Last month, the Hill Times ran a policy briefing focused on copyright and new media that featured an interview with Industry Minister Christian Paradis on Bill C-11. The interview included a particularly notable exchange on Conservative MP Lee Richardson's comment that Canadians need not be concerned by the digital lock rules since lawsuits are unlikely to follow:

Q.    Liberal MP Geoff Regan said during debate of Bill C-11 that “government members have apparently been saying that it would be okay to break the new law and to circumvent digital locks. The member for Calgary Centre wrote: ‘If a digital lock is broken for personal use, it is not realistic that the creator would choose to file a lawsuit against the consumer, due to legal fees and time involved.’ In other words, he is suggesting not to worry about this, that the law can be broken and nothing would happen, that really we are encouraging consumers to break the law. What does that say about the Conservatives’ position, that they are telling Canadians to break this law that they have not passed yet?” What’s your response?

A.     “Like any country, Canada has laws that all citizens must respect and obey. Bill C-11 sets out the exclusive rights of creators, including musicians, with respect to their artistic creations. Enforcing these rights in a given instance, however, is a private legal matter on which the government cannot speculate.”

While governments often refrain from commenting on active litigation that is before the courts, they must surely anticipate the likely effects of their legislative proposals. Indeed, that is precisely what the government is doing when it repeatedly claims (as it did yesterday) that the bill "make Canada an attractive location for creators, innovators and investors."

In order to determine whether the digital lock rules found in Bill C-11 strike the right balance the government must speculate - typically described as anticipate or project - how it will be enforced. The overwhelming opposition to the current draft - which includes the opposition parties, business groups, retailers, artists groups, consumers, education associations, and thousands of Canadians - is based on analysis about how the rules as drafted will be enforced. After months of debate, there is no longer any question that the current draft goes far beyond international requirements. There is no question that the 2009 copyright consultation came out strongly against the approach in the current draft and there is no doubt that the majority of what the Bill C-32 committee heard was similarly critical of the digital lock rules. In recent days, the government has heard from over 50,000 Canadians repeating their concern with the proposed approach.

If Paradis and Canadian Heritage Minister James Moore have not speculated on how their digital lock rules could enforced, perhaps it is because they don't need to. They know - or ought to know - that the following scenarios are some of the possible outcomes:

• a Canadian documentary film maker wants to use a video clip found in a commercial DVD within their film. The clip would qualify as fair dealing under the law. They circumvent the digital lock on the DVD in order to use the clip. When the film maker seeks to distribute the film or screen it at a film festival, they require insurance against infringement claims. They are unable to obtain the insurance - and therefore unable to distribute or screen their film - because the circumvention of the DVD lock (which include both access and copy controls) violated Canadian law. U.S. documentary film makers do not face the same restriction.
• a television journalist wants to use a clip found on a DVD for a news report. The piece is a controversial one and is reviewed by a lawyer. The lawyer refuses to approve the use of the clip since it similarly requires circumvention of a DVD lock. While news reporting is a fair dealing category, the circumvention would still constitute infringement.
• a Canadian media researcher plans a major new project that involves using a wide range of media clips. The researcher completes a full grant proposal to support the research. Before submitting the grant, they are required to sign an ethics document confirming that the research does not violate any Canadian laws. The researcher cannot sign the document and cannot apply for the grant since the circumvention would violate the Bill C-11 digital lock rules.
• a B.C. school district opts for open source software for all workstations throughout local schools. The school licenses educational DVDs for classroom purposes. The licence includes a provision that the school will comply will all applicable copyright laws. The school cannot use the DVDs on the workstations without circumventing the DVD locks in violation of the law and licence.
• a Canadian computer science researcher wants to circumvent digital locks on several computer programs for encryption research purposes. The researcher does not alert the owner of the programs, since the program owner has threatened other researchers who have tried to do the same thing with a lawsuit. The company follows up with a lawsuit against the Canadian researcher, noting that the researcher did not qualify for the encryption research exception in Bill C-11 by failing to provide advance notice of the circumvention.
• a Canadian family receives a package of DVDs from relatives in Japan. The DVDs are region coded and will not play on a Canadian DVD player. They try to find a service that will circumvent the digital lock so they can view the movies. No local service will do it since the law prohibits circumvention services.
• a non-profit group representing visually impaired Canadians offers services circumventing digital locks on electronic books to improve access for their members. A leading publisher threatens a lawsuit if the service continues, arguing that service unduly impairs the technological protection measure found on the e-book in violation of Bill C-11.
• a privacy group is concerned with the surreptitious capture of personal information by consumer electronics companies. The group creates a software program that will circumvent the digital lock on the products to identify whether personal information is being collected. A leading consumer electronics company sues to block distribution of the product, arguing that the privacy exception does not apply where the service unduly impairs the technological protection measure.

