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.”

On this motion, the CRIA provided an affidavit from Gary Millin, President of MediaSentry, a company that specializes in detecting the distribution of materials on P2P networks. The record labels supplied MediaSentry with the names of songs that were to be investigated. The company then searched for and downloaded the songs, matched the sources of the files to specific IP addresses and took screenshots of the users shared folders to show the volume of copyrighted material being made available for download.

Justice Konrad von Finckenstein (now chairman of the CRTC) cited Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133, a case involving a pharmaceutical company that sought from Revenue Canada the names of alleged importers of a certain drug. By importing this drug, the importer had effectively infringed on Norwich Pharmacal’s intellectual property rights; in this case, it’s patent. Revenue Canada was ordered to disclose the identity of the importer. The judge determined that The Equitable Bill of Discovery Requirements, which is a list of rules that govern whether a third party can be forced to provide information, should be applied in the file sharing case. (Finckenstein, par. 13)

The first rule states that the applicant putting forth the motion must establish a prima facie case against the person they intend to sue. This means that the plaintiff must provide sufficient evidence to win the case barring any contest or additional evidence presented by the defendant. The respondents (the ISPs) argued that Mr. Millin did not collect the information provided personally and he did not reveal his sources. Therefore, they claimed the evidence was hearsay. Motions Judge Finckenstein agreed. This judgment that the prima facie test had not been met would be the turning point for this ongoing legal battle and would be addressed thoroughly at appeal.

Another requirement for discovery states that the person that is being ordered to provide information must be the only practical source of information available in order to justify a breach of privacy. The Motion Judge did not feel convinced that the identities could not be more easily sought directly from Kazaa.

The other major roadblock to the CRIA being granted access to the users’ identities was the fact that the discovery requirements state that the interests of intellectual property protection must outweigh the privacy concerns of the alleged infringers. The respondents argued that the time between the alleged infringement and when they could provide the information was too long to ensure the information was valid. The ISPs use dynamic addressing, that is they frequently change the address assigned to a particular user. Even then, “at best the ISPs will generate the name of the account holders; however, they can never generate the name of the actual computer users”. (Finckenstein, par. 34) This unreliable data could potentially breach the privacy of innocent users as well as unnecessarily name them as defendants.

The Motions Judge thereby decided that because the evidence was hearsay, and arguably stale anyway, he found that the requirements for discovery were not met and denied the motion put forth by the CRIA. He did not stop there. The Judge continued with far ranging statements regarding whether this was a case of copyright infringement at all.

Read part 3…

Well, it is more accurate to say that file-sharing is not illegal in Canada.

In 2005, I wrote and essay: “Copyright v. Privacy: A Review of the Legal War Between Record Labels and File Sharing from a Canadian Perspective”. I am going to review it here, in my blog and discuss what has happened since. Here is part one of the essay:

In February of 2004, the Canadian Recording Industry Association (CRIA) filed a federal lawsuit against 29 alleged file sharers for copyright infringement and requested their identities from the five major Canadian Internet Service Providers (ISPs). This was the first suit brought by the record label trade group against individual peer-to-peer (P2P) file sharers whom the CRIA claim have caused the loss of millions of dollars and dozens of jobs in the Canadian music industry. Citing privacy concerns, the ISPs refused. The CRIA proceeded to file a motion in the federal court to order the ISPs to disclose their clients’ private information.

This case forced into court the issue of whether file sharing is legal in Canada. In the last several years the Recording Industry Association of America (RIAA), the label trade group for the U.S., has begun suing individual file sharers for infringement of copyright. They are able to do this by virtue of the Digital Millennium Copyright Act (DMCA), which implements the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty, (WPPT), 20/12/1996 (CRNR/DC/95, December 23, 1996) into U.S. law. The DMCA allows copyright holders, among other things, special rights to sue anonymous infringers. Since the DMCA was signed into law in 1998, over 1500 file sharers have been sued for monetary damages by the RIAA. Canada has not implemented the WIPO treaty into copyright law and thus,
“It’s a more difficult, expensive and cumbersome process [to sue infringers] than in the U.S.” (Hu, 2003 quoted Geist)

The plaintiff, the CRIA, represents the major record labels and claim to produce 80% of all legitimate sales of music in Canada. The Defendants are a number of peer-to-peer file sharing program users (mainly Kazaa) known only by their online aliases. The CRIA claims that it has proof that the defendants have made thousands of copyright protected songs available to the world by placing them in shared folders on their hard drives.

By law, in order to bring action against these defendants, the CRIA must be able to identify who they are. They say that the only way that they can determine their identities is through the ISPs providing Internet access. The alleged file sharers have an expectation of privacy that “is based on both sections 3 and 5 of the Personal Information Protection and Electronic Documents Act (PIPEDA) and on their ISP account agreements.” (Finckenstein, 2004 par. 9) But, under PIPEDA, paragraph 7(3)(c), an ISP may disclose personal information if so required by court order. The ISPs originally refused to provide these names citing PIPEDA and hence the CIRA hence brought a motion to have the court order the ISPs to identify the users.

Gripping, no? Subscribe to this blog and don’t miss the stunning conclusion!!

Read part 2…

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?