Prime Minister Stephen Harper arrived in China today for a high profile visit aimed at improving the Canada- China economic ties. Many have noted the change in tone from the Canadian government on China on rights issues, but the intellectual property story is worth noting here as well. Unlike a U.S. visit, which is likely to place IP issues at the very top of the list, the Canadian visit is unlikely to emphasize the issue. Indeed, Canada would do well to consider shifting its approach to China on intellectual property.

While China-based piracy is unquestionable a concern, Canada has too often used the issue to curry favour with the U.S. at the expense of developing the China relationship. In recent years, our support for the Anti-Counterfeiting Trade Agreement (which deliberately excluded China) and now the Trans Pacific Partnership (which also excludes China) does little to help relations. China could be a strategic ally on global IP issues as both countries face significant external pressure for reform. While compliance with international rules should be the starting point for any dialogue, focusing on the flexibility that exists at international law to address domestic concerns is in both our interests.

The biggest Canadian blunder was the decision to join a U.S. complaint against China at the World Trade Organization in 2007 alleging that China’s domestic laws, border measures, and criminal penalties for intellectual property violations did not comply with its international treaty obligations. The case was a big loss. China was required to amend parts of its copyright law but on the big issues - border measures and IP enforcement - almost all of the contested laws were upheld as valid.

More interesting are the background documents that demonstrate that the Canadian government was unable to muster credible evidence of harm among Canadian companies.


Interestingly, the key player in promoting the case in Canada was the Canadian Recording Industry Association, which appears to have worked closely with the U.S. government to pressure Canadian officials to join the case. A Wikileaks cable notes that "CRIA is leading the charge to get the Government of Canada to join the U.S. case." [the same cable also states that the Entertainment Software Association of Canada "expects not to take a position, because not all of their members are in agreement and because their members' IP is not Canada-based anyway."]

I chronicled the background information in a column in 2009 based on documents obtained under the Access to Information Act.  The key findings:

Government records reveal that the U.S. began to pressure Canada to join the case as a full party in 2006, months before the case was formally filed with the WTO.  In April 2006, officials at the Department of Foreign Affairs asked the Beijing and Shanghai consular offices for information on intellectual property infringement problems, but neither provided much assistance.

Two months later, with the case making little progress (in May, an RCMP official wondered aloud why Canada was even concerned with enforcement in other countries), Foreign Affairs launched a public consultation on intellectual property enforcement abroad.  The consultation was not limited to China, as officials decided to keep it open-ended.

The consultation generated 55 responses, but officials hoping to build a solid case against China were left sorely disappointed.  According to a government summary (the consultation results have never been disclosed to the public and were obtained under Access to Information), only one-third of the responses specifically referenced China as a problem.  In fact, there were more responses that criticized the United States and the consultation itself.

By the end of the summer, the U.S. had provided Canadian officials with its legal arguments, but Canada was without the evidence it needed to demonstrate harm and thereby participate as a co-complainant in the case.  Indeed, on the key issue involving criminal enforcement thresholds, a Department of Justice official noted that Justice and RCMP guidelines used similar thresholds for prosecutorial decisions and that the Chinese could effectively make similar claims against Canada.

Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party.  Anticipating an October 2006 complaint, a press release was prepared but was never issued after the U.S. decided to delay launching the case.

With no complaint in sight, the Canadian Recording Industry Association, which had been the most vocal supporter of Canadian participation, met with senior Foreign Affairs officials in January 2007.  Documents prepared by department officials in advance of the meeting noted that CRIA's previous efforts to encourage participation had "lacked specifics."  The memo concluded that "we remain of the view that we do not have enough information related to specific Canadian experiences and interests to go forward as a co-complainant" and that "there is still no real concrete information however, of Canadian interests that have been harmed in China."

Over the next few months, Canadian officials grappled with several concerns as a U.S. complaint appeared inevitable.  For example, with plans for Canada to participate in the intellectual property case against China but not in a second case on market access, officials feared that the Canadian steel industry would voice its objections.

Further, as Canadian officials drafted a formal letter of notification of its participation, a Geneva-based official asked "do we have statistics to mention about intellectual property owned by Canadians sold in China or something like it to explain why we are interested?"  Without solid statistics, the formal notification did not reference the issue, instead merely stating Canada's "concern" with Chinese practices.

The U.S. commenced its action on April 9, 2007. Canada filed its notification as a third party participant two weeks later and within hours, CRIA wrote to Foreign Affairs to offer its assistance on the case. Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party.

