Our law, which was designed to deal with player pianos and renegade printing presses, and later traditional broadcast techologies like radio and TV, is occasionally called upon to deal with illegal filesharing on the Internet. But the legal tools to protect intangible property have not kept pace with the advances in technologies and services that are used to facilitate infringement on the Internet.

While the 1911 law targeted centralized distribution of infringing books, peer-to-peer distribution networks create a situation that could not have been imagined at that time. Now, when a user in Canada illegally downloads an album, software, game, book or film, that person benefits from a situation where other users contribute tiny fragments of that work in a swarm crossing the world, where every personal computer is its own printing press, and where a single memory stick, MP3 player, or tablet can warehouse inconceivable amounts of information.

Critically, unlike 1911, the primary profiteers often do not themselves directly infringe copyright. Instead they take a series of preparatory steps to faciliate and encourage and to aid infringements by others. These activities take many different forms, many of which mutate considerably whenever legal pressures are applied. Sites such as isoHunt or Pirate Bay index and foster illegal copying and distribution of content using the BitTorrent protocol. Cyberlocker providers such as MegaUpload or RapidShare provide storage space for petabytes of information comprising many hundreds of thousands of copyright works that can easily be downloaded by others, and have been known to pay cash rewards to those users whose works are most commonly downloaded. Linking and leech websites gather together links to infringing content stored remotely throughout the world. Even old technologies such as the Usenet are still being deployed to create relatively anonymous means of large-scale file sharing. These sites profit from the distribution of infringing content, at the expense of artists, writers, and other creators, publishers, distributors and everyone else that invests in or supports the creative industries.

Canada has thus far been a haven for such activities. In 2010, Canada was placed on the USTR Priority Watch List because of weak IP laws and the number of pirate sites and services operating within its borders. Earlier this week, the International Intellectual Property Alliance (IIPA) recommended in its Section 301 submission to the USTR that Canada remain on the Priority Watch List. A January 2011 study shows the British Columbia-based IsoHunt as one of the top BitTorrent sites in the world, with an estimated 12,000,000 unique monthly visitors. IsoHunt is just one of the many pirate sites and services still operating in Canada.

IsoHunt views Canada’s laws against secondary infringement as being so anorexic that, in September 2008, it commenced an application in the British Columbia courts seeking a declaration that its operations are legal here and do not infringe the copyrights of record labels. This proceeding is being defended by the labels. (Contrary to the suggestion of Prof. Geist, the record labels brought proceedings against IsoHunt for copyright infringement only after being sued by IsoHunt. The suit brought by IsoHunt has been widely reported since its filing including by Prof. Geist. The responding lawsuit has also been public since it was filed.)

The current Copyright Act aims almost exclusively at direct infringers, supplemented by an authorization right and a narrow set of activities that comprise secondary infringement. Now, with the introduction of Bill C-32 into Parliament, Canada is taking a serious step to deal with the issue of enablement. Following Minister Clement’s publicly stated desire to target “the wealth destroyers”, the Government has included within Bill C-32 a brand-new “enablement” remedy that would expand the existing remedies against secondary infringement.

If passed in its present form, s. 27(2.3) would make it “an infringement of copyright for a person to provide, by means of the Internet or another digital network, a service that the person knows or should have known is designed primarily to enable acts of copyright infringement”. Courts are given criteria to assist in their determinations, including economic benefit from the infringements, overt promotion of the service’s infringing capabilities, knowledge of actual infringements, the presence of significant non-infringing aspects for the service, and acts taken to limit copyright infringement.

This cause of action would override certain exceptions for onlines service providers, such as the network services exception, but would not expressly override other exceptions, such as the hosting exception.

Despite the Government’s goal of targeting the “wealth destroyers”, statutory damages are not available against persons who have been found liable for enabling infringement.

While the new enablement right is a good first step, it has some technical drafting defciencies that need to be fixed to ensure that the new cause of action can be used against the intended pirate sites and services.

• First, Parliament must recognize that pirate sites and services often are “not designed primarily to enable” acts of copyright infringement. The design is very often neutral, but the site or service is run to induce, aid or abet infringing activities, or is primarily used for infringing purposes.
• Second, Parliament must ensure that this provision clearly trumps all all of the online service provider exceptions to avoid a circumstance in which enablers like wealth destroying pirate hosting sites can avoid liability for enablement.
• Third, to provide an adequate and effective remedy against enablement, Parliament should confirm that rightsholders may rely on the full scale of statutory damages against those who are liable for enablement, regardless of whether such persons were operating for commercial purposes. (The experience of the Internet shows that certain enablers can have a devastating effect on the marketplace without acting with profit in mind.)

