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

Here is how the abstract summarizes the study:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Charlie Angus
Scott Armstrong
Tyrone Benskin
Peter Braid
Paul Calandra
Andrew Cash
Dean Del Mastro
Mike Lake
Phil McColeman
Rob Moore
Pierre Nantel
Geoff Regan

For the record, Industry Minister Christian Paradis said the following in speaking about the Bill in the House:

Mr. Speaker, as you know, this is the second time that the government has introduced this bill. During the previous Parliament and for almost a year, the Copyright Modernization Act—then known as Bill C-32—was carefully examined and debated by parliamentarians and stakeholders.

We know how much time and effort members of Parliament, stakeholders and Canadians spent on this bill. The legislative committee created to examine the bill heard from more than 70 witnesses and received more than 150 submissions. All stakeholders were consulted, and the government received letters from across the country.

We fully expect that when the bill is once again referred to a House of Commons committee the work and testimony from the previous Parliament will be carefully considered and taken into account.

Over the course of the committee hearings on this bill in the last Parliament, there were two clear messages that emerged. The first message was that this bill balances the interests of the various stakeholders. The bill, a product of wide-ranging consultation and discussion, sets out a balanced approach to corporate reform in the digital age. While the government strongly believes that this bill delivers the best balance between the interests of consumers and the rights of the creative community, we are open to technical amendments that may improve the clarity and intent of certain provisions.

Second, we heard that Canada urgently needs to pass legislation to update the Copyright Act. By reintroducing this same bill, parliamentarians will be able to build on this previous work in order to enable the swift passage of these important legislative updates. Each year that Canada goes without modern copyright laws, the need for such modernization becomes more evident as technology evolves and new issues emerge.

The last time the act was changed, there were no MP3 players. Video stores were still full of VHS tapes. No one thought we would be able to take pictures with a cellphone and upload them onto computer screens around the world, or use a cellphone to download songs and movies.

The world has changed so much since then that the Copyright Act seems like a law for a different era. The time has come to modernize Canada’s copyright laws and bring them in line with the demands and technologies of the digital age.

This bill must be passed in order to modernize Canada’s copyright regime in accordance with the government’s digital economy strategy.

Digital technology opens new markets and expands the reach of companies. It brings together people and ideas in a way that was still unimaginable only a few years ago. When individuals, companies and national economies create and adopt these new technologies, a number of important things are achieved. Productivity and innovation increase, and new products, processes and business models see the light of day.

The growth of the digital economy in Canada depends on a clear, predictable and fair copyright regime that supports creativity and innovation while protecting copyright holders.

The global economy remains fragile. This bill will help to protect existing jobs and create new ones. It will spark innovation and attract new investments in Canada. It will give creators and copyright holders the tools they need to protect their work and increase their business. The bill establishes clearer rules that will allow all Canadians to fully participate in the digital economy, both now and in the future.

One of the bill’s main objectives is to balance the interests of all stakeholders in the copyright regime. Achieving this balance has become increasingly complex given the exponential growth of the Internet. Canadians can obtain protected works online, sometimes through revenue-generating platforms or services, but also through free services, both legitimate and illegitimate. Our capacity to use high-quality Web services to obtain, protect and create copyrighted works is essential to our economic success and our cultural presence in the world.

That is why, in 2009, our government turned to Canadians to get their ideas and advice on copyright reform in the digital age. Thousands of individual Canadians, companies and stakeholder organizations shared their opinions on the best way to adapt Canada’s copyright regime to this new age. These consultations showed that Canadians were becoming increasingly aware of the importance of copyright in their daily lives and in our digital economy.

On the one hand, this bill seeks to reflect today’s reality where the private, non-commercial use of copyrighted material is commonplace. The bill would authorize many of these uses and establish parameters for cases which, to date, were not well defined.

For example, Canadians could copy works legally obtained on their computers and mobile devices to enjoy them wherever they may be. They could store content in and retrieve it from the information cloud or use a network PVR service.

