Third Time Lucky? Canadian Government Tables New Copyright Act Overhaul

June 2010

After failed attempts in 2006 and 2008, the Conservative Government tabled a new Act to Amend the Copyright Act (Bill C-32) in the House of Commons on June 2nd, 2010. Time will tell if the third time is the charm; it has proven politically difficult in Canada to pass this type of legislation even though it is desperately needed.

The Copyright Act (Canada) has not been materially updated since 1997. To give readers an idea of how out-of-date the Copyright Act is with respect to digital media, the following is a quick list of the major developments in Internet and digital media since 1997:

• the adoption of HDTV, Blu-Ray, DVDs “TiVo” and other DVRs/PVRs;
• the launches of Google, YouTube, MySpace, Wikipedia, Facebook and Twitter;
• the launches of Apple iPod, iPad, iMac and iPhone products;
• the adoption of portable digital media players (such as MP3 and video players);
• the launch of Microsoft Windows 98, Me, XP, 2000, Vista and 7 operating systems;
• the introduction of Google Android, RIM Blackberry, HandSpring/Palm Treo and other smartphones;
• the commercial sale of ringtones;
• the use and prevalence of Adobe Acrobat and, generally, eBooks, and educational institutions’ adoption of digital and Internet-based learning tools;
• the emergence of Napster, KaZaA, NetFlix, Limewire and .torrent filesharing sites and technologies; and
• the introduction of Sony PlayStation2 and 3, Microsoft Xbox and 360, Nintendo DS and Wii gaming consoles.

Because of Canada’s antiquated copyright laws, most Canadians would be surprised to learn that they break the law almost daily. While there has been a revolution in digital content technology for over a decade, there has been stagnation in Canadian law regarding its use. Even putting aside the pervasive issue of unauthorized Internet file sharing, the following commonplace activities are technically infringements under the current Copyright Act:

• “ripping” legally-purchased music or movies to a computer hard drive or MP3 player;
• recording a television programme to a VCR, DVD recorder or personal video recorder (PVR); and
• creating a backup copy of a movie or video.

Canada’s Copyright Act also generates uncertainty about new technologies—for example, the Canadian version of the “TiVo” PVR was delayed for almost ten years amid legal concerns, and broadcasters are concerned about bringing network-based PVRs (where recording and playback takes place at network hubs rather than users’ homes) to the Canadian marketplace.

Against this context, it is clear that the Copyright Act desperately needs an update, but efforts to do so have so far failed. The last attempt, Bill C-61 tabled by the Conservative government on June 12, 2008, never did become legislation. Widespread grassroots movements, opposition from content creators and consumer groups alike, and other political realities resulted in legislation being put back on the shelf. Fast forward to the present, and we have another attempt to strike the appropriate balance between the rights of content creators and the rights of their users, in Bill C-32.

As a refrain of the complaints commonly heard against Bill C-61, most complaints for Bill C-32 can be summed up as, “what Bill C-32 giveth, it taketh away”. Strong provisions dealing with consumer and digital rights are present in Bill C-32, but they can be largely be overridden by the even more pervasive concept of “digital locks”.

For private, non-commercial purposes and under strict conditions, Bill C-32 would permit consumers to make backups of copyrighted contact, to format-shift (e.g., translate from one media to another, such as from CD to MP3) and time-shift (e.g., to record content for the purpose of viewing it later) copyrighted content in their lawful possession, and even to take advantage a “Web 2.0”-friendly mash-up provision allowing non-commercial use of copyrighted material in user generated content (known in some circles as the “YouTube” provision). For the most part, Bill C-32 gets “digital media” provisions right, and does not try to shoehorn the legislation to particular technologies as Bill C-61 did, which means that the provisions should carry forward to future technologies—gone are specific provisions about “videocassettes” (in 2006 no less!) in favour of more neutral provisions that do not choose a particular technology.

However, those advantages and rights are all subservient to the provisions of Bill C-32 dealing with “digital locks”, also known as technological protection measures (“TPMs”). TPMs are technologies that control or restrict access to a work, such as access codes, copy protection measures or regional locks. Canada, as a World Intellectual Property Organization (“WIPO”) member, has a general obligation to implement legislation that protects TPMs. However, the actual implementation of the WIPO TPM measures is largely left to individual member states.

