Criminal Law and IT
copyright 1997 Donald M Cameron, Aird & Berlis
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Criminal Law and ITcopyright 1997 Donald M Cameron, Aird & Berlis |
The term "computer crime" connotes tampering with computer-stored data, unauthorized use of a computer facility and theft of computer-stored data by unauthorized copying. Until recently, the Criminal Code R.S.C. 1953-54, c.51, has been relatively ineffectual in combatting such "crimes".
Criminal law has been called a "blunt instrument" to cure software copyright piracy, particularly because there is no financial threshold befor the criminal sanctions apply.
See the theft section of the Canadian Criminal Code.
Traditional criminal law concepts can deal with damage to or theft of physical property, such as computers, magnetic tapes, etc., but must be reconsidered when dealing with electronic funds transfers and the like.
The Courts have had a easier time dealing with the improper use of electronically-stored information where the information represents monetary funds (See R. v. Scallen ((1974), 15 C.C.C. (2d) 441) than where the information and the computer facility do not relate to banking services.
In Regina v. Stewart[(1984) 74 C.P.R. (2d) 1] , the Supreme Court of Canada held that confidential information was not "property" that could be stolen.
In November, 1984 a jury in the Court of Queen's Bench (the Superior Court) of the Province of Alberta found Clifford Eric Tannas not guilty of theft of over $250,000 worth of computer software that he had copied and kept after leaving the employ of Dome Petroleum Ltd., an oil and gas company in Calgary, Alberta.(14) Mr. Tannas had used the software while working at the drafting section at Dome. Because the Tannas case was decided by a jury, no reason for the acquittal or formal report of the decision is available.
See the fraud section of the Canadian Criminal Code.
Dealing in counterfeit or unauthorized copies of computer software may constitute fraud (R. v. Kirkwood.
The operation of a software rental business may constitute fraud (See R. v. Ram and R. v. Leahy).
See the mischief section of the Canadian Criminal Code.
The Stewart case was followed in R v. Turner,(13) a dismissal of an application to quash the committal to trial of the accused).
The accused had altered information stored in tapes at A.O. Smith Corporation in Milwaukee, Wisconsin. The information was encoded by the accused in such a way that the customers of A.O. Smith Corporation could not properly access the information on the tapes. The accused was charged with mischief under s.387(1)(d).
The judge held that the offence of mischief essentially relates to an interference with the enjoyment of property rather than the physical alteration of property. The accused's interference with the "property" in the information contained on the tapes may constitute mischief and the committal for trial was left in place.
See the unauthorized use section of the Canadian Criminal Code.
Legislative History
In 1980, the Supreme Court of Canada held in R. v. McLaughlinthat the unauthorized use of a computer facility did not constitute 'theft" of telecommunications facilities.
In December, 1982 a private members bill, Bill C-667, "An Act to Amend the Criminal Code and the Canada Evidence Act", was introduced to the Canadian Parliament. In February, 1983 the Bill was sent to the Standing Committee of Justice & Legal Affairs. The Sub-Committee on Computer Crime released its report, recommending certain changes to the Criminal Code including a specific recommendation to extend the definition of "property" in the Criminal Code to include computer data and software.(4)
In 1986 the Canadian Criminal Code was amended. Instead of amending the definition of "property" it created a new offence for the theft of computer services, the interception of computer services and the use of a computer system with the intent to commit the offence of mischief under s. 387 in relation to data or a computer system
See the full wording of s. 42 of the Canadian Copyright Act.
If copyright subsists in computer software, criminal proceedings may arise as a result of the marketing of unauthorized copies of the software, in view of Regina v. Kirkwood.
The criminal provisions in the Canadian Copyright Act exist in addition to (rather than instead of) the Act's civil remedies.(15) In most cases, the Act's provisions permit the Crown prosecutor to choose one of two different methods of bringing proceedings: prosecution as a summary offence and prosecution as an indictable offence. The penalties that may be imposed on conviction vary with the method of prosecution.
The criminal sanctions for infringement are set out in sections 42, 43 and 43.1 of the Act. There are seven main offences found in section 42:
making a work;
selling a work;
distributing a work;
exhibiting a work;
importing a work;
making or possessing any plate for making copies of a work;
causing a work to be performed in public.
