Friday, April 30, 2010

USTR "301" Report Due Today

The USTR is expected to release its annual "301" report today. I wouldn't be surprised to see Canada in the top three "piracy haven" countries on the priority watch list - along with Russia and China. At the Fordham conference earlier this month, Stan McCoy of USTR put Canada right up there in his rhetoric. Will Canada be #1 or #3?

Here are 21 reasons why Canada shouldn't even be on this list, and why the USA should look in the mirror.


PS - the 2010 Report is out. Here's what it says about Canada:

Canada will remain on the Priority Watch List in 2010. The United States looks forward to the government of Canada’s implementation of its previous commitments, recently reaffirmed in 2010, to improve IPR protection, and is encouraged by the high level of cooperation between the Canadian and United States governments on IPR matters. However, Canada has not completed the legislative reforms in the copyright area that are necessary to deliver on its commitments. The United States urges Canada to enact legislation in the near term to update its copyright laws and address the challenge of Internet piracy. Canada should fully implement the WIPO Internet Treaties, which Canada signed in 1997. Canada’s weak enforcement of intellectual property rights is also of concern, and the United States continues to encourage Canada to improve its IPR enforcement system to provide for deterrent sentences and stronger enforcement powers. In particular, border enforcement continues to be weak. The United States encourages Canada to provide its border officials with the authority to seize suspected infringing materials without the need for a court order. The United States will continue to follow Canada’s progress toward implementing an adequate and effective IPR protection and enforcement regime, including its progress on actions to address Internet piracy and improve border enforcement.

Monday, April 19, 2010

US Supreme Court to Hear Costco v. Omega Parallel Import Case

The United States Supreme Court has granted certiorari (i.e. it will hear the appeal) in the case of 08-1423 COSTCO WHOLESALE CORPORATION V. OMEGA, S.A

The fact situation is identical for all intents and purposes to the Kraft v. Euro Excellence case, from Canada's Supreme Court - in which I was involved as counsel on behalf of the Retail Council of Canada and in which our arguments on the "hypothetical maker" issue carried the day.

All eyes will be on this US case, which will be a very important milestone in the never ending "grey" or :"gray" market and "parallel import" wars.

It could be heard later this year.


Saturday, April 17, 2010

A good call by Hon. James Moore on Funding for CDN Music Industry

As I tweeted earlier yesterday:
Bravo to @mpjamesmoore for serious $78 million support for CDN music. This is far more effective than an iPod "tax".
Indeed, it makes a lot of sense to encourage Canadian artists directly through Government programs. That way, the money can go to Canadians and those who have a case to get it.

In this case, the three organizations entrusted with taxpayer's money are worthy ones - namely:



  • SOCAN Foundation:

  • They should hopefully do a decent job of distributing $78 million of taxpayer dollars to worthy Canadian artists - at least in the commercial music realm.

    Serious music is quite another matter, and requires further special attention. This is especially the case since the current management of CBC has effectively thrown serious music under a bus and destroyed 70 years worth of essential infrastructural support for it. It's still not too late to restore much of what was lost and even to save a lot of money in the process - not least of which would involve significantly lower tariff payments to SOCAN and Re:Sound (NRCC). But some serious decisions need to be taken by the CBC president if this is to happen, and if not by him, then by the Board of Directors and potentially, if necessary, by the Government.

    Because funding programs are outside of the copyright system, they are not subject to the strictures of national treatment, which inevitably results in major outflows to the USA and EU.

    This is far better than an iPod "tax" that would hand over lots of money to the the CPCC, which will eventually hand out what's left, after legal, consulting and other expenses, to mostly foreign interests on the basis of proven commercial success - i.e.not to emerging and/or deserving Canadian artists who don't show up enough or at all on the record or radio play data to benefit to any meaningful extent. . Not to mention the distortion and inefficiency such a "tax" would create in the market for everything from cell phones to laptops, and - of course - iPods.


    Friday, April 16, 2010

    Justice Hughes on Canada's Copyright Act

    Here is a recent breathtaking ruling by Hughes, J. of the Federal Court of Canada setting aside a "rolling Anton Piller" order that allowed for civil search and seizure before judgment against several "small shopkeepers." It is an excellent review of the dangers of this ultra-powerful enforcement weapon when used improperly and on the basis of "careless, inadequate or misleading" evidence. This ruling must be read with great care by any IP enforcement counsel contemplating use of an Anton Piller order.

