Bill C-32 (Historical)

Copyright Modernization Act

An Act to amend the Copyright Act

This enactment amends the Copyright Act to
(a) update the rights and protections of copyright owners to better address the challenges and opportunities of the Internet, so as to be in line with international standards;
(b) clarify Internet service providers’ liability and make the enabling of online copyright infringement itself an infringement of copyright;
(c) permit businesses, educators and libraries to make greater use of copyright material in digital form;
(d) allow educators and students to make greater use of copyright material;
(e) permit certain uses of copyright material by consumers;
(f) give photographers the same rights as other creators;
(g) ensure that it remains technologically neutral; and
(h) mandate its review by Parliament every five years.

Mr. Speaker, I am pleased to rise today to debate the amendments proposed by the Bloc Québécois to Bill C-11. This is not the first time the Bloc Québécois has spoken against this bill. The government is presenting the same content it presented in the previous Parliament as Bill C-32. There are, in fact, no changes, although we had asked for changes.

We must be clear that not everything about this bill is bad. Changes certainly were needed with respect to copyright, especially in the field of new technology. Such technology really is new and was previously quite rare. In fact, some technologies did not even exist the last time. Now we must consider copyright as it relates to iPods and even the Internet. Thus, there are changes that follow naturally from progress and current events. Still, the government has once again rushed headlong into legislation without really consulting consumers, authors, artists and creators, of course, or a lot of other people.

Some parts of the bill are good, others are not. Therefore we have to try to introduce amendments. This gives us the opportunity to talk about Bill C-11 and the amendments that should be made. As it stands, the bill clearly favours big business over artists.

As my colleague from Bas-Richelieu—Nicolet—Bécancour is present, I would like to mention that, a little over a year ago, his initiative resulted in many artists coming to Parliament Hill—including his brother Luc Plamondon, the well-known lyricist—to meet with all the political parties. I do not know if they managed to meet with everyone, but I do know that a room was reserved in order for all the political parties to meet with these artists who came to tell us about the problems that Bill C-11 would create in terms of copyright.

When discussing copyright, we should not forget that MPs get a monthly paycheque. Factory workers get paid every week or perhaps biweekly. Everyone is compensated for their work no matter what sector they work in. Authors are compensated through copyright. When we take a look at the percentage of authors who earn a living from copyright, they are just barely surviving. By cutting this source of income, we are clearly telling the artists to work, to create and to do it for free.

A large number of creators came to Parliament Hill by bus. I do not know if it was the show business bus. However, one thing is certain: many stars were present. Artists from my area—Robert Charlebois, Dumas, Marie-Mai—were there. All these people came, not just because they are stars but also because they are often the spokespersons for other artists. All these stars are doing quite well. But there is a whole other group of artists, whom we could call emerging artists, who also deserve to be compensated for their work.

I commend this initiative by my colleague and that of former MP Carole Lavallée, who also did a tremendous amount of work on this file to help artists raise awareness among hon. members. Apparently it was not enough, because in this Parliament, after the election, the Conservatives reintroduced exactly the same bill and only changed its number. It is now Bill C-11.

It is a carbon copy of Bill C-32 and, like its predecessor, it seriously undermines creators and artists, who are the foundation of Quebec culture. Creators are not receiving their due under this bill. The Conservatives refuse to let them have royalties for the use of their works on new media: iPods, MP3s, the Internet and so on, as I was saying earlier. Internet service providers are not being held accountable under this bill, with some exceptions. As I was saying, that is why we are proposing amendments, in order to amend the bill to make servers and Internet service providers suitably accountable.

The Bloc Québécois supports copyright reform, but not what the Conservative government is proposing. If the government had wanted a serious bill, it would have consulted the stakeholders—I listed them earlier—including, chiefly, creators, consumers, the people who are specifically affected by these piecemeal measures that are likely motivated by this government's ideology and its bias for big business.

Nor is it surprising—because I was talking about Quebec culture in particular—that the Quebec National Assembly has unanimously denounced this legislation, which does not ensure that Quebec creators receive full recognition of their rights and an income that reflects the value of their creations.

It is clear that this bill will make our artists poorer and will benefit big corporations. The Conservatives did not listen to any of the legitimate criticisms and are proposing amendments that would significantly benefit the software, gaming, film and broadcasting industries, at the expense of our artists' rights. This explains why the representatives of 400 industries, 38 multinationals, 300 chambers of commerce and 150 CEOs applauded Bill C-32, while artists and even the Union des consommateurs, just to name a few, are condemning the bill, and rightly so.

