in this case, film, is assembled, piece by piece, bit by bit, for viewing. [ 13 ] In order for files to be added and become downloadable to other peers, at least one user who has a complete copy of the entire file in question must be connected. This user, or users, “seeds” the file for the rest of the peers (Voltage amended notice of application, at paragraph 17).

Once a peer downloads an entire file, they can also become a seeder of that file for other users (appeal book, at page 105; Perino affidavit, at paragraph 2(g)). [ 14 ] Because BitTorrent is a file sharing protocol, once files are shared in the network, they are shared by all users. As such, uploading or offering to upload specific files or data packets can be done without a user’s knowledge and can occur whenever a BitTorrent user is connected to the Internet. [ 15 ] Forensic software deployed by Voltage identified the Internet protocol (IP) addresses of BitTorrent users who downloaded any of the Works.

The software also collected information on the BitTorrent users offering to upload these films. This included the IP address used by the uploader, the date and time the film was made available for upload in the form of a computer file and the file’s metadata, including the name and size of the computer file containing the film and the BitTorrent hash number. [ 16 ] An IP address allows data sent over the Internet to be received by the intended recipient device. Every IP address in existence is assigned, in groups or blocks, to different Internet service providers (ISPs), such as Rogers, Telus or Bell.

ISPs, in turn, allocate individual IP addresses to the Internet-connecting devices of their customers, those contractually obligated to an ISP to pay for Internet services (Internet account subscribers). An example of an Internet-connecting device is an Internet router. Although each Internet- connecting device has its own IP address, that device can in turn connect to a variety of other Internet using devices, such as computers, tablets, cellphones, etc.

Multiple devices can thus simultaneously use an Internet connection under the same IP address. [ 17 ] Copyright owners who identify an IP address infringing their works can require ISPs to send a notice of an alleged infringement to the Internet account subscriber associated with the IP address ( Copyright Act , R.S.C., 1985, c. C-42, sections 41.25 –41.26). This is known as “the notice and notice” regime.

ISPs are required to retain records enabling the identification of these Internet account holders for six months following the day on which the account holder received the notice of an alleged infringement ( Copyright Act , at paragraph 41.26(1) (b)). A copyright owner may sue an Internet account holder for copyright infringement following their receipt of the notice of alleged infringement. Though perhaps obvious, in order to identify the alleged infringer and potential defendant(s), a copyright owner must apply for a Norwich order requiring the ISPs to release the name(

s) of the Internet account holder(s). [ 18 ] Later in these reasons, I will return to the implications of the six-month retention period on the question of the composition of the defendant class.

[19] Voltage triggered the notice and notice procedure under the Copyright Act. It assembled the IP addresses, the times of the allegedinfringement and the ISPs associated with those IP addresses. It then requested the ISPs to send notices of the alleged infringement to theInternet account subscribers associated with those IP addresses. [20] Upon reviewing the IP addresses identified by the software, Voltage determined that one, 174.112.37.227, offered to upload allfive of its films at various times.

Voltage obtained a Norwich order compelling Rogers Communications Inc. to disclose the identity ofthe subscriber with this IP address. Following an appeal to the Supreme Court of Canada (Voltage Pictures, LLC v. John Doe,2016 FC 881, 141 C.P.R. (4th) 136 (Voltage-Norwich), at paragraph 14, affd Rogers Communications Inc. v. Voltage Pictures, LLC,2018 SCC 38, [2018] 2 S.C.R. 643 (Rogers)), Rogers Communications Inc. identified Robert Salna as the Internet account subscriber. [21] Voltage filed an application in the Federal Court against the Internet account subscriber connected to that IP address, Mr.

Salna,alleging that its copyrights had been infringed online. Voltage alleged three different acts of infringement: (

i) making a film available fordownload by means of the BitTorrent network offering the file for uploading, or actually uploading a film; (ii) advertising by way of theBitTorrent protocol that a film is available for download; and (iii) authorizing the infringement by failing to take reasonable steps toensure that the first and second unlawful acts did not take place in respect of an Internet account controlled by an Internet accountsubscriber. [22] Voltage classifies persons committing either (

i) or (ii) as “direct infringers” and persons committing (iii) as “authorizinginfringers”. Among direct infringers, Voltage claimed that those who committed (

i) were primary infringers (persons who infringed theircopyright in the Works pursuant to subsection 27(1) of the Copyright Act), and those who committed (ii) were secondary infringers(persons who infringed their copyright in the Works pursuant to subsection 27(2) of the Copyright Act and CCH, at paragraph 81). Thesecategories (direct infringer, authorizing infringer, primary infringer, and secondary infringer) have been used by Voltage to describepersons who commit various acts of infringement pursuant to the Copyright Act. [23] Voltage then brought a motion for an order to certify its application against Mr.

Salna as a respondent class proceeding (a so-called “reverse class application”) under subsections 334.14(2), 334.14(3), and rule 334.16 of the Federal Courts Rules. It is the appealfrom the dismissal of that motion that is now before this Court. [24] Mr. Salna is the owner of a rental property who provides Internet access to his tenants at his rental property. He identified histenants as James Rose and Loridana Cerilli, and claims it was they who performed the alleged unlawful activities. Mr. Rose andMs.

