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.

[Annie Morin, Director, Artisti]

Thank you, Mr. Chairman.

As a collective society that administers and distributes to performers who have taken part in a published sound recording royalties from fair compensation from the private copying and right of reproduction system, Artisti has a number of concerns with regard to Bill C-32.

The first of those concerns relates to the private copying system. The private copying system was put in place in 1997 to enable users to make copies of musical works for their personal use and, at the same time, to grant compensation to rights holders in the music sectors for those copies of their work.

Since the private copying system was implemented, royalties from that system have been a crucially important source of compensation for rights holders. Between 2002 and 2007, royalties from private copying constituted more than 50% of amounts from Canadian sources distributed by Artisti to its Canadian members. However, that is now less and less the case.

The private copying system has been outpaced by technology. Currently, only sales of blank CDs generate royalties. However, they are used less and less to copy music. The medium now preferred for making copies is the digital audio recorder, such as the iPod, which is virtually excluded from the system. Consequently, royalties from private copying are declining at an incredible pace, despite the fact that users are still making as many copies of musical works. We had requested that the amendments made to the Copyright Act correct this problem, but Bill C-32 does not correct this unfair situation. What is worse, it adds to the problem.

If Bill C-32 is passed, everyone will have a right to reproduce for private purposes any work, performance or sound recording, if the original version has been obtained lawfully, and if certain other criteria are met. However, this new exemption will not apply in the case of private copies of musical works made on a blank audio medium such as a CD. Furthermore—Mr. Legault will have the opportunity to talk more about this—it will also be possible to make copies of programs for later viewing or listening, for example.

The introduction of new exemptions covering certain reproductions made by consumers, which does not involve changing the system of royalties for private copying has the harmful effect of in fact creating three separate private copying regimes, two of which do not provide for any financial consideration for creators. There is the present regime which provides for the payment of royalties on audio media such as CDs. There is also the new exemption for reproductions for private purposes, which permits reproductions on a medium or device other than those provided for under the existing system, but which does not provide for compensatory royalties. Lastly, there is the new exemption which permits reproduction for later listening or viewing, without compensation for rights holders.

If Bill C-32 is passed, these three exemption regimes will stand together, each with its own set of non-standard rules. Consumers will not understand them and will ultimately do what they want in any case because there will be no way for rights holders to ensure that reproductions done in homes are performed lawfully. The complicated aspect of the exemptions and the absence of any logic in the proposed amendments runs counter to at least one of the principles stated in the preamble to Bill C-32, that the act should contain "clear, predictable and fair rules".

There is no logical justification for this distinction between the various copies made by consumers for personal use. A copy, whether it is made on a blank CD or on a digital audio recorder, is still a copy, and rights holders should be able to receive royalties for the use of their work, regardless of the medium used. Furthermore, Artisti is of the view that the proposed new exemptions would not pass the three-step test contained in the international treaties to which Canada is a party.

Artisti's second concern is the exemption for reproductions made by broadcasters. Bill C-32 provides for the deletion of subsection 30.9(6) of the current version of the act. The deletion of this provision seems to indicate an intention to eliminate broadcasters' current obligation to pay royalties for reproductions made for broadcasting purposes. It goes without saying that this measure would deprive Artisti's members of a source of revenue since broadcasters are currently required to pay them royalties for the reproduction of their performances.

Lastly, Artisti's third concern pertains to the exemption provided for in section 68.1 of the Copyright Act. In the 1997 reform, Parliament introduced a right to fair compensation requiring broadcasters to pay royalties for using music by distributing it over their airwaves. However, section 68.1 of the act currently provides for an exemption that releases broadcasters from the obligation to pay royalties on the first $1.25 million of their annual advertising revenues.

This situation is utterly unfair as it concerns solely the royalties intended for performers and producers of audio recordings, whereas the royalties paid to authors and composers are subject to no such exemption.

The same is true for the royalties collected by broadcasters.

Artisti deplores the fact that this unfair and obsolete exemption has not been deleted from the act despite its requests to that end.

Thank you.

[Georges Azzaria]

Thank you for listening to my testimony.