Alexander Furnas explains in the Atlantic why the broader implications of ACTA may make it as bad as SOPA. Furnas notes "while many of the alarmists specific claims are inaccurate, ACTA exposes the systemic danger in how international intellectual property regulation has evolved over the last 20 years."

The Czech Republic and Slovakia have joined Poland in suspending ratification of the Anti-Counterfeiting Trade Agreement in response to mounting protests over the agreement.

Kris Kotarski writes an opinion piece in the Calgary Herald that calls attention to the lobby panic that leads to legislation like SOPA and ACTA.

The National Post featured an op-ed from Jesse Kline over the weekend that notes "the essential question that must be addressed going forward is whether government regulation is needed to protect industries that have failed to innovate." He says the answer is no.

Last month, the Hill Times ran a special section on copyright and new media.  I contributed an op-ed (Hill Times version, homepage version) that linked copyright reform with the government's emphasis on the Canadian economy. The column noted that one metric for assessing the effectiveness of copyright reform is to consider whether the bill uses the flexibility at international law to establish a competitive advantage when compared to our trading partners. The answer with Bill C-11 - even without the SOPA-style amendments sought by copyright lobby groups - is a mixed bag.


The column begins by discussing the public domain. For copyright watchers, New Year's Day has become public domain day, the day when the term of copyright expires on thousands of works. While Europe celebrated the entry of James Joyce and Virginia Woolf into their public domain, Canadians noted that both authors’ copyright expired here in 1991. The term of copyright in Canada is consistent with the international standard of life of the author plus 50 years, which this year meant that the works of Ernest Hemingway and Carl Jung entered into the public domain, twenty years before they are scheduled to do so in Europe or the United States.

The Trans Pacific Partnership Agreement may place the difference in copyright term in jeopardy (a recent leaked draft indicates that it mandates extending the term of copyright), but for the moment it provides Canada with an important competitive advantage. Canadian businesses, creators and educators can rely on a far larger public domain than competitors in the U.S. and Europe, leading to new creative and commercial opportunities as well as increased access for teachers and students.

While the government has framed Bill C-11 as a policy effort to strike the right copyright balance, a crucial question in light of Prime Minister Stephen Harper’s emphasis on the Canadian economy is whether the bill uses the flexibility at international law to establish a competitive advantage when compared to our trading partners.

The answer is a mixed bag. The bill contains several unique Canadian proposals that should create some legal advantages. For example, the approach to Internet provider liability, known as notice-and-notice, strikes a better balance than the U.S. notice-and-takedown system, making Canada an attractive home for hosting Internet content. Similarly, the user generated content provision, which legalizes non-commercial remix videos, provides legal certainty to intermediaries that host content and those that create it. Rights holders have also pointed to the “enabler provision” as a made-in-Canada approach to assist enforcement efforts, though are now seeking a far broader rule.

Bill C-11’s approach to fair dealing leaves Canada in the mushy middle when it comes to copyright exceptions and limitations. The inclusion of three new exceptions – education, parody, and satire - is an improvement, but it does not go as far as trading partners such as the U.S. and Israel, which have both recognized that fair use lies at the heart of many industries that rely upon a flexible copyright system. The absence of fair use creates a competitive disadvantage for innovative Canadian businesses, who may decide to set up shop elsewhere as a result.

The biggest competitive shortcoming in Bill C-11 is also the most heavily criticized – the digital lock rules. While the criticism from consumer, education, and library groups is noteworthy, the lack of support from business and creators groups is particularly telling.

On the business side, the Business Coalition for Balanced Copyright, which includes leading technology, telecom, and Internet companies, has argued for changes to the rules, as has the Retail Council of Canada, which fears that the changes could hurt consumer confidence in the digital environment.

The Bill C-11 digital lock rules will also place some Canadian creators at a competitive disadvantage. For example, documentary filmmakers in the U.S. rely on a specific exception that permits circumvention of digital locks found on DVDs. By contrast, the Canadian approach does not feature a DVD circumvention exception, creating additional costs and legal uncertainty.

Supporters argue that the digital lock rules will create incentives for new media businesses, yet there is little evidence those rules provide a competitive advantage. Without any digital lock rules, Canadian digital music sales have grown faster than those in the U.S. for the past five consecutive years, Canadian entertainment software businesses have thrived, and a steady stream of new digital businesses such as Netflix and Rdio have entered the Canadian market, suggesting that the current law is not holding back new marketplace entrants or commercial success.  

