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.

In the press conference announcing the Bill at the Ottawa office of software producer bitHeads Inc., Minister Paradis added “With the reintroduction of today’s legislation, Canadians will soon have a modern and responsive copyright law for the digital age that protects and helps create jobs, promotes innovation and attracts new investment to Canada”. In the House of Commons Minister Moore also said “we introduced a bill that is fair to everyone, both creators and consumers. What artists across the country need right now is copyright legislation that will make piracy illegal in Canada. That is what Bill C-11 will do.”

Bill C-11 is the fourth attempt to amend the Copyright Act since 2005 — to bring the Act into the digital age. The Bill will likely make good the promise made in the Conservative Party Platform on Copyright that, “A Stephen Harper-led majority Government will also reintroduce and pass the Copyright Modernization Act, a key pillar in our commitment to make Canada a leader in the global digital economy.” It will also likely deliver on the commitment made in the Throne Speech to swiftly pass “copyright legislation that balances the needs of creators and users.”

Bill C-11 contains the same proposed amendments as its predecessor, Bill C-32.  This was anticipated based on statements made by Minister Moore and others prior to its introduction. According to a press release announcing that Canada had signed the Anti-Counterfeiting Trade Agreement (ACTA), the “bill informed and guided Canada’s approach to the ACTA negotiations.”

Along with Bill C-11, the Government released Fact Sheets, an FAQ, and a Backgrounder.[1] These are all available on the Government`s website: www.balancedcopyright.gc.ca.

The FAQ describe certain aspects of the Bill including the following summary that says the Copyright Modernization Act will:

• implement the rights and protections of the World Intellectual Property Organization (WIPO) Internet treaties;
• give copyright owners the tools they need to combat piracy;
• clarify the roles and responsibilities of ISPs and search engines;
• promote creativity and new methods of teaching in the classroom by providing greatly expanded exceptions for education;
• encourage innovation in the private sector through exceptions for technical computer processes;
• provide legal protection for businesses that choose to use technological protection measures or “digital locks” to protect their work as part of their business models; and,
• give consumers the ability to, among other things, record their favourite TV shows for later viewing, transfer music from a CD to a digital device, and create a mash-up to post via social media.

I previous provided an overview of the Bill`s key provisions. See, Some thoughts on Bill-C-32: An Act to Modernize Canada’s copyright laws.

As I noted in My C-32 opening remarks to the Legislative Committee that studied Bill C-32, I support the government’s objectives. There are, however, areas where the Bill would have significant unintended consequences if passed without amendments consistent with those objectives. Many of these are technical. Perrin Beatty, President and CEO, Canadian Chamber of Commerce, referred to this in a press release when Bill C-11 was introduced on Sept. 29th:

While the Canadian Chamber supports the principles behind this copyright legislation, improvements still need to be made to the bill. As currently drafted, the bill still contains some possible unintended consequences that could prove problematic for business. We look forward to a rigorous review of the bill at committee stage that will make sure that it achieves the purposes for which it is designed.

In the Government background documents the Government stated that it will refer the Bill to a House of Commons committee and that the “work and testimony from the previous Parliament will be carefully considered and taken into account.” Minister Paradis also confirmed at the press conference that the Government “…will make any technical fixes necessary to achieve our objectives of taking meaningful action on copyright piracy, protecting right owners and promoting creativity, innovation and legitimate business models for the benefit of the consumers.” The Government`s objective remains to have the Bill passed by Christmas.

There has been considerable debate concerning some of proposed amendments. Some of the main issues that will be debated as the Bill winds its way through a House of Commons committee and, ultimately, into law are the following:

• Technological Protection Measures
• The Enablement Right
• The Non-Commercial User-Generated Content (UGC) Exception
• Statutory damages
• The Internet Service Provider and Search Engine Exceptions and Responsibilities
• The Fair Dealing for Education Exception
• The Copyright Exceptions to Encourage Innovation

Technological Protection Measures (aka digital locks or TPMs)

Bill C-11 will prohibit circumventing (hacking) of TPMs that control access to a work. It will also prohibit trafficking of tools or provision of services that can be used for this purpose. The Government background documents explained the TPM provisions and the rationale for protecting TPMs as follows:

Innovative companies, such as video game developers, will have the legal tools to protect the investments they have made in order to reinvest in future innovation and jobs.

Protecting digital locks gives copyright industries the certainty they need to roll out new products and services, such as online subscription services, software and video games, if they choose to use this technology. Not only will this promote investment and growth in Canada’s digital economy, it will also encourage the introduction of innovative online services that offer access to content. Such services are increasingly available in other countries.

The Bill recognizes that certain protections, such as restricted content on news websites or locked video games, are important tools for copyright owners to protect their digital works and are often an important part of online and digital business models.

Opponents of legal protection for TPMs — such as Michael Geist — have made inaccurate statements about the legal protection for TPMs. Michael Geist’s relentless misinformation campaign[2] against them makes it difficult and confusing for many Canadians to form informed views about the Bill’s TPM provisions. Michael Geist repeated some of the inaccurate or misleading statements in a blog post and in the media after the Bill was introduced. For example:

• He continues to suggest that “digital lock rules trump education rights”. However, since Bill C-11 does not prohibit circumventing copy control TPMs, it would be legal to hack a copy control TPM for an educational or any other purpose. Once hacked, a person would be able to make copies of the unprotected work under the new fair dealing for education exception, as long as the dealing is “fair”. However, a person could not bypass a technical control that protects a work against access the person is not entitled to in the first place.[3] The prohibition against hacking access control TPMs is not about “trumping education rights”. It is about ensuring that people who want to make copies of a work for an educational purpose obtain legal access to the work such as by purchasing or licensing a copy in order that the creator or other rights holder may be compensated.
• He also continues to argue that “digital lock rules extend far beyond those required for compliance with the WIPO Internet treaties”; that Canada can properly implement the WIPO Treaties by limiting the prohibition on circumvention to an infringing purpose; that the WIPO Treaties would permit hacking TPMs for the purpose of format shifting; that many of our trading partners have implemented the WIPO Treaties in these ways; and that “many of our trading partners have adopted more balanced digital lock rules”. He makes these arguments although they have been found to be completely inconsistent with the minimum requirements of the Treaties by the leading international expert , Dr. Mihaly Ficscor here, here, here, and here. Michael Geist’s proposals would, essentially, eviscerate the business and policy reasons for protecting TPMs.
• Further, he suggests that the U.S. DMCA’s TPM provisions “offer more flexibility than Canada”.  This statement is misleading as I have shown here, here, and here.

There is also considerable misunderstanding about the TPM provisions within the general public. For example,

• the National Post, Vancouver Sun, Winnipeg Free Press, Calgary Herald, and other newspapers just published an article stating that the TPM “provisions would make consumers liable for thousands of dollars in legal damages if they break the digital encryption on a purchased DVD or video game to make a backup copy for themselves.”
• the Montreal Gazette published an article stating that Bill C-11 contains a “blanket provision against breaking digital locks, even for purposes of personal use; The bill provides for $5,000 fines for even the smallest such violations. This provision was apparently included as a result of heavy pressure from U.S. authorities and in the interest of maintaining cross-border trade and exemption from protectionist measures that would prevent Canadian firms from bidding on U.S. government procurement contracts.”

These statements are just plain wrong. The Bill does not prohibit hacking copy control digital locks for any purpose and there are multiple exceptions that permit circumventing access control TPMs. Moreover, Section 41.1(3) of the Bill expressly precludes an award of statutory damages against an individual who circumvents a TPM for his or her own private purposes. Accordingly, it is flat out wrong to claim that an individual could be liable for “thousands of dollars in legal damages” for hacking a TPM for personal purposes. Further, even if statutory damages did apply, which they do not, the Bill would limit such damages to a range, the maximum of which would be $5,000 for the most egregious case.

In my blog post, An FAQ on TPMs, Copyright and Bill C-32, I tried to set the record straight on the following questions about the legal protection for TPMs to enable the public to make their own assessment of the TPM provisions in Bill C-32 based on correct information:

• Whether Bill C-32 properly implements the WIPO Treaties consistent with the practices of our trading partners
• Whether the Bill permits copying for fair dealing, educational, and other purposes
• Whether the circumvention exceptions in the Bill are flexible enough to deal with unforeseen or unintended consequences
• Whether Canada can properly implement the WIPO Treaties by limiting the prohibition on circumvention to an infringing purpose
• Whether other jurisdictions limit protection of TPMs to circumvention for an infringing purpose
• Whether circumvention of TPMs for the purposes of format shifting, time shifting, and making back-up copies for private purposes (private copying) ought to be permitted
• (Given that one of the legislative goals is to follow international standards) whether other jurisdictions permit exceptions for private copying to trump TPMs
• Whether an exception for private copying that permits circumvention of TPMs for such purpose would comply with the Berne Three Step Test
• Whether the WIPO Treaties which Canada has committed to ratify permit circumventing TPMs for private copying
• Whether Michael Geist`s two proposals for amending the TPM provisions in Bill C-32 (now Bill C-11) have international precedents.

Other posts such as the ones set out below also correct inaccurate statements made about legal protection for TPMs.

• Separating copyright fiction from facts about C-32’s TPM provisions
• Separating facts from hype about C-32
• Are the TPM provisions in C-32 more restrictive than those in the DMCA
• C-32 and the BlackBerry PlayBook: A reply to Michael Geist
• Dr. Ficsor TPMs and Flexibility (’The Ability of Bending Without Breaking’) – Why Should the TPM Provisions of Bill C-32 Protect Access Controls and Prohibit ‘Preparatory Acts”,
• Dr. Ficsor is right; Prof. Geist is wrong about the WIPO Internet Treaties
• Dr. Ficsor: An invitation to Canada to join the international community by ratifying the WIPO Internet Treaties
• Dr Ficsor Legends and reality about the 1996 WIPO Treaties in the light of certain comments on Bill C-32
• Dr Ficsor Only once more – and then Marry Christmas and Happy New Year to everybody, including Professor Geist and his devoted followers: the 1996 WIPO Diplomatic Conference, the WIPO Treaties and the balance of interests
• Reflections on the liberal roundtable on the digital economy
• FACEBOOK FAIR FOR COPYRIGHT OF CANADA: REPLIES TO PROFESSOR GEIST
• ‘TPMs’’: A Perfect Storm for Consumers: Replies to Professor Geist

The Enablement Right

Section 27(2.3) of Bill C-11 would create a new cause of action referred to in the Bill as “enablement”. The Government background documents describe this new right and the rationale for it as follows:

The Bill gives copyright owners the tools to pursue those who wilfully and knowingly enable copyright infringement online, such as operators of websites that facilitate illegal file-sharing.

It recognizes that the most effective way to stop online copyright infringement is to target those who enable and profit from the infringements of others. By allowing copyright owners to pursue these “enablers”, such as illegal peer-to-peer file sharing sites, this Bill supports the development of significant legitimate markets for downloading and streaming in Canada. This supplements existing criminal punishments for those who aid and abet infringement.

The Government background documents also state that the “proposed legislation will ensure that services that enable infringement will not benefit from the liability limitations afforded to ISPs and search engines.”

From the appearances and submissions to the Legislative Committee that studied C-32, there is a consensus supporting the enablement provision. Michael Geist, however, opposes giving rights holders tools to go after pirate sites and services like IsoHunt calling into question the need for an enablement amendment. I responded to his contradictory posts on the state of Canadian secondary liability law in a blog post, Are Canada’s copyright laws friendly or unfriendly towards wealth destroyers according to Prof. Geist? I concluded that:

It is clear that Prof. Geist’s objective in this recent spate of activity is to persuade policy makers and the public that the new proposed enablement cause of action is not needed because Canada’s copyright laws are already robust enough to deal with what Minister Clement calls “the wealth destroyers” like IsoHunt. However, for years Prof. Geist has consistently and repeatedly been writing and telling the public that Canada’s laws related to authorization might not be effective against pirate sites and services and that Canada does not have contributory liability laws that can be used against these sites and services…

The only conclusion that can be drawn from a review of his writings is that he has either changed his long standing opinion about the state of Canadian law – now believing it is effective enough to shut down the wealth destroyers like IsoHunt- or that he is inaccurately describing what he believes Canadian law to be to oppose the amendments in Bill C-32 that are intended to give rights holders the tools needed to close down wealth destroyers.

While the new enablement right could be a very useful tool in fighting online pirate sites and services, it has some technical drafting deficiencies that need to be fixed to ensure that the new cause of action can be used as intended. Perrin Beatty of the Canadian Chamber of Commerce noted this in the Q&A at the press conference in Ottawa where he stated that the concept of “designed primarily to enable infringement” needed to be clarified and that this clarification is an “essential technical amendment to ensure that the bill in fact achieves the purpose for which it was intended.”

