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I'm not a lawyer but here is what harvard law says on the matter -

http://grep.law.harvard.edu/articles/03/08/22/1655233.shtml

In a nut shell P2P file sharing is illegal.

Summary of the article:

In Canada you can make a copy of a CD for your personal use because there are levies on blank tapes, CDs, mp3 players that allow you to do so.

However they way the law is worded:

1) You can borrow a friends CD and copy it for your use.
2) It is illegal for your friend to copy his CD and give you that copy.

P2P is illegal because while your are downloading you are also uploading thus you are making a copy to give to someone else.

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Best practice is to just buy the copyright material so you don't have to worry about whether its illegal or not. Also expect this to all change with the new proposed copyright laws in the works.
 
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