ARCHIVED — DirectTV

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 DIRECTV INC. received in both official languages on September 15, 2001 via mail

Subject: Comments - Government of Canada Copyright Reform

PDF Version

COMMENTS TO THE
CONSULTATION PAPER ON
DIGITAL COPYRIGHT ISSUES

September 15, 2001

Submitted by

DIRECTV, INC.

Gordon J. Zimmerman
Jeffrey D. Vallis
John D. Hylton
Borden Ladner Gervais LLP
Barristers & Solicitors
Scotia Plaza, 40 King Street West
Toronto, Ontario M5H 3Y4
(416) 367-6282

Marc J. Zwillinger
Seth Traxler
Kirkland & Ellis
655 Fifteenth Street, N.W.
Washington D.C. 20005
(202) 879-5000
Attorneys for DIRECTV

    DIRECTV appreciates the opportunity to comment on the issues raised in the
"Consultation Paper on Digital Copyright Issues," published by the Departments of Industry and
Canadian Heritage on June 22, 2001 (hereinafter the “Consultation Paper”). Although
DIRECTV is a United States-based provider of satellite entertainment and does not currently
supply its services in Canada, DIRECTV has a significant interest in Canada’s adoption of
technology protection legislation providing sanctions against persons who engage in activities
related to the circumvention of technology employed to protect unauthorized access to
DIRECTV’s broadcast signal.1 As a result, DIRECTV respectfully requests that the
Departments of Industry and Canadian Heritage consider its comments for the following reasons.

    First, DIRECTV is being demonstrably ha rmed by the absence of Canadian technology
protection legislation (and it is likely not the only non-Canadian entity in this position).
DIRECTV is a direct-to-home satellite television provider that broadcasts in digital format
hundreds of channels of television programming to its subscribers in the United States. In order
to prevent unauthorized reception of its broadcast signal, DIRECTV transmits its digital signal in
an encrypted format. DIRECTV has conducted its own investigations and cooperated with law
enforcement agencies to expose and prosecute individuals who have designed or trafficked in
devices and software intended to circumvent DIRECTV’s encryption technology and thereby
enable unauthorized access to DIRECTV’s broadcast signal. Such devices or software used to
assist in the unauthorized decryption or circumvention of access control measures can be
distributed via the Internet to a worldwide audience. In 1992, a World Intellectual Property
Organization ("WIPO") Committee of Experts acknowledged the possibility that the global
availability of devices used for circumventing technological measures could eventually imperil
the rights of copyright holders.2 This prediction was prescient. Without a comprehensive and
consistent international anti-circumvention regime, copyright owners, and their licensees and
designees, wherever domiciled, can no longer effectively prevent the unauthorized reproduction
and distribution of their works. Unfortunately, as more fully demonstrated below and by the
exhibits attached hereto, Canada has become a perceived safe haven for those who seek to profit
by selling devices primarily used for circumventing DIRECTV’s encryption-based access control
technology to gain access to DIRECTV’s broadcast signal. Although such conduct is prohibited
in the United States by the anti-circumvention and anti-trafficking provisions contained in the
Digital Millenium Copyright Act (“DMCA”), the absence of similar legislation in Canada allows
pirates to distribute pirate devices to U.S citizens from Canada with relative impunity,
significantly hindering DIRECTV's ability to combat piracy within the United States.

    Second, notwithstanding DIRECTV’s geographical location, the circumvention of
DIRECTV’s access control technology has a direct financial impact on Canadian citizens and
business entities. DIRECTV is a licensed provider of copyrighted music and programming
created by leading Canadian artists, who receive revenues partially determined by the number of
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1 The use of the phrase “technology protection legislation” herein refers broadly to legislation designed to provide
liability for the act of circumvention (“anti-circumvention legislation”) and for trafficking in circumvention devices
(“anti-trafficking legislation”).
2 WIPO, Questions Concerning a Possible Protocol to the Berne Convention -- Part III, New Items, WIPO Doc. No.
BCP/CE/III/2-III at Para. 74-75 (March 12, 1993) (quoting model provisions and commentary proposed by the
Committee of Experts on a WIPO Model Law on the Protection of Producers of Sound Recordings in June 1992).

lawful DIRECTV subscribers, and who have separately licensed the right to broadcast their
copyrighted programming to Canadian satellite entertainment companies.3 Accordingly, the
ability of Canadian citizens to use and distribute technologies to circumvent DIRECTV’s
conditional access controls has a direct financial impact not only on DIRECTV, but also on
Canadian copyright holders. In addition, the ability of a viewer to circumvent DIRECTV’s
encryption technology and access DIRECTV programming may affect the ability of Canadian
direct-to- home satellite providers and other Canadian multi-channel programming distributors to
attract and retain subscribers.

Finally, as a U.S. entity, DIRECTV has extensive familiarity with the evolution of the
technology protection provisions of the DMCA in the United States and has first-hand
experience in bringing civil enforcement actions and making criminal referrals under the DMCA.
Accordingly, its experiences may provide valuable assistance to the Departments in their efforts
to fulfill Canada's December 1997 commitment to the WIPO Copyright Treaty (“WCT”) and the
WIPO Performances and Phonograms Treaty (“WPPT”) and to move Canadian copyright law
more fully into the digital age.

