A Day of Reckoning is Coming for Google, Facebook and other major Online Platforms that access News Content without Payment: Will Canada be Next?

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Newspapers and news magazines are struggling but online news aggregators, like Google and Facebook among others, are thriving. The ad dollars that prop up the internet behemoths have drifted away from the producers of the news to those who facilitate access to it without themselves having to invest in the creation of the content that attracts consumers. Readers are drawn to news headlines and stay on the internet services longer in order to browse news content through the portal. This in turn attracts advertisers and helps explain the enormous valuations of Google and Facebook in contrast to the paltry returns, if not incipient bankruptcy, of many newspapers. In the face of the challenges facing news sources on life support, and in support of the principle declared boldly on the masthead of the Washington Post that “Democracy Dies in Darkness”, governments have scrambled for ways to support traditional news-gathering, analysis and reporting. In Canada, a variety of measures have been employed ranging from tax credits to direct funding of local news reporting. But this is chump change when it comes to gaining access to what news organizations consider to be a fair share of the advertising revenues that their content helps generate.

We are talking big bucks. Naturally the internet platforms are not going to roll over and easily give up a share of their revenues. In fact in Australia, where the government is currently proposing a revenue sharing agreement between platforms and news creators, Google is on the war-path. At the end of July, the Australian Government revealed draft legislation that would allow news publishers to negotiate with platforms like Google and Facebook for the latter’s use of news content. The “News Media Bargaining Code” will be administered by the Australian Competition and Consumer Commission (ACCC), using competition law to redress the imbalance of bargaining power between the platforms and news providers. There will be compulsory arbitration after three months if the two parties can’t come to a negotiated agreement, with ACMA (Australian Communications and Media Authority), the broadcasting and media regulator, having the authority to assign arbitrators if there is disagreement. The Code is backed up with substantial fines that could reach ten percent of digital revenues generated in Australia. In addition, there are some other elements of the Code besides revenue sharing that Google in particular objects to, such as required advance notice of changes to algorithms that could affect news item rankings, and a requirement to share data about users accessing news content.

Google has launched a campaign to get Australian consumers to pressure its government to back off, threatening that Australians could lose free search and privacy protections. It has urged Youtubers to bombard the Australian government with complaints about the proposed Code, arguing that the new legislation would benefit “big news businesses”–although the news organizations who will benefit are just a fraction of the size and valuation of Google itself–and even though Youtube is not covered by the proposed legislation.  The ACCC and the Australian government have issued rebuttals  to Google’s allegations, criticizing it for exaggerating and mounting what they term a “scare campaign”, and show no signs of backing down. Google could of course close its operations in Australia, but that is seen as an empty threat. Australia is an important market for Google (it is reported to generate $4 billion annually in revenues). The real issue for Google is one of precedent with regard to payment for news content. It is concerned that if it loses the fight in Australia, this will weaken its position elsewhere.

Google’s basic position is that it provides a service that allows consumers to locate and access content, which in turn benefits the content creator. Creators of the content argue that Google is free-riding on and monetizing their content by collecting and using consumer data for ad targeting (although Google does not sell ads on Google News itself). While Google has announced that it will selectively pay for some content, this is the exception rather than the rule and is on Google’s terms. Google has enormous market power, as it demonstrated in Spain and Germany a few years ago when authorities in those countries attempted to impose revenue sharing arrangements between platforms and news publishers. Google simply shut down Google News in Spain and in Germany kicked off its news platform any news providers who did not agree to voluntarily give Google access to content without payment. This “punishment” made it more difficult for consumers to access news content, impacting views on the publisher’s sites, and soon brought them to heel. (The proposed Australian legislation prevents Google from doing this).

The EU responded with legislation creating a new publisher’s right within the Copyright Directive. (Four years ago I wrote about the need for such a right, and am pleased to see it now enacted).  At the present time, EU authorities are preparing for a second run at Google’s practices, with France in the forefront. (“Holding Google to Account: France Takes a Stand”). Back in April, the French competition authorities gave Google three months to negotiate in good faith with publishers and come up with an agreement that results in payment to them. That period has elapsed and it seems that negotiations are ongoing, with Google dragging its feet by reportedly offering only small payments that publishers have so far rejected. Enabling the negotiations is the EU’s new “neighbouring right” for publishers that expands their ability to control the reproduction and communication of their work to the public.

Facebook has also been active in opposing the Australian initiative. It is fighting the ACCC’s proposals by threatening to pick up its ball and go home. It claims that news content represents “only a very small fraction of the content” in a users’ news feed and has threatened that if the proposals are adopted, it will remove and block news content on its platform. While a user’s news feed consists of a variety of content, including news but also photos, videos, likes, etc., news content plays a role in keeping users engaged and staying on the platform longer (and thus becoming more attractive to advertisers).

Meanwhile, in the wings, Canada is watching and waiting. Responding to Google and Facebook’s tactics “Down Under”, Heritage Minister Steven Guilbault stated that, “The Canadian government stands with our Australian partners and denounces any form of threats.”  Guilbault has suggested that legislation could be introduced this autumn requiring companies like Google and Facebook to compensate news organizations when they use their content.  This came after a public plea to the Canadian Government by Canada’s major newspaper publishers.

One approach that Guilbault could adopt is to establish new rights for publishers along the lines of the EU’s expanded neighbouring rights regime. The Parliamentary Committee that examined the Copyright Act as part of a periodically mandated review of the legislation last year looked at what it termed a “journalists remuneration right”. Noting that, “The production and dissemination of news content is essential to democratic societies”, the Committee stated that it “supports the notion that OSPs (Online Service Providers) who profit from the dissemination of copyrighted content they do not own should fairly remunerate its rights-holders”. However, at the time the Committee was not prepared to make a recommendation for action, but instead proposed further study to take into account developments in other countries dealing with the same issue. Its specific recommendation was that;

“the House of Commons Standing Committee on Canadian Heritage consider conducting a study to investigate the remuneration of journalists, the revenues of news publishers, the licences granted to online service providers and copyright infringement on their platforms, the availability and use of online services, and competition and innovation in online markets, building on their previous work on Canada’s media landscape.”

Despite this cautious recommendation, it appears that Minister Guilbault is preparing to move soon to deal with the issue of fair remuneration for use of news content without prolonged further study. There are various ways to go about this. The government may choose to deal with this as a copyright rather than a competition issue, for example, or it may pursue other means. One factor to bear in mind is the possibility of running afoul of commitments Canada made in the new NAFTA (USMCA) agreement, an objection raised by University of Ottawa law professor Michael Geist, who has consistently opposed requiring platforms to share ad revenues with content providers. Geist has argued that a system that required US companies to pay while only Canadian companies benefited would “likely” violate the USMCA, although this is difficult to predict since the Agreement requires only that digital products of one party be granted treatment no less favourable than like digital products of the other party. However, any measure adopted that is of general application would be non-discriminatory, even if it happened to have the greatest impact on US companies like Google and Facebook.

It is plain that perceptions have changed over the last decade about the value and importance of protecting and remunerating professional content in a world awash in disinformation and illegally distributed works. The fact that legislators and regulators are more engaged than ever in addressing abuses and ensuring a healthy online environment is to be welcomed.

The struggle going on in Australia and France between Google, Facebook and news publishers is unquestionably germane to what happens in Canada, and the stakes are high. Even in the US Google is facing its critics. Draft legislation, the Journalism Competition and Preservation Act, has been introduced into Congress, both the House and Senate, with bipartisan support. If adopted, it would provide news publishers with a four-year exemption from anti-trust restrictions so that they can combine to negotiate with major platforms. It has been supported by the Authors Guild and the News Media Alliance, among others. The legislation would apply to Google and Facebook and potentially to Apple and Microsoft, given their revenue thresholds. At the moment, however, this legislation is stalled while the US Presidential election is underway.

Given widespread dissatisfaction with Google’s current dominant role in many countries, it seems likely that the internet giant will have to make some compromises and start negotiating compensation for its access to valuable news content. However, the amount of revenue it is prepared to offer is likely to be considerably less than the publishers would like to see, although certainly more than Google would like to pay.  If agreement cannot be reached, governments will have to step in and broker a deal. As has been seen in Australia, Google will pull no punches and will use every means it has to fight forced sharing of ad revenues. In the case of Canada, it will undoubtedly remind the Canadian Government of its significant investments in R&D facilities in Waterloo, Ontario with planned expansion in Toronto and Montreal. Of course Google is not investing in Canada to be nice to Canadians. Waterloo is the hub of Canada’s “Silicon Valley” and an important source of cost-effective talent. Plus, Canada’s multicultural society and more relaxed immigration policy make it attractive to offshore software engineers and other experts, something that Google has not hesitated to benefit from. Facebook could also make threats to remove news content from its platform in Canada, similar to what it is threatening to do in Australia, although it surely recognizes that access to news is a key part of its offering and attraction to users. The fact that it has moved to license some content from trustworthy news providers is proof of the value proposition that reliable news content presents.

Will Canada grasp the nettle and introduce legislation to give news publishers greater control over their content, thus helping them to negotiate licensing fees with the big online platforms? Will the pushback from Google and Facebook in Australia give Canada pause? Heritage Minister Guilbault has said that Canada will not be bullied, comparing the tech giants to “polluters”, a reference to his earlier incarnation as an environmental activist. We will have to wait to see what transpires this fall. First, however, the Trudeau government has to survive a confidence motion when Parliament resumes at the end of September (recall that it is a minority government and requires the support of at least one of the three main opposition parties to survive such a vote), and then it has to decide that copyright issues require legislative attention at a time when response to COVID dominates the Parliamentary agenda.

There is a legislative opportunity, however. Despite COVID, Canada needs to introduce amendments to the Copyright Act to bring it into conformity with commitments made in the USMCA to extend the term of copyright protection in Canada by an additional twenty years. Canada has 30 months from the date of implementation of the Agreement, July 1, 2020, to do so. The statutory need to review legislation would give the government an opportunity to address some other issues at the same time, including fair remuneration for online news content.

I am sure the Canadian Government is watching with great interest what happens in Australia with regard to Google and Facebook and their attempts to roll back the proposed Australian legislation. Meanwhile this autumn’s legislative agenda is being considered and I am betting that the odds are pretty good that publishers of news content—and possibly final publishers of other types of content as well—will find themselves equipped with legal provisions designed to help them negotiate a fairer share of the online revenues that their content generates. If it doesn’t happen in the fall session, then look for legislation to be introduced next spring. Either way, the day of reckoning is coming for the big platforms. And it’s about time.

© Hugh Stephens 2020. All Rights Reserved

This post has been edited and updated to reflect recent remarks by Minister Guilbault on the situation regarding Google and Facebook in Australia and on possible action on this issue in Canada.

Undoing the Damage of the Federal Court of Appeal’s Decision on “Mandatory” Tariffs

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In April of this year, the Federal Court of Appeal (FCA) handed down its decision on the appeal by York University of an earlier Federal Court decision regarding a dispute between York and Access Copyright (the authors and publishing collective rights management organization) over York’s unlicensed use of material from Access Copyright’s repertoire. The initial decision had found not only that York’s “Fair Dealing Guidelines” were unfair, and did not justify York’s unlicensed use of these materials, but that York was required to pay the interim tariff established by the Copyright Board of Canada for use of the works. The FCA upheld the initial Court’s conclusion that York’s Guidelines were unfair but overturned the copyright world in Canada by determining that tariffs approved by the Copyright Board were not mandatory after all. Users could decide to opt out, leaving rights-holders only one recourse; to sue unlicensed users for copyright infringement. Unfortunately, most collective societies–like Access Copyright–are not rights-holders themselves but only represent rights-holders for the purposes of collecting royalties. 

