Bill C-18, the Online News Act: Does it Violate Canada’s Trade Agreement Obligations?


As Bill C-18 continues its deliberate journey down the Canadian Parliamentary legislative track on its way toward enactment, the Bill’s prime targets (Alphabet, in the form of Google Search and Meta in the form of Facebook) continue to deploy the full force of their lobbying efforts to derail the legislation. Their most recent effort is a White Paper released earlier this month by Washington DC-based tech industry lobby group, the Computer & Communications Industry Association (CCIA). In a valiant but scarcely credible effort the CCIA attempts to argue that if enacted, C-18 would violate Canada’s international trade obligations, specifically commitments it made in the recently updated NAFTA accord (USCMA/CUSMA) and those required by virtue of its membership in the international copyright treaty, the Berne Convention.

In the process, the paper rolls out a number of other arguments against the legislation, such as claiming that it will benefit only a “select few large and powerful media companies” and will “do little or nothing to support sustainable or quality journalism in Canada”, while claiming that it will promote disinformation and content from untrusted third parties. The paper’s authors even claim that any payment from the digital intermediaries, who have scooped up the lion’s share of ad revenues (largely through leveraging content produced by others, usually without any payment), will “jeopardize the long-term viability of the (media) sector”. How will this happen? I guess it is supposed to make them fat and lazy. I will give the authors an “A” for creativity in terms of the range of objections they manage to roll out, but an “F” for making a convincing argument.

What readers should know is that the legislation is currently targeted primarily at two major US-based internet platforms, “digital news intermediaries” in the words of the legislation, just as Australia’s recent legislation to enact a News Media Bargaining Code aimed at the same two companies (Google and Facebook). However, they are not named in the Bill which, if passed, will apply to a;

“…digital news intermediary if, having regard to the following factors, there is a significant bargaining power imbalance between its operator and news businesses: (a) the size of the intermediary or the operator; (b) whether the market for the intermediary gives the operator a strategic advantage over news businesses; and (c) whether the intermediary occupies a prominent market position.”

Intermediaries have to self-designate, and the definition is generic, but it is clear who we are talking about. The CCIA paper goes to great lengths to quote Canadian politicians to show that Google and Facebook are the main targets although there are also references to “GAFAM”. (Google, Apple, Facebook, Amazon, Microsoft). If the shoe fits, wear it. No one has ever denied where the problem lies. And yes, they happen to be all US companies—for the moment.

The CCIA paper argues that if Alphabet and Meta are the only companies captured by the legislation, this amounts to a denial of national treatment (treating entities of your trading partners in an equivalent manner to domestic entities) and would be a USMCA/CUSMA treaty violation. But is this true? Hardly. Unless a measure is proven to be a disguised barrier to trade, as long as it applies to all companies, domestic or foreign, it will be difficult to substantiate a national treatment violation even if at the moment it affects only certain companies because of their size, market dominance or some other reason. Just because the affected companies happen to be headquartered in the US, it does not follow that this is an action targeted exclusively at US or foreign companies. For example, given the growing use of its platform for news distribution, it is possible that a platform like TikTok could fall within the ambit of the legislation.

C-18 is no more a violation of the national treatment principle than the EU’s Digital Markets Act (DMA), which targets the anti-competitive behaviour of “internet gatekeepers”, who happen to be prominently represented among the GAFAM US-based companies. The US government has not objected to the DMA on national treatment grounds (although Silicon Valley certainly has). Such criticisms as there are accuse the EU of targeting US “gatekeeper” companies in order to protect competing European companies. In the case of Canada, there is no suggestion that any provision of C-18 is designed to offer trade protection to Canadian companies competing with the “digital news intermediaries”. In short, charges that C-18 violates Canada’s national treatment obligations are a red herring.

Just as the Bill contains a definition for digital intermediaries that are subject to the legislation, so too it defines an “eligible news business”. An eligible business, one that can enter bargaining with the platforms for compensation for use of Canadian news content, is any entity producing news content that receives the journalism tax credit or which has a minimum of two journalists in Canada and operates and edits material in Canada. That hardly limits the benefit to “large and powerful media companies”. The CCIA paper goes on to argue that the definition of an eligible news business will make it difficult for Canada to avoid a charge of unjustified discrimination against US media organizations. This argument must truly be galling to US news producers, none of whom belong to the CCIA and most of whom are engaged in trying to bring about the same legislation in the US as Canada is proposing.

In claiming that the legislation is a violation of national treatment, the CCIA makes the laughable comparison with the maple syrup industry, where Canada apparently has a 66% percent market share in the US. (Canada exports 85% of global production). Apart from the fact that there are over 8000 businesses producing maple syrup in Canada spread over 5 provinces (although the large majority are in Quebec, where the climate is most conducive), it is hard to equate the $300 million in Canadian maple syrup exports to the US to the role that Google and Facebook play in the Canadian digital ecosystem. There is no one, giant maple producer that controls 95% of the market in the way that Google dominates online search, or which controls 80% of digital advertising revenues as Google and Facebook do. But this is not the only flaw in reasoning in the paper.

It claims, incorrectly, that C-18 “in essence” imposes a must-carry obligation on US digital news intermediaries with respect to Canadian news content because of the non-discrimination provisions of the legislation. This is way off base and just plain wrong. While it is likely true that to operate successfully in Canada, Google and Facebook need to reference and link to Canadian news media content in order to appeal to Canadian consumers, they are not obliged to do so by the legislation. However, if the platforms opt to “make available” Canadian news content, then they will be subject to the Act and be required to enter compulsory bargaining with news providers, subject to final, binding arbitration if negotiations fail, as was the case in Australia. (If they voluntary reach agreement with news providers, the compulsory bargaining and arbitration provisions will not apply, again, as per the Australian example).

C-18 (Section 51) imposes a non-discrimination requirement on any internet intermediary that makes Canadian news content available in order to ensure that platforms cannot demote or promote certain content over others for their favoured or disfavoured partners, particularly during the negotiation phase. But Section 51 does not require them to make Canadian content available, as the CCIA paper claims, and the law does not prescribe any form of mandatory carriage. The CCIA paper also states incorrectly that if a digital intermediary decided not to make available any Canadian news content, this would prevent it from displaying non-Canadian sources such as the New York Times or the South China Morning Post. This is a fanciful re-interpretation of the Bill. To reiterate, the non-discrimination provision does not require that Canadian news content be made available; however, if it made available then it must be done in a non-discriminatory manner. Distribution of non-Canadian content is not subject to this provision. The wording is Section 51 is clear. The non-discriminatory provisions apply only to “news content that is produced primarily for the Canadian news marketplace by a news outlet operated by an eligible news business”. An “eligible news business” must be based in Canada.

While there is no legal requirement to carry (make available) Canadian news content, nor is there any provision that prevents the distribution of non-Canadian news content in Canada, the market reality is that if Google and Facebook are to be successful in the Canadian market of 38 million people, they will have to make Canadian news content available to their users, as they have been doing. They produce not one column inch of content yet benefit from the readership that this content attracts through domination of digital ad markets. It is this anomaly that the legislation is designed to correct.

Because the CCIA paper has chosen to mischaracterize the bill, its arguments that C-18 violates Canada’s trade obligations under the USMCA/CUSMA and Berne do not stand up to scrutiny. First, as noted above, simply because a measure at the present time may capture a couple of US companies even though broadly targeted, this does not mean the action is a violation of national treatment. The argument that the non-discrimination provisions are, in effect, a “must-carry” requirements for Canadian news content are also inaccurate, negating the argument that this is a violation of the investment chapter of the USMCA that prohibits the imposition of “performance requirements” on investments from a NAFTA country. Even if the above arguments were valid, which they are not, Canada could still invoke discriminatory measures under the cultural exception provision of the CUSMA, Article 32.6, because publication of newspapers, periodicals and magazines is defined as a cultural industry. The cultural exemption clause allows Canada to take measures to protect or promote a cultural industry even if to do so would infringe a USMCA/CUSMA obligation. However, invoking 32.6 would invite retaliation of equivalent commercial effect, and there is no need to do so because C-18 is not in violation of the USMCA.

Another argument trotted out by the CCIA is that C-18 will lead to a breach of Canada’s obligations under the Berne Convention (incorporated into the WTO) because, under Berne, there is a “right to quotation”. The paper also claims that the bill undermines longstanding legal principles related to limitations and exceptions to copyright protection. In Canada, these largely fall under the fair dealing provisions of the Copyright Act; in the US they fall under the somewhat broader “fair use” provisions. In fact, C-18 makes no changes to the Copyright Act, and designated internet intermediaries could still exercise a right to quotation under fair dealing if, for example, they produced content that required use of quotations. Fair dealing and other user rights under the Act are unaffected. However, fair dealing cannot be invoked by the designated platforms to avoid their obligation to enter bargaining with news providers, which is a measure designed to redress a market imbalance rather than adjudicate copyright issues. Put another way, the exercise of fair dealing under the Copyright Act does not provide immunity from the need to comply with other legislation, whether it be the Online News Act or some other legal requirement.

The relevant part of the draft legislation dealing with this issue (Section 24) states that “For greater certainty, limitations and exceptions to copyright under the Copyright Act do not limit the scope of the bargaining process.” As I recently discussed (here and here), while the term “making available” covers linking, which is generally not a violation of copyright (except in certain, well-defined circumstances) and is thus a permitted activity under the Copyright Act, it is also subject to the bargaining framework when employed by designated digital intermediaries—and only the designated digital intermediaries, not other users.

