In the decade of lobbying leading up to the reform of Canadian copyright law in 2012, copyright lobby groups had one core message: Canada needed to implement and ratify the World Intellectual Property Organization’s Internet treaties. While many education, consumer, and business groups expressed concern that the digital lock rules in the treaties would harm innovation, the industry was insistent that the treaties represented an essential component of digital copyright reform.
My op-ed for the Hill Times notes that the lobbying campaign was successful as Canada proceeded to implement and ratify the treaties. The legislation is still relatively new, but in a stunning reversal, one of the leading lobby groups now says that the drafters of the WIPO Internet Treaties were just guessing and suggests that they guessed wrong.
The intensity of the lobbying for the WIPO Internet treaties is difficult to overstate. For years, the industry emphasized the importance of the treaties as the baseline starting point for reform. But in a speech to the Economic Club of Canada last month, Music Canada President Graham Henderson acknowledged that “the people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing.”
Henderson proceeded to make the case that the drafters guessed wrong, arguing that “everything would come down to the question of balance” and that “very quickly, fissures began to appear” with benefits to intermediaries and losses to creators. This led Henderson to claim that there is a “value gap”, which he defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”
The criticism of the WIPO Internet treaties raises several issues.
It is striking to see Henderson now talk about the need for balance in the treaties since that is exactly what educators, librarians, consumer groups, and many innovative businesses argued in 2010 when the reform bill was introduced. Simply put, there was no balance in the bill’s digital lock provisions, which remain among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world.
While Canadians can freely exercise their fair dealing rights in the analog world, the 2012 reforms went far beyond the WIPO treaty requirements by creating unnecessary restrictions on fair dealing in the digital environment. This creates a “fair dealing gap”, where there is a gross mismatch between user rights in the analog world and the digital world. The fair dealing gap should be addressed in 2017 by establishing a long overdue fair dealing exception for the digital lock rules.
Second, claims that the treaties led to an unfair balance favouring technology companies simply does not apply in Canada (if anywhere). Canada did not implement the U.S. DMCA notice-and-takedown system nor grant safe harbours from liability in 1998. The 2012 Canadian reforms include some safe harbours, but not before the industry received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules.
Further, the government also gave the music industry a copyright term extension for sound recordings in 2015 with little public debate or consultation. In other words, claims that “policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy”, as stated by Henderson, is not reflective of the Canadian experience.
Third, unlike the fair dealing gap which is the result of legislative reform, the so-called “value gap” has nothing to do with legislative change. Industry frustration with payments for streaming services are not a function of the law, but rather based on revenue sharing from advertising.
Some may wish to paint the Canadian and U.S. digital copyright experiences as the same, but the reality is that they are very different. Canada did not enact the U.S. rules in 1998. Rather, it ultimately gave the industry what it asked for, implementing and ratifying the WIPO Internet treaties in an overly restrictive manner that created a fair dealing gap that persists to this day.
If Canada is to re-examine the decision to ratify those treaties on the basis that it was all just a wrong guess, the starting point would be to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law.
The post Canadian Copyright Reform Requires Fix to the Fair Dealing Gap appeared first on Michael Geist.
Upon Further Review, the Ruling Should Stand: Why the CRTC Made the Right Call on the Super Bowl Simsub Ban
The CRTC’s 2015 decision to ban simultaneous substitution from the Super Bowl broadcast starting in February 2017 has generated renewed criticism in recent days as the NFL, Bell, and the U.S. government launch a lobbying blitz against the decision that will take effect with this season’s game. The league, broadcaster and their supporters argue that the inability to block the U.S. feed will mean lost revenue for the Canadian broadcaster and presumably reduced licensing revenue in the future for the NFL as the Canadian rights may be viewed as less valuable.
Despite claims about damage to Canadian broadcasting, the ban on simultaneous substitution for the Super Bowl does not eliminate the ability of the Canadian broadcaster to air its own commercials. In fact, the use of simultaneous substitution for the Super Bowl is an outlier when compared to the broadcast of most other major sporting events in Canada. Whether the Stanley Cup finals, the World Series, the Olympics, or the World Cup, Canadians typically have access to both Canadian and U.S. feeds. Canadians often opt for the Canadian version, perhaps because they like the commentators or the Canadian-oriented coverage. No one suggests that Canadian access to the Stanley Cup finals on NBC or the World Series on Fox (Sportsnet uses the international feed and many commented this year that they preferred that version that included Buck Martinez on colour commentary) eradicates rights or eliminates the ability for a Canadian broadcaster to successfully air the same event.
With the elimination of simultaneous substitution, Canadians will have a choice between the U.S. and Canadian feeds. If the two are identical, some will likely opt for the U.S. feed to view the U.S. commercials. If Bell uses the opportunity to compete with local content, many may prefer the Canadian feed. Regardless, Canadian advertisers are not blocked from advertising during the Super Bowl and the predicted revenue losses are purely speculative since no one knows the impact on ratings. Critics contend that relatively few people have filed official complaints about simultaneous substitution of the Super Bowl. But if they are correct that few Canadians truly care, most will watch the Canadian feed with limited impact on domestic television ratings. However, if many Canadians opt for the U.S. feed, that will signal that many more were unhappy with simultaneous substitution, preferring greater choice.
Suggestions that the U.S. may lodge a trade complaint over the issue are rather remarkable given that the U.S. spent years lobbying against simultaneous substitution. There is little chance the U.S. will now argue that Canada must impose Canadian commercials over a U.S. broadcast. With respect to the value on NFL rights, that too is speculative given the enormous interest in the NFL and the active competition between sports networks for television rights. If Bell no longer wants the Super Bowl without simultaneous substitution, Rogers would presumably be happy to scoop up the rights.
The real concern for some in the Canadian broadcasting world is the fear that this marks the beginning of the end of simultaneous substitution. Yet the end of simultaneous substitution started years ago. The growth of specialty channels, which now represent a far bigger slice of the broadcasting revenue pie than conventional channels, heralded the decreasing importance of simultaneous substitution with fewer programs substituted and subscription revenue surpassing conventional television advertising revenue. Moreover, consumers gaining increasing control over what they watch and when they watch it contribute to its declining importance. Recording television shows or watching them on demand eliminates the simultaneous substitution issue. Sports leagues now package their seasons for full streaming (including NFL GamePass) and many watch streamed versions of shows directly from broadcasters or through services like Netflix and CraveTV.
Not only has the relevance of simultaneous substitution declined in recent years, but the policy has arguably harmed the long-term success of the Canadian system. It effectively trades some additional revenue for loss of control over the Canadian programming schedule and turns the Canadian system into a country-wide U.S. affiliate with hundreds of millions of dollars spent on the rights to non-Canadian programming. The CRTC recognized that eliminating simultaneous substitution altogether would still create a shock to the system. Limiting the elimination to the Super Bowl has the practical benefit of starting to move the industry off the addiction to U.S. programming and toward competition rather than regulatory protection.
The CRTC faces no shortage of criticism, but in this instance it is doing exactly what it said it would: “placing Canadians at the centre of the communication system.” The criticism over the decision boils down to broadcasters arguing that Canadians should not be able to see what they want during the broadcast because doing so might hurt their bottom lines. That is not placing Canadians at the centre of the broadcast system, which the CRTC has tried to do with its decision on Super Bowl broadcasts.
The Supreme Court of Canada heard arguments in Google v. Equustek Solutions, a hugely important Internet case with implications for Internet jurisdiction and free speech online. I wrote about the lower court and appellate court decisions and I have a forthcoming piece in the Communications of the ACM on the case. I attended yesterday’s hearing and live tweeted some of the main exchanges between counsel and the court. As my final tweet of the hearing indicated, I have no idea where the court is heading in this case. A storified version of my hearing tweets is posted below.[View the story “Google v. Equustek: The Supreme Court of Canada Hearing on Internet Jurisdiction & Free Speech” on Storify]
The post Google v. Equustek: The SCC Hearing on Internet Jurisdiction and Free Speech appeared first on Michael Geist.
MyDemocracy.ca Responses Don’t Count If You Refuse To Disclose Household Income and Other Personal Information
The government’s MyDemocracy.ca survey/consultation/questionnaire launched yesterday to a steady stream of criticism as the initiative does not follow the typical consultative approach. Rather than asking direct questions about public electoral preferences, there are a series of questions on “values, preferences, and priorities” that are supposedly designed to discern user preferences. The questions focus on representation, parties, and voting rules (there are several questions on electronic voting that ask if there is support even if the systems are less secure).
You do not need to provide your name to use MyDemocracy.ca. However, you will be asked to complete a profile about yourself. You may be asked to provide us with your gender, year of birth, level of education, household income, and other demographic information. The purpose for collecting this information is for Vox Pop Labs to ensure that the overall results of the study are representative of the Canadian population. While answering the profile questions is optional, not answering these questions will result in your input not being included as part of the overall results of the study. [emphasis added]
The demographic information may or may not be personally identifiable. For Canadians in large communities, it may be difficult to identify a particular person. For those from smaller communities, the combination of postal code, profession, education, gender, age, language, and possible identification with certain groups could be enough to identify a specific person. Regardless, it is inappropriate for a government-backed consultation to require Canadians to provide detailed demographic information in order for their opinions to actually count.