I addressed the drafting problems in My C-32 opening remarks to the Legislative Committee and in an article co-written with Dan Glover titled C-32 enablement remedy targets secondary copyright infringement. There we noted three of the technical amendments that are needed to ensure the Government`s objectives of targeting the “wealth destroyers” are met.

• First, Parliament must recognize that pirate sites and services often are “not designed primarily to enable” acts of copyright infringement. The design is very often neutral, but the site or service is operated to induce, aid or abet infringing activities, or is primarily operated or used for infringing purposes.
• Second, Parliament must ensure that this provision clearly trumps all of the online service provider exceptions to avoid a circumstance in which enablers like wealth destroying pirate hosting sites can avoid liability for enablement.
• Third, to provide an adequate and effective remedy against enablement, Parliament should confirm that rightsholders may rely on the full scale of statutory damages against those who are liable for enablement, regardless of whether such persons were operating for commercial purposes or not.

The Non-Commercial User-Generated Content (UGC) Exception

Bill C-11 contains a new exception that would permit individuals to use existing content to create new ‘user generated content’. The Government background documents describe this amendment and its objective as follows:

The Bill permits the use of legitimately acquired material in user-generated content created for non-commercial purposes. This applies only to creations that do not affect the market for the original material. Examples could include making a home video of your friends and family dancing to a popular song and posting it online, or creating a “mash-up” of video clips.

The Government background documents also state that the changes proposed are in “conformity with Canada’s international obligations”.

In My C-32 opening remarks to the Legislative Committee studying Bill C-32 I pointed out some of the unintended consequences of the draft wording in the UGC amendment stating the following:

This is an exception that, to my knowledge, does not exist anywhere else in the world.

From a technical drafting perspective, the exception is so widely cast that it would most likely violate Canada’s WTO TRIPS obligations. TRIPs mandates that exceptions must be subject to what is known internationally as the 3 step test.

The exception, as drafted, would permit individuals to do almost anything that the author could do with his/her work including creating translations, sequels, or other derivative works and publish them on the internet.

They could also create a “collective work” or “compilation” of works such as “the best” of a TV series or artists’ works, or iPod playlist and post those on the internet.

They can also do a lot more.

The result is that the author loses significant control over the uses of his/her work.

But, over and above this, there could be significant economic consequences to the author. The intention is to permit uses which have no effect on the market for the work. However, the drafting permits aggregate effects on the market for the work that could be very substantial.

Also, the individual’s use of the new UGC work must be non-commercial. But a web site operator can charge for disseminating the UGC work. But, the author gets none of that. They would however in other countries which don’t have this exception and which have let the market solve the problem.

I also highlighted some of the potential problems with the draft language of the UGC, format shifting, time shifting, and back-up copying exceptions in a speech on Bill C-32’s fair dealing and other new copyright exceptions at Osgoode Hall Law School’s professional development program on understanding Bill C-32.

Statutory damages

Bill C-11 would cap statutory damages against individuals who infringe copyright for non-commercial purposes to a range of between $100 and $5,000 for all works involved in the proceeding. It also specifically exempts persons who are liable under the new enablement provision from any statutory damages. The Government background documents describe this amendment and its objective as follows:

This Bill ensures that Canadians will not face disproportionate penalties for minor infringements of copyright by distinguishing between commercial and non-commercial infringement.

The Bill ensures that Canadians are not subject to unreasonable penalties by significantly reducing statutory damages for infringement for non-commercial purposes by individuals, providing the courts with the flexibility to award between $100 and $5,000 in total damages. Using the same example of five illegally downloaded songs, the individual would only be liable for a penalty of between $100 and $5,000 under the proposed changes. The Bill will ensure that courts take proportionality into account in awarding damages.

It appears that the rationale for capping statutory damages against individuals is to preclude large judgements against them when they engage in unauthorized downloading of copyright content over the internet. The underlying concern seems to stem from a fear that a Canadian court would award large damages such as have been awarded in the United States.

The existing Canadian and U.S. regimes are very different, however. In the U.S., the statutory damages per work infringed range from $750 to $30,000 for non-wilful infringements. This range can be increased to $750 to $150,000 for wilful infringements. Canada’s statutory damages range is lower- from $500 to $20,000- and cannot be increased even if the infringement is wilful. However, they can be reduced to a range of between $200 to $500 where a person, such as an individual, had no reasonable grounds to believe he or she was infringing. A Canadian Court also has the discretion to lower the damages to zero where there is multiple copying onto a single medium and the award would be grossly out of proportion to the infringement. The Canadian statutory damages regime, unlike the regime in the U.S., therefore already reflects a proportionality principle. Moreover, there has never been a case in Canada where a copyright owner has been awarded anything close to the maximum statutory damages against an individual who downloaded copies of copyright content from file sharing networks.

This Bill would accomplish the Government’s objectives of ensuring that Canadians will not face “disproportionate penalties for minor infringements of copyright by distinguishing between commercial and non-commercial infringement.” However, it does so in a way that undermines the Government’s objectives of deterring wide scale infringements and providing effective remedies against those infringements that can cause significant economic harm. For example:

• the proposal would cap the recovery of statutory damages against infringements undertaken by organized groups like those who trade in Warez – pirated copyrighted works distributed without fees or royalties and without any commercial purpose – in violation of copyright law.[4] This would effectively cap statutory damages at $5,000 for persons who cause large scale commercial damage, but who do so for reasons other than profit. Some of the most notorious pirates and pirate sites are operated for reputational rather than profit motives.
• the proposal would preclude recovery of statutory damages against any pirate site or service that was liable under the new enablement cause of action. If the site was operated for a non-commercial e.g. reputational, purpose statutory damages could be not be recovered. However, statutory damages would still not be recoverable even against a for profit pirate site or service because of the special exception for statutory damages according to such sites.[5] Ironically, under Bill C-11 a person who is liable for enablement – a “wealth destroyer” to use the words of former Industry Minister Tony Clement- would be subject to no statutory damages while an individual who causes minimal damage and who infringes for a non-commercial purpose would be.
• the proposal would cap statutory damages at $5,000 even though a person might copy, distribute, and make available over the internet hundreds of software, video games, e-books, movies, music and other copyright content that are downloaded by thousands of other individuals as long as these acts are done for “non-commercial purposes”; for example, it would enable individuals to copy and store entire libraries of works and to distribute them to all of the person’s friends, including all of the person’s friends on social networks, high school, university or work colleagues, and over file sharing networks like IsoHunt  to millions of potential downloaders, and the maximum statutory damages would still be $5,000.

In amending the statutory damages regime, the Government should not inadvertently undermine the usefulness of statutory damages which are necessary to ensure there are effective remedies against infringers, discourage infringement, reduce the costs of litigation, and encourage parties to settle litigation. When the statutory damages regime was enacted by the Government in 1997 (the same year Canada signed the WIPO Treaties), it explained the rationale for them as follows:

A copyright owner who commences proceedings for infringement must prove not only the infringement, but also the losses suffered as a result. However, it is often difficult, sometimes impossible, to prove such losses because evidence as to the extent of infringement is usually difficult and/or expensive to find. Statutory damages alleviate this difficulty by guaranteeing a minimum award of damages once infringement is established. They also ease the evidentiary burden on the plaintiff in proceedings for infringement, deter future infringements, reduce the cost of litigation and encourage the parties to settle matters out of court.

The above rationale for statutory damages is still valid.

The Internet Service Provider and Search Engine Exceptions and Responsibilities

Bill C-11 contains four new exceptions referred to as the network service, caching, hosting, and information location tool (aka search engine or ILT) exceptions. The object of these exceptions is explained in the Government background documents as follows:

The Bill ensures that ISPs and search engines will not be held liable for the copyright infringements of their subscribers, to the extent that they are acting as neutral intermediaries (e.g., when they provide Internet access, allow users to download material they have stored in online personal storage space they control, or make temporary cached copies for network efficiency).

The bill will clarify that Internet service providers (ISPs) and search engines are exempt from liability when they act strictly as intermediaries in communication, caching, and hosting activities. The proposed legislation will ensure that services that enable infringement will not benefit from the liability limitations afforded to ISPs and search engines.

These provisions also require technical amendments to ensure the Government`s objectives are met. On March 22, 2010, TELUS, Bell and Rogers appeared before the Legislative Committee studying Bill C-32. who appeared for TELUS acknowledged that some technical amendments are needed to the ISP and ILT exceptions stating the following:

TELUS would support amendments that would give rights holders more powerful tools to go after those who actively enable infringement, and also amendments that would prevent the bad guys from taking advantage of the legal safe harbours intended to protect only the good guys…

TELUS does have some recommendations, but they’re relatively minor. They’re focused on making the notice and notice system work better, more efficiently, and more fairly for all the stakeholders involved. As I have also indicated, we recognize the concerns on the part of some rights holders that the provisions designed to protect innocent intermediaries may be drafted too broadly. They may allow not-so-innocent intermediaries to slip in underneath them. That’s not a desirable result, so we would certainly be open to amendments designed to tighten those up.

The Bill would also create a notice and notice regime. The process and its rationale are described in the Government background documents as follows:

The Bill formalizes the voluntary “notice and notice” regime currently used by Canadian ISPs. Under this system, when an ISP receives a notice from a copyright holder that a subscriber might be infringing copyright, it forwards a notice to the subscriber. The identity of the subscriber may then be released with a court order. This uniquely Canadian approach has been effective at discouraging infringement and is consistent with Canadian values.

A notice and notice process is somewhat useful in dealing with infringing activity across P2P networks and other transitory network communications. It should become part of Canadian law. Notice and notice is not effective, however, in permanently stopping online file sharing by users unless the individuals receiving the notices believe that sanctions could be imposed unless they stop such activity. We have had a de facto notice and notice system in Canada for many years and there is no empirical evidence that it materially changes people’s behaviour to stop illicit file sharing and purchase creative products from legitimate services. Research by our trading partners shows that while a simple notice may have a temporary effect in reducing online file sharing, only notices that have a threat of some sanction operate as an effective deterrent. I dealt with this issue in my submission to the Copyright Consultation in 2009 and in other blog posts including here and here.

Given the Government`s statements about copyright reform, it does not appear that any graduated response system will be put in place under any amendments to Bill C-11. However, as noted above in the testimony of Craig McTaggart some technical amendments are required to make the notice and notice system work as intended.

The Fair Dealing for Education Exception

Bill C-11 proposes to add education to the current list of fair dealing purposes. The Government background documents describe the proposed amendment and its objective as follows:

The Bill enables the use of copyrighted materials for the purpose of education, provided the use is “fair” (i.e., it does not harm the market for a work).

It expands fair dealing to recognize education in a structured context as a legitimate purpose.

As drafted, the proposed wording of the amendment would not accomplish the Government’s objective. The proposed amendment is not clearly limited to only enabling the use of copyrighted materials for the purpose of education “in a structured context”. Unlike all of the current educational purpose exceptions, the proposed amendment is not expressly limited to specific institutional beneficiaries. As well, the term “education” conveys a meaning that appears to go beyond any structured context.

Limiting the exception to dealings that are “fair” will also not ensure that the dealings do “not harm the market for a work. “Fairness” does not provide any assurance against this harm to rights holders. The courts in Canada have developed a list of six non-exclusive factors to assist in determining whether a dealing is fair. Of these six, the effect of the dealing on the work is only one factor to be considered. The Supreme Court in the CCH case stated that while the effect of the dealing on the market of the copyright owner is an important factor, “it is neither the only factor nor the most important factor that a court must consider in deciding if the dealing is fair.” This means that a court may be able to conclude that a dealing is fair even if it harms the market for a work. In contrast, in the United States, the effect of the use upon the potential market for, or value of, the copyrighted work is “the most important, and indeed, the central fair use factor”. Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, (1985), Bouchat v. Baltimore Ravens LP, (4th Cir. Sept. 2, 2010)

Prof. Giuseppina D’Agostino, a professor of Intellectual Property at Osgoode Hall Law School, in her testimony before the Legislative Committee stated the following in relation to the proposed new fair dealing exception:

This new purpose is too broad and invites years of litigation to clarify it, which will lead to access-to-justice issues and will force the courts to resolve matters that are for the government to legislate with confidence in so doing…

On fair dealing, one thing I haven’t talked about is my own analysis of the six factors. When you line up Canada with respect to the U.K. and the U.S., you see that the court says there are more or less six factors, and there could be more. At the same time, in terms of the effect of the dealing on the works–meaning the actual market considerations, the market substitute–the Supreme Court of Canada says that it’s not the only factor, nor the most important.

