This is an early draft document. I am making this public so that I can receive feedback as it is being written and make it as useful as possible. Please send me email if you have any thoughts.

Canadian Peer-to-peer (P2P) legal theories, proposals and questions

Conversations in the discussion forum in the last few weeks have suggested there is more than one theory about how peer-to-peer "file-sharing" (P2P) works, what it does, and what the meanings of terms like "upload" and "download" are when used in the context of P2P.

I have been very vocal in my opposition to the suggestion from the Heritage Minister that radical changes to our copyright act are needed.

"We'll also be addressing the peer-to-peer issue," . "It will give the tools to companies and authors to sue."1

Whether you believe the act needs to change appears to depend on the theory you are using to understand how P2P works, and how it interacts with our current copyright act. There also seems to be indication the incumbent music and recording industry want both to require authorization as well as the right to collect royalties ("right or remuneration") for the same activities, something that should be understood as a mutually exclusive choice that the industry must make.

I will explore two theories of how P2P works which I have become aware of in discussions in our forum. Hopefully this will also allow the technical, legal and public policy community to weigh-in, possibly promoting less confusing policies that do not encourage radical changes to our copyright act where the intended and unintended consequences are not adequately understood.

Theory 1: P2P as a "communication by telecommunications", where a copy is kept by recipient.

In this theory P2P operates as a form of "communication by telecommunications", a situation we are quite familiar with through examples such as VCRs that allow us to make copies of things which can be sent to the VCR over distances using wired or wireless means. The sender of this communication would be sending something via telecommunications (wired, wireless, broadcast or to a single recipient), and the recipient would then be making a copy.

In this case the person sending the file is liable under 3(1)(f) of the copyright act.

3. (1) For the purposes of this Act, "copyright", in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right
(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,
and to authorize any such acts.

The person receiving and storing a copy for later use would also be liable, except in the case of "private copies" of music under section 80 of the act. This theory does not differentiate between "streaming" and "filesharing" as far as the sender is concerned, which are considered different only in whether the recipient makes/keeps a copy or whether there are only "ephemeral" copies (temporary caches, buffers, etc).

This theory also suggests that the sender is not "distributing" the work the way it appears to be used in the copyright act to refer to copies. The sender is not "distributing copies" as would be the case if they were giving away photocopies or CDs.

The question of how the contents of the file gets between the two persons is considered important. The terms "upload" and "download" are often used to describe the techniques involved in transferring the file, but I am avoiding these terms as they are being used under a different meanings that can sometimes cause confusion.

Theory 2: P2P as simple "copying", similar to if physical media had been loaned.

In this theory P2P operates as a method to make a copy, similar to physical media (CD, tape, book, etc) being available to an alleged infringer who makes unauthorized copies. The question of how the contents of the file gets between the person with the original copy and the person making the unauthorized copy is not considered relevant. Whether media is provided locally or access to a file on remote media is considered equivalent.

When discussing physical media the owner of the media who loaned it is generally not considered liable as there is no regulation of loaning physical media2. This is how physical media is able to be loaned by libraries or private citizens without authorization by a copyright holder. If the person borrowing makes their own copy without permission, then outside the private copying exception they would be considered infringing.

Under this theory the person who makes the copy is the person requesting, receiving and storing the file. The person making their copy available remotely and instructing their computer to send the file upon request is not considered liable for anything. The sender is also not seen to be distributing copies, nor is a receiver who further "shares" what they receive to other P2P users considered to have distributed copies.

When we talk about making copies of media we don't tend to talk about "uploading" or "downloading", just making copies. There isn't anything we are uploading to or downloading from regardless of which of a variety of meanings of these terms are being used.

This theory also seems to consider it different from the senders perspective whether they are offering a file to be copied or to be "streamed", even though there is little or no difference from the senders point of view and the differences are in how the receiving software is configured.

The General Case

Taken at a higher level it can be said that there are two broad categories of methods to get work between two people: the movement of mechanical/fixed copies and communication by telecommunications.

The movement of copies is well understood, including infringement generally (reproduction and authorization) and secondary infringement (possession, distribution of unauthorized copies). As we are also talking about physical things it is easier for people to understand concepts such as first-sale which says that the person who buys a copy is allowed to resell their copy as long as they have not made any additional copies.

The concept of "communication to the public by telecommunications" is new since 1988 in Canada, with only "communicate by radio communication" was mentioned prior to this. The intention at the time seems to be to expand the definition to make it more technologically neutral and to include all types of communication to the public by wired or wireless means, rather than just radio.

