These issues were considered by the Paris Court of Appeal in the La société Des Auteurs des Arts Visuels et de L’image Fixe Visual Auteurs (SAIF) v Google France  S.A.R.L. and Google Inc case decided last week.

The question of applicable law

The Paris Court of Appeal first dealt with the conflicts question as to which law to apply. It held that French copyright laws applied because that was the country in which, according to Article 5.2 of the Berne Convention, copyright protection was sought. According to the Court, Google intended French citizens to be able to view the indexed and cached images in France and accordingly it was that country’s laws which applied. According to the Court (all translations by Google Translate):

Whereas there is no serious dispute that the applicable law in copyright is the country where protection is claimed, this attachment under Article 5.2 of the Berne Convention for the Protection of Literary Art and the provisions of which were recalled by the decision being appealed; that for much remains to determine the law of the country where protection is sought;

GOOGLE argue that companies that under the legislation and means that the place where the acts were committed at issue, namely the United States, which present a interest of uniqueness, consistency and certainty while appellant argues that the law the place where the damage caused is more relevant in terms of proximity to the dispute and exclude any risk of implantation of the content of a site based solely on the choice of a countries where legislation would be unfavorable to the right of authors;

It is certain that in the context of the Internet instead of the event is not necessarily the same as the damage; in this case French law is that of the judge, law of the country where protection is sought and that for which it is claimed, which may be the place where the acts complained of are borne;

It can not be accepted that the attachment to the French territory would not be sufficient to sole ground that the allegations are essentially originated outside of France, being observed that it is not really disputed that the law of the place where the damage is likely to apply in case of manifestly closer proximity to the dispute;

In this respect if the services under investigation may be viewed by an audience speaking it is nevertheless the case that bears on how Google Images for French language services available to the public and is mainly French for that audience in that it is especially accessible as a URL in “.com” (google.fr and images.google. fr), which territory is indisputably French deliberately described as the country where the images can be viewed and chosen in full knowledge of question;

That the place of connection and reception manner by the holder of the search engine is a significant criterion of proximity while services set to produce placetendent their effects in France and that their purpose as claimed by the respondents was “to facilitate Internet users’ access to information and knowledge;

He is well enough established that the receiving country is a link nearby clearly more relevant than events for assessing this litigation, that decision will be criticized accordingly reversed insofar as it applied in the cause of the Copyright Act of 1976, not French law;

The facts of the Google case pose a significant challenge to traditional conflicts of laws principles applied to copyright cases. The Court found that the copyright liability of a search engine associated with the acts of indexing and caching are to be assessed not by the laws where those acts take place, but by the laws of the place in which damage is done e.g. the place where the thumbnails are communicated to the public. In essence, the Court held that Google’s acts of indexing and caching files in California are subject to the national copyright laws in every country in which Google makes its search service available-which is nearly everywhere on the planet.

Is the decision on this point right?

Under traditional conflict of laws principles applied to copyright, where a foreign element is involved in a claim the court or tribunal must determine what law (the “relevant law” or “applicable law”)[1] to apply  to determine the issue. There are choices between the law of the forum in which the action is being tried (lex fori), in this case France, and the law of the place where the infringing act took place (lex loci delicti).[2] Most often, suits are filed in the country where the infringement allegedly takes place (the “protecting country”). However, suits are sometimes also brought in one country (the “forum country”) for acts that take place in another country (the “protecting country”).[3] In this case the claim was brought in France, the forum country,  for acts of infringement that arguably included acts that take place in the protecting country (acts of reproduction associated with indexing and caching) and the forum country (acts of communication to the public).

