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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The post Government Caves to Lobbying Pressure: Bains Blocks Consumer Redress for Spam and Spyware Losses appeared first on Michael Geist.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The post Canadian Government on Wireless Services: High Prices, Low Adoption, and Unaffordable For Too Many appeared first on Michael Geist.

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

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

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

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

Good morning. My name is Michael Geist.  I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. My areas of specialty include digital policy, intellectual property, and privacy. I have appeared many times before this committee on IP issues and as always, I appear in a personal capacity representing only my own views.

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

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

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

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

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

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

Open Access Publishing

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

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

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

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

IP Legal Barriers

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

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

What does copyright have to do with AI?

Making machines smart – whether engaging in automated translation, big data analytics, or new search capabilities – is dependent upon the data being fed into the system. Machines learn by scanning, reading, listening or viewing human created works. The better the input, the better the output.

Copyright law crops up because restrictive rules may limit the data sets that can used for machine learning purposes, resulting in fewer pictures to scan, videos to watch or text to analyze. Given the absence of a clear rule to permit machine learning in Canadian copyright law (often called a text and data mining exception), our legal framework trails behind other countries that have reduced risks associated with using data sets in AI activities.

There are two ways to overcome the copyright AI barrier. First, Canada could emulate the U.S. fair use model by making the current list of fair dealing purposes illustrative rather than exhaustive. The U.S. exception is open to any purpose, as striking a fair balance depends upon the use of the work, not the purpose of the copying. Since machine learning does not harm the primary purposes of the original work, most text and data mining will qualify as fair use.

Second, other countries have tried to address the issue by creating a specific exception for text and data mining or computer informational analysis. For example, Britain’s exception allows copies of works to be made without permission of the copyright owner for the purposes of automated analytical techniques to analyze text and data for patterns, trends, and other information.

I look forward to your questions.

The post Toward a Canadian Knowledge Transfer Strategy: My Appearance Before the Standing Committee on Industry, Science and Technology appeared first on Michael Geist.

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

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

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

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

the Commission should be open to considering ways in which differential pricing practices related to Internet data plans could be used to promote the discoverability of and consumer access to Canadian programming.

The CRTC rejected the argument, concluding that “any benefits to the Canadian broadcasting system would generally not be sufficient to justify the preference, discrimination, and/or disadvantage created by such practices.” In response, anti-net neutrality advocate Roslyn Layton argued that Canada should exempt Canadian content from data charges, an idea picked up by Kate Taylor and Robert Everett-Green.

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

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

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

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

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

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

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

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

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

The post Why Violating Net Neutrality is not a Smart Way to Promote Canadian Content appeared first on Michael Geist.

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

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

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

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

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

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

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

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

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

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

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

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

The post Now More Than Ever, Canada Needs a Strong Anti-Spam Law appeared first on Michael Geist.

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

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

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

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

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

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

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

Canadian Copyright and Safe Harbours

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

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

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

To this day, there is still no formal notice-and-takedown system in Canada. The Supreme Court of Canada ruled on ISP liability in 2004 in SOCAN v. CAIP, but that decision was not based on digital copyright reforms. The 2012 reforms include some safe harbours, but not before the industry and artists received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules. In other words, there is no notice-and-takedown system to amend in Canada and calls to end safe harbours for technology companies bears little resemblance to Canadian law.

The “Value Gap”

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

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

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

The Importance of Safe Harbours

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

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

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

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

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

The post Music Industry’s Canadian Copyright Reform Goal: “End Tech Companies’ Safe Harbours” appeared first on Michael Geist.

Can Cancon Compete?: A Response to the WGC on The Future of Canadian TV Production

Michael Geist Law RSS Feed - Thu, 2017/05/25 - 10:21

My post this week on the recent CRTC’s television licensing decision elicited a strongly worded response yesterday from the Writers Guild of Canada. My original post made two key points. First, responding to Kate Taylor’s assertion that CRTC Chair Jean-Pierre Blais has offered no consistent strategy to the challenges facing the Canadian television production industry, I noted that over the course of the past five years, Blais has charted a very clear path toward making Canadian policy and regulation relevant in the digital age by promoting a competitive marketplace for Canadian creators, consumers, broadcasters, and broadcast distributors.

