Feed aggregator

Is the Great Canadian Copyright Giveaway Really About Some Cheap Beatles Records?

Michael Geist Law RSS Feed - Thu, 2015/04/23 - 15:32

The government’s surprise decision to include copyright term extension for sound recordings and performances in this week’s budget is being painted by the music industry as important for Canadian artists. But sources suggest that the key reason for the change is lobbying from foreign record labels such as Universal Music and Sony Music, who were increasingly concerned with the appearance of public domain records from artists such as the Beatles appearing on store shelves in Canada. As discussed in this post, Canadian copyright law protects the song for the life of the author plus 50 years. However, the sound recording lasts for 50 years. That still provides decades of protection for record companies to profit from the records, but that is apparently not long enough for them.

Earlier this year, a Canadian company called Stargrove Entertainment began selling two Beatles records featuring performances that are in the public domain in Canada. The records were far cheaper than those sold through Universal Music and were picked up by retail giant Walmart, who continues to list the records on their website (Can’t Buy Me Love, Love Me Do). There were additional titles featuring the Rolling Stones, Bob Dylan, and the Beach Boys. Some of the titles are still available for sale through Walmart.

The Stargrove Entertainment records provided Canadian consumers with low-priced alternatives while still ensures that the authors of the songs received the approriate royalties. While the sound recording is in the public domain for these works, the song itself remains subject to copyright. Therefore, the song writers were still paid for every record sold. The difference is that Universal Records was not profiting from the sale. Instead, a small Canadian company was succeeding in selling the records at a lower price to Canadian consumers.

The Stargrove Entertainment records effectively broke the monopoly enjoyed by Universal Music and Sony Music over these popular artists by offering consumers more choice at better prices. After pressure on distributors and retailers failed to stop the sales, the companies began lobbying the government to change the law. Indeed, Music Canada lobbyists met with officials in the Minister of Canadian Heritage’s office in both February and March of this year.  The Harper government’s decision to cave to pressure from a couple of foreign record labels in a matter of months is remarkable. After years of concern that consumers don’t pay for music, there was a Canadian company that was offering consumers lower-priced versions of music with full payments to the songwriters. Yet because foreign record companies were not also profiting, they sought to change the law and stop the sales.

The government characterizes the reforms as good for the Canadian economy, yet the opposite is true. The changes benefit large foreign record labels at the expense of a small Canadian upstart and ensure that consumer prices for music remain high. As a result, the copyright holders in the songs will earn less revenue, the Canadian public domain is harmed, and new Canadian business models based on the public domain are extinguished.

The post Is the Great Canadian Copyright Giveaway Really About Some Cheap Beatles Records? appeared first on Michael Geist.

Canadian Recording Industry: Works Entering the Public Domain Are Not in the Public Interest

Michael Geist Law RSS Feed - Thu, 2015/04/23 - 10:22

On World Book and Copyright Day, it is worth noting how Graham Henderson, the President of Music Canada (formerly the Canadian Recording Industry Association) characterized the government’s decision to extend the term of copyright in sound recordings and performances:

With each passing day, Canadian treasures like Universal Soldier by Buffy Sainte-Marie are lost to the public domain. This is not in the public interest.  It does not benefit the creator or their investors and it will have an adverse impact on the Canadian economy.”

This statement raises several issues. First, it should be noted that the song Universal Soldier by Buffy Sainte-Marie is not in the public domain nor will it be entering the public domain for decades. As the songwriter, Buffy Sainte-Marie still holds copyright in the song and will do so for her entire lifetime plus an additional 50 years (Howard Knopf further explains the issue of copyright term in songs in this post).

What is at stake with the government’s proposed copyright term extension is not copyright in the song, but rather in the sound recording or performance. Those rights are often held by recording companies, not the artists. They are not authors rights, but rather “related rights” that are found in particular recordings. European studies on term extension for these rights found that the vast majority of revenues went to the record labels, not the artists.

Second, Henderson offers up a vision of the public domain where increasing access to works is somehow counter to the public interest. How would the public be better served by having less access and fewer works in the public domain? The recording industry would obviously like to keep works from entering the public domain so that it can continue to profit from them decades after having recouped their initial investment. Yet it hard to see how anyone can credibly claim that works are “lost” to the public domain and that the public interest in not served by increased public access.

Third, Henderson claims that works entering the public domain have an adverse effect on the Canadian economy. Numerous studies on the economic impact of the public domain find precisely the opposite. For example, Rufus Pollock’s work has examined the value of the public domain and Paul Heald has written several important articles on the economic importance of the public domain. Most recently, Heald found that Kickstarter projects based on public domain works were more likely to succeed and that commercial firms often use public domain works to create new commercial products. James Boyle’s book on the public domain is essential reading as is Yochai Benkler’s work on this issue. The expert analysis demonstrates that copyright term extension hurts the economy and the government’s decision to extend the term of copyright in sound recordings in Budget 2015 is likely to both harm the Canadian economy and undermine Canadians’ access to their cultural heritage.

The post Canadian Recording Industry: Works Entering the Public Domain Are Not in the Public Interest appeared first on Michael Geist.

The Great Canadian Copyright Giveaway: Why Copyright Term Extension for Sound Recordings Could Cost Consumers Millions

Michael Geist Law RSS Feed - Wed, 2015/04/22 - 08:45

Randy Bachman, the well-known Canadian musician, found himself embroiled in a public fight with Prime Minister Stephen Harper last year when Harper used his song “Takin’ Care of Business” as a theme song for a major speech. Bachman said he probably would not have granted permission to use the song, since “I don’t think he’s taking care of business for the right people or the right reasons.” Bachman was singing a different tune yesterday as the government released its budget and apparently took care of the right people – record companies. Despite no study, no public demands, and the potential cost to the public of millions of dollars, the government announced that it will extend the term of copyright for sound recordings and performances from 50 to 70 years. For that giveaway, Bachman was quoted as saying “thanks for the term extension PM Harper, you really are taking care of business.”

While the government lined up industry supporters to praise the term extension, the decision is unexpected and unnecessary (it also announced that it will accede to the Marrakesh copyright treaty for the blind, but that should not require significant domestic reforms). The music industry did not raise term extension as a key concern during either the 2012 copyright reform bill or the 2014 Canadian Heritage committee study on the industry. Experience elsewhere suggests that the extension is a windfall for record companies, with little benefit to artists or the public. In fact, many countries that have implemented the extension have been forced to do so through trade or political agreements, while signalling their opposition along the way.

[Update: New post linking the term extension to lobbying from Universal Music over the release of cheaper public domain Beatles records in Canada.]

Canada will extend term without any public discussion or consultation, yet other studies have found that retroactive extension does not lead to increased creation and that the optimal term length should enable performers and record labels to recoup their investment, not extend into near-unlimited terms to the detriment of the public. For Canadian consumers, the extension could cost millions of dollars as works that were scheduled to come into the public domain will now remain locked down for decades.

