Canadian Internet Policy and Public Interest Clinic
Clinique d'intérêt public et de politique d'internet du Canada

David Fewer, Acting Director

September 13, 2009

The Honourable Tony Clement, P.C., M.P.
Minister Of Industry
Industry Canada
C.D. Howe Building
235 Queen Street
Ottawa, Ontario
K1A 0H5

The Honourable James Moore, P.C., M.P.
Minister of Canadian Heritage
Canadian Heritage
12th Floor, 15 Eddy Street
Gatineau, Quebec
K1A 0M5

Dear Ministers,

Re: Copyright Policy

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The Canadian Internet Policy and Public Interest Clinic (CIPPIC) is a legal clinic based at the University of Ottawa. Since the fall of 2003, CIPPIC has been engaged in research and advocacy on a number of issues involving law and technology from a public interest perspective. Our mission is to fill voids in public policy debates on technology law issues, ensure balance in policy and law-making processes, and provide legal assistance to under-represented organizations and individuals on matters arising at the intersection of law and technology. Copyright law reform has been a focus of our study and advocacy throughout our existence.

We take this opportunity to offer you our comments in respect of the ongoing copyright consultations. To that end, we enclose a copy of a White Paper submitted to your predecessors as Ministers, Mr. Prentice and Ms Verner, in June of last year, prior to the introduction of Bill C-61. This White Paper has been endorsed by CIPPIC along with PIAC (the Public Interest Advocacy Centre), Options consommateurs, and OnlineRights.ca, although I clarify that the present submission is in CIPPIC's name only. This White Paper does an admirable job of laying out a consumer's view of the sorts of changes to the Copyright Act that consumers generally desire.

The White Paper focuses on pragmatic proposals to change the law, and was not drafted as a response to your call for consultation. For that reason, this covering letter offers the principles that, in our view, should guide efforts to revise Canada's Copyright Act. We summarize those principles as follows:

1. Principled Policy: Copyright law should be a principled regulatory framework. This means that Parliament must ground copyright's grant of rights — no less than copyright's limitations and exceptions — in coherent public policy considerations. Both the grant, and its limited nature, must seek to achieve principled objectives, and avoid arbitrarily picking winners and losers.
2. Pragmatic Policy: Copyright policy should also be pragmatic: at times, perfect control must cede to imperfect collective solutions that nonetheless do a better job of achieving copyright's principled objectives. Our observation is that collective solutions to the exploitation of copyrights can overcome market inefficiencies, conflicts of interest, collective action failures, and jealous gatekeepers. CIPPIC firmly believes that solutions to some of copyright's thorniest digital challenges will be found in better collective administration of copyright, not by granting rights-holders and distributors ever-greater control over works.

1. Principled Policy: Achieving Copyright's Objectives

One common view of copyright policy is that copyright's allocation of rights to both rights-holders and to users is merely to facilitate the creation of a marketplace for intangible works. This view confuses copyright's means and ends: copyright does seek to create a marketplace for intangibles, but does so to benefit authors. Unbalanced interpretations of copyright that favour the grant of copyright at the expense of users forget that users include authors and other downstream creators. Balanced copyright policies accordingly promote equality among creators.

However, this view of copyright also forgets that copyright's regulatory framework also promotes goals apart from authorship. For example, copyright in industrial settings promotes innovation. Research and exceptions applicable to technology, for example, encourage and respect innovation. Copyright's grant does not extend to prohibit public non-profit lending because our public libraries promote the development of a literate public, which both encourages consumption of works and authorship itself. Similarly, exceptions and limitations that benefit educational institutions, libraries, archives and museums do so because of the important public policy functions fulfilled by these institutions, and their role in promoting a literate, cultured, and educated public. Copyright's limitations and exceptions are not merely starting points for "bargaining", but rather achieve objectives that are important ends in and of themselves, objectives that serve the public interest.

At bottom, exceptions and limitations preserve the constitutionality of copyright law, which is, after all, a form of government intervention in expression.

This insight suggests certain approaches to important public policy issues that have been the subject of much debate in these consultations.

a. WIPO Implementation

No copyright issue has occupied more attention over the course of the past decade than the means by which Canada might implement the obligations of the WIPO Copyright Treaty and the WIPO Performers and Phonograms Treaty (collectively, the "WIPO Treaties"). CIPPIC has long been on the record with the position that if Canada is to implement the obligations of these treaties, it should do so in a manner that is consistent with Canadian copyright's existing balance. Legal activities should not become illegal merely because one must circumvent an electronic lock to do them. Similarly, it must be legal to acquire the tools necessary to circumvent where it is legal to do so. Even extreme anti-circumvention laws offer some exceptions; to make those exceptions meaningful, beneficiaries who lack circumvention expertise must be able to acquire appropriate tools.

Justifications for extreme implementations of the WIPO treaties argue that these legal protections are necessary to provide the framework that distributors require to be confident in investing in new digital deployment technologies. This position is without merit. Elimination of fair dealing rights in a digital context offers no additional incentive to distributors to roll out new distribution models; protections copyright already affords offer more than sufficient incentive to distribute digital content. Similarly, there is no justification for eliminating libraries' and archives rights under the law to deal with content merely because a digital lock has been applied. Our public institutions take the long view; digital distributors inevitably push a short — quarterly — view. Already, we see digital distribution models boasting "innovative" digital locks being abandoned by distributors and affected individuals — both consumers and public institutions — left without access to purchased content and without recourse. These proposals meet no definition of good public policy.

Extreme anti-circumvention laws are also justified as "solving" the problems associated with online infringement. Again, this position is without merit. The American experience under extreme anti-circumvention laws has not put it any better a position than Canada in respect of such issues.

