[Politech] Canada levies tax on MP3 players, says P2P downloading is OK [ip]

From: Declan McCullagh (declan@private)
Date: Fri Dec 12 2003 - 09:11:29 PST

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    Date: Fri, 12 Dec 2003 09:32:48 -0500
    To: Declan McCullagh <declan@private>
    From: Michael Geist <mgeist@private>
    Subject: private copying
    
    Declan,
    
    The decision is out in 30 minutes, but I've spoken with someone inside the 
    Board and have the key findings -- I've reported it in ILN as follows --
    
    CAN COPYRIGHT BOARD RELEASES PRIVATE COPYING DECISION
    The Canadian Copyright Board released its much anticipated private copying 
    decision this morning.  The Board froze tariffs on existing media such as 
    blank CDs at their prior rates.  It also added a new tariff on embedded 
    memory on MP3  devices starting at C$2 for up to 1 gigabyte of hard drive 
    space to a maximum of C$25 for hard drives of 10 gigabytes or more.  In a 
    split decision, the board also voiced the view that the zero rating scheme 
    used by the Canadian Private Copying Collective was unlawful and would not 
    be used in future private copying tariff determinations. Decision to be 
    available at
    http://www.cb-cda.gc.ca/new-e.html
    
    The decision is roughly 100 pages -- more once its been released and I've 
    read it.
    
    MG
    -- 
    **********************************************************************
    Professor Michael A. Geist
    Canada Research Chair in Internet and E-commerce Law
    University of Ottawa Law School, Common Law Section
    Technology Counsel, Osler, Hoskin & Harcourt LLP
    57 Louis Pasteur St., P.O. Box 450, Stn. A, Ottawa, Ontario, K1N 6N5
    Tel: 613-562-5800, x3319     Fax: 613-562-5124
    mgeist@private              http://www.michaelgeist.ca
    
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    Date: Fri, 12 Dec 2003 11:57:26 -0500
    To: Declan McCullagh <declan@private>
    From: Michael Geist <mgeist@private>
    Subject: private copying -some comments
    
    Declan,
    
    Having worked quickly through the decision, it is safe to say that we're 
    talking about a very significant decision and that the Copyright Board was 
    well aware of its significance (they openly acknowledge that).
    
    Ultimately, four key take-homes in my view.  First, the P2P elements of the 
    decision and the view of the board that private copying can cover online 
    music downloading in certain circumstances.  Second, personal computer hard 
    drives are very much on the table for future tariffs.  Third, ruling that 
    zero rating is outside the board's jurisdiction will infuriate a whole host 
    of groups including universities, broadcasters, etc. and create an even 
    greater challenge next time round.   Fourth, the Copyright board 
    essentially acknowledges that tariffs that are too high will distort the 
    marketplace and create grey market.  They opt not to do that, but in the 
    process are likely distorting the copyright market itself by not providing 
    full compensation for copying.
    
    Key findings:
    
    1.	The decision addresses head on the issue P2P copying.  It is clearly the 
    Board's view that the private copying exemption does not apply to uploading 
    or making available music.  At the same time, it is clearly of the view 
    that it does apply to downloading of music provided that it is for personal 
    use and that it is copied to media covered *or potentially covered* by the 
    regime.  This importantly means that copying to a personal computer hard 
    drive is covered. Note also that the board does not believe that it matters 
    where the original comes from -- they are concerned only with end copying.
    
    2.	The board is well aware of the prospect for the levy to cover computer 
    hard drives.  It notes that the CPCC hasn't asked for that this time, but 
    could in the future.  Given the huge policy issues associated with such a 
    move, it recommends that Canadian policy makers examine the issue.
    
    3.	The board talks again about the value of a private copy.  It remains of 
    the view that private copies (explicitly including MP3s) are not of the 
    same value as the original CD.  This has an impact on the size of the levy.
    
    4.	The board also talks about TPMs.  It notes the policy debate but says 
    that it is outside the scope of the current decision.  It does not, 
    however, that widespread TPM use could have the effect of reducing the levy.
    
    5.	On the size and scope of the levy itself --
    
    - CD-R and CD-RW stay the same -- attributed to no clear evidence
    - no DVD-R -- music copying not the predominant use
    - MP3 players -- create tariff but well below request of CPCC
    
    The board acknowledges the effect of the levy on the market and discusses 
    grey market issues which it believes may exist.
    
    6.	Removal of the zero-rating system -- the Board wants this dealt with by 
    Parliament, not a private collective.
    
    A more couple of comments --
    
    1.	CPCC and the copyright holders will likely be unhappy with this 
    decision.  They've made only marginal gains (MP3 players) and had other 
    media such as DVD-R and removable media exempted.
    
    2.	The zero rating decision will also leave the CPCC unhappy -- it means 
    that many other currently exempted groups such as universities, 
    broadcasters, etc. -- will no longer be covered for future tariff settings 
    (post 2004).  This will likely be challenged.
    
    Call if you have questions or comments.
    
    MG
    -- 
    **********************************************************************
    Professor Michael A. Geist
    Canada Research Chair in Internet and E-commerce Law
    University of Ottawa Law School, Common Law Section
    Technology Counsel, Osler, Hoskin & Harcourt LLP
    57 Louis Pasteur St., P.O. Box 450, Stn. A, Ottawa, Ontario, K1N 6N5
    Tel: 613-562-5800, x3319     Fax: 613-562-5124
    mgeist@private              http://www.michaelgeist.ca
    
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