ARCHIVED — Directors' Guild of Canada

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 Directors' Guild of Canada received on September 17, 2001 via e-mail

Subject: Comments - Government of Canada Copyright Reform

PDF Version of the Response to Consultation Papers on A Framework for Copyright Reform and Digital Copyright Issues
PDf Version of Consultation Paper on the Application of the Copyright Act’s Compulsory Retransmission Licence to the Internet

Submission of the Directors Guild of Canada (DGC) and the Directors Rights Collective of Canada (DRCC) Consultation Paper on the Application of the Copyright Act's Compulsory Retransmission Licence to the Internet

1. Introduction

   Directors Guild of Canada

   The Directors Guild of Canada /La Guilde Canadienne des Réalisateurs ("DGC") or ("the Guild") is a national labour organization that represents key creative and logistical personnel in the film and television industries. The DGC was created in 1962 as an association of Canada's film and television directors. Today it has over 3,500 members drawn from 48 different craft and occupational categories covering all areas of production, editing and design of film and television programming in Canada. The Guild consists of a National Office in Toronto and seven District Councils, each headquartered in a major production center of the region it represents: Alberta, the Atlantic Region, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan. Guild Members are affiliated with the DGC District Council office in the region in which they live, and all are members of the National organization.

   Directors Rights Collective of Canada

   The Directors Rights Collective of Canada/ La Société canadienne de gestion des droits des réalisateurs ("DRCC") is a non-profit organization established in late 1998 by the Directors Guild of Canada to administer the rights of Canadian directors to equitable remuneration (royalties and levies) arising under copyright legislation worldwide from the secondary uses of audiovisual works, such as private copying, rental and retransmission.

   The DRCC works in a complementary fashion with the Directors Guild of Canada. The DGC negotiates collective agreements for its members setting out minimum terms and conditions of engagement as directors; whereas the DRCC administers, on a collective basis, rights to equitable remuneration to which directors are entitled to by virtue of their status as authors.

   
   Position of the Directors Guild of Canada on Internet-based Retransmission

   The Guild has a common interest with producers in seeking to protect the audiovisual productions on which our members work, and in ensuring that the opportunities of successfully exploiting such productions are protected and enhanced. The Internet is a new means of exploitation that has the potential to become - as both the CRTC and the Departments noted - the primary means of distribution, substituting for existing markets from which producers and underlying rights holders derive their revenues. The Guild wants to ensure that the Internet market has the opportunity to develop without the distorting influence of a compulsory licence.

   The Guild commends the Departments for their excellent review of the issues in the Consultation Paper on the Application of the Copyright Act's Compulsory Retransmission Licence to the Internet (the "Consultation Paper"). It evidences considerable creative and analytic effort in grappling with the difficulties posed by the issues. We particularly support the government's conclusion that it should legislate to bring appropriate clarity to the proper scope of the Licence, for the reasons set out in the Consultation Paper.

   It is the view of the DGC that the best option to appropriately define the scope of the Licence is by limiting the Compulsory License to specified technologies which effectively exclude the public Internet, without precluding the use of Internet technologies, such as Internet Protocol technology, in the retransmission of works over closed networks in a secure and private manner.

   We welcome this opportunity to address the policy and technical issues raised by the Consultation Paper, in the pages that follow.

   
   
2. Heavy Burden Rests on Those Who Seek Compulsory Licensing

   A compulsory licence is an exception to an otherwise exclusive right. But while the use of such licences is contemplated in certain defined instances by two provisions of the Berne Convention, nevertheless, international standards are "generally antipathetic to such provisions". At the recent WIPO Treaty discussions in December 1996, the removal of those provisions was seriously debated, though in the end no consensus was reached. Nonetheless, it remains true that "the predominant international mood is clearly not in favour of the extension of compulsory licenses". As Ricketson states:

   "As a general matter, in the context of future revisions of the [Berne] Convention, compulsory licences must be regarded as antithetical to the exclusive rights granted by the Convention and only justifiable as a measure of last resort where these rights would otherwise be completely unenforceable. This test should be one that is satisfied only in extreme circumstances."

   Resistance to the granting of compulsory licenses is also reflected in the 1985 Report A Charter of Rights for Creators cited in the Consultation Paper.

   These comments on the very limited circumstances that can justify the granting of compulsory licences should weigh heavily with the government as it considers whether the compulsory retransmission regime should include Internet retransmission. A heavy onus must be placed on those who promote the extension of the compulsory retransmission licence to the Internet to justify such an interference with the exclusive rights of the copyright owners.

   The public interest in the promotion of innovation in the marketplace, we submit, is better served by refraining from extending what amounts to a regulatory scheme - the Licence - to emerging markets for new technological uses of audiovisual works. The Internet marketplace is a dynamic one, characterized by rapid and unpredictable change. Rights holders and users should be given a chance to find creative solutions to the problems and possibilities of the Internet. The government should not prejudge the outcome, and distort the developing market by the premature imposition of a regulatory scheme.

3. Markets for New Technological Uses of Works Should be Allowed to Develop with Minimal Government Regulation

   Industry Canada and the Department of Canadian Heritage identified this fundamental issue to be faced when applying copyright policy to the challenge of a new technology:

   "Given that legislative intervention could potentially impede the emergence of new models of content creation and dissemination, and given the unpredictable manner and rate at which technology is evolving, when is legislative intervention an appropriate response?"

   There are good reasons to take a "wait and see" approach before extending existing exceptions and compulsory licences (or permitting their extension by interpretation). It is important to give the market time to adjust, to see how changes in technology give rise to solutions and how existing players adjust industry practices to take advantage of the new uses themselves.

   The DGC believes that the Departments, in their promotion of innovation, should prefer market-based solutions and should resist resorting to compulsory licences. This approach, we assert, will better serve the copyright industries and the public at large.

   Approach of US Copyright Office Report on Distance Education

   Not dissimilar issues of principle were faced recently by the US Copyright Office in the study on distance education that it conducted pursuant to Section 403 of the Digital Millennium Copyright Act (DMCA). During the intense negotiations over the DMCA, the issue of extending exceptions to digital distance education was heavily debated. It became clear that the issues were too complex to resolve at that time and so the matter was instead referred for longer-term study.

   The Report on Copyright and Digital Distance Education (the "Distance Education Report"), issued in May of 1999, analyzed the effect of the Internet on distance education and considered whether the law should be changed to extend existing educational exceptions to the new technology.

   The educational community believed that educational exceptions should be extended to take full advantage of the Internet, and complained of the difficulties of obtaining licences for content from copyright owners.

   Copyright owners, for their part, pointed out that expanding the exceptions would harm both the primary and secondary markets for their works. The broadening of the exemptions to the Internet would result in the loss of opportunities to licence works for use in the digital medium themselves - a potentially lucrative market. They argued that more efficient licensing systems were in development and that permissions difficulties would ease with time and with improvements in digital object management and technical protection measures. Unauthorized access, downstream use and dissemination of copyright works, made so easy by digital technology, could have a significant negative impact on their markets. They urged Congress not to foreclose the potential market by legislating prematurely or over-broadly.

   The U.S. Copyright Office began its consideration of the problem with the fundamental premise that, "Emerging markets should be permitted to develop with minimal government regulation". This is the premise that the DGC urges upon the Departments in their consideration of Internet-based retransmission. The Distance Education Report goes on to state :

   "When changes in technology lead to the development of new markets for copyrighted works, copyright owners and users should have the opportunity to establish mutually satisfactory relationships. A certain degree of growing pains may have to be tolerated in order to give market mechanisms the chance to evolve in an acceptable direction.

   At the same time, it must be borne in mind that existing law was crafted to maintain a balance of interests between copyright owners and users of works. In order to maintain a comparable balance, the coverage of an exemption cannot be expanded without considering the impact of the expansion on markets for copyrighted works. If the law is updated to address new technology, the risks posed by that technology must be adequately taken into account."

   In the end, the report urged a wait and see approach, suggesting relatively minor revisions to the existing exceptions while advocating that government refrain from extending exceptions to let the market for licensing and technological protection mechanisms evolve and find its own solutions.

   The parallels between the issues addressed in the Distance Education Report, and those facing us now in considering the appropriateness of extending the Licence to internet-based retransmitters, are instructive.

   Extending the Compulsory Retransmission Licence to Internet-based Retransmitters would pre-empt the developing market for direct exploitation of audiovisual works on-line.

   The Directors Guild, in common with the producer community, views the Internet as a potential primary market for audiovisual works. While the market is still in its infancy, many broadcasters already use their websites to cross-promote their traditional Canadian broadcasting services. And many Canadian television stations distribute their proprietary local news programming through their web sites .

   Producers, broadcasters and the underlying guilds have been expecting that, in keeping with the international digital agenda reflected in the WIPO Treaties, posting audiovisual works to the Internet would be subject to the exclusive authorization of the copyright owner.

