[Recorded by Electronic Apparatus]
Wednesday, November 6, 1996
.1809 
[Translation]
The Chairman: I'd like to call the meeting to order. We are studying Bill C-32.
[English]
We have the great pleasure tonight of welcoming the members of the Canadian Bar Association.
.1810
[Translation]
Before we begin, I'd like to apologize for the delay. There was a vote in the House and of course we will prolong this meeting to give you the time that you were allocated.
It is our pleasure to receive Mr. André Gervais, Vice-President of the Canadian Bar Association;
[English]
Mr. Roger Hughes, president of the Patent and Trademark Institute of Canada;
[Translation]
Mr. Bernard Mayer, member of the Joint Copyright Legislation Committee;
[English]
Mr. Stuart Rennie, a member of the CBA's B.C. branch legal research section; and Ms Tamra Thomson, director of legislation and law reform.
Mr. Gervais, the floor is yours.
Mr. P. André Gervais (Vice-President, Canadian Bar Association): Thank you, Mr. Chairman. I thank the members of the committee for allowing the Canadian Bar Association to contribute to the discussions of the amendments to the Copyright Act contained in Bill C-32.
[Translation]
The CBA is a national association representing over 34,000 jurists across Canada. The Association's primary objectives include improvement in the law and in the administration of justice. And it is in this spirit that we are making our comments to you.
[English]
The Patent and Trademark Institute of Canada is a national association representing more than 1,000 persons specializing in matters pertaining to intellectual property. The Canadian Bar Association fully supports the government's goal of modernizing and clarifying Canada's copyright laws.
As well, the joint copyright legislation committee of the Patent and Trademark Institute of Canada and the Canadian Bar Association has reviewed the bill and submitted a substantial document commenting on technical aspects of the bill.
[Translation]
I do not intend to discuss here the amendments proposed in the technical brief of the joint committee. I do however wish to emphasize that this brief is the final result of the considerable efforts brought to bear by a number of specialists in intellectual property law among the most eminent in Canada. I am sure that their judicious advice will be of benefit to your committee.
[English]
I am pleased to ask Mr. Bernard Mayer to comment on the technical amendments on behalf of the joint copyright committee.
Mr. H. Bernard Mayer (Member, Canadian Bar Association and Patent and Trademark Institute of Canada Joint Copyright Legislation Committee): The brief of the joint committee of both organizations is a technical submission. It is designed to bring to light technical problems the joint committee noted in its study of the legislation. It also reflects the practical experience of its members with regard to the practical operation of the enforcement process and the operation of the Copyright Board.
The joint committee does not consider its goal to be to comment on policy issues such as the scope of neighbouring rights, the scope of exemptions, etc. Our opening comments will be brief in order to leave ample time for questions. We wish, however, to make the following comments.
It is inevitable that once a bill of this complexity is exposed to public comment, a good many technical points will be raised. Such technical points not only relate to matters of drafting but also expose practical implications that may not have been fully considered by the drafters of the legislation. Our submission contains numerous items of the latter nature, which are very diverse and do not lend themselves to a brief summary.
As lawyers we are particularly concerned about the enforcement provisions of the legislation. Rights are meaningless unless they are readily enforceable. As our submission points out, experience has indicated that the results of technical developments since the existing act was first introduced and the resulting changes in the marketplace, the civil enforcement remedies, have in many important cases become largely unworkable.
While we have a significant number of detailed comments, we believe the changes made by the bill by providing for simplified procedures and statutory damages will help to restore the balances between plaintiffs and defendants. We recognize that any civil enforcement system must be seen to be fair not only to plaintiffs but also to defendants. We believe that, subject to the comments made in our brief, the bill achieves this objective.
We believe the criminal provisions of the existing act, which was substantially amended in 1989, are working well. The bill makes only limited changes to the act. Our submission sets out our comments.
It will be noted that there is one change that relates to plates, which are items used to make infringement copies, which causes us some concern. The point is addressed in detail in our submission.
.1815
We recognize that the bill is not intended to deal with the problems occasioned by the technical evolution occasioned by the Internet. It must be recognized, however, that a number of its provisions have implications that are impacted in a major way by the new technology - e.g., a number of exemptions would apply to Internet transmissions. We suggest that the exemptions be reviewed to ensure that they are not broader than intended.
The bill significantly extends the provisions relating to neighbouring rights. It is important that the legislation is clear on the interaction between these rights and the traditional copyright rights. We are concerned that the way in which the matter is handled by the bill may give rise to confusion.
We regret that the bill does not specifically state that the crown, in both its federal and provincial aspects, is bound by the act. The position under the bill is not clear; it may be bound by implication, but the position should be clarified. While the crown in both aspects usually acts as if it were bound, failure to impose clear liability may prejudice the position of rights holders and is a significant flaw in the legislation.
I would now like to turn the presentation back to Mr. Gervais.
Mr. Gervais: Thank you.
I wish to raise with the committee one major policy concern addressed in the policy brief before you: the need to ensure that these amendments do not inhibit access by Canadians to their justice system. In particular, the proposed amendments should not hinder the provision of legal services at reasonable prices, nor should they inhibit access to quality legal information. Public access to legal information is essential for the proper administration of our justice system. Meaningful access to justice also requires legal information to be affordable, current, accurate, comprehensive, and available in both official languages.
Many Canadian courts require photocopies of relevant law. Canadian publishers do not now impose royalties for the reproduction of works for use in judicial proceedings, but the potential remains. This could have the effect of increasing the cost of litigation, which in turn inhibits access to justice. This will have the greatest impact on those with limited resources, or those who rely on legal aid funding. It could also make it more difficult for libraries to maintain accurate and complete collections of legal material for researchers.
[Translation]
We therefore believe it to be in the interest of justice that the bill be amended to provide that copyright is not infringed by anything done for the purposes of judicial proceedings. This would include but not be limited to the reporting of the proceedings.
Judicial proceedings would include proceedings before any court, tribunal or person having authority to decide any matter affecting a person's rights or liabilities.
[English]
We therefore believe it to be in the interests of justice that the bill be amended to provide that copyright is not infringed by anything done for the purposes of judicial proceedings. This would include, but not be limited to, the reporting of the proceedings. Judicial proceedings would include proceedings before any court, tribunal or person having authority to decide any matter affecting a person's rights or liabilities.
We recognize that the government has indicated that there will be a further phase to the review of copyright legislation. However, the need to ensure access to justice is so compelling that we are calling for a judicial proceedings exemption to be included in the current bill.
[Translation]
Thank you.
[English]
I'm now pleased to ask Mr. Stewart Rennie to comment further on the policy amendments.
Mr. Stewart Rennie (Member, B.C. Branch Legal Research Section, Canadian Bar Association): Thank you.
Mr. Chairman, as Mr. Gervais has indicated, our policy is a policy submission. It aims to highlight the issues raised in the amendments as they affect access to justice and the provision of quality legal services to Canadians. I will expand on some of these issues raised by Mr. Gervais, focusing on the legal research issues.
We have concerns about the effect the amendments will likely have on the provision of legal services to Canadians, and on access to justice. We have three concerns in this area. First, as governments are moving away from publishing legal information, the public will become more and more reliant on commercial legal publishers for legal information. Legal information without a commercial market may become unavailable to the public. As a result, Canadians may rely on outdated legal information, which can be misleading and prejudicial to legal rights.
.1820
Second, we see an increased reliance on commercial publishers. While Canadian publishers do not currently impose royalties for works reproduced for legal proceedings, that potential remains under the current amendments. The effect of royalties would be increased costs that would not be sustainable by the users of the legal information - the Canadian public.
Third, we have concerns that libraries that collect and maintain legal information across the country will be faced with increased royalty costs. As a result, they will reduce services, and access to legal information will be compromised.
The exception described by Mr. Gervais would protect access to justice and the quality of legal services available to Canadians. The exception is not about special privileges for lawyers but for fundamental justice for citizens who need to rely on the justice system. The exception codifies the current practice where photocopies are made of legal information for use in judicial proceedings.
In the interest of access to justice for all Canadians, we urge the committee to recommend an exception for copyright infringement for copies of works used in judicial proceedings.
Thank you.
[Translation]
The Chairman: Does that complete your testimony, Mr. Gervais?
Mr. Gervais: Yes, Mr. Chairman.
The Chairman: Thank you, Mr. Gervais.
We'll begin our questioning with Mr. Leroux.
Mr. Leroux (Richmond - Wolfe): Thank you for your brief. I should mention that our committee has been working for a number of weeks listening to testimonies, questioning witnesses as well as examining briefs as they arrive.
We've just received your brief. I must admit I find myself in a rather uncomfortable situation. I would have liked to examine it, evaluate it and discuss it with others in order to ask some good questions. However...
Mr. Gervais: We apologize, but once the document was completed, it had to be revised by several Bar committees and this resulted in inevitable delays.
Mr. Leroux: I'd like to refer to a matter that has been raised in testimony, particularly by rights holders, the authors. They tell us that in its present form, the bill would appear to dilute the recognition of copyright. Exceptions are seen as expropriating a number of the rights authors want to have recognized. Neighbouring rights and other rights are added.
They want a clear delimitation between copyright and neighbouring rights. You say that this field must be clarified. You noted something that doesn't seem quite clear. I'd like you to elaborate on how you perceive these two fields.
[English]
Mr. Mayer: Mr. Chairman, this is one of the points that was made in our opening remarks. The bill's clause 90 says that ``No provision of this act relating to copyright...shall be construed as prejudicing any rights conferred by Part I''. We believe this provision is likely to give rise to confusion. I think it is intended to protect the position of, for example, the musical performing rights societies. If that is the intention, there are other ways in which it could be achieved that are preferable.
.1825
The subject is covered on page 46 in our submission, if the committee will turn to it, where we find some of the problems the existing situation might cause. There are ways in which this could be handled. For example, the position of SOCAN and the musical performing rights society, if that is the intention, could be handled by way of a criterion to the Copyright Board, for example. But we set out at the top of page 46 the kinds of problems it might cause.
[Translation]
Mr. Leroux: You said page 46 of the English version?
[English]
Mr. Mayer: Yes.
[Translation]
Mr. Leroux: Is there a French version?
[English]
Mr. Roger T. Hughes (President, Patent and Trademark Institute of Canada): It is in translation now.
Mr. Mayer: I'm sorry, we have no French text available.
[Translation]
Mr. Leroux: You don't have a French text?
Mr. Hughes: Later on.
Mr. Leroux: After your testimony?
Mr. Hughes: Yes.
Mr. Leroux: It's difficult to work in such circumstances.
[English]
The Chairman: Have you finished, Mr. Mayer?
Mr. Mayer: Yes.
The Chairman: Thank you.
[Translation]
Would you like to have a little time to read it over, Mr. Leroux?
Mr. Leroux: I'll have a look at the briefs. I did have another question to ask but it does deal more specifically with remedies. I'll let Mr. Bélanger have the floor. I prefer to take a closer look at the brief.
[English]
The Chairman: Ms Phinney.
Ms Phinney (Hamilton Mountain): Thank you for coming this evening.
On proposed section 38.1, you say that creating a statutory damages regime is likely to make the civil enforcement process more effective. So we're glad you agree with that.
On proposed subsection 38.1(1), you have noted that the ceiling would be $20,000 and you're wondering if this would be adequate. You mention that for certain circumstances in the United States it could be $100,000. Would you expand on that and tell us why you are not satisfied with the $20,000?
Mr. Mayer: I think in looking at the whole subject of statutory damages you have to bear in mind that the damage range is merely a range that would be applied by the court. It has been pointed out that there are a number of very valuable programs, for example computer programs, that have a value significantly in excess of $20,000. Therefore, the likely utility of the provision would be enhanced if the amount were increased. I think this would not be unfair to defendants because the court still has a range and I think it is very unlikely that any unduly large awards because of that increase would be made.
Ms Phinney: So when you say that if we raise it to $100,000 it would significantly increase the number of circumstances in which it would be used, that's not so the lawyers would get more business, but just that more people would take somebody to court. Is that what you're getting at?
Mr. Mayer: The answer is yes.
Ms Phinney: Thank you. I'll come back later.
[Translation]
The Chairman: Mr. Bélanger.
Mr. Bélanger (Ottawa - Vanier): I share my colleague's concerns about the unavailability of documents in both official languages, particularly since this is a national association. At times we may be more flexible but in dealing with a national association which claims to represent everyone from sea to sea, we have to be more watchful.
I have some questions for Mr. Gervais. As I understand it, the main proposal in the brief you present today on behalf of the Canadian Bar Association is that no act undertaken - and he refers to any type of act - for the purposes of a judicial proceeding shall be considered an infringement of copyright. Could you be a bit more specific, Mr. Gervais, and tell us what exactly that includes or excludes? Are there certain things that you could not do? What exactly does that mean?
Mr. Gervais: It means everything that is used for the purposes of judicial proceedings. Photocopies must sometimes be provided to the court, photocopies of decisions and jurisprudence to clients etc. We're referring to everything that in any way...
Mr. Bélanger: Photocopies of what?
Mr. Gervais: There could be photocopies of regulations, acts, jurisprudence, previous decisions...
Mr. Bélanger: And analysis of decisions as well.
.1830
Mr. Gervais: Yes.
Mr. Bélanger: In the final analysis, everything.
Mr. Gervais: Everything that may have any relationship with a judicial proceeding.
Mr. Bélanger: So you are suggesting that lawyers be entitled to photocopy anything provided it is related to a particular case.
Mr. Gervais: Provided it relates to judicial proceedings. You refer to lawyers. There is a cost involved and the expenses are charged to clients. So it isn't a lawyer who will pay but the clients. Those who cannot afford to do so may perhaps hesitate to take legal action because they know ahead of time that considerable costs will be involved because of the large amount of documents to be reproduced.
Mr. Bélanger: I'd like to know whether in your proposal there are certain exclusions, things that you would not be able to photocopy without infringing copyright?
Mr. Gervais: If it's for the purpose of a legal proceeding, there are no exclusions. If it relates to judicial proceedings, and is used for judicial purposes, there will be an exemption.
Mr. Bélanger: Don't you think that this is a bit exaggerated?
Mr. Gervais: No, not at all, it's in the public interest, in the interest of people who want to take legal action to protect their rights and to make a claim. It is for them. It is an attempt to eliminate or reduce certain costs.
Mr. Bélanger: Has the association given any consideration to the rates legal firms charge their clients for photocopies? Have you looked into this at all?
Mr. Gervais: No, not for the purpose of this presentation.
Mr. Bélanger: Have you not thought of not charging your client for any photocopy for which you do not pay, for example?
Mr. Gervais: Photocopies that we don't pay anything for?
Mr. Bélanger: You don't pay any copyright but maybe you charge 50 cents or a dollar a copy.
Mr. Gervais: That depends. I can't tell you how much a legal firm charges for a photocopy.
Mr. Bélanger: So you haven't given any thought to this aspect?
Mr. Gervais: No, because the cost absorbed by the firm or the lawyer is charged to the client.
Mr. Bélanger: Thank you.
[English]
The Chairman: Mr. Peric.
Mr. Peric (Cambridge): Mr. Chairman, I have a couple of questions.
First of all, this bill does not propose a definition of ``performer''. Are you of the opinion that the word ``performer'' should be defined in this bill?
The second question is why would you pass the cost of copying legal documents on to your customer? Why couldn't you cover it in your own budget? It seems to me that if the government at the present time legislates the banks for charging for their services, the banks will pass it on to the customer. Is that fair, in your opinion?
Mr. Hughes: I can answer the first question that you have about ``performer''. There is no definition in the bill as it is now about ``performer''. Our joint paper - and that's what I'm speaking to - recommends that you have such a definition.
There is quite a dispute about what a performer constitutes. If you watch a stage production, you can say that the singer is a performer. What about the person in the sound mixing studio - that is, somebody like in the translation booth here - is that a performer? There is a body of people that would argue that that person is a performer, and we can go all the way down the sort of system as to where a performer does begin and does end. This causes a great deal of complexity in terms of commercial relations and what have you - who do you have to sign up for these rights, and who do you not?
Therefore we recommend that you make a very clear definition of what a performer constitutes, which I would have thought is somebody you see on a stage, and so forth. But there is, as I say, a debate about that, and that's a decision the government would have to make.
.1835
On the second thing about copies, I should make it clear that this brief does not address that. That is a CBA-alone situation. Mr. Gervais can answer your second question.
Mr. Gervais: With respect to the copying, a lawyer or law firm will incur that cost to make copies of certain documents required for judicial proceedings. That cost is passed on to the client. For that reason it is recommended that there be an exemption, because the cost, if many copies are required, can be quite substantial and would place an undue burden on individuals, particularly small individuals who do not have the means to carry these costs.
Mr. Peric: In your opinion, how substantial could these costs be for an average-size legal firm?
Mr. Gervais: It depends on the circumstances of each situation. You could have hundreds or thousands of pages of copying, or you might have very few. So it depends on the circumstances of a particular judicial proceeding.
Mr. Peric: Roughly how much would you pay for one copy, and how much would you charge your client for the same copy?
Mr. Gervais: It should be the same amount.
Mr. Peric: It should be, but is it?
Mr. Gervais: I can't speak on behalf of the lawyers of Canada as to what they charge their clients for photocopying. We have not done an investigation of that. But it should be for the cost of the equipment, the overhead, the paper and any staff required to carry out that function.
Mr. Rennie: If I might add, a lot of copying of material for judicial proceedings is done in law libraries as well as in law firms. I think part of the answer needs to explain that law libraries are available for the public as well as lawyers or legal researchers to use the information kept there. There are arrangements for photocopies to be made for the benefit of the client to be informed about the law, as well as to be advised as to his or her rights under the law based on the legal information that is accessed in a library.
Mr. Peric: In your comment you suggested that the overhead should be included in that price. Would you share the costs with the artists? Would you pass on the royalty to the artist, which is the cost that is included?
Mr. Gervais: This is a direct cost for making such copies. There should not be any profit in it.
Mr. Peric: In other words, on behalf of the artist you would make profit.
Mr. Gervais: No, it's a direct cost that's passed on to the client.
Mr. Peric: In that cost you would include overhead as well.
Mr. Gervais: But that's not a profit. That's a cost of having to operate the machine.
Mr. Peric: But you could charge whatever you want for overhead. Who could control that?
Mr. Gervais: That's a possibility. Yes, that is a possibility.
Mr. Peric: Thank you.
The Chairman: Mr. Arseneault.
Mr. Arseneault (Restigouche - Chaleur): Thank you, Mr. Chairman.