These are not mere hypotheticals. A detailed review of the U.S. DMCA provisions - which are very similar to those found in Canada - has identified numerous examples where the law chilled freedom of expression and scientific research, jeopardized fair use, and impeded competition and innovation. Moreover, many involve situations where the user does not have the "choice" to not purchase a digitally-locked product, but rather find that the digital lock, when coupled with the Bill C-11 approach, impedes legitimate, legal activity. These examples are in addition to the many consumer rights - format shifting, time shifting, backup copies, etc. - which are all inapplicable anytime a digital lock is present.

This is precisely the kind of "speculation" that many groups have conducted in reaching the conclusion that the Bill C-11 digital lock rules do not strike the right balance. The proposed solution from virtually all the critics is not to dismiss legal protection for digital locks, but rather link protection to copyright infringement. That approach would solve all of the above scenarios. If enacted in its current form, the law will have an impact on the legitimate activities of millions and attempts to falsely assuage Canadians that these provisions are mostly innocuous is simply inaccurate.  

While hysterical predictions about copyright reform in Canada have been ratcheted up yet again, this time the claims are so outrageous that they can perhaps best be described as having “jumped the shark.” Canadians are being told that Bill C-11, an act to amend Canada’s outdated copyright law, could be used to shut down popular websites such as YouTube, fundamentally change the Internet, sabotage online freedoms and hog-tie innovators.

Further details on how the proposed amendments to Bill C-11 could be used to target YouTube are available here and discussed in greater detail below. As noted in the post, the language in the bill - if combined with amendments supported by Sookman's clients - could be used to target legitimate sites such as YouTube. Those same proposed amendments call for website blocking and ISP policies that could lead to loss of Internet service.

Activist organizations are urging Canadians to protest what they call the impending Bill C-11 “Internet lockdown.” Making wild claims about the bill that have no basis in reality are groups such as OpenMedia and Avaaz and illicit businesses who sell hacking devices for pirated video games, all urging online protests and all relying on the hyperbolic musings from University of Ottawa academic Michael Geist of what might or possibly or could one day happen. To fully ratchet up the frenzy, these groups are claiming attempts are being made to bring U.S.-style legislation to Canada.

I have written in detail about the SOPA-style rules including website blocking and expansion of liability for sites that could even cover legitimate sites here and here. The concerns about an "Internet lockdown" likely stem from the recording industry's demand for ISP provisions that could lead to termination of Internet services.

These warnings are an attempt to exploit the controversy and unpopular anti-copyright sentiments about the much-misunderstood U.S. legislation in Congress called the Stop Online Piracy Act, and to derail parts of Bill C-11 and proposals to amend it. It doesn’t seem to matter that SOPA and Bill C-11 are entirely different pieces of legislation, with different goals and legislative text. Canadians should examine the facts and see the hysteria for what it is.

SOPA and C-11 are different pieces of legislation as I emphasized in an FAQ on the issue. What matters is the substance of the provisions in C-11 and the proposed changes that would add SOPA-style provisions to the bill.

Bill C-11 contains many provisions that would greatly expand the freedoms of Canadians to copy creative products under new exceptions for format shifting, time shifting and creating mash-ups. ISPs and other online service providers would have new wide exceptions when they act as neutral intermediaries. The bill also proposes new exceptions for broadcasters and to support learning and education. With these new exceptions, Canada’s copyright law would become one of the most user-friendly, if not by far the most user-friendly, in the world. An Internet lockdown? Hardly.

Bill C-11 certainly includes some user-friendly provisions. From the day the bill was introduced, I have argued that there are many aspect of the bill that deserve support. In fact, a review of the transcript of my committee appearance shows I was more supportive of the bill than Sookman, who appeared on the same day. The public has become concerned, however, because Sookman's clients are seeking radical amendments that would scale back even the user-focused provisions. The proposed amendments (this is their document, not mine) includes limitations on the format shifting, time shifting, and user generated content provisions, restrictions on the ISP provisions, and elimination of the broadcaster provision. To suggest that the bill is user-friendly while simultaneously seeking to change those provisions amounts to a classic bait and switch.

Bill C-11 also proposes amendments to provide legal protection for technological protection measures (a.k.a. digital locks or TPMs) that safeguard intellectual property products. These amendments would use internationally accepted measures to support new business models and innovation in digital products and services such as online music and movie streaming services.