I. INTRODUCTION

    The global digital revolution has generated significant economic prosperity. This
revolution continues to present both new opportunities and new challenges for nations and their
citizens. Such opportunities include the development and growth of new products, services and
industries that contribute to economic expansion and enhance the lives of citizens, as well as
burgeoning distribution methods that allow existing works to be distributed to consumers with
astounding efficiency. Examples include digital distribution of works through the Internet,
through wireless networks and through satellite transmissions.
A significant challenge associated with these potential benefits, however, is the growth of
piracy. Piracy in the digital era differs substantially from piracy in previous eras in terms of its
ubiquity and its consequences. One particularly troublesome outgrowth of modern digital
technology that recurs in the copyright context is the emergence of the pervasive and pernicious
perception that the ability to access equals the right or permission to access. The circumvention
of access control measures in the copyright context is just one manifestation of this growing
societal problem in Canada as well as in the United States; indeed, a recent poll of 47,235
elementary and middle school students conducted by Scholastic, Inc. in the United States
revealed that 48% of kids do not consider hacking a crime.4 Adopting strong technology
protection legislation will send the unequivocal message that ability and right are not
synonymous in the digital context.

    Notwithstanding the technical and social problems presented by digital technology, the
essential aspects of anti-piracy efforts are vigilant attention and effective modern laws.
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3 For example, DIRECTV carries channels of Much Music (the Canadian music video programmer), pay-per-view
events of performances by Canadian artists, and sporting events involving Canadian sports franchises.
4 See www.cybercitizenpartners.org/. Other manifestations include the increased frequency of unauthorized access
to computer networks, interception of electronic communications, and online identity theft.

Technological advances have rendered existing copyright laws unwieldy and expensive to
enforce in situations involving digital piracy. As a result, copyright owners need new legal tools
that better reflect the present state of technology. Two modifications to the Copyright Act would
particularly help DIRECTV and other similarly situated entities combat piracy: (1) the adoption
of anti-circumvention and anti-trafficking provisions; and (2) the creation of a detailed notice
and takedown system.5
II. ABOUT DIRECTV

    DIRECTV operates the United States’ premier digital satellite entertainment service.
DIRECTV has invested billions of dollars to deliver over 225 channels of digital entertainment
and informational programming to millions of subscribers in the United States equipped with
digital satellite system hardware. This hardware consists of a satellite dish, an integrated
receiver/decoder (“IRD”) and an access card that is necessary to operate the IRD. Through this
technology, DIRECTV offers programming including major cable networks, studio movies and
special events offered on a pay-per-view basis, local network channels in select areas, and a
variety of other sports and special interest programs and packages. Purchasers of the digital
satellite system equipment can subscribe to various packages of DIRECTV programming for a
periodic (usually monthly) fee. Subscribers can also order pay-per-view events and movies
either by using an on-screen menu and a hand- held remote control device, or by calling
DIRECTV and ordering the program over the telephone.

    DIRECTV purchases the majority of its copyrighted programming from program
providers such as cable networks, motion picture distributors, sports leagues, event promoters,
and other copyright holders. DIRECTV contracts and pays for the right to distribute the
programming to its subscribers, and holds exclusive satellite distribution rights in certain
programming. DIRECTV also creates its own original content programming, for which
DIRECTV owns the copyright.

    All programming distributed by DIRECTV is delivered to one or both of DIRECTV’s
broadcast centers in the United States where it is digitized, compressed and encrypted before
being transmitted to multiple satellites located in orbit approximately 22,300 miles above the
earth. The satellites relay the encrypted signal back to Earth, where it can be received by
DIRECTV’s subscribers equipped with digital satellite system dishes and IRDs. The signal is
received by the dish and transmitted by wire to the IRD, which processes the incoming signal
using a credit-card sized “access card.”
 
    The access card controls access to DIRECTV programming. Until the customer
purchases one or more programming packages from DIRECTV, the customer cannot view any
copyrighted programming, except for preview channels. When the customer subscribes to a
package, DIRECTV electronically activates the subscriber’s access card in accordance with that
subscription. The access card then acts as a reprogrammable microprocessor to (a) control which
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5 See Sections 4.2 (“Legal Protection of Technological Measures”) and 4.4 (“Liability of Network Intermediaries”)
of the Consultation Paper. These comments use the phrase “notice and takedown” to refer to a scheme by which
“an intermediary is shielded from liability, unless, after having received a notice of infringing material on its
facilities, it fails to take requisite steps to address the situation.” See Consultation Paper, Section 4.

DIRECTV programming the subscriber is permitted to view, and (b) capture and transmit to
DIRECTV the subscriber’s impulse pay-per-view information. Because DIRECTV generates its
revenues through sales of subscription packages, it must be able to control access to copyrighted
programming on the purchase of legitimate subscriptions. Accordingly, DIRECTV devotes
substantial resources to the continued development and improvement of its security system.

