Canada’s Notice and Notice Regime: The End of Speculative Invoicing (It Won’t be Missed)

source: shutterstock.com

In what was an entirely predictable move, the Government of Canada has announced, in draft omnibus legislation, that it will end the practice of allowing settlement demands (speculative invoices) to be incorporated into notices forwarded by ISPs and other platforms on behalf of content rights-holders to users suspected of engaging in online copyright infringement. The demise of this practice will not be lamented by anyone except perhaps the law firm working for Voltage Pictures, the most prolific user of the system.

Buried in Bill C-86, “A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures” (a grab-bag of clean up budget items plus a raft of unrelated amendments to other legislation), is an amendment to the Copyright Act to add the following section;

Prohibited content

(3) A notice of claimed infringement shall not contain

(a) an offer to settle the claimed infringement;

(b) a request or demand, made in relation to the claimed infringement, for payment or for personal information;

(c) a reference, including by way of hyperlink, to such an offer, request or demand; and

(d) any other information that may be prescribed by regulation.

 

Recall that the requirement that ISPs (and other “digital network providers, such as universities) forward infringement notices received from rights-holders came into effect in 2015 as the so-called “Notice and Notice” provision of the 2012 Copyright Modernization Act. Prior to the passage of legislation and the entry into force of the provision, many ISPs had voluntarily forwarded rights-holder notices, but the regulation now required them to do so under penalty of a heavy fine. The “Notice and Notice” provision was so named because a rights-holder would send a notice to an ISP or platform informing them of an alleged infringement by an IP address on their network, and the service provider would in turn forward that notice to the subscriber. Other than the service provider informing the rights-holder that the notice had been delivered, no further action was required by any party.

Some have seen “notice and notice” as the Canadian equivalent of the US “notice and takedown” provisions but they are actually fairly different. First, compliance with the “notice and notice” provision by a platform is not a requirement to obtain safe harbour immunity in Canada, (or to put it another way, safe harbour is not conditional upon forwarding the notice). Thus “notice and notice” and safe harbours are not directly linked as is the case with the US provision. Second, no content is taken down, as occurs in the US. That is not to say that one system is superior to the other. It depends on the objectives of the measure. “Notice and notice” has had some effect in changing consumer behaviour but it does not remove content. “Notice and takedown” removes infringing content—but only temporarily in most cases. The system has not worked well for rights-holders with complaints focussing on the fact that no sooner is content taken down than it goes back up again, leading to calls for “notice and staydown” instead.

The purpose of the “notice and notice” legislation in Canada was to make consumers aware that their infringing behaviour was being noted and to encourage them to cease and desist. However, some creative minds quickly took advantage of this provision by inserting an “offer to settle” in the notices sent to users, even though legally the alleged (and perhaps actual) infringer was under no obligation to respond, let alone make a payment. The result was predictable as I noted a couple of years ago (Starting the New Year off Right: Effective Ways to Fight Online Piracy in Canada–(Don’t Pick on Granny!) The point of that blog was that despite the understandable temptation to go after serial infringers, there is always the possibility—indeed the probability—that some notices will be issued in error either because someone in a user’s household is misusing the internet but not the subscriber herself, an insecure internet account is being used by someone else in the vicinity without the knowledge of the subscriber or else an error has occurred in identifying the IP address (this last possibility being remote). The result was that an 86 year old grandmother received a notice saying that she (or more likely someone with access to her Internet account) had illegally downloaded a sci-fi game that would appeal to an 18 year old. The notice included a demand for payment, threatening her with the maximum amount available under the law ($5000) if she didn’t settle. She went to the press; the press predictably grabbed the story and ran with it, and the headlines gave the warning and educational system a black eye.

Responsible rights-holders and mainstream players recognize this and use the Notice and Notice system as it was intended, as an educational tool. Not that this stopped Michael Geist from attacking the “movie industry” writ large for pursuing a lawsuit strategy against consumers, claiming that “suing individuals or threatening lawsuits appears to be a foundational part of the industry’s strategy.” This was a misleading (to put it politely) headline and statement that could more accurately be described as “fake news”.

There are better ways to combat online piracy, including establishment of a due-process site-blocking regime to disable access by users to offshore pirate websites hosting or streaming infringing content. It is far more effective from the perspective of both outcomes and costs to stop the problem at source rather than trying to chase down tens if not hundreds of thousands of infringing non-commercial users. This concept was behind the proposal by the FairPlay Canada content coalition to establish an Independent Piracy Review Agency that would review complaints from rights-holders and make recommendations to the CRTC, Canada’s broadcasting and telecommunications regulator, to require ISPs to block access to such sites, after due process. The CRTC reviewed the proposal over the summer but has concluded that it does not have the legal authority to implement such a regime. The issue will now have to be dealt with by Parliament as part of the ongoing Copyright Review, and legislation may be recommended.

The site blocking system (I prefer the term “pirated content access control” as it more accurately describes what is happening) works extremely well in many jurisdictions facing the same problem as Canada. In Australia a review by the government of the site blocking regime brought in three years ago reaffirmed its effectiveness. Since the first court-approved blocks were instituted in 2016, a total of eight cases have been brought to the courts, resulting in orders blocking 85 online locations and 483 domains. This has resulted in a 53% reduction in visits to the blocked sites and a 25% reduction in visits by Australian users to pirate sites overall. The system has become “routinized” with ISPs no longer contesting the orders. Costs have been established at $50 (AUD) per site blocked.

But there are still loopholes (the pirates are quick to find every possible way to evade the controls). This has led to the introduction of amendments to the Copyright Online Infringements Act that will tighten the process and add search engines to the entities that could be served with injunctions. Canada could learn a lot from Australia in this regard.

In the meantime, your granny won’t have to be fussed about an infringement notice that she receives from her ISP because it won’t contain an “offer, request or demand” to settle the alleged infringement. That said, granny should still be aware of who is using her Internet account and for what purpose. And those younger members of the household who should know better should also be counselled that in this world, there is no free lunch. Theft of content means less content being produced, fewer jobs in the creative sector, and leakage of revenue owed to governments, rights-holders and distributors. Despite the fact that infringement notices in Canada can no longer be used as vehicles by some rights-holders to demand payment, the message is still the same. Don’t steal content.

© Hugh Stephens 2018. All Rights Reserved.

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