3.   New partners

During the meeting, I asked whether ACTA was open to new countries to join the negotiations before they conclude.  Canada hedged, noting that the issue would be discussed at the Morocco meeting and that it would depend upon the country and the context.  The issue has apparently become more urgent since Canadian officials confirmed that Brazil has approached one ACTA participant about the prospect of joining, but have not received an answer.  Moreover, other countries may have made similar inquiries.  I wrote about the desirability of broader participation earlier this year.

4.   The De Minimis Exception

The issue of creating a de minimis exception within ACTA was raised during the discussion.  The exception would be designed to carve out small quantities and personal use issues from border enforcement.  Officials noted that the primary goal is to address large scale counterfeiting and that the treaty should be non-intrusive and practical.  Canada is one of at least three countries that have put forward de minimis language.  Officials said that there was agreement in principle with including some form of de minimis provision in the treaty.

Although there are many groups involved in copyright lobbying, at the heart of the strategy are two organizations - the Canadian Recording Industry Association and the Canadian Motion Picture Distributors Association.  CRIA's board is made up the four major music labels plus its director, while the CMPDA's board is comprised of representatives of the Hollywood movie studios.  Those same studios and music labels provide support for the International Intellectual Property Association, which influences Canadian copyright policy by supporting U.S. government copyright lobby efforts. 

In addition to their active individual lobbying (described here), CRIA and CMPDA have provided financial support for three associations newly active on copyright lobbying - the Canadian Anti-Counterfeiting Network, the Canadian Chamber of Commerce's IP Council, and the Ontario Chamber of Commerce (there are other funders including pharmaceutical companies and law firms).  Those groups have issued virtually identical reports and in turn supported seemingly independent sources such as the Conference Board of Canada and paid polling efforts through Environics.

The net effect has been a steady stream of reports that all say basically the same thing, cite to the same sources, make the same recommendations, and often rely on each other to substantiate the manufactured consensus on copyright reform.  The relevant reports are as follows:

• CACN - Report on Counterfeiting and Piracy in Canada: A Roadmap for Change (2007)
• Ontario Chamber of Commerce - Protection of Intellectual Copyright: A Case for Ontario (2008)
• Environics polling (2008)
• IP Council (Canadian Chamber of Commerce) - A Time For Change: Towards a New Era for Intellectual Property Rights in Canada (2009)
• Conference Board of Canada - Intellectual Property Rights in the Digital Economy (2009 - recalled)

Just how similar are these reports?  First consider some sample recommendations (note particularly the Ontario Chamber and Conference Board recommendations which include arguable plagiarism problems):

