Supreme Court Agrees to Hear Appeal in York v Access Copyright Case: What Does This Mean for Copyright in Canada?

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Last week the Supreme Court of Canada (SCC) agreed to hear the appeal of the Federal Court of Appeal’s (FCA) decision in the ongoing saga of York University v Access Copyright. Back in April, the FCA overturned the established order in the Canadian copyright world by ruling that what had always been understood to be “mandatory tariffs” (i.e. fees established by the Copyright Board of Canada that were applicable to all unlicensed users of any content that was licensed on behalf of its members by a copyright collective) were, in fact, not mandatory at all. Mandatory tariffs were a long-established way of dealing with the “free rider” problem. While legal clarity is always desirable, the Court’s decision to grant leave to appeal should not rule out some urgently needed legislative fixes to Canada’s creaky copyright framework, both on this topic and on fair dealing in education.

At the same time as it issued its mandatory tariff decision, the FCA also upheld a lower court ruling that the Fair Dealing Guidelines used by York University to guide its students and teachers in the use of unlicensed material–guidelines based on those produced by Universities Canada for its members–were not fair in either their terms or application. Both parties appealed to the SCC, Access Copyright on the mandatory tariff question and York on the fair dealing issue. The Supreme Court declines to hear the majority of cases appealed to it, so its acceptance of these appeals may signal that it wants to add some much-needed clarity to Canadian jurisprudence in this area.

But here’s the problem. Now that the SCC has agreed to take on the case, it may be a very long time before a decision is reached. The issues are complex and the Court’s docket is charged, a situation made all the worse by the COVID-19 pandemic. In the meantime, the uncertainty caused by the FCA’s unusual decision on mandatory tariffs threatens one of the fundamental cornerstones of copyright and the business model of collective management organizations. Collective licensing was established as a way of avoiding endless and costly litigation. One of the reasons why collective societies exist is to provide the strength of a collective entity to negotiate licences with users on behalf of individual authors and publishers, but also to provide a mechanism for licensing that avoids the need for litigation, thus serving both rights-holders and users. This has all now been upended.

While a Supreme Court decision overturning the FCA’s mandatory tariff ruling would be one way to restore balance, the slow pace at which the case is likely to proceed will prolong the financial and legal uncertainty hanging over copyright industries. The case could drag on for years, and of course there is no way of knowing how the SCC will eventually rule. As I noted in a blog last month, “Undoing the Damage of the Federal Court of Appeal’s Decision on ‘Mandatory Tariffs’”, a much more expeditious solution would be for Parliament to clarify its intent through minor amendments to the Copyright Act. However, amending the Act is not something done every day–the last major revisions were in 2012 when “education” was added to the list of fair dealing purposes, in retrospect an ill-advised move that helped to precipitate the present lawsuit.

With a government preoccupied with responding to the health and economic challenges of the COVID-19 pandemic, copyright reform may not seem to be a priority. Nonetheless there are a couple of compelling reasons to re-open the copyright file. The first is a process issue: Canada’s commitments in the recently concluded CUSMA Agreement (aka the new NAFTA) require it to extend its term of copyright protection by twenty years. This process must be completed no later than December 31, 2022. The second is concern, as expressed in the recent Speech from the Throne (SFT), that content providers in Canada are being given short shrift by the major international internet platforms. The SFT stated, in part, that;

“Web giants are taking Canadians’ money while imposing their own priorities. Things must change, and will change. The Government will act to ensure their revenue is shared more fairly with our creators and media…”

Copyright is not the only way to address this issue, but it is one way, and from his public comments it appears likely that Heritage Minister Steven Guilbeault will be developing legislative options to tackle the problem. (It is worth noting, however, that Heritage is not the Ministry with final responsibility for the Copyright Act. That falls to the Ministry of Innovation, Science and Industry).

Just the same, the door is open to reviewing the Copyright Act. This review could clarify uncertainties regarding the status of mandatory tariffs even as the SCC examines the issue, and it could also clean up some of the mess arising from the 2012 Copyright Act revisions such as the uncertainty that has been created as to what “education fair dealing” actually covers. Educational authorities and institutions have used this “exemption” to try to drive a truck through any protection that copyright provides authors and publishers for use of their works in the context of education. It is one thing for students to be given access to limited portions of published works without payment as part of their studies; it is quite another to have major educational institutions and ministries refuse to license content for course packs and other teaching materials simply because they think the new exemption gives them carte blanche to take whatever content they want, in virtually unlimited quantities, all in the name of “education.” Saving money on educational materials is good for the institutions’ bottom line, but why should authors be subsidizing this sector?

There are reasonable solutions available, such as limiting fair dealing uses for private study and educational purposes to materials that are not commercially available. This would give students and educational institutions broad access but preserve the ability of authors and publishers to recoup some return from the use of their content within the important educational sector. Clarifying the fair dealing exceptions would help eliminate the seemingly endless litigation that was a major outcome of the 2012 copyright amendments and is another important role that Parliament could play in bringing forward legislation. 

The COVID-19 pandemic has further reinforced the need for action by Parliament to fix some of the broken elements in Canada’s copyright laws. As I noted in a recent op-ed in the Globe and Mail, the pandemic has exacerbated the challenges that creators face in terms of presenting their work and talents to audiences and, equally important, earning a living. As it responds to the challenges brought about by COVID-19, Parliament has an opportunity over the next year to get copyright “right”. Legislative amendments are needed to restore a balance to copyright where creators—musicians, authors, artists, and other genres—are incentivized and rewarded for creating the cultural fabric so necessary to our quality of life, especially at a time of increasing isolation and lock-downs.

The Supreme Court will in time provide some direction on the legal issues surrounding fair dealing and mandated copyright tariffs, but Canada’s creative industries cannot afford to wait, particularly in the face of the current economic shutdown brought about by the pandemic. Legislation to fix the anomalies in Canada’s copyright laws is needed–and is needed now. The necessary impetus and political will to deal with copyright issues does not come around often and is unlikely to be repeated anytime soon. The current window of opportunity should not be missed. If anything, the SCC’s granting of leave to hear the York University v Access Copyright appeals strengthens the argument for Parliament to deal with these issues in the short term, providing needed guidance to the Court and clarifying Parliament’s intent.

© Hugh Stephens 2020

Google in Australia: Dangle the Carrot, then Yank it Away

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Last week I praised Google for its News Showcase initiative in which it announced it would be paying US$1 billion (over three years) to news content providers to create a new product on Google highlighting news features. These features would be drawn from and created by news sources that agree to contractual arrangements with Google. The countries to be included in News Showcase, according to Google’s announcement, are Argentina, Australia, Brazil, Canada, Germany and the UK (in alphabetical order).

The reaction from publishers was decidedly mixed. Some welcomed the opening, looking forward to talks with Google while others criticized the move as keeping all the cards in Google’s hands by dictating terms and conditions. The initial line up of partners was, with some exceptions, not particularly impressive in terms of name recognition. In fact, part of Google’s approach may have been to sign up smaller players and play them off against their larger traditional media competitors.

In the case of Canada, only two small virtually unknown pure-play digital outlets were listed, Narcity Media and Village Media. Having announced that Canada was to be part of the new arrangement, Google promptly suspended implementation of Showcase in Canada until more media partners were signed up. Noteworthy is the fact that no mainstream media, who have been complaining vociferously to the Canadian government about the need for action to help them corral a portion of the revenues that giant digital platforms generate off the back of their news content, have agreed to terms with Google. The Canadian government, in announcing its legislative priorities for the coming Parliamentary session, noted that it intended to ensure that “web giants” share revenue more fairly with Canadian creators and media. So Google responded, sort of, and then pulled back.

Its tactics were even more blatant in Australia where the government has proposed a “News Media Bargaining Code” that would require Google (and others in a similar position, such as Facebook) to reach agreement with news providers within a defined period. The Code, if adopted, will be administered by Australia’s competition authority, the Australian Competition and Consumer Commission (ACCC). In the current draft, an arbitrator would determine the direct and indirect value of news content to the platforms, the cost of producing it, and evaluate the impact of payment on the platforms. Both Google and Facebook have objected strongly to the proposed Code. Google has threatened that if it is implemented in its current form, Australians may lose access to Google Search, a response that Australia’s Treasurer Josh Frydenberg has characterized as “bullying”.

Google has now moved beyond bullying to what many would call blackmail by announcing that it has no choice but to suspend implementation of the agreements that it had reached with five smaller but respected Australian news providers (as in Canada, none of the major industry players have signed on), because of the ACCC’s proposed code. This is a thinly veiled attempt to increase the pressure on the Australian government and the ACCC, which has said that it will be bringing forth amendments and final recommendations after receiving and evaluating public input. During the public consultation phase Google, through Youtube, encouraged Australians (and others) to swamp the Australian regulator with complaints about the proposals. Putting on the table, and then withdrawing, offers to share revenues with Australian media is yet another pressure tactic. As the Chairman of the ACCC is reported to have remarked (drily), “We note that the timing of these offers appears to coincide with increased Government scrutiny both in Australia and overseas”. Truer words were never spoken.

What is not yet clear is the position of the US government in all this. Will they champion Google in its fight with the Australian regulator? Google would love to be able to enlist the US government on its side, and invoke the Australia-US Free Trade Agreement as an obstacle to implementation of the ACCC’s code, but so far there is no indication that a broadly based competition regulation would be discriminatory and thus violate the Agreement, even if the immediate targets happen to be US companies. Both Google and Facebook are under increasing scrutiny back in the US by both Congress and the Trump Administration for anti-competitive activities, so it is unlikely that the US government will be unreserved and uncritical champions for them.

That said, the Trump Administration has pushed back strongly on efforts by some EU countries and Canada to subject the internet giants (Google, Amazon, Facebook, Apple) to more domestic taxation based on revenues generated in those countries. The tax issue was punted to the OECD to develop an internationally agreed code but in June the US ended its participation in the negotiations, following the standard playbook for this Administration—taking unilateral action. Presumably, the concern is less about the impact on the companies and more on the impact on US tax revenues. Nonetheless, taxation and anti-trust are two separate issues. Australian media reports indicate that the US Trade Representative’s Office submitted a brief to the ACCC, but the focus was on caution and taking time to fully assess the implications of the Code.

