TORONTO — A legal battle is brewing over the use of TV boxes that grant access to web streaming content in a standoff that raises questions about the need to protect copyright while fostering innovation.
The David-and-Goliath standoff pits some of the country's biggest cable companies against small, little-known firms that sell set-top boxes, devices that come preloaded with software that allow customers to watch shows on their TVs — legally or not.
Bell, Rogers, Videotron and Groupe TVA Inc. argue in a statement of claim that the distributors of the set-top boxes are infringing on their copyright by selling the devices and are asking the courts to permanently force them off the market.
Last month, a judge ordered an injunction that prevents five defendants and any future ones named in the lawsuit from selling set-top boxes until the case is resolved. After the injunction was granted, the cable companies added 11 defendants to their lawsuit.
Two of the 16 defendants, WatchSaveNow Inc. and MTLFREETV.COM, have filed a statement of defence denying allegations including that they advertised their services as a way to watch free TV. They also rejected accusations that they developed, produced, serviced or maintained the software loaded onto the boxes.
They have also filed an appeal of the injunction and a counterclaim for yet-to-be-determined damages for loss of business, business reputation and goodwill.
Ariel Katz, an associate professor and innovation chair in electronic commerce at the University of Toronto's faculty of law, said it's not clear that what people are doing with the devices is illegal.
Even if it were, the seller is not authorizing copyright infringement by providing equipment that could be used to obtain copyrighted material, said Katz.
Computers, for example, often come with preloaded content that can be used to reproduce copyrighted materials, he said.
"In order to prohibit the sale of something ... there needs to be a legal basis for doing that, and the fact that people can use it for illegal purposes is not necessarily a good enough reason," he said.
It's hard to know how the injunction can apply to other products, he added.
Jacqueline Michelis, a spokeswoman for Bell, said the case boils down to the need to protect copyright.
"Loading uncertified TV boxes up with off-the-shelf piracy apps isn't innovation, it's illegal," she said in an email.
Jennifer Kett, a spokeswoman for Rogers, said in an email the company is an innovator "at heart" and the TV industry will continue to evolve to meet customer needs, but this is a "very obvious" case of piracy.
But Meghan Sali, a digital rights specialist with advocacy group OpenMedia, said fears of costly legal battles could further stifle innovation in Canada by preventing entrepreneurs from receiving capital during the start-up phase of their business or discourage them from pursuing innovative solutions.
Katz agrees.
"If you're a small business and you can't afford the millions that (you) might require to properly defend such a case, then you just decide, 'OK, it's not really worth it,'" said Katz.
