IIPA and USTR and s. 301

A few quick points about the latest fulsome report from the IIPA:

1. The IIPA is a lobby group - basically run by a Washington law firm that lobbies the USTR on these matters. It represents big content owners in the USA. It has a lot of clout in the USTR but it is definitely not the USTR.
2. Nobody takes the s. 301 process very seriously. Canada's "long tenure" on this list is - if anything - a badge of honour that we not only spell the word "honour" differently than the IIPA would prefer - but we are a sovereign country that does not always ask how high the IIPA and USTR would like us to jump.
3. The IIPA report is, as usual, over the top. It relies on doubtful data such as that of BSA.
   
4. Another example: the Report misstates what Canada's Supreme Court said in SOCAN v CAIP. The Court said - by way of obiter dicta only - that "notice and take down" would be more "effective" in dealing with online infringement than litigation based on the doctrine of "authorization" - which is clearly true. That, however, does not warrant the IIPA saying that the Supreme Court "recommended" "notice and take down."
5. The most flagrant adjudicated flouter of international copyright law is the USA. The WTO has long ago finally concluded that the USA fails to provide royalties for performing rights in many instances as a result of s. 110 of its Copyright Act. This is the most serious copyright dispute to date in the WTO and the USA is clearly unwilling or unable to do anything about coming into compliance. It has bought its way out of this violation with a paltry payment fixed by arbitration of about Euro 1,219,900 per year - a fraction of what the royalties ought to be.
   
6. Except for certain limited recourse available to visual artists, the USA does not provide moral rights and cleverly exempted moral rights from the dispute settlement mechanism in TRIPs. The USA does not believe in moral rights, which are a touchstone of copyright for most countries that really do respect the essence of what copyright law should be about - which is protecting artists and users, and not manipulating and monopolizing markets.
   
7. Countries that live in glass houses....

Michael also has a good take on this entitled "In Good Company".

HK

"Statistically Indistinguishable From Zero"

Oberholzer and Strumpf - the 2007 version of their landmark paper is updated and published in the very prestigious juried Journal of Political Economy from the University of Chicago. My comments will follow at some point. Here's the abstract. **************************** The Effect of File Sharing on Record Sales: An Empirical Analysis
FELIX OBERHOLZER-GEE Harvard University Business School KOLEMAN S. STRUMPF University of Kansas - School of Business Journal of Political Economy, Vol. 115, pp. 1-42, February 2007 Abstract: For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period. (emphasis added) And here's a link to the pre-publication version. ******************************** Thanks to Jon Newton for pointing out this publication. HK

Campaigning about Camcording

The Canadian Motion Picture Distributors Association (“CMPDA”) is the trade association for Hollywood in Canada. It’s the movie counterpart to the Canadian Recording Industry Association (“CRIA”), sometimes referred to as the Canadian Recording Industry of America.

However, the CMPDA has normally been much more restrained and responsible than CRIA in its lobbying and in its descriptions of alleged inadequacies in Canadian law. And needless to say, it has not tried to make its customers into victims of mass litigation. This mirrors the situation down south, where the RIAA carries on its war against weapons of mass distribution, while the MPAA sits back wisely watching and now looks almost magisterial by comparison - especially in the aftermath of Jack (VCR = Boston Strangler) Valenti.

But now the CMPDA has launched a massive campaign about what it sees as a need to attack “camcording” in cinemas in Canada. So far so good. Nobody would seriously defend anyone’s right to camcord a whole movie in a theatre for piratical purposes - even if the harm might be somewhat overstated and the remedy sought may be somewhat overwrought. I’ll get back to that in a moment.

But unless my ears fooled me this morning when I heard the CBC news, the problem is that CMPDA is now seriously conflating this issue with the 1996 WIPO treaties and Canada’s general lack of progress, as CMPDA sees it, in copyright reform. Mr. Frith of the CMPDA suggested that Canada is somehow behind the rest of the world, WIPO-wise.

First of all, nothing in the WIPO treaties (if either applied, it would be the WIPO Copyright Treaty "WCT") has anything to do with camcording in theatres. Camcording in theatres is already illegal. Nothing in the treaties would make it more illegal. If we decide to enact a tougher and carefully conceived anti-camcording law, fine. But it would have no more to do with the WIPO treaties than a fish has to do with a bicycle.

True, the WIPO treaties deal with “making available” and communication of works such as films on the internet. But that’s got nothing to do with camcording in a cinema. And it’s highly likely that Canadian law is already more than adequate in terms of meeting the WIPO treaty requirements in these respects.

And once again, it must be pointed out that the EU is still far from ratifying the WIPO treaties. The only major countries that have ratified the WIPO treaties are the USA and Japan. (Belgium, if one considers it “major”, is said to have gotten ahead of the EU and engaged in “mistaken” premature ratification). The rest are a coalition of the billing ranging from Albania to the United Arab Emirates, virtually all of which are somehow beholden to the USA.

It does not behove the CMPDA to embark on the over-the-top rhetoric we have come to expect routinely from CRIA.

Back to camcording. If better legislation is needed, which may indeed be the case, there’s definitely a need to avoid poorly conceived legislation that might make it illegal to merely carry a recording device into a theatre, since it’s unrealistic to criminalize people for carrying cell phones and video cameras when they go the cinema. And bear in mind that virtually all cell phones can now record video and it's getting harder and harder to tell the difference between video and still cameras, which are increasingly converging technologically.

And after all, if you take the kids to the park and record them on video and then go to the movies, are you supposed to leave your expensive camcorder in the car so that it can easily get stolen? Maybe Canadian law can be improved in this area - albeit with great care. Amending the Criminal Code, which is what CMPDA wants, is not a simple thing. Nor should it be. There are real issues involving deployment of scarce police resources when we have rampant violent crimes involving guns, drugs and other obvious criminal activity. There are serious policy issues about the border between true criminal behaviour and the use of the state to enforce what may in some cases be purely or arguably a civil matter.

HK

The Ecstasy of Influence - A Plagiarism

Here is a very well written and researched detailed essay on copyright, '"open source" culture', borrowing, stealing, love and theft, Jefferson, Disney, Girl Guides, RIAA litigation against twelve year old children and much more in the current Harper's by Jonathan Lethem.

HK

A Victory for an RIAA Victim

One of the 20,000 or so victims of the RIAA war against its members' best customers has just succeeded in getting an order for attorney's fees.

This is unusual in the USA and will be an important precedent - unless the RIAA successfully appeals.

More detail here from Jon Newton.

Bravo to her attorney, Marilyn Barringer-Thomson of Oklahoma City, Oklahoma and to Ray Beckerman for his role in defending various victims and maintaining a great blog all about the war here.


HK

Praise the Lord and Kickoff the Litigation

What could possibly be more important in the U.S. of A. than the Super Bowl and religion?

You guessed it.

Respect for copyright.

Copyright law, it seems, trumps God and gridiron.

So - the NFL has told Fall Creek Baptist Church in Indianapolis that its plans for a Super Bowl watch party in front a big screen TV would be illegal. This, and several other churches in Indiana have canceled plans for communal viewing of the Super Bowl this Sunday.

The NFL forbids such violations of creators’ rights, even where there is no charge for admission. All I can say is that America must be proud to know that mass piracy, theft and flagrant disrespect of creators’ rights are being blocked before they infect the inner sanctums of Indiana churches on Super Bowl Sunday, probably the most sacred day of the year in the USA.

It's one thing to love football, religion, thy neighbor and one's home team. But respect for copyright must always come first.

HK

WIPO Broadcasting Treaty - Update January 19, 2006

The current "non-meeting" is over.

