(A-2017-00307) - Page. 1 Innovation, Science and Innovation, Sciences et HD eeremsCOcicoprsent Canada Developpement economique Canada ‘Security clacton: Protected B ‘Coil Number 295968, Contact Mark Schaan, Strategic Policy Sector, Marketplace NOV 02 16 Framework Policy Branch, 249-291-3700 ECONOMIC DEVELOPMEN™ da’ iht “Notice and Notice” Regime — sumer ‘Complaints over Threatening Notices SUMMARY ‘The "Notice and Notice” regime in Canada’s Copyright Act requires Intemet Service Providers (ISPs) to forward on notices from copyright ‘owners to Intemet subscribers with the goal of discouraging online infringement (e.g., illegal downloading of movies). * Atop stakeholder concem in terms of the regime, and a major source of consumer complaints, is the practice of some copyright owners to include within their notices offers or demands to make settlement payments to avoid threatened legal action. According to ISPs, this problem is compounded by instances of fraudulent notices being sent that also seek such payments from consumers. * Some commentators have described the use of the regime to send notices with settlement demands as a ‘loophole’ that short-circults safeguards to protect consumers from this kind of practice. Consumer anxiety over such notices is apparent in inquires received from ISED's call centre and in media reports. CCM 295369 | Canada(A-2017-00307) - Page. 2 PROTECTED B CONSIDERATIONS The "Notice and Notice” regime is a key element of Canada’s approach to curbing online copyright infringement. The mandatory regime requires Intemet intermediaries, such as Intemet Service Providers (ISPs —e,g., Rogers, Bell) to forward on notices from copyright owners to Internet subscribers to alert them that their Internet accounts have been linked to alleged infringing activities, such as the illegal downloading of movies, Copyright owners often work with forensic investigation companies (e.g., Canipre) to identify online infringements and to send out notices. The goal of the regime is to discourage online infringement, but it imposes no obligations on the Intemet subscribers who receive notices. Soon after the regime entered into force in January 2015, controversy arose over the practice of some copyright owners (or their agents) of including settlement demands within their notices, urging the consumer to avoid threatened legal action. The sending of such notices could lead to abuses, given that consumers may be pressured into making payments even in situations where they have not engaged in any acts that violate copyright laws. In a recent decision, a Canadian court has set out clear rules that apply to the sending of settlement offers or demands to Internet subscribers in the context of copyright infringement lawsuits, which include safeguards to protect consumers. Some commentators have described the use of the regime to send such notices as a ‘loophole’ that short-circuits such safeguards. Officials signalled to stakeholders early on that the sending of such notices to consumers is not consistent with the underlying policy intent, and many of the participants in the regime, including key organizations representing copyright owners, have indicated that they do not support the use of settlement demands. Internet intermediaries complain, however, that the current legislative framework does not expressly prohibit this practice and that they fee! compelled to forward on such notices to their subscribers when they receive them from copyright owners. Consumer anxiety over such notices has been apparent in inquires received from ISED's call centre and in media reports - most recently, a media report involving an 86-year-old woman from Ontario who received a notice that contained an allegation of illegal downloading that she contends is false has attracted considerable attention (see Annex A). Through the call centre and Office of Consumer Affairs website, departmental officials have informed consumers that there is no legal obligation to pay any settlement offered by a copyright owner, and that the CCM 295369(A-2017-00307) - Page. 3 -3- PROTECTED B regime does not impose any obligations on a subscriber who receives a notice, including no obligation to contact the copyright owner or the Intemet intermediary. outs) 210K auc xenatney ‘According to ISPs, this problem is compounded by instances of fraudulent notices being sent to consumers by individuals impersonating actual copyright owners. Such notices are likely being sent to consumers in the hopes of extracting payments under the guise of settling infringement claims. NEXT STEPS. G2 CK ohn Knubley / Deputy Minister 2 Attachment CCM 295369(A-2017-00307) - Page. 4 ANNEX AL Go Public 86-year-old woman on hook for illegal zombie game download Rosa Marchitelli, CBC News: Canadians getting caught in ‘dragnet cash grab’ after government changes tules on copyright infringement Posted: Oct 31, 2016 5:00 AM