CIPPIC SLIGHTLY SWEETENS SOUR SONY SETTLEMENT

My esteemed client, CIPPIC, fearlessly represented by my esteemed former Queen’s student Jason Young, appeared at the settlement hearing in Toronto yesterday and got the Court to somewhat sweeten the sour settlement reached between SONY and the class action counsel.

There will now be an undertaking by SONY to the Court in Canada, which will hopefully function in effect as an injunction. Points made by CIPPIC concerning Christine J. Prudham’s affidavit are noted by Justice Winkler on the record:

I note the objectors point relating to certain of the technical content of the affidavit of Christine Prudham, although I make no findings in this regard.

This is probably not the end of this story.

My quick take is this. CIPPIC cannot save the world from every ill every time - though it has done so surprisingly often to date in its short history. Anyone who says that the Canadian system is working and that we DON'T need protection FROM DRM is simply WRONG, as this still somewhat sour tasting settlement serves to show.

And SONY has no basis to claim any victory here. Quite the opposite. Only CIPPIC can stand proud after this settlement.

HK

SONY Settlement Unsettling?

The almost but not quite done deal of the SONY class action settlement process in Canada is raising some seriously troubling questions.

Michael Geist has managed to to do a great expose and get a copy of the infamously missing Exhibit "C" , which is a an astonishing and hitherto well hidden affidavit from Sony’s Canadian Vice President, Legal and Business Affairs, Christine J. Prudham.

That affidavit purports to explain why Canadians should be content to settle for no injunctive relief, whereas Americans will get injunctive relief against SONY’s outrageous conduct.

The affidavit contains some ludicrous arguments and statements that are clearly intended to pander to Canadian lawmakers who SONY hopes will deliver DMCA North to Canada in short order, and at the same time to get approval from a Canadian court of a settlement that is much worse even than the highly criticized US settlement.

Here is some of what she swears in her affidavit:

10. SONY BMG does not believe that the Injunctive Provisions are necessary in Canada for three reasons: (1) the Injunctive Provisions were specifically based on the US Government Inquiries, for which there is no counterpart in Canada; (2) the Injunctive Provisions may prove incompatible with Canada's international copyright obligations; and (3) the Injunctive Provisions may prove incompatible with forthcoming federal copyright legislation.

COMMENT:

The fact that there were government inquires in the USA and not in Canada does not reflect well on Canada’s Competition Bureau. However, it is no reason to avoid an injunction in Canada. There are - unfortunately - lots of things that the Bureau takes a pass on when it should jump in. That does not validate them. The US claims would be presumably have been pursued in contract, nuisance, negligence and trespass or similar causes of product liability action, and Canadian and American law are generally similar in these respects.

Canada has no international obligation to allow companies like SONY to intentionally or recklessly inflict major damage on the computers of hundreds of thousands of Canadians. I have no idea of what fantasy is on her mind.

As to incompatibility with forthcoming federal copyright legalisation, what does she know that the rest of us do not? And even if she is right, then one hopes that the legislation will rewritten or withdrawn before it hits the floor of the House of Commons. To state the obvious, there is no legislation now. A law that might or might not be passed someday is almost invariably irrelevant to a case at hand, especially when the nature of the law is supposedly unknown. If she has specific information on this supposed new legislation, then someone in Government is leaking big time.

She also says:

15. Until the contemplated new legislation has been introduced and passed, SONY BMG is of the opinion that there is a legal vacuum around TPMs in Canada.
SONY BMG Canada is unwilling to accept Injunctive Provisions that derive from the US Government Inquiries, which were based on United States legislation. To impose in Canada the Injunctive Provisions provided for in the US Settlement because of the US Government Inquiries, based on U.S. legislation, would amount to adopting in Canada the U.S. approach to the 1996 WIPO Treaties without giving the Canadian Government the opportunity decide what its policies will be on TPMs in light of the 1996 WIPO Treaties. The prevailing U.S. approach is inconsistent with Canada's historic approach to copyright, is arguably inconsistent with Canada's international copyright treaty obligations (which are not identical to the United States' obligations in that regard), and is not a valid basis for restricting the use of TPMs in Canada. Until the Canadian government resolves this issue, SONY BMG Canada is not willing to potentially prejudice itself by agreeing to the Injunctive Provisions in the Canadian Agreement.

