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My series of posts on the leak of the Trans Pacific Partnership intellectual property chapter has highlighted Canada's opposition to many U.S. proposals, U.S. demands for Internet provider liability that could lead to subscriber termination, content blocking, and ISP monitoring, as well as anti-counterfeiting provisions that are inconsistent with Bill C-8. This post discusses the section on protection for geographical indications and explains how U.S. demands conflict with Canada has already agreed to in the trade agreement with Europe (CETA).
As I discussed in a post on CETA last month, the Canada - EU deal contains some notable new restrictions on the sale and marketing of cheese in Canada. Under the umbrella of geographical indications, Canada has agreed to new limitations on several well known cheeses including asiago, feta, fontina, gorgonzola, and munster. Existing Canadian producers can continue to use these names, but that's it - any future cheese makers will need to qualify the title by using words such as "imitation" or "style". This is a significant concession that effectively gives rights to existing producers on what many consumers would view as generic names.
The U.S. wants the TPP to take the opposite approach, starting with a general provision stating that trademarks should be sufficient to provide protection. Where parties do provide geographical indication protection (Canada obviously does), the U.S. wants an opposition system to object to them. Moreover, it wants to stop any country from prohibiting third parties from using translated versions of geographical indication (except for wines and spirits) or from using a term that is evoked by the geographical indication. The U.S. also wants the possibility that geographical terms may become customary in common language (ie. feta).
Canada is opposed to all of these proposals (as are most other TPP countries) and it seems unlikely that the U.S. will get its way on all of them. Yet the draft text demonstrates the potential for conflict, which could easily extend to many other areas of the TPP that remain shrouded in secrecy.
The leak of the Trans Pacific Partnership intellectual property chapter confirms that the many concerns about the agreement were well-founded. My earlier posts highlighted Canada's opposition to many U.S. proposals and U.S. demands for Internet provider liability that could lead to subscriber termination, content blocking, and ISP monitoring. This post focuses on some of the anti-counterfeiting requirements in the TPP. The anti-counterfeiting issue is particularly relevant from a Canadian perspective because the government has proposed significant new anti-counterfeiting measures in Bill C-8, which is currently at second reading in the House of Commons and being studied by the Industry Committee. If the U.S. border measures demands are included in the TPP, Bill C-8 would be wholly inadequate to meet Canada's new treaty obligations.
For example, the TPP would require customs officials have ex officio power (ie. power without court oversight or even a formal complaint from a rights holder) to seize in-transit shipments of suspected counterfeit trademark or copyright goods. Bill C-8 currently excludes in-transit shipments. Moreover, the U.S. wants to extend counterfeit trademark goods to goods that are "confusingly similar", a demand currently opposed by Canada and also not contained in the bill.
The TPP would also create a framework where customs officials could notify rights holders of seized goods, even where the rights holder has not asked for assistance. This is inconsistent with Bill C-8, which is premised on a system of a prior request from rights holders. Beyond border measures, the TPP would require countries to establish statutory damages for trademark infringement. Canada does not currently have this form of damages, though there has been lobbying by some groups to include trademark statutory damages in Bill C-8. During my recent committee appearance on C-8, I argued that the bill should be delayed until Canadian obligations become clearer. The leak of the TPP text confirms that the government may be forced into further reforms if the U.S. succeeds with its anti-counterfeiting demands.
In Authors Guild v. Google, Google's motion for summary judgment dismissing the case on fair use grounds has been granted.
In a 30-page decision, Judge Denny Chin, who has been presiding over the case since its inception as a District Court Judge, but who is now a Circuit Court judge in the US Court of Appeals for the Second Circuit, reasoned that Google's "Library Project", which involved scanning books from libraries without permission of the copyright holders:
-was transformative in transforming "expressive text" into a "word index" and searchable data;
Judge Chin concluded:Google Books provides significant public benefits. It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders. It has become an invaluable research tool that permits students, teachers, librarians, and others to more efficiently identify and locate books. It has given scholars the ability, for the first time, to conduct full-text searches of tens of millions of books. It preserves books, in particular out-of-print and old books that have been forgotten in the bowels of libraries, and it gives them new life. It facilitates access to books for print-disabled and remote or underserved populations. It generates new audiences and creates new sources of income for authors and publishers. Indeed, all society benefits.
Similarly, Google is entitled to summary judgment with respect to plaintiffs' claims based on the copies of scanned books made available to libraries. Even assuming plaintiffs have demonstrated a prima facie case of copyright infringement, Google's actions constitute fair use here as well. Google provides the libraries with the technological means to make digital copies of books that they already own. The purpose of the library copies is to advance the libraries' lawful uses of the digitized books consistent with the copyright law. The libraries then use these digital copies in transformative ways. They create their own full-text searchable indices of books, maintain copies for purposes of preservation, and make copies available to print-disabled individuals, expanding access for them in unprecedented ways. Google's actions in providing the libraries with the ability to engage in activities that advance the arts and sciences constitute fair use.
Posted by Alan Norman, Access Principal
Spectrum is an essential resource to fuel the Internet's future—it can power improved broadband access and spark innovation in wireless technology. And, as with any important resource, effective management can help make sure we're making the most of what's available. Both policy and technology have a role to play in making sure that spectrum is managed, allocated, and shared in ways that can help the Internet grow.