There will be another meeting around June 18-22, 2007. There is supposed to be documentation ready and circulated no later than May 1, 2007 in preparation for that meeting.

If there is no consensus on a signal based approach in the June meeting, there will be no diplomatic conference later this year. But for a variety of reasons and complex politics, that doesn't mean that this initiative will then necessarily die.

In spite of the fact that there is been little progress on this in 9 years, and the Chairman and the WIPO Secretariat do not appear to be hearing many things they do not wish to hear, including the strong message that only a signal based approach will fly, the "non-papers" still focus on exclusive rights - which is where the money is, particularly in retransmission.

Here's a couple of terrific blogs to provide more detail:

Jamie Love, with his superb communication skills, has probably done more than anyone to expose the problems of this proposed treaty. He writes about it in the widely read Huffington Post.

The EFF provides a detailed analysis and narrative of what happened and didn't happen in the last three days.

This initiative has tremendous potential for danger to the progress of new technology, the future of the public domain, and the imposition of new costs and controls on consumer behaviour.

To the extent that the broadcasters have a case - and they do in some respects and in some countries - they may wish to consider a far less overreaching approach.

Now that some formidable corporate and NGO opposition has lined up and been energized, the momentum for this treaty has apparently been lost.

HK

A WIPO "Non-meeting"?

There were a bunch of "non-papers" delivered by the Chairman that either were done at the very last minute or presumably could have been sent out ahead of time.

Apparently, there was a "non-slide" presentation about the objectives of the proposed treaty.

And some "non-conclusions."

Manon Ress has the latest.

According to her:

The chair did not want "too many to speak" but had to let India make its statement. Asking for clarification, India describe how the list of matters did not reflect agreement and was just a list of matters that have been discussed for years. According to the mandate, only matters where agreement was reached should be listed.

The plenary ended on that note. People here are puzzled. If you only point to agreement (on or off the record it seems), the non-conclusions might end up very very short. Would that mean that this meeting did not really happen? Like a non-meeting?

HK

WIPO Broadcasting Treaty - Update January 18, 2006

Here's a key part of the Chairman's "non-paper" proposal today for a supposed signal based non-exclusive rights based approach:


SCCR/15/2: Article 9, 11 and 14

Rights in the Broadcast

Broadcasting organizations shall enjoy the exclusive right of authorizing:

i) the simultaneous or deferred retransmission of their broadcasts by any means, including rebroadcasting, retransmission by wire, and retransmission over computer networks; and

ii) the fixation of their broadcasts.


SCCR/15/2: Articles 10, 12, 13 and 15

Protection of Uses Following Broadcasting

Broadcasting organizations shall enjoy adequate and effective legal protection in respect of
i) the direct or indirect reproduction, in any manner or form, of fixations of their broadcasts;
ii) the making available to the public of the original and copies of fixations of their broadcasts;
(iii) the making available to the public of their broadcasts from fixations, by wire or wireless means, in such a way that members of the public may access them from a place and a time individually chosen by them; and

iv) the communiation to the public of their broadcsts, if such communication is made in places accessible to the public against payment of an entrance fee, or using very large screens in places accessible to the public, or made in a profit making purpose.

If it looks, smells and walks like exclusive copyright rights, then maybe that's what it is.

More from Manon Ress here.

HK

The Sky Isn't Falling

10% Growth in Overall Music Sales; Digital Track Sales Exceed 120% Growth

TORONTO--(BUSINESS WIRE)--Nielsen SoundScan Canada, the entertainment industry's data information system that tracks point-of-purchase sales of recorded music product and Nielsen BDS, the music industry’s leading music performance monitoring service, have announced their 2006 Canadian year-end sales and airplay monitoring data, for the 52-week period January 2, 2006 through December 31, 2006.

OVERALL MUSIC SALES (01/02/06 – 12/31/06) (ALBUMS,SINGLES, MUSIC VIDEO, DIGITAL TRACKS – IN MILLIONS)
UNITS SOLD	2006	2005	% Chg.
	64.1	58.4	9.8%

...

More details here.

There are a lot of businesses that would love to see those numbers - and they aren't whining, and wining and dining Ministers, MPs, and senior officials for extra strong interventionist windfall monopoly rights.

The digital track sales are particularly impressive.

Hat tip to Jon Newton.

HK

Copyright and Canadian Politics 2007

Kady O'Malley has a rousing and provocative leading piece on copyright and Canadian politics in Macleans.ca quoting BoingBoing's famous author/blogger/co-founder Cory Doctorow and myself and referring to Michael Geist's work.

The catchline says it all:

The copyright lobby that claimed credit for taking down a Liberal MP sets its sights on the Heritage Minister

She reminds readers of the story of Sam Bulte's defeat and suggests that there are lessons to be learned for those in power today.

Ms. O'Malley has just moved on from the influential but niche circulation Hill Times, where she did great work for years on copyright and the Ottawa lobbying machine behind it.

She will now have a much larger audience. She also does a lot of TV work.

And speaking of large audiences, Cory Doctorow has over 2,000,000 unique readers each month and he is all over the copyright issue. Many of his readers are bloggers themselves.

Here's Cory's take on the current copyright situation in Canada.

HK

WIPO Broadcasting Treaty - Update Janaury 17, 2006

The WIPO Standing Committee on Copyright and Related Rights (SCCR) is holding its First Special Session from January 17 to 19, 2007.

The first day apparently was filled with the sounds of silence as delegates from many countries and NGO's gathered in Geneva. Little happened. The Chair - Mr. Liedes - finally handed out some documents.

According to William New of IP-Watch:

Liedes doled out his non-papers sparingly during the day only when it was clear member governments were not going to proffer their own, he said. “There is no master plan … no mandate on what to do,” Liedes said afterward. He said he decided to put forward “something that reflects my understanding” of positions.

It's not clear why delegates are convening in Geneva to be handed brief documents that could presumably have seen sent out earlier by e-mail. Delegations need time to analyze and need instructions.

IP-Watch has a detailed report on today's events, including the text of the documents.

It's worth recalling that the monumental Berne Convention went from being a glint in someone's eye to fruition in three years from 1883 to 1886 when the telegraph was high technology and steam ships were still fairly new technology. This current effort concerning a broadcasting treaty has been going in earnest since about 2000 and traces back even further - about 8 or 9 years.

There's a lesson to be learned here. But I'm not quite sure yet what it is.

HK

What to look for in 2007 in Canadian Copyright

Here are some big copyright issues to track in 2007 - roughly in the chronological order in which I believe they will unfold.


1. Kraft v. Euro Excellence - on January 16, 2007 the Supreme Court of Canada will begin its Winter 2007 session by hearing the appeal in this very important case about copyright and parallel imports. I’m involved in this case as counsel for an intervener, Retail Council of Canada - so I won’t say anything more for the time being. Here’s the Supreme Court’s summary of the case. For those in Ottawa who wish to attend, the hearing will begin at 9:30 AM. Public seating is limited.