For the non-cognoscenti, it might be useful to review what an “approved tariff” is, and what role the Copyright Board of Canada plays in establishing one.  According to its website, the Copyright Board of Canada is;

an economic regulatory body empowered to establish, either mandatorily or at the request of an interested party, the royalties to be paid for the use of copyrighted works, when the administration of such copyright is entrusted to a collective-administration society.”

Collective societies like Access Copyright, SOCAN, etc. were established to facilitate the collection of royalties owed to creators (musicians, songwriters, performers, authors etc.) for use of their works given the unfeasibility of thousands of creators chasing tens of thousands of users for small payments. The intent was to use economies of scale to keep costs down for rights-holders but also to make it simple for users to legally access content. To further simplify this system, and to avoid costly and unnecessary litigation, where parties could not mutually agree on a royalty rate or licence fee, tariffs were established to set a value on the use of copyrighted materials, such as music and published works. Parties could get together to propose a tariff in lieu of a licence agreement if they agreed on the royalty rate, but where it was impossible to agree on a value, one was set through adjudication by a quasi-judicial body like the Copyright Board. This “mandatory” tariff was then applied to all users who accessed a repertoire covered by the tariff. That has been the system for several decades, ever since the late 1980s when the proliferation of photocopying led to legislation that encouraged establishment of new collective societies through amendments to the Copyright Act. It was at that time (1988) that Access Copyright was formed. 

There were further amendments in 1997 to address the challenge of digital copying. Collective societies, (licensing bodies), were given new powers including the right to file a proposed tariff with the Copyright Board setting out the terms and conditions under which reproduction of the collective’s members’ works would be permitted. After the Board had certified (approved) a tariff, collective societies were allowed to collect the specified royalty and, if not paid, recover it in court. This system worked smoothly for a number of years in the publishing sector with Access Copyright, and its clients (primarily Provincial and Territorial Ministries of Education, school boards in Ontario and post-secondary institutions) voluntarily agreeing on a value for copying. However, over time the consensus as to what constituted a fair royalty rate for copying broke down and the Copyright Board was required to determine a tariff that would have to be paid. This process was cumbersome and protracted, with the result that an interim tariff often had to be established setting out royalties to be paid pending confirmation of the final tariff. It was at this stage that York University decided to opt-out of the interim tariff (back in 2011). The case went to the Federal Court, which denied York’s right to opt-out on the basis that the interim tariff, like a final tariff, is mandatory if an unauthorized use of a work in Access Copyright’s repertoire is made. This is the decision that the FCA has now reversed. 

The FCA’s decision went further than simply declaring an interim tariff to be optional. It declared that all tariffs that had been considered “mandatory” until now were in fact optional for users—and always had been despite the fact that a number of enforcement cases in the past, where collective societies had sued non-licencees, had been decided by requiring the “mandatory” tariff be paid.  As I documented in a blog posting back in June, (“When is a “Mandatory Copyright Tariff” mandatory only if you opt-in?”) this decision was arrived at on the basis of a 1930’s era judicial precedent and the Court’s reading of the legislative record in the 1980s and 1990s. The FCA decided that the original basis for establishment of the mandatory tariff back in 1936 was still the operative legal principle. During the Great Depression, Performing Rights Organizations (PRO) were accused of withholding repertoire from users such as radio stations, sheet music publishers and record manufacturers in order to increase returns, thus behaving in an anti-competitive manner. In the 1930s, the mandatory nature of the tariff was such that if a user opted to pay the established royalty, the PRO was required (mandated) to license the content. At that time, the obligation (mandatory nature of the licence) was on the rights organization or collective society to make the content available, not on the user to pay for using the content without a licence. 

Today the situation is exactly the opposite. Collective societies are eager to license content in their repertoire; the main issue is setting a value on it. That’s where the Copyright Board’s tariff determination and approval process comes into play. Today the issue is not that users cannot get access to content, it is that they are using it without obtaining a licence. When they do so, if a tariff has been approved for that content by the Copyright Board, the understanding has always been–until the FCA’s recent decision–that users of such content are required to pay the tariff (interim or final) whether or not they have sought a licence.

In reaching its decision, the FCA sifted through the entrails of the original 1930s court case and subsequent amendments to the Copyright Act over the years. It concluded that despite substantial redrafting of legislation in both 1988 and 1997, the original elements and language of the tariff regime, and thus the intent of a mandatory tariff, had never been changed. It is a surprising conclusion and we will not know whether the FCA is right until the Supreme Court of Canada (SCC) reviews the decision if it decides to grant leave to hear the appeal. (Both York and Access Copyright have appealed). However, there is no guarantee that the SCC will grant leave (known as certiorari in the US) to hear the case. The SCC has full discretion as to whether or not to hear cases on appeal, and it is not required to provide reasons for declining to grant leave. Less than one in six cases is successful in applying for review. Even if the SCC does agree to hear the case, it will likely take several years to reach a conclusion. In the meantime, a huge pall of uncertainty has been cast over the whole structure of copyright remuneration in Canada. 

But there is another solution. That is to have Parliament clarify the situation by amending the wording of the Copyright Act so that the intent of Parliament, as expressed through amendments in the late 1980s and 1990s, is restored. After all, while the Courts interpret the law, it is Parliament that establishes and enacts it. If the law is drafted in such a way that its wording fails to fully express the will of legislators, the Court can only follow the legislation. If the legislation is faulty, fix the legislation. That is no doubt what the Association of Canadian Publishers meant when they described the situation after the FCA decision as a “broken legal framework” and called for “urgent action on the part of the federal government…to implement reforms that will correct market damage and provide a policy framework that supports future investment in Canadian writing and publishing”.

Parliament will have just such an occasion this fall when it resumes after the Throne Speech in late September, following the prorogation in August. Legislation is required to amend the Copyright Act to bring it into compliance with Canada’s commitments under the new NAFTA (aka USMCA, or CUSMA in Canada). Canada made a commitment to extend the term of copyright protection by twenty years and has 30 months from the date of implementation of the Agreement, July 1, 2020, to bring its legislation into compliance. (There are a couple of ways it can do that, as I discussed here). That process will require a period of public consultation which is why it is important that the draft legislation be introduced at an early date. This affords an opportunity to address other urgent copyright issues at the same time, using the same committee process. 

The first of these is to fix the anomalies in the Act that have led to the FCA decision that undermines the mandatory tariff regime, affecting not just Access Copyright but most collective rights management organizations in the country. The amendments would be minor, but they would rectify the damage done by the FCA’s decision and restore some order and predictability to the licensing of content in Canada through collective societies.

Another is a proposal pushed by major Canadian newspaper publishers to require that news aggregators, like Google or Facebook, share ad revenues with news creators when they distribute their content through excerpts or snippets embedded in links. This is currently a live issue in France and Australia. Google is fighting back, threatening that Australians could lose access to free search and encouraging Youtubers to bombard the Australian government with complaints. These are classic Google scare and misinformation tactics that Google can be expected to also employ in Canada should the government decide to proceed with such a measure, as has been rumoured. Likewise Facebook is playing hardball with the Australian government, threatening to remove news content from its platform if the measures are enacted into law. I plan to write on this subject in my next blog. 

So far there has been no indication as to what issues the government will embrace as it considers its legislative agenda with respect to copyright, or whether it will bring forth legislation this fall or in the spring, but the opportunity to undo the damage wrought by the FCA’s decision on “mandatory” tariffs should not be missed. If there was ever a time to restore predictability and order to the marketplace, and to right an obvious wrong, this is it. 

© Hugh Stephens 2020. All Rights Reserved. 

Copyright on the Rocks

Photo by author

I was enjoying the hike along the rugged southern coast of Vancouver Island. Across the rippling waters of the Strait of Juan de Fuca, the snow-capped Olympic Mountains in Washington State glistened in the morning sun. Below me the sea crashed into the rocks and a seal poked its head through the fields of bull kelp. Bare-skinned arbutus trees twisted their smooth orange limbs toward the sky. As I rounded a rocky bluff, a familiar sign suddenly leapt out at me. Emblazoned on the rock ahead of me, as clear as day, was the universally known © sign. How did it get there? By whose hand? 

Closer inspection showed that it was created by a naturally occurring lichen formation (see photo above). But it was uncanny. It was as if nature had imprinted the scene with her own assertion of copyright. 

As I continued trudging along the rocky path, I couldn’t help but muse about that copyright sign. Was Mother Nature letting me know that she had copyrighted and laid claim to this magical scene? After all, copyright is all about protecting the rights of creators, and this led me to reflect on the greatest creator of all, whom we can call God, or Mother Nature, or the Great Creator or whatever you choose. (To each, one’s own definition). Was the Great Creator in the Sky asserting her or his right to this creation? The scene in front of me certainly qualified as original and creative (a beautiful morning like this surely did “not just happen”). But, as I explained in my blog last week, for a creation to be protected by copyright, there is that tricky problem of “fixation”. Also, we know that copyright does not protect ideas, only expressions of ideas. Was this scene an idea, or was it an expression of one–and exactly how do you separate one from another? (And was it “fixed” other than in my mind?) 

The Berkman Klein Center for Internet & Society at Harvard has an interesting discussion of the concept of originality and the exclusion of ideas from copyright protection. It points out that according to US copyright law;

 “In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated or embodied in such work.”

It also notes that the Berne Convention states that protection “shall not apply to news of the day or to miscellaneous facts having the character of mere items of press information”, and that both the TRIPS Agreement within the World Trade Organization and the World Intellectual Property Organization (WIPO) Copyright Treaty state that, while expressions are copyrightable, “ideas, procedures, methods of operation or mathematical concepts as such” are not.

So what are some of the elements that clearly illustrate the difference between an idea and the expression of an idea, the latter being subject to copyright? Many examples can be given; for example there may be only one Harry Potter but J.K. Rowling does not have a lock on the market for stories about boy wizards, so anyone is free to write on that subject. Some topics are generic and mundane, and cannot be copyrighted but yet these generic elements could form the core of a copyrightable work. As I discussed in an earlier blog, a recipe (a “mere listing of ingredients”, according to the US Copyright Office) cannot be protected by copyright. However, while a recipe to bake bread cannot be copyrighted, Beard on Bread is a copyrighted work because of the creative expression regarding the many aspects of baking that James Beard put into that book. 

Yann Martel’s Booker prize winning novel (and later award-winning film) Life of Pi was based on the premise of a boy sharing a boat with a tiger on an oceanic (trans-Pacific) voyage. Martel was accused by Brazilian author Moacyr Scliar of stealing this idea from his novel Max and the Cats, Scliar’s novel written twenty years previously in which a Brazilian boy and a panther cross the Atlantic together in a boat. Scliar accused Martel of plagiarism, and worse, and his publisher contemplated legal action. Martel freely admitted he had been inspired to adopt the “boy and animal in boat concept” by reading a review of Scliar’s work, but said he hadn’t read the novel itself. It didn’t go to court. Scliar dropped the issue after a conversation with Martel, but it is doubtful that Scliar or his publisher would have had much of a legal leg to stand on. People sharing boats with animals is an idea. His novel was his expression of that idea, but so was Martel’s. 

Sometimes it is difficult to separate an idea from its expression. When these become conflated this is referred to as “merging” or the “merger doctrine”. In effect, under this doctrine the expression of the idea has merged with the idea itself. In such cases copyright does not apply because copyrighting the expression would result in constraining the free use of the idea. A good example is the so-called “jewelled bee case”. In this case a jewelled pin in the shape of a bee was the subject of litigation. Would a similar jewel-encrusted pin in the shape of a bee created by another jeweller be an infringement of the copyright of the original jeweller? This was the question the court had to address in Herbert Rosenthal Jewelry Corp v Kalpakian. The court decided on the basis of the merger doctrine that the idea of a jewelled bee could not be protected by copyright, although the defendants could not copy every aspect of the original piece of jewellery (which they had not done, arguing that they had derived the design by studying actual bees).  Because the idea of a bee and its jewelled expression could not be separated, making a jewelled bee was not an infringement of copyright. 

