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.

Copyright Modernization Act

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

Madam Speaker, certainly the position in the New Democratic Party is that the bill is highly problematic. However, we believe in updating the copyright regime and we believe it is possible with amending language.

For example, the concerns of Canadian librarians were not heard by the government, but it is possible to find amending language to ensure that we would differentiate between what would be done for infringing purposes and what would be done in order to allow people the education opportunities that exist in the digital realm. We saw it done with the other WIPO compliant countries.

If the government is not willing to come to those reasonable balanced compromises, then Bill C-11 will not be balanced. It will be detrimental to Canadian artists, consumers, students and educators.

We are more than willing to bring forward the amending language that will fix the problems of the bill. The problems are many, but they can be fixed. What it will take is whether there is good will on the part of the government to step back a bit and say that it has come so far down the road, that it did not get it right, so we should work together. It is not in the interests of the Canadian Parliament to delay copyright legislation. It is not in the interests of Canadian Parliament not to move forward with copyright. HOwever, it is definitely not in the interests of the Canadian Parliament to move forward with a bill that is fundamentally flawed.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Madam Speaker, it is because we want to maintain the integrity of this process from the consultations in the beginning through the tabling of Bill C-32 and the tabling of Bill C-11, which is why we did not change anything in the bill.

We did that deliberately in order to protect the integrity of this process, so we could continue to have witnesses. Again, if witnesses want to come to the committee and offer ideas, we are more than open to it. This is why we have set up a legislative committee.

I am glad this member is interested in a serious approach to the legislation. I am very hopeful that this will continue on at the committee. We want to get this right. We want to get it done effectively. I am very thankful that the member for Timmins—James Bay and the member for Bonavista—Gander—Grand Falls—Windsor are digging into the substance of this bill, so that we can have a responsible debate, not some of the stuff we have heard in the past.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Madam Speaker, I graduated university in 1999. The University of Northern British Columbia, which actually has satellite campuses on aboriginal reserves, was one of the first universities to engage in this kind of digital learning that my colleague is talking about. We certainly want to protect that kind of education.

The provision that the member refers to in this legislation was not arrived at by the government. It was arrived at after talking to educators, the council of ministers of education, which is every education minister in the country save for the province of Quebec, who offered this proposal that we have in this legislation that we think arrives at the right balance.

The reason for the 30-day limit, of course, is to protect those people, those professors and those educators who are involved in the publishing industry with regard to textbooks. We want to ensure that they will have a business and a business model.

This is the compromise that we have arrived at. We think it works. This provision along with the others with regard to fair dealing and education are the reason why the council of ministers of education across the country, including NDP, Liberal and Conservative education ministers, have endorsed this legislation as being what is best for education.

The member asked if we are prepared to work together. Certainly, this is why we tabled the same legislation as Bill C-32. We want to continue the study.

If my hon. colleague has an amendment he wants to draft and bring forward, we will consider that. We are not obtuse in the way that we are approaching this legislation. We have been open and transparent in the entire process of this bill, in the collection of information and feedback from Canadians from the beginning, through the committee process of the legislative committee, and now as we go forward with Bill C-11.

If my hon. colleague has an amendment that he has drafted and wants to talk about, our doors are open.

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

Madam Speaker, I am very pleased to be here with the Minister of Industry. I should also certainly give a great deal of thanks to the President of the Treasury Board for the work that he did on Bill C-32, which was last Parliament's version of Bill C-11, which we are debating today.

As the Minister of Industry said, the bill contains a number of provisions that Canadians, I think, will welcome and are welcoming. The bill contains provisions that will provide the ability of copyright owners to control the uses of their works to fight online piracy. This is about individual creators and creative industries, like the video game industry, the software industry, the movie industry, and others. It is having the tools to protect their art, their businesses and their jobs.

For example, the bill includes provisions to protect the technological protection measures and authorizes copyright holders to sue those who enable copyright infringement through such means as illegal peer-to-peer file sharing sites. Our government knows that the best way to deal with online copyright violation is to target those who enable this crime and profit from it.