The next step will be the release of policy recommendations by the ACCC following its consultations. Maybe there will be some tweaks that will mollify Google. Or maybe Google will continue to try to change Australia’s policy approach with further “carrot and stick” tactics. It has not been reluctant to wave the big stick (threats to cut off access to search), which did not go down well. Now it has produced the carrot, but after dangling it and allowing a nibble, it has yanked it away. What will its next move be? Stick or carrot?

© Hugh Stephens, 2020. All Rights Reserved.

Did Google Just Blink?

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The announcement on October 1 that Google will be paying $1 billion (over three years) to news publishers to create curated news content for Google News is a welcome sign that Google is finally starting to wake up and smell the coffee. Coming on top of its announcement in June that it would begin to license some content from news creators, the most recent move is an indication of a crack in Google’s usual strategy, which is to double down on existing positions backed by its deep pockets and an army of lawyers and lobbyists, combined with threats of abandoning a given market or service to put pressure on publishers to back off, or on the public to get their governments to back off.

Google’s “never give an inch” approach has been most evident in its fight with news creators over its practice of using news snippets (without permission or licensing) to attract viewers to news topics on its service. As it demonstrated in Spain and Germany a few years ago when authorities in those countries attempted to legislate revenue sharing arrangements between platforms and news publishers, Google has enormous if not monopoly power. At that time, Google simply shut down Google News in Spain, and in Germany removed from its news platform any news provider that did not agree to voluntarily give Google access to content without payment. Google’s retaliatory measures made it more difficult for consumers to access news content, impacting views on the publisher’s sites, and soon brought them to heel. France is the latest EU state to take on Google, as I wrote about back in April (“Holding Google to Account: France Takes A Stand”), using competition law to require it to enter into meaningful negotiations with publishers. So far it appears that those negotiations are going nowhere.

Australia is also trying to get its arms around the Google dominance problem with regard to news content and diversion of advertising revenues, rolling out a proposed News Media Bargaining Code to be administered by Australia’s competition authority, the Australian Competition and Consumer Commission (ACCC). In response, Google has mounted a scare campaign threatening that Australians could lose free search and privacy protections, as a way of getting consumers to pressure the government to back down. This has not gone down well “Down Under”, with strong reaction to what are being described as bullying tactics by Google.

Google’s trench warfare approach to negotiations and legal challenges was best illustrated by its unwillingness to comply with an injunction issued by the Supreme Court of British Columbia (BC) requiring it to delist from global search results listings for a rogue company that had wilfully violated the intellectual property of another Canadian company. Google appealed that decision all the way to the Supreme Court of Canada (Google v Equustek) and lost. Google then tried an end run on Canada’s Supreme Court by seeking to get the order invalidated in the United States (even though it was never intended to be made applicable in the US) and having succeeded in that ploy, it returned to the BC Court to get the original order withdrawn on the basis that the Canadian decision required it to violate US law. In fact there is no US law requiring Google to carry any given search listing, and the BC Court declined to vary its decision. I have documented Google’s legal shenanigans in several posts (here, here, here and here).

Another aspect of Google’s modus operandi that is relevant to the news content issue is its penchant for what is sometimes called “permissionless innovation”. This means helping yourself to “OPC” (other people’s content) without asking or paying and, if caught, trying to sort it out later. It is a variation on the old adage of “asking for forgiveness after rather than permission beforehand” except that Google’s variation on this is “claim fair use after rather than seeking permission (or licensing) beforehand”.

This is the tactic that it has used in its ongoing legal dispute with Oracle where Google has freely admitted that it helped itself to Oracle’s Java API (Application Program Interface) software code after it decided that it didn’t like Oracle’s licensing terms; it is now using every trick in the book to claim fair use. Google’s initial gambit that its use was “transformative and minimalist” was thrown out by the Federal Appeals Court. Now, in its Supreme Court appeal, Google is digging for other justifications such as the “merger doctrine”, i.e. Oracle’s code is so fundamental to the operation of the internet that it could not not use it. The fact that it (a) could have licensed it from Oracle and (b) there were other alternatives, such as developing its own code which Google opted not to do because to poach Oracle’s work was easier and quicker, does not strengthen Google’s case.

Google’s use of other people’s work in the area of news content is similar. Take it, and argue that this is actually good for the content provider, and when that doesn’t work, threaten to shut down listings. Anything to avoid paying someone else for the content they have created. Now, it appears, that is about to change.

It would be churlish of me to criticize Google’s apparent change of heart because the shift in attitude is something to be welcomed. However, one cannot but wonder what brought about this sudden conversion. Surely it was not that Sundar Pichai suddenly woke up one day remembering his old grand-dad reading the newspaper every day at breakfast, and having a sudden outpouring of sympathy for the plight of print media. More likely it was the mounting pressure on Google coming from many quarters, Germany, Brazil (where publishers’ objections to Google’s use of their material goes back to 2012 and earlier) France, Australia, the UK, Canada (as I wrote about a couple of weeks ago, here) and elsewhere. In Canada, the Speech from the Throne (SFT) on September 23 that laid out the government’s priorities for the new Parliamentary session noted that;

Web giants are taking Canadians’ money while imposing their own priorities. Things must change, and will change. The Government will act to ensure their revenue is shared more fairly with our creators and media…”

Google has apparently taken note and Canada is among the first wave of countries to which Google will bring its new paid content formula. (Canada, Germany, Brazil, Argentina, the U.K. and Australia were the countries named). Not all the news industry is in raptures, however. The European Publishers Council is reported to have stated that;

“By launching a product, they can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production”

In Canada, the major publishers represented by the industry association News Media Canada have been pushing the government to take action enabling them to negotiate content licensing deals with major platforms, and this no doubt was largely responsible for the language in the SFT quoted above. The government may choose to approach the issue through regulation, competition law or possibly copyright legislation, but it is clear that Google has now decided to move pre-emptively. To date, however, the only two media organizations listed on the Google Canada blogsite are two small, virtually unknown pure play digital outlets, Narcity Media and Village Media. In Germany, Google has got Der Spiegel onside. In Canada, they will need to show that outlets like the Globe and Mail, Toronto Star, Postmedia, Le Soleil, La Presse and so on are on board if they are to avoid a day of reckoning. So far that hasn’t happened.

What is noteworthy, because of its absence, is any mention in Google’s announcement of US media. Google is subject to lots of scrutiny these days in the US, especially in the anti-trust area. US publishers are no more enamoured with Google’s business model than publishers in other countries, and I can only assume that the absence of any mention of the US in Google’s current plans is because negotiations are ongoing. In fact, with the exception of Der Spiegel and Stern in Germany and Folha de Sao Paolo in Brazil, there is a distinct lack of buy-in by mainstream media anywhere to Google’s initiative.

Nevertheless, what is important is that Google is starting to get the message. After seeing the sticks that several governments are brandishing, or threatening to brandish, Google has reached into its deep pockets and pulled out a $330 million per year carrot. Will it be enough to stem the tide, or is it too little too late? Whatever the outcome, I think it is fair to say that Google just blinked. This doesn’t happen very often and may be a welcome sign that things in the digital world are starting to change for content creators.  

© Hugh Stephens 2020. All Rights Reserved.

Giving the Middle Finger to the Middle Kingdom, and Others: A Tale of “Public Morality, Design, and Just Possibly Copyright

Used with permission of Lao Ganbu

This is a story with many facets. It is about the intersection of copyright and design, but is also an amusing story involving a design application submitted to the Hong Kong Intellectual Property Office by an iconoclastic entrepreneur who sought to register the design shown above, an image that resembles the “good fortune” cat statuettes found in corner stores, offices and restaurants throughout East Asia but with a notable exception, the raised middle digit of the feline’s right paw. It is also about the relationship between Hong Kong and China, the “One Country-Two Systems” principle under which Hong Kong operates as a “Special Autonomous Region” of China, and the extremely cautious “politically correct” positions taken by Hong Kong authorities on any issues possibly related to public order and morality. (One cannot help but speculate on what motivates this).

First, let’s review what we mean by “One Country-Two Systems” (1C2S) and how it is that Hong Kong can make and enforce its own IP laws (as well as laws in other areas) even though it is now a part of China. We have heard a lot lately about the “1C2S” principle because it has come under severe stress and challenge. “One Country-Two Systems” was the special arrangement agreed to between China and Britain, incarnated in the Sino-British Joint Declaration of 1984, a bilateral treaty that helped pave the way for Hong Kong’s return to Chinese administration in 1997. Under “IC2S” Hong Kong retains a substantial degree of autonomy, (except in foreign affairs and defence), including rights and freedoms such as those of the person, of speech, of the press, of assembly, travel, academic research, religious belief, private property and foreign investment, and others (including intellectual property). In addition, Hong Kong is a separate customs territory which operates as a free port. It also maintains its own financial institutions and currency and its own legal system, police force and courts. These freedoms were guaranteed for a period of fifty years after 1997. During the fifty-year period of 1C2S China agreed not to interfere with Hong Kong’s internal affairs. (The question, of course, is what constitutes an “internal affair”).

Of late China has trampled all over Hong Kong’s “1C2S” autonomy with passage by the National People’s Congress of a new national security law for Hong Kong. That law can bypass Hong Kong’s police and courts in cases that China deems to involve its national security and can result in Hong Kong citizens being sent to the Mainland for trial and likely, indefinite incarceration. This exception to 1C2S is supposed to be rarely used and only for severe cases that threaten China’s national security. Well, we’ll see. Since it includes the crimes of sedition, subversion, terrorism and collusion with foreign powers, depending on how those crimes are interpreted and enforced, the new national security law could constrain many of the freedoms supposedly guaranteed to Hong Kong under 1C2S. There is no question that this is an erosion of the autonomy granted to Hong Kong and is a further sign of the gradual assertion of full Chinese control. Apologists for the law claim that it is necessary to curtail unlawful activity that threatens national security.

There is no question that Hong Kong has had its share of what might be considered unlawful activity in the past couple of years, with widespread protest demonstrations, sometimes violent, against actions by the Hong Kong Government to enact a treaty that would allow Hong Kong residents to be extradited to China to face criminal charges there. Demonstrations have also focussed on failure to follow through on measures promised in the Sino-British Declaration to allow for increased voting rights for the position of Hong Kong Chief Executive, and other grievances against creeping extension of Chinese authority in the territory. Whether these protests in support of democratic rights undermine China’s national security is of course another question entirely.

