ARCHIVED — Canadian Association for Interoperable Systems

COPYRIGHT REFORM PROCESS

SUBMISSIONS RECEIVED REGARDING 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 Canadian Association for Interoperable Systems received on September 14, 2001 via e-mail

Subject: Government of Canada Copyright Reform

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I. INTRODUCTION

This submission to the Departments of Canadian Heritage and Industry Canada (the "Departments") is made on behalf of the Canadian Association for Interoperable Systems (the "Association"). The Association is an informal organization of companies that are involved in the development and marketing of innovative hardware and software products that interoperate with the products of other vendors. Members of the Association believe in the existence of a legal regime that will encourage innovative companies to develop new technology products and ensure that Canada remains in the forefront of new technological developments. The Association supports intellectual property laws and policies that will provide a balance between the goals of strong protection and rewards for innovation, on the one hand, and the goals of interoperability, open systems and fair competition, on the other hand.

The Association is pleased to note the commitment of the Government of Canada to examine the issues that arise at the intersection of the new digitally networked environment with the Canadian Copyright Act. We welcome this opportunity to submit our views concerning the Consultation Paper on Digital Copyright Issues ("Consultation Paper") prepared by the Departments, and in particular, to address the issues raised in the Consultation Paper's discussion of "Legal Protection of Technological Measures."

In the discussion of the "Legal Protection of Technological Measures," the Departments encourage the private sector to develop standards for measures that will help enable the emergence of the networked environment as a new marketplace for the copyright sectors. The Association recognizes the importance of measures that would enable copyright owners to monitor and control the unauthorized reproduction and publication of copyright-protected works.

The Departments rightly point out, however, that prohibiting circumvention devices and activities could override the traditional contours of copyright protection by blocking legitimate types of access and use, and by creating what amounts to a new right of access to primarily digital works. This would require us to re-examine the balance sought to be maintained by the Copyright Act, and also could have the effect of introducing a distinction between digital and non-digital copyright works.

The following are the views of the Association in response to the four questions listed at the end of the Section 4.2 of the Consultation Paper. Our responses are followed by a brief summary along with our recommendations.


II. COMMENTS

1. Given the rapid evolution of technology and the limited information currently available regarding the impact of technological measures on control over and access to copyright protected material, what factors suggest legislative intervention at this time?

Factors Put Forward in Favour of Intervention

Proponents of legislative intervention rely on a series of assumptions (outlined below) regarding the infringement and distribution of copyrighted digital works and the circumvention of technological measures used to protect them. In the Association's view, some of these assumptions are based on predictions that have not proved accurate; others appear to simplify the issues, while others appear to be simply flawed. If, in considering whether to intervene, the Departments are in fact making any of these assumptions, the Association urges the Departments to consider the countervailing arguments, as outlined in detail below. Briefly, the Association does not believe that such factors support a case for legislative intervention.

Assumption 1: The distribution of copyrighted content over the Internet will drive electronic commerce. The notion of legal prohibitions on the circumvention of technological protection measures finds its origins in a U.S. government document entitled Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights (the "White Paper".) The White Paper, issued in 1995, reflected the then prevalent view that the direct distribution of copyrighted content over the Internet would be the engine of electronic commerce. Six years later, it is clear that the online distribution of copyrighted content is not the primary engine of electronic commerce, nor does online distribution of protected works appear to be destined to become the primary engine of growth. In fact, at this point in time, relatively little copyrighted content is distributed for a fee over the Internet. The Internet, it appears, is not so much a delivery mechanism as a pu rchasing mechanism. Billions of dollars of goods and services are purchased over the Internet and then distributed by more conventional means. The dollar value of the goods and services now sold over the Internet far exceeds the value of copyrighted content which in the future may be delivered over the Internet. Stated differently, a consumer would have to download many songs and films to equal the value of one plane ticket or computer purchased over the Internet.

