The answers to all of these questions is yes according to a recent study published by Dr George Barker, the Director, Centre of Law and Economics, at ANU College of Law, Australian National University. What’s more, the study was done based on survey evidence conducted by Decima Research on behalf of Industry Canada.

Here is how the abstract summarizes the study:

This report examines data on the effects of Internet peer-to-peer (P2P) file sharing activities on music purchasing which was obtained from a survey commissioned by Industry Canada. The survey was designed to ―inform Industry Canada’s policy development work‖ 2 and ultimately therefore support better policy decisions regarding the copyright law in Canada. In order to support its policy decisions regarding the copyright regime in Canada, Industry Canada commissioned a survey by Decima Research in 2006 which was designed to measure the extent to which peer to peer (P2P) file-sharing activities act as substitutes or complements to music purchases. Given this purpose the Decima survey asked respondents to comment on their behaviour in the absence of P2P file-sharing, as follows:

Considering the songs that you downloaded for free through P2P networks during 2005

a) what % would you have purchased at paid music sites if they were not available through P2P

b) what % would you have purchased as part of a music CD if they were not available through P2P

After analyzing the answers to this question, I report on two key findings:

1. three out of every four respondents said that if P2P were not available they would have purchased some or all of the music which they downloaded; and

2. almost two-thirds of the ―hardcore‖ P2P downloaders (those who indicated in the survey that they only acquired music by P2P) said they would have purchased one-third of the tracks they downloaded if the songs were not available on P2P network. This is estimated to amount to an average additional expense of $168 per person, adding up to hundreds of millions of dollars in extra revenue for the music industry per year from this group alone.3

This analysis of survey data then suggests that P2P downloads have strong negative effects on legitimate music purchases and that P2P downloading acts as a substitute for legitimate music purchases. One might reasonably infer from this analysis that stronger copyright laws would substantially increase music purchases and music industry sales revenues and, by implication, increase artist income, industry employment, economic growth and government tax revenues in Canada. My analysis not only focuses on an important survey question which to date has not been analysed by the researchers hired by Industry Canada, it also contradicts the results of the original analysis of the data commissioned by Industry Canada, first published on Industry Canada’s website in a 2007 report entitled, “Don’t blame the P2P file-sharers: the impact of free music downloads on the purchase of music CDs in Canada”, and then subsequently republished with changes by the authors in the Journal of Evolutionary Economics in 2010.

The Barker study is consistent with the global findings of the IFPI published in the Digital Music Report 2012. The report noted that the new French Hadopi law has see P2P piracy levels decline by 26 per cent with a resulting positive impact on iTunes music sales in France. A study referred to in the report found that iTunes singles sales were 23 per cent higher than they would have been in the absence of the Hadopi law. The report also indicated that site blocking orders made in Belgium and Italy under Article 8(3) of an EU Directive had reduced visits to the foreign sites by 70-80 percent.

For those of you who follow copyright law reform developments on certain blogs and social media sources you might find her speech will resonate with you.

For fun, I have taken extracts of her speech reported in the Toronto Star and have substituted the words “administration of justice” with the words “copyright law”; “the judiciary” with “legislative process”; and “constitutional decision” with “copyright reform process”. Here is how the report of her speech would read:

But she says newspapers, radio and television are “old technology” at a time when anyone with a keyboard can create a blog and call themselves a journalist.

She wondered whether fairness and accuracy might be lost in the world of Facebook, tweets and instant messaging, which she says are part of a profound, cultural shift in how people communicate.

“Some bloggers will be professionals and academics providing thoughtful commentary and knowledge,” she said. “Others will fall short of basic journalistic standards. Will accuracy and fairness be casualties of the social media era?

“What will be the consequences for public understanding of copyright law and confidence in the legislative process? How can a medium such as Twitter inform the public accurately or adequately in 140 characters or less of the real gist of a complex copyright reform process?”

The Chief Justice could not have given her speech at a more opportune time.

If you want to catch up with current events regarding copyright, you might read Fen Hampson’s article Will the medium stop killing the message? in iPolitics and Terence Corcoran’s articles in the Financial Post: The Grey’s copyright wolves, The Internet’s collectivist blarney, and  No oil meets no copyright.

