Implementing Canada’s Online Streaming Act: The CRTC is Fast Out of the Gate

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Just days after Canada’s controversial Online Streaming Act (aka Bill C-11) finally cleared Parliament and was proclaimed law, the CRTC (Canadian Radio-television and Telecommunication Commission), the regulatory body empowered to implement the widespread changes to the Broadcasting Act encompassed by C-11, seized the initiative. First out of the gate was a “Myths and Facts” page to debunk some of the misinformation spread about the bill. The “myths” included claims the CRTC will regulate content and digital creation while exercising jurisdiction over social media users and content generated by them. Along with rebutting these claims, (a person who uploads content to a social media platform is not a broadcaster) the Commission denied it has been given authority to censor what consumers watch, read or listen to online or to regulate the algorithms or prices of online streaming services, nor will it regulate online video games. The broad intent of the legislation is to regulate online streaming services as broadcasters, with detailed implementation left to the CRTC.

As the legislation worked its way through Parliament, there were criticisms as to what it would lead to, particularly whether the Act empowered the CRTC to regulate user-generated content when implementing the objective of increasing the “discoverability” of Canadian content. That morphed into ridiculous accusations that C-11 would implement censorship, with government bureaucrats telling people what to read and creators what to write. Comparisons were even made with the Soviet Union and North Korea, including by people who should have known better like respected author Margaret Atwood, even though she later admitted she had not even read the Bill.

After tackling the misinformation that is out there, the Commission’s next move was to issue a road map for the consultations that are to come, as well as an information bulletin outlining transition provisions as new regulations are implemented. The roadmap is a regulatory plan that breaks the consultations into three phases, beginning immediately. Phase 1 will involve three separate proceedings; 1. Consultation on contributions to the Canadian broadcast system (to consider who should contribute, how much and how), 2. Consultation on registration of online streaming services (which online streaming services will need to be registered with the CRTC), 3. Consultation on exemption orders and basic conditions of service (what changes are needed to update the orders under which online services have operated in the past). Each of these proceedings is backed up by a Notice of Consultation document, referenced above, calling for submissions by June 12, 2023 (June 27 in the case of the consultation on mandatory contributions), with final replies to any comments raised during the consultation period to be filed by July 12. All of this will lead to a public hearing beginning in Ottawa on November 20. There will clearly be no summer leave for CRTC staff this year. Intervenors will also need to go into high gear quickly. The documents are detailed; for example, the consultation on who should contribute, and how, to the Canadian broadcast system runs some 30 pages and poses 39 specific questions of intervenors.

Phase 2, which will take place in the fall and winter of this year and in early 2024, will include the public consultation, as well as publication of an updated Regulatory Plan and engagement on definitions of Canadian and Indigenous content. These preliminary engagement sessions with industry and creators are to help design the approach for a full and separate public consultation to include the all-important issue of how to define what constitutes Canadian content (CanCon). This is one of the most fundamental issues the CRTC has to tackle as I discussed in a blog posting earlier this month (“Canada’s Online Streaming Act (Bill C-11) is Now Law: What Happens Next?). The consultation document on contributions to the Canadian broadcast system notes (in para. 18) that many of the current funding programs that support the creation of Canadian content are not available to international online undertakings, yet they will be required to contribute to them. The new contribution framework will need to consider, therefore, how to ensure equitable treatment between domestic and international online undertakings in supporting the creation of Canadian and Indigenous content.

Phase 3 will mark the launch of the new regime, supposedly toward the end of 2024.

This is a very ambitious blueprint from an organization that is not exactly known for being nimble. If anything, the CRTC is viewed by some as an overly bureaucratic entity subject to regulatory capture by the industry it regulates. It has an extremely broad mandate, covering not just broadcasting but also telecommunications, and the “to do” list mandated to it by C-11 is extensive. Rather than being prescriptive, the Online Streaming Act gives the Commission wide scope to implement the basic principles outlined in the legislation. The government has announced that it will be issuing a Policy Directive to the CRTC to guide it during the implementation phase. That has not yet been released so it is all the more remarkable that the Commission has been so fast out of the gate. This no doubt reflects two things; new energy and direction from Chair Vicky Eatrides, appointed in February of this year, and the election timetable.

