March 31, 2004 11:33 AM PST

Judge: File sharing legal in Canada

Sharing copyrighted works on peer-to-peer networks is legal in Canada, a federal judge ruled on Wednesday, handing the record industry a sharp setback in its international fight against file swappers.

Canadian record labels had asked the court for authorization to identify 29 alleged file swappers in that country, in preparation for suing them for copyright infringement, much as the Recording Industry Association of America (RIAA) has sued more than 1500 people in America.

But the judge denied that request. In a far-ranging decision, the court further found that both downloading music and putting it in a shared folder available to other people online appeared to be legal in Canada.

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What's new:
A judge in Canada rules that sharing copyrighted works on peer-to-peer networks is legal, a major setback to the record industry.

Bottom line:
The ruling affects only Canada, but it could have wider repercussions if it stands. The recording industry has filed hundreds of lawsuits against file swappers to lessen the amount of copyrighted material on networks such as Kazaa and Morpheus.

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"This has certainly stalled (the record industry's) current round of litigation, and...thrown into doubt whether there is infringement at all," said Michael Geist, a University of Ottawa law professor who closely follows Canadian copyright issues.

The Canadian Recording Industry Association (CRIA), which brought the case, said it did not agree with the judge's ruling.

"We are reviewing the decision received today from the trial court and expect to appeal it," CRIA General Counsel Richard Pfohl said in a statement. "In our view, the copyright law in Canada does not allow people to put hundreds or thousands of music files on the Internet for copying, transmission and distribution to millions of strangers."

The ruling affects only Canada, but it could have wider repercussions if it stands. The U.S.-based RIAA has filed hundreds of lawsuits against file swappers in hopes of lessening the amount of copyrighted material available for download through peer-to-peer networks such as Kazaa or Morpheus.

But many studies, including one this week from professors at Harvard and the University of North Carolina at Chapel Hill, have noted that computer users on peer-to-peer networks often download material across national borders.

Canada's debate over file swapping flared last December, when the country's Copyright Board, which regulates intellectual property issues, ruled that downloading songs from a peer-to-peer network for personal use--but not necessarily uploading--appeared to be legal.

The regulators cited a long-standing rule in Canada, in which most copying for personal use was allowed. To repay artists and record labels for revenue lost by this activity, the government imposes a fee on blank tapes, CDs and even hard disk-based MP3 players such as Apple Computer's iPod, and distributes that revenue to copyright holders.

At the time, CRIA attorneys said they did not agree with the Copyright Board's decision, and that they expected courts to rule differently. Last month, they launched the first step in filing lawsuit against alleged music sharers, seeking authorization from the courts to identify 29 Net users at various Internet service providers (ISPs) around the country.

In his ruling Wednesday, Judge Konrad von Finckenstein rejected that request on several grounds. In part, he said the recording industry had not presented evidence linking the alleged file swapping to the ISP subscribers that was strong enough to warrant breaking through critical privacy protections.

But he also questioned whether CRIA had a copyright case at all.

With respect to downloading, the judge accepted the Copyright Board's early decision almost without comment. But he went further, citing a recent Supreme Court decision to say that making music available online also appeared to be legal.

In that recent case, the Supreme Court ruled that libraries were not "authorizing" copyright infringement simply by putting photocopy machines near books. The libraries were justified in assuming that their customers were using the copiers in a legal manner, the high court ruled.

Finckenstein said the same rationale should apply to peer-to-peer users.

"The mere fact of placing a copy on a shared directory in a computer where that copy can be accessed via a P2P service does not amount to distribution," Finckenstein wrote. "Before it constitutes distribution, there must be a positive act by the owner of the shared directory, such as sending out the copies or advertising that they are available for copying."

Ottawa's Geist said this appeared to make uploading itself legal as well, since a peer-to-peer user--like a library--would be entitled to assume that the person on the other side of the connection was acting legally, since downloading was also legal in Canada.

The decision was hailed by Net activists on both sides of the border.

"I think it is a big victory for technology and the Internet and all the people who use technology and the Internet in Canada," said Howard Knopf, an attorney who works with the Canadian Internet Policy and Public Interest Clinic at the University of Ottawa. "The court accepted that copyright legislation has to be read as it is, not as CRIA would like it to be."

The decision is likely to spur more legislative action in Canada, however. The country has not yet ratified World Intellectual Property Organization (WIPO) treaties that contain more specific language saying that only copyright holders or their licensees have the ability to make copyrighted works available to others.

In the United States, the provisions of that treaty were implemented in the controversial Digital Millennium Copyright Act. CRIA has lobbied hard to have a similar bill introduced in Canada, but without success yet. However, the Canadian government has recently indicated that a WIPO implementation bill could be introduced and passed by the end of this year.

On Tuesday, the International Federation of the Phonographic Industry said it was filing 247 lawsuits against alleged file sharers in Denmark, Germany, Italy and Canada.

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