Court File and Parties
COURT FILE NO.: CV-17-580401-00CL DATE: 20180801 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
DISH NETWORK L.L.C., AL JAZEERA MEDIA NETWORK, ASIA TV USA LTD., B4U U.S. INC., GEO USA LLC, MBC FZ LLC, MSM ASIA LTD., SOUNDVIEW BROADCASTING LLC, SOUNDVIEW ATN LLC, STAR INDIA PRIVATE LTD., and VIACOM18 MEDIA PRIVATE LIMITED Plaintiffs – and – SHAVA IPTV NETWORK LLC, IMRAN BUTT AND NAEEM BUTT, INDIVIDUALLY AND TOGETHER DOING BUSINESS AS SHAVA TV, CRES IPTV, IRAA ENTERPRISES AND MAPLE ELECTRONICS Defendants
Counsel: Ira Nishisato and Ashley Thomassen, for the Plaintiffs Charles Wagman and Susan Zakaryan, for the Defendants Imran Butt and Naeem Butt
HEARD: May 7, 2018
L. A. PATTILLO J.:
Introduction
[1] The Plaintiffs seek summary judgment to recognize and enforce in Ontario a U.S. Judgment Order dated January 24, 2017 (the “Judgment Order”) granted against the defendants Imran Butt (“Imran”) and Naeem Butt (“Naeem”) (collectively the “Defendants”) by the Honourable T.S. Ellis, III, United States District Judge, in the United States District Court for the Eastern District of Virginia (the “U.S. Court”).
[2] For the reasons that follow and based on the evidence and the issues raised, I am satisfied that there is no genuine issue requiring a trial and that summary judgment should issue enforcing the Judgment Order in Ontario. The law concerning enforcement of foreign judgments is well settled. The Judgment Order is clear and unambiguous and there are no available defences to its enforcement. As a result, I am satisfied that summary judgment is a proportionate, expeditious and the most cost-effective way to resolve the action.
Background
[3] On June 5, 2015, the plaintiffs filed a Complaint in the U.S. Court against Imran, among others, alleging copyright infringement, trademark infringement and unfair competition (the “U.S. Claim”). The U.S. Claim alleged that the defendants unlawfully captured and transmitted broadcasts of the plaintiffs’ television channels through an interactive, commercial website and were unlawfully using the plaintiffs’ unique logos and marks. The plaintiffs claimed statutory damages and a permanent injunction enjoining the defendants from further copyright infringement and a permanent injunction enjoining the defendants from further copyright and trademark infringement.
[4] On January 11, 2016, the plaintiffs issued an Amended Complaint in the U.S. Court adding Naeem as a defendant.
[5] Imran was served with the U.S. Claim, Summons and other documents pursuant to The Convention on the Service Abroad of Judicial and Extrajudicial Documents (“The Hague Service Convention”) on July 6, 2015, by transmitting the documents to the Central Authority for Ontario, which in turn effected service by having a Court Enforcement Officer for the County of Simcoe leave the documents in a sealed envelope at Imran’s residence in Bradford, Ontario with his wife, and by mailing a copy to him at the same address.
[6] On or about February 10, 2016, Naeem was served with the Amended U.S. Claim, Amended Summons, and other documents under The Hague Service Convention by having a process server leave the documents in a sealed envelope at Naeem’s residence in Brampton, Ontario, with his mother-in-law. On February 12, 2016, the process server again attended at Naeem’s residence and served the documents in a sealed envelope with a person, “John Doe”, who appeared to be an adult member of the household, and by mailing a copy to Naeem at the same address.
[7] Neither Imran nor Naeem filed a defence to the U.S. Claim. On September 25, 2015, the Clerk of the U.S. Court entered default judgment against Imran. On March 9, 2016, the Clerk of the U.S. Court entered default judgment against Naeem.
