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Supreme Court Rules Facebook Can’t Contract Out of B.C. Privacy Law

Michael Geist Law RSS Feed - Fri, 2017/06/23 - 11:02

The Supreme Court of Canada issued a landmark decision this morning on the enforceability of forum selection clauses in online contracts, rejecting Facebook’s effort to block a privacy class action lawsuit in British Columbia on the grounds that its own contract specified that legal actions be brought in California. A divided court ruled that the unequal bargaining power between consumers and companies such as Facebook – combined with the importance of privacy rights – meant that the clause should not be enforced and that the lawsuit should proceed in Canada.

The decision represents a clear recognition that courts should not be quick to allow companies to contract out of important rights by ousting local laws through forum selection clauses. More broadly, the terms found within non-negotiated take-it-or-leave it clickwrap contracts should not always be enforced by the courts, particularly where important rights or remedies might be lost by doing so. While forum selection clauses are an obvious mechanism for restricting rights, the reasoning might also be applied to other online contractual terms that seek to override important laws and protections. These could include contractual terms that seek to override copyright user rights such as fair dealing or local consumer safeguards.

The background of the case involves a privacy class action lawsuit over a Facebook “sponsored stories” program that no longer exists. The trial judge noted that the heart of the case is whether online terms and conditions override domestic legal protections (in this case, the B.C. Privacy Act). The trial court judge ruled that the terms did not, citing provisions in the B.C. Privacy Act that confer exclusive jurisdiction on the B.C. Supreme Court. The B.C. Court of Appeal rejected both the analysis of the BC Privacy Act and the broader public policy considerations of whether online terms should trump local law. The appeal court ruled that the Facebook terms were “valid, clear, and enforceable”. It then fell to the plaintiff to demonstrate why the court should decline to enforce the forum selection clause. The court cited as a possible example evidence that the case could not be heard in the California court (which would have the effect of creating a limitation of liability for Facebook). Without such evidence, the court ruled that the Facebook terms were binding. Moreover, it rejected the argument that the B.C. Privacy Act is intended to trump valid contracts.

The Supreme Court of Canada ruling overrules the B.C. Court of Appeal, holding that the forum selection clause was enforceable. The majority ruling comes from two written decisions:
Justices Karakatsanis, Wagner and Gascon writing one set of reasons and Justice Abella the other.

The Karakatsanis, Wagner and Gascon ruling emphasizes the uneven bargaining power between the parties:

The grossly uneven bargaining power between the parties and the importance of adjudicating quasi-constitutional privacy rights in the province are reasons of public policy that are compelling, and when considered together, are decisive in this case.

While supporters of online contracts frequently cite the need for certainty, the court notes that there may be other factors to consider (happily citing directly from the CIPPIC intervention):

Irrespective of the formal validity of the contract, the consumer context may provide strong reasons not to enforce forum selection clauses. For example, the unequal bargaining power of the parties and the rights that a consumer relinquishes under the contract, without any opportunity to negotiate, may provide compelling reasons for a court to exercise its discretion to deny a stay of proceedings, depending on the other circumstances of the case. And as one of the interveners argues, instead of supporting certainty and security, forum selection clauses in consumer contracts may do ‘the opposite for the millions of ordinary people who would not foresee or expect its implications and cannot be deemed to have undertaken sophisticated analysis of foreign legal systems prior to opening an online account’ (Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic Factum).

The majority concludes that Douez met the burden of establishing that there is strong cause not to enforce the forum selection clause. The reasons include unequal bargaining power and the importance of privacy as a quasi-constitutional right. On unequal bargaining power, they cite my colleague Marina Pavlović in stating:

Despite Facebook’s claim otherwise, it is clear from the evidence that there was gross inequality of bargaining power between the parties. Ms. Douez’s claim involves an online contract of adhesion formed between an individual and a multi-billion dollar corporation. The evidence on the record is that Facebook reported almost $4.28 billion in revenue in 2012 through advertising on its social media platform. It is in contractual relationships with 1.8 million British Columbian residents, approximately forty percent of the province’s population. Ms. Douez is one of these individuals. Relatedly, individual consumers in this context are faced with little choice but to accept Facebook’s terms of use. Facebook asserts that Ms. Douez could have simply rejected Facebook’s terms. But as the academic commentary makes clear, in today’s digital marketplace, transactions between businesses and consumers are generally covered by non-negotiable standard form contracts presented to consumers on a “take-it-or-leave-it” basis (Pavlović, at p. 392).

On privacy, the court discusses its importance as a quasi-constitutional right and is particularly sensitive the privacy challenges that arise from the Internet:

Canadian courts have a greater interest in adjudicating cases impinging on constitutional and quasi-constitutional rights because these rights play an essential role in a free and democratic society and embody key Canadian values. There is an inherent public good in Canadian courts deciding these types of claims. Through adjudication, courts establish norms and interpret the rights enjoyed by all Canadians.

At issue in this case is Ms. Douez’s statutory privacy right. Privacy legislation has been accorded quasi-constitutional status. This Court has emphasized the importance of privacy – and its role in protecting one’s physical and moral autonomy – on multiple occasions. As the chambers judge noted, the growth of the Internet, virtually timeless with pervasive reach, has exacerbated the potential harm that may flow from incursions to a person’s privacy interests. In this context, it is especially important that such harms do not go without remedy.

The majority adds that there are additional factors that weigh toward non-enforcement, including the interests of justice (it wasn’t clear that a California court, which was designated in the Facebook clause, would even hear the case) and the convenience and costs associated with litigating there.

Justice Abella joined the majority with reasons that adopted an even stronger position against the enforceability of the Facebook contract. While Justices Karakatsanis, Wagner and Gascon ruled that the clause is enforceable under contractual doctrine but that Douez met the burden of showing strong cause that it should not be enforced, Justice Abella concluded that it was not enforceable at the first step of inquiry, emphasizing the non-negotiated nature of online contracts.  She states:

I accept that certainty and predictability generally favour the enforcement at common law of contractual terms, but it is important to put this forum selection clause in its contractual context. We are dealing here with an online consumer contract of adhesion. Unlike Pompey, there is virtually no opportunity on the part of the consumer to negotiate the terms of the clause. To become a member of Facebook, one must accept all the terms stipulated in the terms of use. No bargaining, no choice, no adjustments.

Justice Abella then asks the question that many consumers may ask in the context of online contracts:

What does “consent” mean when the agreement is said to be made by pressing a computer key? Can it realistically be said that the consumer turned his or her mind to all the terms and gave meaningful consent?

Her conclusion:

In general, then, when online consumer contracts of adhesion contain terms that unduly impede the ability of consumers to vindicate their rights in domestic courts, particularly their quasi-constitutional or constitutional rights, in my view, public policy concerns outweigh those favouring enforceability of a forum selection clause.

Justice Abella’s analysis then turns to the importance of privacy and the “grossly uneven bargaining power” in concluding that the forum selection clause in the Facebook agreement is unenforceable as a “classic case of unconscionability.”

There is a dissent from Chief Justice McLachlin and Justices Moldaver and Côté.  They emphasize the importance of forum selection clauses, arguing that the default should be that they are enforceable, particularly in the online environment (citing an article I wrote many years ago about the challenges of Internet jurisdiction). They note that many companies large and small rely on the clauses and that :

The overwhelming weight of international jurisprudence shows that, far from being a subterfuge to deny access to justice, forum selection clauses are vital to international order, fairness and comity.

The dissent also argues that there was no evidence of the state of California law nor of the hardship in litigating there.

With the majority ruling against the enforceability of the forum selection clause, the court has demonstrated their discomfort with non-negotiated online terms that place consumers at a significant disadvantage and may result in a loss of rights. While forum selection clauses are an obvious manifestation of that, the reasoning might also be applied to other online contractual terms that seek to override important laws and protections. These could include contractual terms that seek to override copyright user rights or local consumer safeguards. The decision will undoubtedly have a significant impact on online contracting in Canada, forcing many online companies to reconsider whether their agreements are fully enforceable and emboldening consumers to stand up for their rights.

The post Supreme Court Rules Facebook Can’t Contract Out of B.C. Privacy Law appeared first on Michael Geist.

U.S. Lobby Groups Take Aim At Canadian Copyright Law in NAFTA Comments: No Balance, No Fair Use, & No Cultural Exception

Michael Geist Law RSS Feed - Thu, 2017/06/22 - 09:07

The U.S. just completed its consultation on negotiating objectives in the upcoming NAFTA re-negotiations (the Canadian consultation is open until July 18, 2017). There are well over a thousand comments, but a review of the lobby groups who pay attention to copyright reveals that they hope to use the talks to make significant changes to Canadian copyright law. This was expected – I touched on the trade dimension of domestic reforms in my recent Policy Options piece on the 2017 copyright review – but the extent to which many groups want to toss aside foundational elements of Canadian copyright law may still surprise.

For example, the Copyright Alliance, which represents a wide array of lobby group associations and Hollywood type interests, rejects the inclusion of balance as an objective in copyright law. It notes that the TPP included a balance provision and warns against something similar in NAFTA. Ironically, the TPP provision was non-enforceable, stating only:

Each Party shall endeavour to achieve an appropriate balance in its copyright and related rights system, among other things by means of limitations or exceptions that are consistent with Article 18.65 (Limitations and Exceptions), including those for the digital environment, giving due consideration to legitimate purposes such as, but not limited to: criticism; comment; news reporting; teaching, scholarship, research, and other similar purposes; and facilitating access to published works for persons who are blind, visually impaired or otherwise print disabled.

As many commentators noted, the “shall endeavour” requirement was very weak. Further, the actual legitimate purposes are hardly controversial as few argue against the basic exceptions identified in the TPP text. Yet despite the weak language and minimalist approach to balance, even that is too much for the Copyright Alliance, which states that it is “very skeptical about this type of language in a trade agreement.” The Copyright Alliance is less skeptical about including copyright term extension, digital lock protections, and requiring intermediary cooperation with rights holders in order to qualify for safe harbours.