Digital locks and the anti-circumvention laws that privilege them, in addition to posing copyright problems pose unusually acute additional policy problems, including anti-competitive challenges, privacy threats, and innovation hurdles. Copyright's existing balance accommodates these additional concerns through its existing exceptions and limitations. Accordingly, the only responsible implementation of anti-circumvention laws respects copyright's existing balance.

b. ISP and Locator Tool Liability.

CIPPIC is also on record calling for formalization of Canada's de facto mechanism for addressing Internet Service Provider ("ISP") and Internet locator tool liability: the notice and notice system. This system is working well and offers an appropriate balance between owner, creator, user and intermediary interests.

Calls for extreme mechanisms for addressing online infringement, such as the "notice and takedown" system prevalent in the United States, or, even worse, a variation of the "graduated response" systems proposed elsewhere, must be rejected. Copyright interests advancing these proposals forgot that the internet is a communications medium, and one that has become essential to Canadians to engage in commerce, banking, communications, education, and many other activities essential to participation in public and private life. "Graduated response" will not survive constitutional scrutiny in Canada as it has both the purpose and effect of restricting expression in a manner that is not justifiable in a free and democratic society. It will not have its intended effect of stopping infringement — there are simply too many mechanisms available to individuals who wish to acquire content without authorization — and its effects are disproportional. Simply, graduated response is not even on the map of potential policies in Canada.

c. Fair Dealing

No issue in these consultations has obtained wider support than calls for "flexible" fair dealing. CIPPIC is already on the record as viewing fair dealing, with its restrictive categories of dealings, as unconstitutionally narrow. CIPPIC is confident that a court will eventually expand the categories of fair dealing in response to a Charter challenge on the basis of freedom of expression. After all, fair dealing at present enjoins many fair dealings — dealings that do not harm rights holders and advance interests at the core of freedom of expression — that do not fit under the five enumerated categories of dealings. This is so no matter how expansively a court might wish to interpret the categories of dealings. Earlier this year a British Columbia court stated that a parody is not a criticism for the purposes of fair dealing (see Canwest v. Horizon, 2008 BCSC 1609 at para. 11). Is it really that position of the Canadian government that the Copyright Act extinguished the ancient and honourable literally forms of parody and satire?

CIPPIC endorses calls to fix fair dealing. Canada must abandon the restrictive categorical approach to one that flexibly accommodates dealings that don't fit well into the current Act. This will address many additional problems with the Act from a consumer perspective, such as the absence of a time-shifting exception (again, obviously unconstitutional), the need for a backup exception to permit consumers and institutions to protect their investments, and permit the law to meet the reality of how consumers use digital content.

No single legislative change could do more good — for consumers, for innovators, for creators and distributors — than fixing fair dealing.

d.   Contractual Elimination of exceptions and limitations

Recognizing that copyright's balance reflects decisions on important matters of public policy suggests that policy-makers should be cautious about the conditions under which private ordering may set aside those decisions. This is particularly true for libraries, museums, educational institutions — our public institutions. It is also true for exceptions and limitations that benefit consumers and downstream creators and innovators. These exceptions and limitations and operate in the core of purposes served by our constitutional guarantee of freedom of expression. CIPPIC calls on the government to attend to the conditions under which exceptions and limitations may be set aside by standard form contracts.

e.   Statutory Damages

Similarly, statutory damages in the non-commercial context work mischief. They cause our risk-averse public institutions to abandon user rights, and negotiate conservatively. They serve no purpose as a deterrent to infringement in this context — out public institutions enjoy no mandate to act illegally.

Similarly, statutory damages have a chilling effect on creativity, innovation and free speech where an individual is acting with a bona fide belief of non-infringement.

CIPPIC calls on the government to address proper limits to statutory damages.

f. Public Domain

CIPPIC calls on the government to look at means for facilitating access to what is, after all, our common heritage: the public domain. The public domain generally lacks a champion: there is no collective to stand up for it; its authors and owners live yet and focus on current rights. Publishers benefit from it yet remain focused on quarterly earnings and the next best seller.

Yet the public domain is crucial. In a very real sense, copyright's fundamental purpose is to fill up the public domain. There is much governments can do to enhance Canada's access to the public domain. First, Canada could benefit from a coherent digitization strategy. Second, the spectre of liability haunts the public domain: much could be done to enhance access to the public domain where it is difficult or impossible to prove the material date for determining the public domain status of a work, such as removing the availability of statutory damages where a user holds a bona fide belief that a work likely resides in the public domain. A presumption of public domain status could be available to certain works. At the least, the unlocatable copyright owner provisions could be streamlined and made more accessible.

2. Pragmatism: Ceding Control for Collectivism

The maximalist call for extreme copyright protection often takes the form of a demand for greater control over copyright; how content is used, how content is distributed, what rights users have. Such a view of copyright is particularly common among distributors. Such a view shortchanges creators' interests, as well as the interests of users and future creators and innovators. Copyright policy deliberately provides for imperfect control. User rights are deliberate, not accidental. Sometimes those rights take the form of exceptions and limitations; other times, they take the form of a liability right: the user enjoys access, but must compensate the right holder. CIPPIC's view is that this approach offers solutions to some of copyright's thorniest digital challenges.

Copyright policy should also be pragmatic: perfect control is impractical, impossible, and ultimately an inferior to other policy options that ensure that rights holders get paid in return for user access. Collective solutions can do a better job of achieving copyright's principled objectives. Collective solutions can overcome market inefficiencies, conflicts of interest, collective action failures, and jealous gatekeepers.

A little bit less control over copyright can benefit all interests in copyright debates. Collective approaches and liability regimes enhance access to users while making sure copyright owners get paid. These mechanisms provide incentives for innovation and reduce risk in marketplace while at the same time reducing the burden on courts.