People have had a hard time dealing with this concept in the context of the Internet which facilitates many types of communication in one: many-to-many, one-to-one, many-to-one, one-to-many. Traditionally a medium only offered one such as broadcast communication which is one-to-many or telephone which is one-to-one.

The precedent that I have been able to find3 on "communication to the public by telecommunications" discusses broadcast style communications where all members of the public receiving the communication receive at the same time. While the Internet does have a similar concept with multi-cast, at a lower level most Internet communication sends individual packets destined to individual recipients one-at-a-time with the same data sent from the source multiple times, one for each recipient. Whether judges will interpret this as "communication to the public" seems to be uncertain, and they may consider this to be some form of one-to-one communication even though there are multiple members of the public receiving. I believe the most technologically neutral way to interpret the act is to consider the nature of the audience and whether they are private communications or whether they are "to the public", and to not worry about whether the information is received by all recipients simultaneously or not.

When streaming protocols are being used, the question seems to have been answered. In November 2002 the Bill C-114 was passed to address the question of Internet retransmission. It should be clear that if these amendments were to have the desired effect that services such as iCraveTV and JumpTV were being considered by parliament to be retransmitting under the intended meaning of the copyright act, which is a specific type of "Communication to the public by telecommunication". I believe it is quite reasonable to believe that parliament did not intend to have some arbitrary line drawn about the timing details of a specific communications protocol that would differentiate multi-cast, streaming and P2P protocols as methods to communicate a work to the public by telecommunications.

Special case of recorded music

Music copyright is harder to understand than with other types of works. You have composers, authors and music publishers which are copyright holders on "musical works", performers who have a copyright on their performance, and then the copyright holders of sound recordings. These different copyright holder have exclusive rights relating to different activities. It matters whether a recording of a work is seen to have been "copied", "performed", or "communicated to the public" as it involves different rights. When collectives are involved it also involves different collective societies: Canadian Private Copying Collective (CPCC) for private copying, the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) for mechanical copies, and the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for musical works.

As we saw when CRIA opposed the SOCAN tariff proposal for ring-tones, the different parts of this industry are not allies but often competitors trying to increase the money they receive and decrease the money others receive when Canadians pay for music5. Legacy licensing regimes are also not intuitive, for example where the same license to SOCAN that licenses bars to play recorded music to their patrons also licenses musicians to do covers of songs authored by others within those bars.

If we are to see reform to copyright we should start with trying to simplify music copyright. Unfortunately current proposals being made by the industry and government would accomplish the opposite and make music copyright even more complex.

Two existing exceptions to the general case for copyright exist for recorded music which have implications for P2P. In the past it was assumed that music was largely available in copies or communicated via commercial radio, an assumption that is no longer true. P2P involves both a communication by the peer that is sharing the work, and the making of a copy by the receiver/downloader.

Section 19(1) of the Copyright Act states:

19. (1) Where a sound recording has been published, the performer and maker are entitled, subject to section 20, to be paid equitable remuneration for its performance in public or its communication to the public by telecommunication, except for any retransmission.

This suggests that copyright holders are owed equitable remuneration for the "communication to the public by telecommunication" from those sharing music, and that this sharing doesn't require authorization. This suggests that if P2P is considered a "communication to the public" then those who wish to share music could get together and appeal to the copyright board to have tariff rates set, given it is unlikely that there would be easy agreement between P2P users and the recording industry. Once that rate is set, any P2P music file-sharer who pays the rate would not be guilty of infringement for "communication to the public by telecommunication".

That would allow them to pay a fee and share unauthorized music, recognizing that it is a separate action to then make copies.

Section 80 (1) of the Copyright Act provides as follows:

80. (1) Subject to subsection (2), the act of reproducing all or any substantial part of (a) a musical work embodied in a sound recording,
onto an audio recording medium for the private use of the person who makes the copy does not constitute an infringement of the copyright in the musical work, the performer's performance or the sound recording.

Section 81 then defines a right of remuneration that is levied against manufacturers and importers of blank audio recording media.

Depending on how the specific P2P service works, this may or may not cover the activities of the person receiving music. For determining whether this copy is for "the private use of the person who makes the copy" it matters whether you are sharing your copy with others as to whether or not it could be considered "private".

For instance, with P2P services like BitTorrent you automatically share the parts of the file you have received while you are receiving a file. If these parts are considered "substantial parts" under the copyright act, I doubt that your copy will be considered a "private copy" for the purposes of this exception.

Moving forward with Voluntary Collective Licensing of Music File Sharing

The United States based Electronic Frontier Foundation has proposed a Voluntary Collective Licensing of Music File Sharing6. I believe it should be possible to combine sections 19(1) and section 80 of our copyright act to enable this voluntary system. Unfortunately there would need to be amendments to the copyright act in 80.(2) to clarify that, where equitable remuneration has been paid, unauthorized communication to the public by telecommunications does not change the status of a private copy.

