Friday, January 13, 2017

Copyright Reform in Canada – the 2017 Section 92 Review

(Wikimedia)
We can look forward to a lot of lawyering and lobbying devoted to copyright in Canada in 2017.
In the meantime, on the litigation front, we are awaiting important judgments in several cases, including the following that have been heard with the decision pending:
  • We can probably expect a decision sooner rather than later from the Federal Court in Phase I of the Access Copyright v. York U litigation. Indeed, the decision could come any time now, since final arguments were made June 22 - 24, 2016 and the Federal Court usually renders judgments within six months or less. The decision will likely deal with whether the "interim tariff" that is the basis of the litigation was "mandatory" and York's fair dealing guidelines. These were the key "Phase I" issues.
  • We can expect a decision in RE:SOUND v. CANADIAN ASSOCIATION OF BROADCASTERS ET AL, on judicial review from the Copyright Board, which was heard by the Federal Court of Appeal (“FCA”) on February 24, 2016. The long delay is unusual for a Court that usually renders decisions in a few weeks and normally less than six months.
  • We can expect a decision from the Federal Court of Appeal in the judicial review of the AC K-12 decision from the Copyright Board, which was heard on November 22, 2016. Likewise, there will very likely be a decision from the Federal Court of Appeal in the judicial review of the AC Provincial Government tariff, which was heard on June 20, 2016, in which fair dealing was a major issue. Although these cases were heard by different panels on different dates, there are some common issues and the decisions may very well come down together and will presumably be consistent.
  • At some point, there will be a decision from the Copyright Board in the AC Post-Secondary tariff case, from which the interim tariff that gave rise to the York University litigation arose. This case, which began in 2010, was finally heard by the Copyright Board in January of 2016. For all practical purposes, it was a default proceeding. The Copyright Board “ordinarily” and, indeed, often takes two years or more to render decisions – a delay that is unusual by any measure. So, a decision in 2017 – while certainly reasonably to be expected – cannot be assured unless the new Chairman is able to change the way the Board has worked for very many years.
  • Other decisions under advisement at the Copyright Board involve retransmission and online music services, including the long outstanding ruling on whether there is now a new “making available right” and, if so, how tariffs will be affected.
On the lobbying front, we will have the Section 92 Review. It is worth noting that there is now a different review mechanism in place, compared with the five-year review established in 1997 – which eventually resulted in new legislation 15 years later.
CURRENT 2012 LEGISLATION RE “REVIEW”
Review of Act
92 Five years after the day on which this section comes into force and at the end of each subsequent period of five years, a committee of the Senate, of the House of Commons or of both Houses of Parliament is to be designated or established for the purpose of reviewing this Act.
  • 1997, c. 24, s. 50;
  •  2012, c. 20, s. 58.
The effective “coming into force” day for the purpose of this review is November 7, 2012 – which means that the review process need not officially begin until November 7, 2017.
 PREVIOUS 1997 LEGISLATION RE “REVIEW”

Marginal note: Review of Act
  • 92 (1) Within five years after the coming into force of this section, the Minister shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to this Act.
  • Marginal note: Reference to parliamentary committee
(2) The report stands referred to the committee of the House of Commons, or of both Houses of Parliament, that is designated or established for that purpose, which shall
o    (a) as soon as possible thereafter, review the report and undertake a comprehensive review of the provisions and operation of this Act; and
o    (b) report to the House of Commons, or to both Houses of Parliament, within one year after the laying of the report of the Minister or any further time that the House of Commons, or both Houses of Parliament, may authorize.
  • 1997, c. 24, s. 50.
(highlight added)

The main difference now is that the review process will, at least officially, be driven by Parliament rather than the Minister and officials. To what extent tMinisters Bains and Joly wish to get involved at various stages here remains unknown. Will the model of the “Fresh Start” bankruptcy law process be followed? In that case, the legislation was such that “The Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act require that the Minister of Industry report to Parliament on the provisions and operation of both Acts in 2014”. That seems more like the old 1997 mechanism and less like the current mechanism. If recent events are any harbinger, the Senate Banking, Trade and Commerce Committee may be ready, willing and able to lead the way, or at least play a major role. Hopefully, a process that provides a useful and sustainable synergy between expert bureaucrats, Ministers, elected MPs, and a hopefully less partisan and more engaged Senate where long term expertise can develop will emerge from all of this.

That said, it quite possible that Ministers Bains and Joly may play a role in making suggestions to the House and Senate regarding the direction that the review might take. Since there is little doubt that the Ministers and their officials will be heavily lobbied by the usual suspects, it would be logical for the Ministers to open up the process by inviting submissions and, perhaps, holding public fora either online or in person or both, as has been done in the past. Nothing has been announced to date about how this process will unfold. We may not know more for some time – perhaps not even before the summer.

