ARCHIVED — A SIIA

COPYRIGHT REFORM PROCESS

REPY COMMENTS

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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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Reply comment from Software & Information Industry Association (SIIA) received on October 22, 2001 via e-mail

Subject: SIIA Comments on consultation Paper on Digital Copyright Issues

PDF Version

(address, telephone and FAX numbers removed)


October 22, 2001

Comments - Government of Canada Copyright Reform
c/o Intellectual Property Policy Directorate
Industry Canada
235 Queen Street
5th Floor West
Ottawa, Ontario
K1A 0H5

Re: SIIA Comments on Consultation Paper on Digital Copyright Issues

Dear Sir/Madam:

In response to the request for comments by Industry Canada and the Department of Canadian Heritage regarding possible amendments to the Canadian Copyright Act with respect to the issues described in the Consultation Paper on Digital Copyright Issues the Software & Information Industry Association ("SIIA") hereby submits the following comments on behalf of its Canadian members.

SIIA is the principal trade association of the software and information industry and represents over 1,000 high-tech companies that develop and market software and electronic content for business, education, consumers, the Internet, and entertainment. We have members in over 40 countries, including Canada. Some of the Canadian companies we represent include Corel Corp., Brainium Technologies Inc., RightsMarket, Inc, and Softchoice Corp, to name just a few.

SIIA's comments below focus on three main topics presented in the Consultation Paper: (1) digital issues, including issues relating to the protection against circumvention of technological protection measures and the integrity of rights management information, and ISP liability; (2) database protection and (3) technology-assisted learning.

I. Digital Issues

SIIA members represent a wide range of business interests. They create and publish software and information products and services as well as other content. As such there are at least two things they have in common: they are owners of intellectual property and they have had their intellectual property infringed or stolen by someone at some time. It should therefore come as no surprise, that SIIA members have an interest in ensuring that their intellectual property is protected against theft and that they have at their disposal legal and technical tools to enforce their intellectual property rights. This is especially true in digital environments, like the Internet, where copyrighted content can easily and inexpensively be copied and transmitted to millions of people, thereby destroying the value of the content.

Piracy of intellectual property poses a significant threat to us all. Widespread piracy stifles commercial and academic creativity and inventiveness and discourages the dissemination of copyrighted products and services. For the owner of a copyrighted work the loss is immediate and dramatic. The loss of revenues caused by copyright piracy adversely affects the owner's ability to pay the salaries of its employees and to engage in research and development to create new products and services. Moreover, the expense and time involved in litigating against pirates further burdens copyright owners. This is particularly devastating to small, innovative companies whose products are often most in demand, but who operate with limited revenues.

For the user of these pirated products and services, the consequences can also be severe. Often the pirated product is faulty or incomplete, and there is no recourse to the consumer for customer support or refund of money spent. If left unchecked, copyright piracy will force producers to limit employment, cut back on purchases of goods and services, and increase prices in order to maintain a market for quality products, eventually leading to a lower standard of living for us all. It is, therefore, essential that Canadian copyright law adequately and effectively protect the interests of copyright owners in preventing and taking action against piracy.

SIIA members also create and develop new and valuable technological protections (such as digital rights management technologies), use these technologies to protect their proprietary content, and purchase or license software and information products and other content and services that utilize technological protections. Consequently, SIIA members are extremely interested in "digital issues" relating to the legal protection and use of technological protections, such as encryption and other access-control technologies, and rights management systems used by copyright owners to protect their works and the relationship between legal protections prohibiting the circumvention of technological measures and research and development activities relating to these measures.

Several of the digital issues addressed by Consultation Paper on Digital Copyright Issues have already been considered in the international arena. In 1996, the WIPO Copyright Treaty was adopted by WIPO members states. SIIA believes that the WIPO Copyright Treaty takes a correct approach to these digital issues and, we, therefore, support Canada's prompt ratification and implementation of the Treaty. Implementation should include amending the Canadian copyright law to provide for protection of access-control and "copy-control" technological protections used by copyright owners to protect their works and protection of the integrity of rights management information. Although not specifically required by the WIPO Copyright Treaty, any legislation should also include appropriate limitations on the liability of Internet Service Providers for copyright infringements engaged in by their customers, users and subscribers.