It will also be legal to integrate protected works into a work generated by a user for non-commercial purposes. That would include recording a home video of a child dancing to a song, or creating original mixes of songs and videos. This exception requires that the rights and interests of copyright holders be respected. There are many examples where copyright holders have benefited from exposure on the Internet owing to work done by users.

Finally, the bill updates the Copyright Act to reflect new technologies and uses by broadening the exceptions and creating new ones for educational and training institutions, technical procedures, the development of software, broadcasters and the disabled.

I would like to point out that great care was taken when drafting these provisions to reflect the needs and interests of copyright holders. The provisions do place limits and restrictions on the use of protected works.

For example, many of these exceptions do not apply to works protected by a technological protection measure or digital lock. Copyright holders told us that their digital and on-line business models depend on the robust protection provided by digital locks. Therefore, the bill strikes a good balance. It allows Canadians to make reasonable use of content while providing creators and businesses, whose work depends on this content, with the tools and certainty they need to launch new products and services.

While our government knows that the overwhelming majority of Canadians are law-abiding, we are concerned about the threat of major penalties that hang over Canadians who infringe copyright for non-commercial purposes. Currently, those who have been found to violate copyright can be found liable for damages from $500 to $20,000 per work.

If people illegally download five songs, for example, they could theoretically be liable for $100,000. In our view, such penalties are way out of line. As such, the bill proposes to reduce the penalties for non-commercial infringement. Under its provisions, the courts would have the flexibility to award total damages of between $100 and $5,000.

However, while the bill reduces penalties for non-commercial infringements, it still seriously punishes those who profit from copyright infringement. Penalties of $500 to $20,000 per infringement will still apply to piracy for commercial purposes. In addition, the bill proposes new tools to target those who find techniques to infringe online copyright and it sets out serious penalties for those who make money by creating and distributing devices and services designed to hack digital locks. It will be very difficult to benefit from piracy.

Heritage Minister James Moore said the following:

Madam Speaker, I am very pleased to be here with the Minister of Industry. I should also certainly give a great deal of thanks to the President of the Treasury Board for the work that he did on Bill C-32, which was last Parliament’s version of Bill C-11, which we are debating today.

As the Minister of Industry said, the bill contains a number of provisions that Canadians, I think, will welcome and are welcoming. The bill contains provisions that will provide the ability of copyright owners to control the uses of their works to fight online piracy. This is about individual creators and creative industries, like the video game industry, the software industry, the movie industry, and others. It is having the tools to protect their art, their businesses and their jobs.

For example, the bill includes provisions to protect the technological protection measures and authorizes copyright holders to sue those who enable copyright infringement through such means as illegal peer-to-peer file sharing sites. Our government knows that the best way to deal with online copyright violation is to target those who enable this crime and profit from it.

More specifically, Bill C-11 introduces a new definition of civil liability for those who knowingly enable online copyright violation. Online piracy takes revenues away from creators and reduces the incentive to create. This measure sends a clear message that Canada is prohibiting piracy sites and giving copyright holders the tools to protect their activities. What is more, the bill also introduces new provisions to stop those who develop and sell tools and services for getting around technological protection measures.

Canada is among the first jurisdictions in the world, if not the first, to provide its copyright legislation with this very important tool to fight online piracy. At the same time, we are taking steps to ensure that Canadians are aware that they may be infringing copyright. Canadian Internet service providers have developed a unique model in which they tell subscribers when a rights holder notifies them that a subscriber has infringed on copyright material. This is known as notice and notice. The bill formalizes this practice into law. I would just point out here that this is one of the key elements that consumers have come to us and said they want as part of the bill.

We disagree with the American approach with regard to copyright. We have a notice and notice regime in our legislation, not a notice and take down regime as they have in the United States, for very good reason. These provisions are also on top of a wide array of legal protections already provided for in the Copyright Act that rights holders can use to assert their rights.