Eatrides, a lawyer by training, held senior positions in the Competition Bureau before being named CRTC Chair this year. Her marching orders were clear. The announcement of her appointment noted that the Commission was “facing waning trust” and needs to up its game in the following three areas; “Timeliness of decision making; Accessibility of CRTC processes to the public, non-corporate interest groups, and civil society; Openness and transparency”. The new Chair is demonstrating that she got the memo. The second consideration is election timing. If the current Supply and Confidence agreement with the New Democratic Party (NDP) holds through the full term of this government, the next election must be held by October 2025. The opposition Conservatives, who are currently polling strongly, have vowed to repeal the Online Streaming Act, claiming it is the “Liberal Censorship Act”. The Trudeau government needs to ensure that the new regime is fully implemented and operative by the time of the next election to forestall this possibility. Once implemented, it would be extremely difficult, costly and probably counter-productive to try to dismantle.

It is encouraging to see the CRTC step up and engage quickly. They have a gargantuan task on their hands and the clock is ticking. Broadcasters, both traditional and online, will want to know the rules of the game and nature of the playing field as quickly as possible. It will be a busy summer.

© Hugh Stephens, 2023. All Rights Reserved.

Did US-style “Section 230” Internet Platform Immunity Sneak into Canada through CUSMA? No, It did Not (As Google Just Learned–the Hard Way).

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This question about Section 230 has been asked a number of times since Canada ratified the USMCA/CUSMA text that included Article 19.17.2, which says, in part;

no Party shall adopt or maintain measures that treat a supplier or user of an interactive computer service as an information content provider in determining liability for harms related to information stored, processed, transmitted, distributed, or made available by the service, except to the extent the supplier or user has, in whole or in part, created, or developed the information

At the time, some Silicon Valley supporters, both in Canada and the US, (“Thank You Professor! “Explaining” Section 230 to Canadians) crowed that Section 230 of the Communications Decency Act–the 1996 US legislation that over the years has provided internet platforms in the US with broad civil immunity against liability for illegal or harmful third-party content they have distributed or provided access to—had finally come to Canada. Section 230 has been widely abused by platforms that have refused to take down defamatory and damaging content posted by users on their service despite clear knowledge of the existence of that content and the harm caused by it.

Because of limitations inserted into the Agreement, not everyone agreed that CUSMA required Canada to implement Section 230-like immunities for internet platforms. I am certainly in this camp, as I wrote. (“Did Canada get “Section 230” Shoved Down its Throat in the USMCA?”). However, if there was ever any doubt about whether such immunities do not exist in Canadian law, they were dispelled by a recent decision of the Quebec Superior Court (A.B v Google). It cost Google $500,000 (admittedly a rounding error for this company) to get the message.

That clear message is: Section 230 immunities don’t apply  in Canada so stop trying to hide behind them.  

Prominent IP lawyer Barry Sookman has a detailed post on the case. The plaintiff (whose identity is protected) was wrongly accused by a third party back in 2007 of being a pedophile. The plaintiff attempted to get the original post removed and to have Google take down the link to it. At first Google complied— for its Canadian search service only–but reinstated the link after the 2011 Crookes case in which the Supreme Court of Canada ruled that a hyperlink, by itself, does not constitute publication of the content to which it refers. However, Crookes also led the Court to conclude that once ISPs or other platforms acquire actual or constructive knowledge that their systems are being used to disseminate defamatory content, they may be liable for publishing it unless they take steps to prevent its publication. (For a fuller discussion, see Barry Sookman’s 2011 post on the case here). As a result of Google’s actions (or inaction), the results kept appearing, causing extreme damage and suffering to the plaintiff and his career, despite the fact that he had been wrongly identified. Google was aware of the harm but did nothing.

The judge summarized Google’s actions as follows;

Google variously ignored the Plaintiff, told him it could do nothing, told him it could remove the hyperlink on the Canadian version of its search engine but not the U.S. one, but then allowed it to re-appear on the Canadian version after a 2011 judgment of the Supreme Court of Canada in an unrelated matter involving the publication of hyperlinks. Google finally settled on the position that the Canadian version of Google Search will remove the “STC”, i.e. snippet (short extract from the website), title of the website, and cache (stored snapshot of the website at issue) attached to the hyperlink for the Defamatory Post, but not the hyperlink itself. As for other country-specific versions of Google Search, including that of the U.S., the link and the STC would remain.