2. The WIPO Standing Committee on Copyright and Related Rights (SCCR) will hold its First Special Session from January 17 to 19, 2007 in Geneva on the proposed WIPO Broadcasting Treaty. This has been a lengthy effort that has included many previous meetings, all aimed at establishing a treaty that could give broadcasters and cablecasters, such as speciality channels CNN and A&E, sweeping copyright-like exclusive rights in their transmissions - above and beyond the underlying content. Webcasters tried unsuccessfully to climb onboard. It was - and remains - a very complex and arguably far too encompassing and unpredictable solution to what is arguably a very narrow problem largely concerning the “piracy” of live signals of sporting events, etc. in some smaller countries. Broadcasters, for their part, want an exclusive retransmission right - which would enable them to collect considerable revenue from retransmitters, such as cable and satellite companies. In its recent iterations, many have been concerned that the treaty as contemplated could also effectively elongate protection of underlying content virtually forever - even public domain content. And, increasingly, broadcasters’, cablecasters and copyright owners are converging and are one and the same. Now that some big business interests have finally realized some of the potential problems with the treaty, the USA has pulled its support for the wide exclusive rights based approach. It is possible that a much narrower signal based approach could be adopted. If that doesn’t happen, the treaty initiative is likely to fizzle - though possibly slowly. A diplomatic conference is tentatively scheduled for Nov. 19 - Dec. 7, 2007

3. On January 29, 2007, Canada’s Parliament will resume sitting. Talk of an election is in the air. Ministers Bernier and Oda are still in place. The dynamics of a minority government are hard to predict on an issue such as copyright, which obviously is not the sort of issue that would likely defeat a government, but is nonetheless a live grenade that can cause a lot of damage if mishandled, as Sam Bulte well knows. Rumours are that a bill will be introduced soon. Whether the Government will try and in turn succeed in pushing it through the minority minefield before an election remains to be seen.

4. The Copyright Board will hear two very important new cases.

a. One involves the resumption on April 17, 2007 of SOCAN’s still ongoing attempt to collect money for use of of music on the internet. This has been going on since 1995 and has already been to the Supreme Court of Canada once. There are still a number of unresolved legal issues and the internet is a very different place that it was in 1995. Overall questions will involve how many times and to how many collectives and how much must Canadians pay for the same thing - including Canadians who don’t use or consume music on or from the internet in any way at all? More later for sure.

b. The other main hearing will start on June 12, 2007. It is Access Copyright’s attempt to impose a $12 per year fee on every kid in K-12 in Canada. This will be opposed by CMEC, even though that organization shares similar views on many copyright matters with Access Copyright. A big question to watch is the extent to which the 2004 Supreme Court of Canada decision in CCH v. LSUC that empowers a users’ right to engage in research and otherwise opens the horizons of fair dealing will be utilized by CMEC, which has so far shown no cognizance of it in its flagship publication, Copyright Matters!

5. Speaking of Access Copyright, the current round of post secondary Access Copyright licenses expires this year. It’s interesting timing, considering what is happening at the Board on the K-12 front. Let’s see if the AUCC will try to use the CCH v. LSUC decision to significantly reduce the amounts payable and to use the savings to better purposes, such as putting more books in libraries and increasing the amount of information available to Canadian teachers, researchers and students, rather paying more and more times over for less material and less access. Let's see whether CAUT does anything.

6. There is a vacancy at the Copyright Board. The appointment process has changed in at least one way. The vacancy was advertised on the Board’s web site.

7. The Board will at some point rehear the controversial commercial radio tariff, as the result of the Federal Court of Appeal’s ruling sought and obtained by the CAB. But will the Board set the rates even higher than it did before the judicial review? This appears to be a possibility.

8. The Federal Court of Appeal will hear a judicial review application on the ring tones tariff. It appears that the remaining objectors may have may finally figured out that they shouldn’t have conceded that there was a “communication” involved, which I argued strongly early on until my client withdrew from the hearing. It will be interesting to see if the remaining objectors can now raise the issue for the first time in this matter in the Federal Court of Appeal, and what the potential impact of this line of argument could be on other files.


These are some of the things I see on the foreseeable horizon in Canada. But if I’ve learned one thing since law school, it’s to expect the unexpected.

HK

Public Domain Registry? McLean delivers another instalment...

Almost a year ago, Access Copyright ("AC") announced - with great fanfare and some acclaim - a public domain registry project.

Some notable people and organizations were involved, especially Creative Commons ("CC") - both in the USA and Canada. I always wondered what was in this partnership for the CC organizations, since AC has no obvious particular expertise or comprehensive database of death dates to contribute to this effort. AC does have oodles of money - but I don't know why a Wiki-based project would need to cost a lot of money. CC would appear to have much more to contribute than AC. On the other hand, the halo effect of a partnership with Larry Lessig, CC, etc. for Access Copyright was quite obvious. Anyway, I and others have waited to see what might materialize. So far, I'm not aware of any more specifics or publicly announced deliverables, or even a timetable. I'm confident that the project was conceived in good faith and with much enthusiasm, and would serve a useful purpose if it ever materializes. But so far, it appears to remain at the announcement stage...

On the other hand, the redoutable Wallace McLean continues with his third annual edition of Public Domain Day 2007 - with a list of some notable (Billy Bishop, H.L. Mencken, etc.) and many forgotten creators whose work became part of Canada's proud public domain on January 1, 2007 and some material on US PD issues. And some good, trenchant commentary. Wallace doesn't have grants, committees, partnerships, or anything of the sort. What he lacks in resources, he makes up with resourcefulness and enthusiasm.

HK

Vive la France

There's an interesting decision reported on in the IHT picked up on Michael's BNA bulletin today.

It's always dangerous to rely on newspaper reports of legal cases, especially from France - but this is a reputable reporter with the very reputable IHT and it's great to have good news at this time of year.

It seems that a P2P infringement enforcement effort was blocked because the rights holder illegally breached French privacy laws to get the victim's identity by going behind the user's IP address.

This - apparantely - is a major "non, non" en France, which has tough EU directed privacy laws.

Moreover, a French government lawyer is suggesting that the rights owners could be liable for big trouble:

"The rights-holders should now understand that they cannot set up a system to identify downloaders on the Internet without proper authorization from us," said Moulin, whose organization has the ability to grant such permission. "It is important to have these protections established by a court."

Invasion of privacy carries fines of up to €300,000, or $395,000, and five years in prison, Moulin added.

Mais, oui! C'est déja vu all over again, encore une fois. This all sounds sweetly familiar. First, Canada, then the Netherlands and now France are standing up for privacy rights in these attempted invasion situations and Courts are backing up the rights of individuals not to have their privacy rights fundamentally breached without adequate evidence and sufficient oversight in the pursuit of penalizing common place activity that may actually be benefiting record companies.

When this happened in Canada in 2004 in the BMG case, in which I was very involved, Judge von Finckenstein was severely and wrongly criticized and Canada was labelled a "digital Sunni Triangle" by a reporter with the appropriately fitting surname of Bray at the Boston Globe.

It is seems now that Canada is in increasingly refined and enlightened company - and history may applaud us for leading the way.

HK

No copyright bill this year...

Today was the Ides of December. There was no copyright bill.

The House of Commons is now in recess until January 29, 2007.

So, there won't be a bill this year.

Doubtless, a lot of scenarios are being considered and reconsidered by all concerned.

HK

Canadian Documentarians on Copyright

The Documentary Organization of Canada, ("DOC") which speaks for hundreds of Canadian documentarians, issued a package in anticipation of a copyright bill before Christmas. Here is their public letter to the Ministers. There is a background white paper (by your's truly) that discusses legal issues, particularly the problems of the "clearance culture" and makes several specific recommendations. There is also a survey of DOC members on their experiences with copyright and the clearance culture.

Here's the DOC press release.

Here's the Globe and Mail story.

HK

Gowers Day

The Gowers Review is available here.

I haven't gone through it yet - but these recommendations seem interesting...

Flexibility
Recommendation 8: Introduce a limited private copying exception by 2008 for format shifting for works published after the date that the law comes into effect. There should be no accompanying levies for consumers.

Recommendation 9: Allow private copying for research to cover all forms of content. This relates to the copying, not the distribution, of media.

Recommendation 10a: Amend s.42 of the CDPA by 2008 to permit libraries to copy the master copy of all classes of work in permanent collection for archival purposes and to allow further copies to be made from the archived copy to mitigate against subsequent wear and tear.