The copyright treaties do not expressly discuss choice of law rules. Article 5(2) of Berne Convention which was cited by the Court states, however, that “the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed”. This Article has generally been interpreted to implicate a rule of territoriality in which the applicable law is the copyright law of the protecting country, the lex loci deliciti.[4] In an action in which infringements are claimed in multiple jurisdictions, protection has to be analysed country by country, without regard to the substantive copyright laws of the forum country.[5]  In such cases, the court in the forum jurisdiction needs to apply the law of each protecting country.[6] The application of the lex loci deliciti to determining infringement issues, is consistent with the doctrine applicable to torts in both the US [7]and in Canada.[8]

The application of the lex loci delicti principle means that the question as to whether the issue in dispute is a work capable of being protected e.g. is it proper subject matter and does it meet the applicable laws’ originality requirement and questions as to whether an economic right exists and the question of the scope of the rights, are to be answered in accordance with the law of the protecting country. [9]

Applying the lex loci delicti principle, the French Court might have concluded that the acts of indexing and caching which involve acts of reproduction that took place in California should have been analyzed under US copyright law and the acts of communication to persons located in France should have been determined in accordance with French law. But, it did not do so. The Court looked at all of Google’s activities including that thumbnails were communicated to the public in France and assessed all of Google’s activities under French law.

Was Google liable for reproducing and communicating copies of visual images to the public in France?

The Court accepted that Google’s search service involved making reproductions of the copyright works of visuals artists from France, Canada and elsewhere. It also accepted that those reproductions were communicated to the public in France. Hence, there were acts of direct copyright infringement that Google could have been liable for. However, the Court held that Google was not liable for those acts.

The Court’s reasons for this conclusion are difficult to interpret. But, it appears that the Court viewed Google’s search service as being that of a neutral intermediary. Google would not be liable for purely automated acts that are an integral and essential part of the proper technical functioning of a search engine, at least as long Google remains an innocent intermediary by, for example, taking steps to remove or disable access to infringing content from its indexes and caches when it becomes aware of infringement (such as by complying with notices of claimed infringement and removing the allegedly infringing files from its indexes and caches).

[2] Sterling World Copyright Law (Thomson 2d Ed. 2003) at P 122-123, 128-129

[3] The distinction between a “forum country” and the “protecting country” is made in Geller International Copyright at P. INT-7. I leave aside  the question as to whether copyright infringements taking place outside of a forum state are justiciable in the forum state.  See, Lucasfilm Ltd & Ors v Ainsworth & Anor [2009] EWCA Civ 1328 (16 December 2009); Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45

[4] Geller International Copyright at P. INT-41-44, Ulmer Intellectual Property Rights and the Conflicts of Laws (Kluwer) at P. 11-14, .); Subafilms Ltd. v. MGM-Pathe Communications Co., 30 U.S.P.Q. 2d 1746 (9th Cir. 1994); Creative Technology, Ltd. v. Aztech System PTE, Ltd., 35 U.S.P.Q. 3d 1590 (9th Cir. 1995); Murray v. British Broadcasting Corp., 81 F.3d 287 (2nd Cir. 1996) at P. 290-293, Itar-Tass v Russion Kurier, Inc. 153F. 3d 82 (2nd Cir. 1997); Capital Records, Inc. v. Mercury Records Corporation, 105 U.S.P.Q. 163 (2nd Cir. 1995); Pearce v. Ove Arup Partnership Ltd., [2000] Ch. 403 (C.A.).

[5] Geller International Copyright at P. INT-41-4., Sisro v Societie de droit neerlandais en liquidation Ampersand Software BV (2002) IIC Vol. 34 701 (France. Sup.Ct. Mar. 5, 2002)

[6] Boosey & Hawkes v. Walt Disney Company (2d. Cir. April 30, 1988), Armstrong v. Virgin Records Ltd., 54 U.S.P.Q. 2d 1539 (S.D.N.Y. 2000); Creative Technology, Ltd. v. Aztech System PTE, Ltd., 35 U.S.P.Q. 3d 1590 (9th Cir. 1995), P&D International v. Halsey Publishing Company 5 U.S.P.Q. 2d 1133 (S.D. Fla. 1987); World Film Services Inc. v. RAI Radio Televisione Italiana, S.p. A. 50 U.S.P.Q. 2d 1187 (S.D.N.Y. 1999)

[7] Geller International Copyright at P. INT-7, Itar-Tass

[8] Tolofson v. Jensen, [1994] 3 S.C.R. 1022

[9] Geller International Copyright at P. INT-41-44, Sterling World Copyright Law at P 150, Itar-Tass, Bridgeman Art Libray ltd v Corel Corp. 50 U.S.P.Q. 2d 1110 (S.D.N.Y.1998)

Digital technologies are changing how libraries make available books, articles and other works to the public. There is clear demand for these services, and they provide unprecedented benefits to both libraries and their patrons.

