ARCHIVED — Canadian Recording Industry Association (CRIA)

COPYRIGHT REFORM PROCESS

SUBMISSIONS RECEIVED REGARDING THE CONSULTATION PAPERS

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Documents received have been posted in the official language in which they were submitted. All are posted as received by the departments, however all address information has been removed.

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Submission from Canadian Recording Industry Association (CRIA)received on September 14, 2001 via e-mail

Subject: CRIA Submission - consultation Paper - Digital Issues

PDF Version

SUBMISSION OF THE CANADIAN RECORDING INDUSTRY ASSOCIATION IN RESPECT OF CONSULATION PAPER ON DIGITAL COPYRIGHT ISSUES

INTRODUCTION

The Canadian Recording Industry Association ("CRIA") is a not-for-profit corporation whose mandate is to promote and further the objectives and interests of its members and the recording industry in Canada. The CRIA member record companies are primarily engaged in the creation, promotion, marketing and distribution of recorded music. CRIA member record companies are major contributors of Canadian content and actively seek out and nurture Canadian talent, which they market to the world.

CRIA member record companies are represented by the Audio-Video Licensing Agency Inc. (AVLA), a licensing agency that licenses the reproduction of audio sound recordings and the reproduction and performance of music videos for over two hundred rights owners in Canada. The AVLA is agent of the primary beneficiaries of the right to remuneration for the public performance and communication to the public of sound recordings administered by the Neighbouring Rights Collective of Canada (NRCC), a joint collecting society that collects royalties on behalf of producers of sound recordings and performers that hold a joint right to remuneration.

CRIA is the national office for Canada of the International Federation of the Phonographic Industry (IFPI). IFPI is the organization representing the recording industry worldwide. It comprises a membership of 1,400 record companies in 76 companies. Members range from the multi-national record companies to small independent producers. IFPI has national groups in 46 countries, including Canada.

Most of the world-renowned Canadian recording artists are represented by a CRIA member record company. CRIA members are also engaged in all other aspects of the recorded music industry, including manufacturing, producing and distributing sound recordings of music and audio-visual recordings of performances of music, or as they are more commonly called, music videos. The thirty-two members of CRIA account for approximately ninety percent (90%) of all recorded music manufactured and sold in Canada. This high proportion of market share of CRIA members' sound recordings on physical carriers such as cassette tapes and compact discs is reflected in the high proportion of their content in radio programming. CRIA members' repertoire of sound recordings accounts for the highest proportion of the lawful as well as the unlawful use of music on the internet.

We are very pleased that the Departments of Industry Canada and Canadian Heritage are presenting stakeholders and interested parties with a platform to present their views and concerns regarding digital issues and amendments to the Copyright Act.

In this submission, CRIA will respond to the proposals as set out in the Consultation Papers as these relate to the concerns of our members. This submission is divided into seven parts, including the Introduction. Part II will address the need for ratifying the WIPO Treaties. Parts III, IV, V and VI will respond to the digital issues raised in the Consultation Papers as follows: Making Available, Technological Measures, Rights Management and ISP Liability. Part VII is the concluding statement.


MEMBERSHIP IN THE WIPO TREATIES

International Trends on WIPO Treaty Ratification and Membership

Thirty countries must deposit instruments of ratification before the WIPO treaties come into force as international treaties. Placing such a high number of ratifications to bring the WIPO Treaties into force is unusual and underlies the significance that countries have attached to the Treaties. The WIPO Treaties are administered by the World Intellectual Property Organisation, a United Nations organisation based in Geneva, Switzerland.

As at July 31st, 2001 the WIPO Copyright Treaty (WCT) had been ratified by twenty-seven countries and the WIPO Performances and Phonograms Treaty (WPPT) had been ratified by twenty-four. The United States has already ratified both of the treaties.

The European Union has adopted a Directive on Copyright and Related Rights in the Information Society, which constitutes the basis for the fifteen EU Member States and the European Community itself to ratify both treaties. Due to the Association Agreements that the European Community has concluded with non-Community countries, ratification by the European Community and its Member States will trigger ratification by no fewer than forty-two countries.

By 2004 there will be an estimated eighty plus countries that will have ratified and thus become contracting parties (members) to the two WIPO Treaties. The WIPO Treaties will be the standard for intellectual property protection in future Trade treaties.

To become a contracting party Canada must amend its copyright law to ratify both the Treaties and deposit an instrument of ratification with the Director General of WIPO.

Benefits of Adopting the Treaties

The level of copyright and related right protections established in the WIPO treaties provide important economic incentives to creative individuals and copyright industries in every country that has ratified the treaties, both to reward and promote national culture and creativity, and to pave the way for electronic commerce in copyrighted works and products. Laws that implement the WIPO Treaties promote national culture, and discourage counterfeiting and piracy. The treaties also provide a substantial legal basis for healthy electronic commerce.

Economic Incentive

The Treaties, and copyright law generally, provide creators and rights holders with 'exclusive rights' to determine whether and how their works are copied and distributed. This ensures that they enjoy the economic rewards of their creativity, which serves as a powerful incentive to produce and distribute their creative products. This incentive is real: well over $1 trillion in

intellectual-property based products were sold world-wide, $37 billion in sound recordings alone in 2000.

