Evidence of meeting #126 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was film.
A video is available from Parliament.
3:30 p.m.
Liberal
The Chair Liberal Dan Ruimy
Good afternoon, everyone.
Welcome to meeting 126 of the Standing Committee on Industry, Science and Technology as we continue our statutory review of the Copyright Act.
Before we get into it, we just have a couple of minutes of House duty. I'd like to officially welcome Celina Caesar-Chavannes.
Welcome. You are officially a member.
3:30 p.m.
Some hon. members
Hear, hear!
3:30 p.m.
Liberal
The Chair Liberal Dan Ruimy
On this side, both Michael Chong and Dan Albas are official members, too.
Welcome. Congratulations.
As such, we need to elect a vice-chair.
3:30 p.m.
Michael Chong Wellington—Halton Hills, CPC
Mr. Chair, I nominate Mr. Albas as vice-chair of this committee.
3:30 p.m.
Liberal
The Chair Liberal Dan Ruimy
Are there any more nominations from the floor?
I declare Mr. Dan Albas acclaimed as the first vice-chair.
3:30 p.m.
Some hon. members
Hear, hear!
3:30 p.m.
Liberal
The Chair Liberal Dan Ruimy
Now that we have that out of the way, we have with us today some really interesting witnesses. From the Professional Music Publishers Association, we have Jérôme Payette, executive director. From the Canadian Network Operators Consortium, we have Christian S. Tacit, barrister and solicitor, and Christopher Copeland, counsel. From the Société des auteurs de radio, télévision et cinéma, we have Mathieu Plante, president, and Stéphanie Hénault, executive director, and, finally, from the Movie Theatre Association of Canada, we have Michael Paris, director, legal and chief privacy officer.
Each group will have up to seven minutes to make their presentation, and after that we'll go into our rounds of questions.
We're going to start off with the Professional Music Publishers Association.
Mr. Payette, you have the floor for seven minutes.
September 19th, 2018 / 3:30 p.m.
Jérôme Payette Executive Director, Professional Music Publishers' Association
Mr. Chair and members of the committee, I am very pleased to appear before you today on this major review of the Copyright Act.
The Professional Music Publishers' Association (APEM) represents francophone and Quebec music publishers in Canada. Our members run 830 publishing houses featuring 400,000 musical works.
Partnering with songwriters, music publishers support the creation of musical works, and promote and manage them. Typically, a music publishing house works with a number of songwriters to create new works and represents catalogues of existing songs. Publishers are in a way the agents of songwriters and their works. They are the professionals in copyright management.
I would like to point out that the APEM is a member of the Canadian Music Policy Coalition, which produced a 34-page document, of which you have certainly received a copy. Virtually the entire music industry supports this document.
APEM has nevertheless targeted a few points to discuss with you today.
Right away, I will tackle point 1, which proposes to amend the provisions on network services, which indiscriminately apply to a wide range of companies.
Section 31.1 of the Copyright Act is, in a way, the Canadian exemption rule. The text under “Network Services” allows a provider of “services related to the operation of the Internet” who “provides any means for the telecommunication or the reproduction” of protected content to not be held liable for infringing copyright and for not paying rights holders.
Based on how the act is drafted right now, companies providing services as diverse as Internet access, cloud storage, search engines or sharing platforms such as YouTube, Facebook or Instagram indiscriminately benefit from the exception on network services. However, those companies provide very different services: an Internet service provider provides an Internet connection; a storage service stores files and makes them available for private usage; a search engine classifies results according to keywords; sharing services such as YouTube make content available to millions of users, develop recommendation algorithms, promote, organize content, sell advertising and collect user data.
The development of the Internet may have been difficult to predict, but today we know that not all those companies provide the same services. The Copyright Act must now consider those companies' spectrum of activities and ensure that their responsibilities are not automatically the same.
Let me clarify. I think that all those companies should remunerate the rights holders, because they use copyrighted content for commercial purposes. However, Internet service providers may have different responsibilities than YouTube, for example. Internet service providers should remunerate rights holders and be more active in the fight against piracy, whereas sharing services should be required to obtain proper licences for the entire repertoire they make available.
