In the Courts: Fox Teaches Infringer a Costly Lesson

By Joanna Vatavu, Macmillan LLP, Canada

Twentieth Century Fox has achieved a $10.5 million victory against Mr. Hernandez, the former operator of two Internet websites dedicated to streaming episodes of the Simpsons and Family Guy television shows. It was alleged that the defendant had illegally copied over 700 episodes of the programs from television broadcasts and uploaded them to the Watch The Simpsons Online and Watch Family Guy Online websites where the episodes were made available to the public for streaming.

This case is a perfect illustration that statutory damages can be a powerful tool for copyright owners in Canada. Proving actual damages in a copyright infringement case can be difficult, particularly where the defendant is uncooperative and claims not to have any sales records. Section 38.1 of the Canadian Copyright Act provides that copyright owners may elect to recover statutory damages instead of lost profits and damages suffered as a result of activities of infringers. Where the infringements are carried out for a commercial purpose, the Act provides for a maximum award of $20,000 in respect of all infringements relating to each individual work involved in the proceedings. In this case, the maximum statutory damages would have been more than $14 million. It was alleged that the defendant site operator profited from sales of advertising and promotional items related to the television shows, and given the extensive number of episodes uploaded and shared by him, the court awarded $10 million in statutory damages.

Generally a plaintiff can only obtain an injunction prohibiting the defendant from repeating the infringements specifically addressed in the lawsuit. However, section 39.1 of the Copyright Act permits the court to grant a "wide injunction" restraining infringement of not only the works in issue but any other works owned by the plaintiff. In this case, the court granted a wide injunction against the defendant prohibiting him from any further infringing dealings with the works involved in the proceedings as well as any other works in respect of which Twentieth Century Fox owns copyright, including works which come into existence after the date of the judgment.

The court also found that the defendant's repeated, blatant and intentional misconduct merited an award of punitive damages to serve as deterrence and punishment for such illegal activities. The court ordered an award of $500,000 in this respect. This is one of the larger statutory damage awards a copyright owner has obtained in Canada and no doubt sends a strong message to those who build businesses around illegal file sharing in Canada.