Month: June 2024

Two Hundred Years of Copyright History in Canada: What a Journey!

Image: Shutterstock (with AI assist)

As we approach July 1, Canada Day, Canada’s 157th anniversary, it is worth reflecting on the history that shaped this wonderful if imperfect country of now 41 million. While not top of mind for everyone, part of that history relates to copyright! This year, 2024, marks a couple of milestones in the history of copyright in Canada. It is 200 years since the first copyright bill was introduced into the Assembly of Lower Canada and it is 100 years since the entry into force of the legislation that established Canadian copyright sovereignty, the Copyright Act of 1921. During those two centuries, Canada’s copyright history has paralleled its economic and political development, moving from struggling to assert its independence from Britain to learning to live beside and accommodate the economic colossus south of the border. Internationally Canada moved from largely being, or wanting to be, a copyright outlier to a nation that has fully embraced the international rules-based order of copyright (although there are still some areas that could be strengthened).

As noted by Professor Myra Tawfik in her new book, “For the Encouragement of Learning”[i], on February 9, 1824, a “Bill for the Encouragement of Learning by Securing the Copies of Maps, Charts and Books, to the Authors and Proprietors of such Copies during the Times therein mentioned”, was introduced into the Assembly of Lower Canada (now Québec) by François Blanchet, an elected member of the Assembly. This wording mirrored that of the Statute of Anne, the first piece of British copyright legislation protecting authors, adopted in 1710, and the US Copyright Act of 1790. Blanchet’s Bill died on the order paper but subsequently, in 1832, the first piece of copyright legislation in what is now Canada was passed by the Lower Canada Assembly.

The second milestone was the proclamation, on January 1, 1924, of the Copyright Act of 1921 which, with minor amendments, established the copyright framework in Canada for decades until revised in the late 1980s. Although copyright was one of the powers granted to the new Dominion of Canada in 1867, (and indeed Canada passed, or attempted to pass, copyright legislation on several occasions), if that legislation conflicted with British interests and imperial copyright law, it was blocked by the British government. The Copyright Act of 1921 resolved those conflicts. It also brought Canada fully into compliance with the terms of the 1886 Berne Convention, the first international treaty on copyright, which for many years Canada had agitated to leave, having acceded to Berne as part of the British Empire when the Convention was established. (After a perfunctory consultation, Canadian Prime Minister Sir John A. Macdonald had sent a telegram to London agreeing). In 1928, partly as an assertion of sovereignty, Canada acceded to Berne in its own right but subsequently had doubts about having joined (in part because the United States was not a member). Today, Canada has fully embraced the international copyright system through accession to most international copyright treaties and full acceptance of the terms of Berne incorporated into the TRIPS Agreement (Trade Related Aspects of Intellectual Property Rights), part of the World Trade Organization (WTO).

While the 1710 Statute of Anne provided, for the first time, protection to the authors of works, rather than printers, (for an initial period of 14 years, which could be extended for an additional 14 years), it did not apply to any British territories outside Britain, notably not to the North American colonies prior to 1776. Although amendments to the Statute in 1814 provided protection to British authors throughout the Empire, there was no protection for Canadian or other colonial authors unless they arranged to have their works first published in Britain and registered at Stationer’s Hall in London. Not surprisingly, very few did. The Lower Canada Copyright Act of 1832 established the first copyright in Canada for Canadian authors, although it only applied in what is now Quebec. However, after the union of Upper and Lower Canada in 1840 to form the Province of Canada, the 1841 Provincial Copyright Act, modelled on Lower Canada’s 1832 law, applied to both Canada East (Quebec) and Canada West (Ontario). Nova Scotia enacted its own copyright legislation in 1839.

Prof. Tawfik points out that much of the impetus for the introduction of early copyright legislation in British North America (BNA) came from a desire to encourage the publication of Canadian school texts. Given the dearth of local books at the time, various authors of local histories, maps and schoolbooks regularly approached the legislatures of the BNA colonies seeking financial support to print their works, either a subsidy to be provided in advance or a commitment to buy a certain number of the works at a predetermined price. While in some cases, subsidies were granted, a solution to the problem was to introduce a copyright law that would provide a means for authors to be self-sustaining through royalties. As Professor Tawfik notes, government in the colonies “…adopted the position that copyright relieved it of its responsibility to subsidize the printing of books” (p. 148).