This is by far the most contentious aspect of the bill with a digital lock approach that is widely opposed by both major opposition parties, business groups, creator associations, consumer groups, and education associations. The issue is not whether to provide legal protection for digital locks, but rather how to do so in a manner that supports businesses and retains the copyright balance. The Canadian approach goes far beyond international requirements and raises legitimate fears about its impact on consumer property rights, free speech, and privacy. More information on the digital lock rules here.

The SOPA rhetoric has led opponents of legal protection for TPMs to mount further opposition to Bill C-11 by trying to link the anti-copyright sentiments about SOPA to the TPM provisions in Bill C-11, arguing, for example, that they are the “Canadian version of SOPA.” They do this even though there is no connection whatsoever between them.

The argument is that some of the proposed amendments to C-11 are the Canadian version of SOPA. Bill C-11 as it stands is better characterized as the Canadian DMCA, since it largely mirrors the digital lock approach found in that legislation. I discussed this point during my appearance on George Stroumboulopoulos Tonight.

Bill C-11 also proposes an amendment intended to make it an infringement of copyright for a person using the Internet to knowingly enable copyright infringement. The poster children for this legislation are BitTorrent sites such as IsoHunt.com that have been found to facilitate the distribution of files, 95% to 99% of which are infringing. Other targets of the enablement provision are sites such as Megaupload.com, a cyber locker site whose principals were just indicted for criminal copyright infringement. The FBI estimates that the founder, Kim Dotcom, personally made $115,000 a day from his network of sites.

In 2008, Sookman sent isoHunt a cease and desist letter that threatened legal action that would seek up to $20,000 per infringement. That letter was based on current Canadian copyright law.  In 2010, Sookman's firm filed a lawsuit against isoHunt, citing a long list of copyright infringing activities based on current law. IsoHunt may be the poster child for the enabler provision, but Sookman is the poster child for how current Canadian law can be used to target these same sites.

This provision is currently worded to apply only to sites that are “designed primarily to enable acts of copyright infringement.” Mr. Geist claims that clarifying the wording to expressly cover services that are “primarily operated to enable infringement or induce infringement” could be used to shut down sites such as YouTube and would stifle innovation. These claims are ridiculous, though not surprising given his historical antipathy to laws designed to protect the creative industries from theft.

The amendments proposed by the recording industry are not "clarifications" of the enabler provision. They represent a significant expansion of the provision that would risk being applied to legitimate sites as well. I provide a full analysis of why the expanded provision could be used to target sites such as YouTube here.

To be clear, SOPA was intended to target foreign rogue websites that would already be illegal under U.S. copyright law if those sites were operated from the U.S.  Bill C-11 is not about foreign pirate sites: It is Canada’s attempt to establish rules about what is and isn’t legal in Canada.  This is long overdue. The fact that Canada has not updated its copyright laws to deal with the Internet environment has led to our reputation as a haven for internet piracy operations both with our trading partners and pirate operators including Megaupload’s Kim Dotcom.

As noted above, Sookman's legal threats and lawsuits make it clear that he thinks these sites are illegal under current Canadian law. Canada's reputation as a piracy haven is due to the hyperbolic claims of Sookman and his clients. The Business Software Alliance’s annual Global Piracy Report shows Canada among the 15 lowest piracy countries in the world with the Canadian piracy rate at an all-time low. The Canadian Motion Pictures Distributors Association has acknowledged that illegal camcording had largely disappeared from the Canadian market. In 2010, the World Economic Forum found that global executives rank Canadian intellectual property protection ahead of the United States, the United Kingdom, Japan, and most of Europe. Canada is a world leader in digital music sales that even the Canadian Recording Industry Association now characterizes as a commercial opportunity.

The current wave of opposition to the amendments appears to be an opportunist effort to turn the tide on effective copyright reform by leveraging anti-SOPA public opinion. The amendments that are being objected to were first tabled before the Parliamentary Committee examining Bill C-32 in March 2011 and were publically disseminated even by Mr. Geist, well before the SOPA ruckus. At that time there was no public opposition to the proposed amendments as going too far.

The Bill C-32 committee solicited comments and proposed amendments from all Canadians. It received dozens of submissions, but none were posted online or made publicly available. I obtained copies of the submissions last summer after Bill C-32 died on the order paper as part of a request from the committee clerk. There was no public opposition to the proposed amendments because few people were actually aware of the specifics. Moreover, by Sookman's standard, there were no objections to the dozens of suggested changes, the majority of which called for reforms to the digital lock rules.

