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Canadian Music Industry Hit With Competition Complaint Over Public Domain Recordings

Michael Geist Law RSS Feed - Tue, 2015/09/01 - 12:16

Earlier this year, I wrote about the secret campaign by major record labels and publishers to stop the release of public domain recordings, most notably Beatles records that outsold the offerings from major label records at retail giant Wal-Mart. The campaign included extensive lobbying for an extension in the term of copyright for sound recordings. The government included the extension in the April 2015 budget, with Prime Minister Stephen Harper writing personally to the Graham Henderson of Music Canada to inform him of the change. The reforms were a gift to the recording industry, with the result that Canadian consumers now face higher prices and less choice.

Stargrove Entertainment, the company behind the public domain Beatles releases, has found that the industry is still blocking attempts to bring works in the public domain to market. As a result, this week it filed a complaint with the Canadian Competition Tribunal, claiming that major record labels such as Universal Music and Sony Music, music publishers, and CMRRA are violating Canadian competition law by refusing to deal, engaging in illegal price maintenance, and exclusive dealing. The company is seeking an order requiring the companies to provide a mechanical licence so that it can continue to produce and sell public domain records. The complaint (CT-2015-009) should be posted on the Tribunal site shortly.

The complaint tells a fascinating behind-the-scenes tale, with the recording industry doing everything in its powers – including posting false reviews and pressuring distributors – to stop the sale of competing records. The complaint notably identifies Universal Music Canada as a key player in the alleged activities, including former President Randy Lennox, who last week jumped to Bell Media.

The Stargrove complaint alleges three violations of Canadian competition law by the record labels, music publishers, and CMRRA.  First, it argues a violation of refusal to deal (Section 75(1) of the Competition Act) because rights holders are denying Stargrove mechnical licences on the usual trade terms. The company notes that these licences are “normally granted as a matter of course”. The effect has been to deny the public access to competitively priced, popular recordings. Second, it argues violation of the illegal price maintenance provisions (Section 76 of the Competition Act) since the denial of licences is designed to keep Stargrove out of the market and maintain market share and higher pricing. Third, it argues a violation of exclusive dealing (Section 77 of the Competition Act), pointing to Universal’s pressure on distributors and posting of false reviews to keep Stargrove out of the market. Given these violations, Stargrove has asked the Competition Tribunal to order a stop to the violations and to enter into an agreement on standard trade terms.

While the legal issues will be played out at the Competition Tribunal, the evidence included in the application paints a picture of an industry desperate to keep low-priced, consumer friendly alternatives out of the market. Indeed, this had little to do with compensating artists (Stargrove was trying to pay the songwriters) but rather was about maintaining market and price discipline by any means possible.

The application includes evidence of the enormous popularity of the public domain Beatles records. For example, in their first week in Wal-Mart, one of the Beatles CDs was the top seller for all of Wal-Mart Canada. In the months that followed, Wal-Mart and the distributor were anxious for more releases, noting the popularity among Canadian consumers. Stargrove says it planned 45 more releases for 2016, but the industry and the Canadian government has presumably put a stop (for now) to those plans.

In response to the release, the record labels and music publishers tried to shut down the distribution chain. Several rights holders refused to grant mechanical licences, resulting in the removal of a new public domain CD from the Rolling Stones. Later CMRRA, which grants blanket licences, sought to withdraw their licence. Moreover, Universal Music Group,  headed at the time by Lennox, allegedly began fabricating negative reviews of the public domain CDs on the Wal-Mart site. Terry Pursini, the President of Stargrove, says in his affidavit that a Universal Music account manager admitted creating the reviews and urged other employees to do the same. Meanwhile, Lennox allegedly wrote to the CD distributor to ask how it could partner “to resolve the public domain issue.”

In addition to the business pressures and false reviews, Universal Music began lobbying the Canadian government to change the law. The affidavit notes that the distributor advised Stargrove of the lobbying effort as early as December 2014. Despite months of advance notice, the government never publicly raised the issue or consulted with the public. In fact, in documents I obtained under Access to Information, Canadian Heritage officials admitted in February 2015 that there during the many years of copyright reform, there was no evidence of requests for sound recording copyright term extension from Music Canada or the major record labels (including Universal Music).

With the government’s sound recording term extension – completed without any public consultation and without the opportunity for anyone other than the recording industry to appear before committee – Canadian consumers will now pay higher prices for some music with less choice. The latest legal move by Stargrove offers some hope that at least existing public domain records might eventually make their way into the Canadian marketplace.

The post Canadian Music Industry Hit With Competition Complaint Over Public Domain Recordings appeared first on Michael Geist.

students, food insecurity, OER

Fair Duty by Meera Nair - Mon, 2015/08/31 - 22:25

My last post focused on a very one-sided report bemoaning the fortunes (or lack thereof) of the educational publishing industry. That industry apparently needs our support in the form of continued high-priced payments. This, without regard for either developments in law or legitimate and innovative efforts on the part of the educational community to lighten the financial burden imposed on students, parents and taxpayers.

According to the report, without such an industry, our authors would no longer be able to support themselves. The trope of the starving author is a familiar one in the realm of copyright lobbying. Every expansion of copyright (beginning with its establishment in the 18th century) has included references to writers who needed copyright protection to survive. (Yet even in those days, not every writer agreed with publishers’ pronouncements on this matter.) If authors are still struggling after 300 years of relentless expansion of copyright’s ambit, perhaps copyright is neither the problem nor the solution.

Moreover, there is another segment of society where money is tight, or tighter still, and food insecurity is real. (Dietitians of Canada indicate that the main cause of food insecurity is poverty.) Year after year, the difficulties facing post-secondary students are covered in the press. Here is just a small sample of recent discussion:

Many factors play into student poverty, but the rising cost of education cannot be ignored as the principal driver. With tuition and housing as necessities, food is seen as optional. Citing Michael Waglay (coordinator for Beyond Campus Foodbanks) Rachel Grant writes: “the first campus food banks appeared in 1991 at the University of Alberta. Now, … there is a food bank on almost every campus.”

Also appearing on every campus are shelves upon shelves of very expensive textbooks. The educational publishing industry would have us believe that only they can produce such works. Open Education Resources (OER) demonstrates otherwise. Looking for an illustrative example that would have widespread use, I examined materials for pre-calculus. OpenStax’s contribution stands out, based as it is upon a thorough development and review process. A comprehensive book (1400+ pages), it is lucid in delivery and robust in its treatment of the subject. (To ensure a knowledgeable opinion, I placed it in front of my first guide in mathematics; a woman of 35 years’ post-secondary mathematics teaching experience, spanning two countries. Full disclosure – she is also my mother.)

OpenStax College is an initiative of Rice University, with the support of many philanthropic organizations. Its goal is to offer high-quality textbooks which are free online or low-cost in print form. The array of institutions who have adopted OpenStax books is impressive, ranging from high schools and community colleges to exclusive preparatory schools and Ivy League universities.

Returning to my pursuit for pre-calculus learning materials, an informal survey of conventional offerings showed sticker prices beginning at the $150 mark and escalating quickly. With the option to reduce that cost to zero, or near zero, that saving alone could make a meaningful difference to a hungry student.

But there are barriers to the adoption of OER materials. It is not a trivial undertaking to rework an existing course to rely upon a different textbook. Students can only hope that sympathetic professors will consider such exertion worthwhile. Traditional teaching/research institutions could support both parties by recognizing such work as “service” (that component of duties essential to advancement of tenured and tenure-track alike). Yet another barrier is awareness; too many of the professoriate remain unaware that such works even exist. Finally, advanced courses or highly specialized areas are less likely to be served by OER at this time.

