ARCHIVED — Goldie M. Shea-Green

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 Goldie M. Shea-Green received on September 17, 2001 via e-mail

Subject: Copyright Reform Comments

Dear Sir or Madam,

I attach my research document entitled, Canadian Copyright Law and Internet Broadcasting, which comprises my submission in response to the Consultation Paper on the Application of the Copyright Act’s Compulsory Retransmission License to the Internet. The paper is supportive of retaining the technological neutrality of the Copyright Act in general. Specifically, I believe that all indicators point toward an amendment to the Copyright Act to expressly provide for its application on a technologically-neutral basis. Further, after having recently studied this very issue at length, I helieve that the compulsory license ought to be amended to expressly permit retransmission by any technical means so long as other conditions to the license are satisfied. Obviously, the issue of ensuring an effective territorial restriction requires comprehensive discussion and study and I would be interested in seeing some suggestions on how that issue can be resolved.

I would be happy to meet with you to discuss this issue further.

Sincerely yours,

Goldie Shea-Green

PDF Version

Canadian Copyright Law and Internet Broadcasting

A Submission in Response to the Consultation Paper on the Application of the Copyright Act's Compulsory Retransmission License to the Internet

We must, therefore, create in Canada a climate where culture can thrive. To do this, we must, on the one hand, protect and encourage creative endeavours, and on the other hand, ensure that the works, which are the fruit of such endeavours, are widely accessible. Copyright law is the key link in the chain that joins author to producer, to distributor and ultimately to the public at large.

Today, the means by which creative works reach their audience are more numerous and highly developed than ever.

1. Introduction

   This paper discusses the issue of whether the Copyright Act should be modified to accommodate the retransmission of video and television broadcasts on the Internet. This assessment involves a survey of the criteria for exemption as set out in section 31 of the Act. A significant part of the analysis will look into the legislative history behind the addition of the exemption in 1988. A determination will then be made that Internet retransmission fits within the criteria and meets the legislative intent of technological neutrality in the Copyright Act.

   We are in the midst of what some commentators are calling a 'convergence' where the changes in regulatory and technological environments have blurred the line between traditional telecommunications services and entertainment. The most renowned example of this is the Internet. The term convergence eludes precise definition, but it is most commonly expressed as the ability of different network platforms to carry essentially similar kinds of services, or the coming together of consumer devices such as the telephone, television and personal computer. This latter expression of convergence is one most often cited in the popular press - it is easily understood by consumers and has the added interest of reflecting a wider struggle between computer, telecommunications and broadcasting industries for the control of future markets.

   The technology that provides digital streaming has facilitated the real-time transmission of audio and video over a seemingly borderless network. Numerous content providers including television networks and sports and entertainment companies have encouraged the development of the new methods of delivery.

   On the other side of the coin, this new technology has the potential to 'open up telecasting beyond the large corporations normally associated with broadcasting'. Anyone who has a media server and a fast Internet connection can set up a Web site and potentially broadcast original programming or retransmit specific programs. The prospective number and character of the participants has poised this problem for great conflict with the powers that be. How should the legal world respond to this challenge?

   The extent of copyright coverage, the duration of protection and the nature and number of legislated exceptions are important aspects of copyright law. The rights of copyright holders are restricted by compulsory licensing regimes. Compulsory licensing involves the grant of certain rights to use copyrighted works upon payment of royalties at rates established by certain mechanisms. An example of such a scheme involves the retransmission of distant signals by cable companies. It is this, which is the subject of this paper.

   This paper contributes to the discussion by suggesting that there is a very persuasive argument that the retransmission of television broadcasts on the Internet should be entitled to benefit from the compulsory-licensing regime established in section 31 of Canada's Copyright Act . The new means of content delivery over the Internet has created an ever-increasing tension between copyright holders and users. Litigation over online copyright issues is increasing, particularly in the United States.

   The broadcasters perceive unpaid retransmission as unfair. The broadcasting licenses have restrictions on geographical territory and broadcasters argue that program exclusivity is essential because advertisers are unwilling to pay as much for a program already shown or simultaneously shown in the same market. The development of the cable industry and satellite retransmission services has been found to weaken the advertising base of the broadcasting industry and it is felt that Internet retransmission will erode it further as Internet retransmission or streaming is felt to be similar to cable and satellite in the 1980's.

   The paper will start with a brief reference to the principles of copyright law that should be kept in mind in considering Internet copyright questions in Canada. It will briefly review the significant developments in Canada over the past year on the retransmission issue. Of primary importance is the controversy that arose over the applicability of the retransmission regime to the activities of iCraveTV. This paper cannot provide an exhaustive treatment of the legal implications of copyright law on the Internet. It will examine copyright protection, particularly as it relates to Internet Retransmission and especially the iCraveTV case and the up-and-coming saga of JumpTV.

   With the launch of the Internet webcasting company, iCraveTV, in late 1999, Internet users were offered the option of watching television on their personal computers. By doing this, iCraveTV produced a profusion of opposition from broadcasters and content creators throughout North America who reacted immediately by commencing legal actions both in the United States and in Canada demanding the immediate cessation of all unauthorized webcasts on both sides of the border and claiming massive damages for the alleged infringements.