While some IP stakeholders such as the Business Software Association are supportive of safe harbours, most others hope to use NAFTA to require significant reforms to the U.S. process and then impose those changes on Canada and Mexico. For example, the RIAA wants Canada to drop the notice-and-notice system and it wants reform of the U.S. notice-and-takedown system as the North America-wide standard. The MPAA similarly cautions against simply using the DMCA as the standard for intermediary liability.

The MPAA also takes aim at Canadian cultural protections, arguing that cultural safeguards should be removed from NAFTA. It states:

The NAFTA is the only U.S. trade agreement currently in force that includes a cultural carveout.  Such a carveout is inconsistent with the principles of free and fair trade. Cultural promotion and open markets are compatible and complementary. MPAA is committed to the promotion and protection of cultural diversity and firmly believes that NAFTA parties in the modernization negotiations can effectively rely on the flexibilities built into free trade agreements, including permissible support programs, to promote their cultural interests.

Canada has long maintained the need for a cultural exception in its trade agreements and while the TPP opened the door to exceptions, the MPAA wants it eliminated altogether.

The MPAA also wants Canada to extend the term of copyright to life of the author plus 70 years from the current standard found in the Berne Convention of life of the author plus 50 years. It argues that the “extension of the term of protection for copyrighted works has a direct benefit to the creators of these works, as well as consumers.” It does not mention that the creators are long since dead, that consumers face higher prices with term extension, and that the change would lock-down the Canadian public domain for two decades.

The U.S. lobby groups generally favour exporting U.S. rules to Canada, but not when it comes to fair use. Many innovative countries have adopted fair use (South Korea, Singapore, Israel among them), but the RIAA argues that only the U.S. should have it. Its submission states:

[E]fforts to export the American fair use exception are particularly troubling. In the United States, the fair use doctrine stems from the First Amendment of the U.S. Constitution and codified 150 years of American common law precedent. The American fair use doctrine is therefore unique to the United States. Fundamentally, fair use creates uncertainty out of the U.S. context. The fair use doctrine provides for open-ended exceptions, setting out principles which should be considered by the courts when determining whether a use of copyright material is “fair” under our system and, therefore, permitted. The inherent uncertainty of the scope of fair use creates an uneasy and complicated relationship to the first requirement of the three-step-test, which is limited to “certain special cases”. That is particularly true when fair use is implemented outside U.S. context and history and without the benefit of the 150 years of case law on which U.S. fair use is based.

Interestingly, Drake, one of Canada’s best known recording artists, recently used a fair use argument in U.S. courts to defeat a lawsuit over sampling. It would be particularly troubling if Canadian artists and creators could only rely on U.S. law to defend their creativity. Fair use is an approach that works for all – creators, users, and innovators. For the RIAA to argue that fair use rights should be denied to artists under Canadian law points to the hypocrisy of their submission and why Canadian negotiators need to adopt a strong position defending the domestic copyright balance.

The post U.S. Lobby Groups Take Aim At Canadian Copyright Law in NAFTA Comments: No Balance, No Fair Use, & No Cultural Exception appeared first on Michael Geist.

Five Eyes Wide Open: How Bill C-59 Mixes Oversight with Expansive Cyber-Security Powers

Michael Geist Law RSS Feed - Wed, 2017/06/21 - 09:17

Four years ago, Edward Snowden shocked the world with a series of surveillance disclosures that forced many to rethink basic assumptions about the privacy of online activities in light of NSA actions. In the years that have followed, we have learned much more about the role of other countries – including Canada – in similar activities (often in partnership with the NSA). The legality and oversight over these cyber-related programs fell into a murky area, with legal challenges over metadata programs, court decisions that questioned whether Canadian agencies were offside the law, the hurriedly drafted Bill C-51 that sparked widespread criticism, and concern over the oversight and review process that many viewed as inadequate.

Yesterday, the Liberal government unveiled Bill C-59, the first genuine attempt to overhaul Canadian surveillance and security law in decades. The bill is large and complicated, requiring months of study to fully assess its implications (reactions from Forcese/Roach, BCCLA, CBC, Wark, Amnesty). At first glance, however, it addresses some of the core criticisms of the Conservatives’ Bill C-51 and a legal framework that had struggled to keep pace with emerging technologies. Leading the way is an oversight super-structure that replaces the previous silo approach that often left commissioners with inadequate resources and legal powers. The government has promised to spend millions of dollars to give the new oversight structure the resources it needs alongside legal powers that grant better and more effective review of Canadian activities.

Bill C-59 also places some CSE activities under quasi-judicial control for the first time in its history. A newly created Intelligence Commissioner (a former judge) must authorize some Communications Security Establishment activities as “reasonable” before CSE can undertake these activities, establishing meaningful independent oversight over a set of activities that were previously at the discretion of the Minister of National Defence. The new quasi-judicial control could use some tweaking, however, since it is limited by its secrecy (the body only provides its reasoning to the government and the new intelligence oversight agency) and the absence of appeal mechanisms.

Better oversight alone does not effectively address the privacy-security balance, however. The bill goes beyond fixing longstanding oversight shortcomings by also seeking to address some of the hot button concerns that emerged from C-51. The bill seeks to scale back on disruption powers, narrow the terrorism propaganda provision, and alter the much-criticized provisions that might have been applied to public protests. It does not, however, address the serious concerns about information sharing within government that create a “total information awareness” approach. The failure to fix information sharing isn’t a huge surprise – the Liberals were supportive of it during the C-51 discussion – but it is nevertheless a disappointment that leaves a major privacy concern largely intact.

The bill also notably avoids diving back into the lawful access debate. The government’s consultation paper last year placed the issue back on the agenda, raising the possibility of new disclosure warrants and new rules on encryption. Bill C-59 does not touch those issues, suggesting that the government, law enforcement, and civil society continue to struggle to find common ground that would both address law enforcement concerns and remain consistent with the Supreme Court of Canada’s Spencer decision. Lawful access is far from dead – a bill may still be forthcoming – but it remains on the back burner for now.

Yet the aspect of the bill that may require the most careful study is the reshaping of the mandate and powers of the CSE and the expansion of CSIS activities online. The CSE has been at the forefront of cyber-related issues from an operational perspective, but the mandate identified in the National Defence Act required a broad interpretation to make all of its cyber-security activities fit. The mandate states:

The mandate of the Communications Security Establishment is

(a) to acquire and use information from the global information infrastructure for the purpose of providing foreign intelligence, in accordance with Government of Canada intelligence priorities;

 (b) to provide advice, guidance and services to help ensure the protection of electronic information and of information infrastructures of importance to the Government of Canada; and

(c) to provide technical and operational assistance to federal law enforcement and security agencies in the performance of their lawful duties.

Further, the current mandate limits the geographic scope of CSE activities:

Activities carried out under paragraphs (1)(a) and (b)
(a) shall not be directed at Canadians or any person in Canada; and

(b) shall be subject to measures to protect the privacy of Canadians in the use and retention of intercepted information.

Bill C-59 explicitly confirms that the CSE is a cyber agency wielding both offensive and defensive powers and granting it the ability to operate in Canada. This may embolden the CSE to engage in foreign government hacking, access information from domestic Internet companies, and disrupt communication activities.

The new mandate identifies five broad activities: foreign intelligence, cyber-security and information assurance, defensive cyber operations, active cyber operations, and technical and operational assistance. Given that foreign intelligence and technical/operational assistance are holdovers from the prior mandate, the new mandate reinterprets advice, guidance and service to include offensive and defensive cyber operations along with cyber-security.

The active cyber operations should capture particular attention since it signals Canada’s willingness to actively engage in hacking activities globally:

The active cyber operations aspect of the Establishment’s mandate is to carry out activities on or through the global information infrastructure to degrade, disrupt, influence, respond to or interfere with the capabilities, intentions or activities of a foreign individual, state, organization or terrorist group as they relate to international affairs, defence or security.

Bill C-59 limits these cyber operations by providing that they “must not be directed at a Canadian or at any person in Canada.” CSE’s historical defensive operations remain limited because they “must not be directed at any portion of the global information infrastructure that is in Canada”, require Ministerial authorization, and approval from the newly created Intelligence Commissioner. Its newly recognized offensive cyber-operations face similar limitations. However, these limitations do not apply in all circumstances, including activities involving acquiring or analyzing publicly available data or cybersecurity, software, and systems testing.

The challenge of the bill will be to sort through the implications of these provisions. In recent years, there have been many disclosures about Canadian involvement in surveillance activities such as the surveillance of airport wifi or uploads and downloads to Internet storage sites. Would the new provisions explicitly permit such activities?  Consider the combination of an expansive definition of infrastructure and a full mandate to acquire, use, analyze, retain or disclose infrastructure information for purposes such as research and development, testing systems, or cyber-security activities. The definition of infrastructure includes:

(a) any functional component, physical or logical, of the global information infrastructure; or
(b) events that occur during the interaction between two or more devices that provide services on a network – not including end-point devices that are linked to individual users – or between an individual and a machine, if the interaction is about only a functional component of the global information infrastructure. 

It does not include information that could be linked to an identifiable person.

This would appear to open the door to active participation in widespread network surveillance activities and the acquisition of network traffic for the purposes of analysis, testing, retention, or disclosure. These activities would not require authorization. With ministerial and Intelligence Commissioner authorization, the CSE can be authorized to hack into the network, install or distribute anything on the network, and do anything to remain covert. It may be even be authorized to carry “unselected” foreign intelligence acquisition – the same mass surveillance the NSA has been criticized for – so long as these activities are not directed at Canadians. There are some limitations on authorizations, which can last for up to one year. Extensions of the ministerial authorization is not subject to authorization by the new Intelligence Commissioner. The CSE or government’s view of an identifiable person is uncertain, raising questions about whether key digital identifiers such as IP addresses are identifiable in their view.

