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Can Cancon Compete?: A Response to the WGC on The Future of Canadian TV Production

Michael Geist Law RSS Feed - Thu, 2017/05/25 - 10:21

My post this week on the recent CRTC’s television licensing decision elicited a strongly worded response yesterday from the Writers Guild of Canada. My original post made two key points. First, responding to Kate Taylor’s assertion that CRTC Chair Jean-Pierre Blais has offered no consistent strategy to the challenges facing the Canadian television production industry, I noted that over the course of the past five years, Blais has charted a very clear path toward making Canadian policy and regulation relevant in the digital age by promoting a competitive marketplace for Canadian creators, consumers, broadcasters, and broadcast distributors.

Second, I defended the recent CRTC decision on several grounds, including the need to address the gap between regulated and unregulated services (such as Netflix), the already-significant public support for Canadian content creation, the incentives for Canadian broadcasters to invest in original content, and the fact that Canadian broadcasters contribute a very small slice of the overall financing of domestic fictional programming which suggests that the harm to the sector from a further reduction is overstated.

The WGC response takes issue with the emphasis on competition, alternately claiming that Canadian television has always competed in the marketplace but that it cannot compete without regulatory mandates requiring Canadian broadcasters to invest in original Canadian programming. While some of the response is confusing or inaccurate (it mistakes the $2.6 billion Canadian television production market for the Netflix Canadian market, refers to a 1999 Blais television policy when Françoise Bertrand was CRTC chair at the time, discounts co-productions that often feature Canadian themes or iconic stories and generate significant Canadian employment and foreign investment), at its heart is the WGC view that longstanding regulations and market protections should continue or be expanded in the digital environment. In today’s world, Canadians enjoy far more choice, broadcasters face far more competition, and creators can tap into a myriad of new markets and potential investors, but the WGC vision is that old-style regulations should remain in place.

Perhaps nowhere is that more apparent than in the WGC’s final paragraph, which claims that a $40 million drop in broadcaster spending amounts to a 25% decline that it previously described as devastating. The claim simply ignores the reality of how Canadian television is financed today. As I note in my post, private broadcasters today are minor players, contributing only 9% of total financing for Canadian fictional programming. To again quote the CMPA:

With fiction productions, the largest share of financing came from provincial and federal tax credits; the fiction genre also attracted the most foreign financing among all genres. Children’s and youth productions also derived the largest share of their financing from tax credits, followed by broadcaster licence fees. Distributors also accounted for an important part of the financing picture for the fiction, and children’s and youth genres. In the VAPA and lifestyle and human interest genres, most financing came from broadcaster licence fees.

The WGC argues that English and French language production should be treated separately, yet the CMPA data for English-language only production does little to change the analysis. In fact, broadcaster contributions for fictional programs in English are even lower as a percentage of total financing (7% in English vs. 9% overall) and rank as the smallest source of financing among tax credits, foreign funding, and the Canadian Media Fund. In fact, foreign funding is more than three times as large as private broadcaster funding for fictional English-language programs. An overall drop of $40 million for fiction, children’s programming, and documentaries would still just result in a decline of 2.5% of overall financing or 1/10th of what the WGC claims. Further, while it argues that the broadcaster window is needed to trigger other support, that too is changing with new CAVCO rules that allow online platforms to meet the “shown in Canada” requirement.

 

CMPA Profile 2016, Page 56, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf

 

The issue ultimately comes down to two different perspectives of Canadian content in the digital environment. The CRTC view – one that I defended in my post – is that Canadian creators can compete on the global stage, creating compelling content that finds investors and interested broadcasters from around the world. There is still a need for public support in this digital environment (a billion dollars is hardly insignificant) but the CRTC has confidence in Canadian creators and a belief that relying on outdated policies that regulate how content is broadcast or financed make little sense in a globally competitive marketplace that now involves video competition from giants such as Netflix, Google, and Facebook.

The WGC perspective has seemingly little confidence in the ability to compete without regulation (the open letter says as much). The WGC response and its policy positions in recent months have been all about how Canada can’t compete – can’t compete without mandated Netflix payments, can’t compete without ISP payments, can’t compete without mandated broadcaster investments, and can’t compete without simultaneous substitution. In fact, when I wrote earlier this year about how foreign financing has now surpassed virtually all other sources of funding for English-language television production, the WGC response was to express fear that Netflix might change strategies and stop funding Canadian content:

 

@WGCtweet, March 16, 2017, https://twitter.com/WGCtweet/status/842406618931294208

 

Yet Netflix spends millions on production in Canada not because it faces a regulatory requirement, but rather because the entire package – innovative creators, tax credits, good partners – offers a compelling reason for doing so. Indeed, the data shows that the Canadian industry has thrived in recent years for reasons that have little to do with pre-digital regulations with a huge shift in Canadian television production financing from domestic funding to foreign investment.

As Minister Joly crafts her digital Cancon policy, she is faced with the choice of competing perspectives: a policy based on confidence that Canadian creators can compete on the world stage based on a policy framework that attracts investment and provides support for creation and promotion or one premised on the fear that success is only possible when the government mandates contributions from broadcasters and Internet companies.

 

The post Can Cancon Compete?: A Response to the WGC on The Future of Canadian TV Production appeared first on Michael Geist.

integrity

Fair Duty by Meera Nair - Wed, 2017/05/24 - 19:46

Last week I had the pleasure of participating in the Copyright User Rights Access to Justice Symposium hosted by LTEC (Law and Technology) Lab of Windsor Law. The presentations were impressive in their depth and breadth; ensuing discussions illustrated that the intersection of user rights with access to justice is an extensive mine for exploration. Congratulations, and thanks, are due to Pascale Chapdelaine, Erica Lyons, and all the staff who contributed to the makings of a thoroughly enjoyable event.

At the outset, we were reminded that we stood in the realm of the Anishinaabe, the territory of the Three Fires Confederacy of First Nations, comprising the Ojibway, the Odawa, and the Pottawatomie. Such words take on particular significance, convinced as I am that aboriginal legal traditions, particularly those pertaining to land, are instrumental to the underpinnings of the system of copyright. We are accustomed to thinking of the Copyright Act as bijural; arguably, influenced as it is by three modes of law (aboriginal, civil and common), the Act is trijural. This perspective framed my presentation; more details will come another day.

For now, my focus is in connection with a remark made in passing by Ruth Okediji. In the context of discussion about the non-commercial user-generated content exception, Professor Okediji stated what we all know to be true – that this behavior is universal.  But her next words were striking: “Canada had the integrity to acknowledge it.” It was an exalting moment to hear such recognition, to which I may add: Canada should encourage it, as ought any country that values creativity. Creativity does not occur through set rules and methods; creativity operates in its own ecosystem according to an unpredictable dynamism of encounter and engagement, including reimagining and re-creation. Playing with work that has come before is the very foundation of creativity.

My conference junket continues next week at Congress, beginning with a public event concerning the upcoming review of the Copyright Act (jointly hosted by the Association of Canadian College and University Teachers of English and the Canadian Society for Digital Humanities) on Monday, May 29 at 1:30pm in KHW61. It is to be followed by a retreat to the 19th century via a joint event held by the Bibliographic Society of Canada and the Canadian Association for the Study of Book Culture. I hope to ensure that Sir John Thompson—a man of integrity, who was committed to the rule of law—is not forgotten in our sesquicentennial commemorations.


Anti-Lawful Access Tide Continues: Security Consultation Finds Public Strongly Opposed to New Reforms

Michael Geist Law RSS Feed - Wed, 2017/05/24 - 09:20

Law enforcement efforts to revive lawful access reform continue to face political and public opposition. Earlier this month, the House of Commons Standing Committee on Public Safety and National Security recommended that the current approach remain unchanged. Indeed, Committee Chair Rob Oliphant said that police sought expanded powers, but that the argument was not yet “compelling.”

