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The Trouble With the TPP, Day 47: Hits and Misses in the Agricultural Sector

Michael Geist Law RSS Feed - Wed, 2016/03/09 - 10:06

If the Trouble with the TPP is that it is unlikely to generate significant economic growth or create many new jobs (some studies predict job losses), where are the benefits? The agricultural sector is often pointed to as a likely winner with the expectation that more open markets will result in Canadian farmers selling more beef, pork, canola, and other products. Those predictions may prove true, but based on what the Standing Committee on International Trade has heard, there are many other agricultural sectors that stand to lose as a result of the deal.

The dairy industry is the most obvious sector that projects losses in the billions of dollars. Indeed, the Conservative government promised billions of taxpayer dollars as compensation for those losses. When the dairy industry appeared before the committee, it made it clear that it expects the Liberal government to honour the same payout, arguing that the compensation – which amounts to $150,000 per dairy farmer – is part of the agreement (even if not actually part of the TPP text).

In fact, the compensation extends to other supply managed sectors such as the chicken industry, which is also projecting losses due to the TPP (and CETA). In all, these various sectors expect $2.4 billion from an income guarantee program, $1.5 billion from quota-value guarantee program, $450 million for a processor modernization program, and $15 million for a market development initiative.

In other sectors, the impact of the TPP is modest at best. For example, the Canadian Vintners’ Association appeared before the committee to discuss the impact on the Canadian wine industry. With low tariffs already in place in several TPP countries, the impact will be modest unless Vietnam suddenly starts drinking a lot of Canadian wine. According to the CVA, the more important issue, which is not solved by the TPP, are domestic restrictions that limit sales of wine between provinces:

we’re working with one hand behind our back, actually two hands behind our back because we don’t have free trade within our own country. We can only ship wine – British Columbia, Manitoba and Nova Scotia are the only three provinces that have opened up their borders since the unanimous bill passed in the House of Commons and approved in the Senate in 2012. If we had those types of things in place, we can grow our domestic market and therefore take advantage of these agreements. With reduction in tariffs, New Zealand and Australia will continue to grow their market share here, and if we can’t compete, we won’t benefit domestically and we won’t benefit from the TPP.

In fact, the CVA noted that the U.S. opened up the wine market between states, which resulted in many smaller wineries increasing their domestic “exports”, thereby preparing them for a global market. Since that has not happened in Canada, even the CVA acknowledges that most Canadian wine producers are not ready to take advantage of the TPP.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard, Day 42: The Risks of Investor-State Dispute Settlement, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong, Day 44: Canada’s Terrible ISDS Track Record, Day 45: Limited Economic Gains for Canada, Day 46: Limited Employment Gains or Even Job Losses for Canada)

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The Trouble With the TPP, Day 46: Limited Employment Gains or Even Job Losses for Canada

Michael Geist Law RSS Feed - Tue, 2016/03/08 - 10:02

Yesterday’s Trouble with the TPP post canvassed the economic studies released to date on the agreement, finding that the evidence suggests that the economic gains for Canada are modest at best. In addition to efforts to assess the economic growth impact of the TPP, some studies have also tried to estimate its effect on employment.

The Tufts University study referenced yesterday has a specific analysis on job growth. It anticipates that Canada will lose jobs as a result of the TPP, projecting a loss of 58,000 jobs in Canada. That ranks the third highest in the TPP, but the highest of all countries on a per capita basis.

Unifor, the union which represents Canadian auto workers at the big three, estimates that the TPP will place 20,000 automotive jobs at riskNot everyone agrees with that estimate, but other studies have concluded that recent Canadian free trade agreements are leading to lost automotive jobs. Unifor is scheduled to appear before the Standing Committee on International Trade today alongside Ford Canada, which has also criticized the TPP.

In fact, when even the Peterson Institute study, which is currently the most optimistic about the TPP, projects no job growth from the agreement (it argues that the agreement will create job churn in the U.S. and impose adjustment costs on some workers), politicians should be paying attention to concerns that the TPP will create significant costs but do little if anything to spur job growth in Canada.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard, Day 42: The Risks of Investor-State Dispute Settlement, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong, Day 44: Canada’s Terrible ISDS Track Record, Day 45: Limited Economic Gains for Canada)

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The Trouble With the TPP, Day 45: Limited Economic Gains for Canada

Michael Geist Law RSS Feed - Mon, 2016/03/07 - 11:50

The Trouble with the TPP series has spent the past two months examining dozens of provisions in the agreement and their implications for Canadians and Canadian law. Yet beyond the new restrictions, missed opportunities, and business uncertainty, lies real doubt about the actual gains from the TPP. While certain groups were prepared to support the TPP sight unseen, the evidence continues to mount that there are very limited Canadian benefits from the deal. The next few days will consider the economic and employment implications of the TPP.

At a recent Standing Committee on International Trade hearing on the TPP, Brian Kingston, a Vice-President with the Business Council of Canada (formerly the Canadian Council of Chief Executives) was asked if there were any negatives about the deal. Incredibly, Kingston responded that he could not think of any, a position that was rebutted in the next hearing as agricultural groups talked about billions in losses. Further, Kingston was also asked about studies on the TPP. He indicated that the main study he had seen was from the Peterson Institute.

The Peterson Institute study is the most pro-TPP study released to date, yet even it projects only modest gains for Canada. For Canada, the gain by 2025 is estimated at 0.9 percent, one of the weakest gains among TPP countries. That places the estimate $22 billion in growth, which is not insignificant, but still relatively small given the size of the Canadian economy. But even those projections are open to doubt as critics argue that the study uses a faulty economic model and assumes untrue facts.

The Peterson Institute study paints the rosiest picture of TPP benefits for Canada. Dan Ciuriak, the former deputy chief economist at Foreign Affairs and International Trade Canada, has estimated the net gain at only 0.1 percent of GDP by 2035 or $2.7 billion. In a forthcoming study, Ciuriak’s numbers are even lower for Canada’s GDP growth due to the TPP. Ciuriak wrote in the Globe and Mail this weekend that “if there was ever an agreement destined to confirm the law of unintended consequences, it’s probably the TPP, by virtue of its overweening ambition and its flawed process.”

Those low numbers are echoed in a study from Tufts University that finds similar weak growth for Canada from the TPP.  That study estimates growth in ten years for Canada of 0.28 percent, third lowest in the TPP and virtually insignificant in terms of decade-long economic growth. Another study on the TPP’s economic impact, this one from the World Bank, ranks Canada as likely to  have some of the lowest growth rates from the deal among TPP countries.

In fact, some of these studies may understate the negative broader economic impact of the TPP. For example, the New Zealand government has conducted studies on the economic losses that will accrue due to intellectual property reforms such as copyright term extension and pharmaceutical protections.  For New Zealand alone, the costs run in the tens of millions of dollars for copyright. If those numbers are replicated in countries like Canada and Japan (which are also required to extend the term of copyright under the TPP), the price tag could run into the hundreds of millions of dollars.