Cerilli in turn denied committing the unlawful acts Voltage alleged, further stating that they were unsure if Mr. Salna’s Internetconnection had been compromised by other users, including family members, guests, and Internet hackers. [25] Voltage added Mr. Rose and Ms.

Cerilli as proposed named representative respondents for the proposed class application.However, at the hearing of the motion, Voltage advised that the proposed class of respondents would only comprise direct infringersand/or authorizing infringers who are also Internet account subscribers that had received a notice of certification from their ISP in the lastsix months. This amended class description excluded Mr. Rose and Ms. Cerilli as representative respondents. II. Decision of the Federal Court [26] The Federal Court began its analysis by noting the objectives behind reverse class proceedings: (

i) facilitating access to justice;(ii) conserving judicial resources and private litigation costs; (iii) preventing re-litigation of the same issues; (iv) spreading expenses andresolving common issues over many defendants or respondents; and (

v) modifying harmful behaviours (Chippewas of Sarnia Band v.Canada (Attorney General) (1996), (ON SC), 29 O.R. (3d) 549, 137 D.L.R. (4th) 239, [1996] O.J. No. 2475 (QL)(Gen. Div.) (Chippewas), at paragraph 16; Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534(Dutton), at paragraphs 27–29; Hollick v.

Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158 (Hollick), at paragraphs 15, 16 and 25). [27] The Federal Court then acknowledged that a certification motion is a procedural matter, the purpose of which is to determinehow the litigation should proceed, not whether the litigation can succeed (Sauer v. Canada (Agriculture), , 169A.C.W.S. (3d) 27 (Ont. Sup. Ct.), at paragraph 12) and that pursuant to subsection 334.16(1) of the Federal Courts Rules, fiveconjunctive criteria must be met to certify a class proceeding: Conditions 334.16 (1) … (

a) the pleadings disclose a reasonable cause of action; (

b) there is an identifiable class of two or more persons; (

c) the claims of the class members raise common questions of law or fact, whether or not those common questions predominate overquestions affecting only individual members; (

d) a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law or fact; and (

e) there is a representative plaintiff or applicant who (

i) would fairly and adequately represent the interests of the class, (ii) has prepared a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and ofnotifying class members as to how the proceeding is progressing, (iii) does not have, on the common questions of law or fact, an interest that is in conflict with the interests of other class members, and

(iv) provides a

summary of any agreements respecting fees and disbursements between the representative plaintiff or applicant and the solicitor of record. [ 28 ] The moving party has the onus to show an evidentiary basis for each certification requirement ( Samson Cree Nation v. Samson Cree Nation (Chief and Council) , 2008 FC 1308 , [2009] 4 F.C.R. 3 , at paragraph 32 , affd 2010 FCA 165 , 320 D.L.R. (4th) 629), apart from the requirement that the pleadings must disclose a reasonable cause of action.

That requirement is simply based on the pleadings themselves ( Hollick , at paragraph 25 ). [ 29 ] The Federal Court concluded that Voltage had not met its onus in respect of any of the five criteria. [ 30 ] On the first criteria, that the pleadings must disclose a reasonable cause of action, the Federal Court determined that Voltage had not proven its claims at this stage in respect of either direct infringers (neither primary nor secondary infringement) or authorizing infringers. [ 31 ] Primary infringement had not been met as Voltage had not provided a description of how direct infringers may be identified (Federal Court reasons, at paragraphs 68 and 77).

Voltage had failed to identify a direct infringer who was also an Internet account subscriber in its notice of application. This failure would prevent certification of a class as there was no representative primary infringer. [ 32 ] The Federal Court similarly determined that secondary infringement had not been proven as the expert witness evidence showed that there was no difference between uploading and downloading a file on BitTorrent, and that file sharing can happen without a user’s knowledge or consent. Instead, once a file is shared, it is shared by all.

Further, “advertising a work” was not a cause of action recognized in the Copyright Act . [ 33 ] On the final cause of action alleged by Voltage, the Federal Court determined that the claim relating to an “authorizing infringer” failed as it relied on an overly broad reading of Society of Composers, Authors and Music Publishers of Canada v.

Canadian Assn. of Internet Providers , 2004 SCC 45 , [2004] 2 S.C.R. 427 ( SOCAN ), at paragraphs 127 and 128 and the legal obligations placed on an Internet account subscriber under the notice and notice regime in the Copyright Act . [ 34 ] On the second conjunctive requirement for certification, that there be some evidence of an identifiable class of two or more persons, the Federal Court noted that Voltage changed its description of the class in oral argument and excluded two of its named respondents, Mr. Rose and Ms. Cerilli, from its proposed class.

That left Robert Salna as the only representative respondent. As he was not a direct infringer, there was no representative respondent for that cause of action. Although Voltage alluded, in a footnote, to thousands of other IP addresses, this alone did not amount to “some evidence” as it was only a “bare assertion” of other members of the class ( Canada v. John Doe , 2016 FCA 191 , 486 N.R. 223 ( John Doe ), at paragraph 33 ).