For ease of discussion and constancy with the Consultation Paper on Digital Copyright Issues, we have divided our discussion of the digital issues into three separate categories: (1) access-control and "copy-control" technological protection measures; (2) rights management technologies; and (3) Internet Service Provider (ISP) liability.




A. Access-Control and "Copy-Control" Technological Measures

As recent as twenty years ago, the Internet did not exist, most consumers had not heard the term "software," digital content was unknown except to a few, and consumer electronics referred to radios, alarm clocks and turntables. But in the last twenty years, the ways that we as a society learn, communicate, conduct business, purchase goods and services, and entertain ourselves have fundamentally changed - all because of emerging new technologies, such as the Internet.

In fact, it has only been in the last several years that consumers could tap into the vast resources increasingly available on public and private networks. And it is only in that short time frame that businesses, schools and universities, governments and individuals have begun to provide a wide range of products and services to previously unreachable audiences.

Consumers and businesses are learning and growing together. The Internet is perhaps the most competitive marketplace today - one in which consumer demands are clearly and quickly communicated and businesses are able to respond in kind. With the speed of technology, companies are able to address new market needs rapidly and effectively.

The notion of trust in electronic commerce is of critical importance and applies to both consumers and businesses. From securing sales to the handling of personal data to certifying transactions and individuals, trust is the underlying issue that will determine whether electronic commerce reaches its full potential. That trust must be instilled first in copyright owners. If these copyright owners are expected to make their proprietary content available over the Internet, one must recognize the risks associated with placing their property in an environment where it could be stolen, and an infinite number of exact copies can be distributed worldwide. Therefore, if electronic commerce is going to thrive, rights holders must be able to trust that their proprietary digital content will be safe and secure in the network environment. In the long run, this trust will benefit consumers, who will have more products to choose from, and the added convenience and flexibility of access through electronic licensing.

One way a sense of trust can be established in the e-commerce environment is through the use of technological protection measures. SIIA firmly believes that through the deployment of market-developed technological measures, many of the concerns of the copyright owner and user communities can be most effectively addressed.

Perhaps the most promising technological protection measure is encryption technology. Encryption technology allows the users of such technologies to control access to their proprietary materials. While encryption technology-like any other technological solution-will prevent a certain amount of piracy, it is not 100% effective. Because piracy tools that circumvent and disable encryption technologies and other technological measures are widely available, mere use of technological protection measures is not a complete solution.

Another significant part of the solution is the enactment of appropriate legal protections that encourage copyright owners to make their proprietary materials accessible online and adequately punishes those who run afoul of these protections. To restore the balance upset by piracy tools, the legal protections afforded to copyright owners must, with appropriate exceptions, provide effective legal remedies against unauthorized circumvention of technical protection measures and manufacturing or trading in certain tools that permit such circumvention. With passage of the Digital Millennium Copyright Act (DMCA) and the EU Copyright Directive, copyright owners now have these remedies at their disposal in the United States and Europe.

We, therefore, urge amending the Canadian Copyright Act to include provisions that prohibit, with appropriate exceptions and limitations, the act of circumventing technological protection measures to gain unauthorized access to copyrighted works and the trafficking in anticircumvention tools that permit unauthorized access or unauthorized activity (such as copying) that implicates the copyright owner's rights. Both civil and criminal remedies should be available against those who violate either of these anticircumvention prohibitions. The combined force of the availability of encryption technologies and prohibitions that protect against acts of circumvention and trafficking in circumvention tools, likely will reduce fears of rampant downstream piracy sufficiently to encourage copyright owners to make their works available to others online.

The prohibition against the act of circumvention should prohibit such acts as the use of a bootleg password or "crackz" application to gain unauthorized access to a pirate copy of computer software.

Because of the risk of potential over-exclusion of devices, the prohibition against trafficking should apply only to those technologies, products, services, devices, or components that: (1) are primarily designed or produced for circumvention purposes, (2) have only limited commercially significant purpose or use other than to circumvent, or (3) are marketed for use in circumventing a technical protection measure that effectively controls access to a work. Essentially this is the same test adopted by both the United States and Europe. By limiting the prohibition in this manner the risk of inadvertently prohibiting an otherwise legitimate device is reduced.

