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).

Countries such as India have expressed concern that it conflicts with the TRIPS Agreement. Other elements of the agreement increase the standards in the WIPO Internet Treaties and the commercial scale definition at the WTO. The agreement adds new criminal provisions, pressures ISPs to take greater action, and heightens border measures. There remains ongoing debate as to whether the substance of ACTA requires legislative change in many signatory countries (a somewhat dated site on many ACTA issues here).

Beyond the substantive concerns, the ACTA process remains a major issue as it sets a dangerous precedent for international IP agreements. For years, the ACTA process was shrouded in secrecy, with only the occasional leak bringing plans to light. Wikileaks cables confirmed that the secrecy was viewed as a serious problem in many participant countries. In fact, even as most countries supported greater transparency and the release of draft texts, the U.S. steadfastly refused, using transparency as a bargaining chip to extract concessions from other negotiating partners. In addition to the transparency problems during the negotiations, the express exclusion of many countries from the process raises real fears that they will face increased pressure to meet ACTA standards in the years ahead.

Given the ongoing concerns, the big question now is whether much can be done. The majority of ACTA countries have signed the agreement, but it will only take effect once five countries have formally implemented and ratified it. That is not expected until at least May 2013, opening the door to stopping the agreement from taking effect. While there are global initiatives such as the AccessNow petition, much of the activity has shifted to specific countries or regions:

• Europe is home to the most active anti-ACTA effort since there is still a possibility that the European Parliament may reject the treaty. There remain serious doubts about whether ACTA is consistent with the EU Acquis.  Learn more about what can be done at La Quadrature du Net, EDRI, the Open Rights Group, and FFII.
• In Canada, the Department of Foreign Affairs is 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. A March 2011 Standing Committee on Canadian Heritage report recommended limiting Canada's ACTA commitments.
  
• In the U.S., much of the focus is on whether ACTA must be approved by Congress. Senator Wyden has raised questions about the issue. KEI has extensive coverage of the U.S. perspective on ACTA.
• In Australia, the Joint Standing Committee on Treaties is accepting submissions on ACTA until January 27, 2012 (Kim Weatherall's submission here). Australia tabled the agreement in Parliament on November 21, 2011 and has taken the position the agreement will not require any legislative changes. The Australia Productivity Commission recommended in 2010 that Australia not include IP provisions in trade agreements.
  
• The New Zealand government has posted information on ACTA on its website.
• Switzerland and Mexico have yet to sign ACTA.

The dangers associated with ACTA are not limited to this particular agreement. The agreement opens the door to further secretive negotiations, such as the Trans Pacific Partnership, which contain extensive IP provisions that extend beyond ACTA.  The SOPA battle was a big win for those concerned with balanced copyright and the open Internet, but it is by no means the end of the fight.

There are two things particularly noteworthy about the report. The first is that the industry is suddenly promoting statistics that show Canada is actually a leader when it comes to online music sales, noting that Canada is the 6th largest market for recorded music in the world, ranking 6th for digital sales and 7th for physical sales (it might have also noted the digital sales have grown faster in Canada than the U.S. for the past five consecutive years). It also cites new survey data confirming that young Canadians are music buyers, which it says leads to the conclusion that Canada "is a digital greenfield opportunity." This is huge shift from an industry association that a few years ago likened Canada to the HBO series Deadwood.

The second is that the guide provides further evidence of the creation of a digital music market in Canada without digital lock legislation. The guide points to download services such as iTunes, Hip Digital, Puretracks, Archambault, HMV Digital, 7Digital; non-interactive streaming services such as Galaxie Mobile and Slacker Radio; on-demand streaming such as Rdio, BBM Music, and Zune Music Pass; and streaming music videos such as YouTube and Vevo. Some of these services use digital locks, some don't. The experience to date demonstrates that establishing success online music services is a business issue, not a legal one. The claim that a balanced approach to digital locks would harm these businesses (when all these services have launched with no legal protection for digital locks) is undermined by the industry's own data, which points to an investment opportunity and the 6th ranked market in the world.