Who Will be Next Register of Copyrights?

So, who will be the next Register of Copyrights in the USA? This is an extremely important job and always a critically important appointment, and especially so at this time.

The last three Registers have been highly respected and each is credited with remarkable accomplishments.

They were:

1. Ralph Oman, Register 1985-1993 (above)
2. Barbara Ringer, Acting Register 1993-1994
3. Marybeth Peters, Register 1994-2010 (above)

Ralph Oman was very instrumental in bringing the USA into the Berne Convention after 102 years of notable absence and playing a key role in bringing copyright law into the trade realm in a reasoned and reasonable way at the time. 

Barbara Ringer, who acted for a year, had previously as Register presided over the monumental 1976 revision to the US Copyright, which brought the USA into the modern world of copyright and primed it for Berne ratification a few years later in 1988.

Marybeth Peters, amongst many other accomplishments,  saw the evolution of the Copyright Office into the internet age, presided over much needed modernization of systems, implemented the rule making process in the DMCA. played a key role in the TEACH Act of 2002,  got the Copyright Royalty Board up and running, and steered a balanced path for the office through various thus far unsuccessful attempts to politicize it, polarize it, swallow it into the Department of Commerce, and generally take away its vitally necessary independence. 

All three of these giants were very expert in their field and highly respected by all stakeholders. They were true bastions of balance.

Against this background, read Jamie Love's predictably frank and unsurprising assessment of the current short list, as he sees it, which is not necessarily how I would see it.

Whoever gets this appointment has immense responsibility and should be up to challenge of meeting the standards set by the offices' outstanding recent predecessors as Register.

HK

Re:Sound Proposed Tariff for Use of Soundtracks in Theatres & TV Nixed (Again)

Presumably, very few copyright lawyers will be surprised to learn that the Federal Court of Appeal has just decisively (three days after the hearing) dismissed the application for judicial review brought by the collective Re:Sound (formerly NRCC) in its attempt to impose tariffs when a published sound recording is part of the soundtrack that accompanies a motion picture that is performed in public (i.e. movie theatres) or a television program that is communicated to the public by telecommunication (i.e. on TV).

Re:Sound could not overcome the language of the Copyright Act which seems quite clearly intended to prevent this very result.

The definition of "sound recording" is as follows:

“sound recording” means a recording, fixed inany material form, consisting of sounds, whetheror not of a performance of a work, but excludes any soundtrack of a cinematographicwork where it accompanies the cinematographic work;
(emaphasis added)

The Copyright Board had previously ruled that there was no basis under the Copyright Act to impose these tariffs.

Here's the Court's decision.  

Here's the Board's decision.


HK

Francis Gurry (DG - WIPO) on "Future Directions in Copyright Law"

(WIPO)

Here is an  absolute "must read" speech from today delivered down under on "Future Directions in Copyright Law" by Francis Gurry, Director General of  WIPO (above)

It has some rather trenchant comments for everyone from pirates to Presidents. Here are some examples of what he sees as necessary:

The fourth element in a comprehensive and coherent design is institutional collaboration. This is a very delicate area, where any action may have a disproportionate influence on the battle for the hearts and minds of the public on the question of appropriate copyright policy. It is also a somewhat incoherent area, with different national approaches, some emphasizing action against offending consumers and others targeting intermediaries; some plurilateral approaches in the Anti-Counterfeiting Trade Agreement (ACTA); and some practical, industry actions or codes of self-regulation.  

I believe that we need greater coherence if we are to make progress in this area. We need to define sensibly what objectives we share, starting in a modest manner. But we are very limited by the unwillingness of some countries to entertain any international discussion or action in this area.

The final element of a comprehensive and coherent design is better business models. This is undoubtedly happening now. But the story is not over and, for the future, we should constantly remind ourselves that the history of the confrontation of our classical copyright world with the digital environment has been more a sorry tale of Luddite resistance than an example of intelligent engagement.
(emphasis added)

He also deals with other important general principles such as the need for neutrality to technology and to the business models developed in response to technology and the need for comprehensiveness and coherence in the policy response.

Canadian policy makers at all levels who are involved with Bill C-32 would do well to read this speech and see how Canada measures up to Mr. Gurry's lucid analysis of what is desirable in the future of copyright law.

HK

iiNet Wins (again) Against Hollywood in Oz Appeal

iiNet has won on the appeal from its trial victory in Oz.

Here's the decision.

Here's some media coverage.

It's all about "authorization".


HK

Google Book Settlement Update As Suspense Builds

We have just passed the one year mark since Judge Denny Chin (above) reserved his decision on the Google Book Settlement (“GBS”). The hearing was on February 18, 2010. Given the quantum and complexity of the material filed, and the extreme importance of the issues, it’s no wonder that he needs time to reach a conclusion and provide reasons. Judge Chin can certainly be very quick and decisive when the circumstances warrant - such as sentencing Bernard Madoff to 150 years in prison.

BTW, I understand that Judge Chin will be speaking at the Fordham IP Conference this year, but obviously NOT about the Google Book Settlement.

Here’s an update on the GBS from the Open Book Alliance, which consists of some very important entities including Amazon, Internet Archive, Microsoft, National Writers Union, and Yahoo.  This update also includes a summary of some of the key objections to the settlement, including citation of the US Department of Justice claim that that "Google and its partners failed to address DOJ’s concerns on foreign rightsholders" - which notably includes Canadians as I have pointed out on several occasions,

It’s interesting to reread their amicus brief, filed by the Gary Reback - the renowned IP and antitrust lawyer. It is strongly critical of the settlement from an antitrust viewpoint, but is quite readable by anyone.  It proposes, as a possible remedy regarding the antitrust concerns,  that Google’s database be made available to competitors on a compulsory licensing basis for fees that would be “not much”.

A reader of my blog has recently reminded me of  one of my New Year's resolutions for 2011:

  

    5.    Judge Chin will deliver his judgment on the Google Book Settlement approval case in the early part of the year. It will be dramatic. Google will not be happy.

Needless to say, suspense is building. 