Speaking of people who condemn the bill, I would like to quote Gaston Bellemare, president of the Association nationale des éditeurs de livres. In an article I read in Le Devoir some time ago, here is what he had to say about Bill C-11:

This is a direct attack on the values that have always defined Quebec...

Make no mistake, creators and cultural industries are not fighting for protections equivalent to those elsewhere in the world, despite the fact that globalization forces everyone to share the same playing field. That battle has already been lost. The United States, France, England, the giants that captured our markets quite some time ago...have increased the duration of protection to 70 years following the death of artists in order to provide an income to their descendants.

In this case, this is not even about income for creators. Of course, that is part of it, but we also need to think about the future, the people who will follow and who are family members of these artists, including both famous artists and lesser known artists. Canada obviously does not have these kinds of measures.

The battle to extend private copying levies to digital audio devices and e-readers has also been lost. The media campaign against the “iPod tax” [as the Conservative government called it] managed to convince consumers that the few extra cents collected on their mobile devices for creators would be an unacceptable hidden tax.

I just quoted Gaston Bellemare, president of the Association nationale des éditeurs de livre.

The Bloc Québécois has been accused of advocating an “iPod tax”, but this is not an iPod tax. It is a transfer based on how people are using contemporary platforms, and iPods are contemporary platforms. I apologize for using the brand name. People also talk about MP3s and other digital audio platforms.

I am old enough that I still own cassettes, which my girlfriend says is ridiculous. Not eight-tracks, but cassettes that I recorded music on. When we bought blank tapes, we paid a certain amount to cover copyright. We could not complain about that because we bought the tapes to record music, maybe music borrowed from a friend on a vinyl record. The sound quality was exceptional at the time, except for a little squeaking, but I think that was part of the listening experience, which some people find nostalgic and which can still be found today because it is still around. Obviously, we were not buying the records, so there had to be another way to compensate for copyright. I have many tapes like that, and I paid some form of copyright on all of them.

Now, I am also young enough that I have used blank CDs—that was the platform at the time—to record other CDs for personal use, not for sale in flea markets. People buying blank CDs paid a certain fee for copyright.

This is the same principle applied to digital devices. There is nothing wrong with adding a certain fee to the purchase price so that artists can be paid for their work. It is only fair.

In conclusion, there are many reasons, including this one, why we cannot agree to Bill C-11 as written.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Not from my Quebec colleagues, no.

You've done excellent work, Mr. Chair, and we want to thank you.

We'd also like to thank Mr. Brown, who was our previous chair on Bill C-32. We did a lot of prep work for this through the previous committee. That committee did excellent work as well.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman.

In going through the process of listening to witnesses on this bill, one thing remains fundamentally clear to me and to members on the government side. To begin with, we heard from representatives from Music Canada. We heard from representatives from the Canadian film industry and others. We heard from software creators. We heard from gaming creators. We heard from a very broad cross-section that was very clear about the fact that without the ability to protect their work, without the ability to ensure that their work cannot simply be taken without remuneration for that work, technical protection measures are critical.

As we've said many times, we believe that this is a business-to-consumer decision. The market will determine whether or not TPMs are supported.

I raised many times, I believe, on Bill C-32 that I have bought hundreds of CDs and hundreds of DVDs. If I'm not allowed to format-shift them, I just won't buy any more of them. It's up to the companies that have created them to determine whether they want to allow me the ability to format-shift them.

New technologies are coming out all the time. The cloud that's been created by TBD Networks and others has virtually eliminated the need to buy your own copies of works, and people pay a monthly fee for that. The decision to take advantage of that is a decision being made by consumers right across this country.

What we do know, and we know very clearly, is that Music Canada came in and indicated that some $800 million in revenues has gone missing. That's money that's not going to artists. It's money that's not being reinvested in the industry. And it's money that is being lost each and every day by the Canadian economy.

We know that the film industry came in and said that for their industry, it has been more than $1 billion. That's money, again, that's not being invested in Canada. That's jobs that are not being created in Toronto, Montreal, or British Columbia, or in any other of the provinces and regions in this country where great films have been made and where more could in fact be made.