   On January 28 federal judge in Pittsburgh imposed a temporary restraining order against iCraveTV. On February 8, 2000 the judge granted a preliminary injunction barring Internet site iCraveTV and its owner William Craig from transmitting unauthorized performances of U.S. copyrighted film and television programs. On February 28, 2000 iCraveTV announced that it had reached a settlement with the broadcasters and content creators on both sides of the border by agreeing to permanently cease its webcasting operations.

   Now that the dust has settled, it is important to take a step back and evaluate the case of iCraveTV from a Canadian legal perspective. JumpTV, a company operating out of Montreal, is threatening to pick up where iCraveTV left off but is seeking a tariff from the Copyright Board to legitimize its activities prior to commencing operations. What does Canadian law say about the activity of Internet retransmission? Will the future of broadcasting be determined by technological convergence? What does the history of section 31 of the Copyright Act tell us about how the Copyright Board and the Courts should interpret the retransmission right? Is it advisable to deal with this issue by amending the Copyright Act as discussed by the Departments of Canadian Heritage, Industry Canada and others? This paper will examine each of these questions and conclude that the activities of iCraveTV appear to have complied with Canadian law. The legislative history behind the addition of section 31 of the Copyright Act defines a philosophy based on technological neutrality. To exclude Internet retransmission from the application of the retransmission right would be contrary to the intention of the legislation and would hinder the development of new communications technology.

   
   
   
2. The Internet

   The Internet consists of an interlinking of thousands of different sizes and types of networks from all over the globe, originally established by the Department of Defence (as "Arpanet"). The Internet is composed not only of the World Wide Web, but also of search engines and facilities including FTP, Usenet, Gopher, WAIS, Telnet, and E-mail. These functional elements of the Internet enable the user to download, upload, transfer, and view files, messages, data, images, sounds, and video.

   The Internet has now secured a position as an influential technological innovation. The use of this mechanism has been pervasive with the number of Internet users is growing rapidly and expected to reach 320 million by 2001 and 720 million by 2006. North America is predicted to remain the leading region in the world for Internet use until at least 2005. West Europe is growing faster however, and will rank second by the same year. The Asia-Pacific region is growing the fastest, and is expected to have 170 million users in 2005.

   The early culture of the Internet, a culture that remains steadfast in many users today, stressed that the Internet is a forum for the free exchange of information, unhindered by the traditional legal and practical impediments inherent in the non-digital world. Technology visionary John Perry Barlow, a co-founder and chairman of the Electronic Frontier Foundation, argues that 'intellectual property law cannot be patched, retrofitted, or expanded to contain digitized expression any more than real estate law might be revised to cover the allocation of broadcasting spectrum.' Indeed, opponents of regulation of the information highway argue that a hands-off approach by the government in terms of copyright protection may be more profitable in the long run, because it will attract more writers and artists to enter the electronic marketplace with the lure of more users eager to access material that is unhampered by usage restrictions.

   Conversely, authors, copyright holders, and groups advocating on their behalf, vigorously argue that just because the Internet allows users to transfer, view, and copy files easily, valuable copyright protections entitled to authors should not become nullities, particularly in light of the ascendancy of the Internet as a legitimate publishing realm. The legal, computer, and publishing worlds are scrambling to formulate and anticipate the strategies that authors will employ in order to establish a royalty system by which they, as copyright holders, may collect fees. Such fees may come either from large-scale Internet Service Providers (ISPs) who provide users with the ability to link to the Internet or from individual users of the Internet who download, transfer, and view copyrighted works.

   The Internet Protocol (IP) has developed into the de facto network protocol for the Internet, able to route and transport all the elements of a multimedia service (text, image, motion video and sound). IP is also used in Intranet products, providing an infrastructure for multimedia applications within a company or other closed user group. It has evolved very rapidly over the past decade from a largely academic- and government-sponsored network with a backbone capacity of 56kbit/s in 1986, increased to 45 Mbit/s in 1993, and to 155Mbit/s in 1996. This huge change in the capacity of the Internet's infrastructure has been in response to the remarkable growth in the number of people using the Internet and the range of applications and software tools developed for it.

   The open, non-proprietary approach to standards for the Internet has made it easy for companies to take advantage of, and build on, the advances made by others in the industry. For example, many would argue that the rapid development of the capabilities of the World-Wide Web (WWW) has been enhanced by the open approach to browser development taken by vendors such as Netscape, Microsoft and Sun. The Internet will be further enhanced as a vehicle for multimedia transport by the development of several improved or new protocols which Internet service providers expect to implement within the next three years. This brief review of the salient technological developments is not meant to be exhaustive, but to illustrate the role of technology as the motor of change. Technology is developing constantly; its application to innovative services and the bringing of those services to market promise even further dramatic change in the future.

   
   
   
3. Canadian Copyright Law
   1. Introduction

      The Copyright Act governs infringement of copyright in Canada. There has been little attempt in Canada to specify an basic theory or rationale to clarify and influence the interpretation of our copyright legislation aside from various incongruous judicial statements such as that made by MacLauchlin, J. that 'copyright law is purely statutory law which simply creates rights and obligations as set out in the statute'

      The protection of copyright under this Act is on a media-neutral basis, therefore, it logically covers works posted on the Internet. The implementation of the Free Trade Agreement (FTA) led to an amendment of the Act to extend copyright protection to works communicated to the public by telecommunication. Telecommunication is defined in the Act as 'any transmission of signs, signals, writings, images or sounds or intelligence of any nature by wire, radio, visual, optical or other electromagnetic system'. Before these amendments it was generally held that there was no copyright protection for works carried in signals of radio and television stations when retransmitted by cable systems to their subscribers because such communications were determined to be 'private communications'.

