ARCHIVED — Canadian Association of Broadcasters (CAB)

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 Association of Broadcasters received on September 17, 2001 via e-mail

Subject: CAB Submission on Consultation paper on Digital Copyright Issues

The Canadian Association of Broadcasters (CAB), as representative of the vast majority of private broadcasters including private television and radio stations and networks, and specialty, pay and pay-per-view services is pleased to provide its comments with respect to the Government of Canada’s Consultation Paper on Digital Copyright Issues.

Yours sincerely,
Michael McCabe
President & CEO

CAB submission PDF version

I. INTRODUCTION

1. CAB Commends Balanced Approach to Reform

The Canadian Association of Broadcasters ("CAB") represents the vast majority of Canadian conventional television, specialty and pay, and radio services and networks. We are pleased to have this opportunity to comment on the digital copyright issues set out in the Consultation Paper on Digital Copyright Issues (the "Consultation Paper") issued by the Department of Canadian Heritage and Industry Canada (together, the "Departments") on June 22, 2001.

The CAB applauds the Departments' recognition of the importance not only of creators and their rights, but also the needs and contributions of users and, in particular, the fact that digital uses carry significant benefits for the enhancement and enrichment of Canadian culture. The historical Anglo-American approach to copyright has viewed copyright law as an instrument to attain and preserve balance between creators and users, recognizing that such balance is integral to ensuring the continued production and dissemination of intellectual creations in our society. This approach is reflected in the Departments' observation that:

The Copyright Act serves to recognize, promote and protect intellectual expression, as well as enable and encourage access to and dissemination of such expression. It achieves this by granting various rights and exceptions…

- Consultation Paper, p. 4

The Consultation Paper's emphasis on the broad public policy implications of current and prospective use environments builds positively upon the approach taken by the government to the introduction of new rights and exceptions in Bill C-32. In that last round of copyright reform, some new rights were introduced, but in a manner that attempted to factor in negative impacts on users and the public policy roles played by such users.⁽¹⁾

The approach taken to exceptions in Bill C-32 was somewhat more narrow, limiting them to instances in which a very narrowly defined public interest was identified - essentially including educational use, use by individuals with perceptual disabilities, and certain additional public sector uses. There appeared, unfortunately, to be no recognition of the legitimate need for exceptions premised on technological imperatives or the fact that different types of uses may merit varying degrees of protection for creators. As such, certain "exceptions" were limited to situations where rights administration and remuneration were overly cumbersome and such "exceptions" exhausted themselves once the administrative ability to license became available.

While public interest is indeed a legitimate measure for evaluating whether an exception should be granted, in the complex communications culture in which we live it should not be interpreted narrowly, nor is it the only measure relevant to deciding whether exceptions are appropriate.

The fact that key objectives of the Departments (as suggested by the Consultation Paper) now include promoting not only the supply of on-line Canadian content, but also infrastructure capacity, connectivity and Canadian e-commerce is a reassuring recognition that a circumspect approach to reform must be undertaken - an approach that weighs assertions of creators' needs and rights against other relevant public policy considerations, including user interests, technological developments and "big picture" cultural goals.

This seems to be accompanied by a recognition that new media creation, use and access creates not only a need to ensure protections for creators, but may merit appropriate flexibility for users and accessors. The CAB commends the Departments for being open to a broader view of the public interest - one that factors in the practical needs of industries that serve the public interest.

2. Traditional Media Should Enjoy Equivalent User Flexibility

Recognizing that facilitating use may require a carefully thought out approach to the technical requirements and business imperatives of new media is important. It is equally important, however, that any new exceptions that are developed for new media users are extended to traditional users, particularly those which serve recognized and, in the case of broadcasters, legislated public policy objectives.

Broadcasters indeed play a role that is as important as (if not more important than) new media in guaranteeing that Canadians have access to works and subject matter on a cost-effective basis. Indeed, approximately 25% of Canadians continue to receive television signals only via Hertzian waves - not cable, DTH or any other means of distribution. While an approach to reform that allows flexibility to an emerging industry of users and their customers is an important part of realizing the connectedness agenda, denying equivalent flexibility to traditional media and, by extension, their consumers, in effect discriminates against the e-have-nots and further widens the digital divide. Licensed broadcasters fulfil key public policy objectives with respect to the promotion of Canadian culture and values, which must also be taken into account in the context of copyright reform. As such, traditional media should not be placed at a disadvantage simply because they are not the new kids on the block.