Last week, on September 12, the European Parliament adopted a copyright directive to that effect. The directive establishes that online content sharing service providers such as YouTube must make a statement to the public and enter into fair and appropriate licencing agreements with rights holders, even for online user content.
In addition, sharing services will need to be more transparent about how they use content. As a result, users will be able to continue to put content online, but sharing services will have to sign agreements with copyright collective societies, pay for the use of the content and be transparent. I think Canada should draw inspiration from this European approach.
I will close the first point by talking about NAFTA.
We know that the U.S., at the request of major tech companies, is pushing for the intellectual property chapter to include exemption rules based on its Digital Millennium Copyright Act. If Canada were to accept this request, it would be very difficult, if not impossible, to change its own legislation to reflect today's reality.
The second point I want to address is the need to make the private copying system technologically neutral and to set up a transition fund.
Annual revenue from private copying royalties paid to music creators has gone down by 89%, from $38 million in 2004 to less than $3 million in 2016. As economist Marcel Boyer said, it is “the theft of the century”, and just because it's been going on for years doesn't make it acceptable.
The spirit of the 1997 Canadian legislation is no longer upheld, simply because of technological change. The current review of the Copyright Act should be used to make the private copying system technologically neutral and thereby allow royalties to be paid for a variety of devices, including tablets and smartphones. The levy would be charged to the manufacturers and importers of devices.
In Europe, the average fee is $2.80 per smartphone. It would be very surprising if the average price of an iPhone X were to increase from $1,529 to $1,532 if a private copying levy is introduced. That cost would not be passed on to the consumer.
Finally, the drastic drop in private copying revenue requires a $40-million transition fund, as requested by the Canadian Private Copying Collective. The Liberals have agreed, and it is high time the fund became a reality.
The third point proposes to extend the duration of copyright protection to life plus 70 years after the author's death. In the vast majority of OECD countries, the protection lasts for 70 years, whereas in Canada, it is only 50 years after the author's death.
Canadian rights holders are at a disadvantage in terms of exports, since their works are subject to less international protection. Canadian laws should not prevent showcasing our works and creators internationally.
For the music publishers I represent, extending the term to 70 years after the author's death means more revenue to be invested in the career development of Canada's authors and composers of today.
The fourth point is about clarifying and eliminating exceptions. The number and nature of the exceptions under the Copyright Act deprive rights holders of revenue they should normally receive. Today, I don't have time to present all the exceptions that should be amended in the Copyright Act. A document from the Canadian Music Policy Coalition goes over the exceptions in detail.
I will close with a fifth point, which is the importance of having a functional copyright board.
I am well aware that work is under way to reform the Copyright Board of Canada. I applaud that, I think it is great news. I would simply like to emphasize the importance of this reform for implementing the Copyright Act.
Right now, the board takes a long time to make decisions, which does not work in today's environment. Uncertainty about the value of copyright affects publishers, songwriters and all music industry stakeholders.
Thank you.
3:40 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to jump to the Canadian Network Operators Consortium.
Mr. Tacit, you have up to seven minutes.
3:40 p.m.
Christian Tacit Barrister and Solicitor, Counsel, Canadian Network Operators Consortium Inc.
Mr. Chair and committee members, CNOC is a not-for-profit industry association comprised of over 30 small, medium and large-sized competitive ISPs.
At the outset I want to stress that CNOC takes copyright infringement very seriously. In fact, a number of its members are now either licensed or exempt BDUs. Our core message is that the notice and notice regime continues to strike a reasonable balance between the rights of content owners and Internet users for addressing allegations of online copyright infringement and achieving related educational objectives.
However, based on CNOC member experiences, the regime does need some tweaking. More specifically, CNOC makes the following recommendations.
First, the legislation should require content owners to send notices that only contain the elements prescribed by statute. This will prevent abuse by parties who use such notices to transmit settlement demands, advertisements or other extraneous content.