ET Last Updated: Oct 31, 2016 5:37 AM ET URL: http:/www.cbe.ca/news/canada/ottawa/notice-and-notice-system-intemet: copyright-enforcement-settlement-1,3823986 Post-nuclear war, zombie-Killing video games are not Christine McMillan’s thing. But the 86-year-old from Ontario has been warned she could have to pay up to $5,000 for illegally downloading a game she'd never heard of. She is one of likely tens of thousands of Canadians who have received notices to pay up, whether they are guilty or not. "I found it quite shocking ... I'm 86 years old, no one has access to my computer but me, why would | download a war game?" McMillan told Go Public, In May, she received two emails forwarded by her intemet provider. They were from a private company called Canadian Intellectual Property Rights Enforcement (CANIPRE) claiming she had illegally downloaded Metro 2033, a first- person shooter game where nuclear war survivors have to kill zombies. ? + READ Christine McMillan's email notice MeMillan's IP address, the string of numbers that identifies each computer communicating over a network, was used to download the game. 'Foolish' legislation At first, she thought it was a scam. “They didn't tell me how much | owed, they only told me that if| didn't comply, ! would be liable for a fine of up to $5,000 and | could pay immediately by entering my credit card number."(A-2017-00307) - Page. 5 ANNEX A McMillan called Cogeco, her intemet service provider, and discovered the emails were perfectly legal under the federal government's so-called "Notice and Notice" regulations introduced last year under the Copyright Modernization Act. The law requires internet providers to forward copyright infringement notices to customers suspected of illegally downloading content like video games and movies. Customers are identified only through their IP address. The service provider does not disclose any personal information to the copyright enforcers. The goal is to give copyright holders a quick and easy way to notify users of alleged copyright infringement taking place at their intemet address. The result has been a flood of notices to suspected offenders from anti-piracy companies asking them to pay a settlement fee. Copyright holders, such as video game developers and film studios, are hiring third- party companies like CANIPRE to collect settlement money for alleged illegal downloads. “It seems to be a very foolish piece of legislation,” McMillan said “That somebody can threaten you over the intemet ... that to me is intimidation and | can't believe the government would support such action." Company says it's ‘helping clients' ‘The owner of CANIPRE told Go Public he gets 400 calls and emails from people on a busy day and "most of them” settle. “Ultimately, we are helping our clients get their educational message out about anti- piracy and theft of content and how it harms them and their rightful marketplace," Barry Logan said. When asked about the wording that McMillan found threatening, Logan said his company ran the language by lawyers and it's legal. He says his company has collected about $500,000 for its clients since the Notice and Notice regime started almost two years ago. Go Public showed Christine McMillan the video game Metro 2033 for the first time. Watch her reaction: Logan won't say how many files were settled, for how much, or what percentage his company eams.(A-2017-00307) - Page. 6 ANNEX AL None of the big internet service providers (Shaw, Rogers, Bell and Telus) are willing to say how many notices are being forwarded to their customers. A smaller Canadian-based provider, TekSavvy, reported earlier this year it sends out about 5,000 notices a day and has fewer than 300,000 subscribers. "Dragnet cash grab' Network security analyst and technology expert Wil Knoll calls it a “dragnet cash grab." “I's preying on people that don't necessarily understand the system or the technology that surrounds it,” he said, “and they're willing to pay out of court because they're scared." Knoll says because McMillan lives in an apartment, someone could have accessed her unsecured wireless connection, then downloaded the game using her IP address. He says even secured connections can be hacked. “It's very hard then to correlate, or nearly impossible, to correlate from that IP address to any individual that's inside the house, or to prove it forensically," he said. “Especially if these infractions are happening months and months and months ago." Calls for reform Critics say the law needs to be revamped so Canadians understand their rights. Intellectual property lawyer David Fewer says "consumers aren't used to getting these kinds of demands in any other context.” “It can be demands for thousands of dollars, it can be threats that, you know, you're gonna be taken to court, these are all things that are genuinely frightening.” Fewer, who is the director of the Canadian Internet Policy and Public Interest Clinic, ‘says the legislation should include a form letter that doesn't threaten legal action or demand cash and lists specific penalty amounts. “If you do it by sending enough scary letters and making enough demands," Fewer said, “and if enough people are panicked or it's worth it to them to regain their sanity and thei peace of mind, then it becomes a profitable venture for the parties making those demands.” But Fewer wams that rarely do these companies "accept a settlement offer that's close to their actual damages. What they're looking for is the big payout, i's the big payout that sustains the business model.”