My weekly Law Bytes column (Toronto Star version, homepage version)
reports that the the Conservative government is preparing to launch a
Cyber-Security Task Force. Although the Ministry of Public Safety and
Emergency Preparedness does not list any information about the task
force on its site, GEDS, the government's electronic directory service,
was recently updated to include a Cybersecurity Task Force Secretariat. The Secretariat apparently at least includes an Assistant Deputy Minister and a senior policy analyst.
While the move to address shortcomings in Canada's cyber-security
framework is welcome, the creation of this task force raises three
important issues.Read More ...
TagsShareMonday May 29, 2006
First, who will be on the task force? It is essential that the task
force include representation from both privacy and civil liberties
Second, what other legislation could be introduced in such an
environment? With a cyber-security task force on the way, speculation
will increase that the Conservative government is also preparing to
bring back so-called "lawful access" legislation.
Third, how will Canadians be protected against online fraud and other
Internet-based criminal activity? The National Task Force on Spam, expressed concerns about the ineffectiveness of
Canadian law to counter spam, phishing, and spyware. It recommended
that the government introduce new legislation to help prevent such
activities, which have been closely linked with identity theft, massive
consumer losses, as well as reduced confidence in e-commerce and
Given the growing reliance on Internet communications, the move to
address cyber-security issues is long overdue. In tackling the issue,
however, the government should ensure that privacy, civil liberties,
and consumer protection considerations are included in the discussions.
A special edition of my Law Bytes column (Ottawa Citizen version, homepage version) reports on a recent Canadian Heritage commissioned study on the economic impact of the copyright industries. The Connectus Consulting report, entitled The Economic Impact of Canadian Copyright Industries - Sectoral Analysis, has yet to be publicly released. However, I recently obtained a copy of the final report dated March 31, 2006, under an Access to Information Act request.
The report, which spans 1997 to 2004, finds that the copyright industries comprise 4.5 percent of the Canadian economy and contribute 5.5 percent of total Canadian employment. While that is expected to increase in the coming years (the copyright industries are growing at a faster rate than the overall economy), it pales in comparison to sectors such as finance, manufacturing, agriculture, education, and health care.
More interesting is a case study on the sound recording industry that contradicts both the industry claims and the expectations of the report's authors.Read More ...
TagsShareThursday May 25, 2006
It begins by stating that "there is little doubt that the Canadian sound recording sector has undergone significant change in the past several years, primarily as a result of illegal music downloading (or peer to peer file sharing) and the consequent impact on the sale of recorded music."
Incredibly, the report's authors marshal no economic evidence to support this unequivocal assertion nor do they offer any legal analysis to back up the claim that peer-to-peer downloading is illegal in Canada. In fact, the study undermines its own credibility by ignoring evidence that the changes in retail distribution channels, the decline of radio, and competition from other consumer entertainment products such as DVDs and video games are primarily to blame for dropping sales.
Regardless of the reason, the report's authors were clearly surprised when the economic data contradicted their stated thesis. Warning that "these findings should be treated with caution", the study reports that the Canadian sound recording industry grew steadily from 1999 to 2004, with the GDP contribution jumping from $243 million to $387 million.
The report implausibly attributes the increase to reduced employment, noting that there may be greater efficiencies due to a reduction in the number of record labels and the consolidation of the major multinationals.
Given that a ten percent reduction in employment is unlikely to inject an extra $150 million into the Canadian economy, the report's authors might instead have considered the fact that Canadian music labels have enjoyed unprecedented success in recent years. With the major foreign multinationals reporting 20 percent employment reductions, the data suggests that Canadian record companies, who are responsible for 90 percent of new Canadian releases, are providing a counterbalance to the multinationals' struggles.
The 93-page report should be required reading for those involved in the copyright reform - hopefully Canadian Heritage will move quickly to make the full study readily available on its website.
My weekly Law Bytes column (Toronto Star version, BBC version, homepage version) looks at the recent ICANN decision to reject the creation of a new dot-xxx domain name extension. The year-long debate over whether to approve the adult-oriented domain may have long-term implications for Internet governance since it sparked enormous controversy and provided ample evidence of U.S. government intervention into ICANN matters.
With millions of dollars at stake, the Internet community has relied on ICANN to establish a transparent system for creating new domain name extensions. The resulting process has left many observers unhappy. They argue that it is too expensive (application costs alone are now estimated at US$250,000), too cumbersome (creation of the domain name extension may require months of negotiation after preliminary approval is granted), and too subjective (rather than establishing objective criteria, the decisions are fraught with subjective policy choices).
The prospect of a dot-xxx domain name extension created an immediate firestorm in the United States. Read More ...