      The interpretation of a 'public communication' in the Rediffusion case was overturned by the decision in Canadian Cable Television Association v. Canada (Copyright Board) where the court held that a communication was made in public if it was made 'openly, without concealment and to the knowledge of all'. Therefore, a purely domestic audience is no longer a barrier to a determination of a communication to the public and a programme transmitted by a television or radio station to a private subscriber is a public communication.

      Bill C-32, an Act to Amend the Copyright Act, which came into force 1 October 1999, has also modernized copyright law in Canada for the digital era. This legislation introduced new remedies for copyright infringement to provide better deterrents designed to better compensate copyright owners for damages suffered due to the actions of an infringing party.

      Copyright arises in a work automatically, although it may also be registered with the Copyright Branch of the Canadian Intellectual Property Office. Although copyright need not be registered, registration provides benefits such as a presumption of ownership to the registered party. This means that, in the event of a dispute over ownership, the evidentiary burden will fall on the non-registered party to prove the merits of its claim. Whether or not the copyright is registered, it does exist. The copyright will belong to the creator of the work, the employer of that creator, or a party to whom copyright has been assigned.

      The Copyright Act traditionally covers literary works, dramatic works, musical works, artistic works and compilations (of any two or more of the above types of works). There are a number of general considerations in Canadian copyright law that are especially relevant when taking into account copyright issues raised by the digital exchange of information over the Internet. First of all, copyright in Canada is statute law and as such and the rights of copyright holders are only to be interpreted in accordance with the provisions set out in the Copyright Act. Also of importance is the fact that infringement of the exclusive rights of copyright established by section 3 of the Copyright Act is a matter of strict liability. It is not necessary to establish knowledge or mens rea for an act to amount to copyright infringement. This principle is particularly important in the context of the Internet where Internet Service Providers ('ISPs') and others may have no knowledge of the cont ent of the packets they transmit through their routers or the files they store on their servers.

      The primary objective of Canada's copyright legislation is to benefit authors. The Supreme Court of Canada has also held that the Copyright Act was enacted for two purposes: to encourage the disclosure of works for the advancement of learning, and to protect and reward the intellectual effort of the author (for a limited period of time) .

      It is very important to note the fundamental differences between U.S. and Canadian copyright legislation and concepts. Careful scrutiny must therefore be exercised before applying U.S. copyright jurisprudence. Also of importance is the necessity of construing the terms of Canada's Copyright Act as consistent with Canada's international obligations under the TRIPS Agreement, NAFTA, the Berne Convention (1971) and other international trade and copyright treaties that have been ratified by Canada.

   2. Retransmission

      As part of the negotiations toward the Canada-U.S. Free Trade Agreement (FTA), Canada agreed to introduce amendments to the Copyright Act to provide a structure for the retransmission of distant signals. To implement this commitment, Bill C-60 created the new Copyright Board in Phase I reform of the Act. The Board is an economic regulatory body empowered to establish the royalties to be paid for the use of copyrighted works, when the administration of such copyright is entrusted to a collective-administration society. The Board also has the right to supervise agreements between users and licensing bodies and issues licences when the copyright owner cannot be located.

      Since 1989, cable retransmitters of copyright works contained in distant broadcast signals have paid royalties fixed by the Copyright Board subject to a compulsory license. The transmitter of the programming, which is received from distant locations by satellite or microwave, must pay royalties set by the Board at a rate based on what willing sellers and buyers would have agreed to. The lion's share of the $45 million per year this rate costs cable companies is distributed to collecting societies representing U.S. film and television companies (57 percent). Another roughly 13 percent goes to public television and non-U.S. foreign program producers; 12 percent to Canadian and U.S. networks; 10 percent to the baseball, hockey, and football leagues; and 3 percent to SOCAN. Royalties are not required for the local transmission of copyright works contained in the signal of a local broadcaster.

      A retransmission system picks up the signal of the distant station, which has paid for the broadcast rights to the copyright material, and sells it to its subscribers, sometimes in competition with a local station. When this is done over the Internet, the material is streamed over the Internet with only advertisement as potential profit sources. The distant stations complain about this because they perceive the Internet retransmitters as having free access to material that the distant station has paid for and they can then stream it to a boundless amount of people and internationally for free. Copyright owners are up in arms because they receive no compensation for the retransmission of the program.

   3. Section 31 - The Retransmission Right

      31. (2) Retransmission of local signals. -- It is not an infringement of copyright to communicate to the public by telecommunication any literary, dramatic, or musical work if

      (a) the communication is a retransmission of a local or distant signal;

      (b) the retransmission is lawful under the Broadcasting Act;

      (c) the signal is retransmitted simultaneously and in its entirety, except as otherwise required or permitted by or under the laws of Canada; and

      (d) in the case of the retransmission of a distant signal, the retransmitter has paid any royalties, and complied with any terms and conditions, fixed under this Act.

      Subsection 31(2) of the Copyright Act provides for the right to retransmit television signals given that the preceding four conditions are met. This section of the Copyright Act was cited repeatedly by iCraveTV in its dispute with the entertainment and sports industries. The online service maintained throughout its short-lived period of operation, and to this day, that this section provides an exemption for a service such as it that stream television signals online. iCraveTV maintained that it fell under this exemption as it incorporated 'security measures' into its system with the intention of preventing any users outside of Canada from accessing the service. As a result, iCraveTV asserted that it was merely retransmitting local signals.

