Canadian Copyright and Related Issues - Suspense at Summer’s End

Here are some developments we can expect soon in Canadian copyright law:

• York University will likely very soon file a statement of defence in the lawsuit by Access Copyright. This has already taken months longer than usual. York’s position and strategy will inevitably attract much scrutiny, since an adverse outcome for York could profoundly and negatively affect the entire Canadian educational community at all levels.
• The Federal Court could rule at any time in the Voltage Pictures effort to compel Teksavvy to hand over the identities of thousands of its customers. Teksavvy, it will be recalled, has spent a lot of money not to take a position on this issue and to buy time for a law school clinic to get involved as an intervener. Teksavvy’s counsel spoke briefly at the end of the hearing, which took place on June 25, 2013 but Teksavvy had not previously taken any position.
• The Copyright Board has just advised that “the Tariff of Levies to Be Collected by CPCC in 2012, 2013 and 2014 on the Sale, in Canada, of Blank Audio Recording Media is scheduled to be published in the Canada Gazette this Saturday, August 31, 2013. The links to the certified Tariffs, as well as the decision in respect of each Tariffs will be available on our web site under the heading “What’s New” on Friday, by the end of the business day.” The Board will also, at some point, rule on whether it intends to proceed with a hearing on whether there can be a levy on microSDs for the period of January 1 to November 6, 2012. The Government published a regulation on November 7, 2012 that stated that “Memory cards in microSD form factor, including microSD, microSDHC and microSDXC cards, are excluded from the definition “audio recording medium” in section 79 of the Copyright Act.”
• The Supreme Court of Canada could at any time now deliver its judgment in the case involving Cinar and Claude Robinson, et al which will presumably focus on the question of what is a “substantial part”.

In the somewhat longer term, we know that we will see:

• The hearing in the Federal Court of Appeal on the Warman v. Fournier case, which involves fair dealing, substantial copying, limitation periods, etc. and in which there are now some prominent interveners.
• A ruling by the Copyright Board in Access Copyright’s quest to get a tariff on copying by provincial civil service employees.
• A hearing next May by the SCC on the interplay between the Status of the Artist Act and the Copyright Act and whether the National Gallery must negotiate exhibition rights, etc. with respect to pre-existing art works under the aegis of the former act rather than the latter, under which the artists have apparently never even tried to get a tariff at the Board.
• A hearing by the Federal Court of Appeal on whether Catherine Leuthold gets the $22 million or so that she believes she is owed by CBC for the few apparently inadvertently unlicensed re-uses of a few of her still photos from 9/11 that the Federal Court said was worth less than $20,000 and what the cost consequences may be to her if she does not succeed.
• A hearing beginning February 11, 2014 by the Copyright Board of the Access Copyright proposed Post-Secondary Tariff, in which the AUCC has spent almost $2 million that we know about and withdrawn its objections, leaving its members without any representation in a hearing in which Access Copyright is seeking what it considers to be a “mandatory” tariff.
• A hearing by the Copyright Board beginning April 29, 2014 into Access Copyright’s proposed tariff for K-12 schools, which is taking place notwithstanding that the K-12 school boards have stopped paying anything to AC under the previous tariff.

Other issues to watch in the medium term will include:

• How will the educational community react to York’s defence of the Access Copyright litigation?
• Will Access Copyright sue one or more K-12 school boards?
• Whether the Government will look at growing calls to deal with certain issues involving the Copyright Board, some of which could be dealt with by regulation, rather than legislation.
• Whether Canada gives into expected American and/or European pressure to extend the copyright term to life + 70 years, etc. and other potentially controversial US and EU IP demands in the TPP and/or CETA negotiations.
• Whether the far reaching Bill C-56 dealing with anti-counterfeiting – but which goes far beyond what might be required even by ACTA – is reintroduced after the expected prorogation, whether changes will be made before it is re-introduced, and what will happen to it if it proceeds through the committee process.

Most of the above issues have been discussed before on this blog. Watch here for further developments.

HPK

Convergence, Copyright and the CRTC

Once again this year, as was the case when the Supreme Court of Canada released its “pentalogy” of decisions on July 12m 2012, Canadian consumers, IP users and “public interest” advocates need to pinch themselves to make sure that they are not dreaming in Technicolor.