Some of the existing impulse to extend exceptions only to new media may be rooted in the conception of new media as an assemblage of fledgling ventures of, at best, marginal profitability that should not be burdened by additional business costs lest the spark of innovation be snuffed out. On the other hand, traditional media may be viewed as established and profitable enterprises, well able to bear additional costs in the form of copyright obligations.
In addition to being largely untrue (e.g. AOL can hardly be characterized in such a way), such a perspective is discriminatory, creates competitive disparities and wrongly disregards the significant costs of doing business as a traditional, regulated broadcaster. It also threatens to undermine a business model that has, historically, successfully achieved Canadian cultural policy goals, so as to create a distinct and fulsome Canadian broadcasting system.

While some may argue that denying a particular copyright exception to traditional media, or subjecting traditional media to a new right, will not undo an established business, public policy-makers must view the function and future of traditional media broadly so that such media are not subjected to "death by a thousand cuts". There has historically been a lack of co-ordination of broadcasting and copyright policy. While the two areas of law and policy are discrete, the obligations rooted in each affect the current and future viability of Canadian broadcasting. As such, the Departments should recognize, in the course of copyright policy-making, the important role that traditional media play in serving important cultural policy objectives.

3. Need for Intervention/Reform

A thoughtful but conservative approach to reform should be taken to the extent that limitations of the current Act are not clearly crying out to be remedied. Although the Internet has evolved much from its inception (and even since Phase I of the Tariff 22 hearing), it continues to change significantly and rapidly, and will continue to do so until penetration levels are very high and use of certain technologies becomes widespread and habitual for consumers. Many important public policy interests are at stake here, and drafting provisions to address them in the abstract can be very difficult and even dangerous.

Indeed, the attempt at technologically neutral and even-handed drafting that was made in crafting current s. 31 is a prime example of the dangers and the subsequent controversy and need for further amendment that can arise when "modernization" of the Act occurs without the environment having matured fully. As such, if the Act already is sufficiently broad to address an issue (as L.E. Harris and J. Daniel suggested it was in their 1998 examination), it is generally safer to rely on the Act as is, without amendment, than to try to fashion new provisions that prove to be either excessive or inadequate when real issues arise. Change should only be made when it is clear that the current Act is insufficient to remedy a serious problem.

To the extent that change is required, it is also important to recognize that while technological neutrality of provisions may be desirable, in theory, it may not always be wise or practical. The CAB supports the Departments' apparent recognition of this, as the Paper notes that legislation must be technologically neutral "to the extent possible". (Consultation Paper, p. 15)

While the CAB strongly advocates the introduction of equivalent exceptions for new and traditional media, we also believe that on-line use has technical characteristics (e.g., packet transmission, storage and reassemblage) that render it significantly different from traditional media uses, whether analog or digital. As a result, it may be inadvisable for policy-makers to seek a "one-size-fits-all" reform package. A discrete approach to digital uses should be undertaken, where necessary, and reflected in any proposed terms.

4. Cautious Reform Means Treaty Ratification Is Inappropriate Objective at This Time

Notwithstanding that a cautious approach should generally be taken to the introduction of new rights, CAB opposes an approach to reform that is directed at achieving only as many reforms as are considered necessary to permit Canada to ratify the WCT and WPPT.

Although the question of ratification has not been posed directly in the Consultation Paper, it undoubtedly will be urged by many rights holders. In response, the CAB wishes to express its support for the recognition in the Paper that:

…a single regime for copyright protection worldwide may not be a practical objective…

and that the "challenge" of the reform process, as articulated by the Departments, is:

to develop copyright policies that are consistent with and promote international standards of protection, but that continue to validate Canadian priorities, choices and values.

- Consultation Paper, p. 14

First, the CAB does not believe that Canada should rush to treaty ratification: today, very few countries have actually ratified the treaties. A better approach is to reform Canada's Act domestically, using WCT and WPPT as a guide, and examine how the markets for creators and users evolve.

Second, minimalist reform geared towards bare treaty ratification undermines the Departments' objective of seeking creator/user balance and the need to take into account a full range of Canadian priorities, choices and values, as the treaties mandate new rights while making the grant of exceptions optional.