While all these nuances could, potentially, be argued before a WTO or NAFTA panel (except that the US has frozen the WTO process by blocking appointments to the WTO’s appellate body), this raises the more fundamental question as to whether the US Government would be willing to take up cudgels on behalf of Google and Facebook. (A company cannot bring a trade dispute case itself; it has to be done by a government). Neither corporation is exactly in good odour in Washington these days and some of the actions the CCIA objects to are in fact already underway in the US. While the CCIA paper argues against C-18 because it will allow the Canadian media to bargain collectively, (becoming a “cartel” in the CCIA’s words), legislation that would provide exactly the same exemption from anti-trust provisions is currently before the US Congress. (The Journalism Competition Preservation Act-JCPA). It is also worth recalling that the US Government represents US interests broadly. Among those interests are the US journalism industry (which would like to see legislation similar to C-18 in the US) and other companies within the tech sector that are competitors of Google and Facebook. Let’s recall that when Google threatened to pull out of Australia, removing its search function because of impending Australian legislation very similar to C-18, Microsoft stepped in and offered to fill the void, at the same time indicating it would be happy to comply with the Australian law. (Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others) When there are disparate US interests and different voices–equally influential–to consider, don’t expect the US Government to rush to become advocates for Google and Facebook. While the CCIA took up their case, I note that both companies are members of the organization. Microsoft does not appear to be a member.

So, what then are we to make of all this? Simply put, the CCIA paper is a valiant but unconvincing lobbying effort. It tries to invoke scare tactics and threaten US retribution under the USMCA/CUSMA, but it’s a paper tiger. Its arguments are unconvincing and tendentious, and the likelihood of the US Government actually bringing a CUSMA case if C-18 becomes law are somewhere between very slight to zero. And if they did, the case would almost certainly fail.

Australia and France have already brought the big internet platforms to heel when it comes to working out equitable income sharing arrangements with news media. Canada will undoubtedly succeed in doing the same. The US will likely be next in line even though the CCIA will deploy its considerable lobbying heft to oppose action at home as it is doing in Canada.

© Hugh Stephens 2022. All Rights Reserved.

Stopping the Trade in Fake Indigenous Art: Following in the Footsteps of Lucinda Turner

Artist: Ed Simeon (1976); Credit: Simon Fraser University

The lamented passing of artist and activist Lucinda Turner in Vancouver in early July reminded many of the struggle she engaged in to protect Pacific Northwest Coast Indigenous artforms from counterfeiting and copyright infringement. Turner, a non-Indigenous artist who worked for many years with Nisga’a master sculptor and carver Norman Tait, took up the cause of fighting to protect Indigenous, especially Pacific Northwest, art from blatant copying, plagiarism, counterfeiting and passing off after Tait’s death in 2016. Many of the unauthorized reproductions are produced in Asia, with large numbers of the carvings coming from Indonesia, being executed in teak or other wood not native to the Northwest Coast. Others are copies made closer to home, usually by non-native artists.

To combat the trade in fakes, Turner started the Facebook group Fraudulent Native Art Exposed (FNAE), in which she catalogued literally thousands of knock offs of native art. The site includes a registry of authentic native artists as well as a model DMCA takedown letter. (For those not familiar, the DMCA is US legislation that allows those whose copyright has been infringed to submit letters to internet platforms in the US requiring them to remove infringing materials from their site). Today, the group continues as a discussion forum. The topics are interesting, ranging from outing of retail outlets selling fake Northwest Coast art to discussions around cultural appropriation and who can claim native ancestry.

In 2019 Turner stepped up her campaign, drafting an open letter to the Canadian government. In it she called for introduction of legislation and policies to uphold and protect Indigenous intellectual property and copyright through stricter laws and enforcement. Specifically she put forth five recommendations;

  1. Clearer identification to make it easier for a buyer to determine if a work is authentic or not. Institute for Northwest Coast Indigenous artists a system similar to the Canadian “Igloo Tag Trademark” or Alaskan “Silver Hand” that protects Inuit and Alaska Native artists from fraud, cultural appropriation, and theft, by distinguishing authentic Inuit and Alaska Native works from those using Arctic imagery;
  • The introduction of an Indigenous Artists Registry using blockchain technology to enable a direct link to an artist’s portfolio and biography, providing artists with a place to document designs, control ownership, establish provenance, and track works as they are sold;
  • Criminalize and enforce laws against fraudulent acts of purporting to donate proceeds or parts of proceeds to Indigenous communities or associations (fundraising for Indigenous causes using Indigenous images without authorization);
  • Encourage the sale of Indigenous art by eliminating Federal and Provincial sales taxes on these items while retaining (or even increasing) taxes on “Native-Inspired” pieces;
  • Distribution of information pamphlets on where and how to buy authentic Indigenous art in places such as high-traffic tourist areas to help teach consumers how to identify authentic art, and what questions to ask such as: where the product was created, the artist’s name and First Nation affiliation, and whether or not the artist receives royalties from the sale.

These recommendations are a combination of legal action and raising consumer awareness through information and marketing. As in many things, price will usually be the first indicator of whether or not an article is genuine but is not always determinative, especially when well-executed knock-offs are marketed at similar prices to authentic works.

Despite Turner’s call to action, and despite recognition by two Parliamentary committees in 2019 (the Shifting Paradigms report of the Heritage Committee and the INDU Committee Report from the Committee on Industry, Science and Technology) of the need to take special measures to protect Indigenous art, almost nothing has been done to date. This is partly due to delays in revising the Copyright Act (required every five years, with the last revision being in 2012) because of the interruption of two elections (in 2019 and 2021), as well as the government’s focus on other priorities including combatting COVID.

The Minister for Canadian Heritage, the head of one of two government departments responsible for copyright, has been preoccupied with other legislation, such as the Online Streaming Act, Online News Act and legislation dealing with online harms. The lead department responsible, Innovation, Science and Economic Development, has had many other issues to deal with and copyright has been put on the back burner. That may be changing now the Trudeau government has secured a likely mandate to govern until 2025 through a confidence and supply agreement with the opposition New Democratic Party. There is now sufficient time to bring forth proposed changes, conduct public consultation and hopefully get changes through Parliament before another election intervenes and cuts short the legislative process.

With copyright review getting underway within the bureaucracy, calls for more action to stop the trade in fake Indigenous art are increasing. Among those leading the charge is Senator Patricia Bovey, independent Senator from Manitoba and the first and only art historian to sit in the Senate. She served as Director of the Winnipeg Art Gallery (1999-2004) and the Art Gallery of Greater Victoria (1980-1999), has been a professor of Art History, President of the Canadian Art Museum Directors Organization for three years and served on the Board of the National Gallery of Canada. It’s fair to say she knows her stuff, and that she is concerned. While an independent Senator can only do so much in terms of bringing forth legislation, she can encourage, prod and circulate ideas. Among these is the creation of a mechanism or fund to track down companies fabricating Indigenous works or failing to pay royalties. Another would be to strengthen Canada’s “soft border” against trade in fakes. Some of these measures could be addressed by the Copyright Act; others will require legislation in other areas.

As I have written elsewhere, “Can Copyright Law Protect Indigenous Culture? If Not, What is the Answer?”, copyright is not always a perfect fit when it comes to protecting Indigenous Cultural Expression (ICE) which may be more community than individually based and often relies more on stewardship than ownership. But there are still contemporary Indigenous artists who are facing direct consequences now from the growing trade in fakes, facilitated by sales through the internet. Action is needed. A key element is to be able to easily distinguish between real and fake Indigenous art. Lucinda Turner’s idea of making the genuine article free of sales tax would be one transparent way to indicate the difference, allowing law enforcement to take action against fraudulent efforts to pass off non-Indigenous works as genuine as doing so would be a violation of the tax code. Another suggestion is to bring in Canadian legislation that would mirror the US Indian Arts and Crafts Act of 1990 that prohibits the sale, or offer for sale, of any product that falsely suggests it is Indian produced, an Indian product, or the product of a particular Indian “tribe”. There are heavy penalties for violation of the law. In 2018 an owner of several Albuquerque, NM, jewellery stores was imprisoned and required to pay over $9000 in restitution for passing off Filipino-made jewellery as authentic Native American art.

However, the legislation is not necessarily a silver bullet. Apart from questions as to who qualifies as “Indian” under the Act (in the case of the US law it is a member of a federally or state recognized Indian tribe or an individual certified as an Indian artisan by a tribe), the law does not deal with “lookalike” art. As long as there is no false claim that the work is an Indian product, the law does not apply. In other words, non-Indian works taking inspiration from Indian designs, but not claiming to be Indian-made, are not targeted by the law. To close this loophole would be difficult because many non-Indigenous artists have drawn inspiration from native designs, eg. Hopi and Navaho geometric patterns. The most effective means may be to ask artists to be respectful of the cultural significance of works they are inspired by, but that still won’t stop mass marketing of cheap look-alikes for tourist consumption, such as totem poles, masks, jewellery, Inuit sculptures and so on.

If certain art forms are restricted to Indigenous practitioners in Canada, the question of who might qualify to produce them could be tricky since the term “Indigenous” includes members of First Nations reserves with status under the Indian Act, non-status people of Indigenous descent, Inuit and Metis, although “qualification” could no doubt be solved by some form of registry. There is also the question of regional origin within the Indigenous community. For example, should an Indigenous person from, say, the northern prairies be able to claim Indigenous status as a producer of Pacific Northwest Coast art?

But the most difficult question is how to handle clones of Indigenous art, such as elaborately and cheaply carved “copies” from places like Indonesia (where there are also master carvers very good at copying the work of others, in some cases commissioned by businesses in North America), and where there is technically no claim that the work is of Indigenous origin. While Indigenous artists in Canada would like to see those copies stopped at the border (training of border guards is another issue), as long as those “copies” are not exact replicas and not marketed as originals, it will be difficult to stop such trade. If fake art is being imported and passed off as the original, whether it is of Indigenous design or not, it should be stopped. However, if the works simply take inspiration from Indigenous, or non-Indigenous designs, as much as I sympathize with the artists of the original works, it is hard to design a law that will target the problem without causing some kind of collateral damage to trade. This is where a mark of authentication could come in handy. False labelling would be grounds for seizure of goods. Also, the threat of heavy fines and seizure of fake goods might provide some deterrence and ensure that imported artwork is clearly identified as such.

