If China Joined the CPTPP, what would this mean for Copyright Industries?

China surprised many in the trade policy world last September by formally applying for membership in the 11 country “Comprehensive and Progressive Trans-Pacific Partnership” (CPTPP), the trade agreement that rose like a phoenix from the ashes of the 12 country Trans-Pacific Partnership (TPP). There is no guarantee that the current members will agree to negotiate accession with China, or that China is prepared to meet the high standards of the Agreement. But if China did join on the basis that it was prepared to make the necessary trade liberalization concessions, this would be a major boost for trade in the region and would bring greater discipline to the Chinese market. However, would it have much impact on copyright industries, particularly the US film industry that is becoming increasingly dependent on Chinese movie-goers to grow revenue?  This blog posting examines that very question.

First, we need to go back to the TPP, the precursor to the present CPTPP agreement. The TPP process had been led by the United States, beginning in 2008, and was seen as the US’s way of establishing high quality open trade disciplines in the Asia Pacific region. Despite having pushed for the TPP initially and having driven the negotiations largely on its terms and having signed the Agreement in February 2016 (along with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam), the United States then walked away when Donald Trump “triumphantly” announced US withdrawal from the TPP on his first day in office.

Despite the immediate assumption that the deal was dead without US participation, under Japan’s leadership the remaining TPP partners continued to meet and finally reached a new agreement, based largely on the TPP text. Any references to the US, such as tariff commitments, were removed and some articles were suspended to remove items that were seen to primarily benefit the United States. These were mostly in the area of intellectual property and investment. However, the CPTPP clones well over 90 percent of the original agreement. It went into effect in December 2018 when six of the eleven CPTPP completed ratification and is now in effect for eight countries (Australia, Canada, Japan, Mexico, New Zealand, Peru, Singapore, and Vietnam). It has been so successful that so far three others have applied to join, the United Kingdom (even though it is not in the region), China and Taiwan. In the case of Taiwan it will be applying as a “customs territory”, the same basis on which it has membership in the World Trade Organization (WTO).

It is somewhat ironic, to say the least, that China has now applied to join a high standard trade agreement that was once championed by its arch trade rival, the United States, the more so since the US has turned its back on its own creation. There is plenty of speculation as to China’s motives, as I wrote about back in October last year. (China’s CPTPP Application: Serious Economic Move or Strategic Political Gambit?) China’s motives are probably a combination of the two.

There is no question that its move highlights the absence of the US from regional trade initiatives, and for Beijing brings with it the added bonus of complicating Taiwan’s application. It was an open secret that Taiwan was actively considering an application, but Beijing moved first. Taiwan swiftly submitted its own application just a few days after Beijing’s announcement, but now the existing members will have to more actively take into account the “China factor” in assessing how to deal with Taiwan. It may have been a coincidence, but Beijing’s announcement that it had submitted a letter of application to the CPTPP depository nation, New Zealand, came the day after the surprise announcement of the AUKUS (Australia-United Kingdom-United States) nuclear submarine deal. Reaction from most current CPTPP members has been cautious, with both Australia and Japan noting that any country applying must be prepared to meet the high standards of the CPTPP in terms of trade and investment liberalization and transparency. With regard to China, they haven’t said no, but they also haven’t said yes.

Despite some skepticism as to the depth of China’s commitment to trade reform, there are credible observers who note that China is facing a number of economic challenges, and a good dose of market reform would help. This is based on the supposition that there are economic reformers in Beijing who are not fully invested in the regime’s current preoccupation with self-sufficiency and state capitalism. How realistic this assessment is can be debated. There is no question that China would have to make some significant commitments in the areas of investment, labour rights, digital trade, services access and state owned enterprises (SOEs) if it is to meet CPTPP standards. But what about content and copyright industries? Would CPTPP commitments in this area pose an insurmountable obstacle for China? Surprisingly, no, and while its accession would potentially bring some improvement with respect to enforcement of copyright laws, it would not directly deal with the big-ticket market access issue, China’s film market.

Back in 2016 when the US was still touting the benefits of the TPP under the Obama Administration, it sought to enlist support from Hollywood by promoting the Agreement’s role in strengthening copyright protection and providing other benefits to the audio-visual industries. For example, when put into force, the TPP would set the term of copyright protection for TPP member states at life of the author plus seventy years (“life + 70”) as opposed to the “life + 50” term in place in a number of those countries. This would be of benefit to the US film industry. There was a notice and takedown provision similar to safe harbour provisions in the DMCA, an article requiring the outlawing of unauthorized camcording in theatres, and commitments to ensure that criminal or civil penalties would apply in cases of copyright infringement. Persons found to be circumventing technological protection measures (TPMs) and removing rights management information (RMI) on digital products would be subject to civil and criminal penalties.  

The TPP would bring other benefits as well, such as prohibiting governments from requiring companies to turn over encryption keys, eliminating tariffs on DVDs and other film storage products, and removing local partnership requirements, i.e. the Agreement would prevent governments from requiring that a company or person, as a condition for importing movies or television shows, establish a contractual relationship with a local distributor. In addition, it would prohibit the imposition of customs duties on electronic transmissions (such as transmissions containing audio-visual content) and ensure the protection of encrypted program-carrying satellite and cable signals. Signatories would have to be members of the Berne Convention, the WIPO[i] Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).

Those were among the key benefits identified at the time by the US Trade Representative’s Office that would benefit US copyright industries. There was a lot on offer. But then the US withdrew from the agreement, meaning that any concessions or commitments made by the other parties would not be extended to US companies or persons. That’s a pretty significant but not insurmountable problem. The benefits of the agreement could still potentially be accessed by some Hollywood entities through their corporate presence in CPTPP countries. Sony could invoke its Japanese ownership, for example, and content produced under the Village Roadshow banner could access benefits as an Australian entity. However, there is another development that limits many of the gains “advertised” by USTR back in 2016, even if US companies could access the benefits of the Agreement through a roundabout means.

When the remaining eleven countries came together to finalize the CPTPP, they adopted most of the already-negotiated text but suspended some key provisions. They could have eliminated them altogether, but they chose suspension in order to dangle a carrot to entice the US back into the Agreement. Many of the suspended provisions related to the “wins” identified earlier by USTR. For example, the articles relating to the extension of the term of copyright protection, notice and takedown/safe harbours, protection of satellite and cable signals, and prohibitions on circumvention of TPMs and removal of RMI were all suspended. This means that if China (or any other country) were to accede to the CPTPP at the present time, it would not be required to abide by any of these provisions. This will make it easier for China to meet the copyright requirements of the CPTPP.

There are other provisions in the CPTPP’s intellectual property chapter, as well as in its investment and e-commerce chapters that were not suspended and would apply to China. However, these provisions should not present a major difficulty for China since it has already agreed to most of the commitments elsewhere, either by joining the Berne Convention, which it did in 1992, or by acceding to the WCT and WPPT, which it did over a decade ago. More particularly, another regional trade agreement, the Regional Comprehensive Economic Partnership (RCEP) Agreement, which entered into force on January 1, 2022, contains many commitments that are very similar to those in the CPTPP. China, along with all ten ASEAN countries, Japan, South Korea, Australia and New Zealand, is an RCEP signatory state.

As I wrote last year, the RCEP has a fairly robust intellectual property chapter. It includes some provisions not currently in the CPTPP, such a prohibiting the circumvention of TPMs, the removal of rights management information from digital files and a commitment to protect encrypted program carrying satellite and cable signals. It contains similar language to the CPTPP with regard to expeditious remedies to prevent copyright infringement and includes a range of specified civil and criminal measures. Since China has already agreed to all these commitments, it would presumably have no difficulty in signing on to similar commitments in the CPTPP. (Whether it is effectively meeting its commitments is another matter, but non compliance is subject to dispute settlement procedures under both the RCEP and CPTPP.)

If all of the above seems to suggest that the copyright provisions of the CPTPP would not present much of an obstacle for China in terms of accession, that is my conclusion. Nor would China’s accession change much in this sphere for the copyright industries, given that China has already undertaken to comply elsewhere with many of the measures designed to protect copyrighted content. The real issue facing Hollywood and other film producing countries is China’s restrictive regime regarding import and distribution of films. China has always maintained a tight control over its theatrical market by limiting the ability of foreign producers to distribute directly to Chinese audiences.

Back in the “early days” (i.e. 1980s through mid 2000s) this tight distribution was not too much of a problem as the Chinese audience and Chinese venues were relatively limited. Then the explosion of demand occurred and the Chinese theatrical market is now one of the world’s largest and certainly its fastest growing. Hollywood relies heavily on Chinese distribution to generate international revenues and to be able to do so is required to work through China Film (a state owned entity) which retains a virtual monopoly on distribution. Through controlling distribution channels, the Chinese authorities can maintain a tight grip on what content is made available to Chinese audiences (ensuring the “right” political and social messages reach audiences), while also ensuring that Chinese films take a substantial share of box office earnings. As reported by Axios, China blocked all four of the Marvel movies from being released in its theaters last year, a “grim sign” for U.S. film makers.

China not only wants to exercise a tight rein over content, it also wants to propel the Chinese film industry to compete with the US majors. In this regard, it is using its huge domestic market as leverage, just as it has done in other areas, such as automobile manufacturing. Foreign technology and content is welcomed for a while, until such time as Chinese firms can compete, and then the screws begin to tighten. That is what I see happening in China right now. There will always be a market for a few key foreign blockbusters, but they will be distributed on Chinese terms and in accordance with Chinese priorities in the Chinese market, and this will be done in such a way as not to jeopardize the growth of China’s own film industry.

Would China’s entry into the CPTPP change this? It almost certainly would not. While China will have to negotiate its accession, it is clearly going to seek exemptions for certain sectors and industries. One of these sectors will certainly be distribution of AV content. The CPTPP calls for “national treatment” for investment (for example, foreign film distributors and theatre operators should, in principle, be treated on an equal basis with their Chinese equivalents). However, each and every one of the CPTPP member states has made certain exceptions to this rule when it comes to investment, and all of them, without exception, have included reservations with regard to “cultural industries” and content distribution in one form or another. The United States was no exception when it signed the original TPP, identifying a reservation to national treatment for cable television distribution. So, while China will need to get the other CPTPP members to agree to its list of exceptions, it will be difficult for them to argue that China should open its film market when they have all, without exception, claimed the right to discriminate against foreign nationals in various ways when it comes to content distribution.

Will China be able to negotiate accession with the current members? That is the $64 billion dollar question (to update an old expression). First, the UK accession negotiations will have to be completed, giving us an insight into the kind of commitments a new member can be expected to make. China’s accession will be more complicated, not only over questions as to whether it is truly prepared to abide by the standards of the CPTPP, but also by associated political factors, such as its ongoing trade “war” with the United States, even though the US is not a CPTPP member. In theory, the US should be in favour of any process that will induce China to open its market and level the playing field with its trade partners. However, the reality is that at the current time Washington seems disinclined to take any steps that could be construed as doing China any favours, and the US may try to pressure its USMCA partners, Canada and Mexico, to take a hard line on Chinese accession.

