Month: February 2021

In this week’s blog post I am going to address the central issue of what Black History Month is all about; celebrating the courage and determination of people who made enormous sacrifices to advance the cause of racial justice. I want to highlight the case of an intrepid black woman, who was at the same time an entrepreneur and a creator of intellectual property herself–perhaps some of it even protected by copyright– who stood up (actually, sat down) for racial equality in Canada. Viola Desmond’s name may not be that well known outside Canada (or within it for that matter), and it is high time that her story was told to a broader audience.

Even though Viola Desmond’s story does not involve copyright itself, I also want to touch on the role of copyright with regard to race and racial discrimination. Why? Well, because this is a copyright blog and also because I believe that copyright can be an important instrument in helping to achieve greater racial and economic justice.

Is Copyright Colour-Blind?

We need to ask this fundamental question. Does copyright discriminate on the basis of race (or gender)? Does it better protect some racial groups better than others? On its face, I would say no, because at the end of the day an artist is an artist, an author is an author, a musician is a musician. Whether the holder of the copyright is a man or woman, or is of black, Asian, Indigenous or white racial origin, the copyright in a work that they have created belongs to them. It empowers them. The only qualification is that the creator must be human. (Recall the ridiculous attempt by the animal rights group, People for the Ethical Protection of Animals—PETA—to claim copyright for “Naruto” the macaque in the Monkey Selfie Case).  Animals don’t qualify, nor do machines.

Copyright prima facie is blind to factors of race or gender. Once a work is created, as long as it meets the established criteria (originality, fixation, and authorship) copyright is granted automatically, assuming the creator is a resident of a Berne Convention country.  An artist in Zaire, an author in Cuba, a composer in Greenland—they all qualify. I would argue that copyright is the ultimate enabler of democratic economic and moral rights because the simple act of creation confers the right. Unlike other forms of intellectual property, important as they are, copyright requires no formal process of registration. For example, it can be argued (and no doubt proven) that racialized or marginalized groups are under-represented in the patent filing process because of the barriers to filing—process, cost, access to “the system” and so on. There are no such overt barriers with copyright.

But Are Practices that flow from Copyright Colour-Blind?

Now, while I would argue that the establishment of copyright itself is colour and gender blind, I will readily admit that the exercise of the rights within copyright through business practices and application is not always free of bias. It is not difficult to find examples where the application of copyright in various business situations can be argued to be discriminatory, such as in reaching contractual agreements where one side may have disproportionate power. I would note, however, that power imbalance in negotiations over payment for use of copyrighted material (e.g. an author with a publisher, or a musician with a label) can and does happen quite frequently, independently of any racial considerations.  Nevertheless, I think there is a view that while copyright may be race or gender neutral, its application is not always so. This may explain the vigour with which I was criticized a couple of years ago when I wrote a couple of blogs (here and here) on gender and copyright.

Indigenous Cultural Expression

Another issue relating to copyright and societies not necessarily based on Western concepts of individualism and law is the problem of attributing copyright protection to group or collective works, particularly where those works were produced by Indigenous groups. This is a topic on which I have written in the past, arguing that a supplement to copyright laws is needed to protect forms of art loosely grouped under the rubric of “Indigenous Cultural Expression” (ICE). Both national governments and the World Intellectual Property Organization (WIPO) are looking at various means to do this.

Historical Application of Copyright

I also readily concede that historically copyright was not applied in the way that it is today. As with many things, it was reflective of the broader social values of the time and often embodied overt racial discrimination. Moreover, it was not until 1886 that the Berne Convention was established. This international convention established the principle of a creator’s “automatic right” to copyright, as well the virtual universality of reciprocal copyright recognition. Originally, it had just ten original signatories; today it has 179. (The US joined in 1988).

Phillis Wheatley

An obvious example of the historical context of copyright was its application to slaves in a slave-owning society (like the southern US states prior to 1864). Individual creators could hardly expect to avail themselves of their copyrights when they themselves were treated as chattels to be bought and sold. The earliest example of African-American literature, the poems of Phillis Wheatley, a slave girl in Massachusetts, published in 1773, illustrate the struggle faced by people of colour in trying to establish authorship. Wheatley had to appear before a group of notables (all white males of course, no doubt of a “certain age”) who eventually “established” that the poetry was produced by her, an authorship hurdle not known to have been forced on any other writer. Yet copyright prevailed in the end. The publication of her work was entered in Stationers’ Hall, London, the repository for copyrighted works at the time (since the publication predated US copyright and the US Constitution) although it was undoubtedly the British publisher, Archibald Bell of Aldgate, who ensured it was deposited.