We also know that companies such as Google and ESA and others have indicated that their investment in Canada could grow, and will grow, if we put in place the kinds of protections they need. These protections, under technical protection measures, are critical for enabling the next generation in communications.

Those who have suggested that we can allow folks to simply breach TPMs for non-infringing purposes are being blissfully naive to the reality that this will in fact enable the piracy we have seen in this country, the piracy this bill seeks to put an end to. And frankly, it will cripple what has been an effort to ensure that those who create copyrighted materials are in fact paid for those copyrighted materials.

These amendments being sought by the opposition on this specific clause would render many of the other measures in this bill meaningless. That's why we can't support them.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

This has been a real concern for us since it was first put into the old Bill C-32. A number of concerns have been raised about this, particularly the sense that it's creating a two-tiered set of educational rights—that students who leave a classroom are not frisked for their notes or for their reproductions that might be part of the lesson plan, but if they're taking any kind of online development, they will be obliged to destroy reproductions 30 days after the course ends.

The other day it was raised by our colleagues that if they were watching this as a video—not that I think students watch video anymore, but still if we are going back to old VHS tapes and they're watching the feed—what would happen if they made copies and gave it to their friends? Well, education might break out.

It seems to be an unnecessary intrusion into the affairs of the classroom that if materials are being protected under collective licences and the authors are being paid if exceptions to copyright are being made under educational purposes that would exist in a classroom—for example, if students make a copy when they receive their lesson plan and they take a copy from a PDF that's under copyright and they put it in their notes and then they bring it as part of their final work—that they would have to be responsible for finding what's under the exceptions and what isn't and would have to be destroyed. It seems to be an unnecessary overwrite and interference in the potential of digital learning.

What we think, with the importance of digital learning, is that we have incredible opportunities for Canadian educational institutions. We should have good collective licences in place to ensure that the people who are creating the works are being compensated, but this doesn't seem to address any of the basic needs. So we would be opposed to it.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Mr. Chair.

With this bill, the Conservative government will have once again shown that it doesn't listen. It is interfering in many areas of the cultural industry, stirring up ill-feelings and breaking up systems that were quite effective. Rather than looking for "made in the U.S.A." methods, as it likes to do, the government should have drawn inspiration from several options that have, so far, created a nice balance in Quebec.

Quebec has a lot to say about the cultural industry, and with good reason. Quebec culture is neither folklore nor heritage; it is avidly consumed every day. We watch it on television, we read it, we listen to it, we see it in the movies. I'm not talking about a virtuous interest stemming from an awareness of the history, but a real living language, a deep and daily identification. What distinguishes the Quebec nation has generated the commitment of businesspeople and tradespeople who are behind these authors. These people have a market-based approach, and they have exchanged and created many links internationally.

It is with much enthusiasm that I will try to contribute to the efforts made by organizations, including the Canadian Conference of the Arts, to create even more links between the cultural stakeholders of Quebec and others across Canada. All of Canadian culture will benefit from the expertise of the Quebec entertainment industry.

The Quebec cultural environment has mobilized because the balance achieved is threatened by Bill C-11 in several ways. Quebec's cultural know-how wasn't considered in either the preparation of the bill nor in the hearings, including those on Bill C-32 and on Bill C-11. Furthermore, I'll note in passing that the Conservative members of this committee have never ever spoken in French!

Once again, this government has slammed the door on Quebec's face. This contempt has very concrete consequences. Bill C-11 doesn't repair the immense loss of revenues related to the technological development of private copying.

In proposed clauses 29.22 and 29.24, the general flow guarantees copying for personal use without framing the legitimacy or providing royalties. We all know that it is legitimate for consumers to digitize a CD they bought in a store so they can listen to it on whatever platform they own, and that if everyone filled their iPods with music from iTunes, as suggested by Apple, there would just be new distribution methods. But this new digital formal has led to an alarming statistic we all know: nearly 90% of the music on an average iPod is pirated.

So I call upon my colleagues from all parties to study in good faith the update of the royalties system on private copying, royalties that belong to the authors. Because the audio cassette and then the CD-R make private copying possible, this system of royalties must take into account new technologies that both facilitate the life of authors and make it easier to steal from them.