Significantly, the anticircumvention prohibitions should also include certain limitations. In particular, there should be an exception to permit a person to circumvent encryption implemented as a technological measure applied to a published work in the course of good faith encryption research when certain conditions are met. Exceptions for reverse engineering of software and security testing are also appropriate. Other narrowly-tailored exceptions, such as for law enforcement activities and to address privacy concerns, may also be appropriate. It is essential that these exceptions be specific and strictly confined to address the particular concern in order to ensure that an exception is not used in a manner that undermines the purpose and intent of the prohibition itself.

Any anticircumvention provision should also make clear that it does not require that the design of a consumer electronics, telecommunications, or computing product provide for a response to any particular technological protection. Whether a consumer electronics, telecommunications, or computing product affirmatively recognizes any particular technological protection should be determined by the marketplace, not by government intervention.

Finally, we disagree with those who claim that anticircumvention provision discussed above would amount to a new "right of access." In the offline world, physical limitations constrain access to the same extent, if not more, than any technological protection. After all, a person cannot watch a movie at the theater without purchasing a ticket. Nor can a person break into a bookstore to take a book. If a person attempted to do either of these, they would be violating the laws against trespass and/or breaking and entering. There need to be laws to protect technological protections in the online environment just as there are laws to protect these physical protections in the offline environment.

B. Rights Management Information

Rights Management Information (RMI) is an important element in establishing an efficient Internet marketplace in copyrighted works. As such, SIIA believes that it is essential for the Canadian Copyright Act to protect the integrity of such information. As set forth in the WIPO Copyright Treaty, RMI is information used to identify a copyrighted work (including numbers, symbols, and links to the work or to the RMI), the author of the work, the copyright owner, terms and conditions for use of the work, and other relevant information when any of the aforementioned information is conveyed with a copyrighted work.

The law should prohibit intentional removal or alteration of RMI as well as the distribution, importation, or public performance of works in which RMI has been knowingly altered or removed without the authority of the copyright owner or the law. Both these prohibitions are required by Article 12 of the WIPO Copyright Treaty.

The law should also make it is illegal to knowingly provide false RMI or to distribute or import false RMI with the intent to induce, enable, facilitate, or conceal infringement. Notably, inclusion of the "knowingly" standard with regard to provision of false RMI should adequately address any concerns about the RMI provision inadvertently prohibiting good faith alterations of RMI for the purposes of correcting inaccuracies in the RMI. Both civil and criminal remedies should be available against those who violate either the RMI prohibitions.

In response to question two on page 24 of the Consultation Paper, SIIA does not believe that it is appropriate to limit the protection of RMI to terms and conditions that may be invalid in Canada as contrary to public policy. Such a limitation would be beyond the scope and intent of the protection. The goal of RMI protection is ensure that consumers are given the information about a work that the owner of that work intended to provide to consumers when they purchase or license that work. The RMI provision is not intended to certify or endorse a copyrighted work, the manner in which that work may be made available to consumers, or the RMI itself.

In response to question five posed on page 24 of the Consultation Paper, SIIA does not believe that protection of RMI creates any particular non-copyright issues, such as privacy. After all, the use of RMI should be voluntary. It is up to the author or copyright owner whether to include RMI and, if so, what type of RMI to include. Moreover, the RMI provisions would not address "use" of the RMI itself, only the deletion or alteration of the RMI.

C. ISP Liability

In the ordinary course of their operations Internet Service Providers (ISPs) must engage in all kinds of acts that expose them to risks of potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting content and other information over the Internet. Certain electronic copies (i.e., "cached copies") are made to speed up the delivery of information to users. Other electronic copies are made in order to host websites. Further, many ISPs engage in directing users to sites in response to inquiries and/or search parameters by users or they volunteer sites that users may find interesting. Some of the sites - and therefore some of the copies - may contain infringing material.

