Reforming the Copyright Act
Backgrounder

In the last decade, digital technology has evolved so dramatically that reforms to the Copyright Act are long overdue. This is why on October 16, 2007, in the Speech from the Throne, the Government of Canada committed to improving "the protection of cultural and intellectual property rights in Canada, including copyright reform."

By introducing this legislation, the government is following through on its commitment to initiate reform. The amendments represent a "made-in-Canada" approach that truly balances the interests of Canadians who use digital technology and those who create content.

This legislation complements other initiatives introduced by the government aimed at strengthening intellectual property protection in Canada, including:

• Enacting Bill C-59, An Act to amend the Criminal Code (unauthorized recording of a movie); and
• Announcing that Canada will work with other international trading partners towards a possible Anti-Counterfeiting Trade Agreement (ACTA).

Canada's Proposed Amendments to the Copyright Act

The Government of Canada is introducing amendments to the Copyright Act to provide fair and predictable rules for copyright in a digital environment for all Canadians, and to bring the Act in line with advances in technology and current international standards.

In proposing changes to Canada's copyright regime, the government has considered many factors. For example, how do we support creativity in the digital environment while allowing Canadians to take greater advantage of the latest technologies in legal ways? How can copyright rules offer both certainty and clarity while remaining relevant in a fast-changing environment? How can we promote our own interests as Canadians, yet cooperate internationally at the same time?

In developing the proposed changes to the Copyright Act, the government has been guided by four principles:

1. The rights of those who hold copyright must be balanced with the needs of users to access copyright works.

Our quality of life as Canadians is closely tied to the diversity of our society and the vitality of our communities. By making use of our creativity and talent, Canadians contribute to the development of our country, culturally, socially and economically. We are creating a better society.

Access to culture and information is important to Canadians. Limitations and exceptions to copyright protection are in place to complement the uses authorized by rights holders.

There are several types of users (e.g., consumers, educators, libraries), each with its own copyright priorities. These groups view the Internet as an essential means of conducting research, exchanging information and stimulating further innovation. It is understandable that user groups are concerned with proposals that provide strong protection for rights holders.

The Copyright Act already sets out provisions to afford access to copyright-protected material. For example, the Act provides that any "fair dealing" with a work for purposes of private study or research, or for criticism, review or news reporting, is not an infringement of copyright.

In addition to fair dealing, the Copyright Act provides exceptions for different categories of users. One category is for not-for-profit educational institutions, which are permitted to make copies and perform works protected by copyright, subject to certain restrictions. Another category is not-for-profit libraries, archives and museums, which may copy published and unpublished works protected by copyright in order to maintain and manage their collections.

The digital age has seen an explosion in the variety of products and formats. Canadians do not want to pay for the same song twice just so that they can enjoy the music on their computers or MP3 players. They also want to be able to record a television show at home for later viewing or make a copy of a newspaper article or photograph in a format different from the original. Not-for-profit institutions, for their part, want to fully exploit the numerous possibilities offered by the Internet for research and education. The government believes that the law must be modernized to take these new uses into account.

2. The Copyright Act must provide clear, predictable and fair rules to allow Canadians to derive benefits from their creations.

People who work hard and use their talents and abilities to create things should be remunerated for their efforts. The Copyright Act provides protection to creators and other rights holders in the form of rights over the communication, reproduction and other uses of their work. The creation of Canadian and other content, and the availability of diverse choices for Canadians, depend on adequate copyright protection. Without such protection, the incentive to produce original work is greatly reduced.

The Internet has threatened the ability of rights holders to prevent the unauthorized use of works and other protected subject matter. People around the world have taken advantage of the Internet to access content that is available in user-friendly forms. This access is often made through new legitimate services and platforms, and also via free alternatives, both legitimate and illegitimate, to the traditional channels of distribution of copyright material.

The government believes that it is important to provide stronger measures that rights holders could decide to use to fully exploit and enforce their rights and combat infringement in an Internet environment.

3. The Copyright Act should foster innovation in an effort to attract investment and high-paying jobs to Canada.

The Copyright Act affects many sectors of the Canadian economy. According to a study commissioned by the Department of Canadian Heritage, Canada's copyright industries made up 4.5 percent of the Canadian economy ($46.8 billion) in 2004.

Canada has a very high rate of Internet penetration. According to a 2006 survey conducted for the Canadian Radio-television and Telecommunications Commission, 70 percent of Canadian households had Internet access, and more than 85 percent of them were using a broadband connection. The Government of Canada has invested heavily to ensure that high-speed, high-bandwidth Internet access is available to Canadians at reasonable cost. This has prompted growth in Canada's Internet service provider (ISP) community.

In business, educational and research contexts, the ability to use high-quality Internet services to create or access copyright content will be an increasingly important factor in ensuring Canada's future economic success and in promoting Canada's cultural presence around the world. The Internet opens new markets and offers new ways to conduct business. Creators and rights holders recognize that traditional channels of distribution often are insufficient to remain competitive. They have been developing new online services to complement traditional ones, but have also requested, as have user groups, that the current legal framework be improved to optimize access and delivery.