16. Moreover, as an aspect of copyright it is arguable that the scope and protection of TPMs fall under the exclusive jurisdiction of the Federal Court pursuant to s. 20(1)(a) of the Federal Courts Act. SONY BMG is therefore concerned about conceding provincial Superior Court jurisdiction over TPMs, as would be implicit in agreeing to the Injunctive Provisions as part of a settlement of the instant class proceedings.

(Emphasis added).

COMMENT:

Maybe I’m missing her point, but the DMCA (which is apparently what she is talking about but doesn’t bother to specify) was not a problem for SONY in the USA. In fact, it their crutch and their creation. They badly want similar legislation in Canada. I hope - but will not hold my breath - that SONY’s bold apparent defence of Canadian policy sovereignty regarding the DMCA in this assertion will be used to argue against the DMCA North legislation that SONY so desperately wants in Canada.

As to lack of jurisdiction in the Courts of the Provinces to deal with TPM’s , this is utter nonsense as Michael points out. It’s an insult to the intelligence of anyone who has ever heard of the Federal Court Act or the Copyright Act. The courts of the provinces basically can do anything that the Federal Court can do in copyright except to expunge a copyright registration or to do judicial review of the Copyright Board. In fact, the Court of the Provinces can also do a whole lot more than the Federal Court, such as rule on tort and contract and other common law and consumer protection claims - which is what this case would be primarily about if were to go to trial.

It’s really a pity that nobody will likely get to cross examine Ms. Prudham on this affidavit. Unless, perhaps, if the settlement unravels...

And then, it would be interesting to see if she were to try to invoke solicitor client or litigation privilege....


TO SETTLE OR NOT TO SETTLE?

Speaking of going to trial, I sympathize with the class action lawyers here. This may be the best that they could do - and some of the them are very experienced at this. This case might not be as slam dunk as it might seem if it were to go to trial. The damages suffered by individuals could vary greatly and may be hard to quantify financially. SONY can and doubtless would try to spend any class action lawyers into the ground - and the class action lawyers might blow out their brains and time out for nothing. Their clients might - in theory - even be on the hook for costs. The disbursements could be enormous. As for the risk of suffering bad publicity, SONY clearly doesn’t mind. If SONY can support the American style of litigation against little children and dead grandmothers (which they tried but failed to pull of in Canada), and inflict the ROOTKIT in the first place, bad publicity must feel like good testosterone to such a company.

But the overall question remains - is this settlement worse than no settlement? The compensation paid to the class members who are even aware of the action will be minimal. Precisely $7.50 plus 12% [sic?] for GST and PST plus the great honour of some free SONY downloads, presumably uninfected - which presumably cost SONY nothing to provide. (It would be nice if the artists or songwriters got paid, but I doubt it - royalties are rarely paid on “free goods”).

Some deal. Michael says that the deal could be worth $25 million. But if it remains as well hidden as it has to date, and it requires too much hassle to collect the eight bucks, it will likely cost SONY next to nothing because very few people bother to take them up on this waste of time for eight bucks in change and a few freebie downloads. Ironically, they can probably get these downloads in short order for nothing in Canada by downloading them for free and DRM free via P2P courtesy of the blank media tax (oops - levy) that SONY and its colleagues in CRIA so desperately wanted just a few years ago - and the proceeds of which they still are pleased to enjoy while they last.

The cost of the deal in terms of public policy will be potentially very serious.

In particular, some officials at the Department of Canadian Heritage who ought to know better may say “This system works. We have a settlement in Canada. Nobody needs legislated protection FROM DRM and TPM.”

If this is how the system works, then we need to change the system.

As to the class action process, the NOTICE TO CLASS MEMBERS, was published, so I’m told in the last week of August in the Globe and Mail, Maclean’s Magazine, and one or two French language outlets. The deal will be presumably approved the Court in Ontario on September 21, 2006 and the deadline for objection is September 18, 2006 - next Monday.

