Bill C-11 (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.

[Elliot Noss]

I will tell you that when I dug into Bill C-11 as it currently stands, I was pleasantly surprised. That would be right way to put it. There is the appropriate expansion of exceptions for fair dealing, as well as the notice and notice provisions and the statutory damages. Three or four things in there are world-leading and give Canada an opportunity to set a model for the rest of the world.

The interesting thing about that is that there are countries over the world—again, I meet with representatives in the ICANN context—that are looking for an alternative to some of the heavy-handedness going on in a couple of jurisdictions, and the U.S. in particular, sadly. I think there's a fantastic opportunity and a uniquely Canadian opportunity here.

[Elliot Noss]

Bill C-11 feels comfortable to me.

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

There isn't overreach in Bill C-11, is there?

[Jay Kerr-Wilson]

Yes, it does, again subject to the technical amendments that Shaw has put forward. By recognizing the specific roles for hosting and providing Internet access and by exempting liability for those functions, Bill C-11 takes the right approach.

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

Do you feel that Bill C-11 provides that?

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

Okay, great.

It's fair to describe your company as an Internet intermediary, if you will. Do you feel that Bill C-11 has the right measures, recognition, and provisions with respect to your company's role as an intermediary, notwithstanding the technical amendments that you've spoken to? I appreciate those.

[Jean Brazeau, Senior Vice-President, Regulatory Affairs, Shaw Communications Inc.]

Mr. Chair, members of the committee, my name is Jean Brazeau. I am the senior vice-president of regulatory affairs and government relations at Shaw Communications. With me today, to my left, is Cynthia Rathwell, vice-president of regulatory affairs. To my far left is Jay Kerr-Wilson of Fasken Martineau.

Thank you very much for giving us the opportunity to present our views on Bill C-11.

Shaw Communications is a diversified company that offers a broad range of communications services, including cable and satellite television, high-speed Internet access, home phone, and broadcasting.

Through its various undertakings, Shaw creates, acquires, distributes, and transmits copyright-protected content to Canadians. As such, Shaw understands the importance of effective copyright legislation to Canadians and understands that any copyright rules must be carefully balanced to protect consumers' interests and to support both creativity and innovation.

In our view, copyright should support and encourage the development of legitimate markets and products and services. It should give rights holders adequate protection against infringement and the freedom to negotiate fair compensation for the use of their works. Copyright laws should not, however, erect barriers to innovation. They should support and not hinder the development of new services and new business models. They should foster partnerships among creators, distributors, and consumers.

We are pleased to see that the government has taken a balanced, consumer-friendly approach to copyright reform in Bill C-11. In particular, we fully support the minister's statement that this legislation is intended to legalize everyday consumer activities, including time shifting television programs, using cloud computing and remote storage services such as network personal video recorders, creating and sharing user-generated content, and moving content purchased to the devices and into the format of their choice.

We support the government's desire to achieve balance in the legislation, and we believe that Bill C-11 has largely succeeded in achieving that balance.

We would like to bring to the committee's attention three specific provisions of the legislation that we believe fall short of achieving the government's policy, provisions that could be remedied with a few minor and, for the most part, technical amendments.

To ensure that Canada's new notice and notice regime, which we strongly endorse, functions well and becomes an effective partnership between rights holders and ISPs and to ensure that ISPs are not made responsible for any infringements by their customers, a few small technical amendments to Bill C-11 are needed. The details are set out in our written brief.

In general, however, Shaw strongly believes that ISPs' obligation to deliver notices and retain data must come into effect at the same time as regulations that standardize the required notice format and set maximum fees for the provision of notices. The new automated notice system that ISPs must design to comply with the new regime can only be effective if rights holders' notices contain consistent information and formatting. As such, it is appropriate that new notice requirements come into effect pursuant to the regulations that ensure that notice systems can be built and operated efficiently.

Second, the legislation provides for a specific exemption that permits consumers to record, or time shift, television programs for viewing at a later time. The minister has stated that this exemption and the hosting exception are intended to work together to permit network personal video recorder services—PVRs—to operate without incurring copyright liability.

