After Bill C-32, the Copyright Modernization Act, died on the order table following the last election, the Government of Canada re-introduced on September 29, 2011 the Copyright Modernization Act as Bill C-11 with the exact same text as previously proposed under Bill C-32. However, with a firm majority, the Conservative government is now expected to pass the amendments to the Copyright Act before the end of 2011, which would represent the first major changes to the Copyright Act since 1997.

A summary of the most significant changes to the Copyright Act as proposed by Bill C-11 can be found below (as reproduced from the July 2010 edition of the BLG Intellectual Property Bulletin entitled “Bill C-32: Proposed Amendments to the Copyright Act” [available here]:

TECHNOLOGICAL PROTECTION MEASURES AND RIGHTS MANAGEMENT INFORMATION

One of the cornerstones of the proposed amendments to the Copyright Act is the introduction of provisions that prohibit the circumvention (i.e. unauthorized descrambling, decryption, avoidance, bypassing, removal, deactivation and impairment) of technological protection measures (TPM), i.e. “digital locks”, which are often used on movies, music, books, etc.

This prohibition on the circumvention of TPMs is a general and overriding provision that trumps many of the other rights provided for under the proposed amendments. The prohibition on circumventing TPMs also encompasses offering services and providing any device designed primarily for the purpose of circumventing a TPM.

Under the proposed amendments, where there is a breach of the anti-circumvention of TPM provisions, the owner of copyright is entitled to all remedies available in situations of infringement, except in limited circumstances such as statutory damages where the contravention was only for private purposes. In addition, the circumvention of a TPM would trigger criminal sanctions for individuals who are found guilty of infringement in commercial contexts. In the case of a conviction on the basis of indictment, an individual would be liable to pay a fine not exceeding $1,000,000, imprisonment for a term not exceeding 5 years, or both. In cases of summary conviction, an individual would be liable to pay a fine not exceeding $25,000, imprisonment for a term not exceeding six months, or both.

The proposed amendments provide limited exceptions from liability in respect to the circumvention of a TPM, such as investigations related to law enforcement and national security, and acts related to the interoperability of computer programs, encryption research, security of computer systems, making a work perceptible to persons with perceptual disabilities, broadcast undertakings, and for gaining access to a telecommunication service by means of the radio apparatus (i.e. “unlocking” cell phones). Interestingly, there is also an exception for cases where a TPM is not accompanied by a notice indicating that its use will permit a third-party to collect and communicate personal information relating to the user. Even where such a notice exists, an exception exists for cases where the user is not provided with the option to prevent the collection and communication of personal information. Under this exception, the user is permitted to circumvent the TPM to verify and prevent a TPM from collecting and communicating such personal information.

The proposed amendments also add a similar prohibition on the unauthorized removal or alteration of any rights management information in electronic form that is used in relation to a work where such acts will facilitate or conceal an infringement.

PROHIBITION ON FILE SHARING AND EXPANDED RIGHTS FOR PERFORMERS/SOUND RECORDING MAKES

The proposed amendments to the Copyright Act would provide performers and sound recording makers with expanded rights, including the sole right to authorize the making available and communication of sound recordings to the public over the Internet. These amendments would have the impact of prohibiting individuals from sharing digital music online. The Copyright Act would also be amended to expand the scope of moral rights of performers in respect of the above rights while extending the term of copyright protection for performers in a sound recording to 50 years from the first publication of the sound recording or 99 years from the musical performance, whichever is earlier. For sound recording makers, the term of copyright protection in a sound recording would extend to 50 years from the first fixation or first publication of the sound recording. Copyright in a communication signal would subsist for 50 years from when the communication signal is broadcast.

ANTI-PIRACY PROVISIONS

The proposed amendments would make it an infringement of copyright for any person to provide a service that is designed primarily for the purpose of enabling acts of copyright infringement over the Internet, e.g. peer-to-peer (P2P) distribution. In this regard, factors have been provided to the courts to help make a determination as to whether such an infringement has occurred. These include: (1) whether the service was expressly promoted as one that could enable acts of copyright infringement; (2) whether the person had knowledge that the service was used to enable a significant number of acts of infringement; (3) whether the services have significant non-infringing uses; (4) whether the service has any mechanisms to limits acts of infringement; (5) the benefits the person received as a result of enabling acts of infringement; and (6) the economic viability of the service without being able to enable acts of copyright infringement.

“NOTICE AND NOTICE” SYSTEM FOR CLAIMED INFRINGEMENT

The proposed amendments would introduce a “notice and notice” system that allows copyright owners to send a notice of claimed infringement in a specified format to an Internet services provider (ISP). Once a notice of claimed infringement is received, the ISP is then required to forward that notice the alleged infringer. The ISP is also required to retain records as to the identity of the alleged infringer for a period of six months, or one year in the event that court proceedings are commenced in respect of the alleged infringement. Should an ISP fail to comply under this “notice and notice” system, the copyright owner is entitled to claim statutory damages against the ISP of between $5,000 to $10,000.

