STANDING COMMITTEE ON CANADIAN HERITAGE - MEETING NO. 56 Re: Statutory Review of the Copyright Act, Section 92 November 4, 2003

Notes by Milana Homsi, CIPPIC

Witnesses: Canadian Private Copying Collective: Paul Audley, Consultant, Paul Audley & Associates Ltd.; Claude Brunet, Legal Counsel, Ogilvy Renault. Canadian Coalition for Fair Digital Access: Diane J. Brisebois, President and CEO, Retail Council of Canada; Douglas E. Cooper, President, Intel of Canada Limited. CBC/Radio-Canada: Pierre Nollet, Vice-President, General Counsel and Corporate Secretary. Society of Composers, Authors and Music Publishers of Canada: Paul Spurgeon, Vice-President, Legal Services and General Counsel. Canadian Association of Internet Providers: Jay Thomson, President.

The main issues in the hearing were ISP liability and the Private Copying Regime.

1st Witness: Mr Spurgeon, SOCAN

Spurgeon made 4 main points:

2nd Witness: Jay Thompson, CAIP

Thompson's main point was that exempting ISPs from liability is cornerstone of digital copyright reform and important to WIPO treaties. He argued that requiring ISPs to differentiate content makes it impossible for ISPs to operate. It is not practical to attach copyright liability to ISPs. In his view, those who champion ISP liability do so because ISPs are easier to find than those who should be liable: This is unfair towards ISPs.

CAIP believes that exempting ISPs does not mean that creators will go without compensation, and also doesn't mean that ISPs will be resolved from all liability. Thompson pointed out that the notice and notice regime resolves 80% of CR infringement cases and that CAIP's Code of Conduct provides that infringing content should be taken down.

Thompson finished by stating that the delay in Canada's copyright reform is not all bad because it allows Canada to take note of the lessons learnt in other countries. For example, he believes that the DMCA doesn't necessarily work so well with P2P, rather only with website content. CAIP's notice and notice regime is successful because it applies to P2P infringement as well.

3rd Witness: Pierre Nollett, CBC/Radio-Canada

Nollett began by stating that Parliament should consider act as whole, rather than piecemeal, issue by issue. He feels that a review should be complete and encompass the broadest possible overview, rather than have a gradual approach. CBC fears that a gradual reform will be inconsistent and spread instability.

Nollett stated 5 priorities for CBC in the copyright review:

  1. Gaining a single right of retransmission.
  2. Clarifying the copyright of freelancers - right now it is not clear and render rights instable. The protection period should not be extended to 70 years because it does not protect public interest, only protects financial concerns of certain parties.
  3. Private copying: The zero-rating program should be exempted by entrenching principle in Act
  4. Ephemeral Recordings: The current rules are not in keeping with industry standards. An exemption should be created for broadcasting purposes, not for market purposes.
  5. Non profit status for CBC in copyright act: As CBC's mandate includes protecting the culture and heritage of Canada, CBC wants the non-profit status for its archives that libraries get for public accessibility purposes. It wants an exemption to reproduce archives for conservation and any other purpose to fulfill mandate.

4th Witness: Doug Cooper, Canadian Coalition for Fair Digital Access

Cooper stated that the Coalition advocates the interests of Canadians (retailers and users) that are penalized by the private copying regime. He stated that the private copying regime is antiquated and out of step with technological development. He argues that Canada needs to modernize CR law to deal with digital technology in the long term, and we must identify balanced and workable alternatives. 4 main points:

  1. Levies have cost consumers $59 million. New levies would double this amount.
  2. The private copying regime is a crutch for the content industry. It is a disincentive to protect and manage content, as industry won't change business model for digital world.
  3. It is widely accepted that current system is crude because it doesn't made a direct link between user and creator. It is also a principle of fundamental fairness that blank media users not using content should not have to pay levy.
  4. The system encourages people to download illegally - why should they buy legitimately? Alternatives need to be designed, in step with other trading partners

5th Witness: Diane Brisebois, Retail Council of Canada

Brisebois argued that the existing levy regime is unfair and discriminate to users not buying for private copying purposes or paying twice if they already bought music. As well, she is worried when existing legislation would be extended to new products, it would sharply increase costs or far exceed costs - it will be more profitable to be in the levy business then in the retail business. The private copying regime creates an incentive to buy leviable products in US and elsewhere - this grey market: detrimental affect on the Canadian economy. Finally, zero rating is a Bandaid solution - it has been shown to be administratively burdensome and offers no release to small business and consumers. It is an arbitrary creation, designed to buy off opposition.

6th Witnesses: Paul Audley and Claude Brunet, Canadian Private Copying Collective

They argued that it is important to remind ourselves why it is that parliament introduced the private copying regime. In the 1970s there were no measures to remedy CR owner from exploitation of private copying. It was futile to police rights in private homes. Private copying means there is no longer an exclusive right of reproduction for private copying - the exclusive right expropriated from rights holders. It replaced the right of reproduction with right of remuneration.