There is certainly need for more study (and I am happy to post links to other reports), but the analysis to date suggests very limited economic gains for Canada in the TPP. That may be unsurprising given that Canada already has trade deals with nearly half of the TPP, but it should leave the government wondering whether all the costs and regulatory upheaval are worth the effort.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard, Day 42: The Risks of Investor-State Dispute Settlement, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong, Day 44: Canada’s Terrible ISDS Track Record)

The post The Trouble With the TPP, Day 45: Limited Economic Gains for Canada appeared first on Michael Geist.

Giving Pick-and-Pay a Chance: Why Skinny Basic Is Just the Start of More Competitive TV Pricing

Michael Geist Law RSS Feed - Mon, 2016/03/07 - 10:36

Canadians appear to have become so accustomed to an uncompetitive cable and satellite market typified by frequent price increases and restrictive options that many are failing to recognize the arrival of greater consumer choice. Last week’s launch of the new $25 basic “skinny” cable packages mandated by the Canadian Radio-television and Telecommunications Commission (CRTC) left many underwhelmed, as the patchwork of channels and hidden fees seemingly confirmed critics’ claims that consumers would be better off sticking with their existing, pricier packages.

My weekly technology law column (Toronto Star version, homepage version) acknowledges that there is plenty of room to criticize the cable and satellite companies. They have no intention of actively promoting the cheaper options and some seem determined to make them as unattractive as possible. However, the reality is that the combination of basic television service and the pick-and-pay model that must be offered by the end of the year is changing the marketplace for the better.

Start with the new cable and satellite basic packages, which differ significantly between companies. Cable companies such as Rogers and Shaw offer both Canadian and U.S. channels in their basic packages, making them viable choices for those looking for limited service that can be supplemented with streaming options such as Netflix. Bell, on the other hand, has loaded its package with French-language channels and none of the popular U.S. channels, thereby ensuring that there will be few takers among English-speaking households. Consumers looking for a cheaper option have a real (and obvious) choice.

Yet focusing solely on the value of a basic package misses most of the story.

First, the arrival of the basic package has sparked a re-examination of television packages more broadly, with the companies tweaking their more expensive alternatives to make them more attractive. For consumers who were thinking of cutting the cord, the changes may be just enough to stick with conventional cable or satellite services for now.

Second, the emergence of some product differentiation on even basic services should spark greater consumer willingness to shop around. Television services have long been exceptionally difficult for consumers to compare given the wide variability in packages and prices. The new CRTC requirements establish a level playing field, enabling consumers to finally make apples-to-apples comparisons among similarly priced basic packages as well as assessing the incremental costs of adding more channels or specialized services.

Third, the biggest benefits of the new system will come later this year when the full pick-and-pay requirements kick-in. Critics warn that consumers will be shocked by the high prices of some channels. However, early indications suggest that consumers interested in combining a basic service with some additional sports, news, or family-oriented channels will save hundreds of dollars a year when compared to bigger packages. Those larger packages obviously offer access to far more channels, but many consumers may place a very low value on channels they have never bothered to watch.

In fact, the choice is not limited to cable packages or pick-and-pay options. With numerous streaming alternatives, a growing number of consumers will rely on Netflix (or Shomi or CraveTV) for much of their entertainment programming and some may turn to sports streaming subscriptions directly from the leagues.

While not every company will offer an identical package, the CRTC’s mandated requirements have finally cracked open the door to competition and comparison shopping for television services. The new market will still take some time to unfold, but the benefits are likely to be felt by all consumers, whether content with basic services or willing to pay for access to hundreds of channels.

The post Giving Pick-and-Pay a Chance: Why Skinny Basic Is Just the Start of More Competitive TV Pricing appeared first on Michael Geist.

Why Skinny Basic Is Just the Start of More Competitive TV Pricing

Michael Geist Law RSS Feed - Mon, 2016/03/07 - 10:29

Appeared in the Toronto Star on March 7, 2016 as Skinny TV Packages Jump Start Competition

Canadians appear to have become so accustomed to an uncompetitive cable and satellite market typified by frequent price increases and restrictive options that many are failing to recognize the arrival of greater consumer choice. Last week’s launch of the new $25 basic “skinny” cable packages mandated by the Canadian Radio-television and Telecommunications Commission (CRTC) left many underwhelmed, as the patchwork of channels and hidden fees seemingly confirmed critics’ claims that consumers would be better off sticking with their existing, pricier packages.

There is plenty of room to criticize the cable and satellite companies. They have no intention of actively promoting the cheaper options and some seem determined to make them as unattractive as possible. However, the reality is that the combination of basic television service and the pick-and-pay model that must be offered by the end of the year is changing the marketplace for the better.

Start with the new cable and satellite basic packages, which differ significantly between companies. Cable companies such as Rogers and Shaw offer both Canadian and U.S. channels in their basic packages, making them viable choices for those looking for limited service that can be supplemented with streaming options such as Netflix. Bell, on the other hand, has loaded its package with French-language channels and none of the popular U.S. channels, thereby ensuring that there will be few takers among English-speaking households. Consumers looking for a cheaper option have a real (and obvious) choice.

Yet focusing solely on the value of a basic package misses most of the story.

First, the arrival of the basic package has sparked a re-examination of television packages more broadly, with the companies tweaking their more expensive alternatives to make them more attractive. For consumers who were thinking of cutting the cord, the changes may be just enough to stick with conventional cable or satellite services for now.

Second, the emergence of some product differentiation on even basic services should spark greater consumer willingness to shop around. Television services have long been exceptionally difficult for consumers to compare given the wide variability in packages and prices. The new CRTC requirements establish a level playing field, enabling consumers to finally make apples-to-apples comparisons among similarly priced basic packages as well as assessing the incremental costs of adding more channels or specialized services.

Third, the biggest benefits of the new system will come later this year when the full pick-and-pay requirements kick-in. Critics warn that consumers will be shocked by the high prices of some channels. However, early indications suggest that consumers interested in combining a basic service with some additional sports, news, or family-oriented channels will save hundreds of dollars a year when compared to bigger packages. Those larger packages obviously offer access to far more channels, but many consumers may place a very low value on channels they have never bothered to watch.

In fact, the choice is not limited to cable packages or pick-and-pay options. With numerous streaming alternatives, a growing number of consumers will rely on Netflix (or Shomi or CraveTV) for much of their entertainment programming and some may turn to sports streaming subscriptions directly from the leagues.

While not every company will offer an identical package, the CRTC’s mandated requirements have finally cracked open the door to competition and comparison shopping for television services. The new market will still take some time to unfold, but the benefits are likely to be felt by all consumers, whether content with basic services or willing to pay for access to hundreds of channels.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Why Skinny Basic Is Just the Start of More Competitive TV Pricing appeared first on Michael Geist.

The Trouble With the TPP, Day 44: Canada’s Terrible ISDS Track Record

Michael Geist Law RSS Feed - Fri, 2016/03/04 - 11:21

The Trouble with the TPP has discussed how the agreement’s investor-state dispute settlement provisions do not meet the standard set by the Canadian government in CETA, do not address key concerns over policy making as illustrated by the Bilcon case, and raise enormous risks as demonstrated by the ongoing Eli Lilly dispute over Canadian patent law. This final ISDS post points another problem for Canada with ISDS rules: our track record is terrible.