For example, the 2006 Gowers Report on Intellectual Property, a wide ranging and well respected government-sponsored review in the UK, came out against term extension for sound recordings and performances:

In conclusion, the Review finds the arguments in favour of term extension unconvincing. The evidence suggests that extending the term of protection for sound recordings or performers’ rights prospectively would not increase the incentives to invest, would not increase the number of works created or made available, and would negatively impact upon consumers and industry. Furthermore, by increasing the period of protection, future creators would have to wait an additional length of time to build upon past works to create new products and those wishing to revive protected but forgotten material would be unable to do so for a longer period of time. The CIPIL report indicates that the overall impact of term extension on welfare would be a net loss in present value terms of 7.8 per cent of current revenue, approximately £155 million.

A Dutch study on intellectual property reached the same conclusion, noting that the arguments in favour of extension were unconvincing and that the extension would create significant costs for consumers and society as a whole. It concluded:

To conclude, the arguments made in favour of a term extension are not convincing. Many arguments already fall outside the objectives of related rights protection for phonograms. The fact that some recordings still have economic value as rights therein expire, cannot in itself provide a justification for extending the term of protection. Related rights were designed as incentives to invest, without unduly restricting competition, not as full-fledged property rights aimed at preserving ‘value’ in perpetuity. Other arguments do not convince because a term extension would either be ineffective in addressing the concerns in question, because there are other, better remedies available or advisable, or because the costs of an extension would outweigh its eventual benefits. The term of related rights must reflect a balance between  incentives, market freedom and costs for society. This balance will be upset when terms are extended for the mere reason that content subject to expiration still has market value. The public domain is not merely a graveyard of recordings that have lost all value in the market place. It is also an essential source of inspiration to subsequent creators, innovators and distributors.

With many more studies and reports reaching the same conclusion (see here, here, here, and here) – some estimating that the costs to the public would exceed one billion euros with 72 percent of the benefits going to record labels – the issue unsurprisingly proved very controversial in Europe. The European Union ultimately passed an extension from 50 to 70 years in 2011, but not without significant opposition from member states.  Eight countries – Belgium, Czech Republic, Luxembourg, Netherlands, Romania, Slovakia, Slovenia and Sweden – all voted against, while Austria and Estonia abstained.  Sweden argued that the extension was “neither fair nor balanced”, while Belgium argued that it would mainly benefit record producers and negatively affect access to cultural materials in libraries and archives.

Belgium’s concern regarding the lack of benefit for artists was also reflected in the Gowers report, which noted:

If the purpose of extension is to increase revenue to artists, given the low number of recordings still making money 50 years after release, it seems that a more sensible starting point would be to review the contractual arrangements for the percentages artists receive.

While the European experience on term extension for sound recordings and performances is instructive, there have been Canadian studies that have reached similar conclusions. Industry Canada commissioned University of Montreal economist Abraham Hollander to examine the issue in 2005.  Hollander’s study found that the economic value of a term extension to the recording industry was very small:

[Sound recordings] are protected for a period of 50 years from fixation. Adding 20 years of protection would contribute 2.3% to the present value of royalties under a 7% discount rate, assuming that the flow of royalties remains unchanged during the whole period. Under identical assumptions, extending the protection period to 100 years would contribute a mere 3.0% to the present value. This, however, is true only if the royalty flow remains constant over time. When the annual royalties decline rapidly over time, as is typical, the increase in present value would be considerably smaller.

Not only have the studies come out against term extension, but copyright stakeholders have not publicly emphasized the issue. Term extension for sound recordings and performances was nowhere to be found among the thousands of submissions to the 2010 copyright consultation, it was not discussed in the 2002 Canadian roadmap for copyright reform, and groups like the Canadian Independent Record Production Association and the American Federation of Musicians of the United States and Canada did not raise it in their submissions on copyright reform. The music industry’s form letter did not discuss term extension and it was not an issue that was prominently raised in the 2012 copyright reforms. In fact, just last year the Standing Committee on Canadian Heritage conducted a major review of the music industry in Canada with dozens of witnesses taking the time to appear or submit briefs. The final report and the government’s response never raise the term of protection for sound recordings and performances as a concern.

Why is the government using the budget to enact copyright term extension that primarily benefits foreign record labels, has proven controversial elsewhere, has been largely dismissed by numerous studies (including one funded by the government), was not the subject of a major public campaign from stakeholders, and that could cost Canadians millions of dollars?

My best guess is the Trans Pacific Partnership agreement. The TPP is nearing the end game and the U.S. is still demanding many changes to Canadian copyright law, including copyright term extension for all works (not just sound recordings). The Canadian government’s strategy in recent years has been to enact reforms before the trade agreements are finalized in order to enhance its bargaining position. For example, it moved forward with notice-and-notice rules for Internet providers without the necessary regulations in order to have the system in place and protect it at the TPP talks. It may be trying to do the same here by extending term on sound recordings and hoping that that concession satisfies U.S. copyright demands. Yet the concession comes at a significant price – locked down works and increased costs to consumers -  while providing another reminder that too often Canadian copyright law is effectively written by U.S. lobby groups who do not have Canadian interests in mind.

The post The Great Canadian Copyright Giveaway: Why Copyright Term Extension for Sound Recordings Could Cost Consumers Millions appeared first on Michael Geist.

Copyright For Sale: How the Sony Documents Illustrate the Link Between the MPAA and Political Donations

Michael Geist Law RSS Feed - Tue, 2015/04/21 - 10:26

The linkage between political funding and the major copyright lobby groups is not a new issue as for years there have been stories about how groups like the MPAA and RIAA fund politicians that advance their interests. Sites like OpenSecrets disclose the spending, though it gets complicated given how much money comes from individual companies or corporate executives. While those sites tell the story of how much, the recent leak of Sony emails reveal the how. They demonstrate the coordinated efforts by the MPAA to raise hundreds of thousands of dollars for certain politicians with direct efforts from MPAA CEO Christopher Dodd to solicit donations from among the Hollywood studios. This will not be news to those who have been following Lawrence Lessig in recent years, but the matter-of-fact tone of these emails is still revealing.

Some of the examples include efforts by Dodd, a former Democratic Senator, to raise $40,000 per studio for Judiciary Chair Bob Goodlatte:

Call from Dodd re NRCC/Judiciary Chairman Bob Goodlatte:  Chairman Goodlatte has established a new fundraising committee that would allow contributions to his effort WITHOUT giving to the NRCC (all of the studios had the same sensitivity on this as we did).  Dodd is likely to call you with this news, tell you that the studio should support with $40k each, and tell you about the tentative date/time for this fundraiser (likely a lunch on 11/22).  Our PAC can give $15k, the rest would need to come from individual execs.

The Goodlatte fundraiser raised concerns among the studios, yet it later expanded into a breakfast fundraiser for Goodlatte and a lunch fundraiser for Senator Orrin Hatch:

With respect to the timing of a fundraiser either just before/just after the LACS event, I understand Dodd will be calling board members early next week to make a fundraising push – both for Goodlatte and/or the NRCC (the expectation is an aggregate of $100k) and Orin Hatch and/or NRSC (also 100k, which smells a little bit like a Disney play regarding corp. tax reform).  Given that we have given to these folks this cycle, I think much of this would have to be personal money versus PAC dollars – I’m evaluating and will circle back with details in terms of what could be absorbed by our PAC, but wanted you to have the state of play now.  FWIW, I’ve told Joanna that I have doubts regarding our ability to meet goals if this is all personal $$$ (roughly 34k).