Thank you, Mr. Chair.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We would like to move our amendment on the artist's resale right, if this is the time, and just to clarify for the record, this was spoken at our committee under Bill C-32. We had a number of people come forward to speak on it, and the policy of Bill C-11 was that we were not going to allow repeat witnesses, so testimony that was given on the issue of the resale right was actually given in the previous Parliament. This is why we felt this was something that should be brought forward because the witnesses spoke on this—

[Catharine Saxberg]

That's what it looks like. When we started looking at Bill C-11 and its predecessor, Bill C-32, we could see that there was a potential for this loophole, and we raised our concerns at that point. Upon reviewing the broadcasters' submissions, it looks like the broadcasters were—in writing anyway—saying that the 30-day exemption was what they wanted. We kept saying that, despite what they were saying in writing, we thought their true intention was to create a back-door loophole.

I was surprised a couple of weeks ago to see a broadcaster from Edmonton at a town hall meeting—held by a Conservative MP, actually—say that he didn't like this so-called “tax” on the transfer of CDs and that he was glad to see it was being repealed. It was going to be a big nuisance for him to have to make all of these copies. It was the first time that I had seen a broadcaster say out loud that this was what their intention was going to be: they were going to hit “control and delete” every 30 days.

Last week, after hearing testimony that this was in fact a problem, it seems that we've fallen down a rabbit hole. There has been a real shift in the broadcasters' game plan, which is contrary to what they asked for on Bill C-32 and is contrary to the intention of the government.

[Victoria Shepherd, Executive Director, AVLA Audio-Video Licensing Agency Inc.]

Thank you for the opportunity to appear before you today.

My name is Victoria Shepherd. I am here on behalf of the AVLA Audio-Video Licensing Agency, which represents over 1,000 members, including major and independent record companies and many independent artists, representing the vast majority of music played on radio stations in Canada.

I would like to express our enthusiastic support for this initiative to modernize Canada's copyright laws.

Creators and copyright owners need a clear legal framework that protects their work in today's digital marketplace. We applaud the government's effort to create new rules that will enable our members to sell and license their creative work.

I am here today to draw your attention to two issues regarding Bill C-11: first, a potential loophole in proposed amendments to the ephemeral recording exception; and second, recent requests by broadcasters for a major policy change on the ephemeral reproduction right.

In both cases, the end result would be contrary to the government's stated intention to provide a 30-day temporary exemption and could effectively annul the copying right.

Let me give you some background. For decades, radio stations played vinyl records and then CDs. Today, using digital technology, music is copied directly to hard drives. Radio stations have gained significant cost savings and higher profits thanks to the automation and operating efficiencies made possible by the right to make reproductions of sound recordings.

The point is that these rights have economic value. This is why broadcasters are required under the Copyright Act to compensate rights holders. It is also the basis for Copyright Board decisions in 2003 and then again in 2010. The board is an impartial, independent agency created by Parliament, which exhaustively considered expert testimony and the arguments of all stakeholders. It determined the fair and appropriate compensation to rights holders for the efficiencies broadcasters gain from utilizing the reproduction right.

No one during those hearings disputed that copies made by broadcasters have value.

The Copyright Board, in its 2003 decision, found that:

Copying music to a hard drive optimizes the use of these new [broadcasting] techniques, thus entitling rights holders to a fair share of the efficiencies arising from this reproduction.

The 2010 decision found that using the reproduction right “allow[s] stations to increase their efficiency and profitability”.

Commercial radio in Canada has grown steadily and significantly more profitable in the past decade, reflecting, in good part, the increasing importance of the reproduction right to broadcasters. Let's keep in mind that we're talking about the key business input used by commercial radio: music.

Music, more than anything else, is what radio business is all about. Over 80% of commercial radio programming is music. The Copyright Board has confirmed that reproduction rights are distinct from other rights associated with broadcasters' use of music, namely, the right to play the music.

These are separate rights that are separately owned by composers, performers, and record labels, and apply to separate and distinct activities. No one has been asked to pay twice, as the broadcasters argue. The foundation of copyright law is that the owner of a right be compensated by those who use the right.

Last week you heard testimony about the so-called layering of rights. The Copyright Board heard this argument and rejected it.

In its 2010 decision, the Copyright Board considered all commercial radio tariffs in a single, consolidated hearing at the broadcasters' request. They determined what broadcasters must pay for different uses of music and the rights connected to those uses. It found that the effective payment for all uses—equal to 5.7% of revenues—is fair, equitable, and well within their means. Within this total amount, the board set the rates under each tariff.

