Background

Following years of attention and debate over issues such as “digital locks”, “users’ rights” and whether and how Canada is keeping up with other countries in protecting copyright, Canada’s Copyright Modernization Act  (the “CMA”) entered into force on November 7, 2012.

Rapid advances in the use of digital media to access, use, share, and copy works led to increased pressure to overhaul Canada’s copyright legislation, which had not been significantly revised since the last general amendments in 1997. Over the years, the government conducted various stakeholder consultations and put forward four separate bills, all with the intention of better aligning Canada’s legislation with the international standards set forth in two 1996 World Intellectual Property Organization (WIPO) treaties, and with the evolving digital environment.

The CMA is an attempt to balance the policy concerns of increasing innovation and competition against creators’ needs to protect their works. How best to achieve this balance has always been one of copyright’s most fundamental issues.

In this article, we explore a number of the key amendments and their potential impact on creators and users of music, audio ‐visual, print, artistic, and other works.

Introduction

The preamble to the Copyright Modernization Act states that the amendments are intended to:

  1. update the rights and protections of copyright owners to better address the challenges and opportunities of the Internet, so as to be in line with international standards;
  2. clarify Internet service providers’ liability and make the enabling of online copyright infringement itself an infringement of copyright;
  3. permit businesses, educators and libraries to make greater use of copyright material in digital form;
  4. allow educators and students to make greater use of copyright material;
  5. permit certain uses of copyright material by consumers;
  6. give photographers the same rights as other creators;
  7. ensure that it remains technologically neutral; and
  8. mandate its review by Parliament every five years.

Those affected by these amendments include authors, performers, recording companies, film studios and gaming companies, internet service providers, consumers, and any business that relies on the Internet and digital content to operate and to reach its partners and customers.

General Amendments

Technological Protection Measures (TPMs)

TPMs, or “digital locks”, are technologies, devices or components that provide protection for copyright materials through either access control or copy control.

Three types of protection for TPMs are introduced, prohibiting:

  • circumvention of access‐control TPMs;
  • offering circumvention services to the public; and,
  • manufacturing, importing, distributing, selling, renting or providing devices, technologies or components whose primary purpose is circumvention.

“Digital locks” enable copyright holders to dictate how their material may be used. Under the amendments, however, these locks may ultimately disallow activities that the Copyright Act deems to be non‐infringing. This could occur, for example, where a person circumvents a TPM to access a work for a purpose that falls under “fair dealing”, or to change the format of a TPMprotected song purchased on a CD to an MP3 to be played on another device. Both of these examples (fair dealing, transfer of format) are non‐infringing uses because specific exceptions apply to them. They would nonetheless be prohibited where the work is protected by an access ‐control TPM.

There are certain limited instances where circumventing an access ‐control TPM will not infringe copyright, including circumvention for the purposes of software interoperability, encryption research, network security, and for unlocking a wireless device. The government may enact regulations adding to the above list of exceptions.

Internet Service Providers (ISPs)

Current Canadian case law has held that ISPs are generally not liable for copyright infringement provided that they are merely acting as intermediaries between their users and subscribers.

The Copyright Modernization Act confirms this approach stating that an ISP does not infringe copyright simply by providing the means for telecommunication and reproduction. This exception applies to any situation where an ISP is acting solely as an intermediary in communication, hosting and caching activities. However, an ISP may still be civilly or criminally liable if it knowingly enables copyright infringement. Also it must comply with the new “notice and notice” regime introduced by the CMA in order to ensure that it cannot be liable for infringement. Under the “notice and notice” regime, a copyright holder may send the ISP a written notice claiming infringement, and upon receipt, the ISP must forward that notice “without delay” to the alleged infringer. The ISP must then retain records for a prescribed period which would allow for the identity and location of the alleged infringer to be determined. There are similar limitations of liability introduced in respect of search engines as “provider[s] of an information location tool.”

The implementation of the “notice and notice” regime will be delayed, as those sections of the CMA will come into force following further industry and stakeholder consultation.

Expanded “Fair Dealing”

Fair dealing has been interpreted by the Supreme Court of Canada as being “an integral part of the Copyright Act … In order to maintain the proper balance between the rights of a copyright owner and users’ interests, it must not be interpreted restrictively.” Activities that would normally constitute copyright infringement are saved if the use (i) is “fair”, as determined under a judicial sixstep test, and (ii) falls within certain purposes, including research and private study, criticism and review and news reporting.

In a recent high ‐profile decision, SOCAN v. Bell Canada, the Supreme Court of Canada confirmed that the 30 ‐second previews provided by iTunes and other online music services to allow customers to "try before they buy" are an acceptable form of fair dealing for the purpose of research. That finding was based on the fact that the consumers were using previews "to help them research and identify musical works for online purchase", and for no other purpose.

