Bill C-11 Canada s New and Improved Copyright Act

Bill C-11 Canada s New and Improved Copyright Act Insight 9 th Annual Telecommunications Forum Ottawa, Ontario November 15-16, 2012 J. Aidan O'Neill Ariel Thomas FASKEN MARTINEAU DUMOULIN LLP Barristers & Solicitors 55 Metcalfe Street Suite 1300 Ottawa, Ontario K1P 6L5 aoneill@fasken.com athomas@fasken.com 613.236.3882

Page 1 After seven years and three previous attempts at amending the Copyright Act, Canada s Copyright Modernization Act ( Bill C-11 ) was finally proclaimed into force on November 7, 2012. The following summary will highlight the events leading up to, and some of the main features of, the new additions to Canada s copyright law. History of the Amendments The Copyright Act was last amended in 1997. The 1997 amendments were introduced in order to bring Canada into compliance with its international treaty obligations, including the North American Free Trade Agreement and the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations. Almost a decade after the 1997 amendments, further attempts at legislative reform came in quick sequence: Bill C-60 in 2005, introduced by the Liberal Government of Paul Martin, and then Bill C-61 in 2008 and Bill C-32 in 2010, both introduced by the Conservative minority Governments. All three bills died on the Order Paper when federal elections were called. Stephen Harper s current majority Government finally succeeded in enacting Bill C-11. Bill C-11, when introduced, was identical to Bill C-32. During the Committee process the Government introduced some slight amendments to Bill C-11. Bill C-11 received Royal Assent on June 29, 2012. A limited number of provisions in Bill C-11 were not proclaimed into force on November 7, 2012, including those provisions relating to the establishment of a notice and notice regime, explained below. Rather, they will come into force through a separate order-in-council process in the future. Rationale for the Amendments When assessing Bill C-11, it is important to take the external context into account. As was the case in relation to the 1997 amendments, today, Canada s copyright law is being amended to bring it into compliance with two World Intellectual Property Organization ( WIPO ) treaties that date back to 1996 the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty ( WPPT ).

Page 2 Not surprisingly, as more than ten years have passed since the time of the 1997 amendments, and in view of consumers avid consumption of digital materials today, Canada s copyright laws often appear out of step with the ways everyday Canadians use copyright materials. As a result, during the past decade, Canadian courts have been solely responsible for interpreting Canadians copyright obligations in today s world. This has led to at least ten seminal Supreme Court of Canada judgments shaping copyright law in Canada: Théberge v. Galerie d'art du Petit Champlain inc., 2002 SCC 34 CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13 Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45 Robertson v. Thomson Corp., 2006 SCC 43 Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37 Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34 Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36 Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 Re:Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38

Page 3 Highlights of Bill C-11, as Proclaimed in Force As its name suggests, the Copyright Modernization Act accomplishes the task of modernizing Canadian copyright law in accordance with the WIPO treaties. This being said, some have commented that the new protections granted to copyright owners by Bill C-11 exceed the strict requirements of the WIPO treaties. The following will summarize the highlights of Bill C-11 s amendments to Canada s Copyright Act. Technological Protection Measures Technological protection measures, otherwise called digital locks, are used by content distribution and software companies to secure their content from unauthorized use. There are two types of digital locks: access and copy controls. Broadly speaking, an access-control lock prohibits unauthorized accessing of materials, and a copy-control lock prevents unauthorized reproduction, which is the exclusive right of the author. Bill C-11 protects technological protection measures by making it an infringement of copyright to break, or circumvent, an access control lock. Also, certain new exceptions from copyright infringement for time-shifting and format-shifting will not apply if either an access-control or a copy-control lock is broken. This means that content distribution and software companies will have new legal tools (beyond contract terms) to effectively protect the creative content they produce and sell. The availability of exceptions for users in Bill C-11 such as fair dealing will also be subject to the anti-circumvention provisions. In other words, users must first buy the work, or lawfully access the work, before they may use the works without fear of infringement. Prior to Bill C-11, the Copyright Act did not protect digital locks. The new digital locks provisions were the most controversial aspect of Bill C-11 in the public eye. Neighbouring Rights Neighbouring rights are the rights of performers and record companies in their respective performances and sound recordings. As they are not authors of works under the Copyright Act, they do not have exclusive rights such as authors have but, instead, were granted the right to equitable remuneration for the use of their performances or sound recordings in the 1997 amendments. Equitable remuneration takes the form of a compulsory payment by the user to the rights owner through a collective society.