    Satellite pirates seek to circumvent DIRECTV’s security measures to gain unlimited
access to all DIRECTV programming, including pay-per- view events and copyrighted
programming licensed by Canadian providers, without paying a fee. (See Exhibits A, B and C.)
Because the access cards are the primary security mechanism relied on by DIRECTV, pirates
primarily focus on modifying and selling access cards and selling software and devices that
enable the modification of cards. (See Exhibits A, B, and C.) Because selling programmed
access cards is clearly illegal under United States laws, especially under the anti-trafficking
provisions of the DMCA, DIRECTV is able to curtail the sale and distribution of these devices
and software within the United States by bringing lawsuits against the distributors in the U.S., or,
in the case of Internet distributors, by invoking the notice and takedown provisions of the
DMCA. When these distributors relocate to Canada, however, DIRECTV has less effective
recourse because of the absence of technology protection legislation and a notice and takedown
scheme in Canada.

III. REQUESTED COMMENTS
    In Section 4.2 of the Consultation Paper, the Departments raised some of the following
issues for comment, as paraphrased below:
 

1. Given the rapid evolution of technology and the limited information available
regarding the impact of technological access control measures, what factors
suggest legislative intervention now?

2. What factors should be considered in determining whether circumvention and
trafficking in circumvention devices should be dealt with in the context of the
Copyright Act?

3. Should the Act prohibit circumvention activities, trafficking in circumvention
devices, or both? If devices, what factors should be considered in determining
what types of devices would be permitted?

4. How should any anti-circumvention provisions be integrated with existing
exceptions, such as the private copying regime?

DIRECTV's comments on these issues appear below.

1. The Time For Legislative Intervention Is Now

A. The Rapid Evolution of Technology Dictates Action, Not Restraint.

    Historically, Canadian copyright law has provided protection to copyright holders by
prohibiting unauthorized uses of a copyrightable work. The Consultation Paper alludes to this
as a “first layer” of protection available to copyrighted works.6 But technological advances have
rendered this “first layer” of protection ineffective where digital piracy is anonymous,
instantaneous, and global, and the infringers cannot be located or prosecuted. In the modern
digital world, creating and storing perfect digital copies is neither laborious nor expensive. It is
easy and cheap. Digital copies suffer no degradation in quality and can be stored indefinitely.

    Indeed, the U.S. Copyright Office recently stated in its statutorily- mandated report on the
DMCA: “Time, space, effort, and cost no longer act as barriers to the movement of copies, since
digital copies can be transmitted nearly instantaneously anywhere in the world with minimal
efforts and negligible cost.” See Study Required by Section 104 of the Digital Millenium
Copyright Act, United States Copyright Office, August 29, 2001, at p. 8.

    Relying solely on the development of technological measures to provide the appropriate
measure of protection against would-be infringers is flawed for several reasons. First, as the
Consultation Paper acknowledges, no technological measure is foolproof. Advances in
technology will likely continue to favor the copyright infringer, for the same reasons that
computer system attack and defense will always favor the attacker: there are too many
unanticipated and complex variables. Those seeking to protect an access control system must
anticipate and protect against every possible attack method: those attacking the system need find
only one vulnerability to be successful.

    Second, requiring complete reliance on technological measures unsupported by a legal
regime is inconsistent with the rights and privileges afforded to other rights holders in Canadian
society. Of course, copyright owners should attempt to use technology to protect their works and
to obtain what the Consultation Paper describes as a “second layer” of protection. 7 But, in the
context of real or personal property, the right of the property holder to the possession and quiet
enjoyment of his property does not depend on the magnitude of the physical measures he takes to
secure it. Although a property owner may employ a lock to protect valuable property, he is not
left without legal recourse if the lock is defeated and his property is stolen. Relying exclusively
or primarily on technological measures employed by the copyright owner not only places the
burden of risk on the copyright holder, it sends precisely the wrong societal message -- that the
ability to access a computer system is synonymous with the right to access. In light of the
increased use of digital distribution, the sensitive nature of the information stored on computer
systems, and the need to encourage compliance with laws protecting the confidentiality, integrity
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6 Consultation Paper, at p. 15.
7 Id. Historically, use of technological protection measures was unnecessary because other factors discouraged
copying. For example, copying a hard-cover full-length novel is laborious and produces an unbound mass of
individual pieces of paper.

and the availability of data, Canada should refute the notion that ability and right are synonyms
in the digital age. If this misconception is left unchecked in the copyright context, the
effectiveness of copyright law’s “powerful lever to promote innovation, entrepreneurship and
success” will be diminished because the strength of the copyright holder’s protection would
depend not on respect for the rule of law, but respect for the strength of the lock.8

    Indeed, in light of modern technological developments, protecting technology against
circumvention efforts may be the only effective remedy available to copyright owners to combat
global piracy. For example, DIRECTV has spent millions of dollars developing and refining its
encryption-based access control system. Notwithstanding DIRECTV’s efforts, satellite pirates
have found ways to circumvent the technological protections, often in a surreptitious manner that
cannot be detected by DIRECTV. Thus, as a practical matter, individual infringement actions
are ineffective because the identities of the infringers are unknown. An Internet search,
however, can help reveal the identities of Canadian and United States residents who offer the
circumvention devices that encourage such infringement. Given Canadian policy to recognize
and protect copyright interests, Canada should provide effective remedies for infringement of
those copyrights, especially where copyright holders and distributors such as satellite
broadcasters have undertaken meaningful efforts to protect copyrighted works.
 
