The American Music Fairness Act (AMFA): A Better and Fairer Solution for Performers than Seeking “National Treatment”

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From the title of this draft legislation, introduced into the US House of Representatives in late June, you can surmise that something is unfair about music in America. What is unfair–from the perspective of performers and record labels–is that US terrestrial radio stations are not required to pay royalties to performers or labels for playing recorded music on air. Online broadcasters and streaming services do, but not over-the-air AM/FM radio stations. Terrestrial stations do, however, pay royalties to composers and songwriters for music played on air, but not to performers. Why is this, and what is the justification for this free-ride on the work of others?

It goes back to the birth of radio in the 1920s and is related to political clout, in this case the political influence exercised by the National Association of Broadcasters (NAB) in the US. I mean, who wants to pay for something, even if that something is the essence of the service you are offering your customers, if you can get it for free? The argument advanced by the NAB is that radio stations shouldn’t pay performers for playing their music because the stations provide “free air-time” that promotes new recordings. If you want to get your music promoted, you need to get it on air, and therefore—so the broadcasters’ argument goes—performers should be grateful for the free publicity. It is similar to the specious argument that seeks to justify piracy by claiming that it helps promote movies or books. It’s also like raiding the orchard next door and selling their apples for personal gain but justifying the theft on the basis that the more people buy apples (from me), the better it will eventually be for the apple growing industry and for the grower next door. Moreover, because internet radio broadcasters are required to pay performance royalties, while terrestrial broadcaster are not (the requirement for digital transmissions to pay performance royalties was introduced in the US in 1995; prior to this date performance royalties applied only to public performances), the exemption for AM/FM stations is another way of tilting the playing field in favour of just one segment of the broadcasting industry. The
AMFA would deal with this longstanding injustice.

The arguments for passage of the AMFA have been well laid out by several commentators, including retired music industry executive Neil Turkewitz (Broadcasting Rights for Performers & Labels: The Fair Thing To Do) and copyright blogger David Newhoff (Has the Moment Finally Arrived for Fairness to Music Performers?). Both point out that the tired old arguments about free publicity and advertising for performers is thread-bare; if they ever had any validity in the past, that has changed with the introduction of many other ways to promote and distribute music. Terrestrial radio competes with streaming services and satellite radio, neither of which are arguing that they should be exempt from the payment of performing royalties. Radio stations are far from the only game in town when it comes to giving exposure to artists, but they are the only ones to get a free ride on the artistic efforts of third parties, which they monetize through advertising. In fact, the US appears to be one of the only countries in the world not to require the payment of performance royalties by over-the-air broadcasters. (I’m not sure about North Korea).

This US exceptionalism (which the AMFA is trying to address) also results in the situation where US artists whose music is broadcast in other countries generally are deprived of royalties for the on-air playing of their work abroad, even though terrestrial broadcasters in those countries are required to pay performance royalties. This loss of overseas income to US artists has been estimated at over $300 million annually. Most countries apply the principle of reciprocity (“tit for tat”) when it comes to collection and payment of royalties. Since US law provides a royalty exemption for radio stations for all music played, this means that foreign artists also don’t get paid when their recorded works are broadcast. Therefore, most countries reciprocate (one might say “retaliate”) by applying the same rule to US performers, either by not requiring collection of royalties on music performed on terrestrial radio by US artists, or by allowing collecting societies to keep the funds generated by US artists and distribute them to domestic performers. The best way to counter this, and to ensure that royalties flow to US performers, is to fix the problem in the US by removing the broadcast exemption. This would also have the additional benefit for non-American artists of ensuring that they receive compensation when their works are played on terrestrial radio in the US.

However, there is another way to address the problem of collecting foreign royalties for US artists—by pushing for “national treatment”. This is a trade principle whereby foreign entities in a given country are treated as well as (or one could say as badly as) domestic entities. The term of art used is that the treatment must be “no less favourable” than that accorded to a domestic equivalent. No favouritism is allowed to be shown to domestic companies, entities or artists vis à vis foreign entities, and there is no tit-for-tat reciprocal treatment. For example, under the principle of national treatment, if British law has a requirement for payment of performance royalties on radio, all performers should receive them, whether they are British, American or Zulu. The fact that British performers in the US are denied royalties when their music is played on radio is not relevant because British performers are no worse off in this respect that their US counterparts. In other words, US law discriminates against all performers, regardless of nationality. Everyone is treated the same—badly.

But national treatment is not granted by countries willy-nilly. It is usually negotiated bilaterally and is subject to many qualifications. Only certain sectors or products are accorded national treatment, and there are usually exceptions. National treatment concessions are carefully negotiated to ensure a balance of benefits overall between countries, which is the main concern of trade negotiators.

Because there is no national treatment in music between the US and UK (there being no bilateral trade agreement), we get the situation described below by the US advocacy group Music First which, among other objectives,  is urging the US Government to negotiate national treatment commitments with foreign governments, under the deceptively catchy slogan “All music creators deserve equal treatment”. The following example is put forward by Music First to substantiate its case;

because the United Kingdom doesn’t recognize national treatment, if a band has members from both the United Kingdom and United States, only the U.K. artists get paid directly from the U.K. collective when their music is played on U.K. radio.”

Some would say that is only fair because the US doesn’t allow British artists to collect royalties in the United States; others would say that two wrongs don’t make a right. Artists lose out in both scenarios. One way for the US music industry to deal with the overseas royalties issue is to push the US government to negotiate national treatment provisions with foreign countries that respect broadcast performance rights. But this is, at best, a stop-gap measure. A far better solution, one that will benefit all artists, including US and foreign performers both in the US and abroad, is to rectify the injustice by eliminating the US terrestrial broadcast exemption once and for all.

© Hugh Stephens, 2021. All Rights Reserved

Negotiating Payment for Use of News Content on Dominant Internet Platforms: What’s Needed to Reach a Fair Deal?

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Given a choice between reaching “voluntary” agreements with news publishers for use of news content online and being compelled to do so by government, the dominant internet platforms (Google, Facebook) are now doubling down on negotiations with news providers. Mind you, there is nothing like a hanging in the morning to focus the mind. The latest confirmation that the platforms would prefer to negotiate “voluntarily” rather than face legislation compelling them to do so, or worse, have a government arbitrator set the terms of the agreement, was the announcement last month that Google Canada has reached agreements with eight Canadian publishers, including one major Canadian nationwide daily (The Globe and Mail) to license content and pay news organizations to create and curate journalism. This came on the heels of Facebook’s recent announcement that it had reached agreement with 14 Canadian news providers, most of them small digital players, to pay for some content on the platform.

The sudden interest on the part of the platforms in reaching deals with news content providers is not born of charity or concern for the fate of news publishers. It is a direct response to mounting pressure on governments, and by governments, to deal with the issue of the market dominance of the platforms in online advertising, and the fact that part of their offering to attract viewers is use of content created and produced by news publishers.

It is open to interpretation whether or not it is consistent with copyright law for platforms like Google News to scrape content from news sites in order to display headlines and snippets (brief excerpts) of news stories. That is why the EU created a new neighbouring right for publishers through Article 15 of its Copyright Directive, providing news publishers (as opposed to the journalists who create specific stories) with a new right over content they publish, valid for a two year period from the date of publication. This tool was placed in the hands of the publishers supposedly to strengthen their hand in negotiations with the platforms.

This has been a hot topic for a few years now. Attempts to deal with platform free-riding on news content produced by others go back to 2014 when both Germany and Spain enacted a publishers’ right to provide publishers with leverage in negotiations with the major internet platforms. At that time, the main concern was Google’s dominance. Google won the first round, bringing German publishers to heel by threatening to downgrade their search results, and by closing down Google News in Spain. With the enactment of the publishers’ right at the EU level in 2019, the tide began to turn.  

France was the first to move to enact the new provision into national law leading, not surprisingly, to a confrontation with Google. After protracted legal struggles and political lobbying, Google decided that negotiation was preferable to confrontation, and managed to reach agreement with a majority of (but not all) French publishers. They negotiated with some major publications as well as a consortium of publishers known as APIG (Alliance de la presse d’information generale) but some other major news providers, such as Agence France Presse, were excluded. Now a ruling by France’s Competition Bureau has put the APIG deal in doubt. According to press reports, antitrust investigators have accused Google of “failing to comply with the French competition authority’s orders on how to conduct negotiations with news publishers over copyright”. On July 13, the Authority fined Google 500 million Euros ($593 million) for failing to negotiate with the publishers “in good faith” as earlier instructed by the Authority. Google was ordered to present a reasonable offer to the publishers for use of content within two months or face a fine of up to 900,000 Euros a day. Now that’s talking tough. The ruling addresses issues that arise from the nature of the negotiations between the platforms and publishers, whether with individual news providers or with a group or groups of publishers. Because of their scale, the platforms can use “divide and conquer” tactics giving them the upper hand.

In Australia, the government dealt with this by introducing legislation that would have required both Facebook and Google to submit to binding “final offer” arbitration if they were not able to reach revenue sharing agreements for use of content with Australian media providers, giving news providers an additional lever. After unsuccessful attempts to overturn the legislation by threatening to abandon the Australian market (Google) or shutting down all Australian news feeds on its service (Facebook), campaigns which spectacularly backfired, both platforms agreed to negotiate with Australian media publishers, avoiding application of the Code. Since then some impressive deals have been struck, resulting in substantial ongoing payments to Australian media.

Google had already seen the writing on the wall. In 2020, it launched its Google News Showcase, an initiative billed at $1 billion (over 3 years) to support journalism by licensing content from news media outlets in a number of countries. (Canada, Germany, Brazil, Argentina, the UK and Australia were the countries initially named). At the time, very few major media companies signed on; Germany’s Der Spiegel and Stern were initially among the few large players to participate. No sooner was it announced, than in Australia the program was suspended as a means of pressuring the government to drop its legislation targetting the platforms. It was not implemented in Canada because no major media outlets agreed to take part. Google was more successful in Britain, however.  In February it was announced that the platform had reached agreement with 120 British publishers, including the Financial Times and Reuters.

The determination of the Australian government to stand up to the pressure tactics of Facebook and Google was favourably noted—in the US where publishers are supporting draft legislation that would allow news organizations to bargain collectively with platforms by providing a limited time exemption from anti-trust legislation–and in Canada, where Heritage Minister Steven Guilbeault, has committed to bring in legislation similar to that passed in Australia. Guilbeault, however, has not delivered, much to the chagrin of News Media Canada (NMC), the lobby group representing the news publishing industry (the self-described “voice of the print and digital media industry in Canada”). As I noted in a recent blog posting, “An Open Letter to Justin Trudeau: Canada’s News Publishers up the Pressure on Facebook and Google”, NMC is unhappy that the Trudeau government has not got around to introducing the promised legislation because they believe it would strengthen their position in negotiations with the platforms. (Separate legislation introduced in the Canadian Senate by an opposition Senator and modelled on the EU neighbouring rights provisions, is going nowhere. Senate bills rarely make it through the legislative process and bills sponsored by non-government Senators stand even less chance).

