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“There is No Such Thing as Too Much Choice”

Michael Geist - Mon, 09/08/2014 - 05:49

Appeared in the Toronto Star on September 6, 2014 as The Takeaway for the CRTC’s Future of TV Hearing

Rogers Communications unveiled its plan for streaming more than 1,000 National Hockey League games on the Internet last week. Having invested billions of dollars to obtain the Canadian broadcast and Internet rights to NHL hockey, the cable giant pointed to the future of broadcast by embracing consumer demand for making games available online.

As part of the launch, Rogers Media president Keith Pelley responded to questions about the approach by stating “there’s no such thing as too much choice. Let the consumer decide what they want to watch.” Pelley was speaking about hockey streaming, but his comments should resonate loudly this week in a broader context as the Canadian Radio-television and Telecommunications Commission opens its much-anticipated public hearing on the future of television in Canada.

The CRTC hearing has already generated thousands of advance comments from major stakeholders and individual Canadians. It has also unleashed considerable angst from established broadcasters, broadcast distributors, and content creators, who fear that the broadcast regulator will overhaul the current system by implementing changes such as mandatory pick-and-pay channel selection for consumers and reforms to longstanding policies such as simultaneous substitution (which allows Canadian broadcasters to substitute Canadian commercials into U.S. licensed programming).

In fact, the CRTC has left little doubt that change is on the way. In a working document released late last month, it narrowed the likely outcomes to include requiring a mandatory basic cable service at a fixed cost (as low as $20 per month), a mandated pick-and-pay system that would allow consumers to select individual channels rather than being bound by unwanted packages, and the gradual elimination of simultaneous substitution.

While these changes are likely to spur a barrage of horror stories and dire warnings throughout the hearing – broadcasters will claim that the pick-and-pay will effectively kill some unpopular channels and broadcast distributors will warn that increased choice will lead to higher prices – the Rogers hockey streaming announcement signals most of what Canadians really need to know.

First, the CRTC is not forecasting the future of television as much as it is catching up to today’s reality. A broadcast regulatory system premised on limited consumer choice and scarce airwaves has given way to virtually unlimited options and an abundance of delivery mechanisms. With Rogers able to offer nearly the entire NHL season on the Internet, the conventional broadcast system already faces enormous competitive challenges. If the established system does not offer consumers sufficient flexibility and choice, they will go elsewhere.

Second, the Rogers announcement reinforces the importance of existing regulations designed to foster competition online.  The company noted that its package would be available to all Canadians, regardless of which cable or wireless provider they use. The broad availability of the service can be attributed both to the economic benefits of selling to a bigger market and to regulatory rules that restrict vertically integrated companies from granting themselves undue preferences.

Moreover, Rogers acknowledged that data used by its wireless customers to stream hockey games would count against their monthly cap. That approach reflects the need to conform to Canada’s net neutrality rules that are designed to maintain a level playing field and represents an about-face from an earlier television streaming service.

Third, as Pelley noted, there is no such thing as too much consumer choice when it comes to the options to watch programs when, where, and on what device Canadians want. The Canadian broadcast regulatory system has long benefited channels with limited viewership and broadcast distributors who forced consumers to purchase unpopular channels as part of expensive packages.

The CRTC hearing is ultimately about shifting away from that model by providing consumers with more choice. That change should force broadcasters to improve their products and broadcast distributors to offer competitively priced services. As the Rogers approach to streaming hockey demonstrates, if they fail to do so, consumers now have other options.

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 “There is No Such Thing as Too Much Choice” appeared first on Michael Geist.

Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill

Michael Geist - Tue, 09/02/2014 - 06:52

Last year, the federal government trumpeted anti-counterfeiting legislation as a key priority. The bill raced through the legislative process in the winter and following some minor modifications after committee hearings, seemed set to pass through the House of Commons. Yet after committee approval, the bill suddenly stalled with little movement throughout the spring.

Why did a legislative priority with all-party approval seemingly grind to a halt?

My weekly technology law column (Toronto Star version, homepage version) suggests that the answer appears to stem from the appointment of Bruce Heyman as the new U.S. ambassador to Canada. During his appointment process, Heyman identified intellectual property issues as a top priority and as part of his first major speech as ambassador, singled out perceived shortcomings in the anti-counterfeiting bill.

Heyman’s primary concern relates to in-transit shipments, which involve goods that do not originate in Canada and are not destined to stay in Canada. The Canadian bill excludes in-transit shipments from the scope of new rules that grant customs agents unprecedented powers to seize suspect shipments without court oversight.

