The Federal Court of Appeal recently released its decision in Voltage Holdings, LLC v Doe #1, in which the court affirmed the minimum evidentiary requirements to establish direct and authorizing copyright infringement and clarified the extent to which an adverse inference may be drawn in the context of online copyright infringement.
Background
The case before the Federal Court related to the “notice and notice” system by which copyright owners can send a notice to internet service providers to allege that online copyright infringement happened at a particular IP address. The internet subscriber to whom the IP address belongs is then forwarded the notice by the internet service provider.
In this case, warning notices were sent to the internet subscribers and subsequently, Norwich orders were sent to the internet service providers requiring them to provide the copyright owner with information on the internet subscribers’ identities. The respondents are internet subscribers from whom the appellant copyright owner is attempting to receive information about. The respondents never filed any defence.
At the Federal Court level, the Court found that despite the lack of a defence, there was not sufficient evidence provided by the appellants to establish that the respondents were (1) the director infringers or (2) possessing of enough control over those who did infringe to have authorized the infringement. The Court flagged that the appellant had not yet attempted to compel discovery of the respondents, who might have potential evidence that could have filled in some of the gaps in the appellant’s evidence.
The Federal Court of Appeal Decision
The appellant appealed the Federal Court’s decision. They argued that the Court should have drawn an adverse inference to close the evidentiary gap. They also argued that the respondents’ lack of a defence necessitated that such an adverse inference be drawn. They further argued that the Court erred in pointing to the failure to seek discovery as a reason not to draw such an adverse inference.
The Federal Court of Appeal dismissed the appeal. Some important details of the decision to note are as follows:
- The Court made it clear that someone is not authorizing someone else to commit infringement simply by allowing them to use their internet. Both “infringement” and “authorization” are defined, statutory terms. “Authorization” depends on the alleged authorizer’s control over the person who committed the resulting infringement, not on the alleged authorizer’s control over the supply of their technology. Sharing internet access after receiving notices of alleged infringement also does nothing to the work in question, and does not therefore engage any one of the three copyright interests in subsection 3(1) of the Copyright Act.
- The Court established that to draw an adverse inference based on the link between an IP address and its corresponding internet subscriber would make subscribers strictly liable for any infringing activity occurring in relation to their account even though there will be instances when the subscriber will have not illegally shared copyrighted content online. According to the Court, that would not be acceptable. It would also mean that appellants on ex parte motions for default judgment would not be required to present evidence to the court in order to be successful. The Court stated that this was also not acceptable.
- The Court also made it clear that the Federal Court was correct to require the appellants to seek discovery. They emphasized that discovery is not a procedural requirement for claims of infringement, but rather that with all claims, the infringement has to be proven on a balance of probabilities. In this case specifically, the appellant failed to provide the Federal Court with enough evidence to establish a link between the respondents and the infringing activity, which may not have been the case had they sought discovery.
Commentary
The significance of the Court’s conclusions was that they explicitly establish that a Court cannot assume that alleged copyright infringers have actually committed copyright infringement without a certain level of investigation and proof. The amount of investigation and evidentiary-finding exercising required on the part of the accuser will depend on the case, but ultimately, there always needs to be a link between the accused and the infringing activity in order for the infringement to be made out, such that the infringement can properly be proven on a balance of probabilities.