Canada: The Copyright Modernization Act: Canada’s New Rights And Rules

Background

The Copyright Modernization Act has been the subject of a great deal 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.

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 has not been significantly revised since the last general amendments in 1997. Over the years, the government has 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.

Bill C11 received Royal Assent on June 29, 2012. Its provisions will enter into force on a date or dates to be fixed by Order in Council.

The Bill is the government's final, successful 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, audiovisual, print, artistic, and other works.

Introduction

The preamble to Bill C11 states that the amendments are intended to:

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 TPM protected 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.

UserGenerated Content

Users will be permitted to create their own content by combining or using existing copyright material. The colloquially known "YouTube Clause" allows users to create a "mashup" 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"? For more information on these provisions, see The Copyright Modernization Act and User Generated Content (UGC).

Copying for Private Purposes: Format Shifting and Time Shifting

A general user exception will also apply to making copies for private purposes. This exception is available only if: the copy or other source material is not infringing; the individual legally obtained it (other than by borrowing or renting it), owns or is authorized to use the reproducing device or medium; the individual did not circumvent a TPM (see commentary above); and the reproduction is for private purposes and is not given away.

New provisions will also permit users to fix signals and record programs for later listening or viewing; for example, using PVRs to time shift. They will also permit making backup copies of works the user legally owns, provided various conditions are met.

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 constitutes fair dealing for certain purposes, including research and private study, criticism and review and news reporting. Satire, parody and education will be added as legitimate uses of copyrighted material.

Adding satire and parody to the fair dealing exception legitimizes 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".

Statutory Damages

Prior to the amendments' entry into force, rights holders who sue for infringement could seek compensation for losses they have suffered and can prove, or they could ask the court to award statutory damages in an amount between $500 and $20,000 for each work infringed.

The amendments alter this statutory scheme. In the case of a claim for copyright infringement against an individual for private use infringements (e.g. illegally downloading a musical work for private use), the range of statutory damages a court may award is between $100 and $5,000 for all of the infringements alleged under the lawsuit. One notable exception to this is that statutory damages are not available for circumvention of an access control TPM for private purposes.

Statutory damages for infringement for commercial purposes remain at the current range of $500 to $20,000 for each work infringed. However, if the court is satisfied that the defendant had no reasonable grounds to believe it had infringed copyright, the court has the discretion to lower the statutory damages to less than $500, but not less than $200. The court must take proportionality into account in awarding damages for commercial purposes.

These amendments significantly impact Rights owners' entitlements to damages, and will affect how infringement lawsuits will be brought before the courts.

IMPACTS ON KEY STAKEHOLDERS

Performers and Sound Recording Makers

1. Making Works Available Online

Performers and record labels will 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 an artist can better control sharing of their works over peer to peer networks, and can prevent a retailer from releasing his or her 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.

2. Moral Rights

Authors and composers have long held "moral rights" in their work. These rights will be 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 will introduce some new requirements for those dealing with copyrighted works. Standard agreements relating to performers' rights will 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.

3. Term of Protection

The term of copyright protection for sound recordings for performers and sound recording makers will be 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 will extend for 50 years after publication, or 50 years after the end of the calendar year in which the performance occurred.

Educational Institutions

Teachers and students will have more latitude to use digital technology and copyright materials without liability. For example, instructors can now send a lesson by telecommunication (e.g. for distance education), and their students can copy the lesson in order to access it at a more convenient time. Where an educational institution has a reprographic reproduction (photocopy) licence, it can now make digital copies of works, and instructors at such institution can print a copy of the work. Educational institutions and instructors are also granted exceptions to use works and other materials available through the Internet, subject to certain limitations.

Photographers

For many years, those who commissioned photographs were the original owners of the copyright in such works under the Copyright Act. Under the amendments, however, photographers will become the first owners of the copyright in their photographs, regardless of whether or not the works were commissioned. Individuals commissioning works will have rights of personal and non commercial use unless the individual and photographer have agreed otherwise. This amendment is a significant gain for photographers, who were treated differently from other creators under the current legislative scheme, while preserving such photographers' freedom to negotiate in commercial transactions with their clients.

Internet Service Providers

The Supreme Court of Canada has held that internet service providers (ISPs) do not participate in the copyright infringement of their users. If they merely provide "passive connections" for content, and if acting solely as intermediaries for their users and subscribers, ISPs are generally not liable for infringing content.

The amendments effectively codify this approach to ISP liability. They grant exceptions for "providing services related to the operation of the Internet or another digital network", for caching and other similar incidental acts, and for hosting. This will restrict liability, for example, in the area of cloud computing. Some exceptions are also provided for search engines or "information location tools".

Notwithstanding the limits on liability of ISPs and online service providers, however, ISPs and others who knowingly enable copyright infringement can be held civilly or criminally liable for such acts. Moreover, a "notice and notice" regime applies: where a copyright holder provides notice to an ISP of potential infringement by an ISP's subscriber, the ISP is required to forward notice "without delay" to that user, and to maintain records of the user's activity for six months (or one year if proceedings are commenced).

Broadcasters

For many years, the Copyright Act provided exceptions to broadcasters to make certain reproductions in their operations without liability. However, the exceptions were limited, and did not apply where a copyright collective society sought payment for the reproductions through a licence. Over time, various collectives came forward seeking payment. Through Bill C11, the government's stated policy is to limit liability for businesses that make temporary, incidental digital copies as part of their operations. Accordingly, the amendments considerably expand the scope of the broadcasting exception, provided (among other conditions) that broadcasters destroy the copies they make within 30 days.

Conclusion

The practical impact of the Bill C11 amendments remains to be explored in commercial interactions among creators and users, and before the courts. Many of the new provisions have been 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.

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