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Why Canada’s Simultaneous Substitution Policy Should Face Cancellation

Michael Geist Law RSS Feed - Tue, 2017/01/10 - 11:56

With the Super Bowl only a few weeks away, an unusual coalition comprised of the National Football League, Bell Media, Canadian advertisers, and an actors’ union have launched a full lobbying blitz aimed at overturning a 2015 ruling that will allow Canadians to view both the U.S. and Canadian feeds of the game. The change addresses longstanding frustration with Canadians’ inability to view U.S. commercials during the Super Bowl, since simultaneous substitution policies dating back to the 1970s allow Canadian broadcasters to block U.S. signals and substitute their own feed and commercials.

My Globe and Mail opinion piece notes that the fight to block the U.S. feed has led to some unlikely arguments. CRTC critics who typically call on the regulator to get out of the way are now calling on it to impose the simultaneous substitution rules. Meanwhile, in an odd role reversal, the NFL is emphasizing the Canadian culture benefits of blocking its U.S. broadcast and ACTRA, which issued a press release calling the Super Bowl ruling balanced and protective of the public interest when it was first unveiled, is going to bat for Canadian coverage of a U.S. sporting event.

In fact, given the vocal criticism, Canadians could be forgiven for thinking that the CRTC sprung the decision on broadcasters without a proper hearing (it did not as the future of simultaneous substitution was squarely on the record), that it will spell the end of the Canadian broadcasting system (the estimated cost is $18 million in a $16 billion industry), that the ruling bans Canadian commercials (it does not as Bell is free to air its own feed with local commercials), or that dual feeds are unusual for a major sporting event (they are not as Canadians already have access to multiple feeds for the World Series, Stanley Cup, MLS Cup, and Olympics).

Critics contend that relatively few people have filed official complaints about the issue, but if they are correct that few Canadians truly care, most will presumably watch the Canadian feed with limited impact on domestic television ratings. However, if Canadians opt for the U.S. feed, that will signal that many more were unhappy and preferred greater choice.

Beyond the Super Bowl broadcast, the far bigger issue is the future of a policy born decades before specialty channels, recording devices, and Internet streaming that have combined to render simultaneous substitution increasingly irrelevant. Recording television shows, watching them on demand, or subscribing to sports streaming packages largely eliminates the simultaneous substitution issue since Canadians control when and what they watch. Moreover, while the Canadian industry has grown addicted to the revenues from licensing the relatively cheap U.S. programming that triggers the ability to block U.S. feeds through simultaneous substitution regulations, the policy arguably undermines the long-term success of the Canadian system and Canadian programming.

The full column – which also discusses why ending simultaneous substitution is consistent with the government’s emphasis on promoting Canadian content to a global audience – can be found here.

The post Why Canada’s Simultaneous Substitution Policy Should Face Cancellation appeared first on Michael Geist.

Historic or Immaterial?: Making Sense of the CRTC Ruling on Broadband Access as a Basic Service

Michael Geist Law RSS Feed - Thu, 2016/12/22 - 10:04

The CRTC released its much anticipated Talk Broadband ruling yesterday, declaring Internet access a universal service objective, shifting the local voice service subsidy to the Internet, and setting much-improved speed targets of 50 Mbps download and 10 Mbps upload. The decision sparked a wide range of responses: Open Media labelled the decision historic, but business analysts largely shrugged, calling it “immaterial” and “neutral” for the telecom carriers. How to reconcile the competing perspectives?

From a big picture perspective, those that have advocated for a forward-looking Canadian digital policy that places universal Internet connectivity as the foundation have good reason to be pleased. The CRTC’s recognition of Internet access as a basic service is an important development that is long overdue. While critics downplayed the importance of the formal recognition for years, updating Canadian policy to include access to broadband Internet services provides an important signal to the market and the basis for further regulatory and policy steps if needed.

Moreover, after years of middling broadband targets, the CRTC has stepped forward with a broadband target worthy of a country that wants to see itself as an innovation leader. The target of 50 Mbps download and 10 Mbps upload changes the Canadian conversation on broadband. Indeed, when Bell appeared before the CRTC as part of this hearing, it defended the previous 5 Mbps download/1 Mbps upload target. Bell executives warned that the company can’t even offer that speed in some markets, telling the Commission that “If a 5/1 basic service was mandated, we might have to withdraw our internet service from those markets, removing an option for consumers.” With this decision, the days of discussing 5/1 as a reasonable target are thankfully over.

The decision also marks a fundamental shift from voice to the Internet for Canadian communications regulation. Shifting the local voice service subsidy to broadband is absolutely the right thing to do as it takes the essence of a policy designed to ensure that all Canadians have basic connectivity and updates it to reflects how Canadians communicate today. The $100 million from the local voice service subsidy will help address the broadband access issue, though the Commission itself acknowledges that more money will be needed.

While these are all exciting, important developments, digging deeper into the details suggests that this is a small piece of a much bigger puzzle.

It may be important for the regulator to acknowledge the centrality of Internet access, but most Canadians are already there. Similarly, Bell may be content to argue for 5/1 service, but the CRTC’s own data indicates that 82% of Canadians already have access to 50/10. The CRTC wants 90% of Canadians to have access to those speeds by 2021 with the remaining 10 percent of the country getting there within 10-15 years. Expanding access to an additional 8 percent of the population over five years helps, but it isn’t transformative. In fact, given the ongoing investments from various providers, it is worth asking whether Canada might reach that target with or without the CRTC’s efforts. The real challenge remains the last 10% in rural and remote areas and for that the CRTC has no easy solution given that it sets a target of 2031 for achieving universal access.

The CRTC’s five year broadband target is within reach, but many other broadband goals are not. Affordability goes hand-in-hand with access, yet the CRTC largely punts on the issue, noting that “a comprehensive solution to affordability issues will require a multi-faceted approach, including the participation of other stakeholders.” That places much of the responsibility on the government, but it was open to the CRTC to push the providers harder on affordability. It points to innovative solutions from some companies (presumably Rogers and Telus), but does not go further by setting goals or targets for the obvious laggards in the industry.

The CRTC’s approach on data caps also avoids strict regulation, settling instead for more information and tools for consumers to monitor and manage their data usage. Some ISPs already provide those tools and others will be required to do so within a matter of months. These requirements will be helpful for some, but they eschew tougher regulatory options.

The CRTC’s proposed funding model – $100 million per year from the local voice subsidy and another $250 million over five years from telecom revenues that include Internet services – creates a useful source of funding, particularly when combined with the $500 million promised by the federal government. Moreover, the additional funding is relatively modest as a percentage of overall telecom revenues, especially when contrasted with the five percent Internet tax sought by some groups in the digital Cancon consultation. Yet even the CRTC admits that more money will be needed, telling ISED Minister Navdeep Bains that “meeting the nation’s broadband challenges will require billions of dollars over many years to come.”

Given that the CRTC largely avoids imposing regulatory requirements in this decision, more than just money will be needed to meet the broadband challenge. The Commission could have gone much further in mandating broadband obligations, addressing affordability, and curtailing data caps. It calls this decision “Modern Telecommunications Services – The Path Forward for Canada’s Digital Economy” and while it sets the target for modern telecommunications services, the path for getting there will still require much work.

The post Historic or Immaterial?: Making Sense of the CRTC Ruling on Broadband Access as a Basic Service appeared first on Michael Geist.

WIPO’s move to open access laudable among international organizations

Sara Bannerman - Tue, 2016/12/20 - 10:37
My latest post on WIPOMonitor.org notes that the World Intellectual Property Organization (WIPO) is at the forefront of international organizations in adopting an Open Access policy for its publications.  I suggest that WIPO, and other international organizations, should go further to ensure that all its documents and historical records are also openly accessible under the Creative Commons licence designed for international organizations.  Read the post here.