   4. History of the Retransmission Exemption

      When considering the proper interpretation of section 31, it is helpful to examine the legislative and policy history of this section as well as the legal disputes that took place in the early years of the development of the cable industry in Canada. Prior to 1988, cable retransmission of broadcast signals incorporating copyrighted works did not infringe copyright. In the 1954 decision in Canadian Admiral Corporation Ltd. v. Rediffusion, Inc. the court found that a cable system's simultaneous retransmission of a copyright work in a broadcast signal to individual homes was not an infringement of copyright because it was not a 'radio communication' or a 'public performance' of the work. Until the 1988 amendments to the Copyright Act, the law did not require Canadian cable or satellite retransmission systems to pay either the copyright owner for the use of the work, or the broadcaster for the use of the signal embodying the work.

      This issue was never far from the government's agenda. In the 1957 Ilsley Royal Commission Report, dealt primarily with a cable system retransmitting the signals of a local broadcaster within one community. The Report opposed the imposition of copyright liability on the ground that the copyright owner should not be entitled to prevent an authorized broadcast of a work from being retransmitted by a cable system. The Commission felt that as the copyright owner's royalty for the broadcasting of the work was based on total audience size, an additional fee was unjustified.

      In 1971, the Economic Council of Canada in its Report on Intellectual and Industrial Property the Council recommended a system of compulsory licenses whereby, in the Council's opinion, both public access and private compensation could be ensured. In particular, it recommended that cable systems not pay copyright royalties for simultaneous retransmission of broadcast signals, providing the signals were not changed. It recommended that copyright liability be imposed where the broadcast signal contained no advertisements or where the cable system deleted or substituted advertisements, or where the signal did not originate with a wireless operator.

      The 1977 report commissioned by the Federal Ministry of Consumer and Corporate Affairs, Copyright in Canada: Proposals for a Revision of the Law, recommended that liability be imposed on cable systems for the retransmission of Canadian broadcasts containing Canadian copyright material. The report considered that Canada is a net importer of copyright material and in order to avoid copyright royalties leaving the country, the report proposed the grant of a retransmission right to Canadian broadcasters for Canadian broadcasts only.

      In 1980 the Department of Consumer and Corporate Affairs commissioned another report as part of its Copyright Revision Series entitled Copyright Obligations for Cable Television: Pros and Cons which examined the economic justification for the imposition of copyright payments on cable systems for retransmission of broadcast signals. The main finding in the Report was that cable systems increased advertising revenues for broadcasters and, since the compensation that creators negotiate with broadcasters should also benefit from the increased markets, copyright payments were unjustified. The Report measured the changes in viewing habits in terms of the extent to which cable increases viewing intensity and therefore advertising revenues, estimating that cable is responsible for a 19.6 per cent increase despite any influence of the local/distant audience relationship. So, cable systems were found to be likely to have a positive effect on advertising revenues, thus the report found tha t there seemed to be no economic justification for the theory that broadcasting revenues were decreased by cable.

      In 1981, the Minister of Communications, Francis Fox, established a Task Force to advise him on copyright matters. The Task Force produced a report in 1983 that argued that copyright owners should have control over cable television and satellite retransmission of their works because it s inequitable to permit anyone to appropriate the value earned by the labours of another. The report concluded strongly that those who are in the business of using another's intellectual property should pay for such use.

      In 1982 the Applebaum-Hébert Report was released. The Report did not consider copyright protection in detail but articulated principles that the Committee considered should be used in revising the law. Regarding cable and satellite retransmission, the Committee asserted that the basic rights of creators to own and control their works should be guaranteed and that provision should be made for proper compensation.

      From Gutenberg to Telidon, a white paper on copyright, was released in by the government in 1984. In an appendix to the report, the paper outlined the issues surrounding whether copyright liability should attach to cable an satellite retransmission activities and asked for public comment. Following the release of the White Paper, the Standing Committee on Communications and Culture held hearings on the issues put forward in the Paper. When appearing before the Committee, the Hon. Michel Cote (Minister of Consumer and Corporate Affairs) said that

      Copyright first of all protects creators, but consumers of their works are equally affected in their day-to-day life by the Copyright. Our legislation must ensure a balance between the interests of the copyright owner and the user.

      In 1985, the Sub-Committee on the Revision of Copyright recommended, in its report A Charter of Rights for Creators, that the Copyright Act be revised immediately to reflect the first major changes since 1924, when the Act was promulgated. Regarding retransmission, the Committee recommended that a retransmission right be provided in the revised law. The Committee stated that

      the existence of a retransmission right should not be dependent on a single technology. For this reason a very wide definition of what constitutes retransmission is necessary. Any retransmission, by whatever means, of signals primarily intended for individual consumers should attract a royalty.

      RECOMMENDATIONS
      
      

      100. The right of retransmission should be defined in general terms and should not depend on current technology.

      Flora MacDonald, Minister of Communications, House of Commons, Evidence, December 10, 1987, Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-60 ,

      There is little argument, ever, with the contention that creators are entitled to adequate compensation. The criticisms and the problems arise, and they continue to arise, only when it comes to specific application, because the creator demands protection in order to guarantee integrity, control and compensation and the user demands access and affordability for the Canadian public and exceptions in certain situations.