According to Heyman:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

The Canadian position is based at least in part on serious concerns about misuse of in-transit seizures.  For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Indeed, many groups maintain that the seizure of generic pharmaceuticals in transit would pose a threat to international trade, development and public welfare.

Despite the delay, there is little doubt that the anti-counterfeiting bill will ultimately become law. In fact, with some of the bill’s provisions included in the Canada – Europe trade agreement, there may soon be a treaty requirement to address border measures.

With the fall parliamentary session set to start in a few weeks, the emerging question is whether the government will continue to resist foreign lobbying to distort the balance in the bill, by maintaining both the in-transit shipment exclusion and a personal traveler exception, whose removal could lead to increased border searches of physical luggage and electronic devices. If amendments are made late in the legislative process, it may well be a case of caving yet again to unwarranted U.S. pressure on intellectual property laws.

The post Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill appeared first on Michael Geist.

Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill

Michael Geist - Tue, 09/02/2014 - 06:38

Appeared in the Toronto Star on August 30, 2104 as Why Dutch Guards Holding Indian-Made Drugs Bound for Nigeria Sends a Warning to Canadian Legislators

Last year, the federal government trumpeted anti-counterfeiting legislation as a key priority in its Speech from the Throne. The bill raced through the legislative process in the winter and following some minor modifications after committee hearings, seemed set to pass through the House of Commons. Yet after committee approval, the bill suddenly stalled with little movement throughout the spring.

Why did a legislative priority with all-party approval seemingly grind to a halt?

The answer appears to stem from the appointment of Bruce Heyman as the new U.S. ambassador to Canada. During his appointment process, Heyman identified intellectual property issues as a top priority and as part of his first major speech as ambassador, singled out perceived shortcomings in the anti-counterfeiting bill.

Heyman’s primary concern relates to in-transit shipments, which involve goods that do not originate in Canada and are not destined to stay in Canada. The Canadian bill excludes in-transit shipments from the scope of new rules that grant customs agents unprecedented powers to seize suspect shipments without court oversight.

According to Heyman:

“We are pleased Canada has introduced legislation that will give its border officials the authority to seize pirated and counterfeit goods, but the United States is concerned because the bill does not apply to goods that are shipped through Canada, from a third country to the U.S.”

The Canadian position is based at least in part on serious concerns about misuse of in-transit seizures.  For example, in November 2008, Dutch customs agents seized a shipment of AIDS/HIV medications at Schiphol Airport near Amsterdam. The Nigeria-destined medications originated in India, which produced a generic version of abacavir, an anti-retroviral drug. The global health group UNITAID had purchased the 49 kilograms of abacavir with the Clinton Foundation scheduled to assist in their distribution once they reached Africa.

The seizure in the Netherlands came at the request of GlaxoSmithKline, the pharmaceutical giant that claimed the Indian drug violated its patent rights and contained counterfeit materials. UNITAID maintained that the drugs were not counterfeit, but the seizure dragged on for months.

The Dutch seizure was not an isolated incident. During 2008 and 2009, Doctors Without Borders found at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe. Several years later, the Court of the European Justice ruled against in-transit seizures, concluding that there was no infringement in the EU.

While Dutch seizures of Africa-bound pharmaceutical drugs have little connection to Canada, the experience with in-transit seizures of generic pharmaceutical drugs provides an important cautionary tale of why countries are right to resist targeting shipments that do not originate domestically and are destined for a different country. Indeed, many groups maintain that the seizure of generic pharmaceuticals in transit would pose a threat to international trade, development and public welfare.

Despite the delay, there is little doubt that the anti-counterfeiting bill will ultimately become law. In fact, with some of the bill’s provisions included in the Canada – Europe trade agreement, there may soon be a treaty requirement to address border measures.

With the fall parliamentary session set to start in a few weeks, the emerging question is whether the government will continue to resist foreign lobbying to distort the balance in the bill, by maintaining both the in-transit shipment exclusion and a personal traveler exception, whose removal could lead to increased border searches of physical luggage and electronic devices. If amendments are made late in the legislative process, it may well be a case of caving yet again to unwarranted U.S. pressure on intellectual property laws.

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 Why U.S. Pressure Is Behind the Stalled Canadian Anti-Counterfeiting Bill appeared first on Michael Geist.

BC Court Rules on Signing Away Your Reasonable Expectation of Privacy

Michael Geist - Wed, 08/27/2014 - 07:01

Canadian privacy law has long been reliant on the principle of “reasonable expectation of privacy.”  The principle is particularly important with respect to the Charter of Rights and Freedoms, as the Supreme Court of Canada has held that the right to be free from unreasonable search and seizure is grounded in a reasonable expectation of privacy in a free and democratic society.