Under the Copyright Modernization Act provisions, satire, parody and education are now also added as accepted “fair dealing” purposes. This can be expected to legitimize many widespread creative, entertainment and social commentary activities. Many late ‐night television comedy shows, morning radio shows, and print and online publishers rely on parodies and satires of creative works to develop their own material. Canadian courts will likely look to the American jurisprudence in interpreting the meaning of satire and parody, as U.S. copyright law has long included these uses in its parallel concept of “fair use”.

User ‐Generated Content

Users are permitted to create their own content by combining or using existing copyright material. The colloquially known “YouTube Clause” allows users to create a “mash ‐up” of clips as a new work, or add music to a personal video, without infringing copyright. This exception is subject to certain conditions: non‐commercial purpose; mention of the source (where reasonable); the individual’s belief that the source material was non‐infringing; and the absence of any “substantial adverse impact” on the copyright holder’s exploitation of his or her work.

Despite these conditions, some copyright owners are concerned that the amendment will compromise their rights online. Among other things, they fear that the meaning and scope of some of the conditions remain unclear: what is a “new work” or a “substantial adverse impact”?

Copying for Private Purposes

The Copyright Modernization Act introduces several exceptions which make certain types of copying for private purposes lawful. Notably, the CMA provides that it is not an infringement of copyright to reproduce a work into another format (format shifting), to reproduce a work for later listening or viewing (time shifting), or to reproduce a work for backup purposes. This is a significant change from Canada’s previous legislation which prohibited such reproduction despite widespread usage among the consuming public.

However, these exceptions are only available if certain conditions are met: the source material must not itself be infringing, it must have been legally obtained (and not rented or borrowed), and a Technological Protection Measure (TPM) must not have been circumvented. Further, the copy must not be given away, sold or rented. An interesting limitation on the time shifting exception is that the individual may only keep the recording “no longer than is reasonably necessary in order to listen to or view the program at a more convenient time.”

Statutory Damages

The Copyright Modernization Act significantly revises the penalties for non‐commercial copyright infringement. Under the prior legislation, copyright owners could elect to sue for statutory damages for copyright infringement. Those legislated statutory damages were set at between $500 and $20,000 for each act of infringement, regardless of whether the infringement was commercial or non‐commercial.

The new CMA reduces statutory damages to a range of between $100 and $5,000 where the copyright infringement relates to an individual who has infringed copyright for private use. Further, these statutory damages are a one time payment for all infringements. Statutory damages for infringement for commercial purposes remain at between $500 and $20,000 for each work infringed.

Impacts on Key Stakeholders

Performers and Sound Recording Makers

  1. Making Works Available Online

Under the Copyright Modernization Act, performers and record labels have an exclusive “making available right”, to allow them to control the release of their performances and sound recordings online.

Practically speaking, this means that artists can better control sharing of their works over peer ‐topeer networks, and can prevent a retailer from releasing material online in advance of an official release date, among other things. To enforce the “making available” right, a copyright collective must file a tariff (a licence proposal) with the Copyright Board of Canada for certification.

The Supreme Court of Canada recently determined that – as in the United States – downloads do not infringe the right to communicate a work to the public. However, the new “making available right” was not part of that case. Now that the right is in effect, the individual transmission of works to consumers will infringe copyright and be compensable.

  1. Moral Rights

Authors and composers have long held “moral rights” in their work. These rights are extended to performers, for performances occurring after the related amendments come into force.

Moral rights include the right to the integrity of the work (the performance), including the right not to have the work associated with a service or product where that would prejudice the performer’s reputation. Moral rights also include the right to be associated with the performance by name or to remain anonymous; this right applies “if it is reasonable in the circumstances”.

Moral rights may not be assigned, but may be waived in whole or in part. Moreover, an assignment of copyright in a performance does not by itself constitute a waiver of any moral rights.

Waivers of performers’ moral rights introduce some new requirements for those dealing with copyrighted works. Standard agreements relating to performers’ rights now require revision to ensure that the performer’s waiver is addressed. Perhaps more challenging will be obtaining waivers where large groups of musicians perform, since the waiver is individual to the performer.

  1. Term of Protection

The term of copyright protection for sound recordings for performers and sound recording makers is extended to 50 years after publication of the musical performance. Previously, the clock started ticking on these rights upon fixation of the recording, even before it had been published. Performers’ moral rights now extend to 50 years after publication, or 50 years after the end of the calendar year in which the performance occurred.

Conclusion

The practical impact of the Bill C ‐11 amendments remains to be explored in commercial interactions among creators and users, and before the courts. Many of the new provisions are controversial. However, they do address a number of previous inconsistencies in Canadian copyright law, and take much ‐needed steps forward to align the law with international standards and the rapidly changing digital age.