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It was the kind of letter that can ruin a guy's day.

Late in November, Twentieth Century Fox fired off a blunt, one-page missive to Ellis Jacob, the Toronto-based chief executive of Cineplex Entertainment, Canada's biggest cinema chain.

Bruce Snyder, Fox's Hollywood-based president of domestic distribution, had spent the last few weeks steaming mad after his team pinpointed Canadian theatres -- primarily in Montreal -- as the source of illegal camcording of a steady stream of Fox blockbusters, including Borat, Eragon and Night at the Museum.

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Snyder was sick of it. In the Nov. 30 letter, he warned Jacob, a friend and business associate for 20 years, to do something -- or he would.

Then he threatened to do something unprecedented in Canadian distribution history: Fox could stop sending copies of all its films to Cineplex Entertainment's 130 movie houses, with close to 1,300 screens. Or, Fox might decide to delay the Canadian release of popular films until a few weeks after their U.S. release.

In the letter, Snyder fumed that his company had discerned that, at one point during 2006, Canadian theatres were the source for nearly 50 per cent of illegal camcords across the globe: "Much like an out-of-control epidemic, those Canadian camcords . . . have become a leading source of worldwide Internet film piracy."

Jacob, whose company is the world's fourth-largest theatre chain in terms of revenue and fifth-biggest measured by locations/screens, felt physically ill. More so, he readily admits, because he recognized Snyder was absolutely right. Cineplex Entertainment -- in conjunction with the Canadian Motion Picture Distributors Association (CMPDA), the RCMP and other movie chains such as Empire and AMC -- have been lobbying the federal government for years to make it a criminal offence to pirate films. But so far their efforts have fallen on deaf ears. Sophisticated thieves toting black-leather bags with remote zooms, monitor devices and infrared sound receivers, and wearing sweatshirts or jackets with special holes designed to surround the lens of a camera, are having a field day.

For the third year in a row, the U.S. government has placed Canada on its "watch list" for a lack of IPR (intellectual-property rights) enforcement, which means this country is in the same company as notorious film-piracy hubs such as Lebanon, China, the Philippines and Russia.

"We're doing everything we can, but we have problems with the government not doing enough," says Jacob. "We've caught people camcording in our theatres, but all we can do is tell them to leave, and they show up the next day again.

"In the States, you're criminally charged because it's theft. Here, if someone steals five DVDs from Blockbuster, law enforcement swoops down. But someone leaves my theatre with a pirated video in his pocket, and we can't get the police to come," he says.

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"We want people to come to the theatre and enjoy the experience. We don't want to turn theatres into airport check-ins, but it might have to get to that point."

Reached by phone at his office in Beverly Hills, Calif., Snyder says he understands Jacob's frustration with Canada's lax laws. But he adds that unless Cineplex, other Canadian movie chains and the government crack down on film piracy, he will have to take matters into his own hands.

Snyder is also considering pushing Canada's theatrical release behind the U.S. date by a week or two. "At least we would then have a running start before we have to start competing with ourselves."

The U.S. Motion Picture Association (MPA) claims that in 2005 piracy cost American studios $6.1-billion (U.S.). In Canada, the CMPDA estimates its members lost $118-million (U.S.) the same year.

"What drove us to write that letter was the blatant and continuing camcording of our movies, primarily now in Montreal, but previously in Toronto," says Snyder, whose company, along with Fox Searchlight, is one of the largest distributors in the world.

"Canada is now the prime culprit in the world. Once we started busting people in New York, Detroit and Chicago, they figured out the place to be is in Canada. There simply aren't enough teeth in your laws."

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In 2005, U.S. President George W. Bush signed the Family Entertainment and Copyright Act, which made camcording in a theatre a federal felony. John Fithian, president of the U.S. National Association of Theater Owners, adds that 38 of the 50 states have specific state laws that impose criminal sanctions against camcorder pirates, both fines and jail time.

But in Canada, the theft of intellectual property is treated as a "soft crime," says CMPDA president Doug Frith. "Canada has done nothing to remedy its lack of domestic enforcement and complete absence of border enforcement.

"We're very frustrated with the legislative vacuum we have here," adds Frith, who points out that theatre operators have no right to detain an individual they detect camcording a motion picture, or to confiscate their recording. "We're the laughing stock when it comes to piracy in the world."

Frith says government bureaucrats try to placate him by saying that under the Copyright Act exhibitors have the ability to charge someone criminally. "But here's the catch. Under the Copyright Act, you have to prove that an individual camcording in the theatre is doing it for distribution purposes. That's almost impossible.

"Front-line employees catch a guy sitting in the front row camcording Mission: Impossible III, they call police and they're told it's a matter for the RCMP because [the]Copyright [Act]is federal.

"We don't want to have to prove the economic loss from distribution. We want it to be a Criminal Code activity to be caught camcording. Period."

The RCMP readily concedes there has been huge growth in film piracy here in recent years. With help from Interpol, it has also found a clear link between organized crime and film piracy, often more profitable than drug trafficking.

"If money is involved, organized crime is going to be involved," says Andris Zarins, the RCMP's national intellectual property crime co-ordinator.

With film piracy, the rewards can be huge, while the risks of any meaningful law enforcement are currently low, Zarins adds.

Take the example of one of the few film pirates Canada has actually arrested and prosecuted. Several months ago, police in Richmond, B.C., raided a small business in a strip mall, seizing thousands of counterfeit DVDs. It arrested the owner, 46-year-old Chiu Lau, who was fined (for his third time in three years) under the Copyright Act.

Last Remembrance Day, Lau pleaded guilty to 83 counts under the Copyright Act. He got a $5,000 fine and a 12-month conditional sentence. A further wrist slap? He was confined to his home from 11 p.m. to 7 a.m.

