Federal Court of Appeal Decisions

Date: 20060125

Docket: A-117-05

Citation: 2006 FCA 29

CORAM:        DÉCARY J.A.

                        LÉTOURNEAU J.A.

                        PELLETIER J.A.

                       

BETWEEN:

COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC.,

METRO-GOLDWYN-MAYER STUDIOS, INC., PARAMOUNT PICTURES CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS PICTURES, INC., UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., WARNER BROS., a division of TIME WARNER ENTERTAINMENT CO., L.P.

Appellants

and

SERGE GAUDREAULT

Respondent

Heard at Ottawa, Ontario, on October 11, 2005.

Judgment delivered at Ottawa, Ontario, on January 25, 2006.

REASONS FOR JUDGMENT BY:                                                                             PELLETIER J.A. CONCURRED IN BY:                                                                                                      DÉCARY J.A.                                                                                                                                 LÉTOURNEAU J.A.

           

Date: 20060125

Docket: A-117-05

Citation: 2006 FCA 29

CORAM:        DÉCARY J.A.

                        LÉTOURNEAU J.A.

                        PELLETIER J.A.

BETWEEN:

COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC.,

METRO-GOLDWYN-MAYER STUDIOS, INC., PARAMOUNT PICTURES CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS PICTURES, INC., UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., WARNER BROS., a division of TIME WARNER ENTERTAINMENT CO., L.P.

Appellants

and

SERGE GAUDREAULT

Respondent

REASONS FOR JUDGMENT

PELLETIER J.A.

Introduction

[1]                The appellants own the intellectual property rights in a number of films and sporting events which are or have been available to cable or satellite television viewers for an additional fee. The respondent has been convicted of offences under the Radiocommunication Act, R.S.C. 1985, c. R-2 (the Act) involving the unauthorized decoding of the encrypted signals by which the appellants' products are delivered to the consumer. The appellants have commenced an action for damages and, in the course of that action, they have brought a motion for summary judgment. The motion was dismissed on the ground of the insufficiency of the proof tendered in its support. This is an appeal of that dismissal.

PROCEDURAL HISTORY

[2]                On January 18, 2000, the Royal Canadian Mounted Police arrested Mr. Serge Gaudreault. When they searched his house and his vehicle, they found 65 unauthorized decoders which enable one to view encrypted material without paying the system operator's fee for that material.

[3]                Mr. Gaudreault was charged with offences under the Act. He pleaded guilty and was fined $5,000. Section 18 of the Act permits persons who have an interest in the content of a subscription programming signal by virtue of copyright ownership, e.g. the appellants, to commence a civil action to recover damages caused by the breach of certain prohibitions in the Act, including the sale of unauthorized decoders.

[4]                In reliance on this disposition, the appellants commenced an action against Mr. Gaudreault. No sooner had Mr. Gaudreault filed his defence than the appellants brought a motion for summary judgment, relying upon ss. 18(3) of the Act, which provides as follows:

[5]                In support of their summary judgment motion the appellants filed the affidavit of Serge Corriveau, the National Director of the Canadian Anti-piracy Program of the Film and Video Security Office of the Canadian Motion Picture Distributors Association. Mr. Corriveau deposed that:

65. On or about January 18, 2000, RCMP arrested the Defendant under the Radiocommunication Act. Upon the Defendant's vehicle being searched, one box containing 10 decoders and another box containing electronic equipment components was seized, and an additional 55 decoders, 86 electronic components and $4,723 (Canadian) was seized. On September 11, 2001, the Defendant pleaded guilty to two counts under the Radiocommunications Act and was fined a total of $5,000.00

[6]                The appellants also filed the affidavit of Claude Larose, whose evidence it was that between 1999 and 2001, Mr. Gaudreault sold him four or five unauthorized decoders per month. Finally, the appellants filed the affidavit of Deborah Monton, a legal assistant in the appellants' counsel's office, who identified and produced the material disclosed to Mr. Gaudreault by the Crown in the criminal proceedings (the Crown Brief).

[7]                In response to the appellants' motion, Mr. Gaudreault filed his own affidavit in which he deposed as follows:

10. Si j'ai plaidé coupable à certaines infractions statutaires fédérales en 2000, c'est uniquement pour éviter les frais relatifs à un procès.

