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Pre-Loaded Prevention: Interlocutory Injunction Restrains Sale of Television Plug-and-Play Boxes

There is an emerging phenomenon in the Canadian market of pre-loaded “plug-and-play” set-top. The boxes have several legal uses, such as effectively transforming standard televisions into “smart TVs”. However, they are also used to access protected content using online streaming websites and come pre-loaded with the software necessary to do so with ease.

Bell Canada et al. v 1326030 Ontario Inc. dba et al., 2016 FC 612 is a copyright infringement action by various Canadian broadcasters against the companies that sell these set-top boxes. The plaintiffs moved for, and received, an interlocutory injunction restricting the defendants to selling and advertising only set-top boxes containing legal, non-copyright-infringing applications until judgment on the case’s merits.

The Court went through the standard tripartite test for an interlocutory injunction established by the Supreme Court in RJR-MacDonald First, Justice Tremblay-Lamer held there were serious issues to be tried. The Copyright Act gives the plaintiffs exclusive rights, amongst other things, to communicate their programs to the public by telecommunication via television broadcast. Justice Tremblay-Lamer rejected the Defendant’s argument that their actions were shielded by paragraph 2.4(1)(b) of the Copyright Act, holding that this statutory defence does not apply to Defendants that go above and beyond merely providing a means of telecommunication, by being “directly engaged in the content which users will have access to” Since the defendants advertise their products as a way to access free television and to eliminate the need for a cable subscription and allow people to stream or download programs and store them on the device without authorization, there is prima facie copyright infringement.

Second, the Court held the plaintiffs would suffer irreparable harm without an injunction. Citing Geophysical Service Incorporated, the Court found that a strong finding on one part of tripartite injunction test may lower the threshold on the other two prongs. Regardless, the market for pre-loaded set-top boxes is growing and continued sales would “place devices in the hands of consumers which the plaintiffs, even if successful at trial, will not be able, in most cases, to locate or to effectively restrain from accessing copyrighted content.” The loss of actual and potential customers constitutes irreparable harm. Moreover, the Court found that the defendants were unlikely to have the financial resources required to compensate the plaintiffs for their losses should the plaintiffs succeed at trial.

Third, the Court held the balance of convenience favours the plaintiffs as the defendants would not unduly suffer from being restricted to selling and advertising only legal, non-copyright-infringing applications until this Court’s decision on the merits. All plaintiffs also provided the usual undertaking to abide by any damage award made arising out of any improper execution of the requested orders.

A copy of the judgment can be found here.