In Bill C-11, the government has proposed a 30-day exemption to the ephemeral recording exception. In short, Bill C-11 says that broadcasters should not have to pay for temporary copies of music. While the proposed 30-day exemption was unwelcome news to our members, we respect the government's right to set the policy.

Last year, at the Bill C-32 committee hearings, the broadcasters supported the 30-day exemption. The representative of the Business Coalition for Balanced Copyright, appearing on behalf of the Canadian Association of Broadcasters said, and I quote:

On the question of the ephemeral exception and the ability of radio stations to make copies, as the provisions now stand, the lifespan of those copies is 30 days. If radio stations want to make persistent copies of music to use as part of their operations, they can't now rely on the exception to do it.... This is simply short-term copying.

What we are most concerned about today is that the broadcasters appear to have much more in mind than a 30-day exemption. Last week you heard testimony that pointed to a potential loophole. Broadcasters apparently believe that Bill C-11, as drafted, allows radio stations to circumvent the proposed 30-day exemption by copying their music catalogue from one server to another every 30 days. Temporary copies will become permanent.

The original intent of the amendment is summarized on the Industry Canada website, and I quote:

With the adoption of new technologies, broadcasters today make temporary copies of the music they play on the air.... Recognizing the temporary and specific nature of these copies, the Bill removes the requirement to pay for any copies retained for less than 30 days.

Now some broadcasters are going even further. They want to change the original intent so that the legislation removes the requirement to pay for any copies at all. The government has specifically stated that only technical changes will be made at this stage. Broadcasters are asking for a full-scale policy change that is a complete departure from the government's stated intent.

Temporary does not mean permanent. This applies equally to broadcasters' latest request for a policy change and to the potential loophole in the bill as currently worded. Both could have the same result—making the temporary permanent.

All stakeholders should be concerned that, as drafted, this bill will create legal uncertainty. To avoid this outcome, and to support the government's stated policy intention of a temporary exemption, the potential loophole must be closed. To that end, we propose a straightforward technical amendment that will align the provision with the government's intent. We will submit our proposal to the clerk. We must get this right. Please ensure that 30 days means 30 days and that temporary does not mean permanent.

We think the Government of Canada got its priorities right when it said in the very first line of Bill C-11:

the Copyright Act is an important marketplace framework law and cultural policy instrument that, through clear, predictable and fair rules, supports creativity and innovation

We understand that this is a complex issue. We support the government in its effort to modernize the regulatory framework. We applaud the government's objectives to provide “clear, predictable and fair rules”. We believe our proposed amendment strengthens the legislation's ability to meet Bill C-11's stated objectives.

Thank you.

[Jay Kerr-Wilson]

I would say that even small creators need the opportunity to reach their market. Certainly the Internet, as Google testified, gives unprecedented ability for the small creators to reach and find their audiences and to sell. We need to have the tools in place that promote legitimate markets and restrict infringing behaviour. I think this committee and the Bill C-32 committee heard lots of testimony that notice and notice does provide a significant deterrent to infringing behaviour and will give the tools for the legitimate market.

Therefore, you drive people away from the infringing behaviour and towards legitimate services and legitimate service providers. The small creator has unprecedented ability to now access that marketplace, to find their audience, to find their consumers, and to engage in very small transactions that will be profitable.

[John Fisher]

First of all, I have to say that we were surprised, because we're in touch with the education community on a daily basis in our business, and in their testimony before this committee and on Bill C-32 they said they didn't want not to pay.

When we met with the representatives of the two departments, Industry and Heritage, they could not provide us with an explanation as to why that provision had been inserted. Also, no economic study has been done to determine what the consequences and the outcome would be if that provision were included.

So we're mystified as to why it's there. We think it serves no one's purpose whatsoever.

[Suzanne Hitchon, President and General Manager, Head Office, Criterion Pictures]

Good afternoon. Thank you, Mr. Chair and committee members, for allowing us to appear today and to speak to you on behalf of both our company and our industry.

My name is Suzanne Hitchon, and I'm here with John Fisher. Together we are representing Criterion Pictures, a division of Visual Education Centre, one of the largest distributors of audiovisual materials in Canada. Our company focuses on the distribution of curriculum-based materials for in-classroom educational purposes. We have been in business since the 1960s.

