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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It concludes:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

 

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

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

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

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

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

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

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

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

 

Canadian Heritage Slide Presentation, obtained under ATIP

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Copyright Reform in Canada and Beyond

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Deciphering the U.S. NAFTA Digital Demands, Part Two: Digital Economy, Services and Transparency

Michael Geist Law RSS Feed - Thu, 2017/04/06 - 09:20

Last week I posted on the leak of the draft notice from the Trump Administration on the NAFTA renegotiation, which identifies at least 40 issues, will serve as the starting point for discussions once talks begin. The post unpacked some of the general language to decipher what the U.S. has in mind on intellectual property issues. This second post examines some of the digital issues that U.S. officials have indicated will form a key part of the updated trade agreement.

Restrictions on Data Localization and Data Transfers

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

The core provisions in a future NAFTA e-commerce chapter will undoubtedly focus on rules requiring data localization and restricting data transfer. The TPP included a data localization provision which stated:

No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that territory.

The provision came in response to the emergence of data localization as an increasingly popular legal method for providing some additional assurances about the privacy protection for personal information. Although heavily criticized by those who fear that it harms the free flow of information, requirements that personal information be stored within the local jurisdiction is an unsurprising reaction to concerns about the lost privacy protections if the data is stored elsewhere. Data localization requirements are popping up around the world with European requirements in countries such as Germany, Russia, and Greece; Asian requirements in Taiwan, Vietnam, and Malaysia; Australian requirements for health records, and Latin America requirements in Brazil.

Canada has not been immune to the rules either with both British Columbia and Nova Scotia creating localization requirements for government data.  Moreover, the federal government’s 2016 cloud computing strategy prioritizes privacy and security concerns by mandating that certain data be stored in Canada. In response, leading technology companies such as Microsoft, Amazon, and Google have established or committed to establish Canadian-based computer server facilities that can offer localization of information. The U.S. will use NAFTA to restrict the use of data localization requirements.

The draft notice also cites restrictions on data transfers. As I noted in a recent column, those rules are important to preserve online freedoms in countries that have a history of cracking down on Internet speech, but in the Canadian context, could restrict the ability to establish privacy safeguards. In fact, should the European Union mandate data transfer restrictions as many experts expect, Canada could find itself between a proverbial privacy rock and a hard place, with the EU requiring restrictions and NAFTA prohibiting them.

Trade in Services

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

The trade in services issues could focus on several issues. First, the reference to telecommunications suggests that any lingering restrictions – including investment restrictions – could face pressure under the NAFTA renegotiation. Second, the TPP included provisions with implications for sharing services such as Uber and online gambling. Both could be up for review as part of the NAFTA talks.

Regulatory Transparency

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

Regulatory transparency seems like an uncontentious issue, yet the TPP provisions on transparency ventured into issues such as medical device approval and the prospect of a pharmacare program. For example, Annex 8-C 7bis of the TPP required each party to makes its determination on whether to grant marketing authorization for a specific pharmaceutical product on the basis on factors such as clinical data, manufacturing quality, and labelling information. However, it also states that:

no Party shall require sale or related financial data concerning the marketing of the product as part of such a determination. Further, each Party shall endeavour not to require pricing data as part of the determination

Annex 8-E for the approval of marketing of medical devices was similar:

no Party shall require sale, pricing, or related financial data concerning the marketing of the product as part of such a determination

The TPP also included detailed provisions on the creation of a national pharmacare program (including the possibility of creating one in the future), all under the guise of transparency.

The post Deciphering the U.S. NAFTA Digital Demands, Part Two: Digital Economy, Services and Transparency appeared first on Michael Geist.

Why Warrantless Access to Internet Subscriber Information is Back on the Legislative Agenda

Michael Geist Law RSS Feed - Tue, 2017/04/04 - 10:06

The federal government has yet to release its response to last year’s national security consultation, but at least one thing is increasingly apparent. Lawful access, the regulations that govern police access to Internet and telecom subscriber information, will be back on Public Safety Minister Ralph Goodale’s legislative agenda. My Globe and Mail column notes that the details of the complex new rules that would grant warrantless access to some telecom and Internet information system are still a work-in-progress, but the final outcome is sure to raise concerns with the privacy advocates as well as telecom and Internet providers.

A cybercrime working group comprised of senior officials from federal, provincial and territorial governments have spent months developing the new lawful access framework.  It recently held two invitation-only consultations on the issue with Canadian telecom and Internet companies as well as civil society groups and academic experts. I participated in the latter event, which was held under Chatham House rules that allow for disclosure of the content of the meeting without attribution to specific commentators.

Many in the privacy and telecom fields had assumed that the lawful access issue was settled in 2014. The government established several new warrants that opened the door to preserving subscriber information and granted law enforcement additional access to the data. When combined with the Supreme Court of Canada Spencer decision that affirmed a reasonable expectation of privacy in subscriber information, Canadian law enforcement was seen to have the necessary legal tools to combat cybercrime with court-approved access to Internet and telecom information.

The consultation meetings left no doubt that law enforcement is not satisfied with the current system, however. It is seeking significant reforms that would require telecom and Internet companies to disclose some subscriber information without court oversight. Police officers point to a sizable jump in the number of warrant requests following the Spencer decision as the justification for easing the rules of access.

Working group officials emphasized that no final decisions have been made, but much of the internal debate has shifted from whether more reforms are needed to what information could be mandatorily disclosed without court oversight and what should be subject to a warrant.

Warrantless access would be subject to an administrative procedure that would allow for disclosures without the need for prior court review or approval. These disclosures are characterized as involving “precursor” or confirmatory data that law enforcement insists does not have a reasonable expectation of privacy. The specific data points are still to be decided, but could include the subscriber’s city or province, whether a particular person has an account with a telecom provider, and whether the account was active on a particular date. The administrative procedure would also be used to grant access to subscriber information without a warrant in emergency situations and to information in non-criminal policing situations such as missing persons or property.

