Evidence of meeting #109 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was creators.
A recording is available from Parliament.
Liberal
The Chair Liberal Julie Dabrusin
Hello everyone and welcome to the meeting.
We are beginning our 109th meeting of the Standing Committee on Canadian Heritage.
Today we are beginning our study of remuneration models for artists and creative industries.
We have some witnesses with us, but before we start with them, we'll deal with another matter.
Mr. Nantel would like to say something so I will give him the floor.
NDP
Pierre Nantel NDP Longueuil—Saint-Hubert, QC
Thank you, Madam Chair, for your kind invitation.
I would like to proceed to a vote on my motion. The motion is to invite representatives of the key agencies involved in the matter surrounding the famous Chagall painting, La tour Eiffel.
The clerk probably has the motion in hand. If you would like it to be read again, it will not take long. Then we can move on to something else.
Liberal
The Chair Liberal Julie Dabrusin
Do I need to read it again or is everyone already familiar with the motion?
It is the analyst who has a copy of it, so I will read it out again.
This is the motion that was brought by Mr. Nantel. I will read it:
That the Committee invite the Chair of the Board of Trustees of the National Gallery of Canada, Françoise Lyon, the director of the National Gallery, Marc Mayer, the Chairperson of the Canadian Cultural Property Expert Review Board, Sharilyn J. Ingram, and the Department of Canadian Heritage, within 45 days, to explain decisions concerning Marc Chagall's Le tour Eiffel and Jacques-Louis David's Saint Jerome Hears the Trumpet of the Last Judgement and to account to the Committee for these decisions' cost to the public.
I know that we had debate on this at one of our previous meetings.
Does anyone wish to comment on this motion?
(Motion negatived)
Liberal
The Chair Liberal Julie Dabrusin
Now we can continue with our witnesses. Today we have with us from the Department of Industry, Mark Schaan and Martin Simard. From the Department of Canadian Heritage, we have Nathalie Théberge, Lara Taylor, and Ian Dahlman.
Let's begin with the Department of Canadian Heritage, please.
Nathalie Théberge Director General, Creative Marketplace and Innovation and Deputy Director of Investments, Department of Canadian Heritage
Madam Chair, the plan was for the industry department official to give his presentation first. Would that be okay with you?
Mark Schaan Director General, Marketplace Framework Policy Branch, Department of Industry
Thank you, Madam Chair.
My name is Mark Schaan and I am the director general of the marketplace framework policy branch, at the Department of Industry. It is a pleasure to be here today to give you an overview of an important element of Canada's intellectual property framework: the Copyright Act. Ms. Théberge and I have prepared a brief joint presentation.
The Copyright Act is one of our four main intellectual property acts. The main purpose of the Copyright Act is to encourage innovation and creativity for the benefit of all of society. It does this by creating a bundle of rights and establishing exceptions and limitations to these rights.
The Copyright Act provides an incentive for creators to create by ensuring that they will be able to tap into opportunities for their creations in the marketplace. This in turn gives the public access to new creative works.
Intellectual property laws, especially copyright, are considered foundational marketplace framework laws. They provide the rules of the game for businesses and consumers. The Copyright Act is a legislative instrument of general application. Like any law of general application, it must be amended with caution, given the importance of predictability and stability for all market players. The act reflects a complex balancing of various interests and public policy objectives and is increasingly key in facilitating global commerce.
I will now go through the main elements of the Copyright Act.
Copyright protects four broad categories of original works: literary, dramatic, musical, and artistic. This includes books and magazines, audiovisual productions, music, paintings, photographs, architectural drawings, and software.
A fundamental principle of copyright is that copyright only protects the expression of an idea, not the idea itself. For example, an idea for a story would not be subject to copyright protection, but the expression of the idea in the form of a written story would be.
Copyright arises automatically upon creation of an original work that has been fixed in a material form. This approach was adopted internationally so that artists would not have to register their work around the world to benefit from the fruits of their creative effort.
