Michael Geist Blog

Bookseller Restrictions About Competition, Not Culture

Michael Geist — Wed, 17 Mar 2010 09:10:36 +0100

Eight years ago, the federal government faced a hot-button cultural policy issue as online retail giant Amazon.com, which was already selling millions of dollars of books to Canadians from its U.S.-based site, sought entry into the Canadian market. Canadian investment regulations posed a significant barrier, however, since the law required government approval for foreign investment in the book publishing and distribution sectors.

My weekly technology law column (Toronto Star version, homepage version) notes that Amazon was ultimately granted a form of non-entry entry. The company established Amazon.ca, but did not set up shop in Canada. Instead, it outsourced distribution to Canada Post, enabling the government to rule that the company’s plans fell outside the book distribution restrictions.

Amazon.ca is now well-entrenched in the Canadian e-commerce landscape and seeks to create its own Canadian distribution channel. The plan requires government approval, which recently led to predictable outcries from the Canadian Booksellers Association. The CBA wrote to Canadian Heritage Minister James Moore - who must decide the issue - to urge him to reject Amazon’s application.

It argued that Amazon’s entry would "detrimentally affect independent businesses and would raise serious concerns over the protection of our cultural industries. Individual Canadian booksellers have traditionally played a key role in ensuring the promotion of Canadian authors and Canadian culture. These are values that no American dot.com retailer could ever purport to understand or promote."

The CBA’s attempt to cloak the issue as a matter of Canadian culture is unsurprising, but Moore should recognize this for what it is - a transparent attempt to hamstring a tough competitor that ultimately hurts the Canadian culture sector.

Evidence of the benefits of major retailers to Canadian culture comes directly from a 2007 Turner-Riggs report commissioned by Canadian Heritage on the Canadian book retail sector. It pointed to a Quill & Quire study that found that consumers were far more likely to find Canadian titles in the large chains than in smaller independent stores.

Moreover, a second study of sales from eleven small Canadian literary presses found that online sellers represented the largest source of sales growth, while both chain and independent booksellers experienced relatively static sales.

Neither of these findings should come as much of a surprise. The scarcity of space in brick and mortar bookstores has long been a key concern for Canadian authors and publishers, who fear that their titles might get squeezed off the shelves.

Big chain retailers alleviated those concerns to some degree by offering up far more space for titles of all origins (though at a cost of greater reliance on those chains and a weaker bargaining position on commercial terms). Online sellers such as Amazon removed the scarcity concerns altogether, since the number of books the company can offer is unlimited.

That undoubtedly means more competition, yet it also ensures that fears consumers will be unable to access Canadian titles have disappeared. Indeed, the report concludes "the visibility of Canadian titles - and Canadians' access to them - in online book retail rose significantly with the launch of Amazon.ca and its considerable selection of Canadian- sourced inventory."

In 2000, the Standing Committee on Canadian Heritage conducted hearings on the Canadian book market. The resulting report - The Challenge of Change: A Consideration of the Canadian Book Industry - recommended that the government "ensure that no foreign investor is allowed to take over a Canadian firm in the book industry unless credible assurances are made that the investment will increase the availability of Canadian-authored books."

The experience of the past decade has demonstrated that greater retail competition does increase the availability of Canadian books. While the book industry may still require support to bring Canadian books to market, restrictions on who may sell or distribute those books represent a harmful barrier from a bygone era.

Van Loan: Canada Supports Release of the ACTA Text

Michael Geist — Wed, 17 Mar 2010 09:08:39 +0100

A spokesperson for International Trade Minister Peter Van Loan has confirmed yet again the Canadian position on ACTA: "Canada supports the release of the Anti-Counterfeiting Trade Agreement text at the earliest possible opportunity. Canada cannot release the negotiating text until there is consensus to do so among the [ACTA] partners."

CFS Expresses Support For Fair Dealing Motion

Michael Geist — Wed, 17 Mar 2010 09:03:46 +0100

The Canadian Federation of Students has issued a release expressing its support for NDP MP Charlie Angus' motion on flexible fair dealing.

Court Issues Jail Sentence for Movie Piracy

Michael Geist — Wed, 17 Mar 2010 09:01:55 +0100

A Montreal man has been sentenced to 2 1/2 months in jail for unauthorized recording and distribution of movies.