But barriers to some are opportunities for others. Institutions which support OER usage, or, better still, invest in OER development, can enjoy a competitive advantage among the student market. A success story that made the rounds of Creative Commons’ enthusiasts is that of Tidewater Community College (Virginia) which shifted an entire program of study to OER materials. Mike Palmedo recounted the early details in March 2014:

 Tidewater identified 21 courses and signed up faculty members to design the curriculum. They started with the desired outcomes for each of the courses, and then built the curriculum with OER materials that would meet those outcomes. Developing the curriculum took about 12 months. One year into the program, the early results are highly positive.

The initiative was not only about eliminating the prior price tag of $3679 for materials, it was also about improving teaching impact. Continuing the story, via an Inside Higher Education webinar this year, Cable Green (Director of Global Learning, Creative Commons) gave additional good news: better grades, higher rates of completion and increased student enrollment.

Closer to home, the Justice Institute of British Columbia (JIBC) is showing great leadership in the development of OER materials for their students, and is enjoying the attendant institutional benefits. Details were first presented at Open Education 2014 in Washington DC by Tannis Morgan, Associate Dean for the Centre of Teaching, Learning and Innovation at JIBC. Morgan emphasizes that not only is this effort “the right thing to do” but also that “being open has actually increased the bottom line.”


Bitcoin course available on Coursera; textbook is now official

Freedom to Tinker - Wed, 2015/08/26 - 11:09
Earlier this year we made our online course on Bitcoin publicly available — 11 video lectures and draft chapters of our textbook-in-progress, including exercises. The response has been very positive: numerous students have sent us thanks, comments, feedback, and a few error corrections. We’ve heard that our materials are being used in courses at a few […]

Senate Reports Give a Glimpse of Potential Future Digital Policies

Michael Geist Law RSS Feed - Tue, 2015/08/25 - 14:05

The trial of Senator Mike Duffy featured several notable revelations last week about the inner workings of the Prime Minister’s Office. One of the most important was found in a 2013 memo written by former chief of staff Nigel Wright that focuses on the control exerted by the PMO over the Senate. While the Senate is nominally an independent body of “sober second thought”, the memo highlights how the PMO expects Senate leadership to follow directions from the Prime Minister and to avoid developing policy positions without advance consultations and approval.

For anyone who has followed Senate committee reviews of legislative proposals, the Wright memo is not particularly surprising. This past spring, a Senate committee review of Bill C-51, the controversial anti-terrorism legislation, heard from experts such as the Privacy Commissioner of Canada about much-needed reforms. Yet once it was time to vote, the committee left the bill unchanged, lending an air of theatre to the entire process.

My weekly technology law column (Toronto Star version, homepage version) notes that assuming that policy control over Senate committee remains a priority, a recent batch of Senate reports provides new insights into future Conservative policies. Weeks before the election call, Senate committees began releasing long-awaited reports on a wide range of issues including national security, digital commerce, and the future of the CBC. In fact, more Senate committee reports were released in June and July (15 in total) than in the previous 18 months combined.

The Senate Committee on National Security and Defence led the way with two reports on increased border measures and new anti-terror measures. The border measures report has significant privacy implications as the committee recommends a massive expansion in the collection and sharing of biometric information.  This includes requiring all entrants to Canada that require a visa to provide biometric information (such as fingerprints), to retain the data for 15 years, and to share it with countries such as the United States.  The report acknowledges the privacy implications of the policy, but offers few specific protections other than appropriate oversight.

The committee also released a report on anti-terrorism measures that extend far beyond Bill C-51. The report recommends examining training and certification of imams in Canada along with increased screening and information sharing practices. The extensive report featuring 25 recommendations for further action could serve as a blueprint for the next round of anti-terror strategies.

The policy reforms are not limited to national security. The Senate Committee on Banking, Trade and Commerce released a report in June on the regulation of digital currencies such as bitcoin. While the committee emphasized a “light touch” for regulation, a closer read of the report reveals that it supports several new legal initiatives. These include creating licensing requirements for digital currency exchanges that are used to buy and sell “crypto-currencies” and working with other countries to develop global guidelines on the use and regulation of digital currencies.

The Senate Committee on Transport and Communications released one of the most criticized reports which examined the future of the CBC. The report was regarded by many as disappointing since it failed to grapple with some of the systemic problems faced by the public broadcaster. However, it does point to several potential reforms that would affect the CBC’s governance, funding, and mandate. These include changes to the CBC board, the sale of CBC real estate, discontinuing in-house production of non-news and current affairs programming, and emphasizing amateur sports.

Most of the new Senate reports have attracted little public attention, particularly with their release over the summer months. Given what we have learned about the close link between the Prime Minister’s Office and Senate leadership, however, the reports deserve closer scrutiny since they provide a likely outline of future Canadian policy reforms should the Conservatives win re-election in October.

The post Senate Reports Give a Glimpse of Potential Future Digital Policies appeared first on Michael Geist.

Senate Reports Give a Glimpse of Potential Future Digital Policies

Michael Geist Law RSS Feed - Tue, 2015/08/25 - 13:55

Appeared in the Toronto Star on August 22, 2015 as Senate Reports Give a Glimpse of Potential Future Digital Policies

The trial of Senator Mike Duffy featured several notable revelations last week about the inner workings of the Prime Minister’s Office. One of the most important was found in a 2013 memo written by former chief of staff Nigel Wright that focuses on the control exerted by the PMO over the Senate. While the Senate is nominally an independent body of “sober second thought”, the memo highlights how the PMO expects Senate leadership to follow directions from the Prime Minister and to avoid developing policy positions without advance consultations and approval.

For anyone who has followed Senate committee reviews of legislative proposals, the Wright memo is not particularly surprising. This past spring, a Senate committee review of Bill C-51, the controversial anti-terrorism legislation, heard from experts such as the Privacy Commissioner of Canada about much-needed reforms. Yet once it was time to vote, the committee left the bill unchanged, lending an air of theatre to the entire process.

Assuming that policy control over Senate committee remains a priority, a recent batch of Senate reports provides new insights into future Conservative policies. Weeks before the election call, Senate committees began releasing long-awaited reports on a wide range of issues including national security, digital commerce, and the future of the CBC. In fact, more Senate committee reports were released in June and July (15 in total) than in the previous 18 months combined.

The Senate Committee on National Security and Defence led the way with two reports on increased border measures and new anti-terror measures. The border measures report has significant privacy implications as the committee recommends a massive expansion in the collection and sharing of biometric information.  This includes requiring all entrants to Canada that require a visa to provide biometric information (such as fingerprints), to retain the data for 15 years, and to share it with countries such as the United States.  The report acknowledges the privacy implications of the policy, but offers few specific protections other than appropriate oversight.

The committee also released a report on anti-terrorism measures that extend far beyond Bill C-51. The report recommends examining training and certification of imams in Canada along with increased screening and information sharing practices. The extensive report featuring 25 recommendations for further action could serve as a blueprint for the next round of anti-terror strategies.

The policy reforms are not limited to national security. The Senate Committee on Banking, Trade and Commerce released a report in June on the regulation of digital currencies such as bitcoin. While the committee emphasized a “light touch” for regulation, a closer read of the report reveals that it supports several new legal initiatives. These include creating licensing requirements for digital currency exchanges that are used to buy and sell “crypto-currencies” and working with other countries to develop global guidelines on the use and regulation of digital currencies.