Relying on the expert witness affidavits, the Federal Court concluded that the determination of responsibility for infringement associated with each IP address will be a difficult technical exercise, and thus no clear class of two or more persons had been established. [ 35 ] On the third conjunctive criteria, Voltage had alleged that its proposed class proceeding disclosed nine common questions of fact or law: 1. Is each of Voltage’s films an original cinematographic work in which copyright subsists? 2. Does the relevant applicant own the copyright in the appropriate films? 3.

Do the unlawful actions alleged by Voltage constitute copyright infringement? 4. Do the unlawful actions alleged by Voltage constitute offering a film by telecommunication contrary to the provisions of the Copyright Act ? 5. Did any of the respondents consent to or authorize any of the unlawful actions alleged by Voltage? 6. Did the Internet Account Subscribers:

a) possess sufficient control over the use of their internet accounts and associated computers and internet devices such that they authorized, sanctioned, approved, or countenanced the infringements alleged by Voltage?

b) require prior notice to be found liable for authorization, and if notice is necessary, is notice by way of an agreement with an ISP sufficient to engage their liability for the acts of Direct Infringers or is specific direct notice necessary?

c) receive notice of infringement, and if they were provided with notice but ignored such notice, does that constitute authorization of copyright infringement and is willful blindness sufficient to constitute authorization of a copyright infringement? 7. Does the class have any available defences to copyright infringement, including any defence based on fair dealing? 8. What is an appropriate quantum of statutory damages available pursuant to

section 38.1 of the Copyright Act ? 9. Is this an appropriate case for an injunction? [ 36 ] The Federal Court disagreed, finding that only the first two were common questions, as the outcomes of the other seven would be different depending on the factual circumstances of each respondent. [ 37 ] On the fourth requirement, the Federal Court determined that Voltage’s litigation plan was unmanageable. The proposed class action raised more individual issues than common issues within the class and judicial resources and economy would not be saved by certifying the class.

Second, the proposed class proceeding inappropriately relied on using public resources as the proposed litigation plan would require ISPs to send continuous updates on the class proceeding via the Copyright Act ’s notice and notice regime. The

Federal Court Judge found this to run contrary to Parliament’s intention. Fourth, the proposed litigation plan specified that class members could “opt-out” of the class if they had unique issues to raise. However, if all class members opted-out, the class proceeding would evaporate. [ 38 ] Finally, the Federal Court concluded there was no suitable representative respondent who had an interest in defending the application on behalf of a class.

Although Chippewas specified that the consent or unwillingness of a proposed representative is not a barrier to certifying a class (at paragraphs 45–46), Voltage had not shown the proposed respondent in this case had the financial capacity and incentive to defend the application with diligence and vigour. [ 39 ] For these four reasons, the Federal Court concluded that another strategy, the joinder of multiple individual actions, was preferable over certifying a class. [ 40 ] Finding that the class action should not be certified, the Federal Court awarded the respondent costs.

However, the Federal Court also refused to release the $75,000 previously posted by Voltage as security for costs in the class action as Voltage had expressed its desire to continue with the application, although not in the form of a class proceeding. Although Mr. Salna had asked for costs on a solicitor-and-client basis, the Federal Court gave the parties 20 days to negotiate costs. If no agreement could be reached in that time, either party could request an assessment of costs in accordance with the Federal Courts Rules . [ 41 ] There are two issues on appeal:

(1) Did the Federal Court make a reviewable error in refusing to certify the class action?

(2) Did the Federal Court err in its decision to award costs and refusal to release the security for costs? III. Position of the Parties A. Cross-Appeal of the Decision not to Certify [ 42 ] Voltage cross-appeals the Federal Court’s decision not to certify the class action, claiming the Federal Court made a reviewable error in each of the five criteria specified in subsection 334.16(1) of the Federal Court Rules . [ 43 ] On the first criteria and whether the pleadings disclose a reasonable cause of action, Voltage claims the Federal Court erred in considering extraneous evidence.

Whether the pleadings disclose a cause of action is to be based on the assumption that the pled facts are true ( Atlantic Lottery Corp. Inc. v. Babstock , 2020 SCC 19 , [2020] 2 S.C.R. 420, 447 D.L.R. (4th) 543, at paragraph 14 ; Pro-Sys Consultants Ltd. v. Microsoft Corporation , 2013 SCC 57 , [2013] 3 S.C.R. 477 ( Pro-Sys ), at paragraph 63 ). Voltage’s statement of claim specified Mr. Salna and every other class member were primary infringers (see, e.g., paragraphs 6 and 24 of the amended notice of application).

The Court was to take these statements as true without considering any other evidence or material, and in particular, Mr. Salna’s claim that he is not a direct infringer. [ 44 ] Voltage argues it was similarly inappropriate to consider the expert evidence on the differences between downloading and uploading on BitTorrent in concluding the elements for secondary infringement were doomed to fail. Voltage states that it pled the facts for the three criteria for secondary infringement as specified in CCH , at paragraph 81. It argues: (

i) That primary infringement occurred is pled in paragraph 42 of the Amended Notice of Application and is supported by paragraphs 33–37, 6–12, 14, and 24; 42. John Doe #1 Salna and each proposed Class Member is offering to upload at least one of the Works using the BitTorrent protocol. The Voltage Parties plead that such offering to upload is, inter alia , a communication to the public via telecommunication within the meaning of the Copyright Act , and as a result violates s. 27(1) .