Even if China does eventually manage to accede to the CPTPP, the copyright industries, especially the copyright industries in the US, won’t see much direct benefit, although a more open Chinese economy generally would reduce US-China tensions and could potentially help reverse the threatened decoupling between China and western economies. Maybe one day the US would even be prepared to reconsider its position and join the CPTPP instead of continuing to impose managed trade outcomes on China through unilateral application of punitive tariffs. A US-China trade rapprochement along with the adoption of greater trade opening and transparency measures by China would be good for everybody in the long run, copyright industries included.

© Hugh Stephens, 2022. All Rights Reserved.


[i] World Intellectual Property Organization

Winnie the Pooh, the Public Domain and Winnie’s Canadian Connection

On or around January 1 each year we get a recrudescence of the same old story, a “celebration” of all the works that have just entered the public domain in the United States. It is the story that just keeps on giving for journalists facing a quiet day and searching for filler, the most recent example being Michael Hiltzik’s January 3 column in the LA Times. The “hook” this year is the fact that A.A. Milne’s first Winnie-the-Pooh book, published in 1926, is now in the public domain in the US. In Canada, the CBC jumped on this story, notwithstanding the fact that the work has been in the public domain in Canada since 2007. Although Pooh entering the public domain in 2022 is not directly relevant to Canadians, a story is a story so the CBC interviewed Hiltzik, and embellished its report with quotes from a prominent Canadian academic copyright skeptic. (There are other Canadian experts who could have provided an alternate view but that would not have fitted with the CBC’s one-sided editorial slant of “flaws in US copyright law” and “copyright creep”, speculating on how this might apply to Canada).

The explanation of why a large number of works enters the public domain in the United States on the first of January each year is complicated and has to do with the permutations of U.S. copyright law, and extensions to the period of copyright protection passed into legislation over the years. In the most recent extension, in 1998, where the U.S. sought to bring its period of protection into line with that of the EU (which is “life of the author plus 70 years”), copyright protection was aligned with the EU standard for works published after 1978 and set at 95 years from the date of publication for many earlier works, with January 1 of the 95th year being the trigger date. That means that works published in the US during 1926 fall into the US public domain this year.

In Canada, and in other countries (including the US with regard to more recent works), a work enters the public domain on the first of January of the year following a set period of time after the demise of the author. In Canada, that set period is 50 years, which explains why the Milne work entered the public domain in Canada on January 1, 2007, Milne having died in 1956.  That set period is about to change to bring the duration of copyright protection in Canada into line with that of most developed countries, including the US and EU, that is to say, life of the author plus 70 years. This was one of the copyright issues dealt with in the USMCA/CUSMA trade agreement. Judging by the thrust of its report, however, the CBC doesn’t seem to think this is a good idea.

For groups like the Center for the Study of the Public Domain at Duke University, the proclamation of “public domain day” on January 1 of each year is an attention getter. The public domain has been part of the structure of copyright law ever since the first copyright laws were introduced, although there are those who believe that since copyright is a property right it should not lapse, just as other property rights do not expire. From the perspective of a rights-holder, the impending lapse of copyright in a property could be compared to the clock running out on a property lease on which your house has been built. The closer to the expiration date, the less value there is in the property. However, historically copyright has always been a limited property right. The original copyright law, the 1710 Statute of Anne, provided for 14 years protection with a possible extension of an additional 14 years if the author was still living. This was mirrored by the 1790 US Copyright Act. Since then, the duration of protection has been extended for several good reasons, such as providing additional incentives to authors to create (an extended term of protection makes a work more valuable when the rights are licensed or assigned), to providing the incentive for corporate rights-holders to invest in updating and further developing a property.

Those who go to inordinate lengths to “celebrate” a work going into the public domain help feed the false narrative that a work under copyright is one that is “locked up” and unavailable to the public. The Center notes that works falling into the public domain are “free for all to copy, share, and build upon”. That’s true, but a work under copyright is also available for all these purposes through licensing, and/or fair dealing/fair use exceptions. The original Milne Winnie-the-Pooh book has been in the public domain in Canada now for 15 years and I am still waiting to see the explosion of “re-imagined” new works built on it based on the fact that it is no longer under copyright protection. I am not holding my breath for the sudden emergence of new Pooh-based works in the US either. And when authors create new works based on public domain material—guess what? These new works fall under copyright because authors rightly want to protect what they have created. The reality is that one of the main beneficiaries of works falling into the public domain are publishers who can then republish popular works without having to secure the rights. In theory, these works should be cheaper for the public but often they are just as expensive as similar works under copyright, the publisher having fattened its margins rather than pass on the savings to consumers.

We all know that one of the big reasons for so much interest in Pooh is because of the successful Disney animated films. Disney purchased the rights to Milne’s works and characters in 1961 from the Slesinger family who had obtained the rights from Milne in 1930. In 2001 it was reported that Disney bought out remaining royalty rights for £240 million of which £150 million went to the Royal Literary Fund. Since acquiring the rights, Disney has given a whole new life and personality to the Milne characters. (TTFN says Tigger). So, what does the fact that Milne’s 1926 book has entered the public domain (in the US) mean for the Walt Disney Company? Not much. First, only Milne’s first Pooh book is now in the US public domain, not his later 1928 work where Tigger appeared for the first time. But more important, Disney has copyright in the films that it has made, and the anthropomorphic characters that it created, and these rights will last for several more decades. In addition, it has protected some of its IP through trademark registrations as well. And what is wrong with that?

The Winnie the Pooh that most of us know today is the creation of Disney talent, inspired of course by Milne’s book. In the case of Milne’s characters, which were still under copyright, Disney purchased the rights, as it has done for some of its other films like Alice in Wonderland. In the case of many other Disney works, they were based on works or stories already in the public domain, such as Grimms Fairy Tales, published in 1812 (Sleeping Beauty, Cinderella), Hans Christian Anderson (The Little Mermaid) and others including Robin Hood and Pinocchio. While the Disney films and characters are based on the original books, no-one can deny that the Disney studio has imbued these stories and characters with new life and meaning, creating something quite different in the process. (Often the dark endings have been replaced by something more palatable to modern tastes, plus the characters themselves—like the Seven Dwarfs–have been given unforgettable personalities).

The investment in the creation of these works has been enormous, but for the most part so have the commercial benefits. In the process, Disney has brought delight and entertainment to generations of children and their parents. Without the return on investment from its earlier films, Disney would not have continued to be so creative and productive with its most recent generation of animated film releases. Yet somehow, in the eyes of public domain advocates, Disney is at fault for protecting its considerable investments in animated story-telling. Mickey Mouse is a favourite target. But let us not forget that copyright protection has enabled the business model that has led to a wealth of children’s entertainment enjoyed world-wide. Disney will rightly continue to protect its interpretation of Pooh and his friends for many years to come, and we will all benefit.

I could not end this blog without going back to Pooh to highlight his Canadian connection. Most readers in the UK and US will not be aware of this story, and it may be new to many in Canada as well, although it got coverage from the CBC on Winnie’s 100th anniversary a few years ago. Winnie was an orphaned bear cub from White River, Ontario who was purchased for $20 by Lt. Harry Colebourn of the Canadian Army Veterinary Corps as his troop train passed though the town on August 24, 1914, on the way to Quebec to embark for Britain with the Canadian Expeditionary Force. Colebourn named the bear Winnipeg (shortened to “Winnie”), in honour of the city where he had been living. Winnie went with the troops overseas and once in Britain, became the mascot of a Winnipeg cavalry regiment, the Fort Garry Horse. When the time came for the unit to be shipped to the fighting in France, Harry decided to donate Winnie to the London Zoo for the duration of the war. Whenever he was back on leave, he would pay the bear a visit. He had originally planned to take Winnie back to Canada after the war, to the Assiniboine Zoo in Winnipeg, but the very tame Winnie had become such a huge crowd pleaser and favourite of children in London that Colebourn made the donation permanent. Winnie’s sojourn at the London Zoo lasted until her death in 1934. (Yes, the real Winnie was a female bear). The full story is recounted in more detail here.

One of the children who regularly visited Winnie at the zoo was Milne’s son, Christopher Robin Milne, who like many children at the time probably played with the bear. Christopher Robin had a teddy bear, named Edward, but apparently soon dubbed it Winnie. When Milne began writing the story of the animals in the Hundred Acre Wood, the chief bear protagonist became Winnie the Pooh. And the rest, as they say, is history.

The town of White River has jumped on the Winnie bandwagon and each year holds a Winnie the Pooh festival. There is also a statue, and a park named after the famous bear. The City of Winnipeg also has a statue of Colebourn and Winnie in Assiniboine Park. A few years ago, Canada Post issued a series of four Winnie the Pooh stamps (see blog image above) in conjunction with the Walt Disney company. There was some controversy about this, but not over copyright issues. Canada Post and Disney collaborated fully on the production of the stamps, but some curmudgeonly Canadian nationalists grumbled about images of the Magic Kingdom appearing on a Canadian postage stamp!

Even though Canada can claim some tenuous connection to the famous bear, Pooh truly belongs to the world. The two Milne books on Pooh have been translated into many languages, even Latin. Winnie Ille Pu is the only book in Latin ever to make the New York Times bestseller list. The Latin translation was copyrighted in 1960 by the translator, Alexander Lenard, so the Center for the Study of the Public Domain will not be “celebrating” the release of this edition from the “bondage” of copyright for a while yet. It is interesting to note that the right to translate, or to authorize translations, is one of the bundle of rights conferred on the author or rights-holder by copyright law. Although the work is only now entering the public domain (in the US), that fact that it has been under copyright has not impeded the spread of the word of the “bear with little brain” in many languages around the world. As Pooh would say, “People say nothing is impossible, but I do nothing every day.”

© Hugh Stephens, 2022. All Rights Reserved.

Will the Content Tail Wag the Wireless Dog? The Rogers/Shaw Merger in Canada

Credit: Author

Nowadays it is not uncommon for major telecommunications companies (telcos) to provide infrastructure in the form of wireless, wireline and fibre optic, cable and satellite connectivity while also directly controlling some of the content distributed via this infrastructure. Think AT&T/Warner Media, NBC Comcast, Sky (owned by Comcast) and, in Canada, Bell Canada and Rogers Communications. In addition, even telcos that are not vertically integrated play a gatekeeper role for content providers (except for content providers that reach audiences through streaming) through their control of distribution platforms. Therefore when telcos merge, there can be significant implications for content providers.

This is the situation in Canada with the proposed acquisition by Rogers of Shaw Communications, a merger estimated at CAD$26 billion. For those not familiar with the Canadian telecommunication and broadcasting landscape, Rogers is a major provider of cable and internet services, primarily in Ontario and Atlantic Canada, and operates one of the four national wireless (mobile phone) networks. Rogers also owns a number of TV stations such as CITYtv in Toronto, the multicultural OMNI channel and sports channels. Shaw is a leading cable and satellite provider in addition to operating a wireless mobile phone division, based in Western Canada. If the merger is approved, Rogers would acquire Shaw’s cable networks in Western Canada, and its national mobile phone division known as Freedom Mobile plus a number of community broadcast channels. Shaw also used to own major content assets, such as the Global TV network, (one of two major private national TV networks in Canada) but spun them off to Corus Entertainment in 2016 although the Shaw family maintains a controlling interest in Corus (but as a separate entity).

