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Does Anyone Own a Country’s Domain Name?

Michael Geist - Tue, 08/12/2014 - 07:26

Earlier this year, a group of U.S. litigants launched an unusual domain name lawsuit. The group consisted of family members of victims of terror attacks they claim were sponsored by the governments of Iran, Syria, and North Korea. The group had succeeded in winning over a billion dollars in damages in several lawsuits filed in U.S. courts.

Unable to collect, they sued the Internet Corporation for Assigned Names and Numbers (ICANN), the body that administers the Internet’s domain name system. Their goal: seize the dot-ir, dot-sy, and dot-kp domain name extensions (the respective country-code domains) by ordering ICANN to transfer them as compensation.

My weekly technology law column (Toronto Star version, homepage version) notes the notion of seizing a country’s domain name extension may sound implausible, but the case is proceeding through the U.S. court system with ICANN filing a brief late last month. ICANN is unsurprisingly seeking to dismiss the case, arguing that the domain name extensions are not property that is capable of seizure (I am a board member of the Canadian Internet Registration Authority, Canada’s dot-ca administrator, but this article represents my own views and not those of CIRA).

While there is much to be said for dismissing the case – seizing a country’s domain name extension should not be decided by private litigation in U.S. courts – the problem is that many of ICANN’s arguments are undermined by government actions over the past decade. ICANN relies on three key claims: domain names are not property, governments do not “own” their country-code domain, and the U.S. does not have jurisdiction over a foreign country-code domain.  Each claim suffers from some shortcomings.

First, the legal status of a country-code domain name extension is unclear. It is not property in the physical sense and within the ICANN world it amounts to little more than an entry in a database that links the extension to the entity responsible for administering it.

However, the U.S. has enacted legislation that effectively characterizes domain names as property for intellectual property purposes. For example, the U.S. Department of Homeland Security regularly seizes domain names as part of crackdowns against online copyright infringement. Further, in 1999, the U.S. passed the Anti-Cybersquatting Consumer Protection Act, which allows trademark owners to treat domain names as property for the purposes of lawsuits against out-of-country domain name registrants.

Moreover, other countries have treated their country-code domain name extensions as the equivalent of property when they lease it to foreign companies to operate the extension. Prominent examples include dot-nu, the country-code for the Pacific island of Niue, which granted the rights to operate the name to a private company that marketed it as a generic domain.

Second, ICANN argues that “country-code top-level domains are not owned by the countries to which they are assigned.” However, its own Governmental Advisory Committee says that “governments or public authorities maintain ultimate policy authority over their respective ccTLDs and should ensure that they are operated in conformity with domestic public policy objectives, laws and regulations, and international law and applicable international conventions.”

Moreover, countries frequently refer to their domestic country-code domains as national resources and many retain the legal right to determine who administers it. In Canada, before CIRA became the administrator of the dot-ca in 2000, the Canadian government wrote to ICANN to confirm its approval of the transfer.

Third, the issue of U.S. jurisdiction over the entire domain name system remains a contentious political and policy issue. The U.S. government currently maintains ultimate contractual authority over the transfer of a country-code top-level domain (though that may change in the future) and at least one case involving dot-cg (Congo’s ccTLD) found that the country-code could be viewed as located in the U.S.

While countries are adopting a wait-and-see approach with respect to this lawsuit, the case could have a significant impact on global Internet governance while also answering the question of who – if anyone – owns a country’s top-level domain.

The post Does Anyone Own a Country’s Domain Name? appeared first on Michael Geist.

Does Anyone Own a Country’s Domain Name?

Michael Geist - Tue, 08/12/2014 - 07:21

Appeared in the Toronto Star on August 9, 2014 as Can Anyone Own a National Domain Name?

Earlier this year, a group of U.S. litigants launched an unusual domain name lawsuit. The group consisted of family members of victims of terror attacks they claim were sponsored by the governments of Iran, Syria, and North Korea. The group had succeeded in winning over a billion dollars in damages in several lawsuits filed in U.S. courts.

Unable to collect, they sued the Internet Corporation for Assigned Names and Numbers (ICANN), the body that administers the Internet’s domain name system. Their goal: seize the dot-ir, dot-sy, and dot-kp domain name extensions (the respective country-code domains) by ordering ICANN to transfer them as compensation.

The notion of seizing a country’s domain name extension may sound implausible, but the case is proceeding through the U.S. court system with ICANN filing a brief late last month. ICANN is unsurprisingly seeking to dismiss the case, arguing that the domain name extensions are not property that is capable of seizure (I am a board member of the Canadian Internet Registration Authority, Canada’s dot-ca administrator, but this article represents my own views and not those of CIRA).

While there is much to be said for dismissing the case – seizing a country’s domain name extension should not be decided by private litigation in U.S. courts – the problem is that many of ICANN’s arguments are undermined by government actions over the past decade. ICANN relies on three key claims: domain names are not property, governments do not “own” their country-code domain, and the U.S. does not have jurisdiction over a foreign country-code domain.  Each claim suffers from some shortcomings.

First, the legal status of a country-code domain name extension is unclear. It is not property in the physical sense and within the ICANN world it amounts to little more than an entry in a database that links the extension to the entity responsible for administering it.

However, the U.S. has enacted legislation that effectively characterizes domain names as property for intellectual property purposes. For example, the U.S. Department of Homeland Security regularly seizes domain names as part of crackdowns against online copyright infringement. Further, in 1999, the U.S. passed the Anti-Cybersquatting Consumer Protection Act, which allows trademark owners to treat domain names as property for the purposes of lawsuits against out-of-country domain name registrants.

Moreover, other countries have treated their country-code domain name extensions as the equivalent of property when they lease it to foreign companies to operate the extension. Prominent examples include dot-nu, the country-code for the Pacific island of Niue, which granted the rights to operate the name to a private company that marketed it as a generic domain.

Second, ICANN argues that “country-code top-level domains are not owned by the countries to which they are assigned.” However, its own Governmental Advisory Committee says that “governments or public authorities maintain ultimate policy authority over their respective ccTLDs and should ensure that they are operated in conformity with domestic public policy objectives, laws and regulations, and international law and applicable international conventions.”

Moreover, countries frequently refer to their domestic country-code domains as national resources and many retain the legal right to determine who administers it. In Canada, before CIRA became the administrator of the dot-ca in 2000, the Canadian government wrote to ICANN to confirm its approval of the transfer.

Third, the issue of U.S. jurisdiction over the entire domain name system remains a contentious political and policy issue. The U.S. government currently maintains ultimate contractual authority over the transfer of a country-code top-level domain (though that may change in the future) and at least one case involving dot-cg (Congo’s ccTLD) found that the country-code could be viewed as located in the U.S.

While countries are adopting a wait-and-see approach with respect to this lawsuit, the case could have a significant impact on global Internet governance while also answering the question of who – if anyone – owns a country’s top-level domain.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Does Anyone Own a Country’s Domain Name? appeared first on Michael Geist.

The Ghost of iCraveTV?: The CRTC Asks Bell For Answers About Its Mobile TV Service in Net Neutrality Case

Michael Geist - Thu, 08/07/2014 - 07:17

Before there was Youtube, Hulu, Netflix, and broadcasters streaming their content on the Internet, there was iCraveTV.  iCraveTV, a Canadian-based start-up, launched in November 1999, by streaming 17 over-the-air television channels on the Internet.  The picture was small, connection speeds were slow, but the service was streaming real-time television years before it became commonplace. The company relied upon two Canadian laws to provide the service: the Copyright Act, which contains a provision permitting retransmission of broadcast signals subject to certain conditions, and the CRTC’s New Media Exemption order, which excluded new media broadcasters from regulation.

The company faced an immediate legal fight from Hollywood and broadcasters. Within months of launching, the service shut down. U.S. demands for Canadian law reform ultimately led to changes to the Copyright Act, which effectively excluded “new media retransmitters” from taking advantage of the retransmission provision.

iCraveTV is long forgotten for most Internet users, but the legal framework that ultimately emerged was invoked this week by the CRTC in Canada’s leading net neutrality case.

