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In December 2006, the Federal Court of Canada rendered a decision where it awarded $500,000 in damages for copyright infringement in the field of software. Copyright owners and those conducting business in the field of software will no doubt be interested in this development.

Statutory Damages in Canadian Copyright Law until now: Since October 1999, the owner of a copyright in a work can recover "statutory damages" ranging between $500 and $20,000 per work infringed for which proof of actual damages is not required. The utility of this option has been tempered by the following considerations:

• Statutory damages may be reduced to $200 per work infringed if the defendant can satisfy the Court that it was not aware or had no reasonable grounds to believe that it had infringed copyright.
• The $20,000 maximum has never, until now, been awarded.[1]

A Victory for Rightsholders: Against this backdrop, the decision rendered by the Federal Court on December 18, 2006 in Microsoft Corporation v. 9038-3746 Quebec Inc.[2] represents an important victory for copyright owners and a warning for those dealing in counterfeit software. The Court awarded the maximum amount of statutory damages ($20,000 for each of 25 works infringed, for a total of $500,000) and $200,000 in punitive damages against three of the four defendants.

The Facts of the Case: Two Canadian corporations and their principals, in the business of selling counterfeit Microsoft products, were found liable for copyright infringement. The Court found that the defendants had acted in bad faith, notably because Microsoft had warned them in 1998 that they were distributing counterfeit products. The Court determined that the maximum award of statutory damages would deter other infringers.

Tips from the Court: In rendering its decision, the Court highlighted a number of practices which are often put forward in anti-counterfeiting cases. For example, the Court noted the following factors which led it to conclude that the principals were personally liable for copyright infringement:

• that they accepted unwritten assurances from their suppliers (without further inquiry) that the counterfeit goods were authentic and that they were therefore wilfully blind;
• that the prices at which they were purchasing the counterfeit items in question were "extremely low", and
• that their examination of the items in question was "cursory" at best.

This case is not yet over: the defendants have appealed to the Federal Court of Appeal.

At Ogilvy Renault, we provide practical advice tailored to the business client. Please do not hesitate to contact us should you need any assistance in registering or enforcing your copyrights or for any other intellectual property matter.

Louis Gratton

[1].    The maximum amount of statutory damages per work infringed which had previously been awarded in Canada was $10,000 for a single literary work (See Wing v. Van Velthuizen, [2000] F.C.J. No. 1940). The highest award of cumulative statutory damages until recently was $301,350 or $150 per work infringed where 2,009 individual television program episodes or clips were at issue. (See Telewizja Polsat S.A. v. Radiopol Inc., 2006 FC 584).

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