There are some wild cards that could come unexpectedly. The obvious one is that of NAFTA, where copyright could be forced onto the table. No doubt, the American content industry, through its Canadian surrogates, will push for the life + 70 windfall that they managed to get in the now moribund if not dead TPP.

The following is where we can expect the main lobbying in the next weeks and months to be focused:
The copyright content owner and collective “maximalists”, who will likely be led by the music, publishing and copyright collective sectors, will be seeking such things as:

  •          The roll back of the Supreme Court of Canada (“SCC”) rulings on fair dealing, namely CCH v LSUC, SOCAN v. Bell and Province of Alberta v. Access Copyright
  •          To repeal the explicit inclusion of “education” in s. 29 in the 2012 legislation, not that it has made any great difference given that the key SCC fair dealing rulings were all based on the previous law
  •          To impose some version of an “iPod tax” on memory and devices or even the “cloud”, or perhaps a “linking” or “snippet” or other form of “tax” on search engines and news aggregators, or some kind of general ISP “tax”
  •          To eliminate or at least raise the $5,000 cap on statutory damages for non-commercial infringement
  •          Term extension to life + 70 years – especially if NAFTA is re-opened as Trump keeps threatening
  •          Amendments to create new rights and to attempt to force the Copyright Board to eliminate what they call the “value gap”, which will become their mantra.
  •          Amendments to force incorrect interpretations of the Berne “three step test” and US jurisprudence on the “effect on the market” into Canadian domestic law

The “user” community, on the other hand, may seek such things as:
  •          Explicit “fair dealing” provisions to legitimize the circumvention of  technical protection measures (“TPMs”) in appropriate circumstances and, as Michael Geist says, “to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law”
  •          Elimination of criminal offences in relation to circumvention in the absence of commercial scale activity
  •          Regulations to prohibit the use of the “notice and notice” mechanism to troll for settlement demands
  •          Provisions to prohibit the use of “reverse class actions” for copyright infringement
  •          Elimination of crown copyright in laws, statutory instruments and in any material incorporated by reference into the law.
  •          Explicitly confirmation that copyright users’ fair dealing rights cannot be waived by means of contracts or otherwise.

Copyright law has, historically, not been a particularly “partisan” issue in the political sense. However, the Democrats in the USA and the Liberals in Canada have overall been more sympathetic to copyright content owners than Republicans and Conservatives respectively. The current Liberal government would do well to remember, however, that the once promising career of Sarmite Bulte, former Liberal Member of Parliament and once potential Minister of Canadian Heritage, came to quick end in 2006 in no small part as the result of revelations about her controversial relationship generally and a notorious “fundraiser” in particular involving prominent copyright industry leaders, including the still very active Graham Henderson.

Virtually all stakeholders that are affected by Copyright Board decisions are eager to see reform at the Copyright Board. I have long suggested that much, if not most, of what is needed could be done quickly by means of regulations. However, legislation may be required for more profound and long-term change.  There is general agreement that the current delays of typically four years or more to get to a hearing and a further delay of two years or more to render a decision that is inevitably retroactive by six years or more are inexplicable, unacceptable and unsustainable.  The Senate BANC Committee has taken the initiative on this front and its report of November 30, 2016 may signal in some ways how the Section 92 process will unfold.

HPK

Sunday, January 01, 2017

Welcome, Mr. Walt Disney, to the Canadian Public Domain

(Disney in 1946 - Wikipedia)

Today is public domain day in Canada for the works of any sole or last surviving joint author who died in 1966. Canada has a copyright term of life + 50 years.

Walt Disney, the person, died on December 15, 1966. This means that any works of which he may have been the sole or last surviving joint author are now in the public domain in Canada as of January 1, 2017. It will be interesting to see if there are such works. In Canada, there can sometimes be legal and factual complexity and uncertainty in the determination of authorship and the copyright term of films.

As anyone who knows anything about copyright law knows, it was The Walt Disney Company that pushed the US Congress and the Clinton administration to extend the American copyright term to life + 70 years in 1998 through the Copyright Term Extension Act, sometimes referred to as the Mickey Mouse Protection Act.

There are no credible policy reasons to extend the copyright term beyond that of life + plus 50 years. However, there are billions of reasons in the form of dollars for shareholders in legacy copyright-based companies, such as Disney, to do so. Not only will revenue streams be extended – but term extension sets up effective barriers or delays to entry for anyone who dares to emulate Disney’s business model that was built upon exploitation and reliance upon the then much more recent entry of works into the public domain. Here is an article in Forbes by Derek Khanna entitled 50 Disney Movies Based On The Public Domain.