The Hong Kong government has been careful not to rock the boat when it comes to relations with China, and has deployed the Hong Kong police to restrain the demonstrations, often with violence (although to be fair there has been violence on both sides). It is fair to say that Hong Kong officials are “politically correct” to a fault when it comes to how the territory is administered and perceived by Beijing, and Hong Kong’s Chief Executive is seen by many as not standing up for Hong Kong interests against Chinese pressure. This political correctness is well-illustrated in the story that follows.

While “1C2S” is under stress because of the new national security law, it is worth remembering that Hong Kong still retains a degree of legal autonomy and still deals with many issues quite differently from China. One of these areas is copyright and intellectual property (IP) generally, where there is a far higher degree of legal protection for IP and much stronger enforcement than in China.  This helps explain why China is a perennial chart-topper (not a place you want to be) in the annual Special 301 report on IP practices abroad produced by the US Trade Representative’s Office, whereas Hong Kong has seldom made the list, although in the most recent report, it gets (dis)honourable mention for allowing open sale of Illicit Streaming Devices and for insufficient enforcement regarding the use of Hong Kong as a transit hub for traffic in counterfeit goods. However, unlike China, it is not named to the Priority Watch List or the Watch List, the list of IP transgressors identified by USTR annually.

The Hong Kong Intellectual Property Department is responsible for trademarks, patents, designs and copyright within Hong Kong. It is proud of Hong Kong’s reputation as a jurisdiction that respects IP; indeed, this respect for intellectual property is advanced by Hong Kong authorities as one of the territory’s attributes when it comes to attracting foreign investment.

That’s the background. Now to the design registration case at the heart of this blog. The “angry cat” design that the applicant sought to register is based on an age-old Japanese and some say also Chinese icon, the so-called “fortune cat” or in Japanese Maneki Neko. It is a centuries old symbol. What made the angry cat design unique was the modification of the cat’s paw, sporting an upraised middle finger rather than the waving or beckoning gesture that Maneki Neko cats normally have, plus displaying a scowling or contemptuous expression instead of the fortune cat’s usual benign stare. The application for registration was initially rejected on the basis that the design was contrary to public order or morality. The applicant then requested a hearing to review the decision.

What was it about that design that so offended public order that it could not be registered? Well of course it was the “middle finger gesture”. But what exactly does that gesture mean? The applicant, showing no shortage of the creativity that had led him to create the “angry cat” in the first place, claimed that the middle finger gesture does not only convey a message of being rude, contemptuous or disrespectful, but may also convey a message of being humorous, playful or dissatisfied. Moreover, it depends on how a person subjectively thinks about the middle finger gesture. It is commonly used, he claimed, in popular culture and is growing in acceptance. (Some notable examples are Ai Weiwei’s famous middle finger works of art, former Canadian Prime Minister Pierre Trudeau’s so-called “Trudeau salute”, and a host of other notables “flipping the bird” ). The reviewing officer was not buying it. Citing a UK precedent in which the question posed was whether the design was likely to cause “outrage” or be “subject of justifiable censure amongst a relevant section of the public as being likely to undermine current religious, family or social values”, he concluded that combined with the contemptuous facial expression, the design would cause greater offence than just distaste. In fact, he concluded, many “right-thinking” people (a quasi-legal term in the UK implying the broad mass of law abiding citizens) associate the middle finger gesture with the English swear word “fuck” and would find it an offensive and insulting gesture. Besides, children might see it! Imagine how public order in Hong Kong would be undermined if an army of middle-finger gesturing angry cats suddenly appeared in shop windows. Not that refusal to register the design meant that it could not be sold in the territory. It just couldn’t be registered as a design. However, it probably still has copyright protection in Hong Kong, so I hope public order and morality can be maintained.

A design can be protected in Hong Kong through both design registration and copyright law. In Hong Kong, there is no requirement for registration of copyright, and in fact you cannot register a copyright. It is automatic upon creation of the work and normally lasts for the lifetime of the creator of the work, plus fifty years. However,  in a case such as our contemptuous cat, where an article is made by an industrial process and marketed based on an artistic work, if the article is registered as a design, copyright is shortened to 25 years from the end of the calendar year in which the article is first marketed, and if the article is not or cannot be registered as a design, copyright is shortened to 15 years.

A design on the other hand can be registered, and is valid for a period of five years, with five year renewals up to a maximum of twenty-five years. A registered design will give the designer the right to prevent others from manufacturing, importing, using, or selling the design. It can protect the shape, configuration, pattern or ornament applied to an article by any industrial process. In this case, as we have seen, the applicant was denied design registration but will still likely enjoy some protection by virtue of his copyright for a period of 15 years.

The overlap between design and copyright is outlined in an article by Hong Kong law firm Angela Wang & Co., using a teapot as an example;

Registered design will protect the shape and configuration of the teapot only (but) according to the Copyright Ordinance of Hong Kong (Cap. 528), artistic work includes the making in 3 dimensions of a 2-dimensional work and the making in 2 dimensions of a 3-dimensional work. Therefore, if someone manufactures the teapot according to the designer’s drawings without his consent, that person will infringe the copyright of the designer as copyright protects both 2 and 3 dimensional works. Both registered design and copyright can protect the design of the teapot. (However),

(a) copyright protects the design against copying whereas a registered design not only protects the design from being copied, but also against an independent creation which is not substantially different from the registered design;

(b) copyright protects artistic work whereas a registered design protects shape, configuration, pattern or ornament applied to an article by any industrial process, being features in the finished article appeal to and are judged by the eye.”

So, there you have it. Indeed in many jurisdictions, there is intersection if not complementarity between registered design registration and copyright, as in the US (see example here), Canada (here) and the UK (here). Even though our Hong Kong applicant was not allowed to register his creation, he still gets a degree of copyright protection in Hong Kong despite the supposedly offensive nature of that naughty cat image, supposedly undermining Hong Kong’s public order and morality.

Will “angry cats” giving the middle finger salute make it to China? It is unlikely. After all, if they undermine public order in small place like Hong Kong, imagine the consequences in country of 1.4 billion! But there is a sequel to this story that illustrates that some elements of the “One Country-Two Systems” arrangement still exists. The creator of the “angry cat” wanted to register his mark (“chop”) under the trade name  of “Lao Ganbu”, which in Chinese roughly translates as “old official”, usually applied to longstanding members of the Chinese Communist Party. The registration was turned down in China with the explanation that only veterans of the Long March were allowed to style themselves as “lao ganbu”. In Hong Kong, however, the mark was approved. One Country-Two Systems lives! But for how much longer?

© Hugh Stephens 2020. All Rights Reserved.

For those of you interested in getting a limited numbered edition of the angry cat, verified as genuine by the “Lao Ganbu” chop, they can be ordered online from the Hong Kong outlet “Goods of Desire” (GOD). (https://god.com.hk/collections/angry-cat).

Canada’s First Site Blocking Order: What is Driving the Objectors?

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Back in November of last year, the Federal Court of Canada issued Canada’s first site blocking order, an injunction requiring a number of Canadian ISPs to block two sites (GoldTV.biz and GoldTV.ca) that were providing pirated streaming content to Canadian households from offshore servers. Since then the target of blocking has shifted as the pirate content distributors play the evasive game of domain shifting, abandoning the original blocked sites while creating new ones. The applicants need to get court approval each time the list of blocked sites is amended, an ongoing game of cat and mouse.

At the time of the Court’s decision, I commented on the diametrically opposed interpretation of the decision coming from different quarters. While noted Toronto IP attorney Barry Sookman praised the decision as “carefully reasoned”, Michael Geist of the University of Ottawa, no fan of copyright (an understatement to be sure), called the decision “deeply flawed”. Geist has been a longstanding opponent of site blocking, and as the strategy of the content providers–who formed a coalition known as Fair Play Canada–changed from initially seeking establishment of an administrative agency that would adjudicate site blocking requests to now seeking court injunctions, Geist’s opposition has shifted as well. Originally, he criticized the Fair Play Canada proposal as being non-transparent and bemoaned the absence of court orders and full due process when identifying which sites to block. Now that a court order has been issued, he has shifted gears and is criticizing the role of the courts, arguing instead that any decision on site-blocking should be made by Parliament through amendments to legislation. (Those supporting site-blocking argue that while the Copyright Act does not specifically mention targeted blocking as a remedy, it does not preclude it. What the Act does provide for is injunctive relief, which the court has granted in the form of the site-blocking order).

While right now Dr. Geist seems to be advocating for a role for Parliament, if Parliamentarians ever get around to considering explicit legislation to enable site-blocking, as Australia has done, I am willing to bet that he will be among the first witnesses appearing to argue against the proposal.

With regard to the Federal Court’s GoldTV decision, all of Canada’s major ISPs accepted the outcome with the exception of one small ISP reseller, Teksavvy, which launched an appeal. At the time that appeal was filed I wagered a rhetorical bottle of Newfoundland Screech that we would see Silicon Valley-funded groups such as the Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic (CIPPIC) at the University of Ottawa (founded by Michael Geist in 2003) seek intervenor status to support Teksavvy’s appeal. I don’t know who to claim my bottle of Screech from but both CIPPIC and the Canadian Internet Registration Authority (CIRA), represented in part by Dr. Geist’s University of Ottawa law faculty colleague Jeremy de Beer, have filed for intervenor status in support of Teksavvy. Their brief can be read here. TorrentFreak did a pretty good job of summarizing the arguments, which fall into several categories.

Most of CIPPIC’s arguments are technical, for example, questioning whether the Court has jurisdiction to decide the question, arguing that the Telecommunications Act is the applicable legislation to regulate site-blocking, and commenting on the nature and extent of foreign site blocking laws.  The intervenors supporting the initial decision, representing a range of content owners and rights-holders, including music, publishing, and sports, argue on the other hand that the Court has competence, that the Copyright Act does not rule out injunctive relief, and the orders are fully in compliance with Canada’s international obligations, among other points. The CIPPIC/CIRA intervention also argues that allowing the blocking of pirate sites undermines the balance between users and rights-holders inherent in the Copyright Act. Their brief states that encouraging the dissemination of works is one of the Act’s core objectives. No doubt this is true, but the protection of rights and allowing creators to reap just reward is also a key objective. It is hard to see how encouraging or allowing the dissemination of infringing/unlicensed/stolen content is consistent with the core values of copyright or the overall objectives of the legislation.