HK

IMSLP Back in the News - Library of Public Domain Music Scores

The IMSLP - International Music Score Library Project - is back in the news - and indeed in the New York Times. 

This is a huge online resource of about 85,000 public domain music scores - started by a bright young Canadian former music student, Edward W. Guo (aka "Feldmahler"), whose past copyright encounters motivated him to study law, which is what he is now doing at Harvard. It's interesting how music students gravitate to law - but that's another subject.

The basic issue for this website is that some publishers take the view that works in the public domain in Canada but not abroad should not be accessible from abroad. That, of course, is very problematic because some jurisdictions have longer terms of protection than Canada. Determining which particular editions of which particular works are or are not in the public domain in each of 180 or so countries is clearly a nearly impossible task. Blocking based on geo-location tools is a crude method that would result in enormous overkill and is probably very impractical for a volunteer crowd sourced website. I doubt that it is practical or even possible to block out particular scores from particular countries - without blocking out all scores for that country.

In any event, a downloaded PDF is not much of substitute for a well printed edition that can be used for performance purposes. Besides, it makes no sense to harmonize to the highest common denominator. Mexico has a term of  life + 100 years. No doubt some other country will one day go to life plus 120 years, etc.

Sites such as this and Project Gutenberg are invaluable and should not be threatened with over-reaching copyright claims.

I dealt with this issue a few years ago - and had an interesting exchange with Universal Editions Canadian lawyer at the time.

Hopefully, this and other comments helped to keep IMSLP online. I only wish that there had been such a resource when I was a music student.

The whole issue of conflicts of law and extra territorial application of laws is one that is incrementally but inevitably headed for a crisis and may need to be dealt with by a treaty. This is something that WIPO might wish to look into.

HK

Lady Gaga Goes Gooey & QED re Canada's Proposed UGC Exception in Bill C-32

Wherein Lady Gaga goes all gooey and confirms the wisdom of C-32's UGC exception and the notion that many types of unlicensed uses can seriously benefit copyright owners.

Today many lobbyists call this kind of thing "piracy". It used to be called "free advertising."

Here's the CBC story.

Here's part of it:

"Can't stop crying watching this. This is why I make music. She is the future," Gaga's posting stated.

Lady Gaga posted on her Twitter page that she 'can't stop crying' watching the video of Maria Aragon. (Twitter.com)She also included the link to Maria's video which had been viewed about 3,100 times prior to Gaga's tweet. By 8 p.m. CT Thursday, the number of viewers had skyrocketed to about 500,000.

"Gaga sent me here," one person commented, while the majority of those who left posted remarks lauding Maria's voice as "amazing."

The number of viewings could continue to soar, as Lady Gaga has 8.2 million Twitter followers.

HK

"Education" as the "E" Word in Bill C-32

(Access Copyright)

There were many good comments at today’s hearing today on educational issues from those in the educational, library, museum and book seller communities.

The Committee was particularly focussed on the word “education”, which Bill C-32 proposes to include in a revised s. 29. It seems that “education” has become something of an “E” word in Bill C-32.

Despite the orchestrated and inaccurate histrionics and hysteria of Access Copyright et al (e.g. see above for today's latest installment),  the inclusion of the word “education” in and of itself will clearly cause no harm to anyone, since any dealing for the purpose of “education” (whatever that may mean) must also pass the Supreme Court of Canada’s six part fairness test.  In fact, given the recent CMEC K-12 ruling by the Copyright Board as upheld by the Federal Court of Appeal, any dealing involving multiple copies in a classroom is not “fair” and any copies made when “a student is instructed to read the material” are ipso facto “likely” not “fair”. With all respect, I believe that these rulings are incorrect and I hope that the Supreme Court of Canada grants leave to appeal in this case and that the decisions are reversed. CMEC is to be commended for pursuing this matter. (I should disclose that I acted for an intervener,  CAUT, in this case, but these views, as always on this blog, are my own).

Indeed, as some on the Access Copyright side have pointed out, the inclusion of the word “education” by itself may lead to much uncertainty and litigation. The irony is that their side has the resources and presumably the will to litigate, whereas the other side lacks one or the other or both. For example, AUCC, a prominent organization representing universities in the current Access Copyright proposed $45 per student tariff hearing at the Copyright Board, clearly has the means to litigate. However, it has backed away from seeking judicial review of AC’s controversial interim tariff - even though it was “vigorously” opposed to it.

Moreover, if the bill is passed, some will try to submit that the inclusion of the word “education” by itself could suggest - as Access Copyright has already prematurely tried to argue in the Federal Court of Appeal - that “educational” purposes are not part of the present law. Unfortunately, the Court took the then days old first reading bill into consideration and pronounced, by way of obiter dicta, that “ this amendment serves only to create additional allowable purposes”.

All in all, it would seem in everyone’s interest to have more rather than less clarity here - so that the word “education” has some meaning and is still clearly subject to a “fairness” analysis. There is also a need, on many fronts, to ensure that the K-12 decision of the Copyright Board is reversed as soon as possible, since this Bill could become law before the Supreme Court of Canada even hears the K-12 case - assuming that it grants leave. The earliest that the Court might hear this case would be in the late part of this year - and normally there is a six month or so period after the hearing before judgment is rendered.

The Canadian Civil Liberties Association - who I had the privilege of helping as counsel on at the Committee - had a good suggestion for the Committee that takes all of the above into effect. Here is what CCLA has put before the Committee for its consideration on the subject of fair dealing, including the “education” issue (footnotes omitted):

1.    Ensuring an expressive society: Meaningful and flexible protection for fair dealing user rights

a.    In its current form, the Copyright Act (the "Act") recognizes some critical user rights that allow individuals and institutions to access, reproduce and distribute otherwise copyrighted work. The 'fair dealing' exceptions found under s. 29 of the Act state that using works fairly for research or private study do not violate copyright, and neither does criticism, review or news reporting so long as the work is properly cited. There are also additional exemptions for educational institutions,  libraries, archives and museums.  These fair dealing rights are essential to maintaining a healthy balance between an author's interests in compensation, and the public interest in maintaining an open, expressive and informed society. In order to maintain the delicate balance between expressive freedom and author compensation, any future amendments to the Copyright Act should fully respect user rights, and recognition of these rights should be incorporated into all aspects of copyright protection.

