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Mark Edward Davis is a partner with Heenan Blaikie LLP in Toronto, Canada, where he focuses his practice on intellectual property matters. He has significant experience in patent litigation, including proceedings under the Patented Medicines (Notice of Compliance) Regulations, as well as in trademark, confidential information, and copyright disputes, particularly those relating to the Internet. He can be reached at email@example.com. Mr. Davis would like to thank David Yi, who helped put together the presentation to the Copyright and New Technologies Committee of the ABA.
On September 29, 2011, Canada announced the introduction of The Copyright Modernization Act (Bill C-11). The stated purposes of the proposed legislation are to protect and create jobs, promote homegrown creativity and innovation, and attract new investment to Canada by making Canada’s copyright laws forward-looking, flexible, and in line with international standards. Through legislative reform, the government aspires to establishing Canada as a leader in the digital economy of the future.
This is the fourth time1 in the last five years that the Canadian government has attempted to modernize Canada’s copyright legislation. These attempts have been unsuccessful largely due to exigencies arising from the fact that Canada has had successive minority governments at the federal level (there have been four federal elections since 2006, the last two of which have resulted in minority governments). Bill C-32 was Canada’s most recent previous attempt to modernize copyright law. It had passed second reading in the House of Commons and was in the midst of legislative committee hearings when the most recent federal election was called on March 26, 2011, effectively freezing the bill’s progress. As the 2011 election returned a majority conservative government, it is almost certain Bill C-11, which was exactly the same as Bill C-32 when introduced, and has had only minor amendments following Committee review, and following third reading and Senate review will likely receive royal assent quickly—possibly even before summer 2012.
The stated intention for this legislative change is to bring Canadian copyright legislation into line with international treaties to which Canada is a signatory, such as the World Intellectual Property Organization (WIPO) treaties, including the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). The impetus for copyright reform is also, at least in part, attributable to Canada’s repeated and ignominious appearance on the United States Trade Representative’s 301 Priority Watch List. The U.S. Trade Representative has encouraged Canada to prioritize the enactment of copyright legislation that addresses the challenges of piracy over the Internet and to fully implement the WIPO Internet treaties.
The major changes proposed in Bill C-11 include:
Recognition and protection of digital rights management (DRM) information and rules against circumvention of technological protection measures (TPMs), except in limited circumstances;
Expansion of the fair dealing exceptions to copyright infringement from simply research, private study, criticism, review, and news reporting to include education, parody, and satire, and exemptions for certain activities such as format and time-shifting as well as use of a work in noncommercial user-generated content under certain conditions;
Clarification of Internet service provider (ISP) liability, including a notice and notice procedure (as opposed to notice and takedown procedures);
A reduction in statutory damages for noncommercial infringement from between $500 and $20,000 to between $100 and $5,000;
The creation of a new cause of action for secondary infringement against persons who, by means of the Internet or another digital network, provide a service that the person knows or should have known is designed primarily to enable acts of copyright infringement if an actual infringement of copyright occurs by means of the Internet or another digital network as a result of the use of that service; and
A miscellany of other amendments. A consideration of the amendments proposed in Bill C-11 provides an opportunity to highlight some of the existing differences between U.S. and Canadian copyright law.
The differences between U.S. and Canadian copyright law begin with a comparison between the rationales for the respective regimes. Whereas Congress in the United States has authority over copyright matters “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries,”2 the grant of federal jurisdiction over copyright in Canada’s constitution has no similar expression of purpose. In the absence of any constitutional direction, the Supreme Court of Canada has repeatedly held that the overarching purposes of the Copyright Act are twofold: (1) promoting the public interest in the encouragement and dissemination of artistic and intellectual works, and (2) justly rewarding the creator of the work.3 Since these purposes, which grant access to users and remunerate creators, are often in opposition to each other, courts “should strive to maintain an appropriate balance between those two goals.”4 The Supreme Court of Canada also has consistently held that copyright is a creature of statute and the rights and remedies provided by the Copyright Act are exhaustive.5 The legislative differences in the copyright regimes in Canada and the United States have led numerous Canadian courts to observe that U.S. jurisprudence must be approached with caution in Canadian cases.6
Protection for TPMs or “digital locks” has been the most controversial of the proposed amendments contained in Bill C-11. TPMs control access to and use of a digital work. Examples include passwords, product keys, and encryption. DRM systems are more sophisticated systems used to control, monitor, and meter the use of digital works. DRM systems sometimes employ TPMs to achieve these goals. Examples include license counters such as those used in iTunes, as well as previews or trial versions of media and software. Together, TPMs and DRM allow for unbundling of works and much greater control over access by the copyright owner. Presently, there is no protection for TPMs or DRM in Canadian law. The way in which Bill C-11 proposes to extend protection to TPMs is the most criticized feature of the proposed legislation. By using a digital lock, copyright owners can prevent users from exercising rights that they currently enjoy and will enjoy under Bill C-11—the rights given to copyright owners who use TPMs to limit the use and dissemination of their works will trump the rights of users.