The warrantless administrative procedure would be accompanied by the creation of a new production order that would allow courts to order the disclosure of subscriber information. The specific information subject to a court order could include IP addresses and other Internet and telecom identifiers. The order might be subject to a lower threshold of “reasonable grounds to suspect” rather than the stricter “reasonable grounds to believe.”

Officials maintain that the current system has created serious investigative barriers, but have yet to provide concrete data of the extent of the problem. Moreover, the shift away from court oversight, which would likely face court challenges, appears driven in part by the increased costs associated with the current system. Indeed, the use of a warrantless administrative process is consistent with the view that full court oversight over Internet disclosures is too expensive for the police and the courts.

Yet warrantless access would come at a high price to the privacy of Canadians and the cost savings may be illusory since telecom companies are likely to seek new fees for responding to administrative disclosure requests.

Law enforcement officials argue that the Supreme Court’s Spencer decision “broke the system”, claiming that a lawful access framework premised on universal court oversight is too cumbersome and expensive for the reality of today’s Internet. Canadians who want their privacy will therefore have to fight for it, since it would appear that proposals striking a new privacy-security balance may be only months away.

The post Why Warrantless Access to Internet Subscriber Information is Back on the Legislative Agenda appeared first on Michael Geist.

Access Copyright Channels Sean Spicer in Comments on Copyright Fair Dealing Ruling

Michael Geist Law RSS Feed - Mon, 2017/04/03 - 09:05

Access Copyright issued a release on a 2016 Copyright Board decision on March 31st that might have been mistaken for an April Fool’s joke had it been issued a day later. Channeling White House spokesperson Sean Spicer’s penchant for implausible spin, the copyright collective commented on the board decision involving copying in K-12 schools by arguing the decision confirmed that “fair dealing does not encompass all of the copying in education.” Leaving aside the fact that no one has said that it does (hence paid access remains by far the most important method of access), the Access Copyright decision will come as a surprise to anyone who read its response to the decision when it was first released, when it called it a “deeply problematic decision for creators and publishers.”

Access Copyright filed a judicial review of the ruling only to lose badly at the Federal Court of Appeal, which upheld virtually all of the Board’s decision (the only exception was a minor issue on coding errors in its repertoire, which is the source of the reconsideration referenced in the release). Access Copyright presumably issued the announcement on a year-old decision in response to the fact that the deadline has passed for an appeal of the Federal Court of Appeal ruling to the Supreme Court of Canada. What stands – and what Access Copyright seemingly endorses with its latest spin – includes:

1.    The Board reducing its proposed tariff due to fair dealing decisions from the Supreme Court. Note that the 2012 reforms are not cited in the following from the Board:

The main reason for that decrease is the fact that as a result of the decision of the Supreme Court in Alberta v. Access Copyright, 2012 SCC 37, copies made for student instruction, assignments or class work, that were not included in the fair-dealing analysis in the preceding decision, were now included. This resulted in the Board’s finding that a significant proportion of copying by elementary and secondary schools was fair under the fair-dealing provisions of the Copyright Act. These copies therefore do not generate remuneration.

2.    The Board re-affirming the insubstantial copying doctrine, concluding that 1 – 2 pages from a book is insubstantial and not subject to any compensation.

3.    The Board largely upholding the framework of education fair dealing guidelines:

For longer works, such as books, guided by the Supreme Court’s decisions in CCH, Alberta, and Bell, we use the following approximation: where the amount of a work copied was less than or equal to 5 per cent of the work, we conclude that the amount copied tends to make the dealing fair; where the amount copied was more than 5 per cent but no more than 10 per cent of the work, we conclude that the amount copied did not affect the fairness of the dealing; where the amount copied was greater than 10 per cent of the work, we conclude that the amount copied tends to make the dealing unfair.

4.    The Board rejecting virtually all of Access Copyright’s fair dealing arguments:

    •    Access Copyright argued that since copies replace the purchase of works being copied, they are unfair. The Board rejected the argument.
    •    Access Copyright argued that a fair dealing analysis should consider “a just reward” for creators as part of the analysis. The Board rejected the argument.
    •    Access Copyright argued that the Board should consider whether the copying is transformative with the view that non-transformative copying tends to unfairness.  The Board rejected the argument.
    •    Access Copyright argued that the aggregate volume of copying – said to be 300 million pages – should be factored into the analysis. The Board rejected the argument, noting that what matters is a specific copying transaction, not the aggregate amount of copying.
    •    Access Copyright argued that distribution of multiple copies of works that are not destroyed tend to unfairness. The Board rejected the argument.
    •    Access Copyright argued that there were reasonable alternatives available. The Board rejected the argument, concluding that alternatives for “non-consumables” tended toward fairness.
    •    Access Copyright argued that the copying had a negative effect on the market and for the creation of future works. The Board found that there could be some effect on the market, but concluded that the effect on future works was small.

The Federal Court of Appeal hinted that it would have gone even further than Board as part of its review. For example, on the fair dealing guidelines it stated:

Although both parties were clearly disappointed by the fact that the Board did not offer any detailed comments on their evidence relating to those Guidelines, Access did not challenge this finding, which was based on its assessment of the weight of the evidence. This was a wise decision, for indeed, the Board’s conclusion was clearly open to it on the evidentiary record.

Similarly on the Board’s fair dealing analysis, the court stated:

It may well be that the Board’s methodology is not perfect, but again, given the particular circumstances of this case, I have not been persuaded that its overall determination that a large portion of the exposures were fair (again this was much less than the numbers proposed by the Consortium using a similar statistical approach) was unreasonable because of the method it chose to weigh the evidence in forming its overall impression of the fair dealing factors.