I am briefly going to outline a few basic principles of copyright. First, I remind you that copyright is the main piece of legislation designed to give economic value to the work of authors, performers and their talent, as well as to the investment of producers, broadcasters, publishers and so on.

In my view, this bill clearly dilutes the economic value of the work and of this entire chain of stakeholders. It places us before a legal puzzle—and I am weighing my words here—as a result of which producers, broadcasters, service providers, educational institutions and users reduce the position of the author and rights holder, particularly as a result of the increase in the number of exemptions, which are not associated with compensation. Even though you know this, I consider it a good idea to remind you that copyright is based on a simple principle. It is a right of ownership that has been recognized for hundreds of years and that confers the power to grant permission. The author gives his permission because there is a right of ownership at the outset. The issue behind that is the acknowledgement that a work has an economic value.

Copyright has always been built on this model, on this economic exchange. The incomes of authors are sporadic, and this is what is being jeopardized by this bill. The rise of new technologies can obviously change the situation somewhat. This is a culture in which works are accumulated and are free of charge, in some cases. And yet there are no studies showing that, with the Internet, consumers are being deprived of works and are becoming acculturated. On the contrary, we realize that legal purchases are increasingly being made. So we see that the Internet is not a kind of lawless area where everything is permitted, but that, on the contrary, the law and its rules are firmly established there. With these new technologies, copyright can absolutely transpose the rules that prevailed in the 20th century. The Internet has not changed the basis of copyright.

I believe it is important to focus on the bases of copyright. And one of those bases is collective management. It is the natural economic relay of this model of exchange between authors and users which has been applied for nearly a century, since the 1930s in Canada. This is what simplifies the exchange. It is the equation between access to a work and compensation for the author. We even see that, in France, agreements have been signed quite recently between YouTube, Dailymotion and the collective societies. This clearly shows that, if we leave the rights to the authors, the users and user networks will necessarily negotiate with them. Access will not be cut off. In France, everyone has access to YouTube and can post works there, but authors are compensated under that model. People don't realize that this economic model is viable and functional. I believe it is important to emphasize that point. We must preserve and even reinforce this economic model.

Bill C-32—and a number of people have had occasion to say this—is becoming much too complex, in my view. I was hoping that this bill would help clean up the situation, but I see that, on the contrary, it is contributing to a certain amount of disorder. The act is becoming opaque, and Parliament curiously is extremely interventionist. It is quite curious to see that it is interventionist in this very specific economic sector, whereas it is much less so in most other sectors. You all know the requirement in a democracy that an act must be clear and well understood in order to be complied with. In this instance, that is not necessarily the case.

I would like to draw your attention to one effect, an instance of confusion in the act, and to the extent of the exemptions it provides for. Subsection 38.1(2) of the current Copyright Act provides as follows:

(2) Where a copyright owner has made an election under subsection (1) and the defendant satisfies the court that the defendant was not aware and had not reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200.

In my view, in the current state of the bill, defendants will quite easily be able to say that they thought they were dealing with an exemption, that the bill has become so strange and complicated that they thought, in good faith, that they were entitled to do what they did. Then the judge may perhaps decide to impose a fine not of $15,000, but of $200. This bill will indeed have very concrete effects. Perhaps later we can talk about the three-step test, which is obviously still a problem. I know a number of people have emphasized that fact.

On that point, I would simply add that, when we analyze the economic effects of an act, we don't wonder in each case whether they are significant or not. We examine the whole. If there is a systemic effect, that's where we see that the effect is significant.

In closing, I would say that the bill emphasizes the following right for authors in the visual arts, among other things. This following right is absent for reasons that I am unable to understand. This isn't a measure that is costly for the government, on the contrary. The point is to let people in the sector organize matters amongst themselves.

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Good afternoon, everyone, and welcome again to the committee. We are continuing our 18th meeting on the study of Bill C-32, An Act to amend the Copyright Act.

We have with us Ms. Morin from Artisti, and Mr. Legault, from the Union des artistes du Québec. We also have with us, via videoconference, the assistant dean of the faculty of law at Laval University, Mr. Azzaria. Thank you for being with us.

Before starting, I'm going to give the floor...