Despite Shaw no longer controlling media assets, opponents of the merger–among whom are (to no-one’s surprise) Rogers’ main telco competitors Bell Canada, (itself a vertically integrated company that controls Canada’s other major private TV network, CTV, along with a number of specialty general interest and sports channels and a Pay Per View service called CraveTV), and Telus Corp—are claiming that if allowed to proceed, the combined Rogers/Shaw company would dominate the Canadian television distribution landscape, controlling 47 percent of English-language broadcast subscribers in Canada. According to testimony provided by opponents of the merger, the transaction will give Rogers a dominant position in negotiations for carriage with independent channels, leading to reduced revenues for Canadian content producers.

The real issue is really not about broadcasting, however. It is all about wireless. The Government of Canada has long pushed to have 4 major competing national wireless networks as a means of promoting more competition in the market. Critics are constantly pointing out that Canadian consumers pay some of the highest cell phone rates in the world, and the government wants to change this. What Canadian consumers enjoy right now could be characterized as access to 3 ½ networks; Bell, Telus, Rogers and Shaw’s Freedom Mobile as a weak fourth. Shaw bought the fourth carrier, then known as Wind Mobile, in 2016 after its previous owners found they did not have the deep pockets needed to compete with the “Big Three”. The government had done policy backflips in order to allow Wind to come into existence, making exceptions to the policy that mobile carriers had to be majority Canadian owned, with foreign ownership limited to 33 percent. When Shaw finally stepped in to takeover Wind (selling its media assets to finance the purchase), policy makers breathed a sigh of relief. However, even Shaw could not get the fourth network up to scale and with the need for further major investment to build out 5G technology, the folding of Freedom Mobile into one of its three big rivals began to look inevitable. Rogers got there first.

The combination of Shaw’s market predominance in the west with Rogers strong base in Ontario makes a lot of market sense, unless you happen to be a competitor or perhaps a consumer. Cell phone plans will not go down in price, but at least a combined Rogers/Shaw operation can compete with Bell and Telus in terms of rolling out 5G. The real issue with the merger is going to be whether it will advance or impede competition in the wireless market. That call will be made by the Competition Bureau, which has already called for submissions. (It is not the practice of the Bureau to hold public hearings.) However, unlike the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC)—the regulator–has recently completed public hearings to review the merger from the perspective of its implications for broadcasting.

While the CRTC is responsible for both broadcasting and telecommunications regulation, it has determined that it has no need to review the telecommunications aspects of the proposed deal. According to the CRTC;

“…the transaction also involves Shaw’s wireline telecommunications services (including home telephone and Internet), wireless telecommunications services (including wireless telephony operating under the brands Freedom Mobile and Shaw Mobile), and business automation and security. The present application does not include these services since the change in ownership of these elements does not require prior approval from the Commission. However, these elements will be subject to review by the Competition Bureau and Innovation, Science and Economic Development Canada.”

While Telus and Bell will certainly oppose the merger in their submissions to the Competition Bureau based on their opposition to consolidation of wireless and wireline phone and internet services, since the CRTC’s review was focused only on broadcasting, that is where they aimed their guns in the public hearings. While the merger entails the acquisition by Rogers of very few direct broadcast content assets (just a few Shaw community channels), the real impact will come when/if it takes over Shaw’s cable and satellite distribution. This will result in one less platform available to content providers (although perhaps the combined platform will have as many or more subscribers), a concern for smaller, independent channels.

Prime space on platforms is limited. Ideally, from the perspective of a small independent channel, the CRTC would give it “must carry” status, meaning in effect it will get a few cents from the platform for every sub whether or not it has much of an audience. Providing diversity of content is the main argument for such a practice. If not a “must carry” then an independent channel must negotiate for carriage with the platform and a Rogers/Shaw merger not only gives the new combined platform considerable market share and consequently power, but also means one less platform for the content providers to negotiate with. It is not surprising, therefore, that several CRTC interventions were made on behalf of independent content providers seeking guarantees of carriage. In particular ethnic media channels, such as TLN Media Group and the Ethnic Channels Group expressed concern that their content could be shut out from an enlarged Rogers platform.

Concern was also expressed by another Rogers competitor, Telus Corporation, about the impact of the merger on Global News, one of Canada’s three private news networks (Rogers’ CITYtv and Bell’s CTV being the others). Global, formerly owned by Shaw but now owned by Corus Entertainment (which as noted above is still controlled by the Shaw family but as a separate entity) currently receives $13 million annually, or about 10 percent of its budget, from Shaw. Shaw is required by the CRTC to contribute to Canadian programming (even though it does not directly own any commercial channels) and is permitted to direct part of its mandated contribution to local news production, which it does through its contribution to Global News. Rogers is proposing to instead redirect these funds to its own network, CITYtv, which has a very limited presence in western Canada. So why would Telus, a major telco but one which owns no media assets and has no connection with Global News, suddenly be so concerned about a network ultimately controlled by the Shaw family, one of its biggest rivals? The answer is that anything that Telus or Bell can do to put a spanner into the works of a Rogers/Shaw merger is worth raising as an issue.

In response to the various criticisms, Rogers agreed to increase the number of independent channels it will carry from 40 to 45, but rejected demands for revenue guarantees. As for being required to continue to fund Global, a Rogers spokesperson said it was hard to “get our head around” the idea of funding a rival network to its own CITYtv. Eventually, sometime in the new year, the CRTC will issue its report. It will likely consider imposing some requirements on Rogers to continue to ensure the vitality of Canadian specialty channels, but these will just be road-bumps for Rogers. The CRTC could in theory recommend that the merger not be permitted to proceed because of the extent of control it will give Rogers over English language broadcasting content distribution in Canada, but this would truly be a case of the content dog wagging the wireless dog.

The real review will be the one conducted by the Competition Bureau. The Bureau’s examination scope is wide, covering mobile wireless services, internet service, fibre transport service, supply of television programming and broadcasting distribution services. However, it is expected to focus primarily on wireless and internet issues. The Bureau could possibly require that Rogers divest Shaw’s Freedom Mobile and not absorb it into Rogers own mobile platform. That seems unlikely as it raises the question of who would buy it. A forced spinoff could cause the entire deal to fall apart and besides, there aren’t many potential suitors for the struggling fourth mobile network. Despite years of government effort, Canada’s wireless market will likely continue to be dominated by the Big Three of Bell, Telus and Rogers, and Canadians will probably continue to complain about the cost of wireless plans. One potential solution is for the CRTC to force the Big Three to open their networks to smaller operators who “ride on top” of their networks. These independents are known as MVNO’s (Mobile Virtual Network Operators). Not surprisingly the big telcos are very resistant to giving these competitors an opening.

In the final analysis, wireless concentration is the major issue that will be addressed in this merger. Despite the not insignificant implications for broadcasting, the CRTC’s review late last year was, frankly, a side show to the main Competition Bureau event.

© Hugh Stephens 2022. All Rights Reserved.

What Lies Ahead for Canada in 2022 from a Copyright and Content Perspective?

As I noted in my year-end wrap up a couple of weeks ago, some of the copyright and content related issues that were under discussion in Canada in 2021 will likely move forward in a more aggressive way this year. The federal election last fall put on hold a number of copyright-related issues that were in process. Parliament lost several months of work, plus all pending legislation died at the time of the election call and needs to be re-introduced into the new (44th) Parliament. So far, the current Parliament has met for just a few weeks, sitting from November 22 to December 17, 2021, primarily to outline new legislative priorities. Mandate letters for ministers were released on December 16, and among the issues tasked to Pablo Rodriguez, the Minister for Canadian Heritage, are four big files concerning content industries. Rodriguez is instructed to;

  1. “Work with the Minister of Innovation, Science and Industry to amend the Copyright Act to further protect artists, creators and copyright holders, including to allow resale rights for artists.”
  2. “Reintroduce legislation to reform the Broadcasting Act to ensure foreign web giants contribute to the creation and promotion of Canadian stories and music.”
  3. “Swiftly introduce legislation to require digital platforms that generate revenues from the publication of news content to share a portion of their revenues with Canadian news outlets to level the playing field between global platforms and Canadian outlets. This legislation should be modelled on the Australian approach and introduced in early 2022.”
  4. “Continue efforts with the Minister of Justice and Attorney General of Canada to develop and introduce legislation as soon as possible to combat serious forms of harmful online content to protect Canadians and hold social media platforms and other online services accountable for the content they host. This legislation should be reflective of the feedback received during the recent consultations.”

That is a lot to have on one’s plate and one cannot help but wonder how much of this will actually get done. These issues have all been around for some time, and most have already been the subject of online consultation and in some cases, Parliamentary review through committee. Let’s look at each in turn.

Copyright Act Amendments

On the first item, a Copyright Act update is overdue. In theory the Act is supposed to be reviewed every five years. The last significant legislative update was in 2012. In 2019 two Parliamentary committees reviewed the Act and issued somewhat conflicting recommendations, but to date no changes have been introduced. Last year there were several public consultation documents issued regarding copyright, the first on implementation of Canada’s commitment under the USMCA/CUSMA to extend the term of copyright protection, a second discussing a modern copyright framework for online intermediaries and the third on copyright and artificial intelligence and the Internet of Things.

The copyright term extension question is the most pressing, as Canada is required to implement the twenty-year extension agreed to in the USMCA trade agreement no later than December 31, 2022. The consultation paper addressed a number of implementation issues, such as orphan and out of commerce works, while also seeming to dismiss proposals for the institution of an additional registration requirement in order to access the longer period of protection as advocated by some opponents of extending copyright duration in Canada. The implementation of Canada’s USMCA/CUSMA obligation, hopefully done in a straightforward way without the imposition of additional registration barriers, could be rolled into a broader copyright reform bill, or could be bundled into some other omnibus legislation.

The second consultation paper dealt with issues such as safe harbours for internet intermediaries and possible regulations regarding site-blocking of pirate websites, a measure already upheld on appeal by the courts in Canada. The AI paper raises questions such as ownership of works created by AI and the addition of possible additional copyright exceptions to address data mining, among other topics.

Another copyright issue that needs to be addressed, in addition to the introduction of an Artists Resale Right mentioned in the mandate letter, is the question of mandatory tariffs to fix the disastrous decision by the Supreme Court in July 2021 upholding the Federal Court of Appeal’s (FCA) ruling that mandatory tariffs covering unlicensed use of copyrighted content are not reciprocally binding on rights-holders and users alike. The FCA found that for users they are only optional, thus undermining one of the pillars of Canada’s collective licensing regime. Parliament needs to fix this. The wording in the mandate letter instructing the minister to amend the Copyright Act “to further protect artists, creators and copyright holders” offers some hope. The pendulum has swung so far in favour of unlicensed uses that some rebalancing is badly needed.