Assumption 2. The threat of infringement discourages the distribution of digital copyrighted content. Content providers correctly observe that digital content can be easily copied and that the Internet facilitates the worldwide distribution of infringing works. There is no denying that digital works can be reproduced at low cost with little degradation in quality and that the availability of infringing copies on the Internet is aiding in their distribution. That, however, does not necessarily mean that the threat of infringement discourages the distribution of new works. To the contrary, it appears that the content industries have decided that the profits to be made by distribution of digital content outweigh the cost of infringement. Software publishers, for example, have distributed software in digital form for decades. Many databases - such as those containing electronic copies of news articles - are available online and in CD-ROM format. Record companies have sold CDs since the late 1980s and cont inue to sell them in the face of Napster and MP3s, notwithstanding the wide availability of CD burners and MP3 technology that makes the copying of songs easier than ever. If anything, the ease of copying digital works is encouraging content providers to develop better business models. Certain record companies and recording artists, for example, are choosing to distribute their content directly through the Web and, in doing so, are giving consumers more choice in how the music they purchase is delivered. Put another way, while infringement may cut into the content industries' profits, it does not appear to be discouraging the distribution of digital copyrighted works. These industries remain extremely profitable - and will likely continue to be - notwithstanding the threat of infringement.

Assumption 3. Copyright laws cannot adequately protect digital content. In a world with millions of networked computers, enforcement of copyright is indeed a challenge but, in the Association's view, the content providers are rising to the occasion and successfully meeting that challenge. The recording industry, for example, prevailed in U.S. courts against both Napster and MP3.com. In both cases, the recording industry relied on traditional copyright theories and, in both cases, the copyright law was not found to be lacking; in fact, traditional copyright principles more than aptly accommodated the copyright owners' online infringement claims. The music industry has not been the only one to successfully rely on copyright law to protect digital content. The software industry has waged effective campaigns throughout the world against counterfeiters and corporate infringers who exceed the terms of site licenses. Many content providers protect their intellectual property through shrink-wrap or click-wrap licenses and, in cases of a licence breach, have obtained appropriate remedies through the courts. Certainly infringement still occurs, but it is most virulent in countries without effective legal systems. In North America and the European Union, thanks to new copyright laws and improved enforcement strategies, we are seeing a dramatic decline in the rates of infringement. Clearly, we would not be seeing declining rates of infringement if copyright laws could not adequately protect digital content.

Assumption 4. Technological protections are essential to the distribution of digital content. This assumption only carries weight if we accept Assumptions 2 and 3. In other words, technological protections would only be necessary if copyright law were not sufficient and if the threat of infringement did in fact discourage the distribution of new digital works. However, as we noted above, content has been distributed in digital form for decades, and copyright does provide meaningful protection notwithstanding that the content is in digital form. Further, even if technological protections were essential, we should consider whether they would be necessary in the broader economic context. Technological protections would only be significant to the economy as a whole if Assumption 1 were also correct. Put another way, the macro-economic justification would only work if the online distribution of content were the engine of electronic commerce. Yet, electronic commerce has blossomed notwithstanding the absenc e of any meaningful distribution of online content and, given the trends, it will likely continue to be driven by the sale of consumer goods delivered by more traditional means.

Assumption 5. Technological protections can be defeated easily. Having argued that technological protections are essential to the distribution of digital works, content providers then contend that hackers or would-be infringers can easily circumvent them and that the Government should intervene. The Association notes, however, that while weak protections can certainly be defeated by a talented and persistent hacker, it is far more difficult to crack a system that uses more sophisticated measures, such as public key encryption. Granted, sophisticated encryption is more expensive. While the content providers desire strong protection, they do not appear to be willing to pay for it. Moreover, even if stronger protections were vulnerable to circumvention, it does not necessarily follow that most users would in fact circumvent these protections. Studies reveal that the vast majority of computer and Internet users are technologically unsophisticated. While they may be willing to make a digital copy of a song or a computer program if they could do so with a single keystroke, they are far less likely to make that copy if they have to first search the Internet for a circumvention utility, download it, and then use it to defeat copy protections embedded in the song or program. True, there will always a degree of circumvention. However, in the Association's view, this amount is minimal and does not justify legislative intervention.