The CRTC has very surprisingly and very clearly rejected the proposed $3.4 billion Bell/Astral merger. Here’s the summary.  Here’s the decision.

BCE has become a superpower within the Canadian firmament, having huge and converged interests in just about all aspects of media (including news), entertainment, broadcasting, telecommunications, ISP, wireless  and even retailing.

Without commenting on BCE or this transaction in particular, it can  be the case from a purely copyright standpoint that this kind and quantity of convergence can end up being bad for consumers. And we all know that copyright is important these days.

This is because the naturally competition and even occasionally adversarial relationships that might have otherwise taken place between various parts of a corporate empire, if they were separately owned, may cease to take place if there is common ownership. Fuzzy and compromised thinking may be the result, with mixed or confused signals being sent out to regulators and consumers themselves.

The result can even be bad for the mega merged company itself. I suspect that SONY is an example of just such a result. As a hardware company, it was for a long time unbeatable in consumer and even some sectors of professional electronics. It made the best and most innovative gadgets in just about every category. But, then it decided to become an entertainment company too. The two don’t always mix. Entertainment companies virtually all believe that more copyright is always better. Consumer electronics companies tend to believe that less is more and better.

For example, at Canada’s Copyright Board, SONY had a big stake on both sides of the fence in the early days of the tape and CD levy. It stood to benefit from the revenues and was a major stakeholder in the CPCC. But, as a hardware and blank media manufacturer, it was an objector to the levies.  I suspect that SONY had some interesting internal discussions about levies and more recently about TPMs. On the latter front,  it found itself in the incredibly embarrassing position of having deployed its disastrous “rootkit” antipiracy malware embedded in sound recordings that destroyed or injured a lot of hardware that SONY would have made and sold to unsuspecting consumers.

Unlimited convergence may have had its day and that would probably be a very good thing. At least, for this day, it has met its match at the CRTC, and its new Chair, Jean-Pierre Blais pictured above.

HPK

How WIPO Treaty Ratification - and not Bill C-32 - would Double the blank media levies ("taxes") in Canada

Michael Geist has a blog today about the potential political debate concerning an “iPod tax” and how Bill C-32 would have supposedly doubled the "iPod tax"  due to the national treatment requirements of the 1996 WIPO WPPT treaty. I've been writing about this for years and have testified about it to a Parliamentary Committee, and its gratifying to see some of these points being repeated in the government document that Michael exposes and in his own blog.

However, it is incorrect to suggest that “... it is worth noting that Bill C-32, the Conservatives own copyright bill, would likely have doubled the fees that Canadians pay on blank CDs.”

Bill C-32 itself would not have resulted in the doubling the dwindling levy proceeds, which now effectively come only from blank CDs. The “doubling” would only result from a subsequent separate decision to actually ratify the WPPT and the then inevitable issuance of a statement by the Minister pursuant to s. 85 of the Copyright Act that would cause foreign “makers” and “performers” to be considered “eligible” for reciprocal payments. This would require recognition in turn by the Copyright Board in a new tariff, which the Board would doubtless not hesitate to provide - assuming that that blank CDs would still be considered to be an “audio recording medium” - which is probably not the case, but would need to be vigorously contested, given the Board’s past decisions.

Indeed, it is well understood that, while this and the previous Governments both wished their bills to be “WIPO Ready”, any decision to actually ratify the 1996 treaties might need to await the demise or significant reworking of the levy scheme precisely in order to avoid the “doubling” aspect and the arithmetically inevitable major royalty outflow, which could serve no useful purpose whatsoever for Canadian interests and would thus potentially be an acute embarrassment to whatever government were to be in power at the time. 

HK

Private Copying Levies ("taxes") Dealt Blow by EU Court

The Third Chamber of the Court of Justice of the European Union has dealt a major blow to private copying levies in Europe, where the concept originated in the age when cassette tapes walked the earth, as it were. Here's the ruling.

Here's the gist of it:

53 Consequently, the indiscriminate application of the private copying levy to all types of digital reproduction equipment, devices and media, including in the case expressly mentioned by the national court in which they are acquired by persons other than natural persons for purposes clearly unrelated to private copying, does not comply with Article 5(2)(b) of Directive 2001/29.