10. If I pleaded guilty to certain federal statutory offences in 2000, it was only to avoid the costs of a trial.

[Translation by the Court]

[8]                The motion for summary judgment was heard by Mr. Justice James Hugessen, who dismissed the motion. Hugessen J. described the appellants' case in the following way:

[4] Apart from affidavit evidence of a wholly general nature of the alleged illegal activities by the defendant which, in my view, is not sufficiently specific to allow me to give judgment in favour of the plaintiffs on a motion such as this, the plaintiffs rely, as subsection 18(3) of the Radiocommunication Act allows them to do, on a plea of guilty entered by the defendant to two charges under sections 9 and 10 of that Act. ...

[9]                The judge then noted Mr. Gaudreault's admission of a guilty plea for the purpose of avoiding a trial. He noted as well that Mr. Gaudreault was not cross-examined on his affidavit. Without deciding whether Mr. Gaudreault's affidavit evidence was true or credible, he concluded that it was evidence to the contrary within the meaning of ss. 18(3) of the Act so that the appellants could not rely on his guilty plea. In the result, there was no evidence to establish that Mr. Gaudreault had committed the acts alleged by the appellants and the motion was dismissed.

APPELLANTS' ARGUMENT

[10]            Before us, the appellants argued that the evidence which they produced was sufficient to discharge their burden of proof, without recourse to ss. 18(3) of the Act. They also argued that Mr. Gaudreault's guilty plea was prima facie evidence that he had committed the acts alleged in the charges against him, thus satisfying the requirements of ss. 18(1). Finally, the appellants took the position that, quite apart from their statutory cause of action under the Act, the evidence established that Mr. Gaudreault had infringed the appellants' copyright by authorizing infringement by others by the sale of unauthorized decoders.

STANDARDOFREVIEW

[11]            As this is an appeal of a discretionary decision of a judge, the standard of review is whether the judge took into account all relevant considerations and gave them the appropriate weight. Reza v. Canada, [1994] 2 S.C.R. 394. The motion judge dismissed the claim under the Act on the basis of his view of the evidence, and did not address the appellants' claim under the Copyright Act, R.S.C 1985, c. C-42. Consequently, insofar as the claim under the Act is concerned, this Court' role is to examine if the judge considered the relevant considerations and gave them the appropriate weight. Insofar as the claim under the Copyright Act is concerned, this Court is free to deal with it as at first instance since, on this point, there is no decision to review.

Analysis

[12]            As noted, the appellants assert two causes of action, one under the Act and one under the Copyright Act. In order to succeed in their claim under the Act, the appellants must satisfy the requirements of ss. 18(1) of the Act, reproduced earlier in these reasons. That disposition speaks of conduct contrary to paragraphs 9(1)(c)(d) or (e) or 10(1)(b). These provisions read as follows:

[13]            There are three ways in which the appellants could discharge the burden of showing that Mr. Gaudreault had engaged in conduct "that is contrary to paragraph 9(1)(c), (d) or (e) or 10(1)(b)." They could lead evidence as to the conduct itself, as they did in the affidavit of Mr. Larose, and leave it to the Court to conclude that the conduct was a contravention of one of the relevant sections. Or, they could lead evidence to show that Mr. Gaudreault pleaded guilty to a charge of contravening one of the relevant sections, (as they sought to do in the affidavit of Mr. Corriveau), relying on the rule that a guilty plea is an admission of all of the elements of the offence charged. Alternately, the appellants could rely on the evidentiary rule found in ss. 18(3) by putting before the Court the "record of proceedings" ( « procès verbal » ) before the criminal court which convicted Mr. Gaudreault of one of the offences specified in ss. 18(1).

[14]            The appellants are entitled to succeed if they establish the facts by any one of these methods. Insofar as their own proof of violation of sections 9 and 10 of the Act is concerned, the appellants say that the evidence of Mr. Larose proves that Mr. Gaudreault sold equipment or devices which was capable of decoding encrypted signals under circumstances that give rise to a reasonable inference that the equipment or devices was intended to be used for the purpose of decoding encrypted material without the authorization of the lawful distributor of the signal, contrary to paragraph 10(1)(b) of the Act. Mr. Larose's affidavit says that, during 1999 and 2000, Mr. Gaudreault sold him and his company four or five unauthorized decoding devices per month at a cost of $150 per month. Mr. Larose then resold the devices at a cost of $2,000. Mr. Larose's affidavit says nothing more about any circumstances which might lead to a reasonable inference that the devices were to be used for decoding encrypted material without lawful authorization.

