ARCHIVED — Digital Content Management Services

Copyright Reform Process

Submissions Received Ragarding the consultation Papers

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Documents received have been posted in the official language in which they were submitted. All are posted as received by the departments, however all address information has been removed.

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Submission from Digital Content Management Services received on September 17, 2001 via e-mail

Subject: Written comments on Digital Copyright Issues

PDF Version

Submission to

Industry Canada

&

Canadian Heritage

DIGITAL COPYRIGHT ISSUES

Donald Berkowitz

Paul Hoffert

September 14, 2001

1 INTRODUCTION 1

1.1 The Consultation Paper 1

1.2 Timing 2

1.2.1 Assumptions 2

1.2.2 Statement of the Departments' Core Principals 3

2 A COMPREHENSIVE SOLUTION 4

2.1 The Digital Dilemma 4

2.2 Expanding the Discussion 6

3 ADDRESSING THE PROPOSALS 7

3.1 The Making Available Right 7

3.1.1 The Proposed Change 7

3.1.2 Discussion 7

3.2 Legal Protection of Technological Measures 8

3.2.1 The Proposed Change 8

3.2.2 Discussion 8

3.3 Legal Protection of Rights Management Information 10

3.3.1 The Proposal 10

3.3.2 Discussion 10

3.4 Liability of Network Intermediaries 10

3.4.1 The Proposal 11

3.4.2 Discussion 11

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1 Introduction

1.1 The Consultation Paper

On June 22, 2001 the Intellectual Property Policy Branch of Industry Canada and the Copyright Policy Branch of the Department of Canadian Heritage issued a "Consultation Paper on Digital Copyright Issues."

The purpose of the paper is to initiate discussion on issues that arise from the intersection of the new digitally networked environment with the Canadian Copyright Act. The discussion should help promote dissemination of new digital online content, for and by Canadians.⁽¹⁾

The paper cites one … "of the government's key priorities, as part of this agenda, is to help Canada 'become a world leader in supplying on-line content as well as exciting new software and applications…It is also working to ensure that its framework of laws support this objective."⁽²⁾

Ensuring that Copyright policy and legislation support this objective is difficult for policy makers. They must balance:

1. a variety of conflicting points of view ranging from those of copyright owners , Internet Service Providers, and a wide range of classes of content consumers;

2. international treaty obligations including NAFTA, TRIPs (Trade Related Aspects of Intellectual Property), WCT (WIPO Copyright Treaty), and WPPT (WIPO Performances and Phonograms Treaty);

3. the impact of rapid technological change as it relates to the formulation of effective policy.

At the same time the departments believe that this is an appropriate time to consult with stakeholders on a variety of questions related to copyright. In particular, they ask whether or not the act should be updated to include:

• a new making available right for rights holders to determine whether and under what circumstances their works may be made available on networks like the Internet;

• legal protection of technological protection measures;

• legal protection of rights management information; and

• liability of network intermediaries.⁽³⁾

1.2 Timing

We agree that this is an opportune time to reexamine the Canadian Copyright Act. Increasingly, Canadians are using the Internet as a conduit for commerce, information, education, and entertainment. Experts believe that this growth will continue to increase significantly. For example:.

Commerce in online music (in the US) is predicted to grow from USD one billion (USD) this year to more than six billion (USD) by 2006. Thirty percent of sales in 2006 are expected to constitute digital downloads and music subscriptions, up from three percent this year, while the remainder will be online sales of CDs and music products. Music subscription services are expected to soar in popularity, with sales growing from three million (USD) this year to more than one billion (USD) by 2006. ⁽⁴⁾

We believe that the discussion of digital copyright issues should take place in a broad context. We will address the four specific questions raised by the two departments using the following assumptions:

1.2.1 Assumptions

This document assumes that:

1. a fundamental principal of Copyright policy - the balance between the private right of creators to benefit from their works with the public good of a society enriched by those works - will not change. This implies that the right of the creator to control his works must be balanced by the right of users to have reasonable access to those works.