I want to concentrate on the exceptions, copyright for judicial proceedings, and the wording you have here: ``Copyright is not infringed by anything done for the purposes of judicial proceedings.'' Who decides on what purpose it's for? Does the individual doing the copying decide that this is for judicial proceedings? And if the person copied 1,000 pages and submits 500 to the court, does that mean the other 500 pages is a copyright infringement? Or is it that the person can go in there and photocopy 1,000 or 2,000 pages and say he needs it for court, and then he has to go back and sift through it and decide what he does and doesn't need? Where is the line on that? Who decides what's for purposes of judicial proceedings?
Mr. Rennie: In many jurisdictions across the country, both at the provincial and federal levels, there are rules of procedures that the courts themselves have set out. They would require copies to be made and would determine how many copies would be required for the parties involved, for example. In that way the rules and procedures work as a limitation on wholesale copying of material. In addition, materials that are accepted by a court as being relevant and admissible would also be a way to determine how material would be put in for the purpose of judicial proceedings.
.1840
Mr. Arseneault: But if something is not relevant and inadmissible in court, would it then fall outside your exception? Would it then be a copyright infringement if you copied it? That's what I want to know.
Mr. Rennie: As the wording is in our submission, that kind of situation may occur.
Mr. Arseneault: It can occur and it will occur. But what happens when it does occur? That's what I want to know.
Mr. Rennie: A situation like that may occur where a matter is discussed and evidence and facts are determined between the lawyer and the client as to whether that's a relevant matter or not. That would be part of the process of giving legal advice and providing legal services.
Mr. Arseneault: But I'm not worried about how it can happen, I'm worried about what happens when it does happen. Is it an infringement according to...? You people are the lawyers, but you're answering like a politician now. We're the politicians, you're the lawyers. According to this, if there is an overabundance of copying that is not used, that's not required by the courts, will it be an infringement by the lawyer making those copies, or by the lawyer's agents?
Mr. Gervais: Only the number of copies that are required should be made.
Mr. Arseneault: Should be made, but if more have been made...? You still have not answered. Is it an infringement, yes or no?
Mr. Gervais: No, because in the best judgment of the -
Mr. Arseneault: It isn't.
Mr. Gervais: - attorney making that call, all of those copies will be required. If they go into court and it is determined in court that it's not relevant, if the judge decides it's not relevant, then the copies may not be used, but they were required because it was the attorney's opinion that those documents would be necessary for the case.
Once you're in the courtroom you can't say I need those copies, I'll go out and make them now. They have to be there and available in the belief that this is the evidence you wish to give, and that those copies will be necessary.
Mr. Arseneault: So it's a blank cheque for a lawyer. A lawyer can just say I may need those copies in court, so I'm going to make copies of this article, that article and that article because they are sort of related to this case.
Mr. Gervais: No, the lawyer will do what's in the best interest of his client, and if he believes copies are required, one copy or ten copies or 100 copies, that's what he'll do. He or she has to act in the best interest of the client. I don't see the problem here. It's a matter of judgment as to what number of copies is required.
Mr. Arseneault: The next thing is books. An author or someone who can be identified, like a law professor.... I'm not a lawyer, so I don't know, but I imagine there are experts in law who write books, and that you may want to refer to these experts in court and maybe present an excerpt from their book - a hard-covered book, a standard book that we would consider a book. Would there be no copyright infringement if a chapter was copied out of the book and presented in court?
Mr. Gervais: Again, if that chapter is copied for the purposes of the judicial proceedings, it would be exempted.
Mr. Arseneault: What happens if the whole book is copied?
Mr. Gervais: If the whole book is necessary, but I doubt that very much, unless the whole book is one particular article or chapter on a particular matter to be brought before the court. I have not heard of an entire book being copied.
Mr. Arseneault: I hope not.
Mr. Gervais: No, I think then we'd go out and buy the book.
Mr. Arseneault: It's to prove a point, to check out how things move here.
The other point is on your subsection 2 on judicial proceedings. I'm not familiar with the court system, with judicial proceedings. An appearance before the CRTC, for instance, would that be considered a judicial proceeding?
Mr. Rennie: It would be according to the wording of the exemption we have provided for you.
.1845
Mr. Arseneault: What percentage of clients coming before the CRTC would be from the corporate sector, as opposed to individuals? Would you have an idea?
Mr. Gervais: No, I'm sorry; we don't.
Mr. Arseneault: So the lawyer representing these corporations appearing before the CRTC and other boards of that nature would then be allowed to photocopy as well?
Mr. Gervais: That's correct.
Mr. Arseneault: Do I still have time for questions?
The Chairman: One last question.
Mr. Arseneault: Okay.
We did have some witnesses point out that a number of law libraries are charging for photocopies and bringing in very substantial amounts of revenue. I don't have the thing here, but for somewhere in Vancouver I believe $600,000 was the figure quoted. In the Upper Canada Law Society library, somewhere around 100,000 copies are sold. That's why the committee has a concern with that exception, and we're going to look at that quite closely.
My question has to do with the bookseller acting as an agent. As you know, if the book is not available in Canada, a person can import those books from another country. The question was put to us by booksellers as to whether they could be used as agents of that person as an individual. In your estimation, according to what's there, could the bookseller act as an agent for the individual? If not, do you think that would be a legitimate type of amendment?
Mr. Mayer: The point that was put to you was not put to you in a commercialistic sense. If you go to a bookseller and order a special-order book, what happens is the bookseller buys it and then resells it to you. So normally the agency relationship doesn't even come into play in that kind of situation. From a practical perspective, it is very unlikely there would be many circumstances when a bookseller would go to an American publisher and order something as an agent for an individual company.
You're directing your question to the proper interpretation of proposed paragraph 45(1)(a), which enables one or two copies to be imported for personal use. If the intention of the legislation is to commit this type of transaction, if that's the committee's wish, the way to do this is not to focus to the agency concept, but to redraft proposed paragraph 45(1)(a) in a way that covers this kind of special order situation.
Mr. Hughes: On pages 12 through 14 of our brief, we address the bookseller situation, which is not bang on the precise issue you raise, but it generally addresses issues of that nature.
Mr. Arseneault: Thank you, Mr. Chairman.
The Chairman: Ms Phinney, followed by Mr. Peric, and then we'll close the questioning.
Ms Phinney: Thank you, Mr. Chairman.
Proposed section 29.4 states that educational institutions are provided with an exception to reproduce works protected by copyright for the purpose of giving an assignment, test or examination. Many witnesses have suggested the word ``assignment'' could mean almost anything a teacher does in a classroom, or anything the teacher asks the students to do. Do you agree with this interpretation? Can you suggest another way we could write that up?
Mr. Mayer: First of all, as a committee, we agree with that interpretation. That provision, if it stays in, may well undermine certain other much more restrictive exemptions that exist.
Certainly there's a lot of opinion in the committee, though I suppose it is essentially a policy issue, that the word ``assignment'' should be deleted and the focus should merely be on tests and examinations. We even had some doubts as to whether the word ``test'' should not be more appropriately defined.
Mr. Hughes: You'll see that near the top of page 16 of our brief, in section D.
Ms Phinney: My other question is about reprographic reproduction. There are different opinions of what this could include in terms of technology. Do the words include any kind of electronic copying or transmission, in your opinion?
.1850
Mr. Mayer: I am not an expert on this topic, but I discussed it again this morning, as a matter of fact, with another member of our committee because I think it's a very interesting point. As I understand it, the concern is that normally when one thinks of reprography one thinks of photocopying, but the term is sufficiently wide to cover for example digital copy or scanning copy where one can then ask oneself whether in the context of the legislation that matters as long is it merely remains a digital copy and so on.
But the concern is that once you have a digital copy, additional copies can be very easily done off and the thing lends itself to abuse. Therefore, it is felt it is desirable to interpret the phrase. I might tell you that I looked up the phrase in the Shorter Oxford English Dictionary and I couldn't find it.
Mr. Hughes: It's generally not a term of the art. If you talk to a copyright lawyer and said reprographic reproduction, they'd give you the blank stare I'm giving you now.
The Chairman: Mr. Peric.
Mr. Peric: I like your answers. Somehow we can't get a straight answer, yes or no. It's always ``I believe'', ``in our opinion'', and ``this is very correct''.
May I ask you, do you believe, or is it in your opinion, or are you asking this committee to exempt copying of legal documents?
Mr. Gervais: Yes, we are asking the committee to grant an exemption for copying of documents for judicial proceedings.
Mr. Peric: You're asking.
Mr. Gervais: Recommending to the committee.
Mr. Peric: When you have a new client, do you charge him the fee for all the time or do you charge him just partially?
Mr. Gervais: I'm sorry, I don't understand the question.
Mr. Peric: What I'm trying to say is how can you ask this committee to consider exemptions from copying of legal documents, while at the same time you don't charge your client partially and you have no understanding for the artist? You're charging full fee for your client, but you believe that the creators, the artists, shouldn't be rewarded for their work. And your time is very expensive.
Mr. Gervais: It depends on the lawyer.
Mr. Peric: What's the minimum, what's the maximum fee? There's no maximum, I know that, probably the minimum is what, $150?
Mr. Gervais: No, it's less than that. If you come to my firm, I'll get you someone who won't charge you $150 if it's a very simple matter.
Our position is that we're thinking of the public, we're thinking of the persons who have limited funds and how they should have access to justice. As you know, the issue of having new systems of justice is very current today. The Canadian Bar Association in fact came up with a report on that in August. So the thrust is that we must give the public access to justice at all levels and in every manner possible, and this is one area where by limiting the cost to the client it will encourage them to make use of the courts and of the CRTC or any other commission where they might receive justice, rather than saying they can't afford it and they will forgo their rights, which they normally would wish to pursue.
The Chairman: Mr. Peric, we're nearing the end of our time. Make this your last question and be very brief.
Mr. Peric: Do you believe, or is it your opinion, that the writers should be rewarded for their work?
Mr. Gervais: I'm not here to speak on behalf of the writers. The position we're talking about has to do with the judicial documents for judicial purposes, and I wouldn't like to get into a question of my opinion with respect to what writers should receive. That really is not -
Mr. Peric: Your concern.
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Mr. Gervais: It's not that it's not my concern, but I don't feel qualified to answer that question in these circumstances.
Mr. Peric: Thank you.
[Translation]
The Chairman: Mr. Bélanger, you had a question to ask. Since we're late, could you please be brief?
[English]
Mr. Bélanger: I wanted to ask a question of the gentleman representing the Patent and Trademark Institute. In your brief, page 16 - which you kindly pointed out - you questioned the definition in the bill of ``assignment '', and you say: ``consideration should be given to deleting the term `assignment' because of its breadth'', and then to ``defining or qualifying the terms `test and examination'''.
Having taken this position, do you believe that the proposal put forward by the sister association should be more narrowly defined, in terms of the exception requested?
Mr. Mayer: We have taken the position on the joint committee that we are a technical committee. We want to put ourselves in the position that we are not subject to any criticism on the ground of non-objectivity or something, so this committee has decided it would be imprudent for it to take -
Mr. Bélanger: But on technical grounds, do you believe it should be narrower?
Mr. Mayer: I would prefer not to answer the question. I really would prefer to stay out of the discussion.
Mr. Bélanger: Thank you.
[Translation]
The Chairman: Mr. Gervais, gentlemen, I'd like to say to you with the utmost civility that I think I am expressing the view of all the committee members in saying that we were disappointed for two reasons.
First of all, we did not receive this brief in French. I think that an association as prestigious and important as yours should have made the brief available in both languages, in view of the fact that our country does work in two official languages. I hope that the French version will be sent as quickly as possible.
Secondly, I'd like to say how disappointed I am that I did not have a chance to study this brief.
[English]
I think your brief is obviously of exceptional importance to us. You're experts in your field. Just looking at it, I realize it is a very substantive and substantial brief that would have greatly helped our members, had we had a chance to research it in advance.
In fact, if you will recall, the bill was tabled on April 25, 1996, which makes it about six months between the date of tabling to today. Also, when we asked for submission of briefs - I think we wrote in June or July, certainly several months ago - I recall Mrs. Thomson writing to the committee in August, I think it was August 22, to ask for your appearance and to say that we could take it as a matter of course that the brief will be received by us before your appearance. In fact she asked for an appearance towards the end of the proceedings, which we granted because you're one of the last associations or institutions to appear before we close the evening sessions.
So in a sense we haven't been able to take advantage of your knowledge, of your expertise, not having had this chance to study the brief before we go into clause-by-clause, which I hope we will do very soon.
So I would really request you, with all respect and civility, to send us as soon as possible the French text, and allow us the hope that we'll have time.... The researchers are really worked beyond capacity right now. I will express the hope that between now and the time we start the clause-by-clause we'll have the time to really do a proper job of research. But if we cannot, you will appreciate, in this particular case, it certainly wasn't our wish or our doing. It's unfortunate.
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I wanted to mention this without any rancour. I hope the points are taken in the spirit in which they are meant. I wish we could have taken advantage of your obviously excellent work to its full extent, which I don't think we were able to, unfortunately.
Mr. Gervais: Mr. Chairman, I again apologize. We would have liked to have sent the documents to you much sooner and in both official languages.
I think the Canadian Bar Association.... If you research the matter, you'll see that all our documents are usually tabled on time and in both languages. However, in this instance there was a tremendous amount of work involved. It's a very detailed presentation, as you have said, and it required, after the document was prepared in draft, review by several committees. These people are all volunteers, so they cannot perhaps give it immediate attention. Some delays occurred.
I regret that this occurred. Certainly we would have preferred to have given you these documents so you could have come to this committee hearing prepared to ask us questions based on the documentation. Again, we regret the fact that it was not in both languages. You will be receiving the French copies as well.
[Translation]
The Chairman: Thank you, Mr. Gervais.
[English]
Thank you very much for appearing before us tonight. We appreciate it.
[Translation]
Mr. Gervais: Thank you, Mr. Chairman, to you and the committee members.
The Chairman: Thank you.
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.1905
The Chairman: Order, please.
We are particularly pleased to have with us this evening the Copyright Board of Canada, with Mr. Michel Hétu, Vice-Chairman and Chief Executive Officer, Mr. Mario Bouchard, General Counsel and Mr. Claude Majeau, Secretary. Mr. Hétu, you have the floor.
Mr. Michel Hétu (Vice-Chairman and Chief Executive Office, Copyright Board of Canada): Mr. Chairman, ladies and gentlemen, members of the committee. I will start by thanking you for this opportunity of providing further details on some of the comments contained in the Copyright Board's submission of September 3.
With me at the table are Mr. Mario Bouchard and Mr. Claude Majeau to my right. Also present in the room are my fellow commissioners, Adrian Burns and Andrew Fenus.
I do not need to canvass all of the issues raised in our submission and will draw your attention to only a few points, the first being the proposed criteria for the neighbouring rights and home taping regimes.
As you know, the bill contains two sets of provisions dealing with criteria which the Board will be required to take into account in exercising its jurisdiction.
First, section 66.91 grants to Cabinet the power to issue regulations containing directives or criteria. The Board is not opposed to this measure. Having said this, the provision as worded could create certain difficulties and we have suggested some changes in order to improve the text. Please refer to our submission on this issue.
The second set of provisions are subsections 68(2) and 83(9), dealing with neighbouring rights and home taping. These provisions worry us because they are legislative criteria.
In our submission, we stated that it is often both dangerous and undesirable to set out detailed substantive boundaries to the decision-making powers of an agency such as the Board. Statutory criteria are notoriously difficult to change if they prove inadequate or badly worded. Using regulations to set criteria seems a more flexible and adaptable solution over time and allows for constructive consultation, in advance of making the regulation, with the decision maker who will be called upon to interpret the regulation.
I have no intention of challenging either the relevance or the soundness of the criteria set out in sections 68 and 83. Instead, I wish to illustrate how their statutory nature could create difficulties.
Let's take, for example, paragraph 68(2)(b) dealing with neighbouring rights. This provision requires that the Board take into account, among other things, that the tariff applies only in respect of the portion of the total programming of a user that corresponds to performers' performances and sound recordings.
At first glance, this criterion appears innocuous and yet, will it allow the Board to set tariffs based, for example, on national average use data, or will it be interpreted as requiring a tariff structure that closely mirrors each station's individual use pattern?
The intention may be not to deal with the issue at such a level of detail but only to ask that the Board take into account the amount of use of protected works. But why is it necessary to state this here and remain silent on other regimes such as the SOCAN regime, in which the Board regularly takes the issue into account?
The Board already takes into account the amount of use of protected works in setting SOCAN rates. Are the objectives of the provision different from those we think they are?
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Here is another example. Paragraph 68(2)(b) requires that the Board take into account that some users assist the sale of sound recordings through the playing of music.
This is a statutory declaration but does not state to whom it applies. Radio stations are probably targeted but the provision is not limited to them. What about discos? What sort of evidence should the Board possess before deciding the issue? Should the Board, of its own volition, identify those users? Once that is done, how is it to give effect to the criteria?
The legislator does not specify what result is intended. The home taping regime criteria set out in subsection 83(9) could raise just as many problems. Thus, one can readily identify "the amount of time and effort as well as financial resources that the parties or, alternatively, the Board itself will have to expend in order to properly take into account the amount of the levies payable under comparable laws of other countries". Furthermore, I fail to see how much the nature of the North American sound recording industry could impact on the reasonableness of a Canadian tariff, given that the tariff is aimed, first and foremost, at manufacturers and importers of blank audio cassettes and in the most important North American markets, the United States, these cassettes are not subject to a comparable regime.
Looking at this proliferation of criteria, one is left with the impression that, contrary to what courts have stated, the Board should not be seen as an expert tribunal, capable of setting reasonable tariff principles after all interested parties have put forward their evidence and arguments. It looks at though, in the absence of criteria, the Board would be incapable of making informed, reasonable decisions.
Worst of all, these numerous criteria are being set with respect to royalties which, according to those closest to the issue, will amount to only a fraction of the royalties paid under the SOCAN regime, for which no such criteria are either set or proposed. The greater the amount, the greater the Board's discretion; the smaller the amount, the greater the number of road signs.
Our comments on the criteria already set out in the bill apply with equal vigour to any other statutory criteria which others, who have appeared or will appear before this committee, may recommend adding to the bill. Having said this, I will have one comment in respect of those.
Any criterion, whatever its source, constrains the discretion of the person who is bound by it. In its first retransmission decision, the Board ended up using a tariff formula that no one had put forward. Its two most important characteristics are a single price, irrespective of the number of distant signals offered and a scaling of the rates for medium-sized systems.
