Bill C-32 (40th Parliament, 3rd Session) Committee on March 10th, 2011

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

It is. They're paid—

[David Basskin]

No, sir, it is not. Broadcasters are no more being punished by those who create music than they're being punished by those who write software for its use.

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

So then, to clarify, they could actually avoid paying the reproduction fee by simply keeping catalogues of only LPs. They wouldn't have much practical use to them, but--

[David Basskin]

Absolutely. They could avoid the reproduction royalty by not making reproductions. But I'll tell you something; since the tariff was introduced, not a single radio station has gone back from using copies. They know perfectly well that there are costs incumbent upon making those copies. They pay us the royalties. They also pay for the reproduction of the sound recordings.

One station did attempt very briefly to say they weren't making copies anymore and they'd go back to loading them by hand. It lasted less than two months. Why? Because the advantages they get from the technology more than outweigh the costs.

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

They pay for that technology--

[David Basskin]

Of course they do.

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

--and they continue to pay for the rights to the music they play.

[David Basskin]

As they should.

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

Perfect.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you. That was a very constructive exchange.

Now we'll suspend for three minutes and then hear from our next witnesses.

I want to thank the witnesses, especially Ms. Atwood, who is in Dubai, for being with us. Thank you very much. I don't know what time it is there, but your participation was very much appreciated. Good day. Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Good afternoon, everyone, and welcome again to the committee. We are continuing our 18th meeting on the study of Bill C-32, An Act to amend the Copyright Act.

We have with us Ms. Morin from Artisti, and Mr. Legault, from the Union des artistes du Québec. We also have with us, via videoconference, the assistant dean of the faculty of law at Laval University, Mr. Azzaria. Thank you for being with us.

Before starting, I'm going to give the floor...

Ms. Lavallée?

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

I have a point of order. Mr. Chairman, I would like us to treat all our guests with courtesy. Margaret Atwood is a grand dame of Canadian letters, and I believe she is entitled to respect as a result of her rank. Regardless of who our guests are, we must treat them with courtesy, even when we do not agree with them.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you. We will therefore proceed now. I'm going to give Mr. Azzaria five minutes to make his presentation to us.

We can see you very well. I hope you can hear us.

[Georges Azzaria, Assistant Dean, Faculty of Law, Laval University of Quebec, As an Individual]

I can hear you very well.

[The Acting Chair, Conservative, Maxime Bernier]

Then I'll give the floor to the other witnesses.

Go ahead, Mr. Azzaria.

[Georges Azzaria]

Thank you for listening to my testimony.

I am briefly going to outline a few basic principles of copyright. First, I remind you that copyright is the main piece of legislation designed to give economic value to the work of authors, performers and their talent, as well as to the investment of producers, broadcasters, publishers and so on.

In my view, this bill clearly dilutes the economic value of the work and of this entire chain of stakeholders. It places us before a legal puzzle—and I am weighing my words here—as a result of which producers, broadcasters, service providers, educational institutions and users reduce the position of the author and rights holder, particularly as a result of the increase in the number of exemptions, which are not associated with compensation. Even though you know this, I consider it a good idea to remind you that copyright is based on a simple principle. It is a right of ownership that has been recognized for hundreds of years and that confers the power to grant permission. The author gives his permission because there is a right of ownership at the outset. The issue behind that is the acknowledgement that a work has an economic value.

Copyright has always been built on this model, on this economic exchange. The incomes of authors are sporadic, and this is what is being jeopardized by this bill. The rise of new technologies can obviously change the situation somewhat. This is a culture in which works are accumulated and are free of charge, in some cases. And yet there are no studies showing that, with the Internet, consumers are being deprived of works and are becoming acculturated. On the contrary, we realize that legal purchases are increasingly being made. So we see that the Internet is not a kind of lawless area where everything is permitted, but that, on the contrary, the law and its rules are firmly established there. With these new technologies, copyright can absolutely transpose the rules that prevailed in the 20th century. The Internet has not changed the basis of copyright.