      In response to the Sub-Committee's recommendations, the government prepared amendments to the Copyright Act (Bill C-60), which came into effect in 1988 and 1989 (known as Phase I of copyright review). To give effect to the Canada-U.S. Free Trade Agreement, the government revised the Copyright Act in February 1989 and established a retransmission right and system of compensation for certain retransmissions.

      Bill C-60 established mechanisms and procedures for the collective administration of copyright Cable-based Internet access currently is the leading technology for high-speed connections to the net, with a head start in the market over the next leading contender, telcos' digital subscriber line ("DSL") technology).

      Another factor at play in the retransmission debate was Article 2006 of the Free Trade Agreement which compelled both Parties to co-ordinate their copyright and retransmission laws ensuring that payments for the use of recognized intellectual property take place across the Canada-U.S. border. As a result, the new Canadian Copyright Act has effectively extended copyright's applicability to Canadian and American computer software, home copying activities, literary works, etc. Article 2006, in providing U.S. producers with retransmission payments, effectively channels culture and information dollars out of Canada rather than re-circulating cable television profits directly into the hands of domestic producers. Article 2006 of FTA, Canada has had to commence in the co-ordination of copyright and retransmission laws in order to ensure national treatment obligations are met. The 'retransmission right' -- royalties paid for right to 're-broadcast' a signal over cable -- is certainly sk ewed in favour of US creators in light of the disproportionate amount of US television signals entering into Canadian markets. In many ways this right only serves to further decrease the levels of royalties distributed to Canadian creators.

      Technological advances have made national boundaries increasingly unimportant. Every nation must complement these technological advances with the adoption of copyright principles that ensure appropriate compensation to creators of the work they provide but not stifle tech advancement or new media opportunities for consumers.

      In Canada the Copyright Board was established to determine what fair rate of compensation should be. They have the jurisdiction to determine the level of Tariff as well as its distribution among representatives of copyright owners whose works are retransmitted over the Internet. The rates established must be fair to copyright owners generally. The Federal Court has determined that the Copyright Board has the power to interpret the Copyright Act in the course of determining the Issues associated with a proposed tariff. If fair compensation to copyright owners can be provided for Internet retransmission, we should not prevent that from happening.

      In a brief to the Departments of Canadian Heritage and Industry Canada, the Media Content Coalition stated,

      This apparent loophole invites an overly-broad interpretation of a narrowly-intended exception to rights holder's traditional 'right of authorization: - i.e. the absolute right to say 'yes' or 'no' to the use of works -- because it is drafted in what appears to be technologically-neutral fashion. As such, legislative or regulatory change must make it clear that distribution on the Internet falls outside of the Section 31 licensing regime.

      I submit that this is not the case. The legislative evidence during the drafting of section 31 of the Copyright Act in the 1980's illustrates that the amendments to the Act were drafted in technologically neutral language but for a specific purpose, so that the section would apply to new technologies without the necessity for constant amendment. No legislative or regulatory change is currently needed. Distribution over the Internet should not be considered to fall outside of the ambit of the section 31 licensing regime. Copyright owners can be compensated through the compulsory licensing mechanism set up in section 71 of the Act. The Copyright Board has the jurisdiction and the obligation to set a tariff for Internet retransmission and it should do so to legitimize its use and to encourage the development of new technology.

4. The Broadcasting Act

   The Broadcasting Act is Canada's most important broadcast policy document. Section 3 of the Act sets out the fundamentals of broadcast policy in Canada focusing on the protection and promotion of Canadian culture through Canadian ownership of the broadcast system and the promotion of Canadian programming. The CRTC looked into the impact of the development of cable broadcasting on Canadian broadcast policy, first in 1969 with its policy statement, which acknowledged that cable should complement rather than compete with television programming. It also confirmed the necessity of licensing all systems and evaluating their relationship with television.

   The CRTC's approach to the issue of cable retransmission centred on the need to balance the benefits to Canadian broadcast policy with the need for fair compensation to copyright owners. The Commission advocates an industry-led solution based on a negotiated compensation settlement. In the 1978 decision of the Supreme Court of Canada in Capital Cities Communications, Inc. v. Canadian Radio-Television Commission the Court considered the jurisdictional ambit of the CRTC and the right of cable companies to alter retransmitted programmes by inserting their won commercial messages (as approved by the CRTC in its 1971 report). The Court overturned the CRTC policy by ruling that such a policy was unacceptable since it interfered with the rights of the broadcasting station to exploit the commercial value of its programs. Inherent to the decision was the implied understanding that the unchanged retransmission was permissible and not a violation of copyright .

   In July of 1998, the Canadian Radio-Television and Telecommunications Commission (CRTC) commenced an comprehensive study of the regulation of new media which it defined as 'New media broadcasting undertakings provide broadcasting services delivered and accessed over the Internet...' The study addressed the following questions:

   1. In what ways, and to what extent, do new media affect, or are they likely to affect, the broadcasting and telecommunications undertakings now regulated by the Commission?
   2. In what ways, and to what extent, are some or any of the new media either broadcasting or telecommunications services?
   3. To the extent that any of the new media are broadcasting or telecommunications, to what extent should the Commission regulate and supervise them pursuant to the Broadcasting Act and the Telecommunications Act?
   4. Do the new media raise any other broad policy issues of national interest?