You do not need to provide your name to use MyDemocracy.ca. However, you will be asked to complete a profile about yourself. You may be asked to provide us with your gender, year of birth, level of education, household income, and other demographic information. The purpose for collecting this information is for Vox Pop Labs to ensure that the overall results of the study are representative of the Canadian population by weighting the data against population data such as the census. While answering the profile questions is optional, not answering these questions will result in your input not being included as part of the weighted results of the study. Aggregate statistics for all responses will still be included in the final report.
Music Canada Reverses on Years of Copyright Lobbying: Now Says WIPO Internet Treaties Were Wrong Guess
In the decade of lobbying leading up to the reform of Canadian copyright law in 2012, the music industry had one core message: Canada needed to implement and ratify the World Intellectual Property Organization’s Internet treaties. While many education, consumer, and business groups expressed concern that the digital lock rules in the treaties would harm innovation, the music industry was insistent that the WIPO Internet treaties represented an essential component of digital copyright reform. The lobbying campaign was successful as Canada proceeded to implement and ratify the treaties. The legislation is still relatively new, but in a stunning reversal, the head of Music Canada now says that the drafters of the WIPO Internet Treaties were just guessing and suggests that they guessed wrong.
The intensity of the lobbying for the WIPO Internet treaties is difficult to overstate. In 2004, Billboard reported that 26 Canadian industry groups were pressuring the government to ratify the treaties. In 2006, Graham Henderson, president of the Canadian Recording Industry Association (later Music Canada), wrote an op-ed in the National Post titled “Protect Artists: Reform Canada’s Copyright Laws” which argued that:
That’s why adopting the World Intellectual Property Organization (WIPO) treaties into law, something Canada committed to do nearly a decade ago, is so important. WIPO is about providing appropriate protections for intellectual property in the Internet age. Adopting it as part of the Canadian Copyright Act will allow musicians to freely give away their music as a promotional device if they – along with their financial backers – feel it is in their best interests. However, for artists who want to be paid for their time and hard work, WIPO legislation will protect their right to keep people from taking their music without compensation.
As the government was preparing to introduce copyright reform in 2010, Henderson told the Standing Committee on Canadian Heritage:
I would argue that to simply, as a very baseline, implement the intellectual property treaties as contemplated by, for example, Bill C-61, or before that Bill C-60, would be the first step on that road.
Once the bill was introduced, Henderson urged its passage, telling the Senate committee studying the bill that the approach was just what the creative sector needed:
In concluding, Bill C-11 has been drafted, in my view, to meet the government’s objectives of protecting the creative industries, combatting piracy, and encouraging productivity and innovation in Canada’s vital creative sector.
After it was enacted, Henderson again focused on the WIPO Internet treaties in congratulating the government:
We commend the government and Canadian Heritage Minister James Moore in particular, for their tenacity in pursuing a modern copyright framework and legislation that will enable Canada to ratify the World Intellectual Property Organization Internet Treaties.
Given the unqualified support for years for the WIPO Internet treaties, reversing course is simply shocking. In a speech to the Economic Club of Canada last month, Henderson characterized the creation of the WIPO Internet Treaties in the following way:
The people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing. Now there is nothing wrong with guessing. We all make educated guesses on which we base our actions. But the beauty of our world is that with the passage of time and the accumulation of experience, we have the luxury of reassessing our situation, and adapting our behaviours when those first guesses clearly turn out to have been ill-founded. We have now had 20 years of experience with those early WIPO guesses. How are we doing?
The remainder of the speech tries to make the case that the drafters guessed wrong. Henderson may have spent years lobbying for the treaties, but he now argues that “everything would come down to the question of balance” and that “very quickly, fissures began to appear” with benefits to intermediaries and losses to creators. All of this leads to the claim that there is a “value gap”, which he defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”
The decision to criticize the WIPO Internet treaties raises several issues. First, it is striking to see Henderson now talk about the need for balance in implementing the treaties. That is exactly what educators, librarians, consumer groups, and many innovative businesses argued in 2010 when the reform bill was introduced. Simply put, there was little balance in the bill’s digital lock provisions, which remain among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world. This was recognized during the committee review of the bill as the Liberals supported an amendment to expand the digital lock exceptions to cover circumventions for all lawful purposes. Liberal MP Geoff Regan (now Speaker of the House) noted that “what the government seems to want to do is preserve old models and ignore the fact that we have moved into a digital world.” Regan cited comments from software developers, librarians and archivists who all warned of the dangers of overly restrictive digital lock rules.
While Canadians can freely exercise their fair dealing rights in the analog world, the 2012 reforms went far beyond the WIPO treaty requirements by creating unnecessary restrictions on fair dealing in the digital environment. To borrow Henderson’s phrase, this creates a “fair dealing gap”, where there is a gross mismatch between user rights in the analog world and the digital world. The fair dealing gap should be addressed in 2017 by creating a long overdue fair dealing exception for the digital lock rules.
Second, the claims that the WIPO Internet treaties led to an unfair balance favouring technology companies simply does not apply in Canada (if anywhere). Canada is not the United States. We did not implement the DMCA notice-and-takedown system nor grant safe harbours from liability in 1998. The Supreme Court of Canada ruled on ISP liability in 2004 in SOCAN v. CAIP, but that decision was not based on digital copyright reforms. The 2012 reforms include some safe harbours, but not before the industry and creators received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules. In 2015, the government also gave the music industry a copyright term extension for sound recordings with little public debate or consultation. In other words, Henderson’s claim that “policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy” is not reflective of the Canadian experience.
Third, unlike the fair dealing gap which is the result of legislative reform, the so-called “value gap” has nothing to do with legislative change. The industry frustration with payments for streaming services are not a function of the law, but rather based on revenue sharing from advertising. The concern with revenues from Internet advertising are not limited to music – just ask the newspaper industry – but reflect growth of the business, not a problem with the law. The industry is also concerned with a Copyright Board ruling on Tariff 8, but that case is before the federal courts and reflects the decision of the Board, not legal reforms.
Music Canada may wish to paint the Canadian and U.S. digital experiences as the same, but the reality is that they are different. Canada did not enact the DMCA in 1998 nor create the quid pro quo that is suggested in Henderson’s speech. Rather, it gave Music Canada what it asked for, implementing and ratifying the WIPO Internet treaties in an overly restrictive manner that created a fair dealing gap that persists to this day. If the industry wishes to re-examine the decision to ratify those treaties on the basis that it was all just a wrong guess, the starting point would be to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law.
The post Music Canada Reverses on Years of Copyright Lobbying: Now Says WIPO Internet Treaties Were Wrong Guess appeared first on Michael Geist.
Canadian Heritage Minister Mélanie Joly launched her surprise national consultation on Canadian content in a digital world last April with considerable excitement for the possibilities of revolutionizing policies born in an analog era. Joly spoke enthusiastically about the potential for Canadian creators to use digital networks to reach global audiences and for all stakeholders to rethink the cultural policy toolkit.
My Globe and Mail op-ed notes that submissions to the consultation closed last week and despite the hope for new, innovative thinking, many of Canada’s largest cultural groups placed their bets on extending a myriad of funding mechanisms to the Internet. Rather than overhauling older programs, the groups want those policies expanded by mandating new fees, costs or taxes on Internet services, Internet service providers, Internet advertisers, and even the sale of digital storage devices such as USB keys and hard drives.
Netflix is the top target, as the streaming giant is on the receiving end of demands to extend sales taxes and implement a Cancon contribution tax on foreign online video providers. For its part, Netflix highlighted its investment in Cancon in its submission, noting that Canada is now one of the top three locations worldwide for its commissioned original productions and pointing to dozens of Canadian programs that it has licensed or helped finance.
Yet groups such as ACTRA, the Writers Guild of Canada, the Canadian Media Producers Association, and the Directors Guild of Canada remain unconvinced, arguing that the government should require Netflix to contribute a percentage of its revenues toward the creation of Canadian content.
If implemented, such a Netflix tax could have far reaching effects. For example, ACTRA recommends that any online video service that distributes broadcast content with more than 2,000 subscribers be required to contribute 5 per cent of its gross revenue toward independent Cancon creation funds. The proposal could mean that many services block Canadian subscribers to avoid the mandated payments, resulting in decreased online video competition in Canada. In fact, the Directors Guild of Canada wants even more, running into the hundreds of millions of dollars annually.
The rumoured demands for a new tax on Internet access also surfaces with many submissions calling for a new requirement on ISPs to contribute a portion of their revenues for Cancon creation. Groups play down the impact on the affordability of Internet access, with the WGC arguing that an additional 5 per cent cost on Internet services is “minor, bordering on insignificant for virtually all Canadian consumers.” Recent CRTC data reported that Internet access revenues was nearly $10 billion last year, suggesting that an Internet access tax could cost consumers at least $500 million annually.