The limits of policy models predicated on excessive control suggests alternative approaches to some of the public policy issues debated in these consultations.

a. WIPO Implementation

The American approach to anti-circumvention law, and that of Bill C-61, represents the epitome of a control model of digital distribution. Bill C-61, in particular, was touted as a "solution" to problem of unauthorized file-sharing. Of course it was no such thing, no more than the anti-circumvention law of any other nation has offered such a solution.

Those who deliberately infringe copyright will do so regardless of whether or not they must also commit the second infringing act of circumventing a digital lock. Conversely, those who enjoy a right to access content legally will not do so where they would have to unlawfully circumvent a digital lock. The control offered by anti-circumvention laws targets lawful use, not infringement.

CIPPIC submits that a "control" model of anti-circumvention law makes for bad public policy.

b. SAC approach to file-sharing

Consider the case of file-sharing: the approach of the foreign music labels has been to privilege a particular market model — digital locks — while simultaneously filling the courts in the United States with lawsuits targeting ordinary music lovers. This is the worst of all possible outcomes, and is proof, in our view, of the failure of the music distribution marketplace. Canada can do better. Canadian artists, songwriters, and music fans deserve better.

Innovative approaches to music distribution are possible in Canada. The Songwriters Association of Canada has proposed one such approach. It is a starting place, not a destination, but it advances a workable framework. CIPPIC calls on the federal government to show leadership — global leadership — by facilitating stake-holders in developing a proposal for implementing a mechanism for legalizing and monetizing file-sharing.

c. Crown Copyright

Works created through taxpayer dollars should be equally and freely available to all. Copyright's justification as both an incentive and a reward for creativity cannot, by definition, apply to government-produced works. That leaves copyright's role as a control mechanism, as a censor, as one of copyright's only remaining utilities for government actors. But it should be obvious — to this government in particular — that this justification for Crown copyright lacks legitimacy. It represents government interference in the marketplace — both of ideas and commerce.

Finally, CIPPIC calls on the government to examine whether Crown copyright continues to serve the public interest. Scaling back or eliminating Crown copyright will enhance access to knowledge and promote innovation.

Thank you for providing CIPPIC with this opportunity to participate in this important policy consultation. We look forward to engaging you further on copyright policy in the near future.

Yours truly,

David Fewer Acting Director Encl.

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Canadian Copyright Law:
A Consumer White Paper

June 2008

Canadian Internet Policy and Public Interest Clinic (CIPPIC.ca)

Public Interest Advocacy Centre (PIAC.ca)

Option consommateurs (option-consommateurs.org)

Online Rights Canada (onlinerights.ca)

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Table of Content

• Executive Summary
• Introduction
• anti-circumvention Laws
• Copyright Reform
• Conclusion
• Canadian Copyright Law
• Introduction: How Copyright Affects Consumers
  • Part I) anti-circumvention Laws Shouldn't Circumvent the Consumer
    1. The Truth About anti-circumvention Legislation
       1. No Case for anti-circumvention Laws
       2. Copyright Law Already Penalizes Copyright Infringement
       3. DRM Doesn't Work
       4. anti-circumvention Legislation Doesn't Work
       5. Our Markets Don't Need Government Intervention
    2. If We Must Have anti-circumvention Legislation
       1. Liability for Circumvention with Intent to Infringe
       2. Circumvention for Legal Purposes
       3. No Legislation Against Devices and Services
       4. Preserve Rights and Expectations that Consumers have under Copyright
       5. Protect Consumer Privacy
       6. Illegal Activity
       7. The Public Domain
       8. Protect Consumers Against IP Misuse
  • Part 2) Rational Copyright Laws
    1. Clarify Legality of Time, Space, and Format shifting
    2. Expand Fair Dealing Rights
    3. Expand Back-Up Rights
    4. Minimize the Term of Protection
    5. Eliminate Statutory Damages for Consumer Copyright Infringement
    6. Elimination of Crown Copyright
    7. Consumer Ownership of Commissioned Photographs
    8. Balance the Impacts of Private Ordering
    9. Clarify that Ephemeral Digital Copies do not Infringe Copyright
    10. Monetize P2P
• Our Call

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Executive Summary

Introduction

We are a coalition of consumer advocates. We have come together to advocate for copyright laws that serve the interests of Canada and of Canadians.

Copyright law is designed to balance the interests of creators with the interests of the public. Copyright grants creators exclusive rights in their works as a reward for creativity that also serves as an incentive for the creation of new works. These rights are not absolute, but limited in nature, scope and time. These limits are essential to copyright's greater design, for it is at the limits of copyright owners' rights that important consumer interests come into play.

From a consumer's perspective, copyright's current balance is far from perfect. In fact, many consumer dealings with copyrighted content — ordinary dealings, like copying digital music onto a portable device, or using the digital video recorders sold by cable companies — technically infringe copyright. In these and many other cases, the law is simply out of step with reality. Simple, uncontroversial amendments to the Copyright Act can fix many of these failings.

Unfortunately, copyright policy makers are not focusing on consumer interests. Instead, recent proposals to amend the Copyright Act focus on expanding rights holder's interests at Canadian consumer's expense. We call on Canada's law-makers to accommodate consumer interests in any revision to the Copyright Act currently under consideration. Additionally, we call on lawmakers to revise the Copyright Act to address important consumer concerns that are not yet under consideration at all.