Cultural Protection

Copyright law also encourages local and national expressions of culture. Inadequate copyright protections deprive local creators and rights holders of the ability to determine the value of their creations and adequate compensation, and subject them to unfair competition from infringing copies of their works accessible world wide via electronic commerce.

Piracy Deterrent

Counterfeiting and other forms of piracy (unauthorized copying and distribution) have become a major criminal enterprise. For example the global pirate music market topped 1.8 billion units in 2000, worth an estimated US$4.2 billion. Piracy not only hurts right owners, but also destroys legitimate jobs and deprives governments of substantial tax revenues. The WIPO Treaties support other copyright laws that provide the principal legal tools for fighting piracy.

E-commerce Engine

Electronic commerce in copyrighted products requires a healthy trading environment where only legitimate copies of works are transmitted, under the terms negotiated or permitted by the rights owner. The WIPO Treaties provide rights owners in countries that have ratified the two Treaties with such legal certainty. As the treaties are adopted worldwide, they will ensure consistent protections and prevent 'piracy havens' from developing across the wide reach of the Internet.

The Internet is Global

National protection is not enough to obtain the benefits of electronic commerce. Canadian authors, performers and producers need as much protection abroad as they need within the Canadian frontiers. They will only get it if Canada is a contracting party of both WIPO Treaties.

Statistics Canada reported that in 2000, 51% of Canadian households measured had at least one member that had regular internet access. One million Canadian households were connected to the internet by cable and 3.7 million households were connected to the internet by telephone. In total, 4.7 million Canadian households have internet connections to access a global infrastructure of information and entertainment but there will be no corresponding legal protection for Canadian content and creators without WIPO ratification. which would extend the international benefits of the treaties to all member countries but not to non-member countries.

The Canadian Government and WIPO Treaty Ratification

The Canadian Government played a central role in the creation of the Treaties in Geneva in 1996. Further, the Canadian Government signed the Treaties in December of 1997, acknowledging in the announcement that the Treaties "are designed to establish international minimum standards in the area of copyright and related rights". As indicated above, Hhowever, these standards would only apply to contracting parties to the two WIPO Treaties.
The consultation papers recently published by Industry and Heritage do not propose WIPO Treaty Ratification even though many of the provisions in the WIPO Treaties are among the major proposals in the digital issues paper: right of making available, rights management protection and protection of technical measures. The few other issues that would need to be addressed to achieve WIPO ratification compliance do not justify failing to ratify the WIPO Treaties now. Those other issues that need to be added are moral rights for performers, clarification of ownership in photographs and some very minor amendments of a largely technical nature.

Consequences of Not Adopting the Treaties

Even existing protections and any of the new rights and protections proposed in the consultation paper will not be internationally protected if the WIPO treaties are not ratified by Canada. The Government is proposing to modernize the law to protect copyrighted property within our borders, it will deliberately deny our creators and rights holders the same protections internationally.
MAKING AVAILABLE

The 'making available' right is one of the most important achievements of the WIPO Treaties and constitutes a basic requirement for the development of electronic commerce.

The international community, in the 1996 Diplomatic Conference that adopted the WIPO Treaties, unanimously acknowledged that record producers and performers depend on this exclusive right of Making Available to cover the use of their sound recordings in the digital environment. The reason was not only to fight piracy. The international community recognized that the dissemination of sound recordings in digital networks such as the Internet constitutes a primary form of exploitation of music, and therefore should be subject to the exclusive control of the rights owner.

The right of making available is fundamental for the dissemination of music over digital networks and therefore for promoting the development of electronic commerce and of new business models by the recording industry. The development of new business models is immensely attractive not only to copyright holders but also to consumers, who will be able to determine the content, timing and place of the transmissions they receive and therefore enjoy greater and easier access to music .

This right is also of the greatest importance for record producers to stop the unauthorised exploitation of their sound recordings over the Internet, by pirates who upload and open to the public databases containing thousands of music tracks.

The WIPO treaties leave open the possibility to implement a right of making available either on the basis of an existing exclusive right or through enactment of a new exclusive right. Different legal systems may justify different approaches. In principle, countries can include the 'making available' right within the sphere of the 'communication to the public' right-probably the preferred choice in most countries- or the distribution right.

The WIPO Treaties define the making available right on the basis of the capability of members of the public to access works or sound recordings from a place and at a time individually chosen by them. The right is thus designed to cover all forms of transmission that allow for a degree of inter-activity, i.e. all types of exploitations that allow the consumer to have the choice of the time and the place to enjoy music. This should be measured by whether individual members of the public (not the public at large) can determine when and where they want to access a work or sound recording.

The broad formulation of a right of making available is capable of accommodating many different types of interactive exploitation of, for example, recorded music ranging from services that only allow the recipient to listen to the recorded music, to services allowing the download of permanent copies of music tracks. This should include, for example, multi-channel digital services (by on-line or wireless means) that play the same content several times a day and allow for the automatic identification and recording of all or part of the content. Therefore, not only 'music on demand' services but also all other services with a like effect are within the scope of the right of making available.

The act of making available is subject to the control of the record producer or other rights owner from the moment the work or sound recording is accessible to members of the public, regardless of whether it has been accessed or not by the recipient of a transmission. It is the accessibility of the work or sound recording-the potential for it to be received or perceived by members of the public that is the decisive factor. Thus, any implementation of this right must cover not only actual transmissions, but also the initial act of opening a server to the public.