Indeed, those who believe in innovation should strongly oppose term extension. There is no substantial incentive value to any living creator – and obviously no incentive value whatsoever to dead creators – involved in the theoretical possibility of windfall revenues for great-great grandchildren and even beyond. Indeed, excessively effective copyright protection can serve as a disincentive to creativity. See F.M. Scherer’s brilliant book Quarter Notes and Bank Notes: The Economics of Music Composition in the Eighteenth and Nineteenth Centuries.  He suggests that “In the case of Verdi, greater remuneration though full exploitation of the copyright system led perceptibly to a lessening of composing effort.” (p. 194). Verdi, of course, is high if not on top of the pantheon of opera composers. Copyright is not the only and arguably far from the most efficient tool to incentivize literary, dramatic, musical and artistic creativity.

Canada, China and many other countries have not followed Disney’s company’s wish to extend the copyright term to life + 70 years. I take some credit for stopping a stealth move by the Canadian Government to extend the copyright term in 2003. Here’s my “Mouse in the House” National Post op-ed that played a significant role in that resistance. Canada, to its credit, held the line on the life + 50 term in CETA – even though the EU had long since gone to life + 70 even before the Americans. However, the now apparently dead TPP (which Canada had signed) would have extended the term to life + 70 in Canada.

If NAFTA is really going to be reopened as Trump threatens, look for American pressure as focussed and amplified through the usual Canadian lobbyists to escalate the Canadian copyright term to life + 70.  Hopefully, Canada will stand its ground.  The previous Government shamefully snuck through a 20 year term extension in 2015 for sound recordings in an omnibus budget bill at the behest of lobbyists for the American recording industry. I wrote the following on November 17, 2015 based upon a recent New Zealand government study:
Assuming that the New Zealand study methodology for calculation of the cost of a 20 year copyright term extension were to be more or less applicable to Canada and that the results would be more or less proportional to the difference in GDP, here are some admittedly “back of the envelope” calculations:

The average present value of the cost of 20 year copyright for recorded music and books term extension (which included an estimate for film and television) was estimated by NZ is NZ $505 million, which is CDN $434 million, which adjusted by GDP ratio, would work out to about CDN $4.176 billion.

The average annual cost for NZ is NZ $55 million, which is $CDN 47.3, which adjusted by GDP ratio, would work out to about CDN $454 million.

Other notable creators who died in 1966 include:
  •  Lenny Bruce, comedian
  •  Alberto Giacometti, painter and sculptor
  •  Evelyn Waugh, author
  •  C.S. Forester, author
  •  Buster Keaton, actor and director
Canada welcomes them and Mr. Walt Disney himself to the public domain in Canada.


HPK

Wednesday, December 21, 2016

Blacklock’s Must Pay $65,000 for Litigation that “should never have been commenced let alone carried to trial”

http://www.clipartkid.com/lump-of-coal-cliparts/


In an unusually trenchant costs award, Justice Barnes of the Federal Court has ruled that Blacklock’s must pay the taxpayers of Canada an “all-inclusive amount of $65,000 plus interest….” This follows decisively upon Blacklock’s clear loss in the first case of what I have called a “litany of litigation” of 11 lawsuits against the Government of Canada and/or its agencies, not to mention several other cases against other parties in the Federal and Ontario courts.

The Court accepted that the Government was entitled to costs based on the mid-level of Column III and double the otherwise payable costs from the date of its early settlement offer of $2,000, which was “...more than double the cost of individual subscriptions for each of the Department of Finance officials who received and read the subject articles over which Blacklock's claimed copyright protection.”

The Court observed that:
[7] …I also reject the Plaintiff's argument that this case raised "strong public interest considerations". Rather, this case was about the Plaintiff's attempt to recover disproportionate damages without any apparent consideration to the legal merits of the claim or to the costs that it imposed on the taxpayers of Canada.
[8] Any reporter with the barest understanding of copyright law could not have reasonably concluded that the Department's limited use of the subject news articles represented a copyright infringement. Indeed, the fair dealing protection afforded by section 29 of the Copyright Act, RSC, 1985, c C-42, is so obviously applicable to the acknowledged facts of this case that the litigation should never have been commenced let alone carried to trial.