Second, there should be a requirement for notices to be provided simultaneously in both text and machine-readable code. This will facilitate the choice of manual or automated processing of notices by ISPs, depending on the scale of their operations.
Third, content owners should be required to send notices exclusively to the publicly searchable abuse email addresses that ISPs register with the American Registry for Internet Numbers. This will ensure that notices are directed to the correct email addresses that ISPs wish to use for processing notices.
Fourth, the number of notices that a rights holder can send to an ISP for an alleged infringement of a work associated with a specific IP address should be limited to no more than one notice per specified period of time, for example, 48 hours. This will prevent ISPs from being deluged with multiple notices directed at the same IP addresses for the same infringement.
I will now discuss why the kind of approach advocated by the FairPlay Canada coalition, which we'll call “the coalition” in this submission, and other more severe measures, should be rejected. Our analysis is based on a proportionality framework that includes consideration of the following matters: defining the scope of the problem, assessing the benefits and costs of the proposed remedy, and fairness.
The coalition members, which include the largest vertically integrated ISPs and content providers in Canada, have spared no expense to commission and find private studies promoting the view that the financial impact of copyright infringement on content owners is so devastating that the remedy the coalition is promoting is necessary. No other entity has the resources to respond fully to all of the coalition’s submissions. Fortunately, they don’t have to. In the CRTC proceeding assessing the application brought by the coalition last year seeking to implement its administrative content blocking regime, intervenors such as Canadian media concentration research project, or CMCRP, and Public Interest Advocacy Centre used publicly available data to demonstrate that the scope of online copyright infringement and its impact on content owners is not nearly as alarming as the coalition would have us believe. It follows that the adoption of the coalition’s proposed regime is not necessary.
Turning to the issue of benefits, there is no point in instituting the kind of regime advocated by the coalition if it is largely ineffective. IP address blocking, domain name server or DNS blocking, and the use of deep packet inspection, or DPI, to block traffic can all be circumvented by various technical means, including virtual private networks, or VPNs. In addition, blocking techniques can end up blocking non-infringing websites at the same time that they block infringing ones.
When it comes to costs, there are both public and private ones. The private costs are those borne by parties such as ISPs to comply with the regime, and the risks of litigation they bear if non-infringing content is unavoidably blocked as a result of how blocking technology works. Public costs include the additional costs of instituting and maintaining the administrative regime, as well as the erosion of legal and democratic values such as freedom of expression, privacy of communications, and avoidance of unnecessary surveillance, which are currently enshrined in common carriage and net neutrality principles.
In this regard, we caution against the slippery slope of requests made by coalition members and others. At first, most of the large, vertically integrated ISPs and content providers supported notice and notice. Then they embraced the coalition. Perhaps they will now argue like MPA, that injunctions should be available against ISPs for content blocking, and ISP safe harbours should be reduced. Then they might argue that the only way of preventing the circumvention of blocking is to outlaw VPNs altogether, which are used routinely to protect the privacy and security of data and to facilitate freedom of expression.
Content owners might even go further and argue for a notice and take down regime, without any court or administrative supervision.
The costs of all of these alternatives are much too high for Canadians to bear, and there is no need for any of this. The Copyright Act already provides a mechanism for content owners to seek injunctions for the removal of infringing content. The test of what is reasonable in a free and democratic society can be gleaned from a CMCRP analysis of 40 OECD and EU countries. Eighteen of them rarely engage in website blocking, 18 others block websites by court order, and only four block websites by way of administrative procedures.
If, despite these submissions, Parliament does adopt the type of remedy proposed by the coalition, then fairness requires that it also allow ISPs the right to recover their costs of implementing and administering blocking mechanisms. These costs can be significant and can even put small ISPs out of business if the costs are not recovered.
However, we urge this committee to recommend to Parliament the retention of the existing notice and notice regime with the minor modifications we have proposed. Other, more stringent measures should be rejected.
Thank you.
3:45 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move to the Movie Theatre Association of Canada with Mr. Michael Paris.
You have up to seven minutes.
3:45 p.m.