Google's Spectrum Database is one such technology, developed to enable dynamic sharing of TV white space spectrum; this allows parties to use spectrum when they need it, and make it available to other users when they don't. In July 2013, we were certified by the FCC to operate the database for commercial use. Since then, early testers have provided feedback and insights on future innovations. Testers included GE Industrial Communications, which used the database to explore how it could enable new communication options for its Industrial Internet products.
Now, we're launching a developer API for the database that enables general exploration for any user, as well as a commercial account option for device manufacturers. The commercial account allows equipment makers to register their devices with our database in order to operate on available TV white space.
Adaptrum is the first device manufacturer to be certified to use our Spectrum Database, and is already using the tool in the field for a white space deployment, providing public Wi-Fi on the campus of West Virginia University (WVU). The white space network, which is managed by Air.U co-founder Declaration Networks, uses Adaptrum's equipment integrated with our Spectrum Database. The collaboration shows how dynamic spectrum sharing can help deliver broadband coverage and capacity to more rural areas.
We hope that the database continues to support new opportunities like the WVU white space network. With forward-looking policy as well technology advances, we can further encourage dynamic spectrum sharing and the wireless innovation that it supports.
Please contact GE Industrial Communications, Air.U, or Adaptrum for more information on their work.
Cross-posted with the Official Google Blog
posted by Richard Salgado, Legal Director, Law Enforcement and Information Security
In a year in which government surveillance has dominated the headlines, today we're updating our Transparency Report for the eighth time. Since we began sharing these figures with you in 2010, requests from governments for user information have increased by more than 100 percent. This comes as usage of our services continues to grow, but also as more governments have made requests than ever before. And these numbers only include the requests we're allowed to publish.
Over the past three years, we've continued to add more details to the report, and we're doing so again today. We're including additional information about legal process for U.S. criminal requests: breaking out emergency disclosures, wiretap orders, pen register orders and other court orders.
We want to go even further. We believe it's your right to know what kinds of requests and how many each government is making of us and other companies. However, the U.S. Department of Justice contends that U.S. law does not allow us to share information about some national security requests that we might receive. Specifically, the U.S. government argues that we cannot share information about the requests we receive (if any) under the Foreign Intelligence Surveillance Act. But you deserve to know.
Earlier this year, we brought a federal case to assert that we do indeed have the right to shine more light on the FISA process. In addition, we recently wrote a letter of support for two pieces of legislation currently proposed in the U.S. Congress. And we're asking governments around the world to uphold international legal agreements that respect the laws of different countries and guarantee standards for due process are met.
Our promise to you is to continue to make this report robust, to defend your information from overly broad government requests, and to push for greater transparency around the world.
We strongly believe that the Electronic Communications Privacy Act (ECPA) must be updated in this Congress, and we urge Congress to expeditiously enact a bright-line, warrant-for-content rule. Governmental entities should be required to obtain a warrant—issued based on a showing of probable cause—before requiring companies like Google to disclose the content of users' electronic communications.
The leak of the Trans Pacific Partnership intellectual property chapter generated global coverage as full access to the proposed text provided a wake-up call on U.S. demands and the clear opposition from many TPP countries. My first post highlighted Canada's opposition to many U.S. proposals, but nowhere is that more evident than in the section on Internet service provider liability. In fact, ISP liability in the TPP is shaping up to be a battle between Canada and the U.S., with countries lining up either in favour of a general notification obligation (Canada) or a notice-and-takedown system with the prospect of terminating subscriber Internet access and content blocking (U.S.).
The Canadian approach, which enjoys support from Chile, Brunei, New Zealand, Malaysia, Vietnam, Singapore, and Mexico, establishes a general obligation to limit liability for ISPs for infringements that occur on their networks (the U.S. and Australia oppose this approach, Japan and Peru are undecided). The Canadian proposal includes more detailed descriptions of the limitations of liability, an exclusion for services primarily for enabling infringement, and a reminder that ISP liability is still subject to copyright limitations and exceptions. Under the Canadian model, ISP limitation of liability is conditioned on creating a notification process and "legal incentives for ISPs to comply with these procedures or remedies against ISPs that fail to comply."
The U.S. proposal, which enjoys support from Australia (and support for some provisions from Singapore, New Zealand, and Peru) features far more conditions for ISP limitation of liability that could lead to subscriber service termination and content blocking (Canada, Brunei, Vietnam, and Mexico oppose the approach). Under the U.S. model, specific actions are required for specific limitations of liability. For example, a limitation of liability for automated caching is subject to four requirements, including "removing or disabling access, on receipt of an effective notification of claimed infringement, to cached material that has been removed or access to which has been disabled at the originating site." Limitation of liability for network storage or linking users to online sites are also subject to compliance with notifications.
However, all forms of ISP limitations of liability are subject to several additional conditions (which Malaysia and New Zealand oppose):
The U.S. approach also requires a privacy override. While Canadian privacy law has established protections on disclosure of subscriber information, the U.S. model would require:
Each Party shall establish an administrative or judicial procedure enabling copyright owners who have given effective notification of claimed infringement to obtain expeditiously from a service provider information in its possession identifying the alleged infringer.
