Some 2009 Copyright Issues

Mark HayesHayes | eLaw LLP

ALOC Professional Development Day

June 4, 2009

Internet Copyright

• Several common questions since Internet-based copyright use became common in mid-1990s– Does copyright law apply?– What rights are being infringed?– Where does infringement take place?– Who should be responsible for infringement?– How much should be paid for Internet rights?

Copyright Basics• Is work subject to copyright?• Who owns the copyright? • Is the copyright divided, jointly held,

collectively administered?• Can I get the necessary licences to use the

work online?• Will one of the exclusive rights be infringed if

I don’t?• Can I rely on one of the exemptions or “user

rights” in the Copyright Act?

Early Developments

• “Cyberspace Is Not A No-Law Land” – 1997– offline copyright law can apply to online copyright

law

• Copyright Board Tariff 22 – 1999 (and subsequent appeals)– ISPs are not responsible for communicating

copyright works over their systems; caching and subsequent transmission not a new communication

– infringement takes place anywhere there is a “real and substantial connection” with Canada• problematic in licensing context

Recent Developments

• Copyright Board tariff decisions and appeals

• Some court cases on international online copyright liability

• Copyright reform • “User-generated” content

Copyright Board and Appeals

• Ring Tones (Tariff 24)– Copyright Board - August 2006– Federal Court of Appeal - January 9, 2008

• Tariff 22 Phase II – October, 2007• Satellite Radio – April, 2009

Ring Tones – Tariff 24

• Problem created by separate reproduction and communication rights– historically separate– reproduction right concerned with creation of

physical copies (books, CDs, DVDs)– public performance (pre-1990) and communication

(post-1990) mainly related to broadcasting• Internet and other telecommunications

channels conflated these rights– is delivery of a copy of a work by

telecommunications a reproduction, a communication or both?

Ring Tones – Tariff 24

• Ring tones present classic case– small music file being sold for installation on

phone– use of telecommunications a delivery

method, not part of exploitation of work– really a reproduction accomplished using

telecommunication– reproduction right already directly licensed– should wireless provider have to pay again

for communication right?

Ring Tones – Copyright Board

• Agreed that transaction was primarily a reproduction– however, Copyright Act requires payment when a

communication is made by telecommunication– relevant only to tariff rate, not liability

• Result - communication right is not an electronic substitute for pre-1990 performance right

• Copyright owners entitled to additional royalty for transportation of work by telecommunication

Ring Tones – Fed. Ct. Appeal

• January, 2008• Fairly mechanical analysis• Communication takes place when copy of

work is received, even if recipient doesn’t listen to it immediately

• Fact that transmission is primarily a reproduction not relevant

• Simultaneous transmissions not necessary for a “communication to the public”

Tariff 22 – Phase II

• Phase II was to establish rates for Tariff 22 tariff

• As a result of SCC decision in Phase I, claim against ISPs abandoned– SOCAN split tariff into many parts to target all

different online uses– largely a mirror of multiple offline tariffs

• In this decision, Board dealt only with online music services (music downloads)– tariff for other uses (including streaming) yet to

come

Tariff 22 – Phase II

• “Internet transmissions are not just another form of delivery, for the simple reason that paragraph 3(1)(f) of the Act specifically targets communications by telecommunication. While the notion of telecommunication itself must be interpreted in a way that takes account of technological developments, any attempt to compare delivery of music online with delivery of music on physical media is inherently flawed from a copyright perspective. Sending a music file over the Internet is protected by the Act; sending a music CD in the mail is not.”

Does This Make Sense?

• Enumeration of rights in section 3 sets out exclusive acts that copyright owners control

• All acts are exploitations of work, not control over how work disseminated or transported

• Why should reproduction of work over wire be different from reproduction using another digital medium?

• Mainly a problem for music, since copyright historically divided into many pieces with different owners

Some Implications

• Licensees of copyright works must ensure they obtain all necessary rights– for electronic distribution, must obtain

licence to communicate to the public– note most US-drafted licences refer only to

“public performance” rights; may not be equivalent to Canadian communication right

• Will additional payment be required for any new “making available” right?

