The Incoming Tide and it’s Relation to Copyright: Jim Denevan’s Ephemeral Creations

Credit: Brighton Denevan-Used with permission

“Time and tide wait for no man”, Geoffrey Chaucer is reputed to have said back in the 14th century (although versions of the saying predate Chaucer). King Canute proved the truth of this parable in his unsuccessful attempt to command the tide to recede. All he got was wet feet—although he apparently didn’t really believe he could stop the tide but rather was trying to demonstrate to his nobles the limited power of kings. In this, he evidently succeeded. The tide tables continue to be a welcome element of stability and predictability in an unstable and uncertain world. We rely on them to time boat launchings, decide when we should go fishing and, in the case of sand artist Jim Denevan, to know how much time he has left to work on his sand sculptures and when, precisely, his artistic creations will be inundated and obliterated for all time.

According to a CBC report on Denevan’s work at Tofino’s Chesterman Beach on the rugged west coast of Vancouver Island, he takes a philosophical approach to the immutable power of the tides, saying that it is a good life lesson because nothing is permanent. On July 9, at 9:30 p.m. the incoming tide washed out four months of planning and preparation and over a week of work, the designing, digging, etching and creation of an amazing geometric installation in the sand of Chesterman Beach. Chesterman was chosen because, unlike many beaches where the force of nature exerts its presence twice a day, this beach has a berm that is breached only when a king tide comes in. As it did on July 9.

Denevan has created sand installations in many locations, some on dry land, others on beaches. He has worked in various parts of the US (where there is sand, either beach or desert), Saudi Arabia, the UAE, Australia and Canada. His works are massive—and ephemeral by intent. The Tofino installation was of awe-inspiring scope, a full kilometer in length with a width of 200 metres, as you can see from the photos. Clearly a work of that scope requires some serious advance design work, not to mention a healthy dose of physical labour to dig and etch carefully, symmetrically and in straight lines. Under normal circumstances, a finished work of art like this would be protected by copyright, allowing Denevan to exert control over reproductions. But if you go to Chesterman Beach today you will find no trace of Denevan’s work. Nature has seen to that. Yet, because of the partnership with his son, drone photographer Brighton Denevan, Jim Denevan has a physical record of what he has produced, and through Brighton is able to protect reproductions of the work, and to monetize them if he wishes. That, however, is not his intent.

Denevan’s business model does not depend on licensing reproductions of his work; instead he accepts commissions to create them (although the Tofino work was a labour of love). As a result, he does not sell photos of his artwork (Brighton freely gave me permission to use the photo in this blog) if he controls the rights. When accepting a commission under US law he would normally be creating a “work for hire” where the commissioning entity owns the copyright, but Jim has been careful to keep the copyright and limit the use of the reproductions through contract. For example, his sand sculptures have been used in advertising (where he has permitted authorized limited time reproductions to be used on billboards or for video ads) or as ephemeral cultural manifestations, as in the case of his massive sand sculpture in Saudi Arabia (“Angle of Repose”) for the DesertX 2022, AIUla art exhibition. Actually, Denevan’s main line of business is the bespoke mass dining experience known as “Outstanding in the Field”, which he founded some 30 years ago. The commercial success of this endeavour allows him to explore his interest in ephemeral art and to undertake projects out of interest rather than financial return. Thus, Denevan’s only compensation for his Tofino project was seeing the work unfold, and then seeing it disappear under the incoming tide a few days later.

This brings me back to the question of whether ephemeral art can qualify for copyright protection. A photograph is the easiest way to convert an ephemeral work into something more concrete or “fixed”. The need for a physical manifestation of the work arises from the requirement for a copyrighted work to be “fixed” in some medium for it to qualify for protection, at least under US copyright law. Sand on a beach doesn’t appear to qualify under US law as a medium for fixation (although it might under British copyright law where the medium of fixation is less important, an issue I will explore in a future post). A photograph, however, does.

I wrote about the various dimensions of this issue a couple of years ago in a blog post, (“My Fixation with Fixation”). It is not only sand art creations that face this problem. It applies to any creative work that is transitory, such as ice sculptures, cake decorations, fireworks displays etc. Because copyright laws vary between countries, while generally following common principles, the fixation issue leaves plenty of room for discussion. The overarching international treaty that sets the principles and minimum standards for copyright protection for its members, the Berne Convention (to date, 181 members, just about every jurisdiction in the world), prescribes fixation but not its form. The Convention states (Article 2 (2)) that:

“it shall [ ] be a matter for legislation in the countries of the Union to prescribe that works in general or any specified categories of works shall not be protected unless they have been fixed in some material form.”

But the Convention leaves to each member state to decide the means of fixation. In the United States, to cite the US Copyright Office;

“To be copyrightable, a work of authorship must be “fixed in any tangible medium of expression, now known or later developed, from which [it] can be perceived, reproduced, or otherwise communicated, either directly or indirectly with the aid of a machine or device.” 17 U.S.C. § 102(a) “…and the work must be sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” 17 U.S.C. § 101 (definition of “fixed”).

The Office goes on to add that, “if the work or the medium of expression only exists for a transitory period of time, if the work or the medium is constantly changing, or if the medium does not allow the specific elements of the work to be perceived, reproduced, or otherwise communicated in a consistent and uniform manner”, it may not be protected.

But what is “transitory”? Denevan’s sculpture on Chesterman Beach lasted for 9 days as it evolved. Fixation does not mean permanence. After all, what is “permanent”? Ask Ozymandius. A wood carving, a sketch on paper, or a design on textiles may not be permanent given their inability to withstand the ravages of time, although the physical existence of the work might outlast the period of copyright protection.

Arguments can be made that even a transitory work can be protected if its design or instructions for creation are recorded. However, while we can consider the complexities of protecting a work that exists in fixed form only through the written or recorded instructions for its assembly or execution, the simplest and most straightforward solution to the conundrum as to whether a transitory work like Denevan’s is, or was, fixed, is to ensure that it is recorded after execution in an enduring, physical medium, of which photography is the most obvious.

Photography is a very suitable partner for Denevan’s art because, without the aid of the birds-eye perspective provided by Brighton Denevan’s drone photos, it would be impossible to truly appreciate the complexity and symmetry of the designs. You can observe them from ground level, or maybe even from an adjacent hill, but it takes the overhead shot to truly bring out the full dimensions of the work. The relationship between the sculpture itself and the overhead photo of it is symbiotic; you cannot really have one without the other. Thus, it is entirely appropriate that the copyright rests, in effect, with this father-son team even if they have no interest in exploiting it. Of course, there is nothing to stop a third party from flying a drone over the work and taking their own photos, establishing a separate copyrighted work. But, thanks to the tides, they would have limited time to do that.

Perhaps that is the beauty of an ephemeral production; the sculpture can be created, photographed and then erased (by nature), never to be subject to further exact replication. A true one-off. Even if the design could be replicated exactly, the medium (Chesterman Beach) will have changed somewhat owing to wave action, light, storms and so on. That also makes the photos truly unique. No-one can go back and produce a facsimile because all they will see is empty sand. The sculpture existed for a moment in time and was captured in that instant by the eye of the camera. Unlike a photo of the Golden Gate Bridge, or the Tower of Pisa, or whatever permanent art-work you can name, it can never be recreated precisely again. I think that’s pretty cool.

© Hugh Stephens, 2022. All Rights Reserved.

Copyright’s International Conventions: The Importance of Membership Part II (The Rome Convention)

Credit: WIPO

Last month I wrote about the importance of international copyright treaties, using US accession to the Berne Convention as an example. United States accession was strongly supported by US copyright industries and has brought the US many benefits. But if acceding to an international copyright convention has its rewards, absence can bring costs. A recent case in Sweden highlights the importance of expanding the international network of agreements to ensure protection of non-nationals.

Back in March of this year two men who had been convicted in a Swedish court, sentenced to prison and fined $21 million for engaging in widespread broadcast piracy through operating the streaming service Advanced TV Network (ATN), were released on appeal. They were accused of pirating and redistributing signals from Qatar’s beIN Sports (a network widely pirated in Saudi Arabia and elsewhere, which I wrote about here and here). Why were they released? While ATN may have distributed beIN sports broadcasts in Sweden without permission, according to the appeals court the copyright on the broadcasts from the Qatari company could not be enforced because Qatar was not a member of the Rome Convention at the time of the offences.

The Rome Convention, aka the Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, was signed in 1961 and came into effect in 1964. As stated by the World Intellectual Property Organization (WIPO) which, along with the International Labour Organization and UNESCO is responsible for administering the treaty, it “secures protection in performances for performers, in phonograms for producers of phonograms (sound recordings) and in broadcasts for broadcasting organizations”. With respect to broadcasting, broadcasting organizations in member states have the right, among other things, to authorize or prohibit the rebroadcasting of their broadcasts and the communication to the public of their broadcasts if such communication is made in places accessible to the public through payment of an entrance fee. In other words, broadcasts of professional sports matches.

The Convention today has 96 member states, a significant number although representing only about half the number that are members of Berne. Those 96 countries include Qatar (with effect from September 23, 2017). It acceded about a year after the offences for which the owner of ATN and his son were originally sentenced–a year too late it seems, from the perspective of beIN Sports. But better late than never, as the saying goes. However, while Qatar has now acceded to the Rome Convention, the United States has not. Why has the US not acceded, and is this a problem for US rights-holders?

In my blog posting last month, I discussed why the US was reluctant to join the oldest and most important of international copyright conventions, the Berne Convention. It eventually did so in 1989, 103 years after Berne was originally established. The US was a holdout for many years because US law was not consistent with some of the provisions of the Convention. In the case of the Rome Convention, as with Berne, there was (and is) a problem with the incompatibility of some aspects of US law, making it difficult for the US to accept the terms (and the benefits) of the Convention.

US law does not provide full protection for “neighbouring rights” (AKA “related rights”), the right to publicly perform or broadcast a sound recording, one of the categories of rights covered by the treaty. When a work is broadcast, royalties are paid to “authors”, in this case songwriters and music publishers. In Rome Convention countries, royalties are also paid to the artist(s) and recording studio or record label, as related or neighbouring rights. But not in the United States.  US broadcasters are exempt from paying performers and labels when sound recordings are played on terrestrial (AM/FM) radio or on TV. (Digital transmissions are not exempt). Many attempts have been made over the years to correct this situation, the most recent of which is the American Music Fairness Act, introduced in 2021, which I wrote about here. The legislation is opposed by the terrestrial broadcasters, who have considerable political clout in Congress. But as noted copyright scholar Daniel J. Gervais has commented, with respect to the Rome Convention;

Failure of the United States to adhere has cost US performers and industry tens of millions of dollars in remuneration paid for the broadcasting of sound recordings that are not paid to United States rights holders because the Rome Convention and TRIPS (the intellectual property measures in the World Trade Organization treaty) allow reciprocity in this regard as opposed to the usual standard of nondiscrimination against foreign nationals known as national treatment. To obtain the remuneration from Rome Convention members, the United States would have to ratify the Convention and establish a remuneration for the broadcasting of sound recordings

If US artists and labels have been deprived of royalty revenues overseas, the US broadcast exemption has also cost recording artists from other countries significant amounts of potential revenue in the United States.