Frederick Douglass

Another famous work of African-American literature, Frederick Douglass’ “Narrative of the Life of Frederick Douglass, An American Slave” (1845) and a later work, “My Bondage, My Freedom” (1855), both bear the inscription on the fly-leaf “Entered, according to Act of Congress, in the year 1845 (or 1855) by Frederick Douglass, in the Clerk’s office of the District Court of…”. It was Massachusetts for the first work and the Northern District of New York for the second. Prior to 1870, authors and publishers registered their claims to statutory copyright with the clerks of the U. S. District Court for the jurisdiction in which they resided. Douglass, a former slave who had gained his freedom by fleeing from the south to Pennsylvania, took pains to assert his copyright at a time when slavery was still thriving in parts of the United States. Despite the many hurdles and imperfections in application placed in the way of people of colour, copyright could still be harnessed as a means to assert individuality, dignity and creativity, albeit with difficulty.

Copyright Today

I would argue that copyright, imperfect though it may be, is today more of an instrument of empowerment than exploitation, more part of the solution than part of the problem. Even though there have been historical injustices, today copyright can be a liberator and equalizer, putting a powerful tool into the hands of individual creators, rather than being part of a system of oppression and exploitation. To cite but one example, an important argument in favour of creating an Artists Resale Right (about which I will be writing in a couple of weeks) is that it provides the means for an ongoing transfer of wealth from well-heeled art dealers and collectors in Europe to disadvantaged artists in the developing world. Without copyright this would not be possible.

Recent Scholarship

Not everyone will agree with this positive view of copyright, however, and I feel obliged to acknowledge here the learned treatise by Dr. Anjali Vats, Assistant Professor in Communication and African Diaspora Studies at Boston College. Her recent book, “The Color of Creatorship: Intellectual Property, Race and Making of Americans”, argues just the opposite. For her, intellectual property law (including copyright) is racialized and designed to perpetuate white privilege.

“I contend that intellectual property law is organized through a racial episteme that consistently protects the (intellectual) property interests of white people and devalues the (intellectual) property interests of people of color”.

At the risk of gross oversimplification, her argument is based on the premise that if a society is racist as defined by its concepts of “citizenship” (a social rather than legal term), then everything that flows from that is racist. She says, “racial scripts can be baked into the seemingly colorblind ideals of American citizenship that, in turn, inform intellectual property law”. In her view, “the notion that intellectual property law has become equitable…is a dangerous one…” It is a system that is “ideologically rigged in favor of whiteness”. More recently, in what she calls the post-racial IP era, dating from Barack Obama’s accession to the White House in 2008, racism was perpetuated (according to Prof. Vats) by the imposition of maximalist IP policies on an infringing Global South—pharmaceutical patents being one example. But it is unfair of me to selectively quote and try to summarize an important work in a few sentences. Best you read it for yourself and make your own judgement.

At the end of the day, perhaps we are not that far apart. We all know that laws are not applied equally, (look at incarceration rates for racially marginalized groups) even though in theory they apply equally. If perceptions and values are imbued with racist assumptions, a colour-blind law or principle can be distorted. The case of Viola Desmond is a prime example of this.

Viola Desmond

Viola Desmond’s contribution to the ongoing struggle for racial equality does not directly engage copyright questions, although she was a creator of her own products and asserted her intellectual property rights. Her story is about dignity, determination, and courage. Viola Desmond (nee Davis) was born in Nova Scotia in 1914 to a black father and white mother and raised in the black community in Halifax. With career options limited for women, she trained as a beautician although she had to attend school in Montreal and in the US as there were no opportunities for black students at such institutions in Nova Scotia at that time. She opened a beauty culture studio in Halifax catering to women in the black community. This branched out into the Desmond School of Beauty Culture, and a line of beauty products that bore her name. (e.g. Sepia Face Powder by Viola Desmond).

Things were going well for Desmond until her run in with the unofficial but entrenched practice of racial segregation in Nova Scotia. In November, 1946, on her way to sell beauty products in the north of the province her car broke down in the town of New Glasgow. While it was being repaired, she decided to take in a movie at the Roseland Theatre. When she purchased her ticket, for thirty cents, it was for the balcony. Realizing that she could see better from the main floor she seated herself there, and was challenged by the ticket taker, who indicated her ticket was for the balcony. Main floor tickets cost forty cents. She offered to pay the difference and was told the main floor was for whites only. She refused to leave. This account from the Canadian Encyclopedia continues the story;

“Desmond was then confronted by the manager, Henry MacNeil, who argued that the theatre had the right to “refuse admission to any objectionable person.” Desmond pointed out that she had not been refused admission and had in fact been sold the ticket, which she still held in her hand. She added that she had attempted to exchange it for a main floor ticket and was willing to pay the difference in cost but had been refused. When she declined to leave her seat, a police officer was called. Desmond was dragged out of the theatre, injuring her hip and knee in the process, and taken to jail. There she was met by Elmo Langille, chief of police, and MacNeil — the pair left together, returning an hour later with a warrant for Desmond’s arrest. She was then held in a cell overnight.