Tariff 22 – Phase II

• Previews– online services allow users to sample

parts of a song before purchasing

• Board found this activity is fair dealing for research purposes and thus not infringement

• May be applicable to other activities, such as providing samples of books or other works

Tariff 22 – Phase II

• Extra-jurisdictional reach• SCC left Copyright Board with a problem– “Real and substantial connection” test useful

in infringement cases, but impossible to apply to licensing such as tariffs

– Test “requires looking at each communication individually to determine if the connection to Canada is sufficiently strong for the communication to happen “here”. In practice, this is impossible to do.”

Other Cases

• Jurisdictional rule created by SCC in Tariff 22 creating problems outside of tariff cases

• Disney v. Click Enterprises (Ont., April 2006)– Canadian web site streaming copyright movies– plaintiffs obtained default judgment in NY– moved to enforce in Ontario– “real and substantial connection” to NY since

Click “utilized the Internet to enter the United States to carry out its activities”

– use of US payment processor also important

Other Cases

• Contrast Desjean v. Intermix (F.C.A., Nov. 2007)– proposed class action based on allegation that

defendant had delivered spyware to customers– although Intermix delivered software to computers

in Canada, this was not sufficient to establish jurisdiction

– F.C.A.: “it would be manifestly unfair to subject Intermix to this Court’s jurisdiction since it would, in effect, mean a U.S.‑based operator of a Web site, with no business assets in Canada and no physical presence in the jurisdiction, could be sued in this country as well as in any other country from which a plaintiff might choose to download its products.”

Other Cases

• eBay v. M.N.R. (F.C., Sept. 2007)– information about eBay PowerSellers stored on

servers located in US– eBay Canada was not owner of information, but

had access to information in normal course of business

– information had to be produced to M.N.R.

• Internet jurisdictional issues still far from clear– SCC’s test deliberately vague– good for courts; bad for business

Satellite Radio Tariff

1. Liability for authorizing reproductions made outside Canada?

2. Is 4 to 6 second buffer in radio reception device a reproduction?

3. Is Internet-based streaming involve a reproduction?

4. Do added features (extended buffer, radio replay, pause and rewind feature and sampling of programming content) involve reproductions?

Reproductions Outside Canada

• Board decided reproductions made outside Canada did not create liability inside Canada

• Even if person inside Canada authorized the reproductions

• Copyright is territorial, and “here and there” theory from Tariff 22 did not apply to reproductions

• Location of authorization is irrelevant

4 to 6 Second Buffer

• 3 questions:– copy of the protected work?– copying “substantial”?– resulting copy in a “material form”?

• Answer to 1st and 3rd questions is “yes”, but buffer copy does not satisfy substantiality requirement

• Important implications for computer liability

4 to 6 Second Buffer (substantiality)

• “The rolling 4 to 6 seconds of a musical work is not an aggregate of an entire work. At no time does a subscriber possess a series of 4 to 6 second clips which when taken together would constitute a substantial part of the work. It matters not that over time the totality of all works transmitted are reproduced. We are dealing with a rolling buffer and at no time can we line up all of the fragmented copies amounting to one complete copy of a musical work. At no point in time can one extract from the RAM of the receiver more than 4 to 6 seconds of a song (or more accurately of a signal). More importantly, at no time is there a choice as to what goes in there or when it comes out.”

4 to 6 Second Buffer

• Important conclusion for computer and broadcasting industries

• Has been an ongoing concern about liability for automatic transient reproductions

• While Board carved out only a limited exception, may avoid some types of de minimus claims

Copyright Reform

• Canada has been trying to implement “Phase II” copyright reforms since before signing of WIPO Copyright treaty in 1997

• 3 bills introduced - each died before being passed

• Bill C-61 in 2008 latest attempt

Bill C-61

• Although billed as dealing with online issues, changes deal as much with offline issues as with the Internet– “Making available” right– Digital format changes by consumers– Educational use of Internet material– ISPs and server operators; “notice and notice”– Statutory damages limited to $500– Technological protection measures (TPMs)– “Information location tools”

“Making Available” Right

• Both WIPO Copyright Treaty (WCT) and Performances and Phonograms Treaty (WPPT) require granting of “exclusive right of authorizing any communication to the public ..., including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them”

• C-61 would have revised Sections 15 and 18 to grant right “to communicate ... to the public by telecommunication in a way that allows a member of the public to access it from a place and at a time individually chosen by that member of the public”

“Making Available” Right

• This “making available” right granted only to performers and sound recording owners

• Already in place for other works?• Implications:– not clear if “making available” is infringement

of other works, such as audiovisual works– “making available” appears to be related to

communication right; will additional royalty be required in addition to communication and reproduction royalty?

