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.

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

Yes, I know. Small, medium-size and large businesses agree on one point: to do better business, you have to find win-win situations. Everybody has to win; our supplier, our business, our consumer and our client have to win. Do you agree with me, Mr. Beatty? I know why you're very happy about Bill C-32. Despite your association's name, Mr. Wilson, we can see that Bill C-32 isn't very balanced.

I'll take a few minutes to explain to you why that is. More particularly, the creators of artistic content are the big losers. First, since the private copying system hasn't been modernized, they lose at least $13.8 million a year. As a result of the exception for education, they lose $40 million a year. I'm taking shortcuts because you seem to have a clear understanding of the bill. With the abolition of ephemeral recording, they lose at least $21 million a year. That's a minimum. I noticed that other amounts were also paid, but I didn't include them in my initial calculation. That totals $74 million a year.

There's the exception for YouTube, whose content is generated by users. In France, since there's no such exception, France's Société des auteurs-compositeurs français, SACEM, has managed to negotiate with Google for royalties to be paid. And even there, some money is being lost. It's at least $74 million annually that the creators, artists and crafts people are losing under Bill C-32. Do they consider that balanced? No. You know how to talk about money; you know very well they can't find that balanced. These aren't subsidies, but rather money that is being taken out of their pockets, money they normally used to receive.

In addition, yesterday, the Standing Committee on Canadian Heritage heard from the people responsible for the copyright bill at the Department of Industry and the Department of Canadian Heritage. I put the question to certain individuals around the table. I asked them what artists would gain with Bill C-32 and for them to name one bankable gain that they could make money with? There are indeed a few more rights, such as performers' rights, but that's not bankable. A power relationship is being established; the artists are happy, thank you very much, but that's not bankable.

So this is a bill that takes at least $74 million a year away from artists who earn an average of $23,000 a year and that gives them nothing more, no way to make more money. Creators can be viewed as suppliers. They're the ones who fill all the Internet sites of this world. The programming of 80% of radio stations is filled with music. When our suppliers no longer produce because we've slit their throats, what do we do? Will your radio stations want to go to the United States to get American music? When the clientele, Canadian and Quebec consumers, see that, how will they react? As for getting American music, let's go after American broadcasters. They'll change stations.

I want to outline this problem of lack of balance to you. I know you're very intelligent people. You know business, the value of money, and you know what it means to make a situation more profitable for everybody. So I'll let you speak.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you very much for being here this morning and for giving your testimony.

I'd like to start off by focusing on TPMs or digital locks and the issue of the bill as it currently exists, which of course says very clearly that if you circumvent an existing digital lock you are breaking the law. The Liberal Party is very clear on its position that it agrees that if you are circumventing a product with a digital lock for commercial purposes—pirating or what have you—that is breaking the law, and we are against breaking the law. However, we do have a different position with respect to people buying a product and format shifting, copying, transferring it to another personal device for their personal purposes. We've been clear on this since Bill C-60, one of the predecessors of Bill C-32.

I'd like to start with Mr. Kerr-Wilson on this issue because he referred to it briefly in his opening comments. Would you please—and then, Mr. Beatty—explain your position with respect to the use of a product with a digital lock but in the case where it is strictly for personal purposes?

[Perrin Beatty, President and Chief Executive Officer, Canadian Chamber of Commerce]

Thank you very much, Mr. Chairman.

I'm delighted to be here, and I'm very pleased to have with me Mr. Lee Webster, who's a partner with Osler's, and who's also the chair of the Canadian chamber's intellectual property committee and a member of the Canadian Intellectual Property Council.

Mr. Chairman, our members see the bill as a piece of the larger puzzle of innovation in Canada. Many companies, big and small, rely on the protection of intellectual property rights to maintain their businesses. Updated copyright legislation will bring Canada in line with other major industrialized countries and establish rules of the road for downloading and file sharing on the Internet. It will also position Canada to finally ratify the WIPO Internet treaties that Canada signed in 1997.

Some say that Bill C-32 will prevent Canadians from listening to music and watching movies on their portable devices. That's false!

Businesses in Canada don't want to stop people from enjoying their media, but rules do have to be established so that illegal commercial operations are stopped. What we need is to establish a marketplace framework that will support development of new digital products, services, platforms, and business models and make it clear what kinds of behaviour are legitimate and what kinds are prohibited. We have to strike a balance between the interests of consumers and those of rights holders.