Failing passage of legislation to remedy the anomaly of non-payment of royalties for related rights over radio and TV, the US music industry can attempt to have the United States negotiate “national treatment” clauses in bilateral or regional trade agreements, as it did in the recent update of NAFTA (the USMCA). In this case Canada, which (with limited exceptions) does have a radio royalty performance right, agreed to grant US performers “national treatment”, which means that US performers and recording studios can collect royalties for the playing of their sound recordings over terrestrial radio in Canada even though neither Canadian nor American performers currently enjoy that right in the United States.

If the US has not ratified the Rome Convention, how do US artists, record labels (producers of “phonograms”) and broadcasters protect their IP rights abroad? Well, first of all, through the negotiation of “national treatment” provisions whereby US entities are accorded the standard of copyright protection granted by the host country, as occurred with Canada and Mexico in the case of the USMCA/CUSMA, when the host country’s standard of protection exceeds that of the US. Secondly, by acceding to other international agreements that are similar or almost equivalent to the Rome Convention in some of their provisions. For example, the US, acceded to the Phonograms Convention of 1971. That protected the record labels from unauthorized duplication of their recordings. The Convention provides protection to the “producer of phonograms who is a national of another Contracting State against the making of duplicates without that producer’s consent…”. Then, in 2002, the US ratified the 1996 WIPO Performance and Phonograms Treaty (WPPT). This provided additional protection to recording studios and performers (although the US had to take a reservation because of its non-recognition of performing rights for terrestrial radio, allowing other countries to deny payment of royalties to US performing artists) and provided US performers with a moral right, at least for countries that are members of the Treaty.

But what neither of these treaties did was to protect broadcasts, which was one of the areas covered by the Rome Convention, (Some protection was provided to broadcasters in the TRIPS Agreement, part of the World Trade Organization treaty).

For a number of years, WIPO has been trying to negotiate a new international broadcast treaty, so far unsuccessfully. As WIPO explains it;

“International rules to protect television broadcasts from piracy have not been updated since the 1961 Rome treaty, drafted at a time when cable was in its infancy and the Internet not even invented. Now that perfect digital copies of television programmes can be made and transmitted with a few mouse clicks, signal theft has become a big commercial headache for broadcasting organizations around the world.”

It would be fair to say that a broadcast treaty is controversial. The outstanding issues include the scope of coverage, (would it cover internet transmissions?), how signals should be protected, (the extent to which technological protection and encryption methods should be allowed), and what additional rights should be given to broadcasters. As explained by WIPO;

“Under the Rome Convention, broadcasters have exclusive rights for 20 years to authorize rebroadcasting, “fixation” (recording), reproduction and communication to the public of their broadcasts. Most broadcasters want the new treaty to extend and update those rights for the new technologies, especially to prevent unauthorized retransmission of their programmes over the Internet.”

Critics argue that additional protection for broadcasts would hinder access to copyrighted material by requiring an additional level of permission from the broadcaster in addition to the copyright owner, such as the producer of the material. There is also debate about how long protection should last, the 20 years of the Rome Convention or longer. For all these reasons, progress on finalizing the Treaty has been slow.

In the meantime, US broadcast networks distributing their programs abroad cannot invoke the protection of the Rome Convention. I know nothing about Swedish law, but if the recent Swedish beIN Sports case is anything to go by, and if beIN Sports could not pursue broadcast pirates in Sweden because its home country of Qatar had not acceded to the Rome Convention at the time of the proven criminal activity, then US networks must be equally vulnerable. And unlike beIN Sports (since Qatar has now acceded to Rome), US broadcasters remain vulnerable to this day. That can’t be good news for US sports franchises like Formula One, the NBA, or UFC if they distribute their content through US based sports networks, like ESPN International or Fox Sports International. International copyright conventions count. They are there for a reason-to establish standards of international protection and to plug holes in the system.

But while the US eventually accepted the need to join Berne, there appears to be little or no chance that it will eventually ratify the Rome Convention. At the time “Rome” was drafted, sixty years ago, there were issues with US law that prevented ratification. Subsequently the performers and phonograms issues were largely resolved through accession to more modern treaties. As for US broadcasters, they appear to have no interest in pushing for ratification of the Rome Convention but are instead more interested in the future possibility of a new International Broadcasting Treaty.

In the case of Berne, the US eventually saw the need to accede and the political will was mustered to pass implementing legislation, which required some changes to US law. In the case of the Rome Convention, the US has been able to manage without joining for over half a century through various work-arounds and is unlikely to make the effort now. Potentially though, some US broadcast interests operating abroad could suffer the consequences of this decision, as was the case with beIN Sports in the case of Qatar’s non-membership at the time the principals of ATN were convicted of piracy.

Whether to invest the political capital in making the changes needed to permit accession to a given treaty is always a political calculation that governments need to make. The benefits must be balanced against any downsides, while domestic political interests and lobbies have to be taken into consideration. As I noted last week, when the pain is worth the gain, it happens. For the US, joining the 1961 Rome Convention may not be in the cards, but until an international broadcast treaty is achieved, sports networks based in Qatar (or any of the other 95 Rome Convention countries) would seem to have a greater degree of protection against theft of their signals abroad than those networks based in the US. That’s the trade-off.

© Hugh Stephens 2022. All Rights Reserved.

Connecting Online Platform Audiences to News Media Content: Is There A “Missing Link”? 

Credit: Pixabay

Last week I talked about developments in Australia, Canada and the US regarding how to find ways to require large online platforms that aggregate news content for their users to share some of their digital advertising revenues with the producers of that content, namely news publishers and broadcasters. Australia has already taken action, successfully. Canada is currently going through the process of enacting legislation, Bill C-18, the Online News Act. The US is still studying the issue.

As Bill C-18 continues to make it way through the Canadian parliamentary process, much attention has been focussed on whether hyperlinks to content should be covered by the law. Google is firmly opposed, claiming that including links will “break” Google Search, (among numerous other criticisms), despite the fact that links were also covered in the Australian legislation that Google eventually came to terms with.

Bill C-18 targets not just “snippets”, those mini-excerpts containing the gist of the story used by the platforms to entice readers, but also hyperlinks. It is a standard feature of copyright law in most if not all countries that posting a link to content does not constitute copyright infringement. If I don’t have the rights to reproduce an article or to publish the photos in an article, I can nonetheless point my readers to the article and the photos by giving them the URL, usually by embedding a link to the original material. I haven’t copied anything. All I have done is tell people where to access the original, which could be seen as a positive in that I am directing more traffic to the original site. That is what the platforms maintain they are doing when it comes to linking to news articles. But Canada nonetheless intends to include links in the Bill’s coverage because to exclude them would not target the “problem”, the problem being that the big platforms use links—among other devices–to aggregate material produced by others (and to profit from it). Bill C-18’s solution is to require the platforms to compensate producers of media content when they make that content available to online audiences. “Making available” through facilitation of access is the key action, not copying or reproducing, although that is also covered in the legislation. 

While copyright law does not generally cover linking (reproducing short excerpts, or “snippets”, is potentially different although there are legitimate debates about how little or how much can be included in an excerpt without infringing copyright), C-18 does not approach this as a copyright issue. Instead, it takes a competition approach–although the minister bringing forth the legislation is not the minister responsible for competition policy, (i.e. the Minister of Innovation, Science and Economic Development), but rather the Heritage Minister–and the agency responsible for implementing the legislation will be the Telecommunications and Broadcasting regulator, the CRTC, not the Competition Bureau. The Online News Bill is intended to redress an imbalance in the market and an imbalance in bargaining power, just as the Australian legislation did. This differs from the European approach which created a new ancillary copyright, a publishers’ press right, which provided news publishers with a new lever to use in bargaining with the platforms. Notably, hyperlinking is exempt from the provisions of this ancillary right which was brought in under Article 15 of the EU’s Copyright Directive.

The Canadian legislation is all about providing “fair compensation for the news content that is made available”. It doesn’t mention hyperlinks specifically, but since links are a vehicle to make content available, it seems clear they are covered.

The relevant provision in the Bill–Section 2(2)—reads (with Part b being the important element insofar as links are concerned);

For the purposes of this Act, news content is made available if

(a) the news content, or any portion of it, is reproduced;

or

(b) access to the news content, or any portion of it, is facilitated by any means, including an index, aggregation or ranking of news content.

It is well known that publishers themselves often post links to their own content on the platforms, especially Facebook, as the platform is a key tool in attracting an audience. The platforms will say, of course, why should we be required to pay the publishers when they themselves have posted the link? The answer, I believe, comes in the wording of the legislation requiring “fair compensation”. One would expect the calculation of fair compensation to take into account the benefit that news publishers gain by posting links to the platforms. That benefit will need to be offset against the greater benefit that the platforms gain by using news content to attract viewers and advertisers. That trade-off will normally be worked out during bilateral negotiations between the publishers and the platforms, with the government, in the form of the CRTC, stepping in only if there is a failure to reach agreement.

So, yes, linking is covered (but not because of copyright) but the calculation of benefit from posting the links is subject to negotiation between the parties, adjudicated in the end, if necessary, by a three-person arbitral panel. That panel would be selected by the parties from a roster maintained by the CRTC. If the parties cannot agree, the arbitral panel would be appointed by the CRTC itself. “Fair compensation” will likely not be easy to determine, but with the spectre of arbitration in the background I am confident the parties will reach agreement.

Does this mean there is a slippery slope toward a so-called “links tax”, whereby individual users (like me and you) will be constrained from posting links and may be required to compensate the entity to which we are linking. No, that is not the case. The legislation is very clear that it will apply only to a “digital news intermediary” that has a “significant bargaining power imbalance between its operator and news businesses”. That definition will catch Google and Meta, but they will be exempted if they can demonstrate to the regulator that they have already entered into agreements with news businesses on the basis of fair compensation. That is what happened in Australia. Under the threat of designation under the News Media Bargaining Code, the platforms managed to get to “yes” with most news providers, thus avoiding being designated.

Despite all the bluster from Google that including links in the legislation and making them subject to compensation through negotiation will “break the internet” (we’ve heard this one before with regard to site blocking), nothing like that is going to happen. Google is not going to stop providing Search in Canada. When they threatened this in Australia, Microsoft stepped in and offered Bing as a replacement, at the same time going on the record to make it clear they had no problem in complying with Australian law. (see “Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others”).

So lets see how it all works out. There is a lot of hyperbole and misinformation being spread about C-18. (For a detailed deconstruction of Google’s criticisms, click here—yes, a hyperlink!) Maybe the legislation is not perfect in all respects but it’s undergoing careful review, currently at the Committee stage. And then it will go to the Canadian Senate for more review. Google and Meta will eventually swallow hard, bite the bullet, and move on. You can’t blame them for opposing what they see as not being in their corporate interests, and for lobbying hard against the legislation. That is how the system works. But there is no way the Canadian government or Canadian public should be panicked or stampeded into backing down. Inclusion of links within the ambit of the legislation, and making them subject to negotiation, is not a radical proposal. It is a necessary step to redressing a market imbalance, giving some bargaining power to news media content producers to enable journalism to survive, and reining in two digital behemoths that have had it all their way for far too long.

