Happy(?) Birthday, Bill C-11!

After years of debate (almost 15, to be precise) and numerous revisions and cancellations (4, to be precise), Bill C-11 or An Act to Amend the Copyright Act, arguably the most controversial set of changes to the Canadian Copyright Act (R.S.C., 1985, c. C-42), has just been passed by a vote of 158 to 135. This ends years of dealings with a piece of legislation that has polarized opinions like no other in Canadian intellectual property law. Detractors of the Bill have called its stringent digital lock provisions “deeply troubling,” saying that they will actually lead to users having to break the law by breaking the locks for uses that could arguably be considered fair, amongst other points of contention. C-11’s supporters have cited the promotion of innovation, industry and responsible enjoyment of copyrighted material as major pros of the bill. IPOsgoode has consistently followed C-11’s progress since it emerged in September 2011, and posts outlining various perspectives can be found here, here, here and here.

Here then, is a summary of the changes C-11 brings on, gleaned from Osgoode Professional Development’s all-day seminar on June 5, 2012, titled “Understanding Bill C-11: The Copyright Modernization Act.” It was an educative affair, with a range of knowledgeable speakers presenting on the most salient aspects of C-11, and its impact on the Copyright Act.

The focus here was on the division of users as “good” and “bad,” placing this perspective squarely within the copyright “maximalist” camp of arguments. The chief aim was to target the major players in the realm of privacy, such as peer-to-peer file sharing sites and networks that perpetuated large-scale infringement by allowing the public access to copyrighted works without sufficiently compensating the creators and copyright holders of the works. The speaker cited the amendment of the s.27 “enablement provision” as being instrumental in holding such sites, aptly termed “enablers” responsible for such acts, by damage awards within the statute itself, which is a change from C-11’s predecessor, Bill C-32. The language of the provision focuses on sites that are “designed primarily” for the purposes of enabling, and therefore, intent and knowledge are key factors in finding an illegal site an enabler. Responding to the concern that these provisions would also target legal internet service providers (ISPs), the speaker pointed out that C-11 created 4 “safe harbours” for such sites: the network services exception (s. 31.1(1)), the caching exception (s. 31.1(3)), the hosting services exception (s.31.1(5)), and the information tools exception (s.41.27). Put together, these exceptions were deemed to be the safety net protecting and legal or “good” ISPs versus the illegal or the “bad” enablers.

Another aspect is the “making available right,” which is “an exclusive right to control the release of copyrighted material on the Internet.” This provision is a further safeguard for both the creators and/or rightsholders, and extends to include performers as well. Simply put, it can be used to prevent the unauthorized dissemination of copyrighted online and through technology. This “digital transmission” combatant has been cited as necessary primarily to align current Canadian copyright law with its international counterparts, and to clarify that such transmission is a definite violation of copyright, something that has previously been a source of confusion to the Canadian public. The secondary infringement provisions, then, are an attempt at cracking down on the number of illegal file-sharing sites hosted within Canadian territory; this is to ensure adequate protection for the copyright holders, as well as to align Canadian policy with the WIPO, and to save face from the country’s current reputation as the “wild west of illegal file-sharing sites.”

Internet Service Providers’ and Network Services Liability for Copyright Infringement

Building on the above, both in terms of content and analogy, this presentation focused on how the enablement provision (s. 27, Copyright Act) and its exceptions would separate the “sheep from the goats,” by clarifying the specifics on ISP liability, and its limits.

Historically, intermediary sites, or those that are neither pure enablers nor just ISPs have been in the grey areas of legality, as they have been in a position to facilitate the infringing act, even if they have not been the host of the infringing activity itself. Before C-11 came into the picture, the focus was on the transmission itself, leaving the intermediary free to carry out its activities without repercussions. Further, the law did not speak to the acts of functional sites such as search engines, which only pointed users to infringing sites on request, or to their exclusive reproduction rights. At the heart of this, said the presenter, was the question of whether the intermediary was neutral in the infringement, i.e. not participatory in the wrong act, per se. However, C-11 has been said to clarify the status of neutrality by considering the principles set out in Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers (“Tariff 22,” [2004] 2 S.C.R. 427, 2004 SCC 45). Here the SCC held that intermediaries would not be held liable for providing technical functions for Internet usage, but that additional roles such as providing content could lead to liability for infringement. Additionally, the court held that the practice of caching was technical in nature, and therefore, lacked the necessary knowledge element to be deemed infringing on copyrighted material.