Not only are new digital services the target of new tax proposals, but ACTRA also supports extending the private copying levy, whose origins date back to the cassette tape, to newer digital storage devices. The creation of an iPod tax was roundly rejected several years ago, yet the group asks Joly to apply the fees to iPods, USB keys, and hard drives when it next reforms the Copyright Act.
Joly opened the consultation by saying that “for a long time, politicians have been afraid to deal with these difficult issues.” As she now faces the unenviable choice of promoting new Internet taxes over the objection of companies and consumers or implementing new export-driven policies that fall short of the expectations of cultural groups, it may be easier to comprehend why previous politicians were reluctant to re-examine longstanding Cancon policies. The full column can be accessed here.
The post Melanie Joly’s Tough Choice on Canadian Content: New Thinking or New Taxes appeared first on Michael Geist.
The Centre for International Intellectual Property Studies (CEIPI) has launched the publication of “Intellectual Property and Access to Science and Culture: Convergence or Conflict?”, exploring the relationship between intellectual property (IP) rights and the right to science and culture.
The landscape of copyright in scientific work has changed dramatically in recent years, partly as a result of the emergence of a strong critique of the privatization of scientific knowledge and publications. The issue of access to science has been raised at the UN by UN Special Rapporteur Farida Shaheed, who in 2014 noted that privatizing scientific knowledge could work against the human right "to enjoy the arts and to share in scientific advancement and its benefits" (UDHR Art. 27). She noted that, from a human rights perspective:
Copyright laws should place no limitations upon the right to science and culture, unless the State can demonstrate that the limitation pursues a legitimate aim, is compatible with the nature of this right and is strictly necessary for the promotion of general welfare in a democratic society. (20)As Shaheed notes in her introduction to Intellectual Property and Access to Science and Culture, "[a]dopting a human rights perspective on intellectual property issues is both crucial and urgent." The authors of Intellectual Property and Access to Science and Culture discuss the history, origins, and impact of Shaheed's groundbreaking reports, concluding (Christophe Geiger) that a human rights framework requires re-conceiving of copyright as a cultural right that includes a right of access.
Chapter 3 of my book, International Copyright and Access to Knowledge gives further background on copyright and science. Titled "Access to scientific knowledge," it recounts the history of international copyright in scientific works. I note that when the international copyright system was founded, scientific journal articles were placed, by default, in the public domain. This is due in large part to the efforts of Haitian diplomat, doctor, and writer Louis-Joseph Janvier, in fighting for broad and liberal access to scientific works worldwide. My chapter recounts historical debates over the question of whether copyright should apply to scientific works, and traces the transformation of the international copyright system and the narrowing of principles of access to scientific works.
The Standing Committee on Canadian Heritage wrapped up its lengthy hearing on the media and local news last week with appearances from Facebook, Google, and the Globe and Mail (I appeared before the committee last month and my opening comments and review of the discussion that followed can be found here). The high profile witnesses sparked another round of debate over the ongoing troubles in the newspaper industry with intensifying criticism of the CBC’s emphasis on digital news services, including a new opinion section and its acceptance of digital advertising, which are both viewed as direct competition for the struggling private sector alternatives.
For example, Globe and Mail publisher Phillip Crawley told the committee that the CBC is the Globe’s largest competitor in the digital ad space. He expressed concern over the inclusion of opinion, which is viewed as further encroaching on newspapers’ turf, and pointed to the BBC’s approach, which faces government-backed restrictions on accepting digital advertising on its domestic websites. The CBC criticism has emerged as a common theme for several years with many media organizations and commentators arguing that CBC should not be in the business of competing with newspapers.
The CBC responded on Monday with a letter to the committee titled “limiting access to the digital public space is not in the public interest.” The CBC argued that given the struggles of smaller papers, its online presence is more important than ever. Further, it tried to downplay the significance of its digital advertising revenue, arguing that it amounts to $25 million annually, a very small share of the total digital advertising expenditures in Canada.
It is helpful to separate two issues: the CBC competing in digital news as opposed to it competing for digital advertising dollars. While some have characterized the CBC’s role in providing digital news as an unfair, publicly-subsidized competitor to private news services that increasingly rely on paywalls and subscriptions to generate revenue, the industry’s reliance on paywalls is precisely why the CBC should be offering a free, taxpayer-backed digital alternative. An informed electorate demands that all Canadians have access to reliable news and expert opinion without regard for their ability to pay for it. In a digital world filled with paywalls and concerns about fake news, the importance of a publicly-funded, freely available, trusted media institution is greater than ever and the CBC (now backed by hundreds of millions of extra tax dollars) is ideally suited to meet that need.
While the CBC should be responding to its audience with a strong digital news service, it does not follow that it should also compete for digital advertising dollars. As noted in the CBC letter, its total digital advertising revenues are relatively small (and they are even smaller – roughly $6 million – for the online news service) so the foregone earnings will not have a material impact on the CBC. However, there is a market effect of having the CBC compete for ad dollars that affects news organizations of all sizes. This includes large players like the Globe as well as smaller, independent media for whom a loss of thousands in advertising can be significant. An ad-free online service would better justify the public investment in the public broadcaster, make for an enhanced user experience, and remove the concern that the CBC is harming private sector alternatives by competing for advertising dollars.
The government just gave the CBC a $150 million taxpayer boost – six times its annual digital ad revenue – with the promise of much more to come. It would be entirely appropriate for Minister Melanie Joly and the Standing Committee on Canadian Heritage to attach a condition to the funding that encourages a robust digital presence for the public broadcaster but mandates that the news portion of the site remain ad-free.
The post Why We Need the CBC as an Ad-Free Digital News Competitor appeared first on Michael Geist.
President-Elect Donald Trump has ended any further speculation about the future of the Trans Pacific Partnership by announcing that he plans to formally withdraw from the agreement on his first day in office. I’ve written extensively about why ratification for Canada would be a mistake and argued last week in the Globe that Canada should use the death of the TPP as an opportunity to re-examine its approach to trade agreement negotiations including working toward greater transparency, focusing on tariff reduction rather than regulations, and dropping controversial ISDS provisions.
The need for Canada to wait on the U.S. has been readily apparent for months. As currently structured, the TPP cannot take effect without the U.S. since entering into force requires ratification by at least six signatories who represent at least 85 percent of the GDP of the countries in the original deal. That provision effectively gives both the U.S. and Japan veto power. With the U.S. pulling out, the agreement will not enter into force no matter what Canada (or anyone else) does.
The central role of the U.S. in the TPP is no accident. For most TPP countries, access to the U.S. market was the primary reason for entering into the agreement and as Japanese Prime Minister Shinzo Abe said over the weekend, “the TPP would be meaningless without the United States.” Indeed, the reason Canada, Japan, and Mexico all joined the TPP talks late was that without a clear commitment from the U.S., the agreement was of limited value.
For Canada, access to the Japanese market was attractive, but this was a defensive agreement driven by fears of losing preferential Canadian access to the U.S. market. Indeed, the most vocal TPP supporters regularly pointed to the North American market as a crucial reason to support the TPP. For example, Perrin Beatty, President of the Canadian Chamber of Commerce said it would “inconceivable” for Canada to walk away from TPP if the U.S. and Mexico ratified the deal. Beatty also told the Standing Committee on International Trade that “having the deal go ahead with our NAFTA partners of Mexico and the United States in, while we remain outside, would be catastrophic for Canada.”
Similarly, Brian Kingston of the Business Council of Canada told the Standing Committee on International Trade:
“Failure to take part in a trade agreement with such important trading partners would be disastrous for Canadian companies integrated into North American supply chains. Whereas NAFTA has given Canada a leg up on global competition by building a strong North American platform, being left out of the TPP would see the erosion of that advantage to participant countries. Signing on ensures that Canada maintains strong relations with our North American partners.”
In fact, Prime Minister Justin Trudeau acknowledged last month that it would be hard for Canada to turn its back on an agreement that included the U.S.
Despite the fact that the TPP cannot take effect without the U.S., there has been some desperate commentary urging the Canadian government to move ahead with the TPP without the U.S. on board. Gerry Ritz, the Conservative MP and former Agriculture Minister says Canada doesn’t need the U.S. to be part of the TPP. Yesterday in the House of Commons he stated that “as they pull back on the TPP, there is no reason to believe that we cannot join the other six countries that are gung-ho guaranteed to move forward on it, that we cannot join them and rewrite TPP without the Americans. Let us get it done.”
Yet as Lawrence Herman noted over the summer that “a trade deal without the United States would be a vastly diminished proposition.” Canada paid a heavy price for joining for the TPP: ratification would require reforms to intellectual property laws that go beyond international requirements, limitations on cultural policies, restrictions on local regulations, and implementation of investor-state dispute settlement rules that do not even meet the CETA standard. Paying those costs without any gains from an enforceable treaty makes no sense whatsoever.
The TPP was crafted as a trade agreement with the U.S. squarely at the centre. With the U.S. out, further trade agreements in the region must go back to the drawing board, with the opportunity to remove contentious U.S. demands on IP, ISDS, and other issues. Instead, a new agreement, negotiated with the transparency that was missing from the TPP process, would open the door to increased trade without many of the regulatory demands and dispute settlement rules inserted largely at the behest of the U.S. delegation.
