Protection for Technological Measures in Canada – What

Should Canada Do?

Rotman School of BusinessBarry B. Sookman

March 3, 2006bsookman@mccarthy.ca

McTet2 #3681401 v. 3

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What is the Resistance to Enacting Appropriate TPM

Legislation in Canada?

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Arguments Against Protection for TPMs

• Philosophical reasons.• Fears of “digital lock-up”.• Changes the balance in copyright.

• Misinformation about the DMCA.• TPM’s are about “para-copyright”.• Privacy concerns.

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“Philosophical” Reasons

• Growing public disdain for copyright and copyright holders. See MGM v Grokster per Souter J. “Free is good”. TPM’s interfere with “free”.

• Piracy doesn’t hurt anyone.

• There is a growing tendency to suggest that the “public interest” should prevail over “private” copyright holders’ interests.

• Copyright reform is seen as a zero sum game in which an increase in rights for creators is seen as harming the public interest. See “In the Public Interest”.

• The goal of protecting property has been de-emphasized in favour of creating a “public domain”; the goal of rewarding authors has been subjugated to “fair dealing”; and the notion of exclusive rights has been eclipsed by “user rights”.

• Some academics believe that copyright as a system that provides exclusive rights should be replaced with a different system. See, William Fisher III Promises to Keep, Technology, Law and the Future of Entertainment (Stanford University Press 2004).

• No faith in market based solutions.

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Philosophical Reasons

• Is free good?

• What really benefits consumers, authors and rights holders?

• There is a direct link between protecting intellectual property rights and innovation. See, EC, Proposal for a Directive of the European Parliament and of the Council on measures and procedures to ensure the enforcement of intellectual property rights, 30 January 2003, COM (2003) 46 final

• “The Copyright Act (the Act) is an important marketplace framework law and cultural policy instrument that supports creativity and innovation. Many sectors of the economy, for example, those dealing with arts and culture, communications and broadcasting, education and research, either rely on or are affected by copyright.” Statement, Government Statement on Proposals for Copyright Reform (March 2005)

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Philosophical Reasons

• Zero-sum game theory of copyright reform rests on the false assumption that the copyright system is intended to achieve a balance between the “public” and “private rights holders”.

• The objective of copyright is the public interest. The public interest is served by encouraging the dissemination of works “and obtaining a just reward for the creator or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated.” Théberge.

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Philosophical Reasons

• Protecting rights holders from having others unfairly appropriate their works is in the public interest.

• The “capacity of the Internet to disseminate ‘works of the arts and intellect’ is one of the great innovations of the information age.” “Its use should be facilitated rather than discouraged, but this should not be done unfairly at the expense of those who created the works of arts and intellect in the first place.” SOCAN v. Canadian Assn. of Internet Providers 2004 SCC13

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Philosophical Reasons

• Protecting rights holders from having others unfairly appropriate their works is in the public interest.

• “Intellectual property laws originated in order to protect the promulgation of ideas. Copyright law provides incentives for innovators -artists, musicians, inventors, writers, performers and marketers - to create. It is designed to ensure that ideas are expressed and developed instead of remaining dormant. Individuals need to be encouraged to develop their own talents and personal expression of artistic ideas, including music. If they are robbed of the fruits of their efforts, their incentive to express their ideas in tangible form is diminished.” BMG Canada Inc.v John Doe 2005 FCA 193

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Stronger Protection Will Result in “Digital Lock-up”• Why would this happen?

• “The US experience with the DMCA to date indicates that legal protection for technological measures has helped foster new business models that make works available to the public at a variety of price points and enjoyment options, without engendering the “digital lockup” and other copyright owner abuses that many had feared.”

• Jane C. Ginsburg, “Legal Protection of Technological Measures Protecting Works of Authorship: International Obligations and the US Experience”, Columbia Public Law & Legal Theory Working Papers, Paper 0593, 2005

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Stronger Protection Will Result in “Digital Lock-up”

“§ 1201. . . involves genuine tradeoffs: Congress made a judgment that technological protection would foster innovation in new content delivery mechanisms in order to provide consumers with a range of new options for experiencing copyrighted works, recognizing that technological controls might diminish the convenience of non-infringing uses. So far, the balance that Congress struck appears justified. Section 1201 has provided substantial benefits to consumers by encouraging the development of innovative new business models for delivering sound recordings, motion pictures, books and other copyrighted works to consumers.”