Public Safety’s report released last week on responses to its national consultation on security indicates that the broader public agrees. The issue drew the majority of feedback during the consultation:

participants emphasized that respect for privacy and due process are the most important considerations for national security agencies and law enforcement when conducting investigations in the digital world. Many participants said that the challenges faced by investigators in the digital world do not justify circumventing existing rules and regulations and that, if anything, even more oversight and safeguard mechanisms are needed, given how often Canadians use the Internet for sensitive matters such as personal communications and banking. A clear majority of participants oppose giving government the capacity to intercept personal communications, even if a court authorizes the interception, and oppose any moves to weaken encryption technology. Even those who support broad powers of interception think it should only be allowed under rigorous judicial authorization and be limited in scope.

The public did not shy away from addressing access to basic subscriber information, a key target for law enforcement reforms, which seek access to some information without court oversight. The public is strongly opposed to such an approach:

Perhaps the most revealing result of the online consultations is that seven in 10 responses consider their Basic Subscriber Information (BSI) – such as their name, home address, phone number and email address – to be as private as the actual contents of their emails, personal diary and their medical and financial records. Almost half (48%) said BSI should only be provided in “limited circumstances” and with judicial approval, and about one in six (17%) said it should only be available to law enforcement in emergency circumstances, and even then only with a judicial warrant. The principal concern about revealing someone’s BSI is that it could be used for location tracking or to access even more online information about that person.

The prospect of enhanced interception capabilities also generated significant opposition alongside concerns for the economics of government mandated capabilities:

Organizations that commented on these issues tended to argue against requiring providers to build interception capabilities into their networks, with many suggesting that some capabilities already exist and the government has not demonstrated a need for any changes. Many industry organizations said any increased costs of interception should be borne by the government.

Overall, the consultation left no doubt that participants care about their privacy. The report notes that “the vast majority of responses – more than four in five – show that the expectation of privacy in the digital world is the same as or higher than in the physical world.”  If the government is a serious using consultations to help guide policy, lawful access reform should be shelved for the foreseeable future.

The post Anti-Lawful Access Tide Continues: Security Consultation Finds Public Strongly Opposed to New Reforms appeared first on Michael Geist.

Canadian TV in the Netflix Age: In Defence of the CRTC Television Licensing Decision

Michael Geist Law RSS Feed - Tue, 2017/05/23 - 09:10

Last week’s CRTC decision on group licensing for the major Canadian broadcasters has the creative community in a panic, claiming that it could “mean the devastation of Canadian domestic [television] production.” The decision, which set a uniform spending requirement of 5 percent on programs of national interest (PNI, which includes dramas, documentaries, some children’s programming, and some award shows), means a reduction in spending requirements for some broadcasters. The Writers Guild of Canada fears that the decision could lead to a reduction in spending on PNI of $200 million over five years.

Groups have heaped criticism on CRTC Chair Jean-Pierre Blais, whose term ends next month. The WGC labels him a “Harper appointee”, while Kate Taylor says “he doesn’t leave much of a legacy for himself” and that “his piecemeal approach offers no consistent strategy to address the challenges facing Canadian television production in the Netflix age.”

Blais may have his faults, but claiming that he has not had a strategic vision for the digital age is not one of them. He recognized that the advent of the digital networks, an abundance of consumer choice, and the effective removal of longstanding analog protections for Canadian creators would gradually reduce the relevance of the regulator and leave it with two choices. The first – favoured by the creator groups – was to temporarily prolong the protections by extending Cancon regulations to Internet services and increasing regulatory costs on broadcasters. The second was to jump on the digital bandwagon, gradually removing the safeguards and creating a regulatory environment premised on competition at all levels – creators, broadcasters, and broadcast distributors. Anyone following the CRTC broadcast and telecom decisions in recent years knows that he chose the latter.

The result is a digital regulatory framework designed to enable Canadian creators to compete on a level playing in Canada (net neutrality), encourage the creation of programming that finds international audiences and partnerships (TalkTV), grant consumers greater television choice (skinny basic and pick-and-pay) and more competitive Internet services (wholesale fibre access), ensure universal Internet access (TalkBroadband), maintain deregulation of Internet-based services (new media exemption), facilitate new Canadian Internet entrants (hybrid services), and press broadcasters to reduce their reliance on U.S. programming (simsub). The policies may not universally succeed (and the simsub decision did not go as far as he may have wanted), but there is no doubting the strategy. In fact, despite the expectation that some have for Canadian Heritage Minister Melanie Joly to chart a new path, most of her public comments on digital Cancon are headed in the same direction.

Is 5 percent for PNI too low? At least four things can be said to defend the decision and place the impact into proper perspective. First, the argument that broadcasters needed a lower PNI number to compete with Internet-based services such as Netflix has merit. There are good reasons for not creating a mandatory contributions requirement for Internet video services, but the cost gap between regulated and unregulated services is relevant to the setting of mandated contributions for regulated broadcast services. Further, the decision lends credence to those who regularly whispered that the lobbying campaign for a Netflix tax was never about the money that could be generated from the streaming giant (a five percent tax on Netflix Canadian revenues generates a tiny amount of money given that Canadian TV production is a $2.6 billion industry) but rather about maintaining the contributions for the regulated services. When the licences come up for renewal in five years, the calls for the elimination of any contribution in the face of unregulated competition will be far louder.

Second, the suggestion that the Canadian television industry is – as Kate Taylor’s column states – “left to fend for themselves” ignores the massive public support for Canadian content creation. Given the amount invested annually by Canadian taxpayers, it is simply not credible to claim that Canadian television has been abandoned. The CMPA’s Profile 2016 tells the story with well over a billion dollars contributed from public sources including the public broadcaster, federal and provincial tax credits, and the Canadian Media Fund.

Third, while the industry is clearly not left to fend for itself, the CRTC decision is part of a shift that encourages and rewards success, not just creation. The claim that reduced mandatory PNI will devastate the industry is premised on the notion that Canadian broadcasters will only invest in domestic programming if required to do so. Licensing cheaper foreign programming is understandably attractive, yet the long-term success of broadcasters increasingly depends on controlling original content that can be delivered through multiple channels and markets (particularly if simsub disappears). In other words, the market encourages investment in original programming and the CRTC has sought to establish conditions that promote such investment.

Fourth,  critics of the decision are quick to point to higher profile Canadian fictional programming that is said to be at risk, but the CMPA data confirms that private broadcasters are relatively minor players when it comes to the financing of Canadian drama. The report states:

With fiction productions, the largest share of financing came from provincial and federal tax credits; the fiction genre also attracted the most foreign financing among all genres. Children’s and youth productions also derived the largest share of their financing from tax credits, followed by broadcaster licence fees. Distributors also accounted for an important part of the financing picture for the fiction, and children’s and youth genres. In the VAPA and lifestyle and human interest genres, most financing came from broadcaster licence fees.

The CMPA chart below confirms that conclusion with private broadcasters contributing only 9 percent of the financing for fictional programs, less than federal and provincial tax credits, Canadian distributors, foreign financing, and the CMF.  Private broadcasters allocate much of their money toward variety and performing arts as well as “lifestyle and human interest” programming, which including magazine style shows.

 

CMPA Profile 2016, Page 54, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf

 

In other words, financing and the success or failure of Canadian programming such as dramas do not depend upon private broadcaster spending. In fact, the WGC release effectively confirms this since their worst case scenario – $40 million in reduced broadcaster PNI spending per year – represents just a two percent reduction in total financing for the fiction, children’s and documentary genres in Canada at a time when foreign funding from services such as Netflix is on the rise. Hardly the stuff of devastation.

The post Canadian TV in the Netflix Age: In Defence of the CRTC Television Licensing Decision appeared first on Michael Geist.

Why Copyright Law Poses a Barrier to Canada’s Artificial Intelligence Ambitions

Michael Geist Law RSS Feed - Thu, 2017/05/18 - 09:02

The federal government placed a big bet in this year’s budget on Canada becoming a world leader in artificial intelligence (AI), investing millions of dollars on a national strategy to support research and commercialization. The hope is that by attracting high-profile talent and significant corporate support, the government can turn a strong AI research record into an economic powerhouse.