On top of all this, the U.S. is seeking an annex to the chapter that specifies the requirements for effective notices. They are supported by Australia and Singapore. Opposition comes from Canada, Chile, Malaysia, New Zealand, Vietnam, Brunei, Mexico, and Peru.
From a Canadian perspective, the U.S. demands would require an overhaul of Canadian copyright law and potential changes to privacy law. For many other TPP countries, the issue is creating a clear divide, with the U.S. conditioning ISP safe harbours on subscriber termination and content blocking, while the Canadian model favours greater flexiblity in establishing systems that create incentives to address alleged infringements online.
Barry Sookman reports that a CRTC official advised a conference that the Industry Canada anti-spam regulations are now final and should be publicly available in about two weeks. The law will come into force in 2014.
Posted by Pablo Chavez, Director, Public Policy and Government Affairs
This morning, Richard Salgado, Director of Law Enforcement and Information Security, will testify before the Senate Judiciary Subcommittee on Privacy, Technology, and the Law on the Surveillance Transparency Act of 2013.
We commend Senators Franken and Heller for introducing this bill, which would allow Internet service providers to disclose basic statistics about requests we receive from law enforcement for users’ information in the course of a national security investigation. The current lack of transparency about government surveillance programs undermines trust, economic growth and security, and the promise of the Internet as a platform for openness.
More transparency can help fix that. Since 2010, our Transparency Report has shed light on requests for user data that we receive from the government. We strive to surface new and useful data with every update. Richard’s testimony details our efforts to be allowed to disclose statistics about FISA requests that we may receive, including our motion before the Foreign Intelligence Surveillance Court.
Transparency is crucial, but it is only one step among many needed. As we wrote to Congress two weeks ago, it is clear that the U.S. government and other governments must examine broader reforms to government surveillance.
You can read Richard’s written testimony and watch the webcast of the hearing starting at 10:00 AM Eastern.
I'm heading to Melbourne, Australia next week to do a series of events with the Center for Youth Literature of the State Library of Victoria. I'm doing four events: The science of fiction, Creative versus Commons, Digital fiction masterclass, and Future fiction with teens. I hope you'll come out to them!
Wikileaks released an updated version of the secret Trans Pacific Partnership intellectual property chapter this morning (background on the TPP from my appearance before the House of Commons Standing Committee on International Trade earlier this year). The leaked text, which runs 95 pages in length and is current to August 2013, provides a detailed look not only at the chapter - it includes the full text - but also the specific positions being taken by all negotiating countries.
From a Canadian perspective, there is good news and bad news. The good news is that Canada is pushing back against many U.S. demands by promoting provisions that are consistent with current Canadian law. Canada is often joined by New Zealand, Malaysia, Mexico, Chile, Vietnam, Peru, and Brunei Darussalam. Japan and Singapore are part of this same group on many issues. Interestingly, Canada has also promoted Canadian-specific solutions on many issues. The bad news is that the U.S. - often joined by Australia - is demanding that Canada rollback its recent copyright reform legislation with a long list of draconian proposals.
It is instructive to see how different the objectives of the U.S. are on intellectual property when compared to virtually all other countries. With the exception of the U.S., Japan, and Australia, all other TPP countries have proposed an objectives article (Article QQ.A.2) that references the need for balance, promotion of the public domain, protection of public health, and measures to ensure that IP rights themselves do not become barriers to trade. The opposition to these objective by the U.S. and Japan (Australia has not taken a position) speaks volumes about their goals for the TPP.
Canada is also part of a large group (which includes New Zealand, Malaysia, Peru, Brunei, Vietnam, Chile, Japan, and Mexico) that opposes a U.S. and Australian demand that all TPP countries ratify ten other intellectual property treaties by the time the TPP takes effect (Article QQ.A.6). Canada has ratified some, but not all, of the listed treaties.
Canada has also proposed (together with New Zealand, Singapore, Chile, and Malaysia) a principles article that would permit provisions "to prevent the abuse of intellectual property rights by rights holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology." This principle is reflected in Article QQ.A.9, which safeguards the right of countries to adopt measures to prevent abuse of IP rights and anti-competitive practices from such abuse. The U.S. and Japan oppose this article.
Chile, Vietnam and Peru have proposed an article (Article QQ.A.13) focused on the public domain, including the development of public databases that identify works in the public domain. Canada does not appear to have taken a position on this article.
The majority of chapter focuses on reforms to virtually all aspects of intellectual property including patents, copyright, trademarks, and geographic indications. There are also detailed proposals for Internet enforcement, including liability of Internet service providers. These require careful study and I will examine them in subsequent posts.
Thinking of patenting, but waiting for some customers first? Tread carefully. By merely offering your invention for sale, even if the invention has not even been manufactured, you may lose patent rights. The recent US case of Hamilton Beach v. Sunbeam Products Inc. (Case No. 11-CV-0345, Decided: August 14, 2013) dealt with a challenge ...
Holy. Cats. My novel Little Brother has made it into the CBC's Canada Reads Top Ten. It is in astoundingly great and humbling company, including Margaret Atwood's Year of the Flood and Joseph Boyden's The Orenda. I'm so, so pleased by this -- thank you to everyone who supported the book. And I hope you check out the whole top ten, which is quite a list of wonderfulness.
