[IP] The State of File Sharing and Canadian Law
Begin forwarded message:
From: Michael Geist <mgeist@xxxxxxxxx>
Date: June 6, 2005 7:32:27 AM EDT
To: dave@xxxxxxxxxx
Subject: The State of File Sharing and Canadian Law
Dave,
Of possible interest to IP - my regular Law Bytes column features the
second part of an examination of the recent Canadian Federal Court of
Appeal decision involving the recording industry's attempt to
identify 29 alleged file sharers.
After considering the privacy issues last week, this column (posted
below) moves to the copyright implications by considering three
questions: can the Canadian recording industry sue file sharers? Can
it win such suits? And what legal reverberations might ensue if it
does win? The answers require analysis of the Canadian private
copying system and the effect of Canadian Copyright Act's statutory
damages regime and lead to the conclusion that lawsuits are a risky
strategy with many outstanding legal questions.
Freely available hyperlinked version at
http://www.michaelgeist.ca/resc/html_bkup/june62005.html
Toronto Star (reg required) version at
<http://geistfileshareparttwo.notlong.com/>
Part one examination of privacy implications at
http://www.michaelgeist.ca/resc/html_bkup/may302005.html
MG
THE STATE OF FILE SHARING AND CANADIAN LAW
The recent Federal Court of Appeal music file sharing case, in which
the court rejected the Canadian Recording Industry Association's
attempt to uncover the identities of 29 alleged file sharers, raises
important privacy and copyright issues. Last week's column reviewed
the court's test to protect personal privacy; this week's column
assesses the copyright implications of that decision.
Although the court declined to articulate definitive conclusions on
important copyright issues associated with file sharing, its decision
will undeniably have a major impact on copyright policy. This impact
is best addressed by analyzing three questions - can CRIA sue file
sharers? Can it win such suits? And what legal reverberations might
ensue if it does win?
The answer to the first question is relatively straight forward.
CRIA can sue file sharers in Canada and it has indeed asserted that
the decision provides a blueprint for future suits.
In the aftermath of last year's trial decision, the recording
industry expressed grave concern about the state of Canadian
copyright law and lobbied aggressively for immediate changes. In
light of the appellate decision, it is now safe to declare the
copyright emergency over. In fact, the fears of a devastating effect
never materialized. According to CRIA's own figures, in the thirteen
months of reported sales since the March 2004 decision, both sales
and shipments have increased.
The answer to the second question -- whether CRIA can win file
sharing suits -- is open to debate, particularly with respect to
suits filed against individuals that solely download music from peer-
to-peer networks. The complicating factor is the effect of Canada's
private copying system, which establishes a levy on blank media such
as recordable CDs. Anna Bucci, the Executive Director of the
Canadian Private Copying Collective, the body that administers the
$120 million in royalties that have been generated by the levy, last
week described private copying as creating "a new right for the
Canadian public -- the right to make private copies of music for
their own personal use."
There are at least three objections raised to the application of this
private copying right to P2P file sharing. First, the right applies
solely to copying, not to those who "upload" music on peer-to-peer
networks. This objection is certainly valid as neither the Canadian
courts nor the Canadian Copyright Board have ever indicated that
private copying could be used as a defense against the act of uploading.
Second, CRIA recently argued that the private copying right does not
apply to copies made to personal computers. A review of the
legislative history of private copying provides little support for
this interpretation, however, as the statute was intentionally
drafted in a technology neutral fashion such that it could be applied
to new copying media, including computer hard drives.
The primary impetus behind the creation of the private copying system
was the Charter of Rights for Creators, a 1985 parliamentary
committee report. That report explicitly declined to tie the levy to
a particular technology, presciently noting that "future recording
devices might not use blank tape, thereby making a tape royalty
obsolete. The work could be stored in a computer memory with no
independent material support at all."
Eleven years later the Task Force on the Future of the Canadian Music
Industry, which was co-chaired by the heads of CRIA and the Canadian
Independent Record Production Association, continued to press for the
creation of private copying levy to be applied to both media and
devices. The technology neutral levy was enacted into law soon after
with the industry celebrating success after 15 years of lobbying but
lamenting that the delay had "literally killed dozens of careers."
While the levy was certainly intended to cover computer hard drives,
the third objection is whether the provision, as currently drafted,
actually achieves that goal. This issue was thrown into some doubt
by a Federal Court of Appeal decision last December that upheld the
validity of the levy but tossed out its application to MP3 players
such as the Apple iPod.
That decision is currently under appeal to the Supreme Court of
Canada. If Canada's highest court overturns the decision, the intent
of the legislation will be restored and much of the doubt about its
applicability to P2P downloaders will be removed.
If the Supreme Court declines to hear the appeal or upholds the
decision, the impact will extend well beyond music file sharing.
Some P2P downloading would no longer fall under the private copying
right, though downloads to many external or removable hard drives
would presumably still qualify. More importantly, copying of store
bought CDs onto Apple iPods, a common practice extolled by CRIA
itself, would effectively be rendered unlawful in Canada (unless
there is an implied right to copy such CDs, which would then call
into question the need for a private copying system).
The third question - what might follow if CRIA is successful in its
suits - raises the prospect for copyright reform. When the federal
government established the private copying right in the late 1990s,
it also created a statutory damages system. This enables a copyright
holder to obtain specified damages of between $500 and $20,000 per
infringement without the need to prove actual damages. There is,
however, a saving provision that allows a court to order damages well
below the statutory minimums if the total award is "grossly out of
proportion to the infringement."
The statutory damages provision raises several scenarios in the
context of file sharing suits. One possibility, common in the United
States, is that cases do not actually proceed to trial since even
innocent defendants will settle lawsuits to avoid the risk of a
massive statutory damages award. Should a case proceed to trial,
another scenario is that a court might indeed award damages of
hundreds of thousands of dollars based on uploading 1,000 songs onto
a P2P network.
Given that fee-based services such as Napster already offer over
700,000 songs for only $14.99 per month, a raft of settlements or a
massive award might lead to vociferous calls to Industry Minister
David Emerson and Canadian Heritage Minister Liza Frulla for
immediate reform to the statutory damages provisions so that a more
appropriate remedy can be implemented.
Alternatively, a court might be faced with a sympathetic defendant
who could prove that they had legitimately copied store bought CDs
onto their computer and logged onto a P2P network in order to
download a public domain document or open source software program.
In such a case, the judge might be inclined to use the saving
provision and set a precedent of a minimal damages award for P2P
downloading.
The net result of current Canadian law is that file sharing suits are
a risky strategy from both a privacy and copyright perspective. The
Federal Court of Appeal may have provided a roadmap for such suits,
but it is apparent that traveling down that road raises many more
questions than it answers.
--
**********************************************************************
Professor Michael A. Geist
Canada Research Chair in Internet and E-commerce Law
University of Ottawa Law School, Common Law Section
57 Louis Pasteur St., Ottawa, Ontario, K1N 6N5
Tel: 613-562-5800, x3319 Fax: 613-562-5124
mgeist@xxxxxxxxx http://www.michaelgeist.ca
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