[15]            Mr. Gaudreault's evidence was that he gave each purchaser of his decoders a notice which stated " IMPORTANT NOTICE The use of this device is illegal if the required fees are not paid." (translation by the Court). In his affidavit, Mr. Gaudreault also stated that he was aware of the decision in R. v. Langlais, an unreported decision of the Cour du Québec. In that case, Mr. Langlais was acquitted of a charge that he contravened paragraph 10(1)(b) of the Act because the Court found that the giving of notice that the use of the device without the payment of the required fees was illegal raised a reasonable doubt as to whether the device was sold in circumstances such as to give rise to a reasonable inference that the equipment, device or component has been used, or is or was intended to be used, for the purpose of contravening section 9.

[16]            Whether the transactions between Mr. Larose and Mr. Gaudreault were such as to give rise to the reasonable inference that devices sold by Mr. Gaudreault would be used by Mr. Larose's customers to decode encrypted material without proper authorization is a matter which can only be determined by an assessment of the whole of the surrounding circumstances. That evidence is not before the Court. Consequently, the motion judge was correct to say as he did that the evidence was of a wholly general nature which was not sufficiently specific to allow him to render judgment in favour of the appellants.

[17]            If Mr. Larose's evidence is insufficient, the appellants attempt to prove their case out of Mr. Gaudreault's mouth by relying upon his guilty plea. "In law, a 'guilty' plea is an admission of all of the elements and ingredients which go to make up the offence." Hansen v. The Ocean Victoria Daichi Tanker K. K., [1985] 1 F.C. 451 at p. 455. Nonetheless, a guilty plea is capable of explanation and qualification. Re Charlton, [1969] 1 O.R. 706 (Ont. C.A.). The difficulty is that there is no indication in the record as to the charge to which Mr. Gaudreault pleaded guilty. Mr. Corriveau's evidence was simply that Mr. Gaudreault pleaded guilty to two "counts" under the Act. The record does not contain a copy of the Information and Complaint which initiated the criminal proceedings nor a copy of a certificate of conviction as provided at ss. 12(2) of the Canada Evidence Act, R.S.C. 1985, c. C-5. Consequently, while there is some evidence that Mr. Gaudreault entered a guilty plea, there is no evidence of the charge in respect of which the guilty plea was tendered.

[18]            Given the fact that a number of unauthorized decoders were seized when Mr. Gaudreault was arrested, one would presume that Mr. Gaudreault was charged with a violation of paragraph 10(1)(b) of the Act. But such a presumption cannot be treated as a fact, given the possibility that the Crown and Mr. Gaudreault may have come to an agreement on another charge, as often happens. As the appellants are seeking damages, the circumstances giving rise to their loss are relevant to the quantum of damages. If Mr. Gaudreault pleaded guilty to a violation of paragraphs 9(1)(c) or (d), which deal with individual use of an unauthorized decoding device, the measure of damages will be significantly less than if he pleaded guilty to a violation of paragraph 10(1)(b), which deals with the sale and distribution of unauthorized decoding devices. Consequently, it is not enough to show that Mr. Gaudreault pleaded guilty to an unspecified offence under the Act. As a result, the admission by guilty plea which the appellants rely upon does not satisfy the requirements of ss. 18(1) because it does not disclose the offence to which Mr. Gaudreault pleaded guilty.

[19]            In that event, the appellants seek to rely on ss. 18(3) so that the record of proceedings in the criminal proceedings becomes evidence in this case. Hugessen J. found against them on this point when he held that Mr. Gaudreault's evidence that he pleaded guilty to avoid the cost of a trial "was evidence to the contrary". It is evident that the motion judge took the position most favorable to the appellants on the question of the "record of proceedings", i.e., he assumed that he had before him such a record, but he concluded that, even in those circumstances, the appellants could not succeed. While I come to the same result, I prefer to approach the question on the basis that the appellants must establish that the record of proceedings is before the Court.