In early December, copyright lawyers from across the country descended on the Supreme Court to participate in a cluster of cases that may redefine the scope of copyright in the digital era.

The first case heard, ESA v. SOCAN, put the question directly to the court of how the bundle of rights set out in s. 3 of the Copyright Act ought to be construed in the case of downloads of files containing musical works.  A download of a video game could neither be seen nor heard during the transmission.  Yet the performance rights collective Society of Composers, Authors and Music Publishers of Canada argued that it was “communicated” to the public even though it also had to be installed on a computer or game console before a single note of music could be heard during game play.

The appellants — Entertainment Software Association and Entertainment Software Association of Canada (associations of publishers and distributors of computer and video games, whom we represented), contended that the real right at issue was the right to reproduce a work in a material form.  The respondent SOCAN suggested that the s. 3(1)(f ) right to “communicate a work to the public by telecommunication” covered any transmission of information to the public.

The court spent much of its time trying to ascertain from the parties whether Parliament could have intended to extend what was originally introduced as a broadcast right for radio and television to a right covering distribution of copies of works for later use.  Chief Justice Beverly McLachlin asked SOCAN whether a CD still wrapped in its packaging was “communicated” to her; Justice Michael Moldaver asked SOCAN: “Why would Parliament want to put a damper on the most effective mode of communication in the history of mankind?”

The second case heard, Rogers Communications v. SOCAN, focused on the different question of whether a download sent to single subscribers, one at a time, could be “to the public.”  The court was actively involved in this portion of the hearing and asked many probing questions to counsel.

The third and fourth cases involved a revisiting of the fair dealing exception discussed at length in CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] S.C.J. No. 12, in which the court held that a custom photocopying made available by the Law Society to authorized legal researchers was for a research purpose and was fair.

In SOCAN v. Bell Canada, SOCAN complained that unauthorized 30-second previews of music downloads were not for the purpose of research and were not a fair dealing. In this appeal, the court lingered on the perceived economic impact of these uses.  On the record, the previews were temporary streams of lower quality versions of songs and the court appeared to consider them as an inducement to purchase full copies of the songs, for which rights holders would be paid.

SOCAN attempted to argue two things: first, that ISPs who make previews available to the public are not engaged in a dealing that is for research purposes.  This point, which was elaborated on by several interveners has two aspects to it. Research is to be given the dictionary meaning accepted in other Commonwealth cases of some diligent and systematic study.  Further, in accordance with all previous cases (including CCH) the ISPs could not claim the exception since they merely facilitated research by users and were themselves not engaged in research. SOCAN also tried to convince the court that the dealing was nor fair.  The court appeared to give SOCAN and the interveners who supported them a very rough time.  Some members of the court asked whether ISPs engaged in research because they facilitated it.  Some also asked whether rights holders and users were both better off with the availability of free previews, thus questioning whether the dealing was fair.

The fourth case, Province of Alberta v. Canadian Copyright Licensing Agency (on which we were counsel for intervening publisher associations) dealt with the question of how fair dealing should apply to the educational setting.  In this case the Copyright Board had found that it was not a fair dealing for a teacher to make multiple copies of a work for a class with instructions to read them.

The appellants suggested that this decision was inconsistent with CCH and pressed repeatedly the contention that, since fair dealing is an “individual right,” fairness must be measured from the perspective of an individual student.  The court asked the appellants a number of questions examining whether this proposition was sound in view of the aggregate number of copies that were made for the category of works.  Justice Moldaver, in particular, wondered whether there could be a fair dealing where there was a “death by a thousand cuts.”

One question raised by the publisher interveners was whether the court would clarify its statement in CCH that the fairness factor of the “effect on the market” is “not the most important factor” in the fairness analysis and that an adverse affect on the market would only suggest unfairness and not make the dealing unfair, as it would be in the U.S. under the fair use doctrine.

The last case heard, Sound v. Motion Picture Theatre Associations of Canada, dealt with the technical but important question of whether the definition of “sound recording” in s. 2 of the Copyright Act excludes remuneration under s. 19 for individual songs forming part of a movie’s soundtrack.  The appellant relied heavily on international treaty law and commentary to argue that it had a right to collect. It also argued that a recording would not lose its status as such, except where the soundtrack comprised the entire movie soundtrack (the aggregate of all the sounds in the movie).  This interpretation was vigorously disputed by counsel for several respondents.