Shaw fully supports the government's objective to permit network PVR services. We are concerned, however, that the hosting provision as currently drafted is not as clear as it could be in expressing the government's intention to enable cable and satellite companies to offer consumers NPVR service.

To put it simply, a network PVR has to perform two separate functions to operate: it has to make a copy of the television program that the consumer wants to record and it has to transmit that program to the consumer when the consumer wants to see it. The bill, as drafted, provides a clear exception to copyright for the recording of the television program by the network PVR service, but is silent as to the transmission of that same program.

We submit, with respect, that the bill would benefit from additional clarity in exempting the network PVR provider from liability when the program is transmitted to the consumer for viewing.

The current lack of clarity could lead to vexatious litigation and stand as a barrier in the provision of network PVR services to Canadian consumers. We believe that a minor technical amendment to the existing provision will make it clear that a network PVR provider does not incur copyright liability for either hosting or transmitting television programs that have been recorded at the request of the consumer. We have provided the clerk with the specific technical amendment recommended to accomplish that very end.

Our final concern is with the provisions that apply to the sale of content online, and specifically the language of the “making available” right.

As drafted, the legislation could treat every transmission over the Internet as a broadcast to the public. This means that if someone bought a copy of a song from a service such as iTunes, that transaction would be treated the same as if the song had been played on the radio. We think it's far more appropriate to treat an online sale of a song, movie, or game the same as if that song, movie, or game was purchased in a store.

As a result of the approach taken in the legislation, online transactions involving music in Canada will not be freely negotiated between parties, but will require the intervention of the Copyright Board of Canada to set the prices to be paid for music. This will produce what we believe to be unintended results. Under the approach taken by Bill C-11, negotiating with the composer for a fair price to sell the game on the Internet is not even an option. The same problem will apply to the online sale of movies, television programs, and other forms of multimedia entertainment.

Given the government's desire to encourage Canadians to be innovative leaders in the digital economy, we do not believe that copyright legislation should prevent parties from freely negotiating licensing agreements and instead impose input pricing set by the administrative tribunal. In our respectful view, it would be far more reasonable and consumer-friendly to apply the same rules to the sale of products in the online world as apply to the sale of products in the retail world.

Mr. Chairman, members of the committee, we believe that Bill C-11 is an important measure to modernize Canada's copyright laws. We support the pro-consumer exceptions and the enhanced protection against piracy. Subject to our suggested amendments to better reflect government policy, Shaw thinks that Canada and Canadians will be well served by this bill.

We would be pleased to answer any of your questions.

Thank you.

[Alain Lauzon, General Manager, Society for Reproduction Rights of Authors, Composers and Publishers in Canada]

Thank you, Mr. Chairman.

Good afternoon.

I would like to thank the members of the legislative committee for allowing us to give testimony before you today. My name is Alain Lauzon and I am the general manager of SODRAC. Joining me is Martin Lavallée, Director, Licensing and Legal Affairs.

SODRAC has been around for 25 years. In music, we manage reproduction rights, and in visual arts and crafts, we manage all the copyrights of the repertoire we represent.

As a collecting society, we play an important economic role for the thousands of authors, composers and publishers that we represent in Quebec, Canada and abroad. Actually, copyright is sometimes the only compensation creators get.

The members I represent are active in three sectors: musical works in songwriting, audiovisual musical works—television, film, video games—and artistic works in visual arts and crafts.

The Copyright Act is the essential foundation granting creators ownership rights for the work they create. The reproduction right, which is separate from the performance right, is a fundamental right recognized in the Copyright Act, as well as in international treaties and the Berne Convention, to which Canada is a signatory.

The Internet has brought about changes in technology that have transformed the way works are distributed, disseminated and used. That is why the act must be modernized. The question is at what price. Producers say that the measures proposed in Bill C-11 are sufficient, but that is not the case for creators.

In the music industry, Bill C-11 will have a significant impact on our rights holders. Introducing and changing exceptions for broadcasters, not extending the private copying regime to include digital audio recorders, and extending fair dealing to education are all provisions that affect existing royalty sources. The bill also creates new exceptions for users and consumers, without any compensation for rights holders.

