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Fair Dealing Reform a Key Innovation Policy Priority

By Michael Geist

The Hill Times ran a special section [PDF] on innovation policy this week that featured several interesting articles including an op-ed on net neutrality from MP Charlie Angus and a column I wrote that links fair dealing reform and innovation.  While the substance behind the Government’s copyright plans remains to be seen, fair dealing reform is a critical part of a copyright reform package linked to innovation.  Indeed, the 2006 Gowers Report on Intellectual Property, the leading United Kingdom study on intellectual property reform, concluded that "'fair uses' of copyright can create economic value without damaging the interests of copyright owners."

Similar sentiments have been raised in Canada.  
Telus, Canada's second largest telecommunications company, noted to then-Canadian Heritage Minister Bev Oda in 2006 that "in order for Canada to continue to foster innovation and play a leading role in the development and usage of world class communications technologies, our copyright system must be flexible enough to adapt in a timely manner to the rapidly changing technical and entertainment environment we now face." Best Buy, Canada's largest electronics retailer, joined the chorus in January 2008, as a senior executive published an opinion piece in a major newspaper arguing that "Canadians should enjoy a flexible and open-ended list of fair dealing rights, including time, space and format shifting, and the right to mix, remix, mash and engage in satire and parody."

Several other industry leaders have raised fears that Canada's fair dealing provision may not be sufficiently flexible to encourage innovation.  For example, the Digital Security Coalition, comprised of some of Canada's leading digital security companies, has argued persuasively that the fair dealing provision places Canadian companies at a competitive disadvantage when compared with their U.S. counterparts.  In a 2006 letter, the DSC warned that:

"Canadian innovators rely on an unacceptably narrow defence of fair dealing for the legality of reverse engineering and security research. Our American competitors face no such uncertainty with respect to the broader US defence of fair use, which clearly captures reverse engineering. It is time to address this competitive disadvantage by harmonizing fair dealing with fair use."

The failure to introduce greater flexibility within the fair dealing framework has hampered Canadian innovation and left Canada trailing a growing number of competitors, such as the U.S., which established a broad fair use provision decades ago.  In recent years, a growing list of countries that includes the Philippines and Israel have modeled their copyright exceptions provisions after the U.S. fair use approach.

Moreover, many in the Canadian business community are concerned by rumours that the forthcoming copyright legislation will restrict fair dealing, rather than expand it.  The planned inclusion of anti-circumvention legislation, which provides legal protection for digital locks, could eviscerate the fair dealing exception in the digital world, since the blunt instrument of technology can be used to prevent all copying, even that which copyright law currently permits. Those fears are consistent with the first-hand experience of Canadian companies that have spent millions of dollars fending off expensive lawsuits in the United States due to anti-circumvention laws that stifle innovation, rather than facilitate it.  For example, Burlington, Ontario's Skylink Technologies is infamous for having defended itself against an ill-advised digital copyright lawsuit in the U.S. over competing garage door openers.

The current Canadian legal, business, and cultural landscape points squarely to the need for fair dealing reform.  With the need to ensure that Canadian business is not placed at a competitive disadvantage, instituting greater flexibility within the Canadian fair dealing provision should be regarded as a top innovation policy priority.

Full post as published by Michael Geist on April 08, 2008 (boomark / email).