Fair dealing was first introduced in Canada in the 1921 Copyright Act. The Act mimicked the 1911 Imperial Copyright Act which had, for the first time, enshrined fair dealing exceptions in British law, providing greater clarity than the previous common law approach. Fair dealing encompassed several exceptions to copyright protection, allowing unlicensed use of copyrighted works for specified purposes. At the time, these purposes were “research, private study, criticism, review or newspaper summary”. However, even if the dealing, or use, fell within these specified categories, other factors were also considered to determine whether the dealing was fair (e.g. amount or nature of the copying). That is essentially the position that prevails in Canada today, except that the list of specified fair dealing exceptions has been broadened to include, in addition to the original categories, parody, satire, and education, while the term “newspaper summary” has been broadened to “news reporting.”

The 1921 Act also brought Canada into conformity with Berne, a key concern of Britain given Canada’s reluctance to comply during the early decades of the Convention. The issue lay with printing rather than authorship and related in large part to the situation in the United States, where the printing lobby held sway in Congress. Initially the US refused to recognize the copyright of non-US residents and US printers freely copied (one might say “pirated”) British and other works. A couple of years ago, I discussed how Canada got caught in the crossfire on this issue. (International Book Piracy: How Canada Got Caught in the 19th Century British-US Copyright Wars). Joining Berne would have required the United States to recognize non-US copyrights (in return for US copyrights being recognized in other Berne countries), so it stayed out. In 1891 Congress passed the Chace Act whereby the US would recognize the copyrights of non-US authors provided that the work was printed in the US. In other words, the US would only recognize foreign copyrights if the foreign works were published there. Canadian printers wanted something similar. The Canadian Parliament tried to pass legislation containing compulsory printing requirements as a condition for allowing foreign and British works to enjoy copyright protection in Canada, only to have these laws blocked by London because of inconsistency with Berne and potential harm to British publishing interests.  

While Canada was never able to successfully institute a manufacturing clause linked to copyright as the US did, nevertheless like the US it required registration for a copyright to be valid and limited the term of protection to a fixed number of years after publication. In 1908, the Berne Convention countries abolished registration as a requirement (copyright was established automatically with no formalities upon creation as long as other criteria like originality, nationality, fixation etc. were met), while it also established the minimum term of protection to be the life of the author plus 50 years. Canada was worried that its term of protection would be longer than in the US (giving American authors better protection in Canada than vice versa) and was also wary about abolishing registration. Yet Britain wanted to ratify the 1908 revision and since Canada had entered Berne as part of the British Empire, it needed to get Canada onside to do it.

This finally happened with the 1921 Act, although Canada maintained a compulsory licence provision applicable to non-Berne authors for many years. This was aimed at the US, although it was never used. It was designed as leverage to gain an exemption from the US manufacturing clause for Canadian authors, a measure that was eventually successful. Canada also retained a voluntary registration system. As mentioned above, as part of its goal to assert sovereignty through independent treaty-making, Canada joined the Berne Union as a separate entity in 1928.

Despite full accession, Canada had second thoughts about joining Berne for several decades thereafter, largely because of concerns about printing and a view that copyright generated more income for foreign authors in Canada than for Canadian authors abroad. In the 1960s, Canadian officials viewed the country’s international copyright obligations solely through an economic “balance of trade” lens, considering the amount of royalties paid to foreign authors for distribution of their works in Canada as an economic drain, with little offsetting benefit, ignoring social and cultural objectives entirely.[ii] At one point, Canadian officials even took the risible and unsustainable position that Canada was a “developing country” from a copyright perspective and was therefore entitled to weaken its level of copyright protection. The fact that at the time the UN definition of a developing country was limited to those with a per capita income of less than US$300 per year, and that Canada had the third highest per capita income in the world, did not help Canada’s case. This narrow, utilitarian point of view still has advocates as we saw during relatively recent discussions regarding whether Canada should extend its term of copyright protection to match that of the US, EU, UK, etc., with some commentators claiming (with no credible evidence, as I pointed out here) that extension would cost Canada between $100 million and $450 million annually. Total nonsense.

The problem of net copyright revenue outflow back in the 1950s and 1960s lay not with copyright of course, but with the fact that Canadian authors were not particularly prolific or internationally known at the time. It seems not to have occurred to Canadian officials that a strong reciprocal copyright regime might have fostered the growth of Canadian writing and provided a needed economic incentive. Happily, the explosion of Canadian literature has ended most of the parochialism. In particular, the cultural vibrancy of Quebec creators and their success internationally eventually helped push the Canadian government toward a more pro-creator position by the mid-1980s.