The “Open Letter”, which appeared on June 9, blanked out the front page of many daily papers in Canada, including the National Post, Toronto Star and many of the city dailies owned by the Postmedia Group. At the time I mentally noted that the Globe and Mail, and my local daily, the Times-Colonist (Victoria), did not publish the “Open Letter”. Now I know why. In addition to the Globe, Glacier Media, the owner of the Times-Colonist (and many other smaller community papers and specialty industry publications), along with Black Media, another publisher of many community papers, were among those that reached agreement with Google, despite being members of News Media Canada. That leaves Postmedia, the publisher of daily papers in most major cities in English Canada, the TorStar Corporation, publisher of the Toronto Star and Quebecor, the publishers of French language dailies in Montreal and Quebec City, out in the cold, at least for now.

This piecemeal approach is one of the biggest problems facing publishers, whether in Canada, France, the US or elsewhere (except in Australia, where the compulsory arbitration requirement backstops the process) because the deep pockets of the platforms give them a negotiating advantage. Initially, in most countries, Google and Facebook were able to make deals only with small digital outlets primarily. For these small-scale start-ups, funding from the platforms must have seemed like manna from heaven. The major publishers resisted but inevitably the common front began to crack as each outlet determined what was in its best interest.

In the US there have, to date, been no revenue sharing agreements for use of content between US news publishers and Google or Facebook. Many publishers would rather deal collectively with the platforms rather than being picked off one by one. This is one of the prime reasons for the (re)introduction of the Journalism Competition and Preservation Act (JCPA) in the US Congress. According to its bipartisan sponsors, “this bill will support the independence of local papers by giving news publishers the power to collectively negotiate with digital platforms like Google and Facebook”.

The US is not the only country (besides Australia) to recognize the negotiation imbalance. In Denmark, thirty media companies have decided to come together to bargain collectively with the platforms. This reflects a longstanding Scandinavian preference for cooperation among copyright and collective rights organizations, as I wrote about after my visit to Denmark a couple of years ago.

While the draft US legislation to provide news publishers with an anti-trust exemption has bipartisan support, it has been criticized by two well-known anti-copyright advocacy groups, Public Knowledge (PK) and the Authors Alliance. Their gripe is that the JCPAcould be interpreted by courts to implicitly expand the scope of copyright.”

Presumably they are referring to this language, which forms the core of the Bill;

A news content creator may not be held liable under the antitrust laws for engaging in negotiations with any other news content creator during the 4-year period beginning on the date of enactment of this Act to collectively withhold content from, or negotiate with, an online content distributor regarding the terms on which the news content of the news content creator may be distributed by the online content distributor…”

According to commentary published by both PK and the Alliance, their concern is that hyperlinks could be subjected to copyright protection, and that access to snippets of information that may be subject to fair use would likewise be legally constrained through court interpretations. This is not only a pretty far-fetched conclusion (there is absolutely no reference, implicit or otherwise, to hyperlinks in the legislation), but also attacks one of the fundamental principles of copyright, namely that a creator has the right to determine whether or not, and how, their content will be made available. If content is made openly available by the copyright holder, it may be subject to limited fair use access, but if a rights-holder decides to withhold or restrict access to content by putting it behind a paywall for example, that is their right. According to Public Knowledge (PK), the Bill could be interpreted to implicitly create “a new right that would allow news sites to withhold content until or unless they receive the compensation they seek”.  PK wants additions to the legislation to make it clear that copyright protection is not being expanded by the law to include linking, or fair use snippets of linked material. This is a red herring and totally unnecessary, raising a straw man to knock down where none exists. It almost looks as if PK is using this as an opportunity to try to sneak in new limitations to copyright protection that have no basis in the law.

PK has a variety of other objections to the draft legislation as well, despite claiming that it supports US journalism and access to trustworthy sources of news. Its objections are hard to reconcile with the objective of enabling the news media to negotiate fair compensation from the dominant internet platforms.

Having the ability to deal with giant digital companies like Google and Facebook to get fair compensation for use of news content is the nub of the issue for news publishers large and small in many countries, including the US. Robust government enforcement of competition law (or threats to amend competition law through new legislation) seems to be one way of ensuring a more balanced negotiation, and of bringing the platforms to the table. Allowing publishers to work together, to the extent that they are interested in doing so, is another. At the end of the day, the final outcome should be a deal that fairly compensates those who invest in gathering and creating the news, allowing them sufficient financial security to continue doing what they do best, while leveraging the ubiquitous reach of the internet to promote greater access to curated, responsible journalism.

© Hugh Stephens, 2021. All Rights Reserved.

Paragraph 5 has been updated to reflect the decision of France’s Competition Authority to fine Google 500 million Euros for failing to negotiate “in good faith” with French publishers.

The USMCA/CUSMA is One Year Old: What Has Been its Impact on Copyright, Content and Canada-US Cultural Relations?

July 1, apart from marking the 154th Canada Day, was the first anniversary of the entry into force of the “new NAFTA”, now labelled the USMCA (the US-Mexico-Canada Agreement). Canadians, being a stubborn lot, have decided to call it the CUSMA, just because they can. Whatever you call it, reaching agreement with a Trump Administration determined to blow up the original agreement was no small task for Canada, or Mexico. Although Mexico is an equal partner, I am going to concentrate on the implications for Canada (and the US) in this blog with regard to what the Agreement does, and does not do, in the area of copyright, culture, and related fields such as digital services, and to take stock of what has happened in the past year.

Renegotiating NAFTA

Renegotiating NAFTA was no easy task. Trump campaigned on a commitment to renegotiate or tear up the Agreement while Canada’s objective was to preserve as much of it as possible. The essence of the dilemma was summed up by then Commerce Secretary Wilbur Ross who commented that the negotiation was difficult because the US position was all “demand” and no “give”. “We’re asking two countries to give up some privileges that they have enjoyed for 22 years. And we’re not in a position to offer anything in return…”. Nonetheless the three countries finally managed to reach agreement. The fact that much of the original NAFTA was preserved was seen as a victory by Canadian negotiators. The biggest changes were in auto production, with new requirements imposed to try to limit the amount of low-cost Mexican labour involved in the manufacture of vehicles. But not a lot changed. Right after the conclusion of the agreement, the US imposed aluminum and steel tariffs on its NORAD and NATO ally Canada (using national security as the pretext, no less), and to this day continues to apply punitive import tariffs on the import of Canadian softwood lumber (despite unprecedented demand for building materials in the US, shortage of supply and all time high prices for consumers), while Canada continues to find technical ways to frustrate US dairy farmers from gaining a greater share of Canada’s highly protected dairy market.

Renegotiating NAFTA wasn’t just a question of rollbacks. The US set out some negotiating objectives that touched on the area of copyright and digital trade and it achieved some of those objectives– but by no means all. In Canada, there was hope in some quarters that the renegotiation could be used to advance some domestic agendas or reforms. Canadian educational publishers were as unhappy with the new education fair dealing exception introduced into Canadian copyright law in 2012 as were US publishers, given the resulting refusal of post-secondary institutions to license content from the publishers’ copyright collective, Access Copyright. However, renegotiating copyright exceptions was not a priority for either country. If the educational exception is to be narrowed or removed, it will have to be done through domestic legislation. Currently the key litigation (Access Copyright v York University) over the issue of educational fair dealing and mandatory tariffs for use of published materials is before the Supreme Court of Canada, on appeal from the Federal Court.

Extending the Copyright Term in Canada

While the USMCA did not deal with copyright reform in Canada nor did it change Canada’s rather ineffectual “notice and notice” system for dealing with online infringers, it did deal with some copyright and content-related issues, both broad and narrowly targeted. On the broad front it dealt with the longstanding issue of the length (term) of copyright protection, extending it in Canada by an additional twenty years to bring the period of protection in Canada in line with that in the US, the EU and most of the developed world. When implemented (more on that below), this extension will not only benefit Canadian rights-holders in Canada but ironically, will bring them additional benefit in the EU because the EU extends the benefits of the longer period of protection to artists from non-EU countries only on a reciprocal basis. With respect to the US, extension in Canada provides greater equity with respect to US creators in Canada since the US offered the longer term of protection in the US market to Canadian rights-holders, even though Canada did not offer equivalent protection to Americans.

Implementation Still in Progress

The actual implementation of Canada’s term extension commitment is still pending as, under the terms of the USMCA/CUSMA, the Canadian government was accorded 30 months from the date of entry into force of the Agreement to deal with this issue. Thus, it must come into effect no later than December 31, 2022. Exactly how Canada will implement its obligation is still somewhat of an open question. The simplest, most straightforward and most sensible option is to simply extend the existing “life of the author plus 50 year” term by an additional twenty years. That is what all other countries that have extended the life of the copyright term beyond the Berne Convention minimum of “life plus 50” have done. But there are those in Canada who, having opposed the term extension in the first place, now want to make it as complicated and difficult to access as possible by instituting a “trip wire”, a requirement for registration in order to obtain benefit of the additional twenty years. No other country has done this, and it is arguably in violation of the Berne Convention (to which Canada is a signatory). Berne requires an author’s copyright to be awarded automatically upon creation of a qualified work, with no additional registration requirement. Berne also establishes a minimum period of protection but has no restrictions on adding extending the period of protection beyond the Convention minimum.

Earlier this year the Department of Innovation, Science and Economic Development (the arm of the federal government with statutory responsibility for the Copyright Act) issued a consultation paper on issues relating to term extension. As I wrote at the time (“Canada’s Copyright Term Extension Consultation: Why all the Tinkering Around the Edges?”), the focus was not so much on the registration issue as on other tangential questions mostly of interest to the library community, such as orphan and out of commerce works. This will not stop copyright minimalists from attacking term extension as being an economic drain on Canada through an outflow of royalties, a conclusion unsubstantiated by facts, nor those advocating for the additional registration requirement in order to frustrate as much as possible the implementation of the CUSMA commitment. The full list of respondents to the consultation paper is available here. It is widely supported by the creative community.

Then There was the Super Bowl

Term extension was perhaps the broadest copyright-related issue dealt with by USMCA/CUSMA. The most targeted and specific, however, was Annex 15-D of the Agreement, dealing with Super Bowl ads. Yes, you read that right. Super Bowl ads. Hardly the substance of an international trade agreement, but hey, if you can achieve your goals through the leverage of a trade agreement when you can’t get it by other means, go for it. The issue was pushed by the NFL and supported by Bell Media, which licenses the Super Bowl broadcast in Canada. It’s all a bit complicated and will be a mystery to US readers. Essentially Annex 15-D removes an exception that the Canadian broadcast regulator, the CRTC, had permitted whereby Bell Media could not require Canadian cable and satellite platforms to substitute Canadian ads (i.e. Bell’s ads) for the US ads when Canadians watched the game in Canada on the original NBC feed.