'Making available' can happen either via physical networks such as a cable network or by wireless means such as mobile phone networks or signals. Implementing legislation therefore should make clear that this right applies not-with-standing the media or the transmission means by which music or other protected material is made available. The copyright concept of telecommunication as defined in the Canadian Copyright Act already provides a technologically neutral approach that satisfies the scope of principles set out in the treaties.

The treaties require that authors , record producers and performers whose performances are fixed in sound recordings benefit from the exclusive making available right.

CRIA believes that, as far as the rights of record producers are concerned, there is a clear need to add a new exclusive right in article 18 of the Act. If Canada is going to implement the right as established in the WPPT, it should them recognize its broad scope, as explained above. The proposal contained in the Consultation Paper falls short of providing the required protection for it to constitute an adequate implementation of the WIPO Treaties. The right of remuneration established in section 19 of the Copyright Act does not constitute a satisfactory level of protection for Internet transmission and should be limited for traditional forms of broadcasting and communication to the public.

In the consultation paper the government has posed the question concerning how a right of making available would affect the balance among the various copyright interests. This question should be restated. We should rather consider how the absence of a making available right would negatively affect the existing balance among the various copyright interests.

From the perspective of the music industry an imbalance of rights as a result of not adding a making available right to the Copyright Act could have serious consequences. Consider that in the market for tangible copies of recorded music there is a mutual interplay among right holders. Producers of sound recordings pay royalties to performers and also pay royalties to music publishers through the mechanical reproduction collectives. Music publishers, the recipients of mechanical reproduction royalties, in turn submit those royalty earnings, less a percentage, to songwriters. Thus a stream of revenue comes from the exploitation of various rights by supplying the demand in the market for tangible copies of recorded music. Record companies' investments in performers and music plus the overhead necessary to create the master recording and to promote and distribute copies of recorded music are protected by the right of reproduction. Also in the market for tangible copies there is a secondary use of recorded mus ic by broadcasting organizations and through public performances that generates income for broadcasters through the sale of advertising air time. Some of the revenue collected by broadcasters is allocated to pay a royalty to various copyright holders, including record producers and performers under a compulsory license that is often referred to as neighboring rights.

The internet and the access to intangible copies of sound recordings online will disrupt the existing balance among rights holders if a right of making available is not added to the Copyright Act. Reproduction alone would not be sufficient to allow copyright owners to license the use of their works as the real economic exploitation of, for example, a sound recording, is the transmission of that sound recording on demand or interactively. In addition, the online distribution of intangible copies of sound recordings supplants a growing proportion of the market demand that has, up to recently, been satisfied by a supply of tangible copies in the form of CD's, tapes and vinyl records. There must be a corresponding exclusive right such as a right of making available to exercise in the intangible market and to provide protection from infringement in that intangible market. Without a corresponding right of making available for the producers of sound recordings they will experience a loss of revenue both as a re sult of not being able to conduct business online with security in their transactions to adequately supply the market demands for intangible copies and losses will be experienced from availability of infringements which will grow to fill the void left by the lack of legitimate sources for recorded music on-line. These losses, in fact, are already happening. Further, there is a trickle down effect because the fewer revenues the record companies receive the less there is to invest in new music and new performers. The fewer new performers and the smaller quantity of new music available results in less income for songwriters and less revenue for broadcasters who can not attract advertisers because there is less new recorded music available for radio programming.

The only balancing of interests among rights owners that might be relevant to introducing a right of making available is the allocation of revenues in the exercise of an author's right of making available between music performing rights societies and publishers mechanical rights collectives. This allocation should be an internal matter and of no consequence to establishing an exclusive right of making available for authors generally and for producers of sound recordings and performers.

The Consultation Paper also raises the issue of exceptions. Exceptions to the making available right, as any exceptions to existing rights, need to be carefully assessed when applied in the context of digital and on line forms of exploitation. In all cases, the three step test established in the Berne Convention and the TRIPs Agreement, and later confirmed in the 96 WIPO Treaties requires to take account of the economic effects of any exception and the possible prejudice that their application in a digital environment might bring. Many traditional exceptions are inappropriate for the making-available right. For example, a library exception should not allow a library to 'make available' a sound recording to all 200 million internet users. A time-shifting exception would also be inappropriate when works are made available interactively-the very nature of interactivity is to allow the user to select the listening or viewing time therefore a time shifting exception is not applicable.

Finally, the Consultation Paper questions to what extent do existing rights such as the reproduction right fail to provide a measure of control that is comparable to a distinct "making available" right.

The response to this question is very clear. The reproduction right alone is not sufficient or adequate as the only right to license the on-line exploitation of sound recordings. It does not reflect the true nature of the act of exploitation (which goes beyond the making of copies) and it would not take account of important elements for the license such as the intended recipients of the communication. Equally, the reproduction right alone will not be sufficient means to combat piracy.

1. How would a "making available" right affect the balances among the various copyright interests?

This question has been answered in the body of our comments above; however, it is significant to note that for many years there has been a coexistence among various rights holders who all hold an exclusive right of reproduction. Producers of sound recordings and authors of musical works, as well as other works, have, in respect to the right of reproduction, exercised their various interests without conflict. There should be no reason to consider that a right of making available would affect the balance any more than the exclusive right of reproduction has in the past.