We know that this is not the case in the U.K. and not the case in the U.S. What we have in Canada with CCH is a broad and liberal interpretation of both the actual purposes and the fairness factor. Left unchecked, the way it’s configured now means that when you compound education plus CCH, you will have something broad, unless we are able to itemize exactly what we mean.

Ysolde Gendreau a professor of law at the University of Montreal and the President of Association Littéraire et Artistique Internationale (ALAI Canada) in her testimony before the Legislative Committee stated the following:

I would like to submit a few examples of this found in Bill C-32, which, in ALAI’s view, undermines the three-step principle, because these exceptions are too broad, because they are based on unrealistic conditions that, once again, make them too broad. Here we’re talking about fair dealing for the purpose of education, the new section 29. We’re talking about non-commercial user-generated content, private copying under section 29.22…

In a law review article on the subject of the proposed fair dealing exception Professor Gendreau also expressed the opinion that the term “education” would not be read to mean “education in a structured context” and that the proposed exception would likely not meet any of the steps in the Berne Three Step Test.[6]

Michael Geist published a series of blog posts commenting on the scope of this new exception including one entitled “Clearing Up the Copyright Confusion: Fair Dealing and Bill C-32”. He concluded that this amendment would not affect the balance between creators of educational materials and the users of such materials or negatively impact the market for publications. My colleague Dan Glover wrote a series of blog posts responding to the incorrect assertions made by Michael Geist and others and demonstrating the need for amendments to the new exception in order to meet Government’s objectives. The posts are:

• A Response to Professor Michael Geist’s Clearing Up the Copyright Confusion
• En réponse à Pour démêler la confusion à l’égard du droit d’auteur, du Professeur Michael Geist
• Clearing Up the Copyright Confusion (Part II)

The Copyright Exceptions to Encourage Innovation

Bill C-11 would create news exceptions for developing interoperable computer programs, encryption research, network security testing, and technological processes. The rationale for these exceptions is explained in the Government background documents as follows:

The Copyright Modernization Act aims to eliminate some of the uncertainty facing innovative businesses. Provisions aimed at the software industry permit the reproduction of software and the hacking of digital locks in order to engage in reverse engineering, security testing and encryption research. Such provisions support, for example, companies that test software for security flaws and then develop and sell patches. Where copyright owners believe these tools have been misused, they will have recourse to deal with any infringement or inappropriate hacking of digital locks. The Bill also clarifies that companies do not face any copyright liability for technical copies that are essential but incidental to a product or service they offer.

These amendments also need technical fixes to ensure that the Government`s objectives are met. The need for this was addressed by John Manley, the President and CEO of the Canadian Council of Chief Executives, in his testimony before the Legislative Committee. After stating that he strongly endorsed “the overall thrust of this legislation” he said:

Having said that, I believe the committee may wish to consider certain technical changes to the bill so as to avoid unintended consequences. For example, important concerns have been raised with respect to the impact on Canada’s software industry of provisions dealing with encryption research, network security, reverse engineering and copying for interoperability purposes.

In addition, some of the language dealing with user-generated content and copying for private purposes may be too broad.

I also canvassed these amendments in a speech to the 14^th Annual IT.Can Conference titled Bill C-32’s impacts on the IT community.

Conclusion

After many failed attempts to modernize Canada’s copyright laws, it now appears there is a Bill before Parliament that will do this. The Copyright Modernization Act, however, still requires careful scrutiny to ensure that appropriate technical amendments are made so that the Government’s objectives are met and to avoid significant inadvertent consequences inconsistent with the Government’s objectives.

[2] Michael Geist accuses the book publishers of engaging in “a relentless misinformation campaign” against the fair dealing for education exception. His assertion is ironic since it is he that has engaged in this behaviour on copyright reform issues.

[3] See, James Gannon, TPMs: A comprehensive guide for Canadian copyright law

[4] See, Wikipedia, Warez http://en.wikipedia.org/wiki/Warez

[5] Section 38.1(6)(d)

[6] Ysolde Gendreau Canada and the Three Step test: A Step in Which Direction? 15 Intellectual Property L. Rev. 309 (2011). In the article she said:

The purpose of education is introduced within the context of an exception, fair dealing, that does not have a statutory list of criteria for its evaluation. The fair dealing exception also entails that it applies to all categories of works and to all rights, reproduction rights as well as performing rights. Moreover, its application is not limited to educational institutions because of the following a contrario argument: the wording of the specific educational exceptions shows that they are intended for educational institutions while that of the fair dealing for the purpose of education makes no such mention. Consequently, the notion of education extends the application of this exception beyond educational institutions. Government representatives say that the exception is to be a test ground for exceptions that may eventually give rise to specific exceptions. However, they still maintain that it refers to education in a structured context.

It is easy to doubt such a statement because educational institutions do represent a structured context. Courts are likely to say that, in the absence of a specific reference to such institutions, the reference to “education” is not limited to structured contexts. So this new exception would introduce a very broad notion of education in a statute that does not include criteria for the appreciation of fair use either.

After discussing why the proposed exception would have difficulty passing all three of the three steps she concluded by saying:

Generally speaking, since the three-step test has become the standard by which to judge exceptions, I would say there is a fairly strong case for stating that the proposed provision on fair dealing for the purpose of education is so broadly drafted that it goes against the three-step test of the Berne Convention and of the TRIPS Agreement.

“Counterfeit and pirated goods are an increasingly global problem that requires a globally coordinated solution,” said Minister Fast. “We all have an interest in combatting counterfeiting and piracy because these activities cost billions of dollars each year in revenue and trade losses, which translates into higher prices, lost income and lost jobs for people employed in a range of industries—from film and pharmaceuticals to electronics. Counterfeit goods also pose a real threat to the health and safety of people because the producers of goods such as drugs and auto parts evade the rigorous rules, standards and guidelines that are in place to protect consumers.”

ACTA will establish new international standards for enforcing intellectual property rights. It will cover three areas: improving international cooperation, establishing best practices for enforcement and providing a more effective legal framework to address the problem of counterfeiting and piracy. It will also give innovators, artists and entrepreneurs enhanced measures to ensure their creations and associated rights are protected. Alongside Canada, Australia, Japan, Morocco, New Zealand, the Republic of Korea, Singapore and the United States also signed the agreement, which was negotiated by 38 parties in total.

Following the signature of ACTA, the Government of Canada will develop and introduce the necessary legislation to implement the agreement. The government has already taken steps to enforce and defend intellectual property rights and help balance the needs of creators and users by reintroducing its Copyright Modernization Act (Bill C-11) in Parliament on September 29. The bill informed and guided Canada’s approach to the ACTA negotiations.

“The signing of this historic international agreement and our government’s reintroduction of copyright legislation demonstrates Canada’s commitment to combatting counterfeit and pirated goods, and protecting innovation- and knowledge-based prosperity, which are key to Canada’s future economic success,” said Minister Fast.

A backgrounder on ACTA can be found here. A summary of the agreement which I prepared when the text of ACTA was agreed to can be found here.

Signing ACTA is a step towards meeting the significant counterfeiting problems identified by the RCMP in A National Intellectual Property Crime Threat Assessment, 2005 to 2008. The porous nature of our borders and the need to upgrade our border controls to world standards to reduce counterfeiting and piracy in Canada has been noted by two parliamentary committees, three Canadian trade associations, and our major trading partners. Parliamentary Standing Committee on Public Safety and National Security, Parliamentary Standing Committee on Industry, Science and Technology, Ontario Chamber of commerce, Canadian Chamber of Commerce, U.S. Trade Representative,  U.S. Congressional Anti-Piracy Caucus, European Union, and Canadian Anti-Counterfeiting Network (CACN).

These were all questions decided by four precedent setting cases in the UK over the last two weeks in the Lucasfilm Ltd & Ors v Ainsworth & Anor [2011] UKSC 39 (27 July 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) , and The Newspaper Licensing Agency Ltd & Ors. v Meltwater Holding BV & Ors [2011] EWCA Civ 890 (27 July 2011) cases.  Many of the issues in these cases are relevant to digital copyright legal issues currently before, or which certainly will be raised, in Canadian courts.

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

The Lucasfilm decision of the UK Supreme Court decided two issues. The first addressed the definition of “sculpture” in the Copyright, Designs and Patents Act 1988 (the CDPA), and, in particular, the correct approach to three-dimensional objects that have both an artistic purpose and a utilitarian function. The appeal was concerned with copyright in various artefacts made for use in the first Star Wars movie including the Imperial Stormtrooper helmet. The Supreme Court held that the helmets were not sculptures. The helmet was utilitarian and could not be protected by copyright.

In giving its reasons the court recognized that the CDPA’s protection for artistic works such as sculptures should be construed to be separate and distinct from copyright in utilitarian unregistered designs.

There is one other matter to which the Court of Appeal attached no weight, but which seems to us to support the judge’s conclusion. It is a general point as to the policy considerations underlying Parliament’s development of the law in order to protect the designers and makers of three-dimensional artefacts from unfair competition. After reviewing the legislative history the Court of Appeal took the view (para [40]) that there was no assistance to be obtained from the relationship between copyright and registered design right. We respectfully disagree, especially if the relatively new unregistered design right is also taken into account. It is possible to recognise an emerging legislative purpose (though the process has been slow and laborious) of protecting three-dimensional objects in a graduated way, quite unlike the protection afforded by the indiscriminate protection of literary copyright. Different periods of protection are accorded to different classes of work. Artistic works of art (sculpture and works of artistic craftsmanship) have the fullest protection; then come works with “eye appeal” (AMP Inc v Utilux Pty Ltd [1971] FSR 572); and under Part III of the 1988 Act a modest level of protection has been extended to purely functional objects (the exhaust system of a motor car being the familiar example). Although the periods of protection accorded to the less privileged types have been progressively extended, copyright protection has always been much more generous. There are good policy reasons for the differences in the periods of protection, and the Court should not, in our view, encourage the boundaries of full copyright protection to creep outwards.

The Court’s statement about not encouraging ”the boundaries of full copyright protection to creep outwards” touches upon an issue currently before the Canadian Supreme Court in two judicial reviews in the Tariff 22 case. These appeals involve the question as to whether the right of communication to the public extends to the transmission of downloads of musical works to members of the public. SOCAN argues that they do. Those opposing SOCAN’s tariff have argued that following the Supreme Court’s decision in Bishop v Stevens, the communication and reproduction rights must be construed to be separate and distinct rights and that the communication right should not be “progressively extended” so as to “creep” over into the boundaries covered by the reproduction right which applies to making copies through online transmissions.

The second issue addressed by the UK Supreme Court is whether a claim against a defendant domiciled in England for infringement of a foreign copyright is justiciable in the UK. Both the UK High Court and the Court of Appeal held they were not. The Supreme Court came to the opposite conclusion. After canvassing the UK and other Commonwealth cases on the issue and applicable legal and policy arguments, the Court reversed the judgement in the Tyburn Productions Ltd. v. Conan Doyle, [1990] 1 All E.R. 909 (Ch.D.) case and ruled that English Courts have the jurisdiction to try claims for infringement of foreign copyright laws. According to the Court:

There is no doubt that the modern trend is in favour of the enforcement of foreign intellectual property rights. First, article 22(4) of the Brussels I Regulation only assigns exclusive jurisdiction to the country where the right originates in cases which are concerned with registration or validity of rights which are “required to be deposited or registered” and does not apply to infringement actions in which there is no issue as to validity. This can rarely, if ever, apply to copyright. Second, the Rome II Regulation also plainly envisages the litigation of foreign intellectual property rights and, third, the professional and academic bodies which have considered the issue, the American Law Institute and the Max Planck Institute, clearly favour them, at any rate where issues of validity are not engaged.

There are no issues of policy which militate against the enforcement of foreign copyright. States have an interest in the international recognition and enforcement of their copyrights, as the Berne Convention on the International Union for the Protection of Literary and Artistic Works shows. Many of the points relied on by the Court of Appeal to justify the application of the Moçambique rule in this case as a matter of policy would apply to many international cases over which the English court would have jurisdiction and would in principle exercise it, especially the suggestion that questions of foreign law would have to be decided. It was also said by the Court of Appeal that enforcement of foreign intellectual property law might involve a clash of policies such that a defendant may be restrained by injunction from doing acts in this country which are lawful in this country. But such an injunction will be granted only if the acts are anticipated to achieve fruition in another country, and there is no objection in principle to such an injunction. Nor is there any objection in principle, as the Court of Appeal thought, to a restraint on acts in another country. Extra-territorial injunctions are commonly granted here against defendants subject to the in personam jurisdiction. The Court of Appeal also thought that it was relevant that there was no international regime for the mutual recognition of copyright jurisdiction and of copyright judgments, but this is no reason for the English court refusing to take jurisdiction over an English defendant in a claim for breach of foreign copyright.

