August 10, 2018

Ontario Court Enforces U.S. Permanent Injunction Against Pirate TV Provider

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Following Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, the Ontario Superior Court of Justice has enforced another permanent injunction and accompanying monetary judgments in Dish Network LLC v. Shava.

There are strict criteria applied by Canadian courts when deciding whether to enforce foreign injunctive and other non-monetary orders. It is always a good idea to contact competent Canadian counsel before obtaining a foreign non-monetary order that may ultimately be enforced in Canada.

In a U.S. federal complaint Dish Network L.L.C. and other media companies named Canadian defendants, Imran Butt and Naeem Butt, among others alleging copyright infringement, trademark infringement, and unfair competition. The U.S. complaint alleged that the defendants unlawfully captured and re-broadcast the plaintiffs’ media content on the World Wide Web through the use of a set-top box that was sold by the defendants.

The plaintiffs obtained default judgment against the Canadian defendants for over $25 million USD in damages along with a permanent injunction enjoining the defendants from infringing on the plaintiffs’ copyrights and intellectual property.  The U.S. judgment was a final judgment and the appeal period had passed.

The plaintiffs commenced an action in Ontario for recognition and enforcement of the U.S. judgment against the Canadian defendants and then brought a motion for summary judgment. The Canadian defendants defended the Ontario enforcement action and claimed that:

  • the U.S. court lacked personal jurisdiction against the Canadian defendants;
  • the plaintiffs had committed a fraud upon the U.S. court; and
  • there was a failure of natural justice as the defendants had not been properly served with the complaint and summons.

With respect to the issue of personal jurisdiction, the Ontario court adopted the findings of the U.S. court and found that the defendants had conducted business in the U.S. jurisdiction to a degree that was beyond what would be considered as fleeting. Specifically, the defendants:

  • sold their products and services to customers in the U.S. jurisdiction;
  • and made use of servers located in the U.S. jurisdiction to sell their products and services.

Accordingly, the Ontario court found that there was a real and substantial connection between the defendants and the U.S. jurisdiction such that the U.S. court had properly exercised personal jurisdiction over the defendants.

With respect to the fraud defense, the defendants submitted that the plaintiffs misled the U.S. court on facts relating to the ownership of the website used to sell the defendants’ products and services. Despite the evidence that the ownership of the website may have been in the name of another company, the Ontario court dismissed the defendants’ defense of fraud and found that:

  • one of the Canadian defendants was the sole director and shareholder of the other company;
  • the other Canadian defendant had purchased the domain name used by the defendants’ business; and
  • the Canadian defendants did not address and had failed to deny the evidence that they controlled the servers in the U.S. jurisdiction that was used to sell the products and services.

Finally, the Canadian defendants submitted that they were denied natural justice by not being properly served with the originating documents that commenced the lawsuit. Imran Butt was a named defendant from the commencement of the U.S. proceeding, but Naeem Butt was added as a defendant in an amended complaint. Imran Butt submitted that he had not been served with the amended complaint. Naeem Butt claimed that he was not properly served with the amended complaint.

With respect to Imran, the Ontario court found that the amended complaint was substantially similar to the original complaint except for one paragraph that added Naeem as a defendant. In any event, the court found that there was no requirement to serve Imran with the amended complaint because he was noted in default and the claim against him had not changed from those in the original complaint.

As for Naeem, the Ontario court found that Naeem Butt was served with the amended complaint and summons by alternative to personal service. Canada is a non-objecting contracting state to the Hague Service Convention and, accordingly, service by alternative to personal service was held to be appropriate.

The Ontario court granted judgment recognizing and enforcing the U.S. default judgment in its entirety.

Cambridge LLP offers comprehensive Cross-Border Litigation and arbitration services in Canada