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1 Osgoode Forum Bill C-60 and Copyright Reform in Canada-The Issues, Players and Moving Forward Barry B. Sookman October, 25 2005 bsookman@mccarthy.ca 3676179v5

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2 Challenges Posed by Balancing "Copyright", it has been rightly declared, "is one of the great balancing acts of the law. Many balls are in play and many interests are in conflict." To the traditional problems of resolving such conflicts must be added, in the present age, the difficulties of applying the conventional model of copyright law to subject matters for which that model is not wholly appropriate; adjusting it to the "implications of the online environment"; and adapting it to international pressures that may reflect economic and legal interests that do not fit comfortably into the local constitutional and legal environment. Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 Per Kirby J. (para. 169)

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3 Players and Interests The framing of legislation which governs trading monopolies requires the making of difficult policy choices. There are competing constituencies and a delicate balance has to be struck between them. The inventor or designer wants to be rewarded for his skill, genius or efforts. If he sells his invention or design to an entrepreneur, that entrepreneur naturally wants the best possible monopoly he can get. It should be easy to enforce, and hard or better still, impossible to challenge. So that is one constituency. The public wants to be able to buy products manufactured to a high standard at the lowest possible prices and from a diversity of sources. That is another constituency. The manufacturer or trader who supplies the public wants to be able to compete in the market free from red tape and other people's monopolies. That is yet another constituency. One and the same person may belong to more than one constituency. A designer wants the best possible protection for his designs. But he may create his designs using copyright-protected CAD software whose high price he laments. Oakley Inc v Animal Ltd & Ors [2005] EWHC 210 (Ch) (17 February 2005)

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4 Traditional View of Politics of Compromise Much modern legislation regulating an industry reflects a compromise reached between, or forced upon, powerful and competing groups in the industry whose interests are likely to be enhanced or impaired by the legislation. In such cases, what emerges from the legislative process is frequently not a law motivated solely by the public interest. It reflects wholly or partly a compromise that is the product of intensive lobbying, directly or indirectly, of Ministers and parliamentarians by groups in the industry seeking to achieve the maximum protection or advancement of their respective interests. The only purpose of the legislation or its particular provisions is to give effect to the compromise. Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 per McHugh J. (para. 126)

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5 New Players Are Being Drawn Into the Debate The tension between the two values is the subject of this case, with its claim that digital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file- sharing software to download copyrighted works. This very breadth of the software's use may well draw the public directly into the debate over copyright policy and the indications are that the ease of copying songs or movies using software like Grokster's and Napster's is fostering disdain for copyright protection MGM v Grokster (US Sup. Ct. June 27, 2005) per Souter J. Are the flames being fanned?

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6 New Players Have Radically Transformed The Politics of Copyright I believe the DMCA is good legislation that remains necessary today, and I don't believe copyright owners should or will regret its enactment. But I have heard it said by people whose views I respect that in the current political environment - only five years after enactment - it would be impossible to enact the DMCA today. Whatever you think of the DMCA and I think highly of it - there is no question that it's very controversial and has caught the attention of the public, and - however misunderstood it might be it is not viewed favorably by most. Marybeth Peters Copyright Enters the Public Domain April 29, 2004 Journal, Copyright Society of the USA Vol 51, No 4 Summer 2004

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7 Is Rebalancing the Law Bad? Section 1201 does represent a rebalancing of power between copyright owners and users Taking the last pre-DMCA balance as somehow normatively compelled ignores the reality that copyright balances are highly contingent and contextual. The more useful question is, regardless of past allocations of power, whether the new balance makes sense for authors, owners, {intermediaries}and users. Jane C. Ginsburg, Legal Protection of Technological Measures Protecting Works of Authorship: International Obligations and the US Experience, Columbia Public Law & Legal Theory Working Papers, Paper 0593, 2005