C-11 then, works to clarify the issue of neutrality, focusing on holding the behaviours of ISPs liable, by setting up a “willful and knowing” standard that will be enough to turn an intermediary into an enabler, while maintaining a technologically-neutral perspective that does not hold the medium accountable. Further, a new “notice and notice” (s. 41.25, Copyright Act) regime will be adopted, serving as both as a warning to ISPs to cease any activity that could be deemed infringing, as well as to avoid liability by forwarding the notice on to the user.

Finally, the presentation focused on 5 exceptions designed to protect ISPs from liability: the network services shelter (s. 31.1, Copyright Act), which will apply to both rights of communication and reproduction, and will protect those ‘conduits’ that will merely provide the means of telecommunication and reproduction, but not partake in its intent; the caching shelter (s. 31.1(2), Copyright Act), which allows lawful industry practices of using technology to cache data to escape liability from infringement; the hosting shelter (s. 31.1(4), Copyright Act), which allows emerging technologies like cloud computing to escape liability if their purpose is to enable the telecommunication of a work, and provided that there is no awareness or intent to infringe; and the information location tool shelter (s. 41.27, Copyright Act), which deems intermediaries not liable if they merely provide access to infringing material, as long as this is done automatically by the technology involved, for the purpose of providing the information, and there is no modification of the material by the intermediary.

Performers’ Rights Provisions

C-11’s attempts to bridge the gap between international and Canadian copyright law was most apparent in the presentation on the rights of performers and makers of sound recordings. The question here was mostly with respect to aligning Canada’s current take on copyright with those of the the WIPO Copyright Treaty (WCT), and the WIPO Performances and Phonograms Treaty (WPPT). Underlining that the WPPT brought up 4 economic rights of performers into play (reproduction, sale or transfer of ownership, commercial rental and making available), the presentation then focused on how C-11 contains provisions to adapt these into Canadian copyright law.

On implementing the both the WCT’s performers’ rights (Article 8, WCT) and the WPPT’s economic rights provisions (Chap. II, Articles, 6-10, WPPT) into the Copyright Act, C-11 amends s.2.4(1.1) of the Act. It establishes a “conjunctive test” that that requires two steps— making the sound recording available, as well as proving actual communication, and not mere transmission to the public. The result is that C-11 gives performers’ stronger rights under s. 15(1.1)(b), of the Copyright Act, by making any copies that are fixed on a sound recording without the performer’s permission a likely infringement.

With respect to moral rights, C-11 amends s. 17.1 and 17.2 of the Act, by setting the timeframe of moral rights to the same as the actual copyright of the performer in the work; both of these are now at 50 years after the calendar year from date of protection, or 50 years from the date of fixation. Makers’ rights are now outlined in s. 18(1.1)(a) of the Copyright Act, and they are now given the sole right to make a recording available to the public, creating, as the speaker pointed out, an uncertainty in the ownership of the recording. Finally, the issue of collective administration of performers and makers rights is dealt with in s. 67.1(4) of the Copyright Act, which would require that users’ would also have to heed these newly established performers’ rights as included in the “package of rights licensed or assigned with the sound recordings.” The implications are of course, primarily with respect to increased fees and tariffs for users.

Exceptions to Infringement for Online Education, Learning and Research

By recognizing the evolution of education materials and methods to include technology, Bill C-11 creates a “fair-dealing” exception for educational purposes, as outlined in different sections of the Act, with differing levels of liability being imposed. For instance, the “lessons” provision (s. 30.01, Copyright Act) defines this with respect to distance education students, provides a limited right of reproduction and fixation, and dictates that the lesson be destroyed “within 30 days of receiving the final course evaluation” (s. 30.01(5), Copyright Act). It also places the onus on educational institutions to limit the communication of only necessary lessons to students, and to reasonably prevent the unnecessary fixation or reproduction (s. 30.01(6)(a-d), Copyright Act). Obviously, the most important question is to the practicality of this section, given that enforcement might be an issue. Further, secondary infringement provisions are also modified, and provide specific definitions for what these are (s. 27(2.2), Copyright Act). Combined with the s. 30 provisions, C-11 creates strict protections for copyright holders, as the speaker pointed out.