Further, the act of offering to upload and the Unlawful Acts are a result of an unauthorized reproduction of the Works, and therefore, John Doe #1 Salna and each proposed Class Member has unlawfully reproduced the Works and infringed the copyright in the Works in accordance with s. 27(1) of the Copyright Act . (ii) That the secondary infringer knew or should have known that he or she was dealing with a product of infringement is found in paragraph 43, and supported by paragraph 24(

c) of the Amended Notice of Application; 24. For the purposes of this proceeding, the following shall be referred to as the Unlawful Acts of each proposed Class member, including John Doe #1 Salna : … (

c) failing to take reasonable, or any, steps to ensure that a person downloading a Work was authorized to do so by law. … 43. … John Doe #1 Salna and each proposed Class Member knew or should have known that the making of a copy of such Work would infringe the copyright in such Work if it had been made in Canada by the person who made it…. (iii) That the secondary infringer sold, distributed or exposed for sale the infringing good is set out in paragraph 43 and is supported by the description of the mass distribution of the films at issue by way of peer-to-peer software as set out in paragraphs 33–37 of the Amended Notice of Application; 37.

Using [the forensic software] method, the Voltage Parties identified John Doe #1 Salna as being one of the many users engaging in the Unlawful Acts by illegally offering to upload the Works by engaging in the Unlawful Acts.… …

43. The act of offering to upload a Work to any person who seeks to download such a Work further: (

a) distributes such Work to such an extent as to affect prejudicially the Voltage Parties; (

b) by way of trade distributes and exposes such Work; and (

c) possesses such work for the purposes of doing the acts set out in paragraphs (

a) and (

b) above. [ 45 ] Voltage also argues that the “advertising a work for download” claim constitutes copyright infringement in accordance with paragraph 27(2) (

c) of the Copyright Act . The terminology “advertising a work for download” is simply a shorthand and easy to understand analogy for exposing or offering a work for download to the public, just as “advertising” is an analogy for offering for sale— a recognised infringement according to subsection 27(2) .

The only difference is that rather than walking into a store and making a purchase, or dropping a nickel in a photocopier, the offer is accepted with the click of a mouse. [ 46 ] Voltage further submits the claim relating to an “authorizing infringer” has statutory foundation in subsections 3(1) and 27(1) of the Copyright Act . As each proposed class member is an Internet account subscriber, each is liable for the authorization of copyright infringements happening on their IP addresses.

This theory is not doomed to fail, nor does CCH close the door on this cause of action, particularly in light of comments made in SOCAN , at paragraphs 124 and 127 . [ 47 ] Finally, the Federal Court erred as the issue of the reasonableness of the cause of action had already been decided and was res judicata . The Court had already considered the reasonableness of the claims in deciding to grant the Norwich order that identified Mr. Salna. [ 48 ] On the second criteria, Voltage acknowledges that its description of its proposed class changed to avoid unnecessary individual fact-finding.

However, the Federal Court erred in not acknowledging that Voltage has evidence of thousands of other IP addresses that were used on BitTorrent to infringe Voltage’s copyrights in its five films. Voltage asserts that the Judge violated the established rule that a court is not, in assessing the reasonableness of a cause of action, to go behind the pleadings and into the evidence as it did and conclude that Mr. Salna is not, in fact, a direct infringer. That determination is for the merits of the application. [ 49 ] On the third criteria, Voltage argues the judge made an error in law, pursuant to Brake v.

Canada (Attorney General) , 2019 FCA 274 , [2020] 2 F.C.R. 638 ( Brake ), at paragraphs 76–78 , in focussing on whether the answer to each question would be the same for each class member. Voltage claims that pursuant to Brake , the Federal Court should have instead examined whether the resolution of these questions was necessary to the resolution of each class member’s claim.

All that is necessary is that the class member claims must share a substantial common ingredient to justify certification. [ 50 ] On the fourth criteria, Voltage submits the Federal Court erred in law in focussing on the potential number of individual issues and facts, rather than considering the test as expressed in AIC Limited v. Fischer , 2013 SCC 69 , [2013] 3 S.C.R 949 ( Fischer ) and Wenham v. Canada (Attorney General) , 2018 FCA 199 , 429 D.L.R. (4th) 166 ( Wenham ), ( Brake , at paragraph 87 ).

What the Federal Court ought to have considered is described in the following paragraphs from Brake [at paragraphs 85–86] : The governing principles for whether a class proceeding is the preferable procedure in a given case were set out in paragraph 77 of Wenham (relying on Hollick , at paragraphs 27–31 ): (

a) the preferability requirement has two concepts at its core: (

i) first, whether the class proceeding would be a fair, efficient and manageable method of advancing the claim; and (ii) second, whether the class proceeding would be preferable to other reasonably available means of resolving the claims of class members; (

b) this determination requires an examination of the common issues in their context, taking into account the importance of the common issues in relation to the claim as a whole; and (

c) the preferability requirement can be met even where there are substantial individual issues; the common issues need not predominate over individual issues. The preferability of a class proceeding must be “‘conducted through the lens of the three principal goals of class [proceedings], namely judicial economy, behaviour modification and access to justice’”: Fischer , at paragraph 22 , cited by Wenham , at paragraph 78 . [ 51 ] In addressing this test, Voltage argues there are numerous points in favour of a class action versus joinder.

