Movie Piracy in Canada

Daniel Pearlman is a first year law student at Osgoode Hall and is taking the Legal Values: Challenges in Intellectual Property course

Movie piracy is a widely debated IP issue. While many would agree that movie piracy is a problem, much controversy surrounds both the extent of movie piracy, and how it ought to be addressed. In this commentary I will briefly examine competing views on this issue,  in order to highlight the difficulties in resolving this challenge.

The film industry’s perspective offers a useful starting point for this analysis. The Canadian Motion Pictures Distributors Association (CMPDA) presented evidence to the Standing Committee on Industry, Science and Technology on the harms of counterfeiting and piracy.  The Committee notes that in 2005, film piracy in Canada accounted for approximately $270 million in losses for the Canadian film industry.  This figure illustrates the costs piracy imposes on industry. Furthermore, government has taken steps to curb this problem.

Bill C-59 stands as an attempt by the Canadian government to alleviate the impact of film piracy. The Bill criminalizes the camcording of cinematographic works in a theatre, for either personal or commercial use. This legislation reflects the government’s appreciation of the film industry’s concerns over movie piracy.

The legislative summary of Bill C-59 explicitly outlines the impact of pirated films on industry. The summary cites film industry data presented to the Standing Committee, and notes that 90% of pirated films are recorded in theatres. What is more, 20-25% of these copies are made in Canada. The inclusion of these statistics in the summary demonstrates the  government’s recognition of the harm piracy inflicts on the film industry. Nevertheless, there has been criticism of the industry’s role in the formulation of the bill.

Criticisms of the film industry’s position, and it’s role in passing Bill C-59, highlights the controversy surrounding movie piracy. Michael Geist has been outspoken in his critique of Bill C-59. In an article published in the Ottawa Citizen, Geist laments over the role of industry in shaping the governments approach to piracy. More specifically, Geist points to the conflicting figures relied on by the Canadian Heritage Minister in presenting Bill C-59. According to Geist, the film industry aggressively lobbied the government for anti-camcording legislation, and provided the government with inconsistent data.  U.S. film industry representatives suggested that 40% of the world’s pirated copies came from Montreal. This figure is nearly twice the number offered by the CMPDA for Canada’s contribution as a whole.

Geist argues that the passing of Bill C-59, which is nearly identical to a proposed bill presented by  industry representatives, demonstrates the success of industry lobby efforts. Moreover, Geist believes that the  government has sent a clear message that, “private meetings, foreign pressures and lobbyist-drafted bills are how law gets made in Canada”. Despite Geist’s position, the data presented by the CMPDA indicates that movie piracy is costly. Therefore, the question remains, is camcording the cause of these losses, or contrary to the legislative summary for Bill C-59, are there other forms of piracy at work?

A recent study by suggests that this camcording is not the dominant form of pirated content. This study examined over six years of piracy data. More specifically, the study focused on the release of both camcorded, and DVD quality copies of Oscar nominated movies. The researchers found that 23 of the 26 Oscar nominated films had DVD quality copies available online prior to nomination day. Further, many of these films had DVD quality copies available prior, or shortly after, the release of a camcorded copy.  While this study would suggest that camcording is only a fraction of the piracy issue, it must be taken with a grain of salt. Although the methodology is relatively simple, it is difficult to rely on the study, posted exclusively on the blog of an independent journalist, as authoritative. Nevertheless, the study demonstrates that  camcording may not be the dominant source of pirated films. This finding  would suggest that Bill C-59 may not effectively remedy the problem.

In closing,  movie piracy is a hot-button topic. On the one hand, the losses suffered by the  film industry are a clear indication of the detrimental impact of this activity. On the other hand, the influence of lobby groups, some of which present conflicting data, is potentially problematic.  Further, while Bill C-59 represents progress, it may not address the root of the problem. Thus, until an independent study is conducted, which offers a consistent assessment of  the scope of the piracy issue, it will be difficult to arrive at a solution that effectively addresses this problem.

  1. The film industry’s emphasis on camcorders, and the consequent legislation of Bill C-59, underestimates the scope of the piracy problem while simultaneously overstating this one aspect of it. Granted, camcorders are a major source of movie piracy; however, these recordings are merely the first step in a much longer chain of distribution that extends far beyond the walls of the cinema.

    The criminalization of camcorder recordings is only valuable to the extent that it can actually be enforced. With technological advances, it is now just as easy to sneak a pocketsize camcorder into a movie theatre as it is to bring in snacks from the store around the corner. By failing to acknowledging internet distribution as a larger source of the problem, Bill C-59 is effectively limited in its regulation.

    Meanwhile, (and others) imply that another source of the problem lies within the industry itself. That is, by studio employees leaking copies of unreleased movies to the public. Even if numbers from these independent studies cannot be verified, they still indicate that the sources of piracy are not exclusively attributable to camcorders. It is important that the industry addresses this, perhaps by imposing stricter standards of employee confidentiality and liability.

    In order for piracy to be reduced, there needs to be clarity and consensus on what the foundations of this problem are. If the competing perspectives in this debate have proven anything, it is that this problem is much more complex than any one party seems to assert.

  2. There is something interesting thing to note about the statistics used by film industry lobbyists: the assumptions that can be used to develop sympathetic numbers.