Generally, we believe the government has done a good job in striking the right balance, and we support the principles of the legislation. I can certainly tell you, Mr. Chairman, that striking the appropriate balance to establish good public policy is not an easy task. I can commiserate because I had the responsibility for the copyright file when I was Minister of Communications in the early 1990s. Both the Conservatives and the Liberals put legislation on the table in recent years only to have the bills die on the order paper, and we're anxious to see this new bill passed to clarify rights and responsibilities for both businesses and consumers. So perhaps the third time is a charm.

Now, strong copyright protection will benefit communities across Canada, and here are some examples. In Toronto, there are over 3,300 high-tech companies, generating revenues over $32.5 billion annually and employing 148,000 people. In Kitchener-Waterloo, there are over 700 high-tech companies, generating $18 billion annually and employing 30,000 people, with over 200 burgeoning start-ups. The Canadian video game industry generates billions annually and employs over 14,000 people across the country. Many major studios are in the Montreal area, such as Ubisoft and Electronic Arts and Behaviour, while St. Catharines is home to a prominent video game company, Silicon Knights, which employs over 100 people in high-value jobs.

In 2009-2010, the Quebec film and television industry generated an estimated $1.2 billion annually and created more than 36,000 jobs in the province.

IP is the economic currency of the future. Properly applied, IP rights drive job creation, economic growth, and innovation. As I mentioned, copyright is only part of the puzzle; patent and brand protection and promotion is also a key element in attracting and retaining businesses in Canada.

Leading economies around the world have made IP protection a priority. Japan has created an IP strategy council led by the Japanese Prime Minister. In France, President Nicolas Sarkozy heads an anti-piracy commission to curtail Internet piracy. Clearly, other nations are effecting major changes in IP protection. If Canada does not soon follow suit, Canadian businesses risk being left at the periphery of the global economy.

By defining and better protecting IP rights, we'll develop a marketplace that rewards investments in innovation and creation. It will foster new business models that will lead to stronger economic growth, job creation, and prosperity. In modern developed nations like Canada, where services and innovation have become key economic drivers, and given our emphasis on the knowledge economy, doing so has never been more important.

Let's fix the unintended consequences in the drafting of the legislation and get this copyright bill passed. It's desperately needed to provide certainty to Canadian businesses. Mr. Chair, I simply plead with the committee this way. Let's not let the perfect be the enemy of the good. This represents our best chance to modernize.

I was looking at some of the comments that were made in Parliament and elsewhere. I think it may have been Mr. Angus who had made reference to the WIPO treaties reaching back into the past century. I was reminded of George Michael's CD, Songs from the Last Century. What we're talking about here are principles to update from the last century and to bring us into the 21st century. It's something that's critically important.

Since our time is limited for opening remarks, Lee will get into specific areas where we need amendments during the question period. Just to put it very simply, we need to see some clarifications or improvements in the areas of enabling infringement, encryption research, computer and network security, interoperability, reverse-engineering of software, user-generated content, online service provider liability or safe harbours, private copying and backups, and statutory damages.

Thank you, Mr. Chairman. We'd be very pleased to respond to questions.

[Jay Kerr-Wilson, Representative, Business Coalition for Balanced Copyright]

Thank you very much, Mr. Chairman and members of the committee.

My name is Jay Kerr-Wilson, and I am here today on behalf of the members of the Business Coalition for Balanced Copyright.

Thank you very much for giving us the opportunity to present our views on Bill C-32.

The members of the coalition include individual companies and trade associations representing a broad spectrum of the communications, technology, broadcasting, retail, and Internet industries. The one thing our members have in common is that they provide the essential links between creators and consumers.

The issues addressed in today's presentation are those on which there is agreement among the coalition members. Some individual members may wish to address additional questions or concerns when they appear before the committee on their own behalf.

We believe that Canada's copyright laws should focus on two fundamental and interrelated objectives: first, to deter infringing activity; and second, to promote open and efficient markets for legitimate distribution of copyrighted works.

We disagree with the notion that copyright legislation is either good for consumers or good for creators. We believe that by promoting the development of a vibrant digital economy, a balanced approach to copyright legislation can serve the interests of creators, distributors, and consumers.

We also believe that Bill C-32 goes a long way towards striking this balance, and we support its passage in a timely manner.