Educators, students, artists, companies, consumers, families, copyright holders and Canadians in general use technology in a number of different ways, and this bill simply recognizes that reality. It gives creators and copyright holders the necessary tools to protect their works, their investments, and to develop their business through innovative business models. It establishes clearer rules that will allow Canadians to fully participate in the digital economy today and in the future. More specifically, this bill gives creators and copyright holders the tools they absolutely need.

With this legislation Canadians will also be able to create new works incorporating existing publishing or publicly available works, as long as it is done for non-commercial purposes, as my colleague has said. The new user generated content cannot be a substitute for the original work or have the substantial negative impacts on the markets of the original material or on a creator’s reputation.

Canadians with perceptual disabilities will be permitted to adapt legally acquired material to a format that they can easily use. Also, Canadian photographers will benefit from the same authorship rights as creators. Currently, photographers are not considered authors of commissioned works. This legislation changes that.

Consumers and users of content will also see their interests reflected in the bill. Canadians will be allowed to record television, radio and Internet programs to enjoy at their time and choosing with no restrictions as to the device or technology chosen or the time of day.

Under certain conditions, Canadians will also be able to copy for their personal use legally acquired works such as music, movies or other works, on the device or component of their choice. They will be able to make backup copies in the format and on the device or component of their choice.

I would like to close my speech by ensuring the House understands that this was, from the very beginning of the process that we initiated just prior to the summer of 2009, a good faith effort on the part of our government to get copyright legislation done effectively.

The member for Timmins—James Bay was engaged in debate on Bill C-61 when we tabled that legislation. Bill C-61, as it turned out, was not the balance that Canadians were looking for. We think this legislation achieves the balance that Canadians have come to expect. We tabled Bill C-61, there was the fall campaign, and then we came back.

We re-engaged Canadians from the beginning. We went back to square one. We did unprecedented consultation on this legislation. We heard from thousands of Canadians in the process. We went across the country to town halls and we did open, online consultation. We arrived at Bill C-32.

As a result of the participation of thousands of Canadians in that process, we thought we would respect that process.

My observations on the Bill including the areas that will need scrutiny at committee are here.

The legal basis for the order was Article art. 87, §1, al.2 of the Belgian Copyright Act. This provision transposes Article 8(3) of the EU InfoSoc Directive 2001/29/CE. This Article provides that

“Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.”

This obligation of Member States to provide rightsholders with this form of remedy is also found in the EU Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights. Article 11 (Injunctions) states:

“Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by national law, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. Member States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC.”

Blocking orders can play a crucial role in protecting a local market by preventing or impeding domestic users from accessing a foreign file sharing site. Rightsholders may have (or be given) the tools needed to enjoin a domestic operator from facilitating widespread infringement. But, operators of these sites sometimes seek to circumvent these orders by moving their facilities out of the domestic forum. The effect of these orders can also be undermined by operators of other foreign sites or services who provide access to infringing files to domestic users.

The jurisdiction to make blocking orders against pirate sites and services has been used on many occasions in the EU to protect local markets from foreign file sharing sites. Recently it was used in the UK in Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc [2011] EWHC 1981 (Ch) (28 July 2011) to block a site run by operators seeking to circumvent an injunction order against the operators of the Newzbin file sharing site. Prior to that, and as summarized in the Newzbin case, the power was successfully used in other cases including:

IFPI Danmark v Tele 2 A/S (Copenhagen City Court, 25 October 2006): order granted on application of the Danish branch of IFPI requiring ISP to block access to www.allofmymp3.com, it appears by DNS blocking;

SABAM v Tiscali SA (Brussels Court of First Instance, 29 June 2007): order granted on application of Belgian collecting society requiring ISP to filter and block infringing content;

IFPI Danmark v DMT2 A/S (Frederiksberg Court, 29 October 2008) upheld sub nom Sonofon A/S v IFPI (High Court of Eastern Denmark, 26 November 2008) and sub nom Telenor v IFPI (Danish Supreme Court, 27 May 2010): order granted on application of the Danish branch of IFPI requiring ISP to block access to www.thepiratebay.org (“the Pirate Bay”);

