Canada: The Copyright Modernization Act And UGC

Last Updated: June 25 2012
Article by Margot E. Patterson

The proposed 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 have 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 stakeholder consultations and put forward bills intended to better align our legislation with the digital environment, and with international standards as set out in the 1996 WIPO Internet Treaties. Bill C-11 is the most recent proposal to balance out 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.

Much of the tension in the Copyright Act around the balance is found in those significant words: "it is not an infringement of copyright to..." engage in those defined activities the government has identified as being exempt from liability.

An Exception for Consumers – the UGC Provision

The consultations, committee hearings, reports and media commentary associated with Bill C-11 and its predecessor copyright bills raised a great deal of attention among consumers, to say the least. In an attempt to address consumer concerns, and capture consumers' current uses of copyright content, the Bill was drafted to include certain "private use" exceptions.

The provision broadly known as the "YouTube Clause" or "Mash-up Clause" – which we will refer to as the UGC provision (section 29.21 of the Bill) – allows users to create their own content by combining or using existing copyright material. Examples include creating a "mash-up" of clips as a new work, or adding music to a personal video.

The conditions attached to this exception are: 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.

The government described this exemption as follows, in a backgrounder on the amendments:

The Bill permits the use of legitimately acquired material in user-generated content (UGC) created for non-commercial purposes. This applies only to creations that do not affect the market for the original material. Examples include making a home video of a friend or family member dancing to a popular song and posting it online, or creating a "mash-up" of video clips. This provision would not permit such activities as simply adding a few lines to an e-book or a brief introduction to a song and then posting the copy for free online, or re-ordering the tracks on an album and selling CDs at a flea market. Creators' moral rights would also continue to be respected. Moreover, this provision applies only to the UGC creator of such works and only for non-commercial purposes.

While these conditions restrict users' ability to rely on this exception in creating their own content, many copyright holders are all too aware that certain uses of their works previously caught within the scope of infringement could now be legitimized. Many are concerned that despite the conditions attached to the UGC provision, the exemption could seriously impact the commercial market for their works.

The following sketches out three levels or areas of concern among rightsholders and the lawyers representing them.

The Berne Three-Step Test

Some copyright practitioners have argued that the UGC provision violates the Berne Three-Step Test, which requires that any exception to copyright owners' exclusive rights be limited to "certain special cases which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights holder". How does the UGC provision fail the Test? Opponents of the UGC provision say that broad consumer use of works available on any platform and in any medium is decidedly not a limited "special case". More importantly, creating and disseminating UGC – aspects of which are rapidly becoming a business in and of themselves – can easily conflict with the "normal" exploitation of the work and prejudice the rightsholder's interest.

The Copyright Generalists' Test

Those who are not necessarily well-versed in the Berne Convention or the Three-Step Test, but who still claim some familiarity with copyright and the UGC provision, may find themselves asking, "What is a 'non-commercial purpose'?" and "What is a 'new' work"? These are important questions. The concepts are not defined in the Copyright Act, in its current or amended form. And they are not defined as clearly as rightsholders might wish them to be, in the case law interpreting the Act.

The Dorm Room Test

Then there are those who prefer other pursuits over wading through the Bill C-11 amendments to understand the intricacies of the new rules. These individuals may think to themselves, "You had me at 'Youtube'", believing they have a free pass. This is of course largely the cohort the UGC clause was designed to serve.

Fair Dealing?

Could the UGC provision have made more sense as an express element of the Act's "fair dealing" exception? Bill C-11 already proposes to expand fair dealing to include education, satire and parody as acceptable purposes. Some feel that UGC has a lot in common with satire and parody, as a new use of existing content. Moreover, it has been argued that there are already established tests or standards (through CCH Canadian Limited v. Law Society of Upper Canada, [2004] 1 SCR 339 and related decisions) to judge whether dealing is fair or not, potentially giving rightsholders more of a framework to determine which UGC is and is not "fair". However, the government chose not to adopt this approach.

Conclusion

As with all of the new exceptions introduced in the Act, the devil may be in the details. In the current copyright reform climate in which the idea of "users' rights" has gained more traction, entertainment and media lawyers may soon be in for some interesting UGC matters to puzzle over.

About Fraser Milner Casgrain LLP (FMC)

FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit: www.fmc-law.com

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