The Senate Committee on Transport and Communications released one of the most criticized reports which examined the future of the CBC. The report was regarded by many as disappointing since it failed to grapple with some of the systemic problems faced by the public broadcaster. However, it does point to several potential reforms that would affect the CBC’s governance, funding, and mandate. These include changes to the CBC board, the sale of CBC real estate, discontinuing in-house production of non-news and current affairs programming, and emphasizing amateur sports.

Most of the new Senate reports have attracted little public attention, particularly with their release over the summer months. Given what we have learned about the close link between the Prime Minister’s Office and Senate leadership, however, the reports deserve closer scrutiny since they provide a likely outline of future Canadian policy reforms should the Conservatives win re-election in October.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Senate Reports Give a Glimpse of Potential Future Digital Policies appeared first on Michael Geist.

Voting Every Day: Smartphones, Civil Rights and Civic Participation

Freedom to Tinker - Wed, 2015/08/19 - 15:08
The process of influencing government action has undergone a significant transformation in the age of the smartphone. Of course, the traditional lobbying business continues to thrive, with companies, trade associations and public interest advocacy groups relying on experienced experts to plead their cases in Washington, DC, and throughout the country. What the smartphone has done, […]

Premature Capitulation: How Canada Caved at the TPP Talks in Hawaii

Michael Geist Law RSS Feed - Mon, 2015/08/17 - 10:10

Late last month, Canada joined eleven other countries including the United States, Japan, and Australia in Hawaii for what many experts expected would be the final round of negotiations on the Trans Pacific Partnership. According to media reports, the Canadian government was among those expecting the talks on the proposed trade deal that covers nearly 40 per cent of world GDP to conclude, with officials lining up the corporate community to immediately express their support for the agreement.

However, negotiators left Hawaii empty handed, as disputes over intellectual property laws, safeguards and tariffs for the dairy and sugar industries, as well as disagreement over the auto sector, could not be resolved.  With Canada plunged into an election campaign hours later, the government sought to assure its TPP partners that it could continue to negotiate even while acting in a “caretaker” capacity.

My weekly technology law column (Toronto Star version, homepage version) notes that while those negotiations are expected to resume in the weeks ahead, sources advise that Canada dropped numerous demands on key patent and copyright issues in Hawaii, likely in the mistaken belief that a concluded deal was imminent. Indeed, after withholding agreement on critical issues such as anti-patent trolling rules, website blocking, restrictions on digital locks, trademark classification, and border enforcement, Canadian negotiators caved to U.S. pressure but failed to garner agreement.

For example, a leak of the TPP intellectual property chapter as of May 2015 revealed that Canada supported an Australian proposal to allow countries to cancel patents that are used in an abusive or anti-competitive manner. The provision, which was opposed by the U.S., was designed to give countries the freedom to target patent trolls, which refers to instances when companies that had no involvement in the creation or invention of a patent demand licences or other payments from legitimate companies by relying on dubious patents. The language on patent cancellation due to abusive or anti-competitive conduct was removed in Hawaii.

The parties similarly reached agreement on rules for Internet service providers in the latest draft. Chile, which had opposed special rules to accommodate Canada’s notice-and-notice provision in the TPP, was granted its own carve out that will allow it to maintain the system found in the Chile – U.S. Free Trade Agreement.

For Canada, the deal on ISPs means that government has agreed to induce providers to “remove or disable” access to content upon becoming aware of a decision of a court of a copyright infringement. The broadly worded provision could force Canadian ISPs to block content on websites after being notified of a foreign court order – without first having to assess whether the site is even legal under Canadian law.

Canadian negotiators caved on a wide range of other issues. While still holding out against establishing new criminal liability for the removal of “rights management information” (rules associated with Canada’s controversial protection of digital locks), Canada agreed to expanded restrictions on the importation or distribution of goods whose rights management information has been altered.

Canada also dropped opposition to new copyright rules on sound recordings and trademark rules involving the use of an international classification system. It agreed to heighten border enforcement measures involving in-transit shipments of goods that merely pass through Canada without remaining in the country and to use best efforts to expand trademark protections to “scents”.

There are still some unresolved issues in the Hawaii draft, particularly those involving the term of copyright (which the U.S. wants Canada, Japan, New Zealand, and Malaysia to extend by an additional 20 years) and many pharmaceutical patent issues. Yet Canadian negotiators appear to have badly blundered by prematurely making important concessions but failing to close the deal. As a result, it seems likely that Canada will be forced to concede on other key issues when countries next meet to finalize the TPP.

The post Premature Capitulation: How Canada Caved at the TPP Talks in Hawaii appeared first on Michael Geist.

How Canada Caved at the TPP Talks in Hawaii

Michael Geist Law RSS Feed - Mon, 2015/08/17 - 10:08

Appeared in the Toronto Star on How Canada Caved During Pacific Trade Deal Talks in Hawaii

Late last month, Canada joined eleven other countries including the United States, Japan, and Australia in Hawaii for what many experts expected would be the final round of negotiations on the Trans Pacific Partnership. According to media reports, the Canadian government was among those expecting the talks on the proposed trade deal that covers nearly 40 per cent of world GDP to conclude, with officials lining up the corporate community to immediately express their support for the agreement.

However, negotiators left Hawaii empty handed, as disputes over intellectual property laws, safeguards and tariffs for the dairy and sugar industries, as well as disagreement over the auto sector, could not be resolved.  With Canada plunged into an election campaign hours later, the government sought to assure its TPP partners that it could continue to negotiate even while acting in a “caretaker” capacity.

While those negotiations are expected to resume in the weeks ahead, sources advise that Canada dropped numerous demands on key patent and copyright issues in Hawaii, likely in the mistaken belief that a concluded deal was imminent. Indeed, after withholding agreement on critical issues such as anti-patent trolling rules, website blocking, restrictions on digital locks, trademark classification, and border enforcement, Canadian negotiators caved to U.S. pressure but failed to garner agreement.

For example, a leak of the TPP intellectual property chapter as of May 2015 revealed that Canada supported an Australian proposal to allow countries to cancel patents that are used in an abusive or anti-competitive manner. The provision, which was opposed by the U.S., was designed to give countries the freedom to target patent trolls, which refers to instances when companies that had no involvement in the creation or invention of a patent demand licences or other payments from legitimate companies by relying on dubious patents. The language on patent cancellation due to abusive or anti-competitive conduct was removed in Hawaii.

The parties similarly reached agreement on rules for Internet service providers in the latest draft. Chile, which had opposed special rules to accommodate Canada’s notice-and-notice provision in the TPP, was granted its own carve out that will allow it to maintain the system found in the Chile – U.S. Free Trade Agreement.

For Canada, the deal on ISPs means that government has agreed to induce providers to “remove or disable” access to content upon becoming aware of a decision of a court of a copyright infringement. The broadly worded provision could force Canadian ISPs to block content on websites after being notified of a foreign court order – without first having to assess whether the site is even legal under Canadian law.

Canadian negotiators caved on a wide range of other issues. While still holding out against establishing new criminal liability for the removal of “rights management information” (rules associated with Canada’s controversial protection of digital locks), Canada agreed to expanded restrictions on the importation or distribution of goods whose rights management information has been altered.

