Rapid advances in the digital economy have shifted how consumers interact with copyrighted content. Many jurisdictions have amended their laws to more accurately reflect the current landscape and, with the enactment of the Copyright Modernization Act (Bill C-11) (“CMA”), Canada is finally catching up.

The CMA, which amends the Copyright Act (“Act”), received Royal Assent on June 29, 2012, and many of its provisions came into force on November 7, 2012. The result was a new Canadian copyright regime that provides more flexibility for consumers to use legitimately acquired content while also providing added protections for copyright owners.  To wit, there is new latitude for others to use copyrighted materials in parodies and satirical works and for copyrighted material to be included in (non-commercial) user-generated content. To make copyright owners happy, there are also new prohibitions on enabling infringement, including the use of “digital locks”, as well as new requirements for Internet service providers (“ISPs”) to address alleged infringement. These amendments are the result of many attempts to reform Canadian copyright laws and bring them more in line with the digital environment and the international standards set out in the World Intellectual Property Organization (“WIPO”) Copyright Treaty and the WIPO Performance and Phonograms Treaty (“WIPO Treaties”), to which Canada became a signatory in 1997.

New User-Generated Content Exception to Infringement

The new “user-generated content” (“UGC”) exception to copyright infringement has received a lot of attention. This allows one, subject to certain conditions, to create and publish “mash-up” videos and other UGC using legitimately acquired material without infringing the copyright in the works used.  This provision was intended to address the way Canadians are currently using copyrighted content. It is widely known as the “YouTube clause.”

Caveat! There are certain conditions attached to the UGC exception. For example, the use must be for a non-commercial purpose, the source material must be mentioned (if reasonable), the individual must have reasonable grounds to believe the source material was non-infringing, and the use must not have a “substantial adverse impact” on the commercial market for the work (i.e., the copyright owner’s exploitation of the work for commercial gain).  Examples include making a home video using a popular song in the background or creating a “mash up” video of multiple clips and posting them online for friends and family to view. However, it is important to note that this exception only applies to the creator of the UGC and for non-commercial purposes. It would not apply to advertisers who request and use UGC submitted by consumers in a contest or advertising campaign.

Parody and Satire - New Fair Dealing Exceptions to Infringement

The CMA enables the use of copyrighted materials provided the use is “fair.”  Previously, if you wanted to produce a satirical work and used third party copyrighted materials without permission, you could have been sued for copyright infringement. Now, under the expanded definition of “fair dealing” in the Act, creating a satire or parody using others’ materials, such as a third party logo, is no longer considered copyright infringement. To fall within the fair dealing exception the use must: (a) be “fair”; and (b) fall within one of the enumerated categories, which now includes education, parody and satire in addition to research, private study, criticism, review, and news reporting. Whether the use is “fair” is part of a six-part test, as set out in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13.  The test includes:

  1. the purpose of the dealing;
  2. the character of the dealing;
  3. the amount of the dealing;
  4. the nature of the work;
  5. available alternatives to the dealing; and
  6. the effect of the dealing on the work.

New Private Use Exceptions

The amendments make certain types of private copying lawful. These include the right to record and watch/listen to television, radio or Internet broadcasts at a later date and time (time shifting) and the right to transfer legitimately acquired content to other devices owned by the user, like an iPad, cell phone or MP3 player (format shifting).  The amendments also allow users to make backup copies of such materials to protect against loss or damage.  It may be surprising to some of you to know that these common and widespread activities were actually against the law until now!

New Rights for Photographers

In addition to new rights for consumers there are also new rights for artists. Chief among them is a reversal in the default ownership of photographs. Previously, in the absence of an agreement to the contrary, the person who ordered and paid for the photograph (the commissioner of the photo) was deemed to be the author of the photograph and the owner of the copyright in the photograph, rather than the photographer.  Now, however, the legislation provides that the first owner of the copyright in photographs and the author of such photographs is the person who created them. Note that this does not apply to photographs created by employees under a contract of employment. Therefore, unless there is an agreement in place with the photographer that specifically assigns ownership of the copyright to the advertiser, the photographer will retain all copyright.

“Notice and Notice” Requirement (v. the U.S. “Notice and Take Down”)

The CMA confirms that ISPs are not liable for copyright infringement simply by providing the mechanism for reproduction - as long as the ISP is acting solely as an intermediary in the telecommunications activity and does not knowingly enable infringing uses of copyrighted material. In addition, ISPs must comply with the new “notice and notice” regime. This is in contrast to the “notice and take down” system under U.S. copyright law, which requires ISPs, upon receipt of a notice alleging copyright infringement, to remove or block access to the subject material. Under Canada’s “notice and notice” approach, a copyright holder may send notice to the ISP identifying the alleged infringement and, upon receipt of such notice, the ISP is required only to pass along that notice to the person identified as responsible for posting the alleged infringing content.  If they don’t, they may be subject to statutory damages of between CAD$5,000-CAD$10,000. 

No Enabling Infringement!

The new law creates a new cause of action against online services that are primarily for the purpose of enabling acts of copyright infringement. Now, copyright owners can sue the operators of sites like illegal peer-to-peer file sharing and “pirate” sites.

Digital Locks and Rights Management Information

The amendments also make it an infringement to circumvent technological protection measures (“TPMs”), like digital locks such as passwords, encryption software and access codes, which enable copyright holders to further protect how their works are used. Further, the law prohibits services and the selling of devices that are designed primarily to circumvent TPMs. The amendments also prohibit the removal of rights management information (“RMI”) like digital watermarks that are used to identify copyrighted works. RMI enables copyright owners to police their works and helps users verify the authenticity of the work. 

For the full text of the legislation, see the Copyright Modernization Act.