That adds up to more than 40% in royalty losses for the authors, not to mention the weakening of financial instruments that authors and collecting societies use. Also, this bill does not provide any legal or financial solutions to the problem of illegal file sharing and the responsibility of Internet service providers.

Music has never been played, listened to and copied to the extent that it is now. The Copyright Act should continue to provide us with the legal framework necessary to exercise the ownership right with respect to the works of the authors, composers and publishers we represent and to enable us to play our role as a collecting society and compensate them properly.

In terms of artistic works, we believe that Canada should introduce resale rights, just like over 50 other countries, including those in the European Union. Resale rights would enable creators and their rights holders to receive a portion of the resale price.

Creators must be able to participate fully in culture and in the new digital economy through the Copyright Act. We are in favour of the legal protection measures for digital locks, although some platforms used for the distribution of works do not have them yet. Digital locks can be effective in some sectors, such as film and video games, although they are currently more beneficial for producers than creators.

Furthermore, rather than creating exceptions without compensation, we believe that it would be better to favour the licensing system by collecting societies in order to allow access to works. Collective management has demonstrated to be quite effective for both users and rights holders, whose compensation it guarantees.

The technical amendments that we are proposing in our brief represent a minimum threshold in order to avoid an irreversible imbalance between those who create the content and those who use and consume it.

[The Chair, NDP, Glenn Thibeault]

I call the meeting to order.

Good afternoon, everyone—witnesses and guests and members—to the seventh meeting of the Legislative Committee on Bill C-11. I want to welcome you all.

We did have two votes this afternoon. Unfortunately, this delayed us from getting here to start at 3:30, so of course we'll have to adjust the time during questioning.

Welcome, and I'll introduce each of you: from the Society for Reproduction Rights for Authors, Composers and Publishers in Canada, Alain Lauzon and Martin Lavallée; from Tucows Inc., Elliot Noss; and from Shaw Communications, Jean Brazeau, Cynthia Rathwell, and Jay Kerr-Wilson.

I believe you've all been briefed by the clerk that each organization, not each individual, will have 10 minutes, and 10 minutes only, to present. I will, unfortunately, step in after 10 minutes if you haven't wrapped up at that time.

We'll start off with the Society for Reproduction Rights for Authors, Composers and Publishers in Canada.

You have the floor for 10 minutes.

[Jacob Glick, Canada Policy Counsel, Google Inc.]

Thank you, Mr. Chair.

My name is Jacob Glick. I am Google's Canada policy counsel.

It's my pleasure to talk to you today about copyright law, not only because I'm a copyright law nerd, but also because copyright law has become an increasingly important public policy issue for everyday Canadians.

My plan, in the 9.721 minutes I have remaining, is to touch on Google's commitment to Canada and discuss how the framework established in Bill C-11 is critical to jobs, growth, culture, and productivity.

Let me begin by discussing Google in Canada. We have offices in Kitchener--Waterloo, Toronto, Montreal, and Ottawa. In addition to adding people and space in Kitchener--Waterloo, Google is poised to reopen our expanded Montreal office. If I have time in the questions I'll tell you all about the climbing wall connecting the first and second floors in that office.

Google is consistently named one of the best places to work in Canada. Google Canada increased its employment by over 50% last year, and expects continued hiring growth in 2012. Through the “Get Your Business Online” program, Google is helping over 60,000 Canadian businesses get online for free. Our engineers in Montreal and Kitchener--Waterloo are developing products used by hundreds of millions of people all around the world. These engineering offices are expanding and will continue to generate highly skilled, knowledge-based jobs right here in Canada.

I am pleased to say that Google supports Bill C-11. It's not perfect, but perfection is rarely possible on complex public policy issues with a wide variety of divergent stakeholders. Of course, like many stakeholders we suggest some technical amendments to ensure that the stated purposes of the bill are reflected in the language. These suggestions, which have been provided to the clerk of the committee, are submitted on behalf of Google and Yahoo.

In addition, we support the amendments put forward by the Business Coalition for Balanced Copyright, a coalition of Internet, telecom, mobile, and retail companies and trade associations that appeared previously before the Bill C-32 committee.