Another exception has been provided for works that are available publicly, on the Internet (s. 30.04, Copyright Act). An educator can now use such works for educational or training purposes, and has the rights to reproduction, communication by telecommunication and public performance, as long as the audience in each of these cases consists “primarily” of students. As a counter measurement however, rightsholders can either apply technological protection measures (TPMs) to these works, or post notices preventing their use. S. 29.4 then broadens the fair dealing exception for reproduction for instruction, but applies a reasonable time, price and effort test to decide if the work could have been purchased instead. And finally, s. 30.1(1)(c) outlines “evolutive” provisions for libraries, museums and archives for future updating of their records.

Ownership of Photographs and Commissioned Artwork

The Copyright Act has treated photography as separate from the greater framework of literary, dramatic, musical and artistic works, and C-11 aims to harmonize these within the ambit of the Act. The changes include a repeal of s. 10 of the Act, which used to attribute the ownership of the copyright in the photograph to the owner of the negative, and not necessarily the photographer. The new provision will also remove the contradictory definitions of ownership of photographs that existed, with respect to the Act, and the WCT. Further, s. 13(2) of the Act, which placed the ownership of the copyright in the commissioning party of the photograph, will also be repealed in favour of the photographer’s rights. However, a broadened consumer right will permit the commissioning party to use a photograph for a number of purposes, which are codified under the new s. 32.2(1) “permitted acts” section, which allows a consumer to use a photograph for private and non-commercial purposes, as well as to authorize others to do so for the same purposes. As the speaker stated, the biggest concern here is the destruction of the reprint market, with the cost of the initial print going up sizeably, to compensate for the almost 50% loss that photographers face potentially.

The New Fair Dealing Exceptions

C-11 introduces 3 new fair dealing exceptions, to bring the categories up to 5. These are now research, private study, education, parody and/or satire (s.29, Copyright Act). The educational provisions have already been covered elsewhere in this post. The new “user-generated content” exception (s. 29.21, Copyright Act) pertains to published works alone, and applies to non-commercial purposes, requires the source to be mentioned, requires that the users have reasonable grounds to believe that the source was not infringed, and that the usage would not have had a “major effect” on the existing work. The non-commercial aspect has said to be designed for user-generated works, which is also known as the “Youtube exception.” Further, this is not found to be limited to online content, but extends to traditional LDMA works as well (anthologies, compilations, etc.)

The reproduction rights— for “private purposes” (s. 29.22, Copyright Act ) and for “later listening and viewing” (s. 29.23, Copyright Act) do not provide a specific demarcation between ‘private’ and ‘personal’ uses, or specify whether the use must be commercial or not. Further, the ‘time-shifting exception’ for later listening and viewing allows for the ‘fixing’ or recording of broadcast content for private viewing, but must be limited to one recording, and cannot be longer than “reasonably necessary.” As the speaker pointed out, this is again a vague standard. The “back-up copies” exception (s. 29.24, Copyright Act) also allows for reproduction subject to the conditions that the use is non-infringing, but will be difficult to enforce, according to the speaker. Interestingly, also, as the speaker noted, the language in this section says “person,” implying the possibility of corporations availing of this exception as well. Finally, the “temporary reproduction for technological processes” exception (s.30.71, Copyright Act) deems it a non-infringing use of the work if the copying “forms an essential part of the technological process,” but does not define what this process actually is. The speaker’s final point considered whether the new fair dealing exceptions were in keeping with Canada’s international obligations, specifically to the WIPO treaties. He also questioned whether Canada, it its eagerness to improve its embarrassing reputation in the international arena, has perhaps overreached and “gone too far” with respect to C-11’s fair-dealing provisions. This was something that, in his opinion, would only show itself as time goes by.

Statutory Damages and C-11

No seminar on C-11 would be complete without its repercussions on the current statutory damages scheme, and this presentation outlined that C-11 will now divide the damages awarded for infringement into two categories: commercial and non-commercial. The speaker pointed out that a new proportionality standard has been applied, meaning that the limitation on the quantum of damages awarded would be based on the nature of the wrong; therefore, non-commercial infringements (education etc.) face a range of $100-$5000 for all the infringing works combined. On the other hand, the values for commercial infringements are placed from $500-$20,000 per work infringed, showing that C-11’s aims to stop infringement might be harsh, but they are atleast consistent. As the speaker of the secondary infringement talk stated earlier, the main changes are designed to target the biggest pirates on the copyright seas.