One solution to mass- copyright infringement is collective enforcement by creators ( York University v. Canadian Copyright Licencing Agency (“Access Copyright”) , 2020 FCA 77 , [2020] 3 F.C.R. 515 , 448 D.L.R. (4th) 456, at paragraph 203 , revd, but not on this point, 2021 SCC 32 , 460 D.L.R. (4th) 414), another is for a single creator to pursue a large number of infringers. What is proposed by Voltage is, in essence, the inverse of an action by a collective.

Class proceedings are an efficient way to tackle mass violation of copyright as they allow for the resolution of common questions and for interveners or Court-appointed amicus curiae to make submissions on a single application, rather than thousands. [ 52 ] Further, Voltage argues its proposed litigation plan makes no use of public resources and that there are financing options available for Mr. Salna should a class proceeding be certified. The Federal Court’s proposed approach requires each individual to bear their own litigation defence costs.

Even without financing options, having multiple respondents defended by a single counsel allows for cost sharing and a more efficient use of court resources. [ 53 ] Finally, there is no evidence that Voltage’s proposed use of the notice and notice regime was inappropriate or that it would overwhelm ISPs. ISPs automatically send out 200,000–300,000 notices monthly ( Rogers , at paragraph 40). Voltage argues that it should

be allowed to use this regime in new and novel ways, as the policy which underlies the notice and notice regime of the Copyright Act encourages the marketplace to develop non-legislative solutions to supress copyright infringement. [ 54 ] On the last criteria, Voltage argues Mr. Salna’s disinterest in defending the application is not a bar to class certification ( Chippewas , at paragraph 45). Indeed, his affidavit stating his disinterest is premised on the false assumption that he would not have to defend an action brought against him alone, should certification fail.

Should the certification application fail, Voltage intends to pursue Mr. Salna in an individual action for infringement. Mr. Salna will thus incur costs either way. But under the proposed reverse class action, the costs would be significantly distributed across the members of the class. B. Mr. Salna’s Position on Cross-Appeal [ 55 ] On the second criteria, Mr. Salna reminds the Court that the burden is on the moving party to show some evidence of a class of two or more persons. Voltage’s expert affidavit identified only one IP address that had allegedly made the Works available for upload, that of Mr. Salna.

Voltage’s earlier claim, made in a footnote, that there are thousands of infringing IP addresses was overtaken by its acknowledgment that class actions must be limited in time (citing Hollick , at paragraph 17 ) and that the proposed class was restricted to infringements within the last six months. Without that, the footnote in the pleadings is simply a bald assertion on the existence of other class members. [ 56 ] Mr. Salna reiterates that apart from questions (1) and (2), the remaining seven questions of fact and law were not, in fact, common.

Individual fact-finding would be required to determine type of infringement, if any, each Internet account subscriber was guilty of, whether they had any individual defences beyond just fair dealing and the quantum of damages that might be appropriate given the criteria in subsection 38.1(5) of the Copyright Act . [ 57 ] Mr. Salna defends the Federal Court’s findings on the fourth criteria, that the class action would not be preferable.

The Federal Court properly considered the purpose of a class action, and expressed concern over the highly individualised facts associated with each proposed respondent, the reliance on public resources, the overuse of the notice and notice regime and the possibility that every respondent may simply “opt-out” of the class action. The judge is entitled to deference in the weighing of these factors, and the respondent has failed to point to any palpable and overriding error. [ 58 ] Finally, Mr.

Salna points out that the Federal Court did consider that a respondent’s unwillingness to defend an application is not a bar to certification. However, unlike in Chippewas , here there is a limit on the award of statutory damages of $5,000 pursuant to paragraph 38.1(1) (

b) of the Copyright Act . This is a disincentive for him and any other class member to defend the action. C. Intervener’s Position on Cross-Appeal [ 59 ] The intervener, the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC), responded to Voltage’s arguments on the reasonableness of the cause of action and on the proper

interpretation of the Copyright Act ’s notice and notice regime. [ 60 ] CIPPIC submits that the proper test is whether it is “plain and obvious”, assuming the facts pled to be true, the pleadings disclose no reasonable cause of action ( John Doe , at paragraph 23). While the pled facts are assumed to be true, an applicant must do more than simply state bald assertions of conclusions.

Further, the totality of the pled facts must make out each alleged cause of action. [ 61 ] On direct infringement, the intervener submits that Voltage’s statement of claim lacks the specificity required to make out a claim for infringement pursuant to sections 3 and 27 of the Copyright Act . Particularly, Voltage fails to specify how direct infringers will be identified from the group of Internet account subscribers. Even taking Voltage’s claim that Mr.

