Why Are Canadian Universities Vehemently Campaigning Against Any Clarification of Fair Dealing if They Are Already Licensing All the Content They Need for Teaching?

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That is the fundamental question that authors and publishers in Canada have been asking themselves as the government begins preparing to consider some long-overdue revisions to the Copyright Act. For the past decade, Canadian post-secondary institutions (outside Québec) have been refusing to acquire licences from the Canadian Copyright Collective, Access Copyright (AC), to cover the reproduction of hard-copy and digital content in AC’s repertoire for use as teaching and reference materials for Canada’s approximately 1.6 million post-secondary students (not including Québec). This practice began after a couple of court rulings and the expansion of the definition of fair dealing by revisions to the Copyright Act in 2012 to include “education” as a specified fair dealing purpose. Is the opposition of the universities to any change in the interpretation of fair dealing because the nature of academic teaching has changed, and the materials used by instructors and professors no longer depend on the kind of content offered by authors and publishers through collective licensing, as some contend? Or is it because a loose and permissive legal interpretation and legislative definition of fair dealing has allowed the institutions to argue that materials they once paid for through licensing are now free for the taking? Are the majority of Canada’s post-secondary institutions continuing to free ride on the backs of Canada’s authors and educational publishers as represented by their copyright collective organization, or have they moved on to new forms of content which they license directly, not relying on fair dealing for teaching or research materials?

Michael Geist of the University of Ottawa, would have you believe it is the former and that changes in the market and new forms of licensing are the primary source of content for the universities. Therefore, he argues, there is no need to revise the definition of fair dealing when it comes to use of educational materials. But if that is so, and if universities no longer access or require the materials held by the copyright collective, why do they continue to refuse to engage in the licensing process which would ascertain (via an arms-length process conducted by the Copyright Board of Canada) whether, or to what extent, materials in AC’s repertoire were actually being used, and why are they stubbornly opposed to any clarification of fair dealing in the education sector? If they use so little of the content held by Access Copyright, surely it would be immaterial as to whether or not they were required to obtain a licence?

I would contend that the reason for refusing to license content from AC is not just because the post-secondary sector has decided to procure its educational content elsewhere but also because it has decided, on the basis of court decisions and the 2012 expansion of fair dealing, that they are entitled to help themselves to materials they previously accessed under licence and paid for. The post -secondary sector hors Québec is refusing to negotiate with Access Copyright for content licences because it can, not because it has moved on and now depends on other sources for its teaching materials. That is why Parliament needs to fix the loophole in the law, regardless of whether or not universities are spending more on direct digital licences than they once did.

Prof. Geist has just published a series of blog posts to mark Fair Dealing Week last month (here is my own contribution to that week) with a common theme of attacking the arguments put forward by, among others, the Writers Union of Canada and the copyright collective Access Copyright, to the effect that unlicensed copying of works from AC’s repertoire has undermined the educational publishing market in Canada, and been a major contributor to the ongoing decline in income levels for writers. According to a study done in 2018 by the Writers Union of Canada, the average income for a writer in Canada declined by 27% in just the three years from 2014 to 2017, shortly after legal and legislative changes were made to widen Canada’s fair dealing regime. If you accept the argument that authors are still being paid, but through alternate routes such as digital site and transactional licences, then one would expect income levels to grow as direct digital licensing has grown. That hasn’t happened. Direct permission requests (not via the copyright collective) and associated revenues to Canadian publishers have also gone down.

Geist’s argument is based on the fact that post-secondary institutions continue to acquire licences for use of copyrighted material, and have increased their spending on direct digital and transactional licensing in recent years. He also points to the increasing use of “open textbooks”, teaching materials often commissioned by educational authorities to be governed by open licences. This, he argues, marks a shift away from hard-copy course packs and  makes the content that Access Copyright offers irrelevant.

I won’t argue with the numbers he presents in terms of what universities are currently spending on digital and transactional licences, (although they are anecdotal and I suspect there is a selective use of such data to prove a point), nor on the transition from hard copy to digital books, but there is a major disconnect between the “facts” he presents and his conclusions. The “we’re spending more on other content so we don’t need yours” argument is a total red herring. It is not a question of what universities are paying for; rather it is a question of what they are not. Moreover, the content they are currently licensing and the content they are taking under the guise of fair dealing is by and large, not the same. It looks to me like they are robbing Peter (authors and publishers who depend on royalties through collective licensing) to pay Paul.

There is no doubt that a transition is occurring in campuses all across North America, and elsewhere, away from hard copy to digital content. Anyone who has taught a course in the last ten years is more than aware of this. The first place for students to search for information is the internet, and only then the university library. The library is now a virtual repository of huge amounts of digital content, from e-books to journals. The proliferation of online learning, accentuated by the COVID pandemic, has fundamentally changed the nature of teaching for many institutions. But books have not disappeared. Hard copy books are seldom checked out of libraries or purchased at the campus bookstore, although some still are. Much more likely, however, is digital access to the work. As the student body has grown and as the trend from hard copy to digital content has taken hold, one would naturally expect that more would be spent on the acquisition of digital materials. This is indeed the case. However, it is far from a zero-sum game where every dollar increase spent on direct digital licences means a dollar less spent on materials that used to be covered by licences from Access Copyright. AC also licences digital content and e-books. Access Copyright currently has affiliation agreements with approximately 700 publishers and 13,000 authors and bilateral agreements with over thirty collective management organizations covering thirty jurisdictions (including the US, UK, Australia, and New Zealand). Overall, the repertoire consists of hundreds of millions of works. It is inconceivable that post-secondary institutions in Canada would not need to access this repertoire.

The real reason for refusal to licence content is the unilateral decision taken by Universities Canada, after several court cases and changes to the Copyright Act, that large portions of content–previously licensed by Access Copyright (such as ten percent of a work, one article in a newspaper, one chapter in a book, etc)—would now be considered within the parameters of fair dealing. Even though the actual determination as to whether these guidelines are consistent with fair dealing has not been decided by the Courts, the universities outside Québec have managed through the courts to undermine the principle of collective licensing and continue to refuse to obtain Access Copyright licences. Yes, libraries may continue to increase spending on content acquisition and licensing, increasingly focused on digital materials, but to suggest this is the reason they have stopped licensing educational content from AC for use in course packs, digital or otherwise, is to ignore the reality of a permissive legal regime that has allowed this to happen. When the Copyright Act was amended in 2012, did Parliament intend to give one commercial sector (the “education industry”) a free ride at the expense of another (authors and publishers), in the process destroying the Canadian educational publishing sector and removing incentives for the continued creation of Canadian content? I doubt it. Fortunately, there is a reasonable solution.

Authors and publishers have proposed an amendment to the Copyright Act that would clarify that payment is required for unlicensed reproduction by educational institutions where licensed alternatives for content exist. This is what is done in the United Kingdom. Students could still exercise their fair dealing user rights, but the free ride for universities and colleges would end. They would be required to license content either through the rightsholder or a collective, if they wish to use it, when that content is commercially available. If they are already licensing everything anyway (as Michael Geist would have you believe), why is this problematic?

The ferocity with which educational sector is attacking these proposals surely indicates they know full well the extent of the free-riding that is taking place at the expense of authors and educational publishers. It has even descended to some pretty offensive name calling. Stephen Spong, Director of the law library and copyright officer at Western University has accused those seeking changes to the Copyright Act of “goblin mode gaslighting”. In case you are not familiar with that term, Spong defined “goblin mode” as “a type of behavior that is unapologetically self-indulgent, lazy, slovenly, or greedy, typically in a way that rejects social norms or expectations” and “gaslighting” as “grossly misleading or deceiving someone especially for one’s own advantage”. If that is how the copyright officer at one of Canada’s leading universities regards Canada’s authors and publishers who are trying to earn a just return for the unlicensed use of their copyrighted materials, then there is something seriously wrong with the appreciation of the academic sector for the contribution made by creators to the educational ecosystem. In fact, it is downright insulting. Spong first published his attack in a regional newspaper and then in an “inside Ottawa” journal (so perhaps they weren’t read that widely) but then became a podcast guest of Dr. Geist to ensure that his message was given wider circulation.

If it is self-indulgent, lazy, slovenly, greedy and grossly misleading to suggest that Canada’s post-secondary sector should pay fairly for copyrighted materials they use in course instruction, then I plead guilty! The red herring of alternate licensing must not be allowed to obscure the fact that the ill thought-out changes to the Copyright Act in 2012 have been largely responsible for the decimation of Canada’s educational publishing sector and fair incomes for many authors engaged in the production of such materials. If it is true that the hundreds of millions of works held in the repertoire of Access Copyright are no longer relevant, then the post-secondary sector should have no concerns about submitting to a licensing process that would determine the facts of this assertion. In fact, the content is in constant use. It’s just that Canada’s post-secondary institutions outside Québec want to be able to continue to use large portions of AC’s repertoire without any payment, a situation made possible by an excessive widening of fair dealing and weakening of remedies available to rightsholders in 2012. We have had more than a decade to see the damage and injustice this has caused. Now is the time to reset the pendulum back toward the centre.

© Hugh Stephens, 2023. All Rights Reserved.

“The Declaration on the Essential Role of Artists and Creative Expression in Canada Act”: Will it Become Law?

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Last fall, in October, the Canadian Senate gave Third Reading to Bill S-208, The Declaration on the Essential Role of Artists and Creative Expression in Canada Act”. That legislation, sponsored by Senator Patricia Bovey, a distinguished art historian by profession, (former director of the Winnipeg Art Gallery and the Art Gallery of Greater Victoria, Adjunct Professor of Art History at the University of Winnipeg, and the author of a new book to be released later this month, Western Voices in Canadian Art), was then sent to the House of Commons where it was introduced by a Member of Parliament, Jim Carr, and given First Reading there. To become law, it must also successfully undergo three readings in the House, receive Royal Assent (a formality) and eventually be “proclaimed” in order to become an Act of Parliament. What does the Declaration cover, how likely is it that it will become law, and what would be its impact if it did? Let’s unpack these various questions.

First, the ten-point Declaration itself. Here is its full text, contained in an annex to the Bill.

Declaration on the Essential Role of Artists and Creative Expression in Canada

1. The essential role and contribution of the arts, culture and heritage to the health and the social and economic well-being of everyone in Canada, including all aspects of social justice and reconciliation, is hereby recognized and affirmed.

