Tag: canada

The Economics of Copyright: Incentives and Rewards (It’s Important to Get them Right)

Image: Shutterstock

Two years ago, in April 2022, the US Copyright Office (USCO) appointed its first Chief Economist, Dr. Brent Lutes. Many national Intellectual Property Offices have such a position, e.g, UK IPO, IP Australia, EUIPO, and WIPO. (Notably, Canada’s Intellectual Property Office–CIPO–does not). All these positions have broad responsibility for assessing the economics of IP generally, covering patent, trademark, industrial designs as well as copyright. In the US, the Patent and Trademark Office has its own Chief Economist. However, Lutes’ USCO position appears to be the only one related exclusively to assessing the economic impact of copyright. The position sits within the Office of Policy and International Affairs and is composed of a small team of economists, providing the Register of Copyrights, Shira Perlmutter, with policy-relevant research on economic issues related to copyright.

In an interview conducted last month, Lutes talked about the economic goals of copyright in terms of enhancing social welfare. He noted the goal of copyright is to contribute to the welfare of society by promoting access to creative works, now and in the future, through market based behavioural incentives. The goal of the Office of Chief Economist is to gather more information to inform policy making, such as the geographic distribution of copyright activity or the demographic characteristics of creators. As but one example, is racial or ethnic diversity related to creativity? The economic issues surrounding AI and copyright, both pro and con, is another field of research the USCO will be exploring.

In addition to finding the right economic levers to stimulate production of creative works, economic studies of copyright also demonstrate the enormous impact copyright-based industries have on national economic welfare. While the impact can depend on what economic multipliers are used and how direct versus indirect benefits are calculated, there is no question that copyright industries in most economies are very significant as job creators and multipliers. For example, IP Australia in its most recent annual report estimates that cultural and creative activity contributes about 6% of Australian GDP annually, with design, fashion, publishing, broadcasting, electronic and digital media and film being the primary industries involved. In the US the figures are even more impressive. According to the International Intellectual Property Alliance, in 2021 (the last year for which statistics are apparently available), core copyright industries in the US, defined as those industries “whose primary purpose is to create, produce, distribute or exhibit copyright materials”, added $1.8 trillion to US GDP, accounting for 7.76% of the economy. Total copyright industries, a definition that includes industries partially dependent on copyright, such as fabric, jewellery or toys and games, account for another trillion USD, even when only a portion of their total value is included in the copyright calculation.  

The UK Intellectual Property Office published its IP survey in 2022, comparing the role of patents, trademark, registered industrial designs and copyright. While copyright industries were on the low side for exports (£4.7 billion as opposed to patents at £120.6 billion, copyright’s “non-financial value-added output” (IP data is not available for the financial industries, thus the description of “non-financial”) trounced that of patent industries by almost 2:1. As with the US IIPA study, the UK report accounted for the degree to which certain industries depend on copyright, categorizing them as core, interdependent, partial or non-dedicated support industries, adjusting the amount of copyright contribution accordingly. Book publishing, for example, is considered a 100% copyright industry and its value is calculated as such, whereas for an industry such as paper manufacturing, only 25% of the value was included in the calculation of copyright benefits. This methodology followed that of the World Intellectual Property Organization, aka WIPO, which also conducts economic studies as well as assists national authorities with their own. Economists are careful people, not prone to exaggeration, and consistent methodology is important to ensure accurate measurement and reporting.

WIPO worked with the Department of Canadian Heritage to produce a report in 2020 on “The Economic Impact of Canada’s Copyright-Based Industries”. As with other deep dives on the economic benefits of copyright, this study produced similar notable statistics. For example, while many copyright opponents in Canada were deploring the extension of the copyright term of protection in Canada, arguing that the result would be an outflow of royalties to foreign rights-holders because Canada was a net importer of copyrighted materials, the Heritage report established that “Canada has exported more copyright-related services than it has imported, maintaining a trade balance surplus from 2009 ($2.5 billion) to 2019 ($5.6 billion)”. In actual fact, extending the copyright term in Canada brought with it the additional benefit of a reciprocal extended term in many foreign countries for Canadian works, clearly benefiting Canadian rights-holders. The Heritage study went on to document a range of other important outcomes such as employment (over 600,000), contribution to GDP ($95.6 billion) and percentage of GDP (4.9%). All figures are based on 2019 data. No update has been published since. It is just as well that Heritage Canada took the lead in preparing this report since the government department holding lead statutory responsible for copyright in Canada, the mammoth Department of Industry, Science and Economic Development (ISED), unfortunately seems to treat copyright as but a tiny pimple on its elephantine rump.

While the studies cited above highlight the economic contribution that copyright industries make to national economies in terms of jobs and wealth generation, let us not forget the key point that Dr. Lutes underlined regarding the social welfare contribution of copyright through using market-based incentives to promote and encourage creativity and investment in creative outputs. It is hard, if not impossible, to put a dollar amount on the social welfare benefits of creative expression and cultural sovereignty, but they are immense if incalculable. Without copyright, not only would existing content-based industries be unable to thrive and expand, but the formula to encourage new, original content would be missing.

Notwithstanding the importance of a robust copyright framework for both economic and social welfare, creators and content-based copyright industries are facing major challenges today. Some are technological, like the emergence of generative AI; some behavioural, such as a wide tolerance, even acceptance, of piracy and free riding. The struggle against piracy is ongoing and protracted, a cat and mouse game. Free riding is what AI developers are doing on the backs of content creators through unauthorized training of AI models on copyrighted content, with resultant legal challenges. There is also the question of whether wholly AI generated works should be accorded copyright protection. As the Copyright Alliance has observed, the Copyright Clause in the US Constitution is premised on the promotion of the “progress of science and useful arts” by protecting for a limited period of time the writings and discoveries of authors and inventors. Given that premise, it should be self-evident that creator incentivization is not applicable to machines, which do not need nor comprehend economic incentives to create.