While we have taken positions on a number of aspects of the bill, I want to focus my remarks on two issues: the non-commercial, user-generated content provisions; and the appropriate role of online intermediaries.

First, on non-commercial user-generated content, the Internet and digital technology have democratized the economics of content, production, promotion, and distribution. Never before in the history of mass communication has it been so easy for an individual to create and disseminate content reaching global audiences with ease. In 2011 alone, hundreds of thousands of hours of new Canadian content was uploaded to YouTube. The vast majority of this new Canadian content was non-commercial and user-generated.

Members are likely aware of Maria Aragon, the Winnipeg pre-teen whose Lady Gaga cover got her global recognition from an audience as diverse as Lady Gaga herself and Prime Minister Harper. The provisions in Bill C-11 that protect non-commercial, user-generated content can help nurture the next generation of artists like Maria, who will help tell and shape Canada's story without risk of lawsuit. As long as they meet the reasonable conditions set out by the bill, these artists will be free to experiment, re-mix, and mash-up content.

The Internet also makes it easier than ever for creators to move from the non-commercial world to the commercial one. Canadians have proven remarkably adept at becoming commercial successes online.

One of my favourite examples is Haligonian Andrew Grantham. He produces talking animal videos on YouTube. One could make the case that Haligonian Grantham was the most-watched Canadian entertainer last year anywhere in the world. His “Ultimate Dog Tease” video was the second-most-popular video on the planet. This is Canadian content, popular on its own merit, shaping a global discourse.

Bill C-11's protections for non-commercial, user-generated content will be important to creative communities in Canada. They allow creators to continue to confidently share their creations online with the world, and help foster the next generation of commercial successes.

The second issue I want to address is the appropriate role of Internet intermediaries.

In general, we support the Internet intermediary safe harbour provisions in Bill C-11. I'd like to offer some evidence on how important clarity on these provisions can be to the growth of the online economy.

One of the critical issues the government has identified in this bill is ensuring that copyright law doesn't hinder the development of cloud computing in Canada. This is an important exercise, as the wrong legal framework could slow or handicap investment in Canadian cloud services.

A recent study by the Harvard Business School looked at the impact of a U.S. court decision on investments in cloud computing in the U.S. and the EU. The case in question was brought against Cablevision by a consortium of U.S. TV networks. The networks claimed that Cablevision's network PVR service violated copyright, and the courts disagreed.

The court decision clarified the U.S. rules around cloud computing generally. In Europe, that kind of legal clarity on cloud computing hasn't been developed yet. So the Harvard researchers compared investments in cloud computing in the U.S. with investments in Europe. After the Cablevision decision, investments in cloud computing increased by as much as $1.3 billion in the U.S., and Europe lost out.

The Harvard study shows that clarity on copyright may be the single most important factor in determining whether investment flows in the online economy to one jurisdiction or another.

Another study, by Booz & Company, on U.S. angel investors and VCs and their attitudes toward copyright, underscored this point. It found that 80% of investors are uncomfortable investing in business models that are open to unpredictable regulations. Additionally, 81% of investors also said that weakened copyright safe harbour rules would be more likely to slow their investment decisions than would a weakening economy.

To reiterate, for these investors, bad copyright law, with insufficient safe harbours for online intermediaries, is worse than a recession. The study showed that investors want to see clearly defined legislation to protect intermediaries who are acting in good faith. The study concludes that the net benefit of appropriate protections for intermediaries could more than double the pool of investors.

Both of these studies demonstrate how important it is for investment, growth, and productivity that government get the legal regime right. Largely, Bill C-11 succeeds in this task. There are a few amendments Google and Yahoo recommend to provide clarity to ensure that the companies and investors make Canada a leader in cloud computing. The clerk has been provided with these.

You have the amendments put forward by the Business Coalition for Balanced Copyright, which we also support. We would also urge you to avoid amending the enabler provision in a way that would put at risk the safe harbours in Bill C-11 and consequently chill investment in cloud computing.

