University of Toronto Law School Faculty Blog

Collectivizing Rights; Privatizing Taxation: The Unarticulated Function of Copyright Collectives

The recent proposal from the Songwriters Association of Canada to fully legalize peer-to-peer file sharing of music by adding a $5 monthly charge to the cost of Internet access (and similar proposals floating south of the border) has brought renewed attention in the role of levies and tariffs collected by copyright collectives in Canada.  I am now beginning a research project that looks at the broader implications of the expansion of collective administration of copyrights and the use of levies and tariffs.  Since the topic is current, I thought I'd use the blog not only for sharing some of my initial thoughts, but hopefully, to solicit some ideas that will help me to shape them.  Therefore, I'm posting below the description of the project and the questions  it seeks to answer.  Comments on or off the blog will be highly appreciated.  Here it is:

New Articles Available Online: On Competition Law and Intellectual Property, and on Patents and Phramaceuticals Regulation

Two articles of mine have been recently published and are available online.  The first article, published in 49 Arizona Law Review is Making Sense of Nonsense: Intellectual Property, Antitrust, and Market Power.  Here's the abstract:

While the economic rationale for intellectual property ("IP") rights rests on the concepts of "monopoly" or "market power," the U.S. Supreme Court, in Illinois Tool Works v. Independent Ink, has recently joined a "virtual consensus" among antitrust commentators believing that no presumption of market power should exist in antitrust cases involving IP. This Article critically analyzes this consensus, and clarifies the relationship between IP and market power, shows why IP rights often do confer market power in the antitrust sense, but also explains why acknowledging this should not necessarily lead to oversized application of antitrust law to IP.

What else do Canada and Israel have in common (copyright related)?

In my latest post I noted that Canada and Israel share a common copyright heritage. Here's a trivia question: What else, copyright related, do Canada and Israel have in common?

Answer below...

What Can Canada Learn from Israel about Copyright Reform?

A bill entitled Bill entitled "An Act to amend the Copyright Act" is likely to be handed down next week.  While the bill itself is probably drafted already, its content will be deliberated in Parliament.   Therefore, Canadian policymakers may wish to consider looking at the new copyright act which the Knesset, the Israeli parliament, passed last month (downloadable here, in Hebrew; English translation now available here).  There are at least two reasons to look at Israel's new act:  one is to consider the approach taken by the Israeli legislators to many copyright issues that are relevant to Canada.  A second reason is that despite the geographic distance, the two countries share a common copyright heritage.  Until last week, Israel's copyright law was principally based on the UK Copyright Act of 1911, the same statute after which Canada's first home-made copyright act was modeled in 1921. 

Tea and oranges that come all the way from China

Had Suzanne heard the news in recent months she'd probably think twice before serving Leonard Cohen tea and oranges that came all the way from China.  With reports about recalled toys, pet food poisoning and the FDA ban on certain imports of seafood from China, there is no exotic romance in such tea and oranges anymore.  No wonder American politicians and government officials step in to protect consumers against such safety dangers.  As Hillary Clinton said "I don't want to eat bad food from China or have my children having toys that are going to get them sick."  Nor do I. 

Access Copyright and Misleading Copyright Notices

Earlier this week, the CCIA, an association of computer and communication companies, including Google, Microsoft and Yahoo, filed a complaint with the US Federal Trade Commission accusing several professional sports leagues, book publishers and other media companies of misleading and threatening consumers with overstated copyright warnings (such as the FBI warnings available on many DVDs).
This practice of overstated and misleading warnings is not, of course, a US invention.  Canadian copyright owners are not shy of the practice.  An especially annoying example is one that I just came across in the university context.

Euro Excellence v. Kraft

In 1994, when the member states of what would later become the World Trade Organization sat to draft the TRIPs Agreement they could not agree on the question of parallel importation and the extent to which IP law should regulate it and eventually decided not to decide and let each country decide its own policy. It seemed that in Euro-Excellence v. Kraft the same thing happened to the justices of the Supreme Court of Canada. They too could not agree on what Canada’s copyright law says on the issue.

If I have to summarize in one word yesterday’s Supreme Court’s decision in Euro Excellence v. Kraft it will be “mess”. The decision might have solved the current dispute between Euro Excellence and Kraft but provides very little guidance for future disputes.  Moreover, a majority of the Court based their respective decisions on technical grounds, presenting the question merely as one of statutory interpretation. (You can read reports on the decisions in the blog posts of Michael Geist, Howard Knopf and Norman Siebrasse).