Apparently, everyone now agrees that this formula is ideally suited to the Canadian reality. Would the Board have been able to use that formula if a criterion had required it to reflect so-called market rates? I doubt it. It bears repeating that all criteria, as valid as they might appear at first glance, carry with them the risk of preventing the decision-maker from reaching the solution that is best suited to the situation.
In the Board's view, then, serious consideration should be given to removing all criteria from the bill and setting them in regulation if, in the government's view the Board requires direction on certain issues. This approach has at least the advantage of not casting the criteria in stone.
My second point concerned the impact of section 68.1 on setting the neighbouring rights tariff for radio stations whose advertizing income exceeds 1.25 million dollars. Section 68.1 sets at $100 the amount of neighbouring rights royalties to be paid by all radio stations on account of their first 1.25 million dollars of advertizing revenue. This provision worries the Board because of its potential effect on the industry's participation in the Board's hearings and, in the end, on the tariff structure itself.
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The bill settles, once and for all, the situation of two-thirds of the stations, those whose advertising income is $1.25 million or less. These stations may well decide not to show up at the Board's hearings.
By contrast, small systems appeared during the retransmission hearings, and explained their financial predicament. Will the Board have access to all the information it needs to properly assess the industry's financial health?
More importantly, when the time comes to set the tariff, will the Board take into account the financial situation of the whole industry or will it be required to focus solely on the 34% of stations whose revenues exceed $1.25 million? This latter scenario, were it to arise, could have some unforeseen consequences.
My intention is not to state that this will happen. Rather, I am trying to illustrate once again the risks inherent in the predetermined statutory criteria and tariffs.
My third point relates to the tariff regime proposed in sections 29.6, 29.7, and also for persons with perceptual difficulties in section 32.
The bill extends the retransmission regime to the conservation and use, beyond a fixed period of time, of a copy of news and other broadcast programs by an educational institution. As a result, collective societies will be required to file proposed tariffs and the Board will be required to certify them, even where these bodies and the institutions come to an agreement on the royalties.
This regime will also apply to persons who copy works into alternate formats that are better suited to meet the needs of persons with perceptual disabilities.
As outlined, the regime appears overly burdensome. Many of those who have appeared before you have asked to make the regime simpler by exempting collective societies that reach agreements with the relevant persons from filing proposed tariffs. The Board favours agreements and therefore believes that this request should be granted.
My fourth point concerns the agreement certification process set out in section 68.3. We wish to restate our conclusion that this process is both badly structured and ill-advised.
The Board fails to see why agreements reached by collective societies that are subject to the SOCAN regime ought to go through a certification process. In our view, the conclusion of agreements between collective societies and users should be encouraged.
Those who reach an agreement should not be subjected to any form of formal, automatic scrutiny process. Those who cannot should have a recourse.
Clearly, the arbitration regime reflects that principle. There appears to be no compelling reason to treat differently agreements entered into by section 67 collectives.
For purposes of transparency, however, it would be appropriate to provide that agreements dealing with uses targeted in a tariff are of no force or effect unless filed with the Board. This measure would assist in ensuring discipline in the marketplace while allowing the director of research, in appropriate cases, to trigger review procedures before the Board pursuant to section 70.5.
Also for purposes of transparency, the Act should provide that any person may have access to agreements filed with the Board. The usefulness of the filing process is greatly diminished if the documents cannot be consulted.
The Board fails to understand why some persons resist the idea of allowing the public to have access to such agreements. Since the agreement is a substitute for a public process, it would seem normal that it too be made public; that does not seem to be an unreasonable price to pay for the collective society to be allowed to operate as a monopoly or a quasi-monopoly.
Furthermore, if it does not have access to all such agreements, the Board may not have at its disposal all the tools it requires in order to reach the best possible decisions under the circumstances.
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[English]
My fifth point concerns the board's proposed changes to the unlocatable copyright owner's regime.
The board's power to issue licences where the copyright owner is unlocatable was introduced in the act in 1988 as part of the phase one revision. The objective was to give access to published works where it is impossible to obtain the required consent from the copyright owner.
In some ways the board acts as a collective society for the unlocatable copyright owners. Before issuing a licence, the board requires that the applicant contact, among others, any collective society likely to be involved in licensing similar rights so as to assist in locating the copyright owner. The board also ensures that any licence issued conforms to the extent possible with the licensing practices of these collective societies, including the royalty rates to be charged applicants.
From the beginning of this program, the board has been requiring that the royalties set in the licence be paid in trust to the collective society that would normally have been issuing the licence if the owner had been one of its members. Copyright owners have five years to claim these royalties from the society.
In effect, then, the relevant collectives are consulted, their royalty schemes are applied and the royalties are paid to them. Given that practice, there appears to be no good reason that such licences should not be issued by the collective societies themselves instead of the board whenever the use contemplated by the licence is one they administer.
The board would intervene only in those cases where no collective society is available to deal with the request, or to act as an arbitrator when the applicant and the collective society are unable to agree on the royalties and their related terms and conditions.
A further problem arises that is peculiar to artistic works. Many of these works, such as paintings and sculptures, are never published, within the meaning of the act. That is, they are not reproduced in multiple copies. It is easy to understand why no licence should be issued in respect of works that are unknown to the public - unpublished works.
On the other hand, why would it not be possible to issue a licence for the reproduction, say in a catalogue or in an art book, of a protected artistic work that is known to the public because, for example, it has been exhibited in public or is part of a museum's permanent collection?
The board would therefore recommend that the licence may be issued in respect of unpublished artistic works in the circumstances described above. Attached to this presentation is a proposal that attempts to show how proposed section 77 could be modified to reflect our recommendations.
Those are all the substantive issues I wanted to touch upon tonight. I have only two more short comments to make.
The first one concerns the board's budget. Many of those who have appeared before you have asked you to ensure that the board's funding is sufficient to allow it to deal with its increased responsibilities as a result of this bill. I only wish to state that the board has already started working on a proposal that will be forwarded to the minister shortly before the bill comes into force.
My last point deals with how much in the way of royalties will be generated by neighbouring rights and home taping. I wish to respond in advance to what may well be one of the most nagging questions in your minds.
A number of persons have appeared before this committee purporting to demonstrate, using all sorts of documents and charts, the amount of royalties that neighbouring rights and home taping will probably generate. Some civil servants have offered predictions.
I represent the tribunal that will set those royalties, and I confess that neither my colleagues nor I have the foggiest idea what they will be. You will no doubt understand that it would be inappropriate for me to speculate on these issues. To do so at this time would be an exercise in futility. As the retransmission experience has shown, such predictions often end up being utterly incorrect.
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The amount and structure of the new tariffs will be set, as the board usually does, after a detailed examination of the parties' arguments and proposals.
Again, I thank you for allowing me to address the committee. I'm of course available to answer any questions.
The Chairman: Thank you, Mr. Hétu.
[Translation]
Mr. Leroux: First of all I'd like to thank you for your presentation. I think we can consider this brief as a useful working instrument since you deal with the basic aspects of the bill.
I'd like to discuss the various elements you raise, starting with section 66.91 which I find rather disturbing. If this section gives the Governor in Council the right to issue directives to the Board, I wonder about the appropriateness of politicians' rights. I'd like you to tell me whether you think that this could give rise to the same type of situations as have occurred with the Commission.
Intervention does occur with the CRTC and we had the experience of direct intervention. When you tell us to watch out for this possibility of allowing the Governor in Council to establish a framework for the operation of definitions, do you think that we could find ourselves in the same situation as the CRTC, for example when their decisions were overturned in the case of Power DirecTV? That can prove to be very awkward for the industry, particularly when the prime minister's son-in-law is involved. It becomes very complicated, both from the point of view of interpretation and perception. Do you think that you could find yourselves in the same boat?
Mr. Hétu: We look at things from the point of view of principle. It is our feeling that these criteria should in any case be included in the legislative framework of the Copyright Act.
You realize of course that the Copyright Act does not contain, like the Broadcasting Act, a list of legislative aims relating to public policy. There is no such thing in the Copyright Act.
So at the present time the only criterion or legislative signpost is to be found in case law, that is the interpretations given by the courts. The Board must adopt and set rates that are fair and equitable. In so doing, it must give consideration to the respective of weight of the creators and the users in the markets subject to a tariff proposal.
The interpretation given to this section authorizing the Cabinet to establish directives and criteria for the Board must necessarily be in accordance with the fundamental objectives, namely the adoption of fair and equitable rates.
In other words, this is the overriding objective and must be respected in the directives established by the Cabinet; otherwise, it would be considered ultra vires. This is the way we analyze the matter.
But that of course does not mean that the Cabinet could not on occasion abuse this power. Our experience so far, because the legislation does contain similar power with respect to a retransmission regime, shows that the Cabinet may make regulations to establish criteria for the Board. This was exercised once in 1991. It did not create any problems for the Board. So there is no reason to think that it will be exercised or implemented in an improper manner. In any case, these criteria must be published in advance in the Canada Gazette. In our brief we propose that the Board be consulted before the issuing of such criteria, which is not the case now since there is no such requirement. That is our recommendation.
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Mr. Leroux: You are sounding the alarm. You are noting that something is not clear. Could you suggest any particular wording for this section?
Mr. Hétu: We made three recommendations in our submission. I didn't read it this evening. I simply referred you to the text. There are two paragraphs in section 66.91, (a) and (b). Paragraph (a) says:
(a)In establishing royalties to be paid pursuant to this Act;
In other words, the test that is currently in the Act and was removed, should be included in 66.91(a), which sets royalties. Thus, the guidelines and criteria would determine the amount of fair and equitable royalties. That would most certainly ensure clear and well-established parameters.
In terms of (b), reservations have been expressed regarding the power that the Governor in Council would have to establish criteria and guidelines for the Board's rulings on cases within its jurisdiction. This is very general and has to do with questions of procedure and other questions that would normally fall under the jurisdiction of an administrative tribunal. We don't really see why the Cabinet would become involved in this type of exercise. Therefore, we feel that b) should be removed.
The third recommendation was to the effect that we should be consulted. The incorporation Acts of other organizations, including the CRTC and the National Energy Board, contain clauses that ensure that they will be consulted before the fact and that they will not have to react, as if they were simply the general public faced with a fait accompli. We should truly be consulted beforehand.
Mr. Leroux: You also referred to section 83(9), that says that the tariff will take into account, among other things, the nature of the North American sound recording industry, and you raised some very compelling questions. Could you explain in greater depth what the difficulties are involving these types of conditions? Would it be impossible to set any kind of tariff?
Mr. Hétu: I said this evening that this specific criteria was rather vague. First, I'm not sure what the link is between this criteria, which deals with the record industry, and our tariffs, which will deal with the price being paid for cassettes. It musn't be forgotten that the tariffs will be on the cassettes. I wonder what the purpose of that analysis is in setting the value of the tariff.
It is not clear. The problem with these legislative criteria is that in an Act, you want to have as short a text as possible; the intent is not adequately spelled out. If the government had very specific intentions, it seems to me that it should have expressed them much more clearly. The best way to do this in my opinion, is to include them in a regulation, which is a page or half a page long. That type of text can be adjusted and approved.
I can't tell you how that criteria will be used by parties before the Board. Parties themselves will have their own points of view. They will try and use this criteria to put forward their point of view, and to obtain the outcome that they want. We will hear two sides - I imagine they will not say the same thing - and we will have to deal with that. I do not think that this criteria sheds much light on the issue for us.
.1935
Mr. Leroux: I will come back later with a suggestion that the ADISQ gave us on the various systems. This committee heard concerns, rightly so, regarding copyright and neighbouring rights.
Several groups told us that we absolutely had to be aware of the fact that copyright exists already; copyrights have certain rights and neighbouring rights should not affect these copyrights. That possibility has been pointed out more and more. Some groups came to testify before the committee on section 90. For example, SOCAN suggested that we add to this section, so that copyrights and neighbouring rights would be clearer.
Since we still have to establish the neighbouring rights system, do you believe that section 90, were it to include what SOCAN is proposing, would make your work easier, by making the area of copyrights and neighbouring rights clearer?
Mr. Hétu: In my opinion, section 90 as currently worded creates two types of problems. The first problem is the one that several people have raised and that is the issue of the hierarchy of rights between copyright and neighbouring rights. That is a legal issue, if you want that clause interpreted.
The second problem is the one that SOCAN has raised, which is whether or not its own tariffs for the use of musical works could be reduced by introducing neighbouring rights. It recommends that these tariffs be frozen, etc.
First, I have two general comments to make. When you introduce new rights, there is not automatically a link between the two. Just because new rights are introduced does not mean that royalties paid to the current copyright owners will be reduced.
On the other hand, it would be dishonest to claim that the capacity of an industry is not a relevant factor. After all, we are a Board that sets prices and we must take into account, when we set royalties, whatever they may be, the ability of the industry in question to pay. The Board has said this in its rulings. This is a factor among other factors that we need to take into account when we set tariffs on music.
That having been said, the neighbouring rights system as set out in Bill C-32 will inevitably have an impact on these issues. The concerns expressed by various groups regarding effective neighbouring rights on SOCAN tariffs must be put into perspective.
I don't think it is an immediate issue for radio stations. After all, 66 per cent of radio stations will pay $100 a year, on a permanent basis. Therefore, that amount should not affect them financially. Thus, I don't see how, everything else being the same, the introduction of this $100 royalty could open the door to a decrease in SOCAN's tariffs. In other words, section 90 would be redundant in this particular case for two-thirds of radio stations.
In terms of the larger radio stations, they will also benefit from this preferential rate and from a gradual introduction of tariffs. So this is where the debate should be taking place and not before the Commission. That will happen later. I repeat that as far as we are concerned, the ability to pay is a factor.
Mr. Leroux: Fine. I will come back with a proposal.
[English]
The Chairman: Mr. Abbott.
Mr. Abbott (Kootenay East): Thank you.
I really appreciate the candour of your presentation this evening. It's very refreshing.
A couple of things concern me. On page 8, where you talk about how much in royalties neighbouring rights and home taping will generate, it strikes me that there's a potential here for all of the participants that this legislation, as it were, gives a blank cheque. In other words, you're saying that you, as the experts - as the people who'll be responsible for setting the tariffs - really don't know what the number is going to be.
.1940
Mr. Hétu: I'm saying that I'm not going to speculate on what it's going to be, because there's a process under the statute that allows for representations to be made by every side of this question. Frankly, it would be not only premature for me, but inappropriate to be playing around with these numbers. The numbers have been put to this committee. It's a starting point, I suppose. But when the act is passed and submissions are made to the board, we'll have an idea of what rights owners are seeking and what the counter-propositions are from those who are called upon to pay those proposed tariffs. Following the examination of the case and the expert evidence, we'll come to a conclusion.
At this moment your guess is as good as mine, but I'm not going to suggest any numbers.
Mr. Abbott: I'm just suggesting that, for users in particular, the unknown quantity is a bit of a concern.
On page 2 of your presentation, dealing with proposed paragraph 68(2)(b), dealing with neighbouring rights, you note that there's a lack of clarity or definition. I, and I hope our committee, will take that into account, but there's also a lack of clarity in definition even in the determination of $1.25 million in advertising revenues. How will you determine whether advertising revenues are gross or net? What other factors will be taken into account for advertising revenues?
Mr. Hétu: What we have said in our main submission is that this is something this committee should either do in the legislation or, perhaps preferably, include in a regulation to allow the government to define what is meant by that expression. You have to read proposed section 68.1 as it reads, which is notwithstanding the board's tariff. These stations, with that level of revenue, will not have to pay more than $100. Irrespective of what we put in the tariff, the tariff applies above that, but the law or the regulations should indicate what is meant by that particular expression.
Mr. Abbott: Yes. Right now the combination of the lack of definition of advertising revenues and the other issues that you brought up have the chance of being problematic.
Mr. Hétu: Yes.
Mr. Abbott: I'd like to get something clear to make sure that I understood a decision you recently made on background music - music service in stores. I believe your board made the point that the number of uses of the song that occur up to that point.... In other words, when it's being copied from a disc, put in whatever order, or being reordered, it is irrelevant to the royalty. The royalty is payable on the actual hearing of the work - we'll call it the performance of the work. Is that a correct interpretation of what you said?
Mr. Hétu: It's certainly the result of it. This is a tariff that is called supply of background music. In the old days background music used to be bicycled, as they used to say, on cassettes and that sort of thing. In today's environment those companies use telecommunication means to deliver their signals and programming. Theoretically, there are two protected rights being used to be in that business.
The question for us was to determine whether that created an additional value to what was the ultimate purpose of that business, which is to provide background music to these commercial entities. Our conclusion was that this was not relevant. There was in fact only one operation, and we focused on that.
Mr. Abbott: Do you think, then, that there might be a parallel to broadcasters when they are taking and fundamentally doing the same thing before they deliver it to air?
Mr. Hétu: It is certainly something that could be argued. If the collective were administering the telecommunications rights and performance rights, as in the case of SOCAN, which allow us to say, insofar as they're concerned, that they're getting their money's worth, it would be something that could be argued. Arguments could be put forward in that respect.
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In the case of the reproduction by broadcasters, those rights are of course administered by other societies, so that may be a complicating factor in that respect.
Mr. Abbott: At the risk of putting you on the spot, though, I'm just wondering whether you wouldn't agree that the performance of the background music in the mall, the elevator, or wherever it may be is the equivalent of the sound coming out of the radio in an automobile or a home. Those two things are similar. Therefore, the technical application.... The fact that the music is transferred in medium.... There is an ephemeral copying of the work, so it seems to me that there's pretty well a perfect parallel there, isn't there?
Mr. Hétu: You're making the argument, sir, and I suppose that anybody else could equally make it.
The Chairman: You have one last question, Mr. Abbott.
Mr. Abbott: Just dealing with the same issue, we've heard the CAB and other people who are concerned about this whole issue, and I believe I have heard composers and performers speaking on the issue that they are expropriating the use.... What I'm wondering is whether there are other regimes around the world you are familiar with that have these ephemeral exemptions.
Mr. Hétu: I think it's well known that there are such exemptions in the U.S., Britain, and other countries. I have not looked into it in any detail, but I'm aware, as are most people in my field of expertise, that in certain countries there are indeed provisions of this kind, whether they be limited, restrictive, or whatever. You can find those examples, as you can find laws that do not provide for these.... I'm aware of the representations that have been made to this committee by those who would like you to follow a particular course as opposed to another.
The Chairman: Mr. O'Brien.
Mr. O'Brien (London - Middlesex): Thank you, Mr. Chairman.