Funding and personnel have been the top policy priorities, yet other barriers to success remain. For example, Canada’s restrictive copyright rules may hamper the ability of companies and researchers to test and ultimately bring new AI services to market.

What does copyright have to do with AI?

My Globe and Mail column notes that making machines smart – whether engaging in automated translation, big data analytics, or new search capabilities – is dependent upon the data being fed into the system. Machines learn by scanning, reading, listening or viewing human created works. The better the inputs, the better the output and the reduced likelihood that results may be biased or inaccurate.

Copyright law crops up because restrictive rules may limit the data sets that can used for machine learning purposes, resulting in fewer pictures to scan, videos to watch or text to analyze. Given the absence of a clear rule to permit machine learning in Canadian copyright law (often called a text and data mining exception), our legal framework trails behind other countries that have reduced risks associated with using data sets in AI activities.

For example, consider how machines are taught to translate languages. Last year, the United Nations released 800,000 manually translated documents in the six official UN languages (English, French, Spanish, Arabic, Russian, and Chinese) for machine use. By releasing documents containing perfect translations in multiple languages, the data set helps create better automated translation systems. Indeed, official government documents have been an important data source for automated translation since they offer professionally translated materials of identical content.

Yet the downside of relying on these documents is that treaties and diplomatic correspondence rarely mimic everyday speech. Better systems would benefit from a broader range of materials such as translated popular books or television shows. The goal is not to republish or compete with copyright materials, but rather to ensure that researchers and AI companies can mine the text and data for informational analysis purposes.

Canadian courts have ruled that fair dealing – the copyright law’s foundational exception that permits use of materials without the need for prior permission – is a user’s right that should be interpreted in a broad and liberal manner. There are several purposes that would permit some text and data mining activities, notably exceptions for research, education, and private study. However, given Canada’s emphasis on the commercial benefits of AI, the law may not offer sufficient flexibility to safely move from the lab or classroom to the market.

There are two ways to overcome the copyright AI barrier. First, Canada could emulate the U.S. fair use model by making the current list of fair dealing purposes illustrative rather than exhaustive. The U.S. exception is open to any purpose, as striking a fair balance depends upon the use of the work, not the purpose of the copying. Since machine learning does not harm the primary purposes of the original work, most text and data mining will qualify as fair use.

Second, other countries have tried to address the issue by creating a specific exception for text and data mining or computer informational analysis. For example, Britain’s exception allows copies of works to be made without permission of the copyright owner for the purposes of automated analytical techniques to analyze text and data for patterns, trends, and other information. The law does not allow contracts to restrict data mining activities, but the exception is limited to non-commercial research.

Text and data mining exceptions are becoming increasingly popular – Japanese law features an exception and the European Union has been debating adding one as well –
meaning Canada risks falling behind in race to the commercialize AI research because of an overly restrictive copyright law. With Innovation, Science and Economic Development Minister Navdeep Bains and Canadian Heritage Minister Mélanie Joly set to lead a review of copyright law later this year, clearing away unnecessarily restrictive legal barriers must be on the agenda.

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Copyright exceptions for research need attention at WIPO

Sara Bannerman - Thu, 2017/05/11 - 15:30
Last week, the World Intellectual Property Organization (WIPO) continued discussions of a possible international instrument dealing with limitations and exceptions to copyright for educational, teaching and research institutions and persons with other disabilities.

IP Watch reports that proposals have now been narrowed to a core set.  While this core set retains many important proposals relating to educational institutions, many past proposals relating to research institutions have disappeared, including an important proposal relating to data gathering that is core to research.  Past proposals made before WIPO have included important exceptions that would help drive digital research, including data mining, which is becoming more and more key to scholarship.  The following proposal, which I view as especially important, was not included in the core set:
The reproduction and reuse by search engines, automated knowledge discovery tools, or other digital means now known or later discovered of any lawfully obtained copyrighted work for purposes of not-for-profit scientific research, including storage, archiving, linking, data mining procedures, data manipulation, and virtual scientific experiments subject to attribution of the sources used to the extent reasonably feasible (page 33) Research institutions may need to keep a close eye on the SCCR discussions to ensure that research interests, as well as educational interests, are met.

Just Passing Through: Why Canadian Anti-Counterfeiting Law Should Not Permit In-Transit Shipment Searches

Michael Geist Law RSS Feed - Thu, 2017/05/11 - 11:33

As Canadian officials prepare for the forthcoming NAFTA renegotiation, changes to Canada’s border measures provisions seem likely to surface as a U.S. demand. Late last month, the USTR released its annual Special 301 report and the issue of Canadian anti-counterfeiting law – in particular, the absence of provisions to allow for the search of in-transit shipments that are not bound for Canada – topped the list of concerns. The U.S. report states:

The United States remains deeply concerned that Canada does not provide customs officials with the ability to detain, seize, and destroy pirated and counterfeit goods that are moving in transit or are transshipped through Canada. As a result, the United States strongly urges Canada to provide its customs officials with full ex officio authority to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains.

The U.S. position has garnered some support in Canada. For example, a recent Globe and Mail editorial urged the government to change the 2014 anti-counterfeiting law by granting customs agents the power to search and seize shipments that are not bound for Canada.

The Globe editorial echoed longstanding U.S. government pressures that date back to the introduction of the law.  The Canadian law granted customs officials unprecedented powers, but the U.S. was still unsatisfied with then-ambassador Heyman stating:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

James Moore, the Canadian Industry Minister at the time, rejected the criticism, noting that Canada need not act as a customs agent for the United States.

What neither the Globe nor Moore mention is that the seizure of in-transit shipments in other jurisdictions has involved the seizure of generic pharmaceuticals, posing a threat to international trade, development and public welfare. For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Canada adopted the right approach in 2014 and should reject calls to amend a law in a manner that would increase Canadian costs and pose global health risks.

The post Just Passing Through: Why Canadian Anti-Counterfeiting Law Should Not Permit In-Transit Shipment Searches appeared first on Michael Geist.

PBO Concludes CETA Patent Rules Will Lead To Outflow of Hundreds of Millions in Pharma Royalties

Michael Geist Law RSS Feed - Mon, 2017/05/08 - 09:10

The Parliamentary Budget Officer released a report last week providing its estimate on the economic impact of the Canada – EU Trade Agreement. While the Liberal government made CETA its top trade priority when it came into office (and the Conservatives claimed that the deal would add $12 billion to the Canadian economy), the PBO report concludes that the economic benefits will be modest at best.

The report devotes a full chapter to CETA’s intellectual property provisions, particularly the patent related rules that will have a direct impact on the pharmaceutical industry.  CETA establishes patent restoration and patent appeal rules that will extend the term of patent protection for pharmaceutical products, thereby increasing consumer prices and royalty outflows. With a regulatory framework designed to address pricing in place, the report focuses on increased royalty outflows with extended protection.

It concludes that the additional royalty outflows will run into the hundreds of millions of dollars. In 2015, the PBO estimates the increased royalty payments would have been $85 million. By the time the agreement is fully implemented, it pegs the annual royalty increase at $209 million.

Of note is that the report also rejects claims that increased patent protection leads to greater expenditures on research and development.  It states:

The explicit link between patent protection and R & D expenditure was necessary because the two are only weakly linked by market forces. A statistical analysis shows no significant correlation between the two for OECD countries. Moreover, R & D expenditure in Canada for pharmaceuticals has not necessarily followed changes in the protection of intellectual property. After some initial increases following the extension of protection in 1987, R & D expenditures relative to sales have been declining. This coincides with the conclusion of the NAFTA and trade-related aspects of intellectual property (TRIPS) agreements.

CETA may be a done deal and the opportunity to increase trade with Europe important given the uncertainty associated with NAFTA, but the PBO report throws some cold water on the agreement, concluding modest economic gains and huge outflows in royalties due to the patent provisions demanded by the European Union.

