Date: Tue, 8 Nov 2005 11:00:31 -0500

From: David Cheifetz

Subject: Curious Quebec law suit

On a humorous note - here's a cause of action which likely has everything to do with competition, business strategy, posturing, and nothing whatsoever to do with any real belief on the part of the lawyers that there's a valid basis for the claim; or, nice fees if one can get the work.

It's what amounts to a claim for wrongful interference with economic relations based on some sort of positive duty on A's part to protect a competitor B from the financial consequences to B of too easy (here, illegal) access to A's product.

According to the CBC:

Quebec cable company Videotron is suing Bell ExpressVu for $374.2 million, accusing the Bell Canada subsidiary of not doing enough to protect its digital satellite delivery system from piracy.

The plaintiffs [Videotron] have alleged that Bell ExpressVu has failed to adequately protect its system against signal piracy, thereby depriving the plaintiffs of subscribers who, but for their alleged ability to pirate Bell ExpressVu's signal, would be subscribing to plaintiffs' services," a statement from Bell Canada said.

If I'm not missing something, Videotron is alleging that it is losing potential or existing customers because BEV's signal is so easy to steal. Or, putting it another way, people would rather steal BEV's signal than pay for Videotron's and it's so easy and the risk of prosecution so unlikely that it's happening at a significant level.

Perhaps there's something in the Quebec civil code that creates the necessary underlying commercial duty on the part of B towards V, whatever that duty might be. I can't imagine what the common law duty could be - even before we get to limitations on claims for "pure" economic loss.

Leaving aside competition-law based claims (which perhaps is the underlying theme of the suit - I haven't seen the pleadings - and something I don't know enough about) so what if it were true that BEV has made a legal conscious decision to leave back doors open all over the place, on the assumption that easy (i.e. free) access to its signal will eventually drive others out of the market? Is that any different than what we'd have if BEV's plans were to offer its signal for free for as long as is needed to force V and other cable companies out of business? Would V still be suing? If it couldn't then, how can it complain where the only relevant difference is that people are stealing BEV's signal.

Would this be any different than what Microsoft did to Netscape when M decided to offer the free IE browser?

David Cheifetz

--------------------------------

David Cheifetz
Bennett Best Burn LLP
Barristers & Solicitors
150 York St., Suite 1700
Toronto, Ontario
Canada M5H 3S5

Phone 416 362 3400
Fax 416 362 2211

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