Recommendation 10b: Enable libraries to format shift archival copies by 2008 to ensure records do not become obsolete.

Recommendation 11: Propose that Directive 2001/29/EC be amended to allow for an exception for creative, transformative or derivative works, within the parameters of the Berne Three Step Test.

Recommendation 12: Create an exception to copyright for the purpose of caricature, parody or pastiche by 2008.

Recommendation 13: Propose a provision for orphan works to the European Commission, amending Directive 2001/29/EC.

Recommendation 14a: The Patent Office should issue clear guidance on the parameters of a ‘reasonable

Recommendation 14b: The Patent Office should establish a voluntary register of copyright; either on its own, or through partnerships with database holders, by 2008.
Recommendation

15: Make it easier for users to file notice of complaints procedures relating to Digital Rights Management tools by providing an accessible web interface on the Patent Office website by 2008.

Recommendation 16: DTI should investigate the possibility of providing consumer guidance on DRM systems through a labelling convention without imposing unnecessary regulatory burdens.

Recommendation 17: Maintain policy of not extending patent rights beyond their present limits within the areas of software, business methods and genes.
search’ for orphan works, in consultation with rights holders, collecting societies, rights owners and archives, when an orphan works exception comes into being.


One thing caught my eye straight off. The limited private copying exception - despite the lack of an immediate levy requirement - is not as generous or simple as it seems, since it is only prospective. See Section 4.72. The theory seems to be that rights owners will factor the economic value of private copying into their products in the future, but can't do so for the past. The Report suggests that collecting societies pick up the pieces from the past. There has never been levy in the UK. It's not immediately apparent how this could work. Will there be some kind of levy for the legacy works? The main recommendation would seem to explicitly suggest not. So how are the collecting societies supposed to collect? What effect will the current levy review in the EU have on all of this?

Questions indeed.



HK

DMCA Exemptions

The U.S. Register of Copyrights has just issued some useful exemptions to the DMCA - as she has limited power to do.

More - much more - is here and here. AP has a good explanation of all of this.

The first exemption is quite interesting for Canada:

1. Audiovisual works included in the educational library of a college or university’s film or media studies department, when circumvention is accomplished for the purpose of making compilations of portions of those works for educational use in the classroom by media studies or film professors.

That would appear to correspond with what US law is in the non-digital context by reason of their general fair use doctrine.

This is the kind of thing that CMEC and the educators should be striving for in Canada - namely clarification or provision - but only where really necessary - of activities to be treated as examples of fair dealing in Canada. This is something achievable - especially when the USA treats is educators so much better than does Canada.

Instead, our educators have passively accepted the disaster of C-32 and are now going too far to the other extreme with their proposal for a sweeping special exception for educational use of the internet, which manages to be both unnecessary in some respects and excessively vague and overreaching in others. This has managed to alienate a lot of diverse interests and will no doubt distract from what are likely to be the real battles in the next bill, including staving off DMCA North. It could also badly distract from the more reasonable and achievable goals that the educators should be pursuing.

Another interesting one is this:

6. Sound recordings, and audiovisual works associated with those sound recordings, distributed in compact disc format and protected by technological protection measures that control access to lawfully purchased works and create or exploit security flaws or vulnerabilities that compromise the security of personal computers, when circumvention is accomplished solely for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities.

Did anyone say "SONY Rootkit?"

HK

PARLIAMENTARY COMMITTEES AND COPYRIGHT

I am somehow assuming, though not conceding, that the Government is going to ignore, for the moment, my call for a special judicial copyright commission - though I am pleased that Michael Geist has already effectively endorsed it:

Instead of hurriedly introducing a bill that will leave everyone unhappy, the Conservatives would do far better to launch a consultation or commission (as Howard Knopf suggested this week) on copyright.

I am also somehow assuming that the Government is going to keep to Mme Oda’s word by tabling a bill very soon that will be very controversial and that the controversies will be very complex, as they usually are in copyright matters.

If there is a copyright bill, and if it gets as far as committee hearings, it is imperative that it be considered by a balanced committee that represents the mandate of both of the sponsoring departments. The Heritage Committee alone cannot be entrusted alone with this task. Even with Mme Bulte gone, the institutional structure militates against both actual and apparent balance in the hands of that Committee alone. Even before Bulte, that Committee often gave the appearance of imbalance and of being too prone to influence by the Department of Canadian Heritage and the usual lobbying suspects. Indeed, the appearance probably reflected the reality. Clifford Lincoln may have appeared more balanced than Mme Bulte, but the result too often left much to be desired.

The effective low point of copyright committee proceedings was back in the C-32 days in 1996-1997. The Bill that went into committee was a bad one - especially for the educators and broadcasters. But at least there were a few exceptions for users. When it came out of committee, it had exceptions to the exceptions that vitiated the exceptions. It was a dark day for users. And the process was not pretty.

There are two structural improvements that would go a long way to ensuring both the appearance and reality of balanced and transparent committee hearings. They are cumulative and not alternative.

1. There should be a “special joint committee” that brings together all or at least the most knowledgeable and interested members of the Heritage and Industry committees. This would mirror the joint responsibility of the two Ministers and Departments. Such a Committee would have joint chairs. There is ample precedent for this approach.

2. There must be two or even three outside expert counsel to advise the Committee. Bill C-32 had only one outside counsel. For many reasons, the resulting product was a disaster for users. Likewise with the so-called "Bulte Report" in 2004. Fortunately, the Bulte Report had no immediate legal effect, though we may well see its influence infecting the forthcoming bill. In fairness to the counsel involved, we will never know for sure what transpired behind the scenes and whether the results were more because of or in spite of their work. This is simply too much responsibility to put on one person’s shoulders, given the polarization of policy views on copyright and even of expert opinions on legal copyright matters. For example, there is a great cacophony of divergent “expert” opinion on whether downloading P2P music files to a PC hard drive is legal. Another example is whether CCH v. LSUC protects, as fair dealing, much of the activity in the educational system that currently results in passive, massive and arguably greatly excessive payments of millions a year to Access Copyright and much of the internet related activity that CMEC is lobbying about. Whatever Committee considers this bill should have access to frank discussion of the range of opinions. That can only come from hearing all sides - not only from witnesses but from its own expert counsel.

Frankly, I cannot think of any one person who is sufficiently knowledgeable, balanced, experienced, expert in both the common law and “droit d’auteur” perspectives, and who would generally be perceived to be both actually and apparently sufficiently neutral and independent to do the job of committee counsel on their own.

It is no answer for the Government or Parliament to say that it will cost too much to have two or three counsel. How does the Department of Canadian Heritage justify 20 FTEs (full time employees) more or less to work on copyright policy? I suspect that this is probably more than any other government anywhere - and certainly far more than Industry Canada. Presumably, Heritage got the FTEs because copyright is important and because, as many believe, “copyright matters.” Well, if copyright matters, then the money will somehow be found and find its way into the right budget. There’s a huge surplus out there, and it just got bigger with the recent cuts.

What is needed amongst the suggested two and preferably three special committee counsel is a real and perceived balance between common and civil law approaches, and between creators’, owners’, and users’ rights and interests. That is why there ideally should be three people. There should be one person who would have the confidence of creators, owners and collectives on the one hand and another who would have the confidence of users. We would likely need a third person to sit in the middle to facilitate communication and consensus. That person might be a sufficiently experienced, knowledgeable and neutral academic, or, if such a person could not be found, perhaps a retired judge with some good IP decisions under his or her belt. The committee counsel must have the experience and stature to be able to provide frank advice and guidance to committee members, and not simply serve as a passive research or drafting resource. Any relevant client or consulting interests regarding policy matters should be fully disclosed, not only to the committee but to the public.