There is definitely a problem, although the solutions are not simple. While stopping or discouraging the trade in fakes is important, equally important is letting consumers know what is real and what is not. Price does not always provide the necessary distinction. The creation of an Indigenous Art Registry (that work has already begun) and the establishment of a mark of authenticity or a trademark would help consumers identify the provenance and bona fides of a product they want to buy. If I want to buy the real thing, I don’t mind paying a fair price for the genuine article but I really don’t want to pay a similar price for a knock off made elsewhere. That undermines the entire market.

It looks as if the work of Lucinda Turner will be carried forward by others, including Patricia Bovey. Some changes will likely be addressed through Copyright Act revisions. Others may come about as part of the ongoing Reconciliation efforts with Indigenous communities. Still others may come about as a result of tightening the border against the trade in fakes of all kinds. For example, the new NAFTA trade agreement (aka USMCA/CUSMA) requires that customs officials in Canada, Mexico and the US have “ex officio” powers to stop suspected counterfeit goods. “Ex-officio” means that customs officials can act on their own authority if they suspect that a shipment contains fakes, rather than having to wait for a rights-holder to bring a case. In other words, they can pro-actively interdict traffic in fakes rather than simply being reactive.

This is a complex file that involves Indigenous rights and culture, international trade, copyright and trademark, and consumer protection. This suggests that a coordinated approach across government is needed. Lucinda Turner was a leader in taking up this challenge. Others are following her example. I wish them success.

© Hugh Stephens, 2022. All Rights Reserved.

Copyright Protection for Transitory or Ephemeral Works: Going Beyond the Photographic Record

Last month, I discussed the ephemeral art of US sand sculptor Jim Denevan, noting that the simplest way for Denevan to protect his monumental sand designs (if he wished to), was by photographing them. That is what Denevan has done on occasion, through his son, drone photographer Brighton Denevan, who took the stunning photos of the work Denevan père executed at Chesterman Beach in Tofino, BC, earlier this year. That work was obliterated after 9 days when a king tide came in. But what if Denevan hadn’t photographed the work? Could it still have been protected by copyright given that it was “transitory” and not “fixed”?

Unlike in the US, UK copyright law does not explicitly require fixation or permanence for artistic works (as opposed to literary, dramatic, or musical works, where it is required). A recent case in the UK (Islestarr Holdings Ltd v Aldi Stores Ltd) illustrates the tricky role of fixation when deciding infringement. The case involved a design embossed into cosmetic make-up powder, which had been copied by the alleged infringer. Although the embossed powder compact design disappeared when used (i.e. it was transitory), the court nonetheless ruled that the product was sufficiently fixed even if not “permanent” because the embossed powder was based on a fixed design. As noted in the Kluwer Copyright Blog;

“The decision shows that with artistic copyright (in the UK) the emphasis is on the content conveyed by the work as opposed to the medium on which it is fixed.  Provided the design of the artistic work is recorded in some form, the physical manifestation of the design will, in principle, be entitled to artistic copyright regardless of its permanence.  In the Islestarr decision it was relatively straightforward to establish fixation from earlier design drawings…”,

Jim Denevan’s sand installation took place in Canada which also does not have an explicit requirement for fixation in its copyright law, (other than for content transmitted by telecommunications), unlike the US. However, according to Canadian case law, to be protected a work must be expressed to some extent in some material form, capable of identification and having a more or less permanent endurance. Perhaps the designs Denevan used to create his work were in a tangible form, allowing him to assert copyright based on the designs before they were carved into the sands of Chesterman Beach. But perhaps he simply had the design in his head and executed it without preparing a physical copy. In that case, it would seem that copyright would have to depend on an image (such as a photograph) of the non-permanent object if the work is to be protected.

The question of whether a design qualifies for protection regardless of the permanence of the expression of the design, as in the Islestarr case, is interesting to explore. In Denevan’s view, his instructions on how to assemble a work (such as his “Angle of Repose” sculpture at DesertX 2022), are protectable by copyright. In my discussion with him, he pointed out the case of the American conceptual artist Sol LeWitt. LeWitt was known for myriad variations in drawing lines onto walls. His creation was the set of instructions on how to execute the lines, although each artist—usually his assistants–following these instructions would produce something slightly different each time. In LeWitt’s thinking, the instructions were the copyrightable form; the actual physical manifestation was secondary.

I remember visiting the Art Gallery of Ontario a few years ago when an installation by the Chinese artist Ai Weiwei, titled 90 Tons of Steel, was being set up. The work itself was a collection of straightened rebar taken from schools in Sichuan Province that had been destroyed by the 2008 earthquake. Ai had extracted the steel rods, straightened them, and then assembled them into a ripple pattern resembling a seismic wave. The work was a criticism of the Chinese government and local officials for allowing shoddy construction in schools, resulting in the deaths of many students. As the curator was assembling the work, which as I recall had just arrived from New York, I asked him how he could ensure the design was faithful to Ai’s conception. (Ai was not in Toronto; at the time he was under house arrest in China).

The curator said he was following Ai’s instructions but conceded that the layout in Toronto would inevitably differ in some respects—since the bars were not interlocked in any way– from the display in Indianapolis, or Boston, or wherever the exhibition was going next. Yet no-one would dispute that the work was Ai’s and that it was protected by copyright.  The work was clearly transitory or ephemeral since after its run in Toronto, it would be packed up and shipped to another art museum and be laid out again in a different setting. In effect it was Ai’s design as translated through his instructions that was the heart of the work, and which is presumably protected by copyright, rather than the physical expression of the work wherever it may appear. In similar fashion, recorded verbal instructions for assembly of an artwork could be argued to be protected by copyright even though the resulting work might not be fixed.

While it may seem a stretch to argue that a sand sculpture could be copyrighted if it was the expression of an original, recorded design, this happens in other art forms where an ephemeral or transitory expression can be protected by copyright if the instructions are fixed. Choreography is a good example. There is no question that dance choreography is protectable; there are numerous examples. The form of fixation can be a video recording or photograph, but it can also be through dance notation or textual descriptions. The actual performance, which could itself be protectable through the performers’ rights, is unlikely to be an exact replica of the dance each time it is performed, giving it a transitory nature. Yet it is protectable under copyright, as explained by this article in Dance Magazine.

So, while a photograph by the author (or, in the US, on behalf of the author as a work for hire) is a good way to ensure that a transitory work can be protected by copyright, it is not the only way to accomplish this.

© Hugh Stephens, 2022. All Rights Reserved.

Silicon Valley’s Unsuccessful Attempts to Export Section 230 through International Trade Agreements

Credit: Author

A couple of weeks ago I wrote about the Omegle case, a potentially ground-breaking suit in the US in which an internet platform, Omegle, was denied the use of the Section 230 liability immunity defence by a judge in Oregon. The case involved Omegle’s online meeting platform in which it randomly pairs strangers for dialogue—and often more. In this case it paired an 11 year old girl with a male sexual predator in his thirties. The resulting online abuse went on for several years. Section 230 is part of legislation passed in the US at the dawn of the internet age, the 1996 Communications Decency Act. Section 230 provides internet platforms with immunity from civil liability for user content posted on their services, regardless of whether the platforms are aware of illegal content or not and regardless of whether they exercise any content moderation.

Silicon Valley is a big fan of Section 230, arguing that without it we would not have the internet, or at least the internet would not have developed the way it has. (Some would say the way it has developed is a big part of the problem). Silicon Valley’s mouthpieces, like the Electronic Frontier Foundation (EFF) and academics like Eric Goldman, Professor of Law at Santa Clara University (in the heart of Silicon Valley), love it and promote it. Goldman thinks Canadians should adopt it and set out a five-point primer on why Canada should be so lucky to have Section 230 as part of its corpus of law. (See my response, here).  “Thank You Professor! “Explaining” Section 230 to Canadians”.

Fortunately, Canada has not adopted Section 230 despite the attempt by Silicon Valley and its acolytes to have the US Government negotiate a Section 230 commitment by Canada (and Mexico) in the recent update to NAFTA, aka the USMCA or CUSMA. While some Section 230-like language was included in the USMCA (Article 19.17) it was effectively nullified by a footnote in the Agreement that stated “For greater certainty, a Party may comply with this Article through its laws, regulations, or application of existing legal doctrines as applied through judicial decisions.” As a result, when the CUSMA omnibus legislation was introduced into Parliament to implement Canada’s obligations under the new NAFTA, there was no reference to any legislation required to implement Article 19.17. Why? Because none was required. Simply put, Section 230 does not exist in Canadian law despite whatever language may exist in USMCA/CUSMA because no legislation was passed to implement anything related to Article 19.17. This “primacy of Parliament” principle was recently confirmed by the Supreme Court of Canada (SCC) in an unrelated case, Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association (SOCAN v ESA, 2022).

The issue in the SOCAN/ESA case involved whether the “making available” right, implemented into the Copyright Act in 2012 to ensure Canada’s adherence to the WIPO Internet Treaties (1996), was a new right or simply confirmation that it was already protected. The SCC found that Parliament did not create a new right, notwithstanding treaty language and obligations undertaken by Canada. Meera Nair, in her blog Fair Duty notes that “Canadians should savour a significant theme in this decision—that when examining the intersection of international agreements with domestic law, it is the will of Parliament that matters”. She goes on to quote from the Court’s decision;

“While a treaty can be highly relevant to statutory interpretation, it cannot overwhelm clear legislative intent. The court’s task is to interpret what the legislature (federally and provincially) has enacted and not subordinate this to what the federal executive has agreed to internationally. It is always the domestic statute that governs because “international law cannot be used to support an interpretation that is not permitted by the words of the statute” (para 48, citation omitted).”

Thus, regardless of the wording of Section 19.17 of the CUSMA/USMCA, Section 230 does not exist in Canadian law because no law implementing it has been enacted by Parliament.