By limiting the liability of ISPs through a "notice and takedown" system and "safe harbors" for ISPs, Canadian copyright law will help ensure that the efficiency of the Internet will continue to improve and the variety and quality of services on the Internet will continue to expand. It will also facilitate the making of copyright content available on the Internet quickly and conveniently.

Incorporating a "notice and takedown" system into Canadian copyright law will enable ISPs and copyright owners to work together to make the Internet safe for copyright owners to post their copyrighted content without undue risk of copyright infringement liability. Upon receipt of a "notice" of infringing material from a copyright owner, the ISP may immunize itself from liability by expeditiously removing the alleged infringing material or disabling access to it (i.e., "takedown" the material).

The notice should, at least identify the copyright claimant and the infringing material or activity as well as, to the extent possible, the location of the infringing material. The notice should also include a sworn statement to ensure that the statements made in the letter are accurate and true. Finally, the notice should be sent to the person designated by the ISP to accept such notices.

The names of those persons designated by ISPs to receive notices under this "notice and takedown" regime should be maintained by the appropriate government agency or agencies and be made publicly accessible on the Internet. An ISP should not be able to avail itself of the "safe harbors" unless it identifies a designated agent with such agency or agencies.

The "safe harbor" should be limited to four activities engaged in by ISPs: (1) transmitting, routing, and providing connections to infringing material (commonly referred to as "mere conduit" activities); (2) system caching; (3) information stored by a user (commonly referred to as "hosting" activities); and (4) linking or referring users to infringing material (commonly referred to as "linking" activities). The law should also shield ISPs from other types of liability that might result when an ISP takes down material in good faith belief that such material is infringing, either in response to a notice from the copyright owner or on its own accord.

These four safe harbors should be available only when specific conditions applicable to each are met and the ISP meets several threshold requirements. As to the specific conditions that attach to each safe harbor, SIIA believes that the conditions set forth under U.S. law achieve the appropriate balance. As to the threshold requirements, these should include designating an agent (as discussed above), informing subscribers of their responsibility to comply with copyright laws, adopting and implementing policies and procedures to terminate the accounts of repeat infringers in appropriate circumstances, informing subscribers of these policies and procedures, and accommodating and not interfering with "standard technical measures" used by copyright owners to protect their works online.

Finally, SIIA believes that it is essential for the law to provide a pre-judicial procedure, such as subpoena, to allow copyright owners to obtain information from an ISP that would allow the copyright owner to identify the alleged primary infringer.

II. Database Protection

SIIA counts among its members the majority of the world's database producers, including the McGraw-Hill Companies, Reed-Elsevier, Inc., and The Thomson Corporation (all of which have a Canadian presence), as well as many small and medium-sized entities. SIIA also represents the interests of a large number of other organizations whose primary business lies outside the area of database production, but that nevertheless provide valuable databases as an aspect of their operations-the securities and commodities markets being prime examples of these types of organizations. These companies, and many other SIIA members, are extremely concerned about the lack of adequate protection provided to Canadian databases under the Canadian copyright law.

In the Information Age, data-particularly its collection and organization-is of increasing importance, and the potential customer base is growing. The value of databases to researchers, business professionals, government officials, and everyday citizens is immeasurable. It is not an exaggeration to say that at any time of the day someone in the world is using a database in order to make a decision and to do so quickly and confidently. As digital networks proliferate and the cost of tools necessary to access and use them decreases, the demand for accurate and reliable databases will only grow.

In the digital and print environments, the demand for databases that are complete, current and correct has increased dramatically. Without such databases, e-commerce and for that matter all commerce, as well as education and research, would be severely hampered. At the same time the risk and instances of database piracy -- especially over the last few years -- has escalated. It is easy and profitable for a pirate to take all or the most valuable part of an existing database and market it as its own, often in direct competition with the original developer. This fact sharply reduces incentives to make the substantial investments needed to compile, maintain, market and disseminate databases on which Canadian consumers, business people, researchers and scientists rely.