© Hugh Stephens, 2022. All Rights Reserved.

Australia and Canada Tackle the Issue of Requiring Financial Support for Traditional Media from Online Platforms: Will the US Follow?

Source: http://www.shutterstock.com

As first Australia, and now Canada (and the UK) implement legislation to stanch the bleeding of revenues from the traditional media sector to the major online platforms, a development that has resulted in the hollowing out of journalism as the platforms use the aggregation of media content produced by others to help attract and retain viewers, the US continues to evaluate its own approach to this issue. Recently the US Copyright Office concluded a study on whether any changes are needed to US copyright law to protect publishers’ rights, as had recently been done in Europe. The conclusion that no changes are warranted will be disappointing to some content creators, although this now clearly shifts the focus to the area of competition law as a needed remedy to the market imbalance that exists.

Australia’s News Media Bargaining Code has been hailed as the instrument that brought the big internet platforms (read Google and Facebook/Meta) to heel when it comes to “sharing the wealth” with the news outlets they in part draw upon to gain and hold audiences by aggregating their content. Australia has been successful to the extent that the threat of intervention and arbitration by the government has “encouraged” the platforms and media enterprises to reach deals, reportedly on the scale of about AUD200 million annually, allowing print and broadcast outlets, large and small, to hire and retain more journalists to produce the news. At least that is the supposition. No-one knows for sure because the details are clouded in secrecy, with no-one other than the platforms and the news entities themselves knowing exactly how much each received. Nor is there any detail on how this extra funding will be used. It is a fair assumption that it will be invested in journalism but, in fact, there is nothing to stop it from being used to pad the bottom line or increase payouts for executives. It is also not clear why some outlets (such as Australian public service ethnic broadcaster SBS) were excluded from the deals. The Code was never actually invoked; merely the threat of it seems to have been sufficient to ensure bargaining between the platforms and most Australian media. As a result, to date, neither Google nor Meta have been named as targeted entities under the Code. That is the way they like it.

Canada is currently in the process of enacting its own version of the Australian law, although with modifications to make it more transparent. The Canadian draft law has run into the same criticisms that came up during the debate in Australia. For example, will this favour big media over the little guys? Who qualifies as media, i.e. should some small online publication just recently launched qualify? (The answer is yes, if they employ at least two journalists and qualify for the journalism tax credit). Will government decide who qualifies? (see above). If so, is this a suitable role for government given the role of the media as a watchdog on government activities? Will siphoning from the purse of the platforms potentially compromise journalistic coverage of these gigantic businesses? And so on.

Perhaps not surprisingly, the organization that represents many media outlets in Canada, News Media Canada, is fully behind the legislation. The statistics are compelling in terms of the migration of ad revenues to the online platforms and the consequent negative impact on journalism generally, from employment to news coverage to revenues available to be invested in upgraded technology. Whether the output of traditional journalism is in the form of daily or weekly newspapers, online digital editions of the same, news broadcasts on cable, over the air or online, it still requires an investment to produce. And the platforms produce nothing when it comes to content. All they do is ride on the back of content produced by others, searching it, indexing it, highlighting it, and distributing it, in short, aggregating it, attracting the lion’s share of eyeballs, and thus ad revenues. As a result, content producers argue the big platforms should contribute to the production of the material from which they benefit, whether they are compliant with copyright law or not.

And the platforms do contribute in some countries—but on their terms. As the pressure has mounted, both Facebook and Google have been quick to rollout their own programs to subsidize journalism. Critics would call it too little, too late, a band-aid solution when the patient is bleeding to death. But that has not stopped some media enterprises from being very grateful for the limited largesse they receive from the platforms. The organizations pushing for legislation point to the potential hammer of government intervention as one reason for the sudden interest of the platforms in maintaining a viable journalism sector; they also criticize the terms of the “handouts”. It is argued that recipients are more beholden to the platforms as a result of the voluntary agreements than they would be if the agreements were reached as a result of a legislated requirement (or a threatened requirement). In the latter case, more leverage rests with the media outlet, it is argued, as there is potential recourse given the government’s role as the final arbiter.

Both Canada and Australia have approached this question as a competition rather than a copyright issue. France has also used its Competition Authority to require the platforms to reach compensation deals with publishers, although the EU itself has taken a copyright-based approach to dealing with the issue. Do news publishers require additional rights to enable them to bargain with the platforms for compensation for aggregation of their works? The EU identified such a need and brought in a requirement for member states to create an ancillary press publishers’ right, a “neighbouring right” that gives publishers a right of reproduction and a right of making available covering online uses of their press publications by internet platforms for two years from the date of publication of news stories. The question of whether copyright law is deficient and needs updating has also been examined in the US.

The US Copyright Office (USCO) has just concluded its own study, which I referred to in a couple of blog posts last year, (“Paying for Use of News Content? The US Launches Study on Free-Riding by News Aggregators”) and (“How Can News Publishers Best Protect Their Content? The US Copyright Office Explores Options”). While it does not deny the dimensions of the financial problem from the perspective of news outlets, the USCO has now determined that no copyright fix is required. According to the concluding report from its study, there is no imperfection in US copyright law of which the platforms are taking advantage, and which needs to be addressed. As outlined by Copyright Alliance blogger Rachel Kim in a recent post that very effectively summarizes the USCO study;

“The Office first notes that press publishers own the copyright in their textual news content (1) as a collective work or (2) through the work-made-for-hire doctrine, assignments of rights, or exclusive licenses. The report later relies on the existence of these rights to conclude that no U.S. ancillary right is needed since the justification for passage of the EU ancillary right was to grant press publishers similar ownership rights that they didn’t previously enjoy.”

So if the USCO has concluded that addressing the issue through copyright law is not the answer, then what is? It is actually not a great surprise that the Copyright Office did not recommend any changes to US copyright law as even the main protagonists of the need to bring about some form of revenue sharing with the platforms, the US News Media Alliance, did not strongly endorse this remedy in its submission to the USCO. While it would not object to having the EU ancillary rights extended to US news providers in Europe (this will only happen if the US enacts a reciprocal law or if a national treatment commitment is negotiated under a trade agreement between the EU and US), it prefers to have the issue dealt with through competition law, and by passage of legislation that would allow US news media to bargain collectively without violating anti-trust laws.

While rejecting the need for any changes to US copyright law to deal with the effects of online news aggregation on traditional journalism, the USCO notes the competition approach taken by Australia and others but declines to endorse it, simply punting the issue to other agencies to deal with. Given the mandates of respective agencies, and noting how jealously they guard their turf, this is not a surprise. Still, if advocates of pushing the platforms and publishers together to negotiate terms were hoping the USCO study would provide a way forward, they must be disappointed. One area where it clearly does have a role, that of interpreting fair use (although the exact dimensions of fair use are decided by the courts), the Office takes a “two-handed approach”, ie. “on the one hand, and on the other”. In other words, it waffles, reflecting the range of conflicting inputs it received plus the uncertainty over whether a given use is fair or not, a determination that can only be decided on a case-by-case basis by a court.

Kim points out that there is one area where the USCO could have been more helpful to content creators, by addressing the lack of a registration option for dynamic web content. In the US, while registration is not required to assert copyright, it is required if an infringement action is to be brought in court and to recover statutory damages. However, nowadays much content is produced only digitally, and frequently updated, never appearing in a physical version, yet the USCO is stuck back in the last century requiring the deposit of a static copy of an edition as proof of copyright. (The Office currently only accepts deposit copies that show the static form of a website and does not allow copyright owners to deposit copies of the updated versions of that same website for the same registration, which is a problem because almost no website— particularly a press publisher’s website— looks the same as it did five minutes earlier). Rather than offer solutions, the study simply says that the Office hopes to address the issue through its modernization efforts.

Overall, the outcome of the study clearly indicates that the Copyright Office will not be taking the lead in addressing the platform aggregation issue, as much as it is willing to acknowledge the problem. Instead, the onus will be on Congress, where the Journalism Competition and Preservation Act (JCPA), legislation that would allow the news media to combine to negotiate collectively with the platforms, has languished. In terms of the balance of political power in the US, it would seem the platforms (despite increasing scrutiny of their activities by Congress) have more clout than the media. So far they have been able to forestall any meaningful action in the US to deal with the issue of revenue-sharing with content providers. The platforms have been less successful elsewhere, and assuming the Canadian legislation is passed, there will be yet another example of how the internet intermediaries can be induced to come to the table. Will the US eventually follow the example being set in other countries.? It is evident the US Copyright Office is not going to lead the way, but I suspect that in the end, the US will get there.

© Hugh Stephens 2022. All Rights Reserved.

The Online Streaming Act and Canada’s Trade Agreement Commitments: How Donald Trump Gave Canada a “Get Out of Jail Free” Card

Now that US Trade Representative (USTR) Katherine Tai in her recent meeting with Canada’s International Trade Minister Mary Ng has officially taken notice of the Online Streaming Act (Bill C-11), (“Ambassador Tai expressed concern about…pending legislation in the Canadian Parliament that could impact digital streaming services“) this raises the question as to whether aspects of the Bill might violate commitments Canada has made under international trade agreements, such as the updated NAFTA, known as CUSMA. We don’t know what concern was expressed by the US—it may simply have been a shot across the bow to let Canada know that USTR is carefully watching to ensure that any impact on US interests is taken into account as the legislation wends its tortuous way through the Canadian parliamentary process —but there is no question that whatever actions are taken by Canada regarding digital streaming services, they will not constitute a violation of the CUSMA/USMCA. They could, however, have violated Canada’s commitments under the Trans-Pacific Partnership (TPP) but Donald Trump inadvertently came to Canada’s rescue. More on this below.

Any measures taken by Canada to regulate US streaming services under CUSMA, even if discriminatory, would not violate the terms of the Agreement because of CUSMA’s cultural exemption clause. Under this clause, Article 32.6(2), aka Paragraph 2, the Agreement does not apply to any actions taken by Canada that relate to cultural industries (with two minor exceptions). The definition of cultural industries includes;

the production, distribution, sale, or exhibition of film or video recordings; the production, distribution, sale, or exhibition of audio or video music recordings”; and “all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services

There is, however, a sting in the tail of this exemption in the form of Paragraph 4 (Article 32.6 (4)

Notwithstanding any other provision of this Agreement, a Party may take a measure of equivalent commercial effect in response to an action by another Party that would have been inconsistent with this Agreement but for paragraph 2 or 3…” (Paragraph 3 allows the US or Mexico to take similar non-compliant actions to those taken by Canada if Canada initiates measures that violate the terms of the Agreement).

This retaliatory clause allows the US or Mexico to take equivalent economic measures against Canada in any area if Canada takes an action with regard to a cultural industry that would have been inconsistent with the Agreement but for the exemption clause. In other words, if Canada takes discriminatory measures against a US or Mexican entity in the name of protecting Canadian culture, negating a “national treatment” commitment it has made under CUSMA, it would not be obliged to reverse this measure, but it could suffer economic retaliation for having done so.