Which theory are different people using?

If the first theory is correct, then the current copyright act provides more than adequate tools to most copyright holders to sue. In most cases outside of music both the sender and the receiver would be considered liable for unauthorized activities.

In the case of music we have copyright being replaced with a right of remuneration, with an obvious amendment to the copyright act being to remove this exception if the recording industry is not happy with remuneration. It would be inappropriate to break any balance in copyright and go the direction proposed by the recording industry which is more rights, possibly including the right to collect remuneration and sue for the same activities.

If the second theory is considered correct, then only the recipient of files are considered liable. In the case of music it depends on how you interpret private copying as to whether unauthorized P2P sharing of music would be considered an infringement.

While the copyright parts of the BMG case were vacated by the appeals court, this case and the appeal serve as a view into the thinking of these judges. At paragraph 22 of his decision7 Justice Konrad von Finckenstein wrote:

[22] They submit in paragraph 102 of their written representations that such activity amounts to infringement of the Copyright Act on the following grounds:
a. reproduction of sound recordings by the alleged infringers (s. 18(1) and s. 27(1));
b. authorization of the reproduction of the sound recordings (s. 18(1) and s. 27(1));
c. distribution of unauthorized copies of the sound recordings to such an extent as to affect prejudicially the plaintiffs (s. 27(2)(b)), and
d. possession of unauthorized copies, which the alleged infringers knew or ought to have known were infringing, for the purpose of distribution, as set out above (s. 27(2)(d)).

This discussion does not include the suggestion that there was unauthorized communication by telecommunications, suggesting that the plaintiffs (CRIA) were using a theory closer to theory 2, although not identical as the terms "upload" and "download" were being used. CRIA would be familiar with the case of bootleg media being distributed, and the different wording of these activities from the US act, and considered P2P in Canada to be an equivalent scenario.

It is not clear to me is how the term "distribution" is being used in Canadian situations where we are not talking about mechanical copies. A person who sends a file from their computer to another computer isn't "making a copy", but they are communicating the file to a recipient who can store a copy of this information. While the sender may not be making copies, they are doing activities which can be seen to have the same effect but do not seem to be considered equivalent under our act.

After quoting section 80(1) of the Copyright Act two statements were made:

[25] Thus, downloading a song for personal use does not amount to infringement. See Copyright Board of Canada, Private Copying 2003-2004 decision, 12 December 2003 at page 20.
[26] No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings. They merely placed personal copies into their shared directories which were accessible by other computer user via a P2P service.

The wording of paragraph 25 suggests that the judge was not considering whether the music was being further "distributed", "communicated" or otherwise available to a wider audience in determining whether the "downloading" was considered as being for personal use. If this interpretation is what was intended, and this was left as precedent, then this would have understandably made the recording industry upset. CRIA did not consider "communications", there was no distribution of copies, and any reception and storage of copies were being considered covered by section 80(1) of the copyright act which suggested that nobody was being held liable for any unauthorized activity.

In the appeal8 The Honourable J. Edgar Sexton noted:

[49] When the Motions Judge stated that, under subsection 80(1) of the Copyright Act, R.S. 1985, c. C-42, "downloading a song for personal use does not amount to infringement," he gave no consideration to the possible application of subsection 80(2) and the circumstances in which the defence of "private use" will not be available, such as, inter alia, where the reproduction of a musical work embodied in a sound recording onto an audio recording medium is done for the sale, rental, distribution, communication by telecommunication or performance to the public.
80. (1) Subject to subsection (2), the act of reproducing all or any substantial part of
(a) a musical work embodied in a sound recording,
(b) a performer's performance of a musical work embodied in a sound recording, or
(c) a sound recording in which a musical work, or a performer's performance of a musical work, is embodied
onto an audio recording medium for the private use of the person who makes the copy does not constitute an infringement of the copyright in the musical work, the performer's performance or the sound recording.
(2) Subsection (1) does not apply if the act described in that subsection is done for the purpose of doing any of the following in relation to any of the things referred to in paragraphs (1)(a) to (c):
(a) selling or renting out, or by way of trade exposing or offering for sale or rental;
(b) distributing, whether or not for the purpose of trade;
(c) communicating to the public by telecommunication;
[50] The Motions Judge also did not appear to consider whether all the requirements for the application of the exemption relating to personal use contained in subsection 80(1) of the Copyright Act were satisfied. For example, if the users were not using an "audio recording medium", the defence of private copying would not be available. (See Copyright Board, Private copying 2003-2004 (December 12, 2003) and Canada (Canadian Private Copying Collective) v. Canadian Storage Media Alliance, 2004 FCA 424.)

