IP in Canada - Year End 2008/New Year's 2009 Thoughts

Here’s my year end/New Year’s take on Canadian IP law, with a little international colour as it affects Canada. The action in Canada was mostly but not entirely on the copyright front.

First, the past year:

On the good news front from last year, we saw:

1. The election and installation of Francis Gurry, from Australia, as Director General of WIPO. This will hopefully restore focus, competence, integrity, leadership and relevance to this once world leading IP body. A stronger and better WIPO could help to attenuate the trends to bilateralism and secret negotiations by a limited number of parties (ACTA), both of which are potentially harmful to all but the most powerful countries.

2. The demise of Canada’s Bill C-61, which would have been a “made worse in Canada” version of the US DMCA.

3. The death, yet again, of the “iPod Tax”. The Copyright Board and the CPCC were decisively told for the second time by the Federal Court of Appeal that there can be no levy on “on digital audio recorders or on the memory permanently embedded in digital audio recorders” under the current legislation. However, the CPCC has many millions of unspent and undistributed consumers’ levy dollars to lobby for legislative enactment of such a “levy” - assuming that the music industry’s civil war over this issue doesn’t get in the way.

4. An instructive and important decision in Apotex v. Sanofi written by Justice Marshall Rothstein of the Supreme Court of Canada on the doctrines of anticipation and obviousness in patent law, upholding a trial decision by Justice Michel Shore of the Federal Court.

On the negative but still theoretically fixable front, we saw last year:

1. The rollout of, in effect, a new commercial music radio network in Canada paid for entirely by taxpayers without the occurrence of a CRTC hearing or a change in the Broadcasting Act. It is called CBC Radio 2. The “New 2" results from the purge and devastation of what was the former CBC Radio 2. One obvious effect of this will be significant additional expenditure by CBC to fund the apparently inevitable increased tariff payments to SOCAN, NRCC and potentially CMRRA/SODRAC of several million dollars a year due to the replacement of much public domain classical music of “dead, white European males” with that of living Canadian singer/songwriters and other commercial stuff that belongs on commercial radio. This will please the likes of SOCAN, CRIA, CIRPA, CMRRA, SODRAC and the Canadian Songwriters Hall of Fame, etc. Of course, if CBC Radio 2 ratings continue to plummet due to the bad programming that presents a “mix of music you won’t hear anywhere else” ™ (thank God!) , the rise in tariff payments may not be that much, if CBC is on the ball. Current CBC management is spending millions to advertise its new format that benefits these already subsidized commercial interests that also benefit from CanCon regulations. I understand that CBC refuses ATIP requests on the subject of advertising costs.

2. The secret pursuit of the still secret proposed ACTA treaty - which could result in serious interference with legitimate commerce and the inconvenience, invasion of privacy and even prosecution and confiscation of equipment from anyone carrying a laptop, digital camera, iPod, cell phone, etc. who has dared to download anything “illegal” in the eyes of organizations such as the RIAA. If the proposed ACTA isn’t really that scary, then why isn’t it transparent, like every other proposed trade treaty?

3. The continued victimization of tens of thousands of ordinary America music fans and customers by the RIAA - with things about to get even worse in some ways, if the RIAA succeeds in convincing ISPs to act as judge, jury and executioner against alleged repeat infringers with due process dictated by the RIAA.

4. The end of Bill Patry’s learned copyright blog, which was resuscitated momentarily in memoriam of Sir Hugh Laddie.

On the important, interesting and unpredictable front last year:

1. We saw the Federal Court of Appeal uphold a 2007 decision of Justice Roger Hughes of the Federal Court ordering eBay Canada to turn over the names of its “PowerSellers” stored on American servers to Canadian tax authorities. We don’t yet know whether leave to appeal will be sought from the Supremes. The trend to extraterritorial application of laws due to the borderless aspect of the internet seems inevitable but not necessarily desirable, especially for a relatively weaker country like Canada.

2. The Supreme Court of Canada declined to hear an appeal in the ringtones case, thus letting stand the Federal Court of Appeal’s decision that the provision of ringtones involves a communication to the public by telecommunication. If this is the final judicial pronouncement on this issue, we now have an obviously seriously increasing problem of multiple tariffs for the same transaction. Sooner or later, a legislative fix will be required.

On the sad front:

1. We saw the untimely death of the irrepressible and irreplaceable Sir Hugh Laddie, whose influence was global. He would have continued to have a major effect on the future of IP had he not passed away so tragically soon at the age of 62. Hopefully, his legacy as someone who knew how to make the IP system work for owners as a barrister (he invented the Anton Piller order) and to make it function fairly as a judge, and to push, as a professor and scholar, for a truly balanced IP system that didn’t simply pander to the excessive greed of corporate IP owners will live on. He was one of a kind - both as a person and as force in the law of intellectual property.

