So the Federal Court of Appeal made it clear that the area of downloading, hard drives and file sharing remains a very grey area. In future cases, which the CIRA will no doubt file in the coming months, these aspects of the Copyright Act will be tested. This foreboding was voiced in one of Sexton’s final comments: “[I] wish to make it clear that if this case proceeds further, it should be done on the basis that no findings to date on the issue of infringement have been made.” (Sexton, par.54)

This is the decision that has been seen as a victory for privacy rights in Canada, but essentially it describes in detail the legal standard that the CIRA must meet in the future. The CIRA will simply show that they have a bona fide claim for copyright infringement and be handed the names of alleged infringers. Although everyone involved seems to value the privacy rights of Kazaa users, the CIRA makes a compelling point that file sharing “is a blatantly public activity. It is carried on in full view of millions of people. There is no reasonable expectation of privacy here at all.” (Henderson, 2005) Why this was not mentioned during the motion for discovery is not clear, but it will surely make up a part of their future bona fide claim.

The Canadian Government is expected to implement new reforms to the copyright act including a making available right, legal protections for technological protection measures, a notice-and-notice system to address online infringement, protection for rights management information, the introduction of a reproduction right for performers of sound recordings, and an adjustment of the term of protection for sound recordings. (Canadian Heritage, 2005) This is after denying even more drastic changes proposed by a CIRA-lobbied committee tasked with drafting the proposals. (Bulte, 2005) It will no doubt open the floodgates for many RIAA-style lawsuits against Canadians that in the U.S. have shown little effect of the proliferation of P2P file sharing. Geist shares the opinion that “while [the CIRA] is legally entitled to file these suits, similar actions in other jurisdictions have had no discernable impact on file sharing and put the industry at odds with the growing concern for personal privacy. That makes for a risky strategy with few winners and many losers.”

Part 2 ended with the judge suggesting that file-sharing in this case, was not copyright infringement at all…

The Copyright Board of Canada in 2003 amended the Copyright Act’s section on private copying to include language for better definition of an “audio recording medium” and to define levies on the sale of these items. (CBOC, 2003) The point of the Private Copying amendment is to allow an individual to make copies of protected material strictly for their own use, while still paying artists for their work. This money is collected via a levy placed on blank media that is collected by the Canadian Private Copying Collective (CPCC) as royalties.

The CPCC then distributes the monies to copyright holders. The amendment did not discuss the source of the copied material but only the final media holding it, thereby making downloading appear legal under certain circumstances. The WPPT makes available the exclusive right to copy to the copyright holder. This is not a right granted by the Canadian Copyright Act and therefore nothing prevents a person from making as many personal copies as they wish. Based on this, the judge found that since the downloading was for personal use, there was no infringement.

The other important distinction is whether the users had distributed or authorized the reproduction of the materials. The Motions Judged cited a similar case as precedent in his statement. In the case of CCH Canada Ltd. v. Law Society of Canada, 2004, the court found that if a library places a photocopier in the middle of a room containing copyrighted works, the library is not expressly authorizing infringement. Since the users had only placed the files in a shared folder, the element of authorization was missing. Additionally, he found that “before it constitutes distribution, there must be a positive act by the owner of the shared directory, such as
sending out the copies or advertising that they are available for copying.” (Finckenstein, par. 28)

The judge also noted that under section 27 of the Copyright Act, the user must have knowledge that the copyrighted materials are being copied to constitute infringement. Furthermore, he added that under section 80(1) of the Copyright Act, “downloading a song for personal use does not amount to infringement”. (par. 25) Michael Geist, law professor at the University of Ottawa where he holds the Canada Research Chair in Internet and E-commerce Law said, “this appeared to make uploading itself legal as well, since a peer-to-peer user–like a
library–would be entitled to assume that the person on the other side of the connection was acting legally, since downloading was also legal in Canada.” (Borland quoted, 2004)

The decision was reported in the media as a triumph for Internet rights activists and privacy advocates. Canada was proclaimed a haven for piracy and the CRIA vowed to appeal the judge’s ruling.

