Federal Court of Appeal Decisions

Date: 19971120

Docket: A-541-97

CORAM:      DESJARDINS J.A.

         LÉTOURNEAU J.A.

         CHEVALIER D.J.

BETWEEN:

     NII NORSAT INTERNATIONAL INC.

     c.o.b. 'AURORA DISTRIBUTING'

     PRICE COSTCO CANADA INC., LONDON DRUGS LIMITED

     ACE IMPORTS INTERNATIONAL INC.,

     THE (DISCOUNT) STEREO STORE LTD. c.o.b. 'BASE

     ELECTRONICS', BASE ELECTRONICS CORP., A & B SOUND LTD.,

     JERRY'S RADIO & T.V. OF BARRIE LIMITED,

     HI-FI 2000 (YORKDALE) LTD.

     Appellant

     (Defendants)

AND:

     EXPRESS VU INC.,

     ALLARCOM PAY TELEVISION LIMITED,

     THE FAMILY CHANNEL INC., and

     TMN NETWORKS INC.

     Respondents

     (Plaintiffs)

     Heard at Toronto, Ontario, Monday and Tuesday, November 17 and 18, 1997

     Judgment delivered at Toronto, Ontario, Thursday, November 20, 1997

REASONS FOR JUDGMENT BY:      LÉTOURNEAU J.A.

CONCURRED IN BY:      DESJARDINS J.A.

     CHEVALIER D.J.

Date: 19971120

Docket: A-541-97

CORAM:      DESJARDINS J.A.

         LÉTOURNEAU J.A.

         CHEVALIER D.J.

BETWEEN:

     NII NORSAT INTERNATIONAL INC.

     c.o.b. 'AURORA DISTRIBUTING'

     PRICE COSTCO CANADA INC., LONDON DRUGS LIMITED

     ACE IMPORTS INTERNATIONAL INC.,

     THE (DISCOUNT) STEREO STORE LTD. c.o.b. 'BASE

     ELECTRONICS', BASE ELECTRONICS CORP., A & B SOUND LTD.,

     JERRY'S RADIO & T.V. OF BARRIE LIMITED,

     HI-FI 2000 (YORKDALE) LTD.

     Appellant

     (Defendants)

AND:

     EXPRESS VU INC.,

     ALLARCOM PAY TELEVISION LIMITED,

     THE FAMILY CHANNEL INC., and

     TMN NETWORKS INC.

     Respondents

     (Plaintiffs)

     REASONS FOR JUDGMENT

LÉTOURNEAU J.A.:

[1]      After a careful review of the material filed and the submissions made by the parties, I am in substantial agreement with the reasons and conclusions of Mr. Justice Gibson.

[2]      Before us, the debate has turned on the proper interpretation of paragraph 9(1)(c) of the Radiocommunication Act¹ (the Act) which reads:

9. (1) No person shall

(c)      decode an encrypted subscription programming signal or encrypted network feed otherwise than under and in accordance with an authorization from the lawful distributor of the signal or feed;

I see no ambiguity in the meaning of that paragraph.

[3]      The text of the paragraph includes two concepts, to wit, "subscription programming signal" and "lawful distributor", which are defined in section 2 of the Act. When the defined words are incorporated into the provision, such provision simply and clearly reads:

9. (1) No person shall

(c)      decode an encrypted radiocommunication that is intended for reception either directly or indirectly by the public in Canada or elsewhere on payment of a subscription fee or other charge otherwise than under and in accordance with an authorization from a person who has the lawful right in Canada to transmit it and authorize its decoding.

[4]      To put it another way, decoding of the material identified in paragraph 9(1)(c), which certainly includes encrypted subscription programming signal or encrypted network feed coming from the United States, requires a prior authorization and such authorization can only come from a person who holds the lawful right in Canada to transmit it and authorize its decoding. The concept of "lawful right" refers to the person who possesses the regulatory rights through proper licensing under the Act, the authorization of the Canadian Radio-television and Telecommunications Commission as well as the contractual and copyrights necessarily pertaining to the content involved in the transmission of the encrypted subscription programming signal or encrypted network feed.

[5]      As drafted, the prohibition against the decoding of any encrypted radiocommunication intended for reception either directly or indirectly by the public in Canada, or even elsewhere, is meant to cover and covers much more than the mere theft of signals. It is not limited to instances of theft from lawful distributors in Canada as the Appellants would like to see its application restricted to. In a sense and save for the exception in section 10(2.3) which is irrelevant to the present case, it is absolute and proper authorization can only be obtained from a lawful distributor in Canada of that radiocommunication.

[6]      The parties on appeal have referred us to various conflicting excerpts, and have given us conflicting interpretations of these excerpts, from the Report of a Task Force on Broadcasting and the Parliamentary debates surrounding the introduction of the words "in Canada" into the definition of the concept of lawful distributor found in paragraph 9(1)(c).

[7]      Unfortunately, the material filed and argued before us was too fragmentary to be of any assistance in ascertaining the proper meaning of the provision finally enacted after a lengthy process which saw an earlier Bill die on the order of the House of Commons as a result of the launching of an election.

[8]      For example, one excerpt refers to an amendment in 1984 to the American Communication Act from which the prohibition in paragraph 9(1)(c) as well as the remedies in sections 18 (right of civil action) and 19 (injunctive relief and damages) of our Act are supposedly inspired. However, no evidence was filed by the parties as to the contents of these amendments, their meaning, their purpose as well as the evils they were intended to remedy. This is most unsatisfactory and it would be unfair for me to proceed to research and determine such purpose and contents without giving the parties at the very least the benefit of making submissions on the issue.

[9]      I am satisfied that the interpretation given by the learned judge to paragraph 9(1)(c) of the Act is entirely supported by the text of the provision and provides, as I believe it was intended, a measure of control in Canada over the unfair competition which comes both from internal and external sources and is inherent in the reception and enjoyment of satellite services.

[10]      The interpretation that the learned Trial Judge gave to paragraph 9(1)(c) is purposeful, responsive to and warranted by the text and the problem it is meant to remedy, and is reasonable.

[11]      For these reasons, the appeal and cross-appeal should be dismissed with costs.

                             "Gilles Létourneau"

                                     J.A.

Toronto, Ontario

November 20, 1997

__________________

¹      R.S.C. 1985, chap. R-2.