:
Thank you very much, Mr. Chairman and members of the committee.
My name is Jay Kerr-Wilson, and I am here today on behalf of the members of the Business Coalition for Balanced Copyright.
Thank you very much for giving us the opportunity to present our views on Bill .
The members of the coalition include individual companies and trade associations representing a broad spectrum of the communications, technology, broadcasting, retail, and Internet industries. The one thing our members have in common is that they provide the essential links between creators and consumers.
The issues addressed in today's presentation are those on which there is agreement among the coalition members. Some individual members may wish to address additional questions or concerns when they appear before the committee on their own behalf.
We believe that Canada's copyright laws should focus on two fundamental and interrelated objectives: first, to deter infringing activity; and second, to promote open and efficient markets for legitimate distribution of copyrighted works.
We disagree with the notion that copyright legislation is either good for consumers or good for creators. We believe that by promoting the development of a vibrant digital economy, a balanced approach to copyright legislation can serve the interests of creators, distributors, and consumers.
We also believe that Bill goes a long way towards striking this balance, and we support its passage in a timely manner.
This doesn't mean the coalition thinks the legislation is perfect or couldn't benefit from some minor changes to provide greater clarity and certainty. In fact, we have submitted a number of proposed changes that we would like the committee to consider as part of its review.
First, Bill provides limited liability for content hosting services. The ministers have repeatedly stated that these provisions are intended to remove barriers to the introduction of innovative remote storage services, including cloud computing and network PVRs. We are concerned, however, that while the existing language limits liability for the reproduction of a work that is stored using such a service, it still leaves potential liability for any transmissions of the hosted content even back to the person who posted it in the first place.
Second, Bill would create liability for those people who enable others to engage in copyright infringement. We support this provision as an important tool for rights holders to protect themselves against the widespread, unauthorized distribution of their works. We are concerned, however, that the provision as drafted does not adequately distinguish between those individuals who provide services intending that those services be used to infringe copyright and innocent actors who merely provide links to Internet sites but who do not actively promote or encourage infringement.
We are also sensitive to the concern of rights holders that only prohibiting those services that are primarily designed to enable acts of infringement may be too narrow. We therefore support amending the provision to prohibit those services that are designed or operated primarily to enable acts of infringement.
Third, we support providing legal protection for technological protection measures, or digital locks. However, we do not believe that the use of digital copy control locks should prevent consumers from relying on the personal use exceptions such as format shifting or time shifting.
Fourth, we support the provision that would permit broadcasters to transfer musical works onto a different format for a limited time without incurring additional copyright obligations. We believe that a similar amendment should be made to the provision that lets local television stations or community channels tape live events such as parades and concerts for later broadcast.
Fifth, we support the provisions that would impose on ISPs the obligation to implement a notice and notice system. Many Canadian ISPs have engaged in voluntary notice and notice systems for several years, and other countries are now beginning to adopt similar obligations. However, we are concerned that the bill would not provide any time for ISPs to implement the additional obligations that would be imposed by the legislation. We recommend that the notice obligations only come into force once the minister has enacted regulations prescribing the forms of the notice and the fees that can be recovered, and after a sufficient period, for ISPs to implement the necessary systems to comply with all of the obligations.
Sixth, we support the inclusion of an exception for user-generated content. However, we have heard the concerns expressed by rights holders about the potential for abuse of the exception as drafted. Therefore, we agree that the provision could be amended to require that any use of the works in user-generated content be fair, in addition to the conditions that have already been proposed.
Finally, we strongly oppose the introduction of new levies or the extension of existing levies to cover private copying on digital devices. We recognize that the bill does not deal with the private copying levy, but we are aware that the issue has been raised on several occasions before the committee. From our perspective, there are insurmountable problems with such a levy.
Thank you for giving us the time to present these recommendations. I look forward to answering any questions you may have.
:
Thank you very much, Mr. Chairman.
I'm delighted to be here, and I'm very pleased to have with me Mr. Lee Webster, who's a partner with Osler's, and who's also the chair of the Canadian chamber's intellectual property committee and a member of the Canadian Intellectual Property Council.
Mr. Chairman, our members see the bill as a piece of the larger puzzle of innovation in Canada. Many companies, big and small, rely on the protection of intellectual property rights to maintain their businesses. Updated copyright legislation will bring Canada in line with other major industrialized countries and establish rules of the road for downloading and file sharing on the Internet. It will also position Canada to finally ratify the WIPO Internet treaties that Canada signed in 1997.
[Translation]
Some say that Bill will prevent Canadians from listening to music and watching movies on their portable devices. That's false!
[English]
Businesses in Canada don't want to stop people from enjoying their media, but rules do have to be established so that illegal commercial operations are stopped. What we need is to establish a marketplace framework that will support development of new digital products, services, platforms, and business models and make it clear what kinds of behaviour are legitimate and what kinds are prohibited. We have to strike a balance between the interests of consumers and those of rights holders.
Generally, we believe the government has done a good job in striking the right balance, and we support the principles of the legislation. I can certainly tell you, Mr. Chairman, that striking the appropriate balance to establish good public policy is not an easy task. I can commiserate because I had the responsibility for the copyright file when I was Minister of Communications in the early 1990s. Both the Conservatives and the Liberals put legislation on the table in recent years only to have the bills die on the order paper, and we're anxious to see this new bill passed to clarify rights and responsibilities for both businesses and consumers. So perhaps the third time is a charm.
Now, strong copyright protection will benefit communities across Canada, and here are some examples. In Toronto, there are over 3,300 high-tech companies, generating revenues over $32.5 billion annually and employing 148,000 people. In Kitchener-Waterloo, there are over 700 high-tech companies, generating $18 billion annually and employing 30,000 people, with over 200 burgeoning start-ups. The Canadian video game industry generates billions annually and employs over 14,000 people across the country. Many major studios are in the Montreal area, such as Ubisoft and Electronic Arts and Behaviour, while St. Catharines is home to a prominent video game company, Silicon Knights, which employs over 100 people in high-value jobs.
