The millions of Canadians who share music files on the Internet should be prepared for the possibility of facing a lawsuit early in the new year, the head of the Canadian Recording Industry Association said yesterday.

Brian Robertson told the National Post his organization will soon begin launching legal action against Internet music uploaders.

Uploaders are those who allow people to access music stored on their computer hard drives. In some cases, uploaders freely share hundreds of music albums with users around the world.

The legal action will target users who upload or share music files over the Internet using services such as Kazaa, Mr. Robertson said. The Canadian Recording Industry Association, or CRIA, represents Canada's major record labels, including Sony Music and Universal Music.

Mr. Robertson would not say exactly when legal action would be launched, noting "it will be sooner rather than later." Sources told the Post that lawsuits are expected early in 2004.

"We've gone through a process, and spent $1-million on a value-of-music education campaign," Mr. Robertson said. "But the industry continues to be devastated by file sharing. It is regrettable that we'll have to take this action, but we've been forced to."

According to CRIA, sales of compact discs in Canada have fallen by $450-million, or 23%, since 1999.

Andrew Currier, an intellectual property lawyer at Toronto-based Torys LLP, said he expects a file-sharing lawsuit will have a "chilling impact" on Canadians who use free online music services.

"What parent wants to bother retaining a $500-per-hour intellectual property lawyer to defend their child against this?" he asked.

In September, the Recording Industry Association of America launched 261 lawsuits against users who uploaded or shared files using software like Kazaa. The lawsuits' targets included a 12-year-old girl who settled her case for US$2,000 and a 71-year-old Texas grandfather.

From the period starting when the RIAA first threatened lawsuits, through to the weeks following the launch of legal action, the number of people using Kazaa fell by 41%, according to Nielsen/NetRatings. After the lawsuits, compact disc sales, which had been slumping for three years, began to increase.

CRIA has retained litigation attorneys in preparation for the lawsuits. Mr. Robertson would not specify how many lawsuits would be filed, but he did say the legal action would be similar to the lawsuits filed in the United States.

For some time, CRIA has been using software that tracks and identifies users involved in trading free music files. "Users should be aware that using file-sharing services is a very public process," Mr. Robertson said.

Canada has approximately 3.5 million high-speed Internet users. Given the high use of broadband Internet connections, Canadians have been pegged as some of the heaviest per capita users of peer-to-peer file-sharing services in the world.

Only one legal service in Canada, called Puretracks.com, charges users who download music from its site. Songs typically cost 99 cents, while an album costs $9.99.

One of the factors leading to heightened free music sharing is that there has been some ambiguity surrounding the Canadian Copyright Act, leading some to believe that sharing digital music files is legal.

The Canadian recording industry currently receives a tariff on blank media such as MP3 players and recordable compact discs in order to compensate music companies for music sales lost to piracy.

Last Friday, in a decision on raising levies on blank media, the Copyright Board seemed to indicate that music downloading over the Internet was not illegal.

Michael Geist, a law professor at the University of Ottawa who specializes in legal matters related to the Internet, said the law is less murky when it deals with uploading, but there could be problems pursuing downloaders in court.

"The Copyright Board decision doesn't preclude them from going after uploaders, but in terms of downloaders, it certainly creates a complication," he said.

Mr. Currier said he has been waiting for a case in Canada where a music file-swapper was taken to court. He thinks it will clarify some of the ambiguity in the Copyright Act.

"I've been waiting for an upload type case to come -- I've been looking for some clarification from the court. My sense is that the Act would catch an uploader."

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But wait, There's More!

Canada's recording industry is threatening to launch legal action against Canadian Internet users who illegally share music files online.

The head of the Canadian Recording Industry Association, Brian Robertson, says his organization will target Internet music uploaders who allow people to access music stored on their computer hard drives.

Robertson says the music industry has been "devastated" by file sharing. He says his group has spent more than $1 million on "a value-of-music public education campaign,'' but the file-swapping continues.

According to CRIA, which represents Canada's major record labels, sales of compact discs in Canada have fallen by $450 million, or 23 per cent since 1999.

Robertson would not say when the legal action would be launched, noting "it would be sooner, rather than later.'' He said the legal action would be similar to lawsuits filed in the United States.

In September, the Recording Industry Association of America launched 261 lawsuits against users who uploaded or shared files using software like Kazaa. The targets included a 12-year-old girl who settled her case for $2,000 US and a 71-year-old Texas grandfather.

But there are some doubts about whether similar lawsuits would be successful here, since Canadian laws on reproducing music for personal use differ.

For example, it has been legal in Canada since 1998 to make a single copy of a recording for personal use, such as copying a CD onto your hard drive or MP3 player. But the practice is illegal in the U.S.

But under the Copyright Act, it remains illegal to give or sell a CD copy to a friend, since it's not for personal use. In the same vein, distributing copies to friends online is prohibited.

Last week, the Copyright Board of Canada gave the go-ahead on a new levy for MP3 digital audio recorders with non-removable memory. The board ordered tariff of up to $25 be applied to recorders, depending on the size of their memory.

The fight to add levies on recordable devices was spearheaded by a group representing the music industry, the Canadian Private Copying Collective, which wanted compensation for lost sales.

The group, which collects the tariffs on behalf of performers, songwriters and music producers, argued that more money was needed to compensate them because of the widespread practice of downloading music.

Meanwhile, SOCAN, the Society of Composers, Authors and Music Publishers of Canada, is arguing before the Supreme Court of Canada that Internet service providers should pay a blanket royalty fee since so many users are downloading music.

They say that because of illegal downloads of copyrighted content, ISPs should pay a blanket annual royalty -- regardless of whether the ISP is transmitting legal or illegally downloaded music.

Jay Thomson, president of the Ottawa-based Canadian Association of Internet Providers says if the suit is successful, consumers could see an increase in their Internet costs and a slowdown in the transmission speed of their Internet communications.

A decision is expected next year.