Bill C-32 (40th Parliament, 3rd Session) Committee on Feb. 3rd, 2011

[Perrin Beatty]

And I would cast the net very broadly. It's not--

[Serge Cardin, Bloc, Sherbrooke, QC]

Would you allow me just one minute?

[The Chair, Conservative, Gord Brown]

Thank you, Mr. Beatty and Mr. Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

He could answer a question that everyone is wondering about.

[The Chair, Conservative, Gord Brown]

We are well over time. We are going to Mr. Braid for five minutes.

[Perrin Beatty]

Thank you for your question.

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

Thank you, Mr. Chair.

And thank you very much to the representatives for being here this morning and this afternoon. It's been a very informative briefing and presentation.

Mr. Beatty, I certainly appreciated your reference to my riding of Kitchener—Waterloo as being an important engine of the national economy, particularly with respect to the high-tech sector, the innovation sector.

I want to start by asking if you could please underscore and summarize why updating and modernizing our copyright legislation in Canada is so critical for fostering innovation in this country. Could you make that link?

[Perrin Beatty]

Mr. Braid, I know your community very well. I'm a resident of Fergus, where I was born and raised and which I represented in Parliament and which is literally around the corner from you.

I am stunned when I see the creativity in Kitchener—Waterloo and the number of businesses there that have been created and the number of individuals who just exemplify the best of the knowledge economy. This is where Canada's hope lies in the future, in that sort of creation of new jobs.

Intellectual property protection is absolutely critical, whether it's in terms of patent reform or in terms of copyright reform, to reward those people who take risks and those people who invest their creativity.

Both people and capital are mobile to an extent unprecedented in the history of humankind. If we do not protect our intellectual property in Canada, not only will we not be able to attract people here from abroad to make those investments of their brilliance and of their financial resources, but we will lose them voting with their feet to go to other countries. That's why it's so utterly critical.

I have a son in university. I don't want him, when he graduates, competing with a young person from western China on the basis of who will accept the lowest pay. I want him competing on a value-added job based on the knowledge-based sector where we have a sustainable, competitive advantage in Canada. And to do that we need to have a legislative framework in place that rewards creativity and that keeps our best and our brightest in Canada.

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

Thank you very much, Mr. Beatty.

Mr. Webster, when Mr. Beatty concluded his presentation, he mentioned that the chamber had some suggested amendments with respect to a couple of areas. One dealt with the issue of reverse engineering.

I just wanted to ask if you could share that with the committee, elaborate on that, and perhaps provide an example.

[Lee Webster]

Sure.

One of the things we're talking about with respect to reverse engineering is that some have expressed the thought that digital locks or TPMs should not be permitted to lock down subject matter such as software, on the basis that in doing so it would prevent individuals from reverse-engineering software. Well, I think digital locks are essential to preserve business and commercial information. There's nothing strange, nothing new, about that. That's the way things work in the world with trade secrets. So digitally locking down a software code makes a lot of sense.

And on the ability to reverse-engineer it, why should somebody be allowed to break a digital lock to reverse-engineer? It's frankly the trade secret or confidential information of the rights holder. Reverse engineering is a means of copying, essentially, and we don't think digital locks should be broken to allow for that.

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

Okay. Thank you very much.

Mr. Kerr-Wilson, I wanted to ask if you could please speak to the role of ISPs in ensuring legitimate use, and under Bill C-32, the important rights and responsibilities that ISPs have.

[Jay Kerr-Wilson]

Thank you very much for the question, Mr. Braid.

Certainly, ISPs under the act would be obligated to receive notices from rights holders that there's infringement activity and to pass those notices on to the subscriber in question without identifying the subscriber or violating the privacy rights. Then they would also have to retain the records about that, so if the rights holder wants to pursue litigation, there's an evidentiary record.

The fact is that large Canadian ISPs have been doing this for a decade, with no legal obligation, and in cases where, in the United States and Europe, ISPs have been doing nothing to respond to peer-to-peer file sharing. So in fact we've been a decade ahead of the curve. France and the U.K. have now developed models that have led them to notice and notice, which is the model that, as I said, ISPs have already been undertaking without the legal obligation, without a lot of formal structures.

So it's the appropriate response to peer-to-peer file sharing where the ISP doesn't know what content is on the end user's computer; quite frankly, we don't want ISPs to know what content is on the end user's computer, but it sends a message, and has an education component, so the consumer knows what they're doing is wrong.

[The Chair, Conservative, Gord Brown]

Thank you very much. That's going to have to be it.

Thank you to our witnesses.

We're going to take a short break and bring in our second panel.

Thank you very much.

[The Chair, Conservative, Gord Brown]

We are calling the tenth meeting of the special Legislative Committee on Bill C-32 to order.

We have two groups who are going to be witnesses. We have Terrance Oakey and Howard Knopf from the Retail Council of Canada, and Anthony Hémond from the Union des consommateurs.

We will start with Terrance Oakey from the Retail Council of Canada for five minutes.

[Terrance Oakey, Vice-President, Federal Government Relations, Retail Council of Canada]

Thank you, Mr. Chairman.