The reasonable expectation of privacy standard provides a useful starting point for analysis, but the danger is that privacy rights can seemingly be lost with little more than a contractual provision indicating that the user has no privacy. Indeed, if privacy rights can disappear based on a sentence in a contract that few take the time to read (much less assess whether they are comfortable with), those rights stand on very shaky ground.

My weekly technology law column (Toronto Star version, homepage version) notes the limits of the reasonable expectation of privacy standard emerged in a recent British Columbia Court of Appeal case involving the search of a courier package that contained illegal drugs. The court rejected claims of an illegal search, concluding that the defendant had no reasonable expectation of privacy despite the fact that he had no commercial relationship with the courier company and had never agreed to, or even viewed, the terms of the contract.

The case, R. v. Godbout, involved the shipment of courier package from Calgary to Vancouver. The package looked from the outside like a child’s toy, but the customer service worker at the courier company was uncomfortable with the manner of the sender and decided to open the package, revealing both a toy and two bricks of drugs.  The police were contacted and after confirming the contents, arranged for a “controlled delivery” to Godbout, who was arrested after accepting and opening the package.

With strong evidence of illegal drugs, the only legal issue in the case was whether the opening, search, and seizure of the package was consistent with the Charter of Rights and Freedoms.  The court concluded that it was on the grounds that Godbout had no reasonable expectation of privacy.

The basis for that conclusion stemmed from the courier company’s contractual terms, which explicitly provided that “without notice, DHL may, at its sole discretion, open and inspect any shipment and its contents at any time. Customs authorities, or other governmental authorities, may also open and inspect any shipment and its contents at any time.”

That may sound clear-cut, but the problem is that Godbout was not a party to the contract. The sender may not have a reasonable expectation of privacy given the contractual terms, but should those terms also extend to the recipient who had not read or consented to them?

The court concluded that they should, ruling “the fact that the appellant may not have known of the terms of shipment does not make his subjective expectation objectively reasonable.”

The court seems to think that people know that courier packages are subject to inspection and therefore they should not expect any privacy in those packages. Yet it is difficult to reconcile an express acknowledgement that Godbout did not know the terms of the contract with the conclusion that he was nevertheless bound by them, particularly since this was a domestic shipment that would not typically involve customs agents or other authorities.

More broadly, the decision suggests that Canadians can lose their constitutional rights against illegal search and seizure on the basis of contractual terms to which they are not even a party. The court could have attempted to preserve privacy rights by concluding that the search was illegal but that the evidence was still admissible.  By upholding the legality of the search, however, it provided a troubling reminder about how Canadians should not expect much when it comes to the reasonable expectation of privacy standard.

The post BC Court Rules on Signing Away Your Reasonable Expectation of Privacy appeared first on Michael Geist.

What’s a ‘Reasonable Expectation’ of Privacy?

Michael Geist - Wed, 08/27/2014 - 06:55

Appeared in the Toronto Star on August 23, 2014 as What’s a ‘Reasonable Expectation” of Privacy?

Canadian privacy law has long been reliant on the principle of “reasonable expectation of privacy.”  The principle is particularly important with respect to the Charter of Rights and Freedoms, as the Supreme Court of Canada has held that the right to be free from unreasonable search and seizure is grounded in a reasonable expectation of privacy in a free and democratic society.

The reasonable expectation of privacy standard provides a useful starting point for analysis, but the danger is that privacy rights can seemingly be lost with little more than a contractual provision indicating that the user has no privacy. Indeed, if privacy rights can disappear based on a sentence in a contract that few take the time to read (much less assess whether they are comfortable with), those rights stand on very shaky ground.

The limits of the reasonable expectation of privacy standard emerged in a recent British Columbia Court of Appeal case involving the search of a courier package that contained illegal drugs. The court rejected claims of an illegal search, concluding that the defendant had no reasonable expectation of privacy despite the fact that he had no commercial relationship with the courier company and had never agreed to, or even viewed, the terms of the contract.

The case, R. v. Godbout, involved the shipment of courier package from Calgary to Vancouver. The package looked from the outside like a child’s toy, but the customer service worker at the courier company was uncomfortable with the manner of the sender and decided to open the package, revealing both a toy and two bricks of drugs.  The police were contacted and after confirming the contents, arranged for a “controlled delivery” to Godbout, who was arrested after accepting and opening the package.

With strong evidence of illegal drugs, the only legal issue in the case was whether the opening, search, and seizure of the package was consistent with the Charter of Rights and Freedoms.  The court concluded that it was on the grounds that Godbout had no reasonable expectation of privacy.

