American college students aren't the only ones downloading music and movies. Canadians have been downloading 134 million songs per month since the Federal Court in Canada legalized peer-to-peer file sharing in March 2004. The decision in BMG v. Doe (see sidebar) marked a low point for copyright holders in general and the domestic recording industry in particular, which claims it lost more than $300 million to illegal downloading between 1999 and 2004. It's no surprise then that the Canadian music industry is clamoring for the federal government to strengthen the Copyright Act. The government offered several proposals to bolster the Act in March 2005, which, if passed, would go into effect this summer.
"We have been lobbying the federal government to bring the Copyright Act into the modern era for the past 10 years," says Richard Pfohl, general counsel to the Canadian Recording Industry Association (CRIA), which represents the producers, manufacturers and distributors of more than 95 percent of all records produced and sold in Canada.
The most important of the new proposals would beef up protection for rights holders by implementing various provisions of two World Intellectual Property Organization (WIPO) treaties that address the Internet. Canada signed the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty in 1997, but has yet to ratify them.
The current proposals, however, still fall short of the protections available in the United States under The Digital Millennium Copyright Act of 1998 (DMCA), which implemented both WIPO treaties in their entirety and added a number of further protections for rights holders. On the other hand, Canadian rights holders are waiting to see whether the proposed amendments have enough force to substantively improve copyright protection.
"The proposals are a step in the right direction, but they are only a first step," says Paul Spurgeon, general counsel to the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the copyright collective that administers the rights of 75,000 Canadian members, and the Canadian rights of hundreds of thousands of foreign performers.
The most significant amendment would give copyright holders the exclusive right to determine when and how their works can be available on digital networks. Internet users who upload or distribute copyrighted works without permission will be liable for copyright infringement.
According to the Canadian government Web site on the copyright reform process (http://strategis.ic.gc.ca/epic/internet/incrp-prda.nsf/en/home), these changes will make it clear that "the unauthorized posting or the peer-to-peer file-sharing of material on the Internet" constitutes copyright infringement.
But Michael Geist, a law professor at the University of Ottawa and an expert on Internet law, says the power of the proposed changes is being overstated.
"The changes as announced don't touch peer-to-peer downloading," he says. "Rather, they ensure that only the unauthorized posting or uploading of copyrighted work will be an infringement."
In other words, copyright holders will have no recourse against individuals who download copyrighted materials, as they do under the DMCA; their remedies only will be against the individuals who originally uploaded the materials to a peer-to-peer service or a Web site.
Similarly, the Canadian proposals regarding tampering with copyright protection measures don't go as far as American measures. The Canadian proposals link anti-circumvention prohibitions to actual copyright infringement; the United States prohibits tampering outright. That means Canadians who remove or tamper with technological protection measures such as encryptions or passwords and rights management systems (for tracking the use and distribution of works) act unlawfully only if their action has the effect of infringement.
"Someone who tampers with a song from an Apple Web site so that it can be played on an mp3 player as well as an iPod wouldn't be liable because their only intention is to make the song playable," says Elliott Simcoe, a partner at IP boutique Smart & Biggar in Ottawa. "Reverse engineering or tinkering would not be prohibited as it is in the United States."
Also troubling to copyright owners is that it will be up to the rights holders to enforce their rights in the civil courts, because the proposals don't contemplate a regulatory enforcement regime. But Canadian rights holders may find it more difficult to locate and sue Internet infringers--particularly peer-to-peer violators--than their American counterparts do.
Both the Canadian proposals and U.S. law exempt Internet service providers (ISPs) from liability for copyright infringement when they are acting merely as intermediaries, carriers or conduits.
Enforcing laws against Internet copyright infringement, however, frequently requires ISPs to identify the infringing subscribers. To assist in this process, the DMCA imposes a "notice and takedown" regime on ISPs in the United States.
This requires an ISP to block access to, or "takedown," any material that a rights holder alleges is infringing. An ISP that fails to do so becomes liable to the rights holder for damages if infringement has in fact occurred.
Some critics say that the DMCA goes too far, giving rights holders power over ISPs based on allegations that haven't been proved in court.
"The American system gives rights holders more power than police have under search and seizure laws," Simcoe says.