Collectively, these cases raise important questions that will shape copyright law for many years to come.

*The videos of the appeals can be watched here.

The accused, Richard O’Dwyer, owned and operated the site that offered to the public free downloading and/or streaming of thousands of copyrighted movies and television programs, without authorization from the copyright holders. His site was hosted at an ISP in the Netherlands. The site, TVShack.net, contained links to third party websites that hosted thousands of movies and television programs from which copyrighted first run and other movies and television programs could be downloaded or streamed. Through his site he encouraged users to add links to infringing content including by giving users a step by step “how to” guide and FAQ.

O’Dwyer did not charge users for access to the site. However, the complaint suggested he earned substantial advertising revenues with over $230.000 in payments from advertising been identified. The site was very popular. According to Alexa.com, TVShack.net was the 1779^th most popular website in the world and the 1419th in the United States.

O’Dwyer’s site was shut down when its domain was seized. Not to be deterred, he promptly registered a new domain name, TVShack.cc. This site was allegedly hosted on a server located at an ISP either in Germany or the Netherlands.

The request for O’Dwyer to stand trial in the US required the UK prosecution to prove that the alleged offense would be a crime in the US as well as a comparable offense carrying a minimum of 12 months imprisonment under UK law. The prosecution contended the comparable offence would be a violation of S.107 (2A) of the Copyright, Designs and Patents Act 1988 (the CDPA). This section makes the following a crime:

“A person who infringes copyright in a work by communicating the work in public  (a) in the course of business, or

(b) otherwise than in the course of business but to such an extent as to affect prejudicially the owner of the copyright commits an offence if he knows or has reason to believe that, by doing so  he is infringing copyright in that work”.

Section 20(2) of the CDPA provides that references to communication to the public are to communication to the public by electronic transmission, and in relation to a work include the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them. So for the extradition condition to be met it had to be shown that the links accessible from TVShack  made available the files stored on the remote cyberlockers and that the acts of making available would be covered by the territorial scope of the CDPA.

O’Dwyer had argued that the links at his site did not make the content available to the public. Rather, he contended that operators of the cyberlockers made them available. He also argued, relying on an earlier UK case R v Rock & Overton (Crown Court in Gloucester (T20097013) Ticehurst J., on 6^th February 2010) and a decision of Tamberlin, J of the Australian Federal Court in Universal Music Australia Pty Ltd v Cooper [2005] FCA 972 affirmed [2006] FCAFC 187 (18 December 2006) that TVShack was an innocent intermediary protected by the conduit exemption in the UK Electronic Commerce (E.C. Directive) Regulations 2002. These arguments were rejected by the Judge who held that O’Dwyer would be criminally liable under the CDPA for making available infringing content from the foreign cyberlocker sites from the TVShack linking site. In so ruling he said the following:

I am grateful to both learned counsel for their original and additional written submissions as well as oral argument. Without, I hope, discourtesy the lengthy submissions come to a comparatively narrow dispute. Mr Cooper argues nothing in the instant Request amounts to a basis for saying Richard O’Dwyer “made available” copyright material that came from remote websites not the two domain names operated by Richard O’Dwyer… Reliance is placed on HHJ Ticehurst’s adopting of Tamberlin, J’s approach in the Australian case of Cooper supra. At para 48 HHJ Ticehurst found “no recordings were actually stored on the defendant’s website” and that, adopting Tamberlin, J’s words “it is the remote websites which make available the sound recordings”, hence his Honour’s upholding of the “mere conduit” defence. Mr Jones… contends S.107 (2A) is properly reflective of Richard O’Dwyer’s conduct which can be distinguished from Rock & Overton. Firstly both TVShack websites were entirely in the hands of Richard O’Dwyer and his co conspirators requiring third parties to sign up to TVShack and be vetted before going further. Secondly he argues, unlike Rock & Overton, there was no attempt to protect copyright, he, Richard O’Dwyer, knew materials were subject to copyright and actively taunted already cited efforts in June 2010 to seize TVShack.net. Accordingly Mr Jones argues (@ para 15 of his written submissions of 31^st October 2011) “O’Dwyer would not be able to avail himself of the “mere conduit” defence enumerated in Regulation 17 because he was intimately involved in deciding who was allowed to post links on the TVShack websites, which links would be posted…” (etc) & ( para 16 continues) “… a plain reading of the phrase “make available” in this context makes clear O’Dwyer “made available copyrighted material”. HHJ Ticehurst (@ para 71) in Rock & Overton held “make available should bear its ordinary and natural meaning”. He distinguished between providing money “directly to” another as opposed to a financial adviser who may “point” another to a bank meaning the bank alone “makes available the money”.

