In the ongoing struggle against content piracy, a global scourge that undermines and competes unfairly with legitimate content producers and distributors, blocking offshore web and streaming sites that distribute pirated content has proven to be an effective tool in many countries. It provides a remedy to deal with scofflaws that cannot be reached by domestic laws or regulation. Now the Philippines, an important market for domestic and international content, is about to join a growing international consensus by implementing its own site blocking regime.
It was announced in mid-April that the major ISPs in the nation of over 100 million, the Intellectual Property Office of the Philippines (IPOPHL) and the National Telecommunications Commission (NTC), the telecom sector regulator, have agreed on a Memorandum of Understanding (MOU) that will institute a fast, efficient and effective site blocking regime. The targeted site blocking process has arobust framework that will guide IPOPHL’s consideration in determining what constitutes flagrant infringement and ensure that only egregious piracy websites are blocked. Upon receipt of a rights holder’s referral and supporting documentation, IPOPHL will conduct a further investigation to confirm that an identified site is indeed distributing infringing material before referring the case to the NTC for issuance of a blocking order. ISPs have agreed to comply with these orders.
The Philippines has a vibrant domestic film and television industry but also one of the highest rates of piracy in Asia. In a YouGov survey dated September 2020, 49 percent of Philippine respondents admitted to accessing piracy streaming sites, with the total being over 50 percent in the 25 to 34 year age bracket. Almost half of these consumers indicated that, after accessing pirated content, they had cancelled subscriptions to local and international content services, an estimated annual loss of $120 million to the legitimate subscription OTT video industry alone, according to Media Partners Asia. This situation is in marked contrast to the situation in neighbouring Southeast Asian countries, such as Indonesia and Malaysia, where site blocking measures instituted over the past couple of years have helped to reduce significantly what previously were similar levels of consumption of pirated content by local consumers and migrated many of those consumers to legal services.
What has brought about this change in the Philippines? It is a combination of alignment of the interests of the key players, combined with strong local leadership and some external assistance, prompted by a realization that consistently high levels of piracy serve no-one’s interests. The lesson from last year’s Metro Manila Film Festival (MMFF) no doubt played a role as a catalyst. The Festival has been highlighting the best of Filipino talent since the 1970s. In 2020, because of COVID-19, it went virtual. COVID had already forced many theatres to close, thus leading to a surge in consumption of streaming content. Last year the MMFF tried to offset the loss of box office revenue through Video-on-Demand streaming but the result was a disaster. Because of widespread piracy, receipts totalled less than two percent of 2019 revenues. The Manila Times reported that;
“MMFF 2020 Best Picture “Fan Girl” executive producer Quark Henares revealed that his team closely monitored illegal online streaming and found 10 to 20 pirated links every hour.”
Often the enemy of introducing new measures to fight piracy is inertia and bureaucratic process, sometimes combined with misguided arguments that any attempt to deal with pirated content through blocking orders amounts to “internet censorship”. While the experience of the MMFF may or may not have been the spark that lit the fire, the leadership of key local players in the Philippines to address the serious piracy issues was critical. Among these is Globe Telecom, the largest telecom company in the country and a major distributor of online content. Several years ago, Globe launched a public awareness campaign against piracy and illicit content on the internet called “#Play it Right”. The objectives of Globe’s campaign are to combat illicit content on its networks, including pirated content and online child exploitation, and to protect its customers from malware, ID theft and ransomware, often by-products that come with accessing pirate sites.
AVIA, the regional video industry association based in Hong Kong and Singapore, has also played a constructive role. AVIA has signed a separate MOU with the Philippines Intellectual Property Office (IPOPHL) to support the initiative and will be active in providing the Office with information on egregious piracy sites. AVIA has also worked on site blocking mechanisms with authorities in other Southeast Asian countries and has useful experience to share. The mechanism envisaged for the Philippines is an administrative process, with the major ISPs (Globe Telecom Inc., Smart Communications Inc., PLDT Inc., Sky Cable Corp., Converge ICT Solutions Inc. and DITO Telecommunity Corp.) participating voluntarily. IPOPHL under its proactive Director-General Rowel Barba–former Undersecretary at the Department of Trade and Industry—has played the lead role in formulating the site blocking mechanism.
Administrative site blocking regimes have been instituted in a number of places, including Malaysia, Indonesia, Korea, and some European countries while other countries (e.g. Australia, France) have required specific legislation to enable blocking. In yet others blocking orders have been issued by the courts applying existing legislation (UK, Canada). While the immediate priority in the Philippines is to put the MOU into action, a parallel legislative initiative is also underway in the Philippine Congress and Senate. Legislation, however, takes time and is subject to many pressures and uncertainties such as election cycles and legislative agenda in terms of eventual outcome, in the Philippines as elsewhere. In the meantime, the MOU between the ISPs, IPOPHL and the National Telecommunications Commission offers a widely supported way forward to deal effectively with the issue now.
The piracy situation in the Philippines needs urgent action, a situation recognized by all the stakeholders. The first blocking orders should be issued soon and then the Philippines will join the more than fifty countries world-wide that have adopted site blocking mechanisms in one form or another. Philippine creators, cultural industries content distributors and consumers will all benefit from this long-overdue step.
Heritage Minister Steven Guilbeault is steaming full speed ahead with his strategy to get his arms around large internet platforms that deliver, or facilitate the delivery of, content to Canadians. The strategy has three prongs; (a) bringing digital streaming content providers under the oversight of Canada’s broadcast regulator, the CRTC, (b) requiring major social media platforms and search engines to compensate Canadian news providers when their news content appears on those platforms (similar to what has happened recently in Australia) and (c) establishing a regime to regulate “online harms” disseminated on social media. This regime will hold social media companies responsible for illegal content on their platforms if not removed expeditiously as soon as they become aware of it, and will require Canadian ISPs to block offshore websites and streaming services that disseminate illegal content to Canadians over the internet. These online harms proposals respond to public demands to deal with illegal online content related to sexual exploitation of children, hate speech and other harms, but similar principles could be applied to another form of online illegality that also harms the public, copyright infringement by offshore pirate sites.
No legislation has yet been introduced to implement blocking of sites disseminating harmful content although there have been plenty of signals that it is coming soon. It is reported that it will cover five categories of illegal content; hate speech, promotion of terrorism, child pornography, content that incites violence, and revenge porn (sharing of non-consensual images). A regulator will be established to assess and enforce compliance with the new regulations. Enforcement will possibly be done through a court order that, in the case of websites located offshore beyond the reach of Canadian law, would require Canadian ISPs to block content falling into the prohibited categories. Predictably there has been an outcry from the “usual suspects”, civil liberties groups, and “internet freedom” advocates who will argue that “net neutrality” requires that ISPs treat all content on the internet equally. (But net neutrality covers only lawful content.)
There are concerns, some no doubt legitimate, that the new regulator could over-block in isolated instances, but it is expected there will be a transparent mechanism for appeal. This is essential as some online harms are easier to identify than others. No one is going to stand up and argue that child pornography should be available on the internet, but opponents of site blocking will argue that advocates for restrictions are using the fight against child sexual exploitation to open the door to broader “government censorship”. Questions will be raised about how to define terrorism, hate speech and inciting violence, but according to one legal website, “The new legislation is not set to expand on what is illegal, but is designed to address what is already illegal”. In other works, what is already illegal offline should be illegal online. The logic is irrefutable. That said, a more precise definition of “hate speech” may be required. When it comes to issues like hate speech, incitement to violence and even terrorism, there are potential grey areas, as the (in)famous adage that “one man’s terrorist is another man’s freedom fighter” so aptly illustrates. There is little doubt there will be some controversy and debate as all this gets sorted out. However, the main objective of getting racist, hateful, violence inciting, dangerous and otherwise illegal content taken down quickly or disabled is hard to argue with.
Quite apart from targeting offshore websites squatting in cyberspace beyond the reach of the Canadian courts, the legislation will ensure that social media platforms take greater responsibility for the content they disseminate. The “free pass” that major internet platforms have enjoyed to date (in the US through Section 230 of the Communications Decency Act of 1996) is coming to an end. Greater accountability is being propelled by the misuse of the platforms by some users combined with an unwillingness of the platforms to exercise control. With respect to offshore websites, blocking them at the (electronic) border is just about the only practical way to regulate what they disseminate.
These measures are all about illegal content and the application of existing criminal law in the online space. They do not deal with copyright infringing content, but the same principles apply to impeding distribution of pirated content as they do for online harms. The likely establishment of a new regulatory agency to implement offshore site blocking to restrict certain types of harmful content offers an interesting parallel for copyright holders. Canadian content stakeholders have already tried once, unsuccessfully, to initiate a regime for blocking offshore websites offering pirated content. They may be more successful this time.
That earlier effort, launched in early 2018, was called the FairPlay Canada coalition. It brought together several major unions, the public broadcaster (CBC), five of the six largest national telecommunications providers, specialized TV providers, a major sports entertainment company, the country’s largest film festival, several major cinema exhibition chains, independent cinema operators, independent film producers and a combination of English-language, French-language and ethnic media, all with the goal of petitioning the CRTC to allow the establishment of an Independent Piracy Review Agency to adjudicate complaints of unauthorized distribution by offshore websites of content owned or licensed by Canadian rights-holders. If a complaint was authenticated by this administrative body (which contained a built-in appeal process), it would recommend the issuance of a site blocking order to the CRTC. Since the CRTC regulates the telecommunications sector (as well as broadcasting), FairPlay Canada argued that the Commission had authority to issue blocking orders to Canadian ISPs. The CRTC, after a series of public hearings and an internal review, disagreed. It claimed it did not have jurisdiction and referred the issue to Parliament.
Despite testimony in 2019 before the Parliamentary committees reviewing the Copyright Act that site blocking would be an effective remedy against offshore piracy, the committees did not recommend it. The Industry and Technology (INDU) Committee, one of two committees reviewing the Act, came out with a wishy-washy, non-substantive recommendation (while raising the canard of net neutrality);
“Following the review of the Telecommunications Act, that the Government of Canada consider evaluating tools to provide injunctive relief in a court of law for deliberate online copyright infringement and that paramount importance be given to net neutrality in dealing with impacts on the form and function of Internet in the application of copyright law.”
“Consider evaluating…” is not exactly a strong recommendation for action.
The Heritage Committee’s recommendation was even less helpful and less specific. The only tangential reference to site blocking that this committee listed in its recommendations was that the Government of Canada “increase its efforts to combat piracy and enforce copyright.”
As a result, to date no legislative action has been taken, although there are recent signs this may be changing.
