Canada: Copyright Modernization Act (Mostly) In Force

On November 7, 2012, with the publication of Order in Council P.C. 2012-1392 (the Order) in the Canada Gazette, the long-awaited Copyright Modernization Act, S.C. 2012, c. 20has mostly been proclaimed into force.

This Act was the fourth attempt at a major revision of Canada's Copyright Act, R.S.C. 1985, c. C-42since 2005. Three previous Bills died on the Parliamentary order paper; however, in this case, the fourth time was the charm. Bill C-11 received Royal Assent on June 29, 2012.

Many observers had anticipated that the new law would be proclaimed into force early in the fall. This has now happened; however, not all of the law is in force today. Some provisions are still on hold, pending ratification of the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) (collectively, the WIPO Internet treaties).

This note presents an overview of those changes which are in force now and those which are not. A more detailed discussion of what each of these provisions entails appears in the legislative summary prepared by the Library of Parliament.

Provisions in force now

Most of the Act came into force on November 7, 2012. This includes significant new protections for right holders and also a large number of new exceptions and limitations for users.

New protections for right holders include the following.

  • A new exclusive "making available" right is granted for all works. New subsection 2.4(1.1) clarifies that making any work available to the public by telecommunication, for access on demand, is included within the existing exclusive right of "communication to the public". It remains to be seen whether or not this will be interpreted to reverse or modify the Supreme Court's ruling in ESA v. SOCAN that "communication" does not include activities in the nature of reproductions. If it does, then right holders may be eligible to demand additional royalties in relation to a broad range of Internet services.
  • Specific "making available" rights are extended to producers of sound recordings, separate from and in addition to the rights attaching to underlying works (e.g. music). New paragraphs 15(1.1)(d) and 18(1.1)(a) use essentially the same language, defining a right "to make [the recording or performance] available to the public by telecommunication [...] and to communicate it to the public in that way". This raises the question of whether a distinction has been drawn between "making available" and "communicating to the public" which is different than subsection 2.4(1.1).
  • New exclusive rights are defined for performers in their performances and any fixations (recordings) of those performances in subsections 15(1.1) and 18(1,1), as well as performers' moral rights in new section 17.1. Performers will now have the exclusive rights to authorize any recording of their performance, any reproductions of such a recording; and, in the special case of sound recordings, any rental of the recording and the first sale of any tangible copies of the recording (e.g. CDs). These rights are all distinct from the rights held by producers and composers.
  • Performers and producers of sound recordings obtain the right to receive performance royalties for broadcasting or public performances, but only for Canadian works and some foreign works, but not others (this will be discussed in more detail, below).
  • A new form of secondary infringement, generally called "enablement", is defined in new subsection 27(2.3). This provision makes it an infringement of Copyright to provide an Internet service "primarily for the purpose of enabling acts of copyright infringement if an actual infringement of copyright occurs by means of the Internet or another digital network as a result of the use of that service." Subsection 2.4 defines a list of factors that courts "may" consider in applying this provision, including how the person has advertised the service, whether the person had actual knowledge of infringement, whether the service has significant non-infringing use, the person's ability to control infringing uses, the benefits (if any) the person receives from infringing uses and whether the non-infringing uses would be economically viable on their own. This provision should ease the evidentiary burden required for right holders to enforce their rights against mass-infringement.
  • Legal protection is defined for "technological protection measures" (TPMs), subject to certain limitations, in new sections 41-41.22. The Act defines two classes of TPMs: those which control access to the work ("access controls") and those which control acts which need to by authorized by a right holder under the Act ("use controls'). Circumvention of access controls is prohibited, as is offering services or manufacturing, importing, selling, renting or providing devices or technologies for circumvention of either access or use controls.  All of the remedies available for infringement of copyright will apply to circumvention, with two significant exceptions. Statutory damages will not be available where access controls are circumvented for personal use and only injunctions will be available if a library, archive, museum or educational institution inadvertently contravenes this provision. Various statutory exceptions define relatively narrow circumstances in which circumvention will be lawful and the Government has the power to define new exemptions though regulations.

Several new exceptions and limitations have also been introduced.

