[Ecommerce] Canada on file sharing decision and impacts

[Manon Ress]

Michael Geist on the decision and 3 long term impacts

Federal Appeals Court Upholds File Sharing Decision
http://www.michaelgeist.ca/home.php#406

This morning the Federal Court of Appeal issued its much-anticipated
decision on music file sharing. The court upheld the lower court
decision by denying CRIA's request for the identities of the 29 alleged
file sharers. The reason for upholding the decision was straightforward
- CRIA's evidence contained a wide variety of shortcomings and the
appellate court was not about to issue a disclosure order in the face of
bad evidence.

The court focused much of its discussion on the privacy concerns
associated with disclosing the identities of the file sharers. Although
it noted the importance of intellectual property protection, it
emphasized that in the Internet age "the potential for unwarranted
intrusion into personal lives is now unparalleled." The court was
clearly sympathetic to the privacy issues raised by the case and sought
to map out some significant privacy protections. For example, it
concluded that data associating users with an IP addresses goes stale
very quickly and therefore evidence that is not current may be
sufficient reason to dismiss a motion to disclose user identities. The
court also noted that there must be care taken to ensure that personal
information beyond the copyright allegations are not disclosed and that
the identities of the individuals may be protected through
confidentiality orders or by using initials.

While these protections are important, the court has certainly opened
the door to new file sharing lawsuits. The court says that a "bona fide"
standard is sufficient for disclosure, a different standard from the
higher prima facie standard used by the trial judge. The court also left
open many of the copyright issues, concluding that the trial judge
should not have delved into the copyright analysis. While it raised some
potential concerns with that analysis, the appellate court did not reach
any definitive conclusions on the copyright issues.

This case will be dissected for weeks, but a quick analysis suggests
there are three key long term impacts:

First, if the U.S. experience is any indication, we can expect thousands
of suits against individual Canadians in the months ahead. The RIAA has
already sued over 10,000 alleged file sharers in the U.S. While the
suits have had no impact on rate of file sharing, the RIAA also shows no
signs of abandoning its strategy. There is now every reason to think
that Canadians will be subjected to a similar legal barrage. Moreover,
while the lawsuits may have had little impact on file sharing
activities, it is important to note that file sharing itself has not had
a significant impact on the recording industry's bottom line. Although
revenues have dropped over the past five years, a wide range of factors,
including the popularity of DVDs and video games as well as the shift
toward big box retailers as the primary retail channel (creating both
pricing pressures and reduced availability of catalog sales) are clearly
more important factors. Moreover, any loss in royalties for Canadian
artists has been more than offset by the $120 million collected under
the private copying levy.

Second, this decision should lay to rest claims that there is an urgent
need for copyright reform in Canada. The government has indicated that
it plans to establish a "making available" right, however, the Federal
Court of Appeal ruling demonstrates that Canadian law does provide CRIA
with the ability to purse its legal strategy, suggesting that this part
of the reform package should be scrapped. While the making available
right may not be necessary in Canada, the decision and the forthcoming
suits point to the need for changes to Canada's statutory damages
provisions. Those provisions could lead to hundreds of thousands of
dollars in liability for individuals engaged in personal, non-commercial
activity. By contrast, Napster now offers a catalog of more than 1
million songs for $15 per month. It is difficult to reconcile potential
damage awards of hundreds of thousands of dollars given that the
marketplace values the music in question at $15/month (or less under
Yahoo!'s new service). The solution points to one aspect of urgent
copyright reform -- the elimination of the Copyright Act's statutory
damage provisions in these non-commercial cases so that exhorbitant
damage awards used to pressure costly settlements become a thing of the
past.

Third, the decision demonstrates the growing concern for personal
privacy in Canada. While CRIA recently described P2P services as "the
number one threat to privacy on the Internet", the reality is that this
court, much like Justice LeBel of the Canadian Supreme Court, have
expressed deep concern about the intrusiveness of Internet monitoring.
Canadians get this, the Supreme Court of Canada and the Federal Court of
Appeal get this, and most ISPs get it. The question now is whether CRIA
will get it and abandon its legal strategy.
posted on Thu. May. 19/05 12:47:43 PM

--
Manon Anne Ress
manon.ress@cptech.org,
www.cptech.org

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