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Public Safety Committee Recommends Against Lawful Access Reforms

Michael Geist Law RSS Feed - Wed, 2017/05/03 - 09:10

Last month, I wrote about the recent initiative to revive lawful access, the rules that govern police access to Internet and subscriber information. A cybercrime working group has held consultations (I participated in one) as law enforcement seeks new powers for warrantless access to some ISP information (called “pre-cursor” data) and a new, lower threshold warrant for other subscriber data. While law enforcement has argued that the current system is broken, the House of Commons Standing Committee on Public Safety and National Security has recommended that the current approach remain unchanged.

The committee’s much anticipated report on developing a road map for national security contains dozens of recommendations (my colleague Craig Forcese reviews many of them) including one on lawful access.  It states:

That at this time, and following the Supreme Court of Canada’s decision in R. v. Spencer, no changes to the lawful access regime for subscriber information and encrypted information be made, but that the House of Commons Standing Committee on Public Safety and National Security continue to study such rapidly evolving technological issues related to cyber security.

Given that Liberal MPs form the majority of the committee (the report contains dissenting reports from both Conservatives and NDP), the recommendation presumably reflects current government thinking on the issue. If so, it suggests that the government has not immediate plans to reform lawful access. Committee Chair Rob Oliphant says that police sought expanded powers, but that the argument was not yet “compelling.”  Lawful access isn’t going away – the issue has been debated for years – but MPs are rightly unconvinced that there is a need for warrantless access to subscriber information.

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Why Canada’s Net Neutrality Commitment Places Consumers in Control

Michael Geist Law RSS Feed - Tue, 2017/05/02 - 09:10

Canada seemed lost when it came to Internet policy a little over a decade ago. The government showed scant interest in the technicalities of Internet services and the Canadian Radio-television and Telecommunications Commission stood idly by as leading Internet providers engaged in traffic shaping to limit speeds of some applications and mused openly about new fees for the right to transmit content to subscribers. Internally, government policy makers were seemingly untroubled that telecom companies were gearing up to be gatekeepers of Internet content.

My regular Globe and Mail column notes those early Internet policies are unrecognizable today as Canada has emerged as a world leader in supporting net neutrality, the principle that all content and applications should be treated equally and that choices made by Internet users should be free from ISP or telecom interference. The policies do not guarantee Internet success – no law does – but it signals a clear commitment to placing consumers and creators in the Internet driver’s seat.

The foundation of Canadian policy lies in four CRTC decisions that address practices such as managing Internet traffic to limit speeds for some applications or creating pricing plans that “zero rate” certain content that does not count as part of monthly data consumption caps. CRTC policies now restrict these practices, recognizing that net neutrality preserves the “common carrier” approach for ISPs and encourages marketplace competition and innovation based on price, speed, and quality of networks.

The support for net neutrality in Canada – it has also been endorsed at the political level with Canadian Heritage Minister Mélanie Joly promoting the policy as a competitive advantage – comes just as the United States moves in the opposite direction. U.S. President Donald Trump has been prone to policy flip-flops, but his regulator has begun the process of rolling back open Internet rules backed by questionable claims that “Internet service providers do not appear to offer ‘telecommunications’.”

The U.S. Internet policy reversal extends to privacy as safeguards limiting the ability of ISPs to collect, use, and disclose subscriber Internet activities have been discarded. By contrast, the Privacy Commissioner of Canada ruled in 2015 that Bell’s plans to use subscriber information for targeted advertising without express, opt-in customer consent violated the law.

The U.S. model shifts unprecedented power to a handful of giant telecom companies.  Indeed, the removal of privacy protections was justified on the grounds ISPs were unable to compete with Internet companies such as Google and Facebook in using the personal browsing habits of customers for advertising purposes.

Notwithstanding dire warnings that Canada can ill-afford to diverge from the U.S. on Internet and telecom policy, the truth is there have long been significant differences between the two countries. On the regulatory front, Canadian law features safeguards against unjust discrimination, undue preferences or controlling the content of communications.

The Canadian market is exceptionally insular, dominated by domestic companies with little penetration from large, foreign players, whose attempts to enter the market have generated lobbying campaigns by Canadian incumbents to keep them out. Canadian companies have generally greeted the net neutrality framework with support (Rogers Communications supported restrictions on zero rating plans) or indifference (Bell says it already complies with the rules) and there is little reason to believe regulations will have a significant impact on long-term plans to invest in their networks.

Meanwhile, Internet companies have reacted to the U.S. developments with alarm – hundreds recently signed a letter opposing rolling back net neutrality rules – and the Canadian approach may provide an attractive alternative.

Most notably, Canadian consumers and creators will benefit in the long-term from the net neutrality policies. The CRTC noted that the evidence showed that zero rating offers were typically limited to high-end plans, thereby doing little to increase affordability of wireless services. Moreover, the European experience indicates providers that do not zero rate offer better prices and larger data allowances.

In other words, everyone pays for data, even where providers advertise “free” data for some content. What distinguishes the Canadian net neutrality approach from the U.S. model is that it is consumers and creators, not telecom companies or ISPs, that are in control when it comes to using the Internet.

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Ontario Government Placing Big Bet on Open Textbooks

Michael Geist Law RSS Feed - Mon, 2017/05/01 - 09:05

The Creative Commons Global Summit was held in Toronto over the weekend, bringing hundreds of people together from around the world to discuss issues ranging from copyright reform to enhancing collaboration and sharing. As part of the opening of the event, David Lametti, the Parliamentary Secretary for the Innovation, Science and Economic Development, and Deb Matthews, the Ontario Minister for Advanced Education and Skills Development as well as the Minister for Digital Government, both provided words of welcome. Their presence demonstrated how far openness, access, and balanced copyright have come in recent years.  Lametti, a leading voice on copyright as McGill law professor, emphasized the important role of balance and flexibility in the copyright system, while Matthews provided a unequivocal endorsement of openness and access.

Matthews provided more than just encouraging words, however.  She used her opening remarks to promote the creation of a new Open Textbook Library for Ontario that will feature hundreds of openly licensed, professionally created textbooks providing students with access to free digital texts in dozens of university and college courses.

The open library is managed by eCampusOntario, which is working with BCcampus to make the texts available to students in the province. In fact, the provincial government is investing millions in creating new open texts in a myriad of subjects including history, finance, politics, the environment, engineering, and the sciences.

The Ontario government support for open textbooks is notable for several reasons. First, it points to the growing importance of openness in education, including open access publishing of scholarly research, open educational resources, open courses, and open texts. Governments increasingly recognize the importance of investing in open education to support learners at all stages of their lives. Second, the open textbook model provides a cost-effective alternative to expensive textbooks and licences. The works are paid for, but once created, can be freely used and modified without the need for further licences, payments or permissions. Third, this provides a strong rebuttal to those who suggest that open textbooks may be inferior to the pricey, publisher versions. Indeed, the open textbooks are written by teaching professionals, peer reviewed, and professionally developed in the same manner as commercial textbooks. The difference is that once created, they can be freely used, reused, and modified. The approach represents a win-win-win-win scenario: free textbooks for students, reduced long-term costs for education and government, financial support and compensation for creators of the texts, and high quality, Canadian materials freely available for use by teachers across the province.

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CRTC Chair Blais Calls Out Telcos For Double-Talk on Internet Fibre Investment

Michael Geist Law RSS Feed - Wed, 2017/04/26 - 09:31

CRTC Chair Jean-Pierre Blais participated in a fascinating question-and-answer session at MIT this week in which he bluntly spoke out on a wide range of topics including cultural issues, copyright, and Internet policy.  I’ll have a future post on his culture comments (his copyright remarks noted that the zero rating decision may help solidify ISPs’ status as common carriers), but his frank response on Internet investment was particularly noteworthy.