Bergamo Public Prosecutor’s Officer v Kolmisappi (Italian Supreme Court of Cessation, 29 Sept 2009): order requiring ISPs to block access to the Pirate Bay as part of preventative seizure in criminal proceedings;

Columbia Pictures Industries Inc v Portlane AB (Swedish Court of Appeal, 4 May 2010): order granted on the application of the Studios requiring ISP to block access to a tracker website associated with the Pirate Bay;

Constantin Film v UPC (Commercial Court of Austria, 13 May 2011): order granted on application of two film companies requiring ISP to block www.kino.te using IP blocking.

The main reasons given by the Antwerp Court of Appeal for granting the blocking order against The Pirate Bay were summarized by Philippe Laurent in a blog post on the Kluwer Copyright Blog:

- It is clear and uncontested that copyright infringements take place on a massive scale thanks to “The Pirate Bay”…

- The defendants do not commit infringements themselves, but they are nonetheless “intermediaries” in the sense of art. 87, §1, al.2.

- The action brought by the BAF is not a liability action, so the E-commerce Act of 11 March 2003 (transposing the E-commerce Directive 2000/31/CE) is of no help to the ISPs. More specifically, the legal rules providing for a liability limitation to the benefit of ISPs (the Court considers the “mere conduit” liability limitation as provided by art. 12, §3 of Directive 2000/31/CE) is no hindrance to the granting of an injunction order. Furthermore, the blocking measures that are sought by the BAF are no monitoring tasks, as they are limited to the making unavailable of determined websites.

- That the measures sought will probably not put an end to any possible illegal activity on the Internet does not imply that these measures would be disproportionate.

- In order to fight copyright infringements, ISPs may be asked to render specific websites inaccessible to their subscribers. It belongs to the Judge to determine the blocking procedure.

- According to the Court, even though this measure could be more easily circumvented, DNS-blocking is the most acceptable solution, as IP-blocking would be more burdensome to the ISPs and could have more detrimental effects on third parties.

- There are no competition issues at stake, as the defendants are the two biggest Belgian ISPs.

- DNS-blocking is no limitation to the freedom of speech or to other fundamental rights.

- If third parties are affected by the blocking measures, they are free to institute third-party proceedings to contest the ruling.

As noted above, the Court was aware that DNS blocking can be circumvented, as it was almost immediately after the order was issued. Further, it was reported that not all domains were covered by the order. Does the fact that such orders cannot be completely effective militate against having the jurisdiction to make them and exercising that power? The answer to the latter question was addressed by Mr. Justice Arnold in the Newzbin case as follows:

First, it seems likely that circumvention will require many users to acquire additional expertise beyond that they presently possess. Even assuming that they all have the ability to acquire such expertise, it does not follow that they will all wish to expend the time and effort required.

Secondly, evidence filed by the Studios suggests that circumvention measures are likely to lead to slower performance and lower quality downloads, at least unless users are prepared to pay for a certain service provided by a different provider. Again, it is not necessarily the case that all users will be prepared to do this. This is not merely a question of money: there is also a potential security issue with using such services.

Thirdly, it is important not to overlook the question of economics. As I have explained above, Newzbin2 members have to pay a subscription to use it to access content. They will also need to have a Usenet service. For the reasons Mr Hutty himself explains, they will commonly need to use a paid service. Thus they are not getting infringing content for free even as matters stand. If, in addition to paying for (a) a Usenet service and (b) Newzbin2, the users have to pay for (c) an additional service for circumvention purposes, then the cost differential between using Newzbin2 and using a lawful service (such as a DVD rental service) will narrow still further. This is particularly true for less active users. The smaller the cost differential, the more likely it is that at least some users will be prepared to pay a little extra to obtain material from a legitimate service.