However, librarians should be aware that the uses of digital media, such as books or articles in electronic form, e-books and audio books, raise legal issues that do not arise with making available traditional printed materials. These issues fall into two main categories: copyright and contract. The purpose of this article is to summarize what the library community should think about when acquiring digital copies of books or making them available to the public.

1) The Digital World Involves the Use of More Rights

Copyright provides authors and other owners of a work with a series of exclusive rights. These rights are “separate and distinct”, meaning that multiple rights might be implicated in a single act undertaken by a library.

Librarians know about the reproduction right which is used to authorize copying. The reproduction right does not impact the majority of traditional library lending because lending involves the sharing of a pre-existing copy of a book rather than the creation of a new copy. On the acquisition side, acquiring paper copies of a book rarely involves a contract to do anything beyond paying the price of the book.

On the acquiring side, librarians will already be familiar with the Book Importation Regulations made pursuant to Canada’s Copyright Act. These regulations establish rules for how books in a paper format may be imported into Canada from abroad. These rights come into play only after the owner of a copyright or its exclusive distributor gives notice to a library that certain books must be ordered through a Canadian agent.

In the digital space, however, rights that once seemed crisp and clear are blurred. Digital acquisition and lending invariably involves the act of making new copies. It also tends to involve agreements (licences) between libraries and publishers that define the scope of the permitted copying. 

Making copies of digital works available using the Internet or other means of telecommunication also implicates the “communication right”, which gives copyright holders the exclusive right to communicate a work to the public via telecommunication.

As a consequence, both the reproduction right and communication right may be present in any electronic distribution to members of the public. Each right may be implicated if a book is made available for downloading or even electronic viewing, whether that access takes place inside or outside of the library. Each of these acts has to be licensed from the copyright holders or a collective like Access Copyright which represents publishers and authors of works.

2)         Lending without reproducing

Some works in electronic form can be lent out to patrons without any licence from copyright holders. An example is where the patron simply takes out a physical copy of the work that is already stored in some medium. This is the case for an audio book on a CD or cassette. Since no copies are made by the library in order to lend it out, a not-for-profit library can lend out the book (or sound recording, computer program, or other work) without any licence from the copyright holder. (For-profit libraries cannot lend out copies of sound recordings or computer programs without permission.)

3)         Digital Lending Where New Copies are made- What Does Your Licence Permit?

Any time a library transmits a book, article or other work electronically to a member of the public, it must take care to consider whether it has acquired all of the necessary rights to do so.

The first place to look for this right is in any agreement or licence the library entered into when purchasing the digital copy. These documents will typically set out all of the acts the library is permitted to do with the copy of the work. These licences may also set out which acts a library is not permitted to do. If the agreement or licence (1) applies to Canada and (2) grants a permission to distribute further copies electronically, this should give the library comfort that it is permitted to distribute copies to its patrons.

Libraries may be licensed this way where the works are purchased from specialized library services which have a library’s particular needs in mind.

Certain digital books can be distributed in a “limited download” format that permits use of the book for discrete periods of time. However, libraries should be aware of any restrictions in such licences. Some licences permit distribution only in Canada, for example. This would restrict the location to which copies can be made available.

For example, the Toronto Public Library currently offers an electronic version of Frommer’s Florence, Tuscany & Umbria to its patrons. If the licence governing the distribution of this book contains a territorial restriction and a current TPL patron decided to download this travel book while on vacation in Italy, the library would be at risk of breaching the licence. 