   It is for this reason that the proposed extension of the retransmission licence to the Internet has evoked such a visceral reaction from rights holders. The retransmission regime was extended from cable to DTH satellite and multipoint wireless systems during the recent past without raising the firestorm of controversy that Internet retransmission has. In the case of satellite, microwave and cable technology, the retransmission of programming used a technology that required intensive capital investment and infrastructure that was not readily available to producers and broadcasters, nor was the investment in such activities considered as part of their prospective business models or plans.

   But in the case of the Internet, producers have already been exploring business models, in anticipation of the day when delivery of audiovisual works on-line will be feasible.

   That day is fast approaching. It is technically feasible now, as the rising occurrence of illegal bootleg downloads of first run movies attests . The uncontrolled nature of the Internet creates both the risk of damage to existing markets, and impediments to the profitable exploitation of audiovisual works on-line, although the industry is working hard to find solutions. The following are some of the issues the industry is currently working on resolving.

   1. Consolidation of Underlying Rights

      The Internet is a new technology that has resulted in new uses for existing works. Recent cases in the United States have recognized this. In particular, the Tasini case decided at the Supreme Court of the United States, held that electronic uses of freelance periodical works were a 'new use' not included in the statutory grant of publication rights. This decision was rapidly followed by the decision in Random House, Inc. v. Rosetta Books LLC et al , which determined that an electronic book is not included in "book rights" granted to a publisher. Most recently, it was determined that the streaming to the Internet of recorded music carried on a broadcast signal is a different use than the broadcast itself . These cases suggest an increasing legal recognition that the new Internet technology has given rise to a discrete new digital use for works.

      It follows that new rights must be negotiated by producers from underlying rights holders to accumulate the rights necessary for exploitation of works in the new medium.

      For its part, the DGC has been preparing for negotiations with the Canadian Film and Television Production Association (CFTPA) regarding the treatment of Internet rights and payments to guild members. Progress has been made on identifying issues and setting in place a process for negotiation.

      The process of adapting rights transfers and underlying rights acquisition practices in the audiovisual industry will involve time, but should by no means be considered a fixed impediment to the ultimate availability of programming on the Internet. The process of adapting the DGC collective agreements, for example, to account for Internet use, is underway. Other guilds are engaged in the same process with their collective agreements. Individual contracts for services are also being adapted to incorporate reference to the Internet.

      This process of adaptation to new technologies by industry players should not be undercut by an interpretation of the statute that renders a marketplace solution irrelevant.

   2. Technological Immaturity of Audiovisual Delivery Mechanisms

      The Internet is not yet able to deliver audiovisual works in an acceptable quality to a wide audience. The technology is still developing which would permit the rollout of licensed programming or signal distribution for high-end resolution to a large proportion of the public. Broadband access has not achieved widespread implementation as yet.

      As the CRTC noted in its Report on New Media: "Although there appears to be a trend towards an increase in the use of audio and video elements either singly or in combination, the ability to deliver long-form programming of an acceptable technical quality is emerging slowly, most particularly with respect to video." . The Departments themselves stated in the Consultation Paper on Digital Copyright Issues: "Even today, the time taken to transmit the very large files associated primarily with cinematographic works is relatively substantial, though it is diminishing rapidly" .

      In these circumstances, there is no reason to allow a compulsory licence regime to distort what is a nascent and emerging technology.

   3. Unproven Technical Protection Measures; Risks of On-line Infringement

      The Internet exposes rights holders to the possibility of rampant piracy and unauthorized use. The legitimate concerns of rights holders as to the ease of widespread copying and unauthorized global distribution on the Internet, combined with the difficulty of detection, must be acknowledged. Though currently the technique of streaming signals makes copying by the end user difficult, it is only a matter of time before this may change. The Departments have noted the difficulties in protecting copyright works on the Internet in their discussion of the government rationale for digital copyright reforms in the Consultation Paper on Digital Copyright Issues :

      • Rapid and essentially costless unauthorized reproduction and communication on a global basis;
      • Diminished ability to assert copyright in a work once the work is available on the Internet due to the possibility of numerous, anonymous infringers, some of whom reside in jurisdictions with little copyright protection;
      all of which deters rights holders from making their copyright works available on-line.

      Currently, technological protection measures are unproven. It would be rash on the part of rights holders to subject valuable programming to the risks inherent in Internet distribution at a time when protection measures are in the early stages of development.

      The situation will improve to a degree when recognition of digital rights and protection for technological measures and rights management information, as contemplated in the WIPO Treaties, is enacted, not only in Canada, but throughout the world. But this is a matter on which Canada is only now seriously embarking.

   4. Identification and tracking techniques not yet in place

      Several years ago, it was realized that an international system for the identification of audiovisual works would be essential to track usage and ensure compensation for audiovisual works on the Internet. An international effort - in which individual Canadians have played a major role - was undertaken to create the International Standard Audiovisual Number, or ISAN.

      In development since September 1996 under the auspices of the International Standards Organization (ISO), the ISAN is to be a voluntary numbering system for the international identification of audiovisual works. It is designed to provide a unique, internationally recognized and permanent 16-digit reference number for each audiovisual work, regardless of format. An eight-digit suffix, the V-ISAN, will identify versions of the work. The ISAN will reference a database of bare descriptive information about each audiovisual work, intended purely for identification. The formal standard is expected to be finalized, approved, and published by the end of 2001 and implementation will begin shortly thereafter.

      A coalition of all the leading audiovisual organizations in Canada has formed to build a Canadian ISAN agency and promote the adoption of the ISAN in Canada.

      This demonstrates the commitment of the industry to becoming "digitally ready", in anticipation of exploiting works on-line.

   5. Global Reach of the Internet

      The global reach of the Internet complicates the licensing of uses of audiovisual works, since, in existing industry practice, rights are typically licensed by geographic territory. To quote the Departments:

      "The Internet is largely unfettered by national boundaries and reaches most communities around the world serviced by telephony. Wireless distribution systems, such as satellite-based systems, are rapidly ensuring that works in digital formats are easily disseminated to the furthest reaches of the globe."

      Permitting a work to appear on the Internet under these conditions would interfere with the territorial nature of existing marketing practices. This problem of "global reach" is an impediment to direct licensing. If only geographic boundaries could be re-established on the Internet, a huge barrier to Internet marketing by producers would be removed.

      It is thus somewhat ironic that JumpTV claims to have found a way to re-impose digital borders. The claim that it has found a way to recreate the practical effect of territorial borders on the Internet is one of the major arguments of JumpTV to support its entitlement to application of the Licence; it also supports our argument that there is no justification in public policy for doing so, as we discuss further below.

   6. Conclusion

      As can be seen by the foregoing, rights holders are working hard to adapt to the new technological marketplace. Permitting Internet retransmission would interfere with the plans of producers to explore marketing possibilities. Permitting retransmission of audiovisual signals, in the absence of reliable means of protection against unauthorized uses and retransmission, without contractual relationships that would allow right holders to impose standards of protection, would expose audiovisual works to unacceptable risks.

      As a result, extending the Licence to the Internet would not only pre-empt producer efforts to find ways to exploit the prospective market of the Internet directly, it would also subject their works to rampant unauthorized downstream uses which could seriously damage their worth in existing markets. This would clearly interfere with the normal exploitation of audiovisual works.

      To justify this would require an overwhelming public policy objective that could be reached by no other means. But given the rapid state of development of the Internet, how can the Departments say with any certainty that market forces will not accomplish the desired policy goal - perhaps in some manner more suited to the environment of the Internet - without such recourse?

4. Public Policy: Not advanced by Extending Licence to Internet-based Retransmission

   The Departments identified the provision of non-discriminatory access to broadcast signals for all Canadians as the public policy behind the retransmission Licence. The Consultation Paper identified the "vital role that retransmission plays in supplying over 75% of Canadian households with access to a wide range of over-the-air signals". It notes that this access is especially important for rural and remote areas of the country where otherwise there would be little or no access. A compulsory licence is necessary for this purpose, it is argued, because, without it, BDU's would be obliged to negotiate with all rights holders, a process of questionable efficiency and unlikely success. It is considered doubtful that a retransmitter could clear all rights necessary to retransmit entire free-to-air signals.

   The Guild notes that since 1983, when the Canadian pay television services were launched, BDU's in Canada have in fact been able to clear the rights to entire signals, namely, the signals of the pay and specialty programming services. These services clear the necessary BDU rights directly from the program rightsholders, and pass on those rights to BDUs through their affiliation agreements, for a subscription fee. (As we note further below, however, few if any of the pay or specialty services have secured Internet rights for most of their programs. Accordingly, the programming services are not able to pass on these rights to BDUs.)