Fourthly, I agree with counsel for the Studios that the words of Kenneth Parker J in R (on the application of British Telecommunications plc) v Secretary of State for Business, Innovation and Skills [2011] EWHC 1021 (Admin) at [232] are equally applicable here:

“It is not disputed that technical means of avoiding detection are available, for those knowledgeable and skilful enough to employ them. However, the central difficulty of this argument is that it rests upon assumptions about human behaviour. Experts can seek to establish a profile of those who engage in P2P file sharing, and their various reasons for doing so, and may then attempt to predict how these users may be likely to respond if confronted with the kind of regime that the DEA enacts. In theory, some may cease or substantially curtail their unlawful activities, substituting or not, for example, lawful downloading of music; others may simply seek other means to continue their unlawful activities, using whatever technical means are open. The final outcome is uncertain because it is notoriously difficult accurately to predict human behaviour…”

As it happens, the Studios’ evidence is that when a similar kind of order was made by an Italian court blocking access to the Pirate Bay, use of the site appears to have been markedly reduced. It is fair to observe that, as BT’s evidence points out, diverted traffic may not have been picked up by the monitoring results relied on; but there is no hard evidence of a substantial quantity of diverted traffic.

Finally, I agree with counsel for the Studios that the order would be justified even if it only prevented access to Newzbin2 by a minority of users.

Even though UK courts have the jurisdiction to grant blocking injunctions under Section 97A of the Copyright Designs and Patents Act 1988 (CDPA), the UK government is still looking for more effective or additional means to achieve the objective of blocking foreign pirate sites and services.

Bill C-11, The Copyright Modernization Act, contains a new form of liability for enablement which is intended to give rightsholders the tools needed to shut down domestic facitlitators of online infringement. However, the Bill does not contain any new right similar to what exists throughout the EU to give courts the jurisdiction to protect our domestic market by making blocking orders against foreign enablers of online file sharing.

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

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

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

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

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

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

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

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

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

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

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

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

Technological Protection Measures (aka digital locks or TPMs)

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

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

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

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

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

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

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

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

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

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

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

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

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

The Enablement Right

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

They can also do a lot more.

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

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

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

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

Statutory damages

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

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

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

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

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

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

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

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

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

The above rationale for statutory damages is still valid.

The Internet Service Provider and Search Engine Exceptions and Responsibilities

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

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

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

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

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

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

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

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

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

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

The Fair Dealing for Education Exception

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Copyright Exceptions to Encourage Innovation

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

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

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

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

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

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

Conclusion

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

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

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

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

[5] Section 38.1(6)(d)

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

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

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

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

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

MP Dean Del Mastro led off by introducing Minister Moore. In doing so, he noted the importance of the cultural sector to Canadians pointing out the tremendous opportunities available to Canadians. He also noted that “no one understands the dynamics of the cultural industries better than Minister Moore”.

Minister Moore started his remarks by highlighting the importance of the cultural industries to Canada. He pointed out that these industries are a massive generator of economic wealth and social well being for Canadians. These industries contribution to the GDP and jobs are larger than many of Canada’s traditional bricks and mortar and resource based industries.

The Heritage Minister expressed the clear intent to move ahead with reforming Canada’s copyright laws in the fall “hitting the ground running” and by re-introducing Bill C-32. “We plan to reintroduce Bill C-32 when we come back in the fall. We don’t want to lose the momentum.”

Minister Moore expressed the importance of getting copyright reform and policies related to copyright right. He noted that Canada has lagged on copyright modernization calling our current laws “laughable and an embarrassment internationally”. He said we can’t let the status quo continue.

He stated that Canada needs to be in the “vanguard” protecting IP. We should “lead the world” and be “a leader not a follower” to ensure that our creative industries can grow and thrive. “I don’t want Canada’s cultural industries to become just a hobby. It’s a business and should be.” He stated that copyright reform should not be a partisan issue as “we all have a responsibility to protect this country’s economy”.