The Lucasfilm case has opened the doors to permit UK courts to try transnational infringement cases involving infringements that take place over networks such as the Internet and which implicate the copyright laws of many countries, as long as the UK courts have personal jurisdiction over the defendants. But, as these cases start to be brought, secondary issues will likely emerge. These will undoubtedly include questions about which issues raised in the proceedings will be adjudicated under the lex loci delicti (the law where the infringement took place) and which under the lex fori (the law of the forum e.g. the UK). When one considers all  aspects of a copyright action including disputes over subsistence and ownership of copyright, infringement, remedies including accounting of profits, damages, and pre-trial and post trial injunctions, evidentiary rules and discovery,  and the need to establish the law where the infringement took place (which can be different from circuit to circuit in the US) it is likely that the selection of a domestic forum to try a claim of foreign infringement could lead to different results than if the same claim was tried in the domestic forum.

The decision of the UKSC is consistent with the evolving conflicts of laws precedents in Canada. One of the principal impediments for holdings that claims under foreign copyrights are not justiciable in the UK was the rule in Phillips v. Eyre. This case was subject to considerable criticism by the Supreme Court of Canada in Tolofson v. Jensen [1994] 3 S.C.R. 1022 which doubted whether there was any merit to the requirement that in tort claims the wrong must be a tort when committed in the forum in which the suit is brought.  The decision in the Lucsfilm case is also consistent with the decision in the Research in Motion Limited v. Atari Inc., 2007 CanLII 33987 (ON SC) case in which an Ontario court refused to strike out a claim brought by RIM against Atari for a declaration that several RIM games did not infringe Atari’s Canadian or US copyrights.

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

This case raised the question as to whether a UK court could grant an injunction requiring a UK ISP to block a foreign website in order to stop the ISP’s facilities from being used by third parties engaged in unauthorized online file sharing. The Court ruled that making such an order would be a proportionate remedy to counter illegal online file sharing and one which it could make.

The applicants in the case were well known motion picture studios that carry on business in the production and distribution of films and television programmes. The respondent BT is the largest ISP in the UK. The studios brought a test case seeking an injunction against BT pursuant to section 97A of the CDPA to block or at least impede access by BT’s subscribers to www.newzbin.com . The studios brought the application after obtaining an injunction against a previous operator of Newzbin. The order was circumvented by a new unidentifiable foreign operator or operators which continued to operate the file sharing site and to thereby contribute to undermine the market for legal services for movies and TV programmes in the UK.

The UK has implemented Article 8(3) of the EU Information Society Directive with Article 97A of the CDPA which reads as follows:

97A Injunctions against service providers

(1) The High Court (in Scotland, the Court of Session) shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.

(2) In determining whether a service provider has actual knowledge for the purpose of this section, a Court shall take into account all matters which appear to it in the particular circumstances to be relevant and, amongst other things, shall have regard to –
(a) whether a service provider has received a notice through a means of contact made available in accordance with regulation 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013); and

(b) the extent to which any notice includes –

(i) the full name and address of the sender of the notice; (ii) details of the infringement in question.

(3) In this section ’service provider’ has the meaning given to it by regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002.

The High Court accepted “that online copyright infringement is a serious problem for copyright owners such as the Studios and the other rightholders who support this application” even though it is one whose impact is difficult to quantify. The Court also noted that other courts in the EU had made similar orders including orders requiring ISPs to block well know file sharing sites such as The Pirate Bay.

The Court gave several reasons for granting the requested relief.

There was substantial evidence that the Newzbin site was being used to facilitate online file sharing in the UK on a massive scale.

BT’s services were used by users to download TV and movie programming, which acts infringed the studios’ copyrights.

The operators of the Newzbin2 website used BT’s services to infringe copyright. According to Arnold J,

Again, it is important to consider the nature of the infringing act and its relationship with the service in question. In the present case Kitchin J’s judgment in 20C Fox v Newzbin establishes that the operators of the Newzbin2 website infringe the Studios’ copyrights in three ways. First, they authorise the users’ infringements. Secondly, they are jointly liable for the users’ infringements. Thirdly, they infringe by making available. The first two ways are different forms of accessory liability for acts committed by the users. Once it is concluded, as I have, that the users are using BT’s service to infringe copyright, then it follows that the operators are too. As for the third way, this consists of “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 a time individually chosen by them”. The operators make the works available in such a way that users can access them over BT’s network (among others). In my judgment that is sufficient to constitute use of BT’s service to infringe.

BT had actual knowledge of one or more persons using its service to infringe copyright even though it was not proven that BT had actual knowledge of a specific infringement of a specific copyright work by a specific individual.

Section 97A confers on the court a specific and broad jurisdiction to grant an injunction against service providers. This jurisdiction is not confined to the prevention of the continuation, or even repetition, of infringements of which the service provider has actual knowledge.” On the contrary, an injunction may be granted requiring the service provider “to take measures which contribute to … preventing further infringements of that kind”.

The blocking order asked for by the studios required BT to implement an existing technical solution which BT already employed to block child pornography. According to the Court, the order asked for was reasonable: “implementing that solution is accepted by BT to be technically feasible; the cost is not suggested by BT to be excessive; and provision has been made to enable the order to be varied or discharged in the event of a future change in circumstances.”

Further, the requested order was not inconsistent with Article 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms. Article 10 and Article 1 of the First Protocol to, the European Convention on Human Rights read as follows:

Article 10 provides:

“1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.
2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.”

Article 1 of the First Protocol provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The blocking order requested by the studios was held to be proportionate having regard to the studios’ rights protected by Article 1 of the First Protocol.

In general, I am satisfied that the order sought by the Studios is a proportionate one. It is necessary and appropriate to protect the Article 1 First Protocol rights of the Studios and other copyright owners. Those interests clearly outweigh the Article 10 rights of the users of Newzbin2, and even more clearly outweigh the Article 10 rights of the operators of Newzbin2. They also outweigh BT’s own Article 10 rights to the extent that they are engaged. The order is a narrow and targeted one, and it contains safeguards in the event of any change of circumstances. The cost of implementation to BT would be modest and proportionate.

The order was also held to be proportionate even though the studios were not required to identify individual URLs corresponding to the individual NZBs files indexed by Newzbin2 which relate to infringing copies of individual copyright works.

In my judgment such a requirement would not be proportionate or practicable since it would require the Studios to expend considerable effort and cost in notifying long lists of URLs to BT on a daily basis. The position might be different if Newzbin2 had a substantial proportion of non-infringing content, but that is not the case.

Bill C-32, The Copyright Modernization Act, did not expressly include any amendment similar to Article 8(3) of the EU Information Society Directive (or Section 97A of the CDPA). The usefulness of such a provision in combating online piracy to protect a domestic market for legal services from infringements enabled by foreign file sharing sites cannot be underestimated, as the Newzbin2 case amply demonstrates.

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

The TV Catchup Limited (“TVC”) operate an internet based live streaming service of broadcast television programmes, including films, in which the claimants own the copyright. The questions in the case are whether, in providing its live service, TVC communicate the broadcasts and underlying films to the public or reproduce them through buffer copying.

The UK High Court made several important holdings or provisional holdings including the following:

• • TVC communicate the films and broadcasts to the public (the Court stated its intention to refer the question to the EU Court of Justice (the CJEU)).
• • TVC reproduce a substantial part of the films in the buffers and on the computer screens in which they are viewed.
• • There is no reproduction of a substantial part of a broadcast in the buffers or on the screens (the Court stated its intention to refer the question to the CJEU).

One of the important questions in the case is whether streaming programming to individuals in the privacy of their homes is a communication which is “to the public”. The  Court, relying heavily on the CJEU Sociedad General de Autores y Editores de Espana (SGAE) v Rafael Hoteles SL [2007] Bus LR 521 case, provisionally held that the aggregate of individuals who received the programs were to be regarded as a public to whom the streams were communicated.

…the aggregate of the individual communications which TVC make at any given time is properly to be regarded as a communication to the public, as opposed to a plurality of individual and private communications. In Rafael Hoteles it was appropriate to consider the communications to the members of the public in their separate hotel rooms, and to consider as well the fact that the occupants of such rooms are regularly replaced. In my judgment it is appropriate to look cumulatively at the communications in the present case, rather than regarding them as an aggregate of individual ones. I also do not think it matters that the communications are initiated by the users. It is true that user-initiated communications are the subject of the making available right: but in my judgment such communications are a sub-set of the notion of communication to the public, not an extension of it.

In connection with the correct approach to aggregating a number of private communications, TVC relied on a decision of the Court of Appeal of Singapore applying national legislation also based on Article 8 of WIPO Copyright Treaty: RecordTV Pte Ltd v MediaCorp TV Singapore Pte Ltd [2010] SGCA 43. That case involved a service by which members of the public could request RecordTV to record broadcast programmes on their behalf, on Record TV’s servers. The Court held it was the end users rather than RecordTV who were making the copies of the broadcasts for the purposes of the reproduction right. Accordingly the end users were able to take account of a time-shifting defence. So far as “communication to the public” is concerned, the Court held that there had not been any communications to “the public” and RecordTV was not the party who made the communications in any event. At §26, the Court stated:

“In any case, in view of the modus operandi of RecordTV’s iDVR service, we find that any communications made by RecordTV to Registered Users who had requested the recording of a particular MediaCorp show were made privately and individually. We see no reason why the aggregate of the private and individual communications made to each of the aforesaid Registered Users should transform the nature of such communications into “public” communications. Although any member of the public could register with RecordTV to become a Registered User, he had no immediate access to all (or any) of the MediaCorp shows already recorded by RecordTV. This was because RecordTV’s iDVR service was not a video-on-demand service whereby RecordTV shared a library of recorded works with Registered Users. Rather, a Registered User was only allowed to access and view time-shifted recordings of the specific MediaCorp shows which he had requested to be recorded. Thus, each Registered User had to make a request for a particular MediaCorp show to be recorded for him, and only he could access the show recorded at his request.”

To the extent that this conclusion is inconsistent with one of the grounds for decision in Record TV, I respectfully differ from it. Although the Singapore Court was applying a provision of Singapore law derived from the same international convention, I find it difficult to reconcile the conclusion reached there with the reasoning in Rafael Hoteles and the obvious desire in the Directive to provide for a technologically neutral definition of communication to the public. It would be an unfortunate result if a point-to-multipoint communication were to be actionable but a number of point to point transmissions were not.

The issue of whether online “on demand” transmissions are “to the public” is a hotly contested one. In the US Cablevision case, the US Second Circuit held that transmissions of individually stored programs from networked PVRs to the users was not a public performance because these transmissions are not performances which are “to the public”. The Canadian Federal Court of Appeal reached a different conclusion on three occasions including most recently in two decisions in the Tariff 22 case. The FCA held that the transmission of musical works to individual members of the public as part of purchase and sale transactions are “communications to the public”. The Supreme Court granted leave to appeal on this issue. This appeal will be argued in the Supreme Court this December.

On the second issue, the UK Court ruled or provisionally ruled that making buffer copies of films infringed the reproduction right, but the buffer coping of the TV broadcasts did not. On this issue, the Judge relied on the previous English case,  Football Association Premier League v QC Leisure [2008] EWHC 1411 (Ch) (“FAPL“) as well as the Opinion of Advocate General Kokott in the FAPL reference.

The facts of the present case appear to me to be more strongly in favour of a finding of reproduction in part than those in FAPL, at least so far as storage of the films in the buffers is concerned. Much longer sections of the works are stored. My provisional view is therefore that TVC do reproduce and authorise the reproduction of a substantial part of the films in the buffers and on the screens. Final judgment should await the decision of the CJEU in FAPL however.

I have come to the provisional view that TVC do not authorise the reproduction of the whole or any part of the broadcast either in the buffers or on the screens of users. The evidence does not establish that what exists in the buffers or on the screen at any given time can properly be regarded as a part of the broadcast. There could only therefore be infringement if I were to accept the cumulative or rolling approach to infringement of broadcast copyright. Kitchin J declined to do so for Berne works, following Australian authority to that effect in FAPL at [237] to [230]. I would decline to do so here for broadcast copyright for the same reasons. But it seems to me that this raises a further question as to the meaning of the Directive which is unlikely to be resolved in FAPL. I propose therefore to refer a question or questions to the CJEU on this issue as well.

