Canadian Reaction to GOC's Proposed Copyright Law Amendments

UNCLAS SECTION 01 OF 03 OTTAWA 001168

SIPDIS

DEPT PASS USTR FOR CHANDLER AND ESPINEL
4320/ITA/MAC/WH/ONIA/ for GWORD

E.O. 12958: N/A
TAGS: KIPR ETRD ECON CA
SUBJECT: Canadian Reaction to GOC's Proposed Copyright Law Amendments

REF: 04 OTTAWA 893


1. (U) Summary: On March 24th, GOC released its highly
anticipated response to the 2002 Heritage Committee report on the
need for copyright reform. Many Canadian observers had hoped that
the GOC's recent announcement would adequately address remaining
IPR questions, but the government's goals for proposed legislation
appear to fall short in key areas such as ISP liability and
technological protection measure (TPM) circumvention: GOC is
proposing 'notice and notice' rather than 'notice and takedown'
and the proposed definition of TPM circumvention may require that
rights holders prove the circumvention was with the intent to
infringe. Overall, however, Canadian stakeholders are unable to
clearly judge the impacts of the proposed amendments because the
legislative text is not available and the details of the
legislation will be critical. We expect renewed lobbying after
the draft text of the legislation is available. End Summary.

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The Devil's in the details, and he won't hold still
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2. (U) We have spoken to a number of Canadian IPR stakeholders,
including the Canadian Recording Industry Association, the
Canadian Motion Picture Distributors Association, the Canadian
Publishers Council, and the Entertainment Software Association to
get their views on the substance of the GOC's announcement of
intent to table broad legislation this spring to comply with WIPO
obligations and address a number of other IPR issues. The draft
text of the legislation is not yet available, and Embassy contacts
suggest that it may be a long time coming; one senior official
suggested that the GOC will not table a draft before June. All
reactions to the proposed amendments thus far are based on three
documents released by GOC in late March: a backgrounder, a
statement, and a series of frequently asked questions. These
documents are often vague, and industry analysts fear that the
devil may be in the details that have not yet been drafted. For
the GOC's full documentation on proposed amendments, see
http://strategis.ic.gc.ca/epic/internet/incrp -
prda.nsf/en/rp01140e.html.


3. (U) Even between the three released GOC documents, there are
differences. For example, the GOC's Backgrounder and FAQ clearly
state that circumvention of TPM or alteration of rights management
information (RMI) would constitute an infringement of copyright
when done with intent to infringe, but the GOC's Statement seems
to imply that 'enabling' infringement would also be illegal.
Industry analysts who sought to clarify this difference have told
us that they received contradictory answers depending on which
agency they asked (Comment: Both Heritage Canada, which has
traditionally supported IP rights holders, and Industry Canada,
which tends to side more with free-use rights and promotion of new
technologies, have responsibility for the content of this
legislation, which will be drafted by Justice Canada. Frustrated
industry analysts have described the relationship between the two
policy-making agencies as dysfunctional, with Industry holding de
facto veto power and Heritage over-willing to compromise. These
observations are supported to some extent by Embassy experience
with the agencies: at an IPR meeting hosted by the Embassy in
December 2004, Heritage representatives seemed far more eager to
move on the issue. End comment.)

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Even hidden, the Devil scares rights holders
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4. (U) What details can be found in the GOC's documents have
rights holders associations alarmed. Various interlocutors have
mentioned two items in particular as particularly threatening to
intellectual property rights:

--Technological Protection Measures and Rights Management
Information: The GOC's backgrounder and FAQ clearly imply that
circumvention of TPM or alteration of rights management
information would constitute an infringement of copyright only
when done for infringing purposes. Most analysts are reading this
as a reversal of the U.S. standard of burden of proof: rights
holders would have to prove that the circumvention or alteration
was intended to infringe, just the action would not be enough. Our
contacts were discouraged by the GOC's apparent reluctance to
outlaw devices that have no conceivable legal purpose, such as
adaptors that allow video game players to play pirated games.
(Comment: this is somewhat akin to a homeowner having to prove
that a burglar not only picked the lock, but did so with the
intent to steal. More than one analyst pointed out that this
would represent a step back in Canadian law, since sections 351 to
353 of the Criminal Code make it illegal to own breaking and
entering tools, regardless of any proof of 'intent to infringe'.)
As one interlocutor explained, if the rights holder has to prove
infringement, this new language does not provide any new power to
fight infringement assistance, since once infringement is proven,
current law is sufficient to charge the infringer. Another
industry analyst bewailed the fact that this weakness in the law
will mean that rights holders have no way of going after
traffickers, but will be forced to continue suing users (as he put
it: adding one more charge when the rights holder is stuck suing
some kid is a PR nightmare.)