According to the UNCTAD dispute resolution database, Canadian investors lodged 39 claims between 1998 and 2016 using ISDS provisions found in trade agreements and bilateral investment treaties. With all those claims, Canada has only won three times: a 2013 mining case against Kyrgyzstan, a 2011 mining case against Mongolia, and a 2009 mining case against Venezuela. The record is even worse in claims involving NAFTA as Apotex lost in 2008, 2009, and 2012; Canadian Cattlemen lost in 2005,  Grand River lost in 2004, Glamis Gold lost in 2003, Thunderbird lost in 2002, ADF lost in 2000, Methanex lost in 1999, Mondev lost in 1999, and Loewen lost in 1998. Canadian companies just doesn’t seem to win NAFTA claims.

By contrast, Canada has lost multiple NAFTA cases. These include Myers in 1998, Pope & Talbot in 1999, and Mobil Investments in 2007. Moreover, there is ongoing risk associated with current cases. In addition to the Eli Lilly case, CEN Biotech is seeking nearly $5 billion in a NAFTA case filed against Canada last year over a refusal to grant a medical marijuana licence, Windstream Energy is demanding US$522 million over suspension of a wind farm project, and Mesa Power wants almost $1 billion for government measures related to renewable energy. Osgoode Hall law professor Gus Van Harten has examined the impact of the wins and losses, concluding that the ISDS provisions contribute to a regulatory chill.

Further, Van Harten has tracked the size and wealth of foreign investors who have brought claims and received compensation due to ISDS. His key findings:

Our main findings are that the beneficiaries of ISDS, in the aggregate, have overwhelmingly been companies with more than USD1 billion in annual revenue – especially extra-large companies with more than USD10 billion – and individuals with more than USD100 million in net wealth. ISDS has produced monetary benefits primarily for those companies or individuals at the expense of respondent states. Incidentally, we also found that extra-large companies’ success rates in ISDS, especially at the merits stage, exceeded by a large margin the success rates of other claimants. It was evident that ISDS has also delivered substantial monetary benefits for the ISDS legal industry.

The data helps explain why the U.S. is a major proponent of ISDS provisions, but makes it difficult to see why the Canadian government would support TPP ISDS rules given that history tells us it will do little for Canadian companies and may result in enormous liability for taxpayers.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard, Day 42: The Risks of Investor-State Dispute Settlement, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong)

The post The Trouble With the TPP, Day 44: Canada’s Terrible ISDS Track Record appeared first on Michael Geist.

Apple/FBI: Freedom of speech vs. compulsion to sign

Freedom to Tinker - Fri, 2016/03/04 - 10:00
This week I signed the Electronic Frontier Foundation’s amicus (friend-of-the-court) brief in the Apple/FBI  iPhone-unlocking lawsuit.  Many prominent computer scientists and cryptographers signed: Josh Aas, Hal Abelson, Judy Anderson, Andrew Appel, Tom Ball (the Google one, not the Microsoft one), Boaz Barak, Brian Behlendorf, Rich Belgard, Dan Bernstein, Matt Bishop, Josh Bloch, Fred Brooks, Mark Davis, […]

What Your ISP (Probably) Knows About You

Freedom to Tinker - Fri, 2016/03/04 - 02:27
Earlier this week, I came across a working paper from Professor Peter Swire—a highly respected attorney, professor, and policy expert.  Swire’s paper, entitled “Online Privacy and ISPs“, argues that ISPs have limited capability to monitor users’ online activity. The paper argues that ISPs have limited visibility into users’ online activity for three reasons:  (1) users […]

omitting facts, ignoring logic

Fair Duty by Meera Nair - Thu, 2016/03/03 - 23:18

Yesterday John Degen (poet, novelist and executive director of The Writers’ Union of Canada) presented his views concerning copyright and education via The Hill Times. The publication is behind a paywall, making it less than easy to acquire, read, or rebut. But if one is trying to lobby Parliament, the venue of publication is appropriate.

Degen is entitled to his opinions, but does readers a disservice by the distortion of history he presented. There might have been reasonable entertainment value from the diatribe, had the issue not involved the intellectual property rights of generations to come. Our parliamentarians could be forgiven for initially thinking that the copyright amendments of 2012 jettisoned the entirety of Section 3.1 (rights of copyright owners), exclusively to the benefit of teachers and students.

But may we assume that any Member of Parliament, in the face of such a hysterical outburst, as opposed to considered judgments from the Supreme Court of Canada, will investigate the rights and wrongs of the matter? That investigation would lead to the following facts:

  • Copyright is a system of limited rights, whereby the limits ensure balance is struck between the rights of copyright owners and rights of copyright users.
  • Fair dealing is one means by which limits are exercised; fair dealing is not piracy.
  • Fair dealing allows for some unauthorized uses of copyrighted material, subject to a fairness analysis.
  • That analysis was shaped by the Supreme Court of Canada in 2004; the justices have since walked-the-walk on multiple occasions.
  • In 2012, the range of fair dealing was expanded from only the options of private study and research, to include education, parody and satire.
  • Every Supreme Court decision supporting fair dealing occurred before the 2012 amendments took effect. Meaning, the inclusion of education was superfluous to establishing balance between owners’ rights and users’ rights.
  • Educational institutions make significant payments for purchased or licensed materials; the difference now is that such payments tend to flow directly to copyright owners and not to a middle-man collective entity such as Access Copyright.
  • Perfunctory announcements of declines in author’s incomes are, no more than perfunctory! One has to look at the larger context of any situation. A favorite report pointed to by The Writers’ Union (and Access Copyright) is a creation by PricewaterhouseCoopers which paints a dire picture of declining income to the educational textbook industry, with the seeming conclusion of an impending loss of quality educational content. However, the analysis within the report omits such basic details as the advent of quality content via open education resources and the global economic mayhem which began in 2008 and ensured individuals/institutions had less dollars to spend for years thereafter. Details are here.
  • The process of setting tariffs by the Copyright Board is complex, and educational institutions themselves are puzzled at the lack of involvement by national representatives. But to attribute a spiteful motive to Canadian education as a whole is hardly worthy of anyone who claims to be a standard bearer for the preservation of Canadian culture.

Some weeks ago Degen’s colleague Heather Menzies also presented her interpretation of history with respect to educational uses of copyrighted material; my rebuttal is here. It appears that the Writers’ Union of Canada is eager to wrap copyright in the maple leaf and hope that Canadians will overlook the absence of facts or logic.

 


The Trouble With the TPP, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong

Michael Geist Law RSS Feed - Thu, 2016/03/03 - 10:52

The last two Trouble with the TPP posts have focused on the agreement’s investor-state dispute settlement provisions, noting that they do not meet the standard set by the Canadian government in CETA and do not address key concerns over policy making as raised in the Bilcon case. The risks associated with ISDS rules are far more than just the subject of academic or legal debate. Experience shows that the cases can place billions of tax dollars at risk, threatening to wipe out the supposed “gains” created by trade deals.