Overall, the act gives creators the right to control or be paid for the use and dissemination of their works, but these rights have a limited term of protection. The general term of copyright protection in Canada is the author's life plus 50 years. Different term limits apply in certain cases, such as for sound recordings, which are protected for 70 years from the date of publication. Once copyright expires, the works enter the public domain and can be used without payment or consent.
In general, the act grants the copyright holder the exclusive right to reproduce, represent or communicate the work to the public. Doing any one of these things without the copyright holder's consent constitutes infringement.
In certain specific cases, the act also grants rights that are not exclusive, such as the right to remuneration for recording artists and music labels when their sound recordings are played on the radio.
Copyrights are not absolute and are bounded by limitations and a number of exceptions outlined in the act. For example, there's a variety of exceptions for consumers, including for format shifting, recording programs for later viewing, backup copies, and non-commercial user-generated content. There are also a number of exceptions for innovation, notably to enable activities related to reverse engineering for software interoperability, security testing, and encryption research.
Along with the economic rights that I have described, the Copyright Act also confers moral rights. Moral rights protect the integrity of works and the author's right to be associated with them or not. Unlike economic rights, moral rights cannot be assigned, but they can be waived.
The review you are taking part in is the first under the current section 92 of the Copyright Act. This provision was enacted by Parliament in 2012 as part of the last round of comprehensive reform of the act. It calls for a committee of Parliament to review the act every five years.
This provision was enacted to ensure that technology does not outpace the act and to provide a transparent forum for the interested parties to present their concerns regarding the act.
Regarding new technologies, it is important to note that there is already some degree of adaptability built into the copyright framework.
First, the courts have interpreted the act in accordance with the principle of technological neutrality, which allows copyright to evolve jurisprudentially in the absence of changes to the act. Second, copyright can be divided, licensed, or assigned by contracts. This allows parties to define and agree on various terms, conditions, and uses, thereby providing a good measure of flexibility with respect to copyright as new platforms, media, and consumer habits arise.
Canada has a modern and robust copyright framework, generally allowing for a functional marketplace. Yet, given the complexity of copyright policy and how it affects diverse economic actors, often with opposing interests, it is one of the most debated pieces of legislation and there is no shortage of reform proposals to amend it in one way or another. This is why it is important to hear a diversity of viewpoints to ensure our Copyright Act functions as optimally as it can and delivers benefits for all Canadians.
Copyright legislation is a federal responsibility under our Constitution. In recognition that it is both a marketplace framework law and a cultural policy tool, copyright policy responsibility is shared between the ministers of Innovation, Science and Economic Development and Canadian Heritage. Each department has a dedicated team responsible for advising the government on copyright policy. The two departments work together to develop policy options for government's consideration.
There are other organizations that play key roles in the overall legislative framework for copyright. The Copyright Board of Canada is an arms-length quasi-judicial tribunal. It establishes royalty tariffs for the use of certain collectively managed copyrighted works, acts as a neutral arbitrator of individual licences upon request of parties, and issues licences for works for which the copyright owner cannot be known or found, which are also known as “orphan works”.
There is also the Canadian Intellectual Property Office, which is responsible for registering copyrights, assignments of copyright, and licences. While it is not necessary to register a copyright to obtain legal protection, doing so provides some benefits to the owner in the event of a dispute. It also provides notice to others who may wish to use the work or avoid infringing it.
Canadian courts are another important actor in the legislative framework. They resolve disputes by determining whether infringement has occurred and awarding just remedies to copyright owners when infringement has occurred. Courts can also issue injunctions to prevent or stop infringement. Court decisions play a role in determining how the provisions of the act are interpreted and applied. Canada's Supreme Court has been particularly active on copyright over the past 15 years, releasing numerous important decisions since 2002.