Google argued that Quebec law (which provides for platform immunity against publishing defamatory content provided that the platform has no knowledge of the defamation) did not apply, and even if it did, it must be interpreted in a way that is consistent Article 19.17.2 of the USMCA/CUSMA. As Sookman puts it;

Specifically, Google argued that CUSMA requires that the (Quebec) Civil Code liability be constructed as broadly as s.230 of the Communications Decency Act (CDA), a controversial law that provides wide immunity to service providers and which would shield Google from defamation claims brought against it in the United States.”

The Court wasn’t buying this argument. As I have noted elsewhere, when CUSMA was ratified in Canada, an implementation bill was introduced into Parliament to bring Canadian laws into conformity with commitments made in CUSMA. But there were no legislative changes introduced as a result of Article 19.17.2—because none were required. The Article was subject to a footnote that indicated that Canada could comply “through its laws, regulations, or application of existing legal doctrines as applied through judicial decisions.” In other words, secondary and vicarious liability for defamation continues to apply in Canada.

With regard to a potential conflict between the relevant Quebec legislation and CUSMA, the Court noted that any fault that Google committed was not as a result of it being an “information content provider” (as referred to in Article 19.17.2) but rather as an “intermediary that provides technology-based documentary referral services”. According to Quebec law, such an intermediary cannot be held liable for the behaviour of the content provider, but it has potential liability when it becomes aware, as Google was, that its services are being used for illicit activity, and does nothing. Moreover, the language in Article 19.17.2 is far narrower than the immunity provision in Section 230 of the US legislation. Finally, concluded the court, there is a general exception in the CUSMA allowing an override for the preservation of public morals.

Google also argued that Quebec law did not extend to its search engine, which is based in the US, because of jurisdictional issues. This was an argument similar to the one presented in the Equustek case when Google argued that the British Columbia Supreme Court had no authority to order it to delist specified IP-infringing content from its global search engine, as opposed to just Google Search in Canada. That case, which I wrote about at the time, (here) went to the Supreme Court of Canada. Google lost. The Quebec court rejected Google’s jurisdictional arguments because the company had demonstrated that it has the ability to geo-block access to its search services based outside Canada, but elects not to do so. The Court also rejected Google’s argument that Crookes provided it with immunity since hyperlinking does not constitute publication. Google was not an “innocent disseminator” because it knew that the material to which it was providing access was defamatory, yet consistently took no action. Finally, the Court found that Google is not a neutral intermediary but in fact curates the links it provides given that the company presents itself as a reliable source of information, not a purveyor of disinformation.

In summarizing the outcome of the case, Sookman states;

“The court’s interpretation of CUSMA and the decision in Crookes and its characterization of Google as a “curator” of information rather than as a mere intermediary, are also likely findings that will be applicable across the county (sic)”

This is not the first time that Canadian courts have delivered judgements demonstrating clearly that anyone who thinks Section 230 applies in Canada, and that they can hide behind it, is dreaming in technicolour. In March of 2021 I wrote about the case of Frank Guistra, a resident of both British Columbia (BC) and California who sued Twitter in BC for publishing and then refusing to remove defamatory tweets about him. Twitter sought unsuccessfully to have the case heard in California where it would have benefited from Section 230 immunity. As I noted in that post (“Will Article 19.17 of the USMCA/CUSMA Influence Canadian Court Proceedings? (The Long—or Short?—Arm of Section 230”);

“The court asserted territorial competence because the harm to the plaintiff, a BC resident, occurred in BC (as well as elsewhere). It then determined it had jurisdiction–despite the existence of US law on the subject–because under US law the plaintiff would have had no cause of action (because of Section 230) for the harms suffered in BC.”

If we need any further proof that Section 230-like immunity arising from Article 19.17.2 of CUSMA just doesn’t apply north of the 49th parallel, I noted a news item in my local media the other day indicating that BC’s Attorney-General was putting technology companies on notice, warning them they could face orders to stop the distribution of intimate images of BC residents where those images have been shared without consent. As Section 230 critic Danielle Citron has noted, Section 230 as interpreted by various US courts has conferred immunity on sites in the US that encourage and solicit intimate privacy violations, not to mention immunity for simply refusing to remove such images. That is not going to happen in Canada. The new BC law, will set out civil liability for an online company that has not taken reasonable steps to address the non-consensual distribution of images on their site, including an order for damages. (A new provision introduced into the US Senate, the “Stopping Harmful Image Exploitation and Limiting Distribution Act of 2022 (SHIELD Act) would also eliminate Section 230 immunity for platforms in sextortion cases by making such activity a criminal act. Section 230 immunity applies only to immunity in civil cases).