[Translation]
In 2009-2010, the Quebec film and television industry generated an estimated $1.2 billion annually and created more than 36,000 jobs in the province.
[English]
IP is the economic currency of the future. Properly applied, IP rights drive job creation, economic growth, and innovation. As I mentioned, copyright is only part of the puzzle; patent and brand protection and promotion is also a key element in attracting and retaining businesses in Canada.
Leading economies around the world have made IP protection a priority. Japan has created an IP strategy council led by the Japanese Prime Minister. In France, President Nicolas Sarkozy heads an anti-piracy commission to curtail Internet piracy. Clearly, other nations are effecting major changes in IP protection. If Canada does not soon follow suit, Canadian businesses risk being left at the periphery of the global economy.
By defining and better protecting IP rights, we'll develop a marketplace that rewards investments in innovation and creation. It will foster new business models that will lead to stronger economic growth, job creation, and prosperity. In modern developed nations like Canada, where services and innovation have become key economic drivers, and given our emphasis on the knowledge economy, doing so has never been more important.
Let's fix the unintended consequences in the drafting of the legislation and get this copyright bill passed. It's desperately needed to provide certainty to Canadian businesses. Mr. Chair, I simply plead with the committee this way. Let's not let the perfect be the enemy of the good. This represents our best chance to modernize.
I was looking at some of the comments that were made in Parliament and elsewhere. I think it may have been Mr. Angus who had made reference to the WIPO treaties reaching back into the past century. I was reminded of George Michael's CD, Songs from the Last Century. What we're talking about here are principles to update from the last century and to bring us into the 21st century. It's something that's critically important.
Since our time is limited for opening remarks, Lee will get into specific areas where we need amendments during the question period. Just to put it very simply, we need to see some clarifications or improvements in the areas of enabling infringement, encryption research, computer and network security, interoperability, reverse-engineering of software, user-generated content, online service provider liability or safe harbours, private copying and backups, and statutory damages.
Thank you, Mr. Chairman. We'd be very pleased to respond to questions.
:
Thank you very much for being here this morning and for giving your testimony.
I'd like to start off by focusing on TPMs or digital locks and the issue of the bill as it currently exists, which of course says very clearly that if you circumvent an existing digital lock you are breaking the law. The Liberal Party is very clear on its position that it agrees that if you are circumventing a product with a digital lock for commercial purposes—pirating or what have you—that is breaking the law, and we are against breaking the law. However, we do have a different position with respect to people buying a product and format shifting, copying, transferring it to another personal device for their personal purposes. We've been clear on this since Bill , one of the predecessors of Bill .
I'd like to start with Mr. Kerr-Wilson on this issue because he referred to it briefly in his opening comments. Would you please—and then, Mr. Beatty—explain your position with respect to the use of a product with a digital lock but in the case where it is strictly for personal purposes?
:
Part of the problem here is that we all see what has gone on in the United States, with some of the rights holders getting massive damage awards from individuals. I don't think that's a fair way of dealing with things.
That being said, you look at the numbers for personal infringement and the statutory damages provisions--$100,000, $5,000. We think that's good, but there's one problem. We're concerned that it's really a licence for somebody to infringe. I know $5,000 is a lot of money to most people in this country, but what if somebody downloads a gigabyte of music--tens of thousands of songs? Is $5,000 a deterrent to that? I think not.
There's also some uncertainty. It's not just commercial uses of downloaded music. Some individuals like to disseminate music just for the heck of it, frankly.
:
Yes, I know. Small, medium-size and large businesses agree on one point: to do better business, you have to find win-win situations. Everybody has to win; our supplier, our business, our consumer and our client have to win. Do you agree with me, Mr. Beatty? I know why you're very happy about Bill C-32. Despite your association's name, Mr. Wilson, we can see that Bill isn't very balanced.
I'll take a few minutes to explain to you why that is. More particularly, the creators of artistic content are the big losers. First, since the private copying system hasn't been modernized, they lose at least $13.8 million a year. As a result of the exception for education, they lose $40 million a year. I'm taking shortcuts because you seem to have a clear understanding of the bill. With the abolition of ephemeral recording, they lose at least $21 million a year. That's a minimum. I noticed that other amounts were also paid, but I didn't include them in my initial calculation. That totals $74 million a year.
There's the exception for YouTube, whose content is generated by users. In France, since there's no such exception, France's Société des auteurs-compositeurs français, SACEM, has managed to negotiate with Google for royalties to be paid. And even there, some money is being lost. It's at least $74 million annually that the creators, artists and crafts people are losing under Bill . Do they consider that balanced? No. You know how to talk about money; you know very well they can't find that balanced. These aren't subsidies, but rather money that is being taken out of their pockets, money they normally used to receive.
In addition, yesterday, the Standing Committee on Canadian Heritage heard from the people responsible for the copyright bill at the Department of Industry and the Department of Canadian Heritage. I put the question to certain individuals around the table. I asked them what artists would gain with Bill and for them to name one bankable gain that they could make money with? There are indeed a few more rights, such as performers' rights, but that's not bankable. A power relationship is being established; the artists are happy, thank you very much, but that's not bankable.
So this is a bill that takes at least $74 million a year away from artists who earn an average of $23,000 a year and that gives them nothing more, no way to make more money. Creators can be viewed as suppliers. They're the ones who fill all the Internet sites of this world. The programming of 80% of radio stations is filled with music. When our suppliers no longer produce because we've slit their throats, what do we do? Will your radio stations want to go to the United States to get American music? When the clientele, Canadian and Quebec consumers, see that, how will they react? As for getting American music, let's go after American broadcasters. They'll change stations.
