Thursday, March 30, 2006

Nervous about NAFTA & the Cancun Summit

Some of us remember when Brian Mulroney and Ronald Reagan sang “When Irish Eyes are Smiling” in 1985. Mulroney offered up compulsory licensing of pharmaceuticals and copyright retransmission royalties on a platinum platter as a prelude to the FTA negotiations. After that, there wasn’t much left for Canada to negotiate with, and it wasn’t surprising that the actual FTA was largely silent on IP. We had just given away several hundred million dollars a year out of the Canadian economy as an aperitif to the negotiations, so there wasn’t much need for the Americans to get more from us just then.

Any bureaucrat who thought this was unwise was pushed aside. It didn’t matter. There were lots of ambitious and supportive ones ready to please. This period was the beginning of the end of the expert bureaucracy. Lobbyists and Minister’s Offices were making policy. The bureaucrats were there only to implement it and make it look good.

There was a great joke, which found its way into the literature, that Canada’s final negotiating position on IP was “We’ll give you everything you want and 25% more and that’s our final offer. Take it or leave it. God dammit.” If only it were just a joke.

The Americans took it. And they made up for lost time and the lack of IP specifics in the FTA in no time with NAFTA and TRIPS, and with the many FTA’s since then and, of course, the 1996 WIPO Treaties.

Yes, Canada played a key role in all of this. If and when the full and frank history of all of this is written, I’ve very little doubt that the Mulroney Government’s apparent desire to be part of the QUAD (US, EU, Japan and Canada) and curry favour with the Americans at a very high cost were key catalytic factors in the exponential growth of the maximalist IP movement internationally and its alleged interrelationship with free trade. And to give equal credit, far from tearing up NAFTA as promised, the Liberals helped to build on it.

And indeed, free trade is a great thing for Canada and should be pursued. To the extent that they were pursuing true free trade, both Mulroney and Chrétien were doing the right thing.

But in reality, there is real free trade and then there is the American vision of free trade. Strong IP protection and free trade in the American image comprise, in reality, a cruel oxymoron.

So, it is with much trepidation that I await the outcome of the Cancun summit underway between Bush, Harper and Fox. It seems like NAFTA and déja vu all over again.

And now Mexico has really gone off the deep end with a life plus 100 year copyright term. Why Mexico would do so defies reason. Did they think of it all by themselves as an incentive to nurture, protect and prosper from their mariachi music? Or could it be that somebody gave them this idea, perhaps for some unknown consideration?

And suppose that Bush says to Harper something like, “Oh yeah, while we’re talkin’ about harmonizin’ softwood lumber, Steve, let’s all sing from the same hymn book on that other NAFTA stuff, ya know, like IP. And you all Canadians and us Americans gotta do what our friends down in Mexico did because they can’t just go backwards. Ya know, like England made nice with the Germans by goin’ to life plus 70 in 1996. Yup - life plus a 100, Steve. A nice round number. Easy to remember. Oh yeah, and while you’re at it, that WIPO stuff and our DMCA are kinda swell too. Try em. You’ll really like em. Real good for law and order, cause it stops them pirates from stealin’ other good folks’ property. All that P2P stuff just encourages porn and terrorism anyway. And then, when you’re done with this IP stuff, well maybe then we can talk some more about lumber. We always like talkin’ about lumber with Canadians, Steve. Any time. You and me are gonna be good buddies, just like me and Tony. Yep. We’ll sure talk about lumber. You’re gonna do a heck of a job.”

Prime Minister Stephen Harper is down there now with Mulroney’s former finance minister and FTA champion, now Canadian Ambassador to the US of A, Michael Wilson. Hopefully Mr. Harper’s sophistication in economics and Mr. Wilson’s hands on FTA experience and lessons learned will equip them to resist such a scenario. And hopefully, I’m just wrong about the scenario even being there.

Please Messrs. Harper and Wilson - let me be wrong about the possible American agenda in Cancun and beyond. Just this once - really and irrevocably wrong.


