Reasonable people should be able to discuss civilly what should be done about the problem of digital piracy in Canada. Attacks against CRIA and Minister Moore by Prof. Geist this week suggest, however, that the debates over copyright reform this spring are not going to turn out that way.

The IFPI report and the Heritge Committee

According to the IFPI, digital piracy remained one of the biggest obstacles for the recording industry in its efforts to grow the online music business. The availability of free unauthorised music undermined the incentive to buy legal products. Nearly one in four people who download music illegally never buy music. This has lead to significant losses in revenues and jobs.

According to the IFPI, weak IP protection in Canada has limited the development of new business models here. It claims that Canada has seen one of the biggest declines in music sales among the major music markets, with sales more than halving since 1998. This decrease is higher than that of any other top 10 market during this period, except for Spain. The major reason given for the decline is the inability of the digital sector to offset the drop in the CD business with digital sales. According to the report:

“Canada has one of the most advanced broadband markets and one of the highest per capita GDP rates in the world. Traditionally, the value of Canada’s physical market has been the equivalent of around 10% of the US physical market. Yet, its digital music market is only around 4% of the size of the US digital market and less than a third of the UK’s digital market size. This unfulfilled potential in the digital sector is a direct result of the lack of new entrants in the market, an extremely high online piracy rate and the lack of modern and robust IP protection for the digital space.”

The IFPI claims that Canada’s digital piracy rate is estimated at 96%, one of the highest levels of online piracy in the world. This translated into much lower per digital capita revenue than in other countries. It also claimed that Canada is a major source of the world’s digital piracy problem, with a disproportionate number of illegal sites being in Canada. The IFPI attributes this, in large part to, the fact that Canada has weak and ineffective laws to protect creative products including our failure to enact legislation to enable Canada to ratify the WIPO Treaties.

The IFPI also linked Canada’s weak IP frameworks to the failure of digital retailers to launch innovative services desired by consumers in Canada such as AmazaonMP3, MySpace Music, Nokia Come with Music, Spotify and Deezer.

The IFPI report echoed many of the submissions made to the Heritage Committee last week by Darlene Gilliland director of business development for Universal Music Canada, Charlie Millar the director of digital business development for Warner Music, Loreena McKennitt a world famous artist and an owner of a Canadian independent label, and Graham Henderson the president of CRIA.

Darlene Gilliland told the committee about the problems that digital piracy were causing to the Canadian music business:

“Despite our efforts, despite managing to grow our digital business slightly every year, our digital marketplace in Canada is on track to cap out well below our market potential, and well below the level that other developed markets will reach…

We attribute it, in large part, to the lack of a robust copyright regime and protection for creators’ works in our country, especially when we stack Canada up beside our international peers. Our peers have had these protections for a long time.

When technology companies see the piracy that flourishes here in Canada, and the uncertainty in our laws, they are apt to invest elsewhere-and they do. The result is that Canadian creators and consumers miss out on innovative music services that are launching elsewhere in the UK, in France, in Sweden, and in the United States. We miss out on the jobs, revenue, taxes, and consumer choice that come with them.”

She also pointed out that her label invests in music and in Canadian talent and culture. But our laws create a climate in which the product of our investment competes with “free”. She stressed that the industry can’t compete without the government assistance in “making sure creators’ work product receives the same level of protection through copyright as a technology company receives through the patent on its touch screen on their phone.” That is because “All intellectual property industries depend on mechanisms put in place by government to foster innovation, encourage investment, and protect creators. We are no different.”

Charlie Millar advocated for creating a legal environment to deter piracy and to facilitate doing business digitally. He said:

“In summary, how can government help? From a sales perspective, from a digital business development perspective, assistance with deterring pirate lean forward behaviour. Two, implementing ubiquitous government deterrent measures so that Canada and all its provinces can become an environment for digital entrepreneurship and service. Specifically, creating a location for foreign direct investment and/or domestic next generation technology. And I hope we can do it so it’s export ready.

From a free market perspective, industry is willing and able to sell Canada to the world, but it is essential for government to set up appropriate ground rules for the digital business, the digital music business, to be successful.” He also told the Committee that “Because of the lack of copyright reform in this country we’re watching foreign direct investment diminish. We’re watching technology at the next generation level go elsewhere.”

Loreena McKennitt discussed the difficulties with making investments in Canada given our weak copyright laws and described the impacts of piracy on the cultural industries and the wider economy. Talking about her own personal experience she stated:

“In my company, we confront the new realities every day, and we have been hard at work trying to offer new products in new ways and fully leverage the new technologies, but I am here to tell you that making predictions and investments is impossible without some stability in the fundamental recognition and protection of intellectual property.

And it is not just my own revenue stream that is affected, but the jobs of many talented people I have employed over the years. I would like to just give you a sample. They include many recording studios that no longer exist, engineers who specialize in recording classical or acoustic instruments, technicians, their suppliers and administrative staff, graphic artists, photographers, makeup artists, mastering companies, CD manufacturers such as Americ Disc in Quebec, retailers large and small, many now defunct such as Sam the Record Man, or printers such as the Stratford Beacon Herald, publicists, travel agents, airlines, musical equipment suppliers, insurance companies, and local media advertising outlets, caterers, and on it goes….

It may be fashionable in some corners to say the arts don’t really provide much employment or revenue to society, but when I look at my small company which once had 15 employees and now has 5, and then extrapolate that to the whole industry, the scope of this calamity which presently exists cannot be underestimated.”

She also warned against buying into the “free culture” mentality being advocated by those sitting in ivory towers and creating public confusion about what really is at stake:

“It is essential that Canada not be considered a pirate nation when it comes to both regulating and realizing the full advantage of all the advantages of new media…

Nor must we allow clever manipulation of language and media to create confusion in the minds of the public as to what the real issues are, especially by those who have hidden vested interests, or who operate in theory and not in the reality of actual business.

The watchdogs must be able to see through the smokescreen created by those who operate, not by permission, not even by forgiveness, but from a strategy of taking what they can get away with before someone gives notice and takes them down.”

Graham Henderson also criticized the view espoused by opponents of effective copyright reform that we don’t need new or effective measures to help our digital businesses. He called for the Government to support “the sort of rule based environment that practically everybody else in the world has.”

Attacks against CRIA and Minister Moore by Prof. Geist

In response to Mr. Henderson’s appearance before the Heritage Committee, Prof. Geist posted a blog in which he accused CRIA of refusing “to actually specify what reforms it supports” and that it said “virtually nothing specific about what it actually seeks”at the Committee.

This is an unfounded claim since Mr Henderson actually did discuss what reforms CRIA believed are needed at the Committee. He talked about notice and notice, graduated response, notice and takedown, implementation of the WIPO Treaties, and the pros and cons of further copyright levies. For example:

Expanded Copyright Levies: Mr Henderson stated that his members were not against an expanded levy, but did not want to see it expanded in a way that would undermine “a thriving, legitimate digital music market in Canada in which everybody can be fairly compensated.” He stated that “We do not support levies that have the effect of laundering illegally acquired music into legal copies which would have the effect of destroying our marketplace.”

WIPO Treaties: Mr Henderson advocated that Canada should implement the WIPO Treaties. He said, referring to the World Intellectual Property Organization Treaties, “One solution–the best solution… is to implement a set of laws or rules which will provide an environment that will encourage creation and investment.That is what the intellectual property organization treaties were designed to do,and when you see them implemented then you very clearly see a migration from illegal back to legal”. (emphasis added) He reiterated the need to implement the WIPO Treaties again when discussing graduated response. (See below)

Notice and Notice: Mr. Henderson stated that notice and notice is useful as an educational tool, but is not effective by itself to stem online piracy. He said: “So do I like notice and notice regimes? I think they could be a fantastic educational tool. Are they the solution? Do they work? Practice has shown that they simply don’t work.” What is needed is a system of giving notices that have consequences for not stopping illegal behaviour: “Notice and notice can be a fabulous educational tool, but without consequences it can pose a long-term problem”.

Graduated Response: Mr Henderson stated that we are “at a stage in our copyright evolution that contemplating something like a graduated response” is necessary. He specifically referred to the developments in other countries like France, South Korea, and England which “are taking very aggressive stances to protect their creators.” He then stated that the first step is to complete the agenda started with Bills C-60 and C-61. “We’re nowhere near taking the steps that France has to protect its creative class and, in fact, its business community. But I would argue that to simply, as a very baseline, implement the intellectual properties treaties as contemplated by, for example, C-61, or before that Bill C-60 is the first step on that road.”

Notice and Takedown: Mr Henderson also endorsed notice and takedown as an important tool for dealing with infringing content hosted by service providers. He said: “As for notice and take-down…everybody else in the world seems to have it and they don’t seem to have a problem with it.”