I want to outline this problem of lack of balance to you. I know you're very intelligent people. You know business, the value of money, and you know what it means to make a situation more profitable for everybody. So I'll let you speak.
:
Thank you very much, Madam Lavallée. I'll answer in English, if that's okay, just so I can make myself better understood.
I would respond in a couple of ways. First of all, the act, as it exists now and as it would be amended by the bill, creates the same rules for everybody. So whether you're a large corporate rights holder or a small individual creator, the same rules apply to everybody. And the same holds true for Canadian creators and non-Canadian creators. We have an obligation to provide the same level of protection to everybody.
So when you talk about the lost revenue--and I'm not familiar with the figures you cited--certainly, I'm not aware of any money lost through a time-shifting exception, because right now people can use a VCR or a set-top box or a computer to record television shows, and there's no revenue associated with that. So I'm not sure the bill is going to cost anybody any money.
But I think a more fundamental point is that using the Copyright Act to try to sustain some minimum level of income for creators--which I think is a laudable goal and a good public policy objective--has some problems, because the bill applies to everybody. So if you create a measure hoping to provide some moderate level of income to Canadian artists, the way the provision will be applied, most of the revenue generated won't go to Canadians. It will go to large corporate American rights holders who have the bulk of the market in the U.S.
From our perspective, we should set ground rules in the Copyright Act that allow creators to market their creations and to benefit economically, and then on top of that, if we think Canadian artists--because we live in a smaller market and they have a much more difficult economic challenge--require additional support, then as a matter of public policy we should do that directly. We can't target support for Canadian artists through the Copyright Act, because most of the money will simply go to creators from other artists and to those who already get the most airplay, the most CD sales, and the most ticket sales.
:
Thank you, Ms. Lavallée.
[English]
Let me simply set a context for you. First of all, I can hear the passion in your voice when you talk about artists. It's a passion I share as the former Minister of Communications for Canada responsible for Canadian culture
[Translation]
and as former president of the CBC.
[English]
For me, it's absolutely fundamental, and as Minister of National Revenue, I was responsible for bringing in the status of the artist bill, which was designed to help provide protections and income for artists.
Copyright protection is one of the tools--it's not the only tool--the government has at its disposal to provide for better incomes and better support for creators. This is why we support the legislation. Artists themselves will benefit from having better copyright protection. Businesses will, and others will as well.
There are other tools in addition to that, as you're looking at the income of artists--support that may be available for the artistic community, which government also has at its disposal--and you should look across the board at all those measures.
Of concern to us, though, as we look specifically at copyright, and where we believe that both artists themselves and the businesses that are involved with them will benefit, is that we not lose this best chance that we've had to modernize our legislation and move ahead.
I've read the committee's transcripts, and the one area in which there's agreement is that the status quo is unacceptable. We have to make improvements. We need to strike a balance, to find some sort of fair middle ground. We think a conscientious attempt was made to do that. We're making proposals for ways to improve it beyond that. But we think that can be done.
Mr. Webster might want to comment specifically--
:
Thank you, long-suffering Chair. Have I told you lately what a good job you do?
Thank you, gentlemen. This is fascinating. I'm glad to have you here.
What we always hear is that this is about balance. Everyone who comes to us says, “Listen to me because I've got the balance. The other guys are unbalanced.”
There's something I've noticed. I've found two interesting perspectives on copyright. Mr. Webster, you tell us it's about stopping people from stealing your sofa, that it's a property right. Copyright isn't a property right. Copyright is a construct of Parliament going all the way back to Queen Anne's Law, which was designed as a public good. And the good was to remunerate the artists and to decide the limits on that remuneration. It's not like you own a house and you pass that house on to your kids.
Mr. Wilson, you're describing copyright as a laudable goal for Canadian artists. But it's not the Canada Council. I don't care if Bono is going to make a lot more money on Canadian radio than is Sarah Harmer. Copyright is fundamentally about ensuring that artists get paid. Otherwise, there is no business model.
You say we shouldn't worry about updating the levy. But we have some $41 million directly in musicians' royalties that would be lost, from the mechanical royalties that are going to be tossed out if we don't update the levy in some form of digital format. That's a serious amount of money, and that's not counting the other areas where artists are going to lose.
Don't you think there is some obligation, if we're going to talk about copyright, to recognize that it's actually about people getting paid for their work?
:
Yes, Mr. Angus, I agree. And I'm glad you asked the question because I think it also will address Madam Lavallée's question. When she was talking about time shifting, I misunderstood and thought it was about the recording of television programs. I think she was talking about the ephemeral as well.
I have a couple of points to make in response to your question. I'll try to make them quickly.
First, on the question of the ephemeral exception and the ability of radio stations to make copies, as the provisions now stand, the lifespan of those copies is 30 days. If radio stations want to make persistent copies of music to use as part of their operations, they can't now rely on the exception to do it. And if amended, they can't rely on that exception to do it. They need to have some other mechanism to have long-term copies. This is simply short-term copying.
But I absolutely agree with you. The fundamental purpose of the Copyright Act is to provide rights holders with the protections they need so that they can derive revenue from their creations and see a return on their investment.
Going back to Queen Anne, that revenue was through agreements, through contracts, going out to the market and making deals with publishers. And when we finally got to the recording industry, it was about making deals with the recording industry. And then consumers would place the value they wanted on the works.
When we talk about the levy, the problem is that there's a large disconnect between what the levy would be used for and what the levy would be collected on. The days of the single-use digital music player are gone. Everything is a multi-use device. People want their phones, their Internet access, their music players, and their cameras all in a single device. So how do you charge a levy for music on a device that may never see a song embedded in it, such as mine, which can take music but doesn't.
The other problem I have with it is that the coalition wants to see artists succeed in a new digital economy.