[8] On June 24, 2016, the plaintiffs’ motion for default judgment against Imran and Naeem was heard by Magistrate Judge Davis of the U.S. Court. On September 15, 2016, Magistrate Judge Davis issued a Report and Recommendation which reviewed the U.S. Court’s jurisdiction and venue, the service of process on Imran and Naeem and the grounds for default. Following findings of fact from the pleadings, the Magistrate Judge then reviewed the claims for copyright and trademark infringement and unfair competition and the requested relief for statutory damages and a permanent injunction. In conclusion, Magistrate Judge Davis recommended entry of default judgment in favour of the plaintiffs against Imran and Naeem for copyright infringement, trademark infringement and unfair competition and found the plaintiffs were entitled to maximum statutory damages “for each of its 171 registered works, in the amount of $25,650,000”. Magistrate Judge Davis further concluded that the plaintiffs were also entitled to a permanent injunction enjoining Imran and Naeem from further infringing on their exclusive rights in their copyrights and trademarks.
[9] On January 24, 2017, the Judgment Order was issued and provided, among other things,
a. That judgment is entered by default in favour of the Plaintiffs MSM Asia Ltd., Viacom18 Media Private Limited, and Star India Private Ltd., and against the Defendants Imran Butt and Naeem Butt, for statutory copyright damages under U.S.C. 504(c)(1)-(2) in the amount of (1) $23,850,000 USD for the plaintiff MSM Asia Ltd., consisting of $150,000 USD for each of its 159 registered works; (2) $1,350,000 USD for the plaintiff Viacom18 Media Private Limited, consisting of $150,000 USD for each of its nine registered works; and (3) $450,000 USD for the plaintiff Star India Private Ltd., consisting of $150,000 for each of its three registered works; and
b. That the Defendants Imran Butt and Naeem Butt are permanently enjoined from further infringing on the Plaintiffs Al Jazeera Media Network; Asia TV USA Ltd., B4U U.S. Inc., GEO USA LLC, Impress Telefin Inc., MBC FZ LLC, MSM Asia Ltd., Soundview Broadcasting LLC, Soundview ATN LLC, Star India Private Ltd., Viacom18 Media Private Limited, and Dish Network LLC’s exclusive rights in their copyrights and trademarks.
[10] Under U.S. law, the Judgment Order is a final judgment which ends the litigation. Further, pursuant to rule 4(a)(1)(A) of the Federal Rules of Appellate Procedure, the time for appeal of the Judgment Order expired on February 23, 2017 and neither of the Defendants appealed.
Legal Principles Governing Enforcement of Foreign Judgments
[11] The factors which must be satisfied in actions to recognize and enforce foreign judgments had been established by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Beals v. Saldahna, [2003] 3 S.C.R. 416; and Pro Swing Inc. v. ELTA Golf Inc., [2006] 2 S.C.R. 612. Specifically, the court must be satisfied:
i. That the foreign court properly exercised jurisdiction in the action in that it had a real and substantial connection with either the subject matter of the action or the defendant;
ii. The Judgment must be final and conclusive; and
iii. Whether any of the defences available to a domestic defendant, namely fraud, public policy or lack of natural justice, are available to the defendant.
[12] In Pro Swing, the Supreme Court of Canada recognized the ability of Canadian courts to enforce foreign judgments with respect to non-monetary and equitable relief, such as injunctions. The factors to consider in enforcing such relief include:
a) whether the terms of the order are clear and specific enough to ensure that the defendant will know what is expected from him or her;
b) whether the order is limited in its scope; and whether the originating court retained the power to issue further orders;
c) whether the enforcement is the least burdensome remedy for the Canadian justice system;
d) whether the Canadian litigant is exposed to unforeseen obligations;
e) whether there are any third parties affected by the order; and
f) whether the use of judicial resources are consistent with what would be allowed for domestic litigants.
The Issues
[13] In defence of the motion before me, Imran and Naeem raise three issues:
Did the U.S. Court properly assume jurisdiction against them;
Is the defence of fraud available to them; and
Was there a denial of natural justice to Imran and Naeem on the basis that they were not properly served with the Amended Complaint?
Analysis
1) Jurisdiction
[14] The Defendants submit that the U.S. Court did not have jurisdiction over them and that accordingly this court should refuse to enforce the Judgment Order.