A current case before the BC Supreme Court (Guistra v Twitter) further demonstrates this reality. Frank Guistra, a prominent businessman who has also engaged in considerable philanthropy, including with the Clinton Foundation, resides in both British Columbia (BC) and California and has businesses in both. He sued Twitter in BC for refusing to delete defamatory remarks posted by third parties on the platform associating him with the thoroughly discredited and bizarre conspiracy theory related to Clinton and pedophilia, often referred to as “Pizzagate”. Twitter tried to get the case in BC thrown out, arguing that it should be tried in California. The BC Court demurred for a number of reasons, among them the argument that if the case were tried in California, Guistra would have no cause of action because of Section 230. Prominent technology and copyright lawyer Barry Sookman has a full discussion of the case here.

Twitter appealed the BC Court’s decision regarding jurisdiction and lost. While there were several reasons why the British Columbia Supreme Court ruled it had jurisdiction, one of the reasons it gave for rejecting Twitter’s request to transfer the case to California was that this would deny Guistra the opportunity to clear his name–because the case would be summarily dismissed under Section 230. On the contrary, if he has that opportunity in BC it follows that the Section 230 remedy does not apply in Canada. Twitter could use Section 230 to have the case dismissed in a US jurisdiction; not so in Canada.

That will disappoint Eric Goldman, who has argued that Section 230 is the law in Canada (although he added the caveat, “but not really”) and his Canadian counterpart, Michael Geist of the University of Ottawa. During the USMCA/CUSMA negotiations, Prof. Geist suggested that Canada give the US a “win” on this point and signed on to a letter sent to US, Mexican and Canadian trade negotiators by a number of (mostly) US academics urging inclusion of a Section 230 commitment in the Agreement that would bind the Parties.

It is not only Canada that has been the target of the US tech industry’s efforts to lobby the US government to include Section 230 as a trade negotiating objective. The US-Japan Digital Trade Agreement, signed in October 2019  contains similar language (Article 18.2) to that contained in USMCA/CUSMA Article 19.17. However, like that Agreement it also included a “clarifying footnote”, an almost word for word rendition of the caveat Canada used to avoid implementing Section 230 into law. However Japan went one step further and insisted on a side letter to their agreement with the US that said, in part;

“The Parties recognize that there are differences between their respective legal systems governing the liability of interactive computer services suppliers….Moreover, based on a review of information on the operation of Japan’s legal system and discussion between the Parties, the Parties agree that Japan need not change its existing legal system, including laws, regulations, and judicial decisions, governing the liability of interactive computer services suppliers, to comply with Article 18.”

The Japanese want no part of Section 230 either!

Section 230 is also coming under increasing scrutiny in the US, both in Congress and through various reform proposals emanating from think-tanks and elsewhere. Silicon Valley continues to fight tooth and nail to preserve the virtual blanket exemption from civil liability that they were handed back in the infancy of the internet. The Omegle case is one more example of chipping away at the impunity with which platforms have (mis) used Section 230. While the case is not yet concluded, and it is possible that the judge’s decision to dismiss the Section 230 defence offered by Omegle will be reversed on appeal, it is nonetheless one more sign that the days of virtually unrestricted use of a civil liability shield by online interactive computer services (platforms) in the US are coming to an end.

If Section 230 (in its current iteration) is on life support at home in the US, it is not surprising that it is not being embraced by other countries, even though (up to now) US trade negotiators have continued trying to push it on their trading partners. It doesn’t belong in trade agreements, and to date the US Government has been unsuccessful in force feeding it to other countries, including close trading partners such as Canada and Japan. There is a growing awareness around the world that internet intermediaries can and should be held accountable for content on their platforms when they have knowledge of abuse and ignore it, or if the platform and its algorithms is designed to encourage or perpetuate abuse or illegal behaviour. Instead of trying to push Section 230 on to other countries, the US should be moving ahead with Section 230 reform domestically.

© Hugh Stephens 2022. All Rights Reserved.

The Omegle Case: Another Nail in the Coffin of Section 230

Source: (modified)

You may never have heard of Omegle–or perhaps you have. It is an online platform that allows people to meet and talk to total strangers online through video links. Participants are randomly paired but there is also a form of self-selection by indicating shared interests. Once people are paired, they can stay and chat or move to another partner. The site has a reputation for being raunchy, attracting those with a penchant for kinky behaviour (along with those who just want to chat with strangers about whatever) and, unfortunately, as a place where sex predators meet children online for “grooming”. The site has the standard disclaimers on its home page, but there is no age verification process and apparently very little content moderation.

The BBC did an investigative report on Omegle and came up with some disturbing findings. When it input a certain keyword reflecting its supposed interests, it was more frequently paired with people engaging in explicit activity. BBC didn’t reveal the keyword, which apparently has now been dropped from the service, but judging by the type of material the reporter was exposed to, my guess is that it may have started with a w and rhymed with banker. User beware.

Omegle has been in the news recently because one of its users, at the time (2014) an 11 year old girl, is suing the platform in a product liability case. She was randomly paired by Omegle with a man in his late thirties who went on to sexually abuse her online for several years. The perpetrator, a Canadian resident, has been convicted by a Canadian court in a criminal prosecution. However, the plaintiff alleges that Omegle is also responsible for the outcome, based on product liability arising from defects in design, defects in warning, negligence in design, negligence in warning and instruction, facilitation of sex trafficking, sex trafficking of children, human trafficking and negligent misrepresentation. That is quite a list.

Not surprisingly, Omegle trotted out (among others) the infamous Section 230 defence, arguing that it was not liable for user-generated content on its site. That defence was recently dismissed by a district court in Portland, OR. The ruling was based on the platform’s design rather than the content itself with the presiding judge writing that “Omegle could have satisfied its alleged obligation by designing its product differently—for example, by designing a product so that it did not match minors and adults.” The Section 230 immunity did not protect Omegle. That is good news for those concerned about Section 230 over-reach and the abuse of this provision by internet intermediaries.

Many readers will be familiar with the origins of Section 230 and its use over the years by internet platforms to shield themselves from any civil liability arising from content on their services, notwithstanding obvious abuses and the fact that many platforms encourage controversial and marginally legal (or in some cases blatantly illegal) content in order to attract viewers, and thus ad revenues. Tech companies love it and have defended it tooth and nail. It has been under close scrutiny in the US Congress from both Republicans and Democrats.

Republicans got engaged when Donald Trump threatened to revoke the legislation because Twitter had the temerity to fact-check some of his more outrageous tweets. There are many good reasons for revising Section 230 but this was not one of them. In 2018 sex trafficking was carved out of the legislation, removing the liability immunity for platforms that promoted sex trafficking and prostitution, largely because of the role that platforms like Backpage played in sexual exploitation of minors. That legislation, known as FOSTA/SESTA (Fight Online Sex Trafficking Act—the House version—and the Stop Enabling Sex Traffickers Act—the Senate version) has been controversial because it has seldom been used to prosecute offenders and has been criticized by sex workers as having removed a legitimate forum for communication. Nonetheless it has helped to stop online advertising related to child sex trafficking.

The Democrats, particularly in the person of Senator Ron Wyden (D-OR), one of the authors of Section 230 in the first place, are concerned that the balance in the legislation, which was supposed to be (as described by Wyden) both a sword and a shield, has become nothing more than a shield. The sword was supposed to have allowed the platforms to undertake necessary content moderation without being sued. Instead, it is the immunity provided from avoiding any content moderation that has come to prevail. In an interview back in 2018 with The Verge, Wyden said;

“…what was clear during the 2016 election and succeeding events surrounding Facebook, is that technology companies used one part of what we envisioned, the shield, but really sat on their hands with respect to the sword, and wouldn’t police their platforms….The industry better start using the sword, part of the two-part package, or else it isn’t going to be in their hands”.

So, in short, Section 230 is under attack from both sides although neither can decide exactly what action to take. In the current Congress about 20 bills have been introduced that would amend Section 230 in one way or another, although none seems to have enough impetus to pass. But the courts may be making more progress, at least if the Omegle decision stands. Denying platforms immunity when they ignore obvious abuses, or, in this case, design their platforms to facilitate abuses, is hopefully one more nail in the coffin of Section 230 as it exists today.

© Hugh Stephens, 2022. All Rights Reserved.

The Incoming Tide and its Relation to Copyright: Jim Denevan’s Ephemeral Creations

Credit: Brighton Denevan-Used with permission

“Time and tide wait for no man”, Geoffrey Chaucer is reputed to have said back in the 14th century (although versions of the saying predate Chaucer). King Canute proved the truth of this parable in his unsuccessful attempt to command the tide to recede. All he got was wet feet—although he apparently didn’t really believe he could stop the tide but rather was trying to demonstrate to his nobles the limited power of kings. In this, he evidently succeeded. The tide tables continue to be a welcome element of stability and predictability in an unstable and uncertain world. We rely on them to time boat launchings, decide when we should go fishing and, in the case of sand artist Jim Denevan, to know how much time he has left to work on his sand sculptures and when, precisely, his artistic creations will be inundated and obliterated for all time.

According to a CBC report on Denevan’s work at Tofino’s Chesterman Beach on the rugged west coast of Vancouver Island, he takes a philosophical approach to the immutable power of the tides, saying that it is a good life lesson because nothing is permanent. On July 9, at 9:30 p.m. the incoming tide washed out four months of planning and preparation and over a week of work, the designing, digging, etching and creation of an amazing geometric installation in the sand of Chesterman Beach. Chesterman was chosen because, unlike many beaches where the force of nature exerts its presence twice a day, this beach has a berm that is breached only when a king tide comes in. As it did on July 9.

Denevan has created sand installations in many locations, some on dry land, others on beaches. He has worked in various parts of the US (where there is sand, either beach or desert), Saudi Arabia, the UAE, Australia and Canada. His works are massive—and ephemeral by intent. The Tofino installation was of awe-inspiring scope, a full kilometer in length with a width of 200 metres, as you can see from the photos. Clearly a work of that scope requires some serious advance design work, not to mention a healthy dose of physical labour to dig and etch carefully, symmetrically and in straight lines. Under normal circumstances, a finished work of art like this would be protected by copyright, allowing Denevan to exert control over reproductions. But if you go to Chesterman Beach today you will find no trace of Denevan’s work. Nature has seen to that. Yet, because of the partnership with his son, drone photographer Brighton Denevan, Jim Denevan has a physical record of what he has produced, and through Brighton is able to protect reproductions of the work, and to monetize them if he wishes. That, however, is not his intent.