Subsequently, copyright and intellectual property (IP) generally become intertwined with trade policy issues. The Uruguay Round leading to the establishment of the WTO was underway, and IP, including copyright, was one of the issues on the table in the negotiations. The Canada-US Free Trade Agreement of 1989 committed both parties to cooperate in the Uruguay Round and in other international forums to improve the protection of intellectual property. Copyright became “coinage” in the negotiations, to be bundled with other issues (like dairy quotas, automotive rules of origin, or investment rules) as a means to achieve overall negotiating objectives. In 1989, the US finally acceded to the Berne Convention, further harmonizing the international rules governing copyright, and all WTO members incorporated its principal provisions through TRIPS when the WTO was established in 1995. By this time, the World Intellectual Property Organization (WIPO) had been established (in 1970) to manage not only the Berne Convention, but other international treaties related to intellectual property, such as those dealing with patents and trademarks. As Canada has embraced trade liberalization and has meticulously adhered to the rules-based order in international trade out of its own self-interest, it has come to recognize and accept the benefits of a standardized international copyright framework and the benefit this brings in terms of cultural expression and cultural industries.

Copyright in Canada and internationally continues to evolve. The current challenge is AI, and the rules by which AI developers will be able to access copyrighted content to train their algorithms. Will there be a text and data mining (TDM) exception in Canada, similar to the fair dealing exceptions? If so, how broad, or how narrow, should that exception be in order to spur innovation without harming creators and cultural industries? Will there be further international rules to govern how AI and copyright can co-exist, and to what extent will Canada be a player in setting these rules?

Canada evolved from colony to nation as its copyright framework developed over the past 200 years. In the early days, Canada agitated for more control over copyright policy. When it achieved this, it played somewhat of a spoiler role, with one eye always on the US and its impact on Canada and the Canadian market. As Canada matured, it became more committed to playing by and contributing to the international consensus on copyright, although we are still an outlier in some respects, given the situation with educational fair dealing that has decimated the educational publishing industry and the incomes of many authors in Canada. This is a situation not faced in any other country—and needs to be fixed. Although we have come a long way, we still have some lessons to learn. It’s been quite a journey, and the journey continues.

© Hugh Stephens, 2024.

[i] “For the Encouragement of Learning: The Origins of Canadian Copyright Law”, (University of Toronto Press, 2023), p. 48

[ii] Sara Bannerman, in her book “The Struggle for Canadian Copyright”, (UBC Press, 2013) quotes the Secretary of State for External Affairs, in a Memorandum to Cabinet in 1967. Considering the wisdom of Canada staying in the Berne Union, he wrote, “An important consideration…is the fact that about 90 percent of the total cost (about $8 million) of copyright to the public in Canada is accounted for by the protection given foreign works. In turn compensation to Canadian authors by way of payments from overseas to Canada is minimal”. p. 160

The CRTC and Online Streaming: Money Now; Details Later

Photo: Author

The first shoe has dropped for foreign online music and video streamers in Canada, at least those generating more than $25 million a year in “contribution revenues” from the Canadian market. On June 4, the Canadian Radio-television and Telecommunications Commission (CRTC) announced it will be imposing “base contributions” of 5 percent of annual Canadian contribution revenues on streamers such as Netflix, Spotify, Amazon Prime, Disney + etc. as part of the implementation of the Online Streaming Act passed last year. (Canadian streamers associated with a Canadian broadcast entity, i.e. Crave, are exempt). The Act brings online streaming services under the regulatory purview of the broadcast regulator. The “base contributions” are to begin in the 2024-25 broadcast year, beginning September 1 of this year, and are expected to generate in the range of CAD$200 million annually. According to the Minister for Canadian Heritage, Pascale St. Onge, the levy is about “fairness in the system” and will be good for the streamers because it will create more content that will “most likely” go back on their platforms. So why are they not happy? (And they are not).

They are not happy because this is just the first shoe to drop, and while they now know the cost of this shoe, they don’t know what the other shoes are going to cost, what exactly those shoes will look like, or indeed whether they will be allowed to try them on. Because, you see, the rules about who can access the Funds that their money will be going into, and on what terms, have not yet been determined. Key decisions regarding the definition of Canadian content and who can own or control Canadian content (through holding the copyright) are a couple of years down the road. With those decisions could come other requirements, such as allocating a percentage of revenues to production of local content on top of the current “base contribution” to existing Funds, discoverability obligations, and possibly others.