I believe it is important to focus on the bases of copyright. And one of those bases is collective management. It is the natural economic relay of this model of exchange between authors and users which has been applied for nearly a century, since the 1930s in Canada. This is what simplifies the exchange. It is the equation between access to a work and compensation for the author. We even see that, in France, agreements have been signed quite recently between YouTube, Dailymotion and the collective societies. This clearly shows that, if we leave the rights to the authors, the users and user networks will necessarily negotiate with them. Access will not be cut off. In France, everyone has access to YouTube and can post works there, but authors are compensated under that model. People don't realize that this economic model is viable and functional. I believe it is important to emphasize that point. We must preserve and even reinforce this economic model.

Bill C-32—and a number of people have had occasion to say this—is becoming much too complex, in my view. I was hoping that this bill would help clean up the situation, but I see that, on the contrary, it is contributing to a certain amount of disorder. The act is becoming opaque, and Parliament curiously is extremely interventionist. It is quite curious to see that it is interventionist in this very specific economic sector, whereas it is much less so in most other sectors. You all know the requirement in a democracy that an act must be clear and well understood in order to be complied with. In this instance, that is not necessarily the case.

I would like to draw your attention to one effect, an instance of confusion in the act, and to the extent of the exemptions it provides for. Subsection 38.1(2) of the current Copyright Act provides as follows:

(2) Where a copyright owner has made an election under subsection (1) and the defendant satisfies the court that the defendant was not aware and had not reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200.

In my view, in the current state of the bill, defendants will quite easily be able to say that they thought they were dealing with an exemption, that the bill has become so strange and complicated that they thought, in good faith, that they were entitled to do what they did. Then the judge may perhaps decide to impose a fine not of $15,000, but of $200. This bill will indeed have very concrete effects. Perhaps later we can talk about the three-step test, which is obviously still a problem. I know a number of people have emphasized that fact.

On that point, I would simply add that, when we analyze the economic effects of an act, we don't wonder in each case whether they are significant or not. We examine the whole. If there is a systemic effect, that's where we see that the effect is significant.

In closing, I would say that the bill emphasizes the following right for authors in the visual arts, among other things. This following right is absent for reasons that I am unable to understand. This isn't a measure that is costly for the government, on the contrary. The point is to let people in the sector organize matters amongst themselves.

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much, Mr. Azzaria. You were very specific.

Now I'll give the floor to Ms. Morin, from Artisti.

[Annie Morin, Director, Artisti]

Thank you, Mr. Chairman.

As a collective society that administers and distributes to performers who have taken part in a published sound recording royalties from fair compensation from the private copying and right of reproduction system, Artisti has a number of concerns with regard to Bill C-32.

The first of those concerns relates to the private copying system. The private copying system was put in place in 1997 to enable users to make copies of musical works for their personal use and, at the same time, to grant compensation to rights holders in the music sectors for those copies of their work.

Since the private copying system was implemented, royalties from that system have been a crucially important source of compensation for rights holders. Between 2002 and 2007, royalties from private copying constituted more than 50% of amounts from Canadian sources distributed by Artisti to its Canadian members. However, that is now less and less the case.

The private copying system has been outpaced by technology. Currently, only sales of blank CDs generate royalties. However, they are used less and less to copy music. The medium now preferred for making copies is the digital audio recorder, such as the iPod, which is virtually excluded from the system. Consequently, royalties from private copying are declining at an incredible pace, despite the fact that users are still making as many copies of musical works. We had requested that the amendments made to the Copyright Act correct this problem, but Bill C-32 does not correct this unfair situation. What is worse, it adds to the problem.

If Bill C-32 is passed, everyone will have a right to reproduce for private purposes any work, performance or sound recording, if the original version has been obtained lawfully, and if certain other criteria are met. However, this new exemption will not apply in the case of private copies of musical works made on a blank audio medium such as a CD. Furthermore—Mr. Legault will have the opportunity to talk more about this—it will also be possible to make copies of programs for later viewing or listening, for example.