Finally, while the need in Canada for a plethora of new rights to address the implications of digital use may well be unnecessary, it is clear that any digital reform proposal should include an exclusive broadcast signal right. The inadvertent ambiguities of s. 31 of the current Copyright Act (the "Act"), coupled with the debilitating harm to existing business models for the marketing of program rights and Canadian cultural policy objectives posed by unauthorized on-line transmissions of programs, is sufficiently serious to merit the introduction of a signal right. In order to survive in the new digital environment, broadcasters require greater rights to control the exploitation of their signals.

Moreover, while international initiatives shall serve as a guide for, not a master of, Canadian copyright reform, it is notable that at the international level, WIPO is well advanced in its process directed to the adoption of a treaty to address these broadcaster interests. Notably, the United States already requires broadcaster consent with respect to the retransmission of broadcast signals.

5. Objective Measures Should Be Put in Place To Decide Upon Necessary Reform

In evaluating whether a new right should be granted or a reasonable and practical user exception denied, government should evaluate the following issues:

1. potential harm to the creators in question is significant or de minimus;

2. whether the same rights holders are being compensated fairly for their works or subject matter in the absence of such a right or in the presence of a such an exception;

3. the nature of the work or subject matter and the current business model for its exploitation;

4. impact of introduction of a right or the denial of an exception on other creators and users; and

5. in the case of exceptions, whether the user is gaining any discrete and significant value from the use of the right or alleged right for which an exception is sought.

While these criteria generally speak for themselves, a few additional comments should be made.

In general, while the fundamental value of a work or subject matter must not be undermined by a digital use, it is critical for policy-makers to recognize that creator control must always be realistically weighed against impacts on access. The nature of digital communications makes it arguable that many additional rights are triggered and many additional parties are potentially liable in the chain of such use. Put colloquially, the technological features of digital and, in particular, on-line communications, creates the possibility for "slicing and dicing" authorization and remuneration claims to the point where fair use, in its broadest sense, may be stifled.

Creators vested with rights of authorization have absolute control over the use and terms of use of their works. From an access perspective, such a degree of control becomes particularly worrisome when rights owners are large corporations or corporate oligopolies vested with the ability to deny access to or seek unreasonably high rates of remuneration for a significant repertoire of works. New rights of authorization would enable such creators, at minimum, to charge unreasonably high amounts (since, for example, popular sound recordings are not substitutable commodities) and at worst, if untempered by reasonable exceptions, permit them to frustrate emerging uses altogether. Such behaviour would result in an inefficient allocation of resources or, in the case of denial of authorization, disable legitimate and non-deleterious uses (e.g. radio stations engaged in streaming audio) from advancing their businesses to keep in step with emerging media technologies.

With respect to the potential for an outright denial or very selective granting of access with respect to digital uses, it is foreseeable that large organizations which hold rights to a large repertoire (e.g. the major record labels) could use new rights to monopolize the distribution of their property through on-line facilities in which they have an interest. This, in short, would represent a perversion of the purpose of copyright law to the extent that the law would be employed to assist rights holders to establish monopolies over direct distribution, as opposed to ensuring adequate protection and remuneration for their creations.

As such, care must be taken to ensure that legitimate use which does not jeopardize the basic value and integrity of a work is not obstructed by a recognition of new entitlements or a denial or reasonable exceptions. Conceptually, it may be appropriate to evaluate possible new exceptions by reference to whether the exception will completely undermine the value and integrity of a work, or is simply an intermediary practical step in the course of a legitimate industrial use activity for which creators are adequately remunerated. If such reasonable exceptions are denied, rights holders will be extended, in practice, far greater degrees of control over their creations than has historically been conferred by copyright law. Such excessive control, moreover, will be at the expense of access, in particular by traditional media which are merely trying to move to a new technological model to maintain the competitiveness of their product. Public policy should favour multiplicity of diverse players in the provision of access to consumers.

II. No Need for Legislative Reform to Introduce Making Available Right

In the CAB's comments filed in response to the Harris and Daniel Paper, we questioned whether the existing right to communicate to the public by telecommunication (the "communication right") in the Act encompassed the right of making available - particularly since it was unclear whether a "non-real time" transmission constituted a "communication". At that time, the Copyright Board had not yet adjudicated the basic liability issues in SOCAN Tariff 22.

Subsequently, the Board issued its decision on legal issues in connection with Tariff 22, whereby it held that the communication right found at s. 3(1)(f) of the Act is sufficiently broad to include non-real-time transmissions:

Nothing in the Act requires that a communication be sent simultaneously to the intended recipients to be a communication to the public.