Page 4 Many of Canada s international counterparts grant similar neighbouring rights. Bill C-11 expands the protection for neighbouring rights by establishing new rights for performers and record companies including a new exclusive right to make sound recordings available on the Internet, which is required by the WIPO Performances and Phonograms Treaty. This new right may only be enforced through the Copyright Board's tariff-setting process. Bill C-11 would also extend Canada s neighbouring rights protection to signatories of the WPPT, such as the United States. This could vastly expand the liability of Canadian users of international sound recordings to pay copyright tariffs. Bill C-11 will also authorize the Minister to issue a declaration carving out a WPPT signatory country from the Canadian neighbouring rights protections. Such a declaration would redress inequalities in protections between countries, such as where a signatory country does not grant to Canadian performers and record companies the same neighbouring rights protections as the signatory country s nationals would receive in Canada. So, for a country such as the U.S. that does not grant the same neighbouring rights protections to Canadian performers and record companies in the U.S. as Americans would under Canadian law, the Minister may issue a declaration limiting the scope of the neighbouring rights protections granted to U.S. sound recordings. First Distribution Rights Bill C-11 grants to authors and performers the right to distribute works. Distribution refers to the right to control the first transfer of ownership of each copy of a work. This right applies to all types of works, including pre-existing works at the time Bill C-11 becomes law. This will protect people who have incurred expenses or made commitments before the new provisions of the Copyright Act came into force and who are likely to be affected by the new right. Photographs Bill C-11 grants copyright protection to the photographer as the author of the work. Previously, the person who commissioned the work was deemed to be the first author and owner of the copyright. However, Bill C-11 still allows individuals who commission photographs to use them for private or non-commercial purposes. This is a substantial carve-out in the new exclusive right for photographers, and may have a commercial impact on the business of photography.

Page 5 Fair Dealing Currently, the Copyright Act gives users the right, subject to certain conditions, to use works for the purposes of news reporting, private study, research, criticism or review. Bill C-11 expands the availability of the fair dealing exception to uses done for the purposes of education, satire and parody. However, this does not mean that any and all uses done for one of the enumerated purposes will be allowed. Any use for which fair dealing is claimed, in addition to legitimately being for one of the enumerated purposes, must still be found to be fair in the context of the dealing(s). What is, in fact, fair is to be assessed on a case-by-case basis against six, nonexhaustive fairness factors that the Supreme Court of Canada set out in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13: the purpose of the dealing; the nature of the dealing; the amount of the dealing; alternatives to the dealing; the nature of the work; and, the effect of the dealing on the work. During the Bill C-11 Committee hearings, some stakeholders requested an amendment that would have incorporated the six fairness factors into Bill C-11 itself as an explicit limitation on the fair dealing exception. This amendment was not made. Nonetheless, in two recent cases addressing claims of fair dealing for the purpose of research, 1 the Supreme Court of Canada applied the six fairness factors to determine the fair dealing questions. Accordingly, the governing law on how to approach a claim of fair dealing must still include an application of the six fairness factors, despite not incorporating them into the text of the new Copyright Act in Bill C-11. Personal Use (Time- and Format-Shifting) Exceptions Bill C-11 creates new "personal use" exceptions which, subject to certain conditions, will allow individuals to record television programs and copy music for later use (otherwise known as time-shifting ) and move content from one format to another (otherwise known as format-shifting ) without infringing copyright. These exceptions are conditional. For example, the copies and recordings may only be used for the individual s private purposes and the copies cannot be given away. This is an example of Bill C-11 modernizing the current Copyright Act in order to give consumers confidence that they may conduct everyday activities 1 Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 and Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36.