It will not be easy to implement these suggestions. There are a lot of vested interests who would love to replay Bill C-32 and go back to the Heritage Committee (and not a joint committee) and see it with only one outside expert counsel, as in 1996-1997. But we cannot allow that to happen.

I have not forgotten about the official languages problem. That’s another issue and it may require a ruling from the Federal Court of Appeal and maybe even the Supreme Court of Canada. I’m working on that. However, whatever committee handles the copyright bill can temporarily solve the problem by agreeing, as many committees do, to accept written material in either official language and not demanding it in both - but unfortunately this has not been the practice of the Heritage Committee under the previous government. This is a real issue for less well financed interest groups (i.e. most user groups) who cannot afford the cost of translating essential documentation, which in many cases will exceed the cost of preparing or collecting it - even assuming there is time, which there invariably is not. Although this is a huge legal and political problem, it is not a structural one. It is simply a question of the committee following what many more expert than myself in official languages believe to be the law of Canada. As I’ve said before and will have to say again, “either” means “one or the other.” It does not mean “both”.

BOTTOM LINE

If there is to be a bill, we must have the best possible committee structure with the best and most balanced advice available.

We must take the time to get this right. Currently, there are two lobby groups dominating and pushing the agenda. The one that appears to be in the most desperate hurry is CRIA, which has little or no connection with Canadian interests. The other most vociferous demandeur is CMEC, whose approach to copyright matters as reflected in Copyright Matters! is similar to that of Access Copyright as reflected in Captain Copyright, concerning which comparison Michael essentially agrees with me. Ironically, CRIA and CanCopy (the former name for Access Copyright) were the two big winners in Bill C-32.

With all of these difficulties ahead, and the very real likelihood that the bill as expected cannot get through any committee process - fair and balanced or otherwise - before the next election, my judicial copyright commission project begins to look better and better.

Even if there is a majority government after the next election, it may well wish to take the decisive step of calling for and properly constituting a judicially led commission. The current governance model of delegating arguably far too much law making power to the Copyright Board and leaving the ongoing development to be sorted out between two competing departments is not only far from ideal. In too many ways, it isn’t even working.

Perhaps an independent and fully transparent judicial commission can come up with a better way. How should this be set up? We’ll go into that another day.

Ministers may wish to take note.

HK

CMEC & Quebec

It seems that some prominent Quebec publisher spokespersons are opposed to the CMEC special exception for educational use of the internet. There is a very interesting op-ed in Le Devoir today.

So - the CMEC proposal is getting attacked from various sides on the basis of various strongly held points of view.

The politics here could be fascinating, The Bloq Québecois has always been maximalist on copyright. But, if the Bloq decides, for whatever reason, to block a bill containing this kind of provision, that could be real trouble for such a bill.

Could this be one point on which maximalists and users' advocates agree - even if for very different reasons? Two familiar and similar clichés come to mind. The first is that politics makes stange bedfellows. The other is that the enemy of one's enemy can be one's friend.

Could this be the start of a real and open debate that is long overdue? I've been advocating a judicial copyright commission for some time to provide independent and informed guidance on what's best for Canada and to hear all interested parties in the open.

HK

Time out for a commission on the future of Canadian copyright?

I have an op-ed in today's Hill Times - which is an influential weekly publication for those who work on, in or around Parliament Hill in Ottawa.

Bottom line:

Some key aspects of the copyright system and revision process are becoming dysfunctional in Canada. This country has had three excellent commissions over the last eight decades that looked at copyright law with a view to Canada's best interest. Two of these were led by judges. We are long overdue for another such commission, and we have judges who could lead it. That would be productive for the country and would be the best policy and political solution at this time for this government.

HK

Better never than late?

I thought I had traveled back in time - but it's today's story.

One of the band members of Procol Harum is claiming that he is a co-author of "Whiter Shade of Pale", a terrific and obviously very lucrative song from 1967 - notable for its Baroque and Bach inspired elements.

There's apparently a trial underway.

Now, this song was released almost 40 years. That's a long time - one might have though an excessively long time.

So - it will be very interesting to see how the Court treats the limitation period issue and how this got as far as trial in the first place. The alleged infringement was hardly hidden away.

Apparently, the Judge is musically inclined.

According to the Bloomberg story:

An electric organ has been set up in the court room for Fisher to play as part of his evidence. Justice Blackburne, who said he was "of an age to be familiar'' with the song and the Summer of Love, asked for the organ to be left on while the court room was out of use to allow him to play the sheet music submitted as evidence in the case.

HK

Constitutional Challenge to RIAA's statutory damage claims...

From the brave and bold Ray Beckerman - who fights the RIAA:

In UMG v. Lindor, Judge Trager has granted Ms. Lindor's motion to add a defense based on the unconstitutionality of the $750-per-song damages sought by plaintiffs. He rejected the RIAA's arguments that the defense was without merit, that the motion was untimely, that the amendment would prejudice the RIAA, or that Ms. Lindor was required to send a notice to the United States Department of Justice of her defense of unconstitutionality.

Judge Trager ruled:

[P]laintiffs can cite to no case foreclosing the applicability of the due process clause to the aggregation of minimum statutory damages proscribed under the Copyright Act. On the other hand, Lindor cites to case law and to law review articles suggesting that, in a proper case, a court may extend its current due process jurisprudence prohibiting grossly excessive punitive jury awards to prohibit the award of statutory damages mandated under the Copyright Act if they are grossly in excess of the actual damages suffered.....Furthermore, Lindor provides a sworn affidavit asserting that plaintiffs' actual damages are 70 cents per recording and that plaintiffs seek statutory damages under the Copyright Act that are 1,071 times the actual damages suffered. Aff. of Morlan Ty Rogers, ("Rogers Aff.", [pars.]5, 6. See also Aff. of Aram Sinnreich, ("Sinnreich Aff."), [par.] 2, 3 (attesting that popular music sound recording downloads and consumer license to use same are lawfully obtainable to the public at 99 cents per song, and of that 99 cents, roughly 70 cents per song is paid by the retailer to the record label). As FRCP Rule 12(b)(6) requires that this figure be taken as true for purposes of the motion, Lindor has alleged a factual basis supporting her affirmative defense."

This is potentially hugely important. If Ray wins on this issue (RIAA would almost certainly try to get it to the US Supreme Court if he does), it would be, without a doubt, one of the most important copyright cases in modern times...because it would take away the ad terrorem aspect of copyright law from ordinary citizens and the big copyright owners would have to do what normal litigants have to do, which is to prove actual damages. As Ray argues and the Judge notes, "plaintiffs' actual damages are 70 cents per recording and that plaintiffs seek statutory damages under the Copyright Act that are 1,071 times the actual damages suffered."

BTW, a lot of the problems in Canadian copyright law would go away if statutory damages were limited to purely commercial situations and could not be used to intimidate teachers, librarians, researchers, scholars, students and countless ordinary citizens who behave in ordinary ways.

At the time they were enacted in Canada in 1997, only Canada and the USA amongst major countries had the broad concept of statutory damages (i.e. minimum of $500 and $750 per work respectively).

Even in the USA, statutory damages are not available where the activity was done by an educational institution, library, archvive, public broadcaster or employee thereof "in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use". The details are available here.

Now, THAT is something that educators should be fighting for here in Canada. Why should Canada treat its educational user community so much worse than the Americans do? And why should our educators so passively accept this? But it seems that CMEC and others in the educational community are, rather, obsessed with their special educational exception for use of the Internet. There are so many more useful, less harmful and more achievable goals that the educators etc. could be pursuing....and curtailment of statutory damages ought to be at the top of the list.