What is “Simsub” Anyway?

The situation arises because the major US networks are available on Canadian cable systems under a compulsory licence issued by the CRTC. In addition, the CRTC allows Canadian broadcasters who have acquired the rights to US programming also being shown on US television to require that the Canadian cable and satellite distribution systems substitute the ads carried by the Canadian station into the US feed shown in Canada, as long as the programming is being shown simultaneously in both Canada and the US. This is known as simultaneous substitution or “simsub”. In most case simsub is not a big deal for Canadian viewers because an ad is an ad and arguably local ads are more relevant. But when it comes to the Super Bowl where the ads are considered by many as an integral part of the programming, many Canadian viewers want to watch the game with the original ads.

More Business for Border Bars

In 2016 the CRTC issued a decision allowing this if Canadians chose to watch the game on the US feed. Bell appealed but wasn’t sure it would prevail. Given the length of the appeal, in both 2017 and 2018 the CRTC decision prevailed resulting in a reported $10 million dollar loss in ad revenues each year for Bell (and by extension threatening the value of the NFL’s contract with Bell), because Canadian advertisers could not be assured of reaching the full Canadian audience. Although in the end Bell’s appeal was upheld by the Supreme Court of Canada, by then both Bell and the NFL had lobbied the US government to make repeal of the simsub exception a key demand. Remarkably, they were successful and the USMCA now includes a requirement that Canada cannot remove simsub for individual programs unless it ends the practice for all programming. As a result, if Canadians want to watch the Super Bowl with the US ads in 2022 they will have to hit the bars of Blaine WA, Buffalo NY or other border drinking establishments—assuming the border is open by then. At least the USMCA will improve cross-border services trade.

The Canadian Cultural Exception

If Super Bowl ads are an example of how “down in the weeds” trade negotiators can get, the Canadian cultural exception (Article 32.6) is one of the loftier goals. Canada insisted that it had to maintain the cultural exception, a provision that dated back to the original Canada-US FTA in 1988. Under this provision, Canada could take exceptional measures to override commitments in the Agreement to preserve and protect Canadian culture. Culture is defined in the USMCA/CUSMA by reference to a long list of content related industries (film, publishing, newspapers, music, broadcasting). The catch is that if Canada invokes this clause, the other parties to the Agreement are entitled to take retaliatory measures of equivalent commercial effect against any other sector. This is obviously designed to discourage Canadian policy makers from using discriminatory measures to support Canadian culture at the expense of US content producers.  For example, if Canada were to decree that cinemas had to charge an extra fee to consumers to watch US as opposed to Canadian films, in a (misguided) effort to promote Canadian film production, this would be a discriminatory measure against which retaliation would be allowed within the terms of the Agreement. However, if Canada put a tax on all cinema goers, and used the tax revenues to subsidize Canadian film production, that would not be inconsistent with the Agreement and would not justify retaliation.

Does CUSMA Stop Canada from Passing Legislation affecting Internet Platforms?

Recently the cultural exception has been highlighted as one means that Canada could use to defend (proposed) legislation that would require major internet platforms like Google and Facebook (which of course happen to be US companies) to pay news content providers for use of news content on the platforms, similar to the requirements introduced in Australia. Critics of the proposal have argued that such an action would be contrary to the USMCA, but for the cultural exception clause, which they argue would not be used because of the threat of US financial retaliation against non-cultural sectors. This is a red herring. Canada does not need to invoke Article 32.6 to defend actions to require internet platforms to reach content compensations deals with dominant internet platforms, nor, for that matter, to subject the platforms to oversight requirements relating to distribution of harmful content online. There are plenty of provisions of general application in the Agreement that can be used. One also has to consider to what extent the US government would be prepared to champion Google and Facebook, digital giants that are already under close scrutiny in the US for anti-competitive practices.

….Or Holding Platforms Responsible for Harmful Content?

In the digital chapter, the CUSMA includes a particularly controversial provision, Article 19.17 that provides internet platforms with limited immunity from civil liability for content posted by users. This article is based on Section 230 of late 1990s US legislation, the Consumer Decency Act. The misuse of this provision to shield internet platforms from any civil liability or to hold them accountable for harmful or illegal user content distributed (and monetized) by them has led to widespread demands for reform in the US. It almost did not make it into the USMCA given push-back from Democrats, and should never have been included in a trade agreement. It’s not as bad as it could have been, however. The USMCA commitments left sufficient room for the continued application of existing Canadian law without any requirement to enact legislation to create new civil liability immunities for the internet platforms. As I pointed out in an earlier blog on this topic (“Did Canada Get Section 230 Shoved Down its Throat in the USMCA?”), the Parties to the Agreement have the freedom to implement Article 19.17 in various ways including through ongoing application of common law. Existing secondary liability doctrine and precedents will continue to apply in Canada.

The USMCA One Year Later

The fact that the first anniversary of the USMCA/CUSMA passed without much brouhaha is a good sign that things are generally working well. The COVID pandemic has of course challenged global trade patterns, including those in North America but considering that the Canada-US border has been closed for almost a year and a half now except for essential traffic—hopefully it will reopen very soon—two way trade and services have continued to flow with few new trade disruptions,  although volumes were down quite significantly (Canadian exports to the US declined by 15%; imports declined by 11%). Without the security of the established rules and practices enshrined in the USMCA/CUSMA, the situation could have been far worse.

The two countries are intertwined economically in many sectors, including copyright, cultural and content industries. The “new NAFTA” has helped to maintain a mutually beneficial relationship in these areas and laid the foundation for further work.

© Hugh Stephens 2021. All Rights Reserved.

The Artists’ Resale Right: A Matter of Simple Fairness

Credit photo: author 

Canadian artist E.J. Hughes, although likely not a household name to many outside Canada, is nonetheless one of the iconic artists of the west coast of Canada. His paintings chronicle the relatively recent history of the coast of British Columbia (BC), as the example above shows. His works, full of life and colour, record the steamships that used to call in at small settlements along the coast, fishing boats and little car ferries, not to mention spectacular mountain scenery, colourful fishing wharves, houses and sheds.

Hughes was born in BC in 1913 and lived to a ripe old age, passing away at the age of 93 in 2007. Except for a period during the Second World War as a war artist overseas, he spent virtually all his time in coastal communities, the last half century in the Cowichan Valley where many of his paintings were executed.

Recently a Hughes painting, Steamer Arriving at Nanaimo (home of course to the eponymous “Nanaimo Bars”), sold at auction for $841,250 and Three Tugboats, Nanaimo Harbour, for just over $600,000. That may not seem like the big leagues when compared to a recent sale of Monet’s Meules, which fetched over $110 million in 2019, but for Canadian art it is a lot. What is worth knowing about Steamer Arriving is that when Hughes first sold it in the 1950s, it earned him all of $150. Another of Hughes’ paintings, Fishboats Rivers Inlet fetched over $2 million at auction in 2018. It was painted in 1946 using materials that Hughes had left over from his days as a war artist. I could not find a record of what it originally sold for, but it couldn’t have been much as Hughes was living hand to mouth at the time. Another work of his that sold for over $400,000 in 2007 was reportedly purchased for just $200 at a garage sale a few years earlier (although not directly from Hughes, who painted it in 1959). These examples all illustrate the common phenomenon of rapidly escalating values of artistic works that were often originally purchased for just a pittance.

In Hughes’ case, he had a longstanding relationship with Montreal art dealer Max Stern who reached a standing arrangement with the artist to purchase all his work. That suited Hughes who then had a steady source of income. By all accounts, Hughes lived modestly and was not demanding of Stern, who often had to insist on increasing the price he paid Hughes for his paintings. Toward the end of his life, (in 2000), Stern was paying Hughes in the vicinity of $10,000 for new works. This was a fair return given that Hughes was becoming more and more well known, elected to the Royal Canadian Academy of Arts in 1968. As artists become better known, the value of their new paintings generally increases as well as their older works—yet they receive nothing from these earlier works when they are resold. This is a situation that the Artists Resale Right (ARR), which does not exist in either Canada or the US, seeks to redress.

For the past few years, the charge on the ARR has been led in Canada by CARFAC (Canadian Artists Representation), an advocacy group for Canadian artists, and its sister Quebec-based group, RAAV (Le Front des Artistes Canadiens). France is the original home of the ARR, where it is known as the droit de suite, and both CARFAC and RAAV are in regular contact with their French colleagues. The droit de suite was first adopted in France in 1920, and the organization and copyright collective representing French artists, the Society of Authors in the Graphic and Plastic Arts–known as AGADP in France–continues to lobby for global application of the ARR. This is primarily because, although the right was adopted into the Berne Convention in 1948, it is optional rather than compulsory for Berne Convention states and operates strictly on the basis of reciprocity. Thus, broader global coverage brings greater returns for French artists. In 2019, of 15.5 million Euros in droit de suite payments made to French artists, roughly a third or 4.6 million Euros came from payments from sister organizations in foreign countries collecting on behalf of French artists.

But first, let’s examine how the Artist Resale Right works. While structured somewhat differently in various countries, the principle is that where sales of artistic works (works of graphic or plastic art such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs) take place beyond the initial sale, a small proportion of the re-sale price shall be remitted to the original artist or their estate, with post-mortem payments limited to a specified number of years. Often there is a sliding scale for payments, with the percentage going to the artist decreasing as value increases. Sometimes there is a ceiling beyond which a resale royalty is not levied. There can also be a ceiling on the amount paid. In the case of France at the present time that amount is €12,500, a limit to which AGADP objects. It is also important to note that the droit de suite does not apply to private sales that take place without the participation of an art market professional, nor to sales by individuals to public museums.

Normally one would expect the payment to be made by the seller from the proceeds, much as the seller in a real estate transaction is responsible for paying the commission to a realtor. While this is normally the case, in France there was a protracted legal battle over this point when Christie’s auction house tried to impose contracts requiring that the droit be paid by the buyer. French dealers objected, claiming that it was illegal to shift the burden from seller to buyer. After eight years and several levels of appeal, the French Supreme Court ruled that it was possible for the seller of a work of art to agree with the buyer that the buyer be liable for paying the royalty, provided the royalty was still paid to the artist. The royalties are paid to collecting societies who charge a commission (to the artist) for tracking sales and disbursing to artists.

For many works under copyright, the reproduction right provides for steady ongoing revenues to authors, songwriters and performers but in the case of graphic and plastic arts, revenue from licensing of reproductions (print or digital) is generally limited. This raises the question of what art works should qualify for the ARR. Under Berne, it applies to unique works of art or those with very limited authorized reproductions, such as numbered limited editions or signed prints, which themselves could be collected or re-sold. The need to provide some “aftersales” revenue to artists, many of whom struggle financially, is one of the main arguments in favour of establishing an ARR. Artists whose fame increases during their lifetimes usually command higher prices for their new, later works, yet often the production of these artists decreases as they get older. At the same time, the value of their earlier works also rises, but they derive no benefit.