There’s an old joke in Ottawa. If you want to keep something secret, be sure to publish it in the Canada Gazette. That’s more or less what seems to have been done here.

I’m no expert in class actions - but:

• what is the hurry and apparent rush to judgment here?
• why was this NOTICE published apparently only one time and at a time when almost nobody would have seen it (end of August)?

This may arguably be the best possible settlement under the circumstances. But that does not necessarily mean that is a good one. The question is whether it is actually better from a public policy standpoint than no settlement. With no settlement, SONY will have no basis boast to a Parliamentary Committee about how responsive it is to its victims (oops, customers) and to argue that the system works and there is no reason to worry about irresponsible deployment of DRM and TPM in the future.

I hope that this will not be the end of the story. If so, the settlement story will have an unsettling ending.

Those who wish to unsettle the settlement should visit the SONY class action settlement website and file their objection according to the instructions by Monday, September 18, 2006. That's NEXT Monday.

HK

CRIA + CMEC = COPYRIGHT + CONTROVERSY

RUMOURS OF CONTROVERSY:

The summer is almost over. And according to the polls, so too may be the honeymoon with the new Conservative government. Rumours are hot and heavy that the Conservatives will introduce a copyright bill this fall - and that it may even be a priority for this government.

If the bill lives up to the buzz, it could be a bad miscalculation for this minority government - which may have been maneuvered into unexpected controversy. The bill, as rumoured, would be extremely controversial. And nowadays, copyright and controversy can even contribute to electoral trouble – and in one infamous instance, actual defeat. The bill will probably contain two significant and specific policy thrusts that will prove especially divisive and which will exude an odour that may not be welcome as another election looms.

The first and most obviously controversial policy will be the blatantly pro-recording industry and anti-user policy of strong anticircumvention and pro DRM + TPM legislation that will help to strangle the promise of new technology and the internet as we know them and threaten the public domain, fair dealing and other users’ rights.

The other major thrust, which the Government may mistakenly believe will be seen as a balance to the anticircumvention legislation, will in fact be potentially very harmful and immediately costly. It will consist of an apparently user-friendly special educational exception for use of publicly available material on the internet. This would be a dangerous and misleading solution to a non-existent problem and could end up costing Canadians millions of dollars a year in short order - most of which will go to foreign interests.

Any policy that is intended to - or perceived as - currying favour with the current American administration may be particularly controversial. A recent SES poll has shown, in the words of Greg Weston, that:

Canadians like to see their prime ministers in the White House rose garden, but not in the presidential bedroom.

CUI BONO?

Concerning the above policies, cui bono? Who will benefit?

The anti-circumvention (i.e. pro DRM + TPM) measures will be a direct gift to the CRIA (the Canadian Recording Industry Association, a.k.a. the Canadian Recording Industry of America) - which has now lost virtually all of its important Canadian independent members and should no longer even pretend to speak for Canadian interests. It is essentially the RIAA North and might and may as well be called the CRIAA. This initiative will make the American government and the big four multinational record companies very happy. It will likely be actively opposed by some of the leading Canadian independent labels and creators, such as Barenaked Ladies, Avril Lavigne, Sarah McLachlan, Chantal Kreviazuk, and Broken Social Scene. Not to mention an enormous community of concerned and articulate consumers, academics, commercial interests and others.

The educational exception for use of “publicly available Internet materials” is the copyright “cause célèbre” of the Council of Ministers of Education, Canada (CMEC). First of all, it is completely unnecessary. We have a March 4, 2004 Supreme Court of Canada decision (CCH v. LSUC) that extends the reach of fair dealing much further than CMEC has apparently recognized. The current 2005 edition of the CMEC flagship copyright publication, Copyright Matters!, written by CMEC's Counsel, is devoid of any reference to or even apparent consideration of that landmark decision. And we have a deeply developed doctrine of “implied license” in intellectual property law that says that a user is entitled to use a product (in this case, publicly available internet materials) in the manner intended - which clearly means browsing, downloading, saving, cutting, pasting, printing and everything else we have all been doing for years in our offices, homes, classrooms, libraries etc. whenever somebody posts something interesting. That’s the way the internet works, and everyone who freely decides to post material without technical restriction knows it and probably intends it to work that way. If they don’t want their work to be used in this way, they can lock it up behind a pay wall or simply not post it. It would be very surprising if a Canadian court were to rule otherwise in respect of most of the uses that most of us – including educators, students, librarians and archivists – make of “publicly available Internet materials”.

