Locks & Levies

Abstract

This paper explores two ways that law can influence the creation and distribution of digital content. Specifically, it looks at the relationship between (1) prohibitions against circumventing technological protection measures (TPMs) and (2) levies on products or services used to reproduce or transmit digital materials. The relationship between digital locks and levies is analyzed through a comparative study of developments in Canada and the United States. Canada has created a broad levy (compared to the United States) to address the issue of private copying. Canada has not, so far, enacted specific anti-circumvention legislation like the Digital Millennium Copyright Act (DMCA). The United States, on the other hand, has enacted, in the DMCA, relatively strong prohibitions against circumventing TPMs. At the same time, a very narrow levy exists in the United States under the Audio Home Recording Act (AHRA). In short, the legal situation in Canada is basically the inverse of that in the United States. However, there have been proposals in the United States to expand the role of levies. There have also been proposals to introduce anti-circumvention provisions in Canada.

Alternative approaches are examined from the perspective of various stakeholders - creators, technology firms and consumers. Different types of copyright-holders generally prefer different approaches. Individual authors and performers and their representative societies have favorable attitudes towards levies, while major producers and distributors tend to prefer the control digital locks provide. Technology firms and communications intermediaries might be affected by both locks and levies, but are typically against expansive levy schemes. When considering the costs and benefits of locks or levies to consumers, it is important to distinguish between consumers of entertainment and consumers of electronics, who are impacted differently.

Because these stakeholders hold different preferences, compromises are likely to be made in Canada and the United States. If locks and levies are used simultaneously in the market, consumers risk being caught in the middle of a regime that prohibits the circumvention of digital rights management (DRM) systems in order to access or copy digital content, but at the same time mandates levy payments to compensate for copying that either cannot occur, is already licensed, or is or should be fair dealing/use. Without careful study, lawmakers in either country could accidentally create a scheme including conceptually and practically incompatible legal regulations. An overview of various stakeholders' experiences in Canada, the United States and Europe provides valuable insights for North American law and policy makers.

Keywords: copyright, private copying, home taping, AHRA, levies, digital rights management, DRM, technical protection measures, TPM, anti-circumvention, DMCA, alternative compensation schemes