Recommendation	CACN	Ontario Chamber	IP Council	Conference Board
Create an IP Council	Establish a federal Intellectual Property Coordination Council consisting of senior civil servants and IP rights holders whose key objectives would include: (i) creating and implementing educational programs, with emphasis on Canadian youth, that teach the rationale for and importance of intellectual property; (ii) communicating with IP right holders to ensure that their IP needs are being met by the current application of the laws;	IP Inter-Ministerial Coordination Council: - comprising high-level representatives from ministries involved in innovation and intellectual property rights protection (Ministry of Research and Innovation, Ministry of Economic Development and Trade, Ministry of Education and Ministry of Finance) partnered with key industry stakeholders - will be responsible for creating policy programs to promote the protection of IP and increase innovative capacity, such as education programs targeting youth as well as an awareness campaign for businesses and consumers	Establish an Intellectual Property Rights Coordination Council consisting of senior government officials, representatives from the business community, and IP rights holders. The Council should develop and implement a robust IPR framework that promotes the creation and exploitation of innovative products and services in Canada.	IP Inter-ministerial coordination council: comprising high-level representatives from the IP sector; would create policy programs to promote the protection of IP; would enforce key elements such as exposing the dangers and risks to consumer health and safety, highlighting the relationship between IPR crime and organized crime, providing information and resources to SMEs, and creating programs to exploit IPR.
Create an Intellectual Property Crime Task Force	Adequately fund an Intellectual Property Crime Task Force, composed of police officers, customs officers, and federal prosecutors, to guide and coordinate IP criminal enforcement.	IP Task Force: - comprising of specialized IPR prosecutors and police officers dedicated to IP related crime - will coordinate enforcement and prosecution activities against counterfeiters and pirates - will work with border officials to address counterfeit products detected at border crossings	Establish a specialized IP Crime Task Force to guide, coordinate and lead anti-counterfeiting and anti-piracy enforcement efforts in Canada.	IP Task Force: comprising individuals dedicated to IP-related crime; would coordinate enforcement and prosecution activities against counterfeiters and pirates; would work with CBSA to track counterfeit products.
Tougher penalties	Immediately encourage prosecutors to seek more significant penalties, including jail time.	The Federal government must strengthen current IPR protection legislative framework by (…) Incur sufficiently severe penalties to deter and neutralize offenders, i.e. inclusion of jail/prison time as punishment.	impose stronger penalties for counterfeiting and pirating violations that endanger the health and safety of Canadians	enact appropriate penalties as a deterrent
Implement the WIPO Internet Treaties and anti-circumvention measures	Enact criminal legislation clearly defining offences for commercial circumvention activities (including trafficking in circumvention devices)	The Federal government must strengthen current IPR protection legislative framework by (…) Implementing the World Intellectual Property Organization (WIPO) Internet Treaties to curtail internet piracy and counterfeiting.	The Government of Canada should rapidly adopt IP legislation that fully implements the WIPO Internet treaties in a manner that is consistent with international norms and standards and enables the curtailment of counterfeiting and piracy in the online environment (whether physical or digital)	implementing WIPO Internet treaties to curtail Internet piracy and counterfeiting
Create public education and awareness programs	creating and implementing educational programs, with emphasis on Canadian youth, that teach the rationale for and importance of intellectual property	Private and public sector stakeholders should work in partnership with consumer protection groups and education institutions to generate greater public awareness of the impact of counterfeiting and piracy on public health and safety, as well as to the economy	Establish an intellectual property education program targeting the public, businesses, innovators, creators, and government officials.	Private and public sector stakeholders should work with consumer protection groups and academia to generate awareness of the impact of counterfeiting and piracy on public health and safety, as well as to the economy.
Increase funding and resources to tackle IP crime	Provide the RCMP and the Department of Justice with adequate financial and human resources to effectively address counterfeiting.	Federal and provincial governments to provide additional funding and training to CBSA, police, Crown attorneys and judges specifically for the purpose of enhancing IPR protection.	the Canada Border Services Agency (CBSA) should be provided with the legislative authority and resources needed to target, detain, seize and destroy counterfeit and pirated goods on its own initiative.	Federal and provincial governments should provide additional funding and training to all relevant enforcement authorities for enhancing IPR protection.

Not only are the recommendations the same, so too are the claims and the arguments used to support the recommendations.  First the claims:

1.    Counterfeiting costs the Canadian economy billions. (see posts on the uncertainty associated with counterfeiting claims here, here, and here)

Organization	Claim	Source
CACN	The RCMP estimates that the cost to the Canadian economy from counterfeiting and piracy is in the billions.	Royal Canadian Mounted Police “Intellectual Property Crime in Canada – Hazardous and Costly” RCMP Feature Focus 2005 Economic Crime in Canada
Ontario Chamber	In Canada, the RCMP and others have acknowledged that there is no comprehensive study regarding the specific amount of pirated and counterfeit goods. However, a widely accepted estimated cost of counterfeiting and piracy to the Canadian economy, ranges between CDN $10 billion and CDN $30 billion.	Royal Canadian Mounted Police “Intellectual Property Crime in Canada – Hazardous and Costly” RCMP Feature Focus 2005 Economic Crime in Canada
IP Council	It has been conservatively estimated that counterfeiting and piracy cost the Canadian economy $22 billion annually in lost tax revenue, investment and innovation.	Royal Canadian Mounted Police. “Intellectual Property Rights Crime.” Presentation. Montreal. Sept 16, 2008.
Conference Board	Although the RCMP and others acknowledge that no comprehensive study has been done on the specific amount of pirated and counterfeit goods, they concur that a widely accepted estimated cost of counterfeiting and piracy to the Canadian economy ranges between $10 billion and $30 billion per year.	Ontario Chamber of Commerce, Protection of Intellectual Copyright: A Case for Ontario