This doesn't mean the coalition thinks the legislation is perfect or couldn't benefit from some minor changes to provide greater clarity and certainty. In fact, we have submitted a number of proposed changes that we would like the committee to consider as part of its review.

First, Bill C-32 provides limited liability for content hosting services. The ministers have repeatedly stated that these provisions are intended to remove barriers to the introduction of innovative remote storage services, including cloud computing and network PVRs. We are concerned, however, that while the existing language limits liability for the reproduction of a work that is stored using such a service, it still leaves potential liability for any transmissions of the hosted content even back to the person who posted it in the first place.

Second, Bill C-32 would create liability for those people who enable others to engage in copyright infringement. We support this provision as an important tool for rights holders to protect themselves against the widespread, unauthorized distribution of their works. We are concerned, however, that the provision as drafted does not adequately distinguish between those individuals who provide services intending that those services be used to infringe copyright and innocent actors who merely provide links to Internet sites but who do not actively promote or encourage infringement.

We are also sensitive to the concern of rights holders that only prohibiting those services that are primarily designed to enable acts of infringement may be too narrow. We therefore support amending the provision to prohibit those services that are designed or operated primarily to enable acts of infringement.

Third, we support providing legal protection for technological protection measures, or digital locks. However, we do not believe that the use of digital copy control locks should prevent consumers from relying on the personal use exceptions such as format shifting or time shifting.

Fourth, we support the provision that would permit broadcasters to transfer musical works onto a different format for a limited time without incurring additional copyright obligations. We believe that a similar amendment should be made to the provision that lets local television stations or community channels tape live events such as parades and concerts for later broadcast.

Fifth, we support the provisions that would impose on ISPs the obligation to implement a notice and notice system. Many Canadian ISPs have engaged in voluntary notice and notice systems for several years, and other countries are now beginning to adopt similar obligations. However, we are concerned that the bill would not provide any time for ISPs to implement the additional obligations that would be imposed by the legislation. We recommend that the notice obligations only come into force once the minister has enacted regulations prescribing the forms of the notice and the fees that can be recovered, and after a sufficient period, for ISPs to implement the necessary systems to comply with all of the obligations.

Sixth, we support the inclusion of an exception for user-generated content. However, we have heard the concerns expressed by rights holders about the potential for abuse of the exception as drafted. Therefore, we agree that the provision could be amended to require that any use of the works in user-generated content be fair, in addition to the conditions that have already been proposed.

Finally, we strongly oppose the introduction of new levies or the extension of existing levies to cover private copying on digital devices. We recognize that the bill does not deal with the private copying levy, but we are aware that the issue has been raised on several occasions before the committee. From our perspective, there are insurmountable problems with such a levy.

Thank you for giving us the time to present these recommendations. I look forward to answering any questions you may have.

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good morning, everyone. We're going to call this 10th meeting of the special Legislative Committee on Bill C-32 to order.

For the first hour we have witnesses from the Business Coalition for Balanced Copyright, Jay Kerr-Wilson; and also from the Canadian Chamber of Commerce, Perrin Beatty and Lee Webster.

We will start with Mr. Kerr-Wilson for five minutes. You have the floor.

[Barbara Motzney]

Bill C-32 provides creators with new rights and tools for managing their content in the digital environment.

I don't know if there's time to go over each one in detail, but just to give you an idea, there is the making available right, the distribution right, information on the copyright system, the protection of this type of information, the reproduction right for performers, the term of protection for sound recordings.There are also several provisions for photographers. There are technical protection measures as an example of new tools for creators. There are also provisions for enablers, that is, those who facilitate copyright infringement in a digital environment or—

online piracy.

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

I want to draw your attention to what I feel is an inconsistency. You can be the judge of whether it is a major or a minor one.

On page 8, you talk about ways of ensuring that creators of content are compensated for their work. Ms. Cliff, at the beginning you said that Canadian businessmen—I assume you were talking about creators—have all they need right now.

However, upon reading Bill C-32 on copyright, currently before us, we realize that three new provisions will result in artists losing $74 million in copyright fees. First, there is the non-modernization of the private copy system, which, as is does not apply to digital audio players, results in artists losing an average of $13.8 million a year. This is directly related to our topic of discussion. The private copy system exists, but it applies to older material. Bill C-32 does not cover new material, such as MP3s or iPods. Because of this, artists are losing $13.8 million a year.