   In the case of free-to-air TV stations, however, such stations do not clear BDU rights in the normal course. In fact, TV stations typically only purchase the right to broadcast the program in a particular market, which does not include distant markets. BDUs carry the signals of such stations into distant markets without any payment to or contractual relationship with the stations, unlike the situation with pay and specialty services. It is those unique circumstances that give rise to the need for a compulsory licence for the benefit of BDUs, since they cannot obtain the necessary rights by bargaining with the stations. Simply put, the stations do not have the rights to give.

   Armed with the benefit of the compulsory licence to import distant signals, and also offering a range of pay and specialty services, BDUs have made significant investments in order to bring those signals to subscribers across Canada. Over the last few decades, cable has extended its infrastructure progressively to smaller and more remote markets, particularly with the advent of Cancom and its "Part C" systems in the 1980's. More recently, the Canadian DTH and MDS operators have made significant investments to bring BDU service to subscribers beyond the reach of cable, and at the same time to compete head-to-head with cable systems as well.

   With the help of the compulsory licence, in short, existing BDUs already provide virtually all Canadian households with non-discriminatory access to a broad range of off-air signals, on a basis that is regulated by the CRTC, and upon payment of royalties set by the Copyright Board.

   It is important to note the public policy benefits provided by the Licence in the case of cable, MDS and DTH systems, because extending the compulsory licence to Internet-based retransmitters will not advance these same benefits.

   There are two reasons for this.

   No Network Building to Underserved Communities

   First, unlike conventional BDUs, Internet retransmitters do not put a penny of investment into reaching rural or remote homes, by extending their infrastructure to such homes. The extension of the Internet to an increasing number of homes is a job principally done by Internet Service Providers (ISPs), not by webcasters like JumpTV. JumpTV and its kin are effectively handed the Internet as a free good. They do not participate at all in extending the Internet to more homes, unlike cable, MDS or DTH systems that have expended millions of dollars to extend their systems to subscribers in large and small communities as well as rural Canada.

   The Guild is aware that there is a lively debate going on in Canada about the importance of extending broadband Internet access to as wide a number of Canadians as possible. That was the aim of the recently released Report of the National Broadband Task Force. But that Report makes it clear that it will not be webcasters that will be making the investment necessary to reach more Canadians; rather, this will be the function of what are called "network builders", i.e., persons who create transport networks that link national networks to communities, and persons who create access networks that would link individual homes and businesses within communities to the community point of presence for the transport network.

   A proposed webcaster like JumpTV is not a "network builder". It uses the existing Internet infrastructure rather than building that infrastructure out to more Canadians. In short, it is simply not fulfilling the kind of role in the system that conventional BDUs fulfill.

   That massively undercuts any public policy argument suggesting that Internet-based retransmitters should be given the benefit of the compulsory licence so that they can "do what cable does" in supplying Canadian households with access to a wide range of over-the-air signals. They don't do what conventional BDUs have done, i.e., install capital-intensive proprietary signal delivery systems directly to Canadian subscribers.

   No Meaningful Competition to Existing BDUs

   This brings us to a second point. A suggestion is made by the Departments that excluding Internet-based retransmitters from the benefit of the compulsory licence would eliminate an entire class of potential competitors to conventional BDUs. In other words, giving a compulsory licence to a player like JumpTV would promote competition between conventional BDUs and Internet-based retransmitters.

   But again, this is based on a quite erroneous understanding of the situation. The bulk of the programming services carried by cable, MDS and DTH systems are not over-the-air signals. Rather they are the pay and satellite programming services. The programs on these services have been cleared for distribution on conventional BDUs but they have not been cleared for distribution over the Internet. (This is simply a reflection of the concerns of rightsholders noted earlier.)

   The implications of this are obvious. A webcaster like JumpTV may be seeking a compulsory licence for over-the-air signals, but unlike conventional BDUs, it will never be able to negotiate affiliation agreements with most of the pay or specialty services carried by the BDUs, since those services have not obtained Internet rights for most of their programs. Therefore, JumpTV or other Internet retransmitters will never be meaningful competitors to the conventional BDUs, since they will lack most of the programming distributed by those systems.

   That needs to be carefully understood. If the only justification for giving Internet-based retransmitters the benefit of the compulsory licence is to foster more competition with BDUs, then this goal will simply not be achieved.

   This being the case, it then begs the question - why give Internet retransmitters like JumpTV the benefit of a compulsory licence when (a) they will make no investment on infrastructure to remote or rural areas that justified the giving of such a licence to conventional BDUs, (b) even if they had such a compulsory licence, they would not be able to provide a competitive alternative to BDUs anyway, and (c) giving them such a licence would undercut the normal marketplace evolving for Internet use of broadcast programs?

   Finally, it should be noted that the Internet could be distinguished from conventional broadcast distribution by one single fact: the fact that on the Internet, intermediaries between the program righsholder/broadcaster and the end users are no longer essential.

   
   Disintermediation

   The Internet is a decentralized, self-maintaining, non-proprietary global network of digital telecommunications networks, capable of rapidly transmitting communications from one computer to another, anywhere in the world. As evidenced by the Napster phenomenon, it is a great populist distribution medium. The key word in Internet distribution is disintermediation.

   To date, broadcasters have not been able to get the rights to transmit their signals containing audiovisual works over the Internet, for reasons that we have cited. But one of the primary reasons that such Internet licensing of programming for television broadcast has not been available is the problem of the global reach of the Internet, making it impossible to licence rights by territory.

   Should a reasonably reliable technology for re-establishing borders on the Internet become available, that technology would remove an impediment to direct Internet licensing by rights owners, enabling broadcasters to transmit to the Internet without the intervention of a retransmitter. Thus, the very technology - border control - that Internet retransmitters are relying on to facilitate their operations and to qualify for the Licence, would tend to eliminate the need for their existence. Border controls on the Internet would facilitate the licensing of existing broadcasters to make authorized Internet transmissions directly.

   If reliable content protection measures are found, and national borders are restored on-line, broadcasters could well transcend their distance limitations by obtaining streaming rights by licence. Licensing would permit rightsholders to negotiate technological protection measures, to specify "best of breed" technologies, assign responsibility for containment and enforcement when infringement occurs, and generally set terms and conditions flexible enough over time to protect their works in a changing environment. Is the government in a position to do this, in the context of the retransmission regime?

   If effective border control technology comes to pass, the underlying assumption upon which the asserted public policy rationale for the retransmission licence is based evaporates away.

   
   
5. Contradiction of Approaches:

   Exemption from Regulation in New Media Decision;

   Resort to Regulation (Compulsory Licence) under the Copyright Act

   The CRTC New Media Report, in its study of the impact of new media on conventional broadcasting and telecommunications, concluded,

   To impose licensing on new media would not contribute in any way to its development or to the benefits that it has brought to Canadian users, consumers and businesses.

   In that forum, it was recognized that to interfere through the imposition of compulsory licensing on the developing marketplace for Internet delivery and new media would not benefit Canadians. Yet, armed with this freedom from broadcast regulation, Internet retransmitters seek to shelter from market forces by resort to compulsory licensing of copyrights in that very market.

   This is a classic case of sucking and blowing. The wonder is that commentators, who support Internet retransmitters as free market "innovators", have failed to see the contradiction. They miss the perverse fact that the compulsory retransmission licence is regulation, for the purposes of the Copyright Act.

   Both approaches cannot work fairly for rights owners and other players in the market at the same time. While the freedom to develop the market is probably the correct decision for the Internet, at least at present, extending the existing correction mechanisms designed for older technologies to the "radical novelty" of the Internet most emphatically is not.

   If new media players are free to innovate and develop the Internet market without the impediment of regulation, rightsholders in television programming and broadcast signals must have a similar freedom. Their market opportunities should not be hijacked by the invocation of an old, regulated industry compromise -- the compulsory retransmission licence -- built upon assumptions that technology and the New Media decision have blown away.

   
   
6. Technological Neutrality: a Double-Edged Sword

   While technological neutrality has been cited for many years as the ideal in drafting copyright legislation, the government must not apply this principle without careful thought. The Departments clearly recognize the need for careful analysis in applying this principle, in their acknowledgement that technological neutrality may not be appropriate in all circumstances. The goal of technological neutrality is to "contribute to long-term legislative stability by reducing the need for ongoing amendments arising from unforeseen technological change." But that very neutrality may, in some circumstances, create an urgent need for legislative amendment, as is exemplified by the Internet retransmission issue at hand. Neutrality may allow a provision to remain "evergreen". But it may equally lead to unforeseen and inequitable applications.

   Technological neutrality in the context of a compulsory license is particularly questionable. This is because, in crafting exceptions to the exclusive rights of copyright owners, a delicate balancing game is undertaken. Depending upon the nature and effect of a given technology, the balance of a given provision can be dramatically different. While drafters can try to analyze exactly what attributes of a technological delivery system are critical to establishing the balance between users, rights holders and public policy, it is a difficult task in the abstract.