Another email noted that more money could be given to Hatch through the Sony PAC.

Fundraising is not limited to senators. There are also fundraising for members of the House of Representatives (this one for Karen Bass) and fundraising for state governors, including New York Governor Andrew Cuomo, which cost $10,000 per couple.

If that were not enough, there is also a strategy to expand the ability to provide funding to an MPAA political action committee:

MPAA membership expansion for PAC contribution purposes: For legal/structural reasons, the MPAA PAC can only solicit contributions from senior MPA execs and the member companies… This means that Dodd finds himself routinely on the other side of an enormous number of fundraising requests with roughly $50k a year to draw from.  It’s not vetted yet, but I think he wants to float a concept that would allow the membership to change in such a way to allow more individuals to contribute to the MPA PAC (e.g., if there was some high-level producer or studio exec as a “member” of some sort then they could contribute individually, etc.).  Depending on the approach, this would have FEC implications and labor relations implications – I think he understands that, but really wants to gauge reactions from board in terms of exploring viability of this.

What does all of this buy? The emails show lunch with the President of the United States, direct calls with the head of the USTR, and meetings with Prime Ministers (Spain, UK). Further, while there are no references to Canadian meetings in the Sony documents, I wrote in 2012 about meetings between Dodd and then-Canadian Heritage Minister James Moore, then-Foreign Minister John Baird, and then-Industry Canada Senior Associate Deputy Minister Simon Kennedy, all on the same day. The post included a briefing note I obtained under the Access to Information Act that discussed MPAA demands and the Canadian response.

The post Copyright For Sale: How the Sony Documents Illustrate the Link Between the MPAA and Political Donations appeared first on Michael Geist.

Race to the Bottom: Why Government Tax Credits For Film and TV Production Don’t Pay

Michael Geist Law RSS Feed - Mon, 2015/04/20 - 10:07

The Nova Scotia government has been embroiled in a high profile controversy for the past week following its decision to slash tax credits available to film and television production in the province. The decision sparked an immediate backlash from the industry, which staged a major protest last Wednesday across from the legislature in Halifax.

While the government’s approach is certainly open to criticism – abruptly cutting the tax credits without warning may force the cancellation of long-planned productions this summer – the larger question of whether it should provide massive tax relief to the film and television industry is an important one. Eliminating or cutting the programs is politically difficult given the star power associated with film and television production, yet a growing number of studies have found that film and television tax credits do not deliver much bang for the buck.

My weekly technology law column (Toronto Star version, homepage version) notes that the widespread use of film and television production tax subsidies dates back more than two decades as states and provinces used them to lure productions with the promise of new jobs and increased economic activity. The proliferation of subsidies and tax credits created a race to the bottom, where ever-increasing incentives were required to distinguish one province or state from the other.

In recent years, governments have begun to rethink the strategy. States such as Arizona, Michigan, New Mexico, and Iowa suspended or capped their programs. Louisiana found that it lost $170 million in tax revenue in a single year. In Canada, the Quebec government’s taxation review committee recently admitted that its provincial film production tax credit was not profitable and that numerous studies find that there is little economic spinoff activity.

But the most notable Canadian study on the issue has never been publicly released and is rarely discussed. The Ontario government’s Ministry of Finance conducted a detailed review of the issue in 2011, delivering a sharply negative verdict on the benefits associated with spending hundreds of millions of dollars each year in tax credits. It recommended eliminating a 25 per cent tax credit for foreign and non-certified domestic productions that would have saved $155 million per year.

A copy of the presentation to cabinet, obtained under the Freedom of Information Act, identifies at least four major problems with the provincial film and television tax credit approach.

First, rather than encouraging increased spending, government subsidies represent the majority of financing for film and television production. In 2010, tax credits, grants, and other public funding mechanisms subsidized approximately 60 per cent of all Ontario-based film and television production spending. Moreover, the corporations that claim tax credits pay no tax at all, with the total value of the tax credits being 6 times greater than the total tax income of domestic claimants.

Second, the sector is becoming more dependent on government support. In 1998, film tax credit expenditures constituted six per cent of production costs. Ten years later, there were fewer productions in Ontario, but the film tax credit expenditures were responsible for 30 per cent of the costs.

Third, the mounting government expenditures might be justified if it resulted in the creation of long-term high paying jobs. However, the Ontario government study found that film sector wages were below the provincial average and that many of those jobs were temporary, project-based ones.

Fourth, evidence suggests that other factors beyond tax incentives play a key role in determining the location of production activity. For example, the Ontario experience over the past two decades shows that foreign production is typically highest when the Canadian dollar is low relative to the U.S. dollar.

While the economic evidence to support film and television tax credits is weak, that does not mean that governments should not support the industry since the importance of culture extends beyond dollars and cents. Nova Scotia’s decision may be unpopular with some, but it is likely to be emulated by other governments as they assess how to support the film and television industry in a more economically responsible and effective manner.

The post Race to the Bottom: Why Government Tax Credits For Film and TV Production Don’t Pay appeared first on Michael Geist.

Tax Credits for Film and TV Production a Race to the Bottom

Michael Geist Law RSS Feed - Mon, 2015/04/20 - 10:04

Appeared in the Toronto Star on April 18, 2015 as Tax Credits for Film and TV Production a Race to the Bottom

The Nova Scotia government has been embroiled in a high profile controversy for the past week following its decision to slash tax credits available to film and television production in the province. The decision sparked an immediate backlash from the industry, which staged a major protest last Wednesday across from the legislature in Halifax.

While the government’s approach is certainly open to criticism – abruptly cutting the tax credits without warning may force the cancellation of long-planned productions this summer – the larger question of whether it should provide massive tax relief to the film and television industry is an important one. Eliminating or cutting the programs is politically difficult given the star power associated with film and television production, yet a growing number of studies have found that film and television tax credits do not deliver much bang for the buck.

The widespread use of film and television production tax subsidies dates back more than two decades as states and provinces used them to lure productions with the promise of new jobs and increased economic activity. The proliferation of subsidies and tax credits created a race to the bottom, where ever-increasing incentives were required to distinguish one province or state from the other.

In recent years, governments have begun to rethink the strategy. States such as Arizona, Michigan, New Mexico, and Iowa suspended or capped their programs. Louisiana found that it lost $170 million in tax revenue in a single year. In Canada, the Quebec government’s taxation review committee recently admitted that its provincial film production tax credit was not profitable and that numerous studies find that there is little economic spinoff activity.

But the most notable Canadian study on the issue has never been publicly released and is rarely discussed. The Ontario government’s Ministry of Finance conducted a detailed review of the issue in 2011, delivering a sharply negative verdict on the benefits associated with spending hundreds of millions of dollars each year in tax credits. It recommended eliminating a 25 per cent tax credit for foreign and non-certified domestic productions that would have saved $155 million per year.

A copy of the presentation to cabinet, obtained under the Freedom of Information Act, identifies at least four major problems with the provincial film and television tax credit approach.