CPCC states that the magnitude of the downloading problem should be kept on mind. 1.1 billion tracks have been copied - not more than 3% were authorized by rights holder. If the levy is rescinded, there would be massive copying without compensation. Compensation is important because profits for the music industry have fallen by 20% in the last few years.

CPCC has recognized the impact on businesses that aren't involved in copying, and thus has implemented the zero-rating program. The scope of the program is broad, and works for small, medium and large businesses. It is not a bandaid fix, but rather a comprehensive solution.

CPCC advances that TPM/DRM is essential to online delivery of music. They stated that these technologies are beginning to be deployed on new recordings, and will continue to be developed. They concluded that PCR is a stop gap measure until TPMs are pervasive and rights holders are fully be able to control delivery of their goods. PCR is devised to self destruct as TPMs will be implemented.

Member Questions:

Jim Abbott: Stated that the presentation of CPCC was "unbelievable". He is curious to know how CPCC knows that titles always come up in terms of which artists to compensate for private copying. Also he had trouble with the statistics that CPCC produced. He also felt that the PCR means that a consumer is guilty until proven innocent - basically if you can't prove yourself innocent, you have to pay. CPCC responded on the statistics question by stating that they implement a monthly survey with 1000 people to provide documentation of what and how much people download. As well, they know what music people download by the popularity of music in radio broadcasts, etc. CPCC argued that it is immensely expensive to see what EXACTLY is being copied, instead they make the assumption that what is broadcast and what is sold provides reasonable reflection of taste - and provides a distribution model.

Abbott: questioned CPCC whether downloading legal under PCR? CPCC: distinguished between uploading and downloading. They said when a secondary copy is made of original material - if material is subject to blank media levy - than it is legal. The legality of the other person who renders the material available - this is not addressed by PCR.

Member Question: Is SOCAN the only institution to be advocating Intermediary Liability? SOCAN: there has got to be joint and severable liability by access providers. It is too simplistic to say that ISPs should be off the hook - there are other organizations as well that agree with SOCAN's view.

Mme Allard: There are two important issues here - the private copying regime and ISP liability. There is too little time to debate this.

Alex Shephard: This is a question to CPCC. The technology that we are addressing is passing us by - would the PCR go on in perpetuity? CPCC: We have a strong preference for all rights holders to be in control. At the moment there is no alternative to having everything copy protected and subject to DRM. The faster the new online services can be implemented, the happier everyone will be. Shephard: Is the PCR and its objectives an impediments to new online service? CPCC: It is not rocket science to figure out that there is more money for the music industry through sales rather than through levy - rights holder would rather get sale profit than levy. Right now, the levy is an alternative to not getting anything at all. Things are not going as fast as we want them to go - DRM will put control where it should be. Ratifying the WPPT treaty will accelerate DRM implementations - this is a good thing.

Cooper: The fact that DRM is just beginning to be implemented is false. What is really stopping diffusion of technology is the disincentive of levies. The elimination of the levy will encourage content owners to implement technologies.

Member Question to Cooper: What do CR holders do in the meantime if there is no PCR and if DRMs are not yet sufficiently implemented? Retail Council: Is this levy there to support struggling artists? Do not put levies on products simply to protect their copyright. Over 50% of people buying products aren't using them for music. Retailers has hard time believing that 'tax' should disappear. The levy is a band aid solution. The market place needs to find a solution - not a levy. Cooper: What we want is to work with committee to make sure that products that have DRM should not be subject to PCL.

Member Q to CPCC: How do we create a bill that is fair to everyone? CPCC: The phasing out system - we recognize the levy is a stopgap measure. Royalties will fall as copies are made based on the authorization from DRM. Lawmakers should not get involved in the process - unpleasant for other witness - this system is in infancy - as DRM are phased in, the levies will disappear at the request of creators. Member: can lawmakers provide that legislation will ensure that phase-in of DRM happens more quickly? CPCC: Yes - if Canada signs onto WIPO, if it amends legislation to protect DRM systems as called for under treaties - it will speed up development of digital protection services.

Member Q to Cooper: If there was a phase out regime in place - would you be happy? Cooper: Perhaps, there must be a market incentive to move. The plan has to be protected by enforcement. Retail Council: A plan should not penalize everyone when only intends to penalize infringers. We should also consider the economic impact through WIPO national treatment.

Abbott: This business of downloading being legal - if someone is paying levy, s.80 (1) wording means that infringers are off the hook - is this true? is there some way of refuting this position? CPCC: It is no longer CR infringement in this country to reproduce for private copying - thus downloading is legal. The problem with Abbott concept - the person who makes copy is doing so legally, the person who provides unauthorized copy is legal.