BCE Inc.

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A Consultation on a modern framework for online intermediaries

Submission of BCE Inc.

31 May 2021

Table of Contents

1.0 INTRODUCTION

  1. We are pleased to provide our submission to the Government of Canada's Consultation on a Modern Copyright Framework for Online Intermediaries (Consultation Paper).
  2. Bell Canada is Canada's largest communications company, providing a comprehensive and ground-breaking suite of broadband communications and content services to consumer, residential, business, not-for-profit and government customers.  Bell Media is Canada's pre- eminent content creation company with both local television and radio stations, a variety of popular English and French discretionary television services as well as digital media assets.
  3. As a content creator and major economic partner with Canada's creative community, and also a broadcaster and Internet intermediary, we have a unique perspective that supports modern copyright protections that are essential to developing flourishing traditional and digital markets in creative and knowledge economies, the continued roll-out of broadband connectivity to rural and remote communities, and Canadians' access to a free and open Internet that supports free speech and innovation.  While these are sometimes seen as competing objectives that must be "balanced", the reality is that they are mostly mutually reinforcing.  The integrity of copyright and other intellectual property is critical to the flourishing of digital markets.  And the ability to monetize legal operations is a prerequisite to investment and innovation that expands access to and the benefits of a free and open internet for Canadians.
  4. Internet piracy undermines the integrity of digital markets in Canada and is a significant and growing threat to Canadian artists and the broader Canadian creative sector, Canadian broadcasters and legal distributors, and the Canadian economy.  In 2017, there were at least 1.88 billion visits made to piracy sites from Canada and Canadian productions were pirated globally hundreds of millions of times.Footnote 1  In February 2020, MUSO tracked at least $11.2 billion visits globally to piracy sites.Footnote 2 This activity infringes the rights of Canadians who create, produce, invest in, and disseminate creative works, and makes it difficult if not impossible to build the successful business models that will meet the evolving demands of Canadians, support Canadian content production, and contribute to the Canadian economy.
  5. While there is no debate that piracy is illegal, the problem is not easily addressed because its borderless nature renders many of the tools traditionally available in Canada largely ineffective.  That is because piracy relies on the anonymous and global nature of the Internet, which allows pirate operators to disguise their true identities and piracy sites to be accessible in Canada while operating out of jurisdictions in which it is impossible or impractical to take the enforcement measures required to protect the Canadian market.
  6. If the pirate operators behind a piracy site can be identified, they may reside in one jurisdiction, use servers or websites registered in one or more other jurisdictions, and cause damage throughout the world.  And even if slow and expensive traditional legal efforts can be undertaken successfully against these individuals, new pirate operators quickly emerge to provide access to the same pirated works.
  7. Thus, the nature of online piracy means that if the Canadian creative sector is left to rely solely on conventional domestic legal remedies, it will be doomed to fail.  A modern, multi-pronged approach to protecting copyright online is required, and the recommendations that we've outlined in this submission are integral to such an approach.  It is impossible to effectively combat piracy in Canada in the digital age by relying solely on pre-digital remedies against pirate operators.
  8. We support the existing exemptions from infringement and financial liability for intermediaries that are contained in the Copyright Act (the Act).  However, in appropriate cases intermediaries that do business with or whose business is relied on by those operating or accessing large, egregious copyright infringing sites and services should be required to contribute to combatting copyright theft where they are well placed to do so.
  9. In cases around the world, intermediaries such as Internet service providers (ISPs), web hosts, domain name registrars, search engines, payments processors, and advertising networks have both chosen to and been required to play a role in addressing content theft by taking appropriate action directed at large-scale copyright infringement online.
  10. In this submission, we make the following recommendations to ensure that the Act will provide more modern and effective measures to combat online content theft:
    1. No significant changes are required to the safe harbour provisions for ISPs, but the Act should clarify that all safe harbour protections continue to apply to online intermediaries that take action in good faith to address copyright infringement;
    2. The Act should be amended to include a notice and action regime that: (i) applies to at least those online intermediaries involved in the hosting or curation of content; (ii) allows the intermediary to determine in its discretion what action to take in any case; and (iii) to the extent that it applies to ISPs, clarifies that by complying with the notice and notice regime ISPs have discharged their obligations with respect to any notices received related to alleged access by their customers to infringing content;
    3. The Act should be amended to clarify and strengthen enforcement tools against online infringement by establishing a statutory basis and procedure to directly and efficiently obtain injunctions against online intermediaries; and
    4. The existing criminal provisions related to commercial-scale copyright theft should be made technologically neutral so that it is clear they apply to all forms of commercial-scale infringement (including streaming).

