Federal Court of Appeal Shuts Down Voltage's Mass Copyright Lawsuit

The Federal Court of Appeal delivered a decisive victory for Internet subscribers yesterday, shutting down Voltage Holdings’ attempt to launch a “reverse class proceeding” against hundreds of Canadians for alleged movie sharing. The Court found that Voltage's proposed lawsuit was unworkable, echoing several arguments made by CIPPIC and others as interveners in the case.

The case involved Voltage's long-running effort to sue a large, anonymous group of Internet account holders whose connections were allegedly used to share five films using BitTorrent.  Rather than suing the individuals sharing the movies, Voltage sought to bundle them all into a single "reverse class proceeding"—a procedure where a plaintiff sues a representative respondent on behalf of a class of respondents.

CIPPIC argued that Voltage's certification strategy was fundamentally flawed because:

1.      it improperly used the Copyright Act’s notice-and-notice system for litigation purposes,

2.      relied on a fact-specific theory of “authorization” liability unsuitable for a class proceeding, and

3.      failed to provide any viable mechanism for funding defence counsel for the ordinary Canadians who would be swept into the lawsuit.

CIPPIC was gratified to see its positions adopted by the Court of Appeal on several points.

The Federal Court of Appeal rejected the plan on two key grounds.

1.      The Court affirmed that the Copyright Act's "notice-and-notice" regime cannot be weaponized for litigation. This system allows copyright owners to send notices of alleged infringement to Internet Service Providers (ISPs), who must then forward them to the relevant subscribers. Voltage wanted to use this system not just to send a standard notice, but to serve a notice of a class-action lawsuit, a move the Court found was contrary to Parliament's intent. The regime is designed to deter infringement, not to corral thousands of individuals into a lawsuit while forcing ISPs to play an active role in the litigation.

2.      The Court ruled that a class action was not the "preferable procedure" for resolving these claims. The Court of Appeal relied on the recent decisions in Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association and Voltage Holdings, LLC v. Doe #1. The Court emphasized that merely being the subscriber of an internet account is not enough to prove copyright infringement. A copyright holder must prove that the subscriber themselves downloaded the files or exercised control over the person who did.

Because authorization claims require a highly individualized assessment for each and every respondent, the Court concluded that any "common questions" were insignificant, and the individual issues would "swamp" the common ones. Therefore, a class proceeding would do little to advance the proceeding or promote judicial economy.

The Court of Appeal dismissed Voltage's appeal and granted Mr. Salna's cross-appeal in part, varying the lower court's order to dismiss the certification motion entirely, without leave for Voltage to reapply. While this marks a crucial victory, the case could continue if the Supreme Court of Canada grants leave and agrees to hear a further appeal. In the meantime, individual actions continue against thousands of Canadians under the joinder rules.