The Retail Council of Canada is pleased to provide our comments on Bill C-32. As you stated, my name is Terrance Oakey, and I'm a vice-president with the Retail Council of Canada.

Our members speak for an industry that touches the daily lives of Canadians in every corner of the country and one that directly contributes close to $75 billion in GDP, invests $5.9 billion in infrastructure and machinery, $1 billion in logistics, and is also quickly becoming the number one job-creating sector in our economy.

Our industry is innovative and highly reliant on emerging technologies, with one goal in mind: to deliver the highest-quality product and service to the customer in the most cost-effective manner.

Our members sell the very cultural products that this bill intends to protect, so it is in our members' interest to advocate for the best balance between the public and consumer interest on the one hand and the interest of creators, producers, and distributors on the other. RCC has always taken this approach, whether before committees such as this or before major court cases relating to some of the issues that I will deal with today.

I want to focus briefly on five issues in my opening remarks. I believe members of the committee have our submission, so more detail is provided there.

The first issue I want to deal with today is the levies, or some have referred to it as the iPod tax. Even though it is not addressed specifically in the bill, the issue has loomed large in the public debate around copyright. Our members feel that there are good reasons to ensure that the blank media levy is not extended to iPods, and actually should be repealed altogether.

We believe the tax is obsolete. There is nothing like it in the U.K. Australia, or, most importantly, the United States. Most of our retailers compete head to head with U.S.-based retailers. If it is expanded to iPods, we believe it will creep to cellphones, BlackBerrys, and even computers, and it will drive sales away from Canadian retailers.

Although there is persistent denial by iPod tax proponents, the fact is that in SOCAN's most recent attempt at the Copyright Board to impose a levy on digital audio recorders, they asked for an amount of $75 on each recorder with more than 30 gigabytes of memory. In other words, that would cover basically your classic iPod. We know now there are many devices that have three times this amount of memory in their capacity.

This tax would put Canadian retailers at a significant competitive disadvantage and I would argue would simply further incent Canadians to buy their devices outside our borders to escape this fee.

Our next issue is parallel imports. RCC is concerned that clause 4 of the bill may inadvertently affect the ability of retailers to bring in parallel imports of legitimate and competitively priced goods from abroad. This practice of parallel importation is expressly permitted by the 1996 WIPO treaties and other World Trade Organization agreements, and it is seen by consumers and retailers as being an indispensable tool in the maintenance of free trade, competition, and the prevention of international price discrimination.

We do not believe the government intended to change the status quo, so we suggest that this provision either be omitted or that the bill be amended with improved wording that would maintain the status quo. In our more detailed submission, we provide such wording.

Our next issue is fair dealing and exemptions. Our members believe that the performance of music for the sole purpose of demonstrating any consumer electronics device or selling CDs or DVDs should also explicitly be included as an exemption in the legislation. This would be perfectly consistent with long-standing American legislation that deals with this precise issue.

It would also be consistent with the fact that iTunes now can show or sample a song for up to 30 seconds without paying this fee. This is yet another example where bricks-and-mortar retailers are at yet another competitive disadvantage compared to their major trading partners.

Our next issue is photofinishing. As many of you are aware, today's inexpensive, high-tech cameras allow almost anyone to take pictures that look somewhat professional. Some of our members are becoming concerned and are refusing to make prints because they fear being sued under statutory damages, which can be as high as $20,000 for each photo.

This bill should include an explicit exemption that immunizes any commercial photofinisher who acts in good faith and relies on a written representation that the customer has the right to request the reproduction.

Our next issue is technical protection measures. We join the chorus of many manufacturers of consumer electronics, and many artists themselves, who believe that overly rigid measures to protect digital locks are bad for artistic creativity, bad for innovation, and bad for the retail business.

Consumers should be free to do whatever they want with their legitimately purchased hardware and software, as long as that use is for private purposes that are otherwise non-infringing. That is all that is required by the WIPO treaties, and we believe that is as far as Canada should go.

That concludes my opening remarks.

Howard or I will be happy to take your questions.

Thank you.

[The Chair, Conservative, Gord Brown]

We'll move on to Monsieur Hémond.

[Anthony Hémond, Lawyer, Analyst, policy and regulations in telecommunications, broadcasting, information highway and privacy, Union des consommateurs]

I would like to thank the committee for inviting us to take part in the committee's proceedings on the copyright bill.

My name is Anthony Hémond. I am a lawyer and analyst with the Union des consommateurs.

In our presentation on Bill C-32, we will address a number of topics such as the technical protection measures, which raise a number of problems, the new rights conferred on users through exceptions and the accountability of Internet service providers.

By preventing the circumvention of technical protection measures that control access to works, the bill goes beyond the mere protection of authors' rights by enabling authors and rights holders to limit the rights that the legislation confers on users through technical measures. It must be understood that the aim of the IPO treaties, the WCT and the WPPT, is not to provide technical protection measures that protect access to works, limited to those implemented by the authors in the exercise of their rights. Some European countries that have ratified the WCT and WPPT treaties and the information society directive have chosen not to include among the technical protection measures that may not be circumvented those that protect access to works. It is therefore entirely possible to ratify WIPO's WCT and WPPT treaties without including any technical protection measures that are a barrier to user rights.