Canada also dropped opposition to new copyright rules on sound recordings and trademark rules involving the use of an international classification system. It agreed to heighten border enforcement measures involving in-transit shipments of goods that merely pass through Canada without remaining in the country and to use best efforts to expand trademark protections to “scents”.

There are still some unresolved issues in the Hawaii draft, particularly those involving the term of copyright (which the U.S. wants Canada, Japan, New Zealand, and Malaysia to extend by an additional 20 years) and many pharmaceutical patent issues. Yet Canadian negotiators appear to have badly blundered by prematurely making important concessions but failing to close the deal. As a result, it seems likely that Canada will be forced to concede on other key issues when countries next meet to finalize the TPP.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post How Canada Caved at the TPP Talks in Hawaii appeared first on Michael Geist.

Robots don’t threaten, but may be useful threats

Freedom to Tinker - Wed, 2015/08/12 - 12:39
Hi, I’m Joanna Bryson, and I’m just starting as a fellow at CITP, on sabbatical from the University of Bath.  I’ve been blogging about natural and artificial intelligence since 2007, increasingly with attention to public policy.  I’ve been writing about AI ethics since 1998.  This is my first blog post for Freedom to Tinker. Will […]

How not to measure security

Freedom to Tinker - Mon, 2015/08/10 - 12:14
A recent paper published by Smartmatic, a vendor of voting systems, caught my attention. The first thing is that it’s published by Springer, which typically publishes peer-reviewed articles – which this is not. This is a marketing piece. It’s disturbing that a respected imprint like Springer would get into the business of publishing vendor white […]

Why Canada’s Net Neutrality Enforcement is Going at Half-Throttle

Michael Geist Law RSS Feed - Mon, 2015/08/10 - 10:54

Canada’s net neutrality rules, which require Internet providers to disclose how they manage their networks and to treat content in an equal manner, were established in 2009. The policy is administered by the Canadian Radio-television and Telecommunications Commission (CRTC), which releases quarterly reports on the number of complaints it receives and whether any have been escalated to enforcement actions.

At first glance, the reports on the so-called Internet traffic management guidelines suggest that net neutrality violations are very rare. My weekly technology law column (Toronto Star version, homepage version) notes that last year, there were typically a few complaints each month and all were quickly resolved. The CRTC does not disclose the specific targets or subject matter of the complaints.

Yet according to documents obtained under the Access to Information Act, the complaints and their resolution give cause for concern. There are generally two types of complaints: those involving throttling technologies that limit speeds to render real-time services unusable or treat similar content in different ways, and quality-of-service issues that seem like throttling to the customer.

The first type of complaint raises real neutrality issues, but the CRTC has been content to “resolve” disputes without any penalty or further action. Xplornet, the satellite Internet provider, was the target of more complaints than any other provider in 2014 owing to its widespread use of throttling technologies. In a request for comment, Xplornet stated that it is aware of 12 complaints regarding traffic management to the CRTC in the last year on a base of more than 250,000 customers.

Its response to most complaints at the CRTC is simply to cite to its posted traffic management policies, which leave some customers understandably confused. For example, a subscriber to its fixed wireless services complained about throttling, only to learn that they were subject to four different throttling policies: a 24 hour usage allowance that cuts speeds in half for those who reach their daily data limit, a “peak hours” throttling policy that limits speeds to some applications between 8:00 pm and 1:00 am, a dynamic congestion policy that limits speeds during network congestion for the top 10 per cent of users, and a usage allowance policy that reduces speeds once subscribers reach their monthly allowance.

The CRTC does not take issue with the Xplornet approach. As long as Xplornet discloses its policies, which the ISP maintains are designed to ensure that each customer receives fair and consistent access to the Internet, it is compliant with the net neutrality regulations.

More troubling are instances where throttling treats similar content in different ways. One subscriber complained numerous times to Xplornet that traffic to the Google Play store was being slowed, while similar requests to the Apple store was not. The ISP dismissed the concerns and only investigated once the subscriber filed a complaint with the CRTC.

Upon review, it turned out that the company was slowing speeds to the Google Play store due to a change in the way the service was delivered. It pledged to fix the problem and the CRTC treated the issue as resolved. Unlike anti-spam and do-not-call enforcement that has led to significant penalties, however, there was no penalty or public admonishment for an obvious violation of the net neutrality rules.

For those providers that do not limit speeds, the complaints invariably involve service problems with ISPs advertising faster speeds than they were able to provide. For example, a Bell subscriber complained that access to Netflix appeared to be throttled each night. The subscriber explained that they were using the online video service at the lowest bandwidth setting and consumed less than 10 per cent of their monthly available data.

When the CRTC asked Bell to look into the issue, the company responded that the subscriber was located far from the nearest equipment available to service their home, leading to reduced speeds. Moreover, the company aggregated traffic from all the neighbours into a single connection, resulting in nightly network congestion. Bell said it was hoping to address some of the problems in the future, but suggested that the subscriber stop using other devices while watching Netflix.

While Bell was not throttling the connection, it was not offering a usable Internet service either (in a request for comment, Bell noted that if a customer is consistently experiencing lower speeds, they should contact them to undertake further testing). Canadian regulations do little to address ISPs that over-promise and under-deliver in terms of speed and connectivity. With subscribers kept in the dark about the technical limitations of services that are unable to deliver a reasonable connection to Netflix, new rules are needed to ensure greater transparency about actual Internet speeds.

Canada’s net neutrality rules have provided consumers with a system to address concerns with their Internet service. However, with no penalties for ISPs that fail to abide by the rules and no limits on throttling that is publicly disclosed, there is surely room for improvement.

The post Why Canada’s Net Neutrality Enforcement is Going at Half-Throttle appeared first on Michael Geist.

When It Comes to Net Neutrality, Canada’s Going at Half-Throttle

Michael Geist Law RSS Feed - Mon, 2015/08/10 - 10:51

Appeared in the Toronto Star on August 8, 2015 as When It Comes to Net Neutrality, Canada’s Going at Half-Throttle

Canada’s net neutrality rules, which require Internet providers to disclose how they manage their networks and to treat content in an equal manner, were established in 2009. The policy is administered by the Canadian Radio-television and Telecommunications Commission (CRTC), which releases quarterly reports on the number of complaints it receives and whether any have been escalated to enforcement actions.

At first glance, the reports on the so-called Internet traffic management guidelines suggest that net neutrality violations are very rare. Last year, there were typically a few complaints each month and all were quickly resolved. The CRTC does not disclose the specific targets or subject matter of the complaints.

Yet according to documents obtained under the Access to Information Act, the complaints and their resolution give cause for concern. There are generally two types of complaints: those involving throttling technologies that limit speeds to render real-time services unusable or treat similar content in different ways, and quality-of-service issues that seem like throttling to the customer.

The first type of complaint raises real neutrality issues, but the CRTC has been content to “resolve” disputes without any penalty or further action. Xplornet, the satellite Internet provider, was the target of more complaints than any other provider in 2014 owing to its widespread use of throttling technologies. In a request for comment, Xplornet stated that it is aware of 12 complaints regarding traffic management to the CRTC in the last year on a base of more than 250,000 customers.

Its response to most complaints at the CRTC is simply to cite to its posted traffic management policies, which leave some customers understandably confused. For example, a subscriber to its fixed wireless services complained about throttling, only to learn that they were subject to four different throttling policies: a 24 hour usage allowance that cuts speeds in half for those who reach their daily data limit, a “peak hours” throttling policy that limits speeds to some applications between 8:00 pm and 1:00 am, a dynamic congestion policy that limits speeds during network congestion for the top 10 per cent of users, and a usage allowance policy that reduces speeds once subscribers reach their monthly allowance.

