Who controls the British Crown? Who keeps illegal streaming down? The Federal Court of Canada does! (May the pop-culture references commence.) The Federal Court of Canada made international news by handing down one of the harshest copyright sentences in its history, a fine of over $10M. The defendant is only 23 years old.
In Twentieth Century Fox Film Corp. v Hernandez et al. Justice Campbell found a clear infringement of the Copyright Act when the defendant Hernandez streamed and allowed for download an alleged 700 episodes between his two websites “Watch The Simpsons Online” and “Watch Family Guy Online.”
As the judge stated in his decisions, this fine is meant to release the hounds on illegal downloading and streaming communities.
Statutory damages, elected by Twentieth Century Fox in this case, would be insufficient to achieve the goal of punishment and deterrence of the offense of copyright infringement in this case. Hernandez’s repeated, unauthorized, blatant, high-handed and intentional misconduct, and his callous disregard for the Plaintiff’s copyright rights, is deserving of the penalty of punitive damages.
The damage award breaks down into $10M in statutory damages under s. 38.1 of the Copyright Act, $500,000 in punitive damages and $78,000 in costs.
Section 38.1 of the Copyright Act outlines that judges may consider three relevant factors in awarding statutory damages: the degree of good faith of the defendant, the conduct of the parties before and during the proceedings, and the need to deter other infringements in question. In addition to the deterrence motivation, the judge found that Hernandez violated the Copyright Act in bad faith and for commercial purposes through pay-per-click ads on the site. (And you don’t win friends with bad faith.)
As outlined in the judgment, Hernandez easily met the core technical requirements for infringement by doing the following with the video content: copying it onto a computer system, uploading it to a server, creating links to the server, and enabling the public to access the material through the internet.
For those saying, “What the deuce?” to this damage award, in my opinion, it is not completely outrageous on its face.
Justice Campbell provided a strong synopsis of copyright damage types, sizes and relevant factors in Adobe Systems Incorporated v Dale Thompson DBA Appletree Solutions. There he reminds that the Copyright Act dictates a fine of between $500 and $20,000 per infringed work depending on various considerations.
Pursuant to s. 38.1(1) of the Act statutory damages may be awarded “in a sum of not less than $500 or more than $20,000 as the court considers just”, with the proviso that, pursuant to s. 38.1(3), even the minimum amount can be lowered on the basis of proportionality of damages to the infringing activity, “as the court considers just”. Pursuant to s.38.1(5), the following factors are to be taken into consideration in awarding statutory damages: the good faith or bad faith of the defendant; the conduct of the parties before and during the proceedings; and the need to deter other infringements of the copyright in question.
At 700 episodes of evidence, a $10M statutory court awarded $14, 285 in damages per episode, is certainly within the legislatively prescribed range.
In an interesting approach, the plaintiff didn’t put forward a defence at trial. It doesn’t take a lawyer to know that this “If anyone needs me, I’ll be in my room” approach is a bad idea. Judging from this quirky and strange interview Vice did with Hernandez, it’s unlikely his thoughts on the issue – that he didn’t think he was doing anything wrong and also offered links to purchase Fox materials – would have mitigated damages significantly. I don't think it would have hurt him much either.
Since Fernandez didn’t actively engage with the legal system, and seems to treat access to others' creative works as a right, I’m not prepared to side with him. Nor am I prepared to side with the judge in this case or creators' rights advocates. The extremism of this judgment reinforces the David versus Goliath archetype of copyright battles. Is it reasonable to expect a 23-year old to pay $10M in damages? I doubt it. Granted, it could be argued that the purpose of the statutory damages award in this case is to send a message rather than receive compensation. In my mind, awarding these symbolic damages sets a dangerous precedent. Without knowing how much money Hernandez made from the internet ads, or how much Twentieth Century Fox lost in sales, I think it would have been more reasonable to treat each season of each show as a breach. Perhaps I've been soured by the progressive decline of these shows in recent years.
Ultimately, there's a bigger problem here. We have a generation of young people who are drastically out of step with the law as it stands. It seems most of them, like Hernandez, know some of the contours of the law but disagree with it. The law's purpose is to protect creators - defending their income and sustaining their ability to create - but it is also to protect the interests of the public and further the public domain. When applying it against the interests of 23-year-old kids, it's no wonder young people think Goliath writes the rules. Any damage award would have sufficiently sent the message that infringing copyright is wrong. In my opinion, awards this extreme make one wonder if we're achieving the objectives of the Copyright Act and if we are, whether we need to rethink those objectives.