Michael Paris Director, Legal and Chief Privacy Officer, Movie Theatre Association of Canada
Thank you very much, Mr. Chair.
Good afternoon, Mr. Chair and honourable members.
I'm here on behalf of the Movie Theatre Association of Canada, which I might interchangeably refer to as MTAC for short today. We are the trade organization representing the interests of film exhibitors behind more than 3,000 movie screens across Canada. We are exactly what the name suggests. Our members sell the tickets, sell the popcorn and ensure that films are presented the way that creators intended—on the big screen.
Among other things, MTAC represents exhibitors in negotiations with collective societies and otherwise intervenes in proceedings such as this one. Having said that, we are not frequent flyers or by any means regular visitors to copyright proceedings, so we do thank you for the invitation. We're not a collective or an institution that is regularly involved in the business of copyright, although it certainly affects our members and we do pay tariffs to certain collectives.
I'm going to tell you some quick things that you may not know about exhibitors. The first is that exhibitors in fact rent their films from distributors, and we keep less than 50% of every ticket our members sell. They don't control the film product they show, so if you are tired of sequels, you should take that up with the producers.
As a sector of the film industry, exhibition is more than 80% Canadian owned and operated, and it includes hundreds of mom-and-pop locations in places big and small. We also employ thousands of Canadians, and we're a leading first-time employer.
We are also an industry that is experiencing a great deal of disruption. As Telefilm noted in a recent study, while theatres still attract two-thirds of Canadians from time to time, Canadians are increasingly turning to streaming options. Exhibitors are competing with a universe of entertainment options like never before.
Having said all that, MTAC has been historically involved in one single issue that has been raised before this committee, and that concerns the proposal from some of the music industry to amend the definition of sound recording in the act. This is the only issue I'll speak to this afternoon, and I'll keep it very brief.
In this review of the act, a group of stakeholders led by multinational record labels and Canadian affiliates have expended considerable resources to promote the idea of a gap in the business of copyright. This group suggests bleak prospects for creators and depicts a diminishing future where technology causes them to fall further behind if their demands aren't met with legislative amendments.
With respect to this amendment, they're proposing to amend the definition of sound recording in the act to remove the exception that exists for film soundtracks where they accompany a cinematographic work. I'm just going to say “film” from now on, if that's okay. The sole purpose of this amendment is to unlock a stream of royalties from the exhibitors that would provide this constituency with a share of box office revenue.
MTAC believes the current definition of sound recording in the act strikes the appropriate balance between creators, rights holders and exhibitors. The amendment proposed by some of the music industry will aggravate the ongoing forces of technological disruption that affect exhibitors and risks further destabilizing the role of cinema as the primary showcase for Canadian creators within the domestic and global film industry.
The proposal also isn't new. From 2009 to 2012, MTAC successfully responded to legal proceedings initiated by some in the music industry. In those proceedings, they argued that the current definition of sound recording should not be interpreted to contain the exemption for soundtracks that it obviously does contain. It wasn't until the Supreme Court of Canada weighed in in 2012 that this issue was put to rest.
Contrary to the repeated refrain from some, the definition of sound recording is not arbitrary. It's not inequitable or unjustified. As the courts found, it was quite intentional and reflects a balance struck between creators, copyright owners and exhibitors as drafted by thoughtful legislators.
These stakeholders are now asking this committee to pick up the pen where their litigation left off. However, the same problems identified by the courts continue to apply to this proposed amendment.
The first thing I would say is that this amendment is not as simple as they suggest. It will require a significant rewriting of the act to eliminate absurdities identified by the courts in their decisions and other inequities that this amendment would create. I don't have time to go through everything, but I will identify what I think is the most objectionable, and that is that this amendment would create a system of double-dipping where creators and copyright owners are paid on the front end for the inclusion of their work in a film and then also on the back end when the film is played. This is exactly why the exemption was instituted, and it's consistent with how the work of other creators is treated in the act when their work is incorporated into a film.