2. Everyone in Canada, including artists, has the right to freedom of expression and association, especially on issues and at times of public debate.

3. Canadians and residents of Canada of all ages, cultural diversities and backgrounds have the right to know and participate in their artistic memory and collections and in their material and built heritage, which together define our histories and experiences and our individual and community traditions.

4. People in Canada of all cultural diversities and backgrounds have the right to take part in the arts through access to and attendance at artistic events, including music, literature, drama, visual arts, film, dance, theatre and all performing arts.

5. People in Canada of all ages, including children and youth, have the right to engage in artistic creativity and the expressive arts, including the right to learn and acquire the knowledge and the creative processes and skills needed to play a musical instrument, draw, dance, compose, write, design or otherwise live a life of creative innovation.

6. Artists have the right to the intellectual property in and copyright for their work; to be free from cultural appropriation; to equity in employment and to economic security; and to be accorded recognition for the value of their work, which is integral to our nation’s economic health.

7. Artists in all disciplines have the right to earn a prominent presence in public life through their art — including public art presentations — and to the incorporation of their voices and artistic visions in democratic debate.

8. Canadian artists have the right to be represented to the rest of the world, and the public has the right to know about and explore art through the ages from all parts of the globe.

9. Artists, arts organizations and production companies in Canada have the right — and should have the arm’s-length support and capacity — to take risks and invest in creative innovation while serving communities and the public interest.

10. Everyone in Canada, including artists, has the right to be free from discrimination, including racism, ageism and all stigmas, and artists, including those with disabilities or those who are deaf, have the right to barrier-free physical access to places and spaces to create, perform and present their work in both behind-the-scenes spaces and on stages and in galleries, museums, studios and practice spaces, and through online and digital opportunities.

There is a lot to digest there. What are the key takeaways? The Declaration talks a lot about “rights” but generally speaking rights are enshrined in the Charter of Rights and Freedoms, which in most instances overrides legislation. Put another way, legislation must be consistent with the Charter. As far as I can tell, the Declaration meets this test although it does not add any additional rights. What the Declaration does do is to recognize the key economic and cultural role the arts play in Canada’s economy and society. The rights to freedom of expression and association are affirmed along with the right to participate in artistic creativity and endeavours through learning and acquiring skills. It further notes the importance of intellectual property and copyright and recognizes the economic struggles that many artists face in earning a living from their work. There are other points too that you can read for yourself—freedom from discrimination and racism, having artists voices included in public debate, etc. In fact, if this Declaration became the guiding rule for artists and creators, (as Louis Armstrong loved to sing), what a wonderful world it would be!

As a statement of broad objectives and support for the arts, the Declaration is a laudable piece of work. But if it passes, how is it intended to be implemented in the real world? The Bill requires that the Minister for Canadian Heritage consult with various other federal ministers (Labour, Indigenous Relations, Justice, Health), provincial governments, the Canada Council for the Arts (funding agency), the Official Languages Commissioner, artists and organizations whose objects include promotion of artists and the arts, French-speaking artists and organizations representing those artists, artists who represent the ethnic and racial diversity and all other diversities of Canada and organizations that work on their behalf, First Nations, Inuit and Métis artists and organizations representing those artists, and, in case anyone felt left out (which is hard to imagine given the inclusivity of the list), “all other interested persons or organizations that the Minister considers appropriate”. The point of all this consultation is to develop an Action Plan, within two years of Proclamation, to implement the Declaration. How that is to happen is left to those named although as part of this planning, a conference of stakeholders is to take place within six months of the passage of the Bill. This is no small task, especially considering the interdepartmental and intergovernmental nature of many elements of the Declaration, not to mention a certain degree of non-specificity with respect to many of the “rights”.

This is why this Declaration, welcome as it is as an aspirational target, is unlikely to become the law of the land. There is really nothing in the Declaration that a reasonably minded person could object to, but this is also part of the reason that it will almost certainly remain a hortatory call to arms rather than a concrete plan of action. As a private member’s bill (i.e. not one proposed by the government), it has no budget attached. It cannot create a spending authority without government sponsorship, although this could happen later in the process if the government decides to support the Bill. However, this is most unlikely to happen as the aims of the Bill are so broad that specific action flowing from them would be difficult to define.

Even if the Declaration had the force of law, to whom would it be applied? Would the “the right to learn and acquire the knowledge and the creative processes and skills needed to play a musical instrument” mean that a local school board that decided to terminate or scale back its music program in order to save money and meet its budget (as happened recently in Victoria, BC, where I live) would be prevented from doing so? That won’t happen. Education is a provincial responsibility, and local school boards are given considerable autonomy in setting their budget priorities. Would the right of Canadian artists “to be represented to the rest of the world” mean that the Canada Council or some other organization is obliged to provide financial support for overseas exhibitions of Canadian art? Overseas exhibitions will continue to be supported for various reasons but not because of any inherent right on the part of artists. Does the “the right to take part in the arts through access to and attendance at artistic events” mean that it is your right to attend even if you don’t have a ticket, and that you have a “right” to buy a ticket? (Taylor Swift fans would love it). I don’t think so. You get the idea. These are declaratory rather than legal rights.

When all is said and done, realistically this legislation is very unlikely to have any greater chance of success than most private member’s bills, which is to say, little to none. Another obstacle is that it needs to find a new sponsor in the Commons, a task made more difficult by the untimely passing of the MP who sponsored the Bill’s First Reading in the House, the Hon. Jim Carr. (First Reading is essentially a formality. It is the Second Reading, Committee Review, and eventual passage at Third Reading that really counts). If getting privately sponsored as opposed to government sponsored legislation passed is such a heavy lift, why do we have private member’s bills within the Parliamentary process? Many Members of Parliament or Senators want to advocate for their beliefs and causes and choose to use privately sponsored legislation as a means to do so. And on very rare occasions, where a private bill attracts government support, it sometimes even passes. Private members’ bills are a useful part of the Parliamentary system, providing a good platform for the socialization of ideas and initiatives, even if they never become law. The idea of a Declaration dedicated to artists and creators is one such example.

The arts and cultural industries play key economic roles in many countries, and this is often under- appreciated. For example, the Ontario Arts Council estimates that Ontario’s arts and culture sector represents $28.7 billion or 3.5% of the province’s GDP and 301,495 jobs. For Canada, the figure is estimated to be close to $60 billion, larger than that of agriculture, forestry, fishing and hunting, accommodation and food services and eight times larger than sport. The figures are similar in other countries. In the US the percentage of GDP generated by the arts and culture sector is 4.3%, and with the enormous size of the US economy, that translates into economic impact of over $900 billion and 5.2 million workers. In the UK arts and culture contributes £10.8 billion to the UK economy. A broader definition that includes film, TV and music brings the total to £32.3 billion (and that was in 2018). But, of course, it is not just economic impact that counts. Arts nourish the soul of the nation. Culture fosters identity and encourages expression. If “The Declaration on the Essential Role of Artists and Creative Expression” makes the role of artists and creatives more visible and respected, that is a good thing, even if Senate Bill 208 never becomes law.

© Hugh Stephens 2023. All Rights Reserved.

Google’s Threat to Block Canadian News Search: Will Its Intimidation Tactics Work?

Google is at it again. It has confirmed it is temporarily blocking some Canadian users from accessing news content through its online search function. According to the company, this is part of “product testing” in response to the Canadian government’s move to enact legislation, known as the Online News Act (Bill C-18), that would require Google to reach content deals with Canadian news media when it makes their content available on its platform. Facebook is also targeted by the legislation. This is part of Google’s strategy to push back against the impending legislation, which is currently undergoing review in the Senate. Both Heritage Minister Pablo Rodriguez and Prime Minister Trudeau have spoken out against Google’s actions, with Rodriguez saying that Canada will not be “intimidated” and Trudeau calling Google’s actions a “terrible mistake”.

Recall the long saga of Google’s struggle against the Australian government when that country moved to establish its News Media Bargaining Code which would require “designated digital platform services” enjoying “a significant bargaining power imbalance” with respect to news businesses (read, Google and Facebook) to reach agreements with Australian news content providers to compensate them for the inclusion of news on Google’s and Facebook’s platforms and services. Google fought back tenaciously, threatening at one point to leave Australia as part of a lobby campaign to get Australian consumers to pressure their own government to back off. It didn’t work. In the end, in the face of firm resolve from the Australian government, both Google and Facebook managed to reach content deals with Australian media that enabled them to avoid being designated under the Code.

Google has played this game before to stop governments from requiring it to pay for access to news content, starting in Germany and later in France. In Germany, Google removed from Google News the content of German publishers who had sued it for ignoring a new law requiring payment for news content, announcing that it would allow publishers to opt back in only if they waived their right to compensation. The publishers caved in and Google emerged triumphant, wielding its market power like a club. It similarly played tough in Spain when a similar law was passed, simply shutting down Google News in that country. In France, it was not so  successful as the French competition authority dug in and issued an order requiring Google to negotiate with French press publishers and news providers for payment for news content appearing in Google search listings in France. Google finally reached agreement with the main French publishers in early 2021 but at the same time continued its threat, first, to block Australian news content in Australia, and then to leave Australia altogether. Australians stood up to this blackmail.

Google hasn’t gone to quite the extent of threatening to pull out of Canada in the face of the Canadian government’s determination to bring in a regime similar to that of Australia’s. It has, however, resorted to some of the same pressure tactics, such as seeking to enlist the services of the US government to lobby on its behalf by having its tech industry proxy group, the Computer & Communications Industry Association (CCIA) argue that C-18 violates the US-Canada-Mexico (USMCA/CUSMA) trade agreement. I examined that allegation here. (Hint: it doesn’t). Not only is C-18 not in violation of the USMCA/CUSMA, there are US industry voices pushing for a similar regime in the US, as expressed in this recent editorial in the Seattle Times.  