2.0 Theft of copyrighted content causes significant damage to Canadians and to the Canadian economy

  1. Piracy causes significant harm to Canada's social and economic fabric, including the broader Canadian economy, the telecommunications systems, the cultural sector, the broadcasting system, and consumers.

2.1 The creative sector in Canada's economy

  1. Cultural industries employ 650,000 or ~4% of Canadians and contribute $56 billion or ~3% to Canada's gross domestic product (GDP).Footnote 3  Within this industry, according the CMPA's 2020 Profile, film and television production accounted for 244,500 full-time equivalent jobs, $12.2 billion in GDP, and $6.0 billion in foreign investmentFootnote 4 – and that does not include the thousands of jobs and billions of dollars in economic value contributed by the other activities of broadcasters, broadcast distribution undertakings (BDUs), movie distributors, cinemas, retailers, and others impacted by piracy.  Left unchecked, piracy will dramatically erode the contribution of these companies and their employees to Canada's digital and creative economies.

2.2 Piracy harms Canadian creators

  1. Piracy harms Canadian creators by denying rightsholders the right to control the quality and integrity of their works, when and how they are viewed, and the compensation they are entitled to seek in the market for the hard work, creativity, expertise, and resources they have invested in their works.  This negatively affects their earnings and profitability, leading to reduced employment and fewer opportunities for writers, producers, composers, performers, costume designers, and other content creators to make their living producing content.  By denying content creators fair compensation for their work, piracy also reduces the ability of content creators and other rightsholders to develop, produce, and disseminate new content, undermining Canada's social fabric.
  2. The effects on other legitimate participants in the ecosystem are the same.  Rightsholders deal with partners operating all manner of legitimate distribution models, including theatres, conventional and specialty television stations and the BDUs that distribute them, over the top services like Netflix or Crave, and online and bricks-and-mortar retailers.  Piracy diverts potential customers away from these legitimate channels in favour of illegal services that do not negotiate or pay to acquire rights nor comply with licensing rules.  This undermines the ability of these legal operators to invest in innovation, the acquisition of new Canadian content, and in the case of BDUs the expansion of their networks (which provide both broadcast distribution and broadband access) to more Canadians especially in rural and remote communities.  Sandvine made a similar observation:

    Sandvine believes that emergent forms of subscription television piracy represent a real threat to the revenue streams of network operators, not only because the content is being stolen, but because in some instances subscribers are paying to pirate these services, with no money going into the pockets of the content creators or rights holders.Footnote 5

  3. Piracy also continues to erode the contribution of Canada's cultural sector to the country's social fabric and democratic life.  The Canadian creative sector is already under pressure in its efforts to flourish in the digital age and can scarcely absorb increasing losses at the hands of those who seek to appropriate their works.  A consultation undertaken by the department of Canadian Heritage (Heritage Consultation) heard that:

    There is a need to ensure that Canadian creators share in the financial rewards resulting from increased dissemination of cultural content via digital channels. Likewise, there is a need to foster increased re-investments in order to promote the creation of Canadian digital cultural content. Doing so will help ensure the longer term financial viability of Canada's cultural content creators who may otherwise have to seek out other career paths in order to support themselves.Footnote 6

  4. The importance of funding to Canadian content creators was further emphasized in the Heritage Consultation:

    There is a need for increased funding as well as the creation of funding models that are more adaptable. A level field for private sector competition was desired by participants, across platforms, production models, content types and different players within the cultural sector value chain, particularly within the discussion of new digital platforms (like Netflix, Facebook, Amazon and Spotify).Footnote 7

  5. While adapting funding models to the digital age is a complicated challenge, an essential step will be to ensure rightsholders can appropriately monetize their content in a digital marketplace, which requires strong measures to stop the drain that piracy causes on an industry already under stress.  Ensuring that Canadian content creators and distributors are actually paid for the work they produce and distribute (regardless of its distribution platform), rather than that work being appropriated by pirate operators and the pirate sites they operate, is an important and obvious step towards reinforcing the financial viability of the sector that can be achieved without requiring additional access to scarce government (or other) funding.  Strong protection against piracy is an essential complement to other efforts to ensure the continued success of Canada's creative sector and cultural community in the digital age.