2. In which respects might such a right require limitations or be subject to exceptions?

Again, this question has been answered in the body of our submissions above; however, we would again note for the record that the WIPO Treaties require adherence to the three-step test as set out in Article 9(2) of the Berne Convention.

3. In which respects do existing rights, e.g., the reproduction right, fail to provide a measure of control which is comparable to a distinct "making available" right?

As with the previous two questions, the answer to this question is contained in the body of the submission above. In addition, however, the very concept of the right of making available was developed and eventually adopted at the Diplomatic Conference in 1996 because is was recognized that the right of reproduction was not broad enough to sufficiently protect the interests of copyright holders in a digital environment of transmissions of intangible copies (the internet).

LEGAL PROTECTION OF TECHNOLOGICAL MEASURES

The underlying policy reasons for legislative intervention to protect technological measures stem from the changes new technologies have brought to the availability of copyrighted works. Technology has freed the use and enjoyment of content from tangible objects on which works, sound recordings and performances are embodied. In the same token, this has made the protected subject matter more vulnerable to unauthorized use. Law and technology must be used together to maintain adequate incentives for creativity. Failure to offer adequate legal protection to technological protection measures (TPMs), will inevitably inhibit the development of electronic commerce in copyrighted products.

TPMs have the capacity to deter piracy and encourage rights owners to use new media such as the internet. But first and foremost they allow the development of a wide range of new licensing models and new services for the benefit of the consumers. TPMs are the basis for the development of new marketing, distribution and usage models, which open up a sophisticated new range of ways of enjoying music and other protected subject matter.

Unfortunately, technological solutions are vulnerable to misuse. Technical systems can be hacked. Unauthorized passwords and access codes frustrate access-control systems and the making and distribution of circumventing devices pose a serious threat to the integrity of any TPM. Not only content owners, but also consumer electronics and computer manufacturers, which spend substantial sums developing new equipment and encryption technologies to play protected material will find their innovation frustrated and their investment rendered worthless unless TPMs enjoy adequate legal protections.

As no technological measure can permanently resist deliberate attacks, a TPM is only as
good as its legal protection. With the introduction of legal protection for technological measures, the WIPO Treaties create a unique new means of protecting copyrighted products as new digital and internet based uses emerge. The WIPO treaties recognise that authors and other rights owners increasingly rely on technical means such as encryption and other mechanisms to control unauthorised copying, transmission and use of their products.

The WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) require adequate legal protection and effective legal remedies against the circumvention of TPMs applied to protected works and sound recordings. These provisions are formulated in a broad and neutral way, outlining rather the desired result than how to achieve it. Based on recent experiences, in Europe, the US and Japan it is clear provisions implementing theTreaty obligations need to cover both the act of circumvention as well as the manufacture and distribution of a range of circumvention devices.

The amendments to the Copyright Act should therefore take into account the following key elements:

§ The legal provisions should prohibit both the act of circumvention TPMs and the manufacture and dealing in circumvention tools
§ Protection should cover technologies that control access to copyrighted material as well as those that control the exercise of exclusive rights
§ Protection against circumvention tools should include the creation and dissemination components, as well as complete devices and include software and data such as access codes
§ Any eventual limitations to the legal protection should be focused narrowly enough to preserve the adequacy and effectiveness of the prohibitions on circumvention
§ Standards of proof should include "direct and indirect" indicia of a "circumvention" purpose
§ Effective legal remedies must include criminal sanctions


1. What factors suggest legislative intervention at this time?

Adequate legal protection for TPMs is a 'conditio sine qua non' for the development of legal electronic commerce with copyrighted goods. TPMs are the equivalent of walls, doors and burgler alarms, used in the "off-line world" to protect property and business assets.

TPMs enable right holders to create new services and new business models that better cater to individual tastes and needs. This potential remains unfulfilled if circumvention of technologies is allowed and circumvention devices are freely available.

These two basic factors have already lead to legislative interventions at international level (the WIPO Treaties) and in a number of other major jurisdictions; the US, the EU, Japan and Australia. Unless swift legislative action is taken, Canada risks falling behind in the development of electronic commerce and Canadian right holders do not receive adequate protection.

The principle of incorporating measures for the protection of technology is not foreign to Canadian copyright legislation. The Copyright Act currently provides specific provisions with respect to infringements that result from the alteration of a "plate" used to make infringing copies. This concept in our law should be expanded in regard to digital issues. It is appropriate to legislate on these matters at this time.


2. What factors should be considered determinative in deciding whether circumvention and related activities ought to be dealt with in the context of Copyright Act?

The WIPO treaties oblige member countries to provide adequate legal protection to technologies used by right holders to protect works, sound recordings or performances. It is natural therefore that in other major jurisdictions the legal protection of technological measures used by right holders has been dealt with in the copyright context. This allows countries to address and solve the specific questions related to protection of intellectual property in the proper context. There is no reason for Canada to deviate from the international norm. While it might be possible to approach implementing technical measures in a horizontal manner, this has not been the experience in the jurisdictions which are leading in this specific area of protection of intellectual property, particularly copyright. There simply exist no reasons to take the question of protection of technological measures used by the right holders to protect works and other protected subject matter out of its natural context.