    Finally, to the extent the Canadian government seeks to encourage copyright owners to
develop and implement technological measures to induce more rights holders to make their
copyrighted works available online, rigorous technology protection legislation will provide a
powerful catalyst. Copyright owners can invest in such technologies secure in the knowledge
that even if technology is defeated, the law will still protect their investment.

B. The International Community Expects Action

Legislative intervention is imperative now because the international community expects
countries to implement technology protection legislation. Digital piracy – and its worldwide
threat to the creation and existence of legitimate digital businesses, products and services – will
flourish without consistent multi- national WIPO-implementing legislation. Because of this, and
in response to the two 1996 WIPO international treaties, many countries have now modernized
their laws to include legal protection for technology used to protect copyrightable works. These
WIPO treaties require signatory nations like Canada to adopt "adequate legal protection and
effective legal remedies against the circumvention of effective technological measures” that are
used by copyright owners in connection with their works. See WCT, Article 11 and WPPT,
Article 18 (hereinafter “WIPO Treaties”). Canada now has the opportunity to fulfill its
international commitments with respect to copyright by passing its own technology protection
legislation to ensure that "Canada's copyright regime remains among the most modern and
progressive in the world." Framework, at p. 1-2.

    Countries around the world have responded to the opportunities and threats of the digital
era by passing different legislation that implements the two WIPO Treaties. As of July 30, 2001,
over half of the 51 WCT signatories have ratified the WCT and approximately half of the 50
WPPT signatories have ratified the WPPT. (See Exhibit D.) The Consultation Paper notes that
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8 See “A Framework for Copyright Reform,” at p. 2 ("the Framework").

different countries have approached such legislation in various ways. Some countries, like
Japan, prohibit the act of gaining access to protected works. Others, like Australia, prohibit the
trafficking in devices that circumvent "effective technological measures." The United States
prohibits both. Such legislation, although not necessarily uniform, represents an emerging global
consensus about the unique problem of, and possible legal remedies for, digital piracy.

    If Canada truly desires to become a “world leader in the development and use of
advanced information and communications technologies,”9 then it is essential for the Canadian
government to modernize its laws. This is not to say that Canada should mimic the approach of
other countries; DIRECTV agrees that Canadian copyright law should “continue to validate
Canadian priorities, choices and values.” Consultation Paper, at p. 11. But, as acknowledged in
the Consultation Paper, Canadian copyright law should strive to be consistent with international
standards of protection by providing reciprocal protections to those extended by other nations to
Canadian works distributed outside of Canada.

C. Canada Risks Becoming a Safe Haven for Pirates

    The actions of Canadian pirates threaten to affect Canada’s standing in the international
intellectual property community by creating the perception that Canada is a safe haven for
circumvention activities. With regard to satellite piracy, Canada has already become such a safe
haven. Numerous pirate websites are based in Canada and many prominently display Canada’s
flag or its symbols. (See Exhibits C, E, F, G, H and I.)

    Furthermore, DIRECTV is now victimized by United States residents operating websites
through Canadian-based ISPs. Although DIRECTV has successfully disabled many U.S. hosted
Internet websites pursuant to the notice and takedown provisions of the DMCA, the very same
websites frequently reappear on Canadian ISPs because “relocating” to Canada is relatively
effortless. For example, in the first week of August 2001, DIRECTV sent DMCA notice and
takedown letters to four pirate websites hosted by American ISPs. All four ISPs cooperated and
immediately took down the infringing sites. Within a week of takedown, all four pirate sites
were back up, each hosted by a Canadian ISP. In fact, ISPs have sprung up in Canada for the
sole purpose of hosting satellite pirate websites (also known as DSS websites, short for Digital
Satellite Service) that are taken down from American ISPs. (See Exhibit J.)
 
    These pirate websites, and individuals posting to such websites, regularly brag about how
Canadian law allows their circumvention activities to continue undisturbed and how U.S. law is
inapplicable. For example, one posting states,

I’m in Saskatchewan, providing this [software] for Canadians. Because of
how the internet is structured, there is no possible way I can stop yankees
from grabbing these files. But then, the DMCA has no effect on my own
systems run in Canada! Hahah.

(See Exhibit K.) Another posting responded to DIRECTV’s recent enforcement efforts by
trumpeting that “the Law in Canada is totally different to US law.” (See Exhibit L.) One final
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9 From the “Connecting Canadians” website at http://www.connect.gc.ca, accessed 9/3/01.

example is a website that declares itself “based in Canada and … subject only to Canadian laws.
United States laws or the laws of any other foreign nation are of NO FORCE OR EFFECT in
relation to this Web Site.” (See Exhibit M.)