Tuesday, March 21, 2006

DMCA - Right Minded Wisdom

The CATO Institute is a rather right wing and rather prestigious Washington "think tank" that has occasionally published and done some interesting things in IP.

It's quite interesting how the right wing libertarian crowd is beginning to realize that overly strong IP protection is nothing but excessive state intervention and should be looked at much more carefully.

Today, they've published a brilliant, lucid and informative analysis of why the DMCA is a bad thing and is "circumventing competition". It's by Timothy Lee and is entitled:

Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act

It is on the CATO Website.

Canadian policy makers should take note - let us not repeat this blatant folly of our American friends on this front.

Here's the abstract

Executive Summary

The courts have a proven track record of fashioning balanced remedies for the copyright challenges created by new technologies. But when Congress passed the Digital Millennium Copyright Act in 1998, it cut the courts out of this role and instead banned any devices that "circumvent" digital rights management (DRM) technologies, which control access to copyrighted content.

The result has been a legal regime that reduces options and competition in how consumers enjoy media and entertainment. Today, the copyright industry is exerting increasing control over playback devices, cable media offerings, and even Internet streaming. Some firms have used the DMCA to thwart competition by preventing research and reverse engineering. Others have brought the weight of criminal sanctions to bear against critics, competitors, and researchers.

The DMCA is anti-competitive. It gives copyright holders—and the technology companies that distribute their content—the legal power to create closed technology platforms and exclude competitors from interoperating with them. Worst of all, DRM technologies are clumsy and ineffective; they inconvenience legitimate users but do little to stop pirates.

Fortunately, repeal of the DMCA would not lead to intellectual property anarchy. Prior to the DMCA's enactment, the courts had already been developing a body of law that strikes a sensible balance between innovation and the protection of intellectual property. That body of law protected competition, consumer choice, and the important principle of fair use without sacrificing the rights of copyright holders. And because it focused on the actions of people rather than on the design of technologies, it gave the courts the flexibility they needed to adapt to rapid technological change.

Monday, March 20, 2006

CRIA's Statistics & WIPO Ratification

"There are three kinds of lies: lies, damned lies, and statistics."
(Attributed to Benjamin Disraeli and Mark Twain)

So, how should we classify CRIA’s Statistics?

According to CRIA’s recent survey conducted by POLLARA in February and just filed with the CRTC (thanks Michael, for exposing these links and for your eternal vigilance), 46% of Canadians answered "international" to the question:
I would now like to ask you a few questions regarding the protection of artists’ works in Canada, or what is usually referred to as copyright. Copyright protects an artist from unauthorized copying and sale of their works. Some people have said that the current copyright laws are sufficient to protect artists, and others suggest that Canadian laws should be up to international standards that have been drafted by the WIPO, the world organization responsible for copyright. Generally, do you think Canadian copyright laws should be up to international standards or is the present law sufficient?
(emphasis added)
46% said "up to international standards"
35% said the present law is sufficient
20% said they didn’t know.

This was the result of a POLLARA survey of a random sample 1229 respondents interviewed between February 17 and 22. 2006 .

Funny how on December 28, 2005, less than two months earlier, Graham Henderson, Prez of CRIA issued a press release based on a previous POLLARA survey done from December 18th to December 20th, 2005, among a random sample of 1204 Canadians aged 18 and over.
According to a Pollara survey conducted during Canada's recent federal election, the vast majority of Canadians want copyright reform. The study found that 91 percent of Canadians want the work of musicians, artists, composers, authors and others to be protected by copyright to ensure they get paid for copies of their work, while 74 percent believe the country's laws should be made to conform to international standards and treaties on copyright. (Nine percent disagree, while 17 percent are undecided).
(emphasis added)
We don’t know the precise question that was put to the respondents in the December survey. But it seems to be directed at the same point as the question in the February survey - namely supposed support for Canadian conformity with "international standards", which naturally begs the question of whether we already exceed such standardsin in key respects, which I have raised before. However, back to the current point.

