CANADIAN STAKEHOLDERS' CONCERNS ON COPYRIGHT

UNCLAS SECTION 01 OF 03 OTTAWA 002970

SIPDIS

SENSITIVE

DEPT PASS USTR FOR CHANDLER AND ESPINEL

E.O. 12958: N/A
TAGS: ETRD KIPR CA
SUBJECT: CANADIAN STAKEHOLDERS' CONCERNS ON COPYRIGHT
AMENDMENT, SPECIAL 301 OCR, AND ENFORCEMENT

REF: A. OTTAWA 2833 (DEMARCHE ON SPECIAL 301

OUT-OF-CYCLE REVIEW)

B. SECSTATE 173476 (DEMARCHE ON SPECIAL 301
OUT-OF-CYCLE REVIEW)

C. OTTAWA 1168 (CANADIAN REACTION TO GOC'S PROPOSED
COPYRIGHT LAW AMENDMENTS)


1. (SBU) Summary: We have met again with intellectual
property (IP) rightsholders to discuss their views of GOC
moves on IPR. Canadian industry frustration with ineffective
IPR enforcement continues to grow, and further review of the
proposed copyright amendment legislation (C-60) has revealed
some complexities and emerging disagreement among
stakeholders. The Canadian Motion Picture Distributors
Association (CMPDA) also raised a new issue: camcording of
new-release movies in theaters, which seems to be a
significant problem in Canada. End Summary.

COMMENTS ON PROPOSED AMENDMENTS TO THE COPYRIGHT ACT
-------------- --------------

2. (SBU) In our meetings with IP rightsholders in Ottawa and
Toronto, we found that most stakeholder concerns with C-60,
the draft legislation to amend Canada's Copyright Act, were
familiar (see Ottawa 1168). However, time has fine-tuned
industry concerns and highlighted subtle differences in
stakeholder positions.


3. (SBU) Internet Service Provider (ISP) Liability: For
example, while the current USG action plan and U.S.
stakeholders emphasize the need for a notice-and-takedown
regime, Canadian industry opinions are mixed on the need to
push for notice-and-takedown. The Canadian Motion Picture
Distributors Association (CMPDA) is satisfied with the
current notice-and-notice proposal in the draft legislation,
hoping that the record-keeping requirements for ISPs will
help their industry keep track of actions against online
infringers. In CMPDA's view, the advent of peer-to-peer
filesharing has lessened the need for notice-and-takedown,
since fewer users are downloading their files from large
websites of infringing material. On the other hand, the
Canadian Recording Industry Association (CRIA),Canadian
Alliance Against Software Theft (CAAST) and U.S.-based
Business Software Alliance (BSA) representatives strongly
believe that their industries still need a
notice-and-takedown regime. This divergence seems to depend
on how an industry's products are pirated and how
recalcitrant they anticipate the GOC will be on the issue.
Entertainment Software Association (ESA) representatives
opined that the GOC "isn't going to budge" on the issue of
notice-and-notice, possibly because of fears that a
notice-and-takedown regime could be unconstitutional in
Canada. C-60's general waiver of ISP liability was deemed
overly broad by all stakeholders; they felt that the waiver
of liability shouldn't be a blank check and that ISPs should
be held responsible for the content of their users' websites
once they become aware of the presence of copyright
infringing files.


4. (SBU) Trafficking in circumvention "tools" (devices and
software): Even in this area, which generally prompts a
chorus seeking a ban against trafficking in tools to
circumvent technological protection measures (TPM),industry
associations were not entirely in agreement. CMPDA, CRIA,
CAAST, and ESA are all firmly pushing for trafficking in TPM
circumvention tools to be made illegal. Currently the draft
legislation requires that the rightholder prove "intent to
infringe" for trafficking in tools to be illegal, and as one
industry representative points out, they already need to
prove intent and therefore this legislative change doesn't
give them any more ability to fight piracy. Industry
representatives would also like a law that allows them to go
after the larger-scale pirates selling circumvention tools,
rather than continuing to have to go after the "little guys"
who use them. However, the Information Technology Association
of Canada (ITAC) represents security firms who occasionally
circumvent TPMs, either to test their efficacy or to create
fixes for various holes in the security. ITAC says that
these niche activities need the protection of the "intent"
clause, although others argue that circumvention for reasons
other than infringement could be specifically exempted in the
legislation or could fall under 'fair use'. Prompted by its
cyber-security members, ITAC therefore opposes any move to
make trafficking in or creating TPM circumvention tools
illegal and supports the current requirement to prove intent
to infringe. (SBU comment: In an off-hand remark, an ITAC
VP mentioned that ITAC may feel the need to "push the other
side" to balance the anticipated lobbying from ESA, who will
push strongly for trafficking in circumvention tools to be
illegal regardless of intent. End comment.)


