As part of Bill C-86, the Budget Implementation Act, the Federal Government has introduced sweeping changes to Part VII of the Copyright Act, which governs the operation of the Copyright Board of Canada and the collective management of copyright. These changes are intended to speed up the Board's decision-making processes, reduce the extent to which copyright royalties are applied retroactively, and harmonize the various collective management regimes in the Copyright Act.
However, the changes will result in a dramatic shift in Canada's approach to regulating the copyright fees paid for the public performance and communication to the public by telecommunication of both live and recorded music.
The Government has also introduced amendments intended to protect Canadian internet users from copyright infringement notices that demand immediate payment of settlements.
Copyright Board Reform
The efficiency and timeliness of the Copyright Board's decision-making process has been widely criticized by both copyright collectives and copyright users in recent years. It has taken the Board up to three years to issue some decisions and many decisions establish rates that are retroactive for a number of years. In response, the Federal Government launched a stakeholder consultation process last year, culminating in the proposed legislative amendments as part of Bill C-86.
Under the proposed amendments to the Copyright Act, collectives that want to propose copyright tariffs to be approved by the Board will have to file those tariffs 14 months prior to the effective date and proposed tariffs will have to cover at least a three-year period. Currently, tariffs are filed nine months in advance and can be filed for a single year at a time.
The Board will be required to deal with matters "informally and expeditiously" and the Chair will have the power to assign a case manager to a matter before the Board.
The Federal Cabinet will have the power to enact regulations establishing deadlines for the Board to complete matters that are before it.
The Government is also introducing new criteria for the Board to follow in establishing fair and equitable royalty rates, including establishing a "willing buyer/willing seller" standard. However, market criteria will not be sole determinant of royalty rates, since the Board is also required to consider the public interest.
Changes to Collective Management of Music
Perhaps the most significant change to the copyright regime introduced in Bill C-86 is the elimination of ex ante regulation of the rates charged for the public performance and communication to the public of live and recorded music.
SOCAN is the collective that licences the public performance of musical works in Canada on behalf of authors, composers and publishers. Re:Sound is the collective that collects royalties for the public performance of sound recordings of musical works on behalf of records companies and performers.
Currently, both SOCAN and Re:Sound must have a tariff approved by the Copyright Board in order to collect royalties from users or commence litigation for non-payment. The collectives have to file proposed tariffs in advance to give users notice of the royalty rates SOCAN and Re:Sound are seeking. Users can object to the proposed tariffs and trigger a hearing before the Copyright Board, which then establishes the rates and other terms and conditions.
Even if no user objects to a proposed tariff, the Board is still required to consider whether the proposed tariff is fair before approving it, and may alter the rates, terms and conditions as it considers necessary.
A tariff, once approved, is a form of opt-in statutory licence that any prospective user can rely on by paying the applicable rates.
Furthermore, a user cannot currently be sued for publicly performing a musical work unless that work is covered by a tariff.
Approved tariffs cover a wide range of activities including the use of live and recorded music in bars, restaurants and stores, the transmission of musical works by radio, television, cable, satellite, internet streaming services, the use of music in concerts, at sporting events, conventions, fairs, and many others.
As the result of the amendments proposed in Bill C-86, SOCAN and Re:Sound will no longer be required to file proposed tariffs. They will be able to licence the use of music for any purpose through direct negotiations with prospective users. By not proposing tariffs, collectives will not have to give public notice of the rates they are seeking and the Board will have no role to play in considering whether the fees are fair and equitable unless a user or a collective requests a dispute resolution proceeding.
The same rates and conditions will no longer necessarily be available to all users. The Collectives can seek different rates from different users on a licence-by-licence basis.
Finally, the Government is proposing to repeal the provision preventing a user from being sued for infringement unless there is an approved tariff. This will greatly increase the risk of liability for using musical works that are not represented by SOCAN.
Elimination of Settlement Demands from Copyright Notices
If a copyright owner suspects an internet user is infringing copyright, she can send a notice of claimed infringement to the user's ISP. This ISP is required to forward the notice to the user and to keep information that would allow the user to be identified if the copyright owner wants to initiate litigation.
Some owners were sending notice with imbedded hyperlinks and demanding that the internet user go to a website and pay a settlement using a credit card or risk infringement proceedings. In response to this misuse of the notice system, the Government has introduced amendments specifying that notices that contain settlement demands are not compliant with the Copyright Act and do not have to be forwarded by ISPs to user.
However, since there is no prohibition against sending notices with settlement demands, the onus will be on ISPs to identify and filter out such non-complaint notices.
As expected, the changes to the Copyright Act are mostly procedural and institutional. There are few changes to the substantive law of copyright in Canada. Any substantive changes will likely appear only after the 5-year Copyright Act review, which is currently underway.
However, just because changes the changes are procedural does not mean that they are unimportant. Many of the proposed amendments will have a profound impact on the relationship between copyright owners and copyright users. Copyright Board reform will be welcome by all sides, but many of the other amendments will be more contentious, and their effects harder to predict at this stage.