First, rather than encouraging increased spending, government subsidies represent the majority of financing for film and television production. In 2010, tax credits, grants, and other public funding mechanisms subsidized approximately 60 per cent of all Ontario-based film and television production spending. Moreover, the corporations that claim tax credits pay no tax at all, with the total value of the tax credits being 6 times greater than the total tax income of domestic claimants.

Second, the sector is becoming more dependent on government support. In 1998, film tax credit expenditures constituted six per cent of production costs. Ten years later, there were fewer productions in Ontario, but the film tax credit expenditures were responsible for 30 per cent of the costs.

Third, the mounting government expenditures might be justified if it resulted in the creation of long-term high paying jobs. However, the Ontario government study found that film sector wages were below the provincial average and that many of those jobs were temporary, project-based ones.

Fourth, evidence suggests that other factors beyond tax incentives play a key role in determining the location of production activity. For example, the Ontario experience over the past two decades shows that foreign production is typically highest when the Canadian dollar is low relative to the U.S. dollar.

While the economic evidence to support film and television tax credits is weak, that does not mean that governments should not support the industry since the importance of culture extends beyond dollars and cents. Nova Scotia’s decision may be unpopular with some, but it is likely to be emulated by other governments as they assess how to support the film and television industry in a more economically responsible and effective manner.

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 Tax Credits for Film and TV Production a Race to the Bottom appeared first on Michael Geist.

The Error of Fast Tracking the Trans-Pacific Partnership Agreement

Freedom to Tinker - Fri, 2015/04/17 - 15:35
National media reported yesterday that a Congressional agreement has been reached on so-called “fast track” authority for the Trans-Pacific Partnership Agreement (TPP). This international agreement, having been negotiated under extreme secrecy by 12 countries including the United States, Australia, Canada, Japan, Malaysia and Singapore, is supposed to be an “ambitious, next-generation, Asia-Pacific trade agreement that reflects […]

Bitcoin is a game within a game

Freedom to Tinker - Fri, 2015/04/17 - 10:06
In this series on Bitcoin and game theory, I’ve argued that Bitcoin’s stability is fundamentally a game-theoretic proposition and shown how we’ve had blind spots for years in our theoretical understanding of mining strategy. In this post, I’ll get to the question of the discrepancy between theory and practice. As I pointed out, even though […]

Nobody’s Perfect: Leaked Contract Reveals Sony Requires Netflix To Geo-Block But Acknowledges Technology Is Imperfect

Michael Geist Law RSS Feed - Fri, 2015/04/17 - 09:59

The Wikileaks release of tens of thousands of Sony documents includes revelations about opposition to the copyright treaty for the blind, political fundraising, concerns about fair use in treaties, strategies to fund screening rooms in embassies to create a stronger will to protect studio interests, and personal calls to Prime Ministers (UK Prime Minister Cameron in this case) regarding the copyright law. The documents also show that Sony lobbied Netflix to stop Australian users from using VPNs to access the service. Yet it would appear that Sony’s own licence terms with Netflix opens the door to general VPN use.

The documents also include a stunning array of commercial documents, including licensing agreements with broadcasters and online video services around the world. A general search for Canadian documents immediately uncovered parts of the licensing agreement between Sony and Netflix, including the content protection requirements and obligations. Netflix is unsurprisingly requirement to encrypt all programs, use only pre-approved digital rights management systems, and meet various technical requirements.  Of great interest to many Netflix subscribers, particularly those that try to access U.S. Netflix, are the requirements related to geographic filtering. The provision states:

Geofiltering.

3.1    Licensee must utilize an industry standard geolocation service to verify that a Registered User is located in the Territory that must:
3.1.1.    provide geographic location information based on DNS registrations, WHOIS databases and Internet subnet mapping.
3.1.2.    provide geolocation bypass detection technology designed to detect IP addresses located in the Territory, but being used by Registered Users outside the Territory.
3.1.3.    use such geolocation bypass detection technology to detect known web proxies, DNS based proxies, anonymizing services and VPNs which have been created for the primary intent of bypassing geo-restrictions.
3.2.    Licensee shall use such information about Registered User IP addresses as provided by the industry standard geolocation service to prevent access to Included Programs, via the SVOD Service, from Registered Users outside the Territory.
3.3.    Both geolocation data and geolocation bypass data must be updated no less frequently than every two (2) weeks.
3.4.    Licensee agrees to periodically review geofiltering tactics during the Term of this Agreement.
3.5.    Licensor acknowledges that Internet Protocol (IP) based geolocation and geofiltering technologies may in some cases be circumvented by highly proficient and determined individuals or organizations.

The provision confirms several things. First, Hollywood studios are requiring Netflix to use geo-filtering technologies. Those technologies must be regularly updated and try to detect VPN services.  It is notable that detecting VPNs or web proxies that avoid geo-identification are limited to those that “have been created for the primary intent of bypassing geo-restrictions.” That may explain why Netflix would focus on VPN services that market themselves as primarily allowing for access to U.S. Netflix, while not stopping general VPN services that are used for a wide range of purposes, including protecting personal privacy.

Second, the provision does not include other geographic measures, such as credit card confirmation to a specific country (as is used in other Sony agreements). This may reflect the fact that users are entitled to access the service while traveling and may access U.S. Netflix while in the U.S. The service therefore restricts based on where a user is located when accessing the service, not where they reside.

Third, there is a provision that acknowledges that the geolocation technologies can be circumvented by “highly proficient and determined individuals or organizations.” These terms do not appear to be defined, which may create sufficient flexibility to allow Netflix to argue that it meets Sony’s contractual requirements on geo-filtering but that the Hollywood studio itself has acknowledged the imperfections of the technology which can be circumvented.

The post Nobody’s Perfect: Leaked Contract Reveals Sony Requires Netflix To Geo-Block But Acknowledges Technology Is Imperfect appeared first on Michael Geist.

Canada's Copyright Mystique

Sara Bannerman - Wed, 2015/04/15 - 15:14
Two recent law review articles, both responding to the July 2012 release of the Supreme Court of Canada's "pentalogy" of decisions on copyright, take somewhat opposite views of the relationship of the Court's decision to Canadian copyright history.

Professor Ysolde Gendreau of Université de Montréal's law school argues[1] that Canadian copyright law, leading up to the Court's decision, lacked a statement of a broad purpose or philosophy of Canadian copyright.  There was, for example, no statement in the preamble to the Canadian Copyright Act outlining the act's overall purpose.  It also lacked an "historical mystique" that would lend an historical purpose to Canadian copyright, the way that, for example, the storied history of the French authors' rights movement lends understanding to the interpretation of French copyright today.  Given this absence, the Court strode into the void and fashioned for Canadians a purpose that placed users' rights on a similar level with authors' rights in Canadian copyright law--a step that Gendreau believes has "no textual foundation."

Professor Myra Tawfik of the University of Windsor's law school argues[2], on the other hand, that the Court, rather than taking a wrong turn in the absence of clear directional purpose, "demonstrates  a depth of understanding of, and a confidence in, Canada's own particular copyright story"--a story that is very different from those of countries like France, the US, or the UK.  Tawfik argues that the Court now finds itself not in a relative void, but rather in the midst of a fairly developed area of Canadian law: "Canadian copyright law is sufficiently well developed and internally coherent to stand on its own merits."