The current legal battle between the Canadian government and international pharmaceutical giant Eli Lilly provides an illustration of what can happen when ISDS rules go wrong. In the early 1990s, the company applied for patent protection in Canada for two chemical compounds, olanzapine and atomoxetine. The company had already obtained patents over the compounds, but asserted that it had evidence to support new uses for the compounds that merited further protection.  The Canadian patent office granted the patents based on the content in the applications, but they remained subject to challenge.

Both patents ultimately were challenged on the grounds that there was insufficient evidence at the time of the applications to support the company’s claims. The Federal Court of Canada agreed, invalidating both patents. Eli Lilly proceeded to appeal the decision to the Federal Court of Appeal and later to the Supreme Court of Canada. The company lost the appeals, as the courts upheld the decision to invalidate the patents.

Under most circumstances, that would conclude the legal story as nine Canadian judges reviewed Eli Lilly’s patent applications and ruled that they failed to meet the standards for patentability. Yet in June 2013, the company served notice that it planned to use the ISDS provisions in the North American Free Trade Agreement to claim that in light of the decisions, Canada is not compliant with its patent law obligations under the treaty. As compensation, Eli Lilly is seeking $500 million in damages.

The Eli Lilly claim is winding its way through the legal process – submissions from both sides are in alongside several amicus briefs (including one from the Canadian Chamber of Commerce that the Canadian government has flagged due to concerns about its independence) – but the implications are being felt far beyond the specifics of the case.

If the pharmaceutical giant succeeds, it will have effectively found a mechanism to override the Supreme Court of Canada and hold Canadian taxpayers liable for hundreds of millions in damages in the process. The cost to the health care system could be enormous as the two Eli Lilly patents may be the proverbial tip of the iceberg and claims from other pharmaceutical companies could soon follow. That is the real world danger of the TPP’s ISDS provisions, which not only limit the regulatory and policy authority of governments, but also open the door to massive taxpayer liability along the way.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard, Day 42: The Risks of Investor-State Dispute Settlement)

The post The Trouble With the TPP, Day 43: Eli Lilly Is What Happens When ISDS Rules Go Wrong appeared first on Michael Geist.

Government Raises Doubts About Independence of Canadian Chamber of Commerce in Patent Case

Michael Geist Law RSS Feed - Thu, 2016/03/03 - 10:37

The Canadian Chamber of Commerce has been one of the most vocal supporters of the TPP and intellectual property reform. It recently waded into the case that most clearly crystallizes the dangers of trade and IP in Canada: the Eli Lilly claim for compensation from Canadian taxpayers for hundreds of millions of dollars due to a pair of patent law decisions. Most patent experts believe that Canada has a strong defence, yet that has not stopped the foreign pharmaceutical company from seeking $500 million in damages.

Last month, several groups submitted amicus briefs to the dispute resolution panel, including one from the Canadian Chamber of Commerce (there is also a submission from CIPPIC and the Centre for Intellectual Property Policy). The Chamber suggests that declining spending in research and development may be due to legal uncertainty, despite years of declining research and development expenditures by international pharmaceutical companies in Canada that predates the Eli Lilly issue. The brief saves the money quote until the last paragraph:

These failures to invest can be linked to failures in the intellectual property framework that deviates from international norms. Canada needs new strategies to foster Canadian patent generation and internationally competitive pools of Canadian intellectual property. But first, Canadian business needs the certainty that is derived from international patent law frameworks.

The Canadian Chamber of Commerce’s decision to impliedly side with Eli Lilly against the Canadian government will not come as a surprise given that the company is a Chamber member (one of several close connections between the lobby group and international pharmaceutical companies). Yet for the Government of Canada, the submission set off alarm bells and raised concerns about its independence:

The disclosure provided by the Canadian Chamber of Commerce leaves undefined the nature and extent of the relationship between the applicant and Claimant. While its application discloses that Claimant “is a member in good standing of the Canadian Chamber of Commerce,” it does not disclose the extent of financial contributions made by Claimant to the organization. Nor does it disclose the role that Claimant plays in developing and informing Canadian Chamber of Commerce policy positions for the organization’s “active[] and consistent[] engage[ment] with government and the media on issues related to international trade and intellectual property.”
 
Furthermore, the application does not disclose that Claimant is currently sponsoring a Canadian Chamber of Commerce policy project on regulatory barriers to trade. The project, which will result in a report that “draw[s] on input from members, sponsors and regulatory experts,” purports to answer questions like: “How can we make sure our trade agreements result in real regulatory harmonization and mutual recognition?” The project’s co-sponsors include Claimant, IMC (formerly Rx&D, and another applicant for amicus status in this proceeding), and another life sciences organization of which counsel for Claimant, Gowlings, is a member. These facts should concern the Tribunal as to whether the applicant and Claimant are truly independent and whether they have a unique perspective that would assist the Tribunal.

The Tribunal ultimately admitted the Chamber of Commerce’s submission, but the government’s obvious concern about its independence – along with its implicit support for a $500 million ruling against Canadian taxpayers – should resonate within government on the intellectual property policy and trade files for many years to come.

The post Government Raises Doubts About Independence of Canadian Chamber of Commerce in Patent Case appeared first on Michael Geist.

The Trouble With the TPP, Day 42: The Risks of Investor-State Dispute Settlement

Michael Geist Law RSS Feed - Wed, 2016/03/02 - 10:56

The TPP’s investor-state dispute settlement provisions have rightly attracted considerable attention given the risks that come with a process that gives companies the right to sue governments for hundreds of millions of dollars. Yesterday’s post discussed why the TPP ISDS rules do not meet the Canadian government’s own standard for dispute settlement as reflected in the Canada – EU Trade Agreement. The CETA provisions include a clear affirmation of governmental power to regulate, an appellate process, and rules designed to ensure fairness and non-bias in settlement cases. The TPP does not contain equivalent provisions.

The Trouble with the TPP’s ISDS provisions extend beyond the absence of policy freedom and fairness safeguards. The Columbia Center on Sustainable Development has published one of the most exhaustive examinations of the problems with the TPP’s ISDS rules, noting that the deal entrenches, rather than reforms, a flawed system. While the failure to address government regulation and procedural fairness consistent with the standards articulated by International Trade Minister Chrystia Freeland tops the list, the report also points to other issues that strike close to home from a Canadian perspective.

One of the biggest problems with recent ISDS cases involves the question of whether the breach of an investor’s “expectations” gives rise to a minimum standard of treatment claim. A NAFTA lawsuit launched by Bilcon against the Canadian government highlights the problem. Bilcon wanted to develop a quarry near Digby Neck in Nova Scotia but was stopped due to an environmental assessment that concluded that the project was likely to cause significant and adverse environmental effects. Bilcon claimed that the assessment conducted by the Canadian government and the Province of Nova Scotia was arbitrary, discriminatory, and unfair. Using the ISDS rules, it sought over $100 million in damages. A split panel ruled in favour of the company. The CCSD report summarizes the problem with the decision:

the majority of the tribunal indicated that interference with investors’ economic “expectations”, standing alone, would not violate the FET [fair and equitable treatment] obligation but was a factor to take into account in determining whether there had been a breach of that treaty provision. Applying that approach, the tribunal gave disproportionate legal significance to the allegedly “reasonable expectations” of the investors that had been generated by non-binding statements of certain Canadian officials and general promotional materials designed to help the region attract new mining investments. Those “reasonable expectations”, the tribunal determined, were later frustrated by federal and provincial environmental approvals processes, which ultimately resulted in decisions by federal and provincial officials to deny the investors their requested environmental permits. That the governments’ actions frustrated the investors’ “legitimate expectations” led the tribunal to conclude that Canada violated the NAFTA’s FET obligation.