Our industry provides a vast array of audiovisual content that covers all grade levels and all subject matters in both of Canada's official languages. We are here today on behalf of an entire industry that may very well cease to exist should Bill C-11 pass into law.

We operate independently of government subsidies, and our industry as a whole employs more than 8,000 Canadians.

For more than 50 years, our industry has been providing a highly valued service at fair market prices to educational institutions, while at the same time contributing $30 million to $50 million in annual revenue to the Canadian economy. Like many private industries and small businesses in Canada, we have certainly faced our fair share of challenges. We've had to adapt to change and take financial risks, adjusting to new technologies and budgetary constraints while at the same time meeting the needs of our customers as they have demanded increased services at lower prices. This is the reality of the private sector.

In recent years our company alone has invested millions of dollars of our own money to build a K-to-12 digital delivery platform comprising more than 25,000 audiovisual curriculum-based programs to meet the needs of our customers. Through all this change, we have survived and grown without government support or financial assistance. However, since the inception of this industry sector, nothing has posed a greater threat to its continued existence, to our very livelihood and our lifelong investment, than the passing of this new legislation in its current form. Should Bill C-11 pass in its current state, it will have catastrophic consequences for both our business and that of our industry.

As currently written, Bill C-11 will eliminate requirements for educational institutions to pay for copies of materials they currently license from us, representing a direct loss of millions of dollars in revenue and effectively putting us out of business. The current legislation places a new reverse onus on our industry to monitor more than 15,000 schools throughout Canada for violations—an impossible task. Additionally, it subsequently reduces penalties for damages and eliminates all requirements for record-keeping.

These new conditions in Bill C-11 will lead to an overall loss of jobs and investment and a decline of Canadian content, as most financial incentives for private investment are now removed. As a result, students and teachers will become more dependent on U.S.-produced cinemagraphic works, as Canadian product will be difficult to find.

The government will ultimately need to fill the gap by providing more taxpayer funding to organizations such as the National Film Board of Canada and/or the CBC, if it feels Canadian programs have any value.

The passing of Bill C-11 in its current form is of benefit to neither the non-theatrical industry like us nor the Canadian educational community. There is no winner. Educators are not asking to be exempt from the current copyright provisions, but that is what this bill prescribes. This was clearly outlined during the testimony of the Council of Ministers of Education during the previous Bill C-32 committee hearings, when the chair of the CMEC, the Minister of Education for Nova Scotia, stated and I quote:

We are not asking for anything for free. The education system, the sector, pays for licences and copyright, and will continue to do so. What we are asking for with these amendments is to have things clarified.

Ms. Rosalind Penfound, deputy minister of the CMEC, testified:

Our assessment is that each year across Canada there's likely more than a billion dollars spent by the education sector to pay creators for their books, movies, art, etc.... We would not anticipate that this bill would in any way reduce the amount of money the education sector would be putting into these efforts.

Finally, this is from Ms. Cynthia Andrew, from yesterday's testimony, from the Canadian School Boards Association:

...it has been suggested that the education community does not want to pay for education materials, and this is incorrect. Education institutions currently pay for content and for copying of these materials.... CSBA is not suggesting, nor have we ever proposed, that school boards should not pay for intellectual property.

That's the end of the quote.

[John Lawford]

I think I'll say the opposite and say that consumers are up against TPMs every day. They use their iTunes and they realize that they can't put it on more than five devices because that's what iTunes says they can do with it. They are very familiar with the fact that you can't copy a DVD without breaking a lock, that it's difficult, that you have to go and hunt for software to do so. So I think they are familiar with them.

How do we know whether that's the consumer position? Well, we work in this field every day. We saw the submissions that were made in the consultation between Bill C-61 and Bill C-32. The consumer comments in that, which came straight from the public, we thought were very much in line with the position we've taken today. We haven't had the money to do a survey of consumers on this. We're small organizations with limited budgets.

[Janice Seline]

Well, it's not as black and white as it looks. I think the act as it exists now has a huge section dealing with education and what education can and cannot do. It's well understood. Bill C-11 tries to add to that and clarify some things. Some of them I don't agree with, but some I do.

The fair-dealing exception simply muddies the waters. It creates a whole lot of questions. There are institutions such as museums that under the present act are not classified as educational. There's a good definition of what an educational institution is in the act. Museums do not fall into that. On the other hand, they engage in public education.