Read part 4…

In this “institutional economic analysis”, he explains the structure of the music industry, especially the functions of major record labels and music publishing companies, and their dependence on the current system of copyrights. He shows how the industry is directly related to both the national and international system of copyrights and that this system is based upon its historical capacity to influence governing bodies to change intellectual property law in its favour.

Dolfsma concludes that new communications technologies have made current copyright law obsolete and therefore should be “removed or appropriately changed, if and when possible”. The reliability of this conclusion is questionable because of the author’s subjective tone and self-contradiction with respect to financial gains for companies and artists. Although the conclusion is ineffective in illustrating the advantages of Internet transactions’ exception from copyright, it does succeed in proposing a plausible scenario for the future of intermediaries.

Dolfsma believes that “transactions involving music…on the Internet are best exempted from copyright”. He suggests that the main benefit of this model is eliminating the ability of major intermediaries “to maintain excludability and rivalry in the consumption of music products.” His opinion that this would “not be in itself a deplorable development” is obviously subjective since “illegal CD copying and music downloading could put the jobs of 600,000 people in the music industry at risk”, according to Jay Berman, head of the International Federation of the Phonographic Industry (IFPI) (BBC News, 2003). The author assumes that there will always be a market for major label produced and distributed music, and therefore the law should be changed to create a more even playing field on the international music business stage. Even if the Internet was no longer under the jurisdiction of intellectual property law, the author fails to provide evidence that this development would benefit artists, the economy or the
culture of society.

Dolfsma argues that an “Internet free port” would hurt major players that currently benefit from copyright, but does little to show how it would help anyone. One of the main points of the article is that “the institution of copyright in the music industry is a largely ceremonial one” and that it has created an insurmountable barrier to entry for new artists. Record companies and publishers generate a tremendous amount of money through retail sales of CDs and royalty collection that is spent on massive marketing campaigns, radio promotion, prime retail placement, million-dollar productions and international distribution.

Although this copyright-free model could have a negative effect on these companies’ revenues, it does not appear to particularly benefit artists. In fact, he acknowledges that “whether or not less well-known authors will be discouraged from creative activities if the Internet is exempted from copyright, is an open question.” Most of the changes in the future that he predicts don’t seem to be related to copyright. New forms of music will emerge quickly online and the roles of intermediaries will change with or without copyright protection. Even if only a small number of independent musicians benefit financially from copyright, how can denying them that revenue help them?

At the time the article was published, Napster was at its peak and stimulated much social discourse regarding music, art and copyright law. In that the author includes the notion of “arbitrage” and an “Internet free port” but fails to mention Napster or file sharing puts into question the author’s reliability with regard to the topic of digital music.

Dolfsma’s article does propose some unique and thought-provoking ideas regarding the continuing importance of intermediaries in the future. He discusses the potential for online communities to effect volatility in the music marketplace and to promote cultural diversity. His observations regarding steps that must be taken by record companies to “maintain their hold on the market” such as stifling the emergence of new intermediaries is still a major issue today.

More recently, we have seen the labels (now the big four, soon to be the big one?) take some tepid steps into the world of legal digital distribution. Although digital sales of music have slowed the bleeding, the dinosaurs are pulling out all the stops to avoid being left behind on the Titanic. There was a time when the distributors of plastic discs trembled at the sound of the word “disintermediation”. That term originally suggested getting rid of the labels to allow musicians, artists, singers, dancers and all other residents of Camelot to sell directly to their dedicated fans. The musicians quickly learned that their dedicated fans were quite happy to steal from them. Now, it seems, the savvy chaps with a keen eye for talent and tour support budgets are trimming the real fat: warehouses, tracker-trailers and those pesky retailers. No more unsold inventory, no more returns, no more breakage and no more greedy store owners eating into the top line. Could you imagine how much is would cost to ship all those CDs to China?