Based on his claim that CRIA was not forthcoming before the Committee, Prof. Geist then accused CRIA of relying “on the sort of backdoor, lobbyist-inspired meetings that are the talk of Ottawa due to the Rahim Jaffer situation.” Comments on this statement on his blog expressed amazement at the offensiveness of the allegation. One commentator said “Wow, a mudslide.” Another said “I think the Rahim Jaffer/backroom deal reference in Mr. Geist’s piece is sleazy.” Chris Castle also did a specific blog post on the statement ,Geist goes after Canadian labels group for “access”.

This week Prof. Geist also launched a broadside against Minister Moore suggesting he might be called the The iPadLock Minister. This attack was supported by nothing more than his claim that “according to the scuttlebutt throughout the copyright community, Moore may be less iPod and more iPadlock”. No particulars were given as to what lead Prof. Geist to come to this conclusion or the source of the scuttlebutt.

The attack on Minister Moore also is also unfounded. Minister Moore along with Minister Clement worked tirelessly throughout the copyright reform consultations last summer to understand the issues and listen to Canadians. They attended rountables and townhalls. They were genuinly engaged. After such devotion to the process does Minister Moore deserve to be attacked based on mere “scuttlebutt”?

If the attacks on CRIA and Minister Moore this week are any indication, it sure looks like the dialog about copyright this spring is going to be unpleasant.

The abstract of the article states the following:

“Legal context: The prohibitively high cost of civil litigation is inefficient against millions of online infringers; it is virtually impossible to stop online infringement. The establishment and maintenance of a social norm which makes people willing to conform to pro-copyright norms independent of any consideration of legal incentives is indispensable in the fight against online infringers. It requires a credible enforcement mechanism to tell people that online infringement will not be socially acceptable and to increase copyright compliance; but the efficiency of such an enforcement mechanism is a function of transaction costs of copyright enforcement. The debate on the three strikes law should be viewed from its potential impact on our social and economic well being. I suggest that the infringing subscribers, not copyright owners or OSPs, should bear the cost of enforcement. Reducing transaction costs of enforcement is the key factor in designing any three strikes law if there is any reasonable chance that it will work.

Key points: To find a least cost solution to online infringement requires a good understanding of the relationship between the principles of externality and of ‘least cost avoider’. The concept borrows from Tort Law.

Practical significance: The reduction of transaction costs of copyright enforcement in the networked environment increases the credibility of the copyright system, if any design of copyright rule such as three strikes law takes the transaction costs of enforcing copyright in the networked environment and the principle of least cost avoider into consideration, it will change the way we formulate copyright policy.”

The article is one of several recent ones to argue that graduated response systems can be justified on economic as well as other grounds. Other articles include: Prof. Bomsel Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response, Prof. Bridy, Graduated Response and the Turn to Private Ordering in Online Copyright Enforcement, Prof. Strowel, Internet Piracy as a Wake-up Call for Copyright Law Makers—Is the ‘‘Graduated Response’’ a Good Reply?, Barry Sookman and Dan Glover Graduated response and copyright: an idea that is right for the times.

In short, Mr. Owens asserted that the consultations were “gamed” by groups with strong pro-piracy biases.

The reaction to Mr. Owens’ article has been swift. The CCER responded with a blog yesterday. So did Prof. Geist. Others have also published blogs including Chris Castle, a well known entertainment lawyer, James Gannon a technology lawyer at my firm, and the Canadian novelist John Degen. The controversy has also gone mainstream, having now been reported in the Globe and Mail by Jeff Gray.

Mr Owens’ study raises many questions. Fundamentally, however, it calls into question the legitimacy of using a simple quantitative analysis of the submissions to make assertions about the kind of copyright reforms Canadians want. Prof. Geist, for example, regularly asserts that the overwhelming majority of submissions to the consultation rejected Bill C-61 and that thousands of Canadians “called for flexible fair dealing and a link between copyright infringement and anti-circumvention rules”, based on a raw tally of submissions to the consultation. See, The Final Copyright Consultation Numbers: No Repeat Of Bill C-61 However, these submissions are  exactly what the CCER form letter advocated. It is no wonder that Prof. Geist responded so quickly to defend the CCER and its letter writing wizard.

To understand the controversy, the attempts to minimize it by the CCER and Prof. Geist, and its implications on the copyright reform process, one has to understand exactly what the Owens study found.

The study first provided some background about the CCER that users of its letter writing wizard and its form letter would not know about without doing significant research. According to the Owens study:

“The CCER is an advocacy and lobbying organization for sellers and distributors of ‘mod chips’, ‘flash carts’ and other circumvention devices and services.  Many of the CCER member companies are in the business of ‘modding’ video game consoles and handhelds to circumvent the copy protection built into them, enabling them to play pirated video games.  CCER and its member companies fiercely oppose anticircumvention legislation as it would affect their business (which is the whole point of anti-circumvention legislation).  Indeed, effective anti-circumvention legislation could affect their liberty (jail) and pocketbooks (fines).  An essential part of copyright reform would make it clear that their activities would benefit from no loophole—copyright reform is intended to curtail their activities as a matter of public policy. That is why the world, Canada included, negotiated the WIPO Copyright Treaty.”

Next, the Owens study analysed how the CCER letter wizard and form letter became so popular.  He found that to “ensure a high volume of Submissions, the CCER arranged for online forums of “modders” and BitTorrent (peer-to-peer file sharing communications protocol) information sites to encourage their readers to submit the form letter.” The CCER form letter was promoted by TorrentFreak, a European site which caters to the international BitTorrent community. It was promoted on sites like IsoHunt, a file sharing site which a US court recently found to be operating a business wholly dependent on infringement and which is about to be enjoined by the US court.

During the copyright consultation, Prof. Geist also endorsed the CCER letter writing wizard tool in a guest blog on TorrentFreak. In his post he provided a link directly to the CCER site and urged visitors to the TorrentFreak Bittorrent enthusiasts site to use the “tools” provided by the CCER to “process submissions”.  As James Gannon pointed out in his blog, TorrentFreak is a European site that caters to the international torrent community. According to Alexa, only 5% of its readers are Canadian.  TorrentFreak compiles weekly lists of the Top 10 most downloaded Albums, Movies and TV Shows on BitTorrent, with links to the torrent files that correspond to these works. Prof. Geist’s advocacy of the mod chip group’s letter writing wizard on the TorrentFreak site is perhaps surprising, but it should be kept in mind in considering his opinion on the legitimacy of submissions using the CCER wizard.

These appeals to the illegal p2p file sharing community by sites that profit from weak or non-existent copyright laws to fight digital piracy, TorrentFreak which publicises and encourages uses of these sites, and Prof. Geist were intended to solicit the international file sharing community to use the CCER letter writing wizard to submit form letters to the Canadian copyright consultations asking for anorexic protection for technological measures (to keep the mod chip manufacturers and distributors in business), a right to make back-up copies of  works (so that mod chip users can legally make circumvented copies of software for use with their mod chips), “flexible fair dealing” (to help ensure that any reverse engineering of game consoles or game software by mod chip manufacturers is excused from infringement), and notice and notice and not a graduated response system or notice and takedown and the elimination of statutory damages (so that mod chip users would have no deterrents in downloading game software that can be played on circumvented consoles that CCER members could make available).

Of course, the p2p file sharing community that was solicited to make these submissions would not know these subtleties of copyright law that are needed to keep mod chip manufacturers or distributors like CCER’s members in business. But, they would like the appeal to notice and notice rather than graduated response and/or notice and takedown because notice and notice, without any sanction, would do nothing to deter them from continuing to illegally share copyright materials over the Internet. The gamers would like weak anti-circumvention laws because it would give them a way of playing pirated games downloaded from p2p services. And they would similarly like the proposed amendment to statutory damages to protect them financially for their file sharing activities. CCER’s letter writing wizard was quick to use and its message, to the extent it was read, would have been very appealing to a community tied together by “free culture”-anti-copyright values, the values required by CCER members to stay in business.

Was the CCER letter writing wizard successful? According to the Owens study the CCER letter writing wizard was wildly successful. Of the total 8,266 submissions to the consultation, 5,805, or 70.23%, of them were transmitted using the CCER letter writing wizard.

Mr Owens then addresses head on the claims made by Prof. Geist that Canadians want weak copyright laws including weak protection for technological measures based on submissions to the consultation. He states:

“To date, the limited analysis of the Copyright Consultations has simply been quantitative, principally consisting of adding up form letters.  While Professor Michael Geist, for example, has found that the “overwhelming majority” of the Submissions “rejected Bill C-61”, he fails to mention the fact that 95% of these submissions came from the CCER Form Letter.”

Mr Owens then points out that when one takes the CCER form letter out of the equation the conclusions made by Prof. Geist about the consultations cannot be supported. He also states the obvious fact that Prof. Geist’s  “terse  analysis” did not consider “the lack of transparency and accountability in the Consultation process.”

What is interesting is that the CCER blog published yesterday to refute Mr Owens’ assertions does not deny any of his central assertions. It did not deny operating the letter writing wizard; the nature of its business, or the CCER members’ financial and business reasons for opposing effective copyright reform.

