An Alberta judge has shot down a television provider’s attempt to block four major retailers from selling set-top streaming devices, calling their lawsuit “nothing more than an off-target anti-piracy campaign.”
In a scathing decision issued Friday, Court of Queen’s Bench Justice Michael Lema said Edmonton-based Allarco Entertainment — a cable, satellite and streaming company that owns the Super Channel network — had failed to make a “serious case” against four companies it accused of selling “pirate devices” that allow users to “steal” Super Channel content.
“Allarco failed in its attempt to show that the retailers’ selling activities were fanning the flames of piracy … or at least in any way linked to Allarco’s subscription and overall business difficulties,” Lema wrote. “It also failed in its attempt to paint the devices in its sights as inherently objectionable.”
Lema denied Allarco’s request for an injunction against the stores and stayed the lawsuit for procedural reasons, but concluded it was “virtually certain” the retailers would win the case.
The four stores named in Allarco’s lawsuit are Staples, Best Buy, London Drugs and Canada Computers Inc. The lawsuit concerns streaming devices such as Android TV boxes, which Allarco unsuccessfully attempted to paint as tools designed to pirate content through apps such as Kodi.
The lawsuit, filed in 2019, came out of a 19-month Allarco investigation in which a secret shopper recorded interactions with store employees across Canada. The company claimed that staff at the stores encouraged shoppers to purchase TV streaming devices as a way of circumventing subscription fees.
The company also sought to identify people who have purchased the devices and add them as defendants in the lawsuit.
Accompanying the lawsuit was a media campaign including a website, ChangeTheCulture.ca, which claimed the stores were “complicit in promoting, educating, or instructing consumers on how to download and stream illegal content.”
In an affidavit, Allarco CEO Don McDonald blamed piracy for the “overwhelming” loss of Super Channel subscribers since 2016.
“This was strange to me because Super Channel was broadcasting a number of very successful and popular programs,”, he wrote, blaming the issue on the “promotion and normalization of a culture of stealing copyright content in Canada.”
Lema, however, said Allarco had failed to prove any aspect of its case.
Allarco failed to clear the first hurdle, which was proving that it had legal standing to advance a copyright claim without the backing of the copyright holders of the two shows it used as proxies for its content.
“Allarco did not add the copyright owners (as plaintiffs) or even notify them of the proceeding or provide any reasonable explanation on either front,” Lema wrote. “We do not know if they want to participate, do not want to participate, or are indifferent.”
The court also found little if any evidence of misconduct on the part of store employees recorded by Allarco’s secret shopper.
“Virtually all of the employees indicated the company could not assist with modifying any device. A few said otherwise and, taken at its worst, these employees (who have no legal training) were only guilty of trying to assist a persistent customer.”
Lema concluded the only thing Allarco’s undercover investigation proved was “that a piracy-fan poseur could trick some of the retailers’ employees into talking about piracy.” He noted the secret shopper has no background in testing the functionality of such devices and that “Allarco’s core testing was performed by his two (adult) sons.”
Lema also sided with the stores in concluding that streaming boxes have many legitimate uses and that by Allarco’s logic, any device capable of connecting to the internet could be labelled a “pirate device.”
“Whether add-ons could be added in three minutes or 30, or with 10 clicks or 20, the point is that the units here were not configured, as sold by the retailers, for immediate use as a pirating device,” Lema wrote.
He added, “the retailers have no control over consumers’ use of any devices purchased in their stores.”
Allarco declined to comment on the decision. The company has been ordered to pay the defendants’ legal fees before resuming any litigation in the case.