There are those in Canada, such as University of Ottawa professor and blogger Michael Geist, who seem more than happy to amplify Google’s threats, noting that Google, among others in the tech industry, has been laying off workers and that the cost of reaching content deals with Canadian media is not chump change. I would turn this on its head. Because it is facing some new economic challenges, Google can hardly afford to cede its leading role in internet search because it is reluctant to find a way to strike content deals in Canada when it has been able to do so in Australia and France. Once C-18 becomes law, Google has two options. It can either strike deals with eligible news businesses in Canada (it has already reached agreement with some media outlets, like the Globe and Mail, and if it widens its net by reaching agreement with enough other outlets it could conceivably be granted an exemption), or it could comply by blocking all links to Canadian news content sites, in effect exiting the market for news search in Canada. When users search for Canadian news items, only results for US or other foreign providers would be accessible. As National Post journalist Bryan Passifiume, one of those “randomly” selected by Google to be blocked, has recounted,  it is not just Google Search that produces no results. When he searched for specific Canadian news items on various Canadian websites (CBC, National Post, Toronto Star) while in the Chrome browser, he got nil returns. One can’t help but wonder how Google has managed to select journalists working for major Canadian dailies as the victims of its blocking experiment, given that it is apparently targeting just 4% of its Canadian users.  

To stick it to Canadians would be a colossal blunder. That is not the way to maintain market share (and brand loyalty) in a G7 country which, while offering nothing like the size of the US market, is nonetheless the world’s 10th largest economy with a growing population approaching 40 million. As one well-known Canadian journalist has observed, Google (which is being sued for anti-competitive behaviour by the US Justice Department and was fined for the same practices in Europe) is doing this “because it can”. However, if Google were to decide to block access to news in Canada as its response to C-18, not only would it backfire in terms of its other business offerings in Canada, but its competitors, notably Microsoft and Apple, would be quick to take advantage of the vacuum.

It is worth recalling that when Google was engaged in its “stoush” with the Australian government, its main competitor in online search, Microsoft, stepped in with Brad Smith, its Vice Chair and President, explicitly endorsing the Australian proposal. Smith stated that should Microsoft achieve the kind of market dominance enjoyed by Google, “we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organizations.” As I wrote at the time (Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others, February 2021), the entry of Microsoft into the fray made it much more difficult for the US government to intervene on Google’s behalf, especially when both Microsoft and Google are large, powerful entities with significant lobbying clout in Washington.

But Google has more to worry about than just Microsoft encroaching on its dominant role in the Canadian market for online search. Microsoft is working to energize its previously lacklustre search engine, Bing, by the addition of AI capabilities through ChatGPT. The fact that Google’s rollout of its competing AI offering, Bard, was somewhat of a flop has given Bing an even greater fillip. It is way too early to predict whether Bing will be able to successfully challenge Google’s dominance in online search but for the first time in years it appears that Google needs to look over its shoulder. Taking on Canadian consumers, Canada’s news media and the Canadian government at the same time that this is happening is not a very good idea.

C-18 is not yet law. It could still undergo some minor tweaks in the Senate before it returns to the House of Commons for final passage. However, given the commitment that the Trudeau government has made to this Bill and to the Canadian news media, backed up by support from two of the three opposition parties, the chances of it going away because of Google’s bully tactics are nil. Google can comply by reaching deals with Canadian media or it can shoot itself in the foot by following through on its implicit threat to block access to Canadian news sites and Canadian news.

© Hugh Stephens, 2023. All Rights Reserved.

State Sanctioned Piracy: Another Weapon in Russia’s Arsenal

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As the war in Ukraine enters its second year, many things in Ukraine and in its neighbouring countries– Belarus and Russia to the north and east, Poland, Slovakia, Hungary, Romania and Moldova to the west and south—have changed. While the Ukrainian people have clearly suffered the worst direct consequences of the war, none of the people living in countries adjacent to Ukraine have been left untouched. Its neighbours to the west have mainly felt the impact of the influx of refugees, while “normal life” for people in Russia and Belarus has also changed as the sanctions imposed by western governments have impacted various aspects of daily life.

If truth is the first casualty of war, a comment widely attributed to early 20th century US Senator Hiram Johnson, although versions of the saying are claimed to go as far back as the Greek playwright Aeschylus in the 5th century BC, then the next casualties are usually those ordinary “taken for granted” things that constitute the normal rhythms of life—wide availability of goods, reliable sources of power and other utilities, organized sports, cultural activities and entertainment. That is quite apart from the really serious consequences of war, like safety and security, injury or worse, that often follow. It may seem trivial to look at the consequences of war upon culture and entertainment, but “spiritual sustenance” is an important part of a nation’s morale and when normal life patterns are disrupted, people turn to familiar things for comfort and sometimes to escape reality.  A current case study is Russia’s invasion of Ukraine. Among other things, this has affected entertainment choices and availability in Russia, as well as having a major impact on copyright industries, and other IP stakeholders. (By contrast, in Ukraine people are just struggling to survive). But in Russia, and now in Belarus, in addition to all the other war-related measures they are taking, these governments have weaponized copyright piracy.

Back in May last year, just weeks after Russia’s invasion of Ukraine, I wrote a couple of blog posts focusing on the cultural and content aspects of the conflict, noting that Russia was attempting to both deny and eradicate any expression of Ukrainian culture. (Russia’s Invasion of Ukraine: It’s Also a Content and Culture War; Ukraine: Protecting its Culture and its Future). Ukrainian art, music and literature are anathema to Vladimir Putin because they give the lie to the “justification” for the invasion advanced by the Russians; the false narrative that Ukraine is and always has been an integral part of Russia. There are of course common historical antecedents and a close relationship between the Russian and Ukrainian languages (some prominent Ukrainian writers like Andrey Kurkov, Ukraine’s most famous and successful living writer, in fact write in Russian), but Russia’s attempts to destroy Ukrainian culture has just one purpose; to deny Ukraine’s legitimacy as a people and as an independent nation. Culture and entertainment thus become very much caught up in the fabric of warfare and propaganda.

It is not clear to what extent the war truly enjoys support in Russia. Many have made their opposition clear by leaving or trying to leave Russia. Others have protested, and have paid the price for doing so. Still others are no doubt just keeping their heads down. Inside Russia, western sanctions have brought about some changes to lifestyles (although recent reports indicate sanctions have been only partly successful); US streaming services have shut down and supply of content to broadcasters and movie theatres has been interrupted. Microsoft, Apple, Dell, Samsung, Adobe, Cisco, IBM and Intel, have stopped sales to Russia. Certain other western products and brands are no longer available. As part of its response, Russia has turned a blind eye to, indeed has tacitly encouraged, copyright piracy for both software and audio-visual content. In August of last year a bill was introduced in the Duma to introduce compulsory licenses for content and other copyrightable objects not available in Russia because of sanctions. It applied to all content subject to copyright protection, such as theatrical and TV content, music, books, software, databases, videos, and artwork. In December a bill to “legalize piracy” of software was under consideration by the Ministry of Digital Development. In a sense, this is a largely empty threat since the software piracy rate in Russia has remained stubbornly high over many years. These legislative actions are apparently still pending.

On the movie front, where until the invasion of the Ukraine, about 7/10 movies screened in Russia were Hollywood films, Russian cinema owners have resorted to showing downloaded, unauthorized and unlicensed films to “private showings” in order to stay in business. What the impact will be of the unravelling of the already weak IP regime in Russia after the war is over remains to be seen.

The idea of suspending the enforcement of copyright law when it comes to nationals or companies from “unfriendly” countries, i.e. those that have imposed sanctions (Russia’s list includes the US, UK, members of the EU, Norway, Switzerland, Canada, Japan, South Korea, and Australia among others) has been picked up by Russia’s acolyte, Belarus. As reported by TorrentFreak;

“Belarusian dictator Alexander Lukashenko has signed a new law that legalizes piracy of movies, music, TV shows and software owned by rightsholders from ‘unfriendly countries’. The law also allows goods protected by intellectual property law to be imported from any country without obtaining permission from rightsholders.”

Lukashenko is the first and only president that Belarus has had and has been in power almost since the day that it emerged from the ruins of the Soviet Union. He is Putin’s closest ally among the republics that made up the former USSR. So far, he has managed to stay out of the war against Ukraine, although Russia has launched rocket attacks from Belarus. Lukashenko himself and the war are unpopular in Belarus and Lukashenko has a strong stake in survival, thus his caution, but he also counts on Putin for support if needed. Until now, he has kept his powder dry. However, the new Belarus copyright exception law mimics similar legislative efforts underway in Russia. (Western sanctions against Russia have also generally been applied to Belarus.)

The new law does not completely remove the obligation to license copyrighted content but requires users of unlicensed copyright-protected content to instead pay into bank accounts operated by the National Patent Authority, which is in turn authorized to collect a “management fee”. The actual amount of payment will be determined not by rights-holders but by the Belarusian Parliament. Rights-holders will have up to three years to claim payment. But the National Patent Authority’s bank is owned by the Government of Belarus and is under sanctions! Don’t expect western rights-holders to be lining up to collect license fees owed. It is worth noting that all these measures are a violation of commitments that Belarus has made under its WIPO commitments. (Belarus is not a member of the WTO, thus not a signatory to the TRIPS Agreement, but Russia is, and would be in contravention of both WTO and WIPO commitments if it brings in similar measures).

The loss of licensing fees in Belarus, or in Russia for that matter, by western rights-holders may seem like small potatoes compared to the suffering of the people of Ukraine. But copyright protection, and the content that it delivers, is one more casualty of war, inflicted not only on western rights-holders but also on the everyday folk who live in Minsk, or Moscow or elsewhere in these two countries who find themselves on the wrong side of a very nasty, morally unjustified war.

Hopefully one day in the not too distant future, this war will end—with a Russian withdrawal. The people of Ukraine will be able to live in peace, not in fear. They will be able to exercise their rightful cultural heritage as well as direct their own future. Hopefully also the people of Russia and Belarus will accept this outcome, and once again, the bonds of culture and entertainment, through music, film, television and other content, will become bridges to build understanding and mutual acceptance. Copyright piracy won’t go away, in Russia, Belarus (or indeed in Ukraine or elsewhere) but in a postwar world one assumes it will no longer be aided and abetted by the state, as is currently the case in Russia and Belarus today.

© Hugh Stephens, 2023. All Rights Reserved

Fair Dealing, Fair Use…and Fair Play

Credit: author

Yes folks, it is Fair Use/Fair Dealing Week again (Feb 20-24, 2023). As I wrote last year at this time, the activity is promoted by the Association of Research Libraries in the US, with separate components labelled Fair Dealing Week in Canada and the UK. The Canadian version is organized by the Canadian Association of Research Libraries; in the UK the lead last year was taken by Institute of Advanced Legal Studies at the University of London. We will hear a lot about the benefits of exceptions and limitations to copyright, how permissionless use under specific circumstances promotes learning, creativity, free speech, public discourse. etc. The focus will be on the users of copyrighted materials rather than on the creators of works. As a user and consumer of copyrighted materials, I can identify with these views, as I wrote on this blog a few years ago. (“Why this Copyright Blogger likes Fair Use and Fair Dealing”.)