At issue is whether companies such as Bell are violating Canada’s Internet traffic management practices (also referred to as net neutrality guidelines) due the different treatment of Internet video on services such as Bell Mobility. The original complaint noted that the cost of watching a service such as Netflix is different from watching Bell Mobile TV because of different ways of treating the data that is used (the Bell Mobile TV data is exempted from the monthly data cap). The case has now been expanded to include other providers.

Bell has argued that the case is not a telecom case (and therefore subject to the traffic management rules), but rather a broadcast matter that qualifies under the new media exemption. This week, the CRTC sent a series of questions to Bell (as well as Rogers and Videotron). The very first question invokes the iCraveTV legal framework:

Given that you have indicated in your submissions that the Mobile TV App operates under the terms of the Digital Media Broadcasting Undertaking Exemption Order, it would appear that you would be unable to make use of the retransmission regime set out in the Copyright Act. In light of this, please describe in detail the following:
    a.    Which rights you obtain to broadcast live television channels on Mobile TV App; and
    b.    Whether subscribers to Mobile TV App receive any local, regional or distant channels, and if so how you determine what constitutes local, regional or distant for that subscriber.

In plain language, the post-iCraveTV framework means that services can’t both rely on the Copyright Act retransmitter provision and the CRTC’s new media exemption order.  If the retransmitter relies on the Copyright Act, it will be subject to regulation under the Broadcasting Act. Alternatively, if the service is excluded from Broadcasting Act regulation by qualifying under the new media exemption, it cannot rely on the Copyright Act provision and must obtain licenses to avoid copyright infringement claims.

The CRTC notes that Bell says it is relying on the new media exemption for its Mobile TV service. Leaving aside the bigger question on whether the service should be viewed as telecom or broadcast, Bell’s response suggests that it must have licensing arrangements for the channels it carries, otherwise the retransmission infringes copyright. The Bell Mobile TV service includes several over-the-air channels such as the CBC and CITY-TV and the CRTC wants to know more about the licensing deals that presumably exist to allow Bell to retransmit those channels through its service.

The post The Ghost of iCraveTV?: The CRTC Asks Bell For Answers About Its Mobile TV Service in Net Neutrality Case appeared first on Michael Geist.

Did Canada Cave on the Pharmaceutical Patent ISDS Issue in CETA?: Still No Text, But Official Comments Suggests It Did

Michael Geist - Wed, 08/06/2014 - 06:42

For the second time in less than a year, Canada and the EU have announced that they reached agreement on the Canada – EU Trade Agreement.  Back in October 2013, there was an announcement of an agreement “in principle”.  The announcement did not include a release of the text and the parties said there was still further work to be done on drafting and legal analysis. Yesterday, brought another announcement of an agreement on the text. Once again, the announcement did not include a release of the text and the parties said there was still further work to be done on legal review and translation into 23 languages.

Given the agreement is 1,500 pages, the additional work is expected to take a considerable amount of time. While government ministers claimed that CETA “is ready for debate and ratification”, the reality is that there cannot be a meaningful, informed debate without the actual text. Releasing it for full study and comment is the essential next step.

Analysis without the text is difficult, however, the combination of prior leaks and media reports indicate that Canada caved on its concerns regarding the potential replication of Eli Lilly-style pharmaceutical patent lawsuits. I wrote about the issue earlier this week, with the $500 million lawsuit by Eli Lilly prompting the Canadian government to propose an ISDS carve out for court decisions and administrative tribunal rulings involving pharmaceutical patents. The Canadian proposal stated:

For greater certainty, this Article does not apply to a decision by a court, administrative tribunal, or other governmental intellectual property authority, limiting or creating an intellectual property right, except where the decision amounts to a denial of justice or an abuse of right.

The EU countered with a proposal to merely include the following in a separate annex or joint understanding:

For greater certainty, the revocation, limitation or creation of intellectual property rights to the extent that these measures are consistent with TRIPS and the IPR Chapter of CETA, do not constitute expropriation. Moreover, a determination that these actions are inconsistent with the TRIPS Agreement does not establish that there has been an expropriation.

The EU offer was obviously far less than what Canada proposed: it was a side understanding rather substantive provisions within the agreement and it did not carve out anything (rather it sought to “clarify” the scope of the provision).

So how did they resolve the issue?  IPolitics reports that Canadian officials said the following yesterday:

We did agree to a declaration that relates to investor-state dispute settlement when it comes to pharmaceutical products, and we have made it clear in that joint declaration with the EU that investor-state disputes are not to be used as an appeal mechanism for decisions made in domestic courts. We have undertaken to review three years after the entry into force, at the request of either party, how investor-state dispute settlement is working with respect to the pharmaceutical area. And we would be prepared to make changes if necessary. We’ve also talked about parties possibly issuing binding interpretations if we find that arbitration panels may be drifting away from what our intention has been.

In other words, Canada caved. The EU proposal for a joint understanding was adopted with some clarifying language and no carve out. The only real addition was a three year review, which ironically is a favourite giveaway for the Conservatives to the opposition (reviews were added to C-13 and C-36 over the past two months) when it seeks to show a willingness to compromise but not actually change anything of substance.

The post Did Canada Cave on the Pharmaceutical Patent ISDS Issue in CETA?: Still No Text, But Official Comments Suggests It Did appeared first on Michael Geist.

How a 20 Year Old Patent Application Could Up-End Canada’s Biggest Trade Deal

Michael Geist - Tue, 08/05/2014 - 06:26

In the early 1990s, pharmaceutical giant Eli Lilly applied for patent protection in Canada for two chemical compounds, olanzapine and atomoxetine. The company had already obtained patents over the compounds, but asserted that it had evidence to support new uses for the compounds that merited further protection. The Canadian patent office granted the patents based on the content in the applications, but they remained subject to challenge.

Both patents ultimately were challenged on the grounds that there was insufficient evidence at the time of the applications to support the company’s claims. The Federal Court of Canada agreed, invalidating both patents. Eli Lilly proceeded to appeal the decision to the Federal Court of Appeal and later to the Supreme Court of Canada. The company lost the appeals, as the courts upheld the decision to invalidate the patents.

My weekly technology law column (Toronto Star version, homepage version) notes that under most circumstances, that would conclude the legal story as nine Canadian judges reviewed Eli Lilly’s patent applications and ruled that they failed to meet the standards for patentability. Yet in June 2013, the company served notice that it planned to file a complaint under the North American Free Trade Agreement claiming that in light of the decisions, Canada is not compliant with its patent law obligations under the treaty. As compensation, Eli Lilly is now seeking $500 million in damages.

The Eli Lilly claim is winding its way through the legal process – the Canadian government filed its defence several weeks ago – but the implications are being felt far beyond the specifics of the case.

If the pharmaceutical giant succeeds, it will have effectively found a mechanism to override the Supreme Court of Canada and hold Canadian taxpayers liable for hundreds of millions in damages in the process. The cost to the health care system could be enormous as the two Eli Lilly patents may be the proverbial tip of the iceberg and claims from other pharmaceutical companies could soon follow.

Indeed, it appears that the Canadian government has awoken to the danger associated with dispute resolution systems that risk trumping domestic regulations and place billions of dollars at risk.

Last week, reports out of Germany indicated that the German government might not support the Canada – European Union Trade Agreement (CETA) if it includes such a system (referred to as an investor-state dispute settlement or ISDS). ISDS has attracted considerable attention there, due to concerns over a multi-billion dollar claim involving Germany’s decision to phase-out nuclear power.

While the ISDS concerns have centered on Germany, the reality is that the Canadian government has been holding up finalizing the agreement due to related fears stemming from fears of more Eli Lilly-style cases. The pharmaceutical industry is a powerful lobby group in Europe and some may be willing to pursue similar litigation over Canadian patent law.

According to leaked versions of CETA texts, Canada is requesting that court decisions and administrative tribunal rulings involving the creation or limitation of intellectual property rights be carved out of the treaty’s ISDS provisions.

The European Union has thus far rejected the Canadian proposal.  However, given the mounting opposition to ISDS in Europe, it may be willing to shift its position.  From a Canadian perspective, the Eli Lilly case has provided a powerful reminder that the risks associated with ISDS may outweigh the benefits with legal cases that can take decades to resolve.