The issue of whether or in what circumstances buffer copying infringes copyright is also a question that is being litigated in Canada. In the Sirius Canada case, the Federal Court of Appeal recently affirmed a decision of the Copyright Board which held that small buffer copying of musical works in satellite radio receiving devices does not reproduce a substantial part of the musical works received in the use of the service. This decision, which is consistent with the ruling in the ITV case, is the subject of a motion for leave to appeal to the Supreme Court. No decision on the leave motion has yet been rendered.

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

The Meltwater decision of the UK Court of Appeals canvassed several questions related to whether an online article clipping service can legally be operated in the UK. Justice Proudman of the UK High Court had ruled that it could not. Her reasons for that conclusion included the following holdings summarised by the Court of Appeal:

(1) The headlines to the various articles reproduced in Meltwater News are capable of being literary works independently of the article to which they relate.

(2) The extracts from the articles reproduced in Meltwater News with or without the headline to that article are capable of being a substantial part of the literary work consisting of the article as a whole.

(3) Accordingly the copies made by the end-user’s computer of (a) Meltwater News (i) on receipt of the email from Meltwater, (ii) opening that email, (iii) accessing the Meltwater website by clicking on the link to the article and (b) of the article itself when (iv) clicking on the link indicated by Meltwater News are and each of them is, prima facie, an infringement of the Publishers’ copyright.

(4) No such copies are permitted (a) by s.28A CDPA dealing with temporary copies, or (b) as fair dealing within s.30 CDPA, or (c) by the Database Regulations.

(5) Accordingly, the end-user requires a licence in order lawfully to receive and use the Meltwater News Service.

The Court of Appeal agreed with the decision of the trial judge on all of the canvassed issues.

Central to any digital clipping service is the ability to copy article headlines. A recent Australian case refused to protect headlines under copyright holding that to do so would adversely affect making bibliographic reference to the articles. The trial judge in the Meltwater case declined to follow this decision of Bennett J in Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984.  The Court of Appeal affirmed this decision saying:

In these circumstances, the conclusion of Proudman J in paragraph 71 of her judgment that newspaper headlines are capable of being original literary works is plainly correct; indeed at one stage in his argument counsel for PRCA conceded as much. It was not suggested that she was not entitled to accept the evidence of Mr Bromley as indicated in paragraph 70 of her judgment. In those circumstances the conclusion in the last sentence of paragraph 72 that “some of the headlines are independent literary works..” is, in my view, unassailable. I would reject the submissions of counsel for PRCA on this part of the case.

The Court of Appeal also ruled that the reproduction of extracts from the articles comprising no more than 256 characters would inevitably constitute the reproduction of a substantial part of the articles. The Court relied heavily on the CJEU decision in Infopaq International A/S v Danske Dagblades Forening [2009] ECDR 16 in which the CJEU held that reproduction of 10 words from an article could be an infringement if the portion copied represented the intellectual creation of the author.

Each time Meltwater produces an edition of its news for a client, depending on the search term or agent, a large number of extracts are taken from a variety of publications, in some cases several from the same article. Given the principles to be applied it seems to me to be inevitable that some of them will constitute a substantial part of the original so as, when copied by the client, prima facie, to amount to an infringement of copyright in the original literary work. What is in issue is not whether any particular extract is a substantial part of the original but whether the conduct of the business of Meltwater is such as, on a balance of probability, likely from time to time to cause its clients, prima facie, to infringe the copyright of the Publishers in the original work so as to justify the making of the declaration. The judge concluded that it was. I see no ground on which this court would be entitled to interfere with her conclusion.

I have, as the judge did, considered the possibility of the extracts constituting substantial parts separate from the headlines. The proper question is whether the relevant part of Meltwater News comprising both the headline and the extracts is such as, when copied by the clients, prima facie, to infringe the Publishers’ copyright in the original work. In my view the probability of that occurring on a regular basis and to a significant extent is substantial. Accordingly the activities of clients of Meltwater in receiving and using Meltwater News are sufficiently likely to constitute prima facie infringements of copyright to warrant the declaration the judge made. I turn then to the various defences on which PRCA relies.

The defendant also contended that its service could not be infringing because the dealings were for the purposes of criticism or review and were fair. The defense of fair dealing was also rejected by the Court.

The defence of fair dealing is conferred by s.30 CDPA. I have quoted its terms in paragraph 14 above. For such a defence to succeed the relevant dealing with the work must be for either (1) the purpose of criticism or review, or (2) reporting current events, and in either event (3) is accompanied by a sufficient acknowledgement. PRCA contends that each of those conditions is satisfied. Proudman J disagreed. With regard to the first she said in paragraph 127:

“The End User does not apply his critical faculties at all to the work, whether the article or the text extracts. The purpose of Meltwater News is merely to enable the End User to decide whether he wants to see the content of the articles. However widely I interpret the expression “criticism or review”, I do not see that the End User’s activities are comprised within it.”

Finally I should refer to the fact that even if these conditions had been complied with Meltwater’s dealings were not ‘fair’. The judge rejected the fair dealing defence on the ground that the dealing was for commercial purposes and was encouraging end-users to infringe the Publishers’ copyright. I agree, and the counter argument put forward by PRCA does not begin to suggest otherwise. I have dealt with the fair dealing defence somewhat cursorily as it was not considered by counsel for PRCA as sufficiently substantial to be advanced orally either in opening or reply. The counter submissions of counsel for NLA both in writing and orally are compelling.

The decision has been subject to considerable reporting and controversy in the UK including here, here, and here.

The scope of the fair dealing defense is also the subject of considerable litigation in Canada. The Supreme Court of Canada has granted leave to appeal in two important decisions related to fair dealing. The first deals with whether the communication to the public of online music previews by online service providers selling music downloads is covered by the fair dealing for research defense. The Federal Court of Appeal in the SOCAN Tariff 22 case ruled it was a fair dealing. The second deals with whether K-12 educational institutions which copy portions of works to give to students for the purposes of instruction, or which instruct students to make copies of portions of works for instruction purposes, can claim a fair dealing defense. The Copyright Board ruled they could not and the Federal Court of Appeal ruled this holding was reasonable.

The slides include a summary of the following cases and statutory materials:

Privacy:

Cite Cards Canada Inc. v. Pleasance, 2011 ONCA 3

Leon’s Furniture Limited v. Alberta (Information and Privacy Commissioner), 2011 ABCA 94

State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada, 2010 FC 736

Nammo v. TransUnion of Canada Inc., 2010 FC 1284

Randall v. Nubodys Fitness Centres, 2010 FC 681

Stevens v. SNF Maritime Metal Inc., 2010 FC 1137

Vancouver (City) v Ward, 2010 SCC 27

Hannaford Bros. Co. Customer Data Security Breach Litigation 4 A.3d 492 (Sup, Ct. Me. 2010)

Paul v Providence Health System 240 P.3d 1110 (2010)

Doe 1 v. AOL LLC 719 F.Supp.2d 1102 (N.D.Cal. 2010)

LaCourt v. Specific Media, Inc. 2011 WL 1661532 (C.D.Cal. Apr. 28, 2011)

Claridge v. RockYou, Inc.  2011 WL 1361588 (N.D.cal. Apr. 11, 2011)

Jones v. Tsige, 2011 ONSC 1475

CTB v. News Group Newspapers Ltd & Anor [2011] EWHC 1326 (QB)

City of Ontario, Cal. v. Quon, 130 S. Ct. 2619

R. v. Cole, 2011 ONCA 218

U.S. v. Warshak 631 F.3d 266 (6th Cir. 2010)

FCC v. AT&T INC., 562 US__ (2011)

Holmes v. Petrovich Development Co. 191 Cal. App. 4th 1047

Bigstone v. St. Pierre, 2011 SKCA 34

Mosley v. UK (EU Ct. Human Rights) (10 May 2011)

Sparks v. Dubé, 2011 NBQB 40

Warman v. Wilkins-Fournier, 2011 ONSC 3023

Contracts and Electronic Agreements:

Seidel v. TELUS Communications Inc., 2011 SCC 15

AT&T Mobility LLC v. Conception, 2011 WL 1561956 (U.S. Sup. Ct. 2011)

Evans v. Linden Research, Inc., 2011 WL 339212 (E.D.Pa. 2011)

St-Arnaud v. Facebook Inc., 2011 QCCS 1506

Grosvenor v. Qwest Communications Intern., Inc., 2010 WL 3906253 (D. Colo. 2010)

Hoffman v. Supplements Togo Management, LLC, 2011 WL 1885675 (N.J.Super.A.D. 2011)

Roling v. E*Trade Securities, LLC, 756 F. Supp. 2d 1179 (N.D. Cal. 2010)

Patco Const. Co., Inc. v. People’s United Bank, 2011 WL 2174507 (D.Me. May 27, 2011)

Harold H. Huggins Realty, Inc. v. FNC, Inc., 575 F.Supp. 2d 696, 708 (D.Md. 2008) 

U.S. v. Nosal 2011 WL 1585600 (9th. Cir. Apr 28, 2011)

United Stats v. Rodriguez, 628 F. 3d 1258, (11th Cir. 2010)

Facebook, Inc. v. Power Ventures, Inc. 2010 WL 3291750 (N.D.cal.2010)

Naldi v. Grunberg, 908 N.Y.S.2d 639 (N.Y.A.D. 2010)

Golden Ocean Group Ltd. v Salgaocar Mining Industries PVT Ltd. & Anor [2011] EWHC 56 (Comm) (21 January 2011) 

Barwick v. Government Employee Ins. Co., Inc. 2011 Ark. 128 (Sup. Ct. Ark. 2011)

Distinct Fortune Ltd. v. Hyndland Investment Co. Ltd. [2010] HKEC 2013

Yazdani v. Canada (Citizenship and Immigration), 2010 FC 885

Contract and License Issues:

De Beers UK Ltd. v. Atos Origin It Services UK Ltd. [2010] EWHC 3276 (16 December 2010) 

Vernor v. Autodesk, Inc. 621 F.3d 1102 (9th Cir. 2010)

MDY Industries, LLC v Blizzard Entertainment, Inc. 2010 WL 5141269 (9th.Cir. 2010)

London Borough of Southwark v. IBM UK Ltd. [2011] EWHC 549 (17 March 2011) 

Agence France Presse v. Morel, 2011 WL 147718 (S.D.N.Y.2011)

Baidu, Inc. v. Register.com, Inc., 2010 WL 2900313 (S.D.N.Y.2010)

Facebook, Inc. v. Pacific NorthWest Software, Inc., 2011 WL 1843509 (9th Cir. 2011)

Patents and Trade-marks

Amazon.com, Inc. v. Attonrey General of Canada, 2010 FC 1011

Microsoft Crop. V I4I Limited Partnership 564 U.S. __ (2011)

Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. __ (2011)

Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc., 563 U.S. ___(2011)

Rosetta Stone Ltd. v. Google Inc., 730 F. Supp. 2d 531 (E.D. Vir. 2010)

Jurin v Google Inc., 2011 WL 572300 (E.D.Cal.2011)

Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc., 2010 BCSC 765 

Network Automation Inc. v Advanced Systems Concepts Inc, 638 F.3d 1137 (9th.Cir.2011)

Microsoft Corp. v. Shah, 2011 WL 108954 (W.D.Wash. 2011)

Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27

Copyright:

Sirius Canada Inc. v. CMRRA/SODRAC, 2010 FCA 348

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

Telstra Corporation Limited v. Phone Directories Company Pty Ltd. [2010] FCAFC 149 (15 December 2010)

Acohs Pty Ltd. v. Ucorp Pty Ltd. [2010] FCA 577 (10 June 2010)

Roadshow Films Pty Ltd. v  iiNet Limited, [2011] FCAFC 23

REFERENCE for a preliminary ruling from the Nejvyšší správní soud (Czech Republic) ECJ 22 December, 2010

SAS Institute Inc. v. World Programming Ltd. [2010] EWHC 1829 (Ch) (23 July 2010) 

SAS Institute Inc v World Programming Ltd [2010] EWHC 3012 (Ch) (22 November 2010) 

The Newspaper Licensing Agency Ltd. v. Meltwater Holding BV [2010] EWHC 3099 (Ch) (26 November 2010) 

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

Media C.A.T. Ltd. v. A [2010] EWPCC 17 (01 December 2010) 

The Authors Guild et al v. Google Inc.  2011 WL 986049 (S.D.N.Y. 2011)

US v. ASCAP, 2010 WL 3749292 (2nd. Cir. Sept. 28, 2010)

Kernal Records Oy v. Mosley,  2011 WL 2223422 (S.D.Fla. Jun. 7, 2011)

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

“alarmed by proposals to disconnect users from Internet  access if they violate intellectual property rights. This also includes legislation based on the  concept of “graduated response”, which imposes a series of penalties on copyright  infringers that could lead to suspension of Internet service, such as the so-called “three strikes-law” in France  and the Digital Economy Act 2010 of the United Kingdom.”