More specifically, Bill C-11 introduces a new definition of civil liability for those who knowingly enable online copyright violation. Online piracy takes revenues away from creators and reduces the incentive to create. This measure sends a clear message that Canada is prohibiting piracy sites and giving copyright holders the tools to protect their activities. What is more, the bill also introduces new provisions to stop those who develop and sell tools and services for getting around technological protection measures.

Canada is among the first jurisdictions in the world, if not the first, to provide its copyright legislation with this very important tool to fight online piracy. At the same time, we are taking steps to ensure that Canadians are aware that they may be infringing copyright. Canadian Internet service providers have developed a unique model in which they tell subscribers when a rights holder notifies them that a subscriber has infringed on copyright material. This is known as notice and notice. The bill formalizes this practice into law. I would just point out here that this is one of the key elements that consumers have come to us and said they want as part of the bill.

We disagree with the American approach with regard to copyright. We have a notice and notice regime in our legislation, not a notice and take down regime as they have in the United States, for very good reason. These provisions are also on top of a wide array of legal protections already provided for in the Copyright Act that rights holders can use to assert their rights.

Educators, students, artists, companies, consumers, families, copyright holders and Canadians in general use technology in a number of different ways, and this bill simply recognizes that reality. It gives creators and copyright holders the necessary tools to protect their works, their investments, and to develop their business through innovative business models. It establishes clearer rules that will allow Canadians to fully participate in the digital economy today and in the future. More specifically, this bill gives creators and copyright holders the tools they absolutely need.

With this legislation Canadians will also be able to create new works incorporating existing publishing or publicly available works, as long as it is done for non-commercial purposes, as my colleague has said. The new user generated content cannot be a substitute for the original work or have the substantial negative impacts on the markets of the original material or on a creator's reputation.

Canadians with perceptual disabilities will be permitted to adapt legally acquired material to a format that they can easily use. Also, Canadian photographers will benefit from the same authorship rights as creators. Currently, photographers are not considered authors of commissioned works. This legislation changes that.

Consumers and users of content will also see their interests reflected in the bill. Canadians will be allowed to record television, radio and Internet programs to enjoy at their time and choosing with no restrictions as to the device or technology chosen or the time of day.

Under certain conditions, Canadians will also be able to copy for their personal use legally acquired works such as music, movies or other works, on the device or component of their choice. They will be able to make backup copies in the format and on the device or component of their choice.

I would like to close my speech by ensuring the House understands that this was, from the very beginning of the process that we initiated just prior to the summer of 2009, a good faith effort on the part of our government to get copyright legislation done effectively.

The member for Timmins—James Bay was engaged in debate on Bill C-61 when we tabled that legislation. Bill C-61, as it turned out, was not the balance that Canadians were looking for. We think this legislation achieves the balance that Canadians have come to expect. We tabled Bill C-61, there was the fall campaign, and then we came back.

We re-engaged Canadians from the beginning. We went back to square one. We did unprecedented consultation on this legislation. We heard from thousands of Canadians in the process. We went across the country to town halls and we did open, online consultation. We arrived at Bill C-32.

As a result of the participation of thousands of Canadians in that process, we thought we would respect that process--

[Christian Paradis, Conservative, Minister of Industry and Minister of State (Agriculture)]

moved that Bill C-11, An Act to amend the Copyright Act, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to speak this morning at second reading of Bill C-11, the Copyright Modernization Act.

With the permission of the House, I will be splitting my time with the Minister of Canadian Heritage and Official Languages.

[Dr. Michael Geist]

I think it's relatively clear that the digital lock provision, which.... And I'll emphasize again that almost everything in Bill C-11 does a pretty good job of trying to strike a balance. The one exception to that is the digital lock provision, and if you take a look at any number of things, whether it's documents that have come out through things like the WikiLeaks cables and the like...the reality is that this is the result of significant pressure from the United States.