5. (SBU) Circumvention of TPMs intended to prevent access:
In what the CMPDA characterizes as a possible oversight in
the draft legislation, C-60 does not seem to make
circumvention of TPMs intended to prevent access (as opposed
to distribution) an offense. As with other issues of TPM
circumvention, the major industry associations hope to fix
this omission in the upcoming committee hearings on the draft
legislation.


6. (SBU) No criminal sanctions for infringement: CRIA, ESA
and CMPDA note that the WIPO treaties require "effective"
deterrents to copyright infringement. C-60 as drafted does
not provide any criminal provisions for circumvention, which
CRIA and CMPDA believe will mean that Canada does not have
adequate legal protection and effective remedies against
copyright infringement. An ESA representative pointed out
that the original Heritage Committee recommendations for
legislation included a recommendation for criminal provisions
for circumvention. (Comment: Per reftels, Heritage Canada's
stronger stance on IPR protection has been generally
undermined by Industry Canada's pressure for "balance." End
comment.)


7. (SBU) Can C-60 be saved?: One of the most contentious
insights that has arisen during recent consultations with IPR
stakeholders is the question of whether stakeholders even
want the bill to pass. Some industry representatives
predicted that the bill will "die on paper" and criticized
the potential for amending it in committee as likely to
result in "a mess". These representatives expressed the
expectation and hope that the legislation would be scrapped
and described as a best-case-scenario the legislation dying
after oral submissions (so that industries could make
comments.) On the other hand, when asked if they wanted the
bill to die, other industry representative seemed surprised
and explained that their members would rather see this draft
fixed, since if the bill dies, progress will be delayed for
another year.

CUSTOMS ENFORCEMENT
--------------

8. (SBU) Numerous stakeholders noted that Justice Ministry,
Canadian Border Services Agency (CBSA) and Royal Canadian
Mounted Police (RCMP) top priorities--terrorism, the border,
and counterfeits with safety issues like fake
pharmaceuticals--do not currently leave much attention or
funding for copyright protection. Anecdotal evidence of
progress, including RCMP training and minor counterfeit
seizures, was countered by general frustration over CBSA's
lack of power and all three agencies' inaction. Since RCMP
and Customs often do not respond to industry information on
infringement, Embassy has requested greater industry feedback
on industry's own enforcement actions. CMPDA gave an example
of a private seizure of 11,000 counterfeit DVDs from one
store in Toronto's Pacific Mall. (After giving the owner a
list of counterfeit DVDs that the owner agreed to hand over,
CMPDA officials were not surprised to return the next day to
find the store completely restocked...with counterfeit DVDs.)
ESA representatives also indicated that they intend to lobby
for more RCMP resources to combat copyright infringement;
they also hope to find a way for CBSA to have more power to
seize shipments (although ESA and CMPDA mentioned that the
border may become less important as Canadian-made
counterfeiting increases). Obviously enforcement is an
ongoing issue for IPR stakeholders, and we will provide
further information as we receive it. (Comment: one contact
told econoff of a recent discussion with a prominent IPR
lawyer who suggested that industry associations not even try
for criminal sanctions for TPM circumvention in C-60, since
it would not be enforced and therefore would be just one more
toothless law on the books. End comment.)

CAMCORDING IN THEATERS
--------------

9. CMPDA raised a new issue in meetings last week:
camcording new-release movies in theaters to create
counterfeit DVDs that often hit the streets within hours of
the official movie premiers. Because movies open in Canada
at the same time as in the United States, and because movies
in Canada are shown in both French and English, Canada has
become a primary source for camcorded counterfeits. In fact,
according to CMPDA, of all theaters which are used for
camcording new-release movies, 40 percent are in Canada, with
the majority of that 40 percent coming from just two theaters
in Montreal. CMPDA has worked with the theater owners in
question and is engaged in training their staff to combat
this activity, but without any law against camcording in
theaters, options are limited. RCMP and the local police
can't do anything without proof of commercial intent, and
generally the best CMPDA can hope for is that the offenders
will be ejected from the theater for that particular showing.
CMPDA is developing an estimate of the economic loss from
this sort of piracy, which they hope to use to prompt an
amendment to the criminal code outlawing camcording in
theaters. We have requested a copy of their loss estimates
when compiled, and we will continue to follow this issue
closely.

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