It was never a subsidy. Neighbouring rights compensate for uncontrolled usage of sound recordings that can arise without the record label's involvement. However, the right to exploit music in a film is a right for which a licence is required, and for which compensation has already been provided by the filmmakers. That compensation is expressly agreed upon in a contract. The inclusion rights are negotiated directly with the copyright owner and acquired on a worldwide basis to facilitate the global distribution and exhibition rights for the film as a singular unit, not as a collection of works.
This distribution model is critical to the global box office returns, which in turn pay the costs of the filmmaker, including payment to music industry stakeholders.
That's about as far as I can go in the short time provided here today. We will be making a more detailed brief available to the committee later this week on behalf of our members. Thank you for the invitation and your time today. I am pleased to respond to any questions.
3:50 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
For the last presentation, we have the Société des auteurs de radio, télévision et cinéma.
The floor goes to Stéphanie Hénault and Mathieu Plante.
3:50 p.m.
Stéphanie Hénault Executive Director, Société des auteurs de radio, télévision et cinéma
Thank you for inviting us to appear today.
We would like to talk to you about the work of authors, such as screenwriters, and how the Copyright Act could enrich Canadian culture and economy in the long term.
First of all, let me tell you about our organization, SARTEC. Its mission is to protect and defend the professional, economic and moral interests of all self-employed French-speaking authors in the audiovisual sector in Canada. It negotiates collective agreements with producers, advises authors on their contracts, collects royalties on their behalf, and helps ensure that their work is valued.
Our collective agreements prohibit the assignment of rights, but they grant producers operating licences for the text in the form of audiovisual works, they regulate the possibility of granting licences for other purposes, and they allow authors to collect royalties from producers or collecting societies, depending on the type of operation. All this is set out in the agreements.
Screenwriters are creators who devote their lives to writing and imagining the stories of Canadian heroes and values. Their scripts are the source of audiovisual works that bring people together, move them, make them laugh and reflect, promote our culture, our country and its great wealth. The benefits they generate are very positive for the economy and the well-being of Canadians. To ensure that our Canadian audiovisual production is competitive, we have a responsibility to put in place modern mechanisms in the act to ensure that creators are adequately compensated for the fruits of their labour.
It is important to remember that, in order to do their jobs, authors must be able to grant the rights for their work in return for remuneration, whether for a film, to a theatre company for a play or to a publisher in the case of a book. Authors must have the ability to monetize the rights for the adaptation of their screenplays and to reap the benefits. Self-employed workers often assume the risk of creating their work alone. The act must therefore allow them to mitigate that risk, so that they can continue to create and make a decent income in the digital economy.
In our opinion, the act must allow our children who have the desire and talent to dream of working as creators one day too.
3:55 p.m.
Mathieu Plante President, Société des auteurs de radio, télévision et cinéma
To do so, we are basically asking for five things. Today, the time we have forces us to present only three of them to you.
First, we call for the elimination of the unfair exceptions introduced in 2012 in the Copyright Act, which adversely affect Canadian creators. We continue to strongly denounce those exceptions. They actually compromise the ability of our writers to continue to write our stories, but Canada must ensure that they continue to do so.
Second, we ask that the private copying system be extended to audiovisual works. Canadian audiovisual creators and producers have been left out of this system, which works well in most European countries and elsewhere.
Third, we ask that a presumption of copyright co-ownership for audiovisual work be added. In accordance with Canadian case law, the act should specify that the writer and director are presumed to be copyright co-owners of the audiovisual work. The screenwriters write the text, a literary work that will guide all subsequent contributors to the audiovisual work. For their part, the directors will make creative choices to turn the text into an audiovisual work, choices that will influence the costs finances.
The script defines the film to be made as concretely as possible. By writing it, writers create the story. They describe the characters, their intentions, behaviours, dialogues and evolution. They set out the film to be made scene by scene, including its setting, time and sound environment. For their part, the directors direct the performers, designers and technicians to ensure that the screenwriter's work takes on an audiovisual form. The director's choices will influence the style, rhythm, tone and sound of the film.
