The TPP and Copyright Term Extension: What is the true cost to Canada?

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The Trans-Pacific Partnership seeks to provide greater uniformity and harmonization of regulations among its members as a means of reducing regulatory barriers and facilitating trade. Within the Intellectual Property (Chapter 18) is a provision whereby TPP members agree to align their term of copyright protection by extending it from 50 years, in countries where this minimum Berne Convention term is applied (Canada, New Zealand, Vietnam, Malaysia, Brunei), to 70 years. In the case of some TPP members there is a short phase in period for this extended period of protection. Other TPP countries, along with many not in the TPP, already apply a 70 rather than 50 year term. The extension of the term of protection in Canada is the subject matter of much criticism by University of Ottawa law professor Michael Geist who claims that Canada has “caved on copyright”. Of equal concern are statements made by Canada’s Parliamentary Secretary for International Trade, David Lametti, in his former capacity as a faculty member at McGill University. Lametti was known as a proponent of shortening rather than lengthening the term of copyright protection. He is reported as saying recently that he has concerns with the IP provisions of the TPP and these can reasonably be assumed to relate to his earlier views on copyright term extension.

Excessive and Unfounded Estimates of Losses

Prof. Geist has many criticisms of the TPP’s IP provisions but one of his biggest complaints is that Canada agreed to extend the term of copyright from life of the author plus 50 years to life plus 70 years. Based on a study in New Zealand that estimated the annual cost of copyright term extension at $55 million (NZD) to that economy (a study that has nothing to do with Canada) Geist goes on to claim “the cost to the public alone will easily exceed $100 million per year”. Not to be outdone, the blog Excess Copyright cranked out what even it admitted were some “back of the envelope” calculations and came up with a “modest” figure of $454 million in losses! (Geist and Excess Copyright figures are in Canadian dollars). In terms of stretching credulity, this takes the prize.

Loss Estimates based on Faulty Assumptions

It is not my intention here to quibble with the New Zealand study, (although some of its conclusions are highly questionable, and I intend to examine it further in a future blog), but suffice to say that it was based on the very particular situation of New Zealand, (which must have a very low level of domestic creative production if indeed the extension of the term of copyright protection by twenty years leads to an outflow of funds to the extent reported). However, to apply those estimates to Canada by simply taking the New Zealand numbers and multiplying them by a factor of two (or nine, because the New Zealand economy is about 1/9th the size of Canada’s) or any other arbitrary number is, to say the least, like comparing small apples to big oranges. The US economy is ten times larger than the Canadian economy. Does it then follow that the losses to the US economy would be theoretically over $4.5 billion (based on the Excess Copyright calculation of losses to Canada) if the US were in a similar situation? That of course is utter nonsense because each country’s circumstances are unique in terms of creative industries.

Base estimates on the established facts

In fact, there has been a study of the cost of copyright extension in Canada, done for Industry Canada in 2005 by University of Montreal economist Abraham Hollander. That study concluded that the increased cost of extending copyright terms was insignificant. Hollander’s study stated that, “user cost may increase slightly in response to a higher cost of locating right holders” and that “a longer protection term will likely contribute in a small way to an outflow of royalties from Canada”. Based on the latest numbers available at the time of the study, that estimate of costs to Canada was about $2.5 million. Not hundreds of millions; not a hundred million. That study was conducted ten years ago, and needs to be updated, but it is the only credible and reliable study to date. Given the growing creativity of Canada’s artistic community, from performers to writers to film-makers, one can just as easily speculate that any outflow of royalties could by now have been reversed and term extension could lead to a net inflow of revenues to the Canadian economy.

Benefits of Term Extension for Canadian Culture

One thing that is certain is that a longer term of copyright protection will provide additional revenues, and thus incentives, to domestic creators in Canada. While this does not alter the relative welfare within the country (as the additional payments by consumers to creators stay within Canada), the measure supports Canadian cultural industries and increases the incentives to invest in new production.

The opponents of the TPP have resorted to scare-mongering about the alleged costs to Canada of copyright term extension based on dodgy calculations and questionable studies that are inapplicable to Canada. Not only is the net cost to the country likely a wash (it could even be slightly positive), but extending the term of protection will provide significant benefits to Canadian creators and creative industries, in the process providing additional needed support to strengthen Canadian culture.

© Hugh Stephens, 2016. All rights reserved.