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

Source: National Post

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2021. All Rights Reserved.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2021. All Rights Reserved

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2021. All Rights Reserved.  

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

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

Bill C-10

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

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

Should there be a UGC Carve-out?

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

Intense Criticism

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

What’s the Real Issue?

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

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

Is UGC Sacrosanct?

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

Why Include Youtube?

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

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

Net Neutrality

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

Expected “Online Harms” Legislation

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

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

An “Internet Firewall”?

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

Expeditious Takedown

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

Holding Big Tech Accountable

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

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

Conclusion: UGC Must Comply with Laws and Regulation

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

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

© Hugh Stephens 2021. All Rights Reserved.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Case dismissed.

© Hugh Stephens, 2021. All Rights Reserved.

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2021.

Site-blocking for “Online Harms” is Coming to Canada: Similar Measures to fight Copyright Infringement Should Follow

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Heritage Minister Steven Guilbeault is steaming full speed ahead with his strategy to get his arms around large internet platforms that deliver, or facilitate the delivery of, content to Canadians. The strategy has three prongs; (a) bringing digital streaming content providers under the oversight of Canada’s broadcast regulator, the CRTC, (b) requiring major social media platforms and search engines to compensate Canadian news providers when their news content appears on those platforms (similar to what has happened recently in Australia) and (c) establishing a regime to regulate “online harms” disseminated on social media. This regime will hold social media companies responsible for illegal content on their platforms if not removed expeditiously as soon as they become aware of it, and will require Canadian ISPs to block offshore websites and streaming services that disseminate illegal content to Canadians over the internet. These online harms proposals respond to public demands to deal with illegal online content related to sexual exploitation of children, hate speech and other harms, but similar principles could be applied to another form of online illegality that also harms the public, copyright infringement by offshore pirate sites.

No legislation has yet been introduced to implement blocking of sites disseminating harmful content although there have been plenty of signals that it is coming soon. It is reported that it will cover five categories of illegal content; hate speech, promotion of terrorism, child pornography, content that incites violence, and revenge porn (sharing of non-consensual images). A regulator will be established to assess and enforce compliance with the new regulations. Enforcement will possibly be done through a court order that, in the case of websites located offshore beyond the reach of Canadian law, would require Canadian ISPs to block content falling into the prohibited categories. Predictably there has been an outcry from the “usual suspects”, civil liberties groups, and “internet freedom” advocates who will argue that “net neutrality” requires that ISPs treat all content on the internet equally. (But net neutrality covers only lawful content.)  

There are concerns, some no doubt legitimate, that the new regulator could over-block in isolated instances, but it is expected there will be a transparent mechanism for appeal. This is essential as some online harms are easier to identify than others. No one is going to stand up and argue that child pornography should be available on the internet, but opponents of site blocking will argue that advocates for restrictions are using the fight against child sexual exploitation to open the door to broader “government censorship”. Questions will be raised about how to define terrorism, hate speech and inciting violence, but according to one legal website, “The new legislation is not set to expand on what is illegal, but is designed to address what is already illegal”. In other works, what is already illegal offline should be illegal online. The logic is irrefutable. That said, a more precise definition of “hate speech” may be required. When it comes to issues like hate speech, incitement to violence and even terrorism, there are potential grey areas, as the (in)famous adage that “one man’s terrorist is another man’s freedom fighter” so aptly illustrates. There is little doubt there will be some controversy and debate as all this gets sorted out. However, the main objective of getting racist, hateful, violence inciting, dangerous and otherwise illegal content taken down quickly or disabled is hard to argue with.

Quite apart from targeting offshore websites squatting in cyberspace beyond the reach of the Canadian courts, the legislation will ensure that social media platforms take greater responsibility for the content they disseminate. The “free pass” that major internet platforms have enjoyed to date (in the US through Section 230 of the Communications Decency Act of 1996) is coming to an end. Greater accountability is being propelled by the misuse of the platforms by some users combined with an unwillingness of the platforms to exercise control. With respect to offshore websites, blocking them at the (electronic) border is just about the only practical way to regulate what they disseminate.

These measures are all about illegal content and the application of existing criminal law in the online space.  They do not deal with copyright infringing content, but the same principles apply to impeding distribution of pirated content as they do for online harms.  The likely establishment of a new regulatory agency to implement offshore site blocking to restrict certain types of harmful content offers an interesting parallel for copyright holders. Canadian content stakeholders have already tried once, unsuccessfully, to initiate a regime for blocking offshore websites offering pirated content. They may be more successful this time.