:
We're not going to get too much into this, but if you look at the Copyright Board decision, contrary to what my colleagues over there say, it doesn't get applied to cars. It doesn't get applied to cellphones. It has to be very specific in terms of the playing device, and the revenue we're looking at is $35 million. That's a shortfall. I have to go back to artists in my region, or across Canada, and say, we're giving you a copyright bill and we're telling you to lump it. Live off iTunes.
I have songs on iTunes, and I can tell you that doesn't cover one-fiftieth of what's being copied out there. So we have to find a copy mechanism.
I have to move on, because I want to speak with you, Mr. Beatty. I'm glad you read what I said in the House on WIPO. I might have said that it was written when the fax machine was cutting-edge technology. I think that was my full quote. I'm worried that when we talk about WIPO we are applying elements to WIPO that are not necessarily there, for example, the technological protection measures in the original WIPO treaty. And if you look at WIPO-consistent countries, in recent analysis we looked at many of our WIPO competitors and they have exceptions on technological protection measures, because under article 10 in the WIPO Copyright Treaty it says that it is “possible to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable”.
For example, if we give someone the right of parody and satire in a non-digital world and that exists in a digital world, do you not believe it's possible--I know it's difficult and it might be problematic for some--that we can establish a made-in-Canada law, in terms of technological protection measures, that allows us in Parliament to set the exemptions so that we are still WIPO-compliant, so we are still very much with that treaty of 1996?
You touched on a number of topics, but I think the bill is WIPO-compliant as it is. Certainly we can craft exemptions to it if we wish to do it. The question is whether we wish to do it and whether it's appropriate in the circumstances.
I don't want to get into an argument with you over whether my sofa is akin to a copyright, but copyright is an intellectual property right, and the reasons we have an intellectual property right are twofold. One, it is to reward creative efforts, and two, it is to stimulate creation. We're sitting here. The chamber represents not just big business but also little business, but copyright goes back to the authors and the creators. The reason we have copyright is to reward creativity.
We talked about striking a balance. That's fine. The balance we have to work at is how much reward to give to the creators and authors, and that's why we're all here today and that's why the legislation needs to be updated.
One thing we should not have is any misconception that copyright is just something to enrich the pockets of big business. It goes back to authors and creators. That's the fundamental foundation to the right.
How far does the right go? We now have an opportunity to make changes, to look at this to see what's appropriate in the digital age.
:
Thank you very much, Mr. Chairman.
And thank you to the witnesses for appearing today.
Frankly, it's a contrasting testimony to what we had the other day. It's somewhat refreshing.
With respect to the numbers, Mr. Kerr-Wilson, I'm not surprised you're not familiar with some of the numbers that are being thrown around today. For future committee hearings, I'm going to have the chair bring in the big wheel off the Wheel of Fortune. We'll just spin it, and whenever it stops, we'll suggest that that could possibly be a number that might be impacted by the bill, because I have no idea where these numbers are coming from. Even when we asked folks to quantify it, it was very difficult for them to actually quantify where the numbers came from. So I'm assuming it's a big wheel that you spin.
Anyhow, Mr. Beatty, you made a fantastic comment when you said “Let's not let the perfect be the enemy of the good.” I can't agree more. Based on the consultations that we've had across the country, we've met with members, frankly, of the Chamber of Commerce, big and small. There was a comment made the other day that this bill seeks to protect big copyright holders but does nothing for small copyright holders, does nothing for small business. In fact, we get bogged down a lot talking about artists on this committee, but what we're really talking about is creators—creators of all different forms of intellectual property. Some of it is music, some of it is art, some of it is photographs, in fact, which are now protected in this bill. Some of it is software that's created--gaming software, software for computers and business. These are all the types of things that are protected in this bill--creators big and small. It's a good bill.
I've seen your amendments, by the way. They are largely technical amendments that involve making sure that the intent of the bill and the actual function of the bill, in law, is in line. I think I would describe them largely as technical amendments that you're suggesting.
So if we're not going to let the perfect be the enemy of the good, you and your association, I'm assuming, must be here representing big and small and creators of all forms. Is that accurate?
I think we all agree on the importance of modernizing this copyright bill, so you must have been very disappointed when you realized that it took five years for the government to start discussing this after proroguing two, three times. I hear Mr. Del Mastro comment, but if there had been no prorogations, maybe we could have dealt with this before. I don't think the opposition is responsible for this.
[Translation]
We agree that the act has to be modernized and that we have to have a sound copyright system consistent with our international undertakings. We also agree that consumers must have better access to content.
Where we don't agree with you is on this idea that content should be free. From what we've heard from you from the start of the discussion, rights existed and generated income. They will no longer exist, and that's fine; that's not a problem with regard to private copying. In your view, does private copying have a monetary value? Is it worth something?
:
Thank you, Mr. Chairman.
Good morning and welcome, gentlemen.
I'm going to go back to Ms. Lavallée's remarks, which also served as a basis for questions by Mr. Rodriguez following a few points mentioned by you, gentlemen, the witnesses. I believe it was you, Mr. Beatty, who said that "the better is the enemy of the good," and Mr. Del Mastro supported that statement. It's also said that "perfection is not of this world," but we have to try to improve every day, as though we could achieve it.
As Mr. Wilson said, this bill creates the same rules for everybody, but we're talking about different classes of creators, whom you represent as well. Some creators are really smaller. Earlier Ms. Lavallée advanced a figure saying that nearly $74 million in copyright royalties could be lost as a result of this bill.
We're talking about balance, particularly in a context of constant and increasingly rapid technological change. Some creators can easily defend their copyright and ownership rights. However, the smaller creators who don't necessarily have that kind of control must also be given the same ability.