CETA Bill Hits 2nd Reading as Officials Admit They Haven’t Studied Financial Impact of Patent Reforms
The costs associated with the increased patent protections for pharmaceutical drugs in the trade agreement between Canada and the European Union has long been one of the most controversial elements of the deal. At least one study has pegged the cost to provincial health care at more than a billion dollars. In response to those concerns, the Conservative government promised to compensate the provinces for the increased costs. Earlier this year, when officials from Health Canada appeared before a House of Commons committee, they acknowledged that it is hard to estimate the actual cost but that they knew that the agreement would increase the costs of drugs in Canada.
Last week, Steve Verheul, the lead Canadian CETA negotiator, appeared before another House of Commons committee and was asked if the department has done any analysis on the financial impact of the extended patent protection. Remarkably, Verheul said that it has not, arguing that it is difficult to come up with a projection. In fact, when pressed on the issue, Verheul speculated that perhaps costs would not increase since Canadians already pays higher prices for pharmaceutical drugs than consumers in European countries such as the UK, France or Germany.
These comments from Canada’s lead CETA negotiations are simply bewildering.
First, the lack of study on the financial impact of a key element of the CETA highlights a crucial flaw in the government’s rosy assessments of the deal. While the government has been claiming that CETA will deliver major gains for Canadians, its own officials have not even studied some of the financial costs associated with the same agreement. A reasonable analysis of the benefits and costs of the deal would surely factor extended patent protections into the equation.
Second, these comments reinforce that the government’s implementing legislation includes patent reforms for which the costs remain an unknown. As Bill C-30, the CETA implementation bill, receives second reading today, it would appear the government cannot answer a simple question on the likely impact and cost of the bill’s patent provisions.
Third, claims that the Canadian market would not face increased prices because we already pay high prices points to a complete misunderstanding of the pharmaceutical marketplace. The large pharmaceutical companies lobbied for these changes specifically because it would extend the term of protection and keep cheaper generic alternatives off the market for an extended period of time. Canada’s already high pharmaceutical prices are reason not to extend the term of patent protection, not a justification for why there may be a limited impact on Canadian health care costs.
The post CETA Bill Hits 2nd Reading as Officials Admit They Haven’t Studied Financial Impact of Patent Reforms appeared first on Michael Geist.
The Canadian chapter of the International Institute of Communications held their annual conference in Ottawa this week, headlined on Thursday by back-to-back appearances from Canadian Heritage Minister Melanie Joly (in a question and answer session with Jennifer Ditchburn) and Innovation, Science and Economic Development Minister Navdeep Bains.
Both ministers spoke primarily about their key policy initiative, namely digital cancon (Joly) and innovation (Bains). Joly’s cancon discussion again emphasized the benefits of exports and foreign investment, but she also indicated that all policies are still on the table, including an ISP tax and efforts to bring Internet companies such as Netflix “into the system.” Joly was followed by Bains, who used his speech to sketch out the foundation of his forthcoming innovation strategy. His focus included universal, affordable Internet access and telecom competition (which raises real doubts about whether the government will approve Bell’s proposed purchase of MTS).
Both ministers noted that their public consultations are ongoing, yet the reality is that sooner or later the government will have to make some policy choices. An export-led cancon strategy that focuses on foreign participation would mesh nicely with an innovation strategy that envisions similar benefits from embracing the digital environment. However, many of Joly’s comments and the pressures from some stakeholder groups point to the prospect of new Internet fees or regulations to support the domestic industry. Should that happen, it is increasingly likely that Bains and Joly will present dramatically different visions of Canada’s digital future with policy proposals that are fundamentally incompatible with one another.
The most obvious example involves the issue of universal, affordable Internet access which pits Bains’ vision of an innovative economy that has affordable Internet access as its foundation against Joly’s potential support for an ISP tax. The two policies tug in opposite directions as Bains is looking for ways to lower Internet costs and increase access, while an ISP tax would increase costs and reduce access.
There is a similar conflict with respect to a Netflix tax or new Internet regulations designed to bring Internet companies into the system. While Joly may envision new regulations on Internet companies, Bains told the conference that “the digital economy is the economy” and extolled the benefits of Canadian IT companies becoming global players by venturing into every sector in the company. Those goals may conflict with new Canadian-specific regulations that will make it harder to attract technology companies and to keep domestic success stories at home.
In fact, the potential sources of policy conflict extend beyond new cancon tax or levy schemes:
Digital cancon and innovation strategies premised on competition and the benefits of the networked environment would offer obvious synergies. The concern, however, is that proposals that focus on ways to take money out of the Internet economy to support the cultural sector will lead to an inevitable policy collision between the two ministers.
The post Why Navdeep Bains and Melanie Joly Are on a Collision Course on Digital Policy appeared first on Michael Geist.
Donald Trump’s surprise U.S. presidential election victory promises to result in an overhaul of U.S. trade policy, including the immediate end of support for the Trans Pacific Partnership, the controversial trade pact involving 12 Pacific countries including Canada, the U.S., and Japan. While President Barack Obama held out hope that the TPP could be salvaged during the “lame duck session” of Congress that occurs immediately after the election, his administration was quickly forced to concede that the deal has become politically toxic and stands no chance of passage. Since U.S. ratification is required for it to take effect, it’s effectively dead.
My Globe and Mail column notes that the Canadian government’s view of the TPP was always difficult to discern. It was negotiated by the previous Conservative government, but Prime Minister Justin Trudeau and International Trade Minister Chrystia Freeland have been non-committal, focusing instead on TPP public consultations that are still scheduled to run until early 2017.
Their ambivalence was not a function of trade skepticism – the Liberals emerged as enthusiastic backers of the trade deal between Canada and the European Union – but rather stems from the recognition that Canadian interests in the TPP were largely defensive in nature. With agreements already in place with many TPP countries, the agreement offered at best limited benefits for Canada’s economy.
Without a TPP, much of the attention has shifted to developing a Plan B. Those discussions typically involve identifying with whom to negotiate. The list is headed by the possible renegotiation of NAFTA, implementing CETA, and shifting toward bi-lateral agreements with leading economies in Asia. Canada reached a deal with South Korea on a free trade deal in 2014 and has engaged in talks with Japan, India, and China about similar agreements.
Yet the how of negotiation may be more important than the who. The public backlash against the TPP, CETA, and other recent trade deals points to a process that leaves many feeling excluded and terms that are presented publicly for the first time as final. The real opportunity for the Canadian government is not just to explore new trade partners, but to challenge some of the longstanding assumptions about free trade agreements in order to foster greater public confidence in the outcome. The full column focuses on three issues: transparency, regulatory agreements masked as trade deals, and the need to drop ISDS provisions.
The post Death Knell for the TPP: A Chance for Real Change to Trade Policy appeared first on Michael Geist.
On 10 November 2016, Justice Barnes of the Federal Court released his decision for Blacklock’s Reporter v. Canada (A. G.), a case involving unauthorized circulation of two news articles among a handful of staff members working within the Federal Government. The articles had been legitimately obtained via an individual subscription to the site Blacklock’s Reporter, but the copyright owners claimed that the subsequent downstream uses were infringement. Justice Barnes disagreed, and declared fair dealing. “There is no question that the circulation of this news copy within the Department was done for a proper research purpose. There is also no question that the admitted scope of use was, in the circumstances, fair (para 33).”
Briefly, the two articles were read by Sandra Marsden, President of the Canada Sugar Institute, through her own subscription to Blacklock’s Reporter. She subsequently shared the content with Patrick Halley of the International Trade Policy Division of the Federal Government, who in turn passed the articles on to five other staff members. Throughout, their concern was the manner in which information provided by Marsden and Stéphanie Rubec (a government media relations officer) was used and not used, respectively.
In the eyes of the copyright owners, the sharing by Ms. Marsden, and the subsequent sharing within the department, were a violation of the terms and conditions governing the use of the news service. In the claim, Blacklock’s Reporter sought compensation, not by way of six individual subscriptions (each priced at $148), but via a department-wide site license of $17,209. At the end of the day though, Justice Barnes was more than satisfied that the discrete sharing of articles was reasonable; it was fair dealing.
The decision handed down contains a few gems. One in particular is weighty in its simplicity: “The act of reading, by itself, is an exercise that will almost always constitute fair dealing even when it is carried out solely for personal enlightenment or entertainment (para. 36).”
The decision is well-written and straightforward; it brings to mind the comments of James Grimmelmann (Professor of Law, University of Maryland) after an American appeals’ court supported the HathiTrust initiative: “The [decision] is sober, conservative, and to the point; it is the work of a court that does not think this is a hard case.” The same could be said of Justice Barnes’ work. Indeed, during the trial, Graeme C. Gordon of Loonie Politics quotes Barnes as saying, “I don’t think this case is as profound as you and others made it out to be.”
But what might be routine in the hands of Justice Barnes is scarcely so for readers. Particularly given the detailed commentary provided during the trial by Loonie Politics (Day One begins here) and the Centre for Internet Policy and Public Interest Clinic (CIPPIC’s complete summary is here). Emotions on the side of Blacklock’s Reporter ran high–a naked hostility to fair dealing is evident. While that in itself is not surprising, the degree to which the Federal Government was targeted as a private market, is.