Copyright reform may be driven by a desire to meet international standards, but global copyright law provides all countries with considerable flexibility in implementation. Identifying opportunities to create Canadian copyright competitive advantages would bring commercial and creative benefits and though Bill C-11 features several unique provisions, they are undermined by badly missing the mark on the digital lock rules. 

John Ibbitson discusses the implications for Canada of joining the Trans Pacific Partnership, noting it would likely include surrendering Canadian sovereignty over copyright law. A reminder that the government is currently consulting on the TPP. Details on the agreement and participating here, here, and here.

Open Media has launched a new campaign against copyright reforms that threaten digital rights including the prospect of website blocking, Internet termination, and digital locks.

AccessNow is maintaining an excellent map of the protests planned across the continent on February 11th, which has been designated an international day of action against ACTA. The issue has attracted mainstream media attention (eg. New York Times) and questions emerge about the likelihood the treaty will receive the necessary approvals for ratification.

Entertainment software giant Ubisoft, who the Ontario government gave $263 million in 2009 to create 80 jobs per year over 10 years (or $328,750 per job), has advised its customers that its games may not work sometime this week due to its reliance on digital locks and the migration of data servers.

Last week Rogers advised the CRTC that it plans to drop Internet throttling for all customers by the end of the year. The move was not unexpected given that its policy was an outlier among all major Canadian ISPs. I'll have more to say on this development soon.

The Globe's Jeffrey Simpson has an excellent column on the state of big pharma in Canada, noting that Canadians pay high prices for pharmaceuticals but that big pharma has not met its commitment to devote 10 percent of sales to research and development.  Prices would increase further with potential legal reforms in the Canada - EU Trade Agreement.

Polish Prime Minister Donald Tusk has announced the country is suspending its ratification of the Anti-Counterfeitint Trade Agreement. The announcement comes following huge protests in cities across the country.

Last week, I delivered a keynote address on copyright issues at the University of South Florida St. Petersburg. The talk focused on the activism around SOPA and assessed the global strategies employed by the U.S. and copyright lobby groups of shifting away from WIPO toward closed negotiations such as the Anti-Counterfeiting Trade Agreement.

Slovenia's Ambassador to Japan offers a full explanation for why she signed ACTA:

I signed ACTA out of civic carelessness, because I did not pay enough attention. Quite simply, I did not clearly connect the agreement I had been instructed to sign with the agreement that, according to my own civic conviction, limits and withholds the freedom of engagement on the largest and most significant network in human history, and thus limits particularly the future of our children.

The Economist reports on the growing boycott of Elsevier by thousands of academics over open access issues.

Transport Canada has reportedly issued a DMCA takedown notice to Scribd over an on-the-record response it provided to a journalist. The move is particularly odd (though not unprecedented, see here and here) given the document was issued to a journalist and the government changed its crown copyright licence last year to allow for private and non-commercial public use without the need for further permission.

The reports that the music industry lobby (along with the Entertainment Software Association of Canada and the movie lobby) is seeking the inclusion of SOPA-style provisions into Bill C-11 has generated considerable discussion online and in the mainstream media (CBC, Financial Post). Yesterday, Balanced Copyright for Canada, the group backed by the music industry, fired back with several tweets claiming that opposing their reforms would benefit "illegal BitTorrent sites"and "illegal hosting sites." Leaving aside the fact that if these sites are illegal, they are by-definition already in violation of current law, the claims point to what seems likely to become a SOPA-like scare campaign that seeks to paint skeptics of CRIA demands as supporters of piracy.

These claims involve two different issues with Bill C-11. The first are the digital lock provisions, which dozens of organizations (including businesses, the Retail Council of Canada, creator groups, consumer groups, and education associations) have argued are overly restrictive. The proposed solution is to link circumvention of a digital lock with actual copyright infringement, an approach that is consistent with the WIPO Internet treaties and has been adopted by trading partners such as New Zealand and Switzerland (Canada even proposed the approach in Bill C-60). These amendments would not legalize hacking businesses, but rather ensure that the same balance that exists offline is retained in the digital environment.


The second issue involves expansion of the "enabler provision" currently proposed in Bill C-11. I have pointed out that Canadian law appears to effectively address these sites as the music industry is currently suing isoHunt for millions of dollars based on the current law. In the event that more certainty is needed, the current enabler provision would grant even more powers to rights holders to target these sites. Yet that is apparently not good enough for the music, software, and movie lobby groups, who want to expand the enabler provision to include SOPA-like liability as well as add website blocking injunctions to Canadian law. The danger with this approach is that it threatens to target perfectly legitimate websites. Arguing against an overbroad enabler provision is not siding with illegal sites, but rather ensuring that legal ones are not caught by the dragnet.