Not to be overlooked is the significant expansion of CSE’s domestic cybersecurity defence mandate. The agency can now acquire Canada data and interact with designated Canadian infrastructure or electronic information for the purpose of cyber-defence (designated “cybersecurity and information assurance” activities), granting the agency a significant new role in domestic private sector cybersecurity. The Minister and Intelligence Commissioner must authorize such activities before CSE can engage in them.

However, under Bill C-59, CSE is also granted near limitless discretion to evaluate any system for vulnerabilities (including private sector Canadian systems or systems with extensive Canadian data) under its cybersecurity mandate. No authorization is required from either the Minister or the Intelligence Commissioner to carry out such activities, although presumably CSE would still be limited by wiretapping and anti-hacking protections in the Criminal Code when accessing domestic systems without explicit authorization.

The CSIS provisions expand the collection of datasets that may also have significant cyber-implications. The bill states that CSIS may only collect a dataset if it is publicly available, belongs to an approved class, or predominantly relates to non-Canadians who are outside Canada.  This third category on datasets relating predominantly to non-Canadians would seemingly cover major social media and search datasets from the U.S. that include millions of Canadians but do not relate predominantly to Canada. This new scheme comprises a somewhat more tailored attempt to resurrect CSIS metadata program the Federal Court recently shut down as “unnecessary.”

Proponents will argue that these cyber-related provisions simply reflect the reality of global communications today and participation in international networks such as Five Eyes. However, Canada’s participation in these networks and the embrace of a more muscular cyber-security strategy should be done with our eyes wide open, recognizing that with explicit authorization for offensive hacking of foreign governments and massive network data collection, Canada is now an active participant in the network disruption and surveillance programs whose revelation shocked many only a few years ago.

The post Five Eyes Wide Open: How Bill C-59 Mixes Oversight with Expansive Cyber-Security Powers appeared first on Michael Geist.

Why the Government’s ATI Reform Bill is a Promise Broken: Proactive Disclosure ≠ Access to Information

Michael Geist Law RSS Feed - Tue, 2017/06/20 - 09:10

When political parties find themselves in opposition, promising to fix the access to information system invariably seems like a good idea. The public is often skeptical about whether the government is transparent and when combined with a woefully outdated Access to Information Act, reform provides a ripe target. Stephen Harper’s Conservatives promised a long list of access to information reforms before taking power, most of which were never acted upon. Justin Trudeau’s Liberals made similar promises when in opposition, unveiling a 32-point plan in June 2015 that pledged a fair and open government backed by access to information reform.

The government introduced Bill C-58 yesterday, the bill promoted as fulfilling its commitment on access to information reform. Discouragingly, it fails to do so. The bill does include some notable improvements, including implementing order making power for the Information Commissioner and establishing a requirement to justify, with written reasons, why information is redacted. However, the bill does not live up to the campaign promise nor does it fully address longstanding concerns with the law.

The bill substitutes a commitment to bring the Prime Minister and government ministers under the Access to Information Act with a promise of “proactive disclosure.” Proactive disclosure, a reference to an open-by-default approach for certain ministerial information such as mandate letters and briefing books, is not a substitute for access to information. In 2014, I critiqued the Conservatives’ open government initiative, noting:

An open government plan that only addresses the information that government wants to make available, rather than all of the information to which the public is entitled, is not an open plan.

Bill C-58 seeks to conflate access to information with proactive disclosure, treating the information the government wants to make available as the equivalent to the information to which the public is entitled and may want to access. In fact, the bill effectively renames the Access to Information Act with a new long title:

An Act to extend the present laws of Canada that provide access to information under the control of the Government of Canada and to provide for the proactive publication of certain information

The decision to embed proactive disclosure within the title of the act and treat it as an equivalent part of the access to information system represents a dangerous watering down of the legislation and opens the door to shifting more and more information toward government determining what the public is able to see rather than responding to public requests for information. The Standing Committee on Access to Information, Privacy and Ethics 2016 report included several recommendations related to proactive disclosure, but those were framed primarily as open government and open information policies.

The problems with the bill do not end there. It creates the prospect of refusing to respond to requests that are considered vexatious or in bad faith and it resurfaces the possibility of bringing back user fees beyond the $5 application fee. There may be justifiable policy reasons for these provisions (the ETHI committee recommended the refuse to process requests in such circumstances in its 2016 report. It also called for the elimination of the $5 fee), but the government has not fostered trust with this bill and its plan for access to information.

The bill also fails to pick up on several key recommendations that have surfaced over the years. It does nothing to address overbroad exceptions that often result in redacted information, blank pages throughout the request or lengthy delays. It also does not adopt one of the ETHI committee’s most important recommendations: a general public interest override. The recommendation stated:

That in the first phase of the reform of the Access to Information Act, the Act be amended to include a general public interest override, applicable to all non-mandatory exemptions, with a requirement to consider the following, non-exhaustive list of factors:

Open Government objectives;

  • environmental, health or public safety implications;
  • whether the information reveals human rights abuses or would safeguard the right to life, liberty or security of the person.

The general public interest override can cut both ways, sometimes leading to more disclosure, sometimes less. However, many access to information laws include the analysis to ensure that the public interest in factored into the decision determining what information is released. The federal law does not do so and the bill is silent on the issue.

The government and Treasury Board President Scott Brison may respond that the bill also creates a mandatory five-year review, so further reforms could be adopted during the regular reviews in the future. Yet the mandatory five-year reviews are no guarantees of reform – the PIPEDA five-year review has failed to create a regular process for legislative updates – and are no substitute for a bill that fails to fully addresses longstanding problems with the law or live up to campaign commitments to fix the system.

The post Why the Government’s ATI Reform Bill is a Promise Broken: Proactive Disclosure ≠ Access to Information appeared first on Michael Geist.

Saving Private Media: The Good, the Bad, and the Terrible From the Latest Canadian Proposals

Michael Geist Law RSS Feed - Mon, 2017/06/19 - 10:08

Canadian Heritage Minister Melanie Joly does not plan to release her digital culture policy plan until September, but the pressure to address the financial challenges faced by media organizations increased last week with the Standing Committee on Canadian Heritage report (the same report that recommended an Internet tax that was swiftly rejected by Prime Minister Trudeau) and a proposal from News Media Canada that seeks hundreds of millions in annual government support. The recommendations don’t end there: copyright reform, tax changes, and amendments to government advertising policies are all part of the proposals to provide support to Canadian media organizations.

Andrew Coyne’s must-read column persuasively argues against a media bailout, noting the dangers of permanent government funding of an otherwise independent media. He rightly argues that if funding is established, it isn’t going away as government will be reluctant to allow funded media organizations to fail.  Further, Ken Whyte, former editor-in-chief of the National Post, openly acknowledges in a Twitter stream the constraints that come from criticizing government when funding or regulation is at stake.

The News Media Canada proposal adopts the approach that if you’re going to ask for something, you might as well ask big. The organization argues that “the news media industry in Canada is under threat from competitors with bigger reach and development budgets but no real stakes in Canadian democracy.” Its solution is to ask Canadian taxpayers to hand over hundreds of millions of dollars per year to cover the cost of doing business by rebating 35 cents of every dollar spent on journalism up to $175 million per year. There is an additional proposed fund for “business innovation” that would chip in $90 million per year. The funding is limited to established entities (must have at least a 12 month publishing cycle), limited by subject matter covered, and limited by ownership and location of editorial work.

These proposals are similar, though not identical, to the Canadian Heritage committee recommendations (and also echo the Public Policy Forum’s Shattered Mirror report).  The committee’s recommendations included:

  • amend sections 19 (newspapers), 19.01 (periodicals) and 19.1 (broadcasters) of the Income Tax Act to allow deduction of digital advertising on Canadian-owned platforms.
  • introduce a tax credit to compensate print media companies for a portion of their capital and labour investments in digital media. This would be a temporary five-year measure.
  • level the playing field among industries publishing Canadian news, on all platforms, by ensuring that foreign news aggregators, which publish Canadian news and sell advertising, directed to Canadians, are subject to the same tax obligations as Canadian providers.
  • change the Canada Periodical Fund to make daily and free community newspapers eligible and offer greater support for the online distribution of magazines and newspapers;
  • set aside a part of the revenue from the 600 MHz auction to support locally reflective news and programming.
  • require CBC/Radio-Canada to eliminate advertising from its digital news platforms.
  • change the definition of a registered charity in the Income Tax Act to include not-for-profit media or foundation.

While the proposals will all be lumped together as a plan to “save the media”, there is the good, the bad, and the terrible.

The Good

The good include efforts to support non-for-profit foundations or charities that support investigative journalism (as is found in the U.S.), setting aside revenue from spectrum auctions for digital purposes (everyone wants a crack at this money and the government should commit to plowing the revenues back into all things digital – access, literacy, culture, and media), making CBC an ad-free digital news competitor (thereby removing a taxpayer-supported competitor), and levying sales taxes on foreign digital services (this is also an issue with Netflix). None of these changes affect the independence of Canadian media and they might help support independent journalism and address some competition concerns.

The Bad

The bad are the proposals that simply misread the digital advertising market. For example, News Media Canada wants to ban government advertising on foreign owned sites or services. Government advertising isn’t a subsidy program, however. If government invests in advertising, it must surely be to inform Canadians in the most effective way possible. If that means advertising on foreign owned sites, so be it.

The various proposals also hope to make foreign digital advertising more expensive by playing with the tax deduction eligibility. The goal is presumably to push advertisers away from foreign sites and services or away from digital advertising altogether. Yet 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.

The attempts to distinguish between foreign and domestic digital advertising is also far more complicated that the reports suggest. Many advertisers don’t know where their ads will appear and ad networks do not typically distinguish between the ownership or residency of the sites themselves. In fact, the changes would ultimately make it more difficult for small and medium sized business to reach Canadian audiences since they could not easily use existing digital ad networks.