Ms. Lavallée?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

So you are of the view that we should not adopt Bill C-32.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

First, I would like to thank you for testifying before the Legislative Committee on Bill C-32.

Earlier you talked about confiscating copyright. These gentlemen from CSI said that Bill C-32 prejudiced authors.

Do you believe that too? Do you believe that Bill C-32 prejudices authors? What do you believe? Should we adopt it as such or not?

[Casey Chisick, Legal Counsel, CMRRA-SODRAC Inc. (CSI)]

It's important to recognize that the purpose of exceptions to copyright infringement is to guard against situations where otherwise reasonable access to works would be unavailable; it would be compromised. But there is more than one way to achieve that.

CSI's position is that where there are ways to achieve that balance between access and compensation without depriving creators of the right to receive compensation, those alternatives should be preferred. In our view, collective licensing is exactly that alternative, because collective licensing provides access to users at a reasonable and regulated price with reasonable effort at a reasonable time. That principle is already enshrined in the Copyright Act, both in relation to the federal recordings exceptions, which we talked about today, and to many of the exceptions that are available for educational institutions, which are not available if the work is commercially available.

We propose the same for the other new exceptions that are suggested in Bill C-32.

[Marian Hebb, Board Member and Past Co-Chair, Artists' Legal Advice Services]

Artists' Legal Advice Services is a summary legal advice service that provides free legal service to artists of all disciplines: musicians, visual artists, writers, actors, and dancers. We are therefore acutely aware of how difficult it is for artists to earn a living.

The preamble of Bill C-32 mentions two goals that are in the public interest, which could conflict but can be compatible: for rights holders, recognition, remuneration, and the ability to assert their rights; for users, further enhancement of users' access to copyright works.

Everyone wants easy access to copyright works. That can be achieved by either collective administration or by statutory exceptions. Both provide the same ease of immediate access to consumers, but collective administration also provides creators with remuneration that's either negotiated with users or fixed by the Copyright Board.

Rights-holder-run collective societies administer collectively licences or tariffs, which replace multiple, low-value transactions that could otherwise be between the individual rights holders and users, but in fact it's often impossible for individual creators to negotiate individual licences for secondary uses of their work.

Most independent professional creators in this country earn less than $20,000 a year from their professional work, many of them far less, and comparatively few considerably more. Cutting back further on creators' rights with new exceptions will make it more difficult for them to support themselves. ALAS submits that statutory exceptions should be considered only where individual licences are not practicable and collective administration is not available.

We live in times of rapid technological change. Copyright legislation should remain neutral to changes in the marketplace and not introduce exceptions that will prevent creators from earning revenues from new or future business models. The preamble to Bill C-32 refers to the Copyright Act as an important marketplace framework law, affecting many sectors of the knowledge economy through clear, predictable, and fair rules.

It is hard to see how some of the proposed exceptions can be considered clear or the outcomes predictable, leaving aside the question of fairness. For example, there's no guidance in the proposed legislation to consumers or rights holders on how the new fair dealing exception for education might relate to existing educational exceptions or to the new ones proposed in Bill C-32, or whether it relates to them at all. No one will know what this new fair dealing for education means until the courts tell us.

We do know that savings for education mean less money in the pockets of creators. There are other exceptions for education in the current Copyright Act, which Bill C-32 proposes to revise at the expense of creators, because they either remove or reduce the ability of collective societies to license schools and post-secondary institutions for certain uses.

To take an example, the updated version of the interlibrary loan exception in Bill C-32 would allow a single library to supply the same copyright material copied from either print or digital publications directly to the computer of every student or other person across Canada who might choose to order it from his or her school, university, or local public library. We all want digital delivery from libraries. Creators will be among the most frequent users. But their collective societies, which today license photocopying in libraries, should have a reasonable opportunity, following the update of other provisions of the Copyright Act, to offer licences for digital delivery.

The exception for user-generated content, or mashups, is a brave step to recognize current realities, intended to catch up with consumer behaviour by allowing existing works to be used in the creation of a new work by a different author for his or her non-commercial purposes. But much stronger restrictions are needed to make any user-generated content exception fair to the original author. A new work that uses an existing work by another author, also often including performances by artists, should remain private unless there is permission or payment. Collective societies should collect royalties for the creators from a disseminator such as Google-owned, advertising-rich YouTube.