Free riding is also what the education sector has been doing in Canada under the specious umbrella of “education fair dealing”, introduced through copyright amendments in 2012 that broadened the scope of fair dealing. Since then, the “education industry” at the public, secondary and post-secondary level has been siphoning off economic value from writers and other creators to the tune to date of over CAD$200 million. Their legalized renunciation of collective reprographic licensing is ostensibly to benefit students but is in fact a transfer of wealth from creators to the bottom line of educational institutions. If a key objective of copyright is to incentivize creation of new content, such as materials used by educational institutions to teach students, then the current interpretation of education fair dealing in Canada upends a key rationale for granting copyright protection in the first place. (As a footnote, I should add that not all arguments in favour of copyright are based solely on economic incentives. There is also the question of natural justice and equity, providing authors with a degree of control over works they have created).

Since court challenges have unfortunately proven ineffective, the remedy for Canada’s education fair dealing fiasco is for the Government of Canada to amend the Copyright Act so that rightsholders are properly compensated when their works are used in Canada. Both the copyright collective in English Canada, Access Copyright and its Québec counterpart, Copibec, recently called for legal clarification of the nature and extent of educational fair dealing.

Thorough documentation of the contribution that copyright makes to economic and social welfare helps substantiate the case for adequate legal frameworks, including combatting piracy and ending copyright free riding. Sound economic data are essential to sound policy making. The initiative of the US Copyright Office to appoint a Chief Economist helps to meet these goals and is to be commended.  Should the Canadian Intellectual Property Office ever create such a position, its first task should be to evaluate the full economic and social costs of the current short-sighted interpretation of fair dealing in Canada’s education sector in terms of its negative long-term impact on creativity and cultural sovereignty in the country.

The Scottish writer Thomas Carlyle may have described economics as the “dismal science”, an oft-quoted remark, but rather than being dismal it is in fact just the opposite; it sheds light on the importance of copyright to maintaining a well-functioning, equitable and culturally rich modern society.

© Hugh Stephens, 2024. All Rights Reserved.

When Just Going to the Movies is Dangerous: Indian Diaspora Targeted in Canada

Image: Shutterstock

Immigrants who take up a new life in what is often a culturally very different country from their original homeland naturally seek out the familiar by associating with those from “home” as part of the adaptation process. This is certainly true of the Indian diaspora, in Canada as elsewhere. Part of that comforting feeling of “home” comes from sharing cultural experiences, such as food, music, and movies. As is widely known, India has the world’s largest film industry in terms of output, so it is natural that Indian films will be an important part of cultural bonding for South Asian diaspora communities. But what is an Indian film? The Indian film industry is far from monolithic. There is Bollywood, to be sure, for Hindi language films, but also Tollywood, a term variously used to describe Telugu language films originating in Andhra Pradesh but also Bengali films from Kolkata, and not to be forgotten, a South Indian film industry based in Kerala in southwest India, using the Malayalam language, as well as Tamil language films. And others.

In other words, there are lots of Indian diasporas, many of which have a long tradition of producing their own filmed entertainment. Most of these groups are well represented in Canada. According the 2021 census, the South Asian population of Canada (those identifying as South Asian) was just over 1.8 million, or roughly 5% of the population. The term South Asian includes Muslims from Pakistan and Tamils from Sri Lanka, so if we are talking solely about Canadians originally from India, the total falls to 1.4 million. In terms of geography, the largest group is from the Punjab, the majority of them Sikhs, although there are significant populations of immigrants from Gujerat, Tamil Nadu and Kerala. Hindus make up 2.3 % of Canada’s population; Sikhs 2.1%. (It is interesting to note that Sikhs make up about the same percent of India’s population as they do in Canada). One characteristic of Sikhs in Canada is their degree of political activity. In the current Parliament there are no less than 18 Sikh MPs out of a total of 338, spread across three different parties. By contrast, India’s Lok Sabha, with 543 members, has just 13 Sikh Members. But I digress.

Let’s get back to Indian films, particularly South Indian films, in Canada. You might think that going to the movies to watch a flick from home would be a relaxing and pleasant pastime. If that’s what you think, you would be wrong. In fact, going to a Telugu, Tamil or Malayalam film in Canada can be very stressful, if not downright dangerous. For more than a decade there has been a history of violence against cinema operators screening such films. Screens have been slashed, stink bombs set off and worse. The most recent violence involved drive by shootings at four Toronto area cinemas, resulting in the cancellation of showings of the Malayalam language epic “Malaikottai Vaaliban” in Cineplex venues across the country. What’s going on? Is someone trying to stop the South Indian diaspora from enjoying their movies? Well, not exactly. They are trying to stop them from enjoying their movies in certain locations.

What is happening appears to be commercially motivated, with a turf war taking place over the distribution of these films, with distributors accusing a collection of independent theatres of violence and sabotage. (No arrests have been made or charges laid). Screening ethnic films can be a lucrative business with tickets reportedly going for as much as $30 a head. However, large mainstream multiscreen exhibitors like Cineplex routinely charge about half that amount and as the company has moved into showing Indian language films, it has been targeted. To date, the disruptors have succeeded, as on several occasions Cineplex has cancelled scheduled showings, including screening Malaikottai Vaaliban in BC, even though the most recent violence took place in Toronto. In the past there have also been violent incidents regarding the screening of South Indian films in Edmonton and Calgary.

It is natural for a national chain like Cineplex to want to move into the diaspora market, given the size of Canada’s immigrant population. As of the last census, almost 25% of the population was born outside Canada. The COVID pandemic, which for a time brought movie attendance to a standstill (Cineplex shuttered its theatres for several months in 2020), wreaked havoc on the theatre exhibition industry. Things are recovering, however, with revenues up substantially in 2023 although attendance has yet to reach pre-pandemic levels. But NATO (the National Association of Theatre Owners, i.e. the other NATO) is concerned about predictions of a drop in revenues in 2024 owing to a shortage of films after last year’s SAG-AFTRA strike. This is yet another reason for chains like Cineplex to move into screening of diaspora films, where strong attendance for limited showings can be anticipated.