In the morning, Viola Desmond was brought to court and charged with attempting to defraud the provincial government based on her alleged refusal to pay a one cent amusement tax (i.e., the difference in tax between upstairs and downstairs ticket prices). Even though she had indicated when she was confronted at the theatre that she was willing to pay the difference between the two ticket prices and that her offer had been refused, the judge chose to fine her $26.”

That of course is not the end of the story. Desmond could have just bitten her lip and suffered, as her husband advised her to do, but she did not. The NAACP in Nova Scotia took up her case which eventually went to the Supreme Court of Nova Scotia. It would be nice to tell you that she prevailed. She did not, on technical grounds, (the appeal of her fine had not been lodged within the statutory time limitations) but the Justice hearing the case noted acerbically;

“One wonders if the Manager of the theatre who laid the complaint was so zealous because of a bona fide belief that there had been an attempt to defraud the Province of the sum of one cent or was it a surreptitious endeavour to enforce “Jim Crow” by misuse of a public statute”.

Her Legacy

Her case did not end racial discrimination in Nova Scotia or Canada but it was a courageous and singular act that led eventually to greater justice, and to long overdue apologies and attempts to rectify the injustice. The fact that this woman entrepreneur, who built a successful business that not only generated employment in the community and provided career opportunities for young people, but also demonstrated considerable ingenuity and vision through the creation and marketing of her own products, could be denied basic dignity by being ejected from a seat in a theatre is incomprehensible today. And then to be convicted of “tax fraud” for not paying the one cent difference in tax, even though she offered to do so. Although Desmond died in 1965, her sister is still living, and kept her story alive. In 2010 Desmond received a posthumous apology, in 2012 a Canadian stamp was issued in her honour and in 2016 it was announced that she would be the first woman, other than the sovereign, to appear on a Canadian bank note, the $10 bill. Recently Nova Scotia repaid the fine, with interest, to Desmond’s sister. The fine itself was 2,600 times the value of the one cent “fraud”, which was itself a ludicrous charge of the sort that brings the law into disrepute.

The recognition of Viola Desmond’s stand for equality was long overdue. Her act of courage did not change that much that quickly in her lifetime, but she was a pioneer. Many people know of Rosa Parks, who initiated the bus segregation protests in the US in 1955, and who is noted for that and for her many other contributions in fighting racial discrimination over many years, but she had kindred spirits in Canada; people like Viola Desmond who challenged segregation practices a decade earlier.

Racial discrimination today is perhaps less obvious, but no less pervasive. One of the ways to fight it is to provide equal opportunity. Not all creators get equal opportunity, but the rights conferred on them by copyright at least enable them to stand up for their rights. Discrimination can no doubt be argued to exist even today in the application of copyright law, but copyright itself is an important tool in prying open the box of equality.

© Hugh Stephens 2021. All Rights Reserved.

The ongoing tussle between two major US online platforms (Google and Facebook) and the Australian government over proposed legislation that would require the two internet platforms to pay Australian media for using their news content has just been joined by a third party, Microsoft. The legislation would enshrine in law a proposed News Media Bargaining Code developed by Australia’s competition authority, the Australian Competition and Consumer Commission (ACCC). Microsoft has waded into the debate unequivocally on the side of Australia, and in a very timely manner. This positioning by a major US corporation will have wider implications for other countries, such as Canada, seeking to deal with the issue of requiring Google and other major platforms to compensate news content providers for content used on their services.

Does Microsoft’s alignment with the provisions of the ACCC’s Code spring from a genuine concern over the fate of news outlets, many of which are dying on the vine as advertising dollars shift from traditional media to online service providers, or from commercial interest? According to Brad Smith, President of Microsoft, it is both. In a personal blog released late last week, Smith makes the case for maintaining a free and financially healthy Fourth Estate as a critical element of democracy. He recognized that the Australian legislation, about which I reported last week, will help redress the imbalance that exists between technology and journalism by requiring negotiations, backed up by a binding arbitration mechanism, between the two internet giants (“tech gatekeepers”) and independent news organizations. Although the Australian legislation applies only to Google and Facebook, who are specifically named, Smith says that Microsoft would willingly submit itself to the proposed Australian disciplines. This would be both the right thing to do and would also be good business for Microsoft.

Google and Facebook are caught by the legislation because of their market dominance. The fact that two US companies are specifically targeted in the legislation of another country has led to intervention by the US government (the previous Trump Administration) through the US Trade Representative’s Office (USTR) and the US Embassy in Canberra. The USTR wrote to the Australian Senate committee reviewing the legislation that the US government is concerned that “an attempt, through legislation, to regulate the competitive positions of specific players in a fast-evolving digital market, to the clear detriment of two U.S. firms, may result in harmful outcomes”. Smith points out that it would have been better for the legislation to have targeted any company that exceeded a specified market share rather than call out specific named companies. He suggested a market dominance threshold of 20 percent to trigger the legislation. (Google dominates 95 percent of online search in Australia and is clearly a better search engine at the moment although if Bing attained scale and Microsoft invested more in it, it could become competitive).  If the legislation was contingent on a 20 percent market share, and if Microsoft was able to reach that threshold, then it would readily comply according to Smith;

“…the obligations…could easily be written to apply to any search business that has more than 20% market share in Australia. At Microsoft, we are fully prepared to aim for this search share and become subject to the law’s obligations the day we do.”