- Copyright Board of Canada, Decision of the Board Re SOCAN Tariff 22 (1996, 1997, 1998), Phase I: Legal Issues, p. 31

The CAB has not challenged this conclusion. As a result, the CAB's position is consistent with that of the Departments, namely that a new, exclusive right of making available, as it pertains to authors of musical works, need not be introduced because the current communication right is sufficiently broad to encompass it.

Similarly, the CAB believes that sound recording producers and performers are already entitled to compensation for certain on-line communications based on the communication right found at s. 19 of the Act. Such compensatory entitlements are sufficient, when measured against the following evaluative criteria (as noted above) which should be employed to test the introduction of a new right or exception:

1. Potential Harm if Right of Authorization is Not Introduced is Limited to On-Demand Access of Specific Sound Recordings

Real-time transmissions of musical works, sound recordings and performances thereof on the Internet, whether by traditional radio stations engaged in streaming their signals or by discrete Internet radio services, pose no risk to creators of significant harm or loss of control over their works.

The same lack of significant harm exists where streamed over-the-air or Internet radio programs (which include a compilation of various works) are archived for later listener access.

The primary concern underpinning the movement to introduce a right of making available focuses upon the dire consequences of a lack of control by rights holders over their own works and subject matters. Lack of control is rooted both in unauthorized reproduction and loss of sales due to the on-demand provision of specific recordings.

Notably, significant potential harm to creators only exists where on-line provision of works and recordings enables consumers to listen to works specifically chosen by them, whenever and wherever they want. This kind of use could indeed represent a possible replacement for the current business model governing the promotion and sale of sound recordings. Only, however, where such a fundamental threat exists to creators' ability to harness the value of and protect the integrity of their creations should the introduction of broad new rights be considered.

The mere performance of a musical work or subject matter as part of a streamed compilation of works (whether in real time or archived) does not threaten the creator's ability to realize the full value of his rights. It is not a widespread practice for individuals to reproduce music from third-party assembled compilations of streamed music, since users cannot easily locate the music and recordings they want to record. Indeed, to the best of the CAB's knowledge, no evidence was tabled by rights holders in the Copyright Board's recent Tariff 17B hearing that suggests that illegal copying is a concern flowing from digital pay audio broadcasting.

Moreover, technological means of preventing down-loading are widely available by streamers of compiled recorded music programs. These technological measures further reduce the risk that creators' revenues would be jeopardized or that they would experience a loss of control over their works and subject matter.

Finally, where threats to recording sales and the de facto expropriation of such recordings are not a significant issue, there appears to be no public interest in conferring upon creators a right of authorization with respect to on-line use of sound recordings.

The above-noted reasoning seems to underlie the narrow scope of the "making available" right as it currently appears in Article 8 of the WCT (as a component of the communication right) and Article 10 of the WPPT (as a discrete right). Each of these renderings of a making available right restrict it to the provision of works or subject matter:

in such a way that members of the public may access these works [and subject matter] from a place and at a time individually chosen by them.

As a result, any streaming (whether in real-time or archived) in which members of the public can not call up specific works selected by them at specific times and specific places chosen by them are not apparently necessarily subject to the making available rights set out in the treaties.

2. Rights Holders Can Be Fairly Compensated In the Absence of Such a Right

Owners of musical works, sound recordings and performances that are streamed on the Internet, in real time or on an archived basis, as part of a program compilation which cannot be designed or controlled by a user, can be fairly compensated by a tariff granting non-exclusive licences for communication to the public. Indeed, the fact that licences facilitating such use would not undermine the value or integrity of creations is attested to by the fact that SOCAN and NRCC have each filed proposed tariffs with respect to Internet use and SODRAC has filed proposed Tariff 1.

Explicit authorizations of individual users and exclusive licences are not necessary to maximize the value of the work to the creator. Unlike television programming, for which users will only pay a significant licence fee if guaranteed territorial exclusivity with respect to the rights (since television stations compete on the basis of their unique programming), traditional and on-line "radio" services have access to the same repertoires of music but compete with each other on the basis of their compilations of music and recordings and non-musical elements (news, weather, sports, traffic, DJ talk, contests, etc.). As such, an ability of rights holders to confer exclusive licences would not assist creators as creators (an important distinction which is discussed below in the context of criterion 3) from realizing the full value of their works. As a result, s. 19, which already confers upon sound recording performers and producers a right of remuneration for communication to the public, is sufficient.