Anti-Circumvention Laws

Canadian lawmaker's push to bring Canada into line with the WIPO Internet Treaties could have very serious consequences for Canadian consumers. We believe that there is no reason to add anti-circumvention protection to Canadian copyright law. We believe this for several reasons:

1. No justification.
   The case had not been made that Canada needs anti-circumvention legislation. In fact, Canadian cultural industries are flourishing in the absence of anti-circumvention legislation.
2. Redundant.
   anti-circumvention legislation is redundant: copyright law already provides penalties for copyright infringement and there is no need for a second layer of protection that penalizes substantially the same behaviour as copyright;
3. DRM does not work.
   Technological tools like DRM do not work. Corporations invest millions of dollars into developing DRM systems that are broken within hours or days of being released.
4. Technological threats.
   anti-circumvention laws do not improve on copyright law's existing disincentives to infringe copyright. anti-circumvention laws do, however, threaten other values that are important to consumers, such as competitive markets, privacy, and security. The U.S. anti-circumvention law (known as the DMCA) serves as a stark example of this and is a failure.
5. anti-circumvention laws are government intervention.
   Our markets don't need government intervention. Government should instead take a neutral stance, working to ensure a level competitive playing field that benefits consumers rather than privileging particular business models.

If Canadian lawmakers choose to legislate anti-circumvention laws, they must take great care to minimize the negative impact those laws will have on Canadians. We believe that any Canadian anti-circumvention law must respect the following conditions:

1. No new "access" right.
   Laws should tie circumvention liability to an intent to infringe copyright; Canadians should not be liable for accessing content and should enjoy an unfettered right to do so.
2. Non-infringing circumvention.
   Consumers should be allowed to circumvent technological measures, like DRM, providing that their access to the underlying content does not infringe copyright.
3. Legal tools, devices and services.
   anti-circumvention legislation should not prevent people from developing, selling and using tools, devices and services for circumventing technological measures for legal reasons.
4. Protect legitimate expectations.
   Laws should preserve rights and expectations that consumers have under copyright, such as the right to make copies and backups of works that they own.
5. Protect privacy.
   anti-circumvention laws should not protect technologies that do not respect privacy rights. Consumers should retain the right to enjoy works privately and access to content must not be conditional on the surrender of consumer privacy.
6. Do not protect spyware.
   Removing unwanted and illegal technology such as spyware should not be a violation of anti-circumvention laws.
7. Protect the public domain.
   It should always be legal to circumvent DRM in order to access works that are no longer protected by copyright and exist in the public domain.
8. Prohibit misuse.
   Any Canadian anti-circumvention law should be balanced by the creation of specific competitive protections for Canadians and the creation of liability for "copyright misuse."

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Copyright Reform

In addition to the threat posed by anti-circumvention laws, here are many facets of copyright law that run counter to the interests of Canadian consumers and do not reflect the realities of the Canadian marketplace. Canada needs to bring current copyright law into step with the ways consumers use copyrighted materials. Here are our recommendations:

1. Clarify the legality of time, space, and format shifting.
   Copyright laws that outlaw these practices threaten consumers and are out of step with today's marketplace and with reasonable consumer practices.
2. Fix fair dealing.
   Expand fair dealing rights to include other uses of content like parody, digital sampling and other transformative uses. Subsume the requirement to provide the source and author when a work is used for purposes of criticism, review, or news summary into the general fairness analysis.
3. Legalize back-ups.
   Protect consumers' right to protect their investments by making back-up copies of legal, purchased content.
4. Protect the public domain.
   Reduce copyright terms, or keep them to the minimum needed to meet Canada's international obligations.
5. Rationalize statutory damages.
   Require plaintiffs to prove damages against consumers, public institutions, museums, libraries, archives, schools, colleges and universities. Restrict the application of statutory damages to cases of commercial infringement, where they are warranted and actually serve the public interest.
6. Abolish crown copyright.
   The public should enjoy free and unrestricted access to works produced with public funds.
7. Consumer commissioned photographs.
   Copyright ownership of commissioned photographs should stay in consumers' hands. Doing otherwise frustrates consumers' legitimate expectations.
8. Protect copyright and consumers against unfair terms.
   Restrict rights holders' ability to undermine copyright's public policy objectives through the use of contractual terms that limit consumers' rights, including the ability to undertake security, interoperability and reverse engineering research, to make reasonable use of content (time-shifting, space-shifting), to make private copies for personal use, and to re-sell content.
9. Preserve consumers' digital rights.
   The Copyright Act affords rights-holders only limited rights. It has never been an infringement of copyright law for a consumer to simply read a book, or to listen to music in the privacy of one's own home. By the same token, ephemeral electronic copies, or "RAM copies", should be treated the same way.
10. Monetize P2P.
    Efforts to shut down peer to peer networks have failed. We should find ways to transform P2P networks into legitimate music distribution and compensation vehicles to benefit Canadian music creators and their fans. It is time the Canadian government showed some leadership and undertook active study of this option.

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Conclusion

We are concerned that proposals to change Canada's copyright laws do not represent the interests of Canadian consumers. These proposed changes remove many rights that consumers have traditionally enjoyed and fail to address obvious changes that would benefit consumers and creators. We are advocating on behalf of consumers for laws that do three things:

1. Do No Harm.
   Changes to Canada's copyright laws must be guided by this principle. We must not enact changes that harm consumer welfare and threaten education, freedom of expression, privacy and security. We do not want laws that harm small business, stifle innovation, or that cost Canadians millions of dollars.
2. Laws Based on Reality, Not Rhetoric.
   The Canadian government must consult experts on education, security, privacy, small business, and consumer groups before enacting legislation. Our copyright laws should be based on the facts, not on rhetoric.
3. Canadian Law Must Serve Canadians.
   Statistics Canada reports that our copyright royalty deficit — the amount of royalties generated by Canadians abroad compared with royalties earned by foreign performers in Canada — has grown dramatically in recent years. For every $1 earned by Canadian performers outside the country, $5 flows out of the country. Proposals for longer and stronger copyright will increase the flow of dollars out of Canada, rather than foster Canadian creativity. It is important that we address this trade imbalance and focus on the needs of Canadian creators and consumers rather than the self-interested demands of a limited group of rights holders.