The music industry claims to be a big supporter of Bill C-11, yet few groups have demanded more changes. In fact, when it appeared before the House of Commons committee reviewing the bill, one MP noted that their demands were "substantial" and "anything but minor." Their demands include:

• expansion of the enabler provision to include SOPA-style expanded liability
• create new injunction powers to block websites
• create new injunction powers to remove content from websites
• require ISPs to implement a policy on repeat infringers that could include Internet termination
• remove the non-commercial liability cap for statutory damages
• restrict the user-generated content provision
• create new limits on personal copying exception
• create new limits on time shifting exception
• create additional limits on backup copy provision
• limit the safe harbour for ISPs
• limit the safe harbour for caching activities
• limit the safe harbour for hosting content
• limit the search engine (ILT) exception
• eliminate the ephemeral recording amendment

The music industry is seeking a huge overhaul of Bill C-32 that makes any requests for adjusting the digital lock rules look minor by comparison. As it escalates the rhetoric by claiming critics stand with piracy, it is apparent that the lobby groups' fight to blend a Canadian DMCA with a Canadian SOPA will only intensify in the weeks ahead.

Reports indicate that Industry Minister Christian Paradis could unveil the government's spectrum auction and telecom foreign ownership policies this month. My weekly technology law column (Toronto Star version, homepage version) provided a preview of some the key issues. While interest in spectrum auction policy is typically limited to telecom companies and business analysts, all Canadians have a stake in this decision. The available spectrum - known as the 700 MHz spectrum - opens up a host of possibilities for new innovation, competitors, and open Internet access. It is viewed as particularly valuable spectrum since it easily penetrates walls, making it ideal for delivering wireless high-speed Internet services.

Auctioning the spectrum raises a host of critical policy choices.


Topping the list is whether the government tinkers with the auction framework to help foster greater marketplace competition. Some of the large incumbents unsurprisingly favour an “open auction” with no bidding limits, but assuming Paradis concludes that some measures are needed, the choice will likely come down to either a spectrum set-aside that reserves some spectrum for new entrants and smaller companies or spectrum caps.

The last spectrum auction included a set-aside, which opened the door to a handful of new competitors such as Globalive, PublicMobile, and Mobilicity. A further set-aside may make sense since this round of new entrants may look to use the spectrum primarily for wireless broadband services, providing a potential alternative to the cable and telecom dominance.

If another set-aside proves too unwieldy, a spectrum cap, which would limit the amount of spectrum any single company could hold, may emerge as the alternative. A spectrum cap might prove effective if combined with two additional conditions.

First, the implementation of a use-it-or-lose it principle that would require all bidders to use the spectrum within a defined period. The use-it-or-lose-it approach would help guard against the hoarding of spectrum, particularly for incumbents who may overbid in the hopes of keeping new competitors out of the market.

Second, safeguards against opportunistic flipping of the spectrum with the prohibition on its sale within the first five years of the auction. The trio of policies – caps, mandatory use, and a block on transfer, may increase the number of successful bidders.

Another critical issue is who should be entitled to bid for the spectrum. The last spectrum auction featured Canadian ownership requirements, thereby limiting potential entrants. Given that Canada is one of the only developed countries that has retained significant telecom foreign ownership restrictions, the auction provides a tailor-made opportunity to eliminate the restrictions by opening the market to all bidders.

The spectrum policy decision will also determine which spectrum is available for auction and which is reserved for alternate purposes. The government has already indicated that it plans to grant some of the spectrum to law enforcement agencies, which intend to create their own emergency wireless network.

Many leading technology companies have recommended allocating some of the spectrum for unlicensed purposes. This spectrum, which would be free to anyone to use without the need for licence or government approval, could yield new services and technologies.

Beyond the technical details of the spectrum auction, the final billion-dollar question is what the government should do with the auction proceeds. While the $4 billion in proceeds from the last auction went into general revenues, this auction represents the best – perhaps only – opportunity to access billions of non-tax dollars for the digital economy.  The money could be used to support broadband initiatives, digital content creation, and digital skills programs. 

Canadian superstar Neil Young on piracy:

It doesn't affect me because I look at the internet as the new radio. I look at the radio as gone. [...] Piracy is the new radio. That's how music gets around. [...] That's the radio. If you really want to hear it, let's make it available, let them hear it, let them hear the 95 percent of it.