TagsShareMonday May 22, 2006
According to U.S. government documents released last week under a Freedom to Information Act request, U.S. officials quickly recognized the sensitivity associated with the new extension and considered whether it could influence the process. Those concerns grew as several groups actively opposed the new domain extension with letter writing campaigns that generated thousands of critical letters and emails.
Faced with a brewing domestic political issue, the U.S. government urged ICANN to delay final approval to allow for an extensive global consultation. In the months that followed, several other countries voiced opposition to the new domain extension. The ICANN board raised several concerns with the dot-xxx backers, who repeatedly adjusted their proposal in response.
Despite the changes, a divided ICANN board ultimately voted nine to five against the establishment of the dot-xxx domain. In caving to U.S. pressure, ICANN may have traded short-term gain for long-term pain. In the short-term, ICANN has staved off immediate government pressure and has likely ensured continuing support from the U.S. government. In fact, late last week the U.S. government announced that it planned to renew one of its ICANN agreements for an additional five years.
Looking ahead, however, proponents of a multi-lateral Internet governance framework will cite this case as a classic illustration of why the ICANN approach must be altered to ensure transparency, independence, and to better reflect the needs of the global community.
My weekly LawBytes column (Toronto Star version, homepage version) focuses on the CRTC's Commercial Radio Review. I argue that missing from the debate is any real vision about how public policy goals to promote Canadian artists and encourage a diverse, financially successful commercial radio market can be adapted to an environment that faces increasing competition from a plethora of new options including webcasts, podcasts, and self-programming iPod users.
Claims that "smart" Cancon requirements that lead to a reduction of Canadian artist airtime clearly does not provide a solution, yet neither do arguments that simply ratchet up Cancon requirements given that Canadians will be listening to less and less music on commercial radio regardless of how much Cancon fills the airwaves.
It may be that there are no obvious solutions at the present time - the Internet is indeed changing at an incredible pace - however, it would help if the industry at least started to ask some of the right questions.
Why is there so little Canadian content on online music services such as iTunes? Why is French music from Quebec almost entirely absent from most Canadian online music services? What policies could be adopted to encourage Canadian content on webcasts and podcasts? What are the implications of the growing importance of peer-to-peer technologies as a critical method of music promotion and discovery for emerging artists?
While these are difficult questions, they must be asked and answered. Unfortunately, it appears that this week's hearings will not provide many solutions since the participants are stuck on an entirely different frequency. TagsShareMonday May 15, 2006
My weekly Law Bytes column (Toronto Star version, homepage version) focuses on the recent Supreme Court of Canada Heinz decision which sheds light into how Canada' s top court regards the importance of privacy. I argue that the decision can be read as an indirect endorsement of the Privacy Commissioner of Canada's longstanding call for changes to the Privacy Act, which applies to the protection of personal information held by government institutions. Privacy advocates have regularly criticized the statute, dismayed that the government is seemingly unwilling to hold itself to the same standard of privacy protection that it demands of the private sector.
Moreover, when Canada's private sector privacy law is reviewed later this year, the court's acknowledgement of a "lack of teeth" associated with the Privacy Commissioner of Canada is certain to emerge as a major focal point. Canadians who presently launch complaints against either the government or private sector companies under the current privacy law framework are frequently disappointed to learn that the Commissioner is unable to do anything more than issue a non-binding finding. TagsShareThursday May 11, 2006
My weekly Law Bytes column (Toronto Star version, homepage version)
takes stock of the battle against spam one year after Canada's National
Task Force on Spam submitted its report. The column notes that while
filtering has become more effective, first impressions can be
deceiving. Global spam volume continues to increase, with recent
surveys indicating that 80 percent of all e-mail is now spam. Spam has
also become far more dangerous as many messages secretly contain
viruses or other hidden programs that can unwittingly turn ordinary
Internet users with broadband connections into large-scale spammers.
Unfortunately the Canadian legal framework has failed to keep pace with the new spam-related concerns.Read More ...
TagsShareWednesday May 03, 2006
While Canada stands pat, many countries, including New Zealand, Hong
Kong, and Japan have introduced new anti-spam laws over the past year.
In addition, Australia is currently reviewing the effectiveness of its
well-regarded anti-spam law and many U.S. states have enacted anti-spam
statutes designed to supplement the federal Can-Spam Act.
The long-term elimination of spam requires action against the spammers
themselves. The Task Force identified several areas where Canadian law
falls short, including privacy legislation, which is ill-suited to deal
with spam since it does not include tough penalties that would serve as
an effective deterrent; the Criminal Code, which applies to clearly
fraudulent or criminal spam, yet limited resources has kept spam off
law enforcement's radar screen; and the Competition Bureau, which has
launched several anti-spam actions, but only against the most obvious
cases of fraud or misleading conduct.