Cross-border issues

The 1995 Lehman report9, the United States report that is seen as the source for the 1996 WIPO treaties, uses different terminology than the Canadian act. Rather than discussing communications to the public via telecommunications, they instead suggest expanding the definitions of "distribution" and "publication" in the United States Code to include "transmission of copies" to achieve related results. While this language doesn't entirely make sense to me, the use by others of US language to interpret Canadian law may be part of the source of misunderstandings.

The future?

We must strongly oppose the demands of the legacy content industry who appear to want the ability to both levy and sue for the same unauthorized activities.

There are different directions to go:

- Clarify status-quo: we have not yet had any court case that has clarified the status-quo. I wonder if it would be possible to have a mock-trial where current legal theories would be tested? I do not know if this has been done in the past, but with the uncertainty and the widely diverse interpretations of current law this type of thing is needed.

- Move further down the "right of remuneration" path, replacing any copyright for non-commercial communication and copying of music with a levy (Geist and others have suggested this)

- Move to a free market approach. For music this would be to remove existing "right of remuneration" for communication to the public, allowing individual copyright holders and repertoire-only collectives to authorize. To help facilitate innovation in Information and Communications Technology, modify existing private copying regime to include private copying/communication of any type of work, require that the source be an authorized source, and have no levy (The government and collectives have no business in the bedrooms of the nation)

The confusion around the "making available" right part of 1996 WIPO treaties

It has been hard to write anything on this topic without bumping into the use of confusing language. One of the most confusing phrases is the term "making available".

One of the easier to understand uses comes from article 8 of the WIPO Copyright Treaty10

Article 8
Right of Communication to the Public
Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.

This has been seen by many as very similar to section 3(1)(f) of our existing copyright act. Confusion and disagreement seem to come from the question of timing. In a traditional broadcast medium such as radio it is the broadcaster that sets the timing of when something is communicated, where we must now include the situation when the audience member sets the timing.

I do not understand why the timing should matter for an interpretation of our copyright act. We have moved from over-air broadcasts to cable/satellite with "time shifting" stations (where the same programming is offered at different times because of different Canadian timezones) to things such as Rogers On-Demand11. In all these cases the sender/broadcaster can already be said to have communicated the program and/or authorized the program to be communicated.

What Justice Konrad von Finckenstein expressed seemed to have made things even less clear for many people.

[27]As far as authorization is concerned, the case of CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339 established that setting up the facilities that allow copying does not amount to authorizing infringement. I cannot see a real difference between a library that places a photocopy machine in a room full of copyrighted material and a computer user that places a personal copy on a shared directory linked to a P2P service. In either case the preconditions to copying and infringement are set up but the element of authorization is missing. As Chief Justice McLachlin said in CCH, supra [at page 361]:
"Authorize" means to "sanction, approve and countenance": Muzak Corp. v. Composers, Authors and Publishers Association of Canada Ltd., [1953] 2 S.C.R. 182, at p. 193; De Tervagne v. Beloeil (Town), [1993] 3 F.C. 227 (F.C.T.D.). Countenance in the context of authorizing copyright infringement must be understood in its strongest dictionary meaning, namely, "give approval to, sanction, permit, favour, encourage": see The New Shorter Oxford English Dictionary (1993), vol. 1, at p. 526. Authorization is a question of fact that depends on the circumstances of each particular case and can be inferred from acts that are less than direct and positive, including a sufficient degree of indifference: CBS Inc. v. Ames Records & Tapes Ltd., [1981] 2 All E.R. 812 (Ch.D.), at pp. 823-24. However, a person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright. Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law: Muzak, supra. This presumption may be rebutted if it is shown that a certain relationship or degree of control existed between the alleged authorizer and the persons who committed the copyright infringement: Muzak, supra; De Tervagne, supra: see also, J. S. McKeown, Fox Canadian Law of Copyright and Industrial Designs, 4th ed. (looseleaf), at p. 21-104 and P. D. Hitchcock, "Home Copying and Authorization" (1983), 67 C.P.R. (2d) 17, at pp. 29-33.
[28]The mere fact of placing a copy on a shared directory in a computer where that copy can be accessed via a P2P service does not amount to distribution. Before it constitutes distribution, there must be a positive act by the owner of the shared directory, such as sending out the copies or advertising that they are available for copying. No such evidence was presented by the plaintiffs in this case. They merely presented evidence that the alleged infringers made copies available on their shared drives. The exclusive right to make available is included in the World Intellectual Property Organization. WIPO Performances and Phonograms Treaty, Geneva, December 20, 1996, however that treaty has not yet been implemented in Canada and therefore does not form part of Canadian copyright law.