In fairness to Blacklock’s Reporter, such action did not appear to be a part of their initial business model. When the owners put up their shingle in 2012, they did so with noble aspirations—to return to the days when “newspapers were run by journalists for citizens,” with the aim of providing serious news about the functioning of government. At the time, writing for the Tyee, Shannon Rupp observed the goal as being a return to the “old-fashioned business model [when] newspapers were part of their community and their links with the audience were authentic, involving a mutual loyalty that served to maintain readership.”
Returning to the case in hand; news of this dispute was first brought to our attention by Teresa Scassa in August when she described the extent of litigation being brought forward by the news site:
[lawsuits are pending against] a total of 7 federal government departments and agencies and 3 Crown corporations and agencies. Blacklock’s provides articles on a subscription basis only; it accuses the various defendants of having accessed copies of its articles without having subscribed to the service and in breach of their copyrights. The defendants argue that Blacklock’s “employs a pattern of writing misleading or inaccurate articles about an organization with the expectation that these articles would be accessed and shared internally.” They then allege that Blacklock’s files access to information requests to uncover details of such access and distribution in order to issue claims for damages for copyright infringement. Essentially, they contend that Blacklock’s is engaged in copyright trolling.
Justice Barnes did not address the allegation of trolling but did remark that “there are certainly some troubling aspects to Blacklock’s business practices (para. 22).” These aspects are described by Graeme C. Gordon on Day 4 of the trial:
… there were two witnesses — one from Canadian Museum of History and the other from Canadian Mortgage and Housing Corporation — who both gave testimony of their poor experiences with Blacklock’s. One of the witnesses said she felt “sort of duped into creating this situation.” She also said Koski “didn’t seem to be accepting the answers that I was giving him” and that he wrote negative articles that were “misleading” and “misrepresenting” of facts.
CIPPIC indicates that the Museum of History and the Mortgage and Housing Corporation each acquiesced to demands for a $12,000 fee rather than face a legal challenge. CIPPIC also draws attention to the unwillingness of Blacklock’s Reporter to include a comment sent by a staff member in connection to the sugar tax story, before the article was posted:
Ms. Rubec stated that she had spent hours providing a comment only to be told Blacklock’s would print that the Department had provided “no comment”, she had followed up with an email the evening prior to publication, and still the article was not updated when it went live the following morning. She testified that she had been “frustrated” by the exchange.
Justice Barnes addresses this point and adds a footnote that must not be missed: “Not withstanding Ms. Rubec’s several on-the-record responses, [the article] improperly attributed “no comment” to the Defendant. This is a practice Mr. Korski adopts when he does not accept or approve of the answers he is given from a source; see Exhibits … and confirmed by Mr. Korski’s testimony (para.9 / footnote 1).”
Returning to the dispute itself, Justice Barnes brings much-needed clarity to the manner in which terms and conditions, when unilaterally imposed upon consumers, must be interpreted:
As the drafter of [its stipulated terms and conditions], Blacklock’s is bound to the interpretation most favourable to the users of its copy which, in this case, permitted Ms. Marsden’s distribution to the Department for a non-commercial purpose, and by implication, permitted a similar use by Mr. Halley (para. 43).
In his analysis of the unauthorized use, Justice Barnes begins with the observation that fair dealing “is a well-recognized right under the Act (para. 24),” and later confirms that neither copyright owners nor copyright users are permitted to pick and choose which parts of the system of copyright they will adhere to: “Absent consent, subscribers and downstream users are subject to the obligations imposed upon them by the [Copyright] Act. But at the same time they enjoy considerable protection afforded to them under the statutory fair dealing provisions (para. 44).”
And, with what might be my favorite remark, Justice Barnes firmly rejects the all-too-often asserted claim that every use of a copyrighted work represents lost income and thus must be compensated for:
It also goes without saying that whatever business model Blacklock’s employs it is always subject to the fair dealing rights of third parties. To put it another way, Blacklock’s is not entitled to special treatment because its financial interests may be adversely affected by the fair use of its material (para 45).
Readers may be curious, as I was, about the ancestry of the Blacklock in Blacklock’s Reporter. The news site takes its name from the late Thomas H. Blacklock (1873-1934), a revered member of the press from a bygone era. His career as a journalist including writing for multiple organizations within Canada as well as covering WWI. Respected by colleagues and readers alike, he was one of Canada’s best political correspondents of the early 20th century. At the time of Blacklock’s death, Prime Minister Robert Borden recounted this story:
In one of the campaigns when Mr. Meighen and Mr. King were rivals, they engaged in long-range verbal hostilities that were rather ineffective on both sides. Blacklock became impatient and wrote to Meighen a letter which Tom afterwards showed to me. It was keenly critical of the course Meighen was pursuing; and I recall one phrase which ran something like this: ‘Please bear in mind that the people of Canada are not in the least interested in your opinion of Mr. King or in Mr. King’s opinion of you.’ Meighen took the letter in very good part; and showed it to several of his friends. …
The Right Honorable Arthur Meighen spoke at Blacklock’s funeral, saying “there would be few citizens of Canada … whose passing would leave behind so many to speak well of their life and work (The Border Cities Star, 6 August 1934).”
During the trial Blacklock’s Reporter argued that, in order to sustain its operations, it was essential to aggressively police its copyright. Be that as it may, if aggression means misrepresenting facts in order to mount a sting operation, the organization ought to consider changing to a more appropriate name, one without the baggage of ethics and civility.
Commentaries on this decision abound; see Teresa Scassa, Howard Knopf, Michael Geist, Adam Jacobs. But CIPPIC shall get the last word: “The decision represents a solid affirmation of fair dealing rights, and one that should serve to deter copyright trolls from bringing meritless claims against obvious fair dealing practices in the future.”
As Canadian Heritage Minister Melanie Joly’s consultation on Canadian content in a digital world nears its conclusion – comments are due by November 25th – the big issue remains how to pay for an ambitious culture agenda. Joly has emphasized the benefits of expanding exports, which she hopes will bring foreign dollars and more foreign investment in the sector. While a stronger global presence makes sense, many of the established cultural groups have voiced opposition to measures designed to attract greater foreign participation if it risks reducing the guaranteed Canadian role in productions.
For example, the CRTC’s decision to loosen some Cancon rules has elicited ongoing anger, despite the fact that the change would likely make productions with foreign entities more attractive, thereby enlarging the overall size of the industry in Canada. With similar opposition to market-based reforms designed to reduce dependence on the current system (pick-and-pay television channels, gradual reduction of simultaneous substitution), there is little reason to believe that Joly can count on support for expanded exports to pay the bills.
This post unpacks some of the cultural policy options that have surfaced in recent weeks. The post stems from a panel discussion at the University of Ottawa featuring a paper by Richard Stursberg and commentary from myself, the Globe’s Kate Taylor (who covered the panel here), and ACTRA’s Ferne Downey (Stursberg’s paper is here, full video of the event here).
The broad range of funding possibilities fall into three categories: (1) increased revenues that are typically allocated toward “general revenues” (ie. go to the Department of Finance) but which could be earmarked for cultural funding; (2) new tax or levy plans that would be used to support the cultural sector; (3) other sources that derive from tax or cultural policies. I argue that the general revenue approach is the preferred one, given the benefits of new funding and without the significant drawbacks of the expansion of taxes or levies. Not discussed during the panel was the expansion of tax credits, which has the benefit of rewarding actual investment in the sector.
As I noted during my remarks at the University of Ottawa panel, any discussion of increased culture funding should include the context for how much public money is already allocated toward supporting the sector. According to the CMPA, nearly $3 billion was spent on film and television production in Canada in 2014-15. That represents a $230 million increase from the prior year and $500 million more than five years earlier. The public already pays for nearly half of this through tax credits (18% of the total costs from tax credits from federal and provincial governments) and various levies and granting programs. Further, the more than $1 billion in public support does not include the hundreds of millions that goes toward supporting the public broadcaster, the music industry, publishing industry, and video game industry. In other words, Canadians already invest heavily in supporting the cultural sector through taxpayer funded grants and credits.
Notwithstanding the existing support, there is pressure from some groups for more money (interestingly, I also participated earlier this month in a panel sponsored by Telus that primarily featured artists and producers from the west who emphasized marketing and global opportunities, not more funding). There are many possible sources of new revenues beyond more global success and partnerships, but all are not created equal. The remainder of this post highlights many of the possibilities: general revenues including digital sales taxes and spectrum licensing; new levies or taxes including a Netflix tax, Internet tax, and copyright link tax; and cultural or tax policy including benefits packages, tax credits, and digital advertising tax reforms.
A. General Revenues
1. Digital Sales Taxes
If there is one form of new revenue that generates an easy consensus, it is that foreign digital services with a sizable Canadian consumer base should pay digital sales taxes such as GST or HST. These taxes should technically be paid by consumers self-reporting what they owe, but few take the time and effort to do so. If sales taxes are to be applied equally, an unequal form of collection will not work.