Minister Moore explained that after Bill C-61 died, the government took the time through the consultation process to think about how Bill C-61 could be improved. That process resulted in Bill C-32. He admitted that Bill C-32 wasn’t perfect and didn’t satisfy everyone. He went on though to express the view that C-32 was “balanced” and that no legislation as complicated as copyright will satisfy everyone.

The Heritage Minister made clear his desire to move forward with copyright reform with the goal of “nailing it” to “get it right”. He emphasized the role of government is to create permission based marketplace rules to ensure than creativity can be protected “so that it can’t be stolen or given away to friends”.

The Minister stated that there would be technical fixes to the Bill. However, he signaled that key provisions in the Bill would not be watered down in order to “compromise with those who think theft is freedom.” “We need to make piracy and theft illegal in Canada and that’s what we are going to do.”

He pointed out that “those who want to steal from you without permission” are “wrong and we’re not going to tolerate it.” “Theft in the name of creativity isn’t creativity, it’s theft.”

Minister Moore went on to observe that the copyright reform should be an ongoing process. The next bill will only be the “beginning of something very important”. The 5 year mandatory review built into the Bill will set an “expectation for all future governments to pay attention on an ongoing basis” forcing them to “stay engaged, be on the cutting edge.”

Minister Moore made some other comments about the government’s plans for copyright reform earlier this week in a CBC interview on “Q” with Jian Ghomeshi.

In the interview, he also spoke about the need to get copyright reform right:

Expectations are up much higher, so you really have to nail it. There’s no excuses now. You really have to nail it. I think of the big legislative effort that we had in the last parliament from my portfolio which we’re going to be tackling again this fall. Copyright reform – we want to get that right. It is absolutely essential. You know, Canada – one of the things that we do best in the world is intellectual property, which is to say arts and culture, music and television, the video game industry, audio visual production and all that. Intellectual property and intellectual development is what we do best in the world and yet we have an intellectual property regime in Canada that is bush league and it needs to be improved. We have legislation to do that and we’re going to be tackling that very aggressively.

He also emphasized the importance of the creative industries to Canada’s economy and why copyright reform is so essential to setting the right framework to enabling Canadians to succeed in a very competitive global marketplace.

Arts and culture does represent over 46 billion dollars in the Canadian economy. It’s over 640,000 jobs in the Canadian economy which is to say it’s 3 times the size of Canada’s insurance industry, twice the size of Canada’s forest industry. To invest in arts and culture and to support the creative economy is to support the economy as a whole. A lot of the things Canada used to do incredibly well in manufacturing and in our other traditional industries that others are now catching up with us and surpassing us – economies that we didn’t think would but certainly are. China, Japan, South Korea and other countries. What Canada still does better – better than anyone else in the world – is intellectual property, which is to say music, performing arts, theatre, television show and film. We do those things better than anybody else. We need to make sure that the regime of policies that the government has, not just funding, but copyright legislation, investments, support, drawing in the private sector to make sure there’s a steady base of support for culture that doesn’t just come from taxpayers. All of these things have to be working together in concert to make sure that Canada leads the world.

When can we expect our new bill to be in force? According to MP Dean Del Mastro, the goal is to give Canadians an in force bill by Christmas. Now that’s a stocking stuffer!

This week Heritage Minister James Moore also said he’s hoping for the amendments to the Copyright Act to pass by Christmas. According to the Globe and Mail, Minister Moore told The Canadian Press in an interview that the Conservative government will re-introduce Bill C-32 this fall, without amendments. The new Bill will go back to a legislative committee for review. Stakeholders who appeared before the previous legislative committee won’t be asked re-appear. According to the Globe, Minister Moore said:

“We’ve taken a couple runs at it before in minority Parliaments, but we think that we have a very good formula with the old Bill C-32 and when we come forward with our legislative agenda this fall we want to pick up where we left off, which is to continue the study of the legislation,”…

“This is long overdue in Canada. We did so much consultation, so much preparation, there was such a depth of understanding of the legislation that we tabled that we want to continue the study of that legislation.”