The near-total loss helps explain why Access Copyright had chosen not to appeal to the Supreme Court, relying instead on spin that requires readers to ignore its own prior reaction to the decision and the words of the Copyright Board and Federal Court of Appeal.

The post Access Copyright Channels Sean Spicer in Comments on Copyright Fair Dealing Ruling appeared first on Michael Geist.

CRTC: Indigenous peoples underrepresented on Commission

Sara Bannerman - Fri, 2017/03/31 - 15:18
CRTC Chairman Jean-Pierre Blais this week launched a set of hearings regarding applications to operate radio stations serving Indigenous Canadians in five major Canadian cities.  However, the panel for the hearing, Blais noted, "does not include Indigenous members."  Governments past and present, Blais noted, have failed to appoint CRTC Commissioners "for almost 20 years."

After calling on Elder Monique Renaud, Métis of Algonquin and Huron-Wendat descent, to open the hearings, Blais noted, referring to the findings of the Truth and Reconciliation Commission:
The Canadian broadcasting system plays an important role in the reconciliation of Indigenous peoples with Canadian society. The Commission also raised the immediate need to serve the Indigenous community as a whole since vital questions of importance to Indigenous Canadians are not completely covered, or not covered at all, by non-Indigenous media.The National Post noted, earlier this week:
This isn't the first time Blais has criticized the lack of diversity.  He previously chastised telecoms for not including a representative number of women at the public hearings. Currently, only seven of a possible 13 commissioner spots are occupied. Two are women.Two more seats will be vacant by June, leaving five commissioners unless the government speeds up its hiring process. In 2015, the CRTC had revoked the licences of Aboriginal Voices Radio in Toronto, Vancouver, Calgary, Edmonton and Ottawa for licence non-compliance and called for new applications, of which twelve have been received.

Along with the current set of licencing hearings, the CRTC has promised a review of its policies on Indigenous Radio. A conference in Ottawa is planned to set stage for this review, to take place June 15-17 2017.

The review of the Canadian Broadcasting Act, promised in the Liberal's 2017 Budget, should work to  correct the inadequacy with which the Act addresses Aboriginal media.  The Government should also address the inadequacy of representation of indigenous peoples among the CRTC's Commissioners.

Deciphering the U.S. NAFTA Digital Demands, Part One: Intellectual Property

Michael Geist Law RSS Feed - Fri, 2017/03/31 - 09:05

The leak of the draft notice from the Trump Administration on the NAFTA renegotiation, which identifies at least 40 issues, will serve as the starting point for discussions once talks begin. Coverage of the U.S. interests has emphasized tariff issues, rules of origin, and tax treatment, but the digital issues should not be overlooked. The U.S. starting position looks a lot like the TPP, which suggests that we already have a very clear understanding of the text that U.S. negotiators will propose. This post unpacks some of the general language to decipher what the U.S. has in mind on intellectual property issues. A second post will review the other digital issues, including privacy and e-commerce rules.

Exceed international standards on IP

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

The key words in this paragraph on “build on the foundations” of several international agreements and IP treaties. This indicates that the U.S. will not be seeking that Canada and Mexico meet international standards, but rather exceed them. This could involve copyright term extension for Canada (to life plus 70 years from the current international standard of life plus 50 years) and digital lock rules that far exceed requirements under the WIPO Internet treaties.

Block Netflix Regulation via Market Access Rules

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

This provision sounds harmless, but the references to fair and non-discriminatory access are likely to lead to demands that Canada re-open the NAFTA culture provisions. The TPP included two exceptions to the typical Canadian carve out of culture from trade deals which are both likely to resurface in NAFTA. The TPP exception stated:

Canada reserves the right to adopt or maintain any measure that affects cultural industries and that has the objective of supporting, directly or indirectly, the creation, development or accessibility of Canadian artistic expression or content, except:

a) discriminatory requirements on services suppliers or investors to make financial contributions for Canadian content development; and 

b) measures restricting the access to on-line foreign audiovisual content. 


The first provision appears to be a permanent ban on a “Netflix tax” or virtually any expansion of Cancon contributions to currently exempt services. In fact, the scope of the provision goes far beyond just online video: the music industry and publishing industry would face similar restrictions. The exception may be limited to “discriminatory” Cancon payment requirements, but currently exempt providers (such as online video services) will argue that any Cancon payments would be discriminatory against them, because they do not enjoy many of the protections and benefits that go to the Canadian companies that make Cancon contributions as part of a regulatory quid pro quo (Netflix raised the concern when it appeared before the CRTC in 2014 and in its submission that was removed from the record).

There are similar concerns with measures restricting access to online foreign audiovisual content. Given its popularity, few would want to restrict access to Netflix (indeed, the opposite is true as many want access to more Netflix). But what if foreign services have unfair advantages over Canadian-based competition? What if a foreign music service (with videos) targets the Canadian market in a manner that raises legal concerns? The provision would seem to block the ability to take action, since new rules may restrict access to foreign content or constitute the discriminatory requirements.

New Border Measures and Seizure Powers

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

Canada significantly changed it border measures and anti-counterfeiting rules several years ago (doing so was a condition of entry into the TPP negotiations), but the U.S. is still seeking further changes to the rules. For example, Article 18.76 of the TPP sought to expand the power of customs officials by granting them the right to initiate border measures without court oversight, even for goods that are in-transit (ie. not destined to stay within the country). The in-transit issue was a major source of U.S. lobbying during the debate over Bill C-8, Canada’s anti-counterfeiting bill. Canada ultimately excluded in-transit shipments from the ambit of the bill with the government arguing that “our government doesn’t believe taxpayers should be on the hook for the cost of seizing counterfeit products that are destined for the United States that do not threaten health or safety.” The U.S. hoped to reverse Bill C-8 through the TPP and seemingly intends to revisit the issue in the NAFTA renegotiation.

