Date: 20040330
Docket: T-822-03
Citation: 2004 FC 482
Toronto, Ontario, March 30th, 2004
Present: The Honourable Madam Justice Layden-Stevenson
BETWEEN:
VIDEO BOX ENTERPRISES INC. and
TVBO PRODUCTION LIMITED
Plaintiffs
and
ZHEN KUN PENG
Defendant
[1] The plaintiffs request summary judgment against the defendant pursuant to Rule 216 of the Federal Court Rules, 1998 SOR/98-106, as amended. The action is for copyright infringement with respect to certain Asian-language television programs. The plaintiffs allege that the defendant copied programs in VHS video cassette tape format, or imported infringing copies of the programs into Canada, or both, without authorization and then rented out the infringing programs from his personal residence.
[2] The plaintiff TVBO Production Limited (TVBOP) is the copyright owner of the programs. Video Box Enterprises Inc. (Video Box) is the active plaintiff in the proceedings. TVBOP is a party pursuant to subsection 36(2) of the Copyright Act, R.S.C. 1985, c. C-42. Video Box is a wholesale distributor of video products - its principal business consists of authorizing video retail stores throughout Canada, by way of licensing agreements, to rent programs to members of the general public in Canada. Video Box reproduces the programs in Ontario under licence and distributes them throughout Canada (excluding Quebec) to the authorized retail video stores for subsequent rental to the public. Video Box retains all duplication rights to itself.
[3] On June 13, 2003, the plaintiffs executed an Anton Piller order and removed 842 VHS video cassette tape copies of the programs from the defendant's home. The VHS copies of the programs were infringing copies. The plaintiffs also removed 15 of 20 videocassette recorders found on the premises.
[4] The defendant admits infringement and consents to most of the relief requested by the plaintiffs. The only triable issue is damages. The defendant asks that the issue of damages be dealt with summarily on this motion in order to minimize legal costs and expenses.
[5] The appropriate damages will therefore be determined. The plaintiffs do not seek exemplary damages.
[6] The purpose of damages for infringement of intellectual property rights is to compensate a plaintiff for loss or injury. The measure of damages is the normal tort measure, namely, the amount of money that is required to return a plaintiff to the position he or she would have been in had the wrong not occurred: General Tire & Rubber Co. v. Firestone Tyre and Rubber Co. Ltd., [1975] 2 All E.R. 173 (H.L.) (General Tire); Lightning Fastener Co. v. Colonial Fastener Co., [1936] 2 D.L.R. 194 (Ex. Ct.).
[7] Normally a plaintiff must prove the amount of the loss or injury caused by a defendant's infringement, but if a plaintiff is unable to do so, the court may still award damages, damages for copyright infringement if not proven being presumed and at large. In the latter circumstance, where the practice of a plaintiff is to grant licences for the use of the product, the court may award damages in the amount that a defendant would have paid for a licence had the defendant been acting legally rather than illegally: General Tire, supra; Chabot v. Davies, [1936] 3 All E.R. 221 (Ch.). This approach has been adopted and applied in Canada: Colonial Fastener Co. et al. v. Lightning Fastener Co., [1937] S.C.R. 36; Profekta International Inc. v. Lee (c.o.b. as Fortune Book and Gift Store) (1997), 75 C.P.R. (3d) 369 (F.C.A.) (Profekta); Hay and Hay Construction Co. Ltd. v. Sloan (1957), 27 C.P.R. 132 (O.H.C.); MCA Canada Ltd. - MCA Canada Ltée et al. v. Gillberry & Hawke Advertising Agency Ltd. et al. (1976), 28 C.P.R. (2d) 52 (F.C.T.D.); C.P. Koch Ltd. et al. v. Continental Steel Ltd. et al. (1984), 82 C.P.R. (2d) 156 (B.C.S.C.); Performing Rights Organization of Canada Ltd. v. 497227 Ontario Ltd. (1988), 21 C.P.R. (3d) 65 (F.C.T.D.)
[8] The Video Box licence period runs from April 30th to May 1st in any given year. The defendant did not have a licence from Video Box. The plaintiffs tendered evidence that depicts the value of licences for comparable Chinese-language video stores to which Video Box has granted licences. Evidence of infringement was first obtained late in the 2002-2003 licence period and the execution of the Anton Piller order occurred early in the 2003-2004 licence period. To arrive at a value of licence, the plaintiffs suggest an average of the value of an annual licence for both of the licence periods.
[9] The plaintiffs provided a list of comparables delineating licence values for each of the licence periods. At the hearing, counsel agreed that the licence in favour of Leisure Palace provided the most appropriate comparable. The defendant accepted it as such. The Leisure Palace licence for 2002-2003 had a value of $46,181.20 and of $50,799.32 for 2003-2004. The average of these amounts is $48,490.26, or $48,490.
[10] Thus, using that average, if the defendant were a licensee, it is said that Video Box would have charged him fees of $48,490. This number is based on the provision of 5 copies per program. However, Video Box, in the case of the defendant, did not incur the costs of reproducing the programs (material, labour, etc.), which amounts to $3.75 per copy. During each licence year, Video Box released approximately 580 tapes. The number of copies of each program removed from the defendant's residence was inconsistent. On average, the defendant was in possession of 3.82 copies of each volume of the programs when the Anton Piller order was executed. Rounding 3.82 to 4, the costs associated with reproduction would be 580 x 3.75 per copy for a total of $8,700. The reproduction costs, deducted from the licence value, result in a licence value of $39,790. On these calculations, the damages would be $37,790.