Now, for 2009:

1. Even after lengthy delays, we still await some important decisions from the Copyright Board, including the K-12 educational reprography tariff (heard in 2007) that could set the stage for what Access Copyright presumably hopes to be a massive increase in rates for the post secondary institutions. If the Board believes that it has sufficient evidence, it may follow up on the fair dealing implications of the 2004 CCH decision by the Supreme Court of Canada by greatly reducing the amount sought by Access Copyright. We also still await the result of the January, 2008 hearing in which SOCAN sought to greatly increase the cost of background music provided by background music suppliers.

2. Once again, there is unlikely to be closure on SOCAN’s proposed Tariff 22 for music on the internet, which was first filed in at the Copyright Board in 1995 (right after the birth of Netscape). The latest decisions of the Copyright Board on quantum were released in two phases in late 2007 and late 2008. These decisions also raised a number of legal issues and are the subject of several pending judicial review proceedings in the Federal Court of Appeal.

3. The WIPO Standing Committee on Copyright and Related Rights (SCCR) still seems to be adrift without a direction, or a helm. The proposed broadcasters’ rights and audiovisual works treaties remain on the agenda, but are unlikely to go anywhere soon. New efforts to focus on more urgent issues such as limitations and exceptions and particularly a treaty for the rights of blind persons have yet to result in much concrete progress.

4. Canada waits to see whether there will be another copyright reform bill in 2009. For those outside Canada who may not be aware, we currently have a unique political situation consisting of a minority government with an insecure hold on power that has just prorogued (i.e. suspended) Parliament until January 26, 2009 right after a controversially called election and during the worst economic crisis since 1929. One would think that, in these circumstances, the Government may be reluctant to introduce any copyright bill, especially one similar to the now dead Bill C-61 that was so controversial. However, if the Government has the resolve and is prepared to risk significant political capital in this milieu, it does have the opportunity here to present a very different bill that could contribute to an economic stimulus in many concrete ways that would be a win/win for all reasonable parties. But there are a small number (less than a handful) of parties with very self-interested agendas that are not likely to be reasonable, based upon past experience. So, unless the Government is prepared to say no to the excessive demands of these parties, while accepting the occasionally reasonable items on their wish (or should I say demand) lists, any bill at this time is likely to result in much acrimony, distraction, and use of limited parliamentary resources, with little chance of success - an unwelcome scenario except perhaps for lobbyists who get paid by the hour or those whose jobs are dependent on achieving particular results. There is also potentially insufficient time for Parliament to deal thoroughly and fairly with a major copyright bill, since an election could happen at any time and realistically may well happen in the fall of 2009.

5. Whether or not there is a copyright bill, we will see much debate about fair dealing. This could in the context of the forthcoming Copyright Board decision on K-12 reprography, the issue of satire and parody which is now before the Court in BC, and in post secondary education. We are now off to a good start on latter, with the release of this very useful advisory from CAUT, which will hopefully get AUCC and CARL to take stronger stances in favour of users, whose interests they ultimately represent.

6. We await Access Copyright’s Public Domain Registry, announced with great fanfare in 2006. A further announcement that it was in the beta testing phase was made in early 2008.

7. We await the outcome of several proceedings at the CRTC that could, for better or worse, result in some form of Government regulation of the internet. The issues on the table include Canadian content, a “levy” on ISPs, and “net neutrality” or throttling. The latter issue is really important and the CRTC has so far gotten off to a disappointing start with a sometimes sparsely reasoned decision that has maintained, for the time being, the status quo of greatly degraded duopoly controlled internet service barely better than dial-up in many ways with very high prices for most Canadians. Given the complex, anti-competitive and conflicting interests of the dominant ISPs in producing and/or distributing content, the connection with copyright and antitrust law is important.

8. We await with interest the appointment of a new Commissioner of Competition, and what his or her attitude will be to enforcement of issues involving IP. The successor to the outgoing Commissioner, Sheridan Scott, may prove to be more proactive with respect to IP related and other basic antitrust issues - particularly involving telecommunications, broadcasting, media ownership and other IP sensitive fronts, on which the Bureau has been largely invisible and presumably inactive for several years. Hopefully, the Competition Bureau and the CRTC can keep each other on their respective toes and compete for excellence in serving the public interest - something like what we sometimes see in the USA with the FTC, DOJ and FCC. Such inter-agency competitiveness would not necessarily be a bad thing in Canada. It could happen with the right new Commissioner at the Bureau. This will be a very important appointment.

9. We will see some significant changes in the membership of the Copyright Board. In the next months, the second and final terms of two of its members (including the Vice-Chairman) will expire and two other members (including the Chairman) will be up for reappointment for a second term.