In addition, sections 43 and 43.1 set out additional offences which apply to the infringement of dramatic, operatic and musical works.
Previously, the criminal provisions were set out in different sections of the Copyright Act of 1970.(16) The key provision was found in s. 25(1) of the old Act, which provided lighter sanctions:
"...he is guilty of an offence under this Act and is liable on summary conviction to a fine not exceeding ten dollars for every copy dealt with in contravention of this section, but not exceeding two hundred dollars in respect of the same transaction; or in the case of a second or subsequent offence, either to such fine or imprisonment without hard labour for a term not exceeding two months.
Proving criminal infringement
Case law under the Act has it made clear the Crown must prove beyond a reasonable doubt that the accused intended to infringe copyright or that the accused was willfully blind to the possibility of infringement.(17) Where the accused put its own copyright notice on the copied works, and did not take any steps to obtain permission from the true copyright owner, the court could conclude that the accused was wilfully blind as to the possibility of infringement.(18) Where an accused made inquiries about whether his acts amounted to infringement and received equivocal answers from police officers and a lawyer, this did not establish a valid defence to later charges.(19)
For a prosecution to succeed, the Crown must prove on a balance of probabilities that copyright was owned by someone other than the accused.(20) A certificate of copyright registration may be used to prove that the accused did not own the copyright.(21) But a certificate obtained after the date of the alleged offence will not be sufficient.(22) In addition, the Crown must show that the copyright owner did not consent to the copying and that the accused's act did not amount to "fair dealing" under the Act.(23) Copyright can subsist in a work even if it is obscene under Canadian law, but the court may refuse to grant certain remedies because of the nature of the material.(24)
Fines or imprisonment
In most cases, the criminal penalty provisions of the present Copyright Act provide that an accused convicted of a summary offence will be liable to a maximum fine of $25,000 or to imprisonment for up to six months or to both.(25) An accused convicted of an indictable offence will be liable to a maximum fine of $1,000,000 or to imprisonment for up to five years or to both.(26) Lower maximum penalties apply to special cases of infringement of copyright in a dramatic, operatic or musical work.(27) When assessing the appropriate fine, the court must consider both the nature of the material and the purposes for which the infringing copies were made.(28)
R. v. Comox Valley Video Stop(29) dealt with the old criminal provision set out in section 25 of the Copyright Act of 1970. The accused was charged with selling or letting for hire copies of videotapes which infringed another's copyright. The Act provided that the fine for summary conviction was not to exceed $10 for every copy dealt with and not to exceed $200 in respect of the same transaction. It was held that "transaction" did not refer to every infringing work, so that the maximum fine of $200 was imposed rather than a fine of $10 for every offending tape.
A similar issue was considered in R. v. 401986 Ontario Ltd.(30) As part of an investigation of the accused's video rental business, the RCMP seized 410 video cassettes which consisted of single copies of 410 different movies. The accused was charged under section 25 of the old Copyright Act with selling or letting for hire an infringing copy of a work. The accused pled guilty to all 410 counts. The trial judge treated all the counts as single transaction and imposed the maximum fine of $200.
The Crown appealed to the Ontario Court of Appeal on the meaning of the word "transaction" found in the old section 25. The Court of Appeal decided that each offer for sale or hire or exposure by way of trade of an infringing copy was a separate transaction.(31) The word "transaction" referred to the infringement of a separate copyright. Thus, the court decided that a fine of $2050 for the 410 infringing copies should be levied against the accused.
Disposition of infringing copies or "plates" used to make copies
Under sections 42(3) and 43.1(3) of the Canadian Act, the court has the power to order that infringing copies or the plates used to make such copies be destroyed or delivered to the true owner of copyright in the work. The court has the power to make an order relating to the infringing copies or plates regardless of whether the accused is convicted of an offence or not. R. v. Ghnaim(32) is an example of a case where the court ordered all infringing copies of video cassettes to be destroyed.