Some licences permit access of a work only to patrons that physically view the work while at the library’s physical premises. Unless further dissemination is authorized, a library that makes such works available to patrons from remote locations will likely be in breach of the applicable licence. 

4) Has the Correct Copyright Owner Granted You the Right to Distribute?

Another complication is that there is often more than one owner of copyrights in a single digital book or digital audio book. For example, a digital audio book may contain distinct copyrights in a literary work (the text of the book), a performer’s performance, and a sound recording. If music is used to create atmosphere in the digital audio book, there might be further rights in that.

Often, these rights will be split among different copyright owners. While the owners may have come together to create the original digital copy, they may not have agreed to permit that digital copy to be copied and distributed to the public by libraries. So here again, it is important to read your licence to ensure each of the acts you propose to engage in is licensed for the entirety of the work.

Also, copyright holders often divide their rights territorially. For example, the rights to Audrey Niffenegger’s 2003 novel The Time-Traveler’s Wife are owned by Harcourt in the U.S., Random House in Canada, and others elsewhere. When arranging for a digital licence, it is therefore essential for a library to confirm that the right to use the book in the desired fashion has been granted by the owners of the Canadian copyrights.

This can pose a problem if a digital book or audio book is purchased over the Internet from a company in another country. A site in the United States or United Kingdom, for example, may have cleared the U.S. or U.K. rights in a digital book, but if it hasn’t cleared the Canadian rights, it can’t license a library to download or distribute those works electronically in Canada.

5) Does the Fair Dealing Regime or the Library Exception Cover Me?

The Copyright Act has a general fair dealing exception. The Act also has specific “library exceptions”. They permit a user to act in certain ways that might otherwise be seen to infringe copyright.

For example, Canadian copyright law allows libraries to perform a number of specific acts in furtherance of their public objects. Libraries are allowed to make preservation copies of rare or unpublished works if they are deteriorating, or to change the format of a work if the technology needed to use it becomes obsolete. These are tightly drawn exceptions, and they do not apply if the work is commercially available in an appropriate medium and an acceptable quality. They also require all intermediate copies to be destroyed once the permitted copy is made. If these conditions are met, making a copy of a work will be found not to infringe an owner’s copyright.

A library also has the right to make copies of a work or part of a work in digital form on behalf of a library patron that the patron himself or herself has the right to do under the fair dealing exception. Crucially, this exception does not extend to making or transmitting digital copies for patrons of other libraries.

Libraries that make copies on behalf of patrons must have a policy to ensure that the copying on behalf of patrons is in support of their research and private study purposes and that the libraries act in a manner that is fair. The concept of fairness requires a library to develop a fair dealing policy that takes into consideration a number of factors including the purpose of the dealing, the amount of the dealing, alternatives to the dealing, and the effect of the dealing on the market for a work.

If the way in which a library structures its digital programs has a disproportionate or unfair impact on a right holder, or if a library imposes insufficient safeguards to ensure that a work will be dealt with fairly downstream, a library risks having its dealings found to be unfair.

6) How Does the Law of Contracts Affect Me?

Many librarians will be aware of the recent controversy involving Amazon.com’s sale of Kindle versions of the George Orwell novels 1984 and Animal Farm. Mirroring a plot theme of 1984, in which government censors obliterated all traces of news articles embarrassing to Big Brother by sending them down an incineration chute called the ‘memory hole’, Amazon.com remotely erased these Orwell novels from its customers’ Kindle readers.

Why? Amazon.com had distributed 1984 and Animal Farm without clearing all the necessary rights to do so. Its licences, however, permitted Amazon to delete copies of these books from its readers’ Kindle machines. This example illustrates both the difficulty of clearing electronic rights in a book and the unusually long reach of a digital licence. It also illustrates that licences governing works can sometimes have some surprising terms in them.

