Ed.: After failed attempts in 2006 and 2008, the government tabled the Copyright Modernization Act (Bill C-32) in the House of Commons in June of this year. Canada’s Copyright Act has not been materially updated since 1997, when Windows 95 was the latest word in PC operating systems and a high speed internet connection meant you were using 28.8 kb/s dial-up. It has proven politically difficult in Canada to pass this type of reform even though it is urgently needed. Time will tell whether this third attempt has struck a politically acceptable balance between the rights of users and owners of copyrighted works. At the time of editing this article, the consensus remained that, notwithstanding the real possibility of changes and amendments along the political and parliamentary pathways, Bill C-32, as first introduced, will likely be maintained as the basic framework for the new law. Accordingly, in this fall issue, we have included the following article prepared earlier this year.

Because the Copyright Act failed to keep pace with technology, many everyday activities in Canadian households are technically infringements of the present legislation, including:

  • transferring legally-purchased music or movies to a computer hard drive or digital music player;
  • recording a television programme to a VCR, DVD recorder or personal video recorder (PVR); and
  • creating a backup copy of a movie or video.

According to the summary in Bill C-32, among other things, the amendments are intended to permit greater use of copyright material, particularly in digital form, and to make the provisions of the legislation technologically neutral. Whether those aims are achieved with the new Bill have been and will likely continue to be the topic of heated discussion. The following summarizes the key features of the Bill at First Reading.

File Sharing and Format Shifting

The Bill seeks to prohibit individuals from sharing digital music by granting additional rights to makers of sound recordings to control the sale and distribution of their works, including the sole right to communicate a sound recording to the public via the Internet. The Bill allows individuals to transfer legally acquired works of all kinds, including musical recordings, from one format to another for private use, referred to as “format shifting”. For example, individuals would be able to copy legally obtained musical recordings on CDs to digital music players or cell phones.

However, there are numerous restrictions. Most notably, because the work to be “format shifted” must be legally obtained and not borrowed or rented, copying music from a friend’s CD to an iPod would not be allowed. Moreover, the individual must own the medium on to which the work is transferred and the copy must not be distributed, even to friends for their own private use. Any copies made must be destroyed before the individual gives the sound recording to another person. Finally, it would not be permissible to tamper with a technological measure designed to prevent copying, often called a “digital lock”. It is not clear whether these provisions would prohibit sharing iTunes libraries over a home network or the use of the new media sharing features of Windows 7.

The Bill seeks to support businesses like iTunes that distribute digital materials on the Internet by providing that the terms to which their users are bound will govern in the event of an inconsistency with the Bill.

Circumventing Technological Protection Measures

A key principle of the proposed law is that circumventing a technological protection measure, or digital lock, is prohibited, even if the work to which the technological protection measure attaches is legally acquired. For example, if a digital lock is used on books, movies or music, consumers will not be able to copy that content. This prohibition overrides most other rights in the Bill, including the new format-shifting rights. The Bill also bans the distribution and marketing of devices, such as software, that can be used to circumvent digital locks.

While this approach is similar to the U.S. Digital Millennium Copyright Act, some Canadian commentators feel this shifts the copyright balance too far in favour of IP rights holders at the expense of consumers.

Time Shifting

Recording broadcast television, radio programs or Internet programming using any recording device will be permitted under the Bill provided that the program is viewed only once and is kept “no longer than necessary in order to listen to or watch the program at a more convenient time”. Furthermore, the copy made must be for private use and cannot be given away. Of course, it would be illegal to circumvent a digital lock to record the program. These rights do not apply to on-demand services. Commentators have criticized the fact that the time-shifting proposal makes it illegal for a person to create a library of his/her favourite shows, even if maintained strictly for private use.

Exception for User Generated Content

What some are calling the “YouTube” exception will permit Canadians to create remixed user generated content for noncommercial purposes under certain circumstances. Canadian will be able to incorporate existing copyrighted materials into new works, such as Internet “mash-ups”, as long as the new work is created for non-commercial purposes, the existing materials were legitimately acquired and the new work is not a substitute for the original material and does not negatively impact the markets and reputation of the original materials.

Performers' Rights

The Bill makes some minor revisions to the scope of performers’ rights, but more interesting is its extension of moral rights to performers’ rights. Moral rights include the right to the integrity of the work and the right to be associated with a work by name or a pseudonym, or to be anonymous.