Second, I defended the recent CRTC decision on several grounds, including the need to address the gap between regulated and unregulated services (such as Netflix), the already-significant public support for Canadian content creation, the incentives for Canadian broadcasters to invest in original content, and the fact that Canadian broadcasters contribute a very small slice of the overall financing of domestic fictional programming which suggests that the harm to the sector from a further reduction is overstated.

The WGC response takes issue with the emphasis on competition, alternately claiming that Canadian television has always competed in the marketplace but that it cannot compete without regulatory mandates requiring Canadian broadcasters to invest in original Canadian programming. While some of the response is confusing or inaccurate (it mistakes the $2.6 billion Canadian television production market for the Netflix Canadian market, refers to a 1999 Blais television policy when Françoise Bertrand was CRTC chair at the time, discounts co-productions that often feature Canadian themes or iconic stories and generate significant Canadian employment and foreign investment), at its heart is the WGC view that longstanding regulations and market protections should continue or be expanded in the digital environment. In today’s world, Canadians enjoy far more choice, broadcasters face far more competition, and creators can tap into a myriad of new markets and potential investors, but the WGC vision is that old-style regulations should remain in place.

Perhaps nowhere is that more apparent than in the WGC’s final paragraph, which claims that a $40 million drop in broadcaster spending amounts to a 25% decline that it previously described as devastating. The claim simply ignores the reality of how Canadian television is financed today. As I note in my post, private broadcasters today are minor players, contributing only 9% of total financing for Canadian fictional programming. To again quote the CMPA:

With fiction productions, the largest share of financing came from provincial and federal tax credits; the fiction genre also attracted the most foreign financing among all genres. Children’s and youth productions also derived the largest share of their financing from tax credits, followed by broadcaster licence fees. Distributors also accounted for an important part of the financing picture for the fiction, and children’s and youth genres. In the VAPA and lifestyle and human interest genres, most financing came from broadcaster licence fees.

The WGC argues that English and French language production should be treated separately, yet the CMPA data for English-language only production does little to change the analysis. In fact, broadcaster contributions for fictional programs in English are even lower as a percentage of total financing (7% in English vs. 9% overall) and rank as the smallest source of financing among tax credits, foreign funding, and the Canadian Media Fund. In fact, foreign funding is more than three times as large as private broadcaster funding for fictional English-language programs. An overall drop of $40 million for fiction, children’s programming, and documentaries would still just result in a decline of 2.5% of overall financing or 1/10th of what the WGC claims. Further, while it argues that the broadcaster window is needed to trigger other support, that too is changing with new CAVCO rules that allow online platforms to meet the “shown in Canada” requirement.


CMPA Profile 2016, Page 56, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf


The issue ultimately comes down to two different perspectives of Canadian content in the digital environment. The CRTC view – one that I defended in my post – is that Canadian creators can compete on the global stage, creating compelling content that finds investors and interested broadcasters from around the world. There is still a need for public support in this digital environment (a billion dollars is hardly insignificant) but the CRTC has confidence in Canadian creators and a belief that relying on outdated policies that regulate how content is broadcast or financed make little sense in a globally competitive marketplace that now involves video competition from giants such as Netflix, Google, and Facebook.

The WGC perspective has seemingly little confidence in the ability to compete without regulation (the open letter says as much). The WGC response and its policy positions in recent months have been all about how Canada can’t compete – can’t compete without mandated Netflix payments, can’t compete without ISP payments, can’t compete without mandated broadcaster investments, and can’t compete without simultaneous substitution. In fact, when I wrote earlier this year about how foreign financing has now surpassed virtually all other sources of funding for English-language television production, the WGC response was to express fear that Netflix might change strategies and stop funding Canadian content:


@WGCtweet, March 16, 2017, https://twitter.com/WGCtweet/status/842406618931294208


Yet Netflix spends millions on production in Canada not because it faces a regulatory requirement, but rather because the entire package – innovative creators, tax credits, good partners – offers a compelling reason for doing so. Indeed, the data shows that the Canadian industry has thrived in recent years for reasons that have little to do with pre-digital regulations with a huge shift in Canadian television production financing from domestic funding to foreign investment.

As Minister Joly crafts her digital Cancon policy, she is faced with the choice of competing perspectives: a policy based on confidence that Canadian creators can compete on the world stage based on a policy framework that attracts investment and provides support for creation and promotion or one premised on the fear that success is only possible when the government mandates contributions from broadcasters and Internet companies.