Libraries should also realize that terms in licences will trump what might otherwise be a fair dealing exception in the Act. Going back to the previous fair dealing example as an illustration, while libraries have statutory exceptions that permit copying for patrons for fair dealing purposes, such copying can only be carried out legally to the extent it is not in conflict with licences granted to libraries.

The moment a library clicks “I agree” to the terms and conditions that accompany a download of a digital book or audio book, it becomes bound to respect the associated terms and conditions.

Based on the above, and at a minimum, a library should evaluate its licences to determine the following:

• Does the licence clearly grant Canadian rights?
• Does it grant both the reproduction right and the communication right?
• Does the licence allow the library to do everything it wishes to do?
• What does the licence prohibit?
• Does the licence place special responsibilities on the library?
• Does the licence allow the vendor unusual rights or remedies?

With a view to positioning Canada as a leader in the global digital economy, how can copyright reform best balance the rights of creators, intermediaries and users?

Copyright has become an emotional topic in Canada in which everyone has a stake. Authors’ livelihoods depend on it. Rights holders need clear, predictable, and fair rules that support creativity and innovation. The public needs access to books, music, art, software and other creative products, all of which are vital to our culture and values.

The combination of digitization and the Internet have fundamentally changed the ways people access, use, copy, and distribute content. This has produced tremendous worldwide pressures to re-evaluate and recalibrate copyright laws to keep them relevant and effective at achieving their intended purposes.

Individuals now have the ability to create and disseminate creative products using digital technologies. Some non-commercial uses of content may technically violate copyright. This has created a mismatch of expectations by individual users, libraries, educational institutions and others. It has led to calls for new exceptions from infringement and the expansion of private copying levies so that copyright holders are fairly compensated for new non-infringing uses.

The creative industries are also challenged by widespread unauthorized copying over peer-to peer (P2) networks and other file sharing services. These services make investments in content creation, artists, creators and performers, and new distribution models, very difficult.

This summer, the government launched a consultation on copyright to tackle these challenges. It asked Canadians questions about the changes that should be made to the Copyright Act to best foster innovation, creativity, competition, and investment and position Canada as a leader in the global, digital economy. My submission to the consultation contained 8 basic principles, and 11 pragmatic recommendations to guide copyright reform.

In summary, we need to do the following to move ahead with copyright reform in Canada.

Establish specific goals for a “Digital Canada” copyright framework. Canada should follow the lead of the UK, which aims to be a global center for the creative industries as part of its “Digital Britain” initiative. The UK is light years ahead of Canada in researching and understanding the imbalances caused by digital technologies and in recognising specifically what must be done to address the challenges.

Address the “mismatch of expectations”. Exceptions to copyright are an indispensable complement to exclusive rights. There is a need to revisit exceptions to ensure that they remain appropriate for the 21st century. Some useful ideas for this were recently suggested in a UK government report. © the way ahead: A Copyright Strategy for the Digital Age,

Do not adopt “fair use” Some have recommended that Canada adopt a “fair use” system. However, as over 50 leading organisations in Canada pointed out in a submission to the copyright consultation, “fair use” is open ended and vague and would introduce considerable uncertainty leaving consumers, businesses, and copyright owners unsure of what is legal and what is not. By contrast, considerable flexibility and certainty can be achieved by enacting new specific fair-dealing exceptions.

Provide effective digital copyright protection to stimulate intellectual creation and dissemination of cultural products Effective copyright protection is crucial to the creation and dissemination of creative products. Copyright promotes creativity that benefits authors, producers, consumers, and the public at large. It also fosters progress and innovation, encourages investment, promotes growth, and increases competitiveness of the creative industries.

A crucial start is to recognize, as our trading partners like the UK and France have, that unauthorized file sharing has to be reduced to give viable business models a chance to grow and thrive.

