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Canada: Significant damages awarded for circumvention of TPMs

On March 1 of this year, Canada's Federal Court rendered its judgment in Nintendo of America Inc v Jeramie Douglas King and Go Cyber Shopping (2005) Ltd (2017 FC 346). This landmark decision offers the first substantive consideration of the technological protection measure (TPM) provisions of Canada's Copyright Act since their enactment in 2012.

In 2012, Canada's Parliament passed a package of amendments to Canada's Copyright Act including new provisions defining TPMs and proscribing various acts related to the circumvention thereof, in line with the "technological measures" sections of the WIPO Internet Treaties.

In this case, Nintendo alleged that Go Cyber Shopping circumvented, offered services to circumvent, and trafficked in devices, namely so-called game copiers and mod chips, which circumvent various measures used by Nintendo to control access to its copyright works, including games for its Nintendo DS, 3DS and Wii consoles. Nintendo also alleged secondary copyright infringement in relation to certain copyrighted header data that needs to be stored on the game copiers in order to circumvent certain of the TPMs.

In its decision, the Court found that each of the measures used by Nintendo, including the physical configuration of its game cartridges, was a TPM within the meaning of the relevant provisions of the Copyright Act and that Go Cyber Shopping had engaged in circumvention of those TPMs as alleged. In finding liability for these actions, the Court rejected arguments by Go Cyber Shopping that its actions fell within the interoperability exception in the Act merely because of a tenuous assertion, unsupported by evidence, that Go Cyber Shopping's wares could be used in relation to homebrew games.

Nintendo elected to receive statutory damages. This required the Court to consider whether the statutory damages provisions of the Act provided for damages to be calculated based on the number of TPMs circumvented or based on the number of works to which the circumvention grants unauthorised access. The Court preferred the latter conception and awarded Nintendo maximum damages of C$20,000 ($15,000) for each of the 585 copyrighted games at issue for a total of C$11.7 million in damages for circumvention.

The Court also found for Nintendo on the secondary infringement claim and awarded C$60,000 in damages for that claim. In addition, the Court awarded C$1 million in punitive damages, resulting in total damages of C$12.76 million ($9.58 million). Nintendo was also awarded pre- and post-judgment interest and its costs. Finally, the Court granted a wide injunction against Go Cyber Shopping.

This decision makes clear that the TPM provisions of Canada's Copyright Act encompass the broad scope of measures that rights holders may use to protect their digital works. More particularly, this judgment signals that Canada's Federal Court is willing to enforce the TPM provisions and to make appropriate awards recognising the severity of the circumvention of those measures.

Neil Padgett

Smart & Biggar/ Fetherstonhaugh
55 Metcalfe Street Suite 900
PO Box 2999 Station D
Ottawa ON  K1P 5Y6
Tel: 613 232 2486
Fax: 613 232 8440 

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