I have endeavoured to weigh these subtle distinctions. The diagrams of how as a matter of electronic mechanics (if I may term it) the TVShack websites actually operated favour HHJ Ticehurst’s restrictive construction. To my mind there is much in the distinction factually, always remembering these matters are allegations of conduct which a trial court alone can resolve – that Mr Jones contends between the instant matter and Rock & Overton. I also have in mind the mischief Parliament had in mind. Accordingly in my judgement I am satisfied the conduct alleged in the instant request meets the dual criminality test and would be an offence in this jurisdiction…

This has necessarily been a lengthy ruling given the arguments and material put  forward. A dispassionate appraisal of all matters is the essential function of any court. I acknowledge the endeavours of both learned counsel.  I repeat again all matters have been considered even if not expanded upon or cited directly here.  That said, for the reasons given, I reject all challenges advanced to this Request. No bars or other challenge being raised or found I send the case to the Secretary of State (for her consideration of the statutory criteria) pursuant to  Section 87(3) Ex Act 2003. Richard O’Dwyer has the right to pursue an appeal to the High Court so long as it is submitted in time and in proper form (s 103 Ex Act 2003) but cannot be heard until after the Secretary of State has confirmed an order for extradition.

The liability of linking sites for copyright infringement is being actively litigated in the US.  The U S Seventh Circuit Court of Appeals has an appeal before it in the Flava Works, Inc. v. Gunter. case that is examining whether inline linking can give right to a claim for direct infringement. A District Court judge ruled in the case that inline linking sites can be liable for direct infringement of copyright.

Richard O’Dwyer has the right to appeal the decision to the High Court. He has already announced his intention to do so. It is likely these issues will therefore be dealt with again in the UK by the High Court.

My slides and/or the paper summarize the following copyright cases from Canada, the USA, UK and  Europe:

CANADA

Re: Sound v Motion Picture Theatre Association of Canada 2011 FCA 70

Reference re Broadcasting Act 2011 FCA 64

Crookes v. Newton 2011 SCC 47

France Animation v Robinson, 2011 QCCA 1361

Aga Khan v. Tajdin, 2011 FC 14

9077-6204 Québec inc. c. Blanchard 2011 QCCQ 205

Training and Management Pro-Health Inc. c. Sampietro 2011 QCCS 4256

Perfect 10, Inc. v. Google, Inc., 2011 FC 348

Harmony Consulting Ltd. v. G.A. Foss Transport Ltd., 2011 FC 340

Century 21 Canada Limited Partnership v. Rogers Communications Inc., 2011 BCSC 1196

Layette Miniôme inc. c. Jarrar 2011 QCCS 1743

Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., 2011 FC 776

1429539 Ontario Limited v. Café Mirage Inc., 2011 FC 1290

Suttie v. Canada (Attorney General), 2011 FC 119

SOCAN v v. IIC Enterprises Ltd. (Cheetah’s Nightclub), 2011 FC 1088

Robertson v. ProQuest Information and Learning LLC, 2011 ONSC 2629

R. c. Fiset 2011 QCCQ 1344

Reprographic Reproduction, 2011-2013 Interim Decision March 16, 2011

IPC Order MO-2635/June 30, 2011

R c. Gravel 2011 QCCQ 2517

Flow Films v. Global Wealth Trade Corp. [2011] O.J. No. 674

Setanta Sports Canada Limited v. 840341 Alberta Ltd. (Bres’in Taphouse) 2011 FC 709