...

On those grounds, the Court (Third Chamber) hereby rules:...

3. Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and the deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media not made available to private users and clearly reserved for uses other than private copying, is incompatible with Directive 2001/29.

(emphasis added)

HK

The SAC Double Negative Option Celestial Jukebox

Eddie Schwartz/bluepower.com

The quest for a viable "Alternative Compensation System" to deal with perceived problems involving P2P downloading and file sharing lives on.

The Songwriters Association of Canada (“SAC”), led by Eddie Schwartz, was in Ottawa on the Hill on June 3, 2009 and at the University of Ottawa, in an event organized by CIPPIC. Too bad there weren’t more people there because it was very revealing - though frankly not very convincing.

Here is the latest version of SAC’s proposal.

On the plus side, the SAC is to be complimented for daring to think outside the box. Unlike the power brokers in the music industry establishment, they don’t want to kill file sharing technology and they don’t want to sue their fans. They say that they really like P2P technology. And their fans. That much is good, but after that there are some probably fatal devilish details to consider.

The essence of the SAC’s proposal is that it's a negative option for both consumers and rights owners. For $5 a month, every Canadian household that doesn't opt out of the scheme (and "sign and undertaking to pay a predetermined amount of damages if they are caught file sharing") would get the right to download and share all the music authorized by the rights holders that choose not to opt out.

Here is the essential wording of the SAC proposal:

7. While at least 70% of Canadians regularly use the Internet to file share music, and 90% of them use it occasionally, naturally not all Canadian Internet users use the Internet for that purpose. We propose that they should be allowed to opt out of the payment of the fee. Broadband internet and wireless subscribers will be able to opt out of the licence fee if they do not share music files and if they sign an undertaking to pay a predetermined amount of damages if they are caught file sharing.

Payment of this fee would remove the stigma of illegality from file sharing. In addition, it would represent excellent value to the consumer, since this fee would grant access to the majority of the world’s repertoire of music. Existing download subscription offer a mere fraction of the file-sharing repertoire.

Creators or other persons entitled by by this system to claim a portion of the licensing fees but who nevertheless do not wish to be compensated under such a system could similarly opt out. Acceptance of license fees would amount to a waiver of the right to sue for the unauthorized transmission by Canadian users.

(footnote omitted)

Leaving aside the accuracy and provenance of those figures about the percentage of Canadians who file share, the obvious problem with this is that it's a negative option "tax" (or so it will be called) on consumers - with the prospect that exercise of that negative option would give rise to invasive snooping and liquidated and presumably high damages payable by Daddy or Mommy if one of the kids downloads something and gets "caught". And maybe even the additional prospect of litigation at the suit of any of the rights owners who do opt out.

I get the feeling that SAC doesn't want to highlight the "negative option" aspects of this proposal. Somehow I can't see the prospect of a a negative option "tax" for the benefit of the music industry with the alternative being significant fines payable to the music industry being attractive or vote-catching in the eyes of politicians. While Canadians may be passive and polite about many things, the juxtaposition of something that looks and walks, and smells like a tax with a negative option and for the benefit of mostly foreign and mostly wealthy corporate interests may not escape controversy, to put it mildly.

And the negative option for the music industry won't sit well either. If this is backed by legislation, it could be seen, among other things, as a mandatory "formality" that would be contrary to the Berne Convention. There are millions of mostly untraceable rights holders around the world who enjoy copyright rights in Canada. Must they "opt out" if they don't want to be part of this? If they don't opt out, how are they going to get paid? Through their national collectives, who will have no similar reciprocal scheme in place. The mind begins to boggle.

This apparently modest fee - less than a pint of draft beer these days - would be added to their ISP bill. It would generate about $900 million a year in Canada, based upon SAC's admittedly “back of the envelope” calculations. (BTW, that’s about 4.5 times more than what SOCAN now collects - and it’s taken SOCAN and its predecessors more than 80 years to get to that level). Sure - SAC admits that $5 is just a figure for discussion purposes and they could cut back to $3 a month - a mere $600 million. Sometimes, you gotta walk before you can run.