[20]            When counsel for the appellants was pressed on this point, he took the position that the Crown Brief was the record of proceedings. This is clearly wrong. Subsection 18(3) contains two evidentiary rules. The first is that the record of proceedings before the court which convicted a person of an offence under paragraph 9(1)(c), (d) or (e) or 10(1)(b) is proof that the defendant engaged in the conduct which constitutes the offence, unless there is evidence to the contrary. In other words proof of the conviction is, in the absence of evidence to the contrary, proof of the facts in respect of which a conviction was entered. The conviction could be proved by means of a transcript of the proceedings, or the minutes of the proceedings, in those jurisdictions in which the clerk takes minutes of the proceedings. Or, a party could rely on ss. 12(2) of the Canada Evidence Act which provides for proof of conviction by means of a certificate of conviction and proof of identity.

[21]            The second evidentiary rule found in ss. 18(3) is that any evidence given in the criminal trial as to the effect of the conduct of the defendant on the rights holders is evidence "thereof" in the civil action. In other words, evidence of damages in the criminal trial can be used as evidence of damages in the civil trial. Once again, this would require either a transcript or some other record of the evidence such as the minutes of the proceedings if they exist and if they disclose the particulars of the evidence.

[22]            It is clear from this that the Crown Brief, which is simply the information in the Crown's hands as to the facts disclosed by the police investigation, is not the record of proceedings since it does not relate to the proceedings but to the investigation. Consequently, the appellants were not entitled to rely upon ss. 18(3).

[23]            While the motion judge did not structure his analysis as I did mine, nonetheless, it is clear that he was not persuaded by the evidence led by the appellants, and that he declined to allow them to rely upon ss. 18(3). In the end result, there are no grounds which would require our intervention.

[24]            I turn now to the claim under the Copyright Act. The appellants' claim is that Mr. Gaudreault infringed their copyright by authorizing infringement by others. If this argument is to succeed, the appellants must show two things. They must show that their rights have been infringed and that Mr. Gaudreault authorized that infringement.

[25]            The exclusive rights of the owner of copyright are set out at ss. 3(1) of the Copyright Act. They are as follows:

[26]            Section 27 of the Copyright Act provides that it is infringement for "any person to do, without the consent of the owner of the copyright, anything that by this Act only the owner of the copyright has the right to do." In this case then, a person who communicates any literary, dramatic, musical or artistic work to the public by telecommunication without the consent of the owner of the copyright infringes copyright. Any person who authorizes a person to communicate any literary, dramatic, musical or artistic work to the public by telecommunication without the consent of the owner of the copyright also infringes copyright.

[27]            In this case, the appellants' specific complaint is set out in their Memorandum:

The plaintiffs/appellants recognize that to establish a claim for copyright infringement against the defendant/respondent, they must show that the defendant/respondent, by his actions authorized others to interfere with the [appellants] authorized arrangement to reproduce and communicate their copyrighted works to the public by telecommunication.

[28]            What infringement do the appellants allege? They allege an interference with their authorized arrangements to reproduce and communicate their copyrighted works to the public by telecommunication. They do not identify how such interference involves the exercise of rights reserved exclusively to the holders of copyright in ss. 3(1) of the Copyright Act. Specifically, they do not allege that the users of unauthorized decoders either transmitted or reproduced copyrighted material without the consent of the owner of the copyright. I find nothing in ss. 3(1) of the Copyright Act which would make the unauthorized decoding of encrypted signals an act of infringement.

[29]            The only authority advanced by the appellants in support of their position is the decision of the Federal Court in Columbia Pictures Industries, Inc. v. Frankl (c.o.b. Signal Solutions) 2004 FC 1454, (2004), 36 C.P.R. (4^th) 342. The facts of that case were analogous to those of the present case except that Mr. Frankl dealt in the electronic cards which enable the decoder to decode encrypted signals. The Court found for the plaintiffs on the issue of copyright infringement at para. 27 and 28 of its decision where it wrote:

[27] In the case at bar, the affidavit evidence, which is uncontradicted, demonstrates that the defendant imported, manufactured, distributed, modified, programmed, reprogrammed, leased, offered for lease, sold and offered for sale, equipment specifically designed to defeat DirecTV's encryption of Secured Broadcast Signals, thereby enabling the unauthorized receipt and clear viewing of the Secured Broadcast Signals, contrary to the plaintiffs' rights in the copyrighted works.