As the Supreme Court of Canada eloquently stated in the CCH decision in 2004, ""Research" must be given a large and liberal interpretation in order to ensure that users' rights are not unduly constrained, and is not limited to non-commercial or private contexts."  The Court thus confirmed that fair dealing is a users' right and should not be interpreted restrictively against the purpose for which it was clearly intended.

Indeed, the very first copyright law in the world, the legendary English Statute of Anne of 1709 had, as a full title "An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or purchasers of such Copies, during the Times therein mentioned".  This title confirms that the very origin of copyright law was not so much for the purpose of the protection of publishers but rather for the purpose of education. This purpose is now under attack in at the Copyright Board and in the Courts by those who would prefer, in effect, to "tax" education in the name of copyright and to impose high costs, rigid restrictions and even privacy invasive record keeping obligations on Canada's educational institutions at all levels - especially at the post-secondary level.

The Canadian Civil Liberties Association is concerned that, notwithstanding the CCH decision, the Copyright Board and the Federal Court of Appeal, operating under the current legislation, have been interpreted the "fair dealing" provisions in a fixed and restrictive manner thereby preventing a meaningful balancing that can take into account a rapidly changing field. The Copyright Board has recently held, in the context of K-12 education, that multiple copies in a classroom and anything prescribed by a teacher cannot be fair dealing. This ruling has been upheld by the Federal Court of Appeal.   While the CCLA is hopeful that the decision will be reversed in the Supreme Court of Canada, at the date of submissions of this brief, we do not even know if the Supreme Court of Canada will grant leave to appeal.

In order to make 'fair dealing' more responsive to the purposes of the legislation, the CCLA joins with others in calling for the addition of the words "such as," to make the current list of fair dealing purposes suggestive rather than exhaustive.

b.    CCLA also supports the inclusion of the word "education" in section 29. However, in view of the current jurisprudence from the Federal Court of Appeal, this word by itself may not be sufficient since that Court has confirmed the Copyright Board's interpretation that the use of multiple copies in a class room will not pass the "fairness" analysis. CCLA suggests the inclusion of explicit language such as is found in the §107 of the US Copyright Act confirming that fair dealing for the purpose of education can include multiple copies for class room use and copies prescribed by a teacher.

The US provision is as follows:

§ 107. Limitations on exclusive rights: Fair use40

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)

c.    The CCLA was concerned that the existing fair dealing exceptions may not be expansive enough to allow for criticism in the form of parody and satire. Canada should celebrate intelligent, creative forms of social critique and commentary. However, our Courts have put a severe chill on such activity in the form of the controversial 1996 Michelin  decision that is still on the books and has not been overruled. In this decision, the depiction by way of clear parody of the "Bibendum" Michelin character in the context of a union protest was held to infringe copyright.  This is completely at odds with the 1994 decision of the US Supreme Court that permitted a blatantly commercial transformation into a raunchy "rap" song by way of parody of the popular song "Pretty Woman" based on the American fair use doctrine.   Thus, CCLA is pleased that Bill C-32 explicitly include parody and satire as examples of 'fair dealing' and we support the inclusion of such language in Bill C-32.

d.    Therefore, CCLA suggests the amendment of section 29 of the Act  to read as follows:

29.    Fair dealing for purposes such as scholarship, research, private study, parody, satire or education does not infringe copyright. For greater clarity, education may include teaching with the use of multiple copies, and the use of single or multiple copies as prescribed by an instructor.

e.    Bill C-32 does not contain a blanket immunization against statutory minimum damages for educational institutions acting on a good faith belief that their practices involve fair dealing. There is an equivalent provision in the USA - namely §504(c)(2). The "ad terrorem" implied and even explicit threat by certain parties to invoke statutory damages against educational institutions in Canada has been instrumental in the imposition of costs and restrictions that have no counterpart in the American educational system. The result is that Canada is at a considerable disadvantage in terms of excessive costs and, even more importantly, greatly restricted freedom on the part of teachers and students at all levels. Section 46 of the Bill, which deals with section 38.1 of the Act, should be amended to include a provision implementing the foregoing principle.

f.    Finally, with respect to fair dealing and exceptions, the CCLA is concerned that the proposed educational exception for educational use of publicly available material on the internet is not only unnecessary but may actual prove to be seriously harmful. There is no reason why educators need any special exception, if principles of fair dealing and implied license are sufficient.  Moreover, such a provision risks the creation of an "a contrario" implication that anyone outside of the educational framework cannot save, store, print, communicate  or otherwise use publicly available material on the internet in the way in which such use is commonly undertaken and in respect of which certain educators seek a special exception. It is noted that this special exception is sought mainly by the K-12 sector and that there is little if any support in the post-secondary realm and, indeed, some active opposition. Therefore, proposed section 30.04 of the Bill should be eliminated.

(emphasis added)

HK

Déjà vu All Over Again on Copyright and Canada/US Trade? An Election Issue?

(Government of Canada)

Linking Canadian copyright reform to un-thickening the Canada/US border and getting the USA to honour its NAFTA commitments is coming back again, rather like a bad penny.  Colin Robertson, a former Canadian diplomat, who just over a year ago  appeared rather sympathetic to the American point of view and shielded one of its best lobbyists from close questioning on it, is now suggesting in the current Embassy Magazine that with respect to the current Canada/USA Harper/Obama level talks that:

But there exists several hurdles for Mr. Obama and Mr. Harper. A big element is that the Americans are waiting for Canada to push through new copyright legislation, something the country is getting a reputation for abroad as being lax on, said Mr. Robertson.

It’s not clear why Mr. Robertson would repeat the US lobbyists’ and Government’s  mantra about “copyright legislation, something the country is getting a reputation for abroad as being lax on” without at least somewhat defending Canada. Presumably Mr. Robertson would not wish to be inconsistent with his reluctance to let Ms. Greenwood be questioned about this fallacy in December of 2009.