The report has since been subject to widespread comment and considerable criticism. Some of my views about the report were published in an article in The Wire Report last week. (My comments in brackets)

Barry Sookman, a copyright lawyer with McCarthy Tetrault in Toronto who represents the content industries [among others], said in an interview that the report expresses the view of one human rights advocate.

He said it is not the official position of the UN or the human rights council and that it is not binding on UN member states.

Sookman added that the report lacks analysis of the regimes and the legislation it criticizes, and it ignores the balance between reconciling competing values.

“The right to be able to protect your property, including your intellectual property, is actually a fundamental right under the Universal Declaration of Human Rights,” he said.

“The right to protect your copyright has actually been considered to be a constitutional right in a number of countries.”

France’s three-strikes system relies on a series of steps and a tribunal ruling, and the U.K.’s digital economy legislation  doesn’t [currently] empower ISPs to disconnect users, he said.

Sookman pointed to four court decisions—one each in Australia and the U.K., and two in Ireland—that deemed graduated response initiatives a reasonable and proportionate response to file sharing. [See, Roadshow Films Pty Limited v iiNet Limited,[2011] FCAFC 23, EMI Records & Ors -v- Eircom Ltd, [2010] IEHC 108, EMI Records [Ireland] Ltd & Ors -v- UPC Communications Ireland Ltd [2010] IEHC 377, and British Telecommunications Plc & Anor  v The Secretary of State for Business, Innovation and Skills [2011] EWHC 1021]

“One would have thought that somebody who was going to express an opinion would perhaps not only know about these regimes but also know about the case law that has looked at these regimes and found them to be proportionate. I think it didn’t fully consider all of the jurisprudence on this topic,” he said.

Sookman added that while he and most ISPs consider the right to Internet access “fundamentally important,” he doesn’t believe it trumps other rights such as not paying service bills or using Internet service to spam [or transmit pornography, commit criminal or civil offenses, or otherwise violate laws].

“I don’t think it will change Canadian public policy because I think in Canada we recognize that there’s a requirement to do a balancing. Under the Canadian Charter of Rights, individuals have certain Charter rights, but the Supreme Court has made it clear that, even if you have a Charter right, the next question is whether or not legislation that might impinge on it is justified for a good public policy reason,” he said.

Other commentators made these and other observations.  Jakomi Mathews in an article for The Music Void asked the question:

If disconnecting repeat offenders from an Internet connection who are stealing content is a breach of Human Rights where does the right of content owners stand in relation to their human rights? So is the UN stating that breaking the law and stealing rights owner’s content whether that be; music, films, games or software is a Human Right? So this must now mean by default that the UN has legalised stealing content via file sharing and other similar technologies? No? Well then how can sanctions for repeat file-sharing offenders be a breach of human rights?…

The key point I’m trying to get across here is that if content owners cannot sanction people who are repeatedly infringing on their copyrighted works then what rights of protection for their assets do they have in the eyes of the UN? What are the rights of artists to earn a fair and equitable income from their art? Is the UN stating there can be no sanctions for breaking the law? Because that is how their report reads…

James Gannon, a colleague of mine, in a post also questioned the analysis in the report.

IPKat, in a recent post also provided a critical assessment of the report:

The report makes bold statements on the protection of fundamental rights in the digital age, including in the context of cybercrime, data protection, personal privacy and the ‘digital divide’ between the developing and developed world. In those countries where online freedom of speech is restricted on political grounds, the UN’s concerns may be valid. However, on the issue of Internet disconnection for violations of IP rights, sweeping generalisations are made, without any further analysis or evidence, that this legislation is necessarily bad because it may lead to Internet users’ disconnection from the Internet. There is no acknowledgment that

(i)  violations of IP rights are against the law, and therefore that appropriate punishments are warranted;

(ii)  measures leading to temporary suspension from the Internet may be a proportionate attempt to stymie the widespread online piracy that has led to severe job losses and created barriers to innovation;

(iii) the DEA only proposes to cut off a user’s Internet access as a last resort after that person has repeatedly flouted copyright law despite multiple warnings; or

(iv) under international law, rightsholders have a human right to property and a right to an effective legal remedy following infringement of the law.

The UN makes recommendations without attempting to balance the competing rights of the various stakeholders (copyright owners, intermediary service providers and end users). As such, the UN’s approach runs contrary to recent jurisprudence [C-275/06 Promusicae v Telefonica], literature from the US [Obama’sInternational Strategy for Cyberspace] and the European Commission [Strategy on a Single Market for Intellectual Property Rights]. Finally, the report fails to suggest any alternative approaches to tackling online infringement of IP rights. It seems a shame that a document that is clearly intended to identify genuine global concerns about freedom of expression and related human rights in the online environment has taken such a one-sided approach, arbitrarily drawing a connection between unjustifiable State censorship on the Internet and the legitimate protection of intellectual property in the face of prolific online piracy.

On March 22, 2010 – before the federal election was called- TELUS, Bell and Rogers appeared before the Special Legislative Committee studying Bill C-32. The ISPs continued to endorse notice and notice asking that this process be formalized in C-32. Studies around the world have shown that notice and notice by itself-without any real threat of a sanction- is not the most effective way of reducing online peer-to- peer file sharing. TELUS, Bell and Rogers which have, to some extent, been voluntarily passing on notices from rights holders for about decade, were asked by the Parliamentary Committee whether notice and notice was effective. As it turns out, after a decade of experience, it became clear from their testimony that the ISPs could not show to what extent notice and notice (without any real threat of a sanction) deters online file sharing.

The MPs on the Committee were keenly aware that the ISPs had advocated for notice and notice and rejected any form of graduated response to provide further assistance in reducing online file sharing. So, the MPs on the Committee, lead by Mr. Marc Garneau and Mr Pablo Rodriguez, asked the ISPs to provide evidence that notice and notice without the possibility of sanctions is effective. Mr. Garneau squarely challenged Canada’s leading ISPs to provide data to support their positions:

Mr. Marc Garneau: The question that comes up – because I hear from a lot of groups – is whether notice and notice is effective. There are consumer groups and others that say, yes it is effective, it’s working, and we don’t need to ramp up to notice and takedown, or some other hybrid version of a more proactive approach, if you like. What’s missing for me as an engineer is the data. I believe you have that data because you have been providing notice on a voluntary basis to people who are stepping over the line. I’m really interested in it, because some people say that notice and notice is not discouraging those who know it has no teeth while other people are saying, yes as soon as you get a notice and notice in your home from your ISP provider, it sends a chill through you and you realize you’d better not do it again.

You have the data to tell us whether repeat offenders are in large numbers, or whether 95% of people who have received their first notice cease and desist. I would like to hear from each of you if you have that data. If not I’m going to ask you to present it to this committee, because we really do need that data. If you have it, it would be great to hear from each of you, perhaps starting in the way you spoke about whether it is actually effectively working, and I’d like to see some statistics to support that.

The ISPs, who had claimed to be engaging in notice and notice for almost 10 years, did not provide the Committee with any study, survey or independent evidence whatsoever to establish the effectiveness of notice and notice.

Mr. McTaggart who appeared for TELUS told the Committee that TELUS had no data whatsoever to establish the effectiveness of  notice and notice. TELUS, which according to Mr McTaggart has been forwarding notices to its subscribers for 9 years, had only “anecdotal” stories.

Mr. Craig McTaggart: For TELUS’ part my answer is a very short one. We don’t actually have that data. We only forward the notices. We don’t retain any further data about how many messages were sent to a certain customer in a certain period, because we have no business reason to retain that data. We only have the anecdotal stories, as you referred to, that often a household receives a notice, the parent reads it, doesn’t know anything about what it’s about, talks to a child, and gives the strong message not to do it anymore…

Mr. Marc Garneau: So if John Smith gets a notice from you today or in the past, we and you don’t know whether in fact you’ve sent John Smith 25 notices over the course of time because John Smith is clearly ignoring the notice and notice.

Mr. Craig McTaggart: At TELUS we don’t know that.

Ms. Suzanne Morin, who appeared for Bell, said that Bell was in the same position as TELUS. She said that Bell “thinks” it’s effective and has an educational impact … “But at the end of the day it still needs something and so we’re waiting for legislation to be passed so that users know specifically that downloading illegally is not to be tolerated in Canada.”

Ms. Pam Dinsmore appeared for Rogers. She presented some data on Rogers’ experience. Here is what she said:

Ms. Pam Dinsmore: I would like to tell you what happens at Rogers. We can actually track the number of notices that go to an individual household. What we can’t track is how many Sony notices went to a particular household. In terms of the actual processing and sending on of a notice, we do have, at a very high level, those numbers.

Let me put it in perspective for you. On a Rogers customer base, for argument’s sake, of 1.5 million Internet customers, about 5% of that customer base will receive a notice. As I said, in 2010 we processed 207,000 notices.

If I go down the pipe to the next level, of that group, of that 5% of our customer base getting a notice, which is in the area of about 70,000 customers, the next number of households to get a second notice will be somewhere in the area of—, I don’t know—, 20,000 notices. So about a third of those who got the first notice will actually get a second notice.

As I get to the third level, I’m down a third again. So as I go down the list, the number of notices drops in accordance with the times the notices are received.  In our view, the notice and notice routine is effective at discouraging those people who are alleged to have infringed — only alleged to have infringed — from infringing again. We think it does put the fear of God into them and it is effective in doing that.

That’s based on the information that we are able to track.

Anti-copyright advocate Michael Geist argues that these statistics “provides solid evidence that notice-and-notice is effective in countering repeat infringement”. He concludes that “the Rogers data suggests that 67% of recipients (which is already only five percent of subscribers) do not repeat infringe after receiving a notice and 89% cease allegedly infringing activity after a second notice. Within two notices, about 99% of Rogers subscribers are not receiving infringement notifications.”  But, the data does not establish this. What can we conclude from Rogers’ data?

First, the data does not tell us anything about what percentage of Rogers’ customers actually use its systems to illegally share files. According to Rogers, 5% of its customers got notices of claimed infringement in 2010. But, Rogers admitted it has no idea what percentage of its customers actually use its systems to infringe. This information was disclosed in response to questions from MP Pablo Rodriguez:

Mr. Pablo Rodriguez: Okay. Ms. Dinsmore, you said that roughly 5% of your clients get a notice. Does that mean that 95% of your clients comply with all the regulations?

Ms. Pam Dinsmore: They simply don’t get notices that are directed towards their households.

Mr. Pablo Rodriguez: Do you think that 5% is the actual number of people who download things illegally, or are there many who get away with it, without receiving anything?

Ms. Pam Dinsmore: I have no way of knowing that.

Second, Rogers’ data suggests there is an enormous file sharing problem occurring through the use of the ISPs’ networks. Rogers’ data suggests that at least 70,000 of its account holders were engaged in illegal downloading in 2010. The number could be far higher because Rogers says it has “no way of knowing” how many of its account holders are using its systems to infringe. Worse there appear to be at least 20,000 households who recommit infringing acts after being caught.

The existence of an enormous problem was confirmed by testimony from Ms. Suzanne Morin from Bell. She testified that in 2010 Bell received over a million notices of claimed infringement from copyright holders. Bell received so many that it was not able to process them all. To do so Bell “would have to fill a whole floor with individuals in order to process them all.”

Third, there are repeated copyright infringements by Rogers’ subscribers. Rogers’ testimony is that some of its account holders are getting 6 or more notices of claimed infringement. Rogers appears to be saying that it issued 70,000 first time notices (about 5% of Rogers 1.5 million customers which is 75,000 not 70,000 customers); 20,000 second notices (less than a third of 70,000, its 28.5%) and a reducing similar number of notices as Rogers continues to send notices to alleged repeat infringers. Based on the testimony, there are notices being sent at least 6 times to around 133 account holders. The table below extrapolates Rogers’ numbers to the 6th notice. 

Fourth, Rogers’ evidence doesn’t tells us the effectiveness of notice and notice. What the Parliamentary Committee wanted to know was to what extent individuals who received a notice stopped online file sharing after getting the notice. But, Rogers’ data doesn’t answer this critical question.

It is conceivable that receiving a notice deters 2 customers out of 3 to stop infringing. But the figures don’t prove this. We cannot assume that 100% of account holders who get a first notice and who keep infringing are detected by rights holders and sent a second notice. Surely a large number of infringers don’t get second or follow on notices simply because the probability of getting caught is not 100%. If the probability for an infringer to get caught and warned is less than 100% one would expect a declining number of notices to the same account holder.