Another argument often used to support the establishment of an ARR is its effect in offsetting some of the imbalance between third world creators and first world art collectors, galleries, dealers and auction houses. Original works in developing countries are often sold for a very low initial price, yet subsequent profits and benefits flow exclusively to dealers and collectors in major capitals rather than to the artist–unless an ARR is in place. For payments to flow back to artists, however, it is important that their country of residence itself offers an ARR since the right operates only on a reciprocal basis. (Many countries in Africa, especially in francophone Africa, have incorporated the ARR into domestic law for precisely this reason). This argument can be applied to Canada and the US with respect to Indigenous art. In the Canadian case, the work of Inuit artists (soap stone carvings, prints) is the most notable example. As I cited in an earlier blog on copyright and Indigenous art, the renowned Inuit artist Kenojuak Ashevak sold the original of her famous print Enchanted Owl in 1960 for just $24. It sold in 2018 for $216,000 of which Kenojuak’s estate (she died in 2013) received not a penny.

CARFAC is working to build support for amendments to the Copyright Act in Canada to establish an ARR of 5 percent, pointing out that over 80 countries have an ARR arrangement, including similar jurisdictions like the UK (2006) and Australia (2010). CARFAC proposes that an ARR be applied to secondary sales of $1000 or more that are conducted by a dealer or auction house, at a flat rate of 5%, with the liability to pay shared between the seller and the dealer, as is currently the case in the UK. It would apply only to Canadian artists and artists of countries that offer an ARR. Payment would be collected through a copyright collective, Copyright Visual Arts, owned jointly by CARFAC and RAAV. The idea has been around in various forms for several years and has been the subject of a private member’s bill although never receiving government support. More recently it was examined by the two Parliamentary committees reviewing the Copyright Act, with recommendations ranging from adoption to more study.

The issue is also a live one in the US, where various attempts have been made to pass ARR legislation, most recently in 2018. The draft US legislation set a much higher threshold than that proposed in Canada ($5000), would apply only to auction houses with at least $1 million annually in sales, would have a payout ceiling of $35,000 and, as in Canada, would be at a set rate of 5%. Recently the new Register of Copyrights, Shira Perlmutter, expressed support for an ARR in the US. Not surprisingly, it is not supported by the major auction houses, notwithstanding that they comply with ARR legislation in other major art markets, like the UK and France. Neither the US nor China, the two largest art markets, have a resale right although ARR supporters argue that it would strengthen these markets if they did so by encouraging European artists to offer their works for sale there. European artists would benefit from the existence of an ARR in the US and China because of the reciprocity principle and artists from China and the US would then likewise benefit from the ARR in effect in Europe.

In the final analysis, this is more about artists than dealers, despite the symbiotic relationship between the two. Some dealers, in fact, offer voluntary re-sale royalty payments, either European dealers who are not obligated to compensate US or Canadian artists but do so, or North American dealers who have decided that it is in their interest to do so because of their relationship with artists. (A similar concept  has recently been introduced by some second hand book dealers to pay authors when used copies of their books are sold). But business being business, most dealers and auction houses will not do so unless required by law. Extension of the ARR to North America would increase harmonization of international art markets, (although if China remains an outlier this could become a competition problem) and is widely supported by artists in both Canada and the US. It is also, not surprisingly, supported by collecting societies as it provides them with a new revenue stream.

If Canada had an ARR as proposed by CARFAC, the sale of Steamer Arriving in Nanaimo would have brought $42,000 to Hughes’ estate. Were Hughes still alive that would have been a nice supplement to a lifetime career of hand-to-mouth painting income. With an ARR much of the revenue paid goes to artists still alive, usually in their declining years. In Australia, studies showed that 46% of payments went to living artists; in the UK over 80% of artists use ARR revenues to cover living expenses. The argument that it would inflate art prices seems hard to credit, given the ever-increasing value of good art in countries where no ARR is in place. Share the wealth, I say.

The real issue is getting the attention of government at a time when there are many priorities, including of course dealing with the current pandemic. Artists and their advocates are speaking out, but they need a champion. It seems to be a simple matter of fairness—although in the art world, as in other domains, nothing is really that simple.

© Hugh Stephens, 2021. All Rights Reserved.

An Open Letter to Justin Trudeau: Canada’s News Publishers up the Pressure on Facebook and Google

Source: National Post

I was at my local newsstand the other day, perusing the morning papers. My usual modus operandi is to scan them quickly, deciding which catchy headline will entice me to swipe my credit card for my daily “news fix” delivered in that most traditional of formats, the daily newspaper. The kind you can put under your arm and open up over the breakfast table, with a coffee. Usually I riff through each of the major local papers—under the steely eye of the proprietor—before I make my choice. But on Wednesday, June 9, all the papers (save one) had the same front-page. It was an open letter to Prime Minister Justin Trudeau, and this (in part) is what it said;

“For months, you…have promised action to rein in the predatory monopoly practices of Google and Facebook against Canadian news media. But so far, all we’ve gotten is talk. And with every passing week, that talk grows hollower and hollower. As you know, the two web giants are using their control of the internet and their highly sophisticated algorithms to divert 80 per cent of all online advertising revenue in Canada. And they are distributing the work of professional journalists across the country without compensation.

This isn’t just a Canadian problem. Google and Facebook are using their monopoly powers in the same way throughout the world — choking off journalism from the financial resources it needs to survive. The difference is that other countries are putting their foot down. (here the open letter mentions Australia, where recent legislative action was taken to bring the internet giants to heel. See my blogs “Google’s Latest “Stoush” With Australia” and “Facebook in Australia: READY, FIRE, AIM”.) The letter continues;

Time and again, you and your government have committed to similar action…But after months of promises, there is still no legislation…words alone will not sustain Canadian journalists through the long months of legislative inaction and relentless power plays by Google and Facebook.

To put it bluntly, that means that you, Prime Minister, need to keep your word: to introduce legislation to break the Google/Facebook stranglehold on news before the summer recess. It’s about political will — and promised action…The fate of news media in Canada depends on it. In no small way, so too does the fate of our democracy.”

Wow. Strong stuff. “The fate of our democracy”. The language may sound a bit purple but the parlous state of the traditional news media in Canada as elsewhere is a very real concern for good governance given the traditional role of the media in holding government to account. It is not for nothing that the motto of the Washington Post is “Democracy dies in darkness”, or that one of Winston Churchill’s better known quotes (1949) goes like this; “A free press is the unsleeping guardian of every other right that free men prize; it is the most dangerous foe of tyranny.” 

The explosion of digital media has led to a proliferation of “fake news” and self-serving echo chambers where conspiracy theories are peddled to those who want to believe. Responsible, professional journalism is the antidote, and it is actually positive that the digital platforms pick up and distribute stories from the mainstream media alongside much of the user-generated piffle that dominates the internet. The problem is the platforms are averse to paying for it, yet someone has to pay for quality journalism. In the past, despite subscription revenue, that task largely fell to advertisers. But now most advertising goes to the internet platforms. They in turn attract the viewers that advertisers want to reach with content; other people’s content, such as that produced by the news media.

The solution advanced in Australia, France (“Holding Google to Account: France Takes a Stand”) and soon, potentially, Canada is to convince the platforms that it is in their interest to “share the wealth” to some extent. But why should they—unless they are pressured to do so? That is what happened in both France and Australia where the government leveraged its competition laws to require large platforms enjoying quasi-monopolistic market power (read Facebook and Google) to come to revenue sharing agreement with publishers, failing which government regulators would step in.

The platforms were at first reluctant to do so, and only grudgingly opened negotiations. In the case of Google in Australia, it opened its wallet and then quickly put it away because the Australian government refused to withdraw its legislation. Google then threatened to withdraw from the Australian market, a threat that was only shown to be hollow when Microsoft offered to fill the void. As for Facebook, its clumsy effort to blackmail the Australian population and government by cutting off Australian news sources backfired, and the company soon managed to make a deal with the major Australian publishers. In France, Google dragged its feet but eventually came around to finding a way to share revenue in a way that satisfied most of the major French publishers and was acceptable to Google.

All these developments were being watched carefully in Canada by Heritage Minister Steven Guilbeault who undertook to bring in legislation in Canada to tackle the same issue. However, Guilbeault has several pieces of legislation on his plate; amendments to the Broadcasting Act (Bill C-10) to bring digital streaming services under the auspices of the broadcasting and telecoms regulator, the CRTC, “online harms” legislation to control sexual exploitation of children, hate speech and incitement to violence among other harms, including site-blocking provisions to deal with offshore websites dispensing harmful content, as well as the legislation to deal with the issue of payment for use of news content. Because of this legislative overload, things have got bogged down, and to date only the broadcasting legislation has been introduced into Parliament. And it is getting a rough ride. As for the online harms bill, although not yet introduced, the tragic events of the last few days in London, Ont, where a Muslim family was targeted in a horrific hate crime, will give that legislation added impetus.

With regard to Bill C-10, as a result of concern that a blanket exemption for user-generated content (UGC) would defeat the main purpose of the legislation, an amendment was introduced that has become the focal point for opposition to the bill. The main opposition party, the Conservatives, has engaged in delaying tactics that has forced the government, with support from smaller opposition parties, to bring in time allocation measures to limit debate. The fundamental issue is that the clock is running out. Parliament is set to rise on June 23 for the summer and it is widely expected that there could be a general election in the fall, if the COVID-19 situation is brought under control.

The Liberals would love the opportunity to win a majority and get out from under the current situation where they need to rely on at least one of the opposition parties to pass legislation. Of course, it will all depend on the public opinion polls. The Liberals won’t want to try to trigger an election unless their polling shows they can improve on their current seat count. (They won 157 of 338 seats in the 2019 election–with 170 needed for a majority. They currently have 155 seats after three members were kicked out of caucus for various reasons and one Green Party member crossed the floor to join the Liberals.) The opposition parties will also be reading the polls to decide if they want to go to the electorate.

What all this means is that the promised legislation to require the platforms to pay for using news content looks as if it will get the squeeze. Facebook and Google are not waiting for the legislation but rather are trying to head it off by launching their own payment-for-news initiatives. Although it rejected Australia-type news payment rules back in March, Facebook has since announced that it has struck content deals with 14 Canadian news providers. With the exception of the Winnipeg Free Press and French language paper Le Devoir, the others are minor or niche publications like the Coast, the Narwhal, Village Media, the SaltWire Network, the Sprawl, Discourse Media, Narcity, BlogTO and Daily Hive. Not exactly household names in Canada. Google, too, has its own offering called the Google News Initiative which, among other things, provides training for journalists and sustains some journalist positions. Google has also reached revenue sharing deals with some media outlets but, as with Facebook, its initial deals were largely with minor players. It was not until the Australian and French governments started to play hardball that Google had the incentive to reach deals with the major publishers.

