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The joys of file-swapping up north: a Canadian boat-trip?

The joys of file-swapping up north: a Canadian boat-trip?
The joys of file-swapping up north: a Canadian boat-trip?



[Anyone want to join me in chartering a ship on Lake Ontario, complete 
with satellite-based Internet access and a *big* cache? We'd pick up 
American passengers in Buffalo, NY and head north. Once we enter 
Canadian territorial waters a few minutes later, the Net connection 
would be turned on, and the passengers could do whatever they liked with 
the bandwidth. While Kazaa'ing and BitTorrent'ing would not be 
encouraged, it would not be prohibited, and of course Canadian law seems 
to say downloading music is legal. Or perhaps we'd head north from New 
York City to Newfoundland. Bon voyage! --Declan]


-------- Original Message --------
Subject: 	The State of File Sharing and Canadian Law
Date: 	Mon, 6 Jun 2005 07:32:31 -0400
From: 	Michael Geist  
To: 	declan@well.com 



Declan,

Of possible interest to Politech - my regular Law Bytes column features
the second part of an examination of the recent Canadian Federal Court
of Appeal decision involving the recording industry's attempt to
identify 29 alleged file sharers.

After considering the privacy issues last week, this column (posted
below) moves to the copyright implications by considering three
questions: can the Canadian recording industry sue file sharers? Can it
win such suits?  And what legal reverberations might ensue if it does
win? The answers require analysis of the Canadian private copying system
and the effect of Canadian Copyright Act's statutory damages regime and
lead to the conclusion that lawsuits are a risky strategy with many
outstanding legal questions.

Freely available hyperlinked version at
http://www.michaelgeist.ca/resc/html_bkup/june62005.html 

Toronto Star (reg required) version at
 

Part one examination of privacy implications at
http://www.michaelgeist.ca/resc/html_bkup/may302005.html 

MG

*THE STATE OF FILE SHARING AND CANADIAN LAW

*The recent Federal Court of Appeal music file sharing case, in which
the court rejected the Canadian Recording Industry Association's attempt
to uncover the identities of 29 alleged file sharers, raises important
privacy and copyright issues.  Last week's column reviewed the court's
test to protect personal privacy; this week's column assesses the
copyright implications of that decision.

Although the court declined to articulate definitive conclusions on
important copyright issues associated with file sharing, its decision
will undeniably have a major impact on copyright policy. This impact is
best addressed by analyzing three questions - can CRIA sue file
sharers?  Can it win such suits?  And what legal reverberations might
ensue if it does win?

The answer to the first question is relatively straight forward.  CRIA
can sue file sharers in Canada and it has indeed asserted that the
decision provides a blueprint for future suits.

In the aftermath of last year's trial decision, the recording industry
expressed grave concern about the state of Canadian copyright law and
lobbied aggressively for immediate changes. In light of the appellate
decision, it is now safe to declare the copyright emergency over.  In
fact, the fears of a devastating effect never materialized.  According
to CRIA's own figures, in the thirteen months of reported sales since
the March 2004 decision, both sales and shipments have increased.

The answer to the second question -- whether CRIA can win file sharing
suits -- is open to debate, particularly with respect to suits filed
against individuals that solely download music from peer-to-peer
networks.  The complicating factor is the effect of Canada's private
copying system, which establishes a levy on blank media such as
recordable CDs.  Anna Bucci, the Executive Director of the Canadian
Private Copying Collective, the body that administers the $120 million
in royalties that have been generated by the levy, last week described
private copying as creating "a new right for the Canadian public -- the
right to make private copies of music for their own personal use."

There are at least three objections raised to the application of this
private copying right to P2P file sharing.  First, the right applies
solely to copying, not to those who "upload" music on peer-to-peer
networks.  This objection is certainly valid as neither the Canadian
courts nor the Canadian Copyright Board have ever indicated that private
copying could be used as a defense against the act of uploading.