The reference to stronger enforcement may also speak to expanded border measures without court oversight. The TPP required Canada to create a system to allow for the detention of goods with “confusingly similar” trademarks, a change that may be replicated in the NAFTA talks. Article 18.76 of the TPP established “special requirements related border measures” which includes allowing for applications to detain suspected confusingly similar trademark goods as well as  procedures for rights holders to suspend the release of those goods.  The required change is striking since Canada just overhauled its rules for border measures under pressure from the U.S. The Canadian approach did not include “confusingly similar” trademark goods, recognizing that such goods are not counterfeit and require border guards (who rarely have legal training) to make exceptionally difficult judgments about whether imported goods violate the law. Canada opposed the extension to confusingly similar trademarks throughout the TPP negotiations, but ultimately caved on the issue.

Expand Criminal Penalties and Damage Awards

USTR notice http://www.bilaterals.org/?draft-nafta-notice

 

The criminal penalties requirement would require changes to Canada’s already overbroad digital lock rules, which covers both rights management information and technological protection measures. The TPP required Canada to add criminal liability for rights management violations. This marked a significant change from the 2012 copyright reform package, reflecting U.S. desire for increased criminalization of copyright law. Canada opposed the change during the TPP negotiations, but ultimately caved in the final draft (Canada remained opposed as late as the Hawaii TPP round in August 2015). The draft letter suggests that the U.S. will renew its demand that Canada add criminal penalties to the law.

The reference to criminal penalties may also speak to trade secret law. Article 18.78 of the TPP included requirements for criminal penalties and procedures for trade secret violations. The inclusion of criminal penalties for trade secret violations came directly from lobbying by the U.S. Chamber of Commerce, which made the issue a top priority. Agreement was presumably reached by creating some flexibility for TPP countries. The provision contained a mandate to include penalties for at least one of three forms of trade secret breach involving at least one of five different types of harm (commercial advantage or gain, intent to injure an owner, etc.). The flexibility led some to argue that countries like Canada were already compliant with the bare minimum in the provision given the existence of an economic espionage provision in the Security of Information Act (Canada). Yet with the issue re-opened in NAFTA, the U.S. may be seeking a broader extension of the criminal penalties in such cases.

The reference to strengthening compensation for rights holders may refer to two Canadian issues. Outside of the TPP framework, it may signal a desire to re-examine Canada’s statutory damages rules, which include a cap on non-commercial infringement.  Rights holders are still entitled to seek actual damages, but the U.S. may seek to reverse the 2012 change by requiring uniform statutory damages rules for all infringement.

The reference may also revive demands that Canada create damages for individuals who break digital locks for personal purposes. Section 41.1(3) of the Copyright Act states:

The owner of the copyright in a work, a performer’s performance fixed in a sound recording or a sound recording in respect of which paragraph (1)(a) has been contravened may not elect under section 38.1 to recover statutory damages from an individual who contravened that paragraph only for his or her own private purposes.

This was an important provision during the copyright reform process since it sought to assure concerned Canadians that they would not face the possibility of statutory or significant damages for private circumventions. Since statutory damages are not available for a person that circumvents the digital locks on their DVD collection, the Canadian private purposes circumvention rule could be challenged with U.S. demands that Canada implement new damages requirements for individuals who circumvent a digital lock, even for personal purposes.

The post Deciphering the U.S. NAFTA Digital Demands, Part One: Intellectual Property appeared first on Michael Geist.

With U.S. Retreat from Online Privacy, Canada Needs to Safeguard the Internet in NAFTA Talks

Michael Geist Law RSS Feed - Wed, 2017/03/29 - 08:58

The North America Free Trade Agreement renegotiation is likely to start within the next few months as the U.S. triggers provisions that will re-open Canada’s most important trade deal.  With U.S. Secretary of Commerce Wilbur Ross emphasizing the need to address digital economy issues, I wrote about a digital economy-era NAFTA in last week’s Globe and Mail, noting that there were some issues (including online contract enforcement and consumer protection) that should relatively uncontroversial.

In light of yesterday’s U.S. Congressional decision to overturn online privacy rules, it is worth revisiting the NAFTA renegotiation issue and consider whether Canada will need to safeguard its Internet policy. I noted last week that the U.S. was already likely to target two Internet-related privacy measures: data localization and data transfers. Data localization, which could mandate retention of personal information on computer servers located in Canada. has become an increasingly popular policy measure worldwide as countries respond to concerns about U.S.-based surveillance and the subordination of privacy protections for non-U.S. citizens and residents. The Trans Pacific Partnership included restrictions on data localization requirements at the insistence of U.S. negotiators and those provisions are likely to resurface during the NAFTA talks.  Similarly, limitations on data transfer restrictions could surface, restricting the ability to establish privacy safeguards and placing Canada in a difficult position with the EU requiring restrictions and NAFTA prohibiting them.

The U.S. telecom policy changes under the Trump Administration may cause additional areas of contention. The U.S. retreat from online privacy rules will make it easier for telecom companies to track and sell subscriber online activity by lifting an opt-in requirement to use and sell such information. Canada faced a similar issue in 2013 when Bell introduced its “Relevant Advertising Program” that sought to use subscriber information for targeted advertising purposes. The program sparked hundreds of complaints focused on concerns that Bell was planning for an opt-out approach that would allow it use the information unless customers specifically requested otherwise.