Denevan’s business model does not depend on licensing reproductions of his work; instead he accepts commissions to create them (although the Tofino work was a labour of love). As a result, he does not sell photos of his artwork (Brighton freely gave me permission to use the photo in this blog) if he controls the rights. When accepting a commission under US law he would normally be creating a “work for hire” where the commissioning entity owns the copyright, but Jim has been careful to keep the copyright and limit the use of the reproductions through contract. For example, his sand sculptures have been used in advertising (where he has permitted authorized limited time reproductions to be used on billboards or for video ads) or as ephemeral cultural manifestations, as in the case of his massive sand sculpture in Saudi Arabia (“Angle of Repose”) for the DesertX 2022, AIUla art exhibition. Actually, Denevan’s main line of business is the bespoke mass dining experience known as “Outstanding in the Field”, which he founded some 30 years ago. The commercial success of this endeavour allows him to explore his interest in ephemeral art and to undertake projects out of interest rather than financial return. Thus, Denevan’s only compensation for his Tofino project was seeing the work unfold, and then seeing it disappear under the incoming tide a few days later.

This brings me back to the question of whether ephemeral art can qualify for copyright protection. A photograph is the easiest way to convert an ephemeral work into something more concrete or “fixed”. The need for a physical manifestation of the work arises from the requirement for a copyrighted work to be “fixed” in some medium for it to qualify for protection, at least under US copyright law. Sand on a beach doesn’t appear to qualify under US law as a medium for fixation (although it might under British copyright law where the medium of fixation is less important, an issue I will explore in a future post). A photograph, however, does.

I wrote about the various dimensions of this issue a couple of years ago in a blog post, (“My Fixation with Fixation”). It is not only sand art creations that face this problem. It applies to any creative work that is transitory, such as ice sculptures, cake decorations, fireworks displays etc. Because copyright laws vary between countries, while generally following common principles, the fixation issue leaves plenty of room for discussion. The overarching international treaty that sets the principles and minimum standards for copyright protection for its members, the Berne Convention (to date, 181 members, just about every jurisdiction in the world), prescribes fixation but not its form. The Convention states (Article 2 (2)) that:

“it shall [ ] be a matter for legislation in the countries of the Union to prescribe that works in general or any specified categories of works shall not be protected unless they have been fixed in some material form.”

But the Convention leaves to each member state to decide the means of fixation. In the United States, to cite the US Copyright Office;

“To be copyrightable, a work of authorship must be “fixed in any tangible medium of expression, now known or later developed, from which [it] can be perceived, reproduced, or otherwise communicated, either directly or indirectly with the aid of a machine or device.” 17 U.S.C. § 102(a) “…and the work must be sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” 17 U.S.C. § 101 (definition of “fixed”).

The Office goes on to add that, “if the work or the medium of expression only exists for a transitory period of time, if the work or the medium is constantly changing, or if the medium does not allow the specific elements of the work to be perceived, reproduced, or otherwise communicated in a consistent and uniform manner”, it may not be protected.

But what is “transitory”? Denevan’s sculpture on Chesterman Beach lasted for 9 days as it evolved. Fixation does not mean permanence. After all, what is “permanent”? Ask Ozymandius. A wood carving, a sketch on paper, or a design on textiles may not be permanent given their inability to withstand the ravages of time, although the physical existence of the work might outlast the period of copyright protection.

Arguments can be made that even a transitory work can be protected if its design or instructions for creation are recorded. However, while we can consider the complexities of protecting a work that exists in fixed form only through the written or recorded instructions for its assembly or execution, the simplest and most straightforward solution to the conundrum as to whether a transitory work like Denevan’s is, or was, fixed, is to ensure that it is recorded after execution in an enduring, physical medium, of which photography is the most obvious.

Photography is a very suitable partner for Denevan’s art because, without the aid of the birds-eye perspective provided by Brighton Denevan’s drone photos, it would be impossible to truly appreciate the complexity and symmetry of the designs. You can observe them from ground level, or maybe even from an adjacent hill, but it takes the overhead shot to truly bring out the full dimensions of the work. The relationship between the sculpture itself and the overhead photo of it is symbiotic; you cannot really have one without the other. Thus, it is entirely appropriate that the copyright rests, in effect, with this father-son team even if they have no interest in exploiting it. Of course, there is nothing to stop a third party from flying a drone over the work and taking their own photos, establishing a separate copyrighted work. But, thanks to the tides, they would have limited time to do that.

Perhaps that is the beauty of an ephemeral production; the sculpture can be created, photographed and then erased (by nature), never to be subject to further exact replication. A true one-off. Even if the design could be replicated exactly, the medium (Chesterman Beach) will have changed somewhat owing to wave action, light, storms and so on. That also makes the photos truly unique. No-one can go back and produce a facsimile because all they will see is empty sand. The sculpture existed for a moment in time and was captured in that instant by the eye of the camera. Unlike a photo of the Golden Gate Bridge, or the Tower of Pisa, or whatever permanent art-work you can name, it can never be recreated precisely again. I think that’s pretty cool.

© Hugh Stephens, 2022. All Rights Reserved.

Copyright’s International Conventions: The Importance of Membership Part II (The Rome Convention)

Credit: WIPO

Last month I wrote about the importance of international copyright treaties, using US accession to the Berne Convention as an example. United States accession was strongly supported by US copyright industries and has brought the US many benefits. But if acceding to an international copyright convention has its rewards, absence can bring costs. A recent case in Sweden highlights the importance of expanding the international network of agreements to ensure protection of non-nationals.

Back in March of this year two men who had been convicted in a Swedish court, sentenced to prison and fined $21 million for engaging in widespread broadcast piracy through operating the streaming service Advanced TV Network (ATN), were released on appeal. They were accused of pirating and redistributing signals from Qatar’s beIN Sports (a network widely pirated in Saudi Arabia and elsewhere, which I wrote about here and here). Why were they released? While ATN may have distributed beIN sports broadcasts in Sweden without permission, according to the appeals court the copyright on the broadcasts from the Qatari company could not be enforced because Qatar was not a member of the Rome Convention at the time of the offences.

The Rome Convention, aka the Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, was signed in 1961 and came into effect in 1964. As stated by the World Intellectual Property Organization (WIPO) which, along with the International Labour Organization and UNESCO is responsible for administering the treaty, it “secures protection in performances for performers, in phonograms for producers of phonograms (sound recordings) and in broadcasts for broadcasting organizations”. With respect to broadcasting, broadcasting organizations in member states have the right, among other things, to authorize or prohibit the rebroadcasting of their broadcasts and the communication to the public of their broadcasts if such communication is made in places accessible to the public through payment of an entrance fee. In other words, broadcasts of professional sports matches.

The Convention today has 96 member states, a significant number although representing only about half the number that are members of Berne. Those 96 countries include Qatar (with effect from September 23, 2017). It acceded about a year after the offences for which the owner of ATN and his son were originally sentenced–a year too late it seems, from the perspective of beIN Sports. But better late than never, as the saying goes. However, while Qatar has now acceded to the Rome Convention, the United States has not. Why has the US not acceded, and is this a problem for US rights-holders?

In my blog posting last month, I discussed why the US was reluctant to join the oldest and most important of international copyright conventions, the Berne Convention. It eventually did so in 1989, 103 years after Berne was originally established. The US was a holdout for many years because US law was not consistent with some of the provisions of the Convention. In the case of the Rome Convention, as with Berne, there was (and is) a problem with the incompatibility of some aspects of US law, making it difficult for the US to accept the terms (and the benefits) of the Convention.

US law does not provide full protection for “neighbouring rights” (AKA “related rights”), the right to publicly perform or broadcast a sound recording, one of the categories of rights covered by the treaty. When a work is broadcast, royalties are paid to “authors”, in this case songwriters and music publishers. In Rome Convention countries, royalties are also paid to the artist(s) and recording studio or record label, as related or neighbouring rights. But not in the United States.  US broadcasters are exempt from paying performers and labels when sound recordings are played on terrestrial (AM/FM) radio or on TV. (Digital transmissions are not exempt). Many attempts have been made over the years to correct this situation, the most recent of which is the American Music Fairness Act, introduced in 2021, which I wrote about here. The legislation is opposed by the terrestrial broadcasters, who have considerable political clout in Congress. But as noted copyright scholar Daniel J. Gervais has commented, with respect to the Rome Convention;

Failure of the United States to adhere has cost US performers and industry tens of millions of dollars in remuneration paid for the broadcasting of sound recordings that are not paid to United States rights holders because the Rome Convention and TRIPS (the intellectual property measures in the World Trade Organization treaty) allow reciprocity in this regard as opposed to the usual standard of nondiscrimination against foreign nationals known as national treatment. To obtain the remuneration from Rome Convention members, the United States would have to ratify the Convention and establish a remuneration for the broadcasting of sound recordings

If US artists and labels have been deprived of royalty revenues overseas, the US broadcast exemption has also cost recording artists from other countries significant amounts of potential revenue in the United States.

Failing passage of legislation to remedy the anomaly of non-payment of royalties for related rights over radio and TV, the US music industry can attempt to have the United States negotiate “national treatment” clauses in bilateral or regional trade agreements, as it did in the recent update of NAFTA (the USMCA). In this case Canada, which (with limited exceptions) does have a radio royalty performance right, agreed to grant US performers “national treatment”, which means that US performers and recording studios can collect royalties for the playing of their sound recordings over terrestrial radio in Canada even though neither Canadian nor American performers currently enjoy that right in the United States.