(4-201 7-00307) - Page. ANNEX AL What's tricky, he says, is determining legitimate penalties, since no cases involving the Notice and Notice regime have been settled in court yet. Fewer says typically damages awarded by the courts in piracy cases range from the cost of the legal purchase of the content to several times that amount, not the $5,000 maximum. MeNMillan says she's going to ignore the notices and hope the problem will go away, especially since the alternative of taking her to court would be an expensive endeavour for both sides. Review set for 2017 Navdeep Bains, minister of innovation, science and economic development, declined Go Public's interview request. In an email to CBC News, the department says, "Receiving a notice does not necessarily mean that you have in fact infringed copyright or that you will be sued for copyright infringement. The Notice and Notice regime does not impose any obligations on a subscriber who receives a notice, and it does not require the subscriber to contact the copyright owner or the intermediary. There is no legal obligation to pay any settlement offered by a copyright owner." It says since the new system kicked in, department officials have been working with copyright owners and intemet service providers to make sure it's working and to educate Canadians on how it works. The next review of Canada's Copyright Act is scheduled for 2017.(A-2017-00307) - Page. 8 ANNEX A2 U of M forwards 8,000 emails regarding illegal downloads Copyright office likens threatening notices to extortion BY GARETT WILLIAMSON SEPTEMBER 7. 2016 ‘THE MANITOBAN (THE OFFICIAL UNIVERSITY OF MANITOBA STUDENTS' NEWSPAPER) The University of Manitoba's copyright office is waming that notices forwarded to students, mostly from American rights-holders, seeking cash settlements for alleged illegal downloading activities are tantamount to extortion. ‘Amendments to Canadian copyright legislation that came into effect in 2015 require intemet service providers (ISP) - which the university qualifies as — to forward notices indicating the alleged infringement from copyright owners to suspected illegal downloaders. However, some rights holders - commonly producers of pornographic materials — are issuing aggressive letters warning of multi-million dollar lawsuits, the loss of scholarships, and even deportation for intemational students if an immediate cash settlement of hundreds of dollars is not paid. "None of which are real consequences that could ever happen in the Canadian scheme of things, but we hear from students all the time - especially intemational students — who are really freaked out by this," Joel Guenette, U of M copyright strategy manager, said. He noted the threats contained within the notices reflect U.S. laws and that “we don't want any student to fall prey to any sort of extortion scheme.” The notices are drafted by the copyright holders, who monitor how their own content is being shared through the internet, and are then sent to the ISP who identifies the user through an IP address. Notices issued through the university are delivered through the @myumanitoba email account. In the less than two years since the changes — branded as the notice and notice regime — came into effect, nearly 8,000 such letters have been processed by the copyright office of the U of M's Office of Fair Practices and Legal Affairs.(A4-2017-00307) - Page. 9 ANNEX A2 Guenette said the majority of the notices are issued by HBO and relate to illegally downloaded episodes of its flagship show Game of Thrones, which has been the most pirated television show for several years running. He said the cable network's letter is a straight-forward notice that it is aware the content has been downloaded while outlining how the show can be paid for and viewed legally. While the likes of HBO do not threaten legal action, Guenette noted the copyright owners that do have no legal basis to solicit a settlement. He noted nothing in Canadian law requires the university to identify the end-user to the copyright holder. The user's identity can only become known if the notice is responded to directly by the alleged downloader or the rights holder takes the ISP to court for the release of the personal information. “We can't tell students ‘ignore these notices’ and we can't tell students ‘never pay a claim’ but, personally, | want students to know what these are and | want them to know that most of these settlement claims are extortion.” He encouraged students that are unsure of how to proceed upon receiving a notice to seek appropriate legal advice. “It's a student's right to determine whether or not [they] want to make that settlement. | just think they should be fully informed before they make that decision,” he said. “When. I'm talking to students directly, without giving them legal advice, | would say ‘if | were you, | would never pay this.” “In my opinion, | don't think any student on campus should be paying this.” Since the law designed to discourage illegal downloading came into effect, critics have wamed that the failure to explicitly prohibit notices from soliciting settlements has left the legislation open to be abused by unscrupulous copyright holders. The Canadian Office of Consumer Affairs (OCA) asserts that U.S. copyright fines and penalties do not apply in Canada and there are no obligations on the subscriber to contact the copyright owner or the ISP. Adriane Porcin, an assistant professor in copyright law at the U of M faculty of law, said copyright laws generally apply within national borders but jurisdiction can be established outside that if circumstances permit and a compelling case is presented in court. She also said receiving a notice from a copyright owner is only an allegation and does not mean an infringement actually took place. “Ignoring the notice will not trigger a lawsuit," she said. "But, since the provider has the obligation to keep information about the notices forwarded for six months, there is a{4-201 7-00307} - Page. 10 ANNEX A2 possibility that the copyright owner will try to sue the provider to obtain information regarding the identity of the persons who received the notice." According to a blog post by Michael Geist ~ a law professor at University of Ottawa where he holds the Canada Research Chair in Internet and E-commerce Law ~ any copyright owner looking to sue an end-user would first have to navigate a lengthy and expensive legal case in an effort to recoup damages that the legislation caps at $5,000. Guenette said he expects many more students to receive notices in the coming year, which he accompanies with an information package advising them how to best proceed. While students are expected to maintain certain integrity obligations with respect to copyright ownership, he said the university reserves any punitive measures such as restricting access to the top one per cent of high-volume users. Even then, access is only restricted if the user fails to respond to communication from Guenette’s office and is restored following a meeting. "It's not because we want to or we really care about these downloading activities necessarily,” he said. "It's because we have to process them by law." "We want students to know that we're not supervising their intemet activity," he added. “It's rights holders that are doing this directly and we have no choice but to process the notices.”{4-201 7-00307) - Page: 11 ANNEX A3 University of Manitoba students receive ‘extortion’ letters over illegal downloads School is fighting back, advising students they have the option to not respond CBC News Posted: Sep 12, 2016 4:00 AM CT Last Updated: Sep 12, 2016 12:07 PM CT Thousands of students at the University of Manitoba have received copyright infringement letters, some of which the school says amount to “extortion.” Joe! Guénette, the University of Manitoba's copyright strategy manager, said students should know their options when they receive notices waming their IP address is connected to illegal downloads. The notices, sent by copyright enforcement companies such as IP-Echelon and CEG TEK Intemational, call out specific IP addresses for illegal downloads of everything from textbooks to pornography, television shows and movies. The purpose of the notice system, which began in earnest in Canada in 2015 when new copyright laws came into effect, is to discourage piracy — not to get cash. But some anti-piracy companies have been sending letters to suspected pirates, asking them to pay a settlement fee. While many students ignore the warnings, others have paid hundreds to companies, worried they might suffer stiffer penalties in the future if they don't. "It's a tad frustrating when we see some of the messages that have content that really borders on extortion," said Guénette. He is asking students to consider not responding to the letters because if they do, the companies will find out their names and potentially pursue more money in the future. "I would certainly think long and hard before responding directly to the rights holder,” he said. Under Canada’s new copyright laws, the University of Manitoba, as the internet service provider on campus, has been obligated to forward about 6,000 copyright infringement notices to students for downloading illct files on campus. In the past, Guénette said, the school simply discarded the notices, but under the new legislation, the university must forward them to students — otherwise the school risks facing massive fines.