4. Canada must ensure that its copyright framework for the Internet is in line with international standards.

The Internet has dramatically reduced traditional boundaries between countries. Music, film and video games can now be shared around the planet with a few mouse clicks. To be meaningful, the protections offered by Canada must, therefore, be in line with the protections offered in other countries. The international community must work together to ensure domestic copyright laws are effective in the global community.

The World Intellectual Property Organization (WIPO) Copyright Treaty (WCT) and Performances and Phonograms Treaty (WPPT) address copyright issues and the Internet. They provide responses to the challenges that new digital technologies have presented to copyright protection, and their approach represents the most developed and coherent response by the international community to these new challenges. The purpose of the WIPO Internet treaties is to improve the protection of the already existing copyright and related rights treaties: the Berne Convention (1971) and Rome Convention (1961). These treaties date back more than a quarter of a century, to the days before the development of personal computers and the Internet. The WCT and WPPT contain a number of new standards and serve to clarify these older treaties.

Canada participated in the discussions on the WIPO Internet treaties and signed them in 1997, signalling its endorsement of the approach taken to rights and protections in these agreements.

Proposed Approach

So how does the government propose to give effect to these principles? The bill is based on a five-pronged approach that:

• proposes new measures allowing individuals to copy a range of legitimately acquired material to various devices they own;
• implements new rights and protections for rights holders in a manner consistent with international standards;
• clarifies exceptions to copyright rules for some educational and research purposes;
• clarifies ISP copyright liability in respect of material transmitted over their facilities, and further clarifies their role in curtailing misuse of their facilities; and
• amends provisions in the Act relating to photographs to provide photographers with rights equal to those of other creators.

1. Private Use by Canadian Consumers

The proposed bill balances the new rights and protections of rights holders with those of Canadians who use digital technologies for personal enjoyment at home and with their families. These new measures are needed to allow Canadian consumers to benefit from the new products and formats available.

The following provisions would ensure that Canadian consumers can legally take advantage of these new technologies for private, non-commercial use:

• A "recording of broadcast" exception would allow individuals to make a single copy of a television or radio program or a simulcast webstream to which they have legitimate access for listening and viewing at a more convenient time. This is often referred to as "time shifting."
• A "private use of music" exception would allow individuals to copy a legally acquired sound recording to each separate device they own, such as an MP3 player (e.g., an iPod) and a computer. Some conditions would apply to the use of this exception. The individual must not have circumvented a technological measure (TM) or digital lock to make the copy, for example.
• A "private transfer of format" exception would allow individuals to make a single copy of legally acquired books, newspapers, periodicals, videocassettes and photographs to various devices they own. This is often referred to as "format shifting." Again, there would be conditions to guide the use of this exception, such as the requirement that the copy of the source material could only be used by the owner of the material for private purposes.
• Canadians' exposure to monetary liability would be significantly reduced where private, non-commercial activities are involved. For example, in lieu of the maximum amount of statutory damages (which currently can be as high as $20 000 per infringement), a fixed amount of $500 would be payable, providing TMs or digital locks were not hacked in the process. Individuals may still be liable for other types of damages or remedies.

2. New Rights and Protections

New rights and protections are required if rights holders are to better reach new markets, adapt their business models and combat infringement. The government considers a "making available" right and legal protection for TMs essential.

In a digital environment, reproductions are easily made and disseminated. Copyright regimes must provide rights holders with the ability to seek remuneration from uses of their works and to authorize uses that serve their interests.

The bill proposes a making available right that would give the rights holder the ability to determine whether and how their material is posted and shared online. The Act already provides authors with a making available right. The bill would extend such protection to performers and producers as well.

TMs are another mechanism to achieve this important copyright objective. The bill would make it illegal to circumvent or bypass technologies that control access to protected material. It would also become illegal to provide, market or import tools designed to enable circumvention.

The bill offers protection for Rights Management Information (RMI). RMIs are used to identify the rights holders of original work or to outline copyright restrictions on the use of the work. The bill would prevent the removal or alteration of RMIs.

The bill contains further provisions:

• A "distribution right" would allow creators, and performers and producers of music, to control the distribution of tangible copies of copyright works. This right provides control over the initial entry of the product into the marketplace, such as in the first sale of a book or CD.
• A "moral right" would allow performers to prevent distortions or mutilations of their performances and to control what products, for example, are associated with their work.
• The existing "reproduction right" would be clarified. This right allows performers to authorize the direct and indirect reproduction of their performances by, for example, broadcasters, consumers and record producers.
• The term of protection for producers and performers in sound recordings would be extended to 50 years after the publication of the recording.

The proposed amendments would bring the rights and obligations provided for in Canada's Copyright Act in line with those of the international community. As of May 2008, 65 countries have ratified the WCT and 63 have ratified the WPPT. Among major trading partners, Japan, Mexico and the United States have ratified these treaties. All European Union countries have passed legislation necessary to implement the treaties.