Debating Amazon and Canadian Culture Laws

Michael Geist — Wed, 17 Mar 2010 09:00:30 +0100

Yesterday I appeared on CBC Radio's Q to debate the issue of Amazon and its plan to establish a distribution centre in Canada. A podcast of the debate is now online (first segment).

Liberals, Bloc, and NDP All Support Motion To Extend Private Copying Levy

Michael Geist — Tue, 16 Mar 2010 15:30:50 +0100

MPs from the Liberals, Bloc, and NDP today all supported a motion at the Standing Committee on Canadian Heritage to extend the private copying levy to devices such as iPods. The motion, proposed by Bloc MP Carole Lavallée, provided:

That the Committee recommends that the government amend Part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well, thereby entitling music creators to some compensation for the copies made of their work.

Interestingly, the committee was split - 5 in support ( Charlie Angus, Carole Lavallée, Roger Pomerleau, Scott Simms, Justin Trudeau) and 5 against (Rod Bruinooge, Dean Del Mastro, Royal Galipeau, Nina Grewal, Tim Uppal). That left it to Conservative Chair Gary Schellenberger who voted in favour of the motion. That is seemingly at odds with comments today from Canadian Heritage Minister James Moore and Industry Minister Tony Clement who were strongly opposed to measure.

Gov't Reverses on CAP Cuts

Michael Geist — Tue, 16 Mar 2010 13:12:02 +0100

Industry Minister Tony Clement has reversed on the cuts to the Community Access Program. Clement told a press scrum this afternoon that it was a funding envelope misunderstanding.

Angus Introducing Private Copying Levy Bill, Flexible Fair Dealing Motion

Michael Geist — Tue, 16 Mar 2010 09:59:25 +0100

NDP MP Charlie Angus has shaken up the copyright reform process today with a pair of proposed measures. The first is a private member's bill that would expand the scope of the private copying levy to include digital audio recorders (DARs) such as iPods. Bill C-499 comes as a response to earlier court cases that ruled that DARs are beyond the scope of the current law. The second is a motion (M-506) that calls for support to reform the Copyright Act's fair dealing provision by adding the words "such as" to make the current list of fair dealing categories illustrative rather than exhaustive. In addition, the motion codifies the six criteria discussed in Canadian caselaw for determining whether a particular use of a work qualifies as fair dealing.

I'm certainly supportive of Angus' effort to push copyright issues into the spotlight. I'm particularly supportive of the motion on fair dealing. The motion states:

Fair Dealing Provisions within the Copyright Act

That, in the opinion of the House, the government should amend section 29 of the Copyright Act in such a way as to expand the Fair Dealing provisions of the act; specifically by deleting section 29. and inserting the words,

29. Fair dealing of a copyrighted work for purposes such as research, private study, criticism, news reporting or review, is not an infringement of copyright.

29.1 In determining whether the dealing made of a work in any particular case is fair dealing, the factors to be considered shall include,

(a) the purpose of the dealing;
(b) the character of the dealing;
(c) the amount of the dealing;
(d) alternatives to the dealing;
(e) the nature of the work; and
(f) the effect of the dealing on the work.

This approach is precisely what thousands of Canadians supported during last summer's copyright consultation. It strikes the right balance - it's fair dealing, not free dealing - and it is based on current Canadian jurisprudence. Greater fair dealing flexiblity benefits creators, innovators, educators, and the broader public. The motion deserves strong support from all parties.

The attempt to expand the private copying levy in Bill C-499 is more problematic. I am not as opposed to private copying as some, but I think expanding the system in this manner raises real concerns. First, I think we need to work on fixing the system before we work on expanding it. There are ongoing concerns about distribution of proceeds, copying vs. making available, and overbroad coverage of the levy that should be addressed.

Second, the bill expands the levy to audio recording devices, defined in C-499 as "a device that contains a permanently embedded data storage medium, including solid state or hard disk, designed, manufactured and advertised for the purpose of copying sound recordings, excluding any prescribed kind of recording device." This covers everything - iPods, iPhones, Blackberries, Androids, iPads, personal computers. While the CPCC (the private copying collective) may not target all of these devices, there is nothing in the bill that prevents them from doing so.