3. Should provisions related to technological measures be subject to exceptions or other limitations?

The case of allowing exceptions to protection of TPMs is similar to allowing someone to break the lock on a safe, or take copies of works from shops without paying for them. Allowing the act of circumvention or circumvention devices weakens the overall robustness of the TPM encryption or other technology rendering the investment in equipment and technologies worthless and undermining the development of new licensing and business models.
The basic principle that has been recognized both in the US DMCA and in the EU Copyright Directive is that the protection against the making and dissemination of circumvention tools must be unhampered and overreaching. Against this background, for instance the Australian Digital Agenda Bill, now law, clearly fails to meet the WIPO Treaty obligations.

Also, allowing circumvention in cases where a traditional copyright exception applies would totally undermine the protection of TPMs. It is therefore of paramount importance that any eventual limitations to the legal protection of TPMs must be carefully crafted and take into account factors such as the availability of content in other formats, the willingness of right holders to accommodate exemptions, and the danger that the limitation poses to the integrity of the technology and to protection of the content. For example, the EU Copyright directive empowers EU Member States to make right holders in certain limited circumstances offer to beneficiaries of enumerated public interest exceptions the means to enjoy those exceptions . However, not even in these circumstances is the circumvention or making of circumvention devices as such allowed.

4. Are there other non-copyright issues that need to be taken into account?

We fail to identify issues that would be genuinely relevant. Intellectual property should be protected both in the on-line and in the off-line world. Legal protection of technological protection measures is an essential element of effective protection of intellectual property in the on-line environment, exactly in the same manner as safes and alarms are for the protection of tangible property in the off-line environment. Adequate protection for technological measures together with adequate legal rights ensure that music, films, books and other creative material is made available to the widest possible audience in the greatest number of ways.

TPMs are developed to permit wider and more convenient access. The advance in technology permits rights owners to cater to the demands and tastes of consumers in more refined ways, with more flexible options. Naturally, works will remain available in traditional formats. Privacy issues, should any exist, should be dealt with under separate privacy legislation.

LEGAL PROTECTION OF RIGHTS MANAGEMENT INFORMATION

Rights management information (RMI) is information that identifies content protected by copyright, the rights owners in such content and the terms and conditions of use associated with it. RMI often takes the form of an electronic watermark placed in protected content. Watermarks can exist on their own simply as a rights owner's 'label'. Watermarks may also interact with devices that receive or play content and determine the conditions of use of such content. They may provide the basis for additional user services, such as information accompanying a radio broadcast that gives artist, track and purchase details about particular songs.

One of the most important uses ofis RMI is the digital management of rights. Automated digital rights management systems provide a fast and easy tool for users to secure licenses for the use of particular content, and for rights owners to take account of such usage.

The WIPO Treaties provide provisionsestablish provisions for protection for of RMI information about used in connection to works, sound recordings and performances, as well as the identification of authors, record producers, performers or other rights owners. These protectionprotections also extend to information about terms and conditions of use of content. This may be either details of a licence already granted or information about how and under what conditions a licence can be obtained.
WPPT Art. 19
(1) Contracting Parties shall provide adequate and effective legal remedies against any person knowingly performing any of the following acts knowing, or with respect to civil remedies having reasonable grounds to know, that it will induce, enable, facilitate or conceal an infringement of any right covered by this Treaty: (i) to remove or alter any electronic rights management information without authority; (ii) to distribute, import for distribution, broadcast, communicate or make available to the public, without authority, performances, copies of fixed performances or phonograms knowing that electronic rights management information has been removed or altered without authority.

(2) As used in this Article, 'rights management information' means information which identifies the performer, the performance of the performer, the producer of the phonogram, the phonogram, the owner of any right in the performance or phonogram, or information about the terms and conditions of use of the performance or phonogram, and any numbers or codes that represent such information, when any of these items of information is attached to a copy of a fixed performance or a phonogram or appears in connection with the communication or making available of a fixed performance or a phonogram to the public.


To enjoy protection, RMI must be attached to or embodied in a copy of the work, sound recording or fixed performance or for intangible means of use appear in connection with the use of the work, sound recording or performance. It can appear either on the tangible object or in machine-readable form for both tangible and intangible objects.

Rights holders need RMI to label their works, and to let users identify the works and the conditions
of use, particularly in the digital environment where activities move quickly and often leave few residual traces. Works that appear in a digital form can easily be changed, mutilated, misappropriated, reproduced and put into distribution channels without the consent of the rights holder.

The information found on the copy, booklet or cover of a tangible copyrighted product helped rights holders track and prove such illegal activity where copies are in a tangible form in the analogue world. RMI fulfills this function in the electronic environment where copies are in an intangible form.

Digital watermarks and other RMI information also will give consumers confidence in the authenticity of the source of a work or sound recording and certainty as to the conditions for its use. The manipulation of RMI can lead consumers to draw wrong conclusions about permitted uses, and thus can have an economic effect equivalent to common fraud.

As with technological protection measures generally, the integrity of RMI is vulnerable to circumvention. Legal protection iis necessary to prevent deliberate manipulation and distortion of RMI. In order to enable confidence in the authenticity of works, and the integrity of information about the identity of rights owners and the conditions of use, it is essential to protect RMI itself and to prevent the distribution of copies where such information has been removed or manipulated.

Most countries are finding that their copyright laws require some modernising to deal adequately with the legal protection of RMI. There are several elements that the government s and right holders have should consider found crucial to ensure the effective legal protection of RMI.