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Fair Duty by Meera Nair - Wed, 2017/05/24 - 19:46

Last week I had the pleasure of participating in the Copyright User Rights Access to Justice Symposium hosted by LTEC (Law and Technology) Lab of Windsor Law. The presentations were impressive in their depth and breadth; ensuing discussions illustrated that the intersection of user rights with access to justice is an extensive mine for exploration. Congratulations, and thanks, are due to Pascale Chapdelaine, Erica Lyons, and all the staff who contributed to the makings of a thoroughly enjoyable event.

At the outset, we were reminded that we stood in the realm of the Anishinaabe, the territory of the Three Fires Confederacy of First Nations, comprising the Ojibway, the Odawa, and the Pottawatomie. Such words take on particular significance, convinced as I am that aboriginal legal traditions, particularly those pertaining to land, are instrumental to the underpinnings of the system of copyright. We are accustomed to thinking of the Copyright Act as bijural; arguably, influenced as it is by three modes of law (aboriginal, civil and common), the Act is trijural. This perspective framed my presentation; more details will come another day.

For now, my focus is in connection with a remark made in passing by Ruth Okediji. In the context of discussion about the non-commercial user-generated content exception, Professor Okediji stated what we all know to be true – that this behavior is universal.  But her next words were striking: “Canada had the integrity to acknowledge it.” It was an exalting moment to hear such recognition, to which I may add: Canada should encourage it, as ought any country that values creativity. Creativity does not occur through set rules and methods; creativity operates in its own ecosystem according to an unpredictable dynamism of encounter and engagement, including reimagining and re-creation. Playing with work that has come before is the very foundation of creativity.

My conference junket continues next week at Congress, beginning with a public event concerning the upcoming review of the Copyright Act (jointly hosted by the Association of Canadian College and University Teachers of English and the Canadian Society for Digital Humanities) on Monday, May 29 at 1:30pm in KHW61. It is to be followed by a retreat to the 19th century via a joint event held by the Bibliographic Society of Canada and the Canadian Association for the Study of Book Culture. I hope to ensure that Sir John Thompson—a man of integrity, who was committed to the rule of law—is not forgotten in our sesquicentennial commemorations.

Anti-Lawful Access Tide Continues: Security Consultation Finds Public Strongly Opposed to New Reforms

Michael Geist Law RSS Feed - Wed, 2017/05/24 - 09:20

Law enforcement efforts to revive lawful access reform continue to face political and public opposition. Earlier this month, the House of Commons Standing Committee on Public Safety and National Security recommended that the current approach remain unchanged. Indeed, Committee Chair Rob Oliphant said that police sought expanded powers, but that the argument was not yet “compelling.”

Public Safety’s report released last week on responses to its national consultation on security indicates that the broader public agrees. The issue drew the majority of feedback during the consultation:

participants emphasized that respect for privacy and due process are the most important considerations for national security agencies and law enforcement when conducting investigations in the digital world. Many participants said that the challenges faced by investigators in the digital world do not justify circumventing existing rules and regulations and that, if anything, even more oversight and safeguard mechanisms are needed, given how often Canadians use the Internet for sensitive matters such as personal communications and banking. A clear majority of participants oppose giving government the capacity to intercept personal communications, even if a court authorizes the interception, and oppose any moves to weaken encryption technology. Even those who support broad powers of interception think it should only be allowed under rigorous judicial authorization and be limited in scope.

The public did not shy away from addressing access to basic subscriber information, a key target for law enforcement reforms, which seek access to some information without court oversight. The public is strongly opposed to such an approach:

Perhaps the most revealing result of the online consultations is that seven in 10 responses consider their Basic Subscriber Information (BSI) – such as their name, home address, phone number and email address – to be as private as the actual contents of their emails, personal diary and their medical and financial records. Almost half (48%) said BSI should only be provided in “limited circumstances” and with judicial approval, and about one in six (17%) said it should only be available to law enforcement in emergency circumstances, and even then only with a judicial warrant. The principal concern about revealing someone’s BSI is that it could be used for location tracking or to access even more online information about that person.

The prospect of enhanced interception capabilities also generated significant opposition alongside concerns for the economics of government mandated capabilities:

Organizations that commented on these issues tended to argue against requiring providers to build interception capabilities into their networks, with many suggesting that some capabilities already exist and the government has not demonstrated a need for any changes. Many industry organizations said any increased costs of interception should be borne by the government.