This is apparently so simple and straightforward, according to SAC, that all the details and MOUs can be worked out by this September, just in time for a new bill that would put it into effect. The few remaining matters could presumably be dealt with by the Copyright Board. (BTW, the Copyright Board and the Courts are still struggling with SOCAN’s notorious Tariff 22 for music via the internet, which is now about 14 years old and potentially still years and another trip to the Supreme Court away from fruition. That tariff was filed years before Napster, iTunes, YouTube and Facebook even existed. In fact, many users of the latter two services in particular weren’t even born when Tariff 22 was first filed.

Anyway, I hate to be negative. However, if I had a positive solution to the problems of the music industry that those in power could understand and would act upon, I wouldn’t be counting time at stop lights every morning. I’d be counting grains of sand and composing fugues on my own island in the Mediterranean.

That said, here are a baker’s dozen specific serious problems with SAC’s proposal, any one of which could prove fatal:

1. We already have a levy scheme in Canada that the Copyright Board itself and a Federal Court Judge suggest would cover downloading onto computer hard drives. It’s called the private copying levy (most people call it a “tax”, even if the Board and the Courts don’t) and it has generated more than $250 million to date (based upon extrapolation from 2007 published figures, which are, as usual, out of date), much if not most of which comes from people who never copy music - but never mind that inconvenient truth. The major record companies, i.e. CRIA, got what they asked for, i.e. legalized private copying regime with a levy. That this turned out, effectively, to be a legalized downloading regime recalls the maxim about being careful what you wish for. This speaks volumes about short sighted solutions to doubtfully serious or even relevant problems and the credibility of the industry’s current wish list of copyright “cure-alls” for all the various industry problems that have much to do with bad management and little or nothing to do with copyright law. In any case, the SAC scheme would encourage technology and architecture that would allow for downloading that is already legal, but not permit uploading or sharing - and thus would thus encourage avoidance.

2. Similar schemes to SAC’s have been touted in the past - indeed for years. Paul Hoffert of Canada and Terry Fisher of Harvard has been pushing NOANK for a long time - but the world seems to be largely saying “No Thanks”. True, there are differences with the SAC scheme - but they are not that obvious or important overall. The bottom line is that neither scheme will work unless all major copyright owners agree to it. So far as I known, none have.

3. There are significant potential privacy concerns. For the scheme to be viable and fair to creators, it must be accurate in its measurements of usage. Do you really want CRIA members to know what you are downloading and sharing? What if your tastes run to Tiny Tim, or Liberace? Or Falun Gong Favourites?

4. There are treaty concerns. A massive blanket/compulsory license of the reproduction and communication rights imposed by legislation on the basis of a “negative option” regime raises lots of obvious treaty issues even under Canada’s existing obligations, not to mention the 1996 WIPO treaties to which Canada is not bound but has signed.

5. The scheme is inherently socialistic. I have to agree with Graham Henderson on this, who famously referred to Harvard’s Terry Fisher (co-proponent of NOANK) as “Comrade Fisher” at a conference. It’s true that the many SOCAN members make only a few hundred bucks a year, if that, from royalties - though some earn much, much more. Anyone who has “created a musical work or part of a musical work” that is performed anywhere (e.g. a bar or in the subway) can join SOCAN for free. Nobody guarantees self proclaimed musicians an income in Canada. Copyright law rewards success, not simply membership and not necessarily merit. Only failed car manufactures and unsuccessful investment bankers can count on legislated bailouts these days.

6. We already have about three dozen collectives in Canada. This more than anywhere else in the world, I believe. We would need a giant new collective and maybe even several sub-collectives here - resulting in a mechanism that would make the CPCC look like child’s play in comparison.

7. We would need counterpart international schemes - otherwise Canada would be shovelling almost all that $900 million across the border to the USA and over to Europe with virtually nothing coming back. Even if we get our full share back, it’s going to be trivial. Despite the celebrity of a few performers and success of a few songwriters, we have only about 2% of the international music publishing market. Most of the money from this scheme would leave Canada, and almost nothing would come in. Especially so if the propose scheme is fully "national treatment" in nature, as appears to be the case.

8. This scheme wouldn’t work for emerging artists, who don’t show up reliably in any of the current methods used to measure downloading and sharing behaviour. SAC admits that Big Champagne is only “70% accurate” - which, whatever that may means. isn’t very impressive if you are in a garage band and on the margin. Air play and CD sales (what CD sales?, some may ask) are a poor proxy for downloading and sharing behaviour. However, that’s what the CPCC has been using. The long tail theory may work at Amazon - but won’t work here.