Google has resorted to various threats to try to stop the legislation. These range from curtailing or cutting its search function in Australia, removing news listings from Search, or even leaving the Australian market altogether. It has tried to mobilize Australian users to pressure their government to back off. At the same time, it rolled out—and then retracted—an offer to pay for some news content, but on its terms, called the Google News Initiative. Google’s “dangle of the carrot” payment proposal was very recently put back into play (after Microsoft entered the fray), restoring its offer to pay for some content but only on condition that it reserved the right to terminate any contracts reached if the Australian government followed through by legislating the Bargaining Code.

Smith also takes aim at the US government for intervening with Australia on this issue, expressing hope that the Biden Administration will not double-down on past representations made by USTR. In fact, he urges the US government to adopt a similar provision to that being enacted in Australia, “requiring tech companies to support a free press”. There are no current proposals in the US to do this although there was draft legislation in the previous Congress, the Journalism Competition and Preservation Act (HR 2054), that would have provided US news publishers with a four-year exemption from anti-trust restrictions, permitting them to combine to negotiate with major platforms.

The fact that Microsoft has waded into this issue is good news for Australia and will likely result in the US government standing back. When one or two US companies are on one side of an issue involving a foreign country it is relatively easy for the US government to take a position to “defend US interests”. When there are US companies on both sides of an issue it is much more difficult to intervene, especially when both are large, powerful entities with significant lobbying clout in Washington. My guess is that the US embassy in Canberra will be monitoring the legislation but staying out of the melee in future.

As for the legislation itself, the Australian Senate committee responsible for reviewing it has reported out, rejecting any changes after holding hearings and listening to various threats and proposals put forward by both Google and Facebook. Google’s arguments that the legislation is “unworkable” have been undermined by Microsoft’s endorsement of the proposal. The only new proviso put forward by the committee was a proposal that the legislation be reviewed a year after adoption, recognizing that there may be a need for tweaks to the binding arbitration process envisaged by the Code. The ultimate intent of the resort to binding arbitration, of course, is to avoid having to go there by encouraging the two sides to reach a commercial agreement on payment for news content. The legislation will now proceed with a view to adoption within the next few weeks.

These developments in Australia are being closely watched in Canada where news publishers are pushing for the adoption of a similar mechanism requiring the platforms to negotiate. As I wrote back in September (“A Day of Reckoning is Coming for Google, Facebook and other major Online Platforms that access News Content without Payment: Will Canada be Next?”), the Trudeau government has made no secret of its intention to rebalance the playing field between news content producers and the major internet platforms. The exact proposals are still being worked on, but draft legislation is expected soon. Heritage Minister Guilbeault has said that “publishers must be adequately compensated for their work…We must address the market imbalance between news media organizations and those who benefit from their work”.

Guilbeault has made it clear that even though Google is now rolling out its Google News Initiative in several countries (it has signed up two small players in Canada although the program is not currently offered to Canadian consumers), this will not stop him from introducing legislation to require payment to news producers. He has acknowledged that one of the issues to be taken into account in devising a “made in Canada” solution is the existence of the USMCA, the trade agreement between the US, Canada and Mexico that went into effect on July 1, 2020.

When Guilbeault first started talking about supporting the news industry, opponents of the publishers’ proposals argued that the new NAFTA (the USMCA; called CUSMA in Canada) would constrain any Canadian policy measures since action against the major platforms would violate the terms of the trade agreement. In their report submitted to the government, “Levelling the Digital Playing Field”, News Media Canada, representing the major publishers, addressed this point by including an opinion from a noted trade expert, Barry Appleton, rebutting the USMCA argument.

Appleton pointed to Article 32.6 of the USMCA, known as the “cultural exception”. The definition of a “cultural industry” in the Agreement includes the publication of newspapers. Article 32.6 exempts a Canadian cultural industry from any of the USMCA obligations but there is a catch; the other two Parties (the US and Mexico) are allowed to retaliate with equivalent commercial effect against any measure taken by Canada to protect a cultural industry.

“Notwithstanding any other provision of this Agreement, a Party may take a measure of equivalent commercial effect in response to an action by another Party that would have been inconsistent with this Agreement but for paragraph 2 or 3.” (i.e. the exception).