Overall, the consultation left no doubt that participants care about their privacy. The report notes that “the vast majority of responses – more than four in five – show that the expectation of privacy in the digital world is the same as or higher than in the physical world.”  If the government is a serious using consultations to help guide policy, lawful access reform should be shelved for the foreseeable future.

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Canadian TV in the Netflix Age: In Defence of the CRTC Television Licensing Decision

Michael Geist Law RSS Feed - Tue, 2017/05/23 - 09:10

Last week’s CRTC decision on group licensing for the major Canadian broadcasters has the creative community in a panic, claiming that it could “mean the devastation of Canadian domestic [television] production.” The decision, which set a uniform spending requirement of 5 percent on programs of national interest (PNI, which includes dramas, documentaries, some children’s programming, and some award shows), means a reduction in spending requirements for some broadcasters. The Writers Guild of Canada fears that the decision could lead to a reduction in spending on PNI of $200 million over five years.

Groups have heaped criticism on CRTC Chair Jean-Pierre Blais, whose term ends next month. The WGC labels him a “Harper appointee”, while Kate Taylor says “he doesn’t leave much of a legacy for himself” and that “his piecemeal approach offers no consistent strategy to address the challenges facing Canadian television production in the Netflix age.”

Blais may have his faults, but claiming that he has not had a strategic vision for the digital age is not one of them. He recognized that the advent of the digital networks, an abundance of consumer choice, and the effective removal of longstanding analog protections for Canadian creators would gradually reduce the relevance of the regulator and leave it with two choices. The first – favoured by the creator groups – was to temporarily prolong the protections by extending Cancon regulations to Internet services and increasing regulatory costs on broadcasters. The second was to jump on the digital bandwagon, gradually removing the safeguards and creating a regulatory environment premised on competition at all levels – creators, broadcasters, and broadcast distributors. Anyone following the CRTC broadcast and telecom decisions in recent years knows that he chose the latter.

The result is a digital regulatory framework designed to enable Canadian creators to compete on a level playing in Canada (net neutrality), encourage the creation of programming that finds international audiences and partnerships (TalkTV), grant consumers greater television choice (skinny basic and pick-and-pay) and more competitive Internet services (wholesale fibre access), ensure universal Internet access (TalkBroadband), maintain deregulation of Internet-based services (new media exemption), facilitate new Canadian Internet entrants (hybrid services), and press broadcasters to reduce their reliance on U.S. programming (simsub). The policies may not universally succeed (and the simsub decision did not go as far as he may have wanted), but there is no doubting the strategy. In fact, despite the expectation that some have for Canadian Heritage Minister Melanie Joly to chart a new path, most of her public comments on digital Cancon are headed in the same direction.

Is 5 percent for PNI too low? At least four things can be said to defend the decision and place the impact into proper perspective. First, the argument that broadcasters needed a lower PNI number to compete with Internet-based services such as Netflix has merit. There are good reasons for not creating a mandatory contributions requirement for Internet video services, but the cost gap between regulated and unregulated services is relevant to the setting of mandated contributions for regulated broadcast services. Further, the decision lends credence to those who regularly whispered that the lobbying campaign for a Netflix tax was never about the money that could be generated from the streaming giant (a five percent tax on Netflix Canadian revenues generates a tiny amount of money given that Canadian TV production is a $2.6 billion industry) but rather about maintaining the contributions for the regulated services. When the licences come up for renewal in five years, the calls for the elimination of any contribution in the face of unregulated competition will be far louder.

Second, the suggestion that the Canadian television industry is – as Kate Taylor’s column states – “left to fend for themselves” ignores the massive public support for Canadian content creation. Given the amount invested annually by Canadian taxpayers, it is simply not credible to claim that Canadian television has been abandoned. The CMPA’s Profile 2016 tells the story with well over a billion dollars contributed from public sources including the public broadcaster, federal and provincial tax credits, and the Canadian Media Fund.

Third, while the industry is clearly not left to fend for itself, the CRTC decision is part of a shift that encourages and rewards success, not just creation. The claim that reduced mandatory PNI will devastate the industry is premised on the notion that Canadian broadcasters will only invest in domestic programming if required to do so. Licensing cheaper foreign programming is understandably attractive, yet the long-term success of broadcasters increasingly depends on controlling original content that can be delivered through multiple channels and markets (particularly if simsub disappears). In other words, the market encourages investment in original programming and the CRTC has sought to establish conditions that promote such investment.