   The fairness - both from industry player perspectives and as a matter of public policy - of a compulsory licence is very much dependent on the characteristics of the new technology. And each new technology has its own effects. The limited territorial scope of cable retransmission, and its ability to control access to its subscriber base, as well as several important aspects of regulation imposed by the CRTC - now recognized to be important aspects of the Licence - were simply taken for granted in the drafting of Section 31 and were factored into the balance struck in public policy terms for fairness to the parties to the retransmission regime.

   In our view, given the uncontrollable nature of the Internet and its capacity to damage markets for audiovisual works, it is inequitable to extend the Licence to the Internet, even with additional neutral conditions. It is far better to deal with a specific exclusion, while retaining the ability to make amendments, if and when required, through regulation.

   
   
7. Implications of the Internet as a Disintermediation Media:

   Potential for multiplicity of private individual retransmitters.

   The Departments note that the leasing of broadband Internet capacity necessary to operate an Internet-based retransmission undertaking over a shared network may initially be undertaken on a modest scale. But what if, rather than one or two corporate Internet retransmitters or various ISPs taking over the field, a plethora of unregulated small operators sprouts up? As the technology becomes more and more accessible, the existing (relatively minor) barriers to entry may fall and make this possible.

   If small, unregulated retransmitters proliferate, how will the Copyright Board conduct retransmission tariff hearings? How will distant signal royalties be collected? How will compliance with the terms of the Licence be monitored?

   
   
8. Spill-over Effect, Piracy and Unauthorized Downstream Uses

   The Consultation Paper noted the suggestion that other laws should deal with the spillover of signals into other jurisdictions, and that Canadian lawmakers should not concern themselves with this issue. This position ignores our international Treaty obligations, and reflects the utter lack of concern on the part of would-be Internet retransmitters about the proprietary interest of the program owners in the programming carried by retransmission. A spillover has the potential to interfere with orderly marketing, and devalue programming that was made at great expense. But this will be of little concern to an Internet retransmitter: the spillover hurts the creators, producers and distributors - not the Internet retransmitter.

   
   
9. Options for a Government Response:
   
   An Internet Exclusion Preferable

   For all the reasons set out above, it is the position of the Directors Guild of Canada that the compulsory licensing of Internet-based retransmission within Canada is not appropriate under any terms or conditions at this time.

   Despite the understandable preference of the Departments for targeted, technologically neutral provisions, the difficulties are such and the need for clarity sufficient that, in our view, a specific exemption of the Internet is required.

   The DGC accepts, however, with qualifications, the view of the Departments that the use of Internet Protocol technology by a retransmitter employing a network appropriately distinct from what might be thought of as the "public Internet", should not for that reason alone disqualify the retransmitter from reliance upon the Licence.

   The DGC suggests that section 31 be redrafted to restrict its application to specified technologies set out by regulation. This will enable the exclusion of the Internet, subject to certain limited technological uses of Internet technology by conventional BDUs. Setting out specified technologies by regulation would allow the retransmission provision to be more readily adaptable in the event of appropriate new technologies, while ensuring that the applicability of the Licence to any new technology is made in a considered way, after industry consultation during the process of regulation drafting.

   The Consultation paper has identified several additional restrictions that, in the view of the Guild, should be built into a revised section 31.

   Our position can be best summarized by reference to our preliminary proposed amendments to Section 31. In what follows, we have attempted to capture concepts; the language is preliminary, and provisional only. We reserve the right to make alternative suggestions and amendments in response to comments and suggestions of others during this consultation process.

   Our preliminary proposal is to amend section 31 in the following manner:

   
   
10. Directors Guild of Canada Interim Provisional Proposed Revision of Section 31: Compulsory Retransmission Licence

    31 (1) Interpretation - In this section,

    "commercial message" - [means any commercial information or any advertisement, including any such information or advertisement provided in an interactive format, [any communication, whatever its form, that in substance and having regard to all the circumstances, constitutes an advertisement] in respect of which the retransmitter [or a person acting in association with the retransmitter] has received consideration, directly or indirectly, from a party other than the recipient of the retransmission];

    "retransmitter" means a person who makes a retransmission of a signal;

    "retransmission" means the communication to the public by telecommunication of a signal by any means expressly provided for by regulation;

    "signal" means a communication signal that carries a literary, dramatic, musical or artistic work and is transmitted for free reception by the public by a terrestrial radio or terrestrial television station;

    [Existing definition in the Copyright Act: "Communication signal" means radio waves transmitted through space without any artificial guide for reception by the public]

    "subscription retransmission" means [any retransmission that is [encrypted,] controlled and limited to particular recipients [who have entered into direct contracts for service with the retransmitter], and for which consideration is required to be paid or otherwise given by or on behalf of the recipient to receive the retransmission or a package of retransmissions including the retransmission].

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

    1. the communication is a retransmission of a local or distant signal;
    2. the retransmission is lawful under the Broadcasting Act;
    3. the retransmitter is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission under the Broadcasting Act
    4. the signal is retransmitted simultaneously and without alteration thereto, except as otherwise required or permitted by or under the laws of Canada;
    5. the retransmission can be received only by members of the public within Canada,
    6. the retransmission is a subscription retransmission;
    7. 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.

    (3) Exempt Retransmitters - The Governor in Council may by regulation exempt any specified class of retransmitters from the obligations set out in paragraphs (c) or (g) above.

    (4) No Commercial Additions without Consent - Without the consent of the radio or television broadcaster originating the retransmitted signal, no commercial message transmitted by the retransmitter, or by a person acting in association with the retransmitter, may be rendered perceptible to the recipient in conjunction with the signal, [unless such commercial message is merely incidental to the collateral provision by the retransmitter of [access to the Internet]].

    (5) Regulations - The Governor in Council may make regulations (a) defining "local signal" and "distant signal" for the purpose of this section and (b) for the purposes of the definition of " retransmission".

    Proposed Regulations
    
    Definition of "retransmission"

    [For the purposes of the definition of 'retransmission' in section 31. (1) of the Act, conventional retransmission technologies should be listed, which shall not include the Internet, but provision may be made for the mere use of Internet Protocol technology used to retransmit works over a closed network in a secure and private manner, excluding the retransmission of works over an open network.]

    Exempt Retransmitters Pursuant to Subsection 31. (3)

    [MATV stations may be exempt from para (g) (obligation to pay royalties for distant signal retransmission) and Low and Very Low Television Stations as identified by the CRTC may be exempt from the requirement to have a Broadcasting Licence in para (c)]

    
    
11. Explanation of Proposals

    Scope of the Licence

    The DGC suggests that the definition of retransmitter be simplified, and made descriptive and that certain classes of retransmitters, specifically Low and Very Low Television Stations, be exempted by regulation. The definition of "signal' would be amended to incorporate the term "communication signal" which is defined in the current Act. A new definition of "retransmission" should be included as well which would provide as follows:

    "retransmission" means the communication by telecommunication to the public of a signal by any means expressly provided for under the regulations

    The regulations under this section would include conventional retransmission technologies but would exclude retransmission to the public by means of the Internet. Some provision for the use of Internet technologies on private networks not accessible to the public under defined circumstances could be provided for. While we advocate the exclusion of the Internet, we do support making it possible to allow the existing BDU sector to make innovative use of aspects of Internet technology, while avoiding the "public Internet".

    Territorial Restrictions

    The DGC approves of the Department's conclusions that a territorial restriction is required. The Guild believes that a territorial restriction should be imposed on all classes of retransmitters, notwithstanding that some forms of retransmitting do not have the potential to retransmit beyond Canada's borders. In that case, they will have no trouble complying.

    In the light of the exclusion of the Internet, it is the Guild's view that no qualifications to this territorial restriction are required. The difficulty of territorial qualifications can be limited or avoided by the imposition of the requirement that retransmission be by subscription only.

    Banner Advertisements

    Programming is used to sell airtime to advertisers, which provides the broadcasters' revenues. For the purposes of our submission, the DGC will assume from this that the potential effect of banner advertising on over-the-air broadcasters - and accordingly on the rights holders of the programming which they licence - will be negative. It would decrease the available advertising revenue, by permitting Internet-based retransmitters to compete directly with broadcasters for the available advertising dollar, using the broadcasters own signals as consideration. The inequity should be obvious.

    The DGC is of the view that the use of banner advertising- indeed, any advertising - by retransmitters, does raise issues of copyright policy.