Further, 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 often appears on the same Canadian sites that the reports want to support. That revenue initially goes to Google, which then sends a portion back to the site or media organization. For that form of advertising, Google is simply matching advertisers and websites, while collecting a commission for providing the service.  If advertising through the Google or Facebook network alone were enough to disqualify the advertising from tax deductions, Canadian sites would be harmed in the process.

The Terrible

While those are the bad, the proposals also contain some terrible proposals. The government bailout plans should be a non-starter for the reasons articulated by Coyne. Some media organizations are certainly struggling with new competitors and the shift to digital, but turning the media into a state-supported industry imperils an independent media. Moreover, the proposals invariably favour struggling incumbents over upstart digital operations that are an increasingly important presence in the marketplace.

Further, looking to Canadian copyright reform as a solution (as found in the Shattered Mirror report and raised by News Media Canada) would cause considerable harm to freedom of expression and the practice of news reporting with little likelihood of economic benefits. There are at least two kinds of activities at issue. First, there are sites that largely re-write original reporting and run the alternative version of a story on their site with their own advertising. This may be the reference in the report to bloggers using materials without permission. For this form of use, fair dealing is not implicated at all.  Copyright law is designed to protect specific expression, but rightly recognizes that ideas and facts should not be controlled by a single entity. To change the law would grant a single rights holder exclusivity over reporting, effectively limiting the ability of the press to do its job.

Second, there are sites that aggregate content and link back to the original story.  This has generated frustration among some media organizations, who fear that users rely on intermediaries and social networks to decide what to read. It is true that aggregators typically rely upon fair dealing (or fair use) to generate snippets or short summaries of the articles. Yet left unsaid is that fair dealing is exceptionally important for journalists and efforts to restrict it would harm the practice of news reporting. Indeed, news reporting is included as one of the purposes of fair dealing to ensure that copyright is not used to stop important journalism. Claims that fair dealing is a detriment to journalism fails to understand that newspapers are themselves active users of fair dealing. If the media were required to seek permission each time it quoted from another work, expression would be curtailed and costs to produce original reporting would increase.

The post Saving Private Media: The Good, the Bad, and the Terrible From the Latest Canadian Proposals appeared first on Michael Geist.

Why the Government Was Right to Swiftly Ditch the Ill-Advised Internet Tax

Michael Geist Law RSS Feed - Fri, 2017/06/16 - 10:01

Politicians are sometimes said to struggle with “developing policy at Internet speed,” but Thursday the government gave new meaning to the words. My Globe and Mail op-ed notes that as Liberal MPs were presenting the much-anticipated Standing Committee on Canadian Heritage report on media that included a recommendation for a 5-per-cent tax on broadband access, Prime Minister Justin Trudeau and Canadian Heritage Minister Mélanie Joly were assuring Canadians that the government had no intention of accepting the committee’s proposal.

Ms. Joly left the door open to an Internet tax last year through her national consultation on Canadian content in a digital world, steadfastly refusing to take a firm position on the issue. The committee report effectively ended the debate as the immediate criticism of the ill-advised policy measure means that an Internet tax has about as much future as a dial-up modem.

The prospect of an Internet tax should have never reached the recommendation stage, however, as the committee put it in the policy window without any meaningful analysis or effort to grapple with its repercussions.

Committee chair Hedy Fry oddly claimed that the committee had not recommended an Internet tax at all. While she was right about no Netflix tax (the media coverage unfortunately conflated Netflix and broadband taxes), the committee report leaves little doubt that there is a call for a broadband tax.  Recommendation 12 states:

The Committee recommends to expand the current 5% levy for Canadian content production on broadcasting distribution undertakings to broadband distribution.

There is not much ambiguity there and the Prime Minister rightly killed the proposal before it could get out of the news conference. That said, there is much in the committee report that is worthy of consideration including the application of sales taxes to digital services and the use of spectrum revenues to support Canadian content. I’ll take a look at the remaining proposals in a follow-up post next week.

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Against Affordable Access: Why the Heritage Committee Plan for an Internet Tax is Terrible Policy

Michael Geist Law RSS Feed - Thu, 2017/06/15 - 09:17

The Standing Committee on Canadian Heritage is reportedly set to release its much-anticipated study on the future of media today with a recommendation for a new 5% tax on broadband services to fund Canadian media and the creation of Cancon. The Globe reports that the Conservative MPs on the committee oppose the recommendation. I raised concerns about the possibility of new digital taxes last fall, fearing that Canadian Heritage Minister Melanie Joly would implement them as part of her review of Cancon in a digital world and noting that the Ontario government appeared supportive of the approach. Joly has yet to outline her plans which are scheduled for release in September, but has refused to rule out Internet taxes and regulation. I will update this post once the full report is released, but based on the Globe report it must be stated that an Internet tax to fund Canadian content is a terrible policy choice with exceptionally harmful effects on the poorest and most vulnerable households in Canada. [Update 11:45 am: Within minutes of the report’s release, Prime Minister Justin Trudeau rejected the Internet tax recommendation.]

An Internet tax would be a terrible policy choice even if the evidence did not indicate that foreign funding for Canadian television production is largely replacing declining funding from Canadian broadcasters and broadcast distributors. Despite claims of impeding doom, the reality is that $2.6 billion was spent last year on Canadian television production with support from licensing fees, tax credits and many other sources. The rise of foreign funding, which coincides with major investments from Netflix in original content, now exceeds virtually all other sources of funding, growing from 10% of financing in 2013-14 to 18% in 2015-16.  Rather than searching for new sources of mandated funding, the creative community is experiencing significant growth in new sources of funding that largely offset declines from mandated contributions.

An Internet tax would also be a terrible policy even if it complied with the law. However, as the Broadcasting Act is currently drafted, it does not. As the committee surely knows, an Internet tax is inconsistent with the Broadcasting Act, since the Supreme Court of Canada ruled in 2012 that ISPs are not “broadcast undertakings” for the purposes of that statute. As the court summary of the decision notes:

When providing access to the Internet, which is the only function of ISPs placed in issue by the reference question, they take no part in the selection, origination, or packaging of content.  The term “broadcasting undertaking” does not contemplate an entity with no role to play in contributing to the Act’s policy objectives.

In other words, the government cannot mandate that ISPs contribute to broadcasting objectives without changing the law.

An Internet tax would also be a terrible policy choice even if the public did not already contribute billions of dollars toward the creation of Canadian content at a time when there are market incentives for broadcasters to invest in original content production. The CMPA’s Profile 2016 reports that over a billion dollars was contributed from public sources including the public broadcaster, federal and provincial tax credits, and the Canadian Media Fund. In fact, CRTC Chair Jean-Pierre Blais’ noted in a speech this week that Canadian taxpayers and subscribers have invested over $20 billion over the past five years in the Canadian media content and broadcasting sectors.

An Internet tax would be a terrible policy choice even if the committee’s attempt to limit the tax to “broadband” services rather than slower connections were a good idea. It is not. The CRTC has established a target for all Canadians to have access to real broadband – 50 Mbps download and 10 Mbps upload. That target was roundly applauded as a necessary step in ensuring equality of access to critical communications services. Creating a two-tier Internet by taxing faster speeds would create anti-innovation incentives and consign poorer Canadians to slow, if any, access.

An Internet tax is a terrible policy choice for these myriad of reasons, but most importantly it is a terrible policy choice for the harm it will cause to affordable Internet access. The committee heard from many media and creator groups, but heard little about the cost of Internet access and what an Internet tax would mean for the digital divide (I appeared before the committee in October 2016). Had they studied access costs, they would learned that the CRTC’s annual report on communications in Canada found that Canadian broadband prices are higher than many comparable countries. Moreover, they might have listened to Navdeep Bains, the Innovation, Science and Economic Development Minister, who last week acknowledged the broadband affordability problem:

Low-income Canadians spend a higher share of their household income on cellphone and Internet bills than high-income Canadians. So it’s not surprising that only 6 out of 10 low-income households in Canada have Internet service.  By contrast, virtually all households that earn $125,000 annually have it. 

This digital divide is unacceptable. It represents a real barrier to continued prosperity for Canadians. Every child who’s unable to do school assignments or download music online is one less consumer of your products and services. Each one of these children is potentially one less software developer for your industry – and one less job creator for our country.
We need every Canadian to be innovation ready- ready to spot opportunities, imagine possibilities, discover new ideas, start new businesses and create new jobs. All Canadians need access to high-speed Internet, regardless of their income level or postal code. Until we bridge this digital divide, Canadians will not reach their full potential.

Simply put, there is no way around the fact that an Internet tax would make access 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.

An Internet 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. Yet the committee envisions the Internet as little more than cable television and wants to implement a taxation system akin to that used for cable and satellite providers.

I reviewed many of the options for funding Cancon in a post last year, noting that mechanisms  such as digital sales taxes or spectrum revenues that could generate additional revenues for funding programs. Instead, the Liberal MPs on the committee including Hedy Fry, Julie Dabrusin, Seamus O’Regan, Pierre Breton, Darrell Samson, and Dan Vandal reportedly adopted the worst possible option (even a Netflix tax would be preferable), one that is non-compliant with the law and that would help put the Internet further out of reach for four out of every ten low income households in Canadians. 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 Internet. That goal would be badly undermined by an Internet tax that would increase consumer costs and stymie Canadian innovation.

The post Against Affordable Access: Why the Heritage Committee Plan for an Internet Tax is Terrible Policy appeared first on Michael Geist.

“a plea to the academics”

Fair Duty by Meera Nair - Tue, 2017/06/13 - 10:08

If we want writers to flourish, then it is vital to maintain the spaces of legitimate-unauthorized use provided within the system of copyright.

That was the gist of my remarks for a public event concerning the upcoming review of the Copyright Act, held during Congress 2017. I had one objective in mind: to reach the professoriate. Particularly those individuals who are passionate about literature, books, publishing and Canada. That community is the one that may be best able to cut through the political rhetoric that swirls around the word copyright.  They could offer a well-grounded discussion of what the system of copyright is and how it helps or hinders the telling of stories. And so I titled my presentation as A Plea to the Academics.