Instead, digital services that meet a certain threshold for Canadian revenues should collect and remit the sales taxes. There are no shortage of arguments in favour of expanding sales tax collection in this manner: it creates a level playing field (Canadian services such as CraveTV collect HST but Netflix does not), generates additional revenues, and a growing number of countries have moved in this direction. While are some enforcement challenges and questions about appropriate thresholds for collection, digital sales taxes seem inevitable. As with all revenues of general application, however, there are no guarantees that the revenues will be directed toward cultural industries.
2. Spectrum Licensing
The Canadian government generates significant revenues from licensing spectrum. According to the Ministry of Innovation, Science, and Economic Development, the government collects approximately $1 billion per year in direct revenue and another $180 million in licensing revenue. The spectrum proceeds go to general revenues. However, many have argued that the money should be re-allocated back into the network. Indeed, spectrum revenues could help pay for programs designed to ensure affordable access to Internet services for all Canadians as well as for activities on the network, including the cultural industries.
B. New Taxes or Levies
3. Netflix Tax
The imposition of a “Netflix tax” is undoubtedly the most controversial new potential tax or levy. The government is on record on the issue: no new Netflix tax. Yet notwithstanding those public statements, the prospect of millions in new revenues may be too tempting to resist (Stursberg advocates for a new contribution requirement in his paper).
Typically described as a Netflix tax, the proposals are neither limited to Netflix nor technically a tax. Rather, the Netflix tax would seek to extend the current contribution requirements on broadcast distributors to online video services such as Netflix. Supporters of the plan argue that given the growth of Netflix, the contribution requirement would generate tens of millions of dollars and help offset the likely decline in contributions from cable and satellite companies as more consumers cut the cord.
While there may be a superficial appeal to a new contribution requirement on Netflix, there are many problems with the proposal. First, online video has become a staple for a wide range of sites from giants such as Netflix to newspapers that incorporate video into their sites to independent film sites that may use YouTube to distribute their content. Identifying the limitations of a contribution program is difficult and there is a danger that the proposal quickly becomes a tax on all Internet content.
Second, conventional broadcast distributors and Netflix may look similar, but they are very different. Conventional broadcast distributors retransmit over-the-air broadcast channels at no cost, whereas Netflix licenses or creates all the content on its platform. Indeed, the contribution from broadcast distributors may reasonably be viewed as compensation for benefiting from a retransmission system at no cost for content. Netflix is very different – it pays for content and transmission, enjoying none of the benefits accorded to broadcast distributors.
Third, there are obvious enforcement concerns. Netflix and Google argued during a CRTC hearing in 2014 that their activities fall outside Canadian broadcast regulation. The laws could be changed, but not without a legal challenge over the reach of Canadian law. In fact, even if Netflix (with its many Canadian subscribers) does fall within Canada’s reach, the extension of a levy to online video providers still raises questions about which services should or could be caught by the jurisdictional net.
Fourth, the Trans Pacific Partnership is in trouble, but if Canada moves forward with the deal, it will have agreed to no limitations on access to foreign video providers and no discriminatory payment requirements. In other words, no Netflix tax.
4. ISP or Internet Tax
If a Netflix tax were not enough, there is mounting concern that Joly may be pressuring cabinet colleagues to support an Internet tax on ISPs and digital services. A levy on Internet service has long been the holy grail for the cultural industries, who argue that broadcast on the Internet is the functional equivalent of conventional broadcast and that both should face similar funding requirements. Demands for such a tax have come from cultural groups such as the Canadian Independent Music Association, which recently called for mandated contributions to support the development of Canadian content, and ADISQ, which has previously lobbied for a similar policy approach.
When asked about the issue several weeks ago on CTV’s Question Period, Joly stated:
I’ve said that we’re willing to have a conversation with digital platforms. Netflix is one of them. There are Amazons, Hulus, Apple. There are big companies that are part of our ecosystem, that are used and liked by Canadians. This is why we want to make sure that we know that they are using a large part of our spectrum that we can have a conversation with them to see how they can participate.
The comment suggests that Joly subscribes to the view that there is a parallel between conventional broadcast and the Internet that invites a similar regulatory approach. Part of the rationale for broadcast regulation is that broadcast spectrum is scarce, therefore requiring licensing and regulation. By indicating that Internet services use a “large part of our spectrum”, Joly is making the case for treating Internet services as equivalent to broadcast. Moreover, Joly speaks of the need to have a conversation with Internet services “to see how they can participate.” Services such as Hulu and Amazon’s streaming service are not even available to Canadians, but even with those services that are (such as Netflix), the notion of exploring how they can participate again assumes a regulatory approach in which offering a service leads to regulated participation in the Canadian system.
To date, the law has not supported that argument with the Supreme Court of Canada ruling in 2012 that ISPs are not “broadcast undertakings” for the purposes of the Broadcasting Act. However, Joly’s legislative overhaul could involve changing the law to allow for the imposition of new fees on Internet services.
The ISP tax would come at an enormous cost to other policy priorities. Internet access in Canada would become less affordable, expanding the digital divide by placing Internet connectivity beyond the financial reach of more low-income Canadians. The tax would be particularly damaging in indigenous communities. The increased costs would also be felt by the business community, potentially undermining the innovation strategy currently championed by Navdeep Bains, the Minister of Innovation, Science and Economic Development.
An Internet or ISP tax is largely premised on the argument that ISPs and Internet companies owe their revenues to the cultural content accessed by subscribers and they should therefore be required to contribute to the system much like broadcasters and broadcast distributors. The reality, however, is that Internet use is about far more than streaming videos or listening to music. Those are obviously popular activities, but numerous studies (CIRA, Statistics Canada) point to the fact that they are not nearly as popular as communicating through messaging and social networks, electronic commerce, Internet banking, or searching for news, weather, and other information. From the integral role of the Internet in our education system to the reliance on the Internet for health information (and increasingly tele-medicine) to the massive use of the Internet for business-to-business communications, Internet use is about far more than cultural consumption. Given its importance to virtually all aspects of modern day life, there are few policy goals more essential than ensuring that all Canadians have affordable access to the network. That goal would be badly undermined by an Internet tax that would increase consumer costs and stymie Canadian innovation.
5. Copyright Link Tax
The government is scheduled to conduct a full copyright law review in 2017, but that has not stopped some groups from pointing to copyright reform as a source of new revenues for the sector. For example, Duff Jamison of the Alberta Weekly Newspaper Association told the Standing Committee on Canadian Heritage:
I do think that copyright laws were designed before we had this mass digital distribution of content. They probably need to be reviewed and brought up to date, so that there is a means…. We put in a possible suggestion. If you click through to a journalist’s story, then at that point perhaps that journalist and the newspaper that employs him should receive a payment. There are ways to get at this.
Jamison’s comments point to a new copyright link tax. The link tax proposal, which has gained traction in Europe, speaks to the possibility of requiring compensation for merely linking to an article. Yet as the Supreme Court of Canada noted in the Crookes case involving links:
The Internet’s capacity to disseminate information has been described by this Court as “one of the great innovations of the information age” whose “use should be facilitated rather than discouraged”. Hyperlinks, in particular, are an indispensable part of its operation.…
While the Crookes case involved defamation, the Court clearly understood the importance of linking to freedom of expression. Attempts to limit linking – whether by regulation or the imposition of fees – would undermine critical freedoms.
Moreover, creating a link tax would likely mean that sites and search engines stop linking to certain kinds of content. Such an approach would hurt independent creators and others who are dependent on links to find their audiences.
C. Cultural and Tax Policy
6. Benefits Packages
An oft-overlooked source of revenue, benefits packages are created where there is a change in control/merger in the communications sector. Given the number of transactions in recent years, there is a considerable amount of money currently in the system. According to some estimates, benefits packages have already provided hundreds of millions of dollars and will provide $420 million more over the next five years. Any calculation of cultural revenues should take this source into account.
7. Expansion of Tax Credits
Tax credits are commonly used by federal and provincial governments to support the cultural industries on the premise that public support should be contingent on private investment. The value of the tax credits runs into the hundreds of millions of dollars every year. As noted above, the CMPA data indicates that last year the value of federal and provincial tax credits for film and television production was over $500 million. Tax credit programs similarly sit at the heart of support for the video game industry, where provinces compete with other jurisdictions to attract companies based on generous tax credit programs. Looking ahead, a rationalization of the tax credit system for the cultural sector is long overdue and would be provide a far better sense of the full scope of taxpayer support for the industry.
8. Digital Advertising
The Stursberg paper emphasizes the need to target digital advertising, focusing on two issues. First, he discusses applying digital sales taxes to large firms such as Google and Facebook that dominate the digital advertising space. Much like applying GST/HST to Netflix, sales taxes on digital advertising should be similarly uncontroversial. However, unlike consumer purchases such as Netflix subscriptions, digital advertising in typically a business-to-business transaction with some of those revenues offset by the GST/HST paid by the firms.
Stursberg also recommends changing the Income Tax Act by removing the availability of tax deductions for advertising through services such as Google and Facebook. Stursberg believes that removing the deduction will increase advertising on traditional Canadian-based services and sources. As I noted during the panel, I think he’s wrong and misunderstands how digital advertising works.