2.3 Piracy reduces investment in the Canadian broadcasting sector

  1. Piracy directly harms the legitimate Canadian broadcasting system.  Broadcasters make significant investments in their own programming and programming they develop jointly with independent producers.  In exchange, broadcasters receive copyright in that programming, which they then monetize through a combination of traditional television channels and new over-the-top (OTT) platforms in which they are also investing.  These investments are extremely risky for both the producer and the broadcaster, as it is impossible to predict in advance what will be a hit or even which projects will break even.  When a work is successful, it must pay for itself and for all the less successful productions in which investments had to be made to find that one hit.  If hits can't be broadly monetized, broadcasters and producers will become increasingly reluctant to make the investments necessary to produce them.Footnote 8
  2. Legitimate BDUs face a similar impact as Canadians turn to piracy sites instead of legitimate subscriptions to obtain access to creative content.  BDUs will not continue to invest in new telecommunications infrastructure (including in rural and remote areas), technologies, and distribution models if piracy, which relies on stolen content and existing Internet connections (often the result of investment by the same legitimate BDUs), continues to erode the potential returns – simply put, BDUs will not invest if they are forced to compete with services that access content for free because they are illegal.
  3. The illicit and online nature of piracy means that it is difficult to track and quantify impact on rightsholders, distributors, exhibitors, and their legal partners and customers (let alone non-financial harms such as to licensing and windowing strategies, brand and reputational impacts from unauthorized uses, the destruction of legitimate commercial relationships and the spread of malware and high-risk advertising).  Nevertheless, a report published by MUSO found that pirate subscriptions to IPTV services generate subscription revenues of $1 billion annually in the United States alone and these providers operate with estimated profit margins that range from 56% (retailers) to 85% (wholesalers).Footnote 9
  4. The average television subscriber in Canada likely accounts for between $50 and $80 in monthly revenue to a legal BDU.Footnote 10  If even one third of households that cancelled or never obtained BDU subscriptions did so in part because of piracy, the lost revenues for BDUs would be between $220 million and $350 million annually.  There would be additional revenue losses from subscribers that do not cancel their subscriptions entirely but do reduce the size of their subscriptions by eliminating channels they can easily replace with piracy (such as those showing scripted programming and movies).  A number of different estimates of the economic impact of TV piracy in Canada all have midpoints in the range of $500 million to $650 million annually.Footnote 11
  5. This economic harm has an additional impact on government finances, resulting in millions of dollars in lost revenues from sales and corporate taxes that would be paid by legitimate participants in the cultural economy.
  6. Moreover, because Canadian BDUs contribute 5% of their revenue directly to Canadian production funds this is a direct loss of between $11 million and $25 million or more every year.  More importantly, hundreds of millions of dollars are no longer invested by BDUs, both in affiliation payments to Canadian broadcasters that are ultimately directed to programming and in Canada's telecommunications infrastructure.Footnote 12

3.0 No significant changes to safe harbour provisions required

  1. The Consultation Paper proposed a number of potential reforms to the current safe harbour provisions.  With respect to the safe harbor provisions applicable to ISPs in particular,Footnote 13 we do not believe that any significant changes are required or appropriate.
  2. To ensure ISPs are not deterred from taking responsible voluntary action against infringement in appropriate cases, the Act should clarify that ISPs continue to benefit from safe harbour protections and cannot be subject to damages for adopting measures (including but not limited to investigating, detecting, identifying, removing, or disabling access to illegal or infringing content) in good faith to address copyright infringement.  This light-touch approach would remove a potential obstacle to copyright enforcement without imposing any burdensome, costly, or otherwise potentially problematic obligations on ISPs.