Ontario Government Tells Ottawa It Is Open to New Internet Tax to Fund Cancon

Michael Geist Law RSS Feed - Thu, 2016/12/15 - 10:58

The Canadian Heritage consultation on Canadian content in a digital world recently concluded and the department has now posted the responses. There are few surprises with many creator groups supporting Netflix and Internet taxes, while Internet providers and consumer groups oppose them (my submission can be found here). The Ontario government was the only provincial government to file a response. The Ontario Ministry of Tourism, Culture and Sport’s submission acknowledges that there is “no evidence of an overall Cancon policy failure that would justify revolutionary policy reform”, but leaves little doubt that the government is open to new Internet taxes to fund Canadian content.

The Ontario government previously worked toward a Netflix tax as part of the CRTC’s Let’s Talk TV consultation. Given the controversy that generated, it is a bit more cautious this time but its support is not difficult to discern. Its starting point is that all industry players in the Canadian media market be required to contribute to Cancon. The submission states:

The ministry also recommends that the federal government ensure that all industry players participating in, and benefitting from, the Canadian media market contribute, financially or otherwise, to Cancon. These contributions by industry players could be (sample only):

  • Voluntary and/or mandated (by the federal government or CRTC)
  • For Cancon development, creation, production, distribution, marketing and promotion, discovery and/or export; and
  • Financial or non-financial

The Ontario government notes that it is “not advocating for any specific industry player contribution mechanism or contribution level.” In other words, it is not calling for a Netflix-specific tax. That said, it forecasts declining contributions from broadcasters and broadcast distributors and it urges the federal government to “conduct a risk-benefit analysis of all available options, to determine the best way to fill the Cancon funding gap while living within the FPT government fiscal plans.”

The Ontario government then acknowledges two realities. First, that the federal government has said there will be no Netflix tax. Second, that any new Cancon funding must come from a new Cancon revenue source. What might that be? The submission states:

Accordingly, MCTS acknowledges that Minister Joly has publicly confirmed that the FCPR [federal Cancon policy review] scope includes options for new federal government-mandated Cancon contributions from industry players, specifically an ISP levy and/or sales tax payable by foreign OTTs.

The submission does not identify other funding options as part of this analysis. In other words, the Wynne government goes out of its way to emphasize that it believes that there is a need for more funding for Cancon and that it sees two new tax options: a sales tax on digital services and/or an Internet tax.

 

The post Ontario Government Tells Ottawa It Is Open to New Internet Tax to Fund Cancon appeared first on Michael Geist.

Return to Sender: Government Committee Wants Canada Post To Help Solve Rural Broadband Woes

Michael Geist Law RSS Feed - Wed, 2016/12/14 - 10:48

Does the future of Canada Post lie in offering Canadian-based cloud services and rural broadband? The Standing Committee on Government Operations and Estimates thinks it might. The committee released a report yesterday on the future of Canada Post that ventures into the digital realm with several recommendations that will make little sense to those that closely follow digital policy in Canada. The committee report includes discussion that Canada Post could offer a Canadian-based cloud service, a Canadian social network, and rural broadband services. The recommendations include:

The federal government examine, with the Minister of Innovation, Science and Economic Development Canada and the Canadian Radio-television and Telecommunications Commission, the possible delivery of broadband Internet and improved cellular service to rural Canada using Canada Post real estate to house servers and offer retail services to customers.

While there is unquestionably a need to address the rural broadband access issue in Canada, there is little reason to believe that Canada Post, which brings no particular expertise and no money to invest in the actual networks, is the right organization to solve the problem.

Post offices in other countries do offer Internet services, but this report reads as if the committee did not consult anyone with expertise on the issue. The thinking would appear to be that with post offices everywhere, why not have the post office set up a server and take orders. Yet a physical space to offer service is not the issue. Indeed, by that standard, Tim Horton’s or an Esso station could do the same. The challenge with the rural broadband is the cost associated with building and maintaining networks. As the Conservative dissent notes:

the Committee did not hear substantive testimony to indicate that there is a widely-held desire for, or financially sustainable means of providing such services. The technical possibility of this proposal is also questionable. This is another example of a recommendation that is untested, uncosted, and lacks clear supporting information to make the case for such services.

After more than 15 years of trying, it is readily apparent that the economics of rural broadband require some form of public investment along with innovative approaches such as public-private partnerships, community-based networks, and wireless solutions. Looking to the post office at this time seems unlikely to advance the issue.

The post Return to Sender: Government Committee Wants Canada Post To Help Solve Rural Broadband Woes appeared first on Michael Geist.

How the Supreme Court Can Avoid Turning the Internet Into an Online Wild West

Michael Geist Law RSS Feed - Tue, 2016/12/13 - 11:44

Last week, the Supreme Court of Canada heard arguments in a case that strikes at the heart of law in the online world. Google v. Equustek Solutions stems from claims by Equustek, a Canadian company, that another company used its trade secrets to create a competing product and engaged in misleading tactics to trick users into purchasing it.

After struggling to get the offending company’s website taken offline, Equustek obtained a British Columbia court order requiring Google to remove the site from its search index. Google voluntarily removed search results for the site from Google.ca search results, but was unwilling to block the sites from its worldwide index. The B.C. court affirmed that the order applied on an international basis, however, issuing what amounted to global takedown order.

The Supreme Court hearing, which attracted intervenors such as the Wikimedia Foundation, Electronic Frontier Foundation, as well as the music and movie industry associations, focused on issues such as the effectiveness of a Google-targeted order, where the responsibility for identifying conflicting laws should lie, and the fairness of bringing an innocent third-party such as Google into the legal fray.

My Globe and Mail opinion piece notes that largely missing from the discussion was an attempt to grapple with perhaps the biggest question raised by the case: In a seemingly borderless Internet, how do courts foster respect for legal rules and avoid vesting enormous power in the hands of Internet intermediaries who may ultimately find themselves picking and choosing among competing laws.

Google seems unlikely to ignore a Canadian court order, but what happens if a Chinese court orders it to remove Taiwanese sites from the index?  Or if an Iranian court orders it to remove gay and lesbian sites from the index?  Since local content laws differ from country to country, there is a great likelihood of conflicts. That leaves two possible problematic outcomes: local courts deciding what others can access online or companies such as Google selectively deciding which rules they wish to follow.

Courts seeking to strike the right balance face a difficult challenge because if they are unable to assert jurisdiction, the Internet risks becoming a proverbial “Wild West” with no applicable law. If every court asserts jurisdiction, however, the online world becomes over-regulated with a myriad of potentially conflicting laws.

The temptation for courts will be to assert jurisdiction over online activities and leave it to the parties to sort out potential conflicts. But when it comes to Internet jurisdiction, exercising restraint and limiting the scope of court orders is likely to increase global respect for the law and the effectiveness of judicial decisions. The full column is posted here.

The post How the Supreme Court Can Avoid Turning the Internet Into an Online Wild West appeared first on Michael Geist.

Unnecessary at Best, Harmful at Worst: Melanie Joly Seeks Global Consensus on Culture Contributions from Digital Services

Michael Geist Law RSS Feed - Mon, 2016/12/12 - 10:59

Canadian Heritage Minister Melanie Joly heads to UNESCO this week where, according to the Globe and Mail, she will be focused on making the case for a common approach on mandatory cultural contributions from companies such as Netflix. Joly states:

I’ve always said we are ready to have conversations with those companies and those platforms. We are already engaged with them, and will continue to do so. But on a general level, it is obvious that the more we are able to have a concerted approach among countries on this issue, the better we will be able to make sure it is a priority.

Joly’s goal would appear to be to develop a universal position at UNESCO that countries could then leverage to force companies such as Netflix to comply with local content regulations. I’m quoted in the article to the effect that efforts to harmonize sales taxes on digital services makes sense at a global level, but targeting companies like Netflix with new regulations or tinkering with the Internet in violation of fundamental net neutrality principles does not.