BTW, Michael now essentially agrees with me on how CMEC's views are not much different than those of Access Copyright in key respects. Here's his podcast of a recent talk.

HK

CRIA Rebuffed from the Bench

CRIA has just suffered a decisive setback in the Federal Court of Appeal.

Earlier this year, I blogged about how CRIA objected to its Class “B” members (i.e. the Canadian Indies) having to answer interrogatories in a Copyright Board proceeding involving an internecine dispute with the music publishers over online music.

CRIA’s position was that “When it became clear that the interrogatory process was too onerous to involve its smaller members, CRIA withdrew on their behalf."

This is a position with which anyone familiar with Board hearings from an objector viewpoint would tend to sympathize. Of course, CRIA’s concern about onerous interrogatories is nothing if not ironic, given CRIA’s key stakeholder role in the CPCC - which is infamous for its onerous interrogatories.

Onerous interrogatories have succeeded many times in recent years in driving even large and sophisticated objectors out of Board hearings, for example Archambault and Canoe, not only because of the burden and expense involved but the intrusive nature of the process, concerns about confidentiality, and the often doubtfully relevant nature of the interrogatory questions themselves.

However, the Board to its credit, did something quite interesting. Apparently out of concern for the Indies, it ordered CRIA to send notices to the Canadian Indies in the following language:

“CRIA recently opted to change the scope of its representation of its members’ interests in the forthcoming proceedings before the Copyright Board dealing with CSI’ s proposed tariff for the reproduction of musical works by online music services. Subsequently, the Board ordered CRIA to advise you of the following:
1) In these proceedings CRIA has chosen to act only on behalf of (name of each member that CRIA represents).
2) As a result, CRIA will not be allowed to advance any argument or lead any evidence that relates to your situation in particular, or to the situation of any other member of CRIA that CRIA does not represent in these proceedings generally.”

CRIA asked for reconsideration, but the Board stuck to its guns.

CRIA then went to the Federal Court of Appeal on judicial review.

On October 17, 2006, straight from the Bench and with costs, and reportedly without even needing to hear the respondent Attorney General, the Court dismissed CRIA’s application. Once again, the reasons come from Justice John Evans, the dean of Canadian administrative law. They are brief and blunt.

This confirms the wide powers of the Board, as spelled out in the Copyright Act, to require collectives to distribute notices deemed necessary to inform potential objectors and even members:

66.71 Independently of any other provision of this Act relating to the distribution or publication of information or documents by the Board, the Board may at any time cause to be distributed or published, in any manner and on any terms and conditions that it sees fit, any notice that it sees fit to be distributed or published.

It will be interesting if the Board more extensively uses its confirmed powers under this section and more generally to be more proactive in the public interest or the interests of members of collectives. I do have some thoughts on this and will post them in due course.

Ironically, in the interim since this case developed, most of the important Canadian Indies have left CRIA - and taken up their own position on copyright. See their very informative website.

I should point out that I have been involved for a long time in opposing the CPCC at the Copyright Board. I also opposed CRIA in the file sharing litigation. But, as always on this blog, these thoughts are solely mine.

HK

Canada's "International Obligations"?

On October 2, 2006, a senior official from the Department of Canadian Heritage, spoke as follows to the Canadian Heritage Committee of the House of Commons:

Ms. Danielle Bouvet: I believe that Ms. Oda, our minister, has already said that this bill is a priority for her. She has already announced that she wants to act as quickly as possible to ensure that our Act complies with our international obligations.

(emphasis added)

Here’s the link to the whole session. Michael spotted this a few days ago - and it’s a really unfortunate statement because it’s based upon an inaccurate premise and is, frankly, misleading. Canada is in full compliance with its current international copyright obligations, unlike a certain neighbouring country that is strongly pressuring Canada to implement and ratify the 1996 WIPO Treaties but which is itself in ongoing violation of the 1994 WTO TRIPS agreement, as finally adjudicated by a WTO panel.

Needless to say, Canada has not ratified the 1996 WIPO Treaties and therefore has no “international obligations” to implement them or ratify them or to enact any of their provisions. Interestingly, the USA (oops, I said it) is fully bound by the WTO TRIPS agreement, which it continues to violate with respect to s. 110(5) of its Copyright Act. It may have reached a “temporary arrangement” with the complainants, but that unsatisfactory temporary arrangement is getting increasingly permanent and will doubtless come back to haunt.

And it’s getting harder and harder for the Americans to say that they comply with the moral rights provisions of Berne, which is something that Canada has done since 1931. One after another, US court cases are stripping away sustenance for the US argument that it provides the equivalent of moral rights protection. Moral rights are very important to creators and Canada should be proud of its long acceptance of this basic principle that has been fought hardest and longest by the American entertainment industry, and the US government - which managed to carve out moral rights from the dispute settlement mechanism at the WTO.

If that “international obligations” phrase sounds familiar, it could be because it is essentially identical to the language of the PR and GR machine of the CRIA, (Canadian Recording Industry Association) or, the Canadian Recording Industry of America, as many call now call it.

Just over a year ago, on September 5, 2005,C RIA’s Prez, Graham Henderson stated:

The WIPO treaties were signed by Canada in 1997, but have yet to be implemented here. Some commentators, viewing the proposed provisions of Bill C-60, question whether the draft will be effective and whether it will allow Canada to implement its international treaty obligations.
(emphasis added)

Perhaps the Minister of Canadian Heritage and her officials are feeling some pressure on this copyright account from the US government - which is surely the only reason why anyone in Ottawa is even listening to CRIA these days on this subject or anything else for that matter. After all, CRIA lost several of its most important Canadian independent members earlier this year. There are no organizations representing independent Canadian interests that are nearly so aggressive on WIPO ratification.

And speaking of treaties, it’s ironic that Canada is now in such a hurry to ratify the 1996 WIPO Treaties - which were controversial and problematic for Canada from the get go - and are rapidly becoming stale dated in any case. At the same time, it has become apparent this past week that Canada is backing away from our actual, real and existing “international obligations” under the KYOTO Accord. Maybe we’ll do something by 2050. What these two positions clearly have in common is that they suit the current US Administration. So, ironically, about the only thing that will last longer than Mickey Mouse’s copyright will be Canada’s timetable to clean up the air we breathe.

Of course, don’t count Mickey out for copyright term extension in Canada. He may have lost the first battle in the Mouse in the House aka Lucy Maud Montgomery episode. But that won’t be the end of the war. So, his copyright may yet live long enough to see cleaner air in Canada.

Do we, as a country, give a higher priority to protecting the American entertainment industry’s “right” to higher royalties from Canadians than Canadians' rights to clean air?

HK

Copyright Board decision on NRCC Background Music Tariff

The long awaited Copyright Board decision on NRCC’s proposed background music tariff was released on October 20, 2006. Although the Board admired the “eloquent” closing argument of NRCC’s counsel, it basically rejected most of NRCC’s arguments and evidence. At the end of the day, NRCC will get 43.06% of what SOCAN gets for the equivalent activity - covered in SOCAN’s Tariff 16. The 43.06% reflects the fact that NRCC does not have all the repertoire used and not all of the repertoire used is “eligible” for remuneration in Canada. The figure could have been even lower - as low as 36.12% according one of the lead objectors. The fact that is as high as 43.06% is about the one immediate victory that NRCC can claim in this instance.

There are some aspects of the decision that could raise concern for objectors for the long term. But overall, for the moment, it is a victory for the objectors at the Board. The now defunct CCTA (Canadian Cable Television Association), appears to have devoted considerable resources to fighting this tariff and seems to have led the charge, along with several other objectors.