4.0 Introducing a notice and action regime

  1. The Consultation Paper asked whether additional obligations for intermediaries could be enacted to combat and deter infringement through their services.  In particular, it proposed a notice and action mechanism as one of the alternatives in which "intermediaries could be required to implement mechanisms allowing persons to notify them of specific instances of claimed infringement being facilitated by the intermediaries' services and requiring them to take some action".Footnote 14  In the case of ISPs, the notice and notice regime already goes beyond this proposal by requiring ISPs to receive notices and specifying the action to be taken (pass the notice on to the relevant customer and preserve certain records, or advise the notice-sender why the notice could not be passed on).
  2. Subject to the considerations outlined below, expanding these types of obligations to other intermediaries through a notice and action regime could meaningfully assist rightsholders in enforcing their copyright.  In particular, a notice and action regime may create a structure and set of processes that promote productive voluntary measures taken by intermediaries based on the notices received.
  3. Such a regime should not mandate the course of action that any online intermediary must undertake to fulfill its obligations.  It would not be practical for the regime to stipulate a specific action as it may not be applicable, reasonable, or even possible across all intermediaries and in response to all forms of notices (which will not all be accurate or necessarily sent in good faith).  Online intermediaries should have the flexibility to determine the nature, severity, and scale of any action taken in any particular situation entirely on their own accord.
  4. In addition, the notice and action regime either should not apply to ISPs or it should be clear in the Act that compliance with the notice and notice regime discharges any obligations of ISPs under the notice and action framework with respect to the relevant notices.  ISPs have made considerable investment in the notice and notice system and without such clarification there is a risk that someone will argue that something other than notice and notice must now be undertaken by ISPs under the notice and action framework.  While we do not believe this is the intention of the notice and action proposal, making this explicitly clear would reduce uncertainty and pre-empt unproductive litigation that is focused on ISPs rather than on combatting copyright infringement.

5.0 The Act should directly provide efficient process to obtain injunctive relief against intermediaries

  1. The Consultation Paper proposed to strengthen statutory rights and procedures for obtaining injunctive relief against intermediaries: "[t]he Act could be amended to provide expressly for injunctions against intermediaries to prevent or stop online copyright infringement facilitated by their service even when they are not themselves liable for it, such as where they may protected by the safe harbours."Footnote 15  The Consultation Paper further proposed that the Act be amended to: (i) not require judgement against infringers to obtain an injunction against intermediaries; and (ii) only require applicants seeking injunctive relief from online intermediaries to show that they made a good faith effort to identify infringers but were unsuccessful.
  2. The Federal Court of Appeal has recently determined that:

    Having found harm to the plaintiffs from ongoing copyright infringement by defendants who are anonymous, and who are making clear efforts to remain so and avoid liability, it was entirely appropriate for the Judge to find irreparable harm.

    ...

    Subsection 34(1) of the Copyright Act intentionally provides broad discretionary powers to address copyright infringement, including injunction... the possible remedies contemplated in subsection 34(1) of the Copyright include a site-blocking order.Footnote 16

  3. Therefore, the policy question in this consultation is not whether injunctions against intermediaries should be available at all but how to make this remedy, which is the global standard, even more effective and ensure it is accessible to all stakeholders in the Canadian creative sector and not only those with significant investigative capabilities and the time and resources to undertake lengthy and uncertain litigation.  The proposals in the Consultation Paper outlined in the preceding paragraph are directed precisely at this issue and should be adopted.
  4. Canada now has years of direct experience with injunctions against online intermediaries to address IP theft, which adds to the many years of experience with these measures in many of our closest international partners.  This experience puts the lie to the dramatic and unrealistic warnings expressed by some who oppose any enforcement of Canada's intellectual property laws on the Internet.
  5. In 2017, the Supreme Court of Canada upheld a delisting injunction against Google in the EquustekFootnote 17 decision.  In 2019, the Federal Court granted an Order compelling major Canadian ISPs to block their users form accessing websites associated with an illegal Internet protocol television (IPTV) service called GoldTV.  Despite the dire claims of some that these measures would be widely abused and result in the de-indexing or blocking of legal content, the reality is that these measures have worked exactly as intended and there is no evidence at all of abuse or of Canadians being impeded in accessing legal content.  This is consistent with other jurisdictions such as in the UK where site blocking has been available for a number of years and courts have consistently found that there has been no evidence of over blocking.
  6. Piracy is not a new problem but over time it has shifted from the bootlegging of physical media and theft of satellite signals to a decentralized network of anonymous and clandestine online operators, where piracy sites profit from charging users for unauthorized access to content and selling advertising associated with that content.  The Internet has had a profoundly positive impact on Canadian society and individual Canadians but it also has exacerbated the piracy problem, making it easy for pirate operators to make their illegal pirate sites available in Canadian homes.
  7. The nature of online piracy itself is also changing, while the problem continues to grow overall.  In particular, "peer-to-peer" file sharing (torrents, associated with sites such as The Pirate Bay) was until recently the most common means of accessing pirated content in Canada but has now been surpassed by streaming of pirated content.  Today, up to 85% of Canadians' engagements with online piracy are through such streaming sites.Footnote 18
  8. Content is accessed on piracy sites through web browsers and, increasingly, through applications that can also be loaded on phones, tablets, and set-top-boxes.  These applications provide a more user-friendly interface than previous forms of online piracy that provides instant access to thousands of illegal streams available from a variety of piracy sites to find the "best" stream.  This makes accessing piracy sites easy and effective for even the least technologically sophisticated user, and increases the importance of solutions that do not require protracted litigation against every one of the sites involved.  A report published the Digital Citizens Alliance and Nagra in 2020 observed that:

    The most virulent and fast-growing illegal streaming enterprise is the pirate subscription Internet Protocol Television (PS IPTV) Service. This type of service mimics the practices of legitimate streaming services. It charges by the month or by the year – typically, about $10 - $15 per month. And for that low price, it provides the customer with thousands of channels of linear television from around the world, and often with tens of thousands of titles for video on demand, including movies still showing in theaters and every episode of entire TV series.Footnote 19

  9. The piracy ecosystem leverages many services provided by legitimate online intermediaries including but not limited to:
    • Payment processors, including merchant acquirers and credit card companies: used by consumers and resellers of these services to pay subscription fees and wholesale credits;
    • Hosting providers and content delivery networks: used by pirates to support their websites and make pirated video available;
    • Advertising networks: used by pirate operators to monetize traffic to their piracy sites;
    • Website services: provide publisher tools to create and manage IPTV storefronts and domains;
    • Domain name registrars: used by the operators of pirate sites to register and update their website domains; and
    • Social media marketing: used by pirates to promote their services on social media platforms to generate traffic and interest in their services.
  10. Industry experts, including the Digital Citizen Alliance and Nagra also made a similar observation of the piracy ecosystem: "[t]he ecosystem also depends upon legitimate players, including hosting services, payment processors, and social media."Footnote 20

5.1 The difficulty of combating internet piracy

  1. Piracy is, by its nature, often resistant to conventional domestic legal action.
  2. The nature of online communication means that pirate operators can frequently conduct their activities with total anonymity.  Pirate operators can communicate with one another, and with their customers, online using false names and providing no identifying information.  Thus, identifying and obtaining relief against the real individuals operating piracy sites can be exceptionally difficult.
  3. Even when these pirate operators can be identified, they are often located in jurisdictions where conventional legal action may not be a viable option, due to the limitations of the legal system or disproportionate costs.  One of the salutary effects of the Internet has been to make the world smaller, allowing individuals to communicate and collaborate with friends and colleagues around the world.  The corollary of that enormous potential is that an individual can appropriate Canadian content, sell access to that content to Canadians, and cause significant harm to all manner of Canadian creators and businesses without ever setting foot in the country.  Even when pirate operators are located in jurisdictions with robust and fair legal systems, the cost to Canadians in the creative sector and broadcasting system of conducting international litigation is often disproportionate.
  4. Even when pirate operators can be identified, and even when they are physically located in jurisdictions where legal action is a viable option, piracy operations demonstrate great resilience.  This is because the cost of setting up a piracy operation is relatively low – all it requires is a computer, an Internet connection, and a moderate level of technical skill – and such operations can be set up quickly.  In conventional litigation, addressing the recreated site may require an entirely new investigation and litigation process, which is expensive, time-consuming, and inefficient.  In the kind of system proposed here and in place in other countries, the recreated piracy site can be addressed efficiently with the assistance of well-placed intermediaries.  If action is taken to circumvent an injunction against intermediaries (e.g., by moving a website to a new URL or IP address to avoid site-blocking, or opening a new account to regain payment capabilities), this can be addressed through a simple variance of the injunction.  If that can be done expeditiously, injunctions against intermediaries can be incredibly effective at combatting piracy.
  5. This is crucial, because even when actions are successfully brought against pirate operators, the pirate operators typically lack the financial ability to compensate their victims, precisely because they sell access to stolen content at prices far below legitimate market rates.  This is reflected in the fact that even though pirate operators earn an astonishing $227 million in annual advertising revenue, the commercial value of digital piracy of film alone (i.e., excluding television, which likely accounts for more than half of all piracy ) is well over 50 times that amount or approximately $160 billion.Footnote 21  Therefore, victims of piracy can never obtain reasonable compensation for the damage they suffer, emphasizing the importance of preventative measures.Footnote 22