This is a deterrent to ensure that Canada rarely, if ever, uses the cultural exception to override its obligations. It has never done so in the more than thirty years of the existence of the cultural exception (both the original Canada-US FTA and NAFTA had a similar clause) and if it did, it could be made to pay dearly. Retaliation could be applied against any sector, so if Canada’s other two CUSMA partners were really upset with a Canadian cultural measure that “violated” the Agreement they would exert pressure by hitting other, politically influential sectors unrelated to the cultural industry that was being protected. That is the criticism levelled at the cultural exception argument adopted by News Media Canada. I agree that the cultural exception is a pretty thin reed to rely on—it is more of a political fig-leaf than anything else–although it is certainly a defence that can be put forward.

But here is the key question. Is the cultural exception the only defence that Canada would have if it were to bring in a regime that required major internet platforms to strike compensation deals with news content providers, and would such a measure be challenged by the US? There are two angles to consider. The first is that it should be possible to deal with major global corporations like Google and Facebook through policies of general application (i.e. directed at any company meeting certain criteria—such as market dominance–regardless of national origin) in a manner that would be consistent with the CUSMA. For example the Competition Chapter of CUSMA, which happens to be exempt from the Dispute Settlement Mechanism of CUSMA by virtue of Article 21.6, requires that Each Party “shall ensure that the enforcement policies of its national competition authorities include…treating persons of another Party no less favorably than persons of the Party in like circumstances;”. In other words, if a compensation scheme for news publishers were dealt with as a competition issue, it could be devised in such a way as to be applicable to both Canadian and US or Mexican entities without running afoul of the CUSMA. Moreover, the decision could not be taken to dispute settlement by the US government.

The second is the willingness of the US government to invoke the USMCA if Canada established a requirement for certain platforms to negotiate payment for news content. Quite apart from devising measures of general application that would be CUSMA-proof, now that Microsoft has positioned itself in favour of a policy where internet platforms compensate news organizations, and is willing to do so itself, it is much less likely that the US government would invoke CUSMA to argue that US companies are being discriminated against. USTR’s hands are now effectively tied, if not legally than practically in terms of the internal politics affecting the US government’s position.

And it’s not as if Google itself could initiate action. The “investor-state” provision that existed in the previous NAFTA was dropped in the USMCA/CUSMA, ironically at US insistence. The Trump Administration felt that investor-state protections encouraged US companies to invest abroad, and so had it removed. The investor-state provision allowed a private party (a company) to invoke dispute settlement against a NAFTA government if that government had taken action that resulted in expropriation of the company’s property, or measures that were tantamount to expropriation. Changes of domestic policy that resulted in making it more difficult for a foreign NAFTA company to operate or generate expected returns on investment could be argued to violate investor-state protections. Canada lost several investor-state cases under NAFTA and the Canadian taxpayer had to compensate US companies as a result. Even where the investor-state clause was not invoked, it had the potential to exert a chilling effect over policy development and implementation if there was a possibility that a US (or Mexican) company might have grounds to object. No Canadian company ever succeeded in bringing a successful investor-state case against the US although there were a few such cases launched.

Microsoft’s entry into the debate in Australia will scramble the cards and make it easier for the Australian government to deal with Google. However, an added indirect bonus is to widen Canada’s scope for action given the decreased probability that Google will now be able to convince the US government to try to restrain Canadian action under the USMCA/CUSMA.

© Hugh Stephens, 2021. All Rights Reserved.

Later this week, on February 12, the Australian Senate is scheduled to present its report reviewing important draft legislation, the tongue-twisting “Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill, 2020”. This legislation, when enacted, will implement the News Media Bargaining Code developed by the country’s  competition regulator, the Australian Competition and Consumer Commission (ACCC). Assuming the final law retains all or most of the provisions of the draft bill, it will require Google and Facebook—and only Google and Facebook by the way—to license Australian news content that they use in their search or social media offerings. In other words, the platforms will have to compensate Australian news content providers when they present the providers’ content. “News content provider” is defined in the legislation according to several professional and revenue criteria, but essentially the definition includes all major Australian news entities, both publishing and broadcasting. Why does the code apply to only Google and Facebook? It has to do with scale, dominance and market power. As I discussed in a blog on this topic two weeks ago, and in earlier blogs, Google and the Australian government have been engaged in real “stoush”, a big-time arm wrestle, over this legislation.

The Australian News Media Bargaining Code

Google has said the Code is unworkable and is threatening to pull out of Australia, or at least to shut down its search function, rather than comply with the legislation if it is enacted without amendment. Google says it doesn’t object to paying content providers for use of their content, but wants to do it on the company’s terms, through its “Google News Initiative”. (Last fall Google announced it was prepared to start paying news sources, but then suspended its offer after the ACCC refused to drop its code. Now, under pressure from the new legislation, it has decided to re-activate the program).

From the perspective of the ACCC, the Google News Initiative puts most of the cards into Google’s hands, and therefore the Code contains a requirement for binding arbitration if a voluntary agreement cannot be reached between the platforms and publishers. Google doesn’t like arbitration, and particularly objects to the form of arbitration proposed in the Australian legislation. Known as “final offer” arbitration, it requires the arbitrator (which will be ACMA—the Australian Communications and Media Authority) to select a final offer from one of the two sides. If the platforms refuse to negotiate, they could be subject to heavy fines of $10 million or 10% of annual turnover.  They could also be fined if they fail to comply with an arbitration decision or take retaliatory action against news media companies. Clearly, there are some real teeth in this legislation.

