Is illegal downloading declining in Canada?

Copyright-enforcement company CEG TEK International said recently that it’s seen a significant fall in the piracy of its clients’ content in Canada over the past few months, which it attributes to the inclusion of settlement demands in its copyright infringement notices. CEG TEK was cited in a press release from a group called the Internet Security Task Force last week as saying peer-to-peer piracy of content owned by its 125 clients dropped among the five largest Internet service providers (ISPs) in Canada over the past 13 weeks. The most dramatic decline was on BCE Inc.’s networks, at 69.6 per cent, while piracy among Telus Corp. customers fell 54 per cent. CEG TEK reported falls of 52.1 per cent at Shaw Communications Inc., 38.3 per cent at TekSavvy Solutions Inc. and 14.9 per cent at Rogers Communications Inc. The press release said those declines happened after the Canadian government instituted its notice-and-notice copyright system in January, which requires ISPs to forward copyright infringement notices to their customers, and the task force called for the U.S. to implement a similar system. “Decreases in piracy of our clients' content are directly correlated to the inclusion of settlement offers in our notices,” CEG TEK chief operating officer Kyle Reed said in an email Thursday, adding that “mere cease-and-desist notices” don’t deter piracy. In response to a question about why piracy dropped so much less at Rogers compared to Bell, Reed said: “Canadian ISPs are at various stages of notice forwarding. Some are fully up to date in forwarding notices whereas some are still working through a backlog.” Those numbers, though, don’t necessarily mean piracy in Canada in general is falling, Barry Logan, managing director of Montreal-based forensic copyright company Canipre Inc., said in a phone interview. “I would approach the numbers with a grain of salt,” he said. Logan noted that pirated content has a lifecycle of its own. For example, interest in a movie levels off after it has been available for four to six weeks, he said. He said some people might have switched to “alternate means” to access content, such as virtual private networks (VPNs) to disguise their IP addresses while illegally dowloading or accessing content from Netflix Inc. not normally available in their country, or using private torrent sites that CEG TEK does not monitor. Downloaders might have also switched to a different version of the torrent involved, he added. He also said piracy numbers based on downloading don’t include all forms of piracy, such as illegally streamed content, which is “where everything is transitioning to,” or the downloading of content directly from websites instead of using peer-to-peer technology. Logan said it’s too early to determine what effect notice-and-notice has had on piracy. “I haven’t crunched the numbers to the point where I’d be satisfied, and it simply would be limited to the world of Bit Torrent once I did,” he said. “I don’t think enough time has passed. I’ve not seen anything, I’ve not heard anything from our technicians, I’ve not heard anything in the industry,” he said. CEG TEK’s business is based on demand notices, and the company isn’t known for going to court, Logan noted. He defended the practice of settlement demands as “one of the tools that’s available to a rights holder,” and said it functions as a deterrent. Settlement demands are “very common” in letters sent by copyright enforcement companies, he said. Allen Mendelsohn, an independent Internet lawyer in Montreal, said in a phone interview that the decline reported by CEG TEK could potentially be occurring on a wider scale. He said that “assuming those figures are accurate,” it is possible they are an indication that piracy in general is down as a result of notice-and-notice. “Obviously, you’d want to take with a grain of salt,” he said, while noting that since the numbers cover Canada’s five largest ISPs, “I certainly would say they’re representative of Canadian habits as a whole.” Mendelsohn said that the wording and nature of the notices could be driving the drop in piracy that CEG TEK identified. “Having seen the CEG TEK notices, they way they are worded, they are quite threatening,” he said, noting that they generally give a 30-day deadline to settle. “And I think the fear factor that that type of notice has could certainly be more responsible for people changing their habits than just a general notice.” He noted that the average citizen would be more likely to take such a notice at face value than a tech-savvy Internet user “who knows that CEG TEK’s threats are not necessarily legitimate.” “I’m not sure if you can put that changing behaviour on the notice-and-notice system, or whether you can put it on the fact that CEG TEK has taken … advantage of the notice–and-notice system in order to send threatening letters that may not be 100 per cent accurate.” Mendelsohn said he has personally only seen notices from one other company, which was “nowhere near the level of threatening, nowhere near the level of antagonism that CEG TEK sends.” He added that another factor could be that “for the most part, CEG TEK notices refer to downloaded material that is adult content, and the adult content tends to worry the average citizen that much more because of the nature of it, and they’re certainly much more willing to make it all go away … for public embarrassment reasons and so forth.” Under Canadian law, a company does not know the identity of a downloader they are sending a notice to, and must get a court order to obtain it. Damages for downloading top out at $5,000, and court actions aren’t very common. The average user may not be aware of that and may not realize they are identifying themselves to the copyright holder by contacting them to pay the settlement. In response to a question about whether that means the notices are misleading, Reed said that “everything in the notice is accurate, and … a receiving party should, as suggested in the notice, take advantage of the opportunity to consult with their own legal counsel.” He added that it’s preferable to “settle claims, for copyright infringement or otherwise, anonymously at low dollar amounts over costly litigation.” Reed said that “both the letter and the spirit of the Canada Copyright Act, which does provide a monetary remedy, are being met by CEG TEK and its clients.” Mendelsohn said that a bigger concern than settlement demands is the notices’ wording about potential penalties. For instance, letters, including a sample notice letter forwarded to The Wire Report by CEG TEK, mention the possibility of criminal sanctions. In Canada, downloading material for personal use is not a criminal activity, and implying that it is “is as far as stretching the truth as you possibly can,” he added. Commenting on settlement demands included in notices, Jake Enwright, spokesman for Industry Minister James Moore, said by phone Thursday that they are “not what the notice-and-notice system is designed to do.” “It’s not designed to demand money from Canadians, and Canadians need to know they don’t have an obligation to pay these fines,” he said. In January, Reuters reported that Enwright had said the government would be contacting ISPs and copyright holders to end the practice. When asked for an update, Enwright said Thursday that “there is an industry-led solution being developed right now.” He added that solution “will be designed to ensure that rights holders and ISPs understand that the notice-and-notice system is not designed to allow companies to demand financial settlement from Canadians.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Is illegal downloading declining in Canada?

Broadcast | May 21, 2015

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