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December 15, 2003
Volume 2, Issue 11

P2P Music Downloading Legal in Canada

Canadian Copyright Board P2P Download Ruling

The Canadian Copyright Board announced on Friday its ruling that, under Canadian copyright law, downloading music using peer-to-peer (P2P) file-sharing applications is legal. The board said that downloading music is permissible when the acquired files are to be used as personal copies.

Canadian law does not address the source of copies or whether the original has to be an authorized or non-infringing version, the board said.  Uploading of files onto P2P networks, however, was not declared to be legal.

Additionally, the board voted to freeze the tariffs that Canadians pay on recordable media like blank CDs -- fees that go into a fund that compensates artists and copyright holders -- at their current rates until the end of 2004.

The decision ignored recording industry requests for an increase on the tariffs, as well as its desire to add recordable DVDs and computer hard drives to the list of taxed devices.

However, consumers will now pay $2 per gigabyte (GB) on hard drive-based MP3 players, with a maximum tariff of $25 for MP3 players with capacities over 10 GB. Collected money will go into a fund to pay musicians and songwriters for revenues lost from consumers' personal copying.

The Copyright Board did not rule out a future tariff on computer hard drives, but decided in the mean time to rule in favor of the consumer. The P2P component of the decision was prompted by questions from consumer and entertainment groups about ambiguous elements of Canadian law.

Canada is approximately one-tenth the size of the United States, but has relatively higher penetration of high-speed Internet connections, now exceeding 4 million, which make it easy to download music files.

Canada could become a model for countries seeking to find a balance between protecting copyright holders' interests and providing consumers with more liberal access to copyrighted works.

A lawyer for the Canadian record industry's trade association CRIA said the group still believed downloading was illegal, despite the decision.

Report from CEO Marty Lafferty

A month ago, following several Congressional hearings focusing on abuses of P2P technologies, Senators Boxer, Cornyn, Durbin, Feinstein, Graham, and Smith wrote to the CEOs of Bearshare, Blubster, eDonkey 2000, Grokster, LimeWire, Streamcast, and DCIA Charter Member Sharman Networks, Ltd. (SNL).

Their letter asked questions about 1) consumer notifications, 2) content filters, and 3) default settings.

Each of the software companies, as well as P2P United, presumably will provide their answers this week. The DCIA would like to comment on this exchange as well.

The DCIA has a unique perspective on this matter in that our mission is to foster the commercial development of P2P and, in that process, encourage balanced participation among platform, operating, and content companies.

Our current focus is on bringing broadband ISPs, P2P software firms, music labels and publishers together to develop viable P2P music distribution models for trial and implementation. 

On the consumer notification question, as previously reported, we've initiated a relationship with the Center for Democracy and Technology (CDT), with whom we will be meeting again later this week regarding this subject.

The DCIA will review current communications to prospective users by P2P software providers advising about the risks associated with copyright infringement, which include being sued by rights holders or their agents for sharing content without proper authorization.

We will recommend enhancements to those communications to the extent they may not be clear, conspicuous, or meaningful. 

At the same time, we will step up our efforts to address what we see as the core issue behind P2P copyright infringement: the large-scale inavailability of licensed content in P2P distribution. We will continue to urge rights holders, rather than seeking to withhold content from P2P, to contribute to a marketplace solution by licensing it for commercial P2P distribution.

The DCIA is looking for a four-part win -- rewarding the huge body of consumers who prefer to obtain online digital material via P2P, broadband ISPs who want to increase their penetration and add new revenue streams, rights holders who are entitled to compensation for the distribution of their copyrighted works, and P2P software companies who are making good-faith efforts to develop their technologies for commercial purposes.  

On the content filter question, relative to copyright infringement and criminally obscene content, the issues are more complex, both technically and legally, than simply committing to implement effective filtering. Having said that, we believe certain type(s) of filtering may prove to be effective as part of larger solution(s).

The DCIA will encourage improvements in software capabilities to help users identify and screen-out pornography without inadvertent exposure to it. 

We will advocate standards that go beyond P2P to include any network-based technology (e.g., search engine, web site, instant messaging, or bulletin board). As reported in this and previous DCINFOs, the Government Accounting Office (GAO) now believes that other Internet applications in fact pose greater threats in this regard than P2P.

SNL and other P2P software industry leaders have already implemented strong parental control software tools.

The DCIA will promote advancements by developers and continue working with law enforcement agencies on in-progress programs to improve the ability of parents to protect their children and themselves from objectionable content.

Turning to infringement, the basic question regards development of software filters to accurately identify files that are in breach of copyright and effectively block them as they are downloaded or uploaded.

No such file identification/blocking software currently exists in the realm of P2P client-side software, and beyond technical feasibility, which the DCIA believes will require an alternative architectural approach, many additional issues would have to be addressed before a solution involving such functionality could begin to be contemplated for possible development.

It is important not only to acknowledge the severe limitations of currently-available client-based technologies that P2P software companies could employ for these purposes, but also to recognize that both the investment to develop more effective approaches and the architectural and policy solutions that would ensure their efficacy are beyond the reach of P2P software companies alone. 

This is why we have engaged in developing business models for P2P music distribution, models that incorporate the identification and screening of traded files not only to enable charging for the use of copyrighted content, but also to reduce the traffic in content that is not authorized to be traded.

These models call for various measures, including those that can be based on currently available technologies and those for which new ones will need to be developed.

We recognize that implementation will require the participation of multiple industry sectors.

Clearly, no P2P software company, nor even any individual industry sector, is in a position to unilaterally implement an effective solution involving P2P traffic filtering technology(ies).

The DCIA will also continue this process, and indeed has already begun to do so, for other types of digital media content beyond music.

Finally, on the default setting question, the DCIA believes that the current practices of SNL and other P2P software leaders with respect to clearly offering consumers the choice of uploading or not uploading files and otherwise providing advanced content security features are appropriate.

We will encourage our P2P software company Members to continue the enormous advancements they have made in protecting consumers from inadvertently sharing confidential data.

The DCIA will urge them to continue incentivizing the sharing of licensed content only, though again this will become truly effective only as major copyright holders consent to add their works to the mix, which we will also continue to work to bring about.

We are particularly proud of the extraordinary responsiveness of the new P2P software technology firms in addressing a host of issues related to consumer protection that Congress has previously helped identify, including the provision of anti-virus software and, as noted earlier, family filters with password protection. 

We are grateful to the six Senators for creating the opportunity to clear the air on these important issues and look forward to engaging further as we make progress towards their marketplace resolution.

Copyright 2005 Distributed Computing Industry Association
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