The call for papers which prompted my participation asked two questions. The first enquired how might those involved with the enterprises of education and research respond to accusations of widespread pilfering of creative works? The second query asked those same individuals how might they demonstrate the value gained by maintaining a robust limit upon the grant of copyright? My answer was that researchers and educators should do what they do best: research and educate. This was not intended as a witty response; I was quite serious. Beyond a handful of dedicated scholars, the majority of the Canadian professoriate is unaware of the structure of copyright law, its particular history in Canada, and the very real risk Canadians face of being drawn into a strict no-copy-without-payment regime with the ensuing loss to creativity (i.e., see here).

It is likely safe to assert that no government has ever lost votes by declaring allegiance to its writers. Thus, copyright owners, or their representatives, have an easy argument to draw from when lobbying for more restrictive copyright laws; they blithely connect stronger copyright with authorial well-being, claiming that an attendant benefit will eventually flow to the general population. The argument lacks credible evidence, and logic, but given the highly emotional setting of the dialogue, countering the argument requires a deeper understanding of the backstory to literary creation. Limitations upon copyright are critical to building a book industry and to the creation of books themselves. To that end, I drew upon the words and experiences of three writers (Margaret Atwood, Charles Dickens, and Ved Mehta) to illustrate a different perspective about copyright and the creation of literature.

But I have no doubt that literary scholars and book enthusiasts would have more such stories to tell.

My notes, with a few slides embedded, are available through the Association of Canadian College and University Teachers of English.

The Upcoming 2017 Copyright Act Review: What Next for Canadian Copyright

Michael Geist Law RSS Feed - Tue, 2017/06/13 - 10:00

This week Policy Options launched a new series on copyright reform with plans to provide perspectives from across the spectrum. I was delighted to write the first published piece, which starts by making the case that the Conservative government got far more right than wrong in 2012. Canadian copyright law is widely regarded as one of the most innovative in the world with unique, forward-looking provisions (non-commercial user generated content, notice-and-notice) and flexible fair dealing. The last five years have largely achieved what the government had in mind as the days of labelling Canada a “piracy haven” are over, the cultural industries such as movies and music are enjoying record earnings, and new digital services have found great success in Canada.

So, as Parliament prepares for a review of the law later this year, what’s next for Canadian copyright?

I note the following:

The mandatory five-year review was lauded in 2012 as a mechanism that would ensure the law remains current, in what is a fast-paced digital world. On reflection, the uncertainty associated with the prospect of never-ending reforms may ultimately do more harm than good, as would-be investors may question whether Canada is committed to its current path of striking a balance between creators’ and users’ rights.

The 2017 review should be used as a benchmarking exercise, enabling the many stakeholders to give their perspectives on what is working well and what needs to be reviewed. There is certainly an opening for modest reforms that build on the changes in 2015 (extending the term of copyright for sound recordings) and 2016 (ratification of the Marrakesh copyright treaty for the blind and visually impaired). But a radical overhaul would be harmful, as the full implications of the 2012 reforms and recent court rulings are still being sorted out.

The low-hanging fruit offers potential action for the three government departments vying for copyright policy influence: Innovation, Science and Economic Development (notice-and-notice, fair use) Canadian Heritage (Copyright Board of Canada), and International Trade (NAFTA, TPP).

The full piece can be found here.

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Putting the Internet at the Centre: Taking Stock of Jean-Pierre Blais’ Term as CRTC Chair

Michael Geist Law RSS Feed - Mon, 2017/06/12 - 09:23

Barring a last minute extension, CRTC Chair Jean-Pierre Blais’ term will come to an end this week. For those new to the CRTC, it is difficult to overstate just how much changed both procedurally and substantively during his five years as chair. For some context, consider a 2006 invitation I received to participate on a panel at the Telecommunications Invitational Summit, a by-invitation-only event that brought together many in the industry for off-the-record, Chatham House Rules discussions on issues of the day. I was grateful for the invitation – I was there to defend the then-emerging issue of net neutrality – but recall being shocked walking into the venue to see senior telecom executives shooting billiards and having a drink with CRTC commissioners.

It is fair to say that those off-the-record bonding-style events between the regulator and the regulated became a thing of the past under Blais. In fact, weeks after he was named chair of the CRTC, I was called into his office in one of several meetings he had with consumer and public interest voices as his first order of business. I had a mixed history with Blais to that point (he was the lead on copyright policy at Canadian Heritage for many years), but he left no doubt that bringing a public interest voice and perspective to the CRTC was his top priority.

That priority was soon mirrored by the CRTC’s oft-repeated strategic goal of placing Canadians at the centre of their communications system. One critic recently suggested Blais wanted to place himself at the centre, but it seems to me that what he really did was place the Internet at the centre. That meant shifting the way the CRTC engaged with the public to account for the power of the Internet to bring new voices and perspectives to the table and dramatically altering policy so that all Canadians are best positioned to access and take advantage of the global network.

The procedural changes under Blais will have an impact long after a new commissioner and the current Liberal government consider whether to amend his substantive rulings. Before Blais, new participants sometimes faced a rough ride at Commission hearings. For example, when Open Media first appeared in 2011, they faced skeptical questions from the CRTC Vice-Chair about who they represented, their funding, and whether they were non-partisan. That changed over the course of Blais’ term, as the CRTC embraced innovative ways to bring new voices and perspectives to their hearings, launching everything from Internet surveys to Reddit discussions to online videos. It is easy to pick faults with some of these initiatives, but the change in approach is striking. Government rarely rewards risk-taking in policy development, but the CRTC was willing to experiment with new methods to make its work accessible to the public. A new commissioner may bring a different perspective, but there is no reversing a more open, accessible CRTC (and there is still more accessibility work to be done – surely a user-friendly website is not an impossibility).

From a substantive perspective, the policy targets for telecom and broadcast involved placing the Internet at the centre. For telecommunications, Blais emphasized competition and affordability. This included enacting the wireless code that put an end to three-year contracts (Canada was an outlier at the time with three-year contracts locking consumers into their provider) and caps on data roaming fees. The code also included a mandatory unlocking requirement that is likely to be updated with a ban on unlock fees in an upcoming ruling. The Commission also established broadband access as a basic service, set ambitious Internet access targets, safeguarded net neutrality, and mandated wholesale sharing of fibre access. Where it fell short, it was usually due to a lack of full courage of its convictions as was the case in the MVNO decision that failed to actually mandate access for upstart providers.

On the broadcast side, I recently noted that Blais 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 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 decisions in the Blais era 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), grants 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), pushes broadcasters to reduce their reliance on U.S. programming (simsub), and uses group licensing to support a more competitive marketplace for Canadian content. As was the case with telecom, where the CRTC fell short it was in not going far enough, as occurred with only a partial ban on simultaneous substitution.

Anyone shaking up the status quo can expect criticism and Blais got his fair share. Some was largely the result of challenging and questioning powerful interests in a manner to which they were unaccustomed. BCE CEO George Cope did not expect to face direct questions from Canadians through Blais at the Bell-Astral hearing and that exchange fuelled acrimony for years with Canada’s largest telecom company. Similarly, creator groups who traditionally viewed the CRTC as an ally in retaining old-style regulations without much regard for the global competitive landscape were flummoxed by a Commission with a different view on how to best foster Canadian content, leading to exaggerated claims about the end of Cancon.

While those criticisms reflected frustration over a changing regulatory environment, the internal dissent with Raj Shoan and the occasional outbursts unbecoming a CRTC Chair are harder to ignore and are a blemish on Blais’ achievements. Some of Blais’ blunt public comments were welcome (e.g. calling out the double-talk from telcos). However, from the public threats to Netflix to comments about executives and their yachts, there were instances where Blais would have been well advised to rise above the criticism.

Judging a five-year term as CRTC chair should account for all of these issues, but Blais ultimately leaves behind an enviable record. Shifting the culture of a government agency and working to bring Canada’s communications regulatory framework into the digital age is something that largely eluded his predecessors. Blais came to the Commission with an exceptionally ambitious agenda. He achieved far more than could have reasonably been expected and he is likely to be regarded as the most consequential CRTC chair in a generation.

The post Putting the Internet at the Centre: Taking Stock of Jean-Pierre Blais’ Term as CRTC Chair appeared first on Michael Geist.

Copyright Misuse Emerges as a Political Issue: QP Questions on Notice-and-Notice Abuse

Michael Geist Law RSS Feed - Fri, 2017/06/09 - 12:08

The problems associated with Canada’s copyright notice-and-notice system have been well chronicled. The Canadian system – which was acknowledged as equivalent to the U.S. notice-and-takedown approach in the TPP – allows rights holders to send notifications alleging infringement to intermediaries who are obligated to forward the notifications to their subscribers. The intermediary does not disclose the identity of the subscriber and it falls to the rights holder to pursue further action if they so choose. Unfortunately, the failure to include regulations stipulating what may be included in a forwarded notice has led to rampant misuse of the system, with anti-piracy companies sending millions of notifications that include demands for payments over unproven allegations.

The need to fix the notice-and-notice system should be a 2017 Copyright Act review priority, though the solution lies in adopting regulations that do not require a legislative overhaul. The issue is attracting increasing attention and made its way onto the floor of the House of Commons this week as NDP MP Brian Masse directly asked Prime Minister Justin Trudeau about it:

Mr. Brian Masse:

Mr. Speaker, thousands of Canadians have been receiving shakedown demands from Internet trolling companies using the notice and notice regime to make unsubstantiated allegations of Internet piracy. Canadians scared by the notice pay the demands without ever being found guilty.

The minister has already acknowledged that these scare tactics have no force of law, but he needs to take real action. When will the government fix this by changing the regulations and stopping the shakedowns? If the Prime Minister does not know the answer or does not understand it, will he please defer to someone who does, because I want action for Canadians. They need it now.

Right Hon. Justin Trudeau (Prime Minister, Lib.):  
Mr. Speaker, keeping Canadians safe, both in reality and online, is something that is a priority for this government. We look forward to working with partners to ensure that we are defending the rights and the financial security of vulnerable Canadians. We will continue to work hard on this file to make sure that Canadians are safe, both online and in their communities.