That earlier effort, launched in early 2018, was called the FairPlay Canada coalition. It brought together  several major unions, the public broadcaster (CBC), five of the six largest national telecommunications providers, specialized TV providers, a major sports entertainment company, the country’s largest film festival, several major cinema exhibition chains, independent cinema operators, independent film producers and a combination of English-language, French-language and ethnic media, all with the goal of petitioning the CRTC to allow the establishment of an Independent Piracy Review Agency to adjudicate complaints of unauthorized distribution by offshore websites of content owned or licensed by Canadian rights-holders. If a complaint was authenticated by this administrative body (which contained a built-in appeal process), it would recommend the issuance of a site blocking order to the CRTC. Since the CRTC regulates the telecommunications sector (as well as broadcasting), FairPlay Canada argued that the Commission had authority to issue blocking orders to Canadian ISPs. The CRTC, after a series of public hearings and an internal review, disagreed. It claimed it did not have jurisdiction and referred the issue to Parliament.

Despite testimony in 2019 before  the Parliamentary committees reviewing the Copyright Act that site blocking would be an effective remedy against offshore piracy, the committees did not recommend it. The Industry and Technology (INDU) Committee, one of two committees reviewing the Act, came out with a wishy-washy, non-substantive recommendation (while raising the canard of net neutrality);

Following the review of the Telecommunications Act, that the Government of Canada consider evaluating tools to provide injunctive relief in a court of law for deliberate online copyright infringement and that paramount importance be given to net neutrality in dealing with impacts on the form and function of Internet in the application of copyright law.”

“Consider evaluating…” is not exactly a strong recommendation for action.

The Heritage Committee’s recommendation was even less helpful and less specific. The only tangential reference to site blocking that this committee listed in its recommendations was that the Government of Canada “increase its efforts to combat piracy and enforce copyright.”

As a result, to date no legislative action has been taken, although there are recent signs this may be changing.

With content owners and rights-holders not getting much joy from Parliament, action turned to the Courts. Somewhat surprisingly, since it was the first time it had done so, the Federal Court issued a site blocking order in November 2019 in the case of GoldTV, an egregious offshore piracy operator that had ignored previous court injunctions. The order was not opposed by any of Canada’s major ISPs but an appeal was filed by a small MVNO (mobile virtual network operator), ISP access reseller Teksavvy. The appeal was subsequently joined by a couple of “internet freedom” groups. It is hard to discern Teksavvy’s interest in appealing except that as a small reseller trying to carve out a customer base from the major ISPs, to be able to portray itself as a champion for unrestricted use of the internet (even to access illegal or infringing content) might be seen to give it some market advantage. (“Consumers of pirated content, you are welcome here”).  It is a specious way to run a business, but if the online harms legislation goes through, Teksavvy will have to comply with it like everyone else. The GoldTV case is ongoing, with the most recent court hearings being held in March of this year.

Meanwhile it looks as if the Trudeau government is finally getting serious about holding internet intermediaries to greater account when it comes to facilitating copyright infringement.  A discussion paper for public consultation proposing a host of possible actions to hold intermediaries–defined as including ISPs, cloud and web hosting services, search engines, web-based messaging and social media–to account, was released by the Industry Department (now known as Innovation, Science and Economic Development Canada) in mid-April. A number of ideas are floated in the paper, from tightening eligibility for safe harbour immunity (for example, by adjusting the knowledge standard related to infringing activity), to compulsory remuneration through collective licensing for use by intermediaries of copyrighted content, to establishing a statutory basis and procedures for injunctions against intermediaries, including site-blocking, de-indexing and takedown orders. The focus is on commercial-scale infringement, rather than individual actions. The comment period closes at the end of May.

This copyright-focussed consultation should be seen in the context of the ongoing discussion about regulating online harms. Driven by public dismay at the impunity with which internet platforms are used to spread dangerous, illegal and harmful content (Montreal-based Pornhub became the poster-child for irresponsible behaviour), the Government of Canada–with Heritage Minister Guilbeault as point man–is responding by proposing injunctions and site blocking for dissemination of illegal content on the internet, whether by domestic or foreign players.

Assuming an online harms regime is introduced, including establishment of a regulator to assess and act on illegal content through a transparent process, the public will gain confidence that the internet can be regulated appropriately in much the same way as offline content is regulated. If a process can be put into place to deal with online harms, one form of illegal behaviour on the internet, it can equally be applied to other forms of illegal conduct, such as copyright infringement. In fact, in some ways it is easier to determine copyright infringement than it is in the case of some online harms such as hate speech, terrorism and incitement to violence, which arguably have grey areas. Despite legal definitions, there will always be a degree of judgment required. In the case of copyright infringement, in the vast majority of cases the rights-holder is not in dispute. Most infringers will likely not even appear before a court or administrative tribunal to dispute the case.