  • The Fair Dealing exception in section 29 is expanded to cover education, parody and satire. Under Fair Dealing, a two-part, fact-driven, analysis is required to determine if a particular use that would otherwise infringe copyright is legally permitted.  The first step asks whether the use fits into a closed list of categories; these new categories have been added to this list. However any use which fits within these categories must also pass the second stage which assesses the fairness of the use in its particular circumstances.
  • A time-shifting exception has been defined in new section 29.23. A person may make a single copy of a broadcast program for later viewing, provided the program was received legally, no TPM was circumvented, the person keeps the recording only so long as is reasonably necessary to view the program at a more convenient time, and the copy is only used for the person's own private purposes. For example, this provision would permit the use of a Personal Video Recorder to record a television program for later viewing with one's family, but would not apply if the same device was used to record programs to be played in a commercial setting like a bar or restaurant.
  • Similarly, a person may make copies of legally-obtained non-infringing works for private purposes under new section 29.22, so long as no TPM is circumvented, the original copy was not borrowed or rented, and the person does not give away, rent or sell the original copy. This would apply to copying authorized downloads of purchased music files onto a portable player, but would not apply to copying the same music from a CD borrowed from a friend onto the same device.
  • The Act includes a novel and somewhat controversial "User Generated Content" exception in new section 29.21. User may make non-commercial use of publicly available works in the creation of new derivative works, provided that the derivative "does not have a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work." This has been referred to as the "YouTube" exception, because one potential application might be using copyright music in the background of a personal video clip. But the precise contours of this provision, particularly in terms of the kinds of adverse effects that will be relevant, remain to be explored.
  • New targeted exceptions have been defined for interoperability of computer programs, security and encryption research in new sections 30.6-30.63. These exceptions permit reproductions that are made solely for specific permitted purposes, such as "assessing the vulnerability of the computer, system or network or of correcting any security flaws." The interoperability provision applies only to "programs"; it likely would not include modifying a program to make it compatible with alternate content, such as to bypass the region-coding on a DVD. (On the contrary, that might well be a prohibited circumvention of a TPM.)
  • An exception has been defined for "temporary reproductions for technological processes" in new section 30.71. For example, this would apply to incidental reproduction when an authorized copy of a work is loaded into the memory of a device, provided that the copies are not retained after the process is complete.
  • A "safe-harbour" provision for network service providers in new section 31.1 exempts them from liability for infringement for merely providing the means for communicating or reproducing a work, including incidental caching and the provision of hosting services. The safe harbour is only available where the service provider does not modify the work, other than for technical reasons. This exception is expressly not available to services that fall within the "enablement" provision.
  • A new exception has been defined for production and export of special format works for people with "print disabilities" in new section 32.01. Royalty obligations may be imposed by regulation. The exception will not apply where suitable format copies of the work are available at a reasonable price in the destination country. This exception is in addition to and independent of existing provisions relating to domestic production and use of special format works for persons with "perceptual disabilities". The two sets of provisions have different definitions of beneficiaries and different conditions of applicability. It is unclear how they will work together in practice.
  • A variety of new targeted exceptions have been defined for educational and archival uses in sections 29.4 to 30.4 of the new Act. Libraries, archives and museums will be permitted to reproduce works in order to preserve them, including by format-shifting to avoid obsolescence. Libraries will be permitted to circulate digital reproductions of works; however they must take a number of steps to prevent infringing uses of those copies. Educational institutions will be permitted to make and use digital reproductions of works under specific circumstances, including for distance learning; however, like libraries, they will be required to take specific measures to avoid infringing uses of those copies.
  • Finally, the limits on statutory damages have been dramatically reduced to a maximum of $5,000 for all past infringements for non-commercial purposes. The previous limit of up to $20,000 per work still apply to commercial infringement.

The Act also repeals special provisions relating to the ownership of copyright in photographs. Whereas previously the person who initially owned the physical negative or plate (or the image itself, for digital images) was deemed to be the author, now authorship will be determined in the same way as for any other work. Furthermore, it also repeals a provision that assigned copyright in a commissioned photograph or portrait to the person who commissioned it, rather than its author. The effect of these changes is that photographs will now be treated the same way as any other work.

Provisions deferred until ratification of the WIPO Internet treaties

Certain provisions of the Act have been linked to ratification of the two WIPO Internet treaties. Generally, these are provisions which extend the same protection provided to Canadian works to works from other countries that are parties to the treaties. This is known in international law as "national treatment" and is a requirement of the treaties.

One potentially significant question for Canadian right holders as well as users in relation to communication and performance royalties for sound recordings remains unresolved. The WPPT includes a general obligation to collect and remit these royalties on behalf of other treaty parties but it permits countries to opt-out of this obligation, in whole or in part. Some countries only honour this obligation on a reciprocal basis (i.e. they pay royalties only to those countries where their own nationals receive such royalties).

Section 15(4) of the Act, which will not come into force until the WPPT does, permits the Minister to designate countries which would not be entitled to receive communication and performance royalties.  It is currently unclear if or how this power would be exercised. This decision is eagerly awaited, as it may have a significant impact on both the royalties that Canadian music users will have to pay for use of foreign works and the payments Canadian right holders would receive for foreign use of Canadian works.

Ratification Process

The Order specifies that the remaining provisions come into force with the treaties. Formal ratification of the treaty is under the control of the executive branch. Cabinet must approve an Order in Council authorizing the Minister of Foreign Affairs to sign an instrument of ratification for each treaty.

As a matter of policy, the government announced in 2008 that all treaties would be tabled in the House of Commons before ratification. The House will have 21 sitting days to consider the treaties, during which time it may debate the treaties and pass motions. However the decision to ratify remains exclusively with the executive. [The Library of Parliament provides a description of the process.]

After that, the instruments of ratification must be deposited with the Director General of WIPO, in Geneva. The treaties themselves provide for a three month waiting period after that before the treaties come into force. [See WCT, Art. 21 and WPPT, Art. 30.] Once that period elapses, the treaties will come into force and, with them, the associated provisions of the Act.

Notice and Notice deferred

One significant feature of the Act which remains outstanding is the so-called "notice-and-notice" regime. This regime will require internet service providers and providers of search tools who receive notices of alleged infringements to pass those notices on to their users and to keep records allowing the users to be identified. However, unlike the "notice-and-takedown" regimes that are found in many other countries (such as the United States of America), the service providers are not required to take any action to stop or prevent the alleged infringement.

These provisions require implementing regulations to deal with the required form of the notice and the fees that providers may charge to process them. The terms of these regulations are being negotiated with stakeholders. No timetable has been announced.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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