Canadian Suits Filed Against Sony BMG for Copy Protection
On the heels of its U.S. court-approved settlement, Sony BMG was sued in Canadian courts over its copy- protection technologies involving spyware. A suit in Ontario Superior Court of Justice seeks $50 million in general damages and $50 million in special damages on a nationwide basis. A suit in the Supreme Court of British Columbia makes the same claims but doesn’t specify damages. The suits claim violations of Canada’s Competition Act and Personal Information & Electronic Documents Act, a more stringent privacy statute than U.S. federal law has. Both ask for “punitive, aggravated, and exemplary damages” for each class member, and 2% interest before and after judgment until payment of any award.
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Although the claims target First4Internet’s XCP and SunnComm’s MediaMax on Sony CDs, First4Internet alone is listed as a defendant. The suits call both technologies spyware, citing CA’s definition, and generally reflect the claims made in U.S. lawsuits -- that the software “has slowed computer function, compromised personal information and/or allowed their computers to be infected with damaging viruses.” The suits also accuse Sony and First4Internet of taking “concerted action to cover up their actions under the guise of trying to fix the problem,” making repeated changes to their end user license agreements (EULAs) and FAQ website sections, “seeming to disclose whatever information had thus far become public from other sources, but no more.” They take Sony to task for requiring customers that request the Web- based XCP uninstaller to provide “personally identifiable information for marketing use by Sony BMG and disclosure third parties [sic].” Sony BMG declined to comment.
Ontario and British Columbia were targeted first because they're population centers presumably home to the most class members, sources said. Named plaintiffs come from Ontario, British Columbia, Quebec and Alberta.
Canadian Suits Hastened by U.S. Settlement
Sony reached an unusually fast settlement with plaintiffs in the U.S. (WID Dec 30 p3), and that agreement got preliminary approval by the U.S. Dist. Court, N.Y.C., last week. Under the settlement, Sony will stop manufacturing CDs with XCP and MediaMax, provide unprotected CDs of the same titles for buyers, and in some cases, free downloads from services including iTunes, which hadn’t been licensed by Sony BMG previously. The court said notice of the settlement must go out by Feb. 15 through newspaper ads, Google ads, e-mail and other forms, said the Electronic Frontier Foundation (EFF). Consumers can only exchange the XCP CDs for unprotected versions until the settlement notice goes out. EFF helped negotiate the settlement, and posted an FAQ page on its website (www.eff.org) to help Sony BMG customers participate in or opt out of the settlement.
The Canadian effort got moving in mid-Nov., Merchant Law Group partner Evatt Merchant told us. The filing of the suits wasn’t a direct result of the settlement announcement and approval, but the firm “saw it as a more urgent situation once there started to be talk of an initial settlement” in late Dec., he said. The firm filed suit once enough class members had been found -- 5 named in the suits, and 10 more unnamed, Merchant added. It’s expecting several thousand class members eventually, but relatively few before a settlement is announced.
The firm will decide in the next month whether to file suits in the other 3 provinces where it practices -- Alberta, Saskatchewan and Manitoba. Merchant is taking a “wait & see approach… We will be [filing suit] if it becomes necessary to litigate in each province,” but the firm will seek a nationwide class-action suit, he said.
The damages figures in the Ontario suit are arbitrary: “Frankly we tend to overestimate,” Merchant said. But a lower claim, say $10 million for all of Canada, “wouldn’t have been suitable,” given the potential damage to class-action members’ computers. Estimating $150-$200 for each class member to pay to rid the unwanted copy-protection from their machines without damaging or erasing data -- a figure Merchant said was based on reports the firm got from potential class members -- general damages could run to $50 million, he said. Merchant estimated customers bought 200,000 Sony BMG CDs with either XCP or MediaMax, and the firm has asked Sony to provide detailed information on Canadian sales, accounting for those CDs already recalled. Given Sony’s updates for the affected technologies, actual damages could drop “very substantially,” probably below $10 million, “but at this point it appears they still have to work out some of the bugs” that have been documented in some removal and patch software (WID Dec 9 p8).
The Canadian suits are “trying to piggyback on the U.S. settlement at least initially,” U. of Ottawa Internet law Prof. Michael Geist told us. The sought damages are higher than usual for Canadian class-action suits relative to the U.S., but the $100 million figure will “at least be the starting point” for a Canadian settlement, he added.
The U.S. settlement could provide a framework for legislation in Canada to address “the need for protection from these kind of copy protections,” leading to “potentially parallel statutes or parallel terms” to restrict misuse of DRM, known in Canada as technological protection measures, Geist said. He expects similar suits to follow around the world: “One would hope that Sony would step up and agree to be bound by similar terms” worldwide for its future use of DRM.