[15] Imran and Naeem do not submit that the U.S. Court did not have subject matter jurisdiction over the U.S. Claim. Rather they submit that the U.S. Court did not have personal jurisdiction over them. In essence they submit that the evidence does not establish a “real and substantial connection” between them and the State of Virginia.
[16] The evidence establishes the U.S. Court had subject matter jurisdiction over the U.S. Claim pursuant to 28 U.S.C. §§ 1331 and 1338(a) because the plaintiffs asserted claims under the Copyright Act, 17 U.S.C. § 101 et seq. and Lanham Act, 15 U.S.C. § 1051 et seq. Further, the U.S. Court was the proper venue as the Defendants were not residents of the United States and thus “may be sued in any judicial district” under 28 U.S.C. § 1391(c)(3).
[17] In his Report and Recommendation, Magistrate Judge Davis notes the above basis for both subject matter jurisdiction and venue. With respect to personal jurisdiction, he finds that both Imran and Naeem were properly served pursuant to The Hague Service Convention and Rule 4 of the Federal Rules of Civil Procedure. He further states:
For this court to exercise personal jurisdiction over Defendants, who are non-residents, the process requires that they have sufficient minimum contacts with the Commonwealth of Virginia such that jurisdiction over them would comport with “traditional notions of fair play and substantial justice”. Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945). Furthermore, Defendants must be properly served with process under federal or state law. See Omni Capital Int’l, Ltd. v Rudolf Wolff & Co., 484 U.S. 97, 104 (1987).
Defendants repeatedly reached into Virginia to transact business in the State. (See Dkt. No. 108, at 4-5). Because of the extent of the Defendants’ contacts with this forum, they could have reasonably anticipated being hailed into court to answer the injury caused in the forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (stating that whether the defendant could “reasonably anticipate being hailed into court” in the forum is critical to the due process analysis). Therefore, it comports with due process for this Court to exercise personal jurisdiction over Defendants.
[18] There was evidence before the Magistrate Judge to support his finding that the Defendants “repeatedly reached into Virginia to transact business in the State.” Specifically:
a) www.shavatv.com (“Shavatv.com”), an interactive, commercial website through which users, including those located in Virginia, purchased Shava TV set-top boxes, was owned and operated by the Defendants;
b) the Defendants appointed their family member and business partner, Nadeem Butt, a Virginia resident, as their exclusive distributor of the Shava TV set-top boxes in the United States, which enabled fulfilling of orders for set-top boxes purchased through the Defendants’ website Shavatv.com and working with sub-distributors in the United States;
c) on Shavatv.com, the Defendants listed 11 sub-distributors for Shava TV set-top boxes and services in Virginia;
d) Imran and Naeem leased servers in Virginia with Leaseweb USA, Inc, a web hosting service in Virginia to retransmit the plaintiffs’ channels which was the infringing content that was the subject of the Judgment Order;
e) at least 193 customers with a Virginia shipping address purchased Shava TV product from the Defendants’ distributor in the United States. The majority of these transactions appeared to have been completed through the Defendants’ website, Shavatv.com.
f) Imran and Naeem both sold Shava TV products to customers in Virginia and received payments for the products through their personal PayPal accounts. Naeem sold products to at least 205 customers in Virginia and Imran to at least 10 customers having a Virginia address.
[19] The Defendants submit that the test is not the basis upon which the U.S. Court assumed jurisdiction. Rather, the evidence must establish that they had a “real and substantial connection” with Virginia. I agree with that submission. Based on the evidence, however, I am satisfied that the Defendants had a “real and substantial connection” with Virginia as that term is discussed in Morguard, Beals and Pro Swing.
[20] In Beals, Major J., on behalf of the majority, described the “real and substantial connection” test as follows at para. 32:
The “real and substantial connection” test requires that a significant connection exist between the cause of action and the foreign court. Furthermore, a defendant can reasonably be brought within the embrace of a foreign jurisdiction’s law where he or she has participated in something of significance or was actively involved in that foreign jurisdiction. A fleeting or relatively unimportant connection will not be enough to give a foreign court jurisdiction. The connection to the foreign jurisdiction must be a substantial one.
