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.

[Danielle Parr, Executive Director, Entertainment Software Association of Canada]

Great. Thank you.

Good afternoon, and thank you for inviting me.

My name is Danielle Parr, and I'm the executive director of the Entertainment Software Association of Canada. With me today is Jason Kee, ESAC's director of policy and legal affairs.

Our association is the voice of the Canadian video and computer game industry, which employs 14,000 people in creative and cutting-edge jobs that are leading Canada's digital economy.

Video games make up the fastest-growing entertainment medium in the world, with some blockbuster titles rivalling Hollywood movies in sales and excitement. In 2009 Canada's video game industry accounted for more than $2 billion in retail sales of entertainment software and hardware, and contributed over $1.7 billion in direct economic activity to Canada's economy.

In our view, Bill C-32 proposes measures that will bring the Copyright Act in line with advances in technology and current international standards of intellectual property protection. Subject to certain technical changes we are very supportive of the bill, and we strongly urge the committee to pass it as soon as possible.

Piracy is a massive problem for the video game industry. It represents huge losses of revenues to game developers and publishers that depend on large, upfront sales to recoup the significant costs of game creation. Piracy ultimately leads to studio closures, lost jobs, or worse.

The bill will provide rights holders with the tools they urgently need to go after those who facilitate piracy, either by trafficking and circumvention devices or services, or by operating pirate websites. Further, by establishing clear rules it will provide much-needed certainty in a digital marketplace, permitting market forces to operate properly, and enabling creators and companies to choose for themselves the best way to make their own content available.

This will contribute to job creation; promote innovation; spur investment in the development of new digital products, services, distribution methods, and platforms; and support a diverse range of new and innovative business models that will, in turn, foster legitimate competition, more consumer choices, and lower prices.

Today we'd like to tell you about how copyright is central to the video game industry, and recommend specific technical changes intended to address loopholes and avoid unintended consequences. We've outlined these issues in more detail in our submission to the committee, so I'll just give you a brief overview.

When it comes to TPMs, the video game industry makes extensive use of technological protection measures in all aspects of its business in order to protect its works. We strongly support the provisions in the bill that will protect TPMs. However, we have concerns with some of the exceptions, and recommend narrowing and clarifying them.

TPMs not only help prevent piracy by allowing creators themselves to determine how their work can be used, and to be properly compensated for their work; TPMs also enable a wide variety of business models by enabling value-added features and facilitating new products, services, and distribution methods in a digital environment.

Let me break that down a little. The choice of whether or not a creator, artist, or company can use a TPM to protect a digital work is and should be the purview of creators. Consumers clearly have the right to avoid purchasing products or services that make use of TPMs if they wish, and it's incumbent on creators and companies to respond to consumer demand, or they'll suffer in the market.

Some companies, such as iTunes, have responded to demand for format shifting by offering TPM-free versions, while others have responded by providing a downloadable copy of the work with the packaged version, like many Blu-ray movies. However, there's no equivalent expectation that a video game purchased for a Nintendo Wii should be playable on a Xbox, and there's no consumer demand for format shifting.

The point is that each market is different, with its own specific rules and idiosyncrasies, and it's good public policy to support the widest possible range of markets and business models and let the consumer decide, rather than pick winners and impose a regime that may be beneficial for one sector over all others. Strong legal protection for TPMs accomplishes this by ensuring that the creator's choice to use a TPM is respected.

It's also important to understand that TPMs play an increasingly critical role in new and emerging platforms and distribution channels for content online. From new streaming radio and music services such as Spotify, to film and television services such as Hulu or Netflix, to gaming platforms such as PlayStation Network or Xbox LIVE, all of these services are supported by TPMs. They control access to the services, thus preventing piracy. They provide viable market-based revenue streams for creators, and enable value-added features, such as rental versus purchase. The video game industry also makes extensive use of TPMs to provide additional downloadable content for games to prevent cheating and to implement subscription services.

We're in the midst of a fundamental change in the way we consume content, and creators will increasingly use online platforms and other new innovative distribution models to deliver their content.