The result, based on the analyses and figures that have been advanced by a number of specialists, is nearly $74 million in losses. Mr. Webster told us earlier that the purpose of copyright was to reward authors and creators. Personally, I don't consider it a reward, but rather a form of salary. Someone has created something and his creation evolves through time and has a monetary value solely as a result of those who use it or consume it.
At that point, we can't say there is a reward. If we consider that this is a reward, what are they doing wrong for them to be deprived of $74 million, as provided for in this bill?
:
I'll start and then turn it over to colleagues after that.
Let me come back to what you were saying about whether we're allowing the perfect to be the enemy of the good. I fully agree with you. Whatever bill comes out of this Parliament, or whatever legislation there is, will not be perfect. It'll represent Parliament's best attempt to put a modern regime in place, and it'll start to feel the creaks and the strains as technologies change very rapidly.
But the only thing that I'm sure of, Mr. Cardin, is that it will be infinitely better than what we have today. And the plea I would make to Parliament is, do not lock us into the 20th century when we've moved into the 21st century. We need to modernize what we do.
Again I come back to the question, what can we do for our artists? One of the key things we have to do is to ensure protection is in place in terms of copyright to protect their creations. That's essential. Is that all we can do for them? No, it's not.
I am a former Minister of Communications responsible for culture. in addition government has many tools to address issues artists have, which it should use. Société Radio-Canada, of which I was president, is the largest cultural institution in Canada and a great source of support for artists as well.
There are many tools, but one of the tools that artists definitely need is to have modern copyright legislation. Without that, we'd lock ourselves in the past, and everybody loses. If we make the change, does everybody win as much as they would like to win? Inevitably there will be debate on that. The only thing I know is that if we don't act, everybody loses. That's why we must act.
:
Mr. Braid, I know your community very well. I'm a resident of Fergus, where I was born and raised and which I represented in Parliament and which is literally around the corner from you.
I am stunned when I see the creativity in Kitchener—Waterloo and the number of businesses there that have been created and the number of individuals who just exemplify the best of the knowledge economy. This is where Canada's hope lies in the future, in that sort of creation of new jobs.
Intellectual property protection is absolutely critical, whether it's in terms of patent reform or in terms of copyright reform, to reward those people who take risks and those people who invest their creativity.
Both people and capital are mobile to an extent unprecedented in the history of humankind. If we do not protect our intellectual property in Canada, not only will we not be able to attract people here from abroad to make those investments of their brilliance and of their financial resources, but we will lose them voting with their feet to go to other countries. That's why it's so utterly critical.
I have a son in university. I don't want him, when he graduates, competing with a young person from western China on the basis of who will accept the lowest pay. I want him competing on a value-added job based on the knowledge-based sector where we have a sustainable, competitive advantage in Canada. And to do that we need to have a legislative framework in place that rewards creativity and that keeps our best and our brightest in Canada.
One of the things we're talking about with respect to reverse engineering is that some have expressed the thought that digital locks or TPMs should not be permitted to lock down subject matter such as software, on the basis that in doing so it would prevent individuals from reverse-engineering software. Well, I think digital locks are essential to preserve business and commercial information. There's nothing strange, nothing new, about that. That's the way things work in the world with trade secrets. So digitally locking down a software code makes a lot of sense.
And on the ability to reverse-engineer it, why should somebody be allowed to break a digital lock to reverse-engineer? It's frankly the trade secret or confidential information of the rights holder. Reverse engineering is a means of copying, essentially, and we don't think digital locks should be broken to allow for that.
:
Thank you very much for the question, Mr. Braid.
Certainly, ISPs under the act would be obligated to receive notices from rights holders that there's infringement activity and to pass those notices on to the subscriber in question without identifying the subscriber or violating the privacy rights. Then they would also have to retain the records about that, so if the rights holder wants to pursue litigation, there's an evidentiary record.
The fact is that large Canadian ISPs have been doing this for a decade, with no legal obligation, and in cases where, in the United States and Europe, ISPs have been doing nothing to respond to peer-to-peer file sharing. So in fact we've been a decade ahead of the curve. France and the U.K. have now developed models that have led them to notice and notice, which is the model that, as I said, ISPs have already been undertaking without the legal obligation, without a lot of formal structures.
So it's the appropriate response to peer-to-peer file sharing where the ISP doesn't know what content is on the end user's computer; quite frankly, we don't want ISPs to know what content is on the end user's computer, but it sends a message, and has an education component, so the consumer knows what they're doing is wrong.
:
Thank you, Mr. Chairman.
The Retail Council of Canada is pleased to provide our comments on Bill . As you stated, my name is Terrance Oakey, and I'm a vice-president with the Retail Council of Canada.
Our members speak for an industry that touches the daily lives of Canadians in every corner of the country and one that directly contributes close to $75 billion in GDP, invests $5.9 billion in infrastructure and machinery, $1 billion in logistics, and is also quickly becoming the number one job-creating sector in our economy.
Our industry is innovative and highly reliant on emerging technologies, with one goal in mind: to deliver the highest-quality product and service to the customer in the most cost-effective manner.
Our members sell the very cultural products that this bill intends to protect, so it is in our members' interest to advocate for the best balance between the public and consumer interest on the one hand and the interest of creators, producers, and distributors on the other. RCC has always taken this approach, whether before committees such as this or before major court cases relating to some of the issues that I will deal with today.
I want to focus briefly on five issues in my opening remarks. I believe members of the committee have our submission, so more detail is provided there.
The first issue I want to deal with today is the levies, or some have referred to it as the iPod tax. Even though it is not addressed specifically in the bill, the issue has loomed large in the public debate around copyright. Our members feel that there are good reasons to ensure that the blank media levy is not extended to iPods, and actually should be repealed altogether.