We've heard them say, in the Bill C-32 hearings, that they can't wait to declare themselves as educators under fair use—which will open up a whole lot of litigation, as far as we're concerned. If we have to fight with them every time they claim fair use, it will cost us a fortune. It will take years. It's better to leave it out of fair use and in the act the way it is now and continue to deal with it the way you do.

There are, of course, millions of dollars paid to the reprographic rights organizations for the privilege of copying. Our organization benefits from that. Our members do. However, in Bill C-11, the part we have a little problem with is that you're declaring that the Internet is not an option for licensing. We think there would be creative ways to do that, and to simply say “Internet” is way too broad. That's all.

[John Lawford, Counsel, Canadian Consumer Initiative]

Mr. Chair, committee members, and Madam Clerk, my name is John Lawford, and with me is Janet Lo. We are counsel to the Public Interest Advocacy Centre, one of four major Canadian consumer groups who have banded together under the title of the Canadian Consumer Initiative, CCI. The other members of this coalition are the Consumers Council of Canada, Option consommateurs, and l'Union des consommateurs.

CCI wishes to bring to the committee our view of the consumer interest in copyright legislation. Consumers are one of three major stakeholder groups in this discussion, along with artists and rights holders. However, despite their huge importance, the voices of consumers have not been loud or clear in this debate.

Consumers buy copyrighted content. They enjoy copyrighted content. They directly and indirectly compensate artists and rights holders. They are an essential part of the equation in achieving a copyright law that fairly grows creative content and personal enjoyment of that content. You can't do it without consumers.

This bill makes strides towards recognizing this foundational role of consumers. We like the explicit recognition of consumer rights: of consumers' rights for all copyrighted content, clear backup rights, format-shifting rights, space- and time-shifting rights. We also applaud the efforts to recognize and validate user-generated content that is non-commercial, creative, and widespread among consumers. As written, that provision ensures non-commercial, non-threatening, non-destructive consumer creativity.

However, we have had to curb our enthusiasm for the expression of these consumer rights in the bill because of their potential override by digital locks or technical protection measures. We continue to believe that the power balance between rights holders and consumers has been tipped too far in favour of rights holders under this bill. Every consumer right under this bill can be taken away by a technical protection measure, and that can be done in two ways.

First, the general protection of technical protection measures in proposed section 41 prohibits consumers from backing up or time- or format-shifting content if a digital block is in place. Second, each of the individual consumer rights listed in proposed new sections 29.22 through 29.24 has a subsection that makes that right applicable only if the individual, ”in order to make the reproduction or record the program, did not circumvent...section 41”.

In effect, then, these sections declare that when a technical protection measure is present, none of the format-shifting, time-shifting, or backup rights even exist. This matters, because consumers will therefore never even be able to argue that they are exercising their consumer rights if they circumvent the technical protection measure. If this bill is passed as written, a consumer who breaks a digital lock for non-infringing purposes will be violating the Copyright Act. Although a consumer would not face statutory damages under the act for a circumvention done for private purposes, we are more concerned with the chilling effect of outlawing all tools that permit circumvention of TPMs, even when designed and used only to allow consumers to enjoy their consumer rights.

In short, no business or individual will write or distribute such software for fear of liability, and the vast majority of consumers will not be able to do this themselves. As a result, consumers will have their rights dictated to them by rights holders, who will likely use this power to deny these rights or to demand additional payments for content that can be backed up or time-, space-, or format-shifted.

Consumers will face a myriad of TPM restrictions on devices, media, and delivery mechanisms that are very likely to make some of the content they have bought unplayable and almost certainly will make that content vastly less secure and less usable. The market will not solve this dilemma. The commercial interests of artists and rights holders go the other way.

The Bill C-32 committee heard Ms. Milman come and explain that she would like to be paid twice, once when a consumer buys her CD and once when they put it on their iPod. The same committee heard Ms. Parr of the Entertainment Software Association of Canada claim that new business models with TPMs would create more choice for consumers, lower prices, and give more flexibility.

Consumers don't think so. They believe and act as the format-shifting, time- and space-shifting, and backing-up normal people that they are. They feel that they have done the right thing by buying content, paying for it once, and using it normally. They have a right to this expectation. It is for the industry to structure itself to be profitable in this environment and for that industry to fairly compensate artists, not for this Parliament to hand an act to rights holders and artists that protects top-heavy, unfair business models and is contrary to the public interest.

