File Sharing, Music Copying, and the Law

   
Conclusions/Facts

• You can make personal copies of CDs that your friends bought.

• Your friends can make personal copies of your CDs that you bought.

• You cannot make copies for anyone, neither can copies be made for you.

• Sharing files (to friends but especially to the public) is a clear violation of the law.

• Downloading and burning music however does not violate the letter of the law in Canada.

• The legal right to privately copy music has been justified by way of a levy that applies to blank media such as blank CDs.

• There is currently a $0.21 levy on CDR/Ws and  a $0.77 levy on CDR/W-audio, contributing, in 2002 alone, over $26 million to authors (66%), performers (19%), and makers (15%).

Can you make copies for your friends?

The simple answer is NO, but you can legally copy your friend's music CD for YOUR OWN use. To paraphrase the introduction to an early Copyright Board ruling:

On March 19, 1998, Part VIII of the Copyright Act came into force. Until then, copying any sound recording for almost any purpose infringed copyright. Part VIII legalizes one such activity: copying of sound recordings of musical works onto recording media for the private use of the person who makes the copy.
 

What mediums are legal to copy?

It does not matter whether you own the original sound recording (on any medium), you can legally make a copy for your own private use.

To emphasize this point, end note 4 of an early Copyright Board ruling says:

Section 80 does not legalize (a) copies made for the use of someone other than the person making the copy; and (b) copies of anything else than sound recordings of musical works. It does legalize making a personal copy of a recording owned by someone else.

Note that the Copyright Act ONLY allows for copies to be made of "sound recordings of musical works". Nonmusical works, such as audio books or books-on-tape are NOT covered.
 

What are some practical examples of this Law?

1. You can legally lend a commercial CD to a friend, give him a blank CD-R, let him use your computer, and help him burn the CD-R which he can keep for his own private use.
2. You can legally copy a commercial CD, keep the copy, and give your friend the original.
3. You cannot legally make the copy yourself and give your friend the copy.
4. Your friends Amanda and Bernie really like the new commercial CD you just purchased. Amanda borrows it and makes a copy for her own use. She then passes the commercial CD on to Bernie, who makes a copy for his own use. Bernie gives the commercial CD back to you. This is all perfectly legal.
5. However, if Amanda had copied the commercial CD, given it back to you, and passed her copy on to Bernie to make a copy for his own use, then copyright would have "probably" been infringed. There is some doubt here because Amanda's original intent is important. In the strictest terms, her copy was no longer just for her private use. Pretty strange considering that the end result of examples 5 and 6 are exactly the same!
    

Can I send mp3's to my friends?

You may not copy a CD or rip an mp3 and give it to anyone else. You may not send an mp3 to a friend over the net, because a copy is made in that process. You may not file share (or upload) over the internet without infringing. This last infringement is due to the nature of p2p file-sharing.
 

Why does p2p programs like Kazaa violate the copyright law for uploading?

When a person requests a file over a p2p network, like Kazaa, the network sends out requests to the effect of, "Hey, Mr. X is looking for song Y, do you have a copy?" Your computer has results, and sends the information back through the network to Mr. X. Mr. X, seeing the result, decides to download it. He sends a request to your computer for the file. Here's what's key: he does not log onto your computer, make a copy of Song Y, and send it back. Your computer receives the request for Song Y, and then your computer makes the copy by reading the information off of your hard drive and transmits it to him. He now has a copy. Thus, whenever someone downloads from your computer, your computer makes a copy for their use. This is clearly infringement because you are responsible for what your computer does.

One important point of all this is that so long as you use a p2p application with sharing turned off, you cannot infringe copyright with that application. That's an imperfect solution, of course, because some of us need to share so that the system works.

There are other reasons as well that file sharing is infringement, which I will canvas briefly: Offering your files on a p2p network is "public" rather than "private" copying, for two reasons. First, because sharing on a p2p network is allowing the public, in the common sense meaning of the word, to access your files. Second, because the Copyright Board has defined "to the public" as something intended to reach more than one person outside your domestic (national) setting. Any public copying is of course not protected under the private copying provision in section 80.
 

Works Cited

● "Cyberpiracy north of the border."  by Michael Geist: Canada research chair in Internet and e-commerce law at the University of Ottawa. Geist is also technology counsel to Osler, Hoskin & Harcourt, and he writes a newspaper column on cyberlaw. Written: October 27, 2003.

● "Canadian copyright levy on blank audio recording media." by Neil Herber.

● "File Sharing and Downloading in Canada," Grep Law--division of Harvard Law School, but directly under the auspices of the Berkman Center for Internet & Society which is a research program founded to explore cyberspace, share in its study, and help pioneer its development.

● Canadian Private Copying Collective

● Canadian Copyright Act, especially part VII

● "Blame Canada," & "Blame Canada II," by Jay Currie a Vancouver writer who interestingly details the file sharing scene in Canada.