The basis for that conclusion stemmed from the courier company’s contractual terms, which explicitly provided that “without notice, DHL may, at its sole discretion, open and inspect any shipment and its contents at any time. Customs authorities, or other governmental authorities, may also open and inspect any shipment and its contents at any time.”

That may sound clear-cut, but the problem is that Godbout was not a party to the contract. The sender may not have a reasonable expectation of privacy given the contractual terms, but should those terms also extend to the recipient who had not read or consented to them?

The court concluded that they should, ruling “the fact that the appellant may not have known of the terms of shipment does not make his subjective expectation objectively reasonable.”

The court seems to think that people know that courier packages are subject to inspection and therefore they should not expect any privacy in those packages. Yet it is difficult to reconcile an express acknowledgement that Godbout did not know the terms of the contract with the conclusion that he was nevertheless bound by them, particularly since this was a domestic shipment that would not typically involve customs agents or other authorities.

More broadly, the decision suggests that Canadians can lose their constitutional rights against illegal search and seizure on the basis of contractual terms to which they are not even a party. The court could have attempted to preserve privacy rights by concluding that the search was illegal but that the evidence was still admissible.  By upholding the legality of the search, however, it provided a troubling reminder about how Canadians should not expect much when it comes to the reasonable expectation of privacy standard.

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 What’s a ‘Reasonable Expectation’ of Privacy? appeared first on Michael Geist.

How Canada Shaped the Copyright Rules in the EU Trade Deal

Michael Geist - Thu, 08/21/2014 - 06:33

In late December 2009, Wikileaks, the website that publishes secret government information, posted a copy of the draft intellectual property chapter of the Canada – European Trade Agreement (CETA). The CETA deal was still years from completion, but the leaked document revealed that the European Union envisioned using the agreement to mandate a massive overhaul of Canadian law.

The leak generated concern among many copyright watchers, but when a German television station leaked the final text of the agreement last week, it contained rules that largely reflect a “made-in-Canada” approach. Why the near-complete reversal in approach on one of the most contentious aspects of a 500 page treaty?

My weekly technology law column (Toronto Star version, homepage version) notes the starting point for copyright in CETA as reflected in 2009 leaked document was typical of European demands in its trade agreements. It wanted Canada to extend the term of copyright to life of the author plus 70 years (Canada is currently at the international standard of life plus 50 years), adopt tough new rules for Internet provider liability, create criminal sanctions for some copyright infringement, implement new rights for broadcasters and visual artists, introduce strict digital lock rules with minimal exceptions, and beef up enforcement powers. In other words, it was looking for Canada to mirror its approach on copyright.

The next leaked text did not surface until 2012. By then, Canada had tabled its own copyright reform bill that featured a wide range of Canadian-specific policies, including a “notice-and-notice” system for Internet providers that did not result in takedowns without court oversight, new flexibilities for consumer uses of copyright works, and limits on damages for non-commercial infringement.

The 2012 leaked text suggests that the Canadian reforms had an impact on the negotiations. Requirements to extend the term of copyright or create new rights for broadcasters and visual artists were removed from the draft text. Moreover, the digital lock rules and Internet service provider liability provisions were substantially re-written to better reflect the Canadian approach.

The 2012 text also included detailed criminal liability provisions modeled after the Anti-Counterfeiting Trade Agreement, which was concluded in 2011. After continent-wide protests against ACTA, the European Parliament rejected the agreement in July 2012 and the criminal liability provisions were subsequently removed from CETA.

The final leaked text completed the Canadian transformation of the copyright rules. The major European copyright demands were ultimately dropped and remaining issues were crafted in a manner consistent with Canadian law.

Negotiations take place behind closed doors, but there are appear to be at least four reasons for the about-face on copyright.

First, the domestic policy situation in both Canada and the EU surely had a significant impact as ACTA protests in Europe and consumer interest in copyright in Canada led to the elimination of the criminal provisions and the adoption of better-balanced, consumer-oriented rules.

Second, while there is much bluster about “strong” European rules or “weak” Canadian laws, the reality is that both are compliant with international standards that offer considerable flexibility in implementation. Beyond the rhetoric, the made-in-Canada approach offers many countries a better alternative than restrictive proposals that do little to benefit domestic creators or consumers.

Third, the “made-in-Canada” approach is gradually garnering increased attention around the world as a creative, viable alternative. Neelie Kroes, the Vice-President of the European Commission, cited the Canadian law with admiration in a speech in early July, while other countries have been considering adopting the Canadian model on issues such as Internet provider liability or the creation of user-generated content.