(highlight added)

The Court went on to say that:
[9] I am also troubled by Plaintiff's attempt to claim an excessive amount of damages beginning with its demand for compensation completely divorced from the Department's limited use of the two articles. In no circumstances would Blacklock's losses have exceeded the cost of individual subscriptions by the six officials who read the articles; yet Blacklock's demanded a license fee equivalent to its bulk subscription rate of over $17,000.00. This practice appears to be consistent with Blacklock's usual approach which is to hunt down, by Access to Information requests, alleged infringers and then demand compensation based on an unwarranted and self-serving assertion of indiscriminate and wide-spread infringement. The record discloses that in several instances government departments acquiesced for business reasons and paid the full amounts demanded. In this instance the Department appropriately took a hard line and succeeded in its defence.

(highlight added)

Canadian Courts are increasingly using costs award to send messages that may encourage meritorious litigation or discourage the type of litigation that "should never have been commenced let alone carried to trial.”

While the Ontario courts tend to award amounts closer to actual costs, the Federal Court is headed in that direction – for better or worse. As long as the judges have discretion and use it wisely, the Federal Court mechanism for costs can generally mete out justice fairly.

In this case, the Court moderated the amount claimed by the Government, which was “$115,702.30, based on 70% of the actual value of professional hours expended in the defence of the claim and including disbursements of $7,020.98.”

Costs awards are usually very hard to appeal successfully – especially one such as this where Justice Barnes has provided ample reasoning and a detailed calculation in Annex “A”.  It will be interesting to see how Blacklock’s clear, convincing and un-appealed loss in its first Federal Court case together with this notable costs award will affect the remainder of Blacklock’s “litany of litigation”. Indeed, it will be interesting to see whether Blacklock’s proceeds at all in view of these recent substantive and costs rulings.

It is difficult, given the time of year and the circumstances, not to think about a “lump of coal” – indeed 65,000 of them.  However, the Federal Court – while refraining to date from ruling on copyright misuse or abuse – is clearly sending a strong message to Blacklock’s.

HPK

Tuesday, December 13, 2016

Deadline for Blacklock's Appeal from Justice Barnes' Judgment Comes and Goes


https://www.blacklocks.ca/
The much watched deadline date of December 12, 2016 has come and gone. This was the deadline for Blacklock's to file a Notice of Appeal of the Decision dated November 10, 2016 from Justice Barnes, of which I noted at time:

The Attorney General of Canada has achieved a clear victory against Blacklock’s Reporter in the latter’s attempt to collect damages of $17,209.10 based upon its supposed institutional subscription rate because a few public servants in the Department of Finance received, read and distributed two Blacklock’s articles about a file they were closely involved in that had been sent to them by a Blacklock’s subscriber.

Here’s the judgment from Justice Robert Barnes – which is unequivocally favourable in terms of fair dealing and even pushes the envelope further by emphasizing that what went on here  was based upon a “legitimate business reason” on the part of the subscriber/sender to the material and a “legitimate business purpose (i.e. to consider whether the stories required a response or correction)” on the part of the Department.
That decision contianed the following among several notable paragrpahs:
 45]           Blacklock’s maintains that this case challenges the viability of its business model including its right to protect news copy behind a subscription-based paywall. The suggestion that Blacklock’s business cannot survive in the face of the minor and discrete use that took place here is essentially an admission that the market places little value on Blacklock’s work-product. All subscription-based news agencies suffer from work-product leakage. But to customers who value easy, timely and unfettered access to news that may not be readily available from other sources, the price of a subscription is worth paying. It also goes without saying that whatever business model Blacklock’s employs it is always subject to the fair dealing rights of third parties. To put it another way, Blacklock’s is not entitled to special treatment because its financial interests may be adversely affected by the fair use of its material. Nothing in these reasons should however be taken as an endorsement of arguably blameworthy conduct in the form of unlawful technological breaches of a paywall, misuse of passwords or the widespread exploitation of copyrighted material to obtain a commercial or business advantage.
 (highlight added)
It is will be interesting to see what effect this latest development, namely Blacklock's failure to file a timely Notice of Appeal, has on the other ten (10) Blacklock's cases pending against the Government of Canada and its agencies.  