Digital Format Changes

• Individuals permitted to make certain format changes, but only to limited categories of works and in specific non-commercial situations– s. 29.21: book, newspaper, periodical or videocassette– s. 29.22: musical work embodied in a sound recording– not non-musical sound recording

• Must own non-infringing original• Cannot have circumvented TPM• If copy was downloaded from Internet, then any

contract prevails over format changing right– unusual provision, to say the least

Educational Use Of Internet Material

• Section 30.04 would have allowed educational institutions to make use of material available on Internet for educational purposes

• Must give credit• Cannot use if protected by TPM or “a

clearly visible notice”

ISPs And Server Operators

• Section 31.1 codifies much of SCC’s decision in Tariff 22– Provision of access in itself not

infringement– Caching in itself not infringement– Provision of digital memory not in itself

infringement unless operator has notice of decision that content is infringing

• Solving a problem that does not exist?

“Information Location Tools”

• Search engines and other providers of information location tools not liable for damages, but can be subject to injunction

• Immunity lost if:– searches not automatic– work is modified– any automated caching restrictions are not followed– operator interferes with lawful gathering of use

statistics

• Solving a problem that does not exist?– US cases have already found implied licence for

search engines where site operator does not block crawling

“Notice And Notice”

• ISPs, storage providers and search engines must pass along any “notice of claimed infringement” to customers

• Failure to do so does not result in loss of immunity from infringement, but could lead to statutory damages of up to $10,000

Statutory Damages

• For individuals, limited to $500 for all infringements of the plaintiff’s works by an individual– infringement must have been for private

purposes– individual can’t have circumvented TPM

• Will significantly reduce possibility of actions against consumers as has been seen in the US

TPMs

• Too complex to deal with in detail here• Important to note 2 types of TPMs:– access TPMs– infringement TPMs

• Only infringement to circumvent an access TPM – copyright owner cannot elect statutory damages

• Cannot provide service, technology or device that circumvents either type of TPM

• Limited exceptions

What’s Next?

• Bill C-61 died on order paper before last election

• Minister has hinted that new bill will be introduced in fall 2009

• US continues to put pressure on Canada• Reaction to Bill C-61 was fairly muted– opposition may not force major changes this

time

• Still much lobbying to be done!

User Generated Content

• UGC not a new concept– bulletin boards in 1990s were similar in

some ways

• Many factors have increased level of concern:– increased bandwidth– improved compression– new technologies for presenting web sites– new ways to connect users

Types of UGC

• Text-related– reviews and rants

• Wikis– collaborative web site collecting factual

information• Social networking sites– in purest form, little copyright material

• Folksonomies• Link exchanges– have been some controversies about “deep links”,

but generally do not create copyright issues

Types of UGC (2)

• Collaborative creation– sometimes online collaboration used to

create offline content

• Submission contests–may be used to create marketing material

and other commercial content

• Games and online worlds• File exchanges

Copyright Issues Involving UGC

• Does content enjoy copyright protection?– content must original enough to qualify for

copyright protection–much of blogosphere might not qualify

• Ownership• Infringement• Defences or exemptions

UGC Ownership

• Often ownership of UGC is quite complex– owned by poster– owned by poster and third party– adapted from third party content– owned entirely by third party

• Single item may have many copyright components with differing ownership– performers and authors may not know actual ownership

situation

• Often “mashups” of content from multiple sources encouraged by site operator

Infringement

• Submission and posting of UGC will infringe a number of rights– reproduction– communication– public performance–making available– broadcasting