Bill C-32 offers many important amendments to the Copyright Act that need to be made to bring our legislation into the 21st century. The enablement provision is an example of one such provision. However, like many of the proposed amendments, it has technical drafting flaws. These need to be addressed at the Parliamentary Legislative Committee to ensure that the Bill accomplishes the objectives set by the government.

The ICSL found that 0.3% of the files sampled were confirmed as being non-infringing (True Negatives); 89% were confirmed as being infringing (True Positives); 1.6% were ambiguous where they could not determine if they were infringing or not, and .91% related to pornographic torrents. Of the torrents in the top three categories (Movies, Music and TV shows), there were no legal torrents in the sample. According to the report:

“Overall, 89.3% of torrents were given a definitive legality. Of those 89.3% of torrents, 99.66% are infringing. If we assume that all of the 16 cases of ambiguous legality are not infringing, we arrive at an overall figure of 97.9% infringing content shared over BitTorrent networks.”

“Information on more than one million torrents were collected through our investigation, however there is a clear skew towards the most seeded torrents. Just 4.0% of torrents, a total of 15367, were responsible for 80% of the current seed population and 9.9% of torrents, just 38365, were responsible for 90%. Despite this, we gave names to more then 120,000 of the top 150,000 most seeded torrents, accounting for 99.36% of all seeders. This means that our 97.9% infringing figure is applicable to both the overall percentage of infringing files and total seeders. Further to this finding, there were no legal torrents in the sample for the top three categories (Movies, Music and TV shows).”

The study is by no means the first to show that the overwhelming amount of content shared over BitTorrent networks is infringing. Earlier this year Prof. Felton published a study which concluded that 99% of BitTorent content was infringing. The study also accords with the recent finding of Judge Wilson in the US Isohunt case where he found that Isohunt’s  “websites are used overwhelmingly for copyright infringement, with upwards of 95% of all dot-torrent files downloaded from Defendants’ websites corresponding to works that are infringing or at least highly likely to be infringing.”

In musing about Parliament being prorogued he suggested a list of 8 TV related items that should be prorogued. In one of them he makes the point that pirating TV shows over BitTorrent and other file sharing networks is not a victimless act. It can affect the lives of ordinary Canadians who directly or indirectly earn a living in the industry.

Here is what he had to say:

“Anyway, seeing as prorogue is all the rage, let’s think big. There are many things we could do without for a while. Herewith, a list of other stuff that should be prorogued (TV-related)….

2. Pirating TV shows from BitTorrent and other sites. Honestly, could people quit shoplifting TV shows for a while? No, you’re not sticking it to some super-rich actor/writer/director or showbiz conglomerate. A few years ago, at the Television Critics Association press tour in Los Angeles, Canadian critic Bill Brioux thought he saw a familiar face among the large group of stenographers who transcribe the press conferences. He thought the guy looked a lot like Max Gail, best known as Detective Wojo on the long-running series Barney Miller . It was indeed Max Gail – working as a typist. Apparently, after his wife’s death from cancer, Gail had stayed home to raise the kids and took odd jobs when necessary. He and the kids could have used some royalties.”

It is a point worth remembering next time someone tells you its okay to download infringing copies of movies, tv shows, music, software, games, or books from BitTorrent or another file sharing network or suggests that illicit file sharing either doesn’t hurt anyone or only hurts big business.

Operators of bittorrent sites like isoHunt often claim they are nothing but content neutral search engines like Google. The Isohunt court disagreed holding, based on uncontested expert evidence, that approximately 95 percent of all files made accessible through Isohunt were infringing or highly likely to be infringing.

The plaintiffs had claimed that Fung was liable for the direct infringement of his sites’ users based on three secondary liability theories: inducement to infringe, material contribution to infringement, and vicarious liability. The first two theories (inducement and material contribution) are known collectively in the US as “contributory liability.” Despite the analytical similarities between the inducement and material contribution theories, some US courts have held that inducement and material contribution are distinct theories of contributory liability through which defendants can be found liable.

Generally, inducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright. By contrast, material contribution (in the context of computer system operators) applies if the defendant “has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works.” The third theory, vicarious liability, is similar to contributory liability but includes some contours that differ from these other theories of liability. A defendant infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.

The Isohunt court premised its liability on the inducement doctrine not finding it necessary to consider the other two theories.