With content owners and rights-holders not getting much joy from Parliament, action turned to the Courts. Somewhat surprisingly, since it was the first time it had done so, the Federal Court issued a site blocking order in November 2019 in the case of GoldTV, an egregious offshore piracy operator that had ignored previous court injunctions. The order was not opposed by any of Canada’s major ISPs but an appeal was filed by a small MVNO (mobile virtual network operator), ISP access reseller Teksavvy. The appeal was subsequently joined by a couple of “internet freedom” groups. It is hard to discern Teksavvy’s interest in appealing except that as a small reseller trying to carve out a customer base from the major ISPs, to be able to portray itself as a champion for unrestricted use of the internet (even to access illegal or infringing content) might be seen to give it some market advantage. (“Consumers of pirated content, you are welcome here”). It is a specious way to run a business, but if the online harms legislation goes through, Teksavvy will have to comply with it like everyone else. The GoldTV case is ongoing, with the most recent court hearings being held in March of this year.
Meanwhile it looks as if the Trudeau government is finally getting serious about holding internet intermediaries to greater account when it comes to facilitating copyright infringement. A discussion paper for public consultation proposing a host of possible actions to hold intermediaries–defined as including ISPs, cloud and web hosting services, search engines, web-based messaging and social media–to account, was released by the Industry Department (now known as Innovation, Science and Economic Development Canada) in mid-April. A number of ideas are floated in the paper, from tightening eligibility for safe harbour immunity (for example, by adjusting the knowledge standard related to infringing activity), to compulsory remuneration through collective licensing for use by intermediaries of copyrighted content, to establishing a statutory basis and procedures for injunctions against intermediaries, including site-blocking, de-indexing and takedown orders. The focus is on commercial-scale infringement, rather than individual actions. The comment period closes at the end of May.
This copyright-focussed consultation should be seen in the context of the ongoing discussion about regulating online harms. Driven by public dismay at the impunity with which internet platforms are used to spread dangerous, illegal and harmful content (Montreal-based Pornhub became the poster-child for irresponsible behaviour), the Government of Canada–with Heritage Minister Guilbeault as point man–is responding by proposing injunctions and site blocking for dissemination of illegal content on the internet, whether by domestic or foreign players.
Assuming an online harms regime is introduced, including establishment of a regulator to assess and act on illegal content through a transparent process, the public will gain confidence that the internet can be regulated appropriately in much the same way as offline content is regulated. If a process can be put into place to deal with online harms, one form of illegal behaviour on the internet, it can equally be applied to other forms of illegal conduct, such as copyright infringement. In fact, in some ways it is easier to determine copyright infringement than it is in the case of some online harms such as hate speech, terrorism and incitement to violence, which arguably have grey areas. Despite legal definitions, there will always be a degree of judgment required. In the case of copyright infringement, in the vast majority of cases the rights-holder is not in dispute. Most infringers will likely not even appear before a court or administrative tribunal to dispute the case.
Quite apart from the current GoldTV court case, it appears that the Trudeau government is finally prepared to move on site-blocking, amongst a suite of other measures to hold internet platforms more accountable. This includes requiring platforms to takedown harmful content expeditiously (no more immunity from liability if platforms fail to act or turn a deliberate blind eye to illegal content posted on their sites), along with blocking or disabling access to offshore websites disseminating similar illegal content. While not directly related, this should help lay the groundwork for the introduction of injunctions and site blocking measures to deal with illegal behaviour in the area of copyright infringement.
Although copyright enforcement is separate from the issue of online harms affecting internet users, there are nonetheless some similarities given that unrestrained copyright infringement also damages the public interest. Leaving aside the harm piracy inflicts on the economy and creative industries, widespread access by users to offshore pirate sites has other downsides, including exposing users to malware leading to extortion and worse, along with promotion of dodgy products and specious services. When it comes to the web, pirate sites operate on the periphery, outside normally acceptable business practices, and constitute yet another form of online harm.
Canada’s determination to address online harms through legislation will set a useful precedent that rights-holders can build on to develop similar measures to combat online piracy. The first hint of what may constitute a “Modern Copyright Framework for Online Intermediaries” is also now out for public consultation. At the end of the day, enacting reasonable controls over the practices of internet intermediaries and platforms is essential from a variety of perspectives, whether it is protecting children, combatting hate and racism and, yes, fighting piracy on behalf of creators and rights-holders.
This year the theme for World Intellectual Property (IP)Day, April 26, is “SMEs and IP”. As the World Intellectual Property Organization (WIPO) points out, SMEs (Small and Medium Sized Enterprises) are the backbone of the economy; they constitute 90 percent of the world’s businesses and employ around 50 percent of the global workforce, generating up to 40 percent of national income in many developing economies. Many micro and small businesses depend on their creativity and innovation to establish a niche for themselves in a competitive marketplace. At the same time, they often face major challenges in protecting their unique creations because they generally lack the wherewithal—knowledge, time, money—necessary to protect their IP. This has been demonstrated time and time again and is an important factor that needs to be taken into account when discussing the importance of IP to small businesses. While many national and international IP authorities focus on the lack of capability to access and incorporate IP into product development–or to properly manage IP–as the major challenges faced by SMEs, their limited ability to protect the IP they already have is also an important issue of concern.
But first what is an SME? There are various definitions of an SME; the European Commission defines a Medium Sized Enterprise as a company having less than 250 employees and an annual turnover of 50 million Euros or less (about $60 million USD), a Small Sized Enterprise as having less than 50 employees and a turnover of less than 10 million Euros and a Micro Sized Enterprise as one having less than 10 employees and an annual revenue of less than 2 million Euros. Many of the companies in this sector are micro-enterprises with just one or two people working to generate income, and indeed, the new term of art incorporates micro enterprises into the acronym as MSMEs (Micro, Small and Medium Sized Enterprises). Many micro enterprises, estimated at about one-quarter of the total, are run by women entrepreneurs and are an important vehicle for social and economic development and greater gender equity.
A few years ago I wrote a blog posting about knitting, crocheting, publishing and copyright featuring Joanne Seiff, a Winnipeg-based author and knitwear designer who was, in effect, running her own MSME. Knitting is a hobby and an industry where most of the players are women, and it is an activity that is growing, spurred on in part by the lockdowns of COVID. The Craft Yarn Council reports that over 50 million people in the US knit or crochet. Knitters are motivated by many things and come from all regions and all age groups. Even young children can be introduced to knitting through use of creative instructional techniques such as setting knitting rhythms to nursery rhymes. While most of the participants in knitting do it a hobby to make items for family, or to raise funds for charity or just to relax, there is a business—an IP related business— behind knitting and writing about knitting. There are some big players but many who earn revenue from knitting-related activities are micro businesses. And this is where protecting IP becomes a challenge.
Knitwear designs are creative works protected by copyright. Creating, editing, distributing and selling new designs is an essential part of the industry, just as important as selling wool, needles and the other accoutrements of the trade. Unfortunately, designs are often copied and distributed, sometimes unthinkingly, as a form of unauthorized “sharing”. When I wrote my first blog on this topic back in 2016, Joanne commented that, in her experience, copyright violation in knitting and crocheting is frequently disparaged as unimportant because it is a predominantly (but not exclusively) female industry. It is seen by some as a “cottage industry” with women earning “pin money” and therefore not taken seriously.
I recently reconnected with Joanne to see how things were going in the era of COVID. She said it is still a challenging business-albeit one that she seems to really enjoy. As with any business, there is upfront investment in the hopes of hitting the jackpot with a design that takes off. She pointed out that it is time intensive to develop and make the sample for each pattern (and have it photographed, written up, tech edited, uploaded online to various sites and then marketed), with each pattern that is downloaded yielding around $5 to $10. A pattern needs to sell a lot of copies over time to break even or make money—but if just one percent of Americans who knit bought a particular pattern once and paid $10 for it, that would amount to…..$5 million! Not too shabby.
While not every micro-business is a success, any more than every multi-national enterprise is successful, there are some encouraging examples. One of these is Kate Davies Designs, a Scottish enterprise founded by Kate Davies in 2010 that has now grown into a successful small business that was named UK Microbusiness of the Year in 2016. KDD & Co. now encompasses many different aspects of publishing, design, and creative practice related to yarn and knitting. Another is Denise Bayron’s business, Bayron Handmade, in California. Yet another is Sarah Schira, of Imagined Landscapes, in Manitoba.
When it comes theft of IP, the problem is that the more successful a pattern, the more likely it will be infringed. In Joanne’s words, there are sites in Russia and elsewhere that steal the designer’s photos, buy or steal one pattern, perhaps translate it, and then sell it online. Then there are those such as the occasional knitter who feels that if she paid for that “cute bunny knitting pattern” once, she can make dozens of the bunnies and then sell them at craft sales. This is not technically against the law, but it goes against the intent of the designer who sells the $5 for single use only. Some people look at the design and reverse engineer it. Human “ingenuity” has no bounds when it comes to trying to get something for “free”. So how can micro businesses protect the IP that is the stuff and substance of their product offering.
In Joanne’s view, there has to be sufficient capital available to invest in IP protection at the beginning of the process. Shortage of capital is a perennial problem for small businesses, who have to make difficult decisions as to where to allocate scarce funds. Product design, better distribution or legal fees to protect IP? Some small businesses have enough money upfront to protect their product (through patents, copyright, registered designs, etc) and to fund the legal support to fight the battles on the business’ behalf. But unfortunately, most knitting designers (writers, artists, etc.) are never in this category. For many people who have a very small business, there’s not enough income up front to do anything preventative from the outset. Further, when something goes wrong, there’s not enough money to follow up properly with legal action.
It is not just pattern designers who face this dilemma. Many writers, graphic artists and musicians, as soon as they start to enjoy some sort of success, face the same challenge of monitoring infringement, chasing it down, sending notices to online sellers and distribution platforms, (usually while trying to avoid incurring legal bills by not engaging a law firm), all while trying to continue to create and produce appealing new content. This is the curse of the small or micro business and the independent artist.
If governments want to help SMEs and empower the small business sector, they need to find ways to allow small businesses to protect their IP without breaking the bank. That is the prime motivation for the passage of the CASE Act in the US (Copyright Alternative in Small-Claims Enforcement Act of 2019), which was enacted in January of this year. Once operative, it will establish an alternate form of settling copyright infringement claims (think, “small claims court” for copyright cases) to allow rights-holders to avoid the costs of litigation in a federal court. Under the CASE Act, a Copyright Claims Board will be established within the US Copyright Office. The process is voluntary (the plaintiff must choose to use the Board and the respondent must agree), statutory damages are limited to $15,000 per work or $30,000 per case and the work in question must be registered with the Copyright Office.