The new argument that amendments would cover sites such as YouTube is spurious. Bill C-11 provides a series of criteria that a court would need to consider in determining if a site primarily enables infringement. The targeted sites are those: promoted to enable acts of infringement; that know they are being used to enable significant infringements; that have no significant uses other than enabling infringement; that benefit from enabling infringement; and that would be economically unviable but for enabling infringement. The types of sites that would be affected are such sites as IsoHunt and Megaupload, the very wealth-destroying “innovators” the bill targets.

I outlined how the specific criteria could applied to YouTube here.  To repeat, contrast the Bill C-11 criteria that a court may consider with Viacom's claims against YouTube, as found in its appellate brief:

Bill C-11	Viacom's Claims
whether the person expressly or implicitly marketed or promoted the service as one that could be used to enable acts of copyright infringement	"YouTube’s founders built an integrated media entertainment business, in the district court’s words, by “welcom[ing] copyright-infringing material being placed on their website.”  That copyrighted material was “attractive to users” and “enhanced defendants’ income from advertisements,” enabling YouTube’s founders to sell the business to Google for $1.65 billion."
whether the person had knowledge that the service was used to enable a significant number of acts of copyright infringement	"Almost immediately after YouTube came online, YouTube became aware of widespread infringement on its site.  And it was the copyrighted videos—not home movies—that people flocked to YouTube to see."
whether the service has significant uses other than to enable acts of copyright infringement	"In their written presentation to Google’s board and senior management, Google’s financial advisors stated that 60 percent of YouTube’s views were “premium” —i.e., copyrighted—and only 10 percent of the premium videos were licensed."
the person’s ability, as part of providing the service, to limit acts of copyright infringement, and any action taken by the person to do so	"Dunton similarly put a stop to efforts to implement software that would notify copyright owners when infringing videos were uploaded.  Even though a YouTube engineer said that implementing an automated anti-infringement tool to alert copyright owners when suspected  infringing content was uploaded “isn’t hard” and would “take another day or [weekend],”  Dunton ordered the engineer to “forget about the email alerts stuff” because “we’re just trying to cover our asses so we don’t get sued.”"
any benefits the person received as a result of enabling the acts of copyright infringement	"Unable to compete with YouTube’s pirated content, in late 2006, Google bought YouTube for $1.65 billion."
the economic viability of the provision of the service if it were not used to enable acts of copyright infringement	"As early as June of 2005, YouTube’s Internet service provider complained that YouTube was violating its user agreement by, YouTube founder Steve Chen believed, “hosting copyrighted content.”  But Chen resolved that YouTube was “not about to take down content because our ISP is giving us shit.”  And, in emails with the other founders, he later remarked “we need to attract traffic. . . .  [T]he only reason why our traffic surged was due to a video of this type”—i.e., copyrighted and unauthorized"

The government has acknowledged that technical amendments to Bill C-11 are required. A healthy debate based on facts can be expected as Parliament’s Special Legislative Committee continues to consider it, and thoughtful debate is always helpful in ensuring a proposed law meets its objectives. But let’s not be fooled by Chicken Little claims. Canadians will all be hurt if the debate continues to be marred by political opportunism and misinformation spread for political purposes.

If there has been political opportunism and misinformation, it has been the consistent mischaracterization of Canadian law by groups such as CRIA and their representatives, which sue on the one hand and lobby for reform on the other. The fact that tens of thousands of Canadians have woken up to Bill C-11 and the radical proposed amendments supported by Sookman's clients is a welcome development, one that will help ensure a full debate with politicians from all parties better aware of where Canadians stand on copyright reform.

Interestingly, the key player in promoting the case in Canada was the Canadian Recording Industry Association, which appears to have worked closely with the U.S. government to pressure Canadian officials to join the case. A Wikileaks cable notes that "CRIA is leading the charge to get the Government of Canada to join the U.S. case." [the same cable also states that the Entertainment Software Association of Canada "expects not to take a position, because not all of their members are in agreement and because their members' IP is not Canada-based anyway."]

I chronicled the background information in a column in 2009 based on documents obtained under the Access to Information Act.  The key findings:

Government records reveal that the U.S. began to pressure Canada to join the case as a full party in 2006, months before the case was formally filed with the WTO.  In April 2006, officials at the Department of Foreign Affairs asked the Beijing and Shanghai consular offices for information on intellectual property infringement problems, but neither provided much assistance.