2.    Lost revenues in the software industry (see my post on the BSA numbers here, dodgy software numbers here)

Organization	Claim	Source
CACN	In 2005, the loss to the software industry as a result of piracy was approximately $736 million. This meant a tax loss of $345 million and a loss of thousands of software-related jobs.	Royal Canadian Mounted Police “Intellectual Property Crime in Canada – Hazardous and Costly” RCMP Feature Focus 2005 Economic Crime in Canada
Ontario Chamber	The RCMP reports that in 2005, the Canadian software industry lost approximately $736 million and 32,000 software related jobs as a result of counterfeiting and crime, the majority of which were lost in Ontario.	Royal Canadian Mounted Police “Intellectual Property Crime in Canada – Hazardous and Costly” RCMP Feature Focus 2005 Economic Crime in Canada
IP Council	According to a study commissioned by the Business Software Alliance (BSA), losses to the Canadian economy due to software piracy surpassed $1 billion in 2007.	Business Software Alliance. News Release. “BSA Urges Stronger Copyright Legislation To Reduce Impact of Piracy on Canadian Economy.” May 14, 2008.
Conference Board	Losses to the software and film industries are approximately $1 billion in Canada.	Ontario Chamber of Commerce, Protection of Intellectual Copyright: A Case for Ontario

  

3.   Losses Due to Film Piracy (see my post on movie industry losses here).

Organization	Claim	Source
CACN	The annual consumer spending loss in Canada due to film piracy in 2005 was estimated at approximately $270 million, while the loss of tax revenues due to film piracy in Canada in 2005 was estimated at approximately $41 million	The Canadian Motion Picture Distributors Association (CMPDA) Beyond Borders: An Agenda to Combat Film Piracy in Canada (Beyond Borders) 2006.
Ontario Chamber	The annual consumer spending loss in Canada due to film piracy in 2005 was estimated at approximately $270 million with a loss of tax revenue accruing to an estimated $41 million	The Canadian Motion Picture Distributors Association (CMPDA) Beyond Borders: An Agenda to Combat Film Piracy in Canada (Beyond Borders) 2006.
IP Council	Film piracy resulted in consumer spending losses of approximately $270 million in 2005, as well as tax revenue losses of $41 million	The Canadian Motion Picture Distributors Association (CMPDA) Beyond Borders: An Agenda to Combat Film Piracy in Canada (Beyond Borders) 2006.
Conference Board	Losses to the software and film industries are approximately $1 billion in Canada.	Ontario Chamber of Commerce, Protection of Intellectual Copyright: A Case for Ontario

4.   Losses to the Music Industry

Organization	Claim	Source
CACN	As a result of the combined impact of the physical and online black markets, the Canadian music industry’s retail sales of pre-recorded CDs and cassettes declined by 48 percent ($637 million) from 1999 to 2006.	The Canadian Recording Industry Association, Press Release, March 2, 2006.
Ontario Chamber	The Canadian music industry’s retail sales of pre-recorded CDs and cassettes have declined by 44 percent from 1999 to 2005, a decrease of $541 million. As a result, the Canadian recording industry has had to shed its workforce by 20 per cent, with most lost in Ontario	The Canadian Recording Industry Association, Press Release, March 2, 2006.
IP Council	Canada’s music industry, faced with unchecked online counterfeiting and piracy, experienced a 48% ($637 million) drop in retail sales from 1999 to 2006.	The Canadian Recording Industry Association, Press Release, March 2, 2006.