"Minimal fines of $5,000 or $6,000 are a joke," says Frith. "These guys view it as a cost of doing business. If we raid them on Friday, they're back in business on Monday morning."

Contrast that to the arrest of Hollywood's so-called "Prince of Piracy." Last month, Johnny Ray Gasca, 36, was sentenced to seven years in prison for copyright infringement after multiple arrests and a 16-month manhunt. And prior to that in New York, the FBI arrested 13 members of two large-scale international movie-piracy rings that had been under surveillance for three years. If convicted, each could face up to five years in prison. Last October, New York Mayor Michael Bloomberg also vowed to find, sue and shut down landlords who knowingly house people who sell pirated DVDs.

Last summer, Toronto police -- with the help of the CMPDA -- busted a counterfeit DVD operation in another suburban strip mall, seizing 140 DVD-CD burners, and 20,000 copies of counterfeit movies. They arrested four people.

Frith says the seized burners could have produced over three-million pirated discs in one year, worth about $17-million (Canadian).

"We want law enforcement to be able to go after those individuals -- to be able to seize cash in the till, to go to their homes, to their cars. I'm not blaming the RCMP. They have their priorities, what with border security and terrorism, but we have a legislative and an enforcement vacuum. We have to allow other police jurisdictions to assist the copyright industry."

Fox's Snyder is particularly irked at the persistent amount of camcording he and his distribution team have been able to track directly back to several of Cineplex's Montreal theatres. (Fox and other studios use forensic watermarking to know the exact time, date and auditorium where a copy was made.) "The reality is in 2005, 20 per cent of all identified camcordings occurred in Canada," says Frith. "That's a huge number. And it's growing.

"These aren't individuals who want to make a few extra bucks," he adds. "They're extremely sophisticated organizations, who use the latest tools, are well organized, tech savvy and well funded.

The scam attracts this calibre of crook because the pay is good. A good camcording of a film can fetch $5,000 to $7,000 from pirate distributors. Make two or three a weekend, Frith points out, and "you're earning between $500,000 and $700,000 a year."

But there are plenty of amateurs in the game as well. Most people who view pirated movies don't pay for them. They download them for free over the Internet at websites such as BitTorrent or Shareaza.

There are some non-techie diehards, though, who still buy bootleg DVDs, out of car trunks, in roadside stalls, flea markets, downtown shops and suburban strip malls, in every city -- and most towns -- across Canada.

Often, the quality of these recordings is abysmal, with people chatting in the background or heads popping up in the picture. But some are good enough for the less discerning movie fan.

But enterprising chaps like Gary -- a 37-year-old Durham, Ont., man -- have found ways to make pirated DVDs they claim are as good as anything coming off the shelves at Wal-Mart.

Gary -- not his real name -- heads into his local Blockbuster the instant a feature film is released on DVD. He burns the movie, usually making up to seven copies, the first night. He then sells his pirated DVDs for $10 a piece to 150 of his closest friends. He says it's a great side business to his full-time job, paying for all the little extras (like more sophisticated software to make better pirated versions).

Does he feel any guilt? Not a bit. "I look at what they charge in the stores, $24.99, and it makes me sick. My copies are among the cheaper ones," he says, referring to competitors who charge up to $15 for a bootleg DVD. "There are people who go through the General Motors plant with hockey bags full of them.

"For a while I did black-market DVDs -- but they're generally bad quality and customers got upset with them," adds Gary, who purchased handheld versions from a woman in a Markham strip mall who had them shipped in containers from China. "Those tapes stunk real bad, too," Gary says with a laugh. "That woman's been arrested four times."

Gary says he has his standards. "I'd never download them off the Internet and make copies," he says. "That leaves a record."

Another Toronto resident says he buys pirated DVDs from his buddies who regularly tape movies at the Alliance Atlantis cinema in the Beaches neighbourhood. They go in with camcorders for the Saturday matinees. Like Gary, this guy says he feels no remorse for essentially buying a piece of stolen property, adding that, "Hollywood is filled with a bunch of fat cats."

And the pace at which pirated copies of new theatrical releases are found for sale as DVDs or on the Internet is dizzying. In 2003, the pirate DVD of Pirates of the Caribbean did not appear until 65 to 75 days after theatrical release.

Last year, the first pirate DVD purchase was made 13 hours after Poseidon's first screening. The first pirate download was 42 hours after the movie made its debut.

In the past 12 months, Fox sales manager Bert Livingston says he has sent tech specialists, training personnel and the latest anti-piracy equipment to Canada to help theatres try to catch the so-called "cammers" (people who shoot films covertly in theatres). "We've tried everything. We were hoping to try to stop it. But it just did not happen," says Livingston. "If we stop it in one theatre, they simply move to another theatre about five miles further out into the suburbs."

An MPA analysis of counterfeit discs in 2005 revealed close to 75 per cent of all films illegally camcorded in Canada were recorded in theatres in and around Montreal, recently identified as the No. 1 city in the world for surreptitious camcording. The reason? Pirates can easily create both English- and French-language masters.

The RCMP's Zarins says there is a major investigation under way in Montreal now. "Our members are working closely with the CMPDA on this. We partner with the private sector as much as we can."

A crackdown can't come too soon for Snyder, who says he's willing to take a short-term financial hit by holding back his pictures to wake up Canadian government officials and lawmakers to the severity of the problem.

"We'll give Cineplex a pass the first time we find someone camcording, or it hits the Internet," says Snyder. "But the second time it happens, we will no longer be playing Fox pictures -- or Fox Searchlight pictures -- there for an indefinite period of time.

"We need our partners in exhibition to protect our films," adds Snyder. "But if they won't -- or can't -- we won't put our movies at risk by putting them in their theatres."

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