Both authors note that the literature on the "historical mystique" of Canadian copyright is beginning to appear; they cite my book, The Struggle for Canadian Copyright, Eli McLaren's Dominion and Agency, and Pierre-Emmanuel Moyse's "The Colonies Strike Back" chapter as offering some of the history of Canadian copyright.

In my view, Professor Tawfik's view is correct. The Court's view of the purpose of Canadian copyright law, which places users' rights on a similar footing to those of authors, reflects longstanding concerns in Canadian copyright history with the accessibility of books, their affordability, and also with developing Canadian creative industries and encouraging Canadian creativity.  The developing range of literature on Canadian copyright history reflects this.

 --
1. Gendreau, Ysolde. "Recent Canadian Development: Fair Dealing: Canada Holds to its Position." J. Copyright Soc'y 60 (2013): 673-673.


2. Tawfik, Myra J. "The Supreme Court of Canada and the" Fair Dealing Trilogy": Elaborating a Doctrine of User Rights under Canadian Copyright Law." Alberta L. Rev. 51 (2013): 191-201.

Canada’s Non-Commercial Copyright Fail: Why Did YouTube Mute a Holocaust Memorial Video?

Michael Geist Law RSS Feed - Wed, 2015/04/15 - 10:34

Holocaust Remembrance Day (Yom HaShoah) starts tonight with events planned around the world. Last year, my daughter Jordan participated in the March of the Living, an annual event that brings thousands of people from around the world to the concentration camps in Poland. The experience had a profound effect and since her return she has become increasingly active within the March of the Living organization including joining the Ottawa board of directors. As part of tonight’s Holocaust remembrance event in Ottawa, she was asked to create a video to commemorate last year’s trip including interviews with participants, pictures, and video. She spent hours interviewing 18 participants on their experience and worked through hundreds of photos and hours of video to create a five-minute snapshot.

Last week, she posted the video to YouTube in anticipation of tonight’s event. Within hours, she received a message from the event organizer’s wondering why so few interviews appeared on the video. When she looked into the issue, she found that YouTube had muted the audio track with interviews after a couple of minutes (at 2:14 to be precise). The reason? The video includes some copyrighted background music. YouTube’s approach when it matches audio to a copyrighted work is to mute the non-music track, though it provides an option to fill out a fair dealing/fair use claim. Jordan did that, pointing out that Section 29.21 of the Canadian Copyright Act provides specific protection for non-commercial user generated content.  The provision states:

It is not an infringement of copyright for an individual to use an existing work or other subject-matter or copy of one, which has been published or otherwise made available to the public, in the creation of a new work or other subject-matter in which copyright subsists and for the individual – or, with the individual’s authorization, a member of their household – to use the new work or other subject-matter or to authorize an intermediary to disseminate it, if

(a) the use of, or the authorization to disseminate, the new work or other subject-matter is done solely for non-commercial purposes;
(b) the source – and, if given in the source, the name of the author, performer, maker or broadcaster – of the existing work or other subject-matter or copy of it are mentioned, if it is reasonable in the circumstances to do so;
(c) the individual had reasonable grounds to believe that the existing work or other subject-matter or copy of it, as the case may be, was not infringing copyright; and
(d) the use of, or the authorization to disseminate, the new work or other subject-matter does not have a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work or other subject-matter – or copy of it – or on an existing or potential market for it, including that the new work or other subject-matter is not a substitute for the existing one.

As of this morning, YouTube had not reinserted the audio track and Jordan spent many more hours creating a new version with different music.

The March of the Living video is precisely the kind of work that this provision is designed to cover: a non-commercial work with no substantial adverse effect on the work incorporated into the user-generated content. Yet more than two years after the provision took effect, YouTube and other online video providers have not adjusted their services to account for the Canadian law. In fact, a review of online video and social media sites finds that no one seems to account for the law within their terms and conditions or stated copyright policy.

During the copyright reform process, the non-commercial user generated content provision was cited as an innovative, “made-in-Canada” rule that provides legal protection for new creative works and the websites that host them.  During committee hearings, Google said:

Bill C-11′s protections for non-commercial, user-generated content will be important to creative communities in Canada. They allow creators to continue to confidently share their creations online with the world, and help foster the next generation of commercial successes.

Government MPs lauded the provision:

This exception recognizes that these new uses of creative content contribute to Canada’s cultural sector. For example, these uses can enhance interest in the original when videos of user-generated content go viral on the Internet. This innovative form of creation can also shed light on emerging talent from across our country and showcase it to the rest of the world. Of course the digital age does not just offer opportunities for creation; it also offers many unique opportunities for learning and education.

The decision by online video providers and social media sites to largely ignore the provision means lawful Canadian works will be muted or taken down contrary to the policy established by the government. There is no reason that online video providers can’t incorporate Canadian law into their service for their Canadian users by asking for affirmation that the work conforms to the provision upon posting (thereby creating a default that the work is lawful) or by creating a response mechanism that is consistent with user rights protections contained in Canadian copyright law.

The post Canada’s Non-Commercial Copyright Fail: Why Did YouTube Mute a Holocaust Memorial Video? appeared first on Michael Geist.

Decertifying the worst voting machine in the US

Freedom to Tinker - Wed, 2015/04/15 - 09:26
On Apr 14 2015, the Virginia State Board of Elections immediately decertified use of the AVS WinVote touchscreen Direct Recording Electronic (DRE) voting machine. This seems pretty minor, but it received a tremendous amount of pushback from some local election officials. In this post, I’ll explain how we got to that point, and what the […]

Back to the Drawing Board: Bell Drops Opt-Out Targeted Ad Program

Michael Geist Law RSS Feed - Tue, 2015/04/14 - 08:18

Days after the Office of the Privacy Commissioner of Canada released its decision that found that Bell was violating Canadian privacy law with its targeted ad program, the communications giant advised that it is withdrawing its program and deleting all customer profiles. A company spokesperson stated yesterday that Bell plans to re-introduce the program using an opt-in consent approach. That would likely require more than just a change to the privacy policy since the company would need to provide customers with incentives or compensation to get much acceptance to be voluntarily tracked.

My weekly technology law column (Toronto Star version, homepage version) notes that Bell’s targeted advertising program, which creates customer profiles that include age, gender, account location, credit score, pricing plan, and average revenue per user, generated controversy from the moment it was announced in October 2013. The communications giant maintained that it complied with Canadian privacy laws, yet many clearly disagreed as the Privacy Commissioner of Canada received an unprecedented barrage of complaints.

While concerns about tracking Internet usage and search queries garnered headlines, the fundamental legal issue was whether Bell was entitled to force its millions of customers to opt-out of the targeted advertising program if they did not wish to participate or if the law requires an explicit, opt-in approach in which consumers must proactively ask to be included before their tracking information is used for advertising purposes.

Last week the Privacy Commissioner of Canada rendered his verdict: Bell’s targeted advertising program violates the law since the consumer data used by Bell is sufficiently sensitive such that an opt-out approach does not adequately protect user privacy. Bell argued that the information it collects is non-sensitive and that opt-out was therefore good enough.