I have three or four questions, but I'd like to start with this whole question of exceptions. We've certainly heard, as you say, sir, lots of evidence and opinions indicating that we should allow exceptions and others indicating that we should basically allow none whatsoever. I wonder what your view is with the question of exceptions, and how does the existence of a collective society in any given case affect your point of view on the exceptions?
Mr. Hétu: That's a rather complicated question, despite its shortness. I've always personally viewed the question of exemptions or exceptions as something you can deal with in two different ways. One could have, I suppose, adopted in the legislation - and in the past many people might have expressed an interest in it - a kind of detailed fair use or fair dealing or a provision that would provide for various factors to be considered in determining whether a particular use is fair. That would have assisted people users and rights owners, whether dealing on a one-to-one basis or within a collective, to sit down and negotiate the parameters - the application of these fair use provisions. That would have been, in my view, more complementary to the phase one exercise of 1988.
The other approach, which is being very detailed in the legislation and in fact outlining and defining in the act what fair use is - this is what really is being done in this bill - is also a valid approach. You can take that approach. The problem now, though, will be to properly define those exemptions. Where do we start? Where do we stop? Will the negotiation take place here, rather than with the rights owners and the users? We will have to apply tests or factors to these particular things.
.1950
I don't know, but it seems to me that in the way this bill is structured, the second approach was taken.
Mr. O'Brien: If I could refer to page 3 of your brief, unless I'm misreading it, it seems to me that there is a bit of a contradiction in the second paragraph. If not, I would like you to elaborate for me, or perhaps ``elucidate'' is a better word.
You're talking about the proliferation of criteria. It seems to me that the brief implies an attitude that is pretty clear to me, which is that the board should not be seen as an expert tribunal. Then a couple of lines down, it looks as though, in the absence of criteria, the board would be incapable of making informed, reasonable decisions.
Am I misreading that? It seems to me that there is some sort of a contradiction in what you're saying in that paragraph. Are you for or opposed to criteria coming with the legislation?
Mr. Hétu: I think I answered that question previously. I said that our recommendation is that there should not be criteria. We're experts enough to make up our mind as to, after hearing the parties, what should be the proper factors and criteria to apply to the particular use in question.
As we have done in other cases, larger cases, these criteria appear to be put in to tell us what to do in words that sometimes are not very clear. This is the problem I really focused on: how do we deal with these, and where does that lead us?
Mr. O'Brien: Is it some sort of new, ground-breaking, precedent-setting situation for government to pass legislation and then to include therein certain criteria for a body such as yours to take into - -
Mr. Hétu: It certainly is for the Copyright Board, except for the regulation-making power that we have in the retransmission regime, which was exercised by cabinet in 1991. But those regulations can be changed if they don't work out the way you intended them to work. That's the flexibility that we think you would want to give government on these things.
Mr. O'Brien: On page 4 of your brief you make reference to the $1.25 million exemption. Then you talk about whether the board will have access to information it needs. You posed the question, but I'd like you to answer it. What constraints do you foresee in having access to the information you would want? Can you answer your own question for me from the last paragraph on page 4?
Mr. Hétu: I'll give you the example of the retransmission regime. The law says that small retransmission systems should get a preferential rate from the board. There was no rate set in the legislation, so they have to come forward to the board and make their case to get whatever rate they thought they were entitled to. They came forward in an organized way and made their case.
Later on, in the second round, the collectives were asking for changes to these rates that we had set in 1990. They came back to say that we should not touch those rates. They said that they worked properly, and so on and so forth.
That's what I mean when I ask whether we will get information about the whole industry if 66% of them don't show up. They don't have to at that point. Why would they come to us to say it should be $100 when the statute says it's so?
Mr. O'Brien: Okay, thank you.
The Chairman: I would like to mention to committee members that we're running late tonight. As you know, it's because of a vote, first of all. But also, because of the importance of the board to the legislation, I've allowed a little bit more time.
Mr. Peric.
Mr. Peric: Thank you, Mr. Chairman. This one will be very brief.
Could you tell us your view on proposed section 90 of this bill, since you've touched on that section before? What is your view?
.1955
Mr. Hétu: Well, I guess when I explained it before, I came somewhat to the conclusion that insofar as the radio stations are concerned, because of the scheme that is being put to you, you are the ones who are really looking after whether these new rights will affect in the immediate future SOCAN's royalties.
But in the longer term, what I'm saying is that you can't say that capacity to pay will never be a factor. Capacity to pay may have to do with other factors than the neighbouring rights, actually. You see, it's not one clear question that you say it's because of the neighbouring rights that we can't pay this, or it may be for other reasons. It's not an automatic sort of conclusion. You have to look at the industry and make a determination as to what has changed in that industry that makes it in a position to be successful in that kind of a claim.
[Translation]
The Chairman: Mr. Bélanger.
Mr. Bélanger: I would like to come back to the question raised by my colleague Mr. O'Brien. You talked about the risk of including criteria and preset tariffs in the bill.
In terms of the criteria, I think that we have heard enough witnesses and it seems to me that a consensus is emerging. This is the first time, however, that we have touched upon the issue of tariffs. Am I to understand that you think it would be preferable not to refer to a minimum tariff, or should we simply not set an amount? There is a difference.
In other words, as members of Parliament, should we leave it up to the Board to determine whether there will be a different tariff for radio stations making a certain amount, or less money than others?
Mr. Hétu: Personally, I think that section 68 has two goals. The first is to give preferential treatment to small stations. They are defined as being stations whose revenue is $1,250,000 and the tariff is fixed. The second goal is to ensure the gradual introduction of neighbouring rights for the biggest stations.
My point is that if these are the two goals, why not put them in the bill and let the Commission do its work as we've done for retransmission? There is preferential treatment for small stations and the Commission has given them a very important one. I think it was $100. It also developed other mechanisms or measures to ensure that the larger stations, in this case the cable companies that have more qualifications than the small stations, would also benefit from a gradual introduction of tariffs.
That was our solution and we also applied this system to another tariff, tariff 17 for specialized services in Canada.
In other words, this is a guideline in the bill that I would really call a...
Mr. Bélanger: Principles are being set out and...
Mr. Hétu: The principle.
Mr. Bélanger: Thank you, Mr. Chairman.
The Chairman: One last question, Mr. Leroux, if you make it brief.
Mr. Leroux: The ADISQ has suggested three categories of radio stations. Does the Board think that this proposal is realistic? Have you, in other cases, based your rulings on a similar system, in other areas?
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Mr. Hétu: I know that in its proposal, ADISQ referred to the Board's tariffs to point out that in the case of retransmission, under tariff 17, the Board had set special tariffs for small stations, and had then scaled the tariff to make its introduction easier, recognizing that in some cases, the ability to pay is a criteria that should be taken into account.
I cannot make a statement regarding the validity of ADISQ's approach. If we were going to establish a minimum rate and use a gradual introduction, then that would be one proposal among others that we would have to look at. So I can't tell you whether that system is preferable to another.
Mr. Leroux: You seem to say that at least two categories, libraries and visual aids, fall under retransmission with respect to the bill and that that was a problem. Perhaps they fall under arbitration and even then, the arbitration people can use the SOCAN system if they want to, under the bill. What are the problems? Is it the cost?
Mr. Hétu: Those who spoke to the committee said that this system, because of its rather limited application - you just have to think of the copying of books for the visually impaired - is cumbersome. We suggested an alternative solution which does not eliminate that system but which simply says that the agreement is enough, even if there is no tariff. It simply provides the current system with more flexibility, and doesn't necessarily change it. We are ensuring that if there is an agreement, then it is not necessary to set a tariff.
The Chairman: Mr. Hétu, your brief and your presentation this evening were well thought out and they will greatly help us. Thank you very much for your presentation and for having come this evening.
[English]
Thank you very much on behalf of the committee. Thank you.
.2002
.2011
[Translation]
The Chairman: It's now our pleasure to welcome representatives of the Société professionnelle des auteurs et des compositeurs du Québec (SPACQ), Mr. Pierre Bertrand, President; Mr. Stéphane Tremblay, Administrator; Mr. Luc Plamondon, Administrator, and Ms Francine Bertrand Venne, Director General.
There are members who do not read French fluently. Do you have a copy of your brief in English?
Mr. Pierre Bertrand (President, Société professionnelle des auteurs et des compositeurs du Québec): I will try to speak slowly and clearly.
Mr. Chairman, you've already introduced the people who are at the table, but I will repeat the exercise: Stéphane Tremblay, Administrator, Luc Plamondon, author emeritus, Administrator and previous President of SPACQ and our Director General, Francine Bertrand Venne. I will now read you my brief. We also have with us members of our association who are authors and composers who have come to Ottawa from Montreal to accompany us and to support us.
Mr. Chairman, members of the committee, first of all I would like to say a word about the organization we represent. The SPACQ is the Société professionnelle des auteurs et des compositeurs du Québec. Our organization represents the main song and music composers in Quebec. A few of our members are sitting around this table or are in this room. First and foremost, I think that it is important to agree on the vocabulary and on the meaning of a few key words. This will save us precious time and will avoid a great deal of useless confusion.
First of all, let's talk about the word "author". An author is a creator. A creator is someone who has the talent that enables him to invent something from nothing. In this case, this may be the author of the words or the author of the music of a song. The author and his work are at the top of the pyramid, the source, the raw material from which everything flows, which everything else depends upon.
Without the creator, there would be no songs, no performers, no records, no shows, no producers or broadcasters, no public, no galas, no Félix or Juno awards, no cultural industry. Without authors, there would be no Copyright Act nor would there be any review of the Act and we would not be here this evening talking about this.
.2015
The creator creates wealth for everyone who follows in his wake. And yet, it is important to recall that copyright is the only salary that the author receives and, furthermore, the author receives compensation only if his creation finds a taker; if not it's back to the drawing board in the hope that his next song will meet with greater success than the previous one. The creator's drive is an affair of the heart. Consequently, the creator often lives on love and fresh water.
The author and the composer of a work can hope to earn income from two main types of royalties: royalties related to the public performance of their works and royalties that come from the reproduction of these works on mediums such as records, tapes, television or radio programs, multimedia mediums or the information highway.
Therefore we are dealing with both performing rights and reproduction rights. In 1990, the Supreme Court recognized both of these rights as being legitimate and distinct.
The Copyright Act pertains to the author of a work and the resulting intellectual property rights. It must be recalled that copyright is a right that was enshrined in the Universal Declaration of Human Rights. This Act constitutes the legal basis which allows a creator to control how his works will be used. It provides the basis for the vision that the judges must have when they are called upon to interpret the law and to rule on litigious issues. This work is done primarily by the Copyright Board.
As its name indicates very clearly, the neighbouring right is a neighbouring right of copyright. It is not a copyright since it concerns the performing artists, the producers and the communication signals of broadcasters, who are all part of the chain of players that appear after the creation, once the work is already in existence.
It is important to remember that our colleagues from this disciplines agree with this definition of neighbouring right and they have never asked for a copyright. Indeed, they, like us, have always felt that this new right should in no shape or form encroach upon copyright and its entitlements.
I would like to provide you with a little bit of background now that I've covered definitions and vocabulary. The 20th century, which is drawing to a close, has been decisive in the evolution of communications. From the gramophone to the Internet, the blue planet has become the global village that was announced by McLuhan. Communication technologies have always broadcast and reproduced works of the mind throughout the world. This has never been truer than it is now, in the age of the computer revolution.
That's why intellectual property is said to be one of the great natural resources of the 19th century by the United Nations Organization.
Legislation is being amended to correct past errors, but mainly to confront efficiently the challenges of the future. Parliament is surely conscious of the formidable and numerous changes brought about by the technological revolution we are witnessing at this very point in time.
With the invention of the printing press, the concept of copyright developed hand in hand with technological evolution. This evolution has become a technological revolution over the last 49 years or so and has really taken off which has led to Parliament often being accused of dragging its feet in updating the Copyright Act.
It's exactly because of those delays and the obsoleteness of the Canadian legislation going back to 1924 that authors and composers of songs got together around Luc Plamondon, Diane Juster and Lise Aubut to set up the Société professionnelle des auteurs et compositeurs du Québec, also known as SPACQ, in the early eighties.
.2020
SPACQ representatives partially got the ear of the Canadian Parliament during phase I of the review of the Copyright Act.
A first amendment to the Act did away with the mandatory reproduction licence regime and gave legal status to collective societies. After this first review and the SOCAN amendment clarifying the definition of a musical work, Parliament then convened us for phase II of the review of the Act.
So we're here before you today because we think that Bill C-32, in its present form, would have very serious consequences for authors, composers and creators in general. Authors and composers are expecting much from this phase II.
First of all, they were expecting an Act with no exceptions so that authors and their collective societies will be able to negotiate a mutual agreement with the users of their works and enjoy the economic fruits of their intellectual property.
Secondly, they were expecting a system compensating for the enormous lack of earnings due to home reproduction, in other words, private copying.
Third, they expected a full and complete guarantee that the vested legal and economic rights of creators would not be affected by the arrival of neighbouring rights.
Authors are bitterly disappointed not only because Bill C-32 tabled last spring as the prelude to phase II does not address adequately any of our legitimate demands but worse still, because it sets up a whole slew of exceptions to the benefit of certain user categories that will dangerously degrade the rights of Canadian authors and will jeopardize the existence of SODRAC itself.
Quebec authors and composers are at a loss. This bill negates the principles of elementary justice in the area of property rights; it reduces authors to the status of second class citizens and threatens their vested rights and their development. At a time when works of the mind represent both the present and the future of both Canada's economy and culture, government is supporting the users of works to the detriment of their legitimate owners, their creators.
Copyright was created to establish a link between authors and the economic life of their works. It's a right that allows all creators to keep control over the use of their works. It's very important that the protection afforded by the Copyright Act actually protect the author, not the work. The very concept of culture in our society depends on this. Notwithstanding, Bill C-32 weakens the creator's position. It does not ensure that Canadian culture and its creators will enjoy the means necessary to make themselves known and appreciated worldwide.
This country's creators will not enjoy adequate protection to deal with the new technologies. How can one pretend to promote the culture of one's country when one allows the marketing of works to be profitable for the business class while excluding the creators of the works?
The author's only salary is the author's copyright. If you finagle with the legislation to introduce all kinds of exceptions, you are affecting the author's moral rights and penalizing the very person you should be doing everything to help and encourage in the act of creation. Making any exception is like suspending the author's fundamental right, the author's patrimonial right. A right cannot be subject to exceptions. A right is a right. Un droit est un droit.
.2025
The government's concern is to ensure that works are available to the greatest number at an affordable price. Authors understand that because they also have in interest in seeing that their works are accessible and reach the greatest number of people possible.
What they will never understand nor accept is that the government wants to expropriate their rights to achieve its ends. After all, these are "their works". They want to have total freedom to negotiate mutual agreements with the users that will also be to their advantage.
In any case, the Copyright Board is still there to decide any unresolved contentions. The authors have always honoured the decisions of the Board and the Act and they want to be treated just like all other citizens of this country, in other words, as adults.
There is an enormous difference between a right and a rate. We have been witness to some of the appearances before your committee and we got the very disagreeable impression that the different stakeholders were appearing before you as thought they were appearing before the Copyright Board.
Stakeholders from all points of the compass explained their financial difficulties or their future lack of earnings in attacking our rights. No matter: the SODRAC people did explain to you that never have the authors held anyone to ransom.
I would remind you of the agreement between TVA and SODRAC under which, in exchange for unlimited reproduction rights for a one year period, TVA pays SODRAC the equivalent of 0.2% of its revenue from publicity.
A right is a right. Un droit est un droit. A property right is a property right. The tariff or rate flows from the value of that right. Considerations about the financial situation of this or that stakeholder should be a factor only during free negotiations between the collective societies and the users or should only be used before the Copyright Board whose role is to decide.
If Parliament wishes to legislate based on the financial difficulties and economic needs of various stakeholders, we would most warmly and in the most friendly way invite it to closely scrutinize the economic and social status of authors themselves, those for whom this legislation has been conceived.
Let's now look at C-32 in more detail. Let's talk about exceptions first. SODRAC, SOCAN, the Songwriters Association of Canada and the other societies of holders of rights have all denounced the 13 pages of exceptions to the fundamental principle of copyright. We support the arguments put to you by the different authors' organizations.
.2030
Mr. Chairman, if government wants to subsidize the institutions exempted by C-32, then these subsidies should come from the taxes paid by all citizens, including authors. However, we do not have the obligation of directly subsidizing any organization whatsoever, however lofty its cause may be. That is the role of all citizens. Nor do we want to be taxed twice.
Let's talk about neighbouring rights. We're not opposed to the introduction of neighbouring rights, this must be said loud and clear, but we do have a serious problem with the wording of the provision and the negative legal consequences which may lead to disorder.
SODRAC, SOCAN and the Songwriters Association of Canada have also spoken out against this legal side-stepping on the part of the government which, for reasons not explained, decided to refer to copyright as the rights of performers and producers, which are in fact universally recognized as neighbouring rights and should normally be the subject of a separate schedule under the Copyright Act. Our colleagues from these disciplines have always demanded their rights without interference in the rights of authors or their entitlements.
Therefore, let us be very clear and give things their real name: neighbouring rights or copyright. Otherwise, the confusion between the rights of one group and those of another might lead to endless legal disputes, eventually forcing Parliament to intervene again in order to clarify the situation. It would be preferable to do that immediately.
Moreover, clause 90 does not guarantee to authors that their economic gains will not be affected by the introduction of neighbouring rights. We obviously want such gains to be retained. In order to do so, it is necessary to introduce a right to payment for performers, producers and distributors while fully and unconditionally respecting the rights of creators.
We would add in this regard that the reason why some of us receive neighbouring rights in addition to copyright is that we're doing more than one job. Would it be conceivable for one moment to pay someone who is both a plumber and an electrician only for one of the jobs he performed, on the grounds that he is one and the same person?
In fact, many author-composer-performers considered to be independent are in fact supported by a team of lyric writers or composers who are less well known.
We would now like to talk about copying for private use. There are new digital scores which record, such as the digital stereo disk, preparing to come on to the market.
.2035
Indeed, digital radio is on our doorstep, not to mention dishes, satellite distributors, hard disks, computers, Internet and many other devices. It is now possible to make perfect copies at home of songs or films, reproducing in every respect the quality of the original master tape. As you all know, manufacturers of analogue-type blank tapes and recorders have made millions of dollars in profits through the sale of such products.