By nature, copyright law is territorial, but it is also governed by an international multilateral system of treaties and agreements that establish minimum standards of protection. This way, authors and creators from one country can easily obtain copyright protection in other countries. This system supports Canadian creators and encourages creative works from other countries to be offered in the Canadian marketplace, providing greater choice for Canadian consumers.
The relevant international agreements that Canada is party to include the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights and numerous copyrights treaties administered by the World Intellectual Property Organization, or WIPO, such as the Berne and Rome conventions and the Internet treaties. One of the minimum standards of these agreements is to provide a general term of copyright protection of at least the lifetime of the author plus 50 years.
The last major WIPO copyright treaty that Canada joined was in 2016 when Canada implemented the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled. In fact, Canada was the first G-7 country to implement the treaty, and the essential 20th country to join the treaty, the total needed to bring it into force internationally.
Copyright is also frequently part of multilateral and bilateral trade negotiations, including the ongoing NAFTA negotiations. These agreements may commit signing countries to minimum copyright standards. Some of these may go beyond multilateral standards. The Canada-European Union Comprehensive Economic and Trade Agreement was the last agreement with copyright provisions that Canada implemented.
The recently signed comprehensive and progressive agreement for trans-Pacific partnership also contains copyright provisions.
Liberal
The Chair Liberal Julie Dabrusin
That brings us to 10 minutes, but I know you have a little more to go, so I'll let you continue, if you can try to wrap it up.
Director General, Marketplace Framework Policy Branch, Department of Industry
Thank you.
The Copyright Act is perhaps the widest ranging of all our intellectual property laws, impacting most Canadians every day.
But as we look ahead beyond the horizon, users are increasingly able to become creators themselves. New technologies related to the fourth industrial revolution such as artificial intelligence, 3D printing, the Internet of Things, and augmented and virtual reality are also going to interact with copyright. And just as the digital technologies of the 2000s were disruptive to many copyright-based industries, these emerging technologies can also be expected to challenge current legal frameworks and business practices.
If I could just touch on one last thing, it would be that we continue to witness a significant use of copyright in Canada. Some copyright stakeholders have been particularly affected by chronic disruption and are facing market challenges, yet Canadians appear to remain avid consumers of copyrighted content.
A public opinion research survey we recently commissioned found that 80% of Internet users in Canada consumed digital content online over the three-month period ending November 2017. In the same period, Canadians reported spending $5.4 billion on copyrighted content, including digital content, physical purchases, and tickets to live performances and movies. The survey also found that the large majority of digital content consumed was consumed legally. About a quarter of content consumers reported consuming at least one file online illegally, and a small percentage, 5% to be precise, reported consuming content online only from illegal sources. I think this gives us some base for consideration.
Madam Chair, I would like to turn it over to my colleague, Ms. Théberge, who will continue the presentation.
Director General, Creative Marketplace and Innovation and Deputy Director of Investments, Department of Canadian Heritage
Thank you very much.
I am happy to be here today to speak to you about the importance of copyright as a policy tool to promote creativity and innovation. In fact, more than ever, copyright and the opportunities for remuneration that it provides creators and creative industries is a central driver of development and prosperity in advanced economies such as Canada's.
Here are a few numbers: the creative sector creates 630,000 jobs in Canada and contributes $54.6 billion per year in economic activity. This includes $7 billion in film and television production; a $561-million sound recording and music publishing industry that provides 11,000 jobs; a $1.15-billion book industry that provides 13,845 jobs; and a video game industry with 472 development studios. Canada is also at the forefront of a rapidly growing virtual and augmented reality sector.
The most recent reform of the Copyright Act dates back to 2012. Parliament passed the Copyright Modernization Act, or CMA, following extensive national consultations. The key objectives of the CMA were to modernize the act in response to changes brought on by the emergence and prevalence of digital technologies; to ensure that the act was forward looking, flexible and adaptable for a constantly evolving technological environment; and to bring it into line with international standards.