The “sting in the tail” comes from the original Canada-US Free Trade Agreement (FTA) of 1987, and was the compromise achieved at the time to allow the Canadian government to say that cultural industries were not covered by the FTA while providing a strong disincentive to override commitments in the Agreement in the name of protecting culture because of the punitive retaliation that could be exacted. (It is also worth noting that if Canada did take measures that negated provisions of the CUSMA, calculating the “equivalent commercial effect” would be a difficult and controversial process. Depending on the measure taken, it could be very difficult to measure what commercial impact it might have).

Therefore, while the CUSMA allows Canada to override commitments it made in the Agreement with respect to digital streaming services, the question is, would it do so given the potential cost?

And what are those commitments? They are spelled out clearly in CUSMA, Article 19.4;

“No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products.”

This is a so-called “national treatment” commitment. You must treat a foreign product or entity no less favourably than the domestic equivalent.

While under CUSMA Canada retains the flexibility to undertake discriminatory measures against US streaming services (although subject to the constraint of retaliation), other trade commitments it made in the past would have clearly made it a treaty violation to do so, not only against US services, but also against streaming services from a number of other countries. This was the commitment Canada made in the 2015 Trans-Pacific Partnership (TPP) agreement whereby it would not adopt or maintain measures that imposed discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development.

In the TPP, which Canada joined late in the process thus reducing its negotiating leverage, it was unable to secure the kind of blanket exemption for cultural industries that it had negotiated in the original Canada-US FTA and NAFTA (and replicated in the CUSMA). Therefore, it took “reservations” on a chapter-by-chapter basis, specifying which areas would be exempt from commitments made in that chapter. In the chapter of the TPP dealing with Cross Border Trade in Services, Canada made the following reservation or exception;

“Canada reserves the right to adopt or maintain a measure that affects cultural industries and that has the objective of supporting, directly or indirectly, the creation, development or accessibility of Canadian artistic expression or content…,”

However, the US insisted on an “exception to this exception”. It read;

“…except:

(a) discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development; and

(b) measures restricting the access to on-line foreign audio-visual content.”

Canada had come late to the TPP negotiations which were well underway by the time it expressed interest in becoming a Party to the Agreement. US trade officials were not keen on adding Canada to the TPP mix but Prime Minister Harper reached out at the political level to President Obama and in 2012 Canada was finally admitted to the process. One of the conditions that Canada accepted was to agree to limitations on its ability to require foreign content providers to contribute to Canadian content development, while also renouncing the ultimate policy instrument of restricting access to foreign online audio-visual content providers. This latter concession was something not likely to be contemplated but was still a last resort measure that the Canadian government had now agreed to take off the table.

But then Donald Trump came to Canada’s rescue. In one of his braggadocio moments shortly after taking office, he withdrew the US from the TPP, effectively ending all prospects of the Agreement coming into force. The policy constraints that Canada had agreed to in the TPP regarding funding of Canadian content were now gone. After the US withdrawal, the other ten TPP members, led by Japan, decided to retain the main elements of the Agreement and to finalize a new text modelled largely on the original TPP, a process which eventually morphed into the renamed Comprehensive and Progressive Trans-Pacific Partnership, the CPTPP. Canada stayed “in the tent” and signed, then ratified the modified agreement. As part of the process of CPTPP finalization, however, Canada sought out and signed side letters with all the ten remaining members, nullifying the exception to the cultural exception. The other countries didn’t particularly care; the restriction had been imposed by the US and the US was no longer party to the Agreement.

The operative wording, taken from the side letter between Canada and Australia but identical to the side letters with all the CPTPP partners reads;

“Canada and Australia agree that, in continuing to give effect to the Agreement, notwithstanding the following language in Annex II – Canada – 16 and 17 – under the Cultural Industries Sector, first paragraph under the subheading “Description,” that states “except: (a) discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development; and (b) measures restricting the access to on-line foreign audio-visual content”, Canada may adopt or maintain discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development and may adopt or maintain measures that restrict access to on-line foreign audio-visual content.”

As a result, while Canada still has to bear in mind the restrictions placed on its policy options by the CUSMA with regard to requiring foreign (US) entities to financially contribute to the creation of Canadian culture in a way that could be discriminatory (unless it wants to accept the risk of economic retaliation), its firm commitment not to discriminate against foreign online service suppliers has disappeared. Canada has Donald Trump to thank for giving it extra policy flexibility as it grapples with the issue of regulating and requiring financial commitments from online streaming services and platforms. The removal of this commitment has thus provided the Canadian government with a bit more scope to deal with policy issues in the Online Streaming Act.

This still begs the question, however, as to whether Canada needs to discriminate against foreign streaming services in order to achieve the objectives of C-11. And what are those objectives exactly, you may well ask. Opinions are widely divided on the need for the bill, its impact and the means the government will use to achieve the stated goals of the legislation. There are a range of stakeholders, including of course the Canadian public, but also the Canadian broadcasting industry, Canadian content producers, foreign streaming services, various foreign internet platforms such as Youtube, Tik Tok, etc., and the government and its regulatory agencies. The legislation is complicated and tries to do a number of things. (Here is a concise summary from a leading law firm).

One of the outcomes of the bill, if it passes in its current form, will be a review of how Canadian content (Cancon) is defined, an issue that I discussed in a recent blog (Unravelling the Complexities of the Canadian Content Conundrum). Other elements include a requirement for “discoverability” of Cancon on streaming platforms, measures to require streaming services, both Canadian and foreign, to contribute a percentage of revenues to the creation of Cancon and greater authority for the broadcast regulator, the CRTC, to audit the books of broadcast undertakings. Behind all these measures is the fundamental objective of bringing online broadcasters such as streaming services (think Netflix, Disney Plus, Crave, CBC Gem etc) and social media platforms that distribute content under the purview of the Broadcasting Act, and thus making them subject to regulation by the CRTC.

We have noted that if Canada invokes CUSMA Article 32.6 to justify regulation of US streaming services, the US (and Mexico) could retaliate. However, for the retaliation to take place legally, the Canadian measure must be inconsistent with the Agreement but for the cultural exemption. This means that if Canada takes measures affecting cultural industries that apply to all players equally, both Canadian and non-Canadian, it is very likely that they would withstand a challenge under CUSMA/USMCA. Therefore, now that Canada is moving to classify online distribution of content as broadcasting, it needs to be careful to do so in a fully non-discriminatory manner, ensuring that regulatory measures apply equally to Canadian, US/Mexican, and other foreign entities.

It remains to be seen whether the Online Streaming Act (and the CRTC’s application of its expanded mandate flowing from the Act) will meet the non-discrimination standard. At the present time, for example, it is impossible for a foreign producer to produce anything that qualifies as Cancon because of the convoluted Cancon rules related to financing and intellectual property, yet US streaming services may be required to meet Cancon quotas just like their Canadian streaming counterparts. They may also be required to contribute to the production of content to which they themselves could never own the rights. Could this be considered discriminatory? The commitments it has made under USMCA/CUSMA Article 19.4 are clearly a factor the Canadian government needs to bear in mind when fashioning and implementing C-11.

What the final outcome will be remains to be seen. Most of the controversy over the bill to date revolves around whether user-generated content (UGC) is regulated. Critics charge that subjecting UGC to CRTC regulation will amount to censorship. The government maintains that the CRTC will not interfere with users or those posting content to platforms. Rather, the obligation will be on platforms to comply with discoverability and other requirements. With the bill now in the Senate for further review, it will take some time for this to play out.

In the meantime, the Canadian government will need to be careful to ensure that any obligations imposed on US online entities are non-discriminatory and consistent with national treatment or else it may open itself to a CUSMA challenge that could result in economic retaliation. (Quite apart from avoiding retaliation, I would argue that it is also good public policy to tackle the difficult issue of redefining broadcasting for the digital age through a fair and non-discriminatory approach.) CUSMA and possible economic retaliation aside, what Canada won’t have to worry about, thanks to Donald Trump, is being accused of directly violating a trade treaty commitment if it does impose a funding requirement on foreign streamers that turns out to be discriminatory. It’s like a “Get Out of Jail Free” card. Another ongoing Trump legacy.

© Hugh Stephens, 2022. All Rights Reserved.

Copyright’s International Conventions: The Importance of Membership-Part 1 (The United States and the Berne Convention)

Credit: US Copyright Office

Back in the first half of the 19th century, despite reasonably robust national copyright laws (for the era), protecting author’s rights was still a major problem. Works protected in one country were not protected elsewhere, leading to “legalized piracy”. The best-known example of this is the legal reprinting, without permission, of British authors (such as the works of Charles Dickens) in the United States. This was legal because US copyright law protected only US authors prior to 1891. But this “legalized piracy” didn’t occur just in the United States. The practice was common and widespread. Belgian printers reproduced French works without authorization; French publishers reproduced British works, and on occasion British publishers reproduced works by American authors, such as Edgar Allen Poe, and so on.

At first countries tried to deal with the problem through bilateral treaties whereby each state would respect the copyrights of the other, but this hodge-podge of bilateral agreements failed to solve the problem. A large international conference was held in Brussels in 1858 with representatives from governments, libraries, literary and scientific associations, individual authors, artists and legal practitioners, booksellers, publishers, and printers. Nothing was resolved but the groundwork was laid for what eventually became the granddaddy of all international copyright treaties, the Berne Convention of 1886. The French novelist Victor Hugo played a leading role in pushing for an international agreement and finally, on September 9, 1886, ten countries signed the first international convention on copyright (Belgium, France, Germany, Great Britain, Haiti, Italy, Liberia, Spain, Switzerland, Tunisia).

That is an interesting group of countries for a 19th century treaty, and one wonders what drove the interest of Haiti, Liberia and Tunisia, not known to have major publishing businesses. In any event, neither Haiti nor Liberia ratified the treaty, leaving just eight initial founding members. There must have been a serious case of buyer’s remorse since neither Haiti nor Liberia joined the Convention until more than a century later, in 1989 in the case of Liberia and 1996 in the case of Haiti. These two countries weren’t the only latecomers to the treaty, which has been modified and updated several times over the years, most recently in 1971. The United States, for one, did not join until 1989. Why was the US a holdout?

The biggest obstacle facing United States accession to Berne was the incompatibility of US law with one of the basic tenets of the Berne Convention; that copyright exists from the moment a work is created (provided it meets other basic criteria) without any need for registration or notice. US law required formal registration as well as application of the © notice. Also, US law at the time did not cover all creative works as required by Berne, did not protect moral rights, and limited the term of protection to less than the Berne standard. An excellent discussion of the reasons why the US stayed out of Berne is presented by Jonathan Bailey in his blog Plagiarism Today. (“Why Did the United States Wait 103 Years to Join the Berne Convention”?). Bailey concludes that;

The United States didn’t join the Berne Convention because its copyright was inherently incompatible with the convention, and it didn’t have enough motivation to overhaul its laws to bring it into complianceHowever, technology changes made that approach untenableThe United States didn’t change its mind and join the Berne Convention, it was forced to by a practical reality and its method of compliance is proof of that.