    And here's a statement from that ruling that should be brought to the attention of those who would impugn the adequacy of Canadian copyright law and are calling for additional and unnecessary enforcement powers:
    [60] The Copyright Act supra is among the most generous of any intellectual property statute in Canada or elsewhere in providing for rights and remedies. Copyright subsists without the necessity for registration and is presumed in the absence of evidence to the contrary. Registration is cheap and easy and provides presumptive evidence as to copyright subsistence and ownership. Proceedings can be quickly brought as an application rather than an action. Damages can either be proved or an election to take statutory damages made. An injunction can extend to works not specifically put in issue. Allegedly infringing works can be taken into interim and final custody. An Anton Piller Order must be considered as an exceptional remedy to be used with caution and respect. It should not be considered as routine where so many other remedies and procedures are available.
    (emphasis added)
    For those in policy circles abroad who may not know him or have seen him at the Fordham IP conference, Justice Hughes was a preeminent Canadian barrister for decades before his appointment to the Federal Court. His books are - or should be - in every IP firm library in Canada. He speaks not only with the authority of a Federal Court judge but as a judge with vast and successful experience in IP law. His views require attention in any fora where IP policy is in issue. ACTA, CETA (Canada/EU) , Special 301 and domestic copyright revision immediately come to mind.


    PS - this 30 page ruling dated April 12, 2010 was issued five days after the hearing.

    Wednesday, April 14, 2010

    Levy Myths, Strange Bedfellows and Taxing Technology

    So - the Liberals, NDP and Bloc have voted for a thankfully non-binding resolution supporting an iPod “tax”.

    And here comes another “save the levy” love-in (i.e. press conference) of artists at the this year’s Juno awards in Newfoundland, paid for by the CPCC which places “levies” on CD’s many or most of which are used for anything but copying music. In other words, paid for in large measure by those who have used CD’s for baby and pet pictures and data backup.

    Let’s get some facts straight on the proposed iPod “tax”. Yes - I’ve been paid to work against it in the past, but nobody is paying me to write the following. I’m a lawyer, not a lobbyist. And unlike a prominent Canadian copyright lawyer I recently heard speaking, I do disclose when I have had involvement on the record in litigation.

    The last time the CPCC tried this on for size in 2007, it formally asked for a $75 levy (i.e. “tax”) on a 30 gig or more device, such as the iPod Classic which currently sells for about $270 in Canada and about $40 less in the USA. This $75 figure is a matter of record. See here at top of page 5. To deny or to fudge this is simply wrong.

    If this “tax” or anything close were to be imposed, many Canadians would take the very easy step of buying such a device from the USA. There are highly reputable online retailers in the USA happy to ship to Canada and the shipping cost would be minimal, given the small size and weight. More retailers would appear. Why would a rational consumer pay a face value difference of more than $100, with the CDN dollar at par or better?

    Here’s the key definition in Charlie Angus’s Bill C-499:
    “audio recording device” means 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”
    The way that Charlie’s bill is drafted, the levy would clearly apply to all kinds of cell phones, smart phones, external hard drives and even to laptops and personal computers, since they have “embedded” memory for all intents and purposes. Devices that use removable flash memory (e.g. Blackberries) would be off the hook, while others such as iPhones would be caught. This alone shows how unworkable such a “tax” is from the start. Of course, to even the playing field, the CPCC could try to “tax” removable flash memory, which it has not been able to do in the past and will not likely be able to do in the future. Since the Federal Court of Appeal has all but disowned its last decision on what “ordinarily used” means in the context of blank CDs, I doubt such a levy on removable flash would survive - even if the Copyright Board blesses it in the first instance.

    So, the CPCC could seek a tariff on all kinds of devices at the Copyright Board, which has shown considerable sympathy with extending this levy scheme as far as it can be pushed and then some. The Federal Court of Appeal has not once but twice had to tell the Copyright Board that it cannot levy “devices”.

    The exemption by regulation provision would be useless. Needless to say, getting exempting regulations implemented after the fact cannot be counted upon and would never be easy. The regulation making power of the Governor in Council should never be counted on as an antidote to bad legislation.