My colleague Professor Don McRae served on the same panel, issuing a stinging dissent that warned the decision “will create a chill on the operation of environmental review panels” “import[] a damages remedy that is not available under Canadian law” and intrude “into the environmental public policy of the state.” Unfortunately, the TPP does not adequately address these concerns. Instead, it keeps many of the same problems in place and threatens to expand the risk by bringing ISDS rules to a wider scope of companies and countries. The CCSD report highlights many other weaknesses of the TPP ISDS provisions and in posts later this week, I’ll discuss how the Canadian experience beyond Bilcon demonstrates that policy sovereignty and billions of dollars may be at risk.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled, Day 41: ISDS Rules Do Not Meet the Canada’s New “Gold” Standard)

The post The Trouble With the TPP, Day 42: The Risks of Investor-State Dispute Settlement appeared first on Michael Geist.

The Trouble With the TPP, Day 41: ISDS Rules Do Not Meet Canada’s New “Gold” Standard

Michael Geist Law RSS Feed - Tue, 2016/03/01 - 11:20

Chrystia Freeland, Canada’s International Trade Minister, yesterday unveiled the final legal draft of the Canada – EU Trade Agreement. While CETA is still awaiting translation, Freeland indicated that she hopes the agreement will come into force in 2017.  The lengthy delay in arriving at a final legal draft arose from ongoing European opposition to investor-state dispute settlement provisions that many fear may limit governmental regulatory power and lead to expensive corporate lawsuits. The CETA text unveiled yesterday features some notable changes to the ISDS rules, with Canada largely acquiescing to European demands.

The ISDS changes raise in CETA at least two points that are relevant for TPP purposes. First, claims that completed trade agreements are non-negotiable and cannot be changed simply isn’t true. CETA was completed years ago, yet political demands for changes to the ISDS rules led all parties to go back to the bargaining table to work out a new system. While Freeland called the changes “modifications”, the reality is that a major aspect of the deal was re-worked in face of European protests. If elements of CETA can be reworked, there may be ways to re-do aspects of the TPP.

Second, CETA and the TPP are no longer consistent with respect to investor-state dispute settlement. The Trouble with the TPP series will spend the next several posts examining the ISDS issue, but for the moment it is notable that Freeland has characterized CETA as a “gold plated” trade deal, arguing that it best reflects Canadian interests. Moreover, TPP proponents have also welcomed the CETA changes, noting that the earlier version raised legitimacy concerns. For example, Lawrence Herman told the Globe and Mail:

I’ve thought for some time that it’s not acceptable for decisions on matters of national policy to be decided by ad hoc arbitrators, where there was no avenue of appeal.

There is room to debate whether the CETA model solves ISDS concerns (many groups argue it does not), but there is no doubt that the TPP ISDS rules fall well short of even the CETA standard. This raises an important question of how the Canadian government can support TPP ISDS rules when it is now on record as supporting significant changes to those rules in the CETA context.

For example, Article 8.9 of CETA now includes an explicit provision on government’s right to regulate that was not included in the initial consolidated text:

1.    For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity.
2.     For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section.

Freeland spoke in support of this provision, noting:

The core notion of having a dispute-resolution process is not to supersede that right to regulate – it is to ensure that governments don’t discriminate against foreign investors. That is the core idea behind trade deals.

Freeland added in another interview:

We strengthened the right of governments to regulate. This is something that I am very proud and pleased to do. The sovereignty of democratically-elected governments to regulate, including in essential areas like the environment and labour, is very important. And we know it’s something that Canadians believe, as they should, and something that Europeans believe in too.

The problem is that the TPP does not meet the standard Freeland has set in CETA. Article 9.15 of the TPP contains a much narrower provision:

Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.

The CETA provision identifies a far broader range of policy objectives than the TPP and clarifies that modification of laws is not a breach of an obligation. Conversely, the TPP is limited to measures “otherwise consistent with this Chapter” which, as one study notes:

That article provides no real protection. Rather, it simply notes that the government can regulate in the public interest as long as, when doing so, the government complies with the Investment Chapter’s requirements regarding treatment of foreign investors and investments. The words, “otherwise consistent with this Chapter,” thus negate any protections otherwise purported to be given under that article.

The TPP creates a real risk of limiting countries’ ability to regulate in their own national interest without facing the risk of multi-million or billion dollar lawsuits. The Canadian government has now endorsed an approach in CETA that tries to limit that risk, but faces the same problem in the TPP.

CETA also establishes an appeal system within the ISDS rules, something Herman points to with approval. The appellate tribunal starts with CETA but there is a provision (Article 8.29) that promises to pursue a multilateral appellate tribunal. By contrast, the TPP does not contain an appeal mechanism. At best, Article 9.22 (11) states that in the event that an appellate mechanism is developed in the future, Parties “shall consider” whether TPP awards will even be subject to that mechanism.

There are many other TPP ISDS shortcomings that will be examined over the next few days.  However, the new ISDS system in CETA along with the government’s clear endorsement of that approach sends an unmistakable signal about its views on the appropriate mechanism to resolving investor disputes and the need to preserve the right to regulate, to create appellate mechanisms, and to institute provisions that better guarantee fairness. The Trouble with the TPP is that it does not come close to meeting the standard that the Canadian government itself has now set for resolving investor disputes.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions, Day 40: Mobile Roaming Promises Unfulfilled)

The post The Trouble With the TPP, Day 41: ISDS Rules Do Not Meet Canada’s New “Gold” Standard appeared first on Michael Geist.

Why the FBI’s Apple iPhone Demands Are Rotten to the Core

Michael Geist Law RSS Feed - Tue, 2016/03/01 - 10:45

The U.S. government’s attempt to invoke a centuries-old law to obtain a court order to require Apple to create a program that would allow it to break the security safeguards on the iPhone used by a San Bernardino terrorist has sparked an enormous outcry from the technology, privacy, and security communities.

For U.S. officials, a terrorism related rationale for creating encryption backdoors or weakening user security represents the most compelling scenario for mandated assistance. Yet even in those circumstances, companies, courts, and legislatures should resist the urge to remove one of the last bastions of user security and privacy protection.

My weekly technology law column (Toronto Star version, homepage version) argues that this case is about far more than granting U.S. law enforcement access to whatever information remains on a single password-protected iPhone. Investigators already have a near-complete electronic record: all emails and information stored on cloud-based computers, most content on the phone from a cloud back-up completed weeks earlier, telephone records, social media activity, and data that reveals with whom the terrorist interacted. Moreover, given the availability of all of that information, it seems likely that much of the remaining bits of evidence on the phone can be gathered from companies or individuals at the other end of the conversation.