Other arguments, not in CIPPIC’s brief, have been advanced by the appellant Teksavvy, including arguments about freedom of expression and net neutrality. No one in their right mind would consider that blocking offshore websites that disseminate pirated, unlicensed content, while simultaneously pushing advertising for dodgy products and often installing malware on the laptops of consumers foolish enough to think that they are getting something “for free”, is a violation of the freedom of expression. Whose expression? The pirates, or the consumers of infringing content? Surely I don’t need to repeat the obvious fact that free speech has its limits. No one is entitled to claim the right of free speech to deliberately cause harm to others (the calling “Fire” in a crowded theatre analogy) and the right of access to content on the internet is accordingly constrained by the law. Child pornography is the most obvious example but there are a number of others. Illegal conduct does not become legal just because it is conducted online. As the Supreme Court of Canada stated in its landmark decision on Google v. Equustek;  

 “jurisprudence has not, to date, accepted that freedom of expression requires the facilitation of unlawful conduct…”

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, some of which are themselves large content providers, such as Bell and Rogers. Not surprisingly, the ISP arms of these companies did not oppose the site blocking order, but nor did any of the other ISPs named in the order. 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.

If Teksavvy’s motives are not that hard to figure out, I find it really difficult to get my mind around why an institution like CIPPIC, that claims it is a “public interest” law clinic, would be so vigorous in advocating against measures clearly designed to assist legitimate, employment-creating, taxpaying businesses against offshore bad guys, content pirates who contribute nothing in terms of social benefits and whom everyone recognizes are not playing by the rules. Where is the “public interest” in that position. Maybe they just don’t like creators and the content industries? 

CIPPIC’s opposition seems to be driven by an ideological bent to oppose reasonable online regulation in the copyright field on the dubious premise that this will constrain the growth of the internet and internet freedom. (This position is remarkably similar to arguments put forth by Google in any forum where there is an attempt to protect rights-holders and put some reasonable controls on behaviour of internet intermediaries.) Just a coincidence, I guess. To pursue its agenda, CIPPIC employs skilful legal practitioners who dive into the nooks and crannies of the law. That’s as it should be of course, since the law has to be clear, and in the end dispense justice–although sometimes the law and justice are not synonymous. In my view, if there is any justice in the current situation, the Federal Court will dismiss Teksavvy’s appeal, but we will have to see what points of law are considered.

But here’s the rub. Content owners are not seeking to impose their content on unwilling consumers. There is a plethora of legitimate content available at just about any price point. They are also not seeking to constrain freedom of expression on the internet. All they are trying to do is stop organized criminal enterprises from undercutting legitimate businesses that contribute to the Canadian economy and support Canadian cultural expression. Their response measures are proportionate and targeted, and come after a series of frustrating experiences in trying to shut down domestic distributors of unlicensed “Kodi” boxes. How is it in the “public interest” to fight this tooth and nail as CIPPIC is doing? What am I missing here?

© Hugh Stephens 2020. All Rights Reserved.

A Day of Reckoning is Coming for Google, Facebook and other major Online Platforms that access News Content without Payment: Will Canada be Next?

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Newspapers and news magazines are struggling but online news aggregators, like Google and Facebook among others, are thriving. The ad dollars that prop up the internet behemoths have drifted away from the producers of the news to those who facilitate access to it without themselves having to invest in the creation of the content that attracts consumers. Readers are drawn to news headlines and stay on the internet services longer in order to browse news content through the portal. This in turn attracts advertisers and helps explain the enormous valuations of Google and Facebook in contrast to the paltry returns, if not incipient bankruptcy, of many newspapers. In the face of the challenges facing news sources on life support, and in support of the principle declared boldly on the masthead of the Washington Post that “Democracy Dies in Darkness”, governments have scrambled for ways to support traditional news-gathering, analysis and reporting. In Canada, a variety of measures have been employed ranging from tax credits to direct funding of local news reporting. But this is chump change when it comes to gaining access to what news organizations consider to be a fair share of the advertising revenues that their content helps generate.

We are talking big bucks. Naturally the internet platforms are not going to roll over and easily give up a share of their revenues. In fact in Australia, where the government is currently proposing a revenue sharing agreement between platforms and news creators, Google is on the war-path. At the end of July, the Australian Government revealed draft legislation that would allow news publishers to negotiate with platforms like Google and Facebook for the latter’s use of news content. The “News Media Bargaining Code” will be administered by the Australian Competition and Consumer Commission (ACCC), using competition law to redress the imbalance of bargaining power between the platforms and news providers. There will be compulsory arbitration after three months if the two parties can’t come to a negotiated agreement, with ACMA (Australian Communications and Media Authority), the broadcasting and media regulator, having the authority to assign arbitrators if there is disagreement. The Code is backed up with substantial fines that could reach ten percent of digital revenues generated in Australia. In addition, there are some other elements of the Code besides revenue sharing that Google in particular objects to, such as required advance notice of changes to algorithms that could affect news item rankings, and a requirement to share data about users accessing news content.

Google has launched a campaign to get Australian consumers to pressure its government to back off, threatening that Australians could lose free search and privacy protections. It has urged Youtubers to bombard the Australian government with complaints about the proposed Code, arguing that the new legislation would benefit “big news businesses”–although the news organizations who will benefit are just a fraction of the size and valuation of Google itself–and even though Youtube is not covered by the proposed legislation.  The ACCC and the Australian government have issued rebuttals  to Google’s allegations, criticizing it for exaggerating and mounting what they term a “scare campaign”, and show no signs of backing down. Google could of course close its operations in Australia, but that is seen as an empty threat. Australia is an important market for Google (it is reported to generate $4 billion annually in revenues). The real issue for Google is one of precedent with regard to payment for news content. It is concerned that if it loses the fight in Australia, this will weaken its position elsewhere.

Google’s basic position is that it provides a service that allows consumers to locate and access content, which in turn benefits the content creator. Creators of the content argue that Google is free-riding on and monetizing their content by collecting and using consumer data for ad targeting (although Google does not sell ads on Google News itself). While Google has announced that it will selectively pay for some content, this is the exception rather than the rule and is on Google’s terms. Google has enormous market power, as it demonstrated in Spain and Germany a few years ago when authorities in those countries attempted to impose revenue sharing arrangements between platforms and news publishers. Google simply shut down Google News in Spain and in Germany kicked off its news platform any news providers who did not agree to voluntarily give Google access to content without payment. This “punishment” made it more difficult for consumers to access news content, impacting views on the publisher’s sites, and soon brought them to heel. (The proposed Australian legislation prevents Google from doing this).

The EU responded with legislation creating a new publisher’s right within the Copyright Directive. (Four years ago I wrote about the need for such a right, and am pleased to see it now enacted).  At the present time, EU authorities are preparing for a second run at Google’s practices, with France in the forefront. (“Holding Google to Account: France Takes a Stand”). Back in April, the French competition authorities gave Google three months to negotiate in good faith with publishers and come up with an agreement that results in payment to them. That period has elapsed and it seems that negotiations are ongoing, with Google dragging its feet by reportedly offering only small payments that publishers have so far rejected. Enabling the negotiations is the EU’s new “neighbouring right” for publishers that expands their ability to control the reproduction and communication of their work to the public.

Facebook has also been active in opposing the Australian initiative. It is fighting the ACCC’s proposals by threatening to pick up its ball and go home. It claims that news content represents “only a very small fraction of the content” in a users’ news feed and has threatened that if the proposals are adopted, it will remove and block news content on its platform. While a user’s news feed consists of a variety of content, including news but also photos, videos, likes, etc., news content plays a role in keeping users engaged and staying on the platform longer (and thus becoming more attractive to advertisers).

Meanwhile, in the wings, Canada is watching and waiting. Responding to Google and Facebook’s tactics “Down Under”, Heritage Minister Steven Guilbault stated that, “The Canadian government stands with our Australian partners and denounces any form of threats.”  Guilbault has suggested that legislation could be introduced this autumn requiring companies like Google and Facebook to compensate news organizations when they use their content.  This came after a public plea to the Canadian Government by Canada’s major newspaper publishers.

One approach that Guilbault could adopt is to establish new rights for publishers along the lines of the EU’s expanded neighbouring rights regime. The Parliamentary Committee that examined the Copyright Act as part of a periodically mandated review of the legislation last year looked at what it termed a “journalists remuneration right”. Noting that, “The production and dissemination of news content is essential to democratic societies”, the Committee stated that it “supports the notion that OSPs (Online Service Providers) who profit from the dissemination of copyrighted content they do not own should fairly remunerate its rights-holders”. However, at the time the Committee was not prepared to make a recommendation for action, but instead proposed further study to take into account developments in other countries dealing with the same issue. Its specific recommendation was that;

“the House of Commons Standing Committee on Canadian Heritage consider conducting a study to investigate the remuneration of journalists, the revenues of news publishers, the licences granted to online service providers and copyright infringement on their platforms, the availability and use of online services, and competition and innovation in online markets, building on their previous work on Canada’s media landscape.”

Despite this cautious recommendation, it appears that Minister Guilbault is preparing to move soon to deal with the issue of fair remuneration for use of news content without prolonged further study. There are various ways to go about this. The government may choose to deal with this as a copyright rather than a competition issue, for example, or it may pursue other means. One factor to bear in mind is the possibility of running afoul of commitments Canada made in the new NAFTA (USMCA) agreement, an objection raised by University of Ottawa law professor Michael Geist, who has consistently opposed requiring platforms to share ad revenues with content providers. Geist has argued that a system that required US companies to pay while only Canadian companies benefited would “likely” violate the USMCA, although this is difficult to predict since the Agreement requires only that digital products of one party be granted treatment no less favourable than like digital products of the other party. However, any measure adopted that is of general application would be non-discriminatory, even if it happened to have the greatest impact on US companies like Google and Facebook.

It is plain that perceptions have changed over the last decade about the value and importance of protecting and remunerating professional content in a world awash in disinformation and illegally distributed works. The fact that legislators and regulators are more engaged than ever in addressing abuses and ensuring a healthy online environment is to be welcomed.