Amend the Act to ratify the WIPO Treaties. We need to enact laws that will enable Canada to ratify the WIPO Treaties that Canada signed over 12 years ago. This includes providing the protection against circumvention of technological measures (TPMs) required by the WIPO Treaties and that comport with international standards. Opponents of legal protection for TPMs argue that there is “considerable flexibility” in how to implement the treaties and that this flexibility extends to prohibiting circumvention only for the purposes of infringement and that there is no need to prohibit the trafficking in circumvention tools and services. As I have shown elsewhere, these claims exaggerate what is possible to be compliant with both the letter and spirit of the treaties and, if followed, would do nothing to support the policy objective of fostering ecommerce in digital products.

Implement notice and notice backed up by a nuanced graduated response process. A “notice and notice” process is somewhat useful in dealing with infringing activity across P2P networks. It is only effective when supplemented by a graduated response process that has potential consequences for chronic failures to stop file sharing after receiving warning notices.

Anti-copyright advocates often misleadingly characterize graduated response systems as a “three strikes your out” process and attempt to discredit them by using fear mongering tactics telling the public that under these systems a family’s internet connection can be terminated for one year based solely on three unproven allegations of infringement and that personal information will be indiscriminately shared between ISPs to ensure this happens.

The graduated response processes being enacted by our trading partners such as France, New Zealand and the UK are nothing of the sort. The proposed provisions of the UK Digital Economy Bill, for example, would implement a notice and notice system. If this process proves insufficient to reduce significantly the level of online infringement of copyright, the government can impose obligations on ISPs to take measures to limit internet access to certain subscribers. These would be likely to include bandwidth capping or shaping that would make it difficult for subscribers to continue illegal file-sharing, but temporary suspension of broadband connections could also be considered. To safeguard the interests of consumers, the provisions require evidence of infringement and two independent appeal processes are available before any technical measures could be applied to an individual.

Implement a notice and takedown system that fully respects due process considerations. Canada should adopt a formal “notice and takedown” regime. “Notice and notice” and “notice and takedown” are complementary methods of dealing with online file sharing. They have sometimes been wrongfully portrayed as mutually exclusive processes.  They are not.  Notice and notice may be somewhat useful in dealing with P2P file sharing. Notice and take down is very effective in dealing with infringements on systems being stored or hosted on a system or network operated by a service provider.

In mid-2009, the Canadian government launched a nationwide consultation meant to canvass what amendments to the Copyright Act are necessary to support Canada’s participation in the global, digital economy, and to foster innovation, creativity, competition and investment.

There is no doubt that our copyright laws need amending. Amendments are required on a number of fronts. New exceptions are required to meet legitimate user expectations to access and use copyright content without infringement. Amendments are also needed to reduce online piracy and to support making licensed services available to the public.

We propose to focus this article on one of the most needed and most poorly understood processes for reducing online infringement and promoting legitimate sources of online content. It is called “graduated response” or, as critics often derogatorily label it, “three strikes”.

A developing trend among other governments modernizing their copyright legislation is to bring Internet Service Providers (ISPs) and rights holders together in a “graduated response” system to help reduce illegal peer-to-peer (P2P) file sharing.

As the New Zealand government recognized in a December 2009 cabinet paper, illegal P2P file sharing places real strains on conventional copyright law.[1] Many leading P2P technologies break down files into extremely small pieces that are shared dynamically across a network by hundreds or thousands of users. There is no website that “hosts” the file itself, making it difficult for rights holders to get an infringing file to be taken down off the Internet.

Graduated response, which has been implemented in jurisdictions such as France, Taiwan, and South Korea, and which is in the process of being enacted in the UK and New Zealand, is viewed by many policy makers as a fair and effective means of addressing the problem of online unauthorized file sharing. Although each country has adopted or proposes different balances, the key characteristics of these systems are: (1) rights holders monitor P2P networks for illegal downloading activities; (2) rights holders provide ISPs with convincing proof of infringements being committed by an individual at a given IP address; (3) educational notices are sent through an ISP to the account holder informing him or her of the infringements and of the consequences of continued infringement and informing the user that content can be lawfully acquired online; and (4) if the account holder repeatedly ignores the notices, a tribunal may take deterrent action, with the most severe sanctions reserved for a court.  