An interesting issue in the case was whether the US court had subject matter jurisdiction over the infringement given that Fung’s four web sites were hosted in Canada. The court held it did based on the well established principle in US law that in the context of secondary liability, an actor may be liable for activity undertaken abroad that knowingly induces infringement within the United States.  Once a plaintiff has established that an act of infringement has taken place within the United States, defendants may be held liable for their conduct that constitutes inducement, material contribution, or vicarious infringement, even if Defendants’ conduct took place abroad.

Fung had argued that to establish acts of direct infringement that are subject to the US copyright law, the plaintiff has to provide evidence that both the transferor and the transferee are located in the United States. The court rejected this contention holding that proof of either acts of uploading or downloading a file in the US are all that is required. According to the court:

“However, United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringement liability. Uploading a copyrighted content file to other users (regardless of where those users are located) violates the copyright holder’s § 106(3) distribution right. Downloading a copyrighted content file from other users (regardless of where those users are located) violates the copyright holder’s § 106(1) reproduction right… Accordingly, Plaintiffs need only show that United States users either uploaded or downloaded copyrighted works; Plaintiffs need not show that a particular file was both uploaded and downloaded entirely within the United States.”

The court found that there was overwhelming evidence of acts of direct infringement in the US.

The argument that bittorrent sites like Isohunt are nothing but content neutral search engines like Google was also categorically dismissed by the court holding that “the evidence of Defendant’s intent to induce infringement is overwhelming and beyond reasonable dispute”. This finding was backed up by detailed findings about messages to users, assistance to users, and the implementation of technical features, which were all intended to induce direct infringement by site users. The court also found that the defendants’ business model depended on massive infringing uses of the plaintiffs’ copyright materials.

The defendants had also relied on three safe harbours provided under the DMCA to exclude their liability; namely, the safe harbours available to providers of information location tools (ILTs); to mere conduits; and to providers of hosting services. These exclusions were carefully drafted to ensure that they applied to innocent intermediaries without creating the inadvertent consequence that they could be relied on by unauthorized file sharing sites and services. The court held they did not apply for several reasons.   

First, the DMCA safe harbours were inapplicable because Fung was liable for secondary infringement. Since the safe harbours were intended for use by only innocent intermediaries, they were not available because Fung was found to have actively induced infringement. According to the court:

“The Digital Millennium Copyright Act provides affirmative defenses for providers of certain internet services. In many ways, the Digital Millennium Copyright Act is simply a restatement of the legal standards establishing secondary copyright infringement – in many cases, if a defendant is liable for secondary infringement, the defendant is not entitled to Digital Millennium Copyright Act immunity; if a defendant is not liable for secondary infringement, the defendant is entitled to Digital Millennium Copyright Act immunity. The two sets of rules do not entirely overlap, but this framework is helpful for understanding the Act’s statutory text and structure.”

(This finding by the court is consistent with the approach taken by the Supreme Court of Canada in the SOCAN Tariff 22 case which held that the intermediary exception in para 2.4(1)(b) of the Copyright Act applies only to innocent intermediaries.)

Second, the DMCA safe harbours were unavailable because Fung had not met the statutory condition that requires US service providers to do what they can reasonably be asked to do to prevent the use of their service by repeat infringers, if they want to rely on the DMCA safe harbours.

Third, Fung was unable to rely on the DMCA safe harbours because he could not inadvertently fit within their intentionally specific provisions. For example, under the DMCA a provider of “information location tools”  must satisfy the three conjunctive requirements to apply; the defendant (1) must not know or have reason to know of infringing activities, or does not remove infringing materials upon receipt of such knowledge; (2) does not profit from infringement where it has the power to control the infringement; and (3) upon receiving notice (in the statutorily prescribed manner) from the copyright holder, removes the infringing material. Fung was not able to satisfy any of these requirements. Fung was also unable to rely on the hosting or conduit exceptions because, according to the court, no infringing materials were posted on or passed through defendants’ systems.

The  Isohunt case should be of particular interest to Canadians as we assess the amendments needed to our laws to enable Canadians to stem online infringements facilitated by unauthorized Canadian file sharing sites and services. It is apparent from the opinion in the case that key legal doctrines played a major role in the findings of infringement. In particular, the following factors were central to the court’s findings of liability: 

1. Liability for direct infringement based upon acts of uploading (e.g., making files available for distribution such as required by the WCT and WPPT making available and distribution rights) and downloading (creating reproductions of files).
2. Existence of robust doctrines of secondary liability such as inducement.
3. Service provider safe harbours that (a) are narrowly tailored, (b) protect only legitimate innocent intermediaries e.g., ISPs who do not participate in or induce infringement by users of their services, and (c) do not apply unless the service providers act responsibly and do what they can reasonably be asked to do to prevent the use of their service by repeat infringers.