With regard to the top-up of existing funding mechanisms, just about anybody who is anyone in film, TV or music will be lining up to get a share of the $200 million pie. The list includes (and I am not kidding) no less than 11 identified recipients named by the CRTC;  the Canadian Media Fund, the Independent Local News Fund, the Black Screen Office Fund, Certified Independent Production Funds supporting OLMC (Official Language Minority Communities), the Indigenous Screen Office Fund, FACTOR and Musicaction, a new temporary fund supporting local news production by commercial radio stations outside designated market, the Canadian Starmaker Fund and Fonds RadioStar, the Community Radio Fund of Canada, direct expenditures targeting the development of Canadian and Indigenous content and, last (and least, in terms of percentage of the funding from audio online undertakings), the Indigenous Music Office. Is anyone missing? What about the Punjabi Weather Network or the Lawn Bowling Broadcast Fund? This is micro-management gone wild.

The 5% contribution funding is divided up into various slivers, some larger than others, by the Solomons at the CRTC. As for the Minister’s optimistic belief that those making the contribution will “most likely” benefit from the content produced, I struggle to see how Netflix or Disney+ will get much out of the Independent Local News Fund (which is currently funded by Canadian cable platforms) or Francophone productions in British Columbia or Alberta. The argument, no doubt, is that this is the price for participating in the Canadian broadcast ecosystem, that now includes online streaming undertakings. Music streamers, on the other hand, will probably benefit from the development of more Canadian talent.

As a consumer of music and audio-visual content, I am also a participant in the broadcast ecosystem and already pay in various ways, through income and sales taxes, and streaming and cable (yes, I am still one of them) subscription fees. I have a hunch I am about to pay more. For several years now the AV streaming services have been on a spending spree in an attempt to grab market share. Profitability came second, but that is rapidly changing as the market matures. And that means subscription fees are going up. (Netflix is killing off the basic subscription I have had for a number of years and given me the choice of a slight price reduction if I put up with ads, or else face a roughly 50% increase in monthly subscription fees. I am still dithering). And this was before the CRTC dropped its latest bombshell. If the CTRC is going to take 5% or more of revenues, simple math tells you there are only a couple of ways to make that up, cut costs or raise prices. “Costs of doing business” inevitably get recovered from customers. If the price of supporting a viable content industry in Canada was limited to a 5% increase in my monthly subscriptions, I would gladly pay but I doubt that my contribution will be limited to 5%.

Ironically, the issue of whether the CRTC should regulate streamers was postponed for years in Canada because of aversion of what was referred to at the time as the “Netflix tax”. No-one knew for sure what that meant; it could have meant imposing sales taxes on a Netflix subscription (which has since been done), or it could have meant a levy on Netflix (which was the first streaming service to enter Canada) to fund Canadian content. But while people weren’t clear on what a Netflix tax was, they knew they didn’t like it. It became a symbol of piling yet one more nuisance fee onto consumers (“carbon tax” anyone”?) and while a small fee on a streaming subscription was unlikely to send anyone to the poor house, politicians from all parties outdid themselves by swearing to avoid any form of Netflix or internet tax.

Serendipitously, I have just finished reading Howard Law’s new book, “Canada vs California-How Ottawa Took on Netflix and the Streaming Giants”, a fascinating deep dive on Bill C-11, which became the Online Streaming Act, and its unsuccessful predecessor Bill C-10. (For those who don’t know, Howard also publishes a weekly blog, MediaPolicy.ca, another essential read for anyone interested in the Canadian media scene). Law devotes an early chapter to “No Netflix Tax 1999-2019” and then goes on to take the reader through the painful teething pains of Bills C-10 and C-11. The term “Netflix tax” has fallen out of use these days but the end result of the imposition of the CRTC “base contribution” on foreign streamers is really no different from an indirect tax.

Alternatively, if the streamers do not fund this new “base contribution” by raising prices to consumers, they will likely compensate for it by spending less elsewhere, i.e. on Canadian production, the very objective for imposing the contribution in the first place. According to MPA-Canada, in 2021-22 “foreign investment in production” (FIIP, a metric for international participation in the film and television production industry in Canada) contributed $875 million to production of Canadian content, about 13% of total financing for Canadian-owned content productions. (This is in addition to the much larger Foreign Location Shooting spend on US productions made in Canada). By comparison, the Canadian Media Fund contributed only 7% of total financing for Canadian productions. The foreign contribution to Canadian production was not far off the $1.09 billion spent by Canadian broadcasters on in-house production. A similar scenario exists in Australia, where the government is also exploring various options to require foreign streaming services to fund local production. Yet the streamers are currently the leading source of production funding for Australian adult drama. In Australia, streaming services invest more in this drama than public, commercial and subscription broadcasters combined, despite having no legal obligation to do so.