The CASE Act is one example. In the UK there is the Intellectual Property Enterprise Court (IPEC) which has the capacity to perform much the same function. According to IPEC, the small claims track within the court provides “a forum with simpler procedures by which the most straightforward intellectual property claims with a low financial value can be decided:
• without the need for parties to be legally represented
• without substantial pre-hearing preparation
• without the formalities of a traditional trial and
• without the parties putting themselves at risk of anything but very limited costs.”
That is the sort of facility that small businesses need, but a streamlined legal process only works when the perpetrator (or suspected perpetrator) is known. Much infringement takes place online, where perpetrators can hide their true identity. To combat this kind of infringement, both platforms (like Amazon) and governments have a role to play. My brother, a successful indie author who has published several e-books on Kindle through Amazon, discovered that one of his more successful books was being pirated (by definition, only successful books get pirated) and listed on Goodreads (owned by Amazon). It was also a Kindle edition, with only a slight spelling change in the title. He brought it to Amazon’s attention whose response was to suggest he contact the website (which Amazon owns) and consider applying DRM (digital rights management) to the work. DRM is one solution but is easily stripped off the work. In fact, when I searched “DRM and Kindle”, the first listing on Google was “Remove the DRM from Kindle Books”. If you do decide to list your work on Amazon, the platform has a form you can submit to report infringement. How much is done about it by Amazon is another question.
Given the prevalence of online copyright infringement, any means that helps interrupt the distribution of pirated content is helpful. In this regard, various forms of site-blocking that have been instituted in a number of countries are a useful tool. (My World IP Day blog last year focused on the need to forge a global solution to the problem of global piracy by expanding site blocking). Site blocking in some countries (UK, Australia, Canada—just one case so far) is triggered only through the courts—a process which favours complainants with the means to pursue legal action, normally large companies. However, in some other countries (Portugal, Italy, Korea, for example) there is a relatively simple administrative process in place that allows rights-holders to seek a site blocking order, making it more accessible to SMEs. Site blocking orders require ISPs to block offshore web and streaming sites that promote and distribute infringing pirated content. In Canada a number of content owners tried unsuccessfully to petition for the establishment of an administrative site blocking review entity (the Independent Piracy Review Agency) operating under the oversight of the telecommunications and broadcast regulator, the CRTC, but were unsuccessful when the CRTC determined that establishment of such an agency was beyond its mandate. The problem, however, has not gone away and is now being resolved through the courts.
To come back to SMEs—they face many challenges; underfunding, difficulties in distribution, and issues related to IP, both access to innovation and protection of IP they have developed. For small businesses that require access to patented knowledge, mechanisms and concepts such as open innovation and various technical support programs offered by national governments and WIPO can help. For copyright based small businesses, the biggest IP challenge is fighting piracy with minimal available resources. The more that governments can do to facilitate enforcement action and lighten the burden on rights-holders seeking to protect and enforce their rights, the better.
As Joanne Seiff summed it up, “yes, SMEs can definitely succeed if enabled by good IP protection”. That is a big “if” and a good reminder to all concerned as we mark World IP Day.
The US Chamber of Commerce’s Global Innovation Policy Center (GIPC) has just published its 9th annual report assessing and ranking the intellectual property (IP) policies of 53 countries worldwide against a set of performance indicators, 50 in all. IP policies and practices are evaluated in nine categories, covering patents, copyrights, trademarks, design rights, trade secrets, commercialization of IP assets, enforcement, systemic efficiency and membership in international IP treaties. Each category has a set of specific sub-criteria against which each economy is evaluated. In the case of copyright, the seven sub-categories are term of protection, exclusive rights, injunctive-type relief, cooperative action against piracy, limitations and exceptions, digital rights management, and government use of licensed software. There is a detailed report on each of the 53 economies, a chapter summarizing the global IP environment in 2020 and chapters highlighting key issues in each of the categories. Produced for the Chamber by the consulting firm Pugatch Consilium, it is truly a magistral work, an amazing compendium of information and insights.
While the country rankings are interesting, it is the trends as much as the rankings that are important. In 2020, GIPC concluded that 60 percent of the 53 countries measured improved their overall scores over the previous year, with an overall improvement rate of over six percent since 2014, with improvement rates in many large developing countries exceeding that substantially. The score for China, for example, has improved by 18 percent over that period while India’s has increased by 13 percent. This year the report understandably focusses on the role of IP industries in meeting the challenges of COVID-19, from the rapid development of vaccines to the role of digital industries in keeping us connected and sane during periods of COVID lockdown. In particular, the research-based pharmaceutical industry has stepped up to meet the challenge of developing several vaccines in a historically short period of time, and then producing them to scale. The report states clearly what must surely be an intuitive conclusion for most people, namely that “economies with stronger national IP environments have higher levels of innovation capacity and produce more innovation in the form of new products and technologies”.
I last wrote about the GIPC Index Report in 2017 and 2018, focusing primarily on its copyright aspects, as I will do today. Not having looked at it closely for the past three years, I thought it was time to see what has changed, what progress has been made, and what new challenges have surfaced, particularly with respect to the copyright world. The report notes that there continues to be a challenging environment for creators and copyright holders in the majority of the economies sampled, with 32 of the 53 economies failing to reach a score of 50%. The scores (out of 100) ranged from a high of 96.43 for the US to a low of 18.29 for Vietnam. Some economically advanced countries, like Switzerland, scored below the 50 percent mark, and there is an extensive discussion of the problems with protection of copyright in Switzerland in the Copyright chapter.
Copyright in Switzerland
The problem has to do with a loophole in Swiss law related to the protection of personal data that makes it difficult to combat online infringement, leading to the country becoming a preferred location for pirate sites. Also, there is a private use exception allowing downloading even if the material downloaded is infringing, and there are no injunctive relief (site blocking) measures. Overall, Switzerland scores just 48.29 in the copyright category although it scores highly in other categories and is ranked 9th overall out of 53.
Effect of Trade Agreements
One of the Report’s key findings is that “trade agreements continue to substantively improve national IP frameworks. That is certainly true with respect to trade agreements signed by the United States given that strengthening of IP protection is always one of the prime negotiating goals of the US Trade Representative, the US trade negotiator. However, even in the case of trade agreements not involving the US this principle holds generally true, although perhaps not to the same extent as with agreements to which the US is a party. The recent Regional Comprehensive Economic Partnership (RCEP) Agreement is a case in point. Although its IP chapter was not the most sophisticated or far-reaching, it nevertheless marked a positive step forward in terms of levelling up standards of IP awareness, compliance and commitments across 15 economies of varied size and development in the Asia-Pacific region.
A major trade agreement cited in the GIPC Report is the new NAFTA (aka USMCA/CUSMA) Agreement, which has led to positive copyright changes in both Canada and Mexico.
Canada and the CUSMA/USMCA
In the case of Canada (which scored 16th overall and 19th in the copyright category, at 57.71), the report notes that under the terms of the CUSMA/USMCA, Canada extended the terms of “some” copyright terms to 75 years. This actually relates to a very minor category of works (anonymous and pseudonymous works) where, if the identity of an author is unknown and the work is unpublished, the work will now be protected for 75 years following its creation (an increase from 50 years of protection). If it is published during this period, copyright will subsist for a further period of 75 years from the date of publication. However, if the author becomes known, copyright reverts to life of the author plus 50 years, the current period of protection. But that is going to change by the end of 2022 at the latest as Canada made another commitment in the USMCA that has not yet been brought into effect, namely to extend the term of copyright protection for a known, published work by an additional twenty years beyond the date of death of the author, from “life plus 50 to “life plus 70”.
How exactly that is going to happen is currently the subject of a public consultation, as I noted in a recent blog (Canada’s Copyright Term Extension Consultation: Why all the Tinkering Around the Edges?) with various options being floated to deal with orphan works (where the author is unknown or cannot be located), as well as out-of-commerce works. There is also the outside possibility that extension of the term of protection will be made subject to a registration requirement, an additional bureaucratic hurdle advocated by some copyright minimalists. This would be a mistake, and happily the language in the government’s consultation paper seems to suggest that this is not a favoured option. Presumably when the “life plus 70” standard comes into effect, Canada’s score under the “term of protection” indicator will increase further.
Mexico and the USMCA
Mexico (23rd overall, 20th in copyright at 54.14) also comes in for a shout-out owing to USMCA commitments in the copyright area. Changes to Mexican law as a result of USMCA commitments include a new notification system for removal of infringing online content, provisions outlawing the use, manufacture, sale, importation and distribution of DRM (digital rights management) and technical circumvention devices, and making illegal the use, manufacture, and sale of satellite signal decoders. These are all incremental steps toward a better environment for the protection of copyrighted content in Mexico, although there is still room for improvement.
Other countries singled out in the copyright section include China, Saudi Arabia, Ukraine and Costa Rica. China (24th overall, 25th in copyright at 43.29) introduced a number of changes to strengthen its copyright laws as a result of bilateral discussions with the US in 2020, among them new definitions of copyrightable material, clearer definitions of performance rights, sound recording and broadcasting, and increases to statutory damages for copyright infringement.
Saudi Arabia (37th overall, 31st in copyright at 36.14) was given credit by GIPC for stronger enforcement efforts. This is a welcome change as the Kingdom has long been a hotbed of piracy, including state-sponsored signal theft directed at Qatar’s BeIN Sports Network. This was done primarily for political reasons as I noted in my blog post on “Content Piracy as Hybrid Warfare”. This situation now seems to have been resolved after a World Trade Organization (WTO) panel ruled against the Saudis and found them in violation of WTO rules by virtue of failing to protect the intellectual property (broadcast signals) of an entity based in another WTO member state (Qatar). For this and other reasons, the Saudis finally took action to block a number of websites that had been distributing Illicit Streaming Devices (ISDs) that were providing access to a Saudi-based pirate sports network (protected by senior Saudi officials) competing with BeIN Sports.
Use of Unlicensed Software
Government use of unlicensed software is the big copyright issue in both Ukraine (39th overall, 43rd in copyright at 26.14) and Costa Rica (25th overall, 22nd in copyright at 49.86), with Ukraine failing to make any progress over the past eight years despite an official edict requiring government offices to use only licensed software. Costa Rica, on the other hand, has managed to get a handle on the problem by implementing a new automated registration, compliance and software asset management platform, allowing all ministries and government organizations to file annual software audits and proof of licensing compliance. This is a good example of how simply passing a law requiring government entities to acquire software licences has no effect without a concrete and enforceable implementation and monitoring plan. Costa Rica has figured this out; Ukraine is either unable or unwilling to do so.