The starting point is the definition of RMI. The treaties themselves provide a clear and useful definition, which would be important to include in implementing legislation. The definition must include the required categories of protected information (information on works, sound recordings or performances; on the identity of the author, the record producer or the performer; or on the terms and conditions of use). It should also indicate that the information must be attached to a work, a fixation of a performance or a sound recording or must appear in connection with any intangible type of use including the communication to the public, broadcasting, or 'making available'.

Of the two options proposed in the consultation paper, only Option A is appropriate, as it incorporates the definitions of Article 12(2) of the WCT and Article 19(2) of the WPPT. We do not think Option B is an appropriate alternative.

One of the treaties' main aims of protection is the prohibition of manipulation of RMI. The treaties explicitly mention the unauthorised removal and alteration of RMI. Another type of manipulation of RMI having equivalent effect is the unauthorised addition of information. This activity can mislead users and businesses of the permitted uses of the copyrighted work and discourage the use of RMI, just as much as the removal or alteration of RMI does.

The second main element of protection is the prohibition of activities relating to copies as to which RMI has been removed or altered without authorization. To enable rights owners to take such copies out of circulation and prevent further harm, it is important to provide a complete list of prohibited activities including distribution, export, import for distribution, broadcasting, communication to the public, and the making available to the public of such copies where the RMI has been altered or removed without authorization.

Activities relating to RMI need not lead to legal proceedings if they have been performed accidentally and innocently. The knowledge test established by the treaties varies depending on the type of activity. As regards the removal or alteration of RMI without authorization, the test is whether the person knew, or in the case of civil proceedings had reasonable grounds to know, that such manipulation would induce, enable, facilitate, or conceal infringement of copyright. These tests are consistent with the provisions for secondary infringement of section 27(2) of the Copyright Act.

As regards the dissemination without authorization of content where RMI has been manipulated or removed, the test is whether the person knew that RMI has been manipulated or removed, as well as whether the person knew, or in the case of civil proceedings had reasonable grounds to know, that the dissemination of content without RMI (or with manipulated RMI) would induce, enable, facilitate, or conceal an infringement of copyright. These tests are consistent with the provisions for secondary infringement of section 27(2) of the Copyright Act.

In parallel to the protection of technological measures, meaningful protection against RMI manipulation and removal should extend to devices designed or adapted to manipulate or remove RMI. There is a substantial danger that devices that systematically 'wash out' watermarks while leaving the content unchanged will undermine the confidence of rights owners and legitimate users, which is essential to the use of rights management information in the first place. The protection required by the treaties can be achieved best by also prohibiting the manufacture, importation, distribution, offer to the public, provision or otherwise trafficking in devices designed or adapted to manipulate or remove RMI, and means with equivalent effect.

Virtually all countries have to change their law in order to implement the protection of RMI. Protections already provided under criminal law (computer fraud), moral rights, media law, trademark law, personality right or competition law typically provide only limited aspects of the required protection.

1. What information should be protected under the Copyright Act? Given that information may cease to be accurate over time, should information relating to, for example, the owner of copyright and to terms and conditions of use be protected?

In the Copyright Act, the provisions for registration contain basic information about the owner of copyright and licensees of copyright, which might also be subject to change. It is accepted that the registration system is adequate, despite the possibility of flaws as pointed out in this question. RMI's would have the equivalent purpose of registration but not require the same formalities and would be implemented by copyright owners rather than through a government organization. RMI would therefore work in conjunction with registration systems where these exist. We therefore do not believe that there is any reason for concern that information and terms and conditions would not be accurate. The International Standard Recording Code (Isrc) is a code which has been employed worldwide by record companies. Isrc identifies the recording throughout its life and is intended for use by producers of recordings as well as by copyright organizations, broadcasting organizations, media libraries, archives and other u sers. In particular, Isrc is meant to identify the nationality of the first maker, the record company registering the code, the year the recording was made and the individual identifier of the recording. Twenty -two countries are currently using the Isrc. Canada has issued Isrc registrant codes to 224 Canadian record companies.

2. Certain terms and conditions may not be legally valid in Canada if they are contrary to public policy. In light of this, what limitations should there be on the protection of such information? Is a provision required that specifies that the protection of such information does not imply its legal validity in Canada?

To the extent that information will relate to contractual provisions, if that is the intent of this question, legal validity would have to rely on conflict of law provisions as these apply with respect to Canadian law.

3. Given the fact that some technologies serve a dual purpose, i.e., reflect rights management information and protect a work against infringement, how should provisions concerning rights management information take into account provisions regarding technological measures?

To the extent that provisions would be complimentary, we can see no reason for concern, given that an infringement of one of these would also mean an infringement of the other.

4. If the Act were amended to protect rights management information, does the fact that some technologies may be used both to set out rights management information and protect a work against infringement mean that duplicate or overlapping sanctions could result in some cases?

If there are concerns with regard to doubling of charges or claims for infringement, these should be satisfied in respect of the decisions of the courts in such cases and would be resolved in respect of the quantum of penalty or damages awarded.

5. Are there non-copyright issues, e.g. privacy, that need to be taken into account when addressing rights management information?

Privacy issues, should any exist, should be dealt with under separate privacy legislation. We can see no conflict with protection of rights management information as part of the copyright legislation. There is a provision in the Copyright Act in section 89 which might be invoked with respect to privacy.