That is exactly what is happening in Canada. Facebook and Google are prepared to throw a few pennies in the direction of Canadian media but, from the perspective of News Media Canada-NMC (formerly the Canadian Newspaper Association), leverage in the form of legislation will be required to get them to offer meaningful revenue-sharing. Back in the fall of 2020, NMC published a detailed study “Levelling the Digital Playing Field” that strongly advocated for an Australian-type competitive negotiating framework, backed up with regulatory muscle. News Media Canada was the sponsor of the June 9 open letter to Justin Trudeau as well as an earlier effort back in February when a number of newspapers published blank front pages, the message being that news could disappear if something is not done to level the playing field.

The June open letter calls on the government to introduce news payment legislation before the impending summer recess. That is unlikely to happen and even if it does, the legislation will die before enactment assuming an election takes place in the fall. However, the letter is important as part of the tactics to maintain pressure on both the government and the platforms. If the platforms think that the legislation is dead, and that their payment offerings to date will carry the day, Canadian publishers will not see the kind of money they feel they need to be able to continue to function. In commenting on Facebook’s announced deal-making with some small Canadian media business, News Media Canada commented that “Until all news media in this country can negotiate collectively with Google and Facebook, the two multinationals will continue to use their market dominance to drive terms that are in their interests.”

Collective negotiation does not just mean the ability for media to negotiate as an industry without running afoul of competition legislation (an exemption in the US for just such a scenario, the Journalism Competition and Preservation Act, has been floating around Congress for a couple of years now) but would also include an obligation on the platforms to negotiate with the media industry collectively as was proposed in the Australian legislation. (In the end it was not applied to Facebook and Google in Australia because suddenly, magically, they were able to strike deals before the hammer of the legislation was applied to them).

The open letter is but another shot in the ongoing war between the publishers and platforms. The outcome is almost certainly going to be something similar to the arrangements reached in Australia and France. The only issue will be the amount of revenue-sharing, and who will be included. Experience has shown that achieving an outcome that meets the needs of the creators of news content requires government action, or a realistic possibility of government action. Without legislation, the platforms hold the strong cards. Even though the prospect of legislation in Canada to require payment for use of news content is fading as quickly as the last days of the current Parliamentary session tick by, it is essential for the publishers to retain legislation as a realistic future possibility. They need this in order to have sufficient negotiating leverage with Facebook and Google to reach a deal that keeps quality professional journalism alive in Canada.

I hope they succeed or else, one day when I go to the newsstand, there will be nothing to read—or perhaps there won’t even be a newsstand.

© Hugh Stephens 2021. All Rights Reserved.

Adapting Opera in the Age of COVID: From “Grand Rights” to “Synchronization Licenses”

Source: http://www.shutterstock.com

Think of yourself as Ian Rye, CEO of Pacific Opera Victoria (POV), my hometown opera company. You’ve been planning ahead for the next season, and advance planning is very much a requirement in the opera scene. The operas have been selected— Die Walküre, Death in Venice and Don Giovanni–costumes and properties designed, lead singers lined up, subscriptions sold and advertising readied—and then COVID hits. You are initially shut down for a few weeks, so the opera Carmen that you were planning to mount is put on hold. Everyone holds their breath, waiting for the storm to pass. But it doesn’t. The 2020 season is gone, but what about the company? There are expenses to meet—staff, artists, office—and no revenue except some additional grants from government. More challenging is the fact that you have an ecosystem to maintain; the artists who want to work, not just for financial but for professional and artistic reasons. Once the bond of shared artistic creation is broken, people will drift away. As the summer of 2020 brings little relief on the COVID front, you re-imagine the offering. Let’s take it online. Let’s make the next production a film version. And that is what happened.

To keep the company together, to give everyone a common goal and purpose, and to stretch the imagination, POV decided to stage an opera, and film it. Not filming it as in a video recording of a live performance, but creating a film version of a new opera, The Garden of Alice, by Canadian composer Elizabeth Raum. You can get more information here. That sounds pretty straightforward; turn what would have been a live performance into a film. (The company’s concert series were also being filmed and put up for digital distribution.) But creating a de novo filmed opera such as “Alice” was taking things to a new level, and while there clearly would be artistic and logistical challenges in going from one genre to another, most of us would not think about some of the other less obvious challenges, such as union issues and copyright.

When it comes to performers in live theatre or opera, most of them (in Canada) are members of Canadian Actors Equity Association or (CAEA). Film actors are members of a different association, ACTRA. But when you take live actors and turn them into film actors, the same artists are represented by a different union, with different fees and distribution rights. This was a new experience for many of the artists but it was worked out fairly easily. Less simple were the copyright issues in going from live to film.

Copyright is a pretty basic concept, but the execution and implementation can be complex. The concept is straightforward; when creators (authors, artists, composers, etc) create an original work, they own it and have the right to control its sale, reproduction and distribution, subject to certain limitations such as duration and fair dealing or fair use. However, in many works there is more than one rights-holder. Think of a recording—there could be a songwriter (of the lyrics), a composer (of the music), and a performer or performers, all of whom have contributed to the creation of the work. A book could have an author and an illustrator. The overall copyright for the work could be held by a record label or book publisher, who would have acquired the rights. In such circumstances, this simplifies matters when it comes to commercialization of the work. And then there is the issue of the rights themselves, which depend on the nature of the work. Rights can be limited geographically and by means of distribution, e.g. live performance, audio visual, digital and so on. Each of these various rights is licensed separately and carries different conditions and royalties. This is where it gets complicated for an organization like Pacific Opera Victoria.

In the case of opera, the clearance of rights starts with what are called, in the trade, “grand rights”. These are the fees paid to an artist and a publisher for the right to a live performance, but only certain live performances. As explained in this report, “Untangling the Bundle: Grand Rights vs. Small Rights”, grand rights works can be put into two general categories;

“a) Works conceived to tell a story with words and music such as musicals, operas, and oratorios. Rodgers and Hammerstein’s South Pacific, Berg’s Wozzeck, and Stravinsky’s Oedipus Rex are examples, and

b) Existing or commissioned works that are used in certain extra-musical contexts, such as with choreography, stage action, or as part of a play.”

Just as an aside, “small rights” are fees collected by Performing Rights Organizations (PROs) , such as the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc, (BMI) in the US, the Society of Canadian Composers, Authors and Music Publishers of Canada (SOCAN) in Canada, by PRS in the UK and so on. Many of these PROs have reciprocal agreements with each other. Their function is to collect fees from music users and distribute royalties to the composers and appropriate publishers.

The definition of whether a work is covered by “grand rights” can be tricky. For example, (again citing “Untangling the Bundle”) a gala evening of arias from different operas in concert do not implicate grand rights because standalone arias and numbers can be treated as small rights, as are instrumental excerpts of operas and musicals, because there is no “dramatic performance”.  On the other hand, a full concert performance of an opera, even without costumes, dialogue, or movement, or a performance of a song or a selection of songs from an opera or musical, with the singers in costume and in character, would be a grand rights issue. Got it?  But this is an “aside” because in the case of converting live opera to a filmed version, it was not a question of “grand rights” versus “small rights” but rather yet another type of rights, “synchronization rights” (aka sync rights).

According to Songtrust’s music glossary, synch rights are “payments made to a songwriter or music publisher for permission to use a song in “sync” with visual images on a screen. More specifically, sync refers to the use of a song in television, movies, and commercials. Sync royalties are generally a one-time sum paid directly to the publisher.”

With respect to sync rights, ASCAP notes that “Often, the music is “synchronized” or recorded in timed relation with the visual images. Synchronization rights are licensed by the music publisher to the producer of the movie or program.”

For POV, venturing into the realm of sync rights was entering new territory, and they worked with a clearing house in the US (Easy Song Licensing) to get clearances for works in the concert series. In the case of The Garden of Alice, they were able to obtain all rights directly from the composer. It was a big change for a local opera company whose traditional concerns had been to perform locally and fill the house to getting licenses to distribute an audio-visual work internationally. It presented challenges, but also opportunities for new revenue streams.

In the case of The Garden of Alice, a new opera that has never been publicly performed, there is an opportunity to find distribution partners who could give it international exposure. There obviously would be a high degree of Canadian content (Cancon), which would make it attractive to Canadian broadcasters seeking to fulfill their “Cancon” obligations, but the basis of the story is well known internationally and there could be many distribution opportunities in other markets. At the very least it could be distributed directly from the POV’s website on a “Pay per View” (PPV) basis. While there is always risk with a brand new production that has not been tested with audiences, it makes eminent sense to launch the film venture with something new. Film versions of famous operas abound, and the POV would be offering nothing unique. If the foray into filmed opera is successful, future productions could be eligible for various forms of media funding from sources such as the Canadian Media Fund, a multi-million dollar fund established to promote Canadian AV production, adding to potential revenue streams from traditional operatic funding organizations.

All this demonstrates the need for adaptability and flexibility when it comes to producing the arts. The POV’s film venture has been a creative way to keep the company operating despite the challenges of having no live audiences (and no revenue) during the pandemic. There are many challenges to mounting a successful opera season—selecting the right program, lining up key performers and musicians, creating costumes, building sets. Added to these are the pandemic challenges arising from pivoting to a new genre and producing a new product, among them navigating the rules of copyright. But the company has risen to the task.

As Ian Rye says, “It’s been a learning experience but an exciting one. It is a bit early to say how successful our film experiment will be but it’s become a common goal around which the whole company has come together”.

I am sure that it will be a success and hope to see The Garden of Alice one day in the near future from the comfort of my living room.

© Hugh Stephens 2021. All Rights Reserved

Appeal Against Canada’s First Successful Pirate Site-Blocking Order is Dismissed: Good News for Copyright Protection in Canada

In a unanimous decision, on May 26 Canada’s Federal Court of Appeal (FCA) dismissed the appeal by internet service provider (ISP), Teksavvy, against Canada’s first site blocking order for copyright infringement issued in November 2019. At the time, I commented that the site blocking order marked a significant step forward for the protection of copyrighted content in Canada, even though it was attacked by critics who claimed that it would lead to “internet censorship”, violated net neutrality and was a usurpation by the courts of the role of Parliament. Those criticisms were unfounded then and they are unfounded now, as the Appeal Court has ruled. The decision confirms that blocking orders are available in Canada to combat pirate content providers who camp in cyberspace while targeting Canadian consumers, and it confirms that Canada has joined the more than 40 countries that use site-blocking to fight online piracy and protect legitimate content distributors.

The case was initiated by Bell Media, Rogers Media and Groupe TVA in 2019 against GoldTV, an offshore pirate website illegally distributing content licensed for the Canadian market by the three companies. GoldTV failed to respect repeated injunctions and failed to appear in court to defend itself, which is not surprising given the offshore pirate business model it follows. (It sells subscriptions to its unlicensed content through providing apps that modify a digital box purchased by consumers, all at a fraction of the cost of legitimate subscription services). Bell, Rogers and TVA secured a court order requiring ISPs in Canada, including internet services owned by themselves, to block GoldTV. No ISPs, except Teksavvy, a small internet reseller, objected to the order.