Where changes to copyright laws are needed, Canada must adopt laws that serve Canadian interests first. Pressure from American interests and proposals must be rejected.

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Canadian Copyright Law

Introduction: How Copyright Affects Consumers

Copyright is designed to balance the interests of creators with the interests of the public. Copyright grants creators exclusive rights in their work as a reward for creativity that also serves as an incentive for the creation of new works. These rights are not absolute, but limited in scope and time. These limits are essential to copyright's greater design, for it is at the limits of copyright owners' rights that important consumer interests come into play.

This balance is far from perfect. In fact, many consumer dealings with copyrighted content — ordinary dealings, like copying your music onto your iPod, or using the digital video recorder that your cable company sold you — technically infringe copyright. In these and many other cases, the law is simply out of step with reality. Simple, uncontroversial amendments to the Copyright Act can fix many of these omissions. However, our politicians are not even considering amending the law in this way. Instead, the Canadian government is considering expanding the scope and reach of Canada's copyright laws in ways that disrupt consumers' legitimate interests in their enjoyment of and access to the content that they have purchased.

Canadians deserve reasonable copyright laws that accommodate their legitimate interests. We call on Canada's law-makers to:

1. accommodate consumer interests in any revision to the Copyright Act currently under consideration; and
2. revise the Copyright Act to address important consumer concerns that are not yet under consideration at all.

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Part I) anti-circumvention Laws Shouldn't Circumvent the Consumer

Canadian lawmakers are considering changing Canadian copyright law to bring them into compliance with the World International Property Organisation (WIPO) Internet treaties. Canadian legislators are under tremendous foreign pressure to ratify these treaties. However, it is far from clear that implementing these treaties are in Canadian consumers' best interests.

The WIPO Internet treaties oblige Canada, among other things, to create legal protections for technological measures, like DRM systems, that protect digital content. These technological tools, and the laws that protect them, have the potential to seriously disadvantage Canadian consumers.

A) The Truth About anti-circumvention Legislation

There is no need to add anti-circumvention protection to Canadian copyright law. We say this for several reasons:

1. the case had not been made that Canada needs anti-circumvention legislation;
2. anti-circumvention legislation is redundant:
   copyright law already provides penalties for copyright infringement and there is no need for a second layer of protection that penalizes substantially the same behaviour as copyright;
3. technological tools like DRM do not work;
4. anti-circumvention legislation does not work; and
5. our markets don't need government intervention.

1. No Case for anti-circumvention Laws

Those seeking to change the law need to show that the marketplace is failing in some way and that a change in the law can correct this problem. Supporters of anti-circumvention laws in Canada have failed to do this. anti-circumvention laws do nothing to improve the marketplace. In fact, Canadian cultural industries are flourishing in the absence of anti-circumvention legislation.

2. Copyright Law Already Penalizes Copyright Infringement

Copyright law already provides penalties for infringing copyright. If someone circumvents technological measures, and accesses material in a way that infringes copyright, copyright law offers copyright owners a remedy. Groups that want anti-circumvention laws need to demonstrate why they need a second layer of legal protection. They have not done so, and they have not proven that the benefit that they will get from anti-circumvention legislation will outweigh the harm it does to the public.

3. DRM Doesn't Work

Technological measures like DRM systems cannot effectively protect content because they are fundamentally flawed, and circumventing them is trivial. Corporations invest millions of dollars into developing DRM systems that are broken within hours or days of being released.

4. Anti-Circumvention Legislation Doesn't Work

anti-circumvention laws are justified as an incentive necessary for investment in digital content distribution models and as necessary to combat digital copyright infringement. However, in practice, neither of these claims holds water.

The United States crafted its anti-circumvention laws — the Digital Millennium Copyright Act, or DMCA — in 1998. In the decade since enactment, the DMCA has created many problems — anticompetitive abuses, stifling criticism, repressing security research, undermining security, etc. — but it has not encouraged any additional investment in digital distribution models. anti-circumvention law proponents cannot credibly point to a single market that has emerged because of anti-circumvention laws. Canadians enjoy virtually all of the same digital services that Americans enjoy.

Similarly, the DMCA has had no impact on copyright infringement levels. After a decade under the DMCA, infringement of movies over file-sharing networks in the US is at an all-time high. Infringement levels do not significantly differ between Canada and the United States.

We conclude that anti-circumvention laws provide no measurable improvement to copyright's existing incentives to roll out new digital distribution models, and similarly do not improve on copyright law's existing disincentives to infringe. anti-circumvention laws do, however, threaten other values that are important to consumers, such as competitive markets, privacy, and security — a point that we will return to shortly.

5. Our Markets Don't Need Government Intervention

In imposing anti-circumvention laws on Canadian consumers, the government would intervene directly in the marketplace in favour of certain copyright owners. anti-circumvention laws protect technology, not content, and in so doing privilege business models that rely on that technology — including those involving technological measures and all of their inherent competitive, security, and privacy risks. Government should instead take a neutral stance, working to ensure a level competitive playing field that benefits consumers rather than privileging particular business models. The copyright system should be neutral, should encourage many channels for bringing content to market, and should discourage the formation of distribution bottlenecks that result in destructive concentrations of ownership.

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B) If We Must Have anti-circumvention Legislation

If Canadian lawmakers choose to legislate anti-circumvention laws, they must take great care to minimize the negative impact those laws will have on Canadians. Canada should learn from the mistakes of nations who have already implemented anti-circumvention laws and avoid repeating their mistakes. Any Canadian anti-circumvention law must:

1. tie circumvention liability to an intent to infringe copyright;
2. allow circumvention of Technological Measures for legal purposes;
3. allow the sale of circumvention devices and services;
4. preserve rights and expectations that consumers have under copyright law;
5. protect consumer privacy;
6. discourage illegal activity;
7. avoid locking away material that is in the public domain; and
8. protect consumers against IP misuse.