Quite apart from the current GoldTV court case, it appears that the Trudeau government is finally prepared to move on site-blocking, amongst a suite of other measures to hold internet platforms more accountable. This includes requiring platforms to takedown harmful content expeditiously (no more immunity from liability if platforms fail to act or turn a deliberate blind eye to illegal content posted on their sites), along with blocking or disabling access to offshore websites disseminating similar illegal content. While not directly related, this should help lay the groundwork for the introduction of injunctions and site blocking measures to deal with illegal behaviour in the area of copyright infringement.

Although copyright enforcement is separate from the issue of online harms affecting internet users, there are nonetheless some similarities given that unrestrained copyright infringement also damages the public interest. Leaving aside the harm piracy inflicts on the economy and creative industries, widespread access by users to offshore pirate sites has other downsides, including exposing users to malware leading to extortion and worse, along with promotion of dodgy products and specious services. When it comes to the web, pirate sites operate on the periphery, outside normally acceptable business practices, and constitute yet another form of online harm.

Canada’s determination to address online harms through legislation will set a useful precedent that rights-holders can build on to develop similar measures to combat online piracy. The first hint of what may constitute a “Modern Copyright Framework for Online Intermediaries” is also now out for public consultation. At the end of the day, enacting reasonable controls over the practices of internet intermediaries and platforms is essential from a variety of perspectives, whether it is protecting children, combatting hate and racism and, yes, fighting piracy on behalf of creators and rights-holders.

© Hugh Stephens, 2021. All Rights Reserved.

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SMEs and IP: The Biggest Challenge For Many Small Businesses—Protecting their Intellectual Property

This year the theme for World Intellectual Property (IP)Day, April 26, is “SMEs and IP”. As the World Intellectual Property Organization (WIPO) points out, SMEs (Small and Medium Sized Enterprises) are the backbone of the economy; they constitute 90 percent of the world’s businesses and employ around 50 percent of the global workforce, generating up to 40 percent of national income in many developing economies. Many micro and small businesses depend on their creativity and innovation to establish a niche for themselves in a competitive marketplace. At the same time, they often face major challenges in protecting their unique creations because they generally lack the wherewithal—knowledge, time, money—necessary to protect their IP. This has been demonstrated time and time again and is an important factor that needs to be taken into account when discussing the importance of IP to small businesses. While many national and international IP authorities focus on the lack of capability to access and incorporate IP into product development–or to properly manage IP–as the major challenges faced by SMEs, their limited ability to protect the IP they already have is also an important issue of concern.

But first what is an SME? There are various definitions of an SME; the European Commission defines a Medium Sized Enterprise as a company having less than 250 employees and an annual turnover of 50 million Euros or less (about $60 million USD), a Small Sized Enterprise as having less than 50 employees and a turnover of less than 10 million Euros and a Micro Sized Enterprise as one having less than 10 employees and an annual revenue of less than 2 million Euros. Many of the companies in this sector are micro-enterprises with just one or two people working to generate income, and indeed, the new term of art incorporates micro enterprises into the acronym as MSMEs (Micro, Small and Medium Sized Enterprises). Many micro enterprises, estimated at about one-quarter of the total, are run by women entrepreneurs and are an important vehicle for social and economic development and greater gender equity.

A few years ago I wrote a blog posting about knitting, crocheting, publishing and copyright featuring Joanne Seiff, a Winnipeg-based author and knitwear designer who was, in effect, running her own MSME. Knitting is a hobby and an industry where most of the players are women, and it is an activity that is growing, spurred on in part by the lockdowns of COVID.  The Craft Yarn Council reports that over 50 million people in the US knit or crochet. Knitters are motivated by many things and come from all regions and all age groups. Even young children can be introduced to knitting through use of creative instructional techniques such as setting knitting rhythms to nursery rhymes. While most of the participants in knitting do it a hobby to make items for family, or to raise funds for charity or just to relax, there is a business—an IP related business— behind knitting and writing about knitting. There are some big players but many who earn revenue from knitting-related activities are micro businesses. And this is where protecting IP becomes a challenge.

