Fortune Global Forum 2018 #27 by John Lehmann/Fortune  FORTUNE Global Forum (CC BY-NC-ND 2.0) https://flic.kr/p/2c3SF2A

Fortune Global Forum 2018 #27 by John Lehmann/Fortune FORTUNE Global Forum (CC BY-NC-ND 2.0) https://flic.kr/p/2c3SF2A

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Chrystia Freeland’s Hidden Tax: How Canada Should Implement the Copyright Term Extension Buried in Budget 2022

Deputy Prime Minister and Finance Minister Chrystia Freeland unveiled Budget 2022 yesterday. While much of the focus was on housing and the environment, buried in Annex 3 at page 274 was a promise to extend the term of copyright from the international standard of life of the author plus 50 years to life plus 70 years. The extension fulfills a commitment in the Canada-US-Mexico Trade Agreement with the specific implementation details presumably to come in several weeks in the Budget Implementation Act. This is both a terrible policy making approach (Prime Minister Justin Trudeau was elected in 2015 in part on a pledge not to use the budget to sneak through legislation this way) and terrible policy that experts have termed a “tax on consumers”. Indeed, term extension was long opposed by successive Canadian governments both Liberal and Conservative for good reason: it creates significant costs with limited to no benefits.

Given the harms that arise from copyright term extension, it is essential that Canada mitigate those harms in the most effective manner possible. The best approach – as recommended by the Standing Committee on Industry, Science and Technology in its extensive review on Canadian copyright – is to establish a registration requirement for the additional years of copyright protection. The committee concluded:

The Committee believes that requiring rights-holders to register their copyright to enjoy its benefits after a period equal to the life of the author plus 50 years would mitigate some of the disadvantages of term extension, promote copyright registration, and thus increase the overall transparency of the copyright system.

Registration would allow rights holders that want the extension to get it, while ensuring that many other works enter the public domain at the international standard of life plus 50 years. By providing for life plus 50 and the option for an additional 20 years, Canadian law would be consistent with Berne Convention formalities requirements and with its trade treaty obligations. Copyright registration would not eliminate all the harm to the public domain, but it would mean that only those that desire the extension would take the positive steps to get it.

The negative effects of term extension has been confirmed by many economists, including in an Abraham Hollander study commissioned by Industry Canada, which concluded that extending the term simply does not create an additional incentive for new creativity. Moreover, studies in other countries have concluded that term extension ultimately costs consumers as additional royalties are sent out of the country. For example, when the issue was raised during the Trans Pacific Partnership negotiations, New Zealand estimated that the extension alone would cost its economy NZ$55 million per year. Given Canada’s larger population, the Canadian cost is undoubtedly far higher.

The Australian Productivity Commission considered the impact of term extension in Australia in 2017 and concluded:

The scope and term of copyright protection in Australia has expanded over time, often with no transparent evidence-based analysis, and is now skewed too far in favour of copyright holders. While a single optimal copyright term is arguably elusive, it is likely to be considerably less than 70 years after death.

Independent academic study has arrived at much the same conclusion. For example, Professor Paul Heald, who Canadian Heritage commissioned to engage in research in the area, has written several important articles on the economic importance of the public domain. Heald has characterized copyright term extension as a “tax on consumers.”

In fact, Professor Heald has found that works in the public domain are far more likely to be published and available in different forms to the public. He writes:

a 2018 study of bestsellers published in the US from 1910-1936 found that a book’s transition to the public domain was associated with the appearance of an average of 26.5 additional editions of the title. Another 2018 study shows a significant increase in the accessibility of German textbooks in the US after a WWII executive order essentially moved them into the public domain. The extension of copyright terms has further been found to correlate negatively with the production of audiobooks. A 2013 study found that public domain bestsellers from 1913-1922 were significantly more likely to be offered as audiobooks than copyrighted bestsellers from 1923-193.

More recently, Professor Rebecca Giblin has studied the impact of copyright term on the availability of e-books. Her findings:

we found what appears to be a positive public domain effect: that titles are more available, and in a greater number of editions, where they are in the public domain than where they are under copyright. Longer exclusive rights for older, ‘culturally valuable’ titles demonstrably results in less investment than where those titles were permitted to enter the public domain.

Moreover, there is a significant impact on consumer cost as Professor Giblin notes that “US (copyright) titles are more expensive than Canadian (public domain) titles by up to 136%, while US (public domain) titles are almost universally cheaper than the Canadian offerings.” The Giblin findings highlight that the negative effects arising from term extension involve both economic and cultural harms.

Indeed, term extension will create a massive blow to access to Canadian heritage. Even artists have expressed doubt about the value of the term extension. For example, famed Canadian recording artist Bryan Adams told the Standing Committee on Canadian Heritage in 2018:

Canada is now more or less duty-bound to increase copyright protection by 20 years, to “life + 70”. Extending the duration of copyright essentially enriches large firms of intermediaries. It does not put money in the pockets of most creators.

Canadian publishers such as Broadview Press, an independent academic publisher that has been a vocal proponent of copyright, has warned about the dangers of the term extension to its business and the academic community:

Unlimited, or excessively long, copyright terms have often kept scholars from publishing (or even obtaining access to) material of real historical or cultural significance. They have severely restricted certain options for university teaching as well. Broadview’s editions of Mrs. Dalloway and of The Great Gatsby (edited by Jo-Ann Wallace and by Michael Nowlin, respectively), for example, are to my mind unrivalled. Each includes far more than just the text itself: explanatory notes, extended introductions, and an extraordinary range of helpful and fascinating background material in a series of appendices. They offer a truly distinctive pedagogical option. But instructors and students in the USA are still not allowed access to those editions.

Given this negative impact, it is essential that Freeland and the government seek to mitigate the harms through a registration requirement that gives copyright owners the extension they seek and preserves parts of the public domain. But Freeland doesn’t need to take my word for it. Her cabinet colleague, Minister of Justice David Lametti, one of Canada’s leading copyright experts, has written in support of a registration requirement in the context of copyright, particularly once the term of protection extends beyond a reasonable period of time. In a 2005 book chapter, Lametti argued:

we might consider strengthening these proposals [on copyright term] with a registration requirement, especially for longer terms, putting some of the onus on creators themselves of identifying and protecting works of ongoing value.

Lametti was right then and the registration policy is the right approach now. Copyright term extension is damaging to creators and a tax on consumers. It should be the subject of a full standalone bill, but if it is to be part of the Budget Implementation Act, the implementation should mitigate against those harms through a registration requirement.

7 Comments

  1. I realize the most we can do is make the best out of a bad situation, but if the Canadian government is serious about preserving user freedoms and the balance of copyright, perhaps we can have some ‘compensation’ for such a travesty (i.e, expanded fair-dealing/fair-use even in the case of digital locks/DRM/TPMs). This was a major controversy of the 2012 ‘modernization’ act and has not been challenged or rectified. Amendments by other functional governments in the recent past have enacted similar positions.

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