Canadian Cable Television Association (CCTA)

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Canadian Cable Television Association (CCTA)

COPYRIGHT REFORM PROCESS

SUBMISSIONS RECEIVED REGARDING THE CONSULTATION PAPERS


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.

Submission from Canadian Cable Television Association (CCTA) received on September 14, 2001 via e-mail

Subject: CCTA's Comments on Two Consultation Papers

Comments on Consultation Paper on the Application of the Copyright Act's
Compulsory Retransmission Licence to the Internet - PDF Version


Comments on the Consultation Paper on Digital Copyright Issues - PDF Version


Comments on the Consultation Paper on the Application of the Copyright Act's Compulsory Retransmission Licence to the Internet


Introduction

1. These comments are provided by the Canadian Cable Television Association ("CCTA") in response to the Consultation Paper on the Application of the Copyright Act's Compulsory Retransmission Licence to the Internet, issued by Industry Canada and Canadian Heritage ("the departments") on June 22, 2001.

2. The departments have undertaken this consultation in response to the recent emergence of websites that have offered, or propose to offer, on-line access to Canadian and American retransmitted distant over-the-air television signals. The departments believe that such activities raise significant public policy concerns, and are therefore seeking public input.

3. The CCTA represents more than 800 licensed cable television systems which provide service to approximately 7.4 million households across Canada. As the industry association that represents the majority of retransmitters in Canada, the CCTA has a significant interest in any potential legislative or regulatory changes to the existing retransmission compulsory licence.

4. CCTA's position can be summarized as follows:

· The government should wait until after the Copyright Board has issued a decision on Internet retransmission before deciding whether or not to proceed with amendments to section 31 of the Copyright Act;

· The Copyright Act is intended to be technologically neutral in its application, and should remain so;

· The government should not adopt any measures that would limit the ability of broadcasting distribution undertakings to take advantage of the benefits offered by the continuing convergence of broadcasting, telecommunications and computer sectors. Canadian players in these industries should not be hindered in the development and deployment of innovative new technologies, including the use of the Internet, in the delivery of integrated services to consumers;

· The use of banner advertising in conjunction with retransmission of distant signals over the World Wide Web is not a copyright issue; to the extent that banner advertising impacts on Canadian broadcasters it could be addressed by the CRTC in the context of the New Media exemption order; and

· If the federal government is persuaded to proceed with amendments to the Act, any such amendments should address only the narrow issue of the retransmission of distant signals to locations outside Canada by introducing a territorial restriction to the criteria that retransmitters must satisfy to qualify for the compulsory licence.

5. The CCTA discusses these points in more detail below.

Amendments to the Copyright Act are Not Necessary

6. The CCTA does not believe that there is any need for the government to proceed with amendments to the Copyright Act to deal with the emergence of Internet retransmission capabilities.

7. We note that the Copyright Board has now initiated a process to consider the issues raised by Internet retransmission and that a hearing has been scheduled to commence on December 4, 2001. The CCTA believes that the Board should be given an opportunity to hear evidence and render its decision before any amendments to the Copyright Act are considered.

The Internet and the Web are not the same

8. Before any discussion of the role of new technology in the retransmission of over-the-air signals can take place, the CCTA submits that an important distinction must be made between the Internet, the use of Internet technology including Internet Protocol (IP) and the World Wide Web ("Web").

9. Although the term "Internet" is often used to describe the Web, in fact the two terms are not synonymous. In its Phase I decision on the legal issues arising from SOCAN Tariff 22, the Copyright Board defined the Internet as "a network of computers and computer networks designed to receive and forward bytes of data grouped into packets between end nodes." The Board found that this network supports a range of user-visible, high level services or applications. Examples of such high level applications include the Web, e-mail, newsgroups, and peer-to-peer data transfer.

10. The Web is a global system of interlinked web pages or web sites that allow users equipped with browser software to access a variety of text, graphic, audio and video files that are stored on servers around the world.

11. Of the networks that are connected to the Internet, some are closed and some are open to the public. Closed networks that make use of IP technology are not part of the Web and cannot be accessed by the public. IP technology is routinely used to transmit data over closed networks in a secure and private manner.

12. IP backbone networks carry all types of business traffic and Internet traffic without shared access by end-users. Similarly, cable systems are used to deliver both broadcast and Internet services, but high-speed Internet customers have no access to cable-delivered conventional broadcast services through their IP address even though the network is shared.

13. The departments recognize this distinction and express the view that the use of Internet Protocol (IP) technology by a retransmitter should not be reason to disqualify the retransmitter from reliance on the compulsory retransmission licence. Given the difficulty in defining "use of the Internet" and in predicting future uses of emerging technology, there is a serious risk that any Internet exclusion could be applied in an overly broad manner resulting in the prohibition of legitimate retransmission activities that make use of these new technologies.

14. While the CCTA welcomes the departments' view that the use of IP technology should not disqualify a retransmitter from reliance on the section 31 licence, we believe that the same principle should apply more broadly to the use of the Internet itself. The CCTA submits that any use of the Internet or Internet technology in the retransmission of local and distant signals should be permitted, so long as that use is consistent with the criteria set out is section 31 of the Copyright Act, including any territorial restriction that the government may decide is necessary.

The Copyright Act Must Continue to be Technologically Neutral

15. The CCTA strongly supports the view of the departments that technological neutrality and innovation are important principles that must be considered in the context of the retransmission regime. We believe that adherence to the principle of technological neutrality with respect to section 31 is not only preferable; it is absolutely essential for the Copyright Act to remain consistent with clearly stated public policy objectives.

16. The Canadian government made the decision many years ago to pursue technological neutrality in its primary communications statutes: the Copyright Act, the Broadcasting Act and the Telecommunications Act. The principle of technological neutrality is fundamental to the development of competition in the converging communication sectors, and must be maintained.

17. Section 31 of the Copyright Act is technologically neutral in its application and encompasses a number of different delivery methods including coaxial cable, direct-to-home satellite, and wireless multipoint distribution systems (MDS). The CCTA strongly believes that the government must maintain this section's technological neutrality.

18. The importance, from a public policy point of view, of maintaining technologically neutral laws and regulations was clearly identified in the 1995 report of the Information Highway Advisory Council (IHAC):

New Technology
In addition to the telephone and cable television networks, the Information Highway will consist of other access technologies, including wireless communications services. Public policy should not favour certain technologies: for example, over-the-air television broadcasting services to cable. The government should pursue technologically neutral policies, i.e., it should not be selecting the technologies to be used for future service delivery of the Information Highway.

19. As a result of this conclusion, IHAC recommended to the government that the development of the Information Highway should continue to be technology neutral.

20. In the final report on the second phase of its mandate, IHAC reiterated the necessity of pursuing technology neutral policies and stated that:

...there is a continuing need for government and the CRTC to adapt their policy and regulatory regimes to the rapid pace of technological change. In an age of headlong technological transformation, it is critical that market forces determine what technology is appropriate for the provision of a particular service. Only in this way can Canadians receive full benefits from the convergence among technologies and industries now occurring in the economy. To this end, the policy and regulatory regime must be "technology-neutral" - not favouring one technology - as emphasized in Connection Community Content.

21. Given the clearly established public policy objective of maintaining technological neutrality with respect to emerging issues related to the Internet and the Information Highway, including issues that impact the broadcasting system, the CCTA respectfully submits that it would inappropriate for the government to adopt any amendments to section 31 of the Copyright Act that are inconsistent with this principle of technology neutrality.

22. It is conceivable, and even probable, that existing broadcasting distribution undertakings who rely on the section 31 licence to retransmit distant signals to Canadian households will want to adopt Internet-based technology in order to serve their customers more efficiently, offer greater choice and flexibility in the services being offered, to facilitate value added features such as interactive elements or allow users to access Web content and traditional broadcasting simultaneously.