    • The pairing of the works contained in the communications signal with advertising (which is the means by which broadcasters and hence program owners are compensated for the licensed use of the works) conflicts with the normal exploitation of the works and would unreasonably prejudice the legitimate interests of the program owners and broadcasters who seek proceeds of exploitation from advertising. It would do so by potentially siphoning off advertising dollars, thereby harming the broadcaster in a way that subscription-based retransmission does not. It introduces direct competition.
    • It could implicate the moral rights of authors in the works contained in the communication signals;
    • New concepts of advertising could potentially create a compilation - creating a combined work without authorization through the combining of the communications signal and works with extraneous material, whether a banner ad, or embedded links or web pages, in an effort to create something which is interactive for commercial ends.
    • This competition would extend, not only to traditional advertising, but also to contemplated interactive commercial linkages.

    The advertising world is poised for change, as the "click-through" rate for traditional television advertising rises. This can be seen in the rise of "placement" advertisements, (like that of FedEx in the Hollywood movie Cast Away). Interactive commercial linkages to the Internet sent simultaneously with programming are a potential new source of advertising revenue that should not be permitted under a compulsory licence as it affects the primary exploitation rights of program owners and broadcasters.

    By way of example, a new company called iLoveTV Inc. (iLoveTV.ca) has emerged that promises to provide a website platform on which broadcasters or producers will stream their content. The platform enables web pages to be dynamically generated with live broadcast and pre-recorded content. The technology permits TV signals to be synchronized with links, which will appear thematically and in-sync with the TV program's content. As described on its website:

    iLoveTV enables the content to be easily embedded with advertiser and information links, as well as closed captioning, banner ads, sponsor buttons, live chat rooms, voting, polling and much more. This enhanced programming can be viewed on a television as a split screen visual, it can be streamed solely on a computer monitor or it can be viewed on both at the same time.

    This is a prime example of innovation in the marketplace that offers producers and broadcasters new options for exploitation.

    The DGC believes that any commercial additions to the signal should be permitted only with the consent of the broadcaster.

    Requirement to hold Broadcasting Licence from the CRTC

    The reason to impose this requirement as a condition of eligibility for the Licence is threefold.

    First, if provision of retransmission via the Internet is of sufficient importance to Canadian broadcasting and cultural policy that it merits the imposition of a compulsory licence, then it should be recognized to be of sufficient importance to merit regulation by the CRTC. Any retransmitter to which this requirement is deemed too onerous (such as MATV systems) may be specifically exempted by regulation.

    Second, the requirement that a retransmitter hold a broadcast licence would subject all retransmitters to collateral CRTC licence terms, thus preventing an undue advantage to new technologies over existing ones.

    Third, it provides a degree of flexibility in regulation, allowing the CRTC to respond to new developments that may affect the equities of the retransmission regime.

    Subscription Retransmission

    A further condition for the protection of signal and programming copyright owners is a requirement that the business model of any retransmitter be based upon subscription.

    This requirement would only permit controlled access retransmissions, thereby reducing the anonymity of users and providing a basis for border control. It also guards against advertising-based models of retransmission.

12. Other Issues raised by the Departments:

    Unauthorized Retransmission by Authorized Users

    Our position is that we do not think it appropriate at this time that Internet-based retransmitters be given the benefit of the Licence. The possibility of unauthorized retransmission of signals outside Canada by persons authorized within Canada to receive them demonstrates the extreme difficulty of adequately protecting the interests of rightsholders in signals retransmitted over the Internet. The problem admits of no satisfactory regulatory solution that we can see at this time. Examination of these difficulties fuels our argument in favour of Internet exclusion.

    Subsidiary Signals

    The DGC believes that subsection 31. (2) (c) respecting the obligation to retransmit a signal simultaneously and in its entirety should be amended to read "simultaneously and without alteration", as this language is more in keeping with Canada's obligations under Article 2006(2)(b) of the Canada-U.S. Free Trade Agreement.

    Simultaneity and Entirety

    The DGC does not believe that the Licence need be amended to clarify that the requirement for a signal to be retransmitted 'simultaneously and in its entirety" does not exclude from the benefit of the Licence a retransmission involving any reasonable delay, etc. We believe that this requirement can be left to reasonable interpretation.

    Other Jurisdictions

    The absence of any known jurisdiction in the world extending the benefit of a compulsory retransmission licence to the Internet underscores the Guild's view that it is not in Canada's interests to extend our retransmission regime to the Internet. Given the international nature of the Internet, we feel strongly that extending a compulsory licence of this nature into that global distribution medium would be contrary to the international goal of promoting a level of common protection of copyright in digital media. As the Departments rightly state: "The need for some degree of internationalization of copyright is particularly acute in the digital network context."

    Australia expressly excluded the Internet from its new compulsory retransmission licence after receiving representation from rights holders. These rights holders argued that there is no justification for imposing a statutory license over rights to retransmit broadcast material over the Internet, or through any other new technologies, if by doing so they prevent the development of a free market in these rights . While it was clearly the Australian Government's desire that the Copyright Amendment (Digital Agenda) Bill be technology neutral, nevertheless, it was argued successfully that, due to the lack of geographic boundaries on the Internet, the risk of harm to copyright owners from a global system of retransmissions subject to a compulsory retransmission licence was too great.

    In the United States, the issue of whether to extend the benefit of their retransmission regime to the Internet was addressed by the U.S. Copyright Office in its Review of the Copyright Licensing Regimes Covering Retransmission of Broadcast Signals, dated August 1, 1997 . In its executive summary the Report concludes:

    The Copyright Office concludes that it would be inappropriate for Congress to grant Internet retransmitters the benefit of compulsory licensing. The primary argument against an Internet compulsory license is the vast technological and regulatory differences between Internet retransmitters and the cable systems and satellite carriers that now enjoy compulsory licensing. The instantaneous worldwide dissemination of broadcast signals via the Internet poses major issues regarding the national and international licensing of signals that have not been fully addressed by federal and international policymakers, and it would be premature for Congress to legislate a copyright compulsory license to benefit Internet retransmitters.

    In the body of the report, it is interesting to note that the then would-be Internet retransmitter (AudioNet) confidently argued that, if required, it could limit the geographic scope of its retransmissions.

    The arguments against extending the licence made at that time included the following:

    • Instantaneous worldwide dissemination of broadcast signals via the Internet poses major issues regarding US and international licensing of the signals; coupled with an Internet user's ability to store, edit and retransmit information, it would be bound to create havoc with the licensing mechanisms working in the free market
    • Producers of original programming are beginning to transmit their works over the Internet, and giving Internet retransmission services the advantage of compulsory licensing would put those originators at a competitive disadvantage and possibly thwart the development of free market licensing
    • Copyright owners should not subsidize the costs of a fledgling Internet retransmission service's entry into the communications field especially before the free market has had an opportunity to operate
    • Revenues paid by Internet retransmitters under a compulsory licence would likely not be high enough to result in any worthwhile additional royalties for copyright owners
    • Internet technology allows almost anyone to retransmit copyrighted material
    • For time-sensitive sporting telecasts, Internet retransmission would displace the sponsoring institutions from exploiting international markets
    • Internet retransmitters are unregulated in the communication context, are not subject to FCC regulations such as must-carry, syndicated and sports exclusivity, network non-duplication, and PEG requirements, and with no such protections to local broadcasters and copyright owners, the compulsory licensing of their services would severely compromise local broadcasters' ability to control the distribution of their signals, would harm syndicated programming and local broadcasting businesses, and would jeopardize the network/affiliate system
    • There already exists sufficient availability of retransmission service
    • Internet retransmissions are so subject to unauthorized copying and downstream redistribution, and current encryption technology is of such doubtful sufficiency, that no compulsory licensing should be contemplated until such time as reliable technological security measures are available, if then
    • International policy makers are only beginning to address the telecommunications and copyright policy issues posed by the Internet and it is inappropriate and premature for Congress to adopt a compulsory licensing regime before the policy debates have been fully held.
    • The FCC has taken a wait-and-see, anti-regulatory perspective toward the Internet.

    The Copyright Office added its own point to this list, a list of arguments with which it generally concurred, stating that it believed it was premature to consider the implications for the retransmission of broadcast signals via the Internet before it has fully considered the many other copyright issues involved in all aspects of Internet operations. In particular, the Copyright Office questioned AudioNet's claim that retransmitting broadcast signals over the Internet does not actually involve copying in addition to publicly performing the copyrighted works retransmitted. The Report states: "If each user of AudioNet's services actually copies or has the potential to copy retransmitted programming on his or her home computer, the copyright implications go far beyond compulsory licensing."

13. Conclusion

    In the Guild's view, despite the understandable preference (in the abstract) of the Departments for targeted, technologically neutral provisions, the difficulties are such and the need for clarity sufficient that, in our view, a specific exemption of the Internet is required. Given the dynamic state of change in the Internet marketplace, it is simply not possible to regulate by technology neutral compulsory licence, and get it right.