Whatever may be the rationale for CMEC’s proposal, its potential effect is all too clear to those who see beyond the apparently “user friendly” rhetoric and the laudable goal of enhancing education and reducing costs and risks in the classroom. However, the proposal, if enacted, would almost certainly create a strong “a contrario” implication that everyone other than those in the educational community must now “pay” to use publicly available material - and Michael Geist reports that Access Copyright (a.k.a. “Excess Copyright”) is apparently trying to get Canadian Heritage to actually subsidize its work on a scheme that would help to pull this off. This initiative reminds one in many ways of the non-transparent back room activity at Canadian Heritage that led to the unsuccessful attempt to elongate the copyright term in posthumous works by up to 34 years. That was the Lucy Maud Montgomery Bill as it came to be called. When properly understood, that bill was defeated and I’m proud to have led that charge. It was another unnecessary solution in search of a problem - and the solution would have been a major blow to the public domain and benefit to publishers and, thus, Access Copyright. Once again, the educational internet exception is a gratuitous and unnecessary initiative that will benefit Access Copyright - by sacrificing a relatively small amount of potential revenue from the educational community in order to confirm Access’s “entitlement” to a potentially huge amount of revenue from the rest of Canadians outside of the CMEC umbrella.

CMEC may well have good intentions. And the Ministers no doubt genuinely believe that this is a “user friendly” initiative. But, in copyright law as in anything else, “The best laid schemes o' mice an' men gang aft aglay." And to use another cliché, “the road to hell is paved with good intentions.”

If the educators need any more legislated certainty, which is very doubtful, there are far more proven and precise formulations to give them what they want without collateral damaging consequences to the rest of Canadians. One could begin in no better place than the American legislation, which among other things, expressly recognizes that “multiple copies for classroom use” can be “fair”.

I will have more to say about the CMEC initiative in the days ahead. Michael Geist is doing an admirable job on 30 Days of DRM and has also raised several good points in opposition to the CMEC proposal. Hopefully, the CMEC plan will unravel by itself as the more independent-thinking factions of the broader educational community - such as the Canadian Library Association - see what is really going on.

COPYRIGHT AND ELECTIONS:

If this government believes that controversy over copyright is an acceptable and manageable political risk worth taking in order to court good will of the entertainment and publishing industries and the approval of the American government, it may wish to study the defeat of Sam Bulte in last January’s election. Michael has documented it in great detail and was indeed quite active in the unfolding melodrama itself. There is a wealth of publicly available internet material on the subject.

Mme Bulte’s blunt and brazen support of the same trade associations and collectives that are now working their charms on the Conservative government is widely believed to have led to the shift of a large number of votes in the once presumptively safe Liberal riding of Toronto Parkdale. Mme Bulte was the copyright establishment’s choice for the next Minister of Canadian Heritage, since the incumbent Liza Frulla from Quebec was doomed by the Gomery inquiry fallout. As every backroom person knows, a few votes can make a decisive difference in one riding and a few thousand votes can even swing an entire national election. Anyone who doesn’t believe this should ask not only Sam Bulte but Al Gore.

