On June 29, 2012, the Copyright Modernization Act (CMA) received Royal Assent. The CMA is intended to address numerous issues arising from the development of digital and Internet technology since the Copyright Act was last substantially revised in 1997. While most of the provisions of the CMA came into force on November 7, 2012, a limited number of provisions are not yet in force (most of which relate to reciprocity of copyright protection in World Intellectual Property Organization (WIPO) treaty countries, which will not come into force until each of the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty come into force in Canada).

New Rights for Creators and for Users

The CMA creates new rights for both creators and users of copyrighted materials.

For users, the CMA expands the existing exception of fair dealing to include situations when copyright material is used for the purpose of parody, satire or for education purposes. Additionally, it would be permissible to use an existing publicly available work to create a new work, provided this is done solely for non-commercial purposes, the source of the original work is credited, and the creation of the new work does not have a substantial adverse effect on the original work.

In addition to the new fair dealing exemption, the CMA provides a number of rights and exemptions to educational institutions and educators. Exemptions permitting educational institutions to reproduce, display or perform works in the classroom are rendered more technologically neutral by removing links to specific technologies. Further, a number of proposed amendments facilitate the use of new digital technologies in the classroom. These changes encourage the delivery of both lessons and course materials over the Internet, and permit the use of materials obtained from the Internet for educational purposes, provided the material was posted by the copyright owner without the expectation of compensation and is not protected by technological protection measures.

The CMA also provides legal sanction to several practices that have become widespread with the advent of digital technology (or for that matter video cassette recorders). Firstly, it permits the reproduction of a work for private purposes where the initial copy of the work is a lawful copy, not merely rented or borrowed, provided the individual making the copy does not circumvent a technological protection measure to create it. This right allows an individual to make backup copies of materials they have purchased legally, but would not permit them to distribute those copies. This provision also permit individuals to copy the work onto any medium or device they own, (for example, would permit copying a compact disc onto a computer or digital music player).

Additionally, the CMA includes a provision that allows “time shifting” in the case of recordings made for the purpose of viewing or listening to a program at a later time, provided the recording is kept no longer than is reasonably necessary, and the individual received the program legally. This provision does not apply to “on-demand” programs.

As for creators, performers benefit from expanded exclusive rights in their performances when embodied in sound recordings. This expansion includes a broader right of reproduction, making it available through digital distribution and the right to sell tangible copies of such sound recordings. Further, the CMA gives performers moral rights in their performances, similar to those enjoyed by other creators.

Additional changes eliminate the differential treatment of photographs under copyright law as compared to other works, by providing that the copyright in a photograph would be first owned by the author or the author's employer, as is the case for other works. A person who commissions a photograph would be permitted to make a personal or non-commercial use of it, unless they enter a contract that provides otherwise.

New Penalties and Enforcement Mechanisms

The CMA prohibits the circumvention of the technological protection measures used by rights-holders to secure and control their digital content. It also prohibits providing circumvention services to others, or dealing in technology designed to circumvent protection measures. Interestingly, these prohibitions appear to apply even when a user circumvents a technological protection measure for an otherwise permitted use of a work, such as fair dealing for the purpose of review or criticism.

The CMA also makes it an infringement of copyright for anyone to provide a service over the Internet or another digital network if they know or should know that the service is designed primarily to enable acts of copyright infringement. Whether infringement is established under this provision will be based on factors including how the service is promoted, the provider's knowledge of past infringements relating to the service, whether the service has significant uses other than copyright infringement, and whether the service would be economically viable if it were not used to enable acts of infringement.

While CMA strengthens the ability of copyright owners to protect their works, it also includes provisions that will result in non-commercial infringers of copyright facing considerably less exposure to statutory damages. The CMA reduces the range of possible statutory damages to awards of between $100 and $5,000 per infringer, which will cover all past infringements. The court would also be permitted to consider factors such as the hardship of the award to a non-commercial infringer and whether the infringement impacted the plaintiff. Infringement for commercial purposes will remain subject to potential statutory damage awards of between $500 and $20,000.

Finally, the CMA limits the liability of Internet Service Providers (ISPs) and operators of Internet search engines for copyright infringement carried out by their subscribers, as they act as mere conduits for material over the Internet. The CMA permits copyright owners to send a notice of claimed infringement to an ISP in a prescribed form. On receiving such a notice, the ISP would be obligated to forward it without delay to the alleged infringer identified in the notice, and to retain records that would help determine the identity of the alleged infringer for a period of six months to one year.