1. Liability for Circumvention with Intent to Infringe

Anti-circumvention laws come in two flavours: those that regulate access to content, and those that regulate dealings with content. The WIPO Internet Treaties speak to the latter, not the former. Any Canadian anti-circumvention law should do the same: consumers should only be liable for circumventing technological measures when their intent is to infringe copyright.

We say this for three reasons: first, anti-circumvention laws that favour technologies that regulate access to content effectively create a new access right that copyright owners do not currently enjoy under the Copyright Act.

Second, an access right like this seriously tips the balance, inherent in copyright law, towards the interests of copyright owners (not creators), by effectively eviscerating essential rights of users, consumers, libraries, archives, museums, researchers, educational institutions, and the perceptually disabled. Undermining these user rights undermines copyright itself.

Third, adoption of an access right — one that goes beyond the requirements of the WIPO Internet treaties — is a policy choice: no international treaty or trade agreement requires Canada to adopt such a right. If we go this route, we will have no one to blame but ourselves.

2. Circumvention for Legal Purposes

Consumers enjoy certain rights to use content without infringing copyright. The presence of technological measures doesn't change that, and neither should anti-circumvention laws. Consumers must be able to circumvent technological measures, like DRM, providing that their access to the underlying content does not infringe copyright. These consumer rights fulfil important public policy goals, preserving consumer welfare, free speech, and innovation. The use of technological measures already threatens these values. anti-circumvention laws shouldn't statutorily undermine them as well.

3. No Legislation Against Devices and Services

Around the world, even under the most restrictive anti-circumvention regimes, users enjoy certain exceptions to liability for circumvention of technological measures. However, prohibitions on selling the tools, devices and services that permit circumvention frustrate these exceptions. anti-circumvention legislation should not prevent people from developing, selling and using tools, devices and services for circumventing technological measures for legal reasons.

anti-circumvention laws must be narrowly targeted to prevent behaviour that infringes copyright. These laws should not be so broad that they undermine innovation. Devices like PVRs (Personal Video Recorders), iPods, and the services that permit them to function, enhance consumer welfare and the vibrancy of the digital entertainment marketplace. Their developers should not have to run the risk of being found liable for violating anti-circumvention laws.

4. Preserve Rights and Expectations that Consumers have under Copyright

Consumers expect that they will be able to deal with their digital content in certain important ways. For example, consumers expect that they will be able to make software back-ups, rip a new CD they've purchased to play it in an iPod, and quote passages from a book in a review. Copyright law protects some of these dealings; others are simply expectations derived from common practices. anti-circumvention laws potentially undermine consumers' legitimate expectation that they will continue to enjoy these rights.

a. Consumers Stripped of Legitimate Rights and Expectations

Excessive anti-circumvention laws have the potential to harm consumers by stripping them of these rights and frustrating these legitimate expectations:

1. consumer electronics will cost more and have fewer functions;
2. consumers will not be allowed to transfer legal, paid-for content to devices of their choice;
3. it will be illegal for consumers to backup their legal, paid-for content to protect their investments against accidental destruction or erasure; and
4. it will be illegal for consumers to convert legal, paid-for content to formats that will function on new devices.

b. Less Choice and Fewer Rights

anti-circumvention laws don't enforce copyright. They enforce the contractual terms imposed by a content distributor. These terms reflect the distributor's private interest, and don't necessarily reflect copyright's public policy objectives. By privileging these private terms, anti-circumvention laws lend the power of the state, and all of the remedies available in the Copyright Act, to these imposed terms. These terms can prohibit activities like criticism and research, activities that serve important public interests. In some cases consumers may not even be allowed to re-sell or give away the music or videos that they already own. Ultimately, consumers will enjoy less choice in the marketplace.

c. Copyright Law Exceptions

Since anti-circumvention laws privilege access to content, tipping the balance of copyright in favour of private interests, they must incorporate certain exceptions to liability. Those exceptions should mirror every exception that currently exists in the Copyright Act. These exceptions are important; they further crucial public policies, including consumer welfare, innovation, freedom of speech, and security. Specific exceptions to liability for circumvention should include:

1. access for people with disabilities;
2. benefits for educational institutions;
3. benefits for libraries, archives and museums;
4. reverse engineering;
5. incidental inclusion;
6. ephemeral recordings;
7. private copies of musical sound recordings;
8. back-ups of computer programs; and
9. fair dealing.

Two of these exceptions merit specific discussion:

Private use of Music — anti-circumvention legislation must also allow consumers to continue to copy music for private use. In exchange for this right Canadians pay a levy on blank CDs and DVDs. The money Canadians pay for their right to copy music for private use goes to rights-holders. If anti-circumvention laws make it illegal to copy music creators and consumers will be hurt and, copying will continue, and Canadian artists will see an important revenue stream disappear.

Backup Copies of Software — Consumers must be able to make back up copies of their software, even if that software is protected by technological measures. Back-ups protect consumers' investment in content. Outlawing back-ups only frustrates consumers' legitimate expectations.

5. Protect Consumer Privacy

Many technological measures, like DRM systems, make access to content conditional on consumers' surrendering their privacy. This practice is invasive and has nothing to do with protecting intellectual property. These systems target consumers' personal information and personal habits. Justice Lebel of the Supreme Court of Canada identifies this type of information as "core biographical information". anti-circumvention laws should not protect technologies that do not respect these privacy rights:

• consumers should retain the right to enjoy works privately;
• access to content must not be conditional on the surrender of consumer privacy; and
• circumvention, in order to protect privacy rights, should be permitted.

6. Illegal Activity

DRM and other technological measures are like spyware in that they are technologies that consumers potentially do not want. Consumers deserve notice of the presence of technological measures and must consent to their use. anti-circumvention laws should not protect content distributors that do not meet these requirements. Removal of unwanted and illegal technology should not be a violation of anti-circumvention laws.