    The DGC accepts, however, with qualifications, the view of the Departments that the use of Internet Protocol technology by a retransmitter employing a network appropriately distinct from what might be thought of as the 'public Internet" should not for that reason alone disqualify the retransmitter from reliance upon the Licence.

    The Departments' review of the retransmission regime has revealed a number of other restrictions that should be reflected in the conditions for applicability of the Licence, and the Guild proposes that these additional restrictions, including that of territorial restriction, be included in a revised provision.

The Directors Guild of Canada thanks the Departments for their excellent canvassing of the issues in the Consultation Paper, and urges that the government to act swiftly to amend Section 31 to clarify that the compulsory retransmission regime does not extend to the Internet.

All of which is respectfully submitted, this 17th day of September 2001.

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Response to Consultation Papers on A Framework for Copyright Reform and Digital Copyright Issues

Introduction

The Directors Guild of Canada /La Guilde Canadienne des Réalisateurs ("DGC") or ("the Guild") is a national labour organization that represents key creative and logistical personnel in the film and television industries. The DGC was created in 1962 as an association of Canada's film and television directors. Today it has over 3,500 members drawn from 48 different craft and occupational categories covering all areas of production, editing and design of film and television programming in Canada. The Guild consists of a National Office in Toronto and seven District Councils, each headquartered in a major production center of the region it represents: Alberta, the Atlantic Region, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan. Guild Members are affiliated with the DGC District Council office in the region in which they live, and all are members of the National organization.

Directors Rights Collective of Canada

The Directors Rights Collective of Canada/ La Société canadienne de gestion des droits des réalisateurs ("DRCC") is a non-profit organization established in late 1998 by the Directors Guild of Canada to administer the rights of Canadian directors to equitable remuneration (royalties and levies) arising under copyright legislation worldwide from the secondary uses of audiovisual works, such as private copying, rental and retransmission.

The DRCC works in a complementary fashion with the Directors Guild of Canada. The DGC negotiates collective agreements for its members setting out minimum terms and conditions of engagement as directors; whereas the DRCC administers, on a collective basis, rights to equitable remuneration to which directors are entitled to by virtue of their status as authors.

The Directors Guild of Canada congratulates the Government upon the commencement of the important process of consultation on copyright reform. The release of the Departments' Document A Framework for Copyright Reform (the "Framework Document"), and the Consultation Paper on Digital Copyright Issues (the "Consultation Paper") was a valuable and critical step forward. Digital copyright issues are challenging. Industry users and government must work together to craft Canadian solutions.

A Framework for Copyright Reform

The Guild supports the government's effort to build a framework and set an agenda for step-by-step copyright reform in Canada. A structure is essential to meet the demanding challenges of international treaty implementation, and to adapt to the implications of fast-paced technological developments. Moving in stages, it is important that the aspects selected for reform at any stage be designed to achieve a defined goal.

WIPO Ratification

The Guild is pleased that the Departments have chosen to address, as a matter of priority, the three key digital copyright issues posed by the WIPO Treaties. But we urge the Departments to move swiftly and concurrently to address the few remaining matters that require amendment to put Canada in position to ratify the Treaties. Chief among these issues are the recognition of moral rights for performers and the amending of the term of protection of photographs to life of the author plus fifty years.

The coming into force of the Treaties is within sight. Once the Treaties are in force, the nationals of ratifying countries will obtain the benefit of digital rights and protections from each other, but contracting parties will not be obliged to extend such rights and protections to those who have not ratified the Treaties. Providing digital copyright protections under our domestic law is not enough to promote e-commerce in intellectual properties. The need for international protections is critical on the Internet.

The Departments have started the process of WIPO Implementation with a consultation process on the core digital agenda issues. The DGC urges the Departments to follow quickly with the matters remaining to bring Canada's law into line with the WIPO Treaties.

Audiovisual Works

The Guild urges the government to place the issue of authorship of audiovisual works high on its agenda for legislative reform. The issues involved in audiovisual authorship have been thoroughly analyzed and consulted upon extensively within the industry. Protection of audiovisual performances is the subject of a draft WIPO treaty. Surely authors' rights should be addressed as well. Aspects of the Act respecting cinematographic works are antiquated (such as the definition, and aspects of the term of protection), and the integrity of the Act demands that they be addressed.

Digital Copyright Issues

Right of Making Available: Works

It is the Guild's position that a specific "right of making available" should be provided, not only for performances and sound recordings, but also for works.

The delegates to the WIPO Diplomatic Conference concluded that the applicability of the "right of communication to the public" to on-demand communications had to be specifically addressed and clarified at the international treaty level. The WIPO Copyright Treaty provides that the right of communication to the public explicitly includes the making available to the public of works in such a way that members of the public may access them from a place and at a time individually chosen by them.

The Guild believes that the Canadian Copyright Act should do the same.

We are aware of the view, articulated by the Copyright Board in its Tariff 22 decision, that an on-demand communication right may be contained within the right to authorize the communication of a work to the public by telecommunication. We are aware too of the opinion expressed by the expert consultants in their 1998 report that the communication right is sufficiently broad to include a making available right for authors and their successors.

We have some reservations with this point of view, however.

Interpretation of "to the public"

Judicial interpretation could still limit the meaning of the phrase "to the public" in its application to individual on-demand communications, causing interactive communications made at a time and place individually chosen by a member of the public to be characterized as a private communication. The IHAC Report suggested that existing interpretations of "to the public" were not adverse to date, but the Guild sees no reason to leave the matter open to any doubt. The making available right is critical in a network environment, and the Guild feels that the right should not be subject to any risk of adverse judicial or other interpretation that may call this right into question.

Mere Posting

It remains unclear in our law whether the right of authorizing communication to the public applies to situations in which a work is simply posted or "made available", without being subsequently communicated. Until a site is accessed there is no communication to the public.

The Tariff 22 decision suggested that the right to authorize communication to the public might apply to the simple act of making available on-line. But this bears analysis.

Posting to the Internet may reasonably be argued to imply an authorization to the public to access and receive the posted work. It may imply that the poster has the authority to post and communicate the work. But can it be held to imply that the poster has authorized a person accessing the site to communicate the work to the public?

If an offense of authorizing the communication of a work to the public is to be made out, there must be another party to whom the authorization is directed: the poster cannot be said to authorize himself to communicate to the public. Can it be said that, by merely accessing a site, (thus effecting the individual communication) a member of the public is personally "communicating to the public"? Can it be said that, by merely inviting access to a site, a poster is "authorizing another person to communicate to the public by telecommunication?"

Corresponding Right for Performer's Performances and Sound Recordings

As the Departments note, a right of making available must be introduced for performers performances and sound recordings to put Canada's laws in conformity with the WIPO Treaties for ratification. The Guild is concerned that, in the absence of a corresponding explicit right for works, the relative scope of protection for works and sound recordings will be open to debate.

For these reasons it is the Guild's position that, to fully implement the right of making available in Canada, an explicit right of making available is necessary for works.

Right of Making Available: Performances and Sound Recordings

The Guild supports the inclusion of a right of making available for performances and sound recordings to meet the requirements of the WIPO Performances and Phonograms Treaty.

Departments' Questions (in relation to works)

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

   With respect to works, particularly audiovisual works, the introduction of express rights of making available will not, to our knowledge, affect the balances among various copyright interests. We believe issues of balance are more pertinent to the case of sound recordings, on which we will not comment.

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

   From a technical perspective, the degree to which existing exceptions may apply to a new right of making available will depend to some degree on how such a right is framed, for example, whether it is designed as a right included within the right to communicate to the public by telecommunication, or is considered a new stand-alone right.

   In any case, whether examining the application of existing exceptions, the extension of existing exceptions to digital networks, the creation of new specifically digital exemptions or the creation of specific exemptions for new digital rights, the impact of each such exception on digital networks must be carefully analyzed.

   The classic "three-step test' established by Article 9(2) of the Berne Convention, restated by Article 13 of TRIPS, and confirmed in the WIPO Copyright Treaty Article 10, must be borne in mind in such an analysis: limitations of or exceptions to copyright must be confined to certain special cases that do not conflict with normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.

   This test necessitates an assessment of the potential effects of the application of any given exceptions in the digitally networked world. It requires a thorough study and appreciation of capabilities of the Internet. Many traditional exceptions may be inappropriate when transposed to the Internet, at least without additional safeguards. Such exceptions may require significant fine-tuning to achieve industry balance between the legitimate concerns of rights holders over protection of their works on-line, and the interests of users in facilitating on-line access and use.

   It may help put the challenges for copyright law posed by the Internet into perspective by considering past technological changes that necessitated review of the law.

   The twentieth century saw the introduction of several significant new means of exploitation and dissemination of copyright works. The phonogram created a new use for musical works, radio airplay created a new use for sound recordings and cable, satellite and MDS retransmission created a new use for television programming. The impact on the copyright owner of a new use will vary considerably depending on the technology involved. The economic implications of the new technology may not be obvious at first.

