SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 09-46989

RE: ATTORNEY GENERAL OF CANADA – Plaintiff v. MADELEINE RUNDLE c.o.b. NEC PLUS ULTRA - Defendant

BEFORE: Mr. Justice Martin James

COUNSEL: Gregory S. Tzemenakis, Leah Garvin for the Attorney General of Canada

HEARD: April 2, 2014

ENDORSEMENT

[1] This is an uncontested assessment of damages for breach of copyright. The Defendant was present but pursuant to a separate endorsement was not permitted to participate as her statement of defence was previously struck. The Plaintiff obtained summary judgment before Beaudoin J. on April 18, 2013 reported at 2013 ONSC 2747 who determined the liability issues in favour of the Plaintiff and directed that the Plaintiff’s damages be determined at trial. The applicable facts are fully set out in Justice Beaudoin’s decision.

[2] The Defendant in this case provided language training services directed at assisting federal government employees pass various language proficiency tests for bilingual positions within the federal public service. The tests evaluated both French and English language skills, including oral and written competency and reading comprehension.

[3] Responsibility for all aspects of the evaluation of language skills rests with the Public Service Commission (“PSC”). Considerable effort is made to maintain the integrity of the evaluation system and the confidentiality of the tests. Here the Defendant service provider ignored the Crown copyright, assisted students to cheat by providing training for specific test questions that were supposed to be confidential and attempted to suppress the fact that the Defendant had advance knowledge of test questions.

[4] Beaudoin J. made the following findings:

(i) the Defendant knew that the evaluation tests were confidential and protected by copyright;

(ii) the Defendant collected test information from her students after they completed the PSC’s second language evaluation;

(iii) the Defendant requested that the students destroy preparation material provided by the Defendant when the students were finished using it;

(iv) the Defendant surreptitiously obtained confidential test materials and used them for financial gain;

(v) after the PSC implemented replacement tests following the discovery of the Defendant’s activities, the Defendant continued to harvest test information from her students and provide training to the new tests.

[5] In testimony before me Robert McSheffrey, Director of Assessment and Counselling Services, stated that the Defendant’s students achieved exemption status, the highest rating available, at a rate eleven times greater than other candidates and that the Defendant’s students achieved perfect scores at a frequency rate more than forty times greater than other candidates.

[6] The PSC incurred substantial costs in designing and implementing replacement tests when it became apparent that the integrity of six different tests had been compromised. New online versions had to be created as well. About fifty people were engaged in different aspects of replacing the compromised tests.

[7] The Plaintiff says the Crown is entitled to damages from breach of copyright, breach of confidence and punitive damages, but is requesting only statutory damages for breach of copyright and punitive damages.

[8] Section 38.1(1),(5) and (7) of the Copyright Act R.S.C., 1985, c. C-42 provides in part as follows:

38.1(1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for all infringements involved in the proceedings, with respect to any one work or other subject-matter, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $500 or more than $20,000 as the court considers just.

(5) In exercising its discretion under subsections (1) to (4), the court shall consider all relevant factors, including

(a) The good faith or bad faith of the defendant;

(b) The conduct of the parties before and during the proceedings; and

(c) The need to deter other infringements of the copyright in question.

(7) An election under subsection (1) does not affect any right that the copyright owner may have to exemplary or punitive damages.

1997, c. 24, s. 20.

[9] The Plaintiff seeks the maximum damages of $20,000 for each of the six tests that were compromised and replaced. In addition, the Plaintiff seeks punitive damages of $15,000.

[10] In Microsoft Corporation v. 9038-3746 Quebec Inc., 9014-5731 Quebec Inc. v. Adam Cerrelli and Carmelo Cerrelli, 2006 FC 1509, Harrington J. granted the maximum statutory damages for each of the twenty-five infringements for a total of $500,000 from three Defendants where the Defendants’ estimated profit was 1.8 million dollars.

[11] In Louis Vuitton Malletier S.A. and Louis Vuitton Canada Inc. v. Lin Pi-Chu Yang et al. doing business as K2 Fashions, Yan et al., 2007 FC 1179, Snider J. awarded the maximum amount for two infringements for a total of $40,000, plus punitive damages of $100,000 on an estimated annual profit of between $90,000 to $135,000 over an eighteen month period.