Knitwear designs are creative works protected by copyright. Creating, editing, distributing and selling new designs is an essential part of the industry, just as important as selling wool, needles and the other accoutrements of the trade. Unfortunately, designs are often copied and distributed, sometimes unthinkingly, as a form of unauthorized “sharing”. When I wrote my first blog on this topic back in 2016, Joanne commented that, in her experience, copyright violation in knitting and crocheting is frequently disparaged as unimportant because it is a predominantly (but not exclusively) female industry. It is seen by some as a “cottage industry” with women earning “pin money” and therefore not taken seriously.

I recently reconnected with Joanne to see how things were going in the era of COVID. She said it is still a challenging business-albeit one that she seems to really enjoy. As with any business, there is upfront investment in the hopes of hitting the jackpot with a design that takes off. She pointed out that it is time intensive to develop and make the sample for each pattern (and have it photographed, written up, tech edited, uploaded online to various sites and then marketed), with each pattern that is downloaded yielding around $5 to $10. A pattern needs to sell a lot of copies over time to break even or make money—but if just one percent of Americans who knit bought a particular pattern once and paid $10 for it, that would amount to…..$5 million! Not too shabby.

While not every micro-business is a success, any more than every multi-national enterprise is successful, there are some encouraging examples. One of these is Kate Davies Designs, a Scottish enterprise founded by Kate Davies in 2010 that has now grown into a successful small business that was named UK Microbusiness of the Year in 2016.  KDD & Co. now encompasses many different aspects of publishing, design, and creative practice related to yarn and knitting. Another is Denise Bayron’s business, Bayron Handmade, in California. Yet another is Sarah Schira, of Imagined Landscapes, in Manitoba.

When it comes theft of IP, the problem is that the more successful a pattern, the more likely it will be infringed. In Joanne’s words, there are sites in Russia and elsewhere that steal the designer’s photos, buy or steal one pattern, perhaps translate it, and then sell it online. Then there are those such as the occasional knitter who feels that if she paid for that “cute bunny knitting pattern” once, she can make dozens of the bunnies and then sell them at craft sales.  This is not technically against the law, but it goes against the intent of the designer who sells the $5 for single use only.  Some people look at the design and reverse engineer it. Human “ingenuity” has no bounds when it comes to trying to get something for “free”.  So how can micro businesses protect the IP that is the stuff and substance of their product offering.

In Joanne’s view, there has to be sufficient capital available to invest in IP protection at the beginning of the process. Shortage of capital is a perennial problem for small businesses, who have to make difficult decisions as to where to allocate scarce funds. Product design, better distribution or legal fees to protect IP? Some small businesses have enough money upfront to protect their product (through patents, copyright, registered designs, etc) and to fund the legal support to fight the battles on the business’ behalf. But unfortunately, most knitting designers (writers, artists, etc.) are never in this category.  For many people who have a very small business, there’s not enough income up front to do anything preventative from the outset.  Further, when something goes wrong, there’s not enough money to follow up properly with legal action.

It is not just pattern designers who face this dilemma. Many writers, graphic artists and musicians, as soon as they start to enjoy some sort of success, face the same challenge of monitoring infringement, chasing it down, sending notices to online sellers and distribution platforms, (usually while trying to avoid incurring legal bills by not engaging a law firm), all while trying to continue to create and produce appealing new content. This is the curse of the small or micro business and the independent artist.

If governments want to help SMEs and empower the small business sector, they need to find ways to allow small businesses to protect their IP without breaking the bank. That is the prime motivation for the passage of the CASE Act in the US (Copyright Alternative in Small-Claims Enforcement Act of 2019), which was enacted in January of this year. Once operative, it will establish an alternate form of settling copyright infringement claims (think, “small claims court” for copyright cases) to allow rights-holders to avoid the costs of litigation in a federal court. Under the CASE Act, a Copyright Claims Board will be established within the US Copyright Office. The process is voluntary (the plaintiff must choose to use the Board and the respondent must agree), statutory damages are limited to $15,000 per work or $30,000 per case and the work in question must be registered with the Copyright Office.

The CASE Act is one example. In the UK there is the Intellectual Property Enterprise Court (IPEC) which has the capacity to perform much the same function. According to IPEC, the small claims track within the court provides “a forum with simpler procedures by which the most straightforward intellectual property claims with a low financial value can be decided:

• without the need for parties to be legally represented

• without substantial pre-hearing preparation

• without the formalities of a traditional trial and

• without the parties putting themselves at risk of anything but very limited costs.”

