Mark Evans
Financial Post

To be perfectly blunt, the music industry was badly spanked yesterday when the Federal Court denied its request that Internet service providers cough up the identities of people who they accuse of downloading music using peer-to-peer software such as Kazaa or iMesh.

The ruling by Mr. Justice Konrad von Finckenstein is so one-sided, it can only be seen as a terrible setback for the music industry, which claims CD sales have tumbled in recent years as more computer users download free songs. Far more troubling, however, is the apparent new reality that sharing or downloading music is now completely legal in Canada.

Until the laws are changed, Canada could quickly become the world's Kazaa capital. Who knows, maybe Napster founder Sean Fanning will come out of hiding and launch a new and improved P2P service north of the border. If you have been at all cautious about loading up your 20-gigabyte iPod with thousands of MP3s from the Net, Mr. von Finckenstein has come to your emotional rescue.

The challenge in showing how severely the music industry will be stung by this decision is deciding where to start. Mr. von Finckenstein, for example, ruled it is difficult for the music industry to link the pseudonyms used by P2P users with the IP addresses they are assigned when logging onto the Internet. This makes it hard to pin down their real identities.

For the uninitiated, an IP address identifies a computer or device on the Internet. In many cases, a computer or device will receive a different IP address each time it goes online because ISPs do not have an unlimited number of addresses. This means an IP address assigned to an enthusiastic P2P user could be re-used the next hour by a grandmother who believes Kazaa is a toy wind instrument universally loved by children.

So, who does the music industry, which is engrossed in preparations for the upcoming Juno Awards, go after unless an ISP has detailed records that match IP addresses to specific users? Mr. von Finckenstein said ISPs do not generate this kind of information, and it would be costly if they were forced to do it to help the music industry's efforts.

The most damning part of Mr. von Finckenstein's decision involves his interpretation of Canada's copyright laws. If these laws are applied, he ruled that downloading music for personal use does not infringe copyright. "No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings," he wrote.

He goes on to point out that accusing P2P software makers of facilitating copyright infringement has as much merit as people who believe libraries encourage the reproduction of copyrighted material by having a photocopy machine.

The second half of Mr. von Finckenstein's one-two copyright punch is that people who share their music over P2P networks are not infringing copyright because placing a song on a shared directory does not amount to distribution.

"Before it constitutes distribution, there must be a positive act by the owner of the shared directory, such as sending out the copies or advertising that they are available to copying," he wrote.

This ruling is eye-opening because it is a crucial part of the Recording Industry of America Association's legal battle against P2P users in the United States.

Michael Geist, a professor at the University of Ottawa, said Mr. von Finckenstein's ruling is "stunning", particularly the way he addressed copyright laws.

"This was a judge who took it seriously that the courts are there to interpret copyright law not make copyright law," he said. "It is open to Parliament to amend copyright law but as it currently sits, Canadian copyright law doesn't cover [the downloading or sharing of music]."

After the music industry licks its wounds, it will likely head to the Federal Court of Appeal -- probably over Mr. von Finckenstein's analysis of copyright law. Their other options include pushing the federal government to amend the copyright laws; educating the public about why using P2P services are bad; and promoting the use of fee-based music services such as Puretracks.

Whatever the music industry decides, its efforts against people who download and share music online have been dealt a terrible setback. Without help from the federal government it may find it difficult to recover.

© National Post 2004