At a minimum, this bill should be amended to recognize these consumer expectations and actual use of copyrighted content in the real world. Therefore, we recommend that the committee consider striking out the language I quoted in each of the proposed new sections 29.22 through 29.24, and those are 29.22(1)(c), 29.23(1)(b), and 29.24(1)(c). These TPM restrictions expressed right in the text of the supposed consumer rights are at the very least redundant, and at the most a contradiction of the consumer rights that are supposedly granted in these sections.

As for the larger technical protection measures in proposed new section 41 and what that means for consumers and other public uses of copyrighted content, CCI understands the Canadian Library Association has written a proposed amendment to the committee of the definition of “circumvent” that will “ensure Canadians' ability to invoke their full rights as information users by allowing them to bypass digital locks for non-infringing purposes”. We support that amendment.

With regard to a positive in the bill, we welcome the amendments to the fair-dealing right, including specific listing of education, parody, and satire. However, again CCI is disappointed that the acknowledgement of rights like this that promote the public interest can be limited by digital locks.

Finally, CCI has a specific amendment to suggest to the committee. I have provided it to the clerk in both languages, and I do hope you have a copy before you.

We were very pleased that the bill creates a category of non-commercial infringement for statutory damages that is limited to $5,000 for all violations. This gives consumers some measure of comfort that they will not face unreasonable and unrealistic demands from copyright-based business models of suing consumers who do not profit from infringement.

However, the proposed new section 38.1 as written in the bill still allows suing consumers as a business model. This section gives rights holders an election to sue for actual damages or statutory damages. Although non-commercial statutory damages are capped at $5,000, the rights holder may threaten very large actual damages in the hope that a consumer faced with a lawsuit settlement letter will pay up. The amount demanded could be far in excess of the $5,000 for non-commercial infringement, even if the likelihood of the rights holder proving actual damages in this amount would be practically zero.

The key phrase is “may elect, at any time before final judgment”. This allows the rights holder or agent to threaten to proceed under actual damages and to send that settlement letter right up until final judgment. This power must be removed from rights holders. It has been abused in the United States under the Digital Millennium Copyright Act.

In Canada, we have several Hurt Locker cases against individual consumers waiting in the bullpen for this act to pass. The solution is to require rights holders to elect at the outset of proceedings under the Copyright Act whether to prove actual damages or rely upon statutory damages when alleging non-commercial infringement.

Our amendment will help to ensure what we believe was the original intent of the bill: to guide rights holders toward the capped statutory damages for most non-commercial consumer infringements.

We thank the committee for its attention, and we're prepared to answer your questions.

Thank you.

[Aline Côté]

The three-step test is really important because it defines what it's going to be.

That is going to define the main criteria.

I would like to say a couple of things about everything we have heard so far. We are seeing all kinds of practices that show that the impact of Bill C-11 and its predecessor, Bill C-32, is already being felt. For example, 35 universities have opted out of collective management. Two of them have gone back because they realized that rights management is quite a big deal.

There is also a drop in educational material purchases. With tablets, whiteboards, and so on, there is an upward trend toward buying one set of materials for the whole class. We realize that the Supreme Court also meant that fair dealing will be defined by current practices.

Over the past 15 years, digital practices have gone in all directions. We are talking about 15 years without any specific legislation for that. Even thinkers—one of them was here yesterday but maybe he did not talk about this—encourage you to hurry up and interpret fair dealing as widely as possible, as defined by the criteria in the CCH Canadian Limited decision. This way, when there is a dispute, it will be possible to rule in favour of current practices.

People call us fear-mongers, but we are already seeing things. Not only will this make us lose money and reduce our capacity to develop new materials, but the neutrality of the bill allows for format shifting. As a result, anyone can create something in any format, and shift from one platform to another, go from paper to digital or vice versa, and so on. This feature of the legislation results in a huge loss of control. And the loss of control, with everything that will be available, will make things more complicated.

For example, in many classes, they use digital tablets or iPads. That is very appealing, but then you also have access to YouTube. In light of everything that can be reorganized, posted on the Internet and reused in the classroom, we think that this will have an impact on our ability to keep track of the identification of works. Which one is the original work? Is the work I will be using truncated or tampered with?