Canadian Heritage Committee on Nov. 27th, 2018

[The Chair, Liberal, Julie Dabrusin]

Good morning, everyone. Welcome to the 133rd meeting of the Standing Committee on Canadian Heritage.

We're continuing our study of remuneration models for artists and creative industries.

We're joined by Dave Forget and Samuel Bischoff, from the Directors Guild of Canada, and, as individuals, Howard Knopf and Jessica Zagar, who are both lawyers.

We are going to start with your presentations and then go to a question-and-answer period. We'll go in the order in which you appear on the agenda.

We will begin with the Directors Guild of Canada.

Go ahead, please.

[Dave Forget, National Executive Director, Directors Guild of Canada]

Thank you, Madam Chair, Vice-Chairs and members of the committee.

My name is Dave Forget and I'm the national executive director of the Directors Guild of Canada. With me today is Samuel Bischoff, the Guild's public policy manager.

We appreciate the committee's invitation to discuss remuneration models for artists and creative industries. In a period of significant disruption and transition to digital platforms, authors are often forgotten and left behind, while they are at the heart of a robust, innovative and successful screen-based industry. We commend the Standing Committee on Canadian Heritage for having launched this review on remuneration models to ensure fair and equitable compensation for creators.

The Directors Guild of Canada is a national labour organization representing key creative and logistical professionals in the film, television and digital media industries. Today, we have approximately 5,000 members in 47 occupations covering all areas of direction, design, production, logistics and editing. Twenty years ago, in 1998, the Directors Guild founded the Directors Rights Collective of Canada, a collecting society that administers foreign royalty payments from copyright legislation in other jurisdictions and distributes those earnings to Canadian directors working in all genres. In 2017, the DRCC paid out $796,000 in foreign royalties to its membership of 1,349 Canadian directors. Since 2001, the DRCC has paid out over $10 million.

We understand that the committee's mandate is to review remuneration models and the opportunities from new access points for artists and creative industries in the context of the Copyright Act. The DGC is proposing a simple amendment to the act to confirm that the screenwriter and director are first copyright owners and presumed co-authors of audiovisual content. Recognition within the act is a fundamental step to ensuring fair remuneration for creators, and doing so would also provide greater economic clarity in the marketplace, including as we transition to new business models based on digital distribution systems.

Moreover, the current version of the act and the recent legal rulings and interpretations are consistent with this definition, which makes this change a natural extension of the existing text.

The DGC's proposed amendment would be simple to implement and wouldn’t require any further changes to more fundamental sections of the act. The modifications would be focused on section 34.1 of the act, which is responsible for the ambiguity regarding authorship. More importantly, this change wouldn't affect the status of the producer of a cinematographic or audiovisual work, wouldn't disrupt the existing economic framework, and wouldn't have an impact for other categories of authors.

Authorship is a central concept in the Copyright Act. Historically, writers and directors have been considered co-authors in Canada. This fact is supported by common industry practices and is reflected in our collective agreements with producers' organizations. These collective agreements were negotiated by the DGC and other organizations representing directors and screenwriters, such as the Writers Guild of Canada, the Association des réalisateurs et réalisatrices du Québec and the Société des auteurs de radio, télévision et cinéma, in order to outline the terms and conditions governing compensation for talent and the future use of their work. These agreements also provide for the transfer of moral rights in the productions and authorize commercial exploitation.

This transfer of rights implicitly recognizes the screenwriter and director status of co-authors and first copyright owners. Moreover, broadcasters, distributors and other investors would not finance a production without the certainty that they had secured the rights necessary to fully exploit the economic benefit.

This transfer also acknowledges that producers are disposing of existing rights and are the logical second holders. This “chain of rights“, as we call it, is not only in line with the existing interpretation of the courts but is the product of collective agreements and contracts in our industry.