If the US has not ratified the Rome Convention, how do US artists, record labels (producers of “phonograms”) and broadcasters protect their IP rights abroad? Well, first of all, through the negotiation of “national treatment” provisions whereby US entities are accorded the standard of copyright protection granted by the host country, as occurred with Canada and Mexico in the case of the USMCA/CUSMA, when the host country’s standard of protection exceeds that of the US. Secondly, by acceding to other international agreements that are similar or almost equivalent to the Rome Convention in some of their provisions. For example, the US, acceded to the Phonograms Convention of 1971. That protected the record labels from unauthorized duplication of their recordings. The Convention provides protection to the “producer of phonograms who is a national of another Contracting State against the making of duplicates without that producer’s consent…”. Then, in 2002, the US ratified the 1996 WIPO Performance and Phonograms Treaty (WPPT). This provided additional protection to recording studios and performers (although the US had to take a reservation because of its non-recognition of performing rights for terrestrial radio, allowing other countries to deny payment of royalties to US performing artists) and provided US performers with a moral right, at least for countries that are members of the Treaty.

But what neither of these treaties did was to protect broadcasts, which was one of the areas covered by the Rome Convention, (Some protection was provided to broadcasters in the TRIPS Agreement, part of the World Trade Organization treaty).

For a number of years, WIPO has been trying to negotiate a new international broadcast treaty, so far unsuccessfully. As WIPO explains it;

“International rules to protect television broadcasts from piracy have not been updated since the 1961 Rome treaty, drafted at a time when cable was in its infancy and the Internet not even invented. Now that perfect digital copies of television programmes can be made and transmitted with a few mouse clicks, signal theft has become a big commercial headache for broadcasting organizations around the world.”

It would be fair to say that a broadcast treaty is controversial. The outstanding issues include the scope of coverage, (would it cover internet transmissions?), how signals should be protected, (the extent to which technological protection and encryption methods should be allowed), and what additional rights should be given to broadcasters. As explained by WIPO;

“Under the Rome Convention, broadcasters have exclusive rights for 20 years to authorize rebroadcasting, “fixation” (recording), reproduction and communication to the public of their broadcasts. Most broadcasters want the new treaty to extend and update those rights for the new technologies, especially to prevent unauthorized retransmission of their programmes over the Internet.”

Critics argue that additional protection for broadcasts would hinder access to copyrighted material by requiring an additional level of permission from the broadcaster in addition to the copyright owner, such as the producer of the material. There is also debate about how long protection should last, the 20 years of the Rome Convention or longer. For all these reasons, progress on finalizing the Treaty has been slow.

In the meantime, US broadcast networks distributing their programs abroad cannot invoke the protection of the Rome Convention. I know nothing about Swedish law, but if the recent Swedish beIN Sports case is anything to go by, and if beIN Sports could not pursue broadcast pirates in Sweden because its home country of Qatar had not acceded to the Rome Convention at the time of the proven criminal activity, then US networks must be equally vulnerable. And unlike beIN Sports (since Qatar has now acceded to Rome), US broadcasters remain vulnerable to this day. That can’t be good news for US sports franchises like Formula One, the NBA, or UFC if they distribute their content through US based sports networks, like ESPN International or Fox Sports International. International copyright conventions count. They are there for a reason-to establish standards of international protection and to plug holes in the system.

But while the US eventually accepted the need to join Berne, there appears to be little or no chance that it will eventually ratify the Rome Convention. At the time “Rome” was drafted, sixty years ago, there were issues with US law that prevented ratification. Subsequently the performers and phonograms issues were largely resolved through accession to more modern treaties. As for US broadcasters, they appear to have no interest in pushing for ratification of the Rome Convention but are instead more interested in the future possibility of a new International Broadcasting Treaty.

In the case of Berne, the US eventually saw the need to accede and the political will was mustered to pass implementing legislation, which required some changes to US law. In the case of the Rome Convention, the US has been able to manage without joining for over half a century through various work-arounds and is unlikely to make the effort now. Potentially though, some US broadcast interests operating abroad could suffer the consequences of this decision, as was the case with beIN Sports in the case of Qatar’s non-membership at the time the principals of ATN were convicted of piracy.

Whether to invest the political capital in making the changes needed to permit accession to a given treaty is always a political calculation that governments need to make. The benefits must be balanced against any downsides, while domestic political interests and lobbies have to be taken into consideration. As I noted last week, when the pain is worth the gain, it happens. For the US, joining the 1961 Rome Convention may not be in the cards, but until an international broadcast treaty is achieved, sports networks based in Qatar (or any of the other 95 Rome Convention countries) would seem to have a greater degree of protection against theft of their signals abroad than those networks based in the US. That’s the trade-off.

© Hugh Stephens 2022. All Rights Reserved.

Connecting Online Platform Audiences to News Media Content: Is There A “Missing Link”? 

Credit: Pixabay

Last week I talked about developments in Australia, Canada and the US regarding how to find ways to require large online platforms that aggregate news content for their users to share some of their digital advertising revenues with the producers of that content, namely news publishers and broadcasters. Australia has already taken action, successfully. Canada is currently going through the process of enacting legislation, Bill C-18, the Online News Act. The US is still studying the issue.

As Bill C-18 continues to make it way through the Canadian parliamentary process, much attention has been focussed on whether hyperlinks to content should be covered by the law. Google is firmly opposed, claiming that including links will “break” Google Search, (among numerous other criticisms), despite the fact that links were also covered in the Australian legislation that Google eventually came to terms with.

Bill C-18 targets not just “snippets”, those mini-excerpts containing the gist of the story used by the platforms to entice readers, but also hyperlinks. It is a standard feature of copyright law in most if not all countries that posting a link to content does not constitute copyright infringement. If I don’t have the rights to reproduce an article or to publish the photos in an article, I can nonetheless point my readers to the article and the photos by giving them the URL, usually by embedding a link to the original material. I haven’t copied anything. All I have done is tell people where to access the original, which could be seen as a positive in that I am directing more traffic to the original site. That is what the platforms maintain they are doing when it comes to linking to news articles. But Canada nonetheless intends to include links in the Bill’s coverage because to exclude them would not target the “problem”, the problem being that the big platforms use links—among other devices–to aggregate material produced by others (and to profit from it). Bill C-18’s solution is to require the platforms to compensate producers of media content when they make that content available to online audiences. “Making available” through facilitation of access is the key action, not copying or reproducing, although that is also covered in the legislation. 

While copyright law does not generally cover linking (reproducing short excerpts, or “snippets”, is potentially different although there are legitimate debates about how little or how much can be included in an excerpt without infringing copyright), C-18 does not approach this as a copyright issue. Instead, it takes a competition approach–although the minister bringing forth the legislation is not the minister responsible for competition policy, (i.e. the Minister of Innovation, Science and Economic Development), but rather the Heritage Minister–and the agency responsible for implementing the legislation will be the Telecommunications and Broadcasting regulator, the CRTC, not the Competition Bureau. The Online News Bill is intended to redress an imbalance in the market and an imbalance in bargaining power, just as the Australian legislation did. This differs from the European approach which created a new ancillary copyright, a publishers’ press right, which provided news publishers with a new lever to use in bargaining with the platforms. Notably, hyperlinking is exempt from the provisions of this ancillary right which was brought in under Article 15 of the EU’s Copyright Directive.

The Canadian legislation is all about providing “fair compensation for the news content that is made available”. It doesn’t mention hyperlinks specifically, but since links are a vehicle to make content available, it seems clear they are covered.

The relevant provision in the Bill–Section 2(2)—reads (with Part b being the important element insofar as links are concerned);

For the purposes of this Act, news content is made available if

(a) the news content, or any portion of it, is reproduced;


(b) access to the news content, or any portion of it, is facilitated by any means, including an index, aggregation or ranking of news content.

It is well known that publishers themselves often post links to their own content on the platforms, especially Facebook, as the platform is a key tool in attracting an audience. The platforms will say, of course, why should we be required to pay the publishers when they themselves have posted the link? The answer, I believe, comes in the wording of the legislation requiring “fair compensation”. One would expect the calculation of fair compensation to take into account the benefit that news publishers gain by posting links to the platforms. That benefit will need to be offset against the greater benefit that the platforms gain by using news content to attract viewers and advertisers. That trade-off will normally be worked out during bilateral negotiations between the publishers and the platforms, with the government, in the form of the CRTC, stepping in only if there is a failure to reach agreement.

So, yes, linking is covered (but not because of copyright) but the calculation of benefit from posting the links is subject to negotiation between the parties, adjudicated in the end, if necessary, by a three-person arbitral panel. That panel would be selected by the parties from a roster maintained by the CRTC. If the parties cannot agree, the arbitral panel would be appointed by the CRTC itself. “Fair compensation” will likely not be easy to determine, but with the spectre of arbitration in the background I am confident the parties will reach agreement.

Does this mean there is a slippery slope toward a so-called “links tax”, whereby individual users (like me and you) will be constrained from posting links and may be required to compensate the entity to which we are linking. No, that is not the case. The legislation is very clear that it will apply only to a “digital news intermediary” that has a “significant bargaining power imbalance between its operator and news businesses”. That definition will catch Google and Meta, but they will be exempted if they can demonstrate to the regulator that they have already entered into agreements with news businesses on the basis of fair compensation. That is what happened in Australia. Under the threat of designation under the News Media Bargaining Code, the platforms managed to get to “yes” with most news providers, thus avoiding being designated.

Despite all the bluster from Google that including links in the legislation and making them subject to compensation through negotiation will “break the internet” (we’ve heard this one before with regard to site blocking), nothing like that is going to happen. Google is not going to stop providing Search in Canada. When they threatened this in Australia, Microsoft stepped in and offered Bing as a replacement, at the same time going on the record to make it clear they had no problem in complying with Australian law. (see “Google’s Tussle Over Payment for News Content in Australia: Microsoft Scrambles the Cards–With Positive Implications for Canada and Others”).