7. The Public Domain

Technological protection measures may potentially eliminate public access to content that is in the public domain. anti-circumvention laws offer content distributors a way to circumvent the bargain inherent in copyright's grant of exclusive but limited rights. Copyright in every work, from the banal to the sublime, expires. All work eventually joins the common heritage that is the public domain. It should always be legal to circumvent in order to access works that are no longer protected by copyright.

8. Protect Consumers Against IP Misuse

Technological measures like DRM have been shown to pose anti-competitive threats to consumers. Similarly, anti-circumvention laws have been misused in other jurisdictions. Any Canadian anti-circumvention law should be balanced by the creation of specific competitive protections for Canadians and the creation of liability for "copyright misuse."

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Part 2) Rational Copyright Laws

There are many facets of copyright law that run counter to the interests of Canadian consumers and do not reflect the realities of the Canadian marketplace. Canada needs to bring current copyright law into step with the ways consumers use copyrighted materials.

There are several changes we can make to existing copyright law that will significantly benefit Canadian consumers:

1. clarify the legality of time, space, and format shifting;
2. expand fair dealing rights;
3. expand back-up rights;
4. minimize the term of protection;
5. eliminate statutory damages for consumer copyright infringement;
6. eliminate crown copyright;
7. ensure continued consumer ownership of commissioned photographs;
8. balance the impacts of private ordering;
9. clarify that ephemeral digital copies do not infringe copyright; and
10. monetize P2P.

1. Clarify Legality of Time, Space, and Format shifting

Common consumer practices frequently result in "technical" copyright violations. Time shifting (the recording of a broadcast for enjoyment later), space shifting (copying content for use on a device other than the one for which it was originally intended), and format shifting (the copying of information from one form of storage to another) are all technically violations of the Copyright Act.

These violations can have a very real effect on consumers and are not at all in line with the expectations of Canadians. It has been legal to time shift in the U.S. for over 20 years. VCRs and PVRs are sold openly on the Canadian market for this very purpose. Yet, inexplicably, Canadians do not enjoy a clear exception from liability for using a VCR.

Space shifting occurs when a consumer moves content on one type of format to another. For example, someone who takes their old Betamax videotapes and copies them to VHS has space shifted. Doing this is a violation of copyright law in Canada, despite the fact that this is a common and reasonable practice among consumers.

Finally, anyone who has ever copied a VHS tape onto a blank DVD so they could watch it on their player, has format shifted, and has arguably also violated the law.

Copyright of this kind threatens consumers. It is out of step with reasonable consumer practices and is never litigated by even the most grasping of copyright owners. It is long past the time for Canada to legalize these practices.

2. Expand Fair Dealing Rights

Many countries, including Canada, have exceptions for the use of content in ways that are fair but that, but for the exception, infringe copyright. In Canada, this right is known as "fair dealing" and it permits dealing with copyright protected content for the purposes of research, private study, criticism, review or news reporting.

Fair dealing does not plainly apply to reverse engineering, time, space or format shifting, or transformative uses such as satire or parody, appropriation art, or digital sampling. All of these practices are at the core of the public polices that the Copyright Act is supposed to further. Parody, appropriation art, digital sampling and other forms of transformative use of content are also expressive practices that embody the essence of the values enshrined in the Charter of Rights and Freedoms. Copyright should permit these creative practices that benefit all Canadians. Three simple reforms would address this short-coming.

First, the current law denies the defense to any dealing that does not fit within an enumerated category, no matter how fair. Amending the provision to read, "…fair dealing for purposes including", rather than "…for the purposes of", would accommodate those practices.

Second, while we view the current categorization approach as too restrictive, the categories do offer certainty. Accordingly, the categories of dealings expressly identified as falling within the defense should be expanded to include other identifiable categories such as parody.

Third, Parliament should do away with the Act's requirement to provide the source and author (where given in the source) in the case of fair dealings for the purposes of criticism, review, or news summary. These provisions prove particularly challenging for creative, transformative uses such as parody to meet. This is a well-intentioned but needless effort to introduce attribution rights into the fair dealing analysis. No court should rule against use of content that is "fair" simply because it fails to cite the source and author of the work in question.

3. Expand Back-Up Rights

Consumers enjoy the right to make back-up copies of software, but not of other content like music and movies. Consumers spend a lot of money of digital content and media can be fragile: DVDs and CDs scratch and hard drives fail. Consumers should enjoy the right to protect their investments by making back-up copies of legal, purchased content.

4. Minimize the Term of Protection

Do not forget: copyright is a monopoly, and, like all monopolies, imposes costs on society. Those costs should be minimized. Academic studies demonstrate that the term of protection for copyright already far exceeds anything economically justifiable. Copyright terms should be reduced or kept to the minimum needed to meet our international obligations.

5. Eliminate Statutory Damages for Consumer Copyright Infringement

The minimum penalty for copyright infringement in Canada is wildly out of step with the real world costs of infringement. The rights holder has the option of requiring anyone found liable for infringement to pay statutory damages, ranging from $500.00 to $20,000.00 per violation.

Statutory damages are awarded at the rights-holder's option, irrespective of any actual damages suffered or proven by the rights-holder. If you were found liable by a judge for photocopying an article from a newspaper and distributing it to fifty friends and colleagues, your minimum damages would be $25,000. Considering that daily newspapers cost about a dollar each, this minimum damages award is completely out of step with the actual cost of infringement.

We see this phenomenon at work in the United States. Rights holders are using the threat of enormous statutory damages to extort settlements in file-sharing lawsuits, despite the fact that these rights holders have failed to prove that file-sharing is responsible for any economic harm to their businesses.