3. The Current Business Model for the Exploitation of Sound Recordings, Performances and Musical Works

The Departments' Consultation Paper astutely recognizes that:

…it is noteworthy that each of the different copyright industries operates under its own uniquely-developed business models, which means that each has its own needs and requirements in the on-line world, not all of which relate to copyright.

- Consultation Paper, p. 5

As such, the Paper suggests that certain positions on copyright taken by such "industries" are designed to compensate for or mitigate other risks which those industries face. Such compensation or mitigation may or may not be an adequate justification for copyright reform.

It is becoming apparent that the real objective of certain rights holders (primarily, the multinational record studios) is not to maximize the value of their creations per se or to protect the inherent value of their works, but rather to extend their businesses to include use as well as creation. Put another way, these creators desire - in view of their current industrial power, combined with the technical ability which new technology provides to them, to distribute their own creations internationally - to transform themselves from producers into predominant communications enterprises with respect to their own creations.

There is nothing inherently wrong about record companies vertically integrating and establishing on-line streaming services to perform their own repertoires (or, for that matter, non-proprietary repertoires which they have licensed). It would, however, be an extremely misdirected and dangerous use of copyright law to permit rights holders to deny to traditional and emerging users the rights which they need to perform recorded music simply because the record companies wish to move in and predominate the field because technology has made it possible for them to do so.

While record studios, in their role as rights holders, could argue that that development enables them to realize a more fulsome value for their creations - given that a "middle man" can be cut out - those "middle men" - particularly when they are broadcasters engaged in streaming their programming - serve extremely important public purposes and provide real value to consumers. First, they provide wide access to the works by the public - not access which is designed to promote only a proprietary repertoire. Second, the way in which these distributors variously package the vast repertoire of popular music and recordings - both in the process of selection and in the act of packaging recorded music with other content - promotes a diversity of voices and expression within Canadian society. These are values which are not only promoted by the Broadcasting Act, but indeed by the Charter of Rights and Freedoms. Third, in Canada licensed broadcasters bear a legal responsibility to promote Canadian cultural policy objectives: as such, "Canadian content" on the radio means that, when such stations stream their programming, there is a significant representation of Canadian content on-line as well. Finally, in addition to performing recorded music for the public, third party "middle men" also bring other key content to audiences in the form of news and local information of varying sorts - the value of which cannot be overestimated in the face of concerns about the globalization of culture.

Moreover, the real value of vertical integration, whereby recording companies become oligopolistic distributors, lies not in maximizing the value of rights in recordings, but in using their power to limit use to enter into and dominate an industry which is quite apart from their traditional business of record production. The reform process should not be used to serve an end which is unconnected to the fundamental objectives of copyright law.

4. Owners of Musical Works Would Be Damaged Significantly By Introduction of a Right of Making Available for Sound Recording Producers and Performers

If producers and performers of sound recordings were invested with a right to authorize the making available of their respective subject matter, refusal to make such subject matter available would frustrate the ability of the authors of musical works to exploit their own communications on-line. This is fundamentally unfair to composers, particularly since the very existence of performers' and producers' rights depend upon the pre-existence of a copyright work and the agreement of the work's creator to license the fixation of that work on a sound recording.

Although producers and performers have long asserted the position that their rights are not inherently inferior to copyrights in musical works, s. 90 of the Act, suggests that Canadian law protects the fundamental right of owners of copyright works to exploit their works without interference from the holders of neighbouring rights, stating that:

No provision of this Act relating to

(a) copyright in performers' performances, sound recordings or communications signals, or

(b) the right of performers or makers to remuneration

shall be construed as prejudicing any rights conferred by Part I…

If producers and performers were permitted to stymie the on-line exploitation of musical works by denying authorization to communicate their subject matter on-line, it is difficult to imagine what the purpose of s. 90 is intended to be.

Article 1(3) of the WPPT is very similar to s. 90. However, Article 1(2) of the WPPT recognizes the ability of a performer or producer of phonograms to frustrate the ability of a copyright owner to exploit the rights in his work. This appears to obviate any significant meaning for Article 1(3), which proscribes the prejudicing of rights granted by other treaties by exercise of WPPT rights. If the right of copyright owners to exploit their works on-line is completely undermined by neighbouring rights holders' refusal to consent to have their works communicated on-line, how much more seriously could the copyright owners' rights be "prejudiced"?