I think Joly’s seeming interest in creating a global cultural regulatory framework for digital services is unnecessary at best and harmful at worst. First, the emergence of global digital giants has largely been fuelled by the absence of content regulation. Platforms such as Netflix and Google have grown by providing consumers more choice and flexibility than the regulated system. By responding to market demands, the companies have developed enormously popular, well-priced services that offer great potential for creators to find new markets and call into question the relevance of many legacy regulations.

Second, even if there is a role for domestic regulation, UNESCO, a United Nations agency, is surely not the right venue to address these issues (the U.S. is not even a signatory to the 2005 convention referenced by Joly). There may be value in discussing cross-border issues such as harmonized sales taxes or ensuring that countries do not block access to online video services at a global level (which already takes places in venues such as the OECD), but a U.N. policy on domestic cultural regulation is a poor fit for the issues raised by online video services.

Third, the Netflix response to the government’s consultation on Canadian content provides a compelling argument against the need for domestic regulation in order to attract investment. Despite the absence of regulatory requirements, Netflix has emerged as one of the leading backers of Canadian content, reporting that it commissioned hundreds of millions of dollars in original programming in Canada in 2016 (a Netflix tax comparable to that paid by cable and satellite companies would generate a fraction of that amount). In fact, Netflix says that Canada now ranks as one of its top three locations worldwide for original productions. Given that the company spends billions each year on content, the activity in Canada is likely larger than all but a handful of regulated sources. The Netflix submission provides a full sense of the scope of its support for Canadian content.  It includes:

Original Cancon co-productions with Canadian producers and broadcasters in 2016 (Netflix obtains rights outside Canada )

  • Anne (with CBC)
  • Alias Grace (with CBC)
  • Between (with Rogers’ City TV)
  • Travelers (with Corus Entertainment’s Showcase)
  • Frontier (with Bell Media’s Discovery Channel)
  • Degrassi: Next Class (with DHX Media’s Family Channel)
  • Orphan Black  (with Bell Media)
  • Some Assembly Required  (with Corus Entertainment YTV)

Original CanCon that may not qualify as such due to Netflix financing and global distribution

  • Trailer Park Boys
  • ARQ

Netflix originals produced in Canada for global distribution making use of Canadian creative and other resources

  • Special Correspondents
  • Van Helsing
  • I Am the Pretty Thing That Lives In the House
  • Lost in Space
  • A Series of Unfortunate Events
  • Altered Carbon
  • Okja
  • Death Note
  • Dirk Gently
  • Hemlock Grove
  • Haters Back Off

Netflix original kids titles produced in Canada for global distribution making use of Canadian creative and other resources

  • Little Prince
  • Beat Bugs
  • Lost and Found Music Studios
  • Inspector Gadget
  • Hilda, Luna Petunia
  • True and the Rainbow Kingdom
  • Project MC2
  • Justin Time Go!
  • Magic School Bus 360

Rather than looking for new forms of global Internet regulation, perhaps Joly should be asking why there are still Canadian groups calling for regulation of an entrant that would appear to be one of the leading investors in Canadian content and working on ways to ensure that Canadian content can be exported worldwide.

The post Unnecessary at Best, Harmful at Worst: Melanie Joly Seeks Global Consensus on Culture Contributions from Digital Services appeared first on Michael Geist.

Sir John Thompson

Fair Duty by Meera Nair - Sun, 2016/12/11 - 13:55

We are told he is the best Prime Minister Canada never had. Sir John Sparrow David Thompson served only two years in that capacity; an untimely death on 12 December 1894 cut short his stewardship. But his contributions to Canada spanned much longer than those two years would suggest.

Under Sir John A. Macdonald, Thompson held the position of Justice Minister (sworn in on 26 September 1885), a responsibility he maintained to his death. While deeply respected by his Conservative colleagues, Thompson’s sterling character did not always meet with approval from all; one party stalwart moaned: “He won’t even consider whether a thing is good for the party until he is quite sure it is good for the country.”[1]

As Justice Minister, Thompson undertook the monumental task of giving Canada its own Criminal Code. Working closely with a bi-partisan committee, the result was a statute that reflected Thompson’s skills as jurist, and dedication as a Canadian. His first biographer, J. Castell Hopkins, would argue that the Code was far more deserving to be named for its maker than the Code Napoleon. Thompson also served as an arbiter in the Bering Straits dispute between Canada and the United States, and he staunchly supported the position that Canada should set its own copyright course—that indeed Canada had the right to do so as a self-governing Dominion.

Thompson’s commitment to the rule of law, fairness and justice were unparalleled, earning him praise from both sides of the aisle. He was, in a word, a statesman. Throughout though, he was confronted by the internecine Catholic/Protestant mistrust, a challenge that has largely faded from Canadian memory but was as potent in its time as the misplaced-hostility over multiculturalism is today. Thompson, a Methodist turned Catholic, initially turned down Governor General Lord Stanley’s request to assume the helm following Prime Minister Macdonald’s death—Thompson felt that his Catholicism would provoke trouble for the government. But when MacDonald’s successor John Abbot resigned on account of poor health, Thompson agreed to lead the Conservative Party and thus too the Government of Canada.

My interest in Thompson was sparked during my doctoral exploration of Canadian copyright history.[2] In 1889, under Thompson’s guidance, the Canadian Copyright Act was amended as necessary to address the complexities of Canada’s geographic and political position, caught as the country was between American capitalism and British imperialism. Passed with unanimity by Canadian parliamentarians, the Act encouraged the development of a national publishing industry by ensuring the legitimate reprinting of works of foreign authors, through a compulsory royalty. This measure applied only if the copyright holder did not seek publication in Canada within one month of publication elsewhere. Canadian readers and all authors would have benefited.

But the passage of the 1889 Act required disengagement from Imperial copyright law, as also from the blanket pronouncements of the recently-formed Berne Convention. Thompson argued, not for Canadian autonomy, but for recognition of the autonomy as it already existed in the British North America Act of 1867 and had further developed in the decades following Confederation. Unfortunately, although Thompson held the better argument, the political clout of British and American publishing industries ensured that such recognition was withheld.

British intransigence towards Canada stemmed in part from the desire to bring about an Anglo-American copyright treaty; Canada was a valuable bargaining chip. Even before a treaty of sorts eventually transpired, the Canadian market was offered up by savvy copyright holders who sought private arrangements with American publishing houses. If assured that no similar arrangement would be made with a Canadian printer, American publishers were willing to provide some compensation to the owner. As P. B. Waite describes, the tone was not always benign: “You will get no compensation whatever from us, if you permit any Canadian house to publish your work.”[3]

These practices were so widespread as to merit inclusion in a Royal Commission on Copyright. Aware of the gentleman’s agreement among American publishers (some might say honour among thieves), whereby the right to continued publication was reserved to the house that gained first publication, the Commissioners observed:

[S]ecured from competition … it is worth while for [American publishers] to rival each other abroad in their offers for early sheets of important works. We are assured that there are cases in which authors reap substantial results … and instances are even known in which an English author’s returns from the United States exceed the profits of his British sale …. (para. 242)..

Notably, that same Commission report supported the measures that Canada would later attempt to enact in 1889 (paras.206-207).

When the long-desired Anglo-American Treaty came into being, it provided much less benefit than what Canada had offered. The United States would not abandon its manufacturing clause—ensuring the betterment of American industry and loss to the British counterpart—meaning that foreign authors could only obtain copyright for works set and printed within the United States. Faced with that expensive proposition, English authors and publishers were left with little to show for the years of waiting. Following the passage of the American Copyright Bill, C.J. Longman (of the House of Longman) did not mince words:

The Act … offers protection—on conditions—to any British author.  There are already signs that the value of this protection may be over-estimated in this country. It is desirable therefore to point out that to those writers whose published works are before the world, … but have failed to attract the attention of pirates, the Act gives no advantage. If there had been any prospect of republishing those books profitably, the enterprising American publisher would certainly have availed himself of his chance when he could have had them for nothing.  ….
– “The American Copyright Bill,” The Economic Review 1.2 (1891).