To do this, the CMA introduced new rights and protections for creators and rights holders, as well as tools to protect their investments and to support the creation of new online business models. Technological protection measures, or TPMs, are one of the tools that rights holders can use to control or restrict access to their protected works—through passwords, subscriptions, etc.—or to prevent copying, through download or copy blocking, etc.. These measures have positively contributed to online business models for the video game and software industries.
Still in 2012, a number of new provisions were introduced to improve digital access to copyrighted materials, along with clear rules on how to legally use these materials. This included new consumer exceptions, new purposes under fair dealing, notably for education, parody and satire, new and updated exceptions for educational institutions, libraries, museums, and archives, and exceptions to use legitimately acquired materials for the creation of non-commercial, online user-generated content.
The CMA also addressed the liability of new players in the online space, such as Internet Service Providers, or ISPs, digital storage devices, website hosts, or search engines such as Google and Bing, and other digital intermediaries, such as Apple, Amazon, Facebook, and so on. It clarified that these digital intermediaries are not responsible for infringing activity carried out by people using their services or products, as long as they are acting as neutral providers of communication, hosting, caching, and search services or products. At the same time, it offered the ability to take action against those that intentionally enable copyright infringement. One such example is the 2015 injunction obtained by the Motion Picture Association of America against the Canadian programmers of Popcorn Time, a website that allowed for the dissemination of free online content. As part of these changes, ISPs were also mandated to help curb infringement on their networks by participating in a voluntary notice regime.
Since 2015, the Copyright Act has of course continued to evolve in response to regulatory changes and our international obligations.
Mr. Schaan already mentioned two important initiatives: the intellectual property strategy and the reform of the Copyright Board, the impact of which is essential for the economic growth of a number of creative industries, notably the music and education sectors. Budget 2017 also announced a review of the Broadcasting Act and the Telecommunications Act.
In September 2017, the creative Canada policy framework was launched by Minister Mélanie Joly after consulting stakeholders on how to strengthen the creation, discovery and export of Canadian content in a digital world.
Over 30,000 Canadians, including creators and cultural entrepreneurs, took part in the discussion. Creative Canada proposed the government's vision and approach to supporting and growing Canada's creative industries by strengthening existing cultural policy tools, setting a path to renew the ones that require updating, and introducing new initiatives to help creators and creative industries thrive in a global digital marketplace.
The impact of the digital transformation is different from industry to industry. Through the emergence of new distributors, new technologies have not only shifted how money is made but also who benefits and how those benefits flow through to creators and rights holders.
In the music industry, the shift to streaming is a significant change that engages rights in a manner different from when music was consumed via albums or downloading. Relying on complex licensing structures, new services are providing consumers with access to a near infinite catalogue for a set regular fee. Through these services the volume of accessible content has skyrocketed, and increased competition has created a “winner takes all” environment, where although significantly more content is available and consumed, the benefits are concentrated among few. Where value used to be in the creation of an album, it now lies in the individual songs, resulting in an increased focus on acquiring the largest, most valuable catalogue of music. It is interesting to note that from 2010 to 2015, overall revenues from sound recordings in the Canadian music industry remained relatively stable, in large part due to the increase in streaming revenues.
A similar shift toward online streaming, including legal and illegal services, is just one pressure facing the Canadian audiovisual industry. User-generated content has already greatly increased the volume of content that is available to consumers for free.
Of course these issues are not unique to Canada. Digital intermediaries, like on-demand content providers and user-generated content platforms, are increasingly important in the creator-to-consumer value chain for creative content in Canada and abroad. As such, many countries are considering how to address this in terms of liabilities and responsibilities with respect to copyright.
Many are also coming to terms with the fact that copyright legislation is not always the only or the best solution. Issues like the integrity of content metadata, better tracking of copyright activity, simpler licensing practices, and the crucial importance of transparency for all players in the system may indeed not require changes to the legislative framework.
