Twenty-five Years of US-Vietnam Cooperation—Don’t Let “Decree 06” and Ongoing Piracy Spoil It!

Source: http://www.shutterstock.com

How time flies! That is a truism we are all familiar with, but it was brought home to me forcefully when I was reminded by friends still living in Vietnam that this year, 2020, marks the 25th anniversary of the establishment of diplomatic relations between the United States and Vietnam. These two nations fought one of the most protracted, divisive and bloody wars in recent history, yet they have both been able to put this behind them and work together to create, in Vietnam, one of the most dynamic economies in the region. Since the establishment of diplomatic relations between the two countries on July 11, 1995, and the conclusion of the US-Vietnam bilateral trade agreement five years later, Vietnam has continued to open its economy. It joined ASEAN in 1995, became a member of the World Trade Organization in 2007 and is one of the eleven founding members of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which came into effect for Vietnam in early 2019. Its export-led economy, a hybrid capitalist-guided socialist model, has enabled it to increase its GDP ten-fold over this period and it has embarked on a number of domestic economic reforms that have opened up many sectors of the economy, including in areas close to copyright.

The US has provided considerable assistance in terms of funding over the years, ranging from health initiatives to capacity-building in the area of policy development. Vietnam has largely opened to the world, both in terms of tourism (until COVID hit earlier this year), manufacturing and services, and the Vietnamese people have greatly benefited from these developments. At times there have been setbacks and even missteps, but the overall thrust has been forward.

I well remember back about 15 years ago when Vietnam was beginning to open its television market to satellite and cable providers. It decided to “experiment” by “borrowing” satellite content without authorization and rebroadcasting it domestically through a state-controlled platform to test demand. When those of us then in the industry pointed out to the responsible Minister at the time that this content was unlicensed, indeed “pirated”, this led to some uncomfortable moments but also a sensible re-evaluation of Vietnam’s position. As a result, what was in effect state-sanctioned piracy quickly ended and Vietnam established a thriving pay-TV industry, with subscriptions more than doubling between 2010 and 2017, and pay-TV penetration reaching 37% of households. This has brought enormous benefit to the entire industry ecosystem. Now, as is the case in many countries, the configuration of the industry is changing as the growth of subscription satellite and cable television slows down and as streaming options take off.

Vietnam is now a vibrant market for over-the-top (OTT) streaming and Video-on-demand (VOD) services. However, there is a significant black cloud on the horizon, Decree 06. This has been around in draft form for several years, and despite various amendments is still extremely problematic. Decree 06 is being sponsored by the Authority of Broadcasting and Electronic Information (ABEI), the regulator that falls under the Ministry of Information and Communications. If enacted in its present form, it would constrict the ability of VOD services to participate in Vietnam’s digital market. Although supposedly designed to harmonize regulations between VOD and traditional broadcasting, and protect Vietnamese culture, the proposals will be counterproductive. Enactment will move Vietnam away from best practices in the region led by countries such as Singapore and Malaysia that treat VOD with a light regulatory touch, and closer towards China’s e-commerce model. Of most concern is a licensing scheme that would require a local presence through a forced joint venture, and onerous censorship requirements.

Experience in other markets has demonstrated that heavy-handed regulatory measures don’t work as intended. Indeed, they often have just the opposite effect. A licensing requirement through a forced joint-venture with a local company, or licensing through a local company, would discourage investment in Vietnam. Foreign investment has proven to be a strong catalyst for the development of creative industries around the world.

Classification and censorship is yet another issue. Curated content services have developed practical and sophisticated parental controls that empower parents to take control over what their children can watch. Many governments, such as Malaysia and Singapore, are moving towards a self-regulatory model to address such concerns. Other countries, like Australia, New Zealand and India have also recently announced that they are working with industry towards a self-regulatory model within a legislative framework. This will permit self-classification, after certain conditions have been met. Vietnam should pursue similar options. Decree 06 is the wrong solution.

And then there is the ever-present challenge of piracy. At one point, Vietnam was host to one of the world’s largest illicit streaming sites, 123Movies. It was suddenly shut down by the Vietnamese authorities back in April of 2018–an encouraging move–but this type of enforcement action has not been consistent. Today, some of the most egregious piracy sites and services in the world still operate out of Vietnam, inflicting damage not only on the nascent local market but also on many international markets. A noteworthy example is the free streaming website ‘Phimmoi’. This is a Vietnamese-language site that offers thousands of unauthorised feature film and television series from the US and other countries. Phimmoi was named by the U.S. Trade Representative’s Office in its 2019 Notorious Markets Review and in the Special 301 report. For the 12-month period from June 2019 to May 2020, phimmoi.net received a total of 862 million visits (a monthly average of 71.83 million visits), with 98% of this traffic coming from Vietnam. Local rightsholders have attempted to have the site dealt with, but the operators have been able to continue undeterred.

It is distressing to see Vietnam potentially taking a backward step by limiting access for content services and failing to seriously address piracy, particularly as it has made so much progress, and just when it is marking a milestone in its relations with the United States. The US is a strong proponent of open digital markets, and US industry is committed to working cooperatively with Vietnam in this area. In fact, in this vein, to celebrate the 25 years of US-Vietnam cooperation and friendship, in April the Motion Picture Association in partnership with the US embassy, the Vietnam Film Development Association (VFDA), and others, hosted a “Pocket Filmmaking Masterclass” on smartphone technology with Australian filmmaker Jason van Genderen. Over 150 people tuned in for the event, a majority of whom were emerging Vietnamese filmmakers.

This is the sort of win/win cooperation that benefits the content ecosystem in Vietnam and internationally. It is the sort of cooperative activity that supports open markets and the creation of legitimate content, bolstering the bilateral relationship. Ignoring piracy and imposing a flawed and narrow regulatory regime such as that represented by Decree 06 will have just the opposite effect. Decree 06 has languished in various drafts since at least 2016, and it’s high time to end its misery and put it on the shelf—permanently. Now that would be a good way to celebrate 25 years of cooperation and friendship!

© Hugh Stephens, 2020. All Rights Reserved.

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

Source: http://www.shutterstock.com

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2020

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

Source: http://www.shutterstock.com

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

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

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

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

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

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

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

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

© Hugh Stephens, 2020. All Rights Reserved.

Did Google Just Blink?

Source: http://www.shutterstock.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens 2020. All Rights Reserved.