23. These new technologies promote competition and increased efficiency and will provide cable operators with the ability to offer new, value-added services to consumers. They should be promoted and encouraged, not stifled. To the extent that these new technologies can be used in a manner that does not erode the principles that underlie Canada's existing retransmission regime, then the Copyright Act should not be amended in any way that would create barriers to innovation.

Potential Uses of the Internet and Internet Technology in Signal Retransmission

24. It is trite to say that the Internet is the most advanced and adaptable communication system ever developed. It allows simultaneous two-way communication between virtually any two points on the earth. It can be used for point-to-point communication, as well as point to multipoint communication. It can be used to transmit text, video, audio or a combination of these elements with no loss of quality; and it is widely accessible by cable, phone line, satellite and wireless means at an extremely low cost to consumers.

25. Given these features, it is not surprising that the communication industries, including cable operators and other telecommunications companies, are incorporating elements of the Internet and Internet technology into their operations, and that new entrants are emerging who rely on this new technology to compete with the established entities.

26. Internet technology is already finding its way into the modern cable system. Cable operators use technologies associated with the Internet to support various network capabilities required to transmit data over closed networks in a secure and private manner. IP addresses may be used to facilitate communication between various network devices. As well, the set-top boxes currently being used by cable subscribers to access digital cable services and interactive television services use both HTML and JavaScript.

27. While it difficult to predict with any certainty the development of communications technology, it is possible to suggest examples of ways in which cable operators might use the Internet in the future to deliver services, including retransmitted signals, to consumers. The CCTA offers the following three examples of possible uses of Internet technology:

28. Example One - Backhaul: A cable operator could establish a central headend to receive over-the-air signals and transmit the signals, in a secure encrypted format, over the Internet to regional headends where the signals would be decrypted and distributed to subscribers over the cable system. At no point would the distant signals be accessible over the Web or otherwise distributed to anyone other than the cable operator's subscribers. From the standpoint of subscribers and rights holders there would be no difference between the retransmission of distant signals in this manner, and the existing means of cable retransmission.

29. For the cable operator, such a process might provide an efficient way to distribute signals to multiple headends in a manner that is more cost effective than satellite or microwave. However if the Copyright Act were amended to create an Internet exclusion in section 31, a cable operator who used Internet technology to distribute signals in the manner described above might fail to meet the definition of "retransmitter" and would then no longer be able to provide consumers with distant Canadian signals pursuant to the section 31 compulsory licence.

30. Example Two - Server-based Headends: A headend could be established that relied on servers to manage video signal delivery to subscribers, greatly increasing the capacity of the system. In such a system, subscribers with advanced set-top boxes would select the channel they wish to watch; the set-top box would relay the request to the server at the headend; and the server would deliver the appropriate video stream to the subscriber's IP address.

31. This server-based technology would enable the delivery of advanced services including video-on-demand and interactive television features. Distant signals could also be delivered in this way, but as with the backhaul example, the retransmission would be secure and would be entirely consistent with the existing section 31 regime.

32. Example Three - Advanced Interactive TV Services: Advanced set-top boxes will eventually also allow cable subscribers to access a variety of video and data services on their televisions including video-on-demand, interactive television services, e-mail, and Web browsing. Subscribers may have the choice of accessing two or more of these features at the same time in a "split screen" format. This would allow a viewer to watch a retransmitted signal while simultaneously viewing a web page about the program and sending e-mail to a friend.

33. The ability of consumers to simultaneously access various features, including retransmitted signals and web browsers on their televisions also raises serious concerns about any attempt to restrict or prohibit the presence of banner advertising. If it becomes possible for a consumer to view a retransmitted distant signal while simultaneously accessing a web site, that retransmission should not suddenly fail to qualify for the compulsory licence just because there are banner ads on the web site that is being accessed. These concerns will be addressed more fully in the section dealing specifically with banner advertising.

34. Any amendments to section 31 of the Copyright Act that would exclude any use of the Internet in the retransmission of distant signals would threaten the ability of cable operators to offer subscribers these advanced services, or to adopt the more efficient technology available, even though these potential uses of the Internet would in no way prejudice the program producers and broadcasters who hold rights in retransmitted signals and works.

35. The CCTA strongly believes that the public policy objectives of ensuring access by Canadians to the most advanced services, and enabling Canadian communications companies to use the most efficient and effective technology to deliver these services, far outweighs the need to address concerns raised by retransmission on the Web, particularly since other, more rationally-connected measures are available that can protect rights holders and that won't stifle innovation.

36. The Internet exclusion as described in Section 4 of the consultation paper would restrict technological innovation. Such a constraint is clearly inconsistent with the federal government's desire that Canadians in all regions of the country have access to the most advanced and innovative telecommunication services, including high speed Internet services, and interactive digital television services.

37. In addition, we would note that because of the number of rights holders involved in retransmitted distant television signals, it would be extremely difficult, if not impossible, for a retransmitter to obtain the consents that would be necessary to be able to retransmit distant signals using the Internet. Consequently, excluding Internet retransmission from section 31 would, in effect, prevent any use of the Internet in the delivery of retransmitted signals. Such a technological restriction cannot be in the public interest.

The Primary Issue is the Retransmission of Signals Outside Canada

38. In Section 3.2 of the consultation paper, the departments express the view that if Internet-based retransmission were to have the benefit of the compulsory licence it likely must, at a minimum, be subject to an appropriate territorial restriction. Section 5 outlines some of the issues associated with a technology-neutral licence subject to a territorial restriction.

39. Unlike an Internet exclusion, a technology-neutral licence subject to a territorial restriction is rationally connected to the potential harm that the government is being asked to prevent. The problem is not the use of Internet technology per se; it is the use of that technology to retransmit distant signals on a global scale to the detriment of the rights holders. Establishing a territorial restriction, whether such a restriction were qualified or absolute, would address that concern without creating unnecessary barriers to the use of advanced technologies by retransmitters.

40. Pursuant to such a condition, a retransmitter would not be able to rely on the section 31 compulsory licence if it did not maintain reasonable technological measures intended to restrict reception of the signal to locations in Canada.

41. In other words, if an Internet retransmitter made its retransmissions available outside Canada, then section 31 would not apply and the retransmitter would be liable for infringing the exclusive rights of the rights holders. Rights holders would then have access to all of the enforcement measures and remedies provided in the Act, in addition to the possibility of pursuing further legal remedies in the foreign jurisdictions where reception occurred. In the CCTA's submission, this is precisely the result that ought to occur.

42. The CCTA agrees with the departments' assessment that an absolute territorial restriction would, in effect, create an absolute restriction for Web-based retransmitters given the unlikelihood of such a retransmitter being able to establish absolute technical effectiveness against foreign reception. We support the view that limited, unintentional foreign reception of retransmitted signals should not result in the violation of any territorial restriction that may be adopted.

43. Cable operators only provide service to subscribers who are connected to the closed systems that they operate. Therefore, as the departments point out, there is no "spill-over" of cable retransmission into foreign jurisdictions and cable systems will be in complete compliance with any territorial restriction the government may adopt.

Reasonable Technological Measures to Prevent Foreign Reception

44. In examining the possible features of a qualified territorial restriction, the departments express the view that retransmitters should be required to put in place and monitor the operation of measures forming a reasonable territorial restriction, and further be required to take effective corrective action to address the circumvention of those measures.

45. The CCTA recognizes that the obligation to establish technological measures to prevent foreign reception of retransmitted signals is a reasonable approach to ensuring that any territorial restriction that may be adopted can be enforced as effectively as possible.

46. We believe that Canadian cable operators will automatically be in compliance with any obligation that may be imposed, based on the fact that we provide service exclusively over a closed system and only to Canadian residents. Given that cable systems are not subject to signal "spill-over" as are BDUs that use other technologies, we submit that cable operators should not be subject to any additional obligations with respect to monitoring, audits or corrective action.