Despite the inadequacies of the American arrangements, the British Crown continued to refuse Canada’s requests for independent action regarding copyright. Even though Sir Charles Trevelyan had emphasized for years that partnering with Canadian publishers would allow England to gain the upper-hand in the reprints market of North America as a whole. That logic, not to mention the greater benefit for English authors, fell on deaf ears. English authors and copyright holders could neither envisage altering the model of monopoly copyright, nor tolerate diversity within colonial implementation of the law.

Thompson continued to press his case with clarity, evidence, and appeals to the rule of law. Invited to serve as a member of the Queen’s Privy Council, he traveled to London in December 1894 to be sworn in. In the days prior to the ceremony, Thompson discussed the copyright issue with members of the Colonial Office, and achieved some recognition of the legitimacy of Canada’s position: “… the claim of the Canadian legislature is a good one, and the burden of proof that it is contrary to public policy rests on those who contest it.”[4] But whatever ground Thompson had gained, was never to be capitalized on. Within hours of the swearing-in ceremony Thompson collapsed at Windsor Castle and died. He was forty-nine.

Without Thompson’s leadership, Canada could not achieve meaningful independence on matters relating to copyright.

Notes:

[1] Quoted by Gordon Donaldson in The Prime Ministers of Canada (Doubleday Canada Limited, 1994) p.53

[2] I cover this period of  history in detail in “The Copyright Act of 1889–A Canadian Declaration of Independence,” Canadian Historical Review, Vol. 90, Issue 1, p.1-28.

[3] Quoted by Peter B. Waite in “Sir John Thompson and Copyright, 1189-1894: Struggling to break free of Imperial Law,” Bulletin of Canadian Studies.  Vol.6 No.2, p.36-49.

[4] Ibid.

 


Canadian Copyright Reform Requires Fix to the Fair Dealing Gap

Michael Geist Law RSS Feed - Fri, 2016/12/09 - 10:56

In the decade of lobbying leading up to the reform of Canadian copyright law in 2012, copyright lobby groups had one core message: Canada needed to implement and ratify the World Intellectual Property Organization’s Internet treaties. While many education, consumer, and business groups expressed concern that the digital lock rules in the treaties would harm innovation, the industry was insistent that the treaties represented an essential component of digital copyright reform.

My op-ed for the Hill Times notes that the lobbying campaign was successful as Canada proceeded to implement and ratify the treaties. The legislation is still relatively new, but in a stunning reversal, one of the leading lobby groups now says that the drafters of the WIPO Internet Treaties were just guessing and suggests that they guessed wrong.

The intensity of the lobbying for the WIPO Internet treaties is difficult to overstate. For years, the industry emphasized the importance of the treaties as the baseline starting point for reform. But in a speech to the Economic Club of Canada last month, Music Canada President Graham Henderson acknowledged that “the people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing.”

Henderson proceeded to make the case that the drafters guessed wrong, arguing that “everything would come down to the question of balance” and that “very quickly, fissures began to appear” with benefits to intermediaries and losses to creators. This led Henderson to claim that there is a “value gap”, which he defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”

The criticism of the WIPO Internet treaties raises several issues.

It is striking to see Henderson now talk about the need for balance in the treaties since that is exactly what educators, librarians, consumer groups, and many innovative businesses argued in 2010 when the reform bill was introduced. Simply put, there was no balance in the bill’s digital lock provisions, which remain among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world.

While Canadians can freely exercise their fair dealing rights in the analog world, the 2012 reforms went far beyond the WIPO treaty requirements by creating unnecessary restrictions on fair dealing in the digital environment. This creates a “fair dealing gap”, where there is a gross mismatch between user rights in the analog world and the digital world. The fair dealing gap should be addressed in 2017 by establishing a long overdue fair dealing exception for the digital lock rules.

Second, claims that the treaties led to an unfair balance favouring technology companies simply does not apply in Canada (if anywhere). Canada did not implement the U.S. DMCA notice-and-takedown system nor grant safe harbours from liability in 1998. The 2012 Canadian reforms include some safe harbours, but not before the industry received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules.

Further, the government also gave the music industry a copyright term extension for sound recordings in 2015 with little public debate or consultation. In other words, claims that “policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy”, as stated by Henderson, is not reflective of the Canadian experience.

Third, unlike the fair dealing gap which is the result of legislative reform, the so-called “value gap” has nothing to do with legislative change. Industry frustration with payments for streaming services are not a function of the law, but rather based on revenue sharing from advertising.

Some may wish to paint the Canadian and U.S. digital copyright experiences as the same, but the reality is that they are very different. Canada did not enact the U.S. rules in 1998. Rather, it ultimately gave the industry what it asked for, implementing and ratifying the WIPO Internet treaties in an overly restrictive manner that created a fair dealing gap that persists to this day.

If Canada is to re-examine the decision to ratify those treaties on the basis that it was all just a wrong guess, the starting point would be to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law.

The post Canadian Copyright Reform Requires Fix to the Fair Dealing Gap appeared first on Michael Geist.

Upon Further Review, the Ruling Should Stand: Why the CRTC Made the Right Call on the Super Bowl Simsub Ban

Michael Geist Law RSS Feed - Thu, 2016/12/08 - 09:51

The CRTC’s 2015 decision to ban simultaneous substitution from the Super Bowl broadcast starting in February 2017 has generated renewed criticism in recent days as the NFL, Bell, and the U.S. government launch a lobbying blitz against the decision that will take effect with this season’s game. The league, broadcaster and their supporters argue that the inability to block the U.S. feed will mean lost revenue for the Canadian broadcaster and presumably reduced licensing revenue in the future for the NFL as the Canadian rights may be viewed as less valuable.

Despite claims about damage to Canadian broadcasting, the ban on simultaneous substitution for the Super Bowl does not eliminate the ability of the Canadian broadcaster to air its own commercials. In fact, the use of simultaneous substitution for the Super Bowl is an outlier when compared to the broadcast of most other major sporting events in Canada. Whether the Stanley Cup finals, the World Series, the Olympics, or the World Cup, Canadians typically have access to both Canadian and U.S. feeds. Canadians often opt for the Canadian version, perhaps because they like the commentators or the Canadian-oriented coverage. No one suggests that Canadian access to the Stanley Cup finals on NBC or the World Series on Fox (Sportsnet uses the international feed and many commented this year that they preferred that version that included Buck Martinez on colour commentary) eradicates rights or eliminates the ability for a Canadian broadcaster to successfully air the same event.

With the elimination of simultaneous substitution, Canadians will have a choice between the U.S. and Canadian feeds. If the two are identical, some will likely opt for the U.S. feed to view the U.S. commercials. If Bell uses the opportunity to compete with local content, many may prefer the Canadian feed. Regardless, Canadian advertisers are not blocked from advertising during the Super Bowl and the predicted revenue losses are purely speculative since no one knows the impact on ratings. Critics contend that relatively few people have filed official complaints about simultaneous substitution of the Super Bowl. But if they are correct that few Canadians truly care, most will watch the Canadian feed with limited impact on domestic television ratings. However, if many Canadians opt for the U.S. feed, that will signal that many more were unhappy with simultaneous substitution, preferring greater choice.