Another extraordinarily broad exception will allow everyone to reproduce any work without compensation to the author or performer for private purposes. This reproduction is subject to some restrictions, but without the clear, predictable, and fair rules promised in the preamble to the bill, it will be left to individual litigants to find out what the courts may allow as a private purpose. Digital locks are not an acceptable substitute for clear law.

Creators mostly do not want to use digital locks. They want users to access their work freely, but not for free. A collective administration model already exists for the private copying of music, although it badly requires updating for the digital environment.

All of the exceptions I have mentioned are intended to exempt users from licensing and payment for uses that currently are or could be administered efficiently by collective societies, subject to the oversight of the Copyright Board.

Copyright provides the legal foundation for creators' business models and is the economic basis for all of the creative industries. Particularly in the digital environment, collective administration of secondary rights plays a critical role. Confiscating creators' rights means more copying and less licensing of Canadian works. Artists and other cultural workers will find it harder to survive as their markets shrink and jobs disappear. Inevitably there will be fewer made-in-Canada works for all of us to benefit from.

Thank you.

[Alain Lauzon, Vice-President, CMRRA-SODRAC Inc. (CSI)]

Modernizing the Copyright Act should aim to create a stable, innovation-friendly environment without eliminating existing or potential royalty sources for creators.

The current law is technologically neutral and this principle should not be called into question. What constitutes copying or reproduction today should remain so as technologies continue to evolve.

In determining the value of various types of reproductions, the courts have thus far applied a range of economic values established on the basis of the reproductions' utility and effectiveness in the eyes of various users. However, Bill C-32 creates numerous exceptions that do away with royalties.

More specifically, section 32 of the bill, which authorizes technological reproductions, should be withdrawn. At the very least, the wording should be revised to ensure that it covers only transient reproductions without real value. If not, the subjective notion of "facilitate a use" will prompt certain broadcasters to think that the reproductions they currently pay for will be free of charge.

Section 22 of the bill, which authorizes multiple backup copies, should be reviewed. Why should multiple copies be authorized when a single copy is sufficient?

In addition, section 22 would allow "commercial intermediaries" such as YouTube to keep on developing profitable business models by distributing non-commercial user-generated content without compensating the rights holders.

One of the solutions proposed in our brief would be to allow these intermediaries to reproduce existing works if they obtain a licence from a collective society.

A straightforward solution aimed at fixing the current bill would be to stipulate that the exceptions created by the bill would only apply if a collective society were unable to issue a licence.

The collective licensing system has been in place for several years now and has not brought about a market collapse. Collective licensing is the best solution to reach a balance that would support innovation while ensuring compensation for rights holders.

Thank you for your attention.

[David Basskin, President, CMRRA-SODRAC Inc. (CSI)]

Thank you, and good morning.

My name is David Basskin. I'm the president of CMRRA-SODRAC Inc. (CSI). With me are Alain Lauzon, CSI's vice-president, and our legal counsel, Casey Chisick, and Martin Lavallée.

CSI represents the reproduction right in musical works—songs. Broadcasters, including commercial broadcasters, the CBC, pay audio, and satellite radio at present pay CSI when they reproduce works in our repertoire.

Since 1997, the act has required payment only if a blanket licence is available. A single payment licenses the millions of works in our repertoire.

Broadcasters pay CSI either pursuant to tariffs certified by the Copyright Board of Canada or through negotiated agreements. They paid CSI $17.6 million in 2009-10.

The commercial radio broadcasters want you to strip away our rights. Why? They'll tell you that the copies they make are worthless. That's nonsense. Expert evidence, accepted by the Copyright Board, extensively documented the benefits that broadcasters receive from these copies. For one example, through voice tracking, broadcasters can produce a four-hour program in just 20 or 30 minutes.

They'll tell you that it's unreasonable and unsustainable to continue paying seven-tenths of one percent of their earnings for the right to make copies. Unreasonable? They pay 5.7% of their revenue to all collectives for the music that makes up 80% of their programming. Unsustainable? When the commercial radio tariff was introduced, the industry enjoyed average pre-tax margins of 10%. In 2009, in a severe recession, their margin was 21.2%.