Velsoft Training Materials Inc. v. Global Courseware Inc. 2011 NSSC 274

Fabrikant v. Swamy [2011] QJ No 2826

Statement of Royalties to be Collected for the Communication to the Public by Telecommunication, in Canada, of Musical Works and of Published Sound Recordings Embodying Musical Works and Performers’ Performances of Such Works (SOCAN and Re:Sound Tariffs 1.C (CBC – Radio 2006-2011) [2011] C.B.D. No. 3 (Copyright Board, July 8, 2011)

Statement of Royalties to be Collected for the Performance in Public or the Communication to the Public by Telecommunication in Canada, of Published Sound Recordings Embodying Musical Works and Performers’ Performances of Such Works (Re:Sound Tariff No. 6.A – Use of Recorded Music to Accompany Dance, 2008-2012) [2011] C.B.D. No. 4 (Copyright Board, July 15, 2011)

UNITED STATES

Agency France Presse v Morel, 769 F.Supp.2d 295 (S.D.N.Y. 2011)

Warner Bros. Entertainment Inc v WTV Systems, Inc. 2011 WL 4001121 (C.D.Cal. Aug, 1, 2011)

Flava Works, Inc, v Gunter dba myVidster, 2011 WL 1791557 (N.D.Ill.May 10, 2011)

Flava Works, Inc, v Gunter dba myVidster 2011 WL 3205399 (N.D.Ill. July 27, 2011)

Flava Works, Inc, v Gunter dba myVidster, 2011 WL 3876910 (N.D.Ill. Sep. 1, 2011)

Perfect 10, Inc v Megaupload Limited 2011 WL 3203117 (S.D.Cal., Jul. 27, 2011)

Disney Enterprises, Inc v Hotfile 798 F.Supp.2d 1303 (S.D. Flo. 2011)

UMG Recordings v Shelter Capital Partners LLC 101 U.S.P.Q.2d 1001 (9th. Cir. 2011)

Capitol Records, Inc. v. MP3tunes, LLC, 101 U.S.P.Q.2d 1093 (S.D.N.Y.2011)

Arista Records LLC v. MyxerInc., f/k/a Visible Technologies, Inc., Case No. CV 08-3935-GAF-JC (C.D. Cal. April 1, 2011)

The Authors Guild et al v. Google Inc.  770 F.Supp.2d 666 (S.D.N.Y. 2011)

Penguin Group (USA) Inc. v. American Buddha 16 N.Y.3d 295 (Ct.App.N.Y. 2011)

Kernal Records Oy v. Mosley,  794 F.Supp.2d 1355  (S.D.Fla. 2011)

Seng-Tiong Ho v. Taflove, 2011 WL 2175878 (7th.Cir, 2011)

Softech Worldwide LLC v. Internet Technology Broadcasting Corp. 761 F.Supp.2d 367 (E.D.Vir.2011)

Righthaven LLC v. Hoehn 792 F.Supp.2d 1138 (D.C.Nev.2011)

Capitol Records Inc v. Jammie Thomas-Rasset 2011 WL 3211362 (D.C.Minn.2011)

UK and COMMONWEALTH

Lucasfilm Ltd & Ors v Ainsworth & Anor [2011] UKSC 39 (27 July 2011)

Football Dataco Ltd & Ors v Sportradar GmbH & Anor [2011] EWCA Civ 330 (29 March 2011)

Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc [2011] EWHC 1981 (Ch) (28 July 2011)

ITV Broadcasting Ltd & Ors v TV Catchup Ltd [2011] EWHC 1874 (Pat) (18 July 2011)

The Newspaper Licensing Agency Ltd & Ors. v Meltwater Holding BV & Ors [2011] EWCA Civ 890 (27 July 2011)

Roadshow Films Pty Ltd. v  iiNet Limited, [2011] FCAFC 23 (decision of High Court pending)

Super Cassettes Industries v. MySpace Inc. High Court of Delhi, judgment pronounced on 29/07/2011

Dynamic Supplies Pty Limited v. Tonnex International 2011 FCA 362  (Federal Court of Australia)

Media CAT v. Adams 2011 EWPCC 6  and 2011 EWPCC 10  (Patents County Court)