In Canada, Cineplex, the nation’s largest cinema chain and the fourth largest in North America, struggled as much as others during COVID. One result was the collapse of its acquisition by Cineworld, the UK based exhibitor (which operates Regal Cinemas in the US) that had made a bid for Cineplex in 2019, just prior to the outbreak of COVID-19. With the onset of the pandemic, Cineworld backed out of the deal, and was promptly sued by Cineplex. The result was a $1.24 billion judgement in favour of Cineplex. Subsequently, however, Cineworld declared bankruptcy in the US. No collection on that debt.

Meanwhile, what should Canada’s Indian diaspora do when even going to the movies becomes a fraught and potentially dangerous outing? They should be demanding action on the part of the police! In my estimation, Canadian police forces have typically been slow to come to grips with what one might call “blue on blue” violence, where one element of a diaspora community will harass or intimidate other elements within the same community. In part, it is a result of certain institutions being behind the times and not reflecting the current ethnic make-up of the population; it takes time to win the trust of and to be able to penetrate some ethnic communities. But even allowing for these excuses, it is unacceptable that random (or maybe not so random) violence should be permitted when it comes to something as basic as going out with your family to watch a show. I guarantee it would not be tolerated in the non-diaspora community. Can you imagine the owners of the local indie theatre sending out gunmen to shoot up the local Cineplex because the theatre chain had the temerity to show “Live at the Met” on a Saturday morning? That is the equivalent of what’s been happening, and it’s been going on for far too long.

Even though to date no one has been injured or killed, if this violence continues something really bad is inevitably going to happen. Cancelling showings is not the answer; this only encourages the perpetrators. Toronto-area police forces need to make investigating and stopping this illegal activity a priority. It is like the “broken-windows theory”. If you can’t take your family in safety to the movies, what’s next for the unravelling of law and order?

I don’t think I will ever go to a Telugu or Malayalam language movie, but I respect the rights of those who do. I hope that the next diaspora blockbuster to come to Canada gets a proper screening across the country in popular venues that provide inexpensive, comfortable and safe viewing. Our immigrant communities deserve no less.

© Hugh Stephens, 2024. All Rights Reserved.

Public Lending Right (PLR) Registration in Canada is Still Open: Enrol If You Are Eligible

Photo: Author

If you know all about the Public Lending Right (PLR) program in Canada, you probably don’t need this reminder. However, if you don’t and are a Canadian (citizen or resident) writer, editor, translator, photographer, illustrator, or narrator who has published a printed, audio or e-book with an ISBN number in the last five years, you may qualify for a PLR payment—but only if you register by May 1. The PLR program, run by the PLR Commission in association with the Canada Council, has been in operation in Canada since 1986. It distributes annually approximately $15 million to qualified authors registered with the program, based on a sampling of major libraries across the country to determine whether registered works are present in library holdings. Payments are based on library holdings, not the number of times a work is loaned out, despite the name “lending right”. This year, payments were made to 18,247 authors of the 20,091 who have registered. The maximum payout to an author was $4,500. Minimum payment is $50. The average payment was $806 and the median (half above; half below) was $399.91. Once a book is registered and confirmed to be in the library inventory, payments can continue for up to 25 years.

Not all genres are eligible. While the program covers fiction, poetry, drama, children’s literature, non-fiction and scholarly works, “practical” books such as cookbooks, self-help, “how-to” guides, travel guides, manuals, reference works, educational books like textbooks or books resulting from a conference, seminar or symposium, and periodicals, are not eligible. Full eligibility criteria for registration can be found here. Registration is a bit old-school and not that simple. A form needs to be downloaded and completed by hand. Various codes have to be added to the form (there is a guide). Photocopies have to be made of the work’s title page, copyright page, and table of contents. For audiobooks similar information must be provided, such as a photocopy of the audiobook box cover. Next, this all has to be packaged up and mailed through Canada Post. Registered mail is advised. Applications are then assessed, compared against an electronic database of library holdings and cheques prepared for mail out by February of next year. (A recent innovation is an option for electronic deposit). All this is accomplished by a dedicated staff of just 4 people!

About 800 authors a year apply for the program. In a sense, this is a problem because funding has not been increased for around two decades. (While new authors are added, there is some natural attrition as the estates of deceased authors do not receive payments, plus there is a drop off as older works age out). But the end result is a net increase, with the same amount of funding being spread over an ever-increasing base. Not only that, with inflation over the years the value of payments has actually declined by almost 50%. The Trudeau government made a pledge to increase the PLR back in 2021 but so far has taken no action. The Writers Union of Canada has advocated for a doubling of annual funding from $15 to $30 million (it was just $3 million when first launched in 1986). A coalition of Canadian publishing and authors organizations has just sent a public letter to the Minister for Canadian Heritage and the Finance Minister prior to the release of the 2024 budget on April 16 urging that commitments to increase funding be fulfilled.

The formula for payments to authors is somewhat complicated. It is explained on the PLR website as follows:

“Payment per title = Hit rate × # libraries where title is found × % share × time adjustment”

The hit rate varies but last year was $61.53. That is multiplied by the number of libraries where the title was found. If the author claims full title there is no percentage share adjustment but where a work has more than one author claiming a share of title (e.g. a writer as well as an illustrator), there is an adjustment related to the amount of contribution each made to the creation of the work. The time adjustment is related to when the work is published. Older works are subject to a discount. Got it? The best way to find out what you might earn is to register, assuming your work qualifies. If you get a cheque in 2025 you will have some idea of your contribution to the literary base of Canadian libraries.

