On July 10, 2026, the Federal Court released its decision in Millennium Funding, Inc. v. Bell Canada, 2026 FC 929, the latest chapter in a dispute that highlights the novel defence of “copyright misuse” in Canada. Building on the Federal Court of Appeal’s 2025 recognition of the defence as potentially viable, the motion judge largely dismissed the plaintiffs’ motion to strike Bell’s Further Amended Statement of Defence and Counterclaim, clearing the way for the copyright misuse defence to be considered on the merits in the litigation.
Background
As discussed in our previous Cassels Comments,1 the plaintiffs (the Millennium Producers) are a group of film production companies, each claiming copyright in a motion picture. Using forensic software to detect allegedly infringing activity online, the Millennium Producers send notices of claimed infringement to Internet Service Providers (ISPs) under the notice and notice regime provided in sections 41.25 and 41.26 of the Copyright Act. In the litigation, the Millennium Producers allege that the ISP defendants, Bell Canada and Bell Aliant (Bell), failed to forward those notices to the subscribers associated with the identified IP addresses. The Millennium Producers seek statutory damages under subsection 41.26(3) of almost $400 million.
Bell pleaded in defence that the Millennium Producers’ copyright enforcement program misused the notice and notice regime by sending automated, non-compliant notices to intimidate alleged infringers into disproportionate settlements and to make exorbitant claims against ISPs, and that this conduct amounts to the tort of copyright misuse.2
As covered in our earlier Cassels Comments, the procedural road to this decision has been long. At first instance, the case management judge struck Bell’s pleadings in their entirety without leave to amend. The Federal Court upheld that decision. On further appeal, the Federal Court of Appeal found that Bell’s pleadings disclosed a viable copyright misuse defence based on allegations that the Millennium Producers had used the notice and notice regime for improper purposes. The Federal Court of Appeal therefore reversed the decision of the Federal Court denying Bell leave to amend.
Bell filed its Further Amended Statement of Defence and Counterclaim in December 2025. The Millennium Producers then moved to strike broad portions of that pleading under Rule 221 of the Federal Courts Rules, arguing that Bell’s amendments exceeded the scope of the leave the Federal Court of Appeal had granted and otherwise have no reasonable prospect of success.
The High Threshold for Striking a Novel Defence
The motion judge began with the governing standard. Under Rule 221(1)(a), a pleading will be struck only where it is “plain and obvious,” assuming the pleaded facts to be true, that the claim or defence has no reasonable prospect of success. Particular caution is warranted before striking a statement of defence or a novel claim.
The motion judge began by noting that the copyright misuse defence has not been fully considered or tried in Canada. Although the Supreme Court of Canada discussed copyright misuse in Euro-Excellence Inc v. Kraft Canada Inc., that decision did not comment on the doctrine’s possible application in Canada but instead left that issue “for another day.”3 In addition, the Federal Court of Appeal’s order granting Bell leave to amend its pleading allowed a broad scope for a policy-based copyright misuse defence. The Court further observed that it “should hesitate to strike a novel defence based on ‘responsible, incremental extension of legal doctrine’ especially when that doctrine has persuasive support in United States jurisprudence.”4 Accordingly, the Court held that the Millennium Producers had not met their significant burden to show that the defence has no reasonable prospect of success.
The Misuse Allegations
The motion judge declined to strike Bell’s specific allegations of copyright misuse. The Court’s rulings on some of the key allegations are discussed below.
Bell claimed that the Millennium Producers’ notices did not comply with the Copyright Act and that this constitutes copyright misuse. Bell claimed that the notices were non-compliant because they included (i) the address of the Millennium Producers’ counsel instead of the claimant’s address; (ii) an offer to settle; and (iii) a request for personal information. The motion judge declined to strike those pleadings because their viability will depend on matters of statutory interpretation and findings of fact made at trial.
The Court also did not strike Bell’s allegation that commencing infringement proceedings and obtaining Norwich orders before sending a notice is copyright misuse. The Court noted that paragraph 41.26(1)(b) of the Copyright Act – concerning an ISP’s obligations upon receiving a notice of claimed infringement – contemplates that litigation will follow, not precede, a notice of claimed infringement.5
The Court also refused to strike Bell’s allegation that the “network services” exception in section 31.1 of the Copyright Act reflects Parliament’s intention to largely shield ISPs from liability for their subscribers’ infringing acts, and that the Millennium Producers’ conduct effectively contravenes that policy. Although the Supreme Court held in Rogers Communications Inc v. Voltage Pictures, LLC, 2018 SCC 38, that ISPs remain liable for failing to meet their obligations under the notice and notice regime notwithstanding the section 31.1 exemption, the motion judge held that – given the novelty of the misuse defence – it was not plain and obvious that Bell’s position was doomed to fail.
The Court also preserved Bell’s counterclaim. It found that Bell had pleaded sufficient material facts to support each element of abuse of process and declined to strike Bell’s related requests for declaratory and injunctive relief. The Court further rejected the Millennium Producers’ arguments that Bell’s amendments had improperly withdrawn admissions requiring leave, distinguishing formal from informal admissions and noting that answers given on examination for discovery may be corrected or qualified under Rule 245(1) of the Federal Courts Rules. While the Court did strike certain of Bell’s allegations, the copyright misuse defence and much of the counterclaim survived intact.
Conclusion
This decision represents an important step in the development of the copyright misuse doctrine as a defence in Canada. By declining to strike the defence, the Federal Court has allowed for the doctrine to be considered and applied on a full evidentiary record rather than resolved on the pleadings. While this case will consider copyright misuse in a specific context – i.e., in an action against an ISP for its alleged failure to comply with notice and notice obligations – the Court’s eventual decision may have ramifications for parties to many types of copyright disputes in Canada and should be carefully monitored.
Footnotes
1. See our earlier Cassels comments: The Tort of Misuse of Copyright: A Viable Defence; and A Year in Canadian Copyright Law: Notable Decisions and Updates From 2025.
2. Bell also counterclaimed against the Millennium Producers and their counsel for abuse of process and unlawful means conspiracy. It later abandoned the counterclaim against counsel and withdrew the conspiracy claim.
3. Millennium Funding, Inc. v. Bell Canada, 2026 FC 929, para. 31 citing Euro-Excellence Inc v. Kraft Canada Inc., 2007 SCC 37, para. 98.
4. Millennium Funding, Inc. v. Bell Canada, 2026 FC 929, para. 34.
5. Millennium Funding, Inc. v. Bell Canada, 2026 FC 929, para. 41, citing Voltage Pictures, LLC v. Salna, 2025 FCA 131, para. 75.
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