Suggestions that the U.S. may lodge a trade complaint over the issue are rather remarkable given that the U.S. spent years lobbying against simultaneous substitution. There is little chance the U.S. will now argue that Canada must impose Canadian commercials over a U.S. broadcast. With respect to the value on NFL rights, that too is speculative given the enormous interest in the NFL and the active competition between sports networks for television rights. If Bell no longer wants the Super Bowl without simultaneous substitution, Rogers would presumably be happy to scoop up the rights.

The real concern for some in the Canadian broadcasting world is the fear that this marks the beginning of the end of simultaneous substitution. Yet the end of simultaneous substitution started years ago. The growth of specialty channels, which now represent a far bigger slice of the broadcasting revenue pie than conventional channels, heralded the decreasing importance of simultaneous substitution with fewer programs substituted and subscription revenue surpassing conventional television advertising revenue. Moreover, consumers gaining increasing control over what they watch and when they watch it contribute to its declining importance. Recording television shows or watching them on demand eliminates the simultaneous substitution issue. Sports leagues now package their seasons for full streaming (including NFL GamePass) and many watch streamed versions of shows directly from broadcasters or through services like Netflix and CraveTV.

Not only has the relevance of simultaneous substitution declined in recent years, but the policy has arguably harmed the long-term success of the Canadian system. It effectively trades some additional revenue for loss of control over the Canadian programming schedule and turns the Canadian system into a country-wide U.S. affiliate with hundreds of millions of dollars spent on the rights to non-Canadian programming. The CRTC recognized that eliminating simultaneous substitution altogether would still create a shock to the system. Limiting the elimination to the Super Bowl has the practical benefit of starting to move the industry off the addiction to U.S. programming and toward competition rather than regulatory protection.

The CRTC faces no shortage of criticism, but in this instance it is doing exactly what it said it would: “placing Canadians at the centre of the communication system.” The criticism over the decision boils down to broadcasters arguing that Canadians should not be able to see what they want during the broadcast because doing so might hurt their bottom lines. That is not placing Canadians at the centre of the broadcast system, which the CRTC has tried to do with its decision on Super Bowl broadcasts.

The post Upon Further Review, the Ruling Should Stand: Why the CRTC Made the Right Call on the Super Bowl Simsub Ban appeared first on Michael Geist.

Google v. Equustek: The SCC Hearing on Internet Jurisdiction and Free Speech

Michael Geist Law RSS Feed - Wed, 2016/12/07 - 10:28

The Supreme Court of Canada heard arguments in Google v. Equustek Solutions, a hugely important Internet case with implications for Internet jurisdiction and free speech online. I wrote about the lower court and appellate court decisions and I have a forthcoming piece in the Communications of the ACM on the case.  I attended yesterday’s hearing and live tweeted some of the main exchanges between counsel and the court. As my final tweet of the hearing indicated, I have no idea where the court is heading in this case. A storified version of my hearing tweets is posted below.

[View the story “Google v. Equustek: The Supreme Court of Canada Hearing on Internet Jurisdiction & Free Speech” on Storify]

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MyDemocracy.ca Responses Don’t Count If You Refuse To Disclose Household Income and Other Personal Information

Michael Geist Law RSS Feed - Tue, 2016/12/06 - 09:28

The government’s MyDemocracy.ca survey/consultation/questionnaire launched yesterday to a steady stream of criticism as the initiative does not follow the typical consultative approach. Rather than asking direct questions about public electoral preferences, there are a series of questions on “values, preferences, and priorities” that are supposedly designed to discern user preferences. The questions focus on representation, parties, and voting rules (there are several questions on electronic voting that ask if there is support even if the systems are less secure).

The initiative is being run by Vox Pop Labs and the site’s privacy policy advises that the Privacy Act and PIPEDA apply.  However, dig into the policy and you learn that users that do not provide detailed demographic information – including age, gender, education, household income, profession, language, interest in politics, and postal code – will not have their responses considered as part of the study. The specific provision states:

You do not need to provide your name to use MyDemocracy.ca. However, you will be asked to complete a profile about yourself. You may be asked to provide us with your gender, year of birth, level of education, household income, and other demographic information. The purpose for collecting this information is for Vox Pop Labs to ensure that the overall results of the study are representative of the Canadian population. While answering the profile questions is optional, not answering these questions will result in your input not being included as part of the overall results of the study. [emphasis added]

The demographic information may or may not be personally identifiable. For Canadians in large communities, it may be difficult to identify a particular person. For those from smaller communities, the combination of postal code, profession, education, gender, age, language, and possible identification with certain groups could be enough to identify a specific person.  Regardless, it is inappropriate for a government-backed consultation to require Canadians to provide detailed demographic information in order for their opinions to actually count.

Update 12/8/16: The government has updated the privacy policy by dropping the language indicating that not answering personal information would result in the input not being included. The new policy states:

You do not need to provide your name to use MyDemocracy.ca. However, you will be asked to complete a profile about yourself. You may be asked to provide us with your gender, year of birth, level of education, household income, and other demographic information. The purpose for collecting this information is for Vox Pop Labs to ensure that the overall results of the study are representative of the Canadian population by weighting the data against population data such as the census. While answering the profile questions is optional, not answering these questions will result in your input not being included as part of the weighted results of the study. Aggregate statistics for all responses will still be included in the final report.

The post MyDemocracy.ca Responses Don’t Count If You Refuse To Disclose Household Income and Other Personal Information appeared first on Michael Geist.

Music Canada Reverses on Years of Copyright Lobbying: Now Says WIPO Internet Treaties Were Wrong Guess

Michael Geist Law RSS Feed - Thu, 2016/12/01 - 10:11

In the decade of lobbying leading up to the reform of Canadian copyright law in 2012, the music industry had one core message: Canada needed to implement and ratify the World Intellectual Property Organization’s Internet treaties. While many education, consumer, and business groups expressed concern that the digital lock rules in the treaties would harm innovation, the music industry was insistent that the WIPO Internet treaties represented an essential component of digital copyright reform. The lobbying campaign was successful as Canada proceeded to implement and ratify the treaties. The legislation is still relatively new, but in a stunning reversal, the head of Music Canada now says that the drafters of the WIPO Internet Treaties were just guessing and suggests that they guessed wrong.

The intensity of the lobbying for the WIPO Internet treaties is difficult to overstate. In 2004, Billboard reported that 26 Canadian industry groups were pressuring the government to ratify the treaties. In 2006, Graham Henderson, president of the Canadian Recording Industry Association (later Music Canada), wrote an op-ed in the National Post titled “Protect Artists: Reform Canada’s Copyright Laws” which argued that:

That’s why adopting the World Intellectual Property Organization (WIPO) treaties into law, something Canada committed to do nearly a decade ago, is so important. WIPO is about providing appropriate protections for intellectual property in the Internet age. Adopting it as part of the Canadian Copyright Act will allow musicians to freely give away their music as a promotional device if they – along with their financial backers – feel it is in their best interests. However, for artists who want to be paid for their time and hard work, WIPO legislation will protect their right to keep people from taking their music without compensation.

As the government was preparing to introduce copyright reform in 2010, Henderson told the Standing Committee on Canadian Heritage:

I would argue that to simply, as a very baseline, implement the intellectual property treaties as contemplated by, for example, Bill C-61, or before that Bill C-60, would be the first step on that road.

Once the bill was introduced, Henderson urged its passage, telling the Senate committee studying the bill that the approach was just what the creative sector needed:

In concluding, Bill C-11 has been drafted, in my view, to meet the government’s objectives of protecting the creative industries, combatting piracy, and encouraging productivity and innovation in Canada’s vital creative sector.

After it was enacted, Henderson again focused on the WIPO Internet treaties in congratulating the government:

We commend the government and Canadian Heritage Minister James Moore in particular, for their tenacity in pursuing a modern copyright framework and legislation that will enable Canada to ratify the World Intellectual Property Organization Internet Treaties.