The post How a 20 Year Old Patent Application Could Up-End Canada’s Biggest Trade Deal appeared first on Michael Geist.

How a 20 Year Old Patent Application Could Up-End Canada’s Biggest Trade Deal

Michael Geist - Tue, 08/05/2014 - 06:25

Appeared in the Toronto Star on August 1, 2014 as How a 20 Year Old Patent Application Could Up-End Canada’s Biggest Trade Deal

In the early 1990s, pharmaceutical giant Eli Lilly applied for patent protection in Canada for two chemical compounds, olanzapine and atomoxetine. The company had already obtained patents over the compounds, but asserted that it had evidence to support new uses for the compounds that merited further protection.  The Canadian patent office granted the patents based on the content in the applications, but they remained subject to challenge.

Both patents ultimately were challenged on the grounds that there was insufficient evidence at the time of the applications to support the company’s claims. The Federal Court of Canada agreed, invalidating both patents. Eli Lilly proceeded to appeal the decision to the Federal Court of Appeal and later to the Supreme Court of Canada. The company lost the appeals, as the courts upheld the decision to invalidate the patents.

Under most circumstances, that would conclude the legal story as nine Canadian judges reviewed Eli Lilly’s patent applications and ruled that they failed to meet the standards for patentability. Yet in June 2013, the company served notice that it planned to file a complaint under the North American Free Trade Agreement claiming that in light of the decisions, Canada is not compliant with its patent law obligations under the treaty. As compensation, Eli Lilly is now seeking $500 million in damages.

The Eli Lilly claim is winding its way through the legal process – the Canadian government filed its defence several weeks ago – but the implications are being felt far beyond the specifics of the case.

If the pharmaceutical giant succeeds, it will have effectively found a mechanism to override the Supreme Court of Canada and hold Canadian taxpayers liable for hundreds of millions in damages in the process. The cost to the health care system could be enormous as the two Eli Lilly patents may be the proverbial tip of the iceberg and claims from other pharmaceutical companies could soon follow.

Indeed, it appears that the Canadian government has awoken to the danger associated with dispute resolution systems that risk trumping domestic regulations and place billions of dollars at risk.

Last week, reports out of Germany indicated that the German government might not support the Canada – European Union Trade Agreement (CETA) if it includes such a system (referred to as an investor-state dispute settlement or ISDS). ISDS has attracted considerable attention there, due to concerns over a multi-billion dollar claim involving Germany’s decision to phase-out nuclear power.

While the ISDS concerns have centered on Germany, the reality is that the Canadian government has been holding up finalizing the agreement due to related fears stemming from fears of more Eli Lilly-style cases. The pharmaceutical industry is a powerful lobby group in Europe and some may be willing to pursue similar litigation over Canadian patent law.

According to leaked versions of CETA texts, Canada is requesting that court decisions and administrative tribunal rulings involving the creation or limitation of intellectual property rights be carved out of the treaty’s ISDS provisions.

The European Union has thus far rejected the Canadian proposal.  However, given the mounting opposition to ISDS in Europe, it may be willing to shift its position.  From a Canadian perspective, the Eli Lilly case has provided a powerful reminder that the risks associated with ISDS may outweigh the benefits with legal cases that can take decades to resolve.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post How a 20 Year Old Patent Application Could Up-End Canada’s Biggest Trade Deal appeared first on Michael Geist.

CRTC Finds Rogers Engaged in Unjust Discrimination With Its Domestic Roaming Agreements

Michael Geist - Fri, 08/01/2014 - 06:53

From seemingly the moment in launched in Canada, Wind Mobile argued that it was being placed at a competitive disadvantage due to unfair roaming agreements with Rogers. As a new entrant, the company was reliant on roaming agreements to offer nationwide service, yet it claimed that Rogers was tilting the playing field against it. Rogers unsurprisingly disagreed.  In a Senate appearance in 2009, the company was asked directly about the issue:

Senator Zimmer: Have you had any requests from new wireless entrants for roaming and tower-sharing agreements, and how have you handled those? What is the progress on these arrangements to date?

Mr. Engelhart: I am glad you asked that question, because we have been reading in the press some grumbling by some of the new entrants, and it has left us puzzled. Mr. Roy and I, mostly Mr. Roy, have successfully concluded roaming agreements with all the new entrants who have approached us, and we did that in a business negotiation that did not need arbitration or enforcement from Industry Canada. We have also provided access to a huge number of our towers to the new entrants. We believe the government policy that requires us to make those facilities available is working, and we are proud of what we have done.

A year later, Wind filed a complaint with the CRTC over dropped calls when its customers roamed on the Rogers network, arguing that it was an undue preference since Chatr (a Rogers flanker brand) did not face the same problem. The Commission rejected the complaint, finding that there was insufficient evidence and that:

the fact that the terms and conditions of the roaming agreement negotiated between WIND and Rogers do not require seamless roaming, the Commission is not persuaded that WIND has demonstrated the existence of a preference in the circumstances of this case.

By 2013, the regulatory environment for wireless services in Canada had changed and the government was displaying a clear willingness to regulate wholesale wireless services to encourage greater competition. The CRTC began investigating the issue in 2013 with a fact-finding exercise that found:

some Canadian mobile wireless carriers were charging or proposing to charge significantly higher rates for wholesale mobile wireless roaming services to other Canadian mobile wireless carriers than to U.S.-based carriers. For instance, the rates that some Canadian carriers contracted to pay or were being asked to pay were many times higher than those that U.S.-based carriers paid, particularly with respect to data services. Further, some Canadian carriers were subject to more restrictive terms and conditions than those that applied to U.S.-based carriers.

While Rogers remained dismissive, warning against cheaper roaming agreements that it says discourage network development, those findings raised the possibility of a violation of Canadian telecom law, with the incumbent carriers granting themselves an undue preference or engaging in unjust discrimination.

Yesterday, the CRTC ruled that Rogers had engaged in unjust discrimination, charging new entrants far higher prices than those for U.S. carriers and including exclusivity clauses that prevented the new entrants from negotiating better terms with other carriers. As a result, the Commission has created a ban on exclusivity clauses in wholesale domestic wireless roaming agreements.

Further regulatory measures may be forthcoming in the fall when the CRTC conducts a more extensive review of wholesale wireless services.  While the practical effect may be limited given the new legislated cap on domestic roaming, the decision provides some vindication for Wind and affirms that unlawful, discriminatory tactics were used by incumbent carriers to hamstring new wireless competitors in Canada.

The post CRTC Finds Rogers Engaged in Unjust Discrimination With Its Domestic Roaming Agreements appeared first on Michael Geist.

The Battle Over Tariff 8, Part 2: The Recording Industry’s Surprising Opposition to Songwriter, Composer and Music Publisher Streaming Royalties

Michael Geist - Wed, 07/30/2014 - 05:57

Yesterday I posted on the battle over Tariff 8, the Copyright Board of Canada’s new tariff for digital music streaming services that the media has suggested could open the door to popular foreign services migrating to Canada. Despite the initial excitement, the Canadian recording industry, led by Music Canada (formerly the Canadian Recording Industry Association) has taken aim at the decision, which its President Graham Henderson argues:

will further imperil artists’ livelihoods, and threatens to rob them of the fruits of their labour in the new digital marketplace. And it will further undermine the business environment, undercutting the ability of labels and other music companies to make future investments in Canadian talent.

As noted in the post, Re:Sound, the collective responsible for the tariff, has filed for judicial review of the decision and Music Canada is urging its supporters to “like” its Facebook protest page, which it says will help win the fight.

There are two things that make the campaign against the decision particularly striking, however: the industry’s failure to mention to that Tariff 8 is only one of several payments made for music streaming and its opposition to those other payments.

First, the recording industry is seemingly loath to mention that Tariff 8 is only a part of the payments that are made by Internet music streaming companies to rights holders, including performers, songwriters, composers, music publishers, and record labels. As the Board itself notes, the Tariff 8 decision focuses on a limited number of rights that may be triggered by an online music service. It states:

Streaming music over the Internet can involve as many as six rights or sets of rights. These proceedings only concern the equitable remuneration to which performers and makers are entitled when a published sound recording of a musical work is communicated to the public by telecommunication. These two rights always trigger a single payment for any type of sound recording; in the case of sound recordings of musical works, that payment is always made to a collective society authorized by the Board to collect it. Re:Sound administers these rights for the vast majority of eligible performers and makers.