[Samuel Bischoff, Public Affairs Manager, Directors Guild of Canada]

Producers organizations are unduly using an ambiguity present in the current Copyright Act, precisely the authorial status of a so-called “cinematographic work”, to claim they are the main author and creator, yet both the text and subsequent legal rulings give overwhelming support to the proposition that the screenwriter and director are co-authors of the audiovisual work.

Section 11.1 of the act defines a cinematographic work as a set of actions giving the work its “dramatic character”, providing a term of copyright, which now is the life of the author plus 70 years, only to those works where, “the arrangement or acting form or the combination of incidents represented give the work a dramatic character”.

A writer, of course, puts words on paper—the script. A director then directs the performers and conceives and arranges all of the various creative elements that will ultimately appear on screen, including the staging, camera frames and camera movements, conceiving the settings and selecting locations, determining the tone and interaction of the performers, arranging the final sequence of images in the edit, and determining the sound design and musical score.

Section 11.1, in essence, determines that the screenwriters and directors are at the core of the creative decisions. As defined in the act, the screenwriter and director are the originators and creators who provide the dramatic character to a cinematographic work, whether it is a feature film or a TV series.

The term of the copyright itself, set at the life of the author plus 70 years, constitutes further evidence that the author must be an individual and a physical person, someone who can be credited with authorship and natural ownership of moral rights, not a corporation or other legal entity. Again, contrary to producers' claims, this interpretation of the act is supported in all existing Canadian case law and in Quebec jurisprudence under the civil code, and also in everyday practices in the Canadian film and TV industry.

While it is true to say that a cinematographic work is the result of a collective vision, copyright protects the expression of ideas, not the ideas themselves. Producers are responsible for the financial and administrative facets of a production. They are defined in the current act as “makers”. While carrying out a project from concept to screen is an important responsibility, it is not creative in the artistic sense, and it does not make the producer an author. ln other words, producers aggregate the rights to later license them. This logically establishes that ownership of copyright and moral rights must belong solely to the originating author and that the author must be a physical person giving the work its original dramatic character.

[Dave Forget]

This is why we are requesting a clarification of the act to better align with the current industry practice. This minor adjustment would not cause any disruption to the existing business and economic model but would safeguard author rights and promote fair compensation for screenwriters and directors, acknowledging their moral rights as individuals and creators.

Furthermore, this adjustment will safeguard all directors working in Canada, not just those covered by labour organizations such as the Directors Guild. All directors and writers will be recognized as authors and have their work protected under copyright. Second, it will bring predictability to the system, particularly with regard to the exploitation on any future platform, to guarantee that those rights will continue to be respected.

Ultimately, this clarification will establish Canada as a jurisdiction with clearly defined rules, thereby enhancing our export potential and freeing distributors and production companies to fully exploit the economic value of audiovisual works.

Members of the committee, thank you for your attention. We'd be pleased to answer any questions you may have.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

We will now go to Howard Knopf, please.

[Howard Knopf, Counsel, Macera & Jarzyna, LLP, As an Individual]

Good morning, committee members.

I have about half a dozen points to make. I hope I am able to get through them before we turn to questions.

The late legendary Canadian economist John Kenneth Galbraith explained the aptly named trickle-down theory of economics as follows. He said that if you feed the horse enough oats, some will pass through to the road for the sparrows.

That's essentially the basis of the copyright system as we know it in Canada. It's frankly a bit messy. We have about 38 collectives in Canada, which is about six times more than in the United States. We have the largest, most expensive, and slowest-moving copyright tribunal in the world.

Most of the sparrows get very little from this system. Take Access Copyright, for example. Based on its 2017 figures, 11,000 creators got $2,090,000 from Access Copyright and its publishers for an average of about $190 per annum each. That's less than the hourly billing rate of most junior lawyers these days.

The copyright system can be a disincentive to creation. A case in point is that of Giuseppe Verdi. For any of you who are opera fans, he was probably the greatest opera composer of all. This is documented in a wonderful book, which I urge you to look at or get your research staff to look at, by Professor F.M. Scherer, called Quarter Notes and Bank Notes. I'll post a link to it on my blog.