Why did Teksavvy resist the order by launching an appeal? According to an interview with its VP of regulatory affairs posted on its website, Teksavvy’s position is that it is “not defending piracy, but rather the broader principle of an open internet against a creeping regime working in favour of very narrow commercial interests.” And what would those “narrow commercial interests” be? Well, apparently they are represented by larger ISPs and integrated media and telecom companies like Rogers, Bell and TVA that not only pay to license and distribute content, but also build the backbone internet infrastructure on which internet access resellers like Teksavvy depend. As you can surmise, there is no love lost between Teksavvy and the majors.

Teksavvy is a “reseller”, a company that offers internet service to consumers but does not own the last mile. It must obtain, for a fee, access to the home from the major telcos who have built and who own the infrastructure. The telcos are required by the regulator, the Canadian Radio-television and Telecommunications Commission (CRTC) to offer access to the resellers at wholesale rates set by the Commission. This is done to encourage competition. The real issue is the rate structure. If too high, the resellers won’t be able to compete at the retail level; if too low, they will undercut the telcos who will say they can’t earn a sufficient return on investment to continue to build out and upgrade their infrastructure. Teksavvy is not the only reseller in this position, just one of the more vocal ones, and has consistently been a thorn in the side of the major telcos. Coincidentally–and unrelated to the FCA’s decision–just days after the Appeal Court’s ruling, the CRTC announced a revised rate structure that largely favours the telcos, increasing the wholesale rate for access. In response, Teksavvy called for the resignation of the Chair of the Commission and announced that it would withdraw its application to provide mobile services.

Was animus toward the telcos one of the reasons for Teksavvy leading the charge against a site blocking process that was widely accepted by the industry? It is hard to say with precision what their motives are but in an earlier blog (Canada’s First Site Blocking Order: What is Driving the Objectors?)  I examined both Teksavvy’s motivations and those of intervenors appearing in support of its appeal (the Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic (CIPPIC) at the University of Ottawa and the Canadian Internet Registration Authority (CIRA), also associated with the University of Ottawa’s law faculty). I noted that;

“Although Teksavvy claims it is fighting for internet freedom and not to defend piracy (David vs. Goliath and all that), it is pretty clear that this is all about competing with the large ISPs…If Teksavvy is permitted to continue providing access to pirated content to its subscribers while its major competitors are either constrained from doing so, or willingly agree not to, this gives “David” a competitive advantage when it comes to finding and keeping customers, especially those whose proclivities tend to consumption of content they haven’t paid for”.

As for the intervenors, they fell into two groups, (1) those supporting the site blocking order (Fédération Internationale des Associations de Producteurs de Films–FIAPF; the Canadian Music Publishers Association, International Confederation of Music Publishers, Music Canada and International Federation of the Phonographic Industry (IFPI); the International Publishers Association, International Association of Scientific, Technical and Medical Publishers, American Association of Publishers, The Publishers Association Limited, Canadian Publishers’ Council, Association of Canadian Publishers, The Football Association Premier League Limited and Dazn Limited, a sports streaming service), and (2) those opposed (CIPPIC, CIRA and the British Columbia Civil Liberties Association–BCCLA). The court grouped them into three categories, the supporters of the order, CIPPIC and CIRA and finally, the BCCLA.  This somewhat unusual procedure was taken to expedite the filing of evidence and to hasten the court process.

Those opposing the order—Teksavvy, CIPPIC, CIRA and BCCLA– put forward a number of arguments; viz. site blocking is not mentioned in the Copyright Act and therefore the court has no jurisdiction; the CRTC has jurisdiction (this, despite the fact that the CRTC concluded that it did not have jurisdiction to establish site blocking as a result of the FairPlay Canada application to create an administrative agency to manage a site blocking regime); site blocking is inconsistent with net neutrality and, finally; that site blocking interferes with freedom of expression as enshrined in the Charter of Rights and Freedoms. The Appeal Court examined and ultimately dismissed all these arguments. For a detailed examination of the case, see prominent copyright lawyer Barry Sookman’s blog posting “Blocking orders available in Canada rules Court of Appeal in GoldTV case”.

Will this be the end of it? Teksavvy could of course try to appeal to the Supreme Court of Canada (SCC), but there is no guarantee the SCC would grant leave to hear the case. One can never pre-judge what the Supreme Court justices may decide in terms of what to add to their docket, but the FCA’s decision was both clear-cut and unanimous, suggesting little grounds for appeal. For now, the GoldTV order remains in place and the way has been cleared for further similar orders. Thus Canada is well on its way to joining the large number of countries that have already instituted blocking of copyright infringing content either through the courts, legislation or an administrative process. The Philippines is but the most recent country to move to implement site blocking as a means to protect legitimate content industries and artists.

An obvious exception is the United States, where an initiative in 2011 to bring in a measured site blocking approach through legislation, known as the Stop Online Piracy Act (SOPA) was torpedoed by a coalition of internet platforms and associations, led by Google, Wikipedia and the Electronic Frontier Foundation, among others. A campaign of fear-mongering and misinformation led to the withdrawal of the legislation, and the concept of site blocking has remained toxic in the US ever since, notwithstanding its successful introduction in a number of other democracies that are just as concerned with personal freedoms as the US, with the United Kingdom, Australia and now Canada being good examples.

While the courts in Canada have tackled the problem in the absence of specific legislation governing site blocking (as they did in the UK), arguing that a copyright owner is “entitled to all remedies by way of injunction, damages, accounts, delivery up and otherwise that are or may be conferred by law for the infringement of a right”, other countries such as Australia have passed legislation (enacted in 2015, amended in 2018) to address the issue. Australia has been one of the more successful regimes to curtail widespread online offshore piracy.  Canada is also considering legislation.

As part of the process for updating the legal regime for protection of copyrighted content in the digital environment, a consultation paper “A Modern Copyright Framework for Online Intermediaries” has recently been released by the Department of Innovation, Science and Economic Development (ISED). ISED is the department of government in Canada that has statutory authority for the Copyright Act. The paper posits a wide range of options for dealing with online copyright infringement and the role of intermediaries, with public comments sought by May 31. One of the options is to establish a statutory basis for site-blocking in cases of copyright infringement, subject to a number of conditions such as prima facie infringement, prior notice, technical feasibility, irreparable harm, effectiveness, complexity and cost, and safeguards. The paper cautiously notes that “establishing such a remedy in legislation could be warranted” given that there is already a legal basis for such orders, i.e. the GoldTV case. It thus appears that the Federal Court’s decision has helped move the bureaucratic process forward in terms of potential legislation, although one has to wonder if legislation is really necessary now that the courts have already dealt with the issue on the basis of existing law.

Any legislative solution will be a slow process given the input from across the spectrum of stakeholders, with a number no doubt opposed to any form of site blocking based on the usual exaggerated objections related to net neutrality and online freedom of expression. The result may be gridlock with proponents and objectors engaged in extensive lobbying of a Parliament where the government is in a minority situation and has a number of other difficult content and technology issues on its plate. It is therefore all the more welcome that the FCA has upheld the initial site blocking order of the Federal Court and confirmed that site blocking orders are available in Canada as a form of relief against offshore pirate websites.

© Hugh Stephens 2021. All Rights Reserved.  

Should User-Generated Content (UGC) be Exempt from Law and Regulation? Should Internet Platforms Bear any Responsibility for UGC they Distribute?

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Should user-generated content (UGC) on social media platforms be free from any regulation and the rule of law, simply because it is user-generated? Should social media platforms be given a pass when it comes to any responsibility for the UGC that they distribute? That seems to be the message from those busy attacking Canadian Heritage Minister Steven Guilbeault for proposing legislative amendments to broadcasting regulation (Bill C-10), and for promising future legislation that will require the platforms to control “online harms”, another form of UGC. Bill C-10 (in its current form) would subject the platforms that host UGC (Youtube–owned by Google–being the prime example) to some regulation with respect to that content. The “online harms” legislation has yet to be introduced although Guilbeault has made clear it is coming this spring.  (Online harms refers to child sexual exploitation, hate speech, revenge porn and incitement to violence.) That Bill’s exact provisions remain to be determined.

Bill C-10

With respect to Bill C-10, the issue is whether the online platforms will be considered “broadcasters” when disseminating video content posted by users. If so, and if Guilbeault’s proposed legislation is enacted, that content would be subject to “discoverability” criteria established by Canada’s broadcast and telecommunications regulator, the CRTC (“the Commission”) to ensure that Canadian content is promoted. The legislation has run into a buzz-saw of opposition from various quarters and has quickly become politicized. Guilbeault has been accused of wanting to “censor” the internet.

Strangely, considering the focus of the criticism, the primary objective of the Bill is not to regulate user generated content. Rather, it is to bring online streaming services under the purview of the broadcasting regulator to ensure that Canadian content is promoted and made “discoverable”, among other obligations.

Should there be a UGC Carve-out?

The original version of the Bill included an explicit carve out for user-generated content in order to reassure consumers that they were not being targetted, but once review by Parliamentary Committee began it was quickly realized this would create a massive loophole that could be exploited by the social media platforms. They could have used the UGC exception to avoid obligations being imposed on other streaming services, such as Spotify for example, with respect to Canadian music. An amendment was therefore proposed dropping the explicit exclusion for UGC. This prompted critics to charge the government with interfering with free speech and dictating what Canadians can post on social media. This is total hyperbole and the critics from the main opposition party, the Conservatives, are surely aware of this, but politics is politics.

Intense Criticism

It has not helped that Guilbeault has struggled to explain clearly the intent of the legislation, which is targetted at the platforms, not consumers. Some of the criticisms have come close to becoming a personal vendetta, with Michael Geist of the University of Ottawa leading the charge, accusing Guilbeault of giving “disastrous” interviews that should lead to him being fired. Geist has been on a campaign for weeks to discredit the legislation, Guilbeault, and the government’s agenda to confront the web giants, publishing almost daily attacks on his blog. Geist is particularly unhappy that Guilbeault and the Heritage Ministry have been given the file to run with rather than the usually more Silicon Valley-friendly Ministry of Innovation, Science and Economic Development. In other words, the “culture” mavens seem have priority over the techies who guard “industry” interests.

What’s the Real Issue?

With regard to the policy intent of Bill C-10 (Amendments to the Broadcast Act), one can legitimately question whether Canadian content “discoverability” requirements are needed, or indeed whether streaming services should be treated as broadcasters. Even the whole question of Canadian content quotas can be debated. I, for one, remain to be convinced that enhanced discoverability requirements are needed to get Canadians to watch more Canadian content (Cancon). And then there is the question as to what constitutes Cancon, but that is another entire topic. But just to give one example of the arcane rules that govern Canadian content, a project produced by Netflix with a Canadian story, Canadian actors and Canadian writers will not qualify as Cancon if it is fully financed by Netflix. Why? Somehow, the money is not “Canadian” enough. Go figure. Since establishing its Canadian operation in 2017, Netflix has spent over $2.5 billion on production in Canada but much of that does not count toward content quotas. (An earlier blog I wrote on this topic, “Netflix in Canada: Let No Good Deed Go Unpunished explains how difficult it is for companies like Netflix to qualify.)