Graduated response systems such as the ones mentioned above are effective and proportionate. The French system was recently reviewed and approved by a national constitutional council as respecting the country’s constitutional protections and the European Union’s privacy directives. In the United Kingdom, a test of the graduated response system showed that 70% of customers stopped infringing in the six month period after receiving the first notice, with a further 16% stopping after the second notice. Respected authorities on copyright such as Alain Strowel have characterized graduated response as an important evolution of copyright law that will address a real deficiency in the present system without unduly impacting individual liberties.[2] 

Detractors of “three strikes” systems often assert that the termination of an Internet account is the only sanction used in these systems. This is patently false. The UK government, for example, identified a range of less severe sanctions to address the problem of repeated infringements, including blocking specific sites or protocols, capping the speed of a subscriber’s Internet connection or volume of data traffic, and content identification and filtering. These kinds of sanctions would allow for the avoidance of Internet account termination except in the most extreme circumstances, and would not impact on other services such as a telephone or cable television service.

In its cabinet paper, the New Zealand government recognized the critical importance of providing an efficient, low-cost, proportionate, and credible regime to deter individuals from infringing copyright and to support the New Zealand creative industries. It described graduated response as being an emerging international trade standard, whose timely implementation would be beneficial for New Zealand. After holding extensive consultations, the New Zealand government concluded that there was a consensus that the proposed graduated responses system represented a reasonable compromise between the interests of rights holders, ISPs, and consumers.

Graduated responses systems are not intended to be anti-consumer or heavy handed. To the contrary, user interests and their privacy and procedural rights are respected. Instead of being haled into court for copyright infringements, users receive multiple notices before any action is taken by rights holders. These notices provide ample opportunities to change consumer behaviour from unauthorized file sharing to purchasing content legally. When proceedings are taken, there are procedural safeguards to ensure that sanctions are only imposed on the real offenders, and that they are proportionate.

A graduated response system that is proportionate, respectful of privacy, limited to clear cases of infringement, and supervised by the courts or other tribunals, is likely to be a win-win proposition for all stakeholders in Canada as well. It would accomplish the dual goals of reducing online piracy and increasing legitimate sales through consumer education and the knowledge that a deterrent exists if illegal file sharing does not cease.

While graduated response will never eradicate online infringement altogether, it would also give rights holders and ISPs the necessary protection they need to develop innovative business models such as the subscription plans created by European ISPs like Orange and BSkyB, and by mobile providers such as Nokia and Sony Ericsson. Bringing together graduated response with these access-based models would give users a safe, affordable and reliable means to get the creative content they desire while fostering innovation, creativity, competition and investment in intellectual property.

The Canadian government has stated on multiple occasions that it intends to adopt best practices in upgrading Canadian copyright laws. Graduated response systems are now recognized as being critical instruments of copyright policy. Accordingly, we urge the government to critically examine these systems and to include a graduated response system in any new copyright reform bill that is introduced.  

*Note by Barry Sookman:

Since writing this article, I came across an economic analysis of graduated response by Olivier Bomsel and Heritiana Ranaivoson entitled “Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response”,  Review of Economic Research on Copyright Issues, 2009, vol. 6(2), pp.13-29. The authors argue that in the current digital environment the difficulty in enforcing copyright rights online provides incentives to free ride on copyright by consumers. Internet users are not deterred from illegally downloading content because the probability of being caught and the fines associated with being caught are too low. They contend that the behaviour of the internet user is determined by the expected fine — the perceived probability of being caught multiplied by the amount of the fine and that the way to deter infringement is to find a way to create a greater potential sanction that can act as a deterrent to illegal downloading. They argue that graduated response can fulfill this function.

Earlier this month, the federal government launched a copyright consultation asking Canadians for input on copyright reform. Chief among its questions were what sorts of changes would best foster “innovation and creativity,” “competition and investment” and best “position Canada as a leader in the global, digital economy.”