The Act should provide a more efficient and effective injunction process for rightsholders

  1. The Act is "an important marketplace framework law and cultural policy instrument that, through clear, predictable and fair rules, supports creativity and innovation and affects many sectors of the knowledge economy."Footnote 23  In order to facilitate the Act's objectives, we recommend that the Act clarify and strengthen enforcement tools against online infringement by establishing a statutory basis and procedure for injunctions against online intermediaries:
    1. the Act should be amended to provide expressly for injunctions against all types of intermediaries to address, deter or demonetize online copyright infringement that is directly or indirectly dependent on or supported by their service, even where they are not themselves liable for it, such as where they may be protected by the safe harbour provisions; and
    2. the Act should specify that these injunctions are available without the need for rightsholders first to obtain judgment directly against the alleged infringer.
  2. First, our experience has shown that obtaining injunctive relief against an illegal service alone is often not effective in stopping infringement.  Rightsholders often have difficulty locating these operators to enforce the injunction for the reasons outlined in section 5.2 above.  For example, despite an injunction issued against the anonymous operators behind GoldTV in 2019 by the Federal Court, the service continues to operate today.Footnote 24  In 2019, DISH Network and NagraStar sued the operators behind another illegal IPTV service named IPGuys in the United States and that service continues to operate today.Footnote 25  Since 2016, despite an injunction obtained against resellers of set-top boxes pre-loaded with applications to allow users to obtain unauthorized access to content owned and distributed by Bell Media, Rogers and Videotron, some resellers continue to ignore this Order (resulting in contempt of court charges against them)Footnote 26 and these pre-loaded set-top boxes remain available from countless anonymous sources online.
  3. Second, it is clear that services provided by online intermediaries play a critical role in the operations of these illegal services.  Pirates rely on intermediaries to obtain and redistribute illegal content to virtually anyone in the world, from anywhere in the world, and to monetize this activity.  The Act should recognize that obtaining an order against these online intermediaries can be an effective remedy for rightsholders.
  4. In particular, intermediaries that do business with or whose business is directly or indirectly relied on by large, egregious infringing sites should be required to contribute to combatting copyright theft where they are well placed to do so.
  5. Making it possible for rightsholders to apply for this type of remedy directly in appropriate cases rather than only after a protracted legal process would provide a practical means to address the issue of piracy for all stakeholders.  It will provide certainty regarding the legal framework and avoid prolonged and ultimately unproductive investigations and litigation in respect of anonymous piracy operators.
  6. We note that these requirements should be applied to all online intermediaries as it is clear from section 5.1 above that their services are integral to the operations of the overall piracy ecosystem.  For example, potential applications of this remedy could result in an order for ISPs to block access to an identified infringing service, search engines to de-index the service, hosts and social media platforms to take down the service and to not direct users to it, advertising networks to not place advertisements with the service, and financial institutions not to process payments to the service.
  7. In aggregate, these measures could significantly reduce piracy in Canada without any adverse impact on legal activity in the Canadian marketplace.

5.3 Similar principles exist in other jurisdictions

  1. The notion that a copyright regime should allow rightsholders to obtain mandatory relief against intermediaries, including requiring ISPs to disable access to piracy sites, is not novel.
  2. Notably, the United Kingdom introduced its regime in 2003 and has disabled access to infringing sites including The Pirate Bay and First Row SportsFootnote 27 as well as disabling access in real time to illegal streams of live sporting events.  France implemented its own regime in 2006 and has disabled access to several notorious sites including Allostreaming and The Pirate Bay.  Outside the European Union (EU), Australia implemented its regime in 2015 and in December 2016 required ISPs to disable access to sites including The Pirate Bay, Torrentz, TorrentHound, and IsoHunt.Footnote 28
  3. In total at least 20 countries, including most of Canada's closest partners, have implemented regimes to disable access to piracy sites. These include both regimes that are operated through the courts (for example, the United Kingdom) and either alternative or additional administrative regimes (for example, Portugal, which in 2015 established a regime to provide for disabling of access to piracy sites that is overseen by the Inspecção Geral Das Actividades Culturais).
5.3.1 European Union Directive
  1. The EU's Direction on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information SocietyFootnote 29 directs member states to have regimes allowing rightsholders to obtain mandatory relief against intermediaries including requiring ISPs to disable access to piracy sites:

    (59) In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, rightsholders should have the possibility of applying for an injunction against an intermediary who carries a third party's infringement of a protected work or other subject-matter in a network. This possibility should be available even where the acts carried out by the intermediary are exempted under Article 5...