We believe the tax is obsolete. There is nothing like it in the U.K. Australia, or, most importantly, the United States. Most of our retailers compete head to head with U.S.-based retailers. If it is expanded to iPods, we believe it will creep to cellphones, BlackBerrys, and even computers, and it will drive sales away from Canadian retailers.
Although there is persistent denial by iPod tax proponents, the fact is that in SOCAN's most recent attempt at the Copyright Board to impose a levy on digital audio recorders, they asked for an amount of $75 on each recorder with more than 30 gigabytes of memory. In other words, that would cover basically your classic iPod. We know now there are many devices that have three times this amount of memory in their capacity.
This tax would put Canadian retailers at a significant competitive disadvantage and I would argue would simply further incent Canadians to buy their devices outside our borders to escape this fee.
Our next issue is parallel imports. RCC is concerned that clause 4 of the bill may inadvertently affect the ability of retailers to bring in parallel imports of legitimate and competitively priced goods from abroad. This practice of parallel importation is expressly permitted by the 1996 WIPO treaties and other World Trade Organization agreements, and it is seen by consumers and retailers as being an indispensable tool in the maintenance of free trade, competition, and the prevention of international price discrimination.
We do not believe the government intended to change the status quo, so we suggest that this provision either be omitted or that the bill be amended with improved wording that would maintain the status quo. In our more detailed submission, we provide such wording.
Our next issue is fair dealing and exemptions. Our members believe that the performance of music for the sole purpose of demonstrating any consumer electronics device or selling CDs or DVDs should also explicitly be included as an exemption in the legislation. This would be perfectly consistent with long-standing American legislation that deals with this precise issue.
It would also be consistent with the fact that iTunes now can show or sample a song for up to 30 seconds without paying this fee. This is yet another example where bricks-and-mortar retailers are at yet another competitive disadvantage compared to their major trading partners.
Our next issue is photofinishing. As many of you are aware, today's inexpensive, high-tech cameras allow almost anyone to take pictures that look somewhat professional. Some of our members are becoming concerned and are refusing to make prints because they fear being sued under statutory damages, which can be as high as $20,000 for each photo.
This bill should include an explicit exemption that immunizes any commercial photofinisher who acts in good faith and relies on a written representation that the customer has the right to request the reproduction.
Our next issue is technical protection measures. We join the chorus of many manufacturers of consumer electronics, and many artists themselves, who believe that overly rigid measures to protect digital locks are bad for artistic creativity, bad for innovation, and bad for the retail business.
Consumers should be free to do whatever they want with their legitimately purchased hardware and software, as long as that use is for private purposes that are otherwise non-infringing. That is all that is required by the WIPO treaties, and we believe that is as far as Canada should go.
That concludes my opening remarks.
Howard or I will be happy to take your questions.
Thank you.
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I would like to thank the committee for inviting us to take part in the committee's proceedings on the copyright bill.
My name is Anthony Hémond. I am a lawyer and analyst with the Union des consommateurs.
In our presentation on Bill C-32, we will address a number of topics such as the technical protection measures, which raise a number of problems, the new rights conferred on users through exceptions and the accountability of Internet service providers.
By preventing the circumvention of technical protection measures that control access to works, the bill goes beyond the mere protection of authors' rights by enabling authors and rights holders to limit the rights that the legislation confers on users through technical measures. It must be understood that the aim of the IPO treaties, the WCT and the WPPT, is not to provide technical protection measures that protect access to works, limited to those implemented by the authors in the exercise of their rights. Some European countries that have ratified the WCT and WPPT treaties and the information society directive have chosen not to include among the technical protection measures that may not be circumvented those that protect access to works. It is therefore entirely possible to ratify WIPO's WCT and WPPT treaties without including any technical protection measures that are a barrier to user rights.
We also believe that Canada should draw extensively on the approach adopted in Sweden's copyright legislation, since that approach, which protects both the existing rights of rights holders and the public, manages to maintain a balance between creators' rights and those of the public, which Canada's copyright legislation should absolutely aim to do.
In the view of some, the technical protection measures that control, for example, user access to downloading platforms which in their view are necessary because they support business models must be protected under the Copyright Act. The purpose of the Copyright Act is obviously not to protect business models, but rather to confer certain rights and obligations on authors, while ensuring that there is a balance between those rights and the rights of the public. In our view, the technical measures that control access do not come within the purview of the Copyright Act. The business models referred to concern the provision of a service, not copyright. We also suggest that the bill be amended to change the definition of technical protection measures and to enable them to be circumvented where they unduly limit user rights.
These new exceptions, reproduction for private purposes, reproduction for later listening or viewing and backup copies, are welcome. This initiative is all the more appreciated since these new exceptions legalize practices that are widespread among consumers, practices supported by the market, and that have long provided them with some of the tools that permit or facilitate those practices. However, in our view, the provisions for these exceptions must be amended. Certain conditions associated with the exercise or context of the exceptions could very well prove inapplicable, or appear not to achieve their target. In addition, certain limits placed on the exercise of those rights seem unwarranted in our view. Furthermore, the wording of those clauses does not always appear conducive to enabling users to know and have a clear understanding of the nature, scope and limits of the rights conferred on them.
From a perspective of simplification for the purpose of providing everyone with a clearer understanding of what is permitted and of the limits of these authorizations, we also think that a more broadly conceived copying right would make it possible to include in a single clause the exceptions made for the fixation of a signal or a recording of a program for later listening or viewing, the private copying right and the backup copies right introduced by Bill C-32. In our view, it would be possible and preferable to institute a single system for the reproduction of works including adequate royalties. Such a system, which ideally would be technologically neutral, would afford the twofold benefit of enabling all creators whose works are copied—
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Such a system, which ideally would be technologically neutral, would afford the twofold benefit of enabling all creators whose works are copied to be compensated and of relieving users of any legal insecurity over whether copying a particular work on one of their devices is or is not authorized by rights holders or by the act.