Copyright creators are amongst the most prolific “users” of copyrighted materials, but I like to think that as creators we are also mindful of the rules surrounding appropriate use. We can, as users, quote from and link to copyrighted material, draw inspiration from it, parody it, even reproduce limited amounts of it for private study, research or educational purposes. That is all well and good and epitomizes the basic balance that has traditionally existed between the protection afforded authors to control the use of their works, and the ability of users to access those works.

What fair use and fair dealing do not justify is the wholesale appropriation of copyrighted content through industrial-scale unauthorized copying that destroys any market for the author’s works. Unfortunately, that is what is currently happening in both Canada and the US–through broad-based uncompensated educational copying in Canada and through infringing digital copying by libraries (and “pretend libraries”, like the Internet Archive) in the US, and to some extent in Canada as well.

In Canada, the “user’s right” referred to in the Supreme Court of Canada’s 2004 decision (CCH Canadian Ltd. v. Law Society of Upper Canada) has been interpreted so broadly in recent years that an institution, such as a university, can claim to exercise the student’s “user’s right” by mass producing learning materials copied willy-nilly and without payment or authorization from educational texts, and can then sell the copied course-packs to students through the university bookstore! This is not a case of an elementary school teacher photocopying a couple of pages from a textbook that is in short supply in order to provide their class with learning materials—which was the original justification for the practice of a teacher exercising the user right on behalf of students. (Alberta (Education) v Canadian Copyright Licensing Agency (Access Copyright). Even this non-digital example has led to situations where a school has ordered and paid for exactly one copy of a textbook, with teachers then scanning or photocopying to reproduce multiple copies for students. Is that fair to authors and educational publishers? And, in the long run, to students? Along with fair dealing we also need an element of fair play.

The argument often advanced is that “cash-strapped” educational institutions, and “suffering students” who are having difficulty in making ends meet (owing in large part to hefty hikes in admission fees) are being expected to pay “wealthy publishers” for access to learning materials. I heard these arguments recently on a self-serving podcast from the Canadian Teachers’ Federation. If anyone is “cash-strapped” it is authors, and the current situation is making the situation worse. In a 2018 report, the Writers’ Union of Canada reported that;

“Taking inflation into account, writers are making 78% less than they were making in 1998. In fact, writers are making significantly less from their writing than they did just three years ago: $9,380 in 2017 vs. $12,879 in 2014. That’s a 27% drop over a short period — the same period that has seen a massive increase in uncompensated educational copying.”

The situation is undoubtedly worse today. As for all those “wealthy publishers”, the educational publishing market in Canada has been shrinking, with several publishers either ceasing to publish for the educational sector or closing up shop entirely. Fewer culturally specific educational materials for the Canadian market are now being published as there is no incentive to do so. The fix is relatively straightforward and narrowly targeted. It is to ensure that students can continue to exercise their educational fair dealing rights but to limit that right for educational institutions to situations where no licensed alternative is available. This approach works well in other countries, including the United Kingdom and Ireland. This will stop the wholesale plundering of copyright-protected content by institutions in the name of exercising their students’ user’s rights.

With regard to “cash-strapped” educational institutions, you should know that the cost per student at the K-12 level of a licence from Access Copyright was $2.41 per student per year in 2016 (I would say about the price of a cup of coffee, except that it is pretty rare these days to get a cup of coffee for that amount). Despite this, most Ministries of Education not only refuse to pay the tariff but have sued the copyright collective, Access Copyright, for the amounts that they had paid back in 2010-12. It is true that some School Boards and universities are “cash-strapped”, but does that stop them from paying their suppliers, their teachers, from running school buses, repairing school buildings. Of course not. So why should paying for the educational inputs they use be any different? Put another way, why should cash-strapped authors be subsidizing educational authorities in various jurisdictions across the country? That is not fair play.

In the US (echoed in Canada) another egregious example of unfair play through unauthorized copying is taking place under the guise of fair use. This is the invented theory of “Controlled Digital Lending” (CDL) actively promoted by the Association of Research Libraries in the US and supported by its Canadian equivalent, the Canadian Association of Research Libraries as well as the Canadian Federation of Library Associations. CDL’s proponents claim that they should be able to make a digital copy of a physical work they hold, and then lend the digital copy, keeping the original work in its archive. But there is no basis in law for this theory.

As I noted in a recent blog post on this topic (“Controlled Digital Lending: Could Canadian Universities Find Themselves Out on a Limb?”), organizations such as the Internet Archive and others that promote CDL (for copyrighted works) ignore the reality that it all hinges on the making and distribution of an unauthorized copy of a copyrighted work. That unauthorized digital copy then substitutes for any licensed e-version of a published work that exists or which might be produced, effectively destroying the market for the work and imposing economic injury on the rights-holder. Nevertheless, the Association of Research Libraries claims thatboth the exhaustion doctrine and the fair use doctrine support CDL when properly implemented”. This is creative but just plain wrong on both counts, as the Association of American Publishers has pointed out.  

The first sale or exhaustion doctrine applies to physical works and allows a purchaser to dispose of a work without reference to the rights-holder once the work has been sold. However, although you own a copy of the work, you do not own the copyright. Thus, if you purchase a book you can resell it, lend it, give it to your dog to eat or burn it. But the one thing you cannot do is to copy or reproduce it without authorization, save for non-substantial portions or selective uses that conform with fair use or fair dealing. For a library to digitally scan an entire work and then lend out the digital copy is a clear violation of both the author’s reproduction right and distribution right. (The distribution right grants to the copyright holder the exclusive right to make a work available to the public by sale, rental, lease, or lending.) Given these realities. no matter whether “properly implemented” (whatever that means) or not, CDL cannot be fair use under US law and there is certainly no provision in Canadian law that would make it a fair dealing. Nor does exhaustion or the first sale doctrine apply in this case.

The Association of Canadian Publishers (ACP) has recently released a statement highlighting for Canadian libraries the risks and realities of CDL in Canada. The ACP, which represents 115 independent English-language book publishing firms across Canada, underlines that copying and making available are exclusive rights of copyright holders. It notes that there are no provisions for CDL in the Copyright Act, and points out that with respect to fair dealing, there is no certainty that the copying is for an allowable specified purpose or that the dealing is “fair” with respect to the impact on rights-holders. Finally, the ACP notes that litigation is pending in the US. This is the case currently before the court of the Southern District of New York (Hachette v Internet Archive), a case which is likely to settle this question in the US definitively this year.

Wishful thinking does not make something non-infringing or turn an unauthorized use into a fair use or dealing. Fair use and fair dealing have their rightful place as part of the overall system of copyright, allowing limited access without permission for specified purposes and subject to certain conditions. And of course, new situations will arise that will require either the legislature or the courts to apply fair use/fair dealing criteria to determine to what extent exceptions (or user’s rights) apply as technology evolves. (AI generated art will likely become a test case in 2023).

While the means of delivery may change, the fundamental principles of copyright, including what is a fair use or dealing, continue to apply. As a principle, the determination of fair use/dealing should be fair to both rights-holders and users, although in recent years that has not always been the case when it comes to creators. For the ecosystem to work, it is important to play fair. Ripping off authors and educational publishers in Canada is not fair. Trying to bend the rules to invent a new lending doctrine that relies on unauthorized copying and distribution is not fair. When fair play prevails, everyone wins. That is what Fair Use and Fair Dealing Week should be all about.

© Hugh Stephens 2023. All Rights Reserved.

The Challenges of the Indie Musician: Piracy, the Value Gap, Broadcast Royalty Exemptions…and Now (For Foreign Performers) a Possible Tripling in US Visa Fees.

Source: http://www.shutterstock.com

It has always been a challenge for indie musicians and performers to earn a living, and it looks like it may soon get worse for performers outside the US who hope to play gigs there. Among the big challenges to earning a living from music are piracy, the “value gap”, COVID and now a new hurdle, a possible tripling of visa processing fees for performers to enter the US.

Piracy continues to be a major challenge. The forms of piracy have changed over the years as technology has evolved, but it is still a major source of revenue leakage for the industry, primarily in the form of stream-ripping.  Digital music services were supposed to come to the rescue but the earnings, except for the biggest names, haven’t restored revenues to what they were before the onset of digital piracy. The music industry talks about a “value gap” between what the streaming industry earns and the amount paid to performers. Part of the value gap problem initially arose because the big digital platforms were insufficiently diligent in screening out pirated content, as I wrote in a blog post a few years ago (“YouTube and the Music Value Gap”). That problem has been largely addressed but now the issue is the digital pennies that flow from the big streaming services, of which Spotify is the poster-child, to the artists. This is a source of perennial complaint. It has been reported that Spotify pays as little as a third of a cent per stream. Young artists claim they cannot earn a living wage from streaming royalties. Part of the issue is that revenues are often split with recording studios and rights-holders. Spotify pays rights holders who distribute royalties to performers. That is how the ecosystem has been constructed. It works well for well-known performers but perhaps not so well for emerging artists.

Another issue that reduces payouts to artists are the exceptions granted to certain broadcasters in the US allowing them to avoid paying performance royalties. This is a longstanding US issue where terrestrial broadcasters are exempted from paying royalties to performers or labels for playing recorded music on air. Online broadcasters and streaming services are required to pay, but not over-the-air AM/FM radio stations. These terrestrial stations do, however, pay royalties to composers and songwriters for broadcasted music, just not performers. This anomaly goes back to the early days of radio and repeated attempts to level the playing field by applying the same rules to terrestrial and online broadcasters regarding performers’ royalties have been beaten back time after time by the broadcast lobby. The failure of the US to pay terrestrial broadcasting royalties to performers has led a number of other countries to reciprocate (one could say, retaliate) by denying similar payments when US works are played in their countries, even though domestic performers benefit from royalty payments. This tit-for-tat measure is estimated to cost US performers over $300 million annually. Securing “national treatment” through trade agreements is one way to get around the denial of benefits to US performers abroad, but a better way would be to change US legislation to remove the broadcast exemption which would then benefit both US and foreign performers. Back in 2021 I blogged about attempts to end the discriminatory treatment through the American Music Fairness Act. That legislation did not pass before the term of the last Congress expired, but has since been re-introduced.