The CCER does not allege that it took explicit steps to ensure the transparency of its position or role in the reform process. It asserts that it has “always fully disclosed who our coalition members are and what our position is on the future of copyright in Canada.” Yet, in their own position paper they described themselves as “an advocacy group dedicated to the preservation of user rights throughout the copyright reform process in Canada”. This misleadingly suggests they were attempting to project an image of a public interest group rather than a trade association.

Nor does the CCER allege that it took steps to geo-filter or geo-block submissions from non-Canadians. As Chris Castle pointed out in his blog yesterday and in a previous blog Fair Copyright Canada and 100,000 Voters Who Don’t Exist, his own letter to the consultation submitted from the US using the CCER letter wizard got through. Nor does the CCER deny that its system permitted the same person to submit multiple submissions to the consultation.

The CCER stated that it had “no formal affiliation, agreement, or for that matter any interest in any “BitTorrent site”.” But, Mr Owens did not claim that the CCER entered into a “formal” conspiracy agreement with anyone to achieve its goals or contend that CCER operated or owned or had an “interest” in any BitTorrent site.

Prof. Geist attempted to refute Mr Owens’ assertions in his blog yesterday. However, his refutations did nothing to shake the conclusions in the study. What does he say?

• Claim: A few other entities used form letters besides CCER accounting for a total of a 45 submissions. Response: This hardly undermines the serious assertions about the lack of transparency of the CCER or the overwhelming skewing of raw statistics about what Canadians want in copyright reform.
• Claim: The concern with Torrent Freak is misplaced “as it is widely used as a source of original reporting on digital issues” including by me in twitter postings. Response: Prof. Geist makes a fundamental mistake in equating my reporting what TorrentFreak may say to subscribers who follow me on Twitter (or on my blog) and soliciting TorrentFreak readers to participate in the consultations. By Prof. Geist’s logic, reporting on a criminal organisation like the mob in a news article is no different than surveying or soliciting the mob’s views on stiffer penalties for racketeering and then asserting that the public doesn’t believe stiffer penalties are needed to fight organized crime based on the survey.
• Claim: The people who used the letter writing wizard were well enough informed to be able to make credible and useful submissions to the consultations. Response: There is no evidence one way or the other about the skill or expertise of those over 5,000 people who clicked on the letter wizard to make a submission to the consultation. One does not need to be a lawyer to have views about copyright, as Prof. Geist pointed out. However, one does have to assume that users of electronic form letters do not give submissions the same level of thought as “scratch” submissions. But, Prof. Geist misses the fundamental point that the demographics of the senders are highly biased towards anti-copyright views and are much more amendable to the policy laundering tactics of the CCER. (By the way, Prof. Geist misstates my critique of his the Fair Copyright for Canada Facebook group. My criticism was not that individuals in such groups are incapable of forming independent views or that consultations are “useless”. My claim was that he so misrepresented the issues that ordinary citizens would be misled in their views about copyright. It is the same point I made about his scaremongering in the media about ACTA. It is not that the public can’t make informed decisions. It is that the ordinary citizen will have a hard time recognizing when something he or she reads or hears from a well known professor is not accurate.)
• Claim: The lack of francophone participation in the consultation process “perhaps… reflects the fact that francophones are not nearly as concerned with creator-focused copyright as some suggest (or perhaps many decided they wanted to do something else with their summer)”. Response: This is a shocking statement. It is well known that creators from Quebec are passionate about their culture and its protection by copyright and other means.In fact, many pro-copyright representatives dominated the Montreal townhall. It is much more likely that when the over 5,000 submissions from the CCER letter writing wizard are disregarded there would be a much higher percentage of participants from Quebec. I haven’t examined the statistics to know. But, I believe it is incorrect to assume that if Quebecers did not participate actively in the consultations it is because of any lack of concern.

So where does this leave us? Does it mean that the consultations were a waste of time or not useful? Of course not. As Mr Owens pointed out, there were many very well thought out submissions provided to the government from all walks of life and from all communities across our country. We as Canadians had lively and challenging debates during the roundtables and townhalls, in the press, in the submissions, and elsewhere.

Does it mean that the consultation was tainted? No. The ONLINE exercise was perverted; manipulated, like a financial market. But, as a whole the exercise was a success and there are records of the opinions expressed by Canadians in the townhalls, roundtables and in the written submissions. The two Ministers travelled across this country, during the summer, and consulted with a wide range of Canadians –listening to them, asking questions, caring enough about the issue to learn about it in a way no other politicians have done before. They are to be congratulated for eliciting such diverse views about copyright.

Does it mean the government or those well informed about the copyright consultation process were duped by the CCER? No. Many people who examined the consultations closely had noticed exactly what Mr Owens did. In fact, I alluded to this in a blog I did last November in which I estimated, based on a sampling I had asked a student to do for me, that 65% of the submissions to the consultation were received from the CCER letter writing wizard. Last February I also wrote a blog with my Reflections on the liberal roundtable on the digital economy in which I pointed out that Prof. Geist’s proposal for weak protection of technological measures would provide no protection for makers of video games and game consoles and that was why the CCER was “so active in the copyright reform process and together with Prof. Geist argued for such ineffective protection for TPMs”. Neither the CCER nor Prof. Geist disputed my assertions back then. To do so would, presumably, have drawn more attention to them.

What has changed now is that the issue is fully in the public view. Mr Owens’ study shows there is credible, indeed compelling, evidence that some people tried to game the consultations. Now that this is known, we need to reject unqualified statements made about the views of Canadians simply by using misleading statistics and counting on no one taking a closer look. It simply cannot be credibility asserted that the submissions to the consultation show that the majority of submissions to the consultation rejected Bill C-61 and that thousands of Canadians “called for flexible fair dealing and a link between copyright infringement and anti-circumvention rules”.

* Since posting this I noticed that TorrentFreak also posted a reply.

The background to the case involves a settlement agreement between Eircom and various rights holders that requires Eircom to implement an agreed to protocol to reduce illegal file sharing by Eircom’s customers. It involves collection of IP addresses by rights holders that are associated with online infringements. The IP addresses will be sent to Eircom which in turn will send out a series of notices designed to educate users about unauthorized file sharing and give them ample opportunities to stop or face possible sanctions including account disconnection. This remedy can only be applied following three notices and a review of individual circumstances and mitigating factors by Eircom.

The copyright holders had pressed for the settlement because of the significant losses being suffered due to unauthorized file sharing. The judge recognized this, finding that remuneration to rights holders is “shrinking by reason copyright theft over the internet” and that the interests of creators is being “utterly disregarded” by this activity.

The judge pointed out that the “attraction of free, but illegal, downloading of the latest songs and videos made the sale of internet access attractive.” Everyone from users to ISPs were free riding from unauthorized file sharing resulting in losses to artists and the creative community.

The Data Protection Commissioner had raised several questions about the settlement. The first two were the following:

“1. Do data comprising IP addresses, in the hands of EMI or its agent(s), and taking account of the purpose for which they are collected and their intended provision to Eircom, constitute “personal data” for the purposes of the Data Protection Acts, 1988-2003, thereby requiring that the collection of such IP addresses by EMI or its agents must comply with the specific requirements of each of section 2, 2A|, 2B, 2C and 2D of the Data Protection Act, 1988 as amended?

2. Having regard to section 2A(1) of the Data Protection Act, 1988 as amended, and assuming for current purposes that the processing by Eircom of “personal data” in the context of the third of three steps envisaged by the graduated response scheme proposed under the terms of this settlement, (i.e. the termination of an internet user’s subscription) is “necessary for the purposes of the legitimate interests pursued by [Eircom]”, does much processing represent “unwarranted [processing] by reasons of prejudice to the fundamental rights and freedoms or legitimate interests of the data subject”?

Is an IP address “personal data”

This question was easily answered in the negative by the trial judge. The Data Protection Act 1988 defines “personal data” as “Data relating to a living individual who is or can be identified either from the data or from the data in conjunction with other information that is in, or is likely to come to into, the possession of the data controller.” The IP addresses collected by rights holders did not personally identify any living person who is infringing their copyright. According the court:

“Nothing in these provisions changes one basic fact. Neither DetectNet, or any similar service of detection, nor any of the plaintiffs whose copyright material is being infringed would ever know through this process that the infringer is a particular person living in a particular place in Ireland. What they do know is that a particular IP address has been involved in the downloading. An IP address is the number given to a computer from an internet service provider when it receives internet access. The IP number electronically identifies the user of the internet. Banks of numbers for IP addresses are produced by an international organisation and these, in turn, are provided to internet service providers. One can find out by looking at the IP number, I understand, who the internet service provider is. What internet service provider is given what bank of thousands or millions of IP numbers is not kept a secret anywhere. Since each internet service provider will have, in turn, many thousands of customers, one is not moving much closer to finding out the identity of an internet abuser by knowing the copyright infringing IP address was assigned to that company. That number will probably give you no more than an indication of the domicile of the computer. Further, I am convinced, on the basis of the affidavit evidence before me, that the plaintiffs have no interest at all in using this process to find out who the copyright infringers are. Rather, what they are interested in having the protocol work so that the plague of copyright infringement may be undermined…

I conclude, that none of the plaintiffs have any interest in personally identifying any living person who is infringing their copyright by means of the settlement and protocol. I do not regard it as at all likely that they will attempt in any way to use the IP address as supplied to them by DetectNet of those engaged in illegal downloading in order to find out their names and addresses. Further, since, on the affidavit evidence before me, the plaintiffs had previously engaged in expensive litigation against Eircom in order to find out who they are, there seems no legal avenue open to them to get that information apart from an application for the names and addresses of the copyright thieves to the internet service provider. It is proved to me to be close to impossible that they could have recovered them by any easier or less pricey means. Nor do any of the plaintiffs have any intention of engaging in any illegal activity. Rather, the entire purpose of this litigation is to uphold the law. The first question is therefore answered no.”

