Copyright Review in Canada: The Second Shoe Drops

Credit: Author

In the ongoing process of Canada’s copyright review, the “second shoe” has dropped and, as expected, the thud as it landed on the floor of the House of Commons was different from that of its companion report, Shifting Paradigms, the report of the Standing Committee on Canadian Heritage tabled on May 15 of this year. This most recent report delivered by the INDU Committee (officially known as the Standing Committee on Industry, Science and Technology) on June 3 contains thirty-six recommendations. As I noted in an earlier blog posting on Shifting Paradigms, it is not surprising that a number of the INDU Committee’s recommendations are not fully consistent with those of the Heritage Committee; indeed some of them are directly inconsistent. In some cases, the two committees come to similar conclusions but propose different remedies. In a couple of cases, the recommendations are identical. Now the government will have to take both reports into consideration as it decides how to move forward with any changes to legislation. It has 120 days to respond in writing to the report. All of this will be subsumed by a general election on October 21, which will decide whether the current Liberal government will be dealing with the recommendations or someone else.

It is fair to say that on balance the INDU Report can be seen as less favourable to rights-holders than Shifting Paradigms. That is certainly how anti-copyright law professor and blogger Michael Geist is interpreting it, calling it the “authoritative review”, and describing it as “balanced and forward-looking” as opposed to the “one-sided” Heritage Committee report. Geist calls it a “near-total repudiation” of Shifting Paradigms. That is an exaggeration. Both Access Copyright, the publishing and authors’ collective society that was delighted to see in Shifting Paradigms an endorsement of its position that the 2012 education fair dealing exception needs to be modified, and Music Canada, which had also strongly endorsed Shifting Paradigms (finding its recommendations with respect to the music industry ground-breaking”), found things to praise in the INDU Report.

Education and Fair Dealing

While it is true that the INDU Report did not adopt the Heritage Committee recommendation that the Government of Canada amend the Copyright Act to limit the education fair dealing exception to circumstances where the work is not commercially available, it was not unsympathetic to the plight of publishers and authors. It accepted that while technology changes were an important factor in the decline of licensing fees, it was not the only factor and noted that the 2012 amendments;

expanded the breadth and number of exceptions to copyright liability available to educational administrators, educators, researchers and students. As one would expect, these exceptions affected their behavior and reduced the revenues of rights-holders…This is particularly true when an educational institution argues that its activities fall under fair dealing, only to face appropriate scepticism in a court…The evidence presented does give the Committee pause. Given that the fair dealing exception is normally applied on a case-by-case basis and in consideration of a number of different factors, condoning the use of copyrighted content under fair dealing on the basis of a bright-line criterion is questionable

“The fact that educational institutions spend increasing amounts to lawfully access and use some copyrighted content does not preclude infringement beyond the terms of licensing agreements. The Committee also notes that compliance mechanisms and disciplinary measures in case of copyright infringement vary from one institution to another, making it difficult to determine whether the education sector has adopted adequate measures to prevent and discourage copyright infringement since 2012”.

The INDU Committee made two recommendations with respect to educational fair dealing;

That the Government of Canada consider establishing facilitation between the educational sector and the copyright collectives to build consensus towards the future of educational fair dealing in Canada, and

That the House of Commons Standing Committee on Industry, Science and Technology resume its review of the implementation of educational fair dealing in the Canadian educational sector within three years, based on new and authoritative information as well as new legal developments.

In part this will allow the appeal of the Access Copyright v York University case to play out, in which York was found guilty of copyright violation by virtue of its unilateral decision to opt-out of its collective licence with Access Copyright. It is also significant that the committee called for this to be revisited within three years given their opening recommendation that the statutory requirement to review the Copyright Act every five years be abolished because this provided insufficient time to assess the impact of copyright changes.

In response to the INDU Report, the Association of Canadian Publishers commented that it was encouraged by the committee’s recognition of the significant financial losses suffered by the sector since 2012, and welcomed the recommendation that the government bring the education sector and copyright collectives together to build consensus around the future of fair dealing in Canada.

Access Copyright stated;

“While Canada’s writers, visual artists and publishers are concerned with sections of the Report that threaten to exacerbate harms to their livelihoods, it also provides two instructive recommendations to address education as a fair dealing purpose and harmonization of statutory damages for collectives.”

These are listed as the recommendation to the Government to facilitate discussions between copyright collectives and the educational sector to build consensus on fair dealing in education, and another recommendation to harmonize the payment of statutory damages available to collective societies.

The Music Industry

In the case of the music industry, Music Canada’s press release issued June 4 stated that;

Yesterday’s report from the Industry Committee includes important recommendations to narrow the radio royalty exemption, review safe harbour provisions, extend the term of copyright for musical works and review the private copying regime. These recommendations, together with the recommendations made in the report from the Heritage Committee on artist and creative sector remuneration, have set the stage for legislative change which will help restore Canada’s middle class of artists and close the Value Gap for the broader cultural industries.”

Narrowing the radio royalty exemption, a policy that allows radio stations to shelter their first $1.25 million in advertising revenue from payment of performers’ royalties, and recommending a re-sale right for visual artists, were two recommendations common to both the Heritage and Industry committees.

Both Access Copyright and Music Canada also referred to Shifting Paradigms as part of the input that government will need to take into account in formulating policy positions.