The UK Government also simultaneously published a series of  other reports including: Next steps for implementation of the Digital Economy Act, “Site blocking” to reduce online copyright infringement, Draft-Sharing-of-Costs statutory-instrument, Impact Assessment for the Sharing of Costs Statutory Instrument, Digital Economy Act Appeals Process: Options for reducing costs, International Strategy, and IP Crime Strategy.

The Government response makes it clear that intellectual property is of fundamental importance to economic growth, and that maximising its contribution relies on both enabling use of intellectual property and protecting it. The Government endorsed the Review’s view that it must  “not put our hugely important creative industries – or  any other IP-led business sector – at risk by what we do.  Managing that risk includes not only responding effectively to the challenges posed by technology, such as issues around enforcement of IP rights, but also seizing the opportunities for  growth that technology opens up.”

Several important plans are to:

• Bring forward proposals for an orphan works scheme that allows for both commercial and cultural uses of orphan works, subject to satisfactory safeguards for the interests of both owners of ‘orphan rights’ and rights holders who could suffer from unfair competition from an orphan works scheme.
• Bring forward proposals for extended collective licensing to benefit sectors that choose to adopt it, and look to maximise the benefits it could bring to smaller creative firms and individual creators in particular.
• Create “a limited private copying exception”; to widen the exception for noncommercial research, which should also cover both text- and data-mining to the extent permissible under EU law; to widen the exception for library archiving; and to introduce an exception for parody. These will be implemented “in ways that do not prejudice the provision of appropriate incentives for creation of works through the copyright system”.  No private copying levies are contemplated.

Following the successful defence of the Digital Economy Act provisions in judicial review, the Government is moving forward with the DEA initial obligations including plans to move ahead with the DEA notification system.

The Government decided not to bring forward regulations on site blocking under the DEA, at this time. Contrary to what has been widely reported, Ofcom did not rule out site blocking in the future and the Government stated it was “keen to explore the issues raised by Ofcom’s report and will be doing more work on what measures can be pursued to tackle online copyright infringement.”

Ofcom’s report concluded that blocking of infringing sites could potentially play a role in tackling online copyright infringement, but that the approach set out in the DEA was unlikely to be effective because the slow speed that would be expected from a full court process would provide site operators with the opportunity to change the location of the site long before any injunction could come into force. The Government noted that Section 17 and 18 of the DEA would not be faster than what is already available under section 97A of the UK CDPA. This process, which is required under Article 8(3) of the EU Copyright Directive, was just successfully used to obtain an order against BT to block access to the Newzbin file sharing web site in Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc [2011] EWHC 1981 (Ch) (28 July 2011) (summarized here).

The Government canvassed additional measures that could be used to block access to content besides those contemplated by sections 17 and 18 of the DEA. It concluded that additional effective measures include those available under section 97A of the UK CDPA, notice and takedown, domain seizures, squeezing site revenues, and search engine delisting.

According to the Ofcom report: Site blocking” to reduce online copyright infringement, the following additional processes are available:

Blocking injunctions: section 97A of the Copyright Designs and Patents Act 1988 (CDPA) gives the Court power to grant an injunction against a service provider “where that service provider has actual knowledge of another person using their service to infringe copyright.” Such an injunction exists in addition to the power of the Court to grant an injunction in the context of an action for breach of copyright by a particular person.

Notice and take-down: where content is hosted in the UK copyright owners may ask the hosting service provider to take down the content at source. Where this happens the service provider can review the material and take its own view as to whether the content is infringing. YouTube offers a particularly interesting model of this. Where copyright owners identify content which they believe to be infringing, YouTube offers them tools to allow for the content to be taken down or actually monetised. The copyright owner can take a share of the advertising revenue on the page or use the page to promote the copyright owner’s own videos on YouTube. If the service provider chooses to remove the content then the party who has posted the content will typically be informed and given the opportunity to challenge the decision, with access to the content being re-instated if the service provider is persuaded that it is not infringing.

