Canadian High Court Takes Copyright Heat Off ISPs

In the second ruling to limit the legal ammunition of Canadian copyright holders looking to sue file-sharers and hold ISPs accountable for peer-to-peer (P2P) piracy, the Canadian Supreme Court ruled that ISPs are not subject to royalty fees.

Canada’s high court ruled that the creation of a cache copy by Internet providers is part of their business to provide access to users, who have an expectation of freedom and privacy, and should not mean the providers have to pay royalties, as proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), which has fought for nearly nine years for the fees.

While industry observers have called Canada’s struggle with P2P file-sharing a good measure of the copyright issues facing legitimate online music providers, artists, ISPs and others all over the world, Gartner research director Mike McGuire said that this week’s ruling highlights that each nation is different.

“In Canada, copyright law is a little different,” McGuire told TechNewsWorld. “This continues to show there are no like markets or homogeneous markets.”

McGuire added that because of its “progressive” history and nature, Canada might be the origin of new distribution models that will bridge the gap between licensed and free services, as well as the gap between copyright holders and consumers. “We may see more forward-thinking distribution models in Canada compared to other places,” he said.

Common Carrier Classification

By holding that ISPs are “common carriers,” the Canadian Supreme Court unanimously rejected the idea that these companies — which argued they would suffer hardship and even potential death if copyright fees were forced on them — should pay for content cached on their servers.

At the end of last year, Canada’s Copyright Board did approve a fee on the hardware that plays digital files in an effort to offset losses and pay artists and others in the recording industry. While Canadian copyright holders wanted the same types of fees imposed on ISPs, the Canadian court ruled that providers were “common carriers,” not consumers.

Yankee Group senior analyst Mike Goodman told TechNewsWorld that because of its size and geographic location, Canada serves as a test bed for licensing and copyright-enforcement models.

Goodman said that the hardware tariff, for example, could be pushed by industry and copyright owners in the United States if the model proves successful in Canada.

Continued Protection

McGuire said it might not have been unreasonable for copyright holders to ask for the fees, but he pointed out that it was perfectly logical and reasonable for ISPs to resist them as well.

McGuire said that the recent ruling, in combination with a previous Canada ruling rejecting the disclosure of account information by ISPs and a similar victory for Verizon in the United States, represents a trend away from ensnaring ISPs in copyright-holder crusades.

“It seems to be a continuation of some protection of ISPs,” McGuire said. “I’m not sure a lot of us would want ISPs in the position of being able to scan and cough up information on personal activity for [finding alleged infringers].”

For ISPs, Not Foragers

A somewhat similar ruling in the United States last year that required the Recording Industry Association of America (RIAA) to take a different, more cumbersome legal path to suing alleged file-traders was credited by many with a bounce in P2P use early this year.

However, McGuire said that the Canadian ISPs were benefiting more from the recent Canada ruling than the use of free file-sharing utilities and networks.

“P2P traffic will always ebb and flow,” McGuire said. “That hasn’t changed. I think [P2P use] is going to ebb and flow and continue to be there.”

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