The struggle going on in Australia and France between Google, Facebook and news publishers is unquestionably germane to what happens in Canada, and the stakes are high. Even in the US Google is facing its critics. Draft legislation, the Journalism Competition and Preservation Act, has been introduced into Congress, both the House and Senate, with bipartisan support. If adopted, it would provide news publishers with a four-year exemption from anti-trust restrictions so that they can combine to negotiate with major platforms. It has been supported by the Authors Guild and the News Media Alliance, among others. The legislation would apply to Google and Facebook and potentially to Apple and Microsoft, given their revenue thresholds. At the moment, however, this legislation is stalled while the US Presidential election is underway.

Given widespread dissatisfaction with Google’s current dominant role in many countries, it seems likely that the internet giant will have to make some compromises and start negotiating compensation for its access to valuable news content. However, the amount of revenue it is prepared to offer is likely to be considerably less than the publishers would like to see, although certainly more than Google would like to pay.  If agreement cannot be reached, governments will have to step in and broker a deal. As has been seen in Australia, Google will pull no punches and will use every means it has to fight forced sharing of ad revenues. In the case of Canada, it will undoubtedly remind the Canadian Government of its significant investments in R&D facilities in Waterloo, Ontario with planned expansion in Toronto and Montreal. Of course Google is not investing in Canada to be nice to Canadians. Waterloo is the hub of Canada’s “Silicon Valley” and an important source of cost-effective talent. Plus, Canada’s multicultural society and more relaxed immigration policy make it attractive to offshore software engineers and other experts, something that Google has not hesitated to benefit from. Facebook could also make threats to remove news content from its platform in Canada, similar to what it is threatening to do in Australia, although it surely recognizes that access to news is a key part of its offering and attraction to users. The fact that it has moved to license some content from trustworthy news providers is proof of the value proposition that reliable news content presents.

Will Canada grasp the nettle and introduce legislation to give news publishers greater control over their content, thus helping them to negotiate licensing fees with the big online platforms? Will the pushback from Google and Facebook in Australia give Canada pause? Heritage Minister Guilbault has said that Canada will not be bullied, comparing the tech giants to “polluters”, a reference to his earlier incarnation as an environmental activist. We will have to wait to see what transpires this fall. First, however, the Trudeau government has to survive a confidence motion when Parliament resumes at the end of September (recall that it is a minority government and requires the support of at least one of the three main opposition parties to survive such a vote), and then it has to decide that copyright issues require legislative attention at a time when response to COVID dominates the Parliamentary agenda.

There is a legislative opportunity, however. Despite COVID, Canada needs to introduce amendments to the Copyright Act to bring it into conformity with commitments made in the USMCA to extend the term of copyright protection in Canada by an additional twenty years. Canada has 30 months from the date of implementation of the Agreement, July 1, 2020, to do so. The statutory need to review legislation would give the government an opportunity to address some other issues at the same time, including fair remuneration for online news content.

I am sure the Canadian Government is watching with great interest what happens in Australia with regard to Google and Facebook and their attempts to roll back the proposed Australian legislation. Meanwhile this autumn’s legislative agenda is being considered and I am betting that the odds are pretty good that publishers of news content—and possibly final publishers of other types of content as well—will find themselves equipped with legal provisions designed to help them negotiate a fairer share of the online revenues that their content generates. If it doesn’t happen in the fall session, then look for legislation to be introduced next spring. Either way, the day of reckoning is coming for the big platforms. And it’s about time.

© Hugh Stephens 2020. All Rights Reserved

This post has been edited and updated to reflect recent remarks by Minister Guilbault on the situation regarding Google and Facebook in Australia and on possible action on this issue in Canada.

Undoing the Damage of the Federal Court of Appeal’s Decision on “Mandatory” Tariffs

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In April of this year, the Federal Court of Appeal (FCA) handed down its decision on the appeal by York University of an earlier Federal Court decision regarding a dispute between York and Access Copyright (the authors and publishing collective rights management organization) over York’s unlicensed use of material from Access Copyright’s repertoire. The initial decision had found not only that York’s “Fair Dealing Guidelines” were unfair, and did not justify York’s unlicensed use of these materials, but that York was required to pay the interim tariff established by the Copyright Board of Canada for use of the works. The FCA upheld the initial Court’s conclusion that York’s Guidelines were unfair but overturned the copyright world in Canada by determining that tariffs approved by the Copyright Board were not mandatory after all. Users could decide to opt out, leaving rights-holders only one recourse; to sue unlicensed users for copyright infringement. Unfortunately, most collective societies–like Access Copyright–are not rights-holders themselves but only represent rights-holders for the purposes of collecting royalties. 

For the non-cognoscenti, it might be useful to review what an “approved tariff” is, and what role the Copyright Board of Canada plays in establishing one.  According to its website, the Copyright Board of Canada is;

an economic regulatory body empowered to establish, either mandatorily or at the request of an interested party, the royalties to be paid for the use of copyrighted works, when the administration of such copyright is entrusted to a collective-administration society.”

Collective societies like Access Copyright, SOCAN, etc. were established to facilitate the collection of royalties owed to creators (musicians, songwriters, performers, authors etc.) for use of their works given the unfeasibility of thousands of creators chasing tens of thousands of users for small payments. The intent was to use economies of scale to keep costs down for rights-holders but also to make it simple for users to legally access content. To further simplify this system, and to avoid costly and unnecessary litigation, where parties could not mutually agree on a royalty rate or licence fee, tariffs were established to set a value on the use of copyrighted materials, such as music and published works. Parties could get together to propose a tariff in lieu of a licence agreement if they agreed on the royalty rate, but where it was impossible to agree on a value, one was set through adjudication by a quasi-judicial body like the Copyright Board. This “mandatory” tariff was then applied to all users who accessed a repertoire covered by the tariff. That has been the system for several decades, ever since the late 1980s when the proliferation of photocopying led to legislation that encouraged establishment of new collective societies through amendments to the Copyright Act. It was at that time (1988) that Access Copyright was formed. 

There were further amendments in 1997 to address the challenge of digital copying. Collective societies, (licensing bodies), were given new powers including the right to file a proposed tariff with the Copyright Board setting out the terms and conditions under which reproduction of the collective’s members’ works would be permitted. After the Board had certified (approved) a tariff, collective societies were allowed to collect the specified royalty and, if not paid, recover it in court. This system worked smoothly for a number of years in the publishing sector with Access Copyright, and its clients (primarily Provincial and Territorial Ministries of Education, school boards in Ontario and post-secondary institutions) voluntarily agreeing on a value for copying. However, over time the consensus as to what constituted a fair royalty rate for copying broke down and the Copyright Board was required to determine a tariff that would have to be paid. This process was cumbersome and protracted, with the result that an interim tariff often had to be established setting out royalties to be paid pending confirmation of the final tariff. It was at this stage that York University decided to opt-out of the interim tariff (back in 2011). The case went to the Federal Court, which denied York’s right to opt-out on the basis that the interim tariff, like a final tariff, is mandatory if an unauthorized use of a work in Access Copyright’s repertoire is made. This is the decision that the FCA has now reversed. 

The FCA’s decision went further than simply declaring an interim tariff to be optional. It declared that all tariffs that had been considered “mandatory” until now were in fact optional for users—and always had been despite the fact that a number of enforcement cases in the past, where collective societies had sued non-licencees, had been decided by requiring the “mandatory” tariff be paid.  As I documented in a blog posting back in June, (“When is a “Mandatory Copyright Tariff” mandatory only if you opt-in?”) this decision was arrived at on the basis of a 1930’s era judicial precedent and the Court’s reading of the legislative record in the 1980s and 1990s. The FCA decided that the original basis for establishment of the mandatory tariff back in 1936 was still the operative legal principle. During the Great Depression, Performing Rights Organizations (PRO) were accused of withholding repertoire from users such as radio stations, sheet music publishers and record manufacturers in order to increase returns, thus behaving in an anti-competitive manner. In the 1930s, the mandatory nature of the tariff was such that if a user opted to pay the established royalty, the PRO was required (mandated) to license the content. At that time, the obligation (mandatory nature of the licence) was on the rights organization or collective society to make the content available, not on the user to pay for using the content without a licence. 

Today the situation is exactly the opposite. Collective societies are eager to license content in their repertoire; the main issue is setting a value on it. That’s where the Copyright Board’s tariff determination and approval process comes into play. Today the issue is not that users cannot get access to content, it is that they are using it without obtaining a licence. When they do so, if a tariff has been approved for that content by the Copyright Board, the understanding has always been–until the FCA’s recent decision–that users of such content are required to pay the tariff (interim or final) whether or not they have sought a licence.

In reaching its decision, the FCA sifted through the entrails of the original 1930s court case and subsequent amendments to the Copyright Act over the years. It concluded that despite substantial redrafting of legislation in both 1988 and 1997, the original elements and language of the tariff regime, and thus the intent of a mandatory tariff, had never been changed. It is a surprising conclusion and we will not know whether the FCA is right until the Supreme Court of Canada (SCC) reviews the decision if it decides to grant leave to hear the appeal. (Both York and Access Copyright have appealed). However, there is no guarantee that the SCC will grant leave (known as certiorari in the US) to hear the case. The SCC has full discretion as to whether or not to hear cases on appeal, and it is not required to provide reasons for declining to grant leave. Less than one in six cases is successful in applying for review. Even if the SCC does agree to hear the case, it will likely take several years to reach a conclusion. In the meantime, a huge pall of uncertainty has been cast over the whole structure of copyright remuneration in Canada. 

But there is another solution. That is to have Parliament clarify the situation by amending the wording of the Copyright Act so that the intent of Parliament, as expressed through amendments in the late 1980s and 1990s, is restored. After all, while the Courts interpret the law, it is Parliament that establishes and enacts it. If the law is drafted in such a way that its wording fails to fully express the will of legislators, the Court can only follow the legislation. If the legislation is faulty, fix the legislation. That is no doubt what the Association of Canadian Publishers meant when they described the situation after the FCA decision as a “broken legal framework” and called for “urgent action on the part of the federal government…to implement reforms that will correct market damage and provide a policy framework that supports future investment in Canadian writing and publishing”.