Broadcasting Act “Reforms”

The next item on Mr. Rodriguez’s “to do” list is reintroduction of “reforms” to the Broadcasting Act, known as Bill C-10 in the last Parliament. This is a hot potato for a couple of reasons. In the last Parliamentary session, the legislation passed in the House but failed to get through the Senate before the election was called. In the parlance of the mandate letter, it targets “foreign web giants” to ensure that they “contribute” to the production of “Canadian stories and music”. Put more bluntly, it is designed to extract funding from foreign players like Netflix, Amazon Prime, Disney Plus, Spotify and other online streaming platforms to support Canadian production. Not production in Canada, of which there is plenty, some of it supported by these same platforms, but “Canadian production”.

The question of what qualifies as “Canadian production” is, to say the least, arcane. Currently, a production using a Canadian story with a Canadian director and Canadian actors does not qualify as Canadian content if the financing is not Canadian controlled (i.e. it is not produced by a Canadian-owned production company) and, under the draft legislation, if the copyright of the production is not held by a Canadian. What is the goal?  Is it to tell more Canadian stories in Canadian settings to Canadian and global audiences or is it to ensure that more money is put into the hands of “qualified” (i.e. Canadian) producers by extracting from streaming services a “tax” similar to that which is imposed on conventional broadcasters? Those broadcasters must, as a condition of licence, spend at least 30 percent of their aggregate revenue in the previous year on Canadian content programming. While full foreign funding automatically disqualifies a production from meeting Canadian content requirements, there seem to be no qualms about requiring foreign producers to pay into a fund that would then be used to finance Canadian production. In effect the foreign funds are laundered through a Canadian production house. Finding the right balance to promote the creation of Canadian content (and sensibly defining what that is) while incentivizing the telling and distribution of Canadian stories by international production houses is a major challenge.

The other controversial aspect of the previous Bill C-10 was its application to platforms like YouTube, Twitter, Facebook and Instagram through inclusion of user-generated content (UGC) in “discoverability” requirements imposed on the platforms. To have omitted UGC would have created a massive loophole. YouTube, for example, is one of the primary music and video distribution platforms in the country. There is no reason to grant UGC an exemption from the application of law and regulation, as long as individual expression is subject to the normal protections afforded by the courts and the Charter. Critics accused the government of empowering the regulator, the CRTC, to censor content posted to social media by individual Canadians. This was a canard and a misunderstanding of the intent of the legislation since the obligations would have applied only to the platforms and would have had no impact on individual freedom of expression. We will have to wait to see whether and in what form the UGC issue is addressed in the 2022 version of the legislation.

Payment for Unlicensed Use of News Content by Internet Platforms

Rodriguez’s instruction on this issue could not be clearer. “Swiftly introduce legislation” to require payment by digital platforms to Canadian news providers when the platforms generate revenue from that content, “modelled on the Australian approach”. This is clearly an idea whose time has come. One option the government had been considering was following the EU model of granting news publishers an ancillary copyright in their content, but it has now opted for the successful Australian model of using competition law to deal with the issue of free-riding by the platforms. With the Australians having taken on Google and Facebook and brought them to heel, the task should be considerably easier for the Canadian government. (The US government is also studying the issue.) Just the threat of legislation has inspired Google to reach content deals with many Canadian news providers. This legislation will provide the needed legal backstop.

Online Harms Legislation

This will be a big issue in 2022. There is no question that social media platforms and online services (Facebook, Instagram, Twitter, YouTube, TikTok, and Pornhub are specifically identified) need to be held to greater account for the socially harmful content posted by users that they knowingly host (and from which they often profit). The trick is to define “harms” in such a way that is clear and legally sustainable. This is easier to do for some harms than for others. In this regard, the offline world can provide precedents. A consultation paper was released in the fall of 2021 outlining the five categories of harms that would be regulated; terrorist content; content that incites violence; hate speech; non-consensual sharing of intimate images; and child sexual exploitation content.

The consultation paper proposes that a Digital Safety Commission be established to regulate platforms, with strong enforcement powers. Platforms would be required to establish reasonable monitoring mechanisms, assess flagged content, and remove harmful content within 24 hours, subject to appeal. They would also be required to establish a flagging and appeal process. Legislation would require greater transparency from platforms and impose an obligation to notify law enforcement in the case of “imminent serious harm” or potential criminal conduct. The paper elicited a number of comments, some negative, many of them from “internet freedom” advocates traditionally opposed to any meaningful regulation of the internet. Objections range from the requirement for a takedown within 24 hours to the obligation to share information with law enforcement to opposition to site-blocking powers. While one must be careful to target only behaviour and content that is truly harmful and illegal, it is also time to increase the pressure on platforms to exercise greater responsibility.

A recent, egregious example of the kind of harmful material found on the internet was this report in the New York Times about a “how to” suicide website. Site-blocking for online harms would be one effective way to deal with such outrageous content, given that the search engines refuse to delist the website. Those who oppose Canada extending its regulatory reach to international internet platforms, like University of Ottawa law professor Michael Geist, cite Article 19.17 of the USMCA/CUSMA as an obstacle. Geist claims that Canada agreed to provisions in the USMCA/CUSMA that “look very similar” to Section 230 of the 1996 US Consumer Decency Act and makes the dubious claim that if Canada enacts online harms legislation that creates new liability for the platforms, the US might take retaliatory trade action.  Section 230 is the much-criticized US legislation that absolves internet platforms of any civil liability for user content on their platforms. It has been much abused over the years by the platforms who have used it as a shield to avoid taking action to moderate or remove harmful content.

Dr. Geist’s conclusion is inaccurate for several reasons. First, Article 19.17 may contain some phrases that are similar to parts of Section 230, but it is quite different in terms of its effect. As I wrote in an earlier blog posting (here), it imposes no obligations on Canada to enact any laws that would entrench Section 230 immunities in Canadian law because Canada protected its ability to implement 19.17 through its “laws, regulations, or application of existing legal doctrines as applied through judicial decisions”. Second, Article 19.17 is subject to a “public morals and public order” exception (embedded in Annex 19-A), an exception that the US has itself used in the past (Antigua online gambling case). If tackling online harms such as terrorism, child sexual exploitation, incitement to violence etc. doesn’t fall within the ambit of protecting public morals or maintaining public order, then I don’t know what does. Third, Section 230 and indeed Article 19.17 deal only with civil liability. Article 19.17 has an additional provision, subsection 4 (c) which states that;

Nothing in this Article shall…be construed to prevent..(i) a Party from enforcing any criminal law; or (ii) a supplier or user of an interactive computer service from complying with a specific, lawful order of a law enforcement authority

The online harms legislation in Canada will involve the Criminal Code. Raising USMCA Section 19.17 as a potential obstacle to introducing online harms legislation in order to hold the platforms more accountable for harmful content they allow to be distributed to users is just one more red herring dangled by opponents of the legislation.

The online harms bill is to be introduced “as soon as possible” while reflecting feedback received during the recent consultation. That suggests that it may not have as high a priority as some of the other items on Minister Rodriguez’s task list.  We shall see.

Other developments

In addition to the four “to do” items included in the Heritage Minister’s mandate letter, there are some other issues in the content field on the 2022 agenda, the primary one being the proposed acquisition of Shaw Communications by Rogers, a subject I plan to write about in a subsequent blog posting. This merger has both significant content and telecommunications impacts.

 It promises to be a busy year as Justin Trudeau’s minority government tries to steer several key pieces of legislation through a Parliament where it will require the support of at least one major opposition party to get anything done. The stakes are high, particularly for rights-holders and copyright industries, and there are hopes–and expectations—that the new 44th Parliament will achieve more than the unfinished business of the last one.  

© Hugh Stephens 2022. All Rights Reserved.

Some Copyright Highlights in 2021-Around the World and in Canada

It seems as if it was only a few weeks ago that I was writing a similar summary for 2020, the “annus horribilis” when COVID first hit us, but in fact it was 51 weeks ago yet many of the same pandemic and copyright-related issues that I wrote about last year are still with us, albeit in somewhat modified form.  This time last year, creative industries were just starting to come out of a series of lockdowns that decimated many genres, especially those involving live performances. Others were making the transition to “virtual” performances and delivering content online. The early rollout of vaccinations gave hope that 2021 would be a better year, one where we turned the corner on the pandemic. That seemed to be generally the case until the Omicron variant reared its head in late November and now, at the time of writing, we seem to be going backwards again.

There is no doubt that 2021 was a challenging year for creators, although there were some bright spots. At the end of December 2020, in the United States the CASE Act became law. This legislation finally provides a simple means for individual rights-holders to enforce their rights in the US without necessarily resorting to litigation. A three person tribunal, the Copyright Claims Board (CCB), will be established within the US Copyright Office to deal with small copyright claims, potentially avoiding costly and lengthy litigation, assuming both parties agree. That’s the good news. The not-so-good news is that establishment of the CCB has been delayed beyond the expected date of implementation, December of this year, to 2022, in order to ensure that all runs smoothly. Still, a few months delay for this alternative dispute resolution forum for small copyright claims will be worth the wait.

Online Platforms vs News Media Providers

Australia

One of the big stories in 2021, echoing developments a year earlier, was the issue of payment to news providers for use of their content (snippets, headlines and small excerpts) by online news aggregators and social media platforms. While the issue is still unfolding in several countries, there were significant developments on this file in 2021 in both France and Australia, despite both Google and Facebook fighting long and hard against any obligation to license content from news providers. In Australia in particular, this pushback took the form of attempts to mobilize Australian public support against the Australian government, forcing it to back away from legislation that would give the competition regulator, the Australian Competition and Consumer Commission (ACCC), power to enforce new regulations under the News Media Bargaining Code. This code requires Google and Facebook (and only them because of their market dominance) to license Australian news content that they use in their search or social media offerings. While the threat of legislation finally got Google to start negotiations with some Australian media providers, its dominant position made it difficult for news providers to negotiate reasonable terms. The Australian legislation, therefore, threatened to impose “final offer” arbitration.

Google went ballistic, but its pressure campaign failed spectacularly. Likewise, its attempt to enlist the support of the US government flopped when Microsoft stepped in and stated it would be happy to comply with Australia’s terms. In the end, determined government action resulted in an outcome that both the Australian government, Australian media and apparently Google can live with. Facebook tried its own pressure tactics, blocking all Australian news on its newsfeed in Australia. The result, which I detailed in my blog posting (“Facebook in Australia: READY, FIRE, AIM”), was a classic climb-down. Facebook retreated, restored newsfeeds, and entered into talks with the Australian government. Miraculously, they were also suddenly able to strike content deals with Australian media.

France

Likewise in France, strong government action to enforce the new neighbouring right for press publishers established by Article 15 of the EU Copyright Directive, has achieved what earlier proved impossible in both Spain and Germany. In those countries, Google either shut down or threatened to shut down Google News and kick off the platform any news providers who objected to Google’s unlicensed use of their content. In France, the Competition Bureau stepped in, fining Google €500 million for failing to bargain with news providers “in good faith”. With this “encouragement”, Google has managed to reach content deals with many French publishers, the most recent being with press agency Agence France Press (AFP) just last month.