The following exclusive rights are not at play in these proceedings: the right to communicate a musical work to the public by telecommunication; the right to reproduce a musical work; the right to reproduce a sound recording; the right to reproduce any reproduction of an authorized fixation of a performer’s performance for a purpose other than that for which the authorization was given; the rights granted, on November 7, 2012, to Canadian performers and makers over the communication resulting from making available a sound recording to the public.

The Copyright Board established tariffs in 2012 for several of these other rights with SOCAN and CMRRA/SODRAC (CSI). Those tariffs will ensure that music streaming fees go far beyond just Tariff 8.

Second, despite the revenues to be generated by the other tariffs, the recording industry has either opposed or dismissed those royalties, which are provided to songwriters, composers, and music publishers. For example, CRIA intervened in SOCAN and CSI tariff proceeding, arguing its statement of case that the online music tariff proposals were “grossly excessive.”

Rather than standing together as it now suggests, it argued that it did not think that “composers and publishers should share in any increase in profit in the market since, unlike the Objectors [CRIA], they made no investment and took no risk in developing the online market.” CRIA also argued that there should be no minimum royalties since that might harm the development of new services:

CRIA submits that minimum fees are not only unjustified for users who generate revenues but are particularly inappropriate for the online distribution of music, where new legitimate online music services attempting to establish themselves in the market face “competition” from free unauthorized peer-to-peer networks. 

In addition, CRIA emphasized the need to limit revenues by excluding non-compensable activities.  It stated:

the revenue base must be defined so as to exclude any revenue generated by activities that do not trigger any liability under the Tariff. This would include: (i) all downloading or streaming by end-users not located within Canada; (ii) downloading or streaming resulting from promotional use; and (iii) downloading or streaming of music that is not within the Collectives’ repertoire.

It is noteworthy that the Copyright Board does precisely that in the Tariff 8 decision by accounting for activities that do not trigger liability under that tariff, yet now CRIA argues that the tariff is too low.

In fact, not only did CRIA argue for lower payments in the SOCAN and CSI proceeding, but Re:Sound (whose Vice-Chair is Graham Henderson) continued to dismiss their tariffs in its statement of case for Tariff 8. It argued that the evidence was incomplete in setting those rates, that the market had changed, and that a rate structure based on a percentage of revenue was unreliable. Indeed, Re:Sound argued that it had “grave concerns” about a tariff structure based on a percentage of revenue.

The Copyright Board granted Re:Sound its wish: the tariff is not based on a percentage of revenue despite the fact that that approach would have given greater business certainty to new entrants and allowed performers and labels to directly benefit as those businesses grow. Instead, it received a per-play rate lower than it wanted, leading to its public relations blitz against the decision. While many labels have chimed in, SOCAN has unsurprisingly said little, other than releasing a statement that it awaits an updated tariff of its own and that:

SOCAN has proposed a percentage of revenue rate of 8.6 percent. SOCAN will be monitoring the Re:Sound application for judicial review closely as it advances through the court process.

The collective refrained from noting the opposition from the recording industry when songwriters and music publishers seek to be paid, but the public record speaks for itself.

The post The Battle Over Tariff 8, Part 2: The Recording Industry’s Surprising Opposition to Songwriter, Composer and Music Publisher Streaming Royalties appeared first on Michael Geist.

The Battle Over Tariff 8: What the Recording Industry Isn’t Saying About Canada’s Internet Streaming Royalties

Michael Geist - Tue, 07/29/2014 - 06:57

Over the past month, Music Canada, the lead lobby group for the Canadian recording industry, has launched a social media campaign criticizing a recent Copyright Board of Canada decision that set some of the fees for Internet music streaming companies such as Pandora. The long-overdue decision seemingly paves the way for new online music services to enter the Canadian market, yet the industry is furious about rates it claims are among the worst in the world.

The Federal Court of Appeal will review the decision, but the industry has managed to get many musicians and music labels worked up over rates it labels 10 percent of nothing. While the Copyright Board has more than its fair share of faults, a closer examination of the Internet music streaming decision suggests that this is not one of them.

The Music Canada claim, which is supported by Re:Sound (the copyright collective that was seeking a tariff or fee for music streaming), is that the Canadian rates are only 10 percent of the equivalent rate in the United States. That has led to suggestions that decision devalues music and imperils artists’ livelihood.

My weekly technology law column (Toronto Star version, homepage version) argues the reality is far more complex. First, Internet streaming services pay rights holders several different fees reflecting various copyrights (as many as six copyrights are triggered by the services). In fact, the Re:Sound fee is only part of the overall payment structure that includes royalties to copyright collectives that represent songwriters and music publishers such as SOCAN, SODRAC, and the Canadian Musical Reproduction Rights Agency (CMRRA).

Unlike the Re:Sound royalty, which is based on a set fee per 1,000 streams, the other collectives were willing to bet on growing revenues for digital music by taking a percentage of revenue approach. Music Canada (then known as the Canadian Recording Industry Association) remarkably opposed the proposed fees for the other collectives, arguing that they were “grossly excessive” and that it did not think “composers and publishers should share in any increase in profit in the market.”

For many artists, however, revenues come from multiple sources. In fact, there are Canadian fees that are not paid at all in the U.S.  For example, while there is a fee for the reproduction of musical works in Canada, U.S. webcasters do not pay a similar fee. Moreover, the fees paid in Canada for performing rights of songwriters and publishers are higher than those in the U.S.

Leaving aside all the other fees payable to artists and the industry, are the Re:Sound fees really so unreasonable? The specific rate is considerably lower than the U.S. equivalent, however, the Copyright Board notes that comparing the two makes little sense. Due to international copyright obligations, the Canadian repertoire during the period of the tariff was about the half as large as the U.S. one. That means that even a simple comparison would result in cutting the U.S. rate in half.

The Copyright Board relied on commercial radio rates as their barometer, which seems appropriate given the similarities between an Internet streaming service that does not allow users to select specific songs and a commercial radio station that plays a regular music rotation. Indeed, Pandora describes itself as an Internet radio service that adapts playlists to user feedback and offers advertising opportunities to local and national businesses.

While much of the grousing about the Copyright Board decision appears to be about how to apportion payments among rights holders, the irony is that since all of the recent decisions apply retroactively to an earlier time period, they do not directly involve Pandora, which is still not available in Canada. Proposed rates for the future will probably account for the repertoire issue (Canadian law changed with the 2012 copyright reform package) and should be based on a percentage of revenue, which Re:Sound is now willing to accept.

Ironically, when the music streaming industry complained about Re:Sound’s initial demands, its CEO encouraged them to participate in the regulatory process, noting that “it’s up to the Copyright Board to determine what is effectively the fair market value of these rights.” Now that the board has done that – and provided much needed certainty in the process – the recording industry has changed its tune, claiming the decision will “undermine the business environment.”

The post The Battle Over Tariff 8: What the Recording Industry Isn’t Saying About Canada’s Internet Streaming Royalties appeared first on Michael Geist.

What the Recording Industry Isn’t Saying About Canada’s Internet Streaming Royalties

Michael Geist - Tue, 07/29/2014 - 06:55

Appeared in the Toronto Star on July 26, 2014 as What the Recording Industry Isn’t Saying About Canada’s Internet Streaming Royalties

Over the past month, Music Canada, the lead lobby group for the Canadian recording industry, has launched a social media campaign criticizing a recent Copyright Board of Canada decision that set some of the fees for Internet music streaming companies such as Pandora. The long-overdue decision seemingly paves the way for new online music services to enter the Canadian market, yet the industry is furious about rates it claims are among the worst in the world.

The Federal Court of Appeal will review the decision, but the industry has managed to get many musicians and music labels worked up over rates it labels 10 percent of nothing. While the Copyright Board has more than its fair share of faults, a closer examination of the Internet music streaming decision suggests that this is not one of them.

The Music Canada claim, which is supported by Re:Sound (the copyright collective that was seeking a tariff or fee for music streaming), is that the Canadian rates are only 10 percent of the equivalent rate in the United States. That has led to suggestions that decision devalues music and imperils artists’ livelihood.