2. the stated Canadian government policy to help Canada "become a world leader in supplying on-line content as well as exciting new software and applications" should be a guiding framework.

3. it is in the interest of all stakeholders - content creators and owners, ISPs, content consumers, and government - to find a common ground that will encourage the transmission and consumption of content over digital networks. We believe that this common ground is achievable.

4. a comprehensive solution can be found. Such a solution would include a combination of technology, business models , legislation, regulation, public education, and public policy. These are all important components of an online content solution and none are sufficient on their own.

1.2.2 Statement of the Departments' Core Principals

The Departments' discussion paper identifies key core principals that support the major objective of the promotion of the "Connecting Canadians agenda by creating a copyright framework that encourages the dissemination of new digital content on-line for and by Canadians."⁽⁵⁾ Those core principals are:

• the framework rules must promote Canadian values;

• the framework rules should be clear and allow easy, transparent access and use;

• the proposals should promote a vibrant and competitive electronic commerce in Canada;

• the framework needs to be cast in a global context;

• the framework should be technologically neutral, to the extent possible.

2 A Comprehensive Solution

Our objective is to find a comprehensive solution that is consistent with public policy, that is seen to be fair to all sides, and that can be implemented in a practical manner.

2.1 The Digital Dilemma

The United States' National Research Council commissioned a broad based, expert panel to report on intellectual property issues in the digital age. The committee coined the term "Digital Dilemma" to refer to the problems that interested parties face. "The information infrastructure - by which we mean information in digital form, computer networks and the World Wide Web - has arrived accompanied by contradictory powers and promises. For intellectual property in particular it promises more - more quantity, quality and access - while imperiling one means of rewarding those who create and publish."⁽⁶⁾

The report recognized that the carefully constructed balance between the private right of the creator to benefit from his or her work, and that of society to benefit from the collective progress of innovation could potentially be destroyed by the very same information infrastructure.

The report recognizes that the fabric of a solution to the dilemma of providing an equitable and workable framework for intellectual property in the digital age needs to be woven from the following five threads:

1. Technology

2. Law

3. Economics

4. Public Policy

5. Community Acceptance and Public Education

Potential Solutions Should Be Evaluated from a Variety of Perspectives

The multiplicity of forces at work in each of these areas need to be considered when evaluating solutions.  For example, a technical scheme may appear to provide a solution at first glance but may turn out to present an obstacle to average users (as, for example, early attempts at copy protection for software).  Similarly, new laws can sometimes be thwarted by powerful market forces (as, for example, rent controls meant to preserve low-cost housing that are circumvented by converting apartments to condominiums, resulting in reduced stock of rental housing).

The five threads provide a useful framework to evaluate proposed solutions. Solutions should be technologically feasible (e.g., for a software solution, the desired program will require a plausible amount of time and hardware to run). The solution needs to be evaluated with respect to the specifics of the law as it currently exists, the legislative history and intent (how it got that way), and some understanding of legal context (i.e., how the statute fits into the collection of laws).  The solutions needs to make  economic sense as well,  Consideration should be given not only to the costs and benefits but to who pays the costs and who derives the benefits.  The solution should take account of psychology and sociology; it must ultimately be viewed as fair and pragmatic by the majority of citizens.  Finally, the solution should take account of public policy goals, as embodied in, for example, copyright law, antitrust law, and foreign policy.

Given the complexity of the challenges for intellectual property presented by the information infrastructure and the variety of perspectives that should inform evaluation of any proposed solution, it is certain that any proposed solution will inevitably be imperfect in some manner.  The committee believes that it is important, when exploring both problems and potential remedies, to not just point out  that the solution is imperfect; that's a given, and far too easy.  The more interesting approach, indeed the more effective mind-set, is to ask questions such as, Is it good enough?  Will it do enough of the task to be worth the cost and effort? How can it be improved?⁽⁷⁾

We agree with this approach to the issue of Copyright. We believe that legislative change that does not take these other factors into account may in fact impede the effective development of business models, technical solutions, and other public policy priorities.