The role of governments and the rights of industry and consumers with respect to TPMs is a very controversial topic, generating heated opinions from all sides of the discussion. The fight over how to implement TPM protections will likely be just as strong under Bill C-32 as it was under Bill C-61. Bill C-32 fervently prohibits the circumvention of TPMs above almost all other rights granted, with very few exceptions. This essentially means that copyright holders can freely decide what recipients can and cannot do with TPM-protected materials, leaving recipients with few legally-available options other than acquiring further rights from the copyright holder. For example, if a content provider chooses to implement a TPM (as is the case in most recent commercially-available CDs and DVDs) most of the digital-era user rights granted by Bill C-32 are forbidden, including private purpose copying, format-shifting, and time-shifting. A copy-protected DVD, for example, could not be transcoded for play on a digital media player if it required the circumvention of a TPM; instead, a user would be required to purchase a version designed for that player.

The various positions taken with respect to TPMs demonstrate a wide divide between content creators and user groups. Generally, content creators wish to control the manner in which their works are used and received (so as to respect their own licensing arrangements) and protect their pricing models (which are based on different uses, access and restrictions) in order to foster innovation and develop digital marketplaces. In other words, content creators might not be willing to release digital media at consumer-level prices without TPMs in place. Those who argue against Bill C-32’s rigid TPM protection measures suggest that arts and innovation have been flourishing in Canada without a prohibitive TPM legal framework in place, and that Bill C-32 improperly focuses on the lock-breaking instead of the nefarious activities that some lock-breakers undertake.

There will no doubt be substantive debate about Bill C-32 in the upcoming months, and the legislation is hardly final, but it will be interesting to see if this proposed legislation can reach the finish line and become law, particularly given the difficult balance that needs to be struck.

Below is a general summary of Bill C-32’s provisions:

• Stringently implements World Intellectual Property Organization (WIPO) treaty obligations by making it illegal to break TPMs, with piecemeal, limited exceptions for law enforcement, interoperability of computer programs, encryption research, network security or unlocking cell phones;
• Creates new exceptions to infringements, all of which are not carved out of the TPM protections of Bill C-32, meaning that even if the purpose of breaking TPMs is for non-infringing purposes, the protections that Bill C-32 grants to TPMs may not be circumvented:
  • Permits time-shifting (i.e., recording something on a DVR to watch it later) and format-shifting (i.e., converting a CD to a MP3 file) under certain circumstances;
  • Creates a new backup copy exception to infringement;
  • Expands upon the Canadian concept of “fair dealing”, adding “education, parody and satire” to the current fair dealing uses of research, private study, criticism, review or news reporting;
  • Creates new library and educational institution provisions that let such bodies digitally distribute copyright materials for distance education or “new media” education under certain circumstances; and
  • Permits certain technical, temporary and incidental reproductions of copyrighted materials without infringement—for example, for reformatting materials to fit on mobile phone screens;
• Enforces the “notice-and-notice” Internet Service Provider (ISP) infringement system—if an ISP’s user is infringing copyright through the Internet, the content creator can send notice to the ISP in question, and the ISP is required to notify the end user and undertake certain monitoring activities if it wants to avoid liability (the alternative would have been the U.S.-style “notice-and-takedown” system, whereby an ISP receiving notice of copyright infringement has to take down the content and then let the creator/user fight it out.);
• Reduces statutory non-commercial infringement penalties from $500-$20,000 (under current Canadian law) per infringement to $100 to $5000 in aggregate for all infringements that took place prior to the lawsuit as long as TPMs were not circumvented in the process;
• Creates aggressive, new penalties for websites that facilitate infringement (likely in direct response to the lawsuit against .torrent site isoHunt in Canada), giving copyright holders a new set of tools to go after these “facilitating” infringers;
• Gives photographers, performers and persons who make sound recordings new or extended copyrights; and
• Changes the rules for commissioned photographers’ ownership of copyrights, such that the photographer, by default, would own the photograph and the commissioner would have a “personal use” license thereto.

Ryan J. Black is an associate in the Technology and Intellectual Property Group at Lang Michener LLP’s Vancouver office. He can be reached at (604) 691-7422 or rblack@lmls.com.