That is the sort of facility that small businesses need, but a streamlined legal process only works when the perpetrator (or suspected perpetrator) is known. Much infringement takes place online, where perpetrators can hide their true identity. To combat this kind of infringement, both platforms (like Amazon) and governments have a role to play. My brother, a successful indie author who has published several e-books on Kindle through Amazon, discovered that one of his more successful books was being pirated (by definition, only successful books get pirated) and listed on Goodreads (owned by Amazon).   It was also a Kindle edition, with only a slight spelling change in the title. He brought it to Amazon’s attention whose response was to suggest he contact the website (which Amazon owns) and consider applying DRM (digital rights management) to the work. DRM is one solution but is easily stripped off the work. In fact, when I searched “DRM and Kindle”, the first listing on Google was “Remove the DRM from Kindle Books”. If you do decide to list your work on Amazon, the platform has a form you can submit to report infringement. How much is done about it by Amazon is another question.

Given the prevalence of online copyright infringement, any means that helps interrupt the distribution of pirated content is helpful. In this regard, various forms of site-blocking that have been instituted in a number of countries are a useful tool. (My World IP Day blog last year focused on the need to forge a global solution to the problem of global piracy by expanding site blocking). Site blocking in some countries (UK, Australia, Canada—just one case so far) is triggered only through the courts—a process which favours complainants with the means to pursue legal action, normally large companies. However, in some other countries (Portugal, Italy, Korea, for example) there is a relatively simple administrative process in place that allows rights-holders to seek a site blocking order, making it more accessible to SMEs. Site blocking orders require ISPs to block offshore web and streaming sites that promote and distribute infringing pirated content. In Canada a number of content owners tried unsuccessfully to petition for the establishment of an administrative site blocking review entity (the Independent Piracy Review Agency) operating under the oversight of the telecommunications and broadcast regulator, the CRTC, but were unsuccessful when the CRTC determined that establishment of such an agency was beyond its mandate. The problem, however, has not gone away and is now being resolved through the courts.

To come back to SMEs—they face many challenges; underfunding, difficulties in distribution, and issues related to IP, both access to innovation and protection of IP they have developed. For small businesses that require access to patented knowledge, mechanisms and concepts such as open innovation and various technical support programs offered by national governments and WIPO can help. For copyright based small businesses, the biggest IP challenge is fighting piracy with minimal available resources. The more that governments can do to facilitate enforcement action and lighten the burden on rights-holders seeking to protect and enforce their rights, the better.

As Joanne Seiff summed it up, “yes, SMEs can definitely succeed if enabled by good IP protection”. That is a big “if” and a good reminder to all concerned as we mark World IP Day.

© Hugh Stephens, 2021. All Rights Reserved.

The 2021 Global IP Index Report: Implications for Copyright

Credit: US Chamber of Commerce. Used with permission

The US Chamber of Commerce’s Global Innovation Policy Center (GIPC) has just published its 9th annual report assessing and ranking the intellectual property (IP) policies of 53 countries worldwide against a set of performance indicators, 50 in all. IP policies and practices are evaluated in nine categories, covering patents, copyrights, trademarks, design rights, trade secrets, commercialization of IP assets, enforcement, systemic efficiency and membership in international IP treaties. Each category has a set of specific sub-criteria against which each economy is evaluated. In the case of copyright, the seven sub-categories are term of protection, exclusive rights, injunctive-type relief, cooperative action against piracy, limitations and exceptions, digital rights management, and government use of licensed software. There is a detailed report on each of the 53 economies, a chapter summarizing the global IP environment in 2020 and chapters highlighting key issues in each of the categories. Produced for the Chamber by the consulting firm Pugatch Consilium, it is truly a magistral work, an amazing compendium of information and insights.

Current Trends

While the country rankings are interesting, it is the trends as much as the rankings that are important. In 2020, GIPC concluded that 60 percent of the 53 countries measured improved their overall scores over the previous year, with an overall improvement rate of over six percent since 2014, with improvement rates in many large developing countries exceeding that substantially. The score for China, for example, has improved by 18 percent over that period while India’s has increased by 13 percent. This year the report understandably focusses on the role of IP industries in meeting the challenges of COVID-19, from the rapid development of vaccines to the role of digital industries in keeping us connected and sane during periods of COVID lockdown. In particular, the research-based pharmaceutical industry has stepped up to meet the challenge of developing several vaccines in a historically short period of time, and then producing them to scale. The report states clearly what must surely be an intuitive conclusion for most people, namely that “economies with stronger national IP environments have higher levels of innovation capacity and produce more innovation in the form of new products and technologies”.