The departments appear to share this point of view.

Accordingly, it may be that amendments made to the Act at this time could have the inadvertent effect of working against a Canadian presence if technologies develop along particular or unpredictable pathways. Despite the radical novelty of the Internet, the analysis reflected in this paper has proceeded on the basis that the Copyright Act has already developed into a flexible instrument that is capable of responding to many challenges of the digitally networked environment.⁽⁸⁾

2.2 Expanding the Discussion

The call for submissions by the departments is an important first step in achieving a comprehensive solution. The next step should be to expand the discussion to include all factors, in addition to the Copyright Act itself, that need to be considered in the process of articulating a solution.

3 Addressing the Proposals

In this section we examine each of the four proposals contained in the Consultation Paper. We will provide a brief statement of what the proposal is, followed by an analysis of the possible implications of such an

3.1 The Making Available Right

3.1.1 The Proposed Change

In this proposal, the Act would include a new right called the "Making Available Right". This would confer to content owners the right to authorize the appearance of their works or protected subject matter within the networked environment.

3.1.2 Discussion

The creation of a new right in the legislation presupposes that the existing rights conveyed in the existing legislation are insufficient to deal with the realities posed by the digital environment. These realities include the easy creation of perfect copies of works, and ease of distribution.

Some experts have suggested that we rethink the foundation of Copyright itself for the digital environment. "The committee suggests that the notion of copy may not be an appropriate foundation for copyright law in the digital age. Where digital information is concerned, legitimate copies are made so routinely that the act of copying has lost much of its predictive power."⁽⁹⁾ We believe that existing body of rights, crafted for a particular era, may no longer be sufficient for articulating the balance in the digital environment.

We agree that the particular realities of the digital environment present unique problems for the protection of creators' rights. We also see the need for caution in the creation of new rights such that they do not impede the ability of the public to legitimately access works.

These discussions, as they pertain to the digital environment, should also consider the degree to which the digital channels will supplant more traditional forms of reproduction, performance, and distribution. Does the fact of digitization mean that traditional forms of book and periodical reproduction and distribution will disappear completely? If a work is made available in the digital environment will it therefore not be made available in other locations, libraries, and stores?

If the traditional forms of delivery will continue to provide that access to the content that has been considered appropriate for the preservation of the public right, then the creation of a new right will not unduly affect the balance. If traditional forms of delivery are materially affected by digital reproduction then we should have greater concern for the impact that a new right would have on limits to copyright.

This goes directly to the question of balance as presented in the Consultation Paper. We encourage policy makers to consider:

• what impact will a new making available right have on owners and users? It will certainly provide a strong tool for owners to withhold use of their works online but, on the other hand, it may not convey a greater control than those owners enjoy today for physical products. This is because the mechanical reproduction licenses that are required for physical expression of works (CD's, books) are relatively easy to audit by counting inventories in warehouses and comparing them with manufacturing and sales records. It is the lack of this audit trail of the physical goods that has changed the balance in favour of consumers online.

• Is the notion of "copy" the effective base for dealing with these policy concerns in the digital environment, or should the new types of use dictate new terms in copyright law?

• How will digital reproduction, transmission, and distribution affect traditional channels of reproduction, distribution and performance; and if those channels are materially affected, how can we ensure that the protection of the creator's rights does not preclude the public right to access?

3.2 Legal Protection of Technological Measures

3.2.1 The Proposed Change

Various technological measures have been developed, or are being developed, to assist content owners in the protection of their property in the on-line environment. It is widely accepted that no measure can be considered completely infallible, however continued development will improve effectiveness.

The fact that technological measures remain vulnerable has led some to argue that additional measures are required to directly address the development or dissemination of measures specifically developed to defeat technological protection measures.