For Google (and Facebook), the only way to opt out of the legislation–other than by withdrawing their services entirely from Australia or, in the case of Google, closing down its search function—would be to remove all Australian news content from their services. Google has already started to test the latter option by blocking access to Australian news content for some users in Australia. Meanwhile, rival Microsoft has stepped up indicating that while it is not subject to the Code, it would willingly comply with it. The US company is eager to fill any gap left by Google. Google’s withdrawal from online search in Australia would be a boon for Microsoft’s Bing which currently has only about 5 percent of the Australian market.

Because of this competitive factor, and because of the importance of Australia as a leading OECD country and also the expressed determination of the Australian government to follow through with the legislation, I think that a compromise will be found in the end. But be under no apprehensions. Google plays hardball as was demonstrated a few years ago when Germany tried to grasp the same nettle, although using a different approach to that taken in Australia.

What Happened in Germany

Back in 2013 Germany passed legislation that gave publishers an ancillary right (Leistungsschutzrecht) to their news content (for one year) to enable them to negotiate with major internet platforms (read Google). The “publishers right” was considered necessary because, as it was phrased in an EU study on this topic, “Although print publishers have long been able to claim copyright indirectly from the contributions of their journalists, historically, copyright has not been a key part of their business model.” The intent was to create a “neighbouring right” similar to that enjoyed by investors in broadcasts, sound recordings and films. This would relieve publishers of the need to rely on the rights created and granted by journalists and photographers they employed in order to prove ownership of copyright in each work of journalistic output they published. This new right sits alongside, and is in addition to, regular copyright protection. I wrote about the push for a publishers’ right back in 2016 when the EU was considering bringing it into the EU Copyright Directive, a step that has now been taken.

Google didn’t want to negotiate payment for what was referred to at the time as “news snippets”, and as usual was a tough negotiator. At first Google dragged its feet, so an umbrella group of German publishers sued it for ignoring the law. Google then removed all German publishers from Google News, resulting in a huge loss of traffic to major news websites. For leading German publisher Axel Springer, this amounted to a decline in visits to its websites of 80 percent. Google announced that it would allow publishers to opt back in to Google News only if they waived their right to compensation. Faced with this ultimatum, the publishers caved in and Google emerged triumphant, wielding its market force like a club. It similarly played tough in Spain when a similar law was passed, simply shutting down Google News in that country.

EU Takes the Lead

Since then, a law similar to Germany’s Leistungsschutzrecht has been enacted by the EU, as Article 15 of the Copyright Directive (although the EU Directive confers two years of protection as opposed to the one year of protection in the original German law). It is the platform for passage of national laws to implement a publishers’ right. France is the first EU member state to have done so, although more will follow. In taking the lead, France was the first to tangle with Google under the new rules, as I wrote back in April of last year (here). France implemented the Directive by means of its Competition Authority, requiring Google to negotiate, much as Australia is doing.

Why German Publishers Failed to Tame Google

Dr. Heidi Tworek of the University of British Columbia, a scholar who specializes in the history of German media, has recently argued that people have forgotten about what happened in Germany in 2013 when they look at recent developments in France and Australia, and potentially in Canada, when it comes to requiring Google to pay for news content.  “Levelling the Digital Playing Field”, the report released last October by News Media Canada, the industry group representing the Canadian news publishers, leans heavily to the Australian model in its advocacy, while noting France’s rights-based approach. The German experiment is not mentioned. Tworek points out that the struggle between news providers and news disseminators is not a new phenomenon. She refers back to the 1920s when there was a push in Germany to create a new right for publishers to protect them from the incursions of radio into their hitherto exclusive news domain. The issue was framed as one of “who owns the news” but the attempt to create a special news right foundered, just as the attempts by German publishers in 2013 were unsuccessful.

The Impact of the German Example

While German publishers did not succeed in their attempt in 2013 to force Google to share revenues generated through news content, I would argue that regulators and legislators have not forgotten what happened in Germany a few years back (although I am sure none of them are aware of the earlier history of trying to regulate news content on radio unless they have read any of Professor Tworek’s articles on the subject.) The problem in Germany in 2013 was that Google was permitted to use its market power to bend the publishing industry to its will. It was able to dominate and split the industry by offering to allow some publishers back on to its platform if they renounced their right to payment, while punishing others for exercising their rights.  Simply providing publishers with an ancillary right to the content they produced was not sufficient to empower them to stand up to the market dominance of Google. Neither France nor Australia have made that mistake. They have put the full muscle of their Competition authorities behind the confrontation with Google, leaving the platform with only a couple of options; find a solution (as they have done in France), or exit the market in full or in part (by removing all news content).