The CRTC does not take issue with the Xplornet approach. As long as Xplornet discloses its policies, which the ISP maintains are designed to ensure that each customer receives fair and consistent access to the Internet, it is compliant with the net neutrality regulations.

More troubling are instances where throttling treats similar content in different ways. One subscriber complained numerous times to Xplornet that traffic to the Google Play store was being slowed, while similar requests to the Apple store was not. The ISP dismissed the concerns and only investigated once the subscriber filed a complaint with the CRTC.

Upon review, it turned out that the company was slowing speeds to the Google Play store due to a change in the way the service was delivered. It pledged to fix the problem and the CRTC treated the issue as resolved. Unlike anti-spam and do-not-call enforcement that has led to significant penalties, however, there was no penalty or public admonishment for an obvious violation of the net neutrality rules.

For those providers that do not limit speeds, the complaints invariably involve service problems with ISPs advertising faster speeds than they were able to provide. For example, a Bell subscriber complained that access to Netflix appeared to be throttled each night. The subscriber explained that they were using the online video service at the lowest bandwidth setting and consumed less than 10 per cent of their monthly available data.

When the CRTC asked Bell to look into the issue, the company responded that the subscriber was located far from the nearest equipment available to service their home, leading to reduced speeds. Moreover, the company aggregated traffic from all the neighbours into a single connection, resulting in nightly network congestion. Bell said it was hoping to address some of the problems in the future, but suggested that the subscriber stop using other devices while watching Netflix.

While Bell was not throttling the connection, it was not offering a usable Internet service either (in a request for comment, Bell noted that if a customer is consistently experiencing lower speeds, they should contact them to undertake further testing). Canadian regulations do little to address ISPs that over-promise and under-deliver in terms of speed and connectivity. With subscribers kept in the dark about the technical limitations of services that are unable to deliver a reasonable connection to Netflix, new rules are needed to ensure greater transparency about actual Internet speeds.

Canada’s net neutrality rules have provided consumers with a system to address concerns with their Internet service. However, with no penalties for ISPs that fail to abide by the rules and no limits on throttling that is publicly disclosed, there is surely room for improvement.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Netflix Taxes and Canadian Digital Issues in the Election Spotlight

Michael Geist Law RSS Feed - Thu, 2015/08/06 - 09:13

This week my regular technology law column (Toronto Star version, homepage version) focused on the long election campaign and the prospect that digital issues might get some time in the spotlight. The column pointed to three broad themes – what comes after Bill C-51, the Trans Pacific Partnership, and a digital strategy 3.0. As part of the digital strategy discussion, I stated that questions abound, including “are new regulations over services such as Netflix on the horizon?”

Prime Minister Stephen Harper addressed that question yesterday with a video and tweet in which he pledged that the Conservatives will never tax digital streaming services like Netflix and Youtube. Harper added that the Liberals and NDP have left the door open to a Netflix tax, but that he is 100% opposed, “always has been, always will be.” Both opposition parties quickly responded with the NDP saying they have not proposed a Netflix tax and the Liberals saying they have never supported a Netflix tax and do not support a Netflix tax.

So is this much ado about nothing?

Not exactly. First, there are groups and provincial governments that support a Netflix tax or mandated contribution to fund the creation of Canadian content. These include the Ontario and Quebec governments along with many creator groups. Earlier this year, I obtained documents under the Ontario Freedom of Information and Protection of Privacy Act that showed that the Ontario government spent months working toward a recommendation to expand the regulation of new media, including Canadian content requirements and increased regulation of foreign online video providers.

Second, while the Liberals and NDP have not proposed a Netflix tax, they have called for requirements that online video providers disclose revenues, Canadian content availability, and subscriber numbers to Canadian regulators. This is a very soft form of regulation that Netflix and Google have rejected as beyond the power of the Broadcasting Act. Providing information to allow for more informed regulatory analysis does not seem particularly unreasonable, but the companies unsurprisingly fear that that analysis could ultimately lead to calls for more regulation or payments.

Third, the real Netflix tax is the prospect of a levying sales taxes on digital products such as music downloads or online video services. It was the Conservatives that raised this possibility in the 2014 budget, launching a consultation on the issue that garnered supportive comments from companies such as Rogers, which noted that Canadian-based online video services such as Shomi operate at a disadvantage since they collect GST/HST, but Netflix does not. With many countries moving toward some form of digital taxation (as I noted in a January 2015 column on the issue, the real challenge lies in the cost of implementation), it seems inevitable that Canada will do the same in order to level the playing field and recoup a growing source of revenue. The Conservatives would presumably seek to differentiate between a generally applicable sales tax and a tax or fee targeting online streaming services, though many may feel it is a distinction without a difference.

Given the context, I think discussion of a Netflix tax (whether the debate is about supporting Canadian content or taxation of digital services) is fair game. However, my concern is that it distracts from far more important digital policies. As I noted in my column, questions include what do the parties plan to do after Bill C-51?  Where do they stand on specific provisions in the TPP? Are there more changes coming to the wireless sector to increase competition and lower consumer costs? Will the parties support programs that ensure both universal access and address affordability concerns that have left millions of Canadians on the digital sidelines? Do the parties have any policies planned to support Canadian content or to address the future of the CBC? Are reforms to the copyright notice-and-notice system that has resulted in Canadians facing thousands of demands for settlements forthcoming?

No shortage of questions that are not easily answered in a tweet.

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Election Could Shine Spotlight on Digital Issues

Michael Geist Law RSS Feed - Thu, 2015/08/06 - 09:11

Appeared in the Toronto Star on August 1, 2015 as Election Could Shine Spotlight on Digital Issues

The launch of the longest national election campaign in decades will provide numerous opportunities to contrast the various political parties on key issues such as economic policy, security, ethics, the environment, and health care. Digital policies will also deserve some time in the spotlight. Topping the list of concerns include the post-Bill C-51 landscape, support for the Trans Pacific Partnership, and the prospect of a Digital Canada 3.0.

1. Bill C-51 and what comes next

Bill C-51, the controversial anti-terrorism bill, emerged as one of the biggest political issues of the year, with thousands of Canadians protesting against legislation they viewed as excessively restrictive of their privacy and civil rights. The bill passed in June, but not before all three major parties adopted distinct positions. The Conservatives unsurprisingly supported their plan with few amendments, the NDP offered the strongest opposition, and the Liberals voted for the bill but promised changes if elected.

Those positions open the door to a robust debate on what comes next. The Liberals have committed to repealing elements of Bill C-51, but leaving some of it untouched. What would an NDP government do? With a Conservative-backed Senate committee recently proposing additional reforms, do the Conservatives view Bill C-51 as the end or the beginning of legal changes to combat terrorism?

On top of Bill C-51 and its aftermath, the Edward Snowden surveillance revelations still loom large. The government has largely avoided discussing Canada’s role in global Internet surveillance activities even as other countries have eliminated some programs and beefed up oversight in response to public concern. A clear position from each party on Canadian network surveillance activities is long overdue.

2.     The Trans Pacific Partnership

The twelve countries negotiating the Trans Pacific Partnership, a proposed trade deal that covers nearly 40 per cent of world GDP, failed to reach a deal last weekend in Hawaii, yet the government has indicated that it plans to continue to negotiate during the election period. Some have speculated that the prospect of a finalized TPP  comes at the worst possible time politically since the deal will likely mandate major changes in the Canadian economy just as politicians are campaigning for re-election. Yet that is precisely why this may be the best time to put the issues squarely on the table.