Assumption 6. Technological measures require protection by a legal prohibition on circumvention. This assumption follows from the previous one. The content providers argue that if technological measures are easily susceptible to circumvention, the circumvention of technological measures must be prohibited. However, as stated above, it is far from clear that strong technological measures are easily circumventable or that many computer users would in fact engage in circumvention for the purpose of infringement. Further, the content providers' reasoning is circular. They assert that technological protections are necessary because legal protections are inadequate and that legal protections are needed because technological protections are not enough.

Assumption 7. The only effective way to prevent circumvention is to prohibit circumvention devices. Content providers concede that a prohibition on the act of circumvention is not likely to be any more effective than a prohibition on the act of copying. Accordingly, they press for a prohibition on the manufacture and distribution of circumvention devices. This is akin to prohibiting photocopiers and VCRs in order to prevent copying. This conclusion completely overlooks the costs of a prohibition on circumvention devices. It ignores the fact that there are legitimate purposes for making copies without the copyright holder's authorization and that these legitimate purposes would be frustrated by a ban on circumvention devices. In the U.S., the U.S. Supreme Court has held that a manufacturer of a copying device cannot be found liable for infringement if the device is capable of substantial non-infringing uses (Sony Corp. v. Universal City Studios, 464 US 417 (1984)). Similarly, as long as there are ci rcumstances in which the lawful owner of a copy of a work is permitted to make further copies of the work without infringing copyright, a general prohibition against devices that tamper or interfere with technological measures of protection will have the undesired effect of interfering with the legitimate rights of the user or owner of these digital works.

Assumption 8. For certain types of offenders, only criminal penalties will prove effective. The content providers argue that in order to deter circumvention by judgment-proof hackers and repeat offenders, it is not sufficient to simply prohibit circumvention; these offenders would only be deterred, they say, by criminal penalties. The Association, however, is concerned with how easily criminal penalties can be abused. A perfect example is the recent indictment in the U.S. of Dmitry Sklyarov under the circumvention provisions of the Digital Millennium Copyright Act ("DMCA"). Sklyarov, an employee of a Russian corporation which develops software that decrypts the protection on Adobe e-book readers, was arrested by the FBI after giving a talk about his research at a conference in the United States. Putting aside the question of whether the software does, in fact, violate the DMCA, there is no evidence that the software actually facilitated any infringement. Moreover, there is no evidence that th e Russian corporation was judgment-proof or that the company or Sklyarov were repeat offenders.

Looking at the broader context, it is inevitable that such tactics will have ripple effects that may not be intended. Already, Sklyarov's case has had a chilling affect on encryption research worldwide. His arrest, combined with threats leveled by the U.S. music industry at a Princeton University professor to deter him from publishing his research, are making U.S. researchers reluctant to publish their work and foreign researchers reluctant to participate in conferences in the U.S. There is no reason to believe that criminal penalties will not have a similarly chilling effect in Canada. In the long run, they will harm cybersecurity and research and will make copyrighted works more vulnerable to infringement.


2. Technological devices can be used for both copyrighted and non-copyrighted material. Given this, what factors should be considered determinative in deciding whether circumvention and/or related activities (such as the manufacture or distribution of circumvention devices) ought to be dealt with in the context of the Copyright Act, as opposed to other legislation?

If the question is simply what statute would most appropriately accommodate such prohibitions, this should be determined based on the purpose of the activity or circumvention device. It is true that the vast majority of the material protected by technological devices is in fact the subject matter of copyright. The text, photographs, databases, and computer programs on a Web site protected by a firewall are all copyrightable subject matter. The question, however, is not so much whether the material is copyrightable but rather what the purpose is behind the circumvention. Is the circumventer seeking to avoid paying a license fee? Is he intending to engage in wholesale infringement? Is he trying to make a fair use of a small portion of the material? In any of these cases, the acts are properly addressed within the rubric of copyright. If, on the other hand, he is attempting to disfigure or disable the site or is seeking to engage in financial fraud (such as the theft of credit card numbers), his acts wou ld more appropriately be addressed in a cybersecurity statute and would not fit well within the Copyright Act.