Whether its Google, Twitter, Facebook, Pornhub, or any other internet intermediary trying to hide behind Section 230 in Canada on the basis of Article 19.17.2 of the CUSMA/USMCA, it is time for a reality check. It cost Google $500,000 to learn that lesson. For Google this financial penalty is like a fly landing momentarily on its arm (its legal fees defending the case were likely more) although the plaintiff, who sought $6 million in damages, has appealed the modest sum. Nevertheless, Google’s lawyers will take note and hopefully next time the platform will be more responsive and more responsible when it serves as the knowing distribution platform for false and defamatory information in Canada.

© Hugh Stephens 2023. All Rights Reserved.

Canada’s Online Streaming Act (Bill C-11) is Now Law: What Happens Next?

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On Thursday, April 27, Bill C-11, the Online Streaming Act, finally made it over the finish line after almost three long years extending over two Parliaments. The Canadian Senate voted to adopt the bill as returned to it by the House of Commons after the Commons accepted some Senate amendments but rejected others. Thus, the first legislation in over thirty years to amend the Broadcasting Act was passed. When the Broadcasting Act was last amended (1991), AOL was just emerging as an internet giant, flip-phones were the latest thing, and the most common internet sound was the screech of a dial-up connection. Google was still seven years away from being born. Bill C-11 will extend the reach of the Broadcasting Act, and the broadcasting regulator, the CRTC (Canadian Radio-television and Telecommunications Commission), to cover online streaming content. That simple concept will have wide implications for content production and distribution in Canada.

Judging by who you talk to, C-11 is the best thing that has happened to promote Canadian content and culture in a very long time or is a deeply flawed bill representing the worst possible form of government overreach, interfering with freedom of expression and undermining opportunities for digital creators. It is seen by some, such as the Canadian Media Producers Association as a positive step toward ensuring the vitality of Canadian creativeness in the digital age, although they think it does not go far enough because it seems to hold foreign streamers to a lower standard than Canadian broadcasters. For others, such as the Washington DC based high tech trade association, the Computer & Communications Industry Association (CCIA), C-11 is a discriminatory and unwanted intrusion into the market affecting US companies in ways that violate Canada’s international trade obligations under the US-Canada-Mexico Agreement (USMCA/CUSMA). Google has been vocal that it will negatively impact YouTube and tried to mobilize YouTube users to oppose the legislation. In particular, YouTube objects to being required to install Canadian content discoverability features on its platform. Much of the controversy has revolved around whether user-generated content will be captured by new regulations to be developed to implement the legislation.

As for the trade agreement arguments, I deal with them in detail in this analysis recently published by the School of Public Policy of the University of Calgary. (Spoiler alert: the CCIA’s arguments that Canada will have to invoke the CUMSA cultural exception clause because the legislation violates national treatment and other CUSMA commitments are a valiant lobbying effort, but unsubstantiated.)

At this stage no one knows for sure exactly how the bill will be implemented because the CRTC is required to engage in public hearings as part of its rule-making process. It will also be provided with further guidance through a Policy Directive to be issued by the government. While some, such as Michael Geist of the University of Ottawa, have criticized the Bill for creating a long, drawn-out process that will likely not see the final regulations in place until 2025, it is important for the CRTC to get it right within the overall guidelines they have been given by the legislation and the policy directions they will receive. After all, it has been 33 years since the Broadcasting Act was amended so why quibble about a few months of consultation? If the CRTC rushes the process, they will be subject to criticism for moving too quickly. (The requirement for extensive CRTC hearings was not Geist’s only criticism of the Bill. In fact, he has criticized just about every aspect of the legislation in an endless series of blog posts, to the point where one wonders if there is anything left in the legislation for him to find fault with).

