Federal Court Refuses to Strike Bell’s Copyright Misuse Defence in Millennium Funding Litigation

In the Federal Court’s decision in Millennium Funding, Inc. et al v. Bell Canada ( 2026 FC 929) dated July 10, 2026, the Plaintiffs sought to strike broad portions of Bell’s Further Amended Statement of Defence and Counterclaim following the Federal Court of Appeal’s (FCA) decision to grant leave to amend.

The underlying action was commenced by several film production companies, including Millennium Funding, which alleged that Bell failed to forward copyright infringement notices and retain subscriber information as required under the Notice Regime provided in sections 41.25 and 41.26 of the Copyright Act. The Plaintiffs sought nearly $400 million in statutory damages. Bell, in turn, alleged that the Plaintiffs’ use of the Notice Regime amounted to “copyright misuse” and counterclaimed against Millennium and its counsel, alleging that their use of the Notice Regime constituted several torts, including abuse of process and unlawful means of conspiracy.

Initially, the Case Management Judge struck Bell's copyright misuse defense without leave to amend on the basis that it lacked specific material facts and was fatally flawed. Bell’s appeal to the Federal Court was dismissed. The FCA reversed the decision in part, after which Bell filed a Further Amended Statement of Defence.

The present motion before Justice McDonald concerned whether substantial portions of Bell’s Further Amended Statement of Defence and Counterclaim should be struck. Millennium argued that Bell’s amendments exceeded the scope of leave granted by the FCA and that many of the pleaded allegations had no reasonable prospect of success.

A central issue was the scope of the FCA’s decision granting Bell leave to amend its pleadings. Millennium argued that Bell’s amendments should be confined to specific allegations concerning misuse of the Notice Regime. Justice McDonald rejected that position, finding that the FCA had not limited or curtailed Bell’s ability to plead the copyright misuse defence.

Justice McDonald reiterated that the copyright misuse defence has not yet been tried in Canada and that courts should be cautious before striking novel defences, particularly when it has support in U.S. jurisprudence. The Court observed that the FCA characterized Bell’s defence as a potentially viable copyright misuse defence based on the alleged use of the notice and Notice Regime for improper purposes.

Bell’s allegations included that Millennium sent notices that did not comply with the Copyright Act, Millennium’s actions were contrary to the policies of the Copyright Act, and they relied on forensic software that allegedly failed to account for potential fair dealing defences. Ultimately, the Court found that Millenium failed to establish that the positions advanced by Bell had no reasonable prospect of success.

Millennium also argued that Bell’s amendments improperly withdrew prior admissions. The Court rejected these submissions, finding that Bell’s earlier pleadings did not contain the clear and unambiguous admissions alleged by Millennium.

The Court likewise dismissed arguments that Bell had advanced positions inconsistent with prior proceedings. In particular, statements made in a demand letter or Bell’s decision to take “no position” in earlier related proceedings were not sufficient grounds to strike pleadings.

However, Millennium was successful in convincing the Court that Bell’s references to third parties, including Millennium’s counsel, should be struck.

Finally, Bell’s counterclaim in respect of abuse of process and declaratory and injunctive relief survived scrutiny, as the Court found Bell had pleaded sufficient material facts in support.

This case highlights that courts are reluctant to strike a novel claim from a pleading, with the court here favouring a cautious approach and leaving in Bell’s novel defence of copyright misuse. The law on this defence, including underlying issues of statutory interpretation, is still evolving in Canada.