Canada Can Stand Its Ground on Copyright in NAFTA Renegotiations

It’s all about knowing when to say no

Published: August 9, 2017

Author: Howard P. Knopf

This article is part of a series about what the renegotiation of the North American Free Trade Agreement means for the knowledge economy in Canada and the people who turn ideas into innovations within one of the world’s largest free trade zones.

Intellectual property (IP) and copyright in particular have played a crucial role at critical times in Canada’s evolution from a colony to a serious sovereign player in the G7 and G20. Copyright became a key component of the various free trade agreements that began to incorporate IP, beginning with the Canada-United States Free Trade Agreement (CUSFTA) in 1987. The North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) Uruguay agreements followed in 1994, and countless others have appeared since.

Various themes have persisted since the nineteenth century in Canada. For example:

  • Canada has a unique and proud record of creatively combining the British common law approach with the French civil law approach to copyright.
  • Canada has attempted to guard its perennial net importer status in copyright-based industries such as film, music, books and software, against incessant pressure from American lobbyists to ratchet up laws that would increase our trade deficit in these sectors.
  • Canadian political leaders try to avoid Canada being seen as a “lackey” of foreign governments, especially the United States. Interestingly, Brian Mulroney, who tried to avoid this with mixed success, is now back at the NAFTA table, presumably as a “Trump whisperer.”

It will be recalled that the Mulroney government made two crucial IP concessions at the outset in the CUSFTA negotiation. First, Canada agreed to get rid of compulsory licensing for pharmaceuticals and to greatly increase drug patent protection. This was done in Bill C-22. Canada also agreed to provide a cable retransmission right, which was estimated to be a minor cost at the time but now costs Canadians more than $100 million a year — and may double, depending on the long-awaited decision of the Copyright Board.

The American “Summary of Objectives for the NAFTA Renegotiation,” released July 17, 2017, says nothing specific about copyright. Instead, it states that its objective is to “ensure provisions governing intellectual property rights reflect a standard of protection similar to that found in U.S. law.” However, “similar” does not mean “identical,” and Canadian copyright laws are not only similar to but actually stronger and better than US laws in several ways, as shown below. Canada should plan to take the position that there is simply no need to talk about IP law generally, or copyright law in particular, in the NAFTA renegotiations. Canada is compliant with all major multilateral IP treaties — arguably much more so than the United States. Canada and the European Union have just agreed on the Comprehensive Economic and Trade Agreement, a free trade model that is the best and most recent template.

Moreover, the Supreme Court of Canada (SCC) has ironically, fortuitously and — doubtless without any political motivation — just effectively conceded what could have been arguably Canada’s two best IP bargaining chips. In the June 30, 2017, AstraZeneca v Apotex decision, the SCC decisively undid decades of careful Canadian jurisprudence concerning the patent “promise doctrine.” According to Richard Gold, “The court concluded in a ruling that inventors are now free to make unsubstantiated claims about their inventions and still receive a patent.” That is a huge victory for the American drug industry and also extremely ironic, since Canada had just been vindicated in a NAFTA investor-state dispute pursued by Eli Lilly after the SCC had refused to even consider the “promise doctrine” issue four years earlier. The other big decision came on June 28, 2017, in Google v Equustek, when the SCC ruled, in effect, that anyone with an arguable IP right in British Columbia (that is, virtually any film studio or record company) can obtain a worldwide extraterritorial interlocutory injunction forcing Google to de-index all links to an alleged infringer’s websites. This could turn Canada into a busy IP enforcement tourist destination, in particular for multinational copyright and trademark owners seeking easy, and most likely unopposed, one-stop worldwide interlocutory injunctions that will effectively be the end of the line in most cases where defendants rely on the internet.

IP, and copyright in particular, have played a crucial role at critical times in Canada’s evolution from a colony to a serious sovereign player in the G7 and G20.

Seen one way, these two SCC cases could weaken Canada’s NAFTA IP hand — since Canada has lost its best bargaining advantage even before the game has even begun. Seen from another perspective, this may just provide the rationale for Canada to walk away from the IP part of the NAFTA renegotiations, because the United States has already won more by happenstance from the SCC than it could have ever expected from the Canadian government. There have also been some lower court developments that US copyright lobbyists will love, including a decision on anti-circumvention and a preliminary ruling on reverse class actions that could set the stage for corporate copyright trolling.  

Nonetheless, the usual American copyright lobbying suspects and their Canadian surrogates will likely press certain points. For each, there are good responses.

  • The United States will seek term extension on copyright, from life of the creator plus 50 years to life plus 70 years, as in the United States-Korea Free Trade Agreement (KORUS) of 2012, which the US content industry is pushing as a model. Quite apart from a chill on learning and a negative effect on innovation and education, such a move would be very costly financially. Based upon a New Zealand government study, my rough estimation shows that such a term extension would cost Canadians more than $450 million per year, or a present value of $4.5 billion. Besides, the Americans had their windfall 20-year term extension on sound recordings and artists’ performances given to them needlessly and stealthily by former Prime Minister Stephen Harper in a budget bill in 2015. If the Americans even say the words “term extension,” Canada should respond by threatening to repeal Harper’s gratuitous gift.
  • The United States may want to change Canada’s “notice and notice” regime to “notice and takedown.” Quite apart from the fact that the SCC’s Google decision goes far beyond anything possible under US law, we don’t need automated takedowns of happy dancing baby videos in Canada.
  • The United States may try to push back on fair dealing in Canada. The easy response is that their section 107 “fair use” is more permissive in many ways than Canada’s fair dealing regime, as their Google Books and HathiTrust decisions show. Moreover, Canada’s Federal Court has just drastically curtailed educational fair dealing in Canada in the York University case, unless it is overturned on appeal. The Recording Industry Association of America (RIAA) has the temerity to suggest that the US fair use law should not be exported to other NAFTA partners — in other words, “Do as we say, not as we do.”
  • The United States may try to eliminate the $5,000 cap on statutory minimum damages for “non-commercial” activity. Canada is already an outlier in providing any form of statutory minimum damages, and the $5,000 limit is already being abused by copyright trolls.

Canada can demonstrate that its copyright laws are stronger and better in important ways than those of the United States. For example:

  • Canada recognizes moral rights for all creators, not just visual artists.
  • Canada has lucrative neighbouring rights for the music industry that include analog broadcasting and public performances.
  • Canada has eliminated compulsory mechanical licences for cover versions.
  • Canada requires payments for performances in countless bars, restaurants, retail stores and other small-area business establishments. The United States notoriously exempts these establishments, contrary to the 17-year-old WTO ruling on section 110, which it continues to flout.
  • Canadian movie theatres pay extra for the performance of music, whereas US theatres do not.
  • Canada’s blank media levy scheme had generated $345 million to the end of 2015, most of which flowed south. The United States has no comparable scheme.
  • Canada seriously respects the right of independent creators to own their copyright. The United States walks all over this with its “work for hire” doctrine that favours large corporations.
  • Canada has some 36 copyright collectives, many of which have received government subsidies. The United States has only about one-sixth as many, with no government support.
  • Canada has no explicit statutory exception for the performance of music for the purpose of selling sound recordings or audiovisual equipment, as in section 110(7) of the US legislation.
  • Canada’s historic lack of compulsory registration and formal renewal requirements, together with our long-standing life-plus-50 term, has frequently resulted in a much longer duration of Canadian copyright protection for American works than is the case in the United States.

Canada should stand its ground on copyright in any NAFTA renegotiation and “just say no” as needed.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.