To date, each party has offered carefully crafted answers on their general views of the TPP. Comments about “acting in the best interests of Canadians” or refraining from comment until the final deal is disclosed will not be good enough in an election campaign. As politicians go door-to-door in search of votes, it is time to ask all candidates and political parties about their views on specific TPP issues including copyright term extension, patent reforms, intellectual property enforcement, and domestic privacy protections.

3.    Digital Strategy 3.0?

The government’s long-delayed national digital strategy was released in 2014 with an updated “Version 2.0″ quietly unveiled just before the start of summer.  The government made progress on several digital policy fronts, including enacting the Digital Privacy Act, anti-spam laws, and spending millions on Internet access in rural and remote communities. Yet the digital policy file is far from complete with Canadians facing higher wireless costs than those found in many developed countries and universal, affordable Internet access still years away.

Digital policy questions abound: are there more changes coming to the wireless sector to increase competition and lower consumer costs? Will the parties support programs that ensure both universal access and address affordability concerns that have left millions of Canadians on the digital sidelines? Do the parties have any policies planned to support Canadian content or to address the future of the CBC? Are new regulations over services such as Netflix on the horizon? Are reforms to the copyright notice-and-notice system that has resulted in Canadians facing thousands of demands for settlements forthcoming?

There is no shortage of questions on the digital policy front that require answers. With an election campaign set to run until mid-October, there may finally be a chance at a meaningful discussion about how each party envisions Canada’s digital future.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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The TPP Copyright Chapter Leaks: Canada May Face Website Blocking, New Criminal Provisions & Term Extension

Michael Geist Law RSS Feed - Wed, 2015/08/05 - 08:39

KEI this morning released the May 2015 draft of the copyright provisions in the Trans Pacific Partnership (copyright, ISP annex, enforcement). The leak appears to be the same version that was covered by the EFF and other media outlets earlier this summer. As such, the concerns remain the same: anti-circumvention rules that extend beyond the WIPO Internet treaties, additional criminal rules, the extension of copyright term, increased border measures, mandatory statutory damages, and expanding ISP liability rules, including the prospect of website blocking for Canada.

Beyond the substantive concerns highlighted below, there are two key takeaways. First, the amount of disagreement within the chapter is striking. As of just a few months ago, there were still many critical unresolved issues with widespread opposition to (predominantly) U.S. proposals. Government ministers may continue to claim that the TPP is nearly done, but the parties still have not resolved longstanding copyright issues.

Second, from a Canadian perspective, the TPP could require a significant overhaul of current Canadian law. If Canada caves on copyright, changes would include extending the term of copyright, implementing new criminal provisions, creating new restrictions on Internet retransmission, and adding the prospect of website blocking for Internet providers. There is also the possibility of further border measures requirements just months after Bill C-8 (the anti-counterfeiting bill) received royal assent.

Given the extensive debate on copyright during the 2012 reforms, the TPP upsets the balance the Canadian government struck, mandating reforms without public consultation or debate.  The government has granted itself the power to continue to negotiate the TPP during the election period, but all the major parties should publicly declare where they stand on these issues.

Further discussion on key provisions are posted below.

Copyright Term

Unsurprisingly, the U.S.wants all TPP countries to ensure that their copyright term of protection is at least life of the author plus 70 years. That would require countries such as Canada, Japan, New Zealand, and Malaysia to extend their terms by 20 additional years beyond the international standard found in the Berne Convention. The length of term within the TPP is currently in square brackets, suggesting that countries have still not reached a final decision (though expectations are that Canada will cave on the issue).

The Importance of the Public Domain

The general provisions section of the IP chapter contains a notable dispute between Canada and the U.S. over the public domain. There is an article that emphasizes the importance of taking into account the interests of rights holders, service providers, users and the public. Canada and Chile have proposed additional language to acknowledge “the importance of preserving the public domain.” The U.S. and Japan oppose the reference.

Limitations and Exceptions

The copyright provisions include an article on limitations and exceptions that references “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.” There is also a footnote recognizing the Marrakesh Treaty and one that acknowledges that commercial uses may be legitimate purposes under exceptions and limitations. This article is consistent with current Canadian law.

Internet Retransmission

The U.S., Singapore, and Peru support a provision granting rights holders stronger rights over Internet retransmission of television signals. The provision states:

No Party may permit the retransmission of television signals (whether terrestrial, cable, or satellite) on the Internet without the authorization of the right holder or right holders of the content of the signal

Canada – along with Vietnam, Malaysia, New Zealand, Mexico, Chile, Brunei, and Japan – all oppose the provision.

Anti-Circumvention Rules

The DMCA’s anti-circumvention rules (often referred to as digital lock rules) make it into the chapter with restrictions that extend beyond those required by the WIPO Internet treaties. Earlier opposition to mandatory criminal penalties for some circumvention has disappeared as the countries now agree that it is a requirement. The TPP permits some exceptions (there are some found in Canadian law), subject to strict limitations.

In addition to the anti-circumvention rules, there are also provisions on rights management information. Canada currently stands alone in opposing mandatory criminal penalties for rights management information violations (for example, making available copies of works knowing that rights management information has been removed). If Canada caves on the issue, the digital lock and rights management information provisions in the Copyright Act would require amendement by adding new criminal penalties.

ISP liability

The liability of Internet service providers is currently the subject of a lengthy addendum that is complicated by different approaches in the varying TPP countries. The primary approach is to create a legal requirement for ISPs to cooperate with anti-infringement activities in return for limits on liability. The key requirements include a notice-and-takedown system similar to that found in the United States. However, there are also flexibilities included for other countries and a complete carve-out for Canada.

Given that the Canadian government invested significant political capital in the new notice-and-notice system, Canada and the U.S. have proposed an annex to the IP chapter that exempts countries from the ISP requirements provided they have rules that look a lot like the current Canadian copyright rules. These include a notice-and-notice system, a provision creating liability for those that enable infringement, and a search engine content removal provision. It is worth noting that several countries, including Chile, Vietnam, Brunei, and Peru oppose the concept of an annex to address the legal system of one country.

There is potentially one critical additional requirement that would be added to Canadian law – website blocking. The provision currently states that the country would “induce”

Internet service providers carrying out the function referred to in paragraph 2(c) to remove or disable access to material upon becoming aware of a decision of a court to the effect that the person storing the material infringes copyright in the material. 


The word “induce” is bracketed, suggesting that there is still some disagreement on the legal requirement associated with the issue. It is not clear what “induce” means in this context, but it seems likely that the U.S. is pushing Canada to create a new website blocking requirement in return for acceptance of the notice-and-notice system.

Copyright Misuse and Abuse

Virtually all countries support a provision that allows for compensation where a rights holder has abused the enforcement powers. The proposal states:

Each Party shall ensure that its judicial authorities shall have the authority to order a party at whose request measures were taken and who has abused enforcement procedures to provide the party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse. The judicial authorities shall also have the authority to order the applicant to pay the defendant expenses, which may include appropriate attorney’s fees.

The lone holdout? The U.S., which opposes the provision.

Statutory Damages

There remains a significant dispute over the inclusion of statutory damages. The U.S. wants all countries to be required to have them. Many TPP countries, including New Zealand, Japan, Mexico, Australia, Brunei, and Malaysia, oppose a mandatory requirement. Canada already has statutory damages within the law.