The government's anti-counterfeiting legislation, which died over the summer when the Conservatives hit the parliamentary reset button, is now back on the legislative fast track. Industry Minister James Moore quickly re-introduced the bill last month and speedily sent it to the Industry Committee for review (I appeared before the committee last week).
That review has revealed that the numerous new border measures envisioned by the bill, including seizure powers without court oversight, fall short of the demands of intellectual property lobby groups. Those groups intend to use the committee hearings to seek further expansion of border seizures and to shift more enforcement costs to the public.
My weekly technology law column (Toronto Star version, homepage version) notes that since virtually everyone is opposed to harmful counterfeiting - particularly when fake goods create health and safety risks - it is unsurprising that the bill appears to enjoy all-party support. The focal point of the bill is that it grants customs officials broad new powers without court oversight. Officials will be required to assess whether goods entering or exiting the country infringe any copyright or trademark rights. Should a customs official determine that there is infringement, the goods may be seized and prevented from entering the country.
The bill features several safeguards designed to limit the potential for wrongful seizures or targeting of individuals. For example, it excludes both patent claims (which are very difficult to assess) and in-transit shipments (which involves goods that do not originate in Canada and are not destined to stay in Canada). Moreover, there is an exception for the personal effects carried by individual travellers as they cross the border.
While those are sensible limitations, the lobby groups are demanding several significant changes. First, the groups want to vest even more powers in the hands of customs officials, calling for reforms that would allow for the destruction or forfeiture of goods without court oversight. Moreover, the groups argue that under the proposed system, "too much is asked of rights holders." As a result, they want taxpayers to bear the burden of much of the costs associated with private enforcement of their rights.
Second, the lobby groups are demanding new statutory damages for trademark infringement. The inclusion of statutory damages would mean that rights holders would not have prove any actual damages, but rather could potentially sue for millions of dollars without evidence of loss. In the U.S., statutory damages for trademark has led to trademark trolls engaging in litigation designed primarily to obtain costly settlements against small businesses that can ill-afford to fight in court.
Third, lobby groups are seeking the removal of the exception for in-transit shipments, arguing that customs officials should be permitted to seize goods not destined to stay in Canada. Experience with in-transit seizures in Europe reveals that generic pharmaceuticals are often targeted. 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. This included a Dutch seizure of AIDS drugs that was en route from India to a Clinton Foundation project in Nigeria. In 2011, the Court of the European Justice ruled against in-transit seizures on the grounds that there was no infringement in the EU.
Fourth, there has been discussion at the Industry Committee about the possibility of amending the personal traveler exception. If the exception were removed, it might open the door to escalated searches of both physical luggage as well as electronic devices such as iPods, smartphones, and personal computers.
The government's counterfeiting bill would benefit from some amendments, but the current lobby group emphasis signals that there may be escalating pressure to remove many of the balancing provisions. Those changes could result in cost shifting enforcement to the public and increasing the expenses borne by small businesses that import goods from abroad.
A curious story came to light last week, that of a film studio exerting influence over the design of a curriculum. Warner Brothers took issue with an English course, prepared by the University of New Hampshire and offered this past summer to children, titled “Harry Potter as Storytelling: An Online Adventure for the Young Fan.” Most coverage of the story emphasizes that Warner Brothers was concerned that people would think the studio had sponsored the course. However, the cease and desist letter, courtesy of Michael Brindley writing for New Hampshire News, shows a decidedly more strident tone than that of concern:
Warner Bros. is the exclusive owner of all trademark rights, and certain other intellectual property rights in and to all elements contained in the best selling series of “Harry Potter” books and popular motion pictures, including, but not limited to, “Harry Potter and the Sorcerer’s Stone,” “Harry Potter and the Half-Blood Prince,” and “Harry Potter and the Deathly Hallows” (hereinafter, collectively, the “HARRY POTTER Properties”). Because of these rights, no one may utilize the HARRY POTTER Properties without the express written permission of Warner Bros.
(Of course, the last sentence is patently false; fair use and fair dealing expressly permit some unauthorized uses of any copyrighted work, including the HARRY POTTER Properties.)
What is striking about the letter is its lack of precise detail. While rushing to claim its trademark rights and “certain other intellectual property rights”, Warner Brothers only goes so far as to state that words and concepts were used in the course. The studio does not explain how this is a violation of any intellectual property right:
[The] course is entirely themed around the HARRY POTTER Properties and makes extensive use of them for commercial and marketing purposes. For example, each of your five classes mimics the fictional classes taught at Hogwarts School of Wizardry as expressed in the HARRY POTTER books and motion pictures. In addition, there are “magical areas” (e.g. Azkaban, Honeydukes, etc.) which are derived from protected elements of the HARRY POTTER Properties. Other elements of Hogwarts are used, such as “prefects,” and school houses, etc., all of which are obviously designed to mimic an experience in the fictional world of Hogwarts. Moreover, the website uses trademarks owned by Warner Bros. to promote the course. These include the name “Hogwarts,” “Harry Potter,” and depictions of the lightning bolt and glasses – all derived from and associated with the HARRY POTTER Properties.
