Titan Linkabit Corp. v. S.E.E. SEE Electronic Engineering Inc.
T-129-91
MacKay J.
3/3/93
25 pp.
Application for interlocutory injunction restraining defendants from certain activities pending trial of copyright and patent infringement action -- Plaintiffs manufacture and sell scrambling/descrambling system (VideoCipher) by which satellite transmissions carrying television programming, including pay TV, encrypted prior to transmittal and decrypted upon reception -- VideoCypher Key Index, comprehensive program necessary for operation of descrambler, subject of Canadian copyright -- Computer software, used to implement control instructions for operation of VideoCypher descrambler, also subject of Canadian copyright -- Computer programs and Key Index together make possible sophisticated security system designed to permit reception and descrambling of encrypted transmissions by authorized decrambling devices -- Plaintiffs obtained ex parte interim injunction and Anton Piller order authorizing seizure of certain "pirate" devices capable of receiving and descrambling telecommunications signals broadcast by plaintiff First Choice -- Alleging until execution of Anton Piller order, defendants manufacturing descrambler devices by copying or duplicating Unit Seeds (starting point for sequence of "keys" providing access to audio and video portions of programming scrambled to prevent unauthorized viewing) from valid VideoCipher units and inserting them into defendants' devices -- Software alleged to infringe plaintiffs' copyrighted computer programs -- Defendants contesting copyright, patent validity -- Application of tripartite test for interlocutory injunction in Turbo Resources Ltd. v. Petro-Canada Inc., [1988] 3 F.C. 235 (C.A.) -- (1) Plaintiffs establishing number of serious issues concerning copyright and patent interests -- (2) If injunction not awarded pending trial, plaintiffs will suffer irreparable harm -- Cases where prima facie infringement based on obvious copying of industrial designs or copyrights distinguished -- Infringement of copyright per se not constituting irreparable harm where validity of copyright in issue -- Applying principle in Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129 (F.C.A.), where validity challenged, must be clear finding of irreparable harm, based on factors other than copying found or admitted, to warrant interlocutory injunction -- Continuing distribution and sales of defendants' descramblers will place devices in hands of consumers which plaintiffs, even if successful at trial, will be unable to locate or effectively restrain from unauthorized reception of encrypted satellite broadcasts -- Will compromise security of plaintiffs' VideoCipher system and interests of those who use it on ongoing basis -- Loss to plaintiffs' reputation and continuing monetary losses will be almost impossible to assess with any precision -- Any substantial damages that may be awarded in favour of plaintiffs at trial for intervening period unlikely to be recoverable from defendants -- (3) Balance of convenience favouring grant of injunction -- Although defendants will suffer harm if injunction now awarded, no basis to conclude injunction would put them out of business -- Continuing in business despite interim injunction and materials held under Anton Piller order -- If injunction now awarded, and defendants' devices ultimately found not to constitute infringement of proprietary interests, harm to corporate defendants' fledgling enterprises seeking to get established in highly competitive market may not be readily addressed in damages -- Constitutes irreparable harm -- Market for sale of descrambling devices to permit unauthorized reception of satellite broadcasting likely limited by amendments to Radiocommunication Act (S.C. 1991, c. 11) making it offence to receive encrypted television signals without authorization -- Injunction itself may not adversely affect defendants' lawful opportunity to market devices without authorization -- Plaintiffs undertaking to meet any damages caused to defendants if injunction now awarded, but trial finding defendant not infringing plaintiffs' proprietary interests -- Defendants merely undertaking to maintain account of all devices sold pending trial if injunction refused -- Application allowed -- Federal Court Rules, C.R.C., c. 663, R. 469.