And there's this: the broadcasters want a double standard. They license the reproduction rights in their broadcast programs to media monitoring companies. They receive a royalty of 10%, and for 2011 to 2013 they want a 40% increase, to 14%, ten times higher than the 1.4% they themselves pay to reproduce music, seven-tenths of a percent for songs and seven-tenths of a percent for recordings.

There's no similar exception that applies to Canadian broadcasters' reproduction rights.

However, even if the broadcast mechanical right were left as it is, other provisions in Bill C-32 would undermine the rights of our members. Alain Lauzon will speak to those other provisions in the bill.

[The Acting Chair, Conservative, Maxime Bernier]

Good morning, everyone, and welcome to the 18th meeting the of Legislative Committee on Bill C-32.

Pursuant to the order of reference of Friday, November 5, 2010, today we are continuing our study of Bill C-32, An Act to amend the Copyright Act.

In the first hour, by videoconference from Dubai, we have with us Ms. Margaret Atwood, writer. She is testifying as an individual.

I hope you can hear us.

Copyright

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I am honoured to present a petition signed by over 1,200 people in my riding alone, calling on all parliamentarians to amend Bill C-32 on copyright, to restore balance. In its current form, the bill inordinately benefits big business, to the detriment of our artists.

Some artists came to Ottawa in their tour buses. At the time, members of the opposition parties, including the Liberal Party, said they would support the artists' demands. Unfortunately, the leader of the Liberal Party has since withdrawn his support. He changed his mind. I hope this petition will convince him to go back to his original stand.

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

Well, I think it would be a fascinating discussion, and I would love to have him before our committee.

I am concerned, as Mr. Rodriguez said, about the precedent, because if we agree to this, then next week I might find someone from the artistic community who I think is absolutely special and bring them in, and then they would get turned down. We end up leaving the other witnesses in a position of being embarrassed or of being treated as seemingly second-class if some people are pushed by special motion to the head of the line and other people are told to wait or not heard at all, so I think we should stay the course.

It would be a fascinating discussion, and maybe at our heritage committee at one point we will invite him and follow up on this issue, but we have to stay the course on Bill C-32.

[The Acting Chair, Conservative, Maxime Bernier]

We are now going to continue the work of the legislative committee on Bill C-32. We are going to look at Carole Lavallée's motion.

Mrs. Lavallée, I will give you the floor so that you can speak to the motion.

[Serge Cardin, Bloc, Sherbrooke, QC]

Two minutes? You are generous, Mr. Chair.

Good afternoon, gentlemen.

In your brief, you have said the following:

I have often said that copyright is to creativity like water is to humans: too little and you dehydrate and die, too much and you drown and die.

The Canadian Conference of the Arts has calculated the royalties creators would be losing under Bill C-32. The total comes out to $126 million, which is rather conservative. The creators will literally dry up. What do you think about that?

If we have enough time, could you tell us about the keys and how they could protect copyright, even though they are not owned by the authors or the copyright holders?

[David Fewer]

Yes. That Federal Court of Appeal case is incredible, in that the court actually looked at Bill C-32and said that the educational fair dealing amendment won't change the fairness analysis. So it won't have an impact on the business model. It won't have an impact on the need to pay royalties for those kinds of dealings. That supports my view.

The other thing that supports my view and that doesn't get a lot of attention is what happened across the border. In the United States, the fair use exception actually has within its four corners a provision that says multiple copies for classroom use can be fair use. That's the equivalent of the fair dealing provision. We don't have the multiple copies business in our educational fair dealing amendment.

But you know what? Even though the States does have the multiple copies business, universities in the States still pay royalties for casebooks. Money still comes across the border into Canada for course packs that are being copied in the United States and that include Canadian authors. If they're still paying royalties in the States with that incredibly lenient fair use provision, it's not going to happen here in Canada with a more limited educational fair dealing provision.

Regardless of that, if you go back to that first point, it's not fair. If it's not fair, it's not covered by educational fair dealing. I think that's the ultimate guarantee of the safety of educational fair dealing to authors.