The disappointment is that so many groups--business groups like the retailers, education groups, consumer groups, the Business Coalition for Balanced Copyright, which includes the major telcos and the broadcasters--and it's really across the spectrum, have all said it's not that they don't want legal protection for digital locks, it's that they want the same kind of balance in language that you've tried to install in so many other places. It's complying with our international obligations, it provides legal protection for those who want it, but at the same time it doesn't eviscerate many of the kinds of rights that retailers depend upon so consumers buy the products, that consumers depend upon, and that our educators depend upon.

[Dr. Michael Geist]

I'd be happy to.

The concern is there is nothing to stop any business from employing a digital lock. We've seen that in a number of businesses. Many businesses have given it up. You might think back to the music industry that started with digital locks. They thought they needed to lock it down. Consumers, by and large, rebelled and rejected it, and what the industry did was ultimately drop it.

So no one is saying that it isn't open for a business to choose to have a digital lock. Whether we're talking about consumer groups, education groups, the Retail Council of Canada, or many others, the concern they have is that the current proposal in Bill C-11 would effectively mean that the presence of a digital lock would trump many of the other rights that exist within the Copyright Act.

So consumers who purchase a DVD find themselves unable to transfer it from one device to another, and that creates a pretty significant lock.

Earlier this year, when RIM launched the PlayBook, I had the chance to mention this as well when I appeared before the committee studying Bill C-32. I talked out of concern that for people who have invested in a competitor platform—let's say the iPad—the real cost of the device isn't in the device; it's in all the content that, over time, gets accumulated. It's in the e-books, it's in the movies, and the television shows and all the rest of the content you buy.

If what we do is have policies that encourage the use of these digital locks—which, make no mistake, is precisely what Bill C-11 does—then the cost to a consumer transferring content from the iPad to the Canadian PlayBook is increased dramatically because the costs there aren't just in the device. It's now the cost of transferring all that content because the consumer is literally locked out.

[Dr. Michael Geist, Canada Research Chair, Internet and E-commerce Law, University of Ottawa, As an Individual]

Thanks very much.

Good afternoon.

As you heard, my name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. I appear before the committee today in my personal capacity, representing only my own views.

I want to congratulate the committee for launching the study of e-commerce in Canada. It's a critically important issue, deserving of greater attention.

While the committee has identified some excellent questions, I would boil the issue down to a single one: why have Canadian consumers embraced e-commerce but Canada has failed to produce many significant global e-commerce success stories?

The Canadian consumer success story is well known. We're among the global leaders in Internet use and online video consumption. For several years, Canada was the world's largest per capita user of Facebook. Netflix launched online only, first in Canada, and quickly grew to one million subscribers. And digital music sales have grown faster in Canada than in the United States for each of the past five consecutive years.

Yet despite the growth on the consumption side, we punch well below our weight in creating global online companies, an issue recognized by a McKinsey study prepared for the G-8 meeting in France earlier this year. There are exceptions, of course—Club Penguin, Flickr, AbeBooks, and StumbleUpon, among them—but most are bought out by larger U.S. companies before they have the chance to grow into global players.

Canada does have its share of e-commerce SMEs, but the multinationals that employ thousands and generate billions in revenue have largely eluded us. The question is why. There are no doubt many factors—venture capital, market size, appetite for risk—but as they say, when you're a hammer, everything looks like a nail. When you're a law professor, you see legal and policy failures.

Over a decade ago, Canada established the e-commerce law basics, including enforceability of online contracts, privacy rules, and some online consumer protections. But these were just the price of admission. The success stories often lie in countries that went further. I believe companies like YouTube, Google, and Facebook could have been Canadian, but legal rules made it less likely.

For example, YouTube could have been Canadian. The company would have been called iCraveTV, a Toronto-based online video startup that launched in 1999. It streamed television programming, supported by advertising along the bottom of the screen. It was YouTube years before YouTube was YouTube, and it relied on Canadian law to do it. The U.S. objected, and within months of launch the service was shut down, and Canadian law changed as we caved to the U.S. pressure.