If the consumer data is taken piece by piece, Bell might have been right. Yet in an era of “big data”, the Privacy Commissioner effectively concluded that the sum of personal information is more than the parts. In the case of Bell, he placed the spotlight on the remarkable scale of the company’s data collection and usage:

“Bell is able to track every website its customers visit, every app they use – and in the future, potentially every TV show they watch and every call they make – using Bell’s network, whether at home or abroad. Under the RAP [Relevant Advertising Program], Bell can use this information to infer a wide range of both general and specific interests. The combination of this information with the extensive account/demographic information (e.g., age range, gender, average revenue per user, preferred language and postal code) used by Bell for the RAP will result in highly detailed and rich multi-dimensional profiles that, in our view, individuals are likely to consider quite sensitive.”

Bell was willing to make small adjustments to its program in response to the Privacy Commissioner’s concerns, but for months it would not budge on the opt-in issue. Indeed, with over 113,000 customers taking the trouble to navigate the opt-out form on its website in the first year alone, it likely knows that few will agree to have their personal information tracked and used without any compensation or incentives (by contrast, AT&T offers a discount on high-speed Internet services in some U.S. locations if customers allow it to track their web browsing history to deliver customized advertising).

Hours after the release of the Privacy Commissioner’s decision – which indicated that it was considering filing a legal action against Bell at the Federal Court of Canada to enforce the ruling – Bell issued a brief statement conceding that it is prepared to comply with all of the findings, including the opt-in requirement. The Privacy Commissioner met with company officials last Wednesday, but was apparently still unsatisfied with its compliance plans. That changed on Monday as the company caved on the opt-in issue.

While a courtroom showdown has been averted, Bell’s brazen decision to initially reject the ruling points to Canadian privacy law’s biggest flaw. Unlike provincial privacy commissioners and data protection regulators around the world, Canada’s federal privacy commissioner does not have order making power, relying instead on moral suasion or media pressure to convince companies to comply with the law.

The government claims that the law provides strong privacy protections, but merely hoping that companies will abide by their privacy obligations is not good enough. With Bill S-4, the Digital Privacy Act, currently before the House of Commons, the Bell targeted advertising case demonstrates why reforms are urgently needed to provide the Privacy Commissioner of Canada with long overdue power to enforce the law.

The post Back to the Drawing Board: Bell Drops Opt-Out Targeted Ad Program appeared first on Michael Geist.

Why Bell’s Opting-Out Approach Isn’t Good Enough

Michael Geist Law RSS Feed - Tue, 2015/04/14 - 08:14

Appeared in the Toronto Star on April 11, 2015 as Why Bell’s Opting-Out Approach Isn’t Good Enough

Bell’s targeted advertising program, which creates customer profiles that include age, gender, account location, credit score, pricing plan, and average revenue per user, generated controversy from the moment it was announced in October 2013. The communications giant maintained that it complied with Canadian privacy laws, yet many clearly disagreed as the Privacy Commissioner of Canada received an unprecedented barrage of complaints.

While concerns about tracking Internet usage and search queries garnered headlines, the fundamental legal issue was whether Bell was entitled to force its millions of customers to opt-out of the targeted advertising program if they did not wish to participate or if the law requires an explicit, opt-in approach in which consumers must proactively ask to be included before their tracking information is used for advertising purposes.

Last week the Privacy Commissioner of Canada rendered his verdict: Bell’s targeted advertising program violates the law since the consumer data used by Bell is sufficiently sensitive such that an opt-out approach does not adequately protect user privacy. Bell argued that the information it collects is non-sensitive and that opt-out was therefore good enough.

If the consumer data is taken piece by piece, Bell might have been right. Yet in an era of “big data”, the Privacy Commissioner effectively concluded that the sum of personal information is more than the parts. In the case of Bell, he placed the spotlight on the remarkable scale of the company’s data collection and usage:

“Bell is able to track every website its customers visit, every app they use – and in the future, potentially every TV show they watch and every call they make – using Bell’s network, whether at home or abroad. Under the RAP [Relevant Advertising Program], Bell can use this information to infer a wide range of both general and specific interests. The combination of this information with the extensive account/demographic information (e.g., age range, gender, average revenue per user, preferred language and postal code) used by Bell for the RAP will result in highly detailed and rich multi-dimensional profiles that, in our view, individuals are likely to consider quite sensitive.”

Bell was willing to make small adjustments to its program in response to the Privacy Commissioner’s concerns, but for months it would not budge on the opt-in issue. Indeed, with over 113,000 customers taking the trouble to navigate the opt-out form on its website in the first year alone, it likely knows that few will agree to have their personal information tracked and used without any compensation or incentives (by contrast, AT&T offers a discount on high-speed Internet services in some U.S. locations if customers allow it to track their web browsing history to deliver customized advertising).

Hours after the release of the Privacy Commissioner’s decision – which indicated that it was considering filing a legal action against Bell at the Federal Court of Canada to enforce the ruling – Bell issued a brief statement conceding that it is prepared to comply with all of the findings, including the opt-in requirement. The Privacy Commissioner met with company officials on Wednesday, but was apparently still unsatisfied with its compliance plans.

While a courtroom showdown may yet be averted, Bell’s brazen decision to initially reject the ruling points to Canadian privacy law’s biggest flaw. Unlike provincial privacy commissioners and data protection regulators around the world, Canada’s federal privacy commissioner does not have order making power, relying instead on moral suasion or media pressure to convince companies to comply with the law.

The government claims that the law provides strong privacy protections, but merely hoping that companies will abide by their privacy obligations is not good enough. With Bill S-4, the Digital Privacy Act, currently before the House of Commons, the Bell targeted advertising case demonstrates why reforms are urgently needed to provide the Privacy Commissioner of Canada with long overdue power to enforce the law.

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 Why Bell’s Opting-Out Approach Isn’t Good Enough appeared first on Michael Geist.

The Copyright Notice Flood: What to Consider If You Receive a Copyright Infringement Notification

Michael Geist Law RSS Feed - Mon, 2015/04/13 - 09:37

For the past few months, I’ve received daily emails from people who have been sent a copyright infringement notification as part of Canada’s notice-and-notice system. Most of the notifications come from CEG-TEK, a U.S.-based anti-piracy firm. Canadian Internet providers are now required by law to forward these notifications and CEG TEK has been taking advantage of a loophole in the system to include a settlement demand within the notification. Some of the recipients claim that the notification has been sent in error. Others say that they have received multiple notifications for a single download. In some cases, the recipient has clicked on the settlement demand link, while in others the person has called the company and revealed their identity. In virtually every case, they are looking for advice on what to do.

My typical response has been to point to my earlier posts on the issue that have explained Canada’s notice-and-notice system, the misuse of the system by rights holders in sending misleading information about Canadian copyright law, the government’s failure to stop the inclusion of settlement demands within the notices, and the massive expansion in the number of notices with the arrival of CEG TEK. I also point to Industry Canada’s page on the notice-and-notice system, which provides the government’s perspective on the issue. These resources can be helpful, but what most people really want to know is whether they should pay the settlement or ignore it. I don’t condone infringement but I believe that the misuse of the notice and notice system is extremely problematic. Moreover, I certainly think people that did not infringe copyright should not pay a settlement demand. I’m unable to provide specific legal advice, but I can provide more information that may assist in making a more informed decision about a system that was designed to discourage infringement, not create a loophole to facilitate settlement demands.