Canada is now one of more than 30 countries that has a PLR. (The US does not). The first PLR program goes back to 1946 in Denmark, followed by Norway and Sweden although the idea originated in 1919 with the Nordic Authors’ Association passing a resolution calling on governments to compensate authors for library lending of their books. The World Intellectual Property Association (WIPO) defines the PLR as “the legal right that allows authors and other right holders to receive payment from government to compensate for the free loan of their books by public and other libraries.” In Europe, the PLR is actually underpinned by copyright legislation in the form of the Rental and Lending Right Directive (Directive 2006/115/EC) that provides authors with an exclusive right over the lending out of their works, or remuneration for the lending of such works. PLR in non-EU countries, such as Canada, Australia, New Zealand and Israel is not dependent on a legal right but is in fact a form of government subsidy to authors. In some countries payment is based on how often works are loaned, in others, such as Canada, it is based on library holdings.

In most countries, including Canada, libraries do not pay for the PLR, and it does not affect their budgets. Instead, funding comes from central government sources. You would think, therefore, that being part of the writer/publisher/reader ecosystem, libraries would be enthusiastic supporters of such payments to authors as it encourages them to create more works, enlarging the base of books available to users of libraries. That, however, is usually not the case. Libraries generally don’t support, or give very lukewarm support, to the PLR for fear that funding for it might come out of their hide, as in the Netherlands. (WIPO tactfully says that “In the few cases where libraries pay for PLR, such as in The Netherlands where public libraries operate as independent entities, PLR is viewed by the library community as a legitimate charge that fairly compensates authors for the use of their works free of charge by the public”). That is a very rosy interpretation of the position of most library associations. Not only is there concern that somehow funding for authors will mean less money for libraries, but there is ideological opposition from library associations too.

The International Federation of Library Associations and Institutions (IFLA), in its policy statement on PLR, states that “IFLA does not favour the principles of ‘lending right’, which can jeopardize free access to the services of publicly accessible libraries, which is the citizen’s human right…” It goes on to say that “the justification usually given for PLR – that the use of copyright works through public libraries detracts from primary sales – is unproven”, arguing that lending by libraries often assists in the marketing of copyright works. (equally unproven, I would say). The Canadian Library Association has published opinion pieces echoing IFLA’s position, although its official position is that it supports payments to Canadian writers and endorses the use of library data to implement the PLR. There are caveats, however, such as opposition to any legal entitlement to PLR payments for writers plus assertions that library lending is of financial benefit to authors even without any PLR payments.

Despite reluctant library endorsement, PLR continues to grow globally. It now exists in 34 countries, with another 27 having it under consideration. As a result, in 2019 IFLA nuanced its outright opposition. For countries where there is not yet a PLR, members are urged to continue to oppose it. In particular IFLA opposes establishment of a PLR in developing countries (I guess writers in those countries don’t deserve support). If institution of a PLR appears inevitable, IFLA’s position is that national library associations must insist it not be funded from library budgets and that the administrative burdens on libraries be minimized.

PLR International, an advocate for expanding the PLR that holds an international conference every few years (the last one was in Brussels in September of last year), has addressed the IFLA position head on. It clearly states in its Charter of Best Practices that “PLR systems should be funded directly by central and/or regional government and should NOT be funded from library budgets.” Canada’s PLR Commission has “Celebrating Libraries” as one of its three fundamental pillars, the others being “Supporting Authors” and “Enriching Readers”, no doubt in acknowledgement of the generally tepid position of library associations on the PLR. (Interestingly, in the UK, the PLR system is run by the British Library).

The sometimes surprising misalignment between authors and library interests relates not just to the PLR, as I wrote a few years ago (“Are Libraries the Enemy of Authors and Publishers?”). I concluded they were not, although more recently the position that some in the library sector have taken on Controlled Digital Lending and collective licensing (“Chided by the Canadian Federation of Library Associations for Defending Authors: What an Honour!) for educational publishers makes me wonder.

But whether Canadian libraries are enthusiastic or lukewarm supporters of the PLR, it exists and has been in existence in Canada for almost 40 years, albeit without any legislative foundation. Although payments are relatively trivial, they are nonetheless a welcome supplement to the income of many writers and are a mark of recognition and partnership between libraries and authors, even though it seems some librarians are reluctant to see it that way. Published authors out there who have not registered should do so, if only to demonstrate to the government the wide base of creativity in Canada and to encourage a topping up of the PLR fund. You have two weeks left. Deadline is May 1. Don’t miss out.

© Hugh Stephens, 2024. All Rights Reserved.

A Cautionary Copyright Tale

My daughter’s (copyrighted) art, circa 1990, age 5 (Used with permission)

It is rare that a copyright story makes the national news, in Canada or elsewhere, but this one had all the needed ingredients. A teacher exploiting students, irate parents, and a possibly negligent school board. What’s not to like?

The Canadian Press reported that ten Montreal area parents have launched a lawsuit for CAD$1.6 million against a junior high school teacher for copyright infringement, and for negligence on the part of the Board. According to the report, Mario Perron is (or was?) an art teacher at Westwood Junior High in St. Lazare, QC, west of Montreal Island. Perron had assigned his class to prepare “creepy portraits” of themselves and other students in the style of artist Jean-Michel Basquiat who, despite his Quebecois sounding name, was an American neo-impressionist artist in the 1980s who worked with Andy Warhol. Some of the works produced by the students were quite interesting, judging by the samples displayed in this Google search. (Who knows? Maybe they relied on an AI program to produce Basquiat-like works “in the style of”, as I did a couple of years ago for an earlier blog). My prompt, however, was for an artist (Monet) whose work is in the public domain.