such as transferring music from a CD to a laptop to an ipod without infringing copyright. User-Generated Content Page 6 Pursuant to the section on exceptions to infringement, Bill C-11 creates a new exception for non-commercial user-generated content. This has been referred to as the mashup provision. It will allow an individual to use, in a non-commercial context, a publicly available work in order to create a new work, such as those frequently seen on YouTube. Like the fair dealing exception, this exception is subject to several conditions, namely that the user identifies the source of the original work, that the underlying work copied was legally acquired and, that the use did not have a substantial adverse effect on the commercial exploitation of the underlying work. Educational Uses of Online Materials Bill C-11 sets out new exceptions respecting the use of material accessible on the Internet for the purposes of education or training. For example, educational institutions may now reproduce or otherwise use a work in order to display it. This broadens the scope of, and makes technologically neutral, the previous exception that allowed educational institutions to make copies of works for overhead projections. Additionally, educational institutions may communicate lessons to, or make a fixation of a lesson for their students, an activity which might otherwise be infringing. This would facilitate distance education so lessons with copyrighted materials can be communicated online without being an infringement of copyright. However, the exception only applies if students destroy their copies within thirty days of receiving final course evaluations. This has been referred to as the book burning carve-out. Computer Programs Bill C-11 allows, under certain conditions, to copy computer programs for the purposes of i) computer program interoperability; ii) encryption research; and, iii) assessing and correcting the vulnerability of computer program or network security.

Page 7 Ephemeral Recordings Ephemeral recordings are copies of musical works that broadcasters such as radio stations make in order to facilitate programming. Previously, to make these copies, radio stations paid a tariff set by the Copyright Board. Bill C-11 changes this regime. Where copies are kept for less than 30 days, broadcasters no longer are required to pay the tariff. This amendment to the Copyright Act was a highly controversial issue during the Bill C-11 Committee hearings. Given that many broadcasters told the Committee they tend to use their ephemeral copies for more than 30 days, it remains to be seen whether they will change their behaviour under the amended Copyright Act will they delete their copies every 30 days, or continue paying the existing tariff? Internet Service Providers, Search Engines and Cloud Computing Services Bill C-11 limits the liability of Internet Service Providers ( ISPs ), search engines and cloud computing services for doing such activities as making cache copies and communicating works by telecommunication to the public. Broadly stated, this limitation of liability will only apply to the activities in which those services engage as neutral intermediaries. Furthermore, ISPs will be required to set up a notice and notice regime whereby they must forward notices of alleged copyright infringement, as soon as is feasible, to subscribers and to retain the records necessary to determine the subscribers' identities. The method and manner of implementing a notice and notice regime will be clarified in the regulations made under the new Copyright Act. For instance, these new regulations must address: the form of the notice sent by the owner of the copyright to claim infringement to ISPs; the obligations of the recipient ISP who receives the notice to provide notice; and, the limitation to remedies with respect to reproductions made from the electronic location which operated as the base for the alleged infringement.

Page 8 Enabling Infringement Online Bill C-11 attempts to stamp out online infringements by giving rights holders a new tool to pursue services which enable those infringements. Rights holders can sue anyone who provides services primarily for the purpose of enabling online infringements. This could include ISPs, websites, web hosts, or peer-topeer file sharing networks. In determining whether a service is an enabler, the courts must examine several factors outlined in Bill C-11; for example, whether the operator of the service was able to limit acts of copyright infringement, and whether the service would be economically viable if it were not used to enable acts of infringement. Thus, Parliament has provided some guidance to the courts in interpreting what could otherwise be read to be quite a broad cause of action. Statutory Damages The statutory damages in Bill C-11 are very different than those in the previous Copyright Act. Formerly, damages ranged from $500 to $20,000 for each infringement. Bill C-11, by contrast, makes the quantum of damages dependent on the commercial and non-commercial purpose of the infringement. When suing an alleged non-commercial infringer, rights holders can elect statutory damages that will be limited to a range of $100 and $5,000 for all infringements in a single proceeding for all works. This greatly reduces the maximum amount of statutory damages which may be awarded against an individual who infringes copyright for private use and should provide some comfort to consumers. Conclusion From the first attempt to modernize the Copyright Act pursuant to Bill C-60 in 2005 to the highly anticipated enactment of Bill C-11 in 2012, the only one thing upon which all stakeholders in this process can possibly agree is that copyright reform in Canada has been a long and arduous road. During this process, the interests of copyright users have been pitted directly against those of copyright owners. One can only hope that, with the coming into force of Bill C-11, the government has finally found an appropriate balance between these two competing sets of interests. As with most things in life, only time will tell.