Canadian and foreign performers face a similar but slightly less onerous provision in Canada. The first $1.25 million in advertising revenues for terrestrial stations is sheltered from performance royalty payments except for a nominal $100 fee. In effect, this is a greatly watered-down version of the performance royalty exemption enjoyed by US radio stations and is as controversial in Canada (and as unpopular with the music industry) as the terrestrial broadcast exemption is in the US.

With all these impediments, it is a wonder that anyone is able to make a living from playing music. One way that artists have been encouraged to earn a living is through touring. That was the standard response when digital piracy was rampant. “Go on tour” was the answer given by those who argued that musicians would just have to learn to live with piracy and instead earn a living from music by performing live. Then along came the COVID epidemic and the collapse of concerts. As COVID recedes into a bad memory (we hope) touring is resuming, but suddenly a new financial challenge has cropped up for performers outside the United States. That barrier is the threatened drastic increase in the cost of getting into the US to perform. This is applicable to all non-US performers (not just musicians) but particularly affects Canadian musicians who seek to reach a North American audience.

For many entertainers outside the US, America is the big enchilada. To issue a permit to perform in the US, the US Government understandably wants assurances that the applicant is actually qualified to perform. US artists generally don’t seem to mind the friendly competition, and of course often tour abroad themselves, but want reassurance that performers getting performance visas are qualified to receive them. The Department of Homeland Security (DHS) offers two categories of visas that are primarily used by foreign performers, “O” and “P” visas. “O” Visas are for an individual who possesses  “extraordinary ability in the sciences, arts, education, business, and athletics… and has been recognized nationally or internationally for those achievements”. (US Citizenship and Immigration Services). A “P” visa is for groups of international renown, or for groups who are “culturally unique”, such as musicians who perform folk music in their home country. There is an additional type of P visa for Canadian artists or musicians entering the US through a government recognized reciprocal exchange program (P2 Visa). While there are several windows through which to gain entry, in order to be recognized as being of sufficient stature, applicants need to be certified by a US presenting arts organization or union such as the American Federation of Musicians (AFM) , the American Guild of Musical Artists, IATSE (International Alliance of Theatrical Stage Employees, Actors’ Equity), or SAG-AFTRA. That costs money. In the case of AFM, the charges are $300 for normal processing time (5 to 10 business days); $400 for expedited service (2 business days); or $550 for super-expedited service. Other organizations charge similar processing fees for the recommendation letters. And on top of that, there are the visa fees themselves.

At the present time, the fees charged for “O” and “P” visa processing by the US Citizenship and Immigration Service (USCIS), a part of DHS, are $460. This was the fee level set in 2016, when they were last raised (from $350). There was a proposal for a hefty increase in visa fees in 2020 as part of a general USCIS fee increase but it was not implemented in the face of a federal court injunction. Now the proposal for an increase is back, in spades. DHS has proposed that the filing fees for a regularly processed “O”-type visa increase from the present $450 to $1,655, more than tripling them (an actual increase of 260%) and for “P”-type visas from $460 to $1615.

The DHS proposal is not just directed at foreign performers. It is part of a proposed across-the-board increase by DHS to increase funding for its visa operations. In a 200 page notice published in the Federal Register in early January, DHS proposes “to adjust” various fees because its costs have increased, there has been higher demand, and the Department needs to hire more employees. The purpose is supposedly to improve service yet the proposed standard on visa processing is to move from 15 calendar days to 15 business days, a downgrade in service delivery times. The Department is chronically underfunded and at times has been on the verge of furloughing employees because of Congressional failure to approve funding.

Public comments on the proposed fee increase are solicited with a deadline of March 6. You can submit a comment here.

It seems that foreign performers have been caught up in a wider problem of US government under-funding although the proportional increase in the “O” and “P” visas is one of the largest proposed. (H1-B visas, usually paid by employers who want to bring hi-tech workers to the US, also face a similar steep increase). One of the reasons for the exponential increase is the inclusion of a $600 surcharge to fund asylum programs. Some visa categories in the humanitarian category remain fee exempt or face no or very small increases as a result of this proposed cross-subsidization. (“DHS proposes this cost shifting approach with the Asylum Program Fee to place greater emphasis on the ability-to-pay principle for determining user fees”, Federal Register, Vol 88, no. 2, p. 453). The question, however, is whether it is reasonable to expect struggling musicians to help fund US government shortfalls and finance humanitarian programs. Clearly some organizations representing performers, such as the American Federation of Music (AFM). do not think so. (“AFM Opposes Proposed USCIS Visa Increases“)

The AFM statement is both a demonstration of artistic solidarity with foreign performers, such as the Canadian Federation of Musicians, (which is affiliated with the AFM) and a recognition that the presence of foreign performers in the US also benefits US artists and the US entertainment industry. The AFM points out that “Music is collaborative in nature, providing US artists with the ability to connect with international artists, who in turn provide those US artists with access to markets abroad” and that “International touring artists contribute to the US economy in the way of filling venues, booking hotels, and the many other costs associated with a tour”. Advocacy by the AFM and US artists is important because the US government is going to listen, first and foremost, to input from US stakeholders. Foreigners don’t vote for Congress. The AFM has written to Congressman Bennie Thompson, Ranking Member of the House Homeland Security Committee, to solicit his support. Canadian groups such as Folk Music Ontario have also been sounding the alarm, suggesting that its members “please reach out to all US buyers, venues, artists, associations, etc., you may work with, to seek their assistance”. It is interesting to note that so far none of the other associations or unions in the US that engage with incoming performers by processing and issuing certification letters appear to have taken a public position on this. (They haven’t supported the increase, but neither have they spoken up to oppose it. Perhaps silence is their position).

What about the cost for US performers to tour in Canada as a comparison? It’s either free (depending on an earnings threshold) or $155 with a cap of $465 for three performers or more. Wouldn’t it be nice for Canadian performers if the US offered reciprocal treatment? That won’t happen, but perhaps the projected increase will be made less draconian. DHS needs to be adequately funded, just not on the backs of indie musicians.

While piracy and inadequate payments to performers from streaming services are long-term issues to tackle, holding the line on exorbitant visa increases would at least ensure that an additional burden was not added to the travails of indie musicians seeking to tour in the US. While DHS faces a funding dilemma, hopefully the burden can be more equitably applied and the proposed increases rolled back to something more reasonable.

© Hugh Stephens, 2023. All Rights Reserved.

Update: The letter of famed guitarist and author’s advocate, Marc Ribot, calling on DHS to “withdraw this ill timed, culturally and economically reckless proposal”, has just come to my attention and merits mention. It was featured in a blog post just published by former music executive Neil Turkewitz, “A Tale of Two Visa Regimes: A Dickensian Parable”.

Will the Year of the Rabbit be the Year of Contentious Copyright Litigation over AI-Generated Content?

Credit: Author

According to the Chinese zodiac, the Year of the Rabbit (this year) is supposed to represent “relaxation, quietness and contemplation”. This “Rabbit Year” is predicted to be “calm and gentle”. (Good news for the people of Ukraine, if true).  However, when it comes to the thorny issue of copyright and content generated by artificial intelligence (AI), the Year of the Rabbit may end up being the Year of Contentious Litigation.

First out of the gate in 2023 are two cases, one where Getty Images is suing Stability AI in the High Court of London (UK) and the second in the US where artists Sarah Andersen, Kelly McKernan, and Karla Ortiz have brought a class action suit against AI powered art services Stable Diffusion (owned by Stability AI), Midjourney and Deviant Art. Technically these cases were not initiated in the Year of the Rabbit, but in the last days of the preceding Year of the Tiger. The date of Chinese New Year varies each year, being determined through a complex calculation involving both solar and lunar cycles, but it always falls sometime in January or February. In 2023, that day was January 22. Anything in this calendar year that occurred before that date took place in the Tiger Year. As can be imagined by its name, the Year of the Tiger is associated with “courage and bravery” and the “defeat of evil”. (Another Ukraine analogy). It certainly takes courage to take on large AI platforms as the artists have done. As for defeating evil, I don’t think that is the characterization I would have for AI, although there is no doubt that it can be put to evil purposes. In fact, this is already happening with the production of artificial photo-substituted images of celebrities and others, and use of AI platforms like ChatGPT to produce misinformation.

Okay, let set aside the theme of the Chinese zodiac for a moment, and focus on the point of this blog post, which is to look at what is happening on the litigation front with respect to AI-generated content. There are fundamentally two principal issues involved. First, whether AI-generated content (images, writing, music) infringes the copyright of creators by building its database through the scraping and ingestion of millions of copyrighted works off the internet without licence or authorization. Second, whether the producers of AI-generated content (that is, users manipulating the platform, not the platforms themselves) have any claim to copyright on the works created. It is all very unclear, which is exactly the point of the litigation.

In the case of Getty Images, the company already licenses content to technology companies to help them train artificial intelligence systems to generate AI products, but Stability AI did not bother to seek a licence. Stability AI is just one of a number of companies that has emerged in the AI generated image space, as I wrote about in an earlier blog. (AI and Computer-Generated Art: Its Impact on Artists and Copyright). Both Microsoft through its investment partnership with OpenAI (DALL-E2 and ChatGPT) and Google are developing AI platforms, although they have been relatively cautious with their release owing to issues with NSFW content as well as copyright issues. DALL-E2 and ChatGPT have been released as trials while Google has been holding back on the public release of its latest AI generated image product, Imagen. In contrast, Stability AI’s founder, Emad Mostaque, seems to subscribe to the “better to ask for forgiveness after rather than permission before” school of thought. A couple of months ago, I wrote about Mostaque and his laissez-faire approach to copyright and AI. (AI Generated Art: Another “Technical Breakthrough” Calling Out for Responsible Management and Regulatory Oversight).