Fourth,  critics of the decision are quick to point to higher profile Canadian fictional programming that is said to be at risk, but the CMPA data confirms that private broadcasters are relatively minor players when it comes to the financing of Canadian drama. The report states:

With fiction productions, the largest share of financing came from provincial and federal tax credits; the fiction genre also attracted the most foreign financing among all genres. Children’s and youth productions also derived the largest share of their financing from tax credits, followed by broadcaster licence fees. Distributors also accounted for an important part of the financing picture for the fiction, and children’s and youth genres. In the VAPA and lifestyle and human interest genres, most financing came from broadcaster licence fees.

The CMPA chart below confirms that conclusion with private broadcasters contributing only 9 percent of the financing for fictional programs, less than federal and provincial tax credits, Canadian distributors, foreign financing, and the CMF.  Private broadcasters allocate much of their money toward variety and performing arts as well as “lifestyle and human interest” programming, which including magazine style shows.


CMPA Profile 2016, Page 54, http://www.cmpa.ca/sites/default/files/documents/industry-information/profile/Profile%202016%20EN.pdf


In other words, financing and the success or failure of Canadian programming such as dramas do not depend upon private broadcaster spending. In fact, the WGC release effectively confirms this since their worst case scenario – $40 million in reduced broadcaster PNI spending per year – represents just a two percent reduction in total financing for the fiction, children’s and documentary genres in Canada at a time when foreign funding from services such as Netflix is on the rise. Hardly the stuff of devastation.

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Why Copyright Law Poses a Barrier to Canada’s Artificial Intelligence Ambitions

Michael Geist Law RSS Feed - Thu, 2017/05/18 - 09:02

The federal government placed a big bet in this year’s budget on Canada becoming a world leader in artificial intelligence (AI), investing millions of dollars on a national strategy to support research and commercialization. The hope is that by attracting high-profile talent and significant corporate support, the government can turn a strong AI research record into an economic powerhouse.

Funding and personnel have been the top policy priorities, yet other barriers to success remain. For example, Canada’s restrictive copyright rules may hamper the ability of companies and researchers to test and ultimately bring new AI services to market.

What does copyright have to do with AI?

My Globe and Mail column notes that making machines smart – whether engaging in automated translation, big data analytics, or new search capabilities – is dependent upon the data being fed into the system. Machines learn by scanning, reading, listening or viewing human created works. The better the inputs, the better the output and the reduced likelihood that results may be biased or inaccurate.

Copyright law crops up because restrictive rules may limit the data sets that can used for machine learning purposes, resulting in fewer pictures to scan, videos to watch or text to analyze. Given the absence of a clear rule to permit machine learning in Canadian copyright law (often called a text and data mining exception), our legal framework trails behind other countries that have reduced risks associated with using data sets in AI activities.

For example, consider how machines are taught to translate languages. Last year, the United Nations released 800,000 manually translated documents in the six official UN languages (English, French, Spanish, Arabic, Russian, and Chinese) for machine use. By releasing documents containing perfect translations in multiple languages, the data set helps create better automated translation systems. Indeed, official government documents have been an important data source for automated translation since they offer professionally translated materials of identical content.

Yet the downside of relying on these documents is that treaties and diplomatic correspondence rarely mimic everyday speech. Better systems would benefit from a broader range of materials such as translated popular books or television shows. The goal is not to republish or compete with copyright materials, but rather to ensure that researchers and AI companies can mine the text and data for informational analysis purposes.

Canadian courts have ruled that fair dealing – the copyright law’s foundational exception that permits use of materials without the need for prior permission – is a user’s right that should be interpreted in a broad and liberal manner. There are several purposes that would permit some text and data mining activities, notably exceptions for research, education, and private study. However, given Canada’s emphasis on the commercial benefits of AI, the law may not offer sufficient flexibility to safely move from the lab or classroom to the market.

There are two ways to overcome the copyright AI barrier. First, Canada could emulate the U.S. fair use model by making the current list of fair dealing purposes illustrative rather than exhaustive. The U.S. exception is open to any purpose, as striking a fair balance depends upon the use of the work, not the purpose of the copying. Since machine learning does not harm the primary purposes of the original work, most text and data mining will qualify as fair use.

