6/30/2004 5:00:00 PM - A unanimous decision in favour of CAIP helps redefine the status of the Internet industry in Canada. Two providers reflect on the business impact, while SOCAN identifies its next target
by Neil Sutton
A Supreme Court of Canada decision delivered Wednesday classifies ISPs as carriers that are not responsible for the way in which their customers use them.
The decision revolves around the still controversial subject of music downloading. The Society
of Composers, Authors and Music Publishers of Canada (SOCAN) had sought a tariff from Canadian ISPs based on their role in the online distribution of music. The Canadian Association of Internet Providers (CAIP) responded that its ISP members should not be held responsible for the data that is transmitted between users and Web sites.
SOCAN had initially sought 10 per cent of an ISP's revenue, which would then be collected and distributed to music copyright holders, but the court ultimately sided with CAIP, ruling 9-0 in its favour.
CAIP did not return calls for comment, but Wendy Gross, a partner in the technology group at Toronto-based law firm Torys LLP, said, "I think it's a great victory for the ISPs and they feel that it is the right result. They are not the infringers and do not control the content that's distributed over their networks any more than any other content carrier."
If the court had ruled the other way, a tariff would have been assessed and then applied to ISPs. "That would have added a great expense to the operation of ISPs and that would have been passed on to the users as well, so this is, I think, a victory for end users also," said Gross.
"It certainly makes (ISPs) a little more relaxed about going for prospects, because they're not going to have to spend time -- and money, more importantly -- monitoring what their users are doing," added Yankee Group in Canada analyst Mark Quigley. "They're just providing access to a service they don't control. It's not their business to monitor."
William Papolis, the president of Speedline Canada Inc., an Oshawa, Ont.-based ISP, said that the decision is something of a relief.
"Even from a technical point of view, to be able to police what all our users are doing -- as far as downloading or trading information goes -- that's a massive thing," he said.
Tristan Goguen, president of Toronto-based Internet Light and Power Inc., agreed. "From a technical (and) administrative perspective, this would have been an absolute nightmare. There would be a lot of mechanics and we would have spent years and years trying to identify who's downloading what," he said.
The SOCAN decision has implications far beyond music downloading, added Goguen. "The SOCAN decision was strictly music, but if they had won, then the next question is, What else might fall under this? This was a decision that has a lot to do with intellectual property over all," he said, adding that the cost of downloading other media would be borne by both consumer and business Internet users.
Papolis, Goguen and their industry peers have been insulated from any further SOCAN action, but the organization said it will assess other aspects of online music.
"We've reached the end of the line in terms of finding (ISPs) strictly liable, but we're not at the end of the line when it comes to copyright reform. It really lays down a foundation . . . for Parliament to reform our copyright law," said SOCAN's general counsel Paul Spurgeon.
Spurgeon said that the Supreme Court decision allows SOCAN to move onto Phase 2, which is to seek tariffs from Web sites that offer downloadable music media. ISPs that also play a more direct role in music distribution could also face scrutiny, he said.
Experts like Quigley and Gross said they are not surprised by the Supreme Court's decision, which is consistent with how other countries have opted to treat ISPs.
Papolis said he's glad that his company would not be responsible for any additional expense, noting that the provision of Internet services has become infinitely more complex recently.
He said his customers were receiving so much spam, for example, that in March Speedline was forced to take more drastic measures to reduce it. By introducing heavy filters, he said the spam has been reduced by as much as 95 per cent. Some users were occasionally missing out on legitimate e-mail, "but that's the price you pay for implementing a system like that."