I have pointed out any number of times that Canada’s copyright legislation is already stronger than US law in at least 21 ways that generate substantial cash flow to the USA. 

Hopefully, Canada will see through this irrational and asymmetrical linkage effort once again. This is truly “Déjà vu All Over Again.” Given other recent developments and the rhetoric, such as that of Colin Robertson now building on the border issue, let us not be surprised if copyright does become an actual election issue.

As to the “Déjà vu All Over Again” aspect, on December 8, 2009 I wrote about the absurd suggestion by big time American lobbyists Scotty Greenwood that all that Canada needs to do to deal with the “Buy American” problem at the time and other trade issues (in which the USA was not honouring its obligations) was to capitulate the USA on its copyright demands. 

I said then:

There was a very interesting international trade event on The Hill yesterday - very capably and even-handedly hosted by the Hon. Scott Brison, PC., M.P. Lots of MPs, Senators and trade policy types. Some very senior level speakers. Mr. Ignatieff was there listening and said a few words. The Right Honourable Joe Clark, former Prime Minister, was the main keynote lunch speaker and spoke eloquently about Canada-Africa trade, despite inexcusable bungling by the Hill technical people of his slide presentation. He was witty and wise.

Anyway, the highlight for me was the astonishing statement that was made by Maryscott (“Scotty”) Greenwood, who is an energetic figure in on the Canada/US relations front. Among other things, she is Executive Director of the Canadian-American Business Council (“CAB”).

She is also a sometimes controversial lobbyist, who worked for and now with Gordon Giffin, a former US Ambassador to Canada under the Clinton administration from 1997 to 2001.

The CABC is big on such issues as the “Buy American” controversy that is hurting so many Canadian SMEs, such as Hayward Gordon (a 57 year old pump technology company), whose President, John Hayward, spoke so eloquently yesterday.

Greenwood’s remarks unfolded like a slick Hollywood movie leading to an unstoppable, inevitable and unbelievable conclusion.

After a lot of very intelligent talk by her and others about the “Buy American” problem and the long history of Canada/US relations, she said that the solution is very simple.

You could feel the punch line coming when she was concluding her remarks just before questions were taken by indicating that she “loves linkages” (trade policy jargon for the linking of two often unrelated issues, which can result in the giving away of one sector’s interests to benefit another's).

Her conclusion was then a predictable climax, in which she actually came out and said that Canada could solve most if not all of its current trade problems with the USA - and particularly the “Buy American” issue - by simply “fixing copyright.” These problems would then be solved “tomorrow.”

Yep - the Canada/US file is now all about copyright, according to her. All we have to do is do what the US Government and the American lobbyists say. It doesn't matter how wrong the USA may be about “Buy American” and countless other trade irritations. Or even if the USA is the most flagrant scofflaw at the WTO in international copyright law.

Never mind that Canadian copyright law is already stronger and better in more than a dozen ways than US copyright law - some of which provide a lot of money to American interests.

Never mind all of this, we should just do as they say.

So I asked a question - admittedly with something of a preface to set the context - about why Canada would even discuss copyright with the USA when:

• the father of the American father of the DMCA, which is the model we are supposed to follow, (Bruce Lehman) has disowned it;

• there was no evidence of serious counterfeiting and piracy in Canada and no basis for the 301 listing, other than that of a few lobbyists’ recycled back-of-the envelope musings;

• the most obvious source of counterfeit and pirated goods are the street corners of midtown Manhattan; and,

• above all why Canada would be discussing a secret treaty called ACTA that would make the border even more sticky and inefficient than it already is.

The Moderator, Colin Robertson is a DFAIT diplomat who is on loan to the Norman Paterson School of International Affairs, which has generally been very supportive of Canadian foreign policy and big business interests.

Mr. Robertson was the first to mention Canada's place on the US piracy list yesterday. He clearly didn't like my question, or the context setting remarks. Ms. Greenwood - to her credit - answered it, however briefly and unsatisfactorily. I didn’t get a follow up. Her answer was that Canada should fix its copyright law in the manner suggested by the USA because this would be better for Canada or words to that effect. Isn't it touching that American lobbyists are so concerned for the best interests of Canada?

Anyway, some influential folks were quite interested in my question and it clearly took many by surprise who were unaware of ACTA, its trade implications, the secrecy attached to it, and the general sensitivity of the copyright account.

Yesterday was clearly another example of US government and entertainment industry lobbying and policy laundering at its finest. Let us hope that some, at least, saw through it.

HK

The $45,000,000 Chet Baker Estate Copyright Class Action Settlement - The February 9, 2011 Deadline

The class action on behalf of Chet Baker against the major record labels in Canada has been settled, according to a press release The labels will reportedly pay out about $45 million. That sounds like a lot - and indeed it is by any measure in Canadian copyright litigation. However, this figure can better be seen in perspective when one reads the Fresh as Amended Statement of Claim  (“the Claim”), which alleges that there were 300,000 (not a misprint) works on the “pending lists”  “for which no license has been obtained and no compensation has been paid to the class owners.”  The Claim states that “According to the Record Companies, the lists reflect liability for unpaid royalties in excess of $50,000,000." 

Initial reports had the law suit valued at $6 billion based upon statutory damages of $20,000 a piece for 300,000 works.

After an unspecified number of millions more in legal fees, disbursements and commissions are paid out from the settlement funds, something likely well under an average of $135 will be paid to copyright owners for each work allegedly infringed. This may not sound like very much. Indeed, if the figures in the Claim are accurate, it’s less than the face amount of what is owed.  However, it is a significant chunk of what was allegedly owed and is far better than nothing. Whether it is enough is for class action members and their advisors  to decide, assuming that they are aware of the deadline of February 9, 2011 to voice their objections prior to the scheduled approval hearing date which is set for February 15, 2011.