FALSE PREMISES:

Both of these problematic initiatives - anticircumvention and the CMEC educational exception - proceed from false premises. The strong anticircumvention proposals are almost certainly being peddled upon the false notion that Canada has some sort of obligation or “commitment” in international law to implement them. We do not. We have done nothing other than “sign” the 1996 WIPO treaties, which does not oblige us to implement or ratify them. And even if we choose to implement and ratify these treaties, the previous government’s much more modest anticircumvention provisions would have been compliant and then some. Contrary to CRIA’s misleading-as-usual propaganda, there was nothing in the recent G-8 declaration that required any IP action on the part of Canada. Anyway, the Americans are in no position to complain about non-compliance with international copyright law. They are in flagrant adjudicated violation the TRIPS agreement by eliminating royalties for musical performances in smaller business establishments - and clearly have no intention of doing anything to fix this problem. This is the most serious decided WTO case to date of violation of international copyright law.

The CMEC proposal stems from the false premise that it is necessary to avoid liability for classroom activity involving internet use. Apart from those in the CMEC camp, there are few, if any, experts who believe this to be a serious issue, especially given the current state of Canadian law as spelled out by the Supreme Court of Canada. And given Access Copyright’s costly and painful lesson in test case litigation in CCH v. LSUC, it will likely be a long time before it launches or supports another dubious law suit. CMEC’s proposal will benefit Access Copyright and nobody else - by predictably ensuring that everyone other than the educational community will have to pay more to use the internet. I predict that, if CMEC gets its way, it will take little time for Access Copyright to file a proposed tariff that will fall on ISPs, who will pass it along to internet users in the form as in the form of a tariff duly certified by the Copyright Board. Canada would likely be unique in this folly.

Ironically, the CMEC proposal could seriously erode the “large and liberal” ambit given to the research exception and to users’ rights by the Supreme Court of Canada in the CCH decision. It would be fascinating to see whatever reasoning and evidence may be the basis for this proposal and it should be of some concern that CMEC has not published any adequate analysis, as far as I know. What we do know is that there is a long paper trail of the evolution of this proposal from the Department of Canadian Heritage and the Canadian Heritage Committee, under the leadership of Sam Bulte. It is nothing if not ironic that, whatever may be its intentions, CMEC is, in the result, doing a more effective job at helping Access Copyright’s agenda than Access itself. In this instance, CMEC has – for whatever reason - come to be a wolf in sheep’s clothing.

POLITICAL RISK:

It would be surprising if this Government – assuming it to be fully and frankly briefed - were to take the risks associated with these proposals, especially while it is in a minority position. Copyright law is now the subject of lead editorials on a regular basis - e.g. just the other day in the Ottawa Citizen on September 5, 2006 right after Labour Day. It is a big political issue.

Moreover, copyright law has nothing to do with the Government’s five current priorities. To say that it has something to do with law and order would be ludicrous - unless one believes that making it easier for CRIA to sue children and dead grandmothers and to extract large settlements from ordinary families, as its American master, the RIAA, has been doing with aplomb, is somehow about law and order. This Government has lots of very serious law and order issues to keep it busy - from dealing with serial pedophiles to gun crimes to border security - not to mention the gun registry. These are promises that need to be kept.

It can only be hoped that this Government to will not proceed with the more controversial copyright proposals at this time only to respond to pressure from American interests and the American government and/or to satisfy certain domestic demands, such as the CMEC proposal, which entail harm and controversy of which the Government is likely not fully informed.

BENEFIT OF THE DOUBT?

I would like to give this Government the benefit of the doubt. Hopefully, the rumours about the bill are wrong. Or if they are right, hopefully there is still time for frank second opinions, better advice and a rewrite of the legislation - or time to simply to shelve it before introduction. There are lots of positive things that need to be done to update Canada’s copyright law in Canada’s interest - but it is likely that most of them will not be in this Bill.

I believe that this Government means well on copyright. The Conservatives’ Policy Declaration of March 19, 2005 was a very good start. Let’s see if they can live up to it. The two primarily responsible Ministers are highly qualified. Hopefully, they and their Government will not succumb to bad advice on this difficult dossier.

The ultimately irony is that this Conservative government is about to engage in profound interventionism in the marketplace of ideas, knowledge and electronic commerce by enacting extreme and unnecessary protectionist measures for the benefit of special commercial interests. Whether that is consistent with Conservative ideological roots is an interesting question. Whether the rumoured policy pillars of the proposed legislation are good for Canada is far clearer. They are not.

HK