The takeaway is that while accession may require some changes to domestic law, absence from agreements that offer creators international copyright protection can be costly for national interests, especially as copyright and technology evolve. Nations need to ensure that their international instruments and level of protection are current and fit for purpose in the modern age.

During the many years that the US was unwilling to join Berne, it looked for work-arounds to achieve similar objectives. One means was to develop and accede to other conventions that would help protect American copyrights abroad without the need to change US law. As a result, the US signed the Buenos Aires Convention of 1910 which brought the United States and many Latin American states into a mutual recognition copyright regime that was consistent with US law. In 1952 the US became a founding member of the Universal Copyright Convention (UCC), an international agreement that mirrored Berne in many ways but allowed the US to keep its legal requirements. But the world was moving on.

By the time the US eventually joined Berne in 1989, the Convention had 120 member states. Today, the total is 180 out of the 195 (more or less) sovereign states that exist today. Furthermore, when the World Trade Organization came into existence in 1995, the TRIPS Agreement (part of the WTO package) incorporated the principal elements of Berne. Therefore, any country joining the WTO agrees to implement the terms of Berne. Of the few states that do not belong to Berne, almost all (such as Taiwan, which cannot sign Berne for political reasons, and a few others) are members of TRIPS. After the US and Russia joined Berne (Russia in 1994), the UCC became increasingly irrelevant and with the accession of Cambodia (the last country to be a UCC member but not a member of the Berne Convention) to Berne in December 2021, the UCC in has in effect become obsolete.

While membership in international conventions comes with obligations, it also brings rewards. For example, since the US joined Berne, US publishers no longer needed to resort to what was called the “back door to Berne”, whereby many US publishers first published in Canada (a Berne Convention country) in order to obtain the benefits of Berne-standard copyright protection in Convention countries.

Interestingly, the back door to Berne may not be entirely closed, even today. That is because when the US joined Berne, it did not adopt, holus-bolus, the Berne requirement that copyright is established automatically, without registration (assuming other conditions are met). The US accepted automatic copyright but retained the registration requirement for cases where rights-holders wish to pursue an infringement action (Section 411 of the US Copyright Act).  However, Section 411 registration applies only to “US works”, so that a rights-holder of a non-US work (even though a US resident or citizen) can bring an infringement action in the US without have to go through the registration process. This potentially provides some advantages since there is no risk of registration being denied, which can happen if not done properly, and there is no need to wait for completion of registration, which can take over a year in certain circumstances, before launching infringement action. As a result of this situation, in which non-US works get “better than national treatment”, it has been suggested that it may be in the interests of a US rights-holder to first publish a work outside the United States, thus avoiding the need for US registration yet still being able to enforce copyright. The work would have to either be published first outside the US but in another Berne Convention country, or, if published simultaneously in the US and another Berne Convention country, that state would have to offer a term of copyright protection shorter than that offered in the US.

One has to ask oneself why a rights-holder, if concerned about possible infringement, would go to all that trouble to ensure registration as a non-US work when they could simply register the work with the US Copyright Office early in the process? Still, the differential (i.e. more advantageous) treatment of non-US works is one of the quirks of the US accession to Berne and illustrates the complexity when international agreements collide with domestic law.

In Jonathan Bailey’s view, the US should eliminate these quirks and harmonize its copyright requirements with those of other Berne Convention members. (This would presumably also include expanding moral rights in the US). Bailey says;

The United States is still very much a nation that wants to enjoy the benefits of the Berne Convention but is wanting to keep its quirks and oddities, no matter how much they harm local creators…Even today, the United States is dragging its feet on these issues, refusing to ditch antiquated and harmful approaches to copyright, even as the rest of the world moves forward.”

But maybe the important thing is that the US eventually got to “yes”, regardless of the tweaks and compromises that were necessary to get the legislation through Congress. US accession to Berne opened the floodgates, and many other states joined subsequently.

US law had evolved over the years making it easier for the United States to accept Berne’s conditions. Moreover, the US saw advantages for its own creative industries if it acceded and so the necessary compromises were made, allowing the US to become a Berne Convention member. Just as with any international agreement, some concessions were granted, some changes were made to domestic law and some limitations on sovereignty were accepted, all in order to obtain stronger protection for national copyright interests abroad. Any minor “pain” was worth the substantial “gain”.

At the end of the day, that is the bottom line. And that is the reason why copyright’s international conventions are so important to creators around the world, regardless of nationality. 

© Hugh Stephens 2022. All Rights Reserved.

The WTO Extends its Customs Moratorium for Digital Products: Good News for Creators, Copyright Industries…and for Consumers

Source: WTO

At the recent 12th WTO Ministerial meeting, the first in more than four years (because of COVID), Trade Ministers reached agreement on several key decisions. Two of them of are of direct interest to copyright industries, one for what was not done (relating to an intellectual property patent waiver for COVID-19 vaccines) and one related to a further extension of the 1998 moratorium on the application of customs duties to digital products. I am going to focus primarily on the latter because of its importance to content industries, to consumers everywhere and to the global economy.

It is no secret that the WTO is facing its challenges. Created as an organization in 1995 from the framework of the General Agreement on Trade and Tariffs (the GATT), a trade treaty established in 1948, the WTO today has 164 members, representing almost total global coverage. It sets trade rules which members agree to abide by, and (until recently) settled trade disputes between members. In recent years, there has been a split between developed and developing country members over how strict the rules should be, and to what extent the organization’s dispute settlement decisions should apply to members. Ongoing negotiations to resolve these issues have hit gridlock. Nevertheless, the organization is the only global regime that governs trade; it is indispensable to maintaining trade disciplines and fighting growing protectionism.

At its most recent meeting, WTO ministers did not resolve the ongoing impasse over the dispute settlement body nor other deep-seated conflicts between developing and developed countries, but they were able to agree on a package of measures, including the two related to copyright. The copyright related measures included a decision to permit compulsory licensing of patents necessary to produce vaccines to treat COVID-19 infections, and an agreement to “to maintain the current practice of not imposing customs duties on electronic transmissions until MC13 (the 13th Ministerial Conference), which should ordinarily be held by 31 December 2023. Should MC13 be delayed beyond 31 March 2024, the moratorium will expire on that date unless Ministers or the General Council take a decision to extend.” In other words, the “customs moratorium” on digital products, first instituted in 1998 for two years and extended until the next ministerial meeting at every meeting since, has been extended for another two years.

The COVID-related patent waivers will address concerns raised by developing countries, permitting the compulsory licensing of patents for production and export of generic vaccines. This more targeted compromise approach replaces the unnecessary and overly broad original proposal floated by South Africa and India that would have also included a waiver on industrial designs, trade secrets and copyright for any technologies potentially related to fighting COVID.

As for the extension of the customs moratorium, if it has been extended at every ministerial meeting since 1998, you might ask, what is the big deal about one more extension? And what is the moratorium all about and why is it important? A significant element of the moratorium is that it is just that, a “moratorium”, in other words a “temporary prohibition”. If it has been in existence for over twenty years yet has not been made permanent, there must be a reason for this. To understand why, we need to look at the origins of the WTO moratorium. At the organizations 2nd Ministerial meeting in 1998, the WTO adopted a work program to examine all trade issues related to e-commerce, which was in its infancy at the time. Unlike physical goods, digital products delivered seamlessly electronically via the internet were not stopped at the border and subjected to customs duties. At the time, it was decided not to prejudice the outcome of the work program. Therefore it was agreed that a customs “moratorium” on goods delivered through electronic transmissions, (i.e. suspending the application of import duties on digital products) would be put in place while more work was undertaken to better understand the impact of digital goods and services on global trade. The term “moratorium” implies that but for the suspension, customs duties would normally apply. The amount of the duties (tariffs), like duties on physical goods, would depend on various factors, such as whether a country wished to impose them either to generate revenues or to protect domestic industries. Tariffs can be set high or low, be completely abolished or kept in place but suspended. Calculation can be based either on value or some other measurement, e.g. per kilo. Having established a tariff on a given product, countries can then choose whether to implement the tariff or whether to agree to lower or abolish it in return for equivalent concessions from trading partners.

Calculating a value, and thus a duty rate, on electronic transmissions is not easy. Digital products (goods or services) can range from music and audio-visual content such as movies or other broadcasts, to e-books, software, video games and various forms of data such as designs, legal documentation and health information delivered through media files as well as 3-D printing. E-commerce (digital trade) is defined as the production, distribution, marketing, sale or delivery of goods and services by electronic means. The fact that products delivered electronically have been exempted from customs duties and other border clearance requirements is both a reflection of the difficulty in applying border measures to digital goods and services as well as a generally accepted realization of the benefits of encouraging e-commerce and digital trade.

The internet has enabled access to global markets for those providing digital content, ranging from Hollywood studios and record labels to individual artists, web designers and software developers. It also provides a means to access offshore services such as legal document preparation and review, accounting and auditing, and tele-health. It is a key element in allowing micro and small businesses to access customers globally, in transmitting knowledge and education, keeping costs down and making supply chains more resilient. The global importance of the digital economy was underscored by a statement from the International Chamber of Commerce, representing 91 trade associations from all continents, urging that the moratorium be extended. But if digital trade is so generally beneficial, why has the customs moratorium not been made permanent?

Developing countries (and developed countries in years past) have traditionally used tariffs to create protective walls behind which to nurture their own “infant industries”, as well as to generate government revenue, given often ineffective tax collection systems. There is however a price to be paid for these tariffs in terms of economic inefficiency, with the costs largely borne by consumers and secondary producers in protected economies. As more products are traded digitally, some developing countries have begun objecting to the digital exemption, arguing it bypasses their tariff walls without compensation. In 2020, India and South Africa (not coincidentally the same two states that championed the broad IP waiver related to COVID), filed an objection to the continuation of the moratorium, arguing that it unduly benefited developed countries, primarily the US and EU, and China, technically not a developed country. The paper claimed that the moratorium was costing $10 billion in customs duties annually, with 95 percent of the “losses” being absorbed by developing countries. It also challenged the assumption that digital services are covered by the moratorium.

Many economists would say that these purported losses were actually “savings” enjoyed by consumers in developing countries where tariffs on imports of digital products have been foregone. But India and South Africa are also interested in advancing their agenda in the WTO and in obtaining additional trade concessions from the developed countries. Thus, to put a price tag of $10 billion in revenues “lost” to developed countries (notwithstanding it is consumers in the developing countries who actually pay these so-called “lost revenues”) sets up the negotiating agenda to demand equivalent concessions from the developed world in terms of improved market access through ongoing WTO negotiations. This is further borne out by the statement in the India/South Africa paper that if the moratorium was lifted, developing countries would not necessarily implement tariffs on digital products, just that they could do so. In effect, the paper decries the supposed benefits that the moratorium confers on developed countries and China, and demands its elimination to create a perceived negotiating advantage. This is notwithstanding the fact that a content-rich country like India exports digital products and maintains large offshore service operations facilitated by duty free access of digital content and has benefited enormously from the suspension of customs duties on electronic transmissions, as have many other developing countries.