    Looking ahead, nations perceived as safe havens for digital piracy risk increased
consumption of servers and network bandwidth for the unauthorized distribution of content
online, including over peer-to-peer networks. Unless Canada implements its own strong
protections, instead of developing “an infrastructure … to provide a platform for promoting a
strong and visible Canadian presence around the globe” (Consultation Paper, at p. 3), the visible
Canadian presence around the globe might become that of a piracy haven.
 

2. The Copyright Act is the Appropriate Statute to Address Circumvention and
Trafficking in Circumvention Devices

    Copyright law is the natural and appropriate legal mechanism to combat the problems of
digital piracy. The driving need for these changes to the law is the protection of copyrightable
works and, as such, this subject matter naturally falls within the ambit of copyright law. More
generally, copyright law is intended to strike an appropriate balance between the competing
interests of copyright owners, copyright users and other involved parties. This balance can only
be properly achieved when all relevant considerations, including digital piracy but also
considerations of access and fair dealing, are evaluated and addressed. When viewed in this
manner, it cannot be said that issues relating to legal protection of technological measures are
“extraneous” to copyright principles. Consultation Paper at p. 15. 10 Indeed, at least one current
provision in the Copyright Act was drafted in response to the threat of digital piracy. Section
30.2(5) allows inter- library distribution of analogue copies but specifically prohibits digital
copies from being distributed between libraries in order to prevent unlimited copying once the
works are outside of the control of the library. See Copyright Act, Section 30.2(5) (“… but the
copy given to the patron must not be in digital form”).

    As the federal government knows, Section 9(1)(c) of the Radiocommunication Act was
introduced to make it an offence to decode an encrypted signal without consent:

9(1) No person shall . . .
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10 Historically, Canadian copyright law has been inextricably linked to technological developments. Three examples
of this relationship are: (1) amending Section 3(1)(f) from “to communicate such work by radio communication” to
“to communicate the work to the public by telecommunication”; (2) including a definition of “computer program” in
Section 2 and expanding the definition of “literary work” to include “tables, computer programs, and compilations
of literary works”; and (3) the additions of Sections 67.1 and 70.1 et seq. to expand the collective administration of
performing rights and communication rights and the administration of other collective societies.
    The United States has a similar tradition. For example, the U.S. Supreme Court has stated, “From its
beginning, the law of copyright has developed in response to significant changes in technology. Indeed, it was the
invention of a new form of copying equipment – the printing press – that gave rise to the original need for copyright
protection. Repeatedly, as new developments have occurred in this country, it has been the Congress that has
fashioned the new rules that new technology made necessary.” Sony Corp. v. Universal City Studios, 464 U.S. 417,
430-1 (1984) (internal citations omitted). Significant examples of changing U.S. copyright law in response to
technology can be found in the Sound Recording Amendment of 1971, the revisions to Section 108 in 1976, and the
Audio Home Recording Act in 1992.
 

(c) decode an encrypted subscription programming
signal or encrypted network feed, otherwise than
under and in accordance with authorization from the
lawful distributor of the signal or feed.

For several years DIRECTV has attempted to combat the grey and black markets relating to
illegal reception of its signal in Canada, partly in reliance on this section. However, this section
has been the subject of intense litigation in Canada, with very mixed results and dramatically
divergent legal reasoning and may only be settled on appeal to the Supreme Court of Canada.11
While the federal government can amend Section 9(1)(c) to overcome any difficulties of
interpretation, DIRECTV believes that the Copyright Act provides an effective statutory basis to
deal with digital piracy.

    Although contract law has been suggested as an alternative, relying on contract law has
serious limitations. Although copyright owners can and should use contract law to impose
restrictions on use, much illegal activity occurs outside the privity of contractual relations. For
example, when underground pirates receive and sell unauthorized goods and services, owners
like DIRECTV are not parties to these transactions. Contract law is also less effective when
establishing liability rules applicable to other parties outside privity with the copyright owner,
such as ISPs. In the absence of a public right of action through copyright, the motivating force
of ISP liability will not assist copyright holders in protecting their rights.

    Significantly, excluding technological protection from copyright law forces private parties
to rely upon non-copyright causes of action to combat behavior that harms the interests of
copyright owners. If companies are forced to rely on non-copyright laws to enforce their rights,
there will be a misplaced incent ive to develop business models, distribution methods, and new
technologies that are tailored to permit relief under these laws. This is particularly important
because most non-copyright causes of action fall outside federal jurisdiction and may not be
uniform across Canada.