The scope of copyright protection under the Canadian Copyright Act is set forth in the 1997 Federal Court of Appeal case of Tele-Direct (Publications) Inc. v. American Business Information Inc.. In that case, the court held that a database is protected under Canadian copyright law only if it is "original," which is established by proving that the database includes elements of "creativity." If the database is sufficiently creative, only those elements of the database that are considered to be creative are protected by copyright. The court held that this was necessary in order to fulfill the intent of the North American Free Trade Agreement (NAFTA) amendments of 1994. Significantly, this court rejected those cases granting copyright protection to databases based on the "industriousness" or "sweat of the brow" of the database producer, holding that labor alone is insufficient to render a database protectable under Canadian copyright law.

The result of this decision creates an unsettling result. The most valuable, user-friendly databases may not be protected by copyright law if there is found to be no creativity in their selection or organization. If a database is in a logical order, so that consumers can more easily access the information contained in the database, the database may not be sufficiently creative. Similarly, if the database is in no order at all, and the information is presented to the consumer based on parameters established by the consumer, the database will likewise not be protected under Canadian copyright law for lack of creativity.

Interestingly, a database whose order is awkward and difficult to use, will likely be protected by copyright law, because it will be considered to be creative. This is not the type of incentive we want to provide to Canadian database producers. Canadian database providers should be encouraged to create useful, valuable databases for Canadian consumers. If the Canadian copyright law cannot achieve this goal, then there ought to be other Canadian law that database providers can rely upon to protect misappropriation of their investments in creating and distributing their databases. Unfortunately, there is no such "other protection," which further exacerbated the lack of any adequate protection under Canadian copyright law.

The solution to this problem is to enact a law against database piracy. Current laws and technological protections have a role to play, but fall well short of providing the confidence needed to encourage investment in creating, maintaining and disseminating databases and in making them easy to use. The void can be filled by a federal anti-misappropriation statute that defines and treats database piracy as a type of unfair competition. Such a statute should be drafted to respect the legitimate interests of database users and the general public as well.

The core of the new law should be a general prohibition against database piracy. The prohibition should be carefully focused on instances in which database piracy threatens to create unfair competition. This new law should not expand copyright or create new exclusive rights in the databases. Nor should it lock up the information itself. The law should merely protect database producers from free-riders who take their databases and make them available in a way that hurts their businesses.

More specifically, we propose that under a new database law, to establish a cause of action, the plaintiff should have to prove that: (1) the database producer invested a significant amount of monetary or other resources in gathering, organizing or maintaining the database; (2) a third party took all or substantial part of the database; (3) the third party made the database, or a substantial part of it, available to another person without the database producer's authorization; and, most significantly; and (4) the unauthorized act of making the database available materially harms a market for or value of the database.

The four requirements set out above -- coupled with appropriately-tailored exclusions and exceptions -- creates a well-balanced standard that provides the incentive for database producers to create and disseminate new, valuable databases to the public while recognizing the legitimate interests of databases users. The law should make clear that the making available of information that is independently obtained and not extracted from the plaintiff's database is not prohibited and that the mere using of facts taken from a database is not prohibited, provided a substantial part of the database is not being made available. The law could also provide exceptions for reasonable uses of databases for limited purposes such as teaching, research, analysis and criticism, as well as appropriate uses by nonprofit educational, scientific and research users and reporting of important database information by the press.

There are numerous benefits to enacting a database law that protects Canadian database producers from database piracy. Most notably, enacting a new database law would promote international trade by putting Canadian database companies on equal footing with their EU counterparts. In 1996, the countries of the European Union ("EU") finalized a Directive on the Legal Protection of Databases ("Database Directive"). The Directive requires each of the EU member countries to implement laws that protect against database piracy. The Database Directive, however, precludes these countries from extending protections to any databases produced outside the EU, unless the country where the database was produced provides "comparable protection." Because Canada has no comparable protection, databases produced by Canadian companies are not protected in the European Union. The inequity between the legal protections in Europe and the Canada has placed Canadian database producers at a serious competitive disadvantage in the
huge European market.

For example, David Brooks, a computer programmer from Toronto, created a comprehensive and carefully constructed Vincent van Gogh Gallery. Over the past five years, Mr. Brooks painstakingly scanned and digitally mounted reproductions of every one of van Gogh's 2,200 paintings, sketches, watercolors and drawings, often searching through obscure auction catalogues to find the best possible images. He also included the texts of all of the artist's 864 surviving letters. The site was praised by the Van Gogh Museum in Amsterdam because of its comprehensiveness.