In response, a number of developed and developing WTO members (Australia, Canada, Chile, Colombia; Hong Kong, Iceland, Republic of Korea, New Zealand, Norway; Singapore, Switzerland, Thailand and Uruguay) filed a counter paper arguing that overall benefits of the free flow of digital products far outweigh any potential foregone government revenues, pointing out that the significant issue of consumer welfare is missing from the India/South Africa paper. The paper draws on a detailed OECD economic study published in 2019. The basic argument is that the cost of the tariffs imposed on imports of digital products via electronic transmissions will be borne primarily by consumers, not exporters. Foregone customs revenues can be recouped by imposing taxes (such as consumption taxes) on the incremental overall economic growth generated by the efficiencies to economies brought about by cheaper digital inputs. Here is one excerpt;

The welfare analysis (of the OECD paper) outlines that the reduction in production and transportation costs associated with digital deliveries, as well as the removal of the tariff, can lead to a reduction in price. In consequence, the increase in demand leads to a rise in imports and an increase in consumer surplus, part of which is associated with redistribution from the domestic producer and part of which is from government revenue to the consumer. The study is unambiguous: the overall impact to the economy is ‘positive and large’….The study finds that the imposition of equivalent duties on electronic transmissions could negate those positive effects by increasing the price of the digital delivery…”

And so, the debate continues. Because some countries are unwilling to give up the perceived leverage of being able to impose tariffs on digital products, yet implicitly recognize the benefits that tariff free treatment of digital products confers on both local economies and the global economy, the moratorium gets rolled over and kicked down the road. That has happened once again, and the moratorium will stay in place at least until 2024. Hopefully at the next Ministerial meeting, it will either be made permanent or at least further extended.

A failure to renew the moratorium would be a significant setback for the global trading system and for the trade liberalization agenda. It would impose a potential barrier for consumers of digital products and services and slow adoption of the digital economy. For creators and copyright industries, who have invested heavily in the development of digital products and digital delivery, it would be a retrograde step that would, in the end, increase costs for consumers and reduce their options. Given the current power dynamics within the WTO, it is likely too much to expect that the moratorium will be made permanent. That is the best possible outcome that would ensure long-term predictability and stability. In the meantime, it is good news that the moratorium has been extended to 2024, and hopefully beyond.

© Hugh Stephens 2022. All Rights Reserved.

Big Wins for Site Blocking as a Means to Counteract Online Content Piracy

Source: http://www.shutterstock.com

Site blocking—aka disabling access to copyright infringing websites and services—continues to gain wider acceptance as a useful tool in the fight against online content piracy. Several recent developments provide a good indication of the increasing acceptance of site blocking orders as a tool to dissuade users from accessing copyright infringing online streaming content. The first is a ruling in early May by the District Court for the Southern District of New York that a issued site blocking order applicable to “all US ISPs”, requiring them to block access to three pirate streaming services that were infringing the copyright of several Israeli film and TV distribution services in the United States (The order was subsequently withdrawn at the request of the plaintiff but nonetheless marks a first in the US). A second is the issuance of the first dynamic site blocking injunction in Canada. And finally, there is the inclusion of measures referencing site blocking in the impending Australia-UK Free Trade Agreement, currently pending ratification, a first for a trade agreement.

The injunctions issued by the New York District court are unremarkable, except for the fact that the orders were applied to all ISPs operating in the United States. As reported by Torrent Freak, despite the failure to pass the Stop Online Piracy Act (SOPA) a decade ago, “a US court has demonstrated that the ability to block sites has been available all along”. The plaintiffs, three Israeli based companies affiliated with cinema investor Moshe Edery, sought statutory damages for copyright infringement and an injunction to prevent future infringement. The targets of the action, Israel-tv.com, Israel.tv and Sdarot.tv, did not contest the proceedings, as is normal in most streaming piracy cases. Torrent Freak reports that the court issued injunction enjoined the defendants from infringing the plaintiffs’ rights, including by streaming, distributing, or otherwise making any of their copyrighted works available to the public. They were also banned from operating their websites from existing domains or any other they might use in the future. But in what is a break-through the court also ordered that;

“all ISPs…and any other ISPs providing services in the United States shall block access to the Website at any domain address known today (including but not limited to those set forth in Exhibit A hereto) or to be used in the future by the Defendants (“Newly-Detected Websites”) by any technological means available on the ISPs’ systems.”

The ruling provided not only for permanent injunctions compelling all US based ISPs to implement site blocking on the three named services, but it also included a “dynamic” element whereby the order applied to any new websites used by the defendants to evade the order.

Injunctive relief in the form of site blocking has been available in the US through the DMCA’s Section 512 (j) for a number of years in cases of copyright infringement but has been seldom used. SOPA, (and its Senate equivalent, the Protect IP Act—PIPA) if passed, would have permitted rights-holders to seek an injunction requiring ISPs to block the domain names of foreign infringing sites. The legislation was attacked by groups, many of them misinformed and egged on by the tech sector, claiming that site blocking legislation would amount to censorship, would make the internet unworkable, and would be in violation of the free speech First Amendment of the US Constitution. The fact that a number of countries, led by Australia and the UK but including over 40 other states, have successfully implemented site blocking measures, has led for renewed calls in the US for a review of SOPA.  Now a US District court has simply exercised its inherent jurisdiction to provide injunctive relief while targeting the order to all ISPs across the US. One wonders why it didn’t happen before. Perhaps no plaintiffs ever sought such an order. Given the precedent, one would expect that one or more ISPs would appeal the ruling. No ISP has done so but there has been legal pushback from Cloudflare and Google allowing big-tech friendly groups like the EFF (Electronic Frontier Foundation) and the CCIA (Computer and Communications Industry Association) to request permission to file amicus briefs opposing the order.

A similar scenario took place in Canada. When the Federal Court issued its first site blocking order back in 2019 (unopposed by any the major ISPs), a small wholesale-based provider, TekSavvy, stepped forward to carry the burden of the appeal, allowing the “usual suspects” such as Silicon Valley-funded groups like the Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic (CIPPIC) at the University of Ottawa, to pile in with intervenor briefs.  It was not clear to me initially why TekSavvy decided to appeal or who funded it, but in the end they lost. (Andy Kaplan-Myrth, TekSavvy’s VP for Regulatory Affairs, subsequently contacted me to clarify that the appeal was self-funded by the company on the basis that they disagree with site blocking in principle, given their role as an ISP). The appeal was dismissed last year by the Federal Court of Appeal. Subsequently several broadcasters of live hockey, a big attraction for Canadians, applied for the country’s first dynamic site blocking injunctions to protect their hockey broadcast rights. Dynamic injunctions have been successfully used in Britain to interrupt pirate feeds of English Premier League football (soccer) broadcasts. In May, the Federal Court granted Canada’s first dynamic blocking order (an order permitting the listing of blocked sites to be updated without needing to go back to the court for additional orders when pirate operators take actions to bypass the blocks). The order, requested by Rogers Media and other companies, is a major breakthrough for Canada.

In the case of the New York site blocking injunction, there was a strange development in which the plaintiffs, having secured the order, subsequently requested that it be suspended. The motivation is unclear. Did someone lobby the plaintiffs (United King Film Distribution, DBS Satellite Services, and Hot Communications) to withdraw the order, fearing that an appeal against the injunction might be dismissed? Were the plaintiffs given some sort of assurances that the pirate feeds would be “dealt with” by ISPs without the need for a court order? Or maybe some content interests were concerned that the appeal would be upheld and set a negative precedent for future site blocking orders in the US? The plaintiffs might have been persuaded that they could achieve their ends through other means, such as working with domain name registrars. Who knows? It is very strange. And now there is an appeal of the order, even though suspended, although not from an ISP but from intermediaries (Cloudflare and Google). Had the order been upheld and implemented, the US would have joined the growing international consensus allowing selective use of site blocking, adjudicated by courts or administrative tribunals, as an important tool in fighting growing online streaming piracy. Even if this order is not reinstated, it will likely encourage others in the US to seek site blocking injunctions in future as a remedy against online piracy. That is no doubt why EFF and CCIA are seeking to intervene.

Moving on to yet another major development on site blocking, for the first time a site blocking commitment will be included in a bilateral trade agreement, giving it the force of international law. Once again, the sharp eyes of the writers at Torrent Freak highlighted the inclusion of Article 15.89 in the Australia-UK Trade Agreement, signed in December 2021. It is currently undergoing the ratification process in both countries. The Agreement is part of the post-Brexit push by the UK government to secure overseas markets for UK goods and services by reaching trade agreements with its major trading partners. Other examples are Britain’s application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a UK-New Zealand Trade Agreement and a Trade Continuity Agreement (TCA) with Canada to replace disciplines covering trade with Britain when it was part of the EU. In March of this year Canada and the UK formally launched negotiations toward a new bilateral agreement that both sides hope will be concluded within a year to replace the transitional TCA.

In the case of the UK-Australia Agreement, the Intellectual Property chapter included the following measures under Article 15.89;

“Blocking Orders

1. Each Party shall provide that its civil judicial authorities have the authority to grant an injunction against an ISP within its territory, ordering the ISP to take action to block access to a specific online location, in cases where:

(a) that online location is located outside the territory of that Party; and (b) the services of the ISP are used by a third party to infringe copyright or related rights in the territory of that Party.

2. For greater certainty, nothing in this Article precludes a Party from providing that its judicial authorities may grant an injunction to take action to block access to online locations used to infringe intellectual property rights in circumstances other than those specified in paragraph 1.”

Both countries already routinely use site blocking orders at the request of rights-holders to discourage users from accessing infringing content from offshore streaming sites but the inclusion of this measure in a bilateral trade agreement is a first, encouraged by the UK-based Alliance for Intellectual Property. In a submission to the UK government as part of consultations leading to the Australia-UK Agreement, the Alliance proposed inclusion of site blocking along with several other copyright-related measures. Since both countries have a well-established track record of successfully implementing site blocking injunctive orders, the trade agreement commitment creates no new legal requirements. However, it is significant from the perspective of raising the profile and international acceptability of site-blocking as an anti-piracy measure.

Would such a measure be included within a future Canada-UK agreement for example? It is possible since the courts of both countries have already issued site blocking orders. However, the UK-New Zealand Trade Agreement, concluded just a couple of months after the UK-Australia Agreement, contains no such measure. This may be explained by the lack of any legal precedent at the moment for the issuance of site blocking orders in New Zealand. Would a future UK-US Agreement (if one is ever negotiated) contain such a measure? Again, it is possible depending on the degree to which acceptance of site blocking takes hold in the United States. The New York District Court ruling discussed above may the first concrete sign of broader acceptance of site blocking as a remedy in the US, although a couple of years ago the US Copyright Office studied the issue, without coming to a definitive conclusion. Instead, it basically recommended “more study”.

Nonetheless, there is clearly progress on the site-blocking front, both through the Canadian and US courts and via the medium of trade negotiations. I am convinced that in the end, it will become an uncontroversial measure that will help—but by no means fully resolve—the ongoing challenge of combatting content piracy in the digital age.

© Hugh Stephens, 2022. All Rights Reserved.

This blog post has been updated in the 4th paragraph (related to Canada) to include feedback from TekSavvy as to their motivations for appealing the GoldTV Federal Court ruling, and the source of funding for that appeal.