3. Canada Should Prohibit Both the Act of Circumvention and Trafficking in
Circumvention Devices

    Effective legislation must be broad enough to encompass all forms of conduct that are
contrary to the principles of, and rights attached to, copyright ownership in Canada.
Comprehensive legislation would prohibit both circumvention and trafficking in circumvention
technology because both acts threaten the rights of copyright owners and frustrate the legitimate
exercise of rights protected under the law. With regard to satellite television providers, such
legislation would prohibit the distribution of devices that are primarily designed to enable users
11 See, e.g., ExpressVu v. N1I Norsat, [1998] 1 F.C.J 245 (T.D.): F.C.J. No. 1563 (C.A.) in the Federal Court of
Canada in contrast to Bell ExpressVu Limited Partnership v. Rex [2000] B.C.J. No. 1803 in the British Columbia
Court of Appeal. Leave to appeal was granted to Bell ExpressVu on May 16, 2001 by the Supreme Court of
Canada. In the same appeal, DIRECTV was granted leave to intervene on September 11, 2001. Regardless of the
outcome of this appeal, pirates should not be allowed to defeat the expectations of copyright owners that are based
in copyright law.

to gain unauthorized access to a satellite broadcast signal, as well as circumventing access
control protections to receive the signal.

    As indicated in the Consultation Paper, other countries have reached different
conclusions in determining whether to prohibit trafficking, circumvention, or both. For example,
while Australia prohibits trafficking only, and Japan prohibits circumvention only, the United
States prohibits both acts. Contrary to the suggestion in the Consultation Paper that “the most
basic form of prohibition” would be an anti-circumvention provision and that an anti-trafficking
provision would be “at the other end of the spectrum,” DIRECTV believes that an anti-trafficking
provision is an essential and basic component of any technology protection
legislation.

    Although circumvention activities may lead more directly to an act of copyright
infringement, trafficking in circumvention devices causes more economic harm because the ease
of access to circumvention devices is a catalyst for widespread infringement activity.
Furthermore, an anti-circumvention prohibition may add little to existing copyright remedies
(because circumvention frequently involves or immediately leads to an act of copyright
infringement) while presenting the same practical difficulties found in applying traditional
copyright law principles in the digital era, such as the problem of identifying particular,
anonymous violations and the problem of inefficiently pursuing multiple actions. In the context
of satellite piracy, detecting anti-circumvention activities is as difficult as detecting acts of
infringement. Accordingly, an anti-circumvention provision, standing alone, would provide little
recourse against the plethora of Internet websites enabling in- home circumvention.
 
    Prohibiting trafficking in devices is both fair and consistent with the Copyright Act.
Indeed, the Copyright Act provides precedential support for this position: Section 27(4) makes it
“infringement of copyright for any person to make or possess a plate that has been specifically
designed or adapted for the purpose of making infringing copies of a work or other subject-matter.”
Copyright Act, Part III, 27(4). This Section prohibits conduct intended to facilitate
copyright infringement even if no actual infringement can be shown. It recognizes that there is
no legitimate purpose for possessing plates intended to make unauthorized copies. Of course,
Section 27(4) as currently drafted would not apply to all circumvention devices that permit
unauthorized uses, such as unauthorized performances. Thus, it is logical in the digital
environment to enact an analogous provision related to devices designed to permit any type of
unauthorized use.
 
    Fairness can be further ensured by limiting anti- trafficking violations in a manner similar
to the “specifically designed” limitation in Section 27(4). For example, Canada could follow the
United States’ example and limit violations to situations involving devices that: (a) are primarily
designed for the purpose of circumvention; (b) have only limited commercially significant
purpose or use other than circumvention; or (c) are marketed by a person for purposes of
circumvention. These conditions are significant because they impose a burden on the copyright
owner to establish a requisite condition before prevailing on an anti-trafficking violation and
they would only apply to copyrightable works that a copyright owner has taken reasonable or
effective measures to protect using technological methods.?12

    Furthermore, achieving a proper balance between the rights of copyright owners and end
users entitled to the exceptions under the Copyright Act is simpler in the context of anti-trafficking
legislation. The exceptions under the Copyright Act primarily govern the conduct of
educational institutions, libraries, archives and museums and relate primarily to circumstances
where unauthorized copying is permissible. Although anti-circumvention laws may cover such
conduct if the works are protected by access-control technology, anti- trafficking laws would not
render such institutions liable since they do not traffic in circumvention devices. Similar
exemption issues in the anti-circumvention context led the U.S. Congress to delay
implementation of its anti-circumvention law for two years in order to allow continuing
government study of non- infringing uses. But the U.S. immediately implemented its anti-trafficking
law.

    Finally, with regard to the anti-trafficking provision, DIRECTV believes that criminal
liability should apply where individuals willfully distribute circumvention devices for
commercial gain. Without criminal liability, the general deterrent effect of the anti-trafficking
prohibitions will not be as strong. Adding possible criminal sanctions to the civil remedies
prevents those who would engage in such trafficking from adopting a simple strategy of
economic cost-benefit risk. The decision to act illegally should carry with it the risk of criminal
conviction.

4. Legislation Can be Harmonious with Existing Canadian Copyright Law,
Including its Exceptions

    DIRECTV recognizes that any new laws must be harmonious with existing Canadian
copyright law, including its exceptions. Although a complete examination of the intersection
between the proposed changes and existing copyright law is beyond the scope of this submission,
the following analysis of significant doctrines of Canadian copyright law demonstrates that
harmony can be achieved.
 