June Besek, “Anti-Circumvention Laws and Copyright: A Report From the Kernochan Center for Law, Media and the Arts”, 27 Colum. J. L. & the Arts 389, 446-66 (2004) at P. 512-513.

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Stronger Protection Will Result in “Digital Lock-up” or Interfere with Fair Uses

“…there is little evidence at this point that technological controls are preventing privileged uses. Flexibility in the law, the realities of the digital environment and market imperatives appear to be accommodating legitimate uses. Most copyrighted works are available for fair uses, though not necessarily in a form amenable to the most technologically advanced forms of copying, remanipulation and retransmission. Such limitations, however, are at the heart of the new business models that are emerging in the marketplace.”

June Besek, “Anti-Circumvention Laws and Copyright: A Report From the Kernochan Center for Law, Media and the Arts”, 27 Colum. J. L. & the Arts 389, 446-66 (2004) at P. 512-513.

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Stronger Protection Will Result in “Digital Lock-up”-Process Checks• The U.S. Copyright Office examined the use of technological

measures in 2000 and 2003. It found that technological measures had not been used in a heavy-handed or inappropriate way.

• In 2003 the US Copyright Office examined whether technological measures interfered with fair use and other limitations to copyright. It strongly defended the use of these measures and found that on balance they expanded product availability and consumer choice.

• See, Marybeth Peters “Copyright Enters the Public Domain: The 33rd Donald C. Brace Memorial Lecture”, April 29, 2004 Journal, Copyright Society of the USA Vol 51, No 4 Summer 2004, P 701 at P. 723; Copyright Office, Exemption to Prohibition on Circumvention of Copyright Protection Systems for access ControlTechnologies, 68 Fed. Reg. 62011 (31 October 2003) at 62016 and 62017 online: Federal Register http://www.gpoaccess.gov/fr/search.html.

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Changes the Balance in Copyright

• “Access controls are a new form of restraint that takes away rights.”

• Copyright owners (like other property owners) have the right to control access by physical, license, and legal means.

• Access Control TPMs are technological measures that can be “used in connection with the exercise” of exclusive rights

to physically prevent or inhibit a person from being able to access a work to make unauthorized copies or undertaking other acts which infringe copyright, oras a general deterrent or to discourage acts of infringement by impairing the quality of copies made such as where an unauthorized copy is made but cannot be apprehended because of the presence of an access control TPM.

• Conditional access business models using the Internet would be futile without TPMs.

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Misinformation about the DMCA

“THE COURT: The plaintiffs liken themselves to modern Galileos persecuted by authorities. I fear that a more apt analogy would be to modern day Don Quixotes feeling threatened by windmills which they perceive as giants. There is no real controversy here.

The plaintiffs may wish to strike down the Statute, but their concern is, as the defendants say, political, rather than a legal concern, one that can best be pursued in the halls of the Legislature until they have a real At this stage, they do not.” Felten v RIAA (Nov 28, case or controversy to bring before this Court.

2001) Final Hearing Transcript, http://www.eff.org/IP/DMCA/Felten_v_RIAA/20011128_hearing_transcript.html

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Misinformation about the DMCA

• It “protects” “garage door openers” and “printer cartridges”.

• Cases under the DMCA have ensured that anti-circumvention provisions apply only to works.

• Lexmark Int’l v Static Control 387 F.3d522 (6th.Cir.2004), Chaimberlain Group v Skylink Technologies 381 F.3d 1178 (Fed.Cir.2004)

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It is “Para-copyright”

• “The law should not protect technologies that protect copyright.”

• The WIPO Treaties recognized the continual arm’s race and need for speed bumps

• Radiocommunication Act prohibits decoding encrypted programming signals or network feeds or trafficking in devices that do so. (ss9-10). Are works deserving of less protection?

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It is “Para-copyright”

• “The law cannot protect technologies that protect copyright.”• Section 91.23 gives Parliament exclusive jurisdiction over

”Copyrights”.• The Supreme Court of Canada has stated that copyright in

Canada “is a creature of statute and the rights and remedies it [the statute] provides are exhaustive”.Théberge v. Galerie d’Art du Petit Champlain Inc., [2002] 2 S.C.R. 336

• Copyright is concerned with balancing the public interest in theencouragement and dissemination of the works and “to prevent someone other than the creator from appropriating whatever benefits may be generated.” Théberge

• The proper balance is one that has changed, and continually needs to be re-evaluated from time to time, in response to technological change and to reflect international developments.