The Privacy Commissioner of Canada ruled that Bell’s plans violated Canadian privacy law in 2015, concluding:

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 initially refused to comply with the decision, but later agreed to abide by the opt-in requirement. The case places Canada and the U.S. on opposite tracks when it comes to the commercialization of online tracking by telecom companies. The concern from a NAFTA perspective is the potential for the U.S. to want Canada to match its approach, arguing that Canadian law makes it more difficult for its marketers to conduct business in Canada. In this case, as with data localization and data transfer, the issue should be off the negotiation table.

The Trump Administration has also shifted away from its open Internet policies with changes to ISP transparency and the closure of net neutrality inquiries into zero rating arrangements. Canada takes a different approach with transparency a core requirement of the Internet Traffic Management Practices and zero rating currently under consideration at the CRTC. A renegotiated NAFTA could see the U.S. seek to stop Canadian net neutrality rules from restricting potential “zero rating” agreements between large U.S. rights holders and Canadian Internet providers.

Canada once adopted a trade approach that excluded culture from the ambit of U.S. trade negotiations, arguing that each country was entitled to its own policies. The strict “off-the-table” approach on culture was abandoned in the TPP, but the NAFTA renegotiation may bring a new requirement that negotiators ensure that the U.S. keep its hands off the Canadian Internet.

The post With U.S. Retreat from Online Privacy, Canada Needs to Safeguard the Internet in NAFTA Talks appeared first on Michael Geist.

Fixing PIPEDA: My Appearance Before the Access to Information, Privacy & Ethics Committee

Michael Geist Law RSS Feed - Tue, 2017/03/28 - 09:07

Last week I appeared before the House of Commons Standing Committee on Access to Information, Privacy and Ethics as part of its review of PIPEDA, Canada’s private sector privacy law. The ETHI study is expected to last several months and may provide the foundation for potential reforms. My opening remarks are posted below:

Appearance before the House of Commons Standing Committee on Access to Information, Privacy & Ethics, March 21, 2017

Good afternoon. My name is Michael Geist.  I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. My areas of specialty include digital policy, intellectual property, and privacy.  I served for many years on the Privacy Commissioner of Canada’s External Advisory Board and I have been privileged to appear before multiple committees on privacy issues, including appearances on PIPEDA, Bill S-4, Bill C-13, and this committee’s earlier reviews of social and media privacy and the Privacy Act.

I appear today in a personal capacity representing only my own views.

There is much I’d like to discuss: stronger enforcement through order making power, the example of Canadian anti-spam legislation as a model for tougher enforcement and consent standards, and the mounting concerns with how copyright rules may undermine privacy. Given limited time, however, I’d like to use my opening remarks to focus on three issues: privacy reform pressures, consent, and transparency.

1.    Need for Reform

I had the honour of appearing before both the House and Senate committees on Bill S-4, which was ostensibly the effort to update PIPEDA by implementing recommendations first made in 2006. At the time, it was obvious that further changes were needed. In fact, the ongoing delays in implementing aspects of that bill – security breach notification for example – shows how painfully slow the process of updating Canada’s privacy laws has been.

I believe that there is now an increased urgency to address the issue. The committee has already heard about developments in Europe with the GDPR that could threaten Canada’s adequacy standing with European privacy officials.  There is another international development that could have a significant impact on Canadian privacy law that bears attention: trade deals.

The upcoming NAFTA renegotiation seems likely to include U.S. demands that Canada refrain from establishing “data localization” rules that mandate retention of personal information on computer servers located in Canada. Data localization has become an increasingly popular policy measure as countries respond to concerns about U.S.-based surveillance and the subordination of privacy protections for non-U.S. citizens and residents under the Trump Administration.

In response to the mounting public concerns, leading technology companies such as Microsoft, Amazon, and Google have established or committed to establish Canadian-based computer server facilities that can offer localization of information. These moves follow on the federal government’s 2016 cloud computing strategy that prioritizes privacy and security concerns by mandating that certain data be stored in Canada. The Trans Pacific Partnership included restrictions on data localization requirements at the insistence of U.S. negotiators. Those provisions are likely to resurface during the NAFTA talks.

So too will limitations on data transfer restrictions, which mandate the free flow of information on networks across borders. Those rules are important to preserve online freedoms in countries that have a history of cracking down on Internet speech, but in the Canadian context, could restrict the ability to establish privacy safeguards. In fact, should the European Union mandate data transfer restrictions as many experts expect, Canada could find itself between a proverbial privacy rock and a hard place, with the EU requiring restrictions and NAFTA prohibiting them.

2.    Consent

Privacy laws around the world may differ on certain issues, but all share a key principle: the collection, use and disclosure of personal information requires user consent. The challenge in a digital world where data is continuously collected and can be used in a myriad of previously unimaginable ways is how to ensure that the consent model still achieves the objective of giving the public effective control over their personal information.

Rather than weakening or abandoning consent models, Canadian law needs to upgrade its approach by making consent more effective in the digital environment. There is little doubt that the current model is still too reliant on opt-out policies in which businesses are entitled to presume that they can use their customers’ personal information unless they inform them otherwise. Moreover, cryptic privacy policies that leave the public confused about how their information may be collected or disclosed creates a notion of consent that is often based on fiction, not fact.

How to solve the shortcomings of the consent-based model?  Four proposals:

First, Canada should implement opt-in consent as the default approach. At the moment, opt-in is only used where strictly required by law or for highly sensitive information such as health or financial data. The current system means that the majority of information is collected, used, and disclosed without informed consent.

Second, since informed consent depends upon the public understanding how their information will be collected, used, and disclosed, the rules associated with transparency must be improved. Confusing negative-option check boxes that leave the public unsure about how to exercise their privacy rights should be rejected as an appropriate form of consent.