3.2.2 Discussion

The Digital Millennium Copyright Act (DMCA) in the United States incorporated very strict language in regard to the protection of technological measures. That has been one of the most controversial elements of the DMCA.

As we write, a first test case is under way in the US. Dmitry Sklyarov has been charged under the DMCA, with creating a program that tampers with the technological protection measures developed by Adobe for the protection of text content delivered in its proprietary format. The case is a flashpoint for activists opposed to what they see are infringements of their rights to legitimate use of content and to legitimately create software, posed by the DMCA.

This case could provide useful judicial interpretation that could assist Canadian policy makers in the creation of a Canadian position on this issue. We do not believe that there is a sufficiently compelling reason to implement new legislation in this area prior to resolution of this landmark case.

Traditionally, Canadian jurists will look to other jurisdictions, particularly the US or the UK, in absence of Canadian precedent in a given area of law. With that in mind, review of the disposition of the Skylarov case would only help to improve the effectiveness of any Canadian legislative initiatives in these areas.

Experts in the United States predict "The DMCA won't be overturned by the legislative process; it will be modified by case law that is built on cases such as the Napster trial."⁽¹⁰⁾ We do believe however, that should the judiciary deem that the creation, and/or distribution, and/or use of anti-circumvention measures, be in contravention, that the intent of the use should be considered as a factor.

There are legitimate reasons to create and use anti-circumvention measures, not the least of which include the improvement of those self same measures. Inflexibility in legislation is not desirable.

We agree with the proposition that the Copyright Act may not be the appropriate mechanism for legislative protection of technological measures.⁽¹¹⁾ Are there more effective legislative mechanisms, either in criminal or civil legislation, that would provide the protection required while permitting the Copyright Act to fulfill its objective of creating the balance between the public and private right?

The Consultation Paper clearly identifies the dilemma facing policy makers on this issue. We agree that further research is required in this area. As the on-line industry continues to evolve new business practices we may discover that the issue of the protection of technological protection measures loses its import due to the broad scale acceptance of new economic models.

We encourage policy makers to look to ongoing research activities in this area, in particular, the OnDisC Trial (http://www.OnDisC.ca).

3.3 Legal Protection of Rights Management Information

3.3.1 The Proposal

When on-line content is made available rights information is associated with the content itself. The rights information serves a number of purposes such as identification of ownership, what rights have been conveyed, who the authorized recipient of the content is, and so on.

The Consultation Paper suggests that rights management may require specific protection from tampering.

3.3.2 Discussion

We agree that the issues related to the protection of Rights Management Information are very similar to the issues in the Protection of Technological Measures.

We raise the following specific points for further discussion and research:

• It is paramount for all stakeholders to ensure that the authenticity of metadata online, including rights management information, be protected. One has to be certain that for example, if a work claims to be owned by a certain party and is has no fees for usage in its metadata, that this information is accurate and correct.

• Consideration must be given to the legitimate updating of rights management information as rights are legally transferred or assigned, or as the copyright devolves to the public domain.

• The intent of any party in an act of modification of rights management information must be considered.

We note that one expert believes that "by 2004, digital rights management for music distribution will be a non-issue to consumers. The management technology will be seamless. The entire music distribution chain will be aligned by de facto standards around digital rights technology."⁽¹²⁾

3.4 Liability of Network Intermediaries

3.4.1 The Proposal

The Copyright Act does not currently take into account the role of the ISP. Should the Copyright Act be amended to create a tariff(s) for copyright royalties, and should there be limits placed on the copyright liability of ISP for infringing activities undertaken by ISP subscribers without the ISP's permission and consent

3.4.2 Discussion

We will respond to each of these issues separately.

3.4.2.1 Tariffs for Copyright Royalties

The Federal Court is currently hearing an appeal to the Copyright Board's preliminary ruling on SOCAN's Tariff 22. The key issue raised by SOCAN in this appeal is that the Copyright Board erred in its assessment of liability when it did not hold the ISP liable.