In my view, the answer to getting Canadians to watch more Cancon is to produce more good quality Canadian content. (Schitt’s Creek is a prime example of successful Canadian programming that does not need to be “discovered”). However, putting the Cancon question aside for a moment,the issue is now whether a level playing field will be established for all streaming services. If discoverability requirements are going to be applied to streaming services, then social media platforms should not be given a pass simply because they host user generated content.

Is UGC Sacrosanct?

There is nothing sacrosanct about UGC that puts it into a separate universe. For the most part, it should be left alone as it forms part of the free expression of society, but where and when it crosses the line of the law, or falls into an area subject to regulation, there is no reason why UGC should be treated differently from any other content. The killer of 51 people at two mosques in Christchurch , New Zealand, live-streamed the shootings on Facebook. That live-stream was 100% UGC. Some critics claim that subjecting UGC appearing on Youtube to CRTC oversight will impair free speech rights and would be contrary to the Canadian Charter of Rights and Freedoms. This, despite an opinion from the Department of Justice, backed up by testimony from the Minister of Justice (himself a distinguished legal scholar), explicitly dismissing claims that any provisions of the Bill would violate Charter freedoms.

Why Include Youtube?

Why extend the content discoverability requirements to Youtube? Because Youtube is a major distributor of music and video, and in fact acts as an online broadcaster—although the content is user-generated. (There are more than 35 million Youtube channels, most of them with an admittedly small following). According to a Ryerson University study (quoted in the Toronto Star), 160,000 Canadians post content on Youtube, with 40,000 of them earning revenue. Would subjecting this “broadcast content” to discoverability requirements be an impairment of free speech rights? Why would it be? Nothing is censored, nothing is “taken down” or “buried”. Users are free to post what they wish. Indeed, that is part of the problem. Sometimes what they post is illegal, infringing or libellous.

The fact that content is user-generated is no reason to exempt it from regulation deemed to be in the public interest (although there may be different viewpoints as to what constitutes the public interest).  Where it falls within regulation, user-generated content—especially when done for commercial purposes such as ad-supported Youtube channels—should not have an unfair advantage over other forms of content.

Net Neutrality

Another argument against applying any regulation to the distribution of UGC is that CRTC oversight will undermine net neutrality. Vocal C-10 critic Michael Geist claims that Guilbeault’s bill shows the Canadian government has abandoned its support for this principle. This is an old canard regularly trotted out by opponents of any internet regulation. By Geist’s own admission, net neutrality requires ISPs to avoid practices that would unfairly give preference to certain content over others through discriminatory charges. In particular they are required to not favour content in which they have a financial interest over other content that may compete with it. Net neutrality is founded in the common carrier concept that emerged from the telegraph era when companies like Western Union prevented competing news services from using their telegraph system to file competing news stories. The principle is the same today. But net neutrality has never meant that there should be no regulation of internet content. The best example of the need for regulation is the question of “online harms”, the next Guilbeault shoe set to drop.

Expected “Online Harms” Legislation

Right now, Bill C-10 is the target of the critics, but I am sure that when the “online harms” legislation is tabled (shortly), we will hear the same complaints about how it interferes with freedom of expression on the internet. This raises yet again the fundamental question as to whether government has any role in regulating what appears on social media. The answer, surely, must be yes—subject to the normal protections regarding freedom of expression. In Canada this is done through the Charter of Rights and Freedoms. Section 2(b) of the Charter protects, “freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication”. But that is subject to limitations. The Canadian government’s explanation of the Charter says, right up front with respect to the freedoms that it guarantees, “The rights and freedoms in the Charter are not absolute. They can be limited to protect other rights or important national values. For example, freedom of expression may be limited by laws against hate propaganda or child pornography.”

That is apparently what the online harms legislation will do. Michael Geist doesn’t like that legislation either. In an opinion piece in Macleans (once described as Canada’s national news magazine), Dr. Geist attacked the online harms legislation because it will likely include a mechanism to block illegal content hosted by websites outside Canada that are beyond the reach of Canadian law. According to him, this would “dispense with net neutrality”. If net neutrality means protecting the rights of offshore websites to disseminate hate speech, material that sexually exploits children and incites violence and terrorism, most of it UGC by the way, then net neutrality is not worth protecting. But of course, this has nothing to do with the meaning of net neutrality. Net neutrality as a huge umbrella protecting everything on the internet exists only in the minds of the cyber-libertarian claque. 

An “Internet Firewall”?

Disabling access by consumers to illegal content hosted offshore is not some Orwellian plot. It is a reasonable application of the law to rogue sites that thumb their nose at national legislation because they are hosted somewhere in cyberspace. Opponents of any form of site-blocking claim that it creates an “internet firewall”, with obvious comparisons to the “Great Firewall of China”. What China is doing to limit access to online content by Chinese citizens parallels other censorship and behaviour control measures instituted by the authorities in China. But China is China. Canada is Canada. To equate targetted blocking of content that is illegal under the Canadian criminal code with the kind of thought control techniques exercised by the Communist Party in China is fanciful. Another potential use for targetted site-blocking, subject to all the requirements of due process—application, hearing, appeal, etc.—is to disable access by consumers to offshore sites hosting illegal, pirated, copyright infringing content. See my recent blog “Site-blocking for “Online Harms” is Coming to Canada: Similar Measures to fight Copyright Infringement Should Follow”.

Expeditious Takedown

In the same op-ed, Prof. Geist also objects to the fact that platforms will likely be required to takedown illegal content within 24 hours. This is similar to Australian legislation passed after the Christchurch killings that requires platforms to “expeditiously” take down “abhorrent violent material” when notified to do so. Geist claims this approach substitutes speed for due process. But sometimes speed is precisely what is needed when the harm is so egregious that action must be taken immediately. One would expect the platforms to exercise their own oversight in such cases, but experience has shown that they often will not act unless required to do so.

Holding Big Tech Accountable

At the end of the day, the key question comes down to whether UGC has some special place as a form of speech that cannot be regulated or subjected to lawful oversight, and to what extent the social media platforms that host and thrive on UGC should bear any responsibility for the content they allow to be posted. For all too long, the platforms have hidden behind the pretence that they are just neutral “bulletin boards” with no responsibility to vet what goes up on those boards. They employ terms such as “net neutrality” and “freedom of speech” to duck any responsibility for offensive and illegal content that they are happy to monetize—and on occasion even encourage. Some of this is copyright infringing content, which is why I am writing about UGC on this copyright blog. By sprinkling magic dust on UGC to make it “different”, the big tech platforms have tried to duck their share of responsibility for allowing and exploiting infringing content, shifting all the burden to the users which they enable.

One thing is certain. Change is coming. Platforms are being increasingly held to account for the content they carry, in Australia, the EU and in Canada.  In the US, serious reconsideration of Section 230 of the 1996 Consumer Decency Act, the “get out of jail free” card that the internet platforms have used for years to avoid any responsibility for online content that they host and distribute, is coming under serious scrutiny. Those opposed to any change in the status quo are fighting a furious rear-guard action, invoking hallowed and sacrosanct concepts such as free expression (the First Amendment in the US, the Charter in Canada), net neutrality, lack of due process, and so on, all in a vain attempt to avoid any restrictions on big tech and to hold it more accountable.

Conclusion: UGC Must Comply with Laws and Regulation

I cannot predict at this stage what the final shape of Bill C-10 will look like, or whether Steven Guilbeault will be able to withstand the furious attacks by opponents seeking to strip user-generated content (UGC) out of the legislation. As for the online harms legislation, we will have to wait to see how it deals with harmful and illegal content on the internet, much of it generated by users. If it requires platforms to expeditiously take down harmful material, that will be a good thing. If it provides a mechanism to prevent consumers from accessing purveyors of illegal content who avoid Canadian law by locating their servers offshore, that would also be a good outcome.

With regard to C-10, although you can question the necessity for bringing streaming services under the broadcasting regulator and applying Canadian content and discoverability requirements to them, if that is the policy direction, then there is no reason to give Youtube a pass simply because it commercializes user-generated content. Laws and regulation must apply to UGC, subject to constitutional limitations, just as they do to other forms of content. To act otherwise creates a massive loophole that undermines policy delivery, is unfair to other content services, and tilts the playing field by impeding fair market competition.

© Hugh Stephens 2021. All Rights Reserved.

Using Copyrighted Broadcast Content without Authorization to Produce Political Attack Ads: “All’s Fair” Rules the Federal Court in Canada

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Using Copyrighted Broadcast Content without Authorization to Produce Political Attack Ads: “All’s Fair” Rules the Federal Court in Canada

We all know that politics is a blood sport. If you can discredit your opponent by casting doubt on their integrity, intelligence, judgment or whatever, this is perceived to bring political gain. As much as many Canadians bemoan the introduction of “US-style” negative campaign ads, they have become a feature of political campaigns in many countries. Political strategists must think they work or else they would not see such frequent use. In Canada, the Conservative Party are masters of the “attack ad”, although they certainly do not have exclusive rights to the technique. In 2011 they attacked Liberal leader Michael Ignatieff as “just visiting”, because of the more than 30 years he had spent abroad as a journalist and academic. They won that election. In 2015, Justin Trudeau was the target with the slogan “just not ready”, alluding to Trudeau’s supposed lack of political experience. The fact that Trudeau’s Liberals thrashed the Conservatives in that election begs the question of what impact the slogan had.

To develop attack ads you need material, and what better material than footage of the candidates themselves, engaging in contradictions, waffling or putting their foot in their mouth. And if they aren’t clumsy enough, there is always selective editing, juxtaposing earlier statements against ones made later, all bundled together with provocative voice-overs and music. And what better place to access this material than to pull it off the airwaves, from debates, political panels or news shows. However, most of this material is protected by copyright, and its use for partisan political ads is the nub of the issue.

The Conservative Party of Canada (CPC) has made no secret of its desire to use clips culled from broadcasts to assemble into political ads. In 2014, when still in power as the government of the day, the Conservatives proposed to introduce an amendment to the Copyright Act to provide an exception to copyright exclusivity for the narrowly targetted purpose of using copyright protected material in a political campaign by candidates and parties. It was going to be buried in a much larger omnibus budget bill but after the proposal was “outed” and drew criticism, it was quietly dropped.