Given the unqualified support for years for the WIPO Internet treaties, reversing course is simply shocking. In a speech to the Economic Club of Canada last month, Henderson characterized the creation of the WIPO Internet Treaties in the following way:

The people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing. Now there is nothing wrong with guessing. We all make educated guesses on which we base our actions.  But the beauty of our world is that with the passage of time and the accumulation of experience, we have the luxury of reassessing our situation, and adapting our behaviours when those first guesses clearly turn out to have been ill-founded. We have now had 20 years of experience with those early WIPO guesses.  How are we doing?

The remainder of the speech tries to make the case that the drafters guessed wrong. Henderson may have spent years lobbying for the treaties, but he now argues that “everything would come down to the question of balance” and that “very quickly, fissures began to appear” with benefits to intermediaries and losses to creators. All of this leads to the claim that there is a “value gap”, which he defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”

The decision to criticize the WIPO Internet treaties raises several issues. First, it is striking to see Henderson now talk about the need for balance in implementing the treaties. That is exactly what educators, librarians, consumer groups, and many innovative businesses argued in 2010 when the reform bill was introduced. Simply put, there was little balance in the bill’s digital lock provisions, which remain among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world. This was recognized during the committee review of the bill as the Liberals supported an amendment to expand the digital lock exceptions to cover circumventions for all lawful purposes. Liberal MP Geoff Regan (now Speaker of the House) noted that “what the government seems to want to do is preserve old models and ignore the fact that we have moved into a digital world.” Regan cited comments from software developers, librarians and archivists who all warned of the dangers of overly restrictive digital lock rules.

While Canadians can freely exercise their fair dealing rights in the analog world, the 2012 reforms went far beyond the WIPO treaty requirements by creating unnecessary restrictions on fair dealing in the digital environment. To borrow Henderson’s phrase, this creates a “fair dealing gap”, where there is a gross mismatch between user rights in the analog world and the digital world. The fair dealing gap should be addressed in 2017 by creating a long overdue fair dealing exception for the digital lock rules.

Second, the claims that the WIPO Internet treaties led to an unfair balance favouring technology companies simply does not apply in Canada (if anywhere). Canada is not the United States. We did not implement the DMCA notice-and-takedown system nor grant safe harbours from liability in 1998. The Supreme Court of Canada ruled on ISP liability in 2004 in SOCAN v. CAIP, but that decision was not based on digital copyright reforms. The 2012 reforms include some safe harbours, but not before the industry and creators received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules. In 2015, the government also gave the music industry a copyright term extension for sound recordings with little public debate or consultation. In other words, Henderson’s claim that “policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy” is not reflective of the Canadian experience.

Third, unlike the fair dealing gap which is the result of legislative reform, the so-called “value gap” has nothing to do with legislative change. The industry frustration with payments for streaming services are not a function of the law, but rather based on revenue sharing from advertising. The concern with revenues from Internet advertising are not limited to music – just ask the newspaper industry – but reflect growth of the business, not a problem with the law.  The industry is also concerned with a Copyright Board ruling on Tariff 8, but that case is before the federal courts and reflects the decision of the Board, not legal reforms.

Music Canada may wish to paint the Canadian and U.S. digital experiences as the same, but the reality is that they are different. Canada did not enact the DMCA in 1998 nor create the quid pro quo that is suggested in Henderson’s speech. Rather, it gave Music Canada what it asked for,  implementing and ratifying the WIPO Internet treaties in an overly restrictive manner that created a fair dealing gap that persists to this day. If the industry wishes to re-examine the decision to ratify those treaties on the basis that it was all just a wrong guess, the starting point would be to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law.

The post Music Canada Reverses on Years of Copyright Lobbying: Now Says WIPO Internet Treaties Were Wrong Guess appeared first on Michael Geist.

Melanie Joly’s Tough Choice on Canadian Content: New Thinking or New Taxes

Michael Geist Law RSS Feed - Wed, 2016/11/30 - 11:59

Canadian Heritage Minister Mélanie Joly launched her surprise national consultation on Canadian content in a digital world last April with considerable excitement for the possibilities of revolutionizing policies born in an analog era. Joly spoke enthusiastically about the potential for Canadian creators to use digital networks to reach global audiences and for all stakeholders to rethink the cultural policy toolkit.

My Globe and Mail op-ed notes that submissions to the consultation closed last week and despite the hope for new, innovative thinking, many of Canada’s largest cultural groups placed their bets on extending a myriad of funding mechanisms to the Internet. Rather than overhauling older programs, the groups want those policies expanded by mandating new fees, costs or taxes on Internet services, Internet service providers, Internet advertisers, and even the sale of digital storage devices such as USB keys and hard drives.

Netflix is the top target, as the streaming giant is on the receiving end of demands to extend sales taxes and implement a Cancon contribution tax on foreign online video providers. For its part, Netflix highlighted its investment in Cancon in its submission, noting that Canada is now one of the top three locations worldwide for its commissioned original productions and pointing to dozens of Canadian programs that it has licensed or helped finance.

Yet groups such as ACTRA, the Writers Guild of Canada, the Canadian Media Producers Association, and the Directors Guild of Canada remain unconvinced, arguing that the government should require Netflix to contribute a percentage of its revenues toward the creation of Canadian content.

If implemented, such a Netflix tax could have far reaching effects. For example, ACTRA recommends that any online video service that distributes broadcast content with more than 2,000 subscribers be required to contribute 5 per cent of its gross revenue toward independent Cancon creation funds. The proposal could mean that many services block Canadian subscribers to avoid the mandated payments, resulting in decreased online video competition in Canada. In fact, the Directors Guild of Canada wants even more, running into the hundreds of millions of dollars annually.

The rumoured demands for a new tax on Internet access also surfaces with many submissions calling for a new requirement on ISPs to contribute a portion of their revenues for Cancon creation. Groups play down the impact on the affordability of Internet access, with the WGC arguing that an additional 5 per cent cost on Internet services is “minor, bordering on insignificant for virtually all Canadian consumers.” Recent CRTC data reported that Internet access revenues was nearly $10 billion last year, suggesting that an Internet access tax could cost consumers at least $500 million annually.

Not only are new digital services the target of new tax proposals, but ACTRA also supports extending the private copying levy, whose origins date back to the cassette tape, to newer digital storage devices. The creation of an iPod tax was roundly rejected several years ago, yet the group asks Joly to apply the fees to iPods, USB keys, and hard drives when it next reforms the Copyright Act.

Joly opened the consultation by saying that “for a long time, politicians have been afraid to deal with these difficult issues.” As she now faces the unenviable choice of promoting new Internet taxes over the objection of companies and consumers or implementing new export-driven policies that fall short of the expectations of cultural groups, it may be easier to comprehend why previous politicians were reluctant to re-examine longstanding Cancon policies.  The full column can be accessed here.

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Intellectual Property and Access to Science and Culture: Convergence or Conflict?

Sara Bannerman - Fri, 2016/11/25 - 15:15
The Centre for International Intellectual Property Studies (CEIPI) has launched the publication of Intellectual Property and Access to Science and Culture: Convergence or Conflict?, exploring the relationship between intellectual property (IP) rights and the right to science and culture.

The landscape of copyright in scientific work has changed dramatically in recent years, partly as a result of the emergence of a strong critique of the privatization of scientific knowledge and publications. The issue of access to science has been raised at the UN by UN Special Rapporteur Farida Shaheed, who in 2014 noted that privatizing scientific knowledge could work against the human right "to enjoy the arts and to share in scientific advancement and its benefits" (UDHR Art. 27). She noted that, from a human rights perspective:
Copyright laws should place no limitations upon the right to science and culture, unless the State can demonstrate that the limitation pursues a legitimate aim, is compatible with the nature of this right and is strictly necessary for the promotion of general welfare in a democratic society. (20)As Shaheed notes in her introduction to Intellectual Property and Access to Science and Culture, "[a]dopting a human rights perspective on intellectual property issues is both crucial and urgent." The authors of Intellectual Property and Access to Science and Culture discuss the history, origins, and impact of Shaheed's groundbreaking reports, concluding (Christophe Geiger) that a human rights framework requires re-conceiving of copyright as a cultural right that includes a right of access.