    A fundamental doctrine of copyright law is that copyright owners have the right to
determine when their works are initially provided to the public and then sub sequently made
available for further exploitation. See Copyright Act, Parts I & II. The proposed legislation
would bolster this doctrine by strengthening a copyright owner’s technological right to control
exploitation in the digital environment, especially with regard to access to satellite television
programming. Moreover, modernizing this exploitation right fully promotes the Canadian
government’s public policy objective of fostering the dissemination of copyrighted works. The
proposed legislation would enable content providers to increase the dissemination of copyrighted
works to Canadian citizens through efficient methods of digital and satellite distribution,
widening the choices and lowering the costs for Canadian citizens.
 
    The Consultation Paper expresses the Department’s concern that prohibitions on
circumvention and trafficking could potentially “block all types of access and use, whether or not
they constitute infringement of a copyright.” Consultation Paper, at p. 16. The Consultation
Paper also raises the question as to whether allowing content providers the freedom to control
access would amount to a fundamental shift in Canadian copyright law. In reality, the
fundamental shift has already occurred to the detriment of the copyright owner: through?13
technological developments, citizens now have the unlimited ability to access and use
copyrighted materials in ways unintended or unauthorized by the copyright holder. Amending
copyright law would simply restore the equilibrium that existed before digitally networked
environments created the epidemic of digital piracy.

    Moreover, it is not foreseeable that copyright providers will begin blocking all types of
access and use in a way harmful to Canadian residents. First, copyright owners will continue to
release their works in multiple formats, not all of which will be protected by technology. For
example, the copyright owner of a novel will likely release the book in paper version and in
digital “e-book” version. Only the digital version will be protected by technology, allowing
traditional and acceptable access and use of the paper version to continue. Secondly, and more
importantly, copyright owners have no economic incentive to block all types of access and use.
Indeed, copyright owners are generally interested in allowing certain types of access and use, but
only on conditions that are fair to the copyright owner. One clearly unfair and unacceptable
condition is the global, costless, unlimited and anonymous access and use that can result when
digital works are placed on the market. In between these poles of “no access” and “unlimited
access,” conditions for acceptable uses are best determined in an open marketplace. Even if
Canada adopts legislation that fully protects technological measures employed by copyright
owners to limit access, copyright owners will not be able to sell products whose use is restricted
so as to prevent consumers from full enjoyment of the work.

    Any Canadian technology protection legislation should be crafted to incorporate well-established
exceptions and limitations, including finite term, public domain, fair dealing,
educational institutions, libraries, archives and museums, incidental inclusion, and others. In
some respects, anti-circumvention legislation would automatically be consistent with existing
limitations, such as finite term and public domain, because it would only prohibit circumventing
access to works protected by the Copyright Act. Works that enter the public domain or finish
their term would not be “protected” by the Copyright Act any longer, thus making the anti-circumvention
restriction inapplicable to those works. Other existing exceptions could be
preserved as exemptions to violations on circumvention and trafficking.

    Importantly, the exceptions in the Copyright Act have never been interpreted as positive
obligations on copyright owners. Copyright owners are, and should be, solely entitled to control
distribution and exploitation of their works (unless the copyright owner has availed itself of
protection under Part VII’s provisions on copyright collectives). For example, the private
copying regime in Section 80(1) does not provide an enforceable right of access. This regime
simply categorizes certain copying as “not constitut[ing] an infringement.” Likewise, the “fair
dealing” exception in Section 29 et seq. does not provide an enforceable right of access. For
example, a publisher may provide an advance copy of a manuscript to a critic and the critic’s use
would likely constitute fair dealing. But the publisher is not (and should not be) affirmatively
required to provider the critic with access to or use of an advance copy of the manuscript. If the
critic breaks into the publisher’s office to takes a copy, his theft of the manuscript in order to
make critical use of the material therein is not authorized. Similarly, a movie studio need not
admit patrons for free, even if they just want to watch several minutes of a film. The same
reasoning should be true for “pay per view” programming transmitted through a satellite signal.
The satellite broadcaster, like DIRECTV, need not make the copyrighted programming?14
contained therein available to the world so that the world can make fair use. Instead, it can
control access to copyrighted programming to paid subscribers, even if a non-paying subscriber
would only like to intercept the signal, for example, in order to write a critical essay on the works
of William Shakespeare.12

    Moreover, several exceptions do not apply if copyright owner has made the work
“commercially available in a medium that is appropriate for the [otherwise protected] purpose.”
Copyright Act, Part III, 29.4(3) (fair dealing) and 30.1(2) (libraries, archives and museums).
This statutory language indicates a clear intention to allow the open market to determine
acceptable access and use, as well as an acknowledgment of the reality that a work can exist in
multiple media and should be treated accordingly. Because permitting a copyright owner to be
solely entitled to explo it his works is deemed consistent with the current limitations and
exemptions in the Copyright Act, existing Canadian defenses and limitations need not and should
not be changed to impose affirmative obligations on copyright owners to permit access. Rather,
such exceptions should continue to exist as defenses to copyright infringement and should also
be extended to violations of circumvention and trafficking, according to the same exacting
conditions that exist in the Canadian Copyright Act. That is, a circumvention performed in order
to make an excepted use under the Copyright Act, would not create liability. Similarly, the
distribution of a circumvention device to an educational institution for an authorized use could be
permitted, while the widespread distribution of such a device would be prohibited. The burden,
however, must remain on the trafficker to show that the distribution was for purposes of a
recognized exception. The ubiquitous general disclaimer that use of a device is for “educational
purposes only” (see Exhibits A, M and N) should not suffice as a defense.
 