Under US law, there is a formal legal process for such a scheme, operated under the Digital Millennium Copyright Act (DMCA). Service providers are provided with a safe-harbour, which grants them immunity from prosecution (under secondary infringement rules) where they operate within a specific framework in considering requests from copyright owners to block access to sites or to remove content where they are hosting it….

A notice and take-down scheme could provide a valuable complement to a technical blocking measure, essentially offering the service provider the opportunity to remove the content in question prior to a formal block being put in place. The opportunity for the site operator to remove infringing content ahead of a block being implemented could be helpful where the blocking technique carried a risk of over blocking. In this context, it is worth noting that the Italian communications regulator (AGCOM) is consulting on proposals for regulated notice and take-down scheme under which the regulator would have powers to require service providers to remove infringing content. That the removal of content was at the request of the regulator would, we assume, protect the service provider from liability.

De-listing from search index: some search engines, most notably Google, will de-list particular sites following the submission of evidence from a copyright owner that the site is infringing copyright. Application to de-list is submitted to Google via post or fax. Google will attempt to contact the site hosting the alleged infringing content and provide them with an opportunity to engage in the process before Google reaches its decision. De-listing can be an effective measure in so far as it makes it more difficult for users to find unlawful sites and it makes it easier to locate lawful alternatives, as they will appear higher on the search rankings than would otherwise be the case.

De-listing of infringing sites could increase the effectiveness of a blocking scheme. Whilst the operator of a site which has been blocked can move the site to an alternative IP address, URL or domain, if it cannot secure a listing for the new location on search engines then it will prove harder for users to find it and for the operator to effectively re-build its business.

Squeeze revenues: infringing sites can often appear legitimate to users and some are alleged to be successful at generating significant revenues. Some infringing sites charge a subscription fee, carry banner advertising for legitimate brands and often look more attractive to consumers than their lawful alternatives. It can be difficult for a consumer to know whether the site is indeed infringing. Many brand owners are unaware that their adverts are appearing on such sites until it is brought to their attention by copyright owners. Copyright owners have reported some success in persuading those brands to instruct their advertising agencies to withdraw ads from such sites. Similarly, credit card companies are reported by copyright owners as having been put under pressure to withdraw payment platform services from such sites. In addition to helping make the service appear less legitimate, the removal of payment platform services and advertising may make such sites less attractive to operate given the costs of bandwidth and storage required for operation, as well as the inconvenience caused by the disruption and from having to secure alternative payment platform services.

Domain seizures: a recent development in the U.S. has been the seizure of websites which were allegedly illegally streaming live content. In February, the U.S. Immigration and Customs and Enforcement (ICE) department executed a federal Court order in the Southern District of New York, seizing 10 websites. The websites were streaming coverage of National Football League, National Basketball Association and National Hockey League events. ICE has said publicly that further seizures will occur. Visitors to those sites were redirected to a banner advising that the domain name had been seized by the New York office of ICE because of criminal copyright violations. There may be a greater attraction to domain seizures in the US than would be the case in the UK, given that there are more significant domain registries with the US jurisdiction. We believe that such a measure, if implemented in the UK, would only be capable of a limited effect, given that it would only affect domains using “.uk” country code top-level domains. Site operators can respond to a seizure by registering their site in a different country. Whilst this is an inconvenience, it is not a significant barrier to the operation of unlawful sites. The approach could be made more effective through improved international cooperation amongst enforcement agencies, limiting the number of countries to which those subject to seizure orders can switch.

The Ofcom report concluded:

We believe that the measures outlined above could potentially play a role in support of a site blocking scheme, complementing the more technical approaches and, in some cases, helping to compensate for weaknesses inherent in the blocking techniques. A bill has been introduced in the US which would see many of these measures adopted to help the enforcement agencies and copyright owners to tackle infringing web sites based outside of the US. It is too early to predict the outcome for that proposal, but we believe there is value in considering further how such measures could be deployed to enhance the effectiveness of site blocking within the UK.