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When news came down last month that the United States had placed Canada on an international watch list of the worst digital pirate havens and copyright offenders in the world, many MPs on Parliament Hill rolled their eyes.

They'd heard this refrain before.

Canada has "gained a regrettable but well-deserved reputation as a safe haven for Internet pirates," states a 2008 report from the International Intellectual Property Alliance (IIPA), which is used by the Office of the U.S. Trade Representative to create its list of worldwide piracy hotbeds.

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"Canada remains far behind virtually all its peers in the industrialized world with respect to its efforts to bring its copyright laws up to date with the realities of the global digital networked environment," the report states, referring to the fact Canada's copyright law has not changed since 1997, two years before Napster and four before the first iPod.

Some of the other 11 countries on this year's edition of the Special 301 list from the USTR include Algeria, Thailand, Pakistan, Israel and Indonesia.

"I don't think MPs take this seriously, and they shouldn't take it seriously," said Charlie Angus, the federal NDP's critic for culture, heritage and digital issues. "People looked at it and said it's absurd. To treat your No. 1 trading partner like this, a partner that's been right in the forefront when it comes to dealing with a lot of these issues."

This is not Canada's first appearance on the Special 301 list. Canada has been on the list for several years, it was only upgraded to a higher threat level this year. Under heavy influence from the U.S. entertainment lobbies, the U.S. government's sights remained trained on Canada, as it attempts to pressure one of its largest trading partners into falling in line with other nations who have enacted new copyright legislation to deal with the digital reality.

However, a new report from BayTSP, a U.S. firm that tracks copyright content for the music and movie industries, found that Canada is dropping in the world rankings when it comes to claims of copyright infringement. Spain, Italy and France all have at least five times the number of claims as Canada, according to a recent report.

Despite this, international pressure is still mounting on Canada to start taking copyright seriously.

Countries around the world are debating and instituting measures to stem the flow of copyright-infringing work. France has passed new legislation that would create a new government department with the power to cut off Internet service to users found to be sharing copyrighted material. And Sweden recently took aim at The Pirate Bay, a website that indexes files that allow pirates to browse and download everything from music and movies to games and software, sentencing its four founders to jail terms and imposing millions of dollars in fines.

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The IIPA has called on Canada to update its legislation with similar measures, including beefing up border security to stop the flow of counterfeit goods, putting greater pressure on Internet service providers (ISPs) to police the actions of their users and create new laws that would give rights holders and the entertainment industry greater legal power to sue the operators of file sharing services.

Yet here at home, Canadian politicians would prefer to avoid the topic entirely.

"We've got a situation where the term copyright has become a political hot-button issue," Mr. Angus, said. "You mention copyright on Parliament Hill and pretty much all the politicians run to their respective bunkers and put their helmets on."

For more than a decade, successive governments have failed to overhaul the Canada Copyright Act, much to the chagrin of some of the country's trading partners.

In that time, copyright issues became relevant to ordinary Canadians. When the rise of digital media and the Internet gave Canadians increased control over how they consumed and produced media, copyright issues instantly became more visible. Whether its posting a video with copyrighted music to YouTube or digital rights management technology on CDs, copyright went from being something Canadians only thought about while fast forwarding the FBI warnings on DVDs to something they confronted in their day to day lives.

Jeremy de Beer will be with us on Wednesday at noon ET to take questions on what the future holds for intellectual property in the digital age

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Although Canada signed the World Intellectual Property Organization's Internet treaties in 1996, Jean Chrétien's Liberal government's never ratified them. Paul Martin's Liberals tabled a proposal to amend the copyright act - Bill C-60 - in 2005, however the government fell before it could be passed into law. Stephen Harper's Conservative government introduced its own attempt to update the legislation with Bill C-61 last June. Once again, the legislation was essentially dead on arrival, with a fall election already widely anticipated.

Now, some in the cultural industries worry that a lack of political will coupled with a trend of successive minority governments will make it difficult for Canada to pass contentious legislation. And, they say, Canada's failure to ratify piracy-prevention legislation is hurting consumers by keeping legitimate digital dollars out of the country.