Let me conclude by saying that Canadian content is succeeding online. Canadians have embraced the open Internet, and they benefit from the increased choice and competition it provides. Clearly, we are in the midst of a new era of individual creativity, facilitated by the Internet. With this legislation, the government is protecting an important creative platform, allowing for the creation of new Canadian cultural content, and helping to grow a critically important Internet economy.

Thank you for this opportunity to speak today, and for those of you playing the home game, I tweet at jacobglick.

I'm happy to answer your questions.

[Gary Maavara]

In this context, Corus creates a significant amount of content and is therefore concerned with the protection of our proprietary works. We know about copyright and we are invested in ensuring the laws make sense for creators and for users. We believe it is important that the members of this committee understand a basic reality about copyright: it does not create markets for content. It is true that good copyright law can help to protect the value in content, but it does not create it. Other factors contribute to that. Some of the most important of these value creation factors are what Corus Radio does each day. When you think about the modern digital world, we are surrounded by an ocean of music that is available everywhere from your personal iPad to the local bar, restaurant, club, concert hall, supermarket, elevator, and these days even at the gas station pump.

Local radio uses a small portion of this music and mixes it with local personality and information to create listeners, advertisers, and revenue. Radio competes with every other medium for your attention, so we understand the challenges of the digital economy. It's important to understand that in the context of the massive amount of piracy that the music industry endures as a result of digital technologies, radio is an island of stability. We pay higher amounts to the music industry each year and we provide massive amounts of support for local music content development and promotion.

Our cash contribution on music development alone has increased by 487% in the last ten years, and as an industry we paid about $65 million to music collectives last year for the use of their music. Our payments in this regard have increased by 63% in just the last decade. We are not disputing these payments, and they will continue.

We create an enormous amount of value in that music for the artists who create it. We are proud of our efforts in that regard, but we are seeking small changes to Bill C-11, the most important of which is to the exception for incidental copying done to facilitate our broadcasts. The proposed exemption would require radio stations to delete their entire catalogue of music and related data every 30 days. This involves thousands of songs and related data for every station. Operationally, it just won't work. Imagine if your local riding team had to re-enter your constituent mailing list data once a month. Let's say that process took five minutes for each name and address, and you had to do a few thousand a month. You get the picture. It's a big job, and deleting and reconstituting the same information is a waste of time and money. Requiring radio to do that would fly in the face of this government's stated wish to make Canada more efficient and competitive.

To take advantage of the new Canadian digital economy, radio needs the Copyright Act to support our growth in innovation, not stand in our way. Without our proposed technical amendments, radio stations will be forced to operate as they did in 1995 to limit this unnecessary liability. This is neither progressive nor logical. Creative businesses like ours need the necessary tools to remain competitive in the new digital economy.

The main opposition to our request is the assertion that artists benefit from the money we pay for the reproduction right and that they will lose $21 million. This is a gross exaggeration and it flies in the face of the actual economics of the situation. The vast majority of the current industry payments goes to offshore recipients and almost none of it ends up with any artist, let alone a Canadian one. This was confirmed to you on Tuesday by Bill Skolnik of the Canadian Federation of Musicians, who said the mechanical royalties are for the publishers and record labels, not the artists.

At best, artists may only see a fraction of the amount. If local radio can continue to grow local value, then the artists will continue to grow their revenue, but if radio is forced to continue to pay these reproduction tariffs, our ability to create local content will be threatened and so will revenue for local artists. Getting this provision right will make a significant difference to the future of local radio. Radio is about the only place where a member of Parliament can talk to constituents about important matters. Furthermore, we employ people who live in your riding and we help local retailers and their businesses to get their messages out to the local community in ways and at times that no other media can do. Local radio fills a need that no other medium does as well as we can, and our model is not sustainable under the current tariff regime.

The truth is that the reproductions made by broadcasters to get music into our playback systems do not harm or shortchange the rights-holders in any way. Private radio broadcasters make reproductions only to facilitate the broadcasting of the music we've already paid to use. This process also reduces the music companies' costs for distributing their content to our stations. No new use is made of the music. Radio makes no additional revenues, but our use adds enormous incremental value to the music.