Strong anti-circumvention measures such as those contained in this bill are essential, not only to prevent piracy and allow creators to determine how their works will be exploited, but also to ensure the new platforms are secure and to maintain the integrity of the nascent digital marketplace.

However, we are concerned that certain exceptions to circumvention will be exploited by those who enable piracy by trafficking in circumvention devices and services in order to escape liability. Overly broad and vague exceptions will render the provisions virtually unusable. We recommend that those exceptions be narrowed to close this loophole.

Briefly I'd like to mention three other areas that are of concern for our industry.

With regard to enabling infringement, we applaud the new enabling infringement provision but we are concerned that as drafted it might not be effective. We recommend clarifying it to ensure services that are both designed or operated to enable infringement are captured and that rights holders can obtain the full range of legal remedies against enablers including statutory damages.

The second is the exception for user-generated content. Generally the video game industry takes a very permissive approach to UGC. However, the wording of the bill would essentially permit widespread appropriation of existing works. It essentially allows anyone to copy the designs, art assets, even programming code from a game, and release a copycat game, for free, on the Internet. This exception must be narrowed and additional factors added, such as the need for the new work to be transformative, to avoid these clearly unintended consequences.

Another issue of major concern is with regard to the statutory damage provisions. The new multi-tiered approach is clearly intended to limit damages payable by private individuals who infringe copyright for personal purposes, but it could create perverse incentives and have the unintended consequence of giving a free pass to large-scale pirates. We recommend that this unworkable distinction be eliminated and that instead the factors the courts must consider when determining the award be emphasized.

Thank you, and we look forward to your questions. Merci.

[Zachary Dayler, National Director, Canadian Alliance of Student Associations]

Thank you, Mr. Chair.

On behalf of our 26 post-secondary institutions across Canada, representing over 300,000 students, we'd like to thank you and the members of the committee for inviting CASA here today.

We come before you to bring your attention to the importance of creating education as a new category of fair dealing. The inclusion of education as fair dealing is viewed by our membership as one of the most important changes the Government of Canada can make through Bill C-32.

The importance of an education fair dealing right cannot be understated. Our neighbour universities and colleges in the Unites States are able to capitalize on their fair use education right to drive innovation, but the growing reality for Canadian post-secondary institutions is that they are being financially and legislatively left behind.

If this category is not created, students will be getting double-charged, sometimes triple-charged, for access to materials they've paid for through a variety of fees collected, whether they be through collective licensing, library, or tuition fees.

Licensing collectives, such as Access Copyright, are looking to expand their scope beyond photocopying, to include fees for digital copies of already purchased articles, quotations in PowerPoints, and even to colleagues sharing texts over mail.

Beyond that, the economic argument for a more liberal fair dealing regime is clear. Modern tech-heavy creative industries in the United States rely on fair use to find innovative ways to generate more wealth and income for their country. Studies point to the fact that this fair use economy amounts to 17% of the U.S. GPD, and education forms a significant proportion of that in direct contributions and training for future contributors.

If Canada seriously wants to be a 21st century leader in innovative sectors, the U.S. example shows liberalizing fair dealing must be a cornerstone. Simply, we must allow access for the sake of education or sit by and watch our competitors pass us by.

However, as it is currently drafted, the educational fair dealing right is not enshrined as a true right but as a secondary right that can be overwritten by a digital lock. Creating a balance in the bill is important, and digital locks have their role, but allowing them to override fair dealing undermines the very concept of fair dealing. If a work has a digital lock, a copyright holder can limit any use of it. And fair dealing means there can be no inherent limit of the purpose, if the purpose is just.

This is more restrictive than the copyright regime in the United States and goes beyond Canada's obligation under international treaties. If we are to take fair dealing seriously, it needs to be a true right and it needs to not be trumped by a digital lock.

There are also two further amendments to the bill that CASA is proposing. The first is an amendment requiring libraries to self-destruct articles they lend through interlibrary loans. Students have two options when taking on such an article: either print one copy of it on paper, or let them destruct five days after receipt.

This clause undermines the way modern study operates. The benefits to digital articles are immense. They can be carried everywhere, organized in new ways, volumes can be searched in seconds, and citations can be automated. By requiring students to physically print out these articles, the law would actively bring education research back into the 20th century, at a loss to all Canadians.