Third, the bill deals solely with sound recordings, but there have already been calls to extend to video and other forms of content. Expanding the levy in this manner without addressing those issues leaves open the prospect of an even bigger levy in the future.

Fourth, the competitive concerns associated with levies on devices cannot be ignored. The last attempt to place a levy on iPods led to charges as high as $75 per device. That market distortion leads consumers to purchase outside Canada, which means no levy, no sales taxes, and lost retail sales.

Fifth, we need to think about the interaction between private copying and anti-circumvention rules. The industry is pushing for anti-circumvention rules that would prohibit Canadians from picking the digital lock on copy controls found on CDs. If Canadians have paid for the right to copy via the levy, surely those rights should not be trumped by the use of DRM. Yet that is precisely what both Bills C-60 and C-61 proposed.

Sixth, the industry cannot have the levy and continue to claim that Canada is an illegal downloading haven. Canadians have paid more than $250 million in fees associated with the levy and the Angus bill would ratchet that up dramatically.

Angus' comments in the House of Commons this morning are posted below:

Mr. Speaker,

I rise today to submit a bill to update the Canadian copyright Act, which extends the Private Copying Levy to the next generation of devices that consumers are using for copying sound recordings for personal use.

The private copying levy is a long-standing Canadian solution that has compensated artists for some of the enormous copying that is taking place.
At the same time, updating the levy will provide legal certainty for fans to copy songs onto an i-Pod or MP3 player.

The levy is a compromise that works. In a world of endless downloading and copying, it provides a monetizing stream for the artists who create such phenomenal cultural works.

Mr. Speaker, there are two dead end roads on the copyright debate. The first dead end is the belief that digital locks, predatory lawsuits and zero tolerance on access can push consumers back in time.

The other dead end is the belief that all the great works of film, music and art can be looted at will.

If we are going to move down the right road we must get serious about securing a monetizing stream for creators.

Canada has a chance to strike the right balance:
No. 1: artists have a right to get paid. This is why I am bringing forward the bill on updating copying levy.
No. 2. Consumers, educators and researchers have a right to access those works - which is why I will be tabling a motion on defining fair dealing to protect those rights.

Mr. Speaker, the New Democratic Party will continue to work to ensure that copyright laws are updated to protect artists while ensuring access to these amazing works.

Government Pulling Support for Community Access Programs

Michael Geist — Mon, 15 Mar 2010 07:03:57 +0100

Marita Moll reports that Industry Canada has sent letters to thousands of community access program sites advising that funding is coming to an end for most sites. CAP was established in 1995 to provide community access to the Internet. The program will be scaled down to cover only those communities without access to a publicly funded library within 25 kilometres. Other program sites will see their funding disappear effective April 1, 2010.

Industry Canada describes CAP in the following manner:

The program plays a crucial role in bridging the Digital Divide; contributing to the foundation for electronic access to government services; encouraging on-line learning and literacy; fostering the development of community based infrastructure; and, promoting Canadian e-commerce.

The Government says the program is no longer needed. The letter to administrators states:

As you know, CAP was created in 1995, when Internet technologies and participation in the new knowledge-based economy had not yet penetrated the Canadian socio-economic landscape. Since that time, broadband Internet service in Canada has increased considerably:94 percent of Canadians now live in a community where broadband access is available for purchase. In fact, since 2008, almost all urban households and over three quarters of rural households have had access to broadband service. An estimated 8 in 10 Canadians presently use the Internet on a regular basis. In addition, alternative forms of public Internet access are now available throughout most of Canada.

The world has changed, but Moll points out that CAPs have served as a valuable resource for many communities.

Angus To Introduce Bill Proposing MP3 Levy

Michael Geist — Mon, 15 Mar 2010 06:56:26 +0100

Billboard reports that NDP MP Charlie Angus plans to introduce a private member's bill that would extend the private copying levy to MP3 players.

FCC Chair Genachowksi on Broadband

Michael Geist — Mon, 15 Mar 2010 06:55:05 +0100

FCC Chair Julius Genachowksi has a strongly worded op-ed on a U.S. broadband strategy that is scheduled to be unveiled on Tuesday.