One of the elements of the legislation the Policy Directive will apparently deal with is to provide clarity regarding user-generated content, confirming that it will not be subject to regulation–although the platforms that carry it will be. Heritage Minister Rodriguez has repeated on numerous occasions that it will be “platforms in; users out”. This may be a distinction without a difference, and it will be interesting to see exactly how this will be achieved. Early in the process the government closed a loophole in the legislation that would have allowed platforms like YouTube that host user-generated commercial content to evade the requirements to promote Canadian content, such as music, in videos. The music industry –especially in Quebec–was concerned that this would negate the intent of the legislation to promote Canadian music content. An elaborately developed definition put forward as an amendment by the Senate that would have defined what forms of content were captured by the legislation based on who did the uploading was rejected by the government, presumably because it was too prescriptive. In the end, Senators passed the revised legislation without this amendment after the government gave public assurances that Bill C-11 “will not apply to user-generated digital content.”  

The bill includes a number of other measures as part of its objective to promote Canadian content on streaming services. One of these to redefine what constitutes Canadian content (CanCon). Right now, the definition is a complex web of funding and creative requirements that vary across music, film and television as I outlined in this blog post on the topic last year. (“Unravelling the Complexities of the Canadian Content (Cancon) Conundrum”). The definition is important because not only does the achievement of Canadian cultural objectives hang on it, but so does a lot of funding. The new Act instructs the CRTC to consider the following in arriving at a new definition of CanCon; (Regulations — Canadian programs 1.1)

(a) whether Canadians, including independent producers, have a right or interest in relation to a program, including copyright, that allows them to control and benefit in a significant and equitable manner from the exploitation of the program;

(b) whether key creative positions in the production of a program are primarily held by Canadians;

(c) whether a program furthers Canadian artistic and cultural expression;

(d) the extent to which persons carrying on online undertakings or programming undertakings collaborate with independent Canadian producers, with persons carrying on Canadian broadcasting undertakings producing their own programs, with producers associated with Canadian broadcasting undertakings or with any other person involved in the Canadian program production industry, including Canadian owners of copyright in musical works or in sound recordings; and

(e) any other matter that may be prescribed by regulation.

The bill will also require streaming services to make “maximum, and in no case less than predominant, use of Canadian creative and other human resources in the creation, production and presentation of programming” (subject to some exceptions for non-English or French language programming) but foreign streamers are subjected to a somewhat lesser requirement. They are only required to “make the greatest practicable use of Canadian creative and other human resources”. However, they are also required to contribute “in an equitable manner” to strongly support the creation, production and presentation of Canadian programming. Criteria for calculating financial contributions are not fixed but will almost certainly include measurement of revenues generated by foreign streaming services in Canada. Canadian streaming services, like Canadian broadcasters, will also be required to contribute to Canadian production.

The requirement for foreign streamers to contribute to Canadian production is an issue the CRTC will need to handle carefully. It is one thing to set conditions that have to be met when foreign content producers are seeking to access a subsidy (e.g. minimum Canadian spend, use of certain Canadian talent) but it is quite another when these same producers are required to provide the subsidy. If they are not given fair and equitable access to the content they have indirectly funded, this could call into question the fairness of the CRTC regime. Requiring that all copyright be held by Canadians for a production to qualify as CanCon could be an obstacle. One solution might be to allow co-productions between foreign streamers and Canadian indie producers, allowing for assignment of copyright to one of the co-producers.

This won’t satisfy those who see keeping the rights in Canadian hands as a policy objective but may be a realistic way to deal with the desire to promote Canadian independent production while not unfairly handicapping foreign funders. While not directly related to CanCon, no one wants to jeopardize the huge amount of Foreign Location Shooting (FLS) production that takes place in Canada. These are US shows shot in Canada in order to access film production credits and benefit from lower Canadian production costs. FLS constitutes the largest amount of Canadian production by value but has nothing to do with Canadian stories or content. US scripts and lead actors are used, but Canadian production crews and post-production facilities benefit. Netflix, for example, has extensive production facilities in Canada. What the Canadian AV production industry wants to do is keep and grow the FLS sector while shifting more foreign funding into production of CanCon. Bill C-11 gives the CRTC a stick to do this, but a bit of carrot would be helpful as well.

Whether the CRTC will be able to thread that needle will be determined as it develops the regulations to implement the intent of the Online Streaming Act. Stay tuned. It will be a long ride.

© Hugh Stephens, 2023. All Rights Reserved

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