Moreover, given the uncertainty associated with big data and cross-border transfers of information, new forms of transparency in privacy policies are needed. For example, algorithmic transparency would require search engines and social media companies to disclose how information is used to determine the content displayed to each user. Data transfer transparency would require companies to disclose where personal information is stored and when it may be transferred outside Canada.

Third, effective consent means giving users the ability to exercise their privacy choices. Most policies are offered on a “take it or leave it” basis with little room to customize how information is collected, used and disclosed. Real consent should also mean real choice.

Fourth, stronger enforcement powers are needed to address privacy violations. The rush to comply with the Canadian anti-spam law was driven by the inclusion of significant penalties for violation of the rules. Canadian privacy law is still premised on moral suasion or fears of public shaming, not tough enforcement backed by penalties. If privacy rules are to be taken seriously, there must be serious consequences when companies run afoul of the rules.

3.    Transparency and Reporting

In recent years, the stunning revelations about requests and disclosures of personal information of Canadians – millions of requests, the majority without court oversight or warrant – points to an enormously troubling weakness in Canada’s privacy laws. Most Canadians have no awareness of these disclosures and have been shocked to learn how frequently they occur.

Recent emphasis has been on private sector transparency reporting.  Large Internet companies such as Google and Twitter have released transparency reports and they have been joined by some of Canada’s leading communications companies such as Rogers and Telus.

Despite the availability of a transparency reporting standard approved by the government and Privacy Commissioner, there are still some holdouts.  The problem lies with the non-binding approach to transparency disclosures. After an industry-wide meeting organized by the privacy commissioner held in April 2015, Rogers noted that “it was indicated at this meeting that any guidelines adopted would fall short of regulation, but would regarded as more substantive than voluntary guidelines.” Yet if the non-regulatory approach does not work, it falls to either the federal privacy commissioner or the government to take action.

The most notable company to refrain from meeting these transparency standards is Bell, Canada’s largest telecommunications company.  While Bell initially claimed that it was waiting for a standard from the Privacy Commissioner, it has still not met those standards. Simply put, millions of Canadians still do not know when, under what circumstances, and with what frequency Bell discloses subscriber information.

This, in my view, is unacceptable.  If the current law does not mandate such disclosures, there is a problem with the law. A reform requiring disclosure with real penalties for failure to do so is needed.

Scarcely a day goes by without some media coverage of a privacy-related issue.  The public is concerned with their privacy and the business community recognizes the value of personal information.  It is time for the law to catch up.  I look forward to your questions.

The post Fixing PIPEDA: My Appearance Before the Access to Information, Privacy & Ethics Committee appeared first on Michael Geist.

What Would a Digital Economy-Era NAFTA Mean for Canada?

Michael Geist Law RSS Feed - Fri, 2017/03/24 - 09:45

U.S. Commerce Secretary Wilbur Ross is expected to file a notice of renegotiation of the North American free trade agreement within weeks, paving the way for talks that could reshape the Canadian economy. It became clear last week that the renegotiation will involve much more than just a few “tweaks”, as a U.S. congressional hearing saw officials trot out the usual laundry list of demands including changes to agricultural supply management, softwood lumber exports, and anti-counterfeiting measures.

Those issues will undoubtedly prove contentious, yet my Globe and Mail article notes that more interesting were comments from Mr. Ross about the need for new NAFTA chapters to reflect the digital economy. The emphasis on digital policies foreshadows a new battleground that will have enormous implications for Canadian privacy laws and digital policies.

Some of the digital economy policies, including online contract enforcement and consumer protection, should be relatively uncontroversial. Moreover, online sellers can be expected to renew their call for increases to the de minimis customs threshold from the current C$20 to C$200. The measure would prove popular with consumers who would be free to import bigger ticket items tax-free, but is sure to face stiff opposition from Canadian retailers who fear heightened competition from U.S.-based Internet sellers.

Even more difficult will be U.S. demands that Canada refrain from establishing “data localization” rules that mandate retention of personal information on computer servers located in Canada. Data localization has become an increasingly popular policy measure as countries respond to concerns about U.S.-based surveillance and the subordination of privacy protections for non-U.S. citizens and residents.

In response to the mounting public concerns, leading technology companies such as Microsoft, Amazon, and Google have established or committed to establish Canadian-based computer server facilities that can offer localization of information. These moves follow on the federal government’s 2016 cloud computing strategy that prioritizes privacy and security concerns by mandating that certain data be stored in Canada. The Trans Pacific Partnership included restrictions on data localization requirements at the insistence of U.S. negotiators. Those provisions are likely to resurface during the NAFTA talks.

So too will limitations on data transfer restrictions, which mandate the free flow of information on networks across borders. Those rules are important to preserve online freedoms in countries that have a history of cracking down on Internet speech, but in the Canadian context, could restrict the ability to establish privacy safeguards. In fact, should the European Union mandate data transfer restrictions as many experts expect, Canada could find itself between a proverbial privacy rock and a hard place, with the EU requiring restrictions and NAFTA prohibiting them.

The NAFTA digital economy implications extend beyond privacy issues. The U.S. and Canada have begun to move in opposite directions on network neutrality rules, which ensure that all content and applications are treated equally online. Canada has had net neutrality rules in place since 2009 and many believe that the Canadian Radio-television and Telecommunications Commission will expand them later this year.

Since the election of President Donald Trump, the U.S. has shifted away from its open Internet policies. The TPP included general net neutrality obligations, but a renegotiated NAFTA could see the U.S. seek to stop net neutrality rules from restricting potential “zero rating” agreements between large U.S. rights holders and Canadian Internet providers.