Several stakeholders are already taking advantage of technologies to develop new ways of managing their copyright. Innovations such as application programming interface, blockchain, and smart contracts offer opportunities for more transparency, better rights clearance, and more business potential. Such a technology focus may be the best way to discover common ground among stakeholders.
Going back briefly to the music industry for example, some stakeholders have started using artificial intelligence and cloud-based technologies to capture better data and develop a digital marketplace that improves the ease and accuracy of compensating rights holders. They are also exploring the use of blockchain technologies to streamline licensing and rights management. These are two examples of non-legislative, market- and stakeholder-driven initiatives aimed at simplifying rights management in support of facilitating remuneration.
In short, to fully understand creator remuneration today, one must broaden the scope of investigation and look beyond the law and what the marketplace is doing by itself and consider how to incentivize collaboration among those who benefit and contribute to creator remuneration and nudge innovative thinking.
Before I conclude, I want to reiterate that the work of this committee presents an opportunity to consider the needs and interests of indigenous people, particularly as they relate to traditional knowledge and traditional cultural expressions. Many have argued that the current legal framework is not well suited to addressing some of the key concerns of indigenous communities with respect to the protection of their cultures. Canadian Heritage and its portfolio organizations are active in various processes under way to understand and implement commitments under the United Nations Declaration on the Rights of Indigenous Peoples, which refers specifically to intellectual property.
Canada has also been working actively with international partners under the auspices of the World Intellectual Property Organization, WIPO, to look at the feasibility of developing international norms for the protection of traditional knowledge and traditional cultural expressions. This work is particularly complicated, as the fundamental underpinnings of intellectual property often do not match the particular characteristics of indigenous traditional knowledge and traditional cultural expressions, which are generally intangible and collectively owned.
Thank you for your attention. I hope the information we have provided will be useful to you in your study.
Mr. Schaan and I will be happy to answer your questions.
Thank you.
Liberal
The Chair Liberal Julie Dabrusin
I want to thank the witnesses for their presentations.
We will now begin the question and comment period.
Ms. Dzerowicz, you have the floor for seven minutes.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you so much for the excellent presentation. You've presented a colossal amount of information in a very short period of time, and I could probably spend hours asking you lots of questions right now. That was a really heroic job in a very short period of time.
I'm going to anchor my questions based on what I'm hearing from artists and creators and those in the culture industries from my riding of Davenport. I think it's the best way for me to approach it.
Mr. Schaan, you were talking about remuneration for the youth and the dissemination of artists' and creators' work. You said it's protected for the general life of the author plus 50 years and that for song recordings it's 70 years. The impression I have been given from those in the industry is that Canada is behind other countries. I think that Mexico has a protection for songs for 100 years; most countries have moved to 70, and we're behind at 50 years.
I want to know whether that is factually true, and if so, why it is so.
Director General, Marketplace Framework Policy Branch, Department of Industry
Thanks so much for the question. I agree that it's a lot to cover in a short period of time.
Canada's term of protection for copyright is based on the type of work, but for most works it generally extends, as you indicated, to 50 years after the death of the creator. The term of protection for sound recordings and performances is slightly different. It's based on the date of fixation of publication and generally lasts for 70 years after this date, so it's 70 years after the song is published. This term was changed from 50 to 70 in 2015.
There is a variety of approaches to copyright term in the international sphere. As you know, in Mexico it is life plus 100, but only for Mexican authors; it's not honoured for authors of other national origin. In the United States it is life plus 70, which is consistent with the term in Europe. There are few studies that indicate one way or the other the economic impact of the life of the creator plus 50 or of life plus 70 years, but internationally, various countries have taken differing approaches to the way they look at term.
Liberal
Julie Dzerowicz Liberal Davenport, ON
From what I'm hearing, in comparison with Europe and the U.S. we are behind, because we're at 50 and they're at 70 at this point in time. This is something that has gone back and forth, so I wanted to confirm it, and I appreciate your doing so.