So lets see how it all works out. There is a lot of hyperbole and misinformation being spread about C-18. (For a detailed deconstruction of Google’s criticisms, click here—yes, a hyperlink!) Maybe the legislation is not perfect in all respects but it’s undergoing careful review, currently at the Committee stage. And then it will go to the Canadian Senate for more review. Google and Meta will eventually swallow hard, bite the bullet, and move on. You can’t blame them for opposing what they see as not being in their corporate interests, and for lobbying hard against the legislation. That is how the system works. But there is no way the Canadian government or Canadian public should be panicked or stampeded into backing down. Inclusion of links within the ambit of the legislation, and making them subject to negotiation, is not a radical proposal. It is a necessary step to redressing a market imbalance, giving some bargaining power to news media content producers to enable journalism to survive, and reining in two digital behemoths that have had it all their way for far too long.

© Hugh Stephens, 2022. All Rights Reserved.

Australia and Canada Tackle the Issue of Requiring Financial Support for Traditional Media from Online Platforms: Will the US Follow?


As first Australia, and now Canada (and the UK) implement legislation to stanch the bleeding of revenues from the traditional media sector to the major online platforms, a development that has resulted in the hollowing out of journalism as the platforms use the aggregation of media content produced by others to help attract and retain viewers, the US continues to evaluate its own approach to this issue. Recently the US Copyright Office concluded a study on whether any changes are needed to US copyright law to protect publishers’ rights, as had recently been done in Europe. The conclusion that no changes are warranted will be disappointing to some content creators, although this now clearly shifts the focus to the area of competition law as a needed remedy to the market imbalance that exists.

Australia’s News Media Bargaining Code has been hailed as the instrument that brought the big internet platforms (read Google and Facebook/Meta) to heel when it comes to “sharing the wealth” with the news outlets they in part draw upon to gain and hold audiences by aggregating their content. Australia has been successful to the extent that the threat of intervention and arbitration by the government has “encouraged” the platforms and media enterprises to reach deals, reportedly on the scale of about AUD200 million annually, allowing print and broadcast outlets, large and small, to hire and retain more journalists to produce the news. At least that is the supposition. No-one knows for sure because the details are clouded in secrecy, with no-one other than the platforms and the news entities themselves knowing exactly how much each received. Nor is there any detail on how this extra funding will be used. It is a fair assumption that it will be invested in journalism but, in fact, there is nothing to stop it from being used to pad the bottom line or increase payouts for executives. It is also not clear why some outlets (such as Australian public service ethnic broadcaster SBS) were excluded from the deals. The Code was never actually invoked; merely the threat of it seems to have been sufficient to ensure bargaining between the platforms and most Australian media. As a result, to date, neither Google nor Meta have been named as targeted entities under the Code. That is the way they like it.

Canada is currently in the process of enacting its own version of the Australian law, although with modifications to make it more transparent. The Canadian draft law has run into the same criticisms that came up during the debate in Australia. For example, will this favour big media over the little guys? Who qualifies as media, i.e. should some small online publication just recently launched qualify? (The answer is yes, if they employ at least two journalists and qualify for the journalism tax credit). Will government decide who qualifies? (see above). If so, is this a suitable role for government given the role of the media as a watchdog on government activities? Will siphoning from the purse of the platforms potentially compromise journalistic coverage of these gigantic businesses? And so on.

Perhaps not surprisingly, the organization that represents many media outlets in Canada, News Media Canada, is fully behind the legislation. The statistics are compelling in terms of the migration of ad revenues to the online platforms and the consequent negative impact on journalism generally, from employment to news coverage to revenues available to be invested in upgraded technology. Whether the output of traditional journalism is in the form of daily or weekly newspapers, online digital editions of the same, news broadcasts on cable, over the air or online, it still requires an investment to produce. And the platforms produce nothing when it comes to content. All they do is ride on the back of content produced by others, searching it, indexing it, highlighting it, and distributing it, in short, aggregating it, attracting the lion’s share of eyeballs, and thus ad revenues. As a result, content producers argue the big platforms should contribute to the production of the material from which they benefit, whether they are compliant with copyright law or not.

And the platforms do contribute in some countries—but on their terms. As the pressure has mounted, both Facebook and Google have been quick to rollout their own programs to subsidize journalism. Critics would call it too little, too late, a band-aid solution when the patient is bleeding to death. But that has not stopped some media enterprises from being very grateful for the limited largesse they receive from the platforms. The organizations pushing for legislation point to the potential hammer of government intervention as one reason for the sudden interest of the platforms in maintaining a viable journalism sector; they also criticize the terms of the “handouts”. It is argued that recipients are more beholden to the platforms as a result of the voluntary agreements than they would be if the agreements were reached as a result of a legislated requirement (or a threatened requirement). In the latter case, more leverage rests with the media outlet, it is argued, as there is potential recourse given the government’s role as the final arbiter.

Both Canada and Australia have approached this question as a competition rather than a copyright issue. France has also used its Competition Authority to require the platforms to reach compensation deals with publishers, although the EU itself has taken a copyright-based approach to dealing with the issue. Do news publishers require additional rights to enable them to bargain with the platforms for compensation for aggregation of their works? The EU identified such a need and brought in a requirement for member states to create an ancillary press publishers’ right, a “neighbouring right” that gives publishers a right of reproduction and a right of making available covering online uses of their press publications by internet platforms for two years from the date of publication of news stories. The question of whether copyright law is deficient and needs updating has also been examined in the US.

The US Copyright Office (USCO) has just concluded its own study, which I referred to in a couple of blog posts last year, (“Paying for Use of News Content? The US Launches Study on Free-Riding by News Aggregators”) and (“How Can News Publishers Best Protect Their Content? The US Copyright Office Explores Options”). While it does not deny the dimensions of the financial problem from the perspective of news outlets, the USCO has now determined that no copyright fix is required. According to the concluding report from its study, there is no imperfection in US copyright law of which the platforms are taking advantage, and which needs to be addressed. As outlined by Copyright Alliance blogger Rachel Kim in a recent post that very effectively summarizes the USCO study;

“The Office first notes that press publishers own the copyright in their textual news content (1) as a collective work or (2) through the work-made-for-hire doctrine, assignments of rights, or exclusive licenses. The report later relies on the existence of these rights to conclude that no U.S. ancillary right is needed since the justification for passage of the EU ancillary right was to grant press publishers similar ownership rights that they didn’t previously enjoy.”

So if the USCO has concluded that addressing the issue through copyright law is not the answer, then what is? It is actually not a great surprise that the Copyright Office did not recommend any changes to US copyright law as even the main protagonists of the need to bring about some form of revenue sharing with the platforms, the US News Media Alliance, did not strongly endorse this remedy in its submission to the USCO. While it would not object to having the EU ancillary rights extended to US news providers in Europe (this will only happen if the US enacts a reciprocal law or if a national treatment commitment is negotiated under a trade agreement between the EU and US), it prefers to have the issue dealt with through competition law, and by passage of legislation that would allow US news media to bargain collectively without violating anti-trust laws.

While rejecting the need for any changes to US copyright law to deal with the effects of online news aggregation on traditional journalism, the USCO notes the competition approach taken by Australia and others but declines to endorse it, simply punting the issue to other agencies to deal with. Given the mandates of respective agencies, and noting how jealously they guard their turf, this is not a surprise. Still, if advocates of pushing the platforms and publishers together to negotiate terms were hoping the USCO study would provide a way forward, they must be disappointed. One area where it clearly does have a role, that of interpreting fair use (although the exact dimensions of fair use are decided by the courts), the Office takes a “two-handed approach”, ie. “on the one hand, and on the other”. In other words, it waffles, reflecting the range of conflicting inputs it received plus the uncertainty over whether a given use is fair or not, a determination that can only be decided on a case-by-case basis by a court.

Kim points out that there is one area where the USCO could have been more helpful to content creators, by addressing the lack of a registration option for dynamic web content. In the US, while registration is not required to assert copyright, it is required if an infringement action is to be brought in court and to recover statutory damages. However, nowadays much content is produced only digitally, and frequently updated, never appearing in a physical version, yet the USCO is stuck back in the last century requiring the deposit of a static copy of an edition as proof of copyright. (The Office currently only accepts deposit copies that show the static form of a website and does not allow copyright owners to deposit copies of the updated versions of that same website for the same registration, which is a problem because almost no website— particularly a press publisher’s website— looks the same as it did five minutes earlier). Rather than offer solutions, the study simply says that the Office hopes to address the issue through its modernization efforts.

Overall, the outcome of the study clearly indicates that the Copyright Office will not be taking the lead in addressing the platform aggregation issue, as much as it is willing to acknowledge the problem. Instead, the onus will be on Congress, where the Journalism Competition and Preservation Act (JCPA), legislation that would allow the news media to combine to negotiate collectively with the platforms, has languished. In terms of the balance of political power in the US, it would seem the platforms (despite increasing scrutiny of their activities by Congress) have more clout than the media. So far they have been able to forestall any meaningful action in the US to deal with the issue of revenue-sharing with content providers. The platforms have been less successful elsewhere, and assuming the Canadian legislation is passed, there will be yet another example of how the internet intermediaries can be induced to come to the table. Will the US eventually follow the example being set in other countries.? It is evident the US Copyright Office is not going to lead the way, but I suspect that in the end, the US will get there.

© Hugh Stephens 2022. All Rights Reserved.

The Online Streaming Act and Canada’s Trade Agreement Commitments: How Donald Trump Gave Canada a “Get Out of Jail Free” Card

Now that US Trade Representative (USTR) Katherine Tai in her recent meeting with Canada’s International Trade Minister Mary Ng has officially taken notice of the Online Streaming Act (Bill C-11), (“Ambassador Tai expressed concern about…pending legislation in the Canadian Parliament that could impact digital streaming services“) this raises the question as to whether aspects of the Bill might violate commitments Canada has made under international trade agreements, such as the updated NAFTA, known as CUSMA. We don’t know what concern was expressed by the US—it may simply have been a shot across the bow to let Canada know that USTR is carefully watching to ensure that any impact on US interests is taken into account as the legislation wends its tortuous way through the Canadian parliamentary process —but there is no question that whatever actions are taken by Canada regarding digital streaming services, they will not constitute a violation of the CUSMA/USMCA. They could, however, have violated Canada’s commitments under the Trans-Pacific Partnership (TPP) but Donald Trump inadvertently came to Canada’s rescue. More on this below.