First, digital advertising is a function of the audience. Given that more and more people are shifting their viewing and media consumption habits from offline to digital, advertisers are unsurprisingly following their audience. A change in the tax code will not result in a shift to less effective advertising venues. Rather, it will simply make the digital advertising more expensive and leave Canadian business less competitive in the digital marketplace.
Second, digital advertising with companies such as Google typically involves a revenue share between Google and the site where the advertising appears. In other words, the advertising is on the same Canadian sites that Stursberg wants to support. That revenue goes to Google, which then sends a portion back to the site or media organization. There is a reasonable debate to be had over the dominance of Google and Facebook in the digital advertising sector, but cutting the flow of dollars to those companies will do little to actually help Canadian organizations seeking to attract digital ad dollars.
The post The Billion Dollar Question: How to Pay for Melanie Joly’s Digital Cancon Plans appeared first on Michael Geist.
Federal Court Rules Against Blacklock’s: Business Models Always Subject to Copyright Fair Dealing Rights
The Federal Court of Canada issued its much anticipated copyright decision yesterday in the lawsuit launched by Blacklock’s Reporter, an Ottawa-based online paywalled news site, against many government departments. I discussed the case in a Canadaland podcast earlier this year, highlighting some of Blacklock’s business strategies that include using the access to information system to trace the use of its articles by government subscribers and recipients of articles from third parties. Blacklock’s sued the Department of Finance for $17,209.10 over two articles that were sent to government officials from a paying subscriber concerned with comments found in the article. The articles were subsequently forwarded to several media relations personnel within the department.
The court acknowledged that there are concerns with some of Blacklock’s business practices (the government argued that it engages in copyright trolling), but concluded that it could address the case with only a fair dealing analysis. Affirming well established Supreme Court jurisprudence on fair dealing, the court emphasized that fair dealing is a user’s right that must not be interpreted restrictively. In this case, the court had little trouble finding that the department’s use of the articles qualified as fair dealing given that it was done for a proper research purpose, involved a limited distribution, the originals were obtained legally by a paying subscriber, and officials had a legitimate interest in reading the articles in order to hold Blacklock’s to account for questionable reporting.
The recognition of the right to read is particularly noteworthy:
What occurred here was no more than the simple act of reading by persons with an immediate interest in the material. The act of reading, by itself, is an exercise that will almost always constitute fair dealing even when it is carried out solely for personal enlightenment or entertainment.
While Blacklock’s tried to rely on its website terms and conditions to argue that the subscriber should not have forwarded the articles, the court ruled that it failed to ensure that subscribers were aware of the contractual limitations. More importantly, the court stated that it could not apply the terms to downstream users such as the government officials, adding “it also goes without saying that whatever business model Blacklock’s employs it is always subject to the fair dealing rights of third parties.”
Some have expressed concern that the ruling may harm paywall business models, but as the court notes:
Nothing in these reasons should however be taken as an endorsement of arguably blameworthy conduct in the form of unlawful technological breaches of a paywall, misuse of passwords or the widespread exploitation of copyrighted material to obtain a commercial or business advantage.
In other words, the foundation of a paywalled business model is not implicated by this decision. Rather, this ruling rightly applies fair dealing, consistent with the growing number of Canadian cases that have emphasized the importance of granting user’s rights a large and liberal interpretation.
Donald Trump’s stunning win of the U.S. Presidency on Tuesday night has sparked numerous articles speculating about the implications for various policies and issues. Given how little Trump said about digital policy, predictions about telecom or IP policy are little more than educated guesses. Trade policy was a major Trump issue, however, as his opposition to the Trans Pacific Partnership and vow to renegotiate NAFTA was repeated at virtually every campaign stop. Senate Majority Leader Mitch McConnell confirmed yesterday that the TPP would not be brought up for a vote this year, leaving Trump to decide on its future. Officials in other TPP countries such as Australia, New Zealand, and Malaysia have now acknowledged that the TPP is likely dead.
From a Canadian perspective, the end of the TPP should mean renewed efforts to negotiate bi-lateral trade agreements with Japan, India, and other leading Asian economies. While those agreements could result in more traditional trade agreements focused on tariff reduction, the U.S. trade relationship seems likely to be dominated by the possible renegotiation of NAFTA. No one is sure if Trump will really demand a NAFTA renegotiation, but Canadian Ambassador to the U.S. David McNaughton has already said that Canada is prepared to talk about revisiting aspects of the 1994 agreement.
If NAFTA is reopened, the U.S. will likely use the opportunity to reinsert the TPP intellectual property provisions into the agreement. NAFTA contains some IP provisions, but it is not nearly as detailed or prescriptive as today’s typical U.S. trade deal which place an enormous emphasis on exporting U.S. copyright rules, expanding patent protections, and increasing IP enforcement provisions. Consistent with those policy goals, the TPP contains IP rules that would require amendments to Canadian law, notably extension in the term of copyright, patent law changes, expanded border measure rules, criminalization of trade secret law, and trademark reforms.
The TPP may be stalled for now, but a re-opening of NAFTA would likely be used by Trump Administration to advance the same IP policies (which some in the U.S. argue do not go far enough). In other words, when it comes to IP and digital policies, a new NAFTA could become Canada’s own private TPP.
The post Trump Victory May Kill the TPP, But Reopening NAFTA Could Bring Back the Same IP Demands appeared first on Michael Geist.
Have American media helped elect a president that will contribute to the decline of press freedom? Yes, they have. Trump's presidency also may mean the end of net neutrality, the rise of internet tracking, and the rise of alt-right-wing media.
Trump has derided mainstream media and journalists as dishonest and corrupt. As Justin Peters comments, "He represents a group of people who see a strong independent press not as a necessary check on accumulated power in America but as a bothersome impediment to the accumulation of that power. And he will almost certainly use the office of the presidency to bring the press to heel." His opposition to journalists goes beyond derision and antagonism to threaten its very freedom; Trump is known for suing journalists and he has threatened to "open up" libel laws to make it easier for public figures to sue the press:
One of the things I'm going to do if I win, and I hope we do and we're certainly leading. I'm going to open up our libel laws so when they write purposely negative and horrible and false articles, we can sue them and win lots of money. We're going to open up those libel laws. So when The New York Times writes a hit piece which is a total disgrace or when The Washington Post, which is there for other reasons, writes a hit piece, we can sue them and win money instead of having no chance of winning because they're totally protected.Journalists and media outlets have only begun to ask what approach and tone they will take in their coverage of Trump. Will their approach be conventional and traditionally adversarial, or oppositional? But the threat of libel lawsuits and the decline of advertising dollars could restrict their scope of action.
Trump has opposed potential mega-media mergers while favouring alt-right media and social media. He has expressed opposition to mergers between AT&T and Time Warner, and Comcast and NBC Universal. His opposition to free trade could impact foreign (and especially Chinese) investment in Hollywood and US content producers (Lieberman). Meanwhile, alternative media like the Breitbart Report, which supported Trump, are now set to expand internationally, seeking to "monetize the anger and anti-immigrant sentiment unleashed by Donald Trump’s successful presidential campaign" (Flitter).
Trump's presidency will affect the leadership and composition of the FCC. It will mean a change of leadership, as the chair traditionally leaves office when a new President is elected. Democratic Commissioner Jessica Rosenworcel may have to step down at the end of the year if her re-nomination is not confirmed by the Republican majority Senate. The balance of power in the FCC will shift Republican (Silbey). Broadcast attorney David Oxenford has speculated that this well mean “a lessening of the regulatory burden on broadcasters" (McLane).
Trump has opposed net neutrality, siding with ISPs over Amazon, Netflix, and other services (Glaser). This could make it easier for ISPs to charge internet companies like Netflix for faster speeds. Trump's presidency could also lead to the overturning of recently-passed regulations that require ISPs to obtain explicit consent from their subscribers before selling their data to marketers (Glaser).
As on many policy issues, Trump has said little that indicates his stance on intellectual property, other than complaining about Chinese theft of American intellectual property (Standeford).
American media have contributed to the rise of a president who could change the entire landscape of media, press freedom, and the communications industry.
The government of Argentina has submitted an important proposal in current negotiations towards an international instrument on limitations and exceptions to copyright at the World Intellectual Property Organization (WIPO).
Most international treaties seek to establish minimum standards. In the case of the current WIPO negotiations, relating to exceptions and limitations to copyright for education and research institutions and persons with disabilities, this means that all countries would agree to permit a minimum set of things, such as permitting photocopying for classroom use or reproduction for classroom display.
As the Argentinian government notes, this often does not go far enough, especially in the online context, since countries invariably differ widely in their implementation of such minimum standards, and digital transactions often involve multiple country jurisdictions.