The introduction of new exemptions covering certain reproductions made by consumers, which does not involve changing the system of royalties for private copying has the harmful effect of in fact creating three separate private copying regimes, two of which do not provide for any financial consideration for creators. There is the present regime which provides for the payment of royalties on audio media such as CDs. There is also the new exemption for reproductions for private purposes, which permits reproductions on a medium or device other than those provided for under the existing system, but which does not provide for compensatory royalties. Lastly, there is the new exemption which permits reproduction for later listening or viewing, without compensation for rights holders.

If Bill C-32 is passed, these three exemption regimes will stand together, each with its own set of non-standard rules. Consumers will not understand them and will ultimately do what they want in any case because there will be no way for rights holders to ensure that reproductions done in homes are performed lawfully. The complicated aspect of the exemptions and the absence of any logic in the proposed amendments runs counter to at least one of the principles stated in the preamble to Bill C-32, that the act should contain "clear, predictable and fair rules".

There is no logical justification for this distinction between the various copies made by consumers for personal use. A copy, whether it is made on a blank CD or on a digital audio recorder, is still a copy, and rights holders should be able to receive royalties for the use of their work, regardless of the medium used. Furthermore, Artisti is of the view that the proposed new exemptions would not pass the three-step test contained in the international treaties to which Canada is a party.

Artisti's second concern is the exemption for reproductions made by broadcasters. Bill C-32 provides for the deletion of subsection 30.9(6) of the current version of the act. The deletion of this provision seems to indicate an intention to eliminate broadcasters' current obligation to pay royalties for reproductions made for broadcasting purposes. It goes without saying that this measure would deprive Artisti's members of a source of revenue since broadcasters are currently required to pay them royalties for the reproduction of their performances.

Lastly, Artisti's third concern pertains to the exemption provided for in section 68.1 of the Copyright Act. In the 1997 reform, Parliament introduced a right to fair compensation requiring broadcasters to pay royalties for using music by distributing it over their airwaves. However, section 68.1 of the act currently provides for an exemption that releases broadcasters from the obligation to pay royalties on the first $1.25 million of their annual advertising revenues.

This situation is utterly unfair as it concerns solely the royalties intended for performers and producers of audio recordings, whereas the royalties paid to authors and composers are subject to no such exemption.

The same is true for the royalties collected by broadcasters.

Artisti deplores the fact that this unfair and obsolete exemption has not been deleted from the act despite its requests to that end.

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much, Ms. Morin.

I'll now give the floor to Mr. Legault, from the Union des artistes.

[Raymond Legault, President, Union des artistes (UDA)]

Thank you, Mr. Chairman.

Thank you for having us.

The Copyright Act must be amended. There can be no doubt about that. It is obsolete. It no longer meets Canada's international obligations and has not been adapted to the digital universe.

However, there are a number of elements in Bill C-32 that do not meet stated objectives or comply with the international treaties that Canada has signed. In addition, Bill C-32 generally runs counter to social choices made in the past, including the decision to promote collective management in order to guarantee creators a right to compensation for the uses made of their works.

Today, by adding exceptions without providing for a right to compensation, and by absolving certain players in the new economy of all responsibility to the detriment of creators, Bill C-32 runs counter to the modern orientations that Canada has adopted in the field of copyright.

Bill C-32 creates new exemptions for private copying. I will limit myself to the possibility for users to make private copies for later listening or viewing. The problem with this new exemption is that the numerous conditions for its implementation cannot readily be verified. How could a rights holder determine whether a user has retained the copy solely for the time necessary to watch the program at a better time? And what does "the time necessary" mean? A week, a month or a year? It's not defined.

It will clearly be impossible to verify whether the conditions of the exemption are met. Consequently, rights holders will be able to exercise no control over copies made by users, and, in actual fact, consumers will ultimately do what they want.

The bill provides for no compensation for rights holders whose works, performances and sound recordings are produced in that manner. And yet it would have been possible to expand the private copying system to include audiovisual copying as is the case in France.

Another stumbling block in Bill C-32 is the issue of technical protection measures and recourse offered to rights holders. Bill C-32 contains provisions prohibiting the circumvention of technical protection measures.