[11] The defendant argues that damages in the amount of $37,790 are tantamount to exemplary damages. Referring to the various factors considered in awarding exemplary damages, the defendant says that, with the exception of wilful disregard of the plaintiffs' rights, all factors militate against an award of exemplary damages. A pro-rated approach should be employed on the basis that it reflects actual use. Additionally, the defendant contends that it is common sense that the cost of a licence will increase by the number of tapes released. Leisure Palace, under the terms of its licence, received a minimum of 960 tapes. The defendant proposes, by reference to the cost of reproduction, that 210 tapes would have been released to him. This submission is based on the assumption that the number of copies per tape was calculated at 4 and when this is divided into the number of tapes seized (842), the result is that 210 tapes were released to the defendant.
[12] The differences in the proposed methods of calculation result in significant discrepancies. The plaintiffs' number comes in at $37,790 and the defendant's is under $4,000. I do not propose to conduct a microscopic examination in this regard. Damages are to be liberally assessed, since the defendant is the wrongdoer, keeping in mind that the assessment is intended to compensate a plaintiff rather than punish a defendant: General Tire, supra.
[13] The Federal Court of Appeal endorsed consideration of the extent and timing of a defendant's possession of tapes as an appropriate factor in assessing damages: Profekta, supra. Thus, the pro-rated approach urged by the defendant should be utilized. The plaintiffs, having calculated the number of copies for reproduction purposes as 4, must live with that number rather than 5, which is applicable to Leisure Palace. I am not prepared to reduce the number of tapes that were seized from 842 to 210 as proposed by the defendant. The plaintiffs comments regarding a pirate's cherry picking the cream of the crop for reproduction purposes are well taken. The defendant accepted Leisure Palace as the appropriate comparable. He offered neither evidence nor authority to support his submission that fine distinctions between the operations warranted the adjustment sought.
[14] The evidence establishes that the extent and timing of the infringement is a period of 5.5 months. I therefore determine that the appropriate licence fee is: $37,790 x 5.5/12 x 4/5 = $13,856 rounded to $13,850. On this basis, I find that the plaintiffs are entitled to damages in the amount of $13,850.
ORDER
IT IS HEREBY ORDERED THAT:
The plaintiffs will have summary judgment against the defendant Zhen Kun Peng in the terms set out in paragraph 1 of the statement of claim, specifically:
(a) a declaration that copyrights subsist in the programs (defined below) and that:
(i) TVBO Production Limited is the owner in Canada of the copyrights in the programs the titles of which are set out in Exhibit B to the affidavit of Jephu Cheng sworn February 11, 2004;
(ii) Video Box Enterprises Inc. has a right, title, and interest in the said copyrights protected by the Copyright Act;
(b) a permanent injunction restraining the defendant and his employees, servants, agents, assigns, successors, and all those over whom the defendant exercises control, and all those having knowledge of the order, from, directly or indirectly, infringing copyright in any of the programs, by reproducing all or a substantial part of the programs in a material form or by any one or more of the following means:
(i) selling or renting out; or
(ii) distributing to such an extent as to prejudicially affect the plaintiffs' respective
rights; or
(iii) by way of trade distributing, exposing or offering for sale or rental, or exhibiting in public; or
(iv) possessing for the purpose of doing any of those acts described in paragraphs (b) (i), (ii), or (iii) above; or
(v) importing into Canada for the purpose of doing any of those acts described in paragraphs (b) (i), (ii), or (iii) above, copies of the programs that infringe copyright or would infringe copyright if made within Canada by the person who made them and/or by
(vi) ordering, abetting, authorizing, or assisting others to do any one or more of the acts described in (b);
(c) forfeiture to the plaintiffs of all property seized by the plaintiffs during the execution of the order of the Federal Court dated May 28, 2003;
(d) delivery up at the defendant's expense:
(i) all infringing copies of the programs and all plates used or intended to be used in the production thereof, and
(ii) all related equipment and records as may be in the possession, power, custody or control of the defendant;
(e) damages for copyright infringement in the amount of $13,850;
(f) pre-judgment interest at a rate of 3.0% per annum from May 26, 2003 up to, but not including, the date of this order and post-judgment interest at a rate of 3.25% per annum from the date of this order;
(g) costs and disbursements in an amount to be assessed;
(h) Goods and Service Tax as may be payable pursuant to the Excise Tax Act, R.S.C. 1985, c. E-15, as amended, on any damages and costs awarded.
"Carolyn Layden-Stevenson"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-822-03
STYLE OF CAUSE: VIDEO BOX ENTERPRISES INC. and
TVBO PRODUCTION LIMITED
Plaintiffs
and
ZHEN KUN PENG
Defendant
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: MARCH 29, 2004
REASONS FOR ORDER
AND ORDER BY: LAYDEN-STEVENSON J.
APPEARANCES BY:
Mr. Gary McCallum FOR THE PLAINTIFFS
Mr. Edward Hung
FOR THE DEFENDANT
SOLICITORS OF RECORD:
Weisdorf, McCallum & Tatsiou
Barristers & Solicitors
Toronto, Ontario FOR THE PLAINTIFFS
Edward F. Hung
Barrister-at-Law
Toronto, Ontario FOR THE DEFENDANT
FEDERAL COURT
TRIAL DIVISION
Date: 20040330
Docket: T-822-03
BETWEEN:
VIDEO BOX ENTERPRISES INC. and
TVBO PRODUCTION LIMITED
Plaintiffs
and
ZHEN KUN PENG
Defendant
REASONS FOR ORDER
AND ORDER