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

[Declan McCullagh <declan () well com>]

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Date: Fri, 12 Dec 2003 09:32:48 -0500
To: Declan McCullagh <declan () well com>
From: Michael Geist <mgeist () pobox com>
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 () pobox com              http://www.michaelgeist.ca

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Date: Fri, 12 Dec 2003 11:57:26 -0500
To: Declan McCullagh <declan () well com>
From: Michael Geist <mgeist () pobox com>
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 () pobox com              http://www.michaelgeist.ca

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