Readers of this blog may recall one of my posts from June 2016 in which I noted that Bell told the CRTC and the government that requirements to share fibre networks could reduce their investment in the sector, but that a top executive told investors that it was going to continue to build fibre networks since they were critical to the company’s future, offering significant cost savings and higher revenues. It would appear that the CRTC took note of the same contradictions. When asked about the CRTC fibre decision at roughly the 34 minute mark, Blais responded:

“companies came to our hearing and advocated that we should not have unbundling of fibre. They were saying it would slow down investment, they would not go forth as much, it was different from the mandatory access we had given in the past.  It was a new brave world, they weren’t incumbents. A whole series of arguments. In the end we decided we were going to mandate unbundling even on fibre. They went to the federal cabinet to appeal it. The federal cabinet did not intervene.

Oddly enough, as they were saying one thing to us about slowing down investments, they were having a completely different dialogue with the investors and saying quite the opposite.  I don’t know what they think we read and don’t read, but I’ve got some very, very smart people working for me at the CRTC and we read investor reports, we read what’s in the news, we know what’s happening. So it goes straight to credibility when you make arguments in front of us one day and take a completely different position when you’re in an investor or shareholder call.

Moderator Dave Clark’s last question asked Blais to name his most notable achievements as chair. Blais cited the changed culture at the CRTC with a far more engaged public along with the basic services decision. To his credit, the list is far larger (last week’s zero rating decision belongs there) and should include his willingness to rightly call out Bell’s credibility when it tells the regulator one thing and the investment community something else.

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Australian Copyright Scandal Points to the Need for Greater Oversight of Copyright Collectives

Michael Geist Law RSS Feed - Tue, 2017/04/25 - 09:15

The Australian copyright community has been shocked by a scandal involving the Copyright Agency, a copyright collective that diverted millions of dollars intended for authors toward a lobbying and advocacy fund designed to fight against potential fair use reforms. The collective reportedly withheld A$15 million in royalties from authors in order to build a war chest to fight against changes to the Australian copyright law. I wrote last month about my experience in Australia, where groups such as the Copyright Agency have engaged in a remarkable effort to mislead policy makers on the state of copyright law in Canada. A former director of the Copyright Agency describes the latest situation as “pathetic” noting that it was outrageous to extract millions from publicly-funded schools for a lobbying fund.

The Australian case is far from an isolated incident. A quick search reveals plenty of examples of legal concerns involving copyright collectives with corruption fears in Kenya and competition law concerns in Italy over the past couple of months as well as recent fines against Spanish collecting societies. In fact, Jonathan Band and Brandon Butler published an eye-opening article several years ago chronicling an astonishing array of examples of corruption, mismanagement, lack of transparency, and negative effects for both creators and users from copyright collectives around the world.

Canada is home to an enormous number of copyright collectives and the allocation of revenues toward lobbying is also an issue here. For example, this year’s Access Copyright annual report re-names the longstanding expense on copyright tariffs as “Tariff, litigation and advocacy costs”, better reflecting expenditures on lobbying and advocacy activities in which the organization lines up against fair dealing and in favour of copyright term extension. Since the introduction of copyright reform in 2010, Access Copyright has reported spending nearly $7 million on litigation that has been largely unsuccessful, tariff applications, and government lobbying and advocacy (the specific amounts totalling $6.81 million are 2016: $641,000, 2015: $443,000, 2014: $826,000, 2013: $1,571,000, 2012: $1,221,000, 2011: $1,459,000, 2010: $730,000).

Given the expenditures, the federal lobbyist registry indicates that Access Copyright has emerged as one of the most active copyright lobby groups in Ottawa. Since the enactment of the 2012 copyright reforms, the registry lists 27 meetings including multiple meetings with the Prime Minister’s Office (PMO), Canadian Heritage, and Industry Canada/ISED. The number of meetings have increased over the past year, with five meetings listed in the lobbyist registry with just the PMO.

Last year, the Senate Standing Committee on Banking, Trade and Commerce held a hearing on the Copyright Board of Canada (my comments here), issuing a blistering report calling for reform. As the government prepares for its review of the Copyright Act later this year, an examination of copyright collectives and the potential for new regulations addressing transparency and the use of creator funds for lobbying purposes should be placed on the policy agenda.

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CRTC’s Zero Rating Ruling Kills Proposals for Preferential Treatment for Cancon Online

Michael Geist Law RSS Feed - Mon, 2017/04/24 - 10:12

There is much to like about last week’s CRTC’s differential pricing decision (also referred to as zero rating) with recent posts from Dwayne Winseck, Timothy Denton, and Peter Nowak providing some helpful analysis. My initial post focused on the CRTC’s key findings and the new framework that will govern differential pricing plans. In addition to those rules, however, there are several additional findings that will have significant implications.

One notable aspect of the decision is that the CRTC has effectively killed proposals to create Internet-style Cancon regulations. While there may still be efforts to impose requirements on companies such as Netflix, the ruling ends the possibility of granting preferential treatment to Canadian content in the provision of Internet services. Columnists such as Kate Taylor have speculated about new regulations and the Canadian Media Producers Association promoted the proposal in its submission to the CRTC:

the Commission should be open to considering ways in which differential pricing practices related to Internet data plans could be used to promote the discoverability of and consumer access to Canadian programming. There are different ways this might be accomplished. For example, the Commission could allow service providers to eliminate data usage charges for accessing trailers and other promotional materials specific to Canadian programs. This would assist the discoverability of Canadian programs. A broader and deeper approach would be to eliminate usage charges for accessing any qualified Canadian programs. Such an approach would not only promote discoverability but actual viewership.

It concludes:

In closing, the CMPA submits that high speed broadband presents a wealth of opportunities for Canadian audiences to access high quality informative and entertaining programming made by Canadians on the platform(s) of their choice. For this reason, we submit that the Commission should permit – or, if necessary, mandate – retail Internet access services to adopt practices, including differential pricing practices, which will serve to promote and improve these opportunities.

The possibility of mandating zero rating for Canadian content is directly addressed by the CRTC, which puts an end to the possibility.  Its analysis acknowledges that differential pricing could be used to support Canadian content, but that the implementation of such a plan raises problems:

The creation, support, and discoverability of programming made by Canadians underscore many of the policy objectives set out in subsection 3(1) of the Broadcasting Act. Those objectives could be supported by differential pricing practices that would make that content available on Internet platforms in an easy and inexpensive way. However, the conception and implementation of such practices would be problematic for the same reasons that differential pricing practices based on content categories would pose a problem. For instance, while longstanding Canadian content recognition procedures are in place, the reliable identification by ISPs of this content, as well as the regulation and enforcement of the differential pricing practice, would be difficult.

When the parties who suggested such use of differential pricing practices were asked how they would implement their suggestion, they did not provide details at a practical or technical level. The record does not provide any basis to demonstrate that differential pricing practices could be fully and reliably implemented in such a way as to ensure that all programming made by and transmitted to Canadians in the online space would be properly captured.

In light of this analysis, the CRTC’s concludes:

Given all the drawbacks and limitations of using differential pricing practices as a way to support and promote Canadian programming, the Commission considers that any benefits to the Canadian broadcasting system would generally not be sufficient to justify the preference, discrimination, and/or disadvantage created by such practices.

The decision effectively means that efforts to establish regulations or policies designed to grant preferences to Canadian content on basic Internet services are likely to violate the differential pricing rules. As Canadian Heritage Minister Melanie Joly develops policy plans coming out of the Cancon in the digital age consultation, there is at least one tool that should come out of the toolkit.

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Net Neutrality Alive and Well in Canada: CRTC Crafts Full Code With Zero Rating Decision

Michael Geist Law RSS Feed - Thu, 2017/04/20 - 16:36

The CRTC today released the final chapter (for now) in its net neutrality governance framework, creating policy that establishes strong safeguards against net neutrality violations and severely restricts the ability for providers to engage in zero rating practices. When combined with the federal government’s clear support for net neutrality, the Canadian framework is now one of the strongest in the world, providing guidance for the providers and appropriate protections for users and innovative services.