[21] Given the nature of the business which the Defendants were operating via the internet, in my view, the above noted connections and transactions in Virginia were more than sufficient to establish a real and substantial connection with Virginia. The Defendants’ connection with Virginia was not unimportant nor were their contacts fleeting. In particular, they leased servers in Virginia to retransmit the infringing content and engaged in significant sales in Virginia.
[22] The Defendants submit that the analysis of the “real and substantial connection” test should be based on the Supreme Court’s decision in Van Breda v. Village Resorts Ltd., [2012] 1 S.C.R. 572. But as Gascon J. states in Chevron Corp. v. Yaiguaje, [2015] 3 S.C.R. 69, at paras. 38 to 41, nothing in Van Breda altered the jurisdictional inquiry in actions to recognize and enforce foreign judgments as established by the court in Morguard, Beals and Pro Swing.
[23] Based on the evidence, I conclude that the U.S. Court had jurisdiction over the Defendants.
2) Fraud
[24] The Defendants rely on the defence of fraud to defeat the plaintiffs’ action. They submit that the plaintiffs failed to advise the U.S. Court of facts relating to the ownership of the website Shatvatv.com which would likely have resulted in the U.S. Court declining jurisdiction over them. They submit that the plaintiffs misled the U.S. Court into believing that the Defendants owned and operated the website.
[25] The Defendants submit that the plaintiffs knew that the defendant Shava IPTV Network LLC was not in existence and did not own or operate the website Shatvatv.com. Rather, it was owned and operated by Good Ace Limited, a Hong Kong corporation which Naeem was the sole director and shareholder of.
[26] Inram admits that he set up Shavatv.com and purchased its domain name which was registered in his name, prior to the formation of Good Ace. Further, in a letter to the plaintiffs’ attorney dated July 20, 2015, shortly after being served with the U.S. Claim, Imran, on behalf of himself and Shava TV, take issue with the U.S. Claim and jurisdiction of the U.S. Court. Inram, who identifies himself as “Sales manager for Shava”, ends the letter as follows:
Here, without prejudice to its rights and without limitations, ShavaTV requests that the Plaintiffs may not use this complaint to intimidate our users or resellers. And it is further noted that ShavaTV reserves the right to seek appropriate damages for any economic loss incurred by this action on your client’s behalf.
[27] Nor have the Defendants addressed or denied the evidence that they controlled the web servers in Virginia that were used to transmit the infringing content and each sold ShavaTV products to persons in Virginia as reflected in their personal PayPal accounts. As the plaintiffs have established, those facts alone establish a clear basis for both personal jurisdiction and liability under U.S. law.
[28] Based on the evidence, I am satisfied that the plaintiffs did not mislead the U.S. Court into assuming jurisdiction over the Defendants. As a result, the Defendants defence of fraud is dismissed.
3) Denial of Natural Justice
[29] The Defendants submit they were denied natural justice by not being properly served with the originating documents in the U.S. Claim.
[30] In Imran’s case, he submits that he was not served with the Amended Complaint joining Naeem.
[31] The original U.S. Claim and the Amended U.S. Claim are substantially the same with the exception of paragraph 28 which adds Naeem as a defendant. Under Fed. R. Civ. P. 5(a)(2) and US case law (Carbajal v. Queirolo, No. 1:10-CV-00009 (GBL/IDD), 2011 WL 7444704, at *3 (E.D. Va. Sept 8, 2011), adopted at 2011 WL 4434857 (E.D. Va. Sept 20, 2011)), and similar to our Rules, the Plaintiffs were not required to serve the Amended U.S. Claim on Imran because he was in default and the claims against him did not change from those in the original U.S. Claim.
[32] Naeem says that the Amended U.S. Claim was never served on him personally and never came to his attention.