The second amendment requires professors and students to destroy their course materials 30 days after the end of the course. This is absurd. In the 21st century, students are taught to be information gatherers and synthesizers who can find the information that exists in the world and bring it together in a way that generates new and original knowledge.

Tests that were once closed-book in the 20th century are now open-book in the 21st. Requiring students to destroy the information they've built their skills on after the course is over is to force them to take an open-book test without the book, to build a house without their hammers, when they enter the workforce. It's needless and it doesn't impact the bottom line of rights holders.

Because students gained access to these lessons in an economically fair manner in the first place, if the cost of an education doesn't carry with it the ability to use that education in the workforce, I ask: what are students paying for?

Thank you, Mr. Chair.

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

Good afternoon, everyone.

I call to order this seventh meeting of the special legislative committee on Bill C-32.

Today we have two hours of witnesses. In the first hour we will have witnesses from the Canadian Alliance of Student Associations, Zachary Dayler and Spencer Keys; and from the Entertainment Software Association of Canada, Danielle Parr and Jason Kee.

For five minutes, from the Canadian Alliance of Student Associations, you have the floor.

Copyright

[James Moore, Conservative, Minister of Canadian Heritage and Official Languages]

Mr. Speaker, the government's primary responsibility with respect to copyright is to ensure that piracy is illegal here in Canada. That is what we are proposing with Bill C-32. On the one hand, we have an obligation to protect our creative communities, and on the other hand, we have an obligation to protect the interests of consumers. That is why we are saying no to a new tax on consumers, a new tax on iPods, a new tax that affects everyone: creators and consumers. Our Bill C-32 is responsible and fair and it meets the needs of all Canadians.

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

Mr. Speaker, copyright expert and president of the Association littéraire et artistique internationale, Ysolde Gendreau, told members of the legislative committee that Bill C-32 violates the international treaties signed by Canada. According to this leading academic, the bill introduces three exceptions that do not comply with the treaties: the education exemption, the YouTube exception and the reproduction for private purposes exception.

Does the Minister of Canadian Heritage and Official Languages understand that those are three more good reasons to significantly amend Bill C-32 so that creators are not only protected, but also compensated?

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

So there could be negative consequences for creators and consumers if Bill C-32, An Act to amend the Copyright Act, were not passed? That's what you're saying?

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

Clearly, Bill C-32 strips artists of three major sources of compensation to which they long had access.

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

The minister told the CBC that Bill C-32 was not designed to compensate artists, but rather to protect their works so that they are not stolen. You're saying that the objective is to compensate artists.

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

I'm going to come back to the exemptions later, if I have the time.

With regard to the three-step test, the third particularly states: "no unreasonable prejudice to the legitimate interests of the authors" or copyright owners. Does that mean that the three elements that are not contained in Bill C-32 and that force artists to lose enormous annual revenues constitute undue hardship?

The first of the three steps is the non-modernization of private copying. This is an advantage, which artists currently have, that will cause them to lose $13.8 million a year. Then there is the education exemption, which will cause them to lose $40 million a year. There is another one, which we have not discussed today, and that is the exemption granted to broadcasters from paying fees for transitory copying: that's $21 million a year. In all, artists will lose $74 million a year as a result of this bill. Does that mean that this constitutes undue prejudice to authors' legitimate interests?

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

Bill C-32 does not comply with those international treaties, contrary to what the minister says, whereas you know that that is one of its main objects. It states that one of the main objects of Bill C-32 is to comply with international treaties. It also states that one of its main advantages is that it is renewable every five years. It's as though someone wanted to sell me a car and told me that that was good because I would be able to change it in four years. It's as attractive as that.

To go back to the international treaties, the minister says that the main reason for this bill is to comply with international treaties. You say that it doesn't comply with those treaties and that Canada could be brought before international bodies to explain itself.

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

Thank you very much.

Ms. Gendreau, I very much appreciated your presentation, particularly when you said: "Copyright is a partnership between authors and disseminators," and the word "disseminators" is used here in its broadest sense. Too often I hear the minister say that there should be a balance between artists and consumers instead. I've often heard that as well from the Conservatives. They say the same thing.