In addition to analysis of IP performance by category, the GIPC Index includes detailed country reports on all 53 economies included in the survey. This makes it an invaluable comparative resource. Whether you want to know more about the state of enforcement in Algeria, systemic efficiency in Morocco or how copyright is protected (or not) in Venezuela, it is all here, along with a complete explanation of how the various indicators were assessed and scored. I have mentioned the scores of the countries highlighted in the copyright section, but if you want to know how “your country” fared you can check the results quickly by going to the Executive Summary of the Report.
Let’s hope the trend of steady improvement seen over the past several years continues, in the area of copyright as well as the other aspects of intellectual property measured by the Index. Kudos to GIPC for producing this invaluable report.
Early this year PBS announced that it would cease to carry the Canadian animated children’s TV show “Caillou” (which means “pebbles” in French) after twenty years on the network. Since Caillou is a series not without controversy, some parents no doubt breathed a sigh of relief while others pondered their electronic babysitting options.
To those of you who don’t have young children in your life (at the moment or previously), Caillou may not be on your radar. There is a whole world out there—characters, vocabulary, controversy—forming part of the children’s entertainment scene that is familiar to many, and almost unknown to others. If you have had children, or looked after young children—yours, those of others, your grandkids etc.—names like Dora the Explorer, Peppa Pig, Curious George and, of course, Caillou, will be well known to you. How else to get through the period of preparing dinner with a four-year old around your ankles?
The demise of Caillou on PBS—it will continue to be broadcast on the Family Jr. channel in Canada and may be picked up by some other outlet in the US—will no doubt not end the controversy over the main character’s behaviour. Parents either love or loathe the little bald boy. Caillou was produced between 1997 and 2010 under licence to CINAR and has aired in 70 countries around the world. The books on which the series is based have been translated into over a dozen languages and sold 15 million copies. This makes it one of the more successful Canadian cultural exports, although some who dislike Caillou’s behaviour when he is frustrated have wondered whether his occasional histrionics reflect lax parenting standards in Canada. The smouldering discontent with Caillou burst into open flames a couple of years ago when he was featured in one of Canada’s two national dailies, the National Post, under the title, “Caillou is an aggressively bad show ruining the world’s children … and it’s all Canada’s fault”.
To parents who don’t like Caillou’s portrayal of a four-year old’s behaviour, I say, “change the channel”. Maybe four and five year old kids enjoy watching a show that portrays how someone their age actually reacts to things beyond their control rather than having to absorb a morality play. I must say I have never been able to force myself to actually watch a full episode of Caillou—although I have read the newspaper or books while it has been on the screen and have thus listened with one ear—but I don’t recall anything especially obnoxious. I do recall certain homilies and virtues being emphasized, but I don’t think that my grand-daughter’s behaviour was any better—or worse—for having watched it. All I know is that she enjoyed it and, for a certain period of her young life, when asked what she wanted to watch on TV, the response was invariably “Caillou!”.
While Caillou has generated lots of controversy among parents and even child psychologists, it also has an interesting legal and copyright history which, no surprise, is why I am blogging about it here. Caillou was created by Quebec writer Christine L’Heureux in 1989. L’Heureux had founded Chouette Publishing two years earlier. The Caillou books were illustrated by artist Hélène Desputeaux. Like so many artistic collaborators (Gilbert and Sullivan, Simon and Garfunkel, Abbot and Costello…) L’Heureux and Desputeaux had a falling out. And, yes, it was about copyright, and money.
As with many cases of this nature it is complicated. Originally the two (Chouette Publishing of which L’Heureux was the majority shareholder on the one hand and Desputeaux on the other) formed a partnership for the purpose of creating the books. They entered into contracts with each other as co-authors, including assigning the reproduction rights for the use of the Caillou character to Chouette Publishing. This covered merchandising and audiovisual works. Desputeaux was to be paid if she provided illustrations for any works using the character. Moral rights were waived by both parties. Subsequently there was a dispute over the terms of the contracts. The dispute went to arbitration under Quebec’s civil code. The arbitrator upheld the contracts, concluded that Chouette held the reproduction rights and determined that the work was of joint authorship (copyright held jointly) because both parties had signed the contracts as co-authors. Desputeaux’s position was that she held the sole copyright for the illustrations of the Caillou character and in the character itself.
Desputeaux challenged the arbitral decision and asked the Quebec Superior Court to annul it. She argued that the arbitrator had exceeded his mandate and, rather than just ruling on the validity of the contracts, had intervened on the question of intellectual property and the status of the parties as co-authors. Her challenge was dismissed and the Superior Court upheld the arbitral decision. Desputeaux then appealed to the Quebec Court of Appeal, where she had better results. The Court of Appeal upheld her appeal, ruling that any determination of copyright fell within the domain of the federal government under the Copyright Act and was not subject to provincial arbitration.
At this point, we need to step back briefly into history and look at the Quebec Code of Civil Procedure under which the arbitration took place. The Quebec civil code goes back to the Quebec Act of 1774 which reinstated French law in civil matters as part of an attempt to win the loyalty of French Canadians by preserving the French language and French institutions (civil law and role of the church) after the British conquest. British law had prevailed during the brief period from 1763, when France ceded control of Quebec to Britain, and the passage of the Quebec Act. A civil code ultimately based on the Napoleonic Codes in France was formally adopted in Quebec (Lower Canada) in the 1860s and, with minor changes and updates, has prevailed in Quebec ever since, operating alongside British criminal law principles and federal laws. The civil code required arbitration in matters of disputes between professional artists and promoters.
With the provincial Court of Appeal having ruled in favour of Desputeaux the illustrator, L’Heureux and Chouette appealed that decision to the Supreme Court of Canada (SCC). The SCC ultimately determined that the federal Copyright Act does not prevent an arbitrator from ruling on the question of copyright. The arbitrator’s mandate includes everything closely connected with the agreement they are adjudicating and in this case, the question of co-authorship was intrinsically related to other questions raised within the terms of the agreement in question. Even though copyright affirms rights against all third parties globally, two parties to a copyright dispute should not be denied the right to arbitration, the SCC ruled. L’Heureux’s appeal and joint authorship was upheld. A more learned explanation of the outcome of the case can be found here.
It doesn’t end there, however. Two years after the SCC ruling, the two parties were back in court again but finally reached an agreement which remained confidential for ten years until it was released in 2015. Basically, this agreement affirmed Desputeaux’s rights to her original illustrations of Caillou but gave Chouette permission to license and create subsequent versions, including through its agreement with CINAR for the animated television production. Desputeaux was to be granted a percentage of the royalties. Desputeaux agreed to limit production of Caillou depictions for a 5 year period. Was this the final end to the dispute? Regrettably, it was not.
As outlined in a blog posting just two years ago “This Precedent-Setting Cartoon is Back at it Again”, Desputeaux subsequently applied for a judicial declaration that L’Heureux had no claim to co-authorship of Caillou following the 2005 settlement agreement. She wanted the Court to declare that the 2005 settlement agreement prevailed over the original arbitral decision and that its terms precluded L’Heureux from claiming moral rights in the works or to be their co-author. The application was dismissed in November 2018 on the basis that this was a disguised form of appeal of a case that had already been decided by the SCC. It’s never over until it’s over, as they say.
How is it all going to end? I know that Caillou believes in “sharing” because I have heard him say so. But what constitutes a fair share can depend on your perspective, which perhaps explains why Caillou’s bad temper seems to have rubbed off on his creators. More than two decades of copyright litigation has surrounded this little character who continues to either enthrall or enrage parents and kids—and his co-authors as well. Maybe there is a moral lesson hidden in there somewhere.
The English language is constantly being transformed by the addition of new words, meanings, terms and acronyms. It is hard to keep up sometimes. The latest to crowd into my consciousness is “NFT”. While the expression NFW (you can look it up and no, it doesn’t stand for Nashville Flower Week) is quite familiar to me, WTF is NFT? And does it have anything to do with copyright? Of course it does, you say, or else he wouldn’t be blogging about it.
An NFT is a “non-fungible token”, the digital phenomenon that has taken off in recent weeks as wealthy investors purchase, often at art auctions, digital representations of “something”. Rather than try to explain it, I will crib from someone who undoubtedly knows more about NFTs than I do. As explained by Luke Heemsbergen, a Ph.D candidate at Deakin University in Melbourne, in his blog “NFTs Explained: What They Are and Why They Are Selling for Millions of Dollars”;
“NFTs are digital certificates that authenticate a claim of ownership to an asset and allow it to be transferred or sold. The certificates are secured with blockchain technology similar to what underpins Bitcoin and other cryptocurrencies… (Unlike Bitcoin) NFTs are by definition non-fungible, and thus, are deployed as individual chains of ownership to track a specific asset…. NFTs are designed to uniquely restrict and represent a unique claim on an asset. And that is precisely where things get weird: often, NFTs are used to claim “ownership” of a digital asset that is otherwise completely copiable, paste-able and shareable, such as a movie, JPEG, or other digital file”.
NFTs can be bought and sold (for a lot of money—usually cryptocurrency), as shown by the example of the token created by digital artist Beeple (Mike Winkelmann) and sold to an anonymous buyer for $69 million through auction house Christie’s in early March. They exist only digitally but unlike most digital images they cannot be duplicated as each has a unique digital signature, although a semblance of the NFT can certainly be reproduced. Basketball fans can buy unique NFTs of video game highlights of NBA games, a collectible that can be traded or sold, even though the same video clip can be viewed for free on Youtube. But the NFT owned by the fan is identified and unique. I guess it is a bit like anyone being able to see Monet’s Artist’s Garden at Giverney in an art magazine or even on the internet, but the one and only original is in the Musée d’Orsay in Paris.
An NFT can be made out of just about anything digital—images, text (Jack Dorsey’s first Tweet), videos, music, etc. and just like the famous Dutch tulip bulb is a product of scarcity. It has value because someone will pay something for it, in the expectation that in future it can be sold to someone else who will be willing to pay even more for it.
How about the role of copyright with respect to NFTs?
One thing is certain. It is the creator of the artwork or music in an NFT who owns the copyright to the underlying work, not the purchaser unless the sale includes the sale of certain rights. In many cases, even though the buyer is the sole owner of a particular NFT, the artist who created the work to which the NFT is linked could continue to produce copies of the work. One legal blog illustrates the limits of an NFT owner’s copyright by using the following example;
“Unless the NFT owner has received explicit permission from the seller, the NFT owner does not automatically acquire the legal right to take pictures of the creative work attached to the NFT and make T-shirts or postcards for sale.”