A similar concept to the merger doctrine applies in the area of writing, called as a term of art “scènes à faire”. According to Duhaime’s Law Dictionary, this encompasses “Elements of an original work that are so trite or common that they are not captured by copyright.” There have been several well-known cases in the US where the courts have ruled that common elements of a plot cannot be copyrighted. For example, two police dramas set in the Bronx both involving Irish cops, prostitutes, and drinking would not necessarily involve copyright infringement on the basis of these elements because you likely couldn’t tell a police story in that setting without involving such characters and storylines. The US case where the scènes à faire principle was first enunciated (Cain v Universal Pictures) involved accusations of copyright infringement between the author of a book and a script written for a film. The judge ruled that elements in both such as a couple taking refuge in a church–and engaging in certain activities within the church such as praying and playing the piano–were, in effect, generic and were ideas rather than expressions of ideas. A recent case based on the same principles involved a suit against Disney by two screenwriters who accused the studio of lifting copyright protected elements from their screenplay to produce “Pirates of the Caribbean”. The court dismissed the case pointing out that the similarities between the leading protagonists of both works were common characteristics of pirates; 

“cockiness, bravery, and drunkenness are generic, non-distinct characteristics which are not protectable.”

“Scènes à faire” is not just some abstract copyright theory only relevant in the distant past. In the current dispute between Oracle and Google, in which Google is accused of copying Oracle’s “declaring code” (application programming interface, or API packages) to construct its Android platform, Google is arguing that Oracle’s code had become indistinguishable from standard industry practice and therefore it was entitled to use it without licence, similar to a “scènes à faire” argument. This is a bit hard to swallow when one considers that Google refused a licence from Oracle because it didn’t want to accept the terms of the licence, but then went ahead and copied Oracle’s copyrighted Java code anyway. As Keith Kupferschmid, CEO of the Copyright Alliance stated in an article at the time that the Alliance filed an amicus brief in support of Oracle;

“Google had other options, including creating new declaring code. And if Google wanted to benefit from Oracle’s innovative way to program device functions, it should have licensed the right to do so.”

I am sure that all of these legal arguments are well known to copyright lawyers and are probably a staple of any first year copyright law class, although I wouldn’t know, not having gone to law school! (At the time, I thought history was more interesting). So for you non-legal practitioners amongst my readers, I hope that this quick overview of ideas versus expressions of ideas may provide something new to think about. 

But back to the inspiration for this blog.  As I hiked along the rugged trail, still thinking about the © mark that seemed to have dropped from the sky, I concluded that no-one should be able to copyright this gorgeous setting. The creation that is Nature belongs to us all.  And by the way, let’s not screw it up for future generations. 

© Hugh Stephens, 2020. All Rights Reserved.

My Fixation with Fixation

credit: William Warby: Creative Commons Attribution 2.0 generic license

Sometimes I write about really serious copyright topics, like the economic impact of piracy or proposed changes in copyright legislation, and sometimes the blog posts are more whimsical (monkey selfie), light-hearted (rubber ducky), or practical (recipes), but they all deal with real copyright issues. I will let you decide which category this blog falls into, the serious or the whimsical. 

Earlier this year, just pre-COVID, my wife and I travelled north on Vancouver Island to Parksville, BC, a beach resort where, when the tide goes out, the sand dunes and tidal pools extend for at least a kilometer out to sea. It’s a great place to beach-comb and to build sandcastles. In fact, Parksville hosts an annual Sand Sculpting Competition as part of its Beach Festival held every July and August. Last year over 100,000 people visited and viewed the sculptures. (This year it has been cancelled owing to the pandemic). And sculptures they are. Gone are the days of your grand-dad’s sandcastle. These are sculptures that demonstrate true artistry, with subjects ranging from Icarus flying too close to the sun to sea monsters to fairy princesses. They are truly works of art, as you can see by clicking here. And a work of art ought to be protected by copyright, right?

To be eligible for copyright in the United States and in most countries a work needs three key elements (1) fixation (2) originality and (3) expression (of an idea). Originality requires that the work be created by the author and must possess “at least some minimal degree of creativity” (according to the US Copyright Office-USCO). Expression of an idea means taking a generic idea (such as a vase of flowers) and expressing that idea in a specific, creative way (such as a painting of the flowers). 

Fixation is a bit more complicated. Again, quoting the US Copyright Office with regard to US law, fixation requires that a work 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.” In Canada, there is no specific requirement for fixation, although it is implicit. 

As to how it is fixed, in the US the author’s expression may be fixed “in a physical object in written, printed, photographic, sculptural, punched, magnetic, or any other stable form.” In other words, the exact form of fixation is not prescribed, but some activities are clearly not fixed. A song that you compose in your head and perform for a live audience is not subject to copyright protection, but if you write down the music or record the performance of the song, that constitutes fixation. Therefore as long as your song meets the other basic requirements, it can be copyright protected. Ironically, if someone makes an unauthorized recording of your live performance, this can constitute fixation allowing you to claim copyright even though the recording itself is an infringement. Using the same criteria, a story that you tell someone does not qualify for copyright protection unless it is written down or recorded, but if it is “fixed” in some way the story (work) can qualify for copyright protection if it meets the originality test.  

What about a work that exists in a physical form but that form is not permanent? Like a sand sculpture. Does that form constitute fixation? Could a sand sculpting artist copyright their work for its original design and shape? 

The USCO provides the following guidance that a work may not be protected by copyright; “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. A sand sculpture, particularly one below the high tide mark, is certainly transitory. One that is built higher up the beach, in a protected area (like the ones at Parksville) is certainly less transitory but it wouldn’t survive a good rainstorm. (It doesn’t rain in Parksville in the summer, but if it did…..). What if the sculptor added a few secret ingredients, like a wee bit of Portland cement, to the moist sand? Now that could be permanent. But would it be a “sand” sculpture? It’s a copyright conundrum. 

The website New Media Rights, in a non-legal FAQ blog posting for creators discussing “What Can and Cannot be Copyrighted”, gives a sandcastle or an ice sculpture as examples of objects that cannot be protected by copyright because they are not fixed;

“’Fixed’ work is defined as a work that is “sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” For example, a sandcastle or ice sculpture that you worked all day on would probably not be considered fixed so it’s not copyrightable. However, as soon as you take a photograph of your sandcastle or ice sculpture, thus fixing it in reproducible medium other than your own memory, the image and design of the sandcastle can receive legal protection.”

There are two important points here. First they hedge their advice on whether these objects are subject to protection by copyright, by saying they “probably” would not be considered for protection. They are smart to hedge because very little is really definitive when it comes to copyright. Then they make the point that to obtain legal protection, all that needs to be done is take a photograph of the image. This will “fix” it since photographs qualify for copyright protection. However, the photograph is a separate work, not the original work so what if someone else took the photograph? They would then own the copyright in that photo, so it is important that if you are the sculptor, you take the photograph. 

OK, taking a photograph of the work is an easy out, but let’s chase this concept all the way down the rabbit hole. Suppose that no photographs were taken, but yet the author still wants to protect their creation from unauthorized copies. Could a sandcastle or an ice sculpture be sufficiently permanent to be fixed? 

I remember well the ice sculpture festival “Winterlude” that takes place in the depths of every winter in Ottawa, where I lived for a few years. Quebec City also has a well-known annual ice sculpture festival. The creations are truly remarkable as you can see here. Of course one day in late spring it will warm up in Ottawa (the world’s second coldest capital city, by the way, exceeded in frigidity only by Ulaan Bator, Mongolia’s capital), and the sculptures will melt. But what if the sculpture was carved at the North Pole, or in Antarctica, in a location that will always be subzero? (Until global warming allows palm trees to grow there). Surely then it would be fixed? What about an ice sculpture created for a hotel banquet table setting which, after it has been displayed, is then put back in the hotel’s freezer? It would be fixed as long as the freezer works, but perhaps not permanent. But “permanence” is not required for fixation. Law professor Marc Randazza pondered this question a few years ago in this blog posting; he concluded that an ice sculpture was fixed. 

The issue of fixation has been tested in the courts. The well-known law firm of Bird&Bird reports on a case in the UK where the High Court found copyright infringement of designs debossed in foundation powder pallettes. Once put on a consumer’s nose or cheeks, the design is gone in a puff of powder. But in Britain, under the Copyright, Designs and Patents Act of the UK;

Copyright in literary, dramatic or musical works does not subsist until the work is recorded in writing or otherwise (section 3(2), CDPA). Artistic works are not explicitly required to be fixed in a tangible medium.” 

According to the UK court, as reported by TwoBirds website; 

“The designs could be compared to copyright-protected sand sculptures that would be washed away by the tide. If the sculpture was not so protected, the artist would be unable to claim the copyright in a photograph of it. Similarly, a bespoke wedding cake that later was eaten could still constitute a copyright work, as could an ice sculpture that had melted. The court emphasised the unique position of copyright in an artistic work, in that it does not explicitly require permanence.”   

So in the UK at least, it doesn’t matter if the work has disappeared as long as it was in a tangible form at one point. 

On the cake design issue, a US law firm looked at a real situation where the cake for Barack Obama’s inauguration was copied by the Trump Administration, which ordered an exact replica but from a different bakery. The question was whether the original cake designer could sue for copyright infringement. This article pointed out that for legal action to be taken on a copyright case in the US, the copyright has to be registered, which it wasn’t, and questioned whether the baking of a layer cake and decorating it with designs using the Great Seal of the United States etc. was sufficiently original. We will never know. But the “transitory nature” of the cake did not seem to be an issue. 

I can go on. Chalk art is an interesting topic. It is probably transitory, like a sandcastle, but could last for a considerable period of time if it was in a protected setting. I found an article online regarding chalk art and copyright but it was a warning to chalk artists not to infringe the copyright of others by using unlicensed images as subjects of their art, rather than arguing that the chalk designs were protectable works of art in their own right. 

Then there is the “plating” (arrangement) of food on a plate by a chef. The California Law Review (May 2020) contains a well-researched article arguing that an artistic plating should qualify for copyright protection because it meets the standard of originality and expression despite the banality of the underlying ingredients and the fact that the food arrangement will disappear when eaten. On fixation, one argument advanced is that because the food plating arrangement is repetitively performed, night after night, the fact that it is consumed nightly does not mean that is not sufficiently stable to be “perceived, reproduced, or otherwise communicated for a period of more than transitory duration”, in the same way that an argument can be made for copyrighting of “conceptual art” (installations). It’s a valiant argument but to date has not been successful in court. In the only similar case cited (Kim Seng Co. v. J & A Imports, Inc), in which copyright was claimed in a specific bowl of Vietnamese food as a three-dimensional structure, the claim failed because the dish was ruled to be neither an original work of authorship nor fixed in a tangible medium.

How about fireworks displays? According to the IP law firm of Suiter Swanz, Can you Copyright a Firework Show?, the answer is “no” because it is not fixed in a tangible medium of expression. On the issue of photographing a fireworks display this blog notes that;

“the fact that uncopyrightable subject matter has been fixed through reproduction does not transform the underlying subject matter into copyrightable material.  For example, a photograph or video of a fireworks display may be a copyrightable fixation of the photographic image(s) of the fireworks display, but the fireworks themselves do not constitute copyrightable subject matter… Since a firework display is not recorded on a fixed medium it does not receive copyright protection and it can be photographed but not always recorded/filmed. The photograph taken of the display can be protected as an original photographic/artistic work, with the copyright typically owned by the photographer.”