Making Fair Dealing Exceptions “Illustrative” rather than “Exhaustive”

There are a couple of areas where the INDU recommendations could be problematic. In the area of fair dealing, although the committee rejected calls for creating further exceptions except for adding “informational analysis” (i.e. to be able to aggregate data including copyrighted content for use in the development of Artificial Intelligence) to the specified purposes list, it nevertheless recommended that the list of fair dealing exceptions be considered “illustrative” rather than “exhaustive”. This would mean adding the words “such as” to the list of specified exceptions that today include education, private study, research, parody, satire, criticism, review, and news reporting. The courts would play the primary role in determining whether the purpose of a dealing was fair (as well as assessing the other factors relevant to a fair dealing finding). If adopted, this would introduce further uncertainty into what is or is not a fair dealing and would further empower the courts at the expense of Parliament.

Circumvention of Technological Protection Measures (TPMs)

Another a particularly worrisome recommendation is the following;

The Government of Canada examine measures to modernize copyright policy with digital technologies affecting Canadians and Canadian institutions, including the relevance of technological protection measures within copyright law, notably to facilitate the maintenance, repair or adaptation of a lawfully-acquired device for non-infringing purposes.

This sounds relatively benign insofar as it refers to the controversial “right to repair”, a situation where consumers are prevented from having devices repaired by third party providers or farmers are prevented from doing their own maintenance on the software systems of their tractors by the licensing terms and conditions that come with the device or machine. This has been partly addressed in the US where the US Copyright Office published new rules last year to permit repairs on smartphones. But the language in the INDU committee report is broader than the right to repair mentioned in the Recommendation. In the preamble to the recommendation the report states that the Committee:

agrees that the circumvention of TPMs should be allowed for non-infringing purposes…In other words, while anti-circumvention rules should support the use of TPMs to enable the remuneration of rights-holders and prevent copyright infringement, they should generally not prevent someone from committing an act otherwise authorized under the Act.”

What does “generally” mean? How do you allow circumvention for non-infringing purposes (such as fair dealing for research, private study, news reporting etc.) while respecting pay-walls put up by content providers to protect their content and enable their business model? As I explained in an earlier blog posting, in the analog world you wouldn’t be allowed to steal something (a book for example) just so that you can exercise your fair dealing rights to reproduce some of the content for research or private study purposes. You would have to buy it or borrow it legally in order to do so. Therefore why, in the digital world, should you be allowed to hack a pay-wall or technical protection device without payment to access content so that you can exercise your fair dealing rights to reproduce it? If the government accepts this recommendation, it will have to be extremely careful in implementing it so that the caveat put forward by the Committee (“anti-circumvention rules should support the use of TPMs to enable the remuneration of rights-holders and prevent copyright infringement”) is fully respected.

Pirate Site Blocking

Finally, site blocking (what I prefer to call “disabling access to offshore pirate websites”) is addressed at some length in the INDU report. After the failure of the FairPlay Canada coalition to get the CRTC to act on its proposal to establish an administrative agency to implement site blocking (the CRTC declined to rule on the proposal arguing that it did not have jurisdiction to do so), the issue was punted to Parliament to deal with, and the Committee took it on. In its “Observations” it says;

“The Committee…agrees that there is value in clarifying within the Act that rights-holders can seek injunctions to deny services to persons demonstrably and egregiously engaged in online piracy, provided there are appropriate procedural checks in place. The Committee also supports amending the Telecommunications Act to remove any procedural duplication or unnecessary hurdles.”

The wording of the Recommendation states;

“Following the review of the Telecommunications Act, that the Government of Canada consider evaluating tools to provide injunctive relief in a court of law for deliberate online copyright infringement and that paramount importance be given to net neutrality in dealing with impacts on the form and function of Internet in the application of copyright law.”

This is a positive outcome for rights-holders. The proposal put forward by FairPlay Canada was one way of skinning the cat. To mix a metaphor, it didn’t fly owing to the CRTC’s view of its jurisdiction and authority. The current legal process for obtaining injunctions in Canada to block or takedown infringing sites is inadequate, taking far too long and costing far too much for very minimal result. Australia has been able to implement a very effective system of site blocking through the courts and there is no reason why Canada could not do the same.

Other Recommendations

There is much more in the INDU Committee’s thirty-six recommendations, from proposals for dealing with Indigenous culture (on which I plan to write a blog in future) to term extension and reversion of rights, to ownership of AI-generated works, to revisions to Crown copyright, and more. Taken together with the Shifting Paradigms report, the government has a lot to chew on. Post-election we will see how much of either report it takes on board. The outcome will be critical for artists, creators and the copyright industries in Canada.

© Hugh Stephens, 2019. All Rights Reserved.

2 thoughts on “Copyright Review in Canada: The Second Shoe Drops”

  1. Mr. Stephens: As usual, your review of the INDU Report was informative and enlightening. I think you were perhaps too gentle with the Fair Dealing for educational institutions section where you wrote that the Report proposed that the government facilitate discussion “between copyright collectives and the educational sector”. Mr. Justice Phelan was not as gentle in his decision (Access v York), where he wrote about the sector’s fair dealing thresholds asserted in the AUCC (as it then was) Guidelines: “It is no response to the issue to say that the thresholds are fair because AUCC determined they were fair….The evidence of AUCC’s development of the thresholds shows no external basis for the thresholds — for example, there was no outside consultation..” In short, AUCC created the thresholds out of whole cloth.

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