Maximum Statutory Damages, Punitive Damages, and Solicitor-Client Costs Awarded Against Unapologetic Software Bootlegger

Published November 6th, 2012

Adobe Systems Incorporated et al. v. Dale Thompson d.b.a. Appletree Solutions, 2012 FC 1219 (Campbell J.)

Summary – Given the Defendant’s blatant disregard for copyright and his wilful infringement in the unauthorized reproduction and sale of pirated software, Justice Campbell awarded maximum statutory damages allowed under the Copyright Act and additional punitive damages as deterrent relief.  Costs were also awarded on solicitor-client scale for a total award of $445,000 plus interest.

Analysis – The facts made this case easy for Justice Campbell to award summary judgment against the Defendant.  Dale Thompson operated a business by the name of Appletree Solutions, through which he engaged in unauthorized reproduction of software programs and cover art owned by the Plaintiffs (e.g., Adobe’s Acrobat X, InDesign CS, Creative Suite 5; Microsoft’s Word, PowerPoint, Outlook, etc.; and Rosetta Stone’s Arabic, Chinese Mandarin, French, etc.).  He sold the counterfeit software on Kijiji and Craigslist (classified advertisement websites) and assisted purchasers with installation of the software by supplying product keys and “cracks” and by providing detailed instructions.

Justice Campbell found that the Defendant’s infringing conduct was overwhelming and that there was no genuine issue for trial.  The only participation by the Defendant in the action was the filing of a Statement of Defence, in which the Defendant placed blame on the Plaintiffs and disclosed what Justice Campbell found to be his “misguided attitude of entitlement” to pirate the software.  For example, the Statement of Defence included allegations that the Plaintiffs were all engaged in a networked scheme of allowing copyright infringement and piracy to thrive as part of an economic practice for maintaining market dominance and maximizing profits.  The Defendant’s view of this alleged toleration of copyright infringement set the stage for his infringing conduct.

Statutory Damages:
Pursuant to s.38.1(1) of the Copyright Act, Justice Campbell awarded the maximum statutory damages available on the basis of the Defendant’s bad faith attitude and strong intention to infringe, coupled with the need for deterrent relief.  Thus, $340,000 was awarded to the three Plaintiffs – $20,000 for each of the 17 works infringed.

Punitive Damages:
Following the Supreme Court’s lead on punitive damages[1], Justice Campbell characterized the Defendant’s conduct as “malicious, oppressive, and high-handed, offends the court’s sense of decency, and represents a marked departure from ordinary standards of behaviour”.  In particular, Justice Campbell considered the factors set out in a recent similar Federal Court decision[2] for determining whether such conduct was present:

i)      the scale and duration of the infringing activities;

ii)     cooperation of the infringing party during court proceedings and willingness to admit wrongdoing;

iii)    whether the infringing party’s actions were knowing, planned and deliberate;

iv)   whether the infringing party attempted to conceal and cover up wrongdoings;

v)    whether the infringing party continues to infringe the copyright in question; and

vi)   whether the conduct of the infringing party in the course of the proceedings has resulted in additional costs to the plaintiffs.

Each of the factors weighed in favour of awarding punitive damages against the Defendant.  Justice Campbell awarded the amount of punitive damages sought by the Plaintiffs – $15,000 per plaintiff for a total of $45,000.[3]

Costs:
Given the Defendant’s reprehensible, scandalous and outrageous conduct, Justice Campbell found it an appropriate case to award costs on the solicitor-client scale in the amount of $60,000.

Other Awards:
The Plaintiffs were also awarded declaratory and injunctive relief and pre- and post-judgment interest on the statutory damages.

Practice Point – This case adds to the recent growth of case law concerning statutory damages under the Copyright Act, providing yet another set of facts where a claim for maximum statutory damages and punitive damages may be deemed appropriate.  The decision also aptly illustrates that statutory damages may be very useful where:  (1) a plaintiff has multiple works infringed; and (2) a plaintiff would have difficulty obtaining the necessary information directed at the quantum of infringement to support a standard recovery of profits/damages.



[1] Whiten v. Pilot Insurance Co., 2002 SCC 18, [2008] 1 SCR 595 (SCC).

[2] Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., 2011 FC 776 (FC);

[3] In comparison to the judgment in Louis Vuitton Malletier S.A. v. Yang, 2007 FC 1179 (FC), where Justice Snider awarded to essentially one plaintiff $100,000 in punitive damages against two defendants, the award in this case almost appears mild.