As Apple and other technology companies have recognized, scratch below the surface and you find a case that is fundamentally about establishing legal precedent that can be wielded to require companies to establish backdoor access to devices, break encryption, or weaken security measures. In fact, despite claims that it is a one-time request, there are already reports of at least nine other cases involving Apple in the U.S. alone.

The problem with such a precedent extends beyond the “slippery slope” argument. Creating security vulnerabilities leaves everyone more vulnerable since there is no mechanism to limit weakened security measures or backdoors to the “good guys.” If the U.S. government can get it, so too can other foreign governments or criminal organizations.

Moreover, the case enhances the role of government and law enforcement in the design of security safeguards within consumer devices. Ironically, the U.S. government has recognized the danger of its approach in other venues. For example, it has pointed with approval to provisions in the Trans Pacific Partnership that purport to restrict the ability of governments to impose conditions on products that contain encryption, claiming those restrictions will allow companies and individuals to “use the cybersecurity and encryption tools they see fit, without arbitrary restrictions that could stifle free expression.”

That is a laudable goal, yet the TPP contains its own backdoor provision that allows law enforcement to use the courts to require access to unencrypted communications. The Apple case highlights how the TPP will ultimately do little to address the issue, with the U.S. example paving the way for foreign governments to demand similar access to otherwise secure devices.

While the Apple case may take months to resolve, it has already placed the spotlight on the near-complete erosion of privacy within our modern communication system. Telecom transparency reports have revealed how law enforcement is able to use our everyday communications to create detailed maps of our movements and communications habits. Our reliance on cloud computing services for email, photographs, and document storage grants centralized access to data that previously only resided on harder-to-access  personal computers.

The last line of defence may be our portable devices, where access can be secured through passwords, data can be encrypted from prying eyes, and security settings can thwart would-be hackers. Yet should Apple lose this case, those safeguards will be gone, escalating fears that in today’s Internet-enabled, smartphone world, privacy is gone too.

The post Why the FBI’s Apple iPhone Demands Are Rotten to the Core appeared first on Michael Geist.

Apple iPhone Unlock Standoff Rotten to the Core

Michael Geist Law RSS Feed - Tue, 2016/03/01 - 10:36

Appeared in the Toronto Star on February 28, 2016 as Apple iPhone Unlock Standoff Rotten to the Core

The U.S. government’s attempt to invoke a centuries-old law to obtain a court order to require Apple to create a program that would allow it to break the security safeguards on the iPhone used by a San Bernardino terrorist has sparked an enormous outcry from the technology, privacy, and security communities.

For U.S. officials, a terrorism related rationale for creating encryption backdoors or weakening user security represents the most compelling scenario for mandated assistance. Yet even in those circumstances, companies, courts, and legislatures should resist the urge to remove one of the last bastions of user security and privacy protection.

This case is about far more than granting U.S. law enforcement access to whatever information remains on a single password-protected iPhone. Investigators already have a near-complete electronic record: all emails and information stored on cloud-based computers, most content on the phone from a cloud back-up completed weeks earlier, telephone records, social media activity, and data that reveals with whom the terrorist interacted. Moreover, given the availability of all of that information, it seems likely that much of the remaining bits of evidence on the phone can be gathered from companies or individuals at the other end of the conversation.

As Apple and other technology companies have recognized, scratch below the surface and you find a case that is fundamentally about establishing legal precedent that can be wielded to require companies to establish backdoor access to devices, break encryption, or weaken security measures. In fact, despite claims that it is a one-time request, there are already reports of at least nine other cases involving Apple in the U.S. alone.

The problem with such a precedent extends beyond the “slippery slope” argument. Creating security vulnerabilities leaves everyone more vulnerable since there is no mechanism to limit weakened security measures or backdoors to the “good guys.” If the U.S. government can get it, so too can other foreign governments or criminal organizations.

Moreover, the case enhances the role of government and law enforcement in the design of security safeguards within consumer devices. Ironically, the U.S. government has recognized the danger of its approach in other venues. For example, it has pointed with approval to provisions in the Trans Pacific Partnership that purport to restrict the ability of governments to impose conditions on products that contain encryption, claiming those restrictions will allow companies and individuals to “use the cybersecurity and encryption tools they see fit, without arbitrary restrictions that could stifle free expression.”

That is a laudable goal, yet the TPP contains its own backdoor provision that allows law enforcement to use the courts to require access to unencrypted communications. The Apple case highlights how the TPP will ultimately do little to address the issue, with the U.S. example paving the way for foreign governments to demand similar access to otherwise secure devices.

While the Apple case may take months to resolve, it has already placed the spotlight on the near-complete erosion of privacy within our modern communication system. Telecom transparency reports have revealed how law enforcement is able to use our everyday communications to create detailed maps of our movements and communications habits. Our reliance on cloud computing services for email, photographs, and document storage grants centralized access to data that previously only resided on harder-to-access  personal computers.

The last line of defence may be our portable devices, where access can be secured through passwords, data can be encrypted from prying eyes, and security settings can thwart would-be hackers. Yet should Apple lose this case, those safeguards will be gone, escalating fears that in today’s Internet-enabled, smartphone world, privacy is gone too.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Apple iPhone Unlock Standoff Rotten to the Core appeared first on Michael Geist.

The Trouble With the TPP, Day 40: Mobile Roaming Promises Unfulfilled

Michael Geist Law RSS Feed - Mon, 2016/02/29 - 10:49

The Trouble with the TPP series has identified several instances where promises about deal’s benefits for consumers prove to be largely illusory upon closer examination of the actual text. These include weak privacy protections, anti-spam standards, and e-commerce rules. The same over-promise and under-deliver TPP approach arises with respect to consumer mobile roaming.  The TPP contains a large telecom chapter, which some governments used to promote as a key pro-consumer feature of the agreement. For example, the Australian government claimed:

Australia has successfully advocated for a provision that addresses, for the first time, the high cost of International Mobile Roaming.

The Canadian government used similar language in its TPP summary, stating that the TPP “includes, for the first time in a trade agreement, a dedicated article addressing the high cost of international mobile roaming.”

Given the high cost of roaming and the desire to create greater trade and movement among TPP countries, meaningfully addressing roaming costs would indeed be a positive aspect of the deal. In fact, the OECD’s Council on International Mobile Roaming Services, which includes most TPP members, has already issued recommendations that raise the possibility of wholesale and even retail price regulation to address the issue.

So how does the TPP address the high cost of roaming?  It doesn’t. Article 13.6 covers mobile international roaming and starts with the following provision:

The Parties shall endeavour to cooperate on promoting transparent and reasonable rates for international mobile roaming services that can help promote the growth of trade among the Parties and enhance consumer welfare.