An interesting question is whether a "plate" used to make infringing copy may include a computer. The Canadian Act provides an open-ended definition of a "plate": the term "includes any stereotype or other plate, stone, block, mould, matrix, transfer or negative used or intended to be used for printing or reproducing copies of any work, and any matrix or other appliance by which records, perforated rolls or other contrivances for the acoustic representation of the work are or are intended to be made."(33)
In Australia, the courts have found that a computer will be a "plate" if it is used to make infringing copies.(34) In Irvine v. Hanna-Rivero,(35) the Federal Court of Australia ordered that computer hardware used to make infringing copies be seized under that country's copyright legislation. However, the court decided that only some of the accused's hardware should be seized because the accused had used the hardware for legitimate purposes as well.(36)
In light of R. v. Ghnaim, the Canadian courts will likely follow the Australian approach. In that case, the court held that the definition of "plate" is was extensive enough to catch all equipment used to produce infringing copies.(37) It would be against the spirit of the legislation to exclude video cassette recorders and video tapes from the definition of a "plate" even though they were unknown at the time the definition was first enacted in 1921. The court ordered that the VCR used to make infringing copies be forfeited to the Crown under a procedure set out in the Canadian Criminal Code.
Time limits
Summary conviction proceedings in the Copyright Act must be initiated promptly or the applicable limitation period will expire. As the Act does not contain a specific limitation period for criminal proceedings, the time limit set out in the Criminal Code will apply.(38) The Code states that summary conviction proceedings must be brought within six months of the time that the subject matter of the proceedings arose. While the Code contains no general time limit for indictable offences, lengthy delay may provide the accused with the opportunity to argue that his or her rights under the Canadian Charter of Rights and Freedoms have been infringed.(39)
Noteworthy criminal cases
Ghnaim case
In Regina v. Ghnaim(40) the accused was charged under section 25 of the old Copyright Act for illegally copying and selling 1,782 "adult" video cassettes. The Crown attempted to prove various counts of: knowingly making for sale or hire copies of 18 different video cassettes; being in possession of infringing video cassettes; and being in possession of a video cassette recorder used to make infringing copies. The accused was convicted on various counts at trial but appealed to the Alberta Court of Appeal.
The Court of Appeal dismissed the summary offence charges of making infringing copies because there was no evidence of the time at which the copies were made.(41) Thus, the Crown was unable to show that the proceedings were brought within six months of the relevant events, as required by the time limit set out in the Canadian Criminal Code. However, the convictions on charges of possession of infringing copies remained valid. There was evidence which showed that the accused had possession of the infringing copies and the video cassette recorder within the six-month time limit. The court ordered that all infringing copies of the video cassette tapes be destroyed.
Photocenter case
In R. v. Photocenter Inc.,(42) accused Rodrigue Larouche distributed 129 copied video cassettes to customers of Photocenter Inc. The video cassettes were protected by copyright and the accused did not have permission to copy them. Before he was charged, Mr. Larouche consulted a lawyer who said that the practice seemed legal but also expressed some doubt about it. Mr. Larouche also consulted two police officers about the practice; the officers said that they saw nothing illegal in it, but that they had no particular knowledge of copyright law. Mr. Larouche was convicted under section 25 of the old Copyright Act for the offence of distributing infringing copies of a work. He appealed to the Quebec Superior Court.
While Mr. Larouche had no knowledge of the law which prohibited the distribution of the copies, ignorance of the law was not a defence. The Quebec Superior Court wrote that in order for the accused to rely on his lack of knowledge he must show that he took all reasonable precautions to learn about the law. In addition, he must show that once he became aware that his acts were unlawful, he acted with diligence to terminate his infringement. The doubt expressed by his lawyer should have roused Mr. Larouche to properly inform himself. The information provided by officers was not in the nature of an expert consultation. The precautions Mr. Larouche took were not reasonable.(43)
The Quebec Superior court upheld the accused's conviction on 129 counts of distribution. The accused was fined $10.00 on each count, payable within 90 days, and court costs.
Miles of Music case
In R. v. Miles of Music Ltd.,(44) Wilford Roch and Miles of Music Ltd. were jointly charged with various offences under section 25 of the old Act. In particular, the accused parties were charged with three counts of selling or letting for hire infringing copies of a work and 39 counts of distributing infringing copies of a work.