There is a recent important book and article by Professor Glynn Lunney on contemporary sound recording in the commercial music industry, and I'll also post that stuff.

Here are some facts I would ask you to keep in mind.

It's impossible to define who a professional writer, musician, composer, painter or other creator may be. I write a lot in my work and outside of my job. I certainly don't consider myself a professional writer; however, I did get a cheque the other day for just short of $85 from Access Copyright, which is more than a lot of other people I know get. It's always been incredibly easy to qualify as an Access Copyright creator or affiliate. Doubling my Access Copyright royalties would mean nothing to me other than maybe a nice lunch for two, but would cost the educational system in Canada hundreds of millions of dollars a year.

The composers whose works you might hear over at the National Arts Centre, the composers of so-called serious music or concerts, are lucky to make $500 or $1,000 a year from SOCAN. It's a good thing they get grants and commissions and maybe salaries, if they're fortunate enough to be a professor.

Virtually all professors are writers, and they get paid well for their writing by getting tenure and nice six-figure salaries these days. But only a very small handful, such as Jordan Peterson, make serious money publishing books.

In Canada, a trade book selling 5,000 copies is considered a great success. The writer will be lucky to get $15,000 from the publisher and a pittance from Access Copyright, so I hope they have a good day job.

My second point is on how digital technology can help artists get paid. While digital technology has a lot of potential, Justin Bieber was discovered by his talent manager and got a record deal because of his YouTube video covers 10 years ago, and the rest is history. Then there is the recent example of that wonderful 95-year-old gentleman, Harry Leslie Smith, who is suddenly a worldwide Internet sensation and sells books and whatever, and we wish him a speedy recovery. The Internet was his ticket to being known.

There is no doubt that artists will find a way, perhaps with the help of Google, Amazon, Shopify or other platforms yet to come, of selling directly online to their fans without having to sign away their rights and most of their revenues in exchange for recoupable advances and elusive dreams that almost never come true. But beware of digital delusions and vapourware. For example, I am frankly very skeptical about Access Copyright's latest announcement on something called “Prescient”, which promises the world. Once again, I am not holding my breath, based on its past failures to deliver.

Talking about blockchain and machine learning is easy to do. That's why everybody is doing it and talking. Everybody is talking about it, and hardly anybody is doing it.

Above all, please consider that we're looking at the cultural and knowledge sector of which copyright is only a component or tool and not the sector or the end in itself.

Think about the transportation sector, which evolved from horse and buggy to cars. More money got spent on transportation over the years, but it got spent differently. Things change and constantly evolve. Old business models and jobs are not guaranteed—just look at Oshawa. As Universities Canada pointed out the other day and in their brief filed with the INDU committee in June of this year, Canadian universities are spending more than ever before in purchasing content—more than one billion dollars in library content in the past three years combined. That's based on StatsCan data.

My third point is that increasing use of Public Lending Right and similar models would be a good idea. The Public Lending Right is an excellent program that rewards creators whose works are borrowed from public libraries. Because it's outside the copyright system, the payments can be restricted to Canadian writers. Unfortunately, the amount has fallen over the years from $4,000 to $3,000 as the maximum payment. Let's put more money into this system and consider Roy MacSkimming's excellent suggestion for broadening the system to include an educational lending right. That would enable payments to Canadian authors of school and college textbooks and educational materials, including scholarly works.

My fourth point is how can collectives best serve artists? Collectives have an inherent conflict of interest when it comes to serving creators. High salaries and high legal fees can only be justified in big organizations with annual revenues in the tens or hundreds of millions of dollars. Collectives can best serve artists by doing their best to put themselves out of business, or at least making themselves smaller and smarter, by embracing digital technology. It's simply unacceptable for a collective to spend 25% or 30% of its revenues on administration, lobbying and legal fees. That's the members' money.