Two months later, with the case making little progress (in May, an RCMP official wondered aloud why Canada was even concerned with enforcement in other countries), Foreign Affairs launched a public consultation on intellectual property enforcement abroad.  The consultation was not limited to China, as officials decided to keep it open-ended.

The consultation generated 55 responses, but officials hoping to build a solid case against China were left sorely disappointed.  According to a government summary (the consultation results have never been disclosed to the public and were obtained under Access to Information), only one-third of the responses specifically referenced China as a problem.  In fact, there were more responses that criticized the United States and the consultation itself.

By the end of the summer, the U.S. had provided Canadian officials with its legal arguments, but Canada was without the evidence it needed to demonstrate harm and thereby participate as a co-complainant in the case.  Indeed, on the key issue involving criminal enforcement thresholds, a Department of Justice official noted that Justice and RCMP guidelines used similar thresholds for prosecutorial decisions and that the Chinese could effectively make similar claims against Canada.

Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party.  Anticipating an October 2006 complaint, a press release was prepared but was never issued after the U.S. decided to delay launching the case.

With no complaint in sight, the Canadian Recording Industry Association, which had been the most vocal supporter of Canadian participation, met with senior Foreign Affairs officials in January 2007.  Documents prepared by department officials in advance of the meeting noted that CRIA's previous efforts to encourage participation had "lacked specifics."  The memo concluded that "we remain of the view that we do not have enough information related to specific Canadian experiences and interests to go forward as a co-complainant" and that "there is still no real concrete information however, of Canadian interests that have been harmed in China."

Over the next few months, Canadian officials grappled with several concerns as a U.S. complaint appeared inevitable.  For example, with plans for Canada to participate in the intellectual property case against China but not in a second case on market access, officials feared that the Canadian steel industry would voice its objections.

Further, as Canadian officials drafted a formal letter of notification of its participation, a Geneva-based official asked "do we have statistics to mention about intellectual property owned by Canadians sold in China or something like it to explain why we are interested?"  Without solid statistics, the formal notification did not reference the issue, instead merely stating Canada's "concern" with Chinese practices.

The U.S. commenced its action on April 9, 2007. Canada filed its notification as a third party participant two weeks later and within hours, CRIA wrote to Foreign Affairs to offer its assistance on the case. Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party.

The column begins by discussing the public domain. For copyright watchers, New Year's Day has become public domain day, the day when the term of copyright expires on thousands of works. While Europe celebrated the entry of James Joyce and Virginia Woolf into their public domain, Canadians noted that both authors’ copyright expired here in 1991. The term of copyright in Canada is consistent with the international standard of life of the author plus 50 years, which this year meant that the works of Ernest Hemingway and Carl Jung entered into the public domain, twenty years before they are scheduled to do so in Europe or the United States.

The Trans Pacific Partnership Agreement may place the difference in copyright term in jeopardy (a recent leaked draft indicates that it mandates extending the term of copyright), but for the moment it provides Canada with an important competitive advantage. Canadian businesses, creators and educators can rely on a far larger public domain than competitors in the U.S. and Europe, leading to new creative and commercial opportunities as well as increased access for teachers and students.

While the government has framed Bill C-11 as a policy effort to strike the right copyright balance, a crucial question in light of Prime Minister Stephen Harper’s emphasis on the Canadian economy is whether the bill uses the flexibility at international law to establish a competitive advantage when compared to our trading partners.

The answer is a mixed bag. The bill contains several unique Canadian proposals that should create some legal advantages. For example, the approach to Internet provider liability, known as notice-and-notice, strikes a better balance than the U.S. notice-and-takedown system, making Canada an attractive home for hosting Internet content. Similarly, the user generated content provision, which legalizes non-commercial remix videos, provides legal certainty to intermediaries that host content and those that create it. Rights holders have also pointed to the “enabler provision” as a made-in-Canada approach to assist enforcement efforts, though are now seeking a far broader rule.

Bill C-11’s approach to fair dealing leaves Canada in the mushy middle when it comes to copyright exceptions and limitations. The inclusion of three new exceptions – education, parody, and satire - is an improvement, but it does not go as far as trading partners such as the U.S. and Israel, which have both recognized that fair use lies at the heart of many industries that rely upon a flexible copyright system. The absence of fair use creates a competitive disadvantage for innovative Canadian businesses, who may decide to set up shop elsewhere as a result.

The biggest competitive shortcoming in Bill C-11 is also the most heavily criticized – the digital lock rules. While the criticism from consumer, education, and library groups is noteworthy, the lack of support from business and creators groups is particularly telling.