Can a graduated response system that involves account disconnection be justified?

The second question before the court asked, essentially, whether the graduated response protocol which included the possible termination of an internet user’s subscription, is necessary for legitimate purposes and whether it represents unwarranted processing of personal data by reason of prejudice to the fundamental rights and freedoms or legitimate interests of users, the data subjects. The court resoundingly found that the protocol was necessary and justifiable.

In giving reasons, the court made some important holdings and observations which are canvassed below.

The Judge started his judgment by emphasizing the importance of copyright. He stated:

“Copyright is a universal entitlement to be identified with and to sell, and therefore to enjoy, the fruits of creative work. It applies to everyone who manages to produce anything copyrightable from a song, to a telephone directory, to a symphony, to a film. Were copyright not to exist, then the efforts of an artist could be both stolen and passed off as the talent of another. Were the artist not entitled to exploit her or his creation by preventing others from copying it without permission, usually for a fee, then the fruits of moments of inspiration worked out through weeks of endeavour and representing, sometimes, the distillation of some fundamental experience of life would bring no reward, perhaps not even applause. Even if an artist won acclaim, it alone would not keep body and soul together. Examples of what can occur where copyright protection is absent used to be found as notorious examples of unfairness in history rather than as a contemporary situation that has developed because of the abuse of the internet. When Jan Sibelius, a Finn, penned his Valse Triste, Finland was part of the Russian Empire, not a party to the copyright convention, and the great composer received nothing for what was then his most popular work. The three early ballets of Igor Stravinsky, a Russian, suffered the same fate; though on moving to the West, the composer re-orchestrated them and republished them gaining copyright but only in that form. No reasonable person doubts the injustice of that situation. The law does not doubt it either.”

Justice Charleton also explicitly recognized the right to be identified with and to reasonably exploit one’s own original creative endeavour as a human right protected under the Constitution of Ireland. On this he said:

“In dealing with this aspect of data protection entitlement, I feel I must return, for a moment, to some basic principles of law. There is fundamental right to copyright in Irish Law. This has existed as part of Irish legal tradition since the time of Saint Colmcille. He is often quoted for his aphorism: le gach bó a buinín agus le gach leabhar a chóip (to each cow its calf and to every book its copy). The right to be identified with and to reasonably exploit one’s own original creative endeavour I regard as a human right. Apart from legal tradition, the rights now enshrined in the Copyright and Related Rights Act, 2000 were, under their previous legislative incarnation, identified in Phonographic Performance Ireland Limited v. Coady, [1994] I.R. 504 by Keane J. at 511 has having a pre-legislative origin and super-legislative effectiveness as part of the unenumerated fundamental rights under the Constitution:

‘The right of the creator of a literary, dramatic, musical or artistic work not to have his or her creations stolen or plagiarised is a right of private property within the meaning of article 40.3.2 and article 43.1 of the Constitution of Ireland, 1937 as is the similar right of a person who has employed his or her technical skills and/or capital in the sound recording of a musical work. As such, they can hardly be abolished in their entirety, although it was doubtless within the competence of the Oireachtas to regulate their exercise in the interests of the common good. In addition and even in the absence of any statutory machinery, it is the duty of the organs of the State, including the courts to ensure, as best they may, that these rights are protected from unjust attack and, in the case of injustice done, vindicated.’”

The judge then pointed out that the Internet is not a special case where the law does not apply. The Internet has not changed fundamental values and rules. As the judge pointed out: “There is nothing in the criminal or civil law which legalises that which is otherwise illegal simply because the transaction takes place over the internet. Child pornography, for instance, remains child pornography whether sent by post or digitally transmitted.”

Further, the judge observed that although the Internet has many postive attributes it also has a dark side. This includes illegal online file sharing which is subject to the law notwithstanding the free culture attitude of entitlement among online file sharers:

“When the internet gained wide currency in the 1990s many of its adages began to believe that a new form of reality had been created. Some felt that it should be subject to no rules since, as it was not based in a particular country, but as its name implies is a world-wide web of communication, unlike the previous means of communication through the post, by telephone, through television or through films, it seemed to be impossible to subject to local regulation. That is not so. Nor should it be. In common with other aspects of life, the internet has a positive and dark side. On the positive side, its aids free communication; it opens up avenues of knowledge so that it has become a centre of learning in itself; it furthers public debate; and has established the swiftest and most far reaching form of communication that humanity has known. It is, on the other hand, also thickly populated by fraudsters, pornographers of the worst kind and cranks.

The internet is only a means of communication. It has not rewritten the legal rules of each nation through which it passes. It is not an amorphous extraterrestrial body with an entitlement to norms that run counter to the fundamental principles of human rights. Since the early days of the internet, and increasingly as time has gone on, copyright material has been placed on world wide web by those with no entitlement to share it. There, it is downloaded by those who would normally have expected to pay for it. Among younger people, so much has the habit grown up of downloading copyright material from the internet that a claim of entitlement seems to have arisen to have what is not theirs for free.”

On the specific issue of whether the graduated response protocol was justified, the judge recognized that disconnection of an internet account was a serious sanction. He noted that “Some would argue that it is an imposition on human freedom.” He rejected this assertion pointing out that “There is no freedom, however, to break the law.” Then, after adverting to the right to obtain protection for “one’s own original creative endeavour” “as a human right” under the Irish Constitution, he held that the graduated response protocol was fully justified to vindicate this important human right. According the the court:

“The courts under the Constitution are obliged to supply, even in the absence of legislative intervention, appropriate remedies for the undermining of rights within the scheme of fundamental law that the Constitution represents. As has often been said, the powers of the courts in that regard are as ample as the Constitution requires. I am therefore obliged by Constitutional imperative to protect, as best I can, the rights of copyright owners from unjust attack or, where that sort of attack has taken place, to vindicate their rights through an appropriate order. There is ample expression of statutory remedies in the laws passed by the Oireachtas under the Constitution. Section 37 of the Copyright and Related Rights Act 2000 provides that the owner of the copyright in work has the exclusive right to undertake or authorise others to make that work available to the public. This legal entitlement is being flagrantly violated by peer-to-peer illegal downloading. I can see no other way of looking at the problem. More than one of the conditions in s.2A of the Data Protection Act, 1988 as amended is met as to both the legitimate interests of Eircom, as a responsible company, and that of the community in general. The most important of those interests is that of abiding by the law. It is completely within the legitimate standing of Eircom to act, and to be seen to act, as a body which upholds the law and the Constitution. That is what the court expects of both individuals and companies. That expectation is derived from the rights protected under the Constitution and the general pact which the people of Ireland mutually made in founding a legal system, as the Preamble to the Constitution clearly declares, that is dedicated to attaining true social order. The insertion of express conditions by Eircom in the user – internet service provider contract, as quoted above, against the use of the internet as a facility for transmitting obscene images and against the infringing the copyright of others is a step taken in pursuance of a corporate policy that is no less than lawful and proper. It is abundantly clear that the data subject has given his or her consent, in return for obtaining internet access. Under contract, if any of these conditions be breached, then their access can be terminated. It may be that internet access is available elsewhere from other internet service providers on lesser conditions. If that is so it is hard to see, however, how conditions of a contract can validly avoid the law. These, however, are the conditions that apply here. A contract for service, involving termination for breach as a consequence on the operation of a condition is present by consent. That is not all. Furthermore, such processing, involving sifting the data from the plaintiffs, warning Eircom customers and, ultimately, cutting them off, is necessary for both the performance of a contract and for compliance with a legal obligation cast upon the courts, among other organs of the State, to defend the Constitution and the laws of our society. No one in the community can escape the law, as to the obligations that it imposes or the rights that it declares. The means of infringement, or the ideology that may grow around a medium of infringement, are not germane. Otherwise, the law lacks legitimacy.