That is a less than satisfying response from Prime Minister Trudeau – essentially a generic comment on safety and security – but it points to the likelihood that copyright misuse emerges as a key policy issue during the upcoming copyright review.

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Government Caves to Lobbying Pressure: Bains Blocks Consumer Redress for Spam and Spyware Losses

Michael Geist Law RSS Feed - Thu, 2017/06/08 - 09:16

On May 17, 2005, the National Task Force on Spam, which included stakeholders from the across the spectrum including the Canadian Marketing Association, ITAC, Bell, CAIP, and consumer groups, presented its final report to then-Industry Minister David Emerson. The unanimous report included the following recommendation:

There should be an appropriate private right of action available to persons, both individuals and corporations. There should be meaningful statutory damages available to persons who bring civil action.

The inclusion of a private right of action was no small matter. I was a member of the Task Force and recall discussion of lawsuits launched in the United States by large ISPs and Internet companies such as Microsoft and Amazon that had proven effective. It took nine years for the task force recommendations to become law when all parties – Conservative, Liberal, NDP and Bloc – supported the resulting legislation. The private right of action provision was to have taken an additional three years as the Conservative government chose to delay its implementation until July 2017 to give businesses three years to ensure compliance with Canada’s anti-spam law.

Yesterday, Innovation, Science and Economic Development Minister Navdeep Bains indefinitely suspended the private right of action before it could take effect. In doing so, Bains blocked important consumer redress for harmful spam and spyware that would have supplemented enforcement efforts overwhelmed by spam complaints. Bains indicated that the statutorily-mandated review of the law, which is required after three years, will be used to assess the law and the private right of action (the Canadian Federation of Independent Business holds out hope that it will be struck down permanently).

The decision to block the private right of action represents an enormous victory for business lobby groups, notably the Canadian Chamber of Commerce and the Canadian Marketing Association, who have been relentless in lobbying against the legislation. Indeed, the Canadian Marketing Association used its release to note that it spearheaded efforts to fight against the provision leading to “numerous meetings with officials and the Minister’s office.”

In fact, the fight against the law is nothing new. The long delays in the law taking initial effect – it passed in 2010 but did not take effect until 2014 – can be attributed to lobbying efforts to water it down with exceptions or kill it altogether. The law is cast as a complex, burdensome piece of legislation, yet the basic requirement is simple: informed consent. The lengthy delays between the 2005 task force report and the 2014 implementation meant that many businesses had accumulated email lists without obtaining informed consent. The prospect of having to formally ask for consent was viewed as a business threat, leading to ominous warnings about the end of commercial email and fantastical claims about the impact of the law.

Those warnings continue to this day and clearly had an impact on Bains. Consider the department’s release and his tweet using similar language: “Canadian businesses, charities and non-profit groups should not have to bear the burden of unnecessary red tape and costs to comply with the legislation.” This is remarkable as the Minister is now seemingly suggesting that enforcement of a law passed by all parties in Parliament constitutes “red tape.” There are arguments that CASL creates compliance costs for business, but there are no reasonable claims that the private right of action constitutes “red tape” as it is simply a mechanism to encourage compliance and to allow for redress for consumers harmed by spam and spyware. Further, the inclusion of “charities” is absurd given that the CASL regulations include an exception for a commercial message “that is sent by or on behalf of a registered charity as defined in subsection 248(1) of the Income Tax Act and the message has as its primary purpose raising funds for the charity.”

The steady stream of false or exaggerated claims about the scope of the law appear to have had the desired impact as the precis for the Order-in-Council states that the delay is needed “in order to promote legal certainty for numerous stakeholders claiming to experience difficulties in interpreting several provisions of the Act while being exposed to litigation risk.” This too is remarkable. The law has been in effect for three years with multiple enforcement actions and guidance documents. Businesses are still subject to millions in liability if they violate CASL. The prospect of enforcement exists with or without the private right of action and delay does nothing to promote legal certainty.

If there is any uncertainty, it comes from the same lobby groups promoting inaccurate claims about the law. For example, the Canadian Chamber of Commerce’s release on the delay states “the law goes far beyond what most would consider to be spam and includes business to business messages.” Yet among the myriad of exceptions in the law, is Section 5(b) that states that requirements do not apply to a commercial electronic message “that is sent to a person who is engaged in a commercial activity and consists solely of an inquiry or application related to that activity.”  In other words, the law features an exception for legitimate business-to-business messages.

The Chamber also states that “businesses rely on their capacity to communicate with their clients, and some of these measures would have limited their capacity to do this.”  How does an enforcement mechanism limit the ability for businesses to communicate with their clients (particularly when CASL’s requirements remain in force)?  The answer is that there is nothing specific about the private right of action that would have limited the capacity of business to communicate with their clients.

Further, the Canadian Marketing Association claims that the private right of action would have created a competitive disadvantage for Canadian businesses, yet the reality is that private anti-spam lawsuits have been launched by large Internet providers for years in the United States with multi-million dollar judgments used to shut down known spamming operations. Canada was playing catch-up to the many jurisdictions that already have a private right of action.

The Direct Marketing Association of Canada comes closest to admitting the reality, when it states that the private right of action delay means very little to organizations emailing Canadians. It notes that major brands would have been initial lawsuit targets but that “everyone else would have felt little impact from the Private Right of Action other than the increased awareness it may have brought to CASL and our Government’s efforts to reduce the spam in our inboxes.” While lawsuits against major brands was not guaranteed, the average Canadian business had little reason to expect a rash of lawsuits and the new right could have brought about greater awareness and compliance.

By caving to lobbying pressure and soundbites do not stand up to even mild scrutiny, Bains has eliminated the ability for consumers to help combat online harms through lawsuits seeking compensation for ransomware payments or other consumer losses. Far from striking a balance, the move will encourage further lobbying and claims of uncertainty as groups hope to parlay the delay into an all-out effort to eviscerate or eliminate the anti-spam law altogether.

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Canadian Government on Wireless Services: High Prices, Low Adoption, and Unaffordable For Too Many

Michael Geist Law RSS Feed - Wed, 2017/06/07 - 09:10

Earlier this year, the Liberal government granted approval for the merger between BCE and MTS, eroding the competitive wireless market in Manitoba. In response, I argued in the Globe and Mail:

The Conservative government was criticized for failing to fix Canada’s uncompetitive wireless market, but at least it recognized the problem and did not shy away from challenging the Big Three. By contrast, Mr. Bains was faced with a sure thing – higher wireless prices for consumers and a less competitive, innovative marketplace – and blinked. Unless there are some new pro-competitive policies on wireless yet to come, the approval of the BCE-MTS merger guarantees that the government’s innovation strategy will start with a weak foundation.

It turns out, there was more to come. This week, Innovation, Science and Economic Development Minister Navdeep Bains put the wireless market back in the spotlight with a speech that left little doubt that the Liberal government has reached the same conclusion as its predecessor, namely that the Canadian wireless market continues to be marked by insufficient competition leading to high prices, low adoption rates, and a lack of affordability for consumers with low household income.

The government’s first step toward addressing the issue is an order-in-council requiring the CRTC to review a recent decision involving how regional and smaller wireless companies access wholesale roaming services from larger providers. While much of the attention has focused on the potential impact of varying that decision, the far more important takeaways come from the language found in the order, which presumably reflect the views of the government.

The government leaves no doubt that it believes the current market offers too little choice, leading to high prices and low adoption rates for wireless services (particularly for low-income Canadians). The order states:

Whereas Canadians continue to pay high rates for mobile wireless telecommunications services;

Whereas Canada has among the lowest adoption rates for mobile wireless telecommunications services among industrialized countries;

Whereas Canadians with low household income in particular face challenges related to the affordability of telecommunications services;

The government not only makes its views on the state of the wireless market clear, it also points to its preferred solution: new competitors such as MVNOs or mobile virtual network operators. MVNOs offer the potential to bring new competitors in the market and while the CRTC stopped short of creating a regulatory framework to support their entry, the government clearly views it as part of the solution. The order also states:

Whereas the Governor in Council recognizes that the Commission has previously determined that it would not be appropriate to mandate wireless carriers to provide Mobile Virtual Network Operators with wholesale access to their networks, as doing so could negatively impact investment in wireless network infrastructure;
Whereas the Governor in Council considers that innovative business models and technological solutions can result in more meaningful choices for Canadian consumers, especially those with low incomes who are not well served by current market offerings

The order asks the CRTC to reconsider whether the benefits of new, non-traditional service providers (including providers that emphasize WiFi connectivity) outweigh concerns with respect to network investment (which the government believes can be managed with appropriate regulatory conditions).

The Bains speech sent other signals to the CRTC such as the need to ban phone unlock fees, but at its heart, it provides the foundation for future wireless policies. The Liberal government may have approved the Bell-MTS merger, but it has signalled that it recognizes that Canadians pay high prices for wireless services relative to other developed countries and that further regulatory measures are needed to foster a more competitive marketplace.

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Toward a Canadian Knowledge Transfer Strategy: My Appearance Before the Standing Committee on Industry, Science and Technology

Michael Geist Law RSS Feed - Fri, 2017/06/02 - 09:10

The House of Commons Standing Committee on Industry, Science and Technology recently launched a study on intellectual property and tech transfer, which it hopes will feed into the government’s national IP strategy. I appeared before the committee yesterday, which provided an opportunity to provide a perspective that shifted away from encouraging greater university patenting and instead emphasized that the real goal should be knowledge transfer, not just tech transfer. I noted that knowledge transfer certainly incorporates tech transfer but it also includes research papers, data trials, educational materials, and highly qualified students and personnel.  My opening remarks also highlighted potential strategic reforms including emphasizing open access, crafting an anti-IP abuse statute, and expanding fair dealing with additional categories or adopting fair use provisions.  The ensuing discussion touched on a wide range of issues, including patent and copyright trolls.  My opening remarks are posted below.

