US IP Infringement Judgement Reaches into Canada

If a US company obtains a judgement from a US court for intellectual property infringement in the US, can the judgement be enforced in Canada?

Several American movie studios sued a Canadian company Click Enterprises Inc. (“Click”), and its principal, an Ontario resident named Philip Evans, for infringement of intellectual property rights.  Specifically, the lawsuit involved allegations of copyright infringement arising from unauthorized movie downloads.  The movie studios obtained default judgement in New York state and sought to enforce their judgement against the Ontario company in Canada.  In the decision in Disney Enterprises Inc. v. Click Enterprises Inc. the Ontario court decided that there was a “real and susbstantial connection” between Click’s conduct and the United States, where the original judgement was granted.  The court said “it is inescapable that Click was making its services available to residents of the United States who wished to illegally download American films.”  Because of this connection, the US court had exercised proper jurisdiction in the eyes of the Ontario court, and the US judgement was upheld in Ontario.  In effect, the US judgement was enforced as though it was the judgement of a Canadian court.

The lessons for business?  The use of the internet was instrumental in cementing the “real and substantial connection” between Click’s conduct and the United States.  Click had US customers and accepted online payments in the US.  Any online business must take into account the risks of intellectual property infringement which might actually take place south of the border.  If a Canadian business infringes IP rights in the US, the long arm of the law does have a way of reaching across the border.

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