And a few of the arguments:

1.   Piracy is out of control in Canada

CACN	Piracy can only thrive in a culture where citizens view the acquisition of counterfeit goods as acceptable, thereby opening the way to consumer demand for those products. This appears to be case in Canada - particularly among youth - where research has found that stealing IP is increasingly regarded as morally acceptable.
Ontario Chamber	the OECD found in a December 2005 report that Canada had the highest level of peer-to-peer downloading among OECD countries.
IP Council	The RCMP has identified an “ever-growing use of the Internet for IP crime” in Canada, and predicted that the problem will escalate because “soft ware, music and movie piracy are easy, low-risk activities.” In November of 2007, the Quebec Superior Court declared that unauthorized file sharing in Canada was an “endemic” problem.
Conference Board	The Internet piracy problem within Canada continues to worsen and is causing serious problems for markets in other countries.

2.   The U.S. is unhappy with Canada

CACN	The United States Congressional International Anti-Piracy Caucus, which designated Canada as a “Watch List Country” (along with China, Russia, Mexico, India, and Malaysia) because of its failure to amend its copyright law in accordance with its WIPO obligations and because of “Canada’s lax border measures [that] appear to permit the importation of pirated products from East Asia, Pakistan, and Russia.”
Ontario Chamber	Further, the United States Trade Representative (USTR) has stated that Canada’s lax border measures “appear to be non-compliant with TRIPS requirements” and the Canadian Anti-Counterfeiting Network has stated that “Canada has effectively failed to meet” its TRIPS obligations.
IP Council	Several international organizations and countries have specifically identified Canada for its failure to adequately protect IP rights. In March 2008, the International Intellectual Property Alliance placed Canada in the same league as well known counterfeiting havens like China and Russia by listing it among “countries of the greatest concern.” In April 2008, the United States Trade Representative (USTR) placed Canada on the Special 301 Watch List for the fourteenth consecutive year.
Conference Board	There is ongoing debate and outcry in Canada regarding the 2007 and 2009 Special 301 Reports issued by the Office of the United States Trade Representative.

3.   Canada’s lax IP protection hampers innovation and puts foreign investment at risk

CACN	By providing a marketplace where investments in creative goods and services will be profitable, IP protection fosters innovation, job creation and economic prosperity. In developed nations like Canada, where innovation has become a key economic driver, this has never been more important. Unfortunately, it appears that all levels of government in Canada lack a sophisticated understanding of the connection between innovation and IP.
Ontario Chamber	There is a real concern that mounting criticism of Canada’s IPR regime will impact Ontario’s attractiveness to foreign investors, its ability to foster innovation as well as overall competitiveness
IP Council	Canadian failure to properly protect IPR directly affects the willingness of foreign firms to invest domestically.
Conference Board	Canada is not among the top innovation nations, but is well positioned to do better if it can bring together its fragmented and uncoordinated innovation infrastructure. Otherwise, Canada will continue to offer only a marginal framework for developing and exploiting intellectual property from both the private and public sectors. The role of intellectual property systems in Canada has received inadequate attention. If Canada does not change, its economic outlook will suffer.

False Momentum

It is not just that these reports all receive financial support from the same organizations and say largely the same thing.  It is also that the reports each build on one another, creating the false impression of growing momentum and consensus on the state of Canadian law and the need for specific reforms.  Consider the IP Council's A Time for Change, which was released in early 2009.  The very first chapter of the report is titled "Canada's Emerging Consensus on Intellectual Property Rights."  Where does this consensus come from? 

According to the IP Council, it starts with the CACN report, followed by two House of Commons committees that heard primarily from these groups and which led to the 2007 Speech from the Throne and Canada's participation in ACTA.  The chapter then states that IPR policy was taken to the "next level" with the Ontario Chamber report, the founding of the IP Council, and the 2008 Conference Board of Canada conference that led to the three recalled IP reports.  The chapter then notes the "growing public awareness of the need for action" which cites Environics polls (paid for by the IP Council) and a Toronto Star supplement on counterfeiting (paid for by the CACN).  In all, the IP Council cites the CACN four times, the Ontario Chamber twice, the Conference Board of Canada proceedings 13 times, and the Environics research five times.

