ISPs prepping for increase in copyright infringement notices

After "significant" investments in time and money to prepare for the notice-and-notice regime that went into effect this month, independent Internet service providers Teksavvy Solutions Inc. and Distributel Communications Ltd. say they haven’t seen an increase in the number of rights holders' requests that infringement notices be passed on to customers — but they’re expecting one. Under the notice-and-notice regime, which came into effect this month, ISPs have to forward to subscribers copyright infringement notices sent to them by rights holders. Some ISPs participated in a voluntary notice-and-notice system before the new regime came into effect, though Distributel and Teksavvy were not among them. Both companies say preparing for the new law to come into effect has required investing significant resources, and that those costs could continue to mount for ISPs should, as they expect, the number of requests from rights holders start to add up. “We’d be very surprised if we did not see it. And there’s a simple reason,” said Bram Abramson, chief legal and regulatory officer at Teksavvy, explaining that because ISPs can’t charge rights holders for forwarding notices, and the systems rights holders used to send the notices are automated, there are no additional costs to the rights holders to send a larger number of notices. Distributel CEO Matt Stein said that “it’s not even the cost of a postage stamp for a rights holder … to send these notices. There is no cost other than an email.” He added: “All the cost gets borne by the ISP and then by the consumer.” Preparing for the notice-and-notice regime resulted in “significant development efforts” for Teksavvy over the past few months, Abramson said in a phone interview. “We’ve spent a lot of … time developing systems, automating things that were not previously automated, and generally tooling up our ability to pass on these notices automatically,” he said. “And doing all those things at the same time is not trivial. I can tell you that some of our software developers pulled long hours and worked through weekends to get ready for January,” he said, adding that has had a “significant” financial impact. Abramson added that because some rights holders are sending automatic notices set up in a U.S. format, ISPs “have got to examine each notice to determine whether it has all the information elements required in order to create the obligation to forward it.” The fact that ISPs are also responsible for saving user information related to the notice for six months adds additional costs, as do an increased number of customers calling their ISP to ask about the notices they’ve received, he said. “These are costs that we have to recover somehow,” he said, noting that because the legislation doesn’t allow ISPs to charge for passing along notices, “we have no way to recover development costs, except in the only place left, which is consumers.” Stein said in a phone interview that Distributel has also had to put in place an automated system to prepare for the new regime. “So there’s been a lot of IT work going on here to prepare, at a very substantial cost,” he said, adding that “it was a significant investment of both time and money.” He noted there’s no way to recover that spending. “So that ends up being borne by Distributel and Distributel’s customers,” he said. While most notices can be handled automatically, some will need to be handled by hand, “which will be more work for us,” he said. “The more notices come, the more work for us, even with an automated system.” Both companies said they’re not seeing an increase in requested notices yet. In December, Teksavvy was receiving about 3,000 copyright infringement notices a day, while in the first week of January those numbers have been closer to 2,000, “and that has actually continued to fall,” Abramson said. Stein also said Distributel hasn’t seen “much of an increase” in the number of notices received since December, though the number of notices and the percentage of customers affected rose throughout 2014. Abramson said the notices are issued by a small number of entities, and that rights holders might be holding off from sending new notices until they can “retool for the specific requirements of Canadian law.” “It may be that we get completely flooded tomorrow,” he said, adding he expects to see an increase once the copyright enforcement companies have their system fully up and running. In the past few days, issues have also emerged around the content of the letters. For instance, ISPs are required under the new federal law to forward notices even if they’re only in English. “Clearly, we don’t have the ability to translate all of these notices… that would be a massive amount of work,” Abramson said. He also confirmed Teksavvy has been sent notices that warn consumers about penalties under U.S. law and not Canadian law, and said that the company has been sending information attached to the notices that try to “directly address that for consumers and to clear it up for them.” “The difficulty is that the way the law is written, we’re required to forward a notice… if it has all the required elements,” he said. “It’s a real quandary for us.” Abramson added: “There are real points of friction.” The issue around companies sending notices warning users they could face American penalties arose last week, when University of Ottawa law professor Michael Geist wrote on his blog that U.S. company Rightscorp Inc. was sending notices with “false legal information,” such as that recipients could have their Internet service suspended and be liable for damages of up to $150,000 per infringement, when Canadian law has no suspension provision and “caps liability for non-commercial infringement at $5,000 for all infringements.” On Friday, the NDP issued a statement calling on the government to prohibit false claims in copyright infringement letters sent under the new notice-and-notice regime. Jake Enwright, press secretary for Industry Minister James Moore, said in an email Monday: "Companies cannot use these notices to demand money from Canadians and we expect them to play by the rules and abide by the law. Industry Canada officials will be contacting internet service providers and rights holders to work with them to put an end to these misleading notices." Geist said in a phone interview that he “lays some of the blame on Industry Minister James Moore’s feet on this.” He said that “people were well aware of the risks, even within the government … that the system could be misused,” and that before the law was put in place “there were calls for the prospect of developing a defining template could be used. There were calls during the process of removing the minimum statutory damages, which effectively force ISPs to send along every single notification, even if they know there’s misleading content.” “Moore rejected the amendments to the bill when it was a bill,” he said. Meghan Sali, campaigns coordinator for advocacy group OpenMedia.ca, said in a phone interview that many subscribers don’t know that the content in the letters is not true. She said the government needs to put in place “some common-sense rules around what type of information can be included in the notice,” and that ISPs could also send information about what the Canadian law along with the notices they forward. Sali noted that in the information some ISPs are including along with the forwarded notices, they’re suggesting that the subscriber contact the rights holder for more information. “Which is actually not great advice, because under Canadian law, those rights holders actually have to get a court order to be able to get your personal information, and if you go ahead and contact them, you’re really taking out that extra step,” she said. Barry Logan, the managing director of Montreal-based forensic copyright company Canipre Inc., said in a phone interview that it was “unfortunate that one of our industry… contemporaries made such an error in sending out a U.S. letter into the territory of Canada,” though he said the issue has been “sensationalized." “The effect that it’s had on an organization like Canipre is it’s really thrown a bad light onto us and anybody else, any rights holder trying to enforce the rights on what they’ve created. It’s just put a bad taste in everybody’s mouth,” he said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

ISPs prepping for increase in copyright infringement notices

Broadcast | January 12, 2015

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