Given Mostaque’s approach, the fact that Stability AI chose not to acquire licences–yet clearly ingested some images owned by Getty (the company’s watermarks even show up on some of the AI generated works)–is not surprising. Getty’s goal is no doubt to provide AI companies with a sharp reminder that licensed images exist for AI training. As for the artists’ lawsuit, its basis and likelihood of success is less clear. Dr. Andres Guadamuz of the University of Sussex, editor of the Journal of World Intellectual Property, has criticized the basis of the case as being technically inaccurate. (see below for more information)

The artists’ suit against Stability AI, MIdjourney and Deviant Art is based on the factual reality that the “data” that feeds the AI art generating algorithms consists of millions of images scraped without authorization from the internet, many of them under copyright and at least a few of them belonging to the plaintiffs. Specifically the suit declares that Stability AI through its application “Stable Diffusion”, “downloaded or otherwise acquired copies of billions of copyrighted images without permission”. It then “caused those images to be stored and incorporated…as compressed images”, referred to as “Training Images”. The training images were then used to train the algorithm. The “new” images produced by Stable Diffusion’s algorithm are argued to be derivative works produced from the training images. The suit states that ultimately the platform is basically a complex collage tool that creates art works “in the style of” based on real artists’ works without compensation or permission leading to “blatant and enormous infringement” of copyright while producing works that compete in the marketplace with the works of the original artists. Accordingly, the suit accuses the defendants of direct and vicarious copyright infringement, violation of the DMCA (by removal of Copyright Management Information), violation of the right of publicity and unlawful and unfair competition. Relief sought is in the form of statutory and punitive damages, costs, and permanent injunctive relief. If successful, this suit would throw a major spanner into the works of AI machines producing works based on data (consisting of images, written works, and music as examples) ingested without licence or permission from the internet. It would require much smaller data sets based on licensed or public domain content. Another option would be for the AI platforms to allow and make it easy for artists, writers and musicians (“authors”) to opt out of the database.

The tech industry does not want to have to tailor its databases or be subject to any restrictions on data mining. Scooping it all up (for free) is the model it prefers. In arguing their case, the defendants will claim fair use, insisting that the resultant work is not derivative but rather the result of a transformative process. They will also no doubt claim that what the algorithm produces is not a copy of the artists’ work, even though it may be “in the style of”. However, although not an exact copy, the question will be whether it reproduces a “substantial” part of the original work? Another defence argument will probably be that not all the ingested works necessarily fall under copyright, the output being an amalgam of millions of images, some protected, some not.

In addition to legal arguments rebutting the complaint, there are also technical arguments to consider. In his article critiquing the lawsuit from a technical perspective, Dr. Guadamuz argues that the scraped inputs do not form a “collage”. He states they are a combination of links to images (not the images themselves) combined with text descriptions, all of which are themselves narrowed by the descriptor that is inputted into the model. If the user is seeking an image that uses the word “cats”, all data that does not relate to cats is discarded. Thus, he argues, it is inaccurate to claim that AI generated art draws on a database created from every image ever ingested. He concludes that the artists involved in the suit will therefore not be able to prove that their work was infringed.

However, one problem for those arguing that text and data mining fall under fair use is the reality that the resulting “new image” can and often does substitute for the original work (which may have been included in the training data), thereby negatively affecting the author’s ability to economically exploit the work. The interpretation of fair use and fair dealing in relation to text and data mining (TDM) is still very fluid.

The UK, for example, is currently reviewing its existing TDM exception. (Britain’s Proposed Approach to Text and Data Mining (TDM) for AI: How Not to do It (A Lesson for Canada and Others). The original proposal from the Intellectual Property Office (IPO) was to allow TDM “for any purpose” and to specifically eliminate any possibility of licensing content for text and data mining. It was argued that this broad exception would promote “innovation”, but the proposal aroused huge opposition from Britain’s artistic community. Recently the Communications and Digital Committee of the House of Lords studied the IPO proposals and concluded that “The Intellectual Property Office’s proposed changes to intellectual property law are misguided. They take insufficient account of the potential harm to the creative industries.”  Even the Minister responsible has said she thinks it is likely the IPO’s proposed changes will not proceed. For its part, the IPO now has indicated it will continue consultation. While there are potentially legitimate reasons for some TDM exceptions, allowing it for “any purpose” is damaging and misguided, and hopefully the IPO’s proposals as they stand will be substantially modified.

Many academics have argued they need access to TDM material to be able to conduct research. In some countries, such as Canada, there is currently no TDM exception in copyright law, an issue that may be reviewed in the next update of the Copyright Act, expected in the next year or so. However, there is a big difference between providing open access to copyrighted content to enable sampling of works to produce research that does not reproduce the original work and in no way competes with it, (and is used for non-commercial purposes), and using copyrighted works to produce derivatives that can substitute for or compete with the originals. Any TDM exception needs to be narrowly focussed to achieve the end of enabling legitimate research while avoiding a free-for-all that would undermine the interests of rights-holders.

Apart from the question of whether AI platforms should be able to ingest copyrighted content (note that what is often described as “data” actually consists of pre-existing copyright protected works) without authorization, there is the issue of who can exercise rights to “new” images created by the algorithm. Who created them? Was it the algorithm/platform or the user who “created” them by inputting minimal textual instructions. “Create a work of a dog eating ice cream in the style of…..”. There is not much originality of expression there although longer, more complex prompts/instructions could theoretically qualify. This is another point that will require clarification. On the other hand, if the user cannot claim ownership because of failure to meet the test of originality, could the rights be held by the creators of the algorithm? And if it was an algorithmically generated image, was there any human creation involved? If not, according to the US Copyright Office, such a work is not eligible for copyright registration. Finally, any discussion of possible copyright protection for an AI-generated image must address basic questions related to the legitimacy of the inputs used to generate it. Has the output become a “poisoned” derivative work because of infringement at source?

These and other questions will need to be weighed by the courts. The decisions will have a major impact on artists and other creators, the way in which AI develops in the years ahead, and even the role of AI content in modern society. The Getty and class action lawsuits are but the first shots in what will be a long campaign. The Year of the Rabbit is unlikely to be “calm and gentle” on this issue. Next year, 2024,  is the Year of the Dragon and it is supposed to represent “good luck”. One has to ask, “good luck for whom”? The courts will have an important role in answering that question.  

© Hugh Stephens 2023. All Rights Reserved.

Update: The day this blog post went live the UK minister responsible for the IPO, George Freeman, declared in Parliament that the British Government was no longer planning to introduce the proposed unlimited TDM exception into UK copyright law.

Where do US interests lie when it comes to Canada’s Online News Act?

Back in November, US Trade Representative Katherine Tai met virtually with her Canadian counterpart, International Trade Minister Mary Ng. According to the account of the meeting released by USTR, among the issues raised was impending or proposed Canadian legislation related to digital platforms;

“Ambassador Tai expressed concern about Canada’s proposed unilateral digital service tax and pending legislation in the Canadian Parliament that could impact digital streaming services and online news sharing and discriminate against U.S. businesses.”

The critics of the pending legislation, particularly Bill C-18, the Online News Act, jumped on this statement as proof that the US might retaliate if the Bill is passed, sounding the klaxon of doom. In case anyone missed it, C-18 is designed to implement a negotiation process (backed up by government enabled compulsory arbitration if negotiations fail) for compensation for the use of news content by “digital news intermediaries” (which for sure include platforms such as Alphabet/Google and Meta/Facebook, and possibly others in future) and designated news businesses in Canada. It is based on Australia’s example where that country introduced a News Media Bargaining Code requiring the platforms to negotiate payment with news providers for providing access to Australian news. If a suitable deal was reached, the platforms could avoid designation under the Code. Not surprisingly, incentivized by the threat of legislation, the platforms managed to strike deals with most media outlets in Australia, although not without some initial game-playing and resistance by both Google and Facebook. The Canadian legislation is designed to do much the same, although with more transparency and more guidance on where the money is to be spent (on newsrooms).

The platforms have pulled out all the stops to oppose the Canadian legislation, which they probably see as writing on the wall for what is likely to happen eventually in the US. Facebook has threatened to block posting of Canadian news on its site in Canada, a tactic it also employed in the US to fight back similar legislation (Journalism Competition and Preservation Act, JCPA) being considered in Congress. (The JCPA almost made it through the US legislative mill last year, having been attached to the National Defense Appropriations Bill, but in December of 2022 the platforms and others mounted a counter-offensive that succeeded in getting the news provision dropped from the Defense Bill at the last moment).

Another tactic the platforms have used is to dredge up various claims that C-18 violates Canada’s commitments under the new NAFTA, the USMCA (or CUSMA in Canada), or the Berne Convention. An industry association to which both Google and Meta belong (Computer & Communications Industry Association, or CCIA) produced a White Paper arguing that if enacted, C-18 would violate Canada’s international trade obligations in several ways. The CCIA’s paper not only misconstrued key elements of C-18, its analysis did not stack up in terms of demonstrating any denial of national treatment to US companies, as I outlined in a previous blog post and article, (Bill C-18, the Online News Act: Does it Violate Canada’s Trade Agreement Obligations?).

One voluble critic of C-18 made much of the fact that the USTR read-out of the meeting contained the reference to Canadian legislation that I reproduced at the top of this blog post, whereas the Canadian read-out did not. (Michael Geist, A Tale of Two Readouts). Suggesting that there was some sort of subterfuge by Canada on this is just plain silly.  For its part, the Canadian statement mentioned topics that did not make it into the US read-out such as softwood lumber and the need to maintain a well-functioning dispute settlement system within the WTO, both areas where Canada is not happy with US positions. (The latter refers to the current US position on the WTO’s dispute settlement system which has led it to block future appointments to the WTO’s Appellate Body). Regardless of the relative merits of the issues discussed, it is standard practice in reporting on such meetings that each side highlights the issues it has raised, not those brought up by the other side. The fact that the Canadian statement did not include Ambassador Tai’s comments on digital legislation is not even worth commenting on—unless you want to make a big deal out of nothing.

More important is the import of what USTR Tai had to say. Was the fact that she “expressed concern” over legislation that “could…discriminate” against US businesses an “Oops, we’ve got it wrong, and had better change the legislation” moment for Canada? Hardly. It is true that USTR was laying down a marker, as it frequently does, expressing its view that US businesses should not be discriminated against, especially when there are national treatment commitments that could be infringed. And of course, Trade Minister Ng “reassured” Tai that Canada’s legislation is consistent with its trade obligations. This is standard back-and-forth positioning between countries when measures that could affect the interests of the other are under consideration.