Parliament will have just such an occasion this fall when it resumes after the Throne Speech in late September, following the prorogation in August. Legislation is required to amend the Copyright Act to bring it into compliance with Canada’s commitments under the new NAFTA (aka USMCA, or CUSMA in Canada). Canada made a commitment to extend the term of copyright protection by twenty years and has 30 months from the date of implementation of the Agreement, July 1, 2020, to bring its legislation into compliance. (There are a couple of ways it can do that, as I discussed here). That process will require a period of public consultation which is why it is important that the draft legislation be introduced at an early date. This affords an opportunity to address other urgent copyright issues at the same time, using the same committee process. 

The first of these is to fix the anomalies in the Act that have led to the FCA decision that undermines the mandatory tariff regime, affecting not just Access Copyright but most collective rights management organizations in the country. The amendments would be minor, but they would rectify the damage done by the FCA’s decision and restore some order and predictability to the licensing of content in Canada through collective societies.

Another is a proposal pushed by major Canadian newspaper publishers to require that news aggregators, like Google or Facebook, share ad revenues with news creators when they distribute their content through excerpts or snippets embedded in links. This is currently a live issue in France and Australia. Google is fighting back, threatening that Australians could lose access to free search and encouraging Youtubers to bombard the Australian government with complaints. These are classic Google scare and misinformation tactics that Google can be expected to also employ in Canada should the government decide to proceed with such a measure, as has been rumoured. Likewise Facebook is playing hardball with the Australian government, threatening to remove news content from its platform if the measures are enacted into law. I plan to write on this subject in my next blog. 

So far there has been no indication as to what issues the government will embrace as it considers its legislative agenda with respect to copyright, or whether it will bring forth legislation this fall or in the spring, but the opportunity to undo the damage wrought by the FCA’s decision on “mandatory” tariffs should not be missed. If there was ever a time to restore predictability and order to the marketplace, and to right an obvious wrong, this is it. 

© Hugh Stephens 2020. All Rights Reserved. 

Copyright on the Rocks

Photo by author

I was enjoying the hike along the rugged southern coast of Vancouver Island. Across the rippling waters of the Strait of Juan de Fuca, the snow-capped Olympic Mountains in Washington State glistened in the morning sun. Below me the sea crashed into the rocks and a seal poked its head through the fields of bull kelp. Bare-skinned arbutus trees twisted their smooth orange limbs toward the sky. As I rounded a rocky bluff, a familiar sign suddenly leapt out at me. Emblazoned on the rock ahead of me, as clear as day, was the universally known © sign. How did it get there? By whose hand? 

Closer inspection showed that it was created by a naturally occurring lichen formation (see photo above). But it was uncanny. It was as if nature had imprinted the scene with her own assertion of copyright. 

As I continued trudging along the rocky path, I couldn’t help but muse about that copyright sign. Was Mother Nature letting me know that she had copyrighted and laid claim to this magical scene? After all, copyright is all about protecting the rights of creators, and this led me to reflect on the greatest creator of all, whom we can call God, or Mother Nature, or the Great Creator or whatever you choose. (To each, one’s own definition). Was the Great Creator in the Sky asserting her or his right to this creation? The scene in front of me certainly qualified as original and creative (a beautiful morning like this surely did “not just happen”). But, as I explained in my blog last week, for a creation to be protected by copyright, there is that tricky problem of “fixation”. Also, we know that copyright does not protect ideas, only expressions of ideas. Was this scene an idea, or was it an expression of one–and exactly how do you separate one from another? (And was it “fixed” other than in my mind?) 

The Berkman Klein Center for Internet & Society at Harvard has an interesting discussion of the concept of originality and the exclusion of ideas from copyright protection. It points out that according to US copyright law;

 “In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated or embodied in such work.”

It also notes that the Berne Convention states that protection “shall not apply to news of the day or to miscellaneous facts having the character of mere items of press information”, and that both the TRIPS Agreement within the World Trade Organization and the World Intellectual Property Organization (WIPO) Copyright Treaty state that, while expressions are copyrightable, “ideas, procedures, methods of operation or mathematical concepts as such” are not.

So what are some of the elements that clearly illustrate the difference between an idea and the expression of an idea, the latter being subject to copyright? Many examples can be given; for example there may be only one Harry Potter but J.K. Rowling does not have a lock on the market for stories about boy wizards, so anyone is free to write on that subject. Some topics are generic and mundane, and cannot be copyrighted but yet these generic elements could form the core of a copyrightable work. As I discussed in an earlier blog, a recipe (a “mere listing of ingredients”, according to the US Copyright Office) cannot be protected by copyright. However, while a recipe to bake bread cannot be copyrighted, Beard on Bread is a copyrighted work because of the creative expression regarding the many aspects of baking that James Beard put into that book. 

Yann Martel’s Booker prize winning novel (and later award-winning film) Life of Pi was based on the premise of a boy sharing a boat with a tiger on an oceanic (trans-Pacific) voyage. Martel was accused by Brazilian author Moacyr Scliar of stealing this idea from his novel Max and the Cats, Scliar’s novel written twenty years previously in which a Brazilian boy and a panther cross the Atlantic together in a boat. Scliar accused Martel of plagiarism, and worse, and his publisher contemplated legal action. Martel freely admitted he had been inspired to adopt the “boy and animal in boat concept” by reading a review of Scliar’s work, but said he hadn’t read the novel itself. It didn’t go to court. Scliar dropped the issue after a conversation with Martel, but it is doubtful that Scliar or his publisher would have had much of a legal leg to stand on. People sharing boats with animals is an idea. His novel was his expression of that idea, but so was Martel’s. 

Sometimes it is difficult to separate an idea from its expression. When these become conflated this is referred to as “merging” or the “merger doctrine”. In effect, under this doctrine the expression of the idea has merged with the idea itself. In such cases copyright does not apply because copyrighting the expression would result in constraining the free use of the idea. A good example is the so-called “jewelled bee case”. In this case a jewelled pin in the shape of a bee was the subject of litigation. Would a similar jewel-encrusted pin in the shape of a bee created by another jeweller be an infringement of the copyright of the original jeweller? This was the question the court had to address in Herbert Rosenthal Jewelry Corp v Kalpakian. The court decided on the basis of the merger doctrine that the idea of a jewelled bee could not be protected by copyright, although the defendants could not copy every aspect of the original piece of jewellery (which they had not done, arguing that they had derived the design by studying actual bees).  Because the idea of a bee and its jewelled expression could not be separated, making a jewelled bee was not an infringement of copyright. 

A similar concept to the merger doctrine applies in the area of writing, called as a term of art “scènes à faire”. According to Duhaime’s Law Dictionary, this encompasses “Elements of an original work that are so trite or common that they are not captured by copyright.” There have been several well-known cases in the US where the courts have ruled that common elements of a plot cannot be copyrighted. For example, two police dramas set in the Bronx both involving Irish cops, prostitutes, and drinking would not necessarily involve copyright infringement on the basis of these elements because you likely couldn’t tell a police story in that setting without involving such characters and storylines. The US case where the scènes à faire principle was first enunciated (Cain v Universal Pictures) involved accusations of copyright infringement between the author of a book and a script written for a film. The judge ruled that elements in both such as a couple taking refuge in a church–and engaging in certain activities within the church such as praying and playing the piano–were, in effect, generic and were ideas rather than expressions of ideas. A recent case based on the same principles involved a suit against Disney by two screenwriters who accused the studio of lifting copyright protected elements from their screenplay to produce “Pirates of the Caribbean”. The court dismissed the case pointing out that the similarities between the leading protagonists of both works were common characteristics of pirates; 

“cockiness, bravery, and drunkenness are generic, non-distinct characteristics which are not protectable.”

“Scènes à faire” is not just some abstract copyright theory only relevant in the distant past. In the current dispute between Oracle and Google, in which Google is accused of copying Oracle’s “declaring code” (application programming interface, or API packages) to construct its Android platform, Google is arguing that Oracle’s code had become indistinguishable from standard industry practice and therefore it was entitled to use it without licence, similar to a “scènes à faire” argument. This is a bit hard to swallow when one considers that Google refused a licence from Oracle because it didn’t want to accept the terms of the licence, but then went ahead and copied Oracle’s copyrighted Java code anyway. As Keith Kupferschmid, CEO of the Copyright Alliance stated in an article at the time that the Alliance filed an amicus brief in support of Oracle;

“Google had other options, including creating new declaring code. And if Google wanted to benefit from Oracle’s innovative way to program device functions, it should have licensed the right to do so.”

I am sure that all of these legal arguments are well known to copyright lawyers and are probably a staple of any first year copyright law class, although I wouldn’t know, not having gone to law school! (At the time, I thought history was more interesting). So for you non-legal practitioners amongst my readers, I hope that this quick overview of ideas versus expressions of ideas may provide something new to think about. 

But back to the inspiration for this blog.  As I hiked along the rugged trail, still thinking about the © mark that seemed to have dropped from the sky, I concluded that no-one should be able to copyright this gorgeous setting. The creation that is Nature belongs to us all.  And by the way, let’s not screw it up for future generations. 

© Hugh Stephens, 2020. All Rights Reserved.

My Fixation with Fixation

credit: William Warby: Creative Commons Attribution 2.0 generic license

Sometimes I write about really serious copyright topics, like the economic impact of piracy or proposed changes in copyright legislation, and sometimes the blog posts are more whimsical (monkey selfie), light-hearted (rubber ducky), or practical (recipes), but they all deal with real copyright issues. I will let you decide which category this blog falls into, the serious or the whimsical. 

Earlier this year, just pre-COVID, my wife and I travelled north on Vancouver Island to Parksville, BC, a beach resort where, when the tide goes out, the sand dunes and tidal pools extend for at least a kilometer out to sea. It’s a great place to beach-comb and to build sandcastles. In fact, Parksville hosts an annual Sand Sculpting Competition as part of its Beach Festival held every July and August. Last year over 100,000 people visited and viewed the sculptures. (This year it has been cancelled owing to the pandemic). And sculptures they are. Gone are the days of your grand-dad’s sandcastle. These are sculptures that demonstrate true artistry, with subjects ranging from Icarus flying too close to the sun to sea monsters to fairy princesses. They are truly works of art, as you can see by clicking here. And a work of art ought to be protected by copyright, right?

To be eligible for copyright in the United States and in most countries a work needs three key elements (1) fixation (2) originality and (3) expression (of an idea). Originality requires that the work be created by the author and must possess “at least some minimal degree of creativity” (according to the US Copyright Office-USCO). Expression of an idea means taking a generic idea (such as a vase of flowers) and expressing that idea in a specific, creative way (such as a painting of the flowers). 