In any event, the record companies and CSI (CMRRA + SODRAC) appear to be very happy with this result, which is hardly surprising considering that they are apparently, according the Claim, paying less than the face value of the amount owing after several years and after legal costs. Arguably, they are about to get, effectively, a judicially sanctioned retroactive compulsory license on a massive scale.
   
Although announced on January 10, 2011, this has received remarkably little attention, especially considering that it is probably the largest ever class action copyright settlement in Canada, and is worth more than four times the $11 million settlement in the Robertson case that went to he Supreme Court of Canada. However, despite the large sounding figure - is not notably generous to the class members, who will receive at the end of the day, which could be a very long time from now if at all (assuming that they can be found), something likely well under an average of $135 per title infringed. This is far less than the $20,000 first forecast per infringement and less than a third of the normal minimum statutory damages amount of $500 per work - BEFORE further legal and other costs (which could be very substantial) are taken into account.   

And the obvious fact is that this involved alleged infringement by the worlds biggest record companies, which are commercial businesses.

All of this arises from allegations “that the Record Companies are liable for copyright infringement by reproducing certain musical works in sound recordings released in physical formats in Canada, without securing licenses from the owners of copyright in those musical works and/or without payment of the necessary royalties”.

Once upon a time (prior to 1988) we had a compulsory mechanical license system in Canada. A record company could use this license to make a sound recording by paying the required fee.  The USA still has this system. Now, we have a system where licenses (i.e. permission) is supposed to be obtained in advance for each recording, and the agreed amount must be paid. Enter CMRRA (English Canada) and  SODRAC (French Canada), which can provide many but not all necessary licenses on behalf of many but not all music publishers and copyright owners These organizations had a very small footprint prior to 1988.  CMRRA/SODRAC represents music publishers. However, a good chunk of the music publishing business is owned by the record companies. Interestingly, CMRRA was largely responsible for the abolition of the mechanical license in 1988 - based upon the memorable slogan of “Two cents too long.”

According to the Court approved Notice:

    The “Pending Lists”

    The class action pertains to a process whereby the Record Companies maintain lists, usually referred to as “Pending Lists”, pursuant to mechanical licensing agreements with CMRRA. Those lists itemize musical works that have been reproduced by the Record Companies in sound recordings (and in some cases, video products) released in physical formats in Canada, for which the Record Companies have not, for various reasons and despite ongoing efforts, secured licences from and/or paid royalties to the owners of copyright in those musical works. 

Also, according to this Notice:

    CMRRA and SODRAC agreed to and have provided the plaintiffs with evidence, cooperation and assistance to the plaintiffs in exchange for a release of the claims made against them.  

This is somewhat odd since CMRRA and SODRAC would have had to provide evidence in any event, if pressed,  through the discovery process. After all, they were named as Defendants. Needless to say, CMRRA and SODRAC are in an interesting position here, given their relationship with the big record companies on the one hand and composers and publishers on the other hand, particularly considering that the record companies have very major publishing interests.

In the end, not only are CMRRA and SODRAC let off the hook in the settlement - they indeed will actually benefit from it with the 10% “commission” they will receive - see below. This is presumably in addition to the amounts they would normally earn from their licensing activities.

It is possible that the normal minimum statutory damages award amount of $500 was negotiated down for a number of reasons, which could include the provisions of the statute itself allowing this where there are a large number of works and the ostensible three year limitation period in the statute. The limitation period issue might have been very interesting, it’s far from clear how that  limitations period might have applied  in a situation such as this, where much of the alleged infringement may not have been reasonably discoverable by many of the plaintiffs.

For reasons which are explained further below, it is not clear from the available documents how the settlement will resolve the issues that led to this litigation on a going forward basis.

Some limited documentation is available on the Plaintiff’s lead counsels' website. These documents indicate that:

•    The four labels will pay collectively a minimum of $750,000 for “partial indemnity costs”.
•    Additional payments for legal fees and disbursements will come out of the Settlement Trust as approved by the Court. The available documentation does not indicate what this amount will be. It is likely that the amount sought will be substantial. However, it is not apparent how far along this case got in the litigation process beyond the statement of claim and the certification stage.
•     CIPPIC, the legal clinic at the University of Ottawa Faculty of Law, which has a mandate to “provide legal assistance to under-represented organizations and individuals on matters involving the intersection of law and technology”,  is listed on the Statement of Claim with its current director (David Fewer)  and former director (Phillippa Lawson) as co-counsel for the class plaintiffs along with counsel in two private law firms. Their role in this case and financial involvement in this settlement and the expected multimillion dollar legal fees are not apparent in the currently publicly available settlement documentation. 
•    CMRRA/SODRAC will receive 10% of all payments made out of the Settlement Trust as “commission” for acting as “settlement administrator”. Presumably, this will be in addition to the regular remuneration that CMRRA/SODRAC receives from copyright owners. They will not have to pay anything to the copyright owners.
•    Notice costs to a maximum of $150,000 will be paid out of the Settlement Trust. These notices, usually in the form of newspaper ads, are often the only vehicle by which class members become aware of their entitlement, the deadlines and procedures for making a claim and, of course, the deadliness and procedures to opt out of the settlement and to seek their own redress if they are not satisfied with the award.
•    For reasons which are not apparent the “opt-out” threshold will be provided to the Court for approval on a confidential basis.       
•    A number of documents referred to in the available settlement documents, such as the potentially very important CSI (CMRRA + SODRAC) “term sheet” are not available.

Thus, the net average payment per work alleged to have been infringed will be something probably well below an average of $135 after CMRRA and SODRAC and the plaintiff’s class action counsel get paid.
   
For better or worse, settlements have no binding precedential value as such in the Courts for future court cases. It would have been very interesting and informative had this matter gone to trial, but we will presumably never know why it did not. Nonetheless, there are some interesting and ironical lessons that some might argue are can be gleaned from this settlement, if it is approved.

For example, the American international parents of the same record companies that are getting off the hook for less than $150 per alleged infringement in Canada are asking for and pushing with all their considerable might for  $62,500 for each of the 24 songs that Jamie Thomas-Rasset, a single native American mother,  downloaded and "shared" in litigation brought by in the USA.