"It's even worse than having a bad reputation," said John Kennedy, chairman of the International Federation of the Phonographic Industry (IFPI), a trade group responsible for more than 15,000 record labels around the world. "It's become a place where as far as I can see, people don't want to invest their digital dollars, Euros or pounds because they just don't think it's the right environment in which to do it."

In Canada, where the cultural industries account for an $84.6-billion (Canadian), or 7.4 per cent of GDP according to the Conference Board of Canada, piracy is beginning to affect the bottom line, the entertainment industries say.

About 32 per cent of the computer software in Canada is pirated, contributing to losses of $1.2-billion (U.S.) in 2008 alone, according to a report from the Business Software Alliance (BSA). If Canada were to crack down and get its piracy rate to around 23 per cent - close to the U.S. rate of 20 per cent - it could result in 5,200 new jobs and contribute $2.7-billion to the country's economy by 2011, according to a 2008 report from market research firm IDC.

Yet Canadian politicians may be forced to deal with the copyright issue sooner than they'd like. Now that the Pirate Bay trial is over, the entertainment industry's new public enemy No. 1 lives just outside of Vancouver.

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On the April morning a Swedish court passed judgment on The Pirate Bay, Gary Fung was in his Richmond, B.C., home seeing how his websites - isoHunt and TorrentBox - were doing. Mr. Fung's sites are torrent search engines, which allow nearly 40 million unique visitors a month to scour the Web for downloadable files. His website aggregates data from torrent trackers such as The Pirate Bay and provide users with the links to the content, similar to how Google Inc.'s Google News service provides access to articles from newspapers and magazines.

Although Mr. Fung said he doesn't believe The Pirate Bay verdict will have a significant impact on his company, he was still surprised to learn the four men who ran the site were sentenced to jail time. "That's harsher than I thought," he said.

Mr. Fung is currently fighting a pair of lawsuits on both sides of the U.S.-Canada border, brought by the Canadian Recording Industry Association and the Motion Picture Association of America.

He says what he's doing isn't illegal. He's just linking to content. "It will be like saying Google or Yahoo is illegal for linking to any illegal content on the World Wide Web," he said. "We know there's a lot of copyright infringing content and even patent infringing or child pornography that may be illegal... But the platform provider or the technology provider or the search engine should not be held liable because of what is out there. What is out there is not under the control of the search engine or the websites involved."

New legislation that would extend legal power to go after people like Mr. Fung is something the IIPA and the entertainment industries are pushing for in Canadian copyright reform.

But while file sharing might never be stopped, effective legislation could be helpful in curbing it and bringing it down to a level where legitimate sales of digital media could contribute to cultural communities, said Barry Sookman, a lawyer with the Toronto firm McCarthy Tetrault and one of the country's leading experts on copyright.

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"When the government stands up and starts to clarify the rules related to copyright, it can make a difference," said Mr. Sookman, who has worked for groups such as the Canadian Recording Industry Association in the past. "We need to create the right framework so that [copy]ights will work in the digital environment so that businesses can develop new models to make available to consumers. That's what consumers want."

What consumers want, says Michael Geist, a law professor who holds the Canada Research Chair in Internet and e-commerce law at the University of Ottawa, is to have a say in the process and to see legislation tailor made for the current digital reality.

"I think most would agree that there is certainly room and value in reforming Canadian copyright law, but I think much of the debate has shifted as many more people have become part of that discussion," Mr. Geist said. "It has stopped being solely about how can we lock content down and provide legal protection for those locks and much more about how do we ensure there is an appropriate amount of flexibility so that we enable the kind of creativity that millions of Canadians are engaging in regularly."

The question for Canadians is, will they have a voice.

Have an opinion on copyright in this country? The Globe is inviting readers to share their thoughts and help craft a piece of legislation for the digital era

Canadian Heritage Minister James Moore appeared before the Standing Committee on Canadian Heritage on Feb. 9 this year and said that new copyright legislation would not be unveiled until the fall. However, the Conservatives have remained largely mum on the subject. Several requests for comment to the offices of Industry Minister Tony Clement and Mr. Moore - the so-called iPod Minister - were declined.

