Inducement of copyright infringement is a novel cause of action recognized for the first time in Bell Canada v. L3d Distributing where the Federal Court awarded a group of media broadcasters over $25M in statutory damages for the streaming of unauthorized content on defendants pre-programmed set-top boxes.
In cases of \”whack-a-mole\” patterns of infringement where an interlocutory injunction is being ignored by a defendant, like in this case the interlocutory injunction was breached over 175 times and resulted in 10 amendments of the statement of claim, inducement is rather obvious and a very welcome cause of action. It is a known pattern (modus operandi) of Canadian copyright infringers to deliberately breach interlocutory injunctions in the hopes to financially exhaust copyright holders and plaintiffs. It is interesting that ALL such breaches happen after a defendant strategically consents to an interlocutory injunction while contesting the permanent injunction, the result being a whack-a-mole situation.
Inducement is thus a separate common law cause of action (until now available for patent litigation) requiring proof of defendant\’s intent to induce copyright infringement. It can be done ex parte. Here the Respondent Defendants knowingly induced infringement of the Media Plaintiffs’ copyright by offering for sale and selling preloaded set-top boxes that facilitate the infringement by the users and the streaming sites.
The Legal Test for Inducement is set out in paragraphs 72 et seq. of the judgment
\”[72] Inducement occurs when someone does something that leads another person to infringe an intellectual property right. In other words, someone (i) knowingly (ii) induces or procures (such as by offering for sale and selling a product, the use of which by the purchaser would be an infringement), and (iii) another to infringe the intellectual property right: Hanson International Inc v Whirley Industries Inc, 2002 FCT 1045 [Hanson] at para 17. The Court articulated this test in the context of a motion to strike a claim alleging industrial design infringement, as well as procurement and inducement of industrial design infringement.
[73] A similar test was described in a proceeding involving patent infringement and infringement by inducement as follows: (i) the act of infringement was completed by a direct infringer; (ii) completion of the act of infringement was influenced by the acts of the inducer, without which influence the infringement otherwise would not have taken place; (iii) the inducer seller knowingly exercised the influence; that is, the seller knew their influence would result in the completion of the act of infringement: MacLennan v Produits Gilbert Inc., 2006 FCA 204 at para 22.
[74] Although Hanson, in respect of the motion to strike, did not consider the applicability per se of the principle of inducement to industrial designs, I see no reason why this principle should be restricted to any particular type of intellectual property rights, such as patents (in the case of MacLennan). Thus, considering the test here, I find that first, the streaming sites that host and distribute the Plaintiffs Programs, in response to users requests, unlawfully infringe the Media Plaintiffs’ exclusive right to communicate those programs to public by telecommunication.
[75] Second, the pre-loaded set-top boxes offered for sale and sold by the Respondent Defendants provide the means to enable substantial infringement by providing a user-friendly interface and curated sets of preinstalled applications that facilitate or encourage users to request and receive streams of infringing content. In other words, the infringement was influenced by, and otherwise would not have taken place without, the actions of the Respondent Defendants.
[76] Third, based on the Plaintiffs’ evidence regarding the activities of the Respondent Defendants summarized above, and absent their participation in this proceeding, I am prepared to infer that the Respondent Defendants knew their activities would result in infringement of the Media Plaintiffs’ copyright. In the words of Justice Tremblay-Lamer, the Respondent Defendants “deliberately encourage consumers and potential clients to circumvent authorized ways of accessing content… [and] market themselves to consumers specifically on the basis that their “plug-and-play” set-top boxes make it easy to eliminate the need for a cable subscription”
: Bell Canada FC 2016 at paras 22-24.\”