Of particular concern to the US is the position of Canada and a number of other countries regarding a proposed Digital Services Tax (DST). DST’s have been proposed in many countries because some large companies operating digital platforms have managed to avoid being taxed in many jurisdictions where they generate considerable revenue, yet have no or minimal physical presence. Note that many, indeed most, of these companies are incorporated in the US. The DST is designed to tax companies doing business digitally but with no physical presence by imposing a levy based on a percentage of income (usually around 3%) earned in respective jurisdictions. The EU has been particularly active in this regard, and some countries have already imposed a digital tax. In 2020 the US imposed retaliatory tariffs on French luxury goods because France had imposed a DST that captured some US companies.

The OECD has been working for some time on an international agreement on profit-shifting that would address the issue of digital companies doing business in countries without a physical presence. If implemented, the agreement would avoid imposition of digital services tax by individual jurisdictions. That process is going slowly, but a draft Convention has now been reached. The US, however, has not yet signed on. The Biden Administration is onside but the problem, as always, is getting the deal approved by Congress. Given this situation, a number of countries, Canada included, have prepared DST legislation and are prepared to enact it if a suitable agreement is not finalized soon. It is against this backdrop of shadow-boxing that USTR Tai “expressed concern about Canada’s proposed unilateral digital service tax”. Since Canada is also developing the Online Streaming Act (to bring streaming content under the Broadcasting Act) and the Online News Act, C-18, why not throw them in too as areas of “concern”? But does this mean that this is setting the stage for a trade challenge by the US to C-18? Most unlikely.

Apart from the fact that C-18 is of far less concern to the US Government than the digital tax issue (the main issue with the DST is that if other countries tax US-based digital companies unilaterally, there could be less revenue for the US Treasury), there is also a huge difference in the impact and design of the legislation. While C-18 will likely target a couple of large US-based digital players, it will also benefit any US news companies that have qualifying news bureaux in Canada. Bloomberg and the NYT come to mind. The Online News Act is not discriminatory legislation aimed at US companies; rather it is legislation designed to reign in and require payment for content by mammoth internet platforms that exist as virtual monopolies. And the goal of this legislation has support in the US.

The fact that the interests of the United States and those of Google and Facebook are not one and the same was clearly highlighted in the form of a letter written to USTR Tai in mid-December by Danielle Coffey, Executive Vice President and General Counsel to the News/Media Alliance (NMA), a US industry association representing over 2000 publishers nation-wide. (News/Media Alliance Reminds USTR of the Importance of High-Quality Journalism). The NMA has been actively pushing for similar legislation to C-18 in the US and has been an active proponent of the JCPA (Journalism Competition and Preservation Act). Even though the JCPA just failed to secure adoption in the last Congress, the NMA will continue to advocate for it.

In its letter, the Media Alliance expressed its “serious concerns” over the comments that Tai made to Trade Minister Ng about C-18. The NMA letter says, “We believe this…fails to represent wider US business interests, in addition to contravening the public policy concerns underlying Canada’s C-18 and similar efforts elsewhere , including the United States”.

The letter goes on to say;

“Numerous studies, reports, and investigations have shown without question the ways that (a few dominant) platforms impose unfair terms on news publishers and other actors in the online ecosystem and reap the majority of the benefits, including digital advertising dollars and user data. The legislative measures – in Canada, other countries, and the United States – aim to correct these market failures and rebalance the online marketplace by making sure the platforms cannot benefit from publisher content without compensation. They are focused on tackling specific business practices by those with the most power – regardless of their national origin. The fact that many of the dominant companies engaging in these damaging practices, and therefore affected by the legislations, are incorporated in the United States does not make these laws discriminatory.”

It continues;

“Publishers in the United States stand firmly with our international partners in supporting laws to combat market abusive business practices in the online ecosystem, including the Online News Act. Not only do many of our members have readers or operations in Canada, we strongly believe that such laws correspond with the public policy objectives of the United States to protect the free press.”

Finally, it concludes with; (emphasis added)

“We strongly believe that the Office of the USTR should represent the whole of the United States, not the interests of a few large companies… we urge you to refrain from taking positions that benefit one sector of the U.S. economy at the expense of others.”

That last sentence says it all. Important US interests align with the objectives of C-18. This is yet one more reason why the US Government will not be bringing retaliatory trade action against Canada for implementing the Online News Act.

© Hugh Stephens, 2023. All Rights Reserved.

More Public Domain “Triumphs”: Winnie the Pooh “Blood and Honey”, and The Great Gatsby (Zombie Version)

Credit: Generated on Stable Diffusion by author

Every year around the beginning of January, a lot of public domain hyperbole hits the airwaves with stories about how our lives are about to be enriched now that such-and-such a work is no longer under copyright protection but has fallen into the public domain. It will now be free for anyone to use for remixing, reissue, republication, alteration, distortion…etc. Usually this “excitement” is fed by groups such as the Center for the Study of the Public Domain at Duke University, which has carved out a niche for itself as the go-to place for any reporter who wants a quick sound-bite or commentary to do a public domain story. The Center has proclaimed January 1 of each year as “Public Domain Day”.

This year is no exception, except that in Canada the “celebrations” have been put on hold because Canada has just extended its term of copyright protection by an additional twenty years, bringing its duration of copyright into alignment with that of its major trading partners, the US, EU, UK, Japan, Korea, and Australia. This has led to some hand-wringing in certain circles, such as the Canadian Association of Research Libraries, (which nonetheless has a fair point about access to orphan and out-of-commerce works, an issue that has yet to be addressed by the government,) to outright vitriol and misinformation from anti-copyright voices like TechDirt. (“Canada Steals Public Domain Works from the Public”). We are informed by other copyright skeptics that the works of former Canadian Prime Minister Lester B. Pearson, who died in 1972, will now not be in the public domain for an additional twenty years. (Is that the sound of silence that I hear?).

Much of the ballyhoo around “Public Domain Day” turns on the ability of anyone to “copy, share and build upon” previously copyrighted works (to quote the Duke Center). With copyright no longer applying to A.A. Milne’s 1926 book “Winnie the Pooh”, which entered the public domain in the US last year (although it’s been in the public domain in Canada since 2007) and Arthur Conan Doyle’s “Sherlock Holmes”, which became a public domain work in the US on January 1 of this year (public domain in Canada since 1980), no licence, payment or permission is required to use, copy or adapt these works. Not only do the rights-holder’s economic rights over the work cease to exist, but so too does the ability to control any use of the work. In many cases, the rights are held by the author’s descendants, such as their children and grandchildren. One of the reasons for granting a period of protection post-mortem lasting for approximately two generations after death is the premise that to protect the integrity of the work, control over its use should be vested in those who have a living memory of the author.

With Milne’s first book now in the public domain, the door has opened to the “copy, share and build upon” phenomenon so dear to the folks at the Duke Public Domain Center, resulting in such new creations as the movie “Winnie the Pooh: Blood and Honey”. I haven’t actually been able to bring myself to watch it but according to the New York Times, “the pudgy yellow bear turns feral. In one scene, Pooh and his friend Piglet use chloroform to incapacitate a bikini-clad woman in a hot tub and then drive a car over her head”.  Great stuff. Duke’s Center for the Public Domain also touts the creation of Ryan Reynolds’ “Winnie-the-Screwed” ad for Mint Mobile and a comic strip in which Pooh celebrates his nudity as proof of the benefits of the Bear of Little Brain entering the public domain in 2022. When F. Scott Fitzgerald’s “The Great Gatsby” entered the public domain in the US in 2021, the Duke Center gushed that ,“There were …new works such as Michael Farris Smith’s prequel Nick, which tells the backstory of Nick Carraway, a graphic novel adaptation, The Gay Gatsby, The Great Gatsby Undead (the zombie edition), and reports of an animated movie as well as a Gatsby musical by Florence Welch from Florence + the Machine.” Wow. I am sure that F. Scott would have been delighted. What new interpretations of the sleuth of Baker Street can we await in 2023 thanks to Conan Doyle’s “The Case Book of Sherlock Holmes”, the final set of twelve of his short stories, now being in the public domain?

Those who make a big deal of celebrating the arrival of works into the public domain every January 1 are consciously feeding the misconceived narrative that a work under copyright is a work that is largely inaccessible to the public. The opposite is true. Copyright exists as an incentive for the production and dissemination of works. Without it, there would not only be much less creativity, but creative works would increasingly become the exclusive domain of those who are independently wealthy or subsidized in some other way (such as by having an academic position). Alongside this utilitarian purpose are certain moral rights allowing the author to protect the integrity of their work.

Those who want to see as much content put in the public domain in as short a time as possible, like the Canadian Association of Research Libraries to judge by its public positions, seem to regard copyright protection as an inconvenience to be bypassed or neutralized whenever and however that can be achieved. I mean, just think how much easier it would be for hunters and hikers if there was no private property and they weren’t ever impeded by “No Trespassing” signs. They could do whatever they want. The same mindset seems to apply in many of our academic institutions and in the library sector.  Others who want classic works in the public domain as soon as possible include publishers who specialize in re-issuing books where copyright has expired. There are many, but in Canada Broadview Press has been particularly vocal. This of course does not stop Broadview or other publishers like them from copyrighting the derivative editions they have just put on the market.

Let me conclude by saying that I am not opposed to the public domain, nor do I subscribe to the theory that copyright should last forever, a position advocated by some. For better or for worse, it is not a perpetual property right and there is no question that the existence of copyright can pose an impediment in some cases where a work is long out of print and the rights-holder cannot be located. These situations can be dealt with through specific exceptions, much as fair use and fair dealing allow for specified unauthorized uses that do not damage the rights of the author. However, the narrative that the public domain liberates content from the shackles of copyright is utter nonsense, although the way that some organizations and some journalists portray it, you would think that is exactly what happens.

It is pretty clear that Disney, the current holders of A.A. Milne’s copyright, would not have authorized the Winnie the Pooh horror film, nor would the F. Scott Fitzgerald estate, who control that writer’s copyrights, have greenlighted the zombie, gay or prequel editions of Fitzgerald’s work. If now having such (copyrighted) works available to the public is a breakthrough in creativity, as the Duke Center seems to believe, then so be it. To me, these “triumphs” are hardly a convincing demonstration of the wonders that await us once a work enters the public domain.

How about Sherlock Holmes meets Godzilla? Oh, Godzilla is not yet in the public domain? Damn! That would have been a major contribution to creativity and culture. How can we possibly live without it?

© Hugh Stephens Blog, 2023. All Rights Reserved.  

Why Can’t Canada Produce Top Quality Localized TV Drama like the Aussies Do?