Unravelling the Complexities of the Canadian Content (Cancon) Conundrum

Credit: shutterstock

Feds to modernize definition of a Canadian film and TV program” screamed the headline. The Canadian Press story, repeated in newspapers across the country early last month, was based on comments by Canadian Heritage Minister Pablo Rodriquez who declared that as part of the process of enacting Bill C-11, now known as the Online Streaming Act, he wants to modernize the definition of Canadian content and is “open to all kinds of suggestions and ideas.” If this is really true, he will get an earful. The Canadian Content rules (Cancon for short) are one of the most complicated and convoluted aspects of Canada’s broadcasting and audio-visual policy, with multiple stakeholders engaged, many of whom have divergent, or at least not fully aligned, interests. It is a policy that is difficult enough to explain, let alone to find the secret formula to untie the Gordian knot that Cancon has become. But first, let me attempt to explain the policy.

Cancon regulations go back to the 1970s and are designed, in theory, to promote Canadian culture and identity through the production of more Canadian content, basically to help offset the cultural tsunami existing next door in the United States. They apply to audio-visual (AV) productions (movies and TV shows), as well as music, but I am restricting my comments here to Cancon regulations applicable to the AV sector.  How do the Cancon regulations work, and do they in fact achieve their professed goal? Cancon requirements are implemented in two ways; by requiring that a certain percentage of content broadcast on television stations based in Canada meets minimum Canadian content quotas and by increasing production of Cancon by providing financial subsidies to productions that qualify as Canadian. Some of these funds come from mandatory contributions (a percentage of revenues) imposed on broadcasters and cable distributors by the Broadcasting Act as a condition of licence. The intent of C-11 is to extend the reach of the Broadcasting Act to encompass online streaming services, making them subject to oversight by the broadcast regulator, the CRTC. Among other things, the Bill would empower the CTRC to apply Cancon requirements or other “discoverability” obligations to online streamers, whether they are based in Canada or not. Europe has already taken similar measures. Thus, what qualifies as Cancon is a critical piece of the puzzle. 

Most Canadians would probably think the objective of the Cancon policy is to create more productions that tell Canadian stories–stories written by Canadian writers, stories set in Canada, stories featuring Canadian actors, stories that reflect Canadian realities, and so on. But they would be wrong, as is frequently pointed out by the media when running stories on Canadian content. The current poster child for this anomaly is the Disney animated feature Turning Red, set in Toronto, featuring the story of a young Chinese-Canadian girl growing up in the city, and starring Canadian actor Sandra Oh. It may look and feel Canadian, but it does not qualify as Cancon because it was made by Disney, a non-Canadian entity. Disney financed it and holds the copyright. Nor did the adaptation of Margaret Atwood’s Handmaid’s Tale (filmed in Cambridge, Ont.) or Amazon Prime’s recent series on the Toronto Maple Leafs qualify. This is because there are complex financial, management, creative and intellectual property formulas that govern what is considered Canadian content. On the other hand, some obscure co-production with another country that has no distinguishable Canadian features at all can qualify. The varying requirements to be Cancon-certified are overseen by three different organizations, the Canadian Audio-Visual Certification Office (CAVCO), a unit of the Department of Canadian Heritage, the broadcast regulator, the CRTC, and Telefilm Canada, a government corporation, which certifies treaty co-productions. There are common features but not all certification requirements are the same.

For CAVCO, there are four key elements that are taken into consideration; production control, copyright and distribution rights, creative positions and production spend. The producer must be the central decision maker and must be Canadian. With regard to the intellectual property, unless the film is a treaty co-production, the Canadian production company must be the copyright holder for all commercial exploitation purposes for a minimum of 25 years. As for distribution, the producer must control the initial licensing of all commercial rights and there must be an agreement with a Canadian distributor or a CRTC-licensed broadcaster to show the production in Canada within the first two years of release. Now we come to the creative positions and the (in)famous points test.

A production must achieve a minimum of 6 out of 10 points to be considered Canadian under both CAVCO and CRTC rules. Under this system, the writer gets 2 points; the director gets 2 points. Either the writer or the director must be Canadian. The highest and second highest paid performers each get 1 point and one of these two must be Canadian. For live action productions the other 4 points go to the Director of Photography, the Production Designer; the Music Composer and the Picture Editor. Those people born in Canada who have made it big in Hollywood, and who have retained Canadian citizenship, are invaluable for their points! Some sources of funding, like the Canada Media Fund, require a full 10 points out of 10. Finally, there is the production spend. Seventy-five percent or more of all cost for production services must be payable to Canadians and a similar percentage of all post-production costs must be incurred for services provided in Canada. If a production is CAVCO certified, it qualifies for Cancon tax credits (a straight financial subsidy).

CRTC certification is different and is not quite so stringent. It does not qualify a production for CAVCO Cancon tax credits but does provide access to less generous Production Services Tax Credits. Under CRTC certification a minimum of 6/10 points is required, the producer must be Canadian and 75% of the cost of production must be spent in Canada or on Canadian services. The CRTC also imposes Cancon quotas on Canadian broadcasters, a percentage of on-air time and a percentage of revenues dedicated to Canadian production.

Then there is Telefilm Canada, the agency that administers the co-production agreements that Canada has with more than sixty countries, but, significantly, not the United States. The US does not need co-production agreements. It has Hollywood. Depending on the amount of financing from each of the co-production partners, the copyright ownership, per country budget spend, split of creative and key crew roles, the production activity allocation and the distribution rights are roughly divided according to the respective share of financing from each partner. To the uninitiated Cancon is, (as Winston Churchill famously said when referring to Russia prior to WW2), “a riddle, wrapped in a mystery, inside an enigma”. As I have noted above, qualifying as Cancon is important for two key reasons; to meet regulatory requirements (spending and airtime quotas) for broadcasters–and potentially for online streaming services if the Online Streaming Act passes in its current iteration–and to be able to access financial subsidies, aka tax credits.

That is what Cancon is.[i] What it clearly is not, is a system designed to encourage the telling of Canadian stories or stories by Canadian authors through film and television. The fact that Atwood’s Handmaid’s Tale, Life of Pi written by Canadian author Yann Martel and The English Patient written by Michael Ondaatje did not qualify as Cancon demonstrates this, although there is nothing particularly Canadian about any of these stories. The fact that the films were made without any need for CAVCO tax credits perhaps illustrates that good stories will get made, regardless of the nationality of the author.

So what is a Canadian story? According to retired media executive Richard Stursburg in his recent book The Tangled Garden (A Canadian Cultural Manifesto for the Digital Age), productions funded with Canadian money should look Canadian. He laments the fact that many Canadian productions are “Americanized” to make them more attractive to US audiences, and thus more commercially valuable. The cops don’t look like Mounties, the cityscapes look like any random North American city with all distinguishing Canadian features excluded, even the accents are the same. Contrast this to British productions that are clearly British. There is no mistaking Line of Duty for FBI. I guess part of Canada’s problem is that so much of it looks like parts of the US. And except for the Newfies, it is pretty hard to distinguish a Canadian accent from a middle-of-the-road US accent. The Brits have no such problem. (By the way, have you noticed how villains almost always talk with a British accent—at least Canadians don’t have that cross to bear!)

But does a production have to look Canadian to be Canadian? Not all productions lend themselves to portraying Canada. What about Sci-fi? Do the aliens have to end every second sentence with, eh? And then there are the kids shows. Kids really don’t care much about the national origins, accents or behaviour of the animated characters they are watching, as long as they are entertained. Look at the success of Peppa Pig in North America, plummy British accents and all. And Bugs Bunny’s Brooklyn/Flatbush accent has gone around the woild. Then there is Caillou, the misbehaving little boy that many parents apparently blame for their own kids temper tantrums. Caillou is one of Canada’s contributions to the world of children’s cartoon characters, for better or for worse. His two authors, Christine L’Heureux and Hélène Desputeaux, have spent most of the past two decades legally scratching each other’s eyes out over ownership of the character’s copyright, as I noted in a blog post about a year ago. (“Caillou: Did the Little Boy’s Bad Temper Spill Over to the Copyright Squabble between his two “Mothers”?) The kid’s bad behaviour is apparently contagious.

However, let’s get back to defining Canadian content. One idea is to provide tax credit incentives to shows that look more Canadian or tell Canadian stories, regardless of the source of the money. That is what is done in Britain where there is a broader definition of what is British. There has to be a minimum amount of production done in Britain, as in Canada, but the “Britishness” of stories is a positive factor, and foreign financing is not a disqualifying factor. Thus, the Harry Potter films, made by Warner Bros. qualify. And why not? What is more British than Hogwarts?

This is part of the dilemma that Minister Rodriguez is facing. How to define Cancon, and how to support Canadian producers, while encouraging foreign producers to undertake more production of Canadian stories. It is worth noting that Cancon aside, foreign filmmakers have made Canada one of the prime locations for movie production outside the US, bringing plenty of good jobs to the industry. There is lots of “Foreign Location Shooting” (FLS) taking place in Canada that benefits from Canadian provincial tax credits, but which makes no pretence of representing Canada or Canadian stories in any way. FLS does not seek to access Cancon subsidies. Foreign, mostly US, studios film in Canada because Canada offers tax incentives, skilled crews, good locations and lower costs while being close to US centres. They churn out product for the US market using US stars and Canadian crews. The recent Nordicity study shows that almost twice as much is spent in Canada on FLS than on Cancon productions. This FLS production is good news for those Canadians engaged in the film and TV industry, but apart from building and maintaining production capacity, does nothing to promote Canadian content.

Netflix, for example, is one of the largest producers of content in Canada through its FLS productions but no matter how Canadian it makes its stories, under the present rules its product will not qualify as Cancon because the producer (Netflix) is not Canadian, and the copyright is not held by a Canadian. If the CRTC imposes a “compulsory contribution” of a percentage of revenues generated in Canada on streaming services, the foreign streamers will be helping to finance Cancon production with no guarantee of getting distribution rights, while still possibly having to meet some kind of Cancon quotas (which are more difficult to implement with regard to on-demand streaming services as opposed to linear broadcasters). They could, of course, seek to license productions from the Canadian producers, who are eager to tap into the resources of the big streamers to help finance their own productions. But again, depending on what definition of Cancon emerges from this process, the end result may not look or feel any more Canadian than any other production. As for the Canadian public, a recent poll from Nanos Research indicates that two-thirds of Canadians support or somewhat support foreign streaming services financially supporting the creation of Canadian content in the same way that Canadian broadcasters do. That’s assuming that the Canadian public actually understands how Cancon works and what Cancon is.

What will the solution be? Does Cancon have to be recognizably Canadian? To promote Cancon, does the content have to be produced by Canadians and the copyright held by Canadians? Is the goal to promote jobs and grow the industry or to promote content that strengthens Canadian identity? Is it possible to do all of the above? I don’t have the answers. Minds greater than mine have laboured over this question for years and many recommendations have been brought forth. If the legislation passes, (and I assume it will after review in the Senate now that it has been voted out of Committee in the Commons), it will still take some time for the definition of Cancon to become clear as the Bill requires the CRTC to come up with a definition, after public hearings. However, the CRTC will also be required to take into account guidance provided to it by government which includes, among other things, an obligation to consider copyright ownership and distribution control by Canadians. It is going to be a long process.