I last wrote about the GIPC Index Report in 2017 and 2018, focusing primarily on its copyright aspects, as I will do today. Not having looked at it closely for the past three years, I thought it was time to see what has changed, what progress has been made, and what new challenges have surfaced, particularly with respect to the copyright world. The report notes that there continues to be a challenging environment for creators and copyright holders in the majority of the economies sampled, with 32 of the 53 economies failing to reach a score of 50%. The scores (out of 100) ranged from a high of 96.43 for the US to a low of 18.29 for Vietnam. Some economically advanced countries, like Switzerland, scored below the 50 percent mark, and there is an extensive discussion of the problems with protection of copyright in Switzerland in the Copyright chapter.

Copyright in Switzerland

The problem has to do with a loophole in Swiss law related to the protection of personal data that makes it difficult to combat online infringement, leading to the country becoming a preferred location for pirate sites. Also, there is a private use exception allowing downloading even if the material downloaded is infringing, and there are no injunctive relief (site blocking) measures. Overall, Switzerland scores just 48.29 in the copyright category although it scores highly in other categories and is ranked 9th overall out of 53.

Effect of Trade Agreements

One of the Report’s key findings is that “trade agreements continue to substantively improve national IP frameworks. That is certainly true with respect to trade agreements signed by the United States given that strengthening of IP protection is always one of the prime negotiating goals of the US Trade Representative, the US trade negotiator. However, even in the case of trade agreements not involving the US this principle holds generally true, although perhaps not to the same extent as with agreements to which the US is a party. The recent Regional Comprehensive Economic Partnership (RCEP) Agreement is a case in point. Although its IP chapter was not the most sophisticated or far-reaching, it nevertheless marked a positive step forward in terms of levelling up standards of IP awareness, compliance and commitments across 15 economies of varied size and development in the Asia-Pacific region.

A major trade agreement cited in the GIPC Report is the new NAFTA (aka USMCA/CUSMA) Agreement, which has led to positive copyright changes in both Canada and Mexico.

Canada and the CUSMA/USMCA

In the case of Canada (which scored 16th overall and 19th in the copyright category, at 57.71), the report notes that under the terms of the CUSMA/USMCA, Canada extended the terms of “some” copyright terms to 75 years. This actually relates to a very minor category of works (anonymous and pseudonymous works) where, if the identity of an author is unknown and the work is unpublished, the work will now be protected for 75 years following its creation (an increase from 50 years of protection). If it is published during this period, copyright will subsist for a further period of 75 years from the date of publication.  However, if the author becomes known, copyright reverts to life of the author plus 50 years, the current period of protection. But that is going to change by the end of 2022 at the latest as Canada made another commitment in the USMCA that has not yet been brought into effect, namely to extend the term of copyright protection for a known, published work by an additional twenty years beyond the date of death of the author, from “life plus 50 to “life plus 70”.  

How exactly that is going to happen is currently the subject of a public consultation, as I noted in a recent blog (Canada’s Copyright Term Extension Consultation: Why all the Tinkering Around the Edges?)  with various options being floated to deal with orphan works (where the author is unknown or cannot be located), as well as out-of-commerce works. There is also the outside possibility that extension of the term of protection will be made subject to a registration requirement, an additional bureaucratic hurdle advocated by some copyright minimalists. This would be a mistake, and happily the language in the government’s consultation paper seems to suggest that this is not a favoured option.  Presumably when the “life plus 70” standard comes into effect, Canada’s score under the “term of protection” indicator will increase further.

Mexico and the USMCA

Mexico (23rd overall, 20th in copyright at 54.14) also comes in for a shout-out owing to USMCA commitments in the copyright area. Changes to Mexican law as a result of USMCA commitments include a new notification system for removal of infringing online content, provisions outlawing the use, manufacture, sale, importation and distribution of DRM (digital rights management) and technical circumvention devices, and making illegal the use, manufacture, and sale of satellite signal decoders. These are all incremental steps toward a better environment for the protection of copyrighted content in Mexico, although there is still room for improvement.

China

Other countries singled out in the copyright section include China, Saudi Arabia, Ukraine and Costa Rica. China (24th overall, 25th in copyright at 43.29) introduced a number of changes to strengthen its copyright laws as a result of bilateral discussions with the US in 2020, among them new definitions of copyrightable material, clearer definitions of performance rights, sound recording and broadcasting, and increases to statutory damages for copyright infringement.

Saudi Arabia

Saudi Arabia (37th overall, 31st in copyright at 36.14) was given credit by GIPC for stronger enforcement efforts. This is a welcome change as the Kingdom has long been a hotbed of piracy, including state-sponsored signal theft directed at Qatar’s BeIN Sports Network. This was done primarily for political reasons as I noted in my blog post on “Content Piracy as Hybrid Warfare”. This situation now seems to have been resolved after a World Trade Organization (WTO) panel ruled against the Saudis and found them in violation of WTO rules by virtue of failing to protect the intellectual property (broadcast signals) of an entity based in another WTO member state (Qatar). For this and other reasons, the Saudis finally took action to block a number of websites that had been distributing Illicit Streaming Devices (ISDs) that were providing access to a Saudi-based pirate sports network (protected by senior Saudi officials) competing with BeIN Sports.