However, if we look at history and the Statute of Anne—Anne, Queen of England—we realize that this has always been a search for a balance between authors and disseminators in the broadest sense of that term. It is good to see the facts re-established.

Moreover, unless I'm mistaken, when you refer to the exemptions under Bill C-32 that do not meet the three-step test, you're saying that the bill is inconsistent with international treaties?

[Glen Bloom, Chair, Copyright Legislation Committee (Technical), Intellectual Property Institute of Canada]

Good afternoon. Bonjour. My name is Glen Bloom, and I'm a partner in the law firm of Osler, Hoskin & Harcourt. I appear today on behalf of the Intellectual Property Institute of Canada, IPIC.

It's a pleasure for me to be here today on behalf of IPIC. Thank you for inviting us.

IPIC is the association of intellectual property law professionals. Our membership totals over 1,700 individuals, consisting of practitioners in law firms and agencies of all sizes, corporations, government, and educational institutions. I am the chair of IPIC's copyright legislation technical committee and appear today in that capacity.

To explain the purpose of my presentation, I first need to give you some background about our committee.

The technical committee is composed of experts in copyright. We practise law in private practice, with the exception of Ms. Gendreau, a committee member who is an academic. We represent clients across the spectrum on all sides of the policy debates. The committee takes no position, however, on the policy decisions behind Bill C-32.

Members of our committee have extensive experience in the practice of copyright law and by virtue of that experience have a good understanding of how the Copyright Act works and how amendments could affect both rights holders and users. We therefore bring a different perspective to the specific language utilized in Bill C-32 from the government officials, who address policy choices, and the legislative drafters, who, although experts in drafting legislation, may not have expertise in copyright law and its application in practice.

Our committee has examined the technical issues arising from the amendment to the Copyright Act. By technical issues, I mean the actual wording of Bill C-32. Our goal is to assist the government to ensure that the wording of the bill achieves the government's policy intent and avoids unanticipated consequences. We make suggestions to clarify the proposed amendments to ensure the English and French language texts are aligned to achieve internal consistency in the Copyright Act and to point out possible consequences of proposed amendments, which may not have been intended.

We have prepared a detailed submission addressing technical issues in Bill C-32. A copy of the table of contents showing the breadth of our comments has been handed to you. IPIC will be forwarding the submission to government officials shortly. IPIC would be pleased to provide a copy of the submission to this parliamentary committee, if you wish.

I will provide you with two examples of our many technical comments.

First, subsection 13(2) of the Copyright Act currently provides special rules for the ownership of commissioned engravings, photographs, and portraits. Clause 7 of Bill C-32 repeals subsection 13(2). As a replacement for subsection 13(2), Bill C-32 will enact a new paragraph, proposed paragraph 32.2(1)(f). This new section will provide Canadians certain rights to the non-commercial use of commissioned photographs or portraits. There's no reference to engravings. Our committee questions whether this was an unintended omission and suggests that consideration be given to amending proposed paragraph 32.2(1)(f) to refer to “photographs, engravings, or portraits”.

The second example of our technical comments relates to treaty obligations. Our committee understands that the matter of the extent to which Bill C-32 implements the obligations established by the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty is considered to be a policy matter. However, this is not the case with respect to technological protection measures, or TPMs, which we understand are considered to be a technical matter. Consequently, the committee does not comment on treaty implementation, save in the context of TPMs. With respect to TPMs, we are of the view that Bill C-32 is compliant with the obligations in the WIPO treaties. We express no view as to whether a lower threshold of protection for TPMs or fewer legal remedies for the circumvention of TPMs would or would not also be compliant with the treaties.

You may ask why our committee wants to reduce the ambiguities of the legislation and therefore potential areas for litigation. IPIC and our committee strongly believe that in the area of copyright, as with other areas of intellectual property, everyone is better served by certainty. The less doubt there is regarding the scope and application of copyright, the better it is for creativity and for the dissemination and use of copyright works in Canada.

Thank you for listening to me.