Chapter 3 of my book, International Copyright and Access to Knowledge gives further background on copyright and science. Titled "Access to scientific knowledge," it recounts the history of international copyright in scientific works. I note that when the international copyright system was founded, scientific journal articles were placed, by default, in the public domain. This is due in large part to the efforts of Haitian diplomat, doctor, and writer Louis-Joseph Janvier, in fighting for broad and liberal access to scientific works worldwide. My chapter recounts historical debates over the question of whether copyright should apply to scientific works, and traces the transformation of the international copyright system and the narrowing of principles of access to scientific works.

Why We Need the CBC as an Ad-Free Digital News Competitor

Michael Geist Law RSS Feed - Wed, 2016/11/23 - 10:42

The Standing Committee on Canadian Heritage wrapped up its lengthy hearing on the media and local news last week with appearances from Facebook, Google, and the Globe and Mail (I appeared before the committee last month and my opening comments and review of the discussion that followed can be found here). The high profile witnesses sparked another round of debate over the ongoing troubles in the newspaper industry with intensifying criticism of the CBC’s emphasis on digital news services, including a new opinion section and its acceptance of digital advertising, which are both viewed as direct competition for the struggling private sector alternatives.

For example, Globe and Mail publisher Phillip Crawley told the committee that the CBC is the Globe’s largest competitor in the digital ad space. He expressed concern over the inclusion of opinion, which is viewed as further encroaching on newspapers’ turf, and pointed to the BBC’s approach, which faces government-backed restrictions on accepting digital advertising on its domestic websites. The CBC criticism has emerged as a common theme for several years with many media organizations and commentators arguing that CBC should not be in the business of competing with newspapers.

The CBC responded on Monday with a letter to the committee titled “limiting access to the digital public space is not in the public interest.” The CBC argued that given the struggles of smaller papers, its online presence is more important than ever.  Further, it tried to downplay the significance of its digital advertising revenue, arguing that it amounts to $25 million annually, a very small share of the total digital advertising expenditures in Canada.

It is helpful to separate two issues: the CBC competing in digital news as opposed to it competing for digital advertising dollars. While some have characterized the CBC’s role in providing digital news as an unfair, publicly-subsidized competitor to private news services that increasingly rely on paywalls and subscriptions to generate revenue, the industry’s reliance on paywalls is precisely why the CBC should be offering a free, taxpayer-backed digital alternative. An informed electorate demands that all Canadians have access to reliable news and expert opinion without regard for their ability to pay for it. In a digital world filled with paywalls and concerns about fake news, the importance of a publicly-funded, freely available, trusted media institution is greater than ever and the CBC (now backed by hundreds of millions of extra tax dollars) is ideally suited to meet that need.

While the CBC should be responding to its audience with a strong digital news service, it does not follow that it should also compete for digital advertising dollars. As noted in the CBC letter, its total digital advertising revenues are relatively small (and they are even smaller – roughly $6 million – for the online news service) so the foregone earnings will not have a material impact on the CBC. However, there is a market effect of having the CBC compete for ad dollars that affects news organizations of all sizes. This includes large players like the Globe as well as smaller, independent media for whom a loss of thousands in advertising can be significant. An ad-free online service would better justify the public investment in the public broadcaster, make for an enhanced user experience, and remove the concern that the CBC is harming private sector alternatives by competing for advertising dollars.

The government just gave the CBC a $150 million taxpayer boost – six times its annual digital ad revenue – with the promise of much more to come. It would be entirely appropriate for Minister Melanie Joly and the Standing Committee on Canadian Heritage to attach a condition to the funding that encourages a robust digital presence for the public broadcaster but mandates that the news portion of the site remain ad-free.

The post Why We Need the CBC as an Ad-Free Digital News Competitor appeared first on Michael Geist.

Back to the Drawing Board as Trump Kills the TPP

Michael Geist Law RSS Feed - Tue, 2016/11/22 - 11:00

President-Elect Donald Trump has ended any further speculation about the future of the Trans Pacific Partnership by announcing that he plans to formally withdraw from the agreement on his first day in office. I’ve written extensively about why ratification for Canada would be a mistake and argued last week in the Globe that Canada should use the death of the TPP as an opportunity to re-examine its approach to trade agreement negotiations including working toward greater transparency, focusing on tariff reduction rather than regulations, and dropping controversial ISDS provisions.

The need for Canada to wait on the U.S. has been readily apparent for months. As currently structured, the TPP cannot take effect without the U.S. since entering into force requires ratification by at least six signatories who represent at least 85 percent of the GDP of the countries in the original deal. That provision effectively gives both the U.S. and Japan veto power. With the U.S. pulling out, the agreement will not enter into force no matter what Canada (or anyone else) does.

The central role of the U.S. in the TPP is no accident. For most TPP countries, access to the U.S. market was the primary reason for entering into the agreement and as Japanese Prime Minister Shinzo Abe said over the weekend, “the TPP would be meaningless without the United States.” Indeed, the reason Canada, Japan, and Mexico all joined the TPP talks late was that without a clear commitment from the U.S., the agreement was of limited value.

For Canada, access to the Japanese market was attractive, but this was a defensive agreement driven by fears of losing preferential Canadian access to the U.S. market. Indeed, the most vocal TPP supporters regularly pointed to the North American market as a crucial reason to support the TPP.  For example, Perrin Beatty, President of the Canadian Chamber of Commerce said it would “inconceivable” for Canada to walk away from TPP if the U.S. and Mexico ratified the deal. Beatty also told the Standing Committee on International Trade that “having the deal go ahead with our NAFTA partners of Mexico and the United States in, while we remain outside, would be catastrophic for Canada.”

Similarly, Brian Kingston of the Business Council of Canada told the Standing Committee on International Trade:

“Failure to take part in a trade agreement with such important trading partners would be disastrous for Canadian companies integrated into North American supply chains. Whereas NAFTA has given Canada a leg up on global competition by building a strong North American platform, being left out of the TPP would see the erosion of that advantage to participant countries. Signing on ensures that Canada maintains strong relations with our North American partners.”

In fact, Prime Minister Justin Trudeau acknowledged last month that it would be hard for Canada to turn its back on an agreement that included the U.S.

Despite the fact that the TPP cannot take effect without the U.S., there has been some desperate commentary urging the Canadian government to move ahead with the TPP without the U.S. on board. Gerry Ritz, the Conservative MP and former Agriculture Minister says Canada doesn’t need the U.S. to be part of the TPP.  Yesterday in the House of Commons he stated that “as they pull back on the TPP, there is no reason to believe that we cannot join the other six countries that are gung-ho guaranteed to move forward on it, that we cannot join them and rewrite TPP without the Americans. Let us get it done.”

Yet as Lawrence Herman noted over the summer that “a trade deal without the United States would be a vastly diminished proposition.” Canada paid a heavy price for joining for the TPP: ratification would require reforms to intellectual property laws that go beyond international requirements, limitations on cultural policies, restrictions on local regulations, and implementation of investor-state dispute settlement rules that do not even meet the CETA standard. Paying those costs without any gains from an enforceable treaty makes no sense whatsoever.

The TPP was crafted as a trade agreement with the U.S. squarely at the centre. With the U.S. out, further trade agreements in the region must go back to the drawing board, with the opportunity to remove contentious U.S. demands on IP, ISDS, and other issues. Instead, a new agreement, negotiated with the transparency that was missing from the TPP process, would open the door to increased trade without many of the regulatory demands and dispute settlement rules inserted largely at the behest of the U.S. delegation.