However, this opportunity for rights holders to put these measures in place is quite theoretical, in the case of performers, because they are not the ones who make the media incorporating their performances available to the public.

I would also like to emphasize that virtually none of the works that have been produced to date are equipped with these mechanisms or locks. And virtually all works circulate on the net through illegal downloading networks. This therefore means that it will never be possible to protect those works, which nevertheless enjoy immense popularity.

Bill C-32 does not come close to creating the necessary incentives for these TPMs to be effective in Canada. Most rights holders cannot afford to institute proceedings to collect to the paltry sums provided for under Bill C-32.

Another matter addressed by Bill C-32 is Internet service providers and their obligations with regard to copyright violations. The proposed amendments provide for a "notice and notice" system rather than a "notice and withdrawal" system that would require the service provider to withdraw the material in violation of copyright, as in the United States, for example.

The creation of this kind of obligation would have given rights holders real means to put a stop to the violations, and to do so quickly, thus limiting the economic damage caused. Internet service providers are absolved of responsibility for copyright violations that are committed on their networks, whereas they benefit from them to a large degree.

In another connection, Bill C-32 introduces new rights for performers. Although the UDA approves these additions, it deplores the fact that they are applied only in cases where the performance is fixed in a sound recording.

Consequently, performers whose performances are fixed in a medium including a visual aspect, such as music DVDs and digital audio files containing videoclips, do not enjoy the exclusive right of reproduction or other rights created by Bill C-32. This distinction is unfair and serves no purpose.

Furthermore, with regard to these new rights, Parliament should have ensured that the rights initially granted to performers could actually benefit them by providing that those rights could not be assigned before they were even created by the act.

The utility of this kind of transitional provision is not merely theoretical. There are practices in the industry whereby producers request that performers assign all copyright over their performances.

Lastly, Bill C-32 grants moral rights to performers, a fact that the UDA is very pleased about. However, we note that the moral right of a performer is recognized only where the performer's performance is given live and fixed in a sound recording.

It follows that artists whose performances are included in an audiovisual or cinematographic work will not enjoy a moral right over that performance.

The UDA notes that Bill C-32 provides that performers may be led to waive their moral rights, which poses a serious problem from the standpoint of Quebec's civil law.

In conclusion, I would say that, unless it undergoes significant amendments, Bill C-32 should be abandoned. While it claims to be modern and to favour creators, it in fact favours the users and businesses that benefit from their work.

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you, Mr. Legault.

I'll now give the floor to Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you, Mr. Chairman.

Thanks to each of you for being with us today.

My first question is for you Mr. Azzaria. You said that Bill C-32 faces us with a legal puzzle. The government is telling us that this will simplify and clarify matters. You're telling us the contrary. Can you clarify your thinking, please?

[Georges Azzaria]

Mr. Legault's remarks were also along those lines. There are increasing numbers of quite confused rules and exemptions. Honestly, I would challenge anyone to explain not only this bill, but the summary of copyright that it will provide. This is a very complex law. For private copying, I was told that we have a right to make a copy. Sometimes it has to be destroyed, but we don't really know when or how; sometimes we can retain it, sometimes the authors are compensated. I believe there is a great deal of confusion here.

This is a strange legislative policy. Curiously, in this bill, Parliament is highly interventionist. It will really go into very small details to tell us certain things. Ultimately, it's going into people's homes to determine whether they have destroyed the copies. At the same time, it's telling people they'll have to go through the courts if they want to change this and interpret the act. It's a strange way to make law, to go into details and then to tell people they'll have to settle the matter in the courts. This does no favours for culture or consumers, in any case.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you.

Ms. Morin, according to what you said, it's as though the bill would result in a loss of vested rights and income for creators. Is that correct?

[Annie Morin]

Yes, absolutely, even just in the private copying system. Once people no longer use blank audio media, which are currently covered by the act, there will obviously be a dead loss in this area. Reproductions could be made without there being any financial compensation.

The same is true for the reproduction royalties currently paid by broadcasters, although, for the moment, those royalties, at least for Artisti and its members, are much lower than the royalties resulting from the private copying system.