Can the NFT itself be copyrighted? The answer is unclear but it is unlikely because the NFT itself (i.e. the certificate of ownership) is not a creative work. Some people have compared it to a deed to a house, but not the actual house. The NFT gives title to the underlying work but normally is not the work itself. (There are some exceptions when an original piece of art is uploaded directly into the blockchain but this is unusual because, as explained here, the cost of writing data into the blockchain is often prohibitive).
What about NFTs based on works created by a team, or by employees in the course of employment or by AI machines? The answer to these questions is the same with respect to other tangible works, it depends on the circumstances, except that a machine cannot hold a copyright. There has to be a human creator behind the AI.
This raises an intriguing question with regard to the NFT created by the humanoid robot “Sophia” that was put up for sale in an online auction at the end of March. The underlying art is based on a collaboration between Sophia and Italian digital artist Andrea Boneceto, with Sophia shown manipulating Boneceto’s original creations to produce something new. The NFT of the work will not include the copyright which pershaps will belong jointly to Boneceto and David Hanson, the owner and founder of Hanson Robotics, Sophia’s creator. It will be interesting to find out.
Can the copyright of the underlying work be transferred to the owner of the NFT? That question has been pondered by legal experts; the conclusion seems to be yes, although the actual modalities of transferring a Blockchain-verified digital file written in software code might be complicated. A rights-holder might also choose to license certain, but not all, of their rights associated with an NFT. A key element in the process is ensuring the integrity of the link between the NFT and the underlying work in order to be certain that any given NFT actually represents the art on display.
NFTs offer some potentially exciting new advantages to artists in terms of copyright tracking, as well as greater returns from selling the copyright. As I wrote in a blog posting about a year ago (Blockchain and Copyright: How can this new Technology serve Creators?), blockchains can be a useful tool to enable tracking of authorship attribution, and thus attribution of royalties, as well as monitoring of use of copyrighted materials. They enable digital music distribution companies like Bluebox to flow royalties back to rights-holders more efficiently. With respect to NFTs, these are now being exchanged through the Bluebox platform. As reported by Bloomberg, one technique is to split each song into multiple NFTs, each representing a one percent split of the song’s copyright, half of which will be sold to the public. In this way, fans could purchase “bits” of recordings to help propel their favourite artists to the top of the charts, and then potentially resell their NFT for a profit.
However, it is not all smooth sailing. Artists have found their work appropriated by sellers of NFTs, without permission. It’s a bit like finding your art work adorning posters and T-shirts being sold on the internet, all without permission or licensing. NFTs have their downsides but still, they offer a new revenue-stream for some artists, as long as they can protect their copyright.
NFTs also raise ethical concerns for some artists because of the huge amounts of energy required to power blockchain transactions. Environmental responsibility is a big issue for some artists and consumers and, believe it or not, the way in which content is distributed and consumed can have a significant impact on one’s carbon footprint.
Coming back to copyright, it should be entirely possible for the laws and principles of copyright to be adaptable to works of art that have become digital tokens. However, there are still many unanswered legal questions related to NFTs, several of them involving copyright, others contractual terms. One US legal firm has outlined a number of them in the context of US law;
What rights and remedies does a creator have if their work is tokenized without their permission?
How can platforms, issuers, and IP owners enforce their rights and remedies against NFT owners in violation of license terms and contractual restrictions?
How do you clearly and conspicuously “attach” terms and conditions to an NFT and ensure that those terms follow the NFT and bind subsequent owners?
What right of publicity and SAG (Screen Actors Guild) issues are triggered by the tokenization of an asset that includes an individual’s image, likeness, voice, or performance?
How do moral rights impact NFTs in the U.S. and abroad? Does the Visual Artists Rights Act (VARA) apply, or should it? (Comment: VARA protects the moral rights of artists in the US).
What rights and remedies does an NFT owner have, and against whom, if the underlying asset disappears or changes? (Comment: This could happen if the entity hosting the NFT went out of business or dropped its internet registration).
How does the first sale doctrine (17 U.S.C. § 109) operate in the world of NFTs? (Comment: It probably doesn’t since the first sale doctrine does not apply to digital works).
How do copyright terminations work in a world of NFTs that is designed to last for eternity?
I certainly don’t know the answers to these questions and I am not sure that anyone does. However, the author of the blog that I have referenced above, Jeremy Goldman of Frankfurt, Furnit, Klein and Selz PC in New York would be more than happy to help you figure it all out. For a fee of course. There, Jeremy, some free publicity in return for providing such a thoughtful piece on the issue of NFTs and copyright. Thank you.
There are a host of challenging and as yet undefined issues when it comes to the sale and monetization of NFTs. Will NFTs, like the Dutch tulip bulbs of the 17th century flame out, or are they here to stay as part of our digital world? Only time will tell. In the meantime, Beeple has cashed in “big-time” for his digital token “Everydays: The First 5000 Days”. Will his benefactor be so lucky in future? WTHDIK?
The wheels of justice grind slowly—and at great expense to all concerned. The result to date has been a colossal waste of public money by many of Canada’s post-secondary institutions (outside Quebec) who have chosen to incur large legal fees while hiring unnecessary staff, all to avoid paying a reasonable tariff to Canadian authors and publishers for reproducing their works in the teaching materials they provide to their students.
Beginning May 21, the Supreme Court of Canada (SCC) will hold initial hearings in the cross appeal by York University and The Canadian Copyright Licensing Agency (Access Copyright) of a recent decision by the Federal Court of Appeal (FCA) in this long-running case. York is contesting the Appeal Court’s decision upholding the 2017 ruling of the Federal Court that York’s fair dealing guidelines failed to prevent—indeed tolerated if not encouraged– infringement of copyright. For its part, Access Copyright is appealing the FCA’s ruling that the “mandatory tariffs” certified by the Copyright Board of Canada for the use of any material in its repertoire by unlicensed users are not, in fact, mandatory, allowing York to opt-out and not pay the certified tariff despite making widespread unlicensed copies of published works.
This case goes back over a decade and involves an ongoing lawsuit over the refusal by York (standing in as a proxy for Canadian post-secondary institutions outside Quebec), to pay Access Copyright for using (reproducing) copyrighted works held in its repertoire. Instead of obtaining a licence from Access Copyright, as they did for two decades after the copyright collective society was formed in the late 1980s, or alternatively paying the per student tariff established by the Copyright Board of Canada, York and the post-secondary institutions have fought tooth and nail to escape the obligation to pay for the content they are using in (mostly digital) course packs. Over the past decade York, along with much of the rest of the post-secondary sector, has declared it was “opting out” of the tariffs established by the Copyright Board, boycotted hearings of the Board rather than participate in the rate-setting process aimed at determining a fair and equitable tariff, tried to devise Fair Dealing Guidelines that would get it off the hook for payment, and appealed an unfavourable judicial decision on its Guidelines to the Federal Court of Appeal (FCA) and now to the Supreme Court, supported throughout by Universities Canada (UC).
Quebec universities deal with a separate copyright collective society, Copibec, and after similar litigation involving Laval University as the proxy, all have now agreed to licences for use of materials in Copibec’s repertoire. Outside Quebec, the struggle continues.
Unneeded Staffing Increases
While York was contesting payment for use of Access Copyright materials, other post-secondary institutions were bulking up their staffing to handle copyright management, a step that would have been largely unnecessary if the universities had simply taken out a license with Access Copyright or paid the established tariff for reproducing materials in the repertoire. The Copyright Board has established a current tariff of $14.31 per student annually. Did all this ducking and weaving actually result in saving the universities any money or lightening the financial burden on students? Ironically, based on information provided by Universities Canada itself, this seems to have not been the case.
In its Motion for Leave to Intervene in the SCC case, at paragraph 32, Universities Canada makes much of the increased resources universities have dedicated over the past few years to ensuring compliance with copyright licensing. This is intended to rebut assertions that institutions are free-riding without paying. However, hiring staff to “promote and assist compliance” in effect means increasing staffing in order to operationalize self-defined fair dealing guidelines, policies that have been found by the Courts to fall outside the boundaries of fair dealing and which condone infringement. UC states that;
“Staffing at Canadian universities further confirms the importance of copyright universities. Based on a survey Universities Canada did of its member institutions between thefall of 2016 and summer of 2017, Canadian universities, on average, had hired the equivalent oftwo additional full-time staff dedicated to copyright since 2012. Larger institutions will havehired even more. For example, in the summer of 2017, the University of Guelph reported that ithad ten full-time equivalent staff working on copyright issues across its campus (including at thelibrary, bookstore and distance education office). The University of British Columbia has 16 fulltime employees working on copyright issues across both campuses, including five new rights andpermissions assistants added in 2019. These staff promote and assist compliance with copyrightlaws by members of the campus community.”
What the Numbers Mean
Let’s unpack these numbers. There are 77 universities outside Quebec that have hired on average the equivalent of two additional full-time staff (FTE) dedicated to copyright since 2012. These staff members presumably spend their time trying to ensure that university users are aware of and follow the institution’s fair dealing policy as well as seeking to acquire copyright licenses when they are required. This adds up to a lot of personnel resources, at least 154 new full-time positions since the universities decided not to licence content from Access Copyright. Most of these costs could have been avoided by the simple expedient of securing a single licence, or paying the tariff, since the university would have been granted a blanket licence to use content within the repertoire. One of the main functions of a copyright collective is to provide an efficient and effective mechanism for users to obtain permission to reproduce and use copyrighted works published by multiple rights-holders, savings and efficiencies that the universities have decided to forgo.
It is impossible to know exactly how much the added costs of these 154 incremental professional staff amount to, but a fair estimate would be about $80,000 to $85,000 per FTE in 2021, including benefits which on average amount to 13 percent of staff costs. Thus, the cost for this additional copyright management staff cumulatively amounts to $12.5 to $13 million dollars annually, not including office overheads. How does this compare to the cumulative cost of paying the Access Copyright tariff? It is almost the same–$13 to $14 million annually.
Now of course it is true that even if the universities sought and obtained licences from Access Copyright, or paid the tariff set by the Copyright Board, they would still have to do some copyright management. Despite having millions of works in its repertoire, Access Copyright does not represent all authors and publishers. However, it covers a substantial proportion of them, and a licence agreement would undoubtedly have allowed university libraries to reduce or streamline their copyright clearance staff significantly. The 154 FTEs noted by Universities Canada are all incremental staff added since the universities decided to drop the Access Copyright licence. Universities are huge consumers of public funds, getting almost half their funding, (47.2% in 2017-18), from government. Rather than investing these largely public funds into the creation of more and better Canadian content through payment to authors and publishers, the universities have instead chosen to increase staffing levels. And on top of that, York, its spear-carrier, has had to commit substantial funding to legal resources to defend its position in court, and after losing (twice) has dug the hole deeper by further appeals.