The proposed amendment to the Act was criticized from several perspectives. Apart from comments by the Liberals that it showed how “underhanded” the Conservatives were, another objection was that if fair dealing exceptions were to be broadened to allow use of news clips for criticism, this should be applied widely and not just limited to political operatives. Others argued that an amendment to the Act was not necessary because use of copyrighted material in a political campaign would likely already be permitted by existing fair dealing exceptions, such as news reporting, criticism, parody or satire. In the 2019 election the Conservatives put that assumption to the test by using a series of clips from the CBC and other broadcasters in attack ads against Justin Trudeau, which they posted on Facebook. The CBC requested that they be taken down. Even though the Party obliged, the CBC sued, seeking an acknowledgement from the Conservatives that the Party had engaged in the unauthorized use of copyrighted material.

The CBC wasn’t seeking damages and it dropped a request for an injunction after the Conservative Party complied with the request to take down the ads that used CBC footage. Rather, it was trying to establish the principle that use of its footage by a political party in an election campaign undermined its status as a neutral national broadcaster. The clips were clearly from the CBC. Some of them bore the CBC logo, a factor used by the Respondents to support their claim that the “criticism or review” fair dealing exception applied in this case. (To invoke this exception, the material has to be attributed to the original source). Others featured well-known CBC presenters and journalists.

The CBC’s dilemma is similar to the one faced by the BBC in the 2019 “Brexit” election. The Conservative Party in the UK used BBC footage to put together anti-Brexit ads that appeared on Facebook. The BBC filed an objection with Facebook over unauthorized use of its copyright-protected material, and Facebook took down the ad. Although the UK Conservative Party wasn’t happy, that was the end of the matter. In Canada, the CBC decided to go one step further by seeking to obtain a court ruling confirming that such use is an infringement of copyright, knowing that the Canadian Conservative Party would use the tactic again. That decision has just (May 13) been rendered by the Federal Court. The CBC lost.

The decision is an interesting one to read. As is usual in court cases, the Respondents presented several lines of argument in defending their position. Some of these were dismissed. The Court confirmed that not only was the material subject to copyright, but the Respondents taking of content was substantive, even though the clips themselves were just a very small part of each broadcast. The facts of news cannot be protected by copyright but the expression of those facts (i.e.  the comments of Justin Trudeau as broadcast by the CBC) are subject to copyright. As the Court noted, the broadcast incorporated “the artistic design, production services (lighting, camera work, audio, etc.) and journalistic decisions (i.e. the flow of discussions and the election and posing of questions) which are the skill and judgment of the CBC and their employees”, making it a creative work subject to protection. The use of that creative work was substantial. The judge also accepted the bona fides of the CBC’s complaint, noting that as a state-owned corporation it was reasonable for it to try to protect its image and reputation as being politically non-partisan. Yet the Court did not find adverse consequences for the CBC’s reputation from the use of its broadcast content in partisan attack ads, terming any adverse impact as “speculative”.

Having established that the material was copyrighted and the taking substantive, the Court then came to the nub of the issue; was the Conservative Party’s use of the material a fair dealing, thus providing an exception to copyright protection?  In ruling that the use was fair, the judge focused on the fair dealing exception of “criticism”. Unlike the fair use doctrine that applies in the US, for an unauthorized use of copyrighted materials to be considered a “fair dealing” in Canada (and in other countries with fair dealing laws), the use must fall within the four corners of the exceptions specified in legislation. Since 2012, in Canada these are research, private study, education, satire, parody, criticism, review or news reporting. A fair dealing must also meet other criteria that have been established through earlier Court rulings. These are the purpose, character, and amount of the dealing; the existence of alternatives, and the nature and effect of the dealing on the copyrighted work. The Court uses these criteria to determine whether, on balance, the dealing is fair even if it falls within the specified exceptions (an allowable purpose).

In finding an allowable purpose that would shoe-horn the Party’s use of the clips within the specified fair dealing exceptions in the Copyright Act, the Respondents cast a wide net, arguing that any or all of the following applied; criticism and review, satire and education. All but criticism were rejected by the Court but in finding that the use qualified as “criticism”, the judge took a liberal interpretation of the meaning of the term. CBC had argued that “criticism” applied only to critiques of the program itself (which is the genesis of the criticism and review exception, allowing theatre critics, for example, to reproduce or quote from parts of a play or movie in order to review or critique it).  However, the judge found that criticism encompasses not just the form of the content, but the ideas contained in it. In this case, the criticism included “the ideas and actions of the Prime Minister and the Liberal Party in the sense of fault finding.”

So there you have it. The CPC’s use of the CBC’s clips for political attack ads was not an infringement of copyright; rather, it was a fair dealing based on the specified purpose of criticism. That will clarify matters going forward and I can confidently predict that whenever the next election occurs, we will see lots of attack ads, with likely some of the material drawn from copyrighted broadcast content belonging to the CBC or other broadcasters.

The CBC could, of course, appeal, but I doubt that it will do so. First, as I noted in an earlier blog on this topic written right after the 2019 election, there is no love lost between the Conservative Party and the CBC. Many in the Party would like to privatize the CBC, if not do away with it altogether. Thus, it was a bold move for the Corporation to have directly confronted the Conservatives on this issue. Now that they have, and lost, they can maintain that they took all possible steps to protect their reputation for political neutrality. If their content is being used to produce political attack ads, there is nothing further that they can do to stop the practice.

The ruling also shows how legal interpretations can adapt to changing social expectations. Use of copyrighted broadcast material in attack ads has become relatively commonplace. To limit the free-for-all of political debate on the basis of a strict interpretation of copyright law would likely not serve the broader purposes of copyright protection. As the Court concluded;

There may be situations in the future where the manner of use and distribution of CBC material may adversely affect the CBC – however, that is not the case here. Fear and speculation cannot ground a finding of unfairness in this factor.”

Case dismissed.

© Hugh Stephens, 2021. All Rights Reserved.

Blocking Offshore Pirate Content Sites: The Philippines is Joining a Growing International Consensus

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In the ongoing struggle against content piracy, a global scourge that undermines and competes unfairly with legitimate content producers and distributors, blocking offshore web and streaming sites that distribute pirated content has proven to be an effective tool in many countries. It provides a remedy to deal with scofflaws that cannot be reached by domestic laws or regulation. Now the Philippines, an important market for domestic and international content, is about to join a growing international consensus by implementing its own site blocking regime.

It was announced in mid-April that the major ISPs in  the nation of over 100 million, the Intellectual Property Office of the Philippines (IPOPHL) and the National Telecommunications Commission (NTC), the telecom sector regulator, have agreed on a Memorandum of Understanding (MOU) that will institute a fast, efficient and effective site blocking regime. The targeted site blocking process has arobust framework that  will guide IPOPHL’s consideration in determining what constitutes flagrant infringement and ensure that only egregious piracy websites are blocked. Upon receipt of a rights holder’s referral and supporting documentation, IPOPHL will conduct a further investigation to confirm that an identified site is indeed distributing infringing material before referring the case to the NTC for issuance of a blocking order. ISPs have agreed to comply with these orders.

The Philippines has a vibrant domestic film and television industry but also one of the highest rates of piracy in Asia. In a YouGov survey dated September 2020, 49 percent of Philippine respondents admitted to accessing piracy streaming sites, with the total being over 50 percent in the 25 to 34 year age bracket. Almost half of these consumers indicated that, after accessing pirated content, they had cancelled subscriptions to local and international content services, an estimated annual loss of $120 million to the legitimate subscription OTT video industry alone, according to Media Partners Asia. This situation is in marked contrast to the situation in neighbouring Southeast Asian countries, such as Indonesia and Malaysia, where site blocking measures instituted over the past couple of years have helped to reduce significantly what previously were similar levels of consumption of pirated content by local consumers and migrated many of those consumers to legal services. 

What has brought about this change in the Philippines? It is a combination of alignment of the interests of the key players, combined with strong local leadership and some external assistance, prompted by a realization that consistently high levels of piracy serve no-one’s interests. The lesson from last year’s Metro Manila Film Festival (MMFF) no doubt played a role as a catalyst. The Festival has been highlighting the best of Filipino talent since the 1970s. In 2020, because of COVID-19, it went virtual. COVID had already forced many theatres to close, thus leading to a surge in consumption of streaming content. Last year the MMFF tried to offset the loss of box office revenue through Video-on-Demand streaming but the result was a disaster. Because of widespread piracy, receipts totalled less than two percent of 2019 revenues. The Manila Times reported that;

MMFF 2020 Best Picture “Fan Girl” executive producer Quark Henares revealed that his team closely monitored illegal online streaming and found 10 to 20 pirated links every hour.”

Often the enemy of introducing new measures to fight piracy is inertia and bureaucratic process, sometimes combined with misguided arguments that any attempt to deal with pirated content through blocking orders amounts to “internet censorship”. While the experience of the MMFF may or may not have been the spark that lit the fire, the leadership of key local players in the Philippines to address the serious piracy issues was critical. Among these is Globe Telecom, the largest telecom company in the country and a major distributor of online content. Several years ago, Globe launched a public awareness campaign against piracy and illicit content on the internet called “#Play it Right”. The objectives of Globe’s campaign are to combat illicit content on its networks, including pirated content and online child exploitation, and to protect its customers from malware, ID theft and ransomware, often by-products that come with accessing pirate sites.

AVIA, the regional video industry association based in Hong Kong and Singapore, has also played a constructive role. AVIA has signed a separate MOU with the Philippines Intellectual Property Office (IPOPHL) to support the initiative and will be active in providing the Office with information on egregious piracy sites. AVIA has also worked on site blocking mechanisms with authorities in other Southeast Asian countries and has useful experience to share. The mechanism envisaged for the Philippines is an administrative process, with the major ISPs (Globe Telecom Inc., Smart Communications Inc., PLDT Inc., Sky Cable Corp., Converge ICT Solutions Inc. and DITO Telecommunity Corp.) participating voluntarily. IPOPHL under its proactive Director-General Rowel Barba–former Undersecretary at the Department of Trade and Industry—has played the lead role in formulating the site blocking mechanism.

Administrative site blocking regimes have been instituted in a number of places, including Malaysia, Indonesia, Korea, and some European countries while other countries (e.g. Australia, France) have required specific legislation to enable blocking. In yet others blocking orders have been issued by the courts applying existing legislation (UK, Canada). While the immediate priority in the Philippines is to put the MOU into action, a parallel legislative initiative is also underway in the Philippine Congress and Senate. Legislation, however, takes time and is subject to many pressures and uncertainties such as election cycles and legislative agenda in terms of eventual outcome, in the Philippines as elsewhere. In the meantime, the MOU between the ISPs, IPOPHL and the National Telecommunications Commission offers a widely supported way forward to deal effectively with the issue now.

The piracy situation in the Philippines needs urgent action, a situation recognized by all the stakeholders. The first blocking orders should be issued soon and then the Philippines will join the more than fifty countries world-wide that have adopted site blocking mechanisms in one form or another. Philippine creators, cultural industries content distributors and consumers will all benefit from this long-overdue step.

© Hugh Stephens 2021.