   The Internet of course is a "new use" technology, allowing dissemination of digital works of all kinds instantaneously, worldwide, by telecommunications networks. But the earlier new use technologies that permit the mass dissemination of intangible works (broadcasting, cable satellite and MDS) require massive capital investment, centralized facilities and are subject to public regulation. The Internet, on the other hand, is a public network open to all, permitting private and widespread dissemination of intangible works instantly and throughout the world.

   Other twentieth century technological developments created, not a new use, but a new means of infringement, typically decentralized, cheap, widespread, readily available, private and hard to discover. Examples of such technologies include the photocopy machine and audio and video home recording. This kind of "decentralized infringement" raises issues of fair dealing and prompts counter-measures -technological protection measures aimed at raising the cost and inconvenience of unauthorized uses.

   Once again, the Internet, as a network of computers with the ability to make perfect copies of all kinds of digital works at virtually no cost, fits within this class of new technology. And just as clearly, it has raised issues of fair dealing and technical measures of protection.

   Considered from this perspective, the Internet is a double whammy as a technology: it represents both a new use for rights holders and new means of infringement, private, widespread and global in scope. Added to this is the fact that it provides a new use for all kinds of works (once digitized), not just one kind. The implications of the Internet for copyright dwarf those of previous new technologies.

   In this context, the application of the three-step test for exceptions requires careful thought, because works are so vulnerable to infringement on the Internet.

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

   The Guild does not believe that the primary right required for protection of works on-line (the right of making available) should be dependent upon establishing technical reproductions. The reproduction right, by itself, will not provide a proper mechanism to combat piracy through mass dissemination of works. The right as described in the WIPO Copyright Treaty is recognized as part of communication to the public, which more accurately reflects the true nature of the exploitation. At that level, it was recognized that the right of reproduction was not broad enough to sufficiently protect intangible works transmitted on digital networks.

   On a practical level, the Guild is concerned that there will be pressure to minimize the effect for copyright purposes of technical reproductions that are an integral part of an on-line transmission. On this point we refer to the Australian Copyright Reform (Digital Agenda) Act 2000, ("CADA") which introduced a new exception to the exclusive right of reproduction for temporary reproductions made as part of the technical process of making a communication, having little or no independent economic significance.

   The Guild does not want to see the right to control the use of copyright works on the Internet dependent on the fact of technical reproductions made during the course of online transmission. Depending on the reproduction would make critical online copyright protection susceptible to arguments of the kind that persuaded the Australian government to create the above exception.

Legal Protection of Technological Measures (TPM)

The discussion in the Consultation Paper on the subject of the legal protection of technological measures makes it clear that the Departments are concerned about the "digital lockup" of works in the event legal protection of technological measures extends to a prohibition on manufacture, import and distribution of devices primarily designed to circumvent access controls or the provision of services to the same end. This is considered particularly troublesome because it has the potential to place a barrier to the use of exceptions that define our copyright laws, such as fair dealing and exceptions for libraries, archives, educational institutions and the perceptually impaired. As many of our accustomed resources move online, the perceived problem of digital lockup is a major concern for users.

On the other hand, it is recognized that, without a prohibition against the manufacture and traffic in circumvention devices, and in the provision of circumvention services, those intent on infringing uses could easily and legally access the means to enable their infringement, in a manner that is difficult to detect and to prevent.

There is no denying the complexity of the issues. In the view of the Guild, the settling of these issues equitably will require a process. Some flexible process of industry consultation and discussion between users and rights holders should be encouraged. But the solution must include restriction on devices and services, as well as acts of circumvention.

The obligation under the WIPO provisions is to provide adequate legal protection and effective legal remedies. As the Consultation Paper states with regard to the possibility of sanctioning acts of circumvention alone, the concern of stakeholders is that "attempts to seek legal recourse on the basis of such acts are costly and may not always be effective in providing a strong deterrent to infringement in a globally interconnected world." In our view, confining technological protections to acts of circumvention will not result in adequate protections and effective remedies. If circumvention devices and services are in free circulation, rights holders' ability to enforce the prohibition against acts will be inadequate.

A prohibition on conduct alone adds little to existing copyright protections and suffers from similar practical difficulties in enforcement. In the absence of a prohibition on circumvention devices and services, the only enforcement measure open to a rights holder is to detect individual acts of infringement and bring actions against the infringers. Given the unprecedented power of the Internet as a tool for widespread, private, difficult to detect, perfect, costless copying and dissemination of works, this approach would be neither adequate nor effective.

Criminal sanctions should be provided. Protection should be extended to measures that control both access to and use of copyright works. Prohibitions should extend to the provision of components of circumvention devices.

Departments' Questions

1. Given the rapid evolution of technology and the limited information currently available regarding the impact of technological measures on control over the access to copyright protected material, what factors suggest legislative intervention at this time?

   We need legislative intervention to discourage the increasing amount of peer-to-peer infringement occurring on a mass scale and increasingly affecting the audiovisual sector. This trend will only grow, as the Napster phenomenon has demonstrated. Protection of TPM will encourage the development of technological protection measures, and discourage the development of a market in circumvention devices. This is crucial if electronic commerce in vulnerable, highly popular and expensive intellectual property, such as audiovisual works, is to occur.

2. Technological devices can be used for both copyrighted and non-copyrighted material. Given this, what factors would be considered determinative in deciding whether circumvention and/or related activities (such as the manufacture or distribution of circumvention devices) ought to be dealt with in the context of the Copyright Act, as opposed to other legislation?

   As a practical matter, the weighing of all the considerations as to access and use and the balancing of interests in the implementation of technological protection measures can only be done in the context of the Copyright Act. Balancing the various principles at stake in the context of TPM - user interests and protection of works online - is the genuinely difficult issue at stake, and would only be rendered even more problematic by removing the matter from the context of the Act.

3. If the government were to adopt provisions relating to technological measures in which respects should such provisions be subject to exceptions or other limitations?

   The Australian Copyright Amendment (Digital Agenda) Act makes it illegal to manufacture or trade in devices or to provide services for circumventing technological protection measures, but provides exceptions permitting the provision of such devices or services to qualified persons in connection with (a) certain computer program uses (error correction, rendering programs interoperable, security testing) (b) library, archives and educational institution exemptions and(c) government uses. We are concerned that broad exceptions for circumvention devices like these will not provide the level of protection contemplated by the WIPO provisions.

   The DMCA prohibits trade in circumvention devices in respect of both access controls and copy controls, and prohibits the act of circumvention of access controls, but does not prohibit the act of circumvention of copy controls on the theory that this will enable fair use. The DMCA contains a list of highly specific constrained exemptions, and imposed a two-year hiatus on the coming into force of these provisions to permit a rule-making to identify other needed exceptions. That rule-making, constrained by its own terms, produced only two more very limited exceptions. A rule-making procedure will be held every three years to determine if new exceptions are required.

   Neither of these approaches results in a perfect equitable fit as far exceptions go. Ideally, provisions protecting technical protection measures should not be subject to exceptions that would permit circumvention. To permit circumvention or trade in circumvention devices could seriously undermine the effectiveness of such measures.

   Having said this, we recognize the legitimate concerns of users who are concerned that technological protection measures will overreach, denying unnecessarily to users the opportunity to make uses of digital works which would otherwise be permitted by law through exceptions. (The process of determining what such exceptions should be, and what safeguards might be imposed in the exercise of those exceptions in the digital environment is another question beyond the scope of this discussion.)

   Rather than permitting circumvention by creating exceptions to the prohibitions on circumvention, government might explore with users and rights holders whether there is some mechanism to encourage the design of technological protection measures or the provision of technological services that would enable permitted uses where works are protected by technical protection measures, particularly for institutional users such as libraries. This would be more in keeping with the approach in principle of the EU Copyright Directive, which places the onus on copyright holders to find means to accommodate public purpose exceptions. Collectives may be able to play a role in facilitating, as well.

4. Are there non-copyright issues, e.g., privacy, that need to be taken into account when addressing technological measures?

   Privacy is an important concern that is common to all areas of electronic commerce. The protection of technological protection measures is not intended to protect against unauthorized invasion of privacy contrary to privacy laws of general application. Perhaps a provision like that of section 1205 of the DMCA is needed to clarify that the protections of TPM do not shield against the application of privacy laws. The DMCA provision reads as follows:

   "Nothing in this chapter abrogates, diminishes or weakens the provisions of, nor provides any defense or element of mitigation in a criminal prosecution or civil action under, any Federal or State law that prevents the violation of the privacy of an individual in connection with the individual's use of the Internet."

Legal Protection of Rights Management Information

The Guild supports implementation of effective legal protection of rights management information ("RMI") in the Copyright Act.