Second, other countries have tried to address the issue by creating a specific exception for text and data mining or computer informational analysis. For example, Britain’s exception allows copies of works to be made without permission of the copyright owner for the purposes of automated analytical techniques to analyze text and data for patterns, trends, and other information. The law does not allow contracts to restrict data mining activities, but the exception is limited to non-commercial research.

Text and data mining exceptions are becoming increasingly popular – Japanese law features an exception and the European Union has been debating adding one as well –
meaning Canada risks falling behind in race to the commercialize AI research because of an overly restrictive copyright law. With Innovation, Science and Economic Development Minister Navdeep Bains and Canadian Heritage Minister Mélanie Joly set to lead a review of copyright law later this year, clearing away unnecessarily restrictive legal barriers must be on the agenda.

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Copyright exceptions for research need attention at WIPO

Sara Bannerman - Thu, 2017/05/11 - 15:30
Last week, the World Intellectual Property Organization (WIPO) continued discussions of a possible international instrument dealing with limitations and exceptions to copyright for educational, teaching and research institutions and persons with other disabilities.

IP Watch reports that proposals have now been narrowed to a core set.  While this core set retains many important proposals relating to educational institutions, many past proposals relating to research institutions have disappeared, including an important proposal relating to data gathering that is core to research.  Past proposals made before WIPO have included important exceptions that would help drive digital research, including data mining, which is becoming more and more key to scholarship.  The following proposal, which I view as especially important, was not included in the core set:
The reproduction and reuse by search engines, automated knowledge discovery tools, or other digital means now known or later discovered of any lawfully obtained copyrighted work for purposes of not-for-profit scientific research, including storage, archiving, linking, data mining procedures, data manipulation, and virtual scientific experiments subject to attribution of the sources used to the extent reasonably feasible (page 33) Research institutions may need to keep a close eye on the SCCR discussions to ensure that research interests, as well as educational interests, are met.

Just Passing Through: Why Canadian Anti-Counterfeiting Law Should Not Permit In-Transit Shipment Searches

Michael Geist Law RSS Feed - Thu, 2017/05/11 - 11:33

As Canadian officials prepare for the forthcoming NAFTA renegotiation, changes to Canada’s border measures provisions seem likely to surface as a U.S. demand. Late last month, the USTR released its annual Special 301 report and the issue of Canadian anti-counterfeiting law – in particular, the absence of provisions to allow for the search of in-transit shipments that are not bound for Canada – topped the list of concerns. The U.S. report states:

The United States remains deeply concerned that Canada does not provide customs officials with the ability to detain, seize, and destroy pirated and counterfeit goods that are moving in transit or are transshipped through Canada. As a result, the United States strongly urges Canada to provide its customs officials with full ex officio authority to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains.

The U.S. position has garnered some support in Canada. For example, a recent Globe and Mail editorial urged the government to change the 2014 anti-counterfeiting law by granting customs agents the power to search and seize shipments that are not bound for Canada.

The Globe editorial echoed longstanding U.S. government pressures that date back to the introduction of the law.  The Canadian law granted customs officials unprecedented powers, but the U.S. was still unsatisfied with then-ambassador Heyman stating:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

James Moore, the Canadian Industry Minister at the time, rejected the criticism, noting that Canada need not act as a customs agent for the United States.

What neither the Globe nor Moore mention is that the seizure of in-transit shipments in other jurisdictions has involved the seizure of generic pharmaceuticals, posing a threat to international trade, development and public welfare. For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Canada adopted the right approach in 2014 and should reject calls to amend a law in a manner that would increase Canadian costs and pose global health risks.

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PBO Concludes CETA Patent Rules Will Lead To Outflow of Hundreds of Millions in Pharma Royalties

Michael Geist Law RSS Feed - Mon, 2017/05/08 - 09:10

The Parliamentary Budget Officer released a report last week providing its estimate on the economic impact of the Canada – EU Trade Agreement. While the Liberal government made CETA its top trade priority when it came into office (and the Conservatives claimed that the deal would add $12 billion to the Canadian economy), the PBO report concludes that the economic benefits will be modest at best.