  "Public Performance of Private Works," Copyright Board of Canada. Describes the laws and concepts regarding broadcasting content via the internet (uploading).  Written: October 27, 1999

Articles

Canadian Regulator Imposes New Taxes on MP3 Players, Star Says
Dec. 13, 2003 (Bloomberg) -- The Canadian Copyright Board approved a new levy of as much as C$25 ($19) on MP3 players and other fixed-memory devices to compensate artists for wide-spread copying of music, the Toronto Star reported.

The new tax, which comes into effect immediately, will add C$2 to the cost of devices with less than 1 gigabyte of memory and rise to C$25 for 20-gigabyte music jukeboxes such as Apple Computer Inc.'s iPod, the Star said.

The Copyright Board balked at raising tariffs on blank recording media, such as recordable compact and digital video discs, fearing such taxes would encourage Canadians to buy the products in the U.S. and hurt Canadian retailers. The board also ruled that copying music for personal use, even if the music is downloaded for free from an online song-swapping site, is not prohibited under the Copyright Act, the Star said.

The music industry called the decision ``disappointing'' and said the Copyright Board didn't go far enough to protect the rights holders, the Star said. A group representing the industry had proposed a levy that would have added C$112 to the cost of the iPod, the newspaper said.
 

Canada deems P2P downloading legal
December 12, 2003, 2:20 PM PST
By John Borland
Staff Writer, CNET News.com

update Downloading copyrighted music from peer-to-peer networks is legal in Canada, although uploading files is not, Canadian copyright regulators said in a ruling released Friday.

In the same decision, the Copyright Board of Canada imposed a government fee of as much as $25 on iPod-like MP3 players, putting the devices in the same category as audio tapes and blank CDs. The money collected from levies on "recording mediums" goes into a fund to pay musicians and songwriters for revenues lost from consumers' personal copying. Manufacturers are responsible for paying the fees and often pass the cost on to consumers.

The peer-to-peer component of the decision was prompted by questions from consumer and entertainment groups about ambiguous elements of Canadian law. Previously, most analysts had said uploading was illegal but that downloading for personal use might be allowed.

"As far as computer hard drives are concerned, we say that for the time being, it is still legal," said Claude Majeau, secretary general of the Copyright Board.

The decision is likely to ruffle feathers on many sides, from consumer-electronics sellers worried about declining sales to international entertainment companies worried about the spread of peer-to-peer networks.

Copyright holder groups such as the Recording Industry Association of America (RIAA) had already been critical of Canada's copyright laws, in large part because the country has not instituted provisions similar to those found in the U.S. Digital Millennium Copyright Act. One portion of that law makes it illegal to break, or to distribute tools for breaking, digital copy protection mechanisms, such as the technology used to protect DVDs from piracy.

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

"Our position is that under Canadian law, downloading is also prohibited," said Richard Pfohl, general counsel for the Canadian Recording Industry Association. "This is the opinion of the Copyright Board, but Canadian courts will decide this issue."

In its decision Friday, the Copyright Board said uploading or distributing copyrighted works online appeared to be prohibited under current Canadian law.

However, the country's copyright law does allow making a copy for personal use and does not address the source of that copy or whether the original has to be an authorized or noninfringing version, the board said.

Under those laws, certain media are designated as appropriate for making personal copies of music, and producers pay a per-unit fee into a pool designed to compensate musicians and songwriters. Most audio tapes and CDs, and now MP3 players, are included in that category. Other mediums, such as DVDs, are not deemed appropriate for personal copying.

Computer hard drives have never been reviewed under that provision, however. In its decision Friday, the board decided to allow personal copies on a hard drive until a fee ruling is made specifically on that medium or until the courts or legislature tell regulators to rule otherwise.

"Until such time, as a decision is made on hard drives, for the time being, (we are ruling) in favor of consumers," Majeau said.

Legal analysts said that courts would likely rule on the file-swapping issue later, despite Friday's opinion.

"I think it is pretty significant," Michael Geist, a law professor at the University of Ottawa, said. "It's not that the issue is resolved...I think that sooner or later, courts will sound off on the issue. But one thing they will take into consideration is the Copyright Board ruling."

Friday's decision will also impose a substantial surcharge on hard drive-based music players such as Apple Computer's iPod or the new Samsung Napster player for the first time. MP3 players with up to 10GB of memory will have an added levy of $15 added to their price, while larger players will see $25 added on top of the wholesale price.

MP3 players with less than 1GB of memory will have only a $2 surcharge added to their cost.

With a population of about 31 million people, Canada is approximately one-tenth the size of the United States. But Canadians are relatively heavy users of high-speed Internet connections, which make it easy to download music files. About 4.1 million Canadians were using a broadband connection at home as of the end of June 2003, according to U.K.-based research firm Point Topic. By comparison, U.S. cable and DSL (digital subscriber line) subscribers totaled 22.7 million at the end of September, according to Leichtman Research Group.