Even if only s. 2(a)(1)(b) of the Data Protection Act was operative, it is legitimate for Eircom to have a corporate policy whereby the facilities that it hires out to the people of Ireland are used for lawful purposes only. Having that policy, they are entitled to pursue it by means of conditions in contract that incorporate an enforcement modality. The protocol is merely a more complex means to that end. I find it impossible to imagine that such interference is unwarranted because there is some fundamental right or freedom or legitimate interest in the data subject whereby, in contrast to those who engage in other forms of unlawful copyright theft which may leave them more readily subject to the law, the internet is used for the violation. There cannot be a right to infringe the constitutional rights of others, absent some argument as to a genuine and compelling competing right. In some instances, the purpose for which a right is asserted undermines its character as a right. There could not be, for instance, a constitutional right to privacy that extended to the organisation of a violent crime over the internet or by telephone. There is nothing disproportionate, and it is therefore not unwarranted, about cutting off internet access because of three infringements of copyright. The exceptions in the protocol, to which I have already referred in detail, provide for upholding relevant rights to medical care, to livelihood and to business use in appropriate circumstances. The protocol, at the relevant stage, is not inhumane or arbitrary. Rather, there is a right to make representations and these will, I am assured and I believe, be listened to if sensible and credible.”

The decison will now permit Eircom to implement the graduated response protocol worked out with rights holders. Ireland will now join France, UK, New Zealand, South Korea and other countries who have enacted or are in the final processes of enacting graduated response systems to help stem illegal online file sharing and to promote legitimate markets for the sale of creative products and services.

Consider the following summary by Prof. Geist in yesterday’s Toronto Star article which was re-published in his blog this morning. Prof. Geist says:

“the text confirmed many fears about the substance of ACTA. If adopted in its current form, the treaty would have a significant impact on the Internet, leading some countries to adopt three-strikes-and-you’re-out policies that terminate subscriber access due to infringement allegations, increasing legal protection for digital locks, mandating new injunction powers, implementing statutory damages provisions worldwide, and engaging in widespread data sharing across national borders.”

Here again, Prof. Geist is misrepresenting what the actual published text of the draft treaty says. As I have pointed out in two previous articles, Fear Mongering and Misinformation Used to Slag ACTA and A reply to ACTA critics, the draft text would not mandate any “countries to adopt three-strikes-and-you’re-out policies that terminate subscriber access due to infringement allegations”. This is pure scaremongering.

The draft treaty would require contracting countries to provide legal protection for technological measures, but these measures have already been implemented around the world throughout the EU and elsewhere in order to comply with the WIPO Internet Treaties. Of course, ACTA would require Canada to “increase” protection for TPMs. We don’t have any protection for TPMs now and we are the only G20 country not to have any such protection.

It is also hard to understand Prof. Geist’s criticism of international cooperation including sharing of information to combat counterfeiting. Prof. Geist was an ardent supporter of Bill c-27, the Electronic Commerce Protection Act. That Bill would have given the Canadian Government extensive rights to share data with other countries to fight SPAM. Prof. Geist endorsed these provisions in that Bill, even testifying before the Parliamentary Industry Committee studying the Bill supporting international data sharing to fight SPAM. (See, Lines 1715-1722 of his testimony). It is well known that organized crime is extensively involved in counterfeiting activities. It is puzzling that Prof. Geist believes that international cooperation is essential when dealing with SPAM but not counterfeiting. SPAM may clutter our in-boxes and cause economic harm. But, as two Parliamentary Standing Committees recently found, counterfeiting causes economic harm and also poses serious health and safety issues for Canadians. See, Standing Committee on Public Safety and National Security, Counterfeit Goods in Canada – A Threat to Public Safety (May 2007), Standing Committee on Industry, Science and Technology, Counterfeiting and Piracy Are Theft (June 2007)

As the debate about ACTA continues, the public should realize that simply relying on secondary and tertiary summaries of the draft treaty will not provide an accurate assessment about what the treaty is really about. You really need to check your sources.

The article discusses the dynamics of why ISPs and rights holders should be motivated to work together to solve the problem of online file sharing. Apart from good business reasons, she points out that today ISPs are increasingly deploying “smart” technologies within broadband networks. Technologies like deep packet inspection (DPI) have given operators an unprecedented level of control over the content that flows through their pipes. These enhanced capabilities of ISPs may also increase their exposure to copyright liability as they are less and less “dumb pipes”.

Prof. Bridy proposes a set of principles to guide the implementation of private graduated response regimes. She contends that ISPs and rights owners “must take it upon themselves, in the interest of the customers they aim to get and keep, to ensure that their private arrangements for enforcing copyrights online are both adequately transparent and meaningfully consumer protective.”

The article proposes that privately implemented graduated response regimes be designed to minimize the likelihood of mistaken responses, to maximize opportunities for consumer compliance before the imposition of any sanction, and to limit the duration of any access-related sanction imposed in the absence of a neutral adjudication of infringement. In this regard, the following principles are suggested:

• Users should be given an opportunity to contest notices of infringement with their ISPs as the notices are received and before any sanction is imposed.
• When it comes to adding up strikes, ISPs should count a single notice of infringement that alleges multiple instances of infringement as only one ―strike against the subscriber receiving the notice.
• The principle underlying graduated response is that sanctions should escalate as infractions accrete. The disciplinary approach is an incremental one, and in the interest of consumer protection, there should be more, rather than fewer, increments when it comes to the nature and duration of access-related sanctions. To maximize opportunities for Internet users to comply, ISPs that agree to implement a graduated response regime should graduate the access-related sanctions they impose, beginning with a speed sanction after three uncontested notices and graduating to a brief suspension of access with the fourth.
• Broadband providers should provide full disclosure of their copyright enforcement practices to prospective and existing customers.

Others including professors Alain Strowel and Olivier Bomsel have separately made strong arguments for graduated response systems. Prof. Bridy’s article provides an analysis of the legal liability reasons why ISPs and content owners should work together. While the analysis flows from the copyright liability regime in the US, her analysis could well resonate in Canada in view of the decision of the Supreme Court in Society of Composers, Authors, and Music Composers of Canada v. Canadian Association of Internet Providers, [2004]  S.C.R. 427, 2004 S.C.C. 45 which conditioned certain ISP immunities on ISPs being a dumb pipe and being unable to discern the nature of the content flowing through their systems.

The article also provides practical insights into how a voluntary graduated response system might be implemented.

I commend Messrs. Garneau and Rodriguez for organizing this event. Developing a strategy for Canada’s digital future is a critical component of ensuring prosperity and opportunities for all Canadians.

As noted above, Prof. Geist was on my panel. In his prepared remarks which he posted on his blog and in answers to follow up questions from the audience, Prof. Geist made a number of assertions which should not go unchallenged. Let me go through some of them adding my reflections.

Bill C-60 was good legislation while Bill C-61 was bad

Prof. Geist started his presentation by suggesting that Bill C-60 got copyright policy right. His statements before the Liberal caucus should be compared with what he actually said about Bill C-60 after it was introduced and during the election following the introduction of the Bill. At that time, Prof. Geist repeatedly excoriated Bill C-60 and the then Liberal minority Government over it.

Prof. Geist lambasted Bill C-60 arguing it was a sell out to “special interests” that did “little for individual Canadians.” His criticisms were wide ranging including specific attacks on Bill C-60’s amendments related to protecting technological measures (TPMs) and other provisions such as the exceptions for educational institutions and ISPs. By way of example, he said:

• “I’ll have much more to say in the days ahead but my immediate impression is that the recording industry is the big winner with an enormous basket of new rights and individual Canadians are the big losers as the bill does little to address their interests. Canada Introduces New Copyright Bill…Anyone who has followed copyright reform history will not be surprised to learn that individual Canadians are the big losers today.” Canada Introduces New Copyright Bill

• “there was much to criticize about Bill C-60”. 30 Days of DRM

• “Last week the federal government unveiled Bill C-60, its long awaited digital copyright reform bill. Ottawa kept its promises – the recording industry and Canada’s Internet service providers emerged as the big winners with each securing a lengthy list of new rights, power, and protections.” Canadian Copyright Bill a Missed Opportunity

• “Bill C-60, the copyright reform bill currently before the House of Commons, provides a laundry list of new rights and powers to special interests, but does little for individual Canadians.” What’s The Frequency, Liza?