The reality is far more complex. First, Internet streaming services pay rights holders several different fees reflecting various copyrights (as many as six copyrights are triggered by the services). In fact, the Re:Sound fee is only part of the overall payment structure that includes royalties to copyright collectives that represent songwriters and music publishers such as SOCAN, SODRAC, and the Canadian Musical Reproduction Rights Agency (CMRRA).

Unlike the Re:Sound royalty, which is based on a set fee per 1,000 streams, the other collectives were willing to bet on growing revenues for digital music by taking a percentage of revenue approach. Music Canada (then known as the Canadian Recording Industry Association) remarkably opposed the proposed fees for the other collectives, arguing that they were “grossly excessive” and that it did not think “composers and publishers should share in any increase in profit in the market.”

For many artists, however, revenues come from multiple sources. In fact, there are Canadian fees that are not paid at all in the U.S.  For example, while there is a fee for the reproduction of musical works in Canada, U.S. webcasters do not pay a similar fee. Moreover, the fees paid in Canada for performing rights of songwriters and publishers are higher than those in the U.S.

Leaving aside all the other fees payable to artists and the industry, are the Re:Sound fees really so unreasonable? The specific rate is considerably lower than the U.S. equivalent, however, the Copyright Board notes that comparing the two makes little sense. Due to international copyright obligations, the Canadian repertoire during the period of the tariff was about the half as large as the U.S. one. That means that even a simple comparison would result in cutting the U.S. rate in half.

The Copyright Board relied on commercial radio rates as their barometer, which seems appropriate given the similarities between an Internet streaming service that does not allow users to select specific songs and a commercial radio station that plays a regular music rotation. Indeed, Pandora describes itself as an Internet radio service that adapts playlists to user feedback and offers advertising opportunities to local and national businesses.

While much of the grousing about the Copyright Board decision appears to be about how to apportion payments among rights holders, the irony is that since all of the recent decisions apply retroactively to an earlier time period, they do not directly involve Pandora, which is still not available in Canada. Proposed rates for the future will probably account for the repertoire issue (Canadian law changed with the 2012 copyright reform package) and should be based on a percentage of revenue, which Re:Sound is now willing to accept.

Ironically, when the music streaming industry complained about Re:Sound’s initial demands, its CEO encouraged them to participate in the regulatory process, noting that “it’s up to the Copyright Board to determine what is effectively the fair market value of these rights.” Now that the board has done that – and provided much needed certainty in the process – the recording industry has changed its tune, claiming the decision will “undermine the business environment.”

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post What the Recording Industry Isn’t Saying About Canada’s Internet Streaming Royalties appeared first on Michael Geist.

CRTC Report Confirms Yet Again: Canadian Wireless Prices Among Most Expensive in G7

Michael Geist - Tue, 07/15/2014 - 06:28

The Canadian Radio-television and Telecommunications Commission yesterday released the latest Wall Communications Report comparing prices for wireline, wireless, and Internet services in Canada and with foreign countries. While some initial reports focused on the increased wireless pricing for light wireless users (150 minutes per month with no data or texting) that was attributed to the shift from three-year contracts to two-year contracts, the bigger story is that Canadian wireless pricing is ranked among the three most expensive countries in the G7 in every tier.

The report measures four different baskets of users and for every usage Canada is one of the three most expensive countries in the survey (other countries include the US, UK, France, Australia, Japan, Germany, and Italy).

Summary of International Price Comparison 2014, Wall Communications Inc. http://www.crtc.gc.ca/eng/publications/reports/rp140714.htm

As the chart demonstrates, Canada is the most expensive among all countries for Level 1, third most expensive for Levels 2 and 3, and second most expensive for Level 4.

The initial reports focused on the Level 1 data, noting that high prices may be the result of the new wireless code that limits contracts to two years. However, Level 1 is an increasingly small part of the market since fewer and fewer consumers use phones for a small amount voice only with no data or texting (and those that do are more likely to use one of the cheaper new entrants). Indeed, Level 1 likely excludes all smartphone users as the plan offers only 5 minutes of talk per day with no data and no texting. It therefore has little to do with amortizing the cost of expensive devices such as the iPhone. Moreover, the increase in pricing for this service actually demonstrates again why the market is uncompetitive, since two-year contracts or less are standard in most other parts of the world, yet the Canadian pricing is the highest in the category.

Last week, I wrote about the sorry state of wireless competition in Canada, noting that Bell, Telus, and Rogers all recently confirmed that they are reducing promotional activity and exercising greater “price discipline”. This latest report provides further confirmation that Canadian wireless prices remain high by global standards and unless the new competitive measures succeed, the incumbents have no intention of changing that any time soon.

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Canadians That Access U.S. Netflix May Be in a Legal Grey Zone, But They Are Not Stealing

Michael Geist - Mon, 07/14/2014 - 07:38

Netflix is enormously popular in Canada with millions using the online video service. While the Canadian version of Netflix has improved the scope of available titles since it launched, there are still differences with the U.S. service, leading some subscribers to use virtual private networks to mask their address and access U.S. Netflix. Are those subscribers “stealing” something? The Globe and Mail’s Simon Houpt apparently thinks so.

This weekend he wrote a column titled Even the Content Creators are Stealing Content, which focused on content creators who unapologetically download television shows or use virtual private networks to access U.S. Netflix from Canada. Accessing the U.S. Netflix service is common in many countries including Canada (see stories on Australia, New Zealand, and the U.K.). Houpt argues that accessing the U.S. Netflix from Canada deprives creators of their fair share of earnings and make the creation of future shows less likely:

Paying for the Canadian service means your money goes to whoever holds the Canadian rights for the shows on Netflix. If you’re watching the U.S. service, the rights holders – that is, those who pay the creators to make the shows you’re actually watching – aren’t getting their fair share. That means they’re less likely to help get the next round of shows or movies green-lighted, making it harder for artists to get their projects off the ground.

Yet while the legal issues associated with accessing U.S. Netflix may be in a legal grey zone, the argument that creators are not paid seems wrong.

First, Netflix spends billions each year licensing content in bulk so that it can be viewed an unlimited number of times. Unlike songs played on a radio or television programs aired in syndication, the Netflix model does not pay based on views or the number of times aired. The company notes:

Our licensing is all time-based, so that we might pay, for example, $200,000 for a 4 year exclusive subscription video-on-demand (SVOD) license for a given title. At the time of renewal, we evaluate how much the title has been viewed as well as member rating feedback to determine how much we are willing to pay. How many similar titles we have is also a consideration.

In other words, there are no additional payments to rights holders regardless of how many times a title is viewed during the licence period. In fact, a Canadian viewing a title on the U.S. Netflix would simply add to the number of views and potentially increase Netflix’s willingness to pay when the licence expires.

Second, many of Netflix’s most popular titles (House of Cards, Orange is the New Black) are licensed worldwide and which geographic service is used to access the title is irrelevant. There is growing overlap between the two services (popular shows such as Breaking Bad and Lost are similarly available on both services), so whether the U.S. or Canadian service is used, much of the content is the same.

Third, neither Netflix nor rights holders seem particularly troubled by the practice. Netflix is well aware of the practice of accessing the U.S. service, but has not taken steps to stop it (other than the inclusion of provision on access and geography in its terms of use). If rights holders were seriously concerned with the practice, they would presumably pressure the company to crack down or refuse to licence their works. To date, I can find no reports of that happening. There are some Canadian groups concerned with respect for geographic licensing, but no reports of the rights holders whose work actually appears on Netflix publicly objecting or refusing to licence on those grounds. By comparison, Hulu has attempted to block non-U.S. users from using VPNs.

It is possible that there are rights holders that have licensed their shows to Netflix in the U.S. and to different companies in Canada (where they also license to Netflix in Canada there is no difference in which service is used to view the show). In such circumstances, it can be argued that accessing the show through the U.S. Netflix would deprive the Canadian licensee of an opportunity to commercialize their licence (though Canada is without an obvious competitive alternative). Yet those instances involve questions of which intermediary is paid, not whether the rights holder that created the original work is compensated.