We also believe that Canada should draw extensively on the approach adopted in Sweden's copyright legislation, since that approach, which protects both the existing rights of rights holders and the public, manages to maintain a balance between creators' rights and those of the public, which Canada's copyright legislation should absolutely aim to do.

In the view of some, the technical protection measures that control, for example, user access to downloading platforms which in their view are necessary because they support business models must be protected under the Copyright Act. The purpose of the Copyright Act is obviously not to protect business models, but rather to confer certain rights and obligations on authors, while ensuring that there is a balance between those rights and the rights of the public. In our view, the technical measures that control access do not come within the purview of the Copyright Act. The business models referred to concern the provision of a service, not copyright. We also suggest that the bill be amended to change the definition of technical protection measures and to enable them to be circumvented where they unduly limit user rights.

These new exceptions, reproduction for private purposes, reproduction for later listening or viewing and backup copies, are welcome. This initiative is all the more appreciated since these new exceptions legalize practices that are widespread among consumers, practices supported by the market, and that have long provided them with some of the tools that permit or facilitate those practices. However, in our view, the provisions for these exceptions must be amended. Certain conditions associated with the exercise or context of the exceptions could very well prove inapplicable, or appear not to achieve their target. In addition, certain limits placed on the exercise of those rights seem unwarranted in our view. Furthermore, the wording of those clauses does not always appear conducive to enabling users to know and have a clear understanding of the nature, scope and limits of the rights conferred on them.

From a perspective of simplification for the purpose of providing everyone with a clearer understanding of what is permitted and of the limits of these authorizations, we also think that a more broadly conceived copying right would make it possible to include in a single clause the exceptions made for the fixation of a signal or a recording of a program for later listening or viewing, the private copying right and the backup copies right introduced by Bill C-32. In our view, it would be possible and preferable to institute a single system for the reproduction of works including adequate royalties. Such a system, which ideally would be technologically neutral, would afford the twofold benefit of enabling all creators whose works are copied—

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Excuse me, Mr. Hémond. The interpreter just said that you're reading too quickly for her to understand.

[Anthony Hémond]

Such a system, which ideally would be technologically neutral, would afford the twofold benefit of enabling all creators whose works are copied to be compensated and of relieving users of any legal insecurity over whether copying a particular work on one of their devices is or is not authorized by rights holders or by the act.

With regard to the accountability of Internet service providers, certain rights holders suggest that the act should require Internet service providers to pay compensation for works circulating on the Internet in violation of their rights. In fact, they would like Internet service providers to pay for all acts that they consider illegal and that are committed on networks by users. If Internet service providers were required to pay such fees, it could of course be anticipated that they would, on the other hand, increase Internet subscription rates. In other words, all users, whether or not they violate rights holders' rights, would have to pay for that kind of compensation. All users would therefore be encouraged to commit the acts that rights holders consider illegal.

If a system of royalties were to be considered, it would be a good idea to develop something more logical and equitable. It is indeed curious to consider a system that proposes, on the one hand, to maintain and even increase the number of violations of the Copyright Act by users who would pay even if they did not violate that legislation, since they would be encouraged to do so, and that, on the other hand, contemplates payment by non-offenders of royalties that, as far as possible, should be imposed solely on those who intend to act in a manner that might involve the works subject to copyright. That is why we advocate the introduction of a licence to make available—

[The Chair, Conservative, Gord Brown]

You'll have to wrap it up.

We have to move to questioning.

[Anthony Hémond]

All right. That is why we advocate the introduction of a licence to make works available on networks that are paid for by users. We believe this approach would be more effective, more viable and more equitable.

[The Chair, Conservative, Gord Brown]

We'll move to the first round of questioning.

Mr. McTeague, for seven minutes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Yes, I promise not to be very fast in my questions.

Thanks to all the witnesses appearing before the committee today.

Mr. Oakey and I have done work in the past on credit cards and other issues. I have always known him to be a very solid individual in an organization that has a great reputation. I certainly wouldn't want the organization to give a perspective to an ideal about iPod taxes or levies that are those of the Liberal Party.

As you know, Mr. Oakey, we do not support that. Despite the Conservative attack ads, which tend to be nothing less than a provocation of the truth, the reality is that we don't. I think you understand that. Is that correct?

[Terrance Oakey]

Yes, I do. I met with Mr. Garneau and Mr. Rodriguez as well, and I've been assured of that.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Oakey, I'm very interested in the RCC's take on copyright in general. I know that you were very helpful in 2006 when the industry committee came to a number of conclusions, which led, I think, to part of the legislation that we have before us today. I'm somewhat pleased to hear the endorsement, the support, that you have for TPMs and the position we've taken.

Within your own membership, do you have concerns about the illegal use or the sale of products? This is something that I recall hearing at one of the speeches given some years ago, that there was a sort of attempt—within the organization itself, within the RCC—to at least curb the incidence of copyright infringement, particularly of the more egregious natures.