I will now be pleased to answer your questions.

[Ysolde Gendreau, President, Association Littéraire et Artistique Internationale (ALAI Canada)]

Thank you very much, Mr. Chairman.

My name is Ysolde Gendreau. I am a professor at the Faculty of Law, University of Montreal. However, I'm here today as president of ALAI Canada, which is the Canadian branch of the International Literary and Artistic Association, a body that was founded in 1878 for the promotion of authors' rights.

I will continue my presentation in French.

Because the ALAI is at the origin of the Berne Convention, I have come here today to talk to you about Bill C-32's compliance with international law and especially with the requirements of international law with respect to exemptions. Before talking about the exemptions, perhaps we should talk about the basic principle. I would first like to submit that a copyright act, whether it concerns copyright or droit d'auteur, represents a partnership between authors and distributors. From the time the first copyright legislation came into existence 300 years ago, Parliament has intervened to inform the distributors of works—at the time, they were printers and book stores—that they had to take authors into account in the compensation they obtained from the sale of their books. The role of Parliament is to provide a framework for this partnership and its evolution as new distributors arise.

In a relatively recent example, in 1954, the Federal Court—at the time, it was called the Exchequer Court of Canada—held that the retransmission of works by cable did not give rise to the payment of copyright royalties. In 1988, 34 years later, Parliament intervened and required cable companies to pay royalties to authors. I would like to point out that that intervention occurred at the time of a trade agreement with the United States.

It is by developing this partnership between authors and disseminators as technology evolves that we foster the technological neutrality of copyright. Exemptions to copyright mark the limits of this partnership because, otherwise, there might be no end. This partnership entails exemptions—as you know, since you have previously heard about this—at the international level. These exemptions are sublimated in what is called the three-step test under the Berne Convention and TRIPS, two instruments to which Canada is bound, and also in the WIPO treaties. There are certain special cases: no conflict with normal exploitation, no unreasonable prejudice to the legitimate interests of the authors/copyright owners.

I would like to submit a few examples of this found in Bill C-32, which, in ALAI's view, undermines the three-step principle, because these exceptions are too broad, because they are based on unrealistic conditions that, once again, make them too broad. Here we're talking about fair dealing for the purpose of education, the new section 29. We're talking about non-commercial user-generated content, private copying under section 29.22. We can add, of course, fixing for later listening or viewing. We can add back-up copies that are not limited to software and applied to all works under section 29.24.

The three-step test is what indicates that copyright and copyright holders have limits. This three-step test is not just a statement of prohibition. It provides for a solution to settle the cases of exceptions that might not meet the three-step test.

Why does it contain in itself this seed of a solution? Because the three-step test was designed in the 1960s, at a time when photocopying was on the rise. Copyright thinkers at the time viewed the increase in photocopying as a rise in mass use and foresaw that technology would continue along that path. What do we see today? We are indeed facing mass use of all kinds of media. They also understood that the answer to these mass uses was collective management. We can come back to this later in response to certain questions that you may wish to ask. What the origin of collective management was, to explain that answer and the context of the exceptions, assists in adjusting collective management, mandatory licences and the determination of value.

International copyright law protects this partnership between authors and distributors. It imposes limits on it that must be respected.

I will be pleased to answer your questions.

Thank you.

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

To ensure that artists are properly compensated, shouldn't the focus be on ensuring that artists receive dollars and not pennies? And would you not agree it's important to ensure that the legal market for music, and the legitimate purchase of music, is bolstered and protected? In some European countries that have implemented legislation similar to Bill C-32, the legal market for music has been further supported and bolstered and protected. Are you familiar with those examples, and would you agree that's where the focus should be?

[Annie Morin]

I can tell you that, based on the last figures we've obtained, legal downloading has increased somewhat in a year. Before that, 90% of the content on an MP3 player consisted of unauthorized copies. For 2008-2009, we see that unauthorized reproductions represented 85%. So there has been a slight improvement.

That said, I don't see how Bill C-32 could improve the figures on music copies. Even if there are no further opportunities for illegal downloading, people will nevertheless copy music and pay nothing if the copying is done on a digital audio recorder.