    The estimated economic loss of $270 million for 2005 was provided by the CMPDA. The report by the Standing Committee on Industry, Science and Technology acknowledges that estimates are extremely difficult to make with precision and makes recommendations for improvements. However, the committee appears to accept the number for its purposes.

    That said, the question of where the number of $270 million comes from is of interest. The inherent bias of the film industry in providing these numbers likely means that broad assumptions were made to obtain a number that was sympathetic to their cause.

    A single download doesn’t necessarily mean that a DVD and/or movie ticket sale has been lost. It would be very easy to inflate statistics of economic losses by attributing every download to direct losses in sales.

    Many people cannot afford to go out and watch a large number of movies in the theatre. Instead, they might rent the movie a few months later. They might even forget the movie has existed by the time it becomes available. If they download a movie they would not have otherwise watched, how much economic loss is actually attributable to their actions?

    This isn’t to say the film industry doesn’t have a case. The fact of the matter is that an economically valuable product is being taken without compensation. I merely suggest that the film industry should be careful in how it presents its case if it wants the sympathies of the masses.

  3. It is evident now, if it were not before, that the scale of movie piracy is so huge and so international in scope that it is impractical to see the remedy coming from the enforcement of copyright law against each and every person engaged in the practice. I think the industry reckons that the next battle is for the hearts and minds of the consumer so that, at least in the market economies of the world, people will choose a legal product over an illegal one. There are many things that stand in the way of copyright owners winning this next front.

    First, unlike other forms of property, copyright expressly recognizes rights of both users (e.g., criticism and review) and authors (e.g., moral rights) that co-exist with those of copyright owners. I think that the industry has incorrectly reasoned that if the typical consumer is to more intuitively understand copyright infringement as “theft”, then these mitigating or complicating considerations of user and author rights are problematic. To that end, even if the criminal prohibition against camcorders in the cinemas results in very few prosecutions or convictions – which I expect will be the case – they will have still served their more significant industrial goal of positioning copyright as an unconditional property right of the copyright owner in the mind of the consumer. I think that this, however, will prove to be a hollow victory.

    Second, the industry seems determined to fight the rationalization often heard for unauthorized downloading, namely, that it is done for personal use and without commercial gain. Many people intuitively feel that a “theft” cannot occur unless the loss suffered by one person is reflected in a gain taken by another and if a work is merely reproduced without commercial gain then it cannot be wrong. People are often surprised to learn that infringement can occur without commercial gain on the part of the person who has reproduced the work without authorization from its copyright owner.

    Again, in what I think is really an effort to simplify this and make copyright more intuitive for the public, the industry regularly issues statistics tallying the losses arising from piracy. However, the statistics are increasingly meaningless as the public is intuitively aware that a copyrighted work is not at all like a physical good in that the taking of one unit of that copyright “product” does not necessarily deprive another of the unit or require that an additional unit be made by the owner to replace the one taken. In fact, millions can enjoy multiple viewings of a movie on-line with no direct cost to the copyright owner other than what might be described as “opportunity cost” – that each of the viewers of the product illegally is potentially one fewer viewer of the product legally.

    The key word here, however, is “potentially” because there is really no way to know with certainty how many of the viewers of an illegal download would, but for viewing that illegal download, have been a paying customer at full price for the legal alternative. It could have been that none of the viewers would have paid money to see the legal product or perhaps all of them would have. I have not seen how the industry sets a value for this variable and I have seen no research or data as to how one can set a value that is at least statistically informed, rather than merely self-serving. I expect that given the huge numbers the industry is offering up to the public they are characterizing every illegal download as a lost sale. This, I think, has created a certain piracy loss inflation in the public mind, where the numbers simply do not match the public experience of reality and therefore have been discounted by the public to the point of losing all meaning. After all, we do not see cineplexes closing by the hundreds – yet.

    I think that the industry has overstated their case on piracy to the lawmakers and to the public and in the long run it is damaging their cause, which is a legitimate one. To the lawmakers they have positioned copyright as a form of property that must ignore the legitimate interests of users and authors. To the public, they have tried to equate copyrighted works with physical goods. Both of these, while simplifying copyright in an attempt to fit copyright infringement within some kind of intuitive public conception of “theft of goods”, are in fact dishonest and in the long run will have the exact opposite effect of actually turning the public away from seeing copyright as a solution to piracy, if they see piracy as an issue at all before it really does take its toll.

    Rather than whitewashing copyright to attempt to make it uncomfortably conform to the public’s conception of a theft of goods, I think the industry would find more success in rethinking copyright in terms of the interests of all stakeholders – owners, users and authors – in taking advantage of the changing ways people now enjoy these works. The goal should be to ensure that copyright makes the the net financial gain to owners and authors collectively higher without turning back the clock on the technological advances that have given the public (i.e., users) unprecedented access to these works. In this new digital world not everyone who watches a movie on-line may be really all that interested in it to have paid full fare for the experience and so the unit prices have to come down dramatically and perhaps the whole idea of unit pricing of “a work” may need to be supplemented or superseded in the on-line world with new concepts like content “pools” or content “flows”. Industry needs to spend more time working collectively for a redesign of copyright for the digital age rather than trying to make the digital age fit copyright.

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