Canada

These content deals provide an important demonstration effect for other countries in their dealings with the dominant platforms. Canada has announced that it intends to bring in legislation to deal with the issue. The mandate letter for the new Minister of Canadian Heritage, dated December 16,  instructs him to,

“Swiftly introduce legislation to require digital platforms that generate revenues from the publication of news content to share a portion of their revenues with Canadian news outlets to level the playing field between global platforms and Canadian outlets. This legislation should be modelled on the Australian approach and introduced in early 2022.”

This promise of action is at least partly in response to an active campaign launched by Canada’s news media advocacy organization, News Media Canada (NMC) this past June. NMC published an “Open Letter” to Prime Minister Justin Trudeau in many newspapers across the country urging action against the “predatory monopoly practices” of Google and Facebook.

United States

In the US, the Copyright Office has launched a study to determine whether additional copyright protections (or other measures) are needed to protect news publishers in dealing with the news aggregation issue. Earlier this month, it held a public roundtable to further air the issues. There is also legislation currently before Congress, the Journalism Competition and Preservation Act, that would provide a limited anti-trust exemption to allow US media companies to bargain collectively with the platforms. Some action seems inevitable, but whether it will occur in 2022 remains to be seen.

Access Copyright vs York University

One copyright issue that came to a head in in Canada in 2021 was the ongoing and seemingly never-ending legal dispute between the author/publisher copyright collective, Access Copyright, and York University (Toronto), with York standing in as a proxy for post-secondary institutions outside Quebec. This started out a number of years ago when York declined to renew its licence with Access Copyright for reproducing (copying into course-packs) educational materials, arguing that its use constituted fair dealing. The main legal issue was whether the “interim tariff” established by the Copyright Board of Canada for use of materials in Access Copyright’s repertoire applied to York, in cases where York’s use was not a fair dealing. In 2017, the Federal Court ruled ruled that York was required to pay the interim tariff (i.e. regulated license fee), and dismissed York’s claim of fair dealing. York appealed and last year, the 2017 decision was overturned by the Federal Court of Appeal (FCA). The FCA found that the tariff certified by the Copyright Board was not mandatory insofar as content users like York were concerned. Having found that the tariff was not mandatory, it did not rule on the fair dealing question since York’s fair dealing defence against payment of the tariff was no longer relevant.

Both parties appealed to the Supreme Court. The bombshell dropped on July 30, 2021. The Supreme Court of Canada (SCC) upheld the Appeal Court’s decision that the “mandatory” tariffs set by the Copyright Board of Canada are optional with respect to users of content covered by the tariffs. While not ruling on whether York’s unlicensed use was fair (since with the dismissal of the mandatory tariff question, there was no longer a legal dispute between Access Copyright and York), Justice Abella nonetheless launched into an extensive discourse as to whether the Federal Court in its initial finding of unfairness had taken into account the user’s rights of individual students. Despite the unequivocal finding against York in 2017 that their Guidelines had materially harmed the Canadian publishing market, the interpretive musings by the SCC add significant uncertainty to the issue of what is a fair dealing when post-secondary institutions engage in widespread unlicensed copying of educational materials for instructional purposes. 

More damaging that this, however, is the dismissal of Access Copyright’s appeal on mandatory tariffs. The SCC decision upends the basis for collective licensing in the publishing field in Canada, something that had existed for almost 30 years on the premise that the licence fees established by the Copyright Board applied to all users of a repertoire covered by the tariff. Canadian publishers are already facing dire financial challenges owing to the proliferation of uncompensated copying enabled by the addition of “education” as a fair dealing exception in the Copyright Act revisions of 2012. Now the fundamentals of the collective licensing system have been kicked out from under them. The only solution would appear to be an amendment to the Copyright Act, given that Parliament clearly intended to create a collective licensing scheme when it amended and updated copyright legislation in the late 1980s. The fact that it did so in such a way that was open to legal challenge (the FCA and the SCC reached their decision on the non-binding nature of “mandatory” tariffs by examining their origins in the 1930s) suggests that clarity of intent is needed. Review of the Copyright Act is overdue so perhaps this loophole will be closed in future amendments

Copyright Term Extension in Canada

Other amendments to the Act will be required to give effect to Canada’s commitment to extend its term of copyright protection by an additional twenty years, as per Article 20.62 of the USMCA/CUSMA. In February of this year the government launched a public consultation over how the obligation is to be implemented, which must be in effect by December 31, 2022. The consultation focused primarily on how to handle orphan and out-of-commerce works, although copyright opponents have been trying to institute a copyright registration process (an unnecessary bureaucratic obstacle and one that potentially conflicts with Canada’s Berne Convention obligations) as a condition of accessing the extra twenty years of protection. I discussed the consultation process here.

Very recently a new wrinkle has appeared regarding term extension in Canada. You would not think that copyright and electric vehicles have much in common, but when it comes to international trade, everything is linked. The Canadian government is very concerned about a proposal by the Biden Administration to offer subsidies of up to $12,500 per unit to American consumers to purchase electric vehicles. Canada is not against electric vehicles. The problem is that, as currently written in Biden’s gigantic “Build Back Better” bill, the subsidies apply only if the vehicle is manufactured in the US. Canada’s position is that this violates the provisions of the USMCA that established a North American market for automobiles, is an illegal subsidy that will impose a de facto 30 percent tariff on Canadian-made vehicles and will destroy decades of automotive industry integration between the two countries. In a worst-case scenario, if these large subsidies go into effect and apply only to US made vehicles, it could ultimately mean the end of automotive manufacturing in Canada. In an attempt to get the attention of US lawmakers before the Build Back Better bill is passed, Canada has threatened retaliation in areas that could impact US jobs, including suspending some commitments made under the USMCA. One of these is copyright term extension.

This, along with other areas of retaliation, might be sufficient to get the attention of enough US legislators to amend the legislation in this one area, especially if Canada agrees to provide a similar subsidy to Canadians for the purchase of North American manufactured electric vehicles. At the moment it is unclear what will happen. The Biden Administration looks as if it will not be able to pass the bill because of the opposition of Democratic Senator Joe Manchin from West Virginia. Manchin is an unlikely ally for Canada, but his opposition may buy enough time to be able to resolve the electric vehicle subsidy issue, thus allowing the important reform of bringing Canadian and US terms of copyright protection into alignment to proceed.

Canadian Election Brings Delays

There were other issues on the copyright front in Canada that did not get dealt with owing to the pointless election called by Justin Trudeau’s Liberals in August. When the final results were tabulated on September 20, the Liberal minority government was in almost exactly the same place as it had been in the previous Parliament. The impact on copyright and other legislation was the cancellation of all legislation in the pipeline at the time of the election call. It all needs to be reintroduced in the new Parliament, bringing in new ministers, new priorities, and inevitable delays. I will take a closer look at what is in store in 2022 in a subsequent blog posting.

Other Developments

There were many other copyright issues that I wrote about this year, and I can’t possibly summarize them all. Here are a couple. The Philippines joined the broad international consensus that blocking of offshore pirate websites is an effective way to combat piracy, and the appeal against Canada’s first site-blocking order was dismissed. Singapore updated its copyright legislation, bringing in some improvements. The changes took effect in November.

Looking Ahead

There is lots on the agenda in the coming year, in Canada and elsewhere. Stay tuned.

© Hugh Stephens 2021. All Rights Reserved.

How Can News Publishers Best Protect Their Content? The US Copyright Office Explores Options

Source: http://www.shutterstock.com

This past October, the US Copyright Office (USCO) announced it would be undertaking “a public study to evaluate the effectiveness of current copyright protections for publishers in the United States, with a focus on press publishers.” The study, announced in the Federal Register, included a request for written submissions along with inviting stakeholders to participate in a virtual roundtable to be organized by the USCO. That roundtable was held last week, on December 9.  The inquiry was triggered by a Congressional request in response to ongoing financial challenges facing the news industry (over the past decade, a decline in the number of newsroom employees by 40 percent and the closing of one in five newspapers in the US), while at the same time online news aggregators have come to dominate the market for digital news consumers while controlling the digital ad market.

One of the concerns of news publishers is that, for many readers, the aggregators such as Google News provide a substitute for the publisher’s websites. Consumers can get sufficient information to satisfy their needs from the high-level excerpts posted by the aggregators without clicking through to the original source material. This creates a situation whereby those who invest the time, effort, and money to produce the news–not just reporting on facts but the storytelling that requires knowledge, expression and editorial decisions–derive only limited benefit while the lion’s share of audience attention, and thus ad revenue, goes to the aggregators. In effect, these platforms get a free ride. (The aggregators don’t view it that way, claiming they are providing a service to news providers by making their content more discoverable and that content providers can opt out of aggregation at any time).

While noting that current US copyright law provides several means by which news publications can protect their content, the USCO “Notice of Inquiry” reviews developments outside the United States with respect to the problem of free-riding by news aggregators. These actions fall into two categories. The first is ancillary copyright where news publishers have been given additional “neighbouring” rights, such as the exclusive right to make their work available to the public for commercial purposes. This is in addition to whatever other rights publishers may already hold under copyright such as rights to articles written by journalists, or photographs, where rights have been assigned. The press publication right is intended to provide the publishers with additional leverage in their negotiations with online platforms over the use of news content.  The poster child for ancillary rights is Article 15 of the EU Copyright Directive that provides news publishers with the right to authorize (or prohibit) reproduction of their content for two years following the date of publication. There are exceptions built into Article 15 such as non-commercial use, linking without reproduction, and limits on substantiality; individual words or very short extracts are exempt. EU member states are required to implement Article 15 in national law by mid-2022.

France was the first EU country to do so, and it is not coincidental that it is in France where a major struggle took place between news producers and Google. France backed up the provision of ancillary rights to news publishers with the application of competition law. Google was required to negotiate “in good faith” with French news providers and despite reaching agreement in January 2021 with some French publishers to pay for content, it was fined €500 million for its negotiating tactics. (Google is appealing). Recently it signed a five year deal with Agence France Press (AFP), one of the holdouts from the January deal.

The second international development noted by the US Copyright Office is the use of competition law to require negotiations between the dominant platforms and news producers. Australia is the most prominent example of a successful outcome using this approach. Both Google and Facebook dragged their feet and played chicken with the Australian competition regulator, the Australian Competition and Consumer Commission (ACCC), before finally beating a strategic retreat and reaching content deals with the majority of Australian media providers, both small and large. (For more on this saga, see here, here and here). Australia’s approach is not copyright based but it has been effective. Canada has stated that it will soon introduce legislation along the lines of the Australian model to deal with the news media/digital platform imbalance.

The USCO roundtable on December 9 brought together the “usual suspects” (aka key stakeholders) to explore the issues outlined in the Notice of Inquiry and to respond to questions posed by Copyright Office moderators. Among those represented were the News Media Alliance, Google, the Copyright Alliance, Public Knowledge, National Writers Union, representatives of the computer and telecommunications industry, academics, library representatives and legal experts. The roundtable examined a number of questions, including whether news content “scraped” by the platforms, such as headlines and snippets, was protectable under US copyright law, and if so, how fair use would apply.