Google cannot play the game it played in Germany by splitting the industry. “Divide and rule” will no longer work. The Australian code has a non-discrimination provision ensuring that the platforms cannot choose to negotiate with some content providers, but not others. There is also the requirement for binding arbitration.  If Google follows one of the extreme options of either leaving the market, or the news segment of the market, it will create a vacuum that its competitors Bing, Yahoo and others will be only too happy to fill.

Levelling the Playing Field

The example of what happened in Germany tells us that the playing field has to be levelled if there is to be a rebalancing between the publishers and major internet platforms, of which Google is the prime example. That can only be done by dealing directly with the issue of dominance and market power as part of the solution.

Developments in Canada

This holds lessons for Canada where the Heritage Minister, Steven Guilbeault confirmed in late January that a bill for online news compensation is in the works, and is expected to be presented to Parliament in the spring. Canada has apparently not yet decided what approach it will take (the French approach, or that of Australia or a “made in Canada” solution) but Guilbeault has been in touch with ACCC’s Chair Rod Sims, and Canada is closely following how the Google-Australia “stoush” is playing out. It has been reported that Guilbeault favours a binding arbitration model, as was advocated by News Media Canada in its report.

One thing is certain. If history holds any lessons for regulators when it comes to dealing with the giant international internet platforms, it is that they are too big for local content industries to be able to deal with directly without government support. Government muscle in the form of limiting market power and anti-competitive behaviour is required. The real lesson to be learned from the German example is not that Google cannot be brought to heel; it is that this has to be done using the right tools.

© Hugh Stephens 2021. All Rights Reserved.

Back in mid-November, something significant happened in Asia, largely unnoticed. While most of the western world continued to grapple with daily reports of increasing COVID-19 hospitalizations and deaths, (well before the word “variant” became part of our everyday vocabulary), and while we watched transfixed to see whether Donald Trump would succeed in overturning the expressed will of the American people, fifteen countries came together on November 15, 2020 to sign the Regional Comprehensive Economic Partnership (RCEP) Agreement.

These countries, the ten members of the Association of Southeast Asian Nations, known as ASEAN (comprised of Myanmar, Thailand, Malaysia, Cambodia, Laos, Vietnam, Singapore, Indonesia, the Philippines and Brunei), plus China, South Korea, Japan, Australia and New Zealand will form the bloc. India was an original negotiating partner but elected not to join the others, largely from fear that its internal market would be swamped with Chinese goods. Even without India, the amount of trade within the bloc will encompass 30% of global trade.  This is not surprising given the presence of the world’s second and third largest economies, China and Japan, plus major trading countries like Korea and Indonesia. The RCEP was built on the foundation of several “ASEAN Plus” agreements, that is to say, ASEAN plus China, ASEAN plus Japan, ASEAN plus Korea and ASEAN plus Australia/New Zealand, all agreements negotiated some ten years back or more. RCEP brings these disparate ASEAN-centered agreements together under one umbrella, with common Rules of Origin (qualifying rules for preferential tariff treatment under the agreement). It is estimated that through its trade liberalizing provisions RCEP could lead to income gains of over $200 billion by 2030 and add $500 billion to world trade.

Because of the widely varying levels of economic development among the RCEP participating members, the level of “ambition” in accepting trade disciplines is not as great as in some other trade agreements, notably agreements like those between the US, Canada and Mexico (the USMCA/CUSMA), or between the EU and Japan or Korea. In fact, I have heard RCEP described as being “as wide as the Pacific and as deep as a puddle”. There is something to be said for this description. Compared to another regional trade pact, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the eleven-country successor to the Trans-Pacific Partnership that included the United States until the US withdrew shortly after Donald Trump took office, the RCEP has fewer binding commitments to trade liberalization and is less aggressive in its reduction of tariffs. (Some of the countries in RCEP—Japan, Australia, New Zealand, Malaysia, Brunei, Vietnam and Singapore—are also members of the CPTPP. The others in the CPTPP are Canada, Mexico, Peru and Chile).

Unlike the CPTPP, RCEP does not contain chapters covering labour, the environment or state-owned enterprises, all issues of great importance in dealing with large emerging markets like China. It also does not provide for common commitments to liberalize trade in services, although there is improvement in some areas for some countries. However, it does contain a chapter on intellectual property (IP), including a number of provisions relating to copyright. While it would be fair to say that the RCEP’s IP chapter is not the most ground-breaking or sophisticated, the inclusion of a chapter on intellectual property is nonetheless important. It is worth remembering that this agreement covers 15 countries with widely differing levels of economic development and capacity, ranging from highly advanced countries like Japan, Korea, Singapore, Australia and New Zealand to rising emerging powers like China and Indonesia to lesser developed countries like Cambodia, Laos and Myanmar. A look at per capita GDP levels is revealing. They range from a high of $65,233 in Singapore to just $1,407 in Myanmar, with a huge variety in between including Australia at $55,060, Japan at $40,246, Korea at $31,846 and China at $10,261. (All figures are from the World Bank, 2019, expressed in USD).