As you can see, this is complex stuff! There are variations between different legal systems in terms of fixation, and in most cases, the issue is rhetorical rather than practical. The courts are not exactly inundated with cases questioning whether ice sculptures or sand sculptures are fixed and thus subject to copyright, but legal questions involving fixation do occur. These include questions such as whether ephemeral copies–temporary reproductions lasting just a few micro-seconds that are required for technological processes, like broadcasting–are subject to copyright. In Canada, the courts have held that they are reproductions under the Copyright Act; in the US, the situation is just the opposite, when it comes to broadcasting. Even though there is an ephemeral use exception for broadcasting in US law, there is no general ephemeral use exception in the US. In the EU, there is. As I said, it’s complicated. 

So what explains my fixation with fixation? In my defence, all I can say is that I find it fascinating to explore the nooks and crannies of copyright law and its various interpretations. I know it’s all a bit arcane, but I hope you enjoyed the journey. 

© Hugh Stephens 2020. All Rights Reserved. 

Are Libraries the Enemy of Authors and Publishers?

As regular readers of this blog will know, I am unabashedly and unapologetically pro-©, pro-creator, pro-author, pro-artist, pro-publisher and a strong supporter of our cultural and entertainment industries. I am also pro-public library. This raises the question of what to do about publisher Kenneth Whyte’s long and controversial opinion piece that appeared in the Globe and Mail on July 25, “Overdue: Throwing the Book at Libraries”.  (Byline: “As important as public libraries are to civic culture, the good they do is made possible by being a net harm to literature, Kenneth Whyte writes. Libraries are overdue for renewal”). 

Should I refute his criticisms of this venerated public institution? Others, including not surprisingly librarians themselves, have already done that. I could try to defend Whyte’s thesis, that public lending libraries undercut booksellers to the detriment of authors and publishers by giving readers for free what they should be paying for. But then his description of libraries as “pimping free entertainment to people who can afford it” becomes a little difficult to defend, even allowing that he may be deliberately using strong language for effect. I could simply ignore it, as it appears many others in the copyright world have done (and as a couple of friends suggested that I also do). After all, attacking libraries is not a helpful tactic in dealing with a public that is not always convinced of the benefits of copyright to society, and won’t win authors and publishers many friends. Techdirt, a notoriously anti-copyright publication has already jumped on Whyte’s article accusing him of being a “copyright maximalist” who hates libraries. 

Now since you are reading this blog, it is obvious that I did not take the friendly advice to avoid wading into the debate on Whyte’s opinion piece. Why? Because the issue he has raised, which is far from being cut and dried, intrigues me. There are many shades of grey on this one. Whyte’s piece is not the first attack on the role of the public library in the book trade, only the most recent. In Britain a few years ago, when British libraries were facing a funding crisis, popular children’s writer Terry Deary claimed that libraries had outlived their usefulness, being relics of the Victorian age when there was widespread illiteracy. He is reported to have said that: “People have to make the choice to buy books. People will happily buy a cinema ticket to see Roald Dahl’s Matilda, and expect to get the book for free. It doesn’t make sense”. 

There is little doubt that libraries do hustle for business, trying to broaden their appeal to consumers to justify their need for public funding, and this can make it sometimes appear that they offer (unfair?) subsidized competition to booksellers. A good example is this clip from “Curbside Larry” for the Harris County Public Library in Houston, TX. Yes, it’s hilarious and no, it’s not a spoof (I think). It certainly gets its point across that “we got it, and it’s absolutely free”. So librarians are good marketers of what they offer. Better that than stock a product no-one is aware of. They can also be very protective of their own turf to the point of even objecting to free pop-up libraries in parks and people’s front gardens. 

One measure that has been taken in Britain, Canada, Australia and New Zealand–but not the US–to help offset the diversion of revenues away from authors and publishers because of library lending is the Public Lending Right (PLR) scheme. Under the PLR authors (and in some countries publishers) get annual payments based on the number of time their titles are loaned out by libraries. These payments come from general government revenues and are a form of cultural subsidy. Deary complained that the British PLR paid him only 1/6 of what he’d get from a book sale. At the time he was getting 6.2p each time his book went out on loan up to an annual maximum of £6,600. He complained that “if I sold the book I’d get 30p per book. I get six grand, and I should be getting £180,000”. (I’m not sure about his math; just quoting). As for the Canadian PLR regime, Whyte describes it as throwing “a few beans at guileless authors in compensation for the use of their works in libraries”, and urges that it be vastly expanded and adopted in the US. 

The Canadian PLR was instituted in 1986 and was the result of concerns at the time by authors that they were being “ripped off” by libraries. Of course not every book loaned out is a foregone sale, a point repeatedly made by librarians. Maybe a sixth of a loaned loaf is better than 100% of a loaf that wasn’t sold and brought in no revenue? Just how generous the PLR actually is clearly depends on your perspective. University of Ottawa law professor and blogger Michael Geist points out that the PLR is the gift that keeps on giving for authors, earning them some revenue for up to 25 years (as long as their books are in a library’s inventory and go out on loan), albeit with a diminishing percentage as the years pass. In Canada, seven “marker” libraries are used to determine the inventory. That said, according to Geist the average payout per author last year was only $822 with a maximum per title of just $467.88 and the maximum payment to an individual author of $4,500. No one in the literary field is getting rich from the Public Lending Right. The total funding envelope is just over $14 million annually so for the PLR to provide any meaningful income to authors, it would have to be increased many-fold. That is unlikely to happen, despite Whyte’s calls for “more”. 

It is not just libraries that stick in the craw of some authors. Second-hand book shops are also a target. Authors get no royalties from sales of second-hand books. In the US this is known as the “first sale doctrine”, (called “exhaustion” in Canada and some other countries) and this principle allows the purchaser of a book to do just about anything with it once it has been paid for;  keep it, give it away, lend it, sell it or burn it; anything except copying and redistributing it. The authors gets their royalty from the initial sale. Stores selling used books are common, and often they “recycle” books by taking back books that have been “gently read” against a credit that can be used to purchase more used books from them. I frequent one myself because it has a great selection of out-of-print titles, but if it’s a relatively recent title that’s also available online at Amazon or Indigo, or at a bookshop selling new titles, should you feel guilty if you pick up your copy second-hand? Some writers think so; others are more relaxed about it arguing that the most important thing is that a book gets read. 

As an aside, the same principle of exhaustion (i.e. once you buy a work, you can do with it what you wish without further reference to the author, except for not violating the author’s copyright) applies to works of art in Canada and the US. As I noted in an earlier blog posting, there is a push afoot in both countries to get a legislated “Artists Resale Right” whereby an artist would get a small portion of the sale proceeds when one of their works is resold. (A resale right exists in the EU, UK and Australia). One notorious case cited in Canada is that of the Inuit artist Kenojuaq Ashevak, who sold her famous print “Enchanted Owl” in 1960 for just $24. An original print of the work recently changed hands for over $200,000 but her estate gets not a sou. All the benefit from the increased value of her work as she became renowned in the art community accrued to galleries and previous purchasers, and this pattern is often repeated with artists whose work becomes sought after later in their careers. A resale right wouldn’t work for writers though because (a) it would be difficult if not impossible to track the resales and (b) books usually—but of course not always—go down in value as time passes.

But back to libraries. So far I have been discussing how libraries and authors relate mostly with regard to physical books. Lending of digital works opens up many new questions. In the case of an e-book, a consumer typically does not purchase the work but rather licences the right to read the work on a device. The copy on that device could be loaned to someone, but the device would have to be loaned as well. However when loaning a digital book, you can’t have your cake and eat it too. You can’t lend out the work or give it to someone else while still retaining a copy. Libraries have got into the e-book business in a big way, often licensing multiple copies of a work (under terms where they pay considerably more per copy than an individual user would), and then lending out these e-copies to borrowers. However, it is important to note that if a library licenses ten copies of, say, The Handmaid’s Tale, only ten copies can be in circulation at any one time. One digital loan has to terminate before another digital copy can go out on loan to a new borrower. 

Despite this, many publishers are not happy and are concerned that the ease and ubiquity of library digital copies is cannibalizing e-book sales. The argument is that borrowing a physical book causes “friction” that can be alleviated by the consumer when opting for a purchase. Friction consists of inconveniences such as having to go to the library to pick up the book, often having to request it be put on hold, returning the book on time and paying a fine if not returned by the due date, etc. A digital book abolishes friction, as it can be downloaded at home from a library website and the download sunsets when the loan period is up. In an attempt to deal with this issue, in November of last year MacMillan announced that in order to encourage purchases it would withhold new digital titles from libraries for eight weeks after digital release to consumers, with the exception of one copy per library. This is similar in concept to the “windowing” strategy used by major film studios whereby the DVD or streaming release of a film is held back for a set number of weeks while the film plays in cinemas. That strategy is becoming less prevalent in the movie industry, in part because of concern that withholding the home entertainment versions encourages piracy as determined consumers try to skirt the rules to get access to pre-release streaming versions of popular films. Would delayed release also encourage e-book piracy, which is already a growing problem? It’s hard to say, and we may not find out, since MacMillan backed down after loud protests from the library community. However, COVID-19 was undoubtedly a factor and the policy could be revived in future in a post-COVID world. 

COVID was also the catalyst for another experiment involving digital lending and libraries, this time the so-called “National Emergency Library” launched by the Internet Archive in the US. Through its “Open Library” project, the Archive (and other libraries) had been pushing a project whereby it scanned books in its inventory and made them available for loan digitally, bypassing the normal licencing requirements for e-books. The issue of scanning a book to provide a digital version is controversial, with detractors saying this is a form of copying while supporters claim it is a fair use by simply changing formats. Until COVID hit the Archive was careful to follow normal lending rules by allowing only as many copies into circulation as it physically had in inventory. This is known as “controlled digital lending” and requires that if a scanned digital copy is loaned out, the physical copy stays in the stacks. In other words, there is a wait list and a limit on the number of copies in circulation (no more than the number of physical copies from which the scans were taken). 

With the arrival of COVID, the Archive announced that it was suspending the normal practice of maintaining a wait list and would allow unlimited digital copies to go into circulation. While a few initially lauded the Archive for taking measures to assist consumers self-isolating because of the pandemic, it was quickly pointed out that this unilateral move hurt authors and publishers—who were not consulted– and was a case of giving away someone else’s property. Publishers had already loosened controls during COVID and brought suit against the Internet Archive accusing it of giving away what it did not own. The National Emergency Library has now been closed but the suit over controlled digital lending continues. 

Kenneth Whyte, however, was not complaining about the Internet Archive’s agenda to digitally scan and circulate books for free; he was complaining about taxpayer-funded competition from public libraries who lend out both hard copy and digital books in apparent competition with publishers and booksellers. One of Whyte’s suggested solutions is to impose a charge to use libraries, like a monthly Netflix subscription, with an exemption for low-income borrowers. In other words, institute a means test for library borrowing. Somehow I don’t think that is going to catch on. In fact to judge by the majority of the reaction to his op-ed, his views are not mainstream, even amongst publishers. Kate Edwards, Executive Director of the Association of Canadian Publishers wrote to the Globe and Mail to put on the record that;

Canadian publishers recognize that libraries are an important part of the reading ecosystem and a primary channel for book discovery….Library sales are also an important part of the publishing business model…Readers are best served when libraries purchase and promote a diversity of material, including books by local authors published by independent Canadian presses. Increased investment in and attention to these efforts are critical to building a strong reading and literary culture. Publishers and librarians are well poised to pursue these shared goals in partnership, to the benefit of readers, writers and local communities.” 

That sound you just heard was the rug being pulled out from under Whyte by his publishing colleagues. That said, many writers and independent publishers are in a perilous financial position, particularly with the additional challenges of COVID. Publishers, booksellers and writers face challenges from large online book marketers and digital publishers like Amazon, second-hand book stores, consumers who pirate hard copy and e-books, universities and public education systems that refuse to acquire copying licences arguing that their actions constitute fair dealing and, yes, libraries. However that is the ecosystem we live in with all its complexities, and to single out libraries as the main problem seems disingenuous. It’s not cut and dried as to who is right and who is wrong, if that is even the correct way to assess the situation. The situation is complex, combining several hundreds of years of publishing and bookselling trade practices, a hundred and fifty years of public libraries, and twenty years of the digital revolution. 