Copyright Board's New Ringtone Decision

The Copyright Board issued yesterday its decision certifying SOCAN's Tariff 24 for ringtones.   The Board set a base rate of 6% of the price paid by the subscriber for the ringtone (net of any network usage fees) with a minimum of $0.06 per ringtone.  The main legal controversy before the tribunal was whether the delivery of ringtones is "communication to the public" but I don't want to comment on that here.  Instead, I want to comment on a more fundamental issue, and ask why should the royalties be set by a tribunal at all?  Why wouldn't copyright holders and ringtone suppliers enter into voluntary agreement and decide who should pay and how much?  Ordinarily, prices are determined by the "market".  Why then are these prices set in a strange way in which one seller (SOCAN) proposes prices and then, over a period of three years lawyers, prominent economists and other experts try to convince a tribunal what those prices should be?

Rewriting IP Rights from the Back-End

Richard Owens aptly describes how the vagueness of the boundary between lawful borrowing and unlawful copying makes it difficult for creators who build upon others’ previous works. He urges us to develop intellectual property laws with clearer rules defining such boundaries.

While I agree with the motivation for the plea, I’m not sure that if the goal is attainable. Not, of course, that we couldn’t have clear rules. We could, for example, rule that any borrowing of any idea or any expression requires permission. This would be a clear rule, but one that would plague creativity with transaction costs and surely stifle it. We could have no copyright at all—again a clear rule—but assuming that copyright is important, not one that will do much good either. So I’m not sure if we can avoid Learned Hand’s challenge of fixing a boundary without ever knowing precisely where.

Re-Righting Copyright

I recently published an op-ed in the National Post called "Intellectual property laws need a rewrite."  It drew an unusual amount of interest, so I thought I would post it here (albeit one might have to discount the level of interest for the fact that the article discusses the Da Vinci Code).  Comments welcome.

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Writers and publishers have a problem; the very law that serves their business obstructs their business.  And no one knows what best to do about it.

All new works of authorship borrow from previous ones, taking characters, plot devices, abstract ideas or even quotations.  But common though such borrowings are, copyright law makes it very hard to know exactly which ones are without risk of legal liability.  Dan Brown, author of the popular Da Vinci Code, was accused of taking too much of another work's ideas and plot. He got away with it - after a very expensive court battle made necessary by the ambiguous law.  By the time a court renders a decision in a given case, far too much money and productive time have already been spent on it.  And so, authors and publishers make very cautious decisions or even try to obscure their sources.

How Piracy Opens Doors for Windows - Los Angeles Times

The LA Times yesterday published the following article:  How Piracy Opens Doors for Windows.  The article explains why some software publishers complain so much about piracy, but do very little to prevent it. Basically, it makes the same argument that I made in a paper published last year in the UTLJ.  What I especially liked (in addition to being quoted...) is a remark made by Bill Gates, which in an unguarded moment confrimed my point.  Here's what Gates said in 1998 to an audience in the University of Washington: 

Although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though... And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade.

I wish I had this qoute for my paper.  Thanks Bill.

Schumpeter in the Supreme Court

Last November, in  Kirkbi AG v. Ritvik Holdings Inc. the Supreme Court of Canada dismissed Lego's case against Mega Blocks.

The plaintiff was the manufacturer of the well-known LEGO construction bricks for children. It had obtained patent protection for the locking system of interlocking studs and tubes that held the bricks together. On expiry of the patents, the defendant had commenced the manufacture and sale of its Mega Blocks, similar construction bricks using the same locking method. The plaintiffs had commenced an action for passing off, claiming trade-mark rights in the orthogonal pattern of the raised studs distributed on the top of each brick (the 'LEGO Indicia'). The trial judge had found that the LEGO Indicia was purely functional and dismissed the action, a finding that was upheld by the Federal Court of Appeal. The plaintiffs obtained leave to appeal to the Supreme Court of Canada.  The SCC held that the appeal should be dismissed.

Competition between Copyright Holders? How Horrendous!

The European Commission announced last Wendesday that it has decided to open formal proceedings against CISAC (the “International Confederation of Societies of Authors and Composers”) and the individual national collecting societies that are members of CISAC and has sent them a Statement of Objections (SO).

The Commission doesn't question the practice of collective administration of performing rights. The SO concerns only certain relatively new forms of copyright exploitation: internet, satellite transmission and cable retransmission of music.

The more interesting question in Eli Lilly v. Apotex

The Federal Court of Appeal recently held that where an agreement to assign a patent increases the assignee's market power in excess of that inherent in the patent itself, the assignment may be subject to scrutiny under the Competition Act (see a short discussion of the case here). This holding shouldn't have been really surprising, but the judge at the lower court thought that since the patent act provides that a patentee may assign the patent, such an assignment--even if results in a lessening of competition--can never be undue.  He also rejected the argument that all that the patent act meant was to reiterate the principle that a property right may be assigned.  In his view, if that was all that the patent act meant to say, that would be a redundancy because it was obvious that patents (like any other property) may be assigned.   

So luckily the court of appeals reversed.  It makes a lot of sense to hold that holders of substitute patents may not be allowed to combine them together and have a carte blanche to eliminate competition between themselves.