The Commission established its first net neutrality policy response in 2009 with the Internet traffic management practices. The rules restrict content blocking or slowdowns and require ISPs to disclose how they manage their networks. The issue expanded into zero rating in 2013 when Ben Klass, a graduate student in telecommunications, filed a complaint with the CRTC over Bell’s approach to its Mobile TV product. In January 2015, the CRTC released its decision in the case, siding with Klass. The Commission expressed concern that the service “may end up inhibiting the introduction and growth of other mobile TV services accessed over the Internet, which reduces innovation and consumer choice.”

Today’s decision largely completes the process by providing a framework for examining future zero rating or differential pricing cases (and rejecting Videotron’s music service plan in an accompanying decision). The ruling opens by examining whether differential pricing (of which zero rating is a form) raises concerns regarding preferences or disadvantages.  The Commission concludes that it often does:

differential pricing practices, generally speaking, result in (a) a preference toward certain subscribers over others, (b) a preference toward certain content providers over others, (c) a disadvantage to subscribers who are not eligible for, or interested in, a differential pricing practice offering, and (d) a disadvantage to content providers that are not eligible for, or included in, an offering.

The impact is significant as the Commission notes that it can affect competition, innovation, consumer choice, access and affordability as well as privacy in a section of the decision that comprehensively makes the case for the harms associated with zero rating. For example, with respect to competition, the CRTC states:

The Commission considers that competition in the retail Internet access services sector is best served, and the telecommunications policy objectives set out in the Act are best achieved, when ISPs compete and differentiate their services based on their networks and the attributes of the services on those networks, such as price, speed, volume, coverage, and the quality of their networks.

The Commission also believes that differential pricing practices that favour particular services, technology, or content would generally negatively affect innovation.  On consumer choice, the CRTC is mindful of what consumer groups and pro-net neutrality advocates have warned:

The Commission considers that any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such practices

Moreover, given that differential pricing is typically offered for higher tier services, it finds that there was no evidence that it meaningfully increases access.  Interestingly, the Commission also expresses support for the use of VPNs and is reluctant to embrace policies that might discourage their use. The decision states:

The Commission would be concerned, however, if differential pricing practices affected the use of VPNs. The Commission recognizes that VPNs are a legitimate tool to protect sensitive information, as recommended by security firms. While the Commission does not find differential pricing practices to have a direct negative impact on privacy per se, it is concerned that their adoption could discourage the use of VPNs and thus compromise the privacy and/or security of consumers.

Given the concerns and harms associated with zero rating, how to address the issue?

The CRTC rejects category style approaches advocated by some groups, concluding that they would not solve the concerns.  It also rejected calls from some cultural groups for preferences for Canadian content, noting:

Given all the drawbacks and limitations of using differential pricing practices as a way to support and promote Canadian programming, the Commission considers that any benefits to the Canadian broadcasting system would generally not be sufficient to justify the preference, discrimination, and/or disadvantage created by such practices.

Instead, the CRTC has established a framework that bears considerable similarity to its 2009 ITMP approach.  It will allow for a complaints-based mechanism that can lead to an evaluation of whether the differential pricing is compliant with the law.  Given that the Commission rejected many of the proposed categories and exceptions, this will be a difficult standard to meet and there is now considerable guidance for providers.

The evaluation criteria involves four key issues: agnostic treatment of data, exclusiveness of the offering, impact on Internet openness and innovation, and whether financial compensation is involved.  Agnostic treatment is viewed as the most important, though none are determinative. The Commission will also consider exceptional circumstances, which allow for public interest considerations, and a minimal harm analysis (which effectively expands the criteria to six possible grounds).  The details on the four main criteria:

The agnostic treatment of data. The Commission will consider the extent to which data traffic is priced or rated equally or agnostically by an ISP with regard to its customers’ retail Internet access services, while having regard to the amount of data involved. Offerings that rate or price data non-agnostically, such as by zero-rating data traffic from certain content providers (including affiliated entities), are likely to raise concerns under subsection 27(2). Differential pricing practices that treat data traffic agnostically (e.g. time-of-day offerings) are not likely to raise the same level of concern.

The exclusiveness of the offering. The Commission will consider the extent to which a differential pricing practice is exclusive to a particular class or group of subscribers, or to a particular content provider or class or group of content providers, while also having regard to the number of subscribers or content providers affected. For example, differential pricing practices that are exclusive to subscribers to a particular data plan are likely to raise concerns under subsection 27(2).

The impact on Internet openness and innovation. The Commission will consider the extent to which a differential pricing practice inhibits or compromises the openness of the Internet for Canadians and the choices available to Canadians. In particular, this analysis will consider (a) whether a differential pricing practice affects the ability of content providers or innovators to enter the market by creating barriers to entry, and (b) the extent to which a differential pricing practice affects innovation. For example, differential pricing practices that require content providers to conform to administrative and technical requirements that are burdensome, costly, or time-consuming to meet are likely to raise concerns under subsection 27(2). Differential pricing practices that favour large, established content providers over smaller ones and new entrants are also likely to raise concerns.

Whether there is financial compensation involved. The Commission will consider whether a differential pricing practice results in financial compensation or other financial benefits between a content provider and an ISP or third-party sponsor (including affiliated entities), having regard to the amount of compensation involved and the extent of the financial interest with any affiliated entity. For example, sponsored data arrangements, where an ISP receives payment from a content provider in exchange for zero-rating the data traffic to and from that provider, are likely to raise concerns under subsection 27(2).

The Commission expects all provides to follow these guidelines and – like the ITMP regime – will investigate complaints. Given that Commission rejects the Videotron service, has already rejected the Bell Mobile TV service, and rejects many compromise proposals that were raised during the hearing, it is clear that the bar for approval of a zero rating or differential pricing plan is very high.  Time of day differences are permitted as are plans that treat data in an agnostic manner.  In other words, the CRTC goes back to first net neutrality/common carriage principles of treating data equally.

It is worth noting that the CRTC decision also addresses the issue of data caps, declining to ban the practice and merely monitor the situation for now. Several groups (and many Canadians) had asked the Commission to address the practice.

In sum, this is a huge win for net neutrality in Canada as the CRTC was ultimately guided by its longstanding principle that telecom regulation should restrict the ability of ISPs to determine winners and losers through their power as the Internet’s gatekeepers. When combined with the the ITMP framework and the decisions involving Bell Mobile TV and Videotron, the CRTC has crafted a reasonable, pro-net neutrality framework that provides carriers with guidance and users – whether innovative businesses or consumers – with assurances that net neutrality is the law of the land.  As a complaints-based mechanism there is considerable onus placed on consumers to monitor to practices and to seek enforcement, but the right framework is in place for long-term benefits to innovation and consumers.

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The Reel Story: Why Changing How We Measure a “Canadian Film” is Long Overdue

Michael Geist Law RSS Feed - Thu, 2017/04/20 - 10:26

National Canadian Film Day 150, described as the world’s largest film festival, was held yesterday with events that showcased Canadian feature films at hundreds of venues from coast to coast. The event had a large number of sponsors (the Prime Minister promoted it) that helped place the spotlight on Canadian film. Yet a day devoted to Canadian feature film might also have called attention to the struggles of the Canadian feature film category and considered whether significant policy reforms are needed. This year’s Canadian Media Producers Association Profile 2016, which chronicles the industry (I used it earlier this year to discuss how foreign financing – not regulated contributions – is the now the top source of English-language television production in Canada), tells a story of a feature film industry that relies on public dollars to finance the majority of its costs, has hit a decade low in the number of films produced, and is experiencing declining budgets.

In the last reported year, the average English-language feature film budget declined to $2.2 million and the percentage of films with budgets over $10 million dropped to just 2%.  There were a total of 94 feature films made, the lowest figure in the past decade. The average budget for a Canadian English-language fiction feature film was also its lowest in the past ten years.