HPK

Monday, December 05, 2016

Google v. Equustek in the SCC - Webcast Live December 6, 2016 at 9:30 AM ET

This very interesting and extraordinarily important case will be heard tomorrow in the Supreme Court of Canada. Here's the Court's Summary:
(British Columbia) (Civil) (By Leave)
Keywords
Administrative law - Interlocutory orders, Injunctions, Private international law, Extraterritoriality, Communications law, Internet, Intellectual property, Industrial design.
Summary
Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.
Administrative law — Interlocutory orders — Injunctions — Private international law — Extraterritoriality — Communications law — Internet — Intellectual property — Industrial design — Interim injunction issued against non-party to litigation — Google prohibited from displaying impugned websites in Internet search results — Under what circumstances may a court order a search engine to block search results, having regard to the interest in access to information and freedom of expression, and what limits (either geographic or temporal) must be imposed on those orders? — Do Canadian courts have the authority to block search results outside of Canada’s borders? — Under what circumstances, if any, is a litigant entitled to an interlocutory injunction against a non-party that is not alleged to have done anything wrong?
The plaintiffs sued their former distributors for unlawful appropriation of trade secrets, alleging that the distributors designed and sold counterfeit versions of their products. The plaintiffs obtained injunctions against the distributors, prohibiting them from carrying on any business online. When this proved ineffective, the plaintiffs sought a court order against Google, to prohibit it from displaying search results that included the distributors’ websites.
The Supreme Court of British Columbia granted a worldwide injunction against Google, finding that it had territorial competence over Google and that it possessed an inherent jurisdiction to maintain the rule of law and protect its processes, which in appropriate circumstances may include an injunction against non-parties. In this case, the balance of convenience favoured granting an injunction. The Court of Appeal agreed that the court held jurisdiction over Google with respect to the injunction application. It also concluded that it was permissible to seek interim relief against a non-party. The power to grant injunctions is presumptively unlimited, and injunctions aimed at maintaining order need not be directed solely at the parties involved in litigation. In this case, an injunction with worldwide effect was justified.

(highlight added)
The webcast should be available live here at 9:30 AM ET.

Here are the factums on appeal.



HPK

Thursday, December 01, 2016

Blacklock's Sues the Government of Canada - Again

Blacklock's has sued the Government of Canada once again - this time with respect to alleged breach of the Copyright Act and alleged breach of contract by Environment and Climate Change Canada.

Here, without specific comment, is the latest Statement of Claim in Simplified Action #T-2012-16.

This is now the 11th case in what I have called the "litany of litigation" against the Government of Canada and some of its agencies.  Except for the case referred to below that Blacklock's resoundingly lost, the other nine cases were stayed until 45 days after the judgement below.

It will be recalled that Blacklock's lost it first Federal Court case to go to trial in a judgment issued on November 10, 2016 which included the following language:
[45]           Blacklock’s maintains that this case challenges the viability of its business model including its right to protect news copy behind a subscription-based paywall. The suggestion that Blacklock’s business cannot survive in the face of the minor and discrete use that took place here is essentially an admission that the market places little value on Blacklock’s work-product. All subscription-based news agencies suffer from work-product leakage. But to customers who value easy, timely and unfettered access to news that may not be readily available from other sources, the price of a subscription is worth paying. It also goes without saying that whatever business model Blacklock’s employs it is always subject to the fair dealing rights of third parties. To put it another way, Blacklock’s is not entitled to special treatment because its financial interests may be adversely affected by the fair use of its material. Nothing in these reasons should however be taken as an endorsement of arguably blameworthy conduct in the form of unlawful technological breaches of a paywall, misuse of passwords or the widespread exploitation of copyrighted material to obtain a commercial or business advantage.
(highlight added)

We shall know on or before December 12, 2016 whether Blacklock's intends to appeal the above ruling.

HK



Wednesday, November 30, 2016

Senate Committee Calls for “thorough, in-depth examination of the Copyright Board of Canada’s mandate, practices and resources.”


The Senate’s Banking, Trade and Commerce Committee (“BANC”) has just released, on time as promised, its eagerly anticipated report entitled “Copyright Board: A Rationale for Urgent Review”.

With highlight added, here is the bottom line:

From the Executive Summary:
Many witnesses agreed that a review of the Board – either overall or in specific areas – should be
undertaken during the forthcoming statutory review of the Act. Consequently, the committee
strongly recommends that the mandate, practices and resources of the Copyright Board of Canada be the subject of in-depth study during the forthcoming statutory review of the Copyright Act by a committee of the Senate or of the House of Commons or of both.

From the Recommendation:

RECOMMENDATION
The Copyright Board of Canada plays a pivotal role in Canada’s cultural sector. Yet, from what the committee heard, the Board is dated, dysfunctional and in dire need of reform. Whether the reasons are statutory, structural or otherwise, the Board did not – or could not – provide the committee with solutions to the problems that were identified by witnesses. The concerns outlined in this report require further investigation and timely action.

The next statutory review of the Copyright Act will take place in 2017, as stipulated in the legislation. That same legislation also requires the review to be conducted by a committee of the Senate, of the House of Commons or of both. The committee therefore recommends that:

The forthcoming, five-year statutory review of the Copyright Act should include a
thorough, in-depth examination of the Copyright Board of Canada’s mandate,
practices and resources.

More to follow…


HPK