The Copyright Board should allow a collective to operate only if it does so in the best interests of both creators and users. In all cases, it should require full disclosure of actual repertoire; average and median payments to individual creators; salaries of senior officers and in-house counsel; and amounts spent on outside lobbyists, lawyers, experts and other consultants, along with their names.

The next point is on levies and earmarked taxes. Since 1997, Canada has had a blank media levy system. On behalf of the Retail Council of Canada, I tried to get the Federal Court of Appeal to agree that it's an illegal tax, and I very nearly succeeded, but close is no cigar. However, a previous minister, the Honourable James Moore, agreed with me, and in 2010 called the proposed iPod levy a “tax”, and said: “this idea is really toxic and, frankly, really dumb.”

The Copyright Board is inexplicably keeping this zombie tax alive and allowing the music industry to use the small revenues of about $2 million a year, almost 30% of which goes for administration, lobbying and lawyers, to wait in zombie-like stealth for another day to pounce on smart phones, ISPs, the cloud, and whatever they persuade a gullible government to somehow tax.

The music industry is also now asking for a new “tax” on iPhones. They don't call it that.

[The Chair, Liberal, Julie Dabrusin]

Mr. Knopf, I just want to give you a heads-up that you're already at eight minutes. Perhaps you can try to wrap it up.

[Howard Knopf]

I only need a small fraction of time. I thought my friends had more time.

They're asking for a $40-million per year taxpayer handout until an iPhone tax can be implemented, not to mention a recent proposal that would subject broadband data to a copyright tax.

It's more than time enough to kill off this levy scheme in part VIII of the act. There's no “value gap” in the copyright system. There is a “values gap”, however, in the fake news that's being disseminated these days about IP in general and copyright revision in particular.

My last point, which we might have to come back to in questions, is that the elephant in the room is whether copyright tariffs are mandatory. I say they're not. I convinced the Supreme Court of Canada three years ago that they're not, but there's a lot of denial and resistance to that ruling.

For example, a tariff that sets a maximum for a train ticket from Ottawa to Toronto is fine. We used to have tariffs such as that. However, even in those days, passengers were always free to take the plane or the bus, or drive their car, or ride their bicycle, or use any other legal and usually unregulated means. It should be no different with Copyright Board tariffs.

Thank you. I'll defer to questions.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

We will now go to Jessica Zagar, from Cassels Brock & Blackwell. Thanks.

[Jessica Zagar, Lawyer, Cassels Brock & Blackwell LLP, As an Individual]

Good morning.

My name is Jessica Zagar. I am a lawyer at Cassels Brock & Blackwell in Toronto. I am a corporate and commercial litigator, but I focus my practice on copyright matters.

I act for a wide variety of clients, including rights holders, copyright collectives and users of copyright-protected material. The views I express here today, though, are my own.

My submissions focus on site-blocking injunctions and de-indexing orders; and specifically amending the Copyright Act to authorize a court to grant one of these orders against an Internet intermediary, with worldwide effect and on a no-fault basis. This amendment would be an important step towards ensuring fair compensation to artists for uses of their works. Online piracy runs rampant, siphoning compensation out of their hands. Yet, artists do not have effective tools to enforce their rights on the Internet.

I understand that one of the arguments against amending the Copyright Act to specifically provide for these orders is that injunctive relief is already available through common law. As a litigator, I have participated in many litigation proceedings, including injunction proceedings. I have witnessed first-hand the challenges associated with obtaining these orders, including the significant time, cost and uncertainty associated with securing and enforcing them. I would like to share with the committee my observations about the actual steps required to seek and obtain these types of orders, because I think it will illustrate why they are not a particularly effective remedy for artists.

By way of example, an artist may discover that his music has been posted online without permission or compensation. The artist wants the content removed, but ultimately what the artist really wants is for the harm to stop. The artist wants the traffic to go to legitimate sources, not the infringing source. The artist likely cannot do that without a court order. The Copyright Act does not expressly permit site-blocking or de-indexing orders. As a result, the artist needs to seek injunctive relief through ordinary means. That means starting a claim in the courts against the infringer or the intermediary. Usually it will be the infringer, but both approaches pose significant challenges.