Intellectual property rights are contingent upon the nature of the use made of the claimed property. It is not enough for any intellectual property claimant to merely state that something was used. How it was used and why it was used are germane to the claim of right. And it is not at all clear what portion of law would actually support most of Warner Brothers’ objections.
To suggest that anyone can, or should, control the use of the word “prefect”, or the use of the idea of school houses, is audacious. There is no basis in law to claim rights to a common word or concept. Besides, the terminology and concept have been in popular use since English boarding schools were created; even today, among the private schools that cater to children of the Empire, we still hear of prefects and school houses.
Continuing to review the listed complaints, the objection to mimicry is bizarre. Invoking fictional settings with role playing is a time-honoured pleasure for children, and a highly-regarded method of teaching. Getting into the skin of a character is a means to the better understanding of character development. For such mimicry to be effective, explicit references to characters and events are not only appropriate, they are necessary. For such mimicry to be a violation of law, the law would have to require that explicit reproduction of specific words is the sole basis upon which rights are awarded. That is hardly true. As I have written many times, copyright law permits unauthorized reproduction of protected works, depending on the context. So too, does trademark law.
Warner Brothers makes the claim that their trademarks were violated in the marketing of the course. They objected to the use of: “Hogwarts,” “Harry Potter,” and, “depictions of the lightning bolt and glasses”. Without seeing all the original marketing materials, it is not possible to accurately state whether a trademark violation occurred or not. Nevertheless, the law and contemporary discussion* offer some clues.
According to the Legal Information Institute at Cornell University, a trademark is:
any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.
However, control over a trademark is not absolute. Trademark law has its own limits. This situation calls for consideration of the legal doctrine of nominative fair use which allows for use of a trademark when the purpose is to refer to that product. A course about Harry Potter will naturally require the use of the words “Harry” and “Potter” in both its title and course description. And if the course is intended to simulate the schooling experience, using “Hogwarts” would seem not unreasonable.
As to whether the lightning bolt and glasses were necessary, more information is needed. But, interestingly enough, the library at the University of Texas has a timeline of trademark history, accompanied by illustrations, and indicates that lightning bolts were used in the 1930s as signs of modernity and power. Which leads one to wonder if Warner Brothers and J.K. Rowling sought permission for using said lightning bolt in their creations.
Like fair use in copyright law, limits upon trademark control are a grey area; each situation must be evaluated on its own merits. This flexibility is important to maintain the flexibility that is inherent to all creative endeavor. It is worth noting that while the principal of trademark rights is to avoid confusion to consumers, courts have tolerated modest confusion depending on the circumstances. In this case, if the title of the summer-school course invites momentary confusion that Warner Brothers is actually getting into the education business, a simple disclaimer in the course outline would alleviate that confusion.
Returning to the University of New Hampshire, their response to Warner Brothers appears to be one of capitulation; without admitting wrong-doing, they have set out to:
… remove all uses and references that could be interpreted as improper from content and title. The course will still include the Harry Potter novels as part of the curriculum literature for the course’s educational purposes, but will no longer reference, mimic, or emulate the Harry Potter properties. (Emphasis mine.)
This is disappointing, as Warner Brothers’ objections appear more mischievous than legitimate.
* Some interesting reading
Trademark Law and Theory: A Handbook of Contemporary Research, edited by Graeme B. Dinwoodie, Mark D. Janis (Edward Elgar, 2008). Nominative fair use is discussed in detail; i.e., “… occurs when the defendant designates its product source using a third-party trademark for its referential meaning (p.426).”
Further discussion of trademark law is available from William McGeveran, “The Trademark Fair Use Reform Act,” Boston University Law Review (2010). McGeveran draws attention to the challenges for free speech wrought by aggressive, and sometimes groundless, claims of trademark ownership. His initial words are disturbing:
[Some] lawyers charged with policing their clients’ trademark portfolios now send threatening “cease and desist” letters (C&Ds) as a routine response to virtually any unauthorized use of a mark. In addition to deterring the individual recipients, these legal threats also serve a broader signaling function by warning against all unauthorized uses of a mark (p.2273).
McGeveran remarks that it is “the risk of litigation, not the risk of liability,” that compels would-be defendants to adopt risk-averse policies (p.2276). Together with his own proposal to ameliorate this chilling effect, he presents a comprehensive literature review of other proposals for change (see footnotes 5-10, p.2270)).
TechDirt: Prenda Loses Big Again; Court Orders It To Pay Back Settlement Money, Refers To Law Enforcement
Interesting article in TechDirt about Prenda's growing difficulties:
Prenda Loses Big Again; Court Orders It To Pay Back Settlement Money, Refers To Law Enforcement
And here we go again. In yet another Prenda court case, Team Prenda has lost big. These are the cases in Minnesota that were reopened earlier this year, after the court became aware of Judge Wright's ruling in California, showing how Paul Hansmeier, John Steele, Paul Duffy and Mark Lutz appeared to be engaged in fraud on the court. In August, the magistrate judge assigned to review the cases, Franklin Noel, started demanding real answers to questions -- answers which never came.