47. Given that the need to establish, monitor and enforce territorial restrictions will not apply to cable operators, the CCTA does not intend to comment on whether corrective action should be required in response to particular or systemic circumvention and, in the case of systemic circumvention, what may constitute an appropriate threshold.

Banner Advertising

48. While the CCTA recognizes the concerns caused by the use of banner advertising to support Web sites that offer retransmitted signals, we do not believe that it is appropriate to address these concerns through an amendment to the Copyright Act.

49. First, in the context of the broadcast industry, the Canadian Radio-television and Telecommunications Commission ("CRTC") already regulates advertising pursuant to the Broadcasting Act and regulations made pursuant to the Act. The CRTC determines the types of programming services that may sell advertising, the number of broadcasting undertakings that serve each market, the amount of advertising that each undertaking may broadcast, and approves standards for the content of the advertising.

50. The existing criteria set out in section 31 of the Copyright Act already includes the requirement that the retransmission be lawful under the Broadcasting Act. Web-based retransmitters such as iCraveTV and JumpTV claim that their activities are lawful under the Broadcasting Act because the CRTC has decided to unconditionally exempt New Media broadcasting undertakings from regulation.

51. In its review of new media that led to the Exemption Order, the CRTC found that some digital audio services and audio-visual signals that are delivered over the Internet do fall under the Broadcasting Act's definitions of "programs" and "broadcasting", but it concluded that regulation of these services is not necessary to meet the objectives of the Act.

52. The CRTC's authority to exempt from regulation certain classes of undertakings is found at subsection 9(4) of the Broadcasting Act, which states that:

The Commission shall, by order, on such terms and conditions as it seems appropriate, exempt persons who carry on broadcasting undertakings of any class specified in the order from any or all of the requirements of [Part II] or a regulation made under this Part where the Commission is satisfied that compliance with those requirements will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1).

53. Therefore, if the CRTC subsequently determines that the use of advertising on Web pages that are engaged in broadcasting activities will have an adverse impact on the advertising revenues of traditional broadcasters, then it has the jurisdiction and regulatory tools required to address the situation by revisiting the scope of the Exemption Order.

54. The second issue raised by a prohibition on banner advertising in section 31 is the substantial difficulty in defining with any degree of precision and certainty the activity that is to be restricted or prohibited. As was discussed earlier at paragraph 32, technological developments will eventually allow cable subscribers to view television programming, browse the Web, send and receive e-mail, and access other advanced services simultaneously on their television screens in a "split screen" format that combines two or more of these elements on the screen at the same time.

55. A subscriber who is watching a retransmitted distant signal may, through split screen functionality, be simultaneously browsing a web page that contains banner advertising. It would be an odd and undesirable effect if the presence of banner advertising on the web page could somehow render the retransmission an infringement of copyright because a consumer chose to multitask.

56. Electronic program guides, which are an essential feature of the digital, interactive television environment, may also run afoul of a banner advertising prohibition if they offer a preview window that is displaying a retransmitted signal and also offer advertising content.

57. Given these difficulties, and the existence of a specialized broadcasting regulatory authority, the CCTA does not believe that the issue of banner advertising should be addressed in the context of amendments to the Copyright Act. For the same reason, we agree with the suggestion by the departments that the issue of subsidiary signals is also best left to the CRTC.

Remedies

58. In the consultation paper, the departments have identified the difficulty in enforcing territorial restrictions when the effect of a retransmitter being in breach of the restrictions will be felt almost entirely in one or more foreign jurisdictions.

59. CCTA supports the view expressed in the paper that non-compliance with a territorial restriction should not render the entire retransmission an infringement of copyright, subject to the full range of existing remedies for direct infringement. If a retransmitter's activities in Canada are in compliance with the requirements of the compulsory licence, then any remedies that result from the foreign reception of the retransmitted signals should only apply to those instances of foreign reception.

60. The CCTA believes that injunctive relief is the most appropriate form of remedy that should be available to rights holders when foreign reception of distant signals occurs. As the departments acknowledge in section 3.2 of the consultation paper, rights holders already have recourse to legal remedies in each of the foreign jurisdictions where a retransmission is received. The proposed territorial restriction is, in effect, the regulation by Canadian law of activity that does not take place in Canada.

61. In support of this approach, the departments express the view that non-consensual retransmission to locations outside Canada does not further Canadian public policy interests and could undermine the ability of rights holders to exploit Canadian films and television programming in foreign markets.

62. If rights holders have access to injunctive relief, they will be able to block the infringing retransmission and preserve their territorial licensing arrangements. Because rights holders would be able to respond to a retransmission to foreign jurisdictions by seeking an injunction, and would also be able to seek damages in the foreign jurisdictions where the retransmission is received (and where, presumably, the harm occurs), the CCTA does not believe it would be appropriate for rights holders to recover damages pursuant to the Canadian Copyright Act for non-compliance of the territorial restriction, unless specific harm in Canada as a result of the retransmission can be proved.

Unauthorized Retransmission by Authorized Users

63. In section 5.4 of the consultation paper, the departments discuss the suggestion that all retransmitters be required by law to immediately discontinue service to any authorized users if the retransmitter is aware that such users are or have used the Internet to retransmit a signal provided by the retransmitter.

64. This remedy, which would compel a retransmitter operating in complete compliance with the law to cut off service to a customer with absolutely no due process, is unreasonable and far in excess of the substantial remedies that are available to other rights holders under the existing legislation.

65. Part IV of the Copyright Act establishes a range of civil remedies that are available to plaintiffs in copyright infringement cases, including wide injunctive relief, damages, and accounting for profits. The CCTA does not believe that parties who hold rights in works contained in retransmitted signals are entitled to the extraordinary remedy of being able to force retransmitters to cut service to a customer upon some form of unspecified notice and without any proof of wrongdoing or judicial oversight.

66. As the departments note, the proposed remedy also potentially conflicts with section 48 of the Broadcasting Distribution Regulations, which requires cable operators to provide service to any household that requests service and is located in a residential area within the cable operator's licensed service area.

67. With respect to the potential liability of ISPs for copyright infringement, the CCTA submits that the issue should be dealt with in the context of the departments' consultation on digital copyright issues, and that the approach established as the result of that consultation process should apply to all instances of copyright infringement, including any instances of retransmission that are not in compliance with section 31.

Conclusion

68. In summary, the CCTA does not believe that any amendments to the Copyright Act are necessary at this time to deal with emergence of new forms of retransmission. The Copyright Board is empowered to examine these issues and should be permitted to conduct the proceeding that it has initiated.

69. However, should the federal government be persuaded that amendments to the Act are required, those amendments should be technologically neutral and should focus on only preventing the specific harm that has been alleged as arising from Internet retransmissions. The government should not amend the Act in such a way that will prevent the use of Internet technology for the legitimate retransmission of local and distant signals where such retransmission are being performed in a way that does not unduly impact on the rights holders.

70. It is CCTA's respectful submission that, of the two options presented in the consultation paper, the technology-neutral licence that is subject to a territorial restriction is the most appropriate approach. It is not a barrier to innovation, as is the case with the Internet exclusion; it recognizes the increasingly important role of the Internet in the communications industries; and it directly addresses the core concern associated with retransmission on the Web, namely reception of signals in foreign jurisdictions.

71. The CCTA further submits that the issue of banner advertising is not a copyright issue and that the regulation of advertising in the broadcast industry should be left to the CRTC.

72. The CCTA appreciates the opportunity to present its views on this matter.



Comments on the Consultation Paper on Digital Copyright Issues


Introduction

1. These comments are provided by the Canadian Cable Television Association ("CCTA") in response to the Consultation Paper on Digital Copyright Issues, issued by Industry Canada and Canadian Heritage ("the departments") on June 22, 2001.