Their teacher clearly did not give much thought to copyright when he posted artwork created by the students on his website, including portraits of classmates and self-portraits screened on to tee-shirts and coffee mugs. They were offered for sale at various prices, over $100 in some cases. There is little question that this was a flagrant violation of the student artists’ copyright. You may ask why these students would enjoy copyright in these amateur works? The answer is simple. The works met all the criteria in Canada to be eligible for copyright protection.

There is no minimum limit on the age of a creator, although a creator has to be living, sentient human being, not an AI robot or a monkey with a camera. (Yes, in theory even an infant’s artwork could be protected by copyright). All that needs to be shown is that the work is original (not a copy), that it is the expression of an idea (the idea itself cannot be copyrighted), that it demonstrates “skill and judgement” and that it is fixed in some form (i.e. a physical incarnation as on a canvas, or on paper, a recording, a photograph.) Plus, the artist must be a resident of a Berne Convention country (which Canada is). These works met all these criteria. A work does not have to be a Rembrandt to enjoy copyright protection. The artist does not have to be famous or have produced any other work. It could be argued that even dipping your hand into a can of paint and placing it in a certain way on the canvas constitutes originality, skill and judgement. These works belonged to the student artists and neither their teacher, nor anyone else, had the right to appropriate them through unauthorized reproduction and distribution, let alone for commercial purposes. The law is very clear.  

In addition to copyright considerations, here are additional factors to take into account, such as the fact that the portraits were, according to the teacher’s instructions, either self-portraits or portraits of classmates. Since the instruction was to produce a “creepy portrait” à la Basquiat, it is not inconceivable that some of the subjects of the works might become the object of ridicule or harassment since their first names were attached to the portraits. This issue goes beyond copyright law, but it is important to remember that copyright law grants the creator the right to determine the means and extent of distribution of a work (for example, the author can decide not to publish or display it). These rights were violated. It is the potential damage from the unauthorized distribution of the works that could be even more harmful than the violation of economic rights. To usurp the right of the artist to decide where and how their work will be displayed is a clear violation of copyright law. I won’t comment on the personal harm aspects of the case, but they are clearly related to the copyright infringement elements.

The remedies sought are substantial, amounting to $155,000 for each of the ten families involved in the suit, based on statutory damages of $5000 per work times 31 works, the number created by each student. In addition, the plaintiffs are seeking $100,000 in punitive damages and $150,000 in costs. Canada’s Copyright Act, Section 38.1(1) provides for statutory damages (damages where the amount of actual damage does not have to be documented, nor actual injury proven) of not less than $500 and not more than $20,000 for commercial infringement, and not less than $100 and not more than $5000 for non-commercial infringement. Mr. Perron is potentially in big trouble.

As for the School Board, which is saying very little, the claim is that they were negligent in allowing this to happen. Are they any more negligent than a company whose employee carries out illicit after-hours activities, such as copyright violations of the work of others? I wouldn’t have thought so, but of course a teacher does exercise a position of trust over their students, and the Board is responsible for ensuring that the trust is exercised responsibly, so perhaps. The works were created in a classroom setting (this does not give either the school or the instructor any authorship rights over the works, by the way), yet the infringement occurred outside school hours and premises. Could or should the school administration have known? There certainly wasn’t a line in the policy book for teachers that said, “Do not make unauthorized use of student art for your own commercial gain”. Who would have thought of that?  Anyway, I am not a lawyer so what I think about the Board’s culpability doesn’t really matter. The court will decide, if it gets to court.

The parents (one of whom must surely be an IP lawyer) have also asked for a written apology, the removal of all the students’ art from the internet and an accounting of funds earned. To my knowledge, they have not demanded that Perron be fired, although that may happen. Perhaps the suit has been filed to get the attention of the School Board, which was dilatory in responding to initial complaints. Perhaps there will be a non-punitive settlement, with any proceeds to date being donated to school art programs. Hopefully Mr. Perron and others will have learned an important lesson about the role of copyright in protecting the work of creators, even if they are young students. Perhaps he won’t lose his job.

I would like to think the result will be a greater awareness by educators, students and the public of the importance of copyright in society today. Let’s hope that this particular teacher was simply blind or ignorant with regard to his actions, not malign. He will now know better. It is an important lesson for all concerned, and a cautionary copyright tale if there ever was one.

© Hugh Stephens, 2024. All Rights Reserved.

Would Anyone Copyright This Flag? (Not an April Fool’s Joke)

Image: Flags of the World (Used with permission)

No, this flag is not an April Fool’s joke, although I am posting this on April 1. As a flag design, it’s a dog’s breakfast. Not that a registered design has to be aesthetically appealing, but it needs to be original. And this one is original, in its own way. The flag of the Town of Ladysmith, BC, as Ladysmith councillor Jeff Virtanen has stated, is a “hodgepodge”. The mayor also agrees that it should be updated. Where it actually came from, no-one is saying but it is a pastiche of the red bars of the Canadian flag, with a maple leaf in the lower right, dogwood symbol (the provincial flower of British Columbia) in the upper left, and then, in the middle, a design of what appears to be a sail boat (Ladysmith does have a harbour) with two horseshoes superimposed on the sail (not sure what they are supposed to represent), with a diagonal slash that says “49th parallel”.

That is a reference to Ladysmith’s location, smack on the 49th parallel, the dividing line between Canada and the United States for most of North America west of Lake of the Woods. However, owing to a quirk of both history and geography, when the boundary west of the Rockies between the United States and British possessions in North America was settled by the Oregon Treaty of 1846, all of Vancouver Island, which extends south as far as Victoria at latitude 48’ 25” N, was included within British territory. Somehow, the fact that you can drive through the 49th parallel without being accosted by the US Border Patrol or the Canada Border Services Agency is part of Ladysmith’s appeal. Actually, it is a nice little town of 9,000 originally established as a coal mining centre back at the beginning of the 20th century, with a great location, some nice heritage buildings—and a very eclectic flag.