Google took the position that news snippets are excluded from copyright protection, based on the “words and short phrases” doctrine spelled out in an interpretive bulletin issued by the USCO. However, Columbia law professor Jane C. Ginsburg, a noted copyright expert, demurred, arguing that the doctrine hinges on originality, not brevity. She pointed out that not only are photos, which are often included with news snippets, protected but that headlines can also be protected because of their originality. Examples were given of the same news story headlined in a number of different ways, using creativity and originality to catch reader attention. As to whether use of such snippets constituted fair use, there was considerable disagreement over how the four fair use factors would apply to such content. For those who don’t follow US copyright law, the four factors used in judging whether or not a use is fair are; the purpose and character of the use; the nature of the copyrighted work; the amount (substantiality) of the portion used; and the effect of the use on the potential market for, or value of, the work. With respect to the third factor (substantiality), both quantity and quality are considerations to take into account. As for the question of impact on the market, News Media Alliance argued there was substantial revenue diversion.

Considering that a substantial element of the USCO’s study is to examine the potential applicability of Europe’s ancillary copyright regime to the US, there was surprisingly little appetite for such a solution even from the principal potential beneficiary, the news content industry as represented by the News Media Alliance (NMA). In response to questions as to how the new press publishers right is working in Europe, the NMA’s response was that it is too early to tell. That said, it would not object if the right were extended to US content producers in Europe. At present, the new benefit is applicable only on a reciprocal basis and as a result, EU member states will not extend the press publication right to US content providers unless the US enacts a similar law. One solution proposed by the NMA is for the US to try to bring the right under national treatment if and when a US-EU trade agreement is ever negotiated. This would give US content providers the benefit of the European law even if the US failed to offer a similar provision. Any negotiations are a long way off, however.

Instead of pushing for additional ancillary rights, NMA is advocating primarily for greater ability to enforce existing copyright law as well as for an anti-trust exemption that would allow newspaper owners to be able to bargain collectively with big online platforms like Google. This exemption is currently before Congress in the form of draft legislation, the Journalism Competition and Preservation Act. If news industry to platform negotiations were to take place, they could involve not just payment for use of content but also access to audience data relevant to advertising, another concern of the publishers. With respect to existing copyright law, one area that could be improved for news publishers would be easier registration of “dynamic webpages”. Dynamic pages are the norm for news providers today, as news is continuously updated throughout the news cycle. While registration is not required to establish copyright, in the US registration is required for US citizens if they wish to bring legal action for infringement of a US work, thus difficulty in registering impedes enforcement action.

Regarding Google’s argument that news providers can opt-out of its content aggregation services, NMA’s position is that its members have neither authorized nor consented to the scraping of content by Google but opting-out is not really a choice because of the dominance of the platform. The ability to opt-out is a “Hobson’s choice”, an illusory rather than an actual choice. Either the content is buried and not found by readers, or else it is found by readers on an aggregation site but little or no benefit accrues to the content provider.

This is only a partial summation of the arguments pro and con but gives a flavour of the debate. The challenge facing news providers is complex, and likely no single remedy will suffice. There is also a wide disparity of views with–generally speaking–the internet platforms and tech companies on one side and content providers and the copyright community on the other, with other players taking various positions along the spectrum. All seem to agree that a healthy news and journalistic sector is vital to the preservation of democracy; debate centres around the source of the problems facing journalism and the solutions.

What happens next? Another round of written submissions to the USCO has been called for, due in early January 2022. After that, presumably the Office will report back to Congress with its conclusions. While the solution is not clear, judging by the submissions received so far and the discussion at the roundtable, it will likely not include establishment of a new ancillary copyright for press publishers in the US. What is clear, however, is that there are major challenges when it comes to the continued economic sustainability of professionally created and curated news sources, and the unlicensed use of news content by online aggregators is a significant part of that problem. Solutions are required. Given the ongoing efforts to come to grips with this issue in a number of countries, (and the ability of the quasi-monopoly platforms to comply when they find they have to), I find it hard to believe that the US will not be able to find a satisfactory way to ensure that news providers are dealt with fairly when it comes to the use of their content by dominant internet platform aggregators.

© Hugh Stephens 2021. All Rights Reserved

Books and Supply Chains: A Christmas Challenge for Authors, Publishers and Booksellers

Source: Canadian Coast Guard

On October 22, the Malta registered giant container ship Zim Kingston, enroute from South Korea to Vancouver, lost 109 containers overboard in heavy seas off the coast of Vancouver Island. Although four containers washed ashore further north up the coast, most are assumed to have sunk. Two days later a fire broke out aboard the ship. The fire was eventually contained, with water and smoke damage to some of the remaining 1900 containers. The ship was escorted to an anchorage off the Port of Victoria, where it remained for several weeks pending a decision as to when and where to offload it. It has now been decided that it will be moved to the nearby port of Nanaimo for unloading, inspection, disposal and triage. While the containers that went overboard were known to have contained everything from fridges to stuffed toys, no one has been able to do an inventory of the contents of the containers that remain on board to see what they contain and what condition the contents are in.

Somewhere on that ship, if they did not go overboard, are 15,000 books that Orca Book Publishers of Victoria were expecting from the printers in China. The books, which Orca reports were new stock of five bestselling nonfiction titles for children, were to fill pre-holiday orders for bookstores and schools, and were expected to be on the shelf for Christmas sales. Four of the books were written by local authors. Orca is an independently owned Canadian book publisher with “1200 active titles in print and digital formats and 95 new titles each year”. It states that it prides itself on publishing Canadian authors.

Why was Orca having Canadian authored books printed in China? Printing books is expensive and in a trade with low margins, saving on printing costs is a key consideration. The savings from printing in countries like China are so great, in terms of cost of labour and materials, that even the expense of shipping does not negate the cost savings. Most publishers in Canada, the US and elsewhere outsource their printing, and much of this is done in China or Korea. This leads to situations like the one faced by Orca Books when supply chains are disrupted. Orca’s experience with the Zim Kingston is rare; most supply chain blockages are not a result of containers going into the drink, catching on fire, or the ship having to wait while it is declared safe for unloading. Yet supply chain issues abound. As reported in the Canadian Press, quoting Kate Edwards, Executive Director of the Association of Canadian Publishers;

“The trouble starts with a worldwide paper shortage, which alongside surging demand for adhesives and ink, has made the book production process more expensive and more complicated…The scarcity of raw materials has, in turn, jammed up book printers…leaving publishers jockeying for press time at premium prices…(T)he obstacles stack up further on the distribution side as shortages of workers, shipping containers and storage space cause delivery delays.”

In an industry where a sizeable share of book purchases is gift-related, missing the holiday season can be catastrophic for booksellers, resulting not just in disappointed customers (who may not return, giving up on their local bookshop to buy on Amazon) but also in a surfeit of books after the holiday season when they have lost their market appeal. I am not in the book trade, but I can imagine that it is a tricky proposition to ensure that books that suddenly gain prominence through winning awards such as the Man Booker in the UK, National Book Award in the US, Governor-General’s Literary Awards in Canada and similar awards in other countries are printed in sufficient quantity, distributed and shelf ready for the holiday season. For some reason these prizes are normally all awarded in November, leading to the Christmas scramble. Supply chain issues arising from a shortage of workers, and shipping and port holdups arising in part from COVID, only exacerbate the problem. At the end of the day, some reshoring of book printing may solve part of the problem, but closer access to local printers has to be balanced against increased costs. Supply issues are just one more problem faced by the industry, and by those who provide the industry with the content that makes it all happen, authors.

It’s a tough time to be an author. A couple of years ago, The Writers’ Union of Canada released the results of a survey showing that Canadian writers made on average $12,789 annually, about a quarter of the national average income. Figures for the US and UK are similar. Changes in technology offer some hope, especially for independent authors seeking new audiences, but any benefit is arguably more than offset by rampant online piracy of titles. And it’s not just guerrilla piracy that is the problem. Organized, widespread, “legitimized” piracy like the Controlled Digital Lending program of the Internet Archive represents a fundamental challenge to the digital licensing models of the publishing industry. It is not surprising that CDL is the subject of a major lawsuit brought in the US by several large international publishers against the Internet Archive.

In Canada, the business model for educational publishing has had the rug pulled out from under it by the recent Supreme Court of Canada decision in the cross appeal of the Access Copyright v York University case. The Court ruled that the basis of collective licensing, the mandatory tariffs certified by the Copyright Board of Canada, were not reciprocally binding on rights-holders and users. Users could decide to opt-out and decline to pay the tariff to the collective, leaving litigation by individual rights-holders as the only recourse. This presents a further challenge to writers and publishers in Canada and, as I wrote shortly after the decision was released (“Supreme Court of Canada Decision Undermines Canada’s Collective Licensing System: A Parliamentary Fix is Needed”), it would seem that the only alternative is for Parliament to remedy deficiencies in the legislation if Canadian publishing and the ability of Canadian writers to earn a living is to be preserved.

The good news is that books and writers continue to be in demand. COVID, if anything, has strengthened an interest in reading. But an interest that cannot be satisfied because the book has not arrived from the printer in China leads to frustration rather than satisfaction. As Scott Fraser, president of Canadian publisher Dundurn Press has been quoted as saying, missed sale opportunities for writers can be devastating;

It is a major, major source of anxiety because they don’t get paid if the books don’t sell”.

All those Orca books aboard the Zim Kingston, (if indeed, they are still aboard) won’t earn their authors one penny until they are in the hands of readers. Children’s books tend to find their way into Christmas stockings and Santa only comes but once per year. Ironically, in a statement Orca Books indicated that it had been planning to phase out printing in China and the Zim Kingston shipment was one of the last to be printed there. According to publisher Andrew Woolridge;

Earlier this year, we made the decision to transition the bulk of our printing away from printing overseas in favour of printing in Canada. There are many reasons for this shift; politically, socially, environmentally we are endeavouring to match our printing decisions more closely to our overall mandate and goals. These books were amongst the last planned printings in China and Korea”

Too bad they didn’t make the switch sooner. This was one overseas printing too many. Let’s hope that these and other books enroute, clogged in the supply chain, will get through to consumers in a timely way. Writers need the income, publishers need the cash-flow, booksellers need the customers and readers need their book fix. In a world where many books are pirated online, copied without compensation or loaned digitally without the necessary licenses, the sale of the good old fashioned bound book remains a staple of the industry. But when it is printed halfway around the world, what can go wrong will go wrong. Just ask Orca Books.

© Hugh Stephens 2021. All Rights Reserved.

Another Poke in the Eye for Authors and Publishers from New Zealand’s Libraries

Despite the welcome news that the National Library of New Zealand is reconsidering its badly flawed decision to donate 600,000 surplus books, including many still under copyright, to the controversial US-based Internet Archive for digitization, the National Library of New Zealand and the country’s librarians through the Library and Information Association of New Zealand (LIANZ)–of which the National Librarian is Past President—recently lobbed another grenade at authors. This time they are taking aim at the announcement by the New Zealand government that it intends to lengthen the country’s term of copyright protection. This measure would see New Zealand eventually–by 2036 no less (!)–get in step with most developed economies and extend its term of copyright protection for an additional twenty years beyond the Berne Convention minimum of “life (of the author)+ 50”.