Fixation is a bit more complicated. Again, quoting the US Copyright Office with regard to US law, fixation requires that a work be “fixed in any tangible medium of expression, now known or later developed, from which [it] can be perceived, reproduced, or otherwise communicated, either directly or indirectly with the aid of a machine or device.” In Canada, there is no specific requirement for fixation, although it is implicit. 

As to how it is fixed, in the US the author’s expression may be fixed “in a physical object in written, printed, photographic, sculptural, punched, magnetic, or any other stable form.” In other words, the exact form of fixation is not prescribed, but some activities are clearly not fixed. A song that you compose in your head and perform for a live audience is not subject to copyright protection, but if you write down the music or record the performance of the song, that constitutes fixation. Therefore as long as your song meets the other basic requirements, it can be copyright protected. Ironically, if someone makes an unauthorized recording of your live performance, this can constitute fixation allowing you to claim copyright even though the recording itself is an infringement. Using the same criteria, a story that you tell someone does not qualify for copyright protection unless it is written down or recorded, but if it is “fixed” in some way the story (work) can qualify for copyright protection if it meets the originality test.  

What about a work that exists in a physical form but that form is not permanent? Like a sand sculpture. Does that form constitute fixation? Could a sand sculpting artist copyright their work for its original design and shape? 

The USCO provides the following guidance that a work may not be protected by copyright; “if the work or the medium of expression only exists for a transitory period of time, if the work or the medium is constantly changing, or if the medium does not allow the specific elements of the work to be perceived, reproduced, or otherwise communicated in a consistent and uniform manner. A sand sculpture, particularly one below the high tide mark, is certainly transitory. One that is built higher up the beach, in a protected area (like the ones at Parksville) is certainly less transitory but it wouldn’t survive a good rainstorm. (It doesn’t rain in Parksville in the summer, but if it did…..). What if the sculptor added a few secret ingredients, like a wee bit of Portland cement, to the moist sand? Now that could be permanent. But would it be a “sand” sculpture? It’s a copyright conundrum. 

The website New Media Rights, in a non-legal FAQ blog posting for creators discussing “What Can and Cannot be Copyrighted”, gives a sandcastle or an ice sculpture as examples of objects that cannot be protected by copyright because they are not fixed;

“’Fixed’ work is defined as a work that is “sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” For example, a sandcastle or ice sculpture that you worked all day on would probably not be considered fixed so it’s not copyrightable. However, as soon as you take a photograph of your sandcastle or ice sculpture, thus fixing it in reproducible medium other than your own memory, the image and design of the sandcastle can receive legal protection.”

There are two important points here. First they hedge their advice on whether these objects are subject to protection by copyright, by saying they “probably” would not be considered for protection. They are smart to hedge because very little is really definitive when it comes to copyright. Then they make the point that to obtain legal protection, all that needs to be done is take a photograph of the image. This will “fix” it since photographs qualify for copyright protection. However, the photograph is a separate work, not the original work so what if someone else took the photograph? They would then own the copyright in that photo, so it is important that if you are the sculptor, you take the photograph. 

OK, taking a photograph of the work is an easy out, but let’s chase this concept all the way down the rabbit hole. Suppose that no photographs were taken, but yet the author still wants to protect their creation from unauthorized copies. Could a sandcastle or an ice sculpture be sufficiently permanent to be fixed? 

I remember well the ice sculpture festival “Winterlude” that takes place in the depths of every winter in Ottawa, where I lived for a few years. Quebec City also has a well-known annual ice sculpture festival. The creations are truly remarkable as you can see here. Of course one day in late spring it will warm up in Ottawa (the world’s second coldest capital city, by the way, exceeded in frigidity only by Ulaan Bator, Mongolia’s capital), and the sculptures will melt. But what if the sculpture was carved at the North Pole, or in Antarctica, in a location that will always be subzero? (Until global warming allows palm trees to grow there). Surely then it would be fixed? What about an ice sculpture created for a hotel banquet table setting which, after it has been displayed, is then put back in the hotel’s freezer? It would be fixed as long as the freezer works, but perhaps not permanent. But “permanence” is not required for fixation. Law professor Marc Randazza pondered this question a few years ago in this blog posting; he concluded that an ice sculpture was fixed. 

The issue of fixation has been tested in the courts. The well-known law firm of Bird&Bird reports on a case in the UK where the High Court found copyright infringement of designs debossed in foundation powder pallettes. Once put on a consumer’s nose or cheeks, the design is gone in a puff of powder. But in Britain, under the Copyright, Designs and Patents Act of the UK;

Copyright in literary, dramatic or musical works does not subsist until the work is recorded in writing or otherwise (section 3(2), CDPA). Artistic works are not explicitly required to be fixed in a tangible medium.” 

According to the UK court, as reported by TwoBirds website; 

“The designs could be compared to copyright-protected sand sculptures that would be washed away by the tide. If the sculpture was not so protected, the artist would be unable to claim the copyright in a photograph of it. Similarly, a bespoke wedding cake that later was eaten could still constitute a copyright work, as could an ice sculpture that had melted. The court emphasised the unique position of copyright in an artistic work, in that it does not explicitly require permanence.”   

So in the UK at least, it doesn’t matter if the work has disappeared as long as it was in a tangible form at one point. 

On the cake design issue, a US law firm looked at a real situation where the cake for Barack Obama’s inauguration was copied by the Trump Administration, which ordered an exact replica but from a different bakery. The question was whether the original cake designer could sue for copyright infringement. This article pointed out that for legal action to be taken on a copyright case in the US, the copyright has to be registered, which it wasn’t, and questioned whether the baking of a layer cake and decorating it with designs using the Great Seal of the United States etc. was sufficiently original. We will never know. But the “transitory nature” of the cake did not seem to be an issue. 

I can go on. Chalk art is an interesting topic. It is probably transitory, like a sandcastle, but could last for a considerable period of time if it was in a protected setting. I found an article online regarding chalk art and copyright but it was a warning to chalk artists not to infringe the copyright of others by using unlicensed images as subjects of their art, rather than arguing that the chalk designs were protectable works of art in their own right. 

Then there is the “plating” (arrangement) of food on a plate by a chef. The California Law Review (May 2020) contains a well-researched article arguing that an artistic plating should qualify for copyright protection because it meets the standard of originality and expression despite the banality of the underlying ingredients and the fact that the food arrangement will disappear when eaten. On fixation, one argument advanced is that because the food plating arrangement is repetitively performed, night after night, the fact that it is consumed nightly does not mean that is not sufficiently stable to be “perceived, reproduced, or otherwise communicated for a period of more than transitory duration”, in the same way that an argument can be made for copyrighting of “conceptual art” (installations). It’s a valiant argument but to date has not been successful in court. In the only similar case cited (Kim Seng Co. v. J & A Imports, Inc), in which copyright was claimed in a specific bowl of Vietnamese food as a three-dimensional structure, the claim failed because the dish was ruled to be neither an original work of authorship nor fixed in a tangible medium.

How about fireworks displays? According to the IP law firm of Suiter Swanz, Can you Copyright a Firework Show?, the answer is “no” because it is not fixed in a tangible medium of expression. On the issue of photographing a fireworks display this blog notes that;

“the fact that uncopyrightable subject matter has been fixed through reproduction does not transform the underlying subject matter into copyrightable material.  For example, a photograph or video of a fireworks display may be a copyrightable fixation of the photographic image(s) of the fireworks display, but the fireworks themselves do not constitute copyrightable subject matter… Since a firework display is not recorded on a fixed medium it does not receive copyright protection and it can be photographed but not always recorded/filmed. The photograph taken of the display can be protected as an original photographic/artistic work, with the copyright typically owned by the photographer.”

As you can see, this is complex stuff! There are variations between different legal systems in terms of fixation, and in most cases, the issue is rhetorical rather than practical. The courts are not exactly inundated with cases questioning whether ice sculptures or sand sculptures are fixed and thus subject to copyright, but legal questions involving fixation do occur. These include questions such as whether ephemeral copies–temporary reproductions lasting just a few micro-seconds that are required for technological processes, like broadcasting–are subject to copyright. In Canada, the courts have held that they are reproductions under the Copyright Act; in the US, the situation is just the opposite, when it comes to broadcasting. Even though there is an ephemeral use exception for broadcasting in US law, there is no general ephemeral use exception in the US. In the EU, there is. As I said, it’s complicated. 

So what explains my fixation with fixation? In my defence, all I can say is that I find it fascinating to explore the nooks and crannies of copyright law and its various interpretations. I know it’s all a bit arcane, but I hope you enjoyed the journey. 

© Hugh Stephens 2020. All Rights Reserved. 

Are Libraries the Enemy of Authors and Publishers?

As regular readers of this blog will know, I am unabashedly and unapologetically pro-©, pro-creator, pro-author, pro-artist, pro-publisher and a strong supporter of our cultural and entertainment industries. I am also pro-public library. This raises the question of what to do about publisher Kenneth Whyte’s long and controversial opinion piece that appeared in the Globe and Mail on July 25, “Overdue: Throwing the Book at Libraries”.  (Byline: “As important as public libraries are to civic culture, the good they do is made possible by being a net harm to literature, Kenneth Whyte writes. Libraries are overdue for renewal”). 

Should I refute his criticisms of this venerated public institution? Others, including not surprisingly librarians themselves, have already done that. I could try to defend Whyte’s thesis, that public lending libraries undercut booksellers to the detriment of authors and publishers by giving readers for free what they should be paying for. But then his description of libraries as “pimping free entertainment to people who can afford it” becomes a little difficult to defend, even allowing that he may be deliberately using strong language for effect. I could simply ignore it, as it appears many others in the copyright world have done (and as a couple of friends suggested that I also do). After all, attacking libraries is not a helpful tactic in dealing with a public that is not always convinced of the benefits of copyright to society, and won’t win authors and publishers many friends. Techdirt, a notoriously anti-copyright publication has already jumped on Whyte’s article accusing him of being a “copyright maximalist” who hates libraries. 