Salna is a direct infringer to be true, Voltage’s pleadings state that the Internet account subscribers “should have” or “ought to have” known what their account was being used for. This does not relate to direct infringement. [ 62 ] On secondary infringement, the intervener argues that Voltage has failed to plead facts relating to the elements for secondary infringement as set out in subsection 27(2) of the Copyright Act ; in particular, Voltage has not pled any infringement occurred prior to the alleged infringement caught by the forensic software.

Second, Voltage has not claimed the proposed class respondents knew they were dealing with the product of an infringement: indeed, they did not plead they notified the Internet account subscribers of the alleged infringement.

Finally, they have not pled any of the actions seen in the third element, such as selling or distributing for sale. [ 63 ] On the “authorizing infringer” claim, the intervener agrees with the Federal Court that this cause of action relies too heavily on comments made in SOCAN , in which the Supreme Court of Canada opined about the possible liabilities associated with a notice and takedown regime.

Actions for copyright infringement must instead be grounded in the Copyright Act , and post- SOCAN the Canadian legislature elected to adopt its notice and notice regime instead of the opined upon notice and takedown regime. Pursuant to the Copyright Act , any claim of authorization must take into account the factors and elements set out in subsections 27(2.3) and (2.4) .

Voltage has failed to plead facts in relation to these factors, most critically, that the Internet account subscriber had any knowledge of the infringement prior to joining the application. [ 64 ] Even if knowledge was pled, knowledge alone is insufficient to ground authorization. For that, the intervener argues something more is required, whether approval, acquiescence or encouragement; what is required is authorization of copyright infringement, not the authorization of the use of the technology ( CCH , at paragraphs 38 and 42–43; Century 21 Canada Limited Partnership v.

Rogers Communications Inc. , 2011 BCSC 1196 , 338 D.L.R. (4th) 32 ( Century 21 ), at paragraph 342; Sirius Canada Inc. v. CMRRA/SODRAC Inc. , 2010 FCA 348 , [2012] 3 F.C.R. 717 ). Indeed, authorization may not be established even where a person has knowledge of the infringement and takes no steps to stop it (see, e.g., Microsoft Corporation v. Liu , 2016 FC 950 , 140 C.P.R. (4th) 327, [2017] 2 F.C.R. D-2 ). [ 65 ] Further, the issue of the reasonableness of the pleadings is not res judicata .

Prior to the certification motion, all motions before the Court that may have relied on the reasonableness of the pleadings were unopposed on this issue. In the alternative, even if the matter is res judicata , the Court should exercise its discretion to consider the merits of the issue to avoid unfairness to the proposed class members ( Danyluk v. Ainsworth Technologies Inc. , 2001 SCC 44 , [2001] 2 S.C.R. 460 ( Danyluk )).

[ 66 ] On the issue of the Copyright Act ’s notice and notice regime, the intervener argues that Voltage’s proposed use of the regime to: (

i) ground liability for copyright infringement; (ii) provide notice for certification of a class; and (iii) advise class members of hearings, etc. takes the regime outside its intended scope, upsetting the balance between copyright owners’ rights, privacy rights, and the interests of ISPs. IV. Analysis [ 67 ] The objectives of class proceedings are well known: (

i) facilitating access to justice through the distribution of legal fees across a large number of class members, (ii) conserving judicial resources by reducing unnecessary duplication in the fact-finding and legal- analysis process, and (iii) modifying harmful behaviours by ensuring that actual and potential wrongdoers take into full account the harm they are causing or might cause ( Dutton , at paragraphs 27 and 29 ; Hollick , at paragraphs 15, 16, and 25 ).

These advantages exist not only in a typical plaintiff class proceeding, but also in the case of a reverse class proceeding, where specific plaintiffs bring a proceeding against a class of defendants.

Defendant/respondent class proceedings have been described “as a means of providing plaintiffs with an enforceable remedy where it was otherwise impractical to secure the attendance of all potential defendants, while at the same time ensuring that those affected by the outcome of a lawsuit, although absent, were sufficiently protected” ( Chippewas , at paragraphs 16–17). [ 68 ] Recognizing these advantages, the Federal Courts Rules allow for the certification of both plaintiff and defendant applicants (when the underlying proceeding is an action) and applicant and respondent applicants (when the underlying proceeding is an application) for class proceedings (subsections 334.14(2) and 334.14(3)). [ 69 ] Regardless of the type of class proceeding, a judge must certify a proceeding if the criteria in subsection 334.16(1) [of the Federal Courts Rules ] are met.