• “If the Canadian government is serious about supporting education, it needs to move toward a broad fair use provision, to promote policies that help rather than hinder access, and to craft a copyright bill that does more than just cater to the interests of the recording industry while failing to address the needs of millions of Canadians”. Canadian Ministers Respond to Copyright and Education Concern

• “Even where the Canadian model provides some relief in contrast to the U.S. approach, it still does not go far enough. The best example is the anti-circumvention provisions”. Canada Introduces New Copyright Bill

• “does the copy control technology even qualify as a technological measure under Bill C-60? If it does, should it? I don’t think we have a clear answer here. Other jurisdictions focus on the effectiveness of the technological measure…The failure to include an effectiveness standard in Bill C-60 is yet one more reason why Canadians should stand up to the proposed copyright reform package. Stand Up

• “The copyright lobby argued that Bill C-60 did not go far enough in protecting TPMs. It seems to me that this report from independent parliamentarians (no pro-user zealots there) confirms that the opposite is true: the bill did not do enough to provide consumers and the marketplace with adequate protections from TPMs.” Australian Parliamentary TPM Report Accepts User Concerns. See also, 30 Days of DRM – Day 22: Libraries (Circumvention Rights) , 30 Days of DRM – Day 14: Private Copying (Circumvention Rights),  Bill C-60 and Private Copying

• “I focused on the Liberal record during its minority government and this week I posed “big picture” issues that need answering…I view this as a clear acknowledgement that Bill C-60 is not balanced. ….Bill C-60 is about meeting the interests of one side of the copyright balance. Election Answers. See also, The Political Parties on Copyright , The Liberal Tech Law Record

• “Should the outcome of the election be favourable for the morally besieged Liberal Party, perhaps leader Paul Martin should consider rewarding Ms. Bulte’s hard work and loyalty with a different portfolio entirely, if only to show that Canadians won’t dance to every tune the Americans wish to play and charge us for.” Quoting Jack Kapica’s article in the Globe in Cleaning Up Copyright. See also, Campaign Contributions

Prof. Geist was right at the time to point out that Bill C-60 had its flaws. The provisions related to protecting technological measures were one of them. The ISP provisions were another. What is surprising, however, is that Prof. Geist, after repeatedly condemning Bill C-60 would now tell the Liberal caucus that “there are many who would say with hindsight you got it right”.

While C-60 may have had flaws, the expressed goals of Bill C-60 were right then and are still right today. Its goals were to amend the Copyright Act: to meet the challenges and opportunities of the Internet; to help foster an innovative economy based upon the creation, dissemination and commercialization of ideas; to ensure that innovators are rewarded, research is facilitated, and the use of technology is enhanced; to strengthen our creative industries against the unauthorized use of their works on the Internet; to provide creators, intermediaries, and users of copyright material with the certainty and clarity that will allow them to take full advantage of the opportunities of the Internet; to implement the WIPO Treaties; to clarify liability for ISPs; to facilitate the use of new technologies for educational and research purposes; and to harmonize the treatment of photographers with that of other creators; and to strike a balance to serve both our creators and users.

The WIPO Internet Treaties.

At the roundtable, Prof. Geist reiterated his opinion that any new Bill should limit protection for technological measures (TPMs) to acts of circumvention where done for the purposes of infringement. His arguments in support of this were based on the following incorrect positions.

• Claim: The WIPO treaties “offer considerable flexibility” in how to implement its anti-circumvention rules. Response: I have previously addressed Prof. Geist’s incorrect assertion that the minimum standards in the WIPO Treaties, which require that there be adequate legal protection and effective legal remedies against the circumvention of TPMs, can be satisfied in the way he suggests. Dr. Ficsor, an internationally revered copyright scholar and professor and the former Assistant Director General of WIPO, has also twice specifically repudiated Prof. Geist’s assertions about the WIPO Treaties’ minimum requirements. See, Dr. Ficsor: An invitation to Canada to join the international community by ratifying the WIPO Internet Treaties; 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.

• Claim: The recently published Conference Board of Canada’s report on intellectual property confirms that there is considerable flexibility in how the WIPO Treaties can be implemented. Response: That report stated “Indeed, there is some room for Canadian customization in how the WIPO provisions would be accommodated in our laws: the implementation models all differ for the U.S., the European Union, Japan, and Australia, although all have ratified the same WIPO treaty.” (at p.56-57). The countries referred to by the Conference Board, however, all had WIPO compliant implementations that provided protection against circumvention of TPMs not linked to copyright infringement and had protections against trafficking in circumvention tools. There were some deviations in how exceptions were handled and whether protection was provided against copy control (versus access control) tools. However, these deviation were variations above the minimum floor required by the treaties, not below them as proposed by Prof. Geist. The Conference Board provides no support for the position taken by Prof. Geist that there is flexibility to implement the treaties in the manner he proposes.

• Claim: Bill C-61 “was lacking in flexibility (beyond WIPO requirements to cover all circumventions – even for fair dealing, to protect privacy, research, etc were prohibited).” Response: Prof. Geist inaccurately describes Bill C-61. Bill C-61 contained exceptions from the anti-circumvention provisions including exceptions to protect privacy, to permit encryption research, to permit security research, to permit research for interoperability purposes, to help persons with disabilities, and for law enforcement and national security purposes. (ss.41.11-41.19) Bill C-61 also had two provisions which flexibly permitted the Government by regulation to broaden the list of proposed exceptions. (s.41.2)

• Claim: Bill C-60 offers a “more balanced” approach to dealing with legislation designed to provide legal protection for TPMs. Response: In fact, Bill C-60 offered a completely ineffective means of providing legal protection for technological measures. For example, Jason Kee from the ESAC who appeared at the roundtable spoke about the challenges faced by the entertainment software industry in combating mod chips. These devices enable infringing copies of games to play on game consoles or computers by effectively circumventing the access control TPMs associated with the games and game consoles. Prof. Geist’s proposal would provide no protection against these technologies. (The infringing copies of the games have already been made and the circumvention of the TPMs in the games consoles to enable them to play is not for the purpose of committing any infringing act.) That is why organizations like the Canadian Coalition for Electronic Rights (CCER), whose members include sellers of circumvention tools such as “mod chips” for video game consoles were so active in the copyright reform process and together with Prof. Geist argued for such ineffective protection for TPMs. Prof. Geist is correct in his contention that “The difference between the Conservative C-61 and the Liberal C-60 is not a matter of legal fine tuning.” Bill C-60’s TPM provisions were the darling of the mod chip manufacturers because they did nothing to stem the use of businesses built around and profiting from infringement or to enable tax-paying, job creating enterprises to grow and thrive in the digital economy.

• Claim: Canada faces great pressure to “implement” the WIPO Treaties. Response: Canada is under domestic and international pressure to RATIFY not merely implement the WIPO Treaties.

Intermediary Liability

Prof. Geist advocated that any new bill implement “notice and notice” and not notice and takedown or graduated response. His reasons were the following:

• Claim: Notice and notice works. Response: Prof. Geist’s assertion that notice and notice works is without foundation. We have had a de facto notice and notice system in Canada for many years and there is no evidence that it changes people’s behavior to stop illicit file sharing and purchase creative products from legitimate services. As I pointed out elsewhere, 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.

• Claim: Notice and notice avoids having to implement notice and takedown. Response: “Notice and notice” and “notice and takedown” are complementary methods of dealing with online file sharing. They are portrayed by Prof. Geist as mutually exclusive processes when they are not. Graduated response is useful in dealing with P2P file sharing; notice and takedown is necessary to deal with files that are hosted by an ISP.

• Claim: Graduated response “could result in Internet users losing access based on allegations of infringement.” Further, as contended by Prof. Geist in answer to a question, privacy of individuals’ personal information would be violated. Response: Prof. Geist is once again engaging in scaremongering. See, Fear Mongering and Misinformation Used to Slag ACTA; A reply to ACTA critics. Graduated response systems such as those being enacted by the UK and New Zealand are being carefully designed to expressly avoid any such consequences. See, Graduated response and copyright: an idea that is right for the times. Any legislation in the UK, for example, would have to recognize, as the French Hadopi law did, that end-users’ access to or use of the Internet must respect the fundamental rights and freedoms of natural persons, as guaranteed by the European Convention on Human Rights and Fundamental Freedoms and general principles of Community law. Accordingly, any technical measures taken against an individual can only be taken with due respect for the principle of the presumption of innocence and the right to privacy. Further, a prior fair and impartial procedure must be guaranteed, including the right to be heard of the person or persons concerned. A right to an effective and timely judicial review must also be guaranteed. See, Article 1(3)(a), Revised EU Framework Directive, EU Telecoms Reform

• Claim: Graduated response’s costs cannot be justified. Response: This assertion by Prof. Geist was roundly criticized by economist Prof. Bomsel in his recent article The costs and benefits of graduated response in copyright enforcement and by me in another recent blog. Prof. Geist`s cost argument against graduated response essentially is that costs looked at alone and without regard to any economic, social, or other benefits militates against implementing any such system. Using his methodology, we should conclude that no laws can be justified because they all involve costs of administration or enforcement.

• Claim: The Australian iiNet decision shows that graduated response cannot work. Response: The iiNet decision did not consider the effectiveness of state sanctioned graduated response mechanisms. Further, a chief difficulty in iiNet was that there was no industry consensus or policy as to how to deal with multiple infringers.