    Article 8 - Sanctions and remedies

    1. Member States shall provide appropriate sanctions and remedies in respect of infringements of the rights and obligations set out in this Directive and shall take all the measures necessary to ensure that those sanctions and remedies are applied. The sanctions thus provided for shall be effective, proportionate and dissuasive.
    2. Each Member State shall take the measures necessary to ensure that rightsholders whose interests are affected by an infringing activity carried out on its territory can bring an action for damages and/or apply for an injunction and, where appropriate, for the seizure of infringing material as well as of devices, products or components referred to in Article 6(2).
    3. Member States shall ensure that rightsholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.Footnote 30
  2. Significantly, the EU has also recognized that it is important that these injunctions be available in a timely fashion:

    (22) It is also essential to provide for provisional measures for the immediate termination of infringements, without awaiting a decision on the substance of the case, while observing the rights of the defence, ensuring the proportionality of the provisional measures as appropriate to the characteristics of the case in question and providing the guarantees needed to cover the costs and the injury caused to the defendant by an unjustified request. Such measures are particularly justified where any delay would cause irreparable harm to the holder of an intellectual property right.

    (23) Without prejudice to any other measures, procedures and remedies available, rightsholders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the rightsholder's industrial property right. The conditions and procedures relating to such injunctions should be left to the national law of the Member States..Footnote 31 [emphasis added]

  3. The EU Directive has been widely implemented into the laws of various EU member states.  Since 2010, it has been relied upon in at least 17 countries across the EU and resulted in final orders issued in relation to more than 2,000 copyright infringing sites.
5.3.2 United Kingdom
  1. In the United Kingdom, section 97A of the Copyright, Designs and Patents Act provides applications for website blocking orders for those engaged in copyright infringement:

    97A. Injunctions against service providers

    • (1) The High Court (in Scotland, the Court of Session) shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.
    • (2) In determining whether a service provider has actual knowledge for the purpose of this section, a court shall take into account all matters which appear to it in the particular circumstances to be relevant and, amongst other things, shall have regard to—
      • (a) whether a service provider has received a notice through a means of contact made available in accordance with regulation 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013); and
      • (b) the extent to which any notice includes—
        • (i) the full name and address of the sender of the notice;
        • (ii) details of the infringement in question.
  2. While there is no requirement for the exchange of pleadings, the application is supported by evidence sufficient to enable the Court to determine whether the threshold conditions are satisfied, and whether the grant of a blocking order is appropriate and proportionate in all circumstances.
  3. Following the adoption of the site-blocking regime, INCOPRO found that the remedy has had a significant impact on all blocked sites and their related proxies, with all categories showing a significant decline in usage since the blocks were implemented.Footnote 32  In particular, they found that blocked sites consistently declined over a two-month period immediately after the block is implemented, before settling at a new lower usage level.  On average, blocked sites in the United Kingdom lose approximately 77% of their estimated usage in the 2 months following a site block.Footnote 33
5.3.3 Australia
  1. Australia has recognized that site-blocking remedies against online intermediaries can be an effective tool for rightsholders. For example, in the second reading speech for the Copyright Amendment (Online Infringement) Bill 2015 (Cth), the Honourable Mr. Malcolm Turnbul said that:

    … the Copyright Amendment (Online Infringement) Bill 2015 provides an important part of the solution to the problem of online copyright infringement. It is vital that copyright owners have an efficient mechanism to disrupt the steady supply of infringing content to Australian internet users from overseas based websites. This bill will provide an enhanced, streamlined mechanism that enables infringing material to be blocked by a carriage service provider – an internet service provider – without the need to establish fault on the part of that provider. Specifically, the bill will introduce a new provision that allows a carriage service provider to disable access to infringing online locations located outside Australia.