[33] Following an unsuccessful attempt on February 10, 2016 to personally serve Naeem with the Amended U.S. Claim, the Amended Summons and other documents at his residence in Brampton, Ontario, the process server left the documents with Fazilat Butt who identified herself as Naeem’s mother-in-law and confirmed that Naeem resided at that address. The process server returned to Naeem’s residence two days later but was again unable to effect personal service. At that time, he/she left the documents with an adult male who did not identify himself but acknowledged that he was a member of the household. The process server described the individual in the affidavit of service. Following the second visit and on the same day, the process server sent a copy of the documents by prepaid first class mail to Naeem at his address.
[34] In response, Naeem says his mother-in-law was only visiting for a few days, doesn’t speak English, didn’t mention the visit to him or give him any documents. He denies that she was a member of his household. He also states that he does not know the “John Doe” the process server spoke with on the second visit and that no person with the description provided is a member of his household. He says he never received any documents.
[35] As noted, Naeem was served with the Amended U.S. Claim, the Amended Summons and other documents in accordance with Article 5 of The Hague Service Convention. As a contracting, non-objecting state, service of legal documents in Canada from a party state can be effected in accordance with our Rules of Civil Procedure (Article 10 of The Hague Service Convention) which is what occurred in respect of Naeem.
[36] I am satisfied from the evidence that Naeem was properly served with the Amended U.S. Claim and the other originating documents in accordance with our Rules of Civil Procedure and specifically rule 16.03(5) which provides for an alternative to personal service where, as here, personal service cannot be effected at a person’s residence. Naeem does not deny that the address where service was affected is his place of residence. Given the evidence of the process server, which I accept, if the documents did not come to Naeem’s attention, the fault lies with his household rather than a failure of service.
[37] I also have difficulty accepting his evidence that the Amended U.S. Claim never came to his attention. In addition to the originating process which was either left at or mailed to his residence, the evidence is that the Plaintiffs continued to serve both Imran and Naeem with numerous documents in the U.S. Action by sending them by prepaid, first class U.S. mail to their home addresses. These documents included the Request for Entry of Default, the Motion for Default Judgment, the Proposed Order for Judgment and Permanent Injunction, the Plaintiffs’ Memorandum in support of the Motion for Default Judgment and the Notice of Hearing for the Motion for Default Judgment. In addition, under the direction of the U.S. Court, the Report and Recommendation of Magistrate Judge Davis was also sent to them by mail. None of the documents were returned.
[38] Further, on April 10, 2016, Inram wrote a letter to both District Judge Ellis and Magistrate Judge Davis, approximately two months after service was effected on Nadeem, objecting to jurisdiction and venue, in part on behalf of Naeem as well as Imran, which indicates clearly, in my view, that Imran and likely Naeem were aware of the U.S. Claim against them.
[39] For the above reasons, therefore, I am satisfied that both Imran and Naeem were properly served with the originating documents in the U.S. Claim. There was no denial of natural justice to either of them.
Enforcement of the Injunction
[40] Having regard to the provisions of the Judgment Order enjoining the Defendants, I am satisfied that the factors set out in Pro Swing relating to the enforcing of non-monetary judgments weigh in favour of recognizing and enforcing the injunction against the Defendants.
[41] The findings of fact and recommendation of Magistrate Davis clearly and unequivocally identify the infringement of the plaintiffs’ copyrights and trademarks. The terms of the injunction are clear and specific. They set out exactly what must be done to comply. There is no risk the Defendants will not be able to identify which activities are prohibited under the Judgment Order. While the scope of the injunction is broad, I am satisfied it is fair and reasonable and necessary in circumstances of ongoing infringement of intellectual property rights through a variety of technological means.
[42] Further, I am also satisfied that enforcement of the Judgment Order will not place an undue burden on the Canadian justice system. Nor are there any unforeseen obligations to which any Canadian litigant will be exposed or any third parties affected by the Judgment Order.
Conclusion
[43] For the above reasons, therefore, I am satisfied that the plaintiffs’ motion should be granted and summary judgment issued recognizing and enforcing the Judgment Order in Ontario.
[44] The plaintiffs are entitled to their costs of the motion and the action. The parties have agreed on costs of $20,000, which in my view, given the issues raised, is fair and reasonable.
L. A. Pattillo J.
Released: August 1, 2018