2. The departments have undertaken this consultation process as part of their assessment of the need to revise Canada's Copyright Act to take into account the development of new communications technologies, notably the Internet, that facilitate the reproduction and transmission of copyright protected works and other subject matter in digital format.

3. In particular, interested parties are being asked to consider whether the Canadian legislation should be amended to enable Canada to ratify the two treaties negotiated by the World Intellectual Property Organization ("WIPO") in 1996: the WIPO Copyright Treaty ("WCT") and the WIPO Performances and Phonograms Treaty ("WPPT").

4. The CCTA represents more than 800 licensed cable television systems, which provide service to approximately 7.4 million households across Canada. CCTA's members are also significant providers of broadband Internet access and therefore have a significant interest in the development of the digital environment.

5. Our position, which is explained in detail below, can be summarized as follows:

§ ISPs, when acting as "mere conduits", should be explicitly exempt from any liability for copyright infringement. This exemption from liability should cover the transmission, caching and storage of third party content, activities that are technical, passive and automated in nature;

§ To protect rights holders in the digital, networked environment, the Copyright Act should provide an expedited judicial process to obtain injunctive relief to deal with infringing activities and the removal of infringing content;

§ In addition to an expedited judicial process to facilitate the removal of infringing content by court order, a "notice and notice" regime should be incorporated into the Copyright Act that would require an ISP to relay a copyright-related complaint to the third party in control of the allegedly infringing content where that content is stored on the ISP's facilities by the third party;

§ The Copyright Act should be amended to make it clear that the right of distribution does not apply to transmission, caching and hosting functions performed by ISPs;

§ The existing right to communicate a work by telecommunication already includes Internet-related activities including streaming and downloading, therefore it is not necessary to recognize a new and separate "right of making available" for authors;

§ Performers and makers of sound recordings, who hold neighbouring rights, should be granted a "right of making available" that is subject to the statutory licensing provisions of sections 67 and 68 of the Copyright Act;

§ Any measures designed to protect rights management information and technological measures, such as copy protection, should deal exclusively with acts of circumvention and not attempt to restrict the manufacture or distribution of devices that may have legitimate uses; and

§ The ISPs' exemption from liability should extend to the transmission, caching or storage of works or other subject matter that have had rights management information removed, or technological protection measures circumvented.

I. ISP Liability

6. The CCTA believes that resolving the issue of intermediary liability in a way that addresses the concerns of stakeholders and also takes into account the realities of the Internet environment is central to developing a workable copyright framework for the digital age.

7. While it is essential to ensure that rights holders have access to effective remedies to address instances of infringement, imposing on ISPs unrealistic or unreasonable requirements to enforce third party rights will unduly burden service providers, inhibit the growth of a vibrant ISP industry, increase consumer costs, and limit the availability of Internet access to many Canadians.

8. In order to discuss the issue of liability for copyright infringement on-line, it is necessary to examine the different roles played by Internet participants. Some services offered over the Internet, like e-mail, video-conferencing and telephony, involve the transmission of direct communications between end-users at the initiation of those users. In this context, there is no intermediary with any control or knowledge regarding the content of the communication. Communications involving the World Wide Web are more complex, and require an examination of the functions being performed by various parties.

9. There are essentially three functions involved in on-line communications: the provision of communications services; the provision of content; and the use of content and communications services by end-users, i.e., consumers. Of course, a person can be, and often is, involved in more than one of these functions; however, because these functions involve different degrees of involvement in the content being made available on-line, it is necessary to examine these functions individually.


Communications Services

10. Internet users obtain connectivity from Internet service providers, referred to as "ISPs". The term ISP commonly refers both to enterprises that provide the backbone infrastructure as well as to enterprises that provide communications services to individuals or organizations (including content providers and users) so they can connect to the Internet. Accordingly, an ISP's main role is the provision of communications services in order to facilitate connectivity, or the transmission of information between end-users in a technical and automatic process.

11. In order to facilitate certain customers making content available to the public over the Internet, ISPs also supply server capacity to these customers. The provision of this server capacity is commonly referred to as 'hosting'. An ISP functions as a web host when it leases out space on its server. For this reason hosts are sometimes referred to as the "landlords of the digital economy". Individuals and small businesses usually outsource their own hosting requirements to an ISP, which specializes in maintaining servers linked to the Internet through high-speed lines.

12. Whether an ISP is simply providing Internet access services, or whether it also performs a storage function by hosting a customer's web site on its server, an ISP is performing a communication function, rather than a content provision function. In other words, it is merely providing the facilities necessary to facilitate its subscribers' connection to and communication with, the network of interconnected computers that makes up the Internet.

13. Use of the term 'host' can be problematic in so far as it suggests a closer relationship between the parties than actually exists. The noun 'host' is also sometimes used to refer to an individual web site. To say an ISP 'hosts' a web site does not mean that it plays an active role in the content of that site, which may be one of thousands residing on its servers. The ISP acting as host is simply an entity that functions to move bits of data efficiently by storing third party content closer to users that access this material. This activity is of a technical, automatic and passive nature.

The Separation of Carriage and Content

14. A third party owning and controlling a specific web site will assemble the various elements of the site and exercise editorial control over what information becomes available over this site.

15. 'Building' a web site amounts to determining the content that will be displayed and is the sole responsibility of the web site owner. Regardless of what ISP provides connectivity, including hosting services, editorial control over content is entirely up to the web site owner. Just as in the provision of traditional telecommunications services, the separation of carriage from content generally applies to ISPs vis-à-vis content providers. It is also important to realize the Canadian ISPs provide storage and connectivity services to a relatively small number of sites and have absolutely no relationship with the vast majority of web sites available on the Web.

16. That an ISP has no editorial function when it provides either access or hosting is exemplified by the fact that the only action available to the ISP is to "takedown" its customer's site. Takedown is not possible where the site in question exists on servers that are external to the ISP network. Section 36 of the Telecommunication Act prohibits a Canadian carrier from "controlling the content" or "influencing the meaning or purpose of telecommunications" carried by it for the public, without approval of the CRTC.

17. Although the CRTC has granted approval for Canadian carriers to be involved in the content of that carrier's own Internet service , this approval does not appear to extend to the ability of ISPs to influence or control third party content, whether that content is stored on the ISP's facilities or not. In Telecom Decision CRTC 99-4, the Commission indicated that the approval was intended to cover activities such as creating the service's own homepage and providing links to other sites.

Activities of CCTA's Membership

18. The ISP members of the CCTA perform a number of different functions, including the provision of both communication services and content:

§ Internet access via cable modems and network: a cable modem is an electronic device that connects an individual's computer to the Internet via the ISP. Cable modems allow end-users to download information at speeds much faster than dial-up modems.

§ Hosting: This service allows a web site owner to store its web site on the ISP's servers, which are connected full time to the Internet via a high-speed connection.

§ Portal: An Internet portal is a site that the owner positions as a default entrance to other sites on the Internet. Many ISPs offer their own portals, which typically contain content selected by the ISP, as well as search engines, free e-mail and chat.

§ Dedicated site: An ISP may operate its own web site dedicated entirely to describing its own products and services. Acting in this capacity, the ISP is a content provider just as any other web site owner and operator. As such, it would be subject to the same rules as any other web site owner.

19. As the departments recognize, Canadian participation in the digitally networked environment, and fulfillment of the goals embodied in the government's Connectedness Agenda depend on a viable and competitive ISP sector.

Copyright Board's Decision on SOCAN Tariff 22

20. After examining the various functions performed by ISPs in the communication of musical works over the Internet, the Copyright Board of Canada ruled that ISPs should be able to claim the benefit of the so-called "common carrier exemption" created by subsection 2.4(1)(b) of the Copyright Act. The Board concluded that, generally speaking, only the person who posts a musical work communicates it and that ISPs can avail themselves of subsection 2.4(1)(b).