Many everyday actions done in the context of educational institutions potentially involve multiple jurisdictions, and could be legal in one jurisdiction but not in the other:
Argentina therefore proposes that "within the scope of a treaty on limitations and exceptions, lawful conduct in one territory should not be illegal in another. If reproduction or making available is valid under the treaty, it cannot then be invalid under the rules of another State jurisdiction." (p. 4). The exact wording of the proposal is as follows:
Where performed in accordance with the exceptions and limitations set forth in this agreement, the reproduction or making available of a work shall be governed by the law of the country in which the reproduction or making available occur, without precluding the reproduced work from being delivered to or used by a person or institution benefitting from exceptions and limitations located in another Member State, provided that such delivery or use is consistent with the terms and conditions set forth in this agreement. (p. 4).The Argentinian government has proposed a solution worthy of serious discussion at the WIPO meeting to be held next week.
The Senate Standing Committee on Banking, Trade and Commerce conducted two days of hearings last week on the Copyright Board of Canada. The hearings featured members from the Board, leading copyright collectives and associations, and a panel of individuals that included law professors and practitioners. Ariel Katz and Howard Knopf have already posted their opening remarks. My comments, which focused on the importance of the public interest in Copyright Board decision making and the need for greater public participation, is posted below.
Appearance before the Senate Standing Committee on Banking, Trade and Commerce, November 3, 2016
Good morning. My name is Michael Geist. I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. My area of specialty is digital policy, with an emphasis on intellectual property. I have been very active on copyright issues for many years, editing three books on Canadian copyright reform and court jurisprudence and regularly appearing before committees on the issue.
I appear today in a personal capacity representing only my own views.
There is no shortage of criticism of the Copyright Board. Indeed, in an field that is often sharply divided, disenchantment with Board is sometimes the one thing people seem able to agree on.
It seems to me that the criticism typically comes down to two issues: the substance of decisions and the way those decisions are rendered. I think this committee should pay little attention to substantive criticism of Copyright Board decisions. As former Chair of the Board Vancise noted earlier this year, criticism of the substance of decisions usually comes down to “whose ox is being gored.” In other words, if you like decision, you’re ok with the Board. If not, you think the Board is dysfunctional and in need of an overhaul.
I have been both critical and supportive of past Board decisions. I think the Board was very slow in acknowledging and implementing the copyright decisions delivered by the Supreme Court of Canada, particularly around fair dealing. That has changed in recent months, however, and the decisions are now more reflective of the court’s jurisprudence. Decisions are and will continue to be challenged, yet we should recognize that there is an established system to address appeals. Reform isn’t needed on the substance of decisions.
Contrast the substantive concerns with the administrative ones. How the Board reaches decisions, the costs involved, the timeliness of those decisions, and the ease of participation is very much a matter for review.
We have thus far seen two different initiatives aimed at identifying potential reforms. The Board itself established a working group of lawyers and experts who regularly appear before it as part of a consultation process. The process did not go far with some seemingly reluctant to criticize the Board and its processes on the record.
More recently, as you know, there have been two important studies conducted by Professors de Beer and Daly with more extensive recommendations. I think those studies are enormously valuable contributions and provide insightful recommendations on potential reforms.
From my perspective, there is unquestionably a need to develop reasonable timelines for conducting hearings and issuing decisions. At times, there may be parties that are content to “rag the puck” without any urgency on Board processes. Given the importance of Copyright Board decisions beyond the immediate parties, timeliness is crucial. We see that in many others areas – CRTC decisions for example – which provides all parties with greater certainty about timelines and reduces costs that come from long delays and retroactive application of decisions.
Yet beyond timeliness, I would like to focus on the lack of public participation in board processes.
The exclusion of the public stands in sharp contrast to the other boards, tribunals, and agencies that address issues with individual parties but whose decisions have ramifications for a far broader group of stakeholders.
For example, the CRTC and Competition Bureau have both taken steps in recent years to involve the public more directly in policy making activities, hearings, and other issues. In the CRTC’s current differential pricing hearing, being conducted this week, it found a number of ways to engage the public, including discussions on the website Reddit. All of this participation, goes into the public record, allows for better informed decision makers, and leads to greater confidence in the decisions themselves. By contrast, the Copyright Board does little to encourage public participation, despite the fact that its decisions often have an impact that extends beyond the parties before it.
When asked about accessibility and participation concerns, the board pointed to the working group as evidence that it regularly reviews its practices and compared itself to the Federal Court of Appeal, noting that “of course they [the public] don’t participate, because they don’t really belong there, per se.”
With all respect, I think the Board is wrong. The impact of its decisions extend far beyond the limited number of parties that participate in the hearing, yet it thinks its stakeholders are limited to IP lawyers and copyright collectives. Decisions have a direct impact on commercial users, on the broader public, and on our understanding of copyright law. This in turns implicates consumer pricing as well as copyright practices on issues such as fair dealing and the public domain.
Many branches of government and administrative agencies have recognized the need to engage the public and to develop better decision making processes by maximizing public participation and engagement. To date, the Board has not done so. Its processes are costly, lengthy, and for all practical purposes inaccessible to the general public. That needs to change.
I look forward to your questions.
The post The Missing Public Voice: My Comments on the Copyright Board at the Senate Banking Committee appeared first on Michael Geist.
The mantra that our cultural creators are essential to the soul of Canada is doing double duty these days. Not only is it invoked in connection to the pending copyright review, but it has provoked a public consultation regarding Canadian content in a digital world. Melanié Joly, Minister of Canadian Heritage, caught the attention of many when she publicly supported the claim that the internet is only a vehicle for consumption of culture with, as Michael Geist writes, culture being confined to “movies, television or music.”
— Mélanie Joly (@melaniejoly) October 29, 2016
It seems that on Minister Joly’s internet, worldwide networks only function in service of those industries that make an obvious contribution to GDP, be it in Canada or in another country. On her internet, there is no plethora of public domain content collected by volunteers and posted (legitimately) at Project Gutenberg or IMSLP. There is no impetus to share knowledge in the selfless manner exhibited by Sal Khan (founder of the Khan Academy) or John Page (a Silicon Valley software engineer who sought a better solution to mathematics instruction than the weighty tomes inflicted upon his son). There are no scholarly repositories, managed online, such as those pertaining to Emily Dickinson or L.M. Montgomery. There is no growing array of open-access quality-textbooks like those found at BC Campus or OpenStax. And there are no individuals who facilitate the development of creative effort by sharing well-written, well-researched, and well-curated material. Maria Popova’s site BrainPickings comes to mind; it deserves to be declared an international treasure.
Those clamouring for Canadian content do not appear to give much thought as to what goes into developing that content. Financial well-being is as far as they go. Yet creative effort does not occur by the presence of money alone. Creativity needs knowledge, awareness, skill, diligence, luck, and something that lacks capture in a single word; loosely speaking, this indefinable element is a capacity to envision that which others may not.
That aside, the insistence on the importance of Canadian content invites the question – what is Canadian content?
My current assortment of library books includes two contenders. Dal and Rice is a memoir written by Wendy M. Davis describing life in pre and post-independence India. Davis was born in England, but resides in Edmonton; as best as I can tell, the work was written in Canada. Moreover, Dal and Rice was published by McGill-Queens Press. I will tentatively say that this is Canadian content.
But I am less certain about the second book; Eleanor Wachtel’s compendium The Best of Writers & Company. I am sure it would be declared Canadian content, given the unimpeachable fact that Wachtel is a Canadian citizen by birth, and has remained here throughout the development of her admirable career. Published by Biblioasis (the regional press that commands national acclaim), the Canadian qualifications appear unassailable.
And yet, the majority of the content is the handiwork of others. The book is a compilation of the transcripts of fifteen interviews conducted by Wachtel. True, Wachtel writes the introductory text that prefaces each interview, and Wachtel shapes the dialogue by posing the questions. But it cannot be said that she wrote the responses. Those words are (presumably) the independent creation of her fifteen subjects, only three of whom are identified as Canadian (Ann Griffin, Alice Munro and Mavis Gallant).
Perhaps the hint of Canadian’ness lies in the front matter. Both books acknowledge contributions from Canadian taxpayers through the Canada Council for the Arts and the Book Publishing Industry Development Program. It sounds crass, to reduce the dialogue of Canadian letters to a matter of money, to have the temerity to ask: who paid for it? But it cannot be ignored that the patriots of Canadian content are expressly concerned with a similar question: who pays for it?
The answer, in terms of the consultation, is pointing towards a levy on the revenues of internet service providers. This mandatory contribution would be channeled towards continued development of Canadian content. In October, writing for the Financial Post, Josh Tabish of Open Media reminded all Canadians that our internet services fees are among the highest in the world. (It is no exaggeration to say that for Canadian families living in poverty, internet service already competes with food.) Three weeks later, Tabish and Denise Williams (a Coast Salish member of the Cowichan Tribes) writing for Motherboard, offered a further reminder that heightened internet service fees would hit indigenous communities the hardest.
No government should be so naïve as to believe that fees imposed on internet service providers in Canada will not be passed on to consumers. Whether it is called a levy or a tax will make no difference. As to whether the dollars accumulated will translate to more Canadian content, we will have to wait and see. The only assured outcome is less money with which even to purchase our much-vaunted Canadian content, creating the peculiar paradox of less content for Canadians.
Fortunately, the fact is that the internet will still provide delightful, educational, thought-provoking, and endearing content for everyone, from everywhere.
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