9. Unless virtually all of the major record companies, music publishers and performers go along with this, there would still be threats of litigation against individuals - so Canadians would have multiple levies, digital locks and litigation.

10. We would need significant buy in by ISPs - who would have to keep track of which subscribers are “in” or “out” and when - and transmit that information to the collective. More privacy issues and much more expense to ISPs. Not to mention that the perceived “tax” - even if “voluntary” - will be seen as an add-on to the ever expanding monthly bills from Bell and Rogers, etc. that will further alienate customers and result in other “optional” and more profitable service being dropped. And if there’s enough of a financial incentive to the ISPs from the new collective to let them swallow this scheme, consumers and artists may see it as a kick-back and react accordingly.

11. If this works, which it likely won’t, we would likely see similar schemes touted by movie distributors, book publishers, newspapers publishers, knitting pattern publishers and every other sector that claims to be a "victim of piracy” on the internet. Will Canadian consumers greet the add-on of another $20, $50, or $100 a month or more to their ISP bill with flowers? I doubt it.

12. We will see the largest copyright tribunal anywhere (Canada's Copyright Board) get even larger, and full employment for lots of copyright lawyers - which some readers of this blog might regard as a good thing. However, how this will serve actual Canadian creators or consumers remains rather unclear.

13. Last but not least, if this scheme works, it would surely kill or seriously wound virtually all remaining retail store and online iTunes-type activity in Canada, and stifle any innovation in the business end of the music industry for a long time to come.

The bottom line is this. If there is a problem out there that requires a copyright solution - and that remains to be proven - a bad solution enacted in haste could be worse than no solution.

As CRIA well knows, or at least ought to know by now, be careful what you wish for.

HK

Levies Then and Now

$3.00 Each???

$2,800 each???

There's a story out that the capacity of a blank DVD could be boosted to 1.6 terabytes, which would make the "levy" sought by the CCPC back in 2002 of $2.27 seem fairly small on a capacity basis. However, that proposed levy on blank DVDs was shot down (yes - I was involved) and has not been resuscitated because the CPCC apparently (though I'm sure reluctantly) recognized that these products are not "ordinarily used" to copy music. That said, the $2.27 proposed levy then sought on blank DVDs is now about 10 times the retail price, if you buy them in any quantity and get a good deal. They are now cheaper by far in many cases than blank CDs (which have only about 15% of their capacity at best), because the latter have a $0.29 "levy" (commonly referred to as a "tax"), which is what is keeping the CPCC in business and supporting its overall more than 10% expense/revenue structure. The CPCC has still not published its 2008 financial figures, though we are well into 2009.

Speaking of 2002 proposals, the CPCC then proposed a levy "of $21 per gigabyte of of memory in each non-removable hard drive incorporated into each MP3 player or into each similar device with an internal hard drive that is intended for use primarily to record and play music." In other words, the current 120 gig iPod "Classic" that sells for under $300 would have had a levy of $2,520 if the CPCC had succeeded. Yes - we stopped that too, though the CPCC and Copyright Board had to be told twice by the Federal Court of Appeal that it wasn't on.

All of this shows that today's quickie proposed legislative solutions and oft inflated tariff proposals to deal with supposedly serious crises arising from copyright and new technology are potentially tomorrows' absurdities or even nightmares.

HK

Locks, Levies and Litigation - My First Take on Bill C-61

OK.

Better late than never, I hope.

Here's my Power Point presentation (with a couple of updates arising from discussion) based upon my presentation at the University of Ottawa on June 18, 2008.

Lots to think about.

HK

CPCC won't seek leave to appeal...

CPCC has announced today that it will not seek leave to appeal to the Supreme Court of Canada from the January 10, 2008 decision of the Federal Court of Appeal quashing the Copyright Board's decision to hold a hearing to set a tariff on digital audio recorders. (I acted in this matter for the Retail Council of Canada, which along with Apple Canada, etc. had brought the applications to quash.)

Jack Kapica has a blog on this today, as well as his prediction on the much awaited copyright legislation.

HK