LIABILITY OF NETWORK INTERMEDIARIES, SUCH AS INTERNET SERVICE PROVIDERS, IN RELATION TO COPYRIGHT

During the last few years, a number of countries have confronted the issue of network intermediary (NI) liability and tried to clarify the liability of NIs for the transmission of infringing material in general and of copyrighted material in particular. Two aims have been driving this need for clarification: the need to provide legal certainty both to NIs and to content providers, and the need to establish a legal framework that provides an incentive for all parties to cooperate in the fight against on-line infringements.

Some jurisdictions have approached the issue of liability in a horizontal manner, developing rules of general application for all types of infringements. Other jurisdictions have chosen specific rules to respond to specific types of on-line infringements such as infringements of copyright.

There are many countries though which have not considered that there is a need to address the issue of NI liability as the application of general liability rules and its interpretation by case law is proving to lead to satisfactory and fair solutions. Courts in a number of jurisdictions have been careful to avoid the imposition of liability on NI that do not have any knowledge or means of control over infringing material. At the same time, the application of general liability principles has ensured that NI act diligently and do not turn a blind eye to infringing activities.

Furthermore, the establishment of specific rules on the liability of NI is not a WIPO Treaty issue and although it is recognized to be an important question it is not essential that this issue be addressed in this context. Indeed, if there are any issues that have been raised in the Consultation Papers that could be delayed for future resolve this issue stands out for that particular distinction.

In addition, the issue of service provider liability is currently before the Federal Court of Appeal on judicial review of a decision by the Copyright Board in respect of the approval of a tariff for royalties proposed by the authors' performing rights society, SOCAN. CRIA has in fact been granted intervenor status in the judicial review on two issues one of which is NI liability. CRIA has taken the position that Network Intermediaries should be liable based on a knowledge standard similar to the standard that currently exists in respect of secondary infringement. That standard implies constructive knowledge: "knew or ought to have known". The establishment of rules on NI liability should be delayed pending the resolution of the SOCAN tariff judicial review. The decision of the Federal Court of Appeal in the judicial review could provide important insights, which should be examined before addressing this matter in a consultative process, if that is subsequently necessary.

If the government decides to proceed with the issue of liability of NI at this time, CRIA respectfully submits that the following general principles should underline any proposals:

q Any proposal should strive to preserve the basic principles of copyright law while advancing electronic commerce;
q Any proposals should preserve and strengthen incentives for cooperation between copyright owners and service providers in detecting and dealing with online piracy.

Proposals to establish blanket immunities for a particular category of players (NIs) are unacceptable. They would result in a serious erosion of copyright protection, amounting to limitations to the reproduction and other rights that are likely to be in contradiction of Canada international obligations, in particular in the context of the TRIPs agreement.

On the basis of these considerations, CRIA believes that the proposal advanced in the Consultation Paper as regards Network Intermediaries' liability is not acceptable. The proposals are overly broad in scope and exceed by far the exemptions available to network intermediaries in the existing legislative text. As a result it would result in an extremely unbalanced set of provisions that would take away any incentive for parties to cooperate in the fight against piracy.

The major problem with the proposal advanced in the consultation paper is that it starts by establishing a general limitation on liability for copyright infringement. This is done without consideration of; the intermediary's role in the dissemination of content, its possible knowledge of the infringement, its possible role in controlling in one way or another the content or the possible economic benefit derived by the NI from the infringing activity. This results in the establishment of wide and unjustified limitations to the rights established in the Copyright Act amounting to a considerable weakening of copyright protection.

CRIA recommends that the government consider the following elements if it is going to establish any limitation for Network Intermediary liability:

- No limitations of copyright but rather "safe havens" from liability for copyright infringements for intermediaries may be established

- These limitations should not be general, rather they should only be available with regard to activities where Network Intermediaries act as true "intermediaries" in the sense that they just transmit or store information provided by third parties. The definition of the activities covered is extremely important and should be treated in detail. "Blanket" exceptions based on generic definitions are not appropriate.

- Limitations of liability should be restricted to liability for damages, thus preserving the possibility of injunctive relief, even if the Network Intermediary is protected by a limitation. Network Intermediaries are very often the only entities in a position to help stopping or preventing infringements. Injunctive relief is an essential remedy for copyright holders and as such should be preserved without compromise.

- Limitations of liability can never be justified if the Network Intermediary had knowledge or reasons to know about the copyright infringement. The aim of liability rules is to ensure that Network Intermediaries are not subject to unreasonable levels of liability when they have no knowledge or possibility to know and when they have no control. If a Network Intermediary has knowledge of the copyright infringement or has reasons to know and it does not act to take down the infringing or unlawful material, the Network Intermediary should not be granted immunity from liability either for direct or indirect infringement.

- Legislation should encourage incentives to ensure that Network Intermediaries cooperate with copyright holders to (i) stop or prevent infringements, (ii) identify the primarily responsible for the infringements .

- Legislation should also ensure that Network Intermediaries accommodate and not interfere with technical protection measures and rights management information employed by copyright owners.

It might be useful, as a guide, to draw from the legislative experience in the European Union and the United States where this issue has been addressed in a manner that reflects a compromise accepted by all interested parties. In this respect the approach taken by the United States in the Digital Millennium Copyright Act and in the Electronic Commerce Directive in the European Union indicate the emergence of an international consensus on how to legislate in this matter. Both sets of regulations have avoided establishing new limitations on copyright (which is in fact what the government proposal in the Consultation Paper would do) but rather have targeted the cases in which Network Intermediaries are acting as true intermediaries, with limited or no control over the third party content, and have established for those specific cases and under specific circumstances the necessary limitation of liability.