Appearance before the House of Commons Standing Committee on Industry, Science and Technology, June 1, 2017

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 areas of specialty include digital policy, intellectual property, and privacy. I have appeared many times before this committee on IP issues and as always, I appear in a personal capacity representing only my own views.

I’d like to start by welcoming this committee’s study on an important aspect of IP. However, I respectfully suggest that the name of the study gets it wrong. I understand that the notion of “tech transfer” has taken hold in some discussions on how Canada can shift innovative research from Canadian campuses to exciting new commercialization opportunities. However, I’d like to suggest that the real goal is not tech transfer, but knowledge transfer.

Knowledge transfer encompasses a far broader set of policy goals that seek to take the knowledge that emerges from within our labs and classrooms and bring it out to the public – whether for commercialization, better public policies, or a more informed and engaged public. Knowledge transfer certainly includes tech transfer but it also includes research papers, data trials, educational materials, and highly qualified students and personnel. Simply put, if the target is just IP and tech transfer, we miss out of many of the benefits that come from innovative post-secondary research and run the risk of establishing the wrong incentives within our policy frameworks.

Further, the potential emphasis on the U.S. Bayh-Dole approach is misplaced. As you heard from department officials, there is little evidence that the policies governing who owns IP rights have an overriding impact on the success of tech transfer as measured by the volume of patents and licenses.

This should come as little surprise to anyone who has spent time on campuses with academic researchers.  The metrics of success in the academic environment – publications, grants, tenure, chairs, successful students – have little correlation with commercialization.  Even for those with commercial interests, those are often achieved through consulting arrangements or other mechanisms where the business expertise is left to business people.

I would argue that the emphasis on university-based patenting is misplaced. It can have a corrosive effect on universities, who forego important, publicly-funded research in favour of potential licensing or patenting opportunities.  With properly funded institutions, there is no need to chase licensing dollars. Instead, the cutting edge research ends up in the hands of businesses who can better leverage it for commercialization opportunities.  This should not be viewed as lost revenue for universities or their researchers, but rather as a better return on the public’s investment in post-secondary research.

From an IP strategy perspective, I’d like to focus on two broad issues.

Open Access Publishing

If the currency of academics is publishing – not patents – then the challenge is how to ensure that the published research ends up as broadly distributed as possible. While it has captured limited attention outside of educational circles, the Internet has facilitated the emergence of open access publishing of research, transforming the multi-billion dollar academic publishing industry and making millions of articles freely accessible to a global audience. The move toward open access means that global research is far more accessible to everyone – scientists, researchers, businesses, and the general public.

The three federal research granting institutions – CIHR, NSERC, and SSHRC – have adopted open access mandates that requires recipients of federal funding to make their published work available under open access.

This helps foster greater collaboration between researchers and the business community with improved access leading to commercialization opportunities that might otherwise be missed. Further, openly available articles are already being incorporated into teaching materials, thereby replacing conventional textbooks and removing the need for copyright permissions and fees.

As for government strategies, open access mandates should only be the beginning.  Moving toward open trial data and open book publishing are the next steps in linking significant public funding to enhancing public access to their investment.

IP Legal Barriers

Given that Canada already meets or exceeds international standards on IP, a key concern is to address the abuse of IP rights that may inhibit innovation. The Canadian government could address the issue through an anti-IP abuse law.

There is no shortage of policy possibilities. For example, in the patent arena, countering patent trolls could include a prohibition against legal demands that are intentionally ambiguous or designed to induce a settlement without considering the merits of the claim. Other reforms could include requiring public disclosure of the demand letters, reforming the Competition Act to give the Competition Bureau the power to target anti-competitive activity by patent trolls, and giving courts the power to issue injunctions to stop patent trolls from forum shopping.
There is also a need to address IP barriers that may limit the ability to take research from labs into the commercial world. For example, the federal government placed a big bet in this year’s budget on becoming a world leader in artificial intelligence (AI). Yet  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?

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 input, the better the output.

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.

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.

I look forward to your questions.

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Why Violating Net Neutrality is not a Smart Way to Promote Canadian Content

Michael Geist Law RSS Feed - Wed, 2017/05/31 - 09:33

In the aftermath of last month’s CRTC’s zero rating decision, there have been several pieces in the Globe and Mail raising the possibility that Canadian cultural policy might benefit from zero rating Cancon. In other words, rather than rely on net neutrality rules (including restrictions on zero rating) to ensure that Canadian content benefits from a level playing field, perhaps it would be even better to tilt the rules in favour of Cancon by mandating that domestic content not count against monthly data caps.

The issue was raised during the CRTC zero rating hearing as Canadian Media Producers Association argued that:

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.

The CRTC rejected the argument, concluding 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.” In response, anti-net neutrality advocate Roslyn Layton argued that Canada should exempt Canadian content from data charges, an idea picked up by Kate Taylor and Robert Everett-Green.

To date, Canadian Heritage Minister Melanie Joly has been a vocal net neutrality supporter  and there is no indication that she plans to change that position. Indeed, abandoning net neutrality in order to support Canadian content would raise of host issues including the prospect of increased surveillance of Internet usage, unenforceable regulations, and diminished value of Canadian content.

When Canada first debated net neutrality regulations in 2009, the Canadian cultural community was solidly in favour of it. For example, the Canadian Film and Television Production Association (CFTPA), the predecessor to the CMPA, stated:

The CFTPA submits that certain ISP traffic management practices, such as discriminatory traffic throttling, diminish the range of distribution options and degrade the quality of the Internet as a content distribution platform. If left unchecked, such practices threaten to reduce the diversity of Canadian programming that is available to Canadians. It is therefore critical that a regulatory framework be adopted that ensures that ISPs do not become gatekeepers of Canadian content on the Internet, undermining the ability of Canadian independent producers to play their role.

The CFTPA, therefore submitted that the CRTC should require “as a condition of service that ISPs refrain from employing any traffic management practice that discriminates on the basis of application or protocol.”  Similar support came from ACTRA, the Canadian Media Guild, the Documentary Organization of Canada, and the Canadian Conference of the Arts.

What these groups rightly recognized was that Canadian content depends upon a level playing field against the large intermediaries such as the major ISPs that often control both carriage and content. That has not changed over the past eight years. If anything, a level playing field is more important given that a media giant such as Netflix would be granted even greater power in a system that permits zero rating since it would have the financial ability to buy access unavailable to Canadian players.

Beyond the issue of a level playing field, Taylor and today’s CMPA seem to hope that making Canadian content cheaper by reducing or eliminating data costs will increase its marketplace success. Yet the more likely outcome will be that Canadian content will be viewed not as cheaper, but rather as content that can only find an audience if the government requires that it be distributed for free. Consigning Canadian content to the mandatory free lane would send a signal that it can’t compete, the precise opposite of what Joly has been promoting.

Were the government to overrule the CRTC on the issue, it would then face the challenge of making a Cancon-specific zero rating system work. A system treating all Canadian content as data free would require Internet providers to engage in widespread surveillance of all user Internet activity, identifying the content of the bits running on their network (how to categorize video content on Youtube, Facebook, Periscope and other services is anyone’s guess). The system would eliminate private viewing, discourage the use of virtual private networks to protect privacy, and add huge costs to network services. In other words, free Canadian bits would actually be very costly, paid for in lost privacy and increased Internet access costs for all since ISPs would pass along the added costs to consumers.

Alternatively, Taylor suggests zero rating entire services that meet Cancon minimums. For example, a music service with 35 percent Cancon would be zero rated. This too raises a multitude of problems. First, zero rating was about whether a provider could zero rate aspects of its service, not if the government would require all providers to give away data for free. Leaving it to the government to determine how providers should price specific content is exceptionally problematic. Second, the system could be easily gamed as providers could simply include a sufficient amount of Cancon to meet the requirement but with no guarantees anyone would actually watch it.

Taylor concludes her column by asking what Joly might get in return for promising Hollywood and Silicon Valley net neutrality. The answer is that net neutrality benefits Canadians and Canadian creators just as much – if not more – than it does companies such as Google and Netflix.

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Now More Than Ever, Canada Needs a Strong Anti-Spam Law

Michael Geist Law RSS Feed - Tue, 2017/05/30 - 09:49

Canada’s anti-spam legislation has long been the law that Corporate Canada loves to hate. Months before it was slated to take effect in 2014, there were ominous warnings about how regulation would bring commercial e-mail to a screeching halt, banning everything from large-scale business marketing efforts to emails promoting a neighbourhood lemonade stand.

My regular Globe and Mail technology op-ed notes that nearly three years later, e-mail marketing is alive and well in Canada as many have adjusted to the tougher privacy standards that require informed consent prior to sending commercial electronic messages. Moreover, in a world where malware and ransomware have become serious cybersecurity threats touching millions of Internet users, the inclusion of antimalware provisions has proven prescient since they give authorities the legal tools to participate in global enforcement efforts.

Yet despite ample evidence that the law has had a positive impact – Cloudmark, a U.S.-based anti-spam company, found a noticeable decline in spam originating from Canada after the law took effect – the business community has engaged in a behind-the-scenes lobbying campaign to reverse some of its core provisions.

The top target has been a new private right of action that opens the door to lawsuits over harmful spam. The provision is scheduled to take effect on July 1, but groups have been urging the government to postpone its implementation. Officials have quietly consulted some stakeholders on the issue (I was contacted in my capacity as a law professor and former member of the National Task Force on Spam), but have not conducted a broader public consultation.

If the government caves to the lobbying pressure and delays the new rule, the move would signal a major shift in Canada’s approach to fighting spam and cybercrime. Recent reports have concluded that two-thirds of all email is spam and that as much as 10 per cent of global spam can be classified as malicious. Weakening the legal rules designed to combat spam would therefore be at odds with the country’s increasing emphasis on confronting cybercrime.