With many other countries continuing to aggressively target spammers,
Canada would do well to act on both the domestic and international
levels. Domestically, it should remove the uncertainty associated with
the current anti-spam legal techniques by upgrading domestic
legislation with tough penalties against spam.
On the international front, Canada should increase its presence by
working on cross-border enforcement initiatives. Moreover, it should
consider providing anti-spam assistance to developing countries, who
are frequently unable to deal effectively with the spam overload.
The recent improvement in spam filtering may have the unintended
consequence of decreasing public pressure for anti-spam action since
the full impact of spam may be hidden from Internet users. However,
with spammers branching out to computer viruses and identity theft, and
ISPs reporting that four out of every five email messages are now spam,
the risks associated with problem continues to increase.
My weekly Law Bytes column (Toronto Star version, homepage version) examines the recent resignations
of six leading Canadian independent record labels from the Canadian Recording Industry Association as part of a larger trend of pressure on longstanding industry associations. In that regard, the column discusses the CCTA's decision to disband and the likely pressure within the Canadian Association of Broadcasters.
I argue that the common link behind these developments is the Internet and new technologies, which have complicated businesses in many arenas by rendering it virtually impossible to garner industry-wide consensus on policy matters. The upheaval will lead to the formation of three types of business advocacy groups in Canada.
The largest Canadian companies will "go it alone" employing independent lobby firms and adopting company-specific policy positions.
Foreign companies will form associations with little pretense of representing a Canadian perspective. This is typified by the Canadian Motion Pictures Distributors Association, which bills itself as the voice and advocate of the U.S. studios, and now CRIA, whose board of directors is comprised exclusively of its president and executives representing the four major foreign multi-national labels.
The third group will be made up of smaller Canadian companies that cannot afford expensive lobby campaigns. They will form issue-specific coalitions and rally around smaller associations such as the CCSA and the Canadian Independent Recording Industry Association (CIRPA). The danger, as always, is that the interests of this third group, which best represents small and medium sized Canadian businesses, will be lost amid the noise from industry giants and foreign-backed associations.
TagsShareTuesday April 25, 2006
My weekly Law Bytes column (Toronto Star version, homepage version) uses the recent French Parliament law involving interoperability and Apple's DRM as the basis for a discussion of governments that tinker with technology through regulation. The law should be understood as a logical reaction to mounting consumer frustration with technological limitations on their purchases and a desire for balance in copyright.
Although the French law may appear to be unique, many governments regularly tinker with technology through regulation. For example, the Liberal government last year introduced "lawful access" legislation that would have required Internet service providers to dramatically overhaul their networks by inserting new surveillance technologies. Similarly, the U.S. established "broadcast flag" requirements that would have mandated the inclusion of copy-controls within a wide range of electronic devices (a court struck the requirements down as unconstitutional).
Moreover, experience demonstrates that the private sector may not respond to consumer demands to offer compatible products. The satellite radio market provides a recent example, with the two major providers - XM and Sirius - steadfastly refusing to offer a device that supports both services despite the fact that they have jointly developed just such a product.
With government intervention looming as a possibility and the private market unlikely to resolve compatibility concerns, what principles should regulators adopt to provide all stakeholders with greater certainty about the appropriate circumstances for lawmakers to tinker with technology?Read More ...
TagsShareTuesday April 18, 2006
The obvious starting point is that intervention is possible - indeed desirable - where companies with dominant marketplace positions exploit the lack of compatibility for anti-competitive purposes (there have been no allegations that Apple has acted illegally with the iPod and iTunes, though the major music labels are the target of several anti-competitive investigations in the U.S. arising from the digital music market). The legal actions against Microsoft in the U.S., Europe, and South Korea, most of which remain active, highlight this principle. Authorities fear that the world's largest software maker could use its proprietary standards in the operating system market to exclude competitors in other software areas.
Regulators may also be inclined to act in order to protect the public in cases when technology poses a safety concern or is used to eliminate or hamper consumer rights. Technological requirements to meet safety standards or enforce environmental protection are common today, with government setting requirements for many consumer products and mandating testing before certain technologies may be marketed to the public.
Similar issues are entering the digital domain. For example, most DVDs include region codes that link the product to the region in which they were purchased. DVDs purchased in Canada will play on Canadian DVD players, yet discs bought while on vacation in Europe will not function on those same DVD players.
In addressing the issue, Australia has proposed protecting the content on the DVD, but ensuing that the public is not precluded from trying to break the technological protection that surrounds it. The Australian response, which the French parliament would have been well advised to emulate in the iTunes case, highlights the need for government to avoid prohibitions that limit the ability of the public to tinker with technology. Tinkering often encourages innovation through new discoveries, while a patchwork of patents, trademarks, trade secrets, and copyright protect the underlying content.