The Tariff in Perspective
As noted above, the Copyright Board determined that starting in 2015, a fair tariff for uncompensated use of works whose rights were held by authors and publishers represented by Access Copyright would be $14.31 per full time student. (It was higher for the period 2011 to 2014). This was despite a potential wider application of fair dealing arising from the addition of “education” as a fair dealing exception in 2012 and the fact that many universities directly license some content from some publishers. How significant is this tariff, a fee which provides reproduction rights and legal access for students and teaching staff across the country to the works of over 11,000 Canadian authors and 600 publishers, as well as millions of international works and publishers represented by Access Copyright, in comparison to the cost of education in Canada?
For the most recent year for which figures are available from the Canadian Association of University Teachers (CAUT), 2017-18, the total cost of university education in Canada was slightly more than $38 billion dollars. If divided by the most recent reported number of full-time equivalent university students in Canada (1,027,644), that amounts to a per capita cost of around $37,000. The tariff set by the Copyright Board amounts to less than .0004% of the average annual cost per student (or less than four cents a day).
Wasting Scarce Public Funds
While the case before the Supreme Court involves appeals by both parties, the litigation could be very disruptive in terms of upsetting and undermining the existing copyright collective licensing system if the Supreme Court upholds the FCA’s decision on “mandatory tariffs”. One cannot help but wonder whether all this legal action was necessary in the first place. Had the universities, including York, reached a licence agreement with Access Copyright, or alternatively complied with the Copyright Board’s tariff ruling, the lengthy litigation and waste of public funds could have been avoided while providing Canadian authors and publishers fair compensation for use of their work. Nor did York have to appeal the initial finding that its Fair Dealing Guidelines were, in the words of the judge of the Federal Court “not fair in either their terms or their application”, a conclusion upheld by the Federal Court of Appeal. None of this obstinacy and litigation saved the universities any money or lightened the financial burden on students.
Where do we go from here? With the appeals having been launched, the court proceedings probably have to now play out, although the government could step in to clarify the legislative intent with regard to the applicability of mandatory tariffs for use of content within the repertoire of a collective society, as I argued it should in an earlier blog. (Undoing the Damage of the Federal Court of Appeal’s Decision on “Mandatory” Tariffs). For York and the universities outside Quebec, it is not just the $13 million for 2020 that is at issue, or the royalties that York owes. Because of the stonewalling by the universities over the past decade, hundreds of millions of dollars are now at stake, going back to 2011.
COVID-19 has increased the challenges for universities (not to mention authors and publishers). Foreign student enrolment, a revenue “quick fix” that more and more universities have become addicted to, is down sharply and may not recover. Government funding is tightening as provincial and federal budgets are under stress from COVID. Already one major university, Laurentian in northern Ontario, has declared bankruptcy. Every penny counts these days, which is why it is so frustrating and disappointing to see university funds being squandered on legal proceedings and hiring unnecessary staff to manage multiple copyright permissions and find loopholes. Instead, the universities should be doing the obvious and right thing by licensing the content needed by students and professors from the collective society that represents the vast majority of authors and publishers, both Canadian and international, in Canada. It is time that the universities, York in particular, faced up to their obligations and stopped throwing good money after bad.
Over the past couple of years I have written, as have others, about the abuses generated from the free-ride that large internet platforms have been given as a result of their exemption from liability for abusive or sometimes illegal content carried on their services and disseminated by them. They have thrived in this permissive environment. In the US, the cornerstone of this immunity is Section 230 of the Communications Decency Act, 1996. This piece of legislation, passed at the dawn of the internet era, has come under increasing scrutiny in the US–most recently because of the antics of Donald Trump.
Trump’s online comments have long been suspect with regard to accuracy, but it was his comments justifying violent, seditious activity such as the attack on the Capitol Building on January 6, that finally forced the major platforms to act. Facebook/Instagram, Twitter, Youtube, Reddit, Snapchat and others all took action to block his access to their services, either temporarily or on a longer-term basis. The flow of alternate facts and incitement to violence was finally turned off. It has taken far too long–and needed an incident that shook US democracy to its core–for the major social media platforms to finally “man up” and exert some control over the harmful, even dangerous, content propagated by Trump. While on this occasion they acted, on too many others the platforms have hidden behind the immunities provided by Section 230. This legislation is 25 years old this year; it is high time for a serious update.
Why is Section 230 a Concern?
Why am I writing about this in a copyright blog when intellectual property infringement is specifically carved out of Section 230 immunities for internet platforms? There are other laws in the US (viz. Section 512 of the Digital Millennium Copyright Act, known as the DMCA) that provide safe harbours to the platforms when copyright infringement takes place, provided they take certain actions. (Section 512 is also under review because in the view of many it has not operated as intended to protect copyrighted content online). Section 230 is relevant because of the broader need for internet intermediaries (platforms) to assume responsibility for the content they propagate and profit from, especially when they are well aware of the abusive content they are enabling. That need for greater accountability and responsibility extends into many areas, including respect for copyright and creators.
The lack of responsibility—enabled by Section 230—that has been a feature of the industry for many years is now catching up to it. The immunity should never have been so broad or widespread. Section 230 has been used as the shield to protect websites promoting child sexual exploitation, selling weapons to individuals prohibited from purchasing them in the offline world, and promoting hate-speech; it has even allowed businesses like Airbnb to ignore municipal regulations on home rentals. Through its broad immunity shield, it has indirectly enabled revenge-porn, doxing, cyber-bullying and defamation. No wonder there are calls for review.
Not only is the new US Congress likely to scrutinize the protections that internet platforms have enjoyed—and often abused—for the past 25 years, but the unfettered right of these platforms to host defamatory or inappropriate content is being challenged in other forums as well, such as courts outside the US. On several occasions, national courts have sought and exerted jurisdiction over cases of abusive online behaviour tolerated by the platforms that has affected their nationals.
Twitter Challenged in a Canadian Court
The most recent example is the lawsuit brought against Twitter in the British Columbia (BC) Supreme Court by Frank Guistra, among other things the founder of Lionsgate Entertainment. He has accused Twitter of publishing and then failing to remove false and defamatory tweets related to him. The tweets in question accused him of being involved in “Pizzagate”, the spurious conspiracy-theory about pedophilia that arose during Hilary Clinton’s campaign against Donald Trump in 2016.
Twitter had argued that the BC Court did not have jurisdiction, and wanted the case heard in California, where Guistra has a residence and where Twitter maintains its corporate headquarters. Guistra, who is a Canadian citizen and whose career in the financial, mining and entertainment industries has been primarily pursued in Canada, maintains his home in Vancouver. Twitter wanted the case heard in California for obvious reasons—they could hide behind Section 230, as well as argue the First Amendment to the US Constitution. The First Amendment provides for freedom of speech and freedom of the press, amongst other things, although it applies only to the role of government. “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press…”. It doesn’t stop Twitter from moderating content on its platform.
There are several interesting aspects to this case; that of jurisdiction, the geographic reach of a potential ruling on the case, and probably most important, whether a social media platform like Twitter can be held liable in Canada for defamation arising from content published on its service by third parties, its users. Related to this last point is the question of whether Section 230 has extended its long arm into Canada as a result of Article 19.17 of the USMCA/CUSMA, the updated version of NAFTA that entered into force in July 2020. Noted copyright lawyer and blogger Barry Sookman has an extensive post on the various legal ramifications of this case, which is well worth reading.
Does Canada have Jurisdiction?
I won’t repeat the well-documented legal arguments in Sookman’s blog posting but want to touch briefly on the jurisdiction question and then take a deeper dive on 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. With the venue issue settled (unless there is a successful appeal), the really interesting point is whether Twitter is liable in Canada for defamation.
Can Twitter Rely on USMCA/CUSMA Article 19.17
Sookman points out that, in a Canadian context, strictly passive intermediaries (bulletin boards, social media platforms, etc.) will not be held liable for publishing defamatory content posted by users unless they know, or should have known, that their services are being used to distribute such content and they take no steps to remove it. Guistra had specifically requested that Twitter remove the defamatory tweets, and block future ones. Allegedly it did not do so fully, despite repeated requests.
Assuming no appeal, or an unsuccessful appeal, the case will be heard in Canada. This brings Section 230 back into the picture, specifically the language in USMCA/CUSMA Article 19.17, which reads 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.”
This language almost didn’t make it into CUSMA because of last minute objections by Nancy Pelosi and House Democrats at the time the Trump Administration was seeking Congressional approval of the negotiated USMCA deal. Other changes were made to the treaty at the request of the Democrats, changes that Mexico and Canada subsequently agreed to, but Pelosi’s eleventh hour opposition to inclusion of Article 19.17 was too little, too late, and the language, which mirrors parts of Section 230 but with modifications, stayed in. It is the sort of measure that should not be in a trade agreement, and many in the US are opposed to exporting it to other countries.
There is a qualifier (footnote 7) to 19.17 which reads;
In other words, Canada was not obliged to pass any new legislation as a result of the USMCA/CUSMA commitment and can comply through the application of existing law.
Will the USMCA/CUSMA language shield Twitter from Giustra’s suit? It will be interesting to find out. The question of the extent to which Article 19.17 will bear on defamation cases in Canada involving internet platforms is an open one, as I wrote just over two years ago (“Did Canada Get Section 230 Shoved Down its Throat in the USMCA?”). You can read that blog for yourself, but my conclusion was that;
“…while the Parties have agreed under the USMCA to not treat a platform as the creator of content, in other words as a primary publisher, platforms are still liable under the Canadian common law as secondary publishers when they knowingly publish the contents of a primary publisher that is, for example, defamatory.”
“Far from having Section 230 type safe harbours shoved down its throat, Canada protected its ability to regulate platforms and protected the ability of the courts to take action against platform abuse where and when required.”
Does Article 19.17 Cover Secondary Liability?
This interpretation is based on the explicit wording of Article 19.17. While the article prevents the Parties to the USMCA from treating an “an interactive computer service” (like Twitter) as an “information content provider” (publisher) for purposes of liability for content “stored, processed, transmitted, distributed, or made available” on its service (unless it has created the information itself), that protection is related solely to not treating the interactive computer service as a content provider. This expressly does not exclude secondary publishers from potential liability. Rather, they may be liable if they have published content from someone else, have knowledge of what they have published, and have refused to remove it. That is why the common law clarification in the footnote is important. It confirms that liability as a secondary publisher is not being changed.