Second, CRIA recently argued that the private copying right does not
apply to copies made to personal computers.  A review of the legislative
history of private copying provides little support for this
interpretation, however, as the statute was intentionally drafted in a
technology neutral fashion such that it could be applied to new copying
media, including computer hard drives.

The primary impetus behind the creation of the private copying system
was the/ Charter of Rights for Creator/s, a 1985 parliamentary committee
report. That report explicitly declined to tie the levy to a particular
technology, presciently noting that "future recording devices might not
use blank tape, thereby making a tape royalty obsolete. The work could
be stored in a computer memory with no independent material support at all."

Eleven years later the Task Force on the Future of the Canadian Music
Industry, which was co-chaired by the heads of CRIA and the Canadian
Independent Record Production Association, continued to press for the
creation of private copying levy to be applied to both media and
devices.  The technology neutral levy was enacted into law soon after
with the industry celebrating success after 15 years of lobbying but
lamenting that the delay had "literally killed dozens of careers."

While the levy was certainly intended to cover computer hard drives, the
third objection is whether the provision, as currently drafted, actually
achieves that goal.  This issue was thrown into some doubt by a Federal
Court of Appeal decision last December that upheld the validity of the
levy but tossed out its application to MP3 players such as the Apple iPod.

That decision is currently under appeal to the Supreme Court of Canada.
If Canada's highest court overturns the decision, the intent of the
legislation will be restored and much of the doubt about its
applicability to P2P downloaders will be removed.

If the Supreme Court declines to hear the appeal or upholds the
decision, the impact will extend well beyond music file sharing.  Some
P2P downloading would no longer fall under the private copying right,
though downloads to many external or removable hard drives would
presumably still qualify.  More importantly, copying of store bought CDs
onto Apple iPods, a common practice extolled by CRIA itself, would
effectively be rendered unlawful in Canada (unless there is an implied
right to copy such CDs, which would then call into question the need for
a private copying system).

The third question - what might follow if CRIA is successful in its
suits - raises the prospect for copyright reform.  When the federal
government established the private copying right in the late 1990s, it
also created a statutory damages system.  This enables a copyright
holder to obtain specified damages of between $500 and $20,000 per
infringement without the need to prove actual damages.  There is,
however, a saving provision that allows a court to order damages well
below the statutory minimums if the total award is "grossly out of
proportion to the infringement."

The statutory damages provision raises several scenarios in the context
of file sharing suits.  One possibility, common in the United States, is
that cases do not actually proceed to trial since even innocent
defendants will settle lawsuits to avoid the risk of a massive statutory
damages award. Should a case proceed to trial, another scenario is that
a court might indeed award damages of hundreds of thousands of dollars
based on uploading 1,000 songs onto a P2P network.

Given that fee-based services such as Napster already offer over 700,000
songs for only $14.99 per month, a raft of settlements or a massive
award might lead to vociferous calls to Industry Minister David Emerson
and Canadian Heritage Minister Liza Frulla for immediate reform to the
statutory damages provisions so that a more appropriate remedy can be
implemented.

Alternatively, a court might be faced with a sympathetic defendant who
could prove that they had legitimately copied store bought CDs onto
their computer and logged onto a P2P network in order to download a
public domain document or open source software program.  In such a case,
the judge might be inclined to use the saving provision and set a
precedent of a minimal damages award for P2P downloading.

The net result of current Canadian law is that file sharing suits are a
risky strategy from both a privacy and copyright perspective.  The
Federal Court of Appeal may have provided a roadmap for such suits, but
it is apparent that traveling down that road raises many more questions
than it answers.


-- 

**********************************************************************
Professor Michael A. Geist
Canada Research Chair in Internet and E-commerce Law
University of Ottawa Law School, Common Law Section
57 Louis Pasteur St., Ottawa, Ontario, K1N 6N5
Tel: 613-562-5800, x3319     Fax: 613-562-5124
mgeist@pobox.com http://www.michaelgeist.ca 
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