Football Dataco Ltd  v. Yahoo! UK Limited 2011 EWCA Civ 330 (UK Court of Appeal)

Forensic Telecommunications Services Ltd v Chief Constable of West Yorkshire 2011 EWHC 2892 (Ch)

R (on the application of British Telecommunications plc and another) v. The Secretary of State for Business, Innovation and Skills 2011 EWHC 1021 (Admin)

EU (other than UK)

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., Paris Court of Appeal, Jan. 26, 2011

Google v Copiepresse et al, Brussels Court of Appeal (9th Chamber) May 5, 2011

Premier League Football (ECJ Case C-403/08),  4 October 2011

Scarlet Extended SA v SABAM, (ECJ Case C-70/10) 24 November, 2011

Stichting de Thuiskopie v Opus (ECJ Case C-462/09) 16 June 2011

The slides can be seen below:

Despite all of this litigation, key issues are still being litigated and perhaps will only be settled in the US Supreme Court. The issues include: can a cyberlocker or social media site be liable for direct infringement for the files uploaded to it; can a site which automates processes that it knows will result in copying be responsible for this copying or will it be exonerated as lacking in “volition”; when will the site operator be liable for contributory infringement or vicarious liability; and when does a site operator have actual or constructive knowledge of infringement or of “red flags” so as to lose DMCA safe harbor protection if the operator doesn’t take appropriate steps to disable access to the content.

2012 started off with yet another US case to address these issues. The case is Wolk v Kodak Imaging Network, Inc. 2012 WL 11270 (S.D.N.Y. Jan 3, 2012). In this case the Plaintiff, Wolk, an independent artist of fantasy images and sports art, sued Photobucket, a photo-sharing Internet service provider that operates a website located at http://www.photobucket.com. Photobucket is what is known as a “user-generated content” website, which provides an online platform for users to post material that the users themselves upload. Photobucket enables users who establish a Photobucket account to upload digital photographs and videos so that they may be stored and viewed on the website. There are approximately 9 billion images and videos posted to Photobucket.

The facts in the case repeat a common pattern. The Plaintiff sent Photobucket a series of DMCA takedown notices. Where the notices listed specific URLs, access to those images were removed. However, Photobucket left accessible numerous identical copies available through other URLs. According to Wolk, sample searches she conducted yielded approximately 3,000 infringements of her images. Wolk stated this represented only a small portion of the full amount of infringements occurring on Photobucket of her images, and that many of the infringements consisted of multiple duplicates of images, sometimes five or six copies of the same image by a single user. Photobucket did not dispute this.

The parties brought various summary judgement motions for rulings before trial. The Court made the following findings:

• Photbucket was not liable for the direct infringements resulting from the uploading of infringing images to its site because all of the copying occurred “automatically”. Photbucket, the court ruled, lacked the necessary volition to be liable for this copying.
• Wolk had presented two theories to hold the other defendants, the Kodak defendants, liable for infringement: first, the Kodak defendants infringed because they reproduced Wolk’s images onto various products; and second, they infringed because an electronic preview page was generated on the Kodak Gallery website when a user made an order for a product bearing an image imported from the Photobucket website. Because all reproductions, displays or transmissions occurred through an automated process with no human intervention, the court ruled there was no volitional conduct for which they were responsible.
• Photobucket was a service provider for the purposes of the DMCA and was entitled to the hosting safe harbor. Despite the infringements which occurred at the site and the site operator’s awareness that infringing images of Wolk were on the site, these facts and circumstances did not meet the actual or constructive knowledge requirements of the DMCA.

The Court’s holding on the applicability of the DMCA hosting safe harbor mirrored the recent decision of the Ninth Circuit Court of Appeals in the UMG Recordings v Shelter Capital Partners LLC (Veoh Networks) 101 U.S.P.Q.2d 1001 (9^th. Cir. 2011) case, although only the decision of the lower court in the case was referred to.

The Second Circuit Court of Appeals is considering somewhat similar issues in the Viacom litigation against YouTube. A ruling on that appeal is pending. The issues in that case are extremely important ones for both copyright holders and online service providers and will likely determine the extent to which cyberlockers and social media sites in the US will have responsibility to cooperate in stemming infringements they enable. These issues are of such importance that they will likely not be settled until the US Supreme Court rules on them.

