News / Canada

Canadians have 'no obligation' to U.S. piracy firm

An L.A. company is asking thousands of Canadians to cough up hundreds of dollars each for illegally downloading videos, taking advantage of recent changes to the Canadian Copyright Act.

CEG TEK, an anti-piracy firm that works on behalf of content owners, has been emailing notices to Canadians via Internet service providers (ISPs). The notices accuse recipients of piracy and offer them settlements, ranging from $150 to $450, to “prevent legal action.” The ISP TekSavvy, along with several recipients, have recently posted copies of these types of notices to an online forum.

But while the notices don’t violate Canadian law, “there is no obligation for Canadians to pay these settlements,” said Jake Enwright, press secretary for Industry Canada Minister James Moore. He added that the ministry’s aim is to combat online piracy not by penalizing consumers but by educating them that the practice is illegal and hurts content producers.

In Canada, the maximum penalty for digital copyright infringement is $5,000, and the only way content owners can track piracy is through the anonymous IP addresses, the uniquely assigned identifiers of internet connections. ISPs have said they will only hand over clients’ identities under court order.

In an email interview, Kyle Reed, chief operating officer at CEG TEK, wouldn’t confirm how many emails the firm has sent to Canadians or how many recipients have opted to settle. But Bram Abramson, chief legal and regulatory officer at TekSavvy, which has 250,000 customers, said his company forwards approximately 1,300 notices a day — more than half of which are from CEG TEK.

Through the end of 2014, copyright holders or their representatives could send infringement notices to ISPs, but the ISPs were not legally required to forward the notices to their customers. That changed on Jan. 1, when an updated Copyright Act demanded that all infringement notices be forwarded.

What’s more, there is no fee associated with sending these emails, despite lobbying efforts from the ISPs, which Abramson said would prevent sending out huge numbers of emails. Ultimately, the cost of setting up auto-forwarding and monitoring services for these notices was pushed onto the ISPs, who will ultimately pass these costs on to consumers, according to Michael Geist, a research chair in Internet and e-commerce law and professor at the University of Ottawa.

CEG TEK, which began operating in Canada on Jan. 2, 2015, has been active in the U.S. since 2009. It made the news last September when it sent out a blitz of emails on behalf of Millennium Films, going after people who illegally downloaded The Expendables 2 and 3, asking for upwards of $300 in settlements, according to media reports. How many people chose to settle remains unknown. Reed said the data is proprietary.

Reed claims CEG TEK’s model is the only proven method to decrease content piracy, and that it's working — he pointed to a reduction in clients’ content downloaded here in Canada. “We are unaware of any law or regulation that prohibits presenting a settlement opportunity, and we are unaware of anyone at Industry Canada ever asserting that a notice from CEG TEK was in any way in violation of Canada law,” he added.

Stephen Ellis, the co-chair of the copyright committee at the Canadian Media Producers Association, which fought for stricter changes to the Copyright Act, said going after consumers for a few hundreds dollars isn’t the way to curtail piracy — rather, he said, efforts should be geared at those profiting from the pirated material by posting them online in the first place.

Enwright said the ministry spoke to CEG TEK more than a month ago to “better inform them of what the rules are in Canada,” emphasizing the current system is a “not a notice-and-settlement regime.”

Enwright said there are no plans to close the loopholes in the current copyright law to deter this practice of demanding settlements, and the government is instead waiting on the industry to come up with an appropriate solution.