Border Measures

There remains considerable disagreement over the border measures provisions.  Having just established new rules in Bill C-8 (the anti-counterfeiting bill), Canada is clearly opposed to reopening the issue. It has therefore proposed adding language clarifying that the rules do not apply to “grey market” goods (ie. goods legally sold first in another country and exported elsewhere) or to in-transit shipments that are destined for another country. There are still many proposals in this section with some attempts to find compromise among the various TPP parties.

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Canadian Government Amends “Caretaker Rules” To Give Itself Power to Continue Negotiating TPP

Michael Geist Law RSS Feed - Tue, 2015/08/04 - 09:25

This past weekend was a busy one politically as Canada was launched into a lengthy election campaign just as countries negotiating the latest round of Trans Pacific Partnership negotiations in Hawaii failed to conclude a deal. With reports that there may be a follow-up ministerial meeting within weeks, Canadian officials have been quick to claim that the election campaign will not interfere with the TPP trade talks.

To support the claim that the government is permitted to continue negotiating even when it is a “caretaker” government, the Privy Council Office yesterday released a document titled Guidelines on the Conduct of Ministers, Ministers of State, Exempt Staff and Public Servants During an Election. In previous elections, this document was not publicly released, leading Liberal MP Ted Hsu to table a motion in 2011 calling for its availability and to recent op-eds raising the same concern.

Why the sudden change of heart? Perhaps it has something to do with the desire to release this paragraph:

For greater clarity, there may be compelling reasons for continued participation by Ministers and/or officials in specific activities such as treaty negotiations. For example, when negotiations are at a critical juncture with timelines beyond Canada’s control, the failure to participate in ongoing negotiations during the caretaker period could negatively impact Canada’s interests. Under such conditions, a compelling case may be made for ongoing efforts to protect Canada’s interests. Irreversible steps such as ratification should be avoided during this caretaker period.

That paragraph sounds suspiciously tailor-made for the government’s claim that it can continue to negotiate the TPP, reading more like an argument than a guideline. In fact, it is the only section in the document that purports to expand upon the guidelines by offering “greater clarity.” More notably, the paragraph was not included in earlier versions of the guideline.  James Bowden obtained a copy of the 2008 guidelines under the Access to Information Act. Those guidelines, which were also issued under a Conservative government, are very similar to the 2015 version with the exception of the paragraph discussing on treaty negotiations.

Despite the government’s attempt to grant itself the power to continue to negotiate the TPP during an election campaign, there are reasons to doubt that it can effectively do so. First, while there would seemingly be no problem with ensuring Canada remains at the negotiating table, committing to significant policy changes would go well beyond the description of a caretaker government that should be largely limited to “routine” activities.

The guidelines note that “where a major decision is unavoidable during a campaign (e.g., due to an international obligation or an emergency), consultation with the opposition parties may be appropriate, particularly where a major decision could be controversial or difficult for a new government to reverse.” The government seems unlikely to consult with the opposition parties and the end-game TPP negotiations are anything but routine. As has been widely reported, the agreement would require major changes to a wide range of issues including Canadian copyright law, patent law, and supply management protections. These changes would involve significant legislative reforms with enormous costs to health care, education, and agricultural sectors. Agreeing to those changes when acting as a caretaker government would appear to violate the requirement to restrict activities to routine or non-controversial matters.

Second, even if the government participates in the negotiations, the remaining TPP countries should have doubts about Canada’s ability to deliver on its commitments since a change in government in October is a possibility. A new government – or even a Conservative minority government – might have an impact on Canada’s position on the most contentious TPP issues that would force parties back to the bargaining table. The electoral uncertainty places Canada in much the same position as the U.S. before Congress approved Trade Promotion Authority.  Without TPA, the TPP was subject to specific approval by Congress, which could have demanded changes to the text. The remaining TPP countries were unwilling to negotiate with the U.S. knowing that an agreement was not really final given the possibility that U.S. domestic politics could lead to changes.

The same is now true for Canada. Without a government mandate, Canadian negotiators simply can’t provide other TPP countries assurances that concessions made today will last beyond October 19th. The government may have quietly altered its rules to provide assurances that it can negotiate a deal, but it would be more appropriate to adopt observer status until the conclusion of the current election campaign.

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with due respect to PricewaterhouseCoopers

Fair Duty by Meera Nair - Mon, 2015/08/03 - 22:20

Howard Knopf (a prominent intellectual property lawyer and longstanding advocate for maintaining the limits upon copyright as prescribed by law) has drawn our attention to a new study commissioned by Access Copyright and carried out by PricewaterhouseCoopers (PwC). The study concludes that the end is nigh for educational publishing in Canada. Which in turn shall impose great hardships upon Canadian authors and illustrators, and ultimately mark the end of Canadian culture. The root cause of these troubles, according to PwC’s assessment, is the advent of fair dealing upon the Canadian educational landscape. Because fair dealing is actually practiced now (with guidance from the Association of Universities and Colleges Canada (AUCC) and Colleges and Institutes Canada (CIC)), the publishing industry is denied its time-honoured income gained through blanket-licensing of written materials for education in Canada.

There was a time when I would direct students to PwC reports as exemplars of informed and dispassionate analysis. I am not sure I would do so today. With due respect to PwC, their knowledge of copyright in general (and fair dealing in particular) is scant. But even setting aside any lack of understanding of copyright, the spectacle of being a paid messenger to a biased cause does little credit to PwC.

And the message is this: Canadian educational publishers can maintain their industry only by returning to the level of payments received from schools and post-secondary institutions in the past. Educational institutions must continue spending as before, regardless of: (1) the position of the law, (2) the general decline of funding to education, (3) availability of alternative resources, or (4) better fiscal management on the part of educators and administrators. All of this is set upon a lament about the perils of coping with new technology.

Incidentally, that lament has been heard with every past introduction of a new medium. The script remains unchanged: that existing industries are threatened, they are endeavoring to cope with a strange new world, and if their demands are not met then culture and attendant jobs will go the way of the dodo bird. A modest historical exploration would confirm that the printing press did not end the creation of literature (or the art of calligraphy), musical composition did not stop because of the player piano, the film industry did not collapse with the arrival of the VCR (indeed, studios found new markets in the form of the home-movie-collection), and digital technology has strengthened the music industry today.

Returning to the report, its premise is voiced as a complaint. In describing their mandate, PwC refers to the fair dealing guidelines framed by AUCC and CIC: “which, we understand, were developed without the input of the writing and publishing industry, claim to authorize educational institutions to make copies of portions of published works without permission from, or payment to, the copyright holder (p.13).”

PwC is clearly aware of CCH Canadian (2004) but makes selective use of it. A complete reading of the decision would have alerted PwC that the current guidelines are structured along the terms of the Access Policy of the Great Library which allowed for copying of modest amounts of work (one case, one article etc.) with requests for greater copying to be further examined (2004 SCC 13, para 61.) In declaring such a system as fair dealing, our Supreme Court gave the blueprint for the fair dealing policies now followed across Canada. Moreover, further words from the Supreme Court established the viability of sheltering legitimately, unauthorized copying in educational institutions, as fair dealing (Education v Access, 2012 SCC 37).

It is disappointing to hear that Canadians (individuals or institutions) need to solicit input from others, before choosing to act under the law as it is sanctioned by our highest court.