The updated trade agreement could also touch on digital cultural policies. The TPP departed from longstanding Canadian policy by not containing a full cultural exception and creating unprecedented restrictions on policies to support the creation of Canadian content. Those included a ban on access restrictions to online video services and a limitation on requirements on foreign providers to make financial contributions in support of Canadian content production.

Those provisions were seemingly designed to support the unregulated entry of services such as Netflix with trade-based restrictions on creating a so-called “Netflix tax.” There is little support for a cultural Netflix tax within the government, but cultural policy has traditionally been treated as a hands-off area for Canadian trade negotiators. Having opened the door to new regulatory restrictions in the TPP, those provisions can be expected to resurface during the NAFTA renegotiation.

Many of these digital provisions went largely unnoticed during the TPP talks, but will garner far tougher scrutiny in the spotlight of NAFTA trade negotiations. Indeed, the initial U.S. signals suggest that the renegotiated agreement could have a profound impact on Canadian law and policy, creating an enormous challenge for Foreign Minister Chrystia Freeland and International Trade Minister François-Philippe Champagne, who must simultaneously bring the U.S. onside and sell the deal to the Canadian public.

The post What Would a Digital Economy-Era NAFTA Mean for Canada? appeared first on Michael Geist.

C’mon Uber: Sales Taxes on Uber Rides Are Not a “Tax on Innovation”

Michael Geist Law RSS Feed - Thu, 2017/03/23 - 17:03

Yesterday’s federal budget included plans to amend the law to ensure that GST/HST is applicable to ride sharing services such as Uber. The budget states that the government will:

Amend the definition of a taxi business under the Excise Tax Act to level the playing field and ensure that ride-sharing businesses are subject to the same GST/HST rules as taxis.

This change should not be particularly controversial. No one likes paying taxes, but equal application of sales taxes ensures appropriate revenue collection and a level-playing field for all businesses in the sector. As I noted in an earlier post, I expect that this is a first step toward extending requirements to collect and remit sales taxes on foreign digital services such as Netflix and Spotify.  Applying sales taxes to all foreign digital services is complicated – there needs to be thresholds implemented to ensure that administrative costs do not outweigh revenues collected – but Uber is well established in Canada with many local jurisdictions establishing a regulatory framework for the service.

Moreover, Uber already collects and remits sales taxes in some Canadian jurisdictions. For example, the Uber page for drivers in Montreal explains that drivers are required to obtain sales tax registration numbers. It adds:

After you have provided your tax numbers, Uber will collect and pay the sales tax (GST and QST) for every trip on your behalf. However, you will need to report your sales tax once per year.

In fact, Uber promotes the sales tax collection by promising drivers a six percent rebate on the sales tax collected to account for offsetting business expenses. In other words, Uber promotes sales tax collection as a benefit to drivers in Montreal. When sales tax questions have been raised elsewhere, Uber has also claimed that drivers are expected to collect GST/HST (which is totally unrealistic given that it uses cashless transactions).

Given its position on sales taxes in Montreal, Uber might have welcomed the announcement in yesterday’s budget. However, it is apparently opposed, implausibly claiming that it is a “tax on innovation.” The company states:

This new tax on innovation would hurt over a million Canadians who use ridesharing to earn income and get around their cities.

It continues by claiming that Uber doesn’t even compete with taxis. Rather, it says its competition is with car ownership and that the tax will make Uber less price competitive with buying a car (last time I checked, cars were subject to sales taxes). Uber has enough regulatory fights on its hands. It doesn’t need another one based on weak claims about innovation that are directly contradicted by its own business practices in one of Canada’s largest cities.

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Budget 2017: Why Canada’s Digital Policy Future Is Up For Grabs

Michael Geist Law RSS Feed - Wed, 2017/03/22 - 18:02

Canadian Finance Minister Bill Morneau released his government’s 2017 budget today and while the spending promises may be underwhelming for some, the documents sets out an ambitious agenda for digital policy review. In fact, with changes to copyright, patent, broadcast, telecom, net neutrality, digital taxes, fintech, Canadian media, and Cancon all under consideration, the coming year will have enormous implications for the future of Canada’s digital policies.

The budget does include several spending promises, including $13.2 million over five years to support an affordable Internet access program, $50 million for kids coding programs, $29.5 million over five years for digital literacy, and $14.9 million for digitization of Indigenous language and materials. There is also new money for the growth of artificial intelligence sector and the much-anticipated revamping of innovation funding programs.

Yet the biggest digital implications may ultimately come from the policy reforms. First up may be new digital sales taxes. The budget includes a commitment to extend sales taxes to ride sharing companies such as Uber, a move that seems likely to ultimately lead to a broader extension of sales taxes to digital services such as Netflix.

A review of the Copyright Act was already planned for November 2017 as required by the law. However, the government is throwing open an even bigger review of intellectual property laws as it seeks to develop a new IP strategy:

In recognition of the importance of a well-functioning intellectual property regime, Budget 2017 announces the Government will develop a new intellectual property strategy over the coming year. The strategy will help ensure that Canada’s intellectual property regime is modern and robust and supports Canadian innovations in the 21st century.

Canada already meets international standards on IP and has some one of the world’s toughest anti-piracy measures. As I noted earlier today, what has been missing are rules to better support innovation and the need for Innovation, Science and Economic Development Minister Navdeep Bains to assume the policy lead on the issue. The review and strategy exercise offers the chance to adopt fair use rules that have been critical for innovative economies such as the United States, Israel, South Korea, and Singapore. When coupled with the restrictive digital lock rules that suffer from narrowly interpreted exceptions, the Canadian copyright law environment is supportive of cracking down on infringement but lacks the flexibility needed for new creativity and innovation.