The government is fully aware that some stakeholders believe that these international treaties are outdated, given the development of the Internet. They argue that major music companies, for example, are moving away from anti-copy technology, making the legal protection of these TMs moot. Some groups fear that the legal protection of TMs will unduly hinder public access to works. Others view such protections as potentially threatening to free speech and privacy.

To the contrary, the government believes that the measures set out above are very important to protect works in a digital environment. A majority of rights holders have been asking for years for Canada to get in line with the current international consensus on protecting copyright in a digital era.

The bill also introduces important limitations on TM protections to address potential concerns over their impact on freedom of speech, privacy and "follow-on" innovation. For example, the prohibition on circumvention would be limited to allow for reverse engineering, security testing and encryption research — three activities that facilitate innovation and research in the high-tech field. There is a proposed limitation to ensure that persons with perceptual disabilities are not prevented from enjoying copyright materials. There is a limitation to ensure that Canadians can protect their personal information. Finally, the government would retain the power, through regulation, to ensure access to other areas where the public interest might be served.

With regard to TMs in particular, it is critical to note that these technologies are used at the discretion of rights holders. They can choose not to use them if they feel they can more effectively market their products in another fashion. The law is designed to ensure that rights holders have a choice. Consumers have a similar choice in that they can avoid products and services that employ TMs if they disagree with their use. Rights holders can then choose to adjust their business practices accordingly, as we see happening now.

3. Access for Research and Education

The bill contains several provisions to address concerns from educators and researchers about reasonable access by:

• allowing schools to use publicly available material that has been legitimately posted on the Internet by rights holders without an expectation of compensation;
• allowing schools to transmit materials used in classroom study to students located off-campus so they can interact with the teacher during the lesson or view at a time chosen by them, provided that the institution takes reasonable measures to restrict access to students only;
• allowing schools that already have licences to make photocopies of copyright works to make digital copies of those works to send to students, subject to payments; and
• enhancing the ability of researchers to gain quicker access to material stored in distant libraries via the Internet.

4. Internet Service Providers

The bill contains provisions to address the liability of ISPs and the role they should play in curbing copyright-infringing activities on their networks. To the extent that ISPs enable Internet connectivity and facilitate communication between users, the bill makes it clear that they are not liable for the infringements of their subscribers.

At the same time, however, ISPs must do their part in discouraging copyright infringement. ISPs are the link between the copyright owner and an alleged infringer. That is, but for the ISP, the copyright owner has virtually no means of identifying and communicating with the alleged infringer (a "notice and notice" approach). ISPs would become legally obligated to forward to their subscribers any allegations of infringement that they receive from rights holders. ISPs also would be obliged to keep a record of the information that would enable the identification of the subscriber engaged in the alleged infringing activity for six months. In the event of litigation, this record-keeping requirement would help ensure that relevant information was not lost.

This "notice and notice" approach represents a unique “made-in-Canada” method of dealing with copyright infringement.

Some rights holders do not support the proposed exemption from liability for ISPs. Nor do some favour the proposed "notice and notice" approach, preferring instead the "notice and takedown" model adopted in Australia and the United States. In these countries, ISPs are expected to block access to alleged infringing material after having been notified by the rights holder. But this “notice and takedown” model was adopted before the emergence of peer-to-peer file sharing applications and is not well-suited to manage such activities. In addition, a provision that would result in a "takedown" of material without sufficient due process may be inconsistent with Canada's legal framework.

The bill would also clarify that information location tools, such as search engines (Google, Yahoo, etc.) would not be liable to pay damages for reproductions made in the course of providing such tools, unless they ignore a notice requesting the removal of alleged infringing material.

5. Photographs

The Copyright Act currently treats photographers differently from other creators in terms of ownership and term of protection. The bill would harmonize the copyright treatment of photographers with that of other creators. The photographer would become the owner of the copyright, rather than the individual who commissions the photograph or portrait. It would not, however, be an infringement of copyright for the individual who has commissioned the work for personal purposes to make private, non-commercial use of that photograph or portrait, subject to any agreement to the contrary.

The term of protection would be based on the life of the photographer plus 50 years after his/her death.

Conclusion

Copyright reform is complex. The digital environment has injected a broad range of interests and challenges into the process.

The government's proposals are based on four principles:

1. The rights of those who hold copyright must be balanced with the needs of users to access copyright works.
2. The Copyright Act must provide clear, predictable and fair rules to allow Canadians to derive benefits from their creations.
3. The Copyright Act should foster innovation in an effort to attract investment and high-paying jobs to Canada.
4. Canada must ensure that its copyright framework for the Internet is in line with international standards.

Canada's copyright regime must be responsive to the challenges and opportunities of the globalized digital age in a way that benefits all Canadians, while bringing Canada in line with international standards. This is why the government is proposing a balanced, made-in-Canada approach to copyright reform.