This is even more ironic because the head of the Canadian Recoding Industry Association, Graham Henderson, is on record as complaining that Bill C-32 gives those engaged in non-commercial activity a “license to steal”, even though they could be found liable for far more than $150 per work to a maximum of $5,000. A $5,000 damages award to an individual is far more severe than a $50,000,000 hit that retroactively and with an apparently very substantial discount wipes the commercial mechanical license infringement slate clean for an industry that still takes in about a $1,000,000,0000 a year in Canada from various revenue sources. One might even say that the operative rule that eventually led to this litigation could have been to the effect of "exploit now, pay later if at all."

One positive potential lesson here, but which will likely be lost upon many who could learn from it, its that overly risk-averse management and counsel of Canadian educational institutions who are constantly alarmed by Access Copyright’s veiled threats of statutory damages could take some considerable comfort here.  If this case is any guideline, even mass systematic commercial infringement will settle at a discount. Needless to say, universities are not engaged in such activity. And Access Copyright would likely never have as good as case as the plaintiffs had in this instance.

Thus, it seems that in a very big copyright action involving an extremely large number of titles and owners, a settlement at significant discount may be the logical and even inevitable result if the case is well fought.  In any copyright action involving even one title, there can be fatal difficulties in proving chain of title - especially where there is no timely registration and the actual creator and/or copyright owner are not eager to get involved - and especially so when they are not in Canada.  In mass infringement, there can presumably be mass difficulties.

Facts about the Settlement:
   
The documentation available on the lead law firm’s website is not detailed.  For example, there is no indication of the contents of the CSI “term sheet” that is mentioned many times, nor how CMRRA/SODCRAC will deal with the issues that have arisen in the future. While the Google Book Settlement documentation was enormously voluminous and complex, this documentation is on the other extreme. We do not know, for example, how much the lawyers for the class plaintiffs will receive at the end of the day from the settlement proceeds, or even what they are asking for.  We do not know what the “opt out” threshold will be and why this is confidential. We do not know what is in the CSI “Term Sheet”.

In fact, some key information found in the Wire Report story of January 11, 2011 is more revealing than the settlement documentation. It indicated that CMRRA will, interestingly enough, rely on s. 77 of the Copyright Act to deal with unlocatable owners:

    Basskin [of CMRRA] said the new platform will prevent labels' pending lists from building up anew.

    “We will be assisting the record companies in obtaining licences from the Copyright Board of Canada pursuant to section 77 of the Copyright Act,” he said.

   

    “Under the Copyright Act, if a person who wants to use a copyright has made reasonable attempts to find the owner, but has been unable to do so, he can apply to the Copyright Board for a licence to close that gap. The Copyright Board then takes care of the process of issuing the licence, collecting the royalties and basically advising the public at large, 'if this is yours, come forward and get your money.'”

   

    The CMRRA and SODRAC will also create a website where the public can verify if any of their works are on a pending list.

This is really interesting because s. 77 of the Copyright Act was arguably never intended to set up mass clearances by the Board of thousands of works, especially where the circumstances will be different and difficult by definition in each case. Handing this issue over to the Board and expecting the Board to bless massive numbers of mechanical licenses in bulk for supposedly “unlocatable” copyright owners and deal with the proceeds and claims looks a lot like a compulsory license regime, with the potentially considerable administration costs borne at least in large part by taxpayers. The Board is rarely reticent about asking for more resources, even though it is already apparently by far the largest Board of its type anywhere in the world.

As noted above. that CMRRA expects a 10% commission on the proceeds it distributes for the Settlement Fund, in other words to the locatable owners. This presumably will be in addition to whatever else it gets paid for its agency services.

In any case, the Board has had apparent difficulty handling the relatively small number of requests it has hitherto received in a timely manner. About half of the applications take more than eight weeks to process. It is unclear whether any of the Board actually have any hands on involvement with this process. (The Board has held only one actual “hearing” on an unlocatable issue and the result was a very  troublesome 3-2 split decision). The Board currently estimates that a reasonable normal time delay would be about 45 days, which is likely unsuitable for the music industry.  Currently, the Board receives only a few dozen applications a year for “unlocatable” licenses. In 2008-2009, it received only 28 applications and issued only 14 licenses.  Even with all of its resources, which were recently augmented, the Board still requires as much as 18 months or more from the conclusion of a hearing to issue decisions from the few hearings it holds each year.  (This year, there are none scheduled). What the Board will do with an ongoing  list of conceivably thousands or more of unlocatable copyright owners remains to be seen.

While it is understood that informal talks may have taken place with the Board, it is also understood that there is no formal or official arrangement in place. Nor is there any reference in the available settlement documents to this information disclosed to the media by CMRRA.
   
Approval Hearing of February 15, 2011 and Deadline of February 9, 2011:

Those who may wish to object to the terms of the settlement for any reason should note the following, from the notice approved by the Court and very short deadline from now for making submissions (February 9, 2011) in advance of the approval hearing itself (February 15, 2011). It is unclear to what extent notice of this key step in the proceeding has been given to class members. There are lots of interesting questions in this instance, which may or may not be answered if and when we see more documents.

Note the following from the "Notice of Approval and Settlement Certification Hearing" document:

A hearing to approve the settlements entered into between the Plaintiffs and the Defendants will be held by the Ontario Superior Court of Justice in Toronto on Tuesday, February 15, 2011 at 10:00 am.


Class Members are permitted to appear and make submissions at the hearing with respect to the settlements or to make submissions in writing. If you wish to comment on or make an objection to the settlements, a written submission must be delivered to Class Counsel by fax or regular mail at the contact particulars listed below by Wednesday, February 09, 2011. Class Counsel undertake to forward all such submissions to the Court and to counsel for the Defendants for consideration. If the settlements receive court approval, further notices will be published to advise of such court approval.


Class Members who do not oppose the proposed settlements need not appear at the hearing or take any other action at this time to indicate their desire to participate in the settlements. The process for Class Members to make a claim for settlement benefits will be explained in the future within a subsequent notice.