What does the US government think of the CRTC’s announcement? That will depend on how hard the foreign streamers push the US Administration to intervene, and right now it is not clear what they will do. Part of the issue is those other dangling shoes. The outcome might not be all that bad for the streamers if they are given fair access to the content they will be required to fund. After all, they need to spend on content to fill their pipeline. But the terms of what payback they will get from their required investments are not clear. A lot will depend on what amount of spend the Commission imposes on foreign streamers for production of Canadian content (Cancon), and how Cancon is defined.

Right now, the Canadian content definition is a complicated formula, set by different funding and regulatory bodies, as I outlined in a blog a couple of years ago,  (see “Unravelling the Complexities of the Canadian Content (Cancon) Conundrum”) and as Law outlines in his book. The core is the infamous points system, based on the nationality of key players in the production, plus amount of local spending. In addition, one of the current conditions for a production to be considered Canadian—and thus qualify for tax credits (funding)–is that the copyright and catalogue rights must be held by a Canadian (normally the producer) for a minimum of 25 years. However, the CRTC does not impose a copyright requirement when defining Cancon for broadcast quota purposes. Will this continue when the Commission finally gets around to addressing this issue? That shoe is still hanging there.

If the Cancon definition is tweaked in such a way that the foreign streamers are required to spend a set percentage of local revenues on Canadian content, but at the same time are excluded from being able to acquire such production (i.e. restricted to licensing content they have already invested in), this will be a problem. It is one thing to apply strings when a producer is applying for tax credits (AKA a subsidy). It is quite another to be required to fund production but be excluded from recouping a return on that investment in a way that makes most sense for the funder. With the Cancon definition shoe still dangling, trying to enlist the US Administration to bring pressure on Canada right now may not be the best strategy. Not that this has stopped some of the usual suspects, like the National Foreign Trade Council and the US Chamber of Commerce from weighing in. Their comments are no doubt a marker for future reference if needed. CUSMA/USMCA obligations need to be kept front and centre.

As I noted in an article last year, (“Could or Would the US Retaliate Against the Online Streaming Act (C-11) Now That it is Law?”), “the CRTC must be mindful that foreign streamers who contribute to Canadian productions need to be able to access, acquire and distribute them on an equal footing with Canadian streamers, who face no such limitations”. The CUSMA/USMCA trade agreement requires that cross-border digital services be dealt with on a national treatment basis, i.e. accorded no less favourable treatment than Canadian streaming services. The current proviso that exempts Canadian streaming services associated with a Canadian broadcaster from the 5% levy on revenues is not an auspicious start, but we will have to wait to see what happens.

Regarding the link between Cancon and copyright ownership, I know there are people in the industry in Canada whom I respect who argue this is very important to maintain cultural sovereignty. They feel strongly that it is essential for Canadians to hold the copyright in productions to avoid becoming just service producers. They have a point, although there are other considerations that need to be borne in mind. A Canadian producer should be able to hold the copyright (and assume the risk that the production may not be big earner in future) if they wish, or else assign it, take the money and move on to the next project without the government putting its thumb on the scale of commercial negotiations. And it is not unreasonable for those who provide the funding and invest in a project to be allowed to negotiate commercially on how the asset is exploited.

The CRTC’s June 4 announcement can be considered a down payment or perhaps a first shot across the bow, depending on how you want to look at it. We are in for months, if not years, of more consultations. The CRTC’s own announcements project consultations into 2026, well past the next election. There will be several more shoes to drop, and the political landscape could well change. In the meantime, the streamers will have to start paying into a mixed bag of Funds as directed by the CRTC. As for those all-important details about the regulatory framework, they will come later.

© Hugh Stephens 2024. All Rights Reserved.

It Took Glue on Pizza to Spotlight Google’s AI Problem

Image: Shutterstock (with AI assist)

Google, the “indispensable” search engine relied on by millions for accurate and reliable search, has done it again, stepping smack into the pile of steaming excrement waiting for it in the middle of the road. Its most recent ill-starred foray into AI generated search has yielded some hilarious results, lighting up the blogosphere and making Google the butt of many jokes. After flubbing the public launch of its first AI enabled service, Bard, back in early 2023 when the AI driven search function produced the wrong results for a simple question about the James Webb Space Telescope, overnight wiping $100 million off Google’s valuation, Google’s new Gemini “AI Overview” service scored another own goal with its “hallucinatory” responses to questions like how to ensure cheese will stay on pizza (add glue) or how many rocks a day should a human eat. (Only one, in case you were wondering). It also informed users that Barack Obama was the first Muslim President of the United States.