Similarly, the education exemption translates into a $40-million annual loss for the artist. This is because you want to enable those involved in education to get what they need on the Internet without having to pay copyright fees.

There is also the abolition of ephemeral recording, which you talked about earlier. The reason why broadcasters are asking for a royalty holiday—if I may call it that—on ephemeral recording is that the material has become digital. Now that it's costing them less, they want to pay less. This is resulting in artists losing another $21 million a year.

The losses add up to at least $74 million a year. That amount can also be much higher.

The YouTube exemption, that is, the exemption on user-generated content, means additional lost income for the artist. Collectives from around the world have signed a contract with Google to pay royalties on the music used on YouTube. On September 30, 2010, the Société des auteurs, compositeurs et éditeurs de musique de France, SACEM, announced the signing of such an agreement with YouTube. By adding the YouTube exemption, which applies to user-generated content, you are pulling the rug out from under Canadian collectives that could have negotiated the same royalty contracts with Google or YouTube.

Maybe you could set me straight on this, but I don't see any other rights in Bill C-32 that will be marketable, except perhaps in the case of photographers. However, it's also not clear that there will be more such rights than there are today. I don't see anything in Bill C-32 that would enable creators and artists to collect new royalties to offset the $74 million they're losing. I also don't see any business opportunities related to YouTube, Google and other similar websites.

[Barbara Motzney]

Bill C-32 would make the circumvention of a technological protection measure a copyright infringement, so what Ms. Downie mentioned as being the administration would come into play for this as a violation of copyright.

[Barbara Motzney]

I can start off.

Just to be very clear, the broadcasters pay a tariff to copyright owners for the right to broadcast music. Currently they also pay a tariff for making the temporary technical reproductions that are merely incidental to that broadcasting process.

Bill C-32 removes the requirement for broadcasters to pay the tariff for these reproductions, while retaining the requirement to pay for the right to broadcast itself.

Twenty years ago, with the technology at that time, these payments didn't exist. Radio stations would play music directly from CDs with no reproductions, but technology has changed, and radio stations now broadcast via computers in a process that requires digital copies of songs to be made. Under current law, broadcasters are required to pay for these incidental copies. Removing this payment requirement will promote the adoption of new technologies in broadcasting and make the rules governing broadcasting technologically neutral.

Radio stations and record labels determine their business arrangements with broadcasters in the delivery of song tracks to radio stations for broadcasting. Copyright law, as marketplace framework law, is supposed to allow for and promote these kinds of market solutions. As technology evolves, the removal of the ephemeral recording exception makes this treatment of broadcasters technologically neutral.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

We have seen an extreme reaction to both sides of the industry over the broadcast mechanical in Bill C-32. Is this provision fair, in light of what's happening in the industry?

[Barbara Motzney]

—to control how his works are made available online.

With regard to moral rights, those rights exist under the current Copyright Act for authors. Under Bill C-32, those rights are extended to performers.

[Barbara Motzney]

Thank you very much. I'll try to be really brief in highlighting the fact that Bill C-32 actually introduces new rights and protections for creators in the digital environment. The specific purpose of the bill is to deal with the digital environment, so to respond to your Justin Bieber question, under Bill C-32 he would have a new “making available” right, which would allow him to have a right—

Copyright

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

Mr. Speaker, following the example of the Quebec National Assembly, the Union des consommateurs, the Barreau du Québec and various groups of artists and artisans, including ADISQ and UDA, now the City of Montreal has also said that Bill C-32 should apply the principle of private copying and thereby guarantee that Quebec creators receive compensation in accordance with the value of their intellectual property. Contrary to the minister's scornful remark, it is not just a handful of musicians who oppose his bill.

When will the minister decide to make significant changes to his bill and give creators fair compensation?

[Reynolds Mastin]

They are. But what's very interesting, and I think it's important to underscore this, is that for certain business models and forms of content distribution for membership, they're absolutely integral and essential. There are other circumstances when our members won't use TPMs, particularly when they're trying to promote a show and they want to use different vehicles of content distribution to do that.

What's critical for our membership is that we have the choice to use them or not. That's what Bill C-32 enables our members to do.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Do you concur with the fact that Bill C-32 endeavours to bring us in line internationally, and is that important to your industry?