This last section was interpreted to suggest that ratification of the treaties would have removed any requirement that information be communicated, or copies to be made or distributed. I people read far more into what was said, with the CCH case more closely mirroring what was already said in the WIPO treaties.

Agreed statements concerning Article 8 : It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention. It is further understood that nothing in Article 8 precludes a Contracting Party from applying Article 11bis(2).12

I believe that it is quite appropriate to consider the previous configuration of a tool that communicate a work to be equivalent to configuring tools that communicate immediately. I am not, however, comfortable with considering this configuration as authorization, and do not see anything either in the current act or the WIPO treaties that suggest that courts should. There should be proof that at least one unauthorized communication occurred to at least one member of the public, possibly an investigator, before there is a claim of infringement.

The United States is the origins of the policy that became the 1996 WIPO treaties, and is still trying to figure out this issue. A recent decision seems to agree with the idea that there needs to be more than proof of an offer to communicate or distribute a work for there to be infringement. While it may surprise some to know that there are current lawsuits relating to the original Napster, a recent summary judgment in one case included the following:

Rather than requiring proof of the actual dissemination of a copyrighted work or an offer to distribute that work for the purpose of its further distribution or public performance, plaintiffs' theory is premised on the assumption that any offer to distribute a copyrighted work violates section 106(3). This is not sufficient to satisfy plaintiffs' burden of proving that Napster or its users directly infringed their copyrighted musical compositions and sound recordings, as they must do if they are to hold defendants secondarily liable for that infringement. Accordingly, the court holds that defendants are entitled to summary judgment on this issue.13

Other possibly related provisions of the 1996 WIPO treaties

The following WIPO treaty articles relate to the making and distributing of fixed copies, which I believe does not relate to peer-to-peer itself. I am including them here for quick reference.

WIPO Copyright treaty:

Article 6
Right of Distribution
(1) Authors of literary and artistic works shall enjoy the exclusive right of authorizing the making available to the public of the original and copies of their works through sale or other transfer of ownership.
(2) Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right in paragraph (1) applies after the first sale or other transfer of ownership of the original or a copy of the work with the authorization of the author.6

See also:

Agreed statements concerning Articles 6 and 7: As used in these Articles, the expressions "copies" and "original and copies," being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects.

WIPO Performances and Phonograms Treaty14:

Article 8
Right of Distribution
(1) Performers shall enjoy the exclusive right of authorizing the making available to the public of the original and copies of their performances fixed in phonograms through sale or other transfer of ownership.
(2) Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right in paragraph (1) applies after the first sale or other transfer of ownership of the original or a copy of the fixed performance with the authorization of the performer.7

Article 8 has the same agreed statements as articles 7+8 of WCT.

Article 10
Right of Making Available of Fixed Performances
Performers shall enjoy the exclusive right of authorizing the making available to the public of their performances fixed in phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them.

1Frulla promotes tougher copyright laws, CBC Arts, April 4, 2005

2Rental is considered different than loaning. Rental of sound recordings is covered by the act under 3(1)(i), 15(1)(c) and 18(1)(c). Rental of computer programs is covered under 3(1)(h).

3I have a copy of "The 2001 annotated copyright act", by Normand Tamaro ISBN: 0-459-26067-7

4Legislative summary of bill C-11, an act to amend the copyright act to address "Internet retransmission"

5Music industry abruptly changes tune on ringtones, by Michael Geist - Toronto Star, August 23, 2004

6Voluntary Collective Licensing of Music File Sharing

7BMG Canada Inc. v. John Doe (FC) , 2004 FC 488

8Federal Court appeal of BMG Canada Inc. v. John Doe (FC) , 2005 FCA 193

9Intellectual Property and the National Information Infrastructure, The Report of the Working Group on Intellectual Property Rights . Primarily authored by Bruce A. Lehman, Assistant Secretary and Commissioner of Patents and Trademarks

10WIPO Copyright Treaty, adopted in Geneva on December 20, 1996

11Rogers On Demand is a digital service from Rogers Cable which allows an audience member to chose a program from a menu that is then streamed to the specific audience. The audience has the ability to use VCR-like controls such as pause, rewind and fast-forward.

12WIPO copyright Treaty, Agreed statements concerning Article 8

13P12, line 14 of Judge Marilyn Patel's June 1, 2005 ruling in case M:00-cv-01369-MHP
See also EFF DeepLinks: Offering != Distribution -

14WIPO Performances and Phonograms Treaty, adopted in Geneva on December 20, 1996