It is not easy to start an action and obtain relief against an infringer. They are often, not surprisingly, difficult to find. They hide their identity, location and address. Frequently they are not located in Canada. This creates complications for service of court materials and for enforcing any relief that might be granted against them. While an intermediary might be easier to find, their actions may not rise to a level of activity recognized under the Copyright Act. In their mere conduit roles, they may be, by extension, enabling infringement through their services, but that, in and of itself, is not an actionable cause of action. To prove infringement, the artist would need to show, for example, that the intermediary provides a service primarily for the purpose of enabling infringement and that an actual infringement has occurred.

The artist will likely start the claim against the infringer, and the artist will likely need to seek an interlocutory injunction to stop some or all of the harm pending trial. Depending on the nature of the relief sought, the artist must show that there is a serious issue to be tried or a strong prima facie case, that there will be irreparable harm if the relief is not granted, and that the balance of convenience favours the artist. This is not an easy test to meet. Interlocutory injunctive relief, by its very nature, is not something that courts are readily willing to dispense; after all, they are dispositions before a full hearing on the matter. These motions are expensive and risky.

While the proceeding is moving through the process, a defendant may at any point disappear. In Equustek, the defendants changed their business operations after the lawsuit started. They changed where they operated from. They started offering their product for sale through other websites and filled those orders from unknown locations. Those issues need to be dealt with to the extent possible to minimize the harm to the artist as the case proceeds.

Hopefully, the artist secures an interlocutory injunction. Also, at the end of the process, the artist hopefully secures a damages award and an order requiring the infringer to take down the infringing content. But it rarely stops there.

An award of damages is only as good as your ability to enforce it. Furthermore, an order for the infringer to take down the content nevertheless requires the infringer to comply. If the infringer does not comply, the artist, having gone to all of this time, effort and expense, either has no relief or has to seek more relief in the form of contempt proceedings. All of this comes at additional time and expense to the artist, without any certainty or assurance that the infringer will ultimately comply.

Nevertheless, with an order in hand, the artist may decide to approach an Internet intermediary and seek their voluntary assistance. The intermediary might or might not be willing to assist.

However, new offending sites may appear overnight, and it can become a whack-a-mole exercise. The infringer may simply move the objectionable content to other pages of their website, or they may create new websites from new locations altogether.

It is unlikely that the Internet intermediary will voluntarily take all of the steps needed to actually have the infringing content removed or effectively blocked or de-indexed. Often it needs to be compelled by the court order, because the only effective remedy is the more large-scale de-indexing or blocking order on a worldwide basis. The artist then needs to seek relief against the non-party intermediary to obtain that relief. As became evident in Equustek, this can be no easy feat. If the intermediary opposes the relief sought, it may raise any number of arguments. It may attack the court on jurisdictional grounds or form. There is no guarantee that the court will rule in the artist's favour—far from it—because the test for the relief, as I've just discussed, has a very high threshold. An order may be appealed. ln Equustek, it was appealed all the way to the Supreme Court of Canada, but it did not stop there. Google took the order to California and the matter ended up back in the British Columbia courts to deal with the U.S. ruling that the Canadian order was unenforceable.

Litigation presents many twists and turns, and no two cases are exactly the same. I hope I have been able to demonstrate that it is not easy for artists to enforce their rights in the existing regime. The artists face many time-consuming, expensive and uncertain hoops and hurdles before they are in a position to stop the harm.