We note with interest the statement in the Consultation Paper regarding the SODRAC Tariff application. "The departments acknowledge that over time, changes in the policy and technological environment may eventually compel the international copyright community to give this type of framework detailed consideration. In the meantime, however, the need remains to articulate a domestic policy that is cognizant of the interests of rights holders and of ISPs and of the global nature of the digitally networked environment."⁽¹³⁾

We believe that this discussion should consider the practical realities of implementation of the solution. We have demonstrated, through various research activities including OnDisC, and the Intercom Ontario trial⁽¹⁴⁾, that it is both technologically feasibly, and economically efficient, to implement a solution where copyrighted content could be made available to networked subscribers under a transparent licensing scheme.

The internet itself is a network of networks. For subscribers, their particular on-ramp through an ISP brings them first to a local area network. This local area network then is the jumping off point to the broader internet.

This 'network of networks' design means that Canadian legislators and regulators can establish a series of rules and regulations that will govern all Canadian ISPs and will not impede their competitive ability. Foreign ISPs that elect to provide service to Canadian subscribers will have to comply with Canadian regulations. The provision of local service negates the problem posed by the lack of borders on the Internet.

We believe that the phase one decision of the Copyright Board would lead to a costlier and more cumbersome solution that would ultimately be less desirable for both producers and consumers of content. Policy makers should review that the decision of the Federal Court of Appeal in order to ensure that Parliament provides a legislative framework that encourages the implementation of viable and efficient solutions.

Liability of ISPs and others who maintain contractual relations with users of online works appears to be the best mechanism proposed, thus far, for a comprehensive, inexpensive, and transparent implementation of rights tracking and payments for online use of works. Moreover this approach allows for tracking the use of all content whether protected by copyright or not and whether the owners choose to charge fees for use or not. The usage information will become, the authors believe, much more valuable over time.

3.4.2.2 ISP Liability for Subscriber Activity

Notice and takedown procedures provide both a mechanism for protecting rights holders and for limiting the liability of the ISP for infringing acts conducted on their network without their authorization or consent.

By complying with a legitimate notice and removing the offending site, the ISP has no further liability for the event.

The departments observe that notice and takedown may represent an overhead expense to the ISP. In our research we have found that ISP's, particularly those that provide broadband consumer access through either a DSL or Cable modem solution, are currently monitoring subscriber activity on a regular basis. We installed a firewall on a personal computer connected to a cable modem and found that there were hundreds of attempts to access the PC on a daily basis. The overwhelming majority of these attempts came from networked security devices operated by ISPs across North America that were looking for subscriber originated Web Servers and Newsgroup Servers. These are already part of the ongoing operations of ISPs.

Incremental costs associated with notice and takedown will be part of the cost of operation for all ISPs. The greatest portion of the cost of locating infringing sites will be born by the content owners and not the ISPs themselves.

1. Consultation Paper on Digital Copyright Issues, p. 1

2. ibid. p. 1

3. op cit. P. 5.

4. Jupiter Media Metrix, July 23, 2001

5. Consultation Paper on Digital Copyright Issues. p. 12.

6. The Digital Dilemma, Intellectual Property in the Information Age (pre-publication copy). Randall Davis, et.al. National Academy Press, Washington, D.C. 1999. p. ES-1

7. op.cit. p. I-18

8. Consultation Paper on Digital Copyright Issues. p. 5.

9. The Digital Dilemma. p. 6-20.

10. P. J. McNealy and Michael McGuire. Digital Copyright Law: Protect Content - and Consumers. The Gartner Group Reports. August 2001. p. 6.

11. Consultation Paper on Digital Copyright Issues. p. 21.

12. McNealy and McGuire. p. 6.

13. Consultation Paper. p. 34.

14. The authors of this paper will be pleased to provide additional supporting documentation should this be requested.