III. Need for New Technological Transfer Exception That Would Encompass Caching and Medium Transfers by Traditional Users

The CAB believes that it is fundamental that any attempt at copyright reform must strike an appropriate balance between the rights of creators and the needs of users. In the last round of copyright reform, the Canadian Government chose to implement an extremely narrow exception for ephemeral recordings and recordings made to facilitate transfers of format. This legislative decision not only created an imbalance in favour of creators, but was and remains completely unresponsive to the needs of the Canadian broadcasting industry.

Temporary reproductions may be argued to occur when a broadcaster streams its over-the-air signal on-line. Moreover, a temporary reproduction does occur when a broadcaster archives its streamed broadcasts for access on-line by a listener at a later date. It is the CAB's view that real ephemeral and transfer of format exceptions need to be introduced to cover real-time streaming currently present at s. 30.8 and s. 30.9 of the Act (to the extent any reproduction occurs, which is not the position of the CAB) and streamed programs which have been archived. Such exceptions should not stand to be negated in the event that collective licensing is offered by rights holders, nor should administrative requirements imposed in connection with any such exceptions obviate their value. As discussed below, neither live nor archived streaming are significantly harmful activities, nor do they prejudice the ability of rights holders to exploit their works. Furthermore, the CAB believes that, at the same time as introducing new digital ephemeral and transfer of format exceptions, the current limitations of the ephemeral and transfer of format "exceptions" for traditional media should be removed to properly give force to the policy rationale behind ephemeral and format transfer exceptions.

1. The Potential Harm to Creators if the Ephemeral Exception is Expanded to Accommodate Streaming Radio is Non-existent or, at best, de minimus

As noted, when a broadcaster streams its signal on-line, a communication to the public occurs. Consequently, the authors of the musical works and the sound recording producers and performers are entitled to compensation for such communication. However, it may be argued by some that streaming also involves a temporary reproduction effected when the music is sent across the World Wide Web.

To the extent that streaming involves reproduction (which assertion the CAB would dispute), the CAB believes that it would be inappropriate to attach liability to this act. The type of temporary reproduction that may be argued to occur when a signal is streamed (i.e. on a packet by packet basis) is not a duplication of a work or subject-matter, or a substantial part thereof. It cannot be sold, nor can it be exploited using a service like Napster. As a result, authors and performers suffer no significant harm or lost revenue when it occurs.

When a radio broadcaster chooses to archive its broadcasts for access on-line by a listener at a later date, a reproduction does occur. However, such a reproduction is not of a discrete musical work or subject matter, but rather a compilation of works that form a program. Moreover, the purpose of the archive is for convenience - to allow listeners to hear a favourite disc jockey or a special event at a later time, not to discourage them from purchasing an artist's recording. A broadcaster could simply repeat the programming, but this would restrict the diversity of its programming over-the-air.

Moreover, any harm to rights holders that could be alleged to occur pursuant to archived streamed broadcasts is minimized, in the case of radio, by the fact that the same works and subject-matter are available from other radio stations. Whether a radio broadcast occurs in real time or is archived to be accessed at a later date does not impact an author or performer's ability to exploit his works especially due to the fact that radio stations rarely license exclusive content. Consequently, if one radio station has archived a compilation of songs, it is entirely possible that a mix of those same songs could be available on another station at the same time. Placing restrictions on how licensed broadcasters disseminate music will only result in music, including songs by Canadian artists which Canada's broadcasters are mandated to promote, becoming less available.

2. Both Authors and Performers are Well Compensated When Broadcasters Stream Their Works On-line

As noted above, when a radio broadcaster streams its signal on-line, it is liable to pay royalties to both authors and performers. Both SOCAN and the NRCC have filed tariffs relating to Internet communications.

Reproductions that may occur in the context of live streaming are a necessary component to a use for which the same rights holders are already compensated. Furthermore, archived broadcasts are not being sold to end users, nor is there any significant risk that individual works that comprise part of that broadcast will be digitally reproduced and disseminated. These compilations are accessible only on the broadcaster's web site and only for a limited time.

3. Ephemeral and Format Transfer Exceptions Would Support Fair Current Business Models

Authors, performers and recording companies are currently compensated in a variety of ways for the use of their works. A composer is paid for writing a song and receives royalties when that song is fixed on a sound recording, reproduced by record producers and, ultimately, communicated to the public by telecommunication. A performer is compensated for contributing to a record and is also compensated when his or her songs are communicated to the public by telecommunication. The recording companies generate revenues when recordings are sold to the public and communicated to the public by telecommunication.

Ephemeral and format transfer exceptions for temporary reproductions that occur as part of a broadcaster's on-line activities would not change the business model described above.