These criteria are: Conditions 334.16 (1) … (

a) the pleadings disclose a reasonable cause of action; (

b) there is an identifiable class of two or more persons; (

c) the claims of the class members raise common questions of law or fact, whether or not those common questions predominate over questions affecting only individual members; (

d) a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law or fact; and (

e) there is a representative plaintiff or applicant who (

i) would fairly and adequately represent the interests of the class, (ii) has prepared a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members as to how the proceeding is progressing, (iii) does not have, on the common questions of law or fact, an interest that is in conflict with the interests of other class members, and (iv) provides a

summary of any agreements respecting fees and disbursements between the representative plaintiff or applicant and the solicitor of record. [ 70 ] The Federal Court made reversible errors in relation to each conjunctive criteria. I propose to make the conclusions that the Federal Court should have made on the first three criteria under paragraphs 334.16(1)(a), (

b) and (c) [of the Federal Courts Rules ]. However, as the reasons of the Federal Court with respect to the fourth and fifth criteria (paragraph 334.16(1)(

d) and (e)) are insufficient to provide a basis for appellate review ( R. v. G.F. , 2021 SCC 20 , 454 D.L.R. (4th) 1, 2021 CarswellOnt 6892 ( G.F. ), at paragraphs 71 and 74 ), the motion for certification is returned to the Federal Court for consideration of paragraphs 334.16(1)(

d) and (e).

(1) Whether the pleadings disclose a reasonable cause of action [ 71 ] As a preliminary observation, Voltage argues that the question of whether the proceeding discloses a reasonable cause of action is res judicata as the Federal Court had already determined that the pleadings disclosed a bona fide claim when the Norwich order identifying Mr. Salna was granted ( Voltage-Norwich , at paragraph 14). Further, the Supreme Court of Canada did not disturb that finding ( Rogers ). However, CIPICC is correct that the request for the Norwich order before the Federal Court was unopposed on this issue.

In essence, CIPICC argues that the parties have not engaged on the question. Accordingly, this Court will not treat the matter as res judicata but instead will exercise its discretion to consider the question ( Danyluk ). [ 72 ] On the first criteria, the test is the same as it would be in any motion to strike: the pleadings must disclose a reasonable cause of action, assuming that the facts as pled are true ( Pro-Sys , at paragraph 63). [ 73 ] The Federal Court erred in its application of the test. Rather than taking the facts pled to be true, in this case Voltage’s pleading that Mr.

Salna himself is a direct infringer, the Federal Court concluded that Voltage had not pled how it is that Internet account subscribers are direct infringers (Federal Court reasons, at paragraphs 68 and 77). The pertinent part of this pleading can be seen in paragraph 42 of Voltage’s amended notice of application: John Doe #1 Salna and each proposed Class Member is offering to upload at least one of the Works using the BitTorrent protocol.

The Voltage Parties plead that such offering to upload is, inter alia , a communication to the public via telecommunication within the meaning of the Copyright Act , and as a result violates s. 27(1) .

[74] The Federal Court assessed the strength of the evidence underlying this plea and then made findings of mixed fact and law anddrew conclusions with respect to the merits of the claim. This includes Mr. Salna’s plea that he is not a direct infringer. This was an errorof law as there is no burden on Voltage, at this stage, to prove that Mr. Salna is a direct infringer.

Further, the pleadings do not fall intothe category of bald assertions that would be screened out by the test on a motion to strike. [75] The Judge also accepted, as conclusive, expert evidence on the nature of the distinction between “uploading” and “downloading”on BitTorrent (Federal Court reasons, at paragraph 80). This was an error of law affecting the Federal Court’s findings on both theprimary infringement and secondary infringement causes of action.

A judge should not engage in an assessment of expert evidence inassessing whether there is a reasonable cause of action. [76] The Federal Court also erred in dismissing Voltage’s cause of action that the respondents authorized the infringement. The Judgeconcluded that Voltage relied on an overly broad reading of Binnie J.’s obiter comment in SOCAN, at paragraph 127.

Binnie J. observedthat the failure to take down infringing conduct after receiving notice “may in some circumstances lead to a finding of ‘authorization’”(emphasis added by the Federal Court Judge) (SOCAN, at paragraph 127; Federal Court reasons, at paragraph 79). [77] Here again, the Judge delved into the merits of the argument, rather than considering whether Voltage should be precluded fromadvancing the argument. At this stage of a proceeding, it is not appropriate to engage in a detailed analysis of the argument, and moreparticularly, whether the proposed argument is good law (Merck & Co., Inc. v.

Apotex Inc., 2012 FC 454, 106 C.P.R. (4th) 325 (Merck &Co.), at paragraph 28). Indeed, the careful use of the word “may” is an indication from the Court that the question is open forconsideration. [78] When combined, subsections 3(1) and 27(1) of the Copyright Act grant the right to authorize the reproduction of a Work.Voltage’s claim may push against the boundaries of a claim for authorizing infringement, but that is not the test on a motion to strike.Although the topic of “authorizing infringement” has been judicially considered, the Court in this case is faced with a novel applicationof the doctrine.

Specifically, this Court must consider the prohibition on authorizing infringement in the context of BitTorrent technologyand the notice and notice regime. [79] The key precedents, CCH and SOCAN, arose in distinct legal and factual contexts. CCH dealt with authorization in relation tophotocopiers while SOCAN was decided prior to the enactment of the notice and notice regime. Accordingly, the extent to which theseauthorities provide the requisite guidance in this context to conclusively preclude allegations of direct and authorizing infringement at thecertification stage is an arguable question. [80] Mr.

Salna made no submissions on the question of whether there was a reasonable cause of action; rather he adopted theargument of the intervener. [81] CIPICC argues that cases like CCH, SOCAN and Century 21 closed the door to the possibility that a party can be liable forauthorizing infringement without explicitly authorizing infringement.