If Houpt’s concern is that rights holders get their fair share so that new projects can get off the ground, what matters is not which intermediary is paid, but rather whether the viewer is ultimately paying for access to the program so that the creator is paid. The availability of Netflix has reportedly been linked to a decrease in unauthorized, unpaid access by Canadians, suggesting that more people are paying for content. The characterization of copyright infringement as “stealing” often seems inappropriate given that theft involves the loss of the object, which does not occur with an extra copy or viewing. Even if the term is expanded to include a loss of revenue for the creator, that still does not apply in this case. Accessing U.S. Netflix may sit in a legal grey zone, but the concerns associated with ensuring that the original creators or rights holders are paid by those that view their content seems unfounded.

The post Canadians That Access U.S. Netflix May Be in a Legal Grey Zone, But They Are Not Stealing appeared first on Michael Geist.

In Defence of Canada’s Anti-Spam Law, Part Two: Why the Legislation Is Really a Consumer Protection and Privacy Law in Disguise

Michael Geist - Thu, 07/10/2014 - 06:42

My first post defending Canada’s anti-spam law focused on why spam remains a problem and how the new law may help combat fraudulent spam and target Canadian-based spamming organization. Most would agree that these are legitimate goals, but critics of the law will argue that it still goes too far since it covers all commercial electronic messages, not just fraudulent or harmful messages.

If the law were only designed to deal with harmful spam, they would be right. However, the law was always envisioned as something more than just an anti-spam bill. Indeed, when it was first introduced, it was called the Electronic Commerce Protection Act, reflecting the fact that it was expressly designed to address online consumer protection issues (the name CASL was an unofficial working name developed within Industry Canada). The law has at least three goals: provide Canada with tough anti-spam rules, require software companies to better inform consumers about their programs before installation, and update Canadian privacy standards by re-allocating who bears the cost for the use of personal information in the digital environment.

The need for tough anti-spam rules were discussed in my first post. The software installation provisions have yet to attract much attention since they do not take effect until 2015. Once they do, Canadian law will require companies to provide clear and prominent descriptions of the functionality of the software and to obtain express consent before installation. Business groups lobbied for significant changes to the rules, but the government and the CRTC refused to water down the requirements. The new rules are straight-forward consumer protection measures designed to enhance disclosure and require full consent before software programs are installed on users’ computers.

The third – and currently most controversial – aspect of the law is the update to Canadian privacy standards on consent for emails from legitimate businesses. Before CASL, most of the costs of commercial electronic messages were borne by consumers. With weak “implied consent” standards (as evidenced by the many unexpected opt-in emails Canadians received from organizations that harvested email addresses in a myriad of ways with little real awareness or consent from consumers), businesses sent messages safe in the knowledge that consumers would bear virtually all the costs. These include downloading the messages (particularly for mobile downloads where data still counts), higher ISP fees to account for filtering software and equipment costs, time spent reading the email, and the time to respond, delete or opt-out. Given those costs, organizations knew that relatively few would incur the cost (in the form of time) to opt-out.

Businesses unsurprisingly argue that this is a good approach, noting that the cost for any single opt-out is relatively trivial. Yet for consumers, the cumulative effect of hundreds or thousands of emails from different organizations adds up to a non-trivial cost. Multiplied by millions of consumers who each face the same thing and the off-loaded cost on consumers becomes significant. Moreover, from a privacy perspective, this leads to a weakened approach to consent under which privacy and consent start to mean very little. If anything is “ludicrous” or “absurd”, it is the notion that a simple inquiry should grant a business the right to burden the consumer with additional costs by marketing to them in perpetuity using their personal information unless the consumer pro-actively demands that it stop.

The new Canadian law re-calibrates this approach by giving consumers greater control over the costs they bear from commercial email. By shifting to an opt-in approach, the costs associated with receiving and dealing with email better reflects consumer choice since consumers only incur the costs for those commercial emails for which they have expressly provided consent. It is worth noting that the allocation of costs is also reflected in many (though not all) of the exceptions in the law. For example, product recalls and safety warnings are exempt from the consent requirements, reflecting the benefit to consumers, who bear the costs of receipt. Similarly, business-to-business email is generally exempted as a cost of doing business.

The debate over where to strike this privacy balance is an old one. For example, in 1991, the U.S. passed the Telephone Consumer Protection Act. The TCPA included a ban on sending unsolicited commercial faxes without prior express consent. Business groups objected to the TCPA, using many of the same arguments raised with CASL. In fact, a constitutional challenge on the ban was launched, but failed. A review of the Congressional thinking behind the bill notes:

It simply was not fair to require consumers to swallow the costs – paper, ink, wear-and-tear on the machine – of automatically-received, unwanted faxes promising great hotel deals or special car wash discounts. Congress reasoned that the consumer protection rights of the fax recipient – who must unfairly waste time waiting while a machine receives and prints out an unwanted transmission, all at the recipient’s cost – trumped any commercial speech rights of the marketers.

Faxes are not the same as email, but the reasoning is the same. There is a cost to consumers for the receipt of commercial email from legitimate businesses. For over a decade, businesses have effectively off-loaded those costs. CASL seeks to create a more equitable balance, leading to support from many Canadians but opposition from business.

In fact, the same balancing debate occurred with the creation of Canada’s do-not-call list. Marketers warned about the negative impact on many businesses, but the government noted that consumers faced the brunt of the cost for telemarketing calls in the form of time and interruption of privacy in the home. The result was a more balanced approach with an expanded opt-out system that requires all marketers to consult the do-not-call list before engaging in telemarketing.

With respect to commercial email, the policy rationale is similar: since an opt-out do-not-spam list is not viable, the best way to address the cost imbalance on commercial email is to relieve consumers of some of the costs by granting them the right to opt-in to emails, rather than opt-out.

As for the business costs of compliance, business was already required to maintain lists and respect opt-outs. Much of the additional compliance costs stem from either seeking an opt-in or the complexity of relying upon exceptions. In the case of seeking opt-ins, businesses could have obtained an opt-in the first place, but chose not to do so. Moreover, businesses have been given a three-year transition period to address the requirement (note that if the law was only concerned with fraudulent spam, there would be no need for a three year transition). As for the compliance costs from relying upon exceptions, it seems reasonable that there may be some costs for those businesses that would prefer to avoid obtaining express consent.

Some may still disagree with the policy rationale or the privacy balance struck by CASL. However, what should be obvious to all is that the law is about far more than just harmful spam. The application to legitimate businesses is not an unintended consequence but rather a well-considered policy decision to update Canadian privacy standards by more fairly apportioning the costs associated with the use of personal information.

 

The post In Defence of Canada’s Anti-Spam Law, Part Two: Why the Legislation Is Really a Consumer Protection and Privacy Law in Disguise appeared first on Michael Geist.

In Defence of Canada’s Anti-Spam Law, Part One: Why Spam is Still a Problem and the New Law Will Help

Michael Geist - Wed, 07/09/2014 - 06:08

Canada’s anti-spam legislation took effect at the beginning of the month, sparking a steady stream of critical opinion pieces calling it everything from an absurd solution to a mostly non-problem to “ludicrous regulatory overkill.” The criticisms generally boil down to three claims: spam isn’t a big problem, the law is ineffective because most spam originates outside Canada, and the law is overbroad because it targets legitimate businesses alongside fraudulent spammers. I think all three criticisms are wrong. This post addresses why spam is still a problem and how the law will help. A second post tomorrow tackles the broad scope of the law, arguing that it is better understood as privacy legislation that fairly apportions the costs associated with electronic marketing.

Spam is Still a Problem

As spam filters have improved, many apparently no longer see spam as a significant problem. Yet the data confirms that there is still an enormous amount of spam that comes at real cost. Recent estimates indicate that there are roughly 80 billion spam messages sent daily, meaning that spam represents more than 70% of all email traffic. While there are varying estimates on the economic cost of spam, a 2012 study by Rao and Reiley conservatively placed the cost at roughly $20 billion per year. Given that spammers bear little of the cost of their marketing and earn only a fraction of the costs back in revenue, the authors estimate that the cost of spam to consumers outweigh the social benefits by an order of 100 to 1.