    Politics often maketh strange bedfellows but the current alliance of the Bloc and NDP on this issue - plus today’s addition of the Liberals - is really odd. Here’s what the Bloc spokesperson said in the House the other day:
    There can be no doubt that people must be paid for their work. All workers have the right to earn wages, even my colleagues and me. Artists and craftspeople have the right to be paid for what they do and create. Consumers have the right to load the CDs they have legally purchased onto their iPods without feeling like they are breaking the law every time, without feeling like criminals.
    Let’s examine some of the contradictions, paradoxes and myths that flow from those two sentences alone, which are straight from the CPCC play book:

    1. Sure, musicians should get paid for their work. But musicians aren’t working when someone shifts music from one format that has already been paid for to another - whether for preservation or convenience purposes. And why should they be paid from the proceeds of a very high “tax” on countless people who don’t listen to any music on these devices? All of these devices are, after all, multipurpose. That is the beauty of modern innovative technology and the very essence of the modern computing “machine” that can do whatever it is instructed to do. And that’s why there is not and likely will never be “taxes” on media or devices in the USA, the UK and Australia, which are Canada’s closest copyright proxies. These countries “get” the idea that technology shouldn’t be taxed in favour of the loudest interest group. Justice Stevens got it in 1984 in the US Betamax case when he carried a majority of the US Supreme Court in favour of innovation rather than inhibition of promising new technology capable of substantial non infringing use.

    2. Consumers should not have to pay a “tax” to format shift CDs they already own. Even the President of CRIA agrees with that. The musicians have already been paid at least once - and more than once for those who have replaced LPs with CDs.

    3. How many times should copyright owners get paid for the same thing? Musicians are already getting paid for iTunes downloads by the record companies - assuming that the record companies get around to it - which doesn’t always happen. The Board has already certified Tariff 22.A for composers and authors (subject to judicial review) for permanent downloads from iTunes, etc. This is SOCAN’s Tariff 22A. That is for a “communication right”, even though the composers are already getting paid for reproduction. More can be expected in due course from other claimants. Unlike US Courts, the Copyright Board has no hesitation in imposing multiple tariffs on the same transaction in favour of different collectives with more or less the same ultimate stakeholders for what the Board considers to be distinct rights under the legislation.

    4. There is a myth that these “taxes” ensure that creators get paid. This is easy to dispel. The maximum average payout to beneficiaries of the Canadian private copying levy to date is about $160 a year, according the CPCC’s and own figures. The average payout to actual individual creators is doubtless much less, because this figure includes some presumably very large payouts to publishers and record companies.

    5. There is a myth the levies benefit creators. See #4 above. On the other hand, about $25 million to date has been paid out to date to a handful of lawyer and consultants and the employees of the CPCC. It is not a large organization. I strongly suspect that the levy results in no more than enough for a few beers per year per musician, and that’s only for those who show up on the CPCC radar screen on the basis of radio play and CD sales, which by definition is a fraction of the creative musician universe. Many emerging artists, most well established “serious” musicians, and many of yesterday’s stars are probably not getting a penny. Not to mention countless “session” musicians, who are the backbone of the music business. This levy means virtually nothing to them.

    6. There is a myth that the levy system in Canada is transparent. However. I have been trying for a long time to get disclosure of such basic figures mean (average) and median payouts to creators and other categories of beneficiaries. The Copyright Board won’t require this disclosure, although it could readily do so in my view. It considers this to be an internal matter for the collectives. So, not only individual creators but the Canadian public have no idea of how much this levy really means to the average and median creator. I challenge the CPCC to provide audited figures on this to the public. But I won’t be holding my breath.

    7. There is a myth that there is a reliable method in the distribution of the levies. They are supposedly distributed, as noted, according to data relating to radio play and sales. This, of course, has no obvious connection to what is actually copied but does clearly favour established artists and record companies. While the big record companies and collectives may keep a watchful eye on each other, I have seen no basis to assume that anyone is looking out for the interests of individual non-commercially significant creators in this distribution process.

    I’m just getting started....

    This particular exercise in Parliament will, of course, have no legal significance whatsoever - but it could have very interesting political consequences. Ironically, and not for the first time, these consequences will probably not be what the music industry intended.