(The controversial donation deal—now on pause while the National Library considers its next move—would have seen the Library effectively endorse the Internet Archive’s Controlled Digital Lending (CDL) program through the donation of 600,000 surplus books from the National Library’s collection despite CDL being the subject of a major copyright infringement lawsuit in the US brought by major international publishers.)

The opportunity for New Zealand to extend its term of copyright protection comes about as a result of the new UK-New Zealand Trade Agreement, reached in October 2021. One of the provisions of that agreement, insisted on by the UK no doubt, was that New Zealand bring its term of copyright protection into alignment with that of Britain. The “life of the author + 70” standard is the rule in the EU, UK, the US, Australia and will soon be enacted in Canada as a result of the USMCA/CUSMA. New Zealand may have regarded this as a concession but in fact when finally implemented it will benefit New Zealand authors and publishers not only in their domestic market and in the UK, but also in the EU which extends the benefit of the extra twenty years of protection only on a reciprocal basis. (The UK also applies its longer term reciprocally so New Zealand authors currently do not benefit from it). Of course, it will also benefit British authors and publishers in New Zealand, which is why the UK pushed the proposal but, given the 5 million population of New Zealand versus the 67 million of the United Kingdom, it is clear that New Zealand’s creators will derive the greater benefit.

So why are New Zealand’s librarians so critical, claiming that the term extension will result in the “locking up” of works for another twenty years. They say:

“…not only books, but films and music will be locked up for a further 20 years after the death of the authors, delaying the entry into the public domain of culturally significant New Zealand works and the creation of new works based on those works.”

This language implies that any work under copyright and not in the public domain is “locked up” and somehow out of reach of the public. Nothing could be further from the truth. Even though works under copyright require permission or licensing if they are to be reproduced, (unless the limited use of the work qualifies as a fair dealing), licensing provisions are in fact an incentive for the rights-holder to ensure that the work is given wide circulation. This is often done through derivative works, such as a movie based on a book. But according to the LIANZ,

Early New Zealand films, television and radio shows are starting to emerge from copyright. Locking them up for another 20 years will impact on cultural institutions without the resources to source permissions to use these materials.”

Are we to understand that New Zealand films, TV and radio shows that up to now have been under copyright protection under the original 50 year term have been “locked up” all this time? What cultural institution worth its salt doesn’t have the means to apply the minimal resources necessary to obtain permission (or to license) such content? This is another “the sky is falling” scenario often employed by those who profess to respect the copyright protection and incentives provided to authors, but then go out of their way to discredit them. New Zealand is not unique when it comes to this tactic.

In Canada too opponents of the alignment of the terms of protection between Canada the US resort to similar arguments, such as characterizing copyright as “locking up” content whereas in fact its purpose is just the opposite; to incentivize creators to create and disseminate their works. Another line of argument used is the “small market” hypothesis, whereby there will be an “enormous” outflow of funds to foreign authors and publishers.

The LIANZ statement managed to dredge up reference to a 2009 study (once but no longer available on the website of the New Zealand Ministry of Foreign Affairs and Trade-MFAT) undertaken by the Ministry of Economic Development (as it was then called). The study was commissioned from Concept Economics and undertaken by Australian academic Henry Ergas. The study was part of New Zealand’s preparation for negotiation of the Trans-Pacific Partnership (TPP) which at that time included the United States. It was correctly assumed that a US negotiating objective would be to bring the length of copyright protection in TPP partner countries into line with the term in the US (basically life + 70). One of the takeaways of that study released by the New Zealand government, one that is often cited by critics of copyright term extension, was that the cost of extending the term would amount to NZ$55 million annually to the New Zealand economy. Dr. George Barker, a well-known Australia-based economist, demonstrated that those figures were wildly off base because Ergas had greatly over-estimated the purported losses, and the New Zealand government had then compounded the distortion by amplifying the miscalculations. A couple of excerpts from Barker’s report will give you the flavour;

“The New Zealand government has commissioned and used a report from Concept Economics (“Ergas”) in order to gauge the economic impact of an extended copyright term. We have carefully examined that report as well as the Government’s use of that report. We have found numerous and extremely serious errors in the report that make it entirely unworthy for the basis of any policy recommendations. Its estimates of costs are wildly above any plausible values.”

The Government exacerbated Ergas’ misleadingly high costs by assuming, completely out of thin air, a cost of term extension for film and television that was not estimated by Ergas, and then compounded this unfounded claim by including in its cost estimate “range” a high value from the Ergas report that was contingent on a particular legal result that was known to have not occurred by the time the government came up with its range. Finally, when converting Ergas’ present value results into a yearly value, the government inappropriately used a discount rate inconsistent with that used by Ergas, a decision that increased the estimated costs from what they would have been had a consistent discount rate been used”,

There were also some basic calculation errors. In just one instance, the government had concluded that the losses in the music industry would be $17 million. Instead they should have been just $77,000, which were more than offset by gains that term extension would bring the New Zealand music industry, which Barker estimated could be worth up to $150 million annually.

Still, that $55 million net loss figure keeps resurfacing like a bad penny, and term extension opponents in Canada seized on it a few years ago to do “back of the envelope” calculations to conclude that extending the term of protection in Canada would amount to a cost of almost half a billion dollars annually to the Canadian economy! These claims were completely unfounded, and totally fanciful, as I wrote back in 2016. (“The TPP and Copyright Term Extension: What is the true cost to Canada?”).

Orphan works (works where no-one can identify the rights-holder) can be a problem, another argument trotted out by the librarians to oppose the measure. In implementing its USMCA commitment to extend the copyright term in Canada, the Canadian government is holding public consultations to examine several possible options to deal with the orphan works question;

Option 1 — Expand Canada’s current orphan works licensing regime / extend regime to out-of-commerce works

Option 2 — Collective licensing regime(s) to facilitate use of orphan works and/or out-of-commerce works

Option 3 — Permit the use of orphan works and/or out-of-commerce works, subject to claims for equitable remuneration

Option 4 — Exception for use of works during the final 20 years of protection

Option 5 — Exception for use of works 100 years after their creation”

The Canadian government’s position paper made it clear that copyright term extension would happen in Canada but there were some options in terms of dealing with the method of implementation so as to address issues like orphan and out of commerce works. Similarly, assuming the UK-New Zealand FTA is put into effect, New Zealand will also be joining the new international consensus on the preferred length of copyright protection, although this will not happen for some time given the excessively long period for implementation of this obligation—15 years! Maybe during that implementation delay New Zealand can figure out how to deal with the orphan works issue?

There are clearly costs and benefits for everything, including copyright. It is a shame that New Zealand’s library association seems to have focused exclusively on what they see as the costs, which are themselves exaggerated and inflated. They have completely ignored any benefits, which include an economically healthier and more productive creative sector in New Zealand, although given the very lengthy period of implementation—15 years—the benefits for New Zealand’s creators will take a while to flow. But better late than never, say I. However, if New Zealand is smart, it will accelerate the process and extend its term of protection sooner.

© Hugh Stephens, 2021. All Rights Reserved

Those Problematic Comments on Facebook—Who Bears Responsibility for Them?

http://www.shutterstock.com

Unless you have been living in a cave, you will be well aware of Facebook’s current travails, fed by whistle-blower Frances Haugen’s explosive testimony about how Facebook researched but ignored findings that suggested the company’s algorithms were harming individual users by promoting content that kept them engaged—but at a cost to their mental wellbeing. In other cases, Facebook promoted user “engagement” over such basic considerations as factual accuracy, impact on community health (COVID misinformation), public safety (January 6 attack on the US Capitol) and avoidance of sexual exploitation. Facebooks use of self-reinforcing algorithms to maintain a closed loop of content and the creation of “echo chambers” for users, especially users addicted to fringe conspiracy theories and other non-mainstream views, is one problem, as I wrote about recently. It’s spotty record in content moderation is another. Part of the blame for this lies with a pernicious and widely abused piece of legislation, Section 230 of the 1996 Communications Decency Act. While this legislation may have been well intentioned at its outset, over the years it has been interpreted by US courts as providing blanket immunity from liability for internet platforms with regard to any user-generated content that they distribute, including user comments on posts. And digital platforms like Facebook have acted accordingly; namely done as little content moderation as they can get away with.

While Facebook is not liable for whatever content is posted in user comments, in an interesting wrinkle coming out of a defamation case in Australia, parties who posted content to Facebook are having to defend themselves against liability for comments made by others about that content. So far this has been limited to news publishers who used Facebook to reach a wider audience for their content. Traditionally, publishers have been expected to moderate content that they publish. Among other things, they are expected to avoid publishing libellous comments from users, (such as in “Letters to the Editor” columns), by exercising editorial oversight. Likewise, news outlets moderate the content of their own websites, including comments posted by readers. But what about comments posted by readers to Facebook? They could be seen as similar to a “letters” feature in a newspaper but carried (distributed) by Facebook rather than by the publishers themselves, either in their paper or on their own websites. But Facebook is off the hook.

The defamation case in question involves a suit by an Australian citizen, Dylan Voller, against two Australian media outlets, the Australian and Sky News, for comments made on their Facebook pages by other Facebook users. The Australian court held that the media outlets were liable for the comments left by readers in response to content that the outlets had posted to Facebook. Whether the comments themselves were defamatory has not yet been decided as the ruling focused on who was liable for the comments. The Rupert Murdoch owned outlets had offered the defence that they were neither able to moderate the comments on Facebook’s platforms, nor switch them off, because these were controlled by the platform. At the time, Facebook did not allow comments to be switched off in Australia. Why? The comment feature encourages user engagement, and this helps build Facebook’s bottom line. After the initial Australian court case in 2019, Facebook finally agreed to allow news outlets to delete comments but insisted that they could only be disabled one post at a time. Eventually, earlier this year, Facebook changed its policy and announced that all users will have the right to control who can comment on posts.

In Canada, the CBC has now decided to shut down all Facebook comments on its news posts. Initially, it did so for just a month, citing the “vitriol and harassment” that its journalists face on social media, but it has now made that decision permanent. The CBC notes that:

We know certain stories will draw out obnoxious and hateful comments. The truth is we spend a considerable amount of attention and resources attempting to moderate our Facebook posts. It takes a mental toll on our staff, who must wade into the muck in an effort to keep the conversation healthy for others. It is not sustainable.”

In explaining its decision to make the disabling of comments ongoing, it continued;

we were seeing an inordinate amount of hate, abuse, misogyny and threats in the comments under our stories. Our story subjects were attacked. Other commenters were attacked. Our journalists were attacked. Misinformation and disinformation were rife.

As a result of this toxicity, we were posting fewer of our stories and videos to Facebook, knowing our story subjects would face certain abuse and particular communities would be targeted. When we did share stories to Facebook, we spent a huge amount of time and effort cleaning up the sludge.”