As you also know, none of these authors, composers, performers or producers, without whom such sales would be non-existent, receive anything at all from the manufacturers. What is worse, they loose significant income because of this practice. I would like to reiterate that in the case of creators, such income is their only source of livelihood.
I would point out, for information purposes, that the sale of two records each containing a dozen titles, which could fit approximately on a 90-minute blank tape, provides about $1.60 in reproduction rights, which have to be shared between on the one hand the author and composer and, on the other, the publisher. The amount concerned generally breaks down as follows: $0.40 for the lyric writers, $0.40 for the composers, and $0.80 for the publisher.
Bill C-32 contains provisions on copying for private use. Unfortunately, they are both incomplete and dangerous. In fact, clause 80 of Bill C-32 states that reproducing work at home "does not constitute an infringement of the copyright". We would suggest that the bill should read that the payment of the levy provides a licence for private use.
Furthermore, the provisions on copying for private use are incomplete in three respects. First, Bill C-32 makes no provision for private copying or audiovisual work. And as I said earlier, the digital video disk is about to come on to the market. It will be possible to copy films digitally, erase them and copy others etc. Eventually, it will also be possible to do that on Internet. Technology is moving forward quickly.
Second, Bill C-32 makes no provision for the payment of levies by manufacturers of recorders.
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Third, Bill C-32 does not guarantee that the levy paid on blank tapes will offset the losses actually incurred by the three groups of copyright holders: authors, performers and producers.
If the Copyright Act does not clearly state that the provisions on copying for private use exist in order to offset the losses actually incurred by copyright holders, the Copyright Board, which has to assess the amount of the levy, will not have any parameters for making its decisions; the amount it sets may be ludicrous.
Imagine, for example, if the Board sets a ludicrous levy of $0.37 on each blank tape for private copying. Anything is possible. As Mr. Hétu pointed out earlier, C-32 makes no provision in that regard. Imagine now that this amount of $0.37 is distributed between the authors, performers and producers. Remember that we share our portion with our publishers.
For the purposes of this example, remember also that you can record two discs, that is 24 songs, on a 90-minute cassette. I have in fact brought with me a typical cassette manufactured by a company called TDK. It could just as well have been Sony. Every company does the same thing. Written on the cassettes are the words: Best for CD.
In other words, the basic sales argument is that these cassettes are fantastic for copying laser discs; there will be no problem, the quality will be very good. That is the main sales argument. There is something incredible about it.
I have brought my pre-recorded commercial cassette also. Anyone could take my album and record it on the blank cassette. Furthermore, the company manufacturing the blank cassettes also makes the recorder. Moreover, they are often the owner of enormous catalogues, since they frequently own compact disc companies. In this case it is TDK, but it could have been Sony.
Let me go back to our example. We have a 90-minute cassette, on which you can record two records or, for the purposes of this example, 24 songs. As compensation for his song being recorded on a blank cassette, the song writer will receive the staggering sum of 0.00125 cent!
The sale of the pre-recorded cassette, containing the same songs, will have brought the author approximately 1.65 cents. Taking this example, our songwriter receives 130 times less for private copying than he would for the sale of the record in a store. As they say in English...
The Chair: How much more time do you need for your presentation? We have to leave some time for questions.
Mr. Bertrand: Two pages. Alright, I will go more quickly. Our works have been stolen and raped for far too long. Enough is enough! It is high time that Parliament took measures to halt this very widespread practice, which is becoming more and more common with increasingly sophisticated digital reproduction technology being used at home.
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On the eve of the 21st century, we are concerned about the future of those people in our country who are creating cultural and economic wealth if the government goes ahead with Bill C-32, as it is currently drafted. As we have seen, technological progress is such that in the relatively short term, discs may disappear and be replaced by purchases through the information highway. It is already possible to achieve exceptionally high quality reproductions at home. The Copyright Act must protect authors against any unpaid use of their work.
Bill C-32 is going in the opposite direction. Radical amendments should therefore be made to it.
First, the legislation should not contain any exceptions. The government must allow free negotiations to govern relations between creators and users, regardless of who they are.
Second, the legislation should clearly state that the introduction of a right for performers or producers is a neighbouring right. The legislation should clearly specify, as is the case with foreign legislation, that neighbouring rights are completely different from copyright. Furthermore, the provisions concerning neighbouring rights should be the subject of a separate chapter and be contained in a schedule to the Copyright Act, as is also the case in the legislation of other countries.
Thirdly, the Act must guarantee and specify that the rights currently conferred on creators in part I are considered acquired rights.
Fourthly, the Act must clearly state that royalties for private copies must equal the real losses incurred by holders of sound recording and audiovisual rights. Bear in mind that there are also film soundtracks and videocassettes of artists' performances. That is of grave concern to us.
In conclusion, Bill C-32 is a major setback for authors and composers. We expected the government to strengthen the creators position, but Bill C-32 does the opposite. It will have nothing but a negative impact on authors. It would change the Copyright Act in an unacceptable way. It attacks the very basis of copyright and jeopardizes our society for reproduction rights, SODRAC. This bill must not be enacted.
The Copyright Act is fundamental legislation for the entire country. It is of crucial importance at the dawn of the next millennium. There is a lot of talk about Canadian culture and Canadian cultural content. To really contribute to Canadian culture, we must strive to encourage the creators of Canadian works.
Creators will be the most affected by a review of the Copyright. It is their Act, and their creations that we are talking about. So logically, the Act must first satisfy creators' expectations, desires and legitimate needs. That is its raison d'être. If the changes we are asking for are not made, rest assured that we will do all in our power to see that the bill is never adopted. We will not allow our rights to be seriously eroded without a fight. We will not take this lying down.
Thank you for your attention. We will now answer your questions. Thank you very much.
The Chairman: Thank you, Mr. Bertrand. You have explained your point of view very eloquently, clearly and with conviction. I hope the members will do the same, because we have very little time left. We will have to be brief now that you have explained your point of view. Hopefully you will be able to focus on a question and a half. Mr. Leroux.
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Mr. Leroux: It is true that the presentation was quite clear, but we also need time for dialogue.
First of all, it is very clear, in our view, that this bill is a step forward with respect to neighbouring rights. A lot of performers have been involved in the long-term battle with producers over joining the family of 50 countries that signed the convention on neighbouring rights, etc. I think we are clear on that, and you acknowledge it.
Mr. Bertrand: O.K.
Mr. Leroux: But we're taking a step backwards.
Mr. Luc Plamondon (Administrator, Société professionnelle des auteurs et des compositeurs du Québec): The SPACQ's position has always been to exclude neighbouring rights from the Copyright Act. We have always defended the idea that the government should create a compensation fund for authors, composers, performers and producers, to compensate for private copying.
Mr. Leroux: You clearly stated with respect to the bill...
Mr. Plamondon: This Act will create a 20-million dollar fund, 80 per cent of which will go abroad and we will be left with peanuts.
Mr. Leroux: You clearly stated with respect to the bill that neighbouring rights are included and that you are willing to accept that, except that there was a major setback: a bill to amend the Copyright Act has been introduced and it goes on and on explaining that you do not have rights.
There is a problem in the sense that the exceptions send out an extremely negative message about lack of accountability. In areas as important as education, museums, etc., people do not have to comply with copyright, they're exempt, etc. So that jeopardizes copyright. Then you raise the issues of recognition and freedom to negotiate.
I looked at the Board's brief. The Board is a depository for more than 250 agreements signed by collective societies. It states that the directors of research did not ask for changes.
People have come here and told us that there are agreements with SODRAC, SOCAN, and collective societies.
There are currently tools with respect to collective societies and the Copyright Board, and the Act introduces exceptions.
Since there are so many exceptions, I will make a simple suggestion. If we made some adjustments in the "General Provisions" section of the Act, that would say for example that exceptions apply only where there is no collective society, what kind of effect would that have on you?
Mr. Stéphane Tremblay (Administrator, Société professionnelle des auteurs et des compositeurs du Québec): That could certainly benefit collective societies, but we are fighting for the same basic principle, which is intellectual property recognized by copyright. Perhaps, it would be the lesser of two evils, but what I want to say is that the principle is the principle. I do not see why we would start making distinctions.
Mr. Plamondon: No author is forced to be a member of a collective society; an author is always free to join or not to join a collective society. I could decide to negotiate my songs separately, or a writer can choose not to be a member of a collective society for rights of reprographic reproduction, for example, in educational institutions.
We cannot allow an educational institution to reproduce thousands of copies of a writer's book on the pretext that he is not a member of a collective society. That would be completely absurd.
Mr. Leroux: The approach in the bill basically expropriates copyright. Moreover, in the bill, here, there is a copyright flaw. It should also say "the Department of Industry", but it only says "the Department of Canadian Heritage". These copyrights should fall under the Department of Industry.
You talk about the freedom to negotiate. That is an acknowledgment. What can we do now, apart from your position of wanting to withdraw all exceptions, even if some people have acknowledged that there would be valid exceptions in some areas?
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The Act already contained exceptions and I do not think that you challenged them. Even in 1989...
A Witness: We have always challenged them.
Mr. Leroux: In that one too, the full withdrawal of...
A Witness: We do not want exceptions.
Mr. Plamondon: We have been asking the government to remove the exceptions from the Copyright Act for 20 years.
Mr. Leroux: For you there are no exceptions...
A Witness: We will negotiate them.
Mr. Leroux: There is no leeway, no...
Ms Francine Bertrand Venne (Director General, Société professionnelle des auteurs et des compositeurs du Québec): Mr. Leroux, they're the only workers in these institutions who are not paid; everyone from the janitor, to the school principal to the museum curator is paid.
Copyrights will allow contemporary creations to survive and these are the only workers who aren't paid. They are taxed twice by national institutions, once through their income tax and again by donating their work. That is what we are opposed to.
What is more: the exception for these institutions creates a major gap in the commercial use of the work once it is put on the information highway. Performance and communication via telecommunications are excluded. So everything goes on the Internet. So it creates a big gap in this new technology. The bill greatly concerns us in this respect as well.
[English]
Mr. Abbott: I notice in your presentation you say that after creating SPACQ authors went on to establish a collective society SODRAC, which focuses on the reproduction rights.
This is not a critical question. I want to understand the fine-tuning here. Have we heard something different from you tonight than we've heard previously from SODRAC? Are there different points of view, or are they exactly the same representation?
[Translation]
Mr. Plamondon: SODRAC is just a society that collects mechanical rights.
The SPACQ represents authors. We are advocates for all copyrights, including performing rights and rights for reproduction. SODRAC is a society that collects mechanical reproduction rights.
[English]
Mr. Abbott: Let me understand - this will be imperfect because I'm not in the business. Let's assume I have a CD player and I am going to be using it to broadcast on the radio. The CD player can hold up to five CDs at a time and I can program to take number one off here, number fifteen off there and around. I'm doing it mechanically.
Let's assume a second scenario. Perhaps it breaks down, it doesn't work too well and so instead I choose to transfer the work from the CD to some kind of hard drive. So now it's done electronically instead of mechanically.
Should the author, composer, or whoever would normally be collecting be taken into consideration because I have changed from a mechanical way of putting the music on the air to an electronic way of putting the music on the air, and if so, why?
[Translation]
Mr. Plamondon: You have made a reproduction and we are defending the point of view that the authorization to make this reproduction must be granted each time. If not, the product exists and may be used for many purposes. If ephemeral rights are granted to radio and TV broadcasters, how could we, after weeks or months of their using a medium, then go and ask them to sign an authorization? Permission must be granted before the reproduction is made. That is the principle that was incorporated in the Act in 1924 and that you want to remove now.
Ms Bertrand Venne: Mr. Abbott, reproduction rights in Canada have only come into use since the abolishing of the mandatory licence and the $0.02 that was set in the Act.
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SODRAC is not the cause of the problem. The lump sum agreement that we are talking about here covers all reproductions made at the station. So the exception asked of you for a very specific precise use is covered by a lump sum agreement. The problem is not SODRAC. Instead, it is the confusion of the user who is wondering what will happen when others knock on his door. The collective society is an excellent way of solving the problem, obtaining fair and equitable payment for authors and composers, and for the society that is the distributor, to cover reproduction: the copy to the CRTC, the so-called ephemeral recording, etc.
In some ways, like I say each time I make my pitch, it is as if restaurant owners in Canada were to come to you to ask for an exception for beef. Rest assured that all restaurant owners in Canada would put beef on their menus, because as good businessmen, they would see to it that they do not have to pay for the raw materials.
So if an exception for ephemeral recordings were granted, believe me, in practice, users would try to have all of their activities considered ephemeral recordings.
We are here today to tell you that the lump sum agreement covers all reproduction rights.
[English]
Mr. Abbott: Mr. Bertrand, just in conclusion -
The Chairman: Can we pass on here? It's really late. Okay, last question.
Mr. Abbott: I must say I found Mr. Bertrand's closing comment to be unusual, harsh, tough, and - please permit me to be blunt - disagreeable. I would like to clarify your statement for us. When you say you will do your utmost to see that the act is never adopted, is that hyperbole, is that just an extreme? Are you really frustrated about this and will you actually do something? If so, what will you do?
Mr. Plamondon: We had a press conference today in Montreal. We told the media that we were against this project and we will do everything we can to stop it. We are writers and you're talking about our rights. We make our living writing songs. We're the only people really concerned about this law in this place.
Mr. Bertrand: It's our car and we want to drive it.
Mr. Plamondon: We're talking about our way of making a living and our art.
Mr. Bertrand: We're serious. Maybe we're disagreeable, but that's the way it is.
Mr. Plamondon: I've been writing songs for 25 years, I've been writing musicals for 25 years, and I've been fighting for 25 years for Canada to get a good law for its creators. I founded SPACQ and we have some of the best-known songwriters in Quebec with us. We all gathered today in Montreal with Gilles Vigneault, Daniel Lavoie, and Richard Séguin - with the biggest names in songwriting.
Mr. Bertrand: And some who are not so well known but important.
Mr. Plamondon: About 50 of us are among the best-known people writing songs in Quebec and we are unanimously against this project. After having fought for years and years, to get this is an insult to us.
Mr. Bertrand: Remember one thing also - SPACQ is the organization that triggered everything. We were the first ones - and he was the first one, actually - to try to change that old law of 1924. He was at the origin and we gathered around him. SPACQ is the momentum.
We have the right to be disagreeable because we were expecting that because we were alerting people that our situation was not okay, we were hoping that through a revision of the law our legitimate aspirations, desires, and needs would be met. It's the contrary. We're losing rights with this law.
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Mr. Plamondon: The songwriters are the poorest people in this business. This business, show business, the record business, generates hundreds of millions of dollars every year and we're the poorest people in this business. We're always the last ones to get paid and every time we go before the Copyright Appeal Board....
Mr. Bertrand: We lose.
Mr. Plamondon: We've been fighting for years and years to get concert rights when our songs are performed on stage, and again this year the Copyright Appeal Board has turned us down. We get only 2% on concerts while most civilized countries collect 6% or 8% or 10% for songwriters on the concert rights. This is just an example.
We used to earn 2¢ a song for every record sold. The law was changed in 1988 because we fought between 1980 and 1988. For eight years we fought in order to get that compulsory licensing abolished, and finally it was abolished. In the last seven years we've been fighting for a lot more things, and what we get is not what we've been fighting for.
Mr. Bertrand: It's not what we expected.
By the way, many other associations have the same questioning, the same disappointment. We're not alone. You saw all the people who came here. I told you that the Songwriters Association of Canada, which is the same kind of association as the one we represent in Quebec, has the same opinions.
Mr. Abbott: This is one time when I'm happy to say this is the Liberals' law.
The Chairman: Excuse me.
[Translation]
Mr. Bélanger.
Mr. Bélanger: Mr. Chairman, we have heard a rather moving testimony here. I would prefer to give the floor to Mr. Arseneault, if I may, because my questions are rather technical in nature, and I would not want to change the present atmosphere too much.
The Chairman: After that, if you agree, we will have to stop, because it is almost 9:15. We still have to hear from another organization whose representatives have been here since 8:15. Out of respect for them, we should wrap up our session with this group.
Mr. Arseneault.
Mr. Arseneault: I will not be long, Mr. Chairman. I just have one or two questions.
Mr. Bertrand, I was a little bit surprised when you said in your presentation that all of the effects of the proposed legislation are negative.
Mr. Bertrand: From the author's point of view.
Mr. Arseneault: For authors. Have you asked yourself if a recognition of neighbouring rights would have a positive effect not for authors, but for others? No, no, listen. You had the floor and you will get a chance to respond.
In my mind, it is very positive. We have heard from witnesses who have criticized us, but who have done so in a positive way. They told us they wanted various changes, but not that they wanted to throw the whole thing out.
Mr. Bertrand: We have also made positive suggestions.
Mr. Arseneault: The same is true for copies for private use. That will help you. It is a step in the right direction. It is a request already addressed to the government. We are responding, and it is a start.
The other aspect is recourse to a court. Is that idea not advantageous for you? I have heard the remedy procedure...
Mr. Bertrand: The Board's?
Mr. Arseneault: Yes, the Board and its procedures. If you have to go to court.
Mr. Plamondon: Each time we go before the Copyright Board...
Mr. Arseneault: Not before the Board, but a court of justice. It is very positive. Could you give me your view on that, please?
Mr. Tremblay: I do indeed see the positive side to the neighbouring rights. However, for us, it is neither negative nor positive. We're happy for them; we have supported their efforts. But that doesn't change our situation in any way.
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However, we're afraid that our established rights will be weakened. Of course, it would good if section 90 guaranteed our rights.
What we are here to talk about is the following point. You know our position on exceptions. It is obvious that if, after having confirmed the right, you take 13 pages to deny it, that is hard to accept. Do not ask us to be pleased and not to see it as a setback.
Finally, regarding the copies made for private use, you are right; the fact that it is contained in the bill is positive. What we are saying is that it will still have to be modified to be made more meaningful. We gave you the example of $0.37 in royalties. It is a number we pulled out of our hat. If the bill were to guarantee that private copies would be used to compensate for real losses, we would clearly be more satisfied.
Of course we've been critical. Of course we are offended, because our rights are under attack. But we are proposing things that could satisfy us.
Mr. Plamondon: With this bill, we will have to spend our life appearing before the Copyright Board in Ottawa. Each time we go, it costs us tens of thousands of dollars in lawyers' fees, travel costs and accommodation in Ottawa. Mr. Hétu said it earlier: the established criteria are extremely unclear. I will give you an example. Explain the definition of "maker", that is given in the middle of page 2 of the bill. Can someone in the room tell me what this sentence means?
- "maker" the person by whom the arrangements necessary for...