The case is a gold mine for copyright lawyers. It canvasses many copyright issues including the application of the standard of originality to partially completed works, the test for infringement when there has been substantial alterations and improvements to the original work, the relevance of expert evidence in copyright cases in light of the Supreme Court of Canada decision in the Masterpiece Inc. v. Alavida Lifestyles Inc. case, and the application of the patent standard for calculating profits in a copyright case under the Supreme Court’s Monsanto Canada inc. v. Schmeiser decision.

There is also a very interesting discussion of the basis for awarding punitive damages for copyright infringement under Quebec law. The Court of Appeal held that the intentional infringement of copyright is a violation of the copyright owner’s right to the enjoyment of property protected under Articles 6 and 49 of the Quebec Charter of Rights and Freedoms. The Court quoted from its prior decision in Construction Denis Desjardins inc. c. Jeanson, [2010] RJQ 1600 in which it stated:

The Copyright Act does not in as many words provide for punitive damages, though section 38.1(7) refers to them by stating the right to claim them, if applicable. These damages are acknowledged and routinely awarded based on the ordinary law of the province in which the lawsuit was instituted. In Quebec, a few judgments by our Court have acknowledged the possibility of awarding punitive damages in cases of intentional copyright infringement. Though the Court did not specify the basis for such awards, it may be possible, through article 1621 C.C.Q. and sections 6 and 49 of the Charter of human rights and freedoms, to argue intentional copyright infringement as a breach of the owners’ rights to the peaceful enjoyment of their property.

The quoted Articles of the Quebec Charter of Rights and Freedoms state the following:

Article 6 Every person has a right to the peaceful enjoyment and free disposition of his property, except to the extent provided by law.

Article 49 Any unlawful interference with any right or freedom recognized by this Charter entitles the victim to obtain the cessation of such interference and compensation for the moral or material prejudice resulting therefrom.

In case of unlawful and intentional interference, the tribunal may, in addition, condemn the person guilty of it to punitive damages.

The Quebec courts are not the only ones to recognize that the protection of copyright is rooted in fundamental rights and freedoms. For example, the protection of the right to intellectual property is enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union. This right is balanced with other fundamental rights. Recently the Irish High Court in the EMI Records -v- Eircom Ltd [2010] IEHC 108 case relied on article 40.3.2 and article 43.1 of the Constitution of Ireland as a basis for protecting copyrights against online infringements.

An English translation of the Robinson case created using Google Translate can be found here.

* Motions for leave to appeal to the Supreme Court of Canada are pending. See, http://www.scc-csc.gc.ca/case-dossier/cms-sgd/dock-regi-eng.aspx?cas=34469, http://www.scc-csc.gc.ca/case-dossier/cms-sgd/dock-regi-eng.aspx?cas=34468, http://www.scc-csc.gc.ca/case-dossier/cms-sgd/dock-regi-eng.aspx?cas=34467, http://www.scc-csc.gc.ca/case-dossier/cms-sgd/dock-regi-eng.aspx?cas=34466.

According to the USTR “The scale and popularity of these markets can cause economic harm to U.S. and other IP right holders.  In addition, products sold at these markets may pose possible health and safety risks to consumers.”

We were recognized in the following markets:

B2B and B2C

Modchip.ca and Consolesource:  Both sites, reportedly based in Canada, allegedly sell circumvention devices and components used to circumvent technological protection measures on game consoles.

These are the type of sites and services the TPM anti-trafficking prohibitions in Bill C-11 are intended to address.

BitTorrent Indexing

IsoHunt:  Canada-based IsoHunt is one of the largest BitTorrent indexes in the world, ranking among the top 300 websites in global traffic and among the top 600 in U.S. traffic, according to Alexa.com.  At least one U.S. court has found liability in cases involving IsoHunt.

Kat.ph (formerly kickasstorrents):  Another popular indexing site, this site, which reportedly is based in Canada, Ukraine and Romania, is notable for its commercial look and feel.  The site is currently ranked by Alexa.com among the 320 most visited sites in the world.

torrentz.eu (formerly torrentz.com):  This site, which reportedly is based in Canada, Panama and Switzerland, is a major aggregator of torrents from other BitTorrent sites, and currently ranks among the top 150 sites in the world.