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8 Is Rebalancing the Law Bad? The definition of TPM in s 10(1) of the Copyright Act was one of a number of changes to the balances hitherto observed in Australian copyright law, influenced by international treaty obligations and by conclusions apparently accepted by the Executive Government and the Parliament. In such circumstances, complaints about disturbance of those balances are less convincing than they might otherwise have been. Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 (para.199) per Kirby J.s 10Copyright Act

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9 Is Rebalancing the Law Bad? Modern technology such as the Internet has provided extraordinary benefits for society, which include faster and more efficient means of communication to wider audiences. This technology must not be allowed to obliterate those personal property rights which society has deemed important. Although privacy concerns must also be considered, it seems to me that they must yield to public concerns for the protection of intellectual property rights in situations where infringement threatens to erode those rights. BMG Canada Inc.v John Doe 2005 FCA 193.

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10 Does Bill C-60 Contain the Right Balance? Canada's Copyright Act needs to be updated and clarified to address the challenges and the opportunities of the Internet and digital technology generally. Amendments will: enhance protection of works in the on-line environment, both to address infringement and to enable the development of new business models; enable use of the Internet as a tool for learning and research; and, clarify Internet service provider (ISP) liability. The enhanced protections will be provided through the implementation of the obligations set out in two treaties that were concluded in 1996 at the World Intellectual Property Organization (the WIPO Treaties). Government FAQ (March 2005) Have these goals been met in a balanced way? Will the amendments actually increase unauthorized uses of works and provide protection for infringers?

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11 Distance Education Exception S30.01(1) lesson means any lesson, test or examination in which a workis copied, reproduced, translated, performed in public or otherwise used on the premises of an educational institution or communicated by telecommunication to the public situated on those premises. It could cover handouts or display of any copyright material including articles, whole books, movies, albums, or software source code that has been reverse engineered. Exception permits practically any work or subject matter to be sent over Internet to students with no guarantee that there will not be infringement.

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12 Expansion of Inter-library Loan Exemption s30.02(5) The inter-library loan exemption has been expanded to permit electronic distribution of a copy of printed matter eg, scientific or technical publication, newspaper, or copies of any other work that the end user himself/herself is able to make under any of the fair dealing exemptions as long as they take measures that can reasonably be expected to prevent the making of any reproduction of the copy other than a single printing, its communication, or its use for a period of more than seven days. This could destroy publishers subscription markets. In effect, only one library need have the work in question in its collection. There are no minimum technical standards and libraries are not accountable for unauthorized uses.

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13 Mere Conduit Exemption for ISPs A person who, in providing services related to the operation of the Internet or other digital network, provides any means for the telecommunication of a work or other subject-matter or a reproduction of it through that network does not, solely by reason of providing those means, infringe copyright in that work or other subject-matter. S31.1(1) The exemption is much broader than that recognized by the Supreme Court in the Tariff 22 case and without the protections to rights holders contained under DMCA or EU E-Commerce Directive. It is not restricted to entities that provide transmission, routing, or connections. It does not contain any requirement for content to be transmitted through the facilities of the ISP-a communication through the Internet is enough. It could provide protection to P2P services like Napster. See, A&M Records Inc. v. Napster, Inc., 55 U.S.P.Q.2d 1780 (N.D. Cal. 2000) affirmed 57 U.S.P.Q.2d 1729 (9th Cir. 2001) in which Napster was found not to be exempt from liability under the DMCA because files were not transmitted through systems it operated. It could provide protection to Sharman Networks. See, Universal Music Australia Pty Ltd. v. Sharman License Holdings Ltd., [2005] FCA 1242. Sharman was able to claim the benefit of s112(E) of the Australian Act because the facilities it provided did not have to be physical facilities.

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14 Caching and Incidental Acts by ISPs A person referred to in subsection (1) who performs any other acts related to the telecommunication that render it more efficient, including the caching of a reproduction of the work or other subject-matter, does not, by virtue of those acts alone, infringe copyright in the work or other subject-matter. s31.1(2) The section inherits the breadth of subsection 1 and permits any other acts that make transmissions more efficient. There is no requirement that the purpose of the act be for the onward transmission of files through facilities controlled or operated by or for ISP. The subsection could permit a P2P file share service to cache or provide links or provide direct connections to files to render communications more efficient. The section does not contain conditions that are recognized in other jurisdictions to protect rightsholders e.g., the provider complies with conditions on access to the information, and the provider acts expeditiously to remove or disable access to information upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or administrative authority has ordered such removal or disablement. DMCA s512(b)(2)(D) & (E) and EU Ecommerce Directive Article 13(1)(B) and (E).