This is distressing but it is the reality. There seems to be something about the internet that encourages toxicity in public discourse amongst a small but vocal minority, who seem to have nothing better to do than resort to hateful, racist, misogynistic comments and personal attacks, something that would never be tolerated in the offline world. People engaging in that kind of behaviour would either not have a platform to propagate their bile or they would be shut down, pronto. Is it the anonymity of the internet, or the knowledge that small, marginal voices will be amplified and given greater credibility by the nature of the social media platforms they inhabit that encourages this behaviour?

One cannot blame Facebook for the dark side of human nature, but one can reasonably expect it to step up and own what it has created–and address the problem. Just as news publishers in the past kept the crazies out of the limelight, so too should we not have an expectation that the world’s largest social media platform ought to exercise greater editorial oversight over what it distributes? Note that in the case of the CBC, and media outlets in Australia, the publisher of the material that was the target of negative comments on Facebook had to take on the task of moderating the content. In the US at least, Facebook can hide behind Section 230 immunity for civil liability.

In an article examining the “Unintended Economic Implications of Limited Liability Regimes for Online Platforms”, German commentator Stefan Herwig notes that Facebook does not have to factor in “economic externalities” because it has been able to offload its costs to others when it comes to algorithmic amplification and content moderation policies. These include “journalistic research corrective agencies” for dealing with disinformation or police investigative agencies with regard to hate speech or terrorist propaganda. However, the principle should be the same as with environmental contamination; the polluter should pay. Facebook does, of course, undertake some content moderation—content that violates its terms of service and content that potentially violates criminal law, an area where no platform immunity exists. But it does so at a minimum cost, automating where it can and outsourcing to the lowest cost (often offshore) provider where it cannot. The result is that automated systems often get it wrong, either blocking content that should not be blocked, as in this recent case highlighted in the Canadian media, or else not blocking content that should be blocked. One could argue that Facebook is damned if it does, and damned if it doesn’t but it is hard to feel sympathy for a trillion dollar company that dominates social media and has made scale its prime asset. If scale brings with it additional costs in terms of hiring real people to perform essential tasks to keep content within socially and legally acceptable bounds, that is part of the price that has to be paid.

While deeper user engagement is good for business, Facebook may find that it has embarked on an increasingly risky path. If reputable organizations are becoming increasingly reluctant to post content to the platform because of the proliferation of irresponsible, vindictive and defamatory comments, this is eventually going to hurt the company’s bottom line. One way to “encourage” Facebook (and other platforms) to take a more active role in moderation would be to modify the blanket Section 230 civil immunity that is provided, requiring platforms to accept more responsibility in cases where users or society are being subjected to real harm from the dissemination of damaging user-generated content.

Supporters of Section 230, like Prof. Eric Goldman of the Santa Clara School of Law, claim that elimination of platform liability immunity will curtail “niche non-majoritarian voices”. Obviously not all non-majoritarian voices are down in the gutter, but some are, and giving them a platform to spread their poison serves no useful purpose. (See “Thank You Professor! Explaining Section 230 to Canadians”). Short of fixing Section 230 in the US—and enacting measures in other countries to hold the platforms responsible for content they distribute and profit from—the only viable solution seems to be to switch off user-generated comments because the bad outweighs the good, especially if or when the burden of legal responsibility is placed on the party posting the content and not on the platform nor on the party making the defamatory comments.

There seems to be something wrong with this picture with respect to where the burden lies.

© Hugh Stephens, 2021. All Rights Reserved.

Why is New Zealand’s National Library Declaring War on Authors?

Source: Wikimedia Commons

At first blush, one would think that a natural symbiotic link would exist between authors, publishers, librarians and readers. After all they are all part of what I could call the literature ecosystem, the chain of content that leads from the creation of a work to its dissemination to its consumption, either for entertainment or learning. Librarians love books, so why wouldn’t they love the creators of books? But it’s not all that unusual to find authors and publishers on one side of an issue and the librarians on the other, as is currently happening in New Zealand. In this case, it involves an ill-conceived plan announced by the National Library of New Zealand to donate some 600,000 works it no longer wants to the Internet Archive (IA) in San Francisco for digitization as part of the Archive’s “Open Library”.

Another author-publisher/librarian split famously happened last year in the US when the Internet Archive decided to unilaterally launch its so-called “National Emergency Library” (NEL) in which it removed all lending restrictions on the books it had digitized, and began to freely loan out unlimited digital copies on the grounds that many libraries were closed or had restricted access because of COVID. This move was applauded by the American Library Association (ALA). On March 24, 2020, the same day the National Emergency Library was announced, the ALA tweeted;

“@InternetArchive has announced the creation of a new National Emergency Library with over 1.4 million books available to borrow. With libraries across the country closed, we appreciate IA filling this need.”

The ALA’s support was initially echoed by others such as National Public Radio which, on March 26, published an laudatory piece calling the National Emergency Library a “compelling alternative” (to closed public libraries). It wasn’t long before the media pendulum began to swing the other way, however, as authors’ associations such as the Authors Guild and the American Association of Publishers issued critical statements, accusing the Internet Archive of copyright violation and an “unlawful, and opportunistic attack on the rights of authors and publishers”. Writing in Medium, Adam Holland of Harvard’s Berkman Klein Center for Internet & Society published a good summary of the ebb and flow of the debate over the NEL. The Internet Archive ended its NEL experiment in June 2020, shortly after several major publishers filed a lawsuit against the IA. As I commented at the time, it looked as if the Archive was using the pandemic as an excuse to challenge some of the basic precepts of copyright. Even though the IA ended its Emergency Library, the lawsuit continues as the publishers are challenging the base principle under which the Internet Archive lends digitized works that are still under copyright. The theory the IA uses to justify the way it operates its Open Library is known as “Controlled Digital Lending”.

While the National Emergency Library amounted to Controlled Digital Lending (CDL) on steroids, CDL itself is controversial and is at the root of the publishers ongoing lawsuit. Critics of CDL say that scanning a book to produce a digital version is a form of copying, while supporters claim it is a fair use since it is simply a change of format. However, the problem with substituting a digitally scanned version of a book for the original hard-copy version is that this undermines copyright and destroys the market for e-books. As blogger Neil Turkewitz has pointed out in his piece, “The Internet Archive’s Misguided Effort to Liberate Books”, no-one is going to buy an e-book for their Kindle after they have read a “free” digitized version. Licensing e-books is part of the publishing eco-system that relies on the distribution rights contained within copyright. Libraries are frequent purchasers of e-book licenses, allowing them to lend digital copies to their members. The Internet Archive’s Controlled Digital Lending theory upends this publishing eco-system, depriving authors of the opportunity to fully exploit their rights to their work. Turkewitz sums it up as follows;

“Publishers have established independent and distinct distribution models for ebooks, including a market for lending ebooks through libraries, which are governed by different terms and expectations than print books. IA’s end-run around these differences and restrictions is aggressive and unlawful.”

The best that one can say about Controlled Digital Lending and the Internet Archive’s Open Library is that it is controversial. (The worst might be that it is engaged in book piracy). That being the case, one might want to tread carefully in engaging with the Internet Archive, especially if one was a national library operating under government auspices, such as the National Library of New Zealand (NLNZ). The Library’s mission statement is to “collect, connect, and co-create knowledge to power New Zealand.”  One of the ways it intends to fulfill its mandate is by donating 600,000 “surplus” works, including many under copyright, to the Internet Archive for digitization. This has caused a furor in New Zealand.

It all goes back to last year when the National Library announced it had a problem. It had too many books—many of which had limited readership—and needed to slim its holdings. It wanted to cull 625,000 books from its overseas published collections in order to free up more space to accommodate indigenous New Zealand holdings. It proposed to “re-home” some of these books by donating them to regional libraries, others would be sold in book fairs. Many New Zealanders were not impressed with the way the Library approached the issue or announced it as an “operational matter” within its purview to decide. Accusations of “cultural vandalism” were launched.

Unwilling to back down, the Library announced in July of this year that it had struck a “historic agreement” with the Internet Archive to donate all the books left at the end of the overseas published collections review process to the Archive for digitization and preservation. If the Library’s plan to offload part of its collection of foreign books to book sales and local libraries aroused concern, the plan to donate the works to the Internet Archive generated outright anger in a number of circles, particularly among New Zealand writers and publishers. The concern was not so much that works of New Zealand authors would be sent by the Library to the Internet Archive but rather that the Archive engages in “piracy on a massive scale”. The New Zealand Society of Authors and the Publishers Association of New Zealand declared that “leading authors from New Zealand…have had their books illegally distributed online for free by the Internet Archive, forcing publishers and authors to repeatedly spend time and money taking enforcement action.”

The Publishers Association asked, “How can the National Library stand alongside internet pirates and not New Zealand’s own literary community?” The joint statement ended with;

Authors and publishers will be reviewing all their current relationships with (the) National Library in light of this total disregard for New Zealand books and creativity.”

Fighting words.

But did the librarians at the National Library reconsider their course of action? They did not. Instead, they denied that there were any copyright implications arising from the Internet Archive donation and stated that any authors who wanted their works delisted from the donation could opt-out (leading to the destruction of the work). The onus for opting out is put on the author and is not trivial;

“You will need to provide proof of rights and the unique number for the title you have identified. The unique number is on the spreadsheet. We cannot process requests that do not include the unique number allocated to a title. Follow the steps below to opt out:

Check the list below to see if you hold rights to any titles being donated.

Search the spreadsheet either by author name or publication title. (Pressing the keys “ctrl” and “F” on your computer keyboard will enable the search function.)

Email us with the titles you would like removed. Your email must include proof of rights and the unique numbers of the titles you would like withdrawn.”

British and Australian authors have been warned that if they don’t want their works ending up at the Internet Archive to be digitized, they have to act fast. The Australian Society of Authors and the Australian Publishers Association requested that the National Library of New Zealand proactively seek permission from any rights-holders whose books will be donated to the Internet Archive for digitization, but the Library has refused, leaving the onus on authors and publishers to opt-out. So much for the symbiotic relationship between authors and libraries.

Actually, it is not the donation of a few copyrighted works to the Internet Archive that is the principal concern of contemporary authors and publishers; it is that a reputable national organization like the National Library of New Zealand would put its thumb on the scale of a high-profile copyright dispute between the Internet Archive and international publishers by, in effect, siding with the Archive by donating works to it. They are concerned about the reputational damage done to a New Zealand institution by throwing in its lot with IA , plus the disrespect shown to New Zealand writers by having their National Library choose to work with an organization that has repeatedly damaged their economic interests and infringed their copyrights.

The National Library has chosen to thumb its nose at New Zealand creators and seems intent on forging ahead with its disposal plans. I mean, why not offload your responsibilities to a controversial US organization who will take the books off your hands for nothing and digitize them at no cost to the Library? If a few authors and publishers get hurt in the process, well so what? It’s all pretty sad and I would have expected better of an organization like the New Zealand National Library, and also the New Zealand Government that has authority over the Library.

If the Library truly believes its own rhetoric that its mission is to “co-create knowledge to power New Zealand”, it seems to me that it could start by showing some respect for the writers and publishers who produce the works that is its mandate to collect.

© Hugh Stephens, 2021. All Rights Reserved.

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