21. As described in the preceding sections, ISPs do not exercise any editorial control nor have any knowledge about the placement of content on third party websites hosted on their servers. Therefore, it would be inappropriate to impose on ISPs liability for activity about which they have no knowledge and over which they have no control.

22. The fact that ISPs should not be held liable for third party infringement is recognized in the WIPO Treaties. The Agreed Statement concerning Article 8 of the WCT (Right of Communication to the Public) states that "It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention." As will be discussed below, both the European Community and the United States in their respective approaches have adopted these fundamental principles to intermediary liability.

The European Community

23. The European Community ("EC") is taking a horizontal approach to dealing with the issue of ISP liability. In other words, the EC Member States have agreed that rules concerning intermediary liability should be consistent whether being applied to instances of copyright infringement or other content related issues.

24. The EC's approach to intermediary liability is set out in the Directive on Electronic Commerce. Recital 42 of the Preamble to the Directive describes the nature of the activity that qualifies for the exemption from liability that has been established:

(42) The exemptions from liability established in this Directive cover only cases where the activity of the information society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored.

25. This recognition that intermediaries such as ISPs when acting as "mere conduits" are not liable for the transmission and storage of content over which they have no knowledge or control is consistent with the finding of the Copyright Board in the Tariff 22 decision that Canadian ISPs can rely on the common carrier exemption found in subsection 2.4(1)(b) of the Copyright Act.

26. The requirements for the treatment of ISP liability are set out in Articles 12 to 15 of the Directive on Electronic Commerce.

27. Article 12 applies to transmission activities and requires Member States to ensure that ISPs are not liable for the information transmitted, on condition that the ISP:

a. does not initiate the transmission;
b. does not select the receiver of the transmission; and
c. does not select or modify the information contained in the transmission.

28. Article 13 applies to "caching" activities and requires Members States to ensure that ISPs are not liable for the "automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information's onward transmission to other recipients" on condition that the ISP:

a. does not modify the information;
b. complies with conditions on access to the information;
c. complies with rules regarding the updating of the information;
d. does not interfere with the lawful use of technology to obtain data on the use of that information; and
e. acts expeditiously to remove or to disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the information has been removed from the network, or that an administrative authority has ordered such removal.

29. Article 14 applies to "hosting" activities and requires Members States to ensure that ISPs are not liable for the information stored at the request of a subscriber, on condition that the ISP:

a. does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts of circumstances from which the illegal activity or information is apparent; or
b. upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.

30. Articles 15 prohibits Member States from imposing a general obligation on ISPs, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity. The exemption from liability created by the Directive does not preclude a court from issuing an Order to require an ISP to remove content or prevent an infringement.

The United States

31. The United States has also adopted measures designed to limited the liability of ISPs. Unlike the EU, however, the United States has adopted a vertical approach to ISP liability by establishing requirements that are particular to issues relating to copyright and related rights.

32. The Digital Millennium Copyright Act of 1998 (the "DMCA") amends the U.S. Copyright Act to bring the US into compliance with the WCT and the WPPT, as well as addressing several other copyright-related developments.

33. Title II of the DMCA amends the Copyright Act to create limitations on the liability of ISPs and other online service providers for copyright infringement when engaged in certain specified activities. As with the EC's Directive on Electronic Commerce, the DMCA establishes that ISPs should not be liable for infringement when engaged in the transmission, caching or hosting of materials, and also deals with the use of information location tools.

34. The conditions that an ISP must satisfy in order to qualify for the exemption from liability under the DMCA are similar to those established in the EC's Directive and generally reflect the fact that ISPs have no knowledge of, or control over, the content that they transmit, cache and host, and they should therefore not be found liable for the infringing acts of third parties to whom ISPs provide service.

35. The CCTA submits that Canada ought to follow the examples set by the EC and the United States and amend its Copyright Act to clearly establish that Canadian ISPs are not liable for copyright infringement with respect to their transmission, caching and hosting activities, an approach that is clearly supported by the Copyright Board's finding in the Tariff 22 Phase I decision and is consistent with the separation of carriage and content mandated by the Telecommunications Act.

36. In this regard we support the departments' proposal, found at page 36 of the Discussion Paper, to establish limitations on an ISP's liability for copyright infringement when the ISP's facilities are used by a third party for disseminating copyright-protected material, whether this dissemination is understood as communication to the public or reproduction.

37. Specifically, we recommend that the Copyright Act be amended to codify the Board's Tariff 22 ruling that the common carrier exemption in subsection 2.4(1)(b) applies to ISPs. In addition, it will be necessary to extend the scope of the exemption so that in addition to transmission activities it explicitly covers caching and hosting activities which may, arguably, raise issues related to reproduction.

38. It is important to note that neither the WCT, nor the Copyright Board in its Tariff 22 decision, established any link between the copyright liability of ISPs and any enforcement measures that may include a "notice and takedown" procedure. The Copyright Board clearly determined that ISPs are not liable for copyright infringement because they are not the ones that are communicating the works by telecommunication. It should be self-evident that where there is no infringing activity, there should be no liability. Likewise, the Agreed Statement concerning Article 8 of the WCT recognizes, as a statement of fact, that ISP functions do not amount to communication.

39. The CCTA submits that it would not be appropriate to manufacture liability where none exists in order to conscript ISPs into enforcing third party rights with no judicial oversight. The Copyright Act should recognize that ISPs who provide transmission, caching and hosting services are acting as mere conduits and that these functions do not infringe copyright.

Right of Distribution

40. In addition to exempting ISPs from liability related to the communication and reproduction of works and other subject matter, the CCTA believes it is also necessary to amend the Copyright Act to specify that subsection 27(2)(b), which establishes liability for the distribution of a work, sound recording, fixation of a performance, or fixation of a communication signal, does not apply to an ISP's transmission, caching or hosting activities, all of which are technical, passive and automatic in nature.

41. The subsection, which creates liability for secondary infringement, states that:

(2) It is an infringement of copyright for any person to
...
(b) distribute to such an extent as to affect prejudicially the owner of the copyright
...
a copy of a work, sound recording or fixation of a performer's performance or of a communication signal that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.

42. The CCTA submits that subsection 27(2)(b) is intended to apply only to the distribution of works or other subject matter that exist in a tangible form, such as books, CDs, audio and video tapes, etc.

43. Given the Copyright Board's ruling in Tariff 22 that the transmission of works over the Internet is covered by the exclusive right to communicate to the public by telecommunication, and given the fact that the WIPO Treaties require Canada to create an exclusive "making available" right for performers and makers of sound recordings, there is simply no public policy rationale for subsection 27(2)(b) to apply to the activities of ISPs.

44. This view is consistent with Agreed Statements that accompany the two WIPO Treaties. Article 6 of the WCT deals with the rights of distribution and the Agreed Statement concerning Articles 6 and 7 (right of rental) states:

As used in these Articles, the expressions "copies" and "original and copies" being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects.

45. Amending the Act to clarify that the restriction on distribution applies only to tangible objects and does not apply to the transmission, caching and hosting activities of ISPs will in no way prejudice the rights of copyright owners and holders of neighbouring rights who will already have their Internet-related rights protected by the sections of the Act dealing with the right to communicate by telecommunication and, in some instances, the right of reproduction.

Notice and Take Down

46. In the Discussion Paper, the departments propose to create in the Copyright Act a provision for the "notice and takedown" of allegedly infringing material. The departments note that this proposal would be "limited to the intermediary function that relates to hosting and caching since purely transmission related activities would not be amenable to notice and takedown regimes."

47. The CCTA agrees with the departments that a notice and takedown regime is not technically and procedurally amenable to third party content that is not stored on the ISP's own servers. However, there are also serious concerns raised by the proposed complaint-driven notice and takedown procedure, even where such a procedure is only intended to apply to content hosted on an ISP's own servers.