The Fax number for Jonathan Foreman at Harrison Pensa, the lead counsel, is:
Fax: (519) 667-3362

Anyone wishing to object to this settlement should fax Harrison Pensa IMMEDIATELY - and in no case later than February 9, 2011.
   
CONCLUSION

Like many class actions that are settled, this one raises as many questions or more than it answers. However, settlements that are in the interests of all parties are clearly preferable to protracted litigation. 

This settlement appears to result in the paying of a significant portion of money that has been owing for a long time. The settlement apparently works very well for the record companies, CMRRA/SODRAC and the many lawyers involved for all parties.

While the record companies are no doubt pleased that they have been able to “exploit now and pay later”, at an apparent discount, the ironies of this position are open for discussion in future policy and even legal confrontations. If these commercial enterprises can do this, can they in turn, wearing their copyright owner hats, henceforth continue to express outrage about non-commercial private use and to seek the right to collect disproportionate statutory damages from non-commercial users such as students and single mothers? Will the potential ironies of this approach affect the ability of other would be copyright claimants - such as Access Copyright - to credibly threaten large statutory damage awards in non-commercial contexts, such as educational institutions and governments, where non-clearance is bound to be inadvertent and anything but systematic?

Invariably last, but not least, are the artists and creators. Whether the terms are adequate for them - assuming that they know about it - will be decided very soon on February 15, 2011 in a Court in a Toronto court room. Any objections by them must be filed with class counsel by February 9, 2011.

HK

Canadian Bar Association ("CBA") Brief on Bill C-32 Now Available

The Canadian Bar Association ("CBA") National Intellectual Property & National Privacy and Access Law Sections Canadian Bar Association has released its brief on Bill C-32, available here.

Its format seeks to balance the views of owners/creators on the one hand and users on the other, and to indicate where there is some common ground. It uses charts to set forth a summary of the competing views on the key issues. There is also some extensive discussion.

It begins as follows and is well worth reading:

Copyright is a controversial subject, which engages the interests of a wide cross-section of Canadians. The copyright bar, similarly, holds a multiplicity of perspectives on copyright. Because of the diversity of perspectives, the CBA Intellectual Property Section and Privacy and Access Law Section (CBA Sections) have chosen, in their submission, to summarize the legal contours of the various policy perspectives on copyright, to assist Parliamentarians in their study of Bill C-32. The goal of any new copyright legislation must be to strike the appropriate balance in the rights of all parties, while recognizing the value of the intellectual property in copyright. 

In reviewing Bill C-32, the CBA Sections assembled a working group of CBA members with expertise in copyright law and privacy law to develop the submission (the Working Group). The Working Group was often unable to agree upon an assessment of specific provisions from a policy perspective. Therefore, in lieu of specific recommendations, it adopted a format wherein it identified potential issues with each provision, noted the diversity of perspectives with respect to these issues, and developed a chart summarizing relevant commentary from creators/owners’ and users’ perspectives.

The Working Group produced commentary under the headings: Technological Protection Measures, Exceptions to Copyright Infringement, ISP and Search Engine Liability, Making Available and Distribution Rights, and Statutory Damages, and ends each section with the aforementioned chart.

HK

Federal Court Judgment Overturns Cabinet Decision in Globalive Case

(Credit: Couvrette)

Justice Roger Hughes (pictured above) of the Federal Court has issued a notable and inevitably controversial judgment reversing Cabinet's reversal of the CRTC Globalive decision.

Although Cabinet has the power to overrule the CRTC, Cabinet must follow the intent of the statute that confers upon it this power.  He says:

[117] In the first of the above “Whereas” clauses, the Governor in Council misdirected itself in
law  by interpreting the Canadian ownership and control requirements of the Telecommunications
Act ,to use its words, “in a way that ensures access to foreign capital, technology and experience is
encouraged”.  While the Governor in Council is correct in saying in the same clause that “the Act
does not impose limits on foreign investment” it must be kept in mind that the Act does not refer
anywhere to “foreign investment” or to “foreign capital, technology and experience”. What the Act
does say is that telecommunications has an essential role in the maintenance of Canada’s identity
and sovereignty and provides a policy objective which requires Canadian ownership and control to
be promoted. There is no policy objective in the Act that encourages foreign investment. The Act
provides tests as to Canadian ownership and control including in subsection 16(3)(c) that a
corporation not be otherwise controlled by a non-Canadian. The intent of the Act is clear that a
situation such as this is to be determined in a manner so as to ensure that there is Canadian control. 
Where there is a concern that foreign investment and other factors may put Canadian control at risk
then it is the promotion of Canadian control that is to be the essential criterion upon which the
matter is to be determined. It is for Parliament not the Governor in Council to rewrite the Act.

(emphasis added)

There will be much analysis of this decision, which I found on the very worthy http://www.thewirereport.ca/ website. It is not yet on the Federal Court website, though it will no doubt appear very soon.

This is the latest of many decisions since Dunsmuir to probe the "sempeternal" question of standard of review, although review of cabinet decisions is quite rare. One had hoped that the issue would have been put to rest by the Supreme Court of Canada's decisions in Housen, Dunsmuir and Khosa. There was also a pronouncement on standard of review in Calgene, delivered by the SCC as recently as on the second day that this case was being heard. . However, the Federal Court and, most notably, the Federal Court of Appeal have seemed lately to be, with respect,  rather unpredictable and not notably consistent with respect to the application of the standard of review jurisprudence. Hopefully, if the SCC takes CMEC's K-12  fair dealing case along with the SOCAN "previews" case, which it has already agreed to take, we will get further needed guidance, since standard of review is likely to be an important issue in these cases.

It will be interesting to see what effect, if any, Justice Hughes' decision - assuming that it stands - could have on the recent very controversial UBB ruling from the CRTC, which the Government has indicated it will not allow to stand.

There was a voluminous record in this proceeding going back more than one year. There was a two day hearing involving several very high powered parties on January 19 and 20, 2011. Justice Hughes' 57 page decision followed 15 days later on February 4, 2011.