Instead, we got a hearing in Minnesota that revealed some explosive new info, while Mark Lutz disappeared never to be heard from again. While Hansmseier and Duffy were never able to produce Lutz or answers to Judge Noel's questions, they did try to get Judge Noel kicked off the case.
None of the above strategies worked. At all. Judge Noel today not only rejected the request to pull him off the case, but also slammed Team Prenda, yet again, ordered them to pay back all the settlement money they got from the specific cases involved and then referred the case to law enforcement to look into the activities of Hansmeier, Steele, Duffy and Lutz....
I appeared yesterday before the House of Commons Standing Committee on Industry, Science and Technology for a hearing on Bill C-8, the anti-counterfeiting bill that has been placed on the legislative fast-track by the government. The panel also featured representatives from the Canadian Anti-Counterfeiting Network, the Canadian Standards Association, and the Intellectual Property Institute of Canada. The hearing was cut short by a vote in the House of Commons, but there was still an opportunity for a ten minute opening presentation and to address a few questions from the committee members. My prepared remarks are posted below. Given time constraints and the comments of the other panel members, there were some adjustments (I omitted the first section on the scope of counterfeiting and noted that fellow panel members proposed the precise amendments I was discussing).
Appearance before the House of Commons Standing Committee on Industry, Science and Technology, November 6, 2013
Good afternoon. My name is Michael Geist. I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. I have edited several books on Canadian copyright and appeared many times before committees on copyright and trade policy. I appear today in a personal capacity representing only my own views.
I appreciate the opportunity to appear today to speak to you about Bill C-8. While the panel may disagree on certain elements of the legislation, I am sure that all agree that where harmful counterfeiting occurs - particularly involving health and safety - the law should provide all concerned with the legal tools necessary to address the problem. Indeed, we should not forget that the existing law in Canada is regularly used to conduct anti-counterfeiting raids and seizures, that border officials work with the RMCP and Health Canada on health and safety issues, and that the courts have awarded increasingly significant penalties in counterfeiting cases.
That said, context within a discussion on counterfeiting is important. It is easy to point to the obvious health and safety issues and conclude that any possible legal remedy should be adopted in response. Yet it is important to recognize that the scope of the problem remains the subject of considerable debate and that some proposed solutions may have unintended consequences that are themselves harmful and should be avoided. Moreover, given Minister Mooreâs insistence that the bill is about protecting intellectual property on an international scale, the international context - the Anti-Counterfeiting Trade Agreement and the proposed trade agreement between the Canada and the EU - merits some discussion as well.
Given the need for context, I plan to focus on three issues in my opening remarks. First, provide context on the scope of counterfeiting based on reports and data we have available. Second, highlight some potential unintended consequences in Bill C-8, particularly those that could arise from some proposals for amendment. Third, briefly discuss the international context of ACTA and CETA. I should add that I will not discuss the myriad of trademark reforms in the bill, but I think those are out-of-place in a counterfeiting bill. If the intent was to introduce an omnibus-style intellectual property bill, it should also deal with live issues such as access for the blind which is the subject of a new international treaty and reform to the Copyright Board of Canada.
1. The Scope of Counterfeiting
As I mentioned a moment ago, where counterfeiting raises health and safety concerns, no one would oppose measures to address it. Yet it should be noted that the data on counterfeiting has been regularly debunked as inaccurate and overstated. The U.S. General Accounting Office examined the issue in 2010 and concluded that the oft-quoted estimates are not reliable and cannot be substantiated to a data source. A year later, the Social Sciences Research Council released a major piracy report - funded by Canada's IDRC - that found little evidence of organized crime involvement in piracy activities. In 2012, the CATO Institute posted another assessment of the common piracy claims, which it found were unsupportable.
Similar suspect data has been regularly used in Canada. For years, the RCMP cited figures of $30 billion in losses due to counterfeiting, but upon closer examination, the claims were found to be fatally flawed, based on little more than a single bullet point in a slide presentation from an industry group. The RCMP no longer cites the figure but some industry groups still do when lobbying for anti-counterfeiting legislation. Last week, Public Safety released an RFP for a study on the size of the Canadian market for counterfeit product, a long overdue effort to obtain more reliable data that might allow for a meaningful assessment of the problem and potential solutions.
Beyond the estimates, some impartial studies on actual seizures raise doubts about the scope of the problem. For example, the U.S. Government Accountability Office found that of 287,000 randomly inspected shipments from 2000 to 2005, counterfeiting violations were only found in 0.06 percent - less than one tenth of one percent. Moreover, the GAO noted that despite increases in counterfeiting seizures, the value of those seizures in 2005 represented only 0.02 percent of the total value of imports of goods in product categories that are likely to involve intellectual property protection. That is obviously a far cry from the 3 - 4% that is often used in counterfeiting estimates.
2. Potential Unintended Consequences of C-8
Let me start by saying that the exception for individual travelers, the exclusion of patents and in-transit shipments, and the attempt to avoid application to grey market goods are positive policy choices designed to target the bad actors and to not allow border seizures to raise consumer costs. That said, there are some real concerns about potential unintended consequences. Iâd like to briefly highlight four.