The report devotes a full chapter to CETA’s intellectual property provisions, particularly the patent related rules that will have a direct impact on the pharmaceutical industry.  CETA establishes patent restoration and patent appeal rules that will extend the term of patent protection for pharmaceutical products, thereby increasing consumer prices and royalty outflows. With a regulatory framework designed to address pricing in place, the report focuses on increased royalty outflows with extended protection.

It concludes that the additional royalty outflows will run into the hundreds of millions of dollars. In 2015, the PBO estimates the increased royalty payments would have been $85 million. By the time the agreement is fully implemented, it pegs the annual royalty increase at $209 million.

Of note is that the report also rejects claims that increased patent protection leads to greater expenditures on research and development.  It states:

The explicit link between patent protection and R & D expenditure was necessary because the two are only weakly linked by market forces. A statistical analysis shows no significant correlation between the two for OECD countries. Moreover, R & D expenditure in Canada for pharmaceuticals has not necessarily followed changes in the protection of intellectual property. After some initial increases following the extension of protection in 1987, R & D expenditures relative to sales have been declining. This coincides with the conclusion of the NAFTA and trade-related aspects of intellectual property (TRIPS) agreements.

CETA may be a done deal and the opportunity to increase trade with Europe important given the uncertainty associated with NAFTA, but the PBO report throws some cold water on the agreement, concluding modest economic gains and huge outflows in royalties due to the patent provisions demanded by the European Union.

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Public Safety Committee Recommends Against Lawful Access Reforms

Michael Geist Law RSS Feed - Wed, 2017/05/03 - 09:10

Last month, I wrote about the recent initiative to revive lawful access, the rules that govern police access to Internet and subscriber information. A cybercrime working group has held consultations (I participated in one) as law enforcement seeks new powers for warrantless access to some ISP information (called “pre-cursor” data) and a new, lower threshold warrant for other subscriber data. While law enforcement has argued that the current system is broken, the House of Commons Standing Committee on Public Safety and National Security has recommended that the current approach remain unchanged.

The committee’s much anticipated report on developing a road map for national security contains dozens of recommendations (my colleague Craig Forcese reviews many of them) including one on lawful access.  It states:

That at this time, and following the Supreme Court of Canada’s decision in R. v. Spencer, no changes to the lawful access regime for subscriber information and encrypted information be made, but that the House of Commons Standing Committee on Public Safety and National Security continue to study such rapidly evolving technological issues related to cyber security.

Given that Liberal MPs form the majority of the committee (the report contains dissenting reports from both Conservatives and NDP), the recommendation presumably reflects current government thinking on the issue. If so, it suggests that the government has not immediate plans to reform lawful access. Committee Chair Rob Oliphant says that police sought expanded powers, but that the argument was not yet “compelling.”  Lawful access isn’t going away – the issue has been debated for years – but MPs are rightly unconvinced that there is a need for warrantless access to subscriber information.

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Why Canada’s Net Neutrality Commitment Places Consumers in Control

Michael Geist Law RSS Feed - Tue, 2017/05/02 - 09:10

Canada seemed lost when it came to Internet policy a little over a decade ago. The government showed scant interest in the technicalities of Internet services and the Canadian Radio-television and Telecommunications Commission stood idly by as leading Internet providers engaged in traffic shaping to limit speeds of some applications and mused openly about new fees for the right to transmit content to subscribers. Internally, government policy makers were seemingly untroubled that telecom companies were gearing up to be gatekeepers of Internet content.

My regular Globe and Mail column notes those early Internet policies are unrecognizable today as Canada has emerged as a world leader in supporting net neutrality, the principle that all content and applications should be treated equally and that choices made by Internet users should be free from ISP or telecom interference. The policies do not guarantee Internet success – no law does – but it signals a clear commitment to placing consumers and creators in the Internet driver’s seat.

The foundation of Canadian policy lies in four CRTC decisions that address practices such as managing Internet traffic to limit speeds for some applications or creating pricing plans that “zero rate” certain content that does not count as part of monthly data consumption caps. CRTC policies now restrict these practices, recognizing that net neutrality preserves the “common carrier” approach for ISPs and encourages marketplace competition and innovation based on price, speed, and quality of networks.

The support for net neutrality in Canada – it has also been endorsed at the political level with Canadian Heritage Minister Mélanie Joly promoting the policy as a competitive advantage – comes just as the United States moves in the opposite direction. U.S. President Donald Trump has been prone to policy flip-flops, but his regulator has begun the process of rolling back open Internet rules backed by questionable claims that “Internet service providers do not appear to offer ‘telecommunications’.”