When it comes to AI, “hallucinations” refer to incorrect or misleading results resulting from lack of training data, biased or selective training data, or incorrect assumptions made by the model. Hallucinations leading to trademark dilution was one of accusations levelled against OpenAI and Microsoft by the New York Times in its landmark copyright infringement case that is still working its way through the courts. In this case, the AI algorithm incorrectly attributed the false information to the Times, thus undermining its journalistic credibility, and diluting its trademark, or so the argument goes.

Apparently, the source of the pizza glue misinformation was an old tongue-in-cheek post on Reddit. I guess an AI algorithm has no sense of humour and can’t tell sarcasm from reality. It also gives credibility to conspiracy theories and blatantly false information, such as the Barack Obama example. Normally a search on any subject turns up a variety of sources on Google, some clearly more authoritative than others. Searchers can weigh a Wikipedia entry against a Reddit post against information from a government website or reputable academic institution. Even a plain old tendentious website put up by an advocacy organization can be probed and the bona fides of the source checked out. That is becoming more difficult, or at least less obvious, with the AI generated search summary provided by Google’s AI Overview.

If the search topic falls within AI Overview’s purview (and at the moment, not all do), viewers will see a summary of the information requested drawn from sources chosen by the algorithm. The algorithm decides how much information is drawn from any given site, and which sites are chosen. Users have the option of clicking through to access these and other sites that are displayed (below the annoying sponsored listings). However, many consumers, looking for a quick information fix, will not bother to do this and thus risk taking the AI summary as gospel. If you are being advised to mix glue into your pizza topping, you can probably figure out that something is haywire, but if the summary is only slightly wrong, or is on a subject that you are not familiar with, watch out. A good example was provided by the website Plagiarism Today. It asked Google five questions about copyright in the US. Its conclusion regarding the responses provided by AI Overview? Decidedly mixed. One A, one B, one C, one D and one resounding F.

The accuracy of the summary obviously depends on the sources of information chosen by the algorithm, and the emphasis it chooses to put on information from any given source. Unfortunately, in many instances it does not seem to prefer credible and authoritative sources, but instead goes for those that are popular. That is one of the basic problems of AI generally—quantity over quality, popularity over facts. (By the way, this account of how AI Overview works is based on reading about it from US sources since it is not yet available in Canada, which may be a good thing since I have read various US posts explaining that Overview is impossible to disable and very hard to turn off). Google intends to cram it down your throat whether you want it or not.

Of course, Google assures everyone that Overview is a “good thing” and the early kinks will be ironed out. Many websites are not happy with the new interface that will now exist between themselves and the consumer. They lose traffic when users simply read the AI summary and move on, not visiting the source website. Google used to boast that it had a symbiotic relationship with content providers because it facilitated, and even drove, eyeballs to the sites. No longer. It has appropriated–without permission–content from independent sites to feed AI Overview in the same way that the LLM (Large Language Model) AI developers have scooped up content, including copyrighted content, from rightsholders, without permission, licence or payment to enable their AI training. It is one thing to link to third party content, which requires a visit to the actual site to access the content; it is quite another to freely copy from it and mix it, sometimes inaccurately or inappropriately, with content from other websites that may not be reliable or acceptable sources of information.

Google clearly controls what goes into AI Overview and has said that it will apply more filters. If it can screen out sources of sarcasm and parody, it clearly has the capacity to install other filters that could differentiate trustworthy information from garbage. This might require Google to license the use of this curated information (Horrors! Google having to pay for the information of others that it so freely uses!). Licensing has already begun for content used for generative AI training. News Corp has just signed a licensing deal with OpenAI, as has the AP and the Financial Times. Licensing is at the heart of the dispute that OpenAI is facing with the New York Times.

Licensing presupposes knowledge of what inputs are being used, a requirement now enshrined in EU law which requires that AI developers maintain an inventory of works used for training purposes (transparency). This will allow rightsholders to opt out or negotiate a licensing solution unless the copying meets the text and data mining exception (i.e. for research by research and cultural organizations).

However, Silicon Valley has variously proclaimed that (a) it is impossible to track all the information ingested during AI training; (b) it would bankrupt the industry should they have to pay for content (c) they need to use copyrighted content because there is not enough current public domain information available (d) it is not feasible to filter out or identify specific works amongst the millions of datapoints that it ingests (e) everything that it does is fair use anyway (f) all of the above. Google’s embarrassment, and its apparent ability to finetune AI Overview, demonstrates that it is clearly feasible to filter out certain works and types of content. It is the will to do so generally that is lacking. Meanwhile, the number of lawsuits brought by rightsholders against AI developers continues to multiply.