The departure of six leading indie labels from CRIA is timely given that my Lawbytes column this week (Ottawa Citizen version, homepage version) focuses on Canada's growing cultural deficit. Late last month Statistics Canada released data on Canadian trade in cultural services. The data tracks the import and export of cultural services such as film production, television broadcasts, and music royalties. The latest report reinforces the economic importance of cultural services - imports and exports total nearly $5 billion per year in Canada - as well as the apparent inability to reduce the "culture deficit." That deficit, which reflects the gap between the amount of money flowing out of the country relative to the amount coming in, now stands $546 million dollars, up from $477 million the year before.
Virtually the entire deficit stems from copyright royalties and broadcasting fees. The copyright royalty deficit, which stands at $358 million, comes from nearly every cultural sector. Two dollars of copyright royalties exit the country for every one that enters in the writing market, three dollars exit for every one in the music industry, and four dollars exit for every one in the film industry. The broadcasting industry is the most lopsided. Reflecting the enormous popularity of U.S. television shows in Canada and the limited success of Canadian television productions outside the domestic market, Canada faces a broadcasting fee deficit of $363 million as well as a broadcasting copyright royalty deficit of $150 million.
The growing deficit signals the need for industry leaders and policy makers to rethink how Canada develops and promotes cultural services.Read More ...
TagsShareThursday April 13, 2006
Domestically, it is readily apparent that stronger protection - whether in the form of Canadian content regulation or copyright law - is of limited value. After decades of stronger content controls with steadily increasing Canadian content requirements for television and radio broadcasters, Canadians still spend far more on foreign cultural services than they do on their own culture. Moreover, with the availability of a seemingly unlimited array of foreign content on the Internet, this gap will only grow in the coming years.
Similarly, stronger domestic copyright rules provide marginal benefit to Canadian artists since the Statistics Canada data reveals that there currently is a disproportionate benefit to foreign artists leading to more dollars leaving the country (which helps explain why the United States closely links intellectual property protection with its national trade policy).
The experience of the film industry does illustrate, however, that government support for cultural services can yield benefits to the country. Policy makers would do well to replicate the film industry's success by considering new tax initiatives such as tax relief for copyright royalties and incentives for the use of Canadian music and television programming on emerging delivery channels such as wireless and the Internet.
The best way to address the cultural deficit is not to endeavour to decrease spending on foreign culture in Canada, which invariably fails, but rather to increase foreign spending on Canadian cultural services. It is this aspect of the data that is the most disappointing since it illustrates that Canadians have failed to fully capitalize on the Internet and new technologies to broaden global interest in Canadian culture.
With Canadian books previously missing from bookstore shelves now readily available in foreign markets through online booksellers, Canadian music accessible worldwide from a host of online music channels, and Canadian broadcasts open to new Internet-based distribution models, there is an unparalleled opportunity for Canadian culture to find success in the global marketplace. In order to reverse the cultural deficit, Canada must be prepared to drop the protectionism of the past by embracing the technological promise of the future.
My latest Law Bytes column (Toronto Star version, BBC version, homepage version)
highlights the growing frustration with ICANN's accountability and
transparency. The column highlights the many policy issues associated
with Internet governance and notes that over the past month even
ICANN's most ardent supporters have begun to express doubts about the
organization' s lack of transparency and accountability. Read More ...
TagsShareTuesday April 04, 2006
Last week, U.S. Congressman Rick Boucher called for a Congressional
investigation into ICANN and its recent decision to settle litigation
with VeriSign, which manages the lucrative dot-com registry. The
settlement, which awards VeriSign near-permanent control over the
dot-com domain, has faced sharp criticism from across the Internet
Closer to home, CIRA recently published an open letter to ICANN calling
on the organization to implement greater accountability, transparency,
and fair processes. Backing up its words with actions, CIRA announced
that until ICANN addressed these concerns, it would suspend payment of
thousands of dollars in contributions and cease consideration of a new
contractual agreement with ICANN. Moreover, CIRA added that it would
no longer host or sponsor any ICANN-related events.
While CIRA focused on ICANN's lack of accountability, the Public
Interest Registry, which manages the dot-org domain, last week called
on ICANN to address concerns over the thriving business of grabbing
domain names that have not been re-registered. PIR noted that many
registrants are unaware that their domain names are valuable and that
allowing them to lapse may lead to their misuse. PIR pointed
specifically to one instance where a domain name associated with a rape
crisis center was not re-registered and soon after pointed to a
Internet governance policies strike at the core of free speech,
privacy, and a competitive marketplace. ICANN's seeming inability to
address these issues in an accountable, transparent, and timely manner
has alienated some of its strongest supporters, opening the door to the
prospect for major changes to the global Internet governance landscape.