Note first the incontrovertibly embarrassing anomaly of a 28% drop (74% - 46%) in support for "international standards" in less than two months. That's about as bad as Bush and Cheney's drops in approval ratings - except it's much quicker. Or maybe it means that the data is simply unreliable - and what does that say about other CRIA data?

The real issue is how anyone is supposed to take such survey data seriously to begin with. Is it likely or, frankly, even possible that any statistically significant percentage of the randomly selected 1,229 respondents interviewed between February 17 and 22, 2006 have every heard of WIPO? Of those that might have heard of WIPO, is it possible that any of them would have ever read these "international standards" drafted by WIPO? Presumably the reference is to the 1996 WIPO internet treaties but, then, who are we to ask? Or would they have even the faintest clue about what these "international standards" refer to? This is a bit like asking whether Canadian society should show appreciation and respect for Mothers and Grandmothers in a manner endorsed by a coalition of high level religious leaders. Don't expect a lot of naysayers to such a question. In fact, the fairly large number of naysayers in this survey - given the suggestive questions - should raise lots of alarm bells, assuming anyone does take these surveys seriously.

There are other obvious quality issues with this survey data, such as the inherent bias - and overly simplistic inaccuracy - in suggesting that WIPO is "the world organization responsible for copyright." Tell that to the WTO, or the USTR, the Bush trade representatives that have forced (oops, "negotiated") numerous bilateral WIPO Plus "agreements" with numerous lesser powers.

I’d even be surprised if more than 5% of the members of the Intellectual Property Institute of Canada ("IPIC") have ever actually read those WIPO treaties, much less thought about them in detail. Oddly enough, there are about 1,300 members of IPIC, which is the main professional body for IP lawyers and trade-mark and patent agents in Canada. That’s coincidently about the same size as POLLARA’s sample - but it’s as far as you can get from a random sample.

And I would seriously doubt that there would be much consensus amongst actual copyright lawyers who have actually carefully studied these treaties as to whether Canada actually does comply with certain key provisions already, much less whether Canada should comply with these "international standards" - especially in the extreme implementation version espoused by CRIA.

Anyway, there are more gems in CRIA’s data and CRIA’s own spin on CRIA’s data. Michael has outlined some. Stay tuned for more.

And thank you, CRTC, for helping CRIA to be so transparent. Perhaps the Copyright Board should take note.

BTW, you should read CRIA’s submission to the CRTC. What does CRIA want to do in the name of Canadian artists? They want to weaken Canadian content requirements by moving to a "Smart" 35% CanCon regime. See page 29 of their submission to the CRTC. We hope that the powers that be will be shocked, shocked that the Canadian Recording Industry of America, oops, I meant the Canadian Recording Industry Association, would suggest such a thing. And "smart" enough to see through it.

Shocked? After all of those lovely, reliable, consistent, relevant and clearly incontrovertible statistics?

"Considered accurate to within +/- 2.8%, nineteen times out of twenty."
Shocked, indeed. We hope. "Nineteen times out of twenty".

Saturday, March 04, 2006

Excessive TPM & DRM - forfeiture as an antidote?

A possible antidote to excessively intrusive and even harmful TPMs and DRMs (e.g. Sony’s Rootkit) and to excessively protective legislation for such measures in the name of implementing the WIPO treaties might be quite simple.

There could be a provision inserted in the Canadian Copyright Act that would provide a forfeiture of copyright for those who inflict damage via malware that goes farther than reasonably necessary to protect copyright. So, if a record producer inflicts another Rootkit fiasco upon Canadians, copyright in Canada in the sound recording would be forfeited. Of course, this shouldn’t affect the copyright in the underlying musical compositions or performances, unless those creators are complicit.

There can be little doubt that such a provision would be intra vires the Federal Government and its copyright powers. If CRIA et all are begging for Copyright Act protection for TPM and DRM - it would be hard for them to argue that protection from it is ultra vires the Feds.