We therefore invite you to acknowledge that the author of the script, the adaptation and the spoken text, as well as the director are presumed to be the copyright co-owners for the audiovisual work. We would have no objection to also taking into account the composer of any music specifically created for the work.
Finally, we are asking that the act be modernized so that the protection it grants to works is extended from 50 years to 70 years after the author's death and so that it better complies with intellectual property in the case of audiovisual works that are digitized and distributed on digital platforms. A more explicit brief on this issue will be subsequently sent to you.
4 p.m.
Executive Director, Société des auteurs de radio, télévision et cinéma
Before I conclude, I would like to remind you of the primary purpose of the Copyright Act, which is to protect the intellectual property of creators to ensure that they are paid for the use of their work.
We feel that it is your duty to encourage their long-term ability to continue to bring people together, entertain them, move them, make them laugh or reflect, promote our country and our values, and contribute to our pride. To do so, we believe that some of the provisions of the act need to be updated to bring it in line with international best practices that connect creators with the economic benefits of their works.
Thank you.
4 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much for all your presentations.
We will start the period for questions.
We're going to go right to Mr. Longfield.
You have seven minutes.
4 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thanks, Mr. Chair.
Thank you all for the concise presentations that you have prepared and delivered for us. We're here to try to find the right path forward, and your presentations are helping.
I have a few questions, starting with Mr. Payette.
You mentioned changing the Copyright Board. I met with a group of musicians in Guelph recently who talked about the Copyright Board as well. One of their points was that there should be musicians on the Copyright Board.
Would you have any opinions on who makes up the Copyright Board? Should we include musicians, publishers and the range of stakeholders?
4 p.m.
Executive Director, Professional Music Publishers' Association
I'm not very familiar with the Copyright Board's procedures, because mostly it's the collective administration societies that go in front of the Copyright Board. To my understanding it's mostly like a tribunal that sets the rates, so it's very technical.
I'm not sure that musicians should be on the board, but of course people who are willing to recognize the value of the music created should be.
4 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Okay. Thanks. I was just wondering how deep the comment went.
Also, staying with you on the share that a performer typically receives in a live performance versus a recorded and published performance, do you have a sense of what kind of gap there is? Some of the musicians have said that the way to get paid now is to be live, and that payments from streaming services or publishers have dropped so drastically that they've had to really rethink the way they go to market with their product.
4 p.m.
Executive Director, Professional Music Publishers' Association
There are different types of professionals in the music industry. You can be a songwriter that does not necessarily perform, but in the case of a singer-songwriter who's also a performer, yes, performing has become important to make a living.
Concerning mostly streaming services, I was suggesting that we might look at what the European Parliament just did last week and try to get more money from the services. I think that's very important. They said that the sharing services, for example, like YouTube, will have to pay for all the streams. Right now, that's not the case. They only pay for the streams that are being commercialized. If a user puts something online, like on YouTube, for example, there's no money coming out right now. However, if we follow what they're doing in Europe, there would be money coming to the rights holders following.... I think they call it the “communication to the public” in Europe.
4 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
That's great. That's helpful. When we consider our trade agreements with Europe, with intellectual property agreements being part of that, and how we go to market in North America versus Europe, we can see that there could be an influence from the European decision. However, it's a recent decision, so we haven't quite got into it but it's really good to hear your first take on it.
4 p.m.
Executive Director, Professional Music Publishers' Association
I think it's a very good example to follow and gives good balance to the rights holders, ahead of big international companies. They don't always have licences and they don't always pay for the music that's being used.
4 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thanks.
You just alluded to another issue that I was thinking of, which is the difference between a songwriter and a performer. When you think of Aretha Franklin performing Otis Redding's Respect, she didn't get paid for that. She took the meaning of the piece and she turned it on end. Instead of a man coming home and being respected by the woman, she turned it around and really changed the meaning of the song in the way that she performed it, but she really didn't get paid for that, in terms of the revenue stream.
Regarding the stream between performers and writers, is that something that has changed over the years? Is that something that we need to be looking at, in terms of legislation?