Funding for these films comes primarily from tax dollars with public sources accounting for $146 million or 57% of the total financing of Canadian theatrical feature film production. The total budget is small: $178 million for English-language films and $76 million for French-language films. The chart below highlights how little Canadian private sources spend on making feature films. After accounting for public dollars through CFFF-Telefilm, tax credits, and foreign money, less than one-third of funding comes from Canadian private sources. Note that this data is focused on Canadian feature film production to the theatres and does not include co-productions with other countries, which add an additional 26 productions (11 in English and 15 in French) with larger average budgets.

CMPA Profile 2016, Page 67, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf

 

The audience for Canadian feature films isn’t great either. While going to the movies is a billion dollar industry in Canada, Canadian feature films garnered just 0.6% of box office receipts in the English-language market (the number is better in French at 10.7%). The revenues are truly tiny: a total of $4.9 million in revenue for English-language feature films out of a box office of $857.1 million. The low revenue is notable since there were over 100 Canadian films shown constituting 7.9 percent of all English-language films.

 

CMPA Profile 2016, Page 118, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf

 

There are surely many factors behind the performance, not the least of which is the popularity of U.S. films, which typically have bigger budgets and more promotion associated with them. But if Canada deems feature film important, is willing to spend millions in tax dollars and credits to support the industry, and wants to ensure that Canadian stories make it onto the big screen, then considering other policy issues is needed (Simon Houpt did so in an excellent piece in 2015).

Topping the list of considerations might be how Canada defines a “Canadian film.” This issue was the subject of debate at the annual CMPA conference in February that was also covered by Houpt.  While the debate and Houpt piece focus on the virtues and problems with Canadian 10-point system for determining whether a film qualifies as “Canadian”, the reality is that the Canadian approach is an outlier when compared with many other countries.

I recently obtained a study conducted by the Department of Canadian Heritage under the Access to Information Act that compared approaches in ten countries: Canada, Australia, the UK, Ireland, Hungary, New Zealand, Mexico, Germany, France, and Colombia. The study noted that point systems are common, but Canada stands alone in focusing exclusively on the nationality of personnel involved in the production.

The majority of countries allow for points for three main criteria: cultural content (the cultural contribution of the film itself), production (the degree to which the film is nationally produced), and personnel. Some countries emphasize one criteria more than another, but only Canada considers a film to be Canadian based strictly on the nationality of personnel. Canada is also the only country to require the company to maintain worldwide copyright.

The report notes that Canada’s focus on process may come at the expense of cultural outcomes:

In its pursuit of cultural goals, Canada maintains a distinct focus on a process rather than outcome based approach relative to other countries being examined. The Canadian system focuses solely on ensuring the creators behind the production are Canadian. Not only do other countries have lower requirements relating to the number of key staff that must have their countries’ nationality, they also allow low scores in this category to be compensated by strong scores in cultural content and production…

When trying to achieve cultural goals, focusing on outcomes rather than process has potential advantages and disadvantages. Traditional policy literature encourages focusing on outcomes, as this is the clearest way to connect policies to the mandate of government. For example, a film made entirely by Canadian producers and key creative staff could still be based on American source material, be set in the United States, and consist only of American characters. This would not necessarily be achieving the goals of producing distinctly Canadian cultural content.

An internal presentation that accompanied the report highlighted the limitations of the Canadian approach, noting a film based on a Canadian novel, starring Canadian actors, and filmed and produced in Canada might still not qualify as Canadian if written, directed, and produced by an American.

 

Canadian Heritage Slide Presentation, obtained under ATIP

 

The outlier cultural approach – when combined with the financial struggles of the Canadian feature film industry and the significant public investment in the sector – suggests that it is time to reconsider the Canadian system. The Canadian industry is enormously successful once foreign location and service production is taken into account. That side of the industry – in which foreign producers use Canadian locations for filming and services – was a $2.6 billion industry with 128 feature films last year. However, the industry often cites the cultural importance of Canadian feature films, in part to justify the significant public support. If the goal of the feature film industry in Canada is primarily cultural with box office success or film budgets deemed secondary, then changing the way we measure what constitutes a “Canadian film” is long overdue.

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The Internet as Cable: The Risk of Treating Telecommunications as Cultural Policy

Michael Geist Law RSS Feed - Wed, 2017/04/19 - 09:33

Canadian Heritage Minister Mélanie Joly travels to California this week with an agenda that includes meetings with Internet giants such as Google and Facebook. Given the recent announcement in the budget that the government plans to “review and modernize” the Broadcasting Act and Telecommunications Act, the discussions may help shape an issue that could have a profound impact on the Internet in Canada as there are concerns the government may attempt to shoehorn Canadian cultural policies into telecommunications law.

My Globe and Mail column notes that Ms. Joly’s consultation last year on Cancon in a digital world revealed there is a strong appetite within the traditional Canadian culture lobby for bringing policies such as cultural taxes and mandated Cancon requirements to the Internet. The groups claim the Internet is rapidly replacing the conventional broadcast system as a means of distributing cultural content and that the longstanding analog rules should be shifted into the digital environment.

Revisiting Canada’s twin communications laws is regarded by the cultural lobby as the opening to treat telecommunications regulation as a matter of cultural policy in what would amount to the Broadcasting Act taking over the Telecommunications Act with the Internet treated as little more than a giant cable television system.

Few Canadians would view their wireless or Internet connections as a matter for cultural regulation, but that is precisely what the cultural groups envision. Indeed, in light of an earlier Supreme Court of Canada decision that rejected attempts to impose cultural taxes on Internet service providers owing to the separation of the two statutes, creating a combined culture-focused Communications Act would establish a fundamental change in Canadian Internet regulation.

Yet the reality is that the policy objectives of telecommunications and broadcast do not mesh well, making it difficult to craft a single communications statute. Telecommunications regulation is fundamentally about competition and consumer protection. The rules are designed to foster affordable network access, effective consumer rights through transparency and redress, and to prevent the temptation of vertically-integrated telecom giants to grant their own content preferential treatment.

Those rules must be adapted for the Internet – decisions scheduled for release this week by the Canadian Radio-television and Telecommunications Commission on net neutrality that address equal access for Canadian content and applications are the Internet’s version of old battles over common carriage – but the twin policy goals of competition and consumer protection remain largely unchanged.

Broadcast policy, on the other hand, is primarily a cultural policy document designed to maximize the benefits of broadcast spectrum in a world of scarcity. In that analog world, the “broadcast system” features policies such as licensing requirements, Cancon contribution mandates, public broadcaster support, and simultaneous substitution policies as a means to encourage the creation of Canadian content and to safeguard broadcast space for domestic content.

The broadcast world of scarcity has given way to a world of abundance, however, with no channel limits nor restrictions on the ability for anyone to “broadcast” or distribute their content to a national or international audience. The regulatory world therefore no longer needs to rely on the policies of scarcity. Instead, the key ingredients to encourage cultural choice and to provide incentives for creativity include equality of network access, marketing, distribution, and ease of discovery in a world of seemingly unlimited content.

Ms. Joly appears to intuitively understand the success of the Canadian industry does not lie in new regulations. She has emerged as a champion for the export potential of Cancon with new markets, foreign investment, and Internet-based distribution offering the opportunity for greater commercial and cultural success.

Support for Canadian content remains important, but neither the broadcasting system nor the Internet should be viewed as the primary source of funding. In fact, change is already happening with foreign financing now the largest source of support for Canadian English-language production, exceeding revenues generated through regulatory policies such as mandated contributions.

The importance of global markets for Canadian content is certain to increase in the digital world. As Ms. Joly meets with the Internet giants, their pitch should focus on a confident, culturally relevant country producing content the world wants to see in a market committed to affordable broadband Internet access, net neutrality, and modernized digital communications laws in which content and contribution requirements are no longer the focus.

