December 2011

In September, the Harper government mounted the fourth attempt in six years to reform Canada's Copyright Act. Previous efforts – Bill C-60 in 2005, by the Liberal government of Paul Martin, Bill C-61 in 2008 and Bill C-32 in 2010 – were casualties of the inherent volatility of a minority federal government.

Now that the Harper government has secured majority status, its latest effort – Bill C-11 tabled on Sept. 29 – is almost certain to become law. Titled the Copyright Modernization Act, it is an effort to update an Act which doesn't adequately reflect the dramatic changes that have occurred over the past two decades in how we access content in digital form over the Internet and with connected devices such as tablets and smartphones.

The government asserts that, in drafting the legislation, it has struck a fair balance between the rights of consumers, content creators and copyright holders. But Opposition parties, special interest groups and other stakeholders have still found reason for criticism. In this article, we will outline some of the benefits and shortcomings of Bill C-11.

The Positive

Key provisions of the Bill do clarify the liability of various parties involved in the creation, distribution and consumption of copyrighted content. For example, the Bill contains a number of "safe harbours" for Internet intermediaries, such as Internet Service Providers (ISPs) and search engines, to ensure that these vital services are not subject to copyright liability for merely facilitating the use of the Internet by Canadians.

These intermediaries will be required to play a role in addressing online infringement of copyright protected material. ISPs will have to adopt measures to notify a subscriber if a rights holder alleges that the subscriber's account has been used to infringe copyright.

The Bill also clarifies the rights of rights holders and provides them with greater enforcement power.

For example, rights holders have often complained that the provisions of the current Act do not provide them will adequate legal recourse to take action against "enablers." These are the individuals who engage in content piracy for commercial purposes. Enablers make it possible for others to infringe on copyright by pirating content and making it available for download, or creating websites that have links to pirated content. Bill C-11 provides rights holders with the legal tools they need to take action against these individuals.

These changes provide the creators and owners of copyrighted content, as well as those in the distribution channel, such as ISPs, with the confidence to invest in new products and services.

For consumers, the Bill has also taken a quite progressive approach to recognize and protect their rights from a fair dealing perspective. For example, throughout the entire useful life of the video cassette recorder, it was probably an infringement of copyright under the Act to record a television show, even if it was only for personal use. Bill C-11, however, makes it legal to time shift, transfer music from a CD to an iPod, and use existing copyrighted materials to create new user-generated content, such as a mashup on Youtube, provided it is not for commercial use.

The Negative

In other areas, however, the Bill remains mired in archaic provisions which predate the Internet. Under the current Act, the distribution and use, or "making available," of content over the Internet is included in a category referred to as "communication to the public by telecommunication." Bill C-11 specifies that when even one member of the public receives a private, point-to-point transmission, that transmission is a communication "to the public."

However, "communication to the public by telecommunication," was originally enacted into Canadian law in the 1980s to govern the mass broadcast of copyrighted material via radio, television, cable and satellite. This regime is not a rational approach to protecting the rights of rights holders and consumers in the context of the Internet, where a transmission often involves just one consumer downloading a single piece of content.

The shortcomings of this provision in the current Act are no more apparent than in the context of copyrighted music.

The communication and public performance in Canada of any song that is subject to copyright, regardless of whether it is on a CD or in the soundtrack of a movie or a video game, is subject to the payment of copyright royalties that are set by the Copyright Board of Canada. For example, a movie studio that has secured all the rights it requires to distribute a movie on DVD in Canada must still go before the Copyright Board if it wants to make that same movie available for download directly from its website, due to the music included in its soundtrack.

Under the current Act, only the Board has the authority to determine the licensing fee that should be applied to the music. Under the terms of the Act, the distributor cannot negotiate payment for the transmission directly with the rights holder/composer of the music. Instead, it must incur the expense, delay and uncertainty of pursuing institutional litigation before the Copyright Board, which typically sets rates years after the transmission has taken place.

Again, this stems from the fact that the current Act attempts to put a square peg in a round hole by applying provisions intended for broadcast radio and television to the Internet. This is a significant hindrance for stakeholders in the Canadian marketplace that will be enshrined if Bill C-11 is passed in its current form.

A controversial issue which has generated much debate surrounding the legislation is the addition of education, parody and satire to the list of "fair uses" which are deemed not to infringe copyright. While supporters of these measures applaud the government for legitimizing every day use, some rights holders are concerned that overly broad applications of these fair use provisions could jeopardize existing sources of revenue.

Another hotly debated aspect of Bill C-11 is the government's approach to providing legal protection to technological protection measures (TPMs) or "digital locks," as they are sometimes called. While rights owners maintain that legal protection for TPMs is necessary for the development of the digital market place, critics worry that overzealous application of TPMs could lock up content and prevent consumers from being able to benefit from the exceptions that exist in the Copyright Act.

What's next?

In many respects, Bill C-11 is a long overdue and progressive attempt to modernize Canada's Copyright Act. However, shortcomings remain that must be addressed to more fairly reflect the realities of our increasingly digital world.

At present, there are two cases before the Supreme Court of Canada that are attempting to address the "communication to the public by telecommunication" conundrum discussed above. In one of those appeals, Fasken Martineau is acting for a number of Canadian telecom companies which will argue that downloads are not communications to the public. Appeals and arguments in these cases are being held at the time of this article's publication, with decisions by the Court possible by summer. At the same time, Bill C-11 will be winding its way through parliamentary committee and senatorial review. It could become law as early as the spring.

It's a two-horse race that remains too close to call. The Supreme Court may rule in favour of the appellants, or it may not. If its decision comes too late, any victory for the appellants will be a hollow one. A ruling in their favour will not precipitate a change in the Act if it comes after Bill C-11 has passed.

---

Jay Kerr-Wilson practices primarily in the areas of communications and public law, with a particular emphasis on copyright. He represents large and small cable and direct-to-home satellite companies in proceedings before the Copyright Board of Canada and advises these clients on issues related to copyright liability. He also represents Canada's largest communications companies on issues related to copyright law reform and has testified on several occasions before the Standing Committee on Canadian Heritage.