48. ISP operators lack the resources, expertise, or authority to adjudicate a dispute between a complainant and an alleged infringer. As the departments recognize, "the copyright status of the materials and the legal relationship between the right holder and user (i.e. is the use authorized?) will often be unknown and unknowable to the network intermediary."

49. For example, suppose an ISP receives a "notice" from an individual claiming that one of his literary works (i.e. a poem) has been posted without his authority on a website hosted by the ISP. The ISP has no way to verify the veracity of the claim and, if the ISP's subscriber disputes the allegation, no way of adequately resolving the issue.

50. Even if the allegation is true, the ISP may have no other means to takedown the infringing content than to block access to the entire website, despite the fact that all of the other content posted on the website is non-infringing in which innocent third parties may have a legitimate interest.

51. While the departments suggest that an ISP acting in compliance with a notice that meets the criteria would enjoy "safe habour" from claims arising from any harm suffered by its subscriber and any third party, there is no way to prevent the irreparable damage that such action would cause to the ISP's relationship with its customer and with the innocent third parties whose content has also been disabled.

52. CCTA believes that a determination of whether or not content posted on a web site infringes copyright can only be made by a competent judicial authority and that ISPs should not be required to take any action against content hosted on their servers without a court order or other form of judicial intervention.

53. Under the existing provisions of the Copyright Act, an individual who believes that her rights in a work or other subject matter have been infringed can commence a summary proceeding for infringement, can immediately apply for a court order requiring the ISP to reveal the identity of the alleged infringer and an injunction requiring the ISP or the infringer to disable access to the allegedly infringing content, and, if infringement is proven, can be awarded damages and any profits earned by the infringement.

54. This process has the significant benefit of requiring some form of judicial oversight before any action is taken against allegedly infringing content. This oversight greatly reduces the risk of spurious or vexatious claims and ensures that, to the extent possible, the rights of all parties are respected.

55. The CCTA recognizes that, given the speed with which content can be transmitted around the world on the Internet, some rights holders may be concerned that relying on the courts will not provide effective remedies in a timely fashion. Therefore, we recommend that the Act be amended to create an expedited process that would allow rights holders to commence an action and obtain in a timely fashion the requisite court orders to deal with the allegedly infringing content.

Notice and notice

56. Although we have serious concerns about a complaints-driven notice and takedown process that operates without any judicial oversight, this does not mean that ISPs do not play a role in addressing the problem of copyright infringement on the Internet.

57. In late 1999, the CCTA initiated discussions with the Canadian Recording Industry Association ("CRIA") and the Canadian Association of Internet Providers ("CAIP") in an attempt to deal, on an industry-wide basis, with complaints by CRIA's members about the use of Internet to transmit infringing copies of sound recordings.

58. After a year-long consultation process, the three associations agreed on a three step, voluntary "notice and notice" regime that appears to have been very successful in dealing with the majority of CRIA's complaints.

59. The notice and notice process works as follows:

§ Step 1 - Upon discovering allegedly infringing content on a website hosted by a CCTA member, CRIA alerts the cable ISP to the presence of the allegedly infringing material in an e-mail communication.

§ Step 2 - The ISP relays CRIA's complaint to the customer associated with the alleged infringement and reminds the customer that copyright infringement is not an accepted use of Internet services. The customer is provided with CRIA's contact information in the event he or she wants to discuss the complaint.

§ Step 3 - The ISP acknowledges CRIA's complaint and indicates that it has been passed on to the customer in question

60. This process was agreed to on the explicit understanding that it is without prejudice to CCTA's position that its members are not liable for copyright infringements when third parties use their facilities. Our position on liability is completely consistent with the Copyright Board's Tariff 22 decision, with the agreed statement concerning Article 8 of the WCT, and with the approach taken in other jurisdictions including the EC and the United States.

61. Experience has demonstrated that this notice and notice procedure resolves a majority of complaints. It is evident that where a subscriber is unaware that his activities are infringing copyright, or the individual assumes that his activities or his identity are hidden, the receipt of a simple notice from his ISP will dispel these misconceptions and compel him to correct his behaviour.

62. In the event that this process does not remedy a particular situation, CRIA's members still have recourse to the full slate of remedies provided for in the Copyright Act, including the ability to bring an infringement action against the content provider and the right to seek injunctive relief. CCTA is unaware of any such legal actions being pursued by CRIA or any of its members in Canada.

63. To provide rights holders with an immediate response to instances of apparent infringement, CCTA recommends that, in addition to providing expedited access for rights holders to the judicial system, the Copyright Act could also be amended to implement the principles of the notice and notice regime. Under this proposal, an ISP would be required, upon receipt of proper notice of an alleged infringement regarding content hosted on the ISP's facilities, to relay that notice to the subscriber associated with the website where the content is posted.

64. This proposal would provide rights holders with a process that is quick, easy to access and to administer and that is already proven to be effective in resolving a majority of copyright-related complaints. This process does not have the serious legal and administrative drawbacks associated with a notice and takedown regime, and respects the rights of individuals who may be the target of an unfounded complaint. If a complainant were unsatisfied with the results of the notice and notice process, she would still be able to rely on the expedited judicial proceedings.

65. Rights holders would also have the option of commencing an action under the expedited court process without first attempting to resolve the matter through the notice and notice process. It would also be open to rights holders to enter into contractual relationships with ISPs to vary the notice and notice regime to suit their particular circumstances. The departments have indicated that the legislated process should be subject to any such contractual arrangements.

66. A combination of an expedited judicial process with a full slate of available remedies, combined with a legislated notice and notice process subject to alternative contractual arrangements, would offer rights holders full protection of their rights in a way that would also respect the rights of innocent third parties and take into account the realities of the Internet environment and the role played by ISPs.

II. Communication Right and Right of Making Available

67. The departments have asked for comments on how the Copyright Act might have to be amended to provide rights holders with an exclusive "making available right" as required by the WCT and the WPPT. Given the different nature of copyrights and neighbouring rights, the two treaties differ in their approach to communication rights and a right of making available.

68. In the Internet context, the transmission of sound recordings and the musical works embodied on sound recordings can be divided into two broad categories - "streaming" activities and "downloading" activities.

69. Streaming over the Internet is similar in function to an over-the-air radio signal. Listeners can access musical works embodied in sound recordings from the Internet if their computers are equipped with the appropriate software such as RealAudio. An end user can listen to the music as it is streamed, but the sound recording is not copied to the user's hard drive. Music sites that offer streaming music often provide a selection of music channels each devoted to a different genre.

70. These sites also offer varying levels of interactivity that allow users to customize their listening experience. At the low end of interactivity, a user may be offered only one stream with no ability to influence the musical content. A radio station that streams its programming on the Internet is an example of this kind of activity.

71. At the other end of the scale, highly interactive sites offer Internet "jukeboxes" that allow users to select particular performers, particular albums, or even particular works. WWW.Iceradio.ca is an example of this type of site.

72. In between these two extremes are sites that allow users to indicate a preference for different types of music or particular artists, but do not offer the ability to choose when particular works are played. An example of this type of site is www.bonzaroo.com.

73. Downloading, on the other hand, involves the transfer of a copy of a sound recording, in the mp3 format for instance, from one computer to another. The recipient of the downloaded sound recording can then listen to that sound recording at any time using an mp3 player. The sound recording can also be further copied and transmitted to other users or copied to a compact disc. The site www.mp3.com offers both streaming content and downloadable files. Peer-to-peer files sharing services such as Napster and Gnutella are also examples of services that involve downloading of recordings.

Author's Rights

74. Article 8 of the WCT requires Member States to grant to authors "the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them."

75. In the case of authors, the act of making a work available to the public is considered to be an element of the more general right to authorize the communication of the work to the public, and not treated as a separate or distinct right.



76. Subsection 3(1)(f) of the Canadian Copyright Act already grants to authors of literary, dramatic, musical or artistic works the exclusive right to communicate their works to the public by telecommunication, and the right to authorize the communication of their works by telecommunication.

