Some thoughts on Bill-C-32: An Act to Modernize Canada’s copyright laws

June 3rd, 2010 by Barry Sookman Leave a reply »

At long last we have the Government’s proposed copyright amendments: Bill, C-32 the Copyright Modernization Act. The new Bill aims to address gaps in the current Copyright Act created by the Internet and other digital technologies in line with international standards.

This Bill is substantially different from its predecessors Bills C-60 and C-61 and reflects new thinking by the Government on how best to modernize the Act. While the Bill is an advancement over previous attempts at copyright reform, it will require amendments to ensure it accomplishes the goals set out by the Government and does not introduce unintended consequences.

The Preamble to the Bill describes its objectives, which include the following:

  • To create a marketplace framework law and cultural policy instrument that through clear, predictable and fair rules will support creativity and innovation in the knowledge economy;
  • To address opportunities and challenges that are global in scope for the creation and use of copyright works or other subject-matter;
  • To adopt coordinated approaches to copyright protection based on internationally recognized norms including those reflected in the WCT and WPPT;
  • To provide rights holders with recognition, remuneration and the ability to assert their rights;
  • To enhance users’ access to copyright works or other subject-matter; and
  • To enhance the protection of copyright through the recognition of technological measures and other measures, in a manner that promotes culture and innovation, competition and investment in the Canadian economy.

In summary, the intent of the Bill is to amend the Copyright Act in order to do the following:

Implement the WIPO treaties (the WCT and WPPT): The Bill contains amendments to create the making available right and a distribution right for tangible goods, to protect rights management information, and to provide legal protection for technological measures. The TPM provisions are consistent with international norms and standards for these provisions which require adequate legal protection and effective legal remedies against the circumvention of TPMs. The Bill contains exceptions to the prohibitions on circumvention to allow for reverse engineering, security testing and encryption research, creating interoperable computer programs, enabling persons with perceptual abilities to access materials, and enabling consumers to protect their personal information. There are also two new exceptions that did not exist in Bill C-61: one for temporary recordings made by broadcast undertakings and another for unlocking a wireless device. The Government has also retained the flexibility, through regulation, to broaden the class of exceptions where the public interest might be served.

Create exceptions for certain uses of copyright material for private purposes: The Bill would create new exceptions for format shifting onto any medium or device, making back-up copies, and copying of broadcasts for time shifting purposes. These are technologically neutral exceptions which extensively broaden what individuals can do with content. Copyright owners would not receive any remuneration under the private copying levy for such copying. These provisions go far beyond the exceptions which were proposed in Bill C-61 and will need to be studied carefully to ensure they don’t have unintended consequences.

Create an exception for “Non-commercial user generated content”: The Bill would create a new exception to enable individuals to use existing works in the creation of new works such as “mash-ups” and to permit the new works to be posted online. The provision is subject to the following conditions: (a) the copying or dissemination of the new work must be done solely for non-commercial purposes; (b) the source is mentioned “if reasonable in the circumstances”; (c) the individual had reasonable grounds to believe that the existing work was not infringing copyright; and (d) the copying or dissemination of the new work “does not have a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work … or on an existing or potential market for it”.

The Government has stated that the intent of the provision is to protect the making and posting online of a home video of a friend or family member dancing to a popular song, or creating a ‘mash-up’ of video clips. The breadth of the section suggests potential unintended consequences, however. For example, the new work could theoretically involve very substantial copying by an individual of very large parts of works or collections of works as long as some new work of whatever character or originality is created. There is no need for the copying to be transformative or the extent of the copying to be fair in any way. Also, the Section extends to authorizing commercial entities to disseminate the new work unless the damages suffered by the rights holder reaches the level of “a substantial adverse effect” on the exploitation or potential exploitation of the existing work. The intermediary would be immunized from liability. This section together with the new hosting exception would undermine current business models where content is licensed for online uses and is not consistent with the Government’s stated intent.