Canada is a signatory to the WCT and the WPPT. These treaties provide for the legal protection of TPMs and DRM by prohibiting circumvention or removal of these rights protection mechanisms for infringing purposes. Bill C-11 reflects Canada’s efforts to enact legislation to meet its obligations under the WCT and WPPT. Somewhat ironically, given the outcry from users groups over the indiscriminate protection offered to TPMs, there is some concern amongst copyright owners that the protections offered under Bill C-11 are not adequate to meet Canada’s obligations under the WCT and WPPT.
The United States has been a strong and vocal proponent of protecting TPMs and DRM. The initial U.S. proposal for protection of TPMs and DRM at WIPO, which was ultimately reflected in the Digital Millennium Copyright Act (DMCA), was even stronger than the provisions eventually adopted in Articles 11 and 12 of the WCT and Article 18 of the WPPT. The U.S. position, which seems to have been adopted in Bill C-11, uses a blanket prohibition on TPMs and DRM circumvention, rather than limiting infringement to cases where the TPM was circumvented in order to make use of the work for an infringing purpose. This position seems to have found favor with the Canadian government as well. They are proceeding with the legislation as drafted despite vociferous calls to provide exceptions for what would, but for the use of TPMs, be permissible uses.
Although somewhat analogous, there are considerable differences between the Canadian “fair dealing” exception to copyright infringement and the “fair use” exceptions under U.S. copyright law. Analysis of the fair dealing exception proceeds very systematically. In order to qualify as “fair” dealing, the impugned activity must fall within one of the excepted categories such as research or private study. Bill C-11 proposes to expand fair dealing protection to education, parody, and satire (activities that presently do not receive special treatment). Other fair dealing exemptions presently exist for criticism, review, and news reporting. To qualify as fair dealing in such circumstances, there are additional prerequisites, such as attribution to the original author. Currently, there are a few additional specific fair dealing defenses available in very narrow sets of circumstances.
Bill C-11 proposes to add a multitude of additional fair dealing defenses, including exemptions for noncommercial user-generated content, reproduction for private purposes, and a “time shift exception.” The exception for content generated by noncommercial users, or the “mash-up exception,” gives users the right, in a noncommercial context, to create a new work using existing works. To qualify for the exception, the user must identify the source of the original work and have legally obtained it, and the new work must not have a substantial adverse effect on the exploitation of the original work. There is also a format-shifting exception that allows a user to reproduce, for private purposes, a copy of a work that was legally obtained. There is currently no explicit exception for personal recording of television programs in Canada, even for private purposes such as time-shifting for later viewing. Bill C-11 will introduce an exception to infringement for “fixing signals and recording programs for later listening or viewing.” The use of personal video recorders (PVRs) is, at least theoretically, illegal in Canada, although in practice, there have been no infringement actions based on the use of PVRs.7 These changes are largely consistent with popular Canadian practice and the reasonable expectations of consumers.
The way in which Canadian copyright law presently addresses infringement on the Internet has probably attracted the most criticism, especially by comparison to U.S. law and, in particular, the safe harbor provisions for ISPs that have been available under the DMCA since 1998.
In Canada, Bill C-11 would establish a “notice and notice” system. Essentially, a copyright owner who has identified an infringement may notify the alleged infringer’s ISP. The ISP must, in turn, notify the alleged infringer. No other action need be taken by the ISP, although records to allow identification of the alleged infringer must be kept by the ISP for six months following receipt of the notice. Unsurprisingly, many have criticized the notice and notice system as toothless in comparison with the DMCA’s “notice and takedown” procedure. It remains to be seen whether “notice and notice” will be effective and avoid the problems associated with unsubstantiated claims under the DMCA.
Bill C-11 reworks the rules relating to statutory damages. Presently, a copyright owner may elect to claim statutory damages of between $500 and $20,000 for each work that has been infringed (the damages are calculated per work rather than per infringement). In awarding statutory damages, courts have considered the nature of the infringement. Bill C-11 codifies these considerations. Going forward, statutory damages for noncommercial purposes will range between $100 and $5,000. This will apply to all works infringed prior to the commencement of the action for infringement. Statutory damages for commercial infringements will continue to be awarded on the present scale. In recent decisions, the Federal Court has demonstrated a willingness to impose statutory damages to deter infringing behavior.8 A residual discretion also remains to reduce the award of statutory damages in cases where even an award at the minimum rates would be disproportionate.