The post Back to the Drawing Board as Trump Kills the TPP appeared first on Michael Geist.

CETA Bill Hits 2nd Reading as Officials Admit They Haven’t Studied Financial Impact of Patent Reforms

Michael Geist Law RSS Feed - Mon, 2016/11/21 - 10:10

The costs associated with the increased patent protections for pharmaceutical drugs in the trade agreement between Canada and the European Union has long been one of the most controversial elements of the deal. At least one study has pegged the cost to provincial health care at more than a billion dollars. In response to those concerns, the Conservative government promised to compensate the provinces for the increased costs. Earlier this year, when officials from Health Canada appeared before a House of Commons committee, they acknowledged that it is hard to estimate the actual cost but that they knew that the agreement would increase the costs of drugs in Canada.

Last week, Steve Verheul, the lead Canadian CETA negotiator, appeared before another House of Commons committee and was asked if the department has done any analysis on the financial impact of the extended patent protection. Remarkably, Verheul said that it has not, arguing that it is difficult to come up with a projection. In fact, when pressed on the issue, Verheul speculated that perhaps costs would not increase since Canadians already pays higher prices for pharmaceutical drugs than consumers in European countries such as the UK, France or Germany.

These comments from Canada’s lead CETA negotiations are simply bewildering.

First, the lack of study on the financial impact of a key element of the CETA highlights a crucial flaw in the government’s rosy assessments of the deal. While the government has been claiming that CETA will deliver major gains for Canadians, its own officials have not even studied some of the financial costs associated with the same agreement. A reasonable analysis of the benefits and costs of the deal would surely factor extended patent protections into the equation.

Second, these comments reinforce that the government’s implementing legislation includes patent reforms for which the costs remain an unknown. As Bill C-30, the CETA implementation bill, receives second reading today, it would appear the government cannot answer a simple question on the likely impact and cost of the bill’s patent provisions.

Third, claims that the Canadian market would not face increased prices because we already pay high prices points to a complete misunderstanding of the pharmaceutical marketplace. The large pharmaceutical companies lobbied for these changes specifically because it would extend the term of protection and keep cheaper generic alternatives off the market for an extended period of time. Canada’s already high pharmaceutical prices are reason not to extend the term of patent protection, not a justification for why there may be a limited impact on Canadian health care costs.

The post CETA Bill Hits 2nd Reading as Officials Admit They Haven’t Studied Financial Impact of Patent Reforms appeared first on Michael Geist.

Why Navdeep Bains and Melanie Joly Are on a Collision Course on Digital Policy

Michael Geist Law RSS Feed - Fri, 2016/11/18 - 10:59

The Canadian chapter of the International Institute of Communications held their annual conference in Ottawa this week, headlined on Thursday by back-to-back appearances from Canadian Heritage Minister Melanie Joly (in a question and answer session with Jennifer Ditchburn) and Innovation, Science and Economic Development Minister Navdeep Bains.

Both ministers spoke primarily about their key policy initiative, namely digital cancon (Joly) and innovation (Bains). Joly’s cancon discussion again emphasized the benefits of exports and foreign investment, but she also indicated that all policies are still on the table, including an ISP tax and efforts to bring Internet companies such as Netflix “into the system.” Joly was followed  by Bains, who used his speech to sketch out the foundation of his forthcoming innovation strategy. His focus included universal, affordable Internet access and telecom competition (which raises real doubts about whether the government will approve Bell’s proposed purchase of MTS).

Both ministers noted that their public consultations are ongoing, yet the reality is that sooner or later the government will have to make some policy choices. An export-led cancon strategy that focuses on foreign participation would mesh nicely with an innovation strategy that envisions similar benefits from embracing the digital environment. However, many of Joly’s comments and the pressures from some stakeholder groups point to the prospect of new Internet fees or regulations to support the domestic industry. Should that happen, it is increasingly likely that Bains and Joly will present dramatically different visions of Canada’s digital future with policy proposals that are fundamentally incompatible with one another.

The most obvious example involves the issue of universal, affordable Internet access which pits Bains’ vision of an innovative economy that has affordable Internet access as its foundation against Joly’s potential support for an ISP tax. The two policies tug in opposite directions as Bains is looking for ways to lower Internet costs and increase access, while an ISP tax would increase costs and reduce access.

There is a similar conflict with respect to a Netflix tax or new Internet regulations designed to bring Internet companies into the system. While Joly may envision new regulations on Internet companies, Bains told the conference that “the digital economy is the economy” and extolled the benefits of Canadian IT companies becoming global players by venturing into every sector in the company. Those goals may conflict with new Canadian-specific regulations that will make it harder to attract technology companies and to keep domestic success stories at home.

In fact, the potential sources of policy conflict extend beyond new cancon tax or levy schemes:

  • If Joly hopes to use spectrum proceeds to fund cancon, she will likely find Bains opposing the proposals as he will want to allocate the money toward building Canadian networks.
  • If Joly wants to use copyright reform to increase liability for Internet companies or to scale back fair dealing, she will find Bains arguing that changes to the liability rules or user rights will place Canadian companies at a competitive disadvantage.
  • If Joly promotes changes to Internet advertising rules that eliminates tax deductions for digital advertising with foreign companies (ie. Google), Bains will express concern that the changes are likely to reduce e-commerce adoption in Canada and limit growth of the digital economy.

Digital cancon and innovation strategies premised on competition and the benefits of the networked environment would offer obvious synergies. The concern, however, is that proposals that focus on ways to take money out of the Internet economy to support the cultural sector will lead to an inevitable policy collision between the two ministers.

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Death Knell for the TPP: A Chance for Real Change to Trade Policy

Michael Geist Law RSS Feed - Thu, 2016/11/17 - 09:14

Donald Trump’s surprise U.S. presidential election victory promises to result in an overhaul of U.S. trade policy, including the immediate end of support for the Trans Pacific Partnership, the controversial trade pact involving 12 Pacific countries including Canada, the U.S., and Japan. While President Barack Obama held out hope that the TPP could be salvaged during the “lame duck session” of Congress that occurs immediately after the election, his administration was quickly forced to concede that the deal has become politically toxic and stands no chance of passage. Since U.S. ratification is required for it to take effect, it’s effectively dead.

My Globe and Mail column notes that the Canadian government’s view of the TPP was always difficult to discern. It was negotiated by the previous Conservative government, but Prime Minister Justin Trudeau and International Trade Minister Chrystia Freeland have been non-committal, focusing instead on TPP public consultations that are still scheduled to run until early 2017.

Their ambivalence was not a function of trade skepticism – the Liberals emerged as enthusiastic backers of the trade deal between Canada and the European Union – but rather stems from the recognition that Canadian interests in the TPP were largely defensive in nature. With agreements already in place with many TPP countries, the agreement offered at best limited benefits for Canada’s economy.

Without a TPP, much of the attention has shifted to developing a Plan B. Those discussions typically involve identifying with whom to negotiate. The list is headed by the possible renegotiation of NAFTA, implementing CETA, and shifting toward bi-lateral agreements with leading economies in Asia. Canada reached a deal with South Korea on a free trade deal in 2014 and has engaged in talks with Japan, India, and China about similar agreements.

Yet the how of negotiation may be more important than the who. The public backlash against the TPP, CETA, and other recent trade deals points to a process that leaves many feeling excluded and terms that are presented publicly for the first time as final. The real opportunity for the Canadian government is not just to explore new trade partners, but to challenge some of the longstanding assumptions about free trade agreements in order to foster greater public confidence in the outcome. The full column focuses on three issues: transparency, regulatory agreements masked as trade deals, and the need to drop ISDS provisions.

The post Death Knell for the TPP: A Chance for Real Change to Trade Policy appeared first on Michael Geist.

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