By way of background. On May 11, 2002 the Neighbouring Rights Collective of Canada (which represents performers and record companies) filed its background music tariff - which covers the delivery of background music to commercial establishments, such as restaurants and hotels. The hearing was held in April, 2005. The decision was rendered on October 20, 2006, about 1 ½ years later. That’s about 4 ½ years in total.

This is one of the Board’s more detailed decisions, as if anticipating the Federal Court of Appeal’s ruling of last week that will now force the Board to provide more detailed reasons. This decision will not be an easy one to reverse on judicial review - because by Board standards, the reasoning leading to the rate calculation is more detailed than usual and there doesn’t appear to be any obvious legal error.

The Board rejected NRCC’s main arguments that:
• background music is analogous to pay-per-view for “proxy” purposes and that the Board should not rely on the long established SOCAN Tariff 16, which has worked well for many years for businesses that use third party commercial background music suppliers
• “neighbouring rights” are just as valuable as traditional composers’s and author’s copyrights and that record producers and performers are EACH entitled to the same share as SOCAN.

The latter argument is particularly bizarre, but NRCC persists. To suggest that a record producer who may front an advance, pushes buttons in a recording studio and distributes CDs is entitled to the same level of remuneration for a public performance as an Irving Berlin or Lennon/McCartney or Leonard Cohen who wrote the song is tantamount to an attack on the real creators of music. Very occasionally, a performer can “make a song” that would otherwise go nowhere. In these instances, the performers usually do very well indeed through other mechanisms (concerts, record contracts, endorsements, etc.) as do the record companies. But without composers and authors, there would be nothing to record or perform. The Board held the line by valuing neighbouring rights in total equally overall to traditional copyright - which some would argue is still an overvaluation. But it’s a predictable Canadian compromise.

In Europe, neighbouring rights are still regarded as something removed from pure copyright. In the USA, most of what Canada considers to be neighbouring rights are not even recognized as such under copyright law.

What should the objectors be concerned about in this decision? Although the Board rejected a number of NRCC’s arguments, it did so mainly because it felt that the evidence wasn’t there - this time. For example, the Board left it open to NRCC to charge separately for separate rights (performance + communication) involving the same single transaction - by coming back with better evidence. More layering in store....Some of the arguments could have been rejected out of hand. This invites a substantial change and more trouble in the future, if NRCC is able or willing to marshal better evidence. Also, the Board has explicitly disagreed with some important aspects of its own 1996 SOCAN Tariff 16 decision, which no doubt will make SOCAN happy - because that Tariff is up for a new round of hearings - but will cause uncertainty. While administrative tribunals are not bound by stare decisis, there is a certain virtue in predictability and certainty - unless the earlier decision was clearly wrong.

So, this is a temporary victory for users of background music and maybe even for users generally in terms of recent trends at the Copyright Board. But it may only be temporary. Time will tell.

This tariff lasts until 2009. By the time this comes around again, the Board will hopefully have updated and rationalized the other background music tariffs, namely SOCAN Tariffs 15A and 16.

One overall concern about the decision is that it will be largely inscrutable to those without considerable familiarity with the Board’s past tariffs and the roles of SOCAN and NRCC. For all of its relative length, it does not really put this tariff into a full and transparent context.

For example, the decision fails to adequately explain that ANY business can provide its own background music for free by operating a “radio receiving set”, as enshrined in s. 69(2) of the Copyright Act.

This historical exemption is something that small businesses or even big businesses with small premises who can use a “radio receiving set” need to be more aware of. This is a very useful exemption. Many businesses are probably needlessly paying money to SOCAN and NRCC - when they could use a “radio receiving set” - the only cost required being the cost of buying it and the electricity to use it. This is one exemption that SOCAN and NRCC would really like to repeal - and SOCAN certainty has tried and very nearly succeeded. But hopefully the Government will remember the considerable history and importance of it and leave it intact. Any attempt to get rid of it would and should cause enormous controversy. To its credit, the Board put a reference to s. 69(2) in the tariff itself, but this will likely be lost upon members of the public who don’t know what it is all about and how helpful it can be to small business establishments.

HK

CAB Gets SOCAN + NRCC radio increase sent back to CB by FCA

On October 14, 2005 the Copyright Board gave SOCAN and NRCC an increase in the tariff payable by commercial radio stations amounting to about 30% by the Board’s own estimate. The hearing had taken place in May, 2004 - about 18 months earlier.

The Canadian Association of Broadcasters (“CAB”) - which was largely responsible for the establishment of the predecessor the Board to deal with the predecessor of SOCAN about 70 years ago - was very upset, calling the decision “aberrant and unreasonable” and referring, controversially, to the Board as “renegade”.

After only one week of deliberation, the Federal Court of Appeal (“FCA”) on October 19, 2006 has granted, with costs, a judicial review application by the CAB on the basis of “the inadequacies of the Board's reasons respecting the quantification of the royalty increases attributable to both the historical undervaluation of music, and the greater efficiencies achieved by the industry through its use of music”.

The FCA declined to reverse the Board on its alleged failure to take into account the “cumulative royalty burden” resulting from the “proliferation in the number of rights holders to be compensated”. This additional burden - of course - flows from the decision of Parliament in 1997 to recognize neighbouring rights.

The decision was written by Mr. Justice John Evans, who is not a only a judge of the Federal Court of Appeal but is the co-author of the leading Canadian treatise on administrative law. He said:

[16] The Board is entitled to the greatest deference in the exercise of its discretion to set a rate and, accordingly, the discretionary decisions lying at the heart of its expertise are reviewable only for patent unreasonableness. However. it must explain the basis of its decisions in a manner that enables the Court on Judicial review to determine on the basis of the reasons, read in context, whether the decision was rationally supportable. When an administrative tribunal's decision is reviewable on a standard of reasonableness, its reasons are the central focus of a judicial review: Law Society at New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 see 20, at paras. 48-9, 54-55.

[17] In my view it was not sufficient in the circumstances of this case for the Board to justify its quantification of the undervaluation by merely referring to the evidence taken as a whole. It is not enough to say in effect: "We are the experts. This is the figure: trust us." The Board's reasons on this issue served neither to facilitate a meaningful judicial review, nor to provide future guidance for regulatees.
(Emphasis added)

This appears to be a victory - for at least the time being - for the CAB.
But the really interesting question is what effect this could have on the Board itself. The Board already takes considerable time - often well over a year - to render its reasons, which are invariably carefully written and which hitherto been considered close to “bullet proof” in terms of appellate deference to rate calculation, review of the evidence and the other matters in which the Board is presumed to have great expertise. Traditionally, the FCA has refused to get involved in such issues unless there is “patent unreasonableness” in the decision.

Now, however, it seems that Board must now explain in greater detail how it gets to its bottom line. And in some respects, more detailed reasoning may open up even more possibilities for judicial review. Merely referring to the often voluminous evidence filed before it is no longer going to be sufficient.

The new regime set forth by Justice Evans may also lead to the need for the Board to evaluate more critically and analyse the quality of the evidence it relies upon, and why it is being relied upon. Evidence at the Board is often less than convincing. It is sometimes hearsay by any measure and is sometimes submitted by persons whose independence as experts could be readily challengeable in a court of law because they have a close ties with the collective that retains them to testify before the Board.

Below the tip of this iceberg is the fact that Parliament has chosen to largely delegate - some might say “abdicate” - a lot of power to the Board to not only determine terms, conditions and rates of tariffs but to effectively make law from square one. This is in stark contrast to many royalty issues in the USA, which are spelled out in often gruesome detail.

