When Canadian Prime Minister Stephen Harper called for a snap October federal election, he threw into doubt the oft-delayed attempt to reform Canada’s outdated copyright laws–the fate of which rests on Harper’s Conservative Party staying in power.

It has been 11 years since Canada signed the World Intellectual Property Organization’s (WIPO) Internet Treaties in 1997, and Parliament still hasn’t implemented them.

By contrast, the U.S. took only two years to enact the Digital Millennium Copyright Act of 1998, which implemented WIPO treaties.

“Successive governments have left Canadian business and consumers adrift by failing to reform copyright legislation,” says Barry B. Sookman, co-chair of McCarthy T?(C)trault’s technology law group.

Canada’s ruling Conservatives have been working on copyright reform since their minority government took power several years ago. All indications were that legislation would be forthcoming in December 2007. It wasn’t, but rumors of impending action remained rampant.
In June, the Conservatives finally tabled a comprehensive reform bill.

But asking how the proposed amendments to the Copyright Act will affect Americans doing business in Canada is like asking whether the sun is to the north or to the south: It depends on which side of the dividing line you’re standing. Copyright law is nothing if not an attempt to strike a balance between the rights of creators and users.

Digital Dilemma
“The industries most affected are the ones with products that are delivered digitally,” says St?(C)phane Caron, a copyright lawyer at Gowling Lafleur Henderson. “They’re the ones looking for improved protection.”

The main challenge for these industries, of course, is the ease with which digital products can now be reproduced and communicated. This makes illicit copying not only simple but highly profitable.

“The amendments address these concerns by making it illegal to break through digital locks that prevent copying,” Caron explains.

Digital locks control who can access content, and when and why they can use it.

“Digital locks are speed bumps that forestall pirate attempts to eviscerate the economic interests of rights holders, like locks on doors,” Sookman says. “Would you invest in manufacturing a product that can be stolen with impunity?”

But while the argument for greater protection finds its most public expression in discussions of copyright infringement resulting in lost revenue, the business case really arises from the fact that the traditional sales and licensing techniques used to commercialize music, TV shows and cinema are hardly the preferred business model for digital products these days.

Digital sharing is no longer–and may never have been–about a bunch of geeky kids developing programs to pirate music or videos. It’s at the heart of the rights that businesses competing in the multimedia world have against one other.

Can they move content from one medium to another or from one location to another? Can they reformat content? Should paying customers of cable companies be allowed to watch locally blacked-out sports events on “time-shifting” devices?

Essentially, creators and distributors seek ways to attach different kinds of limited rights to their digital products. To that end, digital locks or blocks are already common in broadcast signals, Internet encryption and e-commerce. They allow publishers to make their works available in diverse ways to different people.

“Protection against copying enables versioning of products to meet individual consumer needs,” Sookman says. “It provides diversification for consumers who can choose to pay less for the limited uses in which they are truly interested.”

Winners and Losers

With the appropriate protection, content distributors can determine what kind of customer sharing is the most profitable. They can monetize that sharing with other revenue-generating techniques.

Consider movies, for example: Producers recoup their huge costs by showing the movies in theaters, then licensing them to pay-per-view outlets, then movie channels, then mass
marketing DVDs and finally spinning the films off to specialty outlets such as airlines.

But unless producers can be sure the limits of their licenses will not be breached, tremendous risk exists for rights holders in an environment where the ubiquity and ease of use of copying technology and digital transmission means that a single act of unauthorized reproduction can proliferate globally in seconds.

Digital locks and sanctions for tampering with them greatly reduce that risk–so in that sense, businesses selling rights benefit most from the copyright amendments.

But there are losers in this scenario as well. According to Michael Geist, research chair of Internet and e-commerce law at the University of Ottawa, they include telecommunications companies that are thinking of marketing network-based personal video records; digital security companies involved in encryption research that discover flaws in digital locks, exposing them to charges of tampering with those locks; and retailers with prices that are inflated by the private copying levies imposed to balance perceived losses from private use exemptions.

“Even the movie and music sectors have losers,” Geist says. “In fact, the proposed amendments go so far as to undermine the business model for many of these groups.”
But the balance may change: Even if the Conservatives stay in power after the elections, a minority government may ensue, leaving the opposition parties in a good position to demand amendments that are less favorable to business.

Continued Uncertainty

Meanwhile, the debate about the legislation is bitter and the lobbying intense.

“There are no babies to kiss,” says one lawyer observer who has been intimately involved with copyright reform in Canada. “All copyright issues offer to politicians is the chance to stand between intensely opposed forces.”

Unfortunately, politicians facing this type of conundrum are hardly known for standing tall, especially with an election looming. Canada may find itself in the copyright wilderness for some time yet.