Two New Types of Secondary Infringement

Rights management information is intended to serve a variety of important functions in the dissemination of works and other subject matter on-line, as the Departments point out. The Consultation Paper contemplates two RMI offences, one, the removal or alteration of RMI to aid or abet infringement, and two, the alteration or removal of RMI that would impede the management of rights. The Guild firmly supports the introduction of both of these offences. Explicit protection of RMI against removal or alteration impeding the management of rights will be an important aspect of RMI protection as electronic commerce in copyright works and subject matter increases.

Integrity of Information

The point that the Departments raise as to the possible inaccuracy of certain RMI is a valid one. It is also true that the author or first owner of copyright may differ under the law of different jurisdictions. The validity of terms and conditions may change over time and from place to place.

Though the use of such changeable information could cause confusion, the Guild is persuaded that this is not a problem that need be addressed by legislation. We are confident that such matters will over a short time be addressed and rationalized by industry practice.

It should be obvious to producers of digital content that embedding information that is highly changeable or specific to a particular legal system will not advance the cause of efficient rights management on a global network. International identifier systems - such as the International Standard Audiovisual Number (ISAN) - attach a permanent, unique number to a work, without embedded information, which links to a database of identifying information specified for factual permanence and relevance to the identification of a work. The Guild predicts that, to a large degree, the management of works will be done through these international codes linked to databases, rather than through the embedding of detailed information in each work.

But that is not to say that a proposed definition of rights management information should be narrowed to apply only to such international identifier numbers. It is merely to suggest that the problems of inaccurate or invalid RMI envisaged by the departments are equally obvious to the parties who are most keen to resolve them - the rights holders - and, with protections in place, industry practice will likely evolve to use RMI efficiently so as to minimize confusion. The inclusion of RMI is not, after all, mandatory, and so information can be selectively chosen by the rights holder for embedding in a work.

The Departments note that the US has gone further to include a provision that creates sanctions for knowingly providing false rights management information. This suggests that the addition of protection against, not only removal or alteration of RMI, but also the unauthorized addition of RMI, is needed.

This may place some positive obligation on those who initially embed RMI to avoid information that is subject to change over time and place. Such a provision could possibly have the virtue of forcing good industry practice to avoid the problems raised by the Departments.

Definition of Rights Management Information

The Departments note the growing international consensus towards the adoption of simple identifying codes, such as the ISAN. They raise the question whether protection of rights management information should be confined to such identifiers. While we appreciate the reasons for the government's Option B, in the view of the Guild, the definition of rights management information should not be so narrowed. If Canada is to ratify the WIPO Treaties, the full protection of the RMI set out in the Treaties must be implemented in Canada. For this reason, Option B is not a suitable option.

The departments should ensure, however, that the definition of rights management information is wide enough to provide, not only the minimum description of RMI set out in the WIPO Treaties, but also that such identifiers are clearly included within the definition. A number such as the ISAN is a "dumb" numbers, containing little, if any, encoded information, other than to act as a link to a database of identifying information about the works. The definition in the DMCA of RMI refers to "identifying numbers or symbols referring to such information or links to such information", which may go some way to addressing this concern.

Accordingly, the Guild supports Option A.

Departments' Questions

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

   Yes, this information should be protected, as required for implementation of WIPO, and it should be left to industry players to develop good practice in regard to choice of information for inclusion in its rights management information.

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

   There should be no limits on the protection of such information, nor should its legal validity be implied. Provision for legal protection of RMI should not attempt to distinguish between correct or incorrect, valid or invalid information. As suggested under Option A, the fact that terms and conditions are protected does not, by itself, imply that those terms and conditions apply or are legally binding in Canada. The Guild would have no objection to the inclusion of a provision to this effect.

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

   Separate provisions regarding each set of protections should be created. Different considerations may apply to these technologies as their purposes differ in concept, even though one mechanism may, if rights holders choose, apparently serve both functions. Nevertheless, two separate provisions should be created to accommodate different legal considerations surrounding RMI and TPM.

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

   The government should not be deterred from creating two separate offences by this concern. Coincident liability for multiple infringements arising from one act is not uncommon. It may be left to the discretion of the judge to weight the equities in imposing sanctions under both provisions under the circumstances.

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

   Please see our response to question 4 concerning technological protection measures.

Liability of Network Intermediaries, such as Internet Service Providers, in Relation to Copyright

The Guild believes that ISPs should remain liable for copyright infringements on their systems subject only to a limitation of liability in defined circumstances when an ISP (meeting a statutory definition) is carrying on certain defined "passive carrier" functions (defined), has no actual knowledge of infringing activity, and has met defined requirements of a responsible ISP, including notice and take down provisions. Outside the circumscribed behavior, ISPs would remain liable.

The Guild is not in favour of moving to a compulsory or blanket licence model for content on-line.

The proposal sketched out by the Departments is not clear. The Guild is concerned that a blanket immunity is contemplated, rather than a defined 'safe harbour' from otherwise applicable general copyright liability principles subject to a complaints-driven notice and take-down process. Such immunity would destroy ISPs incentive to follow responsible practice in deterring copyright infringement and dealing with infringements when they occur.

ISPs should remain generally liable for copyright infringement on their systems and should not be given a broad exemption. Any liability limitations must be carefully and narrowly crafted, so as not to permit ISPs to shelter careless behavior, or involvement in the actual dissemination of works as other than a passive carrier. We read the sketched outline of the government's proposal through the lens of the considerable detail of the DMCA which identified which ISPs and what passive behaviors qualified for the "safe harbour" provisions of that act.

The Guild urges careful definitions of the ISPs and of the passive behaviors of transmission and routing, system caching and hosting to which limitation of ISP liability would attach. The government must bear in mind in fashioning these provisions the varied organizations that provide such services, including government itself and educational institutions. The proposal sketched out by the departments in the Consultation paper does not go into any detail concerning the definition of what constitutes "passive carrier" behaviors. While sympathetic to the government's desire to achieve its goal through simpler provisions than those of the DMCA, the Guild nonetheless believes that the goal of certainty will be better achieved by clear definitions.

Government Questions

1. Do the current provisions of the Copyright Act already adequately address ISP concerns?
   
   The current provisions are unsettled and consequently uncertain, given the appeal proceeding on Tariff 22, and the inapplicability of that decision in any event to reproduction rights. The pending tariff proceedings on the SODRAC tariff and the CMRRA tariff also have put the question squarely, since the existing "common carrier" exception does not apply to reproductions.
   
   
2. Some ISPs and rights holders have entered into agreements for dealing with infringing material. In what respects is this approach sufficient or insufficient?
   
   The Guild agrees with the Departments' assessment that reliance on individual agreements for dealing with infringing material will not produce the clarity and predictability that both sides want. The liability of ISPs cannot be effectively dealt with on a contractual basis. A uniform statutory approach applicable to all ISPs will prevent a patchwork, and provide at least a ground level of procedural protection.
3. What other intermediary functions that have not been discussed in this section, but that are nonetheless being carried out by ISPs, ought to be considered when developing a policy regarding ISP liability?
   
   The Guild has no comment, but reserves the right to comment on the responses of other parties.
4. To the extent that a notice and take-down system is being contemplated, how would such a system affect the framework in Canada for the collective management of copyright? What alternative proposals should be considered? Under what conditions would a compulsory licensing system be appropriate?
   
   Compulsory licensing does not address the removal of infringing material, which is the purpose of the notice and take-down provisions. The Guild strongly opposes any suggestion of a compulsory license for audiovisual works online. The audio-visual industry is seeking to preserve and exploit its exclusive rights.
5. To the extent that issues surrounding the scope and application of the reproduction right are being examined in relation to Internet-based communications, are there reasons why this examination should be restricted to the question of ISP liability?
   
   By this question, the Guild assumes that the government is alluding to some general exception for technical reproductions made during online delivery of content.
   
   The right of reproduction has been critical to date in the context of establishing rights holders exclusive rights online. Extending the discussion of the limitation of liability for technical reproductions beyond ISPs raises grave concerns, because beyond ISPs the issues are so open-ended. The Guild is concerned that a broad general removal of strict liability for unauthorized reproductions online may leave copyright works unprotected in private communications and in other respects. Accordingly, this examination should be restricted to ISPs.

Conclusion

The Guild recognizes the difficulties in implementing within Canadian copyright law the principles outlined in the WIPO Treaties digital copyright issues. We recognize in particular the difficulties surrounding the equitable implementation of the protection of technological measures.

We urge the government to proceed however, with the implementation of the digital agenda.

The Guild submits these comments in the spirit of ongoing commitment to the process of consultation on these challenging matters.

We look forward to the opportunity to comment on the submissions of others and to continue the process of arriving swiftly at a Canadian implementation solution.

All of which is respectfully submitted.