So did the number of second and follow on notices decline because the notices had an effect on illegal activity or because the continued file sharing was not detected, for some other reason, or for some combination of reasons? The notices may have had some effect as it is logical to conclude that some people would be discouraged from further illegal file sharing when receiving a notice of claimed infringement. But, we cannot ascertain how much of an effect it had from the disclosed data. It seems fair to assume that if Rogers does not know how many of its customers that infringe for the first time are sent notices of claimed infringement, Rogers also does not know how many of its customers who received a first notice continue to infringe but are not caught and so are not sent a second or follow on notice. Accordingly, there is no basis in the data disclosed by Rogers to draw any conclusions about how effective the notice and notice routine is at discouraging those people who are alleged to have infringed from infringing again.

To determine the effectiveness of Rogers’ notices, one would need to follow the perpetrating households through time to determine the extend to which receipt of a notice has actually lead to a reduction in online file sharing. One would also want to go further and focus on the question of the relevant counterfactual[1].  One would want to compare the effect of a notice against the results under a different regime. Rogers’ data doesn’t answer  the real questions the Committee was concerned to learn about, namely: (a) has notice and notice been effective on changing behaviour compared to no notice at all, and (b) would notice and notice with a real potential sanction or threat of a real sanction generate a better effect than a notice and notice not backed-up by a realistic threat of a sanction  to deal with repeat infringers?

On counterfactual (a), if there was no notice and notice regime, one might have recorded the account holders’ behaviour and seen some decline in repeat infringements. In such event, the notices would not be the only circumstance impacting on the flow of notices.

On counterfactual (b) Rogers’ data does not reveal whether the threat of a real sanction being carried out would result in less recidivism. If the counterfactual is a regime with a real threat of a sanction being carried out– simple economics predicts people make cost/benefit decisions and that a real threat would change behavior, but that no real threat is unlikely to do so to the same degree. (Having a speed limit that is never enforced or which has no sanction even if enforced will not have as much effect on reducing speeding than one that has a sanction that is enforced.)

Rogers’ data also does not tell us which category of its account holders are causing the most damages. It may be the recidivisits who are ignoring the notices are causing a disproportionate amount of the harm.

In the end, after a decade of notice and notice, the three ISPs were unable to provide the Committee with any reliable data or studies to back up their claims that notice and notice is a good policy choice because it is an effective deterrent or at least as good a deterrent as other means. MP Pablo Rodriguez summarized his interpretation of the ISPs’ testimony at the Committee as follows:

Mr. Pablo Rodriguez: That’s the crux of the problem. You are telling us that notice and notice is enough, but, on the one hand, you have no data, and, on the other hand, you are not able to tell me whether the 5% is representative or not…

Yet you insist that notice and notice is enough. I am not an engineer, but I would like to have data to rely on, and we don’t.

Bill C-32 is behind us. We now need to start thinking about what policies will work best to stem online file sharing to help foster the legal market for digital products. In doing this we need to understand that the threat that rights holders will sue their customers in Canada is not and has not been a deterrent to illegal file sharing. Further, one cannot expect that simply sending notices to account holders when there is no realistic expectation of a penalty to be imposed by someone will be as effective a means to deter illegal online file sharing as one that has a substantial deterrent. Reducing statutory damages for either non-commercial or private purposes would also send a signal that there will be fewer sanctions for engaging in illegal file sharing. From an economic standpoint, the deterrence relies on the expectancy of the sanction.[2]

The Full Court of Australia in the iiNet case recently unanimously found that notices are likely to be effective in reducing infringements when coupled with potential action such as suspension or termination of accounts of customers that fail to heed such notices. The judges also expressed the unanimous opinion that taking steps to adopt and implement a graduated response system would be reasonable and likely effective to prevent repeat infringements by its subscribers.

Canadian ISPs have pushed for notice and notice to be in the previous copyright reform amendments, Bills C-60, C-61, and C-32. However, after a decade of notice and notice, the ISPs have not produced evidence of the effectiveness of notice and notice or its relative effectiveness against other options including some form of graduated response such as what countries like France, UK, and South Korea have implemented. It is now time to examine alternatives that would have the intended effects which presumably everyone wants to achieve.

*Note blog amended April 4, 2011.

[2] 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.

It is widely accepted in the EU that “infringements of intellectual property rights cause widespread economic harm and that a “significant number of products infringing intellectual property rights now pose a real threat to consumer health and safety.” Further, the proper protection of intellectual property rights “is fundamental to stimulate innovation and culture in a competitive, wealth-generating, knowledge-based economy.”

The report found that the Directive had led to progress in combating intellectual property infringement by, among other things, creating high European legal standards to enforce different types of rights that are protected by independent legal regimes such as copyright, patents, trademarks and designs. However, it also found that despite an overall improvement of enforcement procedures, “the sheer volume and financial value of intellectual property rights infringements are alarming.” One reason given “is the unprecedented increase in opportunities to infringe intellectual property rights offered by the Internet.”

The Internet and digital technologies have added an extra, challenging dimension to enforcing intellectual property rights. On the one hand, the Internet has allowed creators, inventors and their commercial partners to find new ways to market their products. On the other hand, it has also opened the door to new forms of infringements, some of which have proved difficult to combat.

The multi-purpose nature of the Internet makes it easy to commit a wide variety of infringements of intellectual property rights. Goods infringing intellectual property rights are offered for sale on the Internet. Search engines often enable fraudsters to attract Internet users to their unlawful offers available for sale or download. File-sharing of copyright-protected content has become ubiquitous, partly because the development of legal offers of digital content has not been able to keep up with demand, especially on a cross-border basis, and has led many law-abiding citizens to commit massive infringements of copyright and related rights in the form of illegal up-loading and disseminating protected content. Many online sites are either hosting or facilitating the online distribution of protected works without the consent of the right holders. In this context, the limitations of the existing legal framework may need to be clearly assessed.

The EU Directive gives a broad interpretation to the concept of “intermediaries” to include all intermediaries “whose services are used by a third party to infringe an intellectual property right”. This means that intermediaries with no direct contractual relationship or connection with the infringer are subject to these measures provided for in the Directive.

Nevertheless, the report found that “uncertainties remain over intermediaries and the specific measures to which they are subject by contributing to or facilitating an infringement, regardless of their liability.” The report noted that “Internet platforms such as online market places or search engines can also play an important role in reducing the number of the infringements, in particular through preventive measures and ‘notice and take-down’ policies.”

Other EU Directives also employ a variety of means to incent or procure ISPs to cooperate with rights holders to reduce online infringement. For example, under the EU Directive on ecommerce (as in the USA, Australia and elsewhere), ISPs cannot obtain the benefit of safe harbors (exceptions from liability) when they provide hosting services, if they have actual or constructive knowledge that their systems are being used to facilitate infringement and they fail to remove or disable access to the infringing conduct. EU Member States must also under Article 8(3) of the EU Copyright Directive give their courts the power to grant injunctions against ISPs to enjoin the use of their systems by third parties who use them to infringe copyright. This jurisdiction has been used in countries such as Italy and Belgium to require ISPs to block foreign pirate sites such as The Pirate Bay.

Notwithstanding these laws, the report referred to the findings in the Staff Working Paper that accompanied the report indicating that the currently available legislative and non-legislative instruments were not powerful enough to combat online infringements of intellectual property rights effectively. The report stated that “Given intermediaries’ favourable position to contribute to the prevention and termination of online infringements, the Commission could explore how to involve them more closely.”

The report also considered whether there was a need to increase damages in IP infringement cases to ensure that they play a dissuasive role on infringements. The report observed that “Measures, procedures and remedies provided for by the Directive must be effective, proportionate and dissuasive. However, “present, damages awarded in intellectual property rights cases remain comparatively low.” The report explained that damages need to be high enough to really be dissuasive.

According to information received from rightholders, damages awards do not currently appear to effectively dissuade potential infringers from engaging in illegal activities. This is particularly so where damages awarded by the courts fail to match the level of profit made by the infringers.

The main aim of awarding damages is to place the rightholders in the same situation as they would have been in, in the  absence of the infringement. Nowadays, however, infringers’ profits (unjust enrichment) often appear to be substantially higher than the actual damage incurred by the rightholder. In such cases, it could be considered whether the courts should have the power to grant damages commensurate with the infringer’s unjust enrichment, even if they exceed the actual damage incurred by the rightholder.  Equally, there could be a case for making greater use of the possibility to award damages for other economic consequences and moral damages.

In cases where the infringer is a legal person and the rightholder fails to obtain damages because the infringer has no assets, has been liquidated or is in any other way insolvent, an assessment could be made as to whether the rightholder is able to claim damages from the company’s managing director(s) under national law, and if so under what conditions.

The report acknowledged that infringements of intellectual property rights taking place outside of the EU also constitute a major source of concern. The report stated that the Commission is addressing them in different ways, for instance by including ambitious chapters on intellectual property rights in bilateral trade agreements (such as CETA) and through participation in international initiatives such ACTA.

The EU report provides an interesting lens to compare the divergent approaches of Canada and the EU when it comes to intellectual property rights protection. For example, as noted above, the EU already has copyright laws that promote cooperation between ISPs and rights holders. This is achieved, inter alia, by conditioning ISP safe harbors on ISPs not having knowledge of infringement or taking down or disabling infringing content when knowledge of infringement becomes apparent and through measures like Article 8(3) of the EU Copyright Directive. Yet, the EU has recognized that effective measures will require even more active cooperation by ISPs.

By contrast, under Bill C-32, ISPs have almost no legal incentives to cooperate with rights holders. For example, the Bill does not condition the hosting safe harbor on ISPs taking steps to remove or disable access to infringing content even if infringement is apparent (except in the rare case where there is a take down order of a court). Moreover, there is nothing comparable to Article 8(3) of the Copyright Directive. There is only the relatively ineffective requirement to pass on notices of infringement under the notice and notice system.

The EU report also stresses the importance of damages to act as a deterrent against infringements. By contrast, Bill C-32 would make statutory damages unavailable against the most virulent pirates on the internet who are liable for enabling infringement. The Bill also could make statutory damages unavailable against pirate sites and services and other infringers which operate without motive of commercial gain.

All of the political parties agreed that copyright reform is important. They concurred with the objectives behind the Bill including the goals of creating a legal climate in which creators can both safely invest in and get paid for their content and at the same time ensure access by users to their works. They recognized the need to modernize the Copyright Act to address the challenges of the 21^st century.

For example, Heritage Minister James Moore stated the following:

Canada has not elected a majority Parliament since November 2000. It has been 10 years. As a result of the realities of minority Parliaments, often it is politically challenging for governments to be willing to step forward and to engage in the copyright issue. This legislation forces Parliament, regardless of political pressures, to make sure that Canada’s copyright regime stays on the cutting edge so that Canada can continue to create jobs, so that we maintain the reputation that we have around the world as being not only an innovator and a leader in new technology, but also one of those countries that protects the rights of creators to have their works protected by law.

MP Marc Garneau (Lib.) stated the following:

The digital economy is changing culture in this country. It is also changing our society and our economy. The information and communications technology sector employs some 600,000 Canadians and spends $6 billion a year on research and development. The digital economy is flourishing around the world. Last year, OECD countries invested nearly $3 trillion in hardware, software, communications and IT…

Unfortunately, when it comes to copyright, Canada has, for too long now, been way behind in terms of global best practices. Our outdated copyright legislation has been the subject of international criticism.

A 2005 OECD study found that Canada had the greatest per capita number of offenders engaging in illegal file-sharing. In May 2009, the United States put Canada on its blacklist of countries designated as being especially lax in protecting intellectual property, a list that includes Algeria, China, Russia, Pakistan, Indonesia and Venezuela.

Copyright and intellectual property protection have become a crucial component of trade talks with the European Union.

The time has come to ensure that our artists and creators receive fair compensation for their work and that, in this digital era, our entrepreneurs are compensated for their innovations. Canada must modernize its copyright legislation.

In short, the time has come for Canada to adopt a fair and balanced copyright law, one that takes the needs of both creators and consumers into account.

MP Dan McTeague (Lib.) expressed that same point as follows:

While I sit on  the industry side of things, we can all appreciate the importance of Canadian culture, Canadian music, Canadian songwriters and the great impact they have made as a result of these kinds of arrangements, constructed in large part by Parliament in previous times. We know the Canadian recording industry is sound and strong. We are very proud of it and we have to do everything we can, in modern times, to ensure it is effectively and equitably safeguarded.

I believe there is the basis in the country for solid rewrite and review of copyright. It is long overdue. Members of Parliament may have differing opinions as to where and how we view effective copyright legislation, but I think we recognize that as the world changes, as technology evolves, so must the panoply of laws and the framework that allows us to change with changing times. That is the pragmatic approach, which the bill will require in order for it to be an effective response to the demands, needs and realities that society, that those in the industry as well as those artists expect.

