Thoughts on C-32 committee meeting 19

Meeting 19 was at 1 Wellington Street, rather than centre block. Gordon Brown (Leeds—Grenville) was back as chair after having been away due to a death in the family. While sending my condolences to him, I also want to send out a "get well soon" to Dan McTeague (Pickering—Scarborough East) who despite having pneumonia was at the meeting and in the house today (participating as much as he could given the situation).

Up in the morning as witnesses was representatives from Bell, Rogers and Telus. While all three of these companies have vertical integration from content creation, broadcasting, BDU's, and voice/phone service, their focus was largely on their roll as ISPs. The focus of the discussion with MPs was on intermediary liability, and the Notice-and-Notice regime that has been articulated in Bills C-60, C-61 and the current C-32.

A little troubling was questions from Liberals's Marc Garneau and Pablo Rodriguez demanding that the ISPs provide data on the effectiveness of the regime. I believe this is a bit premature for a few reasons.

  • We don't yet have common criteria for judging success of the regime. In my mind Notice-and-Notice is part of a graduated response (no, not 3-strikes) system where some more formalised communication can happen between alleged copyright holders and alleged infringers. Given the complexity of Canadian copyright law, many Canadians are inadvertent infringers and it is very helpful to provide an inexpensive communications system between copyright holders and people who may not realize that there is anything wrong with what they are doing.
  • While ISPs have been offering a free communications services to copyright holders on a voluntary basis, until there is legislation and regulation it is impossible to streamline this process. While Rogers did offer some vague numbers (only 5% of customers ever had any notices sent, only 1/3 of those ever saw a second, and only 1/3 that received a second ever received a third - or less than half of a percent of customers receiving three notices), I suspect these are also anecdotal and not the type of disclosure that may be part of the relevant regulation.
  • After passing a bill that created a notice-and-notice regime, there is a need to create regulation such that notices can be automated. This requires discipline in the market, which in this case means requiring that copyright holders wishing to have their notices communicated do so in a reasonable manner.
  • We should not concern ourselves with whether the 95% who have never been sent a notice may or may not be infringing. It is useless to worry about unreported hypothetical infringements, and there must be some onus on copyright holders to take this minimum step to protect their own rights. Far too much of the alleged harm from infringement comes down to anecdotal evidence and biased studies with methodologies that have holes you can drive trucks through. We need to start to realise that a vast majority of Canadians are honourable people. I'm far more sceptical about whether the 5% are bad actors than whether the 95% are good law abiding citizens.

I believe that if any infringing activity can be deterred without needing to take people to court, the system is a success. On the flip side, any system that allows for extrajudicial punishment (IE: remedies without having to go to court) for something as complicated as copyright where lawyers often disagree on how to interpret clauses would be a sign of failure. The Notice-and-notice regime with appropriate regulation strikes the right balance. A notice-and-take-down or notice-and-terminate regime are entirely unreasonable.

While I oppose a three-strikes and your out system, I also support a graduated response. I believe we have the beginnings of this in C-32.

Notice-and-notice provides the first level response: it is extremely cheap for everyone involved, and makes sure that anyone infringing knows that they are infringing.

A reduction of statutory damages for first and second-time individual infringers provides a second level response. This avoids the outrageous situation of cases seeking massive statutory damages against children, single mothers, dead people or other such things. This is a situation that requires court intervention to determine if an activity really was infringing.

The third-level response would be for people who are repeat infringers, where infringement is determined by the courts. This would be where the reduction of statutory damages would no longer be available.

It is unfortunate that the Liberal and Block MPs who spoke weren't thinking this way. Then again, they may all be distracted by the increasingly likely that we will be headed into an election by the end of the week. This may have been the last or second-last Bill C-32 committee meeting.

In the afternoon there was representatives of the Canadian Federation for the Humanities and Social Sciences (CFHSS), Canadian Library Association (CLA) and Canada Council for the Arts (CCA).

Both CFHSS and CLA spoke about how any legal protection for TPMs should be limited to activities that would otherwise be infringing. This was picked up by Mr. Angus who spoke about how we are setting up a two tiered system where we have one set of rules and laws for tha analog world and a different one for the digital world. Obviously this is of concern to me, given the TPM section of C-32 can be (and likely would be if passed) abused to circumvent contract, e-commerce, privacy, trade, consumer protection and property law. Contrary to how the Conservatives have been selling it, these provisions would accomplish the opposite of creating a well mannered free marketplace of legitimate products and services.

There was some discussion about moving away from the narrow criteria for Fair Dealing and moving to a "such as" model such as used in the United States. This would allow us to focus on the fairness test.

The Supreme Court of Canada has identified six non-exhaustive factors to assist a court in determining whether a specific use is fair: (1) the purpose of the dealing; (2) the character of the dealing; (3) the amount of the dealing; (4) alternatives to the dealing; (5) the nature of the work; and (6) the effect of the dealing on the work.

In the United States their Fair Use regime (§ 107. Limitations on exclusive rights: Fair use) says:

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — 

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

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

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

(emphasis added)

Looking at these, it should be noted that there is considerable overlap in the non-exhaustive criteria used to determine whether a use is fair. The suggestion that continues to come from some of the lobby groups that using the language "such as" or adding the word "education" or "teaching (including multiple copies for classroom use)" would open the floodgates for uncompensated uses in ways that would not be allowed under US law doesn't appear to be based in the language of the laws or in any court interpretations I have been made aware of.

My suggestion for fair dealing reform was to use the "such as" language and include the 6 non-exhaustive factors within the Copyright Act itself. I believe this is in everyone’s best interests, including (and maybe especially) those concerned that clearly unfair activities might somehow be considered fair.