Mr. Plamondon: I apologize. I'm asking you for an explanation of the text of the bill you are publishing.
Mr. Arseneault: The other aspect of our question dealt with court remedies.
Mr. Plamondon: Sir, this definition of "maker" means absolutely nothing. I'm asking you to tell me what it means.
Mr. Leroux: I would like to make a comment. I think that asking for clarification on a clause in the bill that the way Mr. Plamondon has... We're not the witnesses. We're exchanging views. I think Mr. Plamondon proceeded normally.
Mr. Plamondon: I'm not asking a question. I'm just giving an example of the confusion that will be created...
Mr. Leroux: Even if you asked a question, Mr. Plamondon, it would be fine. We're having a dialogue.
The Chairman: Mr. Leroux, I think we have had enough dialogue.
Mr. Plamondon: We are before the Copyright Board. Imagine a right of private copy that had to be paid to producers. There is a neighbouring right that says rights must be paid to producers. But the bill says:
- "maker" in relation to a sound recording, the person by whom the arrangements necessary for
the first fixation of the sounds are undertaken.
Let me give you an example. Let's say I'm writing a new opera with a composer. Let's say we recorded 15 songs from that opera, lyrics and music, in a studio yesterday. In other words, we did the first fixation of the sound. That would mean that both myself and the composer, Richard Cocciante, would be the "makers" according to this bill. I recorded, I did the first fixation of the sound. It is an example, but the entire wording is very confusing.
Mr. Hétu gave you a few examples earlier that will lead to months of discussions with the Copyright Board to determine who gets what from neighbouring rights and the rights of private copy.
Mr. Leroux: Mr. Plamondon, other people have made the same observation as you have about the clarity of the wording. Indeed, there are a number of things to clarify.
Mr. Arseneault: The technical aspect should be clarified.
Mr. Leroux: Yes, there are a number of things to be clarified and it is important.
The Chairman: I think the debate has gone on long enough. Excuse me, Mr. Leroux. I did say very clearly that we had far exceeded the time allocated. Other people are waiting for us. It is 9:15.
I would like to sincerely thank Mr. Bertrand, Mr. Plamondon and their colleagues for expressing their views so clearly, openly and unambiguously.
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We are here to listen to all viewpoints. I think you expressed yours very clearly. I thank you kindly for coming here this evening. We apologize for not having more time, but there are other witnesses waiting. Thank you very much.
Mr. Bélanger: Sometimes I do not share your views. This is one of them.
Personally, I do not think you can impose anything on anyone, but I would be willing to continue the discussion for another 15 minutes, because some fairly important things are being said. Without imposing anything on my colleagues, or on you, I just want to say that I am certainly willing to continue.
The Chairman: Mr. Bélanger, I am also willing to continue for as long as necessary. Indeed, some people were invited to appear at 8:15. They have been here since then. If they don't object, I won't either.
I think that out of courtesy we should ask them whether they mind.
Mr. Bélanger: I fully agree with you.
The Chairman: They are already an hour late this evening. If we continue until 9:30, which I am perfectly willing to do, that would mean those who are waiting will still be here at 10:30. I do not know how they plan to get home. We should therefore have the courtesy to ask them.
There is Mr. Knopf, among others. We will suspend the meeting for a few minutes and I will ask the clerk to speak to them.
[English]
Thank you very much, Mr. Knopf.
[Translation]
So, it's clear.
Mr. Leroux: On that subject, Mr. Bélanger, I would rather check our schedule to see whether we could resume the discussion at another time, in two or three weeks, so that we can go into these matters in detail. I think it is very important to have a good understanding of the issues. The committee must move forward with its work.
Thus I would suggest that we invite the witnesses back another time. I am not sure that ten more minutes would be that helpful. We will not be able to study the subject in more depth.
The Chairman: You're well aware, Mr. Leroux, that I will not give you any such guarantee this evening. The decision will have to be made by the committee. We have already set our schedule until the end of November. As you know yourself, these things are not easy. We will have to meet to make a decision on this. I cannot make a decision now.
With Mr. Knopf's agreement, all I can do this evening is to continue for another 15 minutes. If we do that, we will have to stay later this evening. I am quite willing to do that, but I cannot guarantee you that we will be able to have Mr. Plamondon, Mr. Bertrand and their colleagues back if we do not have the consent of all committee members.
If you would like to take 15 more minutes this evening, I am quite prepared to do that. We now have Mr. Knopf's consent. So it is up to you to decide.
So we will carry on!
Go ahead, Mr. Bertrand and Mr. Bélanger.
Mr. Bélanger: You did not get your answers.
The Chairman: They all gave me...
Mr. Arseneault: Perhaps Ms Bertrand Venne could answer my question.
Ms Bertrand Venne: In our view, the remedies are satisfactory. We suggested an amendment to clause 34 which reads as follows: "Where copyright has been infringed, the owner of the copyright...". The words "collective society" should be added here.
Collective societies are in a different situation. They often represent foreign catalogues. They are agents and not owners of the copyright in Canada. So the clause should mention explicitly that collective societies may institute legal actions.
The Chairman: Mr. Bélanger, please.
Mr. Leroux: If you can ask questions, I'm going to ask questions too, Mr. Chairman.
The Chairman: To be fair, Mr. Leroux, he is the person who asked that we extend the meeting so that he could ask his questions.
Mr. Leroux: That applied to anyone, Mr. Chairman. In any case, I've said what I had to say.
Mr. Bélanger: I'm going to ask you a hypothetical question. I will not make it into a motion, because it is not up to me to do that type of thing.
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I would like to know what you think of the 12 words that SOCAN suggested be added to clause 90. Do you know what I'm referring to?
Mr. Bertrand: Yes.
Mr. Bélanger: Would that make the bill clear enough so that you could support it, or would you still be asking for its withdrawal?
Mr. Tremblay: There's no doubt that exceptions will always cause us to ask that the bill be withdrawn.
Mr. Bélanger: So as long as there is one exception, you will be asking that the bill be withdrawn?
Mr. Tremblay: Absolutely.
Mr. Plamondon: The Act does not have to grant exceptions. We have collective societies that can decide to grant these exceptions. We are not saying that we are opposed to any exception, but we are against having exceptions in the Act. We want to negotiate the exceptions with schools, museums, or whatever group. They should come and see us; we have the copyright, it is our property we are talking about, and we want to decide ourselves whether or not we will grant exceptions for humanitarian or other reasons.
Mr. Bélanger: That's very clear.
Mr. Plamondon: Indeed.
Mr. Bélanger: We spoke earlier about collective societies. You said that you think they are a good way of simplifying the administration, for cases such as SODRAC and TVA. Does that mean implicitly that all the holders of copyright must necessarily be part of a collective society?
Ms Bertrand Venne: No. It is a property right and we cannot force people to belong to a collective society. However, to reassure you, I can tell you that collectives work, and because of all the new technologies and new users, collectives will grow and will become the preferred approach for composers and creators generally.
Because of the new technologies and their proliferation, collective societies will become the preferred solution for everyone, and will give composers some clout in negotiations, which is significant as well.
Mr. Bélanger: Yesterday, for example, we heard from a group whose name I have forgotten. They represented companies that produce audiovisual teaching material, people from the educational field. They were suggesting that collective societies be mandatory. Is that something that we should avoid, in your view, or...
Ms Bertrand Venne: I think that if there are no exceptions and there are free negotiations, that would be a sufficient incentive. There are many composers who have seen that SODRAC did a good job when it negotiated with bodies such as radio and television stations. We have taken legal proceedings against radio stations because since 1924, they have never paid any reproduction rights in Canada.
As regards television stations, some composers have joined SODRAC, because they thought they would never see the revenue from these reproduction rights otherwise. Obviously, a composer who goes by himself to knock on the door of Radio-Canada, TQS or TVA does not have the same bargaining power as a collective society. So this was a very significant incentive.
Mr. Plamondon: It should be mentioned that in Canada, traditionally mechanical rights were managed by producers. In other words, an author turned his song over to a producer who collected his mechanical rights or his right of ideographic reproduction for him from the record companies. In the European countries and in most countries of the world now, mechanical rights are collected for groups, not individuals. The situation is changing gradually in Canada. Composers and producers come together in collective societies for their rights because, of course...
Mr. Bélanger: I could go on for a long time but... Thank you, Mr. Plamondon.
Mr. Leroux: To come back to the very essence of the Copyright Bill, you say on page 6 of your brief:
- The current Act has allowed Quebec authors to administer their reproductive rights in
accordance with the European practice which is faithful to the idea of "droit d'auteur".
English-speaking authors in Canada have administered this right in accordance with the rules
of common law. The fragile balance between "droit d'auteur" and copyright has been
maintained until now.
- And you go on to say:
- But Bill C-32 plunges us into the whole concept of copyright as opposed to "droit d'auteur". I
believe that is the basis of your approach. That is it, in a nutshell.
I turn now to the issue of neighbouring rights. I think the question of jurisdiction has been raised in Canada with respect to copyright and provincial jurisdictions. Have you looked into this question in detail, Mr. Tremblay?
Ms Bertrand Venne: Yes. I am very proud to tell you that there is no constitutional problem calling a neighbouring right a neighbouring right, because it flows out of copyright and it is internationally recognized that there can be no neighbouring right if there is no copyright in the first place. There has to be a work, as we stated here, in order for a performer to have a repertoire to sing. If he were to sing nothing but the scale, that would be rather boring, even if he had the most beautiful voice in the world, and there would be no record producers, and so on. That is what we tried to demonstrate this evening.
Thus, in constitutional terms, I think the Canadian Parliament could very well call its right a neighbouring right without loosing constitutional control. That really comes under copyright law, le droit d'auteur and the meaning is such that this would remain under federal jurisdiction.
Mr. Leroux: Thank you, Mr. Bélanger, for the extra 10 minutes.
Some honourable members: Oh! Oh!
[English]
The Chairman: Mr. Abbott.
Mr. Abbott: In your presentation this evening you talked about looking for compensation for the enormous shortfall as a result of home copying.
Dealing with the technology that the average Canadian has in their home today, so that we're all talking about the same thing, and looking for a real-life solution, not what would be nice but what can actually be done, I wonder if you could give us some suggestions considering the following problems as I see them.
First off, how much would that blank tape have sold for in the store? Would it be about $1.50?
[Translation]
Mr. Bertrand: Maybe $3.
[English]
Mr. Abbott: Okay, $3. Let's assume that if you were to put the 37 cents on when the tape comes across the border and that goes through, now instead of a $3 tape you have a $4 tape, just for simplicity. I think that's a fair assumption.
Let's also assume that because you now have a price differential of $3, which is probably comparable to what people could buy a tape for across the border in the U.S. by the time you got all the exchange rate, now you have a $4 tape.
How would we answer the problem of the smuggling of cigarettes or alcohol, or the smuggling of 600 people going in the opposite direction? How would we actually resolve that, particularly if as I understand it you would prefer to see the figure even higher than 37 cents? In other words, is it realistic? Is it practical? Can we actually realize any more than if we do 37 cents times 44 million tapes, about $14 million? Can we actually realize a gross of any more than $14 million, and if we can I wonder if you could tell us how we could do that.
Mr. Plamondon: You know that 80% of this $14 million would go back to the United States, because the Canadians consume 80% of American goods. I'm talking about the music business.
Mr. Abbott: Your understanding of the legislation is that of the $14 million collected, a major portion of it would be going back to the U.S.
Mr. Plamondon: Yes.
Mr. Abbott: I don't think that's fitting into the legislation.
Mr. Plamondon: As well, this applies for singers, authors, composers, publishers and producers. The movie business in Canada sends 97% of its gross back to the United States. The music business sends about 80% to 85% back to the United States.
Mr. Abbott: You're putting me in an unusual position of defending Liberal legislation, but I think my understanding of the legislation is that in fact the $14 million would be either staying in Canada or it would be payable to Rome Convention countries.
Mr. Plamondon: We need a fresh start. Your understanding is that the $14 million....
Mr. Abbott: My understanding is that the $14 million would either be payable in Canada or be payable to Rome Convention countries under the Rome Convention. If I'm wrong, I would be happy for you to tell me that I'm wrong.
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[Translation]
Mr. Plamondon: The United States did not sign the Rome Convention.
Mr. Tremblay: The Rome Convention is not about neighbouring rights. Private copies are related to copyright, and so it would rather be the Berne Convention that would apply. The United States did sign that convention.
[English]
Mr. Plamondon: European countries pay rights to the United States.
Mr. Abbott: Some of these people have left us the wrong impression. It's terrible.
Mr. Plamondon: The European countries pay neighbouring rights and home copyrights to the Americans even if they are not members of the Rome Convention.
Mr. Abbott: I'm learning something here. Of the $14 million, a major portion of it would end up going back to the U.S. Is that what you're saying?
Mr. Plamondon: Yes.
Mr. Abbott: Interesting.
Mr. Plamondon: A major portion, of course. That's why I'm saying. There would be very little left for us at the end.
Mr. Abbott: You've been very enlightening for me. Thank you.
Ms Bertrand Venne: You confused the rights of singers and the rights of authors and composers in your question. The important thing for you to know is that when Luc says it goes back to the United States, it's because he's talking about the rights of authors and composers.
Mr. Plamondon: I'm also talking about singers, producers and publishers.
[Translation]
Ms Bertrand Venne: Here, we're getting into the Rome Convention. That is the distinction.
[English]
Mr. Abbott: Thank you.
[Translation]
The Chairman: Thank you very much for coming. You certainly stimulated the discussion. Thank you very much.
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The Chairman: Order, please.
[English]
I would like to welcome our next witnesses: from the Laurier Office Mart, Mr. Shahé Avedissian, president, and Mr. Howard P. Knopf, counsel.
Before we start, I would like to thank both of you very sincerely for your courtesy and openness in agreeing to delay your appearance here. We appreciate it very much. The members are extremely grateful. And be sure that you will be given all the time you need to make your presentation tonight.
I don't know who is going to start. The floor is yours.
Mr. Howard P. Knopf (Counsel, Laurier Office Mart): Thank you very much, Mr. Chairman. It is indeed my pleasure that you allow us back to continue.
As it happens, I used to be a professional musician. It is't that I necessarily agree with what they said, but I always accord deference to professional musicians and professional musicians tend to come alive late at night.
The Chairman: What instrument did you play?
Mr. Knopf: The clarinet.
Mr. Peric: Are you good? We'll ask you to play.
A voice: He doesn't have his clarinet.
Mr. Knopf: I didn't bring it along. It would have been an example of neighbouring rights, I suppose.
As you know, Mr. Chairman, I've been quite eager to appear here, so what's another hour in any case?
The Chairman: Sure. Thank you.
Mr. Knopf: Mr. Chairman and members, Laurier Office Mart is perhaps one of the smallest organizations that will appear before this committee but by no means the least important. Laurier Office Mart is unfortunately all too familiar with what it means to be a user of copyright in Canada when the current law is misapplied and pushed too far.
Laurier Office Mart is very concerned with what will happen if the RCMP, collectives and publishers have even more lethal weapons in the future in their arsenal, with even fewer safeguards on the use of these weapons. Even without the benefit of statutory minimum damages, wide injunctions and anti-competitive inducements to join collectives and many of the other features of Bill C-32 that were included at the behest of some rather sophisticated lobbyists and lawyers, the reprography movement in Canada has done remarkably well.
In English Canada the only reprography collective is called CANCOPY, or as the former president of York University, Professor Harry Arthurs, sometimes calls it, CAN'TCOPY. Who is CANCOPY? They're a non-profit organization that currently makes about $13 million a year, including almost $1 million in interest, and has undistributed royalties of about $11.5 million on hand as of July 31, 1996. Almost all this revenue comes from the government and educational institutions.
CANCOPY is a typically Canadian creation. It is a product of accommodation, understandings, winks, nudges and timely agreements strategically entered into between the government, academia and certain major publishers. They have not yet begun to touch the corporate sector or the law profession. They are probably waiting for the new legislation to do this, because these sectors will undoubtedly fight back.
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Their formula is really very simple. They want at least 5¢ a page for practically all photocopying that takes place in Canada, plus wherever possible a flat annual fee for each user. One way or another, they want to be paid for copying that may or may not be fair dealing or insubstantial under the law, and therefore should be free. They probably stand to gain more from this new legislation than any other identifiable organization.
Government and the establishment academic community have offered little effective impediment or opposition towards the progress of CANCOPY. Now that CANCOPY has very substantial revenues and is clearly a dominant force in every legal and common sense meaning of that word, CANCOPY is already a difficult entity for any organization to bargain with. Even if the government or academic community ever decides to get really tough with CANCOPY, it will now be very difficult under the current law, but will be much more difficult under the new law as spelled out in Bill C-32.
Despite CANCOPY's success in collecting money, they have been slow and inefficient to distribute it. Many question whether they have any real method at all in their distribution of the $11 million or probably $12 million now with interest that they have on hand. Some have received money who never expected it. Others who should have received it have not done so. The amounts would seem to be purely guesswork.
CANCOPY will tell you when they finally appear before this committee that they are looking at various models, computer programs, survey techniques, etc., to determine how this money can be best distributed. Meanwhile, the undistributed royalties have augmented, earned interest and almost doubled in the last year. Most of this money comes from the public sector, or institutions directly funded by the public sector, that have already paid large amounts at least once through salaries and sometimes more through grants for the production of most of the material that has already been licensed.
The CANCOPY situation involves a self-appointed collector in search of money first, then a method of distribution, then a publisher, and last and least an author. The vast majority of those authors who create, labour and toil to write scholarly materials that are used on Canadian campuses will be lucky if they ever see $50 or $100 a year before taxes from CANCOPY. Most would gladly pass on this, give it up, in exchange for the relief of the copyright chill that is now pervading our Canadian campuses.
CANCOPY is also unlike any other established collectives in Canada. By their own admission, they have no real rights in most of the repertoire they purport to represent. Their indemnity scheme, which is the basis of their bargain with the academic community, is of very dubious legality. They offer permission and indeed encouragement to copy vast repertoire in which they have no right of representation. That itself is contrary to the Copyright Act, which makes it just as illegal to authorize infringement as to commit it.
I urge you, when you have a moment, to look at section 3 of the Copyright Act. I'm sure you've already looked at it, but look at it again, because it's the most important section of the act. It provides a list of all the exclusive rights of copyright owners and says that only they can give permission to do these things. Then it goes on to say that anybody can commit an infringement by authorizing any such acts. By the case law, this means to sanction, countenance, permit or encourage somebody to do something.