The “shall endeavour to cooperate” is the weakest of the TPP requirements as it is not a requirement at all. After that, there are a series of provisions that are optional on pricing along with rules requiring transparency where a country chooses to institute price regulation. That is about it.  There is nothing that places countries on the road toward better mobile pricing nor any mandate to ensure more competitive pricing. The TPP governments may have included an international roaming provision, but it stops well short of actually addressing the high cost as the Canadian and Australian governments promised in their summary documents.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards, Day 39: Quiet Expansion of Criminal Copyright Provisions)

The post The Trouble With the TPP, Day 40: Mobile Roaming Promises Unfulfilled appeared first on Michael Geist.

Quebec Court Dismisses Copibec Copyright Class Action Against Laval University

Michael Geist Law RSS Feed - Mon, 2016/02/29 - 10:05

The recent Copyright Board ruling involving Access Copyright and copying at K-12 schools affirmed the fairness of educational copying practices across Canada. While writers groups continue to mislead with claims that the board’s decision springs from 2012 legislative reforms, the reality is that the current approach is grounded in several Supreme Court of Canada decisions. Writers groups and Access Copyright have repeatedly sought to downplay those decisions, yet it has been obvious to most observers that there is nothing unfair about copying up to 10% of a work for purposes such as research, private study, criticism, and education.

With repeated losses at the Copyright Board and the Supreme Court of Canada, copyright collectives have adopted another legal strategy: lawsuits and class actions against universities. The Access Copyright lawsuit against York University is ongoing, but the Quebec counterpart – an attempted class action filed by Copibec against Laval University in November 2014 -  hit a legal wall last week. Copibec had been seeking millions in compensation after Laval shifted to an approach based on fair dealing and transactional licenses. According to a release from Copibec, the court refused to authorize the class action. Copibec says it plans to appeal, but the decision suggests that the legal alternatives for the copyright collectives is rapidly diminishing.

The post Quebec Court Dismisses Copibec Copyright Class Action Against Laval University appeared first on Michael Geist.

The Trouble With the TPP, Day 39: Quiet Expansion of Criminal Copyright Provisions

Michael Geist Law RSS Feed - Fri, 2016/02/26 - 11:22

The past two Trouble with the TPP posts have focused on the disconnect between the TPP and Canadian copyright law which raises the possibility that the Canadian digital lock rules may not be consistent with the TPP.  In addition to those concerns, the Electronic Frontier Foundation recently identified a subtle change that was added during the “legal scrub”. The change involved a provision on applying criminal procedures and penalties in cases of willful copyright infringement on a commercial scale. The version released in November stated:

With regard to copyright and related rights piracy provided for under paragraph 1, a Party may limit application of this paragraph to the cases in which there is an impact on the right holder’s ability to exploit the work, performance or phonogram in the market.

The new version posted after the legal scrub changed the words “application of this paragraph” to “application of this subparagaph”. EFF argues that the change has enormous implications:

What does this surreptitious change from “paragraph” to “subparagraph” mean? Well, in its original form the provision exempted a country from making available any of the criminal procedures and penalties listed above, except in circumstances where there was an impact on the copyright holder’s ability to exploit their work in the market.

In its revised form, the only criminal provision that a country is exempted from applying in those circumstances is the one to which the footnote is attached – namely, the ex officio action provision. Which means, under this amendment, all of the other criminal procedures and penalties must be available even if the infringement has absolutely no impact on the right holder’s ability to exploit their work in the market. The only enforcement provision that countries have the flexibility to withhold in such cases is the authority of state officials to take legal action into their own hands.

Government officials have not responded to requests for clarification. If this is correct, however, the TPP extends criminal provisions to copyright cases in a far broader manner than previously envisioned.

(prior posts in the series include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards, Day 12: Restrictions on Data Localization Requirements, Day 13: Ban on Data Transfer Restrictions, Day 14: No U.S. Assurances for Canada on Privacy, Day 15: Weak Anti-Spam Law Standards, Day 16: Intervening in Internet Governance, Day 17: Weak E-commerce Rules, Day 18: Failure to Protect Canadian Cultural Policy, Day 19: No Canadian Side Agreement to Advance Tech Sector, Day 20: Unenforceable Net Neutrality Rules, Day 21: U.S. Requires Canadian Anti-Counterfeiting Report Card, Day 22: Expanding Border Measures Without Court Oversight, Day 23: On Signing Day, What Comes Next?, Day 24: Missing Balance on IP Border Measures, Day 25: The Treaties With the Treaty, Day 26: Why It Limits Canadian Cultural Policies, Day 27: Source Code Disclosure Confusion, Day 28: Privacy Risks from Source Code Rules, Day 29: Cultural Policy Innovation Uncertainty, Day 30: Losing Our Way on Geographical Indications, Day 31: Canadian Trademark Law Overhaul, Day 32: Illusory Safeguards Against Encryption Backdoors, Day 33: Setting the Rules for a Future Pharmacare Program, Day 34: PMO Was Advised Canada at a Negotiating Disadvantage, Day 35: Gambling With Provincial Regulation, Day 36: Why the TPP Could Restrict Uber Regulation, Day 37: Breaking Digital Locks for Personal Purposes, Day 38: Limits on Canadian Digital Lock Safeguards)

The post The Trouble With the TPP, Day 39: Quiet Expansion of Criminal Copyright Provisions appeared first on Michael Geist.

OMDC Response Confirms Minister Coteau’s Music Fund Claims Inaccurate

Michael Geist Law RSS Feed - Fri, 2016/02/26 - 10:23

My column/post this week on the Ontario Music Fund’s lack of transparency and exaggerated impact has elicited numerous private responses from people frustrated by the program (some public too) as well as some comments from the Ontario Media Development Corporation. Speaking to FYI Music, OMDC unsurprisingly defend the program and its results. However, the comments appear to confirm that claims about the impact of the program by Michael Coteau, the Minister of Tourism, Culture, and Sport, were inaccurate.

Coteau spoke to Karen Bliss, Billboard’s Canadian correspondent, in April 2015 about the Ontario Music Fund. As part of the interview, Coteau was asked about auditing or vetting where the money was spent:

The reports that we get from our agency [the OMDC] that have come from the companies that actually received money in the previous year, the overall numbers that we get from our agency is that there’s been a 60 percent growth in the area that they were funded, 2000 jobs have been created and over $24 million in new revenue have been brought forward in that sector.

Those comments led me to seek out the source of Coteau’s claims. I filed an access to information request with the Ministry seeking three things:

1.    All records of reports sent to the Minister or Minister’s office reporting on the first year of the Ontario Music fund and its recipients.
2.    All records that provide  the basis for growth, job estimates, and new revenue data cited by the Minister.
3.    All reports submitted by funded recipients from the first year of the Ontario Music Fund.

The Ministry responded that there were no records for #1 and #2. When I inquired how that could be, I was told:

OMDC provided the final reports from grant recipients to MTCS (item #3) and nothing more.  Any analysis and reports to the Minister’s Office (items #1 & 2) were done by MTCS (not OMDC).

OMDC later advised that the reports in #3 would not be disclosed due to exemptions under the Act, but they worked to provide de-identified data which indicated the creation of 263 full-time jobs. The OMDC may now be citing part-time jobs to reach the 620 job mark. Regardless, both figures are well below Coteau’s claim of creating 2,000 new jobs.