Article 19.17 and Section 230: Some Significant Differences
The precise language of Article 19.17 is also interesting because, unlike Section 230, it does not limit access to injunctive relief. It does not exclude the issuance of injunctions, or court-ordered equitable relief whereas Section 230 has been interpreted to prevent the issuance of injunctions against internet intermediaries.
Clarifying Section 230’s Reach into Canada
The Giustra case should help clarify the extent to which Section 230 has reached into Canada through the back-door of Article 19.17. The outcome will be important. Meanwhile, Section 230 is unravelling in the US, and there are moves to amend or get rid of it, notwithstanding Article 19.17 which of course applies as much to the US as it does to Canada and Mexico (although Mexico negotiated a three-year delay in implementing it). If the US Congress intends to forge ahead and amend or repeal Section 230 in order to start holding internet platforms accountable for the harms that they disseminate through unmoderated content posted by users, regardless of the USMCA, then one wonders how much credence courts in Canada will or should give to the trade agreement’s “obligation”, particularly since no legislation was needed to implement it. As I noted above, Canada was free to comply with the commitments in Article 19.17 through the application of existing legal doctrines (i.e. common law principles) as applied through judicial decisions.
Does Article 19.17 have any Legal Effect?
Vivek Krishnamurthy and Jessica Fjeld, two legal scholars who published a research paper on issues related to the implementation of Article 19.17 in the US and Canada have pointed out that;
“The Supreme Court of Canada has found that international treaties are of no force and effect beyond what is provided in their implementing legislation. Since there is nothing in Canada’s USMCA implementing legislation that refers directly to Article 19.17, the provision appears to have no direct domestic legal effect. However, the Supreme Court has also held that it will consider Canada’s international obligations and customary international law as interpretive aids when the meaning and effect of a provision is called into question.”
However, it has since been pointed out to me that the above interpretation is not uncontested in legal circles, and is at variance with the conclusion from the 2007 Reginav Hape (SCC) case that there is a presumption that Canada’s laws will confirm to treaties;
...courts will strive to avoid constructions of domestic law pursuant to which the state would be in violation of its international obligations, unless the wording of the statute clearly compels that result… (R v Hape,  2 SCR 292 BOA Tab 92 at para 53).
Section 230 Reform in the US
We will have to wait to see what happens with the Giustra case with regard to the applicability of a Section 230-like safe harbour in Canada. In the meantime, calls for Section 230 reform continue to get plenty of traction in the US, such as this thoughtful analysis published by Dr. Mary Anne Franks, Professor of Law at the University of Miami, and concerns about under-filtering identified by University of Virginia School of Law professor Danielle K. Citron. What happens in the US may eventually influence what happens in Canada with regard to Article 19.17 because if it becomes a dead letter in the US, one can hardly expect that it will be rigorously applied in Canada (or Mexico).
On February 11, the Canadian Government, through the lead ministry responsible for the Copyright Act, Innovation, Science and Economic Development Canada (ISED), issued a consultation paper asking the question as to “whether accompanying measures should be adopted to address concerns that have been raised over the potential implications of a longer general copyright term”, and if so, what measures?
The issue is not whether Canada will be extending its copyright term, bringing it into alignment with roughly 80 countries around the world (including most of Canada’s major trading partners), but how, i.e. whether it should adopt “accompanying measures”. Canada made a commitment in the new NAFTA agreement, aka the USMCA or CUSMA in Canada, to extend its general copyright term of protection from life of the author plus 50 years after death (known in the trade as post-mortem auctoris, or pma) to 70 years pma. The Canadian government has 2.5 years from the entry into force of the USMCA/CUSMA (July 1, 2020) to do so, in other words by the end of 2022. It could just go ahead and bring in legislation without any consultation or accompanying measures, but since the question of term extension has been frequently debated in Canada and was studied by two Parliamentary committees reviewing the Copyright Act in 2019, a process of public consultation presenting some options to consider as “accompanying measures” seems inevitable and is probably a politically astute move.
Parliamentary Review of Term Extension
The two committees of Parliament that examined term extension and other copyright issues were the “INDU” Committee (Standing Committee on Industry, Science and Technology), and the Heritage Committee. I discussed the different conclusions these two committees reached on a number of copyright-related issues back in June 2019 at the time the INDU Committee released its report, some two months after the Heritage Committee’s report, (called “Shifting Paradigms”) was made public. Both were chaired by Members of Parliament from the governing Liberal Party, and both included representatives from the two other major parties, yet they reached different conclusions on a number of copyright issues, including term extension.
While the Shifting Paradigms recommendations were more copyright and rights-holder friendly, significantly it is the ISED Minister–served by the INDU Committee–who has the statutory responsibility for copyright legislation, not the Minister responsible for Heritage Canada. (Both Departments cooperate on copyright issues and have officials that work on copyright topics, but when it comes to legislation, the “Minister” in the Act refers exclusively to the Minister of Industry, except for one section of the Act relating to customs measures, where the “Minister” is the Minister of Public Safety. The Copyright Office is part of ISED and the Registrar of Copyrights reports to the ISED Minister through the Commissioner for Patents). Despite this well-known and well-established fact, after the release of its report (which was somewhat at odds with the conclusions of Shifting Paradigms), the INDU Committee felt compelled to issue a shrill and tone-deaf press release declaring that it had “sole responsibility” for reviewing the Act, in effect dismissing the Heritage Committee report. This was seemingly a way of mollifying critics who didn’t like the conclusions reached by the Parliamentarians who drafted Shifting Paradigms. It is worth noting that the government is under no obligation to accept the recommendations of either committee.
With regard to term extension, the Heritage Committee unequivocally endorsed an extended term, recommending simply “That the Government of Canada pursue its commitment to implement the extension of copyright from 50 to 70 years after the author’s death.” The INDU Committee was more lukewarm in its recommendation, endorsing term extension “only if CUSMA is ratified”, and adding another qualification promoted by groups opposed to extending the term of protection.
“The Committee believes that requiring rights-holders to register their copyright to enjoy its benefits after a period equal to the life of the author plus 50 years would mitigate some of the disadvantages of term extension, promote copyright registration, and thus increase the overall transparency of the copyright system.”
Additional Registration Requirement?
This two-stage process, which would insert a barrier into what would otherwise be a smooth transition from a life plus 50 regime to life plus 70, was hailed by copyright critics such as University of Ottawa professor Michael Geist who claimed this would be “making the best of a bad provision”. As I commented at the time, inserting such a road-bump in the way of extension would in fact be making complex what should be simple, would increase costs for rights-holders, and would arguably be a violation of Canada’s international obligations under the Berne Convention, (given that under Berne copyright is to be conferred automatically without a registration requirement). The current Government of Canada consultation document seems to agree;
“The approach recommended by INDU raises serious questions in the context of Canada’s international obligations, as well as the costs that would be borne by copyright owners and the duplication of administrative efforts that might result. Numerous international treaties to which Canada is a party (e.g., Berne) prohibit the imposition of any ‘formalities’ that would need to be satisfied for foreign works to benefit from copyright protection in Canada. While limitations on enforcement of copyright linked to registration are not unprecedented, they do not appear to be the norm internationally. In addition, with new pressure on copyright owners to register their works, such an approach would likely result in increased costs in the form of registration fees and associated administrative and legal costs, particularly for owners of copyright in multiple works”
In other words, instituting a registration requirement to access the additional twenty years of copyright protection is a bad idea.
Expect Misinformation About the Costs of Term Extension
That conclusion won’t stop the critics, however, who are already complaining that the one-month consultation period is inadequate. (On the evening of March 11, the day before the consultation period was to close, it was announced that an extension would be granted, with submissions now due by March 31). They will also undoubtedly trot out all the old discredited arguments about how extending the term of protection will cost Canada hundreds of millions of dollars by leading to a massive outflow of royalties from Canada to other countries, ignoring the benefits that Canadian rights-holders will get from qualifying from an additional period of protection in overseas markets that apply the 70 year pma standard reciprocally. The same misinformation was circulated about this time last year prompting me to write a blog post on the topic, (Copyright Term Extension in Canada: Facts versus “Fake News”). However, I fully expect that the same distortion of facts will be recycled again, and I am not the only one to think so.
Possible Accompanying Measures
Clearly the point of the consultation paper is not to re-open the debate on whether term extension should occur or even to focus primarily on a registration requirement. Rather, as the document makes clear, it is to invite comments on options for measures dealing with orphan works and out of commerce works (e.g. out of print books) that could accompany term extension. Neither of these issues is directly related to extension of the copyright term, although there is a connection in that difficulties in accessing copyrighted works that fall into these categories could be increased by virtue of longer terms of legal protection.
More important, tinkering around the edges to increase access to copyright protected works that are often difficult to access is a politically astute move designed to draw some of the sting from critics of term extension, given that the signals emanating from the consultation document indicate the government is unlikely to adopt the INDU committee’s recommendation to impose an additional registration requirement on rights-holders in order to access the extra twenty years of protection. Canada’s term of protection could be simply extended with no accompanying measures, but it seems that the government has decided that increasing access by “LAMs” (Libraries, Archives and Museums) to copyright-protected but difficult to access works will help offset some of the criticisms of a longer term.
Orphan and “Out of Commerce” Works
Orphan works, works where the copyright holder cannot be identified, are an issue regardless of the duration of copyright, particularly when an institution like an archive or library wants to digitize them. There is currently a provision in Canadian copyright law for access to orphan works, through an application to the Copyright Board of Canada. This, however, is a slow and cumbersome process. There is currently no such provision for “out of commerce” works, works that presumably have little current commercial value except for a very limited number of users (like a library) where obtaining additional (digital) copies can be a challenge if a publisher is not interested in licensing further production. The consultation paper puts forward several options for consideration. They include remuneration and exception-based models (five options are presented).
Minimum Standards to Protect Rights-Holders
Whatever model is adopted, it must be carefully constructed so as not to undermine the rights of copyright holders. It should be limited to LAMs in accordance with their public interest mandate and restricted to non-commercial exploitation. (Special attention will need to be paid to educational institutions to ensure they do not use the special access provisions as a means to do an end-run on rights-holders and avoid payment for materials used in course packs, etc. as they have done with the education fair dealing exception introduced in 2012). It must also ensure that a reasonable and documented search has been conducted for the author of an orphan work and should provide a reasonable window after use during which a rights-holder could come forward to claim compensation.