77. In its decision on Phase I of SOCAN Tariff 22, the Copyright Board found that the act of transmitting a work via the Internet is potentially covered by the right to communicate a work to the public by telecommunication, if the transmission was intended for reception by the public.

78. The Board also found that although a person does not communicate a work when she makes it available to the public by, for instance, posting the work on a website, that person is authorizing the communication of the work and is therefore still engaged in conduct that is covered by the rights administered by SOCAN. The communication right covers both streaming activities and downloading activities, without distinguishing between the two.

79. The CCTA agrees with the departments' initial assessment that Canada is already meeting its obligations under Article 8 of the WCT and that no amendments to the Copyright Act are necessary to explicitly provide authors with an exclusive right of making available because the right to authorize communication to the public already exists and is being administered by SOCAN.

Rights of Performers and Makers of Sound Recordings

80. Unlike authors, who are to be granted an exclusive right to authorize the communication of their works to the public under the Berne Convention and the WCT , performers and makers of sound recordings, who hold "neighbouring rights", enjoy the right to equitable remuneration under the Rome Convention and the WPPT.

81. However, unlike the WCT which treats making available as an activity covered by the communication right, the WPPT distinguishes between these two rights and requires Member States to grant performers and sound recording makers the exclusive right to authorize the making available of their performances and sound recordings.

82. The Canadian Copyright Act recognizes that performers and makers of sound recordings have the right to be paid equitable remuneration for the communication to the public of a published sound recording. Therefore, Canada is already in conformity with Article 15 of the WPPT.

83. However, the Copyright Act does not grant to performers and makers of sound recordings the exclusive right to authorize the making available to the public of their performances and sound recordings in such a way that members of the public may access them from a place and at a time individually chosen by the individual users, as required by Articles 10 and 14 of the WPPT. Therefore, if Canada wants to comply with the Treaty, amendments to the Copyright Act will be necessary.

84. The CCTA recommends that any amendment to the Act that grants performers and sound recording makers an exclusive right to authorize the making available to the public of their performances and sound recordings must clearly distinguish the activities that are covered by this new right from those that should be covered by the existing right to equitable remuneration for communication to the public.

85. The U.S. Copyright Act was amended by passage of the Digital Performance Right in Sound Recordings Act of 1995, to grant makers of sound recordings an exclusive right to perform their recordings publicly by means of a digital audio transmission. This new digital performance right is limited by the creation of a statutory licence for "non-interactive" digital audio transmissions. Therefore non-interactive services may rely on the statutory licence, but interactive services are required to obtain the consent of rights holders before engaging in digital audio transmissions of sound recordings.

86. This has lead to considerable controversy as to the definition of interactivity and precise nature of service that may be offered pursuant to the statutory licence. In November 2000, the US Copyright Office denied a petition by the Digital Media Association (DiMA) to initiate a proceeding to amend the definition of "service" to specify that a service is not interactive "simply because if offers some degree of influence over the programming offered by the webcaster".

87. In its decision to deny DiMA's petition, the Copyright Office found that:

In light of the rapidly changing business models emerging in today's digital marketplace, no rule can accurately draw the line demarcating the limits between an interactive service and a noninteractive service. Nor can one readily classify an entity which makes transmissions as exclusively interactive or noninteractive.

88. The CCTA believes that the high degree of uncertainty caused by the use in the US legislation of a concept as amorphous as "non-interactivity" to distinguish services that may rely on the statutory licence from those that require consent, will restrict the development of innovative, competitive new services in the digital environment.

89. We recommend that it would be far more useful to distinguish between streaming activities, which are covered under the existing right to remuneration for the communication to the public of a sound recording or a performance, and downloading activities, which should be subject to the exclusive right to make available.

90. The ability to download a digital copy of a sound recording in such a way that the recipient retains a permanent copy could potentially impact on the sales of that sound recording by the maker, which would negatively affect not only the maker of the sound recording, but the performer and the author as well. Therefore, it is appropriate that this activity be subject to an exclusive right.

91. Streaming, on the other hand, is similar to radio broadcasting in that it does not involve the reception of a permanent copy, which can be replayed at any time or further communicated to the public. As with radio play, the streaming of a sound recording by a website has the potential to raise awareness of the artist and the recording among the public which could, in turn, promote sales of the sound recording. This benefits the maker of the sound recording, the performer and the author.

92. Recognizing that all three rights holders will be compensated for streaming activities covered by the communication rights through the distribution of the royalties that will be collected pursuant to the certified tariffs, the application of the statutory licence to these activities strikes an appropriate balance between rights holders, webcasters, and the public who will access the recordings.

The Relationship Between Authors' Rights and Neighbouring Rights

93. Sections 67 and 68 of the Copyright Act govern the collective administration of communication rights. Each collective society that administers the communication right on behalf of authors of musical works, performers or makers of sound recordings is required to file with the Copyright Board a proposed tariff that sets out the royalties that the collective society proposes to collect. SOCAN administers communication rights on behalf of authors, and NRCC administers the right to equitable remuneration on behalf of performers and sound recording makers.

94. Subsection 67.1(4) prohibits the commencement of an action for infringement of the right to communicate a musical work, performance or sound recording by telecommunication where a proposed tariff has not been filed, without the consent of the federal Minister of Industry. This creates, in effect, statutory licences for the communication by telecommunication of musical works, performances and sound recordings.

95. Under this regime, an over-the-air radio station may broadcast sound recordings that embody the performance of musical works so long as the appropriate royalties have been paid to SOCAN and NRCC.

96. The licensing of music for transmission over the Internet is subject to the same rules. A website operator who wishes to stream sound recordings embodying the performances of musical works will be able to clear all of the necessary communication rights by paying the royalties that will be established in certified tariffs that apply to this activity.

97. However, a very different situation will arise with respect to downloading activities, which are subject to the right to make available. For authors of musical works, the making available of their songs is covered by the existing right to communicate to the public by telecommunication, which, in turn, is subject to the statutory licensing provisions in sections 67 and 68 of the Act. The ability of States to create statutory licences with respect to the communication right is clearly recognized in Article 11bis(2) of the Berne Convention:

It shall be a matter for legislation in the countries of the Union to determine the conditions under which [the communication right] may be exercised, but these conditions shall apply only in the countries where they have been prescribed. They shall not in any circumstances be prejudicial to the moral rights of the author, nor to his right to obtain equitable remuneration which, in the absence of agreement, shall be fixed by competent authority.

98. The Agreed Statement concerning Article 8 of the WCT explicitly states that nothing in Article 8 "precludes a Contracting Party from applying Article 11bis(2)". Therefore, it is entirely consistent with the WCT that sections 67 and 68 of the Copyright Act apply to the right to communicate to the public by telecommunication, which covers both streaming and downloading activities. A third party who wishes to offer musical works for download does not require the consent of the author and is only required to pay the appropriate royalty.

99. However, if performers and makers of sound recordings are granted an exclusive right of making available that is not subject to a compulsory licence, then third parties will have to individually negotiate the consent of the performer and the maker of the sound recording to make the sound recording available for download.

100. This will produce the situation where if a website operator wishes to offer a musical work for download, he will not require the consent of the author of that musical work, but he will require the consent of the performer of the musical work and of the maker of the sound recording upon which the work is embodied. In other words, the holders of the neighbouring rights will be in a position to exercise greater control over the use of the musical work than the author of that work. In essence, the performer and the maker of the sound recording will have veto power over the downloading of the work, where the author will merely have the right to collect royalties. This situation is in reverse to the traditional relationship between authors and holders of neighbouring rights.