Of course, Access Copyright may use this report as they see fit; Knopf muses that the report will be presented to the Copyright Board when the Board moves on Access Copyright’s requests for tariffs linked to educational copying. Knopf also reiterates his observation that the Board is taking a more inquisitorial role in its hearings.

For instance, the Board might place close attention to this passage from the executive summary: “With less content purchased for the [K-12] classroom, teachers are increasingly required to fill the void by copying and repurposing published content (p.4).”

No citation is given; there is no effort to indicate how much content is involved or how often these actions occur. In the early pages of a 95-page report, it sets a tone of rampant piracy. The term “fair dealing” is entirely absent. Granted, it is the interpretation of fair dealing that is being taken to task, but to refrain from even a cursory acknowledgement that Section 29 of the Copyright Act may very well shelter these actions (depending on the facts of each situation) is, at best, an error on the part of PwC. At worst, it is intentionally misleading.

Regarding the thrust of that passage, readers may recall that when a decline of purchasing of educational content in the K-12 sector was brought to the attention of the Supreme Court in 2012, our justices acknowledged:

… as noted by the [educational representatives], there was no evidence that this decline was linked to photocopying done by teachers.  Moreover, [they] noted that there were several other factors that were likely to have contributed to the decline in sales, such as the adoption of semester teaching, a decrease in registrations, the longer lifespan of textbooks, increased use of the Internet and other electronic tools, and more resource-based learning (2012 SCC 37, para.33).

On that same theme, PwC continues:

As the market shifts away from the purchase of traditional paper-bound textbooks to the adoption of digital technology, the revenues of K-12 publishers and related creators have fallen dramatically. Total revenues generated in the K-12 Educational Publishing Market has declined by 40% since 2008 (p.4-5).

It is plausible that the collapse of global economies in 2009 also had some influence here. In any case, the K-12 educational body falls at the bottom of the funding totem pole. Transfers of taxpayer dollars flow from the federal government, through provincial and municipal governments before making their way to school boards and schools. And, unlike post-secondary institutions, tuition dollars are not a reliable component of school budgets. (Interestingly so, PwC observes a much smaller drop in revenues from the post-secondary sector; see p.12). In an era of cost-cutting and belt-tightening, it should come as no surprise that schools are spending less and looking for alternatives with respect to quality educational materials.

Perhaps one of the most startling aspects of PwC’s report is the disdain for efforts among educational communities to develop and circulate materials of their own. Section 7.1.1.1 Emerging models for K-12 materials (p. 49-51) describes some of these initiatives; notably characterized as “disruptive business models” as they shift money away from the past structures of the Educational Publishing sector. The efforts by provincial governments to promote collaboration among stakeholders in the pursuit of less-expensive, suitable material for K-12 students are mentioned without praise, even though taxpayers might see such steps as productive. The report also indicates that schools are: “… increasing use of content sources from the Internet; and making more use of open-source educational content …  [content that can be copied and shared for free] (p.51).” Again, this is laudable but not to PwC:

Open Educational Resources (OER) are a threat to traditional publishers as they provide textbook and course materials for free. Some school boards have access to digital content developed by the Ministry and/or teachers free of charge. … For now, exchanges of content between provinces remain limited however this is expected to increase in the future (p.51)”

In PwC’s hands, good educational content has very narrow boundaries; such content is deemed as only those materials that are legitimate to use via a paid license fee to a member of Canada’s “Educational Publishing Industry.” But even when speaking of the decline of licensing fees in Canada, the emphasis is upon the decline of blanket license fees, meaning a set fee per student, for all students, paid to Access Copyright. (PwC seems oblivious to its patron’s own role in this decline.)

PwC acknowledges that some institutions are dealing directly with publishers for transactional licenses but observes (albeit upon incomplete data) that the transactional licensing income does not match the decline of the revenue received via Access Copyright (p.62). However, PwC neglects to point out that some publishers did not wish to do business with educational institutions. Writing in September 2013, Stephen Toope (then president of UBC) gave details of the $25 million spent at UBC in direct transactions with copyright holders and indicated that, in connection to coursepacks, some publishers/authors refused to enter into contract for a transactional license to use works.

It has come to our attention over the last year or two that some publishers and authors have decided not to grant any transactional clearances. This is unfortunate, as this restricts faculty and students from utilizing the materials produced by the affected publishers and authors and, it would seem, unnecessarily cuts-off a source of revenue for them. Nonetheless, this is the right of publishers and authors and, if they are not prepared to grant a transactional clearance, the material will not be used.

It should be noted that, perhaps in some effort to show neutrality, PwC offers its lens of assessment as clarifying its scope:

[We have] considered this issue in light of the economic theory of copyright protection and its counterbalance, the fair dealing exception… The theory is that, without proper regulation, prospective users could consume certain goods without paying for them (in other words, they could “free ride”), resulting in “market failure”. This failure is signified by a reduction in the economic incentives to develop new creative content (p.6).

However, this invocation of loaded vocabulary invites two comments. First, the pejorative emphasis upon free ride and market failure conceals the reality that good public policy will aid and abet free-riders, because it is better for society as a whole. (Health care, education and public parks all come to mind—each of these is sustained through taxpayers, with varying degrees of contributions, including the option of a zero contribution.) And second, PwC seems unaware that markets themselves are of variety and will not necessarily transact in dollars and cents. Exceptions to copyright have existed for as long as copyright itself. The “market” in which creativity thrives is one which acknowledges that some goods/services will be transacted, without awareness, and without conventional payment. This is not a failure of the market; quite the reverse. Payment is in kind. Creators of today were users of yesterday, and pay their debt to the future.

PwC has lent its voice to Access Copyright’s ongoing complaint that educational institutions now may enjoy for free, the modest discretionary copying that they once paid a license for. However, the real grievance for Canadian students, teachers and parents is that until now, educational institutions endorsed a system whereby fair dealing, a right given to Canadians by Parliament, was treated as a consumer item to be bought and paid for.

To PwC’s credit, it is upfront in stating the limitations of the report; that PwC does not verify the accuracy of the information provided to them. Readers may wish to pay close attention to the sources from which the report was compiled (p.96); there is a distinct lack of diversity in perspective.

If this report is offered to the Copyright Board, it will be of interest to hear the Board’s impressions.


The Defend Trade Secrets Act Has Returned

Freedom to Tinker - Mon, 2015/08/03 - 12:48
Freedom to Tinker readers may recall that I’ve previously warned about legislation to create a federal private cause of action for trade secret misappropriation in the name of fighting cyber-espionage against United States businesses. Titled the Defend Trade Secrets Act (DTSA), it failed to move last year. Well, the concerning legislation has returned, and, although it has some changes, […]

Does cloud mining make sense?

Freedom to Tinker - Mon, 2015/08/03 - 12:18
[Paul Ellenbogen is a second year Ph.D. student at Princeton who’s been looking into the economics and game theory of Bitcoin, among other topics. He’s a coauthor of our recent paper on Namecoin and namespaces. — Arvind Narayanan] Currently, if I wanted to mine Bitcoin I would need to buy specialized hardware, called application-specific integrated […]

The Chilling Effects of Confidentiality Creep

Freedom to Tinker - Sat, 2015/08/01 - 10:07
Today, North Carolina’s Governor Pat McCrory has a bill on his desk that would make it impossible for the public to find out what entities are supplying the chemical cocktail – the drugs – to be used for lethal injections in North Carolina. Known as the Restoring Proper Justice Act (the “Act”), it defines  “confidential […]
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