The U.S. Internet policy reversal extends to privacy as safeguards limiting the ability of ISPs to collect, use, and disclose subscriber Internet activities have been discarded. By contrast, the Privacy Commissioner of Canada ruled in 2015 that Bell’s plans to use subscriber information for targeted advertising without express, opt-in customer consent violated the law.

The U.S. model shifts unprecedented power to a handful of giant telecom companies.  Indeed, the removal of privacy protections was justified on the grounds ISPs were unable to compete with Internet companies such as Google and Facebook in using the personal browsing habits of customers for advertising purposes.

Notwithstanding dire warnings that Canada can ill-afford to diverge from the U.S. on Internet and telecom policy, the truth is there have long been significant differences between the two countries. On the regulatory front, Canadian law features safeguards against unjust discrimination, undue preferences or controlling the content of communications.

The Canadian market is exceptionally insular, dominated by domestic companies with little penetration from large, foreign players, whose attempts to enter the market have generated lobbying campaigns by Canadian incumbents to keep them out. Canadian companies have generally greeted the net neutrality framework with support (Rogers Communications supported restrictions on zero rating plans) or indifference (Bell says it already complies with the rules) and there is little reason to believe regulations will have a significant impact on long-term plans to invest in their networks.

Meanwhile, Internet companies have reacted to the U.S. developments with alarm – hundreds recently signed a letter opposing rolling back net neutrality rules – and the Canadian approach may provide an attractive alternative.

Most notably, Canadian consumers and creators will benefit in the long-term from the net neutrality policies. The CRTC noted that the evidence showed that zero rating offers were typically limited to high-end plans, thereby doing little to increase affordability of wireless services. Moreover, the European experience indicates providers that do not zero rate offer better prices and larger data allowances.

In other words, everyone pays for data, even where providers advertise “free” data for some content. What distinguishes the Canadian net neutrality approach from the U.S. model is that it is consumers and creators, not telecom companies or ISPs, that are in control when it comes to using the Internet.

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Ontario Government Placing Big Bet on Open Textbooks

Michael Geist Law RSS Feed - Mon, 2017/05/01 - 09:05

The Creative Commons Global Summit was held in Toronto over the weekend, bringing hundreds of people together from around the world to discuss issues ranging from copyright reform to enhancing collaboration and sharing. As part of the opening of the event, David Lametti, the Parliamentary Secretary for the Innovation, Science and Economic Development, and Deb Matthews, the Ontario Minister for Advanced Education and Skills Development as well as the Minister for Digital Government, both provided words of welcome. Their presence demonstrated how far openness, access, and balanced copyright have come in recent years.  Lametti, a leading voice on copyright as McGill law professor, emphasized the important role of balance and flexibility in the copyright system, while Matthews provided a unequivocal endorsement of openness and access.

Matthews provided more than just encouraging words, however.  She used her opening remarks to promote the creation of a new Open Textbook Library for Ontario that will feature hundreds of openly licensed, professionally created textbooks providing students with access to free digital texts in dozens of university and college courses.

The open library is managed by eCampusOntario, which is working with BCcampus to make the texts available to students in the province. In fact, the provincial government is investing millions in creating new open texts in a myriad of subjects including history, finance, politics, the environment, engineering, and the sciences.

The Ontario government support for open textbooks is notable for several reasons. First, it points to the growing importance of openness in education, including open access publishing of scholarly research, open educational resources, open courses, and open texts. Governments increasingly recognize the importance of investing in open education to support learners at all stages of their lives. Second, the open textbook model provides a cost-effective alternative to expensive textbooks and licences. The works are paid for, but once created, can be freely used and modified without the need for further licences, payments or permissions. Third, this provides a strong rebuttal to those who suggest that open textbooks may be inferior to the pricey, publisher versions. Indeed, the open textbooks are written by teaching professionals, peer reviewed, and professionally developed in the same manner as commercial textbooks. The difference is that once created, they can be freely used, reused, and modified. The approach represents a win-win-win-win scenario: free textbooks for students, reduced long-term costs for education and government, financial support and compensation for creators of the texts, and high quality, Canadian materials freely available for use by teachers across the province.

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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 was 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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