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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The post Net Neutrality Alive and Well in Canada: CRTC Crafts Full Code With Zero Rating Decision appeared first on Michael Geist.

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

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

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

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

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

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

 

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

 

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

 

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

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

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

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

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

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

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

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

 

Canadian Heritage Slide Presentation, obtained under ATIP

 

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

The post The Reel Story: Why Changing How We Measure a “Canadian Film” is Long Overdue appeared first on Michael Geist.

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

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

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

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

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

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

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

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

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

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

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

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

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

The post The Internet as Cable: The Risk of Treating Telecommunications as Cultural Policy appeared first on Michael Geist.

Copyright Reform in Canada and Beyond

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

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

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

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

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

The post Copyright Reform in Canada and Beyond appeared first on Michael Geist.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Restrictions on Data Localization and Data Transfers

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

 

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

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

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

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

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

Trade in Services

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

 

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

Regulatory Transparency

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Routing Detours: Can We Avoid Nation-State Surveillance?

Freedom to Tinker - Tue, 2016/08/30 - 18:44
Since 2013, Brazil has taken significant steps to build out their networking infrastructure to thwart nation-state mass surveillance.  For example, the country is deploying a 3,500-mile fiber cable from Fortaleza, Brazil to Portugal; they’ve switched their government email system from Microsoft Outlook to a state-built system called Expresso; and they now have the largest IXP […]

Differential Privacy is Vulnerable to Correlated Data — Introducing Dependent Differential Privacy

Freedom to Tinker - Fri, 2016/08/26 - 09:57
[This post is joint work with Princeton graduate student Changchang Liu and IBM researcher Supriyo Chakraborty. See our paper for full details. — Prateek Mittal ] The tussle between data utility and data privacy Information sharing is important for realizing the vision of a data-driven customization of our environment. Data that were earlier locked up […]

Language necessarily contains human biases, and so will machines trained on language corpora

Freedom to Tinker - Wed, 2016/08/24 - 16:32
I have a new draft paper with Aylin Caliskan-Islam and Joanna Bryson titled Semantics derived automatically from language corpora necessarily contain human biases. We show empirically that natural language necessarily contains human biases, and the paradigm of training machine learning on language corpora means that AI will inevitably imbibe these biases as well. Specifically, we look at […]

Security against Election Hacking – Part 2: Cyberoffense is not the best cyberdefense!

Freedom to Tinker - Thu, 2016/08/18 - 09:00
State and county election officials across the country employ thousands of computers in election administration, most of them are connected (from time to time) to the internet (or exchange data cartridges with machines that are connected).  In my previous post I explained how we must audit elections independently of the computers, so we can trust the […]

Security against Election Hacking – Part 1: Software Independence

Freedom to Tinker - Wed, 2016/08/17 - 09:27
There’s been a lot of discussion of whether the November 2016 U.S. election can be hacked.  Should the U.S. Government designate all the states’ and counties’ election computers as “critical cyber infrastructure” and prioritize the “cyberdefense” of these systems?  Will it make any difference to activate those buzzwords with less than 3 months until the […]

Can Facebook really make ads unblockable?

Freedom to Tinker - Thu, 2016/08/11 - 17:18
[This is a joint post with Grant Storey, a Princeton undergraduate who is working with me on a tool to help users understand Facebook’s targeted advertising.] Facebook announced two days ago that it would make its ads indistinguishable from regular posts, and hence impossible to block. But within hours, the developers of Adblock Plus released an […]

The workshop on Data and Algorithmic Transparency

Freedom to Tinker - Wed, 2016/08/10 - 09:57
From online advertising to Uber to predictive policing, algorithmic systems powered by personal data affect more and more of our lives. As our society begins to grapple with the consequences of this shift, empirical investigation of these systems has proved vital to understand the potential for discrimination, privacy breaches, and vulnerability to manipulation. This emerging […]

A response to the National Association of Secretaries of State

Freedom to Tinker - Tue, 2016/08/09 - 08:11
Election administration in the United States is largely managed state-by-state, with a small amount of Federal involvement. This generally means that each state’s chief election official is that state’s Secretary of State. Their umbrella organization, the National Association of Secretaries of State, consequently has a lot of involvement in voting issues, and recently issued a […]

Supplement for Revealing Algorithmic Rankers (Table 1)

Freedom to Tinker - Fri, 2016/08/05 - 05:35
Table 1: A ranking of Computer Science departments per csrankings.org, with additional attributes from the NRC assessment dataset. Here, the average count computes the geometric mean of the adjusted number of publications in each area by institution, faculty is the number of faculty in the department, pubs is the average number of publications per faculty […]

Revealing Algorithmic Rankers

Freedom to Tinker - Fri, 2016/08/05 - 05:35
By Julia Stoyanovich (Assistant Professor of Computer Science, Drexel University) and Ellen P. Goodman (Professor, Rutgers Law School) ProPublica’s story on “machine bias” in an algorithm used for sentencing defendants amplified calls to make algorithms more transparent and accountable. It has never been more clear that algorithms are political (Gillespie) and embody contested choices (Crawford), […]

Election security as a national security issue

Freedom to Tinker - Wed, 2016/08/03 - 13:11
We recently learned that Russian state actors may have been responsible for the DNC emails recently leaked to Wikileaks. Earlier this spring, once they became aware of the hack, the DNC hired Crowdstrike, an incident response firm. The New York Times reports: Preliminary conclusions were discussed last week at a weekly cyberintelligence meeting for senior officials. […]
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