3. If the government were to adopt provisions relating to technological measures, in which respects should such provisions be subject to exceptions or other limitations?

If prohibitions against circumvention acts or devices are enacted, they should be subject to various exceptions. The circumvention provisions recently adopted in the United States, Australia, and the European Union all contain specific exceptions. While the exceptions vary from jurisdiction to jurisdiction, the statutes are consistent in relation to reverse engineering. All three jurisdictions contain an exception to allow for the reverse engineering of software for the purpose of achieving interoperability . The fact that such an exemption is contained in all three statutes attests to the importance of reverse engineering to the development of innovative, competitive software products. The Association strongly believes that if the Canadian software industry is to continue to flourish, any legislative prohibitions in Canada should be subject to a similar exception.

The Association believes further that if Canada were to enact prohibitions against circumvention, it would be crucial that they be subject to certain additional exceptions. To this end, it is useful to consider additional exceptions contained in the U.S., Australian and E.U. legislation. As an example, the DMCA contains exemptions for:

· nonprofit libraries, archives and educational institutions;

· law enforcement, intelligence, and other government activities;

· encryption research;

· protection of personally identifying information; and

· security testing.

In the Association's view, however, the exceptions adopted by other jurisdictions are insufficient in two respects. First, as described further below, some of the exceptions are worded too narrowly or too ambiguously. For example, despite the fact that the DMCA contains an exception for encryption research, the Recording Industry Association of America has been able to threaten an Ivy League professor with litigation in an attempt to dissuade him from publishing his research. Second, individually and collectively, these sets of exceptions are understandably incomplete. It is impossible to predict now what exceptions may be needed in the future, particularly given the rapidly evolving nature of digital technology.

To this end, the DMCA establishes a rulemaking procedure that provides for the adoption of new exceptions every three years. Under the DMCA, the general prohibition against the use of circumvention devices does not apply to "users of a copyrighted work which is in a particular class of works, if such persons are, or are likely to be in the succeeding 3-year period, adversely affected by virtue of such prohibitions in their ability to make noninfringing uses of that particular class of works under this title... " To determine what classes of works should be designated as such, the Act outlines a mandatory rule-making procedure which is to take place in each three year interval following the enactment of this section of the Act. To facilitate the rulemaking, the Register of Copyright is required to consult with the Assistant Secretary for Communications and Information of the Department of Commerce and make a recommendation to the Librarian of Congress regarding the designation of such classes of works. The Librarian of Congress is then required to make a determination based on factors the Librarian considers appropriate, including:

· the availability for use of copyrighted works (generally and for nonprofit archival, preservation, and educational purposes);

· the impact the circumvention prohibition has on criticism, comment, news reporting, teaching, scholarship and research (which are categories of "fair use" in the U.S.); and

· the effect of the prohibition on the circumvention of technological measures on the market for or value of copyrighted works.

To date, the rulemaking procedure under the DMCA has resulted in the creation of two exemptions. The first is "compilations consisting of lists of Web sites blocked by filtering software applications." The second is "literary works, including computer programs and databases, protected by control mechanisms that fail to permit access because of malfunction, damage or obsolescence." While we recognize the value of maintaining the flexibility to periodically assess the effects of legislative prohibitions, we note that the exceptions put forward so far in the U.S. are extremely limited in nature, calling into question the effectiveness of an administrative rulemaking process to provide adequate accommodations.

In the Association's view, the better approach is to focus on the purpose of circumvention from the very beginning. One option is to create a general exception permitting acts of circumvention and the distribution or sale of circumvention devices but only in instances in which the acts or the devices are targeted at non-infringing activities. Another is to frame the provision as a prohibition on conduct and devices that are intended to facilitate infringement. The Association recognizes that it may be difficult to determine whether an act or device is targeted at a non-infringing activity, but notes that the challenge of ascertaining the purpose of the conduct or device is not a question for the legislature but for the courts.