[28] Consequently, I find that the defendant authorized others to reproduce the plaintiffs' copyrighted works. There is no genuine issue for trial in relation to copyright infringement under the Copyright Act.

[30]            On my reading of para. 27, the Court found that the "unauthorized receipt and clear viewing of the Secured Broadcast Signals [encrypted signals]" is an infringement of copyright ("contrary to the plaintiffs' rights in the copyrighted works"). The Court cited no authority in support of its conclusion and I have been unable to find any. There is nothing in ss. 3(1) which reserves to the holder of copyright the exclusive right to receive and view encrypted broadcast signals. The right which is protected by ss. 3(1) is the right to broadcast, not the right to receive a broadcast signal. As a result, I do not find this authority persuasive.

[31]            The fact that unauthorized decoding is prohibited by para. 9(1)(c) of the Act does not make it an act of infringement. Given that the onus is on the appellants to make out their case, particularly in a motion for summary judgment, I find that they have not persuaded me that, as a matter of law, the unauthorized decoding of encrypted signals is, in itself, an infringement of copyright.

[32]            If there is no infringement, there cannot be authorization of infringement. The appellants' claim in copyright therefore fails. The result would be the same even if I had found that the unauthorized decoding of encrypted signals amounted to copyright infringement. The notion that the supply of equipment which permits one to infringe copyright necessarily amounts to authorizing infringement was rejected by the Supreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339, 2004 SCC 13 at para. 38 where McLachlin C.J. said, on behalf of the Court:

[38] ... However, a person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright. Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law ...

[33]            Mr. Gaudreault's affidavit evidence, on which he was not cross-examined, was to the effect that all of his decoders were sold with a notice that use of the machine without the payment of the required fees was illegal. On its face, this seems to bring Mr. Gaudreault's case within the presumption referred to above. As a result, the appellants have not persuaded me that there is no genuine issue for trial with respect to their allegation that Mr. Gaudreault infringed their copyright by authorizing others to infringe.

CONCLUSION

[34]            In the end result, there is no reason to interfere with the motion judge's dismissal of the motion for summary judgment. The judge properly considered all relevant factors in relation to the claim under the Act and gave them the appropriate weight. While he did not deal with the claim under the Copyright Act, I have concluded that the appellants have failed to establish that there is no genuine issue for trial on that issue. As a result, there is no reason to interfere with the decision of the motion judge. I would therefore dismiss the appeal with costs.

J.D. Denis Pelletier

"I agree

     Robert Décary j.a."

"I agree

     Gilles Létourneau j.a.

                                                  FEDERAL COURT OF APPEAL

                            NAMES OF COUNSEL AND SOLICITORS OF RECORD

APPEAL FROM AN ORDER OF THE FEDERAL COURT OF CANADA BY HUGESSEN, J. DATED MARCH 4, 2005 (T-42-02)

DOCKET:                                                                               A-117-05

STYLE OF CAUSE:                                                               COLUMBIA PICTURES INDUSTRIES INC. et al. v. SERGE GAUDREAULT

                                                                             

PLACE OF HEARING:                                                         Ottawa, Ontario

DATE OF HEARING:                                                           October 11, 2005

REASONS FOR JUDGMENT OF THE COURT:              Pelletier J.A.

CONCURRED IN BY:                                                          Décary J.A.

                                                                                                Létourneau J.A.

DATED:                                                                  January 25, 2006

APPEARANCES:

Mr. Thomas M. Slahta Mr. Lorne Lipkus	FOR THE APPELLANTS
Mr. Louis Savoie	FOR THE RESPONDENT

SOLICITORS OF RECORD:

Daniel Ovadia Montréal, Quebec Kestenburg Siegal Lipkus LLP Toronto, Ontario	FOR THE APPELLANTS
Jutras et Associés Drummondville (Québec)	FOR THE RESPONDENT