For all these reasons, we are asking that Bill C-11 be amended to provide for a real exception that will still help artists protect their music while helping us to create the value in that music.

We have attached to our speaking notes our proposed amendments. These changes are very technical in nature, so we won't review them here.

Mr. Chairman and members of the committee, we thank you for your attention on this matter and we welcome any questions you may have.

Thank you.

[The Chair, NDP, Glenn Thibeault]

Ladies and gentlemen, witnesses, and members, I'd like to welcome you to the second half of the sixth meeting of the Legislative Committee on Bill C-11.

Before I begin, we still have those technical glitches, so I'm going to remind the members and the witnesses to ensure you do not touch the microphones today to ensure that our fantastic proceeding and verifications officer can make sure the mikes are on.

If there is a point of order, of course you have the right to do that. We just ask that you take one second, take a breath, and then speak. That will give our PVO the opportunity to turn your mike on. Again, we apologize for this inconvenience. It's beyond our control, but we will do our best to make sure we can get through this today and make sure everyone has the mikes on when they speak.

With that being said, I'll turn to our witnesses and thank them for coming today. Each of you has been briefed by our clerk that you have ten minutes of opening time. I will ensure that you stick to those ten minutes. That's part of my job.

I'd like to introduce our guests. From Corus Entertainment, we have Mr. Gary Maavara.

Did I say your name correctly, sir?

[Geoff Regan, Liberal, Halifax West, NS]

Are you saying the fix should be in Bill C-11? Is this a bill that's not ready for prime time?

[Nancy Marrelli]

The solution is definitely orphan-works legislation, which we know is not in Bill C-11, but which is essential for solving these problems. We understand that Bill C-11 is not going to solve this problem. It makes our problems more complex, because it can make ascertaining the copyright holder, owner, or creator more complicated than it was. But the problem is already there. The fix is not in Bill C-11. We need the fix, and we need to move forward on this.

[Gerard Peets, Acting Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry]

Thank you.

One of the questions posed in the invitation to attend today was how intellectual property, or IP, is protected in Canada, and how it stacks up to other jurisdictions.

Intellectual property in Canada is primarily set out in four key federal statutes, and they are the Patent Act; the Copyright Act, amendments to which are included in Bill C-11, which is currently being examined by legislative committee; the Trade-marks Act; and the Industrial Design Act.

As a department, Industry Canada has both a policy and an administrative role in support of these frameworks. The department is responsible for providing policy advice to the Minister of Industry on these acts. It also houses the Canadian Intellectual Property Office, which is responsible for the administration and processing of the greater part of intellectual property in Canada.

Of the various pieces of intellectual property legislation, the most pertinent to emerging transportation technology is the Patent Act. The core purpose of the Patent Act is to promote innovation and investment in Canada and foster competition, especially in new areas of technology. It does this by conferring an exclusive right to prevent others from making, using, selling, or importing an invention. This protection is available for any invention that is new, useful, and non-obvious.

Companies make use of patents to secure and protect a market space in which to exploit their inventions. These patents can also be used to gain revenues from licensing and sales, and, increasingly, to attract financing.

You have a chart that shows how our patent regime compares internationally with some of our key trading partners and in particular how we line up against the United States, the European Union, Japan, and Australia. As the chart shows, each of these peer jurisdictions has the same 20-year term of protection for patents. They all allow for the patenting of business methods. They all have some form of “early working” exception to allow others to use a patent prior to its expiry under certain circumstances, and they all allow for expedited reviews before the granting of a patent.

One area where the frameworks differ is that of computer software, which is not, generally speaking, patentable in Canada or the EU.

I would add that there are certainly indications that companies are making use of patents in Canada in some areas of emerging transportation technology. For example, according to data provided by the Canadian Intellectual Property Office, Canada ranks fourth in the world in patent filings in the area of fuel cells, behind Japan, the United States, and Germany.

To sum up, from an intellectual property perspective Canada's regime is competitive internationally and is being used by companies that are engaging in emerging technology development in the transportation sector.

Those are my remarks. I will turn to my colleagues from Transport Canada.