What the IP chapter does do is to set some minimum standards across all these economies. It is based largely on the TRIPS commitments (the Agreement on Trade-Related Aspects of Intellectual Property Rights) in the World Trade Organization (WTO), and includes accession to several IP-related international treaties. In the area of copyright, these include the Berne Convention, the WIPO (World Intellectual Property Organization) Copyright Treaty and the WIPO Performers and Phonograms Treaty, commonly known as the WCT and WPPT, respectively. This will result in Cambodia and Myanmar acceding to Berne, and Cambodia, Myanmar, Laos, Thailand, and Vietnam acceding to the WCT and WPPT, although some of these countries have a grace period of up to a decade or more in which to implement their obligation. The IP chapter includes articles dealing with the protection of broadcast and encrypted program-carrying satellite signals and the establishment of collective management organizations. On this latter point, the wording is somewhat laboured and non-binding, i.e. “the parties shall endeavour to foster the establishment of appropriate organisations for the collective management of copyright and related rights”. Still, it is a start for countries where no such organizations exist.

There is also standard language on technological protection measures (TPMs) and rights management information (RMI). On TPM’s the agreement requires each party to “provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors, performers, or producers of phonograms in connection with the exercise of their rights…”, although exceptions can be provided in accordance with laws and regulations. RMI refers to information that identifies the work, performance, author and so on, of a recording, normally embedded in code. Signatories to the agreement will make illegal the removal or altering of any electronic RMI or allowing the import, distribution, broadcast etc. of works or recordings where the RMI has been removed or altered. All of this is pretty standard stuff in most modern trade agreements, but its inclusion in the RCEP will help propagate these minimum standards.

There is also language requiring the destruction of seized pirated and counterfeit products to avoid them simply being returned to channels of commerce (as often happens in developing countries), and provisions to suspend release of suspected pirate goods at a rights-holders request. Damages in civil cases will be commensurate with injury, i.e. statutory damages are not referenced.

What is not in the agreement is any reference to providing safe harbours for internet platforms, absolving them of any civil liability for content posted by their users. Of late, this has become one of the standard “asks” put forward by USTR when the United States negotiates trade agreements. The USTR language is based on Section 230 of the Communications Decency Act, 1996, a highly controversial piece of legislation in the US. I and others have argued that it has no place in the text of a trade agreement. Canada and Mexico agreed to a watered down version of Section 230 in the new NAFTA, known as the USMCA (CUSMA in Canada), but given calls in the US to amend or eliminate Section 230 it is hard to believe that its inclusion in the USMCA will have any material effect on any of the parties in terms of holding the platforms to greater account for hosting illegal or harmful content. With respect to the RCEP, this is all moot. Since the US was not a party to the negotiations, Section 230-type safe harbours didn’t come up and none of the fifteen RCEP countries had the least interest in raising the issue. Likewise, there is no inclusion of a safe harbour regime for intellectual property infringement as in some other agreements, where implementation of a notice and takedown (or equivalent) regime gives platforms protection against liability provided they respond expeditiously to bona fide takedown requests.

Some commentators have argued that the RCEP “focuses more on the balance of rights and obligations to prevent the abuse of IP rights”, but the language in the preamble, which talks about reducing impediments and distortions to trade, fostering innovation and creativity and maintaining an appropriate balance between rights-holders and users is not significantly different from the TRIPs preamble (1995) or the IP chapter preambles in more recent trade agreements like the USMCA/CUSMA. In fact, it’s a good beginning. It would have been very concerning had there not been an IP chapter in this large regional trade agreement.

For RCEP to come into effect it still has to be ratified by at least six ASEAN member states and three non-ASEAN states. Once ratified, it will join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) as an operating trade bloc in the Asia-Pacific region. The CPTPP has been ratified by seven (Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam) of its eleven members and has now been in effect for two years. The overlap between some RCEP and CPTPP members has led to talk of a long term aspirational goal of a Free Trade Area of the Asia Pacific (FTAAP) that would be an eventual merger of the two agreements. If that ever happened, the more comprehensive terms of the CPTPP’s IP chapter would undoubtedly prevail. (Right now, the US is the only major Asia-Pacific state not in either, but under the Biden Administration the US position may eventually change).

RCEP is a welcome step forward at a time when global trade has been threatened not only by the global pandemic but also by the increasing resort to unilateral protectionist policies on the part of some countries, such as the US under the Trump Administration. While the IP chapter and its copyright provisions are not the most sophisticated or far-reaching, they nevertheless provide a positive step forward in terms of levelling up standards of IP awareness, compliance and commitments across 15 economies–large and small, developed and developing–in the Asia-Pacific region.

© Hugh Stephens 2021. All Rights Reserved.