Frankly, I must confess that this is not entirely an original idea. I was inspired by none other than Judge Richard Posner of the 7th Circuit in the USA, who is much more favourably disposed to IP owners and much more sceptical of antitrust complaints than most judges or scholars. And speaking of scholars, his accomplishments are legendary and extraordinarily prolific.

Here’s his view of forfeiture, which he posted in a guest appearance on Larry Lessig’s blog in 2004:
What to do about such abuses of copyright? One possibility, which I raised hypothetically in my opinion in WIREdata, pp. 11-12, is to deem copyright overclaiming a form of copyright misuse, which could result in forfeiture of the copyright.
(emphasis added)
This was suggested in the much less egregious context of “systematic overclaiming of copyright, resulting in a misunderstanding of copyright’s breadth”.

In fact, Judge Posner’s logic might suggest that the use of DRMs and TPMs to prevent otherwise lawful exercise of user’s rights should result in copyright forfeiture. Hmm.., Not a bad idea.

The music industry wants access controls that could eliminate the concepts of insubstantial copying, fair dealing, fair use, access to orphan works and ultimately to the public domain itself. These controls could also result in “pay per use” and a regime in which there is no right to make private copies or to shift formats. Regional access controls could become effective tools for anticompetitive price discrimination (they already have done so for DVDs) and – worse still – for censorship.

And if this isn’t bad enough, they want legislative sanction for all of this and to make anyone who dares to get around (i.e. "circumvent”) it
an infringer or even a criminal. Scary? You’d better believe it.


Thursday, March 02, 2006

“Fallout" at the Copyright Board?

Two significant players in Canada’s copyright scene have just conspicuously withdrawn in protest from two major Copyright Board hearings. They are Archambault (the Quebec music retailer) and Canoe (an internet portal), which are both part of the giant Quebecor empire. The hearings involved music on the internet. One is the decade old and still inchoate SOCAN Tariff 22 tariff. The other is the CMRRA/SODRAC (CSI) proposed webcasting tariff. Archambault had earlier withdrawn from the CSI proposed online music tariff. Efforts on the part of objectors to somehow consolidate or rationalize these three closely interrelated tariffs have proven fruitless.

In an 8 page letter from their counsel, Me Jean-Philippe Mikus, Archambault and Canoe stated that they had to take:

the least harmful path given the untenable constraints now being imposed on objectors wishing to express their point of view before the Board. Archambault and Canoe are compelled to withdraw because their participation in the Board's proceedings would imperil their key financial information invaluable trade secrets critical technological information strategic information concerning development and marketing plans and projects, and a host of other information in respect of which the utmost secrecy is essential for their survival.

They point out that “…the mere participation in the Board’s hearings is in and of itself a very considerable burden on a number of levels. The mass of information that collectives systematically seek to obtain from objectors brings about exorbitant costs both in terms of collecting the information and then processing it.”

They suggest:

When collective societies holding monopolies or quasi-monopolies are involved in infighting and then formulate grossly exaggerated claims and multiply instances before the Board, including unreasonable requests for disclosure of irrelevant or marginally relevant highly confidential information, some measure of control must be exercised. The Board should be the first line of defense to avoid that exclusive copyrights established by Parliament and concentrated in the hands of collective societies be an instrument of oppression (to paraphrase Lord Justice Lindley in Hanfstaengl v. Empire Palace (1894) 3 Ch. I09). The experience of Archambault and Canoe leave the bitter impression that the Board is failing at this task and that this failure is already causing extremely serious harm to businesses that have had the courage to jump into untested waters. Significant reform is both necessary and urgent to end the abuses that threaten the very foundation of Canadian businesses offering legal alternatives for the use of music on the Internet. At this stage, it appears that such reforms can only originate from the government or Parliament; it is unfortunate to say that our clients no longer hold out any hope that the Board is able or wiling to address these concerns.

They conclude by reserving the right to seek judicial review “on the basis inter alia that they have not been given the right, reasonably exercised, to be heard in these proceedings.”