101. It also raises the potential for anti-competitive behaviour by makers of sound recordings who will be in the position to exercise monopoly power over the supply of downloaded music on the Internet. In the United States, some federal lawmakers have recognized similar concerns with respect to the potential development of an anti-competitive environment in the licensing of on-line music services. Congressmen Rick Boucher and Chris Cannon recently introduced the Music Online Competition Act , which would require sound recording makers to engage in nondiscriminatory licensing to affiliated and non-affiliated music distribution services:

It is anticipated that the [on-line] distribution services owned by record companies will cross licence each other, so that each site will be authorized to distribute over the Internet approximately 80 percent of all recorded music. If the major record companies do not also license independent non-affiliated distribution services, music will be distributed exclusively by a vertically integrated duopoly. In such a circumstance, there would be no competition in music distribution.

102. One possible way to avoid giving holders of neighbouring rights greater control over the use of musical works than can be exercised by the authors of those works would be to grant to authors a separate right of making available that would not be subject to the statutory licence regime that applies to communication by telecommunication. In other words, the Act could provide authors, performers and sound recording makers with the same unlimited exclusive right to authorize the communication by telecommunication.

103. However, this approach would make the process of clearing rights even more difficult by giving each of the three rights holders the ability to veto any licensing arrangements that either of the other parties may enter into. Under this regime, there would be no guarantee that even any of the rights holders themselves would be able to clear the rights necessary to offer an on-demand music service on-line. In the United States, authors and sound recording makers have been engaged in a public debate over the licensing of musical works for the on-line services proposed by the record companies. To facilitate their licensing arrangements with authors, record companies have asked Congress to impose a statutory licensing regime for the use of musical works.

104. The CCTA submits that the preferred approach to ensuring that all rights holders are adequately compensated while avoiding the exercise of anti-competitive monopoly power, would be to make performers' rights of making available and sound recording makers' rights of making available subject to a statutory licence to provide similar treatment as that given to authors. This would have the benefit of greatly simplifying the process of clearing the rights necessary to offer sound recordings on-line and would increase the supply of music in the digital marketplace to the benefit of the consumers.

105. The CCTA believes that any amendments to the Copyright Act must adequately protect the interests of rights holders, but must also promote public access online to a wide variety of music and other content that is provided by a competitive marketplace subject to reasonable terms and conditions. Therefore we recommend that if the Act is amended to provide a right of making available to performers and makers of sound recording, the newly created right should be subject to a statutory licence pursuant to the provision of sections 67 and 68 of the Act.

III. Rights Management Information and Technological Measures

106. The CCTA believes that the proposals regarding the legal protection of rights management information and the legal protection of technological measures raise similar issues and similar concerns.

107. We recognize that in a digital, networked environment, where one copy of a work or sound recording can be used to create an endless supply of perfect reproductions, which in turn can be transmitted globally, rights holders need to develop and implement technological measures designed to prevent the unauthorized reproduction of protected works and other subject matter.

108. It is also evident that these technological measures will be subject to attack from individuals interested in circumventing copy protection measures to gain access to the protected works and sound recordings without having to compensate the relevant rights holders.

109. To address these concerns, both the WCT and the WPPT require Member States to provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors, performers or makers of sound recordings to restrict acts which are not permitted by the rights holder or permitted by law.

110. Both Treaties also include similar obligations that require Member States to provide adequate and effective legal remedies against the removal, without authority, of electronic rights management information, and against the communication or making available of works, performances or sound recordings knowing that electronic rights management information has been removed.

111. In the Discussion Paper, the departments raise the issue of whether the adequate legal protection of technological measures should address only acts of circumvention, or whether it should also include prohibition against the manufacture and distribution of devices (including software) that can be used to circumvent technological measures.

112. The CCTA submits that, as the experience in the United States has shown, any attempts to restrict devices runs the risk of imposing liability on persons who are not engaged in the circumvention of technological measures for the purpose of infringing copyright.

113. We note the recent case where a Russian programmer attending a conference in the United States was arrested and charged with violating American digital copyright law, after making a presentation at a conference about the security flaw in the encryption technology used to protect electronic books.

114. In another well-publicized case, a Princeton computer scientist was reportedly threatened with legal action to prevent the presentation at an academic conference of a paper describing how a copy protection system used by the music industry could be circumvented.

115. In neither case was there any suggestion that either the programmer or the academic was involved in the infringement of rights associated with protected works. These cases demonstrate the problems associated with the prohibition against "devices" that may be used to circumvent technological measures.

116. Another issue raised by the protection of technological measures, is the question of whether the government would want to impose legal liability for the circumvention of technological measures being used to restrict access to works that are not protected by copyright. For example, there is no infringement of copyright when a work that has fallen into the public domain is reproduced or communicated to the public. Such works should be free to use without restriction. Therefore, the CCTA submits that no liability should be imposed on someone who circumvents technological measures that have been employed to restrict access to a work in the public domain.

117. As the departments recognize, some devices that are capable of being used to circumvent technological measures may also have legitimate uses. It would be inappropriate to impose liability for the manufacture of distribution of such devices if they are intended to be used for legitimate purposes.

118. Finally, the CCTA submits that it is essential that ISPs not be held liable for the communication of w orks or other content from which rights management information or technological measures have been circumvented, altered or moved without the ISPs knowledge or control. As discussed in the section on intermediary liability, ISPs lack the resources or technical capability to monitor the immense volume of data that is constantly being transmitted over the Internet, or that is stored by third parties. The imposition of any such obligations would threaten the development of a competitive ISP market and hamper the delivery of affordable Internet access to all Canadians.

Conclusion

119. The government faces a difficult task in determining whether any amendments to the Copyright Act are necessary and, if amendments are deemed necessary, what form those amendments should take.

120. On the one hand, there is the need to ensure that the interests of rights holders are adequately protected in the digitally-networked environment. Authors, performers and makers of sound recordings must be fairly compensated for the use of their works and other subject matter, on reasonable terms and conditions. Rights holders must have access to an effective set of remedies to respond to infringing acts, including the ability to have infringing content removed and the right to recover damages where appropriate.

121. On the other hand, the government needs to take into account its own public policy objective of encouraging the development of a nation-wide, broadband communications infrastructure that provides Canadian in all parts of the country with an opportunity to fully participate in the digital age. The success of this goal depends on the existence of a vibrant telecommunications industry that will invest in new infrastructure, and provide the transmission, caching and hosting facilities Canadian require to communicate with each other and with the world.

122. While there is a need to find the appropriate balance between the interests of rights holders and the realities of the Internet, these two objectives do not need to be incompatible. We believe that our recommendations strike a balance:



Recommendation 1: The Copyright Act should be amended to specify that the subsection 2.4(1)(b) common carrier exemption covers all transmission, caching and hosting activities performed by ISPs, and that the exemption from liability applies to both the right to communicate by telecommunication and the reproduction right. The Act should also make it clear that the right of distribution does not apply to the functions performed by ISPs.

Recommendation 2: The Copyright Act should be amended to create an expedited judicial process that rights holders can access to quickly address situations involving infringement of works or other subject matter. This process should include the ability to quickly obtain a judicial order for the removal of infringing content from a website. This expedited judicial process can be supplemented with a mandatory "notice and notice" procedure to ensure that third party content providers are made aware of allegations of infringement. ISPs should not be required to remove content hosted on their own servers except pursuant to a court order or other competent authority.

Recommendation 3: The Copyright Act should be amended to grant to performers and makers of sound recordings a new right of making available. This right should be subject to the provisions of sections 67 and 68 of the Act that require collectives to file a proposed tariff for the use of the subject matter.

Recommendation 4: The Copyright Act should be amended to provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures used to restrict the unauthorized and unlawful use of protected works. The Act should also be amended to provide effective legal remedies against the removal of rights management information or the distribution of works, knowing that rights management information has been removed. There should be no restriction on the manufacture or distribution of devices that have legitimate uses and the exemption from liability for ISPs should apply to these provisions as well.

123. The CCTA appreciate the opportunity to provide these comments. We look forward to submitting reply comments once we have reviewed the submissions from other parties.






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