The proposal to amend the Copyright Act is about efficiencies and giving rights holders a tool to enforce their rights—a leg-up to stop the harm, with fewer hoops. It will not eliminate all of the hoops. It will not make these orders easy to obtain or result in wide-scale, unhindered censorship on the Internet. lt will still take time, money and due process to secure them. However, it will eliminate some of the steps that artists need to take today, and it will help them get an effective result faster and at less expense.

ln closing, I will note that the proposal is not about blame or fault; it is quite the opposite. The proposal is about recognizing that Internet intermediaries, such as ISPs, hosting providers and search engines, are best placed to prevent or limit large-scale online copyright infringement. And it is about recognizing that rights holders need meaningful, effective tools to enforce their rights and ultimately receive fair remuneration for uses of their works.

Thank you. Those are my submissions.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

We started the meeting late because of the votes. I therefore propose that there be a five-minute question and answer period for each group. That way, we can ask questions before we hear from the other witnesses.

Ms. Dhillon, you have five minutes.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

My first questions will be for the Directors Guild of Canada.

Could you please comment on the challenges faced by the sector as a whole, not just from the perspective of directors and screenwriters?

[Dave Forget]

That's a big question.

I think one of the key challenges we're seeing as we're migrating from conventional content distribution systems to online is around how content gets made and how it gets the economic model for it. In our case, it's how artists and creators are being compensated for it. One of the big challenges we're seeing is that, as audiences are moving, revenue models are changing, and that's impacting the ecosystem in any number of ways.

We have a short window in which to answer, but I'd say that's the major challenge out there, that we're migrating from more a conventional system to an online world.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Perfect.

Could you please elaborate on your relationship with producers?

[Dave Forget]

We work very closely. As I said in the introduction, our organization represents 47 different categories. This includes directors, sound and picture editors, location managers, and designers. Our members are working on productions right across Canada with television, digital media and feature film. For scripted content, the model in Canada is largely organized around an entrepreneurial model in which independent production companies are commissioned to create content, so those producers then bring together teams. Those include many of our members alongside writers, other professionals, and creators in the sector. We work very closely.

We negotiated a new collective agreement that kicks in on January 1 with the Canadian Media Producers Association. I'd say we have a very close working relationship with producers.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

That is perfect.

Should we be looking at other jurisdictions in the world where the role of directors and screenwriters is more valued, in the context of copyright and remuneration?

[Dave Forget]

Yes, I'd say the models in place in Europe would serve you well, in terms of doing the research. Keep in mind that what we're proposing here is not a change to the system we have but just a clarification.

The act makes reference to an author of audiovisual content, but doesn't name the author. It's presumed to be—and this has been industry practice, and supported by the courts—writers and directors. We're simply saying that a small modification, to make it clearer who we're talking about when we talk about the author, would bring more clarity and predictability to the act.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you. I'll direct the same question to Mr. Knopf and Ms. Zagar.

[Howard Knopf]

Well, I was not speaking on behalf of any particular sector, and I should have indicated, of course, that I'm speaking in my personal capacity. I guess my remarks were focused on the educational sector, as I think about it now. That was not intentional. I did mention the music sector as well.

I meant it to be a general comment on the effectiveness of collectives, the Copyright Board, tariffs and that sort of thing. Thank you.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Would you like to add anything, Ms. Zagar?

[Jessica Zagar]

I would. In response to Mr. Knopf on the collectives issue, I just want to say that my experience with collectives has been quite different from what Mr. Knopf has described. Artists rely on collectives to do the work that they would be unable to do on their own. Most of these collectives are not-for-profits that really exist only to benefit their members and provide a valuable service. They're dealing in micropayments, and with licensing disparate uses that those rights holders wouldn't be able to license on their own.

I wanted to raise that with the committee, because my understanding of the collectives has always been that they are really doing the work to benefit their rights holders, and taking their mandate from the work that rights holders want them to do. We should be strengthening and supporting collectives, not trying to tear them down through this process. They are providing an indispensable service to artists in their remuneration.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

That's perfect. Thank you.

[The Chair, Liberal, Julie Dabrusin]

You have 15 seconds left.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

I'm finished, thank you.

[The Chair, Liberal, Julie Dabrusin]

We will now be going to Mr. Yurdiga, please.