Indeed, to recognize unlimited rights of reproduction in connection with live and archived streaming could invest rights holders with the ability to shift their own current and well-established business models. This would allow them not only to reap new revenues, but to stymie legitimate and established users from evolving their businesses. It would also permit such rights holders to move, in a monopolistic fashion, into the business of distribution.

4. The Failure to Implement a Broad Ephemeral Exception Will Frustrate the Development of Canadian On-line Entertainment

As discussed above, broadcasters may be frustrated in their plans relating to on-line broadcasting in the event that they can be denied the right to use works and subject-matter on-line or are required to pay for intermediate uses which are merely ancillary to a licensed end-use. In turn, this will impact the exposure that Canadian artists receive, which results in increase record sales.

Moreover, other public policy objectives well served by local broadcasters (e.g., the provision of local information on-line) will be undermined to the extent that on-line uses of licensed intellectual property are impeded by an overly rigorous and inappropriate application of copyright law.

5. Archiving Adds Little Value for Broadcasters

While the CAB believes that broadcasters should have the right to archive their broadcasts for access on-line, at least for a temporary period of time, it is important to recognize that archiving is of little tangible value to broadcasters and is unlikely to generate any additional revenue. Such streaming is merely a means to be employed in keeping licensed broadcasting apace with emerging media. In fact, those benefiting from such a service are listeners, who will have additional opportunities to listen to certain programming, and performers, whose works will be more widely disseminated. Placing restrictions on the archiving of broadcasts will only lead to less diversity in the system. Consequently, the CAB believes that reproduction made in the course of streaming broadcasts or when those broadcasts are archived for access at a later date should benefit from a broad exception.

IV. Technological Measures

Digital technology allows users to make identical copies of copyright works with relative ease. Moreover, the nature of the Internet is such that these works can then be made available to other users, worldwide. As a consequence, the CAB agrees, in principle, that in certain circumstances it may be appropriate for Canadian copyright law to recognize and protect the ability of creators to use appropriate technological measures to ensure that their works are not unlawfully exploited. Moreover, we agree that in certain circumstances, it may be appropriate for copyright law to prevent the improper circumvention of such measures by users.

That being said, any protections that are introduced should not give creators rights or de facto protections greater than that which they enjoy pursuant to the Act, nor should they enable creators to reassert control over works that have fallen into the public domain. For example, the current term of protection for copyright works in Canada is the duration of the life of the author, plus fifty years. Creators, however, are pressing for the extension of copyright protection to include "life plus seventy years". The CAB strongly opposes any extension of the current duration of copyright. Moreover, it is very concerned lest technological measures which may become the subject of legal protection, such as encryption, be used to limit access to public domain works.

Beyond the risk that technological measures protections will be relied upon inappropriately to extend creator rights, any such protections must not be permitted to be used to defeat or undermine the rights of legitimate users. Safeguards should be put in place to prevent rights holders from using technological measures to frustrate the use of the works pursuant to legal exceptions. Technologies that result in the degradation of quality of reproduction should not, for example, be permitted to impede the legitimate rights of users to ephemeral exceptions. Moreover, it should be made clear in any adoption of technological measures provisions that such measures cannot be used to impede or impose liability in connection with reasonable use further to licensing.

The WCT and WPPT are drafted in a manner that gives great flexibility with respect to the implementation of technological measures provisions.

While rights holders will likely seek to prohibit both the act of tampering with technological measures, as well as the manufacture and distribution of devices used to circumvent technological measures, the CAB believes that only the activities undertaken with the intention of infringing or facilitating infringement of a work, and not reasonable actions taken in the course of legitimate use, should be prohibited.

Intention is an important component of liability, since, as the Departments recognize that:

The difficulty is that devices which are suited to infringing uses are, by and large, equally suited to non-infringing uses.

- Consultation Paper, p. 23

The CAB strongly agrees with the Departments' concerns and believes that to outlaw devices with a legitimate purpose would be inappropriate. It would confer upon rights holders the ability to frustrate technological development - something which cannot be in the public interest and which is completely unjustified to the extent that technology has or even potentially has lawful uses.

V. Rights Management Information

The CAB agrees with the Departments that maintaining the integrity of electronic rights management information is an important objective. However, the CAB does not believe that there should be strict liability for the removal of rights management information. Moreover, subsequent users of materials from which copyright management information has been removed should not be liable in any way for the removal.