Create exceptions from infringement to clarify the liability of ISPs: The Bill contains very broad exceptions for internet intermediaries and network providers, including exceptions for providing network services, caching, hosting, and providing information location tools (ILT). These provisions are very similar to the exceptions in Bill C-61, except that the network service provider and ILT exceptions are not applicable to sites that are primarily designed to enable acts of copyright infringement such as illegitimate P2P file sharing services.

Many of the standard conditions associated with these types of exceptions worldwide are not in the Bill. For example, these exceptions are not conditioned on the service provider being unaware of infringing activities or being required to takedown or disable access to infringing content. The ISP exceptions are also not conditioned on ISPs having a policy to curb copyright infringing activities on their networks or to comply with generally accepted industry codes, as is the case in other countries.

The Bill contains the notice and notice system that was in C-61.There is no notice and takedown system, something that has been implemented internationally, and is required to effectively deal with operators of pirate sites that infringe content on a substantial scale and to deal promptly with time-sensitive postings, such as postings of pirated movies, video games or albums prior to their official release, which can thwart the commercial viability of new releases.

Create a cap on statutory damages: The Bill creates a cap applicable to infringements for non-commercial purposes. It also permits a judge to reduce these damages even further for a number of reasons including if they would be disproportionate.

Create a broader exception for broadcasters to permit them to copy music for their operations: This exception significantly widens the current exception to the broadcast mechanical reproduction right in the Act. This amendment would prospectively affect music publishers’ and the proposed record labels’ broadcast mechanical tariffs once certified for ephemeral copying. The Copyright Board is scheduled to rule imminently on the current tariffs.

Create other exceptions: The Bill would also create new exceptions to permit reverse engineering of computer programs for interoperability purposes, reverse engineering for encryption research, and for network security vulnerability testing purposes. The Bill would also create new exceptions to permit temporary copying such as buffer copying as an essential part of the execution of a  technological processes. It would also create three new categories of fair dealing exceptions, exceptions for parody, satire and education. There are also new exceptions for distance learning and accessing publically available information from the Internet. These exceptions, some of which are new, will also have to be studied carefully as the wording or scope of these exceptions departs significantly from the approach taken in other jurisdictions for exceptions of these kinds.

Create a secondary infringement action for enabling infringement: Bill C-32 creates a new cause of action against a person who provides a system that he knows or should know is “designed primarily to enable acts of copyright infringement”. This is intended to target pirate services such as illegal peer-to-peer file sharing sites. The Bill creates an open-ended set of factors that are intended to guide courts in applying this new rule, including: (a) whether the person expressly or implicitly marketed or promoted the service as one that could be used to enable copyright infringement; (b) whether the person had knowledge that the service was used to enable a significant number of acts of copyright infringement; (c) whether the service has significant uses other than to enable acts of copyright infringement; (d) the person’s ability, as part of providing the service, to limit acts of copyright infringement, and any action taken by the person to do so; (e) any benefits the person received as a result of enabling the acts of copyright infringement; and (f) the economic viability of the provision of the service if it were not used to enable acts of copyright infringement.

The drafting of this section will need a close review to ensure that the stated policy objective of making “the enabling of on-line copyright infringement itself an infringement of copyright” is achieved. For example, the section is limited only to internet services that are “designed primarily to enable acts of copyright infringement”.  Also, the cause of action is an exception to only two of the new safe harbours available to Internet Intermediaries, namely the network services and information location tool exceptions. Curiously, there is no exception to the caching or hosting services safe harbours. This creates potentially very significant unintended consequences, particularly when the section is read together with the very broad hosting exception. Also, the new cause of action does not permit the recovery of statutory damages against these pirate enablers, thus undermining the intent of the Government to allow copyright owners to fight internet piracy by pursuing those entities that promote illegal P2P file sharing.

The Bill is long and complex and will require close reading to fully understand its scope and application. It is clear from a first read of the Bill that it attempts to address many of the challenges posed by the Internet and digital age. However, many provisions in the Bill need ironing out to ensure the Bill meets the Government’s stated objectives without creating material unintended consequences.

For more information about the Copyright Modernization Act or Bill C-11 or copyright reform, see Change and the Copyright Modernization Act.

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