One other thing that I hear quite a bit is from artists in my riding who ask me why we don't have resale rights in Canada. As an artist, they sell their work; they sell it for what they think it's worth, but then over their lifetime, it increases in value, and they'd like to be able to share in the profits of that increase.
Have we considered this in the past? If so, why have we not implemented it?
Director General, Marketplace Framework Policy Branch, Department of Industry
Artist resale right is a right for a visual artist. It allows for some form of gain on future sales of a particular work as its value accrues. It's usually done as a portion of the proceeds that comes out of the gallerist or the auction house that does the sale.
As with all things in copyright, it's a challenging issue. There are views on both sides of artist resale rights. We have examined this in the past.
You'll hear from some that being able to benefit from the upward gains of their creative work is critical for people. You'll hear from others that those creative gains are often for superstar artists, of which there are not many, and that the incremental gain for them over the course of their life is not that high, whereas for most artists it's a slow and steady kind of gain and not a one-time windfall.
You'll hear from some that our gallerists already make a significant investment in the promotion and development of their artists and that for the artists to claim back a portion of their proceeds later in life will disincentivize the gallerists from making such investments.
It's a complicated issue, but one we have looked at.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Do other countries offer resale rights? In particular, do the U.S. and Europe offer it?
Director General, Creative Marketplace and Innovation and Deputy Director of Investments, Department of Canadian Heritage
There are about 90 jurisdictions that offer artist resale rights. Germany's an example. Australia is another example.
Mark is correct. One of the challenges we have is actually finding data that would allow us to see the anticipated impact of adding this to the Copyright Act. You will hear both sides of the story, just like Mark said.
Liberal
Julie Dzerowicz Liberal Davenport, ON
What data do you think we're missing in terms of being able to evaluate that?
Director General, Creative Marketplace and Innovation and Deputy Director of Investments, Department of Canadian Heritage
We need to be able to understand the economic impact it would actually have on both the creators and the art market more generally. Some would make the point that it will make it more profitable to actually have art being sold out of the U.S. rather than Canada. There is no data that would demonstrate that because it's about future behaviour. It's about anticipated market behaviour.
One of the things that Canadian Heritage has been doing is trying to get a sense of what the reality is for artists in the visual art market. We were involved in a very interesting project over the last year to be able to aggregate anecdotes as a way to find data, because we don't have any data.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you.
I have a lot more questions on resale, but I'm going to move on to my next question because I have a feeling we will dig into that question on resale over the next little while.
This question is around photocopying. I have a wonderful publishing house in my riding. Textbooks are not printed as much. Books are not printed as much. There's a lot of photocopying that goes on, so there's a very strong belief that writers and authors are not being remunerated for the photocopies that are made.
I know this is a big debate. I'm sure there are some things that have gone to the courts. I just want us to weigh in on where we are in terms of our thinking around remuneration for our authors and writers.
Director General, Creative Marketplace and Innovation and Deputy Director of Investments, Department of Canadian Heritage
What would be the purpose of the photocopying? Is it for educational purposes? Is it for commercial purposes or non-commercial purposes?
Liberal
Julie Dzerowicz Liberal Davenport, ON
For the most part, they talk a lot about educational purposes, and then it moves on to commercial purposes as well.
Let's start with educational purposes.
Liberal
The Chair Liberal Julie Dabrusin
We're now at 15 seconds, so we don't really have much time. If you wanted to do a segue, there might be an ability to catch it up on other questions. I expect you'll have some other questions on this.
Director General, Marketplace Framework Policy Branch, Department of Industry
It might come back up again, and I think we can indicate that educational copying is currently one of the most complex and heated issues in copyright. I think our view on remuneration would be, generally, that we would like to see a world in which the public policy objectives of a sustainable publishing industry are there, as well as an efficient mechanism for students to be able to access copyrighted material.