Statutory damages should be eliminated for instances of infringement by consumers, public institutions, museums, libraries, archives, schools, colleges and universities. Plaintiffs should be required to prove damages. The role of statutory damages should be restricted to those cases where they will have the greatest effect: cases of commercial copyright infringement.

6. Elimination of Crown Copyright

A surprising aspect of Canadian copyright law is that the government has granted itself exclusive rights in works it produces. This is called "crown copyright". Content paid by and produced for the benefit of Canadians should be freely available to Canadians. Crown copyright should be abolished, and works produced with public funds should be made freely available to the public without any restrictions.

7. Consumer Ownership of Commissioned Photographs

Copyright ownership of commissioned photographs should stay in the hands of consumers. This is the normal practice in the industry today. Consumers own copyright in their commissioned wedding and baby photos. Anything else is an affront to consumers and does nothing more than frustrate their legitimate expectations. The government should resist calls to trample consumers' rights in their own photographs.

8. Balance the Impacts of Private Ordering

Increasingly, copyright owners license the use of content to consumers through contracts such as end user license agreements (EULAs). The EULA dictates the terms of use to the consumer; the terms are not negotiated in any meaningful sense. TPMs provide copyright owners with the ability to enforce the terms of these contracts. The end result is that consumers are often unable to use lawfully purchased content in ways that are expected. In some cases, consumers are even denied rights granted to them under the Copyright Act.

With the proliferation of restrictive contracts for the use of content, private interests are essentially able to re-write the rules of copyright in their own favour — a process that has been referred to as the "private ordering" of copyright. This can be an unfair process that is biased in the favour of copyright owners. Consumers have little if any ability to bargain for better terms of use. In this way, "private ordering" can replace copyright's balancing of the interests of users and rights holders — a balance set by law-makers accountable to the Canadian public — with an allocation of rights that reflects the private interests of the rights-holder, who is not accountable to anyone. Private ordering has no need to accommodate values such as privacy and freedom of expression, and in fact opposes other public interests such as the need to foster competition and follow-on innovation through reversed engineering and interoperability research.

Copyright policy should reduce the unfairness that is inherent in the process of private ordering. The Copyright Act should protect certain consumer rights, including the ability to undertake security, interoperability and reverse engineering research, make reasonable use of content (time-shifting, space-shifting), to make private copies for personal use, and to re-sell content, notwithstanding contractual terms to the contrary.

9. Clarify that Ephemeral Digital Copies do not Infringe Copyright

The Copyright Act affords rights-holders only limited rights. It has never been an infringement of copyright law for a consumer to simply read a book, or to listen to music in the privacy of one's own home. These are important user rights that reflect fundamental liberty and privacy values that underpin Canadian society.

As we have shifted from analog to digital formats, these rights are coming under attack. Some rights holders view the use of digital content — reading an e-book, or listening to an MP3 music recording — as not non-infringing private use, but rather a reproduction of a work that infringes copyright where the reading or listening occurs without the rights holder's permission. This startling view rests on a characterization of the "RAM copy" — a temporary copy of a work in a computer's short term memory — as sufficiently "fixed" to qualify as a copy for the purposes of the Copyright Act's reproduction right. This argument is fallacious: the digital content is completely ephemeral — it is no more "fixed" than a book reflected in a mirror — and derives from an accident of technology rather than a deliberate effort to reproduce a work.

To hold that an "unauthorized" RAM copy infringes copyright would be to create a new exclusive right to read digital content. Such a right would radically tip copyright's balance in favour of rights holders and away from consumers interests, with unfortunate implications for freedom of expression, liberty, and consumer privacy. The government of Canada should clarify that ephemeral digital copies are not sufficiently fixed to implicate the reproduction right.

10. Monetize P2P

For a decade now, Canadians have used peer-to-peer file-sharing services to access music and other content. The content industry has responded by suing consumers, attempting to shut down P2P networks and locking down content with technological measures. These efforts to kill file-sharing have failed. Today, file-sharing is more popular than ever and Canadian artists are still not being paid for content shared by their fans. The time has come to look for alternatives. Consumers deserve access to the services of their choice, and artists deserve to be paid. Finding ways to transform P2P networks into legitimate music distribution and compensation vehicles would unleash a wave of innovation that could only benefit Canadian music creators and their fans. It is time the Canadian government showed some leadership and undertook active study of this option.

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Our Call

We are concerned that proposals to change Canada's copyright laws do not represent the interests of Canadian consumers. These proposed changes remove many rights that consumers have traditionally enjoyed and fail to address obvious changes that would benefit consumers and creators. What we want are laws that:

1. do no harm to Canadians;
2. are based on reality, not rhetoric; and
3. serve Canadians.

1. Do No Harm

Changes to Canada's copyright laws must be guided by the principle of "do no harm". We must not enact changes that harm consumer welfare and threaten education, freedom of expression, privacy and security. We do not want laws that harm small business, stifle innovation, or that cost Canadians millions of dollars.

2. Considered Copyright

The Canadian government must consult experts on education, security, privacy, small business, and consumer groups. Our copyright laws should be based on the facts, not on rhetoric.

3. Canadian Laws Must Serve Canadians

Statistics Canada reports that our copyright royalty deficit — the amount of royalties generated by Canadians abroad compared with royalties earned by foreign performers in Canada — has grown dramatically in recent years. For every $1 earned by Canadian performers outside the country, $5 flows out of the country. Proposals for longer and stronger copyright will increase the flow of dollars out of Canada, rather than foster Canadian creativity. It is important that we address this trade imbalance and focus on the needs of Canadian creators and consumers rather than the self-interested demands of a limited group of rights holders.

Where changes to copyright laws are needed, Canada must adopt laws that serve Canadian interests first. Pressure from American interests and proposals that primarily benefit foreign distributors should be rejected.