{4-201 7-00307) - Page: 12 ANNEX A3 Letters spark fears, U of M official says Guénette said students feel threatened when they get the warming letters. “Ihave students that come to me and ask, 'Am I going to lose my scholarship? Am | going to lose my visa? Am | going to be deported? Are you going to tell my parents?" he said, “And all of these questions are a tad heartbreaking, because they're really outside of the sphere of the possible consequences of the types of copyright violations that are being alleged." Guénette said the anti-piracy companies do not know students’ names; they only have access to IP addresses. Only the University of Manitoba knows the names of students associated with the IP addresses connected to alleged illegal downloads. “We are essentially the middle link in that three-part chain, and we keep that information private," he said. Guénette said it's common for students to be threatened with multimillion-dollar lawsuits, especially when the content is pornographic or "perhaps more of a sensitive nature," he said. The maximum fine for copyright violation in Canada is $5,000. What's more, students who have already paid money to the companies may risk being asked to pay more in the future. The so-called settlements do not often settle anything, he said, “There is no evidence that | have seen that shows that the notices stop once payment has taken place," Guénette said, More than 6 million notices last year Canadian Intellectual Property Rights Enforcement (Canipre), a company that sends copyright infringement notices on behalf of copyright holders, said it sent out more than six million anti-piracy notices last year. “Everyone has the right to seek restitution before something becomes a legal matter," said Barry Logan, the company’s managing director. Canipre has provided rights holders with more than $500,000 from people who have accepted a settlement, said Logan. They have "very good compliance’ in terms of the number of people who actually respond to their letters, he added. Logan said the best advice he can offer is for alleged copyright infringers to get a legal opinion when they receive anti-piracy waming notices.{4-201 7-00307) - Page: 13 ANNEX Aa Published | Publis: 2016-11-06 2:00 Macleans (est) Education Rleceived | Regu: 2016-10-26 12:15 (est) Student downloaders beware Anti-piracy firms are coming after you, and they're mighty heavy-handed. Know your rights. Michael Robinson Despite the latest episode of Game of Thrones being just a few mouse clicks away, students looking to save a quick buck may want to think twice before pirating the popular fantasy television series while connected to campus WiFi. New federal laws are forcing universities to forward thousands of copyright notices to students alleged to have illegally downloaded and shared copyrighted content such as music, movies and video games, even if critics say the notices appear threatening, misleading and can potentially put students on the hook for hundreds of dollars. This “notice-and-notice" system became mandatory under new copyright laws introduced in January 2015. Because universities provide services similar to those of commercial Internet providers like Telus, Bell or Rogers, they too are required to. forward infringement notices to suspected pirates surfing on campus computer networks. If universities fail to comply, they risk being sued by copyright holders (movie, television, music and video game studios, for example). The ilicitinfringers aren't just misbehaving students, Post-secondary institutions forward these notices to staff and faculty, as well. While film and TV studios like HBO-the rights holder for Game of Thrones-use anti- piracy notices to inform recipients how to watch HBO programming legally, others use them as a means to recoup stolen profits. The controversial practice of offering an “out- of-court’ settlement is where a notice recipient is invited to purchase the equivalent of a *Get Out of Jail Free card!" to avoid legal action. Montreal-based Canadian Intellectual Property Rights Enforcement (CANIPRE) sent out more than six million anti-piracy notices to Canadians-including students-last year alone. Less than five per cent were sent to universities, but that's still something close to 300,000 notices. "We don't discriminate. No matter if i's a priest, a little old lady or a student. The only people who receive a notice are those involved in illegal file-sharing," said CANIPRE director Barry Logan, whose clientele includes rights holders from Canada, the U.S. and Europe.