Stiff Penalty For Copyright Infringer In Canada: Federal Court Hands Out Prison Sentence

• Published date: 14 January 2022
• Subject Matter: Intellectual Property, Copyright
• Law Firm: Smart & Biggar
• Author: Mr Daniel Anthony and Denise Felsztyna

In a recent Federal Court case, the Court ordered the director of a corporation to be imprisoned for at least 6 months and payment of $100,000 fine for bypassing an injunction against copyright infringement. We previously reported on a jail sentence issued for trademark infringement¹. These cases both highlight the Canadian courts' ability and willingness to enforce their own orders when breached.

Background

Canadian Standards Association (CSA) is a not-for-profit organization that develops voluntary standards in various fields, including for installation and maintenance of electronic equipment in Canada (CSA Code). CSA sells copies of the CSA Code to fund its services and updates the code every three years. Knight Co. is a book publisher, and Mr. Knight is its sole officer and director. Knight Co. had published its own version of the CSA code that substantially copied the CSA code with additional commentary (i.e., Knight Code). The Knight Code was sold at a significant discount as compared to the CSA Code.

In 2015, CSA pursued litigation against Knight Co., claiming that the Knight Code constituted a copyright infringement of the 2015 edition of the CSA Code. CSA was ultimately successful in obtaining judgment in 2016², including delivery of infringing copies and an injunction against Knight Co., its officers and directors, employees and related companies from further copying of the code.

The decision was appealed to the Federal Court of Appeal and affirmed in 2018³, and leave to appeal to the Supreme Court of Canada was dismissed in 2019⁴.

In 2020, CSA learned that Mr. Knight was again selling copies of the new 2018 Knight Code, which substantially copied the 2018 edition of the CSA Code. Additionally, this time, Mr. Knight incorporated the new U.S. company - Knight America - in an attempt to evade the jurisdiction of the Canadian injunction. Importantly, Mr. Knight was the sole officer and director of Knight Americas, and Knight Americas was shipping products from Canada.

CSA commenced contempt proceedings against Knight Co., Knight Americas, and Mr. Knight personally (Knight Parties), claiming breach of the 2016 injunction⁵.

Test for Contempt

Contempt proceedings in Canada are quasi-criminal in nature. To succeed, a Plaintiff must establish beyond a reasonable doubt that:

1. The order was clear and unequivocal;
2. The Defendant had actual or inferred knowledge of the order; and
3. The Defendant knowingly carried out the actions prohibited in the order OR know...