The law is only three years old, but it has already played a significant role in countering all forms of spam. There have been enforcement actions against anti-spam violations, including failures to obtain appropriate consent or respect rules governing opting-out of future email correspondence. Moreover, the law was used in 2015 to shut down a malware command and control centre in Toronto as authorities worked with law enforcement agencies from around the world to stop a malware network that affected more than a million computers.

While the business community fears a proliferation of lawsuits once the private right of action takes effect, the experience of other countries suggests that it will be used in limited circumstances. The law allows for private actions based on commercial emails sent without consent, alteration of transmission data that disguises the source of the email, and the surreptitious installation of malware or other computer programs.

The law could come in handy in combatting several serious harms, including instances of  ransomware victims paying the ransom fee and other frauds. For general business emails, the possibility of lawsuits may provide a helpful incentive to promote compliance.

Notwithstanding the fear mongering, compensation for spam violations is commonly available in many other countries. For example, private anti-spam lawsuits have been launched by large Internet providers for years in the United States with multi-million dollar judgments used to shut down known spamming operations. In fact, the National Task Force on Spam unanimously recommended implementing a private right of action in Canada.

Innovation, Science and Economic Development Minister Navdeep Bains has said little about the future of Canada’s anti-spam law. Given the ongoing proliferation of spam and the mounting concern over the dangers of malware, delaying the full implementation of Canadian law would represent a significant step backward at a time when other countries are prioritizing the fight against online harm.

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Music Industry’s Canadian Copyright Reform Goal: “End Tech Companies’ Safe Harbours”

Michael Geist Law RSS Feed - Mon, 2017/05/29 - 09:58

Miranda Mulholland, a Toronto-based musician and music label owner, delivered an exceptionally passionate, accessible, and deeply personal keynote speech last week to the Economic Club of Canada. Mulholland’s talk was notable not only for providing an artist’s perspective, but for coming ready with next steps for everyone. She urged artists to create and protect their intellectual property, consumers to create playlists, write reviews, go to shows, and subscribe to digital music services, the music industry to be upfront about payment, to better support artists (including providing daycare services), and to pay for tickets to their own artists (Kate Taylor offered her take on the talk here, which includes an incredible comment from Music Canada that it wants only a level playing field, not public money. Music Canada has spent the last few years successfully lobbying for tens of millions in taxpayer support from provincial governments).

Given the active support from Music Canada for the event, her recommendations for policy makers were a core part of her message and largely mirror those of the industry. Unlike the 2010-2012 copyright reform process, piracy is no longer a key issue. Indeed, the issue of peer-to-peer file sharing and unauthorized downloading was not even mentioned in the speech. With the Canadian digital music market enjoying remarkable growth – Canada leaped ahead of Australia last year to become the 6th largest music market in the world and SOCAN generated record revenues – the industry focus is no longer on whether the public is paying for music (they are) but whether they are paying enough.

Mulholland is at her strongest when she raises clearly personal policy issues. For example, she cites a single performance payment for music without any royalties that is replayed regularly on the television show Republic of Doyle, making a compelling case for reform. She is weaker when she mirrors the industry line about the need to eliminate intermediary safe harbours in the hope of forcing Google to increase royalty payments for Youtube music streaming. Mulholland has an exceptional presence and is a talented musician, but her music videos on Youtube have generated at most a few thousand views and claims about low royalties do not ring true. To be clear, the number of Youtube views says absolutely nothing about Mulholland as an artist, but it is relevant with respect to royalty payments.

According to Mulholland (and the industry), the government should “end tech company safe harbours”. The goal is clear: by making Google liable for any content available on its site, the government will force the company to police its content, permanently remove anything that is alleged to infringe, and ultimately pay more for licences. The legislative demand is framed as fixing a mistake from the 1990s, where Mulholland (and before her Music Canada’s Graham Henderson) claim that artists were promised success in the digital age and instead found that only new Internet intermediaries benefited from the online environment.

Mulholland comes across as a thoughtful and engaged person, but she is wrong about the development of Canadian copyright and safe harbours, wrong about the so-called “value gap”, and wrong to recommend an end to safe harbours that play a critical role in safeguarding the free speech rights of millions of Internet users.

Canadian Copyright and Safe Harbours

Mulholland and the industry spin a story of unfulfilled promises to artists from the 1990s that the digital environment – supported by legal rules creating statutory safe harbours for intermediaries – would lead to economic success for the creative class. The problem with the story is that it re-writes legislative history. In the U.S., the pressure for copyright reform in the 1990s that led to the Digital Millennium Copyright Act came from the music and movie industries, not the intermediaries (there was no Google or Facebook at the time). The resulting DMCA codified digital lock rules (anti-circumvention legislation) that U.S. officials acknowledged went far beyond those required in the WIPO Internet Treaties. It was the music and movie industries who claimed the legislation featuring legal protection for digital locks would support creators in the digital environment.

The inclusion of safe harbours within the legislation was a compromise that granted rights holders unprecedented power to encourage the removal of alleged infringing content without court oversight. At the heart of the U.S. notice-and-takedown system is the ability for rights holder to effectively require the removal of content based only unproven allegations of infringement. There is no court review or other independent analysis. The system grants intermediaries protection for liability if the content is removed, a legal condition that encourages taking down content without an independent review. As a result, there have been cases of misuse of the takedown system, including recent revelations that nearly all takedown requests for Google search results are fake.

Even if you believe that the U.S. system is somehow unfair, the notice-and-takedown system was never implemented in Canada. The DMCA-style issues, including digital lock rules and intermediary liability, were only addressed in legislation in 2012.  By then, the music industry argued that the essential reform was anti-circumvention laws. After the law was passed, the industry still did not lobby on safe harbours, choosing instead to engage in a major lobby campaign to extend the term of protection for sound recordings in an effort to keep public domain Beatles records out of the Canadian market.

To this day, there is still no formal notice-and-takedown system in Canada. 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 artists 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 other words, there is no notice-and-takedown system to amend in Canada and calls to end safe harbours for technology companies bears little resemblance to Canadian law.

The “Value Gap”

The global music industry has been focused on the so-called “value gap” (the amount paid for Youtube streams vs. streams on subscription services) for months, but there is no compelling case for legislative change in Canada. As noted above, the industry is experiencing record streaming revenues in Canada. For example, SOCAN reports that Internet streaming revenues increased more than 460 percent last year. Meanwhile, IFPI reported last month that music revenues rose 12.8% in 2016 in Canada, far ahead of most other countries. The growth was led by digital revenues, which now comprise 63% of recorded music revenues with streaming revenues more than doubling in Canada last year.

Meanwhile, Youtube may pay lower rates than subscription-based services such as Spotify, but it also offers Content ID, a free service that provides rights holders with greater control over their works, including the ability to have them removed or to monetize their videos. Google-commissioned research highlights many of the benefits of the service, including music discovery and reduced piracy. Further, there are labels and other businesses that point to the revenue potential from Youtube.

The disagreement over royalty rates (echoed with Music Canada’s anger over the Copyright Board’s Tariff 8 decision, in which the industry also argued that the rates determined by the independent tribunal were “too low”) is fundamentally a matter of negotiation. Google has more leverage than a company like Spotify and can be expected to negotiate better rates. Its service is based on ad-revenues, not paid subscriptions and the different business model understandably leads to different royalties. Moreover, music is all that Spotify offers. Youtube, on the other hand, has an unlimited array of video choices of which music is only a part. From a value perspective, it is easy to see why music would carry less value for Youtube than for Spotify and why it would generate lower streaming rates.

The Importance of Safe Harbours

If this were nothing more than a desire to renegotiate a commercial licensing agreement or even pressure on an Internet giant to pay more royalties, the issue would not be of great concern to the general public. However, when Mulholland and the industry argue for an end to tech company safe harbours, they are effectively arguing for an end to services that billions rely upon every day. The removal of safe harbours – relied upon by everyone from Wikipedia to the Internet Archive – would instantly result in the removal of a massive amount of legitimate content, increase surveillance or content filtering of website activity, create a huge burden on new, innovative companies, and curtail freedom of expression.

Consider online videos that many may have watched this week. It might be a clip of U.S. President Donald Trump in Europe, some sports clips from the NHL playoffs, a video of memorial events in Manchester, a user generated piece featuring remix of music and home videos, or a video from a concert. If Youtube or any other site were to lose safe harbour protections, they would likely filter each video to determine whether there was a risk of infringing content. Each of these videos would likely trigger a warning of potential infringement and would be blocked from the service. While each might be qualify as fair use (in the U.S.) or fair dealing (in Canada), the absence of a safe harbour and huge potential liability would likely lead to blocking the content.

Moreover, the impact would not be limited to videos: Wikipedia would have to actively monitor new contributions for potential infringement and scrape its current site for possible offside content, photo sharing sites such as Flickr would be forced to block millions of uploads, the Internet Archive and other online libraries would face closure, and social media services such as Facebook, Twitter, and Snapchat would begin the process of widespread content removal and monitoring. The impact would be felt not only by the big players and their millions of users, but smaller sites – including many artist-focused music and video sites – who would be forced to re-evaluate their businesses due to increased risks of legal liability.

In addition to taking down content, an end to tech company safe harbours would mean increased surveillance of platform usage with upload monitoring software designed to stop potentially infringing content from appearing on the site. Start-up and smaller companies would be unable to afford such solutions, further entrenching the large, dominant players in the market. The loss of safe harbours would ultimately have an enormous impact on freedom of expression curtailing the ability to freely post legitimate content online on many sites.

Mulholland is an articulate spokesperson for artists who highlights some of the economic challenges of her profession. Her ideas for next steps for consumers, labels and artists are fresh and deserve attention. Yet once she moves to digital policy and legal reforms, the debate over compensation for artists online should account for data from the industry that points to huge revenue gains from streaming. Further, her claims regarding safe harbours and notice-and-takedown are an inaccurate portrayal of legal developments over the past 20 years both at home and abroad and the proposal to end those safe harbours would create enormous harm for millions of people.

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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.


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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.

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