Now since you are reading this blog, it is obvious that I did not take the friendly advice to avoid wading into the debate on Whyte’s opinion piece. Why? Because the issue he has raised, which is far from being cut and dried, intrigues me. There are many shades of grey on this one. Whyte’s piece is not the first attack on the role of the public library in the book trade, only the most recent. In Britain a few years ago, when British libraries were facing a funding crisis, popular children’s writer Terry Deary claimed that libraries had outlived their usefulness, being relics of the Victorian age when there was widespread illiteracy. He is reported to have said that: “People have to make the choice to buy books. People will happily buy a cinema ticket to see Roald Dahl’s Matilda, and expect to get the book for free. It doesn’t make sense”. 

There is little doubt that libraries do hustle for business, trying to broaden their appeal to consumers to justify their need for public funding, and this can make it sometimes appear that they offer (unfair?) subsidized competition to booksellers. A good example is this clip from “Curbside Larry” for the Harris County Public Library in Houston, TX. Yes, it’s hilarious and no, it’s not a spoof (I think). It certainly gets its point across that “we got it, and it’s absolutely free”. So librarians are good marketers of what they offer. Better that than stock a product no-one is aware of. They can also be very protective of their own turf to the point of even objecting to free pop-up libraries in parks and people’s front gardens. 

One measure that has been taken in Britain, Canada, Australia and New Zealand–but not the US–to help offset the diversion of revenues away from authors and publishers because of library lending is the Public Lending Right (PLR) scheme. Under the PLR authors (and in some countries publishers) get annual payments based on the number of time their titles are loaned out by libraries. These payments come from general government revenues and are a form of cultural subsidy. Deary complained that the British PLR paid him only 1/6 of what he’d get from a book sale. At the time he was getting 6.2p each time his book went out on loan up to an annual maximum of £6,600. He complained that “if I sold the book I’d get 30p per book. I get six grand, and I should be getting £180,000”. (I’m not sure about his math; just quoting). As for the Canadian PLR regime, Whyte describes it as throwing “a few beans at guileless authors in compensation for the use of their works in libraries”, and urges that it be vastly expanded and adopted in the US. 

The Canadian PLR was instituted in 1986 and was the result of concerns at the time by authors that they were being “ripped off” by libraries. Of course not every book loaned out is a foregone sale, a point repeatedly made by librarians. Maybe a sixth of a loaned loaf is better than 100% of a loaf that wasn’t sold and brought in no revenue? Just how generous the PLR actually is clearly depends on your perspective. University of Ottawa law professor and blogger Michael Geist points out that the PLR is the gift that keeps on giving for authors, earning them some revenue for up to 25 years (as long as their books are in a library’s inventory and go out on loan), albeit with a diminishing percentage as the years pass. In Canada, seven “marker” libraries are used to determine the inventory. That said, according to Geist the average payout per author last year was only $822 with a maximum per title of just $467.88 and the maximum payment to an individual author of $4,500. No one in the literary field is getting rich from the Public Lending Right. The total funding envelope is just over $14 million annually so for the PLR to provide any meaningful income to authors, it would have to be increased many-fold. That is unlikely to happen, despite Whyte’s calls for “more”. 

It is not just libraries that stick in the craw of some authors. Second-hand book shops are also a target. Authors get no royalties from sales of second-hand books. In the US this is known as the “first sale doctrine”, (called “exhaustion” in Canada and some other countries) and this principle allows the purchaser of a book to do just about anything with it once it has been paid for;  keep it, give it away, lend it, sell it or burn it; anything except copying and redistributing it. The authors gets their royalty from the initial sale. Stores selling used books are common, and often they “recycle” books by taking back books that have been “gently read” against a credit that can be used to purchase more used books from them. I frequent one myself because it has a great selection of out-of-print titles, but if it’s a relatively recent title that’s also available online at Amazon or Indigo, or at a bookshop selling new titles, should you feel guilty if you pick up your copy second-hand? Some writers think so; others are more relaxed about it arguing that the most important thing is that a book gets read. 

As an aside, the same principle of exhaustion (i.e. once you buy a work, you can do with it what you wish without further reference to the author, except for not violating the author’s copyright) applies to works of art in Canada and the US. As I noted in an earlier blog posting, there is a push afoot in both countries to get a legislated “Artists Resale Right” whereby an artist would get a small portion of the sale proceeds when one of their works is resold. (A resale right exists in the EU, UK and Australia). One notorious case cited in Canada is that of the Inuit artist Kenojuaq Ashevak, who sold her famous print “Enchanted Owl” in 1960 for just $24. An original print of the work recently changed hands for over $200,000 but her estate gets not a sou. All the benefit from the increased value of her work as she became renowned in the art community accrued to galleries and previous purchasers, and this pattern is often repeated with artists whose work becomes sought after later in their careers. A resale right wouldn’t work for writers though because (a) it would be difficult if not impossible to track the resales and (b) books usually—but of course not always—go down in value as time passes.

But back to libraries. So far I have been discussing how libraries and authors relate mostly with regard to physical books. Lending of digital works opens up many new questions. In the case of an e-book, a consumer typically does not purchase the work but rather licences the right to read the work on a device. The copy on that device could be loaned to someone, but the device would have to be loaned as well. However when loaning a digital book, you can’t have your cake and eat it too. You can’t lend out the work or give it to someone else while still retaining a copy. Libraries have got into the e-book business in a big way, often licensing multiple copies of a work (under terms where they pay considerably more per copy than an individual user would), and then lending out these e-copies to borrowers. However, it is important to note that if a library licenses ten copies of, say, The Handmaid’s Tale, only ten copies can be in circulation at any one time. One digital loan has to terminate before another digital copy can go out on loan to a new borrower. 

Despite this, many publishers are not happy and are concerned that the ease and ubiquity of library digital copies is cannibalizing e-book sales. The argument is that borrowing a physical book causes “friction” that can be alleviated by the consumer when opting for a purchase. Friction consists of inconveniences such as having to go to the library to pick up the book, often having to request it be put on hold, returning the book on time and paying a fine if not returned by the due date, etc. A digital book abolishes friction, as it can be downloaded at home from a library website and the download sunsets when the loan period is up. In an attempt to deal with this issue, in November of last year MacMillan announced that in order to encourage purchases it would withhold new digital titles from libraries for eight weeks after digital release to consumers, with the exception of one copy per library. This is similar in concept to the “windowing” strategy used by major film studios whereby the DVD or streaming release of a film is held back for a set number of weeks while the film plays in cinemas. That strategy is becoming less prevalent in the movie industry, in part because of concern that withholding the home entertainment versions encourages piracy as determined consumers try to skirt the rules to get access to pre-release streaming versions of popular films. Would delayed release also encourage e-book piracy, which is already a growing problem? It’s hard to say, and we may not find out, since MacMillan backed down after loud protests from the library community. However, COVID-19 was undoubtedly a factor and the policy could be revived in future in a post-COVID world. 

COVID was also the catalyst for another experiment involving digital lending and libraries, this time the so-called “National Emergency Library” launched by the Internet Archive in the US. Through its “Open Library” project, the Archive (and other libraries) had been pushing a project whereby it scanned books in its inventory and made them available for loan digitally, bypassing the normal licencing requirements for e-books. The issue of scanning a book to provide a digital version is controversial, with detractors saying this is a form of copying while supporters claim it is a fair use by simply changing formats. Until COVID hit the Archive was careful to follow normal lending rules by allowing only as many copies into circulation as it physically had in inventory. This is known as “controlled digital lending” and requires that if a scanned digital copy is loaned out, the physical copy stays in the stacks. In other words, there is a wait list and a limit on the number of copies in circulation (no more than the number of physical copies from which the scans were taken). 

With the arrival of COVID, the Archive announced that it was suspending the normal practice of maintaining a wait list and would allow unlimited digital copies to go into circulation. While a few initially lauded the Archive for taking measures to assist consumers self-isolating because of the pandemic, it was quickly pointed out that this unilateral move hurt authors and publishers—who were not consulted– and was a case of giving away someone else’s property. Publishers had already loosened controls during COVID and brought suit against the Internet Archive accusing it of giving away what it did not own. The National Emergency Library has now been closed but the suit over controlled digital lending continues. 

Kenneth Whyte, however, was not complaining about the Internet Archive’s agenda to digitally scan and circulate books for free; he was complaining about taxpayer-funded competition from public libraries who lend out both hard copy and digital books in apparent competition with publishers and booksellers. One of Whyte’s suggested solutions is to impose a charge to use libraries, like a monthly Netflix subscription, with an exemption for low-income borrowers. In other words, institute a means test for library borrowing. Somehow I don’t think that is going to catch on. In fact to judge by the majority of the reaction to his op-ed, his views are not mainstream, even amongst publishers. Kate Edwards, Executive Director of the Association of Canadian Publishers wrote to the Globe and Mail to put on the record that;

Canadian publishers recognize that libraries are an important part of the reading ecosystem and a primary channel for book discovery….Library sales are also an important part of the publishing business model…Readers are best served when libraries purchase and promote a diversity of material, including books by local authors published by independent Canadian presses. Increased investment in and attention to these efforts are critical to building a strong reading and literary culture. Publishers and librarians are well poised to pursue these shared goals in partnership, to the benefit of readers, writers and local communities.” 

That sound you just heard was the rug being pulled out from under Whyte by his publishing colleagues. That said, many writers and independent publishers are in a perilous financial position, particularly with the additional challenges of COVID. Publishers, booksellers and writers face challenges from large online book marketers and digital publishers like Amazon, second-hand book stores, consumers who pirate hard copy and e-books, universities and public education systems that refuse to acquire copying licences arguing that their actions constitute fair dealing and, yes, libraries. However that is the ecosystem we live in with all its complexities, and to single out libraries as the main problem seems disingenuous. It’s not cut and dried as to who is right and who is wrong, if that is even the correct way to assess the situation. The situation is complex, combining several hundreds of years of publishing and bookselling trade practices, a hundred and fifty years of public libraries, and twenty years of the digital revolution. 

Changing the public lending model and the role of public libraries is an unlikely and frankly politically unacceptable solution to the problem. However, ensuring that authors get paid for the use of their work by educational institutions, and taking stricter measures against digital piracy and unauthorized copying are actions that could be taken. In the meantime, despite the financial challenges that authors and publishers face, I can confidently predict that books will continue to be written, published, and sold in digital and hard copy formats, both new and used, while being simultaneously circulated by public libraries. There are many paths to literacy. 

© Hugh Stephens 2020. All Rights Reserved.