Google could have been Canadian. The company would have been called OpenText. OpenText is, of course, Canada's largest software company, based in Waterloo. Before Google was even a Stanford graduate student project, OpenText was providing the search technologies for companies like Yahoo. U.S. copyright law has a fair use provision that Google later relied upon to index the web and become a multi-billion-dollar company. Canada still has a more restrictive fair-dealing approach, and OpenText opted for managing content in the corporate market, which doesn't raise the same legal issues.

Facebook could have been Canadian. The company would have been called Nexopia, which is now an Edmonton-based social network that is still active. It was founded in 2003, a year before the launch of Facebook, but unlike Facebook and thousands of other U.S. companies, Canada does not have a rule that grants legal immunity to intermediaries for the postings of third parties. In the U.S., the Communications Decency Act, section 230, has been used by all the giants—Facebook, Amazon, Google, and eBay—to limit risk and liability for the postings of their users. In Canada, we don't have the same protections, and the risks faced by anyone operating online are far greater.

I could go on. We could talk about why Skype was unlikely to be Canadian because of the regulatory and competitive environment for telecom companies. We could talk about how Zillow, the online real estate giant, couldn't be Canadian because of restrictive rules over the use of listings data. We could talk about how Amazon couldn't be Canadian because of foreign investment restrictions.

Canada has failed to build the competitive legal and policy e-commerce framework, and we now live with the consequences.

So what comes next? There are numerous policy issues that ought to be put on the table, not all of them a matter for the federal government, as some fall within provincial jurisdiction. I'll quickly highlight four, and perhaps we can discuss more during the question period.

First are the privacy and marketing rules. We should move ahead with the anti-spam rules, not diluted through regulations, as some are calling for. Ensure swift passage of the just introduced privacy measures in Bill C-12. Moreover, the next round of privacy law review is due this year. We need tougher enforcement measures put on the table and retention of the principle of court oversight for mandatory personal information disclosure.

Second is copyright flexibility. Today and tomorrow's e-commerce businesses rely far more on the flexibility of copyright law, not the digital locks that form a cornerstone of the current copyright bill, Bill C-11.

Third, other countries have adopted fair use, and yet more are considering the issue. Canada should do the same. An equivalent of the CDA section 230, which I spoke about earlier, for Internet intermediaries is absolutely crucial. It would, however, require provincial cooperation.

Fourth, and finally, is removal of foreign investment restrictions and other competitive barriers in many sectors that touch on e-commerce. Foster a more competitive Internet environment with a set-aside for new entrants in the forthcoming spectrum auction.

Note that Canada may have been the first with an online-only Netflix, but we also hold the dubious distinction of having had Netflix offer bandwidth-reduced versions of its content due to Internet data caps and high costs. The impact extends well beyond the consumer market, as it directly affects e-commerce businesses as well. Canada may have missed out on a generation of e-commerce leaders. We must not miss out on the next one.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

In that regard, we've certainly heard from some in the music industry and others in Canada about the issues of copyright being on the table. There are some serious concerns. Bill C-11 is before the House. People in the industry are quite concerned about that, but they're just as concerned, if not more so, about those issues being on the table in these negotiations with the EU.

I wonder if you could perhaps give us some indication of where those discussions have taken you.

[Helen McDonald, Senior Assistant Deputy Minister, Spectrum, Information Technologies and Telecommunications, Department of Industry]

Thank you very much.

Your committee will be undertaking a study on e-commerce in Canada. I would like to take this opportunity to provide your members with Industry Canada's perspective on e-commerce and related issues.

First, I will briefly explain e-commerce and where Canada ranks in relation to other countries.

Second, I will give you an overview of the main activities underway at Industry Canada to stimulate e-commerce, that are a part of the digital economy strategy.