While there was consensus at the high level, there was a great deal of discussion about the best ways to accomplish those goals. The following are some observations about some of the key issues in the debates.

Stopping the sites that enable piracy

Of all of the issues debated by the parties, there was no disagreement that our copyright law should enable artists to vigorously pursue the end of illegal file sharing sites and services. Beginning the debate was Industry Minister Tony Clement. He referred to “helping artists by cracking down on those who would destroy value”.  Minister James Moore stated, “We need to make pirating and theft illegal in this country. We need to ensure that those who are creating in an effort to make a living out of what it is they love doing, which is music, software and video game publishing, are not being ripped off. That is article one.”

MP Bonnie Crombie (Lib.), in discussing the “wild west” of piracy facilitated by peer-to-peer sites, stressed that “Copyright laws are only as good as the enforcement that accompanies them.” MP Dan McTeague  also made reference to “the absolute destruction and devastation” enabled by the “wealth inhibitors” such as the operators of BitTorrent sites like IsoHunt and wanted to ensure that exceptions intended for innocent intermediaries are tightened up so that these sites and services cannot rely on them. MP Marc Garneau also referred to ‘examining technical issues surrounding exemptions with regard to hosting, information location tools and network services.’

TPMs

All of the parties were in agreement that C-32 should provide legal protection for technological measures (TPMs) as required by the 1996 WIPO Treaties. Minister James Moore recognized that 21^st century business models depend on legal protection for TPMs. Individuals and businesses use locks to protect tangible property against theft and they rely on the law to protect them in those efforts. Artists and other creators of digital intellectual property should have the same rights to protection under the law. According to Minister James Moore:

Copyright holders told us that their 21st-century business model depends on strong technological protection measures. And we listened: Bill C-32 contains protection measures such as digital locks to protect against piracy and to allow creators to choose how they wish to protect their works.

We think the issue with digital locks is a central element. If a person is a creator and has created a product, a piece of software, and has decided to protect it in the way that person chooses to protect it to engage in the marketplace, we think that person has the right to protect what he or she has created, in the way he or she has chosen to protect it. If people want to hack around that or break a digital lock without that person’s consent, that person has the right to protect his or her own intellectual property. That is pretty basic. In terms of those who argue that digital locks should not be a part of this legislation, I just frankly disagree. I think they are wrong.

There are elements of the bill on which we can agree or disagree, certain defining elements of education and how that should be dealt with in fair dealing. There are certain things on which we can agree or disagree. But if a person creates some software and decides to put a digital protection measure on that software and to engage in the marketplace with 90-day trials in which things are locked down afterwards, and so on, if the person chooses to engage in that and chooses to protect his or her intellectual property, that person should have the right to protect his or her property in the way he or she chooses.

Obviously as part of this legislation, it should be illegal for one to hack somebody else’s property and to steal it and put it onto BitTorrent and spam it around the Internet and degrade people’s capacity to actually make a living on what they are doing.

… I do not want arts and culture creativity, the software industry, the video game industry, the creative community in this country, to become a hobby. I want business models to be able to work in this country, and that requires a strong and robust copyright regime.

Several Liberal MPs including MP Marc Garneau supported legal protection for TPMs but expressed opinions that Canadians who have legitimately purchased and paid for a CD, DVD or other products should have the ability to transfer their purchases onto other personal devices, such as an iPod, or make personal backup copies on their computers so long as they are not doing so for the purposes of sale, commercial distribution, or transfer to others.

Representatives from the NDP including MP Charlie Angus and from the Bloc including MP Carole Lavallée expressed similar and other concerns about TPMs. One concern raised by several members of the NDP was that legal protection for TPMs would not pass a constitutional challenge. This point, which has been made by several anti-copyright advocates is not supportable for at least four reasons.

First, Section 91.23 of the Constitution gives Parliament exclusive jurisdiction over ”Copyrights”.  The Supreme Court of Canada has stated that copyright in Canada “is a creature of statute and the rights and remedies it [the statute] provides are exhaustive”.[1] Copyright is concerned with balancing the public interest in the encouragement and dissemination of the works and “to prevent someone other than the creator from appropriating whatever benefits may be generated.”[2] The proper balance is one that changes, and therefore  needs to be re-evaluated from time to time, in response to technological evolution or to reflect international developments. Parliament has the right to determine the appropriate balance including how best to protect intellectual property against piracy.

Second, it seems obvious that legislation (1) whose object is to enable rights holders to prevent the unauthorized exercise of their exclusive rights, (2) which is enacted to implement copyright treaties such as the WIPO Treaties, and (3) which has been implemented around the world as part of copyright legislation, would be in pith and substance copyright.[3]

Third, legislation protecting TPMs is in pith and substance copyright because, like the private copying levy in Part VIII of the Act, it would be “created for the purpose of supporting the creators and the cultural industries by striking a balance between the rights of creators and those of users.”[4]

Fourth, the provisions in the Radiocommunication Act which prohibit decoding encrypted programming signals or network feeds or trafficking in devices that do so have been enforced by the Supreme Court of Canada.[5] It is not plausible to assert that laws designed to prevent the decoding of devices that protect programming signals would be enforced, while devices that protect works’encryption and other content safeguards from being broken would not be protected.

Several NDP MPs also criticized the TPM provisions in C-32 for allegedly following the implementation model used in the DMCA or for going considerably further than what the WIPO Treaties require.  However, as James Gannon has pointed out, Bill C-32 actually departs considerably from the legal protection for TPMs found in the U.S., including by having significant flexibility to enable the government to enact additional exceptions through regulation at any time. Moreover, to the extent that their criticisms of C-32 are based upon an interpretation of the WIPO Treaties that Canada can comply with the treaties without prohibitions against trafficking in circumvention tools, or by linking prohibitions against circumventing TPMs to infringing acts — they are in error. See, Separating facts from hype about C-32;  Are the TPM provisions in C-32 more restrictive than those in the DMCA? Dr. Ficsor is right; Prof. Geist is wrong about the WIPO Internet Treaties;Legends and reality about the 1996 WIPO Treaties in the light of certain comments on Bill C-32.

Statutory damages

The Liberals and the Bloc expressed concerns about the proposed amendments to statutory damages. Several Liberal speakers (including MPs Marc Garneau, Bonnie Crombie, and Dan McTeague) expressed the opinion that statutory damages must continue to be commensurate with the severity of the infringement. For example, MP Bonnie Crombie stated,“ A number of people to whom I have spoken, and who have come to meet with members of Parliament, have expressed concern about this section and believe that statutory damages must be commensurate to, equal to and proportional to the severity.” Bloc MP Carole Lavallée expressed concerns with absolute caps on statutory damages.

User generated content (UGC) exception

The Liberals and Bloc also suggested that the new exception for user generated content needs to be amended to ensure that the exception is not abused. MP Marc Garneau stated his party’s concerns as follows:

Another issue is mash-ups. Bill C-32 creates a new exemption for user-generated content. However, it is broadly written and can create a potential opening for abuse. We will seek amendments to tighten the language to ensure that the mashup exemption can only be used for its intended purposes and not unexpectedly create a loophole for further copyright infringement.

According to MP Dan McTeague:

In our view, this section is too broadly written. Under the rule, individuals can post an entire movie on YouTube as long as they add a small inserted clip at the beginning or the end. Then they can call the video a mashup. It is kind of the exemption given in this kind of circumstance.

MP Carole Lavallée made the following statement about the proposed UGC exception:

The exception known as the “YouTube exception” allows a mother to post her son’s first steps on YouTube along with music, used in good faith. That seems nice enough but it opens the door to a whole slew of music piracy. The scope of this clause needs to be reduced, and these so-called works created from other works should be banned. That is exactly what it means to respect artists’ rights.

Fair dealing for education

Both the Liberals and Bloc expressed the opinion that the proposed new exception that would allow education as a purpose for fair dealing was problematic. Their concerns were that the new exception itself was unfair as it would allow substantial unpaid for copying; the concept of “fairness” was indefinite and would result in costly litigation to sort out; “fairness” was no guarantee that significant revenues needed to fund educational publishing would not be lost; and the term “education” was not defined, was not limited to any structured context, and its meaning and scope would have to be settled by litigation.

MP Marc Garneau wanted to be sure that authors and creators are paid fairly for their work. He was also worried that the concept of “fairness” was too open-ended and required clarity:

Let us talk about the exemption for the education sector. The Liberal Party agrees that educators need flexibility in order to ensure that education is as enriching as possible. However, we must see to it that authors and creators are paid fairly for their work. The education sector is in the best position to convey the message that copyright is important, and we must ensure that Canadians understand that it is important for our creators to be compensated fairly for their work.

With regard to the exemption for the education sector, the Liberal Party will attempt to amend the bill by proposing to clarify what exactly constitutes “fair dealing”. Naturally, the secret of a good policy always resides in the right balance. By defining what is fair, we will ensure that the law gives educators the necessary flexibility while offering artists, authors, and creators a better guarantee that their works will be protected.

MP Dan McTeague expressed a similar concern. In addition, he asked “…why private, commercial education institutions should be permitted to disseminate works for education purposes without compensating copyright” owners.

As well, MP Scott Simms (Lib.) spoke on the proposed new fair dealing exception for education. His major – and serious — concern was that significant policy questions about what uses of educational materials could be exercised without making any payments to copyright owners would be decided by the courts as a result of litigation, rather than by Parliament:

Some artistry groups have said that an open-minded, fair dealing provision puts in the hands of the courts what should be determined by Parliament. That is something we have to consider. Again, it becomes incredibly litigious. Fair dealing has that possibility so we have to consider that. We have to draft legislation to make sure that does not happen, in my humble opinion. Artist groups are saying that the full impact of an open-ended fair dealing provision may be difficult to predict but the fact that there will be unintended consequences is wholly predictable.

MP Joseph Volpe (Lib.) shared the concern that the proposed new exception “introduces legal uncertainty, and whenever we introduce legal uncertainty, we are encouraging litigation.”

MP Bernard Bigras (BQ) had several concerns with the fair dealing exception for education. One concern was that it was unfair for educational institutions to have an exception that permits uncompensated copying. Under copyright law any person may copy any part of a work — unless the copying is substantial– without infringing copyright. However, when a particular use is elevated to a fair dealing purpose such as research, private study or education, copying of substantial portions of a work is permitted without authors being compensated. According, to MP Bigras, such substantial uncompensated copying by educational institutions of authors’ works would not be fair:

There are a lot of exceptions in this bill. One particularly problematic exception stands in opposition to what should, in theory, be a positive principle. It concerns educational institutions. Teachers will be able to use protected materials in their courses without obtaining permission to reproduce them. This applies to movies and plays, among other things. The problem is not that people will be disseminating these cultural and artistic works, but that schools, for example, will not be required to pay royalties if they reproduce works. That is the problem.

We have to ensure that everyone in our society has access to culture. Our young people need rapid access to our literary works and their authors, but we must not forget that these are artists whose livelihoods depend on this.

I was reading the latest statistics. In the education sector alone, there are 175 million copies of parts of copyrighted works in schools, CEGEPs and universities. The education sector alone provides $9 million per year to 23 Quebec authors and 1,000 Quebec publishers. People’s economic livelihood depends on publishing and culture. Of course we want our young people to have access to culture, but we must also recognize that our creators have the right to fair compensation.

MP Bernard Bigras was also concerned that even a “fair” dealing for education was no guarantee that authors would not be economically damaged by free uncompensated copying. (Unlike in the US, the effect on the market is not the most important factor in assessing whether a dealing is fair in Canada.)  He pointed out that the “notion of fairness is not defined in the bill”. He also pointed out that the term “education” was undefined which “could therefore be defined quite broadly and have a broad scope”.

Private copying levies

The issue of extending the private copying levy to include digital audio recording equipment was raised repeatedly by the NDP and the Bloc including by NDP MP Charlie Angus and Bloc MP Carole Lavallée. However, both Ministers Clement and Moore spoke out against extending the levy. Minister Tony Clement stated that his party opposed an extended levy on DARs such as iPods as being “regressive, unfair and economically destructive.”  Minister James Moore expressed the view that it “is an old solution for an old problem and it does not embrace the fact of new media.”

As the Bill moves into committee for further review, I am sure that we will hear much more about these issues — as the parties redouble their best efforts to craft legislation that will meet the needs of all Canadians.

[2] Ibid.

[3] See Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65.

[4] See Canadian Private Copying Collective v. Canadian Storage Media Alliance, 2004 FCA 424; also, Private Copying 1999-2000, Copying for Private Use.

[5] Bell ExpressVu Ltd. Partnership v. Rex, 2002 S.C.C. 42.