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15 Hosting Services Protects an ISP when it provides digital memory to enable a communication. S31.1(4) The Section permits businesses directly interested in and who benefit financially from infringement and who are fully aware of the infringing activity to make infringing works available to public until it is served with a court order that a work infringes. The knowledge requirement (a decision of a court) is much higher than the standard required by other jurisdictions to enable the intermediary to have the benefit of the exemption.

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16 Information Location Tools (Search Engines) The owner of copyright in a work or other subject-matter is not entitled to any remedy other than an injunction against a provider of information location tools who infringes that copyright by making or caching a reproduction of the work or other subject-matter. S40.3(1) T he term information location tool means any instrument through which one can locate information that is available by means of the Internet or any other digital network. Napster, Kazaa, Aimster and other P2P systems and Googles book digitization project could be protected. Exemption applies even where the search engine benefits financially and can control the copying unlike in other jurisdictions. It also applies even where the provider has actual knowledge of infringement until a formal notice is given. Even where notice is given, it may be too late to stop future file sharing once files have been shared over the Internet for any period of time.

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17 Notice and Notice Objective: A "notice and notice" regime in relation to the hosting and file-sharing activities of an ISP's subscribers is provided. When an ISP receives notice from a rights holder that one of its subscribers is allegedly hosting or sharing infringing material, the ISP is required to forward the notice to the subscriber, and to keep a record of relevant information for a specified time. Government Statement An ISP has no takedown requirement, even when it has or should reasonably know of infringement. S40.1(1) and (2). No speedy remedy to address infringements, especially early releases.

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18 Exemptions Have No Conditions For Eligibility There is no requirement to adopt and reasonably implement a policy to prevent use of a service by repeat infringers; or comply with the relevant provisions of industry codes relating to accommodating and not interfering with standard technical measures used to protect and identify copyright material. These concepts are in the DMCA and Australian legislation and have been effective in ensuring that P2P file share services like Napster & Aimster are not eligible for DMCA safe harbours.

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19 Bill Does Not Enhance Ability to Pursue Purveyors of File Share Software that Encourage Infringement The 2000 Australian Act inserted into s 101 a new subsection (1A), dealing with determination of the question whether a person has authorised infringement. The matters to be taken into account include: (a) the extent (if any) of the persons power to prevent the doing of the act concerned; (b) the nature of any relationship existing between the person and the person who did the act concerned; (c) whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice. Section applied in the Kazaa case. Similar remdies are available in the US if the service provider induces or encourages infringement.

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20 Are the TPM Provisions Balanced? The TPM provisions take a minimalist approach to reform. The TPM provisions provide far less protection for creators and rightsholders than the legislation of any country that has implemented the WIPO Treaties. The amendments fall well below international standards for the protection of TPMs and below what is required to comply with the WIPO Treaties.

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21 Are the TPM Provisions Balanced? The Bill provides no protection against the easy and broad availability of circumvention tools. The Bill provides very weak protection against circumvention services requiring knowledge that providing the service would result in an infringement of copyright. The Bill provides protection against copy control TPMs only where the purpose of the circumvention is an infringement of the copyright in it making it of limited if any use. The Bills remedy for distributing works that have been circumvented adds little (if anything) to existing remedies. The need is for a remedy against the distribution of circumvention tools.

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22 Conclusions The world of copyright has been radically changed. The Act needs to be recalibrated to serve it dual functions. Balance must be assessed by looking at todays challenges not what was the previous balance. Does Bill C-60 adequately rebalance the Act? Does it reflect a set compromises that fail to address real problems?