HK

PS - here's a direct link to the Federal Court posting of the decision.

The Access Copyright Interim Tariff: An Excessive or perhaps "Egg-cessive" Access Management Fee?

(Ally Bank commercial)

A lot of effort was put in by a lot of people to oppose Access Copyright’s controversial Interim Tariff - sought belatedly and without any evidence, or indeed any existing tariff to form the basis of an extension or interim tariff.  The Copyright Board rendered a decision on December 23, 2010  favouring Access Copyright - without providing reasons.

Here’s an update on the Board’s Interim Tariff ruling favour of Access Copyright that supposedly maintains the status quo “to the extent possible”.

1. The parties that clearly have the means and who might have been expected to seek judicial review (“JR”) have not done so. The presumptive deadline for doing so was January 21, 2011. Their reasons for failing to do so are not apparent. 

2. Indeed, this failure is very interesting, since AUCC (representing university management) protested that it “vigorously opposes” the AC application and said that the Board has “no jurisdiction” in this instance. Along with ACCC (representing college management), it filed several good arguments as to why the Board should not issue an interim tariff. Thus, the decisions of the two main objectors not to seek judicial review are difficult to understand.

3. Other parties who may have wished to seek judicial review may have lacked the means to do so. 

4. Whatever the reason that JR has not been sought by any participant, it ought not to have been based upon concern over the likelihood of success. Indeed, while nothing is ever certain in a Court, this was a very arguable and even strong case. There are very good arguments in this instance that the Board had no jurisdiction to award a so-called “interim” tariff that will probably last at least three years and cost at least $48 million. Moreover, even if the Board had jurisdiction, this case failed to meet the requirements of the Board’s own precedents for an “interim” tariff. There was no previous tariff and Access Copyright filed no “evidence” of any “deleterious effect” other than certain statements in a letter from its former lawyer.  Finally, there were arguably serious issues regarding procedural fairness  - such as the incredibly compressed schedule, the failure to allow an oral hearing, and the arguably unfair accommodation of the shortcomings in terms of substance and procedure of AC’s submissions. 

5. The failure of AUCC and ACCC to step up to the JR plate may reflect simple pragmatism as seen by risk averse university and college management - at the expense of faculty and students. Many institutions will likely pass these “interim” costs along to their students. UWO, for example, decided to this very early on and may even make a tidy profit in the short run - since it is taking more than $16 per student per year to cover this. Morever, administrators can now go back to their risk free “don’t ask, don’t tell” indemnity regime (at least for non-“digital” rights), without worrying about being sued, or how many times over they are paying for clearances they don’t need in the first place or that AC may lack any chain of title or rights to begin with in many cases.

6. The downside of this current status quo as imposed by the Board  could be as follows:

a. Students will have to pay money that could have been saved and better spent elsewhere.  If the students don’t pay directly, the taxpayers will pay indirectly. The potential cost is presumably $48 million over three years  based on AC’s own figures. That would pay for a lot of professors, a lot of library books and even a few nice buildings. 

b. The restrictive practices included in terms of the tariff - and the fact that it confers de facto legal status on digital rights that arguably don’t even exist (e.g. linking and display), may seriously impact any future assessment of “fairness” in the Courts or at the Board, especially since AUCC an ACCC have not even tried to set this interim tariff aside. AC may argue that this tariff sets forth the floor value both in terms of dollars and practices that comprise any fairness assessment - since the universities and colleges apparently agree with it. Otherwise, they would have at least tried to contest this in the Federal Court of Appeal, or so the argument could go.

c. AC and the Copyright Board may now reasonably infer that AUCC and ACCC will not be fighting this proposed tariff as “vigorously” as many would have hoped or even as “vigorously” as professed. Indeed, one suspects that AUCC would consider anything less than $20 to $22 per student at the end of the day to a victory.  The end game here will likely be an amount somewhere between $18 to $22 per year for university students and somewhat less for college students - no matter how many millions of dollars the main parties spend on legal fees, survey costs, etc. 

7. In any case, the final tariff - which will almost assuredly be years away - will almost certainly be substantially higher than the interim amount of $3.38 plus $0.10 a page will generate - which is likely to form an unofficial base or foundation for AC to build upon. The Board rarely lowers tariffs. It will also almost certainly be retroactive for the several years that the Board normally spends on these cases, unless this practice of the Board in granting such long reaching retroactive tariffs is finally successfully challenged in the Courts. There are good arguments to be made that this practice could and should be challenged. 

8. Indeed, there are good arguments why the final figure should be even less than the $3.38 current minimum. This is because paper course packs are becoming obsolete, and the CCH v. LSUC decision may not have been adequately taken into account in renewing that rate several years following the 2004 decision of the Supreme Court of Canada.  As well, there are serious problems with the framing of the “digital rights” in the proposed tariff  and the basis of AC’s chain of title in any event. But this is not a likely outcome.

9. If the costs gets passed on to students anyway, do university and college managements really care? If there are undue restrictions on faculty and students in term of access to knowledge, will anyone in management even notice, given the  Canadian educational system’s apparent tolerance at all levels for a far more restrictive and expensive copyright regime than in the USA, for example? 

10. There are signs that some universities - both large and small - are not exactly pleased about what is going on here. Nor should they be, since these issues place Canadian teachers and students and a distinct disadvantage as compared to their counterparts in other places, such as the USA and China. As many have begun to notice, AUCC’s recent fair dealing  guidelines, for example, and its overall dealing with AC have generally seemed something considerably less than vigorous. It will be interesting to see what happens inside AUCC and ACCC.

11. Ironically, all of this is about supposedly generating more money for authors who, in most cases, will see less per year from Access Copyright than many copyright lawyers would normally bill per hour. 

12. Last but not least, it is now more than six weeks since the Board quickly and decisively issued its December 23, 2010 decision on the Interim Tariff without reasons. We still have seen no reasons, which is rather surprising under the circumstances. Now that the Board knows that there will almost certainly be no attempt at judicial review, it will be even more interesting to see what these reasons say when we eventually see them.

HK