• Parliament has the right to establish the appropriate balance.

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Legislation Related to TPMs is in Pith and Substance “Copyright”

• Parliament has steadily revised the acts that constitute infringement to make conduct previously non-infringing subject to new exclusive rights to achieve the dual goals of copyright.

• It seems obvious that legislation (1) whose object is to enable rights holders to prevent the unauthorized exercise of their exclusive rights, (2) which is enacted to implement copyright treaties like the WIPO Treaties, and (3) which has been implemented around the world as part of copyright legislation, would be in pith and substance copyright. See, Kirkbi AG v. RitvikHoldings Inc., 2005 SCC 65.

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Legislation Related to TPMs is in Pith and Substance “Copyright”• Legislation protecting TPMs (including access control TPMs) is

in pith and substance copyright because, like the private copying levy in Part VIII of the Act, it would be “created for the purpose of supporting the creators and the cultural industries by striking a balance between the rights of creators and those of users.” See, Canadian Private Copying Collective v. Canadian Storage Media Alliance, 2004 FCA 424

• “Part VIII provides compensation to rights holders for an activity that involves the use of a subject matter that is properly within the purview of copyright and is difficult or impossible to monitor… whether Part VIII relates to copyright cannot depend on the existence of a perfect correlation between the activity being legitimized and the media being targeted. After all, it is the near impossibility of controllingprivate copying that gave rise to the legislation in the first place. Private Copying 1999-2000, Copying for Private Use

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Privacy Concerns

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Privacy Concerns

• DRM systems give users choices and enable copyright holders to be paid for uses of works.

• PIPEDA was passed to promote e-commerce knowing that personal information was going to be collected, used and disclosed.

• Are there differences between collection of information for use in DRM systems and other areas, e.g., libraries, rewards programs, hotels, book and record clubs, retailers, credit cards, smart cards, GIS systems etc?

• Where do the criticisms come from and are they addressed by PIPEDA?

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Anonymity Principle

“…the anonymity principle is rooted in its broader adjunct, referred to in PIPEDA as the “appropriate purposes” principle. According to this principle, “[a]norganization may collect, use or disclose personal information only for purposes that a reasonable person would consider are appropriate in the circumstances.” As noted above, since many of the current identification and surveillance features of DRM generally are not necessary, and therefore are generally inappropriate incursions on privacy, there is good reason to think that the “appropriate purposes” principle is applicable to protect the anonymity of those who obtain content through the distribution channels of DRM.” Ian Kerr, “If Left to Their Own devices…How DRM and Anti-Circumvention Laws Can Be Used to Hack Privacy” in Geist (ed) In the Public Interest (Irwin 2005) at P. 186

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Individual Access

“As is the case with access to digital content, an individual’s ability to control personal information in some instances depends on that individual’s ability to gain access to it in the first place. Canada’s privacy legislation contemplates this possibility and posits a general duty upon organizations to ensure that the individual has knowledge of and consents to the collection, and subsequently to provide an individual with access to personal information which has been collected about him or her.” Kerr, P.189

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Excessive Monitoring

“Would a DRM licence that permitted excessive monitoring or collection be contrary to public policy?...Pursuant to section 4(3), the privacy requirements of PIPEDA apply despite any provision in any other Act, unless the other Act expressly declares that its provision operates notwithstanding. When one considers that Bill C-60 is silent on this issue, it would seem that the requirements of PIPEDA would prevail, further buttressing the claim that excessive DRM monitoring or collection would be contrary to public policy.” Kerr, P. 197

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Freedom of Contract

“Using PIPEDA as the model, there are at least three elements built into the legislation as counter-measures to the low threshold of contractual consent and the one-sided nature of standard form agreements: (i) a appropriate purpose requirement; (ii) a higher statutory threshold for consent; (iii) a “refusal to deal” clause.” Kerr, P. 200

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What is the Right Approach?

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Is Bill C-60 the Right Approach?

• It would have provided little comfort to Canadians that works and other subject matter are protected in the digital environment.

• No “adequate legal protection and effective legal remedies” against the circumvention of TPMs.

• Clearly out of step with – and fall far below –international trends and developments in the international community.

• No compliance with the WIPO Treaties.