What does the rights holder know about the subscriber when they send the notification?

The short answer is not much. Internet providers do not disclose their subscribers’ personal information as part of the notice-and-notice process. The rights holder merely has an IP address and evidence it claims links that address to a copyright infringement. It does not know who receives the actual notice.

What steps are needed for a rights holder to sue in Canada?

As discussed in my other posts, the notices forwarded by Internet providers are an unproven allegation of infringement. For a rights holder to successfully pursue a case against an alleged individual infringer, it would first need to obtain a court order requiring the Internet provider to disclose the identity of the subscriber. Canadian courts have established privacy safeguards around potential disclosure of such information. The ISP may oppose the disclosure of the subscribers identity or argue for subscriber notification of the legal process.

If the rights holder succeeds in obtaining the subscriber’s personal information, it might then send another demand letter seeking payment in return for settling the case. Canadian courts have recently required that such letters be reviewed by the court before being sent to subscribers.

If the subscriber refuses to settle, the rights holder could pursue an infringement action in court. The rights holder would be required to prove its rights in the work, that an infringement occurred, and that the subscriber was responsible for the infringement. The rights holder would likely also need to provide some evidence of damages, given the cap on non-commercial infringement under the law discussed below. The subscriber could challenge these claims in court, potentially providing evidence that they were not involved in the unauthorized download (perhaps due to an error by the rights holder, incorrect IP address information, or an insecure wireless network) or by attempting to make the case that their actions did not violate Canadian copyright law.

What are the damages if a rights holder is successful in their lawsuit?

The legal process described above is expensive, yet the potential payoff from litigation against individuals is limited. The government established a new cap on liability for non-commercial infringement in its 2012 copyright reform package. The law now sets a maximum liability of C$5000 for all non-commercial infringements. The provision states:

Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally,

(b) in a sum of not less than $100 and not more than $5,000 that the court considers just, with respect to all infringements involved in the proceedings for all works or other subject-matter, if the infringements are for non-commercial purposes

The government’s intent was clearly to ensure that the maximum applied to all infringement from all rights holders. Indeed, the government’s fact sheet on the bill stated:

The Bill ensures that Canadians are not subject to unreasonable penalties by significantly reducing statutory damages for infringement for non-commercial purposes by individuals, providing the courts with the flexibility to award between $100 and $5,000 in total damages. Using the same example of five illegally downloaded songs, the individual would only be liable for a penalty of between $100 and $5,000 under the proposed changes. The Bill will ensure that courts take proportionality into account in awarding damages.

Some rights holders have recently argued that they could choose to pursue actual damages, rather than the non-commercial statutory damages. Yet the primary reason governments implemented statutory damages is that proving actual damages can be very difficult. As Howard Knopf rightly notes, to suggest that rights holder might be able to prove significant actual damages in mass copyright litigation is “extremely far fetched.”

Has anyone successfully sued a downloader for non-commercial infringement in Canada?

Not to my knowledge. The members of the Canadian Recording Industry Association ultimately abandoned the first file sharing lawsuits launched in 2004. More recently, Voltage Pictures has sought a court order for the identity of roughly 2,000 TekSavvy subscribers. After more than two years of litigation, it has obtained an order for the subscribers’ identity but that information has not been released due to an ongoing dispute over the costs its must pay before the information is made available.

Does CEG TEK regularly follow through on the demand letter with lawsuits?

According to the Cashman Law Firm, it has not sued anyone in two years in the United States. I am not aware of any lawsuits being filed in Canada.

The post The Copyright Notice Flood: What to Consider If You Receive a Copyright Infringement Notification appeared first on Michael Geist.

CRTC, Competition Bureau Enforcement Actions Show Anti-Spam Law Has Teeth

Michael Geist Law RSS Feed - Wed, 2015/04/08 - 12:25

As the launch of the Canadian anti-spam law neared last spring, critics warned that enforcement was likely to present an enormous challenge. Citing the global nature of the Internet and the millions of spam messages sent each day, many argued that enforcement bodies such as the Canadian Radio-television and Telecommunications Commission and the Competition Bureau were ill-suited to combating the problem.

My regular technology law column (Toronto Star version, homepage version) notes that in recent weeks it has become increasingly clear that the CRTC and the Bureau can enforce the law against companies that send commercial emails that run afoul of the new legal standards. Those agencies have completed three enforcement actions against Canadian businesses that point to the risks of millions of dollars in fines for failing to obtain proper consent before sending commercial messages, not granting users the ability to unsubscribe from further messages, or sending false or misleading information.

The first CRTC case involved Compu-Finder, a Quebec-based corporate training company that sent commercial emails without consent and without proper unsubscribe mechanisms. Their emails practices accounted for a quarter of the complaints in the sector received by the CRTC. In response, the company was hit with a $1.1 million penalty.

The CRTC concluded its second case last month, this time targeting Plenty of Fish, the popular online dating site. The Commission received complaints that the company was sending commercial emails without a clear and working unsubscribe mechanism. One of the key requirements in the law is that each commercial email contain an unsubscribe mechanism to allow recipients to opt-out at any time. Plenty of Fish agreed to settle the case by paying a $48,000 penalty and developing a compliance program to address its email practices.

While most of the anti-spam law enforcement attention has focused on the CRTC, the biggest case to date originates from the Competition Bureau. In March, it took action against Avis and Budget, two of Canada’s largest rental companies. The Bureau alleged that the companies engaged in false and misleading advertising when they failed to disclose numerous additional fees as part of their car rental promotions.

The misleading advertising was featured in several places, including email messages. The Bureau used the anti-spam rules, which contain new prohibitions against false or misleading commercial messaging, as part of its complaint. The case now heads to the Competition Tribunal, where the Bureau is seeking $30 million in penalties as well as customer refunds.

These cases confirm that the Canadian anti-spam law comes as advertised with tough penalties and enforcement agencies that will not hesitate to use it. However, it also suggests that solitary errors are unlikely to lead to investigations or fines. Rather, the CRTC examines the hundreds of thousands of complaints it receives from Canadians to identify trends and suitable targets for enforcement.

The cases have thus far focused on legitimate businesses that fail to comply with the law. That can be expected to continue, but the enforcement agencies must also turn their attention to the large spamming organizations that are still operating in Canada. According to Spamhaus’ Register of Known Spamming Organizations, five of the top 100 spamming organizations (responsible for 80 per cent of spam worldwide) are based in Canada.

Since the anti-spam law is premised on both improving the commercial email practices of legitimate business and shutting down Canadian-based spamming organizations, the CRTC should continue to work with businesses on anti-spam law compliance and also begin the process of wielding tough penalties to stop the groups responsible for clogging in-boxes with millions of unwanted messages every day.

The post CRTC, Competition Bureau Enforcement Actions Show Anti-Spam Law Has Teeth appeared first on Michael Geist.