With regard to the accountability of Internet service providers, certain rights holders suggest that the act should require Internet service providers to pay compensation for works circulating on the Internet in violation of their rights. In fact, they would like Internet service providers to pay for all acts that they consider illegal and that are committed on networks by users. If Internet service providers were required to pay such fees, it could of course be anticipated that they would, on the other hand, increase Internet subscription rates. In other words, all users, whether or not they violate rights holders' rights, would have to pay for that kind of compensation. All users would therefore be encouraged to commit the acts that rights holders consider illegal.
If a system of royalties were to be considered, it would be a good idea to develop something more logical and equitable. It is indeed curious to consider a system that proposes, on the one hand, to maintain and even increase the number of violations of the Copyright Act by users who would pay even if they did not violate that legislation, since they would be encouraged to do so, and that, on the other hand, contemplates payment by non-offenders of royalties that, as far as possible, should be imposed solely on those who intend to act in a manner that might involve the works subject to copyright. That is why we advocate the introduction of a licence to make available—
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Thank you, Mr. McTeague.
The best example I can give is the one that was in the Supreme Court of Canada three years ago in which the Retail Council of Canada intervened. Kraft, big multinational Kraft, tried to use copyright in a highly technical way to block the importation of perfectly legitimate Toblerone chocolate bars from Europe that were coming in at a lower price; they said there was copyright on this little logo, a tiny little logo on the chocolate bar. Justice Binnie, in his usual brilliant and witty way, asked the lawyer for Kraft if this was really about artistic creativity, which the lawyer for Kraft said it was. Justice Binnie said, “Do you seriously think that anybody's going to buy this chocolate bar, frame the package, and throw away the chocolate?” The answer was...of course, it was a rhetorical question.
That's what parallel import law is all about, to use copyright in a very technical way that has nothing to do with the product in most cases and is designed to achieve price discrimination and eliminate competition. So we've come up with what I think is a very simple amendment that we've given you that would combine both. There were several opinions in that Supreme Court case, and we combined the two prevailing opinions: the one rather technical one having to do with hypothetical maker, which you don't want to hear about, I'm sure, and the other having to do with what Justice Bastarache called “an incidental use”. So if the incidental use of this little logo on the label is incidental to the chocolate bar, which is the real object of the transaction—
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Thank you, Mr. Chairman.
To start with, I'd like to set the record straight with regard to a statement contained in the brief by the representatives of the Retail Council of Canada.
You wrote that the levies on the iPhone could represent $75. You say, and I quote: "This fact cannot be denied." Pardon me, but I'm going to deny it. I followed the link you sent us and I saw that that amount didn't correspond to the levy proposed by the Copyright Board of Canada, but that there was a proposed levy of $75. I'll leave it up to you to go and search the Copyright Board of Canada site on the Internet. A decision made and the levy obviously didn't exceed $25. So that could be denied, just as the idea of calling it "a tax" could be denied. A tax, as you know—you're intelligent, like everyone—is money that goes to the government. However, a royalty is money paid to a copyright collective to be redistributed to artists.
Between you and me, it's quite surprising that this Conservative government doesn't want to pay artists royalties on the sales of digital audio players but instead wants to tax books in Quebec as part of the tax harmonization. Really!
My question is for Mr. Hémond.
Good morning, Mr. Hémond. I'm glad you're here. I have two questions for you, and then we'll set aside a little time because I would like to talk to you about music streaming. For the moment, I'm going to talk to you about Part VIII of the Copyright Act concerning private copying.
You say that other countries have this system—I suppose there are countries where it works very well—and that it works extremely well here in Canada and Quebec. From the point of view of consumers, whom you represent, if you had to rewrite this part of the act, to what devices would you apply this levy and to what works? Would you focus on music? Would you set a ceiling? For example, the Copyright Board cited a figure of $25. Would there be a ceiling? How would consumer interests be served in this private copying system?
Don't forget to allow 30 seconds for us at the end.
Once again, it is a fascinating discussion.
Mr. Oakey, you were correct on one element on the levy: the United States doesn't use a levy. You're absolutely correct. They sue people. A hundred thousand people last year alone were sued in the United States. They don't actually get to court. They just get a thing in the mail that says, “Give us five thousand bucks, or we'll sue you for a million bucks.” That's not exactly consumer friendly.
You didn't mention that many European countries use a levy, because a levy has been found to be a balancing act. It goes back to the days of the cassettes, when they started to notice that music revenue was starting to drop off because people were making numerous copies.
As a musician, I never had a problem with making copies. Nobody makes more copies than musicians, because we love music. It's not about dinging people and shutting them down. It's finding some balance.
You threw out the $75 fee that my colleagues over there just love to run with. Yet I look at the Copyright Board's decision, and it seems completely at odds with the position you're taking. When it was applied to cassettes, it wasn't market distorting. When it was applied to CDs, it wasn't market distorting. Sure, we heard people complain. I used to hear people say, “I've never made a copy. I'd never make a copy. Why should I pay the levy?” I never met so many digital virgins in my life. The fact is that people are making massive numbers of copies.
When it came before the Copyright Board, sure, the rights holders were going to start up as high as they wanted, but the Copyright Board adjudicates. It makes them go through it. It tests them. You could start with seventy-five bucks, and they could bring it down to five bucks, because one of their decisions is going to be that it has to be based on the intent. For example, James Moore asked if the iPod levy would be applied to cars now. Well, it wouldn't be applied to cars, because you don't buy a car to record a song. If you do, you have lots of extra dough that you probably shouldn't have anyway. It applies to music players. Now, there are many other forms out there right now—people have phones and everything else—but the Copyright Board was very specific: it had to be marketed as a music player. That's it. It was very limited in what it was.
The Copyright Board also made it clear that it is not going to be market distorting.
