Grey-market satellite TV suffers a legal blow

For the London Free Press - September 20, 2010 Read this on Canoe

An Ontario Superior Court recently upheld an interlocutory injunction against several defendants alleged to be engaged in the grey market sale of DirectTV to Canadians.

The case of DirectTV, Inc. v. Donaldson dealt with defendants based in the town of Charring Cross, just outside of Chatham. The injunction prohibits the defendants from selling DirectTV dishes or having anything to do with selling DirectTV subscriptions.

Grey-market satellite customers purchase a U.S. satellite dish, and pay monthly for programming. Grey-market customers use false U.S. addresses to misrepresent that they are U.S. residents. DirectTV is the largest provider of satellite-delivered subscription television programming signals in the United States, but is not licensed for sale or use in Canada.

Obtaining an interlocutory injunction -- meaning an injunction in a preliminary motion before the trial has begun -- is not easy, as courts are reluctant to make such decisions without hearing all the evidence.

The test for granting an interlocutory injunction is that:

there be a serious question to be tried; irreparable harm will be suffered if the relief is not granted; and the balance of convenience favours the granting of an injunction, i.e. the harm to the plaintiff if the injunction is not granted will be greater than the harm to the defendant if the injunction is granted.

In this case, the judge said, "I am satisfied that there is a serious issue to be tried and that DirectTV's claim is not frivolous or vexatious and stands a reasonable chance of success at trial."

The defendants tried to argue consumers could use the dishes for things other than receiving DirectTV signals, but the court was not convinced.

The judge said:

"I am satisfied that there is a serious issue to be tried as to whether the Haskell Defendants have breached the Radio Communication Act and are liable to DirectTV therefore. I am also satisfied that there is a serious issue to be tried as to whether the Haskell Defendants have aided and abetted in the breach of the Radio Communication Act and are liable to DirectTV therefore. I am also satisfied that DirectTV can show a serious issue to be tried as to whether the Haskell Defendants are liable for fraud, fraudulent misrepresentation, conspiracy, conversion, unlawful interference with economic relations, and unjust enrichment."

Even if this case never proceeds to trial, it sends a strong message that the sale of grey-market satellite receivers is unlawful.

This is not the first case to send that message. In the 2002 case of Bell ExpressVu Limited Partnership v. Rex, et al., it was decided that section 9(1)[copy] of the Radiocommunication Act prohibited the decoding of all encrypted satellite signals, except where authorization was acquired from a distributor holding the necessary legal rights in Canada to transmit the signal. That case also dealt with black-market satellite, meaning accessing satellite TV using hacked access cards

UPDATE:  Here's a link to the decision in case anyone is interested in reading it.   http://www.canlii.org/en/on/onsc/doc/2010/2010onsc4062/2010onsc4062.html