I suggest to you, Mr. Chairman, that the very fundamental basis of CANCOPY's operation entails in many instances, if not most, infringement of copyright. This is all very ironic, given the logo on their web site and I suppose in their brochure that says ``We make it easier for schools, governments, corporations and individuals to obey Canada's copyright laws''.
Moreover, unlike well-established collectives in the music industry, some of which I think are still here, CANCOPY is dealing mainly in works created with taxpayers' dollars, access to which is needed by students and scholars to ensure Canada's competitiveness. The music industry is about entertainment; reprography collectives are about education and research. Therefore a different regime is not inappropriate, and many countries have recognized this.
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As it happens, about $15,000 of this annual revenue of CANCOPY comes from an organization called Laurier Office Mart Inc., just over 1%.
For reasons best known to CANCOPY, it has undertaken to license fewer than 30 copy shops across Canada to date, making life rather difficult and more expensive for these shops and leaving the others alone. Mr. Avedissian will enlarge on that.
I've already talked a lot about CANCOPY, but what about Laurier? Who are the Avedissians? They are a family that has a long familiarity with what can go wrong in government. Some of them are here tonight. They are originally from Armenia. As a result of the Turkish genocide in the early part of this century, their ancestors fled to Lebanon for safe haven. In turn they had to flee the notorious Lebanese civil war and the government repression that was going on there, and they came to Canada in the 1970s.
They have operated out of the same premises on Laurier Avenue east of King Edward here in Ottawa, on the edge of the University of Ottawa campus, for more than 16 years. Father Avedissian operated a sewing machine business. Mr. Shahé Avedissian converted this business to an office supply and copy shop business some 11 years ago. Being 11 years in the same successful business, on the same premises, is stable by Canadian standards or any other standards around the world.
Canada should be very proud of small businesses like this. We shouldn't be prosecuting them, Mr. Chairman and members. We should not be prosecuting them.
But in 1993 along came the RCMP, assisted by CANCOPY, who decided they wanted to test the law of copyright on the Avedissian family. We will not dwell on this unfortunate incident. The facts are all set out in the brief and the accompanying materials that you have.
The Avedissians were fortunate enough to have able counsel - not myself, I would add - who succeeded in getting them acquitted after much stress, time and trouble and about $15,000 in legal fees.
Their acquittal was appealed by the crown. This was an ill-advised appeal after an ill-advised trial and an ill-advised prosecution, and their acquittal was upheld on appeal. You have copies of the judgments and, as I say, most of the relevant documents.
What does Laurier Office Mart want to see in the new bill? First and foremost, they want to see that the criminal remedies be amended so that there can be no possibility whatsoever of criminal charges being laid unless there are both wilful commercial intent and a threshold of damages of $5,000.
Why do we suggest that formula? Because this formula follows an approach that has been in place in the United States for some time, was recently reconsidered and amended in 1992, and has worked in that jurisdiction. And that's a jurisdiction that I think we can all respect.
I've given you copies of the U.S. legislation. If you care to look at it at a later time, the statutory mechanism involves a cross-link between the Copyright Act and another title under the U.S. code. I've given you both of them.
The provisions essentially require that all the following conditions be met before the criminal law can be invoked.
Firstly, in the U.S. there has to be a minimum of $2,500 U.S. of retail value. We suggest the amount of $5,000 because of course American dollars are worth more, but also some current proposals by the current commissioner of patents in the United States and current bills are also suggesting $5,000 as a threshold amount.
There must be at least 10 copies made within 180 days and there has to be wilful intent for commercial purposes or private financial gain. This is to ensure that the law is used only against pirates and not against people like Mr. Avedissian.
I'd be happy to give you more material on this in due course if you need it. It works in the United States.
No credible authorities in Canada support the status quo. There are counsel for the various computer, motion picture and sound recording trade associations, who obviously have a vested interest and who defend the status quo. And they're frank enough, I must admit, to suggest they do so for among other reasons that it's cost-effective to them.
Even the senior Department of Justice person involved with the 1988 amendments that gave rise to these very high and punitive fines suggests that criminal offences be taken right out of the Copyright Act and dealt with as fraud under the Criminal Code. This would provide some safeguards. We don't go as far as Mr. Piragoff does in his paper. We would be happy to see the threshold concept - which would involve considerably less surgery, I might add, to this bill.
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In any event, either of the foregoing proposals would also have the additional advantage of saving considerable RCMP resources that could presumably be devoted to more urgent priorities, such as the pursuit of real criminals involved with real terrorism, violence, drugs, telemarketing fraud on the elderly, protection of the Prime Minister, competent security checks, parking on the Hill, and other more urgent matters.
There are a lot of statistics kicking around about this. At a conference I chaired in 1994, an RCMP spokesman indicated that they handle about 1,000 cases on average per year involving copyright infringement. If we assume that this might take 100 person-years of RCMP officer and Attorney General legal personnel time - and that's probably not a far-off assumption - we could be looking at a minimum of about $7.5 million or more, in terms of taxpayers' money, and that's not counting court time or judges' salaries or any of those expenses.
This is also all being duplicated at the provincial level through organizations such as the Ontario Provincial Police. Unfortunately, sometimes there is even a rivalry between the provincial police and the RCMP to see who can catch the most copyright criminals. Clearly the direct cost to taxpayers is many tens of millions of dollars a year. The cost to innocent victims such as the Avedissians cannot be measured by money. The benefit to the multinational corporations that use this system to avoid the dirty work of collecting debts is enormous.
The cost in terms of chill on our campus and our classrooms is also not capable of being calculated. We all know teachers and professors who are so afraid of certain collectives and the RCMP that they no longer hand out materials in classes or at meetings. Part of the chill problem arises because our fair dealing laws as they now exist, and as proposed, are absurdly limited by world standards. Every minute little exception, such as the right to write on a blackboard, means that anything not on this bizarre list is illegal.
The only other comparable country to Canada to take such an approach in modern times is the United Kingdom. The leading authority on copyright in that country, who is now a judge, Mr. Justice Laddie, condemns it very explicitly. He says - and please permit me to read you these few lines; they're very important. He is referring to the U.K. act:
- Here one may find no less than 49 sections setting forth in (too great) detail what are the
exceptions to copyright protection. Some of these regulations will soon be out of date, and an
embarrassment. Others can only have been invented by persons who did not think out properly
what they were supposed to be achieving. How much better the Americans do it with their
simple, flexible ``fair use'' exception! (a concept which originated on these shores, by the way).
This is in the preface of what most people would regard as the current leading textbook on U.K. law, by the current leading authority on U.K. copyright law - something we should consider.
It seems obvious that further education of RCMP officers in order to avoid inappropriate prosecutions could only result in a further expenditure and a wastage of taxpayers' dollars toward an inherently hopeless cause.
If the best lawyers and judges in Canada and other countries, including Mr. Justice Laddie, cannot agree on the time of day when it comes to the meaning of ``fair dealing'' or ``substantial'' in the context of a civil action, it seems clear that the state has absolutely no legitimate role to play in terms of invoking the criminal process against individuals and small businesses in anything other than blatant piratical situations, especially when these doctrines are the essence of the possible defences in many cases when the amounts in question are very small. The Laurier Office Mart criminal prosecution established that very clearly, both at trial and on appeal.
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Interestingly - and this is very important - CANCOPY forces copy shops to pay for what is fair dealing and insubstantial copying. Their own view of the law supersedes what almost anyone would agree actually is the law - even in Canada, even today. This is a take-it-or-leave-it provision in their licence agreement.
We have provided in the supplementary materials a copy of the CANCOPY licence agreement and taken the liberty of marking the provision that very explicitly says that Mr. Avedissian has to pay CANCOPY for fair dealing and for insubstantial - in other words, small, trivial - amounts of copying, even though they ought to be free under the Copyright Act.
This is a take-it-or-leave-it provision. In the United States I have no doubt that the antitrust authorities would make mincemeat of such provisions. You will see this in the material that we have supplied, as I said.
On to statutory minimum damages: Laurier Office Mart believes these should be dropped from the bill. They will most certainly be abused; it is only a matter of time. It is already clear that CANCOPY is in no hurry to negotiate new deals under the current copyright law. They are waiting until the statutory minimum damages are in place and the playing field will tilt heavily in their direction.
With the exception of the United States, which has a much different and more liberal fair use regime, no other comparable country has these statutory minimum damage remedies.
I have given you copies of section 107 of the United States act, which you've probably also heard about in many other contexts. Interestingly, it explicitly allows for multiple copies for classroom use - something CANCOPY does not want to see.
In any case, copy shops serving an educational clientele should have available any defences and any exemptions that would be available to educational institutions, provided they are serving legitimate faculty, staff, or students of educational institutions. This follows from the normal rules of agency, and will encourage efficiency on the campus through competition in photocopy services with the universities.
We believe the Copyright Board should be required by statute to fix rates, terms and conditions that apply - mutatis mutandis, as we lawyers like to say - for copy shops serving educational institutions, based upon the nature of the clientele. Otherwise the universities and collectives will be tempted to set prices so as to make copy shops non-competitive. The copy shops cannot be expected to take on major collectives or the universities either in front of the Copyright Board or the Competition Tribunal. It's just too expensive. It's an impossible burden for them to meet financially.
The Copyright Board should be required to ensure that those who collect royalties for them are compensated for their efforts on behalf of the collectives, just as small businesses are partly compensated now for tax collection. Mr. Avedissian will expand on this.
There are two new matters I need to mention that are emerging and developing even as we speak. The first is an initiative I understand is being sought by some parties to amend this bill to clarify that a ``plate'' as defined in the Copyright Act might include such a thing as a photocopy machine. Mr. Chairman, I'm not quite sure what is being sought, but it seems to me that it's very dangerous. This could be both unnecessary and may lead to unforeseen consequences.
Under most sound legal systems, including our current law, something can be seized if it is actually used to commit a serious crime. It's not a problem under the current law. But it should not be seized because it might be so used, or someone thinks it was so used, especially if the device or machine has other legitimate purposes. Our current law is flexible enough. As well, Mr. Avedissian will tell you about the business of leasing expensive photocopying equipment.
The other matter that needs clarification may involve what constitutes a collective - for purposes of the educational sector at least - or what constitutes a licensing scheme.
The chief executive officer of CANCOPY has explicitly indicated that they are leaning towards a withdrawal of their ``transactional licence'' scheme and moving towards a clearing-house function. As I understand it, they want to serve as a clearing house in the process of collecting amounts set supposedly individually by publishers.
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This is not necessarily bad per se, and indeed is of interest to some institutions with which I am familiar. However, the transactional licences are useful, even if somewhat high-priced, for those institutions or those businesses that do not need or want a full-fledged blanket licence that may not fit. When it comes to blanket licences, one size does not fit all.
The reasons for this move by CANCOPY are complicated, but I think the result is clear enough. Users will be forced either to take a blanket licence that may not suit them, or a licence of some sort based on an intermediary scheme that is clearly intended to be beyond the reach of the Copyright Board.
If this is the intention - and there is every indication that it is the intention - we may need an amendment to Bill C-32 clarifying that clearing-house functions or licensing schemes that operate in this way are under the jurisdiction of the Copyright Board, where the clientele are educational institutions or those that serve them, such as the Laurier Office-Mart, in order to protect numerous societal interests.
Mr. Chairman, I may have more details on this in the next days, and I hope you and your colleagues will entertain them if I can provide them to you. As I say, this is an emerging issue.
We want to stress that Laurier Office Mart is not asking for anything that is radical or unusual. It is, in many respects, Bill C-32 that is in fact at the margin of intellectual property law on the world stage.
When Parliament empowers collectives to the extent that Canada is now proposing to do, it should also provide specific safeguards to control and prevent abusive behaviour by collectives. Bill C-32 does the former; it fails to do the latter.
Mr. Chairman and members, the motto ``faster, higher and stronger'' is a worthy motto for the Olympics, but not for intellectual property law.
Mr. Avedissian will now tell you about what it has been like for him to operate a small and honest business. He will tell you what you as members of Parliament can do to ensure that small businesses like his can thrive and help the cause of commerce and education in Canada. We will then be pleased to answer questions.
Mr. Shahé Avedissian (President, Laurier Office Mart): Thank you, Howard.
Good evening, Mr. Chairman and members of the committee. I'd like to start off by thanking the committee for selecting my company and giving me the opportunity to express my views regarding Bill C-32 and how it will affect my reprography business, located next to the University of Ottawa.
Please keep in mind that my presence here today is supported by three reputable associations. They are the Ontario Association of Quick Printers, also known as the ONAQP; Canadian Office Products Association, or COPA; and locally by the Ottawa-Carleton Board of Trade. These associations combined represent approximately 2,250 businesses or individuals that support my position. Their letters of support are included in the package that was given out today.
I appreciate the effort of Bill C-32 to compensate authors, and I realize the importance of the role of a collective society such as CANCOPY, but I highly disagree with their methods. I will share these points with you later on.
Having been through one controversial court case and an appeal regarding copyright violation, I have become more familiar with the issues of copyright than I would have liked. I feel that Bill C-32 represents a real threat to the future of my business and others like it. Licensed copy shop owners who obtain a copy shop licence from CANCOPY and who are willing to collect and remit a reasonable fee for copyright clearance are still prone to criminal prosecutions and civil lawsuits for the smallest copyright violations.
I am still at the mercy of the RCMP for criminal charges. In addition, collectives now want to get minimum statutory damages of $500 for each work, and they may now want to come and seize my printing equipment if they think I might be infringing somebody's rights.
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I will try to explain to the committee the difficulties a licensed copy shop owner will have in his everyday work should Bill C-32 become law as drafted.
Protecting copyright is a good thing. I strongly feel that we need a new law in Canada to clarify what is a violation of copyright, what is not, who may or may not be exempted from infringing, and also to prevent heavy-handed prosecution for such petty amounts of violation, as was the case with us for supposedly $32 a month paid royalties. This was a waste of taxpayers' money. It cost me and my family a lot of money, time, and stress to prove our innocence. Yet Bill C-32 does not protect me from a repeat of what happened to me.
Criminal law: I'm very concerned about this. Nothing we do falls under the notion of criminal activities. We do not copy books in entirety. We refuse to copy any work we are not sure of - and there are many instances of this taking place. I do not want my family, staff and clients to be paranoid as to when the next RCMP officer will come in to carry out an investigation.
Since our trial, neither the Government of Canada nor CANCOPY have been able to enforce universal compliance of copyright throughout the private copy shop sector. This has caused an unfair burden to those copy shops who have obtained CANCOPY licences. There are only approximately 30 licensed copy shops in all of Canada, to date.
We presently turn away a lot of business when copying requests exceed the limit of our CANCOPY licence. Our unlicensed competitors benefit from this, and have done so for the past four years. It is very frustrating to see most of our competitors operating without copy shop licences. They offer savings of 40% to 65%.
If Bill C-32 becomes law as drafted, it will force judges to impose liability and large damages awards for even the smallest infringements. The proposed statutory minimum remedies are prone to serious misuse. We would have lawsuits facing us on a regular basis, no matter how careful we are. These interruptions can be very costly for small business. At $500 minimum for each infringement, a handful of inadvertent mistakes could force us into bankruptcy.
The proposed statutory minimum remedies are very harsh, and are not needed. They are very one-sided. They protect the authors, publishers, and collective societies. But what happens if I get sued by a publisher who is on CANCOPY's exclusion list, or if I need to rely on the controversial indemnity scheme that the CANCOPY licence offers?
Licensed copy shop owners cannot be bogged down in courts to justify why one of their employees may have copied three, four, five, ten or even twenty pages from an article in a book for a student, for his or her legitimate class readings.
Bill C-32 offers very limited exemptions to fair-dealing defences to educational institutions. Students, professors, and researchers should be exempted from copying violations if they are copying material for educational purposes. However, these exemptions should also be made available to licensed copy shops who serve that same market. The law should not force the people who are exempt to do their copying inside the boundaries of an educational institution. It should give them the choice to copy where they please. With proper identification documents they should be able to copy what they need at licensed copy shops. Similar practices already exist in the software industry.
If licensed copy shops are not given the same exemptions as educational institutions, we will not be able to compete fairly. As you probably know, most universities across Canada are surrounded by copy shops in their immediate neighbourhood. Most of these shops rely heavily on the markets where they are situated. I can speak for my company in saying that well over 50% of my walk-in clientele is generated from the university. Yes, we do compete with the University of Ottawa, and vice versa. Competition is good for everyone, most of all for the students. But if Bill C-32 becomes law as drafted, most of these shops if not all will be forced to close their doors.
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I think this threat is so real because over the years we have all made commitments to considerable investments in our leased equipment and overhead expenses, and if suddenly we are completely shut out of this market and are obliged by law to pay all of our creditors, specifically the companies leasing the photocopying equipment, we will soon find ourselves adding to the long list of Canada's unemployed.
And if all of this is not enough, this is a typical example of what happens when a student comes in to my store and requests copies of copyrighted material. First, they claim what they are copying - in most cases legitimate requests - is exempt from any royalty charges and they are not infringing copyright law because the material they are copying is for educational purposes. We have to tell them sorry, but our CANCOPY licence does not allow us to copy this for you without charging you a royalty.
Then the debate starts between our staff and in most cases a very clever student. Suddenly we have to educate the student. It should have been CANCOPY's mandate to educate the public regarding copyright compliance, but instead my employee will now have to do all the dirty work for CANCOPY - and by the way, they love free publicity, all at our expense. My employee has a very difficult task ahead of him explaining to the student and convincing him or her why they should get their copies done at Laurier Office Mart for anywhere from 40% to 65% more for their educational photocopying.
What do you think happens next? They leave our store frustrated, thinking we are trying to rip them off, and they will find one of many other unlicensed copy shops and get them copied there, without questions asked, or they will walk up to a do-it-yourself machine at the University of Ottawa and pay no royalties there.
One thing I'm certain of is that they don't come back to our store. And this goes on day in and day out. One student tells another and another that Laurier Office Mart is not a reasonable place to get their copies done, because we're fully complying with the CANCOPY licence and the law. As you can see, all the odds are against us to service this market.
We need a law requiring that we be treated the same as the university when we serve the same community. Otherwise, we will be driven out of business. The University of Ottawa already sees us as a threat. They won't let us distribute flyers on campus. And at the same time, CANCOPY tells the professors that University of Ottawa is authorized to charge a lower royalty rate than we do - 3.5¢ versus 5¢ is the current rate. I have attached the necessary correspondence to today's handout to support these statements. They are pages 7, 8 and 9.