At the other end of the spectrum from broad law making, the Board routinely rules on procedural matters such interrogatory disputes (the Board’s somewhat analogous procedure to discoveries - except that there is no oral examination). There are often significant disputes as to what is relevant or too burdensome. Almost invariably, the Board provides no or at most extremely brief reasons for its procedural rulings.

Justice Evan’s decision will create a dilemma for the Board. There is already criticism, that that Board often takes well over a year following a hearing to render a decision. And the lead up to the hearing is often a couple of years. And in recent years, the Board’s panels have usually consisted of only three of its five members. In a report in Lawyers Weekly, September 8, 2006, Arnold Ceballos reported that Mr. Justice Vancise, the judicial Chair of the Board, recently acknowledged in a Toronto speech that there are substantial delays. Judge Vancise reportedly stated that “If the Supreme Court of Canada can render a decision in six months I can see no reason why this Board cannot do better”.

The Judge certainly and commendably seems to be trying to help to move things along. Of course, it’s not easy to compare statistics here. It’s an interesting question as to whether the Supreme Court of Canada is the most appropriate proxy for a benchmark for pendency of decisions . But that is a subject for discussion elsewhere. The immediate question is whether the need for more detailed decisions result in even longer delays in the release of decisions at the Copyright Board?

It will be interesting to see what the Board will do about this particular decision. It apparently has to hold another hearing - and to give more detailed reasons. There may be new evidence. The FCA said “On these issues of quantification, the Board may invite the parties to supplement the existing record with new evidence and submissions.” Will “may” mean “must”? If so, could it be virtually a de novo hearing? Also, the two members who did not hear the case before must now be involved. Will they review the previous record or should they hear the case all over again? Will this mean another three person panel or a full five member panel, which has been rare in recent years? This is all very interesting - and will undoubtedly be very costly to the parties in fees alone.

Will the Board change the result - or will it reiterate its previous decision - but with more “adequate” reasoning? Could it result in an even higher tariff? And when will we know the answer?

HK

Be Prepared

The Hong Kong progoganda perversion of the Boy Scout movement is spreading straight to LA.

According to the Washington Post:

Scouts will be instructed in the basics of copyright law and learn how to identify five types of copyrighted works and three ways copyrighted materials may be stolen.

Scouts also must choose one activity from a list that includes visiting a movie studio to see how many people can be harmed by film piracy. They also can create public service announcements urging others not to steal movies or music.

Here is the activity patch the copyright kids can earn:

Cory at boingboing is onto this, of course....

BTW, I hesitate to ask but I wonder where Captain Copyright is these days? Has he completed his therapy, probation or whatever program his creators announced a while back?

HK

Ringtones REDUX - US & Canada compared

Here’s an update of my earlier posting and a brief take on yesterday’s American decision.

The US Register of Copyrights has just rendered a very important decision on ringtones, which can be found here. The proceeding was commenced on August 1, 2006. After written submissions received on September 14, 2006 and a brief oral hearing on October 4, 2006, she yesterday issued a detailed 35 page single spaced decision with 137 footnotes, one of which refers to the recent Canadian decision on a small point. Bill Patry has a good analysis of the decision on his blog.

Here’s my quick take on a very complex and very important decision, from Canada’s standpoint:

Canadians should note:

1. Providers of ringtones in the USA may avail themselves of the compulsory license regime found in s.115 of the US Copyright Act. Canada, probably unwisely, abolished the compulsory mechanical licensing regime for musical works in 1988. Not only has the USA retained its compulsory license for mechanical reproductions - but has created a new compulsory license regime in the form of the Digital Performance Right in Sound Recordings Act of 1995, which was held to apply in most cases to the provision of ringtones as songs or portions thereof as a “digital phonorecord delivery” or “DPD”. The argument that the compulsory license applies only to a whole song and not a portion thereof was rejected. Generally speaking, it appears that there will be a one stop shop mechanism for ringtone providers to get a compulsory license for monophonic, polyphonic and mastertone ringtones, except in the presumably rare case that a ringtone comprises sufficient originality to be a “derivative work” under American law, or is an newly created composition and recording never before distributed to the public.

2. Although the actual rates are not yet determined, they will likely be MUCH lower than in Canada - where a initial 6% solution was imposed (essentially half way between SOCAN’s number and the objectors’ number). And Canada has not seen the end of ringtone tariff costs, because the 6% goes to SOCAN and the other “colleges” of rights holders will soon want their piece of the pie in addition.

Some points worthy of note:

• Not everything about US copyright law is bad. Au contraire. This decision illustrates an example of what is good about it - namely it is much more technologically neutral in the result than we see in Canada in this instance. It may turn out as well that that Congress saw more clearly into the digital future in 1995 in some respects than Canada has yet managed to do. Canada is still grappling with some of the less desirable last century aspects of US law, such as the DMCA - while ignoring what is sometimes better and more prescient about US copyright law.

• The Copyright Office has shown its ability to deliver a very learned decision very quickly. The process - which involved referral of a question of law by the Copyright Royalty Board to the Register of Copyrights - started on August 1, 2006 and resulted in the ruling of October 17, 2006 - less than three months. The lengthy delay of 14 months in the rendering of the Canadian ringtones decision - this following a two year lead up of preliminary matters - will have a ripple effect on other Board hearings, especially since the Canadian decision is now the subject of judicial review and could be overturned. To be fair, the Canadian Copyright Board heard a lot of factual evidence that was apparently not dealt with in the American proceeding which was on certain legal issues only, and has determined a rate - which also has not yet happened in the USA.

• But it should be asked whether Canada’s Copyright Board should bifurcate more often. Not every instance will turn out to be as much of a problem as Tariff 22. In fact, an early determination of some of the obvious legal questions in de novo tariffs - based upon a minimum evidentiary record if indeed needed - might save a lot of time and money overall. In some cases, tariffs have been so poorly conceived that the Board ought to find a way at the outset to say “try again next year” - and save everyone a lot of bother.

• The American case illustrates the ongoing complexities and ironies of internecine warfare in the music industry. However, Congress and the Copyright Office appear to have a good understanding of how this works. One can only smile that the RIAA also has been caught, yet again, sucking and blowing. It often deplores the concept of compulsory licenses when it is on the receiving end, but is apparently quite happy to take advantage of them when it suits its needs.

• The American decision is expected to result in falling prices to consumers in the “mobile industry” - whereas Canadian prices are clearly heading upwards due to high and layered tariffs.

• This decision illustrates by contrast that Canada has a much more costly and complex system. That seems to be the Canadian way. This renews the question about whether or not the Canadian Board can or should do something to stop this costly and complex layering of tariffs. Paying much higher tariffs overall to more parties in Canada - when most of the money will go the USA and Europe anyway - is not very obviously in Canada’s national interest, to say the least.

• Do we need another judicial commission to sort out what the bureaucrats, Parliament and the Copyright Board are all unwilling or unable to confront?

Speaking of judicial review of the Canadian ringtones decision, it’s interesting that the remaining objectors have switched counsel and filed a Notice of Application. It will be interesting to see whether they now have a change of heart and attempt to argue that the provision of ringtones is NOT a “communication by telecommunication” - a point that was inexplicably conceded before the Copyright Board. Their Notice of Application for judicial review leaves this possibility open.

This is a very important point and could affect, for example, the forthcoming SOCAN Tariff 22 hearing scheduled for April 17, 2007. It may affect the recently concluded CSI online music tariff hearing, which took place shortly after the Canadian ringtones decision was rendered. I had intended to argue that point myself at the Board, but my client MOVISO - the largest supplier of ringtones - decided to withdraw form the Canadian Copyright Board ringtone hearing, as have many other parties lately in other Board matters. I raised this point about “communication” again in my blog when the decision came out last month.

HK