Changing the public lending model and the role of public libraries is an unlikely and frankly politically unacceptable solution to the problem. However, ensuring that authors get paid for the use of their work by educational institutions, and taking stricter measures against digital piracy and unauthorized copying are actions that could be taken. In the meantime, despite the financial challenges that authors and publishers face, I can confidently predict that books will continue to be written, published, and sold in digital and hard copy formats, both new and used, while being simultaneously circulated by public libraries. There are many paths to literacy. 

© Hugh Stephens 2020. All Rights Reserved. 

USCO’s Study Offers Hope for Reform of the “Notice and Takedown” Law, But Ducks the Issue on Site Blocking

Source: http://www.shutterstock.com

The US Copyright Office (USCO) recently released its 200 page study on Section 512 of the 1998 Digital Millennium Copyright Act (DMCA), the legislation passed to implement US obligations under the WIPO (World Intellectual Property Organization) Copyright Treaty. This section of the DMCA is otherwise known and better described as the Online Copyright Infringement Liability Limitation Act, the essence of which are the notice and takedown provisions of the legislation. The USCO study is a result of five years’ work reviewing whether Section 512 is working effectively in terms of balancing the needs of internet platforms with those of creators. In a nutshell, Section 512 represents the “grand bargain” that was struck back in the late 1990s at the dawn of the digital age to facilitate the development of online platforms while protecting creators and rights-holders. 

In its most basic terms, the essence of the bargain was that internet platforms (called OSPs, or Online Service Providers in the legislation) would be provided immunity from prosecution for storing, caching, transmitting or linking to copyright infringing materials as long as they took reasonable measures to remove infringing materials when notified of infringements by rights-holders. This is the so-called “safe harbour”. There are many more elements to this, including the need for repeat infringer policies, the question of what constitutes “knowledge” of infringement, the process by which content is taken down and put back, and so on, but the basic arrangement was a compromise between copyright industries who wanted internet platforms to bear more responsibility for carrying or facilitating access to infringing content and internet companies who wanted to avoid the uncertainties and pitfalls of ongoing litigation for infringing material on their platforms. 

More than two decades later, those nascent internet companies (many of which did not even exist in 1998) have become corporate behemoths. Generally speaking Silicon Valley has been very satisfied with the way in which Section 512 has worked; creators, rights-holders and the content industries not so much. As the USCO Study puts it: 

“In the twenty-plus years since section 512 went into effect, the question has often been asked whether the balance that Congress sought has been achieved, particularly in the light of the enormous changes that the internet has undergone.”

“Roughly speaking, many OSPs spoke of section 512 as being a success, enabling them to grow exponentially and serve the public without facing debilitating lawsuits. Rightsholders reported a markedly different perspective, noting grave concerns with the ability of individual creators to meaningfully use the section 512 system to address copyright infringement and the “whack-a-mole” problem of infringing content reappearing after being taken down. Based upon its own analysis of the present effectiveness of section 512, the Office has concluded that Congress’ original intended balance has been tilted askew.” (emphasis added)

Given this conclusion, the USCO Study makes a number of recommendations as to how Congress could restore that balance. The debate on these recommendations is going to be drawn out, intense and fierce, and there is not the space here to get into the specifics. Many others will be writing on these questions over the coming months. Instead, I want to focus on just one issue that was raised in the study; that of blocking access by consumers in the US to offshore pirate streaming and download sites as a means to combat content piracy. The short-hand term for such measures is “site blocking”.

The USCO examines site blocking in the section of the Study (pp. 58-63) that looks at how other countries have tried to strike the balance between platforms and rights-holders when it comes to online infringement. It notes that “recent studies have shown that website blocking has operated as an effective tool in addressing digital piracy, despite the familiar misperceptions about its efficacy and alleged potential for abuse” and that “currently, more than 40 countries have either enacted or are under an obligation to enact some form of no-fault injunctive relief to block access to piracy sites”. This is all thoroughly documented. The USCO Study goes ono to examine the very effective systems in place in the UK, Australia, India, and the EU, regimes that I have commented on elsewhere (here, here and here). So far, so good.  But then we move to the section of the Study dealing with “Specific Findings and Recommendations”. 

Site blocking falls under the rubric of “Adoption of International Approaches”. Actually, given the non-recommendation that results, it should more accurately read the “non-adoption” of approaches used successfully by other countries. This section starts out all right;

Some rightsholders also advocated for a more extensive system of no-fault injunctions to address websites primarily dedicated to piracy…many of these websites are located abroad, beyond U.S. jurisdiction, which insulates them from any likelihood of being forced to pay millions of dollars in statutory damages.  Rightsholders supporting the proposal of expanded injunctive relief report that such systems have been largely effective in addressing the most egregious cases of infringement.”

But then, after a discussion of the technical means to give effect to site blocking, the Study turns to the notorious anti-copyright lobby group EFF (Electronic Frontier Foundation) for its received wisdom; 

EFF echoes a number of website blocking opponents when it asserts that website blocking systems ‘introduce dangerous mechanisms for Internet censorship, interfere with users’ fundamental rights, and, often, prove ineffective in solving the problem of online copyright infringement’.”

All of these assertions are effectively rebutted by footnoted studies cited by USCO but in its attempt at a “on the one hand, and on the other” approach, the Copyright Office’s “two-handed” strategy inevitably ends up going nowhere. 

After citing numerous research papers documenting the effectiveness of site blocking, the Study’s only recommendation is for “additional, dedicated study”. In other words, sit firmly on the fence. This is a disappointing outcome to what could have been an important opportunity to add a major tool to the US toolbox to combat online piracy. As I noted in a blog to mark World IP Day “Time to Forge a Global Solution to a Global Problem (Blocking of Pirate Streaming Sites)”, the US is fast becoming an outlier and the major holdout on instituting some form of site blocking. And it’s not as if the US doesn’t have a problem. The US is the leading source of visits to pirate streaming sites globally. It thus has the dubious distinction of leading Russia, China and Brazil as the home of the largest number of pirate streaming site users, with 1.2 billion pirate site visits in December 2019 alone.

Strangely, Section 512 already contains a provision–Section 512(j)–that could be used to obtain injunctions to effect site blocking. That was the original intention, as noted in a 2007 study published in the Vanderbilt Law Review, cited as a reference by the USCO; 

“The Foreign Site Provision may be used to stop the U.S. infringement that occurs through the use of foreign sites and services. Interpreted correctly, the provision may be used to block infringing sites as well as those that offer the programs used to infringe. After obtaining a judgment against just one direct infringer, a copyright holder may have a service provider enjoined from providing access to the infringing site. While blocking an infringing site will not stop copyright infringement through that site worldwide, it will stop infringement through that site in the United States, where 2005 album sales were at their lowest level since 1996. The Foreign Site Provision will not solve all the problems of copyright holders. Aside from handling continued worldwide infringement, copyright holders using the Foreign Site Provision will undoubtedly face unfounded claims of censorship and damage to innovation from their actions. Nonetheless, the provision was written to protect copyrighted works and should be used accordinglyThe Foreign Site Provision is the next step in this ongoing fight against digital piracy and copyright holders should take it.”

Despite this call for use of Section 512 (j) and language in the legislation providing for site blocking injunctions, this provision has seldom if ever been used. The USCO Study examines this anomaly, and notes that rights-holders assert that they have not used the provision because “courts have interpreted the injunctive relief too narrowly” and it has become conflated with domestic takedown requests. Smaller rights-holders complain about the cost of pursuing injunctions. The platforms have argued that 512(j) is not needed or used because relief is available through the notice and takedown provision (although the USCO study noted that this is unbalanced and is not working as intended) and that expanding it could jeopardize their safe harbour protections. Whatever the reason, 512 (j) has effectively been a dead letter from the inception of the DMCA. 

So where does the USCO come out on this issue? While accepting that there may be some untapped potential in Section 512(j) to combat online infringement, it concludes that it’s unlikely that changes to this provision would play a significant role in restoring the balance between rights-holders and platforms. Yet at the same time USCO admits that courts have been overly narrow in their consideration of whether injunctive relief should be available to rights-holders under 512(j). Therefore it recommends that Congress monitor what is happening and consider (eventually), whether clearer language is needed. 

“For this reason, Congress may wish to monitor court decisions interpreting this provision and consider whether a reformulation is warranted.”

This again is a disappointment and effectively ducks the issue despite a clear conclusion that this element of the legislation is not working as originally intended by Congress. 

One cannot help but wonder why the USCO wandered into the site blocking minefield if it was not prepared to come up with any concrete recommendations. Perhaps this is explained by the fact that the Study’s terms of reference required it to respond to comments received. Some rights-holder organizations filed submissions arguing for a site blocking mechanism in the US through injunctive relief, while others, like the EFF, submitted opposing views. USCO tries to capture both viewpoints without providing any direction. 

Hearings have already begun on the Study, despite some platforms claiming that the COVID epidemic requires that examination of copyright issues be put off for another day. But it has already taken five years to produce the USCO’s 512 Study. Let’s hope it doesn’t take as long to come to grips with its recommendations. It would have been helpful to see concrete recommendations, of which there are many in the Study that are useful, also extend to enablement of site blocking in the US. That didn’t happen, so reform will have to come in some other way. In the meantime, an opportunity has been missed and the US remains a major outlier when it comes to using site blocking orders—either through the courts or via an administrative regime—to block access to offshore pirate streaming content. 

I am confident that the US will eventually get there. The question is “when”. From a rights-holder perspective, the sooner this happens, the better. 

© Hugh Stephens 2020. All Rights Reserved. 

New Zealand’s Ongoing Copyright Review Process: MBIE’s Revised Objectives Paper Withdrawn

Earlier this month it was reported that the department of the New Zealand government responsible for leading the current review of the Copyright Act (1994), the Ministry of Business, Innovation and Employment (MBIE) had issued a welcome statement withdrawing the revised objectives paper for the review it had released back in November of last year. MBIE’s statement reads, in part;

“We are writing to let you know about the latest stage we have reached in the review. In November 2019 we published a paper outlining revised objectives for copyright law. This paper was developed in response to the submissions on the Issues Paper we had previously received in April 2019. The main change we had proposed to the revised objectives was to ensure they more expressly recognise the rights and interests of people involved in creating copyright works.

Some stakeholders have raised concerns about this paper and their inability to provide formal feedback on it. It is important to MBIE for all stakeholders to have trust and confidence in the review. For this reason, we are withdrawing the revised objectives paper. The next stage in the review will be to formally consult on potential revisions to the objectives. (Emphasis added). This will ensure all stakeholders have the opportunity to fully contribute to this part of the process in an open and transparent way.

We expect to carry out this further consultation as early as possible in the new Parliamentary term. Following this, we will consult on an Options Paper.”

The New Zealand Society of Authors, who reported this turnaround, noted;

“We were delighted to secure the support of Minister Faafoi to achieve this and look forward to re-engaging with MBIE to develop objectives for the Review that will deliver legislation that will underpin the growth of New Zealand’s creative economy.”

This is a welcome rethink of the copyright review process and a needed pullback of a flawed rewrite of the objectives of that review undertaken in mid-stream and without public consultation. This skewing of the objectives threatened to undermine the integrity of the entire copyright review process. MBIE, and the Minister, are to be congratulated for listening to the voices of concerned stakeholders by withdrawing the current paper so that any potential revisions to the objectives can benefit from stakeholder input.