  2. Section 115A of the Copyright Act 1968 (Cth) enables a copyright owner to apply to the Court for an injunction requiring a carrier service provider to take reasonable steps to block access to websites that infringes, or facilitates an infringement, of their copyright relating to websites located outside of Australia:

    115A  Injunctions against carriage service providers providing access to online locations outside Australia

    • (1) The Federal Court of Australia may, on application by the owner of a copyright, grant an injunction referred to in subsection (2) if the Court is satisfied that:
      • (a) a carriage service provider provides access to an online location outside Australia; and
      • (b) the online location infringes, or facilitates an infringement of, the copyright; and
      • (c) the primary purpose of the online location is to infringe, or to facilitate the infringement of, copyright (whether or not in Australia).
    • (2) The injunction is to require the carriage service provider to take reasonable steps to disable access to the online location.
  3. Under this regime, ISPs, hosting service providers as well as search engines may be subject to injunctions for the use of their services by pirates.
  4. The current regime has been successful in reducing piracy.
  5. The Motion Pictures Association (MPA) found that in the period immediately following a substantial volume of blocking orders were granted, they observed a 5% increase in visitation to legal sites.Footnote 34  The MPA study also emphasized the importance of reaching a critical mass in the number of blocked websites for the remedy to be effective: "[t]hese results substantiate the findings of earlier research regarding the importance of the size of the site blocking wave in determining its likelihood of impact".Footnote 35  This observation shows that any site-blocking remedy should be efficient and cost-effective for rightsholders.
  6. In that connection, a crucial proposal in the Consultation Paper is that the Act should clarify that injunctions against intermediaries are available without the need to first obtain judgement directly against the alleged infringer or include the alleged infringer.  Requiring rightsholders to obtain an injunction against anonymous piracy operators before they can obtain an injunction against online intermediaries would introduce significant costs and delays while pirates continue to cause harm to rightsholders.
  7. In a separate study, INCOPRO found that site blocking in Australia has had a positive impact upon the usage of blocked piracy sites including reducing the usage in Australia of the websites targeted by the blocking orders by 71.7% since December 2016 and decreased usage of the top 50 sites in Australia by 7.7% since October 2016.Footnote 36
  8. A recent report published by the Australian Government's Department of Infrastructure, Transport, Regional Development and Communications found that 59% of consumers who encounter a blocked website did not take any further action to access the website and "simply gave up".Footnote 37
  9. The evidence in Australia demonstrates that site-blocking remedies have been effective in combating piracy and emphasizes that the remedy should apply to a broad range of intermediaries (ISPs, search engines, hosting service providers, etc.).  As well, mechanisms that reduce the cost for rightsholders to pursue these types of remedies are integral to ensure that they will be effective in combatting piracy.

6.0 CRIMINAL PROVISIONS SHOULD APPLY TO STREAMING

  1. Section 42(1) of the Act provides that certain acts of copyright infringement undertaken for commercial purposes or at commercial scale are criminal offences.  Specifically, it refers to activities such as copying and distributing copies of works without authorization.  In the new digital economy, illegally streaming (or otherwise making available or communicating to the public by telecommunication) of copyrighted works has replaced copying as the most common method of commercial-scale piracy operators.Footnote 38  While we believe the current criminal provisions apply to much of this activity, others have suggested this is now a "grey area."  In any event, the reality is that given this uncertainty authorities are hesitant to apply the existing criminal provisions to large commercial operators of illegal pirate streaming services who may in some cases be taking in millions of dollars from this activity.
  2. Revising section 42(1) of the Act to apply to all forms of commercial scale copyright theft without regard to whether copies are being made would be consistent with the underlying principle of the Act that its provisions and remedies be technologically neutral, and would help Canada avoid becoming a safe-haven for what is effectively organized, profit-motivated criminal activity.  Unfortunately, our country has become known as something of a safe harbour for operators engaged in massive global piracy (for example, the individuals that operated the notorious illegal Popcorn Time service operated out of Montreal, as did the operator of TVAddons, until recently one of the top piracy sites in the world).
  3. We recommend that the criminal provisions be updated to address streaming by including making available and communicating to the public by telecommunication pirated material at commercial scale or for a commercial purpose as a criminal offence.  To be clear, just as is the case with the existing offence, this offence would not apply to individual users but rather only to significant piracy operators.  Making the existing offence technologically neutral would simply reflect the reality that modern piracy typically occurs through online streaming.

7.0 CONCLUSION

  1. The development of the Internet has generated unprecedented benefits and opportunities.  However, it has also presented copyright owners and exclusive licensees around the world with a new degree of difficulty in protecting their copyright.  While there is no single solution to combat piracy, our recommendations provide a multi-prong approach to address the global problem of piracy and respond to real-world enforcement issues faced by Canadian rightsholders in the current digital economy. This will ultimately benefit all legal operators and in turn Canadians will benefit from investment and innovation in flourishing digital markets.
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