The cost of spam extends far beyond the expense associated with filtering it, transferring it, downloading it, and deleting it. There are additional costs that extend to all businesses, since spam undermines consumer confidence in electronic commercial messages more generally, making them less likely to be opened, believed or acted upon. Spam filtering has become a necessity, but an unwanted effect is that it decreases the reliability of email, since false positives invariably lead to some legitimate messages ending up in the junk folder (which require users to spend time reviewing the spam or simply accept that some messages will not get reach their intended destination).

Further, fraudulent spam results in real harm, leading to actual consumer losses (studies indicate that billions are lost each year just from 419 scams). Despite all harms, until last week, Canada was one of the only major economies in the world without anti-spam legislation. In fact, the new Canadian law identifies 118 other countries with spam laws that address similar conduct.

The Effectiveness of the Law

Critics argue that since the majority of spam originates outside the country, the Canadian anti-spam law will be ineffective in curtailing spam that reaches Canadian in-boxes. It is certainly true that the law will not eliminate all spam. No law alone does and no one has ever credibly suggested otherwise. However, most analysis – including the 2005 National Task Force Report on Spam that had marketing and business representatives and unanimously recommended opt-in anti-spam legislation – has concluded that law is an integral part of the solution.

The notion that Canada can do little to address global spam so it should not bother with domestic anti-spam laws sounds oddly reminiscent of global warming critics, who similarly argue that Canada is responsible for a small fraction of greenhouse gases and therefore any Canadian emissions limitations will not have a significant impact on a global problem. Yet most now accept that everyone must do their part to preserve the real-space environment and the same is true for the online environment.

In fact, Canada’s role in global spam is larger than most might think. The Register of Known Spam Operations is a database of the world’s largest spamming organizations, identifying just over 100 groups responsible for 80% of all spam worldwide. The list currently identifies seven organizations based in Canada, making us the third largest home of spamming organizations in the world, behind only the United States and Russia. It is unclear why spamming organizations have chosen to establish themselves in Canada, though the longstanding absence of any anti-spam law may have been partly to blame.

What makes the list particularly remarkable is that we know where the organizations are (others such as Montreal’s Adam Guerbuez – who faced an $873 million judgement for spamming on Facebook – actively blog and promote themselves), yet have not had the legal tools to do much about it. In fact, organizations such as MAAWG, which brings together the global anti-spam and anti-spyware industry, has been supportive of the legislation specifically because it will allow for improved information sharing and global enforcement activities.

The effectiveness of the CRTC’s enforcement of the law remains to be seen, however, the experience elsewhere suggests that laws with tough penalties can reduce domestic-originating spam. Taking action against Canadian-based spammers would be a good start, but it only scratches the surface of the broader impact of the law. Beyond targeting the most harmful spam, the new law is fundamentally privacy legislation that seeks to recalibrate who bears the costs associated with the use of personal information in the digital environment. More on the privacy side of the law in a post tomorrow.

The post In Defence of Canada’s Anti-Spam Law, Part One: Why Spam is Still a Problem and the New Law Will Help appeared first on Michael Geist.

Why the Latest Canadian Wireless Policy Move is More Shakeup Than Shakedown

Michael Geist - Tue, 07/08/2014 - 04:34

Industry Minister James Moore announced new spectrum policy measures yesterday designed to help foster the creation of a viable fourth national wireless competitor. The policy features an accelerated timeline for another spectrum auction (AWS-3) and a significant set-aside of spectrum for new entrants such as Wind Mobile. When combined with the government’s policies on domestic roaming, tower sharing, and foreign investment, it is clear that it intends to continue to use the policy levers at its disposal to encourage greater wireless competition. For this, the government deserves kudos, as its emphasis on fostering greater competition is the right thing to do.

While the announcement generated criticism from the usual suspects who want Canadians to believe that the market is already competitive (or incredibly might somehow become more competitive if it shrunk down further to two competitors), it is worth revisiting the Competition Bureau’s analysis of the wireless market. Earlier this year, Canada’s independent agency responsible for competition in the marketplace concluded that the Big 3 enjoy “market power”, which it defines as “the ability of a firm or firms to profitably maintain prices above competitive levels (or similarly restrict non-price dimensions of competition) for a significant period of time.” In fact, the Bureau commissioned its own study of the market on domestic roaming and found that a more competitive market would deliver approximately $1 billion in benefits to the Canadian economy.

As if on cue, the Big 3′s most recent quarterly investor calls confirmed that they face little pricing pressure.

Rogers started the confirmation in its April investor call, noting that “we have reduced the amount of promotional activity” in response to a question about “price discipline.” Bell followed in its May call, noting that increased wireless service revenue came in part from the expiry of promotional pricing. Further, CEO George Cope emphasized “the discipline in our pricing in the marketplace.” Not to be outdone, Telus also indicated on its call  that even when “there are all kinds of aggressive promotions in the market, it allows us to stand back from the frame a little bit and be a little more sanguine.”

Those messages are invariably well received by the analyst community for whom “pricing discipline” means increased revenues. For consumers, however, they send the signal that the already high Canadian wireless prices are not coming down anytime soon. Canadians judging the government’s policy reforms on wireless therefore face an actual choice: they can either believe pundits who now claim that less competition will result in better pricing or they can listen to the Competition Bureau and the Big 3 themselves, who insist that they plan to maintain “pricing discipline” for wireless services. If you take them at their word, it is wireless consumers who are often left feeling that they have been the target of shakedown and hoping that government policies might provide a much-needed shake-up of the Canadian wireless market.

The post Why the Latest Canadian Wireless Policy Move is More Shakeup Than Shakedown appeared first on Michael Geist.

Why The Secrecy on the TPP Talks in Ottawa This Week? Because There is Something to Hide

Michael Geist - Mon, 07/07/2014 - 07:00

Trade agreements have emerged in recent years as one of the federal government’s most frequently touted accomplishments. Having concluded (or nearly concluded) free trade deals with the likes of the European Union and South Korea, senior government ministers such as International Trade Minister Ed Fast and Industry Minister James Moore have held dozens of events and press conferences across the country promoting the trade agenda.

The next major agreement on the government’s docket is the Trans Pacific Partnership, a massive proposed trade deal that includes the United States, Australia, Mexico, Malaysia, Singapore, New Zealand, Vietnam, Japan, Peru, and Chile. While other trade talks occupy a prominent place in the government’s promotional plans, the TPP remains largely hidden from view. Indeed, most Canadians would be surprised to learn that Canada is hosting the latest round of TPP negotiations this week in Ottawa.

My weekly technology law column (Toronto Star version, homepage version) argues the secrecy associated with the TPP – the draft text of the treaty has still not been formally released, the precise location of the Ottawa negotiations has not been disclosed, and even the existence of talks was only confirmed after media leaks – suggests that the Canadian government has something to hide when it comes to the TPP.

Since this is the first major TPP negotiation round to be held in Canada, there was an opportunity to build public support for the agreement. Yet instead, the Canadian government approach stands as one of the most secretive in TPP history. Why the secrecy?

The answer may lie in the substance of the proposed agreement, which leaked documents indicate often stands in stark contrast to current Canadian policy. The agricultural provision may attract the lion share of TPP attention, but it is the digital issues that are particularly problematic from a Canadian perspective.

For example, late last month the government announced that new copyright rules associated with Internet providers would take effect starting in 2015. The Canadian system, referred to as a “notice-and-notice” approach, is widely viewed as among the most balanced in the world, providing rights holders with the ability to raise concerns about alleged infringements, while simultaneously safeguarding the privacy and free speech rights of users.

The government rightly described its approach as a “made in Canada” solution. However, according to leaked text from drafts of the TPP, the U.S. is demanding that Canada abandon notice-and-notice in favour of rules that could lead to terminating subscriber access, content blocking, and even monitoring of online activities.

The same is also true for the term of copyright protection. Canadian law currently provides protection for the life of the author plus an additional 50 years. That meets the international standard, yet the U.S. wants all TPP countries to extend the term to life plus 70 years, effectively keeping works out of the public domain for decades.

The TPP could also lead to significant changes to Canadian patent law by altering the standard of utility under Canadian law, expanding protections to plants and animals with few safeguards, and extending the term of patents in a manner that would keep cheaper generic drugs off the market. The net effect could be to sharply increase health care costs.