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Canada’s Online Streaming Act, (Bill C-11) the draft legislation that will bring online streaming content under the purview of the Broadcasting Act, will continue its slow progress through Parliament in 2023. Review in the Senate last year led to a number of amendments, one of which dealt with the definition of Canadian content (Cancon). That amendment added a provision that no factor is determinative in establishing Cancon standards or equitable contribution rules. It is unclear at this point whether the government will accept any of the amendments adopted by the Senate or will reject them and send the Bill back to the Red Chamber for further review.

The Bill has many provisions and objectives but one of them requires the broadcasting regulator, the CRTC, to update the arcane formula that determines what content qualifies as “Canadian”. An amendment that would give the CRTC the flexibility to weigh various elements in determining what constitutes Cancon, rather than being bound by an outdated and inflexible formula, would be welcome. That is the approach taken in Australia, and this more flexible definition seems to have been successful in producing content that is recognizably and unabashedly Aussie.

As an example, I have just started watching the Australian “political thriller” Total Control, being broadcast and streamed on my local public television provider, Knowledge Network. It is a gripper, with great character development, contemporary storyline, and realistic settings. Most of all, it proudly and unabashedly Australian. For those not familiar with the show, it is the story of an Aboriginal woman, Alex Irving (played by Deborah Mailman) who achieves national prominence because of her bravery in stopping an act of gun violence. As a result of that, she is approached by the office of the Prime Minister of Australia (a women, played by Rachel Griffiths) to fill a vacancy in the Australian Senate. (While the Australian Senate, unlike the Canadian Senate, is an elected body, if a vacancy occurs due to a senator’s death, resignation or expulsion, a replacement can be appointed by the Governor of a state to complete the term. This was the case in this scenario). The government in the show has a narrow majority, and the PM is concerned about her future political career and the possibility of an internal coup. Given recent Australian political history, this is entirely plausible.

The new Senator has to deal with the pressure of adapting to her new political role while championing her people and the region she represents. The show is set in Canberra, where the corridors of power in Parliament are displayed both through the interactions of the protagonists and the physical settings of the offices and chambers, and in the outback, where Alex Irving lives. As a Canadian who has visited Australia, including the Parliament in Canberra a few times, it spoke to me. I can imagine that for Australians it is a story that has resonance. Certainly, the show has enjoyed generally positive reviews in Australia and is now being distributed globally. While acclaim has not been universal, what no-one can deny is that this is an Australian production that tells Australian stories in an Australian way. Australia has long been known for the excellence of its productions in telling Australian stories (and I am not talking about Crocodile Dundee), as well as producing Hollywood-style product for the international market. It has a thriving film industry and as a country that has managed to project its culture globally, it punches above its weight.

Canada also has a strong film industry, the largest part (in terms of value) based on Foreign Location Shooting (FLS), which brings many benefits. But when it comes to projecting Canadian culture through film productions, Canada punches well under its weight. In fact, you could say it has barely climbed into the ring. I cannot recall a Canadian drama where Canada’s political culture was a central part of the story. Ottawa and the Canadian Parliament never seem to appear on screen. Many of the themes explored in Australian productions such as the clash between Indigenous and “settler” cultures are similar to those in Canada, yet I don’t see this being explored in televised Canadian drama. Instead, we get clones of US shows (“Family Feud Canada”) or productions, like the award-winning Schitt’s Creek, where any possible indication that the show was filmed in Canada has been airbrushed out—all on the dubious premise that if it is to be sold in the US market, it must look American if it is to appeal to US audiences. (I am not convinced this is the case. When I look at the offerings provided by Netflix, they include US shows to be sure, but also Nordic, German, Spanish, Korean and Australian. Squid Game, produced in Korea with a Korean soundtrack, was Netflix’s most watched show. They even have some “Canadian” films on their platform, although not all of them meet the legal definition of “Canadian content”). I find it interesting that Australian shows seem to revel in their “Australian-ness” while Canadian shows generally go to great lengths to hide any reference to their Canadian origins. What accounts for this difference?

Some will say Canada’s geographical proximity to the United States is the biggest factor. It certainly is one reason why a lot of FLS production takes place in Canada, and there is no question that the sheer weight and quality of US content can easily overwhelm competing voices. But if that is true in Canada, it is also true in Australia, New Zealand, and perhaps to a lesser extent in the UK, just to name the leading English-speaking markets. To provide support to local production, Canada, Australia and the UK (as well as the EU) all have local production incentives linked to content requirements. Canada’s are particularly convoluted and confusing, as I wrote recently (“Unravelling the Complexities of the Canadian Content (CanCon) Conundrum”). Canada’s financial incentives for “CanCon” are essentially tied to who produces, directs, and finances a production. It matters not if the story has any Canadian connection whatsoever.

Blogger and commentator Michael Geist has had fun with his Cancon quiz in which readers are invited to guess whether a given production qualifies as Canadian content. (Hint: anything with any obvious relationship to Canada in terms of storyline, location or author doesn’t qualify whereas any production you have never heard of likely does). Most people don’t do too well on the quiz. Obscure co-productions with Norway or Ireland qualify but Disney’s “Turning Red, about a Chinese-Canadian girl growing up in Toronto, starring Canadian actor Sandra Oh, does not qualify nor does a production like “Ultimate Gretzky” or Margaret Atwood’s “Handmaid’s Tale”. The current Cancon policy is designed to support jobs in film production, not to promote identifiably Canadian stories. It is an industrial policy, not a cultural policy. The biggest single impediment to a production qualifying as Cancon, and thus being eligible to receive production incentives as well as meeting Cancon airtime broadcasting quotas, is the requirement that the copyright must be held by a Canadian. This eliminates all productions financed by international producers, from Amazon to Netflix to a Hollywood studio. The only exception is a treaty co-production—but there is no co-production treaty with the US.

Australia also has content quotas for commercial television broadcasting.[i] While less onerous than Canada’s, they are designed to do essentially the same thing by ensuring that a certain amount of Australian content is shown on primetime TV. Australia is also considering extending the quotas to online streaming (Subscription Video on Demand—SVOD) services as is happening in Canada with Bill C-11, the Online Streaming Act although, as in Canada, there is some pushback. The big difference between Australia and Canada, however, is not how content quotas are applied, but in how national content is defined. I have already referred to the unnecessarily complex and confusing formulae for deciding on Canadian content. It is based on four key elements (production control, copyright and distribution rights, creative positions and production spend) and calculated using a complicated points system, where productions must get a minimum of 6 points out of a possible 10 (10/10 for access to some funding), based on the following;

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.”

Simple it’s not.

Australia, like the UK, takes a broader view of what constitutes Australian content. According to Screen Australia and the Government of Australia in its “Producer Offset Guidelines”, the SAC (Significant Australian Content) Test—which is applicable for the producer offset (tax rebate) and compliance with quotas–covers the following;

  • the subject matter of the film
  • the place where the film was made
  • the nationalities and places of residence of the persons who took part in the making of the film
  • the details of the production expenditure incurred in respect of the film
  • and any other matters that we consider to be relevant.

More detail is provided on each element. For example, in assessing the subject matter of the film, the following factors are taken into account;

  • did the project originate in Australia or was it developed by Australians?
  • is the project under Australian control?
  • were Australian citizens or residents involved in the project’s development?
  • is the project based on an Australian story?
  • is the project about Australian characters?
  • is the project set in Australia?
  • does the project reflect a cultural background that is particular to Australia or Australians?
  • does the project reveal some aspect of Australia’s or Australians’ cultural background or experience?
  • are there other relevant factors which are specific to the individual project?

To be sure, as in Canada, factors such as the nationality of the main players in the production (executive producer, producer, writer and director, lead cast members, creative heads of department such as the director of photography, production designer, editor, costume designer, sound designer and composer; and other cast, crew and service providers) are all considered. Australian “creative control” has set criteria set in legislation. However, for me the single most important element of the assessment is the statement that “The SAC test is a holistic one and no single element is determinative”. In other words, there is no rote formula and unlike the Canadian definition, an element of judgement actually enters into the assessment. Hopefully C-11 will give the CRTC that flexibility when it passes.

If Canada had a content definition that placed more emphasis on the story, location and talent rather than on the production and source of funding, would it result in more shows like Total Control?[ii] Richard Stursberg has argued for a different way to assess Canadian content. Stursberg is the former head of English services (TV, radio, digital) at the CBC, former CEO of Telefilm Canada, and former chairman of the Canadian Television Fund. He has written in his book, “The Tangled Garden (A Canadian Cultural Manifesto for the Digital Age)”, and more recently in an op-ed in the Globe and Mail, that Canadian content should look, sound and feel Canadian. He cites the British content definition that takes into account (by according points on the scorecard) things such as whether the program is clearly set in Britain, is based on British subject matter, and offers an interpretation of British culture, heritage or diversity. The definition does not require production companies to be British-owned and controlled, simply that the company be incorporated and pay taxes in Britain. The Harry Potter films, set in Britain and based on the work of English author J.K. Rowling, but produced and distributed by Warner Bros., qualify. A similar production in Canada would not.

According to the Minister responsible for bringing forth C-11, Pablo Rodriguez, one goal of the Online Streaming Act is to modernize the definition of Canadian content. If a redefinition leads to the production of more shows and films that are recognizably Canadian through their stories and settings, that would be very welcome from my perspective. It would also incentivize the big US producers to produce content that looks Canadian, at the same time unleashing the power of their global distribution systems to promote Canadian content since they would have skin in the game by being able to invest in and earn a return on certified Cancon, which could in turn be used to meet content quotas where they apply. More production would create more work for Canadian writers, actors, film-makers, etc. not just for FLS production but also to produce recognizably Canadian stories. That would be both good business for the studios and help meet Canadian cultural objectives of telling Canadian stories in a recognizably Canadian way. Maybe one day, I will be able to watch a drama series about an Indigenous legislator from Canada’s “outback” (Saskatchewan?) dealing with political issues in the corridors of power in Ottawa, set in a recognizably Canadian setting, along the lines of Total Control in Australia.

© Hugh Stephens, 2023. All Rights Reserved

[i] Total Control was aired on the Australian public broadcaster, ABC, which is governed by its Charter, rather than by content rules that apply to commercial broadcasters. However, its Charter requires it to “to broadcast programs that contribute to Australia’s sense of national identity, inform and entertain, and reflect the cultural diversity of the Australian community…”. 


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