The new statutory regime also specifically excludes enablers (s.38.1(6), Copyright Act), but allows for actual damages and injunctions to be claimed. The rationale here is that these infringers will likely not be affected much by statutory damages.

Protections and Remedies Against Circumventing TPMs and DRMs

The next presentation dealt with one of the most controversial changes to the Copyright Act through C-11, the provisions designed around TPMs and Digital Rights Managements (DRM) measures. Here again, the question of harmonization with the WIPO treaties seemed to be foremost on Parliament’s mind, specifically with respect to preventing the circumvention of TPMs, as well as DRM systems. The speaker pointed out that even though copyright infringement was technically a strict liability offence, with no requirement of intention to establish the wrongful act, both the WIPO treaties, and consequently, Bills C-61, C-32 and now, C-11 place an emphasis on the “knowing” element, with respect to tampering with rights management information (RMI) systems. Apart from this, a new exception (s. 41.18, Copyright Act), deals with the unlocking of wireless devices.

With respect to TPMs, C-11 places an absolute restriction on circumvention of access control TPMs (s.41(1)(a), Copyright Act), and it is here that intention has no effect. Additional provisions include the prevention of aids designed to help circumvent TPMs, including the manufacture, sale or importing of such devices (s. 41(1)(b),(c)). The criticism of these provisions comes from the fact that they are construed as being too strict, with there being no exception for fair dealing, backup copies, preserving digital copies and for obsolete/broken TPMs. Also, consumers are left in the dark with respect to which aspects of a product might be TPM or RMIs-protected, and which will not be, leading to potential for confusion and misperceptions as to the protection that will be afforded. Finally, the speaker left the room with some food for thought, by pointing out that even though Canada wants to align itself with the WIPO treaties, there is no real consistency with respect to the effectiveness of TPMs. Further in practical terms, the question of breaking a TPM might be simpler than expected, making detection and enforceability a possible issue.

The Sole Distribution Right of Copyrighted “Tangible Objects”

The final aspect of C-11’s changes dealt with the new “distribution” right that has been introduced in the Act, as per Article 8 of the WPPT. The speaker pointed out the additional  ambiguity that has been created within Canadian law, with respect to distinguishing between an actual distribution right versus that of the “making available” one,  attributing this gap in understanding to the ignorance of the French word “exemplaire,” which would have been better poised to correct the matter. The distinction would effectively have characterized the two with respect to the right of distribution for an original, and an ‘original copy.’ Further, a right to publication would be completely exhausted at the ‘offer’ stage, while a right to distribution would be exhausted on a copy-by-copy basis, according to the speaker.

After noting that the distribution right would not have an effect on the existing rights to publish, make available or of exclusive distributorship, the speaker noted that the right could have been put in Canadian law to introduce the doctrine of exhaustion – the principle that once the rightsholder has obtained an economic gain through the work, the purchaser would be “entitled to use and dispose of [the work] without further restriction.” Arguably, this would not reduce the copyright owner’s control over the work, because all other rights except for the distribution one would still be maintained. On the flip side, it does not seem to add to the holder’s rights either, but could add more actors on the copyright stage, like distributors. The speaker’s ultimate conclusion was that the right could have been placed in the Copyright Act to aid harmonization with the WIPO treaties.

House Debates on C-11

On June 15, 2012, the final round of Hansard debates regarding C-11 took place in the House of Commons, with MPs bringing up any final concerns regarding the bill. Foremost on the minds of the MPs was the issue of balance, and to ensure that this was played out with as much integrity as possible. Criticisms ranged from there being a lack of eye-to-eye on both sides, with respect to achieving this balance, as well as the worry that C-11 was ultimately profiting corporations and “satisfying industry concerns” (David McGuinty, Ottawa South, ON). Its supporters, on the other hand, insisted that the fairness balance had been found, and that the bill would ensure the Copyright Act would be ushered into the 21^st century, allowing for Canadian copyright law and policy to be on par with the rest of the world (Christian Paradis, Minister of Industry and Agriculture).

The birth of Bill C-11 and its passage into law has been anything but smooth. Even though it still has some time before it’s provisions are codified into the Copyright Act as formal law (it is now headed to Senate), Canada’s current round of copyright reform is here to stay, for better or for worse. The question that is foremost on the minds of many Canadians, no doubt, is whether the better will trump the worse, and is something that only time and patience will tell.

Mekhala Chaubal is a JD Candidate at Osgoode Hall Law School.