   The Commission held months of hearings and received submissions from hundreds of concerned parties and released its New Media Report in May of 1999. After reviewing the extent of Internet activity and the definition of 'broadcasting' in the Act, the Commission determined that the majority of services available on the Internet consisted predominantly of alphanumeric text and therefore it fell outside the scope of the Act and consequently the Commission's jurisdiction. New media services, where the potential for user customization is significant were deemed not to be not a transmission of programs for reception by the public and therefore fell outside the scope of the Act.

   The CRTC determined that some new media services do meet the legislation's definitions of 'program' and 'broadcasting'. Incorporated into that is Internet content that consists only of 'audio, video, a combination of audio and video, or other visual images including still images that do not consist predominantly of alphanumeric text'. The Commission went on to say that the definition of 'broadcasting' included the

   [T]ransmission of programs, whether or not encrypted, by other means of telecommunication. This definition is, and was intended to be, technology neutral. Accordingly, the mere fact that a program is delivered by means of the Internet, rather than by means of the airwaves or by a cable company, does not exclude it from the definition of 'broadcasting'.

   Regardless of the application of the Broadcasting Act to particular forms of Internet broadcasting, the CRTC concluded that, for new media which falls under the definition of 'broadcasting', regulation 'will not contribute in a material manner to the implementation of the policy objectives set out in section 3(1) of the Act.' Accordingly, pursuant to section 9(4) of the Broadcasting Act, an exemption order was proposed with respect to all new media undertakings that are providing broadcasting services over the Internet in Canada. The CRTC recognized that any attempt to regulate new media broadcasting might put Canadian industry at a competitive disadvantage in the global marketplace.

   The activities of iCraveTV appear to qualify for the CRTC exemption and thus were exempt from regulation under the Broadcasting Act . The CRTC has continuously expressed its belief that the exemption of these services will enable continued growth and development of the new media industries in Canada and will be a factor in achieving their broadcasting policy objectives, including liberal access to these services in Canada. The Canadian government has taken a modest approach to the regulation of copyright and the retransmission of broadcast signals through cable transmissions. Considering Canada's low-key approach to the regulation of e-commerce and the information highway, it seems quite clear that this way of thinking will apply regarding the topic of Internet retransmission of broadcast signals.

5. The iCraveTV Case

   iCraveTV was a Toronto-based company that began retransmitting U.S. and Canadian broadcast television signals directly on the Web in November 1999. The signals were picked up by antenna and digitized for retransmission on the Internet. iCraveTV was planning to take advantage of the Canadian retransmission exception contained in the Copyright Act. This exception allows Canadian companies to retransmit by wire, signals that are broadcast from terrestrial-based antennas (as opposed to satellites). The retransmitter must then pay any tariff that is established by the Copyright Board of Canada. The Board then distributes the tariffs to the intellectual property stakeholders who have some claim to the content of the signal that is retransmitted. The problem arose because iCrave TV was retransmitting over the Internet and these signals were viewable not only by Canadians but also potentially in the United States as well.

   The major broadcasters and sports leagues reacted strongly to this activity and launched legal action on both sides of the border . The Canadian side of the case was never litigated. A court in Philadelphia promptly applied U.S. copyright legislation to award damages and issue an injunction ordering iCraveTV to cease transmitting the signal to U.S. viewers. In subsequent negotiations iCraveTV agreed to not 'engage in, any transmission or dissemination...of plaintiff's copyrighted audiovisual or audio works ... through the Internet, through any World Wide Web site, or through any other online or wireless technology of any type whatsoever' . The Settlement Agreement also states that if a court should determine that the retransmission of signals is legal then iCraveTV would be able to recommence its operations.

   Such a case has not been litigated in Canada and there has been much speculation as to how Canadian law would have treat the matter. This case represents a perfect illustration of how new technology has 'completely upset the traditional business model used by television broadcasters and cable companies' . It illustrates how telecommunications, broadcasting and copyright law are having to converge together to deal with the reality of this new technology.

   iCraveTV was able to circumvent conventional broadcast regulation and licensing requirements because of the CRTC's decision in 1999 to exempt Internet broadcasters from regulation, at least for the time being. Although the iCraveTV web site is currently inactive, the issue of Internet retransmission has not vanished from the limelight. The Montreal-based Company, JumpTV, has been threatening to deliver similar services and broadcasting and production groups are seeking changes to the law to pre-empt them.

   Some legal observers have claimed that despite assertions to the contrary from many in the broadcasting community, iCraveTV stood on fairly solid ground under Canadian copyright law. A very persuasive argument can be made that the four prerequisites to qualify for the retransmission exemption were satisfied by iCraveTV.

   • First, the retransmission must be of a local or distant signal. Since Internet retransmitters such as iCraveTV capture local or distant signals using antennas, they meet the requirements of this provision.
   • Second, the retransmission must be lawful under Canada's Broadcasting Act. As luck would have it, the decision made by the Canadian Radio-television and Telecommunications Commission to take a hands-off approach to the Internet -- a position also supported by the broadcasters -- cleared the way for Internet retransmitters to comply with this provision. In December, 1999, the CRTC issued an order exempting new media broadcasters, such as iCraveTV, from regulation under the Broadcasting Act.
   • Third, the signal must be retransmitted simultaneously and in its entirety. Internet retransmitters seek to comply with this provision by capturing the television signal, digitizing it, and immediately retransmitting it onto the Internet.
   • Fourth, the retransmitter must pay any applicable royalty or tariff. Since Canada's Copyright Board has yet to establish an Internet retransmission royalty, the way is clear for Internet retransmitters to operate since there is no applicable royalty or tariff.