On the business side, the Business Coalition for Balanced Copyright, which includes leading technology, telecom, and Internet companies, has argued for changes to the rules, as has the Retail Council of Canada, which fears that the changes could hurt consumer confidence in the digital environment.

The Bill C-11 digital lock rules will also place some Canadian creators at a competitive disadvantage. For example, documentary filmmakers in the U.S. rely on a specific exception that permits circumvention of digital locks found on DVDs. By contrast, the Canadian approach does not feature a DVD circumvention exception, creating additional costs and legal uncertainty.

Supporters argue that the digital lock rules will create incentives for new media businesses, yet there is little evidence those rules provide a competitive advantage. Without any digital lock rules, Canadian digital music sales have grown faster than those in the U.S. for the past five consecutive years, Canadian entertainment software businesses have thrived, and a steady stream of new digital businesses such as Netflix and Rdio have entered the Canadian market, suggesting that the current law is not holding back new marketplace entrants or commercial success.  

Copyright reform may be driven by a desire to meet international standards, but global copyright law provides all countries with considerable flexibility in implementation. Identifying opportunities to create Canadian copyright competitive advantages would bring commercial and creative benefits and though Bill C-11 features several unique provisions, they are undermined by badly missing the mark on the digital lock rules. 

The second issue involves expansion of the "enabler provision" currently proposed in Bill C-11. I have pointed out that Canadian law appears to effectively address these sites as the music industry is currently suing isoHunt for millions of dollars based on the current law. In the event that more certainty is needed, the current enabler provision would grant even more powers to rights holders to target these sites. Yet that is apparently not good enough for the music, software, and movie lobby groups, who want to expand the enabler provision to include SOPA-like liability as well as add website blocking injunctions to Canadian law. The danger with this approach is that it threatens to target perfectly legitimate websites. Arguing against an overbroad enabler provision is not siding with illegal sites, but rather ensuring that legal ones are not caught by the dragnet.

The music industry claims to be a big supporter of Bill C-11, yet few groups have demanded more changes. In fact, when it appeared before the House of Commons committee reviewing the bill, one MP noted that their demands were "substantial" and "anything but minor." Their demands include:

• expansion of the enabler provision to include SOPA-style expanded liability
• create new injunction powers to block websites
• create new injunction powers to remove content from websites
• require ISPs to implement a policy on repeat infringers that could include Internet termination
• remove the non-commercial liability cap for statutory damages
• restrict the user-generated content provision
• create new limits on personal copying exception
• create new limits on time shifting exception
• create additional limits on backup copy provision
• limit the safe harbour for ISPs
• limit the safe harbour for caching activities
• limit the safe harbour for hosting content
• limit the search engine (ILT) exception
• eliminate the ephemeral recording amendment

The music industry is seeking a huge overhaul of Bill C-32 that makes any requests for adjusting the digital lock rules look minor by comparison. As it escalates the rhetoric by claiming critics stand with piracy, it is apparent that the lobby groups' fight to blend a Canadian DMCA with a Canadian SOPA will only intensify in the weeks ahead.

Topping the list is whether the government tinkers with the auction framework to help foster greater marketplace competition. Some of the large incumbents unsurprisingly favour an “open auction” with no bidding limits, but assuming Paradis concludes that some measures are needed, the choice will likely come down to either a spectrum set-aside that reserves some spectrum for new entrants and smaller companies or spectrum caps.

The last spectrum auction included a set-aside, which opened the door to a handful of new competitors such as Globalive, PublicMobile, and Mobilicity. A further set-aside may make sense since this round of new entrants may look to use the spectrum primarily for wireless broadband services, providing a potential alternative to the cable and telecom dominance.

If another set-aside proves too unwieldy, a spectrum cap, which would limit the amount of spectrum any single company could hold, may emerge as the alternative. A spectrum cap might prove effective if combined with two additional conditions.

First, the implementation of a use-it-or-lose it principle that would require all bidders to use the spectrum within a defined period. The use-it-or-lose-it approach would help guard against the hoarding of spectrum, particularly for incumbents who may overbid in the hopes of keeping new competitors out of the market.

Second, safeguards against opportunistic flipping of the spectrum with the prohibition on its sale within the first five years of the auction. The trio of policies – caps, mandatory use, and a block on transfer, may increase the number of successful bidders.

Another critical issue is who should be entitled to bid for the spectrum. The last spectrum auction featured Canadian ownership requirements, thereby limiting potential entrants. Given that Canada is one of the only developed countries that has retained significant telecom foreign ownership restrictions, the auction provides a tailor-made opportunity to eliminate the restrictions by opening the market to all bidders.