First, as you know, the bill vests enormous power in the hands of customs officials. Customs officials are not copyright and trademark experts, yet they may now be forced to assess infringement cases including determining whether any copyright exceptions apply. The bill opens the door to detention of works if created without consent of the copyright owner and if they infringe copyright. Yet there many works that are made without consent of the owner but rely upon exceptions such as fair dealing. Those may result in disputes over whether the works infringe, which is an issue best left to the courts. With this bill, customs officials will now make the determination and send the works to the copyright owner to consider whether they think it infringes copyright.
While there have been claims that these powers are consistent with international standards, the reality is that there are a number of countries - including allies such as Australia and Mexico - that do not have the ex-officio powers envisioned by this bill in their law. Using the courts for oversight is still viewed as a workable, legitimate approach to dealing with counterfeiting - this committee heard on Monday how the CBSA works with the RCMP and Health Canada on safety and security concerns. To vest this power in non-expert customs officials could lead to unintended consequences.
The committee may hear from some groups that want the legislation to go even further - including cost shifting enforcement to the public, and ignoring the costs borne by small businesses that import goods that could get caught up in the seizures. Moreover, some may call for even more expansive powers for customs officials, including destruction or forfeiture of goods without court oversight. These proposals are enormously problematic and would alter any attempt at balance in the bill by removing important safeguards, shifting private enforcement costs to the public, and raising consumer costs. Further, detention of goods can be used to harm Canadian businesses who could find their goods detained by competitors. The absence of a misuse provision in the bill is particularly notable in this regard.
Second, the bill does include an exception for personal travelers. However, the bill is oddly drafted by speaking of âworksâ rather than âgoodsâ - both ACTA and the TPP focus on physical goods - which could also cover iPod and laptop searches. In fact, if the exception were removed, this could lead to escalated searches of iPods, smartphones, and other electronic devices.
Third, there are some groups that may argue for expanded penalties. The bill already moves copyright and trademark into the world of criminal provisions in a manner that extends far beyond conventional IP law. Further, some may call for the inclusion of statutory damages for trademark infringement. With respect to trademarks, statutory damages are unnecessary. Rights holders frequently cite the specific value of their goods and the harm associated with counterfeiting. If these claims are accurate, demonstrating that value for the purposes of damage awards should not be difficult. Moreover, other countries have experienced problems with statutory damages for trademarks. For example, Taiwan reformed its trademark statutory damages provisions when courts began awarding disproportionate awards. In the U.S., statutory damages for trademark has led to trademark trolls engaging in litigation designed primarily to obtain costly settlements against small businesses that can ill-afford to fight in court.
Fourth, during debates over the prior Bill C-56, some opposition MPs raised the prospect of also targeting in-transit shipments. The bill wisely does not do this and such a reform would be a mistake. The seizure of generic pharmaceuticals in transit would pose a threat to international trade, development and public welfare. Experience with such seizures in the European Union led in 2010 to India and Brazil filing complaints with the World Trade Organization highlighting several instances of consignments of generic medicines transiting via the EU being detained because they were suspected of infringing IP rights. For example, 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. In one instance, German customs authorities wrongfully seized a drug shipment of âAmoxicillinâ on the suspicion that it infringed the brand name âAmoxilâ - the cargo was detained for four weeks while further investigation took place, eventually revealing that there was no trademark infringement. In another instance, the Dutch customs authorities seized a shipment of an AIDS drug while it was en route (via Europe) from India to a Clinton Foundation project in Nigeria.
In 2011, the Court of the European Justice ruled against in-transit seizures on the grounds that there was no infringement in the EU. A similar approach is appropriate here and attempts to extend C-8 to in-transit shipments should be rejected.
3. International Context
Notwithstanding claims that this legislation is responding to domestic concerns, much of the pressure comes from outside the country. Ms. Sgro asked about the Anti-Counterfeiting Trade Agreement in Monday. In fact, the United States has not yet ratified ACTA. The only country to have ratified is Japan. With the vast majority of signatories now having rejected ACTA - the entire European Union along with Switzerland is out - there is some doubt that ACTA will ever take effect. Even if it does, it now stands as damaged goods and a far cry from a relevant international standard. ACTA elicited an enormous public backlash and Canada would do well to move on.
Perhaps more relevant is CETA, which apparently contains border provisions consistent with Bill C-8. The problem is that the government has not released the CETA text so there is no way of knowing precisely what is required under that treaty and whether there is room for changes to Bill C-8. The bill may be consistent with CETA, but without the text we canât know if alterations to the bill might still fall within the treaty requirements.
There is also the possibility - some say likelihood - of border measures provisions in the Trans Pacific Partnership, which is still under negotiation.
The net effect of the international pressures is that Canada would do well to pause on this bill until the international treaties are concluded and our obligations are better understood.
Iâll stop there and welcome your questions.
The Wire Report reports (sub req) that NGN Prima Productions has dropped its copyright lawsuit over alleged file sharing by subscribers of Distributel, an independent ISP operating in Quebec, Ontario, Alberta, and British Columbia. Distributel fought back against a motion to disclose the names of its subscribers earlier this year, an approach that appears to have been vindicated by the decision to drop its motion to compel disclosure of subscriber names.