Last year I wrote about flags and copyright (“Flagging Copyright Concerns: Vexillologists Take Note”), given the controversy over the Australian Aboriginal flag, when the Australian government had to fork over AUD$20 million to purchase the copyright to a flag design that it had adopted, as the Aboriginal flag, under the Flags Act. Aboriginal artist Harold Thomas had designed the flag back in the 1970s and an Australian court had upheld his copyright on the design. I doubt if there is going to be any dispute over ownership to the Ladysmith flag, although you will note that the flag image gracing this blog at the top of this page is used with permission of the website Flags of the World, which has a depiction of the Ladysmith flag along with 188,000 other flags. It is very detailed. If you want to know what the flag of Tannu Tuva between 1933 and 1941 looked like, this is the place to find out.

Generally, most country flags are not copyright protected either because the designs have lost protection owing to the lapse of time or because governments have made them copyright exempt. However, there may be other forms of intellectual property protection to ensure the national flag is not misused in such a way as to misrepresent a commercial entity as a government institution, or to prevent it from being disfigured or dishonoured.

Flags of the World has an extensive section on copyright, noting that,  “Our editorial policy is to include images only when we can ascertain that we have permission to use them”. The website gives permission to use any of the flags on the site under the following conditions;

  • you limit your use to a maximum of 5% of the images or content of the website (let’s see, 5% of 188,000 is 9,400 so I am OK there)
  • you quote the author (Check, did that)
  • you quote the website (Check, yup)
  • you do not alter in any way the images or the content of the text (Check)
  • you use the material for non-commercial and non-political purposes only (And Check)

It looks like I am in the clear when it comes to using this particular flag image. However, just to be extra vigilant I asked for and was granted permission to use the flag design on the website which was designed by Masao Okazaki from a photo located by Dave Fowler. It is not clear who the original designer of the Ladysmith flag is or was.

Now, whether and when Ladysmith’s municipal flag will get a makeover is a good question. It may not be top of mind for residents who are dealing with other issues, like inflation, world peace or whatever. Still, a flag is a branding tool, and this brand needs updating.

But here are some copyright considerations that Ladysmith Town Council might want to consider.

When the new design is approved by Council, no doubt after an extensive public consultation process, the flag designer (or their estate) will hold the copyright for the work for the duration of their lifetime, plus 70 years. That is unless they are an employee of the town and were assigned the task of flag design as part of their duties, in which case ownership would vest in the township (unless there is an agreement between the employee and employer to the contrary) although the copyright term of protection will still last for the life of the author plus 70 years. In Canada, there can be a distinction between authorship and ownership. If the artist is not an employee but if the work is produced under a “contract of service or apprenticeship”, (as opposed to a simple “contract for services”), the township will also own the copyright. But if the work is done under a “contract for services”, i.e. as an “independent contractor”, the author of the work will control the copyright. What is the difference between the two types of contracts? That is why we have lawyers!

If you want to add another layer of complexity, even if the copyright is owned by the township, the author will still enjoy moral rights in the work, that is the ability to protect the integrity of the work, unless there is an agreement to the contrary. So, if we take the current flag as an example, and Council decides to remove the two horseshoes from the sailboat’s flag, in theory the creator of the original design (if anyone is aware of who that is) could assert their moral rights to oppose the modification of the flag. Better to get a new one designed and, if possible, control the copyright through contractual provisions.

Replacing a poorly designed flag may be a good idea, but keep in mind the copyright ramifications. I am sure that the Town has a legal department, or at least a lawyer on retainer for legal advice, so they will no doubt do it right. I can hardly wait to see the new flag floating proudly over Ladysmith harbour.

© Hugh Stephens 2024.  All Rights Reserved

After Blocking News in Canada, Meta Challenges Australia (Again)

Image: Shutterstock via AI modification

It was inevitable. After Meta pulled the plug on news content on its platform in Canada as its way of complying with the obligations of the Online News Act, Australia, the model that Canada sought to emulate, was surely next in line. On March 1, Meta announced that it plans to stop paying publishers of news content in Australia, and will not renew its current agreements with Australian media once they expire. Most will expire this year.

Canada had modelled its Online News Act (Bill C-18) on Australia’s News Media Bargaining Code, albeit with “improvements”. Rod Sims, who was head of the Australian Competition and Consumer Commission (ACCC) at the time the Commission designed the Code (later incorporated into legislation as the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021), was invited to testify before the Canadian Parliamentary committee examining Bill C-18. In his testimony, Sims talked about the success of the Code, its benefits for not just large media players but also many smaller “country” outlets, estimating the benefits to be north of A$200 million per year to journalism in Australia. He added that the institution of the Code “has transformed the journalism landscape in Australia. It’s gone from pessimism to optimism.”

Inspired by the results of the Australian legislation (which, by the way, ended up not designating either Google or Facebook under the Code, since they managed to come to sufficient “voluntary” agreements with Australian media), Canada moved ahead, basing its legislation on the Australian law but adding a couple of additional features. One was to increase transparency with regard to deals that would be struck under the law. Another was to require self-designation by platforms (while making it apparent that only Meta/Facebook and Google) met the criteria, allowing them an exemption if they reached acceptable deals with media. In this way, the companies could not avoid designation and would be subject to the law, something they strongly opposed, even though both had already engaged in voluntary programs on their own terms to provide some financial support to selected media outlets.

