Over the past couple of days, there have been multiple reports about the return of file sharing lawsuits to Canada, with fears that thousands of Canadians could be targeted. While it is possible that many will receive demand letters, it is important to note that recent changes to Canadian copyright law limit liability in non-commercial cases to a maximum of $5,000 for all infringement claims. In fact, it is likely that a court would award far less - perhaps as little as $100 - if the case went to court as even the government's FAQ on the recent copyright reform bill provided assurances that Canadians "will not face disproportionate penalties for minor infringements of copyright by distinguishing between commercial and non-commercial infringement."

Bill C-11, the recently enacted copyright reform bill, featured several very good provisions including an expansion of fair dealing, a user generated content provision, new consumer protections, and a balanced approach to Internet provider liability. One of the most important changes to the law, however, was the creation of a cap on potential damages for non-commercial infringement. As I highlighted during debates on the bill, Canada is among a minority of countries that have any statutory damages at all for copyright infringement as most developed countries require rights holders to prove actual damages.

Canadian copyright law once included statutory damages rules that provided for up to $20,000 per infringement, creating the potential for massive personal liability for non-commercial file sharing (the $20,000 per infringement is still available for commercial infringement). The industry insisted it had no intention of bringing such lawsuits back to Canada (CRIA members filed file sharing lawsuits in 2004), with one industry representative telling the committee studying the copyright bill that "we're not interested in sweeping up the John Does." Yet despite those assurances, the file sharing lawsuits have begun with reports indicating that thousands of Canadians may be targeted.

The lawsuits will likely follow a three-step process. First, rights holders will seek a court order requiring Internet providers to disclose customer name and address information. Second, should the court order the disclosure, rights holders will use the information to send settlement demand letters to subscribers. The letters will allege infringement and likely offer to settle the case for several thousand dollars. If subscribers refuse to settle - perhaps they believe the allegation is inaccurate or the settlement demands unfair - it will fall to rights holders to follow through with a lawsuit. Given recent changes to the law, there is reason to doubt those cases will be filed as the individual liability is very limited.

Rights holders can elect to pursue actual damages, but those are likely to be even smaller in the case of a downloaded movie or song. The law sets a maximum of $5,000 liability for all infringements if the rights holders rely on statutory damages. That would still be a very significant award, which is why the law also provides guidance to judges that may result in a figure closer to $100.

While rights holders are obviously entitled to pursue their claims in court (and seek either actual or statutory damages), the statutory damages provisions in Canada are clearly designed to dissuade them from pursuing lawsuits against individuals in non-commercial cases. If Canadians begin to receive settlement demand letters, they should be aware of the recent changes that limit their liability in light of the government's view that huge payment demands for non-commercial infringement are "way out of line."