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Graduated responses and statutory damages come at a price

Russell, would the graduated system you support require a court conviction, an out of court settlement, or merely a DMCA style accusation before moving between graduations?

Statutory damages should be, not just reduced, but eliminated for all but the most egregious repeat offenders, and any fines paid should go to the state, NOT the copyright holders, otherwise there is simply too much incentive to practise the kind of copyright extortion we are seeing more of in the States.

Copyright holders should be required (within a reasonable time) to actually make their products available through legitimate, untied channels in this country before being able to enforce their copyright. Such rules might actually get them to negotiate in good faith with companies like Google and Netflics.

That combined with a ban on global market segmentation through DRM would make many more people such as myself feel that graduated responses and statutory damages were fair and reasonable.

Do I need to clarify language?

This is the language I used for the second-level where there was reduced statutory damages:

"This is a situation that requires court intervention to determine if an activity really was infringing."

Based on your question, I suspect I'll have to use stronger and more clear language next time.

I believe that any scenario that requires a remedy of any type (take-down, damages, etc) must go through a court. Copyright is not the black-and-white issue that some of the more extreme in the debate make it out to be. This is why I not only support the style of graduated response system we're discussing, but also putting a priority on "clarifying and simplifying the act".

I agree with the emotions you expressed otherwise. The "blame the audience" mentality is very wrong-headed and will only decrease revenues to creators. I have also imagined a system that only offered copyright protection for works that were made reasonably available in the marketplace. It could be seen as a radical expansion of the existing fair use/dealings regimes that looked closely at "the effect of the use upon the potential market for or value of the copyrighted work." If the copyright holder decided not to participate in the relevant market, then the use would be considered fair.

It would then only be an infringement if someone violates a contract with reasonable terms, or who simply didn't pay when reasonable payment was demanded.

I don't think we are anywhere near having a conversation like this with federal policy makers. They have generally been convinced that the problem is the morality of Canadian citizens, and not flaws in the law and business practises of many of the relevant exclusive rights dependant sectors.

Related, I received my paper copy of Media Piracy in Emerging Economies from Lulu -- haven't read it yet, but Geist has written about it. While the title focused on so-called emerging economies, the basic "not available for sale at a reasonable price" problem isn't specific to majority-world countries.

As to DRM, I think I've been clear that I'm opposed to any "right of non-interoperability", or the legalisation or legal protection of non-owner locks (on content, media, hardware, software, or anything else for that matter).

There are many non-technical people don't understand that DRM is dependant on dishonest non-owner locks. If the law made it clear that non-owner locks were prohibited, then these non-technical people would be free to attempt to implement their science-fiction without causing major problems in the laws and practises for those of us living in the real world.

Free/Libre and Open Source Software (FLOSS) consultant.

statutory damages

Statutory damages are intended to be compensatory, not punitive, so they can't go to the state. The state has no right which is infringed. What you suggest is essentially a change from a private right to a public right, enforced through a criminal or quasi-criminal regime. I don't think that's an improvement for anyone.

Certain rights holders would like to have their cake and eat it too, by transferring the enforcement obligation onto the state while retaining the benefits for themselves. I'm not in favour of that--although there is potentially some benefit to making infringement suits subject to crown discretion, to weed out meritless or de minimis complaints--but neither would I favour a wholesale transfer of the regime to public law.

The last thing we need is for the state to regulate what is sufficient use to ground a right. Consider that they'd probably base it on commercial exploitation. Would Free Software, and the like, even qualify for protection in such a model?

Statutoty damages ARE significantly punitive

"Statutory damages are intended to be compensatory, not punitive"

This is not entirely true.

From section 38.1 of the copyright act entitled "Statutory damages", the ability of a judge to reduce the amount of statutory damages awarded is regulated by 38.1(5) which states:

In exercising its discretion under subsections (1) to
(4), the court shall consider all relevant factors, including
(a) the good faith or bad faith of the defendant;
(b) the conduct of the parties before and during the
proceedings; and
(c) the need to deter other infringements of the copyright
in question.

Requiring the fine to be high enough to deter, reads as punitive to me. It certainly has nothing to do with compensating for loses.

Good point

Keith makes a very good point, though - as rightsholders continue to argue to move the enforcement burden onto the state, we should be arguing that the obvious corollary is that any penalties should also be paid to the state, not the rightsholder. If copyright infringement really is a moral, rather than purely financial, issue, they should be happy to accept that deal...


True, I should have said "primarily intended". Legal theory generally distinguishes deterrence as a remedial principle from both compensation and punishment, but deterrence is certainly an intended effect.

In theoretical terms, the deterrent function of a monetary award is generally presumed to be independent of who receives the payment. So, in private law it makes sense to discuss the deterrent value of damage awards to plaintiffs, even where those awards are considered to be aimed primarily at compensation of harms. Equally, one can talk about the deterrent function of fines, or other public law penalties. It doesn't really have much impact on the decision as between remedial models.

But you raise a good point. Much of the rhetoric around statutory damages does relate to deterrence. If that is the primary policy objective, rather than punishment or compensation, then we have some difficulties. First, as you note, there's no obvious reason why we should allow a private windfall. But it is also not obvious that there is a public harm that needs to be deterred. There's no public expenditure that flows from the harm, such as the health costs that might flow from negligence causing physical injury, for example.

One is left with the proposition that the public harm flows from the reduced private incentive to create. But there is no corresponding public right. We can't (or at least I think it would be disastrous to try to) assert a public right over private creations. The right, whatever it is, must be primarily a private one. Consequently, the onus to enforce it, and any benefit from doing so, should vest in the rightsholders. I think this is so, even where deterrence is the primary goal.