Statistics Canada released its bi-ennial Internet use survey last week and while much of the immediate reaction focused on the continuing growth of Internet use (due largely to increased usage by those aged 65 and older), my weekly technology law column (Toronto Star version, homepage version) argues the bigger story is the ongoing Canadian digital divide that confirms the strong link between household income and Internet use.
Statscan reports that 83 per cent of Canadians use the Internet, yet a closer examination of the data reveals a significant gap that is closely correlated to income. Moreover, the data also shows that Canada's high wireless prices now play a role in the digital divide, with only a quarter of lower-income Canadians using Internet wireless services.
Internet use among the richer half of the country is actually over 90 per cent with the top quartile of household income at 94.5 per cent and the second quartile at 90.2 per cent. Internet use among the bottom quartile of Canadians stands at only 62.5 per cent (the third quartile is 77.8 per cent).
The digital divide remains consistent across all demographics with wealthier households far likelier to use the Internet than poorer ones regardless of their age. For example, Statscan reports that 47.5 per cent of Canadians aged 65 and over use the Internet (up from 40.2 in 2010), the biggest jump of any age group. However, there is a major divide in Internet use based on household income. While 66.7 per cent of households over the age of 65 in the top half of income use the Internet, that number drops to only 28.5 per cent for the poorest quartile of households.
The ongoing battle over the competitiveness and pricing of Canadian wireless services also plays an increasingly important role in Internet use. Internet wireless use is easily the fastest growing way for Canadians to access the Internet - 48.6 per cent of Canadians used Internet wireless services in 2012, nearly double the 2010 rate of 26.2 per cent.
Wireless Internet use features the largest difference by age of any type of access as 84.2 per cent of Canadians between the ages of 16 to 24 have used Internet wireless services, but that drops to 8.7 percent of Canadians aged 65 and over.
Household income is major factor for wireless Internet use. While 67.8 per cent of all Canadians in the top income quartile have used Internet wireless services, only 26.4 per cent of the bottom income quartile have done so.
The digital divide in wireless Internet use remains consistent across different age groups. The 16 to 24 demographic are the heaviest users of wireless Internet services, but the gap between the rich and poor remains: 88.3 per cent of the top quartile use wireless Internet services, but that declines to 26.4 per cent for the poorest quartile. There is also a major gap among older Canadians with 27.3 per cent of the top income quartile of Canadians aged 65 and over using wireless Internet services compared to only 2.5 per cent of the bottom quartile.
Given the digital divide, it is unsurprising that poorer Canadians rely more heavily on public access points such as libraries to use the Internet. The biggest user of library Internet access are Canadians aged 16 to 24, where 21.5 per cent used Internet library access in 2012 (the overall figure for Canadians was 9.7 per cent). When broken down by income, the number increases to 26.8 per cent for the poorest Canadians in that demographic, compared to 16.3 per cent for the wealthiest in that group.
If the government is serious about ensuring that all Canadians can benefit from the Internet, the Statscan data confirms that it must focus on finding solutions to provide affordable access to lower income Canadians. This may include fostering a more competitive wireless marketplace, working with Internet providers to develop programs targeting lower income earners, and rethinking the decision to cancel community access programs that remain valuable to many Internet users.
Then I propose a solution: using Kickstarter-like mechanisms to fight corruption: a website where victims of everything from patent trolls and copyright trolls, all the way up to pollution and robo-signing foreclosures, can find each other and pledge to fund a group defense, rather than paying off the bandits.
It's the Magnificent Seven business model: one year, the villagers stop paying the robbers, and use the money to pay mercenaries to fight the robbers instead.
What would a Kickstarter for Class Action Defense look like? Imagine if you could pledge, ‘‘I promise that I will withhold license fees/settlements for [a bad patent/a fraudulent copyright fee/a copyright troll’s threat] as soon as 100 other victims do the same.’’ Or 1,000. Or 10,000. Hungry, entrepreneurial class-action lawyers could bid for the business, offer opinions on the win-ability of the actions, or even start their own kickstarters (‘‘I promise I will litigate this question until final judgment if 1,000 threat-letter recipients promise to pay me half of what the troll is asking.’’)
Basically, it’s the scene where the villagers decide to stop paying the bandits and offer the next round of protection money to the Magnificent Seven to defend them.
There’s a lot to like about this solution. Once a troll is worried about a pushback from his victims, he’ll need to raise a war-chest, and since the only thing a troll makes is lawsuits, he’ll start sending more threats. Those threats will attract more people to the kickstarter, raising its profile and its search-rank. The more the troll wriggles, the more stuck he becomes.
We could spin out a thousand possible variations on this – a pro-rated refund if the lawyer wins without spending all the money, or preferential shares to early entrants; a traditional plaintiff’s side class-action sister-project that goes after trolls who’ve lost their suits and uses their defeat as the basis for stripping them of every asset to their underwear and redistributing it to victims (and lawyers, of course – though that’s not a bad outcome, since it means lawyers might be willing to spend more on the ‘‘defense’’ part of the action in the hopes of a bigger payout down the line).
These two young fellows are brothers from Palo Alto who've set out to produce a series of videos explaining the technical ideas in my novel Little Brother, and their first installment, explaining Bayes's Theorem, is a very promising start. I'm honored -- and delighted!
Other key sites
Digital Copyright Canada BLOG