While none of this is particularly new to those experienced with Board practice, the letter is a potentially very important development. It was copied to the very long list of objectors in both files and to both Ministers responsible for the copyright file. The current Ministers may prove to be more sympathetic to the concerns of objectors than their predecessors, given this Government’s potentially different perspective on regulation and the costs thereof imposed upon business.

The fundamental dilemma is that virtually all objectors have many issues to worry about other than fighting copyright tariffs. And almost all of them balk at the incredibly high costs of pursuing objections, which routinely run into the six figures and can go beyond. Resulting direct financial savings are often hard to quantify since most collectives overreach to an often absurd extent in the initial proposed tariff. For these and many other reasons, the economics of objecting are not alluring to many entities, even though they may be directly affected. And trade associations aren’t always the answer. In fact, the sad demise of the CCTA, after so many years of valiant and competent contributions to Copyright Board and appellate jurisprudence, shows the difficulties faced by even the most sophisticated and substantial of objectors.

The collectives, on the other hand, have usually only one purpose on their mind, which is increasing Copyright Board tariffs and lobbying for the statutory rights that make this possible. Their costs are paid for – not surprisingly - from the Copyright Board tariffs that are paid by objectors. The more the collectives spend, the more they make - and vice versa and so on. This is classic asymmetrical warfare, in which a relatively small single purpose and highly strategic entity can win major victories against a much larger opponent.

As the letter points out, it is very difficult for an objector to play a limited role in a hearing. It is basically all or nothing:

The approach adopted by the Board so far is very much akin to an "all or nothing approach. There is simply no way of participating in the Board' s work if a party wishes to both put forward its point of view usefully before the Board and be concerned about the confidentiality of its business information. Parties are expected to be subjected to a full inquiry by collective societies, in the presence of all their competitors. The issuance of confidentiality orders does not justify such inflexibility.

There have been other withdrawals in the past, including MOVISO (for whom I acted), which was perhaps the largest supplier of ringtones in Canada and the world. It withdrew during the interrogatory phase from a major hearing on SOCAN’s proposed ringtone tariff, where staggering amounts of money and important legal issues were at stake. The Board and the Canadian public lost the benefit of their participation. ADISQ recently withdrew from the CSI Online Music Services Tariff proceedings. ADISQ is a professional association which represents hundreds of independent Quebec undertakings working in various aspects of the record, entertainment and video industries, including record producers, distributors, publishing firms, performers’ managers, entertainment producers, booking agencies, playhouses, video clip production firms, etc.

In another recent development, the Canadian Association of Broadcasters has launched a major judicial review effort following a recent Board decision imposing a large increase in commercial radio tariffs. In so doing, it referred to the Board publicly as “renegade”. In
the CAB’s own words, “Because this panel of the Copyright Board acted in such an undisciplined manner, there is now a clear and immediate need for the Government of Canada to rein in this renegade to ensure it complies with its legislated mandate.”

Without commenting on the CAB’s choice of language, it must be noted that the CAB has been dealing with these issues and with the Board and its predecessors from day one in the 1930’s. The CAB is turning 80 this year, and the copyright wars between broadcasters and the predecessor of SOCAN are basically responsible for the formation and much of the evolution of the modern Copyright Board regime in Canada.

The Board has the power to enact (with Governor in Council approval) regulations concerning “the practice and procedure in respect of the Board's hearings”. However, it has never exercised this power. The Board reports to Parliament through the Minister of Industry, who has some apparently broad power to put regulations in place even under the current legislation. Needless to say, the Government can introduce legislative changes to this framework, if required.

It is inevitable that there will be calls to restrain certain practices on the part of certain collectives and their counsel. If the Board currently lacks the legal power or declines to do so, then it is possible that the Government will be called upon by many reputable stakeholders to deal with what has evidently become an unsustainable situation for even very substantial objectors.

There are substantial public interest issues involved here that transcend excessively adversarial trial by attrition. These issues could become an important theme in the forthcoming copyright revision exercise.