The other element is if say, for example, iPods drop from $300 to $59, and we have a $10 iPod fee on them, it's within the minister's power to change it to a percentage or to change it to whatever dollar figure he wants so that we ensure that it's not market distorting.
You come here and say that this is going to be $75, and it's going to drive people to the United States. Did you ever see people driving down to the United States to buy cassettes?
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I think you're incorrect there, and I think the issue of finding a way to do some form of digital remuneration has to be addressed—
Mr. Terrance Oakey: We agree.
Mr. Charlie Angus: —or we have to go to the issue of suing people, because there's no in between. Or we go to digital locks. The Conservative position is that we're going to take out the remuneration, but we're going to put locks on so that you can lock down your content. I think that's going to lead people to piracy.
When I drive down the highway and I get a cup of coffee and that cup of coffee stinks, I don't take it up with the rights holder, the coffee maker, like our previous witness. I leave and go to another coffee shop. I talk to young people, and when they find a product.... For example, my daughter tells me that the last CD she ever bought had a digital lock, and she couldn't back it up. She said, “Twenty-five bucks, Dad?” That's the last CD she ever bought. She went out and downloaded the entire album and felt it was her due. I've talked to many young people, and if it's not easily accessible, they will get it.
The issue is, we move to digital locks because it's the only solution, if we don't have remuneration. How do we find the balance for access and remuneration? People have to be paid. Otherwise you're going to put a lock on it to keep people from stealing it.
I'm finding this discussion incredibly interesting today. There's a lot of ducking and weaving on the part of the Liberal Party because of some things they have said or done in the past regarding the iPod tax.
I find it quite interesting to hear particularly the strong language from Mr. Garneau last meeting and Mr. McTeague this meeting regarding their position. The facts are the facts, and you only have to look at the facts to see that first of all the Copyright Board did propose the iPod tax, which would be in the range, as you mentioned, of $75 for anything more than 30 gigabytes—and of course, that covers most recording devices that are commonly used now, so it's very significant. You can probably get a 30-gigabyte device for $150, so a $75 tax on top of that is pretty significant.
Regarding the specific issue and the language that Mr. McTeague and Mr. Garneau used today, let's just again take a look at the facts. In March 2010, the Standing Committee on Canadian Heritage reported a motion to the House. It's important to hear the wording used in this motion. It read:
That the Committee recommends that the government amend Part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well.
That's pretty clear. It's a pretty clear motion, reported to the House.
On April 13, the House voted on this motion. This is the official record of the House of Commons. This is the final vote on this issue in the House of Commons, in April 2010. I have a list here of the yeas, and I see Mr. Angus—that's not a surprise—Mr. Cardin, not a surprise, and Mr. Garneau--he voted yes to that motion. Ms. Lavallée, of course, is not a surprise.
Mr. McTeague, in the official record of the House, you voted yes to that. You voted yes in the House to recommend that the government amend part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well.
Mr. Schellenberger, if I go down the list here, voted no. Every Conservative member voted no.
Taking a look at the facts—that's the official record of the House—we actually had a vote on the issue. It's pretty hard, in fact....
I have a quotation from that day in the House in which Mr. Rodriguez is saying:
...we are in complete disagreement with the Conservatives when it comes to taxes. We consider it a levy.
He's not opposing the issue itself. He's maybe opposing the wording around it, but is clearly in favour of the iPod tax.
The record is there. You can't argue otherwise. You voted on it not that long ago. We're talking about $75 on a $150 device.
I want to get back to the actual issue at hand, if I could, with Mr. Oakey.
I'm from Alberta, where we don't have a sales tax. I personally avoid buying things here because I don't want to pay 8% more. Seventy-five dollars on a device that might cost $150 is a 50% tax on top of the device. Is it reasonable, for example, that when a Canadian knows they're going to go to the U.S. at some point in the near future, they might not buy something that's going to cost them $225, knowing they can get it for $150 in the United States when they're there?
I'm glad, Mr. Oakey, that you said in response to Mr. McTeague that you recognize the Liberal Party had no intention of putting any kind of levy on iPods and that you'll be ignoring the five-minute rant from my Conservative colleague on that, which is completely disconnected from any sense of reality.
You talked about the fact that when people have bought something for private use they should be able to use it, do some format shifting, perhaps copy it, back it up, and that kind of thing. Do you have a specific, practical way we could do this, in terms of the proposed legislation? This certainly is something that many groups have said is the right thing to do, and I agree with it.
Again, sorry, but I have to come back to Mr. Garneau using the words “completely disconnected with any sense of reality” to refer to my reading from Hansard, the official record of the House of Commons. I find that just astonishing.
We have the official record of the House of Commons, where again we voted on this statement:
That the Committee recommends that the government amend part VIII of the Copyright Act so that the definition of “audio recording medium” extends to devices with internal memory, so that the levy on copying music will apply to digital music recorders as well.
That was a statement on which we voted on April 13, 2010, and when we had that vote, members of Parliament voted, and every single New Democratic member, every single Bloc member, and every single Liberal member, including Mr. McTeague and Mr. Garneau, were recorded on the official record of the House of Commons, Hansard, as voting yes to that motion. Every single Conservative member voted no to that motion. It's very clear. It's the official record of the House of Commons.
You know, if we're going to talk about being completely disconnected from reality.... I'm just trying to make a connection to the official record, and the official record says that all three opposition parties are in favour of the iPod tax; it's very clear.
So as we work our way through this legislation, the way to change that reality is to pass a copyright bill quickly, a copyright bill that does not include an iPod tax. That's the way to disconnect from the reality of the way they voted in the past. When Mr. Angus' bill comes up, which is a bill to introduce such a tax, they will have the opportunity at that point to again prove that they're not in favour of it by voting that way. We'll see what happens at that point.