Use of Unlicensed Software

Government use of unlicensed software is the big copyright issue in both Ukraine (39th overall, 43rd in copyright at 26.14) and Costa Rica (25th overall, 22nd in copyright at 49.86), with Ukraine failing to make any progress over the past eight years despite an official edict requiring government offices to use only licensed software. Costa Rica, on the other hand, has managed to get a handle on the problem by implementing a new automated registration, compliance and software asset management platform, allowing all ministries and government organizations to file annual software audits and proof of licensing compliance. This is a good example of how simply passing a law requiring government entities to acquire software licences has no effect without a concrete and enforceable implementation and monitoring plan. Costa Rica has figured this out; Ukraine is either unable or unwilling to do so.

Conclusion

In addition to analysis of IP performance by category, the GIPC Index includes detailed country reports on all 53 economies included in the survey. This makes it an invaluable comparative resource. Whether you want to know more about the state of enforcement in Algeria, systemic efficiency in Morocco or how copyright is protected (or not) in Venezuela, it is all here, along with a complete explanation of how the various indicators were assessed and scored. I have mentioned the scores of the countries highlighted in the copyright section, but if you want to know how “your country” fared you can check the results quickly by going to the Executive Summary of the Report.

Let’s hope the trend of steady improvement seen over the past several years continues, in the area of copyright as well as the other aspects of intellectual property measured by the Index. Kudos to GIPC for producing this invaluable report.

© Hugh Stephens 2021. All Rights Reserved.

Caillou: Did the Little Boy’s Bad Temper Spill Over to the Copyright Squabble between his two “Mothers”?

Credit: Flyclipart.com

Early this year PBS announced that it would cease to carry the Canadian animated children’s TV show “Caillou” (which means “pebbles” in French) after twenty years on the network. Since Caillou is a series not without controversy, some parents no doubt breathed a sigh of relief while others pondered their electronic babysitting options.

To those of you who don’t have young children in your life (at the moment or previously), Caillou may not be on your radar. There is a whole world out there—characters, vocabulary, controversy—forming part of the children’s entertainment scene that is familiar to many, and almost unknown to others. If you have had children, or looked after young children—yours, those of others, your grandkids etc.—names like Dora the Explorer, Peppa Pig, Curious George and, of course, Caillou, will be well known to you. How else to get through the period of preparing dinner with a four-year old around your ankles?

The demise of Caillou on PBS—it will continue to be broadcast on the Family Jr. channel in Canada and may be picked up by some other outlet in the US—will no doubt not end the controversy over the main character’s behaviour. Parents either love or loathe the little bald boy. Caillou was produced between 1997 and 2010 under licence to CINAR and has aired in 70 countries around the world. The books on which the series is based have been translated into over a dozen languages and sold 15 million copies. This makes it one of the more successful Canadian cultural exports, although some who dislike Caillou’s behaviour when he is frustrated have wondered whether his occasional histrionics reflect lax parenting standards in Canada. The smouldering discontent with Caillou burst into open flames a couple of years ago when he was featured in one of Canada’s two national dailies, the National Post, under the title, “Caillou is an aggressively bad show ruining the world’s children … and it’s all Canada’s fault”.

To parents who don’t like Caillou’s portrayal of a four-year old’s behaviour, I say, “change the channel”. Maybe four and five year old kids enjoy watching a show that portrays how someone their age actually reacts to things beyond their control rather than having to absorb a morality play. I must say I have never been able to force myself to actually watch a full episode of Caillou—although I have read the newspaper or books while it has been on the screen and have thus listened with one ear—but I don’t recall anything especially obnoxious. I do recall certain homilies and virtues being emphasized, but I don’t think that my grand-daughter’s behaviour was any better—or worse—for having watched it. All I know is that she enjoyed it and, for a certain period of her young life, when asked what she wanted to watch on TV, the response was invariably “Caillou!”.

While Caillou has generated lots of controversy among parents and even child psychologists, it also has an interesting legal and copyright history which, no surprise, is why I am blogging about it here. Caillou was created by Quebec writer Christine L’Heureux in 1989. L’Heureux had founded Chouette Publishing two years earlier. The Caillou books were illustrated by artist Hélène Desputeaux. Like so many artistic collaborators (Gilbert and Sullivan, Simon and Garfunkel, Abbot and Costello…) L’Heureux and Desputeaux had a falling out. And, yes, it was about copyright, and money.