Defences or Exceptions

• “Fair dealing” or “fair use”– applicable to both poster and site operator – extent of defence varies widely by

jurisdiction– may limit ability to rely on defence if no

geographic limitation on site access

• Innocent hoster– again varies widely by jurisdiction– generally must not know content infringes

and must not take active role in posting

Defences or Exceptions

• Notice and take down; notice and notice–many jurisdictions require that “innocent”

hosters take down infringing content upon receipt of a notice from copyright holder

– details vary between jurisdictions– DMCA procedure used by many sites, but

may not protect site operator in other jurisdictions

– re-posting of infringing UGC

Standardization

• “Principles for User Generated Content”– published October 2007 by coalition of media companies

and UGC sites

• Number of obligations on UGC site operators– content identification technology– assist in locating infringing content– take down content on receipt of a notice from copyright

owner

• In return, UGC site operators would not be sued and copyright owners would “accommodate fair use”

• Principles widely criticized as biased towards excessive control by copyright owners

Standardization

• Some issues– lack of consultation with user groups– technology focus makes compliance

difficult for smaller UGC sites

• Too soon to tell if Standards will become de facto industry requirement– note that Google is using technology to

prevent infringement even though not subscribing to Principles

Some Site Operator Strategies

• Terms and conditions• Notice and takedown• Licensing and rights clearance

Basic Terms and Conditions

• Restrictions on use and penalties for breach– most common penalty is withdrawal of posting

right– difficult to enforce if users anonymous– may never actually want to use penalties– usually intended to short-circuit argument that

infringement is condoned

• Warranty about content ownership• Licence to use content as required by UGC

site (don’t forget future requirements)

Terms and Conditions

• Must decide whether to use click-through agreement or merely post terms– as in other situations, depends on whether

positive terms need to be imposed

• Be careful of over-reaching– e.g. some sites try to get warranty that content

will not infringe any possible use anywhere in the world

• Possible use of Creative Commons licences

Bare Licences

• “Bare licence” without consideration revocable in many jurisdictions, including Canada

• Terms on many sites say that licence of content is irrevocable– Wikipedia approach: just sue us

• Better approach?– allow revocation on notice but reserve right to

use for archival and related purposes– e.g. Facebook

Notice and Takedown

• DMCA requires very specific procedure– site operator cannot rely on defence unless it follows

procedure– copyright owner cannot sue non-responsive site operator

unless it follows procedure

• However, DMCA only applies in US– following DMCA procedure may not work in other

jurisdictions– e.g. if copyright owner does not follow DMCA procedure,

site operator can ignore notice; notice may nevertheless be valid in other jurisdictions

– also, site operator may be liable to poster in non-US jurisdictions if content removed under DMCA procedure

Licensing and Rights Clearance

• Big problems licensing UGC– site operator doesn’t know who owns it– poster often doesn’t know who owns it

• Three choices– get very broad licence from all big copyright owner

groups– license specific content and only allow UGC based

on it– create own content for use by posters

• Specific content licence not practical for most applications, but……

Licensing and Rights Clearance

• One option is to get very wide licence to try to cover everything users will submit

• For example, YouTube has struck licence deals with:– CBS– NBC– Universal Music– Sony/BMG– Warner Music– EMI– CBC– UK music collectives– And others…..

Licensing and Rights Clearance

• YouTube likely has not cleared all necessary rights, even for mainstream music and videos– producer or record company does not hold all

rights– many rights holders not represented by large

companies

• In any event, only very large sites have option of obtaining wide licence– copyright owners not interested in small fish– control activities through enforcement, not

licensing

Future of UGC and Copyright

• Current copyright regime presupposes centralized production, financing and distribution of copyright content

• Development of decentralized and diffuse UGC doesn’t fit too well into this model

• Will copyright bend to UGC or will use of UGC have to become copyright-compliant?

• TPM situation points to latter but copyright interests are very entrenched

Conclusion

• “Public” Internet is only about 15 years old• Business models still in flux• Copyright is slowly adapting to Internet

realities, but many developments are still in the future

• Still very limited case law• Flexibility and creativity still a part of dealing

with Internet copyright issues• Answers today may not be the same

tomorrow!

Questions?

mark@hayeselaw.com