   The issue being considered currently is not whether iCraveTV's activities were legal in Canada, but whether Canadian law should now be changed so that Internet retransmission is explicitly addressed in the legislation and so that this type of activity can be prevented in the future.

   JumpTV, a company based in Montreal, made a submission to the Copyright Board late last year requesting that it begin hearings to set an Internet retransmission royalty. The broadcasters waived the right to collect royalties apparently because the setting of an Internet retransmission royalty would be to qualify their activities as legitimate and the broadcasters would prefer to see them shut down. The indications from the federal government are that the broadcasters may possibly get their wish. Some draft amendments to the Copyright Act are circulating among broadcasters and other interested parties. The proposals include changes that would restrict the definition of a retransmitter under the act to exclude Internet-based retransmitters. Other proposals would specify that a retransmitter is a cable-like service.

   It is possible that the time is right for a change in the law, but some commentators think that targeting Internet firms is not the answer. The law in this area has long been based on the principle of technological neutrality which, roughly stated, means that the law should not distinguish between technologies since doing so often leaves the law outdated when technology changes. At this time, when the borders between traditional broadcasters, cable operators and Internet companies are disappearing, an Internet-specific provision would violate this policy of technological neutrality.

   As the law stands now, the requirement in section 31 is technology neutral. Instead of amending the Act to exclude Internet-based transmitters, perhaps a more sensible approach would be to add a condition that all entities involved in the retransmission, including Internet and satellite operators, take steps to ensure their signal is not available outside Canada . Such a provision would ensure technological neutrality, while placing the onus on Internet retransmitters to ensure they don't become subject to the jurisdiction of a U.S. court.

   In the case of iCraveTV.com, the President of the on-line television service, William Craig, exhibited an unwavering determination to persist in the face of numerous lawsuits filed by various plaintiffs in two countries. As a result of this relentless onslaught of litigation, however, iCraveTV.com eventually surrendered. This is an excerpt of the message currently posted on the service's website:

   Toronto, Ontario - "We are pleased to have amicably resolved our differences with the U.S. and Canadian rights holders. Given the virtually infinite resources of those rights holders, a .com start-up like iCraveTV was simply unable to continue with protracted multi-front litigation..."

6. Proposed Amendment to the Copyright Act

   As the activities of iCraveTV have indicated, the Internet may be used to distribute over-the-air television signals to the public. A coalition of affected rights holders have sought amendment to section 31 of the Act to 'clarify' that the section does not apply to the Internet. Another interested party has objected to any changes that would have the effect of introducing technology-limiting criteria into section 31.

   On December 1, 2000 the Canadian Departments of Heritage and Industry released a document inviting interested parties to meet with departmental officials to discuss the following:

   • Which public policy interests, if any, would be furthered, and which, if any, would be harmed by the compulsory licensing of Internet-based retransmission.
   • Given the answer to the foregoing, is there a need for modification to be made to the retransmission regime? In this respect, comment is sought on the following non-exhaustive list of possible changes...
   Possible Changes:
   1. The 'Media Content Coalition' proposed the following amendment to section 31:
      'Retransmitter' is amended to mean,
      a person who performs a function comparable to that of a cable retransmission system, but does not include a person who retransmits a signal by means, in whole or in part, of the Internet.
      
      'Internet' is not defined.
      A new subsection would be added to provide that,
      In the event that a retransmitter becomes aware that an authorized user of its service is retransmitting or has retransmitted by means of the Internet a local or distant signal provided as part of the retransmitter's service, the retransmitter shall immediately discontinue its service to such user.
   2. The definition of 'retransmitter' should be repealed. The Governor in Council could be provided the power to define 'retransmitter' for the purposes of subsection 31(2) and could adopt a definition, which expressly excludes Internet-based retransmitters therefrom. 'Internet' would not be defined.
   3. Subsection 31(2) could be amended to include a new condition along the lines of the following:
      [if the retransmission is carried on lawfully under the Broadcasting Act pursuant to an exemption order made under that Act,] the signal is retransmitted solely to locations in Canada.
      
      The condition would be deemed to be satisfied if criteria along the lines of the following were met:
      
      • the retransmitter maintains reasonable technological measures intended to restrict intelligible reception of the signal to locations in Canada, and,
      • the retransmitter takes prompt, effective corrective action in all instances where the retransmitter knows or ought to know of intelligible reception occurring outside Canada.
   4. Subsection 31(2) could be amended to include a new condition which would apply only in respect of a retransmission carried on lawfully under the Broadcasting Act pursuant to an Exemption Order made thereunder. The condition would provide that such a retransmission must be carried on as part of an undertaking in respect of which the retransmitter is required by or under the Broadcasting Act to distribute one or more signals.
   
   
   
7. JumpTV

   JumpTV is raising the stakes in its battle to become an Internet re-transmitter by promising to launch its web site within the not too distant future. The move comes as the company continues its battle for legitimacy with the Copyright Board of Canada, with a hearing destined for the fall of 2001. Canadian and American broadcasters are preparing to do battle with what they view as another iCraveTV-type service. The company had delayed launching its web site, pending approval of a new tariff from the Copyright Board that would legitimize its activity. Jump president Farrel Miller confirms a launch is pending, but won't say if the new site will stream local TV signals when it goes live. The company has mentioned on several occasions that it won't proceed with an iCraveTV-like service until it secures a copyright tariff.