Mr. Roch, a disc jockey, prepared home-made cassette tapes which consisted of compilations of commercially recorded music for use by others. Mr. Roch made the compilations without the permission of the owner of the copyright in the musical reproductions, the Canadian Recording Industry Association. However, the recording industry association had made no complaint about the practice either to Mr. Roch or to the Canadian Disc Jockey Association with whom it was negotiating a licence for the practice.
The RCMP executed a search warrant at Mr. Roch's home and business premises, seizing all his tapes, records, electronic equipment and business records. As a result, Mr. Roch lost his home, his 13-year-old disc jockey business and his retirement savings. Despite the harsh effect of the search and seizure, the Ontario Court of Appeal held that there had been no abuse of process.(45)
Other criminal cases involving computer software
In the 1995 case of R. v. Mishko, an accused who manufactured a counterfeit video game pled guilty to charges under the Canadian Copyright Act.(46) Peter Mishko contracted with a Markham, Ont. firm to make 4,000 copies of "Devil World," a video game owned by the Nintendo company. The accused also approached a Scarborough, Ont. firm in an attempt to arrange for the production of another 250,000 copies. The piracy would have caused Nintendo more than $10 million in lost sales. The court imposed a fine of $12,500 and put the accused on probation for three years.
A 1991 Australian case involved criminal charges under copyright legislation for the infringement of computer software. In Irvine v. Hanno-Rivero,(47) the accused was a member of an informal swap network where members exchanged copies of computer programs. As well, the accused occasionally provided copies of computer programs to people who were not members of the swap network for a fee of $3 per disk. In some cases, the programs were "public domain" and so were not protected by copyright; in other cases, the programs were commercial copies protected by copyright. The accused did not have the permission of the copyright owners to make copies.
The accused pled guilty to charges under the Australian Copyright Act. In particular, he was convicted of four counts of possession for the purpose of distributing articles for the purpose of trade where he knew or ought to have known the copies were infringing.(48) The accused's charges arose from the copying of 23 different programs. Imposing a fine of $1,200, the Australian Federal Court wrote:(49)
Copyright protection is a valuable asset to the authors of software programs. Lost sales from illegal copying result in lost incentive for research and development, and higher prices for the purchasers of software packages who are minded to comply with the law. Victims of illegal copying are not solely the holders of the copyright. Indirectly, the cost to the industry of illegal copying is spread through the community. I referred to this cost in Irvine v. Carson, judgment delivered 5 August 1991. The same material was put to the court on this occasion by the prosecutor, namely that illegal copying costs the software industry in Australia at least $300m in lost sales each year and that on the international level, software piracy costs are up to $10b, with most damage being done in Asia and the Pacific rim. These assertions have not been verified by expert evidence. I treat them merely as indicative of the fact that the cost in lost revenue to those legitimately entitled to receive it is very high. It cannot be over emphasized to those who are minded to engage in illegal copying of works protected by copyright, and trading infringing copies, that they will commit serious crimes.
1. (1984) 74 C.P.R. (2d) 1.
2. Canavest House Limited v. Lett (supra).
3. (1986) 11 C.P.R. (3d) 231.
4. Beatty P., "Computer Crime: changes needed in law"; Ontario Lawyers Weekly; June 10, 1983 p.10.
5. (1974) 15 C.C.C. (2d) 441.
6. R. v. Scallen supra at p.472.
10. [1978] 2 S.C.R. 1175.
12. (1984) 74 C.P.R. (2d) 1.
13. unreported decision of Gray J., Supreme Court of Ontario, High Court, June 18, 1984.
14. The Toronto Star, November 30, 1984 p.A-11.
15. In fact, the criminal sanctions have been criticized as being excessive in view of the civil remedies that exist to control infringement. See, for example: Alan Young, "Catching Copyright Criminals: R. v. Miles of Music Ltd.," (1989-1990) 5 I.P.J. 257.