The spectrum policy decision will also determine which spectrum is available for auction and which is reserved for alternate purposes. The government has already indicated that it plans to grant some of the spectrum to law enforcement agencies, which intend to create their own emergency wireless network.

Many leading technology companies have recommended allocating some of the spectrum for unlicensed purposes. This spectrum, which would be free to anyone to use without the need for licence or government approval, could yield new services and technologies.

Beyond the technical details of the spectrum auction, the final billion-dollar question is what the government should do with the auction proceeds. While the $4 billion in proceeds from the last auction went into general revenues, this auction represents the best – perhaps only – opportunity to access billions of non-tax dollars for the digital economy.  The money could be used to support broadband initiatives, digital content creation, and digital skills programs. 

1.    What, if anything, are the links between current Bill C-11 and SOPA?

Bill C-11, the Canadian copyright reform bill, is the latest iteration of several attempts at Canadian copyright reform. There is a lot to like about the bill: it includes an expansion of the fair dealing provision, new consumer rights for format shifting, time shifting, and backup copies, a provision facilitating user generated content, a new distinction between commercial and non-commercial infringement, as well as a fair and effective approach to Internet provider liability. Some of these provisions are not perfect (flexible fair dealing would be better than the C-11 model, eliminating statutory damages for non-commercial infringement is needed), but the bill is far better than prior Conservative copyright bills.

As I have stated since its introduction, Bill C-11 is flawed but fixable. The major problem with the bill remains the digital lock provisions, which eviscerate many of the new consumer rights and undermine fair dealing. The approach has been widely criticized by dozens of groups representing business, creators, consumers, educators, and librarians. The proponents of the digital lock rules are chiefly U.S.-backed lobby groups, the same groups that were behind SOPA in the U.S. In fact, there is considerable evidence that the Canadian approach is a direct result of ongoing U.S. pressure on the issue. Had SOPA passed, it included a provision requiring further linkages between U.S. trade pressure and intellectual property policy.

2.    Could Bill C-11 become more like SOPA?

Yes. Last week, I noted that music and entertainment software lobby groups have proposed SOPA-style changes to C-11. For example, the industry wants language to similar to that found in SOPA on blocking access to websites, demanding new provisions that would "permit a court to make an order blocking a pirate site such as The Pirate Bay to protect the Canadian marketplace from foreign pirate sites." Section 102 of SOPA also envisioned blocking of websites.

Several lobby groups also want language similar to that found in the infamous Section 103 of SOPA. That provision, which spoke of sites "primarily designed or operated for the purpose of...offering goods or services in a manner that engages in, enables, or facilitates" infringement, raised fears that it could be used to shut down mainstream sites such as Youtube.

According to a music industry document, Bill C-11's "enabler provision" should be expanded to include "services that are primarily operated to enable infringement or which induce infringement." Those demands are echoed by the Entertainment Software Association of Canada, which called on the government to "amend the enabling provision to ensure that it applies to services that are "designed or operated" primarily to enable acts of infringement." Both groups also want statutory damages added to the enabler provision so that liability can run into the millions of dollars for a target website.

Bill C-11 committee member Dean Del Mastro, a Conservative MP, specifically referenced the enabler provision in a recent interview about potential changes and there are rumours that the U.S. government is pushing the Canadian government to toughen the enabler provision (while keeping the digital lock rules unchanged).

3.    Are there plans to add "three strikes and you're out" Internet termination rules to Bill C-11?

The government has indicated that it does not want to add Internet termination (often called graduated response) to the bill.  However, the music industry is demanding that Internet providers be required to adopt a termination policy for subscribers that are alleged to be repeat infringers. According to the music industry document:

To incent service providers to cooperate in stemming piracy by requiring them to adopt and reasonably implement a policy to prevent the use of their services by repeat infringers and by conditioning the availability of service provider exceptions on this being done.

This demand would move Canada toward the graduated response policy that could result in loss of Internet service for Internet users. There is no indication in the music industry document of due process or even proof of infringement.

4.    Are these SOPA-style changes simply technical amendments?

No. The expansion of the enabler provision to include SOPA-style rules could create new legal risk for legitimate websites.  For example, last week I illustrated how the rules could be used to target online video sites such as Youtube.  If those proposed changes are adopted, it could create a huge chill in the investment and technology community in Canada. Online video sites, cloud computing sites, and other online services may look at the Bill C-11 and fear that even a lawsuit could create massive costs, scare away investors, and stifle new innovation.