The review of Cancon in a digital world conducted by Canadian Heritage Minister Melanie Joly also makes its way into the budget with a promise for policy reforms that could dramatically alter the Internet in Canada. The budget places all the big issues up for grabs:

To ensure that Canadians continue to benefit from an open and innovative Internet, the Government proposes to review and modernize the Broadcasting Act and Telecommunications Act. In this review, the Government will look to examine issues such as telecommunications and content creation in the digital age, net neutrality and cultural diversity, and how to strengthen the future of Canadian media and Canadian content creation. Further details on the review will be announced in the coming months.

This guarantees that the major policy fights of the past year will continue into the next, with some viewing this as an opportunity for an ISP or Netflix tax, reform to net neutrality rules that prioritize Canadian content, new Internet regulations as the Internet is folded into broadcast regulation (as opposed to bringing broadcast into the Internet to better reflect what is actually happening), a reshaping of how telecom and broadcast are regulated in the Internet age, and new schemes to support mainstream media. I’ve written a lot about these issues in recent weeks:

Budget 2017 leaves no doubt that digital policy will be a major issue in the coming year (a consultation on fintech retail payments followed by regulation is also promised).  When twinned with the digital policy implications of the NAFTA renegotiation, Canada’s digital policy future will hang in the balance.

The post Budget 2017: Why Canada’s Digital Policy Future Is Up For Grabs appeared first on Michael Geist.

How Navdeep Bains Can Get His #Innovation Groove Back

Michael Geist Law RSS Feed - Wed, 2017/03/22 - 10:06

The release of today’s federal budget is expected to include a significant emphasis on innovation, with the government revealing how it plans to spend (or re-allocate) hundreds of millions of dollars that is intended to support innovation. Canada’s dismal innovation record needs attention, but spending our way to a more innovative economy is unlikely to yield the desired results. While Navdeep Bains, the Innovation, Science and Economic Development Minister, has talked for months about the importance of innovation, Toronto Star columnist Paul Wells today delivers a cutting but accurate assessment of those efforts:

This government is the first with a minister for innovation! He’s Navdeep Bains. He frequently posts photos of his meetings on Twitter, with the hashtag “#innovation.” That’s how you know there is innovation going on. A year and a half after he became the minister for #innovation, it’s not clear what Bains’s plans are. It’s pretty clear that within the government he has less than complete control over #innovation. There’s an advisory council on economic growth, chaired by the McKinsey guru Dominic Barton, which periodically reports to the government urging more #innovation.

There’s a science advisory panel, chaired by former University of Toronto president David Naylor, that delivered a report to Science Minister Kirsty Duncan more than three months ago. That report has vanished. One presumes that’s because it offered some advice. Whatever Bains proposes, it will have company.

Wells is right. Bains has been very visible with plenty of meetings and public photo shoots but no obvious innovation policy direction. This represents a missed opportunity since Bains has plenty of policy tools at his disposal that could advance Canada’s innovation framework without focusing on government spending.

For example, Canada’s communications system – wireless and broadband Internet access – falls directly within his portfolio and is crucial for both business and consumers. Yet Bains has been largely missing in action on the file. He gave approval for the Bell – MTS merger that virtually everyone concedes will increase prices in the province and make the communications market less competitive. There are potential policy measures that could bring new competitors into the market (MVNOs and municipal broadband) and that could make it easier for consumers to switch providers (ban on unlocking devices). Some of this falls to the CRTC, but government direction and emphasis would make a difference.

Even more troubling has been his near total invisibility on issues relating to new fees or taxes on Internet access and digital services. Canadian Heritage Minister Melanie Joly has taken control of the issue with the possibility that Canadians could face increased costs for their Internet access or digital services through mandatory fees to contribute to Canadian content.  Leaving aside the policy objections to such an approach (reducing affordable access and the fact that foreign sources now contribute more toward Canadian English language TV production than Canadian broadcasters and distributors), Internet access and e-commerce are supposed to be Bains’ issue and they have a direct connection to the innovation file. How is it possible for the Innovation, Science and Economic Development Minister to have remained silent for months on the issue?

Bains has been largely missing on trade related innovation issues as well. My Globe and Mail column today focuses on a digital-era NAFTA, pointing to likely U.S. demands on data localization, data transfers, e-commerce rules, and net neutrality.  These are all issues that fall under Bains’ portfolio and will impact investment in Canadian networks and digital services. There are innovation opportunities for Canada here, but Bains has been content to leave the policy issues to others, who will be willing to sacrifice potential gains in those areas.

Intellectual property policy is yet another area that falls directly under Bains’ mandate with an obvious link to innovation, but he has done little on the file. Canada won a huge NAFTA victory late last week involving the Canadian patent system, which was challenged by pharmaceutical giant Eli Lilly. Why has Bains not promoted the decision as an affirmation of how Canada’s intellectual property rules?

On the copyright front, the government is scheduled to conduct a review of the Copyright Act later this year, but it is not clear whether Bains will take the lead or again cede responsibility to Joly. The Copyright Act is statutorily under the Industry Minister and reform offers the chance to kickstart innovation. For example, Canada could adopt fair use rules that have been critical for innovative economies such as the United States, Israel, South Korea, and Singapore. When coupled with the restrictive digital lock rules that suffer from narrowly interpreted exceptions, the Canadian copyright law environment is supportive of cracking down on infringement but lacks the flexibility needed for new creativity and innovation. This represents an enormous opportunity for Bains to create a policy framework that supports innovation without new taxes or public expenditures.

There are no shortage of other opportunities that fall within the ISED mandate: leveraging government-funded research with open access policies, improving open data, and addressing cyber-security opportunities among them. In fact, many of these issues were included in Bains’ mandate letter.  Nearly 18 months after the release of that letter, Canadians are still waiting for the promised “real change”.

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