Although the copyright review process has already been underway for a couple of years, the stakes are such that it is important to take the time needed to get this right. Copyright law revisions do not occur often and are usually drawn out owing both to the extent of the economic stakes involved and the range of differing views on the issues. In particular there is the usual tension between copyright creators and copyright-creating industries (publishing, music, film production, etc) that seek to protect the revenues generated through content creation by limiting exceptions and penalizing piracy, and industries that use content for a variety of purposes (educational institutions, internet platforms, social media and content aggregators) who prefer to do so by paying as little as possible (in fact preferably nothing) for the content they use by expanding copyright exceptions and in some cases being able to turn a blind eye to content theft with few if any consequences.  

The process formally started in November of 2018 when MBIE issued an Issues Paper that laid out the background, the issues at play, the terms of reference and objectives for the review, seeking public comment and input. Following the public input and consultation process which closed in April 2019, the next step would normally be to evaluate that input and formulate recommendations or options, to be presented in an Options Paper that would be subject to Parliamentary and further public review. However in November of 2019, part way through the process of evaluating input, MBIE issued another paper, a  30 page revised Objectives Paper, MBIE’s approach to Policy Development, that changed the objectives of the review. Although wording changes were few, they appeared to reflect a mindset that was worrisome for rights-holders suggesting the changed objectives could lead to potential negative outcomes. There was a subtle shift in the emphasis of the objectives away from incentivizing creativity to instead focus on supply of creative works. There were also suggestions that copyright law should play a role in determining the economic balance between individual creators and the industries that promote creative content, instead of the current practice of freely negotiated contracts. Back in May, I prepared a detailed commentary on the revised objections for NZ Content Café (here). My conclusion was the following;

“What is the sum total of all this tinkering with the objectives of the Copyright review? Why go through such a lengthy process to issue a new 30 page paper (full of dubious premises) prior to producing the Options? Is it to lay the foundation for a series of recommendations that will end up gutting the traditional copyright system and greatly widen exceptions? The tone of the paper and the shifts in emphasis suggests that this may be the case. One hopes not but perhaps MBIE’s attempt at transparency has revealed more about the mindset of the drafters of the document than was intended.

In its conclusion, the MBIE paper states that “Objectives will be used later in the review to assess options for addressing problems with the status quo”. That is why it is very important to get the objectives right before the Options Paper is published. If the foundation for building policy recommendations is not level, then the structure that emerges will likewise be tilted and unstable. Further consultation on the objectives before the Options Paper is produced would seem to be highly advisable.” (emphasis added).

I am sure that others also made the same point and I’m delighted to see that this is now what is going to happen.

There is still a long road to follow before MBIE, New Zealand stakeholders and legislators will be ready to develop and act on recommendations for updating the NZ Copyright Act.  A review is needed in order to take into full account the many changes to copyright practice and use that have occurred in the digital age while still respecting the fundamental premise of copyright. As this review proceeds, it is reassuring to know that the review process will now be able to benefit from full stakeholder input and consultation throughout, including on the all-important issue of determining the objectives of the exercise. Withdrawing MBIE’s Revised Objectives paper was the right step to take in helping make this happen.

© Hugh Stephens 2020. All Rights Reserved.

How the WTO Helped to End Sports Broadcast Piracy in the Middle East

Source: Wikimedia commons

These days the World Trade Organization (WTO) is facing many challenges. To say that it has fallen out of favour with the Trump Administration would be an understatement. The US is currently actively working to undermine the dispute settlement process of the WTO by blocking new appointments to the organization’s Appellate Body, on the grounds that it does not like the fact that a number of WTO decisions have gone against the United States for its use of unilateral trade remedy actions against other WTO members (despite the fact that over the years the US has won far more WTO dispute cases than it has lost). In addition, since the launch of the Do’ha Round of multilateral trade negotiations in 2001, the members of the WTO have been unable to resolve significant differences between developed and developing countries over whether and how to bring new areas of trade and subsidies under WTO disciplines. As a result, the Do’ha Round has stalled, undermining the WTO’s credibility. To add to the WTO’s current woes, recently its Director-General, Roberto Azevedo, announced his early and unexpected retirement, further throwing the Organization into crisis.

Despite all these trials and tribulations, however, the WTO remains an essential component of the international trading system and continues to play a critical role in adjudicating international trade disputes. With the effective temporary demise of the WTO Appellate Body as a result of US actions blocking appointments of new members, a number of WTO members have agreed to bypass the statutory appeals process by establishing a contingency appeal arrangement whereby these members (the EU, Australia; Brazil; Canada; China; Chile; Colombia; Costa Rica; Guatemala; Hong Kong, China; Mexico; New Zealand; Norway; Singapore; Switzerland; and Uruguay) can continue to exercise their right to a review of WTO panel decisions by an appeal body when the disputes are among themselves. Moreover, the WTO continues to establish panels of experts on a case-by-case basis to adjudicate trade disputes between WTO members, and these cases are proceeding. It’s also worth noting that not all WTO panel decisions are appealed (over the years, the rate of appeal of panel decisions has varied between 40 and 100%).

So what does this history of the WTO dispute settlement process have to do with copyright issues? If you are a sports rights-holder (such as those who own the rights to the broadcast of major European soccer leagues) who has licensed content to the Qatar-based sports broadcaster BeIN Sports, and whose content has been openly pirated by the Saudi-based broadcaster BeoutQ, the answer is “everything”.

As I documented in a blog posting (Content Piracy as Hybrid Warfare) last year, the Saudi regime has been pirating BeIN’s signal as a form of non-traditional warfare against the Qatari government, which also happens to own the Al-Jazeera news network, a perennial thorn in the side of the Saudis. Despite pressure from the US through the US Trade Representative’s annual report on global intellectual property issues, which specifically called out the Saudis on this issue, a thin veil of deniability and obfuscation was maintained by Riyadh. Now, thanks in large part to the role of the WTO, this has been stripped away and the situation is changing.

BeIn Sports, unable even to hire legal counsel in Saudi Arabia to pursue its claims of piracy owing to Saudi obstruction, appealed to the Qatari government for help and Qatar filed a case against Saudi Arabia in the WTO, with a number of other WTO members (Australia, Bahrain, Brazil, Canada, China, EU, Japan, Norway, Russia, Singapore, Ukraine, the UAE and the US) joining and submitting briefs as interested third parties. Only WTO members, not companies, can bring WTO cases.  On June 16, a WTO panel found that Qatar had clearly established that the pirated BeoutQ network was operated by individuals within the criminal jurisdiction of Saudi Arabia and that the Kingdom had not only failed to take any action against them but had prevented a Qatari company (i.e. BeIN Sports) from exercising its rights to civil enforcement of its IP rights. The WTO carefully skirted the issue of exactly who was responsible for BeoutQ’s piracy but it is clear that the service is well connected to the Saudi political elite. While the panel partially upheld the Saudi argument of national security as a reason for preventing BeIN Sports from accessing legal counsel, a ruling trumpeted by Saudi media sources, the panel ruling confirmed there was a clear violation of WTO rules by Saudi Arabia.  

The panel rejected the Saudi argument that it had no jurisdiction owing to Saudi Arabia’s invocation of the WTO national security exception based on the fact that it had severed diplomatic relations with Qatar. All of the third country interventions related to the Saudi national security argument, with almost all opposing this for one reason or another. Among the third party intervenors, only Bahrain and the UAE, who are allied with the Saudis against Qatar, and the United States, supported the Saudi’s national security argument. In the case of the US, it takes the position that national security is whatever a country defines it to be (self-judging), regardless of circumstances. The panel rejected this position and concluded by recommending that “Saudi Arabia bring its measures into conformity with its obligations under the TRIPS Agreement.” (TRIPS deals with intellectual property disputes under the WTO framework).

Saudi Arabia must now decide whether it will appeal the WTO panel finding, and given the current suspension of the Appellate Body’s proceedings, this could drag out for a considerable period of time. Ultimately the Saudis could refuse to adopt the panel’s decision, in which case Qatar could seek compensation through authorized trade retaliation. However, the situation is unlikely to come to this and while it will be loath to admit culpability, there are signs that Saudi Arabia is finally recognizing the need to deal with the sports broadcast piracy issue.

Certainly not coincidentally, on June 22 the Saudi Authority for Intellectual Property (SAIP) announced that it would be blocking 231 websites that violate the intellectual property law including a number that distribute Illicit Streaming Devices (ISDs), a prime means of facilitating sports content piracy. BeoutQ’s direct satellite broadcast service was shut down late last year, but continued to be available through ISDs via the internet. In addition, the President of the Saudi Arabia Football Federation has written to UEFA, European Football’s governing body, the English Premier League (EPL), international football federation FIFA and the International Olympic Committee acknowledging that Saudi Arabia has a responsibility to fight broadcast piracy and respect intellectual property rights. 

This sudden conversion is linked not just to the unfavourable WTO decision but also to the desire of the Saudis through their sovereign wealth fund, whose Chairman is Crown Prince Mohammed bin Salman, to purchase a major EPL team, Newcastle United. The EPL’s broadcast deal with BeIN Sports was threatened by BeoutQ’s piracy, and EPL, UEFA and others had tried unsuccessfully to bring suit in Saudi courts. For its part, BeIN Sports had lobbied the EPL to block the Saudi purchase of the English team. The Newcastle ownership bid, which must be approved by the EPL, is certainly not unrelated to the apparent change of course, but there is no doubt that pressure from the WTO decision (first unofficially released in May) is an important factor.

While shutting down BeoutQ will not end the standoff and the ongoing sniping between the Saudi and Qatari regimes, the broader Saudi interest in establishing itself as a major investor in premier sports leagues, combined with the pressure of an unfavourable WTO panel finding (and bilateral pressure from the US and EU) will hopefully lead to an end to widespread, state-tolerated if not state-sponsored content piracy in the Middle East. The WTO demonstrated its value by playing an important part in bringing trade, moral and legal pressure on the Saudi authorities to change their behaviour. This is precisely why a robust and effective rules-based WTO dispute settlement process is still very much needed to help the world navigate and resolve international trade issues.

© Hugh Stephens 2020. All Rights Reserved.

Does the “New NAFTA” (USMCA) Prevent Canada–and the other USMCA Partners–from holding Internet Platforms Accountable for Disseminating Harmful Content?

Source: www. shutterstock.com (modified)

The USMCA finally came into effect a few days ago, on July 1, 2020, committing the US, Canada and Mexico to the treaty provisions the three countries agreed to in the 34 chapters, four Annexes and 16 side letters that comprise the text of the Agreement. Among its many provisions is Article 19.17 (in the Digital Trade chapter) which reads, in part:

 “.…no Party shall adopt or maintain measures that treat a supplier or user of an interactive computer service as an information content provider in determining liability for harms related to information stored, processed, transmitted, distributed, or made available by the service, except to the extent the supplier or user has, in whole or in part, created, or developed the information.” (19.17.2)

In plain English this means that none of the three governments party to the Agreement will hold an internet platform (such as Google, Amazon, Facebook, YouTube, Twitter and hosts of others providing similar “interactive” services) liable for content that appears on their platform. Responsibility rests with the source of the content. Unlike a newspaper, the internet platforms are not to be considered “publishers” of the content they carry and distribute. This is sometimes referred to as “the shield”.

The text of the Agreement goes on to say that;

“No Party shall impose liability on a supplier or user of an interactive computer service on account of…any action voluntarily taken in good faith by the supplier or user to restrict access to or availability of material that is accessible or available through its supply or use of the interactive computer services and that the supplier or user considers to be harmful or objectionable” (19.17.3 a)

Translation: The platform is allowed to take down content that it considers to be “harmful or objectionable” without fear of liability. This is sometimes called “the sword”.

Does this mean that Canada and the other two USMCA partners are now no longer able to enact legislation to hold internet platforms accountable in civil law for illegal, discriminatory, racist, violent or other objectionable and harmful content that they distribute? From a literal reading of the USMCA commitment the three countries made, the short answer is “possibly yes” but from a practical real-world perspective, the answer is a clear “no”.