5. (U) Some rights holders associations are pinning their hope on
a phrase in the GOC's `Statement', which added the concept that
circumventing TPM or altering RMI would constitute an infringement
if the person acted to "enable or facilitate circumvention". This
added phrase could cover the hacker who cracks RMI for fun and
posts the information on the internet (that is, not profiting from
the action but enabling others to profit.) However, this phrase
does not appear in the rest of the documentation (the Backgrounder
or the FAQs),and industry analysts tell us that attempts at
clarifying the situation with Canadian Heritage or Industry have
been met with confusion. Multiple industry reps mentioned that,
without appropriate measures to counter trafficking, these
amendments may not bring Canada into compliance with the WIPO
treaties to which it is a signatory. (Comment: more than one
expert referred us to a book by Mihaly Ficsor called "The Law of
Copyright and the Internet: The 1996 WIPO Treaties, Their
Interpretation and Implementation", which provides a list of
requirements to meet the WIPO treaties. According to industry
reps, Ficsor's argument suggests that the weakness of GOC's
amendments with regards to traffickers means that these amendments
will not bring Canada into compliance with the WIPO Performances
and Phonograms Treaty (WPPT). End comment)

Notice and Notice: If I've told you once, I've...told you once
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6. (U) On the subject of notice and notice (as opposed to the
preferred U.S. model of notice and takedown),industry opinions
vary. Although some stakeholders have described the GOC's intent
to instigate notice and notice as a major flaw of the proposed
copyright amendments, local industry reps have suggested to us
that, although industry groups will lobby for notice and takedown,
internet file-sharing may have moved past the point where notice
and takedown was once critically important. A year ago when
Canada's supreme court issued a controversial decision describing
peer-to-peer filesharing as legal, the filesharing profile of such
programs as Napster involved large caches of files on individual
websites; in this situation notice and takedown could prove
beneficial in combating pirated downloads by requiring that ISPs
remove these caches of files. However, the current popularity of
such programs as BitTorrent and Grokster, where files are
fragmented and not centrally located, means that notice and
takedown may not be an effective tool to combat illegal downloads.


7. (U) However, the proposed notice and notice model provides
little benefit to rights holders beyond ensuring documentation of
their complaints to ISPs (comment: the documentation of complaints
is useful, however, and some industry analysts fear that ISPs will
lobby to remove even that responsibility as onerous. In addition,
rights holders groups expressed concern at the GOC's open-ended
statement that fees may be required to be paid by rights holders
to ISPs for processing such notices. End Comment.) In discussing
future lobbying options, one industry analyst explained that
notice and notice could be helpful in combating peer-to-peer
filesharing if the addition of a 'cease and desist' clause could
be negotiated. That is, if ISPs were required to give notice to
an offending filesharer, that notice could include some reference
to the fact that the user's internet activity was being monitored
and, if infringement continued, the ISP would act to terminate the
user's account. This type of addition would amount to a 'repeat
offender' clause under notice and notice. The industry analyst
mentioned that a best-case scenario would involve GOC's provision
of statutory language for such notices, eliminating confusion
among rights holders and taking some of the burden of public
disapproval away from ISPs.

As in music, timing is everything
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8. (U) Most analysts are withholding final judgment until they can
see the actual draft legislation of the amendments. However, the
current political turmoil as Canada's minority government faces
inquiry into a vast ethical scandal suggests that legislative
language may not be available soon. One industry analyst told us
that, even optimistically, it would be an example of "blinding
speed" if the bill was drafted before June. If the opposition
forces an election, this legislation is likely to fall behind.
The development of this legislation was a major factor in
decisions on Canada's Special 301 placement, and the Embassy
recommended an out-of-cycle review to keep track of and encourage
progress on the legislation.

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A summary of the proposed amendments
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9. (U) WIPO treaty issues

The proposed amendments that are intended to implement the WIPO
treaties (as described by GOC) include:
--clarifying the existing exclusive communication right of authors
to include control over the making available of their material on
the internet;
--providing sound recording makers and performers with the right
to control the making available right of their sound recordings
and performances on the internet;
--making the circumvention for infringing purposes of
technological protection measures (TPMs) applied to copyright
material an infringement of copyright;
--making the alteration or removal of rights management
information (RMI) embedded in copyright material (when done to
further or conceal infringement) an infringement of copyright;
--providing rights holders with the ability to control the first
distribution of their material in tangible form;
--making the term of protection for photographs the life of the
photographer plus 50 years;
--introducing a full reproduction right for performers in sound
recordings;
--modifying the term of protection provided to sound recording
makers so as to extend to 50 years from the publication of the
sound recording;
--providing performers moral rights in their fixed and live
performances.


10. (U) ISP Liability

Proposed amendments concerning internet server provider (ISP)
liability include:
--making ISPs exempt from copyright liability in relation to their
activities as intermediaries (comment: one industry analyst
worries that the phrasing of this exemption could be far too broad
and might encourage the creation of small ISPs dedicated to
hosting illegal copies but not-liable due to this part of the law.
As with many reactions to the proposed amendments, much depends on
the final phrasing of the legislative text.); and
--establishing a "notice and notice" regime in relation to the
hosting and file-sharing activities of an ISP's subscriber (that
is, when an ISP receives notice from a rights holder that one of
its subscribers is allegedly hosting or sharing infringing
material, the ISP would be required to forward the notice to the
subscriber and to keep a record of the relevant information for a
specified time.)


11. (U) Conclusion: The GOC's proposed amendments to the
Copyright Act appear to fall short in key areas such as ISP
liability and technological protection measure (TPM) circumvention
and in fact may not be sufficient to bring Canada into compliance
with the WIPO treaties. Canadian stakeholders are as yet unable
to judge the impact of the proposed amendments because the
legislative text is not available. We expect intense lobbying
once the draft language is available if the draft text does not
adequately address the questions of ISP liability and trafficking.
Post is also watching upcoming court cases and GOC's deliberations
on educational use of the internet (a question which was removed
from the current proposed amendments so that the GOC can obtain
further input on this contentious issue.) Post will continue to
work with stakeholders and GOC agencies to encourage legislation
to bring Canada into compliance with the WIPO treaties. End
Conclusion.