Network Service Providers

Like its two predecessors, Bill C-32, as introduced at First Reading, exempts Internet Service Providers (ISPs) from liability for copyright infringement when they are acting solely as intermediaries in communication, hosting and caching activities. Nevertheless, the Bill suggests that ISPs do indeed have a role in preventing infringement.

The Bill proposes a “notice and notice” system for informing suspected copyright infringers of a copyright owner’s desire to enforce its rights. The system involves a two-step process whereby (i) notification from a copyright holder in a prescribed format is sent to the ISP; and (ii) the ISP then forwards this notification to the subscriber. The ISP is not required to take any further action (e.g. removing the content in question, as it would be required in the American and Australian regimes), but is required to store the subscriber’s IP information for six months, or a year if a court action stems from the infringement. Failure to maintain such information could make the ISP liable to statutory damages in the $5,000 to $10,000 range.

Similarly, there is an exemption for web-hosting service providers that may store the works without infringing copyright, unless the web host knows of a court decision holding that the stored material infringes copyright.

Use of Copyright Material by Educational Institutions

The Bill proposes a number of exceptions for use of copyrighted works by educational institutions, which build on the existing exceptions for educational institutions found in the Copyright Act and are aimed at addressing use of digital materials and materials available on the Internet.

One of the more interesting exceptions would allow educational institutions to copy material publically available on the Internet only if such materials are legitimately posted, are not clearly marked as prohibiting such reproduction and if the educational institution was not aware that the materials were posted on the Internet in violation of the owner’s rights.

Other provisions will facilitate distance learning by permitting the institution to communicate the lesson to the public (i.e. the students enrolled in the course) over the Internet for educational or training purposes, subject to digital locks and as long as the lessons are destroyed within thirty days of conclusion of a course.

Libraries

The Bill permits libraries to distribute materials digitally; however, the library must take measures to ensure that the client only prints one copy of the digital form, does not communicate the copy to another person and ensures that the copy is destroyed within five days after using it. Digital distribution is only permitted if there are no digital locks on the materials.

New Categories of Fair Dealing

The Bill expands the applicability of the concept of “fair dealing”. Currently under the Copyright Act, fair dealing is a statutory exception to copyright infringement that permits the use of copyrighted material for the purposes of private study, research, criticism, review or news reporting. Under the Bill, fair dealing has been expanded to include parody, satire and education, meaning that a person who uses copyrighted works for these purposes will not be liable for infringement.

Ownership of Copyright in Photographs and Portraits

The Bill seeks to make the photographer or painter the owner of copyright in photographs or portraits that have been commissioned, thereby bringing the ownership of copyright in photographs in line with other works. Presently, the person who commissions a photograph or portrait, rather than the photographer, is deemed to be the first owner of the copyright. Photographers, therefore, have had to rely on contractual arrangements to obtain rights to reproduce their photographs. The Bill would give the person who commissioned the photograph or portrait limited rights to use it for personal or non-commercial use without the photographer or artist’s permission, subject to any contract that specifies otherwise.

Statutory Damages

The Bill proposes to decrease the statutory damages available where an individual infringes copyright for non-commercial, private use. Under the current rules, statutory damages range from $500 up to a maximum of $20,000, per work infringed. Under the new rules, statutory damages in non-commercial cases could be as low as $100 up to a maximum of $5,000 for all infringements in a single proceeding for all works. This reduced damage award would apply, for example, to individuals who download music from peer-to-peer file sharing services. It has been argued that a reduction in statutory damages balances the interests of copyright owners and those of users. However, as mentioned above, this limitation may not apply if the infringement was achieved by circumventing a technological measure.

Some Final Remarks

The progress of Bill C-32 through the House of Commons will be followed intently by stakeholders and practitioners in the copyright field. In many cases, new rights may not be as extensive as they might first appear. For instance, the fair use exemption for parody and satire only relieves from copyright infringement and not from infringement of moral rights. If an author of a work could demonstrate that the parody or satire has distorted the work to the prejudice of their honour or reputation, they would have an action for infringement of their moral rights. As well, the “digital lock” provisions trump many of the added reproduction rights in the Bill. As Tom Waits wrote in “Step Right Up” (1976), “what the large print giveth, the small print taketh away.”