The inclusion of Article 19.17 was intended by US negotiators to entrench the (in)famous and controversial Section 230 of the 1996 Communications Decency Act into the USMCA, urged on by Silicon Valley and groups like the cyber-libertarian Electronic Frontier Foundation (EFF) that proclaimed that it wanted to “bake in” Section 230 into NAFTA in order to prevent Congress from making changes to it. Section 230 has become very controversial in the US for a couple of reasons. First, the “shield” aspect of the legislation has been misused by internet platforms to allow them to ignore egregious and obvious illegal content disseminated on their services, ranging from sex trafficking to revenge porn to marketing of banned weapons and more, because they are protected from civil liability for such content. US courts have allowed them invoke Section 230’s liability shield as a reason to refuse to remove such content, even when they have been well aware of its nature and even when they have monetized it by selling ads targeted at consumers attracted to the abusive material. Second, the “sword” aspect of the legislation, although little used, has been attacked by conservative commentators (and Donald Trump) when platforms, such as Twitter, have moderated or taken down objectionable content, in the most recent case false information posted by Trump about voter fraud.  Giving platforms protection when removing content that was considered “obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable”, was the original reason for passage of the legislation more than twenty years ago.

At the time the text of the USMCA was first made public, supporters of Section 230 in Canada and the US went into raptures. University of Ottawa professor Michael Geist had been one of five Canadian signatories on a letter initiated by Santa Clara University law professor Eric Goldman to the three NAFTA negotiators urging that the new Agreement contain protection from liability for online intermediaries for third party online content, similar to Section 230. At the time the letter was sent back in early 2018, other commentators in the US warned that inclusion of blanket immunities for internet platforms in the new NAFTA would “enrich irresponsible actors and undermine the public interest.” Despite these warnings from many within the US, the negotiated draft USMCA text included Section 230-like language. When that was announced, Geist declared that what eventually became Article 19.17 was a “welcome addition” to the Agreement, and declared it meant that;

“Internet companies are not liable for the content of their users. While this does not require the creation of a legislative safe harbour, it restricts the ability for a country to create a system premised on liability for Internet companies. Moreover, the same provision excludes liability for actions taken by Internet companies to remove harmful or objectionable content on a voluntary basis.”

His cheerleading continued;

“The USMCA’s Internet “safe harbour” rule — modelled on US law — remedies a long-standing problem in Canada”

Goldman likewise was enthusiastic;

“USMCA Article 19.17 requires signatories to adopt Internet immunity provisions similar to Section 230….This a major development in global Internet Law–and, I think, incredibly good (and unexpected) news”)

In fact the Agreement did not require any of the Parties to the USMCA to adopt internet immunity provisions (if they didn’t already have them in law), as I clearly outlined in my blog in February last year,  “Did Canada get Section 230 Shoved Down its Throat in the USMCA?”. Canada remains free to apply existing laws dealing with content on internet platforms, including those related to secondary liability. Even Michael Geist acknowledges that “this (Article 19.17) does not require the creation of a legislative safe harbour”. However, Geist was technically correct in saying that USMCA appears to restrict the ability of a USMCA signatory country to impose future liability on internet companies for allowing harmful content on their platforms. It also made it a contravention of the Agreement to impose liability on internet platforms if they remove objectionable material.  That obligation applies to all three signatories to the Agreement (US, Canada, Mexico).

Thus it was with great interest that I listened to a recent podcast where Michael Geist hosted Eric Goldman to discuss this very issue, namely whether its USMCA commitments constrain Canada from holding internet platforms to greater account for the content that they disseminate. Since the initial signing of the USMCA in November of 2018, the text of the Agreement has undergone some minor revisions but what has really changed is the status of Section 230 in the US. Just prior to the conclusion of the final revisions deemed necessary to get the USMCA ratified in the Democrat-controlled House of Representatives, House Speaker Nancy Pelosi suggested that Article 19.17 be dropped because it had become so controversial in the US. The early warnings about the dangers of Section 230 blanket immunities were gaining traction. However, in the end removal of Article 19.17 was “one-last-minute-change-too-many” and the amendment was not made. The revised Agreement that was signed on December 10, 2019 included the contentious Article 19.17 language. However, in the rearguard action fought by Silicon Valley to keep Article 19.17 in the USMCA, it conceded (in a public statement issued by the Consumer Technology Association) that “Inclusion of Section 230 language in trade agreements does not stop the US from changing the law in the future should (it) choose to do so.”

Truer words were never spoken. The ink was barely dry on the Revised Protocol of Amendment for the USMCA when the US Justice Department began holding public sessions into how Section 230 should be revised. The fact that it was included as a US obligation in the USMCA was not even mentioned. More recently President Trump invoked Section 230 reform as part of his infuriated reaction to moderation of a couple of his tweets by Twitter. As a result, the US Department of Justice (DOJ) has published a paper proposing a number of areas for change. Some of these proposals address abuses of the safe harbour liability shield by platforms; others seem more designed to address Trump’s criticisms of alleged “platform censorship” (in Trump’s view, misuse of “the sword”). The point in this blog is not to analyze what changes the Administration may propose and Congress may enact to Section 230, but to highlight the fact that Article 19.17 of the USMCA is not even a speed-bump in slowing down the Administration’s momentum to modify Section 230—for better or for worse. If the EFF’s real goal in pushing the US Trade Representative’s Office to negotiate inclusion of Article 19.17 in the USMCA was more to “bake in” Section 230 as a treaty commitment so that Congress could not modify it rather than to export Section 230 rules to Canada, that tactic has been a dismal failure. This was acknowledged as much by both Geist and Goldman in their recent podcast.

In the podcast, Goldman notes that both Trump and Joe Biden have both gone on record in calling for reform or removal of Section 230, albeit for different reasons, and he assumes that the next Congress will want to amend it. Given differing views as to what needs to be fixed, it is possible that Congressional gridlock will mean that Section 230 will survive a bit longer, but its days are clearly numbered. With regard to Canada, in Goldman’s view, Canada is unlikely to enact anything like a Section 230 law even though (in his opinion) Canada’s current legal framework is not consistent with Article 19.17 commitments. His conclusion was that Canada will be out of compliance, but has no intention of enforcing the commitment.

If Canada is out of compliance (a debatable point at best), what about the US? Since both the Democrats and Republicans seem hell-bent on changing Section 230, the US will likely be the first to be out of technical compliance with the USMCA when it changes legislation to make platforms civilly liable for at least some of the content they carry, under certain conditions. For his part, Michael Geist accepted that Canada is unlikely to put forward any Section 230 legislation, but argued that Article 19.17 is nonetheless useful as a standard, and may cause Canadian officials to think twice before introducing legislation that could or would run contrary provisions agreed to in the USMCA. Goldman disabused him of the restraining effects of USMCA;

“I would just note that Congress will have no such hesitation. Congress will absolutely blast forward with efforts to tinker with Section 230 even if that would also contravene the USMCA…I don’t know who really plans to abide by it, and if no-one plans to abide by it, I don’t understand what the point was”.

I agree. What was the point? It is clear that Article 19.17 is a dead letter when it comes to constraining the ability of the governments of the US, Canada, or Mexico from holding internet platforms responsible, or at least more responsible, for the content that they allow to be disseminated. Even cheerleaders for Section 230, like Michael Geist and Eric Goldman, (both signatories on the January 2018 letter to the three North American governments urging inclusion of Section 230 immunities in the new NAFTA Agreement) are finally coming around to a more realistic view of what Article 19.17 of the USMCA actually means in terms of real-world impact. Zilch. And that’s a good thing.

Governments and legislatures (Parliament in Canada, the US Congress, the Congreso de la Union in Mexico) are not going to allow themselves to be handcuffed by an outdated law that has been misused by internet platforms over the years to evade their responsibility to take down and moderate harmful content just because of some ambiguous wording in the new NAFTA.

© Hugh Stephens 2020. All Rights Reserved.

International Book Piracy: How Canada Got Caught in the 19th Century British-US Copyright Wars

Source: http://www.shutterstock.com

I think it is appropriate to post this blog on Canada Day, July 1, the day that marks Canada’s gradual transition from colony to nation, because it sheds light on the struggle that the new dominion faced in the years after Confederation in 1867 to assert its political independence from Britain, the imperial power and its economic independence from its powerful neighbour, the United States. 

This is a complex story of book piracy in the 19th century and how this became a factor in Canada’s search for identity and full political independence. It features a Canadian “pirate publisher” who, most famously, printed unauthorized editions of Mark Twain’s Adventures of Tom Sawyer and sold them by mail order across the border to American readers before the author had published his work in the US. But it is also a story of American publishers pirating British works, notably Charles Dickens, and British piracy of US authors. In fact, since in those days it was legal to publish without authorization the works of non-nationals (copyright applied only to residents of the country where the work was first published), one has to question whether this was true piracy. In the end international book piracy was sorted out through the establishment of the Berne Convention in 1886 and passage of reciprocal copyright legislation (the Chace Act) in the US in the 1890s. For Canada, this is an illustrative example of the challenges the new nation faced in developing its own publishing industry and national literary identity, handicapped as it was by its semi-colonial/semi-independent status and caught between a growing economic colossus in the US and Imperial administrators in London.

This is an account of how the Canadian publishing industry found itself caught in the crossfire of the British-US copyright wars of the 19th century, resulting in an underdeveloped publishing sector that until recent years was seen by many to have held back the blossoming of Canadian literature and Canadian authors. It is a story of book piracy on both sides of the Canada-US border, and both sides of the Atlantic. The issue has been well researched and documented, notably by Prof. Eli MacLaren of McGill University in his book “Dominion and Agency”, (University of Toronto Press, 2011), but I think it is fair to say that this specialized topic is unknown to most readers of this blog. So let’s pull aside the curtain.

Today, Britain, the US and Canada are all pretty much on the same page when it comes to copyright protection, especially now that Canada will soon be aligning its term of protection with that of the UK, the EU and the US, as a result of a commitment made in the renegotiation of NAFTA, the North American Free Trade Agreement now labelled, in the US, the USMCA (US-Mexico-Canada Agreement). Coincidentally the USMCA comes into effect today, July 1, although Canada’s commitment to extend its term of copyright protection will not take effect for 30 months.

Although the US is still not completely happy with Canada’s copyright regime, judging by the comments of the US copyright industry association, the IIPA (International Intellectual Property Alliance) in its recent submission to the US Trade Representative’s annual review of the IP standards in place in various foreign countries, all three countries are nevertheless members of the 1886 Berne Convention, (to which 178 countries have acceded) and are signatories to the Trade Related Intellectual Property (TRIPS) commitments of the World Trade Organization (WTO) and other international conventions relating to copyright. Mind you, the US did not join Berne until 1989 and Canada was initially a reluctant participant, becoming a member involuntarily only because it was a part of the British Empire at the time the Convention came into being. Today, because of Berne, British, US and Canadian copyrighted works are afforded national treatment in each other’s countries, (although in some instances foreign copyrights get better than national treatment in the US because they are afforded Berne Convention privileges which are better than those provided to US copyright holders by US legislation.)

Back in the 19th century this was not the case. While Britain and the US had similar conceptions of copyright, coming from the wellsprings of the 1710 Statute of Anne in Britain and the 1790 Copyright Act in the United States, copyright protection was initially provided to only domestic authors and printers. Until the passage in the US of the International Copyright Act (aka the Chace Act) in 1891, copyright protection was provided in the United States only to US residents—and then only to those who registered their works in the approved fashion, and had the works printed in the US.  In Britain too, initially copyright protection was restricted to British subjects, a definition that included residents of the Empire (like Canada at the time) and, as in the US, there were registration and publication requirements. However, while Canadian authors had the benefit of copyright protection throughout the British Empire, the works had to be registered (a copy deposited at Stationer’s Hall) and printed in London. Imperial copyright was thus a great boon to the London publishers who had an effective monopoly on printing and distributing British and colonial works throughout the Empire, but it did little to help promote Canadian publishing. It was an uneven playing field that favoured the imperial power.