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Copyright Reform in Canada and Beyond

Michael Geist Law RSS Feed - Tue, 2017/04/18 - 10:04

Creative Commons will hold their annual global summit in Toronto later this month. In anticipation of that event, I discussed copyright reform in Canada and around the world in an interview with Creative Commons’ Public Policy manager Timothy Vollmer.  The full interview, which included discussion on copyright and trade agreements, educational exceptions, and empirical data, can be found here. An excerpt discussing the Canadian experience is posted below:

Creative Commons is looking forward to hosting its Global Summit in Toronto at the end of this month. One of the topics to be discussed is how CC allies from around the world can share information and work together around supporting the reform of copyright rules in service of users and the public interest. CC affiliates are already active in copyright reform and commons advocacy in Europe, Australia, Latin America, and other places. Can you describe what’s going on with copyright reform in Canada, and how the Creative Commons network can help mobilize positive changes? What do you think we should push to achieve at the Summit re: copyright reform organising?

Canada is often held out as a great example of successful copyright advocacy leading to a more balanced law. After more than a decade of debate, the law was overhauled in 2012.  While there are plenty of provisions for rights holders – strong anti-circumvention laws and anti-piracy measures – the law also features some innovative limitations and exceptions such as an exception for non-commercial user generated content.  There is also a cap on statutory damages in non-commercial cases and a privacy-friendly approach to intermediary liability.  Moreover, the Supreme Court of Canada has ruled that fair dealing is a user’s right that should be interpreted in a broad and liberal manner, leading to results that affirm a balance to copyright.

The 2012 reforms also included a mandatory review every five years, which means that a new review will start late in 2017.  There is still room for improvement and learning from best practices from around the world would be enormously helpful.  Moreover, there is an expectation that some rights holders will demand that the government roll back fair dealing at the very time that other countries are open to fair use provisions.  The Global Summit offers an exceptional opportunity to develop national and international strategies, learn about reforms around the world, and begin the process of speaking with a consistent voice on positive copyright reform.

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Copyright in the Public Interest: How Canada Can Establish a Pro-Innovation Reform Agenda

Michael Geist Law RSS Feed - Thu, 2017/04/13 - 08:50

The Centre for International Governance Innovation, the well-respected independent think tank based in Waterloo, has posted the first part of an exceptional new series on innovation. From the introduction from Rohinton Medhora to several pieces on innovation and trade (Kahin, Haggart, Ciuriak, and Van Harten), the series promises to provide politicians and policy makers with valuable insights to support the government’s focus on innovation. I was delighted to participate in the project with a piece titled How Trolls are Stifling Innovators, Gamers and Netflix Junkies.

The contribution, which is accompanied by a video on the impact of copyright and fair use on innovation, identifies several areas of copyright reform that are closely linked to innovation policy.  These include copyright flexibilities such as fair use, the need to prevent IP and copyright misuse, and the harms associated with restrictive digital lock rules. The article starts by noting that the Supreme Court of Canada highlighted the link between copyright and innovation in the 2002 Theberge decision:

the court emphasized the dangers of copyright law that veers too far toward copyright creators at the expense of both the public and the innovation process. The majority noted that “[e]xcessive control by holders of copyrights and other forms of intellectual property may unduly limit the ability of the public domain to incorporate and embellish creative innovation in the long-term interests of society as a whole, or create practical obstacles to proper utilization.”

It concludes with several policy reform recommendations, including adopting fair use, creating greater digital lock flexibility, and addressing IP misuse. Those issues are also discussed in the accompanying video, which is embedded below.

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The International Trade Committee’s TPP Report: Clarifying the Liberal, Conservative, and NDP Policies on Asia-Pacific Trade

Michael Geist Law RSS Feed - Tue, 2017/04/11 - 08:45

The Standing Committee on International Trade released its long awaited report on the Trans Pacific Partnership yesterday, the result of months of hearings and public consultation. The TPP committee review represented the Liberal government’s most tangible mechanism to consult with the public on an agreement it did not negotiate and that suffered from a lack of transparency throughout the negotiation process. Along the way, Donald Trump was elected president of the United States and moved quickly to withdraw from the TPP.  The resulting report is therefore anti-climatic, since the agreement is effectively dead.

Nevertheless, the 113 page report provides a record of the many witnesses that appeared before the committee and places all three political parties on the record. Much of the report identifies the controversial issues – intellectual property, dispute settlement, trade in services among them – and recounts the differing views. The report leaves little doubt about the public divide on the TPP, noting support from some (though not all) business groups and opposition from many public interest groups. For example, the report notes that the intellectual property chapter was among the issues most raised before the committee, particularly the patent provisions and copyright term extension. It highlights not only comments before the committee (including my own), but also briefs submitted to the committee, including one from the Girl Guides of Canada, who expressed concerns with copyright term extension.

As for the future, the committee effectively acknowledged that ratifying the TPP with the U.S. withdrawing makes no sense. The report states:

The Committee is aware that the Government could ratify the TPP, like Japan did earlier this year. That said, even after doing so, the TPP would possibly not enter into force. In that case, Canadian businesses would lack preferential access to Japan and certain other Asia-Pacific countries unless the Government concluded new trade or investment agreements with them.

As well, the Committee recognizes that the Government could provide Canadian businesses with preferential access to some Asia-Pacific countries through negotiating an FTA with some TPP countries; any such bilateral or regional agreement could be based on the text of the TPP. As of March 2017, it is not clear how many or which of the TPP signatories would want to negotiate such an FTA. The extent to which the text of such an FTA would resemble the text of the TPP, or whether it would include non-TPP countries, is not known.

The Committee believes that the Government should proactively pursue bilateral trade and investment agreements with one or more TPP countries. Regarding Japan, the Committee is aware that seven rounds of negotiations for a Canada–Japan economic partnership agreement (EPA) had occurred by 2014, although negotiations were suspended as a result of both countries participating in TPP negotiations. If the TPP does not enter into force, the Government should seek preferential access to Japan for Canadian businesses by engaging the Government of Japan in renewed EPA negotiations.

The Conservative supplemental opinion criticizes the government on trade, despite the fact that it was the Liberals and not the Conservatives that closed the CETA deal. On TPP, the party’s position seems to be to maintain support the TPP even without the U.S.:

Now with the United States having formally withdrawn from the TPP and over a year after signing the agreement, the Liberal government has still refused to take a position on an agreement that they know is in the best interest of Canadians. Japan has ratified the TPP and other remaining signatories like Australia, New Zealand and Vietnam have pledged to continue to pursue the TPP without the involvement of the United States. Accordingly, and in consideration of recent events surrounding the TPP, the CPC maintains our support for the agreement and we urge the Government of Canada to pursue a trade pact with the remaining signatories. Failure to do so will come at great cost to the Canadian economy.

Meanwhile, the NDP aggressively calls for a rejection of the TPP:

It’s difficult to believe that after a year of study, consultation and analysis, the Liberal government is still not prepared to reject the TPP. The NDP calls on the Government of Canada to formally withdraw from the TPP, and to pursue an alternative agenda for strengthening and deepening trade relations in the Asia-Pacific region.

Its recommendations also point to the need to disclose the health care costs associated with patent term extension and to ensure that the “Government of Canada defend intellectual property rights that benefit Canadian consumers and innovators in all future trade and investment agreement negotiations.”

In other words, the political parties now have three distinct positions on the TPP and Asia-Pacific trade. The Liberals want to pursue Asian trade without the TPP through bi-lateral agreements (most notably with Japan), the Conservatives want to stick with the TPP, and the NDP want to reject the deal. The reality is that the TPP is dead given that it cannot take effect without the U.S., but many of its provisions will live on. Indeed, with North American Free Trade Agreement renegotiation the next big trade issue on the Canadian agenda, the party TPP positions and concerns the committee heard on the agreement are likely to resurface again within the context of the upcoming NAFTA talks.

The post The International Trade Committee’s TPP Report: Clarifying the Liberal, Conservative, and NDP Policies on Asia-Pacific Trade appeared first on Michael Geist.

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