Any measures taken by Canada to regulate US streaming services under CUSMA, even if discriminatory, would not violate the terms of the Agreement because of CUSMA’s cultural exemption clause. Under this clause, Article 32.6(2), aka Paragraph 2, the Agreement does not apply to any actions taken by Canada that relate to cultural industries (with two minor exceptions). The definition of cultural industries includes;

the production, distribution, sale, or exhibition of film or video recordings; the production, distribution, sale, or exhibition of audio or video music recordings”; and “all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services

There is, however, a sting in the tail of this exemption in the form of Paragraph 4 (Article 32.6 (4)

Notwithstanding any other provision of this Agreement, a Party may take a measure of equivalent commercial effect in response to an action by another Party that would have been inconsistent with this Agreement but for paragraph 2 or 3…” (Paragraph 3 allows the US or Mexico to take similar non-compliant actions to those taken by Canada if Canada initiates measures that violate the terms of the Agreement).

This retaliatory clause allows the US or Mexico to take equivalent economic measures against Canada in any area if Canada takes an action with regard to a cultural industry that would have been inconsistent with the Agreement but for the exemption clause. In other words, if Canada takes discriminatory measures against a US or Mexican entity in the name of protecting Canadian culture, negating a “national treatment” commitment it has made under CUSMA, it would not be obliged to reverse this measure, but it could suffer economic retaliation for having done so.

The “sting in the tail” comes from the original Canada-US Free Trade Agreement (FTA) of 1987, and was the compromise achieved at the time to allow the Canadian government to say that cultural industries were not covered by the FTA while providing a strong disincentive to override commitments in the Agreement in the name of protecting culture because of the punitive retaliation that could be exacted. (It is also worth noting that if Canada did take measures that negated provisions of the CUSMA, calculating the “equivalent commercial effect” would be a difficult and controversial process. Depending on the measure taken, it could be very difficult to measure what commercial impact it might have).

Therefore, while the CUSMA allows Canada to override commitments it made in the Agreement with respect to digital streaming services, the question is, would it do so given the potential cost?

And what are those commitments? They are spelled out clearly in CUSMA, Article 19.4;

“No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products.”

This is a so-called “national treatment” commitment. You must treat a foreign product or entity no less favourably than the domestic equivalent.

While under CUSMA Canada retains the flexibility to undertake discriminatory measures against US streaming services (although subject to the constraint of retaliation), other trade commitments it made in the past would have clearly made it a treaty violation to do so, not only against US services, but also against streaming services from a number of other countries. This was the commitment Canada made in the 2015 Trans-Pacific Partnership (TPP) agreement whereby it would not adopt or maintain measures that imposed discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development.

In the TPP, which Canada joined late in the process thus reducing its negotiating leverage, it was unable to secure the kind of blanket exemption for cultural industries that it had negotiated in the original Canada-US FTA and NAFTA (and replicated in the CUSMA). Therefore, it took “reservations” on a chapter-by-chapter basis, specifying which areas would be exempt from commitments made in that chapter. In the chapter of the TPP dealing with Cross Border Trade in Services, Canada made the following reservation or exception;

“Canada reserves the right to adopt or maintain a measure that affects cultural industries and that has the objective of supporting, directly or indirectly, the creation, development or accessibility of Canadian artistic expression or content…,”

However, the US insisted on an “exception to this exception”. It read;


(a) discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development; and

(b) measures restricting the access to on-line foreign audio-visual content.”

Canada had come late to the TPP negotiations which were well underway by the time it expressed interest in becoming a Party to the Agreement. US trade officials were not keen on adding Canada to the TPP mix but Prime Minister Harper reached out at the political level to President Obama and in 2012 Canada was finally admitted to the process. One of the conditions that Canada accepted was to agree to limitations on its ability to require foreign content providers to contribute to Canadian content development, while also renouncing the ultimate policy instrument of restricting access to foreign online audio-visual content providers. This latter concession was something not likely to be contemplated but was still a last resort measure that the Canadian government had now agreed to take off the table.

But then Donald Trump came to Canada’s rescue. In one of his braggadocio moments shortly after taking office, he withdrew the US from the TPP, effectively ending all prospects of the Agreement coming into force. The policy constraints that Canada had agreed to in the TPP regarding funding of Canadian content were now gone. After the US withdrawal, the other ten TPP members, led by Japan, decided to retain the main elements of the Agreement and to finalize a new text modelled largely on the original TPP, a process which eventually morphed into the renamed Comprehensive and Progressive Trans-Pacific Partnership, the CPTPP. Canada stayed “in the tent” and signed, then ratified the modified agreement. As part of the process of CPTPP finalization, however, Canada sought out and signed side letters with all the ten remaining members, nullifying the exception to the cultural exception. The other countries didn’t particularly care; the restriction had been imposed by the US and the US was no longer party to the Agreement.

The operative wording, taken from the side letter between Canada and Australia but identical to the side letters with all the CPTPP partners reads;

“Canada and Australia agree that, in continuing to give effect to the Agreement, notwithstanding the following language in Annex II – Canada – 16 and 17 – under the Cultural Industries Sector, first paragraph under the subheading “Description,” that states “except: (a) discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development; and (b) measures restricting the access to on-line foreign audio-visual content”, Canada may adopt or maintain discriminatory requirements on service suppliers or investors to make financial contributions for Canadian content development and may adopt or maintain measures that restrict access to on-line foreign audio-visual content.”

As a result, while Canada still has to bear in mind the restrictions placed on its policy options by the CUSMA with regard to requiring foreign (US) entities to financially contribute to the creation of Canadian culture in a way that could be discriminatory (unless it wants to accept the risk of economic retaliation), its firm commitment not to discriminate against foreign online service suppliers has disappeared. Canada has Donald Trump to thank for giving it extra policy flexibility as it grapples with the issue of regulating and requiring financial commitments from online streaming services and platforms. The removal of this commitment has thus provided the Canadian government with a bit more scope to deal with policy issues in the Online Streaming Act.

This still begs the question, however, as to whether Canada needs to discriminate against foreign streaming services in order to achieve the objectives of C-11. And what are those objectives exactly, you may well ask. Opinions are widely divided on the need for the bill, its impact and the means the government will use to achieve the stated goals of the legislation. There are a range of stakeholders, including of course the Canadian public, but also the Canadian broadcasting industry, Canadian content producers, foreign streaming services, various foreign internet platforms such as Youtube, Tik Tok, etc., and the government and its regulatory agencies. The legislation is complicated and tries to do a number of things. (Here is a concise summary from a leading law firm).

One of the outcomes of the bill, if it passes in its current form, will be a review of how Canadian content (Cancon) is defined, an issue that I discussed in a recent blog (Unravelling the Complexities of the Canadian Content Conundrum). Other elements include a requirement for “discoverability” of Cancon on streaming platforms, measures to require streaming services, both Canadian and foreign, to contribute a percentage of revenues to the creation of Cancon and greater authority for the broadcast regulator, the CRTC, to audit the books of broadcast undertakings. Behind all these measures is the fundamental objective of bringing online broadcasters such as streaming services (think Netflix, Disney Plus, Crave, CBC Gem etc) and social media platforms that distribute content under the purview of the Broadcasting Act, and thus making them subject to regulation by the CRTC.

We have noted that if Canada invokes CUSMA Article 32.6 to justify regulation of US streaming services, the US (and Mexico) could retaliate. However, for the retaliation to take place legally, the Canadian measure must be inconsistent with the Agreement but for the cultural exemption. This means that if Canada takes measures affecting cultural industries that apply to all players equally, both Canadian and non-Canadian, it is very likely that they would withstand a challenge under CUSMA/USMCA. Therefore, now that Canada is moving to classify online distribution of content as broadcasting, it needs to be careful to do so in a fully non-discriminatory manner, ensuring that regulatory measures apply equally to Canadian, US/Mexican, and other foreign entities.

It remains to be seen whether the Online Streaming Act (and the CRTC’s application of its expanded mandate flowing from the Act) will meet the non-discrimination standard. At the present time, for example, it is impossible for a foreign producer to produce anything that qualifies as Cancon because of the convoluted Cancon rules related to financing and intellectual property, yet US streaming services may be required to meet Cancon quotas just like their Canadian streaming counterparts. They may also be required to contribute to the production of content to which they themselves could never own the rights. Could this be considered discriminatory? The commitments it has made under USMCA/CUSMA Article 19.4 are clearly a factor the Canadian government needs to bear in mind when fashioning and implementing C-11.

What the final outcome will be remains to be seen. Most of the controversy over the bill to date revolves around whether user-generated content (UGC) is regulated. Critics charge that subjecting UGC to CRTC regulation will amount to censorship. The government maintains that the CRTC will not interfere with users or those posting content to platforms. Rather, the obligation will be on platforms to comply with discoverability and other requirements. With the bill now in the Senate for further review, it will take some time for this to play out.

In the meantime, the Canadian government will need to be careful to ensure that any obligations imposed on US online entities are non-discriminatory and consistent with national treatment or else it may open itself to a CUSMA challenge that could result in economic retaliation. (Quite apart from avoiding retaliation, I would argue that it is also good public policy to tackle the difficult issue of redefining broadcasting for the digital age through a fair and non-discriminatory approach.) CUSMA and possible economic retaliation aside, what Canada won’t have to worry about, thanks to Donald Trump, is being accused of directly violating a trade treaty commitment if it does impose a funding requirement on foreign streamers that turns out to be discriminatory. It’s like a “Get Out of Jail Free” card. Another ongoing Trump legacy.

© Hugh Stephens, 2022. All Rights Reserved.

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