Bill C-11 would make it illegal to provide through the Internet, or another digital network, a service that is designed primarily to enable acts of copyright infringement if actual infringement occurs as a result of the use of that service. Copyright owners, particularly those frustrated with peer-to-peer file sharing, have applauded the creation of this new cause of action but their enthusiasm is tempered by perceived deficiencies in the statutory language that may limit its practical application.
Bill C-11 will change the default rules relating to the ownership of copyright in, and term of protection for, photographs. Copyright will presumptively vest in the author, and the term will extend for the life of the author plus 50 years as is the case with all other works in Canada. The party who commissions a photograph will enjoy certain limited rights to reproduce the photograph for noncommercial purposes.
In Canada, an author of any work has moral rights in that work. These rights can be waived but cannot be assigned. Moral rights include the rights to the integrity of a work, to be associated with the work by name or pseudonym, or to remain anonymous. The integrity of the work is considered to be violated where it is distorted, mutilated, destroyed, or otherwise modified to the prejudice of the author’s honor or reputation. Bill C-11 will extend moral rights to performer’s performances.
There are a host of amendments directed at educational institutions and archives, museums, and libraries that make it easier for them to deal with and share certain works.
Bill C-11 allows for copying of computer programs for the purpose of interoperability, encryption, research, and correcting security problems, and also allows for the temporary reproductions of works to be made for the sole purpose of facilitating a use that is not an infringement of copyright.
Exceptions also will apply to facilitate access to works for those with perceptual disabilities.
Once enacted, the new provisions in Bill C-11 will be scrutinized by litigants and the Canadian courts. The provincial superior courts and the federal courts have concurrent jurisdiction over most matters involving copyright. Regardless of the court involved, procedural differences in Canadian and U.S. litigation may be surprising. For example, pretrial oral discovery in Canada is usually limited to the examination (deposition) of a single representative for each party. Legal costs are presumptively recoverable in both the federal and provincial courts (although most litigants wind up only recovering a portion of their legal fees). As a result, foreign litigants seeking to enforce their rights in Canada should expect that they will have to post security for costs at the commencement of their action.
Although Bill C-11 has not been universally endorsed, there are not likely to be any significant changes in the adjusted balance between the rights of users and those of creators when this “new” legislation finally gets implemented. What is clear is that Canada will finally, well over a decade later, have legislation to respond to many of the issues addressed by the DMCA. While some of these matters will be treated comparably, such as TPMs, others, such as the “notice and notice” safe harbor for ISPs, have been addressed through a uniquely Canadian solution. Time will tell if Bill C-11 has appropriately struck a balance between the rights of copyright owners and users for Canadians.
1. First Attempt—Bill C-60 was introduced on June 20, 2005. Canada’s 39th general election was held on January 23, 2006. Second Attempt—Bill C-61 was introduced for first reading on June 12, 2008. Canada’s 40th general election took place on October 14, 2008. Third Attempt—Bill C-32 was tabled on June 2, 2010, scheduled for second reading on November 5, 2010, and was the subject of numerous committee meetings between November 2010 and March 2011. Prime Minister Stephen Harper called an election on March 26, 2011.
2. U.S. Const. art. I, § 8, cl. 8.
3. Soc’y of Composers, Authors & Music Publishers of Can. v. Canadian Ass’n of Internet Providers, 2004 SCC 45,  2 S.C.R. 427, para. 40 (Can.); CCH Canadian Ltd. v. Law Soc’y of Upper Can., 2004 SCC 13,  1 S.C.R. 339, para. 23 (Can.); Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34,  2 S.C.R. 336, para. 30 (Can.).
4. John S. McKeown, Fox on Canadian Law of Copyright and Industrial Designs 1–13 (4th ed. 2009).
5. Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37,  3 S.C.R. 20, para. 3 (Can.); Bishop v. Stevens,  2 S.C.R. 467 (Can.); Compo Co. v. Blue Crest Music Inc.,  1 S.C.R. 357, 373 (Can.).
6. Robertson v. Thomson Corp., 2006 SCC 43,  2 S.C.R. 363, para. 43 (Can.).
7. Arguably, a Canadian court would decide such an issue in a manner consistent with Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).
8. Louis Vuitton Malletier S.A. v. Singga Enters. (Can.) Inc., 2011 FC 776 (Can.); Microsoft Corp. v. 9038-3746 Quebec Inc., 2006 FC 1509 (Can.).