UK Digital Economy Bill Update

Michael Geist — Mon, 15 Mar 2010 06:53:48 +0100

There has been a lot of activity on the UK Digital Economy bill in recent days including a leaked recording industry lobby document outlining its efforts to push the bill through and news that the Lib Dems plan to oppose the disconnection and web censorship provisions.

Trosow on Why Copyright Fair Dealing Needs Flexiblity

Michael Geist — Mon, 15 Mar 2010 06:52:30 +0100

UWO's Sam Trosow has posted a column on why Canada should enact a flexible fair dealing provision.

U.S. on ACTA: Full Steam Ahead

Michael Geist — Fri, 12 Mar 2010 08:34:52 +0100

This has been a remarkable two weeks for those tracking the Anti-Counterfeiting Trade Agreement, as the proposed treaty has begun to attract attention at the highest political levels. The European Union has undergone the greatest change. First, the identification of the transparency holdouts led to a unanimous EU position favouring release of the text. This week, EC Commissioner for Trade Karel De Gucht stated: "I will see to it that at the next negotiating round, in April, the Commission will vigorously push its negotiating partners to agree to release the text." This leaves the U.S., South Korea, and Singapore as the remaining barriers to full transparency. Second, this week's European Parliament resolution places the European Commission on the defensive with respect to ACTA. The negotiations will continue, but Europe clearly faces internal challenges in the ACTA process.

The U.S. response to the European developments came yesterday, as President Obama reiterated his support for finishing ACTA. In comments on IP enforcement, Obama discussed the need to "aggressively protect" IP, pointing specifically to ACTA. The reference to ACTA was clearly meant to send a strong signal that the U.S. intends to continue its push for a treaty. Indeed, the U.S. has not changed its position on anything with respect to ACTA - it is one of the lone holdouts on the issue of transparency and its negotiating position on the text itself has not moved much through almost two years of negotiations. Consider the Civil Enforcement chapter, which was first proposed by the U.S. in July 2008 at the second round of ACTA talks in Washington. The recent leak of the latest version of the chapter shows that practically nothing has changed:

Article 2.1 Availability of Civil Procedures
1. No Change
2. No Change

Article 2.2 Damages
1. No Change
2. No Change
3. Wording Change:

Original	New
Each Party shall provide that the right holders shall have the right to choose the remedy in paragraph 2 as an alternative to the remedy in paragraph 1.	Each Party shall provide that the right holder shall have the right to choose the system in paragraph 2 as an alternative to the damages in paragraph 1.

4. Change – transposed words

Original

New

Each Party shall also provide that its judicial authorities, [Option US: at least in proceedings concerning copyright or related rights infringement or willful trademark counterfeiting] shall have the authority to order, [Option US: except in exceptional circumstances][Option J: in appropriate cases], that the prevailing party be awarded payment by the losing party of reasonable attorney’s fees.

Each Party [US/J:shall] also provide that its [US/J: judicial] authorities, [US/Can/Mor/MX/NZ: except in exceptional circumstances], [US/Can/Aus/Mor: {US/Aus/Mor: at least }in proceedings concerning copyright or related rights infringement or willful trademark counterfeiting,] shall have the authority to order, [J/Can/Aus/NZ: in appropriate cases], that the prevailing party be awarded payment by the losing party of [US/J: reasonable] attorney's fees

Article 2.3 Other Remedies
1. No Change
2. No Change
3. No Change

Article 2.4 Information related to Infringement

Change – Addition of words

Original	New
Each Party shall provide that in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities shall have the authority to order the infringer to provide, for the purpose of collecting evidence…	Each Party shall provide that in civil judicial proceedings concerning the enforcement of [US/J: intellectual property rights], its judicial authorities shall have the authority upon a justified request of the right holder, to order the infringer to provide, [US/J; for the purpose of collecting evidence]…

Article 2.5 Provisional Measures
1. No Change
2. No Change
3. No Change

The U.S. position for the moment appears closer to "take it or leave it" with the bet that many ACTA partners will see little political alternative but to take it.

South Korea's Three Strikes Experience: 7 Months, No Shutdowns

Michael Geist — Fri, 12 Mar 2010 08:32:03 +0100

Heesob Nam reviews the South Korean experience with three strikes legislation that has been in place since July 2009. The government reports thousands of initial notices that have been passed along by ISPs. There have been no instances of using the subscriber termination power.