In other words, the mere act of providing access to technology thatallowed the infringement cannot on its own ground a claim for authorizing infringement. [82] CIPICC asks the Court to definitively determine the question of whether, on the facts pled, a reasonable cause of action exists.That is not the role of a court in assessing the reasonableness of a cause of action. [83] At this stage, all a Court should do is determine whether the moving party should be precluded from advancing their argument infront of a trial judge (Merck & Co., at paragraph 15).

In determining this, “the Court must be generous and err on the side of permitting anovel but arguable claim to proceed” (Association of Chartered Certified Accountants v. Canadian Institute of Chartered Accountants,2011 FC 1516, 2011 CarswellNat 5412(WLNext.Can), at paragraph 9; Merck & Co., at paragraph 24). Allowing novel but arguableclaims to proceed is the “[o]nly … way can we be sure that the common law … will continue to evolve to meet the legal challenges thatarise in our modern … society” (Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959, at pages 990–991, (1990), 74D.L.R. (4th) 321).

In this instance, Voltage has shown it has a novel but arguable claim. [84] Voltage has pled the necessary facts to support a claim for direct infringement. While CIPICC claims that Voltage has notconnected Internet account subscribers with the direct infringing activity taking place on BitTorrent, it is not necessary for Voltage toestablish the facts of such a connection. It was sufficient for Voltage to plead that the Internet account subscribers themselves committedthese acts (see, e.g., paragraphs 6 and 24 of the amended notice of application).

It is not for the court, at this stage, to assess the strengthof the underlying evidence, in this case, the link between an ISP address, an Internet account subscriber and the use of Internet providedby an Internet connecting device. At this stage, Voltage’s assertion that Mr. Salna and the other class members committed these acts isassumed to be true. It will be up to Voltage to prove this to be the case at the hearing on the merits. [85] It is also clear that Voltage has pled the material facts necessary to support its claim based on a reasonable

interpretation ofauthorizing infringement. For example, as seen in paragraph 44 of the amended notice of application, voltage pleads that the proposedclass members “possessed sufficient control over the use of his or her Internet account and associated computers and Internet devicessuch that they authorized, sanctioned, approved or countenanced the infringements particularized herein”. [86] Despite my findings on the direct and authorizing infringement causes of action, Voltage has not successfully pled the materialfacts necessary to ground its claim to secondary infringement.

While it does not affect the finding that Voltage’s pleadings disclosea “reasonable cause of action” with respect to direct and authorizing infringement, this deficiency deserves a brief mention as it mayaffect Voltage’s position moving forward. [87] The test for secondary infringement is threefold: (

i) primary infringement occurred; (ii) the secondary infringer knew or shouldhave known that he or she was dealing with a product of infringement; and (iii) the secondary infringer sold, distributed or exposed forsale the infringing good (CCH, at paragraph 81). [88] While Voltage claims to have pled material facts in relation to each element of the test for secondary infringement, the pleadingdoes not satisfy the test. As such, the exercise required in assessing the possibility of success cannot be properly conducted (R. v.

Imperial Tobacco Canada Ltd. , 2011 SCC 42 , [2011] 3 S.C.R. 45, at paragraph 22 ). [ 89 ] In particular, Voltage has failed to plead the facts necessary to support the knowledge requirement. The second element in the secondary infringement test requires that the secondary infringer knew or should have known that he or she was dealing with a product of infringement. Put otherwise, the secondary infringer knew or should have known the copies of the Works in their possession were created by infringing the Works’ copyright.

In claiming it pled the material facts capable of meeting this element of the test, Voltage directed the Court to the following paragraphs in their amended notice of application: 24. For the purposes of this proceeding, the following shall be referred to as the Unlawful Act of each proposed Class member, including John Doe #1 Salna : … (

c) failing to take reasonable, or any, steps to ensure that a person downloading a Work was authorized to do so by law. … 43. … John Doe #1 Salna and each proposed Class Member knew or should have known that the making of a copy of such Work would infringe the copyright in such Work if it had been made in Canada by the person who made it. [ 90 ] Although these paragraphs reference an alleged infringer’s knowledge, they speak of the infringer’s knowledge that what they are doing would infringe Voltage’s copyright. This is not the knowledge requirement for secondary infringement specified by the Supreme Court of Canada in CCH , at paragraph 81 based on its

interpretation of subsection 27(2) of the Copyright Act . The secondary infringer must know or should have known that he or she was dealing with a product of infringement.

Although Voltage used language similar to that seen in the Copyright Act . at subsection 27(2) , particularly that the person “knows or should have known [the copy of a work] infringes copyright or would infringe copyright if it had been made in Canada by the person who made it”, they connected that knowledge to the actions of the class member, and not to the Works in question. [ 91 ] Accordingly, Voltage has failed to plead the facts necessary to support a secondary infringement cause of action. [ 92 ] Despite this, as Voltage’s pleadings disclose a reasonable cause of action with respect to the direct and authorizing infringement claims, paragraph 334.16(1)(a) [of the Federal Courts Rules

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