STATUTORY DAMAGES FOR COPYRIGHT INFRINGEMENT

The proposed amendment would amend the current statutory damages provisions to make distinctions between commercial and non-commercial infringements and provide copyright owners with the ability to elect statutory damages of: (1) $500 to $20,000 if all of the infringements are for commercial purposes; and (2) $100 to $5,000 if all of the infringements are for non-commercial purposes.

Under the proposed amendments, and in the case of non-commercial infringements, the election of statutory damages bars the copyright owner, and any other copyright owner, from later recovering such statutory damages in respect of any of the defendant’s other non-commercial infringing activities that were done before the infringement proceedings commenced.

In the case of commercial infringements, the proposed amendments would provide that a lack of knowledge of the infringement by the infringer would allow the court to lower the award of statutory damages against the defendant to between $200 and $500 if: (1) there is more than one work in a single medium; and (2) awarding even the minimum amount would result in a total award that is grossly out of proportion to the infringement.

In addition, and under the proposed amendments, where a collective society is acting against a defendant and the infringement is non-commercial, the courts would also need to consider the proportionality of the award of statutory damages to the infringements, the hardship to the defendant, whether the infringement was for private or public purposes, and the impact of the infringements on the plaintiff.

These proposed amendments would decrease the scope of statutory damages available to copyright owners against infringers as compared to under the current regime, which provides that a copyright owner can elect for statutory damages of between $500 to $20,000 per work infringed. The proposed amendments would limit such statutory damages in the case of non-commercial infringements from between $100 to $5,000 for all infringements in a single proceeding for all works.

EXPANDED EXCEPTIONS TO INFRINGEMENT OF COPYRIGHT

The proposed amendments would introduce several new exceptions to infringement:

Expansion of the “Fair Dealing” Exception

The proposed amendments would expand the scope of the fair dealing exception to the infringement of copyright by adding education, parody, and satire to the existing exceptions for research, criticism, review or news reporting, and private study.

Non-Commercial User-Generated Content – “Mash-ups”

The proposed amendments would create a new exception to the infringement of copyright for non-commercial user-generated content by permitting individuals to use an existing copyright protected works in the creation of a new work, if: (1) done solely for non-commercial purposes; (2) the source of the existing work is mentioned if reasonable to do so; (3) the individual has reasonable grounds to believe that the existing work is non-infringing; and (4) the use or dissemination of the new work does not have a substantial adverse effect on an existing or potential market for the existing work. This new exception would exempt from infringement the creation, use, and dissemination of “mash-ups”, i.e. a work created by combining or remixing two or more distinct works. While different types of mash-ups exist, they are most commonly found in the form of videos available on websites such as YouTube.

Reproduction for Private Purposes – “Format Shifting”

The proposed amendments would create a new exception to the infringement of copyright for an individual to reproduce a work if: (1) the copy of the work is not an infringing copy; (2) the individual legally obtained the work, other than by borrowing or renting it, and owns the medium or device on which it is reproduced; (3) the individual does not circumvent a TPM; (4) the individual does not give away the reproduction; and (5) the reproduction is used only for private purposes. However, the exception does not apply to reproductions of musical works onto an “audio recording medium”, such as a CD. In addition, the exception does not apply if the reproductions are not later destroyed. While this new exception provides for “format shifting”, there are a number of uses that do not fall under the exception and are infringements of copyright, e.g. borrowing a CD and transferring the content from the CD to an iPod.

Reproduction for Later Listening or Viewing – “Time Shifting”

The proposed amendments would create a new exception to the infringement of copyright for an individual to record using any recording device a broadcast television, radio or Internet program for the purpose of listening or viewing that program later if: (1) the individual receives the program legally; (2) the individual does not circumvent a TPM; (3) the individual makes no more than one recording of the program; (4) the individual keeps the recording for no longer than is reasonably necessary to listen or view the program; (5) the individual does not give away the recording; and (6) the recording is only used for private purposes. These provisions create an exception for “time shifting” broadcast TV, radio, and Internet programs but does not include on-demand services where the user can receive the work, performance, and sound recording at a time of their choosing.

Backup Copies

The proposed amendments would create a new exception to the infringement of copyright for an individual who owns or has a license to use a “source copy” of a work to reproduce that source copy if: (1) the person does so solely for back-up purposes where the source copy is lost, damaged, or unusable; (2) the source copy is not an infringing copy; (3) the individual does not circumvent a TPM; and (4) the individual does not give away any of the reproductions. Where a backup is made in such cases, the backup copy becomes the source copy and the user is required to destroy all reproductions made.