   The National Association of Broadcasters (NAB) asked for leave to participate in Copyright Board hearings on the matter but it's unlikely the group will either be granted intervenor status or have much influence over the Copyright Board's final decision on the matter.

   The members of NAB, who comprise the largest and most powerful broadcasters in America, were swift to have iCraveTV shut down last year, tying the company up in expensive lawsuits in the United States. Though it likely won't be given a voice at the Copyright Board level, except perhaps to submit an amicus brief, analysts expect the organization will be quick to sue JumpTV if it begins re-transmitting over-the-air programming without proven firewall technology to keep the signal out of the States.

   In correspondence dated 2 April, 2001 to the Copyright Board, Henry Baumann, VP of Law and Regulatory Policy for the NAB, stated that:

   An action of this Copyright Board authorizing (JumpTV) to retransmit television broadcast signals over the internet would have profound international implications and adverse consequences, and likely would violate international law. U.S. broadcasters have spent years and millions of dollars in litigation against its domestic satellite industry protecting and enforcing laws and regulations designed to protect local stations from incursions by satellite delivered distant signals violating local stations' rights to program exclusivity in their markets. The damage done by our domestic satellite industry pales by comparison to the havoc that could be wrecked upon the system of free over-the-air broadcasting in the U.S. by granting Objector's tariff.

   Canadian webcaster JumpTV and broadcasting groups have reportedly agreed on a Copyright Board hearing schedule for a retransmission tariff to take place in the fall of 2001. The hearing is scheduled to take place later this year in two phases. The first phase will determine whether JumpTV qualifies as a retransmitter and the second will decide what tariff should be applied to Internet webcasting.

   
   
   
8. Conclusion

   These are turbulent times for intellectual property law, and many battle scars have been effected upon it, but the copyright regime is far from conquered. If anything, this body of law is continuing to grow in size and strength as a result of the 'Digital Age'. The main objective of copyright law is to provide compensation to creators for their innovations. We have an obligation in Canada to provide foreign creators with an income flow for ideas that generate value to Canadian consumers. The benefits are legal access to the works of non-Canadians and the national treatment of Canadian creators in other countries. A more abstract benefit is the ability to influence the structure of a process that provides incentives for the creation and dissemination of cultural products internationally.

   Back in 1984 with the White Paper, From Gutenberg to Telidon , the government recognized, and the broadcasters maintained, that the technological mode of transmission, be it Hertzian wave, coaxial cable or satellite, should not make any difference to the copyright status of the works being distributed. I would make the same argument with the Internet. The normal industry practices of collective program licensing as applied to retransmission activities should be applied to Internet retransmission without amendment to the Copyright Act so long as fair and equitable compensation is provided to the copyright holders.

   It has been suggested that copyright should reflect a country's social beliefs and values. What is the underlying philosophy of Canadian Copyright law? Surely the theory of Canadian copyright law can be expressed more clearly than was the case in Bishop v. Stevens . This paper suggests that, through an examination of the history of the Act, it becomes clear that the theory of Canadian copyright law is based on arriving at an equitable balance between the right of copyright owners to sufficient payment for their works and the interests of the public in ensuring that the works, 'which are the fruit of such endeavours, are widely accessible'.

   The economic reality of today provides us with great technological advancement. The Canadian government has indicated its support for the unhindered development of the information highway. How can we say no to Internet retransmission? It is because of the desire to encourage the development of new technology that the CRTC decided that it would not regulate content on the Internet. The legislation in this area was designed to act in a technologically neutral manner. If a fair and equitable tariff can be established by the Copyright Board why should we stand in the way of the development of new technology. If we change the law to prohibit Internet retransmission we get nothing in return. The copyright holders are out a potentially lucrative source of revenue and we are denied the choice of watching programs on our personal computers.

   The Broadcasting Act states, as its objective, that

   [t]he Canadian broadcasting system should be regulated and supervised in a flexible manner that...is readily adaptable to scientific and technological change; [and] does not inhibit the development of information technologies and their application or the delivery of resultant services to Canadians...

   Within the past ten years alone there has been a significant change in the range and diversity of traditional telecommunications and media services. We should not discourage the utilization of such technology by constraining the development of Web-TV . In Canada we must embrace these changes by creating an environment that supports rather than holds back the process of change. The flexibility of our regulatory framework is critical. The Phase I revision of copyright law was concerned with ensuring that the policy behind the legislation, by striking a balance between creators and users was in accord with other government priorities. Cultural and communication policy must reflect a balanced perspective that transcends the vested interests of the parties involved.

   The Canadian government made its position clear on the retransmission issue in 1988. The choices offered in the government's recently released draft amendments to the Copyright Act, as proposed by the Media Content Coalition and others, are not advisable because if any of these draft amendments are implemented, it would effectively put an end to Internet retransmission and the technological neutrality of the Act. The streaming of content over the Internet from a satellite signal is new technology but the concept is not new. As stated above, the government spent thirty years considering the issue and implemented the retransmission exception in 1988. The Parliamentary Committee, after months of studying the issue, recommended that 'the right of retransmission should be defined in general terms and should not depend on current technology'. To change the Act every time a new technology comes along would be inefficient, ill-advised and unnecessary.