The digital concerns are not limited to intellectual property. The TPP also contains privacy-related provisions, including potential restrictions on local server requirements designed to ensure that Canadian personal information is hosted within Canada. A ban on such requirements would place Canadian data at risk and run counter to the government’s own policies on the storage of its email data.

The Canadian desire to maintain current policies becomes more apparent when the TPP is contrasted with the Canada – South Korea free trade agreement. That agreement permits the use of the notice-and-notice system and contains no reforms to copyright term, key patent issues, or privacy protections. The TPP may ultimately require major changes, however, which helps explain why the government would prefer that Canadians pay no attention to the secret negotiations taking place this week a few blocks from Parliament Hill.

The post Why The Secrecy on the TPP Talks in Ottawa This Week? Because There is Something to Hide appeared first on Michael Geist.

Why the Secrecy on Canada’s TPP Talks? Because There is Something to Hide

Michael Geist - Mon, 07/07/2014 - 06:40

Appeared in the Toronto Star on July 5, 2014 as Why the Secrecy on Canadian Trade Talks?  Because There’s Something to Hide

Trade agreements have emerged in recent years as one of the federal government’s most frequently touted accomplishments. Having concluded (or nearly concluded) free trade deals with the likes of the European Union and South Korea, senior government ministers such as International Trade Minister Ed Fast and Industry Minister James Moore have held dozens of events and press conferences across the country promoting the trade agenda.

The next major agreement on the government’s docket is the Trans Pacific Partnership, a massive proposed trade deal that includes the United States, Australia, Mexico, Malaysia, Singapore, New Zealand, Vietnam, Japan, Peru, and Chile. While other trade talks occupy a prominent place in the government’s promotional plans, the TPP remains largely hidden from view. Indeed, most Canadians would be surprised to learn that Canada is hosting the latest round of TPP negotiations this week in Ottawa.

The secrecy associated with the TPP – the draft text of the treaty has still not been formally released, the precise location of the Ottawa negotiations has not been disclosed, and even the existence of talks was only confirmed after media leaks – suggests that the Canadian government has something to hide when it comes to the TPP.

Since this is the first major TPP negotiation round to be held in Canada, there was an opportunity to build public support for the agreement. Yet instead, the Canadian government approach stands as one of the most secretive in TPP history. Why the secrecy?

The answer may lie in the substance of the proposed agreement, which leaked documents indicate often stands in stark contrast to current Canadian policy. The agricultural provision may attract the lion share of TPP attention, but it is the digital issues that are particularly problematic from a Canadian perspective.

For example, late last month the government announced that new copyright rules associated with Internet providers would take effect starting in 2015. The Canadian system, referred to as a “notice-and-notice” approach, is widely viewed as among the most balanced in the world, providing rights holders with the ability to raise concerns about alleged infringements, while simultaneously safeguarding the privacy and free speech rights of users.

The government rightly described its approach as a “made in Canada” solution. However, according to leaked text from drafts of the TPP, the U.S. is demanding that Canada abandon notice-and-notice in favour of rules that could lead to terminating subscriber access, content blocking, and even monitoring of online activities.

The same is also true for the term of copyright protection. Canadian law currently provides protection for the life of the author plus an additional 50 years. That meets the international standard, yet the U.S. wants all TPP countries to extend the term to life plus 70 years, effectively keeping works out of the public domain for decades.

The TPP could also lead to significant changes to Canadian patent law by altering the standard of utility under Canadian law, expanding protections to plants and animals with few safeguards, and extending the term of patents in a manner that would keep cheaper generic drugs off the market. The net effect could be to sharply increase health care costs.

The digital concerns are not limited to intellectual property. The TPP also contains privacy-related provisions, including potential restrictions on local server requirements designed to ensure that Canadian personal information is hosted within Canada. A ban on such requirements would place Canadian data at risk and run counter to the government’s own policies on the storage of its email data.

The Canadian desire to maintain current policies becomes more apparent when the TPP is contrasted with the Canada – South Korea free trade agreement. That agreement permits the use of the notice-and-notice system and contains no reforms to copyright term, key patent issues, or privacy protections. The TPP may ultimately require major changes, however, which helps explain why the government would prefer that Canadians pay no attention to the secret negotiations taking place this week a few blocks from Parliament Hill.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Why the Secrecy on Canada’s TPP Talks? Because There is Something to Hide appeared first on Michael Geist.

Enforcing CASL: How To Report Spam Violations

Michael Geist - Fri, 07/04/2014 - 04:39

With Canada’s anti-spam law now in effect, many are starting to ask about enforcement of the law. While no one should expect the law to eliminate spam, the goal much more modest: target the bad actors based in Canada and change the privacy culture by making opt-in consent the expected standard for consumer consents. The CRTC, the lead regulatory agency, has made it clear that the fear-mongering of million dollar penalties for inadvertent violations is not going to happen. Chair Jean-Pierre Blais recently stated:

punishment is not our goal. We are not going to go after every indie rock band that’s trying to sell a new release to its fans. We have much bigger fish to fry. The CRTC will focus on the most severe types of violations. This means you may still receive the occasional spam message after July 1st. Our principal targets are abusive spammers and interlopers involved in botnets and, come January, malware and malicious URLs. Our responses to complaints will range from written warnings up to financial penalties or court actions. Our objective is to secure compliance and prevent recidivism. I believe the best enforcement approach should be determined by the facts surrounding each particular case.

How will the CRTC identify abusive spammers? The government has established a Spam Reporting Centre that is currently accepting reports of commercial electronic messages sent without consent or with false or misleading content. Initial reports indicate that hundreds of complaints have been filed daily. The Centre clearly states that it will not investigate all submissions, but rather use the information to identify enforcement targets. The information will be retained for at least three years (or up to ten years if the subject of an investigation). Canadians can use a web-based form to file their report or simply forward their spam email directly to spam@fightspam.gc.ca.

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The Benefits of Consent

Michael Geist - Thu, 07/03/2014 - 06:08

Commercial email did not grind to a halt the day after Canada’s anti-spam legislation took effect and neither did the coverage about the law’s impact (I appeared on CBC’s The Current to debate the issue). Coverage included Microsoft backtracking from its earlier decision to stop security update emails, apparently taking the time to actually read the legislation and find the exception for security notification. There was also a CBC story about the Canadian Avalanche Centre, which stopped an email service after hundred of customization options became “too much of a hassle to maintain”, but the CBC used the timing to link the decision to CASL.

But what really caught my attention was this tweet from Jason Faber, the marketing manager at BoldRadius.

BoldRadius is one of those SMEs that is supposed to be having problems with CASL, despite legal obligations to obtain consents and meet other requirements that have been in effect since 2004. Yet Faber’s initial experience is precisely what one might expect: as companies shift to opt-in lists with customers who explicitly consent to receive messages, they are more likely to open the emails and to click on the links. I asked Faber about the experience to date and he indicated that the company’s list has unsurprisingly slimmed down, but that it is much more qualified, will grow back over time, and offers a more engaged audience, which he prefers. A useful reminder that successful email marketing and opt-in consent are not incompatible. Indeed, opt-in is the standard in most countries around the world and was the unanimous recommendation of the Canadian National Task Force on Spam that included representatives from the marketing community.

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Welcome to the New MichaelGeist.ca

Michael Geist - Wed, 07/02/2014 - 10:03

Welcome to the new look MichaelGeist.ca. Months in the making, the site is new in just about every way: a new cleaner, more colourful design, new content management system (from Joomla to WordPress), updated content, new topic pages for the most popular issues discussed on the site, and better search and social media functionality. The new site still uses a Creative Commons licence and now adds dozens of photos that are also CC licensed.

My thanks to Willy Karam for his years of assistance on the old site, to Amanda Lutz for her work in transitioning to the new site, to students such as Emily Murray and Alexandra Lyn for their help updating content, and to the many creators who use Creative Commons to make their work available to others.

While we have worked hard to ensure a seamless transition, any major website overhaul that transfer thousands of posts and tens of thousands of comments is bound to have unforeseen issues. Readers are invited to provide feedback and to notify me know of anything they encounter that does not work as it should.

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