[12] In Trout Point Lodge Ltd. v. Handshoe 2014 NSSC 62 Coady J. granted the maximum amount for each of the four infringing photographs for a total of $80,000, plus punitive damages of $100,000 where the Defendant had used the photos in the context of an internet campaign to damage, harass and embarrass the Applicants in breach of a court order.

[13] In Louis Vuitton Malletier S.A. and Louis Vuitton Canada, Inc. v. 486353 B.C. Ltd., 2008 BCSC 799, 2008 B.C.S.C. 799, Boyd J. awarded the maximum amount for each of five infringements, plus punitive damages totaling $100,000 against the three Defendants and $200,000 against another Defendant. In this case the Defendants continued to sell counterfeit goods from at least four locations for several years in direct breach of a court order.

[14] In Setanta Sports Canada Limited v. 840341 Alberta Inc., 2011 FC 799, O’Reilly J. awarded $10,000 for each of two breaches where the Defendants infringed on the Plaintiff’s copyright respecting pay per view broadcasts of sporting events.

[15] In Microsoft Corporation v. 1276916 Ontario Limited et al., 2009 FC 849, Mandamin J. awarded statutory damages of $10,000 for each of eight infringements and punitive damages of $50,000 in an undefended action after a cease and desist letter was sent and where the infringement activity continued after the action was commenced.

[16] While it is clear that punitive damages are available in addition to an award of statutory damages, it appears there is some overlap between clauses (a) and (b) of subsection 38.1(5) and the considerations that inform an entitlement to punitive damages. Subsection 38.1(5) specifically refers to the question of the conduct of the parties and the possibility that the infringer acted in bad faith. Punitive damages also address serious misconduct. The possibility of such an award becomes engaged where there are “advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own.” (See Keays v. Honda Canada Inc., 2008 SCC 39, [2008] 2 S.C.R. 362 at para. 62)

[17] In my view, on the specific facts of this case, including the important role of deterrence as a factor in assessing damages in copyright cases, statutory damages are sufficient without awarding an additional amount for punitive damages.

[18] In considering the appropriate amount to award for damages, I note that there is no information respecting the Defendant’s sales volumes or the amount of profit generated by the infringing activity. In addition, there is no clear evidence that any infringements continued after the injunction granted by R. Smith J. in 2012. Profit improperly gained through copyright infringement and deliberate defiance of court orders can be aggravating factors in assessing damages.

[19] The consideration of relevant factors leads me to conclude that damages of $7,500 ought to be imposed in relation to the breach of copyright associated with each of the tests referred to as F630C1, F630D2, F650D2 and F651A1. With regard to tests F632B1 and F653B2, the evidence disclosed that these were replacement tests implemented after the PSC initially ascertained that the copyright and confidentiality of certain tests had been compromised.

[20] It appears that the Defendant continued her infringing activity after replacement tests were put in use. This fact justifies a higher assessment of damages in relation to these tests and I am persuaded that the appropriate amount should be $15,000 for the breach of copyright in relation to each of these tests.

Disposition

[21] The Plaintiff is entitled to statutory damages totaling $60,000.

[22] On the issue of costs, the Plaintiff has delivered a bill of costs for $9,790.07 on a partial indemnity basis and $16,102.90 on a substantial indemnity basis. It was difficult to determine the hourly charge out rates utilized in the preparation of the bill. The trial required a half day. Substantial indemnity costs awards are not the norm and an award of costs on this scale is usually reserved for exceptional cases. Here the fact of wrongful conduct is reflected in the calculation of statutory damages. This case is not so exceptional that a departure from the usual practice of awarding costs in a partial indemnity basis is warranted. Costs to the Plaintiff, payable by the Defendant, are fixed in the amount of 9,800.00, inclusive of disbursements and HST.

Mr. Justice Martin James

Date: April 9, 2014

COURT FILE NO.: 09-46989

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: ATTORNEY GENERAL OF CANADA

Plaintiff

AND

MADELEINE RUNDLE c.o.b. NEC PLUS ULTRA

BEFORE: Mr. Justice Martin James

COUNSEL: Gregory S. Tzemenakis, Leah Garvin, for the Plaintiff

Madeleine Rundle c.o.b. Nec Plus Ultra, Self-Represented

ENDORSEMENT

James J.

Released: April 9, 2014