Environics

The influence over some of these independent reports is evident in other ways.  For example, Environics has emerged as the survey company of choice for this effort (Pollara was a favourite until Duncan McKie left to run the Canadian Independent Record Production Association).  Environics lead on these issues was once Don Hogarth, who now provides communications for CRIA.  On June 4, 2008 - one week before the introduction of C-61 - Environics released a poll that it said found that Canadians are looking for leadership on IP issues.  The report repeats the CACN, Ontario Chamber, and IP Council assertions, stating:

over the past several years Canada has fallen behind the international community when it comes to the protection of intellectual property and products of the mind. The gap between Canadian laws and international standards in the area of counterfeiting, piracy, and illegal downloading is growing ever wider. Canada has been maintained by the U.S. Trade Representative on a special watch list specifically because of its laxity in the realm of protecting intellectual property.

What makes the timing particularly noteworthy is that even though Environics issued a press release claiming that the data came from a new study, the data was not new.  Rather, it was drawn from a 2006 survey that seemingly sat idle for two years until the opportune moment to raise it days before the introduction of new copyright legislation.  Who funded the questions related to intellectual property?  It will come as little surprise to find that CRIA paid for those.  Moreover, Environics oddly proceeded to re-issue the identical press release six months later (June 2008 version, December 2008 version) in conjunction with an IP Council commissioned survey on counterfeiting.

What does it all mean?

At a certain level, none of this will come as a surprise.  Companies lobby for their position and what made the Conference Board of Canada series of events so unusual was the way in which it was exposed. Yet the Conference Board of Canada's recalled reports were clearly just a part of a much larger strategy to influence Canadian copyright policy by creating a narrative of crisis and the false impression of Canada as a piracy haven.  This week's comments from Industry Minister Tony Clement and Canadian Heritage Minister James Moore provide the strong sense that they better understand the current dynamic around copyright, but it is obvious that the lobbying on the issue is only going to intensify in the months ahead.

1.    E-commerce consumer protection

The online marketplace has evolved dramatically in recent years and Canada needs an e-commerce consumer protection framework to match.  In this regard, I think Minister Clement should be congratulated for introducing Bill C-27, the Electronic Commerce Protection Act.  While often described as anti-spam legislation, it is really much more.  It addresses phishing, spyware, and consumer control over their personal computers.  It sets the right standard of opt-in consent that may eventually be applied across all consumer marketing.

That’s the good news.  The bad news is that some business groups - though not all - the Canadian Marketing Association for example was extremely supportive during hearings last week - have been outspoken in their efforts to water down this legislation.   They argue that privacy legislation is good enough or that businesses should be allowed to install software on users’ computers without their consent.  These kinds of reforms will not breed confidence.  Indeed, the experience with phishing sites or the Sony rootkit case is that it is these instances that undermine confidence. If our goal is to establish a safer, stronger online marketplace, we need strong consumer protection laws that return some level of control to the consumer.  It has been more than four years since the National Task Force on Spam issued its unanimous report and there is no need for further delays in implementing its recommendations.

2.    Openness

Confidence also comes from greater openness and transparency. After years of closed, “walled garden” approaches, the world is embracing the benefits of openness. The City of Vancouver recently adopted an openness policy that establishes a preference for open standards, open source software, and open government data.  The federal government should do the same, promoting the use of cost-effective open source software and the benefits of commercial and civic activity around accessible government data.  We are seeing some remarkable open government initiatives around the world.  Witness last week’s initiative by the Guardian in the UK, which is crowdsourcing the review of hundreds of thousands of documents detailing MP expenses.  Within days, 20,000 people have taken part with about 160,000 pages reviewed.  There is no reason that we can’t see similar activity in Canada.

