So it appears NGN has dropped it's filesharing lawsuit against unnamed customers of the ISP Distributel. If you're not a law nerd or a tech nerd, you may not have been aware of this case or why it matters. Fortunately, I am both of those kinds of nerds, so I got you covered.
Consider a movie studio whose movies are being pirated online. They want to sue some of the pirates. They're probably not really all that interested in the money they'll recover from the pirates; here in Canada, with our sensible approach to damages in copyright litigation, chances are any money they recover will be chewed up by their legal fees. What they're really interested in is deterring other would-be pirates. (This deterrence theory of copyright litigation has never been proven to work before, but the movie industry has never been one to let that get in the way of a good lawsuit).
Of course, before they can bring a lawsuit, they have to figure out who the pirates are and where they are. It's easy for them to connect to a file-sharing service such as BitTorrent and trace the users of that service back to their respective Internet Service Providers. (Typically they'll hire a company that specializes in this kind of work to do this part for them). But that's not enough. They need to get the real names and addresses of those users before they can sue them. And the only entities with that information are the ISPs themselves.
At least in Canada, ISPs have no general legal duty to release their customers' information to movie studios who want to sue them. Some might do so voluntarily, but sometimes those pesky ISPs just won't cooperate. So the movie studio will choose an ISP to target, allege that the ISP's customers are pirating it's movie, and then try to convince the court to order the ISP to divulge the customers' real names and addresses. The movie studio can then get in touch with those customers and start demanding settlements or commencing litigation.
There are many reasons an ISP might be reluctant to divulge customer information to copyright holders. They might be motivated by a genuine interest in protecting the privacy of their customers, or it might just be that helping other people sue their customers is not a great PR move. It looks much better to fight back and then, if they lose, they can tell the customer "Hey, the court made us give you up".
Courts and public interest groups like CIPPIC also have concerns about mass copyright litigation. Whether tried as a single case or as individual cases, suing hundreds of defendants uses up a lot of court resources. Plus, mass copyright litigation in the US has not exactly endeared the courts to this sort of thing. Efforts in the US often have more than just a whiff of an extortion scheme about them and the worst cases have seen courts suggesting that the lawyers involved should be investigated for fraud.
Then there's the matter of evidence. After all, the ISP only knows the customer name that is listed on the account. In most households, there are more people than just the account holder using an Internet connection. So there's no way for the ISP or the movie studio to really be sure the account holder is the person who was actually engaged in pirating the movie. Maybe it was their spouse. Or their teenage son. Or any of their teenage son's many friends who know the password for their wireless network. The situation gets even more complicated in the case of small businesses such as coffee shops, who make their networks available to complete strangers. Knowing the real name and address of the account holder isn't very good evidence that the account holder was the one who was actually engaged in movie piracy.
There are other concerns as well, such as the accuracy of the technology the movie studio uses to track users of file-sharing networks and the legitimacy of the reports they generate. If the technology reports that, at a particular moment in time, I was connected to a file-sharing network, is that really evidence of piracy? Copyright infringement only occurs when a substantial portion of a work has been copied. If I connect to a file-sharing network for one minute and I send 0.5% of a movie to someone else, have I really committed copyright infringement? Should I be assumed to have committed copyright infringement just because I got unlucky and a movie studio happened to take a snapshot of the file-sharing network during that one minute that I was connected?
All of these concerns fall under the larger question of: how good does the evidence against an ISPs customers have to be before the court will order the ISP to disregard its customers privacy interests and provide their real names and addresses to a movie studio who wants to sue them?
No court has ever set out a bright line for how good the evidence has to be, but wherever that line is, so far no copyright holder has been able to cross it in Canada. BMG tried in the early 2000s, and the court refused to grant the order, partly due to the fact that BMG didn't adequately explain how the technology they used to identify the pirates in the first place worked. From the summary:
A second problem was that there was no evidence of connection between the pseudonyms and the IP addresses. Neither the affidavits nor the cross-examination thereon provided clear evidence as to how the pseudonyms of the KaZaA or iMesh users were linked to the IP addresses identified by MediaSentry. While the affidavit indicated that Geekboy@KaZaA's IP was 22.214.171.124 and that, according to the American Registry for Internet Numbers' public database, that address had been assigned to Shaw Communications (one of the ISPs from which disclosure is sought), no evidence explained how the pseudonym "Geekboy@KaZaA" was linked to the IP address 126.96.36.199 in the first place. It would be irresponsible in these circumstances for the Court to order disclosure of the name of the account holder of IP address 188.8.131.52 thereby exposing that person to litigation.
In response to all of this, movie studios and other copyright holders who want to engage in this kind of litigation ask: so how the hell else are we supposed to protect our copyrights? The law has given them a right but without being able to get customer information from ISPs, they have no way to enforce it. Which is a reasonable argument to make.
I can't say exactly why NGN chose to drop their lawsuit against the Distributel customers. Maybe they thought they were going to run into the same problems as BMG. This doesn't mean the issue of filesharing lawsuits in Canada is settled. The Voltage Pictures lawsuit against a group of unnamed TekSavvy customers is still ongoing. The court in that case has not yet decided whether or not to force TekSavvy to divulge the names of their customers. I wouldn't be surprised if the court tries to craft some sort of compromise order which no one will be very happy with.