Canada’s copyright levy may be flawed: CCFDA

A federal court ruling is showing flaws in Canada’s copyright levy regime, according to a consortium of high-tech vendors.

The Federal Court of Appeal has ruled to eliminate private copying levies on MP3 players — a ruling that was welcomed by the Canadian

Coalition for Fair Digital Access (CCFDA).

The CCFDA, an organization of manufacturers, retailers and distributors working to repeal Canada’s private copy levy, sees the ruling as evidence of the need to replace the current system with one that responds to the realities of the digital era.

Intel was one manufacturer that went to court to prove its point — and won. “So the fundamental belief is the whole copyright levy has to be rethought and we were right,” says Doug Cooper, country manager for Intel of Canada Ltd.

Members hope the ruling will influence the Government of Canada, which intends to move ahead with a package of reforms to the country’s copyright laws in the coming months.

“We’re saying that eliminating this levy regime has got to be a priority part of that package,” says Kevin Evans, co-chair of the CCFDA.

“The Federal Court of Appeal ruling is very helpful because it demonstrates that the levy system is broken and needs to be replaced with something that responds to the realities of the digital era.”

The levies are collected by the Canadian Private Copying Collective (CPCC), which represents the music industry; it then distributes the money to the owners of the copyrighted material. Since December 1999, when the levy was imposed, the CPCC has collected more than $87 million in levies.

The federal court ruling means that manufacturers have stopped including the levy in the wholesale price of their products. How that filters through to the consumer will depend on the retailer and the nature of the agreement they have with a particular manufacturer.

“It reveals the flaws in the levy in so far as there was some double-dipping going on,” said Evans.

Consumers were paying twice: once when they purchased music online, and a second time through a hidden levy on various products — regardless of how they used those products.

“This is an indiscriminate levy – everyone pays it regardless of whether they’re using recording media to record music or to record data,” he says. “I buy a lot of CDs and I don’t burn music, and yet I’m paying a levy to compensate for the artists and their copyright.”

He said the levy was a good idea in its time, conceived in the analog age when people were copying from tape to tape. But the federal court ruling demonstrates the levy is going to be constantly forced to play catch-up to technology, he said.”The fact is there are better, more effective ways to directly compensate copyright holders for the use of their work.”

Digital rights management is one possible alternative.

It provides a way in which the copyright holder receives direct payment for the use of their product. It could also offer provisions for copying. iTunes is one example of this: digital rights management is used every time you download a song from iTunes.

Technical protection measures (TPM), means the price of the CD includes the right to make a certain number of copies.

But to complicate matters, Canada has signed — but not ratified — the World Intellectual Property Organization (WIPO) treaty, which deals with intellectual property rights. If ratified, it would require the Canadian Private Copying Collective to pay a levy to foreign artists, which means the money currently being collected from consumers from would not be sufficient.

“We have expert opinion that suggests the levy would have to be doubled to permit Canada to recognize its national obligations under WIPO,” Evans said. “That’s going to be completely unpalatable to consumers and underlying just how impractical this levy regime is.”


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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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