Just as happened in Australia, (see “Google’s Latest “Stoush” with Australia: What’s the Lesson from Germany’s Failed Effort? and “Facebook in Australia: “READY, FIRE, AIM”) both platforms pushed back strongly against the draft legislation, threatening to block news for Canadian users. (Facebook briefly and disastrously blocked news for Australian users during its campaign against the Code, but ultimately backed down). First, in the fall of 2022 Facebook said it might have to block postings of news on its Canadian platform, followed by Google which  threatened to block search for Canadian news in Canada by Canadian users. By the summer of 2023, when the Online News Act became law without any of the amendments proposed by the platforms, Meta upped the ante by declaring that it would end news availability on Facebook and Instagram for all users in Canada prior to the Act taking effect, set for December 2023. Again, just as in Australia, Canadian government leaders were public in their condemnation, accusing Meta of threatening and irresponsible behaviour. Alas, it was all to no avail. It appears Meta had already made its decision to not provide financial support for news content in Canada, and to end the few existing agreements that it had undertaken in the past. At the time, it indicated it would also be taking similar action elsewhere. Rather than submit to the legislation by negotiating with media entities, it complied (in letter if not in spirit) by blocking links to Canadian media. Negotiations with Google continued and eventually a compromise of sorts was reached whereby Google agreed to contribute to a fund which would be used to support journalism in Canada.

This was a somewhat pyrrhic victory (the fund will be about $100 million, less than half what had previously been estimated), but a victory nonetheless in the eyes of at least some of the news media. One can debate the overall success of the legislation (see MediaPolicy.ca’s “The Online News Act is law: a buzzer-beater win or epic miscalculation?”), but along with more government financial support, the Google funded pot will be welcomed by many smaller media outfits. Ironically, establishing a fund rather than requiring negotiations between the platforms and media for payment for content was an early proposal by some commentators. Now this has come to pass more by accident than design. Criteria for disbursing from the fund have been tweaked so that broadcast media, and in particular the CBC, who employ the bulk of news journalists in the country, get less than their proportional share would otherwise indicate.

The lesson for Canada, and now for Australia, is that the big digital platforms will not hesitate to play hardball if they feel their global interests are threatened. While Australia, followed by Canada, was first off the mark with legislation designed to level the playing field between a stressed journalism sector and the monolithic platforms, the response of the platforms was governed more by potential precedent than the specifics of those markets. The existence of draft legislation at the federal level in the US, (the Journalism Competition and Preservation Act, aka JCPA) as well as at the state level in California and Illinois, has not escaped the attention of Meta and Google. (Even the watered-down compromise settlement that Google made with Canada has led to some lip-smacking speculation in the US as to the amount of funding that could flow to US media). It appears that Meta, in the face of cost cutting and loss of market share in 2022, had made a business decision that if it had to pay for access to news content, it would do without. To what extent this is a wise business decision remains to be seen, but the company has clearly made a business decision in this regard. This decision may or may not affect Meta’s bottom line, but it will have the effect of leaving the platform as a purveyor of less than reliable information from nonprofessional sources. However, doing the most socially responsible thing as opposed to maximizing profits by cutting costs is not what Meta is about.  Having made its decision, it will need to unwind its commitments to Australian media, which it is now in the process of doing.

What does this mean for Australia and what can the Australian government do about it? Writing about this in Canada’s National Post, Rod Sims, now professor at the Crawford School of Public Policy at ANU, outlined some choices the Australian government needs to face. It could move to designate Meta under the Bargaining Code and force it into the negotiation and arbitration process. That would likely lead to Meta taking precisely the action that it took in Canada. The government could amend the legislation, but to what end? It could publicly criticize Meta, accusing it of unfairness and bad behaviour. It has already done this, with Prime Minister Albanese saying that what Meta is doing is “not the Australian way”. That will have zero influence on Mark Zuckerberg and the people who run Meta.

At the end of the day, Australia can stand up to Meta, and let the chips fall as they may, or it can allow Meta to free ride on Australian news content, accepting that there may be social benefits in allowing this to happen. A recent report by the Australian Broadcasting Commission (ABC) points out that Facebook is the largest social media platform for general news and half of Facebook’s users in Australia report using the social media platform for news. (Regardless of this, Meta’s beancounters give news no value to the platform). According to a University of Canberra report cited by ABC, 45% of Australians get their news from social media as opposed to less than 20% from print sources. The largest source of news is still TV at 58%. (The numbers are greater than 100 because many consumers get their news from more than one source).  In one sampling, 14% of Australians got their news from Instagram! While I find this personally appalling (indirectly revealing my age), that is the reality of our society today. Better that consumers find reliable, curated news somewhere–but we still need to recognize that responsible journalism needs to be paid for. Meta, apparently, has no desire to be a part of that equation. Without the infusion of responsible, curated journalism, Facebook will become an even greater home for misinformation than it already is. But does Meta care? Clearly not. Consumers need to be encouraged to find their news sources elsewhere. Easier said than done.

The Australian government is no doubt pondering how to respond in the best interest of Australia. Allowing Meta to wriggle out from its obligations under the Bargaining Code would not necessarily undermine the deals struck with Google, who appears to have accepted that its overall interest is best served by some form of accommodation. Having Microsoft, which has publicly stated it is willing to subject itself to both the Australian and Canadian legislation, breathing down its neck is undoubtedly a factor in this. Even if the Google deal won’t be undone, it is still galling that Meta can get away with it. Canada had to swallow that reality, yet stood up to Meta. What will Australia do? It’s a tough call.

© Hugh Stephens, 2024. All Rights Reserved

Artificial Intelligence and Copyright: The Canadian Cultural Community Speaks Out

Image: http://www.shutterstock.com

The extended period set by the Canadian Government (through Innovation, Science and Economic Development Canada, ISED) for response to its consultation paper on Artificial Intelligence (AI) and Copyright closed on January 15. We will start to see a flurry of submissions released by participants while ISED digests and assesses the input it has received. One of the first is the submission from the Coalition for the Diversity of Cultural Expression (CDCE), which represents over 360,000 creators and nearly 3,000 cultural businesses in both French and English-speaking parts of Canada. CDCE’s membership includes organizations representing authors, film producers, actors, musicians, publishers, songwriters, screenwriters, artists, directors, poets, music publishers—just about every profession you can think of that depends on creativity, and protection for creative output. The CDCE submission highlights three key recommendations, summarized as follows;

  • No weakening of copyright protection for works currently protected (i.e. no exception for text and data mining to use copyrighted works without authorization to train AI systems)
  • Copyright must continue to protect only works created by humans (AI generated works should not qualify)
  • AI developers should be required to be transparent and disclose what works have been ingested as part of the training process (transparency and disclosure).