These questions reveal fundamental insights about the objectives of copyright reform.

Reforming copyright law will stimulate investment in the creation and dissemination of movies, TV programs, books, music and software; help Canada to be a leader in the global digital market for cultural products; and enable Canadian actors, artists, performers, producers and publishers to be paid for their creative efforts and investments.

Canada is viewed as a pirate heaven, both by the pirate sites that have moved to Canada because of lax laws and by Canada’s trading partners, who have singled us out for our weak laws. The massive unauthorized amount unpaid for file-sharing in this country hurts legitimate creators, producers, distributors, publishers, performers, artists and consumers.

When a pirate BitTorrent site makes pirated copies of cultural products available, everyone involved in the creative process is deprived of income for their work. It means fewer jobs, less money to invest in the cultural industries and fewer new works for consumers. Ultimately everyone suffers.

When a person distributes tools that facilitate picking digital locks that prevent unauthorized copying of works, individuals can easily remove the digital locks and distribute unprotected copies around the world. This trafficking in “digital breaking and entering tools” also harms everyone.

For Canada to be a leader in the global digital economy, there must be adequate legal protection for digital content. Reforming the law to achieve this is not just good for business. It is a “win-win” for everyone, including creators and consumers. Despite the rhetoric by opponents of copyright reform, the only real losers in the face of better laws to protect digital content are operators and distributors of pirate sites and services.

So, how do we achieve the government’s goals?

We should ratify the 1996 World Intellectual Property Organization Internet Treaties. These treaties represent the overwhelming international consensus on how to protect copyright on the Internet. Canada is alone among its trading partners in not having implemented these treaties. The laws they mandate — including requiring protection for digital locks — have proved useful internationally in stimulating investment in cultural products. The global experience shows they enable more diversified choice and access to digital products for consumers.

Internet service providers (ISPs) play a crucial role in enabling digital products to be distributed to Canadians. Any new bill should clarify ISPs’ liability when they act as true innocent intermediaries.

The bill should also include a graduated response process to help stem infringements in peer-to-peer (p2p) networks. Studies show that over 70% of users will stop illegal file sharing when they receive a notice from an ISP about it, particularly when they also know that not stopping could have consequences.

Countries such as France, New Zealand, the U. K., South Korea and Taiwan have enacted, or are finalizing, laws for a graduated response process. They have studied it extensively and developed nuanced processes with due-process considerations and alternatives to stopping illegal filesharing other than terminating Internet accounts.

The government should also introduce a “notice and takedown” regime. It is an essential method of removing access to infringing content hosted on sites and exists in comparable legislation around the world.

Canada also needs to clarify its laws related to secondary infringement to ensure that pirate sites are liable for their actions. Operators of such sites claim they are legal in Canada. isoHunt, one of the largest BitTorrent sites, has even sued the recording industry, claiming its site is legal. There should be no doubt that such sites are illegal here as they are in every other country where they have been sued or criminally prosecuted, such as, most recently, Pirate Bay in Sweden.

Any new bill should also clarify that certain acts done for private purposes are not infringing. Bill C-61 had proposed three new exceptions to permit: format shifting of music on to iPods; format shifting of certain works into a digital form; and time shifting for TV programming and simulcasts. These were well thought out and would have brought Canada’s laws into harmony with those in other countries.

The government’s approach in enacting specific exceptions from infringement rather than enacting a general “fair use” exception is the right approach. Most countries have adopted this tailored approach and have rejected a broad concept of “fair use.” For good reason. A study published for the government by a leading Canadian professor recently identified numerous problems with the fair-use model.

-Barry Sookman is a partner and co-chair of the technology law group at McCarthy Tetrault. He is the author of the leading Canadian five-volume book on computer and Internet law and is an adjunct professor of copyright at Osgoode Hall Law School. Stephen Stohn is president of Epitome Pictures Inc., producers of the acclaimed Degrassi: The Next Generation TV series.

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