4. Are there non-copyright issues, e.g., privacy, that need to be taken into account when addressing technological measures?

There are certainly non-copyright issues that need to be taken into account when addressing the circumvention of technological measures. Several of these are recognized in the DMCA. As an example, the DMCA's exceptions for security testing, encryption research, privacy protection, and the protection of minors have more to do with security, privacy and safety than traditional copyright principles. However, while it is certainly worthwhile to consider how these interests have been balanced in the DMCA, we should also look critically at the outcome. In the Association's view, the privacy and safety exceptions in the DMCA have been drafted too narrowly, while the exception for encryption research is too vague to be of much use:

Privacy: The DMCA's privacy exception permits circumvention for the purpose of disabling "cookies." The exception, however, does not protect users from liability if the Web site notifies them that it has implanted a cookie. This means that, once a user receives such a notice, the user can either sacrifice his or her privacy by simply accepting the unwanted cookie, or leave the Web site altogether and refrain from proceeding with the online activity. Further, while this provision permits acts of circumvention designed to protect personal privacy, it does not expressly permit the development and distribution of the means of effecting that circumvention. In other words, while it creates an exception to the conduct prohibition in Section 1201(a)(1), it does nothing to address the prohibition on devices contained in Section 1201(a)(2). Yet, each is inextricably tied to the other. If developers are not permitted to manufacture and distribute devices to enable circumvention to protect privacy, how w ill users be able to circumvent in these circumstances in the first place?

Safety: The provision permitting circumvention to enable parents to monitor their children's Internet use is also ambiguous, particularly insofar as it does not explicitly permit the development of circumvention components designed to enable parents to access restricted sites visited by their children. Instead, the exception merely permits a court to consider whether the component has this beneficial purpose. Moreover, the exception provides no guidance on what a court should do once it has determined that this is the component's purpose. The exception also applies only to components, not stand-alone devices which perform this function. Finally, while it may permit the manufacture of these components, it arguably does not permit their use.

Encryption research: While the encryption exception permits circumvention in the context of "good faith encryption research," the fact that a Princeton University Professor has been threatened with litigation if he delivers a paper on his encryption research at an academic conference is reason enough to doubt the adequacy of this exception.




III. SUMMARY AND RECOMMENDATIONS

The Association is concerned that legislative prohibitions against circumvention acts and devices will detrimentally affect the balance in the Copyright Act by creating an additional right of access and, in doing so, drawing a distinction between digital and non-digital works. The Association is further concerned that legislative intervention could result in an undue interference with the rights of a person in lawful possession of a digital work to use the work in a manner permitted by the Copyright Act or by the terms of a licence. Finally, the Association believes that it would be inappropriate to prohibit circumvention devices in circumstances where the devices are capable of being used for non-infringing purposes.

Given the need to balance other interests - such as fair use, research, security, privacy and safety - and the difficulty in anticipating all of the circumstances in which legislative prohibitions might impede legitimate access and use, it will be extremely important to make a clear distinction between those acts and devices targeting legitimate uses from those that should be stigmatized as giving rise to an offence. As a result, the Association recommends that the Government of Canada proceed cautiously in relation to the prohibition of circumvention acts or devices. While the Association may find acceptable a provision that prohibits the circumvention of copy-protection systems for purposes of infringement, any such provision must be carefully drafted so as not to extend to legitimate uses of innovative technologies and services. Specifically, if any provision relating to circumvention of technological measures is included in the Copyright Act, it should be qualified at least in the following respects:
1. the prohibition should apply to the uses made of devices (i.e., their uses for infringing purposes) rather than the devices themselves;

2. any such section should be enacted only in conjunction with properly drafted exceptions, including, in particular, provisions which expressly permit reverse engineering; and

3. this activity should not in any circumstance constitute a criminal offence.