If special access provisions are going to be put in place for “out of commerce” works (as is currently the case in the EU and US), definitions have to be carefully drawn as to what constitutes “out of commerce”, and care taken in the administration of permissions. Collective societies that hold “out of commerce” works in their repertoire could, for example, be engaged to issue licences. But there could be other wrinkles as well. An interesting example has recently arisen with the decision of the publisher of the Dr. Suess works to cease publishing a number of his works because of concerns they contain racial caricatures. These books will soon technically be “out of commerce” although existing copies will continue to be for sale for many years as used books. Would an “out of commerce” provision allow someone to publish a work that the copyright owner had specifically decided not to republish? That question was discussed in a US context in a recent blog (Copyright Lately by Aaron Moss), which examined the issue from a fair use perspective. Copyright certainly gives the author the right to decide whether or not to publish a work they created (e.g. a private letter, such as Meghan Markle’s letter to her father), but does this include control over republishing? One would think so, but this underlines the need for provisions to widen access to “out of commerce” works to be crafted carefully in order to avoid unforeseen outcomes.
Public comment is invited with a closing date of March 12, 2021 (since extended to March 31). Various stakeholder groups, from the LAMs to rights-holder organizations, to others with just a viewpoint to express will be making submissions. These will all be made public after the closing date. The stakeholders are obviously best placed to assess their own interests, and it will be illuminating to see whether opinion will coalesce significantly around any one of the options from a user or rights-holder perspective, or whether it will be dispersed across all five. There will also no doubt be repetition of the arguments both for and against term extension, but the die is cast. Copyright term extension will happen in Canada; the only question is how much tinkering there will be around the edges.
This post has been updated to clarify that both ISED and Heritage work on copyright issues, although the Minister responsible for copyright legislation in the Copyright Act is the ISED Minister. The new closing date for the consultation, March 31, has also been referenced.
Over the course of the past week or so, Facebook has managed what some thought impossible; pushing Google off the front pages as the “bad actor” when it comes to behemoth internet platforms thumbing their nose at a sovereign government, indeed at an entire nation, and instead putting itself in the spotlight. This took a degree of clumsiness that only Facebook could manage.
First There Was Google
For months, Google has been in the cross-hairs of the Australian government’s News Media Bargaining Code. The Code, in its original iteration, required that major internet platforms that use news content from Australian media sources (specifically Google and Facebook because of their dominant market share) compensate the content providers through contractual arrangements, failing which a government arbitrator would impose a settlement based on a “final arbitration” model (where each side makes a final offer and the arbitrator selects one of them). It’s not just about payment for news. The Code will also require the platforms to inform news providers in advance of any changes to algorithm settings that may materially affect referral traffic to news, as well as any substantial changes to the display of news and advertising directly associated with news, plus a requirement to share audience data. In other words, a peek behind the algorithmic curtain.
Google dug in, claimed the proposals were unworkable, unfair and would “break the internet”. It threatened to withdraw its online search engine from Australia and to delist Australian news services, while encouraging Australians to bombard their government with complaints about the new Code. In the past, Google has had similar encounters with governments in Europe (Germany, Spain, France) where it resisted reaching agreements to pay publishers for use of news content after publishers had been granted additional rights to the content to enable negotiations. In Germany, Google was able bring the publishers to heel by blocking access to their content on Google News unless they renounced claims to payment. In Spain, Google simply shut down Google News.
Google in France
More recently, in France they faced a determined government that took a stand and used its competition authority to require that Google enter meaningful consultations with publishers over payment for content. Google dragged its feet but finally reached an agreement with one of the major French publishing groups. It may not be out of the woods yet, however, as other publishers not included in the initial agreement have complained to the French competition authority that Google did not bargain in good faith (it has a tendency to approach negotiations on a “take it or leave it basis”), and apparently the Authority has concluded that there is merit to the complaint. The Australian Code will prevent the platforms from abusing their market power through “take it or leave it” offers by holding the arbitration stick in reserve.
Payment for News
Neither Google nor Facebook has refused to pay for access to news content, but they want to do it on their terms. Google has its Google News Initiative that involves some payment for content from selected partners. This was rolled out in some countries after pressure mounted to require quasi-monopoly online platforms that dominate advertising revenues to recognize the contribution of bona fide journalism to public discourse by providing some payment for content. Google tried to use its News Initiative as a lever in Australia by signing contracts with some small media players but making the contracts conditional on the News Media Bargaining Code not seeing the light of day. That didn’t work, and Google has now reached agreements with most of the major media players in Australia. Magically, the “unworkable” Australian proposals suddenly became workable when Microsoft inserted itself into the debate by announcing that it would be more than willing to abide by the Code and in fact, urged the US Government to adopt something similar.
Facebook too has paid for news. In 2019 it reached a deal with major US publishers to pay for headlines for its news feed, and recently reached a similar deal in the UK to license news stories. For Facebook the motivation was largely to insulate itself from growing criticism that it has become a platform for fake news, alternate facts and conspiracy theories, becoming a closed-loop echo chamber for those who subscribe to such theories. However, Facebook has consistently maintained that it derives no value from news content and should not have to pay to access it. The head of public policy for Facebook Canada, Kevin Chan, claimed that the value of news to Facebook was “zero”.
Is News of Value to Facebook?
Facebook’s position is that it does news media a service by allowing them to post content on Facebook, which in turn drives readers to the media outlets. Facebook’s VP of Global Affairs, Nick Clegg (a former Deputy Prime Minister of the UK, by the way) wrote that the company had directed 5.1 billion referrals to Australian media in 2020, worth over A$400 million. Yet news does provide “sticky” content that keeps users on Facebook longer—and thus exposed to more advertising which is the source of 98% of Facebook’s revenue. A Canadian researcher, Prof. Jean-Hugues Roy of the University of Quebec at Montreal, who analyzed 1.9 million Facebook posts in 2020 found that almost 20 percent were from media pages. These posts generated 7.3 percent of the total interactions in the sample. Based on that percentage and Facebook’s revenues in Canada he concluded that “Mark Zuckerberg’s company made $210 million thanks to Canadian journalism in 2020.” By way of contrast, Kevin Chan stated that Facebook had contributed $10 million to various news projects in Canada over the past four years. I am tempted to say, “big deal”.
Facebook Blocks News in Oz
So as we see, Facebook, like Google, is prepared in extremis to throw some dollars toward media providers, but does not like being required to do so. Negotiations with media content providers in Australia had been going nowhere, similar to the situation with Google, until the Australian government rolled out its big gun, the Media Code with its binding arbitration mechanism. Google decided that a strategic retreat was the best option, resumed negotiations with the major news providers, and disappeared off the front pages. They were helped by Facebook’s next move, which firmly planted a bullet in its own foot by threatening, and then following through with, a blockage of all Australian media content. It wasn’t as if Facebook’s engineers executed the move with much care. No. In addition to major news sources, they blocked public health information related to COVID-19 vaccinations, the website of the Australian Council of Trades Unions, information relating to women’s health, food banks, emergency services, cancer clinics, charities…. It couldn’t have been worse. Nick Clegg offered the lame excuse that;
“we had to take action quickly because it was legally necessary to do so before the new law came into force, and so we erred on the side of over-enforcement. In doing so, some content was blocked inadvertently”.
A Classic Backfire
An under-statement. The piling on began immediately. The former chief executive of Facebook Australia, now heading an NGO dealing with digital threats to democracy, described Facebook’s actions as a “shameless demonstration of corporate might”. Other descriptions ranged from “heavy-handed” and “reckless, arrogant and dangerous”, to “corporate bullying” and “unfriending Australia”. The blockage of responsible news sources left open the field for the alternate facts crowd. Facebook has been widely criticized for tolerating abusive content and misinformation on its platform but has argued that it lacks the means to monitor and control such content. Yet, in the blink of an eye it managed to take down just about every legitimate source of essential news in Australia. For a company that has been under constant scrutiny for various abuses, from failing to protect the privacy of users to allowing promotion of conspiracy theories to monopolistic practices, it could not have been a more perfect public relations and reputational disaster. It made (Sir) Nick Clegg’s political achievement of taking the Liberal Democrats in the UK from 57 seats to 8 look like a success.
Facebook back-pedalled, unblocked what should not have been blocked and entered into talks with the Australian government resulting in a compromise, of sorts. Like any good compromise, both sides can claim victory. The government agreed to amend the legislation to provide exemptions from application of the Code if companies subject to it (like Facebook and Google, based on market dominance) have already struck content deals. They also agreed to provide for a one month notice period (to allow for the completion of deals) if the Code is to be applied. Once the Code is triggered, there will be a longer mediation period before arbitration takes place, and platforms will be allowed to differentiate their offers depending on what kind and size of media company they are dealing with. The Code, with these amendments, has now been passed into law. At the same time Facebook announced that it would be restoring news feeds in Australia, that it had secured a content deal with one major Australian media conglomerate, Seven West Media, and was in discussions with others.
Who Won? Not Facebook.
So who won? Overall, certainly not Facebook, although they have likely managed to wriggle out from having the Code applied to them because they will have “voluntarily” reached content deals with media providers. This, of course, was the intent of the legislation all along. If it does not have to be applied, because the market is now working, that is so much the better. And, by the way, the Code is now law and will remain on the books as a back-stop. The outcome is probably even better for smaller players on the Australian media scene given the domination of Australian media by conglomerates such as News Corp. since the platforms are now allowed and encouraged to make differentiated offers. The requirements for disclosure of algorithmic information did not change significantly as the legislation worked its way through the Parliamentary process.
Facebook is claiming that it can still block news coverage, which is true, but this is a hollow victory since it was the blockage of news that caused it such huge reputational damage and ultimately led to the compromise by which Facebook will pay for content in order to avoid becoming subject to the Code. Facebook can still block content—if it wants to shoot itself in the foot yet again. It could also exit the Australian market. The Code does not stop that either, but neither of these things is going to happen.
Not only was Facebook forced to accept reality in Australia, it will now be even more under the gun elsewhere as other governments, notably Canada and the UK, and possibly even the US, will move to ensure that it reaches fairer revenue sharing deals with media organizations. They will draw important lessons from what happened in Australia, as will the platforms. As Canada’s Heritage Minister Steven Guilbeault said in a radio interview on CBC, if Canada ever needed a reason to deal with the platforms, “Facebook just handed it to us on a silver platter”. The Australian experience has demonstrated that it takes determined and robust government action, backed up by application of competition law to deal with market dominance, to bring the platforms to the table. But it can be done.
Facebook was already headed for a fall before all this happened. It has just propelled itself closer to the cliff edge as governments around the world, and particularly in its home jurisdiction of the United States, will be looking ever more carefully at the company’s business practices and their impact on society, democracy and individual freedoms. Whatever “victory” Facebook salvaged from its antics in Australia, it was pyrrhic in the extreme. That’s what you get when your policy consists of “Ready, Fire, Aim”.