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Critics argued that the new Conservatives most recent attempt, Bill C-61, too closely resembled the U.S. Digital Millennium Copyright Act, which has been criticized as being stacked against consumers in favour of rights holders such as the music and movie industries. Critics say the law could have forced ordinary Canadians to pay thousands of dollars in penalties for copying their own legally purchased music to CDs or by uploading videos to sharing sites such as YouTube.

Any time a user circumvented so-called digital locks - technical measures put in place to prevent the transfer of data from one medium to another, such as anti-copying protections on DVDs - they could be susceptible to thousands of dollars of fines under the Conservatives' bill.

Such anti-circumvention legislation is a hallmark of the U.S. DMCA, said Mr. Geist.

"Any attempt to pick the digital lock, even if the reason for picking that digital lock is permitted under law, suddenly now it becomes impermissible because you've picked the lock," he said.

Perhaps the most challenging question facing legislators as they seek to craft a new bill, is what role should Internet service providers be required to play in policing the actions of their users and the data that travels on their networks.

Bill C-61 would have required ISPs such as Bell and Rogers to discourage copyright infringement, but ensured they would not be held liable for the actions of their users. It would have forced ISPs to inform subscribers when a complaint was launched against them by the owner of a copyright. However, they would also be obliged to keep track of that user's contact information for six months in the event that the data became necessary for legal proceedings.





"We have to stop thinking that piracy is unimportant. It has many consequences," Mr. Kennedy said. "Whatever product is being pirated, it's likely that the future production of that product is going to be seriously damaged... ISPs have to take that responsibility from a moral point of view."

Although some independent ISPs worried that the legislation would force them to invade the privacy of their users, other countries around the world have taken such measures even further, with so-called three strikes legislation.

In France, President Nicholas Sarkozy has made three-strikes legislation a hallmark of his government, urged the French lower house to approve a law that experts say is one of the most aggressive attempts to stem the tide of Internet piracy. The law, which was passed on May 12, would give the government the power to cut off the Internet access of users who repeatedly downloaded copyright infringing material.

France and Spain are two of the worst offending piracy countries in the world in volume and per capita, according to the BayTSP report.

The French law creates a new government department that would send a user an e-mail warning when they are found to be downloading copyright material, then a letter through conventional mail, and finally, would allow ISPs to cut off service to that individual for up to one year.

Other countries, such as New Zealand and Britain have attempted to pass similar legislation, but backed down in the face of public pressure.

The French government passed the law in defiance of the European Parliament, which approved an amendment to its telecommunications laws that specifically forbade governments from cutting off Internet access to users without a court order.

Now, critics worry that such legislation could be headed to Canada. However, the artistic community remains divided on the role that ISPs should play in combatting piracy.

"Unless you can get ISPs to kick people off - and I'm not in any way saying that this is something I support - but what I'm saying is if that happens, people will stop downloading because they won't want their internet connection cut off," Canadian musician David Usher said in an interview.

"Do I think that's a positive thing? I don't think I support that. But that's the only thing that is going to be a game changer."

For the so-called pirates who bring the digital booty to the masses, the struggle to stay afloat is a constant one.

Peter Sunde is one of the four Pirate Bay founders who was found guilty by a Swedish judge. He says he and the three other men convicted in the Pirate Bay trial plan to appeal the decision and say they will eventually emerge victorious.

But their struggle is about more than just music and movies, he said in an interview. It's about changing the very understanding of copyright itself.

"Today copyright and intellectual property is based upon the notion that big companies will make a lot of money out of it, which is not why the community would want some kind of intellectual property and we need to redefine that," he said.

It's not about abolishing copyright, he explains, rather, the group wants to remodel it and get governments to start thinking about it differently.

"We should accept now that we have the biggest library ever [the Internet]" he said. "We have the biggest library, and it's so huge and everybody should have a way to use this and the whole idea of 'culture can't be free' is not the issue. We're not saying that everything should be free, it should be free and so on, we don't say that it doesn't have to be for free, it just has to be free [as in]freedom."

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