Tuesday, July 25, 2006

ET Come Home...Hopefully Not To Close to CDN Copyright Law

Some professors at Dalhousie have published a provocative and readable paper on the very complex and very important subject of extraterritoriality (“ET”) entitled GLOBAL REACH, LOCAL GRASP: CONSTRUCTING EXTRATERRITORIAL JURISDICTION IN THE AGE OF GLOBALIZATION.

Not surprisingly, it draws attention to the Supreme Court of Canada’s complex and not very well understood 2004 decision in SOCAN v CAIP. In that decision, the SCC said that the Copyright Board was wrong to limit SOCAN’s reach only to situations where the server is located in Canada. In principle, the SCC held, a content provider in another county could be liable to SOCAN in Canada if there is a “real and substantial connection” to Canada. Justice Binnie indicated that:

(para. 60): A real and substantial connection to Canada is sufficient to support the application of our Copyright Act to international Internet transmissions in a way that will accord with international comity and be consistent with the objectives of order and fairness.

In terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user. The weight to be given to any particular factor will vary with the circumstances and the nature of the dispute.
With respect to Justice Binnie and the Supremes, this could mean a lot of trouble for Canada if the decision is misinterpreted and applied too broadly. In a certain sense, the whole ET discussion was largely obiter dicta because there was no particular scenario before the Court - and the Court recognized the highly fact dependent nature of the necessary enquiry to determine whether there can be liability in Canada . Indeed, apparently mindful of the potential reach of their decision, the Court issued a caution - which has drawn less attention than their otherwise somewhat bold assertion of ET reach:

This conclusion does not, of course, imply imposition of automatic copyright liability on foreign content providers whose music is telecommunicated to a Canadian end user. Whether or not a real and substantial connection exists will turn on the facts of a particular transmission (Braintech, supra). It is unnecessary to say more on this point because the Canadian copyright liability of foreign content providers is not an issue that arises for determination in this appeal, although, as stated, the Board itself intimated that where a foreign transmission is aimed at Canada, copyright liability might attach. (para. 77)
(emphasis added)

On a practical level, it will be very difficult for SOCAN to enforce its theoretical win. I cannot see MSN or YAHOO or countless other foreign sites that may in some way somehow involve music lining up to get licensed with SOCAN in Canada. Nor can I see them responding - other than by way of “make my day - we’ll see you in court” - to any demands from SOCAN.

The application of these ET factors is completely uncertain to the types of situations that readily come to mind. Never mind the enormous difficulties of what constitutes a communication to the public by telecommunication or a performance in public. On the latter points, we may hopefully get some insights in the presumably imminent Board decision on Ringtones, which has been pending for over a year.

I don’t think that the SCC meant its decision to be a carte blanche to SOCAN to go fishing for revenue in the USA or elsewhere. They seem to have explicitly recognized the possibility and danger of multiple payments (which I think is what they mean when they refer to as “layering” of rights) and that the WIPO treaty approach is to affix liability at the point of transmission. This may all get clarified if and when Canada ratifies the WIPO treaties. And it should get clarified in our enabling legislation because it is absolutely not in Canada’s overall interest to get to pushy on extraterritoriality, as I will explain and as the Dalhousie profs agree.

Some of this may also get clarified in the current version of the “100 Years War”, a.k.a. SOCAN’s Tariff 22 which is flaring up again at the Copyright Board. The latest version of the proposed tariff shows little indication that SOCAN has formulated any more precise or viable legal theory than it had in mind in 1995, and which led to the first trip to the SCC. The problem is that many objectors have already been worn down by the expense of opposing SOCAN and SOCAN’s interrogatory tactics (e.g. Archambault and Canoe) and the Board’s unwillingness to permit parties to participate adequately but on a limited basis in order to address legal and jurisdictional issues without being subjected to intensive and invasive interrogatories that will inevitably serve no other function than driving away worthy opponents.

Just because some end users may be Canadians certainly should not be sufficient to find liability against a foreign website owner. Hopefully, the Supremes meant that only to be one factor - and an inconclusive one per se. Were it to be otherwise, the Internet would come to a crashing halt - since any website can attract users from any country in the world. That’s why it's called the “world wide web”. The last thing that we need is each country assuming jurisdiction and applying their law over websites abroad because some users may reside in that country. If that were to become the norm, every Canadian website would have to clear its content under the laws of other jurisdictions ranging from the USA to the Uzbekistan.

