Rethinking notice and notice after C-32 (now C-11)

Canada’s last three copyright bills, C-60, C-61 and C-32, attempted to curb illegal online file sharing by requiring ISPs to forward notices of claimed infringements to customers. Canada’s ISPs had advocated for this “notice and notice” process claiming it was effective. However, they never produced any empirical evidence or studies to back up their claims.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notice no Households %
1 70,000.00
2 20,000.00 28.6%
3 5,714.29 28.6%
4 1,632.65 28.6%
5 466.47 28.6%
6 133.28 28.6%

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

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

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

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

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

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

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

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

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

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

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

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

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

For more information about the Copyright Modernization Act or Bill C-11 or copyright reform, see Change and the Copyright Modernization Act.

*Note blog amended April 4, 2011.

[1] Counterfactual reasoning is a method for evaluating claims of causation by exploring what might have happened had the causal event not occurred. Such reasoning is a common test of the validity of claims in the social sciences and in historical studies. Oxford University press,  For examples of the use of counterfactual analysis in the copyright context, see, Matthew Sag, The Google Book Settlement And The Fair Use Counterfactual, 55 N.Y.L. SCH. L. REV., David Blackburn On-Line Piracy and recorded Music Sales, Seung-Hyun Hong, Measuring the Effect of Digital technology on the Sales of Copyrighted Goods: Evidence from Napster,, Alejandro Zentner Measuring the effect of Online Music piracy of Music Sales,, Alejandro Zentner Ten Years of Files Sharing and Its Effect on International Physical and Digital Music Sales, SSRN-id1792634,

[2] Olivier Bomsel and Heritiana Ranaivoson entitled “Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response”, Review of Economic Research on Copyright Issues, 2009, vol. 6(2), pp.13-29.

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