As with many cases of this nature it is complicated. Originally the two (Chouette Publishing of which L’Heureux was the majority shareholder on the one hand and Desputeaux on the other) formed a partnership for the purpose of creating the books. They entered into contracts with each other as co-authors, including assigning the reproduction rights for the use of the Caillou character to Chouette Publishing. This covered merchandising and audiovisual works. Desputeaux was to be paid if she provided illustrations for any works using the character. Moral rights were waived by both parties. Subsequently there was a dispute over the terms of the contracts. The dispute went to arbitration under Quebec’s civil code. The arbitrator upheld the contracts, concluded that Chouette held the reproduction rights and determined that the work was of joint authorship (copyright held jointly) because both parties had signed the contracts as co-authors. Desputeaux’s position was that she held the sole copyright for the illustrations of the Caillou character and in the character itself.

Desputeaux challenged the arbitral decision and asked the Quebec Superior Court to annul it. She argued that the arbitrator had exceeded his mandate and, rather than just ruling on the validity of the contracts, had intervened on the question of intellectual property and the status of the parties as co-authors. Her challenge was dismissed and the Superior Court upheld the arbitral decision. Desputeaux then appealed to the Quebec Court of Appeal, where she had better results. The Court of Appeal upheld her appeal, ruling that any determination of copyright fell within the domain of the federal government under the Copyright Act and was not subject to provincial arbitration.

At this point, we need to step back briefly into history and look at the Quebec Code of Civil Procedure under which the arbitration took place. The Quebec civil code goes back to the Quebec Act of 1774 which reinstated French law in civil matters as part of an attempt to win the loyalty of French Canadians by preserving the French language and French institutions (civil law and role of the church) after the British conquest. British law had prevailed during the brief period from 1763, when France ceded control of Quebec to Britain, and the passage of the Quebec Act. A civil code ultimately based on the Napoleonic Codes in France was formally adopted in Quebec (Lower Canada) in the 1860s and, with minor changes and updates, has prevailed in Quebec ever since, operating alongside British criminal law principles and federal laws. The civil code required arbitration in matters of disputes between professional artists and promoters.

With the provincial Court of Appeal having ruled in favour of Desputeaux the illustrator, L’Heureux and Chouette appealed that decision to the Supreme Court of Canada (SCC). The SCC ultimately determined that the federal Copyright Act does not prevent an arbitrator from ruling on the question of copyright. The arbitrator’s mandate includes everything closely connected with the agreement they are adjudicating and in this case, the question of co-authorship was intrinsically related to other questions raised within the terms of the agreement in question. Even though copyright affirms rights against all third parties globally, two parties to a copyright dispute should not be denied the right to arbitration, the SCC ruled. L’Heureux’s appeal and joint authorship was upheld. A more learned explanation of the outcome of the case can be found here.

It doesn’t end there, however. Two years after the SCC ruling, the two parties were back in court again but finally reached an agreement which remained confidential for ten years until it was released in 2015. Basically, this agreement affirmed Desputeaux’s rights to her original illustrations of Caillou but gave Chouette permission to license and create subsequent versions, including through its agreement with CINAR for the animated television production. Desputeaux was to be granted a percentage of the royalties. Desputeaux agreed to limit production of Caillou depictions for a 5 year period. Was this the final end to the dispute? Regrettably, it was not.

As outlined in a blog posting just two years ago “This Precedent-Setting Cartoon is Back at it Again”, Desputeaux subsequently applied for a judicial declaration that L’Heureux had no claim to co-authorship of Caillou following the 2005 settlement agreement. She wanted the Court to declare that the 2005 settlement agreement prevailed over the original arbitral decision and that its terms precluded L’Heureux from claiming moral rights in the works or to be their co-author. The application was dismissed in November 2018 on the basis that this was a disguised form of appeal of a case that had already been decided by the SCC. It’s never over until it’s over, as they say.  

How is it all going to end? I know that Caillou believes in “sharing” because I have heard him say so. But what constitutes a fair share can depend on your perspective, which perhaps explains why Caillou’s bad temper seems to have rubbed off on his creators.  More than two decades of copyright litigation has surrounded this little character who continues to either enthrall or enrage parents and kids—and his co-authors as well. Maybe there is a moral lesson hidden in there somewhere.

© Hugh Stephens 2021. All Rights Reserved.