It is easy to throw stones at the present system because it is open to question as to whether it has achieved its desired policy goals, although what those policy goals actually are is part of the question. One thing is certain; change is coming. Whether Rodriguez will be able to thread the needle to satisfy Canadian cultural nationalists, the Canadian film industry, the film industry in Canada (not the same thing) as well as the foreign studios and streamers remains to be seen. Cancon is not going to go away. Whether it can be adapted to the realities of the digital age is another question.

© Hugh Stephens, 2022. All Rights Reserved.


[i] My thanks go to Peter Grant for providing background materials, including a presentation by Doug Barrett and Erin Findlay prepared for the DM@X-tra conference in March of this year.

Was it Careless Infringement (but for a Good Cause) or a Derivative Design Inspired by Another Indigenous Artist? (The “Every Child Matters” Copyright Story)

Credit: Michelle Stoney. Used with permission

Sometimes copyright issues are essentially black or white. There was obvious infringement. It was done for commercial gain. It was bad; it shouldn’t have happened. Period. Often, however, things are not so clear and there are various shades of grey involved. This is one of those cases. I will let you be the judge since this is unlikely to go to court, except perhaps the court of public opinion.

While grey may be one colour to describe this case, in actual fact the most appropriate colour is orange. That is the colour that was selected as part of a campaign to bring to public attention the legacy and shameful history of Canada’s Indian residential schools, marked by National Truth and Reconciliation Day (a new public holiday beginning in 2021 on September 30 of each year). The slogan “Every Child Matters” was added in memory of the tens of thousands of children who were sent to these schools, especially the not inconsiderable number who died, often from epidemics that swept the schools owing to poor food and unsanitary conditions. The symbol of a handprint, often in orange, or white or black on orange, has come to be accepted as a symbol of the lost children. Suspected unmarked graves have been located at many residential schools adding to the poignancy of the slogan.

It is in this context that our copyright case arises. Michelle Stoney is a well-known and respected Gitxsan artist from Hazelton, in northern British Columbia (BC). She is a graduate of the Emily Carr University of Art and Design in Vancouver. In 2019 she won the Crabtree McLennan Emerging Artist Award awarded by the BC Achievement Foundation. She sells her artwork, which is based on traditional Gitxsan designs, through her website, via Etsy, and other online outlets. One of her more prominent works is a human hand in the form of a Gitxsan design (the image at the top of this blog post, on the right). That is the background on Michelle.

Now, like a novelist starting a different thread in a story, a thread that will eventually join the others as the story reaches its climax, I am going to change gears, and talk about lacrosse. Lacrosse is North America’s oldest sport. A form of outdoor lacrosse was played by native tribes in contests that sometimes lasted for days in the St. Lawrence Valley as early as the 1600s, when Europeans first wrote about it, but it probably pre-dates European contact. In the 1860s the rules of field lacrosse were codified, and it became known as Canada’s national game. This was an unofficial designation as it competed for this title with ice hockey. (In the 1990s the Canadian Parliament adopted a motion naming lacrosse as Canada’s official “summer game” and ice hockey as its “winter game”.) Many of the players then and today came from the indigenous (First Nations) community. In the 1930s box lacrosse was developed as a sport that could be played in unused hockey arenas during the summer, and box lacrosse is the one form of the game that has enjoyed commercial success as a professional sport. In the 1990s the National Lacrosse League (NLL) was established in the US. Today, it is based in Philadelphia and has 14 teams. Nine of these are in the US and five in Canada. The vast majority of the players are Canadian, many of them from First Nations.  In short, there is a strong connection between the sport and First Nations communities.

This is where I bring the two strands of the story together. The CBC recently reported that Michelle Stoney had learned that the NLL had copied her Gitxsan hand design and was using it on orange tee-shirts that it was selling to raise funds for causes associated with those who attended former Indian residential schools. The NLL website promoted the tee-shirts as follows;

“Join the National Lacrosse League in raising awareness about Native American residential and boarding schools, which were created to isolate indigenous children from the influence of their culture in order to assimilate them. This Every Child Matters warm up shirt was designed by Dave Sowden, a Halifax Thunderbirds employee of Indigenous descent, and is a replica of the shirt worn by NLL players during week six of the 2021-22 season. Your purchase tells us that you support our NLL Unites initiative in support of the Every Child Matters movement and the NLL will donate directly to the Gord Downie & Chanie Wenjack Fund and the National Native American Boarding School Healing Coalition.” (the Gord Downie & Chanie Wenjack Fund aims to build cultural understanding and create a path toward reconciliation between Indigenous and non-Indigenous peoples.)

You couldn’t find a better cause. The initiative appears to have been started by the Halifax Thunderbirds NLL team. Its owner, Curt Styres, is the only owner in the league of native descent; the team’s captain, Cody Jamieson is likewise from a First Nations family. According to reporting in a Halifax university journal, the Thunderbirds’ involvement began with orange jerseys with stylized handprints on them. The handprints were provided by Donna Longboat, Jamieson’s grandmother and a residential school survivor and Vera Styres, Curt Styres’ mother, also a residential school survivor.

So how did we go from Donna Longboat’s and Vera Styres’ handprints to Michelle Stoney’s design? The path is not clear. According to the CBC report, Stoney’s original design was created for Orange Shirt Day on Sept. 30, 2020. It comprises mountains and trees to represent the Gitxsan Nation, the flowers to represent children, and the feathers to represent the children who were lost in residential schools. When Stoney saw the lacrosse adaptation on the Facebook page of the Vancouver Warriors lacrosse team, she says she immediately recognized her design. While a hand is a hand, the lacrosse version also features stylized fingers based on feathers, similar or identical to the feathered fingers on Stoney’s artwork. She says it appears that the designer of the NLL version “flipped” her work by tracing the hand and adding the words “Every Child Matters” to replace the mountains, trees and flowers on the palm of her piece. I am guessing that this is pretty easy to do with design software.

Stoney is not making this about financial compensation, although she earns her living through her art. Rather, she says she is okay with others using her creative works, such as the Indigenous feather design, as long as they seek her permission. It’s about moral rights. And she wants an apology. The Warriors removed the design from their webpage, and said they are investigating. I contacted the Thunderbirds for comment, but none was forthcoming.

This episode, which has all the hallmarks of unintended consequences, raises two issues; the appropriation of native designs for commercial purposes, about which I have written in the past, (“Copyright, Folklore and Traditional Native Culture”) and whether adapting the essential elements of a design into a new work is a fair dealing (or fair use in the United States), not constituting an infringement because a new work has been created. Michelle is not the only native artist to have had work copied without permission or compensation. Often overseas vendors simply pick up and copy what they perceive will be a popular design and then sell it on Etsy, Facebook or Amazon. Apart from blatant copyright infringement, there is the cultural appropriation aspect to consider. This latter issue raises many questions. Are only native artists allowed to create native designs? Who qualifies as an indigenous artist? Do you have to hold a status card or simply self-identify? It can get very messy and complicated very quickly. The main message, I think, is to show respect for the artist and their culture and don’t infringe.

Which brings me to the second point. Is the work produced by the Halifax Thunderbirds an infringement? It would take a court ruling to determine that, and that is not going to happen. However, there are a couple of factors to consider. A copy does not have to be an exact copy to be an infringement. There is currently a high-profile case wending its way through the US judicial process (Warhol v Goldsmith). In this case, in 1984 artist Andy Warhol was commissioned to create an image of the musician Prince. Warhol painted a series of silkscreen images on canvas, based on a photograph taken by professional photographer Lynn Goldsmith. (The likeness is almost identical). Upon publication of one of the portraits after Prince’s death in 2016, Goldsmith saw the work and threatened to sue for infringement. In response, the Warhol Foundation launched its own suit seeking a declaration of non-infringement. The Foundation won round one. Goldsmith appealed and won round two. Now it is going to the Supreme Court of the United States for adjudication.

How different does a derivative work have to be to avoid infringement? In the case of Warhol v Goldsmith, the case hinges on the US legal doctrine of “transformation”. Is the derivative work sufficiently different from the original? Has the original been transformed into something new? Although in the case of Canada, there is no transformation doctrine per se, a change of medium will be a factor in favour of non-infringement. In the “Every Child Matters” hand design case there is no change of medium. However, there is still another question as to whether the design produced by the Thunderbirds qualifies for separate copyright in its own right. It’s possible.

In trying to determine whether the Thunderbirds’ depiction of the hand design infringed Stoney’s copyright, we can turn to the Canadian Copyright Act. Section 3 (1) states that “copyright, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever…” (emphasis added). So, the work that Michelle Stoney created and any substantial part of it (substantiality is subjective and is normally decided on a case-by-case basis) belongs to her. On the other hand (and in copyright there is always an “other hand”), Section 32.2 (1) states;

It is not an infringement of copyright (a) for an author of an artistic work who is not the owner of the copyright in the work to use any mould, cast, sketch, plan, model or study made by the author for the purpose of the work, if the author does not thereby repeat or imitate the main design of the work;”

Did the Thunderbirds’ author do more than simply imitate the main design of the work? If he did base his design on Michelle Stoney’s work, did he use a “substantial” part of it or was the use insubstantial? How much originality did the artist who created the lacrosse tee-shirt design put into it, and is that artist then also entitled to assert copyright for that work (Image above—left side)? According to Canadian jurisprudence, a “mere copyist” has no right to independent copyright but, according to this legal blog, “a work which has been substantively derived from pre-existing material will be entitled to copyright if sufficient time, effort, labour and skill have been bestowed”.

That is indeed the question. Learned copyright counsel, judges and law professors will all no doubt have opinions on this question. Since I am none of the above, I won’t hazard a guess. I will say that while it is clear that anyone can legally create a design based on a hand, or a design using a hand with feathers for fingers (since copyright protects only the expression of an idea, not the idea itself), to me the finger feather designs in the second work (created by the Thunderbird organization) look remarkably similar to Michelle Stoney’s design, right down to the smallest detail such as the shapes and regularity of the spaces separating the parts of each feather-finger. It is hard not to draw the conclusion that her design was the basis on which the second work was created. However, is the second work simply a partial copy or is it sufficiently original to be a work in its own right? You be the judge.

If there is a lesson here, it is that it’s always best to communicate with an “author” (which could be an artist, composer, writer) if you are going to adapt or borrow from their work. I understand that this is what finally happened, retrospectively. Curt Styres reached out to Michelle Stoney, apologized, and asked if she would design something for him in future.

At the end of the day both Michelle Stoney and Curt Styres had the same broad objectives in mind; to highlight the plight of survivors of Indian residential schools and to contribute to reconciliation as a way of moving forward. It is a shame that the dispute had to occur, but perhaps it is a “teachable moment” about how careful we all need to be with the images that are so ubiquitous and easy to access on the internet. It is all too easy to succumb to the temptation to do what is quick and easy. Respecting the original author/artist is a good lesson for all of us, and I am glad that this story had a happy ending.

© Hugh Stephens 2022. All Rights Reserved.

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