Geist adds that the U.S. system doesn't work because allegations of infringement rarely involve material on an ISP server.
"An ISP has nothing to take down if the allegation relates to file sharing, because the offending files are sitting on personal computers," he says.
With this in mind, the Canadian proposals substitute a "notice and notice" system. Under this system, an ISP that receives notice of infringement from a rights holder must forward that notice to the allegedly offending subscriber--but without identifying the subscriber to the rights holder. However, the ISP must retain enough information to identify the subscriber pending a court's decision as to whether to release the subscriber's identity.
Wesley Ng, a senior associate at Stikeman Elliott in Toronto, believes that the notice and notice system will be effective.
"Peer-to-peer activity generally involves hordes of people sharing only a few files, and delivering a notice will likely scare enough people off to deprive the file sharers of their content," Ng says. "Certainly it will do so when the infringers are 14-year-olds, but even if they're not, this is Canada, and when people are put on notice, they obey the law."
Geist agrees. He says that a similar system has been in place on an ad hoc basis for some time. "It's an implicit agreement between the ISPs and CRIA," he says. "And if you talk to the people at the ISPs, they say the notice is successful in putting an end to infringement the vast majority of the time."
Still, it's precisely that attitude that is subjecting Canada to criticism that it is a laggard in the protection of intellectual property. Copyright holders say that this image inhibits investment in innovation. They argue that the government ought to have adopted the May 2004 recommendations of the Standing Committee on Canadian Heritage, a parliamentary committee that has done research into copyright reform.
The May 2004 report called for reforms that would bring Canadian copyright law in line with the DMCA. It called on the government to ratify the WIPO treaties, establish a notice and takedown system, and implement an anti-circumvention regime similar to the one that exists under the DMCA.
"The committee virtually ignored the public interest by issuing an embarrassing report featuring recommendations devoid of any sense of balance," Geist says.
Still, in the coming political battle over the precise form of the amendments, CRIA and other rights holders will undoubtedly push for something close to the original agenda. But the government's rejection of virtually every recommendation made by the committee doesn't augur well for their efforts.
Slow But Steady
It is perhaps no surprise that Canada doesn't take as strict a view of copyright protection as the United States. Unlike its neighbor, Canada is a copyright importing company.
"On a net basis, our dollars leave the country," Geist says. "It would cost Canada millions of dollars to take the same approach to copyright as the Americans have."
Besides, Geist says, the perception that Canada has some catching up to do is misplaced. He notes that while the United States and Japan have ratified the treaties, dozens of other countries--including every country in Europe--have yet to do so.
"There is a widespread fear that governments are over-regulating technology," he says. "By rejecting the more extreme aspects of the DMCA and adopting proposals that reflect more balance between rights holders and users, we are setting ourselves apart from the United States and becoming attractive to cutting-edge researchers who shun over-regulation."
Overall, Geist is optimistic that the proposals in their present form will become law. "Copyright reform is always controversial, but the current proposals strike a balance between copyrights holders and users," he says. "I'm hopeful that parliamentarians will understand that tweaking the proposals will alter that balance and that it is preferable to leave that balance intact."
BMG v. Doe: A Downloader's Delight
Canada has something of a maverick image when it comes to copyright enforcement.
Much of that image comes from the March 2004 decision of Justice Konrad von Finckenstein of the Federal Court in BMG v. Doe. The decision thwarted the music industry's efforts to crack down on music swappers.
The Canadian Recording Industry Association asked the court to force five of Canada's largest ISPs to hand over the names of 29 individuals who offered music to others. But Finckenstein concluded that simply making songs available on a peer-to-peer network or downloading them didn't amount to copyright infringement because the activity didn't amount to a "positive act" of distribution in either case. File sharing was akin to using a photocopier, Finckenstein said, something that the Copyright Act didn't prohibit.
The result might have been different, he noted, if the impugned individuals had sent out or advertised the availability of the copies.
By way of contrast, the music industry in many other countries, including the United States, has been able to proceed with thousands of lawsuits alleging copyright infringement against file sharers.
The Federal Court of Appeal heard an appeal from Finckenstein's decision in early April. At press time, the decision was still on reserve.