{4-201 7-00307}- Page. 14 ANNEX A Anti-piracy firms like CANIPRE work by monitoring “peer-to-peer” (P2P) file-sharing networks for copyrighted content. CANIPRE scans for and collects any Canadian IP addresses sharing a file. A copyright infringement letter is drafted and sent to an Internet service provider, who forwards the notice to its customer. CANIPRE's notices provide a “settlement opportunity," costing $198. If paid, the recipient is released of all liability and won't be subject to future litigation. “I think that this idea of the student population being poor and living on Kraft Dinner is inaccurate," says Logan. "No one is getting broke here for 200 bucks.” While there is no fine for copyright violation in Canada, the law permits copyright holders to pursue up to $5,000 worth of damages against individuals suspected of non- commercial infringement. According to Innovation, Science and Economic Development Canada (ISEDC), the intent of the notice-and-notice regime is to "discourage’ illegal downloading. "Receiving a notice does not necessarily mean that you have in fact infringed copyright or that you will be sued for copyright infringement,” says ISEDC spokesperson Hans Parmar, adding there is no legal obligation to respond to these notices or "pay any settlement offered by a copyright owner." Toronto intellectual property lawyer Ken Thompson says seeking a settlement offer is a "good compromise" compared to a lawsuit. “I's a nice, gentle approach that allows copyright holders to attempt to find a settlement without taking drastic measures." The problem is, not every anti-piracy firm plays by the rules. Several schools have expressed frustration with these “settlement offers," claiming that some companies use the notices to intimidate and prey on students. According to a report published in the University of Manitoba's student newspaper, officials in the school's copyright office have described some of the notices from U.S.- based studios as "tantamount to extortion." Some of the worst of the roughly 6,000 notices that the University of Manitoba has processed since January 2015, warned of “multi-million-dollar lawsuits, the loss of scholarships, and even deportation for international students" if an immediate cash settlement was not paid. Don Thompson, chief information officer at the University of British Columbia, says his office received 6,875 copyright notices last year. Some students pay settlement fees out of fear of court action, Thompson says. "We have seen situations where the individual voluntarily pays but additional notices are sent," he says. "This, obviously, causes additional stress and concem." McGill was the recipient of 1,796 notices last year. McGill spokesperson Chris Chipello says that many of these "often overstate the rights" of the sender and “request{4-201 7-00307) - Page: 16 ANNEX A immediate payments of large amounts of money that may not be justified, without spelling out that people can challenge them." "Consequently, the university is concemed that these notices are unduly alarming, particularly since we are asked to send them to young adults who may not have access to correct legal advice," says Chipelio. Campuses across the country have begun to introduce policies to crack down on unlawiul file-sharing. At the University of Calgary, students were warmed to think twice before illegally downloading copyrighted content, in September. "It is not okay and our campus community needs to be aware of the risks of engaging in that behaviour," says provost and vice-president (academic) Dru Marshall in an internal campus publication. Last year, the U of C was slapped with roughly 5,000 copyright-infringement notices. Back at the University of Manitoba, officials are looking into the possibility of installing software capable of targeting illegal file-sharing. "We would not be able to filter all copyright-non-compliant material, but would likely be able to block a high volume, significantly reducing the number of notices triggered on campus," says Naomi Andrew, director of the university's legal department. The type of punishment ranges, since students are caught illegally distributing everything from a Taylor Swift album to an entire season of House of Cards. Downloaders who violate file-sharing rules while residing at University of Waterloo's dorms, for example, receive wamings and can temporarily lose 'Net privileges. Lawrence Dobranski, who oversees information technology security and compliance at the University of Saskatchewan, which received 2,000 notices last year, says students are sanctioned only if there have been multiple infractions or in cases involving inappropriate content. McGill administrators say i's "unlikely" the school would sanction students, unless they were "somehow harming or overloading the university's information systems" or in breach of student conduct. Says Chipello: "The university is not the judicial system." Rogers Media Inc.