1. No Strict Liability for Removal

The CAB notes that the WCT and WPPT embody a knowledge standard in their rights management provisions. The CAB believes that it is reasonable to take this "knowledge" standard one step further, and require intention to frustrate rights management as a prerequisite to liability.

This is appropriate, as there may well be instances in which rights management information is removed inadvertently or due to a reasonable business necessity even if the party knew or had reasonable grounds to know that removal would occur. For example, if rights management information is not encoded on a television program, but rather "appears" as part of the work itself (e.g. in end-credits), if that work is edited due to scheduling necessities (and not to frustrate rights management), the user should not be liable.

An approach to removal of rights management information that takes into account intention and the reasonableness of the actions taken would be consistent with the moral rights provisions that already form part of the Act. Specifically, section 14(1) of the Act states that the right of association must be asserted "where reasonable in the circumstances" - recognizing that users may well be subject to some reasonable constraints in their respect for moral rights. Moreover, the moral rights provisions also provide, in their description of the "Nature of the right of integrity" (s. 28.2(1)) that the author's right is only infringed insofar as the use is "to the prejudice" of his honour or reputation. If there is no harm from a user's actions, there will be no moral rights infringement.

Similar flexibility for users must be extended in the context of rights management information which reflects that sometimes there will be reasonable circumstances in which rights management information is knowingly removed. No liability should result where any harm to the rights holder is outweighed by the need for practical flexibility by legitimate users.

2. Practical Difficulties of Protecting Rights Management Information

The CAB notes that rights management information frequently changes, both on the basis of changes in ownership or expiration of copyright protection. To the extent that users rightfully use copies of works or subject-matter, they should not be held liable if the information thereon is no longer current or accurate, nor should they be compelled to obtain a copy of the work that has updated information.

Furthermore, removal of rights management information when copyrights in works or subject matter have expired should not engender any liability.

VI. ISP Liability

While the CAB questions whether it is in the interest of access objectives to impose strict liability for infringement upon parties that act merely as carriers of intellectual property, there may be practical and appropriate measures that could be taken to ensure that ISPs contribute positively to the prevention of copyright infringement.

The CAB is aware that various models are being developed to include ISPs, to a reasonable and practical extent, in the exercise of ensuring that on-line use of protected works and subject matter are legitimate. As such, we encourage the Departments to examine such models, such as that adopted by the United States pursuant to the Digital Millennium Copyright Act, to evaluate measures that may be appropriate for Canada with respect to ISP copyright-related responsibilities.

VII. Copyright Reform

During the past few years, Canada's Copyright Board has seen a significant increase in its workload given the expansion of uses and commensurate expansion of filings. This is in large part a function of the fact that traditional uses are being subdivided in response to technical activities undertaken in connection with modern (both digital and analog) use techniques - notwithstanding that end-product delivery to consumers is (with the exception of the provision of on-demand delivery of individual works) largely the same.

Significant inequities will result to industrial users and ultimate end-users if the Board considers every licensing right separately. Moreover, such an approach cannot likely be sustained given the Board's current resources. As a result, the CAB suggests that a functional approach to licensing (where component "uses" are considered together in the context of the end use), in which all owners alleging entitlement are brought together at once to assess the value of one functional use and the apportionment of such value, would be much fairer to users and a much more efficient use of Board resources. Indeed, the administrative efficiencies achieved pursuant to such procedural reform would be shared by creators, as well as users.

In addition, the CAB strongly recommends the introduction of criteria to govern the Board's establishment of tariffs, including a requirement that they take into account the public policy requirements and objectives with respect to identifiable user groups, as well as the competitive market in which such users carry on business.

Conclusion

The emergence of the Internet has had far reaching implications in a number of areas, including copyright. However, the Departments should not act too rapidly. As noted earlier, attempting legislative fixes before the full maturation of a new use environment can lead to even greater problems in the future.

Regardless, the CAB recognizes that change is required in some areas. Consequently, the CAB would like to stress that any solution must reflect the historical balance in copyright between the rights of creators and the interests of users. Moreover the Departments must be careful to ensure competitive parity between traditional media and new media, and to avoid deleterious impacts on existing business models relating to the use of copyright material.

The CAB would like to thank the Departments for the opportunity to make this submission and would be pleased to respond to any questions or comments which the Departments may have with respect to the submission.

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¹ For example, neighbouring rights for performers and producers of sound recordings were introduced in a manner which sought to ameliorate their impact on Canadian radio services.

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