That’s simply because what goes around comes around in this area - and we don’t want ET coming home to roost too actively in Canada. The authors from Dalhousie recognize this and conclude their report with an explicit reference to the SOCAN case and Canada’s interest:

That said, this is an option which should be used sparingly and cautiously. Canada, though not the smallest boat on the lake, most frequently sails with larger ones: the odds of it being caught in someone else’s wake are far greater than of Canada changing the course of others. Canada’s domestic privacy legislation, as we have noted, largely results from the economic influence of the European Union, which left Canada little practical alternative but to comply: the United States, though, being a larger market still, did not create the same kind of legislation Canada did, but has not lost access to European markets. Similarly, Canada could try unilaterally to impose its views on copyright law on the international community, taking the robust approach to “real and substantial connection” that the SOCAN case suggests. This carries a certain risk, however, if Canada “legitimizes” one state unilaterally imposing its standards on others by doing so itself, this helps to free up the dominant players to act likewise, and in a way that might not accord with Canadian interests. With specific regard to copyright, the dominance of U.S. intellectual property interests internationally dictates that unilateral use of extraterritorial jurisdiction by that country could end up imposing American copyright law on Canada as well as others.

Even allowing that exceptional circumstances might exist where Canada could and should act unilaterally in the absence of international consensus, it must choose the occasions sparingly. While the edifice of territoriality is being slowly dismantled by globalization, this should compel Canada to be defensive and proactive in equal measures as it seeks both to protect and to promote its own interests in the new global order.
(Emphasis added)

For example, if the USA were to get as proactive as Canada is in danger of becoming on ET, it could become illegal in the USA for a Canadian Joyce scholar - for hypothetical example - to post stuff on her Canadian website that is PD here but not there - because of our rightfully and thankfully shorter term. If an American copyright owner were to sue in an American court merely because the site was accessible to Americans, the owner of that website would have to defend - otherwise he or she might get arrested at the American border if a negative default judgment were to be obtained - even if the judgment were not enforceable in Canada. That’s the post 9/11 reality.

In this case, the SCC has opened the copyright ET door in a way that may tempt lower courts or the Copyright Board at the behest of copyright owners to push farther than the SCC may have intended - even with the caution in place. Justice LeBel recognized this in his careful dissent. Parliament may need to put a stopper in place so that we don’t end up falling into a trap set by SOCAN’s potentially overreaching position in Tariff 22 and the SCC’s at least partial agreement with SOCAN’s view of the world.

The Dalhousie study finds the majority reasoning in the SOCAN case to be “confusing in that it refers to the extraterritorial application of the Copyright Act, suggesting that Canada has taken prescriptive jurisdiction over matters outside its borders.” The study seems to suggest at page 40 that the SCC perhaps went to far in applying the Mother of all ET decisions in Canada to the world of the internet and copyright. This is Libman decision of the SCC in 1985 - in which there was clearly a “real and substantial” connection to Canada. A bunch of fraudsters operated a fraudulent stock market boiler room in Toronto - but argued that they couldn’t be prosecuted in Canada because their victims were in the USA and their money was hidden away in Central America, from where the promotional material was mailed. The accused argued implausibly that the offences hadn’t occurred in Canada. Clearly, there were crimes and they had to prosecuted somewhere. In the SOCAN situation, there are no “offences” and if - I repeat IF - a foreign website somehow attracts a Canadian audience, the liability should be determined in the foreign country and the fact that there happens to be a Canadian audience should not per se be sufficient to ground liability in Canada.

I would allow that the situation could be different in the event that a foreign website is actually specifically targeting Canadians - i.e. “Canadians come here - we welcome Canadian Dollars at par with USD - get your illegal movies cheaper here!” And especially if there was clearly at least some element or inseparable element of some infringing activity taking place inside Canada. Some of this may become clearer if and when the British courts deal with BPI’s lawsuit in England against www.allofmp3.com which is the supposedly legal-in-Russia and very cheap but not quite free download site.

Anyway, I highly commend the Dalhousie study by Professors Coughlan, Currrie, Kindred and Scassa. It is important and timely. It was prepared for the estimable Law Commission of Canada, which has done other good work in IP - in which I was privileged to have been closely involved on another complicated issue - security interests in IP.


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