While none of these recommendations are surprising, and from my perspective are eminently reasonable, I am sure we will also see a number of submissions arguing that, “in the interests of innovation”, access to copyrighted works is not only essential but should be freely available without permission or payment. OpenAI, the motive force behind ChatGPT—and the defendant in the most recent high-profile copyright infringement case involving AI (When Giants Wrestle, the Earth Moves (NYT v OpenAI/Microsoft)—has already staked out part of this position. In its brief to the UK House of Lords Select Committee looking into Large Language Models (LLMs), a key technology that drives AI development, the company says;

“Because copyright today covers virtually every sort of human expression–including blog posts, photographs, forum posts, scraps of software code, and government documents–it would be impossible to train today’s leading AI models without using copyrighted materials (emphasis added). Limiting training data to public domain books and drawings created more than a century ago might yield an interesting experiment, but would not provide AI systems that meet the needs of today’s citizens.”

OpenAI claims that it respects content creators and owners and looks forward to continuing to work with them, citing among other things, the licensing agreement for content it has signed with the Associated Press. But failure to reach a licensing deal with the New York Times is really the crux of the lawsuit that the media giant has brought against OpenAI and its key investor Microsoft. If reports are true that OpenAI’s licensing deals top out at $5 million annually, it is not surprising that licensing negotiations between the Times and OpenAI broke down over such lowball offerings.

As for the CDCE submission to ISED, it recommends that the government refrain from creating any new exceptions for text and data mining (TDM) since this would interfere with the ability of users and rightsholders to set the boundaries of the emerging market in licensing. No copyright exemption for AI is what the British government has just confirmed, after playing footsie with the concept for over a year. Apart from the examples of the licensing deals that OpenAI has with the Associated Press and German multimedia giant Axel Springer, the CDCE paper notes a range of other recent examples of content owners offering access to their product through licensing arrangements, including Getty Images, Universal Music Group and educational and scientific publishers like Elsevier. The paper also urges the government to avoid interfering in the market when it comes to setting appropriate compensation, leaving it to market players or, where the players can’t reach agreement, to the quasi-judicial Copyright Board.

In my view, licensing is going to be the solution that will eventually level the playing field, but to get there it will require that major content players lockout the AI web-crawlers while pursuing legal redress, as the NYT is doing. This will help to open the licensing path to smaller players and individual creators who don’t have the resources available to employ either technical or legal remedies. (The issue of what has already been ingested without authorization still needs to be settled). As for the tech industry’s suggestion that creators can opt-out of content ingestion if they wish, CDCE rightly points out that this is standing the world on its head, and would be contrary to longstanding copyright practice. Not only is it impractical in a world where what goes into an AI model is a black box (thus the imperative for transparency) but it is like saying a homeowner has to request not to be burgled, or else can expect to become a target.

On the question of whether AI generated works should be granted copyright protection, CDCE points out the double-standard of proposing an exception to copyright for TDM for inputs while claiming copyright protection for AI generated outputs. The need for human creativity is a line that has been firmly held by the US Copyright Office, pushing back on various attempts to register AI-generated (as opposed to AI-assisted) works. Canada has not been quite so clear cut in its position, owing to the way in which copyright is registered (almost by default, without examination) in Canada, as I pointed out in this blog post (A Tale of Two Copyrights). While AI generated works have received copyright protection in Canada (Canadian Copyright Registration for my 100 Percent AI-Generated Work), this is more by oversight than design, given the way the Canadian copyright registration system works.

Thirdly, we turn to transparency, a sine qua non if licensing solutions are to be implemented.  If authors don’t know whether their works are being used to train AI algorithms, or can’t easily prove it, licensing will fall flat. CDCE calls for publication of all content ingested into training models, disclosure of any content outputs that contain AI, and design of AI models to prevent generation of illegal or infringing content. This is similar to requirements already under consideration in the EU.

CDCE also makes the important point that it is not just copyright legislation that defends individual and collective rights against the incursions of AI and big AI platforms. While the Copyright Act offers some protection to creators, privacy legislation is important for all citizens. As the UK Information Commissioner has pointed out in a recent report, the legal basis for web-scraping is dependent on (a) not breaching any laws, such as intellectual property or contract laws and (b) conformity with UK privacy laws (the GDPR, or General Data Protection Regulation), where the privacy rights of the individual may override the interests of AI developers, even if data scraping meets other legitimate interest tests.

Finally, there is the question of the moral rights of creators that can be threatened by misapplication of AI, whether it is infringement of a performer’s personality or publicity right, distortion of their performance or creative output, misuse of their works for commercial or political reasons or any of the other reasons why copyright gives the creator the right to authorize use of their work.

Quite apart from the question of AI, there are of course other outstanding copyright questions that need to be resolved urgently, including the longstanding issue of the ill-conceived education “fair dealing” exception that has undermined if not permanently damaged the educational publishing industry in Canada. This exception needs to be narrowed to allow users continued unlicensed access to copyrighted materials under fair dealing guidelines for study, research and educational purposes but to limit institutional use to situations only where a work is not commercially available under a license from a rightsholder or collective society. While this issue requires looking back and fixing something that is already broken, policy making with respect to AI and copyright needs to anticipate the future and “do no harm”, while requiring AI developers to open up their black boxes and respect existing rights. This should be achieved by maintaining and protecting the rights of creators in ways that will facilitate market-based licensing solutions for use of copyrighted content by AI developers, while ensuring that creative output remains the domain of human beings, and not machines.

© Hugh Stephens, 2024.