APPENDIX A TO CAIS SUBMISSION EXCEPTIONS TO CIRCUMVENTION PROVISIONS TO PERMIT REVERSE ENGINEERING IN EUROPEAN UNION AND AUSTRALIA

REVERSE ENGINEERING EXCEPTION IN EU:

The EU Directive that prohibits circumvention of technological measures is Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. The Directive contains an exception for reverse engineering of computer programs. Section 50 of the recitals states that the Directive's legal protection "does not affect the specific provisions on protection" provided for by the EU Directive on the legal protection of computer programs:

In particular, it should not apply to the protection of technological measures used in connection with computer programs, which is exclusively addressed in that Directive. It should neither inhibit nor prevent the development or use of any means of circumventing a technological measure that is necessary to enable acts to be undertaken in accordance with the terms of Article 5(3) or Article 6 of the Directive 91/250/EEC. Articles 5 and 6 of that Directive exclusively determine exceptions to the exclusive rights applicable to computer programs.

Subsection 3 of Article 5 of the software directive, Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, states:

The person having a right to use a copy of a computer program shall be entitled, without the authorization of the rightholder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do.

Article 6, Decompilation, states:

(1) The authorization of the rightholder shall not be required where reproduction of the code and translation of its form within the meaning of Article 4 (a) and (b) are indispensable to obtain the information necessary to achieve the interoperability of an independently created computer program with other programs, provided that the following conditions are met:

(a) these acts are performed by the licensee or by another person having a right to use a copy of a program, or on their behalf by a person authorized to do so;

(b) the information necessary to achieve interoperability has not previously been readily available to the persons referred to in subparagraph (a); and

(c) these acts are confined to the parts of the original program which are necessary to achieve interoperability.

(2) The provisions of paragraph 1 shall not permit the information obtained through its application:

(a) to be used for goals other than to achieve the interoperability of the independently created computer program;

(b) to be given to others, except when necessary for the interoperability of the independently created computer program; or

(c) to be used for the development, production or marketing of a computer program substantially similar in its expression, or for any other act which infringes copyright.

(3) In accordance with the provisions of the Berne Convention for the protection of Literary and Artistic Works, the provisions of this Article may not be interpreted in such a way as to allow its application to be used in a manner which unreasonably prejudices the right holder's legitimate interests or conflicts with a normal exploitation of the computer program


REVERSE ENGINEERING EXCEPTION IN AUSTRALIA:

In Australia, the Copyright Amendment (Digital Agenda) Act 2000 provides specific exceptions to the operation of the enforcement measures against circumvention devices or services where the circumvention device or service is used for a permitted purpose. This has the effect of allowing some legitimate manufacture, dealing, advertising supply, etc, of such devices and services in relation to specific exceptions to copyright owners' exclusive rights, including the interoperability exception listed in Section 47D of the Copyright Act 1968, Act No. 63 of 1968 as amended. Section 47D states:

(1) Subject to this Division, the copyright in a literary work that is a computer program is not infringed by the making of a reproduction or adaptation of the work if:

(a) the reproduction or adaptation is made by or on behalf of the owner or licensee of the copy of the program (the original program) used for making the reproduction or adaptation; and

(b) the reproduction or adaptation is made for the purpose of obtaining information necessary to enable the owner or a licensee, or a person acting on behalf of the owner or licensee, to make independently another program (the new program), or an article to connect to and be used together with, or otherwise to interoperate with the original program or any other program; and

(c) the reproduction or adaptation is made only to the extent necessary to obtain the information referred to in paragraph (b); and

(d) to the extent that the new program reproduces or adapts the original program, it does so only to the extent necessary to enable the new program to connect to and be used together with, or otherwise to interoperate with, the original program or the other program; and

(e) the information referred to in paragraph (b) is not readily available to the owner or licensee from another source when the reproduction or adaptation is made.

(2) Subsection (1) does not apply to the making of a reproduction or adaptation of a computer program from an infringing copy of the computer program."

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