By making itself the object of social media ridicule, and then admitting it can address the problem, Google has actually done us all a favour by highlighting the “garbage in; garbage out” problem. Not all copyrighted material is responsible or accurate but a good chunk of it is, such as professional journalism and academic journals. Access to that material is essential to provide credible results. And that material needs to be paid for, on terms set by the content owners.

The solution is not to stop the development of generative AI; for one thing, that won’t happen. It is to corral it, improve it and make it more trustworthy, if necessary with penalties if it is not. The penalties could be imposed by the market (i.e. Google search is not reliable so I will go elsewhere) or, in certain cases, by regulation. Licensing of accurate, credible information to drive search will inevitably distinguish the fake from the real and dubious from the trustworthy. This is what any credible search engine seeks. It is market gold.

Google, open your bulging wallet and start licensing content that will make us want to continue to try you first to get reliable information. Right now, through your clumsy rollout of AI supported search, you are rapidly losing that trust. It is also not acceptable to plagiarize someone else’s content, mix it with garbage from some other source, and serve it up on a platter to consumers on the pretext that this is the definitive answer. The result, as we have seen, is gluey pizza.

(c) Hugh Stephens, 2024. All rights reserved.

The USTR “Watch List” Designation You Will Never See

Image: Shutterstock (AI Assisted)

In my last blog post, I discussed the annual Special 301 Report issued by the Office of the US Trade Representative (USTR). The Report is a global survey of the intellectual property (IP) practices of a number of US trading partners, a kind of “report card” in which those that “fail” (badly) are named to a Priority Watch List (PWL) and those that fail, but not so badly (and so are encouraged to do better), are put on the Watch List (WL). The purpose is to highlight practices that damage the interests of American IP-based businesses and IP stakeholders in order, eventually, to get them changed. While one can quibble with some of the IP “transgressions” identified by USTR in its wide-ranging survey, removing or modifying the IP impediments identified in the Report generally speaking results in better outcomes for innovation and creativity both for US IP interests and foreign rightsholders, at least in the area of copyright. (The practices, laws and policies named in the Report are not restricted to copyright; they cover the full range of IP issues such as patents, trade secrets, industrial designs, geographic indications and trademark infringements/counterfeiting). I am going to restrict my commentary today solely to copyright issues.

Since the Report is a US government document mandated by US legislation, and deals with US foreign trade, it is not surprising that problematic IP issues inside the United States are not included in the document. Thus, US rightsholders are deprived of the salutary effect that arises from shining a spotlight on such practices. Were the USTR to hold up a mirror to the US and apply the same sort of critical analysis it applies to other countries, what would be the result? We will never know as USTR has no mandate to publish such a document; the closest it came to criticizing a US company was its inclusion of Amazon’s non-US affiliates in its 2020 “Notorious Markets” list which forms part of the Special 301 Report. Since USTR will never publish a Watch List that includes the United States, someone needs to step into the breach, hold up that mirror and attempt to write what a US Watch List designation might look like. That someone will be me. However, as noted, the commentary will be based exclusively on copyright issues; I am not going to tread into the minefield of patent trolls, counterfeit products, trade secrets or any of the other aspects of IP that are also grist to USTR’s mill.

In assessing what a US Watch List citation might look like, I will follow the same general approach that USTR applies when it passes judgement on the copyright practices of other countries. A measure doesn’t have to discriminate against US IP interests or rightsholders to be included in the Special 301 Report (i.e. it doesn’t matter if US rightsholders are granted national treatment; USTR can still object to the practice), so I will apply that principle. In judging whether to include criticism of certain US measures, or lack of them, I will be guided by the sort of issues that USTR identifies in the practices of other countries named to the PWL or WL. Since I know a bit about copyright in Canada, and since Canada is again on this year’s WL as it has been for the past couple of decades (except when it was downgraded to the PWL), I will use Canada as my principal marker.

For example, in this year’s Special 301 Report in which Canada once again features on the Watch List, the USTR Report critically notes that “Levels of online piracy remain very high in Canada, including through direct downloads and streaming”. In actual fact, Canada is a relatively minor league player when it comes to online piracy. According to the brand protection website Bytescare, Canada doesn’t even rank in the top 20. The list is dominated by Russia, China, India, Brazil etc, and the United States. In fact, according to Variety, the US is the leading source of online piracy globally with 13.5 billion visits to piracy sites annually. Aha, you say, but what about the rate of piracy? Canada’s population is only 40 million so no wonder it is not as high on the list as some others in terms of total piracy visits. According to the Canadian Internet Registration Authority, as quoted by Global News, Canada’s piracy rate in 2022 was a shocking 22.5 %. The US rate in the same year? As estimated by media research firm Parks Associates, it was 22% is but expected to rise to 24.5 percent by 2027. So I guess the US should be called out for its high levels of online piracy. After all, what is sauce for the goose is sauce for the gander.