One of CANCOPY's mandates was to educate the general public, especially the university committee and our industry. However, they failed to do so. It was only after our case that they began a public awareness campaign. In fact, Lucy White of CANCOPY testified at the criminal trial that they counted on cases like ours to get free publicity - of course, all at my expense. She also said we were a problem because we asked too many questions about copyrights.
CANCOPY's response to my concerns is very simple: collect royalties on everything there is, with the exception of the short list that they provide. But they fail to realize that as their licensees, we come across many people who object to their scheme of collecting royalty on just about all the work that is out there.
I think it is legally and morally wrong for them to say collect from all. They do not represent all authors or publishers. Why don't they provide us with a list of authors and publishers they represent, so that we clearly know what to copy under licence and what not? They should know the list of their authors and publishers. How expensive can it be to keep updating that list?
Why is it that CANCOPY is allowed to deduct overhead costs of approximately 17.5%, according to their figures, from their revenues or royalties? We are not compensated for all of the administrative burdens that CANCOPY's record keeping requires. After all, we are also part of the royalty collection process.
It was up to us to devise our own spreadsheet to help with the tremendous record-keeping requirements, and to train our staff. I have enclosed a sample of CANCOPY's log sheet that we are required to administer, all at our own expense. My last report to CANCOPY consisted of 74 pages similar to the page you have in front of you, which is on page 10.
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The Government of Canada decide to use Laurier Office Mart as a test case. The impact on our company was devastating, much like when a tornado plows through a small town and leaves the people to pick up the pieces bit by bit to rebuild.
For the Department of Justice, of course, this was just another case. But for a small family business such as ours, whose driving force is me, these past four years have been very disruptive, thus preventing me from efficiently marketing my company's services to new clientele. I see nothing in Bill C-32 to prevent this from happening to me or to any other licensed copy shop owner again.
In conclusion, Canadians should have a copyright bill that is fair to all parties. It must address the issues that involve all home-made copies from students, teachers, authors, publishers, collecting societies and copy shop owners.
As drafted, students and teachers will have their educational exemption only if they copy within the physical boundaries of an educational institution. Publishers and authors will be rewarded. Collecting societies will have paid their overhead and more, and we will soon be forced to close our doors - unless, Mr. Chairman, your committee recommends some changes to this bill.
Thank you for you time.
[Translation]
The Chairman: You have no questions, Mr. Leroux?
Mr. Leroux: Not at this time.
[English]
The Chairman: Mr. Abbott.
Mr. Abbott: You mentioned that there are about 30 licenced copy shops in Canada. About how many copy shops are there, roughly?
Mr. Avedissian: For example, in the immediate area around the University of Ottawa there are six of us, I believe, but only two of us are licensed. If you were to multiply that factor across the major cities, the percentage is very small.
Mr. Abbott: So there are six copy shops like yours and two that are licensed.
Mr. Avedissian: Within about five or six blocks east, west and north of the university, and only two of us are licensed.
Mr. Abbott: You say two of you are licensed. Are you licensed?
Mr. Avedissian: Yes, I have been licensed for four years.
Mr. Abbott: I'm sorry, I don't understand. You were prosecuted but you were licensed.
Mr. Avedissian: This is another interesting thing. We became licensed on September 1, 1993. They came into our store with a search warrant in July 1993, and the first thing the RCMP officer asked was whether we had a CANCOPY licence. I said what's a CANCOPY licence, and he suggested I get hold of an attorney, who would explain it to me. So he carried on with his work.
About a month after that we got in touch with CANCOPY and found out that the rules had changed and so on. We obtained a CANCOPY licence as of September 1, 1993, but the RCMP didn't charge us until well into October.
Mr. Knopf: It was November 18, Mr. Abbott.
Mr. Abbott: So the progression is that the RCMP arrived in July, you took out a licence in September, and you were charged in November for activity you had undertaken prior to being licensed. Is that correct?
Mr. Avedissian: That's right.
Mr. Knopf: Mr. Abbott, the chronology gets even more interesting. On April 12, 1994 - this is set out in the brief - a letter was sent to Mr. Avedissian by Mr. Arthur B. Renaud of the law firm that acts for CANCOPY. Mr. Renaud threatened to commence a civil lawsuit against Laurier Office Mart for an injuction, damages, profits and costs unless Laurier Office Mart were to plead guilty to the outstanding charges. That's in the material you have.
Mr. Avedissian: It's on page 18.
Mr. Abbott: Plead guilty to a civil case or a criminal case?
Mr. Knopf: To the criminal charges.
Mr. Abbott: It's been a long time since I was in university, but it doesn't strike me that civil law and criminal law should be mixed. Does that still hold?
Mr. Knopf: Nothing has changed since you went to university.
Mr. Abbott: Many things have changed.
Mr. Knopf: Not in that respect.
Mr. Abbott: My hair has gone away and everything else.
If the company is licensed, what amount of royalties do you pay on an annual basis?
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Mr. Knopf: About $15,000 a year.
Mr. Avedissian: This current year is almost $15,000.
Mr. Abbott: You mentioned that there is a saving of 40% to 65%.
Mr. Avedissian: Yes. What I was referring to is this - if you come into my copy shop and ask me to make a photocopy of copyrighted material, regardless of my fee.... Let's say it's 5¢. If you want this page copied I have to collect my 5¢, of course, plus charge the student an additional 5¢ to copy this page. So he has to pay me 10¢ now - 5¢ is for my own profits, and 5¢ I send to CANCOPY.
It gets even more interesting, because a lot of the time they put two published pages on one sheet when they're photocopied. I still have to collect my 5¢ fee or whatever it is - 6¢ or 5¢ - but this time I have to collect 5¢ for each published page. So it ends up costing the student 15¢ - 10¢ in royalties because there are two pages on the sheet, plus my fee of 5¢. As a licensed copy shop, that's what I have to do when they come to my store. But when they walk out of my store they have a choice of four others that are not licensed where they can spend just 5¢ or 6¢ or whatever their fee is, and get this done there. The saving is quite a bit. It's not a few percentage points.
Mr. Abbott: What would happen if they made the copy on the university campus itself?
Mr. Avedissian: If they go to a do-it-yourself machine they do not pay anything. However, the university was licensed a year ago, I think. If they go to the reprographic centre they pay a different royalty rate there, because the university royalty rate that CANCOPY has assigned is 3.5¢. Again, we're at an unfair disadvantage. If you come to me, I have to charge you a 5¢ royalty fee, but if you go to the university it's only 3.5¢.
Mr. Abbott: Finally, on changing from a criminal sanction, as you're obviously recommending, to a dollar sanction - in other words, taking it out of criminal law - would it be correct to assume that without the fear of criminal activity being there, people might be enticed to take a chance? Particularly if there's a specified dollar amount, they might say I'm going to be paying $15,000 for the year and the penalty's $5,000, so I'll take my chances and if I get caught I'll pay the $5,000.
Mr. Knopf: Mr. Abbott, I see a need to clarify. In the United States, which is the precedent I'm suggesting you look at, the threshold retail value of the copying is $5,000. The fine can be substantially more than that, but the threshold is crossed when you cross $5,000. It's like if you drive over 100 kilometres an hour, you will be charged for speeding. That's a $5,000 retail value threshold, but the amount can be substantially more. The amount of the fines that are available now - $25,000 for summary conviction or a maximum $1 million on indictable - are not the problem. The judges are quite capable of exercising discretion to make sure the fines are not prohibitive.
The problem right now is that an honest business like Laurier can be charged, put through the mill and threatened with civil proceedings in a manner that made many lawyers extremely unhappy when they heard about it - and over a $32 alleged infringement. So the concept is a $5,000 minimum.
The legislative history of the United States law, which I'd be happy to provide to you and your colleagues, makes it very clear that this was intended to deter piracy, to deter commercial activity, not to catch innocent people who may owe some money civilly because of an inadvertence, ignorance or a number of reasons. There are plenty of mechanisms in place right now to ensure that money is collected. But it's outrageous to think they can be charged criminally, pay fines, go bankrupt and in theory go to jail for these small amounts of money.
I don't think anybody in a just society could regard that kind of inadvertence as criminal behaviour.
Mr. Abbott: Thank you.
The Chairman: Mr. Bélanger.
Mr. Bélanger: Thank you, Mr. Chairman. I have a few quick questions.
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This is an aside, but I just want to make sure I understand. You provided a letter saying the University of Ottawa wouldn't let you advertise. The letter says you need to ask permission. Did you ask permission and did they refuse?
Mr. Avedissian: Yes, verbal permission, not written. We've been doing this for the past six or seven years the same way; nothing we did this time was different.
Mr. Bélanger: I'd be interested in knowing what the response would be to a written request. I'd be curious.
Mr. Avedissian: I haven't done it. Maybe I should try the system, but I'm pretty sure it's going to be a no.
Mr. Bélanger: Well, let's find out.
Mr. Avedissian: Okay.
Mr. Bélanger: The second question relates to the University of Ottawa, and maybe it's something we haven't looked at throughout this whole exercise so far. It seems there's some sort of uniformity in royalties or redevances that are paid. For instance, 3.2% is applied to the revenues of radio stations for authors, but there doesn't seem to be any difference in the 3.2% whether you're very popular or not.
I'm intrigued by this 5¢ versus 3.5¢. Would either of you know if there are even greater variances than this? Are there deals that CANCOPY has signed with departments of education, for instance, that might be for even less than 3.5¢?
Mr. Knopf: Mr. Bélanger, I don't know of any deals that are less than 3.5¢. It gets quite complicated. The deal with the universities is 3.5¢ per page, but there's also what they call a part A fee, an FTE fee, for each full-time equivalent student, of $3.50 per year. So it's $3.50 per year for each student plus 3.5¢ a page for copies that are sold to the students.
Mr. Bélanger: I presume if I asked I would be told the $3.50 per student represents 1.5¢.
Mr. Knopf: 1.5¢?
Mr. Bélanger: To bring it from 3.5¢ to 5¢.
Mr. Knopf: No, no, there's no connection. The $3.50 is a flat fee for each student.
Mr. Bélanger: I understand that, but....
I will be asking this question of CANCOPY, but in your mind, how is it justified that copyright in one place is worth 5¢ a page and in another place, for the same work, is worth 3.5¢ a page?
Mr. Knopf: Mr. Bélanger, some of this I can only surmise and some of it I know.
It depends on who you ask. The universities will say they bargained hard to get the low rate of 3.5¢ per page. As you may know, the universities and CANCOPY are currently embroiled before the Copyright Board over whether that rate should be 3.5¢ or 5¢ or to split the difference.
The copy shops have always had to pay a higher rate. They've never had any opportunity to negotiate. CANCOPY will probably tell you that if it were up to CANCOPY management, they would be paying the same rate as the university, but their publisher members won't put up with it or the universities won't put up with it. The universities are quite happy to see organizations such as CANCOPY go down the tube, because the universities are now developing reprography into a profit centre.
So it's a rather mixed up situation of politics. It's rather a labyrinth of competition law issues, none of which Mr. Avedissian or his colleagues can afford to pursue, although in principle there are remedies.
Mr. Bélanger: May I have one more question, Mr. Chairman?
The Chairman: One last question.
Mr. Bélanger: It's to do with the deterrence, I guess you want to call it, or the minimum amount. You suggest $5,000; I guess that's taken from the American law.
That came up before in our committee, and personally I had a bit of difficulty at the time with the magnitude of it, because even at 5¢, you're looking at 100,000 copies. That's pretty close to industrial productions. For a copyright that was worth, you say, about $32 - and you went through this whole rigmarole - you want to go to $5,000. That seems to be quite a stretch. Would you care to comment on that?
Mr. Knopf: Yes, Mr. Bélanger.
I suggest, with all respect, that it's not so simple as saying that at 5¢ a page, you have to get caught with 100,000 illicit copies.
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Under the U.S. law, the judges have a considerable amount of discretion - and the legislative history reflects this - to determine how to calculate that $5,000. I suggest the same could be built into an amendment we devise so that if the judge looked at the infringement and said ``If on a civil basis this is worth $5,000, then we've crossed that Rubicon, we've crossed the threshold, and criminal law may be appropriate''.... So only 20, 30 or 100 copies of a course pack may easily get you up to $5,000 worth of civil damages.
Mr. Bélanger: You're talking about triggering criminal law here?
Mr. Knopf: Yes.
Mr. Bélanger: Thank you. I hadn't made that distinction. Now it's clear. Thank you very much.
Mr. Knopf: I would like to just supplement one point, Mr. Bélanger.
The use of criminal law in Canadian copyright in a heavy-handed way has been recent but indeed, as I say, heavy-handed. Organizations such as SOCAN - and I'm not acting for SOCAN and I carry no particular brief for them - have survived and prospered for 60-odd years through their predecessors and have not once had to resort to the criminal law.
It's not necessary to use the criminal law at all in order to achieve compliance. But if we should have it, and probably we should - indeed we're required, by our international treaty obligations, to have it - there should be a threshold so that trivial amounts don't get brought in.
Mr. Bélanger: Thank you.
The Chairman: Mr. Peric, followed by Mr. Arseneault, and then we'll close.
Mr. Peric: Thank you, Mr. Chairman.
Mr. Avedissian, do you have to pay a licence fee for your licence?
Mr. Avedissian: No. The CANCOPY licence is such that it doesn't cost me anything to have their licence. It just will allow me to collect a licence from a consumer and turn around and remit it to them. There is no cost.
Although, on the contrary, in the newspaper reports they said there's a licence fee, at least from what I know and what I've done, there's no such amount paid ahead of time to have a licence with CANCOPY.
Mr. Peric: Thank you.
The Chairman: Mr. Arseneault.
Mr. Arseneault: Thank you, Mr. Chairman.
Thank you, gentlemen, for the presentation, because it gives us a different focus, and it's nice to have that different focus from time to time.
I'd like to get to the thrust of your argument. Correct me if I'm wrong, but you seem to indicate that Bill C-32, as it's proposed, is going to make it much easier for people to take you to court for infringement. Is that correct? Is that the thrust of your argument?
Mr. Knopf: That's correct, Mr. Arseneault, because the statutory minimum damages will ensure that a plaintiff basically will always win and will always win enough to justify going to court, even when the damages are truly trivial.
Mr. Arseneault: Okay. Would it not then make it much easier to prosecute those who have no licences whatsoever and would it not put them, your competitors, out of business a lot more easily?
You talked about printing shops around the University of Ottawa, for instance. Two are licensed and four are not. Obviously the reason those four are not licensed is it's too hard or too costly for those who think they're infringing upon copyright to bring them to court. With the new law, should it not be easier to take those four...?
If Laurier Office Mart is following the law, is registered and is paying its royalties, as you claim you are - and I don't doubt that - then would it not even it off? It's a level playing field all of a sudden. The other four are going to have to get their CANCOPY licence or else they're going to end up in court, the same way you did at one point.
Mr. Avedissian: It could do that. It could force them, or in essence scare them, to sign up. That's one part of the solution.
On the other hand, the CANCOPY licence we have right now does not fully protect us from all kinds of copying. Specifically because they don't represent all the authors, how can they protect me?
For example, if you had published a book and a few pages were copied at my place and you had not given CANCOPY the right to represent you, how could CANCOPY then legally protect me against people outside the repertoire?
There's also their exclusion list. If, by mistake, we make photocopies off their exclusion list and that particular publisher comes after us, there's still no protection.
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Mr. Arseneault: When the student comes in for a copy and gives you the material, you or your staff copy it. They don't go to the machine themselves.
Mr. Avedissian: No.
Mr. Arseneault: That's part of your service.
The other thing is the difference between Ottawa University's rates and your rates. Are you aware of any difference of rates between profit establishments? There could be a debate on whether Ottawa U is considered profit or non-profit, but we're not going to get into that debate.
Let's take the example of another store in that area that's licensed from CANCOPY. There may be another two or three in Ottawa that you're aware of. Are they all paying the same rate as you?
Mr. Avedissian: The other copy shop licences?
Mr. Arseneault: Yes.
Mr. Avedissian: As far as I know, yes. I would say they're uniform.
Mr. Knopf: If I could just add a gloss to that, Mr. Arseneault, CANCOPY does offer what they call transactional licences. One well-known client of mine uses those rather than the blanket licence. They are more expensive in turn - they seem to be up around 9¢ or 10¢ a page - but may result overall in being less expensive for an institution than a blanket licence.
But ironically enough, a community college such as Algonquin College may end up paying more, for various good and valid reasons, by choosing the transactional licence than Mr. Avedissian has to pay running a small corporate business.
I'd also like to embellish on Mr. Avedissian's answer to your earlier question about whether higher penalties would achieve greater compliance. Certainly that is one possible draconian approach to solving the problem, but it's not necessarily good criminal law policy.
I remember a law school professor of mine suggesting that a very easy way to solve certain criminal problems in this country, ranging from illegal parking to drunk driving, is simply to execute on the spot everybody who commits a violation. Then crime would stop immediately. But is that the kind of society we want? Do we want to impose absurdly high penalties on everybody at random in order to achieve a result?
Mr. Arseneault: They have to be reasonable.
Mr. Knopf: Yes, there are other solutions to law enforcement.
The Chairman: Mr. Arseneault, do you have any more questions?
Mr. Arseneault: I don't have any more questions, but I want to congratulate Mr. Avedissian and other small entrepreneurs, because that's what makes the economy work in Canada.
Mr. Avedissian: Thank you.
Mr. Chairman, I'd like to make just two quick comments.
Our whole frustration is we're caught between two people we're fighting. One, we want our competitors to be on the same level playing field as us. Also, we don't the university to have an advantage over us, because we do compete in that market.
That flat fee of $3.50 that they pay per student would allow any student to go to any university do-it-yourself machine and make 1,000 copies. But if he comes to my place that's not the case. For even one copy I have to charge him. He has a legitimate right to say ``In the Copyright Act there's such a thing as fair dealing. It's for my research.'' Even for four pages, under my CANCOPY licence now I can't say ``Yes, you're right. I'll copy it without charging you.'' Then I've violated CANCOPY's licence.
These are very serious issues, and I'm stuck with it. I've been stuck with it for the past four years.
Mr. Knopf: It's worth recalling that the reason people utilize Mr. Avedissian's shop or shops like it is that universities tend, if left on their own, to be slow, inefficient and expensive in this process. There's a need for competitiveness. There's a need to keep the universities on their toes and help the students have this kind of competition.
The Chairman: Thank you very much, Mr. Avedissian and Mr. Knopf, for appearing before us tonight and for being so indulgent with the delays. We appreciate it. We've learned a lot tonight. Thank you.
The meeting is adjourned.