10. We will see a new head of the Canadian Association of Broadcasters, which is, next to SOCAN and its predecessors, the oldest copyright lobby organization in the country. There could be change in leadership at one or more other prominent trade associations.

On the Wish List Front for the New Year:

1. Now, more than ever, would be the time to constitute a judicially led commission to look at certain seemingly intractable problems in Canadian copyright law, such as issues arising from Canada’s unique proliferation of collectives and their oversight (or lack thereof in certain respects) by the Copyright Board. At the same time, such a commission could deal with certain perennially difficult issues involving patented medicines and generic drug litigation. These Notice of Compliance (“NOC”) cases are consuming an inordinate amount of the time of the Federal Court and the Federal Court of Appeal. The system is costing the Canadian health care system billions of dollars because of less than optimal public policy choices and litigation costs that are doubtless being passed along to the public. These issues involve sufficient billions of dollars each year to rank as “infrastructural” in importance. Since we can expect little from Parliament on these types of issues for some time, investment in such a commission would be an efficient, strategic and politically smart step towards essential infra structural policy reform. Its recommendations could make the job of any Government willing to confront tough IP policy issues much easier and more productive in the future.

In conclusion

Happy New Year, everyone. Whether we like it or not, we are living in changing and challenging times.

HK

Ringtones - Supremes to Rule on Leave Application

We shall find out this Thursday, September 18, 2008 shortly after 9:45 AM whether the Supreme Court of Canada (hereinafter “the Supremes”) will hear an appeal concerning the Copyright Board's Ringtones Tariff payable to SOCAN. The main issue is whether the delivery of ringtones by a provider to the customer's telephone or to the customer's computer upon request constitutes a "communication to the public by telecommunication."

While the narrow legal issues are highly technical, the ramifications entail the potential imposition of multiple layers of payment to multiple claimants for multiple rights involving the same activity and transaction. The concept of “double payment” could become “triple” or more. The “making available” right may some into play if the case is heard.

The three dozen or so collectives in Canada and the oversight provided by the Copyright Board are supposed to simplify the legal landscape and reduce transaction costs so that creators can be paid more efficiently for their efforts and avoid market failures. Canada has more collectives and a larger full time Copyright Board with far more full time resources than any other comparable tribunal in any comparable country.

So far, the result has been excellent for a small number of lawyers and consultants but is of questionable benefit overall to most actual creators, who have seen very little if any money from most of this adversarial and litigious activity.

Since various governments have succeeded only in adding to this complex labyrinth, perhaps only a judicial commission can see beyond the box and sort out and simplify this morass. As matters stand, there are too many vested interests that benefit from the current state of uncertainty. Nothing in the last two Bills - the Liberal’s C-60 or the Conservatives Bill C-61, which both died with election calls, would have clarified this situation. In fact, Bill C-61 would have created the possibility of several new tariffs and the inevitable lengthy hearings and judicial review.

If the Supremes hear this case and reverse the result below, there could be a significant domino effect on subsequent Board matters, including the seemingly perpetual SOCAN Tariff 22 hearing, which is now about thirteen years old and far from resolved. In fact, it is also under judicial review. Time for a Tariff 22 Bar Mitzvah? See my comments on the tie in between the Ringtones matter and Tariff 22 here.

I should confess that I was involved in the Ringtones file at an early stage, but my client, a very major American supplier of ringtones with extensive knowledge of the market and issues, decided to withdraw, as have other major parties involved in Copyright Board hearings who might have brought useful evidence and insights to the table.

Inexplicably, the remaining objectors (the Canadian Wireless Telecommunications Association or “CWTA”) decided to concede at the Board hearing that the delivery of the ringtone files music files in response to consumer orders was indeed a “communication by telecommunication.” As the Board put it:

They concede that downloading a ringtone is a
communication by telecommunication but
contend that the communication is not a public
communication, but a private transaction
between a vendor and a purchaser and as such, is
not protected by copyright.

I have blogged about the Board’s decision at length here, here and here.

The CWTA lost its judicial review attempt in the Federal Court of Appeal on January 9, 2008, as reported here.

The FCA apparently gave full consideration to the new argument reversing the CWTA’s previous concession, even though it was raised for the time only at the appellate stage. However, one cannot help but wonder whether a different record from below based upon the “no communication” theory might have helped the CWTA on its judicial review - or even have led to a different result at the Board.

This file has already had a more than the usual twists and turns in the Supreme Court, with both sides attempting to strike out some or all of each another’s affidavit material.

The Supremes have decided half a dozen major copyright cases since 2002. Before that, they heard about one every decade or so. Will they bite again this year? We’ll know soon enough. Here’s the Supremes’ summary of the case.

HK