I will draw on another example from this year’s USTR Report to justify inclusion of a separate observation in my assessment, regarding music royalties. This year, Barbados is singled out for, among other things, “the refusal of Barbadian television and radio broadcasters and cable and satellite operators to pay for public performance of music.” But guess what? Neither does the US, in certain circumstances. As I outlined in this blog (“The American Music Fairness Act (AMFA): A Better and Fairer Solution for Performers than Seeking “National Treatment”), US terrestrial radio stations are not required to pay royalties to performers or labels for playing recorded music on air, a longstanding practice that dates back to the early days of radio. The same free ride does not apply to digital broadcasters and streaming services. Terrestrial AM/FM radio stations are required to pay royalties to composers and songwriters for music played on air, but not to performers. The US is the only developed country jurisdiction to provide such an advantage to terrestrial broadcasters, although since 1997 Canada has had a carve out whereby commercial radio broadcasters are required to pay only $100 in performance royalties on the first $1.25 million in advertising revenue. Needless to say, this is opposed by Canadian performing rights organizations.

The US AM/FM exception denies royalties to US performers for music played on US terrestrial radio, but it also applies to foreign performers when their music is similarly played in the US. For this reason, many countries, including Canada, apply or applied a reciprocity provision (an exception to national treatment) to payment of royalties to US performers when their music is played terrestrially. Unable to get the US Congress to change US law, US performing rights organizations convinced the US government to seek national treatment in Canada with respect to all categories of IP covered in the IP chapter of the USMCA/CUSMA, a goal that was achieved when the new Agreement was signed. Thus, US performers in Canada now get equivalent treatment to Canadian performers; in other words, they get better IP protection in Canada than they do (or Canadian performers do) in the US. Yet Canada is on the USTR Watch List. Sauce for the goose…

That is some of the background to my decision to put the United States on the Watch List in 2024 for copyright-related issues. There are other reasons as well. I know you want to read the full reasoning, so here goes;

The United States remains on the Watch List for 2024. Despite a strong legal framework in place, the US continues to be the source of the largest number of visits to online pirate sites globally. Unfortunately, unlike some 40 countries globally, including USMCA partner Canada, the US has been unsuccessful in implementing any form of site blocking legislation. Site blocking has proven to be an effective and low cost tool, in combination with other measures, to reduce visits to pirate websites and to convert users to legitimate sources of online content. The US authorities are encouraged to work with Congress to put in place an effective mechanism to implement site-blocking in order to reduce high rates of piracy estimated to be in the vicinity of 25% of users. We also have continuing concerns about the inadequacy of US law in protecting performance rights for music played on terrestrial radio stations. The United States is the only developed country that provides an exception for payment of performance royalties for terrestrial stations, a situation that has led to the denial of performance royalty payments to US musicians and labels on the basis of reciprocity in a number of countries where it has not been possible to obtain a national treatment commitment to protect US performers. We remain deeply concerned by stakeholder reports that a 2020 Supreme Court ruling in the US (Allen v Cooper), that upheld the ability of US states to impair the rights of copyright holders based on the principle of sovereign immunity, remains unaddressed. This interpretation opens the door to widespread “legalized infringement” by state operated institutions, such as state university libraries. With regard to fair use, we are encouraged by recent court rulings that suggest a more narrowly defined interpretation of “transformative use” is being applied by US courts in adjudicating fair use claims. We are also encouraged by the passage of legislation to increase criminal penalties for illegal streaming (the Protect Lawful Streaming Act) but note that the legislation has been rarely used since it came into effect in 2020 and urge the US Department of Justice to take full advantage of the tools at its disposal to curb the high rate of online piracy and illegal streaming in the United States. We look forward to working with the United States to resolve these and other important issues.

So there you have it, a slightly cheeky (and tongue-in-cheek) Watch List designation for the US, aka “The Watch List Designation You Will Never See”. I hope this doesn’t upset my many Stateside friends. It is offered in the spirit of “no one is perfect”. All we can do is strive for perfection through learning from each other.

© Hugh Stephens, 2024. All Rights Reserved.