IV. INTERNET SERVICE PROVIDER LIABILITY

    The Framework acknowledges that another crucial aspect relating to digital piracy is the
circumstances under which Internet Service Providers (ISPs) should be held liable for the
transmission and storage of copyrighted material when their facilities are involved. Framework,
at p. 6. The Consultation Paper supplemented this acknowledgment with specific questions
related to the functions and concerns of extending a liability regime to ISPs.
 
    Although DIRECTV understands the concerns of ISPs because its sister company
DIRECTV Broadband, Inc., functions as an ISP in the United States, DIRECTV endorses a
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12 Other appropriate limitations could be drawn from other nations’ approaches to the WIPO Treaties. For example,
when crafting the DMCA, the U.S. Congress carefully considered appropriate exceptions to and exemptions from
liability for circumvention and trafficking violations. The DMCA eventually included several defenses for, among
other activities, researching encryption, reverse engineering of products, achieving inter-operability between
computer systems, protecting minors, testing security, immunizing certain activities of nonprofit institutions, and
protecting personally identifying information. Moreover, the DMCA is subject to an on-going administrative rule -making
proceeding that allows government review, study and revision. The DMCA has also been (and will continue
to be) subject to interpretation and change by U.S. courts and perhaps even further review by the U.S. Congress.
Thus, the DMCA has developed and will further develop into a flexible law capable of responding to opportunities
and problems presented by the digital era. In this respect the DMCA resembles Canadian copyright law in that it “is
a work in progress.” Framework, at p. 1.

notice and take down system, with concomitant liability to ISPs who fail to act upon receiving
proper notice, because such a system is integral to combating digital piracy and to avoiding
unduly burdening ISPs. Furthermore, it is essential that such liability extend to ISPs who host
websites that traffic in circumvention tools. Of course, ISPs deserve certain safe harbor
protections (which the Consultation Paper acknowledges in its discussion of “notice and
takedown” procedures). But, as recognized in the DMCA, a notice and takedown scheme is
necessary because: (1) ISPs benefit financially from hosting websites; (2) ISPs can, to some
extent, supervise and/or control the operation of sites on their network (upon receiving
appropriate notice of illegality); and (3) ISPs share responsibility for such conduct and should be
obligated to help copyright owners enforce their rights. In the absence of a clear Canadian
liability scheme that mirrors the rules of other nations, pirates will flock toward Canadian ISPs,
turning Canada into an Internet safe haven for pirates. As noted earlier, DIRECTV has already
witnessed this migration. (See p. 8, infra)

V. CONCLUSION

Canada should pass legislation protecting technology in order to induce and protect the
creation of digital content, services and businesses. Protecting technological measures is both
fair and necessary. It is fair because copyright law has traditionally guaranteed owners the right
to control the reproduction and distribution of their works. It is necessary because in the absence
of technology protection legislation, that right is imperiled. Notwithstanding its ability to bring
copyright infringement actions on its own, or in conjunction with its content providers,
DIRECTV faces a significant threat from the unfettered distribution of devices designed to
circumvent DIRECTV’s access control system. Unilateral action by the United States to outlaw
these devices has proven of limited use when satellite pirates can move to the safe haven of
Canada to continue to profit from their circumvention activities. Enacting legislation forbidding
such activity is consistent with Canadian well-established policy objectives and will move
Canada’s intellectual property regime to the forefront of the digital age.

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Exhibit A:  www.testcard.net/index.asp
Exhibit B:  www.huheadquarters.com
Exhibit C:  www.rrtechnology.com/faq.htm
Exhibit D:  attached above
Exhibit E:  www.viperplus.com/main.html
Exhibit F:  www.satansplayhouse.com/hardware/hucards.html
Exhibit G:  www.cansat.net/
Exhibit H:  www3.sympatico.ca/hucanada/
Exhibit I:  www.classicclones.net/clclones.html
Exhibit J:  www.hostingdss.com/about.shtml
Exhibit K:  www.kuro5hin.org/story/2001/6/30/01625/2723
Exhibit L: www.dsschat.com/forum/showthread.php?s=19883d98203eb8d5966a286d2d477537&threadid=84954
Exhibit M:  http://www3.sympatico.ca/hucanada/disclaimer.htm
Exhibit N:  www.dsstoys.com/main.html and the "store policy" for that website