New haven for free music: Canada

Want a free copy of Janet Jackson's newest album? Or the latest song by Sarah McLachlan? If you're in Canada, just go to the Internet.

Music lovers north of the border can swap songs online without fear of breaking the law, thanks to a Canadian court decision this week.

A Federal Court judge ruled Wednesday that downloading songs for personal use or having files available on a computer connected to the Internet doesn't violate copyright laws.

"This is a victory for new technology and the Internet and the rights of users of new technology in Canada," says Howard Knopf, an Ottawa lawyer involved in the case.

But Americans and Europeans beware: this strictly Canadian decision doesn't bring any more clarity to the murky issue of file-sharing in their parts of the world.

"Canadian and American laws are very different," Knopf says. "This won't have any direct effect on the United States, but it'll certainly cause a lot of concern down there."

Nonetheless, this court decision is a blow to the music industry's crusade to stop people from swapping songs through popular Internet file-sharing services like Kazaa or Grokster, also known as peer-to-peer (P2P) networks.

The Canadian court decision comes one day after the International Federation of the Phonographic Industry (IFPI) announced a new wave of lawsuits against 247 individuals in Canada, Denmark, Germany, and Italy accused of illegally sharing copyrighted music.

An intellectual-property lawyer in Germany, where the IFPI has reported 68 individuals to the police, expects the industry body to pursue its case there, even in light of the Canadian ruling.

"My best guess is that the industry will continue its campaign because for the time being that is the only thing it can do," says Stefan Dittmar, a lawyer at the Berlin office of the international law firm Baker & McKenzie. "They have failed to come up with any strategy other than intimidating people. But it won't work."

A spokeswoman for IFPI, whose members brought the Canadian and European suits, says she does not think the Canadian ruling "will impact our European campaign much, because we think it is a misreading of the law in Canada." Should the judgment stand after appeals, however, "it probably will have an impact."

In Denmark, more than 120 people are being sent letters asking them either to stop file-sharing and pay compensation, or face legal action, according to the IFPI. In Italy 30 people have been charged with copyright infringement since the Milan prosecutor's office began ordering raids in January, which have netted computers, hard discs, and files.

So far the legality of file-sharing in Germany has not been tested in the courts, says Mr. Dittmar. "The first cases in Germany are being talked about now, but there have not been any major judgments" to clarify the law, he says.

If file-sharing is ruled to be illegal in Europe, he adds, the Canadian judgment will not shelter European music-swappers, even if they download their songs from a Canadian server. "A copyright holder can pursue an infringement wherever it occurs," he explains. "If you download something in Germany, German law applies."

The Canadian Recording Industry Association (CRIA) tried using the courts to force Internet service providers to release names of 29 people suspected of "distributing thousands of digital music files to millions of strangers" for its Canadian lawsuit.

Justice Konrad von Finckenstein not only rejected CRIA's request in his ruling, he destroyed the industry's case by declaring that making files available on a public network doesn't infringe on copyright.

"I cannot see a real difference between a library that places a photocopy machine in a room full of copyrighted material and a computer user who places a personal copy on a shared directory linked to a P2P service," he said.

His ruling backs a decision by the Copyright Board of Canada last December that stated that downloading a song for personal use isn't copyright infringement. The CRIA plans to appeal.

"In our view, the copyright law in Canada does not allow people to put hundreds of thousands of music files on the Internet for copying, transmission, and distribution to millions of strangers," says Richard Pfohl, a lawyer for the CRIA.

The head of Nettwerk, a record label based in Vancouver that represents more than 40 artists including Ms. McLachlan and Barenaked Ladies, says the judge is "completely out to lunch" on this issue.

"He has basically said that anything you've put up in a file-sharing system - it doesn't matter whether it's music, books, movies, it can be any copyrightable material - if people want to take it from your computer that's perfectly fine, because that's private use," says Terry McBride, CEO of Nettwerk. "But the problem is it's not private use."

Mr. McBride blames file-swapping for driving the global music business into recession.

Indeed, the British Phonographic Industry (BPI), Britain's record-industry trade association, released a study last week saying that while nondownloaders' spending on music last year was flat, downloaders spent 32 percent less on albums and 59 percent less on singles than the year before.

According to IFPI, global sales of recorded music fell 7 percent in 2002, and while last year's sales figures aren't available it expects similar results.

Ren Bucholz of the Electronic Frontier Foundation, a consumer advocacy group based in Saf Francisco, doesn't buy such arguments.

"It's always been a red herring for the recording industry to say that file-sharing was responsible for the huge downturn in their sales," he says. "There's lots of other reasons that are much more believable," adding that DVDs, console games, and movies all compete for the same entertainment dollar.

A study released this week by two professors, from Harvard University and the University of North Carolina, says that file-sharing doesn't hurt record sales and in some instances it actually increases them.

Mr. Bucholz calls Canada's court decision "amazingly good news" on an international level.

"If this decision holds it means we have a highly industrialized nation with pretty good broadband penetration that has declared that having songs in your shared folder isn't illegal," he says.

Bucholz says Canada's decision won't legalize file-sharing in the US, even if someone downloads from a Canadian server. "Users in the US will still have to abide by US law," he says.

Yet US law has yet to be fully clarified. While file-sharing in the US is considered illegal, US judges have not yet ruled definitively on the issue. Most of the Recording Industry of America's nearly 2,000 lawsuits have either been settled out of court or have not yet made it to court because Internet service providers (ISPs) refuse to release the identity of their customers who have been sued, citing privacy rights. A US appeals court ruled in December that the industry can't force ISPs to turn over the identities of file-swappers unless the ISPs are formally sued.

In Canada, the music industry's battle to crack down on pirated music is just background noise for many who embrace file-sharing programs.

Mimi Lee, waiting with a friend outside a Vancouver record store, says she's downloaded 10,000 music and videos from the Internet and file-sharing services in the past six years. "I've always thought of it [as] being illegal," Ms. Lee admits. "I'm surprised that the government [made that decision] but for us we really don't care - we still do it."

Such ambivalence has also entered the corporate world, where employees use work computers with fast broadband connections to beef up their online music collection. A study last year by Ottawa's Assetmetrix found file- swapping software installed on company computers in 77 percent of 560 corporations surveyed. Some companies had these programs on as many as 58 percent of their PCs.

Bryan Hsu, a salesman for one retail electronics chain, says customers do ask about the legality of downloading music, but it hasn't dampened sales.

He personally doesn't see any problem copying music files off the Internet - he has 1,000 tunes on his home computer - and applauds the latest news.

"It's good," he says. "At least we can still find something for free."

• Elizabeth Armstrong contributed to this report from Boston.