Canada has already raised the hackles of some copyright holders through its reluctance to enact measures that significantly expand digital copyright protection, as the controversial Digital Millennium Copyright Act (DMCA) has done in the United States. As a result, Canada could become a model for countries seeking to find a balance between protecting copyright holders' rights and providing consumers with more liberal rights to copyrighted works. For now, it remains unclear how other countries might be influenced by Friday's ruling.

Geist said he believes the tariff decision could be just the tip of the iceberg for hardware makers, as Canadian regulators grapple with the full implications of the policy. Other devices, including PCs, may eventually be brought under the tariff scheme, he predicted.

"Given that they've made a strong stand on (peer-to-peer matters), if the policy remains the same, there's little choice but to move ahead on personal computers," Geist said.

However, a representative of the Canadian Private Copying Collective (CPCC), the group of music copyright holders that typically petitions for new media types to be added to the list, said computers were not on its agenda.

"We have never sought a levy on computer hard drives and do not intend to do so in the future," Lucie Beaucheni, vice chair of the CPCC, said.

Copyright Board ruling will add $25 to cost of MP3
Fight against piracy

Robert Thompson
Financial Post

Saturday, December 13, 2003

The next MP3 player you buy could be as much as $25 more expensive thanks to a decision announced yesterday by the Canadian Copyright Board.

Starting immediately, consumers will be charged a levy based on the size of the internal memory on digital music players, though fees on other blank media, like recordable CDs and DVDs, were frozen.

That means a high-end MP3 player, like a $700 Apple Computer Inc. iPod could cost you an extra $25.

Hit with a flurry of free music downloading since 1999, the Canadian Private Copying Collective, a non-profit organization which represents music publishers, authors, artists and record companies, had asked the Copyright Board to raise levies on various blank media. But with the exception of new fees based on the internal memory in MP3 players, the CPCC's request to raise levies was turned down.

Instead the Copyright Board decided to focus its attention on MP3 players. The wallet-sized devices are so popular that most retailers in New York have already sold out of iPod units and do not expect to get more before the holidays.

Sales of compact discs in Canada have slipped by $450-million, or 23%, since 1999. And MP3 players are exacerbating the situation by making it easier for people to play music they download from the Internet.

The Copyright Board said it would allow a levy on internal memory used in the machines. The levy is $2 for each player with a memory capacity of up to 1 GB; $15 for each MP3 player with up to 10GB of memory; and $25 for machines with more than 10 GB of memory.

The levies are meant to compensate CPCC members for some of these lost sales.

The board added it was freezing levies on audio cassettes at 29 cents and CD-Rs at 21 cents. The rates which are currently in affect were set for 2001 and 2002.

The decision came as a blow to the CPCC, which had sought to raise the levy on CD-Rs to 59 cents (or $59 for 100 CD-Rs) and wanted to have a floating fee on MP3 players which would have raised prices from slightly more than $1 for smaller units to as high as nearly $50.

"No one at the CPCC expected the board would give us everything we asked for," said Paul Audley, the organization's policy adviser. "But freezing the rates is a disappointment because there's been a great amount of technological change over the past few years."

Several large technology and retail companies had opposed the levy increase and formed an organization called the Canadian Coalition for Fair Digital Access.

Doug Cooper, Canadian country manager for Intel Corp., a member of the CCFDA, said the board's decision indicates an overhaul of the levy system needs to be undertaken.

"Our take on this is that we need a complete revamp of this system and that levies on blank media need to be phased out," he said, noting that adding levies on internal storage in MP3 players has "set a bad precedent."

Diane Brisebois, president of the Retail Council of Canada, said any levies on blank media make it difficult for Canadian retailers to have comparable prices to Internet sales from foreign countries. "This makes it difficult for Canadian retailers to compete," she said. "A hidden levy is against everything [Canadian retailers] stand for."

The Copyright Board's decision also notes that technological change may eventually result in the elimination of blank media levies in Canada.

In its decision, the Copyright Board said that the use of digital rights management software and other technological measures may soon ensure piracy of music is stopped. This was an argument put forth by the CCFDA during hearings on the levies.

At the same time, the Copyright Board said as music companies increasingly turn to legitimate online music services in Canada, like Puretracks.com, it can be assumed that consumers are already being allowed to transfer songs to CD-R and MP3 players and the levy would not make sense.

With these issues in mind, the board said it "is no longer comfortable with its grasp of the true situation."

Mr. Audley said the Copyright Board's decision means the $28-million the CPCC collected to distribute in 2002 will likely decline in 2003.

But in its report, the board disputed that notion, stating, "the fact the levy rates have not increased does not necessarily mean that rights-holders' reenumeration will not increase. If, in fact, private copying is on the rise, more blank media will be sold, which in turn will result in greater revenues for the CPCC."