As for the remainder of the OMDC response to FYIMusic, officials simply seek to assure the public that they have a rigorous internal review and that the applications contain sensitive commercial information. That issue is currently the subject of an appeal, but the claim that there can be no disclosure of grant objectives, planned activities or planned outcomes appears to go well beyond safeguarding sensitive commercial information.

In fact, some of the recipients are not commercial entities at all. Millions of dollars from the Ontario Music Fund has been allocated to non-commercial groups who do not compete in the market and their reasons for withholding information often has little to do with commercial concerns. For example, one applicant is currently arguing:

such information could be used by detractors or ‘policy foes’ to attempt to draw attention to shortcomings in the applicant’s achievement of intended goals, or to expose and publicly ridicule the applicant’s business aspirations.

It is difficult to see how this qualifies as a commercial concern or a reasonable justification to withhold information on a government program that has doled out tens of millions of dollars. Yet months after the program launch and the information request, basic details on how Ontario Music Fund money was spent remains a secret.

The post OMDC Response Confirms Minister Coteau’s Music Fund Claims Inaccurate appeared first on Michael Geist.

fair use denied — part V

Fair Duty by Meera Nair - Fri, 2016/02/26 - 10:16

The conclusion to fair use denied (otherwise known as when wildest dreams collide with the creative process). For earlier installments see Part I, Part II,  Part III, and Part IV.

V. factor four and some last words

(4) The effect of the use upon the potential market for or value of the copyrighted work.

In the later twentieth century, this factor was deemed the most important element of a fairness analysis, with the peculiar logic that if a work could have been licensed, then it should have been licensed. A case which facilitated this avenue of thought is American Geophysical v. Texaco, whereby copying journal articles for the purpose of research was deemed infringement.[1] At appeal, the Court of Appeals for the Second Circuit affirmed the district court decision and emphasized that the presence of a means of licensing was reason to deny fair use.[2] As the Second Circuit represents the geographic region of New York, which is home to the core of American publishing, the decision carried further weight.

It is fitting then, that for nearly ten years, the Second Circuit has been instrumental in supporting a more nuanced interpretation of fair use. For instance, in Bill Graham Archives v. Dorling-Kindersley (2006) the Court showed a conspicuous disinterest in adding to licensing revenue even when mechanisms of licensing existed:

“It is indisputable that, as a general matter, a copyright holder is entitled to demand a royalty for licensing others to use its copyrighted work, and that the impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor.” (citations omitted). We have noted, however, that “were a court automatically to conclude in every case that potential licensing revenues were impermissibly impaired simply because the secondary user did not pay a fee for the right to engage in the use, the fourth fair use factor would always favor the copyright holder,” (citations omitted). …  Accordingly, we do not find a harm to BGA’s license market merely because DK did not pay a fee for BGA’s copyrighted images. [3]

In Authors Guild, Inc. v. HathiTrust (2013), the Court was emphatic that market impact was very precisely defined: “…  it is important to recall that the Factor Four analysis is concerned with only one type of economic injury to a copyright holder: the harm that results because the secondary use serves as a substitute for the original work….”[4]  More recently in Author’s Guild v. Google, Inc. (2015) which entailed unauthorized displays of snippets of copyrighted works, the Court sought to evaluate market harm by asking if the copying is: “done in a manner that results in widespread revelation of sufficiently significant portions of the original as to make available a significantly competing substitute (p.34).”[5]

Returning to the current situation, the excerpt used in this instance of play could not serve as a meaningful substitute for the song as a whole. If a complainant was to take the view that sanctioning the reproduction of snippets of works creates the conditions whereby an entire song could be assembled, I am happy to concede this point. Yes, it is theoretically possible. However, it would require a fair amount of serendipity—that a sufficient number of creators all favoured Wildest Dreams and have managed, between the group, to capture the entire 235 seconds of the song through independently chosen snippets. Yet even if such an extraordinary accumulation of creative instinct bore this fruit, it remains that the song as a whole is already sanctioned for enjoyment through vevo.com, making the assembly from snippets wholly unnecessary.

To be clear, using this snippet of Wildest Dreams, has no effect upon the market for Wildest Dreams. And having carried out the four-factor analysis, as required by American statutory law, the use of the snippet of Wildest Dreams in the playful manner described is consistent with fair use.

Last words

While the historical foundation and current structure of American copyright aims to secure the right to copy, neither constitutional imperative nor statutory language has deemed copyright a means of absolute control. It seems fitting then, to return to a cogent reminder offered by Fred von Lohmann in 2008: “Copyright law strives to strike a balance between creating adequate (not maximal) incentives for the creation and distribution of expressive works, while also ensuring widespread public access to and enjoyment of such works.”[6]

As stated at the outset, the degree to which Taylor Swift may, or may not, have any influence over the management of copyright in the production of songs that she performs, is unknown. But as a performer that prizes dialogue with her fans, perhaps Swift might consider using her influence to modify enforcement of copyright, to at least comply with the directive of the Ninth Circuit that fair use must be given consideration before the issuance of a takedown/strike notice.

Quite apart from observing the law, such consideration would help safeguard a realm of play that is necessary to bring forth future generations of song writers, musicians, artists, directors and performers. Something that, we can only hope, Swift would support.

 

Notes

[1] In 1978, publishers in the United States formed the Copyright Clearance Center and began marketing licenses for photocopy reproduction in workplace settings. Lawsuits followed shortly thereafter; “Regular reward notices began appearing in periodicals, offering monetary compensation to those who could furnish conclusive evidence of unauthorized copying. In 1985, numerous CCC-member scientific and technical journal publishers sued Texaco, a company that purchased a CCC photocopy license but, according to the CCC, had failed to accurately report the extent of its photocopying.” See Nicole B. Cásarez, Deconstructing the Fair Use Doctrine: The Cost of Personal and Workplace Copying after American Geophysical Union v. Texaco, Inc. (1996) 6 (2) Fordham Intell. Prop. Media & Ent. L.J. 640 at 644.

[2] “Despite Texaco’s claims to the contrary, it is not unsound to conclude that the right to seek payment for a particular use tends to become legally cognizable under the fourth fair use factor when the means for paying for such a use is made easier;” see American Geophysical Union v. Texaco, Inc., 60 F.3d 913 (2d Cir. 1994) at 931-32.  Rather than attempt further appeal, Texaco opted to settle; as a consequence, the licensing regime instituted by the Copyright Clearance Center of the United States was aggressively promoted; see Cásarez above note 1, at 649.

[3] Bill Graham Archives v. Dorling-Kindersley (2006), 448 F.3d 605 (2d Circ.2006),

[4] Authors Guild, Inc. v. HathiTrust 755 F.3d at 97.

[5] Author’s Guild v. Google, Inc., No. 13-4829 (2d Cir. 2015)

[6] Fred von Lohmann, “Fair Use as Innovation Policy,” 2008 Berkeley Technology Law Journal 23 (2) 1 at 10.


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