Fair dealing

Prof Geist argued that Canada should radically change its approach to copyright exceptions by implementing fair use. The arguments against implementing fair use are many. That is why it was rejected by Canada when last studied here and why it was rejected by of our trading partners such as the UK, Australia and New Zealand after they had also thoroughly examined it. See, Why Canada Should Not Adopt Fair Use (2009) 2 Osgoode Hall Rev.L.Pol’y 13

What copyright reforms are needed

I have set out in detail elsewhere what reforms I believe are needed to help build a copyright framework that is right for the 21^st century, that strengthens our creative industries, fosters innovation, enables creators to build markets and to be fairly compensated for their creative efforts and investments, and which recognizes the legitimate needs of consumers. My recommendations consist of 8 guiding principles and 11 specific recommendations. They are as follows:

Principles to guide copyright reform

1. Recognize the importance and the unique characteristics of the creative sector.
2. Establish specific goals for a “Digital Canada” copyright framework.
3. Provide effective digital copyright protection to stimulate intellectual creation and dissemination of cultural products.
4. Provide clear, predictable, and fair rules that support creativity and innovation.
5. Reform and adapt copyright laws to reduce digital piracy and to promote investment and economic growth in creative products.
6. Reform and adapt copyright laws with new exceptions in accordance with international standards and treaties.
7. Do not regard copyright reform as a “zero-sum game” or succumb to the philosophy of unrestricted user “rights.”
8. Regard technology neutrality perhaps as a goal, although this principle has limitations.

Specific recommendations for copyright reform

1. Amend the Act to enable Canada to ratify the WIPO Treaties.
2. Provide protection against circumvention of TPMs that are required by the WIPO Treaties and that comport with international standards.
3. Establish a “making-available right.”
4. Clarify the law related to secondary infringement to help address online piracy.
5. Implement a notice and notice system backed up by a nuanced graduated response process.
6. Implement a notice and takedown system that fully respects due process considerations.
7. Enable rights holders to obtain injunctions against Internet intermediaries to prevent infringements.
8. Implement fair and effective border measures to protect against the import of pirated goods.
9. Clarify that ISPs are not liable for infringement when they act as true intermediaries.
10. Establish new exceptions to facilitate private uses of works where justified, and do not adopt “fair use” or an “expanded fair dealing” provision.
11. Establish new educational and library exceptions in accordance with the three-step test.

I also recently published a shorter summary of my proposals for reform in CBA’s National magazine.

My slides presented at the copyright panel are set out below.

Sookman Digital Canada Presentation Feb 11 2010

As Canada considers its options for copyright reform, we should be focusing not on whether we should implement graduated response, but on how we ought to do it.

France, the UK, and New Zealand have shown the way. Representatives from Belgium and now Turkey have also expressed support for implementing  such a regime. Yesterday’s iiNet decision in Australia shows that self-regulatory approaches may not work out as expected. And, economists like Professor Bomsel tell us that graduated response is the best way to internalize the externalities associated with copyright infringement to address online file sharing that is hurting creators and the creative industries.

Of course, the actual text of the treaty is not know by the public. So commentators have relied on their interpretations of leaked documents to try and derail it.

When the criticisms are examined, it will be readily apparent that certain ACTA critics misapprehend what has been disclosed and make assertions or reach conclusions that cannot be justified based on the leaked documents. 

Prof. Geist’s Assertions

For example, Prof. Geist published several recent blogs dealing with ACTA.  In one blog, Estimating The Cost of a Three-Strikes and You’re Out System, he attempts to argue against any agreement that would include a graduated response system. He starts his blog with the statement that the discussions in Mexico

“is likely to turn to the prospect of supporting three-strikes and you’re out systems that could result in thousands of people losing access to the Internet based on three allegations of copyright infringement. Leaked ACTA documents indicate that encouraging the adoption of three-strikes – often euphemistically described as ‘graduated response’ for the way Internet providers gradually send increasingly threatening warnings to subscribers – has been proposed for possible inclusion in the treaty.”

He refers to countries such as New Zealand, UK, and France as countries that either have or are implementing such systems.

However, as I pointed out previously in response to similar statements by Prof. Geist, from what is known from the leaked documents, what is actually being proposed is a requirement that ISP safe harbors be tied to eligibility conditions that ISPs “put in place policies to deter unauthorized storage and transmission of IP infringing content”. This self-regulatory approach currently exists in s.512(i) of the DMCA and in comparable legislation in Australia and in other countries.  

Both the leaked EU Memo and the EU Analysis of the US proposal makes this clear.

Section 3 of the EU Memo states in part:

“On the limitations from 3rd party liability: to benefit from safe-harbours, ISPs need to put in place policies to deter unauthorized storage and transmission of IP infringing content (ex: clauses in customers’ contracts allowing, inter alia, a graduated response).  From what we understood, the US will not propose that authorities need to create such systems. Instead they require some self-regulation by ISPs.”

The EU Analysis document states:

“The aim of paragraph 3(b) is to establish a system that can be considered to make the exemptions from liability subject to specific conditions…

The proposed paragraph 3(b)(i) adds an important prerequisite for the limitations on liability to apply: the intermediary must adopt and reasonably implement a policy ‘to address the unauthorized storage or transmission of materials protected by copyright or related rights’…”

The leaked documents, therefore, do not support the conclusion that a state sanctioned graduated response system is being proposed as part of ACTA.

Prof. Geist argues that the system being proposed “is likely to turn to the prospect of supporting three-strikes and you’re out systems that could result in thousands of people losing access to the Internet based on three allegations of copyright infringement.”  However, regardless of whether Prof. Geist is referring to a state sanctioned graduated response system or to a self-regulatory eligibility condition, his statements show he continues to misapprehend or inaccurately describe how these systems work.   

State sanctioned graduated response systems have the following characteristics: (1) rights holders monitor P2P networks for illegal downloading activities; (2) rights holders provide ISPs with convincing proof of infringements being committed by an individual at a given IP address; (3) educational notices are sent through an ISP to the account holder informing him or her of the infringements and of the consequences of continued infringement and informing the user that content can be lawfully acquired online; and (4) if the account holder repeatedly ignores the notices, a tribunal may take deterrent action, with the most severe sanctions reserved for a court. 

Prof. Geist says that this is three strikes “euphemistically described as “graduated response”. In fact, graduated response is “euphemistically” described by Prof. Geist and others as three strikes in order to demonize it.  As, I have previously described , the graduated response systems such as what has been enacted in France and what is being implemented in the UK or New Zealand have built in protections to avoid precisely the consequences Prof. Geists say they have. Prof. Geist continues to slag ACTA by misdescribing how these graduated response systems work.

In so far as Prof. Geist intended to refer to a self-regulatory eligibility condition, his statement that this is a “three-strikes and you’re out systems that could result in thousands of people losing access to the Internet based on three allegations of copyright infringement” is also inaccurate.

The US has had ISP safe harbours since enacting the DMCA in 1998. Congress enacted them in an effort to resolve the unique copyright enforcement problems caused by the widespread use of the Internet. It recognized that tackling copyright infringement on the Internet required balancing the competing interests of several groups. The first set of competing interests includes those of copyright holders and end users. The DMCA intended to balance the need for rapid response to potential infringement with the end-users’ legitimate interests in not having material removed without recourse. The second set of competing interests were those of copyright holders and ISPs whose services may be used to infringe copyrights. The DMCA intended to balance the interests of these parties by creating a mechanism for rights holders to inform ISPs of potentially infringing conduct while, at the same time, providing greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities.  See Ellison v. Robertson, 357 F.3d 1072, (9th Cir.2004); In re Aimster Copyright Litigation, 334 F.3d 643, (7th Cir.2003);  Rossi v. Motion Picture Assoc. of America, 391 F.3d 1000, (9th Cir.2004).

This balancing effort resulted in a statute that creates incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital network environment. For instance, a copyright owner who suspects that his/her copyright is being infringed may follow the notice and take down provisions set forth in § 512(c)(3) of the DMCA. Once properly notified, a service provider must respond expeditiously to remove, or disable access to, the material that is claimed to be infringing. If a service provider fails to take down the potentially infringing material, it exposes itself to full copyright liability.  Rossi,  Recording Industry Ass’n of America v. Verizon Internet Servs., 351 F.3d 1229 (D.C.Cir.2003).

These notice and take down provisions form part of the several safe harbors established by the DMCA that protect certain common activities of ISPs. They provide protection from liability for: (1) transitory digital network communications; (2) system caching; (3) information residing on systems or networks at the direction of users; and (4) information location tools.

To be eligible for any of the safe harbors, a service provider must meet a series of threshold conditions. One of them is the eligibility requirement that appears to be part of what is being considered for ACTA. Under § 512(i) of the DMCA for a service provider to have the benefit of the safe harbors it must show that it

“(A) has adopted and reasonably implemented, and informs subscribers and account holders of the service provider’s system or network of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers”.

This provision has been interpreted many times by US courts. Importantly, they have interpreted it as a flexible provision which does not mandate any specific circumstances e.g. “three strike” before an account is terminated. Rather the standard is “appropriate circumstances”. Further, it has been held that a “standard of reliability and verifiability” is required before an ISP would be required to terminate a repeat infringer’s account in order to claim safe harbor eligibility.  See, Corbis Corp. v. Amazon. com, Inc., 351 F. Supp. 2d 1090 (W.D.Wash. 2004), Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir.2007), UMG Recordings, Inc. v. Veoh Networks Inc 2009 WL 3422839 (C.D.Cal. Sept 11, 2009).

Prof. Geist goes on to state that Spain has rejected graduated response. What he doesn’t disclose, however, is that Spain has passed legislation that will enable the authorities to shut down file-sharing sites rapidly. So it has taken another approach to dealing with massive online file sharing.