The OECD's internationally accepted definition of e-commerce states that

An e-commerce transaction is the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online. An e-commerce transaction can be between enterprises, households, individuals, governments, and other public or private organisations.

While this definition is useful for guiding international comparisons and data collection efforts, from a more practical perspective, payments, online banking, and bill payments are often considered key elements of electronic commerce.

In this definition, one thing is clear: the first prerequisite for e-commerce is that it must be online. More and more Canadians are online.

According to the CRTC's Communications Monitoring Report 2011, 96% of Canadian households currently have access to broadband services at a speed of at least 1.5 megabytes per second. It is estimated that that percentage will reach 98% by 2012.

A transmission speed of 1.5 megabytes per second encourages e-commerce by increasing the number of households able to buy and sell goods and services online.

In 2010, 70% of Canadian households subscribed to broadband Internet services. Statistics Canada's 2009 Canadian Internet use survey found that nearly 22 million Canadians, or 80% of people over 16 years of age, used the Internet for personal reasons--from home, the office, or some other setting.

Once online, Canadians used the Internet for a variety of activities, such as electronic banking and bill payment, searching for information, and communicating with Canadian municipal, provincial, and federal governments. They undertake education and training online, and also access information on weather, travel, health, and investments.

Canadians are also increasingly purchasing online. About 39% of Internet users indicated they engaged in e-commerce in 2009, and the total value of these online purchases was $15 billion. To give you a sense of the magnitude, total retail sales by Canadian firms were $415 billion in that year.

From the perspective of Canadian firms selling online, total online sales, both retail and commercial, were almost $63 billion in 2007--and this unfortunately is the last year in which data was collected. Of these sales, 59% were commercial, business-to-business transactions. The remaining 41%, or $25.5 billion, were retail sales, business-to-consumer transactions. And despite the relatively large value of online sales, only 8% of firms reported selling online in 2007.

The difficulty of encouraging more Canadian businesses to make the transition to e-commerce and the low overall take-up rate of digital technologies by Canadian businesses are closely linked. Investment per worker by Canadian businesses in information and communications technologies is 60% of investment per worker by American businesses.

Digital technologies play an important role by supporting innovation and productivity. Digital technologies greatly contribute to online transaction processing, electronic funds transfers, supply chain management, computerized data exchanges and automatic data collection.

Increasing the take-up rate of all digital technologies—not only those that support e-commerce—is critically important to ensure the vitality and competitiveness of the economy.

Last fall Minister Clement articulated the government's vision for a digital economy in his interim report. This is a quote:

By 2020, the Harper government sees a Canada that boasts a globally competitive digital economy, characterized by innovation, enhanced productivity, and enduring prosperity—a nation where businesses, communities and individuals have the skills they need to use digital technologies to their advantage and where a globally competitive ICT sector supplies more markets with more innovative products and more new services.

For greater adoption of digital technologies or for e-commerce to be successful, the legal framework governing it must be clear. Industry and consumers alike must understand what is expected of them and what the rules of engagement are. For consumers to engage in the online marketplace, they need to be confident that it is a safe place to shop, that consumer protections are in place, and that personal information is secure.

Minister Paradis confirmed in his speech this May to the 2011 Canadian Telecom Summit that the government is committed to ensuring there is a robust legal framework to increase confidence in and security of online transactions.

Canada's anti-spam law received royal assent in 2010 and is expected to come into force in early 2012. This law will protect Canadian businesses and consumers from the most damaging and deceptive forms of online threats and will deter spammers from operating in Canada. The anti-spam regulations were published last July, and the official consultation period ended on September 7. The department is currently analyzing the input received.

Bill C-11 the Copyright Modernization Act,An Act to amend the Copyright Act was tabled in Parliament last week. The phenomenal popularity of social media and new technologies, such as tablet computers, mobile devices and e-readers, has dramatically changed the way Canadians create and use copyrighted materials.

Copyright modernization allows creators and rights holders to have the tools they need to protect their work and ensure the growth of their companies, especially as Canadians consume and buy more copyrighted material online.