Interoperability of Computer Programs

The proposed amendments would create a new exception to the infringement of copyright in a computer program for a person who owns a copy, or a license to reproduce the copy, to reproduce the copy for the sole purpose of obtaining information that would allow the person to make the program interoperable.

Encryption Research

The proposed amendments would create a new exception to the infringement of copyright for a person to reproduce a work for the purpose of encryption research if: (1) it would not be practical to carry out the research without making the copy; (2) the person lawfully obtained the work; and (3) the person has informed the owner of copyright in the work.

Security

The proposed amendments would create a new exception to the infringement of copyright for a person to reproduce a work for the sole purpose of assessing the vulnerability of a computer, system or network or of correcting security flaws, provided consent of the owner or administrator of the same is obtained.

Temporary Reproductions for Technological Processes

The proposed amendments would create a new exception to the infringement of copyright for making a reproduction of a work if: (1) the reproduction forms an essential part of the technological process; (2) the reproduction’s only purpose is to facilitate a use that is not an infringement of copyright; and (3) the reproduction only exists for the duration of the technological process.

Network Services – Limitation of Liability for ISPs

The proposed amendments would create a new exception to the infringement of copyright for ISPs when they are acting solely as intermediaries in providing services related to the operation of the Internet and other digital networks, including communicating, hosting and caching activities, provided that the ISP does not modify the content in the process.

Persons with Perceptual Disabilities

The proposed amendments would expand the scope of the exception provision applicable to persons with perceptual disabilities by permitting non-profit organizations acting for the benefit of persons with a print disability to, subject to certain exceptions, make specially designed copies of a work and to send that work to non-profit organizations in other countries where that work will not be available, provided that the author of the work is Canadian.

EXPANDED EXCEPTIONS FOR EDUCATIONAL INSTITUTIONS

The proposed amendments would expand the limited exception to infringement provisions applicable for educational institutions.

Works Not Commercially Available

The proposed amendments would create an expanded exception to the infringement of copyright provisions for education institutions to, for the purposes of education or training on its premises, reproduce a work provided that the work is not otherwise commercially available.

Distance Education

The proposed amendments would create a new exception to the infringement of copyright for an education institution to, subject to certain conditions: (1) disseminate over the Internet a “lesson” (i.e. all or part of a lesson, test, or examination”) to students enrolled in a course provided by the educational institution; (2) for a student who has received such a lesson over the Internet to reproduce such a lesson in order to listen or view it at another time, provided that the copy is destroyed 30-days after the student receives their final grades and provided no TPM is circumvented in the process.

Digital Reproduction

The proposed amendments would also create a new exception to the infringement of copyright for an education institution that has a reprographic reproduction (i.e. photocopying) license with a collective society to, subject to certain conditions, make a digital reproduction of the paper form and to communicate that digital reproduction over the Internet, provided: (1) that the appropriate royalties are paid for the distribution of the digital work; (2) the education institution takes measures to prevent further communication of the digital work; and (3) the education institution takes measures to prevent students from printing more than one copy or the digital work and further communicating the digital work. The proposed amendments include detailed provisions governing the application of this exception.

Works Available Online

The proposed amendments would create a new exception to the infringement of copyright for an education institution who, for educational or training purposes, reproduces, communicates or performs in public a work that is available through the Internet, provided that: (1) such acts are made in respect of services offered to students; (2) the source of the work is cited by the educational institution; (3) the work is not protected by a TPM and the Internet site does not feature a notice prohibiting such acts; and (4) the work was made available online without the consent of the author.

EXPANDED EXCEPTIONS FOR LIBRARIES, ARCHIVES, AND MUSEUMS

The proposed amendments would also expand on the limited exception to infringement provisions applicable to libraries, archives, and museums (LAMs). In particular, the proposed amendments would create an exception to the infringement of copyright for LAMs in respect of photocopies made for patrons on the basis of research or private study. The amendments would require that the LAM limit the reproduction to a single work and require that the LAM inform the patron that the copy is only to be used for research or private study and that any other use may require authorization from the copyright owner.

While LAMs would be permitted under the proposed amendments to make digital copies for a requesting patron who made the request from another LAM, the providing LAM is required to take measures to prevent the printing of more than one copy, communicating the digital copy to another person, and using the digital copy for more than 5 business days from the request.

OWNERSHIP OF COPYRIGHT IN ENGRAVINGS, PHOTOGRAPHS AND PORTRAITS

The proposed amendments would repeal the provision under the current regime, which provides that it is the person who commissions an engraving, photograph or portrait who is the first owner of copyright. The existing provision would be replaced with the general provision that provides that the author of a work is the first owner of copyright. The effect of this provision would bring engravings, photographs and portraits in line with other works under the Copyright Act.

REVIEW OF THE COPYRIGHT ACT BY PARLIAMENT

The proposed amendment provides that the Copyright Act is to be reviewed by Parliament every five years.