These are the types of sites the new enabling provision in Bill C-11 is intended to address.

• The safe harbor can cover use by service providers of an automated process for transcoding and making files accessible.
• Merely hosting copyrightable content with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the DMCA knowledge requirements that can lead to a loss of immunity if steps are not taken to takedown or disable access to infringing content.
• A service provider does not lose its eligibility for the hosting safe harbor merely because it has a general right and ability to remove materials from its systems.

Veoh Networks (Veoh) was the operator of a publicly accessible website that enabled users to share videos with other users. (It is now out of business.) It was sued by Universal Music Group (UMG) for direct, vicarious and contributory copyright infringement, and for inducing infringement. A California District dismissed the claims holding that Veoh was entitled to immunity under the DMCA.

On appeal, UMG contended Veoh was not entitled to the hosting exception for three reasons.

• First, that the alleged infringing activities did not fall within the wording of the safe harbor which covers “infringement of copyright by reason of the storage [of material] at the direction of a user,” a threshold requirement under § 512(c)(1).
• Second, that Veoh had actual knowledge of infringement, or was  “aware of facts or circumstances from which infringing activity [wa]s apparent” under § 512(c)(1)(A).
• Finally, that Veoh  “receive[d] a financial benefit directly attributable to infringing activity” that it had the right and ability to control under § 512(c)(1)(B).
  On the facts, as found by the Court, when a video was uploaded to Veoh’s site, various automated processes took place. Veoh’s software automatically broke down the video files into smaller 256-kilobyte “chunks,” which facilitated making the video accessible to others. Veoh also automatically converted, or transcoded the video files into Flash 7, Flash 8 and MPEG-4 formats. It also automatically extracted metadata to help others locate the videos for viewing. Every video was also assigned a “permalink,” or web address, that uniquely identified the video and made it available to users. The videos could be acessed by streaming or downloading copies.

  According to the Court,

  “Veoh has simply established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users.” Id. at 1148. Veoh does not actively participate in or supervise file uploading, “[n]or does it preview or select the files before the upload is completed.” Id. Rather, this “automated process” for making files accessible “is initiated entirely at the volition of Veoh’s users.”

  On the first issue, based on these factual findings, the Court held that Veoh had satisfied the threshold requirement to fall within the hosting exception that the infringement be “by reason of the storage at the direction of a user of material” residing on Veoh’s system.

  On the second issue, UMG claimed that Veoh had general knowledge or awareness that it was hosting infringing videos that it did not remove and had therefore lost the benefit of the DMCA hosting safe harbor.

  Under § 512(c)(1)(A) of the DMCA, a service provider can receive safe harbor protection only if it  “(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;”  “(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or”  “(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material.”

  The Court rejected UMG’s claim holding that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the knowledge requirement. The Court also reached the same conclusion with regard to the §512(c)(1)(A)(ii) inquiry into whether a service provider is “aware of facts or circumstances from which infringing activity is apparent.”  The Court held that Veoh’s general knowledge that it hosted copyrightable material and that its services could be used for infringement was insufficient to constitute a red flag.

  On the third issue, UMG had claimed that Veoh had a general right and ability to remove infringing materials from its services and that because it failed to do so it lost the DMCA safe harbor.

  Under the DMCA, a service provider is eligible for the §512(c) safe harbor only if it  “does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” The Court again sided with Veoh, holding that the “right and ability to control” under § 512(c) “requires control over specific infringing activity the provider knows about. A service provider’s general right and ability to remove materials from its services is, alone, insufficient.” This holding was subject to the caveat that “a service provider cannot willfully bury its head in the sand to avoid obtaining such specific knowledge.”

  For commentary on the case, see the blog post by Terry Hart.

  The Second Circuit Court of Appeals is considering somewhat similar issues in the Viacom litigation against YouTube. A ruling on that appeal is pending. The issues in the Veoh case are extremely important ones for both copyright holders and online service providers. Given the importance of the issues, one might expect that these issues will not be settled until the US Supreme Court rules on them.