CRIA would like to stress that any accommodation for Network Intermediaries must fit within the framework of copyright law and thus promote the production and dissemination of creative works. In Canada there is a great deal of emphasis laid on cultural development so much so that our legislators have in the past very adeptly managed to protect Canadian cultural interests. This policy is not visible at all in the proposal for a Network Intermediary liability exemption. In fact, the proposal presented in the Consultation paper is extremely harmful to smaller- scale Canadian copyright industries.

1. Do the current provisions of the Copyright Act already adequately address ISP concerns?

The current provisions of the Copyright Act do not adequately protect copyright owners as the remedies available are unwieldy, difficult to enforce, slow to resolve and expensive with little deterrent effect. In this way the current provisions do not benefit the concerns of copyright owner and do not provide any certainty for Network Intermediaries. Network Intermediaries, knowingly or unknowingly, are the conduits for all of the infringements that occur online over the internet. Network Intermediaries' contractual arrangements with their subscribers also shelter the identities of the vast number of individuals that can with impunity operate websites that provide world wide access to billions of infringing copies of sound recordings, films, software, books and any other copyright materials capable of transmission without a tangible carrier as a medium. Appropriate policy should not permit network intermediaries such as the large telephone companies and cable companies to escape all responsibility for millions of copyright infringements made possible by the operation of their commercial businesses.

2. Some ISPs and rights holders have entered into agreements for dealing with infringing material. In what respects is this approach sufficient or insufficient?

Industry agreed 'Notice and Take Down' (N&TD) procedures can be a useful tool to help eliminate illegal content and activities from NI systems. Such self-regulatory rules improve predictability for all parties and promote electronic commerce in copyrighted materials. However, N&TD agreements cannot function on the basis of a legal framework that would exonerate NI of any liability. A clear legal framework that attributes liability to NI that do not act to remove or block infringing content when they have knowledge or reasons to know of such infringing content is required to ensure both legal certainty and the co-operation of all parties involved.

All in all, N&TD Agreements constitute additional industry-agreed tools that can, within their scope of application, render co-operation more effective. The practical solution of private agreements is only acceptable if these are supplementary legislative provisions that preserve the basic rights of copyright owners.

3. What other intermediary functions that have not been discussed in this section, but that are nonetheless being carried out by ISPs, ought to be considered when developing a policy regarding ISP liability?

None. On the contrary, we believe that one of the major weaknesses of the proposal in the consultation paper is that it does not sufficiently differentiate between different functions and the conditions that need to be met for a Network Intermediary to be considered as acting as such.

4. To the extent that a notice and take-down system is being contemplated, how would such a system affect the framework in Canada for the collective management of copyright? What alternative proposals should be considered? Under what conditions would a compulsory licensing system be appropriate?

Notice and Take Down agreements fulfill completely different functions and have nothing to do with collective management mechanisms. The aim of Notice and Take Down is to stop infringements in the fastest possible manner within a framework that gives legal certainty to NI. Any ideas to establish compulsory collective managements of rights need to be considered separately from the establishment of notice and take down agreements. In that context, the government needs to be aware that imposing compulsory management of rights amounts to the establishment of a compulsory license and will be in many cases incompatible with TRIPs obligations (regarding the reproduction right) and with future WIPO obligations (e.g. as regards the making available right). CRIA opposes strongly any such attempts.

5. To the extent that issues surrounding the scope and application of the reproduction right are being examined in relation to Internet-based communications, are there reasons why this examination should be restricted to the question of ISP liability?

With the exception of private copying and other limited exceptions in the Copyright Act for public policy purposes, there are no exemptions to the reproduction right. Network Intermediaries are, by and large, commercial enterprises that operate on a motive of profit. Historically, copyright law in Canada has not provided exemptions to exclusive rights other than public policy purpose exemptions; for example, to permit easy access for the handicapped. It is not appropriate that profit generating commercial enterprises should be permitted exemptions in the copyright law which are equivalent to those few exemptions for public policy purposes.

CONCLUDING STATEMENT

CRIA wishes to thank the Departments of Canadian Heritage and Industry Canada for taking the initiative of preparing the consultation papers. Copyright reform is a very serious matter for the members of CRIA, for their future investments and for the protection of their intellectual property and the creative talents of performers and songwriters. Recorded music has been greatly affected by the development of digital technologies and the commercial exploitation of the internet. CRIA members and their international affiliates are suffering continuing losses through the unauthorized and infringing copies of their copyrighted sound recordings that have been traded on the internet. The unlawful use of telecommunications for the purposes of copyright infringement must be brought under control. The most effective and efficient way for the Government to assist the cultural industries, including the recording industry, is to move swiftly to implement the provisions of the WIPO Treaties into the Copyright Act.

The foregoing submissions represent the concerns and recommendations of the members of CRIA and its international affiliates. CRIA reserves the right to supplement any of the concerns and recommendations set out in this submission.

CRIA also wishes to reserve any comments it may have on the supplementary consultation paper concerning amendments to the retransmission provisions in section 31 of the Copyright Act.

Once again, we thank the Government for this opportunity to express our concerns, all of which are respectfully submitted.

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