• No remedies to address many of the well- known circumstances of circumvention, let alone those that can be imagined and will be dreamed up by “hackers” and “crackers” in the future.

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How Flawed was Bill C-60?

• If amendments were not made to the TPM provisions Canada would have provided one of the weakest - if not the weakest -TPM protection in the world to its creators and rights holders.

• No other G8, EC country or other industrialized country had such low levels of protection.

• Countries with higher levels of protection would include: United States, Australia, EU member states such as Belgium Cyprus, Czech Republic, Denmark, Finland France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Portugal, Slovak Republic, Slovenia, The Netherlands, United Kingdom.

• Other countries Belarus, Bulgaria, CAFTA members- Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic - and Ecuador, Indonesia, Paraguay, Peru, Moldova, and Ukraine.

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What is Needed?

• Protection against “preparatory acts” of trafficking in access control and copy control circumvention tools and services.

• Protection against acts of circumvention including access control circumvention.

• Effective legal remedies including criminal sanctions in serious cases.

• Must protect Canadian authors and rights holders to enable development of new business models.

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RealNetworks, Inc. v. Streambox, Inc., 2000 WL 127311 (W.D. Wash. 2000)• RealNetworks obtains injunction in

US under DMCA against Streambox that distributed VCR product that enables end-users to circumvent access control TPM (“Secret Handshake“) and copy control TPM ("Copy Switch”).

• Circumvention permitted users to access and download copies of RealMedia files that are streamed over the Internet.

• Without the security measures afforded by RealNetworks, electronic methods of distribution could not succeed. End-users could make and redistribute digital copies of any content available on the Internet, undermining the market for the copyright original.

• Bill C-60 does not contain anti-trafficking provisions. So there would be no remedy against Streambox.

• A consumer’s use of VCR to circumvent the “Secret Handshake” would not be caught, as it is an access control TPM.

• The circumvention of the “Copy Switch” copy control TPM would not be caught unless it could be proved that it was done for the purpose of infringement.

• Using Copy Switch to facilitate infringement by others would not be caught either.

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Universal City Studios, Inc. v. Corley, 273 F.3d 429, (2nd Cir.2001)• Motion picture studios brought

motion to enjoin website owners from posting or linking to “DeCSS” (a program that decrypts digitally encrypted movies (DVDs) protected with CSS (content scrambling system).

• The distribution of DeCSS enables the circumvention of CSS and the illegal copying and use of decrypted movies.

• Bill C-60 contains no provisions prohibiting trafficking in anti-circumvention tools.

• Bill C-60 does not protect against the circumvention of the access control technology of CSS.

• Claims against users under S.34.02(1) would fail unless it could be proved that the circumvention was for the purpose of infringement. The circumventing of the TPM by itself would not be a violation of S.34.02(1).

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Stevens v Kabushiki Kaisha Sony Computer Entertainment & ORS [2005] HCA 58

• Sony games contain an access code TPM on each CD Playstation game that is read by a chip in the Sony Console.

• This device prevents unauthorized (pirated) CDs from being made as they won’t play on Sony consoles.

• Stevens sold “mod chips” and installed them on Playstation consoles effectively overcoming Sony’s access control TPM.

• Bill C-60 does not cover the trafficking of circumvention tools such as “Mod Chips”.

• Individual consumers using “mod chip” game enhancers to circumvent the access control TPM in games would not violate S.34.02(1) even if done for the purpose of infringement or facilitating infringement as an access control TPM is not a “technological measure” as that term is defined in S.1(2).

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U.S. v. Elcom Ltd., 203 F.Supp.2d 1111 (N.D.Cal. 2002)

• ElcomSoft was criminally prosecuted under the anti-trafficking provisions of the DMCA for selling an anti-circumvention tool called the Advanced eBook Processor ("AEBPR").

• It allowed a user to remove the copy control TPM from electronic books distributed using Adobe Acrobat eBook Reader.

• This enabled the book to be easily reproduced and electronically distributed as a naked PDF file.

• Bill C-60 does not have any criminal provisions.

• Bill C-60 also has no prohibitions against trafficking in anti-circumvention tools.

• The use of AEBPR by a consumer would not infringe S.34.02(1) unless it could be proved that the user did so for the purpose of infringement.

• The circumvention of the copy control TPM by itself would not be infringing, nor would using the circumvented ebook for purposes not paid for by the consumer.

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What Should Canada Do?

Strong TPM Protection

Do Nothing