5.    Can Bill C-11 be fixed?

I believe the answer is yes. First, the SOPA-style demands, including website blocking, Internet termination, and expanded liability, must be rejected. Second, the digital lock provisions must be fixed by linking circumvention of digital locks to copyright infringement. Such an approach enjoys broad support as it would provide legal protection for digital locks, be consistent with the WIPO Internet treaties, and follow the model of trading partners such as New Zealand and Switzerland.

6.    Aren't these digital lock rules needed to help the music industry?

No. As the industry itself now promotes, Canada is a leader when it comes to online music sales. Canada is the 6th largest market for recorded music in the world, ranking 6th for digital sales and 7th for physical sales. Digital sales have grown faster in Canada than the U.S. for the past five consecutive years. There are wide range of online music services in Canada, all created without restrictive digital lock rules. I delivered a full talk on the issue titled Why Copyright Reform Is Not the Cure for What Ails the Music Industry last year at the Nova Scotia Music Week conference (talk sources).

7.    Aren't these digital lock rules needed to help the entertainment software industry?

No. The Entertainment Software Association of Canada has been one of the most outspoken proponents of restrictive digital lock rules. Yet its own evidence demonstrates why balanced digital lock rules do not put the industry at risk. In 2007, it released a report called Entertainment Software: The Industry in Canada, which estimated that there were approximately 9,000 video game jobs in Canada. Four years later, the industry has grown to 16,000 jobs, yet Canada has had no digital lock legislation during that period. In other words, without any changes to Canadian copyright law, the industry has emerged as a major success story.

Not only is the claim unsupported by years of experience, but when the industry was recently asked about perceived risks, copyright concerns fell well down on the list. Last year, the ESAC commissioned a study by SECOR Consulting that surveyed the industry and asked for the top three risks faced by the Canadian video game industry over the next two to five years. Copyright ranked far behind many other concerns.

8.   Aren't these digital lock rules needed to be compliant with international law?

No. While digital lock rules are needed to comply with the WIPO Internet treaties (which Canada has signed but not ratified), the treaties offer considerable flexibility in their implementation. I addressed the issue in great detail in a peer-reviewed article on the topic. The article is part of a larger book on Bill C-32 (the predecessor to C-11) called From "Radical Extremism" to "Balanced Copyright": Canadian Copyright and the Digital Agenda. It is available as a Creative Commons licensed download.

9.    Where does Canada stand on the Anti-Counterfeiting Trade Agreement (ACTA)?

Canada signed ACTA in October of last year. At the moment, ratification of ACTA will require legislative change in Canada.  Some of those changes are contained in Bill C-11, but not all. A second intellectual property enforcement bill is expected to be introduced in Canada later this year that will provide new powers to customs officials as well as other measures. The Department of Foreign Affairs is presently conducting an open consultation on ACTA. Email your comments to the department or write Consultations and Liaison Division (BSL), Anti-Counterfeiting Trade Agreement (ACTA), Foreign Affairs and International Trade Canada, Lester B. Pearson Building, 125 Sussex Drive, Ottawa, Ontario, K1A 0G2.

10.    Where does Canada stand on the Trans Pacific Partnership Agreement (TPP)?

The Canadian government filed notice of a public consultation on December 31, 2011 on the possible Canadian entry into the Trans Pacific Partnership negotiations, trade talks that could result in an extension in the term of copyright that would mean nothing new would enter the Canadian public domain until 2032 or beyond. The TPP covers a wide range of issues, but its intellectual property rules as contemplated by leaked U.S. drafts would extend the term of copyright, require even stricter digital lock rules, restrict trade in parallel imports, and increase various infringement penalties. I've written about the effect in Canada here, here, and here.

The major intellectual property lobby groups want to keep Canada out of the deal until we cave to the current U.S. copyright demands. The IIPA, which represents the major movie, music, and software lobby associations, points to copyright reform and new border measures as evidence of the need for Canadian reforms and states "we urge the U.S. government to use Canada’s expression of interest in the TPP negotiations as an opportunity to resolve these longstanding concerns about IPR standards and enforcement." These are the same groups that supported SOPA in the U.S.

The consultation is open until February 14, 2012. All it takes a single email with your name, address, and comments on the issue. The email can be sent to consultations@ international.gc.ca. Alternatively, submissions can be sent by fax (613-944-3489) or mail (Trade Negotiations Consultations (TPP), Foreign Affairs and International Trade Canada, Trade Policy and Negotiations Division II (TPW), Lester B. Pearson Building, 125 Sussex Drive, Ottawa, Ontario K1A 0G2).