Prof. Geist then purports to suggest that countries that are pursuing graduated response have “faced formidable barriers”. He refers to New Zealand which he says “withdrew a three-strikes proposal in the face of public protests (a much watered-down version was floated at the end of last year)”. Infact, one of the main  reasons for the delay in implementing section 92A besides industry and subscriber concerns was the inability of rights holders and ISPs to reach an agreement on a voluntary ISP Copyright Code of Practice (the Code).  The Code would have provided guidance for ISPs and rights-holders on how section 92A would operate. The Government took the initiative in its December 2009 cabinet paper, to outline a full fledged (not watered down) graduated response regime.

Prof. Geist then states that the UK’s proposal has “been hit with hundreds of proposed amendments at the House of Lords”. It is not unusual for any complicated Bill to have amendments proposed to it. Further, many of the proposed amendments had nothing whatsoever to do with the graduated response portion of the Bill. The UK government is still firmly resolved to move ahead with the legislation.

Prof. Geist then refers to “France’s adventure with three-strikes” which he states includes “a Constitutional Court ruling that the plan was unconstitutional”.  He failed to disclose, however, that France has actually passed its legislation and that the French Constitutional Council ruled in October 2009 that the French bill was in conformity with the French Constitution.

Prof. Geist then goes on to argue against a graduated response system because of its costs which he says the UK Government estimated at 500 million pounds over ten years and because of a potential for 40,000 people to lose their Internet access due to anticipated increases in subscriber fees. 

The UK impact assessment referred to by Prof. Geist actually found that the estimated costs would be between £290 – 500 million and that this “cost would have a relatively small but permanent effect of reducing demand for broadband connection between 10,000- 40,000”.  Further, the figures assume that all of the costs associated with the graduated response system would fall on the ISPs and would then be passed onto consumers.  However, it appears that the UK Government plans to pass on 75% of the costs to rights holders. If so, the impacts would be far less than what had been estimated.

Far more importantly, however, Prof. Geist examines only the costs of implementing a graduated response system. He never takes into account the benefits that would result from such a system. However public policy mandates that costs and benefits of any proposal be fully evaluated.  

Prof. Geist’s references to the UK impact assessment omit entirely its analysis of the far greater economic benefits associated with graduated response. The UK assessment pegged the benefits to rightsholders of implementing a graduated response system alone at £1.7 billion.

The assessment also discussed at length the rational for graduated response. For example, the report states:

“The UK Government attaches particular importance to establishing the UK as a leading digital economy for several reasons:

• A Digital Britain can make a significant contribution to the Government’s New Industry, New Jobs agenda.
• A Digital Britain can play a crucial role in helping the government deliver a number of wider policy objectives.
• Broadcasting, the creative industries and the information and communication technology sectors are of major economic importance in the UK.”

“First, it can play a major part in helping the UK emerge from recession by encouraging innovation – one of the five drivers of productivity – in new digital and broadband technologies and content.  Second, it can provide the telecommunications infrastructure that UK businesses – particularly those in the content and creative industries – crucially rely on in order to compete effectively in the global economy.”

“Illegal file sharing of audio, video, data, or anything in digital format between users on a computer network has increased significantly in the last few years. This has served to reduce the incentive for the creative industries to invest in the development, production and distribution of new innovative content.”

The UK impact assessment then summarized the costs and benefits in the table set out below:

The assessment also canvassed the various policy options available to address online file sharing and the rational for choosing graduated response over other options.

“The sheer scale of P2P file-sharing means it is not practicable to take all those involved to court: right-holders estimate there are some 6.5 million people in the UK who are active unlawful filesharers.”

“Further, due to the nature of the technology and the way in which individual infringements are identified, it is not possible for rights holders to identify who are the most frequent or serious file-sharers, making targeted legal action extremely difficult if not impossible.  Legislation is needed to require ISPs to notify subscribers that they appear to be engaged in unlawful activity so that they can alter their behaviour.  It is also needed to help rights holders to take targeted action about the most serious infringers.”

“An important feature of creative industries like the music, software and film industries is that they are characterised by strong intellectual property rights (IPR).  Strong IPR creates an incentive to invest in the development of new and more innovative products since it permits individuals to capture the gains from the new products it creates.”

“However with illegal file-sharing the incentive to invest in new and mainstream artists is undermined because industry cannot capture all the gains generated from its investment.  This is because the public good nature of file-sharing and the spillover effects which exist creates a free-riding problem whereby users may enjoy the benefits of file-sharing without paying the product’s price.  The disincentive to invest in artists as of result of free-riding is a particular problem in the music, film and videogames industries because they are characterised by large investment costs and a relatively high risk of failure.”

“Content companies spend vast amounts of money investing in the success of a product (e.g. film, song or videogame).  These costs are typically in production, marketing and promotion of creating and selling content to the consumer (advance payment to artists, advertising costs, retail store positioning fees, press and public relations to the artist, television appearances and travel, publicity and internet marketing). The industry is characterised by large fixed costs and low variable costs. The increasing trend for creative content to be traded digitally may have seen a change in the investment cost structure.  Overall, some costs have remained high like marketing costs but distribution and production costs have decreased with an overall effect of increasing variable costs relative to fixed costs which may give small, relatively less known artists more room for manoeuvre.”

Prof. Geist’s one sided analysis of the costs associated with graduated response has also been criticised by Prof. Olivier Bomsel for failing to take into account how graduated response can best internalize the externalities associated with copyright infringement.  Prof. Bomsel is a well known Professor of Economics and was involved in the design and the implementation of the French law on copyright enforcement over the Internet.  

 In support of his argument against graduated response, Prof. Geist then alleges that the “UK estimates are consistent with a 2006 Industry Canada commissioned study. However, the Industry study did not deal with any graduated response proposal. It focused on the costs associated with a notice and notice system, a notice and takedown system, and a compulsory license regime. Nevertheless, the report concluded that notwithstanding the costs associated with notice and notice or notice and takedown that “both approaches are economically beneficial for ISPs and other stakeholders in that economic uncertainty is removed.”

Other Criticisms of ACTA

Prof. Geist was not alone in trying to derail ACTA.  A consortium of groups consisting of the Washington-based Public Knowledge, the Ottawa-based Canadian Internet Policy and Public Interest Clinic (CIPPIC), and Quebec’s Union des consommateurs, also weighed in on the debate last week. Their views were given extensive media coverage including coverage in Canada from from CBC.ca, Canadian Press, and Radio-Canada.InternetNews.com.

The CBC article “Consumer advocates declare war on copyright treaty” stated the following:

“A number of these organizations on Monday launched a joint declaration of war on ACTA, which they say threatens the fundamental freedoms of the people living in member countries.”

“This agreement will restrain certain rights and freedoms, particularly freedom of expression and protection of privacy,” the declaration said.

“Leaked documents from the ACTA negotiations, going on for the past year and a half, show that a number of anti-consumer provisions are being discussed, the groups said.  They include:

• Allowing internet service providers to cut customers off if sharing copyrighted files is alleged.
• Limiting the interoperability of legally acquired digital content, such as music or movies.
• Authorizing border guards to search and seize laptops and MP3 players if copyright infringing material is found on them.”

These statements are inaccurate and misleading. They also potentially reveal a lot about who these ACTA critics are really trying to protect.

The statement that ACTA will allow “internet service providers to cut customers off if sharing copyrighted files is alleged” is inaccurate and misleading. This is essentially the inaccurate statement made by Prof. Geist which is addressed above.

There is nothing in the leaked documents aimed at “Limiting the interoperability of legally acquired digital content, such as music or movies”. The leaked documents suggest that ACTA would require that parties joining it to enact measures to protect technological measures along the lines of legislation already existing in most countries around the world, except Canada. A comment on Footnote 8 in the EU Analysis suggests that the US proposal “may not require” interoperability of content downloaded for one device to be played on another device. But, there is a big difference between a term that would limit or prohibit content interoperability (which as the EU Analysis pointed out does not exist in the EU; “Recital 48 to CISD uses the term ‘implies no obligation’”) and one that leaves it open to each country to decide whether or how to address interoperability.  

Moreover, ACTA is not about authorizing “border guards to search and seize laptops and MP3 players if copyright infringing material is found on them”. Douglas George of DFAIT made this clear in his April 2009 presentation to Canadians when describing “What ACTA is NOT About”: “Seizing portable music players and laptops at the border”.

The statement that ACTA is “anti-consumer” potentially reveals a lot about its detractors. The groups that have coalesced to oppose ACTA seem to believe that graduated response is “anti-consumer”. I had always thought that a consumer was someone who legitimately acquires some good or service for that person’s own use. However, the “consumers” referred to by the coalition appear to be those individuals who engage in repeated acts of copyright infringement despite repeated warnings to stop. So, is the moral fight against the substance of ACTA’s proposed provisions related to graduated response by these detractions really about defending the right to take the creative labour and investments of creative individuals and industries for free?