Furthermore, amendments will be made to the Personal Information Protection and Electronic Documents Act under Bill C-12, also tabled last week. One of the main amendments relates to the notification requirement for data breaches. It is an important tool for increasing the security of online markets.

A second prerequisite for e-commerce is access to high speed networks, that is an affordable connection. In order to participate in e-commerce, you have to be connected to the Internet. Therefore, it is clearly in the government's interest to ensure that consumers have enough choice in accessing different affordable Internet services.

In recent years, thanks to government measures to increase competition in the wireless market, Canadian consumers have seen new companies enter the market and have benefited from lower prices and a greater selection of packages.

Increasingly, wireless networks are offering high-speed Internet access and the benefits of a mobile economy. To help meet the increasing demand of Canadian businesses and consumers for access to mobile broadband, Minister Paradis has confirmed that the government will be auctioning off the 700 megahertz spectrum and the 2,500 megahertz spectrum.

The third prerequisite is to increase private sector adoption of digital technologies. Targeted efforts are needed to raise the awareness of businesses, particularly small and medium-sized businesses, of the benefits of adoption. Industry Canada's small-business internship program provides small and medium-sized enterprises with financial support to hire a post-secondary student intern to assist them in their adoption of e-commerce strategies.

The government has taken two additional steps to promote awareness and adoption. In the spring of 2011, the Business Development Bank of Canada announced an array of new efforts to support ICT adoption among small and medium-sized enterprises. The BDC helps firms with web strategies, sales, customer management, and choosing the technologies best suited to the firms' needs.

Budget 2011 also announced the creation of an $80-million pilot project over three years involving the NRC's industrial research assistance program and Canadian colleges, to promote the take-up of advanced digital technologies among small businesses. More details on the pilot will be available once it has been formally launched.

The growth of e-commerce also requires a workforce with the requisite digital skills. In budget 2011, Human Resources and Skills Development Canada will reallocate $60 million over three years to encourage an increase in the number of students enrolled in key disciplines linked to the digital economy.

Citizenship and Immigration Canada also plays a major role by attracting to Canada foreign workers who have the skills to ensure that digital economy and e-commerce thrive, and by encouraging them to stay in the country.

Granting councils have also played a big role over the years by creating research chairs and by financing centres of excellence to face the brand new issues and opportunities.

Promoting the acquisition of digital skills is a responsibility we share with the provinces and industry, which play a leading role. That is why Industry Canada continues to work closely with all of its partners.

Thank you very much for this opportunity to come before you today. I and my colleagues would be happy to take questions at your leisure.

Copyright

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

Mr. Speaker, we introduced a bill that is fair to everyone, both creators and consumers. What artists across the country need right now is copyright legislation that will make piracy illegal in Canada. That is what Bill C-11 will do.

We are also imposing the WIPO Internet treaties. Many aspects of this bill protect the interests of Canada's artists, ensure that our economy continues to recover, and ensure that we are creating employment and investments here in Canada for everyone, including creators.

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

Mr. Speaker, as we said in the campaign and in the throne speech, the focus of our government this fall is on economic growth and ensuring there is job growth as well. That is why we have tabled our copyright reform legislation.

Bill C-11, the copyright modernization act, balances the interests of consumers and creators with the central goal of drawing investment into Canada, protecting jobs and ensuring that we move forward.

The Canadian Chamber of Commerce agrees with our bill. It said that this bill “lays the foundation for future economic growth and job creation”. Françoise Bertrand of le Fédération des chambres de commerce du Québec said that this bill is “critical to ensuring a competitive and stable business environment in Canada”.

This bill has been tabled and we hope for its adoption. We hope for the opposition's support for Canadian jobs.

Copyright Modernization Act

[Gordon O'Connor, Conservative, Carleton—Mississippi Mills, ON]

moved for leave to introduce Bill C-11, An Act to amend the Copyright Act.

(Motions deemed adopted, bill read the first time and printed)