This situation was not rectified until Canada and the other parts of the Empire became members of the Berne Convention in 1886. An example of the way in which the laws were tilted to British advantage was brought home forcefully in the 1830s when pirate editions of one of the earliest Canadian works, The Clockmaker by Thomas Chandler Haliburton, were printed in London with no regard to the Canadian publisher. (MacLaren, 26). This was all perfectly legal at the time.

The result of this situation where protection was afforded only to domestic authors and publishers led to widespread unauthorized printing of British works in the US, about which Charles Dickens famously complained during his visit to the United States in 1842, without getting much sympathy. He was surprised to be attacked for his “mercenary” attitude. Dickens was by no means the only English author whose work was regularly pirated in the US. English writers were popular in the US market and US publishing houses, while required to pay royalties to American authors, had a business model of producing cheap unauthorized editions of British works. American writers, such as Edgar Alan Poe, suffered the same fate in the UK, but given the size of the American market and the number of well-known British authors (the “must-haves” of the 19th century) who were popular in the US, the main problem lay on the American side of the Atlantic. In the end the problem was partially dealt with by US printers requesting and paying a “courtesy of the trade” fee to the main British publishing houses for advance copies of about-to-be released books. This gave them a commercial advantage over other American reprinters by getting their editions to the market first. This fee took the place of royalty payments, but was still deemed unsatisfactory by many British authors.

But what did all this mean for Canada? The unauthorized US editions of British works were blocked from entry into retail trade in Britain, where customs inspection was relatively easy given the maritime nature of trans-Atlantic trade, but it was much more difficult to prevent the US copies from entering Canada across an ill-marked and lightly patrolled land border. As a result, Canada was caught in the middle of this copyright war.

As a country subject to imperial copyright, it was obliged to protect the rights of British authors, but importing expensive books published in London was not what the residents of a frontier colony wanted. Just across the border in the US it was possible to buy the latest books by the best English authors (i.e. the unauthorized American printed editions) at a fraction of the cost of importing them from Britain. Needless to say there was a brisk cross-border trade and Canadian booksellers regularly sourced their books in New York, Boston and in other US cities. So prevalent was this practice that in 1847 the British government recognized the inevitable. It regularized the cross-border Canada-US book trade with the Foreign Reprints Act. This piece of legislation allowed Canadians to import the unauthorized US editions of British works, subject to the payment of a levy that would be remitted to the British Board of Trade for distribution to British rights-holders. It was a sound idea in principle, combining practicality on the ground with the need to respect British copyright law.

The problem was that it didn’t work. Canadian border officials (who were not experts on literature and who had to work from outdated and incomplete lists) had difficulty in determining which works printed in the US were subject to the special duties, and since the colonial government derived no benefit from the revenue–which was to be remitted directly to Britain–enforcement was lax. Very little revenue was actually collected. The Canadian printing industry would have preferred an alternative that would have given them the right to print British works in Canada (under a compulsory licence) and remit royalties to Britain, but the imperial government had decided on the import licence scheme. As a result, the Canadian market came to be dominated by unauthorized US published versions of British works with almost no revenue raised for British copyright holders.

Meanwhile Canadian printers were lobbying the British government to find a way to supply the domestic Canadian market with works by English writers from within Canada, rather than importing the unauthorized US editions of British works. In effect, Canadian pirates wanted to take the Canadian market from American pirates. In 1867 the various British North American colonies came together to establish the Dominion of Canada (as it was called at the time), which was to be largely self-governing. Regulation of copyright was one of the powers given to the Dominion government. In 1872 the Canadian government passed legislation that would have allowed Canadian publishers to publish unauthorized editions of British works, subject to a compulsory licensing fee. It was argued that this could be much better enforced than the import levy on US published books of British authors and would result in more revenues for British rights-holders, while promoting publishing in Canada at the expense of US publishers.

The legislation was passed by Parliament but disallowed by the Governor-General, the Queen’s Representative whose assent was necessary to allow legislation to come into effect. The same system of royal assent exists today except that by convention the Governor-General will not disallow duly passed legislation. In the 1870s that was not the case and the royal prerogative exercised by the Governor-General was subject to influence from London. Thus Canada’s publishers found that their interests were thwarted by Canada’s semi-colonial status as a result of the influence of the London publishers and the British government. The former wanted to protect their market in Canada, while the latter wanted to achieve a reciprocal copyright treaty with the United States, and was concerned that if Canadian publishers could produce cheap reprints of British works, as was occurring in the US, and export these books south of the border, this would complicate negotiations toward a Britain-US Reciprocal Copyright Treaty.

In 1875 a Canadian Copyright Act was finally passed and given royal assent with British approval. It created a system of Canadian copyright, giving rights to Canadian authors and publishers in the Canadian market. However, as subsequent legal cases were to determine, the existence of Canadian copyright did not negate imperial copyright. Thus in cases where a Canadian publisher, such as the Belford Brothers, began independently producing unauthorized Canadian editions of British works, on the basis that British copyright no longer applied, they were struck down by the courts.

The Belfords then proceeded to pirate US authors in Canada, notably Mark Twain (Samuel Clemens). Twain’s The Adventures of Tom Sawyer was first published in Britain to obtain imperial copyright but before the US edition could be printed, the Belfords printed a pirated version in Canada from the British edition, and sold over 100,000 copies in the US, largely via mail order, causing Twain significant financial loss.  Twain was particularly incensed by what he called the “Canadian thieves” and wrote, “I can’t trust any more Canadians after my late experience. I suppose they are all born pirates.” In an attempt to secure Canadian copyright for a subsequent book that was being granted imperial copyright through publication in London, he took up temporary domicile in Montreal. However, since US law required that an author be a permanent resident to qualify for US copyright protection, Canada applied the rule reciprocally and disallowed Twain’s claim. Twain’s frustration with the Canadian pirates led to his advocacy for recognition of international copyright by the United States, which was to occur in 1891.

Because it was illegal for Canadian publishers to pirate British works whereas publishers in the US could do so legally until 1891, the argument has been made that this stunted the Canadian publishing industry and made the development of a national literature more difficult. It is worth noting that Canadian publishers like the Belfords showed no lack of ingenuity in pirating US authors, and for a time enjoyed financial success. (They later went bankrupt and moved to Chicago where they established another publishing enterprise).

By the same token, there is no doubt that the pirating of British works by US publishers contributed to the initial growth of the US publishing and printing industry. This industry became a powerful political lobby which resisted changes to its business model. At the same time, the dominance of pirated British works in the US market in the 19th century arguably made it more difficult for American writers to flourish. As stated by the noted American historian Arthur M. Schlesinger in his book “The Rise of the City, 1878-1898”, (New York, MacMillan, 1933, p.252), “So long as publishers […] could reprint, or pirate, popular English authors without payment of royalty, and so long as readers could buy such volumes far cheaper than books written by Americans, native authorship remained at a marked disadvantage”.

While American literature grew in stature during most of the 19th century, it flowered after the International Copyright Act (Chace Act) was passed in the US in 1891. That legislation provided for reciprocal recognition of copyright between the United States and four entities; Britain and the British Empire, Switzerland, Belgium and France. While this allowed for British and Canadian works to be protected in the US, such protection was contingent on certain measures that protected the US printing industry. To obtain the benefits of US copyright protection, the work had to be printed from type set on American soil and deposited at the Library of Congress before being published elsewhere. (MacLaren, 11, 109). This protectionism mirrored earlier British protection of its printing industry. After 1891 however, US works were not subjected to similar conditions in Canada. Their copyright was protected without any requirement to print in Canada.

Thus Canadian publishers could not serve the US market with unauthorized reprinted British works, and they could no longer produce pirated editions of US works for the Canadian (or US) market. It was equally difficult for Canadian publishers to obtain authorization to reprint British works in Canada since British authors and publishing houses had little incentive to print separate Canadian editions because imperial copyright prevailed in Canada. In fact, they often granted “North American rights” to US publishers whom they licensed. Often this was in response to demands from US publishers who wanted to shut down potential Canadian competitors and keep the Canadian market for themselves. Thus the grant of reciprocal copyright protection between Britain and the US did little for Canadian publishing.

Subsequent Canadian legislation passed in 1889 would have required publication in Canada as a condition for obtaining Canadian copyright by instituting the earlier proposed compulsory licence for reprinting of British copyright works in Canada if the British publisher did not arrange for the publication of a Canadian edition within 30 days of release in Britain. This 30 day period was to allow British publishers to use the original plates and not have to invest in duplicates (as they were later required to do in order to obtain US copyright under the Chace Act). However, like the 1872 Bill, the 1889 Canadian Copyright Bill was killed by the British government through the office of the Governor-General. As archivist and historian Meera Nair has described it;

“The British government’s desire for harmony with the United States, its conformity to international regulations of the day, and its penchant for uniformity throughout the Empire, took precedence over any legislation designed to meet Canada’s particular needs.”

To sum up, in the latter half of the 19th century Canada was coming into being as a nation, finding its way and trying to develop a national consciousness. Its semi-colonial status dictated that its interests came second to those of the imperial power, Britain, in issues that ranged from foreign policy and boundary disputes to copyright. Its economic relationship with its larger North American neighbour, the United States, meant that it was vulnerable to US market forces, such as the supply of cheaper unauthorized versions of popular British works that supplied the Canadian market. Owing to its status as a dependent state within the British Empire, it was unable to follow the US model of producing these works without payment of royalties, which in the US had resulted in the establishment of a robust publishing industry initially built largely on distribution of pirated editions. Notwithstanding these obstacles, Canadian publishers played their own version of the game, pirating US authors such as Mark Twain, even exporting unauthorized copies to the US market.

The eventual resolution of the US-British copyright wars through the passage in the US of the 1891 International Copyright Act strengthened the rights of authors but did little to help Canadian publishers. In a supreme irony, prior to the US joining the Berne Convention in 1989, many US publishers published first in Canada (through Canadian subsidiaries of US publishing houses) in order to obtain the benefit of the international copyright protection afforded by the Convention since Canada was a member of Berne and the US was not. This became known as the “back door to Berne”.

Despite the many obstacles it has faced, today Canadian literature is thriving and Canada has a small independent publishing industry, albeit one that is still economically challenged. Copyright protection in the three countries has been largely harmonized. While many well-known Canadian writers are represented by British or American publishers, this does not seem to have stopped the development of Canadian literature (“CanLit”).

Does a country need a strong national publishing industry in order for local creativity to blossom and thrive? It no doubt helps, but quality writing seems to get published regardless of the source. Does the fact that Canada was not easily able to develop a domestic publishing industry (based initially on pirating the works of others) mean that its creative development was stunted? Possibly, but impossible to prove. Meera Nair has quoted writer and university professor Nick Mount as attributing the explosion of CanLit to post WW2 affluence and an explosion of Canadian self-awareness brought about by the centenary of Confederation in 1967. If that is true, then the 19th century struggles of Canadian publishers may not be all that relevant to Canadian identity at the end of the day. What is clear is that in the area of copyright and publishing, imperial (British) economic and political interests prevailed over those of the nascent Canadian publishing industry, an inevitable outcome of Canada’s semi-colonial status at the time.

The story of how Canada struggled to develop its own “made in Canada” copyright policy in order to establish a domestic publishing industry without being crushed by British or US publishers is an interesting and little known aspect of 19th Canadian political history. As for Canadian literature, it took a century to develop, but develop it did despite the games played by publishers on both sides of the Atlantic.

© Hugh Stephens, 2020. All Rights Reserved.

I am indebted to Dr. Meera Nair, copyright historian, for reviewing this blog post and clarifying and correcting a number of facts. The interpretations and conclusions of the blog are, however, my own.