16. See: Copyright Act, R.S.C. 1970, c. C-30, sections 25 and 26.
17. R. v. Ghnaim (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.) at 465.
18. Ibid., at 468.
19. R. v. Photocenter Inc. (1986), 9 C.P.R. (3d) 425 (Que. S.C.) at 428.
20. R. v. Ghnaim (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.) at 466.
21. Ibid.
22. R. v. Laurier Office Mart Inc. (1994), 58 C.P.R. (3d) 403 (Ont. Prov. Ct.), aff'd (1995), 63 C.P.R. (3d) 229 (Ont. Gen. Div.).
23. Ibid. See also the "fair dealing" exception in section 27(2) of the Copyright Act, R.S.C. 1985, c. C-42.
24. Aldrich v. One Stop Video (1987), 17 C.P.R. (3d) 27 (B.C.S.C.), followed in R. v. Ghnaim (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.).
25. Copyright Act, R.S.C. 1985, c. C-42, sections 42(1)(f), 42(2)(c), 43.1(1)(f) and 43.1(2)(a).
26. Ibid., sections 42(1)(g), 42(2)(d), 43.1(1)(g) and 43.1(2)(b).
27. Ibid., sections 43(1) and 43(2).
28. See: R. v. Ghnaim (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.) at 470.
29. (1985), 5 C.P.R. (3d) 537 (B.C. Co. Ct.).
30. (1987), 16 C.P.R. (3d) 86 (Ont. C.A.).
31. Ibid., at 90.
32. (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.).
33. Copyright Act, R.S.C. 1985, c. C-42, section 2, definition of "plate."
34. On the other hand, the House of Lords has determined that a tape recording machine cannot be considered a "plate" within the meaning of English copyright legislation. See: CBS Songs Ltd. v. Amstrad Consumer Electronics, [1988] 2 All E.R. 484.
35. (1991), 23 I.P.R. 295 (Fed. Ct. of Australia).
36. Ibid., at 301. Justice von Doussa of the court wrote:
"In the present instance, I accept that the defendant is a computer enthusiast, and that his computers were used for many legitimate purposes as well as for making, from time to time, infringing copies. Having regard to the absence of a profit motive for the illegal trading activity with which the defendant is charged, the aggregate value of the hardware equipment seized, and the fact that the defendant makes use of a home computer for employment purposes, I think it would be appropriate in all the circumstances to order only a partial forfeiture of the hardware. I consider the intent of s. 133(4) [of the Australian Copyright Act] will be fulfilled if there be an order for the forfeiture of all magnetic disks seized from the defendant, save for those in the public domain (that is approximately 750 magnetic disks which have a value of approximately $2 each), and of all the hardware save for the printer and one of the computers together with a keyboard and screen, being those most useful to the defendant in the course of his employment."
37. (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.) at 473.
38. See: Criminal Code, R.S.C. 1985, c. C-46, section 786(2), and R. v. Shimming (1991), 35 C.P.R. (3d) 397 (Sask. Prov. Ct.) at 398. Section 41 of the Copyright Act sets out a three-year limitation period for civil remedies for infringement but does not apply to the criminal provisions.
40. (1988), 28 C.P.R. (3d) 463 (Alta. Prov. Ct.), aff'd in part (1989), 32 C.P.R. (3d) 487 (Alta. C.A.).
41. (1989), 32 C.P.R. (3d) 487 (Alta. C.A.) at 489.
42. (1986), 9 C.P.R. (3d) 425 (Que. S.C.).
43. Ibid., at 428. Note that the judge cited the Supreme Court of Canada decision in Regina v. City of Sault St. Marie (1978), 85 D.L.R. (3d) 161, for its discussion of the mental element needed for a strict liability offence.
44. (1987), 18 C.P.R. (3d) 181 (Ont. Prov. Ct.), rev'd (1989), 24 C.P.R. (3d) 301 (Ont. C.A.).
45. (1989), 24 C.P.R. (3d) 301 (Ont. C.A.).
46. See: "Man, 64, fined in computer game scam," The Toronto Star, November 2, 1995, p. A24.
47. (1991), 23 I.P.R. 295 (Fed. Ct. of Australia).
48. See: Australian Copyright Act, 1968 (Cth), section 132(2A)(b).
49. (1987), 23 I.P.R. 295 at 299.
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