Four, when the European Union was pressed to prioritize its top intellectual property issues during the negotiations, copyright ultimately took a back seat to pharmaceutical patents and protection for geographical indications.

While there remain reasons to criticize CETA – Canada caved on its concern regarding pharmaceutical patent lawsuits that could potentially lead to claims with billions at stake – the copyright provisions are not among them. The text represents a win for Canada that reflects a more flexible alternative for countries negotiating copyright rules in their free trade agreements.

The post How Canada Shaped the Copyright Rules in the EU Trade Deal appeared first on Michael Geist.

How Canada Shaped the Copyright Rules in the EU Trade Deal

Michael Geist - Thu, 08/21/2014 - 06:31

Appeared in the Toronto Star on August 16, 2014 as How Canada Shaped Copyright Rules in EU Trade Deal

In late December 2009, Wikileaks, the website that publishes secret government information, posted a copy of the draft intellectual property chapter of the Canada – European Trade Agreement (CETA). The CETA deal was still years from completion, but the leaked document revealed that the European Union envisioned using the agreement to mandate a massive overhaul of Canadian law.

The leak generated concern among many copyright watchers, but when a German television station leaked the final text of the agreement last week, it contained rules that largely reflect a “made-in-Canada” approach. Why the near-complete reversal in approach on one of the most contentious aspects of a 500 page treaty?

The starting point for copyright in CETA as reflected in 2009 leaked document was typical of European demands in its trade agreements. It wanted Canada to extend the term of copyright to life of the author plus 70 years (Canada is currently at the international standard of life plus 50 years), adopt tough new rules for Internet provider liability, create criminal sanctions for some copyright infringement, implement new rights for broadcasters and visual artists, introduce strict digital lock rules with minimal exceptions, and beef up enforcement powers. In other words, it was looking for Canada to mirror its approach on copyright.

The next leaked text did not surface until 2012. By then, Canada had tabled its own copyright reform bill that featured a wide range of Canadian-specific policies, including a “notice-and-notice” system for Internet providers that did not result in takedowns without court oversight, new flexibilities for consumer uses of copyright works, and limits on damages for non-commercial infringement.

The 2012 leaked text suggests that the Canadian reforms had an impact on the negotiations. Requirements to extend the term of copyright or create new rights for broadcasters and visual artists were removed from the draft text. Moreover, the digital lock rules and Internet service provider liability provisions were substantially re-written to better reflect the Canadian approach.

The 2012 text also included detailed criminal liability provisions modeled after the Anti-Counterfeiting Trade Agreement, which was concluded in 2011. After continent-wide protests against ACTA, the European Parliament rejected the agreement in July 2012 and the criminal liability provisions were subsequently removed from CETA.

The final leaked text completed the Canadian transformation of the copyright rules. The major European copyright demands were ultimately dropped and remaining issues were crafted in a manner consistent with Canadian law.

Negotiations take place behind closed doors, but there are appear to be at least four reasons for the about-face on copyright.

First, the domestic policy situation in both Canada and the EU surely had a significant impact as ACTA protests in Europe and consumer interest in copyright in Canada led to the elimination of the criminal provisions and the adoption of better-balanced, consumer-oriented rules.

Second, while there is much bluster about “strong” European rules or “weak” Canadian laws, the reality is that both are compliant with international standards that offer considerable flexibility in implementation. Beyond the rhetoric, the made-in-Canada approach offers many countries a better alternative than restrictive proposals that do little to benefit domestic creators or consumers.

Third, the “made-in-Canada” approach is gradually garnering increased attention around the world as a creative, viable alternative. Neelie Kroes, the Vice-President of the European Commission, cited the Canadian law with admiration in a speech in early July, while other countries have been considering adopting the Canadian model on issues such as Internet provider liability or the creation of user-generated content.

Four, when the European Union was pressed to prioritize its top intellectual property issues during the negotiations, copyright ultimately took a back seat to pharmaceutical patents and protection for geographical indications.

While there remain reasons to criticize CETA – Canada caved on its concern regarding pharmaceutical patent lawsuits that could potentially lead to claims with billions at stake – the copyright provisions are not among them. The text represents a win for Canada that reflects a more flexible alternative for countries negotiating copyright rules in their free trade agreements.

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 How Canada Shaped the Copyright Rules in the EU Trade Deal appeared first on Michael Geist.

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.

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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.

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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.

The post CRTC Report Confirms Yet Again: Canadian Wireless Prices Among Most Expensive in G7 appeared first on Michael Geist.

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.

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