Mr. Brooks, like may database producers, found that his database had been misappropriated and re-posted it without his permission. The person who appropriated Mr. Brook's van Gogh database, Ernst Coors, an entrepreneur from Amsterdam, admitted that the database images were taken from Mr. Brooks website, but he refused to remove the database of images because they were not protected by copyright. Moreover, because Canada does not provide reciprocal protection, Mr. Brooks' database is not protected by the EU Database Protection Directive in the Netherlands.

As alluded to above, a new database protection law would also spur e-commerce in Canada. In the current environment, e-business companies find themselves having to decide whether they should continue to allow open and free access to their databases on the Internet. Other e-businesses have decided, at the outset, not to make their databases available on the Internet, for fear that they will be stolen by unscrupulous database pirates. Sui generis database protection would encourage database producers to make their compilations widely available by providing database compilers with legal recourse against those whose appropriate their databases. The indirect beneficiaries of this protection are consumers and Internet users who will have access to a wider variety of databases. A new law would also encourage those already in the business of creating databases to expand their product line. This can only result in the creation of many new databases for the public to enjoy and use. Finally, by providing database
compilers with a legal means to pursue database pirates, incidents of piracy should abate and consequently so shall incidents of consumers getting incorrect and our-of-date information. Thus, it is in the interest of database producers and users throughout Canada to enact legal protection prohibiting database piracy.

III. Technology-Enhanced Learning

Many of SIIA's member companies are partnering with educators to provide the software tools and digital curriculum necessary to improve teaching and learning through web-based distance education and other technology applications. In fact, SIIA views education as one of the most important applications of Internet technology. We want to ensure its success and have been instrumental for many years in advocating and shaping programs so important to bringing the benefits of technology to schools and students. SIIA has long backed efforts to adapt new business models and technologies to education, and we appreciate the goal of adapting related policies in light of the resulting changes to distance education. At the same time, we are concerned that changes in Canadian copyright law might adversely affect the market for software and information products and services -- especially those published for the educational marketplace.

Distance education has been around for a long time. Over the years, as new technologies and business practices have evolved distance education has grown and adapted. Most recently, the advent and accessibility of the Internet and other digital distribution systems provide educators with vast opportunities to create and implement new methods of providing educational instruction to students regardless of their location. It also provides copyright owners with new ways to make their copyrighted materials available to these students. New licensing mechanisms and technologies for protecting against unauthorized uses of copyrighted materials by students are being developed to meet the latest distance education challenges and should allow distance education to prosper.

Through our experiences and that of our members, SIIA has found little evidence that the Canadian Copyright Act require reform to account for technology-enhanced education. While in its relative infancy, web-based distance education is thriving across all sectors of education and training. Such rapid growth in the area of distance education is due in large part to the wide spread availability of content through various license mechanisms and new technologies to deliver it anytime and anywhere.

While a handful of examples exist where educators have faced hurdles obtaining permission to use content in this relatively new environment, these cases are either the result of unfamiliarity in a new medium or are beyond the scope of Canadian copyright law. We therefore do not believe there is a need to alter Canadian copyright law to account for technology-enhanced learning. Instead, we urge a general reliance on the flexibility of the marketplace to enable the maturation of this dynamic and relatively new web-based learning environment. With web-based models for the distribution of all content experiencing significant growing pains any rush to legislate in this area would significantly harm content owners and therefore weaken the market for much of the content upon which educational institutions rely.

With the combination of technology, innovative licensing practices and effective current legal protections, the marketplace for digital distance education will develop into a balanced environment in which copyright owners feel comfortable making their proprietary educational materials available online and students enrolled in accredited nonprofit educational institutions have access to a wide variety of educational materials.

In closing, we would like to once again thank Industry Canada and the Department of Canadian Heritage for providing us an opportunity to file these comments. If we can provide any supplemental information or clarify any of our comments please do not hesitate to contact us.

Sincerely,



Ken Wasch
President



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