A presumption of openness should extend to other policy areas as well.  Open spectrum policies in the forthcoming spectrum auction would spur new innovation and heighten competition by facilitating greater consumer mobility and promote the introduction of new services not tied to a single wireless provider.

The openness principle should also cover access to taxpayer-funded research, often referred to as open access.  In recent months, the United States and the European Union have taken strong steps toward making their research openly available, with legislative mandates that require researchers who accept public grants to make their published research results freely available online within a reasonable time period.  We have started to move in this same direction but need to make it a priority.

3.    Confidence in our networks

Minister Clement opened the conference by acknowledging our slipping rankings when it comes to issues such as broadband and network infrastructure. I believe that there is diminishing confidence in Canada - sinking international rankings and incidents that raise questions about network management practices have left businesses and consumers alike concerned about our wired and wireless infrastructure. Confidence in those networks extends beyond just mere access, however.  It involves world-class speeds, fair pricing, transparent marketing, and appropriate network management practices.  This is by no means just a consumer issue - businesses big and small similarly depend upon these principles. 

As many of you will know, last week the Liberal party joined the NDP in declaring its support for net neutrality.  I think this is an exciting development, but this ought not to be a partisan issue.  It is a policy issue. While the CRTC will examine network management practices with its own hearing early next month, I believe that confidence in the network must be a core part of our national digital strategy.  In the short term, all parties should work together to address these concerns by at least addressing the easy issues such as better disclosures on network management practices, truth in marketing with minimum rather than maximum speeds, no content blocking, the openness principles discussed earlier, appropriate network privacy, and addressing the concerns about undue preferences that were raised during the recent new media hearings. 

4.    Confidence in Copyright

It will come as little surprise that my fourth issue is confidence in Canadian copyright.  A digital strategy must be about more than just the infrastructure - the content on the networks is a key issue for the digital economy and copyright plays an important role in that regard.  I’d like to touch on confidence in copyright from two perspectives - both the law and the reform process.

Let me start first with the process, which I believe has severely undermined the confidence of thousands of Canadians.  With respect, the process that led to C-61 did little to instill public confidence, with no public consultation and the sense that the process was being driven primarily by a select group of interests.  In recent weeks, that sense has recurred with the decision to continue in the non-transparent Anti-Counterfeiting Trade Agreement negotiations and with the admission by the Conference Board of Canada that three of its IP reports were plagiarized, unduly relied on feedback from a funder, relied on too few sources, and lacked sufficient balance.  Those are their words, not mine. 

We need to restore confidence in the policy making process by putting an end to secret negotiations and an end to the unsupportable rhetoric that seeks to paint Canada as a piracy haven.  Instead we need to adopt an inclusive, consultative approach.  That means placing these issues within the digital strategy framework and following through with a broad consultation as has been recently reported.

From a substantive perspective, there is need for reform.  However, we are not going to increase confidence by adopting rules that encourage locking down content, overriding the flexibilities found in the current law, or that leave Internet subscribers vulnerable to losing their access based on unproven allegations of infringement.  We are not going to increase confidence by failing to address the gridlock faced by creators and users.

Instead, we need to provide business confidence with rules that provide sufficient flexibility to innovate.  We need rules that give consumers confidence that they won’t lose access to their online purchases whenever an online seller drops support for a particular business line.  Rules that assure consumers that it’s ok to use their PVR or to shift music to their iPod.  Rules that encourage rather than discourage research into encryption and digital security, distance learning opportunities, access to knowledge and long overdue digitization initiatives.  We can achieve this kind of reform and still implement international treaties such as the WIPO Internet treaties.

Finally, a word about leadership.   Minister Clement has obviously shown a keen interest in these issues and leadership with today’s event.  But we need to build a leadership team - for example, a Canadian Chief Technology Officer and a clear position for digital issues at the cabinet table would also feed confidence.  There needs to be a sense of urgency here - there is simply no more time to waste.