CRTC, Competition Bureau Enforcement of Canadian Anti-Spam Law Picks Up Steam

Michael Geist Law RSS Feed - Wed, 2015/04/08 - 12:23

Appeared in the Toronto Star on March 28, 2015 as Plenty of Fish, Avis Fines Show Anti-Spam Law Has Teeth

As the launch of the Canadian anti-spam law neared last spring, critics warned that enforcement was likely to present an enormous challenge. Citing the global nature of the Internet and the millions of spam messages sent each day, many argued that enforcement bodies such as the Canadian Radio-television and Telecommunications Commission and the Competition Bureau were ill-suited to combating the problem.

In recent weeks it has become increasingly clear that the CRTC and the Bureau can enforce the law against companies that send commercial emails that run afoul of the new legal standards. Those agencies have completed three enforcement actions against Canadian businesses that point to the risks of millions of dollars in fines for failing to obtain proper consent before sending commercial messages, not granting users the ability to unsubscribe from further messages, or sending false or misleading information.

The first CRTC case involved Compu-Finder, a Quebec-based corporate training company that sent commercial emails without consent and without proper unsubscribe mechanisms. Their emails practices accounted for a quarter of the complaints in the sector received by the CRTC. In response, the company was hit with a $1.1 million penalty.

The CRTC concluded its second case earlier last month, this time targeting Plenty of Fish, the popular online dating site. The Commission received complaints that the company was sending commercial emails without a clear and working unsubscribe mechanism. One of the key requirements in the law is that each commercial email contain an unsubscribe mechanism to allow recipients to opt-out at any time. Plenty of Fish agreed to settle the case by paying a $48,000 penalty and developing a compliance program to address its email practices.

While most of the anti-spam law enforcement attention has focused on the CRTC, the biggest case to date originates from the Competition Bureau. In March, it took action against Avis and Budget, two of Canada’s largest rental companies. The Bureau alleged that the companies engaged in false and misleading advertising when they failed to disclose numerous additional fees as part of their car rental promotions.

The misleading advertising was featured in several places, including email messages. The Bureau used the anti-spam rules, which contain new prohibitions against false or misleading commercial messaging, as part of its complaint. The case now heads to the Competition Tribunal, where the Bureau is seeking $30 million in penalties as well as customer refunds.

These cases confirm that the Canadian anti-spam law comes as advertised with tough penalties and enforcement agencies that will not hesitate to use it. However, it also suggests that solitary errors are unlikely to lead to investigations or fines. Rather, the CRTC examines the hundreds of thousands of complaints it receives from Canadians to identify trends and suitable targets for enforcement.

The cases have thus far focused on legitimate businesses that fail to comply with the law. That can be expected to continue, but the enforcement agencies must also turn their attention to the large spamming organizations that are still operating in Canada. According to Spamhaus’ Register of Known Spamming Organizations, five of the top 100 spamming organizations (responsible for 80 per cent of spam worldwide) are based in Canada.

Since the anti-spam law is premised on both improving the commercial email practices of legitimate business and shutting down Canadian-based spamming organizations, the CRTC should continue to work with businesses on anti-spam law compliance and also begin the process of wielding tough penalties to stop the groups responsible for clogging in-boxes with millions of unwanted messages every day.

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 CRTC, Competition Bureau Enforcement of Canadian Anti-Spam Law Picks Up Steam appeared first on Michael Geist.

Privacy Commissioner of Canada Rules Bell’s Targeted Ad Program Violates Canadian Law

Michael Geist Law RSS Feed - Tue, 2015/04/07 - 11:26

The Privacy Commissioner of Canada has released the long-awaited decision on Bell’s targeted ads program. The Commissioner’s press release soft-pedals the outcome – “Bell advertising program raises privacy concerns” – but the decision is clear: Bell’s so-called relevant ads program violates Canadian privacy law. As I wrote earlier this year, the key issue in the case centered on whether Bell should be permitted to use an opt-out consent mechanism in which its millions of customers are all included in targeted advertising unless they take pro-active steps to opt-out, or if an opt-in consent model is more appropriate. Given the detailed information collected and used by Bell, I argued that opt-in consent was the right approach.

The Privacy Commissioner of Canada agrees:

In our view, for the reasons expressed above, the RAP clearly involves the use of sensitive personal information. As such, the sensitivity of the information at issue leads us to the conclusion that Bell must obtain express consent for the RAP in the circumstances. This conclusion is further supported by our assessment of the reasonable expectations of Bell Customers, which is set out below.

The decision includes detailed analysis of why the opt-in standard is appropriate and why Bell’s insistence that the personal information is not sensitive is wrong. The decision concludes:

we remain of the view that Bell cannot rely on the opt-out consent of its customers in order to implement the RAP. Both the sensitivity of the information at issue and the reasonable expectations analysis lead us to the conclusion that such consent is not appropriate in the circumstances. In our preliminary report, we recommended that Bell provide its customers with the opportunity to make an express opt-in choice regarding whether or not they consent to Bell’s use of their personal information for the RAP. Bell refused to comply with our recommendation. [emphasis added]

Bell’s decision to violate Canadian privacy law leaves the Privacy Commissioner of Canada with little alternative: it must pursue the case in the Federal Court of Canada. Yet that approach will takes years as the case will have to be mounted from scratch. In the meantime, Bell will presumably continue to violate the law.

[Update: Bell now says it will abide by the Privacy Commissioner of Canada’s ruling including the opt-in approach issue.]

The case is a perfect illustration of why Bill S-4, the Digital Privacy Act, should be amended to include order making power (I argued for order making power during my appearance before the Industry committee last month). The government cannot credibly claim that its bill offers Canadians strong privacy protections when the country’s largest telecommunications company can simply refuse to comply with the law and the Privacy Commissioner of Canada’s only recourse is lengthy, expensive litigation.  Provincial privacy commissioners have order making power as do virtually all data protection and privacy commissioners around the world. As currently drafted, PIPEDA leaves the Privacy Commissioner of Canada with little power to fully protect Canadians’ privacy with companies such as Bell seemingly free to reject his decisions.

The post Privacy Commissioner of Canada Rules Bell’s Targeted Ad Program Violates Canadian Law appeared first on Michael Geist.

Scan This or Scan Me? User Privacy & Barcode-Scanning Applications

Freedom to Tinker - Mon, 2015/04/06 - 08:00
[Please welcome guest bloggers Eric Smith and Nina Kollars. Eric Smith serves as the Chief Information Security Officer (CISO) for a higher ed consortium with membership consisting of Bucknell University, Franklin & Marshall College and Susquehanna University. Nina Kollars is assistant professor of government at Franklin & Marshall college, where her scholarship examines the ways […]

Where is Internet Congestion Occurring?

Freedom to Tinker - Thu, 2015/04/02 - 12:32
In my post last week, I explained how Netflix traffic was experiencing congestion along end-to-end paths to broadband Internet subscribers, and how the resulting congestion was slowing down traffic to many Internet destinations. Although Netflix and Comcast ultimately mitigated this particular congestion episode by connecting directly to one another in a contractual arrangement known as paid peering, […]
Syndicate content